What Is a Mesothelioma Trust Fund?
Also commonly called an asbestos trust fund, these trusts are created to secure future compensation for mesothelioma victims when asbestos manufacturers file for Chapter 11 bankruptcy protection.
Mesothelioma Trust funds created through Chapter 11 bankruptcy:
Are funded with enough money to compensate future claims.
Allow people to file a claim with the trust fund instead of suing the company.
Help people with all types of asbestos-related diseases.
Asbestos victims have a legal right to seek compensation to help pay for:
Cancer treatment, medical devices and home health aides
Travel expenses related to cancer treatment
Lost wages and other forms of lost income
Mesothelioma victims may be able to file claims against one or more trust. The process may require you to provide medical records, a physician statement and an asbestos exposure summary.
An experienced asbestos lawyer can provide you a list of asbestos bankruptcy trusts and help you navigate the trust fund process. These trust funds help people with all types of asbestos-related diseases, but mesothelioma claims usually result in the highest compensation.
How Much Money Is Left in Asbestos Trusts?
There are approximately 60 active asbestos trust funds with an estimated $30 billion available for claimants.
These trusts have paid claimants about $20 billion since the late 1980s. This figure includes an estimated $15 billion paid between 2006 and 2012.
List of Asbestos Trust Funds
The following chart shows the top 10 asbestos trust funds available in the U.S. to mesothelioma patients and their families.
|Company||Estimate of Initial Assets||Year Established|
|United States Gypsum||$3.9 billion||2006|
|Owens Corning Corporation||$3.4 billion||2006|
|Pittsburgh Corning Corporation||$3.4 billion||2011|
|W.R. Grace and Co.||$2.9 billion||2001|
|DII Industries||$2.5 billion||2005|
|Johns-Manville Corporation||$2.5 billion||1988|
|Armstrong World Industries||$2 billion||2006|
|Western Asbestos (Western MacArthur)||$2 billion||2004|
|Babcock & Wilcox||$1.8 billion||2006|
|Owens Corning Fibreboard Subfund||$1.5 billion||2006|
Source: RAND Institute for Civil Justice Asbestos Bankruptcy Trusts report, 2015
Find out which companies have a bankruptcy trust and the amount of money available:
How Much Compensation Can Asbestos Trusts Pay Claimants?
The amount of compensation a claimant can receive from an asbestos trust depends on:
The type of asbestos-related disease diagnosed
The payment schedule the trust initially established
The current payment percentage for the trust
Certain types of asbestos-related diseases and levels of severity are eligible for more compensation. For example, mesothelioma trust fund claims routinely pay in six figures, according to a 2016 Mealey’s Asbestos Bankruptcy report.
Each asbestos trust assigns claim values to various types of asbestos-related diseases, which is called a “schedule.” The scheduled values are based on how much compensation the company paid to asbestos claimants before filing for bankruptcy.
Even though trusts are supposed to be established with sufficient funds, most of them don’t end up having enough money to pay the full scheduled value of all present and future claims. As a result, they offer a set percentage of a claim’s value to preserve money for future victims who will be diagnosed years from now.
How Trust Fund Payment Percentages Work
Trust funds offer to pay anywhere between 1% and 100% of a claim’s scheduled value. As of 2019, the median percentage they offer to pay is 25% of a claim.
If a claimant diagnosed with mesothelioma is scheduled to receive $100,000, and the trust’s current payment percentage is 25%, the claimant will receive $25,000.
The appointed trustee is responsible for adjusting the payment percentage to ensure enough funds remain to handle future claims.
The average amount paid by all trusts has decreased by 50% since 2008, according to a recent Mealey’s report.
Even though claimants receive a percentage of what their claim is worth, the compensation can help cover medical bills and make up for lost wages.
Mesothelioma claimants can also consider other types of compensation such as lawsuits, Social Security Disability Insurance and veteran’s benefits.
Don't Let Your Claim Expire
Different types of mesothelioma claims, such as personal injury or wrongful death claims, have different statutes of limitations that vary by state.Start Your Claim
Filing an Asbestos Trust Fund Claim
Evidence required to file an asbestos trust claim usually includes:
Patient’s Diagnosis: Medical documentation proving the claimant is diagnosed with mesothelioma or another asbestos-related disease. These documents may include pathology reports and imaging scans.
Physician Statement: A statement drafted by a qualified physician, such as a doctor or oncologist, confirming the diagnosis.
Exposure Site: Evidence confirming asbestos exposure that happened at the company’s facilities or that the claimant was exposed to the company’s asbestos products. This may include witness affidavits, employment records and invoices.
Asbestos Involvement: Medical documentation describing the extent asbestos contributed to the claimant’s disease.
Asbestos Trust Fund Claims Versus Lawsuits and VA Claims
Trust fund claims are a legal option for victims of asbestos exposure, but they differ from lawsuits VA claims.
Asbestos trust fund claims are not lawsuits, but they can still pay significant compensation to people injured by asbestos products.
Asbestos lawsuits include personal injury claims and wrongful death claims. Compensation from lawsuits comes through settlements or jury verdicts.
VA claims are technically not legal claims, but they offer compensation and health care to veterans of the U.S. armed forces.
You may be able to file claims against more than one asbestos trust fund in addition to filing a lawsuit against one or more solvent companies, but you can’t sue an asbestos company that went bankrupt.
Asbestos companies that successfully file for bankruptcy reorganization are protected from future asbestos lawsuits because claims are handled by the trust fund.
A qualified attorney from a mesothelioma law firm can help you determine your legal options.
Did You Know?
Most mesothelioma cases settle before going to trial, and the average mesothelioma settlement payout ranges between $1 million and $1.4 million.Qualify for a Settlement
How Asbestos Bankruptcy Trusts Are Created
The following factors play a role in the creation of asbestos trust funds:
Bankruptcy Court: Companies that can’t afford their asbestos liabilities and want to stay in business have the option to file for Chapter 11 bankruptcy. They must submit detailed plans to the bankruptcy court for reorganization. These plans include the amount they will put into the trust to pay asbestos claimants and creditors.
The court holds estimation proceedings, which resemble court trials. These trials weigh input and objections to the plan by interested parties, including lawyers of asbestos victims and asbestos company creditors.
Asbestos Claim Estimates: Each interested group offers its own estimate of how much money should be put into the trust for asbestos claims. They support their estimates with how much the company paid in compensation for prior asbestos claims, and with testimony from experts. The testimonies may come from economists, social scientists or legal experts who are knowledgeable about the value of past asbestos lawsuit settlements.
The bankruptcy judge weighs estimates and expert testimony. The judge then determines how much money should be set aside for asbestos claims.
Reorganization Approval: Bankruptcy court may reject a company’s reorganization plan. It can take many years and multiple estimation proceedings for the court to grant approval. Once the plan is approved, the company transfers the money to a trust fund and a trustee is appointed to manage the trust.
Trust Fund Valuation: The trustee regularly evaluates available funds, known as trust fund valuation, to assess the net worth of the fund and determine if the payment percentage needs adjusting.
Limitations on Filing Asbestos Trust Fund Claims
Before filing a trust fund claim, it is essential to know all of your legal options. A qualified mesothelioma lawyer can help you through this process and determine if filing an asbestos trust fund claim is right for you.
Statutes of Limitations: A trust fund claim must be filed within the statutes of limitations set by each trust. These statutes define the time limits for filing a claim. Each trust sets its own time limits, usually around two to three years after a mesothelioma diagnosis or death.
State Laws: The federal government leaves it up to each state to form its own asbestos legislation. State laws vary greatly on when trust claims must be made and how trust compensation affects the determination of lawsuit awards.
Setoffs: If claimants have already received trust payments, any defendant they sue may deduct the amount of that payment from a court award. These are called setoffs. Some states, including Illinois, New York, Texas and West Virginia, may permit setoffs for trust payments. Other states do not allow, or sometimes limit, the use of setoffs.
Filing Multiple Claims and Lawsuits: In some cases, claimants can file asbestos trust claims and asbestos lawsuits at the same time. But filing a trust claim can affect the amount of compensation received from a lawsuit. Various state laws require claimants to disclose information about other claims they may have filed in the past.
Information Sharing: State courts have different rules about sharing trust claim information with lawsuit defendants. Some courts require disclosure of any claims submitted to trusts during the discovery phase of a lawsuit. This requirement does not necessarily mean the plaintiffs must file their trust claims before trial. It just applies to any claims previously filed. Some courts may require filing certain trust claims before trial. A few of these courts include those in New York City and Montgomery County, Pennsylvania.
FACT Act and Asbestos Tort Reform
The Furthering Asbestos Claim Transparency (FACT) Act seeks to make asbestos trust funds report their payouts. The act also would put the personal information of claimants in a public database, including the last four digits of their Social Security number.
Overview of the FACT ACT
Proponents of the bill say it will prevent claimants from “double dipping,” theoretically leaving more funds available for future claimants.
Those who oppose the bill say there is little to no evidence suggesting claimants have received multiple payouts from the same trust. They believe rare, isolated cases of fraud aren’t sufficient to warrant the FACT Act.
On Feb. 15, 2017, the U.S. House Judiciary Committee approved the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 – one of several iterations of the legislation.
The bill repeatedly stalled in the legislature in previous years with a promised veto from former President Barack Obama. Supporters are hopeful President Donald Trump will support the legislation as part of a litigation reform package, but the bill remains stalled and no actions have been taken since 2017.
DOJ Cracks Down on Trust Claims
Since late 2018, the Department of Justice has increased scrutiny of asbestos trust funds, urging for more accountability. The department believes trust funds lack adequate safeguards to prevent fraudulent claims and mismanagement.
In September 2018, the department filed an official Statement of Interest in the bankruptcy proceedings for Kaiser Gypsum Company. Shortly after, the department challenged the appointment of a trustee for the Duro Dyne company trust, claiming the attorney was too conflicted to represent the interests of future claimants.
“Asbestos victims should feel certain that they will receive compensation when they are promised, but fraudulent claims and mismanagement call that promise into question,” Jesse Panuccio, principal deputy associate attorney general at the DOJ, said in the Statement of Interest.
The Department of Justice is also looking for inconsistent evidence between multiple claim filings. Nineteen state attorney generals have cited issues regarding the transparency of the trusts, according to the department.
Will Asbestos Bankruptcy Trusts Have Enough Money to Pay Future Claims?
Given the long latency period of asbestos-related diseases, new claims are expected to emerge for several decades. An estimated $30 billion remain in asbestos trusts.
How Trusts Secure Compensation
Trusts are established after rigorous estimation proceedings. These proceedings 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.
To ensure enough money is left, claimants typically receive a percentage of what their claim is worth. This prevents funds from running out too soon, but it also means that many victims don’t get as much as they deserve.
There are no guarantees that you will obtain a specific amount of compensation if you file an asbestos trust claim. A mesothelioma attorney can explain the procedures and possible limitations on what you may recover from a trust claim.
Johns Manville: The First Asbestos Trust Fund
The first asbestos trust fund was created by Johns Manville in 1988. At the time, the $2.5 billion trust was considered underfunded. Since then, it suspended operations twice and reduced the amount paid to less than 10 cents on every dollar of the original benefit schedule.
According to the Manville Personal Injury Settlement Trust fourth quarter 2018 report, the trust has more than $654 million in total assets and had more than $54 million in total liabilities in 2018.
Since the Johns Manville case, about 100 asbestos companies have sought bankruptcy protection. Trust payouts remain significantly less than what claimants may be eligible to receive in court or through a lawsuit settlement. To date, asbestos trusts have paid out about $20 billion for more than 3 million claims.
Common Questions About Asbestos Trust Funds
- Will I need an attorney to file a mesothelioma trust fund claim?
While trust funds may not require you to have legal representation to file a claim, it is in your best interest to hire an experienced mesothelioma attorney. Asbestos lawyers are familiar with the nuances of how each trust fund works and how to maximize your compensation.
- What are the pros and cons of filing an asbestos trust fund claim versus a lawsuit?
The pros and cons depend on your individual case and whether you are eligible to file both types of claims. It is best to speak with a mesothelioma attorney to learn about the personal pros and cons that may affect whether you decide to file a mesothelioma lawsuit, trust fund claim, or both.
- Is asbestos trust fund compensation taxable?
Compensation from asbestos trust funds is generally tax-free, but only a mesothelioma attorney or tax expert can confirm whether you may owe taxes to the state or federal government resulting from such compensation.
- How much is the average trust fund claim payout?
Each trust fund sets different payouts for asbestos-related diseases. While there is no average trust fund payout, it isn’t uncommon for mesothelioma patients to receive compensation totaling six figures after filing claims with multiple trust funds.
- Can a family member file an asbestos trust fund claim?
Yes, the estate of someone who has died from an asbestos-related disease can file wrongful death claims with asbestos trust funds. A mesothelioma attorney can provide guidance on how to file a successful claim.
5 Cited Article Sources
The sources on all content featured in The Mesothelioma Center at Asbestos.com include medical and scientific studies, peer-reviewed studies and other research documents from reputable organizations.
Frankel, A. (2018, September 28). DOJ intensifies attack on asbestos trusts, files opposition in prepackaged Duro Dyne bankruptcy.
Retrieved from: https://www.reuters.com/article/us-otc-asbestos/doj-intensifies-attack-on-asbestos-trusts-files-opposition-in-prepackaged-duro-dyne-bankruptcy-idUSKCN1M82RL
Fisher, D. (2017, March 20). State AGs Probe Asbestos Bankruptcy Trusts To Recover Medicare Payments.
Retrieved from: https://www.forbes.com/sites/danielfisher/2017/03/20/state-ags-probe-asbestos-bankruptcy-trusts-to-recover-medicare-payments/#7fa30c5d7ce2
Hare, J. & Ryan, D. (2016, April 19). COMMENTARY: Uncloaking Bankruptcy Trust Filings In Asbestos Litigation: Refuting the Myths About Transparency.
Retrieved from: https://www.lexislegalnews.com/articles/7668/commentary-uncloaking-bankruptcy-trust-filings-in-asbestos-litigation-refuting-the-myths-about-transparency
Dixon, L., McGovern, G. & Coombe, A. (2010). Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity with Detailed Reports on the Largest Trusts.
Retrieved from: http://www.rand.org/content/dam/rand/pubs/technical_reports/2010/RAND_TR872.pdf
- Scarcella, M. & Kelso, P. (2013, December 11). Asbestos Bankruptcy Trusts: A 2013 Overview of Trust Assets, Compensation & Governance. Retrieved from: https://www.lexisnexis.com/legalnewsroom/litigation/b/litigation-blog/archive/2013/12/11/asbestos-bankruptcy-trusts-a-2013-overview-of-trust-assets-compensation-amp-governance.aspx
How did this article help you?
What about this article isn’t helpful for you?
Did this article help you?
Share this article
Last Modified March 5, 2020