Nearly 30 years ago, the first of a series of bills to remove asbestos litigation from the tort system by creating an industry-funded mechanism to administratively pay asbestos claims was introduced into Congress. The need for a legislative fix of asbestos litigation has long been manifest. After many unsuccessful efforts to resolve the asbestos litigation crisis, the Senate is poised to take up consideration of S.852, The Fairness In Asbestos Injury Resolution Act of 2005. This essay is a preliminary effort to present some context for discussion of certain aspects of S.852 and to estimate the costs that may be incurred for resolution of personal injury asbestos claims if S.852 is enacted.
To date, over 850,000 individual claimants have filed suit against over 8,400 manufacturers, distributors installers and sellers of asbestos-containing products distributed across most of U.S. industries, as well as against owners of buildings and plants in which asbestos is present, claiming injury from exposure to asbestos. Since each plaintiff sues approximately 60-70 different defendants and bankruptcy trusts, the total number of claims probably numbers in excess of 50,000,000.
A number of factors account for the significant impetus to current consideration of legislative proposals that range from limiting compensation available in the tort system to plaintiffs whose injuries meet specified medical and exposure criteria to the creation of an administrative alternative to asbestos and exposure litigation. These factors include: the number of asbestos lawsuits; the almost 80billionincostsalreadyimposed;anevenlargersumprojectedforfuturecosts;500,000jobslostornotcreatedbecauseofthelitigation;thefurtherfinancialconsequencesofthelitigation2˘7simpactoncapitalmarkets;andtheconcernfortheintegrityoftheciviljusticesystemasmostrecentlyvoicedbyafederaljudgepresidingoverthesilicaMDLproceedingthatX−rayreaders,diagnosingdoctors,screeningcompaniesandlawyerswereengagedinaschemetomanufacturediagnosesformoney.S.852,whichisnowbeforetheSenate,istheproductofanextendedandextensivenegotiationbetweenanumberofstakeholders,including,interalia,businesses,insurers,laborunions,andlawyers.Thebillproposescreationofa140 billion trust ( Trust Fund ) funded mostly by business and insurers, to pay claims that meet the medical and exposure criteria set out in the bill. In this essay, I examine the financial costs, in addition to the 140billiontobepaidintotheTrustFund,whichmaybeincurredtoresolvecurrentandfuturepersonalinjuryclaimsbaseduponasbestosexposure.Inattemptingtoquantifythecoststhatfixingtheasbestoslitigationcrisismaygenerateand,inparticular,thosecostsadditionaltotheTrustFund,IamneitheradvocatingadoptionorrejectionofS.852oranyotherlegislativefixofthemassiveciviljusticesystemfailurethatIdescribeinthisessay.Moreover,thoughIconsiderthecoststhatmaybeincurredinadditiontotheTrustFundtobecreatedifS.852isenacted,Iamnotexpressinganyviewastothelikelihoodofthebill2˘7spassage.Tosetthestageformyanalysis,Ifirstconsiderthebenefitsthatcanberealizedbyenactinglegislationtocreateanadministrativemechanismforresolutionofasbestosclaimsinplaceofthetortsystem.Ithenpresentabriefhistoryofasbestoslitigation,includingthedevelopmentofanentrepreneurialmodelofclaimgeneration,followedbyabriefsummaryoflegislativeeffortstofixtheasbestoslitigationcrisis.IthenbrieflysummarizeS.8522˘7slegislativehistoryandcurrentformat.Finally,Iconsiderthecostswhichcontributorstothetrustfundmayadditionallyhavetobeartoresolvepersonalinjuryasbestosclaims.Iidentifyfivesuchareasofcosts:1.asbestosclaimshandledandpaidoverthepastthirtymonthssinceS.1125wasfirstdiscussed;2.exigentclaimantswhoqualifyforspecialtreatmentunderS.852;3.subrogationandworkers2˘7compensationclaims;4.pendinglawsuitswhereevidencehascommenced,lawsuitswhereafinaljudgmenthasbeenentered,andcertainsettlements;and5.silica/mixeddustclaims.ConsideringonlythecoststhatIhavebeenabletoquantify,myanalysisindicatesthatthecoststhatdefendantsandinsurersmayincurforresolutionofpersonalinjuryasbestosclaims,inadditiontothe140 billion to be paid into the Trust Fund, could range from approximately 37billionto60 billion. To this should be added the cost of four other exceptions that may impose costs outside the Trust Fund that I have not quantified: (i) trial court verdicts; (ii) cases where the presentation of evidence has commenced; (iii) certain settlements; and (iv) silica claims. Each will add unspecified sums to the cost of resolving personal injury asbestos litigation.
The assumptions I have made in quantifying costs and the reports and studies I have relied upon (which I have not attempted to validate), may generate outcomes that are too high or too low. I have set out these costs and acknowledged my inability to quantify certain other costs, however, as an invitation to undertake a similar calculus to those who seek to meaningfully compare the costs of the tort and bankruptcy systems (which I have not attempted to quantify), with the costs that may be incurred for resolution of personal injury asbestos claims if S.852 is enacted