Committee OK needed before Memorial Day or effort might be doomed
WASHINGTON
The U.S. Senate Judiciary Committee continued to draft a bill creating an alternative claims resolution system for asbestos last week, as it looks more likely that such legislation will make it out of the committee before the Memorial Day break.
Optimism is rising because the committee passed a watered-down amendment last week mandating accelerated payment of claims to the sickest victims. The amendment was introduced by Sen. Dianne Feinstein, D-Calif., who had warned for several weeks that failure to include such language was a deal-breaker for her.
The committee was operating under pressure after Sen. Arlen Specter, R-Pa., warned the panel that if the bill wasn't passed by the Memorial Day recess, there was no hope of floor action this year.
The amendment by Sen. Feinstein mandates that mesothelioma victims get one lump-sum payment within 30 days after the claim is approved by the administrator of the trust fund the legislation would create, or six months from the time the claim is filed–whichever is shorter.
Under the bill, a $140 billion trust fund would be created to dole out payments to asbestos victims through 10 levels of medical criteria. Money to populate the fund would be paid by interested parties over 27.5 years. The fund would be administered by the Department of Labor.
Approximately $5 billion would come from trust funds established by several companies under the aegis of bankruptcy courts, which would be used to pay claims to those suffering from mesothelioma.
The insurance industry would pay out $46 billion over the life of the fund, but the amount would be front-loaded–paid by insurers mostly in the fund's early years.
One of the shortcomings noted by the insurance industry is that the payments would not provide them certainty–that claims would revert to the tort system if the fund can't pay claims within nine months of the period they are finally awarded. In addition, claims would revert back to the tort system after the law runs out in 27.5 years.
Action on the bill is taking place against the background of an intense public relations campaign mounted by various interests. For example, Public Citizen, a consumer group, said last week in a new report that the current draft of asbestos legislation would hugely benefit industry at victims' expense.
The report said the legislation would by Public Citizen's calculation reduce the potential liability of 10 large firms that used asbestos in their products from an estimated $259.5 billion if they were to complete bankruptcy proceedings under current law, to only $5.6 billion.
The report contends that at least eight Fortune 500 companies are huge winners under S. 852, because their annual asbestos payments to the trust fund would be capped at $27.5 million per year for 30 years "no matter how large their revenues or how many asbestos cases they might have pending against them."
In a report also timed to coincide with last week's action on the bill, the RAND Corp. released a study indicating that asbestos claimants have received only 42 percent of every dollar spent on asbestos litigation filed from the early 1970s through the end of 2002. The RAND work on asbestos is being funded by industry and insurer interests, including the American Insurance Association.
The insurance industry is divided in its support of the legislation. Work on the bill began before Congress took a 10-day recess at the beginning of May, and more than 60 amendments remain to be disposed of before a decision is made to report the bill to the full Senate.
It is therefore impossible to predict whether work on the bill will be completed in time for action anytime soon.
The RAND report says that more than 730,000 people in the United States filed compensation claims for asbestos-related injuries from the early 1970s through the end of 2002, costing businesses and insurance companies more than $70 billion.
The report, noting that claimants have received about 42 cents of every dollar spent on asbestos litigation, said another 31 cents has gone to defense costs, while 27 cents went to plaintiffs' attorneys and other related costs.
Infographic:
Flag: The Skinny On S. 852
Head: Will A Bill Be Passed In Time?
Here is a summary of the latest on the asbestos litigation reform effort:
o Sen. Arlen Specter, R-Pa., warned that unless legislation is approved by the Senate Judiciary Committee before the Memorial Day recess, there is no hope of floor action in the full Senate this year.
o The Judiciary Committee passed an amendment mandating accelerated payment of claims to the sickest victims, thereby clearing a hurdle set by Dianne Feinstein, D-Calif.
o Public Citizen issues a report blasting the current draft legislation for allegedly bailing out firms producing asbestos at victims' expense.
o A report by RAND Corp. financed by industry and insurance interests says asbestos claimants have received only 42 percent of every dollar spent on asbestos litigation from the 1970s through 2002.
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