ABA Connection

Backing Away from the Abyss

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For years, U.S. Sen. Arlen Specter has been pushing a plan for resolving the hundreds of thousands of asbestos-related personal injury lawsuits that continue to plod along in federal and state courts around the country.

And over the years, many experts have agreed with Specter that something must be done to deal with the glut of asbestos lawsuits that has inundated the courts since the first claims were filed in the 1960s. Some have supported the senator’s idea as a way to unburden the courts of the chore of grappling with a seemingly endless stream–if not flood–of asbestos cases.

That idea is to establish a $140 billion privately financed asbestos trust fund. The proposal calls for establishing up to nine categories of payments for people with illnesses caused by contact with asbestos, primarily in the work environment. The highest payouts would be a little more than $1 million. The trust would be administered by the federal government, while funding would come from corporations with asbestos claims pending against them, as well as from their insurance companies.

And yet, legislation introduced by Specter, a Pennsylvania Republican who chairs the Senate Judiciary Committee, continues to plod along in Congress, not unlike the asbestos litigation it is seeking to end.

The latest version of the legislation is S. 852, a bipartisan bill introduced in the spring by Specter and Sen. Patrick Leahy, D-Vt. The bill appears to have stalled, even though it has support from the Bush administration and Republican leaders in Congress, with no further action expected in the immediate future. Meanwhile, some in the field say they doubt that legislation creating a national asbestos trust fund–or any other federal measures to clear up asbestos litigation once and for all–ever will be enacted.

Many reasons have been propounded for why Specter’s bill continues to languish despite significant support. The most common conclusion appears to be that asbestos litiga­tion, by its sheer size and continually evolving nature, would not succumb to any one silver bullet. The numbers continue to be daunting. Estimates put the overall number of asbes­tos claims filed from the early 1970s through 2002 at more than 730,000, according to a 2005 report by the RAND Institute for Civil Justice in Santa Monica, Calif. Of those, roughly 200,000 are pending in state and federal courts nationwide, according to the As­bestos Alliance, a coalition that includes companies and trade groups that support the legislative solution concept.

The question now is: How many more? Even though asbestosis and mesothelioma, the primary diseases linked to asbestos exposure, have latency periods of 20 to 40 years, the number of claims was expected to start falling since asbestos has largely been out of use for years.

But a 2002 RAND report predicted that 500,000 to 2.4 million claims still may be filed before asbestos litigation finally runs its course.

“I am very surprised we are still doing this,” said Kevin Dunne, whose San Francisco firm represents asbestos defendants, during a 2005 interview with the ABA Journal. “We thought we’d be out of the business several years ago. We’re surprised at how many filings there are, at this late stage, when asbestos exposures have ceased many, many years ago.” (See “Asbestos They Can?” June 2005 ABA Journal, page 20.)

‘It Will Have to be Dealt With’

Other practitioners agree that asbestos litigation is nowhere near an end, but they suggest that high tide may have passed.

While “the rate of cases will begin to taper off over the next five to 10 years, at least in the United States, they will continue at least until the middle of the century,” predicts Steven Kazan, whose Oakland, Calif., firm represents asbestos claimants. Kazan estimates that at least 10,000 claims still are being filed. “Fifty years from now, it may be 500” claims a year, he says, “but it will still be some real number, and it will have to be dealt with.”

Plaintiffs lawyer Allen D. Vaughan of Chicago says that, given the latency periods of asbestos-related diseases, “I would think, in the next five to 10 years, you might see some reduction” in case filings. “We believe there’s plenty of work still to do, but there are not as many calls as there were in the mid-1980s.”

The community of defendants also has evolved during the lengthy course of asbestos litigation.

At one time, when asbestos was considered something of a miracle mineral valued for its qualities as a fire retardant and used in myriad products such as insulation, floor and ceiling tile, exterior home siding and brake linings, it was common for companies to be involved in its manufacture.

The health hazards of exposure to asbestos weren’t well recognized until the 1960s, although some plaintiffs lawyers contend that companies knew about those risks as early as the 1930s. By the ’70s, claims by employees against companies were rampant. And starting in the ’80s, many asbestos manufacturers, including Johns Manville, declared bankruptcy under the weight of liability payouts. To date, an estimated 85 companies have filed for bankruptcy claiming asbestos liabilities as the cause.

With a dearth of primary defendants, it has become common for plaintiffs lawyers to bring actions against “second-tier” and “third-tier” defendants, including manufacturers of products such as brake linings that contain relatively small amounts of asbestos, as well as premises owners and product suppliers.

It isn’t surprising that Specter’s proposal for a national asbestos trust fund is floundering in this fluid environment, some observers say. “It’s essentially impossible to satisfy everybody,” said Howard M. Erichson, a professor at Seton Hall University law school in Newark, N.J., in a 2005 interview. “Then the question becomes, is Congress willing to cram it down?”

The ABA, for its part, has not taken a position on the advisability of establishing a trust fund or another administrative process as the exclusive mechanism for resolving asbestos claims. In February, however, the ABA’s policy-making House of Delegates adopted several recommendations about the operation of such a mechanism that were developed by the Task Force on Asbestos Litigation of the Tort Trial and Insurance Practice Section.

“I have no hope that there will be federal legislation,” says James L. Ware, a defense lawyer in Houston. “I don’t think it’s going to happen. But frankly, I don’t think it matters.”

Instead, Ware says, “I think there’s a realization that, state by state, the states will have to address it. If they want to get a better handle on the way to manage these dockets, they’ll have to do it themselves, rather than wait for the federal government to do it.” Increasingly, lawyers on both sides of asbestos litigation are putting forward another, more fundamental explanation for why Specter’s proposal to create a national trust fund continues to languish in Congress.

It may be, they suggest, that the time for such a drastic attempt to take asbestos claims out of the courts may have passed.

“I do believe the courts have got it under control, and I do believe that a lot of what’s been done has been a good thing for the judiciary and generally not bad for the plaintiffs,” says Gene Locks, a plaintiffs lawyer in Phila­del­phia. “Most of the state courts have worked their way through this over the years, and they know how to deal with the cases. It’s one of the reasons why you don’t need legislation. As a general rule, there’s not an asbestos trial case-management problem in the bulk of the tort system.”

Winnowing The Numbers

Defense lawyers concur that courts are processing asbestos case loads more smoothly than they did in the past. One key reason, they say, is that state courts and legislatures have taken steps to con­trol the flow of asbestos claims into the courts.

“I tell all our clients that, yes, while we still have a number of cases pending, the asbestos war is over–we will never again see the onslaught of cases,” says Ronald G. Peresich, a defense lawyer in Biloxi, Miss. “The problem in the past with these huge numbers of cases was you had so many people in those cases who were not legitimately injured. To separate out the wheat from the chaff, that’s what took so long and was so expensive.” With a growing emphasis on prioritizing claims, Peresich says, “There are still battles to be won; there are still cases to be tried. But the overall war that we saw in the last 10 to 15 years, I think, is done.”

To some extent, the views of plaintiffs and defense lawyers on bringing order to asbestos litigation reflect the priorities and practicalities of their perspectives.

Defense lawyers suggest that, at least in some juris­dictions, reductions in asbestos caseloads were partly the result of broader tort law “reform” movements. As recently as 2002, says Peresich, “we probably had 120,000 to 130,000 claimants in Mississippi–an enormous number. Today, that number is probably down to about 25,000,” he says, thanks to tort reform legislation and the election of state supreme court judges “who would not permit Mississippi to continue to be a dumping ground” for claims of dubious merit. (Peresich participated in the process of drafting the legislation.)

But some plaintiffs lawyers say fears that asbestos litigation might pull the American justice system into an abyss of overcrowded dockets were partly the product of spin from defendants.

In Illinois and other nearby states, for instance, “there’s never been a problem getting these cases resolved,” says Vaughan. “At least in the jurisdictions we practice in, the court system is doing a fine job.”

And some members of the plaintiffs bar say some changes in the law have put asbestos claimants at an unfair disadvantage.

As an example, Charles Siegel, a Dallas plaintiffs lawyer, cites actions in some states to eliminate punitive damages for asbestos plaintiffs. “It’s in asbestos litigation that you find some of the worst corporate conduct ever,” he says, “and some of the worst wrongdoers now are getting away with not having to pay punitive damages just because there’s a perception that asbestos litigation has gone crazy or run amok.”

Despite these differences of opinion, there is widespread agreement on both sides of the asbestos litigation bar that a key step has been to develop criteria, either in the courts or by legislation, to find a way to prioritize asbestos claims. In particular, these efforts have focused on screening claims to allow plaintiffs who display current symptoms of asbestos-related disease to actively pursue their claims, while putting the cases of plaintiffs whose conditions still may be latent in a holding mode.

Parsing The Symptoms

The screening concept was embodied in a recommendation the ABA House adopted in 2003. It endorsed federal legislation that would allow people alleging nonmalignant asbestos-related diseases to file personal injury lawsuits in federal or state court only if they display symptoms in accordance with specified medical criteria. Under the policy, applicable statutes of limitation would not start to run for potential claimants until they are able to meet the medical criteria. The measure would not restrict lawsuits by people with malignancies allegedly caused by exposure to asbestos.

The policy was developed by the ABA Commission on Asbestos Litigation (now disbanded). The commission cited the growth of for-profit litigation screening operations for potential asbestos claimants as a primary reason to develop the policy. Starting in the late 1990s, “for-profit litigation screenings began systematically generating tens of thousands of new claims each year by individuals who had some degree of occupational asbestos exposure, but did not have, and might never get, an asbestos-related disease,” the commission stated in its report to the House. “The overwhelming majority of these claims involve individuals with absolutely no functional im­pairment but who file ‘nonmalignant’ claims based on these screenings, which are often conducted without following generally accepted clinical standards.”

Another problem the commission cited is that, while asbestos claim settlements can be a windfall for some, “for those who later develop mesothelioma, an asbestos-related cancer, the filing and resolution of a premature claim and execution of a full release can become a haunting mistake.”

The commission also said large numbers of claims from asymptomatic claimants “have been largely responsible for the bankruptcy of more than 20 companies in the past two years [before 2003] alone.”

While legislation along the lines recommended by the ABA has been submitted in Congress, the bills, like proposals to create a national asbestos trust fund, have not progressed far. There are bills pending in both the House and Senate, but the ABA does not support their specific proposals regarding medical criteria that asbestos claim­ants would have to meet for their cases to proceed.

Meanwhile, some states have adopted the concept of screening claims to determine which ones may go forward.

Establishing medical criteria “has been a very effective way of culling the cases and allowing the cases that are significant cases to go forward,” says John Christie McMeekin II. A Philadelphia lawyer who defends asbes­tos cases, he chairs the Toxic Torts and Environ­mental Law Committee for TIPS.

That approach benefits plaintiffs as well as defendants, maintains Ware of Houston. “People who are truly dem­onstrably injured by an exposure can file a lawsuit and move it through the system in a relatively short period of time,” he says.

One advantage of addressing asbestos litigation issues at the state level, says Peresich, is that it allows each jurisdiction to tailor approaches to screening claims and related issues in accordance with conditions in its own courts. Asbestos litigation is not the same in each state, he notes. “What’s needed somewhere else is not necessarily what’s needed here, and vice versa.”

Mississippi, for instance, has not included medical criteria standards for claimants among its changes for handling asbestos and other tort cases, Peresich says.

“None of our reforms involve medical criteria,” he says. “Frankly, we don’t need it with the better judges and the legislation we have.”

Instead, the focus in Mississippi has been on revisions to state rules of civil procedure, which provide for independent medical examinations and standards for admitting evidence based on criteria set forth by the U.S. Supreme Court in its 1993 ruling in Daubert v. Merrell Dow Pharmaceuticals.

Texas, on the other hand, is among the states that have adopted medical criteria to help screen asbestos claims. One result of that approach, Ware says, has been to discourage a common practice of plaintiffs lawyers to bring multiplaintiff cases and then insist that defendants settle all the claims at the same time.

But Texas has taken other steps, as well, in efforts to handle asbestos cases in a more efficient way.

As part of a 2003 package of legislation revising the state’s tort law, the legislature authorized the creation of multidistrict litigation courts to handle cases from through­out the state that demonstrate common ques­tions of law and fact. Under that change, asbestos litigation is now rou­tinely handled, on a pretrial basis, by a single judge in Houston. But cases go back to the courts where they were filed for trial. Having a single court handle pretrial proceedings for all asbestos cases filed in the state results in uniform rulings and allows for more standardized discovery to be conducted, Ware says.

Pursuing Claims

But medical criteria standards have not been a cure-all in the states that have implemented them.

One issue concerns the legal status of claimants who cannot meet the medical criteria for pursuing claims.

Generally, such claimants are allowed to file a claim to preserve their right to seek damages if they eventually develop symptoms that meet the medical criteria, regardless of statutes of limitation that might ordinarily apply to tort cases.

Medical criteria provisions in Ohio, Georgia and Florida, however, have become embroiled in controversy because they require the outright dismissal of any claims that do not meet the criteria. Ware says all three states are engaged in court battles over the constitutionality of pro­visions that apply the medical criteria retroactively to claims filed before legislation establishing the criteria went into effect.

Moreover, medical criteria have not eliminated controversy over the validity of medical diagnoses for some asbestos claimants.

On June 8, 47 defendants in asbestos cases filed an unprecedented joint action asking the U.S. District Court in Philadelphia to dismiss nearly 150,000 pending asbes­tos cases. The defendants allege that medical diagnoses on which plaintiffs based their claims are erroneous at least and in some cases may constitute outright fraud. In re As­bes­tos Products Liability Litigation (No. VI), No. MDL 875.

Asbestos isn’t the only realm of cases in which mass medical diagnoses have raised legal eyebrows. Last year in Mis­sissippi, U.S. District Judge Janis Graham Jack issued a scathing 249-page opinion about the quality of claims in a complex case involving claims related to silicosis (a lung con­dition caused by contact with silica dust).

Jack concluded that most of some 10,000 claims in the case were, in essence, fraudulent. “These diagnoses were about litigation rather than health care,” she wrote in her opinion. “It is apparent that truth and justice had very little to do with these diagnoses.” In re Silica Prod­ucts Liability Liti­gation, 398 F. Supp. 2d. 563 (S.D. Tex. June 30, 2005). Jack dismissed most of the claims, due to lack of subject matter jurisdiction, and remanded them to state court in Mississippi, where the lack of diversity of citizenship among the parties is not an issue.

Another developing issue being closely watched by practitioners is a trend, in some states, toward allowing plaintiffs who settled cases previously based on relatively minimal injuries to bring new actions alleging more serious asbestos-related conditions. These cases arise most frequently when individuals develop mesothelioma, which has a long latency period.

In Pennsylvania, for instance, a divided panel of state superior court judges hearing several consolidated cases recently ruled that asbestos claimants may sue again under these circumstances. Abrams v. Pneumo Abex Corp., 2006 PA Super. 136 (June 9). Previously, the standard in Pennsylvania had been “one disease” in other words, a plaintiff who had sued over any asbestos-related condition could not subsequently sue again over a different one.

In a similar case, a Maryland judge hearing consolidated cases involving plaintiffs who initially settled asbes­tosis claims and years later developed mesothelioma ruled May 31 that plaintiffs could proceed with their subsequent claims. John Crane Inc. v. David Puller, 899 A.2d 879 (Md. App.).

Another ongoing issue is what standard of scientific certainty forms an appropriate basis for admitting evidence of injury to claimants as a result of asbestos exposure.

Looking Ahead

Another approach to resolving claims, known as prepackaged bankruptcies, may become the next new thing for seeking to resolve asbestos claims.

Essentially, “prepacks” allow a corporation defending against numerous claims–likely into the thousands–to develop a settlement arrangement with plaintiffs and pay the necessary funds into a trust or other mechanism before filing in bankruptcy court, where proceedings should move along smoothly since any outstanding asbestos claims have essentially been resolved.

A recent example of such a settlement involved the flooring manufacturer Congo­leum, whose products once contained small amounts of asbestos. The company had become a typical second-tier defendant trying to resolve claims against it.

(The Congoleum prepack became somewhat no­torious after a federal judge ordered Gilbert, Heintz & Randolph, a Washington, D.C., firm working on the case, to disgorge $9.6 million it received because it failed to dis­close conflicts of interest.) But prepacks, properly handled, remain a useful tool. “I think the anticipation of legislation has caused a bunch of people to hold off on further exploring prepacks, or doing anything other than praying that Congress will bail them out for free or for cheap,” Kazan says.

“As the reality sinks in that that’s not going to happen, I think that that will revitalize the discussion of prepacks. After Congress goes home this summer, it will be clear that nothing will happen until the next election.”

Martha Neil, a lawyer, is a legal affairs writer for the ABA Journal.

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