[House Report 106-782]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-782
======================================================================
ASBESTOS COMPENSATION ACT OF 2000
_______
July 24, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hyde, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1283]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1283) to establish legal standards and procedures
for the fair, prompt, inexpensive, and efficient resolution of
personal injury claims arising out of asbestos exposure, and
for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.............................................. 2
Purpose and Summary........................................ 15
Background and Need for the Legislation.................... 15
Hearings................................................... 21
Committee Consideration.................................... 22
Votes of the Committee..................................... 22
Committee Oversight Findings............................... 31
New Budget Authority and Tax Expenditures.................. 31
Congressional Budget Office Cost Estimate.................. 31
Constitutional Authority Statement......................... 40
Section-by-Section Analysis and Discussion................. 41
Operating Cost Analysis.................................... 64
Agency Views............................................... 66
Judicial Calls for Federal Legislation..................... 76
Dissenting Views........................................... 79
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Asbestos
Compensation Act of 2000''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--ESTABLISHMENT AND PROCEDURE
Sec. 101. Establishment of the Office of Asbestos Compensation.
Sec. 102. Medical eligibility review.
Sec. 103. Election of administrative process; settlement offers.
Sec. 104. Claimant's choice of forum.
Sec. 105. Administrative adjudication.
Sec. 106. Appeals; judicial review.
Sec. 107. Gathering and maintenance of information.
Sec. 108. Legal assistance program.
Sec. 109. Time limits for dispositions.
TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.
Sec. 201. Medical eligibility.
Sec. 202. Damages.
Sec. 203. Statute of limitations or repose.
Sec. 204. Come back rights.
Sec. 205. Class actions, aggregations of claims and venue.
Sec. 206. Joint and several liability.
Sec. 207. Core claims
Sec. 208. Special rules applicable to section 105 adjudications.
Sec. 209. Special rules applicable to the trustee.
TITLE III--ELIGIBLE MEDICAL CATEGORIES.
Sec. 301. Eligible medical categories.
Sec. 302. Asbestos-related non-malignant conditions with impairment.
Sec. 303. Asbestos-related mesothelioma.
Sec. 304. Asbestos-related lung cancer.
Sec. 305. Asbestos-related other cancer.
Sec. 306. Medical testing reimbursement.
TITLE IV--FUNDING.
Sec. 401. Assessment and enforcement.
Sec. 402. Fiscal and financial management of the asbestos compensation
fund.
Sec. 403. Authorization for appropriations and offsetting collections.
TITLE V--TRANSITION
Sec. 501. Applicability; transitional civil actions.
TITLE VI--DEFINITIONS
Sec. 601: Definitions.
TITLE VIII--MISCELLANEOUS PROVISIONS
Sec. 701. Relationship to other laws.
Sec. 702. Annual reports.
Sec. 703. Enforcement.
Sec. 704. Qualifying national settlement plan.
Sec. 705. Severability.
TITLE I--ESTABLISHMENT AND PROCEDURE
SEC. 101. ESTABLISHMENT OF THE OFFICE OF ASBESTOS COMPENSATION.
(a) Establishment of Program; Administrator.--There is established
in the Department of Justice the Office of Asbestos Compensation (OAC)
to be headed by an Administrator. The Administrator shall be appointed
by the President by and with the advice and consent of the Senate. The
Administrator shall serve for a term of 10 years, and may be removed by
the Attorney General only for good cause. The Administrator shall have
authority to promulgate all procedural and substantive rules necessary
to administer this Act. All claims and other filings under this Act
shall be lodged with the office designated by the Administrator.
(b) Exclusive Jurisdiction.--Except as otherwise provided in this
Act, the OAC shall have exclusive jurisdiction over proceedings to
determine if a claimant is entitled to compensation for an asbestos
claim and the amount of such compensation. The foregoing shall not
apply to any claim brought under any workers' compensation law or
veterans' benefits program.
(c) Medical Director.--The Administrator shall appoint the Medical
Director and may remove the Medical Director for good cause. The
Medical Director shall, under the supervision of the Administrator,
manage the medical review process under section 102 and shall have the
authority to appoint or to contract for the services of claims
examiners, physicians, and such other personnel as may be necessary or
appropriate for the efficient conduct of the medical review process and
to create the exceptional medical claims panel.
(d) Asbestos Compensation Fund.--There is established in the OAC an
Asbestos Compensation Fund for the purpose of providing payments to
claimants under this Act. The Administrator shall appoint the Trustee
of the Asbestos Compensation Fund and may remove the Trustee for good
cause.
(e) Office of Administrative Law Judges.--There is established in
the OAC an Office of Administrative Law Judges for the purpose of
providing expedited administrative adjudication of asbestos claims
pursuant to section 105. The Administrator shall have authority to
appoint Administrative Law Judges on a temporary or emergency basis and
to remove such judges for good cause.
(f) Medical Advisory Committee.--The Administrator shall appoint a
Medical Advisory Committee which shall periodically evaluate this Act's
medical review process and medical eligibility criteria. The
Administrator shall set a term of appointment for members of the
Medical Advisory Committee. The Committee shall make appropriate
recommendations as and when it deems appropriate and shall submit an
annual report to the Administrator and the Congress.
SEC. 102. MEDICAL ELIGIBILITY REVIEW.
(a) Determination of Eligibility.--All claims when filed shall be
immediately referred to the Medical Director. The Medical Director
shall determine whether the claimant meets the requirements for medical
eligibility in section 301 or the requirements for medical testing
reimbursement in section 306
(b) Information for Medical Review.--The Administrator shall issue
rules for the expeditious conduct of the medical review process. Such
rules at a minimum shall provide for the following:
(1) Submission of the following information where relevant
and feasible: smoking history; occupational history;
description of the circumstances, intensity, time, and duration
of exposure; medical test results necessary for a decision as
to whether an exposed person meets the requirements for one or
more medically eligible categories under sections 301, 302,
303, 304, 305, or 306, including all of the supporting data for
any pulmonary function tests on which the claimant relies
(including all flow volume loops, spirographs, and any other
tracings for any test that is performed). The claimant shall
also provide such medical releases as the Administrator may
require allowing the OAC to obtain any and all medical
information relevant to the determination of medical
eligibility.
(2) The Medical Director may require additional non-
invasive medical tests at the expense of the OAC if necessary
for a determination of medical eligibility.
(c) Procedures.--Upon receipt of a complete medical application,
the Medical Director shall send notice to the claimant confirming the
OAC's receipt of the claim. The Medical Director shall make an initial
decision within 30 days of such receipt. If the application is
initially denied, the claimant shall be so notified and, at the
claimant's request, the application shall be immediately referred to--
(1) a review panel of 2 qualified physicians, with a third
qualified physician available to resolve any disagreement
between the initial 2 qualified physicians; or
(2) an exceptional medical claims panel.
The Medical Director shall be bound by a panel's decision. The rules
shall also provide for the prioritization of claims, including enhanced
priority for claimants who have mesothelioma, and set a time limit for
a determination by the review panel.
(d) Exceptional Medical Claims.--The rules of the medical review
process shall provide the claimant with an opportunity to apply to an
exceptional medical claims panel for a determination of whether the
exposed person meets the requirements under section 301(b) for an
exceptional medical claim for any category. This opportunity shall be
provided both at the initial filing of a claim and after a claim has
been denied under this subsection. The exceptional medical claims panel
shall decide whether the claimant qualifies as an exceptional medical
claim within 30 days of receipt of the claim. This time limit may be
extended by the Administrator only for good cause. The Medical Director
shall be bound by the decision of the exceptional medical claims panel.
The Medical Director shall issue a final denial, along with a brief
statement of reasons, if the claimant is found ineligible following an
opportunity to submit the claim to a medical review panel and an
exceptional medical claims panel.
(e) Monitoring Accuracy of Determinations.--The Medical Director
shall establish audit and personnel review procedures for evaluating
the accuracy of medical eligibility determinations, including both
erroneous approvals and erroneous denials.
(f) Opt-Out.--After receiving a certificate of eligibility, a
claimant may opt out of settlement proceedings provided for under
sections 103 and 104 and elect to file suit in any State or Federal
court of competent jurisdiction.
SEC. 103. ELECTION OF ADMINISTRATIVE PROCESS; SETTLEMENT OFFERS.
(a) Naming and Notification of Defendants.--Medically eligible
claimants, other than those who elect to file suit in court under
section 102(f), shall name defendants. Defendants shall receive notice
from the Administrator.
(1) Identification of Defendants Associated with Work
Sites.--At the claimant's request, the Administrator will
provide information concerning person who may have provided
asbestos or asbestos-containing products or materials to work
sites named by the claimant and when such asbestos or asbestos-
containing products or materials may have been provided as well
as the time such products or materials were located at the
named work sites The Administrator may implement this paragraph
through rulemaking.
(2) Verified Particularized Statement.--Within such time
after receiving a certificate of medical eligibility as may be
provided by rule, a claimant shall provide, with respect to
each person that the claimant alleges is responsible for the
injury claimed, a verified particularized statement of the
basis for the allegation that the person is or may be
responsible for the injury. The particularized statement shall
include such information as the Administrator may require for
the purpose of providing the defendant with a reasonable basis
for making an offer of settlement. The claimant may incorporate
by reference any information required by this paragraph that
may already have been submitted to the OAC.
(3) Notice.--Upon finding that the claimant's
particularized statement meets the requirements of paragraph
(2), the Administrator shall provide notice to each named
defendant. The defendant shall at the same time be furnished
with a copy of all particularized statements submitted by the
claimant under paragraph (2) and, subject to reasonable rules
protecting the confidentiality of information provided by the
claimant, a copy of all information submitted by the claimant,
records and other information obtained by the Medical Director
relating to the claim and the results of any medical tests
administered at the direction of the Medical Director. Any
defendant may provide any information relevant to the amount of
any recommended settlement under subsection (b), including
information regarding product identification, exposure, and
damages.
(4) Third-Party Practice.--Defendants may assert third-
party claims in accordance with rules adopted by the
Administrator. Third-party claimants shall provide a verified
particularized statement, meeting the requirements of paragraph
(2), substantiating the allegation that the third-party
defendant may be liable to the third-party plaintiff, wholly or
in part, for the claimant's injury. For good cause shown and
subject to reasonable limitations, an Administrative Law Judge
may allow discovery for the purpose of obtaining information
necessary to allow the claimant or any third-party plaintiff to
provide a particularized statement under paragraph (2) or this
paragraph.
(b) Settlement Offers; Offer of Compensation by the Trustee.--
(1) Mandatory offer from defendants.--Within 21 days
following the naming of all defendants, each defendant shall
provide to the claimant in writing a good faith settlement
offer, and shall provide a copy to the Trustee.
(2) Mandatory offer from Asbestos Compensation Fund.--
Within 10 days of receiving all of the defendants' offers, the
Trustee shall make an offer of compensation to the claimant,
based on a compensation grid which shall be established and
regularly revised by rule.
SEC. 104. CLAIMANT'S CHOICE OF FORUM.
(a) In General.--The claimant shall notify each defendant and the
Trustee whether the claimant accepts or rejects the defendant's
settlement offer under section 103(b)(1). If the claimant accepts any
such offer, or any other settlement offer, the Trustee's offer of
compensation shall be automatically reduced by the amount of such
settlements.
(b) Notice.--The claimant shall notify the Trustee and any
defendant within 60 days whether the claimant accepts or rejects an
offer that has been provided pursuant to section 103(b)(1) or
103(b)(2).
(c) Orphan Shares.--The Trustee shall not make an offer to the
claimant under section 103(b) if no solvent defendant has been named.
(d) Acceptance.--If the claimant accepts the Trustee's offer of
compensation, the Trustee shall assume the claim. The Trustee may
accept any defendant's settlement offer under section 103(b)(1) or may
prosecute the claim against any defendant as provided in section 105,
or may prosecute the claim in any State or Federal court.
(e) Rejection.--If the claimant rejects any defendant's settlement
offer and also rejects the Trustee's offer of compensation, the
claimant may elect an administrative adjudication under section 105 or
opt out of further administrative proceedings and file suit in a State
or Federal court.
SEC. 105. ADMINISTRATIVE ADJUDICATION.
If a claimant elects adjudication under this section, the OAC shall
assign an Administrative Law Judge to conduct a hearing on the record
and to determine whether compensation is to be provided and the amount
of such compensation. The Administrative Law Judge shall adhere to the
law applicable to asbestos adjudications as contained in sections 201
through 210. The Administrative Law Judge shall issue a decision,
containing findings of fact and conclusions of law, as expeditiously as
possible, but not later than 90 days after the case is assigned.
SEC. 106. APPEALS; JUDICIAL REVIEW.
Any person aggrieved by a final decision of the Administrator under
section 105 or a final denial by the Medical Director under section
102, may seek review of that decision or denial in the United States
Court of Federal Claims, which shall uphold the decision or denial if
it is supported by substantial evidence and is not contrary to law. A
decision by the Medical Director that a claimant has an eligible
medical condition is not a final decision under this section. Decisions
of the United States Court of Federal Claims are appealable, without
regard to the amount in controversy or the citizenship of the parties,
to a United States Court of Appeals for a judicial circuit.
SEC. 107. GATHERING AND MAINTENANCE OF INFORMATION.
(a) Product Identification.--The OAC shall collect and regularly
update information regarding product identification and shall make such
information publicly available. The data base maintained by the OAC
under this section is for information purposes only, and the presence
of information in that database shall not lead to any presumption.
(b) Settlements, Judgments, and Awards.--The OAC shall collect data
on settlements, judgments, and awards in connection with asbestos
claims and shall make such data publicly available. The OAC may require
this data to be reported in such form as it may prescribe.
(c) Subpoena Power.--The OAC may compel, by subpoena or other
appropriate process, information from any person regarding past
settlements or product identification for purposes of developing and
maintaining a compensation grid under section 103(b)(2) and maintaining
a database for purposes of naming defendants under section 103(a)(1).
In addition, the subpoena power under this subsection may be used by
the OAC in order to secure financial information from any defendant.
(d) Confidentiality.--Any information or documentary material
concerning settlements which is specific to a company, law firm, or
plaintiff that is provided to the OAC pursuant to subsection (b) or
(c), whether by subpoena or otherwise, shall be exempt from disclosure
under section 552 of title 5, United States Code, and the disclosure of
such information by the OAC or any person is prohibited.
SEC. 108. LEGAL ASSISTANCE PROGRAM.
(a) In General.--The OAC shall implement a legal assistance program
for the purpose of providing legal representation to claimants. The OAC
shall maintain a roster of qualified counsel who agree to provide
services to claimants under rules, practices, and procedures
established by the Administrator.
(b) Free Choice of Counsel.--Claimants shall not be required to use
counsel provided or recommended by the OAC, but shall retain their
right to be assisted by counsel of their choice.
(c) Legal Assistance.--The OAC shall adopt rules concerning the
reasonableness of fees, and all legal representation of persons
asserting asbestos claims shall comply with such rules.
SEC. 109. TIME LIMITS FOR DISPOSITIONS.
(a) In General.--If the Medical Director fails to meet the time
limits for an initial decision provided under this Act with respect to
more than 30 percent of claims, then the Administrator shall take such
action as may be necessary, including increasing staff and
administrative assessments under section 401, to ensure compliance with
such time limit with regard to at least 70 percent of claims
(b) No Offer.--If the Trustee fails to make an offer within 120
days after the Administrator's receipt of a complete application under
section 102 with respect to more than 30 percent of claims, then the
Administrator shall take such action as may be necessary, including
increasing staff and administrative assessments under section 401, to
ensure compliance with such time limit with regard to at least 70
percent of claims.
(c) Duties.--The duties established by subsections (a) and (b)
shall be non-discretionary and enforceable by an order of mandamus from
any judge of the United States Court of Federal Claims.
(d) Exceptions.--The Administrator may by rule establish exceptions
to the time limits in this section. Such rules shall take into
consideration the complexity of the case, the extent to which delays
are attributable to the fault or neglect of the claimant or the
claimant's attorney and other factors that are beyond the control of
the OAC.
TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.
SEC. 201. MEDICAL ELIGIBILITY.
A claimant may recover compensation for damages caused by an
eligible medical condition only if the claimant presents a certificate
of medical eligibility establishing its existence. A certificate of
medical eligibility shall be conclusive unless rebutted by clear and
convincing evidence. However, a certificate of medical eligibility
shall not be conclusive as to allegations regarding exposure to
asbestos or when medical eligibility is established pursuant to section
304(b).
SEC. 202. DAMAGES.
A claimant who establishes an eligible medical condition shall be
entitled to compensatory damages to the extent provided by applicable
law, including damages for emotional distress, pain and suffering, and
medical monitoring where authorized. Such damages shall not include
punitive damages or damages solely for enhanced risk of a future
condition, except as provided in section 208(d).
SEC. 203. STATUTE OF LIMITATIONS OR REPOSE.
No defense to an asbestos claim based on a statute of limitations
or statute of repose, laches, or any other defense based on the
timeliness of the claim shall be recognized or allowed, unless such
claim was untimely as of the date of enactment of this Act. No claim
shall be deemed to have accrued until and unless the claimant's
condition would have qualified as an eligible medical condition under
section 302, 303, 304, or 305.
SEC. 204. COME BACK RIGHTS.
Notwithstanding any other provision of law, a judgment or
settlement of an asbestos claim for a non-malignant disease shall not
preclude a subsequent claim with respect to the same exposed person for
an eligible medical condition pursuant to section 301(b), 303, 304, or
305
SEC. 205. CLASS ACTIONS, AGGREGATIONS OF CLAIMS AND VENUE.
(a) Consolidations.--No joinder of parties, aggregation of claims,
consolidation of actions, extrapolation, or other device to determine
multiple asbestos claims on a collective basis shall be permitted
without the consent of all parties, except as provided in subsection
(b) or unless the court, pursuant to an exercise of judicial authority
to promote the just and efficient conduct of asbestos civil actions,
orders such procedures, including the transfer for consolidation, to
determine multiple asbestos claims on a collective basis.
(b) Class Action Suits.--In any civil action asserting an asbestos
claim, a class action may be allowed without the consent of all parties
if the requirements of Rule 23, Federal Rules of Civil Procedure are
satisfied.
(c) Venue.--At the election of the claimant, an asbestos claim may
be filed in any jurisdiction where the claimant is alleging that the
claimant was exposed to asbestos or where the claimant is currently
domiciled.
(d) Removal.--Any party in a civil action that involves a violation
of subsection (a), (b) or (c) of this section may remove such action to
an appropriate district court of the United States. The district courts
of the United States shall have jurisdiction of all civil actions
removed pursuant to this section without regard to diversity of
citizenship or amount in controversy.
(e) Administrative Proceedings.--In any proceeding under section
105, the Administrative Law Judge may order adjudication of claims on a
collective basis.
SEC. 206. JOINT AND SEVERAL LIABILITY.
This Act shall not be construed to limit joint and several
liability under applicable Federal or State law. In any core claim that
is successfully asserted against a defendant, such defendant shall be
held jointly and severally liable for full compensatory damages to the
claimant notwithstanding any contrary provision of law.
SEC. 207. CORE CLAIMS.
In any core claim, the issues to be decided shall be limited to--
(1) whether the exposed person with respect to whom a claim
is made has or had an eligible medical condition;
(2) whether the exposure of the exposed person to the
product of the defendant was a substantial contributing factor
in causing that eligible medical condition; and
(3) the amount of compensation to be provided.
SEC. 208. SPECIAL RULES APPLICABLE TO SECTION 105 ADJUDICATIONS.
(a) Applicable Law.--Unless otherwise provided in this Act, in
claims based on State law, the Administrative Law Judge shall, with
respect to each defendant, apply the substantive law of the State which
has the most significant relationship to the exposure and the parties.
(b) Full Compensatory Damages in Wrongful Death Cases.--
Notwithstanding any contrary provision of State law, full compensatory
damages, including damages for non-economic loss, shall be awarded in
wrongful death claims involving mesothelima. In all other cases,
damages for non-economic loss may be awarded to the extent that they
are available pursuant to applicable law.
(c) Penalty for Inadequate Offer.--In any proceeding against a
defendant by a claimant under section 105, and in any proceeding by the
Trustee, if the final offer made by any defendant is less than the
share of the total liability awarded against that defendant, a penalty
shall be added to the award equal to 100 percent of the difference
between the defendant's settlement offer under section 103(b) and the
lesser of--
(1) the defendant's share of the offer made by the Trustee
under section 103(b); or
(2) the defendant's share of the award made under section
105.
(d) Punitive Damages.--Punitive damages may be awarded against a
defendant if the claimant establishes by clear and convincing evidence
that the conduct carried out by the defendant with a conscious,
flagrant indifference to the rights or safety of others was the
proximate cause of the harm that is the subject of the asbestos claim.
Punitive damages may not exceed 3 times the amount of the award
pursuant to a section 105 adjudication plus any penalties added to that
award pursuant to subsection (c).
SEC. 209. SPECIAL RULES APPLICABLE TO THE TRUSTEE.
In an action by the Trustee as assignee of the claimant, the award
under section 104(d) shall include compensatory damages for the
claimant's injury and all punitive damages under section 208(d), any
penalties for inadequate offers by defendants, and the Trustee's costs
in establishing the claim, including reasonable attorneys' fees and
expenses and an allowance for interest on the amount paid by the Fund
to the claimant under section 104. Interest shall be calculated from
the time of such payments, and in accordance with Title IV. All
economic and non-economic damages recovered by the Fund in excess of
200 percent of the amount paid to the claimant pursuant to section 104
and all punitive damages under section 208(d) shall be paid to the
settling claimant. The fact that the claimant has accepted an offer of
compensation by the Trustee, and the amount and terms of such offer,
shall not be admissible in any adjudication of a claim brought by the
Trustee against any defendant.
TITLE III--ELIGIBLE MEDICAL CATEGORIES.
SEC. 301. ELIGIBLE MEDICAL CATEGORIES.
(a) In General.--The eligible medical categories under this Act are
asbestos-related non-malignant conditions with impairment, asbestos-
related mesothelioma, asbestos-related lung cancer, and asbestos-
related other cancer.
(b) Establishing Existence.--A claimant may establish the existence
of an eligible medical condition either by demonstrating that the
exposed person meets the standard criteria provided in sections 302,
303, 304, and 305 or by demonstrating to an exceptional medical claims
panel, through reliable evidence, that the exposed person has an
asbestos-related impairment that is substantially comparable to the
condition of an exposed person who would satisfy the requirements of a
given medical category. The Administrator, after consultation with the
Medical Advisory Committee, may adopt rules consistent with this
section to assure consistency and efficiency in the designation of
claims as exceptional medical claims.
SEC. 302. ASBESTOS-RELATED NON-MALIGNANT CONDITIONS WITH IMPAIRMENT.
(a) In General.--The standard criteria for asbestos-related non-
malignant conditions with impairment shall include--
(1) clinical evidence of asbestosis,
(2) pathological evidence of asbestosis, or
(3) evidence of bilateral pleural thickening with
impairment.
(b) Obstructive Lung Disease.--A claimant shall not be disqualified
from compensation under this category solely because an exposed person
who otherwise meets the requirements for impairment has a reduced FEV1/
FVC ratio indicating obstructive lung disease. In that event, the
exceptional medical claims panel shall determine, giving due regard to
the evidence that any impairment is related to obstructive disease and
taking into consideration all available evidence, whether an asbestos-
related restrictive disease substantially contributes to the impairment
of the exposed person. Such a contribution shall be presumed if the
panel concludes, based upon the findings of a certified B-reader, that
the exposed person's chest x-ray is ILO Grade 2/1 or more.
SEC. 303. ASBESTOS-RELATED MESOTHELIOMA.
The standard criteria for asbestos-related mesothelioma shall
include a diagnosis by a qualified physician of a malignant
mesothelioma caused or contributed to by exposure to asbestos with a
primary site in the pleura, peritoneum, or like tissue, or reasonably
equivalent clinical diagnosis in the absence of adequate tissue for
pathological diagnosis.
SEC. 304. ASBESTOS-RELATED LUNG CANCER.
(a) In General.--The standard criteria for asbestos-related lung
cancer shall include--
(1) a diagnosis by a qualified physician of lung cancer
that the physician concludes was caused or contributed to by
exposure to asbestos;
(2) a latency period of at least 10 years; and
(3) either--
(A) evidence of asbestosis or bilateral pleural
thickening with impairment sufficient to meet the
requirements of section 302 or to qualify as an
exceptional medical claim under section 301(b); or
(B) chest x-rays which, in the opinion of a
certified B-reader, demonstrate asbestos-related
bilateral pleural plaques or thickening, and 7.5
equivalent-years of exposure to asbestos-containing
materials in employment regularly requiring work in the
immediate area of visible asbestos dust.
(b) History of Smoking.--If a finding of asbestos-related lung
cancer is made pursuant to paragraph (3)(B) and the exposed person has
a substantial history of smoking, which shall be defined by rule, the
claimant shall be medically eligible for compensation, but the finding
of asbestos-related lung cancer shall not be conclusive as to causation
for purposes of section 201.
SEC. 305. ASBESTOS-RELATED OTHER CANCER.
The standard criteria for asbestos-related other cancer shall
include a diagnosis by a qualified physician of a malignant primary
tumor of the larynx, oral-pharynx, gastro-intestinal tract, or stomach,
caused or contributed to by exposure to asbestos, together with
evidence of a condition sufficient to meet the requirements of section
302 or to qualify as an exceptional medical claim under section 301(b).
SEC. 306. MEDICAL TESTING REIMBURSEMENT.
(a) Level A.--A claimant with at least 4 equivalent-years of heavy
exposure to asbestos, whose chest x-ray shows either small irregular
opacities of ILO Grade 1/0 or bilateral pleural thickening of ILO Grade
B/2, shall be eligible for reimbursement of 100 percent of out-of-
pocket expenses for any medical testing required under section 102, up
to a ceiling of $1500. Level A claimants shall be eligible at 3 year
intervals for similar reimbursement of future medical testing expenses
for up to 2 additional occasions. Level A reimbursements shall be
treated as administrative expenses of the OAC and paid for by
defendants under section 401.
(b) Level B.--The Administrator shall, subject to the availability
of appropriated funds, reimburse up to 100 percent of the out-of-pocket
expenses for any medical testing required under section 102, up to a
ceiling established by rule, with the approval of the Trustee, for any
claimant with at least one equivalent-year of heavy exposure to
asbestos who meets the medical but not the exposure requirements of
Level A. Level B claimants may be eligible for similar reimbursement of
future medical testing expenses for up to 2 additional occasions at
least 3 years apart. The Administrator shall adjust periodically the
amount of the cash payment to reflect changes in medical costs. Level B
reimbursements shall be treated as administrative expenses of the OAC
and paid for by defendants under section 401.
(c) Certified Labs.--The Administrator is authorized to establish a
program for the certification of laboratories to provide medical
testing under this section.
(d) Exposure Verification.--The Administrator shall establish audit
and other procedures to provide reasonable assurance that statements
concerning exposure made by claimants seeking medical testing
reimbursement under this section are accurate.
TITLE IV--FUNDING.
SEC. 401. ASSESSMENT AND ENFORCEMENT.
(a) Rules.--The Administrator shall adopt rules for calculating and
collecting from defendants all costs associated with the determination
of claims and payments to claimants.
(b) Trustee.--The Trustee shall have authority to bring an action
in the district courts of the United States to enforce any obligation
imposed on any person by this section and such courts shall have
exclusive jurisdiction of such actions without regard to the amount in
controversy or citizenship of the parties. The district court shall not
entertain any defense other than lack of jurisdiction in any action by
the Trustee under this subsection.
(c) Trustee Prevails.--In any action under subsection (b) in which
the Trustee prevails, the Trustee shall be entitled to costs, including
reasonable attorneys' fees, and interest on any unpaid amount.
(d) Judicial Review.--A defendant may challenge the legality or
amount of any assessment only by seeking judicial review in the United
States Court of Federal Claims after paying the disputed amount. If
successful, the defendant shall be awarded interest.
SEC. 402. FISCAL AND FINANCIAL MANAGEMENT OF THE ASBESTOS COMPENSATION
FUND
(a) Applicability of Credit Reform Act Principles; Fiscal
Management Rules.--Except as provided in this section, the operations
of the Fund related to settlement payments under section 104, and
associated recoveries from defendants, shall be governed by the Federal
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), notwithstanding the
status of the Fund as a governmental entity. The Administrator shall
promulgate rules, approved by the Office of Management and Budget, for
the fiscal management of the Fund. Such rules and their application
shall not be subject to judicial review and shall, as regards payments
under section 104--
(1) provide all reasonable assurance that, over an
appropriate time period, the subsidy rate associated with the
net litigation risk of the Fund is zero;
(2) provide all reasonable assurance that, in any given
year, the subsidy rate associated with the net litigation risk
of the Fund is no more than 2 percent;
(3) provide for the allocation of receipts from defendants
to various Fund accounts, including the Fund's financing
account, program account, and an account for salaries and
expenses (which shall include litigation costs); and
(4) provide specific instructions for the Trustee to reduce
payments by the Fund when necessary to meet the solvency
requirements of this subsection.
(b) Financing of the Fund, Settlement Payments to Claimants.--
(1) Credit reform principles.--The Fund is authorized to
receive from defendants, as offsetting receipts, any amounts
related to settlements or judgments, including damages,
interest, litigation costs, specific administrative costs that
may be required by the Administrator through rulemaking, and
interest costs incurred by the Fund in connection with payment
of settlement offers made under section 103. Amounts received
from defendants as interest shall be sufficient to pay interest
costs due to the United States Treasury from the financing
account, plus the subsidy costs of the program account,
provided that the latter amounts may not exceed 3 percent of
the amount of any settlement or award. Recoveries on a claim by
the Fund in excess of the settlement amount paid to the
claimant and other costs of the Fund which are not paid to the
claimant under section 209 shall be available to the program
account as a reduction to subsidy costs in the current or any
subsequent year.
(2) Authority.--The program account shall have permanent
indefinite authority, not subject to further appropriation, to
transfer funds to the finance account in accordance with
principles of the Credit Reform Act.
SEC. 403. AUTHORIZATION FOR APPROPRIATIONS AND OFFSETTING COLLECTIONS.
(a) In General.--There are authorized to be appropriated--
(1) to the OAC such sums as may be required to perform
responsibilities under this Act;
(2) to the United States Court of Federal Claims, such sums
as may be required to carry out its responsibilities under this
Act; and
(3) to the OAC an amount not to exceed $100 million, for a
one-time loan to the Fund in connection with startup expenses,
such loan to be repaid by the Fund with interest;
The total of appropriations provided under this subsection in the first
year after the date of enactment not exceed $250 million and in any
subsequent year not exceed $150 million.
(b) Offsetting Collections of Administrative Assessments.--The OAC
is authorized to receive and to expend in any year, as offsetting
collections, all administrative assessments or prepaid administrative
assessments and all costs and penalties paid to it.
TITLE V--TRANSITION
SEC. 501. APPLICABILITY; TRANSITIONAL CIVIL ACTIONS.
(a) In General.--This Act shall be effective upon its date of
enactment with respect to any civil action asserting an asbestos claim
in which trial has not commenced as of that date.
(b) Pending Claim.--A claimant with a pending civil claim on the
date of enactment shall not be required to obtain a certificate of
medical eligibility or otherwise exhaust the procedures set forth in
title I if trial commences within 6 months of the date of enactment of
this Act. This 6-month period may be extended by the Attorney General
for up to an additional 6 months if required for the orderly
implementation of this Act, and after reporting to the Congress the
reasons for any such extension.
(c) Right to Sue Letter.--If a claimant with--
(1) a pending civil action on the date of enactment of this
Act, and
(2) a scheduled trial date within one year after the date
of enactment of this Act
does not receive an initial decision on medical eligibility within the
time period prescribed in section 102(c), the claimant may request a
right-to sue letter from the Administrator at any time prior to the
issuance of that initial decision. If the Attorney General determines
that the 6-month period in subsection (b) should be extended, the one-
year period in the preceding sentence shall be similarly extended. The
Administrator shall issue a right-to-sue letter or an initial decision
under section 102 within 10 days following the receipt of the
claimant's request. A claimant who receives a right-to-sue letter may
assert the claimant's asbestos claim in any competent forum
notwithstanding section 101(b).
(d) Claim in Another Forum.--Any claimant who asserts his claim in
a forum other than the OAC under subsections (b) or (c) must
demonstrate that the exposed person has qualified for medical
eligibility under section 301, 302, 303, 304, 305, or 306.
TITLE VI--DEFINITIONS
SEC. 601: DEFINITIONS.
In this Act:
(1) Asbestos claim.--The term ``asbestos claim'' means any
claim for damages or other relief, arising out of, based on, or
related to the health effects of exposure to asbestos,
including any claim for personal injury, death, mental or
emotional injury, risk of disease or other injury, or the costs
of medical monitoring or surveillance, and including any claim
made by or on behalf of any exposed person or any
representative, spouse, parent, child, or other relative of any
exposed person. The term does not include any claim for
workers' compensation benefits, or any claim by an employer or
insurer for reimbursement from a third-party for benefits paid
under a workers' compensation plan, or any claim for benefits
under a veterans' benefits program.
(2) Asbestos trust.--The term ``asbestos trust'' means a
court-supervised trust established to resolve asbestos claims
arising directly or indirectly from exposure to asbestos or
asbestos-containing products, including a trust created
pursuant to the bankruptcy laws of the United States or Rule 23
of the Federal Rules of Civil Procedure.
(3) Certificate of medical eligibility.--The term
``certificate of medical eligibility'' means a certificate
issued to a claimant pursuant to this Act certifying that an
exposed person meets the requirements of one or more eligible
medical categories or qualifies as an exceptional medical
claim.
(4) Certified B-reader.--The term ``certified B-reader''
means an individual qualified as a ``final' or ``B-reader''
under 42 C.F.R. 37.51(b) (1997) (and any subsequent revisions
thereof) whose certification is current.
(5) Chest X-rays.--The term ``chest x-rays'' means chest
radiographs taken in at least 2 views (Posterior-Anterior and
Lateral) and graded quality 1 for reading according to the
criteria established by the ILO. If the claimant is unable to
provide quality 1 chest x-rays because of death or because of
an inability to have new chest x-rays taken, chest x-rays
graded quality 2 will be acceptable.
(6) Civil action.--The term ``civil action'' means any
action, lawsuit, or proceeding in any State, Federal, or tribal
court, but does not include--
(A) a criminal action; or
(B) an action relating to State or Federal workers'
compensation laws, or a proceeding for benefits under
any veterans' benefits program.
(7) Claimant.--The term ``claimant'' means any exposed
person or the person's legal representative, and any relative
of an exposed person or their legal representative, who asserts
an asbestos claim.
(8) Clinical evidence of asbestosis.--The term ``clinical
evidence of asbestosis'' means a diagnosis of pulmonary
asbestosis by a qualified physician based on the minimum
objective criteria of--
(A) Chest x-rays for which a B-reader report is furnished
showing small irregular opacities of ILO Grade 1/0 and
pulmonary function testing and physical examination that show
either--
(i) FVC <80% of predicted value with FEV1/FVC* 75%
(actual value); or
(ii) TLC <80% of predicted value, with either DLCO>
76% of predicted value or bilateral basilar crackles,
and also the absence of any probable explanation for
this DLCO result or crackles finding other than the
presence of asbestos lung disease; or
(B) Chest x-rays for which a B-reader report is furnished
showing small irregular opacities of ILO Grade 1/1 or greater
and pulmonary function testing that shows either--
(i) FVC <80% of predicted value with FEV1/FVC* 72%
(actual value) or, if the individual tested is at least
68 years old at the time of the testing, with FEV1/FVC*
65% (actual value); or
(ii) TLC <80% of predicted value.
(9) Compensatory Damages.--The term ``compensatory
damages'' means damages awarded for economic loss, such as
medical expenses, as well as non-economic loss. Non-economic
loss includes subjective, non-pecuniary loss, such as pain,
suffering, inconvenience, emotional distress, loss of society
and companionship, and loss of consortium.
(10) Core claim.--The term ``core claim'' means an asbestos
claim against a defendant who either--
(A) manufactured any asbestos-containing product which
released asbestos fibers to which the exposed person was
exposed, and paid out $ 50 million in respect of such claims
cumulatively over the 10 year period preceding the filing of
the claim; or
(B) was not a manufacturer but paid out $ 100 million in
respect of such claims cumulatively over the 10 year period
preceding the filing of the claim; provided that the alleged
liability is not based upon the control or ownership of
property.
(11) Defendant.--The term ``defendant'' means any person
who is or may be responsible for the asbestos-related condition
of the exposed person and who is so notified by the
Administrator pursuant to title I. The term does not include--
(A) an asbestos trust in existence as of the date
of enactment of this Act unless the trust elects to be
covered by this Act under section 701(b); or
(B) the United States Government or a State
government.
(12) DLCO.--The term ``DLCO'' means single-breath diffusing
capacity of the lung (carbon monoxide), which is a measure of
the volume of carbon monoxide transferred from the alveoli to
blood in the pulmonary capillaries for each unit of driving
pressure of the carbon monoxide.
(13) Equivalent-year.--The term ``equivalent-year'' means a
measure of exposure to asbestos adjusted to reflect varying
exposure levels typical of different occupations. Each year of
exposure in which an exposed person's primary occupation
involved the direct installation, repair, or removal of
asbestos-containing products, shall count as one year. Each
year of such occupational exposure in which the exposed
person's primary occupation involved either the direct
manufacture of asbestos-containing products using raw asbestos
fiber or the direct installation, repair, or removal of
asbestos-containing products in a shipyard during World War II,
shall count as 2 years. Each year of exposure in occupations
not described above shall count as one-half year.
(14) Evidence of bilateral pleural thickening with
impairment.--The term ``evidence of bilateral pleural
thickening with impairment'' means a diagnosis of bilateral
pleural thickening by a qualified physician based on the
minimum objective criteria of either--
(A) Chest x-rays for which a B-reader report is
furnished showing bilateral pleural thickening of ILO
Grade B/2 with pulmonary function testing and physical
examination that show either--
(i) FVC <80% of predicted value with FEV1/
FVC* 75% (actual value) or
(ii) TLC <80% of predicted value, with
either DLCO> 76% of predicted value or
bilateral basilar crackles, and also the
absence of any probable explanation for this
DLCO result or crackles finding other than the
presence of asbestos lung disease; or
(B) Chest x-rays for which a B-reader report is
furnished showing bilateral pleural thickening of ILO
Grade C/2 or greater; and pulmonary function testing
that shows either--
(i) FVC <80% of predicted value with FEV1/
FVC* 72% (actual value) or, if the individual
tested is at least 68 years old at the time of
the testing, with FEV1/FVC* 65% (actual value);
or
(ii) TLC <80% of predicted value.
(15) Exposed person.--The term ``exposed person'' means any
person who has been exposed in any State (or while working
aboard a United States vessel outside the United States) to
asbestos or to asbestos-containing products.
(16) FEV1.--The term ``FEV1'' means forced expiratory
volume (1 second), which is the maximal volume of air expelled
in one second during performance of the spirometric test for
forced vital capacity (FVC).
(17) Fund.--The term ``Fund'' means the Asbestos
Compensation Fund.
(18) FVC.--The term ``FVC'' means forced vital capacity,
which is the maximal volume of air expired with a maximally
forced effort from a position of maximal inspiration.
(19) ILO.--The term ``ILO'' means the International Labour
Organization.
(20) ILO grade.--The term ``ILO grade'' means the
radiological ratings for the presence of lung or pleural
changes by chest x-ray as established from time to time by the
ILO.
(21) Latency period.--The term ``latency period'' means the
period from the date of the exposed person's first exposure to
asbestos or an asbestos-containing product to the date of
manifestation of the condition claimed.
(22) Lung cancer.--The term ``lung cancer'' means a primary
malignant bronchogenic tumor, of any cell type, caused or
contributed to by exposure to asbestos.
(23) Manifestation.--The term ``manifestation'' means
either the date of the actual diagnosis of the condition
claimed, or the date upon which the clinical records and
available tests indicate that the condition could reasonably
have been diagnosed by a qualified physician.
(24) Net litigation risk.--The term ``net litigation risk''
means the risk to the Asbestos Compensation Fund that amounts
paid out to claimants, plus associated interest and litigation
expenses, will exceed amounts recovered from defendants,
expressed as a percentage of sums expended, and estimated for a
specific cohort of transactions. Losses on particular claims
are netted against excess recoveries on other claims.
(25) OAC.--The term ``OAC'' means the Office of Asbestos
Compensation.
(25) Occupational history.--The term ``occupational
history'' means a listing of all employment positions,
providing for the dates and location of employment, the
employer, and a description of job responsibilities and
activities.
(26) Party.--The term ``party'' does not include the United
States Government or a State government.
(27) Pathological evidence of asbestosis.--The term
``pathological evidence of asbestosis'' means diagnosis of
pulmonary asbestosis by a qualified physician based on a
finding that more than one representative section of lung
tissue otherwise uninvolved with any other process (e.g.,
cancer or emphysema) demonstrates a pattern of peribronchiolar
or parenchymal scarring in the presence of characteristic
asbestos bodies, and also that there is no other more likely
explanation for the presence of the fibrosis.
(28) Person.--The term ``person'' means an individual,
trust, firm, corporation, association, partnership, or joint
venture. The term does not include--
(A) an asbestos trust in existence as of the date
of enactment of this Act unless the trust elects to be
covered by this Act under section 701(b); or
(B) the United States Government or any State
government.
(29) Physician.--The term ``physician'' means a medical
doctor or doctor of osteopathy currently licensed to practice
medicine in any State who has not, within the 5-year period
prior to the date of enactment of this Act, spent more than one
half of the doctor's professional time, or derived more than
one-half of the doctor's professional income, either annually
or in total, either reviewing or testifying in any forum on
medical-legal issues related to asbestos.
(30) Predicted value.--The term ``predicted value'' means a
published reference to the normal breathing capacity of healthy
populations based on age, height, and gender, as approved by
the Medical Director, pursuant to a rule, issued within 120
days of the date of enactment. For the purposes of this Act,
the use of any published, predicted values that are generally
accepted in the medical community shall be acceptable and such
values may not be adjusted for race.
(31) Pulmonary function testing.--The term ``pulmonary
function testing'' means tests for forced vital capacity, lung
volume, and diffusing studies using equipment, tests and
standards generally accepted in the medical community, as
approved by the Medical Director, pursuant to a rule, issued
within 120 days of enactment of this Act. Such pulmonary
function test shall not be adjusted for race.
(32) Punitive damages.--The term ``punitive damages'' means
damages, in addition to compensatory damages, awarded against
any person to punish past conduct or deter that person, or
others, from engaging in similar conduct in the future.
(33) Qualified physician.--The term ``qualified physician''
means, with respect to a diagnosis or other medical judgment or
procedure under this Act, an internist, pulmonary specialist,
pathologist, radiologist, oncologist, or specialist in
occupational medicine with an appropriate subspecialty, as
appropriate, who is certified by the relevant medical specialty
board.
(34) Qualifying National Settlement Plan.--The term
``Qualifying National Settlement Plan'' means a written
agreement or related series of written agreements with
claimants or with attorneys or law firms representing
claimants, pursuant to which a person who is or may be
responsible for such claims has resolved or agreed to resolve
at least 50 percent of the asbestos claims that were pending
against such person.
(35) State.--The term ``State'' means any State of the
United States, the District of Columbia, Commonwealth of Puerto
Rico, the Northern Mariana Islands, the Virgin Islands, Guam,
American Samoa, and any other territory or possession of the
United States or any political subdivision of any of the
foregoing.
(36) TLC.--The term ``TLC'' means total lung capacity,
which is the volume of air in the lung after maximal
inspiration.
(37) Trustee.--The term ``Trustee'' means the Trustee of
the Asbestos Compensation Fund.
(38) Veterans' Benefits Program..--The term ``veterans'
benefits program'' means any program for benefits in connection
with military service administered by the Veterans'
Administration under Title 38, United States Code.
(39) Workers' Compensation Law.--The term ``workers'
compensation law'' means a law respecting a program
administered by a State or the United States to provide
benefits, funded by a responsible employer or its insurance
carrier, for occupational diseases or injuries or for
disability or death caused by occupational diseases or
injuries. The term includes the Longshore and Harbor Workers'
Compensation Act, (33 U.S.C. 901-944, 948-950), but does not
include the Employer's Liability Act, (45 U.S.C. chapter 2).
TITLE VII--MISCELLANEOUS PROVISIONS
SEC. 701. RELATIONSHIP TO OTHER LAWS.
(a) Applicability of Other Federal Laws.--The OAC may, with the
approval of the Director of the Office of Management and Budget, waive
the applicability in whole or in part of personnel and procurement laws
and regulations, provided that any such waiver must be specific, must
be subject to periodic review and evaluation, and must be reasonably
related to the goals of expeditious, professional, efficient, cost-
effective and fair resolution of asbestos claims.
(b) Application to Existing Asbestos Trusts.--
(1) In general.--This Act shall not apply to any asbestos
trust in existence as of the date of enactment of this Act,
except as provided in paragraph (2).
(2) Election.--An asbestos trust may elect to be subject to
this Act by providing written notice of such election to the
OAC, in which case the trust will have the same rights and
responsibilities under this Act as any person who is not a
trust. A valid election under this paragraph shall be
irrevocable.
(c) Settlements Preserved.--Nothing in this Act--
(1) invalidates any settlement of asbestos claims entered
into prior to the date of enactment of this Act; or
(2) revokes or negates any asbestos defendant's standing
offer to settle existing asbestos claims.
(d) Other Compensation.--This Act shall not be construed to affect
the scope or operation of any workers' compensation law or veterans'
disability benefit program, to affect the exclusive remedy provisions
of any such law, or to authorize any lawsuit which is barred by any
such provision of law.
(e) Successor Liability.--Nothing in this Act is intended to
displace otherwise applicable law governing any liability arising from
the defendants' status as transferee or successor with respect to a
change in ownership of corporate assets.
SEC. 702. ANNUAL REPORTS.
The Administrator shall submit an annual report to the President
and Congress.
SEC. 703. ENFORCEMENT.
The Administrator may enforce any obligation imposed on any person
by this Act in a district court of the United States, and such courts
shall have exclusive jurisdiction over such actions without regard to
the amount in controversy or citizenship of the parties. The
Administrator, if successful, shall be entitled to costs, including
attorney's fees.
SEC. 704. QUALIFYING NATIONAL SETTLEMENT PLAN.
Any defendant which is party to a Qualifying National Settlement
Plan may elect to defer the application of this Act (other than
sections 201 through 207 and section 501) to asbestos claims against
that defendant for a period not exceeding 7 years from a date relative
to the commencement of the Qualified National Settlement Plan. The
Administrator shall, by rule, adopt procedures for processing requests
for deferral under this section. If the request for deferral is
accepted, the deferred defendant and any asbestos claims or third party
asbestos claims against the deferred defendant shall not be subject to
the provisions of this Act (other than sections 201 through 207 and
section 501).
SEC. 705. SEVERABILITY.
If any provision of this Act or the application of such provision
to any person or circumstance is held invalid, it is the intent of
Congress that the remainder of this Act and application of such
provision to other persons or circumstances shall not be affected
thereby.
SEC. 706. SETTLEMENTS.
For a period of 7 years after the date of enactment of this Act, a
claimant or a defendant may specifically enforce, in any applicable
Federal or State court where the claimant is alleging that the claimant
was exposed to asbestos or where the claimant is currently domiciled,
any written settlement agreement which was agreed to by the claimant or
the claimant's attorney and the defendant before such date of
enactment.
The Amendment
Inasmuch as H.R. 1283, the Asbestos Compensation Act of
2000, was ordered reported with a single amendment in the
nature of a substitute, as amended, the contents of this report
constitute an explanation of the bill as so amended.
Purpose and Summary
H.R. 1283 establishes a comprehensive asbestos compensation
program pertaining to asbestos-related personal injury
lawsuits. The purpose of H.R. 1283 is to provide all asbestos
victims with efficient and fair compensation by ensuring that
claimants suffering from an asbestos-related impairment will be
given priority over other asbestos related claims.
The heart of the bill's compensation program is a non-
adversarial determination of medical eligibility. Claimants
that are determined to be medically eligible may assert their
claim by proceeding to State or Federal court at anytime, or
electing non-adversarial settlement offers or an administrative
adjudication under the administrative program. In addition, a
determination of medical eligibility creates a presumption that
the claimant has an asbestos related illness, this presumption
may only be rebutted by ``clear and convincing'' evidence.
H.R. 1283 also contains a comprehensive set of rules
pertaining to asbestos litigation. These rules eliminate
practices that may diminish an individual's claim and hold
major asbestos manufacturers and distributors to a higher
standard of liability. In addition, a legal assistance program
will assure that asbestos victims can retain counsel for a
reasonable fee set by the Office of Asbestos Compensation.
Background and Need for the Legislation
Background
On May 20, 1998, Representative Henry J. Hyde, Chairman of
the Committee on the Judiciary, introduced H.R. 3905, the
``Fairness in Asbestos Compensation Act of 1998.'' While H.R.
3905 expired at the conclusion of the 105th Congress with 12
cosponsors, the committee was consumed with impeachment
proceedings. Accordingly, on March 25, 1999, Chairman Hyde
introduced a virtually identical bill, H.R. 1283 the ``Fairness
in Asbestos Compensation Act of 1999,'' which has 75
cosponsors.
Need for the Legislation
Asbestos: The Public Health Tragedy. Asbestos is a fibrous
mineral that has been widely used as insulation and as a fire
retardant in a wide variety of applications. Asbestos can
produce dust that, when inhaled, becomes deposited in the
lungs. Asbestos dust causes a number of serious, and sometimes
fatal, diseases. These include asbestosis, mesothelioma (a
malignant tumor in the lining of the lungs or the abdominal
cavity), and lung cancer. Asbestos exposure has also been shown
by medical studies to contribute to certain other cancers.
Although it was known early in the 20th century that
exposure to asbestos in high concentrations could lead to
asbestosis, the full range of asbestos hazards only came to be
appreciated in the late 1960's. A turning point in this tragedy
came years ago in the form of a decision made by the United
States Government to require its use in ships during World War
II and for decades beyond. That one decision by our Government
led to the exposure of hundreds of thousands Americans and
prompted wider use of the fibrous mineral for both public and
private purposes.
Through litigation and regulatory action, the widespread
use of asbestos in the United States began a rapid decline in
the 1970's and largely ended in the early 1980's. For almost 30
years, workplace exposures have been regulated by the
Government. Several Federal and State agencies have the
authority to regulate asbestos, most notably the Occupational
Safety and Health Administration (OSHA) and the U.S.
Environmental Protection Agency (EPA). Since the 1970's, the
domestic consumption of asbestos has fallen by more than 97
percent. Further, the manufacture of ``friable'' asbestos
products (material that can be crumbled by hand pressure,
releasing asbestos fibers into the air), which pose the highest
risk of exposure, has been virtually eliminated in the United
States. Today, the production and use of asbestos is at a
historic low, with substitute materials now taking its place in
all but a few instances where there is no realistic substitute.
In the decades before strict Federal regulation, exposure
to asbestos in many occupations was heavy. It has been
estimated that over 27 million Americans have been exposed.
While these people can expect a latency period up to 40 years
before an asbestos related disease will manifest, many will
continue to produce serious asbestos-related illnesses well
into the 21st century. Although the first legislative attempt
to extend benefits to enable asbestos victims to receive
compensation dates back as far as 1973, no Federal program has
been adopted for the purposes of compensating asbestos victims.
Asbestos: The Litigation Crisis. Prior to the 1970's,
asbestos lawsuits were relatively rare. Workers injured by
exposure to asbestos typically sought to recover benefits from
their employers, through the workers' compensation system,
although statutes of limitations and other barriers often
prevented substantial recoveries. At that time, tort suits
against manufacturers and distributors of asbestos-containing
products were usually unsuccessful.
This situation began to change in the early 1970's. In
Borel v. Fibreboard Corp., 493 F.2d 1076 (5th Cir. 1973), a
Federal appeals court affirmed a verdict against an asbestos
defendant on a theory of strict liability for failure to warn.
This decision facilitated liability for asbestos related
illnesses, led to thousands of claims by individuals sick or
dying from exposure to asbestos, and revealed the unknown
dangers of asbestos. The most troubling revelation from these
lawsuits was that many of the largest asbestos manufacturers
and distributors, as well as the United States Government, had
known of the dangers of asbestos exposure well before they had
previously acknowledged.
In the late 1970's, the lawsuits began to multiply. By
1982, the Johns Manville Corporation, the largest manufacturer
of asbestos products, faced over 17,000 pending tort claims.
Under the weight of these lawsuits, Manville declared
bankruptcy.\1\ While at the time, Manville was the largest
defendant, this liability was, in part, transferred to other
companies that either manufactured or distributed asbestos
through joint and several liability. Many of these companies
also faced the same fate as Manville. Recently two additional
major asbestos defendants filed for bankruptcy protection,
Babcock & Wilcox filed on February 22, 2000 and the Pittsburgh
Corning Corporation filed on April 16, 2000.
---------------------------------------------------------------------------
\1\ In re Joint Eastern & Southern Dist. Asbestos Litig., 129 B.R.
710, 751 (E. & S.D.N.Y. 1991).
---------------------------------------------------------------------------
Following the Manville bankruptcy in 1982, the number of
tort lawsuits against other major asbestos defendants rose
dramatically. These lawsuits proved very complex. Studies by
the RAND Corporation showed that they involved large
transaction costs--approximately 61% of the resources expended
by defendants went to lawyers for plaintiffs and defendants and
other litigation expenses, with only 39% going to the
plaintiffs.\2\ In 1985, a group of major asbestos producers and
insurers agreed to pool resources and handle claims on a
collective basis under what became known as the Wellington
Agreement. In 1998 the Wellington Agreement collapsed and
several more bankruptcies followed.
---------------------------------------------------------------------------
\2\ James S. Kakalik et al., Variation in Asbestos Litigation
Compensation and Expenses, p. xviii (Rand 1984).
---------------------------------------------------------------------------
By the late 1980's, the sheer number of asbestos personal
injury cases in the Federal and State courts had presented
serious caseload and backlog problems. In September 1990, Chief
Justice William Rehnquist appointed an Ad Hoc Committee on
Asbestos Litigation. The committee was composed of seven
Federal judges with extensive experience in asbestos
litigation, and it was chaired by Judge Thomas M. Reavley of
the Fifth Circuit. The committee made its report to the Chief
Justice and the members of the Judicial Conference of the
United States in March 1991. The committee's report contained
the following observation, and recommendation:
``The most objectionable aspects of asbestos
litigation can be briefly summarized: dockets in both
Federal and State courts continue to grow; long delays
are routine; trials are too long; the same issues are
litigated over and over; transactions costs exceed the
victims' recovery by nearly two to one; exhaustion of
assets threatens and distorts the process; and future
claimants may lose altogether.
It is easy to describe the problems. It is not easy
to fashion an appropriate remedy in the context of our
Federal system.
The committee firmly believes that the ultimate
solution should be legislation recognizing the national
proportions of the problem both in Federal and State
courts and creating a national asbestos dispute
resolution scheme. . . .'' Report of the Judicial
Conference Ad Hoc Committee on Asbestos Litigation
(March, 1991), p. 3.
In the 102nd Congress, the Subcommittee on Intellectual
Property and Judicial Administration of the House Judiciary
Committee held hearings focusing on the impact of asbestos
litigation on the Federal and State courts and on the findings
of the Ad Hoc Committee's report.\3\ The Subcommittee on Courts
and Administrative Practice of the Senate Judiciary
subsequently held similar hearings.\4\ While no legislation was
introduced in either house to implement the recommendations
provided by the Ad Hoc Committee or any of these hearings, it
was clear that asbestos victims were bearing enormous delays
and costs through this complex litigation.
---------------------------------------------------------------------------
\3\ Asbestos Litigation Crisis in Federal and State Courts:
Hearings Before The Subcomm. On Intellectual Property and Judicial
Admin. of the Comm. on the Judiciary, House of Representatives, 102nd
Cong. 1st and 2nd Sess. (1992).
\4\ The Problems in Asbestos Litigation: Hearing Before the
Subcomm. on Courts and Admin. Practice of the Comm. on the Judiciary,
United States Senate, 102nd Cong. (1993).
---------------------------------------------------------------------------
At approximately the same time that the Ad Hoc Committee
issued its report, all pending Federal asbestos cases were
consolidated for pretrial purposes by the Judicial Panel on
Multi-District Litigation (``MDL Panel''). The MDL Panel
transferred those cases to the Eastern District of
Pennsylvania, where they were assigned to Judge Charles Weiner.
The Panel found that the more than 30,000 asbestos-related
personal injury or wrongful death actions then pending in the
Federal courts had ``reached a magnitude . . . that threatens
the administration of justice and that requires a new,
streamlined approach.'' In re Asbestos Prods. Liab. Litig. (No.
VI), 771 F. Supp. 415, 418 (J.P.M.L. 1991).
The Panel urged Judge Weiner to consider innovative
approaches to managing the litigation, including establishing
``deferral programs'' for plaintiffs ``who have been exposed to
asbestos but do not presently show any signs of impairment.''
Id. at 420. Studies showed that the volume of asbestos claims
by unimpaired plaintiffs was very large,\5\ and deferral of
these claims was considered crucial to providing timely
disposition of claims involving asbestos-related impairment or
malignancy. Accordingly, Judge Weiner implemented an order
(Administrative Order No. 3) establishing a mandatory
negotiation process and setting priority for remand based on
the severity of the plaintiff's medical condition.
---------------------------------------------------------------------------
\5\ See, e.g., In re Joint Eastern and Southern Dist. Asbestos
Litig., 129 B.R. at 935 (app. C) (showing ``pleural'' claims accounting
for 54.4% of all claims involving the Manville Trust).
---------------------------------------------------------------------------
Notwithstanding Judge Weiner's limited progress at the
Federal level, the asbestos litigation problem seriously
deteriorated throughout the 1990's. Even before the
consolidation of Federal cases by the MDL Panel, asbestos cases
had begun to flow from the Federal courts to the State courts.
Following the MDL order, the rate of asbestos related filings
in State courts accelerated. Thus, despite a reduction in
Federal filings, the overall backlog in both Federal and State
courts, estimated by the Judicial Conference at 100,000 claims
in 1990, doubled to over 200,000 claims in 1999.\6\ A survey of
the most recent SEC filings by major asbestos defendants,
reporting pending claims through the third quarter of 1999,
shows that this estimate appears quite conservative.\7\
---------------------------------------------------------------------------
\6\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of
1999'': Hearing Before the House Committee on the Judiciary, 106th
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
\7\ For example, in their filings on Form 10Q with the Securities
and Exchange Commission for the third quarter of 1999, Armstrong World
Industries reported 182,000 pending claims, GAF Corporation reported
114,000, USG Corporation reported 100,000, W.R. Grace & Co. reported
102,894, and Kaiser Aluminum reported 110,599.
---------------------------------------------------------------------------
This large increase in the pending backlog indicates that
the rate of settlements and trials was not keeping up with new
filings. From 1997 through 1999 new filings against some
defendants ranged from 40,000 to over 60,000 per year--figures
that would have been staggering just a few years before.\8\ A
survey of State court dockets in 1999 also showed a serious
pattern of delays, with asbestos cases pending on average for
several years.\9\ The Department of Justice reported in
September 1999 that asbestos cases took, on average, twice as
long as other tort cases to reach verdict, with cases taking an
average of 4 years.\10\
---------------------------------------------------------------------------
\8\ These figures are supported by the most recent figures reported
by major defendants to the Securities and Exchange Commission on Form
10Q, covering the first three quarters of 1999. On these forms,
Armstrong World Industries reports receiving 40,200 claims for the
first three quarters of 1999 and 71,000 claims for all of 1998. Kaiser
Aluminium reports 29,700 new claims for the first three quarters of
1999 and 22,900 claims for calander year 1998. GAF Corporation reports
42,200 new claims during the first three quarters of 1999. W.R. Grace &
Co. reports 20,629 new claims during the first three quarters of 1999.
USG Corporation reports 38,000 new personal injury claims in the first
three quarters of 1999, 80,000 new claims for the entire year in 1998,
and 23,500 new claims in 1997. In Owens Corning's Form 10Q filed with
the Securities and Exchange Commission in November 1998 (covering the
first three quarters of 1998), which is the last SEC form available in
which Owens Corning reports figures for pending cases and new filings,
Owens Corning reported receiving 27,100 new claims for the first three
quarters of 1998, and 36,500 new claims for the entire year in 1997.
\9\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of
1999'': Hearing Before the House Committee on the Judiciary, 106th
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
\10\ Carol J. DeFrances & Marika F.X. Litras, Bureau of Justice
Statistics, Civil Trial Cases and Verdicts in Large Counties, 1996, at
p. 13, table 11 (September 1999).
---------------------------------------------------------------------------
Bankruptcies continued throughout the 1990's. At least 24
known asbestos defendants have declared bankruptcy.
Bankruptcies resulted in serious hardship for plaintiffs with
claims against those companies.\11\ For example, most claimants
against the Manville Trust, which filed for bankruptcy in 1982,
had to wait 12 years before they could pursue their claims--and
even then they were entitled to receive only 10 cents on the
dollar. Other bankruptcies have involved similar delays, and
have left claimants with even less. In addition to plaintiffs,
bankruptcies have harmed--shareholders, employees, and
communities affected, as well as future claimants who now must
look elsewhere for compensation.
---------------------------------------------------------------------------
\11\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of
1999'': Hearing Before the House Committee on the Judiciary, 106th
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
---------------------------------------------------------------------------
Amchem Prods. v. Windsor, Class Action Settlement. When the
Multi District Litigation (MDL) Panel transferred all pending
Federal asbestos cases to the Eastern District of Pennsylvania,
Steering Committees for the plaintiffs and defendants were
formed in an effort to produce a global settlement. When those
broad-based negotiations reached an impasse, plaintiffs' class
counsel and representatives of the Center for Claims Resolution
(CCR)--which comprised 20 defendant companies--began
negotiations to resolve CCR's asbestos liability. After a year
of discussions, the two sides reached a settlement agreement
and filed a class action to implement the agreement. The
settlement agreement also received the backing of Robert
Georgine of the Building and Construction Trades Department of
the AFL-CIO.
The settlement was approved and the settlement class was
certified on August 16, 1994. Georgine v. Amchem Prods., Inc.,
157 F.R.D. 246 (E.D. Pa. 1994). However, certain persons who
would have been members of the affected class under the
settlement, objected to the parties' subsequent motion for a
preliminary injunction that would have barred class members
from initiating claims against any CCR defendant pending a
final judgment in this case. See Georgine v. Amchem Prods.,
Inc., 878 F. Supp. 716 (E.D. Pa. 1994). On appeal, the Third
Circuit Court of Appeals overturned the decision to grant class
certification, finding that it failed to meet the commonality
and predominance requirements of Federal rule 23(a) and
23(b)(3). Georgine v. Amchem Prods., Inc., 83 F.3d 610 (3rd
Cir. 1996). Essentially, the Court determined that the class
was too large and too disparate to meet the requirements of
Federal rule 23. In the course of his opinion, however, Judge
Becker made numerous favorable comments about the innovative
approach taken in the Amchem settlement and, in fact, referred
to it at one point as an ``arguably brilliant partial
solution'' to the asbestos litigation crisis. 83 F.3d at 617.
Nevertheless, the Court felt obligated by a literal
interpretation of Federal rule 23 to overturn the settlement.
On June 25, 1997, in Amchem Prods., Inc. v. Windsor, 117 S. Ct.
2231 (1997), the Supreme Court affirmed the Third Circuit's
decision that the settlement class failed to meet the
requirements of Federal rule 23.
Ortiz v. Fibreboard, Class Action Settlement. On June 23,
1999 the Supreme Court reversed and remanded another massive
asbestos-related global settlement that had been certified
under rule 23 of the Federal Rules of Civil Procedure. Ortiz v.
Fibreboard, 119 S. Ct. 2295 (1999).
The Supreme Court Speaks. In Amchem Prods. v. Windsor,
Justice Ruth Bader Ginsburg, writing for the Court, suggested
that Congress might be the most appropriate body to resolve the
asbestos litigation crisis:
``The argument is sensibly made that a nationwide
administrative claims processing regime would provide
the most secure, fair and efficient means of
compensating victims of asbestos exposure. Congress,
however, has not adopted such a solution. And rule 23 .
. . cannot carry the large load heaped upon it.''
Amchem Prods., Inc. v. Windsor, 117 S. Ct. 2231, 2253
(1997).
Bills responding to the Supreme Court's invitation were
introduced in the 105th Congress by Rep. Henry Hyde (H.R. 3905)
and Sen. Orrin Hatch (S. 2546) of the House and Senate
Judiciary Committees. The 105th Congress came to an end,
however, without action on either bill. Similar bills were
reintroduced in the 106th Congress in both the House (H.R.
1283) and the Senate (S. 758).
While these bills were pending, and in the wake of the
Amchem decision, the Supreme Court handed down the decision in
Ortiz v. Fibreboard. Writing for the Court, Justice David
Souter opined that Congress was the most appropriate body to
resolve the asbestos litigation crisis:
``[T]he elephantine mass of asbestos cases . . . defies
customary judicial administration and calls for
national legislation.'' Ortiz v. Fibreboard Corp., 119
S. Ct. 2295, 2302 (1999).
Chief Justice William Rehnquist, joined by Justices Scalia and
Kennedy, also called for a legislative solution in a concurring
opinion:
``[T]he Court's opinion correctly states the existing
law, and I join it. But the `elephantine mass of
asbestos cases,' . . . cries out for a legislative
solution.'' Id. at 2324.
The Asbestos Compensation Act of 2000. Following these
failed attempts to address asbestos litigation under existing
law, legislation is needed addressing the underlying causes of
the problem. The critical need is to separate the claims of
those who are impaired by asbestos-related disease from the
claim of those who are not impaired. This will alleviate the
serious backlog of mostly unimpaired asbestos claims and focus
resources on compensating the sick.
This basic reform requires objective and administrative
medical criteria. But, it is not enough just to establish an
impairment line. Legislation needs to expedite the claims of
the sick and eliminate arbitrary barriers to recovery. There
needs to be a streamlined administrative process with strict
time limits. Early settlements should be encouraged, and
claimants should be guaranteed fair settlement offers as soon
as medical eligibility is established. The statute of
limitations and other timeliness rules, which have prompted
many unimpaired plaintiffs to file lawsuits prematurely, should
be abolished. And, legislation should simplify the issues, at
least with respect to the main defendants, to provide more
reliable and even handed compensation for the sick.
Legislation is also needed to put an end to abusive forum
shopping and to control punitive damages awards that divert a
limited pool of resources from compensation for the sick and
accentuate the inequities of the current litigation system.
Hearings
The committee's Subcommittee on Intellectual Property and
Judicial Administration held a series of hearings in October
1991 and February 1992 to begin to assess the complex
litigation that had been caused by the prevalent use of
asbestos in America. While legislation had not been introduced,
voluminous testimony detailed the horrors of asbestos
litigation. Six years later on May 20, 1998, Henry J. Hyde,
Chairman of the Committee on the Judiciary, introduced H.R.
3905, the ``Fairness in Asbestos Compensation Act of 1998.''
Later that year, a hearing on H.R. 3905, scheduled for
September 15, 1998 was canceled following the arrival of the
Report from the Independent Counsel. Accordingly, after the
conclusion of the impeachment trial of William Jefferson
Clinton in the United States Senate, Chairman Hyde introduced
H.R. 1283, the ``Fairness in Asbestos Compensation Act of
1999,'' which was virtually identical to H.R. 3905.
On July 1, 1999 the Committee on the Judiciary held an
extensive hearing on H.R. 1283. The hearing consisted of ten
witness on two panels. Witnesses on the first panel included
Professor Christopher F. Edley Jr of Harvard University School
of Law; Louis W. Sullivan, President of the Morehouse School of
Medicine and former Secretary of the Department of Health and
Human Services; Richard H. Middleton, President of the
Association of Trial Lawyers of America; Samuel J. Heyman,
Chairman and Chief Executive Officer of the GAF Corporation;
Dr. Christine Oliver, Associate Physician at Massachusetts
General Hospital; and Dr. Gary Epler, Associate Physician at
Brigham & Women's Hospital in Massachusetts. The second panel
included Maura J. Abeln Smith, Senior Vice President and
General Counsel of Owens Corning; Thomas J. Donohue, President
of the United States Chamber of Commerce; Johnathan Hiatt,
General Counsel of the AFL-CIO; and Conrad L. Mallett Jr.,
former Chief Justice of the Michigan Supreme Court.
Committee Consideration
On March 9, 15, and 16, 2000, the Committee on the
Judiciary met in open session to consider this bill and on
March 16 ordered favorably reported the bill H.R. 1283, with a
single amendment in the nature of a substitute as amended, by a
recorded vote of 18 to 15, a quorum being present.
Amendment in the Nature of a Substitute
Mr. Hyde offered an amendment in the nature of a substitute
which, without objection, was considered as the original text
for purposes of markup.
Votes of the Committee
1. An amendment offered by Mr. Berman to the amendment in
the nature of a substitute to H.R. 1283, which would have
struck the effective date and inserted new language
establishing March 15, 2000, as the effective date. Defeated by
voice vote.
2. An amendment offered by Mr. Scott to the amendment in
the nature of a substitute to H.R. 1283, which would have
struck all tort reform provisions. Defeated by voice vote.
3. Amendment offered by Mr. Conyers, Mr. Nadler, Mr. Scott
to the amendment in the nature of a substitute to H.R. 1283,
which would have struck the medical criteria and inserted new
language requiring the National Institute for Occupational
Safety and Health to establish a uniform medical criteria.
Defeated 10 ayes to 10 nays.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. .............. ..............
Mr. Gekas....................................................... .............. .............. ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. .............. ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. .............. ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. .............. ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. .............. ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. .............. ..............
Mr. Conyers..................................................... .............. .............. ..............
Mr. Frank....................................................... X .............. ..............
Mr. Berman...................................................... .............. .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... .............. .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... X .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 10 10 ..............
----------------------------------------------------------------------------------------------------------------
4. An amendment offered by Mr. Conyers, Mr. Scott, Mr. Hyde
to the amendment in the nature of a substitute to H.R. 1283,
striking the definition of ``predicted value'' and pulmonary
function testing and inserting new language requiring the
Medical Director to approve acceptable predicted values and
pulmonary function testing through an administrative rule.
Adopted by unanimous consent.
5. An amendment offered by Mr. Hutchinson to the amendment
in the nature of a substitute to H.R. 1283, striking the 5 year
limitation for Qualifying National Settlement Plans and
inserting new language limiting Qualifying National Settlement
Plans to 7 years. The amendment inserted new language which
applied all tort reform provisions to any claim filed against a
defendant with a Qualifying National Settlement Plan. In
addition, this amendment struck the July 1, 1999 requirement
from the definition of Qualifying National Settlement Plan.
Passed by voice vote.
6. An amendment offered by Ms. Jackson Lee to the amendment
in the nature of a substitute to H.R. 1283, which would have
created an additional eligible medical category for Bilateral
Pleural Disease. Defeated 11 ayes to 14 nays.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. .............. ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. .............. ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. .............. ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... X .............. ..............
Mr. Berman...................................................... .............. .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 11 14 ..............
----------------------------------------------------------------------------------------------------------------
7. An amendment offered by Mr. Pease to the amendment in
the nature of a substitute to H.R. 1283, which would have
allowed States to enact a law to be excluded from the
jurisdiction of the Office of Asbestos Compensation. Adopted 15
ayes to 14 nays.
ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... X .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... X .............. ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... X .............. ..............
Mr. Cannon...................................................... X .............. ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... X .............. ..............
Mr. Berman...................................................... .............. .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 15 14 ..............
----------------------------------------------------------------------------------------------------------------
8. An amendment offered by Mr. Conyers, Mr. Scott, Ms.
Lofgren, Mr. Watt to the amendment in the nature of a
substitute to H.R. 1283, which would have made the Office of
Asbestos Compensation completely voluntary and would have
struck the prerequisite of medical eligibility before an
asbestos-related claim could be filed in State or Federal
court. Defeated 11 ayes to 18 nays.
ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. X ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. X ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. X ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. .............. ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... .............. .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... X .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 11 18 ..............
----------------------------------------------------------------------------------------------------------------
9. A motion by Mr. Cannon to reconsider the vote by which
the Pease amendment to the amendment in the nature of a
substitute was adopted. Adopted 16 ayes to 14 nays.
ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... X .............. ..............
Mr. McCollum.................................................... X .............. ..............
Mr. Gekas....................................................... X .............. ..............
Mr. Coble....................................................... X .............. ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. X ..............
Mr. Canady...................................................... X .............. ..............
Mr. Goodlatte................................................... X .............. ..............
Mr. Chabot...................................................... X .............. ..............
Mr. Barr........................................................ X .............. ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. X .............. ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... X .............. ..............
Mr. Rogan....................................................... X .............. ..............
Mr. Graham...................................................... X .............. ..............
Ms. Bono........................................................ X .............. ..............
Mr. Bachus...................................................... X .............. ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... X .............. ..............
Mr. Conyers..................................................... .............. X ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... .............. .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... .............. X ..............
Mr. Scott....................................................... .............. X ..............
Mr. Watt........................................................ .............. X ..............
Ms. Lofgren..................................................... .............. X ..............
Ms. Jackson Lee................................................. .............. X ..............
Ms. Waters...................................................... .............. X ..............
Mr. Meehan...................................................... .............. X ..............
Mr. Delahunt.................................................... .............. X ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... .............. X ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... .............. X ..............
Mr. Hyde, Chairman.............................................. X .............. ..............
-----------------------------------------------
Total....................................................... 16 14 ..............
----------------------------------------------------------------------------------------------------------------
10. A motion by Mr. Weiner to postpone consideration of the
Pease amendment to a time certain. Defeated 11 ayes to 18 nays.
ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. X ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. X ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... X .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 11 18 ..............
----------------------------------------------------------------------------------------------------------------
11. Reconsideration of an amendment offered by Mr. Pease to
the amendment in the nature of a substitute to H.R. 1283, which
would have allowed States to enact a law to be excluded from
the jurisdiction of the Office of Asbestos Compensation.
Defeated 14 ayes to 15 nays.
ROLLCALL NO. 7
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... X .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... X .............. ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... X .............. ..............
Mr. Cannon...................................................... .............. X ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... X .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... .............. .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 14 15 ..............
----------------------------------------------------------------------------------------------------------------
12. An amendment offered by Mr. Scott to the amendment in
the nature of a substitute to H.R. 1283, which created a
provision to allow claimants to enforce asbestos-related
written settlement agreements in any applicable State or
Federal court. On unanimous consent, Mr. Scott modified his
amendment to insert ``or defendant'' after claimant on line 3.
Adopted by voice vote.
13. Amendment offered by Mr. Scott to the amendment in the
nature of a substitute to H.R. 1283, which would have allowed
claimants to proceed to State or Federal court if the Office of
Asbestos Compensation failed to act within 60 days from the
date the claim was filed with the Office of Asbestos
Compensation. Defeated 11 ayes to 17 nays.
ROLLCALL NO. 8
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. X ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... X .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... .............. .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... X .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 11 17 ..............
----------------------------------------------------------------------------------------------------------------
14. An amendment offered by Mr. Weiner to the amendment in
the nature of a substitute to H.R. 1283, which struck the
original ``Assessment and Enforcement'' section of title IV and
inserted new language requiring the Administrator to adopt
rules for calculating and collecting assessments from
defendants. Adopted by voice vote.
15. Amendment offered by Mr. Scott to the amendment in the
nature of a substitute to H.R. 1283, which would have extended
the date of enactment until 90 days after the later of the
appointment of the Office of Asbestos Compensation officers,
implementation of all rules, or the collection of all necessary
funds to pay claimants. Defeated 12 ayes to 17 nays.
ROLLCALL NO. 9
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... .............. X ..............
Mr. McCollum.................................................... .............. X ..............
Mr. Gekas....................................................... .............. X ..............
Mr. Coble....................................................... .............. X ..............
Mr. Smith (TX).................................................. .............. .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... .............. X ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... .............. X ..............
Mr. Barr........................................................ .............. X ..............
Mr. Jenkins..................................................... .............. X ..............
Mr. Hutchinson.................................................. .............. X ..............
Mr. Pease....................................................... .............. X ..............
Mr. Cannon...................................................... .............. X ..............
Mr. Rogan....................................................... .............. X ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ .............. X ..............
Mr. Bachus...................................................... .............. X ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... .............. X ..............
Mr. Conyers..................................................... X .............. ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... X .............. ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... X .............. ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ X .............. ..............
Ms. Lofgren..................................................... X .............. ..............
Ms. Jackson Lee................................................. X .............. ..............
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... X .............. ..............
Mr. Delahunt.................................................... .............. .............. ..............
Mr. Wexler...................................................... X .............. ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... .............. .............. ..............
Mr. Weiner...................................................... X .............. ..............
Mr. Hyde, Chairman.............................................. .............. X ..............
-----------------------------------------------
Total....................................................... 12 17 ..............
----------------------------------------------------------------------------------------------------------------
16. The Hyde amendment in the nature of a substitute was
adopted by a voice vote.
17. Motion by Mr. Hyde to report favorably the bill as
amended by the amendment in the nature of a substitute to H.R.
1283, as amended. Adopted 18 ayes to 15 nays.
ROLLCALL NO. 10
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... X .............. ..............
Mr. McCollum.................................................... X .............. ..............
Mr. Gekas....................................................... X .............. ..............
Mr. Coble....................................................... X .............. ..............
Mr. Smith (TX).................................................. X .............. ..............
Mr. Gallegly.................................................... .............. .............. ..............
Mr. Canady...................................................... X .............. ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... X .............. ..............
Mr. Barr........................................................ X .............. ..............
Mr. Jenkins..................................................... X .............. ..............
Mr. Hutchinson.................................................. X .............. ..............
Mr. Pease....................................................... X .............. ..............
Mr. Cannon...................................................... X .............. ..............
Mr. Rogan....................................................... X .............. ..............
Mr. Graham...................................................... .............. X ..............
Ms. Bono........................................................ X .............. ..............
Mr. Bachus...................................................... X .............. ..............
Mr. Scarborough................................................. .............. X ..............
Mr. Vitter...................................................... X .............. ..............
Mr. Conyers..................................................... .............. X ..............
Mr. Frank....................................................... .............. X ..............
Mr. Berman...................................................... .............. X ..............
Mr. Boucher..................................................... .............. X ..............
Mr. Nadler...................................................... .............. X ..............
Mr. Scott....................................................... X .............. ..............
Mr. Watt........................................................ .............. X ..............
Ms. Lofgren..................................................... .............. X ..............
Ms. Jackson Lee................................................. .............. X ..............
Ms. Waters...................................................... .............. .............. ..............
Mr. Meehan...................................................... .............. X ..............
Mr. Delahunt.................................................... .............. X ..............
Mr. Wexler...................................................... .............. X ..............
Mr. Rothman..................................................... .............. X ..............
Ms. Baldwin..................................................... .............. X ..............
Mr. Weiner...................................................... .............. .............. ..............
Mr. Hyde, Chairman.............................................. X .............. ..............
-----------------------------------------------
Total....................................................... 18 15 ..............
----------------------------------------------------------------------------------------------------------------
18. Mr. Scott moved to reconsider the vote (rollcall no.
10) by which the bill was ordered favorably reported, a non-
debatable motion, which was superceded by a motion offered by
Mr. Sensenbrenner to table the Scott motion. No vote on the
Scott motion. Adopted 17 ayes to 16 nays.
ROLLCALL NO. 11
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner............................................... X .............. ..............
Mr. McCollum.................................................... X .............. ..............
Mr. Gekas....................................................... X .............. ..............
Mr. Coble....................................................... X .............. ..............
Mr. Smith (TX).................................................. X .............. ..............
Mr. Gallegly.................................................... X .............. ..............
Mr. Canady...................................................... X .............. ..............
Mr. Goodlatte................................................... .............. .............. ..............
Mr. Chabot...................................................... X .............. ..............
Mr. Barr........................................................ X .............. ..............
Mr. Jenkins..................................................... X .............. ..............
Mr. Hutchinson.................................................. X .............. ..............
Mr. Pease....................................................... .............. .............. ..............
Mr. Cannon...................................................... X .............. ..............
Mr. Rogan....................................................... X .............. ..............
Mr. Graham...................................................... .............. .............. ..............
Ms. Bono........................................................ X .............. ..............
Mr. Bachus...................................................... X .............. ..............
Mr. Scarborough................................................. .............. X ..............
Mr. Vitter...................................................... X .............. ..............
Mr. Conyers..................................................... .............. X ..............
Mr. Frank....................................................... .............. X ..............
Mr. Berman...................................................... .............. X ..............
Mr. Boucher..................................................... .............. X ..............
Mr. Nadler...................................................... .............. X ..............
Mr. Scott....................................................... .............. X ..............
Mr. Watt........................................................ .............. X ..............
Ms. Lofgren..................................................... .............. X ..............
Ms. Jackson Lee................................................. .............. X ..............
Ms. Waters...................................................... .............. .............. ..............
Mr. Meehan...................................................... .............. X ..............
Mr. Delahunt.................................................... .............. X ..............
Mr. Wexler...................................................... .............. X ..............
Mr. Rothman..................................................... .............. X ..............
Ms. Baldwin..................................................... .............. X ..............
Mr. Weiner...................................................... .............. X ..............
Mr. Hyde, Chairman.............................................. X .............. ..............
-----------------------------------------------
Total....................................................... 17 16 ..............
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the committee reports that the
finding and recommendations of the committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 13, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1283, the Asbestos
Compensation Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Lanette
Keith (for federal costs), who can be reached at 226-2860, and
John Harris (for the private-sector impact), who can be reached
at 226-2618.
Sincerely,
Dan L. Crippen, Director.
Enclosure
cc:
Honorable John Conyers Jr.
Ranking Democratic Member
H.R. 1283--Asbestos Compensation Act of 2000.
SUMMARY
H.R. 1283 would establish a process to attempt to resolve
claims made by individuals whose health has been impaired by
exposure to asbestos. CBO estimates that implementing H.R. 1283
would cost about $1.4 billion over the 2001-2005 period,
assuming the appropriation of the necessary amounts. In
addition, the legislation would authorize the recovery of
federal funds used to pay individual asbestos claimants, and
the spending of any funds recovered. Those cash flows would
affect direct spending; therefore, pay-as-you-go procedures
would apply. CBO expects that the collection and spending of
recovered funds would nearly offset each other over the next
several years, but we estimate collections would exceed
spending by $40 million over the 2002-2005 period.
H.R. 1283 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would impose no
costs on state, local, or tribal governments. H.R. 1283 would
create new private-sector mandates for individuals filing new
claims for compensation for injuries caused by exposure to
asbestos, for all attorneys representing those individuals, and
for businesses named as defendants by such individuals. Because
reliable data on current asbestos litigation is scarce, CBO
cannot produce a precise estimate of the total cost of those
mandates. CBO expects, however, that the total cost to the
private sector of complying with the mandates in the bill would
fall below the threshold established in UMRA ($109 million in
2000, adjusted annually for inflation).
MAJOR PROVISIONS
H.R. 1283 would establish the Office of Asbestos
Compensation (OAC) within the Department of Justice. The bill
would authorize appropriations for the new office of up to $250
million in the first year after enactment and up to $150
million in each year thereafter. The OAC would review the
medical eligibility of claimants under the bill, adjudicate
cases, reimburse claimants for medical examination and testing
expenses, pay individuals to settle certain claims, and seek to
recover compensation payments made to individuals from liable
firms in the asbestos industry.
Under H.R. 1283, the OAC would have to issue a certificate
of medical eligibility to claimants before cases could be tried
in federal or state court. The bill would require the OAC and
all defendants named in asbestos litigation cases to offer
settlements to each medically eligible claimant in a timely
manner. If the OAC's settlement offer is accepted by the
claimant, the OAC would pay the claim and seek reimbursement
from the named defendants.
H.R. 1283 would authorize the OAC to recover its
administrative expenses, medical reimbursements, and settlement
payments from the defendants. The OAC also would have the
authority to spend these collections without further
appropriation action.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 1283 is shown in the
following table. The costs of this legislation fall within
budget function 750 (administration of justice). CBO expects
that, after 2005, the number of cases settled each year would
decline. As a result, net discretionary costs would decrease to
about $100 million annually by fiscal year 2010. Both the
claims reimbursement and settlement payments from those
collections also would decline gradually after 2005.
BASIS OF ESTIMATE
CBO estimates that implementing H.R. 1283 would have gross
discretionary costs of $1.6 billion over the 2001-2005 period.
Some of these costs would be offset by assessments on asbestos
defendant firms to cover certain administrative and medical
examination costs under the bill. Over the 2001-2005 period we
estimate the OAC would collect about $260 million from such
assessments. Therefore, CBO estimates that implementing H.R.
1283 would result in net discretionary spending of $1.4 billion
over the 2001-2005 period.
In addition, we estimate that enactment of the bill would
result in the collection from defendant firms of some of the
federal funds paid to compensate asbestos claimants. The
collections would be recorded as offsetting receipts (a credit
against direct spending). Over the 2002-2005 period, we
estimate $1 billion would be collected, and all but about $40
million would be paid to settle additional asbestos claims
during those years.
By fiscal year, in millions of dollars
----------------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Administrative and Medical Examination Costs 20 70 85 90 95
Estimated Budget Authority
Estimated Outlays 15 65 85 90 95
Settlement Payments to Claimants 100 150 340 350 360
Estimated Budget Authority
Estimated Outlays 0 230 330 350 360
Offsetting Collections from 0 -35 -70 -75 -80
Administrative and Medical Reimbursements
Estimated Budget Authority
Estimated Outlays 0 -35 -70 -75 -80
Total Discretionary Spending 120 185 355 365 375
Estimated Budget Authority
Estimated Outlays 15 260 345 365 375
DIRECT SPENDING
Offsetting Receipts from 0 -70 -180 -330 -420
Claims Reimbursements
Estimated Budget Authority
Estimated Outlays 0 -70 -180 -330 -420
Settlement Payments to Claimants 0 70 180 330 420
Estimated Budget Authority
Estimated Outlays 0 65 170 315 410
Total Direct Spending 0 0 0 0 0
Estimated Budget Authority
Estimated Outlays 0 -5 -10 -15 -10
----------------------------------------------------------------------------------------------------------------
This estimate assumes that the funds that would be
appropriated to implement the bill would exceed the amounts
specifically authorized by the legislation. CBO estimates that
additional funds would be required to expedite the settlement
of outstanding claims--as required by the legislation.
While H.R. 1283 would authorize the appropriation of $850
million over the 2001-2005 period for the costs of the OAC, CBO
estimates this amount would not be sufficient for the OAC to
certify applicants and make compensation offers. We estimate
that additional appropriations of $810 million would be needed
over the five-year period. The bill would require that the OAC
quickly certify the medical eligibility of all claimants,
including those involved in the 200,000 cases currently
pending. Claimants could not seek damages in court until
certified. CBO expects that the OAC would attempt to certify as
many applicants as possible. Further, the OAC would not have
the discretion to delay its offer of compensation to claimants.
The bill would require that the OAC offer compensation to each
certified claimant within 10 days of the defendants' offers.
CBO estimates that the OAC would not be successful in
recovering all claims paid to eligible claimants from
defendants. If the OAC does successfully achieve a
reimbursement rate higher that our estimate, the net cost of
this legislation to the government would be lower. H.R. 1283
also would authorize the OAC to recover from the defendants
administrative expenses, medical reimbursements, and settlement
payments. Based on the experience of similar programs and our
assessment of the capacity of the asbestos industry to pay
claims, CBO expects that the OAC will collect over 80 percent
of its administrative costs and about 65 percent of settlement
payments to claimants. We expect that most defendants' payments
would occur over a three-year period.
Asbestos Claims Background
H.R. 1283 would establish the OAC to attempt to resolve a
large backlog of cases involving individuals seeking
compensation from private companies connected to the
manufacture of asbestos. Approximately 200,000 such cases
remain outstanding and about 30,000 new cases are filed each
year. The majority of cases that are resolved each year result
in settlement payments before the cases are tried in federal or
state court.
Asbestos Claims Process Under the Bill
The OAC would serve two major functions under the bill.
First, it would issue certificates of medical eligibility that
all claimants must receive prior to pursuing damages in court.
The bill specifies the medical criteria that would qualify
individuals to seek such compensation. Second, the OAC would
make settlement offers to each qualifying applicant. These
offers would vary depending on the age of the applicant, the
degree of impairment, and other factors. The OAC would
establish a schedule of compensation payments offered by the
OAC and such offers would be made public. Qualifying
individuals could accept a compensation offer from the OAC or
from the private companies named in their claim. The bill would
authorize the appropriation of funds for the administrative
costs of the OAC and for settlement payments to claimants.
OAC Administrative Costs
Because the intent of H.R. 1283 is to provide a timely
resolution to asbestos claims, CBO expects that the OAC would
be fully staffed and able to review claims by the beginning of
fiscal year 2002, with a headquarters in Washington, D.C., and
six regional offices. Based on the experience of other program
startups and the magnitude of the task facing the OAC, we
anticipate that the staff of the OAC would total about 400
persons by 2002 and would grow by 10 percent annually through
fiscal year 2005. The number of OAC staff would gradually
decrease thereafter as the total number of outstanding claims
decreases. Assuming that the OAC is reasonably efficient at
handling claims, we estimate that the office could process
60,000 claims in 2002 and would clear the existing backlog of
roughly 200,000 claims by the end of 2005. CBO estimates that
administrative expenses of the OAC would total $200 million
over the five-year period.
Medical Expenses Reimbursement
H.R. 1283 would provide for the reimbursement of certain
medical expenses of claimants, up to $1,500 per claim. Such
expenses could include chest X-rays and lung capacity testing.
Under current law, settlement offers by the defendants often
include reimbursements for medical expenses. Absent this offer,
the claimants are responsible for such costs.
Based on information from asbestos industry experts, CBO
expects that most claimants who do not meet the bill's
requirements for medical eligibility would apply for and
receive reimbursement at an average cost of $1,200 per claim.
CBO estimates that this provision would apply to over 30,000
individuals for each of fiscal years 2001 through 2005 and
would cost increase discretionary spending byabout $150 million
over the 2001-2005 period.
Settlement Payments To Claimants
H.R. 1283 would authorized the director of the OAC to
establish a schedule of compensationgrid payments that would be
offered to individuals with varying degrees of asbestos
impairment to determine the value of the OAC's settlement
offers to claimants and to make settlement offers to all
medically eligible claimants based on this gridschedule. CBO
estimates that the OAC would be able to process about 60,000
claims in 2002, with the annual amount increasing to about
80,000 by 2005. Based on information from consultants to the
defendant companies, CBO expects that just under half of these
claims would meet the bill's medical eligibility requirements.
In addition, we assume that thatthe settlement amounts
offered by the OAC would be are similar to the payments that
individuals can expect under current law., wCBO estimates that
total settlement payments to claimants by the OAC would be
about $2.2 billion over the 2002-2005 period, including $1.3
billion from appropriated funds and direct spending of $960
million from amounts recovered from defendant companies.
Under current law, settlement offers vary widely and are
determined, in part, by jurisdiction, age of claimant, number
of years of exposure, and type of illness. For example,
claimants with mesothelioma (a severe and terminal disease
caused by exposure to asbestos) are likely to receive a private
compensation settlement of over $1 million, while a case
withinvolving a claimant whose X-rays shows exposure to
asbestos but whose medical tests do not show advanced signs of
disease may receive $5,000 and the right to seek future
compensation if a disease develops. Furthermore, claimants who
present the same facts in different jurisdictions throughout
the United States could receive widely disparate awards. Based
on past settlement payments made by the defendantss, CBO
estimates that the average settlement payment made by the OAC
to claimants would be about $50,000.
CBO expects that some individuals, especially those with
the severest levels of impairment (mesothelioma claimants, for
example) would opt out of the OAC's compensation processes and
seek higher compensation payments in court. Because the
compensation gridschedule would be publicly available, CBO
expects that the defendants would offer claimants from
jurisdictions with historically high compensation levels
greater settlement amounts than what they would receive from
the OAC to avoid the high cost of a jury award in such
jurisdictions. CBO estimates that only about 40 percent of the
eligible claimants (or about 10,000 to 15,000 claimants each
year over the five-year period) would accept the OAC's
settlement offer.
Section 402 would authorize the appropriation of $100
million for a loan to the OAC to settle claims. For the purpose
ofthis estimate, CBO considers the $100 million as an
authorization for the appropriation of funds in fiscal year
2001. Even though the bill characterizes that authority as a
loan subject to the Federal Credit Reform Act, a payment cannot
be considered a loan under Credit Reform if the duty to repay
the government arises from an exercise of sovereign power, tort
liability, or some other non-contractual obligation.
U.S. Court of Federal Claims
The bill would transfer the jurisdiction of cases in which
the claimant accepts the OAC's offer from the U.S. District
Court to the U.S. Court of Federal Claims. CBO estimates that
H.R. 1283 would cost the U.S. Court of Federal Claims $1
million annually over the five-year period for additional
attorneys and support staff. Because of the large backlog of
cases in U.S. District Court, CBO estimates that enacting H.R.
1283 would not result in savings for that court over the 2001-
2005 period.
Cost Recovery
CBO estimates that the OAC would collect $240 million over
the 2001-2005 period from asbestos defendants for
administrative and medical reimbursement costs. (Such
collections would offset appropriated spending.) In addition,
CBO estimates the OAC would collect $1 billion from asbestos
defendants to settle cases over the five-year period. Because
the OAC would be authorized to spend these receipts without
further appropriation action, these collections would be
recorded as offsetting receipts (a form of direct spending) and
their expenditure would be recorded as direct spending.
Administrative and Medical Reimbursements. The legislation
would authorize the collection of funds to reimburse the OAC
for administrative and medical examination expenses, and for
the cost of paying claims to individuals. Based on the
experience of similar programs, CBO estimates that the OAC will
collect nearly $260 million over the 2001-2005 period--about 85
percent of medical and administrative expenses.
Claims Reimbursements. H.R. 1283 would authorize the OAC to
pursue claims against the defendant companies after paying
settlement offers to claimants. CBO estimates the OAC would
receive $1 billion over the 2001-2005 period from defendant
companies--or about two-thirds of the total amount paid to
individuals. The amount of such receipts is highly uncertain.
Because of the large number of cases involved and the history
of asbestos litigation, CBO expects that the OAC and defendant
companies will settle most of the OAC claims out of court.
Based on information from defendants and groups representing
asbestos claimants, CBO expects that the above total is at or
near the maximum amount the industry can pay to settle such
claims without risking insolvency of the firms involved.
Under current law, asbestos defendants report a liability
for asbestos compensation claims that exceeds $8 billion.
Information on the total amount of cash compensation payments
made by defendants to individuals is incomplete but probably
exceeds $3 billion, based on limited information from public
reports. Those payments represent a substantial financial
burden for defendants, and present a significant risk that some
firms will become insolvent. This year alone, two of the major
asbestos defendants entered bankruptcy. This burden is
increasing as juries award larger damages and claimants demand
larger settlements.
Thus, to avoid insolvency, we expect most companies would
negotiate either to repay the federal government amounts less
than those paid by the OAC to settle claims, or to make
scheduled payments over a number of years. The amount of OAC
settlement payments to claimants that is reimbursed would
depend in part on how much the OAC offers on an annual basis.
We expect that defendant companies would be unable to pay total
settlement amounts to claimants significantly in excess of
their current spending level. Information on annual amounts
paid by asbestos defendants to settle asbestos claims is not
uniformly or consistently reported, however, based on
information from some defendant firms we expect defendants
would seek to negotiate reimbursements of up to 90 percent of
the OAC's annual compensation costs over the five-year period.
As the total amount of compensation paid by the OAC declines we
expect the recovery rate from defendant firms would increase.
In addition to negotiated reimbursement amounts, settlement
agreements with the OAC would expose the government to the risk
that defendants would become insolvent before paying the agreed
amounts. To estimate this risk, CBO consulted with industry
experts and examined the credit ratings of defendants. The
information on credit ratings is useful because different
credit ratings reflect analysts' expectations of insolvency.
Most defendants have credit ratings around ``BBB''; however,
one credit-ratings company announced that it is considering
lowering the rating of a defendant as a result of the recent
increase in asbestos liabilities. CBO assumes that the payments
by defendants under settlement agreements with OAC would have a
credit risk comparable to debt rated as ``B.'' Debt with this
rating typically has a default rate of around 30 percent.
Considering both the capacity of asbestos defendants to
reimburse the OAC and the risk to the government that such
firms may default in their agreements to reimburse the OAC, CBO
estimates the OAC would collect about 65 percent of the cost of
settlement agreements from defendants. The precise amount of
recoveries is very uncertain, but is unlikely to approach 100
percent. If the total claims paid by the OAC are significantly
more than CBO estimates, we expect this recovery rate would be
lower. Alternatively, if the OAC can achieve a higher recovery
rate, the net cost of the bill would be lower than we have
estimated.
PAY-AS-YOU-GO CONSIDERATIONS
The Balanced Budget and Emergency Deficit Control Act sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts. The net changes in outlays that are
subject to pay-as-you-go procedures are shown in the following
table. For the purposes of enforcing pay-as-you-go procedures,
only the effects in the current year, budget year, and the
succeeding four years are counted.
By fiscal year, in millions of dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays 0 0 -5 -10 -15 -10 0 10 15 5 0
Changes in receipts
Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS
H.R. 1283 contains no intergovernmental mandates as defined
in UMRA and would impose no costs on state, local, or tribal
governments.
ESTIMATED IMPACT ON THE PRIVATE SECTOR
H.R. 1283 would create new private-sector mandates for
individuals filing new claims for compensation for injuries
caused by exposure to asbestos, for all attorneys representing
those individuals, and for businesses named as defendants by
such individuals. CBO estimates, that the total cost to the
private sector of complying with the mandates in the bill would
fall below the threshold established in UMRA ($109 million in
2000, adjusted annually for inflation).
H.R. 1283 would create a new private-sector mandate for
individuals filing new claims for compensation for injuries
caused by exposure to asbestos. The bill would require such
individuals to obtain certificates of medical eligibility from
the Office of Asbestos Compensation before filing suit in state
or federal court. For individuals who meet the bill's medical
requirements, the cost of the mandate would be small. Section
102 would require the OAC to make determinations of eligibility
within 30 days of receiving a claim. After receiving
certificates of eligibility, those individuals could proceed to
file suit as under current law.
The costs of the mandate for individuals whom the OAC deems
ineligible would be the value of the settlements and judgments
that they would be able to obtain under current law but not
under H.R. 1283. The bill would prevent individuals whom the
OAC judges do not meet the medical eligibility requirements
from obtaining compensation for their exposure to asbestos
through the courts. (The bill would, however, toll the statute
of limitations for such injuries, so that if such individuals
did develop eligible conditions they could seek compensation at
a later date.)
Because comprehensive data relating to asbestos exposure,
litigation, and compensation are difficult to obtain, CBO
cannot precisely estimate the costs of the bill's mandate for
claimants. Based on the information available to CBO from
academic, industry, and other sources, CBO expects that the
cost of the mandate on ineligible claimants could fall between
$10 million and $40 million annually by 2005. (Costs would be
lower in the early years because many claimants receive
settlement payments over the course of several years.) The
uncertainty in those estimates stems from the difficulty in
predicting the number of claimants who would receive
compensation under current law but would be ineligible under
H.R. 1283.
The bill would create a new private-sector mandate for
claimants' attorneys by directing the OAC to regulate
attorneys' fees and compensation. Most attorneys representing
claimants in asbestos cases charge contingent fees; that is,
they take a percentage of any settlement or damages awarded to
the claimant as payment for their services. Although the bill
does not contain specific rules or guidelines for the OAC to
follow, CBO expects that the OAC would limit attorneys' fees to
some maximum allowable percentage of a claimant's recovery,
perhaps comparable to the fees that federal courts allow
claimants' attorneys in product liability class-action suits to
charge. Because the bill contains few guidelines for OAC
regulation and because asbestos cases are tried in multiple
state and federal courts, CBO cannot estimate the costs of this
mandate to claimants' attorneys.
H.R. 1283 would create a new private-sector mandate for
defendants by requiring them to pay assessments to the OAC.
Section 401 would direct the OAC to collect assessments from
asbestos defendants to defray administrative and certain other
costs. The bill would not provide specific rules for
calculating or collecting assessments, however, CBO expects
that assessments levied on individual defendants would be
proportional to the OAC's expenditures relating to that
defendant. CBO estimates that asbestos defendants would be
required to pay assessments totaling $35 million in 2002, $70
million in 2003, $75 million in 2004, and $60 million in 2005.
Overall, however, the bill would result in substantial
benefits to asbestos defendants. H.R. 1283 would encourage
claimants to choose administrative adjudication through the OAC
rather than go to court. Out-of-court settlements are typically
lower than court-awarded judgments. Participation in the bill's
administrative adjudication process would eliminate the risk of
punitive damages for some defendants. More significantly, the
bill would benefit defendants by reducing the number of new
claims against them.
ESTIMATE PREPARED BY:
Federal Costs: Lanette J. Keith, Mark Grabowicz, and Mark
Hadley (226-2860)
Impact on State, Local, and Tribal Governments: Shelley
Finlayson (225-3220)
Impact on the Private Sector: John Harris (226-2618)
ESTIMATE APPROVED BY:
Peter H. Fontaine
Deputy Assistant Director for Budget Analysis
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the committee finds the authority for
this legislation in Article I, section 8, clauses 3 and 18 and
in Article III of the Constitution.
While State and Federal courts have acknowledged the
judiciary's inability to fashion a solution to the problems
created by asbestos litigation, as recently as 1999, the United
States Supreme Court has called on Congress to craft Federal
legislation to handle the massive backlog of asbestos claims.
See Amchem Products v. Windsor, Cass Action Settlement, and
Ortiz v. Fibreboard, Class Action Settlement under Need For the
Legislation.
Section-by-Section Analysis and Discussion
Title I. Establishment and Procedure
Section 101. Establishment of the Office of Asbestos Compensation
Subsection (a) establishes an Office of Asbestos
Compensation (OAC) within the United States Department of
Justice (DOJ). The Administrator is vested with authority to
promulgate all procedural and substantive rules necessary to
administer this act. In addition, the Administrator will
designate an office or offices where all asbestos claims will
be filed. The OAC is headed by an Administrator who is
appointed by the President with the advice and consent of the
Senate. Accordingly, the Administrator will serve for a term of
10 years and will be removable by the Attorney General only for
good cause.
Subsection (b) provides the OAC with exclusive jurisdiction
over proceedings to determine liability and compensatory awards
for asbestos-related claims. However, claims for workers'
compensation, veterans' benefits, claims against existing
asbestos trusts (unless the trusts opt in to the administrative
process), or claims relating to certain private settlements are
excluded from the OAC's exclusive jurisdiction. In addition,
claimants that have receive a certificate of medical
eligibility, under Section 102 (f) of this act, may opt out of
the OAC's jurisdiction and proceed to State or Federal court.
Subsection (c) requires the Administrator to appoint a
Medical Director to manage a medical review procedure, retain
needed medical personnel to conduct the medical review, as well
as create the exceptional medical claims panel.
Subsection (d) establishes an Asbestos Compensation Fund
(Fund) which will be managed by a Trustee that is appointed by
the Administrator. The Fund will make settlement payments to
claimants under Section 104 (d) of this act. In addition,
reimbursement for medical testing expenses does not come out of
the Fund. These expenses are paid for by defendants pursuant to
assessments for administrative expenses under section 401.
Under Section 401, administrative expenses relating to the
general operations of the OAC are collected by the
Administrator directly and under subsection 403 (b) may be
appropriated directly to the OAC. The Fund is there only to
manage settlement payments and recoupment from defendants and
has nothing to do with the OAC's general administrative
expenses.
Subsection (e) establishes an Office of Administrative Law
Judges within the OAC for purposes of conducting administrative
adjudications under Section 105 of this act. The Administrator
will appoint administrative law judges (ALJ's) and may remove
ALJ's for good cause. This subsection does not prohibit the
Administrator from appointing ALJ's from other agencies in
order to process the enormous backlog of pending asbestos
claim.
Subsection (f) establishes a Medical Advisory Committee
(committee) which is appointed by the Administrator. The
committee will periodically review the medical review
procedures and eligibility criteria, make appropriate
recommendations to the Administrator, and submit an annual
report to the Administrator and the Congress. The composition
of the Medical Advisory Committee is within the discretion of
the Administrator, this committee should embody a cumulative
view that is supported by a majority of professional
organizations in relevant medical and scientific fields. In
addition, the Administrator may contract for staff to support
the committee in carrying out its functions.
Section 102. Medical eligibility review
Section 102 creates an administrative procedure to
determine whether the claimant meets the statutory medical
criteria or qualifies as an ``exceptional medical claim.'' This
proceeding is administered by the Medical Director and is
completely non-adversarial. The Administrator will retain
qualified physicians for the medical review process on a
contract basis. These physicians would be treated as ``special
governmental employees.''
The Administrator will promulgate rules and procedures
under subsection 101 (a) to govern the medical review process.
Those rules will be designed to provide a prompt and efficient
procedure for making reliable determinations of medical
eligibility. Claims will be prioritized so that the most
urgent, including those in which the claimant has a malignancy,
are resolved first.
Asbestos claims filed under subsection 101(a) will be
immediately referred to the Medical Director, who will issue a
notice of acceptance unless additional information is needed.
The information to be provided in an application will be
established by rule. This information will include occupational
history, information about exposure, medical history, and the
results of specific medical tests. Where necessary, applicants
may be required to undergo additional non-invasive medical
testing at the expense of the OAC. The OAC will assist
claimants in filing their claims by providing clear
explanations of what is required and by providing standardized
application forms and guidance.
The Medical Director must make an initial determination of
medical eligibility within 30 days of the issuance of the
notice of acceptance. If an application is initially denied,
the claimant may elect to have the application reviewed by a
two physician review panel. In the event of disagreement, a
third physician would be added.
Although most qualified claimants will meet the standard
criteria contained in sections 302, 303, 304, and 305 of the
act, some claimants will not meet those criteria but will
provide equally reliable evidence of an asbestos-related
impairment and may qualify for medical eligibility under
Section 301. For example, a claimant could provide CAT scan
evidence of asbestosis which could be considered equivalent to
the x-ray evidence normally required. Similarly, a claimant
with a smoking-related obstructive lung disease such as
emphysema could provide evidence that asbestosis significantly
contributed to his breathing impairment. Cases of this kind
would be decided, on the basis of all relevant evidence, by an
exceptional medical claims panel. While no criteria has been
created for the exceptional medical claims criteria, the
Administrator is authorized to establish rules and procedures
for reviewing these claims. The Administrator will consult with
the Medical Advisory Committee and the Medical Director to
formulate similar but not identical requirements for
exceptional medical claims; however, the purpose of this
subsection is to include all individuals with an asbestos
related impairment that do not satisfy the existing criteria.
Claimants may designate their claims as exceptional medical
claims either in their initial application or following an
initial denial by the Medical Director. Under subsection
102(d), the exceptional medical claims panel is required to
make a determination within 30 days of its receipt of the
claim. The exceptional medical claims panel may extend the time
for rendering its decision for ``good cause.'' This authority
should be used sparingly. Good cause extensions may be
appropriate when the claimant has not provided necessary
information in a timely way, when further medical testing is
needed, or in cases of unusual medical complexity.
The Medical Director is bound by the determinations of the
appellate panel, the exceptional medical claims panel or an
initial approval. The decision of the Medical Director may be
appealed to the United States Court of Federal Claims under
Section 106.
The Medical Director will establish audit and review
procedures under section 102(e) to evaluate the efficiency and
effectiveness of medical review. The evaluation of the
procedures should include examination of errors in approving
and denying eligibility, as well as timeliness and other
measures of performance.
Those who meet the eligibility requirements of the act will
receive a certificate of medical eligibility. Claimants with a
certificate of medical eligibility may proceed to State or
Federal court under subsection 102 (f) or obtain settlement
offers under section 103.
Section 103. Election of administrative process; settlement offers
Under this section claimants may elect to receive non-
adversarial settlement offers from named defendants and the
Asbestos Compensation Fund. Claimants must first identify
potential defendants with the assistance of the OAC under
subsection 103 (a)(1). For each such defendant, the claimant
will provide the OAC with a verified ``particularized
statement'' of the basis for the defendant's potential
liability. Under subsection 103 (a)(2) the statement will
include information that the OAC, by rule, concludes is
necessary to provide the named defendant with a reasonable
basis for making a settlement offer. The required information
are the dates of exposure, work sites, the nature and frequency
of the exposure, and a description of the exposed person's job
and working conditions during the relevant time period. The OAC
will also help claimants identify defendants by providing
information gathered through the exercise of its subpoena
power, under Section 107.
Under subsection 103 (a)(3), after reviewing the statement
to ensure compliance with the act, the OAC will provide a copy
of each statement to each defendant, and, subject to privacy
rules, each defendant will also receive a copy of the records
of the medical review process. Under subsection 103 (a)(4),
defendants named by the claimant will have limited additional
time, which will be established by the Administrator, to name
``third-party defendants,'' following the same procedure that
claimants follow for naming defendants. Also under subsection
103 (a)(4), discovery may be allowed to obtain information that
is necessary to allow the claimant or any third-party plaintiff
to provide a particularized statement.
Under Section 103 (b)(1), once the time for adding
additional defendants has expired, defendants will have 21 days
to provide to the claimant with a good faith written settlement
offer. Rules will require that all offers will also be
submitted to the Trustee. Under Section 208 defendants will be
penalized for making an inadequate settlement offer. Under
subsection 103 (b)(2), the Trustee of the Asbestos Compensation
Fund is required to make an aggregate settlement offer within
an additional 10 days. The Trustee's offer will be based on a
compensation grid, established and regularly revised by rule
under subsection 103 (b)(2).
The compensation grid will not be a mere average of past
settlements. The Administrator will take into consideration all
relevant factors in determining the grid. Among these factors
is the type of claim, nature and extent of asbestos disease or
injury, smoking history, disability, age, number and age of
dependents, amount of exposure to products of named defendants,
job history, geographic location and any other relevant
criteria generally used in the settlement of asbestos cases. In
addition, the settlement values adopted by the Administrator
will reflect the act's deferral of the claims of the
unimpaired, which may be included in some pre-enactment
settlement averages, as well as the act's limitations on venue.
In short, the grid should reflect the current value of asbestos
claims based on accumulated historical data, also taking into
account the effect of this act.
The compensation grid is a crucial element in the effort to
provide fast and fair settlements. The Administrator may
utilize the good cause exception to the notice-and-comment
requirements of the rule-making process as provided under
Section 553 of the Administrative Procedures Act in order to
issue emergency interim final regulations to establish the
grid. These regulations will be final, following full notice
and comment procedures, and to update them regularly to reflect
new information.
Section 104. Claimant's choice of forum
This section explains how settlement offers are rejected
and accepted. Claimants will receive settlement offers from
each named defendant and the Trustee of the Asbestos
Compensation Fund. Under subsection 104 (a), the Trustee's
offer will be reduced dollar-for-dollar by the amount of any
defendants' offers that are accepted by the claimant. Under
subsection 104 (b), claimant's are required to provide notice
of acceptance or rejection of any offer within 60 days from the
delivery of the receipt of the last offer. Under subsection 104
(c), no offers are required unless the claimant can name a
solvent defendant. Those claimants who cannot name a solvent
defendant, also known as orphan claims, must pursue their claim
in State or Federal court.
Under subsection 104 (d), if the claimant accepts the
Trustee's offer, the Trustee will assume the claim and may
accept any remaining offers from the defendants or prosecute
the claim either in administrative proceedings under Section
105 or in court. By accepting the Trustee's offer, the claimant
agrees to cooperate in future proceedings against defendants.
Such cooperation may include appearing as a witness in
proceedings by the Trustee against defendants. Under Section
209, the claimant would retain the right to any recovery by the
Trustee that exceeds 200 percent of the Trustee's offer, plus
any punitive damages awarded in the administrative process.
Under subsection 104 (e), claimants who reject the Trustee's
offer and do not settle with all defendants may seek to resolve
their claim in State or Federal court or invoking an expedited
administrative adjudication under Section 105.
Section 105. Administrative adjudication
Under Section 105, claimants are provided the option of
electing a 90 day administrative adjudication. An
administrative law judge (ALJ) will be assigned to the claim
and a ``de novo'' hearing (hearing on the record) will be
conducted. The hearing will be governed by the procedures for
formal adjudications provided under the Administrative
Procedures Act. The ALJ will apply the law set out in Sections
201-210; however, Section 208 explicitly pertains to
administrative adjudications. Section 208 contains rules for
applicable law, special damages in wrongful death cases, and
penalties for inadequate offers made pursuant to Section 103.
Section 106. Appeals; judicial review
Under Section 106, a claimant may obtain judicial review of
adverse decisions by the Medical Director under Section102, and
any party may obtain judicial review of final awards by the ALJ
under Section 105. These proceedings will be in the United
States Court of Federal Claims, which will apply the familiar
``substantial evidence'' standard of review. Review will be
based on the record before the OAC, and additional evidence
before the court will be unnecessary. In addition, while the
Court is located in Washington, D.C., it presently hears cases
throughout the United States, this will provide accessibility
for claimants seeking review.
A Medical Director's favorable ruling on medical
eligibility is not a final decision appealable under this
section. Thus, defendants will not be able to delay
consideration of an asbestos claim by appealing a finding of
medical eligibility. Of course, defendants may try, at trial or
in an administrative proceeding, to rebut the finding of
medical eligibility by clear and convincing evidence, and they
may appeal a judgment of an adverse final decision of an
administrative or court proceeding. Decisions of the United
States Court of Federal Claims in turn may be appealed to any
United States Court of Appeals.
Section 107. Gathering and maintenance of information
Section 107 requires the OAC to establish databases
containing product identification information, information
regarding settlements, judgments and awards, which will be used
to establish a settlement grid pursuant to subsection 103
(b)(2). The purpose of the product identification database,
under subsection 107 (a), is to help claimants obtain access to
the information necessary to identify the asbestos products to
which they were exposed. Product identification includes work
sites, location of a product within a work site, the
occupations of exposed persons, and time period the product was
located at the work site. As well as, the location and
identification of asbestos found outside of work sites, this
includes locations where raw asbestos fibers have been released
into the ambient air or various other asbestos containing
products. This information will be made publicly available.
Information on past settlements, judgments, and awards,
under subsection 107 (b) will assist the OAC to establish
values for settlement based on a settlement grid (grid). In
addition under subsection 107 (d), any information obtained for
purposes of Section 107 that is specific to individual
plaintiffs, defendants or law firms will be kept confidential
and is exempt from the Freedom of Information Act. Subsection
107 (c) provides the OAC with subpoena power to obtain
information regarding production identification, settlement
values, judgements, or awards and to secure financial
information from any defendant.
Section 108. Legal assistance program
Under Section 108, claimants are free to retain the counsel
of their choice; however, the OAC will also maintain a roster
of qualified counsel to assist claimants. The OAC will adopt
rules on reasonable attorney fees, which will govern legal
representation of persons asserting asbestos claims before the
OAC. In addition, only those counsel agreeing to comply with
these rules will be placed on the roster of qualified counsel
to assist claimants. Rules on reasonable attorney fees will not
prohibit contingency fee contracts.
Section 109. Time limits for dispositions
Section 109 provides claimants with a procedure to require
the Administrator to comply with time limitations established
by this act. Under subsections 109 (a), (b), and (c), if either
the Medical Director or the Trustee fails to meet the time
limits for an initial decision of eligibility or making a
settlement offer, respectively, with respect to more than 30
percent of claims, the Administrator has a nondiscretionary
duty, enforceable by mandamus, to take remedial action. Such
action may include increasing staff and administrative
assessments against defendants. In addition to the procedures
established in this section for enforcing time limits on a
system-wide basis, the Administrator has authority under
section 101(a) to adopt rules for enforcing time limits case-
by-case.
Title II. Law Applicable to Asbestos Adjudication
Section 201. Medical eligibility
Section 201 of the bill establishes when claimants may
recover compensatory damages for an asbestos claim. This
certificate establishes a presumption of an asbestos related
illness that is rebuttable only by clear and convincing
evidence. The presumption is subject to two qualifications,
however. First, insofar as the certificate of medical
eligibility is based on the claimant's allegations regarding
exposure under Section 306, no presumption is created. This
limitation is required because there is no mechanism to
accurately determine what degree of the claimant's condition
was caused by asbestos. Second, as explained under section
304(b), lung cancer claimants who smoke and who do not have a
qualifying non-malignant disease must establish that asbestos
caused their lung cancer.
Section 202. Damages
Medically eligible claimants may recover compensatory
damages under applicable law, including damages for emotional
distress, pain, and medical monitoring where authorized. They
may not, however, recover for ``enhanced risk'' for other
diseases, such as cancer, since Section 204 eliminates statute
of limitations and statute of repose defenses. Punitive damages
are limited to administrative proceedings in accordance with
subsection 208(d).
Section 203. Statute of limitations or repose
Section 203 eliminates timeliness defenses except as to
claims already untimely as of the date of enactment of the act.
This section also provides that a claim will not accrue before
the exposed person has an eligible medical condition under the
act. Regardless of any State statute that would dictate
otherwise. The policy of the bill is to preserve the claims of
asbestos victims who delay bringing lawsuits until they are
impaired.
Section 204. Come back rights
Section 204 allows claimants to recover additional awards
for subsequent asbestos-related cancers, regardless of any
contrary State law, although the claimant may have already
received an award for a claim based on medical eligibility
under Section 302 (Asbestos Related Non-malignant Condition
With Impairment). However, this provision does not override
private settlement agreements in which claimants may have
bargained for a general release which would cover subsequent
cancer claims. This is reinforced under Section 701 (c).
Section 205. Class actions, aggregations of claims and venue
Section 205 establishes comprehensive rules for the
consolidation and venue of asbestos claims. Under subsections
205 (a) and (b) class actions, consolidations, and other
aggregative procedures may be employed in judicial proceedings
in Federal or State courts (1) with the consent of the parties;
(2) with respect to class actions, if they meet the
requirements of Federal Rule of Civil Procedure 23, and (3)
with respect to all such aggregations, if the court orders such
procedures to promote the just and efficient conduct of the
case. ALJ's presiding over administrative claims under section
105 proceedings may aggregate any number of claims. However,
all claimants must qualify for an eligible medical criteria
under Sections 301, 302, 303, 304, or 305 and must receive a
certificate of medical eligibility under Section 102 before
their claims may be consolidated, bundled or grouped in any
other method.
Under section 205 (c) venue is provided for an asbestos
claim in the State where the exposure occurred or where the
claimant is domiciled. These venues will generally be
convenient for the claimant and will prevent forum shopping.
Under subsection 205 (d), in any case where there is an
alleged violation of the rules regarding aggregation or venue
under this section, the case may be removed to Federal court
pursuant to the guidelines of chapter 28 of title 28 of the
United States Code.
Section 206. Joint and several liability
Section 206 establishes joint and several liability with
respect to claims against major asbestos manufacturers and
distributors. Claims against these defendants are named ``core
claims'' and defined in paragraph (10) of Section 601. For this
class of defendants, therefore, the bill substantially broadens
joint and several liability. For non-``core claims,'' the bill
preserves currently applicable State (or Federal) rules
regarding joint and several liability.
Section 207. Core claims
Section 207 simplifies the resolution of ``core claims'' by
limiting the issues to be decided in each ``core claim''.
Claimants are only required to prove medical eligibility,
product identification, and the amount of compensation. By
limiting the issues, defenses such as ``contributory
negligence'' and ``state of the art'' will not be allowed.
However, by limiting the issues in this way, State law
regarding contribution among joint tortfeasors is not modified.
Section 208. Special rules applicable to Section 105 adjudications
Section 208 sets out special rules to govern administrative
proceedings before ALJs under Section 105. First, under
subsection 208 (a), ALJ's are required to apply the substantive
law of the State which has the most significant relationship to
the exposure and the parties. Second, under subsection 208 (b),
full compensatory damages are provided for wrongful death
actions based on mesothelioma, notwithstanding contrary State
law. This corrects an anomaly found in the law of some States,
where damages for pain and suffering are available in
mesothelioma cases only if the case reaches judgment before the
victim dies. Third, under subsection 208(c), a penalty may be
imposed on defendants whose offer under section 103 turns out
to be below the defendant's share of the total liability
awarded by the ALJ. The amount of the penalty is the difference
between the defendant's settlement offer and the defendant's
share of either the aggregate offer made by the Trustee or the
ALJ's aggregate award, whichever is less. This penalty is not
``punitive damages'' and is considered to be a portion of the
claimant's award for purposes of calculating the limit on
``punitive damages'' under subsection 208 (d). Under subsection
208 (d), ``punitive damages'' may be awarded by an ALJ and are
only allowed through an administrative adjudication. Punitive
damage awards under this subsection are limited to 300 percent
of the claimant's total compensatory award. In order to receive
punitive damages, the claimant must establish by clear and
convincing evidence that the defendant's conduct was carried
out ``with a conscious, flagrant indifference to the rights and
safety of others'' and that the defendant's conduct was the
proximate cause of the harm to the claimant.
Section 209. Special rules applicable to the Trustee
Section 209 sets out rules governing actions brought by the
Trustee as assignee of asbestos claimants who have accepted the
Trustee's settlement offer pursuant to Section 104. First, this
section provides that in addition to any compensatory or
punitive damages, or penalty for inadequate offers, that the
claimant could have recovered, the Trustee may also recover (1)
its own costs in establishing the claim, including reasonable
attorneys' fees and expenses and (2) interest on any amount
paid to claimants from the Asbestos Compensation Fund under
section 104. A Trustee may recover from defendants more than it
actually paid to the settling claimant under section 104.
However, any compensatory damages recovered by the Trustee in
excess of 200 percent of the amount by the Trustee to the
claimant, and all punitive damages, are to be paid over to the
claimant. Finally, the fact that a claimant settled with the
Trustee, and the amount paid to the claimant in that
settlement, is not admissible in the Trustee's action against
the defendant. This rule will avoid any practical prejudice
that might flow from the fact that the Trustee, rather than the
claimant, is pursuing the claim against the defendant.
Title III. Eligible Medical Categories
Section 301. Eligible medical categories
Section 301 establishes eligible medical categories,
asbestos-related non-malignant conditions with impairment,
mesothelioma, lung cancer, and other cancer. Claims may qualify
for compensation under the bill if they (1) meet the standard
criteria set forth in sections 302, 303, 304, and 305, or (2)
are found by an exceptional medical claims panel to be based
upon comparably reliable evidence of these medical conditions.
The exceptional medical claims panel will take into
consideration innovative or non-standardized diagnostic
techniques, including CAT scans and other forms of computer-
assisted imaging.
Section 301(b) authorizes the Administrator, after
consultation with the Medical Advisory Committee, to adopt
rules to assure consistency and efficiency in the designation
of claims as exceptional medical claims. Such rules could, for
example, establish methods for evaluating claims based on non-
occupational exposure to asbestos, or provide guidance on the
interpretation of new or unusual diagnostic procedures which
are not specified in sections 302 through 305 of the act. The
Administrator will use rule-making authority provided in this
section to establish guidelines for exceptional medical claims
rather than announcing such guidelines in decisions on
particular cases.
Section 302. Asbestos-related non-malignant conditions with impairment
Section 302 sets out objective criteria to determine
whether a claimant suffers from a medically eligible non-
malignant condition--either asbestosis or bilateral pleural
thickening with impairment. Asbestosis is a scarring of the
tissue inside the lung that can adversely affect breathing. In
contrast, pleural thickening affects not lung tissue but the
membranes surrounding the lung--the so-called ``pleura.''
There are two types of pleural thickening. ``Pleural
plaques'' are circumscribed thickened areas that, according to
the overwhelming weight of medical evidence, are without
clinically significant effects,\14\ and do not increase cancer
risk above that of similarly exposed individuals who do not
have plaques.\15\ The other kind of pleural thickening is so-
called ``diffuse pleural thickening.'' Here, the thickening of
the pleura is not circumscribed but generalized, and in extreme
cases this condition can cause restrictive breathing
impairment.\16\ Diffuse pleural thickening has a number of
causes other than asbestos exposure.\17\
---------------------------------------------------------------------------
\14\ See American Medical Association, Guides to the Evaluation of
Permanent Impairment 158 (4th ed. 1999)[hereinafter ``AMA, Guides''];
Roggli, V., et al., Pathology of Asbestos-Associated Diseases 176
(1992); Doll, R. & Peto, J., Asbestos: Effects on Health of Exposure to
Asbestos 2 (1985); Epstein, P.E., Asbestos Inhalation and the
Nonmalignant Abnormalities of the Chest, Sem. Roentgenology 1992;
27:85-93, 91).
\15\ See Roggli, et al., supra, at 176; Hillerdal, G., Radiological
Criteria: Pleural Changes, in Finnish Inst. Occ. Health, Asbestos,
Asbestosis and Cancer: Proceedings of an International Expert Meeting
41, 44 (1997) (reviewing medical literature; finding that ``whether
[pleural plaques] indicate an increased risk of lung cancer has not
been proven.''); Smith, D., Plaques, Cancer, and Confusion, Chest 1994;
105:8-9, 9). Pleural plaques are a marker of asbestos exposure,
although there are also other causes. See Light, R.D., Pleural Diseases
224 (1983) (``Asbestos exposure is not the only cause'' of pleural
plaques); Craighead, J.E. et al., The Pathology of Asbestos-Associated
Diseases of the Lungs and Pleural Cavities: Diagnostic Criteria and
Proposed Grading Schema, Arch. Pathol. Lab. Med. 1982; 106:544-597, 551
(pleural plaques ``have been considered one of the pathologic and
radiologic hallmarks of [asbestos] exposure.'').
\16\ See, e.g., AMA, Guides, supra, at 158 (``[I]n an unusual case
of diffuse massive thickening, respiratory movement may be impeded and
a restrictive abnormality may result.'')
\17\ See Roggli, et al., supra, at 177.
---------------------------------------------------------------------------
Asbestosis can be demonstrated through either clinical or
pathological evidence. The definition of ``clinical evidence of
asbestosis'' is found in Section 601(8). A person will be able
to qualify under this definition with the minimum chest x-ray
reading consistent with a finding of asbestosis (a 1/0 reading
on the ILO scale) together with pulmonary function tests that
demonstrate ``restrictive'' impairment--the type of breathing
abnormality typical of asbestos-related disease. If the x-ray
evidence is stronger (a 1/1 or greater on the ILO scale), the
PFT requirements are somewhat relaxed.
Pulmonary functions tests measure impairment and help to
distinguish restrictive impairment, which may be associated
with asbestos exposure, from impairment due to ``chronic
obstructive pulmonary disease,'' which is typically caused by
smoking. Breathing impairment is indicated by a lung capacity
(either ``forced vital capacity'' (FVC) or ``total lung
capacity'' (TLC)) that falls even minimally below the normal
range. The principal indicator of obstructive disease is the
ratio of the amount of air the exposed person can breath out in
1 second (FEV1) compared to the amount of air he can breath out
in a single forced breath (FVC). A ratio of less than 75
percent indicates obstructive rather than restrictive lung
disease.\18\ In addition, an abnormally low total lung capacity
indicates restrictive rather than obstructive disease, since in
the early stages, at least, obstructive lung disease leads to
overinflation of the lung and thus an abnormally high total
lung capacity.\19\
---------------------------------------------------------------------------
\18\ See American Thoracic Society, Evaluation of Impairment/
Disability Secondary to Respiratory Disorders, Am. Rev. Respir. Dis.
1986; 134:1205-1209, 1205.
\19\ See American Thoracic Society, Lung Function Testing:
Selection of Reference Values and Interpretive Strategies, Am. Rev.
Respir. Dis. 1991; 144:1202-1218, 1210 (``A restrictive ventilatory
defect is characterized physiologically by a reduction in TLC.'').
---------------------------------------------------------------------------
The bill's criteria for clinical diagnosis of asbestosis
are more favorable to the plaintiffs than the diagnostic
criteria adopted by the American Thoracic Society (ATS) in
1986.\20\ The ATS requires an ``appropriate'' latency period--
generally a minimum of 15 years--while the bill does not have
any latency requirement at all.\21\ Moreover, the ATS states
that a chest x-ray rated 1/1 or greater is indicative of
asbestosis, and ``considerable caution'' should be observed
before arriving at a diagnosis of asbestos if that criterion is
not met.\22\ The bill, however, requires only a 1/0 x-ray.
---------------------------------------------------------------------------
\20\ See American Thoracic Society, The Diagnosis of Nonmalignant
Diseases Related to Asbestosis, Am. Rev. Respir. Dis. 1986; 134:363-368
[hereinafter ``ATS, Diagnosis''].
\21\ Id. at 365, 367.
\22\ Id. at 367.
---------------------------------------------------------------------------
Asbestosis can also be demonstrated through Pathological
Evidence. ``Pathological evidence of asbestosis'' is defined in
Section 601(27). The key elements of this definition are a
pattern of scarring (fibrosis) in the lungs together with the
presence of characteristic asbestos bodies. This definition is
similar to the College of American Pathologists of the National
Institute for Occupational Safety and Health (CAP-NIOSH)
criteria for pathological diagnosis of asbestosis. CAP-NIOSH,
in an influential joint study, adopted the following guideline:
``[T]he minimal features that permit the diagnosis [of
asbestosis] are the demonstration of discrete foci of fibrosis
in the walls of respiratory bronchioles associated with
accumulations of asbestos bodies.'' \23\ This standard has been
formally adopted by the ATS.\24\ The act's pathological
criteria similarly require discrete occurrences of
peribronchiolar or parenchymal scarring (that is, fibrosis) in
association with asbestos bodies. The additional requirement
that there be no more likely cause does not significantly
deviate from the CAP-NIOSH standard, but merely represents
prudent diagnostic practice.
---------------------------------------------------------------------------
\23\ Craighead et al., supra, at 559 (emphasis in original)
\24\ See ATS, Diagnosis, supra, at 364-65.
---------------------------------------------------------------------------
Claimants may also recover by showing evidence of
``Bilateral Pleural Thickening with Impairment,'' which is
defined in section 601(14). This definition is similar to the
definition of clinical evidence of asbestosis. A claimant with
x-ray evidence of pleural changes (B/2 chest x-ray on the ILO
scale) is medically eligible if his pulmonary function tests
meet the same requirements that apply to asbestosis claimants
with a 1/0 x-ray. If the x-ray evidence of pleural thickening
is stronger (a C/2 on the ILO scale), the pulmonary function
requirements are reduced, as they are for asbestosis claimants
with stronger x-ray evidence.
Claimants suffering from obstructive diseases will not be
disqualified from qualifying for asbestosis. In some cases,
breathing impairment may be caused by both obstructive lung
disease (smoking) and restrictive disease (asbestos). Section
302(b) directs the exceptional medical claims panel to qualify
claimants in this situation if it finds, on the basis of all
the evidence, that asbestos-related disease is a substantial
contributing factor to the claimant's impairment. The panel
must presume that asbestos is a substantial contributing factor
if the exposed person's chest x-ray is graded 2/1 or higher on
the ILO scale. This will ensure that claimants will be
medically eligible if asbestos is a substantial contributing
factor to their breathing impairment, even if smoking is also a
cause.
Section 303. Asbestos-related mesothelioma
Section 303 designates mesothelioma as an eligible medical
category. Where possible, diagnosis of mesothelioma should be
based upon pathological evidence; however, clinical evidence
may be used in the absence of adequate tissue for a
pathological diagnosis.
Section 304. Asbestos-related lung cancer
Section 304 designates asbestos-related lung cancer as an
eligible medical category. The act provides two independent
ways for a claimant with lung cancer to show that the cancer is
related to asbestos. The first is by showing that, in addition
to cancer, the exposed person has a qualifying non-malignant
condition--the claimant also has asbestosis or bilateral
pleural thickening that would meet the requirements of section
301(b) or 302. The second is to show substantial exposure,
which is measured by work history in certain occupations in
which exposure is likely, and confirmed by pleural plaques,
which are a biological marker of exposure.
When eligibility is established on the basis of exposure,
the amount of exposure required is measured in equivalent-
years, as defined in Section 601(13), which adjusts real-time
years of employment to reflect typical levels of exposure in
different occupations. Individuals who received non-
occupational exposures would apply for medical eligibility
through the exceptional medical claims panel. Similarly,
individuals with indirect occupational exposure who could show
that they were exposed to levels of asbestos comparable to the
exposure levels of people who worked directly with asbestos
could make that case to the exceptional medical claims panel.
Individuals whose lung cancer is attributed to asbestosis
on the basis of exposure, without a qualifying non-malignant
disease, are entitled to a certificate of medical eligibility
regardless of their smoking history. See Section 304(b).
However, because of the causation problems that arise when lung
cancer victims were exposed both to tobacco and to asbestos,
smokers without a qualifying non-malignant disease do not
receive the benefit of a presumption of an asbestos caused
illness under Section 201. The Administrator will promulgate
rules to define what constitutes a ``substantial history of
smoking.''
Section 305. Asbestos-related other cancer
Section 305 establishes other cancers as an eligible
medical category. Claimants can recover for asbestos-related
other cancer if they can demonstrate (1) the presence of a
cancer set forth in this section that is caused or contributed
to by asbestos exposure, and (2) evidence of a non-malignant
condition that would satisfy either Section 301(b) or Section
302.
Section 306. Medical testing reimbursement
Section 306 establishes a medical testing reimbursement
benefit for claimants who have a chest x-ray consistent with
asbestosis or substantial pleural thickening but who are not
yet impaired. The benefit allows reimbursement of 100 percent
of out-of-pocket expenses for medical tests required under
Section 102. These expenses include radiographic exams and
pulmonary function tests and will not duplicate payments from
other sources, including Medicare, Medicaid, private insurance,
or employer-provided medical benefits This benefit would be
available for up to three testing occasions at least 3 years
apart. All benefits under this section will be funded by
administrative assessments against defendants under Section
401.
Claimants who have at least four equivalent-years of
exposure, the medical testing reimbursement is capped at $1500
per occasion. The Administrator will establish by rule a cap
for claimants with less exposure. The Administrator is required
under section 306(d) to establish procedures to ensure accuracy
in statements by claimants concerning their history of
exposure. The Administrator is authorized under section 306(c)
to establish a certification program for laboratories that
provide medical testing for claimants under this act. The
purpose of the certification program is to ensure that testing
done under this section is performed at laboratories that meet
industry standards for the administration and interpretation of
tests, including appropriate quality assurance and control.
Claimants are not required to use certified laboratories under
Section 102, although they will be encouraged to do so.
Standards for certification of laboratories will be developed
in consultation with the Medical Advisory Committee.
Title IV. Funding
Section 401. Assessments and enforcement
This section directs the Administrator to adopt rules for
calculating and collecting from defendants all costs associated
with the determination of claims and payments to claimants.
Rules will allocate costs in accordance with a general
principle of proportionality and will provide an exclusion for
defendants whose involvement in asbestos litigation is de
minimis. Also, while costs will be deferred for select
defendants pursuant to Section 704, administrative costs for
these defendants are limited to those claims that are not
covered by the approved Qualifying National Settlement Plan.
Section 401 further provides special procedures for
streamlined collection actions. The Trustee is empowered to
bring an action in any Federal district court to enforce a
section 401 assessment, notwithstanding amount in controversy
or citizenship of the parties, and subject only to
jurisdictional defenses. A defendant may challenge the legality
or amount of the assessment only by seeking review in the
United States Court of Federal Claims, and only after paying
the disputed amount. Moreover, the Trustee is entitled to costs
and reasonable attorneys' fees in any successful action under
this section. Rules and procedures for calculating and
developing assessments will ensure that Funds for the
administration of the OAC will be made available from
defendants rather than the Federal Government.
Section 402. Fiscal and financial management of the Asbestos
Compensation Fund
This section governs the operations of the Asbestos
Compensation Fund relating to settlement payments by the Fund
under section 104, and associated recoveries by the Fund from
defendants. Except as otherwise provided in this section, the
operations of the Fund will be governed by the Federal Credit
Reform Act of 1990, notwithstanding the status of the Fund as a
governmental agency. The Federal Credit Reform Act governs a
wide range of Federal funding programs, including SBA loans,
farm loans, Federal student loans, and various forms of foreign
credit assistance.
Under this section, the Fund is required to recover
sufficient amounts from defendants to offset all payments made
under section 104 together with all other associated costs of
the Fund. The Administrator must promulgate rules, which are to
be approved by the Office of Management and Budget, for the
fiscal management of the Fund. Those rules will not be subject
to judicial review and must provide, among other things, that
over a reasonable period of time there will be no net taxpayer
subsidy to the program.
The Fund may borrow from the Treasury, under Credit Reform
Act principles, amounts sufficient to pay claimants under
section 104. The Fund is authorized to receive, as offsetting
receipts, any amounts paid by defendants in connection with
settlements and judgments of the claims assigned to the Fund
under that section. These amounts include, among other things,
damages, interest, litigation costs, and administrative costs.
These amounts will offset amounts borrowed from the Treasury to
finance section 104 payments to claimants together with a
premium for all of the Fund's litigation risk.
The Trustee will be seeking, at a minimum, to recover from
defendants the amount it borrowed from the Treasury to pay
claimants, plus interest, plus its litigation costs. The Fund
assumes the litigation risk when it settles with individual
claimants, and that risk includes both the possibility that
recovery will fall short of the settlement amount and the
possibility that it will be higher. The Trustee is allowed to
use amounts recovered from defendants, over and above the
amount paid to claimants (but subject to a cap of 200 percent
of that amount), to offset the Fund's litigation risk. In
addition, the Trustee is entitled to prejudgment interest,
litigation expenses, and in appropriate cases a penalty for
inadequate offers by defendants. Finally, the Trustee has full
flexibility to adjust the settlement amount it offers any
claimant to reflect not only the litigation risk in the
specific claim, but also the financial condition of the Fund.
Accordingly, the Fund can and should be managed so that, over
an appropriate period of time, the risk that the Fund will be
unable to recover from defendants the full amount that it paid
to claimants plus its costs.
Section 403. Authorization for appropriations and offsetting
collections
Section 403(b) authorizes the OAC to receive as offsetting
collections, and spend, the administrative assessments, costs,
and penalties paid to it under section 401. This is the basic
funding mechanism for administrative expenses under the bill.
Section 403(a) authorizes additional appropriations to the
OAC and the United States Court of Federal Claims for carrying
out their responsibilities under the act. These appropriations,
if approved by Congress, would supplement administrative
assessments against defendants. These appropriations are not
essential, the OAC can function perfectly well using funds
available to it from defendants under section 403(b). The
consequence of an appropriation under section 403(a) (1) for
administrative expenses of the OAC would be to reduce the
amounts otherwise assessed against defendants.
In addition, section 403(a) authorizes a one-time loan of
$100 million to defray start-up costs for the fund, which will
be repaid with interest from amounts collected from defendants.
Total appropriations under section 403(a) may not exceed $250
million during its first year of operation and $150 million
thereafter.
Title V. Transition
Section 501. Applicability; transitional civil actions
Section 501 provides that the bill will be effective on the
date of enactment with respect to all claims that have not
begun trial by that time.
There are two exceptions to the application of the
provisions of this section. First, claimants with pending
claims as of the date of enactment would not have to obtain a
certificate of medical eligibility if a trial begins within 6
months. This 6-month transition period may be extended by the
Attorney General for an additional 6 months. Claimants covered
by this provision would be required to show medical eligibility
(as defined in the bill) at trial, but would not be required to
receive a certificate of medical eligibility from the Medical
Director. In addition, a claimant who has a trial date within 6
months after the end of the formal transition period may
receive a right-to-sue letter if the OAC is not able to meet
the 30-day statutory deadline for issuing an initial decision
on medical eligibility. At trial, claimants who have a right to
sue letter would have to prove medical eligibility, which does
not include claims for medical expenses.
Title VI. Definitions
Section 601. Definitions
Section 601 defines terms used in the act. The most
important of these terms are described here. Terms relating to
medical eligibility, procedure and administration, and
applicability are discussed separately.
Terms Relating to Medical Eligibility
A number of the definitions in Section 601 are important
for determining medical eligibility. Certain terms--e.g.,
clinical evidence of asbestosis, pathological evidence of
asbestosis, and evidence of bilateral pleural thickening with
impairment--have been discussed in connection with title III,
and that discussion will not be repeated here.
``Chest x-ray,'' under paragraph (5), means chest
radiographs taken in at least two views (Posterior and Lateral)
and graded quality 1 for reading according to the criteria
established by the ILO. If the claimant is unable to provide
quality 1 x-rays, chest x-rays graded quality 2 are acceptable.
Because of the importance of x-rays in the medical eligibility
process, the committee believes that where possible those x-
rays should be of sufficient quality to minimize the risk of
interpretive errors.
``Equivalent-years,'' under paragraph (13), are used to
calculate periods of exposure for purposes of the lung cancer
criteria in section 304 and medical testing in section 306.
Equivalent-years are used rather than real-time years to
reflect the fact that levels of asbestos exposure varied
between different occupations. A year spent in occupations
involving direct installation, repair, or removal of asbestos
products is the standard. Years spent in occupations
characterized by very high levels of exposure--e.g.,
shipbuilding in World War II and manufacturing of asbestos
products--are weighted more heavily, while years in occupations
involving only indirect exposure to asbestos are weighted less
heavily.
Some individuals exposed in non-occupational settings may
have received exposures equivalent to workplace exposures.
Similarly, some who received indirect exposure may have had a
level of exposure typical of workers who directly installed,
repaired, or removed asbestos. Claims of this kind should be
addressed by the exceptional medical claims panels.
The ``latency period,'' under paragraph (21), of a disease
is the time between first exposure to asbestos and
manifestation of the disease. The first exposure to asbestos
under this definition does not need to meet any threshold of
``significance,'' but exposure to background levels of
asbestos, similar to those to which the public generally is
exposed should not be considered a first exposure under this
definition.
``Physician,'' under paragraph (29), means a licensed
medical doctor who has not, in the 5 years prior to the date of
enactment, spent more than half of his professional time, or
derived more than half of his professional income, either
annually or in total, on medico-legal issues related to
asbestos. This definition will help ensure that the doctors who
serve vital functions under the bill will be impartial treating
physicians, and not doctors whose professional life has come to
center on asbestos litigation, usually as witnesses testifying
predominantly for one side or the other.
``Predicted value,'' under paragraph (30), means a
published reference to the normal breathing capacity of healthy
populations based on age, height, and gender. Such values must
be generally accepted in the medical community, and may not be
adjusted by race. The Medical Director will approve such
predicted values by rule adopted within 120 days of the date of
enactment.
``Pulmonary function testing,'' under paragraph (31), means
tests for forced vital capacity, lung volume, and diffusing
studies, using equipment, tests, and standards generally
accepted in the medical community. The results of pulmonary
function testing may not be adjusted by race. The Medical
Director will adopt rules relating to pulmonary function
testing within 120 days after the date of enactment. The
Medical Director will take into consideration, as applicable,
existing rules on pulmonary function testing adopted by the
Department of Labor in consultation with NIOSH and published in
20 CFR 718.013 (1997) and Appendix B thereto. Information
provided to the OAC must be sufficient to enable the agency to
determine whether pulmonary function tests were properly
administered. This will require submission of all spirometry
tests including the designated ``best test,'' both volume time
graphs and flow volume loops, and values for any other attempt
or trial.
Procedural and Administrative Terms
``Compensatory damages,'' under paragraph (9), include both
economic damages and non-pecuniary losses like pain, suffering,
inconvenience, or emotional distress.
``Core claim,'' under paragraph (10), means an asbestos
claim against certain primary asbestos defendants--i.e., (a)
defendants who manufactured an asbestos-containing product to
which the exposed person was exposed and who have paid out $50
million cumulatively over the 10 years prior to the filing of
the claim or (b) defendants who were not manufacturers, and
whose liability is not based on ownership or control of
property, who have paid out $100 million over the preceding 10
years. The bill subjects these primary defendants to joint and
several liability, notwithstanding contrary State law, and it
eliminates most of the those defendants' traditional defenses.
Applicability
``Asbestos claim,'' under paragraph (1), means any claim
for damages or other relief arising out of, based on, or
relating to the health effects of exposure to asbestos. It
includes claims for personal injury, death, emotional distress,
and medical monitoring. It also includes claims brought by
family members, such as loss of consortium. It does not,
however, include claims for workers' compensation benefits, or
any claim by an employer or insurer against the third party for
reimbursement of workers' compensation benefits, or any claim
for veterans' benefits.
``Asbestos Trust,'' while this definition excludes certain
trusts established to pay asbestos claims, other trusts that
may or may not be court-supervised which have also been
established to pay asbestos claims are not excluded by this
definition. In particular, trusts that essentially function as
an escrow account for purposes of paying asbestos claims or
trusts established pursuant to class action settlements are not
intended to be excluded by this definition. Only those trusts
that are active participants in asbestos litigation would
qualify as an ``asbestos trust''.
``Claimant,'' under paragraph (7), means the exposed person
or that person's legal representative, and any relative of an
exposed person, or their legal representative, who asserts an
asbestos claim. The committee notes that the claimant will
often not be the exposed person himself, but rather family
members and personal representatives.
``Defendant,'' under paragraph (11), means any person who
is or may be responsible for the asbestos-related condition of
the exposed person and who is named under title I. The term
does not include asbestos trusts, the Federal Government, or
State Governments. The committee intends that asbestos claims
against the Federal Government and State Governments will not
be subject to the jurisdiction of the OAC but may be brought in
other forums with jurisdiction under other law.
``Qualifying National Settlement Plan,'' under paragraph
(34), sets forth the criteria that a defendant's settlement
plan must satisfy in order to qualify for a 7-year exemption
from the act under section 704. Defendants may reapply for an
extended exemption.
``State,'' under paragraph (35), includes any State of the
United States, the District of Columbia, Commonwealth of Puerto
Rico, the Northern Mariana Islands, the Virgin Islands, Guam,
American Samoa, and any other territory or possession of the
United States. The term also includes any political subdivision
of the foregoing.
Title VII. Miscellaneous Provisions
Section 701. Applicability to Other Federal Laws
This section specifies the manner in which the bill is
intended to interact with other laws as well as with existing
trusts and settlements or settlement offers. First, the
Administrator may waive personnel and procurement laws and
regulations with the approval of the Director of the Office of
Management and Budget. Any such waivers granted by OMB must be
periodically reconsidered. The flexibility to be exempt from
certain of these statutes and regulations is indispensable if
the OAC is to address over 200,000 asbestos claims and achieve
the bill's strict time limits for processing claims. OMB should
act expeditiously and favorably on such requests, in
consultation with interested agencies such as The Office of
Personnel Management and the General Services Administration.
Second, the bill will not apply to existing asbestos trusts
(such as the Manville Trust) unless the trust elects to be
subject to the bill and notifies the Administrator of that
decision in writing. A trust's decision to be subject to the
bill cannot be revoked. Third, the bill does not invalidate any
settlement of asbestos claims entered into before the date of
enactment or revoke or negate any standing offer to settle
claims. This preserves both actual settlements and so-called
``futures agreements'' between defendants and certain law firms
representing asbestos claimants. Fourth, the bill does not
affect the scope or operation of either workers' compensation
or veterans benefits programs. In particular, the bill would
not authorize any lawsuit that is barred by the exclusive
remedy provision of workers' compensation laws. ``Workers'
compensation laws'' includes the Federal Longshore and Harbor
Workers Compensation Act, 33 U.S.C. sections 901-944, 948-50,
but it does not include the Federal Employer's Liability Act
(FELA), 45 U.S.C. chapter 2. FELA applies to occupational
injuries arising out of railroad work and resembles tort
litigation more than traditional workers' compensation
programs. See Metro-North Commuter R.R. Co. v. Buckley, 521
U.S. 424 (1997). Fifth, the bill does not affect any law
governing successor or transferee liability.
Section 702. Annual Reports
Section 702 requires the Administrator of the OAC to submit
an annual report to the President and the Congress.
Section 703. Enforcement
This provision allows the Administrator to seek enforcement
of the bill's provisions in Federal district courts. The
Federal courts have exclusive jurisdiction over such
proceedings without regard to amount in controversy or
diversity. If the Administrator's action is successful, the
Administrator will be entitled to costs and attorney's fees.
Thus, this provision gives the Administrator the authority to
enforce administrative assessments against defendants and,
through the award of costs and attorneys fees, provide another
incentive for defendants to avoid engaging in litigation with
the Administrator.
Section 704. Qualifying National Settlement Plan
The bill permits a defendant who is part of a Qualifying
National Settlement Plan to apply with the Administrator to
defer application of the bill to that defendant for up to 7
years. The term ``Qualifying National Settlement Plan'' is
defined in section 601(34) and would include, for example, the
``National Settlement Plan'' concluded between Owens Corning
Fibreboard and numerous plaintiffs' attorneys in 1998-1999. The
Administrator will determine whether to accept a defendant's
request for deferral according to rules that the Administrator
will promulgate. If the deferral is granted, claims against
that defendant will not be subject to the provisions of the
bill, except for those provisions relating to medical
eligibility, damages, the statute of limitations, come back
rights, class actions, joint and several liability, core claims
and the transition period. See Sections 201-207 and 501.
``Deferral applies to all costs for claims covered by the
deferred defendant's Qualifying National Settlement Plan. This
includes administrative costs. However, a deferred defendant
may not be assessed administrative costs for claims that are
resolved by the approved Qualifying National Settlement Plan.''
Section 705. Severability
If any part of the bill is found to be invalid, the
remainder of the bill will remain in effect.
Section 706. Settlement
For a period of 7 years after the date of enactment, a
claimant or a defendant may specifically enforce any written
settlement agreement that was agreed to by the claimant, or the
claimant's attorney, and the defendant before the date of
enactment. Such enforcement actions must be brought in a
Federal or State court where the claimant is currently
domiciled or where the claimant alleges exposure to asbestos.
Where the claimant is not the exposed person (as happens, for
example, with loss of consortium claims), that enforcement
action may be brought where the exposed person was exposed.
Operation of the Bill
Operating Cost Analysis
Introduction and Background
Operating costs under the committee bill fall into three
broad categories:
LOverhead and medical review costs;
LCosts of administrative adjudications; and
LCosts to the Trustee of administration and
litigation associated with the Trustee's settlement or
prosecution of claims against the defendants.
The bill contemplates that all of these operating costs (in
addition to any amounts paid to claimants in settlements or as
damages) will be borne by the defendants.
Peterson Worldwide (``Peterson''), a wholly owned
subsidiary of Navigant Consulting, Inc., has prepared an
analysis of these operating costs to defendants. Peterson's
analysis estimates start-up costs and annual operating costs
for each of the first five years after the Office of Asbestos
Compensation (OAC) becomes operational. Settlement payments
would not be treated as operating costs under Credit Reform Act
principles, and thus are not included in the Peterson analysis
because those costs must be accounted for in the credit
analysis of the Fund's costs and risks under that distinct
feature of the legislation. (See sections 103(b)(2) and 403.
The Fund's administrative and litigation costs, however, are
included.) Peterson also does not try to estimate the costs of
the medical testing program under section 306. The assumptions
that Peterson used to prepare its analysis were based on
industry experience, available data from defendants and others,
and estimates of projected impaired claimants prepared by
Chambers Associates.
Peterson concludes that the total cost of the program to
defendants, including start up and the first five years of
operation, would be $287 million. Start up expenses account for
$23.8 million of this total. The program would cost $85.2
million annually in the first two years of operation, which is
the amount of time the OAC will need to process the existing
backlog of pending cases. In the next three years, costs drop
to $30.9 million per year. During the last three years of
operation, the program will require 326 full time equivalent
(FTE) personnel. During the first two years, extra personnel
will be required to handle the existing backlog of claims and
the anticipated initially high rate of new filings.
Assumptions
Claim Flow Assumptions. The OAC will process the current
backlog of 200,000 cases within two years, not including some
months of startup time to hire and train staff. In the first
year, new claims will be filed at current levels (about
40,000), but new filings will decline over time. This is a
conservative assumption, since some portion of the current
backlog and the first year's new filings will consist of
unimpaired claims that will not be filed.
Peterson then projects the number of claims that will
qualify under the medical criteria of the bill, based on
Chambers Associates' projection of the incidence of impairing
asbestos-related disease. Peterson then estimates the number of
claimants who will opt out at various stages of the process,
the number who will settle with defendants or the trustee, and
the number that will proceed to administrative adjudication by
an Administrative Law Judge.
Organizational Assumptions. The Peterson model makes some
assumptions about how the OAC will be organized to process
claims efficiently and conveniently. Among these assumptions
are the following:
LThere will be one headquarters and six
regional offices.
LThe Administrator, Medical Director and
Trustee of the Asbestos Compensation Fund will each
head a division of the OAC with sufficient support
staff to perform their duties.
LMuch of the OAC's work, including medical
review, optional settlement proceedings involving the
Trustee of the Asbestos Compensation Fund, and hearings
before Administrative Law Judges, will take place in
the regional offices.
Conclusions
Peterson concludes that the following full time equivalent
(FTE) personnel will be required to handle the steady stream of
new asbestos cases following the first two years (after the OAC
has processed the existing backlog of cases):
------------------------------------------------------------------------
Total Personnel (FTE)
------------------------------------------------------------------------
Administrator's Office..................... 41
ALJ Offices (including Legal Assistance 60
Program).
Medical Director's Office.................. 169
Trustee of Asbestos Compensation Fund...... 44
Total OAC................................ 314
U.S. Court of Federal Claims............... 7
National Medical Advisory Committee........ 5
Total.................................... 326
------------------------------------------------------------------------
In order to handle the existing backlog of pending claims
and claims for medical testing reimbursements during the first
two years of operation, an additional 380-390 personnel (FTE)
will be required on a temporary basis. (Moreover, Peterson
estimates an initially higher rate of new filings that will
require 46 and 31 additional personnel (FTE), respectively, in
the first and second years of the program.) Under section
701(a), the OAC may, with the approval of the Office of
Management and Budget (OMB), waive personnel and procurement
laws and regulations to expedite the handling of asbestos
claims. The OAC is expected to use this authority, as
necessary, to hire additional short term staff and contract for
the needed facilities to meet the objective of processing the
backlog of pending claims as soon as possible, but in any event
within the first two years of operations.
Peterson estimates the cost of salaries and benefits for
the required positions--as well as the cost of necessary
equipment and facilities--based on price data in the locations
where the OAC is expected to have offices. Peterson concludes
that in the first two years the overall cost of the program
will be approximately $85 million per year. This declines to
$31 million per year in the last three years, after the backlog
of pending claims and claims for medical testing reimbursements
has been processed. The report's estimates of cost are as
follows:
------------------------------------------------------------------------
Year Costs
------------------------------------------------------------------------
Start-Up............................ $23.8
1 (including backlog)............... $85.2
2 (including backlog)............... $85.2
3................................... $30.9
4................................... $30.9
5................................... $30.9
Total Start-Up plus 5 Years......... $286.9
------------------------------------------------------------------------
In conclusion, Peterson predicts that the total operating
costs of the Asbestos Compensation Act of 2000, will be $287
million for start up and the first five years of operation. In
its size and scope, the OAC would be roughly comparable to the
Federal Mediation and Conciliation Service, which assists labor
and management in resolving disputes through mediation and
arbitration services. The Federal Mediation and Conciliation
Service has an annual budget of $39 million, and personnel of
292 (FTE).
Agency Views
U.S. Department of Justice,
Office of Legislative Affairs,
Washington, DC, March 8, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: This letter presents the views of the
Administration, updating the preliminary views of the
Department of Justice presented to you on October 26, 1999,
regarding H. R. 1283, the ``Fairness in Asbestos Compensation
Act of 1999.'' H.R. 1283 has changed considerably since our
last letter, which raised a number of issues and questions that
we have spent the last several months analyzing. In recent
weeks, we have received several amendments, including the
latest amendment, in the nature of a substitute, on March 3.\1\
We understand that the Committee has spent substantial time
crafting the legislation, and we have met with your staff and
others working on behalf of the proposed legislation. As we
have informed your staff, we remain interested in continuing
our dialogue about these very important and difficult issues.
---------------------------------------------------------------------------
\1\ While the latest amendment has not yet been introduced, we
understand that the Committee intends to make it a substitute for the
currently pending bill. Therefore, in this letter, ``H.R. 1283'' refers
to this amendment, entitled ``Asbestos Compensation Act of 2000.''
---------------------------------------------------------------------------
Like the Committee, the Department of Justice wants to see
asbestos claims processed fairly, efficiently, and quickly. We
share the same concerns and sympathies for the victims of
asbestos exposure. As the Committee knows, the diseases that
result from exposure to asbestos can cause great suffering, and
often lead to quick and painful deaths. Like the Committee, we
have considered at great length the question of how to ensure
prompt and appropriate compensation for individuals harmed by
exposure to asbestos. The question for both the Department and
the Committee, we believe, is whether the proposed solution
improves upon the status quo by ensuring faster and more
equitable compensation to asbestos victims. We could not
support any proposal that fails to improve the present system
or hinders the progress made in compensating asbestos victims.
We oppose H.R. 1283 for a number of reasons, including:
LThe process of compensating asbestos victims
has improved since the 1980s, when the last
comprehensive study on asbestos litigation was
completed. While the current system is not ideal, we
believe a new administrative process would undermine
progress that has been made.
LH.R. 1283 would deprive asbestos victims of
fair compensation, including victims who are
demonstrably sick as a result of exposure to asbestos;
LH.R. 1283 would transfer costs now borne by
defendant companies--who have been found legally
responsible for the harm caused--to asbestos victims
and the taxpayers; and
LH.R. 1283 would delay and worsen, rather than
accelerate and improve, compensation to the sick.
I. The Asbestos Litigation and Compensation Process Has Improved
Like the Committee, we have been concerned by reports that
the asbestos litigation and compensation process is an
``elephantine'' morass in need of reform.\2\ In evaluating the
state of asbestos litigation, the Supreme Court relied on a
study using data from the mid-1980s. For the past several
months, we have attempted to analyze the situation in asbestos
litigation today. To some extent, our efforts have been
hampered by the paucity of data and the absence of any more
recent comprehensive study of asbestos caseloads, settlements
and the like. Nevertheless, we are persuaded that the process
for compensating victims of asbestos exposure has improved
since the mid-1980s.
---------------------------------------------------------------------------
\2\ See Ortiz v. Fibreboard, 119 S. Ct. 2295, 2302 (1999).
---------------------------------------------------------------------------
First, in recent years the parties to the asbestos
controversy have settled hundreds of thousands of claims, a
marked improvement over the more adversarial culture that
permeated much of asbestos litigation at the time of the last
major study. Working together, the plaintiff and defense bars
have created a number of these private settlement mechanisms
and national settlement programs, all of which have hastened
the payment of claims to sick individuals, reduced the burden
on the courts, and brought greater financial certainty to a
number of defendants. For example, as the Committee was
informed in its July 1999 hearing, Owens Corning alone has
settled over 200,000 claims through the National Settlement
Program it initiated in 1998. Another example is the Louisiana
settlement agreement entered into by plaintiffs and defendants
in 1998, which is creating numerous additional settlements.
Second, as to the claims that do remain on the court
dockets, the courts have made considerable progress in managing
these caseloads. In particular, state and federal courts around
the country have instituted several case management controls
that harness the volume of asbestos claims and permit the
claims of the sickest victims to be expedited. These tools
include multi-district consolidation in the Federal courts, the
consolidation of similar claims for discovery and trial, and
procedures for those with less serious diseases to file claims
in court without actively prosecuting them (i.e., pleural
registries). This latter technique has resulted in a de facto
stay for many claims of the less impaired. Thus, in courts
utilizing pleural registries, even though the cases of the less
impaired constitute a large part of the pending case backlog,
they consume comparatively few judicial resources. In addition,
several states have created distinct causes of action for
different asbestos-related injuries, eliminating the incentive
for victims to rush to court at the first physical sign of
injury and permitting those who initially recover small amounts
for minimal injury to return to court if their condition
subsequently deteriorates.
Third, asbestos has become a ``mature'' tort, with many of
the basic liability questions resolved. Over the past decade,
the litigants have clarified some of the medical issues, made
progress on product identification, causation, and
apportionment of liability issues, and the defendant companies
have resolved a number of disputes with their insurers. This
has resulted in fewer disputes, less discovery, less repetition
in depositions and trials, and, as a consequence, a higher
percentage of available dollars going to the victims.
This is not to say, however, that the present state of
asbestos litigation is ideal. There are still a large number of
cases pending in the courts, and not every court system has
instituted the case management and prioritization techniques
used successfully by other courts. As a consequence, some cases
migrate to forums that are historically more favorable to
plaintiffs, resulting in inconsistent verdicts and settlements,
and some deserving victims are still compensated too slowly.
For the Administration, a key question is whether the
imperfections in the current system justify the substitution of
untested administrative procedures and standards for the
traditional court system. Given our concerns that the system
would not work as hoped and would benefit culpable defendants
at the expense of the victims and taxpayers, we think the case
for this untested system has not been made.
II. H.R. 1283 Would Exclude Many Asbestos Victims From Fair
Compensation
H.R. 1283 would create medical criteria according to which
asbestos victims would be determined to be medically eligible
or ineligible for compensation. At the outset, we note that
legislating medical criteria to limit recipients of asbestos-
related compensation sets standards that overstate the
precision of existing diagnostic testing; and it precludes the
incorporation of advances in medical knowledge by prescribing
standards that may soon be outdated. Further, the proposed
legislation does not foster fairness for people with diseases
resulting from asbestos exposure.
First, the medical criteria in H.R. 1283 would result in
sick people being denied compensation for their injuries. Even
if we were to accept the proponents' avowed purpose of
eliminating the claims of the non-sick while preserving the
claims of the sick, the medical criteria in H.R. 1283 would not
accomplish that goal. Experts from the Department of Health and
Human Services, as well as many in the medical community, have
indicated that the proposed medical criteria are too
restrictive and would result in the denial of compensation to
many injured and impaired patients.
For example, the proposed medical criteria for asbestosis
would require a claimant with evidence of obstructive disease
on lung function testing to demonstrate high levels of fibrosis
on chest x-rays as well. Yet, as our colleagues at HHS have
informed us, asbestos exposure may cause a mixed obstructive
and restrictive pattern and, in some instances, cause
predominantly obstructive disease. In addition, the use of
objective norms to measure the lung function of every claimant
treats all claimants as if their normal lung function is
identical. This, of course, is not the case. Some patients may
have pre-exposure lung functions well above average and may
lose more than 20% of their lung capacity, yet fail to meet the
lung function criteria in the proposed bill. H.R. 1283 would
deny compensation to these people who have been demonstrably
impaired by their exposure to asbestos. Further, patients with
asbestosis may have shortness of breath with exertion and
functional impairment demonstrated by reduced arterial
oxygenation during exercise, yet not meet the lung function
criteria in the bill. In addition, H.R. 1283 understates the
degree of injury experienced by individuals with pleural
disease who fail to meet the lung function criteria, and does
not adequately provide screening for these individuals. As a
result of the proposed medical criteria, we are informed that
physically impaired asbestos victims would be denied
compensation.
Second, the medical criteria of H.R. 1283 would eliminate
many existing causes of action and injuries compensable under
current state law. In many jurisdictions, for example,
plaintiffs are entitled to sue and recover for scarring of the
lungs or for an increased risk of lung cancer as a result of
exposure to asbestos, regardless of impairment. Under H.R.
1283, those claims would no longer be recognized, prohibiting
claimants exposed to asbestos from obtaining compensation. At
best, the claimants alleging such injuries could recover
reimbursement of medical monitoring costs, as compared to the
significant compensation they might receive today. Section
306(a). In a system in which those who are not yet physically
impaired are denied the right to bring a claim, it is unlikely
that the plaintiffs' bar, which currently finances and
facilitates much of the medical monitoring of the less
seriously impaired, would have the necessary financial
incentive to pursue claims for medical monitoring. As a result,
many victims who today receive the peace of mind and prompt
medical attention that results from medical monitoring--at
little or no cost to the victims--would be denied that benefit.
Third, H.R. 1283 would make it effectively impossible for
many victims of asbestos exposure, who also were smokers, to
recover compensation from asbestos defendants for the damage
done to them by asbestos. H.R. 1283 would prohibit presumptive
eligibility for lung cancer victims, where the claimant has a
``substantial history of smoking'' and does not have a
qualifying non-malignant condition. Section 304(b). As many
experts have stated, the interaction of smoking and asbestos
exposure is synergistic, and smokers exposed to asbestos are at
an exponentially greater risk of developing lung cancer than
smokers without asbestos exposure. Among those heavily exposed,
for example, 80% of all lung cancers would have been eliminated
in the absence of asbestos exposure, even had smoking habits
not been changed.\3\ Thus, contrary to the implication of H.R.
1283, many lung cancers involving both a substantial history of
smoking and significant asbestos exposure would not have
occurred but for the asbestos exposure. As for the requirement
that lung cancer be accompanied by a qualifying non-malignant
condition, HHS advises us that many studies have clearly shown
that asbestos is a carcinogen and causes cancer independent of
causing non-malignant disease, again contrary to the
implication of H.R. 1283. In short, H.R. 1283 would prevent
many victims of lung cancer from recovering compensation for a
primary cause of their cancer--asbestos exposure.
---------------------------------------------------------------------------
\3\ See, e.g., A. Ritzen and L. Rosenstock, The Misuse of
Epidemiology and Apportionment in Compensation for Occupational
Disease, New Solutions, Winter 1993, at 29-36. R. Saracci, Interaction
and Synergism. 12 American Journal of Epidemiology 465-466 (1980).
---------------------------------------------------------------------------
Fourth, H.R. 1283 would prohibit courts from awarding
punitive damages to victims. Section 202. Under H.R. 1283,
punitive damages would be available only in administrative
adjudications, thus diluting any right to opt out to a
traditional court and eliminating the already-rare phenomenon
of court-imposed punitive damages. Yet, even in the
administrative context, where any possible concerns over jury-
applied punitive damages would be eliminated, the legislation
would make punitive damages available only where a ``conscious,
flagrant indifference'' to a claimant was ``the proximate
cause'' of the injury. And even if the claimant could satisfy
this standard, he or she would be severely limited as to the
amount of punitive damages available for past bad acts by
culpable companies. Section 208(d). As we have stated with
regard to other tort reform legislation, punitive damages serve
an important deterrent function.
III. H.R. 1283 Would Impose Unwarranted Costs on Asbestos Victims and
Taxpayers
In addition to our concerns with the medical criteria and
the exclusion of asbestos victims, we have a number of concerns
with the economic impact of the legislation. Specifically, we
believe that H.R. 1283 would provide unwarranted benefits to
asbestos companies to the detriment of victims of asbestos and
the taxpayers.
First, to the extent that it is unable to recover from
defendants the recommended aggregate settlement that it has
already paid to claimants, the Asbestos Compensation Fund--the
entity charged with paying claimants--would be required to
reduce future recommended aggregate settlements, taking into
account the outstanding deficit. Section 402(a)(4). This
provision, in effect, creates an incentive for defendants to
avoid paying the government in a timely manner, if at all, on
the assumption that a deficient Fund reduces settlement values
and therefore defendants' ultimate expense. Ultimately, this
would lead to lower settlement values for deserving victims.
Second, although the stated intention of the program is for
defendants ultimately to cover all expenses, under H.R.1283,
the Federal Treasury could advance the Office of Asbestos
Compensation (the ``OAC'') up to $100 million in start-up
funds. Section 403(a). Past programs in which the Federal
government has advanced funds have been largely unsuccessful in
trying to recover from responsible parties. In programs such as
the Black Lung Benefits Act and the Comprehensive Environmental
Response, Compensation and Liability Act (the CERCLA
Superfund), the government spent considerable resources to seek
reimbursement from responsible parties, and yet in many
instances failed, leaving the taxpayers to subsidize the
programs, or reducing future settlements to cover the
shortfall. Similarly, we are concerned that the defendant
companies may not pay for all of the costs associated with the
administration of the OAC.
Third, to the extent that less seriously injured claimants
seek medical monitoring expenses, it is likely that the U.S.
government would be left holding the bill. Unlike other parts
of the legislation, no mechanism is even proposed for the
defendants to fund medical monitoring. By contrast, the bill
contemplates yearly non-administrative appropriations by the
U.S. of up to $150 million, which would not be reimbursable.
Section 403. It appears that payment for medical monitoring
would be drawn from these appropriations.\4\ In the coming
years, therefore, the government could be required to pay
billions of dollars for injuries caused by the asbestos
companies. We see no justification for the taxpayers to assume
such a liability from the defendant companies, particularly in
light of the fact that courts consistently have found the
asbestos companies legally responsible for asbestos-related
harm.
---------------------------------------------------------------------------
\4\ An earlier draft of the bill specified appropriations of $200
million annually for certain medical monitoring reimbursements. That
provision has been excised from the current draft with no new provision
to provide such funding.
---------------------------------------------------------------------------
As we understand it, one of the justifications offered for
this taxpayer subsidy is that the United States should share in
paying for the asbestos problem. This argument does not fully
account for the substantial sums that the United States already
has spent as a result of the asbestos problem. Over the past
thirty years, the government has paid billions of dollars in
health, medical, research, and abatement costs to address the
problems created by the marketing and sale of asbestos
products. Similarly, in the coming years U.S. taxpayers can
expect to pay additional billions in such costs, without the
additional financial burden placed on them by this legislation.
To the extent the Committee believes the government should pay
even more because the United States shares culpability with the
asbestos companies for the sale and distribution of asbestos
products, we believe that premise is misguided. Virtually every
court has rejected the assertion that the United States is
culpable for the harms inflicted by asbestos. Significantly,
these rulings were based not on immunity doctrines but on
factual findings that the liability of asbestos defendants
should not be placed upon the United States. As one court
concluded, the effort by the asbestos companies to transfer
culpability to the government is a ``grossly misplaced''
attempt to ``impose the woes of asbestos compensation upon the
customer [the United States] whom they actively pursued.'' \5\
Another court, after conducting a six-week trial on the issue,
rejected the assertion that ``the Government sacrificed the
health of shipyard workers to the war effort.'' Instead, the
court concluded, based on the facts, that ``the Government took
reasonable health and safety measures regarding asbestos use in
the shipyard environment. . . .'' \6\
---------------------------------------------------------------------------
\5\ Glover v. Johns Manville, 525 F. Supp. 984, 986 (E.D. Va.
1979), aff'd in part, vacated in part and remanded, 662 F.2d 225 (4th
Cir. 1981).
\6\ Johns Manville v. United States, 13 Cl. Ct. 72, 133 (1987),
vacated on jurisdictional grounds, 855 F.2d 1571 (Fed. Cir. 1988); see
also GAF v. United States, 19 Cl. Ct. 490, 499 (1990) (rejecting GAF's
assertion that ``the Government knowingly exposed its employees to
asbestos hazards''), aff'd, 932 F.2d 947 (Fed. Cir. 1991), cert.
denied, 502 U.S. 1071 (1992).
---------------------------------------------------------------------------
Taken together, these various provisions, along with the
elimination of many claims through the imposition of H.R.
1283's medical criteria, result in a massive transfer of
funds--billions of dollars--to the defendant companies,
financed by asbestos victims and taxpayers. We see no
justification for such a significant subsidy, particularly
given the fact that so many courts and juries have found
asbestos companies liable to the people who have been exposed
to their products.
We understand that some have asserted that cost-shifting is
required to ensure the continued viability of defendant
companies so that they will continue to have the capacity to
compensate sick victims in the future. We agree that preserving
the assets of companies in order to compensate sick victims is
vital. However, proponents of H.R. 1283 have not demonstrated
that the financial health of asbestos defendants, taken as a
whole, is so dire as to require a large subsidy of the sort
envisioned by H.R. 1283. The Treasury Department has examined
publicly available information regarding a number of asbestos
defendants. While the industry has seen bankruptcies in the
past two decades, public filings (10K and 10Q reports) by many
major industry participants do not indicate financial distress;
to the contrary, their statements often inform shareholders and
others that asbestos-related liabilities will not have a
material impact upon the present or future financial
performance of the companies. In fact, over the past decade,
many of these companies successfully have recovered, or made
agreements to recover, billions of dollars in insurance
coverage. We do not doubt that some companies may be in
distress due to asbestos-related liabilities, but we have not
seen the kind of compelling financial data, on an industry-wide
basis, to justify shifting the economic responsibility of these
injuries from the culpable corporate defendants and their
shareholders to the victims and the taxpayers. In addition, the
Treasury Department informs us that some companies that have
chosen to work cooperatively with plaintiffs to resolve their
asbestos-related liabilities could be placed at a competitive
disadvantage by H.R. 1283. Public policy should not seek to
reward defendants that have chosen not to settle at the expense
of those firms that have acknowledged their responsibility.
IV. H.R. 1283's Administrative System Would Delay Compensation to the
Sick, Not Make It Better or Faster
While one of the stated goals of H.R. 1283 is to speed
compensation to deserving claimants, our analysis of the
proposal indicates the opposite. In our view, H.R. 1283 would
delay compensation to sick victims of asbestos exposure.
A. Start-up Delays
The creation of an administrative structure to handle a
large number of claims inherently requires a multitude of steps
and decisions before that structure can begin to process the
claims of the sick. Of necessity, these steps and decisions
delay the processing of claims for those cases that are already
pending. Based on our experience administering several
compensation programs, we are convinced such delay would result
were H.R. 1283 to be adopted.
First, we believe it would take a considerable amount of
time to establish and effectively operate the proposed Office
of Asbestos Compensation (``OAC''), which would serve both
administrative and adjudicatory functions. As we read H.R.
1283, the OAC likely would need to hire and/or contract with
hundreds, and perhaps over a thousand employees--including
lawyers, physicians, claims reviewers, and administrative
personnel--before it could adequately handle the large number
of cases that would confront the OAC initially.
In this regard, a comparison to the National Vaccine Injury
Compensation Program, established more than a decade ago, is
instructive. That program processes cases that, while often
medically complex, are nevertheless more streamlined than the
average asbestos case in that vaccine cases do not require
resolution of difficult and fact-intensive issues such as
allocation, apportionment, or the exercise of subrogation
rights against the industry. Yet, the vaccine program utilizes
approximately 100 staffers in various agencies to handle the
approximately 700 cases currently pending before it, and has
resolved approximately 5,000 cases in its entire eleven-year
history. We are concerned that, given similar staff-to-claim
needs and even assuming some economies of scale accompanying
the larger volume of asbestos cases, the OAC may need to hire a
very large number of people to process the tens of thousands of
claims that would be filed upon the commencement of OAC
operations.
Second, in addition to hiring and training all of these
people, the OAC, no matter how well-intentioned and diligent in
purpose, would face further delays in opening due to the
complex and controversial rules that would have to be
promulgated before any claim could be processed. For example,
as we read H.R. 1283, before processing a claim, the OAC must
develop, based on difficult-to-obtain historical data, a
``compensation grid'' on which offers to the asbestos claimants
would be based. Section 103(b)(2). The legislation appears to
recognize the difficulty of this exercise by providing the OAC
with subpoena power to collect information about prior
settlements. Section 107(c). It is almost certain that
litigants would challenge the process of developing this grid.
This is precisely what occurred in the vaccine program, which
has developed and modified its own compensation grid.
Litigation and disputes over the development of the
compensation grid would further delay compensation to the sick.
Third, the processing of asbestos claims would be further
delayed by satellite litigation on at least two significant
issues. First, even once developed, the ``compensation grid''
would lead to more litigation when affected parties were not
satisfied by the outcome. Second, the medical criteria, and the
controversy surrounding them, would lead to new litigation and
multiple appeals. For example, the parties to the asbestos
claims process almost certainly would litigate and appeal
multiple questions involving claimants with asbestos-related
lung cancer and a history of smoking. The uncertainty resulting
from this litigation over new questions--which the parties, not
the OAC, would initiate--would further delay compensation to
asbestos victims facing progressive asbestos-related illness.
This delay in establishing the OAC is crucial because
during this interim, start-up period, most of the pending
asbestos claims would almost certainly grind to a halt.
Although the bill allows for current claimants to continue with
their case in court if trial commences within six months of the
bill's enactment (Section 501(b)), only a marginal percentage
of asbestos cases currently make it to trial, let alone within
six months. Similarly, although the bill permits claimants to
demand ``right to sue'' letters from the OAC if they do not
receive an initial decision on medical eligibility quickly,
that right is limited to those rare claimants with ``a
scheduled trial date within one year'' after enactment. Section
501(c). In any event, even if a few claimants could return to
court before the OAC was operational, the prospective change in
the law that the bill represents (and, in particular, the
development of the compensation grid) almost certainly would
alter the defendants' litigating positions and create
incentives to defer litigating and settling the pending cases
until the OAC process sorted itself out. Therefore, for the
years that it would take for the OAC to become operational,
while many victims' disease would progress, their claims would
not.
Again, a comparison to the vaccine program is illuminating.
Although the National Childhood Vaccine Injury Act was passed
by Congress in 1986, the vaccine program did not issue its
first award for several years. In the interim, during the years
it took to establish the vaccine office, most cases were stayed
by the courts and little settlement progress was made. Once the
vaccine claims resolution process commenced, it took twice as
long to resolve claims as was predicted at the time the
legislation was drafted (two years instead of one). Indeed,
with the backlog created by the initial filing of approximately
4,300 cases by 1990, the vast majority of vaccine cases were
not resolved in even two years. Thus, our experience indicates
that, with the erection of any new administrative structure,
pending cases tend to be delayed far longer than anticipated,
no matter how well intentioned or diligent the staff. The
result is delayed justice for deserving victims.
B. Delays in the Claims Resolution Process
Once the OAC was finally up and running, the proposed
claims resolution process would not, in our view, materially
improve upon the traditional court system. H.R. 1283's claims
processing procedures would require a number of steps for each
individual. First, as we understand the bill, a claimant would
have to submit a detailed, complete medical file before a claim
was considered filed. Section 102(b). Our experience with
asbestos litigation indicates that it would often take months
to complete such a file. Second, once the claim was
successfully filed, the claimant would be required to wait up
to thirty days for the Medical Director to make an initial
decision regarding eligibility. If initially denied, the
claimant would then be obligated to petition for review by a
panel of two qualified physicians or an exceptional medical
claims panel. Section 102(c). If the denial were affirmed by
the review panel, the claimant would then seek further review
through an appeal to the Court of Federal Claims, and
ultimately to a U.S. Court of Appeals. Section 106.
Third, for a claimant determined to be medically eligible,
if the claimant decided to use the administrative system, he/
she would have to name all defendants and submit a verified,
particularized statement providing, with respect to each
defendant, the basis for the allegation. The amount of time
permitted for such a filing is not yet determined. Section
103(a)(2). Fourth, upon finding that the claimant's statement
met the requirements of the bill, the Administrator would have
to provide notice to each named defendant. The Administrator is
not given a deadline for doing so. Section 103(a)(3).
Fifth, each named defendant in turn would have the right to
assert third party claims, and likely would be entitled to
discovery for the purpose of obtaining information necessary to
identify all such additional defendants. This discovery, to be
determined by an Administrative Law Judge, would not be subject
to statutory or regulatory deadlines and could itself take
months, particularly given the history of disputes regarding
the allocation of responsibility among asbestos defendants.
Section 103(a)(4).
As we read H.R. 1283, it is only after these five events
occur that the claimant would be entitled to receive a good
faith settlement offer from the named defendants. It is
entirely likely that a claimant under the new administrative
system would face a substantial wait before receiving even an
initial settlement offer, let alone full compensation. That is
not a material improvement over the current system. Indeed, for
many claimants, the wait to work their way through the system
would follow the wait for the system to be erected, resulting
in years of delay in compensation to the sick.
Moreover, even if a claimant is able to resolve his or her
claim, H.R. 1283 would create the likelihood of bitter
litigation over one of the most contentious issues in asbestos
suits: apportionment of liability among the defendant
companies. In many cases, it is this dispute which occupies the
most time and resources. Rather than attempt to reduce this
litigation, the legislation would insert the U.S. government
further into the maelstrom, by obliging the Trustee to litigate
against defendants in an effort to recover the funds awarded to
the claimant. Section 104. The Trustee would be prohibited from
even acknowledging in court the fact or the amount of the
settlement for which it is seeking reimbursement. Section 209.
Meanwhile, the defendants would remain as capable and likely as
they are today to attempt to elude paying their appropriate
share of liability. Given the litigation history over
apportionment of liability, we believe years of litigation
would be likely, involving the U.S. government in matters that
previously have remained a private dispute, and--to the extent
the defendants were successful individually in defeating U.S.
attempts to recover the full settlement amount--leaving the
taxpayer to pay the difference and reducing the funds available
to victims in future settlements.
Finally, one aspect of H.R. 1283 raises constitutional
concerns. H.R. 1283's provision for the appointment of the
OAC's Medical Director by the Administrator of the OAC, Section
101(c), appears to run afoul of the Appointments Clause. The
Director is an inferior officer whose appointment must be
vested ``in the President alone, in the Courts of Law, or in
the Heads of Departments.'' Because the Attorney General may
remove the Administrator of the OAC for cause (see Section
101(a)), we do not believe the Administrator to be the head of
a department for purposes of the Appointments Clause.\7\
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\7\ In addition to this concern, and the constitutional concern we
raised in our letter of October 26, 1999, H.R. 1283 contains no
congressional findings regarding the problems caused by the current
approach to asbestos litigation, including its impact on victims, on
the judicial system, and, most importantly, on interstate commerce.
This may make it less likely that H.R. 1283 would withstand
constitutional challenge under the Commerce Clause.
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To be clear, the concerns we express about H.R. 1283 do not
stem from a ``can't-do'' attitude, or from any objection that
the Department of Justice, as opposed to another federal
agency, is tasked with developing this proposed administrative
process. If this bill were enacted, the Department of Justice
would embrace this challenge with dedication to our statutory
responsibilities and to the need to speed compensation to
deserving claimants. Our concerns arise, regrettably, from our
experience with similar administrative systems and our decades-
long experience with asbestos litigation.
* * * *
As we noted at the outset, we remain interested in a
dialogue with the Committee on how to improve the present state
of asbestos compensation, which is far from perfect. However,
to the extent that any legislation would improve the process,
one might do better by building upon developments in the
current system than by erecting new structures of the type
proposed by H.R. 1283. As we have informed your staff, we
remain willing to work with the Committee on this issue and to
evaluate any other proposal for improving the present state of
asbestos compensation.
Thank you once again for this opportunity to present our
views. The Office of Management and Budget has advised us that
from the standpoint of the Administration, there is no
objection to submission of this letter. Please do not hesitate
to call upon us if we may be of further assistance.
Sincerely,
Robert Raben, Assistant Attorney General.
cc:
Honorable John Conyers, Jr.
Ranking Minority Member
Judicial Calls for Federal Legislation
Federal Courts. Many in the judiciary have long recognized
the need for legislative action to resolve the asbestos
litigation crisis. In 1991, the U.S. Judicial Conference Ad Hoc
Committee on Asbestos Litigation, appointed by Chief Justice
William Rehnquist, found that the typical asbestos case took 31
months--nearly three years--to wind its way to resolution
through the court system, compared with 18 months for the
typical liability suit. The report issued by the Ad Hoc
Committee called on Congress to address the asbestos litigation
crisis, writing that ``the ultimate solution should be
legislation recognizing the national proportions of the
problem,'' and that ``[i]n the final analysis . . .
Congressional action is necessary.'' These findings were
supported by statistics developed by the Rand Institute for
Civil Justice, which found that attorneys' fees and other
transaction costs consumed sixty-one percent of asbestos
litigation, leaving only thirty-nine percent to compensate
claimants.
In 1993, the Third Circuit in Dunn v. HOVIC, 1 F.3d 1371
(3d Cir. 1993)(en banc), the court wrote that:
``. . . both state and federal courts have recognized
that no single court can fashion an effective response
to the national problem flowing from mass exposure to
asbestos products.'' Id. at 1386.
Again in 1996, the Third Circuit in Georgine v. Amchem
Prods., Inc. 83 F.3d 610, (3d Cir. 1996), stated that asbestos
litigation required:
``innovation in the management of mass tort litigation
. . . But reform must come from the policy-makers, not
the courts. . . . The most direct and encompassing
solution would be legislative action.'' Id. at 633.
In 1997, the United States Supreme Court in Amchem Prods.,
Inc. v. Windsor, 117 S. Ct. 2231 (1997), ruled that a massive
global settlement of asbestos-related claims was invalid under
the Federal Rule of Civil Procedure 23 (b)(3)--the rule
governing class actions in federal courts. Justice Ginsburg,
writing for the Majority, stated:
``The argument is sensibly made that a nationwide
administrative claims processing regime would provide
the most secure, fair, and efficient means of
compensating victims of asbestos exposure. Congress,
however, has not adopted such a solution. And Rule 23 .
. . cannot carry the large load . . . heaped upon it.''
Amchem, 117 S. Ct. at 2253.
Justice Stephen Breyer, concurring in part and dissenting
in part, observed that asbestos litigation has weakened the
judiciary while leaving victims uncompensated. Id. at 2252.
Justice Breyer pointed to the overwhelming evidence provided by
the Ad Hoc Committee, which detailed the chaos asbestos
litigation has levied upon the judiciary, to suggest that if
the majority was unwilling to accept the global settlement as a
means to fix the problem, some other solution was necessary.
Id.
In 1998, the Fifth Circuit in Cimino v. Raymark Industries,
Inc., 151 F.3d 297, 313 (5th Cir. 1998) (quoting Jackson v.
Johns Mansville Sales Corp, 750 F.2d 1314, 1327 (5th Cir.
1985), cert. denied, 478 U.S. 1022 (1986)), the court wrote
that:
``[T]here is no doubt that a desperate need exists for
Federal legislation in the field of asbestos
litigation. Congress' silence on the matter however,
hardly authorizes the federal judiciary to assume for
itself the responsibility for formulating what
essentially are legislative solutions.''
In 1999, the United States Supreme Court in Ortiz v.
Fibreboard Corp., 119 S. Ct. 2295 (1999), ruled that a massive
global settlement of asbestos-related claims was invalid under
the Federal Rule of Civil Procedure 23 (b)(1)(B)--the rule
governing ``limited fund'' class actions in federal courts.
Justice Souter, writing for the majority, stated:
``this case is a class action prompted by the
elephantine mass of asbestos cases, . . . this
litigation defies customary judicial administration and
calls for national legislation.'' Id. at 2302.
Chief Justice Rehnquist, writing the concurring opinion,
stated:
``Under the present regime, transactional costs will
surely consume more and more of a relatively static
amount of money to pay these claims . . . the
`elephantine mass of asbestos cases,' cries out for a
legislative solution.'' Id. at 2324.
State Courts. State Courts, too, have recognized that a
federal legislative solution to the asbestos litigation morass
is required.
In 1986, the Supreme Court of New Jersey in Fischer v.
Johns-Manville Corp., 512 A.2d 466, 480 (N.J. 1986), wrote
that:
``[a]t the state court level we are powerless to
implement solutions to the nationwide problems created
by asbestos exposure and litigation arising from that
exposure.''
In 1994, the Supreme Court of Florida in W.R. Grace & Co.--
Conn. v. Waters, 638 So.2d 502, 506 (Fla. 1994), wrote that:
``[a]ny realistic solution to the problems caused by
the asbestos litigation in the United States must be
applicable to all fifty states. It is our belief that
such a uniform solution can only be effected by federal
legislation.''
In 1996, the West Virginia Supreme Court of Appeals in
Appalachian Power Co. v. MacQueen, 479 S.E.2d 300, 304 (W. Va.
1996), also cited the need for Congressional action:
``Congress by not creating any legislative solution to
these problems, has effectively forced the courts to
adopt diverse, innovative and often non-traditional
judicial management techniques to reduce the burden of
asbestos litigation that seem to be paralyzing their
active dockets.'' Id.
In 1998, the Supreme Court of Texas in Owens-Corning
Fiberglass Corporation v. Malone, 972 S.W.2d 35, 53 (Tex.
1998), wrote that:
``it may be that a truly uniform solution can only be
fashioned by either the Supreme Court or Congress.''
Dissenting Views
We strongly oppose H.R. 1283, the so-called ``Asbestos
Compensation Act of 2000.'' H.R. 1283 is an unjustified Federal
intrusion into State tort law that purports to resolve the
``asbestos litigation crisis'' by cutting off viable claims of
exposed workers. Instead of creating an administrative
alternative to the civil justice system to provide fair and
speedy compensation to injured workers, the effect of this bill
would be to free corporations from their responsibility to
compensate victims injured by asbestos exposure. H.R. 1283 is
opposed by the Department of Justice,\1\ the AFL-CIO,\2\ Public
Citizen,\3\ the National Council of Senior Citizens \4\ and the
Association of Trial Lawyers of America,\5\ among others. The
legislation is expected to be vetoed should it reach the
President's desk.
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\1\ See Letter from Assistant Attorney General Robert Raben, U.S.
Department of Justice, Office of Legislative Affairs, to Chairman Henry
Hyde, (March 8, 2000) (on file with the minority staff of the House
Judiciary Committee) [hereinafter DOJ Letter].
\2\ See Letter from Peggy Taylor, President, AFL-CIO, to Chairman
Henry Hyde, (February 14, 2000) (on file with the minority staff of the
House Judiciary Committee) [hereinafter AFL-CIO Letter].
\3\ See Letter from Joan Claybrook, President, Public Citizen, to
Ranking Member John Conyers, (March 7, 2000) (on file with the minority
staff of the House Judiciary Committee) [hereinafter Public Citizen
Letter].
\4\ See Letter from George J. Kourpias and Steve Protulis, National
Council of Senior Citizens, to Members of Congress, (February 9, 2000)
(on file with the minority staff of the House Judiciary Committee).
\5\ The Fairness in Asbestos Compensation Act of 1999: Hearing on
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999)
(statement of Richard Middleton, Jr., President, ATLA) [hereinafter
ATLA Testimony].
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H.R. 1283 establishes an Office of Asbestos Compensation
(``OAC''), headed by an Administrator in the Department of
Justice (``DOJ''), in which all asbestos complaints must be
filed. Once the program is set up--which is likely to take
several years--and a complaint is filed, a Medical Director
determines whether a claimant meets the restrictive medical
criteria outlined in the bill. If the criteria are met, the
named defendants are then required to make settlement offers to
the claimant. The Trustee of the Asbestos Compensation Fund is
also required to make an offer of compensation to the claimant,
based on a compensation grid to be established by rule. If the
claimant accepts the defendants' offers, the claim is settled.
If the claimant accepts the Fund's offer, the Trustee may then
enforce the claim against the defendant companies through
litigation before a DOJ administrative law judge or in State or
Federal Court. If the claimant rejects both the Fund's offer
and the defendants' offers, he may pursue the claim either
before a DOJ administrative law judge or in State or Federal
court, subject to numerous restrictions on their rights under
State tort law. The legislation has a retroactive effective
date and would preempt all asbestos claims currently pending in
Federal and State court.
In our view, the test for crafting asbestos legislation is
whether it improves the situation of the victims of asbestos as
a whole. Unfortunately, H.R. 1283 does not meet this test in a
number of important respects. First and foremost, the bill's
medical criteria provide that many victims who would be
eligible for recovery under the longstanding traditions of tort
law in our States would be shut out arbitrarily by Congress.
The minimum exposure and latency requirements will deny
compensation to many asbestos supervisors and clean-up workers.
The criteria will also exclude many spouses and children of
workers who contracted cancer from their contact with asbestos
workers and their clothes--like those in Libby, Montana.
In addition, we believe opt-in is effectively laying your
fairness cards on the table. If you really believe this bill is
fair, then why not give the victims the right to make that
determination themselves? Under Amchem Products, Inc. v.
Windsor (Georgine),\6\ a model the proponents of this bill
repeatedly invoke, all of the victims had an absolute right to
choose whether to opt into the plan, and 170,000 chose not to.
However, the proponents propose a perverted version of this.
You can ``opt-out'' of the administrative system and into the
courts only if you survive the contorted medical criteria. That
means that tens if not hundreds of thousands of victims will
never get any choice.
---------------------------------------------------------------------------
\6\ Amchem Products, Inc. v. Windsor, 117 S.Ct. 2231 (1997).
---------------------------------------------------------------------------
Moreover, the new administrative maze will create more, not
fewer, delays. Under the bill, every single claim--no matter
how sick the victim--will be placed in legal limbo for as long
as it takes to create the massive new legal bureaucracy,
promulgate and litigate a dozen new rules, and obtain funding.
Even once the bureaucracy is set up, the delays will go on and
on. Claimants will face nearly a dozen separate steps--each one
subject to lengthy delay and litigation--before they can obtain
any compensation.
The legislation's regressive new ``tort reforms'' will
reduce the value of the few claims which become eligible for
compensation. The bill narrows and caps punitive damages,
limits legal fees, limits class actions, and narrows venue all
on behalf of a special interest. Harm caused by asbestos
constitutes perhaps the most grievous tort in American
history--to date hundreds of thousands of individuals have been
killed, and millions more have been harmed. Given that asbestos
manufacturers have known since the early part of the 1900's
that the fiber would kill workers and harm their families, and
that they have sought to avoid responsibility for their actions
and fight efforts to ban its use, these tort reforms send a
shocking message about corporate accountability.
We also strongly object to the legislation's retroactive
effective date, which will preempt all 200,000 cases pending in
the courts today. The so-called exemption for cases which reach
trial within the next 6 months is next to worthless, since even
these cases will be subject to the restrictive new medical
criteria. The net effect will be to bail out wrongdoers and
shift liability to victims and the Federal Government. For
these and the following reasons, we dissent from this
legislation.
I. The ``litigation crisis'' is vastly overblown and based on dated
information.
The principal purported justification for this legislation
is that we are in the midst of an asbestos litigation crisis,
with a supposed ``elephantine mass'' of pending cases which
will lead to the bankruptcy of most of the remaining asbestos
companies.\7\ We cannot agree with this contention. First,
there is no data showing that asbestos litigation is any more
time consuming or expensive than any other type of product
liability case. Indeed, because of the widespread harm caused
by these products and the 25 years of litigation that have
settled the major liability issues, asbestos is now a mature
tort. Thus, asbestos cases today are less time consuming and
less expensive to pursue than other types of tort actions. The
vast majority of these cases are being settled--with the 20
companies in the Center for Claims Resolution settling
approximately 99.8% of their cases, and with defendants such as
Owens Corning having agreed to a voluntary settlement program
for 180,000 of its claims. At the committee hearing on H.R.
1283, Owens Corning's General Counsel, Maura Abeln, stated that
``there is a viable alternative to legislation--a settlement
process which protects the rights of individual claimants and
permits companies to manage their own financial destiny.'' \8\
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\7\ Ortiz v. Fibreboard Corp., No. 97-1704, 1999 WL 412604, at 5
(U.S. June 23, 1999).
\8\ See ATLA Testimony at 4.
---------------------------------------------------------------------------
Moreover, Federal court procedures are particularly
streamlined, with all Federal cases having been consolidated
for procedural purposes in a single court in Philadelphia.
According to ATLA President Richard Middleton:
[I]t is simply inaccurate to any longer claim that
asbestos litigation is placing an undue burden on the
courts. As statistics clearly show, claims filed do not
translate into cases tried. The vast majority of cases
do not take up the time of the courts. Although many
new cases are filed each year, large numbers are placed
on inactive dockets and most other claims are settled
under private agreements. In fact, according to
Mealey's Asbestos Litigation Report, during 1998 only
55 asbestos cases involving 125 individuals proceeded
to verdict in the 50 States and all Federal courts, a
45% decline from 1997--and clearly a negligible number.
We also note that the courts are already providing the
needed flexibility so that cases involving persons who are
seriously ill may move to the front of the litigation line. A
Public Citizen survey has found that, at both the State and
Federal levels, courts have adopted ``gatekeeper'' mechanisms
which prioritize the claims of plaintiffs with more advanced
illnesses and allow stays for less impaired individuals. This
has been accomplished through the use of pleural registries
(which allow persons with less serious diseases to file claims
in court without actively prosecuting them) and by the
widespread allowance of distinct causes of action for different
asbestos-related injuries. Thus, it appears that because many
of the problems that the courts confronted during the last
decade have been eliminated, the federally mandated
administrative system proposed in H.R. 1283 will only serve to
create new and lengthy delays for injured asbestos victims.
We also find little evidence to support the proponents'
claim that the legislation is needed because we will otherwise
face a growing stream of bankruptcies by defendant companies.
It is instructive to note that the Treasury Department has
examined publicly available information regarding a number of
asbestos defendants and found the Majority's arguments
unpersuasive. They concluded, ``[w]hile the industry has seen
bankruptcies in the past two decades, public filings (10K and
10Q reports) by many major industry participants do not
indicate financial distress; to the contrary, their statements
often inform shareholders and others that asbestos-related
liabilities will not have a material impact upon the present or
future financial performance of the companies. In fact, over
the past decade, many of these companies successfully have
recovered, or made agreements to recover billions of dollars in
insurance coverage.'' \9\
---------------------------------------------------------------------------
\9\ See DOJ Letter at 7.
---------------------------------------------------------------------------
Our review of the specific liability statements by publicly
traded asbestos defendants confirms that the principal
remaining asbestos defendants are not facing any significant
threat of bankruptcy. For example, in March of this year, Paul
Norris, the Chairman and Chief Executive Officer of W.R.
Grace--one of the largest remaining asbestos defendants, and
the company allegedly responsible for the Libby, Montana
asbestos deaths and illnesses--acknowledged that ``Grace
generates ample cash to cover its asbestos-litigation burden.''
\10\ Similarly, Owens-Corning, another major asbestos
defendant, admitted in a March 1, 2000 SEC filing that ``. . .
we believe that the costs which may be associated with [the
asbestos] matter will not have a materially adverse effect on
Owens Corning's financial position or results of operations.''
\11\ The situation is much the same with other significant
asbestos defendants--U.S. Gypsum,\12\ Federal Mogul,\13\
Armstrong World Industries,\14\ and Pfizer (parent company of
Quigley) \15\ all have indicated there is little likelihood
that asbestos liability could lead to bankruptcy.
---------------------------------------------------------------------------
\10\ See Susan Warren, W.R. Grace Has New Business, but Needs a New
Image, Wall Street Journal, March16, 2000, at B4.
\11\ Owens Corning, SEC 10k filing, March 1, 2000; Yahoo! Finance
(December 31, 1999) .
\12\ U.S. Gypsum acknowledged in its quarterly report filed with
the SEC that, ``asbestos litigation is not expected to have a
significant impact on [U.S. Gypsum's] liquidity or cash flows during
1999.'' U.S. Gypsum Corporation, SEC 10Q filing, March 1, 2000.
\13\ In its most recent securities filing with the SEC, Federal
Mogul admitted, ``. . . [M]anagement believes that asbestos claims
pending against the Company . . . will not have a material effect on
the Company's financial position.'' Federal Mogul, SEC 10k filing,
March 1, 2000. Federal Mogul has estimated a maximum of $1.1 billion in
future asbestos liability while at the same time it reported
shareholders' equity of more than 20 times that liability. Yahoo!
Finance (December 31, 1999).
\14\ In its annual report filed with the SEC, Armstrong World
Industries characterized the cost of asbestos claims as not having, ``.
. . [A]ny material after-tax effect on the financial condition of
Armstrong or its liquidity.'' Armstrong World Industries, SEC 10k
filing, March 1, 2000.
\15\ Pfizer, the parent corporation of Quigley Company, Inc., a
producer of asbestos, has stated that costs incurred in defending and
ultimately disposing of the asbestos personal injury claims, as well as
other asbestos-related costs, will be covered by insurance policies and
ultimately will have no materially adverse effect on its financial
position. Pfizer Inc., SEC 10k filing, March 1, 2000. At year end,
Pfizer had a market value of approximately $122.6 billion. Yahoo!
Finance (December 31, 1999).
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If the Majority was truly concerned that Congress' failure
to legislate could cause these firms to file for bankruptcy, we
would have expected them to have subpoenaed, or at least
investigated the financial situation of these companies.
However, that has not occurred, and the Majority has chosen
instead to rely on self-serving statements of financial
distress, rather than the companies' statements made to the SEC
and their own shareholders.
II. Medical criteria will unfairly reduce the number of claimants.
There are several problems with regard to the medical
criteria.\16\ As a general matter, the medical criteria are not
consensus standards generally accepted in the medical community
as demonstrated by communications submitted to the committee by
distinguished experts in the field.\17\ Rather, they represent
litigation-driven standards, promoted by defendants, which are
unsupported by the medical literature. Further, despite the
majority's repeated attempts to characterize the criteria as
merely representing a codification of negotiated private
settlement standards ``agreed to by all the parties,'' the
proponents have chosen the least favorable and the most
restrictive standards from a menu of settlement agreements, the
most restrictive of which was Amchem. At the same time, they
have ignored whole cloth more liberal standards contained in
numerous other settlements and judicially approved plans.\18\
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\16\ The original substitute would have allowed for racial
profiling by referring to an article that provided that African
Americans have worse lung functioning and therefore should have a
higher bar to establish recovery (The original substitute's definition
of ``pulmonary function testing'' referenced standards requiring race
corrections and encouraged physicians to apply different standards
blacks than whites). Fortunately, these concerns were alleviated as a
result of an amendment offered by Representatives Scott, Conyers and
Hyde which requires the Medical Director to eliminate predicted values
and pulmonary function tests that incorporate adjustments based on
race.
\17\ The Fairness in Asbestos Compensation Act of 1999: Hearing on
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999)
(statement of Christine Oliver, M.D.).
\18\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir.
1996).
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Moreover, we believe it is inappropriate for Congress to
specify detailed and fixed medical criteria governing tort
actions. To the extent there is any role for the Federal
Government in this regard, it would be far preferable to assign
the responsibility to an entity with actual expertise in the
area, such as the National Institute of Occupational Safety and
Health (``NIOSH''), rather than Congress.\19\ Also, under the
bill, the value to a victim of meeting the medical criteria is
somewhat limited, given that the medical certificate is subject
to rebuttal by defendants,\20\ and even if it is not rebutted,
it does not automatically entitle the claimant to
compensation.\21\
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\19\ Representatives Conyers, Scott and Nadler offered an
amendment, which the Majority rejected, that would have required the
Department of Justice, in consultation with NIOSH, to draft medical
criteria.
\20\ Sec. 201. The certificate can be rebutted by ``clear and
convincing evidence.'' The defendants could easily argue that a
contradictory diagnosis obtained from their own experts would meet this
standard. Accordingly, the required procedure for obtaining a
certificate of eligibility simply delays the adjudication of the
plaintiff's claim and coerces him to disclose his entire medical case
and all of his evidence of exposure before he is permitted to file
suit. This effectively gives the defendants an unlimited time to
prepare its defense.
\21\ Sec. 207.
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A related concern is that under the procedures in the bill,
asbestos manufacturers would appear to be guaranteed a right to
a jury trial with regard to the claimant's medical condition,
but the claimant's right to a jury trial may be eliminated by
the medical panels or the Federal court of claims.
Additionally, the medical review process unfairly prevents some
of the most qualified physicians--e.g., those who have spent a
significant amount of their time working as asbestos experts--
from serving as an eligible physician for medical review
purposes and requires thousands of workers to submit themselves
to new chest x-rays to meet the bill's more stringent testing
requirements.\22\ Finally, we take issue with the notion that
the so-called ``less sick'' or ``unimpaired'' should be barred
from receiving any compensation.
---------------------------------------------------------------------------
\22\ Sec. 601(28). Sec. 601(5) requires quality one rather than
quality 2 x-rays.
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We also have a number of specific problems with the
individual categories of asbestos related harm, particularly
with regard to lung cancer and non-malignant conditions (i.e.,
``less sick'' or ``unimpaired'' individuals).
A. Lung cancer
The criteria for asbestos related lung cancer is unduly
restrictive and discriminatory. Even if a claimant meets the
arbitrary exposure requirement, the whole issue of medical
eligibility and causation may be fully relitigated at trial if
the lung cancer claimant has a history of smoking. Thus, for
these claimants, the certificate of medical eligibility is
illusory in that it does not establish even a rebuttable
presumption of eligibility.\23\ This presumption against
smokers is inconsistent with the jurisprudence \24\ and could
leave tens of thousands of workers with little chance of
obtaining compensation from either the asbestos or tobacco
industry (notwithstanding determinations by OSHA and the
Surgeon General which have found that persons exposed to
asbestos who smoke have a 50 times greater likelihood of
contracting lung cancer than ordinary individuals).\25\
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\23\ Sec. 304(b).
\24\ See Brisboy v. Fibreboard, 418 N.W. 2d 650 (1988, MI Sup. Ct);
Alvin J. Acosta v. Babcock & Wilcox, No. 90-3714 (5th Cir. 1992)
(applying ``substantial causation'' standard for asbestos claims
brought by smokers, rather than the bill's suggested standard that
asbestos exposure must be the sole and ``but for'' cause).
\25\ An individual with asbestos exposure who is a non-smoker has a
5x greater risk of contracting lung cancer than an unexposed person.
Regular smokers have a 10x greater risk of contracting lung cancer than
persons who do not smoke. However, persons with both asbestos exposure
history and a smoking history have an increased risk of lung cancer
that is 50 to 90 times greater than normal. Health Consequences of
Smoking and Cancer, report of the Surgeon General (1992), pages 189-
190. See also Bldg. & Construction Trades Dept. v. Brock, 838 F.2d
1258, 1265-66 (D.C. Cir. 1986) (citing OSHA Regulations, 51 Fed. Reg.
22,612 et seq., finding that non-smokers exposed to asbestos have a 2x
greater risk of contracting lung cancer than the general population,
smokers have a 10x greater risk, and smokers exposed to asbestos have a
20x greater risk).
---------------------------------------------------------------------------
Another concern is that the legislation denies compensation
to lung cancer victims who cannot show a latency period from
their first exposure to asbestos to the date of illness of at
least 10 years. In addition, victims who are unable to
establish they were regularly exposed to visible asbestos dust
in their workplace for at least 7.5 years (and as a practical
matter, in most cases, 15 years) \26\ unless their lung cancer
is accompanied by a qualifying non-malignant disease, are also
denied compensation under H.R. 1283. These time requirements
bar recovery by persons subject to shorter latency or exposure
periods (the scientific literature contains numerous examples
of individuals developing lung cancer with shorter latency and
exposure periods),\27\ and make it almost impossible for
spouses and children exposed as a result of contact with an
asbestos worker to recover.
---------------------------------------------------------------------------
\26\ Sec. 304(a). As a general matter, asbestos dust is not visible
except at levels that are 1,000 times greater than the OSHA standard of
.1 fibers per cubic centimeter of air. Sec. 304. Further, exposure to
asbestos is often mixed with exposure to other nuisance dusts making
the percentage of asbestos dust present hard to determine. Workers are
unlikely to have access to exposure records of dust levels. Also, with
regard to the issue of ``equivalent years of exposure'' which is
defined in Sec. 601(13), the only persons who would qualify to obtain
full year exposure for each year of work are those persons whose
primary occupation involved the direct installation, repair, or removal
of asbestos-containing products (this would include supervisors,
bystanders, clean-up workers, inspectors, or anyone else who worked in
the same area and breathed the same dust).
\27\ Letter from L. Christine Oliver, Assistant Clinical Professor
of Medicine, Harvard Medical School, et al., to Congressman John
Conyers, Jr., Ranking Minority Member, U.S. House Judiciary Committee,
(February 1, 2000) (on file with the Judiciary Committee Minority
Staff).
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Asbestos-related lung cancer can be caused by minimal
exposure. The medical criteria in H.R. 1283 will result in the
exclusion of a substantial proportion of the lung cancer
victims that are currently compensated in the tort system for
their injuries. The provisions of the bill, therefore, only
serve to emphasize that the proposed medical criteria are not
designed to be fair to exposed victims, but simply to cut off
liability for the defendants. As the Department of Justice
wrote in its letter to the committee, ``HHS advises us that
many studies have clearly shown that asbestos is a carcinogen
and causes cancer independent of causing non-malignant disease,
again contrary to the implication of H.R. 1283.\28\
---------------------------------------------------------------------------
\28\ See DOJ Letter at 4.
---------------------------------------------------------------------------
Yet another concern with regard to the lung cancer medical
criteria is that claimants must either have a qualifying non-
malignant condition or evidence of pleural plaques and many
years of very heavy exposure to visible asbestos dust.\29\ The
weight of scientific evidence is that the presence of
asbestosis or other non-malignant disease is not a precondition
for asbestos-related lung cancer.\30\ Lung cancer, asbestosis
and pleural disease are separate and distinct diseases, each of
which are caused by asbestos exposure. They are not a continuum
or progression of a simple disease. Consequently, there is no
scientific or logical basis for requiring one to be a
precondition for eligibility to receive compensation for
another. Moreover, private settlement agreements such as In re
Asbestos Litigation v. Gerald Ahearn \31\ provide compensation
for lung cancer without regard to whether the claimant has a
non-malignant condition.
---------------------------------------------------------------------------
\29\ Sec. 304.
\30\ David Egilman, Lung Cancer and Asbestos Exposure: Asbestosis
is Not Necessary, American Journal of Industrial Medicine 30:398-406
(1996).
\31\ 90 F.3d 963 (5th Cir. 1996) (prior class action settlement
with Fiberboard corporation).
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B. Non-Malignant conditions
The criteria for non-malignant conditions are based on the
flawed notion that no recovery should be permitted unless an
asbestos victim can show they are impaired. Tort law
traditionally has provided compensation for those injured by
the wrongdoing of another. The amount of damages varies with
the level of harm caused to the victim. Under H.R. 1283,
asbestos victims would have to show greater damage to obtain
recovery--proof of impairment rather than injury--than would
other victims of wrongdoing. We do not agree that asbestos
victims should be held to such a high standard of proof.
Even if impairment, and not injury, were the proper
standard for recovery, the medical criteria in the bill could
deny compensation (other than reimbursing a portion of some
medical tests) for many persons suffering from pleural
thickening and pleural plaques, which are an alteration to the
lining of the lung, based on arbitrarily defined limits on lung
functioning.\32\ Again, this flies directly in the face of
established court precedent,\33\ and private settlements \34\
and will operate to deny justice to persons facing real
suffering--both from the fear of the increased likelihood of
dying as well as from pleural thickening in their lungs and
plaques leading to shortness of breath.
---------------------------------------------------------------------------
\32\ Sec. 302.
\33\ See e.g,. Verryke v. Owens-Corning Fiberglass Corp., 616 N.E.
2d 1162 (Ohio Ct. of App. 1992) (rejecting defendant's assertion that
pleural thickening cases should not be compensable, because ``a pleural
plaque or thickening meets the definition of `bodily harm,' which is a
subspecies of `physical harm,' and thus satisfies the injury
requirement of the Restatement of Torts.''); In Re Cuyahoga County
Asbestos Cases, 713 N.E. 2d 20 (1988); Sullivan v. Combustion Eng., 590
A.2d 944 (Md. Ct. Of Special Appeals 1998).
\34\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir.
1996), settlements.
---------------------------------------------------------------------------
The medical criteria are also unduly restrictive in denying
compensation to those with asbestosis. The bill requires
asbestosis victims to meet arbitrary, rigid x-ray and lung
function criteria to qualify for compensation. These medical
criteria do not conform to the diagnostic guidelines of the
American College of Chest Physicians and the America Thoracic
Society. Experts in chest disease and pulmonary function agree
that there is no clear and consistent correlation between chest
x-ray findings, pulmonary function, and clinical signs such as
basilar crackles, yet H.R. 1283 requires such a rigid
correlation as a prerequisite to medical eligibility.
In this regard, scholarly studies have found that
``[i]ndividuals with pleural plaques and thickening . . .
generally . . . have between 2\1/2\ and 3 times increased risks
of cancer.'' \35\ Another study found that breathlessness of
exertion was reported by 95% of subjects found to have
asbestos-related pleural thickening and a history of wheezing
was found in 55% of subjects, with a regular cough in 53% and
occasional sputum production in 47%. 56% of this population of
individuals with only pleural thickening noted chest pain and a
history of pleural effusions was elicited in 37%.\36\ Yet
another study determined that ``subjects with pleural
thickening appear to have more shortness of breath as assessed
by questionnaire and more dyspnea with major activities such as
walking up a steep hill or climbing two flights of stairs.''
\37\
---------------------------------------------------------------------------
\35\ Fletcher, A Mortality Study of Shipyard Workers with Pleural
Plaques, 29 Bit. J. Industr. Med 142 (1972) & Hillerdal, Pleural
Plaques and Risk for Bronchial Carcinoma and Mesothelioma, 105 Chest
144 (1994).
\36\ Yates, et al, Asbestos-related Bilateral Diffuse Pleural
Thickening: Natural History of Radiographic and Lung Function
Abnormalities, 153 Am. J. Respir. Crit. Care Med. 301 (1966).
\37\ Borbeau, et al, The Relationship Between Respiratory
Impairment and Asbestos-Related Pleural Abnormality in an Active Work
Force, 142 Am. Rev. Respir. Dis. 837 (1990).
---------------------------------------------------------------------------
C. Other cancers
In terms of asbestos related ``other cancer,'' the bill
only identifies certain types of cancers for which there can be
compensation (e.g., larynx, oral-pharynx, gasto-intestinal and
stomach).\38\ To our knowledge, no basis exists--nor has any
evidence been proffered--for excluding any additionally
recognized asbestos-related cancers from eligibility for
compensation.
---------------------------------------------------------------------------
\38\ Sec. 305.
---------------------------------------------------------------------------
III. The tort limitations will unfairly reduce the size of the
settlements without any meaningful offsetting benefit to
claimants and will protect reckless and dangerous misconduct.
A. Nature of tort reform
We also object to the inclusion of a number of extraneous
``tort reforms'' in the legislation, which include: (1) limits
on claimants legal fees (sec. 108(c)); (2) elimination of
damages from enhanced risk of a future condition (sec. 202);
(3) limitations on class actions to those that meet Federal
requirements (sec. 205); (4) limiting venue to jurisdictions
where the exposure occurred or the claimant resides (sec 205 (
c); (5) mandating choice of law (sec. 208(a)); and (6)
increasing the evidentiary standard for establishing punitive
damages and capping punitive damages at three times
compensatory damages for administrative proceedings (sec.
208(d)) and totally eliminating punitive damages in court
proceedings (sec. 202).\39\
---------------------------------------------------------------------------
\39\ Representative Scott offered unsuccessfully an amendment to
strike all of the tort reform provisions in the bill.
---------------------------------------------------------------------------
These ``tort reforms'' tilt the playing field against
workers and unfairly shield defendants from legal
responsibility for their past misconduct. For example, the
restrictions on legal fees (which could include bans on
contingency fee arrangements), constitute a limitation on an
asbestos victim's ability to obtain the most competent legal
advice and are also discriminatory because they apply to
claimants but not defendants. The limits on class actions will
limit victims' access to the courts and prevent States from
being able to resolve mass asbestos claims in the manner they
deem most efficient. The venue limits preclude actions in
defendants' home States or where they are found to be doing
business--even though these may be the only locales where
jurisdiction may lie or service of process can be effectuated.
Finally, the limits on punitive damages will mitigate the
liability of the most egregious offenders. AFL-CIO General
Counsel John Hiatt emphasized this point in his hearing
testimony when he suggested that the committee be mindful of
incentives it creates for industrial decision makers as it
considers whether to create exceptions to State tort law: ``I
am sure the committee would not want to suggest to business
executives making decisions in the future that if the scale of
the risk their product poses is truly awe inspiring, Congress
will step in to save them from the consequences of their
actions under State tort law.'' \40\
---------------------------------------------------------------------------
\40\ The Fairness in Asbestos Compensation Act of 1999: Hearing on
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999)
(statement of John Hiatt, General Counsel, AFL-CIO at 8).
---------------------------------------------------------------------------
B. No offsetting benefit
Traditionally, workers' compensation programs have been
based on a quid pro quo with both injured workers and employers
giving up some common law rights in exchange for administrative
compensation programs. Under this quid pro quo, workers receive
prompt, limited administrative compensation but forfeit their
right to common law remedies for negligence. Employers give up
their right to raise certain defenses to recovery in exchange
for greater certainty as to the amount of recovery. By
contrast, H.R. 1283 contains no quid pro quo. Workers give up
their right to common law recovery, but gain neither prompt
remedy nor certainty as to the amount of compensation. Further,
asbestos defendants give up few of the defenses to recovery
they may currently raise. A victim who obtains a medical
certificate must continue on a long, contentious road before
compensation is provided and is subject to many defenses
including rebuttal of medical eligibility, and causation and
product identification.\41\
---------------------------------------------------------------------------
\41\ Sec. 207.
---------------------------------------------------------------------------
There is also little analogy between the legislation and an
insolvency proceeding--bankruptcy only applies to businesses
whose debts exceed their assets and requires debtors to subject
themselves to a number of legal and financial constraints. By
contrast, H.R. 1283 fails to ascertain in advance whether the
defendants are able to pay their obligations, and fails to
include any protection against fraudulent conveyances to
insiders or limitation on other transactions which could impair
the defendants' ability to make asbestos payments.
C. Previous reckless conduct
It is particularly inappropriate to mandate limitations on
legal liability in asbestos cases, given the perniciousness and
long term harm caused, and the culpability of the industry. In
contrast to previous tort reform bills approved by this
committee, which at least purport to limit ``frivolous suits''
against blameless defendants, this legislation would safeguard
reckless conduct which has already killed and harmed hundreds
of thousands of individuals.
For example, medical articles detailing the dangers of
asbestosis appeared as early as 1902, with a landmark article
by Dr. Merewether published in 1930 that describes in detail
the clinical characteristics of asbestosis, the dust control
requirements that are necessary to prevent the disease, the
importance of educating workers about the hazards of asbestos,
and the future risk to industries such as shipbuilding.\42\ In
1932, medical personnel discovered over 300 cases of asbestosis
at the Johns-Manville plant.\43\ By the 1940's, even more
widespread evidence of asbestos harm was published by the
medical community.\44\
---------------------------------------------------------------------------
\42\ Barry I. Castleman, Asbestos: Medical and Legal Aspects 1,12
(3d ed. 1990).
\43\ Id. at 24.
\44\ Id. at 59.
---------------------------------------------------------------------------
Culpability in the asbestos industry extends well beyond
Manville. For example, in the 1950's and 1960's, Owens Corning
Fiberglass distributed pipe covers and block known as Kaylo,
even though the final report on the product in 1952 concluded,
``Kaylo dust is capable of producing a peribroncheolar fibrosis
typical of asbestosis . . . the results of the study indicate
that every precaution should be taken to protect workers
against inhaling the dust.'' \45\ In the early 1960's, Philip
Carey Manufacturing Company, a producer of asbestos
pipecovering, hired Dr. Thomas Mancuso to investigate its
asbestos problem.\46\ After the completion of his study,
Mancuso advised the Philip Carey officials to end their
practice of putting sub-contractors and insulators on the
payroll because of the occupational disease liability.\47\
Philip Carey ignored Dr. Mancuso's warning and continued
manufacturing asbestos insulation without labels, throughout
the 1960's.\48\
---------------------------------------------------------------------------
\45\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on
Trial 151 (1985).
\46\ Id. at 195.
\47\ Id. at 196.
\48\ Id. at 197.
---------------------------------------------------------------------------
In 1964, Dr. Irving Selikoff convened an international
conference of doctors and scientists in New York City to sound
the alarm about epidemic levels of asbestosis, lung cancer and
mesothelioma that he found in a study of 17,000 industrial
workers in the New York/New Jersey area.\49\ The study
concluded that up to 80% of asbestos insulators were
contracting asbestosis after a latency period of 20 years, that
the risk of lung cancer for asbestos workers (especially that
who smoked) was 90 times greater than expected, and that
asbestosis was killing hundreds of asbestos insulators.\50\
Immediately after the Selikoff Conference, John Brown,
President of the Asbestos Textile Institute, writes to J.T.
Griffus of H.K. Porter Company (an asbestos textile
manufacturer): ``This subject [the Selikoff Conference on
asbestosis and lung cancer] should not be brought to the
attention of [persons] other than management of our several
companies, as any discussion of this situation by sales
personnel with users of our products could possibly aggravate
the situation and result in individual opinions which could be
damaging.'' \51\
---------------------------------------------------------------------------
\49\ Annals of Industry: Causalities of the Workplace, The New
Yorker, October 29, 1973, at 49.
\50\ Id. at 48-49.
\51\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on
Trial (1985).
---------------------------------------------------------------------------
Also, through the 1960's, W.R. Grace appears to have
intentionally and knowingly exposed vermiculite mine workers
(and their families) to dangerous levels of asbestos.
Vermiculite was mined in Libby, Montana--where at least 192
people have died and another 375 have been diagnosed with
asbestosis--and shipped to expansion sites throughout the
country.\52\ Testimony to date indicates that Grace knew of the
problem, yet continued to expose workers and their families
while covering up the dangers.\53\
---------------------------------------------------------------------------
\52\ In a letter to Judiciary Committee Ranking Member John
Conyers, Jr., the attorney for 125 Libby asbestos disease patients
(suffering from mesothelioma, asbestosis and lung cancer) stated that
the medical criteria in H.R. 1283 could shut out 74% of the victims he
represents. See Letter from Roger M. Sullivan, Esq., McGarvey,
Heberling, Sullivan & McGarvey, to The Honorable John Conyers, Jr.,
U.S. House Judiciary Committee Ranking Member, (March 8, 2000) (on file
with the minority staff of the House Judiciary Committee). See also
Letter from Senator Max Baucus (Montana) to The Honorable Henry J. Hyde
and the Honorable John Conyers, Jr., (February 29, 2000) (urging the
committee to take more time to find out whether the medical criteria in
H.R. 1283 unreasonably restricts and clearly screens out large numbers
of individuals exposed to asbestos) (on file with the minority staff of
the House Judiciary Committee).
\53\ See Finstadt v. W.R. Grace, No. DV-98-139 (19th Dist. Mont.
1999).
---------------------------------------------------------------------------
Although most asbestos products were discontinued in the
mid-1970's, after OSHA mandated a series of employer
safeguards, the threat from asbestos is still ongoing. In 1983,
the value of imported asbestos was $80.6 million.\54\ In 1992,
the U.S. consumed 31.6 thousand metric tons of asbestos,\55\
and despite widespread knowledge of asbestos dangerous effects,
its use remains. Moreover, industry objections delayed OSHA
action to prevent cancer risk until 1986 when a Federal appeals
court found further regulation necessary to prevent worker
exposure to significant risks.\56\ EPA's 1989 efforts to ban
the manufacture, importation, and distribution of asbestos
products failed in the face of industry legal challengers.\57\
---------------------------------------------------------------------------
\54\ OSHA RIA at II-3, 1986.
\55\ 59 Fed. Reg. 41026.
\56\ Building & Constr. Trades Dept. v. Brock, 838 F.2d 1258 (D.C.
Cir. 1986).
\57\ Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir.
1991).
---------------------------------------------------------------------------
Finally, the courts have consistently held that the
asbestos industry demonstrated reckless, if not intentional,
misconduct. In Fischer v. Johns-Manville,\58\ the Superior
Court, Appellate Division of New Jersey held: ``The jury here
was justified in concluding that both defendants, fully
appreciating the nature, extent and gravity of the risk (in
exposing plaintiffs to asbestos), nevertheless made a conscious
and cold-blooded business decision, in utter and flagrant
disregard of the rights of others, to take no protective or
remedial action.'' Similarly, the Supreme Court of New Jersey,
in Fischer v. Johns-Manville,\59\ stated ``[i]t is indeed
appalling to us that the company had so much information on the
hazards to asbestos workers as early as the mid-1930's and that
it not only failed to use that information to protect these
workers but, more egregiously, that it also attempted to
withhold this information from the public.'' And, in Ballard v.
Owens-Corning Fiberglas Corp.,\60\ the Supreme Court of Florida
held: ``The clear and convincing evidence in this case revealed
that for more than thirty years the company concealed what it
knew about the dangers of asbestos. In fact, the company's
conduct was even worse than concealment, it also included
intentional and knowing misrepresentations concerning the
danger of its asbestos containing products.'' Despite this
unconscionable conduct, we are considering unprecedented
legislation written, in large part, by that very industry.
---------------------------------------------------------------------------
\58\ 472 A.2d 577 (N.J. Super. 1984).
\59\ 512 A.2d 466 (N.J. 1986).
\60\ 1999 WL 669026 (Fla. 1999).
---------------------------------------------------------------------------
IV. The new bureaucracy will severely delay payment of claims.
Rather than expediting claims, H.R. 1283 will delay the
payment of compensation, including payments to victims who are
seriously ill and at or near death. As the AFL-CIO complained,
``the proposed legislation would slam the courthouse door shut
on hundreds of thousands of poisoned workers to the benefit of
the very companies that poisoned them.'' \61\ In essence, the
legislation will overturn a court system which has adapted over
time to the massive load of asbestos cases, and substitute a
completely new and untested legal regime.
---------------------------------------------------------------------------
\61\ See AFL-CIO letter at 1.
---------------------------------------------------------------------------
Under the legislation, every single claim--no matter how
compelling the merits or how sick the victim--will be placed on
hold for as long as it takes to create the massive new legal
bureaucracy. The prejudice from this delay will be especially
severe for living victims of lung cancer and mesothelioma who
currently can expect to receive prompt trial dates because of
preferential treatment the courts give to these cases.
Moreover, H.R. 1283 cuts off these claimants' right to trial
and provides no mechanism to preserve their testimony by
videotape or any other method. At a minimum, tens of thousands
of victims will now need to schedule new physical examinations
under new standards in an attempt to comply with the numerous
requirements of H.R. 1283. These examinations will be costly
and time-consuming and will provide no benefit to the claimant.
Setting up the OAC will require hiring hundreds if not
thousands of new employees within four separate Justice
Department divisions. Public Citizen has noted that questions
have been raised about the Federal Government's ability to
create and run such a large bureaucracy: ``While the National
Vaccine Injury Compensation Program is held up as model, it has
only dealt with 5,735 cases over 11 years, not the hundreds of
thousands of asbestos cases that would have to be processed
immediately.'' \62\ In addition, the OAC will not be able to
begin to process any claims until it adopts at least 11 complex
new administrative rules,\63\ which are subject to notice and
comment, and in most cases, to extensive legal review and
appeals. It is likely that this hiring and rulemaking process
will take several years at a minimum, by which time scores of
thousands of new claims will be waiting in line for
compensation.
---------------------------------------------------------------------------
\62\ See Public Citizen Letter at 4.
\63\ See Secs. 102(b); 103(b)(2); 108(c); 109(d); 301(b) [likely 4
separate rules]; 304(b); 306(a); 306(b); 401(a); 402(a); & 704.
---------------------------------------------------------------------------
Even once the OAC is set up and running, it will be subject
to further delays. The legislation envisions from 10-15
proceedings before a claimant's case can finally be resolved,
with some steps scheduled to take up to 90 days.\64\ Even
worse, in some cases no deadline is imposed and there is no
legal guarantee that any of the formal deadlines will be
observed for individual claimants, because they are subject to
waiver by the OAC \65\ and because there is no individual
enforcement remedy or mechanism.\66\ The fact that the
legislation includes a mandamus mechanism in the event
deadlines are not complied with more than 30% of the time
constitutes a tacit admission that delays are fully expected
and anticipated.\67\
---------------------------------------------------------------------------
\64\ The possible proceedings include:
1. GFiling of Claim.
2. GDetermination by Medical Director regarding Medical
Criteria within 30 days (sec. 102(c)).
3. GPossible appeal of Medical Director's decision to
review panel of physicians, no deadline (sec 102(c)).
4. GPossible appeal to exceptional medical claims panel,
determination due within 30 days (sec. 102(d)).
5. GClaimant must file particularized statement for each
defendant (sec. 103(a)(2)).
6. GNotice to defendants (sec. 103(a)(3)).
7. GOpportunity for defendants to bring in third parties
(sec. 103 (a)(4)).
8. GEach defendant to make ``good faith offer,'' due
within 21 days of naming all defendants (sec. 103(b)(1)).
9. GTrustee to make offer of compensation to claimant
based on compensation grid. (sec. 103(b)(2), due within 10
days of receiving defendants offers.
10. GClaimant to accept or reject defendant and trustee
offers within 60 days (sec. 104).
11. GIf claimant accepts, Trustee must decide whether to
accept defendant offer or prosecute claim administratively
or in court (sec. 104(d)).
12. GIf claimant rejects, may elect administrative
resolution or file suit in court (sec. 104(e)).
13. GAdministrative decision on claimant's claim due within
90 days (sec. 105).
14. GALJ decision subject to appeal to Court of Federal
Claims by either claimant or defendant, no deadline (Sec.
106).
15. GIf claimant elects to pursue claim in court, no
deadline specified.
---------------------------------------------------------------------------
\65\ Sec. 109(d).
\66\ Representative Scott offered an amendment, which the Majority
rejected, that, among other things, provided that if specified time
limits in the bill are not met, the claimant could leave the
administrative system and file a claim in State or Federal court.
\67\ Sec. 109. And even this mechanism is designed merely to get
the OAC to start working on the problem, not to fix it.
---------------------------------------------------------------------------
Rather than simplifying the processing of asbestos claims,
H.R. 1283 gives defendants the power to make the prosecution of
these claims more complex than they have ever been in the tort
system. The vehicle for this complexity is a specific statutory
allowance for third-party practice \68\ injected into the
government bureaucracy that was allegedly conceived to speed
payments to claimants. This procedure gives asbestos
manufacturers the ability to add unlimited numbers of third-
party defendants to each and every claim for the purpose of
either denying, delaying or diluting their liability to the
claimant and the OAC. Although the committee belatedly acted to
remove the United States government as one of these third-
parties, virtually every other entity can and will be named
including employers (who currently have immunity and a
subrogation lien), tobacco companies, peripheral suppliers and
manufacturers of asbestos products, insurance companies and
others. As the recent experience with the Compensation and
Liability Act (CERCLA/Superfund) has amply demonstrated,
mechanisms such as this when incorporated either directly or
otherwise into statutory schemes inevitably lead to decades of
judicial gridlock.
---------------------------------------------------------------------------
\68\ Sec. 103(a)(4).
---------------------------------------------------------------------------
V. The retroactive effective date will deny court access to thousands
of pending claims.
Another major concern with the bill is that it will force
all existing cases to proceed under the new legal regime
beginning with the date of enactment. This retroactivity
provision--which is unprecedented in scope and application--
provides a very significant financial and tactical benefit to
all asbestos defendants. Efforts to modify the manifest
injustice of the provision have been only cosmetic and provide
nothing meaningful for victims.
H.R. 1283's effective date provision will terminate the
processing of virtually every asbestos case pending in the
courts today (estimated at 200,000) and render worthless the
work product of the pretrial preparation in every such
case.\69\ The problem derives from the fact that the
legislation applies to all cases for which a trial is not
commenced within 6-12 months of the date of enactment.\70\ Even
the few claims which proceed to court within the 6-12 month
time period will be impaired because they will be subject to
the bill's medical eligibility criteria \71\ (even though such
claims will not benefit from any of the nominally pro-claimant
provisions, such as the restriction on defenses (sec. 207),
comeback rights for the non-sick (sec. 204), and penalties for
inadequate offers (sec. 208(c)). Even worse is the fact that
the legislation appears to create a dangerous ``Catch-22''
situation for victims, because it requires a determination of
whether the medical criteria apply before a trial may commence,
yet it may take longer than the statutory deadline of 6-12
months before the OAC issues the medical criteria rules and it
can be determined whether they apply in a pending case.\72\
---------------------------------------------------------------------------
\69\ Sec. 501.
\70\ Sec. 501(b). The Attorney General may extend the initial 6
month period for an additional 6 months if required for ``orderly
implementation of the Act.''
\71\ Sec. 501(d).
\72\ The right to sue letter provided in section 501 to the
Attorney General offers little protection to victims, since it is
totally discretionary.
---------------------------------------------------------------------------
It is highly unusual for tort legislation to ``change the
rules in the middle of the game'' by applying to pending
claims. For example, the Volunteer Protection Act--signed into
law during the 105th Congress--only applies to claims filed
more than 90 days after the date of enactment, and only if the
harm that is the subject of the claim occurred after such
effective date.\73\ Other recently enacted tort laws, such as
the General Aviation Reform Act of 1994,\74\ the Bill Emerson
Good Samaritan Food Donation Act,\75\ and the Biomaterials
Access and Assurance Act of 1998 \76\ were all written to apply
prospectively. The most recent tort reform bills approved by
this committee--the Small Business Liability Reform Act (H.R.
2366),\77\ the statute of repose bill (H.R. 2005),\78\ and the
class action bill (H.R. 1875) \79\--were all drafted to
safeguard pending claims from the proposed new statutory
restrictions.\80\
---------------------------------------------------------------------------
\73\ 42 U.S.C. Sec. 14501.
\74\ 49 U.S.C. Sec. 40101 note.
\75\ 42 U.S.C. Sec. 1791.
\76\ 21 U.S.C. Sec. 1601-06.
\77\ H.R. 2366, sec. 301.
\78\ H.R. 2005, sec. 4.
\79\ H.R. 1875, sec. 5.
\80\ In an effort to address the concerns about the bill's effect
on pending cases, Representative Berman offered an amendment to make
the effective date the date of the markup of the bill, and
Representative Scott offered an amendment to make the effective date
the latter of the date the of the appointment of the Administrator, the
Medical Director and the Trustee, the date the rules are promulgated,
and the date on which the authorized monies have been appropriated.
Neither of the amendments, however, were accepted by the Majority.
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VI. The funding mechanisms are illusory.
We also have deep-seated concerns regarding the reliability
of the bill's funding mechanisms. The entire legal regime rests
on three highly questionable sources of revenue--discretionary
Federal funding, legal reimbursement actions brought against
defendants, and defendant assessments of administrative costs
and payments made to claimants. Although the legislation
authorizes Federal funds ranging up to $150-250 million/year
(in order to set up the legal bureaucracy and loan funds to the
Asbestos Compensation Fund),\81\ there is no guarantee that any
funding (let alone the full amount) will be forthcoming. The
legislation is written in this manner in order to avoid being
subject to a budget point of order, yet the provision raises
the very real risk that the OAC will not be funded or will be
severely underfunded, leaving plaintiffs with little ability to
pursue their claims.
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\81\ Sec. 405.
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A second far larger source of funds is to be derived from
the defendants by way of government reimbursement litigation.
Here again, there is little certainty that such funds will
materialize, as real life experience with reimbursement schemes
in the context of the Black Lung Benefits Act and the
Comprehensive Environmental Response and Superfund have not
been promising. To the extent there is a shortfall in such
reimbursements, claimants will again be left at risk and facing
reduced or no payments, even though they will have already
forfeited their common law rights under the legislation.
An alternative funding mechanism, which vastly improved the
bill, was introduced by Representative Weiner (D-NY), and
accepted by the committee. The effect of the Weiner amendment
is twofold: first, it requires the Administrator to promulgate
rules for calculating and collecting from defendants all costs
associated with the determination of claims and payments to
claimants. Second, if the amount assessed through the
Administrator's rules is inadequate to cover the payments to
claimants, the trustee must bring an action against the
defendant company to recoup payments by the Fund. In addition,
the Weiner amendment removed from the defendants the ability to
assert any defense in such a proceeding other than lack of
jurisdiction.\82\ Notwithstanding the adoption of this
amendment, there remains a major concern that the bill imposes
undue financial risks on claimants (e.g., if a defendant
company contests its assessed amount or if the government
reimbursement litigation is protracted or unsuccessful).
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\82\ The original funding scheme allowed a defendant to litigate
whether so-called ``core claims'' had been asserted against it in order
to obtain an exemption from or reduction in its assessment by the
Administrator.
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VII. The opt-out is illusory.
We also do not believe the legislation's supposed ``opt-
out'' under section 102(f), offers meaningful relief for
victims. First, the opt-out is only available to persons who
obtain a certificate of medical eligibility--perhaps the most
onerous statutory requirement imposed under the bill. Second,
even those claimants who receive a medical certificate and
bring their claim in court would continue to be subject to many
of the bill's ``tort reform'' provisions (such as the
elimination of punitive damages and special statutory
limitations on class actions and venue),\83\ even though they
would not benefit from any of the bill's nominally pro-victim
provisions. The net result is an ``opt-out'' right which will
be very difficult to exercise and will be of very little real
value. While the Majority rejected an amendment that
Representatives Conyers, Scott, Lofgren and Watt offered to
make the administrative system completely voluntary, we believe
that if the legislation provided a demonstrably streamlined and
fair administrative procedure, a true opt-out would not be
problematic.
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\83\ Sec. 205(d).
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VIII. The medical monitoring benefits are inadequate.
Under Sec. 306, medical testing benefits are provided only
to those who can show certain amounts of ``heavy'' \84\
exposure to asbestos at work and establish certain radiographic
injury. Therefore, spouses and children who have been exposed
when asbestos dust was brought home cannot get compensation for
medical monitoring. In addition, it would appear that
supervisors, cleanup workers, inspectors and any other trade
that did not directly have hands-on use of the asbestos product
would not be eligible for medical monitoring.
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\84\ The bill includes no definition of ``heavy exposure'' to
asbestos (as opposed to ``equivalent years of exposure'').
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The medical monitoring benefits provide for a maximum of 3
sets of medical tests during a victim's lifetime. By contrast,
OSHA regulations require more frequent medical testing for
workers exposed to asbestos, and for workers with 10 years of
exposure over age 45, annual physicals with chest x-ray are
required by rules.\85\
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\85\ 29 C.F.R. 1910.1001(L)(3)(ii) Table 2.
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Another concern is that exposure verification is required
by the bill to qualify for medical testing. Yet, few companies
have exposure monitoring records for asbestos before the mid-
1970's. Exposure records may have been lost or destroyed, and
imposing on workers the obligation to prove the levels of their
exposure means many will not be able to obtain medical
monitoring benefits.
IX. H.R. 1283 raises serious constitutional concerns.
Finally, the Federal Government's intrusion into State tort
law raises very serious federalism and constitutional concerns.
Since Congress has traditionally deferred to the States
regarding tort law in general and product liability law in
particular, preempting State law in the area of asbestos
litigation would constitute a dramatic shift in this balance.
And given the direction of recent Supreme Court decisions, the
attempts to impose rules on State court civil justice systems
raises serious constitutional questions. The bill--which
contains no interstate commerce jurisdictional requirement--may
run afoul of the constitutional requirement under the Commerce
Clause. The Commerce Clause limits congressional authority to
the regulation of interstate commerce and under the Tenth
Amendment, which reserves all of the unenumerated powers to the
States. This is a particular concern in light of the recent
Supreme Court decisions such as Lopez v. United States
(striking down a Federal gun-free school zone law which had no
interstate commerce requirement),\86\ and New York v. United
States \87\ and Printz v. United States \88\ in which the Court
showed extreme scepticism regarding Congress' ability to
dictate State legal policies.
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\86\ 514 U.S. 549 (1995).
\87\ 505 U.S. 144 (1992) (invalidating a Federal law requiring
States to assume ownership of radioactive waste or accept legal
liability for damages caused by the waste because it was found to
``commandeer the legislative processes of the States'').
\88\ 521 U.S. 898; 117 S.Ct. 2365; 138 L.Ed. 2d 914; 65 U.S.L.W.
4731 (U.S. June 27, 1997) (invalidating portions of the Brady Act
requiring local law enforcement officials to conduct background checks
on prospective gun purchasers).
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There is also an apparent constitutional flaw under the
``Appointments Clause.'' According to the Department of
Justice, ``H.R. 1283's provision for the appointment of the
OAC's Medical Director by the Administrator of the OAC, Section
101(c), appears to run afoul of the Appointments Clause. The
Director is an inferior officer whose appointment must be
vested in the President alone, in the Courts of Law, or in the
Heads of Departments. Because the Attorney General may remove
the Administrator of the OAC for cause (see Section 101(a)), we
do not believe the Administrator to be the head of the
Department for purposes of the Appointments Clause.'' \89\
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\89\ See DOJ Letter at 11.
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Conclusion
We oppose H.R. 1283 because it constitutes an unjustified
corporate bail-out at the expense of victims and taxpayers. The
legislation creates an unmanageable Federal bureaucracy,
excludes hundreds of thousands of individuals from eligibility
for compensation, reduces and delays compensation payments to
those who remain eligible, throws most if not all existing
cases out of court, and unfairly preempts State law. We cannot
support this extreme legislation, which rewards the
perpetrators of one of the country's most serious and deadly
torts, while punishing the victims and their families.
John Conyers, Jr.
Howard L. Berman.
Rick Boucher.
Robert C. Scott.
Melvin L. Watt.
Zoe Lofgren.
Sheila Jackson Lee.
Maxine Waters.
William D. Delahunt.
Steven R. Rothman.
Tammy Baldwin.
Anthony D. Weiner.
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