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S. HRG. 109–817

THE FAIRNESS IN ASBESTOS INJURY RESOLUTION

ACT

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JANUARY 11, 2005

Serial No. J–109–2A

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ARLEN SPECTER, Pennsylvania, Chairman 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

SAM BROWNBACK, Kansas 

TOM COBURN, Oklahoma 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

DAVID BROG, Staff Director 

MICHAEL O’NEILL, Chief Counsel 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

TUESDAY, JANUARY 11, 2005

STATEMENTS OF COMMITTEE MEMBERS 

Page

Cornyn, Hon. John, a U.S. Senator from the State of Texas ............................... 5

prepared statement .......................................................................................... 93

Kennedy, Hon. Edward M., a U.S. Senator from the State of Massachusetts, 

prepared statement .............................................................................................. 117

Leahy, Hon. Patrick, a U.S. Senator from the State of Vermont ........................ 3

prepared statement .......................................................................................... 128

Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 1

WITNESSES 

Becker, Edward R., Judge, U.S. Court of Appeals for the Third Circuit, 

Philadelphia, Pennsylvania ................................................................................. 6

Berrington, Craig A., Senior Vice President and General Counsel, American 

Insurance Association, Washington, D.C. .......................................................... 35

Engler, John M., President and Chief Executive Officer, National Association 

of Manufacturers, Washington, D.C. .................................................................. 29

Forscey, Michael, Partner, Forscey and Stinson, Washington, D.C. ................... 38

Keener, Mary Lou, McLean, Virginia .................................................................... 41

Robinson, Jeffrey D., Baach Robinson & Lewis PLLC, Washington, D.C. ......... 45

Seminario, Margaret, Director, Safety and Health Department, AFL–CIO, 

Washington, D.C. ................................................................................................. 32

Speicher, Billie, Ontario, California ....................................................................... 43

QUESTIONS AND ANSWERS 

Responses of John M. Engler to questions submitted by Senator Leahy ........... 56

Responses of Craig A. Berrington to questions submitted by Senator Leahy .... 58

Responses of Jeffrey D. Robinson to questions submitted by Senator Leahy .... 60

Questions submitted by Senator Leahy to Margaret Seminario (Note: Responses to questions were not received at the time of printing, March 

13, 2007) ................................................................................................................ 62

SUBMISSIONS FOR THE RECORD 

American Thoracic Society, New York, New York, statement ............................. 63

Berrington, Craig A., Senior Vice President and General Counsel, American 

Insurance Association, Washington, D.C., prepared statement ....................... 88

Engler, John M., President and Chief Executive Officer, National Association 

of Manufacturers, Washington, D.C., prepared statement ............................... 95

Forscey, Michael, Partner, Forscey and Stinson, Washington, D.C., prepared 

statement .............................................................................................................. 107

Gelman, Jon L., Attorney at Law, Wayne, New Jersey, prepared statement .... 113

Keener, Mary Lou, McLean, Virginia, prepared statement ................................. 122

Reinstein, Linda, Executive Director, Asbestos Disease Awareness Organization, prepared statement ..................................................................................... 130

Robinson, Jeffrey D., Baach Robinson & Lewis PLLC, Washington, D.C., 

prepared statement .............................................................................................. 132

Seminario, Margaret, Director, Safety and Health Department, AFL–CIO, 

Washington, D.C., prepared statement .............................................................. 141

Speicher, Billie, Ontario, California, prepared statement .................................... 152

Page

IV

Wallace, Mona Lisa, Attorney at Law, Wallace and Graham, P.A., Salisbury, 

North Carolina, letter and attachment .............................................................. 157

(1)

THE FAIRNESS IN ASBESTOS INJURY 

RESOLUTION ACT 

TUESDAY, JANUARY 11, 2005

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, pursuant to notice, at 9:30 a.m., in room 

SH–216, Hart Senate Office Building, Hon. Arlen Specter, Chairman of the Committee, presiding. 

Present: Senators Specter, Cornyn, Leahy, and Carper (ex officio).

OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. 

SENATOR FROM THE STATE OF PENNSYLVANIA

Chairman SPECTER. The Senate Committee on the Judiciary will 

now proceed with a hearing on a discussion draft seeking to solve 

the asbestos crisis which confronts America at the present time. 

I first saw the asbestos issue back in 1984, more than 20 years 

ago, when then-Senator Gary Hart of Colorado brought in JohnsManville. And this very tough issue has been very elusive for more 

than two decades, and it has mounted in problems, reaching a situation where we now have some 74 companies which have gone into 

bankruptcy, thousands of individuals who have been exposed to asbestos, with deadly diseases—mesothelioma and cancer—and who 

are not being compensated. And about two-thirds of the claims, 

oddly enough, are being filed by people who are unimpaired. 

The number of asbestos defendants has risen sharply from about 

300 in the 1980s to more than 8,400 today, and most are users of 

the product. It spans some 85 percent of the U.S. economy. Some 

60,000 workers have lost their jobs. Employees’ retirement funds 

are said to have shrunken by some 25 percent. And beyond any 

question, the issue is one of catastrophic proportions. 

The concept of a trust fund was incorporated by Senator Hatch 

and Senator Leahy in legislation which was introduced in the last 

Congress. And after an extensive markup in July of 2003, the bill 

was passed out, largely along party lines, obviously filled with a 

great many problems. I supported it in the interest of moving the 

issue along. 

At that time I enlisted the aid of Circuit Judge Edward R. Becker, who had shortly before taken senior status, having been Chief 

Judge of the Court of Appeals for the Third Circuit and having 

written the landmark opinion on asbestos on class certification, 

which was upheld by the Supreme Court of the United States. And 

2

Judge Becker’s aid was enlisted to assist on an analysis and efforts 

to find common ground. 

In August of 2003, for two days in Judge Becker’s chambers in 

Philadelphia, meetings were held with what we call ‘‘the stakeholders’’—the manufacturers, labor, AFL–CIO, the insurers, the 

trial lawyers—to see what areas there might be for common 

ground. And we have since held some 35 meetings in my conference room, the most recent one of which was held just yesterday. 

A major effort was made to try to get legislation through at the 

end of last year. And, of course, if you want legislation passed in 

the last days of a Congress, it is something that has to be done by 

consensus, because any single Senator can block legislation at the 

very end of the term. And we were not successful. 

But we have continued, and there have been areas of pretty 

much agreement. I am reluctant to use the word ‘‘agreement’’ because there is always some strand, somebody who has concerns, 

but I think that is an accurate statement on quite a number of 

matters, like the streamlining of the administrative process and 

the early start-up and the definitive and exigent health claims and 

judicial review. 

The area of the amount of the trust fund has not been put in the 

discussion draft because it is very, very contentious, and it seemed 

to me that it was better to have this hearing, which is largely an 

educational hearing, so that we may explore the parameters of the 

bill and to see where are the areas of agreement and where are the 

areas of disagreement. 

It is very easy to criticize and find fault with any legislative proposal in this field. It is so vast and there are so many complex and 

competing interests. But it would be my hope that the critics would 

hold their fire until there has been an analysis of the bill, and to 

the extent that there are criticisms, that there are objections, bring 

them to the Committee, bring them to our working group, and we 

will address them. 

This may well be the last best chance to deal with this issue in 

the foreseeable future, and the effort has been really, really herculean. Judge Becker received the Devitt Award as the outstanding 

Federal judge of more than 1,000 judges in the Federal court system and has devoted himself very, very substantially. He still has 

some judicial duties as a senior judge, but very, very substantially. 

And we are looking for more than 60 votes to avoid cloture. I think 

if this bill is to be passed, it is going to have to be passed with big 

numbers. We passed the National Intelligence Director by 96–2 

when we barely got it through conference. And in the last Congress, we had a Patient’s Bill of Rights that passed both Houses, 

and it failed in the conference. So that it has to be worked through 

very, very carefully. 

Senator Feinstein had wanted to be here today, but I talked to 

her yesterday afternoon, and she is under the weather, so to speak. 

She has been a major contributor and has proposed legislation in 

the field. And there have been many contributors. Senator Frist 

and Senator Daschle last year worked on this issue very assiduously, and they came to a figure for the trust fund of $140 billion. 

And their consideration, especially the quasi-adversarial relationship, makes that figure entitled to weight. But that is one where 

3

it is my view that we need to confer. Senator Leahy and I, members of the Committee; Senator Cornyn, who has joined us here 

today, has been asked by Senator Frist to take a special look at the 

case. 

This is not the best day of all days to have a hearing when the 

Senate is not in session, but there really is no good day to have 

a hearing, and three Senators, not a bad showing for a hearing on 

any day. But if we did not proceed today, we would be on into late 

January, and once the Senate goes into session, it is going to be 

very difficult to find floor time. 

I have said that I would like to see a bill presented to the Majority Leader by early February, and that timetable has been labeled 

as unrealistic. Well, I believe in unrealistic timetables. If you have 

an unrealistic timetable, you are likely to get it done sooner. But 

there has been a full-court press on this issue because of the importance of it. And illustrative of that, one of the company representatives at a meeting a couple of weeks ago, talking about getting a 

bill done by July—which, candidly, through conference and on the 

President’s desk, would be early on an expedited basis—said to me, 

‘‘July is too late for my company.’’

Again, let me pay tribute to Senator Hatch, the Chairman last 

year, for the trust fund concept, and to Senator Leahy, who has 

been working at our side through this entire complex process. And 

I will yield to Senator Leahy for an opening statement.

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR 

FROM THE STATE OF VERMONT

Senator LEAHY. Well, thank you, Mr. Chairman. 

I would mention to those who are here, I recall in grade school 

a nun who used to say, ‘‘Many are called, few are chosen.’’ She did 

add, however, that those who showed up late would be chosen to 

go to the principal’s office, so the fact that it is a time we have 

some of our colleagues overseas and elsewhere, but there has been 

great interest in this. And I think that Chairman Specter deserves 

an enormous amount of praise from both Republicans and Democrats in the Senate for holding this hearing. 

My message is a simple one. We have to see our efforts through 

until we have a balanced and effective national trust fund that 

fairly compensates victims of asbestos-related disease. If you are 

going to reach that goal, you have got to work with the various 

stakeholders. You have to work with Senators, both Democratic 

and Republican Senators, until we settle the outstanding details on 

fair resolution for all those who are concerned. 

I remember back in September 2002 I chaired the first Senate 

Judiciary Committee hearing on asbestos litigation. I said at that 

time I was in for the long run, the long haul. I have got to admit 

candidly I did not know the long haul was going to be quite this 

long a haul. But I am still here, and I am here because we have 

made some real progress in finding common ground around a national trust fund, even there have been some fits and starts along 

the way. 

In the last Congress, we painstakingly built two of the four pillars of a successful trust fund: appropriate medical standards to determine who should receive quick compensation, and an efficient, 

4

expedited system for processing claims. With the unanimous adoption—unanimous adoption—of the Leahy-Hatch medical criteria 

amendment, this Committee reached consensus on the proper 

standards for determining legitimate victims. 

Meanwhile, Senator Specter and Judge Becker worked hand in 

hand with the stakeholders. They have achieved consensus for a 

no-fault administrative system to be housed at the Department of 

Labor. 

Now, let me just make a personal note. We have people of varying views of what should be done here. You ought to all be thankful 

that Arlen Specter and Judge Edward Becker worked so hard on 

this. I have been in some of those meetings. I know how hard they 

worked. Senator Specter and I met a number of times in December. 

He has kept me fully apprised and my staff has been fully apprised 

of what is going on. Our input has been sought. This has been acting as a Senator should, seeking a consensus on an enormously 

complex piece of legislation. 

And, Judge Becker, we owe you an enormous thanks because, 

you know, you are in a position in your life and career, one of the 

most distinguished of all appellate judges, where you could just 

say, Hey, guys, I have got other things to do, I do not have to take 

on something this complex. You have done it. You have done it 

with competence, skill, and dignity, and I applaud you for that. 

Now, we have not reached consensus on the other two pillars of 

a successful trust fund: fair award values for asbestos victims and 

adequate funding to pay for their claims. And we know that if the 

award values are too low or subject to liens or reduce or exhaust 

recovery for victims, the bill will not go through. There are about 

600,000 legal cases currently pending in the system, so you have 

to have adequate funding at the inception. Direct contributions 

from defendants and insurers and borrowing authority are going to 

be necessary to accommodate the inevitable, that is, thousands of 

these pending claims coming in on the very first day of the trust 

fund. It is a good news/bad news sort of thing for those who want 

to clean this up. 

The negotiations between Senator Frist and Senator Daschle in 

the waning days of the last Congress narrowed the differences on 

many compensation funding provisions. We should build on that. 

Our undertaking is challenges. It is unprecedented. It will not be 

easy to hammer out the details necessary for enacting a bipartisan 

bill into law. But the stakes are so high, so much has already been 

accomplished, we fail if we leave the field before we try our utmost 

to complete this very difficult task. 

Creating a national trust fund to compensate the victims is one 

of the most complex legislative undertakings I have seen in now beginning my 31st year in the Senate. This national trust fund is 

kind of like a Rubik’s Cube, and that is why you have to have consensus, because it would be very easy for those who oppose the legislation to stop it, where it is going to be very difficult for those 

of us who want legislation to move it forward. It cannot be a 

stacked trust fund approach, an attempt to shoot the moon for one 

side or the other. It has got to be balanced. 

You know, as I look at this, both of my grandfathers, my Irish 

grandfather and my Italian grandfather, were stone cutters in 

5

Vermont. One immigrated to this country unable to even speak the 

language. My paternal grandfather died in his mid-thirties from 

silicosis of the lungs. I never knew him. I visit his grave periodically in Barre, Vermont, where it says Patrick J. Leahy, which kind 

of sends a shiver. And my other grandfather eventually died of silicosis of the lungs. I think of them, I think of what they went 

through, and I think of the hundreds of thousands of present and 

future asbestos victims. 

I want to have a balanced bill, and I will work very much—I 

commend all of you, all of the major stakeholders who have worked 

so hard on this. But I want to thank you, Mr. Chairman, Judge 

Becker, and the representatives from organized labor, the trial bar, 

and the industry who have worked so hard to do it. I think it can 

be done. As I said, I was in it for the long run. I would not still 

be in it if I did not think it could be done. 

So, Mr. Chairman, thank you for moving forward, even though 

you must feel a little bit like Sisyphus at times, but it is a rock 

worth rolling. 

Chairman SPECTER. Thank you very much, Senator Leahy. Sisyphus would be a good example for the total work of the Congress. 

I am a little more optimistic on this one. 

Senator Cornyn, we will turn to you for an opening statement.

STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM 

THE STATE OF TEXAS

Senator CORNYN. Thank you, Mr. Chairman. I have a more extensive statement which I would like to make part of the record. 

Chairman SPECTER. Without objection, the full statement will be 

made part of the record. 

Senator CORNYN. Let me just say briefly, so as not to delay hearing from Judge Becker too long, how much I appreciate the good 

work that you have done and Ranking Member Leahy, but particularly the volunteer effort of Judge Becker. We get elected and paid 

to do what we do. He is a volunteer and someone who no doubt has 

carved out a special place in the hereafter as a result of his generous contributions towards solving this true problem. 

Some have said this is not so much tort reform as scandal reform, where unimpaired claimants get to the head of the line and 

leave bankrupt companies in their wake that can only pay pennies 

on the dollar to people who have certifiably genuine asbestos-related disease. And that is something that has caused all three 

branches of Government—the President as recently as the last couple of days, the United States Supreme Court in uncharacteristic 

fashion has called out numerous times for reform, legislative reform; and, of course, you have already cited the efforts made in the 

last Congress. So I congratulate you, Mr. Chairman, for taking this 

on so early in the 109th Congress. I do not think we have a minute 

to waste, and I look forward to being one of those Senators who 

helps contribute to the ultimate success of this bill. There is just 

too much at stake on the part of the victims, on the part of the 

companies that provide pension plans and employment to people 

who have been put out of work. And to a country that calls itself 

a nation of laws and believes in equal justice under the law, this 

6

situation cries out for reform and for a solution. And I look forward 

to working with you on that. 

Thank you. 

[The prepared statement of Senator Cornyn appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, Senator Cornyn. 

We turn now to Judge Becker, whom I first met in the fall of 

1950 on the Frankford Elevated going to the University of Pennsylvania. He was a freshman and I was a senior, and we have been 

close friends ever since, having gone to Penn together and Yale 

Law School together. Judge Becker was a very successful practicing 

lawyer. He became a United States district judge in 1970 at the 

age of 37. He was elevated to the court of appeals in 1982, became 

chief judge in 1998. He has a long resume of awards, having been 

asked by the Supreme Court to take on some of the most challenging jobs facing the Federal judiciary. Within the past week, he 

traveled to California for one job, and he is on his way to San Juan 

for another job, and he is a prodigious worker. 

When we were trying to get this bill finished before the last session of Congress ended, it was on a consensus basis. It is obvious 

that we are not going to have consensus on all the points, but we 

have eliminated many, many areas of contention, and now the decisions on the remaining issues will have to be made by the Congress. The Senate will have a markup, and we will proceed with 

the legislative process. 

This bill is 273 pages in duration. It is a discussion draft, and 

when it has legislative form and is introduced, I will formally at 

that point call it ‘‘the Becker bill.’’

We will have 10-minute rounds for all of the witnesses except for 

Judge Becker, who will speak at length to describe the bill, the 

areas of agreement, the remaining areas of disagreement. And I am 

glad we have the staffs here of all of the Judiciary Committee 

members. And we had alerted the other Senators who had been especially interested. And this I think will advance the knowledge of 

the bill and I hope will enable us to narrow the differences even 

further. And then on the remaining issues, we will be consulting, 

Senator Leahy and I, Senator Cornyn, Senator Feinstein, and those 

not on the Committee—Senator Carper has been especially interested in this legislation, as have been the Michigan Senators, Senator Levin and Senator Stabenow, and the Arkansas Senators. 

This is a matter where we have been besieged on all sides, from 

people who are suffering from mesothelioma, a deadly disease, and 

from companies which are on the verge of bankruptcy, to try to find 

some relief in the immediate future. 

Thank you again, Judge Becker, and the floor is yours.

STATEMENT OF EDWARD R. BECKER, JUDGE, U.S. COURT OF 

APPEALS FOR THE THIRD CIRCUIT, PHILADELPHIA, PENNSYLVANIA

Judge BECKER. Thank you, Senator Specter, Senator Leahy, Senator Cornyn. I am very grateful for your very generous remarks. 

It has been a privilege for me to do what I have been doing here. 

Although, Senator Specter, you very kindly talk about this as the 

Becker bill or the Specter-Becker bill, it is really just as much the 

7

Hatch-Leahy bill because of the magnificent breakthrough in getting the medical criteria which came out of 1125, and the FristDaschle bill because of the major strides that the two leaders made 

during the last Congress. 

I think, as you suggest, that I can be most useful in describing 

the bill. You have described this as an educational section, and 

what I would like to do—it is an enormously complex bill. But what 

I would like to do is go through each important section of the bill 

and lay it out so that there is full understanding. While it may 

take some time because of the length and complexity of the bill, I 

think it will kind of tee it up for the other speakers and facilitate 

their presentation. 

Before I do, I do think it important to state on the record—and 

I will do so very briefly because it is so unusual for an Article III 

judge to be involved in the legislative process in this way—that I 

needed to and I did satisfy myself before embarking on this project 

as to the propriety of doing so. I sought advice and was advised certainly that were four factors that had to be satisfied: 

Number one, that the efforts had to be bipartisan, and that has 

been satisfied because Senator Hatch and Senator Leahy initially 

blessed my participation, and then for 6 days last spring I was a 

personal delegate of Senator Frist and Senator Daschle. So it certainly has been bipartisan. 

Secondly, inasmuch as I do not represent, cannot represent the 

Judicial Conference of the United States, I thought it important to 

note that I would not charge the Government for this. So I paid my 

way down here yesterday and paid my hotel bill, with the two exceptions of 2 days when I was otherwise here on Federal judicial 

business over the last—this has gone on 17 months. I have paid for 

all of these trips, I guess 33 trips, actually more than that, and my 

hotel bills, I paid them out of my own pocket, which I consider a 

privilege as a citizen if I can contribute to solving this crisis, which 

in my Georgine opinion, which Senator Specter pointed out, was affirmed by the Supreme Court in which I said it cried out for a legislative solution because it was beyond the competence of the 

courts. So, in a sense, not only is this a labor of labor for me, but 

it is my penance for having interred the class action solution to asbestos. 

Thirdly, I had to satisfy myself that I had no conflicts with any 

stock, and I did that. And even though, as Senator Specter pointed 

out, as a senior judge I am not obliged to perform extensive judicial 

duties, I do, and last year I did more opinions than anybody on my 

court and continue to do so. So it has not interfered with my judicial duties. 

Let me turn then to the Act and lay it out. Insofar as the statement of legislative findings and purpose, the members of the Committee have essentially set forth what is in the legislative findings 

and purpose, that the asbestos litigation system is broken in the 

tort system; the wrong people are getting paid; many of the people 

who were entitled to get paid, the really sick, are not getting paid 

because of the rash of bankruptcies. 

This has been in my experience the greatest litigation crisis in 

the history of the American court system. And, indeed, one additional factor which is mentioned in the proposed bill is that it has 

8

had an enormous toll on the Federal bankruptcy courts. The Federal bankruptcy courts have been overwhelmed and inundated, and 

the transaction costs in the bankruptcy courts have been huge. And 

the purpose, of course, is to find a fair and efficient means of dealing with the problem. The legislation is called ‘‘Fairness in Asbestos Injury,’’ that is where the ‘‘fair’’ comes from, reform legislation. 

Now, obviously as you pointed out, Senator Specter, and you as 

well, Senator Leahy, the big issue up front is the amount of the 

fund. The parties have not agreed, the stakeholders, on the amount 

of the fund. The business folks, as I understand it, think that the 

$140.25 billion figure which was negotiated by Senator Frist and 

Senator Daschle is adequate. The labor interests feel that it is not. 

And it is not yet in the bill. Ultimately, some figure will have to 

go in the bill, but I think it important, taking that as where we 

are now to describe where the funding comes from and how it 

works. 

The fund under the Frist proposal will be funded by three—and 

in the previous incarnations of the bill will be funded by three principal sources. The defendants—that is, the manufacturers or those 

who have manufactured asbestos-containing products—I do not 

think we have had any asbestos manufacturers for a long time, but 

there are those—but, of course, as you pointed out, Senator Specter, the latency period is 30 to 40 years. Someone can have been 

exposed to asbestos 30, 35 years ago and 35 years later come up 

with lung cancer, mesothelioma, or asbestosis, or some asbestos-related disease. 

So the defendants are responsible for $90 billion under this formula, the insurers for $46.02 billion, and the existing trusts—that 

is, the Manville Trust, the Fuller-Austin Trust—these are the companies which have gone into bankruptcy and have confirmed trusts 

under 524(g) of the Bankruptcy Act or the congressionally approved 

equivalent, which is the Manville Trust, to relieve them of asbestos 

liabilities. So the existing trusts are in for $4 billion. These defendants are companies named as defendants in asbestos lawsuits and 

which have incurred at least $1 million of cumulative asbestos liability. They are placed in seven different tiers. The Act is structured on the basis of tiers—t-i-e-r-s, tiers—based upon the amount 

that they have expended in asbestos liability, having in mind that 

small businesses, as defined under Section 3 of the Small Business 

Act, are exempt from the bill. And also included in the defendants’ 

contribution is $1.4 billion from the Owens-Corning Fiber Board 

Trust, which is the functional equivalent of a 524(g), and that is 

due to be transferred within 60 days after enactment. Under the 

Frist proposal, and, of course, in the bill, when finally drafted, the 

formula for the different tiers will have to be set forth. The financial calculations that I have seen are to the effect that the amount 

set forth in 2290 will have to be increased by approximately 9.3 

percent for each tier in order to reach the Frist $140.25 billion. 

Under the Frist proposal, the payout is over 30 years, minimum 

of $3 billion a year, net of hardship and inequity allowance. I do 

not want to spend too much time on that, but there are provisions 

that a company that can demonstrate extreme hardship or a demonstrated inequity based on a showing that the defendants’ allocaVerDate 0ct 09 2002 12:56 Mar 13, 2007 Jkt 033400 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\33400.TXT SJUD1 PsN: CMORC
9

tion is exceptionally inequitable when measured against its likely 

costs net of insurance of its future participation in the tort system. 

There are hardship and equity allowances for individual companies which are subject to judicial review, but the figure is net of 

those hardship and equity sums. Now the insurers, under the first 

proposal, would pay according to a 28-year schedule. The allocation 

would be determined by the Asbestos Insurance Commission, although with respect to the businesses, the respective contribution 

of the individual defendants is set forth on the basis of what tier 

they fit in. The responsibility of the insurers either has to be 

agreed to by the insurers or determined by an asbestos insurance 

commission, which I will describe a little bit later in my remarks. 

The RAND study has estimated that there are approximately 

8,400 companies—that is a lot of companies—that have been 

named in asbestos lawsuits. There are two senses. John Mesher, 

General Counsel of Saint-Gobain, who is here, did a survey where 

he analyzed all of the companies that were sued I think in Mississippi or Louisiana. I think there were 2,000 companies that were 

sued. And then the RAND did others. So it is not possible to predict exactly where the companies will fall within the tiers, but the 

significant factor from the point of view of the solvency of the fund 

is that the big companies, 100 big companies, will be in one of the 

two highest non-debtor tiers. By non-debtor I mean the companies 

that are solvent and are not in bankruptcy. The formula is in the 

bill. Tier I is the Chapter 11 companies, the companies that are in 

bankruptcy. Tier II is the companies with 75 million or more, Tier 

III with 50 to 75 million, and so it goes. 

But the significant thing, even though in terms of transparency 

we cannot say for sure at this moment which companies are in 

which tiers, we do know that the big companies are all going to be 

in the top two tiers, and the big companies, the defendants as a 

whole, guarantee—the way the bill is drafted, if the payments from 

the defendant companies are less than the statutory minimum in 

any particular year and the defendant has guaranteed payment account, cannot make up the difference, the administrator has the 

right to seek payment on a pro rata basis from the defendant companies for the remaining liability. So it is not tier-by-tier guarantee, but it is a total guarantee. And the guarantee, which is enforced by a charge by the administrator, means that unless American industry goes down the drain—and the big companies are the 

giants of American industry; you have GE and Pfizer and Viacom 

and GM and Saint-Gobain—well, that is a French company but 

with a big American presence—all of the giant companies are in 

the top two tiers, so they have to guarantee these payments. So 

there is, I believe, the way the bill is drafted, a guarantee of solvency. 

There is an issue with respect to the existing trust, the $4 billion 

that I reference. There is an interesting debate. Senator Specter, 

you referenced our attendance at the Yale Law School. The Harvard Law School is in the middle of this because there is one Harvard professor who says that the provision for—well, it is Professor 

Tribe, has given an opinion to the Committee as I recall—that the 

provision to transfer the amount of the $4 billion in the Manville 

and other trusts is constitutional. And another Harvard professor, 

10

Professor Fallon, has said that it is unconstitutional. So we have 

the warring opinions of these two Harvard Law professors as to the 

constitutionality of the transfer of the $4 billion, but I think that 

is something we need not be concerned about because under the 

first proposal, the companies, the big companies guarantee the $4 

billion in the event that that portion of the bill is declared unconstitutional. So there is at least 140.025 on the table. 

There is borrowing capacity. This is a big issue with respect to the up-front money. Under the first proposal there would be $40 

billion up front in the first five years. Labor has expressed the view 

that that is inadequate, but the fact of the business is that with 

the borrowing capacity, at least as analyzed by the Goldman Sachs 

folks, there is $30 billion of borrowing capacity so that in the first 

five years the $40 billion necessary for the start up—and there is 

concern that the fund would be overwhelmed in the early years—

does go up to $60 billion. So there is $60 billion. The borrowing 

would provide liquidity through the life of the fund, and it provides 

greater comfort in the early years when the claims are believed to 

be greater, and of course, when the fund might lose the existing 

trust to a constitutional challenge. 

Will monies be out there? By virtue of the authority given to the 

administrator any borrowing would be senior to senior unsecured 

claims in a bankruptcy. There is plenty of diversity with the 8,400 

companies that have been named. The experts—and I am not one 

of them—say that the fund could achieve an investment grade rating on its borrowing. In terms of the liquidity in the first five years, 

to quantify that, the $40 billion would come $15 billion from the 

defendants, 20.6 billion from the insurers. The insurers do put up 

more up-front money because of the nature of the industry, and as 

I said, $4 billion from the existing trust. So as I have said there 

is, at least according to these folks, $60 billion of liquidity in the 

first five years. 

Will this funding be sufficient to pay the claims? Again, the 

stakeholders are not in entire agreement on that. Whether it is or 

is not is a function of two factors, claim values and the projections. 

The claim values are what are in the bill as to how much you get 

for each category. The projections, which the Lord only knows, is 

how many people are going to get sick, how many people are going 

to get asbestos-related disease. We do know, because of the latency 

period, that sometime in this decade a number of people suffering 

from asbestos-related disease will start going down, but we do not 

know by how much. In the last weeks I have had different projections as to whether it is going up, which labor says, and whether 

it is going down, which is what business says. It is acknowledged, 

there is no doubt the Manville Trust, which has the greatest experience, has reflected a significant decline in the number of claims, 

but the mere fact that the number of claims, that is undisputed, 

has gone down, that is not of course conclusive as to whether the 

incidence of asbestos-related disease after the long latency period 

has gone up. 

Now with respect to claim values, which are set forth in Section 

131 of the bill, I think it is fair to say that there is agreement on 

most of the claim values. The most significant contribution of the 

bill—and again, Senator Hatch and Senator Leahy deserve so much 

11

credit for this—is that those who are, although they have pleural 

thickening, they have asbestosis, but are not functionally impaired, 

the ones who are not sick—and these are the ones who Senator 

Cornyn has pointed out so graphically—have gotten huge awards 

in the tort system, accompanied by great transaction costs, these 

folks simply get medical monitoring. They do not get an award, but 

their condition is monitored. Every two years or every three years 

they get examinations and so forth to see if they get sick, and of 

course, if they do get sick, then they become eligible. 

But the lower levels, which are people Level II and Level III, 

there is basic agreement—and I am comparing here the first offer, 

the Daschle offer, Senator Feinstein’s proposal, and Senator Specter’s and my proposal—at Level II everybody is agreed on 35,000; 

at Level III everybody is agreed on 100,000; Level IV, severe asbestosis, everybody is agreed on 400,000; a disabling asbestos everybody is agreed on 850,000; and Level VI, other cancer—and I will 

talk about that in a few minutes—everybody is agreed on 200,000. 

The disagreements are when you get to the lung cancers and the 

mesotheliomas. Working backward from the mesotheliomas, the bill 

provides—Senator Frist’s offer was 1.050 million, Senator Daschle 

and Senator Feinstein said 1.1 million, Senator Specter and I cut 

the baby in half, and it is 1.075 million. Now, there are a lot of 

mesos, so the dollar figure is not insignificant, but the difference 

in terms of claim value is not that great. 

Working backwards, as I have said, lung cancer with asbestosis, 

there is essential agreement—well, I should point out that when 

you are dealing with the lung cancers, you have got three—and 

this is Level VII, VIII and IX—you have got three subgrades. The 

problem with the lung cancers is the complication of the impact of 

smoking. The companies have expressed a view that their concern 

is that this should not turn into a smoker’s bill, and when smoking 

is in the picture, you have causation requirements. Now, administratively, the structure cannot work unless you have a schedule. 

You cannot have individual, you can only have a limited number 

of individual determinations. But, obviously, the folks who got lung 

cancer who were non-smokers, who never smoked, they need to get 

an awful lot more than the ones who remain smokers. Then you 

have the mid-level are the ones who are the ex-smokers. That is 

the ones who gave up smoking, in different incarnations it has 

been 12 or 15 years ago. 

In Level IX, as I said, working backward from the more serious 

ones, the lung cancer with asbestosis, there is virtually no difference in the claims values among the contending parties. They 

are virtually all at the 575 to 600 thousand range for the smokers, 

950,000 to a million for the ex-smokers and 1.5 to 1.1 for non-smokers. Senator Specter and I put them in as the same as the mesos, 

and we shaded them a little for the others. 

On Level VIII, once again, they are almost the same, indeed for 

the non-smokers they are exactly the same. 

The big issue relates to the so-called Level VIIs which I will have 

more to say about later. The Level VIIs, it is important to note, are 

the individuals who have lung cancer but no markers. That is, even 

though they have lung cancer and they have the requisite 15 years 

of exposure, they have no asbestos-related symptoms, bringing the 

12

causation issue into play. Business has said, look, these fellows are 

smokers and we do not want to turn this into a smoker’s bill. That 

is the one area where on the claims value there is a big disparity. 

Senator Frist’s offer was 150,000. Senator Daschle’s offer was 

500,000. Senator Feinstein’s proposal was 250,000. Senator Specter 

and I did put that in at 200,000, thinking the lower number was 

the better measure because of the causation problems with respect 

to smoking, individuals who have cancer who have been smokers, 

but who have no markers of asbestos. 

The claims values in sum, except with respect to the Level VII 

smokers, the stakeholders are not that far apart on claims values. 

They have a bigger disagreement on projections, which as I have 

said, is something that the Lord has not let us in on in terms of 

how many people are going to get asbestos-related disease. I spent 

two days back in May with all the experts, Tom Florence, Fran 

Rabinowitz, Andy Kaiser from Goldman Sachs, and we went round 

and round and round, and at that point I had thought that the 139 

billion worst case scenario based on the projections that was set 

forth by Goldman Sachs was realistic, but since then labor has 

given us some figures that said, no, epidemiologically there is data 

which shows a wider distribution of not cancers, but asbestosis and 

disabling lung disease. They say there are more mesos. Business 

says no, mesos are going down. I think it is fair to say that we will 

never know, we will never solve the projection issue. The only way 

we will know it is in the long run, and the old saying is: in the 

long run, we will all be dead. We cannot wait 30 years to do this 

bill to see how many people get asbestos-related disease over the 

next 30 years. 

You just have to make some informed predictions on the projections, and having in mind that the linchpin of this bill is if the projections are wrong, there is a sunset. If the fund cannot pay the 

claims, then there is a sunset and it goes back to the tort system. 

So if business is wrong—and everybody wants, and I say this for 

labor—labor has made it very clear, they do not want this to fail. 

They are not interested in sunset. They want this fund to work. 

And none of us know for sure what the accurate projections are, 

but nonetheless, in due course if the projections are higher than we 

think that they are, then it goes back to tort system. In the event 

of insolvency, of course, there is borrowing. There are tough remedies. The bill provides a surcharge on the defendants to make up 

a shortfall, to require the insurers to put up security. There are 

liens, Section 222 to 224, but obviously there is a return to the tort 

system. And if it should turn out that there is overfunding, then 

there are step-downs and holidays which would give the business 

the benefit of that. 

In terms of the benefit categories, I mentioned the unimpaired. 

The unimpaired simply get medical monitoring, and the HatchLeahy Bill gives a very elaborate description of how you qualify for 

Level II, how you qualify, Levels III, IV and V simply are increasing levels of impairment. Level III, minimal abnormality; Level V, 

serious impairment; Level IV in between; and of course the higher 

level you are in, the more compensation you get. And Level VI, 

other cancer, there are some medical/legal problems. Level VI requires a diagnosis of primary colorectal, laryngeal, esophageal, 

13

pharyngeal or stomach cancer. With respect to some cancers, there 

is some doubt as to whether asbestos exposure causes these cancers. They do not fit in easily like the mesothelioma, the lung cancer and the asbestosis, and the bill provides for physician panels 

to deal with these things. And lung cancer I gave you a kind of description. Level VII is primary lung cancer, 15 years of exposure 

but no markers; Level VII where your symptoms are greater; and 

Level IX is with asbestosis; and Level X is mesothelioma, which is 

almost always caused by asbestosis, but there are cases of idiopathic mesothelioma which is not caused by asbestosis, and there 

are exceptional medical claims that can be evaluated. 

With respect to the mesothelioma benefits I should also mention—and Senator Specter has expressed a great interest in this—

there is a proposal that the mesothelioma awards be gradated 

based—let me give you an example. That a 70-year-old mesothelioma victim with no dependents should not get as much as a 40-

year-old mesothelioma with a bunch of young dependents. The 

problem there is to make it cause neutral and not to burden the 

administrative structure with an awful lot of individualized determinations. 

We are working on legislation in terms of, one of the things I was 

going to say at the end, where we go from here, good that this is 

a discussion bill. The stakeholders are here. Senator Specter and 

I met with them yesterday, and they are at work on a proposal, a 

drafting proposal, and they have been enormously helpful that we 

will perhaps solve that problem. We have administratively Senator 

Leahy mentioned about the administrative process. We have a 

streamlined administrative process in the bill. Section 113 sets 

forth the information required. The claimant has to set forth employment history, asbestos exposure history, smoking history, medical information, the medical records, and various affidavits will 

suffice, because have in mind that many of these folks were exposed 30 and 40 years ago. The companies have gone bankrupt, 

and the records are not all available. And so there will be heavy 

reliance on affidavits and affidavits of members of the family with 

respect to medical evidence. 

The bill also contains auditing requirements. There is an expedited requirement for a decision within 90 days, internal administrative review and appeals. There is, and I am not going to spend 

much time on it, but we have set forth an elaborate appellate 

structure to various courts, and indeed, in terms of the thing I 

mentioned earlier where there is a constitutional challenge, the bill 

even says that the Supreme Court has got to give it expedited consideration, which of course it did to the Campaign Finance Bill, 

and I would be confident the Supreme Court would do that. There 

is also a provision with respect to attorneys fees, claimant assistance. There are educational programs. The Labor Department has 

to put up a website. The claims forms would be on the website. 

There are provisions with respect to there are limitations on attorneys fees, but the administrator under the bill has the power to 

limit attorneys fees in certain classes of cases. The prime example 

would be if a mesothelioma victim gets a million dollars, 1.075 or 

whatever it turns out to be, a lawyer who does not have very much 

to do, because meso is virtually a slam dunk, should not get a 

14

$200,000 fee for doing that. Well, there is a 10 percent limitation, 

20 percent limitation for appeals. But the administrator presumably would say, look, in a simple mesothelioma case, that class of 

cases, the fee would not be 10 percent, it would be lower. 

On the other hand, there are going to be cases where there are 

going to be causal issues, where they are really going to have to 

be litigated, and in that case, in order for attorneys to take these 

cases, which I think will be a different breed of attorneys than the 

ones that you, Senator Cornyn, were referring to, I think the asbestos plaintiff bar is going to be going on to other pastures. I think 

we are basically going to have a different bar handling these cases, 

and you do have to have some inducement for lawyers to handle 

these cases. 

But the short of it is that although it will be burdensome, the 

Department of Labor does have the expertise in crafting regulations and handling claims and developing websites. The original 

proposal to put it in the Court of Federal Claims, I have been in 

the court system long enough to know that this is not the kind of 

thing a court could handle. It is not the kind of thing that a court 

is suited to handle. The Labor Department would be it. There 

would be an administrator. The administrator is a presidential appointment. The administrator is required to appoint a deputy administrator for claims administration, and one for fund management. There would be an Asbestos Advisory Committee that the 

Congress will have input into, a Medical Advisory Committee. 

There will be physicians panels. 

The one thing that I would simply urge upon the Members of the 

Committee, if and when you pass this bill, is to urge upon the 

White House the importance of getting this thing up and running 

and targeting somebody, an administrator, who can get in place 

quickly, because as I will get to now, the transition and the sunset, 

become a very serious matter if this fund is not up and running, 

if the administration is not up and running and it has to go back 

to the tort system, the purpose will not have been achieved. So you 

have to target somebody, the White House has to target somebody. 

I do not think this is a political plum, this appointment. I do not 

know who is going to want it, but you are going to have to get the 

right person to get this thing up and running in a hurry, because 

otherwise the purpose of the legislation will not be affected. 

Now let me run quickly through the remaining issues, which are, 

I confess, some of the most controversial issues, because business’s 

position is if we put up $140 billion, we do not want any leakage. 

We are putting that up to settle our asbestos liabilities. We do not 

want to have to be back in the tort system. 

Under start up, the money goes in. There is a transparency provision. It is kind of like the IRS, kind of like our taxes. We selfassess our taxes. These big companies know what they have spent. 

They know what their liabilities are. The insurers is another matter I will come to, and I can discuss that briefly. But within 60 

days they have to set forth what they owe, what likely tier they 

are going to be in. The administrator has got to publish it in the 

Federal Register in case there is any issue. But once the fund goes 

up, there is a stay on all the claims. So the claims are stayed, the 

tort system is shut down. But what happens if the system does not 

15

get going? Obviously, you cannot keep people, I mean I think there 

is a basic understanding that if the system does not work or if it 

is overwhelmed, then folks who have lost their right to jury trial 

have a right to go back to the tort system. 

So what happens if the Labor Department is overwhelmed? This 

bill provides that within 180 days, if the administrator cannot certify that the exigent claims, that is, the mesotheliomas and the 

ones where the doctor says they will not live a year, are not being 

paid at a reasonable rate, they can go back to the tort system. We 

had a meeting with the stakeholders yesterday and I think that 

may have been a mistake. Maybe it ought to be 180 days from the 

time the administrator is appointed or it may be that if it goes 

back to the tort system it does not stay there, it can come back, 

or there is a credit. That has to be worked on some more. But there 

is a real concern, and this gets into the expedition point that I 

made, how critically important it is when this Act goes into effect, 

assuming that it does, that an administrator be appointed and an 

administrator be in place with the deputy administrators, and this 

thing has got to get up and running quickly. The regulations have 

to be promulgated, the claim forms have to be put out on the 

website, and the businesses who want this to work have to get 

their money in and up front quickly. I think they know that, because they want it to work, and I think that they will. 

There is also an escape valve for 360 days unless the administrator can certify that all claims or valid claims are being paid at 

a reasonable rate, and I think the same concerns apply there. 

Next hot button issue is pending cases, what cases should be 

grand-fathered, left in the tort system. The proposal, which I think 

cuts down the leakage, is that the only pending cases which remain 

in the tort system are those which are actual non-consolidated 

cases, that is, not where some trial judge someplace or other has 

consolidated 500 cases together, but a one-on-one typical, traditional two-party or three-party, whatever it may be, law case, an 

unconsolidated case which is actually on trial. Everything else gets 

shut down. 

Insofar as what about settlements, there has been a lively discussion about that. I will point, and Senator Specter has been aware 

of this, some of the meetings that I have had with the stakeholders 

have been four-hour drafting sessions. They have been a lot of fun. 

You know, you have a lot of good lawyers together, and we draft 

and we redraft and so forth. We have had a lot of discussion about 

the settlement issue. The way it is in the bill now is that a settlement is preserved only if it has been signed by the individual and 

the defendant before the enactment of the bill, but there is a 60-

day period. Business is not happy with that, but nonetheless, I 

thought it was reasonable. There is a 60-day period. And the insurers are not happy with that either. There is a 60-day period where 

any necessary paperwork has to be completed, and we have got 

some more drafting to do as to identify those. 

Winding down on the insurance issues, there is, as I suggested, 

an Asbestosis Insurers Commission, which would be appointed by 

the President with the advice and consent of the Senate, and once 

again, if this bill goes through, I would hope that not only the 

16

President makes prompt appointments but the Senate makes early 

confirmations to get this thing up and running. 

One would hope that if this bill goes through, the insurers would 

all agree on the allocations. There has to be 100 percent agreement. There seems to be indication that if the bill is going to go 

through, the insurers are not going to want to subject themselves 

to the tender mercies of the Asbestos Insurers Commission, because they do not know who is going to be on it and what the Insurers Commission is going to do to them. One of the powers that 

is in this bill is a ground-up survey, because some of the insurers 

do not think that the other insurers have accurately reported what 

their asbestos exposure is. The Commission is entitled to do a 

ground-up survey to get records from the SEC. A lot of this is public stuff. But there are criteria of the historic premium lines, the 

recent loss, the amount of reserves, based upon which the Commission makes the determination. One would hope that they will not 

have to do so. 

Another hot-button issue is what I describe as the Equitas issue. 

Equitas is the name given to the Lloyd’s of London—this is the offshore reinsurer. Senator Specter identified the stakeholders as the 

businesses and the insurers, but we have had the insurers and the 

reinsurers, and the insurers and the reinsurers do not always 

agree, and then the domestic and the foreign reinsurers do not always agree. That is why Senator Leahy said this ain’t exactly a 

simple proposition. We have also had, not only labor, Senator Specter mentioned this, but we have had the trial lawyers. We have 

had a representative of ATLA at every single one of our meetings, 

but the London reinsurers, the Equitas Group, think that they 

need to get a certain concession, a hardship concession that the 

American reinsurers do not think they ought to get. I do not want 

to say any more about it now. You are going to hear testimony 

about that. 

Four remaining hot-button issues, and then sunset, and then a 

few other things. Workers Comp subrogation is an issue. Historically most folks with asbestos disease have not sought Workers 

Compensation. They have had access to the court system and the 

court system has given them by and large reasonably big awards 

and they never sought Workers Comp. But now they will not have 

access to the tort system, so the question is will they go and get 

Workers Comp. They may go get Workers Comp and the question 

is whether or not the Workers Comp carriers will be able to get 

subrogation, whether they will be able to go back against the 

claimant. 

A couple of issues, and we mentioned before about things we 

have agreed upon. One of the things that was agreed upon early 

on in our process is that Blue Cross and Blue Shield cannot come 

back and get subrogation. We also have, in terms of health insurance, nondiscrimination under the HIPA Act passed by the Congress. There may be no discrimination against an asbestos worker 

in giving that worker health insurance because of prior asbestos 

exposure. But with respect to subrogation, the business says, look, 

if you are going to get $800,000 out of the fund, you ought not also 

be able to get Workers Comp because that is double dipping. Labor 

says, that is a different carrier. Sometimes it is, sometimes it is 

17

not. A lot of times, many of these businesses, because of the regularity of Workers Comp, are self-insured. 

Senator Specter and I have proposed a compromise. What we 

have tried to do all throughout is propose principled compromises, 

and I think it is a principled compromise, and it is the way it 

works in most states. It is a so-called holiday. That is the Workers 

Comp carrier cannot come back and recover anything that they 

have paid from the worker or from anybody. But during the period 

of time that the worker gets compensation out of the fund, to the 

extent of that total amount that the worker gets out of the fund, 

then the comp carrier does not have to pay comp. It does have to 

pay comp if the State law in New York or Delaware or Texas or 

wherever provides for more comp than they get under the fund. If 

they do that, the comp carrier has to pay that, and they cannot recover anything. So that is the compromise proposal. I am not going 

to tell you everybody is happy with that proposal. We think it is 

a principled proposal, but there it is, it is in the bill. 

Another one is FELA. The rail workers want to preserve—they 

do not want FELA preempted, they want their rights preserved 

under both FELA and the fund. Now, talk about stakeholders, we 

also had the railroads in. Another group we had in were the Association of American Railroads and not just labor but the rail workers. It turned out, upon our investigation, that 95 percent of the 

rail workers who had asbestos exposure are now retired, so the 

would not get Workers Comp. But the other 5 percent or 10 percent, whatever it is, would get less under this bill than the nonrail workers. What we have proposed in the bill is that the difference be made up. That is a compromise. The rail workers are 

worried about somebody tinkering with the FELA. Senator Specter 

came up with the idea of putting in the bill to make it clear that 

Congress does not intend to mess with—excuse my vernacular—

say, ‘‘Don’t mess with Texas,’’ ‘‘Don’t mess with the FELA,’’ Senator 

Cornyn, so they say. That is in the bill. This is not intended to 

mess with the FELA. Once again, it is an improvement, and the 

railroads are satisfied with it. They do not like the language in the 

bill. The rail workers want to do something else. We are still talking about that, but we think it is a good compromise. 

Another issue that business does not like but which is a matter 

of enormous importance to labor as a health and safety issue is 

medical screening. We put in a provision for medical screening, 

that is, over the years to come—well, let me just start back. Business does not like medical screening because for years there was 

a history that the asbestos plaintiffs’ lawyers had some B readers 

and others whom the businesses did not think were reputable, who 

they thought were mills of turning out plaintiffs. This provision is 

very different. It is for rigorous criteria, rigorous standards, run by 

NIOSH or run by a contractor selected by the administrator, who 

would for people in certain high-risk industry, give them examinations every few years to see if they get sick. If they do not get sick, 

they do not get anything. But if they do get sick, then they can 

come into the system. Business says, well, let their doctors, you 

know if they are sick they will go to the doctors, and this is a way 

of encouraging it, and most of the people with asbestosis do not get 

treated anyway. 

18

Be that as it may, this is a matter of it seemed reasonable to us 

to have this avenue available for people in high-risk industries, so 

long as it is subject to reasonable and rigorous requirements, and 

Senator Specter and I have put it in there. Labor feels very strongly about it. Business does not like it. This is one of the issues that 

the Senate is going to have to decide and markup someplace or 

other. 

One other issue where the folks are at odds is mixed dust, and 

Senator Leahy, you in effect introduced this subject. There are 

folks who have been exposed to asbestos and have also been exposed to silica, and they are sick. Business says, hey, look, I mean 

if what you have is really silica disease, sure, you can go in the tort 

system, but we are worried if this bill goes through that folks who 

have been exposed to asbestos, who have had some silica exposure, 

are going to repackage their asbestos claims as silica disease. I 

must say that Senator Specter and I have drafted a lot of things 

that one side or the other is not unhappy with. This is the only 

thing we drafted that nobody was happy with. So we did not put 

it in there. It is a problem that has to be solved. It can be solved 

in a number of ways. One way is, Senator Feinstein’s proposal was, 

was your disease primarily from silica? Another way to deal with 

it is to set forth a credit, that if you have silica disease that the 

trial judge, if it goes into the state tort system, has to offset the 

proportion that is due to asbestos. That is a tough nut we have to 

deal with. 

Finally, sunset. Sunset is a big ticket issue. There are two levels 

of sunset. One is if the total program cannot be funded and the second is the Level VIIs. And that is the tradeoff, if the fund is inadequate, then folks can get back to the tort system where they have 

the right to jury trial, but there are a number of issues. Senator 

Biden was the one who introduced this first, but the Biden proposal has been refined. Everyone agrees that before there be any 

sunset, there has to be program review. The administrator has to 

do a shortfall analysis, projections, how is this fund going to do 

over the next period of time? There must be a plan for winding up. 

There is a provision that has to go to a special commission consisting of the Attorney General, the Secretary of Labor and other 

functionaries in the Government, and it would have to give Congress an opportunity to affix the system. But nonetheless there has 

to be program review. There is agreement on that. The question, 

however, is how long need we wait to sunset? Business’s proposal, 

the 2290 proposal, was seven years. Senator Specter can speak for 

himself on this. Senator Specter felt that seven years was too long. 

And there is no provision in this current draft as to a timeframe, 

although, obviously it could not happen right away because there 

would have to be this very elaborate program review. But at all 

events, the question of the time of sunset is an issue. 

The second issue is the reversion. If it goes back to court, where 

does it go back to court? The provision that we have adopted is essentially a provision that Senator Feinstein proposed, that it could 

go back either to Federal Court or to state court, but only to a state 

court where the claimant lived or the claimant was exposed. In 

other words, you could not have 100 claimants who never had anything to do with Mississippi or some county someplace or other 

19

which was a favorable plaintiffs’ county and bring all the cases 

there. It would have to be either where the plaintiff lived or where 

the plaintiff was exposed. And if you cannot fine the defendant 

then against that defendant only, it is wherever you can fine the 

defendant. Business would like it to go entirely to Federal Court, 

but this is the compromise which we fashioned. 

With respect to Level VII, the Level VIIs, the ones I described 

as the lung cancers, requisite exposure smokers but no markers, 

business has worried about whether the Level VIIs will overcome 

the system. Even though business concedes that most of these 

cases, when they go back to state courts, they win because there 

are the causation issues, nonetheless there are potentially huge 

volumes of them because of the level of smoking in this country, 

and the transaction costs are huge. The question then is what 

about a partial sunset? We have agreed basically there would be 

a partial sunset just for the Level VIIs. What Senator Specter and 

I put in the bill is 15 percent, 115 percent of the CBO figure. Labor 

wanted 150 percent. Business wanted the CBO figure. That is 

something the Senate is going to have to decide. 

The other issue relates to the reversion. There we have put in, 

because there are complex issues as to whether there is in fact a 

proper Level VII reversion, there we have put in that that would 

go to Federal Court and that that could not go to state court. That 

would be a Federal Court matter. Business is happier with that. 

Labor is not. 

With respect to the bankruptcy laws, we have taken a lot of care 

that we do not mess up the bankruptcy laws and bankruptcy liens. 

By and large, other than the confirmed bankruptcies, the others 

are all laying around, and the other bankruptcies are going to be 

folded into the system. 

Three wrap-up items. Senator Murray proposed a ban on asbestos-containing products. That is in the bill. And Labor was concerned about violations of environmental and occupational and 

safety and health requirements, and we put in a bunch of provisions for that. 

Other than some more technical provisions, that is my overview 

of the bill. Where we go from here is we have some more drafting 

sessions. I have identified a couple of issues that we are still working on drafting on. There are some issues that I do not think we 

are going to be able to get consensus on. I think I have identified 

each of them, and the Senate at its markup is going to have to deal 

with those. 

I appreciate your indulgence, but it is arguably a sprawling bill, 

one of the most complex bills. I have been a Federal Judge for 34 

years. I do not think I have ever seen a more complex bill than 

this. So forgive me for taking so long, but I wanted, since Senator 

Specter said it was an educational process, to lay it all out and put 

it on the table. I will be glad to answer any questions that any of 

the Senators may have. 

Chairman SPECTER. Thank you very much, Judge Becker, for a 

very comprehensive statement of the draft discussion bill. Some insight into your level of enjoyment came when you smiled with the 

fun of drafting. Judge Becker is known for not only the number of 

his opinions but the length and the length of footnotes. 

20

Turn the lights on 10-minute rounds, because as Chairman I 

want to observe the time limits meticulously so we can move 

ahead. 

Since that is what you consider fun, that is some insight. Judge 

Becker has been known to write opinions that rhyme, and among 

his many talents he is the pianist for the Songfest of the Supreme 

Court of the United States, one of the little publicized and most interesting activities of the Supreme Court of the United States. 

Judge Becker, as you have outlined the provisions of the bill, you 

have demonstrated the considerations on public policy issues where 

we had positions identified at length by so-called stakeholders, and 

then an evaluation of what seemed fair and just, and on accommodation, we found on many cases the parties could be brought together, and it was a matter of articulating language which would 

bridge the gap, and that has been done in many, many lines. The 

essential question which we have dealt with on this bill has been 

the giving up of the right to jury trial, which is a very fundamental 

right in our judicial system. In exchange for that would be a trust 

fund which was calculated to be adequate to take care of the 

claims. I think it is very important, as you went through the categories of claims—and Senator Leahy did a great deal of work on 

this, Senator Feinstein, Senator Frist and Senator Daschle, Senator Hatch—that there was pretty much agreement as to those 

areas. 

The draft discussion bill has tried to provide for flexibility, on the 

illustration you gave of a 40-year-old man with children as opposed 

to a 70-year-old mesothelioma victim without children, so that it 

remains revenue neutral, so that we have tried to provide that 

flexibility. 

When we had the markup in July of 2003, the issue of the reversion was a very contentious point, and as you have noted, it was 

Senator Biden who came in with a provision that there be a reversion. You have accurately noted considerations really by the insurers of a 71⁄2 limit, and that is not easy to deal with when you have 

the kind of money we are dealing with here and the schedule of 

payments, it seems to be a virtual certainty that it would last at 

least 71⁄2 years. An original draft put it at 20 years, which would 

really freeze out claimants in the event the fund was insufficient 

over that kind of a protracted period of time. But this is a balance. 

When you have talked about reversion in the event that the exigent claims are not paid within 180 days and other claims within 

360 days, just yesterday, the session brought to light a very important consideration that that timing, at least in my judgment, ought 

to start from the confirmation of the administrator because appointments take time, and confirmations sometimes take time. So 

that would be a reasonable parameter, bearing in mind that people 

who go into court are spending a lot more time in dire circumstances, the exigent claims on mesothelioma, but it is an effort 

to make a balance. Understandably, the manufacturers and the insurers were very insistent upon avoiding leakage to carry all the 

pending claims. That was a reasonable request on their part considering the amount of the money, as yet undetermined, but the 

substantial contributions and the reversion. 

21

So unless the case is to verdict, not a matter of having a trial 

date, those cases go into the fund. We have left a little time after 

for settlement on individualized cases where the plaintiffs’ themselves sign the settlement papers, not one of these block settlements where a lawyer settles for thousands of people yet to be determined in a very indecisive way so that there would be a large 

opening on that. 

When it has come to the issue of medical screening, we have 

heard contentions by the insurers and the manufacturers, and just 

as we have tried to limit the 120 days with specification as to what 

will happen during that time, there has been I think a substantial 

and successful effort to have medical screening in a limited context 

so that it is not a wide open field. 

Well, your description I think was very comprehensive, Judge. It 

sets the framework so that we can hear from others and see what 

other people have to say. 

Judge BECKER. I will be glad to remain at the table if you want 

me to. 

Chairman SPECTER. We are going to hear now from Senator 

Leahy, so you may be here for a while. 

Judge BECKER. Okay. 

[Laughter.] 

Chairman SPECTER. Senator Leahy. 

Senator LEAHY. Thank you, Mr. Chairman. 

Judge, as I said before, I really do commend you for doing this, 

your diligence in mediating the matters. I did not realize it had 

been that number of trips down here. You sort of commute back 

and forth the same way that Senator Specter does. 

Judge BECKER. Right. 

Senator LEAHY. But you have made significant progress on the 

all-important issues such as the fund’s borrowing authority, the 

transparency of contributions to the fund, allowing for a sunset if 

the fund runs out of money, another significant area. I know that 

involves delicate balancing acts and a successful trust fund cannot 

shift all the risk to future or current victims, obviously. But then 

you have the possibility of fund insolvency, the risk of inadequate 

funding short of insolvency. All these things have to be addressed. 

I think it is your number, but one of the numbers is 600,000 asbestos cases pending in the tort system. I am worried about the crush 

of claims in that first day. What is the appropriate amount of upfront funding in the first three years of the fund’s existence so that 

we might be able to pay out claims within the statutory deadline? 

What would you say? 

Judge BECKER. The time period I have been focusing on is five 

years, and my sense is that the 60 billion, 40 billion plus 20 billion 

borrowing capacity, for five years is adequate. Insofar as three 

years as opposed to five, while I guess you are right that you would 

probably have more in the first three and then they would start to 

slow down, one of the issues is going to be how fast is the system 

going to get up and running and how many claims are they going 

to process? I mean that was a matter that I expressed concern 

about before in terms of the administrative capacity. 

I think there is no answer to your question. When I say this, 

there is certainly no empirical data. We have talked to the folks at 

22

the Manville Trust. Mr. Austern was in when we were talking 

about projections. But I think in response to your question is that 

we have not done a study—I do not know that we can and maybe 

we ought to focus on this in the next couple of weeks, and it is certainly consistent with my concern that I expressed earlier and that 

I expressed the other day about how quickly the administrator 

structure can get going—as to how many claims are going to be 

filed, how many we can process within the next year or two. I am 

inclined to think that there will be—if the businesses which have 

an interest in getting their money up front, the big companies, 

know what their asbestos exposure has been, they know what tier 

they are going to be in, and if they get their money in in 60 days 

or 90 days, there is going to be a ton of money in this fund from 

both the insurers and from businesses. 

Senator LEAHY. If I could ask you about that, because we talked 

about the 40 plus 20, the 60 billion, discussed this with the Frist 

bill, the Daschle bill and the others. Do you have commitments or 

letters from the financial institutions regarding the availability of 

$20 billion in front-end funding for the bill’s borrowing authority? 

Judge BECKER. Well, I do not think anybody has those letters in 

hand. They would probably violate Sarbanes-Oxley or Leahy-Specter or something or other if they gave those now. 

[Laughter.] 

Judge BECKER. But the predictions are that it would be available. 

Senator LEAHY. But you see what I am getting at. And you are 

absolutely right when you say it is hard to do some kind of an empirical study. We are walking into something similar to what we 

did right after 9/11 with the victims and Ken Feinberg and the others who did that. We had some general idea where we were going. 

We did not know exactly where we were going, but we went. And 

Mr. Feinberg and others worked very well on that. Perfect solution? No, we are not in a perfect world, but it was a heck of a lot 

better than it had been, and that is probably where we are going 

to be here. We are not going to have a perfect bill from the manufacturers point of view, the insurance companies point of view, 

labor, lawyers, victims. It is not going to perfect for everybody. But 

we can get a lot better than the situation we now have. I would 

urge—because I know that there is representatives of all the 

groups I just mentioned in this room—do not look for perfection. 

Do not let the perfect be the enemy of the good, because we can 

do something. Senator Specter and I are committed to do something. 

I notice in your draft bill, Judge, a provision that will allow victims’ awards to be vulnerable to liens by the insurance companies. 

I think the language was compensation holiday. I am worried 

though about a sick victim who finally gets an award. The next day 

the registered letter comes from the insurance company saying, 

hey, give me back the money, give me back all or part of what you 

got in the victim’s award. I do not know whether this subrogation 

language would override states laws on the insurance companies’ 

rights to sue victims for subrogation. Does this create trouble in 

your mind, because we are talking about a no-fault administrative 

23

system to fairly and quickly compensate victims? Is this a doubleedged sword? 

Judge BECKER. Senator, I do not think so. I mean I am not here 

in my usual capacity, but it strikes me that what the Congress 

does overrides state law here. I mean, plainly the Congress has the 

power under the Commerce Clause to do this. The language, as I 

understand it, would forbid the insurance company from trying to 

get money back from the claimant. If it does not say that clearly 

enough, it needs to be redrafted to say it more quickly. 

Senator LEAHY. Is that what you want to do though, make sure 

they do not take back from the—

Judge BECKER. No. They cannot recover anything back, they cannot. 

Senator LEAHY. Okay. 

Judge BECKER. To the extent that that is in conflict with state 

law, the Supremacy Clause, in my opinion preempts state law. 

Senator LEAHY. I had the joys of doing two things over the weekend, recovering from bronchitis and trying to go through the draft 

bill. Both had a certain degree of enjoyment. And I know the draft 

bill has been modified last night. But one thing I should say, all 

joking aside, I am extraordinarily impressed by what you have 

done. I think it reflects good-faith efforts to make real progress and 

reach the consensus that we have to have. I cannot emphasize 

enough to the stakeholders here in the room, this is a bill that will 

go through with consensus and end up on the President’s desk. 

Without consensus on both sides of the aisle, there is no way in 

God’s green earth it is going to make it there. Do you have recommendations how we might continue to narrow differences with 

the stakeholders and with Senators? We have Senators across the 

spectrum who are working in good faith here, as the Chairman and 

I are. How do we get more consensus? 

Judge BECKER. Senator Specter and I and the stakeholders keep 

talking, keep on trucking, we keep on talking. The more we talk 

the more consensus we get. But I do believe, Senator, there are 

going to be certain issues that there is not going to be consensus 

on. I do not want to kid you. I think we can narrow a few more 

issues. 

But there are going to be some of them they are simply not going 

to agree on. There are some folks who just feel by virtue of their 

institutional arrangements that they cannot say yes. And at some 

point I think you gentlemen and ladies are going to have to bite 

the bullet. I think that there are going to be—but the important 

thing is I think it may be narrowed down to six or seven issues. 

Senator LEAHY. Well, you know, we see this in international negotiations all the time. Sometimes people just do not know when 

to say yes. Will you do me a favor? When you are talking to stakeholders on all sides, stress to them the urgency. And it may be a 

grudging yes, but at some point there has to be a yes. I do not 

think if we let this go into next year, or even much into this year, 

that we have a chance. Right now I think we do have a chance. 

Please carry that message back. They are going to hear it from 

both Republicans and Democrats. You have done so much. Senator 

Specter has done so much work on this. It would be a shame to 

let this fall apart. 

24

Thank you, Mr. Chairman. 

Judge BECKER. I will do so. 

Chairman SPECTER. Thank you very much, Senator Leahy. 

Senator LEAHY. I know you will. 

Chairman SPECTER. Senator Cornyn? 

Senator CORNYN. Thank you, Mr. Chairman. 

Judge Becker, last year when we marked up S. 1125, I know 

there were discussions about the adequacy of the funding, and I realize that we do not have a bottom-line figure in this proposal. But 

I want to talk to you about how do we determine whether the trust 

fund concept will be adequate to satisfy the demands made on 

those funds, and some of the things you said here today and some 

of the things I have heard previously I think need to be explored 

so everybody understands. 

The amount of money that we are talking about being contributed into the trust fund is without regard really to our ability to 

know what the dollar demands are actually going to be. Would you 

agree with that? 

Judge BECKER. Unfortunately, yes. 

Senator CORNYN. And I am not being critical. 

Judge BECKER. No. 

Senator CORNYN. I just want to make sure we all understand. 

Judge BECKER. It is in the nature of the situation. 

Senator CORNYN. So if we get into extensive debates about whether $140 billion is enough or $110 billion is enough or $150 

billion is too much, the truth is we do not know what the demands 

are going to be on this trust fund. 

Judge BECKER. I think that is right. I think you end up talking 

to yourself. 

Senator CORNYN. So it is certainly in everyone’s interest who 

wants to see this approach work, this general approach work, to 

make sure we do whatever we can to make sure that the money 

that does go into the fund goes to victims. You would agree with 

that, wouldn’t you? 

Judge BECKER. Absolutely. 

Senator CORNYN. And I know there has been some discussion 

about the near-term funding requirement, and you talked about in 

the first 5 years the $40 billion plus the $60 billion—

Judge BECKER. Plus the $2 billion. 

Senator CORNYN. —borrowing capacity, which I think is a good 

cash flow device, which obviously helps ensure the fund is more 

likely to be successful. But, actually, the $40 billion, if my calculations are correct, represents about a four-fold increase over the 

amount that is currently paid out in the tort system. If you look 

at the—it consumes in the neighborhood of $5 to $7 billion annually, with about 60 to 65 percent going to transaction costs. Not to 

quibble over the numbers, but the amount of money that goes into 

this trust fund the first 5 years is substantial, and it is a multiple 

over the amount of money that currently is paid out to victims 

under the current tort system. 

Judge BECKER. I have seen those figures, and there is documentation that would support those figures. I think the other side, 

I think that labor would controvert that. But, plainly, that is what 

the RAND study shows, absolutely. 

25

Senator CORNYN. Let me ask you a little bit about—

Judge BECKER. Like $6 to $8 billion a year times, you know, 5, 

6, years, that is the 40. So that is right. 

Senator CORNYN. Let me ask you a little bit about the claims 

process. Is it the intent of the working group and your intention 

to make this claims process as simple as possible? 

Judge BECKER. The answer is yes. 

Senator CORNYN. And here, again, if you look at the RAND study 

that you alluded to, about 60 cents on the dollar under the current 

system go to pay the plaintiff’s lawyer or the defendant’s lawyer or 

court costs or other costs. Our goal here is to try to boil down the 

claim to eliminate as many transaction costs as possible so the victims get the money. 

Judge BECKER. Absolutely. 

Senator CORNYN. And is this something, a claim process that you 

think a reasonably intelligent individual could do on their own, or 

are they going to have to hire a lawyer? 

Judge BECKER. I think for the most part, most of these can be 

done on their own. There are going to be some where they are 

going to need lawyers. Some are going to be complicated. Most of 

them they can do it on their own, and the Labor Department, by 

and large, they will hire contractors. I would say the way this is 

done is to hire contractors, and there are a lot of folks out there 

who have processed these claims for the bankruptcy trusts and so 

forth who should be available. But it is a claims evaluation process 

on the basis of the information that is—I do not think it is extraordinarily complex. It has got to be done carefully. But I think in 

most cases the claimant will be able to do it him—it is almost always going to be a himself. And you are not going to have to have 

a highly sophisticated claims examiner to evaluate the claim. 

Senator CORNYN. And if, in fact, an individual, a victim of asbestos disease, is able to file their own claim, will they then be able 

to keep the entire award? 

Judge BECKER. Yes. 

Senator CORNYN. In other words, the amount of money that they 

would otherwise pay as attorney’s fees would go into their pocket? 

Judge BECKER. Absolutely. 

Senator CORNYN. Okay. And I note under the Becker draft that 

there is a 10-percent provision for attorneys’ fees. 

Judge BECKER. And 20 percent if there is an appeal. 

Senator CORNYN. And I want to ask you a little bit about that 

appeal, because, of course, this is just the amount of money that 

would be paid to the plaintiff’s lawyer, the one who would be filing 

the claim. 

Judge BECKER. Right. 

Senator CORNYN. And you would expect, the world being what it 

is, that there would be some money spent, other transaction costs 

in addition, I guess. 

Judge BECKER. I suppose there would be some—in any—it is a 

kind of personal injury case. There may be some costs for reports. 

There is not going to be formal discovery, but I guess there would 

be, you know, xerox costs if there are voluminous records. I do not 

think they would be significant, but I think there would be some 

other costs, travel costs maybe. 

26

Senator CORNYN. Let me ask you about if there is a hearing—

and I note there is a provision for a hearing under exceptional 

cases. 

Judge BECKER. Right. 

Senator CORNYN. Will this be an adversarial hearing? 

Judge BECKER. No, I do not think it is an adversarial hearing. 

Senator CORNYN. So it will just be the hearing officer, whoever 

that is. 

Judge BECKER. The hearing officer, yes. 

Senator CORNYN. And the victim and their lawyer, if they have 

a lawyer. And you have a provision—

Judge BECKER. But there is no defendant who has any interest. 

Senator CORNYN. Right. Well, in terms of transaction costs, that 

is a substantial benefit in terms of getting money to the victim, 

which is our goal. But there is a 20-percent provision for appeals. 

Is that correct? 

Judge BECKER. That is correct. 

Senator CORNYN. And as I understand, there are, I guess, two 

kinds of appeals. One would be an administrative appeal and one 

would be judicial review, which would be based on substantial evidence review. But why is there a provision made to double the attorneys’ fees for appeals because ordinarily—I mean, my experience 

is probably the same as yours, I hope it is, that appeals tend to be 

a little bit cheaper in the tort system than the trial preparation 

and the trial level itself. 

Judge BECKER. Well, I think that generally is correct, but here 

you are talking about a relatively simple initial proceeding, and it 

is hard to picture at this point what the appeal issues are going 

to be. But my guess is that the appeal issues are going to be—it 

is a no-fault system and you do not have to deal with product identification and that kind of thing, which you deal with in the ordinary trial of an asbestos case. But it is probably going to be where 

there is some causation issue or, for example, the individual has 

got colorectal cancer, and was this colorectal cancer caused by asbestos. 

Senator CORNYN. Caused by inhalation of asbestos. 

Judge BECKER. Yes, I mean, that is a tricky issue, and a lawyer 

may have to do a lot of work, you know, to figure that out and 

argue that case. 

Senator CORNYN. I would say a successful lawyer would have to 

do a whole lot of work to make that causal connection. 

Judge BECKER. Well, that may be so. But that is why we have 

given to the administrator the authority to regulate the fees. These 

are simply presumptive maximums, and the administrator has the 

authority to cut them back—or to increase them if there is a fair 

case. 

Senator CORNYN. Well, I will just leave it at this: As you have 

explained it, and as I understand it, the desire is to maximize 

money to the victim, eliminate as many transaction costs as possible, create a simple system that can be done even without counsel, should an individual choose to do so. So I would like to continue to work with you and the Chairman on those attorneys’ fees 

allocations. 

Judge BECKER. Of course. 

27

Senator CORNYN. Because I think we ought to try to encourage 

and create a system that is, as a practical matter, something that 

could be done cheaply, efficiently, and with as few transaction costs 

as possible. 

Finally, let me just in this round of questioning, you have mentioned the problem with Category VII. These are the people that 

have lung cancer, with no markers indicating that they actually 

have asbestos-related disease. And you said these are the kinds of 

cases if they go to court that typically the defendant would win. 

Judge BECKER. They tell me they do. I do not know. 

Senator CORNYN. Well, I would think that even if you are exposed to asbestos but you do not have any evidence of asbestos disease and you die or your diagnosis is lung cancer, that is, should 

be, a pretty tough case to win on the basis of an asbestos claim. 

Judge BECKER. They do pretty well. They do not win them all, 

but they do pretty well in those cases, apparently. 

Senator CORNYN. And under the provisions of this bill, there is 

as much as $200,000 that could be allocated to former smokers who 

have lung cancer but no evidence of asbestos disease. 

Judge BECKER. That is correct. It is a much lower sum, but, you 

know, I guess it is an evaluation of risk. You know, in the tort system they may win three out of four cases, but they lose the fourth, 

and the plaintiff lawyer rings the bell, as they used to say, you 

know, on the fourth case. But, by and large, business has acknowledged that if we are going to have a gradated system, there has 

got to be a dollar figure there. And the only thing I can say is that 

dollar figure, as business has proposed it, and as Senator Specter 

and I have proposed it, is much less—also as Senator Feinstein has 

proposed it, is much less than what labor and Senator Daschle 

have proposed. 

Senator CORNYN. I see my time is up, Mr. Chairman. Thank you. 

Chairman SPECTER. Thank you very much, Senator Cornyn. 

Judge Becker, before you terminate your testimony, you had said 

in the final question from Senator Leahy that there were some 

issues where we cannot have consensus, and you particularized six 

or seven. I think it would be useful if you could enumerate those. 

Judge BECKER. Well, I do not think we are going to get labor and 

business to agree on the dollar amount for the up-front funding. I 

do not think business is going to agree to medical monitoring, but 

you and I met with a whole bunch of business folks the other day 

and said do not fall on your swords on this. You know, it takes two 

to tango or three to troika, or whatever it is. But I think business 

is—business, kicking and screaming, may agree. The rail unions 

were working on this FELA thing. Yesterday at our meeting, Mr. 

O’Bannon from the Association of Railroads and Mr. Griffin from 

the maintenance of way folks agreed to talk some more about a formula. I think there is some possibility we may work something out 

on that. 

I think that on the workers’ comp subrogation, although I think 

what you and I have come up with is a principled solution, my 

guess is that labor is not going to—or the trial lawyers are not 

going to sign off on it. 

Mixed dust, I am hopeful that we can work something out. 

28

Let me look at my notes here. Equitas, the insurance issue, the 

offshore Lloyd’s of London folks, I think you are going to have to 

resolve that. 

I think with respect to the sunset provisions in terms of the reversion, I think we have a principled solution there, but I do not 

think—I mean, I think these are relatively narrow issues. It is up 

or down. But I just think you are just going to—especially with respect to the Level VII reversions, as to whether it is 115 percent 

and as to whether it just goes to Federal court, I do not think they 

are going to come to a consensus on that. And the time of the sunset, both in terms of the initial stay, the terms of that, although 

I think your approach to that is a sensible one, but the time of the 

ultimate sunset I think may be—business had said seven and a 

half years, and insurers have taken a strong position on that. 

Labor has taken the opposite position. 

I think those are the main issues that you are going to have to 

resolve. 

Chairman SPECTER. Well, Judge Becker, I am frankly encouraged 

by your specification of the outstanding issues. I think as to the 

dollar amount there is no doubt that the Congress is going to have 

to decide that. You have 140; as opposed to labor, trial lawyers at 

149. Then you have 140 endorsed by Senator Daschle when he was 

head of the Democratic Party. So we are within the realm of handling it. 

Medical monitoring, I understand the problems, but as we have 

delineated it, we may be able to limit it even further. 

The FELA, we are going to solve that one with language. Labor 

is concerned about this being the start of the slippery slope to 

eliminate Federal employers’ liability, and that is not the intention, 

and we can guard against that. 

And the workers’ comp subrogation, well, there is an issue where 

we may not come to terms, but it is not a gigantic matter. It is important. 

Mixed dust, I think we will be able to draft through on that. 

Equitas is for one group, and we will have to make that decision. 

We are prepared to do that. 

When you talk about sunset, the time of sunset, seven and a half 

years and the amount of the funding to carry through that period 

of time, I think ultimately that the stakeholders, when they decide 

what positions to take, will have to make a judgment as to whether 

a bill which they have some concerns, even significant concerns, is 

better than going on with the system as it is now. 

Judge BECKER. I should add the claims values, the claims values 

on the Level VIIs. 

Chairman SPECTER. I should not have paused if you were going 

to add things. 

Judge BECKER. The Level VII smokers, I do not think they are 

going to agree on that either. 

Chairman SPECTER. Okay. On the reversion on that, labor at 150 

percent and business and CBO and this draft comes in at 115. That 

is subject to some modification. But considering where we started 

off—and we all know that the perfect is the enemy of the good, and 

we are going to have to face up to the catastrophic nature as to 

what is going on. And there may be some room for patriotism here. 

29

That perhaps is an inappropriate word where it is dollars and cents 

and shareholders, but the economy of the country is at risk. 

Anything further, Senator Leahy? 

Senator LEAHY. No. I think you have said it all very well. I 

agree. 

Chairman SPECTER. Judge Becker, we would like you to remain 

at the witness table, if you would. 

Judge BECKER. I would be pleased to. 

Chairman SPECTER. Because there may be some comments which 

come up as we have the balance of our panel: Senator Engler, Ms. 

Seminario—

Senator LEAHY. Governor Engler. He does not want the demotion, Arlen. 

[Laughter.] 

Chairman SPECTER. Governor Engler. Pardon me. Mr. Forscey, 

Ms. Keener, Mr. Speicher, and Mr. Robinson. If you ladies and gentlemen will come forward, our lead witness is the former threeterm Governor of Michigan, John M. Engler, who is now president 

of the National Association of Manufacturers, the largest industry 

trade group in America. Before becoming Governor, Governor 

Engler served 20 years in the State legislature, was the youngest 

person elected to the Michigan State House of Representatives. 

Seven of his 20 years in the legislature were as State Senate Majority Leader. Governor Engler has a law degree from the Cooley 

Law School and his bachelor’s degree from Michigan State University. 

Governor Engler, it is a pleasure to see you. 

Senator LEAHY. Mr. Chairman, before we start, could I just ask 

consent to put in the record a statement by Senator Kennedy and 

some expert testimony in the record on subrogation? 

Chairman SPECTER. Sure. Without objection, they will be made 

part of the record in full. 

Our timekeeper will set the time at 10 minutes, and we look forward to your testimony, Governor.

STATEMENT OF JOHN M. ENGLER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, D.C.

Mr. ENGLER. Thank you, Mr. Chairman. Senator Specter, Senator Leahy, and members of the Judiciary Committee, thank you 

for the opportunity to testify about the need for asbestos liability 

reform, and I do want to say up front that I also have a written 

statement I would like to submit. 

Chairman SPECTER. Without objection, your full statement will 

be made a part of the record, as will all the statements. 

Mr. ENGLER. Thank you. I would also like to introduce our counsel for the Asbestos Alliance, Mr. Pat Hanlon, of Goodwin, Proctor, 

who is seated right behind me. So I have actually brought expert 

back-up as well. 

Chairman SPECTER. Mr. Hanlon has been an extraordinary contributor to our 35 sessions. An extraordinary contributor. So you 

are well backed up. 

Mr. ENGLER. I am indeed. 

30

Senator Specter, the draft legislation, also, we want very much 

to compliment you. It reflects your serious commitment to finally 

resolving the litigation crisis, and we are grateful to you for that. 

I certainly want to acknowledge also the efforts of Judge Becker for 

such dedicated labor on behalf of the public good. 

Today, as you have indicated, I am here speaking on behalf of 

the National Association of Manufacturers’ Asbestos Alliance, a 

broad-based coalition of companies and associations committed to 

seeking a fair resolution of the asbestos litigation crisis. I am also 

very concerned about the plight of the victims, both medical victims 

and workers whose jobs and retirement savings have been affected. 

For their sake, Congress must build on last year’s efforts and pass 

fair and reasonable legislation. 

Our alliance strongly supports the trust fund approach. Removing claims from the tort system is the only way to ensure that the 

compensation goes to the victims, not the lawyers. It is also the 

only way to ensure that victims receive fair and prompt compensation, that the bankruptcies stop, and that the fraud and the uncertainty are eliminated. 

I also want to note for the record that numerous veterans groups, 

including the Veterans of Foreign Wars, Non-Commissioned Officers Association, Paralyzed Veterans of America have also endorsed 

the trust fund approach. I think my seatmate, Ms. Keener, will be 

speaking to that a little bit later, but they do certainly because 

many veterans are also asbestos victims. I would ask that their endorsements be made part of the record as well. 

In addition, I read yesterday that AFL–CIO President John 

Sweeney again described a trust fund approach as the best way ‘‘to 

show genuine compassion for the victims of asbestos disease.’’ So, 

Mr. Chairman, I believe support for the trust fund concept is broad 

and it is bipartisan. And now I would like to move to the specifics 

of the draft bill. We have been continuing our review of that 250-

page-plus draft that we received Friday evening, and the alliance 

is prepared to bring several general observations. 

First, as has been discussed, the draft does not address the central issue of funding. The maximum size of the fund must be no 

more than $140 billion, as finally agreed to last fall by Senators 

Frist and Daschle. And just so there is no fuzzy math on that 

point, that $140 billion total includes all sources: defendant companies, the asbestos trusts, and insurers. 

In addition, the funding schedule, especially in the first 5 years, 

must be reasonable. The approximately $40 billion in cash contributions in the first 5 years discussed last year, and certainly 

again this morning, meets that test. With the borrowing authority 

in the bill, the administrator could have as much as $60 billion or 

more to pay claims. 

Now, to put that in context, the entire amount paid in asbestos 

litigation from the beginning in the late 1960s through 2002 was 

only $70 billion, and 60 percent of that went to those transaction 

costs we have been discussing, to lawyers on both sides of the 

issue. 

The next requirement is that an asbestos solution must completely shut down the broken asbestos tort system. Provisions in 

the draft that call for a return to the tort system if certain deadVerDate 0ct 09 2002 12:56 Mar 13, 2007 Jkt 033400 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\33400.TXT SJUD1 PsN: CMORC
31

lines are not met as the administrator sets up the fund are counterproductive. Worse, if we fail to get these cases out of the tort 

system, it could increase the costs to the program by tens of billions of dollars and result in asbestos victims and their families 

continuing to be victimized twice, first by the disease itself, second 

by a tort system broken beyond repair. 

Certainly the heart of the problem is that too many claims are 

filed on behalf of people who are not sick and may never become 

ill from asbestos. That problem was dramatically illustrated last 

year in an independent study by Johns Hopkins researchers. The 

study was reported in Academic Radiology, one of the top peer-reviewed radiology journals. And, Mr. Chairman, I brought a copy of 

that and I would ask that that article and the accompanying editorial entitled ‘‘Is Something Rotten in the Courtroom?’’ become 

part of the Committee’s record. 

Chairman SPECTER. We will make it part of the record, without 

objection. 

Mr. ENGLER. In this study, the researchers obtained 492 X-rays 

that had been examined by doctors retained by plaintiffs’ lawyers 

and used in asbestos lawsuits. The plaintiffs’ X-ray readers found 

asbestos-related lung damage in 96 percent of the cases. The Hopkins researchers put together an independent panel to interpret the 

same X-rays. The six panelists that they assembled were not told 

that these X-rays had been used in asbestos cases. The independent radiologists found abnormalities in a mere 4.5 percent of 

cases. That is 4.5 percent versus 96 percent. This is an outrage, 

and, generally, all too common in many of these asbestos cases. 

The real tragedy is that thousands of these questionable claims 

are forcing victims, real victims, with serious illnesses in many 

cases, to wait longer and longer and longer for compensation. We 

cannot continue with a system that is hurting those who deserve 

help the most. 

So, Mr. Chairman, I ask this Committee also ensure, which is a 

point we have been discussing this morning, that the legislation 

not become a smokers’ compensation bill. Payments for lung cancer 

claimants who are current or former smokers should reflect their 

smoking history. This principle is essential and will protect the 

fund against an avalanche of smokers’ claims that have little or 

nothing to do with asbestos. 

The bill also must contain strong and effective provisions to lock 

the back door so creative trial lawyers just do not convert tens of 

thousands of unimpaired asbestos claims into silica claims and 

head to the courthouse once again. And I am encouraged by your 

comments on that today. 

Finally, I do want to express concerns, as Judge Becker noted, 

about the new medical screening program included in the discussion draft. People who may have been exposed to asbestos but have 

no indication of any asbestos disease would receive medical services 

that are similar but less frequent than those received by Level I 

claimants. These people would have no claim in court and no right 

to compensation under State or Federal law. My concern with this 

is that every dollar diverted to the screening program, this new 

screening program, is a dollar then that is not available to compensate the sick. 

32

Now, we are continuing our review and will continue to provide 

additional feedback through our able counsel, and the alliance remains committed, Senator, to working with you, Senator Leahy, 

Senator Cornyn, Senator Carper, who I was delighted stopped in 

this morning, because we recognize, as you have stated this morning, that this is a crisis that needs resolution. So your hard work 

and determination will be matched by our efforts. We do look forward to working with you and the members of the leadership and 

members of the Senate and ultimately the House and the White 

House to finally pass a bill that cares for victims and ends the current scandal-ridden system. 

Thank you for the opportunity, Mr. Chairman. 

[The prepared statement of Mr. Engler appears as a submission 

for the record.] 

Chairman SPECTER. Thank you very much, Governor Engler. 

Our next witness is Ms. Margaret Seminario, Director of Occupational Safety and Health, AFL–CIO. She has worked for AFL–CIO 

since 1977, and since 1990 has been responsible for directing the 

organization’s activities on safety and health. She holds a master 

of science degree in industrial hygiene from the Harvard School of 

Public Health and a bachelor’s degree in biological science from 

Wellesley. Ms. Seminario has been a regular attender at our marathon sessions and a major, major contributor, heading up a very 

distinguished team from the AFL–CIO. 

The floor is yours, Peg.

STATEMENT OF MARGARET SEMINARIO, DIRECTOR, SAFETY 

AND HEALTH DEPARTMENT, AFL–CIO, WASHINGTON, D.C.

Ms. SEMINARIO. Thank you very much, Senator Specter, and we 

do appreciate the opportunity to testify on this legislation on asbestos compensation. 

As you have stated, we have been very, very involved in this 

most recent process. Just to note, the first asbestos compensation 

legislation that I was involved with was in 1978, so the AFL–CIO 

has been at this for a very, very long time, and we are pleased to 

see the progress that is being made with respect to addressing this 

issue. 

I want to thank you and Senator Leahy, both of you, for your 

commitment and your tireless efforts to craft and sound asbestos 

compensation bill. And I would also like to acknowledge and thank 

Judge Becker for all of his very hard work, his tireless hours and 

hours spent on this very, very difficult issue. 

We have welcomed the opportunity to participate in these efforts 

to craft a fair compensation bill for asbestos victims. For the last 

several decades we have seen the toll of workers and family members disabled and killed by asbestos disease mount to staggering 

levels, the result of willful practices of manufacturers and employers who withheld information about the hazards of asbestos and 

did little or nothing to control the exposures. And the result of 

these actions is an occupational and environmental disease crisis of 

unprecedented magnitude. And I think that we have to keep this 

in front of us, that while we talk about a litigation crisis—and 

there are indeed problems in the litigation system—the root of the 

problem is one of being an occupational health and environmental 

33

disease crisis of unprecedented proportions. Hundreds of thousands 

of victims have already suffered and died, and hundreds of thousands more will die or suffer in the coming years. 

As the disease crisis has grown, so has the litigation as victims 

have sought redress for their injuries. And as I have said, there are 

indeed problems in the current civil litigation system which we 

have recognized. And it is indeed for both of these reasons—the 

massive asbestos disease crisis and the serious problems with the 

current litigation system—that we have engaged so deeply in efforts to craft a fair bill. 

We have indeed supported in principle the establishment of a 

Federal asbestos trust fund to compensate victims for their personal injuries through a no-fault system to replace the inadequate 

civil litigation system. We have consistently made clear that establishing a national compensation fund must provide for fair compensation for victims who suffer disease. It must have adequate 

funding to pay claims and ensure the fund’s solvency. It must deliver compensation in an efficient and timely manner to victims. 

And it must ensure that victims will not be left at risk if administrative or financial problems arise. 

We have also made clear we will not support and we will strongly oppose any legislation that does not meet these basic principles 

and any legislation that relieves defendants and insurers of responsibility and liability at victims’ expense. 

In the last Congress, much progress was made on some key 

issues of asbestos trust fund legislation, including the medical criteria and the establishment of a no-fault administrative system. 

But, indeed, differences on key issues remain, and let me turn to 

some of those key issues of concern for the AFL–CIO. 

First and foremost is fair compensation for victims because ultimately asbestos compensation is about providing fair compensation 

to those who have developed a disease as a result of asbestos exposure. The compensation awarded should be commensurate with the 

level of disease and disability suffered. And, indeed, compensation 

values for diseases have moved closer to what represents in our 

view is fair compensation. However, the values proposed for some 

diseases in the last draft, 2290, and some of the latest business offers, particularly those proposed for the Level VII lung cancers in 

our view are too low. I think it is important to state that exposure 

to asbestos causes lung cancer and not only that, that indeed 

among victims who smoke, there is a synergistic effect with the resulting risk from both the exposure to asbestos and the smoking 

causing essentially a 50- to 90-fold increase in risk. 

And so the fact of the matter is the fact that people smoked may 

indeed increase risk, but the exposure to asbestos has increased it 

even more, and those people deserve to be fairly compensated. 

We also believe that with respect to the awards that are offered 

to victims under this bill, there should be no subrogation or liens 

against awards. And we do think that the proposals by insurers, 

which essentially call for a compensation holiday but still allow a 

total lien—a total lien against that award, is really unfair. And, indeed, it is worse than exists under many State laws where they do 

not allow a subrogation or lien against the entire award. And so 

we really do not think that those proposals are fair. 

34

There must be adequate funding to ensure the trust fund solvency, and essentially the major sources of concern for us have 

most immediately focused on the early years when the demands 

and the stresses on the system will be the greatest. Last year the 

Congressional Budget Office itself, in an estimate of 2290, estimated that in the first 6 years the cost of claims under that bill 

will be $56 billion. The awards values that we are talking about 

here are higher than that bill. So the estimates of CBO are essentially in the range of, you know, $56 billion in the first 6 years of 

the program. 

But we are concerned that those costs and claims projections are 

actually too low, and in one area alone, mesothelioma claims, the 

Government data, the most recent Government data show mesothelioma claims running essentially 30 to 50 percent higher than those 

estimates. And these are not my figures. These are the latest data 

from the National Center for Health Statistics released this November, and I would like to put those in the record of the hearing 

because I think—

Chairman SPECTER. Without objection, they will be made a part 

of the record. 

Ms. SEMINARIO. I think it is very important that we base this on 

the best information we have. While there is a lot of uncertainty, 

let’s use what we have. 

And related to that, last summer the Centers for Disease Control, again, put forward information on what is going on with 

deaths relates to asbestosis, and, again, I would like to put that in 

the record as well, so that we can base these decisions—

Chairman SPECTER. Without objection, that will be made a part 

of the record as well. 

Ms. SEMINARIO. So what we think is very, very important, that 

we use the information that we have, and that information indicates that the stresses on the system immediately will be very 

great. We think that we should fund to what is expected. We do 

not think that we should be looking at using borrowing authority 

to pay for what is expected. Borrowing authority may be useful to 

deal with what is unexpected, just the same way as we had a contingent call on 1125. But if we know the cost of this bill is $60 billion in the first 6 years, there should be $60 billion paid and not, 

you know, turning to a pool of money, because if the point is reducing transaction costs, we do not need to be paying a lot of money 

in interest. We need to be paying that money to the victims of this 

fund. 

Another area of concern is the preemption of the definition of asbestos claim in the bill. That definition actually changed from 1125 

as reported out of committee to what is in 2290 to be much broader. S. 1125 basically said this bill was about personal injury claims 

for asbestos-related diseases. S. 2290 now says that this is about 

any claim in the civil litigation system related directly, indirectly, 

derivative from, anything dealing with health effects of asbestos. 

We think that is far too broad and would have the unintended consequences of essentially preempting many actions that really 

should not be covered by this bill and for which there is no redress. 

So we do think that has to be looked at very carefully. 

35

Another issue of concern, transition to a new system. This is 

probably one of the most difficult and complex issues with respect 

to this fund. With the existing 600,000 pending claims, new claims 

being filed, new cases coming forward, there are many, many people that are involved, and we do not think the system should be 

set up so that people who are getting sick are essentially put in a 

new holding pen. They might have been in one already in the current system to wait while the system gets up and running. It is not 

fair to people who are sick to basically have to bear what essentially are the time costs in setting up a new system. We have to 

do better with respect to providing some redress for those people 

while the system is getting up and running. 

With respect to the sunset and reversion, I think with respect to 

the process that has been included in the draft in the bill, that is 

one that we have made progress on. But, again, we think if this 

does not work—and we hope it does work—that the system really 

has to go back to the status quo and not put in place a whole new 

set of rules because we do not see this as tort reform, we see this 

as—

Chairman SPECTER. Ms. Seminario, could you summarize please? 

The red light is on. 

Ms. SEMINARIO. Yes. Let me just say that, in conclusion, we do 

support the establishment of a national asbestos trust fund, but it 

must meet the basic principles that we have set forth. We cannot 

and will not support legislation that does not provide fair compensation to victims, but we do stand ready to work with Senators 

and other stakeholders on the outstanding issues to see if an agreement on fair asbestos compensation legislation can be reached. 

Thank you very much. 

[The prepared statement of Ms. Seminario appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, 

Ms. SEMINARIO. We now turn to Mr. Craig A. Berrington, Senior Vice President 

and General Counsel of the American Insurance Association. Prior 

to joining the AIA in 1986, he held several key positions at the Department of Labor, including Deputy Assistant Secretary for Employment Standards. He received the Phillip Arnold Award, the 

Labor Department’s highest honor for distinguished public service. 

He has his law degree from Northwestern and is a graduate of the 

School of International Service at American University and has 

been a contributor and attendee of our marathon sessions. 

Welcome, Mr. Berrington, and we look forward to your testimony.

STATEMENT OF CRAIG A. BERRINGTON, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, AMERICAN INSURANCE ASSOCIATION, WASHINGTON, D.C.

Mr. BERRINGTON. Thank you very much, Mr. Chairman. As 

noted, I am general counsel of the American Insurance Association, 

and my statement today is also on behalf of other insurance trade 

associations—the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America, the 

Reinsurance Association of America, and the Independent Insurance Agents and Brokers of America. We very much appreciate this 

36

hearing, and it goes without saying we appreciate the extraordinary efforts that you and this Committee have made. 

In this connection, I echo what others have said, that we all owe 

a tremendous debt of gratitude to Judge Becker who has led his 

graduate seminar in asbestos litigation with equal measures of intellect, patience, and firmness, and whose masterful presentation 

this morning took everyone through the bill in an extraordinarily 

clear way. 

We have a written statement we would like to have submitted 

for the record, and I would like to make just a few conceptual comments. 

Chairman SPECTER. It will be made part of the record, without 

objection. 

Mr. BERRINGTON. Thank you. 

As others have noted and as you, Mr. Chairman, stated with 

great force this morning, the current system of asbestos litigation 

has caused litigation chaos in the courts, massive economic dislocation to major sectors of the economy, great pressures on the insurance industry, and an extraordinarily expensive system of financial 

relief whose awards are often capricious, with a great majority of 

them going to people who are not sick. The United States Supreme 

Court has decried it but said that only Congress can fix it, as 

Judge Becker mentioned earlier. 

In the insurance industry, we are prepared to support any legislation that will work. We had initially focused on legislation like 

that introduced in the last Congress by Representative Cannon. 

The legislation would provide medical criteria for the courts to use 

in asbestos lawsuits and, in addition, would address a variety of 

other litigation abuses, including those caused by lawsuits being 

brought not in the usual manner, where the plaintiff resides or the 

defendant is located, but where a favorable court decision could be 

guaranteed. 

From the point that the Judiciary Committee decided to go the 

trust fund route, we have worked hard, along with all the other 

stakeholders, to make that approach work as well. At one point I 

think former Chairman Hatch referred to the effort—and it was referred to again this morning, I think perhaps by Senator Leahy—

as this being the toughest litigation task that the Judiciary Committee had ever tackled. And I think we would all agree with that. 

As we have worked on the trust fund approach, we have tried to 

stress certain bright line tests that are critical to us. While any 

piece of trust fund legislation will be complex, that complexity is 

only exacerbated if these bright lines are not included. 

The essential bright line is that the amount of money that insurers put into the trust fund in the aggregate must be both certain 

and reasonable, and the money must pay for the system that is the 

exclusive place for resolving asbestos-related cases. Certainty 

comes in four ways: 

First, by having the amount specifically set forth in the bill to 

be paid pursuant to a reasonable schedule. I understand why it is 

not in the bill right now, but I want to emphasize that the $46 billion nominal in S. 2290 represents maximums, not floors, and does 

not reflect the payments, the very, very substantial payments that 

37

have been made through litigation in the bankruptcy system over 

the past 2 years. 

Second, the bill should make certain no litigation remains after 

the trust fund legislation is enacted. This is often referred to and 

has been this morning as ‘‘the leakage problem.’’ It may be leakage 

from the trust fund, but it could be a huge financial drain for insurers. In short, the trust fund, as I mentioned, must be the exclusive remedy for resolving asbestos claims from the day the President signs the bill, and all asbestos-related claims. 

Third, the bill should not include provisions that require some 

type of operational certification for the trust fund before the litigation can be fully shut down, and we very much appreciate the conversations that we have had about that over the last several days. 

We must all come to grips with this because while we clearly understand the desire, indeed the need to have the trust fund get organized and start operations quickly, the bill already has a full set 

of operational provisions to do that. If more authority is necessary, 

the bill should add it. But if the bill holds out the possibility that 

the litigation system can start up again if operational certification 

is not given to the trust fund, it will have perhaps inadvertently 

provided incentives for some to throw road blocks in the fund’s 

path or to mount legal challenges even to any certification that is 

given. This will cause massive leakage problems and litigation over 

the certification itself. 

Fourth, if the bill is to include a litigation fail-safe system to kick 

in if the trust fund does run out of money, we believe there is no 

public policy justification, none whatsoever, for merely returning to 

the same litigation system that has been the vessel for all of the 

current problems. Thus, any such fail-safe system should, at the 

very least, place litigation in the Federal courts, not the State 

courts. Of course, a properly balanced law would be one where the 

possibility of the trust fund running out of money is very low because the fund’s benefit payment system is well balanced with the 

fund’s income. 

Beyond the bright line requirements, the bill presents numerous 

important policy choices, and I want to raise one red flag about one 

of them. And I was happy to hear that the issue again is being addressed, and that has to do with how we deal with smokers, if individuals have long smoking histories, in the trust fund. We want to 

make sure that the trust fund is not designed with failure built in, 

yet this is the implicit assumption that a return to the tort system 

is inevitable. The reason for that assumption is that many believe 

the Level VII cases will swamp the fund. In fact, that is why there 

is that separate carve-out to move them back to the tort system. 

And it is imperative to remember that, as Judge Becker mentioned 

earlier, the Level VII cases include those claimants who have 

smoked, have lung cancer, and while exposed to asbestos perhaps 

40 years ago, have never developed any underlying asbestos disease. A return to the tort system for these claims or because of 

these claims would be a function of eligibility criteria that will 

place on the fund a huge financial burden of compensating lung 

cancer generally rather than focusing on the compensation of lung 

cancer that was caused by asbestos exposure. 

38

If the fund is to compensation those whose illness is much more 

likely to be the result of smoking, then at the very least we believe 

that the award level should be determined accordingly so those 

awards in the aggregate do not threaten the fund’s existence. 

Mr. Chairman, the insurance industry is committed to remaining 

at the table and to continuing our joint work toward a true and 

much needed resolution of our Nation’s asbestos litigation crisis, 

whether through a properly constructed trust fund, as we are discussing today, or a medical criteria bill that directly addresses 

problems in the litigation system. 

As we have heard this morning, the continued impact of this crisis on the victims, the business community, and the economy calls 

for a solution now. We want to help work with the Committee to 

get that solution. 

Thank you. 

[The prepared statement of Mr. Berrington appears as a submission for the record.] 

Chairman SPECTER. Thank you. Thank you very much, Mr. 

Berrington. 

We turn now to Mr. Michael Forscey, who has been involved in 

the asbestos issue since the 1970s, both as a congressional legislative assistant and private attorney. He appears here today representing the trial lawyers, the Association of Trial Lawyers of 

America, on the asbestos issue. He has had a distinguished career 

as a staff assistant for the Senate Labor Committee from 1977 to 

1980 and as chief minority counsel on the Human Resources Committee under Senator Kennedy from 1981 to 1985 and worked as 

a legislative assistant to House Majority Whip John Brademas in 

the early 1980s. He has been a regular attender and a major contributor to our marathon sessions. 

Welcome today, Mr. Forscey, and we look forward to your testimony.

STATEMENT OF MICHAEL FORSCEY, ON BEHALF OF THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA, WASHINGTON, 

D.C.

Mr. FORSCEY. Thank you, Mr. Chairman and members of the 

Committee. I am appearing here today on behalf of the Association 

of Trial Lawyers of America. I have represented ATLA in the discussions conducted by Judge Becker pertaining to the establishment of a trust fund to pay asbestos claims. 

ATLA members represent the vast majority of the 500,000 existing victims who would lose—in an unprecedented fashion—their 

constitutional right to a jury trial under this Act. These victims 

have filed claims in good faith under the prevailing law for which 

they can expect to obtain substantial recovery in the courts. In our 

view, to radically change the rules governing the adjudication of 

these claims now is inherently unfair. We, therefore, deeply appreciate your willingness to listen to our views and to include us in 

the discussions that this Committee has sponsored and that Judge 

Becker has facilitated over the past several months. 

At the outset, let me say that I believe no organization or lawyer 

should oppose the theoretical possibility of a trust fund that would 

provide fair compensation, paid promptly, to the approximately 

39

million and a half of our fellow citizens who will develop asbestos 

disease in the future. ATLA has always said it could support a 

fully funded trust fund that would guarantee payment to future 

victims. 

We believe that Judge Becker’s involvement in this negotiation 

has produced a number of improvements that have moved us closer 

to the goal of a fair resolution for victims. 

First and foremost, the current—and I emphasize ‘‘the current’’—

draft brings us much closer to both the language and the intent of 

the Biden amendment than does S. 2290. The Biden amendment, 

as we see it, has always been a critical incentive to achieve guaranteed funding, not an excuse to avoid it. 

Second, Judge Becker’s recognition that a 2-percent attorney fee 

is inadequate to ensure legal representation for claimants is also 

an improvement over earlier drafts, although we do not agree that 

we should retain the administrative discretion that is in the current draft. 

Third, Judge Becker’s proposal to increase award values is another welcome development. 

Fourth, we believe that a medical screening and monitoring program is the least that Congress should provide to victims whose established right to compensation is being taken away. We believe 

this program should be fully funded. 

Finally, we appreciate the judge’s decision to remove a confusing 

provision that would have moved claims stayed under the bill back 

and forth between the tort system and the trust with no prospect 

of quick resolution. 

However, many other improvements represent compromises 

which go only partway toward correcting the flaws of S. 2290. We 

remain convinced that the inflexibility shown by some of the other 

stakeholders on several key issues will need to change if a balanced 

package is to be produced through the negotiating process. 

It is important to remember that the public health crisis caused 

by asbestos is real and continues to grow. When asbestos legislation was first considered by the Judiciary Committee last year, 

many Senators had been led to believe that few workers were still 

getting sick from asbestos exposure. Recent evidence, as Ms. 

Seminario pointed out, proves otherwise. 

All told, over 300,000 U.S. workers have died because of exposure 

to asbestos, and approximately 10,000 people die each year from 

asbestos-related diseases. Epidemiologists, as Ms. Seminario pointed out, expect these trends to continue for decades, not decline. 

The money necessary to fairly compensate these victims for the 

harm caused by asbestos manufacturers is obviously daunting. We 

believe the cost of compensating victims is clearly greater than 

$140 billion and could approach $200 billion. In the first 5 years, 

if all pending claims are forced through the fund, at least $60 billion will be necessary. If borrowed funds are used to pay pending 

claims, as is currently envisioned, required interest payments on 

these funds will deplete the money available to pay benefits by as 

much a 25 percent. Unless legislative proposals include guarantees 

of funding at substantial levels, the proposed asbestos trust will 

fail. 

40

Thus, while the draft circulated by Judge Becker includes several 

proposed changes that we support, the central issue of financing—

who pays and how much—is far from resolution. It seems unreasonable to move forward without a resolution to this issue that is 

grounded in sound claims estimates. We believe this issue has remained unresolved largely because the manufacturers and insurers 

have insisted on artificially low liability caps. Such caps render unreasonable a demand that all pending claims be forced into an administrative system that does not yet exist and that will likely not 

be operational for 18 months even under the best of circumstances. 

The demand that all pending claims be resolved by the trust 

fund is at the heart of many of the unresolved issues with which 

this Committee continues to struggle: up-front funding, administrative gridlock, and reversion to the tort system. Forcing the pending 

claims into the fund also produces a substantial cost shift, away 

from those with vast current liability to those with relatively few 

current claims, as this Committee is just beginning to learn. Manufacturers and insurers have objected to honoring many settlement 

agreements into which they have voluntarily entered—agreements 

to pay specific sums to specific victims which, if honored, would significantly reduce the front-end funding needed for the bill and 

would greatly improve the fairness of the draft. Finally, these same 

defendants and insurers have unfairly insisted on forcing into the 

fund even those cases that have produced a judgment and an 

award, forcing claimants to start anew if that judgment is appealable. And we are pleased to see that the draft that was released 

last night appears to correct that problem, and we thank Judge 

Becker for that. 

We are also concerned that the Department of Labor will not be 

able to process claims at the rate envisioned by the bill. We know 

from experience with other Government compensation programs 

that claims projections have historically been low. We also know 

that it is unrealistic to assume this program can be up and running 

in 90 days. Substantial delays have plagued both the black lung 

compensation program and the recent Energy Employees Compensation Act. These two programs are only a fraction of the size 

of this trust. The Committee must solicit the Department of Labor’s 

views, in our view, on whether or not it can do what it is being 

asked to do. If the Department of Labor cannot get this program 

running in a matter of months, then Congress should not, as a 

matter of fundamental fairness, including the pending claims in 

the trust. 

I am going to skip over a couple things, and I want to say finally 

one thing about the mixed dust cases. We do not think there is any 

evidence that mixed dust cases burden the courts, are not fairly resolved, or require Federal intervention. We think the legislation 

should not address these cases with legislative language. 

Also, as to mesothelioma values, while the claims values in the 

latest draft are an improvement, we think that and we would propose that meso claims be compensated at a rate of $1.8 million, 

which is the average death benefit paid by the September 11th 

Fund. 

In the past, compensation programs have been designed to provide a benefit to victims of harm when the courts have failed to do 

41

so. We do not believe Congress has ever before adopted a compensation program that takes away from victims an established 

right to obtain compensation in the courts. As we move forward, we 

should not lose sight of the fact that in this case we are preserving 

not creating the right to compensation for asbestos victims. 

Thank you very much. 

[The prepared statement of Mr. Forscey appears as a submission 

for the record.] 

Chairman SPECTER. Thank you very much, Mr. Forscey. 

We now turn to Ms. Mary Lou Keener, the daughter of a mesothelioma victim who contracted this deadly illness while serving as 

a machinist mate in the United States Navy during World War II. 

Ms. Keener’s father, who spent many hours in the engine rooms 

and boiler working on miles of pipes and fittings, ultimately succumbed to mesothelioma on Veterans Day 2001. And we will be 

hearing from two relatives of victims today, and I would underscore 

what Ms. Seminario had said, that when we talk about crises, we 

are talking about an occupational disease crisis. 

Thank you for joining us, Ms. Keener, and we look forward to 

your testimony.

STATEMENT OF MARY LOU KEENER, MCLEAN, VIRGINIA

Ms. KEENER. Chairman Specter, Ranking Member Leahy, and 

members of the Committee, I am honored by this opportunity to 

appear before you here today and tell you about my dad’s battle 

with asbestos-related disease and his untimely death from mesothelioma. 

Following my dad’s death, my family’s personal experience in 

dealing with the current asbestos litigation system has not been a 

positive one, and it is my hope that by sharing this experience with 

you, the importance of your efforts to establish an asbestos injury 

compensation fund will become apparent. 

My dad and I had a very special bond. We were both Navy veterans. I served as a Navy nurse in Vietnam, and he served as a 

machinist mate during World War II. During his service, he was 

on three different Navy ships, and two of those ships were literally 

blown up underneath him. And because, as you indicated, Mr. 

Chairman, he worked down in the engine room, there was really 

no doubt about the fact that he was exposed to significant amounts 

of asbestos. 

In addition to having those two ships literally hit and blown up 

underneath him, he rode one of those ships back to the West Coast 

and worked in the shipyard to help in repairing that ship for several months. 

Now, we all know, it is well documented that Navy ships then 

and even today still contain significant amounts of asbestos. It was 

literally almost more than 50 years after his service in the Navy—

it was about April of 2001 that he first began to experience some 

pain under his shoulder on the right side. My dad and my mom 

came from Michigan to the D.C. area where they spent about 2 

months with my husband and I, where he was seen and cared for 

at the National Cancer Institute at the National Institutes of 

Health in Bethesda. 

42

It was there that after two months of driving back and forth each 

day on the Beltway, day after day for test after test, that he was 

diagnosed with stage 3 mesothelioma. After that diagnosis, he decided he wanted to go back home, where he underwent six weeks, 

five days a week, of radiation therapy in northern Michigan. He 

was too weak to undergo chemotherapy, and as he probably would 

have wanted it if he could have chosen, it was, as you said, on November 11th, Veterans Day, of 2001, that he died a very painful 

death from mesothelioma. 

After my dad’s death, because in my second life I was a lawyer, 

I was able to help my mother navigate all the regulatory and legal 

issues that she had to deal with. Of course, my dad’s passing was 

so quick, six months from beginning to end, that we really never 

even thought about trying to pursue any type of compensation. All 

we wanted to do was make sure that he was cared for and had a 

good quality of life. 

After his death, as I said, I was able to help my mom because 

I am also a veteran and very familiar with Department of Veterans 

Affairs benefits. I was able to help her file a DIC, a Dependent Indemnity Compensation claim, to receive service-connected death 

benefits because of my dad’s death from mesothelioma due to exposure while he was in the Navy. 

Then I helped my mom file a lawsuit with a plaintiffs law firm. 

That was in April of 2002. That was almost three years ago, and 

to this date her claim has not moved forward at all. Her claim is 

standing in line behind hundreds of claims of unimpaired victims. 

Nothing has happened, and that is just not fair. 

As was mentioned before, there are very few viable, solvent defendants left in these cases. The law firm tells us that there are 

possibly 60 defendants in her case. Of these 60 defendants, 7 of 

them may be solvent; the remainder are all bankrupt. To date, my 

mother has received about three settlement checks from bankrupt 

defendants to the tune of pennies on the dollar from bankrupt defendants. 

Unfortunately, my dad’s story is just one of thousands like it in 

the veteran community. A Wall Street Journal article reported that 

claims from individuals exposed in military service and shipyard 

construction account for 26 percent of all mesothelioma claims, 16 

percent of all lung cancer claims, and 13 percent of all asbestosis 

and other disabling lung disease cases. 

Very few of these men and women who served in the military 

and were unknowingly exposed to asbestos as part of their service 

are receiving the compensation that they so rightfully deserve 

under this current system. The courts are so logjammed that they 

simply cannot provide compensation to the truly sick in a fair and 

a timely manner. The true victims of asbestos-related disease need 

to be compensated now, not years from now, in the current system. 

For these and for many other reasons, I am so proud to join with 

my many friends in the veterans community in supporting this 

trust fund solution. Currently, there are 16 national veteran service organizations supporting a trust fund solution to the current asbestos litigation crisis. Some of these organizations are the Veterans of Foreign Wars, the Non-Commissioned Officers Association, 

the Military Order of the Purple Heart, the Jewish War Veterans, 

43

and many others, including numerous State-based veterans organizations. These groups comprise hundreds of thousands of veterans 

across this country that are supporting the trust fund solution. 

The names of all these veterans service organizations are included in my written statement, which I respectfully submit in its 

entirety for today’s hearing record, and I look forward to answering 

any questions that you may have, Senator. 

[The prepared statement of Ms. Keener appears as a submission 

for the record.] 

Chairman SPECTER. Thank you very much, Ms. Keener.

We now turn to Mr. Billie Speicher, a 67-year-old former Marine 

and pipefitter-steamfitter, who spent most of his career in Southern California oil refineries. He was exposed to asbestos as an aircraft mechanic in the Marine Corps in the 1950s and as a pipefitter. He suffers from mesothelioma and asbestosis and has a 

pending asbestos tort claim. 

Thank you for joining us, Mr. Speicher, and the floor is yours.

STATEMENT OF BILLIE SPEICHER, ONTARIO, CALIFORNIA

Mr. SPEICHER. Good morning. My name is Billie Speicher and I 

appreciate the chance to talk to you today about the asbestos bill 

you have been working on. 

I am here today for three reasons, to speak up for the men that 

used to work side by side with me who someday will have to live 

through what I am going through now. I want to speak for my family, and I would like to urge more research into the cancer that has 

changed my life. 

I have mesothelioma. I don’t have to tell you what that means 

because you have been there long enough. It is a deadly cancer, 

and by all rights I should only have a few months left. I was exposed as an aircraft mechanic for the Marine Corps in 1950, and 

a pipefitter from 1965 until 1999. And looking back, I can’t think 

of two more dangerous lines of work, although none of us knew it 

then. No one told my buddies and me that asbestos could kill you. 

Working on airplane brakes and insulation, and later in refineries and duster shops knocking off pipe insulation and installing 

and removing pipes and valves, cutting asbestos cement pipe, asbestos was everywhere. It was all over me and all over everybody 

who worked there. 

I got the bad news mailed first. At first, the doctor I was seeing 

for two years kept telling me I had asthma, even though I had a 

CAT scan that showed my lungs were scarred with asbestos. Finally, the fluid built up so much in my lungs that they realized 

that I had asbestosis, stage 3. Now, I am living with a lot of pain 

and I can barely get my breath sometimes. I can’t hardly sleep at 

night. 

You know that mesothelioma is a death sentence—one year, 18 

months, tops. That is all they give you and that is all they gave 

me. Well, I am still alive and kicking today because of one thing, 

an experimental drug called Veglin that was discovered by Dr. Gill. 

I started getting the Veglin shots about four months after my diagnosis, and so far it has stopped me from getting any new tumors. 

You can probably figure out that these new experimental medicines like Veglin are very expensive. They are the reason I want 

44

to talk to you about the bill you are thinking about here in the 

Senate. 

I filed a workman’s comp claim in my home State of California 

to help cover my medical expenses. The lawyers who handled this 

case tell me that since I have meso, I will most likely receive the 

maximum level of benefits under State law for permanent total disability medical benefits because I have meso and a death benefit. 

I am not sure how much—somewhere between $200 and $300,000. 

I also have a court case coming up and the trial date is set for February 22 of this year. 

Now, I have followed this bill we are talking about since I got 

meso, and I have to say that I don’t like the idea of it. I am no 

legal expert, but to me the jury system in our country is about as 

important as it gets, and I just don’t think it is right to take those 

rights away from people, which I feel this proposal will do. 

I don’t want to be rude because you invited me here today, so I 

am going to do something with this new trust fund. There are a 

couple of things I hope you keep in mind. For one thing, if you 

would put this thing into law today, that would wipe out my trial 

rights. Even if I go to court before that and win a settlement, you 

get this thing passed by summer and it all goes away and it would 

be like I never got my day in court. 

I would have to start all over again and go into this trust fund 

that is supposed to be set up in about a year that I don’t have. I 

don’t want to be disrespectful, but I was in the Marines. Except for 

war, I don’t think the Government does anything very fast. The 

thing is I don’t have a lot of time. And you may not know it, but 

I live in California where folks like me with meso get put at the 

head of the line in a court case. 

Now, I don’t want anybody thinking I came up here with my 

hand out or saying ‘‘show me the money,’’ because that is not what 

I care about. I need help with my medical bills. Those Veglin shots 

are keeping me alive, and they are the only thing that is keeping 

me alive. 

Second, I want to make sure my family is taken care of—my wife 

and my kids and the most beautiful granddaughter you have ever 

seen. This costs a lot of money to keep me alive and it will cost 

a whole bunch more. I don’t want my family stuck with a pile of 

debts after I am gone. I am telling you right now that causes me 

as much pain as the cancer that is eating inside of me, in my body. 

Finally, I want to say a word about research and the guys I used 

to work with. I am here to speak for them, not just the guys who 

busted pipe and asbestos with me, but the hundreds of thousands 

of guys all over the country who did it for years and may still be 

doing it today because, you know, asbestos is still out there in the 

construction trade and the buildings. The construction workers are 

exposed to asbestos whenever they do renovations. 

You also know that everyday another worker is diagnosed with 

meso or some other asbestos-related disease, and many more will 

keep on coming in the future. So whatever you do, you have to 

make it work for them, and you also have to do something to help 

with the research to find a cure for this disease. I don’t know if you 

put any money in the bill to help that, but you ought to, and you 

ought to do even if the Federal Government has to pay for it. 

45

Now, I know that that doesn’t go over too good, as we are in a 

war with a big deficit. But the plain truth is the Government had 

a lot to do with exposing guys like me to asbestos. I got my first 

taste of it working on airplanes in the Marine Corps. A whole lot 

of veterans got their first exposure to asbestos serving their country. 

So I would just like to close by saying I hope you do the right 

thing by us when you finish writing this bill, and I hope you are 

thinking about all the workers in the future like me who are going 

to hear the same thing I did last May that they only have about 

one year left to live. Let’s find a cure for mesothelioma. We know 

it is going to still be killing people for years and years, so let’s do 

something about it. 

Thank you. 

[The prepared statement of Mr. Speicher appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, Mr. Speicher, for 

sharing with us your own situation, and we see the difficulty of 

your testimony. We very much appreciate your being here and presenting your views. 

Our final witness is Mr. Jeff Robinson, who is a partner with the 

law firm of Baach, Robinson and Lewis. He is a graduate of Lafayette College, summa cum laude, and Yale Law School; served as 

Deputy Assistant Attorney General for the Department of Justice 

and did extensive work on this Committee, working for me many 

years ago. He has been an adjunct professor of law at Georgetown. 

He has been an active participant in our marathon sessions. 

We welcome you here today as a witness, Mr. Robinson, and look 

forward to your testimony.

STATEMENT OF JEFFREY D. ROBINSON, BAACH ROBINSON & 

LEWIS PLLC, WASHINGTON, D.C.

Mr. ROBINSON. Thank you, Chairman Specter, Senator Leahy. I 

am here today on behalf of Equitas, which is an English company 

which is responsible for the pre-1993 liabilities of Lloyd’s of London. Those include the asbestos liabilities.

Although a foreign company and in the position to avoid this, 

Equitas is keenly aware and supportive of efforts to find a legislative solution to the asbestos issue. Some of the allocations which 

have been done suggest that Equitas could be one of, if not the single largest contributor to the asbestos compensation fund.

I want to start by expressing our appreciation to you, Mr. Chairman, Senator Leahy, former Chairman Hatch and the other members of the Committee who have worked so hard during the past 

two Congresses to address the issue of asbestos litigation reform. 

Without that difficult and intense work, we would not be here 

today with the opportunity to enact historic legislation.

Like everyone else, I would also like to thank Judge Becker for 

his work during the last two years. He has forced agreement which 

makes the possibility of legislation a reality.

Many years ago, Equitas recognized that tremendous growth in 

claims from unimpaired individuals threatened to overwhelm the 

ability of the existing tort system to compensate those who were 

46

truly injured by exposure to asbestos. This flood of claims also 

threatened the financial viability of numerous defendant companies 

and their insurers.

Equitas has done what it can as a single company to resist 

claims from the unimpaired and has had some success in this regard, but it has become obvious that no single company or group 

of companies can solve this problem through their own actions. A 

legislative solution is required.

Equitas actively supports efforts to obtain comprehensive legislative reform of the asbestos litigation system. We are not wedded to 

a particular approach and do not insist upon particular provisions 

in legislation. What we have also asked is that any legislation be 

effective at addressing the abuses in the current system and fair 

to all the participants—the claimants, defendants and insurers.

Unfortunately, various provisions in the current discussion draft 

render it ineffective and unfair in some respects. My comments 

today are focused on Title II, the subtitle related to the Asbestos 

Insurers Commission.

Insurers are expected to provide upwards of $46 billion in funding for the proposed trust fund. It should be noted that that $46 

billion figure was reached almost two years ago. Equitas, like others in the insurance industry, has spent considerable amounts resolving claims during that period, significantly reducing our future 

liabilities for asbestos claims.

Despite repeated promises to do so, insurers have not presented 

a formula specifying how contributions would be calculated that 

could be set forth in the statute. As a result, the Asbestos Insurers 

Commission will be charged with the critical task for ensuring that 

the insurers’ contribution is collected and allocated amongst the 

various insurers and reinsurers who will be participants. Despite 

that critical function, the current discussion draft handcuffs the 

commission, severely limiting its ability to obtain the required 

amounts through a fair process.

First and foremost, the discussion draft does not ensure that the 

members of the commission will be free of actual or perceived conflicts of interest when they perform their sensitive task of allocating contributions amongst insurers.

As currently designed, an officer or employee of an insurer participant could leave his or her job one day and the next be in 

charge of allocating billions of dollars amongst his or her former 

employer and its competitors. While it may be acceptable in some 

circumstances for a former employee or party to sit in judgment on 

matters of interest to that party, where the matter involves an allocation of enormous financial liabilities amongst the former employee’s principal and its competitors, it is patently unacceptable, with 

or without disclosure.

The commission members should be subject to no less of a test 

than are judges, who would clearly be required to recuse themselves from deciding a case of this magnitude involving their 

former employer. The appearance of impropriety would compel it. 

Imagine the consternation and mistrust you would feel if you 

learned that your company had been assessed $1 billion more than 

you anticipated by a commission led by the former CEO of your 

47

major competitor. No one would accept such a result from a court 

and it should not be accepted here.

Second, the discussion draft contains a provision allowing groups 

of insurers and reinsurers to circumvent the work of the commission and shield themselves from the commission’s review by concluding private agreements regarding allocation.

Remarkably, the provision provides that all of the authority of 

the commission terminates with respect to insurers who are parties 

to such an agreement. This provision should be rejected. The provision undermines the entire role of the commission. If an independent commission applying a fair and transparent methodology 

to determining insurer shares is an appropriate and important exercise, it is appropriate for all participants.

Second, the provision is discriminatory because it permits domestic and foreign insurers and reinsurers to form alliances to enter 

into such agreements, but inexplicably precludes companies such as 

Equitas from participating in such agreements.

There has been much back-and-forth, as Judge Becker knows, 

concerning the shape of the asbestos commission. We are keenly 

concerned about it because under any version of the bill, our liability will be determined by the asbestos commission. Others who express interest in how the asbestos commission works go on to say 

that, in their desired world, they will never be subject to it because 

they will reach an agreement that terminates the commission’s jurisdiction with respect to them.

Finally, Equitas is particularly concerned about a provision targeted only at it that would deny the commission the ability to 

grant Equitas meaningful financial hardship or exceptional circumstances adjustments, adjustments that could be granted to all 

other insurers and reinsurers.

Under the terms of the bill, insurers and reinsurers can obtain 

an adjustment that reduces their payment obligation to the fund if 

payment without such adjustment would threaten the solvency of 

the company, be exceptionally inequitable, or fail to account for 

other payments the insurer was required to make. This is very 

similar to the provision which are contained for defendant companies.

To keep the fund whole in the event of such an adjustment, the 

amount of the adjustment must be paid into the fund by the remaining insurer contributors based upon their proportionate shares 

of payment to the fund, again as is the case with defendant companies.

Although the bill allows Equitas to receive such an adjustment, 

it then discriminates against Equitas by applying to it and to no 

other insurance participant a provision that would nullify any such 

adjustment. The provision would require that the parties reinsured 

by Equitas make a payment to the fund in the amount of any adjustment granted to Equitas, thereby giving with one hand and 

taking way with the other.

This provision could lead to the following absurd result. The commission determines that the formula it has adopted substantially 

overcharges Equitas because Equitas would be faced with fewer liabilities in the existing tort system. The commission then grants an 

48

adjustment to Equitas, but the parties whom Equitas reinsures 

would then be required to pay back to the commission the amount 

of the adjustment, even though it has been determined to be inequitable. That situation would arise with no other reinsurer, 

whether they could make their payments or whether—if they could 

not make their payments or if they got a hardship adjustment, the 

amounts are reallocated around the entire insurance community. 

But for Equitas, it is targeted back only on those people whom it 

reinsures.

It is simply wrong to treat one identified participant differently 

from all others, and it is also foolhardy. This discriminatory principle may make it impossible for Equitas to make a substantial 

contribution to the fund. It engenders some concern from the UK 

government and others about whether or not we are treating all 

foreign companies in the same way that we are treating American 

companies.

In conclusion, Mr. Chairman, we applaud you for taking up the 

critical but difficult issue of asbestos litigation reform. The discussion draft presented represents an important next step in the process, but it is a step hindered by some correctable errors. Absent 

steps to address these identified failings, this legislation will be 

neither effective nor fair. Taking these steps will go a long toward 

creating legislation that can resolve the asbestos litigation crisis 

facing the Nation.

On behalf of Equitas, we pledge our continued cooperation with 

the Committee in formulating an effective and fair reform of the 

asbestos litigation crisis. Mr. Chairman, I have a statement which 

I ask, like the others, be included for the record, and I thank you 

for inviting us here today.

Chairman SPECTER. Your statement, without objection, will be 

included for the record. Thank you very much, Mr. Robinson.

[The prepared statement of Mr. Robinson appears as a submission for the record.]

Chairman SPECTER. Mr. Speicher, your testimony was very compelling. When you talk about finding a cure for mesothelioma and 

cancer-related ailments, I serve on the subcommittee of Appropriations—actually, chair it—Labor, Health, Human Services and Education. We have allocated some $28 billion for National Institutes 

of Health research, and the cancer fund is right at the $5 billion 

level. So there are very, very substantial efforts being made, but 

I will take another look to see what the National Center Institute 

is handling on asbestosis and mesothelioma, and see if more could 

be done there.

Ms. Keener, thank you for your testimony on your father, who 

was a victim, and we note the problem which you have identified 

where your mother’s claim is not moving forward because so many 

people are getting compensation and are in court where they have 

no disabilities. Governor Engler mentioned that as well, and that 

is one thing this bill is going to change.

The Supreme Court of the United States handed down that ruling. It was sort of inexplicable that they handed it down, but they 

do that from time to time. One of the things that the Judiciary 

Committee is going to be taking a close look at is more of the judgVerDate 0ct 09 2002 12:56 Mar 13, 2007 Jkt 033400 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\33400.TXT SJUD1 PsN: CMORC
49

ments which Congress can correct, and that is one which we can 

deal with.

I was pleased to hear the level of support for the trust fund from 

Governor Engler and Ms. Seminario and Mr. Forscey, although Mr. 

Forscey has substantial reservations about many provisions.

Mr. Berrington, you raise the issue of the medical criteria bill. 

Now, the medical criteria bill pops up from time to time. Would you 

like to see us put the trust fund in the back burner and pick up 

a medical criteria bill—

Mr. BERRINGTON. We would like to work with—

Chairman SPECTER. —for the next 5, 10, 15 years?

Mr. BERRINGTON. I am glad you finished that sentence.

Chairman SPECTER. Well, I didn’t want there to be any doubt as 

to my view of the medical criteria bill, but it is out there in the 

nimbus; it is out there in the clouds. Even the eminence of Judge 

Becker cannot produce a perfect bill. He just can’t do it, and it 

greatly disappoints me that he hasn’t done it.

But do you seriously think we ought to start looking for alternatives like the medical criteria bill?

Mr. BERRINGTON. We want to work with the Committee on what 

the Committee believes is the best way to proceed to get a resolution to this issue. And if we can do it through a good trust fund, 

let’s do it. But if that turns out not to be possible, let’s continue 

to work on the issue and find another approach.

Chairman SPECTER. Well, this Senator thinks that the trust fund 

is the best idea and I would hate to see us go back to ground zero. 

After the kind of effort which the Congress has put into this, it 

would be very hard to contemplate the kind of drive being duplicated on this issue which has happened in the past several years, 

with Senator Hatch and Senator Leahy as Chairman and Ranking—Senator Leahy conducted hearings when he was Chairman—

to go back there.

I am pleased to have heard the comments about improvements, 

and Mr. Forscey has been a regular attender and has grave reservations about taking away the right to jury trials, frankly, as I 

do. But we have tried to provide the safeguards and the safety 

valves with the reversion, and we have heard the concerns about 

the reversion which Governor Engler has articulated.

And then you have the Level VII on smokers and non-smokers, 

smokers, ex-smokers, non-smokers, and lung cancer I. Governor 

Engler doesn’t want this to be a smokers’ bill, and Ms. Seminario 

brought up the issue that the figure is too low and it is synergistic. 

I was glad to hear about synergism between—or interested to 

hear—maybe not glad to hear about it, but interested to hear.

But on this table, Judge Becker and I did precious little with it. 

It came to us pretty much in this form. Judge Becker has been very 

patient and has sat at the witness table for more than an hour.

Judge Becker, on the individual evaluation as to number VII—

and this sort of points up the problem that we have on different 

points of view—the smokers get $75,000, the ex-smokers $200,000, 

the non-smokers $625,000. Can you give us the genesis or origin 

of these amounts of money?

50

Judge BECKER. Well, the 625 for the non-smokers is Frist, 

Daschle and Feinstein. Everybody is agreed on that. I mean, those 

four parties agreed on 625 for the non-smokers, on the theory that 

if they had 15 years of weighted exposure, even though they had 

no absolute asbestos-related symptoms, the causality question 

would likely, if they were not non-smokers, be resolved in their 

favor. Hence, the $625,000.

The smokers, although—well, with respect to the ex-smokers, 

which is the big difference—

Chairman SPECTER. Where did that figure come from, Judge 

Becker, if you know?

Judge BECKER. Well, basically, I mean, Senator, all of these are 

arbitrary. They are, I trust, reasonably arbitrary.

Chairman SPECTER. Who put the arbitrary figure on them, if you 

know?

Judge BECKER. The answer is I don’t know. Senator Frist put one 

figure on, Senator Daschle put one on, Senator Feinstein put one 

on, and we kind of compromised it and we kind of split the difference. But what we put on was much less than the Labor or the 

Daschle offer, and significantly less than the Feinstein offer. It was 

a little more than the Frist offer just with a view to sweetening it 

a little and maybe cutting the baby in half and seeing if everybody 

could be satisfied.

With respect to the smokers, we were very close to the Frist offer 

and significantly below the Daschle offer, on the theory that the 

smokers, as appears to be the case in the tort system, are going 

to have a difficult time proving causation. So by and large, what 

we did was kind of a sweetener, by not by much, to see if we could 

get everybody’s agreement. I don’t know that we have.

Chairman SPECTER. Governor Engler, you have talked about the 

medical screening and I would like you to take a look at that, and 

Pat Hanlon behind you, if there is any language that you would 

like to see us delineate more precisely to avoid opening the flood 

gates, which I understand is your concern.

Ms. Seminario, you have raised the issue about the definition of 

asbestos being too broad. If you have an idea on that, we are glad 

to entertain it further.

I was pleased to hear you say, Mr. Forscey, that the current 

draft is a big improvement on the reversion. And, again, we are 

open to further suggestions. We are working with Mr. Berrington 

on the avoidance of the leakage on the short amount of time afterwards. So we are still prepared.

Mr. Robinson, your issue we have taken up with you individually. We have given you a lot of attention. That is one thing that 

Judge Becker and I have done. You wanted to be a witness and we 

are glad to have you in as a witness, although you have a very fine 

point. But I don’t like the idea of conflict of interest and discrimination, and if you give us language, we will consider it.

Senator Leahy, my yellow light is about to expire into red.

Senator LEAHY. Mr. Chairman, I appreciate the way the time 

goes. I have served on a lot of committees, as you have, and have 

Chaired a number, as you have. Sometimes, it is fault, sometimes 

51

it isn’t. But there just being the two of us here, I would certainly 

have no objection if you need more time.

Chairman SPECTER. Well, I do need more time, but we have done 

a rather thorough job here and I am going to observe my time 

limit.

Senator LEAHY. Thank you. Mr. Chairman, some of this I am 

going to have to submit for the record just because of time constraints and because I am also supposed to be somewhere else at 

the moment.

Mr. Berrington, I was puzzled, actually concerned by your testimony. You know, everybody here is dealing in good faith. The manufacturers have. I think we have been fortunate in having Governor Engler here, a person who, in his former career as governor, 

had to balance certainly in his State some of the most unbelievable, 

conflicting groups, and balanced them very well.

He had to deal with the legislature. He had to deal with all the 

problems of a major State, one with a huge industrial base as it 

transitions into an entirely different time. And I say this very honestly. I think, Governor, you did that in a way that very few people 

could have.

But we are here now in the realities, Mr. Berrington. You speak 

of the criteria bill. With all of the discussions, the hours and hours 

of work on this, the huge amount of lobbying—and I can almost 

hear the meters whirring in this room with those who are not here 

totally on their own nickel, as Judge Becker is.

The idea of a criteria bill—you know, in the last Congress there 

was only one sponsor of the criteria bill and one cosponsor, and 

now the sponsor has retired from the Senate. Now, we are not 

going to get anything through that doesn’t have both Republican 

and Democratic support. It is going to need that to get passed. I 

believe it can be done, but let’s not waste time on something that 

could only get one cosponsor last time and one sponsor, especially 

when that sponsor has retired.

Now, Mr. Speicher and Ms. Keener, I thank you for your military 

service. Ms. Keener, I hope you understand the gratitude of all of 

us for your father’s service, and yours, and our condolences on his 

death.

Mr. Speicher, my youngest son is a former Marine, and so there 

is always a special part in my heart for Marines.

Ms. Keener, before you feel that somehow that leaves you out, 

my wife is a nurse. So we are covering all the bases.

But in your cases—Ms. Keener, in your father’s case, and, Mr. 

Speicher, in yours, the exposure to asbestos was in service to your 

country. Many veterans are now sick, as you have pointed out, Mr. 

Speicher and Ms. Keener, with asbestos disease as a result of their 

exposure during service.

Would you think that the Federal Government should be providing contributions either directly or through tax incentives to 

provide more funding to a national trust fund because of the number of veterans who are going to be affected by this? Do either one 

of you want to answer?

Mr. SPEICHER. The research for mesothelioma which I appreciate 

you addressing was addressed as a cancer grant, and the thing 

52

with mesothelioma is there weren’t enough of us and it was kind 

of pushed over to the side and they tried everything else because 

all the chemos and everything that work for other cancers just 

don’t do this.

So this is the reason I say we need more research in mesothelioma. The research that was done there by Dr. Gill is the reason 

I am able to sit here today, and somebody had to fund it. It was 

the Mesothelioma Foundation there at Norris.

Senator LEAHY. Ms. Keener.

Ms. KEENER. No, sir, I am not advocating any Government expense, but I do have a question perhaps of Judge Becker. In the 

prior bill, there were several provisions in 1125 and 2290 that provided specific advantages for veterans in the bill.

Also, Mr. Speicher, in that bill there was one provision that provided $1 million from the fund for each of the fiscal years 2004 

through 2007 for up to ten mesothelioma disease, research and 

treatment centers. And I guess my question is I am hoping that 

those provisions are or will be included in this current draft.

Judge BECKER. If I may respond, Senator Leahy, Section 

222(c)(1) of the bill, on page 79 of the new bill, entitled ‘‘Mesothelioma Research and Treatment Centers,’’ provides that the administrator shall provide $1 million from the fund for each of the fiscal 

years 2005 through 2009 for each of up to ten mesothelioma disease research and treatment centers. It provides that the centers 

shall be chosen by the Director of NIH, chosen through competitive 

review, et cetera. So that provision remains in the bill.

Senator LEAHY. Ms. Seminario, I know you watched this very 

carefully. I mean, at the AFL–CIO, there are thousands of your 

members who have been exposed to asbestos during the course of 

their occupations. You have been a strong advocate for victims, I 

know, from the work with Judge Becker. You are an expert on occupational safety and health.

Let me ask you this question. Last October, Congress passed and 

the President signed into law legislation transferring the Energy 

Employees Occupational Injury Program from the Energy Department to the Labor Department. What kind of lessons can we learn 

from the Energy workers Federal comp program? Especially, I am 

thinking of difficulties approving claims, but also getting past bottlenecks, because we are talking about some time constraints for a 

lot of the people who are affected by this.

Ms. SEMINARIO. I think there are a number of lessons to be 

learned. The Energy workers program was one which was actually 

a relatively small program. It was to compensate those individuals 

who had worked in the DOE nuclear facilities. They are essentially 

the Cold War veterans, the people that built the atomic bombs in 

this country who were exposed to a variety of toxins, and as a result are suffering very significant illnesses and are dying.

The Congress passed the law, I believe, originally in 1999–2000. 

Part of it went to DOE, and what happened there is that the problems of trying to prove, first of all, exposure for individuals was 

very difficult. These were exposures that took place a long time 

ago. It became a huge, huge bottleneck.

53

It turned out that after four or five years of trying to get this 

program up and running, I believe ten people had been compensated. There was $75 million spent and 10 people compensated. 

DOE was trying to assist people to be compensated through the 

State compensation programs.

So what you had was with both these evidentiary requirements, 

as well as the way it was set up administratively, the hurdles were 

so high that nobody got compensated and a lot of money went to 

the administrative costs.

So the Congress made a decision to essentially shift it to an 

agency that knew how to deal with compensation programs, but, as 

importantly, to basically put in place more simple criteria to be the 

guide posts for whether or not people would be compensated.

The Department of Labor has just received that program and 

that program is dealing with 20,000 pending claims. They have 

been given 210 days to get that up and running. That compares to 

this program with, let’s say, 600,000 pending claims, and there are 

proposals for 180 days. I think we have to be realistic about the 

time that is going to be needed, even with the best intentions and 

the smartest people.

So we are very concerned that during this transition period, the 

defendants and insurers are concerned about leakage. But if you 

are basically going to shut down the existing system, that means 

that people will have nowhere to go and that is not fair. It is not 

fair that victims who are going to die within 6 months—in 180 

days, people will be dead by the time this program gets up and 

running. And we think that that is unconscionable and that the 

Congress cannot and should not put in place legislation that leaves 

victims with no redress.

Senator LEAHY. Mr. Chairman, I will follow your good example. 

I will have, if I might, a number of questions for the record.

Chairman SPECTER. Sure.

Senator LEAHY. On some, I will want to follow up on Governor 

Engler’s testimony, which was excellent, as was everybody’s.

Mr. Berrington, I have a question, as you may gather, for you, 

and Mr. Forscey. I realize this goes beyond the time, but I just 

wanted to applaud the Chairman for doing this.

Chairman SPECTER. You may go well beyond the time.

[Laughter.]

Senator LEAHY. This is one of those things where there are all 

these glamorous things you could be doing in hearings. Certainly, 

everybody is going to be having hearings on tsunami aid, and we 

are going to have hearings on this, that and the other thing. In this 

Committee, you could hit all of the hot-button items. This is one 

of the hard work—this is not the show horse; this is a work horse 

kind of thing. It is extremely difficult.

I applaud the Chairman for taking it on as one of the very first 

things he is doing as Chairman. I know the frustration I felt during 

the 17 months I was Chairman in dealing with it, but I also know 

the tremendous potential boost it can give to our economy if it is 

solved and the tremendous sense of closure and help it can give 

those who suffer. I mean, these are human cases. They are not just 

numbers; they are human cases. I have met many of these families. 

54

None of it is going to be perfect. Judge Becker would be the first 

one to say that, and the Chairman would, but we can do so much 

better than we did.

So I applaud you for that, Mr. Chairman. Lead on.

Chairman SPECTER. Well, thank you very much, Senator Leahy, 

for your cooperation, your joinder on this issue, and your hard work 

and your staff’s participation.

I think the testimony of Mr. Speicher and Ms. Keener was especially important today to put a focus on the victims. It is not easy 

for Mr. Billie Speicher to appear here and talk about the short time 

that he has because he suffers from mesothelioma, and Ms. 

Keener’s comment about her mother not being able to get to court 

because so many people are head of her, where they don’t have any 

injury. So taking care of America’s victims is indispensable as we 

move ahead here. Senator Leahy has commented about the tremendous drain on the economy.

I am pleased to have heard the broad support for the trust fund 

concept. Sure, there are lots of issues, but that broad support is 

very important. With respect to improvements, we are still open. 

What we are going to be doing is going back to work a week from 

tomorrow, on the 19th, at ten o’clock, where there will be more 

time to review the draft. I have invited a number of you to submit 

more language.

My hope is to have other Senators take a look at this draft and 

the changes that we will incorporate, and to try to get a bill ready 

for introduction very, very early on, because once the Senate starts 

to function, it is a virtual impossibility to get floor time. That is 

why we have maintained this very, very heavy workload and fullcourt press over November and December and into January.

I am encouraged by what I have heard today, although I am not 

unmindful of the criticisms, and we are going to try to meet them 

to the extent we can. It is my hope that where the criticisms or the 

questions or the concerns relate to the uncertainty as to what we 

can predict that that will not be a bar as to whether final sum that 

we put on is going to be enough, because we do have an active safety valve.

Kim and I talked about yesterday the seven-and-a-half years. 

They would like there to be some assurances. It seems to me that 

there are a lot of practical assurances that will go well beyond 

seven-and-a-half years. But if the bottom falls out—and I don’t 

think it is going to, but my point is not to let the uncertainties pull 

us down to look for greater certainties or greater protection. It is 

a question as to where we are.

And I use the number VII, smokers/non-smokers sort of illustratively. Maybe $200,000 is too much for people who have quit smoking and maybe $75,000 is too much for the smokers. But in the 

grand scheme of things, that is not going to be a big factor in this 

bill. And I would suggest that some of the other concerns we have 

are not going to be gigantic factors either, compared to getting 

something done. And it is really now or never, so let us not let the 

perfect be the enemy of the good.

Seema Singh, who has done yeoman work, sitting behind me, my 

staffer, will be receptive to any thoughts you may have, as will I 

55

and also Judge Becker. We will reconvene on the 19th, with a view 

to trying to put the bill in final form. In the interim, I will be talking to my colleagues in the Senate to see if we can find some agreement, and we will come up with a figure when we have the next 

bill.

Thank you all very much.

[Whereupon, at 12:50 p.m., the Committee was adjourned.]

[Questions and answers and submissions for the record follow.]

[Additional material is being retained in the Committee files.]

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