RALEIGH, N.C. (Legal Newsline) – North Carolina appears to be the next state to pass legislation targeting asbestos attorneys who attempt to game the compensation system by telling conflicting stories about their clients’ exposures.
The state’s House of Representatives passed Senate Bill 470 on May 23 in a 78-30 vote, a month after the Senate approved it with a 43-5 vote. Republicans control both houses of the state’s General Assembly, and some Democrats also supported the measure.
The bill is similar to legislation that has passed in 14 other states, and it was a bankruptcy case in North Carolina that supporters of more transparency have pointed at to make their point.
In the asbestos compensation system, individuals can submit claims to trusts established by companies that were forced into bankruptcy by their asbestos liabilities.
Meanwhile, an individual can still file lawsuits against solvent companies.
But evidence submitted by Garlock Sealing Technologies in 2013 during its bankruptcy proceeding showed asbestos plaintiffs firms were manipulating the recovery system in order to drive up the value of settlements with and verdicts against solvent asbestos defendants, a bankruptcy judge in Charlotte ruled in 2014.
Asbestos lawyers did this by delaying the submission of their clients’ claims to trusts, the judge ruled.
Garlock claimed asbestos firms delayed filing these trust claims so more blame could be pinned on defendants in civil lawsuits.
The judge agreed in 2014 after Garlock had submitted evidence in 15 cases during a trial to determine how much it would need to place in its trust.
“These fifteen cases are just a minute portion of the thousands that were resolved by Garlock in the tort system,” Judge George Hodges wrote.
“And they are not purported to be a random or representative sample. But the fact that each and every one of them contains such demonstrable misrepresentation is surprising and persuasive.
“More important is the fact that the pattern exposed in those cases appears to have been sufficiently widespread to have a significant impact on Garlock’s settlement practices and results… It appears certain that more extensive discovery would show more extensive abuse.”
The bill would require an asbestos claimant to inform defendants in their lawsuit of what claims they have made to bankruptcy trusts.
Ten Democrat senators voted for the bill, opposed to five voting against. In the House, nine Democrats voted for and 30 against.
Other states with similar legislation are Arizona, Iowa, Kansas, Michigan, Mississippi, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Wisconsin and West Virginia.