Prognosis for Asbestos Compensation Bill Remains Unclear

Congressional efforts to stem the flood of asbestos lawsuits took a major step forward earlier this month when the Senate Judiciary Committee approved a measure that would instead compensate victims from a privately funded trust of up to $153 billion.

The stakes raised by asbestos compensation are high: litigation has already cost companies more than $70 billion, led to dozens of bankruptcies, and studies predict the number of lawsuits has not yet peaked.

The final vote represented a major victory for committee chairman Sen. Orrin Hatch, R-Utah. But completion of legislation to end the litigation still faces major hurdles:

The narrow 10-8 margin of the vote, and the fact the panel broke largely along party lines, augurs ill for its passage by the closely divided Senate;

The insurance industry opposes the measure because it costs too much; the AFL-CIO rejects the bill because it pays victims too little.

Enormous uncertainties remain to be worked out before the complex legislation can move forward.

Senators attached a large number of amendments to the proposal before approving it July 10, and as a result, two weeks after the committee vote, stakeholders still do not know what's in the legislation.

"We haven't seen all the final report language," commented Jan Amundson, senior vice president and general counsel for the National Association of Manufacturers (NAM). "We don't have a bill to comment on."

The Asbestos Alliance, a coalition of defendant companies, also continues to hang fire as it awaits the language of the final bill.

Insurance companies turned against the bill because of an amendment that increased their contribution to the trust by $7 billion.

The bill bans asbestos in most consumer products and requires the insurance industry and defendant companies to set up a no-fault trust fund that would pay workers who have developed cancer or other illnesses caused by asbestos exposure. The proposal takes nearly 300,000 pending asbestos cases out of court and would shield companies from future legal liability.

One of the most contentious and unresolved issues appears to be how much compensation to pay victims. Under the bill approved by the committee, workers suffering from the most serious disease, mesothelioma, would receive $20,000 to $1 million.

The fund recognizes 10 levels of asbestos-related diseases. Smokers, ex-smokers and nonsmokers who are sick due to asbestos-related diseases would get different sums of money.

The current system, with all its flaws, is better than this proposal, according to Peg Seminario, director of health and safety for the AFL-CIO.

"The big problem is unfair compensation for those who are sick," Seminario explained. "The bill grossly reduces compensation for those who smoke, and the vast majority of blue collar workers are smokers."

All sides do agree that the Senate will not consider the bill until September, and that in the meantime negotiations will continue.

"This is a work in progress," commented an Asbestos Alliance spokesperson. "Hatch wanted to move the bill out of the committee and continue talking."

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