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August 2, 2010

U.S. Chamber Says Study Could Lead to Fix of Broken Asbestos Bankruptcy Trust System

WASHINGTON, D.C.—The U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) today applauded a new study released by the RAND Institute for Civil Justice that provides the foundation for debate over how to reform the broken asbestos bankruptcy trust system. The RAND study is the first phase of a major research project investigating the bankruptcy compensation system for asbestos claimants.

“While the bankruptcy trusts were created to compensate those with proven asbestos-related illnesses, they have become a playground for enterprising plaintiffs’ lawyers who have learned how to game the system,” said ILR President Lisa Rickard. “The RAND report underscores the level of trial lawyer control over the trusts and the inability to link payments across trusts to the same individual – encouraging some to dip into multiple trusts with impunity.”

In Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity with Detailed Reports on the Largest Trusts, RAND compiled publicly available data on the history of the asbestos bankruptcy trusts as well as how they are organized, governed and payments are processed. Through its research, RAND identifies a trend where a small group of asbestos plaintiffs’ attorneys have become “repeat players” representing a large number of claimants.

The report also finds that there is typically no coordination between trusts to determine whether a claimant’s exposure evidence is consistent. As the report explains, “a claimant needs credible evidence that he or she worked with or around asbestos during the period of time when asbestos was in use.” However, while claimants have been found to submit conflicting exposure evidence to multiple trusts, the lack of coordination between trusts allows fraudulent claims to slip through the system.

“This study sheds further light on the growing problems surrounding these trusts, including their lack of transparency, coordination and oversight,” Rickard concluded. “Given the massive assets of these trusts, Congress, the Government and Accountability Office and state legislatures must begin to seriously investigate the trust system to prevent future abuses and better provide just compensation for those truly injured.”

ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state, and local levels.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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