This week, the Ohio House of Representatives passed legislation designed to stop the practice of “double-dipping” in asbestos litigation.
In asbestos litigation, a plaintiff can receive compensation from the defendant, bankruptcy trust funds or both.
Supporters of the Ohio legislation have said it will stop double-dipping by not allowing people to go after money from trusts of bankrupted companies created to compensate asbestos victims as well as filing lawsuits against current businesses.
Texas is one of a handful other states, including West Virginia, Louisiana and Oklahoma, that are also working on similar legislation.
In March 2011, State Rep. Doug Miller (R-New Braunfels) filed House Bill 2034, which would mandate that claimants apply for bankruptcy trust payments before going to trial against solvent defendants.
The bill closes a loophole used by trial lawyers and would stop them from gaming the legal system to enrich themselves at the expense of asbestos victims, Miller said in a March 2, 2011, story reported by the Texas Civil Justice League.
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.
H.B. 2034 provides for simultaneous filing of trust claims and tort suits with a deadline of filing trust claims 90 days before trial.
“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.
At the end of the legislative session however, HB 2034 was left pending in committee.
Another Texan is working on reform legislation on the national level.
U.S. Rep. Lamar Smith (TX-21), chair of the House Committee on the Judiciary, submitted House Resolution 4369, the Furthering Asbestos Claim Transparency Act of 2012 (FACT Act).
The FACT Act would require asbestos trusts to file quarterly reports to the bankruptcy court describing each demand the trust received from a claimant, including the name and exposure history of the claimant and any basis for payments from the trust to the claimant.
The bill was sponsored by U.S. Rep. Benjamin Quail of Arizona and co-sponsored by Reps. Bob Goodlatte of Virginia, Tim Griffin of Arizona, Jim Matheson of Utah, Dennis Ross of Florida and James Sensenbrenner Jr. of Wisconsin.
According to Smith’s bill summary, dissenters claim the reporting and disclosure requirements of FACT are “an assault” against asbestos victims’ privacy.
They also say the bill would be inequitable because it requires disclosure by trusts, but does not require solvent defendant companies to disclose their confidential settlement agreements.
Those opposed to the bill claim there is no evidence of systemic fraud with asbestos trusts and say the bill will actually decrease compensation to asbestos victims by forcing the bankruptcy trusts to prepare “burdensome” reports.
Despite the dissents, on June 8 the Judiciary Committee met in open session and after a 15-14 vote, ordered H.R. 4369 to be reported favorably to the House. On Sept. 21, the legislation was placed on the Union calendar, which is a calendar used by the whole House to schedule bills involving money issues.
The Ohio bill, having already passed the Senate, now awaits the signature of Gov. John Kasich.