[Congressional Record Volume 164, Number 181 (Thursday, November 15, 2018)]
[Senate]
[Pages S7042-S7043]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  ASBESTOS BANKRUPTCY TRUST OVERSIGHT

  Mr. GRASSLEY. Mr. President, today I wish to highlight the excellent 
work being done by the Justice Department under this administration in 
ensuring an accountable asbestos bankruptcy trust system.
  In 1994, in response to widespread asbestos litigation in our 
Nation's courts, Congress created a system of asbestos bankruptcy 
trusts. The purpose of these trusts is twofold. First, they provide an 
effective means for victims of asbestos exposure to obtain compensation 
from the companies they worked for years earlier or whose products 
caused their injuries. This helps provide some measure of justice for 
those whose lives have been dramatically impacted by asbestos exposure.
  At the same time, the companies, who otherwise face crippling 
liability, obtain a degree of certainty as they emerge from bankruptcy 
and reenter the stream of commerce.
  Most importantly, these trusts are designed to ensure that all 
victims, current and future, have access to compensation for their 
injuries.
  If the available funds are depleted unfairly through fraudulent 
claims, abuse, or mismanagement, it is the future victims, or those 
whose injuries have yet to manifest, who will feel the impact.
  Unfortunately, the asbestos bankruptcy trust system has largely 
lacked any meaningful, independent oversight to ensure that trusts are 
not deceived into--or willingly engage in--paying erroneous claims to 
unscrupulous lawyers. For years, I have called out this problem and the 
need for more sunshine to deter potential abuse.
  That is why I applaud the Justice Department's recent actions to 
stand up for victims of asbestos exposure by ensuring an accountable 
trust system.
  In a recent letter to 20 State attorneys general who had called for 
action, the Department forcefully criticized the ``problematic lack of 
transparency in the operation and oversight of asbestos trusts'' and 
acknowledged ``alarming evidence'' of ``fraud and mismanagement inside 
trusts.''
  On September 13, 2018, the Justice Department filed a statement of 
interest in a case concerning a proposed asbestos bankruptcy trust in 
North Carolina. The Department objected to the trust's formation, 
arguing that the plans failed to include sufficient safeguards to 
prevent fraud and abuse of the trust funds.
  The Department further stated that the United States will object to 
any plan that ``lacks critical provisions to ensure transparency and 
accountability and to prevent fraudulent claims and mismanagement of 
the trust funds[.]'' This includes ensuring that trusts comply with any 
obligations under the Medicare Secondary Payer Statute, avoid conflicts 
of interest, and prevent excessive administrative costs and attorney's 
fees.
  Shortly thereafter, on September 26, 2018, the Justice Department's 
U.S. Trustee Program, for the first time ever, objected to the 
appointment of a proposed future claimants' representative in a 
separate asbestos bankruptcy case based on the candidate's apparent 
conflicts of interest and close ties to lawyers representing current 
claimants.
  According to Principal Deputy Associate Attorney General Jesse 
Panuccio, ``[t]o best protect all victims, those appointed in asbestos 
cases should be held to the same conflicts prohibitions and standards 
of independence that are

[[Page S7043]]

required of other fiduciaries under the Bankruptcy Code.''
  I couldn't agree more.
  Asbestos bankruptcy trusts are created to compensate victims, not to 
line the pockets of lawyers who file claims or administer the trusts. 
Fraudsters and poor management cannot be allowed to cheat victims of 
asbestos-related diseases out of the assistance Congress established 
for them.
  So I am pleased to see the Justice Department stepping up and using 
its existing authority to push back against trust plans that fail to 
put the victims' interests first. I applaud its commitment to 
investigate conduct related to asbestos trusts that is illegal under 
Federal law.
  It is time the asbestos trust system protects the interests of the 
victims, as Congress intended.
  To be sure, however, Congress's job isn't finished. There are 
commonsense steps we can take to better ensure that the Department has 
the tools and authority it needs to police against fraud and 
mismanagement.
  Earlier this year, I cosponsored S. 2564, the PROTECT Asbestos 
Victims Act, which would codify needed accountability measures for 
asbestos trust oversight. This bill, introduced by Senator Tillis, 
deserves strong bipartisan support. Among other reforms, it strengthens 
the U.S. Trustee's statutory authority to investigate the 
administration and operation of trusts. If the U.S. Trustee believes a 
false claim or demand was paid by the trust, he or she may refer the 
matter to the U.S. Attorney's Office. It criminalizes a knowingly and 
fraudulently false claim or representation to a trust. It better 
ensures that the right people are appointed as future claims 
representatives, in other words, those who understand that their duty 
is to future victims, not to their trial lawyer friends.
  These are commonsense reforms, and I invite all of my colleagues to 
join in support.
  In the meantime, I fully expect the Justice Department to keep up its 
great work in protecting asbestos victims and the American taxpayer by 
policing against waste, fraud, and mismanagement in the asbestos 
bankruptcy trust system.

                          ____________________