Grace, town fight over illness claims

Md.-based chemical company is at odds with Montanans who say the local mine has cast a cloud of death over them


LIBBY, MONT. — LIBBY, Mont.-- --Lloyd Arlt was breathing hard when he reached his roadside mailbox 100 feet from his front door. Even though oxygen flowed from a tank strapped to his back, he was forced to pause, trying to catch his breath.

As he shuffled back to his mobile home, he pulled two envelopes from Health Network America from the mail. One letter was addressed to his wife, the other to him.

"I got halfway down the first page and broke out laughing," said Arlt, a 79-year-old former heavy equipment operator. "Here's this letter from the insurance company for W.R. Grace who poisoned the countryside with asbestos telling me that I'm cured. Since 2000, doctors have run test after test and told me that the lining of my lungs is crusted with asbestos and was getting worse."

The letter to Marjorie, his wife of 58 years, also declared her free of asbestos-caused disease. Similar letters went to 178 others who had worked or lived in and around Libby and been exposed to asbestos fibers from vermiculite ore mined by Grace, an international chemical company based in Columbia. Like the Arlts, they had been diagnosed as ill and eligible for the health care that Grace promised residents of this mountain valley.

In a dispute over the validity of the victims' medical diagnoses, physicians hired by Grace's insurer, HNA, are challenging the findings of Libby physicians, national pulmonary specialists and federal public health experts. In the past two months, more than a quarter of the 700 people covered by the HNA plan have gotten what some residents call "miracle letters" saying they show no signs of asbestos disease. The rest of the victims covered by the plan got letters affirming their diagnoses.

Those who were declared disease-free were told their X-rays had been reviewed by one or more radiologists working for the insurer. "In your case, none of the peer reviewers was able to identify an asbestos-related disease or condition," the letter said.

"Now Grace is performing miracles, curing people with simple letters that say they are free of disease," said Gayla Benefield, whose husband, David, and a nephew received letters saying they are disease-free. Her letter agreed she has asbestos disease. In her extended family, 42 people have died from asbestos disease, are sick from it or are at risk, she says.

The dispute marks the latest development in a toxic episode that goes back decades. Grace's mine, once Libby's largest employer, closed in 1990. Nine years later, the Seattle Post-Intelligencer documented that the mine and its dusty ore-sorting plant had released hundreds of tons of asbestos into the air, and that Grace and the government knew the danger but did nothing. Within weeks, Paul Norris, at the time Grace's chief executive officer, promised free medical care to "anyone in Libby, who after receiving an independent screening, is diagnosed with asbestos-related disease."

Grace filed for bankruptcy protection in 2001. It did so, according to Norris, now Grace's chairman, because it was the only way to protect itself from tens of thousands of lawsuits claiming death or illness from exposure to asbestos in Grace products or from its facilities.

Last February, the Justice Department indicted Grace and seven current or former executives and managers on federal criminal charges that they knowingly endangered the public and Libby mine workers through exposure to asbestos and concealed the information. If found guilty, Grace could be fined up to $280 million and individuals could face prison terms of up to 60 years.

In June, New Jersey's attorney general filed civil charges against Grace and two executives for allegedly concealing asbestos contamination at its former vermiculite processing plant in Trenton.

Class action suits have been filed against Grace and the Canadian government over illnesses and deaths reportedly connected with exposure to Grace's Zonolite insulation in homes built by the Canadian government and others. Grace's bankruptcy does not protect it in Canada. The same dangerous insulation is estimated by U.S. agencies to be present in up to 35 million U.S. homes and businesses.

Grace spokesmen declined requests for comment but previously said the company "categorically denies any criminal wrongdoing." Grace referred questions about the "no disease found" letters to its insurer.

Dr. Jay Flynn, medical director of New Jersey-based HNA, said no one in Libby has been dropped from coverage. "As our letters indicated, those members who do not have a finding on chest X-ray or chest CT scan of previous asbestos exposure will continue as members of the plan," he said by e-mail. He also noted that recipients of the letter were told they could submit a more recent X-ray or have a new one taken that would be covered by the plan.

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