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Legal - Mesothelioma Legislation - Trust Fund Concept

Since 1977, Congress has attempted to put the brakes on asbestos and mesothelioma lawsuits by proposing legislation that would create a trust fund from which all claims of injuries arising from asbestos would be paid.

In theory, the trust fund concept could be an ideal solution to what some people have called the "worst industrial accident in U.S. history". The arguments in favor of a trust fund are simple, but many individuals note problems with the concept. Favorable factors are as follows.

• A trust fund would allow the companies responsible for the asbestos exposure to plan their expenditures for compensation.
• The trust fund would be funded by mandatory contributions from the companies who built their profits on asbestos.
• The trust fund concept has been invoked in Chapter 11 proceedings for the companies who have declared bankruptcy since Congress introduced special treatment for companies facing an overwhelming burden from asbestos litigation. In those cases, the company must commit at least 50% of their reorganized equity to a trust fund which will be used to pay asbestos claims.
• In the FAIR (Fairness in Asbestos Injury Resolution) bills that have been proposed and brought before Congress, the trust from which benefits will be drawn will be funded by contributions from several dozen companies whose contribution is set by the law. The contribution will be determined by their liability and their capacity.

Under-funding of Trusts

Unfortunately, the trusts that have been proposed in each of the bills before Congress have been, in the words of many opponents, "woefully under-funded". The latest rendition of the FAIR bill is under-funded by amounts ranging from $16 billion to over $100 billion, experts predict.

The Johns-Manville case also illustrates one of the strongest criticisms of the trust fund concept. In order to build a fund that will be adequate to address the needs of those affected, there must be accurate estimates of the number of people who will be eligible for benefits. The Johns-Manville committee seriously underestimated the number of claimants who would be eligible for benefits. In the years since its inception, the fund has suspended operations twice and reduced the amount paid to less than 10 cents on every dollar of the original benefit schedule. Under the conditions of that trust, a claimant with a proven case of malignant mesothelioma with significant impairment doesn't even collect enough to cover their medical bills.

Simplification of Payments

However, the trust fund concept would indeed result in simplification of payments. Many of the trust fund concepts proposed have been based on the first of the asbestos trusts to be set up - the Johns-Manville trust to compensate plaintiffs with a case against the Johns-Manville company. Under the provisions of this trust, a schedule of benefits was established to create a "fair and equitable" payment system.

The schedule of payments is set based on condition and level of impairment. Thus every plaintiff with malignant mesothelioma would be entitled to the same benefit amount. This also eliminates the standard criticism of the tort system that it makes arbitrary awards, based on the skill of the lawyer and the emotions of the jury.

Many tout the fact that a trust fund will also ensure timely payment of benefits. This, of course, is no small benefit to those who are trapped in a seemingly endless tort system and coping with delay after delay. When a company declares bankruptcy due pending asbestos suits, the claimants may wait five to seven years before realizing any settlement at all. With the current backlog of asbestos cases in the court system, it could be years before a case is heard and even longer before it is settled, appeals are exhausted, and payment is made.

The Flip Side: Creating a Backlog

Unfortunately, most Congressional bills that call for a trust fund to be established will also shovel all existing and pending claims into the trust payment system. The system will start with a backlog of hundreds of thousands of cases that must be reviewed and decided before any new cases can be considered. It could easily be years before most claimants see any benefits.

Funneling the Money to Victims

One of the biggest criticisms leveled at the current tort system is that lawyer and litigation costs eat up more 60 cents of every dollar awarded to plaintiffs. Those costs, say trust fund proponents, will disappear under a trust/claimant system. That will free up more money to be paid out to those who are ill and deserving of the funds.

Other Issues

In addition, there are other issues with the trust fund concept of asbestos compensation, many of them specific to the asbestos bills that have been proposed. These include:

• Standard of Proof: The Johns-Manville trust relaxed the standard of proof for claimants, but the FAIR bill currently before Congress tightens them. In order to be considered for benefits, claimants will have to prove impairment to the satisfaction of the adjusters.
• Exclusion of claimants with environmental exposure: Under every FAIR bill brought before Congress, the only claimants eligible for benefits and compensation are those who can prove occupational exposure. Those who were exposed after 1976 will be held to stricter standards of proof. With the exception of the residents of Libby, Montana, those affected by Hurricane Katrina in New Orleans, and those exposed to asbestos in the 9/11 attacks, no one who has been exposed outside of their workplace will be eligible for compensation. That includes the growing pool of victims with mesothelioma who suffered secondary exposure to asbestos because someone in their household worked with asbestos.

The trust fund concept for mesothelioma compensation looks good on paper, but there are still many concerns. Until those issues are addressed, the tort system provides the fairest way for those injured by asbestos to receive ample compensation for their pain and suffering.

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