Amanda Smith-Teutsch Dec. 21, 2012, 3:13pm

COLUMBUS, Ohio (Legal Newsline) - With both houses of the Ohio legislature approving HB 380 - a bill that will require plaintiffs in asbestos lawsuits to disclose during civil litigation claims they have filed with asbestos trust funds - legal observers are watching the law's development and implementation with great interest.

"It is a long overdue and very positive first step," Kirk Hartley, of LSP Group LLC and Gnarus Advisors, said. Hartley, an attorney with more than 30 years' experience, has handled asbestos and other product liability claims for defendants, insurance coverage litigation for policyholders, representation of creditors in mass tort Chapter 11 cases, amongst other types of cases.

Called the "Asbestos Transparency Act," the law seeks to prevent what some observers call double-dipping, but what Hartley refers to as exploitation of simultaneous systems of compensation.

"This is about recognizing that there are two different sources of compensation, and putting all of that information on the table," Hartley said.

The law requires plaintiffs in asbestos litigation to reveal claims they've made for compensation from asbestos trust funds. The legislation took the rare step of mandating the disclosure of records that could be part of bankruptcy settlements and agreements, which are normally protected by confidentiality.

"To our understanding (the law) is the first of its kind in the country, but we are hoping additional states adopt comparable laws," said Darren McKinney of the American Tort Reform Association. "With the scandal that is double-dipping in the court systems and in trust funds, a statutory response is the only solution."

Reform of the so-called double dipping phenomenon will most likely occur on the state level, he said.

There has been some activity on the federal level to regulate asbestos-related torts; in April 2012, Rep. Ben Quayle, R-Arizona, introduced the "Furthering Asbestos Claim Transparency" or 'FACT' Act of 2012, which would require quarterly disclosure by asbestos trust funds of all claims, both filed and compensated. While the resolution was reported by committee, action was never taken by the full House of Representatives.

Asbestos litigation has bankrupted 70-80 companies, McKinney said, with more claims filed each year. Asbestos cases are in some states being filed against companies who did not work with asbestos themselves, but are being held liable for the past actions of asbestos-related companies years after the products were marketed. An estimated 60,000 jobs have been lost due to asbestos-related bankruptcies.

"That is not saying anything against people who have legitimately been injured by asbestos," McKinney said. "But so many pending cases are cases where the plaintiff was exposed to asbestos, but cannot allege a demonstrable injury so far."

Ohio has held the position of bellwether for asbestos tort reform before: in 2004, the state enacted legislation that required plaintiffs in asbestos litigation show actual physical injury, a move that resulted in 30,000 cases being dismissed from state court dockets. Legislatures in Florida, Georgia and Texas, soon followed suit in enacting similar legislation, according to a policy briefing published by the Buckeye Institute for Public Policy Solutions.

One state where legislators are expected to take up the mantle of transparency, Hartley said, is Illinois. Madison County and St. Clair County in Illinois account for at least one third of all asbestos claims filed in the nation, a fact the U.S. Chamber Institute for Legal Reform attributes to Illinois' broad venue laws.

Legal Newsline is owned by the U.S. Chamber Institute for Legal Reform.

Illinois State Rep. Dwight Kay (R-Glen Carbon) has said he would introduce a bill modeled after the Ohio legislation.

Hartley said he thinks the Ohio legislation is another step in the slow progression of the reform of the American tort system. Mass litigation is being reformed, slowly and surely, into a system of trust funds for payment of injury claims, he said. He points to the BP Deep Horizon oil drilling rig disaster and the establishment of a trust fund to pay injury claims resulting from the disaster. Such parallel systems only work, however, with full disclosure made of payments received.

"This goes far beyond asbestos," Hartley said.

The requirements set by the bill have the potential to be adapted to other mass-tort environments where non-bankruptcy trusts have been established, Hartley said: Chinese drywall, victims of the Sept. 11 terrorist attacks, breast implants thalidomide and clergy abuse liability trust funds.

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