NU Online News Service, Oct. 20, 2:50 p.m. EDT

Corporate interests and the plaintiff's bar are using a new Government Accountability Office study on asbestos trusts to renew their battle over whether the trusts should be required to be more specific in disclosing claims-settlement data.

The GAO report finds that from 1988 through 2010, asbestos trusts have paid about 3.3 million claims valued at about $17.5 billion. The trusts paid 461,000 claims totaling $3 billion in 2010, the report says.

The trusts were created after companies with huge numbers of asbestos-related claims filed for bankruptcy, and through bankruptcy deferred all of their asbestos liability into trusts. These companies, along with insurers, fund the trusts.

The trusts, according to the report, acknowledge that they cannot pay the full value of a claim and therefore determine a payment percentage, a fraction of the full value that can be paid, to present claimants in order to maintain sufficient assets for present and future claims.

The report studied 52 of the 60 trusts, and finds that only one publicly disclosed the identity and claims of people it had paid. Most of the rest resist such disclosure, citing the confidentiality of claimant medical records.

The report was ordered by Rep. Lamar Smith, R-Texas, chairman of the House Judiciary Committee at the request of the Chamber of Commerce and other business interests.

The Chamber and business interests allege that plaintiff's lawyers largely oversee the operation of these trusts, and mandate process standards which prevent the trusts from sharing information about how much their clients have been paid. That, the Chamber says, leads to fraud.

But, the GAO report discounts the fraud allegation, saying most trusts appropriately audit claims. Specifically, the report says 98 percent of the trusts it reviewed require a claims-audit program. None indicated that these audits had identified cases of fraud.

The Chamber and business interests also allege that the secrecy allows some plaintiffs to hit up multiple trusts with claims that may contradict each other.

Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), says that the report "confirms that the asbestos trusts operate under a shroud of secrecy and without judicial or federal government oversight."

Various initiatives have been taken to deal with the criticisms, one of which was a recent proposal brought by the ILR before the Judicial Conference of the United States, the primary policymaking body of the U.S. courts.

This proposal is being considered this fall by the Judicial Conference.

The proposal would require asbestos trusts to file publicly available quarterly reports.

Reports submitted under this proposal would need to describe each demand for payment the trust received during the reporting period, including an individual's asbestos-exposure history, as well as each amount paid during the report period, but would not include confidential medical records or claimants' Social Security numbers.

Gary Paul, president of the American Association for Justice, the trade group representing the trial lawyers, says, in reaction to the report, "This GAO report shows that the U.S. Chamber and its asbestos allies have severely misplaced priorities."

He says the ILR's insistence on a GAO study of this issue "has backfired, as it found that these trusts are transparent and protect the interests of Americans suffering from asbestos-related diseases."

He adds, "The GAO has found what we knew all along: this attack on asbestos trusts is just the latest attempt to shield asbestos manufacturers that knowingly killed their workers for decades."

Special Reports /

GAO Report on Asbestos Trusts Renews Fight Between Businesses, Lawyers

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