America’s legal system intended to compensate people truly harmed by asbestos, but the system is out-of-control and driven by plaintiff lawyer greed. Put simply, the current process is treating injured persons unequally and taking compensation away from legitimate future claimants. The causes? A lack of oversight and transparency, conflicts of interest, weak evidence standards, high fees, inequitable treatment of claims and outright fraud.
Rooting out fraud and abuse now will help legitimate asbestos claimants who deserve to be compensated for their injuries, as well as the millions of other Americans who are affected by asbestos litigation abuse.
Asbestos claimants have two ways to get compensation:
Claimants have legitimate recourse to seek payments through both processes and from multiple sources based on their exposure record.
Often, asbestos plaintiff lawyers go beyond the facts of their clients’ claims. The lawyers go to more and more sources and provide conflicting “facts” about exposure histories, tailored to seek maximum payout from each company and trust, claiming their client was mostly harmed by the named company.
You might wonder what the managers of these trusts are doing to vet the claims, to make sure they’re not getting ripped off. But it’s not clear they do, or even want to.
Asbestos trusts are often controlled by the asbestos plaintiff lawyers – the very same lawyers who are submitting claims. Typically they keep their methods and operations hidden from the public, and oversight by the bankruptcy courts is negligible at best.
Recent court proceedings in North Carolina have helped reveal the degree of fraud and abuse in asbestos litigation and trust claims.
To help estimate the future trust liability of gasket maker Garlock Sealing Technologies, U.S. Bankruptcy Judge George Hodges allowed a review of 15 prior lawsuits against the company, which revealed evidence was improperly withheld in every suit.
Hodges observed that Garlock’s prior lawsuits were “infected by the manipulation of exposure evidence.” He found that plaintiff lawyers were hiding evidence, coaching clients on what to say, and failing to disclose claims made in other cases.
Based upon Garlock’s litigation history, plaintiff attorneys estimated its present and future liability to be $1.4 billion. However, having learned the estimate was inflated by a history of deceitful litigation, Hodges ruled that Garlock was only liable for $125 million – less than nine percent of the plaintiff lawyers’ estimate.
On December 4, 2014, Judge Hodges ruled against the plaintiffs’ committee motion to reopen the liability estimate process, holding to his $125 million ruling.
This ongoing case may help expose – and help stem – the rampant fraud and abuse in asbestos claims.
The lack of transparency around asbestos claims makes it difficult to expose suspected fraud. Recently, however, two asbestos lawyers and their radiologist were found liable for filing fraudulent lawsuits.
Freight transportation company CSX filed racketeering claims in 2007 against Robert Pierce and Louis Raimond over asbestos lawsuits they had filed against the company, when CSX discovered hundreds of switched diagnoses by radiologist Ray Harron.
To identify clients, many asbestos plaintiff lawyers set up mass X-ray screenings in the 1990s, with “diagnoses” done by experts hired by those lawyers – a recipe for fraud.
U.S. District Judge Janis Jack was overseeing some 10,000 claims for silica exposure in 2005, and an investigation revealed more than half of the plaintiffs had already filed claims for asbestos exposure. Asbestos and silica diseases are not usually found in combination, and if both were present an expert X-ray reader should have noted it.
Federal regulations say all who qualify for asbestos trust payments should be treated equitably. However, as asbestos plaintiff lawyers file excessive fraudulent claims, later claimants may receive a small fraction of the originally intended compensation.
The reasons include lax policing of claims, lack of transparency, and self-serving and ethically conflicted trust oversight. The ethical conflicts: The same plaintiff lawyers who have the profit motive of getting fees for settling their own clients’ claims also control the bankruptcy trusts.
An example is the $900 million T. H. Agriculture & Nutrition (THAN) Trust.
In 2009, the THAN Trust was created and began distributing $387 million to existing claimants at 100 percent value; it also closed the doors on any new claims. Sixteen months later, it finally allowed new claims but, without explanation, reduced payment values by 70 percent.
In this pre-packaged, bankruptcy and trust deal, the company that had 14,000 asbestos claims sees the number jump to 90,000 at trust formation. Also, the company’s largest prior annual payout was $39 million, and the payout process at trust formation jumped to $387 million.
These lawyers are generating substantial wealth with little transparency and oversight, profiting on up to 40 percent of the value of their clients’ claims. (WSJ 3/11/13)
Workers and retirees of companies targeted by plaintiff lawyers’ excessive litigation and specious claims may lose their jobs and pensions. Some 100 companies have declared bankruptcy from asbestos litigation. (Towers Watson 2013)
As volumes of asbestos lawyers’ specious trust claims far exceed the projected number of legitimate claims, payments are reduced and future claimants get less. Payments currently average 15 percent of full claim value. (WSJ 3/11/13)
Businesses are hindered by the burdensome legal costs imposed by asbestos lawyers’ fraudulent claims.
When businesses are forced to pay excessive legal costs to combat asbestos lawyers’ specious claims, costs are passed on to consumers.
The economy and investors are harmed when companies are unfairly targeted and overrun by asbestos lawyers’ questionable claims.
Fixing our broken asbestos claim process will take some combination of the following:
Some states, such as Arizona, Ohio, Oklahoma, Tennessee, Texas, Utah, West Virginia and Wisconsin have passed meaningful asbestos reforms, and many other have introduced reform bills. In 2016 Congress is considering the The Fairness in Class Action Litigation Act, which includes the asbestos reform provisions from the Furthering Asbestos Claim Transparency Act (FACT Act). Learn more about supporting the federal asbestos claim reforms at www.stopasbestostrustfraud.com.