Sen. Hatch sets out proposal for asbestos settlement
By Greg Gordon, Minneapolis Star-Tribune
The chairman of the Senate Judiciary Committee heightened pressure on negotiators for labor and industry to strike a deal settling all asbestos injury claims by releasing draft legislation Tuesday to accomplish that goal.The proposal, which Republican Sen. Orrin Hatch of Utah plans to formally introduce Thursday, would create a privately financed trust fund of more than $100 billion to finance compensation for more than a million victims.
It would abolish hundreds of thousands of asbestos injury suits pending in the courts - cases that critics say are too often resolved inequitably in the current system - and would set a compensation schedule for various asbestos-related diseases.
At the bottom, people with asbestos scarring on their lungs but no disease symptoms would get nothing until they became ill. At the top, people with mesothelioma, a rare, fast-moving cancer of the lining of the lungs, would be paid $750,000, though experts expect that figure to be adjusted to at least $1 million.
Hatch has worked closely with Senate Democrats to forge a compromise to resolve litigation that has led to 67 corporate bankruptcies, leaving many victims able to recover only pennies on the dollar.
But people involved in the complex negotiations described labor union negotiators as perturbed that Hatch moved ahead when they have yet to reach a deal with corporate asbestos defendants and their insurers.
Hatch's draft bill got a warmer reception from the Asbestos Study Group, representing a dozen major companies including General Motors Corp., Ford Motor Co. and Honeywell Corp.
In a statement, the group said the proposal "embodies the principles of fairness and justice for all sides in this debate. The senator has outlined a plan that can ensure prompt and generous payments to the truly sick, while restoring certainty and sanity to a compensation system that is no longer sustainable."
The trust fund would be financed over the next 26 years mainly by 8,400 corporate asbestos defendants, which would put up $45 billion, and insurers that would foot a matching sum. Additional funds would come from asbestos injury trusts set up by bankrupt companies and a possible federal excise tax.
Negotiators for the AFL-CIO, who did not respond to phone calls Tuesday, have rejected a $108 billion offer from corporate asbestos defendants and their insurers as too low. They have made a counteroffer of $135 billion, said David Austern, a corporate lawyer who has assisted in the talks.
Austern, president of Resolution Management Corp., which runs an asbestos claims trust for the bankrupt Johns Manville Corp., said the businesses and insurers have refused to budge in response to the AFL-CIO's demands.
"I'm told the manufacturers have said, 'What you see is what we can get,' " he said.
Austern said the union umbrella group has raised a legitimate question: What would happen to claimants if the funds were exhausted? While actuaries have estimated that future asbestos claims will total about $200 billion under the current system, no one knows how many claims are pending, not to mention how many will be filed in the future, he said.
In a letter to Hatch last week, ranking Democratic Sen. Patrick Leahy, D-Vt., and three of his senators said that any legislation must ensure fair compensation to victims "now and in the future," even if the trust fund becomes insolvent.
Hatch responded that Congress could explore "private insurance mechanisms" to cover excess claims, but that he will oppose "any provision that makes the taxpayers responsible for any potential mismanagement of this fund."
A simpler claim
Under Hatch's draft bill, people diagnosed with asbestos-related illnesses no longer would have to file legal claims and prove the source of their exposures, or pay attorney fees. They would simply submit medical diagnoses to the trust fund.
Nonsmokers with lung cancer traceable to asbestos exposure could recover $400,000; smokers with lung cancer would collect $50,000; those with other asbestos-related cancers would receive $200,000; people with asbestosis that severely restricted their breathing would get $400,000, and those with early stage asbestosis would receive $40,000.
Because asbestos causes progressive lung diseases, people later diagnosed with more serious illnesses could file additional claims.
