Litigation Continues to Be Costly For All SidesMay 5, 2002 | The Daily Press The ultimate reason that the asbestos litigation system is in trouble today must first start with the unavoidable fact that there is an epidemic of asbestos disease in this country caused by the irresponsible failure of the asbestos industry to protect American workers from the dangers of breathing asbestos dust.
Here in Hampton Roads more than 2,000 shipyard workers have died from asbestosis, lung cancer and mesothelioma - the signature cancer of asbestos exposure. Nationwide, tens of thousands of other unsuspecting American workers have died from these diseases.
Unfortunately, it is not over. Just as many people are dying of asbestos-induced cancer today as 25 years ago because of the long latency period associated with these diseases. Asbestos products were used without warnings and safety procedures well into the early 1970s. The latency period between exposure and diagnosis is at least 30 years and it can be as long as 60 years.
The cost of this epidemic to date has been enormous, and the cost in the future will be more, no matter what system of compensation is in place. The current system has been difficult and contentious for the past 25 years, primarily because the asbestos manufacturers have never admitted their liability for these illnesses. Many of the problems of this litigation have never been resolved by the courts or Congress, but today it faces new challenges because of one characteristic that is common to both plaintiff's lawyers and corporations: greed. Greed is causing too many claims to be filed, and greed is creating corporate intransigence to even the most meritorious claims.
Why are so many claims being filed? Part of the reason relates to a failed settlement strategy by the asbestos manufacturers and a fear of the statute of limitations by plaintiff's lawyers.
In many states, plaintiff's lawyers were forced to file claims for asbestos victims as soon as any change appeared on the plaintiff's X-ray that could be attributed to past asbestos exposure. Waiting for impairment to occur would only invite a dismissal of the claim for failure to file within the time limitation. As a consequence, plaintiff's counsel frequently represented both impaired and unimpaired claimants.
Asbestos diseases frequently progress over time; consequently, many of these "unimpaired" cases became impaired or developed into cancer.
Preference for trial dates was given to the impaired cases, typically the cancer cases. When these cases approached the courthouse steps, the asbestos manufacturers encouraged plaintiff's counsel to settle what they referred to as "both the cats and the dogs," that is, both the impaired claims and the unimpaired claims.
The asbestos companies wanted to settle "both the cats and the dogs" because they wanted to report to their shareholders that the per-case average to resolve asbestos claims was low; by settling unimpaired cases cheaply, the manufacturers hoped to avoid an expensive cancer claim in the future.
All this did was feed the system. Plaintiff's lawyers figured out that they could file even more claims for people who weren't impaired and make thousands of dollars both for the claimants and for themselves.
Defense lawyers figured out that they could make lots of money defending serious claims and then settling them with weak claims and reporting a low average to their employer.
THE OBJECTIVES OF BOTH the asbestos manufacturers and the plaintiff's attorneys backfired when many plaintiff's attorneys began mass screenings. Mass screenings involve the parade of thousands of workers through an X-ray machine operated by a "friendly doctor" for the purpose of finding asbestos-related abnormalities.
These abnormalities rarely, if ever, cause impairment, but the incidence of these abnormalities is nearly 80 percent in some occupations. The result has been hundreds of thousands of new lawsuits for unimpaired plaintiffs.
The sheer volume of these cases put an end to the strategy of settling "the cats and the dogs," but on the other hand, none of these cases ever goes to trial. Why? Because judges do not want to hear them, the unimpaired plaintiff is unsympathetic to the jury, the risk of a defense verdict is high, and the expenses of trial can be enormous.
The huge numbers of these unimpaired claims create a wonderful whipping boy for the asbestos manufacturers, who rarely pay these claims. The unimpaired cases are, however, a real problem for the bankrupt defendants - of whom there are now about 20. Bankruptcy law permits all claims - impaired and unimpaired - to have an equal vote in deciding how the assets of the bankrupt estate should be used to pay claims.
Obviously, this means that unimpaired cases - even cases in which the diagnosis rests solely on an X-ray - get paid. As a consequence, it has become profitable for certain plaintiff's attorneys to represent tens of thousands of unimpaired claims. These claims are draining tens of millions of dollars away from the claims of impaired asbestos victims.
Don't the asbestos manufacturers want to pay the impaired asbestos victims? No.
The asbestos manufacturers allege to Congress and to the press that they are willing to pay sick claimants. For most manufacturers and in most jurisdictions, this is not true now and it has never been true.
NATIONWIDE, THE DEFENSE against mesothelioma cases and lung cancer cases becomes more and more elaborate and expensive to overcome every day. In fact, the asbestos manufacturers are not paying for the sick claimants - impaired asbestosis, lung cancer and mesothelioma victims - except when they are forced to do so in trial or on the courthouse steps.
In New York, California and Texas the verdicts and settlements are much larger than elsewhere; but in most jurisdictions the plaintiff's lawyers face interminable delays, discounted settlements and elaborate defenses to every claim.
Federal legislation has been suggested as an easy solution, and it is a fact that federal diagnostic standards would be helpful to resolving tens of thousands of unimpaired claims.
Unfortunately, the asbestos manufacturers don't want to simply eliminate the claims of people who are not sick. They want to eliminate the right to a jury trial of the people who are sick, and they want to create a bureaucratic labyrinth of delays and red tape to discourage any asbestos victim from seeking compensation. Most asbestos manufacturers also insist that they want strict financial caps on the recovery of any asbestos victim, regardless of how catastrophic his disease or damages may be.
In Virginia, for many years (1991-2000) the asbestos litigation was completely under control because of several factors:
Over the course of 15 years of contentious litigation (1976-1990), plaintiff's counsel repeatedly proved the underlying basis for these claims: that is, the asbestos manufacturers knew about the dangers and failed to warn shipyard workers.
Plaintiff's counsel in Virginia filed claims only for victims who had significant illness, meaning impairment.
Counsel for the plaintiffs and counsel for the asbestos manufacturers reached agreements on "impairment-driven" medical criteria and predictable payments to asbestos victims. These eliminated the need of litigation in thousands of cases.
That voluntary settlement system forged from a history of litigation has collapsed because of the Chapter 11 bankruptcies filed by 75 percent of the asbestos manufacturers.
Those bankruptcies have not eliminated the right of plaintiffs to receive compensation in the future, but they have severely diluted the expected recovery.
A RESOLUTION TO THE asbestos litigation crisis will require that Congress take a page out of the Virginia asbestos litigation playbook.
First, Congress needs a simple answer, not a complex one: reasonable definitions of disease, not new federal bureaucracies. The proposals in Congress now would not only eliminate the right to sue for the "unimpaired" but also eliminate the right to sue for 70 percent of the asbestos victims who are considered impaired by the American Medical Association and who are now entitled to compensation in virtually every state.
If the courts can dismiss tens of thousands of truly unimpaired claims because they are not ripe for adjudication, this will relieve enormous pressure from the system and allow those who are sick to have a reasonable opportunity for a trial date or a settlement. This impairment criteria - as a prerequisite to voting or payment in bankruptcy court - will also preserve limited assets to pay only impaired claims.
(This is similar to what the Virginia General Assembly did in 1985 when it defined the "accrual" of an asbestos claim as the date on which asbestosis, mesothelioma or a "disabling" asbestos-related disease is first communicated.)
Second, Congress needs to create the mechanism for a national "voluntary" alternative of mediation or arbitration of claims. If the plaintiffs can be given a voluntary opportunity of mediation or arbitration that the asbestos manufacturers are required to participate in, most plaintiffs would choose that alternative as opposed to litigation. The quid pro quo for requiring asbestos manufacturers to mediate or arbitrate would be to prohibit lawsuits by claimants who are not impaired. Voluntary mediation or arbitration would preserve the state court system and the constitutional right to trial by jury, without imposing a "federal solution."
Third, Congress needs to provide the state and federal courts with procedural authority to separately determine liability issues in a single consolidated trial, jurisdiction by jurisdiction, which permanently prohibits the relitigation of these issues in the future.
This is exactly what the Virginia General Assembly did in 1990. The threat of using this statute resulted in the prompt settlement of thousands of claims.
Nationwide, the use of consolidation and the prohibition of relitigating liability issues will eliminate the cottage industry of experts for both plaintiffs and defendants that thrives on the inefficiencies of the system, and it will eliminate repetitive, lengthy and expensive and unnecessary litigation.
ASBESTOS LITIGATION HAS BEEN ongoing for more than 25 years. The liability issues in this litigation have now been decided hundreds of times, and there is no need to continue this exorcism forever.
Once liability is determined, the innocent will go free - their stock price will recover - and the guilty will face individual trials that are limited to issues of exposure, diagnosis and damages, that is, a one- or two-day trial, not three or four weeks.
Unfortunately, the public debate over this issue is primarily being paid for by public relations firms hired by asbestos manufacturers, and the legislative proposals are being drafted by lobbyists hired by asbestos manufacturers.
Yes, there are a handful of plaintiff's lawyers who are assisting the asbestos manufacturers in this public relations and legislative effort.
Unfortunately, those plaintiff's lawyers - for their own obvious reasons - represent the most severely impaired and dying asbestos victims, the mesothelioma claimants. For this reason, they have no problem with the idea of preserving all of the asbestos manufacturers' money to pay mesothelioma claimants while eliminating the claims of 70 percent of the other impaired victims.
Most plaintiff's lawyers recognize the legitimate need to compensate all impaired asbestosis and cancer victims, not just mesothelioma victims.
Indeed, plaintiff's attorneys who represent impaired asbestos claimants want to be a part of the solution to the asbestos litigation problem; but, like topsy-turvy land, the parties that created this national disaster - the asbestos manufacturers - are now being treated like the victim, and the parties that are disabled and dying are simply considered to be the problem.
One thing is certain. The asbestos companies and their trumpeter, the Wall Street Journal, will not "take care" of the asbestos victims.