August 10, 2010
Asbestos Is A Good Lesson For BP â€” To Avoid (Forbes)
BP's $20 billion oil-spill fund is a pre-emptive strike against plaintiff lawyers, an attempt to settle all conceivable claims from its Gulf of Mexico oil spill before they get to court. And it might just work, if BP can avoid getting dragged into a morass of tangential health claims like the ones that sank just about every company that manufactured or installed asbestos products as a main line of business.
A new report from the RAND Institute for Civil Justice shows just how unruly and devoid of systematic review the asbestos-claim process has been. Authors Lloyd Dixon, Geoffrey McGovern and Amy Coombe tried to pull detailed information about the 44 asbestos trusts. They were established under a special provision of the bankruptcy code Congress passed just to deal with the millions of lawsuits filed by people who claim to have been exposed to the substance, which can cause lung disease and a rare cancer of the chest wall lining called mesothelioma.
The RAND researchers quickly ran into a wall that critics of the asbestos-claim process have frequently pointed out: The trusts don't share important information such as who they've paid benefits to, and under what assumptions. That makes it virtually impossible to determine how many individuals have been paid or whether they've submitted conflicting work histories to obtain benefits from Johns Mansville, say, and a manufacturer in another state the claimant couldn't possibly have worked for at the same time.
It's hard to chalk this up to chance. The top five law firms whose lawyers serve as trustees overseeing these trusts each sit on eight or more of the 26 largest trusts, with the top two, Baron & Budd of Dallas and Oakland, California's Kazan, McClain, Abrams, Lyons, Greenwood and Harley each sitting on trusts with $11.6 billion of the $18.2 billion in total assets.
"Perhaps the most-significant limitation of the publicly available data is the inability to link payments across trusts to the same individual. It is not possible to use trust-level data to determine the number of trusts providing payments to the same individual or the amount the trusts together pay to an individual claimant," the RAND authors state. "This lack of information makes it difficult or perhaps impossible to evaluate the trusts' effect on the overall compensation provided to individual claimants and on the compensation paid by solvent defendants."
The average non-malignant claimant got $3,000 in 2008, the report says, while the average cancer claimant got $34,000. Claims totaled 575,000. If each one was an individual claimant that would make asbestos-related disease a scourge more than five times worse than lung cancer, according to the most recent CDC statistics. We don't know how many individuals claimed asbestos-related disease in 2008, or any other year, because the trusts don't take the simple measure of establishing a central database of Social Security numbers.
I've written about the games lawyers play with asbestos claims, including this tale of an Ohio man's remarkable work history that only unraveled after his attorneys had the audacity to sue Lorillard Tobacco, whose defense lawyers don't play so nice. Lorillard, it seems, manufactured a Kent cigarette in the early 1950s with an asbestos filter. It was marketed toward women.
The RAND report has numbers to put the BP blowout in perspective. Since the asbestos litigation wave began, companies have paid out an estimated $49 billion outside of the bankruptcy trusts. Another $10.9 billion has flowed out of the main trusts, to pay an estimated 2.4 million claims. By putting all its money under the central control of administrator Kenneth Feinberg, at least BP won't be left guessing where the money went.
The original story can be found here