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May, 2004

Corporate Welfare For Companies, Asbestos Insurers
By Alex Horvath

Companies that were at one time involved with asbestos are scrambling to fend off lawsuits. More than 600,000 people nationwide are suing 8,400 companies for asbestos-related claims. One notable company, Halliburton, at one time headed by vice president Dick Cheney, has offered $4.2 billion in a fund to settle more than 300,000 claims.

Help for the multi-billion dollar firms may be on the way through legislative action placing responsibility on insurers and businesses, capping the payout for asbestos at $114 billion over 27-years, and keeping matters out of the courts. Lawmakers and insurers have reached a tentative agreement on financial arrangements laid out as part of "The Fairness in Asbestos Injury and Resolution Act of 2004," introduced April 7. By lobbying for the legislation, companies are warding off the chance of undiagnosed cases and the unknown cost of future lawsuits.

Under terms of the asbestos liability reform bill, a $114 billion trust would be created to compensate victims of asbestos-related illnesses. The language of the bill calls for insurers to contribute $46 billion, with the remainder being provided by corporate asbestos defendants. The corporate defendants would pay an additional $10 billion if the claims could not be paid.

The fund would be administered by the US Department of Labor, rather than by a court administrator.

Industry groups such as the National Association of Mutual Insurance Companies, the Property & Casualty Insurers Association of America, and the Reinsurance Association of America issued a joint statement expressing initial pleasure at the insurers' portion being kept to $46 billion. Senate Majority Leader Bill Frist (R-Tenn), and Sen. Orrin Hatch (R-Utah), introduced the legislation.

But the legislation is not a done-deal. Legislators and insurers still face obstacles from families and victims rights groups who fear the fund could ultimately run out of money because there are so many victims, along with others who have yet to be diagnosed with the slowly progressing disease that is brought on by contact with asbestos fibers. Asbestos symptoms sometimes take years to manifest. Victim's rights advocates protest that the bill, if passed in May, would block victims from seeking a decision from a jury. The Washington, DC based Environmental Working Group Action Fund, called the bill "inadequate," stating that claims for the number of people exposed to asbestos won't play themselves out over 27-years, and that the government and insurers want to fit people into the amount of dollars allocated, rather than determining the amount of people affected.

Chagrined business leaders disagree, saying the measure is the best way for victims to seek compensation without driving companies into bankruptcy. Since 2000, when a glut of asbestos-related claims hit the courts, more than 70 companies have filed for bankruptcy.

 

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