Asbestos deals have neglected needy victims Much of the money for liability system has gone to lawyers

August 09, 1998|By John E. Calfee

While tobacco liability continues to occupy Congress, another liability issue - this one involving asbestos - has bedeviled the courts and tortured victims for many years.

Asbestos litigation is one of the saddest episodes in legal history. Large enterprises have been forced into bankruptcy, while untold millions of dollars have landed in the laps of attorneys. Yet many of the neediest victims, often close to death, have not received compensation. It is the tort system's continuing nightmare, an amalgam of inefficiency and injustice. In California alone, more than 4,500 pending asbestos cases are clogging state courts.

The most obvious problem is the sheer scale of litigation. The largest asbestos manufacturer, Johns Manville, declared bankruptcy in 1982, when it faced 17,000 claims and the courts expected another 70,000 or so - an incredible number then, but one that looks relatively small today.

Other manufacturers suffered similar onslaughts. By 1995, despite thousands of settlements, the total number of suits was about a half-million, and claims continue to arrive at a rate of more than 30,000 per year. Nor are these simple cases. Most involve multiple defendants, a melange of producers and insurers, and the murkiness of history.

The result has been more suits, more lawyering and more money changing hands - with most of it ending up in the hands of parties other than the plaintiffs. About 60 percent of all the money paid into the liability system goes to lawyers and experts, rather than to victims.

With such inefficiency has come delay. The best available data indicate that individual asbestos lawsuits have taken 31 months to reach resolution, compared with barely half that for other product-liability suits.

Amazingly, the greatest growth area is for cases with evidence of asbestos exposure but no impairment - that is, no cancer and no breathing problems. Plaintiffs' attorneys have discovered that some juries will award many thousands of dollars to unimpaired plaintiffs. Trial lawyers go where the money is, and now the bulk of asbestos cases involve unimpaired claimants. No wonder the money sources are drying up for those who need it.

What is required is compensation for the real victims, along with a mechanism for future compensation for persons who have been exposed to asbestos and later develop an impairment - all without the unacceptable cost and delay of tort litigation and minus the threat of punitive damages.

In 1993, a consortium of asbestos defendants and plaintiff attorneys reached such an agreement in Amchem Products Inc. vs. Windsor. But the Supreme Court in June 1997 decided that, however admirable the Amchem settlement might have been from the standpoint of victims and defendants alike, it violated federal rules for class action suits. Justice Ruth Bader Ginsburg noted in her majority opinion, "The argument is sensibly made that a nationwide administrative claims processing regime would provide the most secure, fair and efficient means of compensating victims of asbestos exposure." She added soberly, "Congress, however, has not adopted such a solution."

Congress must act. It can create a compensation scheme that achieves what the courts could not: justice and efficiency. Of course, this is not an easy task. Some previous schemes, such as the Superfund and the black lung compensation plan, succumbed to political pressures to expand benefits along political lines. But there is hope that Congress can get it right this time. Rep. Henry J. Hyde, an Illinois Republican who heads the House Judiciary Committee, has introduced a bill that would adopt the essential elements of the Amchem settlement.

The Fairness in Asbestos Compensation Act of 1998 would create a completely industry-funded entity to provide the opportunity for quick compensation to individuals impaired through asbestos exposure. By focusing compensation on impaired individuals, funds would be conserved to help pay those who become ill later on. An independent medical board would apply objective medical criteria, and victims could seek compensation regardless of certain legal doctrines (such as statutes of limitations) that would otherwise bar lawsuits. Lawyers would still be involved, but fees would be capped at 25 percent. Punitive damages, which have driven the existing system into the bizarre legal territory it now occupies, would be eliminated.

This legislation is a hopeful development. Congress, and apparently only Congress, can finally do something to help the neediest asbestos victims while curtailing the excesses that have disgraced the liability system.

John Calfee is a resident scholar at the American Enterprise Institute in Washington. This article first appeared in the Los Angles Times.

Pub Date: 8/09/98

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