A U.S. Congressman from Texas says reform is needed to stop trial lawyers from draining billions of dollars from asbestos trust funds – money set aside for veterans, firefighters, industrial workers and other Americans suffering from an asbestos-related illness.
In effort to combat asbestos double dipping, Rep. Blake Farenthold, R-Texas, introduced House Resolution 526, the Furthering Asbestos Claim Transparency Act, earlier this year.
Double dipping in asbestos cases occurs when personal injury lawyers sue a company and claim its asbestos products harmed their clients while simultaneously filing claims with asbestos trusts blaming other products for the same exact harm.
On Oct. 2 Farenthold released a column, first published with The Hill, warning that without increased transparency, “asbestos trusts may be fleeced into nothingness.”
“The funds were supposed to provide fair compensation to past, present and future asbestos victims,” the representative writes. “Instead, 23 asbestos trusts have reduced their payments to victims since 2008. Some more than once.”
Farenthold says the decrease in trusts appear to be driven, at least in part, by fraud and abuse.
“A Wall Street Journal investigative report uncovered hundreds of inconsistencies between claims with trusts and in-court cases, as well as thousands of implausible claims that alleged children were exposed to asbestos while working in industrial settings,” he wrote.
“There’s also strong evidence of fraud and abuse in asbestos lawsuits. Last year, a federal judge in North Carolina found that plaintiffs’ lawyers regularly withhold and manipulate essential evidence in asbestos cases.
“Other judges agree. A Delaware judge explained that lying and non-disclosure ‘occurs a lot’ in asbestos litigation.”
Since 1994, bankrupt companies have been able to create trusts to compensate individuals suffering from an asbestos-related injury.
Farenthold says many trial lawyers involved in asbestos lawsuits are filing claims with asbestos trust funds, and some of those attorneys even sit on special advisory committees that influence trust payment decisions and audit procedures.
“Who makes sure that lawyers aren’t cheating the trusts? The Government Accountability Office studied the trusts and found they operate without meaningful federal oversight,” Farenthold wrote.
“It also asked the trusts if their audits uncovered fraud. Their response? Although they have received hundreds of thousands of claims and paid out more than $20 billion, they haven’t been able to find any fraud.
“That’s unbelievable.”
If passed, the FACT Act would require asbestos trusts to provide quarterly reports on their claims to bankruptcy courts.
“By shining a light on the trusts, the FACT Act will discourage abusive claims and protect the money owed to future asbestos victims,” Farenthold wrote.
The FACT Act was previously introduced in 2013, prompting a wave of criticism from trial lawyers across the nation.
For example, Jennifer Lucarelli, partner at the asbestos firm Early Lucarelli Sweeney Meisenkothen, posted a July 2013 column on mesothelioma.com, arguing the FACT Act was against the interest of asbestos victims.
“It (the FACT Act) would require private asbestos trusts to publicly release extensive individual information about victims and would slow down asbestos cases by allowing asbestos defendants to bury the trusts in information requests,” she wrote.
“The legislation is another attempt by Big Asbestos to delay payment to suffering victims.”
Conversely, Farenthold says plaintiffs’ lawyers who argue the act will make it harder for asbestos victims to receive compensation, are wrong, as trust claims are filed electronically and trusts could easily and inexpensively produce the reports required by the act.
“The bill’s opponents also claim that reporting will threaten asbestos victims’ privacy. This is absolutely false,” he added.
“Federal bankruptcy courts zealously guard asbestos victims’ personal information, and they will ensure that reports filed under the FACT Act are properly protected. The FACT Act also forbids any disclosure of confidential medical records.”
In the state of Texas, Farenthold says more than 600,000 veterans are supporting the act.
“Don’t our veterans and first responders deserve the same compensation as the asbestos victims who came before them? I believe they do,” he wrote. “To make this possible, Congress must pass the FACT Act to keep asbestos trusts from running dry due to fraud and abuse.”
The resolution was reported by committee on May 14.
In June, Gov. Greg Abbott signed into law Texas House Bill 1492 to end asbestos double dipping in the Lone Star State.
Since 2011, Farenthold has represented Texas’ 27th Congressional District.