Asbestos Reform Negotiations Collapse

In early May, negotiations over legislation to establish a national asbestos victim compensation trust fund were suspended. The talks, which were mediated by retired Federal Judge Edward Becker, had been initiated by Senate Republican Leader Bill Frist and Senate Democratic Leader Tom Daschle following the failure of a Republican-sponsored bill that would have created a privately financed fund of up to $124 billion. Democrats and labor groups had argued that the bill did not offer enough compensation for victims and would deny them their rights to sue.

Insurance industry representatives expressed disappointment that no resolution was achieved. “Unfortunately, the failure of these negotiations means that those most in need will remain uncompensated, American businesses will be subject to potentially devastating lawsuits, job creation in many businesses will be stifled, and abuse of the tort system will continue unabated,” said Carl Parks, senior vice president, federal government affairs for the Property Casualty Insurers Association of America.

Issues on which the participants failed to reach a consensus included estimates of future claim volume, variable compensation for different asbestos-related diseases, and division of the financial burden among asbestos defendant companies and insurers.

“It is now clear to us that a workable trust fund meeting the original goals of the undertaking — an efficient exclusive remedy for victims, and equity, certainty, and finality for all stakeholders — is politically unattainable,” said Robert E. Vagley, president of the American Insurance Association. “In addition, we believe that a trust fund becomes even less economically viable with the passage of time, as more and more of the finite resources available to compensate the true victims of asbestos are siphoned off by the out-of-control litigation system.” The AIA is urging Congress to consider alternatives to the fund approach and to redouble efforts to enact legislation that protects the medical victims of asbestos, as well as the economy at large.