Senate's FACT Act "clips the wings of the plaintiffs bar"

Heather Isringhausen Gvillo May 30, 2014, 2:50pm

WASHINGTON (Legal Newsline) - Despite strong opposition, supporters of the Furthering Asbestos Transparency Act believe that U.S. Senator Jeff Flake's introduction of the bill in the Senate could reignite interest in the FACT Act.

Mark Behrens, a defense attorney with the Shook, Hardy & Bacon law firm, said the bill "is a helpful step towards building momentum for federal asbestos transparency legislation and may spark additional interest in the topic."

Darren McKinney, Director of Communications with the American Tort Reform Association, said he finds it encouraging that a senator would take a cue from the House and introduce a bill designed to encourage litigation reform in one of the nation's largest tort systems.

"The efforts to lie, manipulate and orchestrate are obvious," McKinney said of what he feels is fraud surrounding asbestos bankruptcy trusts.

Flake, R-Ariz., introduced the bill in the Senate, officially titled S. 2319, six months after the U.S. House of Representatives passed its version of the FACT Act.

The bill seeks to amend title 11 of the United States Bankruptcy Code, requiring public disclosure by asbestos bankruptcy settlement trusts according to section 524(g) of the title.

If passed, the bill would require asbestos bankruptcy trusts to release information on those seeking compensation due to asbestos exposure in quarterly reports, including detailed information regarding the receipt and disposition of claims for asbestos-related injuries.

The bill would also require the quarterly reports to be made on the court's public docket, specifically disclosing the names, exposure history and basis for any payment from the trust of those who have filed a claim with each trust.

The Senate bill is identical to the companion House bill, officially titled H.R. 982.

H.R. 982 was introduced by Rep. Blake Farenthold, R-Texas, on March 6, 2013 and was passed in a 221-199 vote on Nov. 13. The vote remained mostly on the party line as only five Democrats voted for the Act. It was then sent to the Senate for approval.

Calling the Senate bill a positive step, Behrens added that "passage of the FACT Act will promote honesty in litigation and help juries reach fully informed decisions about who is responsible for a plaintiff's injury."

McKinney said that he understands people are going to make mistakes because it has been decades since their alleged asbestos exposure, but their stories and provided evidence should line up with each claim.

"If you plan on filing a lawsuit in one jurisdiction and then making a bankruptcy claim, you ought to be telling the same story to the best of your recollection," he said.

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) released a letter in November written by William Samuel, Director of the Government Affairs Department, that expressed strong opposition to the House version of the FACT Act. The AFL-CIO confirmed in an email that its oppositions to the House bill also apply to the Senate bill.

In his letter, Samuel agreed that the bankruptcy system intended to compensate asbestos disease victims is problematic with its delays, "inadequate" compensation and increased payments to lawyers.

"But [the FACT Act] does nothing to improve compensation for asbestos victims and would in fact make the situation even worse," Samuel wrote. "In our view, the bill is simply an effort by asbestos manufacturers who still are subject to asbestos lawsuits to avoid liability for diseases caused by exposure to their products."

The FACT Act also attempts to protect claimants' privacy by prohibiting disclosure of their confidential medical records and full social security numbers.

However, Peg Seminario, Safety and Health Director with AFL-CIO, said the bill further "victimizes" the asbestos claimants and still violates their privacy.

"Hundreds of thousands of workers and family members have suffered or died from diseases caused by exposure to asbestos," Seminario stated. "For years, companies hid the dangers of this deadly killer and denied victims any compensation."

"Now the Chamber of Commerce and other employers are pushing legislation - the FACT Act - which would further victimize these workers by invading their privacy and posting their exposure history and disease compensation claims on the web, giving unfettered access to victim's personal information," she continued. "These are the same organizations that have opposed virtually every workplace safety and health measure to protect workers, including tougher workplace standards for asbestos and silica."

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

In Samuel's letter, he agreed that the bill would only serve as an invasion of privacy and that claim disclosure would put a burden on trusts, delaying "much-needed" compensation.

"Congress should be helping the hundreds of thousands of individuals who are suffering from disabling and deadly asbestos diseases, not further victimizing them by invading their privacy and subjecting them to potential blacklisting and discrimination," Samuel wrote.

Despite opposition, supporters of the FACT Act argue that U.S. Bankruptcy Judge George Hodges' decision in the Garlock Sealing Technologies case exemplifies why transparency is needed.

Not long after the FACT Act was passed in the House, Hodges, of the U.S. Bankruptcy Court of the Western District of North Carolina, ruled that asbestos plaintiffs' attorneys have been withholding evidence while pursuing claims against Garlock, a gasket manufacturer.

On Jan. 10, Hodges ordered that the amount sufficient to satisfy the company's asbestos liability is $125 million, roughly $1 billion less than what plaintiffs' representatives felt was proper.

During the bankruptcy trial, Garlock brought evidence to the hearing demonstrating that the last 10 years of its participation in the asbestos litigation system "was infected by the manipulation of exposure evidence by plaintiffs and their lawyers."

"Since the House passed its version [of the FACT Act], the Garlock decision by the federal bankruptcy judge in Charlotte reinforces the need for transparency legislation at the federal level," Behrens said of the fraud.

McKinney agreed that the bill could "turn up a little heat" on the need for transparency, but is discouraged that it is enough for the Senate to pass the bill.

McKinney added that although he and other FACT Act supporters would like to see the bill passed, it is unlikely as long as the Senate is controlled by the Democratic Party - especially in an election year.

Calling the FACT Act a bill that "clips the wings of the plaintiffs bar," McKinney said that as long as the plaintiffs bar is one of the most consistently generous campaign contributors, bills that the lawsuit industry doesn't support regrettably will not reach the Senate floor.

"As far as they see it, they need campaign contributions from wealthy plaintiffs' lawyers and law firms if they are going to be competitive," McKinney said.

"These guys know who's buttering their bread," McKinney added. "And I can't imagine for the life of me that they will alienate those who butter their bread."

All requests seeking comments from plaintiffs' attorneys went unanswered.

McKinney said he wasn't surprised plaintiffs' attorneys refused to comment because they "didn't want to be quoted defending fraud," adding that opposition to the FACT Act boils down to defending fraud.

From Legal Newsline: Reach Heather Isringhausen Gvillo at

More News