Commentary

Quenching the Asbestos Fire

The narrowly divided Senate frequently acts as a graveyard for reform legislation. Judiciary Committee Chairman Orrin Hatch, R-Utah, has managed to push legislation through his committee to end the asbestos litigation that threatens to overwhelm the U.S. legal system. But the measure faces formidable opposition on the Senate floor.

Plaintiffs began filing lawsuits in the 1960s, and have since filled the courts, causing the U.S. Supreme Court to complain of “the elephantine mass of asbestos cases.”

Trial attorneys engaged in forum shopping to find the most plaintiff-friendly courts and expanded the list of defendants to firms — 8,400 and counting — which neither manufactured nor installed asbestos. An incredible $70 billion already has been spent on litigation and the ultimate cost could triple.

Scores of defendants have gone bankrupt. Awards to similarly situated victims varied widely; those who demonstrated little or no harm often collected big judgments, while some of the sickest received virtually nothing.

By one estimate, four in 10 claims for asbestosis or pleural disease proved on review to be either exaggerated or false. Yet analysts warn that 2.7 million more cases could be filed, most by people exhibiting few if any symptoms of disease.

Even some trial attorneys have asked Congress to intervene.

Hatch has spent a year attempting to craft a bipartisan solution. Alas, only one Democrat, Sen. Dianne Feinstein of California, supported his measure.

The Fairness in Asbestos Injury Resolution Act has come under fire from all sides. Complaints include:

  • Cost: up to $153 billion from defendants and insurers.
  • Lack of finality: If that much money isn’t enough to cover all claimants, the fund shuts down and lawsuits begin again.
  • Payoff per condition: 10 categories with compensation ranging from “medical monitoring” to $1 million.
  • Medical criteria: So-called mixed criteria will allow smokers to collect as much as nonsmokers, even if smoking was the primary cause of their disease.
  • No limits on attorneys’ fees, maintaining an incentive to file suits, and not only meritorious suits.

But it is important not to allow the perfect to become the enemy of the good. Any resolution will be, to some degree, arbitrary.

Still, asbestos reform legislation makes sense only if it offers compensation for the truly ill, fairness to defendants and certainty for all participants. Particularly important is strict medical criteria to limit compensation to people who actually have been injured.

Despite complaints from the trial bar, the measure protects the injured.

Writes Michelle White, an economics professor at the University of California, San Diego: “The average asbestos plaintiff whose claim was tried in court over the past 15 years received a damage award of just over $1 million in current dollars, but the average claimant whose suit was settled out of court received only about $5,600. For most claimants, the Hatch bill offers speed, certainty and higher average compensation than they would receive in the courts.”

To protect defendants, FAIR requires rigorous diagnosis, minimum exposure levels, and passage of time after exposure to account for long disease latency periods. Moreover, the legislation sets requirements for 10 asbestos-related illnesses.

Yet as several Republicans, led by Sen. Jon Kyl of Arizona, point out, the bill “allows payment of up to $20,000 for ‘mixed disease’ cases,” in which case a plaintiff’s injuries “may well have been caused by something other than asbestos, yet under the bill’s medical criteria, that claimant can obtain an award simply by showing qualifying exposure.”

Moreover, the Republican critics point out that the medical criteria “allow current and former smokers to obtain large awards for lung cancer that, according to expert testimony presented to Hatch’s committee, medical science conclusively links to smoking, not asbestos.”

Dr. James Crapo, a leading specialist in pulmonary medicine, similarly warns: “There will probably be a sizable number of people who do not have a disease caused by asbestos who will be compensated under the bill - i.e., there will be a considerable number of false positives.”

Of one category involving malignancies, Crapo said, “Practically everyone who qualifies for compensation … will be a false positive, since none of the cancers listed in that provision are in fact caused by asbestos.”

Those hurt by contact with asbestos deserve to be compensated. But today’s expensive tort lottery has little to do with justice.

Hatch’s bill isn’t perfect, but it is currently the only realistic game in play. Insurers worried about their potential liability reportedly have won a commitment from Senate Majority Leader Bill Frist, R-Tenn., to “clean up” the bill. On their return from their summer recess, senators should clean it up.

The American people deserve no less. Too much money already has been wasted enriching lawyers and paying off plaintiffs who haven’t been hurt.

Doug Bandow is a senior fellow at the Cato Institute and a syndicated columnist.