An Ultimatum For Asbestos Talks

One issue is how much money industry and insurers must contribute in the short term to the trust fund that would be established to pay claims.

The second item is at what point the so-called deluge of "pending claims"?that is, new claims filed in anticipation of asbestos legislation?would be placed into the alternative processing program.

"To that end, I asked you to give me an indication as soon as you could of whether you thought you could move in our direction on those two issues such that further discussions would make sense."

Mr. Frist said in his letter that he is doing so because "the business and insurance communities are simply not willing to fund a $140 billion trust and, simultaneously, leave open the tort system as your proposal envisions."

A lobbyist for one of the key insurance negotiators on the asbestos issue, who asked not to be named, said he interpreted the letter as indicating that Mr. Frist is ready to call a halt to the interminable negotiations because of the press of backlogged congressional business Mr. Frist will be confronted with when Congress returns for an abbreviated session Sept. 7.

Mr. Frist "knows that there are too many open questions that remain on this issue that cannot be resolved but doesn't want to take the responsibility or the heat for closing down the negotiations," the lobbyist said. "And Daschle is covering his bases in the sense that he doesn't want the business community to think he is totally opposed to class action reform," he said.

He said that Mr. Daschle "is getting strong criticism from South Dakota businesses because it was he who thought up the parliamentary maneuvers which resulted in the death of the bill."

The lobbyist added, "They are playing volleyball with a hand grenade and hoping it blows up in the other person's hands."

Congress, the insurance industry and the so-called defendant companies have been seeking to develop an alternative program for dealing with asbestos claims for three years.

One key issue dividing defendant companies and insurers is that the insurance industry is not united as to the appropriateness of a trust fund, and many key players in the insurance industry are opposed to any legislation containing a trust fund as a result of that.

Other issues dividing insurers is the timing of payments into the trust fund and the so-called "assessment issue"?how insurers will divide up their contributions into the fund. Current proposals for dealing with the latter issue include creation of a commission appointed by the president to make those decisions.

A sub-issue in that category is the timing issue. When Mr. Frist's letter talks about the "startup" issue, he is talking about the timing of insurer/defendant company payments into the trust fund. Mr. Frist and Mr. Daschle are suggesting that $36-to-$40 billion be contributed into the fund in the first six years; organized labor argues that at least $60 billion should be placed into the fund in the first six years or so.

That's because "of the time value of money," the lobbyist said, "and because organized labor and the trial lawyers want the ability as soon as possible to come back and ask for more."

Currently, all contributions into the fund would be over 27.5 years. After that, all claims would revert to the tort system under the current plan. Insurers also object to this, saying that their contributions to the trust fund should eliminate all liability going forward.