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Asbestos Bill Remains $20 Billion Corporate Bailout for Asbestos Companies That Knowingly Poisoned People

(Friday, June 2, 2006 -Washington DC)— In response to the re-introduction of the asbestos bailout bill in the U.S. Senate, Ken Suggs, President of the Association of Trial Lawyers of America (ATLA), issued the following statement:

“This is the same fundamentally flawed asbestos bailout bill that the Senate wisely blocked in February. Once again, this legislation fails to treat victims fairly while making taxpayers, not the wrongdoers, foot the bill.

“It provides the asbestos industry with a $20 billion, taxpayer-guaranteed bailout after it knowingly poisoned people, while leaving numerous victims with nothing and others facing impossible bureaucratic hurdles.

“The basic flaws in the bill that caused it to be opposed by a bipartisan coalition of Senators, every major asbestos victims’ organization in the country, labor, the insurance industry, taxpayer rights’ organizations, and a large number of affected companies remain unchanged.

“If anything, the changes to the bill have made it worse for victims by effectively eliminating a sunset provision that would allow them to regain their rights in the civil justice system when the fund goes bankrupt – an outcome every independent analysis of the bill says is inevitable.

“Perhaps worst of all, bill supporters are giving false hope to asbestos victims poisoned on 9/11 or after Hurricane Katrina – they have the same negligible rights under the new version of the bill as the old one, and still will be left with nothing when the fund collapses under its own weight and flawed design.”

The Facts about the Asbestos Bailout Bill

The asbestos bailout bill, S. 3274, is unfair to victims, under-funded, and unworkable. Every independent analysis of the proposed trust fund it would create predicts it is destined to fail, leaving victims and taxpayers worse off. The flaws that caused the previous version of the bill, S. 852, to be opposed by every major asbestos victims' organization, organized labor, the insurance industry, and a large portion of the business community remain unchanged. This bill is still being pushed by a small group of large, politically-connected corporations that stand to get a $20 billion bailout.

Not All Victims Will Be Covered by the Bill

Not All Asbestos Victims Covered Under the Asbestos Bill (S.3274). Victims of neighborhood exposure and from asbestos in consumer products – ranging from attic insulation to automobile brakes – are excluded from any compensation in the asbestos bill. Those who can’t prove they were exposed to asbestos on the job are forced into a system that is rigged not to help them cope with their asbestos disease.

• While victims in Libby, Montana, where the asbestos was mined, are covered under the bill, the people living near asbestos “hot spots” – where the asbestos was shipped all over the country – are left out of the program
• People exposed and sickened by asbestos in homes and schools (asbestos insulation is in 35 million homes and thousands of schools) are excluded from the fund.
• First responders, rescue workers, and residents of lower Manhattan who were exposed to asbestos in the World Trade Center collapse on Sept. 11, 2001 and in the months that followed are excluded from the fund. Though bill proponents have claimed the new bill includes these victims, they actually they have the same negligible rights under the new version of the bill as the old one.
• Residents of New Orleans exposed to asbestos during the cleanup after Hurricane Katrina are left out of the program. Like 9/11 victims, they have the same negligible rights under the new bill as the old.
• Asbestos victims with lung cancer who do not also have non-malignant asbestos-related disease are excluded – despite the medical consensus that people with heavy asbestos exposure are at a substantially increased risk of cancer, regardless of whether they also have asbestosis or pleural disease.

Those Victims Who are Covered by Bill Will Face Long Delays

CBO Analysis Concluded That Those Covered by Asbestos Bill Would Experience Long Delays. For those asbestos victims who are covered by the bill, there will be significant delays in receiving compensation. The Congressional Budget Office concluded that the trust fund “would not be fully operational until at least a year following enactment of the legislation.” While the fund is being established, all pending claims not already in court would be dismissed, and victims would have to petition the trust. However, the American Lung Association has reported that the survival rate for Mesothelioma victims is about four to 12 months from the onset of symptoms. [Congressional Budget Office cost estimate for S. 852, 8/25/05, p.6; Mesothelioma Fact Sheet, American Lung Association, http://www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=35096]

Under Current System, Victims Have Their Cases Heard in Less Than a Year. The vast majority of Mesothelioma victims, and those with other very serious asbestos-related cancers, have their cases heard in a year or less. At least 22 states, or jurisdictions within those states, have established clear procedures to handle these exigent cases as priority matters. That means that these cases are being heard in California and Colorado within 120 days; in New York, Washington State and West Virginia within 6 months; and generally within one year in Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Ohio, Oregon, New Jersey, Pennsylvania, and Rhode Island. There is also a growing trend for the state courts and legislatures to establish systems to preserve the rights of the less ill, while freeing up court resources to handle the more serious cases.

The Bill is a Bailout Package for Asbestos Companies

Asbestos Bill Would Bail Out the Companies Who Knowingly Exposed their Employees; Bill Nets Corporations More than $20 Billion. According to a recent Public Citizen report, the asbestos bill would create a compensation system that would have the effect of reducing the asbestos liabilities of the very companies that knowingly exposed their employees to asbestos. The report concluded the bill would reduce the liability of the 10 large asbestos companies by more than $20 billion: “The total contributions on behalf of asbestos victims paid [into the trust fund] by 10 large asbestos firms, were they to complete their bankruptcy proceedings under current law, would drop from an estimated $25.9 billion to $5.6 billion if S. 852 becomes law. This represents a savings of $20.3 billion, or 78.5 percent, expressed in today’s dollars. On an individual basis, asbestos companies would effectively see their total payments over the life of the fund decline by margins ranging from 40.5 percent to 100 percent.” [“Federal Asbestos Legislation: And the Winners are…”, Public Citizen, p.3, http://www.citizen.org/documents/master%20report.pdf]

The Asbestos Trust Fund Created by the bill is Critically Flawed

Bates White Analysis Found that the Trust Fund Could Cost as Much as $695 Billion. An independent analysis by the Bates White consulting firm of the proposed $140 billion trust fund shows it will fail in its first three years. The study predicts that the proposed fund will be deluged by a minimum of claims totaling $300 billion. After the fund fails in the first three years, it will add $45 billion to the public debt. This is using a conservative estimate of claims. If higher levels of victims with lung and other cancers are compensated, if all of the other categories described above are not excluded, and more realistic claims estimates are used, the fund would total as high as $695 billion. [Bates White analysis of S. 852, 10/17/05, http://www.bateswhite.com/ news/pdf/2005_Bates_White_study_on _FAIR_Act.pdf]

Senators Gregg and Conrad Raised Concerns About the Bill’s “Potentially Serious Costs to Federal Taxpayers.” In a November 14, 2005 letter to Senate Majority Leader Bill Frist and Democratic Leader Harry Reid, Senators Judd Gregg and Kent Conrad raised concerns about how the trust fund would impact taxpayers: “There are potentially serious costs to federal taxpayers from this legislation. S. 852 would create a national trust fund to compensate victims of asbestos exposures in lieu of those victims pursuing compensation through the tort system. The legislation was reported by the Senate Judiciary Committee on May 26, 2005. There remain, however, major unresolved questions about the budgetary impact of the bill.” The fundamental budget problems in S. 852 remain in S. 3274. [Gregg/Conrad letter, 11/14/05, http://www.asbestostruth.org/news/2005-11-16_Gregg_Conrad.pdf]

GAO Report Highlights Serious Problems With Existing Federal Compensation Programs. A new Government Accountability Office (GAO) report on existing federal compensation programs finds major problems in funding shortfalls and delays for victims that will likely befall the proposed asbestos trust fund. The GAO report warned that, “Policymakers must carefully consider the cost and precedent-setting implications of establishing any new federal compensation programs, particularly in light of the current federal deficit.” The GAO surveyed the claims and financial history of four compensation programs through the end of fiscal year 2004. The programs reviewed were the Black Lung Program, the Vaccine Injury Compensation Program (VICP), the Radiation Exposure Compensation Program (RECP), and the Energy Employees Occupational Illness Compensation Program (EEOICP). The GAO concluded that in all four programs:

• There have been far more claims than originally estimated for each program. In fact the Black Lung program has cost U.S. taxpayers at least $38 billion more than expected.
• Significant delays in completing claims for victims occurred in all four programs.
• It took at least two years for all four programs to become fully operational once enabling legislation was enacted.
• Programs have been expanded “to provide eligibility to additional categories of claimants, cover more medical conditions, or provide additional benefits.” [“Federal Compensation Programs; Perspectives on Four Programs,” The Government Accountability Office, November 2005]
  

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