E-Alert Case Updates
Furthering Asbestos Claim Transparency (FACT) Act Goes to Hearing Before Senate Judiciary Committee
Furthering Asbestos Claim Transparency (FACT) Act of 2015
Hearing video available at:
On January 8, 2016 the U.S. House of Representatives passed the Fairness in Class Action Litigation Act (H.R. 1927), which includes the Furthering Asbestos Claims Transparency (FACT) Act. The FACT Act is aimed at cutting down fraud in asbestos claims. Specifically, the Act would amend federal bankruptcy law to require asbestos bankruptcy trusts to publish quarterly reports including the names, partial social security numbers, exposure history, and basis for any payments made from the trust to asbestos claimants. The Act would also allow defendant corporations to submit written requests for information to asbestos bankruptcy trusts. More information on H.R. 1927, please see www.semmes.com/publications/cases/2016/01/fact-act-2015.asp.
A related version of the Furthering Asbestos Claims Transparency (FACT) Act, S. 357, is currently pending in the Senate. On February 3, 2016, the Senate Judiciary Committee held a hearing on this bill. Senator Chuck Grassley (R – IA), Chairman of the Senate Judiciary Committee presided over the hearing. Senator Grassley introduced the bill by explaining that “[asbestos] trusts have assets in excess of $18 billion dollars, but are without any meaningful independent oversight.” Senator Grassley went on to encourage support for the bill, emphasizing that “if funds in the trusts are depleted with fraudulent claims, it is future victims who will pay the price, as compensation for illnesses will be reduced.”
Senator Patrick Leahy (D – VT) followed Senator Grassley and voiced his “serious concerns” for the bill. Specifically, Senator Leahy expressed concerns that a provision in the bill requiring asbestos trusts to file public reports detailing personal information about victims who receive compensation from the trust would “needlessly violate the privacy of [those] victims while requiring no transparency on the part of the [asbestos-producing] companies.” Senator Leahy also questioned the existence of fraud within the asbestos trust system, arguing that most asbestos victims are exposed in multiple ways by multiple companies.
The Judiciary Committee heard testimony from five (5) witnesses – the Honorable Peggy L. Ableman, Senior Counsel, McCarter & English LLP; Elihu Inselbuch, Member, Caplin & Drysdale, Chartered; Mark Behrens, Esquire, Shook, Hardy & Bacon LLP; Ms. Susan Vento (widow of Congressman Bruce Vento); the Honorable Robert M. McKenna, , Orrick, Herrington & Sutcliffe.
Judge Ableman is a retired judge who served in the Delaware State courts for thirty (30) years and spent considerable time in charge of the asbestos docket. In her testimony, Judge Ableman recalled a case from her time on the bench in which an asbestos plaintiff allowed the defendant company, Foster Wheeler (a boilermaker) to believe that it had sole, or at least predominant responsibility for plaintiff’s exposure – completely failing to identify claims of asbestos exposure against other companies until the week before trial. Judge Ableman found this to have been “severely prejudicial” to the defendant, and observed that “[w]hen twenty manufacturers of asbestos are removed from the equation, an honest and fair allocation of fault simply cannot occur.” Each of these other defendants had settled their cases with plaintiff based upon “insufficient data and an incomplete picture of the plaintiff’s total exposure history.”
Mr. Inselbuch has spent the past thirty (30) years of his career representing victims’ rights in asbestos bankruptcy proceedings. Mr. Inselbuch decried the FACT Act as “the latest, but not the first, attempt by asbestos defendants to reduce, minimize and ultimately extinguish their liability to their victims in the tort system.” Mr. Inselbuch provided a detailed history of the development and function of the asbestos trust system to support his position that the FACT Act “is predicated on a fundamental misunderstanding of why asbestos trusts were created, how they work, and the false belief that there is significant fraud in the trust system.”
Mr. Behrens co-chairs the Public Policy Group of Shook, Hardy & Bacon LLP. In his capacity as co-chair, Mr. Behrens spends a substantial amount of time analyzing trends in asbestos litigation. Mr. Behrens’ testimony primarily reflected on written testimony that he had previously provided to a Task Force on Asbestos Litigation and Bankruptcy Trusts of the American Bar Association’s Tort Trial and Insurance Practice Section in 2013. Mr. Behrens’ research led him to conclude that “inconsistent claiming by plaintiffs appear[s] to be the norm” in the asbestos trust system. Mr. Behrens attributed these problems to “a disconnect between the trust and tort systems and lack of transparency with respect to asbestos trust claims,” all of which he testified leads to “suppression of evidence in asbestos tort cases, prevents juries from reaching fully informed decisions as to fault, and promotes gamesmanship.”
Ms. Vento is the widow of Congressman Bruce Vento, who died of mesothelioma. Ms. Vento’s testimony served to provide the perspective of asbestos victims and their families. Ms. Vento paid particular attention to the fact that asbestos victims were largely excluded from testifying before the House of Representatives. Ms. Vento also testified that reports of fraud in the asbestos trust system are exaggerated and are not worth violating the privacy of beneficiaries of the asbestos trusts.
Finally, Mr. McKenna served as the Attorney General of Washington State from 2005 to 2013. In that capacity, Mr. McKenna was heavily involved in investigating online fraud. As a result of this experience, Mr. McKenna came to the conclusion that the FACT Act “is common sense transparency legislation that will discourage fraud and abuse in the asbestos compensation system while protecting asbestos trust claimants’ sensitive personal information and confidential medical records from disclosure.”
The FACT Act will now go through Judiciary Committee consideration and mark-up before possible introduction onto the floor of the Senate.
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