New Deal Moves Asbestos Trust Over Big Hurdle
By ALEX BERENSON, NY Times
June 25, 2003
|News & Links|
Senators reached a compromise yesterday that would make it easier for asbestos victims to qualify for payments from a proposed trust fund that would end asbestos lawsuits, significantly increasing the chances that the fund will be created.
The trust would end all asbestos lawsuits and instead pay people with asbestos-related diseases according to a set payment schedule. The fund, whose cost has been estimated at $70 billion to $170 billion, would be financed by insurance companies and businesses and administered by the federal government.
The compromise, which sets the medical standards for receiving money from the fund, was reached unexpectedly early yesterday after all-night talks between Democratic and Republican staff members for the Senate Judiciary Committee. Lobbyists for both business groups and unions, as well as staff members from both parties, said they thought the deal had given new momentum to the legislation to create the trust. Last week, the chances for a bill appeared dim because Democrats and unions thought that the details of the legislation were unfair to victims and they seemed to have enough power to block it.
Despite yesterday's agreement, passage of the bill is far from certain. Labor, business and insurers remain at odds on several other important issues, including the amount of the payouts and the total size of the fund.
"A major hurdle was cleared, but there are a couple of steep hills yet to climb," said Joel Johnson a spokesman for the Asbestos Study Group, an association of about a dozen large companies, including General Electric and General Motors, that strongly favor a trust.
The fund is a top priority for big businesses and insurers, which face hundreds of thousands of lawsuits from people who say they have been injured by asbestos. A fund could also benefit victims, who now must wait years to receive payments and must give as much as 40 percent of their settlements to lawyers.
The trust would be the second-largest lawsuit settlement, exceeded only by the agreement by tobacco companies in 1998 to pay states $246 billion for their Medicaid spending on victims of cigarette smoking.
The agreement came after staff members for Senator Orrin G. Hatch, the Utah Republican who is chairman of the Judiciary Committee, and Senator Patrick J. Leahy, the Vermont Democrat who is the committee's ranking minority member, met through the night to discuss ways to make the medical criteria in the legislation acceptable to unions. Under the compromise, the committee eliminated the proposed cutoff date of 1982 for victims. It also added two disease categories for victims, bringing the total to 10, and agreed to create a special board to hear appeals from people who do not qualify under the established criteria.
"I believe the bill we have today with all the changes we have agreed to is a fair and generous bill," Mr. Hatch said yesterday.
Mr. Leahy was somewhat optimistic, saying that he thought the compromise on medical criteria was "a breakthrough agreement." But he added that he thought labor and business still needed to reach agreement on the size of awards and insuring against the risk that the trust will be inadequately financed.
"One down, two to go," he said.
When the bill was introduced by Mr. Hatch last month, after months of talks between the A.F.L.-C.I.O. and business groups, the A.F.L.-C.I.O. immediately protested that the details of the bill would prevent many people injured by asbestos from receiving money from the fund.
Jon Hiatt, the general counsel for the A.F.L.-C.I.O., said the agreement reached yesterday had addressed those concerns. But he added that labor could not support the bill unless payments for people with asbestos-related diseases were increased and both sides could agree on a mechanism to make sure the trust did not run out of money.
"It's helpful, but it's not going to be the epiphany that Senator Hatch tried to make it out to be because it all depends on the other basic pieces that are inextricably tied together," Mr. Hiatt said.
Prospects for a trust appeared bright during the spring as business groups, insurers and the A.F.L.-C.I.O. agreed that a trust was the best solution to the increase in asbestos lawsuits, which have bankrupted more than 60 companies, some of which were only peripherally related to asbestos manufacturing.
But the negotiations bogged down in May when the business groups and insurers refused to move from their initial offer of a $90 billion fund. That is less than half what they are expected to pay out if existing laws are not changed and probably less than victims now receive, although almost 60 percent of all payments go to plaintiffs' and defense lawyers under the current system. The A.F.L.-C.I.O. has said it thinks the fund must be $130 billion to $170 billion.
Unions and Democrats further objected to details of the bill that Mr. Hatch proposed, especially the medical criteria. But businesses and insurers appeared unwilling to make substantive changes, and as June progressed with little action, the outlook for the bill dimmed.
But businesses and insurers have finally accepted that they cannot win bipartisan support, and might not even gain full Republican support, for a bill opposed by unions, people on both sides said. The legislation needs bipartisan support to pass the Senate, where 60 votes are required to overcome a filibuster. There are 51 Republican senators, 48 Democrats and one independent.
Julie Rochman, senior vice president for public affairs at the American Insurance Association, said that the bill "doesn't go anywhere politically" without the A.F.L.-C.I.O. The compromise vastly increases the chances the legislation will pass, she said. "Yesterday, I gave it about a 20 percent chance of passing. Today I'll ratchet it up to 80 percent."