Ohio Senate mulling change to asbestos claims

Michael P. Tremoglie Mar. 19, 2012, 10:33am


COLUMBUS, Ohio (Legal Newsline) - The Ohio Senate heard testimony Wednesday about a bill passed by their colleagues in the House which concerns full disclosure by plaintiffs in asbestos litigation.

The bill imposes certain requirements for the plaintiffs in relation
to filing claims with asbestos trusts. The proposed legislation now being considered requires that defendants must be informed of all claims submitted to asbestos trusts before and during the trial.

Defense counsel may also request plaintiffs file a claim with any asbestos trust, from which the defense counsel believes the plaintiffs are eligible to receive damages.

The language of the bill states, "a claimant shall provide to all of the parties in the action a sworn statement by the claimant, under penalty of perjury, identifying all existing asbestos trust claims made by or on behalf of the claimant and all trust claims material pertaining to each identified asbestos trust claim. The sworn statement shall disclose the date on which each asbestos trust claim against the relevant asbestos trust was made and whether any request for a deferral, delay, suspension, or tolling of the asbestos trust claims process has been submitted."

Furthermore it provides that, "If the claimant, subsequent to the submission of the sworn statement under division (A)(1)(a) of this section, files with or submits to any asbestos trust additional asbestos trust claims not previously disclosed, the claimant shall provide to all of the parties in the asbestos tort action an amendment updating the sworn statement and identifying the additional asbestos trust claims."

HB 380 also mandates, "Any defendant in an asbestos tort action may file a motion with the court, with notice to the claimant and to all of the parties in the action, for an order to stay the proceedings. A defendant's motion to stay the proceedings shall set forth credible evidence that demonstrates all of the following: (1) The identities of all asbestos trusts not previously disclosed by the claimant pursuant to section 2307.952 of the Revised Code against which the claimant has not made any asbestos trust claims but against which the defendant in good faith believes the claimant may make a successful asbestos trust claim."

Douglas Simek of the Cleveland law firm of Sutter O'Connell thinks the law is "a great idea." He said that this is already being done in the county where he litigates cases.

"Cuyahoga County (Ohio) courts have already ruled that this information is discoverable and admissible at trial," he said.

But trial lawyers do not think it is such a great idea. John Van Doorn is the Executive Director of the Ohio Association for Justice, the advocacy group for Ohio trial lawyers.

"HB 380 represents an effort by defendants and insurers to reduce payments to asbestos victims under the guise of increasing the transparency of the asbestos bankruptcy process," he said. "Their efforts are the latest in their campaign to deprive victims of adequate compensation for their astronomical medical costs."

Mark Behrens is a partner in the Public Policy Group of Shook, Hardy & Bacon L.L.P., in Washington, D.C. He testified on March 13 before the Ohio Senate about the bill.

"Because the trusts operate opaquely and make little effort to compare their claims amongst each other or to claims made in the tort system, the trust system is fertile ground for inequity," he told the Senate committee.

He provided an example of one company that reported a random sampling of discovery responses by plaintiffs who sued them that indicated massive inconsistencies. He said of 255 plaintiffs who also filed claims against an asbestos trust only 19 had disclosed their exposure.

Behrens noted that each trust operates independently and that plaintiffs' attorneys are members of the Trust Advisory Committees. These committees are very influential in trustee selection. They also essentially manage the audit and quality control for the trusts.

"While involved in trust governance," he informed the committee, "plaintiffs' attorneys are also actively engaged in soliciting trusts claims through television and Internet advertising, filing trust claims, and receiving contingent fees from trusts' payments."

Alluding to what Simek said, Behrens testified that plaintiffs and the trusts have not cooperated in making this information available, despite the acknowledgement by the courts of the propriety of the discovery.

Behrens also said that this current system can be easily manipulated.

He observed that "the trusts' standards are less than demanding." He also remarked that the lack of transparency by the trusts provides an inducement to be contrary.

"Abuse of the trust process has the potential to impact both defendants and bankruptcy trusts, as starkly demonstrated in the Ohio case of Kananian v. Lorillard Tobacco Co.," Behrens told the senators.

"As I'm sure you're aware, in that case, Judge Harry Hanna barred a prominent California asbestos personal injury law firm from practicing before his court after he found that the firm and one of its partners failed to abide by the rules of the court proscribing dishonesty, fraud, deceit, and misrepresentation.

"Judge Hanna's ruling received national attention for exposing 'one of the darker corners of tort abuse' in asbestos litigation: inconsistencies between allegations made in open court and those submitted to trusts set up by bankrupt companies to pay asbestos-related claims."

He added that this case was not an isolated one. He mentioned another in which defendants wanted discovery of trust claims.

Despite prior rulings making trust claims material available, it was necessary to file motions to compel the plaintiff's counsel to produce the information.

According to Behrens, during a hearing on the matter, the plaintiff's counsel said he had been slow in producing the material because he disagreed with the court. But Behrens alleged another motivation.

"The reason for the counsel's reluctance to produce the trust materials became clear when the documents were produced shortly before trial," Behrens said.

"There were substantial and inexplicable discrepancies between the positions taken in court and before the trusts. Despite specific and explicit discovery requests, the plaintiff had failed to disclose nine trust claims. In addition, the exposure period alleged in the litigation was significantly and materially different from the exposure period alleged in the trust claims."

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