Asbestos trust funds lack trust

The SE Texas Record May 8, 2010, 2:53am

Imagine setting up trusts to settle claims for asbestos-related injuries and letting plaintiffs' lawyers administer them. Now imagine a baseball game at which the home team makes the rules. Who thinks that's a good idea?

That, in effect, is what is going on in most asbestos trust funds that were set up to allow injury claimants to receive benefits from asbestos manufacturers facing insolvency. However, most of the trusts are shrouded in secrecy, making it difficult for judges and fund managers to determine if a plaintiff making a claim against one trust also may have made a claim against another.

Lack of transparency also can allow unscrupulous lawyers to make multiple claims against various asbestos trust funds on behalf of a single client, i.e., double-dipping or even triple dipping.

A noted legal scholar has asserted that asbestos trusts are controlled almost exclusively by plaintiffs' attorneys. "The trusts operate as private kingdoms run exclusively by plaintiffs' lawyers," contends Lester Brickman, a professor at the Benjamin N. Cardozo School of Law in New York. Brickman describes the trusts as "piggybanks owned by the plaintiffs' lawyers, who can write the rules, or rewrite the rules, according to their needs."

U.S. Rep. Lamar Smith (R- San Antonio) wants to shed some light on the situation. He has asked the U.S. Government Accountability Office to investigate the asbestos trusts and find out what all the secrecy is about.

Emphasizing that the U.S. Bankruptcy Code favors transparency in bankruptcy cases, Smith expressed his concern that "this principle of openness is no longer being fully implemented" for asbestos trusts.

Smith said some of the trusts seem designed to shield claimants seeking settlements from multiple sources. "This lack of transparency appears to foster dishonest claims practices and encourage claimants and their attorneys to seek duplicate payments by concealing trust recoveries," he observed. The effect of such actions is to "increase the financial burden on solvent tort defendants and other asbestos trusts and thereby unfairly reduce the compensation available to deserving present and future claimants."

Rep. Smith is to be commended for trying to ensure that the assets of asbestos funds are dispersed, once only, to genuine victims.

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