Privacy protection, costs clarification added to asbestos trust bill

By John O'Brien | Jun 6, 2012


WASHINGTON (Legal Newsline) - The sponsor of legislation that would require asbestos bankruptcy trusts to provide more information on claims amended his bill Wednesday, while changes proposed by Democrats were rejected.

Ben Quayle, R-Ariz., added new aspects to House Resolution 4369, which would allow defendants in asbestos lawsuits to seek information on a plaintiff's claims made to asbestos bankruptcy trusts. Quayle, fellow Republican Dennis Ross of Florida and Jim Matheson, D-Utah, introduced the bill in April.

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 trust funds are being depleted by the filing of fraudulent claims," Quayle told the House Judiciary Committee.

Quayle said asbestos victims will benefit from the legislation because it will help the trusts from paying out fraudulent claims, leaving more for individuals with real claims.

To back this statement, he proposed an amendment that would require defendants in civil lawsuits to pay discovery fees, ensuring no extra costs for the trusts.

He added in his amendment that information supplied by the trusts would still be subjected to privacy guidelines established in the bankruptcy courts - "Privacy standards should not change despite the trusts' new duties," he said.

Those privacy protections extend to an individual when there is a threat of identity theft or unlawful injury to the individual, Quayle said.

An October report by the Government Accountability Office said the trusts operate in secrecy and the possibility exists that a claimant "could file the same medical evidence and altered work histories with different trusts."

A Delaware judge recently voiced her displeasure with the system when it was alleged that Texas attorney Brent Coon had submitted 20 claims to trusts on behalf of a Florida woman's estate after he had referred the case to Florida attorneys who sued, among other, Foster Wheeler Energy Corp. in Delaware.

The company did not know about the bankruptcy trust claims until 36 hours before a trial was scheduled to begin.

"This is really seriously egregiously bad behavior," New Castle County Superior Court Judge Peggy Ableman said in a November hearing. "This is misrepresenting. This is trying to defraud.

"I don't like that in this litigation, and it happens a lot. And I'm trying to put an end to it. This is an example of the games that are played."

Several amendments were proposed by Democrats and rejected. They were:

-An amendment by Hank Johnson of Georgia that would give the bankruptcy court the authority to determine if the asbestos defendant's requests are relevant to the pending claim. Johnson and Quayle then argued over whether the American Legislative Exchange Council wrote the bill;

-An amendment from John Conyers of Michigan that would ensure quarterly reports from the trusts that are required by the legislation would contain only aggregate information, deleting "the bill's burdensome discovery requirement," he said. Quayle said the proposal would prevent defendants from obtaining the data necessary to detect fraud;

-An amendment from Bobby Scott of Virginia that required asbestos defendants to comply with privacy standards established by the Health Insurance Portability and Accountability Act; Quayle said his bill already contained similar protections through his earlier amendment;

-An amendment from Mel Watt of North Carolina that would require the GAO to conduct another investigation, this time looking for particular instances of fraudulent claims to determine if the legislation is necessary. Quayle said the issue needed no more research, pointing to the earlier GAO report that said claimants could submit altered work histories with different trusts;

-Two amendments from Sheila Jackson Lee of Texas that required asbestos defendants to provide information on the possible exposures they've caused. Quayle said his bill would make the exchange of information a two-way street, but her amendment would make it a two-to-one way street; and

-An amendment from Steve Cohen of Tennessee that would keep HR 4369 from applying to trusts that have internal claims audits;

The final amendment, proposed by Jerrold Nadler of New York, would require parties in asbestos cases that seek trust information to make available public health and safety information they have upon written request, as well as information on previous claims payouts.

Quayle argued the amendment would require defendants to "jump through hoops," impairing their defense.

Chairman Lamar Smith, R-Texas, listened to the arguments, and then recessed the committee until Thursday without a vote, much to the surprise of Nadler.

The committee's website says the bill will again be taken up on Friday.

Smith expressed his support for the bill at the beginning of the discussion. He said asbestos victims have a right to seek compensation but "do not have a right to exploit the compensation system and make fraudulent or duplicate claims."

Conyers, the ranking member, opposed the bill in his opening remarks. He said it would provide unlimited discovery demands by any party to asbestos litigation and delay justice to victims.

"The only beneficiary of this measure will be the very entities that knowingly produced a toxic substance that killed or seriously injured unsuspecting consumers and workers," he said.

In Quayle's opening remarks, he referenced 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.

And on Monday, Garlock Sealing Technologies accused a Houston law firm of creating a different story for its client's exposure history in the trust system than the one it put forward in the civil lawsuit against it.

The U.S. Chamber Institute for Legal Reform supports the bill. Legal Newsline is owned by the ILR.

From Legal Newsline: Reach John O'Brien by e-mail at

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