[Congressional Record Volume 149, Number 171 (Saturday, November 22, 2003)]
[Senate]
[Pages S15514-S15519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ASBESTOS LITIGATION CRISIS
Mr. FRIST. Mr. President, before entering into the debate on
Medicare, I will comment on an issue that the Democratic leader and I
have worked on very aggressively over the last several months, and it
relates to the current asbestos litigation crisis. The current asbestos
litigation system is broken, and it is clear that we in this Congress
should fix it. We have an obligation, a real responsibility, to fix it.
I would like to lay out what our plans are to resolve this asbestos
litigation crisis early next year. We have made very good progress
toward enacting Chairman Hatch's FAIR Act, which is the Fairness in
Asbestos Injury Resolution Act. I have made it a personal priority that
the Senate participate aggressively in resolving this challenging
issue.
Why do we call what is occurring today a crisis? First, the events
that are occurring are overwhelming. The torrent of asbestos litigation
has wreaked havoc on asbestos victims, on American jobs, and this havoc
has extended into our economy.
Over 600,000 claims have been filed and those 600,000 claims have
already cost about $54 billion in settlements, judgments, and
litigation costs. Yet even after 600,000 claims and $54 billion, the
current asbestos tort system has become nothing more than a litigation
lottery at this point in time.
Why do I say that? First, a few victims receive adequate compensation
but far more suffer long delays for what ends up being unpredictable
rewards--also, if one looks at the data, inequitable awards. Some
deserving victims do not receive anything at all. It is a system that
there is only one real consistent winner, and that is the plaintiffs'
trial lawyers.
I say that because of all of these settlements. They are taking as
much as half of every dollar that is awarded to the victims.
If you look to the future, it is a problem that only gets worse. It
is accelerating in the negative aspect. But if you look to the future,
it gets even worse.
Future funds for asbestos victims are threatened because company
after company after company is going bankrupt. About 70 companies have
gone bankrupt, and about a third of those have gone bankrupt in the
last 2\1/2\ to 3 years. The pace of bankruptcies of very large
companies with thousands and thousands of employees is accelerating.
Again, this is an issue for us to address. That is why I want to set
a schedule for that in a few minutes.
Companies such as Johns Mansville, bankrupt; Owens Corning, bankrupt;
U.S. Gypsum, bankrupt; and, W.R.
[[Page S15515]]
Grace, bankrupt: these are large reputable companies that have gone
bankrupt because of this crisis with the associated job losses.
Now the hunt is on to get new targets and to go out and sue. People
say this is easy money, and the easy way is to go out in terms of
bringing a lawsuit and filing a lawsuit. Thus, the hunt is on for new
targets to sue. What is unfair and inequitable is that many of these
lawsuits have no connection at all to asbestos. If you really look at
the connection between asbestos and the victims, it is just not there.
Victims aren't the only ones who suffer but also the workers of these
companies that are going bankrupt suffer. Asbestos-related bankruptcies
spell doom for these workers' jobs; thus, their families, and, of
course, incomes and retirement savings. Already, these lawsuits have
cost more than 60,000 Americans their jobs. For those who lose their
jobs, the average personal loss in wages over a career is as much as
$50,000, and that doesn't include the loss of retirement wages or the
loss of health benefits. Workers at asbestos-related bankrupt firms
with 401(k) plans lost about 25 percent of the value of their 401(k)
accounts because of this.
The economic reality of this crisis is not lost on my colleagues in
this body. They understand that under the status quo the national
asbestos crisis could cause our economy more than the savings and loan
crisis of the 1980s and 1990s, and more than the Enron debacle or the
WorldCom debacle. Member after Member from both sides of the aisle has
voiced their agreement with the assessment of the Supreme Court that
the system is broken and the Congress should fix it.
There is only one question: what can we do? Can we create a system
better than the status quo? The answer is yes.
The FAIR Act--the Fairness in Asbestos Injury Resolution Act--has
already made significant headway, and we look forward to progress
today. Under the leadership of Chairman Hatch, it was passed by the
Senate Judiciary Committee last July, and there have been ongoing
discussions and negotiations since then.
I commend Chairman Hatch and the ranking minority member, Senator
Leahy, for their hard work on the bill.
I also want to recognize Senator Specter for his hard work in
conjunction with Judge Becker.
I also want to note that my Democratic colleagues, organized labor,
and other stakeholders have been deeply involved throughout the
process. Led by Senator Hatch, bipartisan breakthroughs have been made
on issues that previously have proved impossible to address, including
such issues as--and there are many of them--the linchpin issue of the
medical criteria that had proven historically to be so difficult and
controversial.
In addition, agreements among stakeholders following the committee
markup have resulted in even more modifications. The resulting bill
creates a system that, while not perfect, is far superior to the
current tort system for resolving asbestos issues.
I became deeply involved in the post-Judiciary Committee negotiating
process, working in concert with Senator Daschle, as well as Chairman
Hatch and Senators Leahy, Specter, Dodd, and Carper, and some others on
both sides of the aisle. We have made good progress. I know during the
debate over this legislation all of the relevant issues have been
unearthed. They have been exposed to public debate, and all parties
have had an opportunity to get involved to contribute their points of
view.
What emerged under S. 1125 and the current negotiations is a
streamlined national trust fund for paying asbestos claimants quickly,
paying them fairly, and paying them efficiently. The new system
provides more certainty and efficiency for claimants, and more
certainty and predictability for businesses.
Passing this bill will create enormous economic benefits. I say that
because the certainty that flows from the bill will stimulate capital
investment. It will also preserve existing jobs and create new jobs as
well.
I had hoped that we would bring this bill to the floor before the end
of this session, but we were unable to achieve that goal. Chairman
Hatch and Senator Leahy worked hard to resolve many difficult issues at
the committee level. Senator Daschle and I, along with our staff, have
continued to work with stakeholders to put more issues behind us over
the past several months.
While there are several issues that remain outstanding, the core
principles of an effective bill are now clear.
What are they?
First, the bill must create a trust fund that is capable of awarding
adequate compensation to victims while providing more financial
certainty and finality to the business community. The new funding
proposal that I put on the table would generate payments that would
exceed by $10 billion the expected funds which victims would receive if
the current flawed tort system is left intact.
Second, the legislation must establish a schedule of claims values
that will ensure victims consistent and equitable awards. We cannot
tolerate the current system where payments can depend on where a
plaintiff lives or which is capable of awarding only pennies for every
dollar promised.
I am also prepared to consider further modest increases in claims
values as requested by the Democrats and as requested by organized
labor, provided that any new increase is targeted to the most severe
disease categories where the relationship to asbestos exposure is most
certain.
We must make sure, however, that lung cancer claims not caused by
asbestos are not allowed to overwhelm the fund.
Third, the fund must be a nonadversarial program that ensures prompt
payment of awards to eligible claimants while minimizing transaction
costs, including attorney's fees. Care must be taken to ensure that the
fund is established on an expedited basis, and adequate moneys are
available to pay exigent claims from the outset.
Fourth, we must preserve the bipartisan medical criteria included in
S. 1125 as reported by the Judiciary Committee. Only by ensuring the
use of real diagnoses of asbestos-related illnesses can the fund avoid
the pitfalls that plague the current mass tort system.
Fifth, and finally, asbestos victims should not bear the risk of
inadequate funding or incorrect predictions about future claims, as is
the case under the current tort system.
The legislation should make clear that if the fund cannot guarantee
that victims will receive all of their claims, a program review is
triggered, and if not corrected the fund should end and claims should
revert to the tort system. To work, however, such a reversion would
have to be to Federal court and should contain certain additional
protections to ensure the current litigation morass is not recreated.
Such an approach reduces, if not eliminates, the need to worry about
which claims projections are correct.
Clearly, a more thorough discussion of these observations,
recommendations, and outstanding issues is warranted.
I ask unanimous consent that a document entitled ``Moving Forward in
Asbestos Injury Resolution Act, S. 1125'' be printed in the Record at
the conclusion of my remarks.
The PRESIDENT pro tempore. Without objection, it is so ordered.
(See exhibit I)
Mr. FRIST. Mr. President, this allows a more complete discussion of
the principles and observations I have made thus far. I do hope people
take a look at that document.
As for the future, if we intend to make good on our collective hope
to pass legislation, at some point the ongoing discussions and
negotiations must cease and a bill must be brought to the floor.
Victims are still going uncompensated today, companies are still going
bankrupt today, and the economy is still unnecessarily burdened. We
must act.
The minority leader as well as Senator Leahy and other Democratic
Members have made clear to me their interest in working toward
consensus legislation. It is clear we still need a little more time for
discussion. Consequently, we will not force a vote on the FAIR Act this
session. Instead, I will give stakeholders more time to negotiate a
compromise. There will, however, be a limit to these discussions
because we must act. Thus, I will commence floor action on an asbestos
bill by the end of March 2004. Again, I will commence floor action on
an asbestos bill by the end of March of 2004.
[[Page S15516]]
There is no perfect solution to the current asbestos litigation
crisis, but it is clear that maintaining the status quo is
unacceptable. We have a responsibility to act, and we will act in this
body. We must not let this historic opportunity to enact fair and
meaningful reform pass in order to pursue a perfect solution that is
unachievable. The time has come for the Senate to fashion the right
solution to one of the most pressing issues facing us, facing our
economy and this Nation today.
Exhibit I
Moving Forward on the Fairness in Asbestos Injury Resolution Act, S.
1125--Statement of Senator Frist
To bring an end to the current asbestos litigation crisis,
Congress must pass legislation creating a national no-fault
asbestos trust fund (``Fund'') that ensures adequate
compensation to victims, while providing financial certainty
to the business community. This kind of program would provide
more direct compensation, more quickly to victims than the
current system can deliver. Moreover, it would provide that
compensation without the bankruptcies or the lost workers'
jobs, incomes, and retirement savings that asbestos personal
injury litigation produces. It represents, therefore, a
tremendous achievement in the creation of a solution to a
problem whose future economic consequences are enormous--in
the magnitude of more than $100 billion if the claims stay in
the tort system.
This past July, under the leadership of Chairman Hatch, the
Senate Judiciary Committee approved S. 1125, the Fairness in
Asbestos Injury Resolution Act (``FAIR Act''), which
establishes the framework for reaching a bipartisan solution.
To reach a consensus, we must build upon that structure,
making improvements where possible but not jeopardizing the
two most fundamental elements of the legislation--adequate,
timely, and equitable compensation for claimants and
financial predictability for the business community.
i. ensuring adequate compensation for victims
According to the two actuarial studies on the magnitude of
the problem, one by Tillinghast-Towers Perrin and the other
by Milliman USA, ultimate loss and expenses under asbestos
personal injury litigation are projected to reach $200 to
$265 billion. With $70 billion already spent, total estimated
future costs thus range from $130 to $195 billion. Victims,
however, can expect to receive barely half that amount in
actual compensation.
According to RAND's analysis of asbestos compensation,
transaction costs under the current system--plaintiffs'
attorney fees, defense costs, and expenses--consume more than
half of the money that goes into the asbestos litigation
system. In other words, only about 40 cents on every dollar
spent in the asbestos tort system actually reaches victims.
Thus, while today's system has a future price tag of $130 to
$195 billion, victim compensation is estimated at only $61 to
$92 billion of that total.
If adopted, the Act will rein in those runaway transaction
costs and provide quick, certain, and fair payment for
victims. In fact, my funding proposal, which has been agreed
to by the defendant companies and insurers, will actually
provide asbestos victims at least $10 billion more than they
would receive if the current litigation crisis is left
intact.
The primary source of funding under the Act is derived from
mandatory contributions: the Act (as reported) required $104
billion in total mandatory contributions from defendants and
insurers. In reaching that total, companies and insurers were
to be assessed equally and according to specific statutory
provisions. Meanwhile, confirmed bankruptcy trust
contributions are estimated to provide an additional $4
billion, bringing total mandatory funding under the Act (as
reported) to $108 billion.
That funding proposal represented a very fair amount to
solve the problem, and provided victims more in direct
compensation than they would receive under the current
system. The Committee, however, went well beyond this
benchmark during markup. S. 1125 (as reported) included
significant additional funding provisions. An amendment
offered by Senators Kohl and Feinstein authorized the
Administrator to compel companies and insurers to pay
additional contingent contributions of up to $31 billion, and
allowed the Administrator to request back end contributions
that could have reached a combined total of $48 billion.
The net effect of these changes to the Act was dramatic. S.
1125 (as reported) could have required businesses and
insurers to provide compensation at up to two times the most
credible estimates of total future plaintiffs' recoveries
under the tort system. As a result, insurers almost uniformly
withdrew their support for the Act, calling it ``dangerously
unaffordable'' and ``potentially worse than the existing
system.''
In order to get the legislation back on track, I initiated
a mediation process between insurers and defendant companies.
We were able to reach agreement on such major issues as
overall funding, allocation of funding obligations, and
insurance policy erosion, and gain renewed insurer support
for the Act. The agreed-upon revisions not only garnered the
support of the business community and insurers for the Act,
but would also ensure greater Fund liquidity.
Under my funding proposal, insurers would make nominal
mandatory contributions of $46.025 billion on an accelerated
payment schedule. Meanwhile, defendants would pay $57.500
billion in total mandatory contributions and, if necessary,
defendants would provide $10 billion in additional
contingency funding. Most importantly, with confirmed
bankruptcy trust assets and interest earned, my proposal
would provide at least $10 billion more than the current tort
system. It will also preserve one of the great breakthroughs
that made widespread business community support for the Act
possible--the landmark agreement on a fair and reasonable
formula for sharing the funding obligation among defendants.
Chairman Hatch is to be commended for shepherding the larger
business community to his unprecedented agreement.
In addition, my proposal would better address the Fund's
liquidity needs than the Act (as reported). The greatest
stress on the Fund is expected to be in the early years when
it is required to pay pending as well as current claims. In
order to address the resulting liquidity demands, the Act (as
reported) allows the Administrator to borrow against the Fund
in an amount equal to that of the following calendar year's
anticipated contributions. My proposal would give the
Administrator authority to obtain billions of dollars of
additional funds, if needed, by expanding the Administrator's
borrowing authority. All of the Fund's repayment obligations
would be fully collateralized by the defendants' and
insurers' mandatory contributions, ensuring that federal
monies are not put at risk.
Although there are still some funding issues to be worked
out, the progress we have made to date is the result of
unprecedented cooperation between industry and insurers to
find an acceptable solution to the asbestos litigation
crisis. We are confident that we can bridge the few remaining
differences in the time frame provided.
II. award values
A further step on the path to providing fair compensation
for asbestos victims is the establishment of a schedule of
claim values that will result in consistent awards. The
history of awards under the current tort system is one
plagued by uncertainty and unfairness to asbestos victims.
Many plaintiffs receive little or nothing, or die before
their cases can be heard in court. Of those who do receive
awards, the amount of compensation typically depends more on
where and when the claims are filed than on the nature of the
plaintiffs's illness. In one 1999 Mississippi case involving
4,000 plaintiffs, allocation of a $160 million settlement was
based on how far plaintiffs lived from the courthouse in
Mississippi. The Mississippi residents each received
$263,000. Similarly situated plaintiffs from Ohio,
Pennsylvania, and Indiana received only $14,000 each. (See
David Cosey, et al. v. E.D. Bullard, et al).
As introduced, S. 1125 contained claim values that were
among the highest of any federal compensation program: For
example, the award value for claimants compensated under
disease level X (mesothelioma) exceeded by three times the
maximum death benefits generally available under the National
Childhood Vaccine Injury Act, one of the most generous of
comparable existing federal programs. Claimant compensation
under the FAIR Act's other most serious disease levels was
also very generous compared with existing federal programs.
Moreover, although the Act's claim values were based loosely
on those awarded in existing bankruptcy trusts, it ultimately
paid more in real dollars. The Manville Trust, for example,
has a scheduled value of $350,000 for mesothelioma claimants,
but is only able to pay 5 cents on the dollar, resulting in
an award of $17,500. Under S. 1125 (as introduced) such a
claimant would have received $750,000--about 43 times the
amount actually paid by the Manville Trust. Nonetheless, many
Democrats indicated that the values under the Act should be
even more generous to claimants.
During Committee consideration of S. 1125, a bipartisan
amendment offered by Senators Graham and Feinstein
significantly increased the claim values. This amendment was
approved by a 14-3 vote of the Judiciary Committee. The
Committee also considered and rejected an amendment offered
by Senators Leahy and Kennedy to provide even higher claim
values. That amendment misallocated funds too heavily toward
those with illnesses less clearly linked to asbestos
exposure. In addition, the Committee adopted an amendment to
index claim awaard values to inflation, further providing
billions of dollars in additional payments. Moreover, all
claimants meeting Level I requirements--potentially over a
million exposed workers--would be eligible for medical
monitoring reimbursement and would have their statute of
limitations tolled so that, if they do get sick, they would
have recourse to all the benefits of the Fund. Since the
Committee's consideration, Democrats and organized labor have
suggested that the medical monitoring should include the out-
of-pocket cost of the physician's examination. I believe this
is reasonable and should be in the final bill.
With the changes reported out of Committee, the scheduled
values under the FAIR Act were even more generous than
before. Continuing an example previously mentioned, S. 1125
(as reported) set the Level X (mesothelioma) claim value at
an amount that was not three times, but four times
[[Page S15517]]
higher than the death benefits generally available under the
National Childhood Vaccine Injury Act--a difference of
$750,000. Similarly, in the bill as reported, mesothelioma
claimants would have received not 43 times, but 57 times the
amount at which the Manville Trust actually compensates
similarly situated victims.
Finally, as introduced, S. 1125 granted the Administrator
broad authority with respect to the timing of award payments.
Organized labor expressed concerns that payments would drag
out over a long period of time, and argued that claimants
should receive payments over three to four years. The
Judiciary Committee addressed this concern by providing that
payments should be disbursed over a period of three years,
and in no event more than four years from the date of final
adjudication of the claim. Organized labor has continued to
express concern, however, that there is no standard to guide
how much of their awards claimants should receive each year.
Again, this concern should be more adequately addressed, if
possible. To address organized labor's concerns, negotiators
have accepted a presumption for payment of awards over three
years in the following percentages: 40 percent in the first
year, and 30 percent in each of the next two years. However,
if necessary to protect the fund from short-term liquidity
problems, the Administrator has the authority to make
payments in equal 25 percent installments over four years.
Notwithstanding the Committee's action to substantially
increase claim values, my Democratic colleagues and organized
labor continue to believe further increases are warranted.
Although I believe the values in S. 1125 are more than fair,
even generous, in a no-fault system, and will bring more to
claimants in the aggregate than the current system, I am
prepared to consider further modest increases in claims
awards in an effort to forge a bipartisan consensus, provided
they are targeted to categories most uniquely caused by
asbestos exposure (versus other possible causes). Consistent
with the express philosophy of S. 1125, the greatest
increases must be targeted to the most severe disease
categories in which the causal relationship to asbestos
exposure is most certain.
A remaining challenge, and a prerequisite to any additional
increase in claim values, is to address the concern that the
criteria for eligible claims under Level VII are sufficiently
broad that they could potentially sweep in claimants whose
lung cancer is not caused by asbestos but by alternative
causes, such as smoking. The American Cancer Society
estimates that in 2003 alone there will be over 170,000 new
lung cancer cases from all possible causes--or 30,000 more
than the Fund's highest projected total of eligible claims
over 50 years and over 110,000 more than the highest
projections made by Dr. Mark Peterson (who testified before
the Senate Judiciary Committee during the debate over the
FAIR Act) for the same period. Exacerbating that risk is
claims experience demonstrating that well over 90 percent of
Manville Trust lung cancer claimants are current or former
smokers. There is a substantial risk that, in moving to a no-
fault system and eliminating the need to establish asbestos
as the cause of the disease, compensating a large number of
smoking-caused lung cancer claims could jeopardize the
solvency of the Fund. If the current exposure criteria do not
adequately narrow eligibility to those lung cancer claims
where asbestos exposure significantly increases the risk over
smoking, the Fund could potentially collapse.
Accordingly, a provision should be added to the legislation
to make sure that lung cancer claims not related to asbestos
exposure are not allowed to overwhelm the Fund's ability to
compensate claimants who have disease caused by asbestos. I
will continue to work with my Republican and Democratic
colleagues to craft a program review which would authorize
the Administrator (in consultation with Congress) to protect
the fund if the total number of Level VII claims
substantially exceeds projections.
iii. administration and startup
In addition to ensuring the availability of adequate funds
to pay fair and consistent awards to asbestos victims,
another critical element of any solution is to create a
system that ensures prompt and efficient payment of awards to
eligible claimants, while minimizing transaction costs.
Again, this is an area in which we have made great headway
towards resolution, but there are still some aspects to be
worked out.
A number of parties have expressed concerns with the system
for filing, evaluating, and reviewing claims established by
the FAIR Act. Under S. 1125 as reported from Committee,
claims would be filed with, and reviewed by, special masters
operating under the guidance of the U.S. Court of Federal
Claims. If a claimant were not satisfied with his or her
initial award determination, the claimant could appeal to a
separate panel of three special asbestos masters. From there,
a claimant could appeal an adverse decision to an en banc
panel of three judges of the Court of Federal Claims, sitting
as the United States Court of Asbestos Claims. Appeals from
the Court of Asbestos Claims would be heard by the U.S. Court
of Appeals for the Federal Circuit. A separate Administrator
would manage the Fund and pay final claims awards. Because
the system was court based, there was no provision
authorizing the promulgating of substantive regulations,
which could help guide special asbestos masters through the
establishment of generally applicable policies for claims
evaluations and eligibility determinations. Instead, these
issues have necessarily been addressed on an ad hoc basis in
the context of individual claims determinations.
This court-based system was heavily criticized by Democrats
and by organized labor as too complex and adversarial from
the perspective of claimants. Labor in particular has
insisted instead on an administrative review process, which
it believes could resolve more claims in less time using a
no-fault, non-adversarial system. With an administrative
process, substantive regulations could be utilized to
establish generally applicable presumptions and to help guide
those evaluating claims to ensure eligibility criteria are
fairly and consistently applied. Such a process could also be
more ``user friendly'' and would allow claimants themselves,
if they so desired, to navigate the process for filing claims
without the need to retain counsel. While all parties
recognize that legal representation may be beneficial or even
necessary at some level of claims review, organized labor has
consistently expressed the desire for an administrative
system that minimizes the need for attorneys in order to
maximize the recovery of a award values by claimants.
I recognize the benefits of such a system. I believe we can
find common ground on developing a non-adversarial system
that can effectively and quickly deliver benefits to
claimants. I urge the parties to continue working towards a
consensus on this issue. Such a system should significantly
reduce transaction costs. We should therefore include a
provision limiting plaintiffs' attorney fees to ensure that
actual awards to victims are maximized. If done correctly, a
new administrative process can also address another problem
with the bill as reported by the Committee, by ensuring that
the program is operating and processing claims in the minimum
amount of time following passage of the FAIR Act.
On a related note, S. 1125, as introduced, provided that
the new federal trust fund would be the exclusive remedy for
all asbestos claims under state and federal law, and that all
other remedies were preempted and barred as of the date of
enactment. Exclusivity and finality are key elements of the
necessary reform. The current tort system has failed victims,
and it has done so largely because filing claims on behalf of
the unimpaired has become too profitable a business for too
many lawyers. Any legislation we pass must end the massive
misallocation of limited funds to unimpaired claimants and
their lawyers at the expense of those who are ill from
asbestos-related disease. We cannot continue to tolerate the
expenditure of limited funds into this broken system, a
system which spawns inventory-style settlement agreements
entered into by attorneys on behalf of claimants who have not
even been identified much less bound by the agreement. Nor
can we leave insurers and businesses exposed to collusive
default judgments or other efforts to evade the Act's
exclusivity provisions. Similarly, the bill should plainly
foreclose all asbestos-related litigation by claimants
against insurers and businesses, including direct actions. In
short, given the consensus that the tort system is terribly
flawed, we cannot allow the current abuses to persist.
Proposals that would have the effect of continuing the status
quo--and draining resources that would otherwise be available
under the Fund for the truly impaired--are unacceptable.
During the markup, Democrats, organized labor, and the
trial bar expressed concerns that asbestos victims could be
faced with a period of time during program startup when they
would have no remedy for their injuries--all tort suits would
be preempted but the Fund would not yet be processing claims.
In response to this concern, the Committee adopted an
amendment offered by Senator Feinstein, which provided that
the preemption and bar on asbestos claims would not be
effective until the Administrator determined that the Fund
was ``fully operational and processing claims.'' Until that
time, all remedies would remain available under state law,
and defendants' and insurers' contributions to the Fund would
be offset by ``the amount of any claims made payable'' during
the startup period.
The Feinstein amendment was intended to address the
legitimate concern that asbestos victims could face a
potentially lengthy period of time during which they would be
without a remedy. Unfortunately, the amendment would leave
the current tort system, with all of its inherent problems,
intact for too long and would allow some parties to
manipulate this interim period for their personal benefit. No
one wants to see the expectations of asbestos claimants
undermined by the kind of legal chicanery that created the
current crisis. If not fixed, the amendment could cause the
very problem the bill is attempting to fix--even more
bankruptcies and the continued diversion of resources away
from legitimate victims.
Moreover, in practice, the Amendment would effectively doom
the prospects of the Fund. As was the experience in states
that have recently adopted tort reform laws, such as medical
malpractice limits, the pending demise of a segment of the
tort system inevitably leads to a flood of claims before the
courthouse door is effectively closed. Under the Feinstein
amendment, awards to plaintiffs, but not defense costs, could
be offset against future Fund contributions. As a result,
settling claims would be cost free to defendants and
insurers, while defending
[[Page S15518]]
claims in the tort system would continue to be prohibitively
expensive. The certain result of this provision would be a
very strong incentive, perhaps even a duty for publicly
traded companies, to immediately settle all pending claims at
potentially elevated values in order to avoid the expense of
defending even the most illegitimate claims. Because all
these settlement costs would be offset against Fund
contributions, the financial effect on funding would be
disastrous. Therefore, it is clear that the amendment is
not the right solution to a very real problem.
To ensure that victims are not left without a remedy for an
unjust period of time, I believe we need an alternative to
the Feinstein amendment that will address the concerns raised
by (1) authorizing the creation of an administrative program
on an expedited basis that will be capable of quickly
processing the most serious claims, and (2) enhancing the
funding provisions to ensure adequate funds are available
from the outset to pay these exigent claims on an expedited
basis. The bill as reported by the Committee goes a long way
toward ensuring that the Fund receives the mandated
contributions within a reasonable time frame. Since that
time, there has been a number of innovative suggestions
relating to the funding and administrative provisions that
would work in concert to address the concerns raised, without
the dire consequences of the Feinstein amendment. I am
confident we can resolve this issue, so that claimants with
the most serious injuries are not left without a remedy, and
I intend to continue working in conjunction with my
Democratic colleagues toward a solution.
iv. eligibility and medical criteria
Once the necessary funding is assured, and an
administrative process is in place to manage claims fairly
and efficiently, the next essential element is to make sure
that available resources are directed to the most deserving
claimants. In contrast to the existing tort system, in which
many if not most asbestos claimants are unimpaired, the FAIR
Act will ensure that awards are directed principally to those
who have suffered the most from exposure to asbestos. This is
assured through the consensus eligibility criteria in the
bill, which set forth the applicable exposure, latency,
medical, and diagnostic requirements for receiving
compensation from the Fund.
The basic premise of the FAIR Act is to ensure that true
victims of asbestos disease receive fair and consistent
awards. To be eligible for compensation from the Fund,
claimants must satisfy the eligibility criteria for various
disease categories. The FAIR Act also provides a mechanism
for consideration of exceptional cases, where claimants can
clearly establish the presence of an asbestos-related disease
but may not satisfy the otherwise applicable medical
criteria. Exceptional cases, as well as those related to
``take home'' exposures where asbestos was brought into the
home by an occupationally exposed person and those related to
the high levels of environmental exposures of residents and
workers in Libby, Montana, are eligible for review by a
Medical Advisory Committee, made up objective, experienced
physicians, to determine whether the claimant is eligible for
compensation. Because the medical conditions of Libby
residents are currently being studied by various agencies,
claims filed by Libby claimants are automatically designated
as exceptional medical claims and referred to the Medical
Advisory Committee.
The consensus criteria reflected in S. 1125 provide a solid
foundation to ensure that eligibility decisions are based on
sound medical practices and real diagnoses by the claimants'
physicians. As a doctor, I cannot emphasize enough the
importance of a diagnosis by the claimant's physician. The
success of the program hinges on ensuring that the Fund
compensates only those with conditions caused by asbestos
exposure and not other causes. Only by ensuring the use of
real diagnoses of asbestos-related illnesses can the Fund
avoid the pitfalls that plague the current mass tort system.
The eligibility criteria reflected in S. 1125, as reported,
are the result of an unprecedented agreement among the
various stakeholders working to find a solution to the
current asbestos litigation crisis. I commend Chairman Hatch
and Ranking Member Leahy for an achievement few thought
possible. I appreciate how complex and contentious an issue
the medical criteria presented. The approval of these
criteria by a unanimous vote in the Judiciary Committee
markup created the opportunity we have for an historic
achievement.
v. protecting victims from risk
From the very beginning, one of the key goals of S. 1125
has been to ensure that compensation is directed at those
legitimately ill from asbestos exposure and is awarded on a
timely basis. The bill accomplishes this fundamental change
from the status quo by moving from a system that compensates
claims of questionable validity to one based on sound medical
evidence and real doctors' diagnoses.
Nonetheless, legitimate concerns remain about the accuracy
of estimates of the number of future claimants that will be
eligible for compensation under the Act. Obviously, prior
attempts to forecast asbestos claimants have proven
inaccurate, leaving the very people who most deserve
compensation with no real recourse. For example, claims to
the Manville Trust have exceeded initial projections, and the
Trust has been forced to reduce claim values to the point
where today the Trust pays claimants as little as five cents
on the dollar. Congress cannot and will not recreate the
Manville experience.
Various experts have developed estimates about future
claims, and the Congressional Budget Office has offered its
own predictions based upon its review of the available
evidence. The truth, however, is that there is no guarantee
that any of these estimates is accurate. The legislation
creates new eligibility criteria and establishes a new system
for processing claims, one designed to weed out unimpaired
claimants and those who suffer from diseases not caused by
exposure to asbestos. Since there is no comparable system
operating today, what is happening with the existing private
asbestos trusts can at best offer only some general
indication of what may happen over the 50-year life of the
proposed Fund. Obviously, this reality makes it even more
important for Congress to make sure that if we establish a
national asbestos trust fund, that we also make sure that
asbestos victims have someplace to go to seek compensation if
the Fund cannot handle all future claimants.
The FAIR Act, as reported by the Judiciary Committee,
includes an amendment offered by Senator Biden that requires
the Fund to terminate and claims to revert to the tort system
if funding proves inadequate. Specifically, the Administrator
would be required to certify annually that 95 percent or more
of the eligible claimants that year had received 95 percent
of their compensation under the FAIR Act. If not, and the
situation could not be remedied within 90 days, the program
would sunset immediately. Although this language clearly
shifts the risk away from claimants, it unnecessarily
jeopardizes the Fund from its very inception and fails to
provide sufficient flexibility to address unexpected, and
possibly fixable, fluctuations in claims.
I agree with the key principle that the risk of inadequate
funding cannot fall on those truly ill from asbestos
exposure. However, the business community cannot be subjected
to an open-ended funding commitment to accommodate an unknown
and unlimited number of claimants into the future. Similarly,
American businesses cannot risk paying over $100 billion
dollars into a Fund only to see it sunset in a few short
years. Either of these outcomes would be worse than the
current broken system. To succeed, the business community
believes the solution must provide at least a limited
window of ``peace'' to bring certainty to business and to
allow the economy to recover from the burden that asbestos
litigation has imposed on it.
Therefore, I propose an alternative that will balance these
competing tensions while fully protecting sick victims. Under
my proposal, if victims do not receive 100 percent of their
claim values, the Fund would end and claims would revert to
the tort system so that claimants will still have a
guaranteed avenue to receive compensation. This approach
significantly reduces the need to worry about which claims
projections are correct. If the estimates of eligible claims
over the next 50 years are too low and the funding is
exhausted, then claims will automatically return to the tort
system and claimants will be able to preserve their ability
to receive compensation. To avoid many of the abuses that
have created the current crisis, however, this reversion to
the tort system must be to the federal courts and must
contain certain additional protections to ensure that the
current litigation crisis is not recreated. Obviously, while
protecting asbestos victims from risk, my proposal does
impose a price on the business community. It compromises to a
degree the absolute certainty and finality that have been the
hallmarks of a solution for those that must fund the program.
They will be forced to bear the risk that the total program
funding is not sufficient.
There is also a legitimate concern that the Fund could
sunset, not because of inaccurate claims projections, but
because the new and untested eligibility criteria in the FAIR
Act end up compensating the wrong kinds of claims. These
would include claims for injuries not caused by asbestos (for
example, smoking-related lung cancers, idiopathic pulmonary
fibrosis, rheumatoid arthritis, byssinosis, etc.) or because
the Fund's medical, diagnostic, and exposure criteria do not
sufficiently eliminate unimpaired claimants. Future victims
of asbestos-related disease, as well as those funding the
program, have a legitimate and strong interest in ensuring
that the Fund is not exhausted because of those kinds of
claims. To address that risk, I propose the Fund undertake a
periodic review of the program to ensure it is compensating
legitimate asbestos-related illnesses. This program review
would regularly evaluate the claims submitted, the quality of
the supporting evidence, and eligibility and award
determinations to determine whether the Fund is compensating
the wrong kinds of claimants and to provide the authority and
opportunity for the Administrator to address the problem
early if that occurs.
My proposal also would address another reality--under the
current tort system, too much of the risk already falls on
victims. Today, some victims go uncompensated because they
cannot remember the product to which they were exposed.
Others are without recourse because they were exposed in
connection with military service and cannot sue the federal
government. Other victims who should be compensated too often
experience long delays before they receive payment,
[[Page S15519]]
waiting for their litigation and all possible appeals to be
exhausted, and then only seeing half of their award, the rest
taken by the lawyers. This is especially true for claimants
who are suing companies that have been forced into
bankruptcy. There, the legal process can take half a decade
and consume millions of dollars, leaving claimants able to
recover only pennies on the dollar from the resulting
bankruptcy trust. In short, victims bear much of the risk
under the status quo, and they will continue to bear that
risk until Congress acts. My proposal protects victims from
those risks, and offers asbestos victims far more protection
and certainty than they have today.
The PRESIDING OFFICER (Mr. Cornyn). The Senator from Nevada.
Mr. REID. Mr. President, I want to make sure, having heard the
distinguished majority leader speak about asbestos, that we understand,
as he has indicated, it is a very complicated, difficult issue. But
there are concerns that I have, and I think I speak for lots of people
in this country. I am very concerned about how it affects business, but
I am also concerned how it affects individual people.
I called Mrs. Bruce Vento this week, a woman from Minnesota whose
husband served in the House of Representatives, a wonderful man. He
worked in an asbestos facility for a few months as a young man. He is
58 years old, he gets sick, he is dead within a year as a result of the
disease that comes from being around asbestos, mesothelioma. The
average life expectancy of a person who is diagnosed with this disease
is a little over a year. They die quickly.
Then we have asbestosis, where people live longer but it has a
detrimental effect on their health.
What we have to do is get rid of the spurious lawsuits, those that
don't deal with those two conditions about which I just spoke.
So I hope, as we proceed through asbestos legislation, we worry about
and are concerned about these very sick people. People in this Senate
have worked extremely hard to come up with a solution. The
distinguished Senator from Utah is in the Chamber, the chairman of the
Judiciary Committee. He and the ranking member, Senator Leahy, have
worked days and weeks to try to come up with something. We always get
close but never quite close enough.
So I hope as we proceed, as the distinguished majority leader
indicated, toward legislation dealing with this, that we keep in mind
the main reason we are doing it. The main reason we need to legislate,
in my opinion, is to take care of the people who get afflicted with the
diseases that are related to asbestos. In the process, I hope we can
ban the importation of asbestos into our country. We continue to import
thousands of tons of this stuff on a yearly basis, even as we speak.
So I appreciate the concern of the majority leader. I have concerns
also. But if I were giving a speech in a prolonged fashion, I would
speak about the people who get sick, as Bruce Vento did, and are now
dead.
Mr. LEAHY. Mr. President, I thank the distinguished Senate Majority
Leader for his remarks today on the need for the Senate to consider
asbestos legislation next year. I wholeheartedly agree with him on the
need for reform to establish a better system for providing fair and
efficient compensation to victims of asbestos-related diseases. I
remain committed to working with Senator Frist, Senator Daschle,
Senator Hatch, Senator Dodd, Senator Specter, and others, to forge a
bipartisan solution to this complex challenge.
Last fall, as Chairman of the Judiciary Committee, I held the
Committee's first hearing to begin a bipartisan dialogue about the best
means to compensate current asbestos victims and those yet to come.
Chairman Hatch wisely held two additional hearings this year. Our
knowledge of the harms wreaked by asbestos exposure has certainly grown
since last fall, as 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 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 who
deserve fair compensation do not receive it, and bankrupt companies can
neither create new jobs nor invest in our economy.
A solution has never before been closer than it is today. Since the
beginning of 2003, we have come to complete accord on the idea that the
fairest, most efficient way to provide compensation for asbestos
victims is through the creation of a national fund that will apply
agreed-upon medical criteria in evaluating patients' injuries. We have
been working tirelessly with representatives from organized labor,
defendant companies, insurers, and other interested parties, to craft
an effective trust fund system that will bring the certainty of fair
payments to victims and financial certainty to industry. A myriad of
issues have been resolved, from the definitions of the panoply of
illnesses resulting from asbestos exposure to a ban on the use of
asbestos in the United States. We are working, even today, on the
details of other aspects of this scheme, down to the fine points of the
administrative mechanism for processing claims.
We have made real progress in finding common ground. But we have yet
to reach consensus, and without consensus we cannot end this crisis.
Too much is at stake for us to walk away when we have come so far. An
effective and efficient means to end the asbestos litigation crisis is
within reach, and we must grasp it. Although the year is drawing to a
close, our bipartisan commitment to this effort remains strong. I look
forward to continuing to work with my colleagues and all stake holders
to craft a consensus bill that we can move through the legislative
process and into law next year.
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