N.Y. asbestos bill continues to idle during gridlock; Finance Committee not discussing at today's meeting

By John O'Brien | Jun 5, 2018

New York State Capitol  

ALBANY, N.Y. (Legal Newsline) - New York lawmakers won't discuss a bill targeting abuses in the asbestos compensation system during today's meeting of the Senate Finance Committee, where the bill, which is similar to legislation passed in 16 states, has sat for three months since being approved by the Judiciary Committee.

According to an agenda provided by the office of Finance Committee chair Catharine Young, a Republican, S2511 isn't scheduled for a debate or vote. Bill sponsor John Bonacic, a Republican who chairs the Judiciary Committee, sent the bill to Finance after a 10-7 vote approved it in March because of opposition from the trial bar.

Partly because one GOP senator has stepped down to fulfill military obligations, lawmakers are effectively "paralyzed," the New York Post reports. Neither Democrats nor Republicans can claim a majority after Tom Croci left for the Navy.

The bill seeks to end the practice of double-dipping by asbestos lawyers who tell one story to recover funds from companies that have established trusts in the bankruptcy system and another story when suing still solvent companies in court.

North Carolina and Missouri are the two latest states to pass similar legislation, but New York has long been reluctant to pass legal reform - largely thanks to former Assembly Speaker Sheldon Silver, who was recently convicted a second time of corruption that allowed him to earn millions of dollars in asbestos lawsuit referral fees.

The state's asbestos court - New York Consolidated Asbestos Litigation - has a poor reputation among businesses and legal reform groups that consider its policies unfair to defendants. Recently, NYCAL allowed plaintiffs to start pursuing punitive damages.

A new asbestos transparency bill was introduced May 29 in the Assembly, streamlining a previous one that has languished in the Judiciary Committee since February of last year amid fierce trial lawyer opposition.

Supporters of the bills say they would level the playing field between plaintiffs and defendants by forcing plaintiffs to identify all the sources of exposure to the deadly substance before taking lawsuits to trial. Under the current system, plaintiff lawyers target solvent companies with lawsuits first, then file claims with the numerous trusts set up by companies already driven into bankruptcy by asbestos litigation. 

Defendants – and the insurance companies that actually pay most of the bills in this system – say withholding bankruptcy trust claims until after trial deprives them of potentially exculpatory evidence about whose products made the plaintiff sick.

NYCAL has been criticized as especially favorable for plaintiffs, with docket procedures that allow plaintiffs to bundle cases together and sue for punitive damages, which defendants say are hard to justify in lawsuits against companies that in most cases ceased operating years ago and were gobbled up in larger transactions by companies like Pfizer and Honeywell. NYCAL has also consistently been tagged a “Judicial Hellhole” by the American Tort Reform Association.

It’s also the court system that spawned the illegal behavior of Silver, who collected millions of dollars in fees from the state’s leading asbestos law firm, Weitz & Luxenberg, in exchange for providing the names of patients diagnosed with mesothelioma, a deadly asbestos-linked cancer. 

Once the state’s most powerful politician, Silver was convicted of steering hundreds of thousands of dollars in taxpayer funds to the doctor who provided him the names. As Assembly Speaker, Silver named Weitz & Luxenberg name partner Arthur Luxenberg to the Judicial Screening Committee for the First Department, which includes NYCAL.

Both of the New York bills face a tough road to passage despite the fact they were sponsored by lawyers and have strong support from the state’s insurers, business community and veterans’ groups.

With support from a group of Democrats, North Carolina recently became the 15th state to pass similar legislation. Missouri later became 16th.

They joined Arizona, Iowa, Kansas, Michigan, Mississippi, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Wisconsin and West Virginia as states with laws targeting double-dipping.

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.”

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Organizations in this Story

American Tort Reform Association Garlock Inc. Honeywell International New York State Assembly Pfizer The State of New York Senate Weitz and Luxenberg

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