Asbestos accord called in peril

Silica-injury lawsuits up from 1,000 to 19,389

bogus claims suspected

February 03, 2005|By BLOOMBERG NEWS

WASHINGTON - An explosion of bogus lawsuits claiming injury from silica threatens to undermine a proposed $140 billion U.S. fund to compensate people sickened by asbestos exposure, Democratic lawmakers say.

The Senate Judiciary Committee heard testimony in Washington yesterday that the number of silica-injury lawsuits jumped from fewer than 1,000 in 2000 to 19,389 in 2003, the year the committee first supported legislation to create a trust to end asbestos-injury litigation that has bankrupted more than 70 companies.

Most claims were filed in Texas and Mississippi state courts, where unscrupulous trial lawyers claimed injuries were from silica to hedge against the possibility that Congress would bar asbestos lawsuits, said Lester Brickman, a law professor at Yeshiva University in New York.

"The lawyers are retreading their prior asbestos claims into silica claims for the same injury," Brickman told a hearing on how to prevent people from collecting twice for the same illness. The false claims could force companies that would finance the trust "to pay tens of billions more," he said.

The proposed asbestos trust would be financed by companies facing claims, such as USG Corp., the world's largest maker of wallboard, and Columbia-based W.R. Grace & Co., and insurers such as St. Paul Travelers Cos., Chubb Corp. and Ace Ltd.

Sixty percent of 8,629 plaintiffs in a federal silica lawsuit in Texas previously filed asbestos claims with a fund to compensate former Johns Manville Corp. workers, Brickman testified. Johns Manville matched the names to come up with the figure, he said.

The congressional proposal would require people filing silica cases in state court to prove their injuries weren't caused by asbestos. The panel's top Democrat, Vermont Sen. Patrick J. Leahy, said the idea is "an overly broad provision that could jeopardize" agreement on an asbestos trust.

"This is a potential deal breaker because it is very hard to solve," said California Democratic Sen. Dianne Feinstein. "We do have to preclude dual claims" without barring legitimate silica lawsuits, she said.

Victims of asbestos exposure would get from $35,000 to $1.5 million each depending on the severity of their disease.

600,000 claims

There are at least 300,000 pending asbestos claims in courts, according to a 2003 estimate by Towers Perrin, a Connecticut management consulting firm. A total of 600,000 asbestos claims were filed through 2000 and litigation has cost $54 billion, said the Rand Institute for Civil Justice, of Santa Monica, Calif. Asbestos is used to make brake linings, insulation and flame retardant.

USG's shares, which have risen 52 percent since the Nov. 2 election on investor optimism Congress would enact an asbestos trust, rose $1.05 to $33.75 yesterday on the New York Stock Exchange.

Pennsylvania Sen. Arlen Specter, the Judiciary Committee's Republican chairman, acknowledged that distinguishing between silica and asbestos claims posed a "knotty problem" for lawmakers. "I am prepared to be flexible," he said.

A group of insurance companies, including American International Group, Chubb, General Re Corp., Liberty Mutual Group and Zurich Financial Services, said in a Jan. 28 letter to the committee that they oppose the bill as drafted. The companies urged Congress to consider legislation requiring asbestos plaintiffs to meet specific medical criteria before they could press their claims in court.

Silica, or silicon dioxide, is found in quartz, sand and other materials used to make glass and concrete.

Medical experts, including David Weill, a medical professor at the University of Colorado, testified that silicosis and asbestosis are easily distinguishable and very few people suffer from both.

"They are really easy to separate," Weill said. "There may be some that have both diseases, but that is very rare."

Weill said the big jump in silica lawsuits is suspicious because the overall incidence of the disease has declined in the past three decades. Evidence presented in silica cases isn't from doctors who treat the claimants, "but from screening companies that sell their diagnostic services to plaintiffs' law firms," he said. "Whether a screening company diagnoses silicosis or asbestosis appears to depend on litigation rather than medical factors."

Brickman quoted 2003 testimony in one of the silica cases by the co-owner of a screening company who said he started focusing on silica tests because Congress was considering banning asbestos suits.

`Diagnosing for dollars'

The legislation "gets lawyers to have to change gears on what they think is going to work," said Heath Mason, co-owner of a screening company, in a deposition cited by Brickman's prepared statement.

"I call it `diagnosing for dollars,'" Brickman said.

Mike Martin, a Houston trial lawyer who represents silicosis victims, said the proposal is unfair because it would require a plaintiff "to prove he is not guilty before he gets to prove his own case."

Martin suggested the committee should require plaintiffs to disclose whether they had previously filed asbestos claims, then require those plaintiffs to prove their illness was because of silica exposure.

"The question everybody is fighting about is, who's got the burden of proof?" said Edward Becker, a retired federal appeals court judge advising the committee on the bill. "I think we can fiddle with the burden-of-proof language."

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