March 23, 2016

The ‘See No Evil, Hear No Evil’ Crowd Opposing Asbestos Trust Transparency

In November 2013, ILR President Lisa A. Rickard penned a blog post about the plaintiffs’ bar’s denial of fraud and abuse in the asbestos bankruptcy trust system.

Two and a half years later, the plaintiffs’ bar has moved from denying the problem to simply ignoring it and creating new, straw man arguments that are easily debunked, yet advanced by their allies on Capitol Hill.

This latest tactic was on display in a recent U.S. Senate Judiciary Committee hearing on the Furthering Asbestos Claims Transparency (FACT) Act, sponsored by U.S. Senator Jeff Flake (R-AZ).

The FACT Act would make the asbestos claims process more transparent by requiring trusts to report their claims quarterly. Trusts would be able to check if an individual previously filed a claim and whether the claims are consistent, which would prevent “double dipping.”

At the hearing, critics of the legislation argued, wrongly, that the bill doesn’t include sufficient privacy protections for claimants, and the possible disclosure of their information could lead to identity theft and other issues.

The chosen deliveryman for the plaintiffs’ bar latest tactic was U.S. Senator Dick Durbin (D-IL).

Easily batting down Sen. Durbin’s attacks was Robert McKenna, the former Attorney General of the State of Washington and an expert in the development of data protection and privacy regulation.

McKenna, who serves as partner at Orrick, Herrington and Sutcliffe, LLP, responded to Sen. Durbin’s claims by asserting:

“All this law does is require that the bankruptcy courts have access to the information, which is already a matter of public record and which today they are not receiving. And it’s designed to protect the very people who I understand you (Sen. Durbin) feel very passionately about.”

In a subsequent interview with Arizona Business Daily, McKenna said:

“There really is no issue in regard to identity theft … and no risk that people’s confidentiality would be compromised because confidential medical records would not be allowed to be disclosed. Bankruptcy courts already have a great deal of authority to protect sensitive information of all types and those rules would continue to be in place.”

Senator Flake seconded McKenna, also telling the newspaper, “Operating under the experienced supervision of the bankruptcy courts, bankruptcy judges will ensure that FACT Act disclosures comply with the privacy provisions and protections that already exist in the bankruptcy code.”

Flake’s spokesperson said the bill will, however, remedy “the lack of transparency and oversight has resulted in a system where claimants can file inconsistent claims among the numerous trusts or against trusts and solvent companies in the tort system.”

It is those inconsistencies that are being ignored by the plaintiffs’ bar and their allies in order to advance the easily-debunked privacy claims.

A recent ILR report shed some more light on those inconsistencies. That report analyzed information from 100 randomly selected personal information questionnaires submitted by asbestos plaintiffs in the bankruptcy proceedings of Garlock Sealing Technologies, Inc.

This analysis found a number of inconsistent and fraudulent claiming patterns, including:

  • 69 percent of claimants did not list every place of employment at which they alleged exposure with every trust;
  • 15 percent of claimants did not list specific products or brands to which they alleged exposure;
  • 55 percent of claimants had date discrepancies across claim forms;
  • 21 percent of the claims displayed even more troubling discrepancies across forms, such as differing medical conditions, inconsistent job descriptions, and implausible exposure allegations. 

Troubling findings? Absolutely.

Will the plaintiffs’ bar and its allies address them? Absolutely not.

Their strategy: Hear no evil. See no evil. Advance the straw man privacy argument.

Meanwhile, the trusts are subject to fraud and future compensation for true victims of asbestos exposure remains at risk. As McKenna says:

“Given the disturbing findings to date by several federal bankruptcy courts concerning misrepresentations in claims made on asbestos trusts, the public has a right to know how far and how deep these problems may or may not extend, and the courts need to know more about claims filed in other forums by the claimants who come before them.”

We couldn’t agree more.

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