Social Security Once Again: A Debate
Mark Thoma and Barry Ritholtz on Interest Rates

Asbestos: Hold on a Minute...

TAPPED sends us to:

On The Hill - Moving Ideas: Asbestos Bill Saves Companies Billions by Denying Victims Justice Posted: 06/14/05: Sen. Arlen Specter (R-PA) is spearheading legislation that would set up an asbestos federal trust fund. The bill, which recently passed out of committee, would: limit the liability of companies who knowingly poisoned their workers; cut benefits to asbestos victims; deny some victims compensation altogether; and pre-empt state laws that provide for speedy trials for terminally ill plaintiffs.

Asbestos claims 9,907 lives per year in America and the death toll seems to be on the rise. Asbestos disease has been documented since the early 1900s, but because the asbestos industry did not disclose the hazards of the material, workers unknowingly used asbestos without protection for decades. Now, even though the dangers of asbestos are well known, it has yet to be banned in this country.

The so-called Fairness in Asbestos Injury Resolution (FAIR) Act, S. 852, establishes a $140 billion trust fund that asbestos victims would have to apply to in order to receive compensation. Victims whose cases have not already been settled would lose their right to sue in court and would have to wait nine months to apply for compensation through the trust fund. The bill also pre-empts state laws and practices that provide for speedy trials for terminally ill plaintiffs. Under the FAIR Act, hundreds would die waiting for court decisions.

To qualify for compensation, the FAIR Act sets up convoluted criteria that are not recognized by the American Lung Association or the American Thoracic Society. Such non-medical criteria, meant to disenfranchise thousands of victims, are necessary to the solvency of the trust fund. If only people dying of the deadly asbestos cancer, mesothelioma, were all paid the current average damages of $2.2 million, the trust fund would be left with no money to pay the tens of thousands of victims dying of other asbestos-related diseases. Furthermore, the bill sets a deadline of 2033 for applicants, leaving the estimated tens of thousands of victims who will be diagnosed after that year with no compensation and no right to sue.

The estimated savings to the asbestos industry is $20.3 billion. A company's annual payment into the trust fund would be capped at $27.5 million per year, totaling $378.5 million in current dollars for the 30 year life of the fund. By comparison, Dow Chemical estimates that its future liability only through the year 2019 will be between $1.6 billion and $2.2 billion. Honeywell projects its liability at $2.75 billion through the year 2018.

Asbestos victims deserve their day in court and just compensation for their suffering. Take action today to ensure asbestos victims are protected, not the companies that poisoned them.

Wait a minute.

Total compensation fund value to be paid to asbestos victims: $140 billion. Savings to the asbestos industry: $20 billion. That means that in the absence of a deal total payments to asbestos victims would be about $115 billion and total payments to trial lawyers would be $45 billion. And the trust fund will, if not incompetently administered, get more of the money to the seriously sick and less to those who simply signed up early with aggressive lawyers.

If Moving Ideas wants to oppose Specter's proposed asbestos bill, it needs to do a *much* better job than this of following the money. I'm willing to be persuaded that Specter's settlement is a bad idea. But claims that asbestos victims deserve "their day in court" are not encouraging. Lawyers want asbestos victims to have "their day in court." Asbestos victims need medical care and survivors' benefits.

UPDATE: From Gypsum Today:

Asbestos legislation that has split the business community limped forward... winning approval from the Senate Judiciary Committee.... The bill, which passed 13-5, would create a $140 billion industry-funded trust from which to pay work-related asbestos injury claims... lung diseases, including a particularly virulent form of lung cancer, mesothelioma.... Insurers... [called] it "wholly unacceptable," in the words of the American Insurance Association.... Mike Baroody, chair of the Asbestos Alliance... said the committee's vote is "very good news for asbestos victims, defendant companies and our nation's economy." But small- to mid-sized companies continue to argue that they are being asked to pay more than their fair share into the trust fund. Particularly opposed are smaller companies that bought enough insurance to meet potential asbestos claims. The legislation would strip them of their insurance, but still require them to make payments into the trust fund.

U.S. asbestos stocks, which had traded up all day, fell on news that the committee had passed the bill....

Sen. John Cornyn, R-Texas, said he voted for the bill Thursday to keep it moving, but "as it is currently written I couldn't support it" on a vote for passage from the Senate floor. Sens. Sam Brownback, R-Kans., Jon Kyl, R-Ariz., and Tom Coburn, R-Okla., said they felt the same.... [B]ill co-sponsor Sen. Patrick Leahy, D-Vt., said "this is a far, far better bill, with a far, far better chance of passing."

The bill would provide a substantial break from potential legal liabilities to former U.S. asbestos manufacturers and producers and their successors businesses. Top beneficiaries include former asbestos manufacturers USG, W.R. Grace, Armstrong, Babcock & Wilcox, NARCO, Owens Corning and Pittsburgh Corning.... Tier II companies include, Dow Chemical Co. (DOW), General Electric Co. (GE), Ford Motor Co. (F), General Motors Corp. (GM), Georgia-Pacific Corp. (GP), Honeywell International Inc. (HON), Pfizer Inc. (PFE) and Viacom Inc. (VIAB), the report said.

For claimants, the bill would provide rapid payments to those near death.... Workers with less exigent injuries would... avoid the expense and uncertainty of... the legal system, but could have to wait for years....

Most Democrats on the committee opposed the bill, arguing that it provided too little relief for asbestos victims and could even strand some victims with no relief at all. Asbestos-related claims filed by more than 730,000 people in the U.S.... Another estimated 400,000 asbestos claims are pending and still more are likely over the next several decades.

The United Auto Workers and Asbestos Workers Union back the bill, but the AFL-CIO has so far refused to endorse it.

Likewise, consumer groups and trial attorneys have joined forces in opposing the measure....

So out of his committee Spector appears to have five other Republicans and three Democrats on board. Five Democrats on the committee are opposed. And four right-wing Republicans say they will vote against final passage, but are willing to let the bill out of committee.

It smells to me like a situation in which both the left and the right would rather have an issue than a bill...