[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.

                          ____________________