NEW YORK (Legal Newsline) – While the recent sentencing to prison of a once-powerful politician should help discourage abuse in the realm of asbestos litigation, an attorney following the issue says reform of the system is ultimately necessary.
“Until the asbestos compensation system becomes transparent across the country, many thousands of plaintiffs and their lawyers will have strong financial incentives to game the system,” David C. Christian of Chicago-based David Christian Attorneys LLC told Legal Newsline.
Former New York Assembly Speaker and prominent lawyer Sheldon Silver was sentenced on July 27 in Manhattan federal court to seven years in prison after being found guilty a second time of taking $5 million in kickbacks and bribes to help two law firms.
Silver had been found guilty of similar charges in 2015, but that conviction was overturned by an appeals court after a U.S. Supreme Court decision strengthened requirements to prove bribery cases. However, Silver was retried and convicted earlier this year.
Silver was found to have entered into an illegal relationship with Dr. Robert Taub, a physician specializing in the treatment of asbestos-related diseases. Federal prosecutors alleged Silver used his influence as a state official to issue state grants to Taub, who would then refer asbestos patients to Silver at the New York asbestos law firm Weitz & Luxenberg, where Silver was of counsel.
Under the deal, Silver allegedly arranged two New York State grants of $250,000 to a nonprofit organization run by Taub, paid from a secret fund controlled by Silver.
Weitz & Luxenberg paid Silver more than $3 million in referral fees while denying knowledge of Silver’s relationship with Taub.
Asbestos is the nation's longest-running mass tort and shows no signs of slowing down. In July, baby powder maker Johnson & Johnson was ordered by a St. Louis court to pay $4.69 billion in compensation to 22 women plaintiffs who claimed their ovarian cancer came from talc powder use.
Johnson & Johnson will appeal the court verdict.
Honeywell - a Morris Plains, N.J.-based producer of commercial and consumer products, engineering and aerospace systems - has also been hit with asbestos claims totaling $1.1 billion in lawsuits, primarily through companies it has purchased. These include Bendix, a maker of brakes, and North American Refractories Company (NARCO), a producer of fire-proof products.
New York has a special court to try asbestos cases, the New York Consolidated Asbestos Litigation (NYCAL) court. The Court has come under fire from critics including businesses and reform groups who consider it unfair to defendants.
Recently, NYCAL allowed plaintiffs to pursue punitive damages in asbestos cases. Christian said the threat of punitive damages can cause defendants to avoid trying cases.
“This threat can enable plaintiffs to package unmeritorious claims with a more dangerous case for the defendant and extract payments beyond what fairness and justice would dictate,” he said.
“This creates an unhealthy system that bankrupts defendants and exhausts insurance coverage so that compensation may not be available to legitimate claimants.”
Such a system, Christian said, makes little sense when the companies principally responsible for the damages have almost all gone through bankruptcy and established trusts to compensate asbestos claimants, while the managers who made questionable decisions about the use of asbestos are generally long retired or deceased.
An asbestos transparency bill in the New York Legislature would level the playing field between defendants and plaintiffs by requiring plaintiffs to identify all sources of exposure to asbestos before taking a case to trial, supporters claim.
The bill generated strong opposition from trial lawyers and has apparently stalled in the Senate Finance Committee. Sixteen other states have passed similar versions of the bill, which requires plaintiffs to disclose other companies they are deeming responsible for their injuries instead.
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 set up by companies that went bankrupt from their asbestos liabilities, the judge ruled.
Garlock claimed asbestos firms delayed filing these trust claims so more blame could be pinned on defendants in civil lawsuits - a practice called "double-dipping."
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.
Christian indicated that milking the asbestos court system for big plaintiff payoffs is unfair to those who are forced to pay more than they should.
“The gamesmanship is unfair to those forced to pay double-dipping plaintiffs, as well as those injured persons who may not be able to collect in the future as the asbestos litigation crisis continues to bankrupt defendants and exhaust insurance policies purchased decades ago,” Christian said.
“As the situation involving Mr. Silver and the Weitz firm shows, however, the games played by the plaintiffs’ bar and its allies sometimes go beyond fairness to fraud and even criminality.”