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When U.S. Sen. Jeff Flake (R-AZ) introduced the Furthering Asbestos Claim Transparency (FACT) Act of 2014 (S. 2319) to the Senate on May 12, he claimed the bill was needed to prevent fraud. But there are open questions whether the fraud the bill addresses is real or imagined, and if it is real, whether there is another way to address the alleged fraud that wouldn’t hurt the very real victims of asbestos exposure.
FACT is aimed at people who seek payments from trusts set up to compensate those whose health has been ruined by asbestos, particularly those suffering from mesothelioma. There are about 60 such trusts in the U.S., set up by courts when companies facing asbestos-related lawsuits sought bankruptcy protection. Supporters of FACT claim that people are “double dipping” and receiving compensation from more than one trust, although actual, concrete examples of such “double dipping” so far have not materialized.
About the FACT Act
The FACT bill passed by the House last year was supposed to provide an easy way to check if claimants had also made claims against or were being compensated by another trust. Some sort of check is not unreasonable, nor should it be that difficult. But the original House bill seemed less about preventing fraud and more about discouraging people from filing claims at all.
The bill requires that all manner of personal information about claimants not only be provided by claimants but also be made public on each trust’s website. The final bill that passed the House in November excluded the claimant’s entire Social Security number and detailed medical history, as does the Senate bill introduced by Senator Flake. But that leaves plenty of other personal information that might be made public, including claimants’ financial data and where they live and work.
Worse, the bill puts a huge burden on claimants to provide any information the asbestos companies might require, potentially giving the companies the power to evade payments with endless fishing expeditions. The bill requires nothing of the companies, however.
A big problem for mesothelioma claimants is that the disease is extremely slow to develop. A wait of 35 to 40 years between asbestos exposure and diagnosis is not unheard of. This makes evidence of exposure a problem. The asbestos company defendants often argue that the plaintiff could have been exposed to asbestos somewhere else. The FACT Act would allow former asbestos manufacturers to endlessly grill claimants about where else they might have been exposed to asbestos, looking for some shred of evidence they can use to deny a claim.
But if the plaintiff installed asbestos insulation for the XYZ Construction Company for 20 years, for example, it’s not unreasonable to assume that’s where he was exposed.
The Phantom Evidence
Let’s go to our questions. Is the alleged fraud real or imagined? The answer is, nobody seems to know. The pro-FACT side makes many claims but has yet to produce actual data. The New York Times editorial board wrote in June 2013, “Fair-minded members of Congress should ask the Government Accountability Office to determine whether there is significant fraud in asbestos claims before enacting a law that makes it harder to obtain fair compensation.” This has not been done.
In his press release on the introduction of FACT, Senator Flake cited an opinion by Judge George R. Hodges of the federal bankruptcy court in Charlotte, North Carolina. The company seeking bankruptcy protection was Garlock Sealing Technologies, LLC. Judge Hodges said in his decision that some of the lawyers of plaintiffs suing Garlock concealed evidence that clients had been exposed to asbestos elsewhere. The evidence and exhibits in the case were sealed, however.
The sealed evidence in Garlock has become a source of endless speculation and hope for those who want to protect former asbestos manufacturers. Although Judge Hodges didn’t use the word “fraud,” those who believe there must be fraud consider the Garlock decision to be their best tangible evidence for it, even though the actual evidence is hidden from sight. Earlier this year it appeared Ford Motors would be allowed access to the evidence, but that decision was stayed by Judge Hodges.
The phantom evidence may become visible some day, and it may tell us something, but it isn’t visible now.
A Fairer Remedy
The asbestos companies complain that plaintiff’s lawyers control the asbestos trusts and have set up a system of confidentiality that allows a single client to be compensated by several trusts, even though they can’t say for certain anyone has actually done this.
However, there are only about 60 trusts, not thousands. It shouldn’t be that difficult for the trusts to set up some sort of discrete filter that would catch duplicate claims, without making it more difficult and time consuming for sick people to file claims and receive compensation.
The Senate bill is now with the Committee for the Judiciary.
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