Asbestos Accord Said to Be Near


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Companies, insurers, unions and Democratic and Republican senators are nearing an agreement in principle to end all asbestos lawsuits and instead pay people with asbestos-related diseases from a national privately financed trust, according to people from all sides who have participated in the talks.

The trust, which would be subject to approval by Congress and President Bush, would pay more than $100 billion to hundreds of thousands of asbestos victims over the next 30 years. It would stop the flood of asbestos lawsuits, 200,000 in the last two years alone, that have strained businesses and the court system.

It would be the second-largest lawsuit settlement ever, exceeded only by tobacco companies' agreement in 1998 to pay states $246 billion for their Medicaid spending on victims of cigarette smoking.

Many details of the trust remain to be worked out, including the exact size of payments to victims and who will pay if the trust unexpectedly runs short of money, and the negotiations could still stall.

Unlike the fund Congress created to compensate victims of the Sept. 11 attacks, an asbestos trust would not allow people to opt out and sue instead. All new and existing claims would be settled through the trust, which would largely or entirely be financed by businesses and insurers, people involved in the talks said. Victims would receive payments more quickly, while businesses would avoid the risk of huge verdicts. And both sides would pay much less to lawyers, who now receive more than half of all the money spent on asbestos litigation, studies say.

Efforts to reduce the rights of asbestos claimants to sue have repeatedly failed in the past. In addition, the law creating a trust would be complicated, and complexity is generally the enemy of legislation. So some experts on asbestos said a trust had little chance of becoming law.

But negotiators for all sides said they disagreed. Democrats and Republicans in Congress seem to agree that the number of asbestos lawsuits has become a crisis, and a trust is the only concept with significant bipartisan support.

In addition, Frederick M. Baron, an influential trial lawyer who has participated in the negotiations, said that the Association of Trial Lawyers of America would not oppose a trust if it offers payments similar to the net amounts, after lawyers' fees, that victims now receive in lawsuits.

Some lawyers will fiercely oppose a trust. But if their lobby stands aside, and unions, companies and insurers can reach a deal, the legislation could pass, Mr. Baron said.

While it might seem surprising that the trial lawyers' group is not fighting a trust, the group has been on the defensive since Republicans gained control of the Senate, and asbestos lawsuits have become particularly controversial.

"A national trust is the best solution," said David Austern, president of an asbestos trust fund that resolves claims against the Johns-Manville Corporation, once the leading maker of asbestos.

Mr. Austern who has watched efforts to resolve asbestos lawsuits since 1988, when he became counsel for the Manville trust, said he thought the trust had a better-than-even chance of becoming law. (Mr. Austern has consulted with Senate staff members, as well as a group of large companies, about the proposed trust. He said he had not been paid for the consulting.)

Creating a trust is a priority for many big businesses, especially manufacturers. Companies worry that they will have to pay hundreds of billions of dollars in claims unless Congress limits lawsuits against them from people who were exposed to asbestos but are not sick. Their concerns have grown in the last two years, after a spate of very large verdicts against companies that did not make asbestos but used it in their factories or products.

Already, lawsuits have forced into bankruptcy almost 70 companies, some of which were only peripherally connected to asbestos. Most American companies stopped using asbestos decades ago, but the number of lawsuits continues to rise. About 700,000 claims have been filed, including 200,000 in the last two years.

At the same time, the trust would ensure that tens of thousands of people who will die over the next 30 years from exposure to asbestos, as well as many others sickened by exposure, will be compensated.

Under the current system of lawsuits, some people who are sick or dying from asbestos exposure receive little money if their exposure happens to have come from companies that are already in bankruptcy. Others, including some who are not sick, get millions of dollars from sympathetic juries.

Most of the money in the trust would go to the sickest people, with the largest payments exceeding $1 million. People who have been exposed to asbestos but are not sick might get up to $1,000, although business groups would prefer much less. The level of payments to people who are not sick is crucial, because if it is set too high, millions of people may apply for payments, draining the trust of money it needs to compensate sick people, said Stephen Carroll, a senior economist at the Rand Institute for Civil Justice who has studied asbestos suits.

While more than half the money paid in the current system goes to plaintiff and defense lawyers, the trust under discussion would pay nearly all its money to victims if they are new claimants. But lawyers who represent people who have already filed claims would receive their standard fees of up to 40 percent of any settlement, meaning those claimants would cost the fund more.

People involved in the discussions say companies that made asbestos or used it in their products, as well as insurance companies, have together offered to pay $90 billion over the next 25 years to pay claims. Insurers and companies would each pay for half its cost. The government might also contribute a nominal amount, or help pay for medical monitoring of people who have been exposed to asbestos but are not sick.

Since the trust's principal would accumulate interest over time, the fund would pay out more than $100 billion in all. That figure is less than half as much as analysts forecast that companies and insurers would eventually spend to resolve asbestos claims under the current system. But because much of the money goes to lawyers under the current system, the companies say, victims would do as well. Trial lawyers say companies and insurers will have to contribute more than $100 billion so that victims do not lose out.

The efforts to build a trust have gained momentum since a meeting on April 1 that included senators and top representatives from the major interest groups. Staff members for Senator Orrin G. Hatch, Republican of Utah and chairman of the Senate Judiciary Committee, and Senator Patrick J. Leahy of Vermont, the committee's ranking Democrat, are meeting regularly to hammer out details. Mr. Hatch has said that he would like to introduce legislation next month, people involved in the talks say.

Proponents of a trust have focused on the Senate because it has killed asbestos bills in the past and they assume that if a bill passes the Senate with the endorsement of business, it will clear the House and be signed by the president. A White House spokeswoman said any legislation would be reviewed.

"Right now everyone's at the table," said Ed Pagano, an aide to Senator Leahy.

Barry B. Direnfeld, a lawyer who represents the Asbestos Study Group, an association of about a dozen large companies, including General Electric and General Motors, that strongly favors a trust, said: "We are close to an agreement. Now we're wrestling with the tough decisions to make it a reality."

Still, efforts to end asbestos litigation have foundered in the past, and this plan faces many hurdles. Although they have reached broad agreement on financing, businesses and insurers have not yet decided exactly how much each company would pay or how such assessments would be determined.

Nor has business agreed with labor on how much money the trust would pay to different types of victims, a factor that will determine the overall size of the trust.

The A.F.L.-C.I.O. believes that the $90 billion that companies and insurers have offered is inadequate, said Damon Silvers, the union's associate general counsel.

Another potential complication is that one of the biggest beneficiaries of any such settlement could be Halliburton, the oil services company, which faces asbestos suits that have depressed its stock price. Because Vice President Dick Cheney was chairman of the company, any settlement that benefits Halliburton may be criticized by Democrats.

"The trust creates a number of problems, " said Lester Brickman, a professor at Yeshiva University and an expert on asbestos who is not involved in the talks. "The complexity of it, the decisions about who contributes and how much."

But Mr. Silvers said the disagreement over the size of payments can be resolved. "We can see far clearer than we could a few weeks ago that there's a meeting point on the financial numbers," he said. "We think there's a win-win number."