Medicare Collection Agency Sets Sights on Asbestos Trusts

Legislation & Litigation

A prominent Medicare services collection agency is taking aim at an estimated 60 viable asbestos trust funds, citing a failure to divulge settlement payments and deliver reimbursement to providers for health care services.

Asbestos trusts are designed to compensate victims of diseases caused by exposure to asbestos, most notably malignant mesothelioma, a rare cancer with no definitive cure.

MSP Recovery LLC, a leading Medicare/Medicaid recovery specialist, filed the first lawsuit last week against the J.T. Thorpe Settlement Trust, according to a report in The Wall Street Journal.

J.T. Thorpe Inc. is a former industrial equipment manufacturer that filed for bankruptcy in 2002. The suit was filed in U.S. Bankruptcy Court in Los Angeles.

Attorney John Ruiz, chief executive officer of MSP Recovery, told The Mesothelioma Center at that he expects to file suit against five more trusts by the end of the month, and all 60 asbestos trusts within the next few months.

“When these companies don’t pay, it’s costing the taxpayers money,” Ruiz said. “We have the right to collect.”

Ruiz believes the lack of transparency regarding the trusts has unfairly shifted the burden of treating patients to the general public through Medicare.

The lawsuit claims the lack of reporting on payouts causes “staggering financial losses” for Medicare Advantage programs, health care payers and physician groups, which are not compensated properly.

Trust Officials Say Complaint Has No Merit

Asbestos trusts are not required to publicly disclose payout amounts, although business groups have advocated for federal legislation that would require more reporting and better protection against potential fraud.

Steven Bray, executive director of the J.T. Thorpe Settlement Trust, told The Wall Street Journal the trust “believes the complaint filed by MSP Recovery and the related allegations are without merit and will vigorously defend itself.”

The trusts are created by negligent companies filing for Chapter 11 bankruptcy protection and include rigorous, court-reviewed payout estimations to provide for current and future claims.

They are companies that knew, or should have known, that asbestos was toxic and that exposure to asbestos could lead to serious health issues. Trusts are often created by solvent companies that were inundated by lawsuits.

According to various accounts, there are 60 asbestos trust funds today with estimated assets of $30 billion, designed to be paid in future years.

Since the early 1980s, the trusts have paid claimants approximately $20 billion. Payouts from mesothelioma trust claims can range from $7,000 to $1.2 million, with a median value of $180,000. Many claimants seek money from more than one trust.

Occupationally exposed laborers are the most common claimants against former employers. Also eligible to file claims are household members exposed to secondhand asbestos, and family members who lost someone to an asbestos disease.

Some of the more prominent companies with asbestos trusts include:

  • Owens Corning Corporation
  • Johns-Manville Corporation
  • Armstrong World Industries
  • Pittsburgh Corning Corporation
  • United States Gypsum
  • W.R Grace and Company
  • Babcock & Wilcox
  • Western Asbestos
  • DII Industries

Disclosure of Settlements at Issue in Lawsuit

According to the lawsuit filed earlier this month, the J.T. Thorpe Settlement Trust has paid more than 5,000 claims worth $167 million since 2006.

Correspondence between MSP Recovery and the J.T. Thorpe trust was included in the lawsuit filing. Trust executors said confidential settlement claims could not be disclosed, and that they were not bound by the Medicare registration and reporting obligations that MSP Recovery wanted.

Also part of the filing, MSP Recovery’s own investigation determined that in 284 of the trust claims, medical expenses were paid by Medicare, the government agency, and that no reimbursement was provided.

MSP contends that when Medicare provides care for patients the asbestos trusts are obligated to report mesothelioma financial compensation and reimburse the Medicare providers.

“These are pretty straightforward cases,” Ruiz said. “Hopefully in a year, or year and a half, things will have changed.”

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