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Trust fund proposed for claims of asbestos

THE BALTIMORE SUN

WASHINGTON -- A congressional effort to cope with the burgeoning number of asbestos lawsuits would end a program in Maryland that has been hailed as a model for streamlining the legal process for victims of asbestos-related diseases.

Since 1992, all asbestos cases in the state have been consolidated in Baltimore Circuit Court, where about 90 percent are settled without a trial. To ensure that the sickest people get help first, Maryland created a two-tier system, with an "inactive" docket for plaintiffs who claim to have been exposed to asbestos but are not yet ill.

"It's a system that's good for the sick claimants. It's good for the court system, because it allows the judges to focus their efforts and the court's resources on the people who need them the most," said Mark A. Behrens, a Washington lawyer who has written extensively about curbing the costs of asbestos lawsuits. "And in that sense, it's also good to defendants."

But a proposal on Capitol Hill that cleared the Senate Judiciary Committee late last month with bipartisan support would substitute local efforts with a $140 billion fund to compensate victims of asbestos exposure.

The legislation would restrict asbestos victims from going to the courts for relief. Instead, they would pursue claims through a new federal department, run by an appointed administrator, that would oversee payments ranging from $25,000 to $1.1 million.

The measure would force asbestos manufacturers and insurers to pay into the fund, eliminating further liability. It also would limit attorneys' fees in most cases to 5 percent of any award.

National system

Asbestos manufacturers, companies that used the fire-retardant material for everything from pipe insulation to paint, and their insurers say a national system is essential to the companies' financial health. A study released last month by the RAND Institute for Civil Justice showed that more than 730,000 people in the United States had filed asbestos-related claims from the early 1970s through late 2002, costing manufacturers and insurers more than $70 billion.

At least 74 companies named in asbestos claims filed for bankruptcy by mid-2004, the study showed. Many more are on the brink of going under.

Congress has struggled for years to deal with the issue. But plaintiffs' attorneys and groups representing workers, family members and others exposed to asbestos fibers are wary of the latest approach. They say that a federal system would pay some victims too little and leave others out in the cold. Ultimately, they fear, the fund would run out of money.

Baltimore Circuit Judge Richard T. Rombro, who has overseen Maryland asbestos cases for more than a decade, says he is concerned that thousands of cases in the state would be transferred from a system that has worked well to one that is uncertain.

"I just think it's setting up another huge federal bureaucracy, and I really don't know that it's going to solve the problem, when there was such a simpler way to do it," Rombro said. "You're just biting off so much."

Local problem

The steel mills, shipyards and other industrial plants that once employed thousands of workers have made Maryland home to a large number of asbestos victims. Rombro said that in May alone, he was working with more than 40 new cases -- including five people diagnosed with mesothelioma, the most severe disease caused by asbestos exposure, and nearly 30 people with lung cancer.

Thousands more individual claims are on the inactive docket, Rombro said.

Maryland also is home to the tainted legacy of Columbia-based chemical maker W.R. Grace & Co. A plant in Beltsville received asbestos-tainted vermiculite from a mine in Libby, Mont. The town has been declared a federal Superfund site; the tainted vermiculite sickened thousands in Libby and in communities where the ore was shipped.

Asbestos claims drove Grace into bankruptcy in 2001. The company and some executives were indicted by the Justice Department in February on charges of knowingly exposing Libby residents to asbestos, which has been blamed for killing more than 200 people.

The federal government has determined that the Beltsville plant, which closed in the early 1990s, poses no current health risk. Claims still could arise from former workers.

Jim Fite once worked at Bethlehem Steel's Baltimore shipyard and now heads the White Lung Association, which advocates for asbestos victims. He said the legislation would be a disaster for workers.

"This thing is taking away all the victim's rights, but it's not giving them anything in return," said Fite, 58, who has lobbied against the bill.

Over the years, lawmakers and private interests have failed in attempts to navigate a deal that recognizes both the needs of victims and the companies they want to hold liable for their illnesses.

The legislation that has gained momentum in recent weeks is backed by Republican Sen. Arlen Specter of Pennsylvania and Democratic Sen. Patrick J. Leahy of Vermont. It has some bipartisan support, but it has detractors on both sides of the aisle. For now, it has not been scheduled for consideration on the Senate floor.

The bill aims to help the sickest people first -- much like Maryland's system -- but the $1.1 million award limit would be far less than many previous settlements.

The trust fund program is attractive to manufacturers and insurers because it would limit their liability. But victims' advocates have labeled it an industry bailout and fear $140 billion won't cover everyone, leaving some sick people without recourse -- or sticking taxpayers with the bill if the fund runs dry.

Opponents' concerns

"Nobody's answered the question: What happens if they run out of money?" Rombro said. "Does the taxpayer then take care of it, or do you go back to the insurance companies and say they need more money?"

The same concern has been raised by some lawmakers. One key player, the American Insurance Association, says it won't support the legislation unless there is a guarantee that insurers won't have to make additional payments once they pay into the fund.

Spokesman Dennis Kelly said insurers are concerned that the legislation still could allow some cases to land in the courts. They also want assurances that any money paid out in future court cases would be subtracted from their obligations to the fund.

"That speaks to the uncertainty and the lack of finality that are really key to us supporting the legislation," Kelly said.

Also opposing the bill is the Association of Trial Lawyers of America, whose members include Baltimore lawyer Peter G. Angelos, whose firm made its name and a fortune in asbestos litigation. The group says the legislation would reward manufacturers while creating an instant backlog of claims.

The Senate Judiciary Committee voted 13-5 to send the legislation to the Senate floor late last month. Specter, who is the panel's chairman and the lead sponsor of the bill, admitted afterward that the measure needs work.

"Everybody wants a little more," Specter said. "But the final vote is going to turn on whether it's better than the current system. And when you look at the bill versus the current system, it's no contest."

The National Association of Manufacturers, which supports the legislation, agrees. Spokesman Darren McKinney said the bill would allow people with the most severe illnesses to move to the front of the line and receive compensation before they die.

"It will just be a fairer and more efficient system for those who are truly sick," he said.

Streamlined efforts such as the one in Maryland have been useful, McKinney said.

But "it's a national problem, and it calls for a national solution," he said. "And therefore, we prefer it to the patchwork of solutions that may or may not be particularly helpful."

The Baltimore system originated about the same time as similar programs in Chicago and Boston, said Behrens, the Washington attorney who has studied asbestos litigation. These systems became a model for other state courts and legislatures.

In recent years, New York City and Seattle have converted to a similar tiered system. Last year, the Ohio legislature adopted a law allowing only those plaintiffs with proven medical problems to move into the court system; Georgia and Florida passed similar legislation this spring.

Rubik's Cube

Behrens called the Senate proposal an effort to "get the lawyers out of it," and said it is based on the premise that without attorney fees and administrative costs, victims can get more money, more quickly.

Tensions between victims' advocates and the companies may doom a Washington solution once again. The bill faces an uncertain path in the Senate and has been less well-received in the House, where there are several alternative proposals.

Leahy, the top Democrat on the Judiciary Committee, compared writing the legislation to solving a Rubik's Cube. But, he noted, even the U.S. Supreme Court has appealed to Congress to find a unified solution to the flood of asbestos lawsuits.

"It is a difficult bill. No bill is perfect," Leahy said. "But we have thousands of people who are suffering from various degrees of asbestos poisoning and many of whom are going to die in a court system that cannot handle these cases."

Fite, who said he was exposed to asbestos while working in the Maryland shipyard but has never filed a claim, doubts that any trust fund would be able to absorb the long-term costs of people sickened by asbestos exposure.

Asbestos-related deaths were supposed to be in decline by now, he said, as people who worked around it before the medical dangers were fully known get sick and die. That hasn't happened.

"The truth is that a lot of asbestos is still being busted up because the people who are busting it up don't know it's asbestos," Fite said. "Millions of tons that we put into our society are still there, and they'll be deadly until they're moved out."

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