[Senate Hearing 108-141]
[From the U.S. Government Publishing Office]
S. Hrg. 108-141
ASBESTOS LITIGATION CRISIS
=======================================================================
HEARINGS
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MARCH 5 AND JUNE 4, 2003
__________
Serial No. J-108-4
__________
Printed for the use of the Committee on the Judiciary
89-326 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON THE JUDICIARY
ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas JOHN EDWARDS, North Carolina
Makan Delrahim, Chief Counsel and Staff Director
Bruce A. Cohen, Democratic Chief Counsel and Staff Director
C O N T E N T S
----------
WEDNESDAY, MARCH 5, 2003
STATEMENTS OF COMMITTEE MEMBERS
Page
DeWine, Hon. Mike, a U.S. Senator from the State of Ohio......... 34
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 1
prepared statement........................................... 111
Kennedy, Hon. Edward M., a U.S. Senator from the State of
Massachusetts.................................................. 36
Kohl, Hon. Herbert, a U.S. Senator from the State of Wisconsin,
prepared statement............................................. 147
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 4
prepared statement........................................... 149
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama.... 39
WITNESSES
Archer, Dennis, President-Elect, American Bar Association,
Chicago, Illinois.............................................. 21
Austern, David T., Claims Resolution Management Corporation, and
General Counsel, Manville Personal Injury Settlement Trust,
Fairfax, Virginia.............................................. 19
Baucus, Hon. Max, a U.S. Senator from the State of Montana....... 6
Harvey, Brian T., Marysville, Washington......................... 17
Hiatt, Jonathan P., Associate General Counsel, American
Federation of Labor and Congress of Industrial Organizations,
Washington, D.C................................................ 23
Kazan, Steven, Kazan, McClain, Edises, Abrams, Fernandex, Lyons
and Farrise, Oakland, California............................... 25
McCandless, Melvin, Plymouth, North Carolina..................... 14
Voinovich, Hon. George V., a U.S. Senator from the State of Ohio. 11
QUESTIONS AND ANSWERS
Responses of David Austern to questions submitted by Senators
Leahy and Kohl................................................. 46
Responses of Steven Kazan to questions submitted by Senators
Leahy and Kohl................................................. 51
SUBMISSIONS FOR THE RECORD
Archer, Dennis, President-Elect, American Bar Association,
Chicago, Illinois, prepared statement.......................... 61
Asbestos Study Group, statement.................................. 88
Austern, David T., Claims Resolution Management Corporation, and
General Counsel, Manville Personal Injury Settlement Trust,
Fairfax, Virginia, prepared statement.......................... 93
Baucus, Hon. Max, a U.S. Senator from the State of Montana,
prepared statement............................................. 102
Harvey, Brian T. Marysville, Washington, prepared statement...... 107
Hiatt, Jonathan P., Associate General Counsel, American
Federation of Labor and Congress of Industrial Organizations,
Washington, D.C., prepared statement and attachment............ 114
Kapnick, Scott B., Managing Director, Goldman, Sachs & Co., New
York, New York, statement...................................... 124
Kazan, Steven, Kazan, McClain, Edises, Abrams, Fernandex, Lyons
and Farrise, Oakland California, prepared statement............ 136
McCandless, Melvin, Plymouth, North Caroline, prepared statement. 151
National Association of Manufacturers, Michael Elias Baroody,
Executive Vice President, Washington, D.C., prepared statement. 154
Voinovich, Hon. George V., a U.S. Senator from the State of Ohio,
prepared statement............................................. 157
WEDNESDAY, JUNE 4, 2003
STATEMENTS OF COMMITTEE MEMBERS
Page
Durbin, Hon. Richard J., a U.S. Senator from the State of
Illinois....................................................... 183
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 159
prepared statement........................................... 362
Kennedy, Hon. Edward M., a U.S. Senator from the State of
Massachusetts, prepared statement.............................. 365
Kohl, Hon. Herbert, a U.S. Senator from the State of Wisconsin,
prepared statement............................................. 370
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 163
prepared statement........................................... 372
WITNESSES
Biggs, Jennifer L., Tillinghast-Towers Perrin, St. Louis,
Missouri....................................................... 207
Crapo, James D., M.D., Professor of Medicine, National Jewish
Center and University of Colorado Health Sciences Center,
Denver, Colorado............................................... 189
Dunbar, Frederick C., Senior Vice President, National Economic
Research Associates, New York, New York........................ 214
Green, Eric D., Professor, Boston University School of Law,
Boston, Massachusetts.......................................... 216
Hagel, Hon. Chuck, a U.S. Senator from the State of Nebraska..... 166
Hartwig, Robert P., Senior Vice President and Chief Economist,
Insurance Information Institute, New York, New York............ 219
Murray, Hon. Patty, a U.S. Senator from the State of Washington.. 181
Parker, John E., M.D., Professor and Chief, Pulmonary and
Critical Care Medicine, Robert C. Byrd Health Sciences Center
of West Virginia University, Morgantown, West Virginia......... 195
Peterson, Mark A., Legal Analysis Systems, Thousand Oaks,
California..................................................... 210
Tribe, Laurence H., Professor, Constitutional Law, Harvard Law
School, Cambridge, Massachusetts............................... 170
Welch, Laura, M.D., Medical Director, Center to Protect Workers
Rights, Silver Spring, Maryland................................ 192
QUESTIONS AND ANSWERS
Responses of Jennifer L. Biggs to questions submitted by Senators
Hatch, Specter and Leahy....................................... 228
Responses of James D. Crapo, M.D. to questions submitted by
Senator Specter................................................ 238
Responses of Frederick C. Dunbar to questions submitted by
Senator Hatch.................................................. 242
Responses of Robert P. Hartwig to questions submitted by Senator
Specter........................................................ 249
Responses of Mark A. Peterson to questions submitted by Senators
Leahy, Hatch and Specter....................................... 251
Responses of Laurence H. Tribe to questions submitted by Senators
Kyl, Durbin and Specter........................................ 264
Responses of Laura Stewart Welch, M.D. to questions submitted by
Senators Hatch, Leahy and Specter.............................. 271
SUBMISSIONS FOR THE RECORD
Baucus, Hon. Max, a U.S. Senator from the State of Montana,
statement...................................................... 282
Biggs, Jennifer L., Tillinghast-Towers Perrin, St. Louis,
Missouri, prepared statement................................... 287
Crapo, James D., M.D., Professor of Medicine, National Jewish
Center and University of Colorado Health Sciences Center,
Denver, Colorado, prepared statement........................... 297
Dunbar, Frederick C., Senior Vice President, National Econimic
Research Associates, New York, New York, prepared statement.... 313
Feinstein, Hon. Dianne and Hon. Herb Kohl, additional views on S.
1125........................................................... 329
Green, Eric D., Professor, Boston University School of Law,
Boston, Massachusetts, prepared statement and attachment....... 334
Hartwig, Robert P., Senior Vice President and Chief Economist,
Insurance Information Institute, New York, New York, prepared
statement...................................................... 358
Murray, Hon. Patty, a U.S. Senator from the State of Washington,
prepared statement............................................. 376
Parker, John E., M.D., Professor and Chief, Pulmonary and
Critical Care Medicine, Robert C. Byrd Health Sciences Center
of West Virginia University, Morgantown, West Virginia,
prepared statement and attachment.............................. 378
Peterson, Mark A., Legal Analysis Systems, Thousand Oaks,
California, prepared statement................................. 398
Phillips, Carter G., statement................................... 405
Tribe, Laurence H., Professor Constitutional Law, Harvard Law
School, Cambridge, Massachusetts, prepared statement........... 414
Waxman, Seth P., Wilmer, Cutler, & Pickering, Washington, D.C.,
prepared statement............................................. 440
Welch, Laura, M.D., Medical Director, Center to Protect Workers
Rights, Silver Spring, Maryland, prepared statement............ 449
THE ASBESTOS LITIGATION CRISIS CONTINUES--IT IS TIME FOR CONGRESS TO
ACT
----------
WEDNESDAY, MARCH 5, 2003
U.S. Senate,
Committee on the Judiciary,
Washington, D.C.
The Committee met, Pursuant to notice, at 2:05 p.m., in
room 216, Hart Senate Office Building, Hon. Orrin G. Hatch,
Chairman of the Committee, presiding.
Present: Senators Hatch, Specter, DeWine, Sessions,
Chambliss, Cornyn, Leahy, and Kennedy.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
THE STATE OF UTAH
Chairman Hatch. Good afternoon. I would like to welcome
everyone to this hearing as the Committee continues its
examination of the asbestos litigation crisis.
At the outset, I want to make everybody know or I want
everybody to know that I intend to make every effort to resolve
this issue, this Congress. We simply cannot wait any longer,
and we have to resolve it.
I am encouraged by the level of interest in this issue as
expressed to me by my colleagues on both sides of the aisle,
and I hope that the Ranking Member, Senator Leahy, and I along
with other colleagues will be able to work in a bipartisan
manner to resolve this issue.
As he indicated at the last hearing, Senator Leahy also
recognizes that this is a situation that requires our
attention, and he conducted a very good hearing as Chairman of
this Committee.
It is not too often that an issue has such bipartisan
interest in Congress, but this one does. The question is can we
put it together. It is very complex and that is one reason for
this follow-on hearing, and this will be the last hearing that
we are going to hold that I can think of.
I don't think there can be any doubt that the crisis in
asbestos litigation is a serious problem, and it continues to
get worse as the abuse continues and Congress has failed to
act, even as the Supreme Court has suggested that we must act
in order to resolve this train wreck.
It is my sincere hope that we can do better this time
around. As I stated in our hearing last fall, which Senator
Leahy chaired, skyrocketing bankruptcies of companies being
sued hurt not only those who are truly sick and deserving of
appropriate compensation, but also those many hardworking
Americans whose jobs and pensions are lost or put at serious
risk.
We have all heard the statistics by now, but they bear
repeating, and I would like to use some charts here. Chart No.
1, as the New York Times has reported, the number of cancer
cases has remained virtually stable sine 1995, while the number
of non-cancer cases has spiked dramatically just in the last
few years. This defies common sense.
Let me go to Chart No. 2. According to a recent study
published by RAND, almost 90 percent of the pending asbestos
claims are brought by persons with nonmalignant injuries.
Nonmalignant cases get 65 percent of the compensation awards
compared to 17 percent for mesothelioma and 18 percent for
other cancers.
Now, there is something wrong with that, and the
consequence is that more than 67 companies have been forced
into bankruptcy, 67 companies and thousands and thousands of
jobs, and more than 20 of those bankruptcies have occurred in
just the last few years, as you can see from Chart No. 3.
Moreover, the scope of the litigation has increased
exponentially and is mind-boggling to anyone. This has become
such a gravy train for some abusive trial lawyers that over
2,400 additional companies were named in the last year alone as
defendants.
One company recently shared their story with me. This
company never engaged in the business of manufacturing,
producing, distributing, or selling asbestos or asbestos-
containing products, nor did this insurance company ever issue
liability or worker's compensation insurance to companies in
the business of manufacturing, producing, distributing, or
selling asbestos or asbestos-containing products.
They did, in fact, lead the way in researching and issuing
one of the first reports that exposed the true health risks of
asbestos, a report that is actually cited by many plaintiff's
attorneys in current cases and has saved lives. And how are
they rewarded? They have been named in thousands of cases, more
than 60,000 per year, alleging that they were not aggressive
enough in revealing these dangers of asbestos, and they have
been brought in as coconspirators.
Now, they told me it is cheaper for them to settle
frivolous cases than to defend them in court. They could win
every one of these 60,000 cases, but the last one they defended
cost, just in defense costs alone, $1.4 million. So it is
cheaper to pay a few thousand bucks per case and to pay what
really is extortion money in order to resolve what really is a
horrendous problem to them. This sounds ridiculous, and it is,
but it is what is happening.
We have a tort system that is out of control here,
especially in these asbestos cases, and I am encouraged by some
recent developments that illustrate more widespread recognition
of the problem. The American Bar Association recently adopted
the findings of the Special Committee on Asbestos Litigation.
I look forward to hearing from our witness, Dennis Archer,
the president-elect of the ABA, on their findings regarding
medical criteria, which would defer the claims of those who are
not currently sick in favor of those who are truly ill and
require urgent compensation. That just seems logical. It just
seems right.
We will also hear from David Austern, trustee of the
Manville Trust, on the problems encountered by Manville and his
ideas on how to resolve this issue.
We look forward to hearing from organized labor. Jonathan
Hiatt kindly is making a return appearance before our Committee
on this issue, as is Steven Kazan, an attorney who represents
the truly sick claimants who are most adversely affected by
this current system.
I know Senator Leahy joins me in my concern that the
current system is hurting the victims of asbestos.
Our panel of witnesses include two physically impaired
individuals, Brian Harvey and Melvin McCandless. We very much
appreciate the effort it must have been for them to come here
today to share their stories.
In addition, we have victims of another sort present in the
audience, people like Mike Carter of Monroe Rubber and Gasket,
who flew here from Louisiana. He is a small businessman whose
business is being threatened by endless asbestos litigation.
In addition, and perhaps most importantly, we will hear
from some victims who could not make it here today, victims who
were unable to be here.
The video you are about to see, which we are putting on
this video player here, was provided to us by an attorney
representing these victims. Perhaps we can just take time and
play that right now.
[Videotape shown.]
Chairman Hatch. Well, in conclusion of my remarks, let me
just say that I believe that today's hearing is an important
step toward finding the right solution, and I am committed to
doing so.
I am going to keep an open mind about how to approach the
best solution or solutions to this problem. We have heard from
some who have proposed the creation of a trust fund. We also
have heard from those who would support a court proposal
requiring medical criteria, among other things, to manage the
cases and to minimize abuses. Both are very intriguing matters
to me, and I am looking at those and I know Senator Leahy is as
well.
I have asked the various interested parties to meet over
the past month and provide the Committee with their
suggestions. We have received some recommendations as late as
this past week, and I would encourage the various interest
groups to take the next 2 weeks to try to come to a single
approach that all can support, the sick victims, the companies
who are targeted and their insurance companies who are at risk,
and hopefully the labor unions who would be affected by the
loss of jobs, the loss of pensions that result from these
abusive suits.
Folks, time is running out before literally thousands of
our most productive companies in this country and hundreds and
thousands of jobs are put at serious risk by these suits, and
there are enough people who have suffered enough here that we
have got to try and figure out how to resolve this problem
without having all the moneys supped up by those who aren't
sick and by runaway juries.
Now, it is time to get together. It is time to come up with
a solution. I will invite your input and look forward to
working with anybody toward a solution here, but we have got to
find a solution and if we don't have the help from the folks in
this audience and others, then we are going to find ourselves
and we are going to come up with a bill here within the next
short while, hopefully before the end of the month of March,
and we are going to proceed with it. I hope that we can come up
with something that will have the vast majority on board that
we can proceed with and we can get these problems resolved.
With these remarks, I will turn it over to our
distinguished ranking minority member, the former Chairman of
this Committee, Senator Leahy, and then will look forward to
hearing our witnesses.
STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE
STATE OF VERMONT
Senator Leahy. Thank you, Mr. Chairman, and also thank you
for the video you showed. I know for some here, that was
probably difficult to watch, but I thank you for allowing us to
do it.
Today's hearing is aptly titled. It is a time for Congress
to act on a fair and effective solution to the asbestos
litigation crises.
Thousands of workers and their families have suffered
debilitating diseases and death resulting from exposure to
asbestos, and with the latency periods for asbestos-related
illness of up to 40 years, the damage done by asbestos will not
end for decades.
As the chairman said, I called the first Senate Judiciary
Committee hearing last September on this to see if we could get
a bipartisan dialog going about the best means to provide fair
and efficient compensation to the current victims, but also
those yet to come. When we had the hearing last year, Senator
Hatch and I discussed the fact that at that time, we knew we
could not go forward with legislation because of the time of
the year, but that we ought to work on this in this year.
Senator Hatch and I have had a number of discussions on
this, and I think it is fair to say we both want legislation to
pass. I would join with the chairman in urging all of the
interested parties to get together if they can.
I spend a lot of time with people who are involved in this
from victims to insurance companies to manufacturers to labor
unions to lawyers to everybody involved in it, and I think it
is possible. I really do think it is possible to come together
on a piece of legislation.
It will not be everything that every single side wants, not
by any means. In fact, if anybody gets everything that they
want, it means that enough others will be disappointed that
nothing will pass. This is not a magnet for every single
special interest from the left to the right by any means. If
that happens, the legislation just would not be able to get
through, and no matter how well-intentioned it is, we have to
work together.
Mr. Chairman, you and I have worked together on this, and I
would suggest, Mr. Chairman, that your staff and my staff just
continue to work as closely together because, if we came out
with a piece of legislation that both you and I supported, I
have a feeling that it would pass the Senate. I really do.
Chairman Hatch. We will certainly work with you, Senator,
and we hope we can put it together.
Senator Leahy. I know you are committed to that, and I
appreciate that.
We have all learned a great deal about the harms wreaked by
asbestos exposure since last fall. Not only do the victims
continue to suffer and their numbers to grow, but the
businesses involved in the litigation, along with their
employees and retirees, are suffering from the economic
uncertainties surrounding this litigation. More than 50
companies have filed for bankruptcy because of their asbestos-
related liabilities. These bankruptcies, of course, create a
lose-lose situation. Asbestos victims deserving fair
compensation do not receive it, and the bankrupt companies
cannot create new jobs nor invest in the economy.
Now, as a general matter, our tort system is well-equipped
to handle the resolution of conflicts. I have long battled the
misguided attempts, hidden beneath the guise of ``tort
reform,'' to limit the access that American people have to
courts, and I will continue to do so because one of the
distinguishing characteristics of our judicial system is its
openness to legitimate claims of injury, its availability to
all aggrieved plaintiffs, but in this case, because of the
particular circumstances of the harm caused by asbestos, the
system is not working as it should.
These circumstances are causing the failure of asbestos
litigation to meet the needs of many victims and the
capabilities of many defendants. That is why, as I have said,
if we work in good faith toward a bipartisan solution, we can
meet the challenge created by this litigation. I agree with the
U.S. Supreme Court's conclusion that the number of claims
defies ``customary judicial administration and calls for
national legislation.'' The Supreme Court is right. We can put
together such legislation. It is going to have to be one where
people on both sides of the aisle and across the political
spectrum come together or it won't work.
An effective solution is not one that would create more
corporate bankruptcies. It would not erect arbitrary barriers
to recovery, and it would not generate excessive legal fees. An
effective solution will fairly and efficiently compensate
victims. It will eliminate the financial uncertainty that
hinders defendants and their insurers from resolving their
liabilities. That is what we have to find. It is going to take
creative ways to do that in a fair and efficient manner, and I
am wide open to such suggestions and solutions.
As I said earlier, the one thing that could kill any chance
for a real bipartisan reform is overreaching by special
interests for immunity from legitimate asbestos claims. For
Congress to enact reforms this year, all the stakeholders are
going to have to come to the table. They have got to be willing
to work with open minds toward a realistic and reasonable
solution. The answer will require the full participation, both
of the victims and the corporate defendants and then their
insurers as well. It is not going to be a stacked solution that
attempts to shoot the moon for one side to the other. It has to
be narrowly targeted. It has to be balanced.
We began this discourse last September on the problem of
asbestos injuries and the litigation that has ensued. It has
been a good one. Senator Hatch and I and others--I see Senator
Baucus here, Senator Voinovich, Senator Ben Nelson, and
others--have worked with us on this. We want a solution that is
going to bring fair and adequate compensation to victims in a
timely fashion, one that will resolve the financial uncertainty
for corporate defendants and one that is going to enable
insurers to predictably meet the obligations of the policies.
So, Mr. Chairman, you know, as I had before, I will
continue to work with you. I think you and I have an
opportunity, if all the parties will cooperate, to bring
legislation that can not only pass the Senate and the House,
but then could go to the President and be signed.
Chairman Hatch. Thank you, Senator. We are honored to have
with us the Honorable Max Baucus of Montana and the Honorable
George V. Voinovich of Ohio. Both of them, I know, share our
concern for this issue. So we will hear first from Senator
Baucus. Then we will hear from Senator Voinovich. We welcome
both of you to the Committee.
STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM THE STATE OF
MONTANA
Senator Baucus. Thank you, Mr. Chairman and Senator Leahy.
Thank you for allowing me to testify before your Committee.
This is an issue that raises a lot of passion on both sides
because so much is at stake, and I applaud you for continuing
to address and to examine the status of asbestos litigation in
this country and where it may or may not be appropriate for
Congress to become involved.
However, Mr. Chairman, I am concerned that in a rush to
address a real or perceived crisis in our courts, Congress may
do an injustice to hundreds or thousands of injured people by
arbitrarily denying those people the ability to protect their
rights. Our number-one concern here should be justice, how do
we ensure that asbestos victims, all asbestos victims, are
treated fairly and compensated for their injuries.
Why am I so concerned about where we are headed? Because we
seem to continue to circle back to the idea of requiring all
claimants to meet strict medical criteria before they can file
an asbestos-related claim. It sounds clean, orderly, and
logical. People can't file for compensation until they are
actually sick, theoretically allowing defendant companies to
protect their assets and ensuring a greater chance that victims
will be able to recover some compensation if and when they
become sick.
Mr. Chairman, as with all issues as complicated as this
one, the devil is in the details. What constitutes an injury?
What does being sick mean? How can we know that money will be
around the next 5, 10, 15, 20 or more years to compensate those
who become sick in the future? And how do we address the
concern that some people are far more likely to become
seriously sick than others, depending upon when, where, or how
they were exposed to asbestos? And frankly, how do we address
the fact that there is still a lot that we just don't know
about the causes and the effects of different types of asbestos
exposure?
As I understand it, a major concern about the current
asbestos litigation crisis is the repeated attempts to reduce
procedural bars to claims. Too often, hundreds and thousands of
people are being lumped together in a class action, even though
those people may have little relation to each other in terms of
when and where they were exposed to asbestos, how they were
exposed, how long they were exposed, and what kind of injuries
they suffered.
The Supreme Court has noted that this approach in many
cases was unfundamentally unfair to the claimants involved.
Yet, the asbestos litigation reform that the American Bar
Association and others have proposed would have exactly the
same effect.
Strict medical criteria would treat all people in the same
manner, regardless of their circumstances, regardless of when,
where, and how they were exposed to asbestos, and in many
cases, regardless of what kind of injury they have suffered.
The proposal would narrowly define an acceptable injury, but
also impose significant costs on claimants before they have any
assurance that they can file a claim for compensation. The
point is no matter how a medical criteria standard is
developed, Congress will have to choose a, more or less,
arbitrary standard that will cutoff people who have been
injured or who ar about to be injured.
We had better be very, very sure that this is the only just
way to address the asbestos litigation, and I have a hard time
believing we can't be more creative.
I have spoken in detail about the little town of Libby,
Montana, before this and other Committees, and on the floor of
the Senate. I won't go back into the details of the terrible
things that happened to the people of this town, that is, at
the hands of a company called W.R. Grace, but this town and the
people who live there, or used to live there, dramatically
illustrate the points I have been trying to make. So I would
like to touch upon a couple of facts.
The vermiculite mining and milling operations at W.R. Grace
blanketed the town of Libby with asbestos-tainted dust for
decades, until the early 1990's. The dust was everywhere, on
clothes, on cars, on children, on the clothes of workers when
they came home from the mine.
I can remember seeing miners years ago come off the mine,
got off the bus. The bus itself was just one big dust bag, and
the miners themselves were lots of little smaller dust bags,
just covered with vermiculite dust.
It was on the high school track, this stuff, on the Little
League field, in people's homes, in their gardens. They didn't
know the dust was poison, but W.R. Grace new. What W.R. Grace
knew was that this dust was contaminated not just with
asbestos, ordinary asbestos, but with deadly tremolite asbestos
fibers, much worse than the chrysotile asbestos that most of us
are aware of. These fibers have killed hundreds of current and
former Libby residents. Hundreds more are sick, and many of
these people will die from asbestos-related diseases and
cancers. Thousands may become sick in the future, and unlike
most any other place in the country, many of these people were
significantly exposed not as workers, but as children.
W.R. Grace lied to these people. Now the town of Libby is
watching their families. Their friends and neighbors die or
steadily become more sick. They have to watch them struggle to
tend to their gardens or just take a walk to the local cafe.
They have to watch them struggle to provide a secure future for
their children, all the while wondering if their children will
become sick, too.
At the same time, these people are struggling to rebuild
their community, to make it a vibrant, prosperous town, to keep
local businesses and help their friends and neighbors. Many of
them wonder if and when they will become sick.
They have to do all of this with little or no help from
W.R. Grace.
I have requested that a letter from the representatives of
many of the Libby claimants, as well as two letters from
doctors who have treated or screened many of the folks in Libby
for asbestos-related disease, be included in the hearing
record. These documents outline how the experience of the
people in Libby, Montana, is unique and demonstrate that the
pattern and progression of their disease--and this is very
important--does not fit within the ABA or other proposed
medical criteria.
These documents speak for themselves, including
illustrating the simple fact that tremolite-related lung
disease does not appear on a chest x-ray like chrysotile-
related lung diseases. Chrysotile is the most common form of
asbestos that most people have been exposed to in this country.
I would like to quote in detail from Dr. Brad Black's
letter because he makes some very important points. Dr. Black
is the medical director of the Center for Asbestos-Related
Disease in Libby, Montana, and Dr. Black states, ``I entered
medical practice in the [Libby] community in 1977. . .At that
time, like most physicians, I was trained to recognize disease
due to chrysotile asbestos, from which significant lung disease
manifested as. . .scarring in the lung tissues. This
[scarring in the lung tissues] has a characteristic pattern on
a chest x-ray. . . .''
Continuing the letter, ``During the period of 1979 to 1999,
asbestos-related disease was incubating in a large number of
Libby residents, but remained undiagnosed. Why did our
community physicians not recognize it? Simply because
tremolite-related lung disease does not appear on a [chest x-
ray] like chrysotile-related lung disease. . .[T]remolite
usually causes scarring in the lining around the lungs (pleura)
and infrequently shows up on x-ray as scarring inside the lung,
even in the heavily exposed'' W.R. Grace ``workers. . .and is
much better seen on'' a CT scan.
Continuing the letter, ``In the last 18 months, I have
observed the diagnosis of five mesotheliomas, with three
individuals already having died. Four of these individuals
(nurse, office receptionist, forest service administrator, a
no-resident who traveled to Libby for basic services) were
exposed to tremolite simply by living and working in Libby.''
That is the only reason they got it, just because they are
living there.
Continuing, ``Another gentleman who lived near a
vermiculite processing facility in the residential area of
Libby died from progressive pleural fibrosis. His spouse has
advanced asbestos-related disease. A significant number of
residents who were exposed environmentally are experiencing
advancing lung disease, some of whom require supplemental
oxygen. Based on past observations with chrysotile exposure,
one would not expect non-occupationally exposed individuals to
develop such extensive asbestos-related disease. . .The
relative potency of tremolite fibers in causing disease
(progressive lung disease, mesothelioma, and lung cancer) has
been striking,'' end quote, end Dr. Black's letter.
This is all included in Dr. Black's letter. It is only two
pages long, and I would respectfully ask that all members of
the Committee personally read Dr. Black's letter. It will be
very instructive to a solution.
Mr. Chairman, medical criteria, such as that proposed by
the ABA or in the Fairness in Asbestos Compensation Act of
1999, would devastate the people of Libby, Montana. The
standard in the 1999 Act would exclude 73 percent of the Libby
patients from filing a claim for compensation. The remaining 27
percent are either dead or in the end stages of asbestos-
related disease and in the process of dying.
It has been made clear to me that we have likely lost
ground under the ABA medical standard, with even more Libby
patients barred from filing a claim under the ABA standard than
were barred under the 1999 Act. I would refer members of the
Committee to a letter from Dr. Whitehouse that I have submitted
for the record where he describes in detail the arbitrary
nature of the ABA standard as applied to tremolite asbestos
patients.
I would also like to include in the record a list of 10
people in Libby who would be excluded from seeking compensation
under medical criteria such as that proposed by the ABA, so
that the Committee can get some idea of the human cost here.
Mr. Chairman, we are no better off today than we were in
1999 when we battled the Fairness in Asbestos bill. The
differences between tremolite and chrysotile continue to be
ignored. The sheer magnitude of the tragedy in Libby
illustrates how hard it is to define the nature of an asbestos-
related injury.
Am I frustrated when I hear about the thousands of people
who have had little or no real exposure to asbestos, but who
have filed asbestos-related claims for compensation? Yes,
because I know that many of those people will be competing
against the folks in Libby for compensation. However, do I know
with any real certainty that some of those people aren't sick
now, or won't become very sick, depending on where they are
from, when they were exposed and for how long? Do I know if
most of those people will be treated fairly by medical criteria
such as that proposed by the ABA or the Fairness in Asbestos
Act or similar legislation proposed in this Congress? No, and
neither does the Congress.
I have stated before that I am sympathetic to the concerns
of companies that have not filed for bankruptcy. These
companies may not share W.R. Grace's or other defendants'
liability or responsibility for asbestos-related disease and
death, but they have been tagged with liability precisely
because they are solvent. These companies are also being
treated unfairly and unjustly by the actions of W.R. Grace and
other companies that are able to hide their assets and declare
bankruptcy; in essence, shifting their rightful share of
liability and responsibility to other businesses.
I have also told this Committee before that I think a
review of the injustices inherent in corporate bankruptcies
would be an appropriate piece of the asbestos puzzle for this
Committee to take a hard look at.
It is pretty clear that W.R. Grace hid a vast amount of its
assets, up to 4- to $6 billion, from the reach of the
bankruptcy court and, by extension, from Libby victims. About a
billion of those assets will be returned to the bankrupt
estate, but W.R. Grace didn't suffer for this. The Department
of Justice had to do all the work, at taxpayer expense, to
unravel this transaction.
At the end of all this, W.R. Grace will likely emerge from
bankruptcy lean and whole and able to continue to prosper as a
business. The Libby victims, unless we are able to protect them
in some fashion, will receive pennies on the dollar. This is
just disgusting.
Add to this the fact that many of them can't get medical
insurance, and that the total cost of treating all those who
have been sick, who are sick or who will become sick, as a
result of their exposure to asbestos in Libby is just
staggering. The cost of treating the former W.R. Grace mine
workers alone threatens to bankrupt the State of Montana's
Medicaid program, another case of W.R. Grace masterfully
shifting liability and responsibility to someone else.
So many people have come together to do the right thing in
Libby. The Montana delegation, the State of Montana, the
Federal Government, the community of Libby, and many concerned
private citizens have been working so hard to bring new
economic development and much-needed health care resources to
Libby. This has been our, practically, number-one goal for the
last couple or 3 years, I must tell you, all four of you. It is
that important. Federal dollars have flowed to Libby for
cleanup, for health care, and revitalizing the economy. There
has been significant progress for the community.
Dr. Brad Black has called for developing a leading-edge,
world-class research facility with the mission of 1 day
developing cures for asbestos-related diseases. The silver
lining is that Libby's tragedy could be used to protect the
health of men, women, and children across the country.
It is just amazing to see how everyone has come together in
Libby to create something positive from a terrible situation,
everyone, that is, except W.R. Grace.
I say all of this because I want to circle back to the idea
of making sure that when we attempt to step into the middle of
the asbestos litigation debate that we are doing justice by the
people of Libby and by the people of this country.
We keep being drawn away from the key issue here, which is
that asbestos companies like W.R. Grace caused the death and
serious illness of hundred if not thousands of people. We
shouldn't be overly concerned about protecting companies like
W.R. Grace. However, are there others who ultimately bear a
share of responsibility for what happened to these hundreds and
thousands of people? There is a good argument to be made that
the Federal Government does share some of the responsibility
for failing to take action to protect its citizens when the
hazards of asbestos became known many decades ago. That is
something for this Committee to consider.
Clearly, we won't be able to come up with an acceptable
resolution to the problems that is perfect or where everyone
will agree, but we have to do our best. We have to put the
victims first. That is the key.
The medical criteria put forward by the ABA and others does
not meet this standard. Their criteria are arbitrary. They are
unfair, excessively burdensome, particularly to the people like
those in Libby who have every right to demand that W.R. Grace
make their town whole and pay for their medical expenses and
suffering.
Thank you, again, Mr. Chairman, Senator Leahy, ranking
member of the Committee. I apologize for such a long statement.
I thank you for your indulgence, but I can tell you that this
is critically important.
If you could sit in the living room of Les Scramstad, as I
did a couple, 3 years ago, and other people from Libby who are
suffering from termolite-related asbestos diseases, you would
understand why I am so passionate about this. I pledged to
myself that moment that I was going to do everything humanly
possible to make sure the people of Libby, Montana, are made
whole again, and I am going to do my very best until it
happens.
I ask the Committee, I beseige the Committee, in drafting
legislation, recognize the main points I have made, namely that
the medical criteria proposed by the ABA will exclude most of
the people of Libby, Montana, who through no fault of their own
have just gone through the biggest tragedy and are suffering
the greatest calamity that I have ever seen in my State.
Thank you.
[The prepared statement of Senator Baucus appears as a
submission for the record.]
Chairman Hatch. Thank you, Senator. We appreciate having
your powerful testimony.
Senator Leahy. Mr. Chairman?
Chairman Hatch. Yes.
Senator Leahy. Mr. Chairman, I just wondered if I could put
in the record a statement by Senator Kohl and the testimony of
The Asbestos Study Group, whose members include Dow and Ford
Motor Company.
Chairman Hatch. Without objection, we will put that all in
the record.
Senator Voinovich, we will turn to you.
STATEMENT OF HON. GEORGE V. VOINOVICH, A U.S. SENATOR FROM THE
STATE OF OHIO
Senator Voinovich. Thank you, Mr. Chairman. I want to thank
you and Senator Leahy for holding this hearing and allowing me
to testify.
I am most impressed with your remarks and Senator Leahy's
remarks about a bipartisan solution to this problem that is
confronted by the victims and also the businesses in this
country. I think that everyone involved has to understand that
they have a symbiotic relationship with each other, and if
everyone could get in the room and work together, that somehow
we could come up with something that is fair.
I would say it would help also if The Asbestos Study Group
and the Asbestos Alliance would get together and speak with one
voice, so that you would have a clear point of view from their
perspective.
I want to preface my remarks by saying that my thoughts are
with the victims of asbestos exposure. Those families who have
lost loved ones and have to live with the debilitating illness
caused by asbestos, they are in the forefront of my mind and in
my heart as I discuss the issue of asbestos liability.
I want to be sure that the solution we craft is one that
will ensure that these truly sick individuals are allowed fair
and just compensation, and, Senator Baucus, you have done a
marvelous job of speaking eloquently on their behalf.
I think, Mr. Chairman, most people would agree that the
issue of asbestos litigation and its aftermath is presenting a
crisis in our country. With over 50 companies already in
bankruptcy and a slew of bankruptcies soon to follow, the U.S.
Supreme Court had it right when they called this an
``elephantine mess.'' What people need to understand, though,
is that the mess has far-reaching effects, and the ripples are
being felt way beyond the corporate board rooms.
Corporate bankruptcies affect victims' compensation so that
truly sick asbestos victims, in too many cases and more and
more frequently, only receive pennies on the dollar.
Employees of bankrupt companies suffer as they watch their
jobs disappear and their pensions in 401(k) plans decrease
dramatically. For example, take the case of Federal Mogul, a
company that employs over 1,200 people in six cities throughout
my State. Employees held 16 percent of the company's stock and
then watched as that stock lost 99 percent of its value. Not
only current employees, but also retirees are feeling the
effect of these bankruptcies. Many retirees depend on company
stock and dividends for income. When this value heads south,
retirees feel it immediately.
Ohio is a manufacturing State, and along with agribusiness,
our manufacturers are the back bone of our economy. In fact,
when you compare Ohio's manufacturing production with New
England States, Ohio's gross State manufacturing is higher than
all six of our New England States combined. Unfortunately, we
have lost a lot of companies facing asbestos liability in many
instances only because of companies that they acquired.
One company which does a lot for the Toledo area is Owens
Corning. As Governor, I worked hard to get Owens Corning to put
their new corporate headquarters in downtown Toledo to help
facilitate the city's renaissance. Owens Corning unfortunately
went bankrupt in 2000. In the 2 years preceding this
bankruptcy, the stock lost 97 percent of its value, and 14
percent of the stock was owned by company employees.
Now Owens Corning has been making a comeback, and I
recently read an article in the Toledo Blade stating that they
saw their sales rise to $4.9 billion in 2002. This is a well-
managed, profitable company. However, accounting charges to
cover their asbestos liability expenses contributed to be what
the Toledo's firm's biggest loss has been, a report of $2.8
billion for the year. The biggest factor in the loss, a $2.4-
billion charge taken in the third quarter to reflect estimates
of its asbestos liability over the next 50 years, and more and
more companies, Mr. Chairman, are going to have to be reporting
those liabilities and you are going to see a lot more of what
has happened to Owens Corning in this country.
Another company recently spoke to me off the record about
its growing asbestos liability. When this company announced
that it had limited asbestos liability, the stock dropped by
about 20 percent and its debt rating was lowered. This began a
chain ripple effect, which included the loss of over 100 jobs,
the sale of assets, a 50-percent cut in capital investments,
and a huge cut in the amount of contributions to the
surrounding community.
As a former mayor, I know firsthand the impact of decreased
contributions to the community. Many of us forget that these
companies make significant contributions to the tax revenues of
the cities in which they are located and the States,
contributions to the United Way, arts, education, health care,
and many other forms of community involvement.
As I have said before, companies like this one make up the
back gone of our State's economy. They don't want to shirk
their responsibilities to those victims who have or will become
sick because of asbestos exposure. They just want to know that
they are not compensating those individuals who are unimpaired.
What I am hearing from Ohio companies is they support
taking the medical criteria approach advocated by the American
Bar Association. As you probably know, in coming to this
decision, the ABA formed a commission chaired by Judge
Nathaniel Jones, a distinguished Federal jurist from Ohio and
former general counsel of the NAACP. This commission included
seven members of the legal community representing the
plaintiff, defense, and corporate bars. The commission heard
extensive medical testimony from the Nation's leading
physicians in the area of pulmonary function, and the ABA's end
result, one that I support, is one that prevents resources from
being misdirected because of a flood of premature claims. It
helps companies avoid bankruptcy, and most importantly of all,
it protects the rights of victims who suffer from a serious or
functionally impairing asbestos-related disease.
I am not going to go into the details of that
recommendation. Mr. Archer, who is on the next panel, can
explain it much more eloquently than I can.
I am sure that there must be some way to accommodate the
concerns that Senator Baucus raised here today before this
Committee.
On a broader scale, the litigation crisis in this country
is like a tornado ripping its way through our economy, an
economy already on the ropes primarily because of the
geopolitical situation that we are confronted with.
The American Tort Reform Association published a study last
year of impact of litigation on my State and found that it cost
every Ohioan $636 per person. A large part is due t the issue
before you today, asbestos.
We need, Mr. Chairman, to move immediately on this issue.
In my opinion, passing responsible asbestos reform legislation
to ensure that the truly injured receive fair and just
compensation and to prevent more companies from sliding into
bankruptcy will do far more for my State than any of this so-
called stimulus proposals that we are hearing about today.
We must stop the hemorrhaging for our victims of asbestos
and the companies, their employees, their retirees, and their
communities.
Mr. Chairman, I want to thank you very much for allowing me
to testify here today.
[The prepard statement of Senator Voinovich appears as a
submission for the record.]
Chairman Hatch. Thank you. We appreciate having the
testimony of both of you fine Senators, and we appreciate the
efforts that you have made to be here with us and to give us
these statements. They are important, and we are paying strict
attention to them. Thank you very much.
Senator Voinovich. Thank you.
Chairman Hatch. Our first panel will be made up of Melvin
McCandless. Mr. McCandless came here from Williamston, North
Carolina, to be here today. We want to thank him for agreeing
to be with us. I know it is not easy for him. So we are
grateful to have him here.
The second witness will be Mr. Brian Harvey. He has
traveled all the way from Marysville, Washington, with his wife
to share his story with us today, and we are very appreciative,
especially given the hardship it must be with his medical
condition. I know that mesothelioma is a very terrible disease.
So we will listen to these two.
Plus, David Austern, Esquire, he is president of the Claims
Resolution Management Corporation and general counsel for the
Manville Personal Injury Settlement Trust in Fairfax, Virginia,
which as we know has been dealing with asbestos claims for
years.
Dennis Archer, Esquire, the president-elect of the American
Bar Association. We are honored to have you with us, Mr.
Archer. He is currently chairman of the firm Dickleson Wright
in Detroit, Michigan. Mr. Archer initiated the ABA's Committee
on Asbestos Litigation.
Jonathan Hiatt, Esquire, is general counsel for the
American Federation of Labor and Congress of Industrial
Organizations, the AFL-CIO, in Washington, D.C.
We are pleased to have all of you here with us today.
Finally, once again, Mr. Kazan, we are very pleased--am I
pronouncing that name right?
Mr. Kazan. ``Kazan,'' Your Honor.
Chairman Hatch. ``Kazan.'' That is what I thought.
You are a partner with the firm Kazan, McClain, Edises, et
al., in Oakland, California. Mr. Kazan has represented asbestos
cancer victims for years, has testified before. We decided to
bring him back because of his tremendous experience in this
area and his ability to help this Committee to try and arrive
at, hopefully, some solutions. I intend to get there, and,
hopefully, I will have the cooperation of our colleagues on
both sides of the table.
So we will start with Mr. McCandless. Then we will go to
you, Mr. Harvey, Mr. Austern, Mr. Archer, Mr. Hiatt, and then
Mr. Kazan.
STATEMENT OF MELVIN MCCANDLESS, PLYMOUTH, NORTH CAROLINA
Mr. McCandless. Mr. Chairman and Honorable Members of the
U.S. Senate Judiciary Committee, let me thank you for the
opportunity to be here today to tell you about my family and my
story. My name is Melvin McCandless, and I am from Williamston,
North Carolina.
I am here today to address the unfairness in the bill that
has been introduced by Senator Nickles, the Asbestos Claims
Criteria and Compensation Act of 2003, Senate bill 413, and in
the medical criteria proposed by the American Bar Association.
I suffer from asbestosis, and I was found by the deputy
assigned by the North Carolina Industrial Commission to be
permanently and totally disabled because of my asbestosis.
Although I have been found permanently and totally disabled by
the deputy who heard my case, I would be unable to recover in a
court of law for the very same disease if this bill or the ABA
proposal became law.
I worked for one of the largest employers in North
Carolina, a large mill in eastern North Carolina. It is lined
literally with miles of asbestos-containing insulation around
pipes, conduits, turbines, and boilers. I worked there 35
years, and for years, almost every day, you could see the dust
in the air.
I worked there as a supervisor. None of us had any idea
about how dangerous asbestos was. We worked around it every
day. Down in eastern North Carolina, the plant where I worked
is one of the few places where you could get a good-paying job.
None of the workers had respiratory protection. We were not
given any special clothing to keep the asbestos off of us or to
prevent us from taking it home to our families. I did not know
asbestos was dangerous until after I already had the disease. I
was required every month to have a safety meeting, but at no
time did the company ever mention anything, nothing about
asbestos, in any meeting that I ever attended. I did not see
any warnings on any boxes of asbestos products.
For several years before I went out of work, I was short of
breath while trying to do my job. At any time I was in dust or
steam, which was really every day at work, it would affect my
breathing. At any time I was in the heat or around the steam
insulation, the coughing would be the same.
As a supervisor, I had to walk around various parts of the
mill, including up and down stairs. I got to where I could not
do my job anymore because I was so short of breath. At any time
I had to exert myself, I would get winded almost immediately.
my work environment aggravated all my breathing problems. In
fact, because of my breathing, I couldn't wear a respirator
because it would suffocate me.
To work as long as I did, I had the other guys help me do
my job, and that was not right.
Although the company gave me a couple of chest x-rays, no
one ever told me of any abnormalities. I did not know what was
wrong with me, but my employer did. See, they had been
monitoring my lungs sine 1985. In 1989, they started seeing
changes on the x-rays the company doctor took, but they never
told me. They just moved me out of the mill onto the woodyard.
Then, 4 years later in 1993, they moved me back into the dust
inside the mill, and that is where my breathing went downhill.
My doctors testified that I should not have been further
exposed to asbestos after the chest x-ray showed I was
developing the disease. After my chest x-ray showed up, the
company took me out of the medical monitoring program.
There is not a lung doctor in my county or a B reader. The
few doctors that are there are just general doctors who usually
don't stay long because of our location. The only reason I ever
found out what was wrong with me is because I contacted a
lawyer who I heard represented by coworkers.
I was sent to a pulmonologist first and then to an
independent State doctor who is an associate professor of
pulmonary medicine, who also confirmed that I had asbestosis. I
also had the B reader who read chest films for the company
confirm that I had it, as did other B readers. Yet, my lawyer
tells me that despite all this, I wouldn't qualify to even file
a claim for compensation in a court of law under the Nickles
bill or the ABA proposal.
The North Carolina Industrial Commission found the reason I
cannot work is because of my asbestosis. I am short of breath,
and I cannot do my job. I could not do my job.
In fact, the dust was so bad, it would come home on my
clothes. While washing these clothes and being around me, my
wife of 37 years, Janice, started inhaling the asbestos as
well. In fact, now my wife has been diagnosed with asbestosis,
too. She is having breathing problems which are getting worse,
and she has a terrible cough.
I am here today because my lawyer told me that if Senate
bill 413 or the ABA proposal is passed, neither I nor my wife
nor most of our friends would be able to recover in a court of
law for asbestosis. Even though the North Carolina Industrial
Commission has ruled I am permanently and totally disabled, I
couldn't recover because my pulmonary function test is ``within
the range of normal,'' and I would, therefore, be excluded
under the Nickles bill or the ABA proposal.
I cannot do any amount of exertion for over a very short
period of time. Just pushing the garbage from the house to the
road makes me short-winded and uneasy. My wife's condition is
similar to mine, but she also would be excluded under the
Nickles bill or the ABA proposal.
I had not planned to be here today because one of my
coworkers was going to testify, but he was put in the hospital
last week due to his asbestosis. He is on oxygen. Like me, his
chest x-ray report would not allow him to qualify for access to
a court under the Nickles bill or the ABA proposal.
I have worsening shortness of breath, a dry cough, and I am
severely limited in what I can do. I cannot be around dusts,
fumes, chemicals, and I truly believe that I may 1 day be like
my friend who could not be here because he is on oxygen in the
hospital.
That is wrong. It is wrong for me, it is wrong for my wife,
and it is wrong for my friends at the mill and all the others
whose lives have been hurt by asbestos.
Thank you for this opportunity to be here today to tell you
my family's story and the story of a lot of my coworkers who my
lawyers say would also not be allowed access to a court under
the Nickles bill or the ABA proposal. Thank you.
[The prepared statement of Mr. McCandless appears as a
submission for the record.]
Chairman Hatch. Thank you, Mr. McCandless.
We will turn to you, Mr. Harvey, and look forward to
getting your testimony as well. If you will pull that mic up
close to your mouth, that will help a little bit for everybody.
STATEMENT OF BRIAN T. HARVEY, MARYSVILLE, WASHINGTON
Mr. Harvey. Mr. Chairman, my name is Brian harvey, and it
is a privilege for me to address you here today.
In some respects, this is a little bit like being at home.
My wife has already had the first word about being at this
testimony, as you may have noticed in the video. That is not
all bad. I should be dead today. The reason I am not dead today
is my wife loved me enough to push me, prod me, and all but
carry me across the State of Washington until I got to the
chest clinic at the University of Washington Medical Center.
After I was in the center, 8 days later, I was presented
with the fact that I was a victim of mesothelioma. I now had to
face the facts as we knew them about mesothelioma. It has been
considered a death sentence, and that is what I felt.
Then I was told, well, if you fight it, you might be able
to string it out from 8 months, which is what they expected if
you didn't fight, to maybe 18 months, but only one in 20 ever
make it to 5 years. The doctor who is responsible for my care
said due to the fact your diagnosis was early and your tumor is
not too advanced, I have a very aggressive campaign that you
would qualify for. I chose that course. That course included,
first, chemotherapy to try to reduce size of the tumor and
reduce its activity, follow that with surgery where he removed
my entire left lung, the left side of my diaphragm, the left
side of my pericardial sack, rebuilt the diaphragm with gortex.
Chairman Hatch. With what?
Mr. Harvey. With gortex.
Chairman Hatch. I see. I missed that.
Mr. Harvey. So that my left chest is now filled with fluid.
You want the fluid there. If that were air, I would have
trouble with infection. And he now followed that with neutron
radiation in an effort to clean out any single cell of the
mesothelioma tumor that might remain.
I am now 42 months from the time of my diagnosis, and I
don't plan on checking out any time soon.
Every 6 months, I return to the University of Washington
for a CAT scan, blood work, and a general checkup. It is a lot
like playing Russian roulette. All of the treatments I was
given were an effort by the doctors of the University of
Washington to remove the bullets from the cylinder of the gun,
but every time I go back, it is like the technicians take out
the gun, spin the cylinder, and hand it to my doctor. He points
it at my head and pulls the trigger. I have been lucky so far.
It has always gone ``click,'' and I remain at no evidence of
disease.
Every day, I rejoice in the fact that I am alive, that I
can still hear the birds in the park behind my house and the
children playing in the yard across the street, and I have at
least one more day to be with my family.
After being diagnosed with mesothelioma, I hired a lawyer
and filed a lawsuit against several companies who manufactured
some of the asbestos products that I worked around. Neither my
wife nor I had ever filed a lawsuit before. However, when we
learned that the asbestos industry had been aware of the
dangers of their products by the 1930's, I felt justified in
seeking compensation for my family and myself. After 6 months
of litigation, my lawyers were able to obtain several
significant settlements in my case.
My wife and I aren't wealthy. My wife still works so that
she can maintain my health insurance. However, our settlement
enabled us to relocate to Seattle where I could be close to the
doctors who are responsible for my still being alive and to put
some money away so that my wife and family are covered if I
die.
Over the past several years, I have worked with the
University of Washington and the Mesothelioma Applied Research
Foundation to counsel other mesothelioma victims. I discuss
possible treatment options and try to prepare the victims for
the devastating effects of the disease. Many victims talk to me
about financial disruption that follows a mesothelioma
diagnosis. When I suggest that they pursue legal remedies, I am
saddened to hear that all the companies from whom I received
compensation have filed for bankruptcy in the past 2 years.
I have read many articles and magazines that tell me that
the vast majority of asbestos claims filed in America today are
brought by people who are not currently sick as a result of
asbestos disease. It makes me angry that these cases are
forcing the defendants into bankruptcy and diverting funds from
the people who are truly sick and dying from asbestos disease.
I am angry that the true victims of asbestos are not getting
the compensation they need and deserve.
Congress must act comprehensively to address the asbestos
crisis in America at four different levels: prevention,
detection, treatment, and compensation.
Congress must act to ban asbestos in America. It is
unbelievable that asbestos is still being used in this country
when its dangers are so well known. My Senator, Patty Murray,
has proposed legislation to ban the use of asbestos in America,
and I ask the members of this Committee to join Senator Murray
in this effort and stop people from being exposed to this
deadly material. The best way to solve the asbestos litigation
crisis is to prevent people from getting sick in the first
place.
Detection. Asbestos disease is very difficult to diagnose
and even more difficult to treat. Congress needs to establish a
medical monitoring program to ensure that the 40 million
Americans who have been exposed to asbestos receive regular
examinations by qualified physicians. Most Americans were
exposed to asbestos while serving in the military or, like
myself, as a union member working in the trades. The Veterans
Administration and AFL-CIO could provide the organization to
administer an asbestos monitoring program for millions of these
exposed individuals.
Treatment. Many individuals diagnosed with mesothelioma are
simply told by their physicians to go home and prepare to die.
Congress needs to appropriate funds for the research and
treatment of asbestos-related disease. Asbestos victims need
real treatment options when they become ill.
Compensation. Although the hazards of asbestos were well
documented from the 1930's, asbestos was widely used by
manufacturers through the 1970's, and it is still used by some
today. People whose lives are disrupted or destroyed by
asbestos disease should be able to seek compensation from the
responsible companies for their injuries. Individuals who are
not suffering a real disease caused by asbestos should be
eligible for medical monitoring, but not monetary compensation.
The American Bar Association has developed criteria to
distinguish individuals suffering from a real asbestos disease
from those who are not impaired. Congress should act now to
enact the ABA standards into law.
Asbestos has had a devastating impact on the lives of
countless Americans. I ask that Congress adopt this
comprehensive approach to the asbestos crisis for the benefit
of all Americans.
Thank you.
[The prepared statement of Mr. Harvey appears as a
submission for the record.]
Chairman Hatch. Thank you. We appreciate both of your
testimonies. They are very dramatic and important to us on the
Committee.
For the remaining witnesses, I have these lights. We have
given each of you 5 minutes, and when that red light goes on, I
would sure like you to wrap up, if you could, because we do
have a lot of questions and we would like to be able to
elucidate this matter a little bit more with some of the
questions we have. If you need more time, just ask me, but if
you can do it within the 5 minutes we have allotted, I would
appreciate it.
We will start with you, Mr. Austern.
STATEMENT OF DAVID T. AUSTERN, PRESIDENT, CLAIMS RESOLUTION
MANAGEMENT CORPORATION, AND GENERAL COUNSEL, MANVILLE PERSONAL
INJURY SETTLEMENT TRUST, FAIRFAX, VIRGINIA
Mr. Austern. Chairman Hatch, Ranking Member Leahy, and
members of the Committee, thank you for the opportunity of
being here today. I am David Austern, and I am president of the
Claims Resolution Management Corporation, and I am also general
counsel of the Manville Personal Injury Settlement Trust, which
is the oldest and at least right at the moment the trust with
the most money.
I appeared here 5 months ago and testified about the status
of asbestos litigation and particularly claims, and I had some
rather dire numbers at that time. I must tell you, after 5
months, things have not improved one single bit.
The CRMC has received on behalf of the Manville Trust well
over 600,000 claims in the last 15 years. We have paid 520,000
of these people over $3 billion, and that sounds like a lot of
claims and a lot of money, but we are not halfway there. Our
future claims forecasters tell us we will receive between 1
million and 2.5 million additional claims. So, arguably, we are
not halfway there. We are barely a quarter there.
Most distressing of all, numbers aside, this is a
fortuitous system, and, unfortunately, the victims are a
function of that fortuity. Whether a victim is paid and how
much or, for that matter, if at all is a function of whether
defendants are solvent, where those defendants are, whether
they are in bankruptcy court, who the lawyer is, and a whole
host of other idiosyncracies including jurisdiction.
In fact, that fortuity is before you here today. Both Mr.
McCandless and Mr. Harvey have filed claims, and I will tell
you that they have both been paid, but because of the
fortuitous-ness of this, one of them was paid at a 10-percent
rate by the Manville Trust because we only pay at a 10-percent
rate at that time, and because of the increase in claims, we
had to cut that pro rata rate to 5 percent. And one of these
gentlemen, disease aside, got only 5 percent of the value of
his claim, and that is so with every single extant asbestos
trust. We pay 5 percent for the Manville Trust, and, yet,
Manville, it is generally thought, had 30 percent of the
liability for asbestos exposure in this country, and not one
single, solitary extant asbestos trust pays more than a
fraction. Indeed, one of them pays, if I remember my math
right, less than a fraction because they pay less than 1
percent of the liquidated value of those claims.
And by the way, we have 18 trusts in bankruptcy court about
to be formed, and not one single one of them will pay anything
more than a small fraction of the liquidated value of those
claims.
Why is there so little money for Mr. Harvey and Mr.
McCandless and the other victims of asbestos? Well, you have
been told before, and I will not reiterate, that the tort
system eats up about 50 percent of all of the funds that get
spent.
Let me turn to something else. We have 18 bankruptcies
ongoing, and they are chewing up substantial sums. In the
Manville bankruptcy, which emerged in 1988, the costs of the
bankruptcy were $100 million in 1988 funds, and if you look at
the market cap of the 18 companies that are now in the
bankruptcy courts and try and figure out what it will cost, I
predict for you, never mind future bankruptcies, those 18
bankruptcies are going to chew up in excess of $1 billion in
trying to resolve the bankruptcy itself and, thus, Mr.
McCandless and Mr. Harvey and their colleagues will have less
than that billion dollars.
You have before you what are arguably some competing
legislative initiatives, and I don't think it is particularly
keen advocacy for me to sit here and be critical of one or the
other. Others may have a different view of that, but U.S.
policymakers have some tough decisions. So I would like to
spend the rest of my time on the trust fund or what some call a
national asbestos claims facility because I feel that, by far,
it is the better of the proposals.
It would, in fact, create a one-payer system, and by the
way, based on no fault, it would be private funded. It would,
in fact, prioritize diseases, and it, in fact, would set, with
your help, legislative standards for funding and for funding
caps.
I would like to be able to sit here and tell you what I do
for a business in paying claims requires the knowledge of a
rocket scientist, but in candor, it does not. This can be done
fast. It can be put together expeditiously, and I would
guarantee to you that from the date of enactment to the payment
of claims would probably not exceed 90 days. In short, those
who criticize this proposal because they think it is
complicated simply have never run an asbestos trust, as I have
for 15 years. I promise you, it is not that difficult to do
this sort of thing.
Let me make one last point before that red light goes on.
We are in a situation in which we are paying fractions of
asbestos trusts, and we will continue to do so. This is the
only proposal that will remove these cases from a litigation
and bankruptcy system, the only proposal that will provide
criteria that are meaningful to the payment of claims.
Now, competing, I realize, legislative initiatives before
you lead to hard choices. This is the only one that, in fact,
will save the money from bankruptcies and will save the money
from the tort systems that Mr. Harvey and Mr. McCandless and
their colleagues can look to further payments in the future.
Thank you.
[The prepared statement of Mr. Austern appears as a
submission for the record.]
Chairman Hatch. Thank you, Mr. Austern. That was
interesting testimony.
Mr. Archer, we are honored to have you here now. I
understand you have Dr. Crapo with you. Feel free, Dr. Crapo,
to advise him anywhere through is testimony or questions.
STATEMENT OF DENNIS ARCHER, PRESIDENT-ELECT, AMERICAN BAR
ASSOCIATION, CHICAGO, ILLINOIS
Mr. Archer. Thank you, Senator Hatch, Senator Leahy,
Senator Kennedy, and all Senators present.
My name is Dennis Archer, and I am president-elect of the
American Bar Association. I appear before you today in that
capacity on behalf of the American Bar.
As you have noticed, Mr. Chairman, in the audience with me
today is Dr. Robert Crapo, an expert in pulmonary testing and
pulmonary physiology. He chairs the American Thoracic Society
Committee that sets these standards. He has been chair for 15
years. He is currently on the Committee that is writing
international standards. He was one of 10 physicians
interviewed by our Commission on Asbestos Litigation when it
developed a medical criteria standard. Also in the audience is
Philip McGuine, a member of the ABA Commission on Asbestos.
We cannot protect victims of asbestos like Brian Harvey and
his wife unless we fix the system. Asbestos litigation, as both
you and Senator Leahy pointed out in your remarks, is spiraling
out of control. 600,000 claims have been filed, with 200,000
currently pending, and in New York City alone approximately
30,000 cases. Increasing caseloads lead to longer delays, which
means people are, frankly, dying before they get their day in
court, as 65 companies have bankrupted. Sometimes bankrupt
companies can only pay, as you heard, pennies on the dollar.
Workers have lost 60,000 jobs and an average of $8,000 in
pension accounts. The courts are overwhelmed, and there may not
be anyone left to pay victims.
There is a simple principle here: Help people who are sick
when they are actually sick. We need to triage the mass of
cases. Sick people are not getting the help they need. For
victims, short-term windfalls can cause massive, long-term
shortfalls. We should use more than three decades of medical
and scientific research to craft a medical standard for
sickness, concentrate on those who are sick and need our help
today.
We need to implement a medical standard which will restore
order to the system, and there needs to be a change of the
Statute of Limitations. Implementing a Federal medical
standard, a clear, consistent, medically sound standard for
those who are sick, change the Statute of Limitations that the
clock will not start ticking when and if a person actually gets
sick.
Debate should be about the system. Today, the system says
file now or never. A better way is to file when you actually
need it. Too often, there is no justice for victims or for
corporations.
The American Bar Association House of Delegates is made up
of lawyers who come from small law firms. They do plaintiff's
work. They do general practice work. There are representatives
there from State and local bar associations. There are
representatives there from sections and divisions like labor
and employment and litigation and health law, and 70 percent of
the lawyers were present who heard the debate. I might add that
we are a very engaging body.
We invited and had privileges of the floor, the president,
the distinguished president of the American Trial Lawyers, Mary
Alexander, who came in and shared her views as to why the
standards should not be passed by the House.
There was an outstanding lawyer, I believe his name is,
Roger Sullivan, who represented plaintiffs from Libby, Montana,
who shared his views.
There was a young woman whose name escapes me, but she was
from California, and her partner, interestingly enough, was a
board-certified physician who shared their views. She shared
their collective views as to why it should not be passed.
There was a former president of the State Bar of West
Virginia who stood at the well of the House and said why he
felt the standard should not be passed.
On the other hand, there were others who advocated the
reason and rationale for the medical standards, and 70 percent
of the people who voted, voted in favor of the standard.
I believe, as Mr. Austern has said, that perhaps one of the
key elements to solve this may very well be a trust fund, but a
trust fund without medical standards will have them going back
to the well and having him paying 5 percent on a claim, and his
prediction is others who are in bankruptcy and coming out with
trust funds will be paying even less.
I believe you can solve this. You should know that I spoke
to Senator Baucus' staff, and I spoke to the Senator. I have
indicated to him that we believe, as I close, that the medical
standards actually cover and respect the concerns of his
constituency in Libby, Montana, but if, for some reason, that
is not the case, I have offered and the Commission has offered
to work with him to find a solution so that his constituents in
Libby, Montana, and those similarly situated can be protected,
but not to denigrate the standards in such a way that the
status quo remains.
Thank you.
[The prepared statement of Mr. Archer appears as a
submission for the record.]
Chairman Hatch. Thank you, Mr. Archer. We are really
pleased you would take time from a busy schedule to be with us
today.
We are honored to have you, Mr. Hiatt, here representing
the AFL-CIO, and we appreciate you taking time to be with us.
STATEMENT OF JONATHAN P. HIATT, ASSOCIATE GENERAL COUNSEL,
AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL
ORGANIZATIONS, WASHINGTON, D.C.
Mr. Hiatt. Thank you very much, Chairman Hatch. Thank you,
Ranking Member Leahy, and the other members of the Committee. I
am very pleased and honored to be invited back, and I do want
to thank the Committee for its interest in this major public
policy issue and its clear intention and desire to see if we
can't figure out some fashion of reaching closure and one that
is, most importantly, based on as much consensus as possible.
Last fall, when you were kind enough to invite me to
appear, you may recall I talked about three things. First, as a
representative of the AFL-CIO that estimates having well over a
million active and retired members of our affiliated unions who
are victims of asbestos-related disease, we acknowledge that
the system, as it presently stands, is broken.
We talked about how it is a system that does not, with very
few exceptions, provide fair compensation to the people who
deserve compensation. It doesn't provide compensation quickly
enough. It doesn't provide it with the certainty that is
necessary, the predictability, and it isn't providing with the
certainty in predictability to companies either that is
necessary.
We indicated, second, that we were open to a legislated
solution as long as it wasn't imposing a system that was as bad
or worse than the current system, that it would only make sense
to go through this exercise if we could end up with a solution
that did truly represent an improvement. We didn't espouse any
one particular approach, but we shared with you a set of
principles that the AFL-CIO's executive counsel had passed at
its meeting last summer in which we talked primarily about the
importance of reducing costs, reducing delay, reducing
uncertainty, No. 1; No. 2, a system that, while it would make
distinctions in terms of compensation levels based on severity
of sickness, it wouldn't just take out of the system completely
victims who may not be as sick as the mesothelioma victims or
the victims represented by Mr. Kazan in many cases, but would
still provide compensation as deserved to compensation victims
who are still, indeed, sick, like Mr. McCandless, even if they
are for the moment at a lower level of severity.
We talked about the need to make sure that testing and
monitoring is built into the system to make sure that victims
have a way of learning when their disease progresses. We talked
about how any system should have at the end of the day some
form of ultimate access to the courts, and we talked, finally,
about the value of some role for the Federal Government, given
the Federal Government's involvement in the early stages of
this whole problem.
Since the hearing last fall, we have, at your urging, been
very engaged with defendants, with defendant companies, with
insurers, with trial lawyers, and with other interested parties
across the board, but I want to report today on what really has
for us become the most hopeful, I think, set of discussions
that we have been having with a range of major asbestos
defendants and insurers on a very comprehensive reform
proposal, and it is the one that Mr. Austern described as the
so-called trust fund approach.
It is extremely complicated. There are many still-
unanswered questions, but I do feel that we are more optimistic
that it would be possible to reach some form of a consensus
approach here than I would have thought and certainly than is
the case with respect to the Nickles bill or some of the other
approaches that have also been proposed.
You have not only the testimony of Mr. Austern, but you
have the written testimony from the so-called Asbestos Study
Group, which consists of a large number of major companies,
including, Dow, Viacom, Ford, General Motors, General Electric,
Honeywell, Halliburton, and a number of major companies that
have taken a very serious role in these discussions. I would
urge that you read carefully their written testimony because I
think that what is most notable is that we do at least in
concept have agreement on a number of very basic features that
this no-fault administrative compensation approach would have
to have.
First of all, that the basic payment structure would,
indeed, be a national no-fault administrative system with a
payment schedule for asbestos-related conditions that would
provide victims with fair compensation.
Second, with reference to Mayor Archer's comments, even in
this trust fund approach, the payments would have to be based
on medical criteria, we completely agree with that. We don't
agree with the medical criteria that the ABA and the Nickles
bill contain. We think that they are too restrictive in a
number of ways, which I would be happy to discuss, but even
there, it seems to me that it should be possible to reach
consensus if you truly bring in representative doctors from the
different groups. It should be possible to reach an agreement
on what medical criteria should be used to distinguish between
the different types of asbestos-related disease and the
different levels of severity within certain types of asbestos-
related disease.
Third, I think we have an agreement in concept that, while
the schedule would take account of victims whose condition may
have involved a variety of causes, it wouldn't deny
compensation to those with asbestos-related disease who also
smoked or were exposed to other harmful substances, which the
ABA's approach and the Nickles' approach would eliminate.
Fourth, the administrative system would be funded by
statutorily mandated payments from asbestos defendants and
insurers, including the bankrupt defendants, and existing
asbestos trusts, and that is something where I understand there
is a good deal of discussions going on right now among the
insurers, among the corporate asbestos parties as well.
Fifth, the Statute of Limitations would be revised so that
the victims who received a payment for one asbestos-related
condition and then developed a second condition would receive
another payment for a different condition.
Sixth, that there would be some ultimate access to the
court structured in, so as not to undermine, but one that
wouldn't undermine the overall integrity of the system.
Seventh, that companies contributing to the funding of the
system would have no standing to contest eligibility issues,
such as product identification or causation, and that this
would truly be a no-fault system.
Finally, that the Federal Government would hopefully be
able to play some significant role if we could find one that
the Federal Government agreed made sense.
I want to just conclude by saying there are two critical
issues that we still are working on very much and would be of
utmost importance to us. One is the risk issue. We believe that
all parties have a legitimate concern about bearing the
ultimate risk here and not miscalculating how much this is
going to cost and what that would mean 10 years from now, 20
years from now. However, we would not be able to agree to a
system that risks ending up where Manville is today, where in 3
years we find ourselves, the victims only receiving 50 cents on
the dollar and in 10 years receiving a nickel on the dollar. So
the risk issue is clearly a critical one.
Finally, as I said at the beginning, any system has to
really address the fairness of the compensation schedule. We
recognize that no compensation schedule can meet the highest
levels of compensation that some of the most successful
lawsuits have resulted in, but by the same token, the numbers
have to be fair. They have to be fair not only to those who
have the most serious illnesses, such as mesothelioma and
cancer, but also to others who are, indeed, impaired and cannot
participate in regular life activities the way that you and I
expect to be able to do.
Thank you very much.
[The prepared statement of Mr. Hiatt appears as a
submission for the record.]
Chairman Hatch. Thank you.
Mr. Kazan, we were very appreciative when you testified
before. We had kind of a give-and-take between you and Mr.
Baron, who differed, but we would like to hear from you again
because you have been representing a lot of people who really
suffer from this disease, and we would like to have your
viewpoint once more and anything else you can add to what you
said before.
STATEMENT OF STEVEN KAZAN, KAZAN, MCCLAIN, EDISES, ABRAMS,
FERNANDEZ, LYONS AND FARRISE, OAKLAND, CALIFORNIA
Mr. Kazan. Thank you, Mr. Chairman, and members of the
Committee. I am honored to join you again as you consider this
important issue.
The title of this hearing----
Chairman Hatch. Please pull your mic over just a little bit
so everybody can hear you. That is good.
Mr. Kazan. The title of this hearing says it best: It is
time for Congress to act. As I emphasized when I sat here 5
months ago, asbestos litigation has become a national nightmare
as well as a national disgrace, and it cries out for your
attention. I sincerely hope that this hearing will be a
springboard for action and that meaningful legislation soon
reaches the President's desk.
At that September hearing, all of the panelists from the
AFL-CIO to the Association of Trial Lawyers of America agreed
that asbestos litigation was a serious problem requiring
congressional intervention, and we all pledged to work with you
to find a solution.
Since then, others have joined the chorus, including your
colleague, Senator Nickles, who has introduced an asbestos
bill, and the American Bar Association. As Mr. Archer
explained, the ABA recently adopted recommendations for
asbestos legislation. So the debate has now shifted.
We are not just talking about the problem anymore. We are
discussing how to solve it, and that is what I will address
today from the point of view of someone who has represented
asbestos victims for nearly 30 years.
My view is simple. Like Senator Leahy, I believe in our
civil justice system. It is the best in the world, and we can
solve the asbestos litigation nightmare simply by making some
small adjustments in that system.
The heart of the asbestos problem is that tens of thousands
of questionable claims, many generated by mass, for-profit x-
ray screening programs are filed every year. These are not
diagnosed cases of asbestos disease in any real sense. The vast
majority of the claimants today have no real illness and no
real symptoms. All they have is an x-ray that shows marks that
could have been caused by asbestos. In most cases, they have
not even seen a doctor. In short, Mr. Chairman, they aren't
really sick. If they were your children, you would not even
keep them home from school.
Unfortunately, in many States, this x-ray report can
trigger Statutes of Limitations, forcing the premature filing
of thousands of claims. These claims prevent the courts from
doing their job, resolving the cases of those really injured by
asbestos.
The first essential step toward solving this problem is to
defer the claims of those who are not yet sick, but preserve
their rights to sue if and when they become sick in the future.
Congress could make this possible by tolling the Statutes of
Limitations. This would allow the courts to focus on the 10 to
15 percent of current claims where the plaintiff has cancer or
some breathing problems caused by asbestos. These claims would
continue as they are today, without limitation. I know our
courts can provide fair and even-handed justice in those cases.
Another important element of any legislation is the
establishment of medical criteria to distinguish between those
who are sick from asbestos exposure and those who are not.
Unlike other proposals which would take claims out of the
courts, this simple approach would create the conditions that
would allow the civil justice system to work.
It is also the approach taken by Senate bill 413 and the
ABA. Their criteria are very similar and address the unique
problems involved in integrating medical standards into the
legal system.
Any legislation should require that a doctor obtain
information about the plaintiff's work exposure and medical
history. The doctor should also examine the plaintiff, review
x-rays and lung function tests, and write a report that
includes a medical diagnosis. Believe it or not, there is no
real medical diagnosis made in most of today's claims, and,
Senator, that is a travesty.
It is also important that Congress set out some sort of
workable standard to objectively measure whether someone is
functionally impaired and whether that impairment is actually
related to asbestos exposure. Unfortunately, many sick asbestos
claimants are not sick from asbestos. They may have been
smokers or have some other illness which has caused their
problems. While the ABA resolution and Senate bill 413 differ
in specifics, they both take a reasonable approach to this
question.
The bottom line is that reasonable medical criteria will
ensure that the truly sick have immediate access to the courts
and will get the compensation they deserve. This would go a
long way toward putting the brakes on the bankruptcies that
delay and reduce compensation to those who deserve it the most.
It would also ensure that those companies already in
bankruptcy could allocate their resources toward the truly sick
claimants and emerge more quickly from reorganization. Since
your last hearing, we have seen more studies quantifying the
crisis, a lot of great discussions about solutions, and even
proposed legislation, but in those same few months, more
defendants have filed for bankruptcy and thousands more
Americans have learned that they have serious asbestos disease.
They face devastating illness and great uncertainty about
whether they will receive just and fair compensation so that
their families will be taken care of.
Congress cannot let this scandal continue. I urge you to
pass legislation establishing medical criteria, and I urge that
it be done soon.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Kazan appears as a
submission for the record.]
Chairman Hatch. Thank you, Mr. Kazan.
We will have 5-minute rounds, so each of us will have a
crack at this.
As I have been listening here--and we have listened to our
two folks who are suffering--it suggests that there is a split
in the business community on this issue.
I think the only difference is in approach, but it is
difficult to get to unanimity on any particular problem or a
recognition. There ia unanimity that we need to reform. The
question is what form to we reform in.
I am going to go to you, Mr. Austern, because you have been
dealing with these type of problems, and you made a pretty
dramatic statement on why the victims are really getting the
short end of the stick here.
First of all, it looks to me like we are talking about
coming up with some reasonable medical criteria that really
will say who is sick and who isn't, and, yet, at the other end
of that spectrum is the hope that we can maybe have an
actuarily sound trust fund. And I presume that all of you would
agree that trust fund is going to have to have a finality to
it, so that all of these companies know just what their limits
of liability are in the end. That is going to be hard to do.
In fact, I am not quite sure that the trust-fund approach
is as easy as some have said, but I am very interested in it
because, if we could get a finality to it and we have enough
money there--let me just ask you this. Do you agree that this
is kind of a generalized statement of where we are, that we
have got to find some way of melding those two things together
or at least try to come up with some way of adding finality to
this, while getting most of the money to the victims rather
than to the lawyers?
Mr. Austern. I think that is exactly right.
Let me say to you that the finality approach can be looked
at in two different ways. One of them is a paper delivered to
this Committee by a representative--in fact, I guess not a
representative, a partner of Goldman Sachs makes the point--and
makes several points, but makes the point that certainty or a
lack of certainty is what is driving the stock market and
driving the financial community.
Chairman Hatch. If we could solve this problem alone, it
would be very helpful, it seems to me.
Mr. Austern. If you could give certainty to what the total
liability will be in some meaningful way, that would be very
productive.
May I also point out--and I realize how inexcusably self-
serving this is, but that is not going to deter me--a national
fund can dispose of these cases and can pay fair compensation
much more cheaply than the tort system. It costs the
beneficiaries of the Manville Trust, including Mr. Harvey and
Mr. McCandless, 3 cents on the dollar to, in fact, pay the
claims, 3 cents on the dollar compared to 50 percent. Now, that
is the transaction cost when you have a trust fund, 3 cents.
I am not here to criticize good-faith efforts that are
otherwise, but the ABA proposal does not remove anything from
the tort system, and my fear is that were you to merely adopt
medical criteria, we would be right back here in 3 years.
Chairman Hatch. Well, if I understand you correctly, you
are saying that it would be wise to have a trust fund if we
could bring one about. It would be wise to have medical
criteria. Would you accept the ABA's recommendations on medical
criteria?
Mr. Austern. I would not.
Chairman Hatch. OK. Why?
Mr. Austern. Well, Senator, I have a fair number of
problems with it. Let me mention just two.
Chairman Hatch. Can I ask one other question that you can
weave into your discussion? How would this trust fund work?
Would it be an opt-in situation where people can opt in and
become part of it and have a finality to their obligations and
be free of them in that sense once they have paid their money
to the trust fund, or would you try to get every company that
is involved--and I understand there are a thousand or so
companies--to sign on right off the bat? How would you work
that?
Mr. Austern. Can I answer the criteria question first?
Chairman Hatch. Sure.
Mr. Austern. Because the second one is much more difficult.
With respect to the criteria, Mr. Chairman, a 2/1 ILO
profusion level, which is the way the ABA approaches the
problem that Mr. McCandless has of not qualifying for pulmonary
function tests, with all due respect, is not an escape clause.
It is absolutely not an escape clause.
We got 56,000 claims last year. 51,000 of them were from
people with some form of asbestosis. We didn't have thirty-five
2/1's. We are not talking about a way of creating a system
that, in fact, will excuse people that they do not qualify, as
Mr. McCandless doesn't, with respect to the PFTs.
And second and even more importantly, as some people behind
me in this room know, because they sued me over this question,
we used to have medical criteria in which we hired our own B
readers and our own B readers looked at x-rays, and they
determined whether the x-rays submitted by the other B-readers
who represented the claimants were correct.
Senator this is not an exact science. Our own B readers had
a 50-percent inter-reader variability. It was 50 percent of the
time, our own B readers disagreed with each other as to whether
somebody would have qualified under the ABA standard.
Essentially, the ABA standard is a binary system. You are in or
you are out, and if you are out, you are out because somebody
looking at a soft-tissue disease x-ray has reached a decision
and that is a decision about which reasonable people can
disagree.
Now let me turn to the second question. You can have an
opt-in program in which people with asbestos liabilities can
opt in, and then you have to get to a certain number of what
the political scientists call decision trees. Are you going to
make it an opt-in program in which everyone is eligible, no
matter what their liability is? Are you going to make it
compulsory so that you have to opt in? And although I realize
there are constitutional limitations on that, I am much more
concerned with the opposite end of the spectrum, and that is,
are you going to have eligibility criteria for people to opt
in, but if they are too small, they can't.
Chairman Hatch. Well, if they don't opt in and we don't
provide a means for them to opt in, then they can be sued.
Mr. Austern. That is correct, and, obviously, there will be
important incentives, not to be sued----
Chairman Hatch. Sure.
Mr. Austern [continuing]. To opt in.
My own view of this--and, Senator, I am not an economist,
but my own view of this is that there are sufficient funds out
there to, in fact, have enough people opt in and to have some
finality to this system. I do not suggest, as I sit here, that
in 4 hours we can solve that problems in terms of shares and in
terms of the amount of money, but we can certainly have an opt-
in system that will work.
Chairman Hatch. Mr. Archer, my time is up, but if you would
care to comment about any of that----
Mr. Archer. Thank you, Senator.
Chairman Hatch.--I think all of us would appreciate it.
Mr. Archer. Let me just concede at the outset, by the very
nature of having some standards, there will be those, depending
upon the level of standards, that will be omitted. They will be
deferred.
Chairman Hatch. You have indicated some flexibility,
though.
Mr. Archer. Absolutely.
The other thing that I think is important to acknowledge is
that what is going on in our State courts right now in New
York, Baltimore, Chicago, other cities, is that judges, without
any guidance from this Congress or anybody else, they have got
so many cases that have been filed that they have simply said
to the lawyers that are representing the plaintiffs, if your
client is not sick, we are going to put them on a deferred
status because we need to get to the cases where people are
sick and are dying. We are merely talking about deferring. When
the person becomes sick, they are able to come into the system,
so that there will be money there for them when they are sick.
As it relates to Mr. McCandless, we care deeply about Mr.
McCandless and his concerns and his health care, but I can tell
you sitting here, I can't admit or deny or suggest that the
doctor or his lawyer, who is not a doctor I don't believe, was
accurate in whether or not he would meet the medical standard
or not. I don't know about Mr. McCandless' history, whether he
happens to be someone who has emphysema or someone who smokes
or didn't smoke or what his history might be, but we want to
make sure that the victims who are sick are compensated.
If you have ever prayed with, prayed over someone who is
dying of cancer, you would have an appreciation of the deep
sensitivity that I and others in the American Bar Association
share, even if they are not dying, but their lives are impaired
so that the quality of their lives are impacted. We care about
them, and so we want money there.
Chairman Hatch. We appreciate that.
What I wanted to just establish is that you are flexible.
Mr. Archer. Yes.
Chairman Hatch. We have got to put something together here
that will work.
Mr. Archer. But the flexibility, Senator--I apologize. The
flexibility is not to weaken the standard, so that the status
quo remains the same.
Chairman Hatch. I understand. Sure.
Senator Leahy?
Senator Leahy. Thank you.
The chairman had mentioned Mr. Kapnick's statement. Can we
make sure that is part of the record? I have it here.
Chairman Hatch. Yes. Without objection.
Senator Leahy. Mr. Mayor, I understand the scope of the ABA
Commission report, and resolution on asbestos litigation was
narrow. Am I correct? It only considered medical criteria and
Statute of Limitations issues. Is that a fair statement?
Mr. Archer. That is correct.
Senator Leahy. So the ABA Commission did not consider how
victims of asbestos exposure might be compensated, such as
medical monitoring for some of the asbestos victims?
Mr. Archer. That is correct.
Senator Leahy. Mr. Mayor, incidentally, I also appreciate
you taking the time to come here. I imagine you have more than
enough to say grace over, and we appreciate you being here.
Some concerns have been raised--and I am sure you have
heard them--that the composition of the ABA Commission may
revise its recommendations. The commission did not include an
attorney who represents organized labor, and, yet, so many of
the members of organized labor have been exposed to asbestos.
It did not have a member of the labor and employment section of
the ABA. I wonder why that is so, and why didn't the ABA
Commission include an attorney who represents nonmalignant
asbestos victims? Should the ABA Commission have been broader
in its representation?
Mr. Archer. With all due respect, no. As it relates to
lawyers who represent those who have asbestos, but may not have
the cancers and more serious problems, let me suggest that
there were several, including Mr. Kazan. He didn't start
practicing law on the complex cases. He gravitated through and
tried other cases and handled other cases. So, therefore, that
aspect was quite covered, and I was completely satisfied.
Let me also say that the House of Delegates was completely
satisfied. The employment and labor section was given every
opportunity to be heard, to speak on the floor of the House, as
would anyone.
In fact, if Mr. Hiatt, for example----
Senator Leahy. If I might on that----
Mr. Archer. Sure.
Senator Leahy.--Mayor Archer. I offer the chance to speak,
certainly. Somebody from the antitrust section could speak,
somebody from the juvenile justice, but that is a little bit
different than being part of the commission where a lot of the
negotiations go on long before the matter is ever on the floor.
Isn't that correct?
I mean, I think it is like here. At any time we bring up a
piece of legislation on the floor, this piece if it comes out
of here, any member of the Senate, all 100, can speak on it,
but it is going to be those of us in this Committee who are
going to craft the basic part of the legislation before it goes
there.
Mr. Archer. Well, we work just a little bit different,
Senator, and that is, that members of the House or sections and
divisions have every opportunity in the well of the House to
raise issues and concerns that they felt were not there, as
well as to make amendments, to make amendments----
Senator Leahy. We do, too, in the Senate. We do, too, in
the Senate, but it still gets written primarily here.
Mr. Archer. Well, it has been primarily written by a
commission that I believe was quite fair.
Senator Leahy. And you don't think it needed somebody
representing organized labor, even though they had so many
members exposed?
Mr. Archer. Senator, let me just simply suggest that in
1983, when the American Bar Association issued its first policy
and said that there needs to be Federal legislation, the labor
and employment section, to my knowledge, has never advanced not
one resolution before the House to have a policy. Others who
have the same opportunity did not do so.
I chose to make sure that this was brought before it so we
would have a voice at the table to work with this honorable
Committee and the Senate, to make sure that we had a voice.
Senator Leahy. Thank you.
Mr. McCandless, I was greatly moved by your testimony. We
have heard a lot today about preventing unimpaired people from
filing lawsuits based on asbestos exposure, either under the
ABA proposal or Senator Nickles' bill. Do you consider yourself
or your wife or your coworkers to be unimpaired, or would you
consider yourself impaired?
Mr. McCandless. I am impaired.
Senator Leahy. I think so. Based on your testimony, I would
agree with you.
The use of asbestos has been banned in 20 countries,
Argentina, Australia, Belgium, Chile, Croatia, Denmark,
Finland, France, Germany, Iceland, Ireland, Italy, Latvia, the
Netherlands, Norway, Poland, Saudi Arabia, Sweden, Switzerland,
and the United Kingdom. Most of the European Union have banned
it by 2005. Asbestos is still being used in some consumer
industrial products in this country.
Let me ask you, yes or no: Should asbestos be banned here
in the U.S., like it has been in all these other countries?
Mr. McCandless?
Mr. McCandless. Yes.
Senator Leahy. Mr. Harvey?
Mr. Harvey. Yes.
Senator Leahy. Mr. Austern?
Mr. Austern. Yes.
Senator Leahy. Mr. Archer?
Mr. Archer. It is going to be up to this Senate.
Senator Leahy. Do you have any feeling? You are a citizen
of this country. What would you want?
Mr. Archer. Oh, I am a citizen of this country. We have no
policy on it for me to speak to.
Senator Leahy. I am asking you individually. Do you think
it should be banned?
Mr. Archer. I think it is going to be up to our national
interests and what you best decide. You will have more
knowledge base on this issue than I will have.
Senator Leahy. Fair enough.
Mr. Hiatt?
Mr. Hiatt. Your Honor, I think I will pass on this because
I am just a lawyer, and I would be a little nervous taking a
position that might be at odds with the Federation's official
position. So I think I had better hold back.
Senator Leahy. I understand.
Mr. Kazan?
Mr. Kazan. My sister who lives in London is the executive
director of an organization called the International Ban
Asbestos Secretariat.
Senator Leahy. And you want to go to the next family
gathering. Is that about the way you are leading here?
Mr. Kazan. She is my smarter, younger sister, and I think
it would be great, but I hesitate to go down the road that both
you and the chairman promised each other last year, that we are
not talking about broad issues and Christmas tree bills. I
would be happy if we solve this problem----
Senator Leahy. No, I am not----
Mr. Kazan [continuing]. But I want to come back to talk
about the ban.
Senator Leahy. I understand. I am not suggesting to go in
this bill, and no matter how I might feel about it, I would not
want it in this bill because I do not want this to be a
Christmas tree bill. But I am just curious while you are here.
I remember what Mr. Harvey said very strongly. I happen to
agree with him, but I don't want it in this bill.
In the last Congress, Senator Hatch and Senator DeWine, who
is here, and I introduced legislation to exempt investment
income in asbestos bankruptcy trust funds from Federal income
tax, doing this to increase the funds available to compensate
victims and the like, investment income and 401(k) is treated.
I thought it was particularly appropriate, given the Federal
Government's role in exposing veterans to asbestos-related
products. Should we exempt investment income from Federal
income tax in order to increase the funds available under these
things?
If I might just ask this of Mr. Austern and Mr. Hiatt.
Mr. Austern. Senator, I cannot think that this would
constitute a Christmas tree or bells and whistles, and I would
strongly urge you to do this.
I will give you an example. The Manville Trust has about a
$1.7 billion left. Our tax liabilities for capital gains and
income tax over the next years if we do not get relief will be
$100 million. If we can have that $100 million without paying
taxes, then, in fact, it would make a big difference to Mr.
McCandless and Mr. Harvey.
Now, we are just one trust, and we happen to pay a lower
tax rate than other trusts. So I can tell you, speaking for the
other trusts, you will provide hundreds of millions of dollars
to victims of asbestos if that legislation is passed.
Senator Leahy. I take it that you agree with Senator
DeWine, Senator Hatch, and myself on this one?
Mr. Austern. I cannot tell you how strongly I agree.
Senator Leahy. Mr. Hiatt?
Mr. Harvey. Yes. I think we agree, Senator, and I think
this also goes to the question that Senator Hatch was asking
about at the end of the day, any kind of a trust-fund approach
is going to have to minimize if not completely do away with the
risk factor that all the parties are going to be expected to
bear. And the kind of cushion that this kind of a measure would
be provide I think will certainly not be the entire answer, but
would be helpful in that regard.
Senator Leahy. Put my other questions in the record.
Chairman Hatch. Yes.
I am not convinced that this trust-fund approach can be put
together. I have met with a lot of people who think it can be,
and if it can, that is an interesting thing, but you are still
going to have to have the other side of that coin, too. We are
going to have to split the baby, so to speak, in order to
figure out what to do to make this as reasonable and good as we
possibly can for the benefit of those who are victims.
Senator Leahy. But, Mr. Chairman, I am convinced that it is
possible to get a legislative solution. I truly am convinced of
that.
Chairman Hatch. I didn't say that.
Senator Leahy. I know you are not. I know you are not.
Chairman Hatch. Legislation solution, I think it is
possible. The question is what.
Senator Leahy. You and I have been working on that, and I
am convinced. And I just urge that all our staffs work closely
together on this. I think you and I can work on that.
Chairman Hatch. I am going to count on us working together.
Senator DeWine?
STATEMENT OF HON. MIKE DEWINE, A U.S. SENATOR FROM THE STATE OF
OHIO
Senator DeWine. Well, Mr. Chairman, let me just thank you
for holding this hearing and salute you for that, and also
Senator Leahy. Senator Leahy held a hearing last year on this,
and I know how interested he is in this issue.
I can't think there is much more important this Committee
is going to do this year than get a bill out, and I appreciate
your commitment not only to hold a hearing, but to move a bill.
The status quo is simply intolerable. It is unfair to the
victims. It is unfair to the employees of the companies that
are being hurt.
We need to worry about, first of all, the victims. The
victims need to be paid fully and they are not, and they need
to be paid quickly and they are not. We need to worry about the
companies that don't really have much of a future because of
the uncertainty and the employees who work for these companies
who don't have much of a future because of the uncertainty.
This has a tremendous impact, as Senator Voinovich has
indicated, on many, many States. It certainly has an impact on
my homestate and Senator Voinovich's State of Ohio. We have a
number of victims in Ohio who this directly affects.
We also have a number of companies who this impacts. Let me
just give an example. In one county in the State of Ohio,
Cuyahoga County, there are 745 companies that have been sued in
Cuyahoga County, and this is the list just in Cuyahoga County.
None of these companies, Mr. Chairman, not one of these
companies ever manufactured asbestos, not one company.
We talked about several different options. I don't know
what is the most viable option. I think either option would be
a vast, vast improvement over the status quo. I suspect that
the medical criteria bill is probably the easiest bill to pass,
but I certainly have an open mind about this. I am going to
continue to listen to the testimony. I think the testimony so
far today has been very, very helpful and very, very
enlightening, and I am going to ask some additional questions
beyond those that have already been asked.
Mr. Archer, let me start with you, if I could. You heard
the testimony of Senator Baucus, and you commented a little bit
on that. Let me just ask you and maybe Mr. Kazan about that, if
I could, if you would go on a little bit further.
In the Senator's written testimony, he says: It has been
made clear to me that we have likely lost ground under the ABA
medical standard with even more Libby patients barred from
filing a claim under the ABA standard than were barred under
the 1999 Act.
I would refer members of the Committee to the letter from
Dr. Whitehouse that I have submitted for the record, and this
is a very lengthy letter. I am not going to reference it. It is
in very tough medical language, but I don't know whether the
two of you have had an opportunity to look at the letter. I
would reference it to you, if you haven't. The Committee would
appreciate your taking a look at the letter, and I would wonder
if the both of you and any other members of the panel could
comment on that.
Mr. Archer. Senator, at the time the doctor's letter was
released, it was at a press conference in Seattle, Washington,
during the midyear meeting of the American Bar Association.
There was a dynamic trial lawyer by the name, I believe, of
Roger Sullivan who is representing Libby, Montana, clients.
They were there tethered to oxygen, and Mr. Sullivan asked of
the six patients or clients who were there, how many would not
meet the ABA standards and all six raised their hand.
At that press conference, there was a lawyer from Chicago,
the chair-elect of the Illinois State Bar, Mr. Lavin, who
practices law as a plaintiff and represents sick people who
have been exposed to asbestos. He was asked after the press
conference what he thought. His observation was: On the basis
of what I see, these people are sick.
We took a look at the letter. In fact, one of the members
of our commission, Robert Clifford, the immediate past chair of
the litigation section of the American Bar, called several
doctors, one of which was a physician at Northwestern
University, who came in and offered testimony to our
commission. He said under the facts that you were just reading
to me, every one of these people are sick and they would
clearly qualify under the standards.
It is consistent with what I shared with Senator Baucus
that we believed that on the basis of the standards that have
been set forth by the American Bar Association that the good
citizens and the people who have suffered so badly in Libby,
Montana, would be taken care of, but if, for some reason, that
after looking at it further and if he had some physicians----
Senator DeWine. You are willing to work with him.
Mr. Archer. Absolutely.
Senator DeWine. All right. Thank you. Mr. Archer, thank you
very much.
Mr. Kazan?
Mr. Kazan. Senator, I have not ever seen that letter. I
would be glad to look at it in writing.
Senator DeWine. We would like for you to look at it.
Mr. Kazan. I have, however, reviewed Dr. Whitehouse's past
work and an article he has in press, and I can tell you that
Dr. Whitehouse himself recognizes that people with clear x-ray
abnormality, such as the pleural plaques that we have been
talking about that are caused by asbestos, that that is very
different from considering those people to be sick. He, in
fact, has recognized that those findings alone really are not a
form of sickness, without pulmonary function abnormalities.
To talk for a moment about Senator Baucus' concern, if this
is the appropriate time to address that, I don't know, but,
clearly, he has a passionate concern for the people of Libby,
and I share that concern.
I have been representing people like his constituents for
30 years, and I have represented factory workers, asbestos
manufacturing workers by the hundreds who have been in a
similar situation. I would agree with every bad thing he wants
to say about W.R. Grace, and I could add things that he doesn't
even know about that make it sound even worse, but the irony is
that the only hope for any compensation of meaningful amounts
for the people of Libby, unless you all want to pass some
separate appropriations provision, is, in fact, the enactment
of something like the ABA criteria because what is going to
happen with the Libby people is they have claims only against
W.R. Grace which is in bankruptcy.
W.R. Grace has historically gotten about 75 percent of the
volume of cases filed against it that the Manville Trust gets.
What that means is that in that bankruptcy, the bankruptcy
trust, unless we change the rules, will have to make provision
to compensate something like a 1.25 million future claims or
more. By the time you do that, everybody in that trust will get
pennies or fractions of pennies on the dollar.
If you impose the medical criteria, as the president of
ATLA herself said to the ABA, that will eliminate 90 percent of
pending claims, you will then concentrate the available moneys
for those who are ill, who have symptoms, not only cancers, but
people with real breathing problems.
Further, what Dr. Whitehouse makes clear is that the people
in Libby, because of the tremolite exposure and the kind of
disease they get, have an unusually virulent and progressive
form of disease, and he says at least 75 percent of those
people progress to have significant impairment. What that
means, then, is that the great majority of people in Libby will
qualify right now under the ABA criteria. They will share in a
fund with far fewer people, and those of them who don't yet
qualify will have a fund available for when they do get sick if
they are unfortunate enough to progress.
I have done some rough calculations, and I can tell you
that the ABA criteria will increase the payments to the
citizens of Libby who have any level of functional impairment
somewhere between 10fold and 20fold at a minimum. That is the
way to take care of the people of Libby, and while it may be
counterintuitive, that is just the reality.
Senator DeWine. Thank you very much.
Thank you, Mr. Chairman.
Chairman Hatch. Thank you, Senator.
Senator Kennedy?
SATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR FROM THE
STATE OF MASSACHUSETTS
Senator Kennedy. Thank you very much, Mr. Chairman, and
thank you for having the hearing. A panel such as this has been
enormously helpful.
I listened carefully to the testimony of Mr. McCandless and
Mr. Harvey. Both of the stories are compelling, and both of
them deserve access to justice. And both of them are entitled
to fair compensation. No proposal that would make us choose
between them, I think, deserves the consideration by this
Senate. Only reforms which would provide fair and timely
compensation to both of them and to the thousands of victims
with similar conditions deserves our support.
Nice to see you, Mayor Archer.
I am concerned, Mayor Archer, your proposal about the
criteria which you have included, and we have heard concerns
that have been expressed. You have indicated a willingness to
consider alternatives, but on the other side, you have also
said that you had to have some kind of a standard.
What kind of assurance can you give to those who, in the
future, may not reach your standard, but still may get sick in
the future, that there is going to be some resources or funding
that will be available to them for their compensation?
Mr. Archer. Senator, I think on the basis of what you have
heard here today and from the comments made by your colleagues
on the Senate Judiciary Committee that there are a number of
lawsuits being filed today without any standard, where people
are not sick, and what has not been discussed is what occurs if
they happen to be a publicly traded company, where an analyst
reviewing their report suggests that--and I think Senator
Voinovich did say this, that they downgrade their stock price
and it becomes a self-fulfilling prophecy, that they are forced
to either settle the cases, try the cases en masse, and
ultimately what occurs is that the companies go out of
bankruptcy. It is being driven, regrettably, by people who,
frankly, are doing what they think is right, and the lawyers,
frankly, representing them think that they are doing right.
If they have some evidence that they have been exposed to
asbestos and under the present system the Statute of
Limitations begins to run, they file. By setting up a standard,
if the Senate Judiciary Committee and then the House and Senate
were to concur and the President signs, it would prevent
bankruptcies in the way that they have been coming. It would
preserve assets, much like Steve Kazan I think has just
responded to the last question from Senator DeWine, and that
there would be more dollars there. I wish I could promise you
and say this is what is going to occur. I don't know what is
going to happen in the near future. We are all waiting, for
example, to see what occurs as to the concerns of the Middle
East and what is occurring in Korea and what is occurring in
our economy. All of those kind of things will impact how we
live now and in the future, and so I can't give you the kind of
assurances that I wish I could.
But if all goes well, as I believe it will, for America, I
think you will have the funds there.
Senator Kennedy. We all hope that is going to be the
outcome, but we wanted to try to make sure in terms of
eligibility, that it is going to be there.
Are we looking at a problem where there is just too many
legitimate claims and too little money, resources?
Mr. Archer. Senator, what we are looking at is you have got
some entrepreneurs who drive up in a tractor trailer rig next
to a Holiday Inn or next to a union hall. Everybody is invited
to go in. They take a look at the x-ray. If there is something
there and they are told that there might be something there,
you ought to see a lawyer because there is a Statute of
Limitations and people are not sick. If they are joggers, they
still jog. If they walk up and down the steps, as Mr.
McCandless used to be able to do before he became breathing-
impaired, that is what is driving the system.
In an effort, I think someone stated, if it was not Senator
Hatch, that it is cheaper for some of these companies to settle
the case than for----
Senator Kennedy. Let me--OK. I hear you. I see Mr. Hiatt.
Did you want to make a comment?
Mr. Hiatt. Thank you, Senator.
We have had conversations with numerous companies and
business associations, the major business associations. Each
one of them tells us, it is not a question of there not being
enough money in the system.
The problem is the predictability and the certainty issue.
This year, we may not need to spend more than a small fraction
of what we will have to spend the year after, but we don't know
that ahead of time. So everyone claims that they are looking
for a system not that will reduce the total amount that is now
being spent, but rather that will spread it out in a more
rational way, in a more predictable way, and a more certain
way.
The problem with the medical criteria bill is I think it
keeps getting hung up on this false dichotomy of sick and not
sick. It is very easy to say that not-sick people shouldn't be
compensated under any of these approaches, but that is begging
the question. As you say, it shouldn't be having to choose
between a Mr. McCandless and a Mr. Harvey. These are both sick
individuals. They have different levels of severity, but we are
not talking about false claims. We are not talking about claims
of people who do not have any kind of impairment. Those are the
easy ones.
The way that Mr. Kazan and even the ABA criteria would have
it is that you would virtually limit claims to people who are
clients of Mr. Kazan or people who are of that level of
severity and everyone else would have to take a back seat.
Furthermore, the problem with the medical criteria approach
as it is now structured is we would go back to a system where
companies would not be incentivized to pay claims quickly, in
the 60 to 90 days as Mr. Austern talks about, but rather they
would be incentivized to start raising all of the old product
identification issues, the old causation issues, all of these
other defenses that they haven't been raising in the context of
the settlements which I agree have major problems with them as
they now stand. But that has meant that people like Mr.
McCandless and Mr. Harvey haven't had to prove which company's
asbestos was it, which actually did the causing, if they have a
history of smoking and asbestos, how much of it was one and how
much of the other.
The medical criteria bill is going to open up all of those
issues again in a way that I don't think is good public policy.
Senator Kennedy. My time is up, but, Mr. Hiatt, one of the
areas that you indicated is the Federal Government should
accept a share of the responsibility of harm caused by the use
of asbestos in the workplace. I assume this would require
substantial appropriations of public dollars. Has any various
work been done in terms of what would be a fair contribution
from the Federal Government in dollars or in percentage terms?
Mr. Hiatt. Not in terms of actual dollars, but, for
example, Senator, we have talked about how critical it is that
testing and monitoring be built into any approach. The fact
that we have an infrastructure, for example, with VA hospitals
around the country or other types of facilities where possibly
there would be a major economy of scale that could be served by
having the Government play some role in some aspect of this
such as in the testing and monitoring functions might be an
area that would be worth exploring with your respective staffs.
That just comes to mind as one possible area. We don't have any
actual dollars.
Senator Kennedy. Thank you, Mr. Chairman.
Mr. Archer. Senator, may I just respond, just briefly? And
that is, I believe that part of the policy that has come out of
the AFL-CIO on principles of asbestos compensation reads in
part--and this was passed out, I believe, in Chicago on August
7th, 2002, and I quote from the paragraph on the first page,
``However, the labor movement has long recognized, and under
current law and legal processes, many asbestos victims are not
being treated fairly or receiving fair and timely compensation.
Some victims with early stage asbestosis are settling their
claims prematurely. Some victims who are dying from asbestos-
related diseases are unable to get timely resolutions of their
cases.''
``On the second page, it reads in pertinent part dealing
with asbestos-related principles or initiatives: While
administrative payment systems have benefits for some classes
of asbestos victims, all those who suffer from serious
conditions as cancers, mesothelioma, and advanced asbestosis
much have unrestricted access to the courts. There should not
be incentives for victims with early stages of asbestos-related
diseases to give up their right to compensation should their
condition worsen. Asbestosis is a disease that progresses, and
you run the real risk of getting sicker''
What happens is you have victims who accept little money
from a settlement or from a jury verdict because it is
commensurate with their disease, but when they get sick later,
there is nothing there for their families or for them. That is
wrong. There needs to be something in place.
We said we believe our standards are fair, but we have also
said, Senator Kennedy, or other similar standards. I am not
saying this is the Bible, the Torah, or the holy Koran, but
what I am saying is that there needs to be a medical standard
that will preserve at the end of the day, if there is a trust
fund, those kinds of dollars, so that there will be something
there for the victims.
Chairman Hatch. And allocate the funds for those who are
sick. I mean, that just makes sense to me.
Senator Sessions?
STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE
OF ALABAMA
Senator Sessions. Thank you, Mr. Chairman.
You know, this is a matter that I became first acquainted
within the late 1970's. I represented a shipyard worker who had
worked in submarines, and that is a very closed area. He sawed
asbestos as they sealed it around the pipes for insulation, and
I remember tears coming to my eyes as he described it being so
thick you couldn't breathe. They would let you go out for
periods of time to get some air, and then you had to go back in
there to do that work. Here he was in his early fifties on
oxygen.
Somebody at that time knew that asbestos was far more
damaging to health, and they should have made that known. This
was a Government ship. The Government should have known and
helped to put the word out. So there is a real problem here.
But it was bizarre how the cases proceeded. People just
simply copied the defendant list that somebody else in their
lawsuit had filed and sued 60 people because somebody may have
at one time sent asbestos to Engel Shipyards. So it was a
bizarre thing as it developed to me.
All of which I would say, I have watched this thing now
through the years. It seems to me that it is a fortuitous
occurrence who gets paid and who doesn't. There is too little
certainty and structure here. We have had 600,000 lawsuits
filed, expecting another 1.2 million to be filed, people that
are dying and ill or having compensation not be paid or dying
before it gets paid, people who ar at this point healthy are
being paid and clogging the system.
As you said, Mr. Archer, I can't blame a lawyer from filing
a lawsuit. I mean, I went out and filed it within days because
I didn't know when the Statute of Limitation was going to run,
and I didn't want to be the one who failed to file the lawsuit
because the statute had run.
Mr. Chairman, when they come in to you and they have a
tendency to asbestos and exposure to asbestos, lawyers feel
almost obligated, since they are on notice, the client is on
notice, the Statute of Limitation is running, to file the
lawsuit, but we can fix that through statutes.
We can create a statute that says if you have been exposed,
you can come forward, the statute doesn't start running until
you reach a certain degree of illness, and then you can seek
compensation.
I have felt that we need to do something different in this
country about a mass tort. For example, it took a while, a lot
of lawsuits, and a lot of battles--and I have to give some of
the plaintiff lawyers that I associated with in that day some
credit because they proved the companies knew and they proved
that the companies should have informed the people, but once
the facts are all clear, every case then becomes basically how
much they should be compensated.
So I think we need to create a system in which compensation
can be readily made to the victims. Frankly, if someone has
mesothelioma, I think they ought to be able to just file a
claim and get a check. I mean, I just don't understand this,
why this is happening the way it is.
I charged a legal fee, and I suspect at that time I had no
idea what would happen, but as I look at it now, I can't
justify morally a legal system that says only 40 percent of the
money paid out by the asbestos companies actually gets to the
victims.
And I think that is, Mr. Archer, what the ABA has realized,
and I salute them for it. You just simply can't justify that
when there is no dispute about liability. It is just a question
of damages.
So I think, Mr. Chairman, you are wise to pursue this. We
should have done something earlier. We got to stay at it until
something gets done. I don't think anybody here will say we
don't need to fix it. We disagree some about how to do that,
and that is understandable, but it is time to bring this to a
conclusion.
Mr. Austern, let me ask you. On the differences between the
national trust and the criteria bill, wouldn't the national
trust also need some sort of medical criteria to distinguish
people who have impairments and who don't? Aren't we always
faced with that challenge?
Mr. Austern. Certainly, we would have to have criteria, and
I would like to suggest that I think that the ABA criteria can
be improved upon, but Mr. Archer has already said that he is
willing to work with us on this and I think it can be solved.
Senator Sessions. So, in your view, then, that puts us in a
route to maximizing an amount of money, the percentage of money
paid out by the defendants, maximizing the percentage they pay
out, that actually gets to the victims, and it would improve
the distribution by ensuring that the money got to those most
needy?
Mr. Austern. It would assure that it would get to those
most needy. It would do it expeditiously, and, in fact, we
would be very close to what you just described. You could file
a mesothelioma claim, and you could get a check.
Senator Sessions. Well, I think we have got to get to that
point. These cases no longer require long, complicated jury
trials. I mean, they are just not that way. The law is settled.
We know what the cases are about.
Mr. Harvey here, if he were just filing his claim, you know
meso is called by asbestos, and he ought to get a check and it
ought not to be years going by and tremendous amounts of
expense.
Thank you, Mr. Chairman.
Chairman Hatch. Thank you, Senator.
Let me just wind this up this way. First, Mr. Hiatt, I
would just like to ask you one question that still sticks in my
mind. You mentioned that the trust that you envision would
compensate claimants based on medical criteria. Does the AFL-
CIO support deferring any of these cases?
Mr. Hiatt. We would agree, just as Mr. Austern has just
said, that while there should be a compensation schedule that
is differentiated based on levels of severity, that the
quickness of payments, the expeditiousness of the payment
system should very much be triggered toward the most seriously
sick.
Chairman Hatch. What I am concerned about here is that Mr.
Kazan says that you can pretty definitely determine who is sick
and who isn't. Now Mr. Austern says that that is true, too,
except that you have got to have the right medical criteria to
be fair, which is I think basically the way I interpret your
thing.
Mr. Hiatt. I think that is correct.
Chairman Hatch. I have been very impressed with Mr. Archer.
I always have been, before he got here today, but especially
today. I think the ABA is very fortunate to have you as their
upcoming president.
Isn't it wonderful that Republicans are finding all kinds
of good things, and the Democrats are finding all kinds of
rotten things about you? I will tell you, it is just wonderful.
I am working on you, I will tell you.
Let me just say this. You have expressed an interest in
modification here. Let me just throw it out here. There are a
lot of people in this audience who could help on this. I have
real questions whether a trust could be done. I have real
questions what the medical criteria should be that everybody
agrees we ought to have. I mean everybody on this panel
certainly does. There are others who feel like if you do a
strict medical criteria bill, you are not going to make it. If
you do a strict trust, you are not going to make it because it
is hard to get people together.
We understand that there are splits within the business
community. There are splits within the insurance community, and
there are splits even in labor. Perish the thought, but there
are. There are a number of companies, a number of labor unions
that are really concerned about their employees losing their
jobs, their pensions, and everything else, and there are some
in the labor union movement, unless it is done in such an
expensive way that nobody can really do that they are not for
it.
Look, this is almost an impossible job unless I throw out
this challenge. I am going to get a bill here. I believe as
Senator Leahy has indicated, he will work very closely with me
on a bill. That means you are covering two ends of the
spectrum, to a large degree. I would hope Senator Kennedy and
other Democrats would help on this as well. I would hope my
colleagues on the Republican side would help.
But I am going to challenge the business community. I am
going to challenge the insurance community. I am going to
challenge the unions. I got to have some help here because I
have no desire to hurt anybody. I don't have any desire to
leave anybody out of the system, but I will tell you this. What
we have is a doggone stinking mess. We have got all kinds of
people getting compensation, sometimes exorbitant compensation,
while really hurt people, really sick people aren't getting
anything, or if they get anything, it is pennies on a dollar.
The costs of this thing are just astronomical because, I
understand, it is about 60 percent that really goes for the
costs and attorney's fees.
Now, you are looking at the guy who helped put together
something that was unputtable together. I think that is a
phrase that can be used. It was the radiation compensation
matter. That took years. Today, all over the world, they use
those standards that we set for radiation compensation. That
was a very difficult thing, but that was a Government thing,
and I am not so sure our Government should be paying for this.
In fact, I am pretty sure the Government should not be paying
for this, even though we might say the Government should have
known, just like everybody else should have known.
I am going to challenge the various factions here. You had
better get together, and I want support for whatever we come up
with. I don't want to have to go to all of this work and then
have little, itty-bitty arguments and fights and infights that
destroy this because this is the year to do it, if it is going
to be done. If we can't do it this year--and it is going to be
within the next month--if we can't do it within that period of
time, it ain't going to be done. That means that thousands and
thousands of people who should have rights aren't going to have
them the way they should have them. I will put it that way. It
means that many people who are sick are not going to get
compensated, while others who don't have a claim that is
legitimate are going to get money because of this really out-
of-control tort system.
I belong to ATLA, and I support ATLA when they are right,
but it is not right to have 50 to 60 percent of these moneys
going to lawyers. If we have a no-fault system, that means we
can have a reasonable set of attorney's fees, but it is not
going to be 50 or 60 percent of whatever this pot is, and I
think everybody needs to understand. Lawyers will be able to
make a very good living by a no-fault system if they have
people who are truly sick.
I think you would agree with that, Mr. Kazan, although you
would prefer it in the regular system.
Mr. Kazan. Well, Senator, what I would say about that is
that the concept of a trust fund has implicit in it the need
for medical criteria, just like we have been talking about. The
irony is that if you had the medical criteria, you probably
don't need the trust fund because every company that has gone
bankrupt has said if it weren't for the volume of the
unimpaired cases they were facing, they would be able to handle
the relative small number of people with illness in the
ordinary course.
Chairman Hatch. That may be so, except that I believe there
are those who believe that a pure medical criteria bill might
be very difficult to get through, probably because organized
labor might not go for it and might not agree with it or other
groups might not go for it. I don't know. I don't know, but I
just think of one case that everybody talks about, and that is
that $150 million was awarded to six plaintiffs who claimed
that asbestos exposure might some day make them ill. I mean,
they weren't even sick, and now we have doctors fleeing
Mississippi because 71 companies stopped writing insurance in
the State.
Mr. Kazan. And, Senator, those cases would not have
qualified under----
Chairman Hatch. That is right.
Mr. Kazan [continuing]. The ABA or other criteria.
The idea of finding a way to assess the contributions to a
trust fund for the 8,400 presently active defendants, to say
nothing of all the other companies who have not yet been sued,
and getting that done this sessions seems to me to be rather a
daunting task, and I think that is the problem. A trust fund
would either have to be a defined benefit plan which leaves
open-ended contribution issues or a defined-contribution plan
which leaves the risk of a shortfall on the victims. They both
have problems, and I, frankly, don't know that you can square
that circle.
Chairman Hatch. Well, I am not for a trust fund that has an
open-ended situation because----
Mr. Archer. Senator, if I may interject, and I apologize
for doing so.
Chairman Hatch. Sure.
Mr. Archer. I think your admonition to everyone should be
heeded. You have a very fine staff. Senator Leahy has a very
fine staff. They have obviously been working together prior to
this, witness the fact that there was a hearing in September--
--
Chairman Hatch. Right.
Mr. Archer [continuing]. Where you both spoke. I think the
insurance industry, I think those who are involved in the study
group ought to be given every opportunity to see if they cannot
come to the table, to see whether or not, in fact, a trust fund
could be put together, whether or not the medical standards
that the American Bar Association or something similar to it
would be able to put something together, and given the
timeframe that you have given and the fact that if something is
going to be done, it should be done as quickly as possible, may
be just the initiative to bring everybody, to get them closer.
As I hear Jonathan Hiatt say, they were close on almost
every issue, but two, and perhaps with your observation and
that of Senator Leahy, there might be enough incentive to do
the right thing.
Chairman Hatch. Is today the 5th? It is the 5th of March. I
am just going to challenge the business community and the labor
community and the insurance community and any others who are
interested, including the legal community, you better make your
case to us within the next 2 weeks because that is going to be
the time we are going to come up with a bill. When we come up
with it, it is going to be your last chance to have this thing
resolved, as far as I am concerned.
Nobody wants to be more fair than I, but on the other hand,
you have to cut the rug sometimes and you got to get things
done.
I would like to do it. I would like to do it so that
victims are helped. I would like to do it so that there is some
stability in the marketplace. I would like to do it so
companies can come out of bankruptcy. The unions would benefit
greatly from that. I would like to do it so that this system
will start to work. I would like to do it so that attorneys
aren't continuously maligned because of what appears to be a
milking of a system.
I like having the American Bar Association work with us,
and I commend you for leading out on this issue. We will look
at the criteria situation that you have called for and see if
it can be modified or it can be improved, and we would
appreciate you looking at it again with your expertise and your
Committee's expertise and let's see what we can do.
I would like some help from labor here because you are the
ultimate beneficiary if we can get this done, but I will tell
you this. I am not for a trust fund if there isn't a finality
to it because, if you don't have that, you don't have anything.
These businesses are all going bankrupt because they don't have
any choice, and union jobs are being lost because these
businesses are going bankrupt. The more they go bankrupt, the
less people are going to get, and I would like to see those
businesses knowing actuarily where they stand and what they can
do and how they factor that into a business plan. I would like
to see the insurance companies factor this. If they have time
to pay, they can do a lot of things that they can't do by
asking for big, whopping judgments right now.
I would like to see the legal community shape up its act a
little bit. I am very appreciative of you, Mr. Kazan, because I
think you have made some very, very important points here. Mr.
Baron, who was here before, if I recall it correctly, he said
he would try and help me with this.
I am going to count on ATLA waking up and realizing that
they are killing our profession if they continue to go the way
they are currently going on matters like this. I have a lot of
respect for a number of the attorneys in ATLA who are leading
plaintiff's attorneys, but these are attorneys who understand
that the system has to be a fair and adequate and right system
and not just a windfall for attorneys, which is what this is
turning out to be.
When I think of this one company that has never had an
asbestos--and you heard other Senators talk about this--never
done anything with asbestos, never insured for asbestos, never
had anything to do with it other than they were the ones that
came up with the medical knowledge that mesothelioma comes from
asbestos and they are brought in as a coconspirator and wind up
with an extortion of 60,000 claims, where they just, as a
business matter, have to pay blood money just to get rid of
those claims, even though they don't owe a dime and would win
every one of those cases with a fair jury, I mean, that is just
not right. It is one of the things that makes this such an
intriguing and difficult thing for me.
So I am asking everybody to get your act in order and get
with us. We are going to come up with a bill, and I just hope
that it will be something, even though it won't be perfect, as
Senator Leahy has said, that all of you will be able to get
behind and help us to resolve. It is the art of the doable. It
is the art of doing what we can.
This has been a very good hearing. It has sharpened up some
things for me that I was worried about, and it has raised some
other issues that I will be working on as we work on this bill.
I want to thank each of you for coming. I want to thank
you, victims, for taking time out. I know it has been an
inconvenience to you. It has been a very, very difficult thing
for you, and I appreciate you coming very much. We all do, and
not only do we welcome you, but we are very appreciative that
you would take time to be with us.
With that, we are going to keep the record open for 2
weeks. We want everybody who has an interest in this to help us
on this.
Thanks so much.
[Whereupon, at 4:37 p.m., the Committee was adjourned.]
[Questions and answers and submissions for the record
follow.]
[Additional material is being retained in the Committee
files.]
[GRAPHIC] [TIFF OMITTED] T9326.001
[GRAPHIC] [TIFF OMITTED] T9326.002
[GRAPHIC] [TIFF OMITTED] T9326.003
[GRAPHIC] [TIFF OMITTED] T9326.004
[GRAPHIC] [TIFF OMITTED] T9326.005
[GRAPHIC] [TIFF OMITTED] T9326.006
[GRAPHIC] [TIFF OMITTED] T9326.007
[GRAPHIC] [TIFF OMITTED] T9326.008
[GRAPHIC] [TIFF OMITTED] T9326.009
[GRAPHIC] [TIFF OMITTED] T9326.010
[GRAPHIC] [TIFF OMITTED] T9326.011
[GRAPHIC] [TIFF OMITTED] T9326.012
[GRAPHIC] [TIFF OMITTED] T9326.013
[GRAPHIC] [TIFF OMITTED] T9326.014
[GRAPHIC] [TIFF OMITTED] T9326.015
[GRAPHIC] [TIFF OMITTED] T9326.016
[GRAPHIC] [TIFF OMITTED] T9326.017
[GRAPHIC] [TIFF OMITTED] T9326.018
[GRAPHIC] [TIFF OMITTED] T9326.019
[GRAPHIC] [TIFF OMITTED] T9326.020
[GRAPHIC] [TIFF OMITTED] T9326.021
[GRAPHIC] [TIFF OMITTED] T9326.022
[GRAPHIC] [TIFF OMITTED] T9326.023
[GRAPHIC] [TIFF OMITTED] T9326.024
[GRAPHIC] [TIFF OMITTED] T9326.025
[GRAPHIC] [TIFF OMITTED] T9326.026
[GRAPHIC] [TIFF OMITTED] T9326.027
[GRAPHIC] [TIFF OMITTED] T9326.028
[GRAPHIC] [TIFF OMITTED] T9326.029
[GRAPHIC] [TIFF OMITTED] T9326.030
[GRAPHIC] [TIFF OMITTED] T9326.031
[GRAPHIC] [TIFF OMITTED] T9326.032
[GRAPHIC] [TIFF OMITTED] T9326.034
[GRAPHIC] [TIFF OMITTED] T9326.035
[GRAPHIC] [TIFF OMITTED] T9326.036
[GRAPHIC] [TIFF OMITTED] T9326.037
[GRAPHIC] [TIFF OMITTED] T9326.038
[GRAPHIC] [TIFF OMITTED] T9326.039
[GRAPHIC] [TIFF OMITTED] T9326.040
[GRAPHIC] [TIFF OMITTED] T9326.041
[GRAPHIC] [TIFF OMITTED] T9326.042
[GRAPHIC] [TIFF OMITTED] T9326.043
[GRAPHIC] [TIFF OMITTED] T9326.044
[GRAPHIC] [TIFF OMITTED] T9326.045
[GRAPHIC] [TIFF OMITTED] T9326.046
[GRAPHIC] [TIFF OMITTED] T9326.047
[GRAPHIC] [TIFF OMITTED] T9326.048
[GRAPHIC] [TIFF OMITTED] T9326.049
[GRAPHIC] [TIFF OMITTED] T9326.050
[GRAPHIC] [TIFF OMITTED] T9326.051
[GRAPHIC] [TIFF OMITTED] T9326.052
[GRAPHIC] [TIFF OMITTED] T9326.053
[GRAPHIC] [TIFF OMITTED] T9326.054
[GRAPHIC] [TIFF OMITTED] T9326.055
[GRAPHIC] [TIFF OMITTED] T9326.056
[GRAPHIC] [TIFF OMITTED] T9326.057
[GRAPHIC] [TIFF OMITTED] T9326.058
[GRAPHIC] [TIFF OMITTED] T9326.059
[GRAPHIC] [TIFF OMITTED] T9326.060
[GRAPHIC] [TIFF OMITTED] T9326.061
[GRAPHIC] [TIFF OMITTED] T9326.062
[GRAPHIC] [TIFF OMITTED] T9326.063
[GRAPHIC] [TIFF OMITTED] T9326.064
[GRAPHIC] [TIFF OMITTED] T9326.065
[GRAPHIC] [TIFF OMITTED] T9326.066
[GRAPHIC] [TIFF OMITTED] T9326.350
[GRAPHIC] [TIFF OMITTED] T9326.351
[GRAPHIC] [TIFF OMITTED] T9326.352
[GRAPHIC] [TIFF OMITTED] T9326.067
[GRAPHIC] [TIFF OMITTED] T9326.068
[GRAPHIC] [TIFF OMITTED] T9326.069
[GRAPHIC] [TIFF OMITTED] T9326.070
[GRAPHIC] [TIFF OMITTED] T9326.071
[GRAPHIC] [TIFF OMITTED] T9326.072
[GRAPHIC] [TIFF OMITTED] T9326.073
[GRAPHIC] [TIFF OMITTED] T9326.074
[GRAPHIC] [TIFF OMITTED] T9326.075
[GRAPHIC] [TIFF OMITTED] T9326.076
[GRAPHIC] [TIFF OMITTED] T9326.077
[GRAPHIC] [TIFF OMITTED] T9326.078
[GRAPHIC] [TIFF OMITTED] T9326.079
[GRAPHIC] [TIFF OMITTED] T9326.080
[GRAPHIC] [TIFF OMITTED] T9326.081
[GRAPHIC] [TIFF OMITTED] T9326.082
[GRAPHIC] [TIFF OMITTED] T9326.083
[GRAPHIC] [TIFF OMITTED] T9326.084
[GRAPHIC] [TIFF OMITTED] T9326.085
[GRAPHIC] [TIFF OMITTED] T9326.086
[GRAPHIC] [TIFF OMITTED] T9326.087
[GRAPHIC] [TIFF OMITTED] T9326.088
[GRAPHIC] [TIFF OMITTED] T9326.089
[GRAPHIC] [TIFF OMITTED] T9326.090
[GRAPHIC] [TIFF OMITTED] T9326.091
[GRAPHIC] [TIFF OMITTED] T9326.092
[GRAPHIC] [TIFF OMITTED] T9326.093
[GRAPHIC] [TIFF OMITTED] T9326.094
[GRAPHIC] [TIFF OMITTED] T9326.095
[GRAPHIC] [TIFF OMITTED] T9326.096
[GRAPHIC] [TIFF OMITTED] T9326.097
[GRAPHIC] [TIFF OMITTED] T9326.098
[GRAPHIC] [TIFF OMITTED] T9326.099
[GRAPHIC] [TIFF OMITTED] T9326.100
[GRAPHIC] [TIFF OMITTED] T9326.101
[GRAPHIC] [TIFF OMITTED] T9326.353
[GRAPHIC] [TIFF OMITTED] T9326.354
[GRAPHIC] [TIFF OMITTED] T9326.102
[GRAPHIC] [TIFF OMITTED] T9326.103
[GRAPHIC] [TIFF OMITTED] T9326.104
[GRAPHIC] [TIFF OMITTED] T9326.105
[GRAPHIC] [TIFF OMITTED] T9326.106
[GRAPHIC] [TIFF OMITTED] T9326.107
[GRAPHIC] [TIFF OMITTED] T9326.108
[GRAPHIC] [TIFF OMITTED] T9326.109
SOLVING THE ASBESTOS LITIGATION CRISIS: S. 1125, THE FAIRNESS IN
ASBESTOS INJURY RESOLUTION ACT OF 2003
----------
WEDNESDAY, JUNE 4, 2003
United States Senate,
Committee on the Judiciary,
Washington, D.C.
The Committee met, Pursuant to notice, at 10:07 a.m., in
room SH-216, Hart Senate Office Building, Hon. Orrin G. Hatch,
Chairman of the Committee, presiding.
Present: Senators Hatch, Specter, DeWine, Sessions, Leahy,
Feinstein, Feingold, Durbin.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
THE STATE OF UTAH
Chairman Hatch. Could I have your attention? I would like
the officers to let in as many people as they can within the
fire safety rules. There are a lot of people out there who have
not gotten in, so if we can line them up along the side, let as
many people in as we can because this is an important bill,
maybe one of the most important bills that we could possibly
do.
Good morning and welcome to this very important hearing on
possible solutions to resolve the asbestos litigation crisis.
I want to thank all of our witnesses for providing their
expertise and suggestions to the Committee so that we can
arrive at the best possible solution as soon as possible. And
time really is of the essence in this matter. This bill may not
make it if we do not move with expedition.
Also, I want to thank my partner on this Committee, the
leading Democrat on the Committee, Senator Leahy, the ranking
member, for his continued efforts and interest in this subject
matter. He along with Senators Dodd, Feinstein, Levin, and
others continue to provide helpful suggestions that will help
us all arrive at a bill that will truly help the hundreds of
thousands of victims of asbestos exposure who currently get
pennies on the dollar in compensation and whose pensions are in
serious jeopardy as more and more companies continue to file
for bankruptcy.
In addition, these workers are losing their health care,
their pensions, their salaries, and we have got to find some
way of solving this problem.
I have to say that I want to pay particular tribute to
Senator Nelson and Senator Miller, who have been prime
cosponsors on this bill, and also to Senators DeWine and
Voinovich. We have not tried to get a number of cosponsors, but
these are people who have been concerned about this right from
the beginning and who deserve a lot of credit.
Senator Leahy along with Senator Dodd, Senator Kennedy, and
others have shown true courage in standing up and tackling the
complex policy issues involved. And they are complex. To get
this resolved, we have to dig deep, face the realities of the
alternatives, and work together in a bipartisan manner to come
up with the best possible solution, one that is fair to the
claimants, one that recognizes the limitations of our economy.
The private sector has been trying to resolve the asbestos
situation for nearly 25 years. Several times major settlements
were challenged by a few members of the trial bar and various
efforts have been curtailed, prompting the Supreme Court, among
others, to call on Congress to ``fix'' this serious problem. We
are very fortunate today to have one of our top constitutional
experts in the country, Larry Tribe, Professor Tribe, here
today to educate us on the constitutional implications of this
pending legislative solution and perhaps on the private efforts
in the past that have failed.
The private sector and the labor movement have had very
important and constructive dialogues, and much has been gained
by their efforts, and we have gained a lot from them. But we
are now at a stage where, given the importance of this issue to
our victims, our workforce, and our economy, we have to act.
Now, it is time for legislators to legislate in the public
interest, and that is why we are here today at our third
hearing on this issue and why I commend my colleagues for their
interests and courage to support efforts to arrive at an
acceptable solution.
I should also say that the legislation we are examining
today, S. 1125, is a product of much discussion and input from
all interested parties. We introduced S. 1125, the bipartisan
Fairness in Asbestos Injury Resolution Act of 2003, in an
effort to move the legislative process along. I have said that
we are open to constructive suggestions to aid us in improving
this bill. I have heard many suggestions from outside affected
parties and from my colleagues here on the dais and elsewhere.
This has been very positive, and I think the legislative
process is working and working well.
We had to bring it to a head. That is why we filed the
bill, knowing that it is not going to be the absolute final
bill. And we are open to these suggestions and to your
suggestions.
Keep in mind, though, we have to get it through both Houses
of Congress. We have to bring together a bunch of disparate
people who do not agree on a lot of these things. So it is a
tough, tough issue and battle as well, or at best, I should
say.
This bipartisan bill, as I noted when we introduced it, is
not without flaws, and this hearing today is intended to
provide expert advice on how best to improve the bill. With
that, I would hope that all of our witnesses today will provide
specific solutions to possible problems or flaws they believe
the legislation may have. It will not help anyone to point out
flaws without suggesting reasonable and workable solutions for
those flaws. In short, we want constructive criticism if there
is going to be any criticism. Now, there is always the other
kind and we can live with that, too, but we would prefer
constructive criticism. If we all commit to that and to be open
on solutions, we will get a bill and we will get one soon, and
we will be on our way to helping our economy immeasurably and
helping our workers and our businesses.
On S. 1125, I want to say that the support around the
country we have gotten has been overwhelming. Many recognize
that it may not be the perfect solution, but it is close to
being one of the best workable solutions. It establishes a
system to pay victims faster, ensure that it is the truly sick
getting paid, and provide the business community with the
stability it needs to protect jobs and pensions. Now, I
appreciate the bipartisan support of the cosponsors of the bill
so far. Prior to introduction of this bill, we incorporated a
number of very constructive suggestions by Senators Leahy and
Dodd, and I look forward to continuing to work with them and
our other colleagues so that we can win full support for this
bill.
Moreover, we continue to address other helpful suggestions
and concerns raised since we introduced the bill. For example,
we are working with Senator Baucus to address the compensation
for those victims who are in Libby, Montana. Senator Baucus
testified at our two prior hearings on this issue, and I know
that it is a serious concern for his constituents. We have also
heard from some of those who are truly sick and suffering from
asbestos-related diseases who are concerned that this bill as
currently drafted would require reductions in awards for
amounts received from collateral sources. We will look to
address as many of those concerns as possible.
Now, I should note on that point that prior to introduction
of the bill, at Senator Leahy's suggestion, we specified that
life insurance proceeds would not be offset. Others, including
Senator Murray, who will provide testimony today, have asked us
to look at enacting a ban on asbestos and provide for research
funding to find cures for these horrible diseases caused by
asbestos exposure. All are laudable, all are well intentioned,
and I would like to work with my colleagues to see if we can
address these issues.
Unfortunately, I also recognize that there will be special
interest groups who benefit handsomely from the current broken
system and have every incentive to stop our efforts on behalf
of victims. That is their right, and I know we will hear all
sorts of parades of horribles on anything we do. I hope their
efforts will not succeed and that we do what is best for the
country and the victims as a whole. We need to recognize where
we will be if we do not get this done.
I want to say to labor, already you have very sick members
that are either being shortchanged in the current tort system
due to the flood of claims and dwindling resources or those who
may receive nothing at all, and members whose jobs and pensions
and health care have suffered as a result of the skyrocketing
bankruptcies. What will your union membership say if that is
allowed to continue because we do not have the guts to do what
we have to do here today and thereafter?
To the business community, I ask, how many of you will
still be around in the next few years if we do not do something
to resolve this crisis now? These are large companies,
employing a lot of people, mostly union people. Let me caution
that many that have gone before you thought that they would
survive, that they would not be flooded with claims, or that
they had enough insurance to cover their claims.
Almost 70 companies have gone bankrupt, nearly a quarter of
which occurred in just the last 2 years. And I should note,
those companies thought it would not happen to them. I know. I
worked with some of them on a legislative solution 5 years ago,
which I introduced with Senators Lieberman and Dodd. And the
insurance companies, I know you have exactly the same concerns.
There has to be some certainty in this process or you cannot
live with it.
One insurance company I know of never had anything to do
with asbestos other than they did some of the medical research
that said that mesothelioma may come from asbestos exposure.
They are now brought in as a co-conspirator in some 60,000
cases. They can win every case; but, the last one they tried,
they paid out $2 million in defense costs. They should not have
to pay a dime, but they are part of this group trying to find
some solution and some certainty to be able to continue in
their business. And, unfortunately, I think they are going to
have to pay something. And there are a number of companies in
that same category who are just going to have to participate in
order to help bring about and effectuate this settlement of
these problems.
All of that being said, I hope this hearing and the fact
that we have a bill to work from will encourage the interested
parties to work with us to support a workable solution that
will benefit the common good. We need to ensure that the truly
sick get compensated first and foremost. But we can do that
without bankrupting companies so that jobs and pensions will
not suffer needlessly.
Now, I look forward to all of the constructive criticisms
and views to be presented here today. I also invite anyone in
the public and victims groups to provide any suggestions and
improvements that you have to us by the close of business this
week. As the interest from each member of this Committee
indicates, we are serious about this, and we intend to get this
done and make tough policy calls, where necessary.
Now, this is the last hearing we are going to hold on this,
and we are going to go to a markup probably next Thursday--not
this Thursday but the Thursday after this one. Now, we will see
what happens at that markup. It may be put over for one other
week, but that is going to be the due date. And I hope we don't
have to put it over because I hope we can get enough consensus
to be able to really go and get this done in this time frame
where we have to get it done or perhaps it will never be done.
So we are very appreciative to have all of you here, all of
you witnesses, and we look forward to hearing your testimony
and hope that we can move on from here.
[The prepared statement of Senator Hatch appears as a
submission for the record.]
The only other opening remarks before we go to Senator
Hagel will be the ranking member of the Committee, Senator
Leahy.
STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE
STATE OF VERMONT
Senator Leahy. Well, thank you, Mr. Chairman, and I thank
you my friend from Utah for calling this hearing on the
asbestos litigation crisis. This is the third hearing we have
had since the one I convened last September. Last fall, I had
hoped to begin a bipartisan dialogue about the best means for
providing fair and efficient compensation to the current
victims and those yet to come.
I have a simple message for everybody who is here today,
and I know you are all very interested in the outcome of this
legislation, so I am going to say it right up front: To end
this crisis we need to restart negotiations among the
stakeholders and interested Senators to finish hammering out
the details of an effective national trust fund for victims of
asbestos-related diseases.
Our knowledge of the harms wreaked by asbestos exposure has
certainly grown since last fall, and so have the harms
themselves. Not only do the victims of asbestos exposure
continue to suffer and their numbers to grow, but the
businesses involved, along with their employees and their
retirees, are suffering from the economic uncertainty
surrounding this litigation. More than 60 companies have filed
for bankruptcy because of their asbestos-related liabilities.
These bankruptcies create a lose-lose situation. Asbestos
victims deserving fair compensation do not receive it, and the
bankrupt companies can neither create new jobs nor invest in
our economy.
Chairman Hatch and I have been working for months with
Senators Dodd, DeWine, Carper, Ben Nelson, Feinstein, and
others to encourage representatives from organized labor and
industry to reach a consensus solution, and to bring our own
ideas and efforts to the table. And I want to say the
stakeholders have made real progress in finding common ground
around a national trust fund. But they have not yet reached
consensus. Without consensus--and I would say this to my
friends on all sides of this. Without consensus, we are not
going to end this crisis.
I do commend Senator Hatch for his hard work in drafting
this legislation. I agree with him that the most effective
solution to the asbestos litigation crisis is taking all the
asbestos cases out of the tort system and establishing a
national trust fund. Our courts cannot handle these, and you
are not going to get finality if we leave these in the normal
tort system. That is what I urged at our last hearing. I still
believe this. And I am continuing to work to develop medical
criteria for use with such a trust fund that is going to be
fair to all asbestos victims and can lead to the quick
compensation of legitimate claims, but will also weed out
frivolous claims.
Now, there are some areas where I disagree with the
legislation before, and, thus, I do not support it as it is
currently written. And I know, as the Chairman said, it is a
work in progress. Senator Hatch has asked for suggestions to
improve the legislation, and I know he is sincere in that. I
have made a number of detailed suggestions already, but I want
to point out a few of the remaining major issues.
First, this bill shifts the financial risk from defendants
and insurers to victims. The bill guarantees businesses a
lifetime of absolute legal and financial certainty, but it
leaves asbestos victims completely out of luck if the trust
fund runs out of money at any time in the next five decades.
The one constant in our experience with projections of asbestos
liabilities is that the projections of today are going to be
wrong tomorrow. Twenty years ago, all the experts predicted
that the Manville Trust Fund would be paying asbestos victims
full compensation for many years. Now, as they testified here,
asbestos victims get 5 cents on the dollar because the Manville
Trust Fund is nearly insolvent. The risk of insolvency, in
fact, the risk of inadequate funding short of insolvency, in a
national trust fund must be addressed in order to provide
certainty to asbestos victims as well as certainty to
defendants and insurers.
The bill does not cover victims, not yet, who were exposed
to asbestos outside the workplace, such as spouses and family
members who get exposure from workers' clothes and community
poisoning cases like the one the Chairman has referred to in
Libby, Montana, something Senator Baucus has spoken about. And
I have heard from Senator Murray about the importance of
addressing ``take home'' exposure, and Senator Murray will be
testifying here later today. And I commend the Chairman for his
usual courtesy in making the time available. We have talked
with Senator Baucus about the basic fairness of covering
victims of tremolite asbestos exposure in Libby.
I think the bill raises unnecessary hurdles that would bar
many legitimate asbestos victims from receiving any
compensation. For example, the bill does not compensate anyone
who was exposed to asbestos in the workplace after December 31,
1982. Now, I see no reason to deny asbestos victims their
rightful recovery because their exposure occurred after an
arbitrary date, particularly because asbestos is still used
today. An arbitrary cutoff in a national trust fund will just
create more injustices later on.
The bill offsets any compensation to asbestos victims by
collateral sources such as previous payments from disability
insurance or health insurance, Medicare, Medicaid, and death
benefits programs. This is really a dramatic change from
current law, and it would result in a cost shift of millions,
even billions of dollars. The cost shift is from defendants and
their insurers to other insurance companies or health care
plans and the Federal Government.
The use of these collateral sources would also reduce or
eliminate compensation pledged to asbestos victims. For
instance, a mesothelioma victim who had disability and medical
insurance and who lived more than the usual 18-month survival
time might not receive any of the aware under the bill because
of these collateral source offsets. I cannot support reducing
compensation to asbestos victims simply because they survived
or because they had the good fortune and foresight to purchase
insurance.
Moreover, the bill requires a physician to independently
verify a victim's exposure to asbestos that may have occurred
10, 20, 30, even 40 years ago. That is an impossible bar to
clear to be eligible for compensation.
Finally, I believe that any alternative compensation system
must be truly no-fault to be fair to those victims who will no
longer have recourse to the courts. Under this bill, before the
thousands of pending asbestos victims may receive any
compensation, Congress would have to create and put together
the bureaucracy of a brand-new asbestos court and do it at the
Federal taxpayers' expense. If this is truly no-fault, we do
not need that. I think such a court appears to be inconsistent
with a no-fault system, and if past experience is any
predictor, it would be unworkable.
So we need to work with all the stakeholders to resolve the
remaining complex and interrelated issues--such as medical
criteria, award values, and insolvency risks--necessary to
enact an effective trust fund solution. I look forward to
hearing from our expert witnesses as we try to craft that kind
of a bipartisan piece of legislation.
Our undertaking is complex. It is unprecedented. It is not
going to be easy to work out the details necessary for
consensus. But I would tell everybody in the room the stakes
are too high for us to leave the field before we try our utmost
to complete this. I would urge everybody--industry, labor,
victims, lawyers, everybody involved--keep on working for a
consensus. If we have consensus, we pass a piece of
legislation. If we don't have consensus, we don't.
You know, my two grandfathers were stonecutters in Vermont.
One grandfather emigrated to this country from Italy, not
speaking any English, worked as a stonecutter until he earned
enough money to bring his wife and children over. My paternal
grandfather, my Irish grandfather, whose grandfathers
themselves were immigrants, worked as a stonecutter. They both
died of silicosis of the lungs because of their workplace
exposure to stone dust. I never knew my paternal grandfather.
He died long before my parents met at a very young age. I do
know his tombstone in Barre, Vermont, where it says ``Patrick
J. Leahy.'' Every time I see that, it reminds me that we can do
better in the workplace. So I think of them. I think of the
hundreds of thousands of present and future asbestos victims. I
want to make every effort to solve this crisis, and I commend
and encourage all those who are working in good faith to do it.
If we act together, if we encourage the private
negotiations to resume, in my view that is the best way to move
a consensus bill through the legislative process and into law.
Both the Chairman and I want very much to get a piece of
legislation on the President's desk that he can sign. There are
a number of important issues on which we need to find common
ground. But if we work together as we have in the past, we have
the best chance of success. Our guiding principles should be
fairness to the victims and certainty for the corporations
involved, through a workable process that will function
effectively over time.
Mr. Chairman, I look forward to continuing to work with
you, Senator Dodd, Senator Hagel, Senator Murray, Senator
DeWine, Senator Carper, Senator Nelson, Senator Feinstein, and
other members of this Committee to craft an effective solution
to the asbestos litigation crisis.
Mr. Chairman, there are a whole lot of other things you
could be doing with your time. I applaud you for holding the
hearing and keeping us moving forward.
The prepared statement of Senator Leahy appears as a
submission for the record.]
Chairman Hatch. Well, thank you, Senator.
We have a variety of witnesses, so we are going to limit
witnesses to 5 minutes, although, Senator Hagel and Senator
Murray, we will grant more time to you. We are honored to have
Senator Hagel here with us, and Senator Murray, when she does
show up, regardless of who is testifying, we will interrupt to
allow her to testify. Since we are all so busy around here, I
want to accommodate her.
We are honored to have you here, Senator Hagel. You have a
lot of experience in this area since you worked with Manville
Trust, and we will be interested in what you have to say about
this bill. So we will turn the time over to you.
STATEMENT OF HON. CHUCK HAGEL, A U.S. SENATOR FROM THE STATE OF
NEBRASKA
Senator Hagel. Mr. Chairman, thank you, and to the
distinguished ranking member, Senator Leahy, and all the
distinguished members of this Committee, I appreciate an
opportunity to share some thoughts with you on a subject that
is very important, I would say even critically important.
Chairman Hatch. Would you pull the mike up a little bit
closer, Chuck?
Senator Hagel. As you noted, Mr. Chairman, I served as a
trustee of the Manville Personal Injury Settlement Trust for
over a year and a half, between February 1994 and June 1995. I
was appointed by the trustees on the recommendation of the
Honorable Jack B. Weinstein, U.S. District Judge for the
Eastern District of New York.
Judge Weinstein and I were first acquainted in the 1980's
when he appointed me chairman of the $240 million Agent Orange
Settlement Fund. I am not an expert, Mr. Chairman, on any of
this, but I do have some real-life experience in making a
number of mistakes, knowing a little bit about what works, what
does not work, and how imperfect the process is and how there
are always questions and concerns, just as Senator Leahy noted.
But this is an issue that affects hundreds of thousands of
Americans, and we need to come to some resolution with some
assistance that is realistic and practical and workable.
I would like to discuss today some of my experiences and
thoughts on this subject and how it relates to your
legislation, S. 1125, the Fairness in Asbestos Injury
Resolution Act of 2003. Mr. Chairman, I am pleased that the
medical and exposure criteria contained in your legislation are
based on the 2002 Manville Trust Distribution Process, because
I think that process, as imperfect as it is, was arrived at
over years of experience in dealing with a very complicated
issue.
The history of the Manville Trust illustrates the problems
facing asbestos claimants and defendants everywhere. And
because the Manville Trust is the largest and the oldest of the
asbestos trusts, it is in the unique position of being the
bellwether for asbestos claims filings. I would like to share
with you some of what I learned based on my experience on that
trust and why I believe Federal legislation is needed to
correct the shortcomings of the current system.
Allow me to begin by discussing three of the major problems
facing the Manville Trust and others like it: first,
insufficient payments to claimants, as we heard this morning;
second, inability to accurately predict the number of future
claims, as also heard this morning; and, third, depletion of
resources by non-sick claimants.
First, insufficient payments to claimants. During the 15
years of the Manville Trust existence, the trust has received
over 620,000 claims and has paid over $3.1 billion to
approximately 530,000 claimants. This is substantially more
than any other asbestos trust has paid to beneficiaries.
Unfortunately, only 27,000 of the total 530,000 paid
claimants have received the full value of their claims. The
remaining 500,000 claimants have received far less than the
fair value of their claims as determined by the courts that
established the trust. Because of a very serious asset/
liability mismatch, approximately 400,000 claimants have been
paid only 10 percent of the value of their claims, while an
additional 100,000 claimants--those who have most recently
filed claims--have been paid only 5 percent of the value of
their claims. Like the Manville Trust, none of the existing
asbestos trusts pay more than a few cents on the dollar when
compared to the court-approved claim values. It appears that
none of the 20 or so asbestos trusts pending bankruptcy
confirmation will pay anywhere near full claim value.
Why does the Manville Trust and every other asbestos trust
pay only a few cents on the dollar? And why do they all have an
asset/liability mismatch? Again, the history of the Manville
Trust illustrates the second problem affecting the fairness and
solvency of the trust: the inability to predict future claims.
The Johns Manville Corporation declared bankruptcy in 1982
because of its asbestos litigation lawsuits. Since then, over
60 corporations have also declared bankruptcy because of
asbestos liabilities. During 1986, expert claims forecasters
testified in the Manville bankruptcy court that between the
late 1980's and 2049, the Manville Trust would receive between
83,000 and 100,000 claims. The trust began operations in 1988
and as of today, only 15 years later, the Manville Trust has
received, as I mentioned, over 620,000 claims, and 2049 is
almost half a century away.
During 2001, the Manville Trust commissioned the fourth
future claims forecast it has undertaken during its 15-year
history. That recent forecast predicted that by 2049 the trust
would receive between 750,000 and 2.7 million additional
claims, in addition to the nearly one-half million claims it
already has received. As you can imagine and know, a future
claims forecast of between 750,000 and 2.7 million additional
claims is essentially a useless prediction if you are trying to
adjust claims payments on a pro-rata basis.
We learned from the Manville Trust that forecasting future
asbestos claims is, at best, very difficult. When considering
the pending legislation, all of us should try to become
comfortable with the inevitable uncertainty associated with
trying to determine the number of future asbestos claims. This
hangs heavy over any final determination of legislative
remedies.
The third problem, depletion of resources by non-sick
claimants. In the morass of asbestos claims data and
statistics, we must remember that behind the numbers are real
people. Senator Leahy mentioned how close he and his family are
to this point, using examples of his grandparents. Some of
these people are suffering from the inevitably fatal illnesses
caused by their asbestos exposure. These claimants, drawn from
a claimant population with an average age of over 66, have had
their lives shortened by their asbestos exposure. Other
claimants, while not terminally ill with an asbestos-related
disease, nonetheless have had the quality of their lives
destroyed.
These claimants have not received the full value of their
Manville compensation. I noted earlier that the trust has paid
its beneficiaries over $3.1 billion, almost all of that at
either a 10-percent or a 5-percent share of claim value.
Currently, the unpaid portion of the Manville claim values is
over $23 billion. Every asbestos trust also has billions of
dollars of unpaid and never-to-be-paid liabilities. While it is
true that some underpaid claimants may have received funds from
defendants in the tort system, it is doubtful that very many,
if any of them, have or will receive the fair value of their
claim.
Why do these huge liabilities remain unpaid? There is, of
course, an ongoing debate as to whether all of the claimants
who have been paid were impaired; what ``impairment'' means;
whether too much money has been paid to claimants with non-
malignant diseases versus the dollars paid to claimants with
malignant diseases; and how many manufacturing and insurance
dollars this country can afford to pay to the victims of one
toxic substance.
Regardless of the definition of impairment, some claimants
are seriously ill, and the proposed legislation you are
addressing today appears to strike an appropriate balance
between those potential asbestos victims who are seriously ill
and those who are not, by codifying the Manville medical and
exposure criteria.
Mr. Chairman, because S. 1125 incorporates the Manville
Trust 2002 Trust Distribution Process, I wish to discuss
briefly what I believe the trust has done right and should be
emulated in any Federal legislation.
During 2002, the trust's administrative costs were less
than 3 percent of claims payments. This is lower than the
administrative costs of any other asbestos trust and lower than
the administrative costs of practically all casualty insurance
companies. The Manville trustees are appropriately proud of
these very low administrative costs. The principal reason these
costs are low is that the trust's operating subsidiary, the
Claims Resolution Management Corporation, employs an
interactive, web-based electronic claim filing system. Federal
legislation, in my opinion, should maintain as low an
administrative burden as possible.
Finally, I would like to conclude with a few short comments
regarding why I believe your legislation, the FAIR Act, is
needed. Some have raised relevant questions related to your
legislation, and many more questions will be raised and should
be raised. You will hear from the experts behind me, as you
know, and they will raise questions and, I hope, provide some
solutions and answers. I also hope we can work through these
issues and move toward a solution to this critical and urgent
problem.
With six operating asbestos trusts and with 20 or so
companies pending bankruptcy confirmation, a national trust and
its single-payer format, such as the one in S. 1125, is long
overdue. No useful purpose is served by having multiple
asbestos trusts, each with their administrative burden, coupled
with the economic burden of the tort system. Such a system
depletes the funds that are available for victims of asbestos
exposure, as I previously discussed.
Where bankruptcies have not occurred, asbestos plaintiffs
and defendants are left to the tort system. In addition to
being costly, the tort system is very uncertain. The tort
system has many equitable attributes, but its uncertainties and
unfairness for some asbestos personal injury victims,
particularly under circumstances where there are insufficient
funds for tens of thousands of injured asbestos workers, is not
a system that should be perpetuated. To say it straight, Mr.
Chairman, some claimants are doing very well under the system,
yet others--many--equally deserving, are receiving little or
nothing. It is obvious that a single-payer system is needed to
bring equity and fairness to current and future asbestos injury
claimants.
In conclusion, I encourage this Committee to focus on the
fact, as you have, that the fair resolution of our asbestos
crisis is not the province of one political party or one
economic point of view but, rather, is an issue that should
unite all of us in a common goal. I believe that S. 1125
accomplishes this objective in an imperfect but yet realistic
and efficient way. And I applaud, Mr. Chairman, you and Senator
Leahy and your Committee for taking this difficult task on. It
is not only complicated, but it has many tentacles wrapped
around it, and it is one that is confounding. And many of us
appreciate the leadership this Committee has given to this
issue and wish you well and stand by to serve or consult or
advise in any way we can.
Once again, I appreciate an opportunity to share my
thoughts with the Committee.
Chairman Hatch. Well, thank you, Senator Hagel. As I
understand it, you are a cosponsor of the bill.
Senator Hagel. I am, yes, sir.
Chairman Hatch. We are honored to have you on this bill and
appreciate your testimony.
With that, we know how busy you are. We will let you go.
Senator Hagel. Mr. Chairman, I would be very glad if any of
your colleagues on this Committee would have questions--I have
got to get back to another committee meeting, but I would be
very happy to respond to those personally or in writing, and my
staff would as well. I am available to any members of your
committee.
Chairman Hatch. Thank you, Senator. We will keep the record
open until the end of the day.
Senator Hagel. Thank you.
Chairman Hatch. Thanks so much. We are grateful to have you
here and grateful for your experience as well.
Our next witness, we would like to welcome to the Committee
Professor Laurence Tribe. He is the Ralph S. Tyler, Jr.,
Professor of Constitutional Law at Harvard Law School and is
known here and throughout the country as one of the most
respected constitutional scholars and practitioners.
Professor Tribe graduated summa cum laude from Harvard
College and magna cum laude from the Harvard Law School,
clerked for Supreme Court Justice Potter Stewart, and has
authored what many of us feel are countless books and scholarly
articles regarding many issues under our Constitution.
Professor Tribe has also argued asbestos matters before the
Supreme Court in the landmark cases Ortiz v. Fibreboard
Corporation and Amchem Products v. Windsor. I think it is safe
to say that his practical experience here gives him a unique
perspective on the constitutional issues presented by the bill.
Professor Tribe, we know you are a very busy man, and we
are very grateful that you would take time from your busy
schedule to come and be with us today and help to educate the
Committee on where we are in this bill and what we might be
able to do in the future. So we will turn the time over to you.
STATEMENT OF LAURENCE H. TRIBE, TYLER PROFESSOR OF
CONSTITUTIONAL LAW, HARVARD LAW SCHOOL, CAMBRIDGE,
MASSACHUSETTS
Mr. Tribe. Chairman Hatch, Senator Leahy, members of the
Committee, I think I am the one who should be grateful. I am
really very honored that the Committee is interested in hearing
my views. And I certainly would join Senator Hagel and the many
others who applaud the effort that you, Mr. Chairman, and the
ranking member and others have made to untie this terrible
Gordian knot, a really intractable problem.
I have a rather lengthy prepared statement that I will
hopefully just have read into the record so that I----
Chairman Hatch. Without objection, we will put all prepared
statements in the record, but we are happy to hear from you.
Mr. Tribe. Thank you, Mr. Chairman. And I would like to
speak really very briefly and want to focus on answering
whatever questions members of the Committee may have.
The sole subject of both the statement that I have
submitted in the prepared form and of my brief oral
presentation this morning is whether the Constitution of the
United States prevents Congress from doing what the United
States Supreme Court on three occasions within the past half-
dozen years--Amchem in 1979, Ortiz in 1999, and most recently,
in Norfolk & Western just this year--implored, almost begged
Congress to do, and that is, to replace a plainly dysfunctional
system for processing what the Court itself called ``an
elephantine mass''--the word is almost as awkward as the use of
the judicial system to achieve it--an elephantine mass of
asbestos cases lodged in the State and Federal courts, to
replace that mass with a more streamlined and certain
administrative procedure for the orderly payment of newly
created, exclusively Federal claims, claims against a national
trust fund where the system rests on the recognition that the
reality of approximate justice, swiftly and surely delivered,
is sometimes vastly preferable to the illusion of precise
justice, that is often delayed until the most grievously
injured risk receiving no justice at all, because by the time
the wheels of litigation grind their way to the most deserving
victims, the finite funds available to satisfy their claims
will often have been used up by payments to the relatively
unimpaired, or used up by the absolutely enormous transaction
costs, as the economists call it, often payments to lawyers,
and often amounting to about $1 of payments on the side for
every $1 that any victim ever sees. It is really a case of the
classic race to the bottom.
Now, I yield to, I think, very few in my admiration for the
judicial system. I think it does a marvelous job with many
problems. But this is not among them. And I think if there is
anything on which there is consensus, it is surely that the
illusory search for perfection, for absolute certainty, for
making sure that everyone with a just claim can get every cent
on the dollar or is somehow satisfied is nothing more than the
hopeless attempt to seek perfection. And I think in this area,
as in many others, the perfect is the enemy of the good.
This particular proposal, as you have said, Mr. Chairman,
is a work in progress; it is not meant to be the final version
of a final bill. But many of those whose real objection is that
they think they could do better in the litigation system
somehow, or that they could do better with a bill that is
tweaked in one way or another--many of those people couch their
objection in constitutional terms. I think those who make the
objection forthrightly in policy terms, who propose
constructive ways of moving the bill in a favorable direction,
are to be commended. But those who cheapen the constitutional
currency by suggesting somehow that Congress is without power
to provide a rational administrative scheme here, simply
because in some instances and for some claims the theoretical
availability of relief under the judicial system is replaced
with no relief under this scheme. Or for some people who might
get $3 million, possibly, under the existing system, they may
end up with less than $1 million under this scheme.
The fact that those things happen is simply testament to
the absence of perfection in any administrative operation. And
if one were to fine-tune the administrative process to the
point where it tries to replicate what the idealized judicial
system can achieve, if you imagine just one case and with all
the time in the world, the thought that you can do that is
itself a profound illusion. Because if you replicate the way
common law claims for tort or contract are treated in the
judicial system within the administrative apparatus that you
have created, you will simply replicate all of the problems,
all of the delays, all of the transaction costs.
And so it is unfortunately necessary that in order to make
an omelet, some eggs are going to be broken. And I feel
terrible for the victims who are not going to ultimately
achieve the full measure of justice that a perfect system would
deliver. But the Constitution does not promise perfection and
can't deliver it. And the fact that some of the lines that have
to be drawn in this bill are merely approximate, the fact that
people could argue about whether the amount of money that the
insurers pay and the amount of money that the asbestos
defendants pay should be exactly equal, or whether some other
ratio is better, the fact that people can argue about the
precise formulas by which these tiers of defendants are
established, should not distract attention from the proposition
that this is a classic case of economic regulation and economic
distribution.
And it is in that area where the Constitution is most
forgiving of approximation and least demanding of perfection,
that area where the watchword is rationality. And unless it can
be argued that this scheme actually takes property from some
people in order to achieve the common good when, in fact, the
taxpayers should be picking up the bill, the beleaguered
taxpayer, unless it can be shown that there is a confiscation
of private property--and I don't think there is that
confiscation here--it seems to me that all of the other
objections, whether they are couched in terms of equal
protection or substantive due process or the non-delegation
doctrine by some who would like a more precise set of
guidelines as to how these burdens are to be allocated,
whatever the label, it comes down to the same thing, the
counsel of perfection, which I think the Chairman and the
ranking member and those who have worked hard on this
legislation have realized would be the death knell for any
realistic solution.
I think I have overstayed my 5 minutes. I probably could
lean harder on the Chair for more time, but I do not want to. I
would rather be responsive to whatever questions any member of
the Committee might have.
Chairman Hatch. I could listen to you all day. We
appreciate your testimony because I think on the constitutional
issues some people have been very concerned about that, and,
you know, I believe you are right. But, Professor Tribe, we
will ask some questions. Maybe we can elucidate even a little
bit further, which would be, I think, pleasing to you.
People who know you think of you--and so do I--as a
champion of victims rights because you have argued and won two
leading Supreme Court decisions about the right of asbestos
claimants to have their day in court. And you are now working
with our colleagues, Senator Feinstein and Senator Kyl, on a
victims rights amendment to the Constitution. Yet you are here
today defending the constitutional validity of this
legislation, which has been openly criticized as allegedly
depriving victims from having their day in court even though we
give all legitimate victims a quick and efficient access to the
newly created fund.
Now, some may think that this represents a departure from
your basic approach to the rights of victims to be fully and
fairly heard, and I would just like to have you respond for the
benefit of everybody here.
Mr. Tribe. Well, I do care very much about victims,
including the victims of crime; it is for that reason that, to
the dismay of many people both to my right and my left, I favor
a victims' rights amendment to the Constitution. And I care
about the victims of torts and the victims of all kinds of
injustice. But it is one thing to believe in somehow
vindicating the rights of victims, and it is another thing to
believe that you can get blood from a stone, that you can
somehow make everyone whole by a system that promises 100 cents
on the dollar but does not deliver; that is, a real concern for
victims and their welfare, I think, has to be tempered with a
measure of pragmatism.
I think it was Justice Jackson who talked about the
illusory promise, a ``promise to the ear to be broken to the
hope, like a munificent bequest in a pauper's will''. That is
the promise that the present system has made to victims, the
promise that many of the asbestos trusts make. And as we have
already heard, they promise 100 and they deliver 5.
I think that a realistic concern for victims means that one
must be open to accommodation and compromise, and to insist on
purity for the sake of purity when in the end people are more
grievously hurt I think would be a terrible mistake.
And let me add one other thing. I think that the most
important system that this country has for protecting those who
are genuinely victimized is ultimately in the most extreme
cases the judicial system. Of course, as you point out, Mr.
Chairman, it is not as though people are completely frozen out
of adjudication here. They have access to an Article III court
to review the determinations of the administrative body. But in
the end, the ability of the Article III judiciary, which is in
some ways the last stop on the train before people are
ultimately abandoned to their fate, the utility of the Federal
judiciary is compromised by the kind of cynicism and corrosion
that is generated by the avalanche of asbestos cases.
I am not one who always agrees with the tort reform
movements and putting this or that kind of cap on damages.
Sometimes it is a good idea, sometimes not. But when you really
do have an area where the experience of well over a quarter
century plainly demonstrates that to promise that we will take
care of victims through the judicial system and then simply to
overwhelm the courts and give people who want to take potshots
at the courts an excuse by saying, look, look how terribly the
courts perform, we have got to get rid of judicial processing,
that I think is a terrible mistake.
And one of the most serious costs of the asbestos crisis, a
cost not measured in dollars, not measured in bankruptcies, not
measured always in unsatisfied victims' claims and in more and
more bankruptcies and in harm to the economy, is the cost of
essentially using the scarce resource of our judiciary to solve
a problem that it was never adapted to solve, leading more and
more people to be cynical about its ability to do what it is
ultimately best at doing, and that is, protecting ultimate
human rights.
Chairman Hatch. Well, the bill that I have proposed would
not affect any of those cases that have gone all the way to
judgment. But it would require the dismissal of asbestos cases
that are still pending in various stages of litigation, and it
would direct those claims to the fund itself, which I would
like to have $108 billion.
Now, the companies are not happy with that, and naturally
the labor movement is not happy with that. But it is about $18
billion more than the companies are willing to pay, but that is
what it is going to be, and less than what the trade unions
would like, in any event. But some have argued that this
interferes with the judicial process in those cases.
Now, do you have any concerns about Congress' authority to
do this under the separation of powers principles?
Mr. Tribe. No, I don't, Mr. Chairman. It seems to me well
established through a series of cases, including those
involving environmental law and those involving financial
matters, that even where Congress takes aim at a number of
pending cases by docket number and by name, as opposed to
generically as you are doing here, as long as it affects those
pending cases by changing the underlying rule of law that is to
be applied, there is no invasion of the judicial province, no
usurpation of the judicial power. That is, it is not a matter
of telling the courts how to decide a pending case. It is a
matter of pulling the rug out from under those cases by saying,
look, that rug is well worn, it won't support the weight that
people are putting on it. We have got to change the law,
replace the State and Federal bodies of law, primarily State,
on which people have rested asbestos claims with a new Federal
cause of action under a statute with an administrative remedy.
And because the law itself is being changed, the fact that
those cases disappear the way Cinderella turned into a
pumpkin--I guess it wasn't Cinderella. It was her chariot,
wasn't it?
[Laughter.]
Senator Leahy. Don't you have grandchildren, Professor?
Mr. Tribe. Not yet. Not yet. And this proves that my
children are a little bit too old for me to remember the
stories that I used to tell them.
The point is that when these claims evaporate, they don't
evaporate because Congress has zapped them one by one, sort of
taking potshots at specific cases pending in the courts. It is
because Congress has said the body of law on which they rest
really won't bear the weight. So we are supplanting with a new
body of law, and as such, of course, that body of law is
processed administratively without juries, no invasion of the
separation of powers.
Chairman Hatch. Thank you, sir.
I am going to turn to Senator Leahy. I will submit other
questions in writing that you have, I think, more than
answered, perhaps, but I will still submit some.
Senator Leahy?
Senator Leahy. Professor, if and when the grandchildren
arrive, I have a whole library of books that----
Mr. Tribe. I will take you up on it.
Senator Leahy [continuing]. Mine are going through, and I
will send them on to you.
Chairman Hatch. If only he would study the law books, you
know, we would----
[Laughter.]
Chairman Hatch. I am only kidding.
Mr. Tribe. I think he has done pretty well.
Chairman Hatch. Yes, he does very well. I am just kidding.
Senator Leahy. Professor, you have experience in litigating
a number of these asbestos cases, and that is valuable. And, of
course, here we are asking about your constitutional
experience. And what you are doing is you are--I want to make
sure I understand. Your opinion today is that this legislation
is constitutional. You are not going into all the policy
aspects of it. Is that correct?
Mr. Tribe. That is right, with one exception, Senator. I am
saying that I think as a policy matter, which is sometimes a
little hard to separate from the issue of fairness, as a policy
matter a national trust of some kind with an administrative
streamlined procedure makes sense. The Supreme Court has called
for it. Observers on all sides think it is necessary. To that
degree, I am offering, I guess, an opinion where I am not
exactly an expert.
The one thing that I guess I learned in those asbestos
cases I litigated, they weren't cases of individual claimants.
They were whole class actions, and they were class actions in
which the people involved were not fairly and effectively
represented. They weren't represented because the classes were
so heterogeneous and so diverse that only a legislative body
under a rule of one person, one vote could represent them. And
that is why I think the Court basically said you can't do it
this way in the judicial system. You can't appoint a few
champions for this kind of class. You have got to do it
legislatively.
Senator Leahy. Of course, the reason we are here is we are
trying to do something legislatively. Justice Ginsburg and
others have suggested that. But you are not necessarily saying,
for example, that we have to create a whole new court just to
handle something that we work out as a no-fault type of
recompense. Is that correct?
Mr. Tribe. No, I do not have an opinion on whether a court
is necessary, but just calling it no-fault doesn't----
Senator Leahy. I understand.
Mr. Tribe. It doesn't mean it is going to solve itself. It
is not self-executing.
Senator Leahy. Let me ask you this: The bill offsets
compensation to asbestos victims by collateral sources, for
example, previous payments from disability insurance or health
insurance, Medicare and so on. Now, that is a shift of millions
of dollars, maybe even billions of dollars. Nobody knows for
sure. The cost shift is from defendants and their insurers to
other insurance companies and health care plans. It could
reduce or eliminate compensation to asbestos victims.
Do you have any take on that part of the legislation?
Mr. Tribe. Certainly I believe that it is constitutional.
Whether it is the best solution, given that the resources are
finite and that one is trying to conserve them, is something I
don't have any expertise in or opinion on.
Senator Leahy. You talked about the propriety of
eliminating a traditional common law claim in the State court
systems. I just want to make sure I understand your testimony
correctly. You say that Congress has the power to do away with
these kind of suits, replace them with claims in an Article I
tribunal. Those new claims involve public rights. Am I correct
so far?
Mr. Tribe. Yes, you are, Senator.
Senator Leahy. And you say these public rights are rights
against the Federal Government or they are closely intertwined
with the regulatory scheme?
Mr. Tribe. Correct.
Senator Leahy. In S. 1125, what particular characteristics
of it give that Federal nexus?
Mr. Tribe. That it is a cause of action which is entirely a
creature of Federal statute and not a derivative of some
preexisting common law right. That is, there is a resemblance,
a family resemblance between the torts claim of an asbestos
victim, whether one who comes down with mesothelioma or
something less severe, and a claim through the asbestos trust
fund, but it'll be a pretty disparate and far-flung family,
because claims against the statutory fund are not based on any
finding of fault. These claims also do not require an
attribution of causation to any particular company. They do not
require the same kind of proof. They are claims every bit as
novel and statutory in origin as those in the Atlas Roofing
case.
Senator Leahy. But is it enough that the Congress just
directs assets into the fund; is that enough to do it?
Mr. Tribe. Well, the mere movement of assets, if it was the
same old claims, and we said, well, those old claims are simply
going to be moved to a new place, no change, they are grounded
in State law. That probably would not be enough, but that is
something like this statute.
Senator Leahy. You have probably seen the plan based on the
United Mine Workers Combined Pension Fund. As a practical and
constitutional matter, would that work in the asbestos context?
Mr. Tribe. Well, you say as a practical and constitutional
matter. First of all----
Senator Leahy. Let me ask you as a constitutional matter.
Would it work in the asbestos context?
Mr. Tribe. I have to admit, Senator, you will have to
remind me of more of the details of the United Mine Workers
solution, but it is certainly not a solution that I think could
easily be extrapolated to the whole Nation with all of the
diversity that exists in the sources of harm and the nature of
exposure.
Senator Leahy. I have been advised that my time is up. I am
going to submit that to you, because I realize this is
something that came out of the blue for you, and I will submit
it for the record, and if you could get back to me on that.
Mr. Tribe. I would be delighted to.
Senator Leahy. Thank you.
Chairman Hatch. Thank you, Senator Leahy.
Senator--Is Senator DeWine here? Senator Sessions.
Senator Sessions. Thank you, Mr. Chairman.
Mr. Tribe, I thank you for your wise insights. I think they
are full of value for all of us. I think it was Justice Macklin
Fleming in California that wrote that perfect justice is a
mirage. In the pursuit of perfect justice we lose the
possibility of what justice we can achieve. I do not know how
we are going to do this and how we will get to it, but when we
have a legal system that is unable to compensate adequately
victims, and when our analysis of that legal system shows that
as much as 60 percent of the amount paid out by the defendant
companies does not get to the victims, we have really got
something that is indefensible morally.
Would you not agree that is the fundamental problem, one of
the fundamental problems we are dealing with is that we are not
getting enough of the limited resources to the victims in need?
Mr. Tribe. I completely agree, Senator.
Senator Sessions. And this Congress would have a moral
obligation to try to create a system that gets as much of those
limited resources to the people in true need as possible?
Mr. Tribe. I think that is right.
Senator Sessions. I have a difficult with the concept that
somehow the Government should be a last payer here, resource of
last resort. I think about the case, I represented a young
widow whose husband was killed in an automobile accident.
People had crossed the center line and hit him head on. They
had no money. They were not compensated. You could not recover
against those victims, and all over America there are thousands
and hundreds of thousands of cases brought or even not brought
because there is no money by the criminal or whoever committed
the act against them.
So do you see an erosion of that--do you see a problem if
the Government becomes a payer for the wrongdoing of an
individual actor, and does it impact our whole philosophy of
jurisprudence?
Mr. Tribe. Well, I suppose it would if it relieved the
actor of liability, but I think I said earlier that you cannot
get blood from a stone. When it turns out that these funds,
maybe even the $108 billion, prove at the end of the day not to
be enough, it is not inconceivable to me that some creative
solution might be worked out in which the Government, in the
end, provides some kind of backstop so that the concern of
insufficient funds that Senator Hagel expressed is in some way
met. I mean I think personal responsibility and corporate
responsibility are things we have given insufficient attention
to, but responsibility is one thing and leaving people
completely out in the cold is another.
Having said that, I recognize that there are lots of
competing demands for scarce public dollars. The taxpayer can
be squeezed only so much. And so in the end there may have to
be some problems that are left undealt with for the time being.
That is sad but not always avoidable.
Senator Sessions. These companies that are in bankruptcy,
the creditor committees that work with the bankruptcy judges
and have certain powers, those committees could sell the assets
of that company, eliminate it if they chose, but they are
allowing them to continue to function, I assume, on the theory
they will get more money that way than selling them.
Mr. Tribe. Well, that is sometimes the case. That is
liquidation, and a fire sale is not necessarily the best way to
maximize resources, and so the whole theory of replacing the
liquidation with a debtor in possession and a confirmed plan of
reorganization is to try to maximize asset value. But even
having done that, sometimes there is not enough there to meet
the just demands of various concerned individuals with rights
at stake.
Senator Sessions. I guess just for those that suggest that
companies have not paid all they can pay, they are under the
gun right now, they are under the power of the bankruptcy
courts, at least 60 of them are, and all their assets could be
liquidated if the court and the creditors thought that was the
best way to maximize their resources; is that not correct?
Mr. Tribe. That is correct, but of course, part of what we
are trying to do, Senator, I assume, what you are trying to do,
is keep that number of 60 from mounting without limit. And the
way we are going now, of course, the number of bankruptcies is
going to escalate dramatically, and that certainly is not a way
of maximizing the effective use of assets, returning on the
investors' investment and ultimately satisfying the claims of
those who have been injured by the companies involved.
Senator Sessions. Finally, it seems to me that this mass
tort--and we have had others of breast implants and certain
medications, mass tort cases. Should we as a Congress now,
separate from this, maybe in the cool light of day, create a
system from which once liability has become clear and it is a
question of damages and payment, that we could create some sort
of system that would apply in these kind of cases in the
future? Is that possible in your opinion?
Mr. Tribe. I think trying to do it, Senator Sessions, in a
very generalized way, would move very far in the direction of
having sort of a mass tort administrative body, some court of a
rather--it might become an elephantine court in itself, a
hydra-headed court. It seems to me that dealing with problems
in a somewhat more surgical way, targeted way, when we have had
the kind of experience that we have had with asbestos so that
we now can see to the horizon and recognize that there is no
end in sight, that it is a mushrooming, ballooning problem, a
problem in which compromise is indispensable, and we now know
that the judicial system cannot handle it.
There are very few mass torts of which we can say with that
kind of confidence that it is beyond the capacity of the
judiciary. When we come to that point, it seems to me then it
is time for Congress to act. I think we have come to that point
with respect to asbestos, but I do not think it is the case
that the whole tort system is broken, that the system is broken
for all cases of mass exposure to injury. I would be hesitant
to reach that conclusion, and trying to create a machine that
is sufficiently diversified and flexible, that it could address
all of those problems, would make the political bargaining that
you are having to engage in here look like child's play. That
is, getting agreement on a system to replace really the
judicial system in a much broader way I think might be just
about impossible.
Chairman Hatch. Senator, your time is up.
Senator Sessions. Mr. Chairman, thank you. Thank you for
your leadership and hard work on this issue.
Chairman Hatch. Thank you, Senator. I can assure you it is
not child's play.
Mr. Tribe. I say it would look like----
Chairman Hatch. No, no. I know. I thought you were
supportive.
Mr. Tribe. I am sure it is not, no.
Chairman Hatch. Senator Feinstein, we will turn to you.
Senator Feinstein. Thanks very much, Mr. Chairman. I want
to thank you and the ranking member as well for your work in
this area. I know the frustrations that both of you have had. I
know a little bit about the discussions that you have had, and
I know the extraordinary difficulty that rests in this in
finding a solution to this.
I wanted to just make a couple of comments, and then
welcome an old friend, Professor Tribe, and ask him a question
about the backstop.
But I have just been reading Senator Murray's bill, her
congressional statement, record statement, as well as the May
30th letter that she wrote to you, Senator Hatch, and she
actually had developed I think a very positive bill to ban the
use of asbestos in America. It is amazing I think to many of us
to know that asbestos is still used, despite the fact of all
the problems we have, and the long line that is outside this
door waiting to come into this Committee room. I would just
like to indicate that it would be my intention to move her bill
as an amendment in markup to any bill that does come out.
Chairman Hatch. Senator, Senator Murray is here. If I
could, as soon as Senator Feinstein is finished, maybe I could
call on Senator Murray because of her busy schedule.
Senator Feinstein. I think that would be excellent.
Chairman Hatch. And if you will stay there for Senator
Durbin's questions. Do you mind if we do that?
Senator Durbin. That will be fine.
Chairman Hatch. Okay, I appreciate that.
Senator Feinstein. I really want to salute her for her work
in this area, because I think it is also very timely right now.
Now to Professor Tribe. One of the problems is the concern
that $108 billion is not enough, and we are just talking about
occupational asbestos. We are not talking about all the other
people out there, whether they be children or housewives or
anyone else that comes into contact with asbestos and gets very
sick from it, but the question that I have is how do we provide
after the 25 years is up? And in 1996 the Supreme Court
decision in U.S. v. Winstar may offer an option. As I
understand the case, Winstar held that future congresses may be
prohibited from passing regulations that interfere with an
existing contract between the Government and a private
business, which might offer the opportunity to make a contract
for a voluntary payment from year 26 to year 50 from defendant
companies, and that we would set the level of that voluntary
payment, and the exchange would be a nonreturn for that period
to the tort system. Would that be held legally viable?
Mr. Tribe. I think with one qualification I would say that
it would be. Let me just go back for a moment to the
description you gave of the Winstar case. It is not so much, as
I understand that decision, that Congress can be prevented from
passing new rules and new laws because someone's contract with
the Government says that they have a special deal. That is,
Congress is always free to legislate, and one Congress cannot
bind a succeeding Congress. But what Congress can do is
authorize an official of the United States unmistakably and
clearly, like the administrator in a scheme of this kind, or an
insurance commission that is set up, the Asbestos Insurance
Commission, to make specific arrangements with particular
parties under which the risk of financial loss resulting from
new congressional legislation no longer falls on the private
contracting party. In effect, the Government insures that party
against the loss that the party will incur if a future Congress
changes its mind. That kind of arrangement can be binding on
the United States, and the holding in Winstar was that, even
though Congress acted within its rights in passing FIRREA,
despite various promises about goodwill, those particular
savings and loan institutions that were induced by government's
specific loss-shifting promise to take steps in reliance on
that promise were to be held harmless, and could sue the United
States for the damages that they experienced when, because
Congress saw a different or a better way of doing business,
they suffered losses. That kind of arrangement, I think, could
achieve the sort of thing you are talking about, that is, it
could make the voluntary bilateral agreements effectively
enforceable no matter what Congress did because the United
States Treasury would make good the loss.
Senator Feinstein. So you are saying the Treasury would
become the bank, so to speak, at the end of the 25 years. That
is not what I am suggesting. What I am suggesting is could
there be a contract entered into after that period of time,
that voluntary payments from the defendants would continue?
Mr. Tribe. There is no question that could be done. The
defendants would certainly be bound, but I am wondering what
the quid pro quo is, that is, what are they getting in return?
Senator Feinstein. If I understand it, the concerns is that
the companies involved, after the 25-year period do not want to
return to the tort system. Ergo----
Chairman Hatch. They do not want to have unlimited
liability. That is what the companies are concerned about.
Senator Feinstein. I beg your pardon?
Chairman Hatch. They want to have certainty. They do not
want to have unlimited liability. They want to have certainty
in what--if they are going to put up this kind of money, $108
billion, they sure as heck want certainty that that is all they
have to put up.
Senator Feinstein. But let me just--I see the red light.
Just for 1 minute. The fact is, asbestos is still legal. It is
still being used in building materials in one way or another,
and yet--so the possibility of this becoming an ongoing and
continuing problem is there. So to say just for 25 years we are
going to solve the problem and then it is all gone, I do not
think that works, Senator. It seems to me there have has to be
some proviso----
Chairman Hatch. Let me assure the Senator that I understand
there is an end game here that I have to resolve. The trade
union movement is upset about it, and frankly, we are going to
have to come up with some way of resolving that. I have to
resolve it in a way that brings people together, not tears us
apart.
Senator Feinstein. All I am asking is if that is legal, if
it would be legal to have an ongoing voluntary contribution
commitment for another period of time.
Chairman Hatch. He said it is.
Mr. Tribe. I do not have any problem with that.
Senator Feinstein. Thank you. Thank you, Mr. Chairman.
Chairman Hatch. But the companies do, as you can see. That
is the problem. And I have got to be able to bring both sides
together to pass this so we can get it through the House.
Senator Leahy. As we have always said, everybody has got to
give a little bit or even a lot of bit to get a bill through
here. We are not quite there yet. I am encouraged that we are
getting closer all the time. I think people of goodwill on both
sides of the aisle, as well as all of the affected parties, are
trying to bring us together.
Chairman Hatch. Well, good. I intend to come up with some
sort of an end game. We are going to have to do that to bring
everybody together, but hopefully that will bring them together
if we can do that. And we will just have to see what we can do
and what will get us the most Senators voting for this because
I would like to be able to get it through the Senate and then
hopefully get the House to take it as well. It is a
tremendously difficult set of problems.
Mr. Tribe. I do not envy you the task.
Chairman Hatch. It is a tough task. If you do not mind
waiting, just stay there at the table.
Mr. Tribe. I do not mind at all.
Chairman Hatch. I would like to call on Senator Murray. I
apologize, Senator Murray. I thought we would be through----
Mr. Tribe. I would be happy to move.
Chairman Hatch. Stay right there, stay right there.
I thought we would be through a little earlier, and I
apologize to you, so we will take your statement.
Senator Leahy. Mr. Chairman, Senator Feinstein mentioned
Senator Murray's legislation, which I have also co-sponsored,
and I thought Senator Feinstein's comments were ones I
certainly ascribe to.
Chairman Hatch. Senator Murray.
STATEMENT OF HON. PATTY MURRAY, A U.S. SENATOR FROM THE STATE
OF WASHINGTON
Senator Murray. Thank you very much, Mr. Chairman, for
allowing me to testify at this important hearing today on an
issue that obviously has consequences for thousands of
Americans.
And I do want to thank Senator Leahy for his support for my
bill to ban asbestos, and Senator Feinstein for her comments
just previously to this as well.
Mr. Chairman, I do have a longer statement I would ask to
add to the record. As you know, I have already outlined many of
my concerns in a letter to the Committee dated May 30th.
Chairman Hatch. Without objection, we will put it in the
record.
Senator Murray. But today let me emphasize my greatest
concern, and that is, if we are going to protect companies from
asbestos lawsuits well into the future, then we must also
protect all current and future asbestos victims into the future
as well. If Congress is going to prevent any future lawsuits,
then Congress must try to prevent any more asbestos casualties
by banning the use of asbestos. More than 30 other countries
have banned asbestos.
Mr. Chairman, this is the elephant in the room for this
legislation. It is the most obvious, yet least discussed
aspects of asbestos.
In 2001 America consumed 13,000 metric tons of asbestos in
brake pads, gaskets and roofing sealants. Like most Americans I
thought asbestos was already banned. The Environmental
Protection Agency banned it in 1989, but the asbestos industry
sued and that ban was overturned in 1991. That is why I
introduced the Ban Asbestos in America Act, S. 1115. My bill
would finally ban the use of asbestos and prohibit the import
of asbestos products. S. 1115 creates a National Mesothelioma
Registry to track where Americans are still developing this
deadly disease. The bill would require us to raise awareness
through an education campaign. In addition, it would require
Federal agencies to improve protections for workers and
consumers, and I greatly appreciate the support from Senators
Leahy and Baucus, who are co-sponsors.
I do not believe that asbestos can be safely used in most
consumer products. The terrible legacy of asbestos disease has
shown us all that. According to the Occupational Safety and
Health Administration, about 1.3 million workers are still
today exposed to asbestos on the job. Between fiscal years 1996
and 2001, 3,000 of OSHA's inspections and more than 15,000 of
its violations involved asbestos. Ultimately, the best way to
protect people from asbestos is to ban it. I do not see how
Congress can end liability for companies that used asbestos
while still allowing asbestos to be legal in America. Congress
needs to pick up where the EPA and the courts left off by
finally fully banning the deadly material.
Mr. Chairman, let me just talk briefly about my other
concerns about S. 1125, which is before your Committee today In
order for an asbestos liability reform bill to be truly fair to
victims, it must ensure adequate compensation for all the
people that are hurt by asbestos.
I want to share with the Committee today a photo that I
brought from the late 1970's, and it is of Justin and Tim
Jorgensen. These boys, as you can see, are climbing on waste
rock. It is from the Western Minerals Plant in Minneapolis,
Minnesota. This plant processed asbestos contaminated
vermiculite from W.R. Grace's plant in Libby, Montana. The
company knew, when it bought that mine in 1963, years before
this photo was taken, that the mine was full of asbestos, but
chose not to warn the workers or their families. The
Jorgensens' grandparents lived across the street from Western
Minerals. The pile that you see Justin and Tim playing on
contains up to 10 percent friable tremolite asbestos. Their
father, Harris Jorgensen, died at the age of 44 from asbestosis
and lung cancer.
Under the bill being considered, if Justin and Tim get sick
from asbestos from playing on this rock, neither one will
receive a dime. Mr. Chairman, this picture breaks my heart.
These kids were just playing outside and they were exposed to
asbestos like many other children in Libby until last year. We
should not abandon them in this bill.
Asbestos exposure can also occur when people work on their
cars or in their homes. I have a constituent in Spokane,
Washington, Mr. Ralph Busch, who while renovating his home,
unknowingly was also regularly disturbing asbestos contaminated
attic insulation. He is now very fearful that 1 day in the
future he will suffer from asbestos related diseases. And Ralph
Busch is not alone. As many as 35 million homes, schools and
businesses could have this asbestos tainted zonolite
insulation. In fact, just a few weeks ago, EPA, finally after
much urging, launched an education campaign warning people not
to disturb this material if it is in their attics.
Mr. Chairman, under the bill before you people like the
Jorgensens and Ralph Busch would not get any compensation, and
companies like W.R. Grace, which knowingly exposed workers and
their families to asbestos, would be protected. I hope you will
consider amending your bill to take in a much larger universe
of existing and future asbestos victims.
In addition, the legislation sets restrictive medical
criteria to determine who would qualify for compensation. I
strongly urge the Committee to redraft the medical criteria
section of this bill. The Committee should base the criteria on
the latest information from the American Thoracic Society and
from the doctors who have been working in Libby and know this
better than any of us.
Finally, the total size of the trust fund, even at 108
billion, may not be sufficient. There is no Federal backstop to
guarantee compensation like the FDIC does for a bank, to ensure
that future victims would be covered, and furthermore, the
funding levels to me seem arbitrarily low. Any legislation to
fix the litigation crisis must be balanced in its protections
for present and future asbestos victims. Protecting these
people is at least as important as protecting companies from
liability. We need to ensure that an end to asbestos liability
also means an end to the creation of new asbestos victims. This
should be the charge to this Committee.
Thank you very much, Mr. Chairman, for allowing me to
testify before you today on an issue that is of great
importance to me and to my constituents.
[The prepared statement of Senator Murray appears as a
submission for the record.]
Chairman Hatch. Well, thank you, Senator. As you know, your
staff is working with our staff to see what we can do. And
there is only so much we can do, but we are going to try and do
the very best we can.
Senator Murray. Thank you very much.
Chairman Hatch. Thank you for coming.
Senator Leahy. And, Mr. Chairman, I thank you also for your
courtesy in making sure Senator Murray could testify. I think
it is very important what she is saying. If we don't have a
bill that covers spouses and children who were exposed to
asbestos outside the workplace, as we see in this picture, home
or in the community, that bill is not going to have my support.
And I would not work to pass it unless it does have the spouses
and children covered. So I thank you very much for your
statement.
Senator Murray. Thank you very much.
Chairman Hatch. Thank you.
Senator Leahy. Mr. Chairman, could I put into the record
statements by Senators Baucus and Kohl?
Chairman Hatch. Without objection, we will put those in the
record at the appropriate place.
Senator Durbin? Or, excuse me, we better go to Senator
DeWine. I didn't realize----
Senator DeWine. I don't have any questions.
Chairman Hatch. Okay. Senator Durbin?
STATEMENT OF HON. RICHARD J. DURBIN, A U.S. SENATOR FROM THE
STATE OF ILLINOIS
Senator Durbin. Thank you very much, Mr. Chairman, and
thank you for your efforts on this bill.
Let me say at the outset that my background before coming
to Congress many years ago was in trial law practice, and I
don't profess to be an expert at it, but I was exposed to it
for some period of time.
Mr. Tribe. Like being exposed to asbestos?
Senator Durbin. I hope it was a more salutary----
Chairman Hatch. It was worse than that.
[Laughter.]
Senator Durbin. But I do want to commend Senator Hatch,
though I have some serious disagreements with major portions of
this bill. I think that he has provoked the debate which needs
to take place. Twenty years ago, when I came to Congress in the
House, I was invited by a company known as Johns Manville to
come out to their national headquarters in Colorado. Of course,
they are long gone now. Two years ago, U.S. Gypsum Company in
Chicago, Illinois, came to me and said unless something is done
about asbestos, we will be gone. And they are.
I believe in the court system. I believe in the tort
system. I believe that people have a right to recover. We have
reached a national crisis when it comes to asbestos, and I do
believe that if there is going to be any compensation for the
many victims, we have to do something. And I am looking for
that solution, and that is why I come to this discussion with
an open mind in the hopes that we can truly have a markup of
this bill that is bipartisan and open. And I have said this to
Senator Hatch personally, and I will repeat it now. I want to
be a positive and constructive part of that conversation. I
hope we can reach that point.
Let me address two or three points here that particularly
stand out as I look at the first draft on the Hatch bill,
Section 134, the collateral source rule. I remember collateral
sources as a practicing attorney because it basically said we
are not going to penalize you as a plaintiff if you had the
foresight to buy protection. If you decided that you were going
to have health insurance to pay your medical bills or life
insurance to protect your family, if someone wrongly injured or
killed you, that person, the defendant in the lawsuit, won't
benefit from your good judgment and your personal sacrifice.
But this bill, unlike the law in every State in America,
says exactly the opposite. It says that the defendant
corporations found responsible and liable for the injury, for
the death, will benefit if the person who was injured had the
foresight and made the sacrifice to have collateral sources of
compensation: health insurance, life insurance, Medicare,
Medicaid. The list is pretty long. The only exception, as I
understand it, is workers' compensation and veterans' benefits.
Tell me, Professor Tribe, how does this square with due
process and equal protection that we would say in this one law
we will provide that collateral sources can be deducted from a
defendant's liability?
Mr. Tribe. Well, until you came to your question, Senator
Durbin, I was troubled because, as a matter of policy, I think
there is much to be said for the trend in the States not to
penalize people for having foresight, and certainly not to
reward someone who has been found liable for the foresight of
the victim.
Of course, in this case, we don't have a finding of
liability. We don't have a finding at all. We have an
administrative scheme in which approximation is the name of the
game. And when you ask not is it a good idea but how does it
square with due process and equal protection, I think there,
whether one likes it or not, one would have to turn the clock
back to well before 1937, at a time when the Supreme Court of
the United States treated the Constitution as imposing very
stringent limits on the kinds of lines that could be drawn, the
kinds of compromises that could be reached with respect to
economic matters.
The law now looks very different. The law now basically
says that unless the legislature is drawing a classification
that is itself suspect in the sense that it draws on
characteristics that have been the source of prejudice and
victimization--race, religious minority, perhaps disability--
or, on the other hand, the law deals with fundamental personal
rights--speech, religion, certain aspects of privacy--unless
one of those things is true, the fact that the law may draw
lines that the ideal legislator in the sky with infinite
resources might never draw, the fact that it might not seem
optimal not to reward foresight, that doesn't bear on
constitutionality.
Take the railroad retirement system. In a case called
Railroad Retirement Board v. Fritz, Congress drew some very
rough and ready lines. It drew distinctions ultimately between
a group of railroad workers who were lucky enough to have an
effective lobbyist at the bargaining table and, therefore, they
were ruled in, and a bunch of others were ruled out. Congress
was literally bamboozled in that case. There was no particular
rationale for that line, but the Supreme Court by an
overwhelming majority said if that was the test, that you have
to have a really good reason for each line that is drawn when
you are making these difficult economic compromises, and that
Congress has to know exactly what it is doing in every detail,
very few laws would survive. That was the Chief Justice of the
United States speaking. I don't think there is a constitutional
problem.
Senator Durbin. Well, Professor Tribe, you are the
acknowledged expert, and it has been many years since I took my
con law course a few blocks away, so I am not going to quarrel
with that. But I am going to tell you that I think there is
something fundamentally wrong then with this bill. If we can
take an established precedent, an established rule of law that
has been found by 50 States to be a fundamental of fairness in
America, that says if you make the sacrifice, if you have the
foresight to have health insurance, you will not be penalized,
you will not lose your right to recover as a person would have
in a court of law when you find out that someone else has
injured or killed you. And this bill, this proposed law, would
make that distinction. And I think--let me just give you a
couple examples, and, frankly, they are not my own. They come
from a witness who will be testifying later, but I have read
through them, and they are compelling.
A mesothelioma victim who receives medical treatment in
excess of $750,000, which I do not believe is out of the realm
of possibility, that is covered by their own medical insurance
that they had would receive nothing under this bill.
A 49-year-old non-smoking lung cancer victim who underwent
$350,000 in surgery and chemotherapy and radiation would have
his compensation capped at $50,000 because he has already
received $350,000 from his own health insurance.
That just isn't the case in any State in the Union in any
physical personal injury case or a wrongful death case.
Mr. Tribe. Senator, without undertaking to defend the
policy of this part of the bill, I just want to say that you
are comparing apples and oranges a little here. It is not the
case within the tort system when we are trying to do something
very different. We are trying to figure out who is really
responsible for this person's harm and whether the responsible
party fell below a certain level of care. We are putting all
kinds of burdens of proof on the plaintiff, which this system
doesn't do. And we have a whole bunch of rules that go along
with that.
Now, the fact that in that kind of system the States have
marched to a different drummer and have said when you are going
to be--trying to achieve individualized justice, it just isn't
fair to penalize someone in this way, you can't quite jump from
that to the conclusion that when you are trying to achieve a
degree of certainty and a degree of predictability and
conserving finite resources, that some of the compromises that
you make are not going to be very fair.
Senator Durbin. I don't disagree with you----
Mr. Tribe. It doesn't make it analogous to the tort system.
Senator Durbin. I don't think the creation of a no-fault
system, which clearly benefits a plaintiff--and you have
outlined it. The burden of proof is dramatically less in a no-
fault system. But I don't think creating a no-fault system
means that the aggrieved, injured, perhaps deceased party gives
up everything. And in this bill----
Mr. Tribe. Surely not.
Senator Durbin [continuing]. They clearly give up a lot
because they are capped in their recovery, their individual
recovery. There is a limit to how much they can recover under
the system.
And yet we have added another factor here with the
collateral source rule that I think goes beyond penalizing. It
really is totally and fundamentally unfair under the system to
ignore the reality that some defendants and this system will
get off the hook because a union bargained and bought health
insurance to protect an employee who died an excruciating and
long death with lung cancer.
Mr. Tribe. You are preaching to the converted if you are
asking me if I had the power, if I were the legislator of the
world, would I avoid that? Sure. But no one of us has that
power.
Senator Durbin. Well----
Mr. Tribe. And if you solve this problem, the question is
what other problem are you going to create. That is, if you
give these added dollars--which I would love to see these
victims get--where are they going to come from exactly? They
might come from another set of asbestos victims. I don't know
that they will. But I take it that the problem that all of you
have is to figure out how best to minimize the total of
injustices, and there are going to be plenty no matter what is
done.
Senator Durbin. Fair enough. But I think we have that
responsibility
Chairman Hatch. Senator, your time is up.
Senator Durbin. I think we have to stand behind some
fundamental principles that 50 States agree on in collateral
sources.
Thanks for your testimony.
Chairman Hatch. Senator, your time is up.
Let me just mention one thing before I go to Senator
Feingold. You know, Carter Phillips, who also is an excellent
lawyer and constitutional expert, wrote to us and sent a
statement in, and basically he said, ``In order to address the
underlying causes of the asbestos litigation crisis and bring
some rationality and equity to compensation of the injured,
Congress must engage in some line-drawing.'' And then he quotes
directly from the Beach Communications case, which said, ``This
necessity renders the precise coordinates of the resulting
legislative judgment virtually unreviewable.''
Do you agree with that?
Mr. Tribe. Well, I agree with that, but I do want to say--
and I imagine you agree with this, Mr. Chairman. Even if you
knew for sure that no court in the world would touch this law,
because perhaps somebody would say, oh, this is all a political
question, you still have to worry, obviously, about the
Constitution as a fundamental charter that binds this body as
well as the court. So that if I thought it was fundamentally a
deviation from principles of rock-bottom fairness, even in an
administrative scheme, I think that would bear ultimately on
the constitutional question, even though Carter Phillips and I
agree that as a matter of judicial institutional role, the
courts are simply not going to touch that kind of calibration.
Chairman Hatch. So it is constitutional. Let me just say
this: We can't solve every problem with this bill. You have
made that case, I think, very persuasively. With regard to
children and families who may or may not ever suffer from
asbestosis, this bill would not, I do not believe, prevent them
later, if they actually could make a case, from utilizing the
system.
So what we are trying to do here is solve the problem for
workers who have been exposed to it. And, you know, it is--like
you say, perfection can sometimes be the enemy of the good. And
if we could get this done, it would be very good for society.
And we intend to do it.
I think Senator Murray brings forth a good point when she
think that asbestos ought to be banned, and probably she will
win on that, and we may very well put that in this bill. But
that is where we are.
Let me go to Senator Feingold.
Senator Leahy. When you bring that up, if I might, Mr.
Chairman, we also have the concern that this might repeal FELA
for railroad worker asbestos claims. I don't know if that is
what is intended or should be intended. I definitely don't want
it to be intended. But the way it is written, it would
effectively repeal the Federal Employees Liability Act with
respect to Federal workers' claims for injuries, for railroad
workers' claims for injuries due to asbestos. That is why we
want to be very careful when we write this because if you start
taking care of people's rights, that is important, but if you
also cut off other people's rights, that has its own
consequences.
Chairman Hatch. Okay. Senator Feingold?
Senator Feingold. Mr. Chairman, I hope to come to ask some
questions of panel three, and I don't have any at this point
for Professor Tribe. It is good to see you again.
Mr. Tribe. Good to see you, Senator.
Chairman Hatch. That would be fine.
Senator Feingold. Let me just comment briefly. I certainly
agree with Senator Durbin's remarks. It is really quite
exceptional to hear the level of concern on this issue from all
sides. It is almost like a fever pitch kind of issue. And so I
am hoping to spend more time at the hearing later, and I am
very pleased that the hearing is being held.
This is a very important issue with very difficult and
complex problems to try to work through. I think most of us can
agree that it would be a wonderful result if we could craft a
global solution to the asbestos liability issue. But that
solution must be fair and equitable to all the stakeholders,
companies that face liability, their insurers, and, of course,
those who have been injured by asbestos, whether their illness
is now apparent or will arise in the future.
And I also acknowledge that a lot of people have been
working very hard on this, and I commend them for their
efforts. It seems to me, though, that the current bill falls
short in a number of ways from being the actual global solution
that we can all unite around. But I am hopeful still that the
process will yield a consensus bill that we can all support.
Thank you, Mr. Chairman.
Chairman Hatch. Thank you, Senator.
We have been delighted to have Senator Carper here, who has
taken a particularly important interest in this bill, and we
are glad to have you here, Senator.
Senator Carper. Thank you very much.
Chairman Hatch. Thank you.
Well, Professor Tribe, let me just say this: Fortunately,
as the Supreme Court's repeated calls to action on this
particular issue suggest, the Constitution does give Congress
broad powers to address national economic issues such as the
current asbestos litigation morass. Seth Waxman wrote a
statement as well, the former Solicitor General under the
Clinton administration, for whom I have a very high opinion, as
I do of you. He said, ``Some claimants might argue that they
will receive less under the new national system than they might
have recovered, even net of attorney's fees and other costs, by
pursuing their claims against various potentially responsible
defendants through the tort system. The courts should not,
however, be receptive to such arguments if they are raised in
an attempt to challenge the constitutionality of the act. No
individual claimant has any vested right in the continued
existence or application of any particular rule of law when
Congress has otherwise validly chosen to preempt that law as
part of its decision to enacted a comprehensive national
solution to a national problem.''
Do you differ with any of that?
Mr. Tribe. Not at all.
Chairman Hatch. He also said, ``While the funding
allocation mechanisms must not, of course, be arbitrary,
irrational, or fundamentally unfair, the courts clearly would
not hold them to any standard of `mathematical precision.'
There is, accordingly, no constitutional requirement that
Congress allow the perfect to become the enemy of the good in
the process of designing a comprehensive solution to this
complex national problem.''
You agree with that as well?
Mr. Tribe. It is very much my view, Senator.
Chairman Hatch. Well, the two of you are great leaders in
this field, and we are just very grateful that you would take
time from what we know is a busy schedule to come here and help
us to understand this better. Thank you, sir.
Mr. Tribe. I am grateful to you, Senator.
Chairman Hatch. We are honored to have you here.
Mr. Tribe. Thank you, Mr. Chairman.
Chairman Hatch. Thanks so much.
Senator Leahy. Take care.
[The prepared statement of Mr. Tribe appears as a
submission for the record.]
Chairman Hatch. We are going to keep going until about
12:30, and we will break for about an hour. I apologize to
those of you who are here to testify, but let's go to panel
three.
Dr. James Crapo is Professor of Medicine at National Jewish
Medical Research Center Hospital in Denver, Colorado. He has
treated many patients exposed to asbestos and has extensive
experience in asbestos-related illnesses.
Dr. Laura Welch is the Medical Director for the Center to
Protect Workers Rights. She has treated many workers with
asbestos-related disorders as part of her medical practice.
Dr. John E. Parker is Chief of Pulmonary and Critical Care
Medicine at West Virginia University Hospital. In addition to
treating numerous asbestos patients, he has extensive
experience with the ILO classification system and the NIOSH B-
reader program.
So you doctors, we are very grateful to have you here today
to help us to understand this better and appear before the
Committee. So why don't we get started with Dr. Crapo and move
to each witness in the order that they were introduced, Dr.
Welch, then Dr. Parker.
I have to step out for a minute, but I will be right back,
and I naturally have read your statements. So we will turn to
you, Dr. Crapo; then as soon as he is through, Dr. Welch; as
soon as she is through, Dr. Parker.
STATEMENT OF JAMES D. CRAPO, M.D., PROFESSOR OF MEDICINE,
NATIONAL JEWISH CENTER AND UNIVERSITY OF COLORADO HEALTH
SCIENCES CENTER, DENVER, COLORADO
Dr. Crapo. Thank you. Good morning, Chairman Hatch, Ranking
Member Leahy, and members of the Committee. I really appreciate
the opportunity to be here to share my views today. I am Dr.
James Crapo. I am currently professor and chairman of the
Department of Medicine at the National Jewish Medical and
Research Center in Denver, Colorado. It is affiliated with the
University of Colorado. I am a board-certified physician in
internal medicine and in pulmonary disease.
I am here to speak to you about some of the provisions of
S. 1125, and I have provided a more detailed written statement,
which I ask be included in the record.
Senator Leahy. [Presiding] Without objection.
Dr. Crapo. Upon review of the medical criteria in S. 1125,
it is my opinion that this legislation is drafted to
appropriately include those individuals who are genuinely sick
from asbestos exposure and who should recover from this fund.
One of the primary diseases caused by asbestos exposure are
asbestosis. It is a type of pulmonary fibrosis that can produce
severe breathing impairment and even death in some individuals.
However, in most cases it has few or minimal symptoms. Second,
asbestos exposure causes lung cancer and it causes
mesothelioma, which is a very rare tumor of the lining of the
chest cavity and the lining of the abdomen.
These are the major health effects of asbestos, and they
are the ones to which this bill is appropriately targeted.
There are also asbestos-related pleural changes--pleural
plaques and pleural thickening--that are considered markers of
asbestos exposure. These generally do not have an association
with impairment, and they have not been identified as a cause
or a precursor of more serious conditions. In addition, there
are a variety of other cancers that have been associated with
asbestos, but there, in my opinion, is not clear scientific or
medical evidence that asbestos exposure is the cause of those
cancers.
The medical criteria in this bill, while in some cases a
little bit overbroad, are appropriate and reasonable in the
context of a national solution to the asbestos litigation
crisis, in my opinion. I would like to discuss some of the
diagnostic criteria in the bill.
As a physician, I believe the criteria to be, in general,
appropriate. In particular, I agree that the diagnosis of an
asbestos-caused disease should be made with the requirement
that a physician exclude other likely causes of the claimant's
condition. This is important because asbestos is only one of
the causes for each of the diseases being considered.
With respect to medical criteria, the bill establishes
eight categories of asbestos-related diseases. Levels I through
IV generally address non-cancerous conditions, while Levels V
through VIII deal with cancers. Levels I and II cover
asymptomatic conditions, including pleural plaques and pleural
thickening, for which medical monitoring is provided but no
other compensation. Compensating individuals in these
categories could divert funds away from people who are
genuinely sick and transfer them towards people who are
basically unimpaired.
Level III is the first category that provides a
compensatory award, and the medical criteria for Level III seem
appropriate in the context of a compromise to me. The measure
of impairment, however, is fairly broad and would allow many
people to qualify for an award even though their breathing
impairment is due to diseases caused by factors such as
smoking.
In addition, the diagnosis of significant occupational
exposure is quite broad, and it treats persons in various
occupations and industries today as if they were the same as
occupations and industries that had vastly different exposures.
For example, exposures in the 1980's and 1990's are not
equivalent to the heavy exposures that occurred in the 1940's,
1950's, and 1960's, primarily due to Federal regulations that
were put in place that brought down the levels of occupational
asbestos exposures. In fact, the Federal regulations largely
eliminated the really high levels of exposures were initially
strongly associated with very high incidences of asbestosis and
lung cancer. Because the types of exposures are different in
different decades in our country, the bill should probably be
designed to account for those historic differences in exposure
conditions.
Cancer claims are also divided into four levels. Level V
consists of other cancers, primarily cancers of the larynx, the
pharynx, the esophagus, and the stomach. I think it is
important to recognize that the weight of the medical evidence
is that asbestos is not a cause of these cancers, many of which
are very prevalent today. Including this category in a national
asbestos program, if not constrained appropriately, creates the
risk of compensating claimants whose medical condition is not
associated with asbestos exposure. I think it is fortunate that
Level V does not include colorectal cancer, which is also has a
very weak link to asbestos exposure and is a very widespread
cancer in the country today.
Levels VI and VII deal with lung cancer, and I have
concerns with Level VI because it requires neither a
significant occupational exposure nor underlying asbestosis as
an indicator of an asbestos-related cancer. There is no causal
link to asbestos as a cause of the lung cancer in Level VI, and
the weight of the medical evidence is that lung cancer cannot
be attributed to asbestos unless asbestosis is present or at
least enough exposure to have caused asbestosis.
Also, there is some concern that compensation is limited to
non-smokers, defining non-smokers as individuals who have quit
smoking 12 years prior to diagnosis. This is problematic
because heavy smokers continue to have an elevated risk of
cancer even decades after stopping smoking.
Level VII, on the other hand, I think is appropriate and
subject to my reservations of the broad definition of
significant occupational exposure, I think it is appropriate.
Level VIII addresses mesothelioma claims and requires only
some exposure to asbestos prior to December 31, 1982. Although
the language of the bill is not clear, I think the bill should
be interpreted as requiring a discrete and identifiable
exposure for mesothelioma that goes beyond background. A
majority of mesothelioma cases in men are caused by asbestos
exposure, but a majority of the cases in women are considered
to be idiopathic, or not caused by asbestos exposure.
So, in summary, I believe that S. 1125 will allow
compensation for virtually all asbestos victims, although some
provisions in the bill should be tightened to protect the
integrity of the fund and avoid compensating those whose
medical problems are not related to asbestos.
The medical criteria in the fund appropriately allow most
fund resources to be directed to the appropriate categories,
which are severe asbestosis, lung cancer, and mesothelioma. I
think this is an excellent first step to providing a solution
to our asbestos litigation crisis and should result in fair
compensation to victims of asbestos exposure.
Thank you for listening to my testimony. I look forward to
your questions.
[The prepared statement of Dr. Crapo appears as a
submission for the record.]
Chairman Hatch. Well, thank you so much, Dr. Crapo. We know
that you are personally serving as chairman and professor of
the Department of Medicine at the National Jewish Center and
University of Colorado Health Sciences Center. Dr. Crapo
graduated from the University of Rochester School of Medicine
in 1971, subsequently trained at the Harbor General Hospital in
California, the National Institute of Environmental Health
Sciences, and Duke University. And prior to his tenure at the
National Jewish Center, he served for over 20 years on the
medical faculty at Duke University. Of those 20 years, Dr.
Crapo served for 17 as chief of Duke's Division of Pulmonary
and Critical Care Medicine. And, of course, you do maintain
affiliation with several professional societies. You are board-
certified in internal medicine and pulmonary diseases and have
published all kinds of articles and several textbooks. So we
are honored to have you here.
We are also honored to have Dr. Welch here. Dr. Welch also
has a great deal of experience, and I don't quite have the same
information on Doctor--well, I have got it. Dr. Welch is the
director for the Center to Protect Workers Rights. She has
personally treated many workers with asbestos-related disorders
as part of her medical practice, and so we are very interested
in your testimony as well here today, and we will turn to you
at this time.
STATEMENT OF LAURA WELCH, M.D., MEDICAL DIRECTOR, CENTER TO
PROTECT WORKERS RIGHTS, SILVER SPRING, MARYLAND
Dr. Welch. Thank you. Thank you, Chairman Hatch, Senator
Leahy, and other members of the Committee. I want to thank you
for the opportunity to testify here today. As you mentioned,
asbestos-related disease is an area that I have been involved
in the whole time I have been practicing medicine.
My name is Laura Welch. I am a physician. I am board-
certified in internal medicine and occupational medicine. I
have been on the faculty at Yale University and at George
Washington University School of Medicine prior to my current
position as medical director for the Center to Protect Workers
Rights here in the Washington, D.C., area.
I think it would help, before I really talk about the
specifics of the bill and medical criteria, to just state a
couple sentences why we are here today.
From 1940 to 1979, more than 27.5 million workers were
exposed to asbestos in shipyards, manufacturing operations, and
construction work, among other activities. Hundreds of
thousands of workers and their family members have suffered or
died from asbestos-related cancers and lung disease, and more
than a million more cases are expected. In this year alone,
over 10,000 people will die of asbestos-related disease. These
are not insignificant cases. These are not people without
impairment. These are people who are going to die, and we can
use all sorts of different projections, and everybody agrees on
those numbers.
So let me turn to the medical diagnosis, and I want to
thank you, Chairman Hatch, and everyone else on the Committee
for your hard work up to now to getting this bill to this
point. As you know, I have been involved in some of the
discussions that were going on to try to develop a consensus in
this area.
The current bill mirrors in large measure the medical
criteria, the Manville 2002 Trust Distribution Process, but I
am concerned that it adds some additional requirements in
addition to the medical criteria that narrow the group of
workers who are eligible and make the application process more
burdensome on people who are currently applying to the Manville
Trust. It also sets levels of compensation that are lower than
the total claims values and awards that are available. So, in
my opinion, we have to first look at the medical criteria, see
what compensating those people fairly will cost, and set a bill
that is based on fair medical and claims values.
As now constructed, I think the bill will exclude the vast
majority of workers with asbestos-related diseases from
receiving any compensation and provide relatively low levels of
compensation for workers with significant impairment and fatal
diseases.
The Manville 2002 TDP criteria were a revision from 1995,
and I think that the 1995 Manville medical criteria were
medically sound. The changes between 1995 and 2002 remove the
tests that are most sensitive for the diagnosis of asbestos-
related diseases, which include oxygen diffusion and CT scans.
Such changes may be appropriate in the context of a bankruptcy
trust that is running out of money and has to decide how to
allocate limited resources, and that is a decision to be made
by that trust. But a new system should be soundly based in
medicine and use the medically recognized diagnostic tests that
are recommended by the American Thoracic Society and by the
American Medical Association.
The American Medical Association has guidelines for the
evaluative impairment for lung disease, and I think that any
bill that is crafted should be based on those guidelines. I
think the current bill does deviate in some significant ways
from the AMA guidelines.
Let me give you an example. The Manville 2002 TDP and S.
1125 require what is called a 2/1 film as part of the
definition of severe asbestosis. That is using a classification
system that is used internationally to grade the amount of
scarring on x-ray. And a 2/1 film is very significant scarring.
But using that as a determination of the amount of impairment
in the lung is really not medically based. The density of
scarring from asbestos on the chest x-ray doesn't correlate
well with impairment, and we can use pulmonary function tests
to measure impairment. The x-ray can be used to determine that
asbestos-related disease is present, but I think we should then
use the approach recommended by the AMA to determine if
impairment is present and how significant the impairment is.
Let me give you an example of the impact of this. If you
use the AMA Guides, at the highest level of impairment you can
have a worker who has lost more than 50 percent of his lung
function, and in that guide they describe the worker would be
unable to perform activities of daily living, such as getting
dressed, taking a shower, cooking dinner, or doing any minimal
work around the house.
If you take a man with clear asbestosis using ATS criteria
for diagnosis and have him in that impairment category, he
could still have a very high likelihood of still being in Class
III under S. 1125. The payment schedule is $40,000. He will
have received more than $40,000 from Social Security disability
because he will be eligible for SSDI given those pulmonary
function tests. So you are taking someone who has asbestosis,
has a significant impairment, and he gets no compensation under
the bill, and that is because it is keyed to that x-ray
criteria for entry. It is something we can fix. It is something
that is in the Manville Trust. But it is really not medically
based, and I think we have to go back to the beginning and make
sure that these criteria are very medically based.
One other thing that I am really concerned about is this
bill states that the physician should independently verify the
duration, proximity, regularity, and intensity of exposure. The
physician has no way of knowing what that individual worker did
30 years before. There is not air monitoring. There are no
independently verifiable ways, and it is generally not
something the physician does. The physician takes a history
from the worker and uses his or her experience and judgment to
determine whether that history of asbestos exposure is
sufficient to cause a disease. So a requirement for independent
exposure verification I think is really an impossible one that
could be a real problem in this bill.
This bill incorporates the 2002 criteria for lung cancer,
which are probably in some ways okay, but sets different levels
of compensation for those. This essentially would set a value
of $100,000 for lung cancer in a smoker, where in the current
system, in the Manville system as well, it is more in the range
of $300,000. Smoking and asbestos act in concert together to
cause lung cancer, each multiplying the risk conferred by the
other. And it is important to treat smokers fairly. We should
not assume that every lung cancer that occurs in a smoker is
not contributed to by asbestos. And any compensation system
really must affirm when a worker has significant exposure to
asbestos, however we define that, he is eligible for
compensation for lung cancer.
Then the Level II, as defined by S. 1125, includes workers
with significant impairment. There are people in there--it is
not people who are asymptomatic. The way the bill is defined,
people with significant impairment can be in that category, and
I am particularly concerned about people who have definite
asbestosis but have asbestosis combined with some other lung
disease. This group of workers who may have a combination of
asbestosis and disease from smoking are currently getting
compensation in the Manville Trust, from the current tort
system, and I don't think it is appropriate that we should
completely deny those people compensation. But under the
current bill, someone with definite asbestosis but who also has
some disease from smoking would receive no compensation.
Then finally, we must remember that not everybody is going
to fit the specific criteria set by the legislation. The
Manville Trust and other bankruptcy trusts have a physician
panel that allows individuals to come in for medical review if
they can demonstrate that they meet in essence the criteria
that--the intent of the legislation, even though they may not
have the specific x-ray finding of a specific pulmonary
function finding. And I think we should be sure that that is
included because you can't write medicine into a bill. There
needs to be a way for an independent review for people who
don't meet the criteria.
So I appreciate the opportunity to appear before the
Committee today, and I hope I have helped you understand that
these diseases are real and affecting thousands of Americans,
and that we can use the accepted medical criteria set by the
AMA and the American Thoracic Society to guide us. I think a
system that is based on these medical criteria will provide
fair, timely, and good compensation to workers and others who
have been made sick as a result of asbestos exposure. So thank
you very much.
[The prepared statement of Dr. Welch appears as a
submission for the record.]
Chairman Hatch. Well, thank you, Dr. Welch.
We will turn to Dr. Parker now.
STATEMENT OF JOHN E. PARKER, M.D., PROFESSOR AND CHIEF,
PULMONARY AND CRITICAL CARE MEDICINE, ROBERT C. BYRD HEALTH
SCIENCES CENTER OF WEST VIRGINIA UNIVERSITY, MORGANTOWN, WEST
VIRGINIA
Dr. Parker. Thank you, Mr. Chairman. I appreciate the
opportunity to talk to the Committee, and I am flattered by the
invitation. Again, I am John Parker. I am a board-certified
internist as well as a pulmonologist and a NIOSH-certified B-
reader. I am currently the professor and chief of Pulmonary and
Critical Care Medicine at West Virginia University. In my
current position, I care for patients at the hospital and also
teach medical students, residents, and fellows. From 1976
through 1998, I held various positions in the United States
Public Health Service, including positions in the Indian Health
Service, the CDC, and NIOSH. While at NIOSH, I assisted in the
administration of the B-reader certification program, and I
also have conducted research on the respiratory system, on lung
disease and chest imaging issues, and published articles and
presented a number of invited presentations about the ILO
classification system as well as the NIOSH B-reader program,
and high-resolution CT scanning and other imaging techniques. I
am also the co-author of a textbook on occupational lung
diseases, and I have typically not served as an expert witness
in asbestos litigation.
I want to address certain medical aspects of the bill,
mainly those involving the non-malignant claims, and at the
outset let me make it clear that I firmly believe that the
medical science overwhelmingly confirms serious adverse health
effects do indeed result from significant asbestos exposure.
These, of course, include lung cancer, mesothelioma, and two
non-malignant diseases of the pulmonary parenchyma and the
pleura.
Overall, the proposed medical criteria in this bill create
a medical criteria in this bill create a medically supportable
system to compensate those that have been substantially exposed
to as well as those substantially injured by exposure to
asbestos. Importantly, this legislation adequately protects the
rights of those who are sick and impaired while providing
safeguards and balance against spending limited resources on
claims by individuals who are not impaired.
It does this by requiring a person who is seeking
compensation for non-malignant claims to meet several criteria.
These, of course, include a detailed occupational and exposure
history. They also include an abnormal chest radiograph as well
as breathing impairment, as shown by pulmonary function tests;
and, finally, a physician's conclusion that the impairment was
not more probably the result of other causes.
In order to explain why these criteria are necessary, I
would, of course, refer you to an attached paper to the
submitted written information.
The first requirement for a respiratory history includes a
detailed work and exposure history to identify exposure to
contaminants at the workplace, including asbestos. And,
unquestionably, the chest x-ray is also a valuable tool in
diagnosing asbestos-related disease. And the International
Labor Office in Geneva has attempted to standardize the reading
of chest x-rays when establishing this classification system.
The ILO system consists of written guidelines, standard or
reference films, as well as a specific form for recording the
interpretation. For asbestos, the important findings include
abnormalities of the lung parenchymal as well as abnormalities
of the pleura.
NIOSH through the years has made attempts to improve upon
the ILO classification system by administering a program of
training, testing, and certification of physicians, and it was
this training and testing that I helped oversee during my NIOSH
career. This experience has provided me with firsthand
knowledge of the ILO classification system as well as certain
issues about variability among people that interpret chest
radiographs.
Although the chest x-ray remains an important component in
any medical criteria, over-reliance on the chest x-ray has its
flaws. First, any interpretation of a chest x-ray remains at
times inconsistent and subjective. The interpretation is
subject to inter- and intra-reader variability.
Another problem with relying too heavily on chest x-rays is
the x-ray interpretation is not specific to asbestos exposure
or injury. There are many abnormalities associated with
asbestos that are actually the same as abnormalities seen on
the chest x-ray in other pulmonary diseases. For these reasons,
the chest x-ray alone cannot support a finding of asbestos-
related disease. And although computer tomography may be useful
in many cases and add detail that the chest x-ray may miss,
there is no universally accepted standardized interpretation
scheme for CT scans. They are also expensive and do introduce
additional radiation risk.
A third requirement in this current scheme is to have lung
function that demonstrates impairment through the use of
pulmonary function tests. Asbestos-related diseases cause a
specific form of lung injury called ``restriction,'' and it is
because the lungs are fibrotic are scarred that breathing is
restricted, and pulmonary function tests that include
spirometry, lung volumes, and diffusing tests can separate
obstructive from restrictive lung diseases.
Lung fibrosis such as asbestosis causes primarily this form
of restriction, whereas chronic tobacco smoke exposure causes
primarily expiatory air flow obstruction. Clearly, some
asbestos-exposed workers have also been chronic smokers, and
the separation of these two functional injuries is rarely
difficult as the overwhelming injury from severe fibrosis
causes restriction with a reduction or decrease in the forced
vital capacity or total lung capacity.
When using pulmonary function tests, it is important that
these test results are determined to be normal or abnormal
based upon a statistical determination of lower limits of
normal. The lower limits of normal are published reference
values that are adjusted by a statistical confidence interval.
The use of arbitrary cutoffs such as 80 percent of predicted
for FVC and total lung capacity has no statistical basis, and
most would agree are medically and statistically unreliable.
The final requirement in the current proposal that I would
like to mention is the requirement that a physician concludes
that the impairment was not more likely the result of other
causes. As I have mentioned, there are other causes for
abnormal chest x-rays as well as impairment, and a physician
must, as he or she would in any clinical setting, rule out
other more probable causes.
In closing, I would like to reiterate that it is my opinion
the proposed medical criteria are medically supportable, and I
welcome this opportunity to answer any questions that you may
have to further help explain these medical criteria or the lung
injury that is associated with asbestos exposure.
[The prepared statement of Dr. Parker appears as a
submission for the record.]
Chairman Hatch. Thank you so much. You three doctors have
been excellent, and we really appreciate the advice that you
have given.
I guess a big question that we want to ask--and you have
tried--I think you have address it to a degree, is: How do we
know who is sick and whose sickness is due to asbestos and
whose is not? What is the best way to ensure that those sick
due to asbestos get paid? Why don't we just start with you, Dr.
Welch, and then go across the table?
Dr. Welch. Well, I think that is a good way to divide it
up. I think we can--we know who is sick primarily by using
their pulmonary function test to measure impairment. And I
mentioned that the American Medical Association has a series of
guidelines for using pulmonary function tests for impairment of
lung disease and puts people into different categories, because
the pulmonary function tells you if they are sick or not, and
then you know they are sick, you have to independently decide
whether this sickness is related to asbestos. And I think it is
important to keep them separate. That was my concern about the
severe asbestosis, is it is trying to mix both at the same
time.
Determining whether someone is sick from asbestos, has
asbestos-related disease is the x-ray findings in the setting
of a history of exposure to asbestos, and there are some
characteristic pulmonary function abnormalities that are due to
asbestos, although I was making the point before--and I do
think it is important--that in people who have history of
exposure to asbestos and an x-ray that shows asbestosis, their
pulmonary function tests may show mixed disease. It may show
some evidence of restriction from asbestos and some evidence of
obstruction from smoking. And those are people that I think
require medical evaluation. But they can have a very
significant impairment, and in a physician's opinion, the
impairment could be substantially contributed to by asbestos
because in a way they already have smoking-related disease; the
asbestos disease on top of that makes them sicker.
But the pulmonary function test really is most valuable for
saying what level of impairment they have, and then the
exposure and the x-rays, and the pulmonary functions for the
pattern of impairment they have, and exposure and the x-rays
tell you whether it is asbestos-related, in my opinion.
Chairman Hatch. Thank you.
Dr. Crapo, do you differ with any of that?
Dr. Crapo. I would agree with Dr. Welch that the pulmonary
function tests are the critical element that we should use to
determine if the patient is impaired or an assessment of how
sick they are. The biggest problem we have here is making the
proper diagnosis and knowing the causation related to asbestos.
For the three major diseases we are talking about--for example,
asbestosis is a fibrotic disease of the lung. Asbestosis is
only one of about a hundred different causes of lung fibrosis.
And if we go into one of my clinics that have--let's say a
pulmonary fibrosis clinic at National Jewish, the vast majority
of the patients there would not have asbestosis. And the
challenge is determining which ones are caused by asbestos.
For lung cancer, the biggest cause is smoking. By far and
away most cancers are caused by smoking compared to asbestos
exposure. And for mesothelioma, a small component are
idiopathic and not caused by asbestosis or asbestos exposure.
So the challenge----
Chairman Hatch. Most of them are?
Dr. Crapo. In men, most mesotheliomas are caused by
asbestos exposure. In women----
Chairman Hatch. Especially if they have been working around
asbestos, you would probably be readily able to conclude that.
Dr. Crapo. That is correct, and that is why I am coming to
the critical aspect of the diagnostic criteria which is to
determine if a disease is caused by asbestos is the exposure
history. There are some other pathologic ways we can do it, but
they require lung biopsy, and we cannot--it is not really
feasible in the context of this type of settlement.
Absent that, the exposure history is the critical element
that lets the physician determine whether the disease is more
likely than not associated with asbestos exposure.
Chairman Hatch. Dr. Parker, anything you care to add?
Dr. Parker. I fundamentally agree with both the other
panelists.
Chairman Hatch. Let me ask you this: Dr. Parker, are Level
I and Level II claimants impaired, in your view? Do you think
they require compensation?
Dr. Parker. In the bill that I have seen, Level I and Level
II do not have functional impairment as measured by lung
function testing. So most would say those are unimpaired, and
currently the existing AMA guidelines would say those are
unimpaired individuals.
Chairman Hatch. Dr. Crapo? And then I will come back to----
Dr. Welch. Could I comment on that, though? Because if
their FEV1/FVC ratio is lower than 65 percent, they are in
Level II. If they don't meet the other criteria, then Level II,
so you can have people with significant medical impairment
where the pattern is more obstructive.
Now, you may say that is fine, but I don't think it is fair
to say people in Level II have no impairment. People in Level
II have no impairment and have obstructive disease or mixed
obstructive-restrictive because they can only move up to Level
III if they meet this requirement. And we know what we are
talking about.
Chairman Hatch. I have an idea.
Dr. Parker. And Level II makes a provision for medical
monitoring of those individuals.
Chairman Hatch. Yes, in our bill we do provide for medical
monitoring, but we treat those levels, I guess, as unimpaired
or not sick and not compensable under those circumstances. But
we do monitor them, and we provide the money to monitor them,
too, which is, I think, the right thing to do.
Dr. Crapo, can you add anything to this?
Dr. Crapo. Yes. I think that when we are looking at a chest
x-ray which shows minimal changes or early diagnostic changes
that are consistent with this diagnosis, when the patients have
pulmonary function changes that are primarily obstructive, that
tells us that the primary disease driving that process is an
obstructive disease, the most common of which is smoking-
induced lung disease. In my experience, when these patients
have significant asbestosis that will also contribute in a
significant way to their impairment, the FEVI/FVC ratio moves
upwards toward normal, and it is generally higher than a ratio
of 65 percent. It is generally in the 70- to 80-percent range.
I agree with Dr. Welch, though, that diagnosing the mixed
diseases is the most challenging thing that the physician
faces.
Chairman Hatch. Let me ask you this, starting again with
you, Dr. Welch. Would a finding that x-rays are consistent with
a particular condition constitute a medical diagnosis? And, if
not, what else is needed?
Dr. Welch. Well, I think Dr. Parker did cover that in his
testimony in a way. I mean, as a physician, I don't think any
of us would say an x-ray is consistent with, is the same as
saying I am diagnosing. It is very different, because the
diagnosis takes into account all the information you have.
You could have some x-ray findings that are 99 percent
likely to be one particular thing. I mean, sometimes you look
at an x-ray, and although you don't have pathology, you say
that is a lung cancer. You know, it is hard to be anything
else.
But, generally, we don't like to work with just one piece
of information. You have a medical history and, for asbestos,
exposure history is really very important.
Chairman Hatch. Medical history and exposure are very, very
important.
Dr. Welch. And then the x-ray and then the pulmonary
function tests, and the pulmonary function tests serve both the
purpose of looking at the pattern of disease and also telling
you the level of impairment.
Chairman Hatch. We provide for monitoring under this bill
for those who think they might have or have feared that they
might have asbestosis-causing diseases.
Let me ask you this, Dr. Crapo: What level of exposure to
asbestos do you believe is required in order to contract an
asbestos illness?
Dr. Crapo. It is widely different depending on which
disease you are talking about. For mesothelioma, fairly low
levels of asbestos exposure can cause it. If we are talking
about the disease asbestosis and its contribution to lung
cancer, it takes a fairly substantial exposure. And most people
that have developed those diseases as a result of asbestos
exposure have something in the range of 100 fibers/cc-years or
more. That is a fairly high level.
Generally I think a fairly good consensus for a cutoff that
would not cause those diseases would be about 25 fiber/cc-
years.
Chairman Hatch. Should anyone with a change in a x-ray be
entitled to compensation?
Dr. Parker. If the chest x-rays reflect a pulmonary
malignancy, I believe--and it is evaluated--that they should
be, and the bill would do so, yes.
In the case of non-malignant pulmonary disease, the
radiograph alone being abnormal as proposed would not
compensate individuals.
Chairman Hatch. How can somebody reading an x-ray
distinguish between asbestos-related diseases and those due to
other causes? Hasn't it been--or isn't it possible to have
abnormalities in x-rays from other sources than asbestos? I
think you have basically said that, but I just want to get that
out again.
Dr. Parker. If it is addressed to me, we agree with that.
What clinicians use----
Chairman Hatch. If anybody disagrees, feel free to respond.
Dr. Parker. Frequently, clinicians, when looking at
asbestos-related parenchymal disease or considering if you see
pleural disease and have the history of exposure, it is quite
common to attribute the exposure to asbestos, both disorders
being caused by----
Chairman Hatch. And if you add to that the pulmonary tests,
then you can pretty well definitively conclude that that is
asbestos-related.
Dr. Parker. A medical history is also helpful. I suppose if
a person had extensive collagen vascular disease, you might
wonder if it was caused by that.
Dr. Crapo. I think that is very important to put in here,
because you need to--you really need to rule out other diseases
that cause that illness. And there are, as I said earlier, a
large number, almost 100 different diseases that cause
pulmonary fibrosis. And the diagnosing physician needs to
consider the other diagnoses and rule them out as part of this
process.
Chairman Hatch. Let me ask one last question before I turn
to Senator Leahy, and that is this: Would all of you or each
one of you support a heightened exposure requirement for other
cancers due to the lack of medical evidence establishing a
causal link between asbestos exposure and other cancers?
Dr. Welch. Can you tell me what you mean by ``heightened''
when you say ``heightened exposure requirement''? Number of
years, for example?
Chairman Hatch. Sure, years or exposure in other forms,
tobacco, et al.
Dr. Welch. I think that to link lung cancer to asbestos it
is really based on exposure, and I think that is what--the
other doctors would agree that as your exposure goes up, at a
certain level of exposure you can essentially say if you know
that exposure occurred that asbestos contributed to that lung
cancer.
Chairman Hatch. What is the level of exposure that you
could say with pretty much certitude that that probably
contributed?
Dr. Welch. Well, I think if you want to construct something
like that----
Chairman Hatch. Would a worker have to work his or her
whole life around asbestos, or could 1 day of exposure cause
this?
Dr. Welch. One-day exposure is not going to cause lung
cancer. One-day exposure may cause mesothelioma, although we
hardly ever see cases that are that low. But leave out----
Chairman Hatch. That is highly unlikely?
Dr. Welch. Leave out mesothelioma because that does occur
from short--but for lung cancer, I think you can construct from
existing guidelines and consensus criteria, you can construct
an occupational exposure history that would say this amount of
years in this kind of job significantly increases the risk of
lung cancer.
Chairman Hatch. So we could actually, under this bill, the
way it is drafted, be able to pretty well tell who deserves
compensation? That is what we have tried to do.
Dr. Welch. I think what you do is you need to agree on--in
some ways, state explicitly what your assumptions are. Do you
think somebody has to have a 20-fold more likely to be lung
cancer that you know that lung cancer is 99 percent----
Chairman Hatch. We are leaving it up to the doctors.
Dr. Welch. I mean, I think that in your written testimony
you said 25 fiber years crosses a threshold, and there is this
international group called the Helsinki criteria that came up
with the same number. A lot of people have used that number.
And we don't have that monitoring data for all individual
people, so you have to create an occupational history that
matches that. But it is possible to do that.
Chairman Hatch. How do we get rid of the dishonest doctor
who is willing to come in and say this guy really has
mesothelioma or cancer caused by--when there is no cancer at
all or, you know, it is very difficult to prove and there is
really no real exposure? How do we stop that? We face that all
the time in personal injury cases.
Dr. Welch. Well, I think the cancer diagnosis is easier
because that is----
Chairman Hatch. It is there.
Dr. Welch [continuing]. Available pathologically. Generally
people have that. I think the debate about----
Chairman Hatch. So we should be able to definitively do
this for----
Dr. Welch. For the cancers, yes. I think that the concern
that comes up is about what you were expressing to some degree,
an x-ray reading that is consistent with asbestos.
Chairman Hatch. And with history.
Dr. Welch. But it hasn't necessarily reached a medical
diagnosis.
Chairman Hatch. Okay. What I want all three of you to do
for us is look over our language. You know, we are not stuck
with any language. I don't want to make this so broad that
everybody who gets a cough gets compensation. Naturally, we
don't want to do that. That takes money away from the honest
people who do, in fact, have problems. But give us any
suggestions you have, and we will take a look at them. But we
think we have written this section pretty well. But especially
you, Dr. Welch, we would like to see how we can improve it, and
especially you, Dr. Crapo, and you, Dr. Parker. All three of
you have extensive experience in this area. So we would like to
have the best really look this over.
I have no axes to grind on any part of this bill. I just
want to get it done, get this problem behind us. I think it
would help this country and these workers better than anything
we could do this year, and maybe for the next 30 years. But it
would certainly lay the groundwork to take care of some of
these very, very difficult problems. And as you can see, we
have to split the differences and come with a bill sooner or
later. Now, this bill is there and we are interested in any
changes that anybody would care to make that are willing to be
constructive changes not just ideological changes. So if you
will do that, we would be very grateful.
Senator Leahy?
Senator Leahy. Thank you, Mr. Chairman. I would note--and I
think everybody would agree with this, certainly from the
testimony--that exposure can also be the so-called take-home
exposure, too.
Dr. Welch. Absolutely.
Senator Leahy. Is that not correct?
Dr. Welch. Right.
Senator Leahy. It is interesting reading the bill, and I
understand from the Chairman that this, again, is a work in
progress. But it doesn't compensate anybody who is----
Chairman Hatch. Can I interrupt you just on that take-home
exposure situation? Because I have been wanting to say
something, and I think since you raised it, this bill--you
know, it is my understanding that those affected by take-home
exposure--a father who brings home clothes that the kids gets
asbestosis from--they will be considered under this bill to
have occupational exposure. So they will be covered, those
children.
Now, we are going to look at that language and see if we
can correct that language or make it better. Now, when they
start throwing around figures like 32 million people might have
exposure, I mean, you know, we can't resolve that problem. But
I have to say if they don't fit in the category of take-home
exposure, then they have got the regular tort system still
available to them.
Now, I think they are going to be pretty tough cases,
between you and me, but, nevertheless, that is where it is. And
that doesn't stop dishonest lawyers from bringing cases that
cost a fortune to defend that aren't valid. That happens. That
is one of the problems with overutilization of our tort system
today. And we have got to find some reasonable ways to bring
Democrats and Republicans together so that our system doesn't
destroy us.
So I would like your help on this, and I want to thank my
colleague for letting me interrupt on this. But we will take
care of those that have taken exposure because of their father
or mother who has worked around asbestos. And this bill I think
does take care of them. But if our language isn't good enough
there, help us to know how to write it. Okay?
Go ahead. I am sorry.
Senator Leahy. Well, of course, all personal injury cases
related to asbestos are covered by the bill, and take out the
tort system and occupational or not, as it is written. So that
is why we are having these hearings, and that is why it is a
work in progress.
I notice the bill, I started to say, doesn't compensate
anybody exposed to asbestos in the workplace after December 31,
1982. It is a puzzlement to me why we would deny asbestos
victims their rightful recovery because the exposure occurred
after an arbitrary cutoff date, New Year's Eve 1982. I mean, a
great celebration for New Year's Eve, especially when you still
use asbestos today, as Senator Murray and others have pointed
out. You have an arbitrary cutoff in a national trust. It seems
to me that only compounds the problems of this arbitrary
cutoff.
Is there any medical reason for the December 31, 1982,
cutoff? That should be easy to answer yes or no. I realize
there may be policy reasons. There may be other reasons. But is
there a medical reason for the December 31, 1982, cutoff?
Dr. Welch. No.
Dr. Crapo. There is not a medical reason. It has to do with
exposures changing.
Senator Leahy. I understand, but there is no medical
reason.
Chairman Hatch. Keep in mind the reason we did that is we
adopted the Manville approach which sets 1982.
Senator Leahy. I understand.
Chairman Hatch. We are not necessarily bound by that
approach.
Senator Leahy. We are not going to follow everything of the
Manville because they are getting 5 cents on the dollar right
now. Dr. Parker, any medical reason?
Dr. Parker. Not that I am aware of.
Senator Leahy. Okay. So there would be--and we will debate
all the other policy reasons, of course, but no medical reason.
Now, Dr. Welch and Dr. Parker, if I could direct this to
you, you are both occupational physicians. As I listened to you
today and as I have read your testimony, you both have
discussed the importance of exposure history in the diagnosis
of asbestos-related disease. I think we would all agree that is
important.
Now, S. 1125 as it is drafted requires a diagnosis be
independently verified with respect to the duration, the
proximity, regularity, and intensity of the asbestos exposure
involved. A lot of these exposures took place 30 or 40 years
ago. I am wondering how you independently verify such exposures
30 or 40 years ago. Is that something that physicians would
normally do in diagnosing occupational diseases with long
latency periods? Is it possible to do that? Dr. Parker, how
about you?
Dr. Parker. I am flattered to have been given some honorary
occupational medicine training. I actually have to say that my
occupational medicine training is on the job. But I do consider
myself expert in occupational lung disease. And the
reconstruction of exposures that occurred many years ago in the
workforce, primarily we take the history, how intense the
exposures may have been, how long they worked in jobs that are
historically associated with potentially high exposures; and
then if there is a health effect, we try to sort out in our own
mind whether that health effect is a result of that exposure.
They are difficult to reconstruct in individuals. They are
also difficult to construct and reconstruct for research. But
there are methods to do that. But certainly it would be very
difficult to individually verify, yes.
Senator Leahy. Dr. Welch, would you agree with that?
Dr. Welch. I would agree. You know, as part of the practice
of medicine, occupational medicine, you take the occupational
history from the individual. And for a history of exposure to
asbestos, we know so much. I can fill in so much about what the
worker is telling me from the existing epidemiology, all the
research that has been done, that there is no need to try to
look for other data to verify that an insulator used asbestos.
I mean, he is telling me that. I know it to be true
independently, for example. You couldn't do it, but it is not
standard practice. People don't do that in this kind of
circumstances where the exposure history from the worker
clearly represents a certain level of exposure. You can
understand if you understand the work that was done in the
literature.
Senator Leahy. Thank you. Well, I know the Chairman has an
event at 12:30, and he has also announced we are going to have
a break at this time. And I realize under our normal practice
he would extend me more time. But I think that we ought to be--
--
Chairman Hatch. Sure.
Senator Leahy. I do have several other questions, as you
can imagine, but if I might submit them for the record.
Chairman Hatch. Without objection. We will keep the record
open for any questions until this evening at 6 o'clock, any
questions that any member of this Committee would care to make.
We would hope that you would get your answers right back
because we intend to put this on a markup next week.
Now, we also intend to make----
Senator Leahy. Also, I have a statement by Senator Kennedy.
Chairman Hatch. And we will put Senator Kennedy's statement
in.
Also, we are looking for ways of improving the bill and
changing it between now and then, and hopefully we could have
some support from everybody involved, because there is no way
that we can please everybody. All we can do is try to be as
fair as we possibly can. And when you are talking $108 billion,
you are talking a lot of money. Frankly, I understand I have
got to come up with some--we have got to come up with some sort
of an end situation here. We will do our best to do that. But I
also have to bring together disparate political viewpoints. And
unless we have a very acceptable bill to the majority of
Members of Congress--and I am saying a significant majority--I
think we are just climbing the wrong tree and we are basically
going to fail.
So it is important that everybody get together. I don't
have any axes to grind. Some feel that I have leaned too far in
favor of the unions. Some of the unions feel I haven't leaned
far enough. The trial lawyers are all mad at me. We have united
them apparently with this bill.
[Laughter.]
Chairman Hatch. That is not hard to do, by the way.
However, they were split. And, frankly, some trial lawyers like
some of the aspects of this bill, but as a general rule, they
are not real happy with it. That ought to please a lot of
people out there, but it doesn't please the trial lawyers.
We have 800-some companies who probably are going to go
into bankruptcy if we don't resolve these problems, and we have
got a bunch of insurance companies who can't afford to go into
bankruptcy, but who either will have to go into bankruptcy or
quit. And I don't want to see that happen when we have at our
fingertips a chance to resolve this.
So you three are very important to us, and we would like
your best advice as to how we might refine this bill further
with regard to the medical aspects of it, health care aspects
of it, or anything else you would care to weigh in on. And the
next panel is going to be a very interesting panel that will
have some differences, and I look forward to hearing from them.
But we won't be back until about 1:30.
Senator Leahy. Mr. Chairman, if I might, I agree with all
of this, that we have to put together--we are much further
along than we were a year ago. We have got a lot of parties in
the room. We still have a way to go. When I was first in the
Senate, I believe it was Senator Mansfield who said something
about running the Senate was like trying to move around a
wheelbarrow full of bull frogs. And maybe this is the same
thing. But people----
Chairman Hatch. I like the analogy. I thought it was very
good.
[Laughter.]
Senator Leahy. You have never had that problem with the
Committee, though, Mr. Chairman.
Chairman Hatch. Especially the ``bull'' part.
Senator Leahy. We do whatever you tell us to.
[Laughter.]
Senator Leahy. But on this----
Chairman Hatch. I think it is about time, is all I can say.
We would all be better off.
[Laughter.]
Senator Leahy. I will make a note of that should I forget.
But----
Chairman Hatch. Don't worry. You will forget.
[Laughter.]
Senator Leahy. What I would suggest is that when we do
finish this hearing today--and there have been good questions
and good answers--that once again we get those parties back in
the room that we had before and continue negotiations, because
we all know that there is not going to be a bill that is going
to be perfect for everybody. No one group is going to find it
perfect, and I understand that because there is no way you can
do that. But we are getting closer. And a consensus bill with
broad bipartisan support will pass the Senate, and the House
may well take it with a sigh of relief. A fractured bill where
the major parties are in opposition, where we don't have that
kind of broad, real bipartisan support, that means across the
political spectrum, doesn't pass and we all know that. We all
know that, especially as we come into the summer months and the
appropriations bills season and all the rest.
So I wouldn't have held that hearing last year if I didn't
have hope this could be done. Senator Hatch has spent an
enormous amount of time on this, as have I. Both of us have a
million other things on our agenda. We want it done. I don't
have any major parochial interests in Vermont on this. I do
have an interest, though, as a legislator in wanting to see
this done and wanting to see a solution that we can all agree
on.
I am committed to continue working with the Chairman, but I
would hope that we can get the parties, once this hearing is
over and we know where the main differences are, we get the
parties back together.
Chairman Hatch. Well, I appreciate that, Senator. Let me
just say that I have succeeded in irritating everybody, which
is probably good. It means this must be a bill that is firming
up.
Senator Leahy. Except me.
Chairman Hatch. I am not going to answer that.
[Laughter.]
Chairman Hatch. Because I had something in mind. And I
still have high hopes we will get you on the bill. But the fact
of the matter is that we are to the point where this is rug-
cutting time. I just don't think we will have the time after
this month. I am certainly not going to kill myself any
further. I mean, I have worked on it, a number of us have
worked on it day and night, and I have met with literally
hundreds if not thousands of people on this and, frankly, have
tried to bring everybody together the best way I can. And I
can't give a great advantage to anybody. We have got to try and
get this so that we don't destroy the good because we desire
perfection so much. And there is no way we can get to
perfection on this and have a bill. In fact, there is no way
you can get to perfection, like most things in life.
But this bill, even in its current form, would do an awful
lot of good for an awful lot of people. For this hearing, the
remaining purpose will be to get all the help we can to rewrite
what has to be written and then bring it up next Thursday after
this one, and hopefully pass it out of the Committee and get
some time on the floor, which is going to be very difficult,
because the last 2 weeks of this month are set up for Medicare.
And that is extremely important to all of us.
So it is a timing thing as well as a cooperative thing, and
I have just got to have cooperation from everybody in order to
get this done. And if not, we are going to fail.
So let's not fail. Let's get this done, and we will be back
here--I better make it quarter to 2 because we are 15 minutes
late, and I have got to go be with Senator Kennedy at this
time. So I don't have any choice. I have to be with these guys
whether I want to be or not.
Senator Leahy. We love you.
Chairman Hatch. We will recess until further notice.
[Whereupon, at 12:48 p.m., the Committee was adjourned, to
reconvene at 1:45 p.m., this same day. Afternoon Session [2:02
p.m.]
Chairman Hatch. I apologize to all of you for all the
delays that we have had here. I haven't been able to do
anything better. So we appreciate all of you being here today
and being here to help us to understand what we should do and
to understand it better, because we certainly need to resolve
some of these conflicts.
Now, we have an excellent panel here today. It is a diverse
panel.
Jennifer L. Biggs. Ms. Biggs is a consulting actuary with
Tillinghast-Towers Perrin and is a principal of Towers-Perrin.
Her practice focuses on quantifying asbestos liabilities
incurred by the insurance industry and corporate defendants
named in asbestos lawsuits.
Dr. Mark A. Peterson. Dr. Peterson has been a special
adviser to the courts regarding the Manville Trust and has
studied asbestos litigation and is the founding member of the
RAND Corporation's Institute for Civil Justice.
Dr. Fred Dunbar is the senior vice president and senior
economist for National Economic Research Associates. He is a
certified expert in the area of mass torts and claims
valuation.
Professor Eric Green. Professor Green teaches negotiation,
mediation, and resolution of mass torts at Boston University
School of Law. He has served as special master in multi-
district asbestos litigation and is court-appointed legal
representative for future claimants in asbestos-related
bankruptcies.
And Dr. Robert Hartwig. Dr. Hartwig is chief economist and
senior vice president for the Insurance Information Institute,
a property, casualty insurance trade association.
We are very grateful to have all of you here. We welcome
you and we look forward to hearing your testimony, so we will
start with you, Ms. Biggs, first.
STATEMENT OF JENNIFER L. BIGGS, TILLINGHAST-TOWERS PERRIN, ST.
LOUIS, MISSOURI
Ms. Biggs. Mr. Chairman, thank you for allowing me to
testify today. My name is Jenni Biggs. I am a consulting
actuary with Tillinghast-Towers Perrin and a principal of
Towers Perrin. I am a Fellow of the Casualty Actuarial Society
and a member of the American Academy of Actuaries. My
consulting practice, as you mentioned, focuses on quantifying
the asbestos liabilities of insurance and reinsurance companies
as well as corporate defendants named in asbestos lawsuits.
In May of 2001, my colleagues and I released our estimate
of the ultimate loss and expense projected to result from U.S.
exposure to asbestos. Our estimate of $200 billion has since
been widely quoted. During this testimony, I will explain to
you how we anticipate our $200 billion estimate will change if
Senate Bill 1125, the Fairness in Asbestos Injury Resolution
Act of 2003, or the ``FAIR Act'', is enacted.
Tillinghast's $200 billion estimate of ultimate asbestos
loss and expense includes both past payments and projected
future payments. The RAND Institute for Civil Justice recently
estimated that $70 billion in asbestos claims were paid through
year-end 2002. Thus, our $200 billion ultimate figure
translates to $130 billion of estimated future payments. This
$130 billion estimate is based on assumptions consistent with
the deterioration in the asbestos litigation environment
observed by 2001.
An important feature of the proposed legislation is the
elimination of plaintiff and defense attorney fees. To put this
into perspective, Tillinghast's $200 billion estimate of
ultimate asbestos loss and expense is significantly reduced
when these frictional costs are removed. Of the $130 billion
remaining to be paid, we estimate that approximately $28
billion, or 21.5 percent, relates to defense costs. Of the
remaining $102 billion, we estimate that approximately $41
billion, or 40 percent, will go to plaintiff attorneys.
Therefore, out of the original $130 billion estimate of future
payments, less than half, or only $61 billion, is expected to
reach the claimants. Our conclusion is consistent with the
findings of RAND: Transaction costs have consumed more than
half of total spending.
In order to project indemnity awards under the proposed
legislation, estimated claim filings are multiplied by the
specific awards for each of eight disease levels under the Act.
We did this separately for estimated future claims and for the
refiling of existing claims. We then added a component for the
cost of medical monitoring.
Tillinghast projected future claim filings using three
disease categories: mesothelioma, lung cancer, and all other.
Therefore, we relied on information provided by the Claims
Resolution Management Corporation, or the CRMC, to split our
original projections in the three disease categories into the
eight disease levels under the Manville 2002 Trust Distribution
Process, which are generally used in this Act. There are some
differences in the medical criteria. However, with the
exception of Disease Level VI Lung Cancer One claims, my
analysis assumes that any differences between the 2002 TDP and
the bill are unintentional, and that the proposed legislation
will be modified.
We also increased the projected number of future
mesothelioma claims to reflect that the increase in publicity
relating to asbestos claims and compensation, as well as the
potential ability to bring claims to a trust in a non-litigious
environment with pro bono legal assistance will likely increase
the propensity for victims to seek compensation.
For pending claim filings, as an upper bound we assumed
that there are currently 300,000 claims pending in the U.S.
court systems. Of these pending claims, we assumed that 230,000
will meet the minimum medical criteria and be refiled under the
Act.
The proposed legislation outlines specific claim awards
that range from zero for Disease Levels I and II to $750,000
for a mesothelioma victim.
As currently drafted, the proposed legislation does not
address increases in the awards to reflect future inflation.
However, we tested the sensitivity of the prospective payments
to indexed awards increasing at 2.5 percent a year.
Under the proposed legislation, the claim awards will be
reduced by the amount of benefits already received. We are not
aware of any publicly available data that would allow us to
estimate the settlement amounts that may have been achieved
with specific defendants. Recall that a single plaintiff may
sue as many as 60 different defendants. Therefore, we have
conservatively assumed no offset to the prospective payments in
the estimates that I will be discussing today.
We estimated medical monitoring costs based on current
Medicare reimbursement schedules, and in total we projected
relatively small medical monitoring costs of only $400 million.
Reflecting these provisions of the FAIR Act, we calculated
the prospective payments from the trust as only $46.7 billion
using the scheduled claim awards and $60.2 billion if you
assume a 2.5-percent annual increase in the claim awards. Thus,
the $108 billion appears to be more than adequate compared to
Tillinghast's best estimate of future costs, given a more
stringent definition of Lung Cancer One claims, which is
consistent with the Manville 2002 TDP.
We note that our estimates are on a nominal or undiscounted
basis. Nominal estimates are appropriate for comparison with
the nominal value of the trust of $108 billion. Discounted
estimates would be lower; however, discounted estimates should
be compared to the net present value of the trust, recognizing
that the entire $108 billion will not be placed into the trust
at inception.
Estimates of the prospective payments are very sensitive to
assumptions regarding the number of future claims, especially
mesothelioma, the potential indexing of future awards, and the
definition of Lung Cancer One claims.
Therefore, for comparison, we also projected the
prospective payments using future claim projections prepared
for and provided by the Manville Trust which range from 600,000
to 2.4 million. In total, these future claim projections are
higher than the Tillinghast claim projections contained herein,
but the number of mesothelioma claims are very similar.
We also added the provision of 230,000 refiled pending
claims to the Manville scenarios. The resulting Manville
projections range from $36.8 billion to $72.3 billion, assuming
no indexing of future awards, and that Lung Cancer One claims
will be defined consistently with the 2002 TDP.
If future awards are indexed at 2.5 percent a year, then
the prospective payments based on the Manville filing
projections increase to $47.2 to $94.5 billion, still assuming
a more stringent definition of Lung Cancer One claims: that
they satisfy the requirement of either an underlying non-
malignant asbestos-related disease or significant occupational
exposure of 5 years.
As currently drafted, the FAIR Act does not require
underlying asbestos-related disease and merely requires 6
months of occupational asbestos exposure prior to year-end
1982. Thus, potentially tens of thousands of claimants that
weren't historically eligible for compensation under the
Manville Trust will be eligible for compensation under the FAIR
Act.
We have projected an additional 172,000 Lung Cancer One
claims for non-smokers. Each of these additional claimants
would be awarded $50,000 for a potential additional $8.6
billion of indicated payments (or $11.8 billion if the future
awards are indexed at 2.5 percent a year).
We also increased the Manville projections to include our
estimate of additional Lung Cancer One claims. If these
additional cancer costs are added, then the Tillinghast
estimate increases to $72 billion and the Manville projections
increase to $56.4 billion under the minimum estimate, $77.6
billion under the mid-point estimate, and reach $108.4 billion
under the maximum projection when future awards are indexed at
2.5 percent a year.
In conclusion, while the estimates are sensitive to the
number of future claim filings, the indexing of future claim
awards, and the definition of Disease Level VI Lung Cancer One
claims, reasonable projections of prospective payments under
the Act are at or below $108 billion if future awards are
trended at 2.5 percent or less.
Thank you.
[The prepared statement of Ms. Biggs appears as a
submission for the record.]
Chairman Hatch. Thank you. I appreciate your testimony, and
it was very interesting to me.
Mr. Peterson, we will turn to you.
STATEMENT OF MARK A. PETERSON, LEGAL ANALYSIS SYSTEMS, THOUSAND
OAKS, CALIFORNIA
Mr. Peterson. Thank you, Senator. I appreciate the
opportunity to be here. It is a privilege to address the
Committee. One of my major areas of research and professional
activity for the last 20 years has been an attempt to develop a
fairer and more efficient system for handling asbestos claims.
And so I appreciate the opportunity to assist the Committee in
dealing with those issues.
I want to go through and really take your invitation to
identify areas of the bill that I think may create problems and
make suggestions of how the Committee might want to deal with
them. I want to do this in a constructive fashion to aid the
Committee.
The first area I want to comment on is about the timing of
payment. There have been repeated references today to the
importance of swift payment of claims, swift provision of
justice, and I think that is a particularly important area here
given the age of the victims of asbestos diseases we are
considering.
One of the major problems, I think, with the present bill
is it won't be swift. It won't provide swift justice. And I
think there are two reasons why both can be addressed. The
first is that it sets up an extremely complicated process for
paying claims, and not only does it set up a new bureaucracy to
pay those claims with a variety of different courts and levels
for doing so, an untested process, but it also sets up two
taxing systems to bill and raise the money necessary to pay
those claims. And it sets up a new court system. So it is a
complicated proposal like nothing I have ever seen, and my own
experience with regard to establishing and working with
asbestos trusts is that the much simpler procedures that they
have take several years, typically, to set up.
I am concerned here that this process will take more than
several years to establish despite the requirements in the bill
for timing. And I think as you go forward, you should try and
seek advice from people that have worked and set up trusts that
do these same kinds of processes. The attempt here is
essentially to have procedures that are very similar to
Manville. Manville has been paying claims under this process.
One can learn and try and adopt a system that is closer to what
is going on with the existing trust that doesn't have all the
complications, expense, difficulties, and inertia, essentially,
in setting this up. That is one area, source of delay.
The other area that really I think is the bigger problem
with regard to delay is there is a mismatch in timing between
the obligation of the fund and the money that will be available
to pay claimants. The funding provisions of the bill are
limited to $5 billion a year over the course of 22 or 23 years.
Unfortunately, the liabilities, the obligations are not steady
over time. They are front-loaded. It is true of any asbestos
trusts we have set up. The reason is twofold: one is that there
are, as Ms. Biggs suggests, around 300,000 claims pending today
that will be seeking compensation; and in addition to that, if
there is a two-, three-, four-, 5-year, whatever delay in
setting up this process and beginning to get the revenue
necessary, you are going to be accruing claims during that
entire period of time. So you have to anticipate that when this
fund opens its doors, it would have 400,000, 500,000, 600,000
claims there.
There are two issues with regard to that. Obviously that is
an enormous number of claims to deal with in an administrative
process, so it creates administrative burdens. But more
problematic is you will be dealing with--you need $30, $40, $50
billion immediately to pay those claims, but the fund will only
have $5 billion a year for 5, 6 years. It will need to wait 5
or 6 or more years in order to accumulate the money that is
necessary to pay claimants who already have claims today. And,
in the meantime, these people will now be waiting up to a
decade to get payment. And I don't think anyone--I assume the
Committee or anyone else--would be satisfied with setting up a
procedure that is going to require elderly present claimants to
have to wait 10 years to get paid. So that is one issue.
The second that I wanted to mention was the amount of money
that is provided, the level of compensation in this bill. The
answer, of course, to dealing with the problem of the mismatch
and timing of liabilities and payments is to make more of the
cash available immediately. I understand--well, I don't
understand, but I can sympathize with the difficulties in
working with the insurance and business community to get them
to provide money sooner rather than later. But it will be
necessary in order to avoid the delays I have been talking
about.
With regard to the amounts of money, there were references
earlier about attempting to have perfection and provide the
highest amounts of money that victims might expect to receive
in the tort system. I have no such expectations about asbestos
litigation. Perfection is not something that is much there. But
the average payment for mesothelioma claims, not the extremely
highest, the average is $2 to $3 million today, as opposed to
$750,000 in this plan. So this plan will cut those payments by
a third. It will cut lung cancer claimants to a tenth because
the average payment for lung cancer claimants, including most
of whom are smokers, is about $1 million a claim. So this fund
will greatly reduce the compensation levels that claimants get.
Again, of course, there are some compromises necessary, but
that is a very steep discount.
The next point I wanted to make is that the $108 billion I
do not believe is enough money. It is not enough money to pay
the claims. I have seen Ms. Biggs' forecasts, and I have done
those of my own. I anticipate that using reasonable alternative
forecasting assumptions, the liabilities are between $150 and
$250 billion, well in excess of the $108 billion number. And I
note that really the only difference between Ms. Biggs'
forecast and mine is the number of future claimants. She
anticipated that there will be a million future claimants; I
forecast that there will be likely 1.9 million future
claimants. And I would comment that the million--while I agree
with much of Ms. Biggs' work, I would comment that the 1
million future claimants is based, even though she notes in her
report or statement that the Manville Trust got 200,000
claimants in the last 3 years, so in a world in which 200,000
claimants come in 3 years, I don't think it is reasonable to
expect that there will only be a million future claimants.
The problem with that--and I have outlined it in my
statement--is that this is a closed-end fund. So if the
liabilities are greater, if they are at the level that I have
suggested they might be as opposed to what Ms. Biggs suggests,
then the claimants will bear the burden. At some point this
fund will run out of money, and it will not be able to pay
anyone anymore. It is the back end problem that Senator
Feinstein referred to.
Chairman Hatch. Of course, if we don't do something about
it, we are going to run out of money in the next few years.
Mr. Peterson. I am assuming the criteria and the levels in
this funding. I am not assuming any payments of the Level
Two's. I am saying that based upon the provisions of this bill,
with the numbers of claims that I am forecasting, there could
be $150 to $250 billion of liability for the very bill you are
considering. And there is a risk of that and the risk will be
borne by the claimants.
Chairman Hatch. There is certainly going to be that if we
continue with the tort system the way it is. As I understand
it, about 60 percent of the people bringing litigation are
people who aren't sick, but who have the fear of sickness,
which the Supreme Court seems to have upheld.
Mr. Peterson. I think that that is not a correct----
Chairman Hatch. Am I wrong on that?
Mr. Peterson. Sixty percent is----
Chairman Hatch. I would be happy to have you give me the
real figures on that.
Mr. Peterson. I will try and respond to that. It certainly
is much lower than that.
Yes, the tort system is expensive, no doubt about it. In
the tort system, essentially the tort system is moving toward a
series of independent trusts that are being run in a couple of
facilities. The kind of process that you are talking about in
your bill is occurring now within kind of the legal system. It
is happening on a case-by-case basis in bankruptcy.
One of the things that the Committee might consider is
making that process available to defendants without having to
file bankruptcy, essentially to be able to have defendants
negotiate Georgine, Amchem, the kinds of cases that the Supreme
Court overturned.
Chairman Hatch. The problem is they can't make those kinds
of payments and still operate the way they are used to
operating. They are going to have to cut back on employees and
everything else. That is why they go into bankruptcy so that
they can reach some reasonable standard that might possibly
keep their business alive.
I have got to say your figures that you have raised and
some that I have got are completely disparate.
Mr. Peterson. Well, I think you have raised an important
issue, and that is that there is such uncertainty about the
forecasts. I can't tell you that my numbers are definitely
right. Ms. Biggs can't tell you that her numbers are definitely
right.
We don't know with certainty what the future would be. We
don't know how many future claims there are going to be against
all defendants, as I described in my statement. We don't know
how this process would be carried out, but there is a
substantial risk that the numbers could be greater than $108
billion, and that risk will be borne by the victims, not by the
defendants and insurance companies.
Chairman Hatch. Let me ask you to do me a favor and do the
Committee a favor. You know, your testimony does not specify
how you are reaching these figures and these numbers. For
instance, I have been led to believe that even with attorney's
fees and everything else, the average award would be about
$900,000 on a serious case, and that includes a whopping amount
of money that the attorneys are going to get, which has been
estimated at between 40 and 50 percent here. It would be
wonderful if we could give everybody $3 million, but we can't.
Mr. Peterson. I appreciate the difficulty of trying to get
a compromise here.
Chairman Hatch. I mean, there is no way we can have a bill
and do that, but we are trying to come up with a way that
everybody who is sick and who has these problems is going to be
compensated, where right now, we know there is going to be a
dry-up of funds and a lot of companies in bankruptcy and a lot
of loss of pension funds and a lot of loss of health care and a
lot of loss of jobs if we keep going in the current system. So
what I am trying to do, as you know, is come up with something
that hopefully everybody can swallow and accept.
Mr. Peterson. I understand.
Chairman Hatch. I don't know what else to do, and I can
tell you that if you are right and it is 1.9 million claims
that ultimately have to be settled, then we are going to have
to do it within this fund.
Now, to me, if I am sitting there in the audience and I am
one of the businesses that has got to pony up part of $108
billion, I am not happy about that.
Mr. Peterson. I can imagine.
Chairman Hatch. And they are certainly not going to be able
to do it in the first two or 3 years. I understand some of
these cases go back 20 years now and they are still sitting
there, in Philadelphia in particular.
Mr. Peterson. There are probably some cases that hang
around that long. They are not being pursued by the plaintiffs.
Chairman Hatch. That is right. The courts aren't doing the
job, the attorneys aren't doing the job, and in the process
justice isn't occurring.
I didn't mean to get into questions right now, but your
testimony has been very interesting to me, as has Ms. Biggs'. I
would like you to supplement that testimony with what you have
used to arrive at these figures because that would be helpful
to us.
Mr. Peterson. I have described them in my statement, but I
will see if there is some supplemental description that I can
give you.
Chairman Hatch. If you can give some definitive economic
analysis that backs up what you are saying, I would be very
interested. And even if you could prove those figures, we are
still faced with a limited ability to get this done, and that
means that we are going to have to have people swallow hard if
they want this done and help us to get it done.
I don't want the union members to be hurt, I don't want the
companies to be hurt, I don't want the insurance companies to
do broke. Frankly, I don't particularly want to hurt the trial
lawyers, but, by necessity, we know the transaction costs do
amount to almost 50 percent. That means that half the monies
are going to people who aren't sick, and that is not counting
the people who aren't sick who are getting some of the money.
So you can imagine how that concerns, I think, any reasonable
person who is looking at it.
But please give us more back-up, and we are open to it, but
unfortunately we need you to do it soon because I am planning
on marking this bill the Thursday after this.
Mr. Peterson. Sure. The part of it that is most difficult,
of course, is anticipating what is going to be the distribution
of claims under the procedures and criteria that have been
established.
Chairman Hatch. And our efforts may have to be on how do we
solve this end game; I mean, how do we solve it if the fund
runs out of funds. Now, admittedly, I want to solve that. I
know one thing. If I have Government do it, this bill is dead.
I can just tell you that right now. We don't have enough votes
to get it through here or the House.
You are looking at the guy who put through the radiation
compensation exposure bill, who has had Government do it. The
Government needed to do it because they were the ones
responsible for it. So you can see some of the difficulties
that we have here. It is not an easy matter.
Mr. Peterson. Senator, I understand very well the problems
and implications of my testimony. I share with you the desire
to have some efficient and fair resolution, and I appreciate
the problems that asbestos generates and I am providing these
numbers in that spirit.
I share with you the desire to try and do something, but I
wanted to make the Committee aware of the implications of the
very proposals that they are making.
Chairman Hatch. Well, back up your numbers with more facts
and we will look at them very seriously.
[The prepared statement of Mr. Peterson appears as a
submission for the record.]
Chairman Hatch. Let's go to Mr. Dunbar.
STATEMENT OF FREDERICK C. DUNBAR, SENIOR VICE PRESIDENT,
NATIONAL ECONOMIC RESEARCH ASSOCIATES, NEW YORK, NEW YORK
Mr. Dunbar. Thank you, Chairman Hatch and Senator Leahy.
Chairman Hatch. Of course, if any of you have comments to
add to either of the first two witnesses, that would be fine,
too.
Mr. Dunbar. I am very grateful to have been invited to
present the work of me and my colleagues. The research that I
am going to talk to you about was based in part on the research
of Sebago Associates, with Professor Joseph Stiglitz, a Nobel
Laureate economist who is teaching at Columbia.
As you mentioned, I am a Senior Vice President of National
Economic Research Associates. We are the largest firm employing
micro economists studying policy and legal issues. We were
formed about 40 years ago by Professor Alfred Kahn. I and
others at the firm have been studying asbestos issues for 12
years.
The focus of my comments today is really on workers, and it
is not necessarily those workers which show up in asbestos
claims statistics. Rather, it is those workers who are employed
by firms bankrupted by asbestos, as well as those workers who
supplied the goods and services to the bankrupt firms and their
employees' families.
Now, the statistics that I can present will seem mind-
numbingly dry, but they have a special meaning for people; in
fact, people like me who grew up in a working-class home. In
such a home, economic security is always a concern, and I and
the others know firsthand how fine the line is between having
economic security and adverse fortuity where it is lost.
Who are the workers? These are people that are your
constituents. More precisely, they are the constituents of 94
members of the Senate because the 60-or-so bankrupt firms
examined by Sebago had facilities with employees in 47 States.
What happens to these employees when a firm goes bankrupt?
The lucky ones stay on, but 25 percent are really not so lucky.
They become unemployed and, on average, they lose $30,000 to
$60,000 in lost income while being unemployed and taking lower-
pay jobs.
Sebago Associates estimates that, to date, 50,000 such
workers have lost their jobs and borne costs that total $1.4 to
$3 billion. In addition, 200,000 of your constituent workers of
these bankrupt companies lost retirement benefits of $1,000
each, for a total adding up to another $200 million to their
losses.
These are what economists call the direct costs. Those are
the losses that people directly bear caused by the
bankruptcies. There are also multiplier effects in the
communities where these facilities were located. These are of
two types.
The first type comes from the bankrupt firms that are
buying less of the inputs for their production, things like
equipment, office supplies and services, from the other firms
that serve them. The second is that the families of the
unemployed and displaced workers are buying fewer goods and
services.
These effects can be quantified. In the communities
involved, there are eight lost jobs for every 10 jobs that were
lost by the bankrupt firms; that is, there has, to date, been a
total of 90,000 workers that have been displaced, 50,000 direct
workers, plus 40,000 from the multiplier effects.
When we add the costs together of the multiplier effects
and the direct impacts, the total borne by these workers is
anywhere from $2.2 billion to $5.2 billion. I will end by
making three observations of why these are underestimates, and
potentially vast underestimates.
The RAND study which has been mentioned here before, using
a different method that focused on both non-bankrupt and
bankrupt firms, estimated that lost job opportunities were
nearly three times larger than those given by the Sebago
estimates.
Also, these numbers exclude other costs to society--
retraining costs, the fact that when an individual is
unemployed they have to pay more for their health insurance,
bankruptcy costs that have been estimated to be in the hundreds
of millions of dollars, and then the legal costs which were
mentioned before, which are, in fact, 60 percent of total
claims which are now in the tens of billions of dollars and act
like a tax on our goods and services.
Chairman Hatch. Just for our information, when you mention
Sebago, you mean Stiglitz, right?
Mr. Dunbar. That is correct.
Chairman Hatch. Okay.
Mr. Dunbar. And then, third, these costs will definitely
continue in the future unless something is done to correct the
current system.
[The prepared statement of Mr. Dunbar appears as a
submission for the record.]
Chairman Hatch. Thank you. I have to say that I can see why
economics is the dismal science.
[Laughter.]
Chairman Hatch. But this has been really interesting to us.
It will be interesting to see what we can do here.
Professor Green, we will turn to you.
STATEMENT OF ERIC D. GREEN, PROFESSOR, BOSTON UNIVERSITY SCHOOL
OF LAW, BOSTON, MASSACHUSETTS
Mr. Green. Thank you, Mr. Chairman, Senator Leahy. I
appreciate the opportunity to testify before the Committee.
I would like to address the impact of this Act on the
rights of the as yet unknown victims of exposure to asbestos.
These victims are commonly referred to as the ``future
claimants''. They are people who have been exposed, but they
have not yet brought any personal injury claim or lawsuit, but
they might or will in the future. They might not even know that
they have a claim right now.
These are the overwhelming majority of the people who are
going to be affected by this Act, any legislation we do.
Estimates of their numbers vary. You have heard the range of
estimates from the actuaries and epidemiologists, but the
future claimants are two to five times the number of current
claimants, anywhere from 1.5 million to 2.5 million claims.
I am currently the court-appointed representative for the
future claimants in the Fuller-Austin, the Federal-Mogul, and
the Babcock & Wilcox bankruptcies. And I am a professor of law
at Boston University, where I have specialized in alternative
dispute resolution, and specifically the resolution of mass
torts. I have assisted courts in various capacities in the
asbestos litigation.
There are 13 other individuals such as myself who are the
court-appointed future reps around the country in the 18
pending bankruptcy cases. I will be representing my own views
here, but I think my views are shared by most, if not all of
them.
The future reps support a national legislative resolution
to the asbestos litigation crisis that can provide an
efficient, low-cost and effective national fund to fairly
compensate present and future asbestos victims. But our support
is reserved only for legislation that produces a result for
future asbestos victims as good as or better than what those
victims will obtain absent legislation.
We are not looking for the perfect solution. We want to do
good for the future victims, but we want to avoid doing bad,
and we know that that is what everybody wants to do. And we
want to work with the Committee in a constructive way to try to
achieve a good result, better than the ``no agreement''
alternative, in negotiation parlance. But we know we can't
achieve ideal justice or perfect justice.
It is critical that we do everything we can in this
legislation, in the short amount of time we have to work on it,
to make sure that the future victims are protected from risks
of error and uncertainty associated with a limited national
fund.
None of us are perfect, Mr. Chairman. None of us have a
perfect vision of what the future will be, and in this
particular area everybody has been wrong more often than they
have been right. And if we enact this legislation, my role will
disappear; the future reps will be history.
Now, we don't mind that. We support this initiative even
though we will be made redundant, but it must be noted that
there will no one left with any statutory authority to protect
the interests of the future claimants. If a single national
fund is going to be the sole source of compensation for future
claimants, it must have access to sufficient resources to pay
all the future claims that we think we are going to get, and it
must be designed in a way that will operate to ensure that
future claimants are paid in full what we want to pay them in a
timely manner.
In short, we must make sure the fund doesn't run out of
money before all these future victims of asbestos are
identified and paid or that will make them wait for payment for
long years. That would be very sad and disappointing, I am
sure, to the Chairman and to everybody involved in this effort.
It would be an embarrassment and a danger to everybody.
So our concerns fall into three categories. Will the fund
have the resources to timely pay future claims? Two, will the
administrative procedures established under the Act be
efficient, or will they be unduly burdensome and will they
create a backlog of claims, with long delays in payment?
Unfortunately, Senator Hatch, the history through this
litigation has been reform attempts, reform attempts, reform
attempts. You are talking about Manville II here, not Manville
I. Many, many attempts that were well-intentioned have resulted
in long backlogs and delay, and made the problem worse.
Our third area of concern is whether the compensation
criteria are fair and consistent with those currently applied.
We support your work. We would like to work with you
constructively to make it good, if not perfect. The Act in its
present form has some problems and concerns. We would like to
work with your people and make it better. I will submit a full
statement for the record at the end of the day.
Our greatest concern, I think, is what you have referred to
as the back-end problem. It is a tough problem, Senator Hatch.
Chairman Hatch. Tell me about it.
[Laughter.]
Mr. Green. I mediate cases every single day, and people
want to put it behind them and they want certainty. We are
dealing with something that is going to be very difficult to
supply certainty to people without at the same time taking risk
and squeezing it and putting it on other people.
There are ways to do it and we offer some suggestions. One
way would be to authorize the administrator of the fund to
impose contingent calls on insurer and defendant participants
after the fund has had some actual experience with the handling
and paying of claims.
I am not prepared to put my money down on any of these
experts' estimates on the future victims. Let's see how these
new criteria for Manville II play out for a while. The people
from Manville II will tell you they are so new that they don't
really have any idea of what the claims filing is going to be
under them.
All the future reps want to make sure of is that the
proponents of whatever numbers are being proposed in funding
are prepared, as they used to say in Pennsylvania where I grew
up, to put their money where their mouth is. If it is not
enough, if there needs to be a contingent call, there has to be
some provision for it or there would have to be a Federal
backstop. I understand you when you say that that is not likely
to happen, so we have to look elsewhere to deal with that risk.
Chairman Hatch. Well, the reason I say it is not going to
happen is because I can't get the votes.
Mr. Green. I understand.
Chairman Hatch. And if we don't have the votes, this bill
isn't going to go anywhere anyway. That doesn't mean that some
future Congress might not remedy that, but this one is not
going to.
Mr. Green. If the worst happened and it turned out that
these predictions were inaccurate, that they were low, and
there is not some mechanism that we work out now to deal with
that contingency, then I am sure that the pressures that would
build would destroy the very stability and finality that the
companies and the insurers are looking for.
Chairman Hatch. We will be interested in your suggestions.
I have some ideas, as well, and so do others on this Committee.
We realize we have to face that problem somehow or other, and I
hope Ms. Biggs is right on this. She did a very good job of
presenting her testimony, but I just hope she is right on it.
A hundred and eight billion dollars is a lot of money. If I
can get all the companies to do what they are supposed to do
there, that is a very, very substantial achievement by the
companies.
Mr. Green. A hundred and eight billion dollars is a lot of
money by any standard, but when one compares it to the reserves
and expectations that many of these companies deep in this
litigation have now, it might not be so large as some have
claimed.
Chairman Hatch. Well, that is highly debatable, as you
know, but I appreciate your testimony. We will look forward to
your suggestions.
Mr. Green. Thank you.
[The prepared statement of Mr. Green appears as a
submission for the record.]
Chairman Hatch. Mr. Hartwig, we will turn to you.
STATEMENT OF ROBERT P. HARTWIG, SENIOR VICE PRESIDENT AND CHIEF
ECONOMIST, INSURANCE INFORMATION INSTITUTE, NEW YORK, NEW YORK
Mr. Hartwig. Thank you, Mr. Chairman and Mr. Leahy, for the
opportunity to testify before the Committee today. My name is
Robert Hartwig and I am Chief Economist for the Insurance
Information Institute, a property/casualty insurance trade
association.
I have been asked to testify before the Committee regarding
several of the most important economic considerations
surrounding the asbestos debate. As an economist, I am
particularly interested in eliminating the extraordinary
inefficiencies associated with asbestos litigation, as well as
the severe economic and financial dislocations associated with
these inefficiencies, within a framework that is fair and
equitable for all parties involved.
The macroeconomic implications associated with the current
out-of-control asbestos litigation system are not in dispute.
As we have heard several times today, nearly 70 companies have
been pushed into bankruptcy by asbestos litigation.
Approximately 8,400 companies in almost every industry have had
claims filed against them.
And as we just heard from Mr. Dunbar, between 52,000 and
60,000 jobs have already been lost as a result of these
bankruptcies. To echo again Mr. Dunbar, for shattered
communities and families, these statistics are only the
beginning of the story, as thousands of jobs are lost in
industries dependent on these bankrupt firms.
If nothing is done to resolve what has already been
described by the U.S. Supreme Court as the elephantine mass of
asbestos litigation, scores, if not hundreds of additional
businesses will be forced into bankruptcy and tens of thousands
of workers will find themselves unemployed. Retirees and
workers who have spent decades saving for retirement will
continue to see their life savings and economic security
vanish.
The inefficiencies associated with asbestos litigation stem
largely from abuse, which has led to a rapid upward spiral in
tort costs. Legislation now before the Committee will address
these abusive practices.
Under the present tort system, hundreds of thousands of
victims, up to 90 percent of whom are unimpaired by any
asbestos-related illness, are able to move from State to State,
setting their sights on the most sympathetic jurisdictions and
judges.
As State and Federal policymakers have determined
previously, there are some public policy crises so profound, or
certainly so vital, as to require quantum legislative actions.
These include, for example, the September 11 Victims
Compensation Fund, funds for black lung disease, vaccine
compensation, or State workers' compensation funds.
The trust fund proposal would be more efficient and
rational than the current system for the following reasons.
Only individuals who are impaired by asbestos exposure would be
entitled to compensation under the fund. Transaction costs
would be radically reduced in the new no-fault framework.
According to the RAND Institute, up to 50 percent of asbestos
litigation dollars go to cover transaction costs rather than
toward direct compensation of the victims.
Wild jury verdicts would be eliminated, such as the recent
$250 million verdict handed down in Illinois or recent cases in
Texas and West Virginia which have allowed plaintiffs to obtain
millions of dollars without any asbestos-related impairment,
or, in fact, to win cases that have allowed them to sue purely
on the basis of fear of developing an asbestos-related illness.
Major insurers and manufacturers have been working with
some of the best financial, actuarial and legal resources
available to construct a privately-funded facility that will
bring certainty, finality and equity to the country's asbestos
problem.
Based on these analyses, insurers believe that $45 billion,
contributed from both the insurance and policyholder sectors,
will fund a facility that approaches $100 billion, and that
that is sufficient to compensate present and future claimants
based upon need, not when or where they file their suits.
Insurers are willing to perfect such a mechanism so that
the annual cash flows run unimpeded and that the solvency risk
is extinguished. The proposed insurer contribution of $45
billion is large and constitutes by far the largest pay-out in
the history of the property/casualty insurance industry, and
will inflict true financial pain on the two dozen or so
companies who will pay the bulk of this amount. Forty-five
billion dollars is approximately 50 percent more than insurers
hold in reserves for asbestos claims today, and it is equal to
about one-third of all the capital held by commercial insurance
companies presently.
In conclusion, it is important to note that the
consequences of inaction are grave. As previously mentioned, a
large swath of corporate America is at risk, jeopardizing the
jobs of thousands of employees, impoverishing retirees, and
shattering families and communities. America's clear national
interest lies in making sure asbestos funds are available for
those who become sick and in lifting an ominous cloud of
litigation from our troubled economy.
Thank you for the opportunity to appear at today's hearing
and I look forward to answering any questions you might have.
[The prepared statement of Mr. Hartwig appears as a
submission for the record.]
Chairman Hatch. Thank you.
I have been asking some questions throughout, so I am going
to turn to Senator Leahy first and recognize him.
Senator Leahy. Thank you, Mr. Chairman.
Let me direct this first at Dr. Peterson and then Professor
Green. When you read over Senator Hatch's legislation, it does
not have--first, I should emphasize everybody up here wants to
get asbestos legislation. We also all know that we either all
hold hands on something eventually or nothing goes through.
I am worried that this legislation doesn't provide for any
adjustments for inflation in the award values for asbestos
victims, even though the trust fund provides for the next 50
years.
Should the award values for asbestos-related diseases be
indexed for inflation to maintain the present value of
compensation to victims?
Mr. Peterson. I think absolutely, it should. Any kind of
fund like this that goes over such a long period of time needs
an inflation adjustment; I mean real inflation, not some
speculation of what it might be. It just needs to keep track of
inflation. Otherwise, someone coming 10, 15 years from now is
only going to get a reduced portion of what someone gets today.
It introduces the kind of present and future dichotomy that the
people like Professor Green have been appointed to deal with.
I should note that both in my analysis and Ms. Biggs'
analysis, we have assumed that a fund like this would have
inflation adjustment. It is surprising that it doesn't,
although I understand that if you add it, I mean it is another
cost item, Chairman Hatch. It probably is another $15, $20
billion, or depending on what your assumption is, $10 billion.
Senator Leahy. Professor Green, do you feel the same way?
Mr. Green. Yes, Senator Leahy, and it is tied up with two
related issues. One perhaps little-noticed provision of the
current Act is that all the existing trusts will be folded into
this national trust. Now, that may well be a good idea, but all
the existing trusts have, thanks to 524(g) of the Bankruptcy
Code which you enacted in 1994 and the work of the future
reps--all of those trusts have provisions which guarantee the
future claimants, the far-out future claimants, that there will
be money for them there when you get in those years.
Now, you take those trusts and you fold them in. That
guarantee, that protection could disappear if the estimates are
wrong. And if there is no adjustment for inflation, you are
taking that away as well, and then if there is no interest on
the payments, if there does turn out to be a backlog because of
the $5 billion-a-year funding, now you have got a triple whammy
on the futures, who are currently protected to some extent in
the current trusts against those things.
Senator Leahy. You also say that you get an additional $14
billion to be collected from the additional contributing
participants. I tend to agree. I wonder how the administrator
of the fund is going to identify future tort defendants. We
have already eliminated a tort regime for these claims. Doesn't
it make it pretty well impossible for the administrator to
credibly assess such future defendants?
Mr. Green. It might be possible, Senator Leahy, to offer a
voluntary--an invitation to voluntarily become a contributing
member and provide some incentives for these peripheral
defendants to do that, but providing that if they choose not
to. The free market, so to speak, of the tort system can still
operate with regard to those companies who do not come into the
system and provide some mechanism where, if they think better
of it, they could join up and pay their share and then get the
protections of being a member of the national trust.
Senator Leahy. I kind of worry about just who is in and who
is out. For example, in S. 1125, all tort claims for asbestos-
related injuries are taken out of the tort system. It also
immunizes all future defendants.
Now, suppose if a company 5 years from now decides, well,
we can cut a corner here, make life easier for us, we will use
asbestos, we have poisonings of our people, now they are
immunized. Shouldn't at the very least only the contributors to
the fund be immunized?
Mr. Green. That is the point I was making, Senator. Of
course, if Senator Murray's bill passes, that situation might
not happen. But there may be companies out there who, for one
reason or another, haven't been identified. One of the things
the tort system has done is it has been an efficient, perhaps
aggressive identifier of responsible companies.
Senator Leahy. Well, you have all looked at these future
projections over the years. I have never found that any of the
future projections that come out being on the high side. They
are usually on the low side. Some have talked about the
Manville Trust, simply tripling it, but back in the early
1980's, the Manville Trust represented about 25 percent of the
liability of asbestos defendants. It is now 15 percent. So if
we tripled that, we are still only at 45 percent. That is not--
it might sound like a nice, easy formula, but it doesn't work,
does it?
Mr. Green. Dr. Peterson is the world's leading expert on
that.
Senator Leahy. Over to you, Dr. Peterson.
Mr. Peterson. It is hard to use Manville as the standard
for dollar values because it hasn't participated in any kind of
litigation now for 20 years. And even when it was, what
percentage it was depended upon what your interests were in
asserting that it was. But certainly given the ascendancy, if
you will, of other defendants now since Manville has been
unavailable, Manville is a much diminished part of the total
compensation that people get. And even the full values of their
claims I don't believe represent anywhere near the quarter that
it did historically. So the 15 percent seems a correct number
to me.
Senator Leahy. Thank you.
Chairman Hatch. But most claimants file with Manville, and
then they file a separate suit to begin with.
Mr. Peterson. Well, Senator, we actually did a calculation
of that. I have databases for the Manville Trust and a number
of other companies that are in bankruptcy now. And we looked at
a period of time when there were kind of current filings, so
they were all the same era of database. And Manville
constituted only about two-thirds of all the names we could
identify.
There are a substantial number of people who haven't sued
Manville or made claims against Manville. They may eventually.
Part of that is affected by the joint and several rules and
contribution rules in States. But Manville isn't--it is
sometimes regarded as the universe of all claims, but I think
that is not correct.
Chairman Hatch. Mr. Dunbar, you have done an excellent job
of illustrating the consequential impact of these bankruptcies,
the loss of jobs and pensions, not to mention economic impact
on the community and the loss of other jobs that naturally
arise because of the loss of the jobs with regard to asbestos.
Have you ever given any thought to the future impact? And
would it be fair to say that the current system operates
essentially as a tax on workers?
Mr. Dunbar. Yes. Let me take the last question first. I
think what is lost in the discussion is the fact that 60
percent of the dollars that go into the asbestos problem go to
professionals such as attorneys, both for plaintiffs and
defendants. That operates--the entire amount, the $70 billion,
operates like a tax, and the question that economists often ask
is: Who eventually pays a tax? And taxes are usually backed
into what are called the factors of production: land, labor,
and capital.
Now, capital can move back and forth globally very quickly,
so that leaves land and labor, and labor is by far then the
biggest participant in that tax.
I mentioned some of the ways that labor is taxed, but
generally how labor does get taxed and has to pay more than the
40 percent that it gets back in claims is because of the
reduced demand and the higher prices that they have to pay on
goods and services. That money comes eventually from--much of
that money eventually comes from the workers. So it is
basically the workers transferring their assets to other
workers, but also in large to the defense bar and the
plaintiffs' bar.
Chairman Hatch. If I am interpreting you correctly, what
you are saying is that this $108 billion trust fund, settling
the whole matter would be a very advantageous thing over the
long run if we can solve that end game problem for workers as
well as the companies.
Mr. Dunbar. I think if you lower the transactions costs and
if you lower bankruptcy costs, it is going to be advantageous
to workers as a whole, yes.
Chairman Hatch. You are talking about lowering the
transaction costs and bankruptcy costs, you are talking about
the expenses of bringing the suits, the attorney's fees
primarily, and then bankruptcy costs, which are quite
extensive.
Mr. Dunbar. That is correct.
Chairman Hatch. And this is where all this money has gone
up the flue, to so speak, rather than for the people who are
really hurt.
Mr. Dunbar. That is correct.
Chairman Hatch. Do you believe that this particular bill
that we have here would solve that problem?
Mr. Dunbar. I think this bill is definitely a step in the
right direction, and I hope that something works out to get it
through this session.
Chairman Hatch. What you seem to be saying is that, yes, so
far we have lost upwards of 70 companies.
Mr. Dunbar. Yes.
Chairman Hatch. If a whole lot more go, this compounds even
worse, doesn't it?
Mr. Dunbar. That is right. These impacts will continue into
the future under the current system. There are going to be more
bankruptcies, more jobs lost, more of our----
Chairman Hatch. Not just direct jobs but spin-off jobs as
well that rely on the direct jobs.
Mr. Dunbar. That is right. The effects are going to be you
are moving plants offshore, out of the United States entirely,
and what is more, there will be communities--I think the median
size community in a facility of a bankrupt company is 27,000
people.
Chairman Hatch. Well, I am obviously concerned about and
very troubled about how asbestos litigation has hurt our
national economy. If we could pass this bill, there is no
question in my mind it would benefit the national economy
greatly. But I am equally concerned, as you have just noted in
your testimony, that smaller communities are perhaps the
hardest hit.
Mr. Dunbar. That is right. Whenever a----
Chairman Hatch. In terms of lost jobs. Can you give me some
more details on some of these smaller communities?
Mr. Dunbar. Yes. The median community in one of the
facilities for a bankrupt company has a population of 27,000.
That means that the multiplier effect of these bankruptcies is
much greater because the ability for somebody who is displaced
to find another position within a smaller community is much
more limited. So what you are having then, because of the
nature of the asbestos producers, is a disparate impact on
smaller communities throughout the country.
Mr. Green. Mr. Chairman, may I add something?
Chairman Hatch. Go ahead.
Mr. Green. The futures reps who don't have a stake on the
plaintiffs' or defendants' side are concerned about the
viability and the health of the companies. But I am afraid you
might be operating under the misperception that these companies
who come through the Chapter 11 proceeding and set up asbestos
trusts disappear and go out of business. They don't. The ones
that I have been associated with reorganized, and they start--
--
Chairman Hatch. They become like Manville where they pay 5
cents on the dollar, and the people get nothing out of it.
Mr. Green. In the trusts, they are paying the victims 5
cents on the dollar, but Manville continued to operate. It was
a successful and thriving building products company. Warren
Buffet bought the company. Federal-Mogul, Babcock and Wilcox,
the companies that I am involved in----
Chairman Hatch. That is because they came up with a trust
that theoretically helps in this situation.
Mr. Green. Yes.
Chairman Hatch. But we are talking about 840 companies
here, not all of whom are as well situated as Manville. And we
are talking about at least 15 insurance companies that really
can't go into bankruptcy. In other words, if they do they are
gone. And so this is not some little itty-bitty problem here,
and this bill I think goes a long distance in solving that
problem.
Yes, Mr. Dunbar?
Mr. Dunbar. I think Professor Green is a little
serendipitous on this. It is true that the firms keep
operations going, but they lose 25 percent of their employees.
I mean, that is an impaired company, on average, the bankrupt
companies.
Chairman Hatch. Well, and by losing----
Mr. Dunbar. Moreover, I happen to know about some of these
companies, and when they go into Chapter 11, it is very
difficult for them to explain to a potential customer,
especially a customer in Asia, yes, I am in bankruptcy but
don't worry, everything is fine. They are losing business as a
result of going into bankruptcy.
Chairman Hatch. I think it is much more complex than has
been stated. But let me just--we have got to get over to a
vote, Senator Leahy and I. But, Professor Green, you have
concerns about whether future claimants will receive adequate
compensation under the FAIR Act, the bill we are talking about.
Now, in your statement you hold up current asbestos
bankruptcy trust funds as a way to ensure that all victims will
be compensated. But according to the testimony we have
received, these trusts are paying just pennies on a dollar, as
I had mentioned. And assuming these assertions were correct, it
is difficult for me to understand how they would be better
off--how the claimants are better off under a system where
claimants get nothing, others have no one to sue, so others
have to wait years before the case is even heard; and for those
who receive awards, a significant portion must be paid to their
attorneys.
Now, is it your position that the current tort system is a
better way to compensate these victims?
Mr. Green. Senator, we agree with you in your direction to
set up a national trust. We think it should be better; it will
be better. But the devil is in the details.
Chairman Hatch. That is right, but let me go back here to
some of my original comments, and that is, the companies
struggled to come up with $90 billion from the manufacturers
and the insurance companies. And there is a reinsurance problem
that is a big problem as well that has to be resolved here.
I was led to believe that if I could get that fund up
higher, we would probably please organized labor. So I moved it
to $108 billion, $18 billion more than they felt was reasonable
for them--they didn't feel $90 billion was reasonable for them
to pay, but they felt they could pay.
The unions came in at $120 billion a while back, but they
are now at $130 billion, and some are even talking $200
billion. Well, $200 billion is gone, $130 billion is gone, $120
billion I think is gone as well. A hundred and eight billion
bucks is where I think we can maybe get a consensus to put this
through, which certainly is going to take care, according to
Ms. Biggs, everybody, according to Mr. Hartwig, everybody who
deserves compensation.
Now, maybe they are wrong. So there has to be in the eyes
of you and Mr. Peterson and a few others, there has to be
perhaps some sort of an end game where we can see if there is
some way of having monies there if there aren't funds when we
get to the end of 25 years.
Now, that is a problem that Senators Leahy and Nelson and
Zell Miller and others and I have to solve. But I can tell you,
anybody who thinks we can get this over $108 billion and get a
huge vote in the United States Senate, which will hopefully get
it through the House, I think has rocks in their head. And we
have got to figure out a way of solving these problems, and I
could use and I know Senator Leahy could use and others on this
Committee could use some help in how do we solve that end game
problem without saddling the Federal Government with it, which
is a non-started.
Senator Leahy. Mr. Chairman?
Chairman Hatch. Yes, Senator Leahy?
Senator Leahy. I know you have worked very, very hard on
this, as I have and so many others have. We actually want to
get a consensus bill. Senator Hatch and I have served in the
Senate long enough to know that there is a certain time,
especially coming closer to both the congressional elections
and a Presidential election where things slow up, except for
those things that have to go through.
Chairman Hatch. Or it won't get done.
Senator Leahy. And so this could be--if this is complex, if
it is something where everybody is sniping at it, it doesn't go
through because it is just not going to be the time to do it.
I think we have a chance of doing something. During the
break, there was kind of an informal discussion about getting
the parties back into negotiations, have Senator Hatch's staff,
my staff there with them. I think that is a good idea. We have
the basic guiding principles. You have got to be fair to the
victims, and you have got to give certainty to the
corporations.
This is something we are united on. Now we just want to
find a way to make sure we do that. This is not an area--all
the statistics you want, this is not an area where there is a
huge parochial interest in my State for this. But I do see the
court systems being clogged with this. I see a lot--I mean,
your hearts have to go out for the victims who are here
testifying. You have a lot of corporations, a lot of corporate
leaders whom I respect highly who would like to put a certain
amount of money out here and say, okay, that is our share, now
let's get on and invest in new plants or business. And I agree
with all of them.
So let's hope we can get together. Let's hope we can work
together. I am committed to do that. But I want to make sure
that we are going to have, as I said at the beginning of this
hearing, both fairness for the victims and certitude for the
corporations. I think it is possible. We are not quite there.
We will keep working.
Chairman Hatch. Well, let me just end with these comments.
This is a very important thing to our Committee, very important
to me personally. I have met with hundreds if not thousands of
people on this issue. I almost lost my health on it. I will be
honest with you. I have worried about it so much. And, to be
honest with you, nobody is totally happy, but everybody
realizes that this may be the only way it is going to be
resolved. And we have got a week to do it in.
Now, I just don't see going back to try and get all the
companies together who basically have said, yes, we will go
along if we have to, we don't like it but we will do it. But
our offices are open. Our staffs are open. We have asked you
for suggestions and ideas. But come next Thursday, there is
going to be a bill put together, hopefully with even an end
game. I would like to have the representatives of organized
labor come and visit with me. I am not against them. In fact,
if anything, we have moved it towards their direction from
where it began. And I would like to resolve this.
But you have got about a week, maybe 2 weeks in which to
get it resolved. If we don't get it done in the month of June--
I mean, I personally believe we have a very uphill job to get
it done this month. I thought last month had to be the window.
But I think we could get it done if we just have a lot of
cooperation.
And, look, that is what compromise is all about. We can't
please everybody on this bill, and we can't please anybody on
this bill. We have got to please everybody by getting a bill
that hopefully will work a lot better than the current system,
which is not working. And that is what we intend to do, and if
we don't have cooperation--and we have had some companies that,
yes, they are not paying much in so they are willing to make
the others pay a lot more. I just don't see that negotiation
going on and being effectively conducted. And there are others
who are paying a lot more and don't want to give one dime more,
you see.
Then there are some who just plain don't think we should be
paying anybody if there is the slightest proof that they are
not sick at all.
These are all complex issues. We could go on and on here.
But this hearing has been very helpful to me, and I just want
to thank everybody who has participated in it. But come next
Thursday, we are going to have a bill that is either going to
go or it is not going to go. I can live with either, between
you and me. I don't think the country can. I don't think the
employees can. I think they are the ones who are going to get
hurt the worst. And I frankly think the organized labor will be
hurt the worst, because who is going to pick up the health care
for all these people? Who is going to make up for the lost
pensions? Who is going to make up for the lost jobs and the
hurts of these small communities because we can't come together
on a bill that is outrageously expensive to some and I think
very, very importantly expensive to people like myself.
So we have got to go vote. With that, we will recess until
further notice. Please send in your ideas.
[Whereupon, at 3:10 p.m., the Committee was adjourned.]
[Questions and answers and submissions for the record
follow.]
[GRAPHIC] [TIFF OMITTED] T9326.110
[GRAPHIC] [TIFF OMITTED] T9326.111
[GRAPHIC] [TIFF OMITTED] T9326.112
[GRAPHIC] [TIFF OMITTED] T9326.113
[GRAPHIC] [TIFF OMITTED] T9326.114
[GRAPHIC] [TIFF OMITTED] T9326.115
[GRAPHIC] [TIFF OMITTED] T9326.116
[GRAPHIC] [TIFF OMITTED] T9326.117
[GRAPHIC] [TIFF OMITTED] T9326.118
[GRAPHIC] [TIFF OMITTED] T9326.119
[GRAPHIC] [TIFF OMITTED] T9326.120
[GRAPHIC] [TIFF OMITTED] T9326.121
[GRAPHIC] [TIFF OMITTED] T9326.122
[GRAPHIC] [TIFF OMITTED] T9326.123
[GRAPHIC] [TIFF OMITTED] T9326.124
[GRAPHIC] [TIFF OMITTED] T9326.125
[GRAPHIC] [TIFF OMITTED] T9326.126
[GRAPHIC] [TIFF OMITTED] T9326.127
[GRAPHIC] [TIFF OMITTED] T9326.128
[GRAPHIC] [TIFF OMITTED] T9326.129
[GRAPHIC] [TIFF OMITTED] T9326.130
[GRAPHIC] [TIFF OMITTED] T9326.131
[GRAPHIC] [TIFF OMITTED] T9326.132
[GRAPHIC] [TIFF OMITTED] T9326.133
[GRAPHIC] [TIFF OMITTED] T9326.134
[GRAPHIC] [TIFF OMITTED] T9326.135
[GRAPHIC] [TIFF OMITTED] T9326.136
[GRAPHIC] [TIFF OMITTED] T9326.137
[GRAPHIC] [TIFF OMITTED] T9326.138
[GRAPHIC] [TIFF OMITTED] T9326.139
[GRAPHIC] [TIFF OMITTED] T9326.140
[GRAPHIC] [TIFF OMITTED] T9326.141
[GRAPHIC] [TIFF OMITTED] T9326.142
[GRAPHIC] [TIFF OMITTED] T9326.143
[GRAPHIC] [TIFF OMITTED] T9326.144
[GRAPHIC] [TIFF OMITTED] T9326.145
[GRAPHIC] [TIFF OMITTED] T9326.146
[GRAPHIC] [TIFF OMITTED] T9326.147
[GRAPHIC] [TIFF OMITTED] T9326.148
[GRAPHIC] [TIFF OMITTED] T9326.149
[GRAPHIC] [TIFF OMITTED] T9326.150
[GRAPHIC] [TIFF OMITTED] T9326.151
[GRAPHIC] [TIFF OMITTED] T9326.152
[GRAPHIC] [TIFF OMITTED] T9326.153
[GRAPHIC] [TIFF OMITTED] T9326.154
[GRAPHIC] [TIFF OMITTED] T9326.155
[GRAPHIC] [TIFF OMITTED] T9326.156
[GRAPHIC] [TIFF OMITTED] T9326.157
[GRAPHIC] [TIFF OMITTED] T9326.158
[GRAPHIC] [TIFF OMITTED] T9326.159
[GRAPHIC] [TIFF OMITTED] T9326.160
[GRAPHIC] [TIFF OMITTED] T9326.161
[GRAPHIC] [TIFF OMITTED] T9326.162
[GRAPHIC] [TIFF OMITTED] T9326.163
[GRAPHIC] [TIFF OMITTED] T9326.164
[GRAPHIC] [TIFF OMITTED] T9326.165
[GRAPHIC] [TIFF OMITTED] T9326.166
[GRAPHIC] [TIFF OMITTED] T9326.167
[GRAPHIC] [TIFF OMITTED] T9326.168
[GRAPHIC] [TIFF OMITTED] T9326.169
[GRAPHIC] [TIFF OMITTED] T9326.170
[GRAPHIC] [TIFF OMITTED] T9326.171
[GRAPHIC] [TIFF OMITTED] T9326.172
[GRAPHIC] [TIFF OMITTED] T9326.173
[GRAPHIC] [TIFF OMITTED] T9326.174
[GRAPHIC] [TIFF OMITTED] T9326.175
[GRAPHIC] [TIFF OMITTED] T9326.176
[GRAPHIC] [TIFF OMITTED] T9326.177
[GRAPHIC] [TIFF OMITTED] T9326.178
[GRAPHIC] [TIFF OMITTED] T9326.179
[GRAPHIC] [TIFF OMITTED] T9326.180
[GRAPHIC] [TIFF OMITTED] T9326.181
[GRAPHIC] [TIFF OMITTED] T9326.182
[GRAPHIC] [TIFF OMITTED] T9326.183
[GRAPHIC] [TIFF OMITTED] T9326.184
[GRAPHIC] [TIFF OMITTED] T9326.185
[GRAPHIC] [TIFF OMITTED] T9326.186
[GRAPHIC] [TIFF OMITTED] T9326.187
[GRAPHIC] [TIFF OMITTED] T9326.189
[GRAPHIC] [TIFF OMITTED] T9326.190
[GRAPHIC] [TIFF OMITTED] T9326.191
[GRAPHIC] [TIFF OMITTED] T9326.192
[GRAPHIC] [TIFF OMITTED] T9326.193
[GRAPHIC] [TIFF OMITTED] T9326.194
[GRAPHIC] [TIFF OMITTED] T9326.195
[GRAPHIC] [TIFF OMITTED] T9326.201
[GRAPHIC] [TIFF OMITTED] T9326.202
[GRAPHIC] [TIFF OMITTED] T9326.203
[GRAPHIC] [TIFF OMITTED] T9326.204
[GRAPHIC] [TIFF OMITTED] T9326.205
[GRAPHIC] [TIFF OMITTED] T9326.206
[GRAPHIC] [TIFF OMITTED] T9326.207
[GRAPHIC] [TIFF OMITTED] T9326.208
[GRAPHIC] [TIFF OMITTED] T9326.209
[GRAPHIC] [TIFF OMITTED] T9326.210
[GRAPHIC] [TIFF OMITTED] T9326.211
[GRAPHIC] [TIFF OMITTED] T9326.212
[GRAPHIC] [TIFF OMITTED] T9326.213
[GRAPHIC] [TIFF OMITTED] T9326.214
[GRAPHIC] [TIFF OMITTED] T9326.215
[GRAPHIC] [TIFF OMITTED] T9326.216
[GRAPHIC] [TIFF OMITTED] T9326.325
[GRAPHIC] [TIFF OMITTED] T9326.326
[GRAPHIC] [TIFF OMITTED] T9326.327
[GRAPHIC] [TIFF OMITTED] T9326.328
[GRAPHIC] [TIFF OMITTED] T9326.329
[GRAPHIC] [TIFF OMITTED] T9326.217
[GRAPHIC] [TIFF OMITTED] T9326.218
[GRAPHIC] [TIFF OMITTED] T9326.219
[GRAPHIC] [TIFF OMITTED] T9326.220
[GRAPHIC] [TIFF OMITTED] T9326.221
[GRAPHIC] [TIFF OMITTED] T9326.222
[GRAPHIC] [TIFF OMITTED] T9326.223
[GRAPHIC] [TIFF OMITTED] T9326.224
[GRAPHIC] [TIFF OMITTED] T9326.225
[GRAPHIC] [TIFF OMITTED] T9326.226
[GRAPHIC] [TIFF OMITTED] T9326.227
[GRAPHIC] [TIFF OMITTED] T9326.228
[GRAPHIC] [TIFF OMITTED] T9326.229
[GRAPHIC] [TIFF OMITTED] T9326.230
[GRAPHIC] [TIFF OMITTED] T9326.231
[GRAPHIC] [TIFF OMITTED] T9326.232
[GRAPHIC] [TIFF OMITTED] T9326.233
[GRAPHIC] [TIFF OMITTED] T9326.234
[GRAPHIC] [TIFF OMITTED] T9326.235
[GRAPHIC] [TIFF OMITTED] T9326.236
[GRAPHIC] [TIFF OMITTED] T9326.237
[GRAPHIC] [TIFF OMITTED] T9326.238
[GRAPHIC] [TIFF OMITTED] T9326.239
[GRAPHIC] [TIFF OMITTED] T9326.240
[GRAPHIC] [TIFF OMITTED] T9326.244
[GRAPHIC] [TIFF OMITTED] T9326.245
[GRAPHIC] [TIFF OMITTED] T9326.246
[GRAPHIC] [TIFF OMITTED] T9326.247
[GRAPHIC] [TIFF OMITTED] T9326.241
[GRAPHIC] [TIFF OMITTED] T9326.242
[GRAPHIC] [TIFF OMITTED] T9326.243
[GRAPHIC] [TIFF OMITTED] T9326.252
[GRAPHIC] [TIFF OMITTED] T9326.253
[GRAPHIC] [TIFF OMITTED] T9326.254
[GRAPHIC] [TIFF OMITTED] T9326.255
[GRAPHIC] [TIFF OMITTED] T9326.256
[GRAPHIC] [TIFF OMITTED] T9326.257
[GRAPHIC] [TIFF OMITTED] T9326.258
[GRAPHIC] [TIFF OMITTED] T9326.248
[GRAPHIC] [TIFF OMITTED] T9326.249
[GRAPHIC] [TIFF OMITTED] T9326.250
[GRAPHIC] [TIFF OMITTED] T9326.251
[GRAPHIC] [TIFF OMITTED] T9326.330
[GRAPHIC] [TIFF OMITTED] T9326.331
[GRAPHIC] [TIFF OMITTED] T9326.259
[GRAPHIC] [TIFF OMITTED] T9326.260
[GRAPHIC] [TIFF OMITTED] T9326.261
[GRAPHIC] [TIFF OMITTED] T9326.262
[GRAPHIC] [TIFF OMITTED] T9326.263
[GRAPHIC] [TIFF OMITTED] T9326.264
[GRAPHIC] [TIFF OMITTED] T9326.265
[GRAPHIC] [TIFF OMITTED] T9326.266
[GRAPHIC] [TIFF OMITTED] T9326.267
[GRAPHIC] [TIFF OMITTED] T9326.268
[GRAPHIC] [TIFF OMITTED] T9326.269
[GRAPHIC] [TIFF OMITTED] T9326.270
[GRAPHIC] [TIFF OMITTED] T9326.271
[GRAPHIC] [TIFF OMITTED] T9326.272
[GRAPHIC] [TIFF OMITTED] T9326.273
[GRAPHIC] [TIFF OMITTED] T9326.274
[GRAPHIC] [TIFF OMITTED] T9326.275
[GRAPHIC] [TIFF OMITTED] T9326.276
[GRAPHIC] [TIFF OMITTED] T9326.277
[GRAPHIC] [TIFF OMITTED] T9326.278
[GRAPHIC] [TIFF OMITTED] T9326.279
[GRAPHIC] [TIFF OMITTED] T9326.280
[GRAPHIC] [TIFF OMITTED] T9326.281
[GRAPHIC] [TIFF OMITTED] T9326.282
[GRAPHIC] [TIFF OMITTED] T9326.283
[GRAPHIC] [TIFF OMITTED] T9326.284
[GRAPHIC] [TIFF OMITTED] T9326.285
[GRAPHIC] [TIFF OMITTED] T9326.332
[GRAPHIC] [TIFF OMITTED] T9326.333
[GRAPHIC] [TIFF OMITTED] T9326.334
[GRAPHIC] [TIFF OMITTED] T9326.335
[GRAPHIC] [TIFF OMITTED] T9326.336
[GRAPHIC] [TIFF OMITTED] T9326.337
[GRAPHIC] [TIFF OMITTED] T9326.338
[GRAPHIC] [TIFF OMITTED] T9326.339
[GRAPHIC] [TIFF OMITTED] T9326.340
[GRAPHIC] [TIFF OMITTED] T9326.286
[GRAPHIC] [TIFF OMITTED] T9326.287
[GRAPHIC] [TIFF OMITTED] T9326.288
[GRAPHIC] [TIFF OMITTED] T9326.289
[GRAPHIC] [TIFF OMITTED] T9326.290
[GRAPHIC] [TIFF OMITTED] T9326.291
[GRAPHIC] [TIFF OMITTED] T9326.292
[GRAPHIC] [TIFF OMITTED] T9326.293
[GRAPHIC] [TIFF OMITTED] T9326.294
[GRAPHIC] [TIFF OMITTED] T9326.295
[GRAPHIC] [TIFF OMITTED] T9326.296
[GRAPHIC] [TIFF OMITTED] T9326.297
[GRAPHIC] [TIFF OMITTED] T9326.298
[GRAPHIC] [TIFF OMITTED] T9326.299
[GRAPHIC] [TIFF OMITTED] T9326.300
[GRAPHIC] [TIFF OMITTED] T9326.301
[GRAPHIC] [TIFF OMITTED] T9326.323
[GRAPHIC] [TIFF OMITTED] T9326.302
[GRAPHIC] [TIFF OMITTED] T9326.303
[GRAPHIC] [TIFF OMITTED] T9326.304
[GRAPHIC] [TIFF OMITTED] T9326.305
[GRAPHIC] [TIFF OMITTED] T9326.306
[GRAPHIC] [TIFF OMITTED] T9326.307
[GRAPHIC] [TIFF OMITTED] T9326.308
[GRAPHIC] [TIFF OMITTED] T9326.309
[GRAPHIC] [TIFF OMITTED] T9326.310
[GRAPHIC] [TIFF OMITTED] T9326.341
[GRAPHIC] [TIFF OMITTED] T9326.342
[GRAPHIC] [TIFF OMITTED] T9326.343
[GRAPHIC] [TIFF OMITTED] T9326.344
[GRAPHIC] [TIFF OMITTED] T9326.345
[GRAPHIC] [TIFF OMITTED] T9326.346
[GRAPHIC] [TIFF OMITTED] T9326.347
[GRAPHIC] [TIFF OMITTED] T9326.348
[GRAPHIC] [TIFF OMITTED] T9326.349
[GRAPHIC] [TIFF OMITTED] T9326.311
[GRAPHIC] [TIFF OMITTED] T9326.312
[GRAPHIC] [TIFF OMITTED] T9326.313
[GRAPHIC] [TIFF OMITTED] T9326.324
[GRAPHIC] [TIFF OMITTED] T9326.314
[GRAPHIC] [TIFF OMITTED] T9326.315
[GRAPHIC] [TIFF OMITTED] T9326.316
[GRAPHIC] [TIFF OMITTED] T9326.317
[GRAPHIC] [TIFF OMITTED] T9326.318
[GRAPHIC] [TIFF OMITTED] T9326.319
[GRAPHIC] [TIFF OMITTED] T9326.320
[GRAPHIC] [TIFF OMITTED] T9326.321
[GRAPHIC] [TIFF OMITTED] T9326.322