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Asbestos Suits Become More Widespread

Sep 26, 2002 | The Los Angeles Times

Asbestos litigation has ensnared more than 6,000 companies--triple previous estimates--and is affecting nearly every industry, a Rand Institute study said Wednesday.

U.S. companies have paid out $54 billion on more than 600,000 asbestos injury claims filed since the early 1970s, the Rand Institute for Civil Justice reported. Asbestos claims ultimately could cost as much as $210 billion, according to projections cited in the study, and more than 60 companies--22 of them in the last two years--have sought bankruptcy protection to staunch their losses.

The rising cost of the lawsuits has brought calls for reforms, and on Wednesday corporate defenders, insurers and lawyers for asbestos-related cancer victims seized on the Rand report as evidence of the need for change in a hearing on asbestos litigation before the Senate Judiciary Committee.

The hearing coincided with this week's opening of a massive class-action suit in West Virginia involving more than 5,000 plaintiffs and dozens of corporations including Exxon Mobil Corp., Owens-Illinois Inc., Westinghouse Electric Corp. and Union Carbide, now part of Dow Chemical Co.

In a measure of the breadth of the litigation, Rand found asbestos suits had been filed against companies in 75 of 83 industry sectors tracked by the government, said Stephen Carroll, the Rand senior economist who headed the study.

"The bankruptcies are the tip of the iceberg," Carroll said. "Under the surface there are a lot of corporations that are being hit hard by asbestos liabilities and they are putting their money into compensation payments instead of investment."

The Rand study also renewed questions about whether the growing pile of lawsuits is benefiting the victims of asbestos. Despite the enormous economic costs, the authors conclude that asbestos litigation is failing to adequately compensate the most seriously ill victims and no longer poses a deterrent to the pursuit of profits at the expense of worker health.

After the costs of litigation, asbestos claimants now receive 43 cents of every dollar spent on asbestos compensation, a slight improvement over the 37 cents that Rand researchers said reached plaintiffs' pockets 20 years ago. At the same time, the most seriously ill victims--people with lung cancer and mesothelioma, an incurable asbestos-related cancer--get little more than a third of all payouts, the study said.

The study echoes others' concerns that a surge in claims in the last four years from people who may have been exposed to asbestos but are not sick is draining money away from cancer victims who have high medical expenses and are no longer able to earn a living.

"The system looks worse 20 years later," said Deborah Hensler, a Stanford University law professor who contributed to Rand's first asbestos litigation study in 1982 and to its latest. "The system [in 1982], however inefficiently, was performing its job of corrective justice. It was making the bad guys pay. And by making the bad guys pay, the system was sending a very strong message to other potential bad guys working with other products that 'If you engage in this kind of behavior, you might find yourself in bankruptcy.' "

Today, Hensler said, high legal costs and payouts to claimants without serious injuries are diverting money away from cancer victims, and corporate America no longer believes that only the most culpable companies pay.

Because litigation has spread to hundreds of companies outside the asbestos mining and manufacturing business, Hensler said, executives of recently targeted companies are saying, " 'This is not fair. We are being asked to pay for something that other blame-worthy companies did.' "

Fred Baron, a pioneering asbestos lawyer from Texas and a recent president of the Assn. of Trial Lawyers of America, disputed the idea that "uninvolved companies" are being unfairly swept into the fray.

"While these companies did not manufacture asbestos, they used, distributed or otherwise sold products to others knowing that their asbestos content was likely to injure downstream users," Baron said. "Other defendants purchased companies, often at a discount, knowing these companies had substantial asbestos liability."

Baron's comments came during the Judiciary Committee hearing.

But Steve Kazan, an Oakland lawyer who represents only cancer victims, told the committee that unless Congress steps in, there will be no money left to compensate people who fall victim to asbestos cancers over the next 50 years.

An estimated 27 million workers were heavily exposed to asbestos between 1940 and 1973. But, because mesothelioma can take 40 years or more to appear, at least 2,500 new cases are diagnosed each year, and the disease is widely expected to claim hundreds of thousands of lives in 30 to 50 years.

To preserve funds for future mesothelioma victims, Kazan has taken the unusual position of joining corporations and insurers in proposing that Congress establish medical thresholds that would bar claims from people who are not functionally impaired. Other asbestos reform efforts have failed over the years, and, despite more than a year of lobbying, the latest idea has not found its way into a bill.

Baron, testifying on behalf of the trial lawyers association, urged the congressional committee to continue its restraint, saying the proposed reforms would harm the rights of most asbestos victims.

"Although they will argue that the only way to pay more to the sickest is by paying less to others, the defendants' real goal is to pay less total asbestos compensation," Baron said. "The concept that a victim must be impaired before their claim can be heard is an invention of the asbestos defendants designed to limit their liability."

Sen. Patrick J. Leahy (D-Vt.), who chairs the committee, said he was interested in coming up with a bill that would respond to the neediest victims, but he said the comittee was unlikely to take it up before Congress adjourns for the year.

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