Proposed bill would close trial lawyer loophole in asbestos suits

Marilyn Tennissen Mar. 9, 2011, 8:48am


State Rep. Doug Miller (R-New Braunfels) has filed House Bill 2034, which would halt abuses in asbestos lawsuits by requiring plaintiffs' lawyers to seek compensation from federal bankruptcy trusts before going to trial against solvent defendants.

"H.B. 2034 closes a loophole the trial lawyers have been driving an armored truck through," said Miller in a story first reported by the Texas Civil Justice League on March 2. "This bill will stop trial lawyers from gaming the legal system to enrich themselves at the expense of asbestos victims."

The bill mandates applying for bankruptcy trust payments before going to trial against solvent defendants in asbestos-related personal injury lawsuits. Under Texas law, the bankruptcy trust payments would be considered settlement credits in litigation against solvent defendants.

H.B. 2034 provides for simultaneous filing of trust claims and tort suits with a deadline of filing trust claims 90 days before trial.

Most trial lawyers filing asbestos lawsuits in Texas don't file claims with the bankruptcy trusts until after the litigation has concluded, according to Miller, and that practice avoids settlement credits and maximizes damages against solvent defendants.

"We applaud introduction of Rep. Miller's bill, which will address the growing problem of double dipping by asbestos plaintiffs' lawyers and promote transparency in asbestos litigation," said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform.

The Southeast Texas Record is owned by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce.

Ninety-six companies have filed bankruptcy due to present and future asbestos liabilities. Sixty-three of those companies have created trusts to pay asbestos-injury claims. Those federal bankruptcy trusts may hold as much as $60 billion in assets to pay asbestos claims, according to 2006 Mealey's Bankruptcy Report.

"The legal system was designed to make victims whole, not to allow them to collect twice for the same injury," said Lee Parsley, president and general counsel of the Texas Civil Justice League.

In asbestos litigation, a plaintiff can receive compensation from the defendant, bankruptcy trust funds or both.

According to the press release, around 98 percent of mesothelioma cases settle without a trial. Texas attorneys are typically paid 40 percent of the plaintiff's total recovery.

"How many more companies have to be driven into bankruptcy before the Legislature acts?" Miller asked. "How many more jobs have to be lost before we close the loophole that allows this widespread abuse?"

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