This week, three U.S. Congressmen introduced the Furthering Asbestos Claims Transparency Act, which will require that all asbestos bankruptcy trusts “disclose claims and exposure allegations while providing third-party discovery in asbestos civil lawsuits.”
According to a Legal Newsline article, the bill was presented by Republicans Ben Quayle of Arizona and Dennis Ross of Florida along with Jim Matheson, a Democratic congressman from Utah. It specifically addressed the companies that declared bankruptcy due to excessive asbestos-related litigation costs and then proceeded to set up trusts to compensate asbestos victims with diseases such as mesothelioma. Of the 90 U.S. companies that have filed bankruptcy for asbestos-related reasons, about 60 set up such trusts. This includes mega companies such as Owens-Corning, Armstrong World, and Babcock & Wilcox.
“The trust fund system originated to resolve present and future asbestos injury claims for victims deserving of compensation,” said Leigh Ann Pusey, president and CEO of the American Insurance Association. “Today, the system is fraught with fraud and abuse to the detriment of legitimate claimants. This legislation’s transparency measures protect claimants’ confidentiality while ensuring the continued viability of the asbestos trust fund system.”
The Government Accountability Office has reviewed trust operations in the past and tends to disagree with Pusey’s statement. Their 2010 report noted that no fraud was found in the system. However, that same report noted that the trust funds did indeed “operate in secrecy.”
“Although the possibility exists that a claimant could file the same medical evidence and altered work histories with different trusts, each trust’s focus is to ensure that each claim meets the criteria defined in its (trust rules), meaning the claimant has met the requisite medical and exposure histories to the satisfaction of the trustees,” the report noted.
Two states – Ohio and Oklahoma – have proposed similar legislation. Oklahoma’s senate passed their bill in March and Ohio is waiting for senate approval to come shortly.