CHARLOTTE, N.C. (Legal Newsline) - A health insurer is arguing that the public is entitled to records disclosed during a bankruptcy case that showed asbestos attorneys were manipulating information to maximize recoveries for their clients.
On Feb. 19, Aetna Inc. filed a motion asking for access to evidence referenced in federal bankruptcy Judge George Hodges' January ruling that said asbestos lawyers withheld evidence of exposure to other asbestos products in order to maximize recovery in civil asbestos lawsuits against Garlock Sealing Technologies.
During a trial to determine how much Garlock would need to put in a bankruptcy trust for future asbestos claimants, Hodges closed the courtroom and access to the exhibits introduced.
Legal Newsline has appealed his decision. The case is pending.
The motion filed by Aetna and The Rawlings Company, which provides cost-containment services to health plans, says they have provided millions of dollars in benefits to plan members to treat their asbestos-related diseases and have subrogation rights directly against Garlock.
"The public is presumptively entitled to access judicial records," attorneys for the health plans wrote.
"Rule 2019 Statements, along with the exhibits filed but not placed on the electronic docket, are judicial records. There is no countervailing interest to overcome the presumption that movants, as members of the public, are entitled to access the Rule 2019 Statements."
Hodges was tasked with determining an amount of money Garlock needed to place in a bankruptcy trust in order to pay out pending and future asbestos claims. He spurned plaintiffs' attorneys request for more than $1 billion to be placed in the trust.
Hodges wrote their math wasn't reliable because Garlock had suffered large jury verdicts as a result of claimants previously focusing their lawsuits on Garlock while losing evidence to other asbestos exposure in the process.
"This occurrence was a result of the effort by some plaintiffs and their lawyers to withhold evidence of exposure to other asbestos products and to delay filing claims against bankrupt defendants' asbestos trusts until after obtaining recoveries from Garlock," Hodges wrote.
Garlock brought evidence to the bankruptcy 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."
According to Garlock's evidence, one firm issued to its clients 23 pages of directions on how to testify. Evidence also showed one lawyer stated, "My duty to these clients is to maximize their recovery, okay, and the best way for me to maximize their recovery is to proceed against solvent viable non-bankrupt defendants first, and then, if appropriate, to proceed against bankrupt companies."
Hodges permitted Garlock to bring evidence proving that roughly 220 settled cases withheld evidence. Then after settlement, clients made claims against roughly 20 companies' bankruptcy trusts.
"It appears certain that more extensive discovery would show more extensive abuse," Hodges continued. "But that is not necessary because the startling pattern of misrepresentation that has been shown is sufficiently persuasive.
"While it is not suppression of evidence for a plaintiff to be unable to identify exposures, it is suppression of evidence for a plaintiff to be unable to identify exposure in the tort case, but then later to be able to identify it in Trust claims. It is that practice that prejudiced Garlock in the tort system."
Ultimately, Hodges ordered a $125 million trust.
The health plans made the argument that none of three exceptions that would keep the evidence private apply to the situation.
"Parties cannot participate anonymously in federal judicial proceedings, save for 'exceptional cases' where 'a litigant's reasonable fear of severe harm outweighs the public's interest in open judicial proceedings,'" the motion says. "Bankruptcy proceedings are no different."
The health plans say they will keep any addresses and social security numbers on the claim forms admitted as evidence confidential.
"The Movants have no intention, or desire, to publish such information; it will be used only to the extent necessary to match the claimant's information to the Health Plans' existing databases to identify any covered members who are seeking recovery for an asbestos-related injury," the motion says.
Representing the health plans is Thomas W. Waldrep, Jr. of Womble Carlyle Sandridge & Rice in Winston-Salem, N.C.
Garlock has filed sealed lawsuits against the asbestos firms it alleges committed fraud.
From Legal Newsline: Reach editor John O'Brien at email@example.com.