Travelers $500 million Asbestos Settlement Overturned on Appeal

NEW YORK, New York - A $500 million settlement agreement reached two years ago by The Travelers Cos. Inc. has been overturned by a federal appeals court, possibly paving the way for potential new asbestos and mesothelioma lawsuits.

Travelers is evaluating the ruling which vacates a March 2006 decision by the U.S. District Court for the Southern District of New York. The settlement stemmed from the settlement of asbestos claims by Johns-Manville Corp.

Travelers was the insurance company for Manville, which made and sold asbestos from the
1940s to the 1970s. The company filed for bankruptcy in 1982 in the face of thousands of lawsuits against them.

Travelers will not decide whether to appeal the decision until they have evaluated their position. The insurer said that it will not change the level of their asbestos reserves, and doesn’t expect the decision to affect earnings.

Travelers insurance said that the company would have preferred the finality of the settlements, which guaranteed payment of asbestos claims against Johns-Manville and the related injunction against further lawsuits. However, the insurance company said, there has been a change in the asbestos litigation environment in recent years and as a result, the current outlook for litigation is more favorable than it used to be.

Johns-Manville was one of many companies that used asbestos in their products before its use was banned in many products. Asbestos is generally believed to be safe as long as it is not in a form that can shed fibers and dust into the air. Airborne asbestos has been implicated in increased risks of lung cancer, asbestos cancer, and many other cancers, and as the cause of mesothelioma, a rare cancer that is only caused by asbestos exposure. In addition, asbestos exposure can result in asbestosis, a condition where lungs are scarred by the presence of the tiny fibers. Asbestosis is a progressive disease that is nearly always fatal.

Because the companies who worked with and distributed asbestos were aware of the mineral’s hazards and deliberately hid those dangers from its employees and the general public, juries have traditionally made large awards to plaintiffs who can prove that they were exposed to asbestos and developed mesothelioma, cancer or asbestosis as a result.

It has been traditional for companies faced with enormous numbers of lawsuits because of asbestos exposure to enter bankruptcy in order to restructure and create settlement funds in order to pay asbestos claims without going out of business. In many cases, these asbestos trusts have themselves gone bankrupt, and payouts to claimants reduced.

If the court decision becomes final, the settlements will become void, said a Travelers in a statement, and Travelers will litigate any direct action cases vigorously.

This entry was posted on Monday, February 25th, 2008 at 5:49 pm and is filed under Asbestos Exposure, Asbestos Litigation, New York. You can follow any responses to this entry through the RSS feed. Responses are currently closed, but you trackback from your own site.