FAIR Act 2005: Will Congress Finally Provide Fix For ‘Elephantine Mass of Asbestos Cases’?July 2005 BY: RICHARD A. CURTIS AND RODNEY B. GRIFFITHWith asbestos litigation reform officially on the Congressional agenda yet again, it remains to be seen whether President Bush’s exhortations and Senator Arlen Specter’s negotiations will overcome stakeholder disagreements about the proposed Fairness in Asbestos Injury Resolution Act of 2005 (the “FAIR Act”). On Thursday, May 26, 2005, the Senate Judiciary Committee voted 13 to 5 to send to the Senate floor the proposed FAIR Act, a bill sponsored by Senator Specter and Senator Patrick Leahy, the Committee’s ranking minority member. The Committee reported the bill, with amendments, to the Senate on Thursday, June 16, 2005. The Senate did not consider the bill before the Independence Day recess, and it is uncertain whether the Senate will take up the bill before September. Senator Specter, R-Pa., who introduced the FAIR Act in the Senate in April, has warned that if the Senate does not consider the bill quickly, other, more pressing legislative issues will make passage of the FAIR Act unlikely. Three Democrats, Leahy, Dianne Feinstein of California and Herb Kohl of Wisconsin, and the Judiciary Committee’s ten Republican members, voted in favor of the bill. Three Republican committee members, Jon Kyl of Arizona, John Cornyn of Texas and Tom Coburn of Oklahoma, voted in favor of the bill in committee, but said that they would oppose the FAIR Act on the Senate floor unless it is amended significantly, the New York Times reported. During Committee hearings, Democratic and Republican Senators, and representatives of stakeholders, including the AFL-CIO and the American Insurance Association, expressed concerns about various provisions of the bill. Representatives of the National Association of Manufacturers and the United Auto Workers expressed support for the bill. Key provisions of the bill, as introduced in the Senate, include:
As a result of amendments by the Judiciary Committee, the Senate bill would require most companies to make payments into the trust fund within ninety days of enactment. Exigent claimants would have to file a claim with the trust fund. Mesothelioma claimants would receive full payment within six months if the trust fund is solvent. Other exigent claimants would receive full payment within a year unless that schedule would “severely harm the solvency of the fund.” In instances in which an exigent claimant has a pending lawsuit, the bill would allow a judicial settlement for the amount that the claimant is entitled under the FAIR Act. Otherwise, the law would stay pending asbestos lawsuits in state and federal courts except for cases being presented to a judge or jury on the date of the law’s enactment. If a defendant made a settlement payment to an exigent claimant, it would receive a credit that reduced the amount payable to the Fund. In cases in which claimants have other asbestos-related disease and are not terminally ill, there would be a 24-month stay. The stay would become permanent if the Fund is operational during the 24 months. Additionally, in cases in which plaintiffs allege a diagnosis of asbestosis or pleural plaques without any breathing impairment or other disease, the FAIR Act would stay those actions permanently. A different version of the FAIR Act was introduced in Allentown, PA • Berwyn, PA • Cherry Hill, NJ • New York, NY • Paramus, NJ • Philadelphia, PA • Pittsburgh, PA • Wilmington, DE the House of Representatives on March 17, 2005. The House bill has been referred to the House Judiciary, Energy and Commerce, Ways and Means, Education and the Workforce and Financial Services committees. The House bill would not stay pending actions during the startup of the Fund. Instead, it provides that existing asbestos personal injury actions in state or federal court are preempted by the FAIR Act. President Bush and Senator Specter have urged passage of the FAIR Act, but insurance companies, asbestos defendants, plaintiffs’ attorneys and labor unions have continued to disagree over provisions of the proposal. In past years, Congress was unwilling to enact asbestos reform while significant differences remained among stakeholders. Absent agreement among the affected parties, it remains to be seen whether Congress will impose a solution to what the Supreme Court has called the “elephantine mass of asbestos cases.” Disagreements about details of asbestos reform include: Contributions to the asbestos trust fund: Insurance and manufacturers’ groups maintain that the fund needs no more than $140 billion. Unions and plaintiffs’ attorneys have called for a $150 to $200 billion fund. Sunset provisions: The insurance industry wants the FAIR Act to be the sole remedy for asbestos claimants. Plaintiffs’ attorneys and unions maintain sunset provisions are needed as a last resort if the fund becomes insolvent. Silica injury claims: Asbestos defendants and insurers have been concerned that under the FAIR Act plaintiffs could avoid asserting asbestos claims, and bring lawsuits in state or federal courts, by alleging their injuries were caused by silica or other types of non-asbestos dust. The Senate bill addresses this issue by preempting actions for alleged silica injury when a plaintiff (a) has brought an action alleging asbestos injury or is eligible for compensation under the FAIR Act or (b) has suffered functional impairment due to silica exposure and asbestos exposure is a substantial contributing factor to the impairment. Constitutionality of Funding Provisions: To create the Fund, asbestos manufacturers, other defendants in asbestos litigation and insurance companies would make payments according to a statutory formula. Bankruptcy trusts for asbestos claimants would be required to turn over their $7 billion in assets to the Fund. A representative of the Coalition for Asbestos Reform, a group of companies and insurers, told the Judiciary panel that the funding mechanism is an unconstitutional taking of property. Former Solicitor General Theodore Olson, who represents some trustees of several bankruptcy trusts, has warned in a letter to Senators that his clients will challenge the FAIR Act’s constitutionality if bankruptcy trusts are required to transfer their assets. Judge Edward Becker, U.S. Court of Appeals for the Third Circuit, has acted as a mediator for asbestos litigation stakeholders. Judge Becker told the Senate Judiciary Committee that constitutional challenges are not likely to be successful. In anticipation of legal actions, the FAIR Ac t, as reported to the Senate, would bar any stay of the law pending a final decision of any suit challenging the statute. The Senate version also would give the U.S. District Court for the District of Columbia exclusive jurisdiction to consider constitutional challenges. A three-judge panel would hear the challenges, any appeals would be directly to the Supreme Court, and the Courts must expedite proceedings concerning the FAIR Act. In speeches this Spring, President Bush called for Congress to enact lit igation reform, including asbestos litigation reform. According to the President, Asbestos lawsuits . . . have led to the bankruptcy of dozens of companies, and cost tens of thousands of jobs. . . . The volume of asbestos lawsuits is beyond the capacity of our courts to handle, and it is growing. . . . Congress has begun considering options to improve the current system for handling asbestos lawsuits. They need to act and get the job done. I look forward to signing an asbestos reform in 2005. Some insurance companies have urged Senator Specter to abandon the idea of a trust fund because of the continuing disagreements among stakeholders. Instead, the companies suggest a federal law establishing medical criteria that a plaintiff must prove to recover for asbestos injury. In Ohio, the state legislature has enacted just such statutory medical criteria for asbestos injury actions. Delays and stakeholder disagreements cannot bode well for the FAIR Act. When Congress considered a similar bill in 2003, the Judiciary Committee did not report the bill until late July and Congress never acted on asbestos reform. Time will tell whether the FAIR Act of 2005 will fare better. |
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