BestWire, R.J. Lehmann
Published April 20, 2005
WASHINGTON - As it had threatened to do just days before, the Property Casualty Insurers Association of America has declared its "strong opposition" to legislation introduced by Sen. Arlen Specter, R-Pa., that would create a $140 billion trust fund to compensate asbestos victims.
Claiming the bill, S. 852, is "too expensive, too uncertain, and does not meet any of the original intentions of an asbestos trust fund," Carl Parks, PCI's senior vice president for federal government affairs, pledged in a statement that the association and its more than 1,000 members plan to "actively fight" the bill's passage.
The announcement follows a letter to Specter signed by PCI and the National Association of Mutual Insurance Companies on the eve of the bill's formal introduction in which the insurance industry trades declared a 400-page draft version of the bill "unacceptable" and pledged to oppose it unless significant changes were made.
Introduced late April 19, following closed-door meetings between Specter and several fellow Republican members of the Senate Judiciary Committee who had likewise expressed serious reservations with the draft, the Fairness in Asbestos Injury Resolution Act creates a national trust fund, administered by the Department of Labor, that would handle claims from those who can demonstrate they faced a significant exposure to asbestos and meet medical criteria for mesothelioma, asbestosis and other asbestos-related symptoms.
Lung cancer sufferers who are or were smokers and don't show asbestos disease "markers" wouldn't be eligible for compensation from the fund.
Insurers would be liable for roughly $46 billion of the trust fund's price tag, with a requirement that most of that funding be provided in the first five years of the fund's existence.
However, in a provision that drew the most significant opposition from industry sources, the bill also leaves open the option that claims could return to the tort system should the fund be unable to pay all claims. Should there be an eventual reversion, asbestos-related suits could be filed in federal court; in the state court where the plaintiff resides; or where the exposure took place.
"Asbestos leaves many victims in its wake," Specter said in introducing the legislation. "First and foremost, the sick and their families have suffered. But the flawed asbestos litigation system not only hurts the sick and their chance at receiving fair compensation, but also claims other victims. These include employees, retirees and shareholders of affected companies whose jobs, savings and retirement plans are also jeopardized by the tide of asbestos cases. With asbestos litigation affecting so many companies, this also impacts the overall economy, including jobs, pensions, stock prices, tax revenues and insurance costs."
Specter said the bill was crafted as the result of mediations he conducted, along with Chief Judge Emeritus Edward R. Becker of the 3rd U.S. Circuit Court of Appeals, on 36 separate occasions in an effort to build consensus among representatives of the insurance industry, manufacturers, trial attorneys and labor groups. He added that he expects the Judiciary Committee, which he chairs, to move the bill by April 28.
But according to Parks, by failing to provide an "exclusive remedy" for all asbestos claims, the bill as it is drafted has "the potential to permanently damage insurance markets and the U.S. economy." In addition to the reversion provisions, PCI noted the fund would permit claims already before a jury to remain outside the system, and claimants who already have received asbestos-related workers' compensation payments would be permitted double recovery.
The association further objected to a provision calling for insurers to make up for the "orphan shares" of companies that are unable to pay, and to the fact that the overall size of the fund wasn't adjusted to reflect the removal of smokers from the system.
Many of PCI's concerns also were raised earlier this week in a separate letter to Specter signed by NAMIC and two other insurance trade associations, the American Insurance Association and the Reinsurance Association of America.
Following Specter's introduction of the bill, AIA spokesman Dennis Kelly said the concerns the group expressed in the letter to Specter still stand, and the association plans to continue its dialogue with legislators in hopes of crafting a more acceptable compromise.
The AFL-CIO and the Association of Trial Lawyers of America also have announced opposition to the bill as written, while the United Auto Workers, the Veterans of Foreign Wars and the National Association of Manufacturers have expressed support.
ATLA, whose members would see their attorney fees capped at 5% of awards under the legislation, cited a report by the Environmental Working Group indicating the trust fund could be deficient by as much as $100 billion, and that there may be as many as 33,000 more victims of mesothelioma and asbestos-caused cancer than the bill anticipates. The trial attorneys also predicted, based on experience with past compensation programs, that the fund would take years to start, and they expressed doubts that the backlog of more than 500,000 cases could be handled in a timely manner.
Lawmakers likewise are divided, on both sides of the aisle. Following an April 19 meeting of Specter, fellow Judiciary Committee Republicans and Senate Majority Leader Bill Frist, R-Tenn., Texas Sen. John Cornyn said he remained dissatisfied with the bill as written.
Speaking from the Senate floor, Minority Whip Richard J. Durbin, D-Ill., said that while he "generally supports the concept of a no-fault trust fund," he doesn't believe the bill is fair to either claimants or companies, and he doesn't expect it to pass.
