Cohen
Siegel
WASHINGTON (Legal Newsline) - At a House subcommittee hearing on legislation concerning asbestos bankruptcy trusts, U.S. Rep. Steve Cohen on Thursday referred to plaintiffs attorneys who contacted him about the illness of his friend as "parasites."
Cohen -- a Democrat from Tennessee and the ranking member of the House Judiciary Committee's Subcommittee on Courts, Commercial and Administrative law -- recounted the story of the death of his friend, singer/songwriter Warren Zevon, from mesothelioma.
Cohen called Zevon, perhaps best known for the song "Werewolves of London," one of his best friends.
"He did not seek a lawyer, didn't want damages," Cohen said. "I had a few parasites -- I'm an attorney -- but I had a few people call me and talk to me, quote-unquote friends.
"Friends, because they wanted to get to Warren to take his case. And Warren was good and didn't do it."
Despite his feelings about the attorneys who reached out to him about Zevon's illness, Cohen spoke out against the bill.
House Resolution 4369 would require bankruptcy trusts, which were created by companies that went bankrupt from asbestos litigation, 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. Solvent companies facing asbestos lawsuits in civil court would be able to obtain information from plaintiffs' trust claims.
The legislation was introduced in April by two Republicans, Ben Quayle of Arizona and Dennis Ross of Florida, and Democrat Jim Matheson of Utah.
Cohen called the legislation "a solution looking for a problem." The same phrase was written in the statement of an asbestos attorney who testified and also appeared on the website of the American Association for Justice, the lobbying firm of plaintiffs lawyers that is against the bill, the night before the hearing.
The AAJ gave Cohen $5,000 for his 2012 re-election campaign.
Cohen graduated from the Cecil Humphreys School of Law at the University of Memphis and was a longtime state lawmaker before his election to the U.S. House of Representatives in 2006.
Charles Siegel of Dallas' Waters & Kraus testified against the bill. He calls it an attempt at delaying and denying compensation to asbestos victims.
"The assertion is that large amounts of money are recoverable from bankruptcy trusts, and that plaintiffs routinely game the system so that they receive a full recovery in the bankruptcy system, and then a second, 'double' recovery in the tort system," he said. "Neither premise is correct.
"There is no windfall of money available to claimants, and plaintiffs cannot and do not 'game the system' such that solvent tort defendants pay the liability shares of bankrupt companies."
Todd Brown, a professor at SUNY-Buffalo Law School, testified in support of the bill.
"As a matter of bankruptcy policy, the very idea that a bill intended to advance transparency would be in any way controversial is striking," Brown said.
"The need for comparable transparency in the asbestos bankruptcy trust context is compelling. As the assets under trust control approach $40 billion... other defendants, many of whom were peripheral defendants until recently, find themselves exposed to far greater defense costs and tort liability.
"Early trusts were flooded with specious unimpaired claims, and though state courts and legislatures have taken steps to reign in the perceived abuses in asbestos litigation, new trusts continue to be flooded with unanticipated claim volumes.
"We know that dubious claims continue to slip through the cracks, and the lack of communication between the trusts and state tort systems fuels concerns that some lawyers may be gaming the system to obtain unwarranted recoveries either in state court or from the 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.
The U.S. Chamber of Commerce Institute for Legal Reform supports the bill. The ILR owns Legal Newsline.
From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.