S.C. legal reform group endorses FACT Act

By Vimbai Chikomo | Dec 21, 2015

COLUMBIA, S.C. (Legal Newsline) - The South Carolina Civil Justice Coalition, a legal reform group, has endorsed the Furthering Asbestos Claim Transparency (FACT) Act of 2015, which seeks to create transparency and access to information regarding asbestos claims.

“Some sunshine needs to be brought to the system and that’s what we are really trying to accomplish. We’re trying to make sure that factual information pertinent to a case is available and discoverable,” Earl Hunter, executive director of SCCJC, told Legal Newsline.

For years, bankruptcy trusts have been paying out money to asbestos victims who have also made claims in civil court.

Information disclosing which trusts have already compensated claimants for their asbestos-related injury is not readily available in the civil court system, which has resulted in some plaintiffs exploiting the system, according t a federal bankruptcy judge overseeing Garlock Sealing Technologies' bankruptcy.

“There are many legitimate claims and the money was set aside for those legitimate claims. But when you have a person that may be ‘double-dipping’ by filing multiple claims with multiple trusts after getting paid for their injuries through civil court or by filing illegitimate claims, they’re getting paid more than they should and the result is the depletion of those resources that are there for legitimate, deserving claimants,” Hunter explained.

Although there have been allegations that some asbestos attorneys have been instrumental in helping their clients file multiple or illegitimate claims, Hunter said that this allegation hasn’t been proved or disproved in South Carolina.

“I don’t think we have any direct evidence at this point in time, but wouldn’t expect any so soon after the Garlock decision,” Hunter said.

“I think the Garlock Sealing Technologies case, as well as other recent cases in other states, would lead one to believe that there have been similar occurrences here. But these may not be uncovered unless other bankruptcy court judges follow Judge (George) Hodges’ lead and, if requested by companies that have settled cases in the past, allow those cases to be reopened to determine whether or not a plaintiff already paid for their injuries by the company, subsequently filed with multiple trusts after receiving payment,” Hunter said.

“There are so many good, fair-minded people in the legal profession. But as with other professions, some take advantage of a system when transparency is limited."

Garlock Sealing Technologies recently issued subpoenas to 29 law firms in an effort to uncover an alleged pattern of racketeering, after U.S. District Judge Graham Mullen granted the company the right to do so on Sep. 3. Garlock's legal action is based on information discovered back in 2013.

During the company’s 2013 bankruptcy case during which the amount of money to put into a trust fund for asbestos victims was being determined, Garlock was allowed full discovery into the cases of 15 plaintiffs.

The investigation unearthed information that showed that attorneys often delayed submitting claims to bankruptcy trusts when there were pending lawsuits against solvent defendants. Hodges ruled in Garlock’s favor in 2014, and reduced the amount the company was required to put in the trust by more than $1 billion less than plaintiffs’ attorneys had requested.

Hunter said promoting transparency is the reason why SCCJC supports the FACT Act, and believes it would have a huge impact on asbestos claims.

“I believe the Federal FACT Act would help shine a light on that and help to prevent future fraud," he said.

"Requiring quarterly reporting and having access to that information during discovery in a civil court case, a company would be able to see if a plaintiff who is seeking recovery from them, may have already filed additional claims through the trusts and been compensated for their injuries.

"It would certainly bring a lot of transparency to the process and give access to factual information involving a plaintiff bringing an action against a business in South Carolina."

Hunter explained that South Carolina passing similar legislation to the federal FACT Act could be beneficial to support transparency between bankruptcy trusts and civil courts.

“Now what we’re looking at is what many other states are looking at – legislation that would complement the federal FACT Act, very similar to what was passed recently in West Virginia and some other states," he said.

"This would require a sworn affidavit by a plaintiff attesting to exposure they’ve had to asbestos – places they have worked, and whether or not they have already filed or intend to file with bankruptcy trusts."

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