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April 1, 2013

Pass the FACT Act to Curb Asbestos Abuses

From its small start more than forty years ago, asbestos has transformed into what the Supreme Court described as a “litigation crisis.”

Despite decades of asbestos litigation, our nation’s asbestos compensation systems are broken. There are strong indications that they are shortchanging victims, hurting businesses and undermining our justice system. That’s why it’s so important that Congress approve the Furthering Asbestos Claim Transparency (FACT) Act (H.R. 942).

Sponsored by Congressmen Blake Farenthold (R-TX) and Jim Matheson (D-UT), the bipartisan FACT Act addresses problems with federally-created asbestos bankruptcy trusts. These entities, with assets estimated in excess of $36 billion, were established by companies forced into bankruptcy by asbestos litigation. Their goal is to compensate asbestos victims fairly and promptly.

Unfortunately, the trusts’ opaque operations open the door to abuse. A recent article in the Wall Street Journal revealed that an employee of a California law firm filed a claim with a trust in the name of someone who didn’t even exist.  Five weeks later, he received a $26,000 check from the trust. The same firm also filed trust claims on behalf of clients who were nurses. They allegedly were exposed to asbestos while chipping paint from boilers – not exactly a typical duty for nurses.

The Journal also found thousands of questionable or abusive claims:

In its analysis, the Journal found 2,689 [Johns Manville bankruptcy trust] applicants through 2005 who claimed to be working in various labor-intensive occupations while under the age of 12. Among them were 753 people who claimed their exposure to asbestos began while working in construction before turning 12; 356 people who said they were metal workers; and 184 chemical workers.”

The paper also found examples of inconsistent filings between the trusts and the court system:

“At least 312 people submitted mesothelioma claims to [the Manville trust] while describing the disease as lung cancer in filings to public court dockets or other bankruptcy trusts.”

These abuses hurt legitimate asbestos victims, as each improper claim paid by the trusts is money that is not going to deserving victims. And they hurt solvent, job-creating businesses – many with only a peripheral relation to asbestos – that are forced to defend themselves in court without knowing about inconsistent trust claims from plaintiffs.

Congress has an opportunity to greatly improve this situation by passing the FACT Act, which will simply require the trusts to file quarterly reports on their claims. These reports will help the trusts and the courts avoid improper claims, protect solvent businesses from lawsuit abuse, and ensure that scarce trust dollars go to the people who actually need them most.

The FACT Act’s opponents claim it is an attempt to delay and deny justice for asbestos victims. But nothing could be further from the truth. Because the trusts have a finite amount of funds, improper payments today are denying compensation to future claimants. By discouraging improper claims, the FACT Act would enhance, not undermine, justice for asbestos victims.

For this reason, Congress should approve the FACT Act. Doing so will help restore integrity to the justice system, protect businesses from lawsuit abuse, and ensure that legitimate asbestos victims receive the compensation they deserve.

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