Flood of asbestos lawsuits from people who aren't sick threatens to dry up funds

By Lillian Thomas, Pittsburgh Post-Gazette

Last month he went to Washington, D.C., to tell members of the Senate Judiciary Committee that thousands of people who also have asbestos fibers in their lungs - but do not have cancer or any other illness - are pushing companies into bankruptcy and depleting the money available for people like him.

Also testifying was a California lawyer who has spent his career extracting money from corporations that made or used asbestos.

"I have no sympathy for asbestos defendants," Steve Kazan said during his testimony. "Many of these companies exposed millions of innocent people to a deadly poison without warning them of the risk to their health, and they should pay for the harm that they did."

Nevertheless, he said, the flood of suits must be controlled or there will be nothing left to pay the people who get sick in coming years.

On Wednesday, the U.S. Supreme Court will hear arguments in Norfolk & Western Railway Co. vs. Ayers, a case that critics see as emblematic of the asbestos-litigation problem. The justices will review a West Virginia jury's award of $5.8 million to six retired railroad workers who alleged they were entitled to emotional-distress damages because they fear their exposure to asbestos may cause them to develop cancer.

The stakes are high in other ways, too, as evidenced by a federal investigation in Pittsburgh earlier this year. It caught Allegheny County Common Pleas Judge Joseph A. Jaffe on tape accepting a $13,000 payment from an asbestos lawyer.

Locally, three law firms dominate asbestos litigation, and the federal government has charged Jaffe with soliciting money from two of those firms' most successful partners. As the court's only asbestos judge, Jaffe had tremendous power to affect the outcome of 2,200 local lawsuits.

Legal tidal wave
The story of how the attempt to compensate victims of asbestos turned so upside down starts more than a century ago.

Asbestos seemed a wonder substance - a silicate mineral that was abundant, relatively cheap, and an excellent fireproofer and insulator. It has been used in manufacturing since the late 19th century. For decades it was found in wall and ceiling tiles and wallboard.

But its tiny hook-ended fibers break free whenever asbestos is disturbed. They float everywhere, including into lungs, where they latch on and stay permanently.

In some people, they cause a fatal, incurable cancer called mesothelioma. In others, they cause asbestosis, a scarring of the walls of the air sacs that is rarely fatal but can be debilitating.

In others, they cause changes in the linings of the lungs, usually in the form of pleural plaques. These plaques do not cause symptoms; they are indications of exposure. They do not help predict whether the person will become ill.

Between 1940 and 1979, as many as 27.5 million people worked in occupations in which substantial exposure to asbestos was common. A hundred million American workers had at least some exposure.

Between 2,000 and 5,000 people a year die because of asbestos, mostly from mesothelioma and lung cancers. Tens of thousands of others suffer from asbestosis.

Asbestos use dropped dramatically after 1973, when federal regulations took effect and manufacturers became concerned about litigation. But because the effects of asbestos often don't appear for years or decades - the latency period is 20 to 40 years - the litigation was just getting started. Since asbestos was used so widely and for so long, and so many people were exposed, it created a tsunami of lawsuits.

More than 600,000 people had brought claims against more than 6,000 companies through 2000. At least as many people will file claims in the future, according to a RAND Institute for Civil Justice study released in August.

The cost to U.S. businesses is estimated at $54 billion thus far and could grow by another $210 billion. More than $20 billion has been awarded in asbestos claims and costs, according to the American Academy of Actuaries. But only about $4 out of $10 awarded has gone to claimants, according to the RAND study.

Lawyers seek clients
As the number of people getting sick - and filing suit - grew, judges began to consolidate claims to manage the caseload. Typically if the case went forward, the jury would hear a sampling meant to represent the dozens or hundreds of claimants whose cases had been bundled together.

That raises fairness questions for both sides. If the plaintiff loses, all parties lose, even if their claims were different from those presented in court. If a defendant loses, the company faces huge payments to parties whose cases it never was given the opportunity to directly challenge.

Though most states require a person to show he has been harmed before he can proceed with a personal injury suit, some states do not rigorously enforce the rule in asbestos cases.

Because asbestos illnesses often take years or decades to appear, courts in some states have been inclined to hear cases of people who have no illness or impairment but can prove exposure and the possibility that they will become sick. In Pennsylvania, proof of impairment is required.

In some states, the statute of limitations meant that if a worker learned he was exposed and had a medical exam, he would need to file a suit within a certain period in order to protect the chance of seeking compensation.

Some lawyers who specialize in asbestos litigation recruit workers en masse, signing them up through unions and setting up X-ray screening stations at work sites. "Find out if YOU have MILLION DOLLAR LUNGS" read the ad of one major firm. Large firms often file suit on behalf of hundreds of clients at a time.

The usual legal process is flipped: Instead of a person feeling sick, going to a doctor and then consulting a lawyer to see whether his illness merits compensation, the lawyer approaches people who have not reported an illness and encourage them to be tested in order to qualify to file a lawsuit.

Cases filed on behalf of people who are not ill make up 60 percent to 70 percent of new asbestos filings, according to the RAND study.

Asbestos suits typically involve many parties, giving plaintiffs' lawyers a choice of where to file. Often those lawyers may choose between federal and state courts, among states, and even which venue within a state.

Each state has different rules on how difficult it is for out-of-state firms to file.

Mississippi's liberal "joinder" rule allows out-of-state plaintiffs to join in-state plaintiffs against out-of-state defendants. The result is a multistate class action, without the plaintiffs needing to meet usual class certification requirements. That is one reason so many cases go there.

The tendency of Mississippi jurors to award large amounts of money to plaintiffs is another. More than 20 percent of all pending U.S. asbestos cases have been filed in Mississippi, and counties there have become fertile ground for asbestos lawyers.

The number of pending asbestos suits in Jefferson County, Miss. - 10,000 - exceeds the county's population - 9,740.

In October 2001, in the case Johnson vs. ACS Manufacturing Inc., a Mississippi jury awarded six plaintiffs $150 million, though none of them claimed to have incurred medical expenses or lost so much as a day of work because of asbestos exposure. The case is being appealed to the Mississippi Supreme Court.

Calls for legislation
Federal courts have worked to manage asbestos litigation. In 1991, the Judicial Panel on Multidistrict Litigation decided to consolidate all pending federal asbestos cases, and transferred them to the Eastern District of Pennsylvania. Judge Charles Weiner handles the cases. A total of 95,994 cases have been transferred to him plus 7,411 filed in the Eastern District. Of those, about 73,000 have been closed.

The result was that lawyers began filing more cases in state courts. Before 1998, 40 percent were filed in federal court; after 1998, fewer than 20 percent were filed there.

Efforts at mass settlements, and at setting guidelines that both plaintiffs and defendants would follow, were tried. All failed.

The U.S. Supreme Court struck down two cases that attempted mass settlements - Amchem Products Inc. vs. Windsor in 1997 and Ortiz vs. Fibreboard in 1999 - ruling that the class was too large and diverse to be represented in a single action.

The court acknowledged the problems involved in asbestos litigation and called for legislative action to remedy the problem.

In the Fibreboard case, Justice David Souter wrote, "The elephantine mass of asbestos cases ... defies customary judicial administration and calls for national legislation."

That hasn't happened, and the explosion of suits has brought asbestos litigation to the point where people are finally staring at the bottom of deep pockets.

When many of the asbestos manufacturing companies were driven into bankruptcy, lawyers began suing thousands of companies that used asbestos in their products. More than 50 companies have declared bankruptcy at least in part because of asbestos litigation.

Bankruptcies serve to delay and reduce payments.
In the United States, the average time from bankruptcy filing to an agreement is six years. It often takes longer for money to start flowing. When it does, the payments are smaller because companies have to reserve funds for future claimants.

The Manville Trust, for example, which was set up to pay people injured by asbestos after manufacturer Johns-Manville Corp. filed for bankruptcy, is paying only 5 percent of the value of claims against it in order to preserve money for future victims.

For terminally ill patients, that could mean they won't live to see the money.

Fixing a broken system
The push for a legislative remedy is on again with this fall's hearings before the Senate Judiciary Committee.

Brian Harvey, the Pullman, Wash., man who testified about his incurable cancer, got paid. With his medical insurance, Harvey has been able to cover costs, though he and his wife had to sell their house and quit their jobs to move to Maryville, Wash., for treatment.

"The current asbestos litigation system does not distinguish between mesothelioma victims like me and the thousands of people who are not sick that file claims," he said. "I am truly frightened that people diagnosed with mesothelioma now and in the future will not receive any compensation at all."

At issue in this week's Norfolk vs. Ayers case is whether people with asbestosis - which has not been linked to the later development of cancer - can claim damages based on the fear of developing more serious illnesses.

Kazan, the Oakland, Calif., attorney who testified at the hearings, is well aware of the seeming contradictions in his position of seeking to help the companies he's spent his career suing.

"The irony of all this is, I end up on the same side as some of corporate and insurance people. We all want the [companies being sued] to survive; I want them to survive so they can pay me next year. They want to survive so they can beat me next year."

Kazan, who represents mostly clients with mesothelioma and other fatal cancers, said in an interview last week that he believed that solutions were within reach of the courts and Congress.

Though the number of cases made it difficult for courts, he said that consolidation wasn't the only answer.

Judges can simply try cases one at a time, and favor the ones brought by ill people, reducing lawyers' incentive to file others, he said. The federal courts and many states, including Pennsylvania, have largely followed that prescription, he said.

Some proof of medical impairment should be at the basis of any proposal for a national system, he said.

"Before you file an asbestos case anywhere in the country you have got to have a report from a doctor saying that something is wrong with you. The flip side of that is you require that, whatever the state statute of limitations is, it doesn't begin to run until the development of pulmonary impairment starts."

The Pennsylvania Supreme Court has done that. Kazan says it ought to be a national rule.

Kazan concedes there is a counterargument to the one he's making. It says everyone deserves his day in court, and that it's not the lawyer's job to worry about the money for future settlements.

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