How Asbestos Lawsuits Are Handled: Trust Fund to Pay Settlements – Mesothelioma (2003)

Asbestos-related cases increased significantly on the U.S. Supreme Court docket after 1980. The Court has dealt with several asbestos-related cases since 1986. Two large class action settlements, designed to limit liability, came before the Court in 1997 and 1999. Both settlements were ultimately rejected by the Court because they would exclude future claimants, or those who later developed asbestos-related illnesses. These rulings addressed the 20-50 year latency period of serious asbestos-related illnesses.

In 1988, the United States Environmental Protection Agency (USEPA) issued regulations requiring certain U.S. Companies to report the asbestos used in their products.

Several legislative remedies have been considered by the U.S. Congress but each time rejected for a variety of reasons. In 2005, Congress considered but did not pass legislation entitled the “Fairness in Asbestos Injury Resolution Act of 2005”. The Act would have established a $140 billion trust fund in lieu of litigation, but as it would have proactively taken funds held in reserve by bankruptcy trusts, manufacturers and insurance companies, it was not widely supported either by victims or corporations.

On April 26, 2005, Dr. Philip J. Landrigan, Professor and Chair of the Department of Community and Preventive Medicine at Mount Sinai Medical Center in New York City,[48] testified before the US Senate Committee on the Judiciary against this proposed legislation. He testified that many of the bill’s provisions are unsupported by medicine and would unfairly exclude a large number of people who have become ill or died from asbestos: “The approach to the diagnosis of disease caused by asbestos that is set forth in this bill is not consistent with the diagnostic criteria established by the American Thoracic Society. If the bill is to deliver on its promise of fairness, these criteria will need to be revised.” Also opposing the bill are the American Public Health Association and the Asbestos Workers Union.

On June 14, 2006, the Senate Judiciary Committee Committee approved an amendment to the Act which would allow victims of mesothelioma $1.1M within 30 days of their claim’s approval. This version would also expand eligible claimants to people exposed to asbestos from the September 11, 2001 attacks on the World Trade Center, and to construction debris in Hurricanes Katrina and Rita. Ultimately, the bill’s reliance on funding from private entities large and small, as well as debate over a sunset provision and the impact on the U.S. Budgetary process caused the bill to fail to leave committee.

Since the bankruptcy filing of Johns-Manville in 1984, many U.S. and U.K. asbestos manufacturers have escaped litigation by filing bankruptcy. Once in bankruptcy, these companies typically are required to fund special “bankruptcy trusts” that pay pennies on the dollar to injured parties. However, these trusts do permit larger numbers of claimants to receive some kind of compensation, even if greatly reduced from potential recoveries in the tort system.

Since 2002, asbestos lawsuits in the U.S. have included the following as defendants: (1) manufacturers of machinery that are alleged to have required asbestos-containing parts to function properly; (2) owners of premises at which asbestos-containing products were installed (which includes virtually anyone who owned a building prior to 1980); (3) banks that financed ships or buildings where asbestos was installed (on the grounds that no rational lender would take a security interest in an asset without studying the risks involved); (4) retailers of asbestos-containing products (including hardware, home improvement and automotive parts stores); (5) corporations that allegedly conspired with asbestos manufacturers to deliberately conceal the dangers of asbestos (e.g., MetLife, a well-known insurance company which worked with Johns-Manville); (6) manufacturers of tools which were used to cut or shape asbestos-containing parts; and (7) manufacturers of respiratory protective equipment.