Asbestos bankruptcy trusts exist to compensate workers and their families who were injured by companies that manufactured asbestos. Those companies establish the trusts, but they are managed by trustees who decide the amount of compensation paid to claimants.
Mesothelioma patients and others who have been injured by asbestos may be eligible to receive compensation by suing those responsible for their injuries. But what happens if a negligent company has filed for bankruptcy?
Companies that successfully file for bankruptcy reorganization are protected from lawsuits. Fortunately, the U.S. Bankruptcy Code allows for the creation of asbestos bankruptcy trusts. Asbestos defendants who have been approved for bankruptcy reorganization under code section 524(g) are required to fund these trusts with enough money to pay current and future asbestos claims.
Asbestos defendants file for protection under a legal process known as bankruptcy reorganization with hopes of staying in business. Section 524(g) of the U.S. Bankruptcy Code allows defendants to bow out of the tort litigation system. But in exchange, the defendants must put money aside to pay current and future claims. The court must approve the amount that is set aside before the company is granted bankruptcy protection. Since bankruptcy reorganization is a lengthy process, receiving that approval can take several years.
Companies hoping to reorganize must submit detailed plans to the bankruptcy court, including how much they will put aside to pay asbestos claimants and creditors. The court holds estimation proceedings, which closely resemble litigation trials, to weigh input and objections to the plan by interested parties. The interested parties in asbestos bankruptcy reorganizations include representatives of current and future claimants, as well as the asbestos defendants' creditors.
Each interested group offers its own estimate of how much money should be put aside for asbestos claims. They support their estimates with testimony by experts, like economists, social scientists or legal experts, who have knowledge about the value of past asbestos lawsuit settlements. The bankruptcy judge weighs the estimates and expert testimony, and then determines how much money should be set aside for asbestos claims.
Sometimes the bankruptcy court rejects the company's reorganization plan. It can take many years and multiple estimation proceedings for a company to receive approval. Once the bankruptcy court grants approval, the company sets aside money in the amount determined by the court to fund a mesothelioma trust.
As with lawsuits, filing an asbestos bankruptcy trust claim requires showing evidence of an asbestos-related injury. Most trusts identify categories and levels of diseases that are eligible for various amounts of compensation. Trusts also may require claimants to satisfy certain medical criteria to file claims.
In addition to filing a claim form or some other written statement concerning an asbestos-related injury, claimants also may be required to provide other evidence about their exposure, medical history and more. These criteria help the administrators of the trust fund determine how much compensation a claimant should receive.
Medical documentation, such as pathology reports, biopsies and X-rays, that show the claimant is diagnosed with mesothelioma or another asbestos-related disease.
A statement from a qualified physician, such as a personal doctor or oncologist, confirming the diagnosis.
Evidence (e.g., witness affidavits, employment records, invoices) the claimant was exposed to asbestos at the company's facilities or from the company's product(s).
Medical documentation describing to what extent asbestos contributed to the claimant's disease.
Bankruptcy trusts are set up on behalf of companies with asbestos liabilities, but the companies do not operate the trusts. In fact, these companies do not review claims or make any determinations based on the evidence submitted by claimants.
Trustees manage asbestos trusts for the benefit of present and future claimants. The claims are processed and decided under preset trust distribution procedures. Representatives of current and future claimants must consent to any significant changes to these procedures.
Trusts often publish additional information about their rules, guidelines and qualifications. Among the information they can publish is a list of confirmed exposure sites.
Speak with one of our Patient Advocates to find out if you're eligible to receive compensation from trust funds.
Speak with one of our Patient Advocates to find out if you're eligible to receive compensation from trust funds.
Claimants sometimes file both asbestos trust claims and asbestos lawsuits. It is important to remember that filing a trust claim can affect the amount of compensation received from a lawsuit. State laws vary greatly on when trust claims must be made and how trust compensation affects the determination of lawsuit awards. A qualified mesothelioma attorney can help claimants understand the process.
Trust claims are different from lawsuit claims and veteran benefits claims. All three types of claims can provide compensation to people with mesothelioma, but different paperwork, eligibility requirements and protocols are required for each type of claim.
Trust claims and lawsuits are best filed by an attorney with experience in mesothelioma claims. Veterans benefit claims are best filed with the assistance of a veteran who is familiar with the ins and outs of the VA health benefits system.
Mesothelioma lawsuits are different from trust claims. A lawsuit involves either a personal injury claim or a wrongful death claim. A person living with mesothelioma can file a personal injury claim against the manufacturers of the asbestos products that caused their cancer. A wrongful death claim is filed by the surviving family of someone who died because of mesothelioma.
Various laws can impact compensation when someone files both a trust fund claim and a lawsuit. These laws vary by state and require claimants to disclose information about other claims they may have filed in the past.
State courts have different rules about sharing trust claim information with lawsuit defendants. Some courts require plaintiffs to disclose any claim forms they have submitted to trusts during the discovery phase of litigation. This requirement does not necessarily mean the plaintiffs must file their trust claims before trial. It just applies to any claims previously filed. A few courts, including New York City and Montgomery County, Pa., may require filing certain trust claims before trial.
Some states, including Illinois, New York, Texas and West Virginia, may permit "setoffs" for trust payments. In other words, if a claimant has already received a trust payment, any defendant he or she sues may be able to deduct the amount of that payment from a court award. Other states do not allow, or sometimes limit, the use of setoffs. For example, some courts may apply setoffs differently depending on whether the compensation is for economic damages (e.g., medical expenses) or noneconomic damages (e.g., pain and suffering).
However, these laws shouldn't dissuade asbestos victims from filing a trust claim. A single asbestos injury may be caused by several companies' negligence. Some companies can be sued in court, while others who have filed for bankruptcy protection can only be held responsible through the trust system. These laws are intended to establish procedures for filing claims against all negligent parties.
It is best to consult a mesothelioma attorney about whether you can file an asbestos trust claim, an asbestos lawsuit or both. They are knowledgeable about the litigation and trust claim processes. They can also let you know how filing one type of claim may affect the amount of compensation you may be eligible to receive through the other type of claim.
The type of attorney you choose could make a difference in the compensation you receive. Mesothelioma lawyers with extensive experience often get more for their clients than lawyers who don’t have experience with asbestos claims. Do your research and make sure to work with an attorney who has lots of experience with mesothelioma lawsuits and trust claims.
It is also important to remember that statutes of limitation only allow a certain amount of time to file a lawsuit. Most states feature a two-year statute of limitation that starts from the time a person is diagnosed with mesothelioma, but some states vary. If your time to file a lawsuit has expired, you may be able to file an asbestos trust claim. Again, it is best to speak with a mesothelioma lawyer to determine the options for your individual case.
It depends on the type of injury and the payment schedule established by the trust. Each asbestos bankruptcy trust develops its own schedule that assigns values to various types of asbestos injuries. Certain types of diseases and levels of severity are eligible for more compensation. The values are based on the compensation payments made by the company before reorganization.
Since most trusts do not have enough money to fully pay all present and future claims, they offer asbestos victims a set percentage of their claims. The 26 largest trusts offer to pay anywhere from 1.1 percent to 100 percent of a claim amount. As of 2010, the median percentage they offered to pay was 25 percent of a claim. The amount of compensation is limited to ensure there is enough money to pay future claimants who will be diagnosed years from now.
Johns Manville started in the 1800s as the H.W. Johns Manufacturing Company, making fire-resistant roofing out of asbestos. By the late 1920s, it had gone public and grown into a major manufacturer of asbestos insulation for Navy ships. It later became a leading manufacturer of asbestos cement pipe, PVC pipes and fiberglass. Along the way, it amassed hundreds of thousands of asbestos personal injury claims and billions of dollars in asbestos liabilities.
Today, Johns Manville is a successful manufacturer of fiberglass and polyurethane products. Some people who see its commercials or hear about its award-winning formaldehyde-free insulation may be surprised to hear about its asbestos-laced past. It's unlikely that its renewed reputation would have been possible without bankruptcy reorganization.
In 1988, Johns Manville funded a $2.5 billion trust to pay asbestos claimants.
The company filed for bankruptcy protection in 1982. In 1988, Johns Manville funded a $2.5 billion trust to pay asbestos claimants. But the trust was widely considered underfunded. In the years since, it suspended operations twice and reduced the amount paid to less than 10 cents on every dollar of the original benefit schedule.
Since the Johns Manville case, nearly 100 companies with asbestos liabilities have sought bankruptcy protection. While trust compensation remains significantly less than what claimants may be eligible to receive in court, today's trusts are generally better funded than the Manville Trust. Dozens have been funded with tens of billions of dollars. Thorough estimation proceedings under section 524(g) of the U.S. Bankruptcy Code help ensure payments for future claims.
The Furthering Asbestos Claim Transparency (FACT) Act of 2015 seeks to make asbestos trust funds report their payouts and the personal information of claimants in a public database.
Proponents of the bill say it will prevent “double dipping” by claimants, theoretically leaving more funds available for future claimants.
Supporters of the bill say there is little to no evidence suggesting that claimants have received multiple payouts from the same trust. They believe rare, isolated cases of fraud aren’t sufficient to warrant the FACT Act, which would make asbestos victims’ private information available to the public, including the last four digits of their social security number.
A version of this act was originally proposed in 2013 to the U.S. House of Representatives. It passed the House and went to the U.S. Senate, where a similar bill was introduced in 2014. Both versions of the bill were archived in 2015.
According to GovTrack, a website that reports on the status of U.S. legislation, there is an 11 percent chance the FACT Act will enact into law.
Given the long latency period of asbestos-related diseases, new claims are expected to emerge for several more decades. As of 2011, asbestos trust funds have combined assets of $36.8 billion in 60 trusts that have been established on behalf of companies who have filed for reorganization. Not surprisingly, there are concerns that asbestos trust fund assets will not be enough to compensate all future claimants.
Trusts are established after rigorous estimation proceedings to determine how much money should be set aside for current and future asbestos claims. They are also managed under procedures to make the money last long enough to compensate future claimants. This means that claimants typically receive a percentage of what they actually claim. However, reorganized companies responsible for asbestos injuries can't avoid paying future claimants.
If you have been diagnosed with an asbestos-related illness, speak with a mesothelioma attorney today about your options for compensation. Although there are no guarantees that you will obtain a specific amount of compensation, a mesothelioma attorney can explain the procedures and possible limitations on what you can recover under a trust claim.
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