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Congressional Cure Needed for Cancer of Asbestos Lawsuitsby
Mark Schmidt May 30, 2002 Asbestos was once considered a “miracle mineral.” Prized
for its resistance to heat, acids, and friction, manufacturers used asbestos
in a wide array of products such as coffee pots and toasters, cement pipes,
car and train brakes, and plasterboard.
But as Montaigne once quipped, “Miracles
arise from our ignorance of nature, not from nature.”
Indeed, experience showed that prolonged exposure
to large quantities of asbestos particles could cause serious health problems
such as lung cancer.
This opened the door for the trial lawyers. Attorneys have so far filed
600,000 asbestos cases – and the total number could reach 2.4 million. In 1998, 9,000 asbestos suits represented fully one-third of all the product
liability cases filed in federal court that year. A backlog of 200,000
asbestos cases, which drag on twice as long as other lawsuits, is currently
clogging state and federal courts.
The costs of what the Supreme Court termed this “elephantine mass” of litigation could reach a staggering $200 billion.
For example, the EPA recently conceded that billions of taxpayer dollars
have already been wasted on asbestos “abatement” in schools and
other public buildings when it admitted that asbestos is only dangerous if
breathed in high concentrations over extended periods.
Over 1,000 companies have been named as defendants, and asbestos liability
has so far bankrupted 55 firms. The most recent casualties include chemical
and materials giant W.R. Grace, auto-parts maker Federal-Mogul, and insulation
manufacturer Owens Corning.
The latest phase of asbestos litigation – against “peripheral” companies that neither sold nor manufactured
the product – clearly illustrates why Congress should overhaul a regime
that often shortchanges the real “victims” of asbestos while enriching
trial lawyers.
Just as companies with little or no connection
to asbestos production are being hauled into court, people are suing and winning
millions of dollars on the fear that they might get cancer. For example, in 2001, a Mississippi jury returned a $150 million verdict for
six plaintiffs who claimed “shortness of breath” and that they
“are worried about their health and future.”
Texas courts have abrogated the statute of limitations and the prohibition
against double jeopardy in asbestos cases. These procedural changes
allow plaintiffs to file a first lawsuit on the fear of cancer and a second
if they develop an asbestos-related malignancy.
Many of these plaintiffs found their way to court thanks to law firms which
send out mobile screening units that x-ray people for signs of asbestos in
their lungs and – not surprisingly – often find it. Even smokers can cash in.
This mass of “exposure” litigation means that those who are truly
sick may only receive 5 cents on the dollar for their claims from the bankrupted
companies’ settlement trusts.
The trial lawyers, of course, get their “contingent fee” of 30
to 40 percent of any payout, even though the outcome of these cases is rarely
in doubt and often requires little more effort than the submission of paperwork
to a settlement trust.
Equally bad, transaction costs including attorneys’ fees consume 61 cents of every asbestos-litigation dollar, while only 39 cents
goes to plaintiffs.
Society also pays a heavy price in terms of lost jobs, inflated insurance
premiums, and plummeting stock prices, while taxpayers are left to foot the
bill for court costs.
The Supreme Court has stated that asbestos litigation “defies customary
judicial administration and calls for national legislation.”
Congress has considered bills to replace inefficient litigation with an administrative
claims process that would reward those suffering from asbestos-related disease,
rather than those who face an “increased risk” of illness and
their lawyers.
But when the last asbestos reform proposal came up in 2000, trial lawyers
– who make millions of dollars’ worth of political contributions
each year – mobilized to kill the bill.
Recently, the September 11 federal claims process served as a decent blueprint
for a system that would pay fair, uniform amounts to those who can prove actual
damages. Such a system would end the litigation lottery that is a jackpot
for lawyers but a bust for everyone else.
Congress should stand up to the trial bar and act decisively to remedy the
asbestos-litigation cancer, before taxpayers are bled for more of
their hard-earned money.
Mark Schmidt is Director of Programs for the 335,000-member National Taxpayers
Union, a non-partisan citizen organization founded
in 1969 to work for lower taxes, less wasteful spending, more economic
freedom, and taxpayer rights at all levels.
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