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September 14, 2018

DOJ Takes Action To Prevent Asbestos Trust Fraud

In a court filing yesterday, the U.S. Department of Justice said the bankruptcy trust created to compensate asbestos-related claims against Kaiser Gypsum Inc. “lacks sufficient safeguards” to protect against fraudulent payouts, The Wall Street Journal reports.

The papers, filed in U.S. Bankruptcy Court in Charlotte, N.C., say the proposed plan allows for “little continuing supervision by this court and with little ability for interested parties to prevent—or even detect—fraud, abuse, or mismanagement.” One safeguard the Department wants added is the power to see who has filed claims and received payments. The government said it has an interest in reviewing the claims to because money paid to fraudulent claims drains money that would reimburse Medicare.

U.S. Chamber Institute for Legal Reform President Lisa A. Rickard said in a statement that the filing is an “historic step to confront the systemic fraud and mismanagement in asbestos litigation.”

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