Bush Supports Asbestos Plan Opposed By Industry

Proposing a solution, the president indicated support for legislation drafted in the Senate that would create an asbestos trust fund to pay off claims and eliminate lawsuits that property-casualty insurance trade groups, as well as some large defendants, said they would not support.

On Tuesday, Sen. Arlen Specter, R-Pa., is convening a hearing on draft legislation embodying the principals the president indicated he would support. The legislation was circulated among parties with a stake in the legislation.

Insurers and industry defendants, including Exxon Mobil, Du Pont and Federal Mogul, are expected to criticize draft Senate legislation when they testify before the Senate Judiciary Committee.

An industry letter to Sen. Specter and other members of the Senate leadership, dated Dec. 21 but not yet released publicly, said, "Based on our recent meetings with you and the other stakeholders, it appears that the discussion draft, as currently contemplated, is unlikely to meet [the industry's basic goals]." As such, the letter adds, "should legislative language based on this draft be introduced in the Senate, we could not support it. Such an outcome would be unfortunate, given our mutual desire to move asbestos legislation to the president's desk next year."

"We believe that the current draft would not equitably resolve the asbestos litigation crisis," the letter noted.

The principles behind Sen. Specter's bill, as contained in discussion drafts circulated in late November and early December, and presumably supported by the president, include creation of a trust fund in the range of $140 billion and an alternative claims handling system based on specific medical criteria.

In earlier versions of the legislation, the insurance industry would have been expected to pay $46 billion over 27.5 years. It is expected insurers would contribute the same in the current version.

Appearing with the president was Lester Brickman, a professor at the Benjamin Cardozo School of Law in New York and an expert on asbestos litigation.

Mr. Brickman said that "asbestos exposure has been a national tragedy, and more than 100,000 workers have died as a consequence of asbestos exposure. But lawyers have taken this tragedy and turned it into an enormous moneymaking machine in which, as you say, baseless claims predominate."

In July, Mr. Brickman spoke on behalf of the American Insurance Association before a House subcommittee studying the issue. In his testimony, he said that pre-packaged bankruptcies designed to settle asbestos litigation in most cases result in discriminatory treatment that benefits "select group claimants" whose lawyers are most familiar with the process.

In a note to investors, Lehman Bros. analyst Kim Wallace said the three principles of asbestos reform mentioned by the president "represent the first demonstrable guidance from Bush on asbestos reform and a step forward."

However, Mr. Wallace said, "they will do little to move the issue forward in the short term in our view, particularly as his principles do not strongly suggest a preference for either a trust fund or medical criteria approach."

Today, Sen. Specter met with the stakeholders separately and released a draft of his proposed legislation in advance of Tuesday's hearing, where AIA general counsel Craig Berrington was scheduled to speak for the insurance industry.

Among other speakers, John Englar, former governor of Michigan and president of the National Association of Manufacturers, will speak on behalf of defendant companies.