C&EN: GOVERNMENT & POLICY - SENATE READIES ASBESTOS LEGISLATION

BY DAVID HANSON

The incredible morass that is asbestos litigation in this country may finally be getting some attention. Legislation may be introduced in the Senate as early as this week that would slow this giant snowball as it careers out of control downhill through the U.S. legal system.

Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Judiciary Committee, working with a coalition of asbestos defendants, is proposing that Congress establish a multi-billion-dollar trust fund to cover claims related to asbestos diseases. Hatch has indicated he will incorporate such a fund into legislation. He hopes to have his proposal out of committee and on the Senate floor by June.

On the other side of the Capitol, a bill has been introduced in the House to establish some definitive medical criteria for making claims for asbestos exposure, but House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.) has said he will not move any legislation on the problem until the Senate has passed a bill.

Many of those involved, including judges, have called for Congress to pay attention to this issue. Perhaps the best known is Supreme Court Justice David H. Souter, who wrote in an opinion in 1999 that "the elephantine mass of asbestos cases ... defies customary judicial administration and calls for national legislation."

Any measure to mitigate the asbestos issue is more than overdue. The extent and damage being done by asbestos tort litigation in the U.S. over the past few decades is incomprehensible. The best data available come from a report completed last fall by the RAND Institute for Civil Justice. Probably more than 600,000 people have filed claims for asbestos compensation, and upward of 2.4 million claims could be filed in the years ahead.

One of the more interesting findings is that as time goes by, the number of companies listed on a lawsuit greatly increases. Recent asbestos suits have listed 60 to 70 defendants, RAND notes, compared with an average of 20 two decades ago. And the total number of companies affected by asbestos torts has risen from about 300 in the 1970s to more than 6,000 today, in nearly all types of industries.

The RAND study also estimates the amount of money received by each claimant. A 1983 asbestos study found that each person received only 37 cents for every dollar spent on asbestos litigation. That figure has actually risen to 43 cents on the dollar, with the rest going to legal fees and other expenses.

Last year, RAND reported that more than 60 companies had filed for bankruptcy because of the liability from asbestos claims. The Asbestos Alliance, a coalition fighting the present tort situation, estimates this mess has cost workers thousands of jobs and many millions of dollars in lost retirement programs. About $70 billion has been paid out in claims so far, and up to $200 billion more is possible.

Chemical companies, to no one's surprise, have been major targets in this tort frenzy. Over the past year, C&EN has reported on a number of actions taken by chemical firms because of their asbestos liability. For example, Dow Chemical took an $828 million pretax charge against its fourth-quarter earnings last year because of asbestos-related expenses. Dow projects its cost of disposing of asbestos claims now at about $2.2 billion (C&EN, March 10, page 17).

Other companies remain in the throes of asbestos litigation. Some of these include Eastman Chemical, Hercules, Royal Dutch/Shell, W.R. Grace, and GAF.

But attempting a legislative fix has been a tough battle. Hatch has been meeting with affected parties for months trying to strike a deal, but business and labor interests have not come together. Hatch says he will introduce a bill anyway.

Basically, the legislation would create a new fund made up of contributions from businesses and insurers. Business lobbyists are looking to set the fund at $90 billion, but labor interests want at least $120 billion. Hatch has indicated he will split the difference, probably requesting $108 billion, but no details of the proposed legislation have been released. Some sort of tiered system would be set up to determine how much a company or insurance firm would pay, but the details of that are also still undecided.

Individuals claiming that they had been made sick from asbestos would have to apply for compensation from the trust fund. They would no longer be able to file a lawsuit. It is hoped that under such a system, individuals could receive real compensation if they are actually sick. One of the major reasons for the huge growth in asbestos lawsuits has been claims by people who believe they have been exposed to asbestos, either from work or even from a company's product, and they may be "functionally impaired" sometime in the future. Most state laws allow this type of claim, and it is a major issue in litigation.

The crushing expense and uncertainty of today's asbestos litigation needs a congressional solution. But it is not just because of what has happened with asbestos. The legal machinery that has profited so mightily from asbestos suits is primed to begin new work.

Companies already are fighting unreasonable cases involving leaded paints from decades ago. It is not to hard to envision other chemical products from times past where some obscure health issues form a basis for never-ending litigation. If a model is made today that can fix the asbestos legal morass, future cases might be handled in a way that is more equitable for everyone.