Subcommittee to weigh asbestos trust bill

John O'Brien May 10, 2012, 7:00am


WASHINGTON (Legal Newsline) - A House subcommittee on Thursday is scheduled to hold a hearing over a proposed bill that would allow defendants in asbestos lawsuits to discover information about a plaintiff's claims against bankrupt companies.

The House Judiciary Committee's Subcommittee on Courts, Commercial and Administrative Law will take up the issue 9:30 a.m. EST. House Resolution 4369 would require bankruptcy trusts, which were created by companies that went bankrupt from asbestos litigation to pay claimants, to disclose claims and exposure allegations while providing third-party discovery in civil lawsuits.

The trust system operates independently of the tort system. More than 90 companies have gone through bankruptcy as a result of asbestos litigation, creating at least 60 trusts.

The legislation was introduced in April by two Republicans, Ben Quayle of Arizona and Dennis Ross of Florida, and Democrat Jim Matheson of Utah.

In April 2010, U.S. Rep. Lamar Smith, R-Texas, asked the Government Accountability Office to investigate the trust system. He pointed to an oft-cited 2007 instance in Ohio, where in Cuyahoga County the California law firm of Brayton Purcell claimed the late Harry Kanania died in 2000 of mesothelioma solely from smoking cigarettes made by Lorillard Tobacco, while simultaneously seeking compensation from multiple asbestos trusts, claiming their products led to Kanania's fatal lung condition.

The GAO released its report in October, finding no fraud in the system. It did note that the trusts operate in secrecy.

"Although the possibility exists that a claimant could file the same medical evidence and altered work histories with different trusts, each trust's focus is to ensure that each claim meets the criteria defined in its (trust rules), meaning the claimant has met the requisite medical and exposure histories to the satisfaction of the trustees," the report says.

"Of the trust officials that we interviewed that conducted audits, none indicated that these audits had identified cases of fraud."

At least two states have proposed similar trust reform. Ohio's senate heard testimony in March on a bill already passed by the House of Representatives, while Oklahoma's senate passed a bill on March 14.

The Oklahoma bill is currently sitting in the House Judiciary Committee.

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