ICS Magazine

No Asbestos Deal Yet, But Senate Eyes Vote

March 12, 2004
NEW YORK, March 12-(Investor's Business Daily) -- After almost a year of bitter fighting, the Senate is close to a vote on a landmark multibillion dollar asbestos settlement bill.

Senate Majority Leader Bill Frist, R-Tenn., wants a late March or early April floor vote, aides say.

But sources involved in talks say key issues remain. A compromise is "a real long shot," said one.

"They're going to have a vote, but I don't know on what," said Jan Amundson, general counsel for the National Association of Manufacturers.

Asbestos is a fire-resistant material widely used into the '70s. Later linked to cancer and other serious health woes, most firms long ago stopped using it. But it's still in some products like brake pads.

Some 730,000 lawsuits for asbestos exposure have been filed, with $70 billion already paid out. A Rand Corp. study estimates at least another $130 billion will be paid absent a congressional deal.

Lawmakers and lobbyists for business, insurers, big labor and trial lawyers have spent months on a deal with little success.

On Wednesday the AFL-CIO blasted the latest plan as "grossly deficient," but will keep talking.

Senate negotiators hope a deadline will force a compromise.

"We simply cannot delay any longer," said Sen. Orrin Hatch, R-Utah, last week. "We need to ensure that the truly sick get fairly compensated and compensated in a timely manner."

Hatch's proposal would create a multibillion dollar trust fund jointly funded by insurers and companies facing asbestos litigation. Payments would be made to people suffering from asbestos-related illness based on how sick they are. In return, companies would be shielded from civil liability.

Business and insurers like the trust fund idea. So does Big Labor. All fear that absent a settlement, a tidal wave of asbestos class-action suits will sink many more firms. Litigation has already driven at least 67 firms into bankruptcy.

But trial lawyers have lobbied hard for Democrats to kill the bill. No wonder: The fund is expected to pay out claims on a no-fault basis, largely cutting out lawyers.

The fund's size is a key sticking point. Hatch first proposed $108 billion. Democrats, led by Sen. Pat Leahy, D-Vt., said it wasn't enough. A Senate panel finally OK'd $153 billion. Senate leaders are now mulling $114 billion, sources say.

"Sen. Frist came up with a funding structure in October that business and insurers signed off on," said one lobbyist. "But labor said, 'Whoa, whoa, there are still funding issues here.' "

Also at issue: how business and insurers split the costs, the victim payment scale and what to do after the fund is empty.

"There are 300,000 pending claims. There will not be enough money, much less for the new claims that are expected," said Carlton Carl, spokesman for the American Trial Lawyers Association.

Congressional aides insist progress is being made. "We're optimistic," said one.

But labor says it won't back a fund under $153 billion. Business says $114 billion is too high already. Insurers vow to walk if the deal allows more suits once the fund is exhausted.

"The difficulty here is that it is a very complex proposal, and all of the issues relate to each other," the lobbyist said. "If you pull on one string, all of the others get out of whack. Nothing is agreed to until everything is agreed to."

Asbestos suits have bankrupted 22 firms since 2000. Over 8,400 companies from across the economy have been hit with lawsuits. Bankruptcies have cost 60,000 to 100,00 jobs.

Cases have swelled in recent years despite falling asbestos use. In 2003, a record 100,000 claims were filed. Critics contend many are suspect.

A 2003 American Bar Association study found that most new filings involve people without cancer and suffering no ailments at all.

"Contemporary asbestos litigation is no longer driven solely or even primarily by the occurrence of disabling asbestos-related diseases," the study said.

Trial lawyers dispute that.

"For people to say that someone is not sick because that person is not yet disabled is ridiculous," ATLA's Carl said.