House looks at asbestos claim transparency bill

WASHINGTON (Legal Newsline) -- The button pinned to the wheelchair-bound woman's sweater said it all: "Asbestos caused my cancer."

The constituent was one of three people with asbestos-related disease who attended a House subcommittee meeting Wednesday designed to address H.R. 982, the Furthering Asbestos Claim Transparency Act of 2013.

Typically referred to as FACT, the proposal would require alleged victims of asbestos exposure to divulge claims they may have filed with the asbestos bankruptcy trusts prior to seeking recovery in the tort system.

The hearing, held to discuss the pros and cons of the proposed legislation, took place before the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

Chairman Spencer Bachus, an Arizona Republican and a supporter of the measure, told the room that his desire is to protect the rights of the victims affected by asbestos exposure and ensure that "justice is served."

Citing a recent Wall Street Journal article that stated that nearly half of the asbestos trusts have reduced payments to new victims at least once since 2010, partly in an effort to preserve assets for future victims, Bachus stressed the importance of crafting legislation that would help cut down on fraud and abuse whereas compensation to claimants is concerned.

"The enemy of any just compensation system is fraud and abuse," Bachus said. "Fraud and abuse take money away from real victims who desperately need help. This is an especially important issue with regard to the asbestos trust funds, which still face huge future claims and where every penny counts."

Peggy L. Ableman, a retired trial court judge from Delaware who handled that state's asbestos docket, was one of four people who testified in front of the subcommittee.

Ableman said while it's important to compensate those who have been adversely affected by asbestos exposure, she also sees a need for reform in this area of the law.

"Absent full disclosure, the defendants cannot be informed of the full extent of an individual's exposure," Ableman testified, referencing the fact that the asbestos trusts work in secrecy. "They are therefore often led to believe - erroneously - that their products were far more responsible for the plaintiff's disease than what may have been the case, because they have no way of knowing the substance of an individual plaintiff's claims."

Ableman said she doesn't fully understand the opposition to this so-called reporting requirement under the proposed legislation because a plaintiff's identifying information would be divulged if the claim were filed in the civil court system as opposed to the bankruptcy trust.

In Delaware, for instance, plaintiffs under state law are required to serve the defense coordinating counsel with claim forms and related materials related to any prior asbestos claims made by the plaintiffs with any trust, entity or person "in any way involved with asbestos claims," Ableman said.

However, even in a state such as Delaware where there is an express requirement of full disclosure early on in the litigation, "deception can still occur, often resulting in irreversible prejudice to one or more defendants," the retired judge said, explaining her support behind proposed federal legislation.

Ableman testified that she believes there can be no real justice or fairness if the law imposes any obstacles to "ascertaining and determining the complete truth."

"From my perspective as a judge, it is not simply the sheer waste of resources that occurs when one conducts discovery or trials without knowledge of all the facts, although that circumstance is indeed unfortunate and one that courts can ill afford in this day and age," Ableman said. "What is most significant is the fact that the very foundation and integrity of the judicial process is compromised by the withholding of information that is critical to the ultimate goal of all litigation - a search for, and discovery of, the truth."

The other witnesses to testify on Wednesday were S. Todd Brown, a professor with SUNY Buffalo Law School in New York, Elihu Inselbuch, a member of New York's Caplin & Drysdale, and Marc Scardella, of the Washington, D.C. economic consulting firm Bates White LLC.

Inselbuch was a vocal opponent of FACT, calling the proposed law the "latest, but not the first, attempt by asbestos defendants to minimize and ultimately extinguish their liability in the tort system."

Inselbuch sparred with Bachus on a few occasions during the hearing, prompting the congressman to divulge that he, too, was a trial lawyer at one time. In fact, Bachus said, FACT has garnered the support of members of both major parties.

Nevertheless, Inselbuch wouldn't back down, stating that laws that seek to enforce disclosure, regulate timing of trust claims, and put additional burdens on asbestos bankruptcy trusts, are "unjust and unfair to asbestos victims."

"These laws are simply the latest stratagem by corporations that produced and distributed asbestos-containing products to avoid responsibility for the deaths and injuries of millions of Americans caused by those products," Inselbuch testified. "Legislators should not allow public policy to be hijacked by special interests, and should be vigilant to protect the rights of injured workers and their families."

Brown, the New York law school professor who specializes in the intersection of mass torts and bankruptcy law, testified that it's important to strike an appropriate balance whereas disclosure is concerned.

"This balancing of interests is necessary to ensure that objections that are ostensibly grounded in individual privacy interests are not used to block legitimate but unwanted inquiry," Brown stated. "The question here is whether disclosure of some information is warranted and whether that disclosure can be tailored - or access to the disclosed information controlled - to limit potential misuse of the information."