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93–082 PDF 2015

FURTHERING ASBESTOS CLAIM TRANSPARENCY 

(FACT) ACT OF 2015 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

H.R. 526 

FEBRUARY 4, 2015 

Serial No. 114–7 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

MIMI WALTERS, California 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

FEBRUARY 4, 2015 

Page 

THE BILL 

H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2015’’ . 3 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary ................. 6 

The Honorable Blake Farenthold, a Representative in Congress from the 

State of Texas, and Vice-Chairman, Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law .......................................................................... 7 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 8 

WITNESSES 

Elihu Inselbuch, Member, Caplin & Drysdale, Chartered, New York, NY 

Oral Testimony ..................................................................................................... 11 

Prepared Statement ............................................................................................. 13 

Nicholas P. Vari, Esq., K&L Gates L.L.P., Pittsburgh, PA 

Oral Testimony ..................................................................................................... 32 

Prepared Statement ............................................................................................. 34 

Marc Scarcella, Principal, Bates White Economic Consulting, Washington, 

DC 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

Lester Brickman, Benjamin N. Cardozo Distinguished Professor of Law, Yeshiva University, New York, NY 

Oral Testimony ..................................................................................................... 66 

Prepared Statement ............................................................................................. 68 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Material submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Ranking Member, 

Subcommittee on Regulatory Reform, Commercial and Antitrust Law .......... 128 

Material submitted by the Honorable Suzan DelBene, a Representative in 

Congress from the State of Washington, and Member, Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law ........................................ 140 

Material submitted by the Honorable David N. Cicilline, a Representative 

in Congress from the State of Rhode Island, and Member, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law ................................... 145 

Response to Questions for the Record from Elihu Inselbuch, Member, Caplin 

& Drysdale, Chartered, New York, NY .............................................................. 164 

Response to Questions for the Record from Nicholas Vari, Esq., K&L Gates 

L.L.P., Pittsburgh, PA ......................................................................................... 192 
Page

IV 

Response to Questions for the Record from Marc Scarcella, Principal, Bates 

White Economic Consulting, Washington, DC ................................................... 195 

Response to Questions for the Record from Lester Brickman, Benjamin N. 

Cardozo Distinguished Professor of Law, Yeshiva University, New York, 

NY ......................................................................................................................... 223

Congressional Budget Office Cost Estimate for H.R. 527, the ‘‘Small Business 

Regulatory Flexibility Improvements Act of 2015’’ ........................................... 227 

Material submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Ranking Member, 

Subcommittee on Regulatory Reform, Commercial and Antitrust Law .......... 232 

OFFICIAL HEARING RECORD 

MATERIAL SUBMITTED FOR THE HEARING RECORD BUT NOT REPRINTED

GAO Report, GAO–11–819, entitled Report to the Chairman, Committee on the Judiciary, House of Representatives, September 2011, Asbestos Injury Compensation, The Role and Administration of Asbestos Trusts. This report is available at 

the Subcommittee and can also be accessed at: 

http://www.gao.gov/products/GAO-11-819 
(1) 

FURTHERING ASBESTOS CLAIM 

TRANSPARENCY (FACT) ACT OF 2015 

WEDNESDAY, FEBRUARY 4, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:04 p.m., in room 

2141, Rayburn Office Building, the Honorable Tom Marino (Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Farenthold, Issa, 

Walters, Ratcliffe, Trott, Bishop, Johnson, Conyers, DelBene, Jeffries, Cicilline, and Peters. 

Staff present: (Majority) Anthony Grossi, Counsel; Andrea Lindsey, Clerk; and (Minority) Susan Jensen, Counsel. 

Mr. MARINO. Good afternoon. The Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law will come to order, and 

without objection, the Chair is authorized to declare a recess of the 

Committee at any time. And just to give you a little head’s up, in 

about 15 or 20 minutes, that bell is going to ring, and we will have 

to go vote, and it should not be that long. I think we only have a 

couple of votes, and I apologize for the inconvenience. 

We welcome everyone to today’s hearing on the ‘‘Furthering Asbestos Claim Transparency Act of 2015,’’ known as the ‘‘FACT Act.’’ 

This morning, I am going to recognize myself for an opening statement, and then I am going to give my good friend, Mr. Hank Johnson, the opportunity for his opening statement. 

This morning, the Subcommittee meets to examine H.R. 526, the 

‘‘Further Asbestos Claim Transparency Act of 2015,’’ or the ‘‘FACT 

Act.’’ This legislation is aimed at preventing fraudulent activity 

within the asbestos bankruptcy trust system. Following the first 

successful tort lawsuit against an asbestos defendant in the 1970’s, 

asbestos litigation dramatically increased to the point that the Supreme Court described the ongoing lawsuit as an, and I quote, ‘‘asbestos litigation crisis.’’ 

Under the backdrop of increasing asbestos claims and an expanding defendant population, courts and parties initiated several attempts to achieve a comprehensive resolution to asbestos litigation. 

Notwithstanding these efforts, no resolution has been reached. 

Likely due to the absence of a comprehensive resolution to the on-
2 

slaught of asbestos litigation, companies closed their doors with 

great cost to the economy and their employees. Estimates of the 

cost of asbestos litigation and the ensuing bankruptcies ranged 

from between $1.4 and $3 billion, coupled with a loss of approximately 60,000 American jobs. 

To allow some companies to emerge from bankruptcy and continue their business operations, Congress amended the Bankruptcy 

Code. The amendment includes a provision, Section 524(g), which 

forges what is a simple compromise. A company can receive a permanent injunction against all of its asbestos liability claims if it 

funds a trust in an amount sufficient to pay all present and future 

asbestos claims. A product of bankruptcies that use Section 524(g) 

is a negotiated resolution. A company can continue generating jobs 

and income for the economy with the certainty that it will no 

longer face asbestos liability. Asbestos claimants will have confidence in a dedicated pool of money that is reserved to compensate 

them for their injuries. 

Over the past several years, however, the Committee has heard 

complaints regarding the asbestos bankruptcy trust system. These 

complaints have focused on the ability of plaintiffs’ firms to exert 

considerable control over the formation and operation of the trust, 

the dramatic reduction in transparency from these asbestos trusts, 

and troubling reports of fraudulent activity occurring as a result. 

The fraudulent activity follows a similar pattern where plaintiffs’ 

firms file claims against a bankruptcy asbestos trust claiming injury with one set of facts. The plaintiffs then file claims against defendants in State court based on different and sometimes conflicting sets of facts. This conduct is calculated to exploit the 

opaque nature of bankruptcy asbestos trust operations. 

Furthermore, fraud of this variety drains the finite funds set 

aside in these asbestos bankruptcy trusts so that when future asbestos victims start to develop symptoms and look to the trusts for 

compensation, their recoveries may be diminished dramatically. 

I support the Vice-Chairman of the Subcommittee, Mr. 

Farenthold, for introducing the FACT Act, and I am an original cosponsor of this important legislation that will increase transparency in the asbestos bankruptcy trust system, and allow these 

trust funds to protect against fraudulent activity. Critics of this 

legislation have raised concerns that this bill imposes an undue 

burden on the asbestos trust. Critics also allege that it infringes on 

asbestos victims’ privacy, and is not necessary because the critics 

allege fraud does not exist in the bankruptcy asbestos trust system. 

These concerns should be carefully evaluated. 

Thankfully, we have an excellent panel of witnesses before us 

today who will help us build upon the Committee’s extensive record 

in support of this measure, and address the concerns that have 

been raised by critics of the legislation. I look forward to their testimony. 

[The bill, H.R. 526, follows:] 
3 
4 
5 
6 

Mr. MARINO. I now recognize the Ranking Member, Mr. Johnson, 

for his opening statement. 

Mr. JOHNSON. Thank you, Mr. Chairman. And, Mr. Chairman, at 

this time, I know that the Ranking Member of the full Committee, 

Mr. Conyers, has some pressing business. And so I will yield to him 

insofar as his opening statement is concerned, and I would like the 

opportunity to make my own once he concludes. 

Mr. CONYERS. Thank you so much, Ranking Member Johnson. I 

appreciate your kindness. We are all under time constraints here. 

I mean, the Committee is full of them. But before I make my remarks about the subject, I just wanted to congratulate our colleague, Tom Marino, on his new role as Chairman—— 

Mr. MARINO. Thank you, sir. 

Mr. CONYERS. Congratulations, sir, on the Subcommittee of Regulatory Reform, Commercial and Antitrust Law. And I look forward 

to working with him and hope that he will continue in the spirit 

of collegiality that his predecessor, Spencer Bachus, exemplified 

during his tenure as Chairman of the Subcommittee, and I know 

that he will. 

And I also see the widow of our former colleague, Bruce Vento, 

Mrs. Sue Vento, here and present, and I wanted to thank her for 

coming, acknowledge her presence here in the Judiciary Committee. Bruce Vento represented the 4th District of Minnesota for 

almost 24 years until his death from mesothelioma, a form of cancer in the lining of the chest cavity often linked to exposure to asbestos fibers. Many of us remember Bruce fondly, a tireless champion of the American worker, the environment, and the homeless. 

And so, I am very pleased that Mrs. Vento has chosen to continue 

his fight, their fight, against those who do harm. 

I also note that she is joined by a number of asbestos victims, 

as well as family members who have lost relatives as a result of 

their exposure to asbestos. Will all they just stand up for one moment, please? 

[Audience members stand.] 

Mr. CONYERS. I did know it was that many. Congratulations. 

Thank you. And I am sure everyone on this Subcommittee appreciates your presence here. You may sit down, please. I understand 

that among them, there are both Democrats and Republicans, and 

you come from across the United States, so welcome again. And in 

spite of your suffering and personal loss, you are here today to help 

enlighten us about your concerns regarding this legislation. You 

are all to be commended, and we are glad that you are here. I also 

want to note the presence of our distinguished witnesses. 

I just want to mention before I yield back that H.R. 526, the 

‘‘Further Asbestos Claim Transparency Act,’’ commonly referred to 

as the ‘‘FACT Act,’’ gives asbestos defendants new weapons with 

which to harm asbestos victims. It imposes invasive disclosure requirements that would threaten asbestos victims’ privacy when 

they seek payment for injuries from an asbestos bankruptcy trust. 

The bill would require disclosure of claimants’ sensitive personal 

information, including their names and exposure histories when 

they seek payment for injuries from these trusts. This means asbestos victims will be re-victimized by allowing this highly personal 

and sensitive health information to be irretrievably released into 
7 

the public domain. Just imagine what insurance companies, prospective employers, lenders, data collectors, and others could do 

with this private information. Worse yet, these asbestos victims 

would be more vulnerable to predators. 

Although H.R. 526’s supporters claim that it is intended to help 

victims of asbestos exposure, asbestos victims vigorously oppose 

H.R. 526. In fact, I am not aware of a single victim who supports 

this bill. And so, it is a proposal that is fundamentally inequitable 

and requires these bankruptcy asbestos trusts to make certain disclosures that imposes no comparable demands on asbestos victims. 

Remember, these are the very companies whose products killed or 

injured millions of Americans. In fact, some manufacturers intentionally concealed information about the known risk of asbestos exposure, and used every trick in the book to avoid liability. They 

even fought the Federal Government’s effort to ban use. 

And so, as a result, asbestos continued to be widely used in constructing our homes, offices, public schools, and even this very 

building in which we are all gathered today. But now, the very 

manufacturers want Congress to help them by passing H.R. 526, 

which effectively shifts the cost of discovery away from these defendants to asbestos bankruptcy trusts. So, while today’s majority 

witnesses may claim that the asbestos trust system is rife with 

fraud, I think we will find out that there is very little merit to this 

assertion. 

And so, I will in closing note that several organizations—the 

Military Order of the Purple Heart, Asbestos Disease Awareness 

Organization, AFL-CIO, the Public Citizen Environmental Working, among others—all oppose the legislation. And I yield back my 

time, and thank the Chairman for his generosity. 

Mr. MARINO. You are welcome. Thank you, Mr. Conyers. The 

Chair now recognizes the Vice-Chairman of the Subcommittee, Mr. 

Farenthold. 

Mr. FARENTHOLD. Thank you very much, and I will be brief. This 

bill is designed to protect future victims of asbestos, or victims who 

have not yet discovered their injury. There are limited resources in 

these trusts. It is designed to prevent double dipping. It is designed 

to prevent fraud as a result of filing suits in multiple cases. 

There is a long history of abuses within the asbestos litigation 

system, a lot of which were brought to light in the district that I 

represent in Corpus Christie where Judge Jan Jack discovered 

massive abuses. We are just trying to get the facts out. We are not 

asking anybody who is a victim who gets a claim from a trust to 

give any more information than they would give in pleadings in a 

typical lawsuit. All we are trying to do here is set up a system of 

transparency where we know if you have been injured and been 

compensated, it keeps unscrupulous plaintiffs’ attorneys, and, in 

some cases, unscrupulous alleged victims from double dipping. 

This is just simple get the facts out there so the lawyers and the 

courts all know what is going on. It is a simple, short, 2-page bill, 

3 pages if you count the header. And all it asks for is a disclosure 

of information that would normally be available in pleadings. It is 

a quick, easy step to solve a problem and preserve limited resources in these trusts for as yet undiscovered victims. I will yield 

back. 
8 

Mr. MARINO. Thank you, Mr. Farenthold. The Chair recognizes 

the Ranking Member, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. Before I begin, I would 

like to take a moment to congratulate you on your new position as 

Chairman of this very important Subcommittee. I enjoyed a terrific 

relationship with your predecessor, Congressman Bachus, and I 

look forward to continuing that relationship with someone that I 

consider a close colleague and a personal friend. Although we will 

not see eye-to-eye on every issue, I look forward to working closely 

with you on important matters this Congress. 

Turning to the substance of today’s hearing, I have serious concerns with the so-called FACT Act. It is actually a very small compact Trojan horse piece of legislation that is quite dangerous to the 

ability of claimants to, particularly those in the future, to get an 

adequate recovery for the harm that was done. And I think all of 

you people here, victims and the families of victims, have probably 

been called perpetrators, malingerers, and fraudulent individuals 

trying to make a dollar off of something that you should not even 

be, you know, trying to get. But I recognize you as people who have 

been aggrieved, and this court system is the place to go to receive 

the relief that you are due. 

Not only does this bill create a major hurdle for families already 

facing the insurmountable fight against asbestos-related disease, it 

also violates their privacy by publicizing sensitive information 

about claimants. This information is already discoverable if relevant to a claim or defense at trial. As written, little would stop 

this litigation from allowing third parties to collect and monetize 

claimants’ medical history, or use this information to discriminate 

against victims and their families. 

Federal or State rules of civil procedure already allow a defendant to gain all relevant information about a claimant’s exposure 

during discovery. Defendants are often wealthy corporations represented by experienced, powerful litigators who have the knowledge and resources to handle discovery. They get paid well to do 

so. But even if both parties were on equal footing, how does a defendant’s need for materials outside of discovery justify a major privacy intrusion on a vulnerable class of persons? This question is especially troubling when we stop to consider the equities of these actions where defendants and claimants are rarely on equal footing 

during discovery, or any other stage of the litigation. 

Rather than providing for broader transparency for both parties 

in litigation, the FACT Act creates significant hurdles for asbestos 

victims while doing nothing to address the other party to the litigation. If we remove the rhetoric behind the FACT Act, all we are left 

with is legislation that creates an asbestos death database with the 

sole purpose of allowing Honeywell, Koch Industries, and the two 

largest asbestos insurers, Berkshire and Mutual, to easily gain or 

easily access other asbestos corporations’ kill lists so they can determine if asbestos victims are getting what they view as too much 

justice and if there is way they can nickel and dime the families 

they have devastated. 

That is what this bill is all about. It is a Trojan horse. It guarantees the asbestos industry and its insurers, it guarantees that they 

pay as little to their victims as possible. That alone is offensive, but 
9 

the way the bill achieves this objective is morally reprehensible. 

Moreover, for the second straight Congress, the majority has ignored and disregarded the hardships and testimony of asbestos victims and families. Not one victim or their family is seated at this 

table today to give testimony. At no point were victims or family 

members invited to testify about a bill that would seriously affect 

their lives. After retracting a promise to these families last Congress, I am disappointed to report that the majority has again shut 

the doors to these families to testify on the real effects of this bill. 

But these problems are only the tip of the iceberg when it comes 

to my concerns about the FACT Act. 

In closing, although I welcome Chairman Marino and look forward to working with him on many important issues this Congress, 

I must respectfully voice my deep opposition to this legislation. And 

with that, I yield back. 

Mr. MARINO. Thank you, Mr. Johnson. I am going to declare a 

recess in a moment, but I would like to bring out a point that my 

good friend brought out before, just in his comments. The procedure has been when the Democrats were in control and we have 

four people at the panel, whoever is in control invites three, and 

the other side invites one. We have continued with that under my 

chairmanship. We invited three. The other side invited one. The 

Democrats could have invited any one of you or anyone else—victim—to come and testify. They chose not to. They chose to have the 

attorney that represents the attorneys in these cases testify, so I 

want to make that perfectly clear. You could have been invited by 

my colleagues on the other side of the aisle. They chose not to. 

I am going to declare a recess at this point, and we will be back 

within 20 or 25 minutes. We have two votes, and then we will introduce our witnesses. 

[Recess.] 

Mr. MARINO. The hearing will now resume. Without objection, 

the other Members’ of the Committee opening statements will be 

made part of the record. 

We have a very distinguished panel today, and I will begin by 

swearing in our witnesses before introducing them. So, if you 

would, please all rise. Raise your right hand. 

Do you swear that the testimony you are about to give is the 

truth, the whole truth, and nothing but the truth, so help you, 

God? 

[A chorus of ayes.] 

Mr. MARINO. Let the record reflect that all the witnesses responded in the affirmative. Thank you. Please be seated. 

I would like to introduce from my left to right, first Mr. 

Inselbuch. Is that correct, sir? Okay. Mr. Inselbuch practices law 

at Caplin & Drysdale New York offices. He has 30 years of experience practicing on behalf of asbestos plaintiffs’ bar, and was first 

retained in that capacity in a landmark asbestos bankruptcy case 

of Johns Manville in 1985. He has represented the asbestos plaintiff’s bar in a number of complex bankruptcies, including those of 

W.R. Grace, Babcock & Wilcox, Pittsburgh Coining, and Armstrong 

World Industries. 

Mr. Inselbuch earned his undergraduate degree from Princeton 

University, his law degree from Columbia University, and a mas-
10 

ters of law degree from the New York University School of Law. 

Welcome, sir. 

Mr. Vari is a partner at the Pittsburgh office of the law firm of 

K&L Gates, where he specializes also in asbestos litigation. He has 

over 25 years of asbestos litigation experience in both trial and appellate courts in a number of States, including: California, New 

York, Illinois, Pennsylvania, Texas, Massachusetts, Michigan, and 

Ohio. Mr. Vari has been recognized repeatedly for the quality of his 

work, including being named one of the best lawyers in America 

and the Pennsylvania Super Lawyer. 

Mr. Vari earned his undergraduate degree in finance from the 

University of Akron and his law degree, summa cum laude, from 

the University of Akron School of Law, where he was the managing 

editor of the Law Review. Welcome, sir. 

Mr. Scarcelli—correct pronunciation? 

Mr. SCARCELLA. Close enough. 

Mr. MARINO. Okay. What is it? 

Mr. SCARCELLA. Scarcella. 

Mr. MARINO. Scarcella. 

Mr. SCARCELLA. Scarcella, yes. 

Mr. MARINO. Okay. Mr. Scarcella—I apologize—is an economist 

and principal with Bates White Consulting Firm. He has over 10 

years of experience in economic consulting related to asbestos litigation, and has extensive knowledge of the Administration and operation of asbestos bankruptcy trusts. Additionally, Mr. Scarcella 

regularly provides his expertise to ongoing asbestos litigation suits, 

and has served as an expert witness in over 50 individual asbestosrelated cases. 

He earned his bachelor’s degree in both economics and public affairs, as well as a master’s degree in economics from American University. Again, welcome, sir. 

Mr. Brickman is a former acting dean and professor of law at 

Benjamin N. Cardozo School of Law at Yeshiva University. He is 

a leading scholar and expert on asbestos litigation. Professor 

Brickman has published numerous articles, spoken on many panels, and testified frequently before governing bodies and courts on 

the issues related to asbestos litigation. 

Professor Brickman earned his bachelor of science degree in 

chemistry from Carnegie Tech, his law degree from the University 

of Florida where he was a member of the Law Review and graduated Order of Coif, and a master’s of law degree from Yale University where he was a Sterling Fellow. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. I ask that each of you witnesses summarize your testimony in 5 minutes or less. And to help you stay within the time, there is a timing light in front of you. Now, I do not 

know how good I am going to be about this because I am color 

blind, and I cannot see the last two. They look they are on or off 

all the time. The light will switch from green to yellow indicating 

that you have 1 minute to conclude your testimony. When the light 

turns red, it indicates that the witness’ 5 minutes have expired. 

And what I will do is if we get to that red light, when someone 

nudges me, I will just politely do a little tap and give you a hint 

to please wrap up. 
11 

Okay. We are going to start with Mr. Inselbuch’s testimony. Sir, 

please make sure the microphone is on and pulled up to you. Sir, 

I think you may have to push that button on that microphone in 

front of you. The light should come on. 

Mr. INSELBUCH. Yes. 

Mr. MARINO. Okay, good. Now, we can hear you. Thank you. 

TESTIMONY OF ELIHU INSELBUCH, MEMBER, 

CAPLIN & DRYSDALE, CHARTERED, NEW YORK, NY 

Mr. INSELBUCH. Thank you, Mr. Chairman. The Committee press 

release says, the ‘‘FACT Act reduces fraud in the asbestos bankruptcy system through increased transparency measures.’’ The 

Committee has been led to believe there is fraud. Presumably 

claims are being paid by trusts based on false information, depleting the pool of funds available for legitimate claimants. 

Nothing could be further from the truth. I know. Unlike these 

other witnesses, my work involves regular interaction with many 

asbestos trusts. No one, certainly not any of these witness, has provided a listing of any such fraudulently paid claims. 

Who is telling you this and asking you to help the trusts help 

themselves and their victims? Not one trust or trustee, not one victims group, not one victim. There are real victims sitting behind 

me in this room today. Ask them how this bill would help them. 

No, this bill comes through the United States Chamber of Commerce on behalf of the asbestos companies and their insurers. They 

presume on your goodwill here and are selling a false bill of goods. 

Increased so-called transparency is apparently only a one-way 

imperative for asbestos corporations because nothing in the act 

would require asbestos defendants to provide transparency for all 

the settlements that they demand be held confidential and hidden 

from public view. Presumably, asbestos defendants do not want asbestos victims to know what they paid to other victims to resolve 

their conduct. 

And whose private information becomes public? Thousands of 

your constituents, many aging veterans, who might prefer the 

world not know who they are, where they live, that they are sick, 

that they have recently resolved a claim, and are in possession of 

funds. And who pays for this transparency? The victims themselves. As Mr. Campbell’s letter attests, ‘‘Compliance with this act 

will cost the trust millions of dollars each year on Section A alone, 

with no possible estimate for Section B.’’ Mr. Scarcella disagrees, 

but he has never worked at any of the trusts in question, and his 

long-ago experiences at the Manville trust hardly qualifies him to 

contradict the people who will actually do the work. 

A word about double dipping. Mr. Vari and his defense colleagues are insulting the intelligence of those members who have 

law degrees, and presuming on the ignorance of the tort law of 

those who do not. First, it is imperative that the Committee Members understand this point. Each trust only pays its respective defendant’s share of the harm caused to a victim, meaning that there 

is absolutely no opportunity to double dip because each trust and 

each settling defendant in the tort system only pays for their portion of the harm caused. No one defendant or trust pays for the 

harm caused by another trust or defendant. 
12 

Also, as the tort law makes clear, an injured person can sue and 

collect from each and every person or entity who culpably caused 

that injury. Asbestos victims are individuals exposed during their 

employment history to dozens of asbestos-containing products, and 

recover from each and every entity responsible. Typically, over 99 

percent of the time, all the claims are settled with tort system defendants and with trusts. What the victim receives is the total sum 

of those settlements, and there is no standard by which to measure 

how well or how poorly compensated he or she has been. 

Only in the very rare circumstance that a case goes to verdict 

has a victim been compensated in full. Mr. Vari knows about cases 

like this, at least in New York where his client, Crane Company, 

went to verdict and was found not only liable, but recklessly so. 

And only after such a verdict has been paid to a victim, and, of 

course, the jury finding is always reduced by any settlement 

amounts already received by the victim, if a victim then sought and 

obtained recovery from a trust, could there be even a possibility of 

so-called double dipping. But this does not ever happen because 

after satisfaction of the rare verdict, the defendant steps into the 

shoes of the victim and can on its own behalf pursue any unpaid 

trust claims. 

So why are we here? If the act will not force the trust savings, 

and if no trust or victims group wants this, who does and why? I 

can only surmise that the bill sponsors believe by trumping longdeveloped State law and obtaining information on hundreds of 

thousands of their victims, asbestos corporations will be able to pay 

less for the injuries and deaths they have caused. You should not 

help them. Thank you. 

[The prepared statement of Mr. Inselbuch follows:] 
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Mr. MARINO. Thank you, sir. 

Mr. Vari? 

TESTIMONY OF NICHOLAS P. VARI, ESQ., 

K&L GATES L.L.P., PITTSBURGH, PA 

Mr. VARI. Mr. Chairman and Members of the Subcommittee, 

thank you very much for affording me the opportunity to appear 

before you today on the important issue of the FACT Act legislation. Just to re-introduce myself, my name is Nick Vari. I am an 

attorney with K&L Gates in Pittsburgh, and for nearly 25 years I 

have represented asbestos defendants across the United States, 

and it is those experiences that shape my comments today. The 

reason I am here is that the asbestos claim recovery system is broken. There are billions of dollars that are being paid every year by 

entities that collectively do not have complete information regarding the claims that are being paid. 

There are two competing remuneration systems or compensation 

systems that exist for asbestos claimants. One is a trust system, 

and that trust system was formed by now bankrupt entities that 

have put money into trusts to not only pay present claimants, but 

future claimants who do not even yet know that they have a claim. 

The other system is the civil justice, or what we refer to as the tort 

system, and that is where the solvent entities are, and the plaintiffs can seek recovery from the solvent entities. 

The mechanisms in each instance are pretty similar. The claimant comes forward with information regarding exposure to a product or showing circumstances that a trust or entity is responsible 

for the claim. Then they also need to provide evidence of a compensable injury that is attributable to that asbestos exposure, and then 

the claim is reviewed. It can be contested, and ultimately it is disposed of and often paid. 

The big difference between the two systems, though, is that the 

claim information for the tort system claimants is available to the 

public largely and takes place under the sunlight of the disclosure 

in the court systems. The trust system disposition or claims disposition occurs behind closed doors, and that information is not 

available to other stakeholders or folks who may need to know or 

could benefit from that information. 

Now, it is the same people, the same claimants, that are seeking 

recovery in each system. And the proposed legislation that we are 

talking about today is not about who is a good guy and who is a 

bad guy, and putting white hats or black hats on people or entities. 

It is just about information, and it is about making sure that all 

of the stakeholders in this claims process have access to the same 

information regarding what claims are being made, and of whom, 

and what is being alleged in all of those claims. 

I reference in my comments the Garlock opinion. It is a bankruptcy opinion out of the Western District of North Carolina. I am 

sure we will have some more discussion on that. But the teaching 

in that claim or in that decision was that the bankrupt entity, 

Garlock, was paying 10 times more in the tort system than the 

bankruptcy court felt that it should have paid had it had access to 

all of the information regarding other exposure claims that its 

claimants were making. 
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Now, while it is correct that I have personally not worked with 

the trusts, I can only presume, though, that each trust would benefit from the same information, and knowing what claims were 

made and what allegations of exposure were being made, and what 

diseases were being alleged by the various trust claimants. At this 

point, all these trusts exist in a vacuum. If that information was 

open, it would not only benefit defendants. It would benefit the 

trusts in evaluating the claims to it. 

The arguments against transparency even from my perspective 

just do not seem to resonate. An asbestos claimant in the tort system makes full disclosures of his or her medical history and medical records. They provide Social Security printouts. They provide 

tax returns. They provide all sorts of wage information. There is 

no information that is submitted to the trust that is not made 

available within the civil justice system. 

And the most important thing, from my perspective, is that nothing in this legislation relates to compensation or costs any claimant 

one cent in compensation. The effect of this information and what 

that may be is a function of state courts and the recovery systems 

that are available on a state-by-state basis. All the legislation provides for is information and enables all of the stakeholders in that 

litigation to have access to the same information. 

Thank you very much, and I appreciate your time. 

[The prepared statement of Mr. Vari follows:] 
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Mr. MARINO. Thank you, sir. 

Mr. Scarcella, please. 

TESTIMONY OF MARC SCARCELLA, PRINCIPAL, 

BATES WHITE ECONOMIC CONSULTING, WASHINGTON, DC 

Mr. SCARCELLA. Thank you, Mr. Chairman, Members of the Subcommittee. I will be addressing a number of Mr. Inselbuch’s concerns throughout my testimony. But one in particular that I think 

is important to address right off the bat is that while it has been 

a number of years since I was the statistician and data management specialist for the Johns Manville trust, I did spend more than 

7 years as a consultant to trustee boards, future claimant representatives, to trustees, where I regularly received and analyzed 

trust data extracts at the claimant level that far exceeded the level 

of detail requested here in the FACT Act. And I was able to receive 

that data in short turnaround at far less cost than opponents of 

this bill seem to posture will actually take place. 

I have testified two times before, both in 2012 and 2013. And I 

can say that since that time the problem has gotten worse, or, at 

the very least, the problem has been partially exposed by cases 

such as the Garlock bankruptcy. I do not intend to speak at length 

about the Garlock proceedings, but its relevancy to this hearing 

and this bill is clear. Transparency uncovers inconsistent, specious, 

or potentially fraudulent claiming behavior. And moreover, a system of standardized transparency, as proposed by the FACT Act, 

will help deter such activity in the future. 

Since I last testified in 2013, there has continued to be a rapid 

depletion of trust assets that far exceeds trust forecasted expectations. Since 2009, 23 trusts have had to lower the net payout that 

they provide to claimants because claim rates and payments rates 

have exceeded what they expected, 23 trusts. 

There are currently 50 trusts operating over a corpus of total as- sets close to $30 billion, yet there are no standardized requirements for reporting or disclosure. To the extent that these advanced accelerated rates that exceed what the forecasts expected by 

these trusts have anything to do with inconsistent, tenuous, or potentially fraudulent claim behavior, transparency would be the appropriate response and solution to curbing such activity in the future, thus preserving money not just for claimants today, but 

claimants in the future. 

The point I just brought up about 23 trusts lowering their net 

payouts to claimants since 2009, a claimant today receives on average 50 percent less in most cases than a similarly-situated claimant received just in 2009. And claimants who get sick and make 

claims next year, 5 years now, 10 years from now, which are all 

claimants that these trusts owe a responsibility to, are going to receive even less if the problem is not stopped now. There is still $30 

billion. We should bring some more transparency to the system. 

Which will bring me to my final set of points which have to do 

with cost because it is difficult to weigh the benefits of any proposed legislation without talking about costs incurred. As I mentioned in my opening, I received regularly claimant-level data from 

various trusts at a level of detail that far exceeded anything that 

is being requested here under the quarterly reporting requirements 
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of the FACT Act. I received it quickly, and I received it at very little cost to anyone. I was able to analyze it and make use of it. 

The quarterly reporting requirements of the FACT Act require 

detail in a tabulated form that the trust can produce in an easy 

and repeatable way, especially information regarding the site, occupation, and dates of exposure, which is information that is submitted electronically through standardized claim forms and stored 

electronically. 

Moreover, the burden of discovery under Part B of this bill shifts 

the cost away from the trusts and onto defendants. If a third party 

defendant or insurer would like to gain additional information that 

is not provided in the quarterly reporting disclosures, they can request it, but it is at their cost. And I think that shift in cost burden, as well as the transparency that could help deter future inconsistent or fraudulent claiming activities, makes the FACT Act a 

reasonable, sound, and useful piece of legislation for preserving 

trust assets for future claimants. 

Thank you. 

[The prepared statement of Mr. Scarcella follows:] 
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Mr. MARINO. Thank you, sir. 

Professor Brickman? 

TESTIMONY OF LESTER BRICKMAN, BENJAMIN N. CARDOZO 

DISTINGUISHED PROFESSOR OF LAW, YESHIVA UNIVERSITY, 

NEW YORK, NY 

Mr. BRICKMAN. Mr. Chairman, Members of the Subcommittee, I 

want to thank you for this opportunity to address the critical issues 

of how to check the fraudulent practices that permeate mesothelioma litigation today. 

Approximately a year and a half ago, I testified in the Garlock 

bankruptcy as an expert witness for Garlock, that the settlements 

that Garlock had entered into in the period 2005 to 2010, which 

the lead plaintiff’s expert had relied on for his calculation that 

Garlock should fork over $1.3 billion to the trust to cover its asbestos liabilities, was simply not a valid basis for these projections. 

The reason I gave was that these settlements were infected by 

plaintiffs’ counsels’ strategy of suppressing evidence of claimants’ 

exposures to a group of large companies that were bankrupted in 

the years 2000 and 2001. 

The presiding judge in Garlock, Judge Hodges, agreed, finding 

that, ‘‘The estimate of Garlock’s aggregate liability are infected 

with the impropriety of some firms.’’ I think the attempts by Mr. 

Inselbuch that you heard today and others to marginalize Judge 

Hodge’s finding would not rattle in a thimble. 

Permit me to briefly explain how this illegal and unethical suppression of evidence is carried out. Plaintiffs’ counsel, who have effective control over the creation and administration of bankruptcy 

trusts, have used that power to include, amend, or add provisions 

to trust distribution procedures, known in the trade as TDPs, designed to limit, if not preclude, defendants’ ability to use discovery, 

to access information, evidence that a tort plaintiff has filed trust 

claims. In filing a trust claim, a claimant must demonstrate ‘‘meaningful and credible exposure to the products of the company funding the trust.’’ 

To facilitate fraud, asbestos trusts have modified or adopted 

TDPs to include provisions designed to allow claimants, who are 

also suing defendants in the tort system, to prevent tort defendants 

from accessing exposure information and other vital information 

submitted by the claimants as part of the trust claims. Now, I have 

more fully described these provisions in my written statement and 

in my scholarship. 

Now, in the teeth of this overwhelming evidence that exists today 

that some plaintiffs’ counsels’ practices are designed to defraud defendants, plaintiffs’ counsel continued to deny any fraudulent practice or practices in mesothelioma litigation. For example, we just 

heard Mr. Inselbuch, who has testified previously as he has testified today, that fraudulent actions to suppress the production of exposure evidence submitted with claim filings are essentially non-existent. And as for the massive fraud in the Canadian case, which 

I presume some of you are familiar with, he testified previously before this Subcommittee that it was ‘‘an isolated incident remedied 

by a State court, involving inconsistent trust claims with respect to 

a single claimant, one of the millions who have filed claims with 
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asbestos trusts.’’ There has also been congressional testimony from 

plaintiffs’ counsel, Charles Siegel, to the same effect. Now, because 

of time I will have to rely on my written statement that goes further into this. 

Now, much of the evidence that was presented in the Garlock 

proceeding, including my expert report in particular, still remains 

under seal, though I understand that this will start to come out in 

about 2 weeks. Now, the Garlock evidence that Judge Hodges did 

disclose in his order as to the frequency of apparently perjurious 

denials of exposures, the products to which plaintiffs had asserted 

‘‘meaningful and credible exposure,’’ coupled with plaintiffs’ counsels’ brazen manipulation of TDPs to facilitate such denials, lead, 

in my opinion, to an inexorable conclusion: the practice of deliberately failing to disclose evidence of other exposure is far closer to 

the norm than the exception. Indeed it is likely that cases in which 

fraud has been successfully employed dwarf the number of cases in 

which abuse has been discovered. 

Now, improper trust payments no doubt have amounted to billions of dollars to this point. As for tort defendants, it is simply not 

possible to even begin to estimate how much money they have paid 

out as a consequence of plaintiffs making false statements as to 

product exposures. Undoubtedly, it amounts to hundreds of millions of dollars, but more likely billions. And it is improbable, to 

say the least, that the scheme to suppress evidence of other exposures is being hatched by plaintiffs. 

Mr. MARINO. Sir, would you please wrap up your testimony in 

your next sentence? 

Mr. BRICKMAN. Yes, sir. Judge Hodges in his estimation order in 

the Garlock bankruptcy has allowed us to peer behind the asbestos 

curtain that shrouds the inner workings of this highly successful 

scheme to use the judicial system to defraud asbestos defendants 

and their insurers out of billions of dollars. It is now up to the Congress to take the critically important step of enacting H.R. 526 to 

contain this massive fraud that now permeates mesothelioma litigation. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Brickman follows:] 
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Mr. MARINO. Thank you. The Chair now recognizes the gentleman from California, Mr. Issa. I have a policy of, since I am 

going to be here, of waiting to go last, and let my colleagues go before me. 

Mr. ISSA. And, Chairman, I have a policy that if my colleague 

from Texas is walking in, as you recognize me and he is supposed 

to go first, that I yield. 

Mr. MARINO. That is fine. 

Mr. FARENTHOLD. I apologize. I picked up a bit of a cough. I had 

to get a cough drop, or I would not have been able to get a sentence 

out. And I appreciate, and I have reviewed you all’s testimony. 

Mr. Inselbuch, yes, I talked a little bit earlier about a judge in 

the district I represent in Corpus Christie, actually retired now, 

Jan Jack, who exposed widespread fraud in asbestos litigation. And 

while her stand on shady medical litigation practices serve to get 

rid of some of the claims, she said that they were neither driven 

by health or justice. We still have strong indications that some of 

the same activities persist today in the asbestos trust system. 

In your written testimony, you state there is not a scintilla of 

evidence of fraud in the asbestos bankruptcy system. Yet the judge 

in the Garlock case where you served as counsel to the Asbestos 

Claimant’s Committee, they found a startling pattern of misrepresentation in 15 cases where the judge allowed full discovery and 

went on to state that those 15 cases were not isolated or unique, 

but rather stated, ‘‘It appears certain that more extensive discovery 

would show more excessive abuses.’’ Were there misrepresentations 

in the 15 cases highlighted in that decision? 

Mr. INSELBUCH. No. 

Mr. FARENTHOLD. Okay. Mr. Brickman, you have indicated in 

prior testimony that some of the profit-driven screening tactics that 

Judge Jack pointed out may or soon will be used to generate additional claims for asbestos trusts. Can you please tell me more about 

the situation and how the FACT Act would fix that? 

Mr. BRICKMAN. Plaintiffs’ counsel back at the time of Judge 

Jack’s decision in about 2004, 2005, were, just as today, denying 

that there was any fraud in the asbestos litigation system. At that 

period of time, the major cases—that is, the majority of cases— 

were non-malignant cases, asbestosis. Hundreds of thousands of asbestosis cases that were the product of what Judge Jack said was 

a scheme by plaintiff lawyers, litigation doctors, and screening companies to manufacture diagnoses for money. In other words, the 

vast majority of those hundreds of thousands of claims were bogus, 

fraudulent. I think the evidence on that is overwhelming. 

Now, what we heard with regard to that finding by Judge Jack 

is again repeated today with regard to mesothelioma litigation. It 

is the same script, just a few words changed. Despite the clear example of massive fraud that she exhibited, which confirmed what 

I had written previously, plaintiffs’ counsel said—— 

Mr. FARENTHOLD. And it is your belief that it is going on today, 

and the FACT Act will help fix it. 

Mr. BRICKMAN. It is going on today, just in a different form, except that now more money is involved. 

Mr. FARENTHOLD. Some of my colleagues on the other side of the 

aisle expressed some concern about the privacy of plaintiffs and 
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their medical records. Let me read you exactly what this says. It 

says, ‘‘A trust described in Paragraph 2 shall, subject to Section 

107(a), file with the bankruptcy court not later than 60 days at the 

end of each quarter a report that shall be made available on the 

court’s public document with respect to such quarter, that, one, describes each demand the trust received from, including the name 

and exposure history of a claimant and the basis for any payment 

for the trust made for such claimant, and, two, does not include 

any confidential medical records or the claimant’s full Social Security number.’’ 

So basically, all we are asking for is you were exposed by company X, Y, Z, and you got—I mean, we are just basically asking, 

so you do not go sue three different companies for the same deal. 

One of our goals here is to lower the cost of litigation and going 

through a costly discovery process to get to that, which is sometimes difficult to get to. We are trying to make it easier for plaintiffs and defendants here. Do you think this is an invasion of the 

medical privacy, or is this stuff that would normally come out during any sort of litigation? 

Mr. BRICKMAN. That claim is simply a red herring, sir. If you file 

a tort action in a State court or a Federal court claiming that you 

were injured, you have to provide in a public forum a great deal 

more information than is to be disclosed by H.R. 526. In other 

words, the claim that this is an invasion of privacy is just utter 

nonsense. It is a make-way claim that is not even gossamer. So the 

bottom line is, anybody can say anything by way of an argument. 

This is an argument that has no credibility whatsoever. 

Mr. FARENTHOLD. Thank you very much. I see my time has expired. 

Mr. MARINO. Thank you. The Chair now recognizes the gentleman from Georgia, the Ranking Member, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. Before I begin my 

questions and before we start running the clock, I would like to ask 

unanimous consent to submit several materials into the record. 

These include an internal memo from National Gypsum Company 

stating, ‘‘Just as certain as death and taxes, if you inhale asbestos 

dust, you get asbestosis.’’ 

Also to be submitted for the record with unanimous consent an 

internal memo from Honeywell stating, ‘‘If you enjoyed a good life 

while working with asbestos products, why not die from it?’’ Also 

an internal industry discussion on asbestosis resulting in the unanimous decision not to admit liability in discussing defensive strategies, as well as an internal memo that chronicles damaging industry documents dating to 1934, explaining that the plaintiffs’ bar 

will probably take the position, not unreasonably, that the documents are evidence of a corporate conspiracy to prevent asbestos 

workers from learning that their exposure to asbestos could kill 

them. 

Mr. MARINO. Without objection—— 

Mr. FARENTHOLD. While I am not going to object to those being 

admitted, I would like to question their relevance to a disclosure. 

But I have no problem with them going in. 

Mr. MARINO. Without objection, the documents will be entered 

into evidence, and if at some point the determination needs to be 
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made on an issue that Mr. Farenthold raised, we will address that 

at that time. 

Mr. JOHNSON. Thank you, Mr. Chairman. Mr. Inselbuch, do you 

agree with this timeline? Excuse me. Let me ask you to take a look 

at the timeline assembled by the Environmental Working Group, 

this timeline, which is a small collection of internal memoranda 

from asbestos corporations that I have submitted into the record, 

represents a century of corporate fraud on the public. It contains 

evidence amply demonstrating the actual knowledge of corporations 

concerning the dangers associated with asbestos exposure dating 

back to 1934, evidence of corporations intentionally misleading the 

public about the widespread use and catastrophic effects of asbestos in home schools and workplaces. 

Mr. Inselbuch, do you agree that this timeline, along with the 

other examples in your testimony indicate that asbestos corporations have defrauded the public for decades through a massive corporate cover up? 

Mr. INSELBUCH. I have not had an opportunity to look at the specific timeline, but I certainly agree with the set of facts that you 

have recited. Indeed the asbestos industry is the most outrageous 

example of corporate misconduct this country has ever seen. 

Mr. JOHNSON. Thank you. Thank you. And the majority witnesses have testified that though deeply regrettable, evidence of 

fraud has no bearing on the current corporate practices. Please describe contemporary tactics by the asbestos corporations to reduce 

asbestos liability, including recent litigation involving Georgia-Pacific, a Koch Industries subsidy. 

Mr. INSELBUCH. Well, as I said in my opening remarks, asbestos 

victims are exposed in the course of their employment to the products of dozens, if not hundreds, of culpable defendants. And they 

have a right to recover from each and every one of those defendants in the tort system or when they go bankrupt from their trusts. 

What the current defendants would have this Committee believe 

and the world believe is that somehow because the claimants are 

collecting from trusts, that somehow they are being overcompensated by the defendants in the tort system. 

Mr. JOHNSON. And that is something that I want to get further 

elaboration on you from, but perhaps one of the other questioners 

can elicit that information. 

Mr. INSELBUCH. Okay. 

Mr. JOHNSON. I would like to move on now to Mr. Vari. Mr. Vari, 

as a lawyer representing asbestos corporations responsible for killing and then covering up the deaths of Americans across the country, I am particularly interested in hearing your thoughts on this 

issue of transparency, which proponents of the FACT Act, including 

yourself, argue will add more transparency and truth to the asbestos trust system. 

Now, Mr. Vari, your client, Crane Company, routinely seeks confidentiality agreements when settling their asbestos exposure 

claims, is that not correct? You routinely use these confidentiality 

agreements, correct? Yes or no. 

Mr. VARI. They are part of settlements, and the reason I hesitate 

is I am here in a personal capacity and not behalf of—— 

Mr. JOHNSON. I understand that. 
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Mr. MARINO. Please let the witness answer your question first. 

Mr. VARI. I will say that—— 

Mr. JOHNSON. I do not want the witness to filibuster and use my 

time. I just want a yes or no answer. 

Mr. MARINO. Well, we will approach that if that is the case, but 

let the witness answer your question. 

Mr. VARI. I will do my best. 

Mr. JOHNSON. Mr. Chairman, if he will answer it yes or no, that 

will be—— 

Mr. MARINO. He has a right to explain reasonably. 

Mr. JOHNSON. After he answers yes or no. 

Mr. VARI. No. Then the answer would be no. 

Mr. JOHNSON. All right. Okay. And you seek increased transparency from victims, but would you also for purposes of leveling 

the playing field and in the interest of fairness support legislation 

that would ban confidentiality agreements from asbestos litigation 

settlement agreements? 

Mr. VARI. On a personal level, I am not sure. But I can tell you 

that in the tort system—— 

Mr. JOHNSON. So is that a yes or no? 

Mr. VARI [continuing]. The plaintiffs resist disclosure of settlement information. In my experience more often defendants—— 

Mr. JOHNSON. Well, I am asking about defense policy. Since we 

are talking about transparency, it seems only to be fair that if you 

are going to have transparency from plaintiffs or from claimants, 

you would also seek it from defendants. And one way that defendants keep from having to be transparent is to insist upon confidentiality agreements. And if you like that process, if you support that 

process, then say you do. If you do not, then it is simple to say you 

do not. 

Mr. VARI. It is unnecessary because the plaintiffs already possess 

the settlement information. The plaintiffs collect the settlements. 

They know what the amounts are. So there is nothing being withheld from the plaintiffs in any settlement regarding information. 

Mr. JOHNSON. Mr. Vari, that answer—— 

Mr. MARINO. Okay. The gentleman’s time has expired. The Chair 

now recognizes Mr. Issa from California. 

Mr. ISSA. Thank you, Mr. Chairman. Would the ladies and gentlemen that were affected by asbestos please stand again? 

[Audience members stand.] 

Mr. ISSA. Just a shake of head, if you do not mind. You are not 

under oath. Do you all either have current cases or have you settled? 

[Nonverbal response.] 

Mr. ISSA. So everybody is involved in that level of either a suit 

or having settled. Thank you. 

Mr. Chairman, my questions for each of the witnesses will fall 

along a simple line. I understand bankruptcy and I understand diminishing amounts of money. As I understand it, there is a fixed 

amount of money in the trust of bankrupt entities, and this will 

represent the entire settlement whether there is one more litigant, 

no more litigants, or an infinite amount of them. So let me go 

through the question, because Mr. Conyers in his opening statement implied that somehow we would be unfair to people if, in fact, 
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we tried to ensure that only those who were actually affected by 

asbestos—not exposed, but affected by asbestos—were, in fact, 

given a settlement. 

So, Mr. Inselbuch, I will start with you and I will go right down 

the line. Would you agree that, in fact, if we run out of money before we run out of actual victims, that, in fact, the harm will go 

to those who have been affected by asbestos and for whom there 

is no money left? 

Mr. INSELBUCH. Well, the design of these trusts would not permit 

that to happen. 

Mr. ISSA. What you are saying is that the amounts will keep getting smaller and smaller, so everyone will get something. 

Mr. INSELBUCH. That is—— 

Mr. ISSA. So if some of the people behind you were to get a settlement today and it was more in actual dollars, not even constant 

dollars, but in actual dollars, it was more today than for somebody 

2, or 3, or 4 years from now, that would be a horrible thing for the 

person later who gets a diminished amount of money for the same 

actual damage, would it not be? 

Mr. INSELBUCH. Yes, and the trusts try very hard to prevent that 

from happening. 

Mr. ISSA. Well, Mr. Vari—— 

Mr. INSELBUCH. But it is very difficult to predict the future with 

great accuracy. 

Mr. ISSA. Well, I am going down each of you, but I think for each 

of you next, if you agree with what has been said, that, in fact, 

there will be diminished payments eventually reaching a de minimus amount or nothing if you continue to have additional claimants. I am not an economist, but I did take accounting in college 

in addition to economics. My basic understanding is for each person 

that is not a valid claimant who is somehow taken out of receiving 

money through kind of reform, whether it is this or others, we are, 

in fact, preserving a larger amount of money for an actual victim. 

Would that not be correct, Mr. Vari? 

Mr. VARI. Yes, that would. And I also would concur in the observation that once the money runs out, there is no more recovery. 

Mr. ISSA. Okay. So you worked with specificity on a lot of this. 

Do you see that exact event happening in which later victims are 

going to be shortchanged or all together left out if we do not ensure, at a minimum, that only those who truly are dealing with 

dreaded diseases caused by exposure are put at the head of the 

line? 

Mr. SCARCELLA. Absolutely. I think it is important for everybody 

to understand that sitting as advisors to many of these trustee 

boards are committees of plaintiff attorneys. They advise the trustees as best they can on current trends in the litigation. These are 

men and women who, probably more than anybody, have their finger on the pulse of claimant filing trends. Yet time and time again, 

trust forecasts of expectations, unclaimed filings, continue to be 

outpaced by reality. 

So, what concerns me is are there bad actors participating in this 

trust compensation system that are staying one step ahead of the 

men and women who are trying to advise these trusts on what 

their future expectations should be. If there are such bad actors, 
113 

then they are going to continue to deplete funds and keep money 

away from those who truly deserve it, and if transparency can help 

deter that, then I see no reason why it should not be passed. 

Mr. ISSA. And, Mr. Brickman, if you will quickly follow up as our 

time is expiring. 

Mr. BRICKMAN. Trusts are paying out hundreds of millions of dollars today to claimants who have no valid claims against those particular trusts. People being defrauded today are the mesothelioma 

claimants in particular who are yet to manifest with the disease. 

The people defrauding them are plaintiffs’ counsel. 

Mr. ISSA. Thank you. Thank you, Mr. Chairman. 

Mr. MARINO. Thank you. The Chair now recognizes the Congresswoman from Washington, Ms. DelBene. 

Mr. JOHNSON. Mr. Chairman, before Ms. DelBene starts her 

questioning, I would like to raise a point of order. What just happened to me with the Chair trying to extract testimony beyond the 

scope of my question and apply our rigorous time schedule to my 

time, what that does is prevents me from moving forward with the 

questions that I have to ask. 

Mr. MARINO. Mr. Johnson, you know what the rules are. You 

know what the policies are. If you have additional questions—— 

Mr. JOHNSON. Well, but my point is—— 

Mr. MARINO [continuing]. You put them in writing. Ms. DelBene, 

you are up next. 

Mr. JOHNSON. No, no, no. My question—— 

Mr. MARINO. Ms. DelBene, you are up next. 

Mr. JOHNSON. My question I have raised—— 

Mr. ISSA. Regular order. Regular order. 

Mr. JOHNSON. I have raised a point of order. 

Mr. MARINO. You have stated no point of order. 

Mr. ISSA. Regular order. 

Mr. JOHNSON. Parliamentary inquiry. Parliamentary inquiry. 

And my inquiry is what is the policy when a person is asking a 

question on this panel, what is the power of the Chairman to take 

over the questioning from that particular—— 

Mr. MARINO. We allowed you almost a minute when you were introducing documents. I did not time you on that, which is normally 

done. You tried this yesterday in a hearing, and we are not going 

to tolerate this. 

Mr. JOHNSON. No, no, no. 

Mr. MARINO. So, Ms. DelBene, are you going to ask—— 

Mr. JOHNSON. You have not answered my point of inquiry. 

Mr. MARINO. Before I go to this side. I have answered your question. 

Mr. JOHNSON. You have not. No, you have not. 

Mr. MARINO. Ms. DelBene, are you going to ask questions? 

Mr. ISSA. Regular order, Mr. Chairman. 

Ms. DELBENE. An opportunity to—— 

Mr. JOHNSON. I am going to yield to Ms. DelBene, but I will assure the Chair that I am going to take this matter up and make 

sure that what is good for the Republican side is also good—— 

Mr. MARINO. You will see both sides handled equally the same 

way. 
114 

Mr. JOHNSON. And I would like for Ms. DelBene to be able to ask 

her questions without interruption. 

Mr. MARINO. The Chair will decide what takes place. Please, Ms. 

DelBene. 

Ms. DELBENE. Thank you. First, Mr. Chair, I would ask unanimous consent to submit two letters for the record from victims and 

their families asking the majority for the ability to testify at this 

hearing and also in the last Congress. 

Mr. MARINO. Without objection, but I do not think you were here 

when I stated that the Democrats had the opportunity to have 

those people sit at the table, and they chose not to do it. But it is 

entered for the record. 

Ms. DELBENE. I wish they had the opportunity to represent 

themselves. In the interest of transparency, my first question is for 

you, Mr. Vari. You support transparency in terms of the victim, information on victims’ exposure. And I wondered, do you also support transparency for asbestos corporations, the ones that you have 

represented, so that they can be more forthcoming with information about the name and location of asbestos-contained products, 

work sites, and exposures? Would you support congressional legislation to do that? 

Mr. VARI. I would repeat my answer that the plaintiffs know that 

information. The plaintiffs who settle know how much—— 

Ms. DELBENE. But this could be publicly-available information, 

which could be important for others to be aware of as well in the 

interest of transparency. 

Mr. VARI. The existence of a settlement is a matter of public 

record in the tort systems. So, to say that my client or any client 

of mine—I am using a hypothetical because I am not here on behalf of a particular client. But the fact that a client settles has to 

be a matter of public record, and it is on a docket. So the same information that is being requested here, which is what is the basis 

of the suit, that is in a complaint. Did my client get sued? Yes. Did 

the client settle? That is already in. 

Ms. DELBENE. It seems like there is an inconsistency between 

the depth of information you would require from victims and the 

information required from corporations. That is disappointing that 

we talk about transparency, but we are not willing in legislation 

to look at this in an equal-sided way. 

Mr. Inselbuch, I wanted to ask, you talk about some of the State 

legislation that has also happened in the interest of transparency 

in Ohio, and Oklahoma, and other areas. I wondered if you could 

respond to some of the issues on transparency and also what you 

have seen from the impact of State legislation so far. 

Mr. INSELBUCH. ‘‘Transparency’’ is a funny word. Mr. Vari says, 

well, the plaintiffs know what they know, and they do, but the 

plaintiff who knows about his settlement when he is a litigant does 

not know about the other fellow’s settlement. And it is the other 

fellow’s settlement and how much that was that would be of interest to that plaintiff, and that is what Mr. Vari and his clients do 

not want anybody to know about. 

And, yes, the fact that there was a settlement, that goes on a 

docket someplace, but not the amount of the settlement. That is 

never disclosed, and it is never disclosed because the defendants do 
115 

not want to disclose it. What they are trying to accomplish is to get 

from this Congress a kind of lending library of information about 

hundreds of thousands of trust claims filed. And in companion legislation throughout the States, they are trying to enact laws, and 

have been successful in some jurisdictions, that would require 

plaintiffs before they bring cases in the tort system to trial to first 

file and resolve their claims against the trusts. 

This will shift a number of the values in how cases are resolved 

in the tort system and will reverse the rule that we have longstanding in the tort system that the plaintiff is the master of his 

case and decides who he sues, and who he settles with, and when. 

And the whole purpose of this is to get unreasonable reductions 

and delays in the tort system based upon this ironic request for 

transparency in the trust system. 

I would also add, Mr. Brickman would like you to believe that 

the information that was so-called withheld from the Garlock defendant is information that the defendants in the tort system never 

have. Nothing could be farther from the truth. I suspect that Mr. 

Vari, who has been in the tort system for 25 years, has an extensive library on where any one of these tort system plaintiffs can 

collect from trusts just based on their work history. And if he does 

not, he can buy it from Mr. Scarcella, who sells it to the public 

based upon his ability with a computer to just plug in all of the 

places where trusts will pay, and cross-ref that with the work history of any one of these plaintiffs. 

The defendants are not missing anything. They know everything. 

They want this list so that they can further prevent asbestos plaintiffs from pursuing their legitimate claims in the tort system, and 

they want to offset the plaintiffs’ claims in the tort system with 

things they would not otherwise be entitled to. 

Ms. DELBENE. Thank you. I know my time is going to expire, so 

I yield back, Mr. Chairman. 

Mr. MARINO. Thank you. The Chair now recognizes Mr. Bishop 

from Michigan. 

Mr. BISHOP. Thank you, Mr. Chairman, and I would like to take 

a moment to thank everybody that has come today. My heart goes 

to all of you for what you have been through, and I hope that this 

hearing is a reflection of the fact that inasmuch as it looks like 

there is some infighting here, that there is a true effort to try and 

make the system better and address some concerns. And I, for one, 

am grateful for you being here today. I am grateful for the panel 

to be here today to share their experience as well. 

Mr. Vari, I have heard varying degrees of testimony today with 

regard to double dipping, and I am wondering if you might be able 

to—I have heard that it does not exist. I have heard that it does 

exist. I assume that it is somewhere in the middle, but if you could 

share with me your experience. 

Mr. VARI. Sure. I do not think that anyone quarrels with the notion that no one should recover for the same injury twice. Where 

we seem to be hung up on is how much information will be available to allow anyone to make that determination. 

So, you know, are there recoveries that occur that are above the 

true value of the claim? As Mr. Inselbuch said, most of these claims 

are settled, so, you know, in that instance it would require an esti-
116 

mation. But certainly there are a lot of recoveries going on and occurring in the trust system that are not made available to the tort 

system defendants. So, if nothing else, transparency would at least 

enable one to say that it does not happen, but in the absence of 

a meaningful cross-flow of information, it could happen, you know, 

and it likely does happen. But without the information, there is no 

way to really study the question. 

Mr. BISHOP. Thank you very much. I also have a question for Mr. 

Scarcella. Sir, I appreciate your testimony, and wonder if you 

might expound a little bit on the portion of your testimony where 

you talked about the discrepancy between disclosures made in 

State court and the asbestos bankruptcy system. It is a lot of nuance, and I am wondering if you can share with me the difference 

between the two systems. 

Mr. SCARCELLA. Was that question for me for Mr. Brickman? 

Mr. BISHOP. Either, or, whatever. I know both of you have ample 

knowledge in this area. It was to you, sir, but either one would be 

fine. 

Mr. SCARCELLA. Well, I will defer to Professor Brickman since 

that who was intended—— 

Mr. BISHOP. Yes, sir, thank you. 

Mr. BRICKMAN. The issue is very simple once you understand the 

facts. And this Committee has benefitted by the fact-finding by 

Judge Hodges in the Garlock bankruptcy. What he found out, 

based upon the evidence presented, was that plaintiffs in the tort 

system when they sue somebody in State court, they are denying 

exposure to the products of the bankrupted companies, like Owens 

Corning, and GAF, and Armstrong World Industries, and U.S. Gypsum, and on and on. 

Now, at the same time in some cases, or during the course of 

that trial, or subsequent to that trial, they are putting in claims 

to the trusts. For example, Pittsburgh-Corning manufactured a 

very, very virulent product in terms of asbestos content, Unibestos. 

In the tort case, they are asked, were you exposed to PittsburghCorning’s Unibestos. They say no under oath in interrogatories, in 

depositions, and in trial testimony, and their lawyers argue to the 

jury there was no such exposures. Then their lawyers file trust 

claims in which they say there is meaningful and credible evidence 

of exposure to Unibestos. That is as plain as I can make it. 

Mr. BISHOP. Thank you, sir. I yield back my time. 

Mr. MARINO. Thank you. The Chair now recognizes the gentleman from New York, Mr. Jeffries. 

Mr. JEFFRIES. Thank you, Mr. Chairman, and let me thank the 

witnesses for their presence here today, and certainly we thank all 

of the victims and their families for your presence here today. And 

certainly you have been subjected to something that no American 

should have to deal with in terms of the asbestos exposure, and 

now this fight to ensure that you are justly compensated. 

Let me start with Mr. Scarcella. You are here today in support 

of the FACT Act, correct? 

Mr. SCARCELLA. Correct. 

Mr. JEFFRIES. And as far as you know, the victims of asbestos, 

those who have been exposed unjustly to asbestos and mesothe-
117 

lioma, other forms of cancer, they do not support the FACT Act, 

correct? 

Mr. SCARCELLA. That is what has been told to me today. 

Mr. JEFFRIES. And as you understand it, the trusts do not support the FACT Act, correct? 

Mr. SCARCELLA. Correct. 

Mr. JEFFRIES. So other than the asbestos industrial complex, who 

in terms of interested stakeholders actually supports the FACT 

Act? 

Mr. SCARCELLA. I cannot speak for who else supports the FACT 

Act. I know I support it. 

Mr. JEFFRIES. Why do you support it, sir? 

Mr. SCARCELLA. Why do I support it? Because I have had the 

unique perspective of working both in the trust and tort system. I 

know how both processes work, and I know how damaging the premature depletion of trust assets can be. Just last April, the UNR 

Asbestos Trust, which was one of the first asbestos trusts that was 

confirmed in the early 1990’s, filed a motion with its bankruptcy 

court requesting early termination by 2019 because it is simply 

running out of money. And at the heat of their request was a claim 

that they received more claims and paid more claims than they expected. 

Mr. JEFFRIES. Right. So, you do not believe that there is any evidence of fraud as it relates to the administration of these trusts, 

correct? 

Mr. SCARCELLA. No, I do not think the management of these 

trusts is acting in any fraudulent way. I think it really comes down 

to a system that is set up in a way that could allow and incentivize 

bad actors to infect it. It is not to say that all plaintiff attorneys 

do not act appropriately. Certainly, I think the plaintiffs all do. 

They put a lot of trust in their counsel. But it is a system that is 

set up to allow bad actors to take advance of certain loopholes. 

Mr. JEFFRIES. Right, but we are putting the cart before the horse 

because we are here to try and correct a problem that does not 

exist. There is no evidence, you have just acknowledged, of fraud 

in the administration of the trusts. Do you think there is evidence 

of waste or abuse? 

Mr. SCARCELLA. Well, no, I believe, at least my understanding of 

your question was that was there fraud being conducted at the 

management level of the trusts. 

Mr. JEFFRIES. Right. 

Mr. SCARCELLA. I am concerned that there may be inconsistent 

or potentially fraudulent claimant behavior being conducted by bad 

actors, such as plaintiff attorneys, who file with the trusts. That is 

my concern. You have to keep in mind, as Mr. Vari put correctly 

in his direct testimony today, these trusts operate in vacuums. 

There are 50 trusts controlling collectively almost $30 billion in assets, and they do not really interact with one another at the claim 

resolution level. I—— 

Mr. JEFFRIES. Sir, let me ask you a question there. Are you familiar with the 2011 GAO report that studies the administration 

of these trusts? 

Mr. SCARCELLA. Very much so. 
118 

Mr. JEFFRIES. Am I correct that it looked at, I believe, a 23-year 

period with respect to these trusts, correct? 

Mr. SCARCELLA. I do not know that, but I will take that to be 

accurate. 

Mr. JEFFRIES. 22, 23 years, from 1988 to 2010, and analyzed 

about 3.3 million claims, correct? 

Mr. SCARCELLA. Again, I will take your word for it. 

Mr. JEFFRIES. Over $17 billion in payouts, correct? 

Mr. SCARCELLA. Again, I will take your word for it. 

Mr. JEFFRIES. And not a scintilla of evidence that so-called plaintiff attorney bad actors had actually managed to pull off a fraud 

resulting in an inaccurate payment, correct? That is what the GAO 

concluded. 

Mr. SCARCELLA. Yes, and I addressed that in my testimony. The 

fact that there was no fraud self-reported by these trusts that they 

interviewed—it was self-reported—— 

Mr. JEFFRIES. Thanks for raising that—— 

Mr. SCARCELLA [continuing]. Is not an indication there is a lack 

of a fraud, but more a serious indication of the lack of ability for 

these trusts—— 

Mr. JEFFRIES. Sir, let me reclaim my time—— 

Mr. SCARCELLA [continuing]. To actually audit properly. 

Mr. JEFFRIES. Sir, let me reclaim my time only because the 

Chairman has been particularly rigid, as I understand it, with respect to the 5-minute rule. The GAO report, which was requested 

by then Republican Chairman, Lamar Smith, never contested the 

GAO report in terms of its methodology. It used a whole host of 

publicly-available documents, interviewed trust officials, court officials, professors, used the RAND study. And it also had subpoena 

power if it determined that it was not getting accurate information. 

And so, I think the reality is, again, we are trying to solve a problem with the FACT Act that simply does not exist. I yield back. 

Mr. MARINO. Thank you. The Chair now recognizes Mr. Trott 

from Michigan. 

Mr. TROTT. Thank you, Chairman. I want to thank all of the 

folks who came here to testify today, and I apologize I missed some 

of your testimony. I am new to Congress, and they schedule you 

to be in three places at once. I did not know that was part of the 

process. 

But I practiced bankruptcy law for the better part of the 20 

years, did mostly secured creditor work. Never really dealt with 

Section 524(g). Did not handle that kind of litigation. But when we 

had to file a proof of claim on behalf of a client, we took that process very seriously. We documented it. We attested to it. We attached documents. We knew that the claim would be scrutinized by 

the debtor’s counsel, by the court, by the U.S. Attorney’s Office potentially. 

So this transparency seems to me to be quite logical, and the 

only thing that I heard earlier when the Ranking Member of the 

Subcommittee and the Ranking Member of the whole Committee 

were making their comments, they offered two reasons as to why 

this was a bad idea. And I would be interested to hear from the 

panel briefly, whoever cares to take the question, first that the disclosures required by the act would compromise the confidentiality 
119 

of some of the folks that have suffered because of asbestos. And 

then also, that that information would be used potentially by employers against them. Do any of the folks here today have concern 

with respect to the use of that information given that there are 

some safeguards in the act? 

Mr. INSELBUCH. I do. 

Mr. TROTT. And I see people behind you nodding, so I would be 

curious if people who have lost victims or members of their family 

have the same—— 

Mr. INSELBUCH. Publishing the information about sick and dying 

people for no purpose at all, as the congressman pointed out, is 

really pointless. All you do is subject these people to inquiry, to ignominy, to charlatans who will try and take their money, and for 

what purpose? And it is not the same as the tort system. This 

would just be put on a court record. 

In the tort system, if there is a reason why a plaintiff wants protection from exposure, there is a judge there. You can go to that 

judge and say do not describe this information about my sick or 

dying child. Do not describe this information. Do not publish it. 

Mr. TROTT. So do you agree there is abuse in the State court system as suggested in some of the testimony? 

Mr. INSELBUCH. I am sorry. I could not hear that. 

Mr. TROTT. So the lack of disclosure is one of the reasons why 

people can make conflicting claims. Do you disagree with that—— 

Mr. INSELBUCH. I disagree with that entirely. 

Mr. TROTT. Okay. 

Mr. INSELBUCH. One thing has absolutely nothing to do with the 

other. There is no showing of any fraudulent claims. The whole distortion here is that somebody thinks that maybe somebody is pulling a fast one somewhere, and for that reason these defendants 

want you to provide them with information that the tort system—— 

Mr. TROTT. Yes, in my experience, I would have to respectfully 

disagree. My experience with the debtor’s bar in bankruptcy court 

and my experience in State court and Federal court, I think there 

is substantial abuse, and the act is a good idea. 

So let me move to my next question. Mr. Scarcella, in terms of 

the administrative costs of implementing the act, do you think 

those costs are exceeded by the costs of not having some transparency? 

Mr. SCARCELLA. Well, I think the answer to that question remains to be seen once we have transparency. To the point that was 

made under the prior line of questioning, the reason why the GAO 

was not provided with any instances of fraud in the 22 years of the 

trust operation system is because the trusts are unable to properly 

audit for consistent exposure allegations across trusts. The system 

simply does not allow it, so I am not surprised that they were unable to uncover fraud. They are not given the equipment to actually 

seek it out and find it. 

Mr. TROTT. All right. Professor Brickman, do you think the fact 

that the trusts are largely set up and organized by the plaintiffs’ 

counsel is one of the reasons that has exacerbated some of the 

problems we see? 
120 

Mr. BRICKMAN. That is an understatement. First, let me make 

clear, the trustees are essentially appointed by plaintiffs’ counsel. 

So when you hear trustees speak, it is the voice controlled by plaintiffs’ counsel. Every aspect of the trust is controlled by plaintiffs’ 

counsel. They effectively select not just the trustees, they populate 

the two committees that run the trusts and set up the rules. In all 

cases but one, they have been responsible for the appointment of 

the future claims representative, who never takes positions opposed to the interest of the plaintiffs’ bar. So, the fact that the 

trusts do not support the FACT Act is simply saying that plaintiffs’ 

counsel do not support the FACT Act because the trustees never 

say anything opposed to the interest of the plaintiffs’ bar. 

Now, in terms of the GAO report, that has been misrepresented. 

The GAO report did not look at data. What it looked at was what 

did the trustees say about fraud. And as Mr. Scarcella pointed out, 

the trustees said we do not see any fraud. Of course not. They are 

not looking for fraud. And the use of the word ‘‘audit’’ is completely 

misrepresented here. 

Mr. MARINO. The gentleman’s time has expired. 

Mr. TROTT. Thank you, sir. 

Mr. MARINO. The Chair now recognizes the gentleman from 

Rhode Island, Mr. Cicilline. 

Mr. CICILLINE. Thank you, Mr. Chairman. Thank you to our witnesses. I first want to begin by thanking the many victims of asbestos injury and illness who are here and have taken time out of 

their lives to be part of this hearing. Thank you for being present 

today, and I hope that we will act consistent with the experiences 

you have had, and do the right thing, and defeat this bill. 

I want to say to you, Mr. Inselbuch, thank you for your testimony, and for its clarity, and for giving us a really important context. And I apologize to witnesses. I have been in and out. I am 

in the middle of another hearing, but wanted to come back for a 

couple of purposes. 

First, I would ask, Mr. Chairman, unanimous consent that a letter from the Military Order of the Purple Heart be introduced as 

part of the record; a letter from the Asbestos Disease Awareness 

Organization Voice of the Victims be made a part of the record; correspondence from the American Federation of Labor, AFL-CIO; a 

letter from AFSCME, the American Federation of State County 

Municipal Employees; Public Citizen; the Environmental Working 

Group; a letter from asbestos patients and their families; and a letter from Douglas Campbell of Campbell & Levine. 

Mr. MARINO. Without objection, so ordered. 

Mr. CICILLINE. Mr. Inselbuch, I want to ask you, Mr. Scarcella 

said that individual trusts operate in vacuums. Can you explain 

why this is not the case? 

Mr. INSELBUCH. Well, every document that governs the trust’s 

conduct is public. It is on a website. And every one of those documents was approved by a bankruptcy judge and a Federal district 

judge. So, there is no mystery about how the trust operates. 

More than that, every trust’s documents state for the public and 

for the defendants exactly what is required in order to recover from 

that trust. And in many cases, based on that information, unlike 

what Mr. Brickman would have you believe, everybody in the world 
121 

can tell from any plaintiff’s work history what trusts he can collect 

from. 

Also about audits, there is no vacuum about the audits either. 

Indeed, the five largest trusts or five of the largest trusts that operate and have their claims processed in Delaware, when they do audits, the audits are, in fact, cross-ref’d, notwithstanding that Mr. 

Scarcella did not know that. They are cross-ref’d one against the 

other to ensure that the trusts are not being given inconsistent information in the claims filing process. 

And finally, I would like Mr. Brickman to tell Judge Robert 

Parker, retired from the 5th Circuit Court of Appeals, that he is 

the tool of the plaintiffs’ bar. I would like to be in the room when 

that happens. 

Mr. CICILLINE. Would you also tell me, Mr. Inselbuch, how trusts 

evaluate demands for payments specifically to prevent fraud and 

abuse, and whether or not the system under which that process is 

undertaken is sufficient to avoid or deter fraud? 

Mr. INSELBUCH. First of all, to my knowledge, more than half of 

the claims that are filed with the trusts are not paid. So it seems 

that even though they pay very little attention to it, they seem to 

be figuring out whether or not the claims should be paid or not. 

The information that they get is very straightforward. It is not difficult for a mesothelioma victim to prove that they have mesothelioma. The doctors that treat them will certify to that, and, my god, 

God bless them, they do suffer. 

Now, the next thing is, were they exposed to the defendants’, the 

trusts’ predecessors, asbestos? That is not difficult to prove either 

when you have the work history. The difference, though, sometimes 

that Mr. Brickman would like you to think is fraudulent is the 

worker 30 years ago when he worked in the factory, or in the shipyard, or in the ship’s hole worked with product that did not have 

a label on it. So he said, yes, I work with insulation products, but 

he may not have known who made them. So when he is asked, as 

he is at a deposition or an interrogatory, did you work with 

Unibestos, he can say I do not know because he does not know. 

If he wants to collect money from Unibestos, it is his lawyer’s 

burden to prove to the court and the jury that that material that 

the plaintiff did not know who made it was, in fact, Unibestos from 

Pittsburgh-Corning. Once Unibestos is settled up, if Mr. Vari wants 

to show that the plaintiff was exposed to Unibestos, that becomes 

his burden, and it is his job to do it. And just saying that the plaintiff did not know it is not an answer to his burden. 

Mr. CICILLINE. And just one final question. Can you explain why 

trusts treat claimant submissions as confidential? And conversely, 

can you explain why the defendant corporations demand that their 

settlements be kept confidential? 

Mr. INSELBUCH. Well, I think that for many reasons, people that 

resolve tort cases, plaintiffs and defendants, have reasons for confidentiality. From the plaintiffs’ standpoint, they might at least 

want to be free from charlatans who will come after them because 

they know they have come into a passel of money, if for no other 

reason. From the defendants’ standpoint, they do not want anybody 

to know what they are paying and to whom they are paying it because they do not want to give additional information to plaintiffs. 
122 

So whether we are in the tort system or in the trust system, there 

is a reason for confidentiality. 

But in the tort system, the defendants are perfectly entitled to 

subpoena from the plaintiff what the plaintiff has filed with any 

trust, and they do it all the time, and they get it all the time. 

Mr. CICILLINE. Thank you. I thank you, Mr. Chairman. I yield 

back. 

Mr. MARINO. Thank you. Seeing no others, I am going to ask my 

colleague if he has another question he would like to ask. 

Mr. JOHNSON. Well, thank you, Mr. Chairman. I believe I will. 

Mr. Scarcella, as an analyst, did you calculate or have you ever had 

occasion to calculate the value of the lives of the millions of future 

claimants killed or injured due to asbestos-related disease? 

Mr. SCARCELLA. Yes. In fact, the bedrock of 524(g) bankruptcy, 

in order to preserve assets for future claimants, requires an estimate of what those future financial obligations will be. 

Mr. JOHNSON. And so, you used your best judgment to come up 

with a figure that in the worst case scenario would be high so that 

you would be able to advise your clients in terms of how much potential exposure they would have. Is that correct? 

Mr. SCARCELLA. No, I do not think that would be necessarily true 

to advise on the high side of any range of estimates. It depends on 

the context in which it is being used. 

Mr. JOHNSON. Okay, thank you. And for Mr. Brickman, do you 

get paid by the Manhattan Policy Institute? 

Mr. BRICKMAN. No, sir. I had to fill out a form like every witness 

did about who he represents. And as I write down on every testimony I ever give to Congress, I represent myself. Nobody is paying 

me. Nobody is paying my transportation. Nobody is buying my 

lunch. 

Mr. JOHNSON. Have you ever represented a claimant or a plaintiff before? 

Mr. BRICKMAN. I have not represented anyone. I do not practice 

law, sir. 

Mr. JOHNSON. Thank you, sir. 

Mr. MARINO. I have a couple of questions I would like to conclude. Okay. The Chairman of the full Judiciary Committee, Mr. 

Goodlatte, has some questions. 

Mr. GOODLATTE. Thank you, Mr. Chairman. No, I am going to 

put my statement before the Committee. First of all, let me start 

by thanking you for holding this hearing on this very important 

legislation that will help those asbestos victims who must look to 

the bankruptcy process to seek redress for their or their loved ones’ 

injuries. Unfortunately, on too frequent an occasion, by the time asbestos victims assert their claims for compensation, the bankruptcy 

trust formed for their benefit has been diluted by fraudulent 

claims, leaving these victims without their entitled recovery. 

The reason that fraud is allowed to exist within the asbestos 

trust system is the excessive lack of transparency created by plaintiffs’ firms. Due to a provision in the Bankruptcy Code, plaintiffs’ 

firms are essentially granted a statutory veto right over a debtor’s 

Chapter 11 plan that seeks to restructure asbestos liabilities. 

Plaintiffs’ firms have exploited this leverage to prevent information 

contained within the asbestos trusts from seeing the light of day. 
123 

The predictable result from this reduced transparency has been a 

growing wave of claims and reports of fraud. 

The increase in claims has caused many asbestos trusts to reduce 

the recoveries paid to asbestos victims who emerge following the 

formation of the trust. In addition, instances of fraud within the asbestos trust system have been documented in news reports, State 

court cases, and prior testimony before the Judiciary Committee. 

Most recently, news reports have described numerous accounts of 

fraud that were uncovered during a bankruptcy case in North 

Carolina. 

The FACT Act, introduced by Congressman Farenthold, would 

combat this fraud by introducing long-needed transparency into the 

asbestos bankruptcy trust system. The FACT Act increases transparency through two simple measures. First, it requires the asbestos trusts to file quarterly reports on their bankruptcy dockets. 

These reports will contain very basic information about demands to 

the trust and payments by the trusts to claimants. Second, the 

FACT Act requires asbestos trusts to respond to information requests about claims asserted against and payments made by the 

asbestos trusts. 

These measures were carefully designed to increased transparency while providing claimants with sufficient privacy protection. To accomplish this goal, the bill leverages the privacy protections contained in the Bankruptcy Code, and includes additional 

safeguards to preserve claimants’ privacy. The FACT Act also was 

deliberately structured to minimize the administrative impact on 

asbestos trusts. 

I believe that the FACT Act strikes the appropriate balance between achieving the transparency necessary to reduce fraud in an 

efficient manner and providing claims with sufficient privacy protections. We cannot allow fraud to continue reducing recoveries for 

future asbestos victims. 

I look forward to hearing testimony from today’s panel, which 

has already taken place. And I thank the Chairman for yielding me 

the time. 

Mr. MARINO. Thank you, Chairman. Mr. Inselbuch, could you 

please tell me who makes up the trust? Who is the trust comprised 

of? 

Mr. INSELBUCH. You mean who the trustees are? 

Mr. MARINO. Trustees, yes. 

Mr. INSELBUCH. They are people selected by the litigants in the 

bankruptcy that includes the representatives of the plaintiffs, the 

futures representative, and the debtor, and they are approved by 

the bankruptcy court. 

Mr. MARINO. And is there—— 

Mr. INSELBUCH. And for the most part, they are retired Federal 

and State court judges. 

Mr. MARINO. Who makes up the panel? Is there not a group of 

people who can veto certain issues? Are there not plaintiffs that 

make up a committee that have a say in this? 

Mr. INSELBUCH. There are two fiduciaries appointed typically 

under these documents. One is a representative of the future claimants, and one is a representative of the present claimants, sometimes called the trust advisory committee. 
124 

Mr. MARINO. Okay. 

Mr. INSELBUCH. That committee consists of plaintiffs’ lawyers. 

The futures claimants’ representative and the trust advisory committee have the same rights under these documents. They have 

very little power. The trustees run these trusts. If the trustees 

want to amend the trust documents, in other words, change them 

from the way they were approved by the bankruptcy court, then 

they need, first, if they can get approval from the trust advisory 

committee and the futures representative. But if they do not get 

that approval, they can go to the bankruptcy court. 

Similarly, if the trustees need to or want to change the payment 

percentage, they bring that again to the trust advisory committee 

and the future claimants’ representative. And if they both consent, 

then it will be done. If not, the trustees can go to the bankruptcy 

court. Other than that, neither the trust advisory committee nor 

the futures claimants’ representative have any significant input 

into the workings of these trusts. 

Mr. MARINO. Does the advisory committee have a larger say, a 

larger percentage, that 75 percent have to agree to certain matters? 

Mr. INSELBUCH. No. 

Mr. MARINO. So, are you saying it is split evenly on both sides 

for the plaintiffs and the defendants? 

Mr. INSELBUCH. No, there are no defendants there. 

Mr. MARINO. Okay. So it is plaintiffs and plaintiffs’ lawyers—— 

Mr. INSELBUCH. The trust. 

Mr. MARINO. Is it plaintiffs and plaintiffs’ lawyers? 

Mr. INSELBUCH. The trust advisory committee, and the role they 

have is what I have just described to you. 

Mr. MARINO. Okay. So do you think that they are going to step 

forward and say if there is fraud? Do you think they would actually 

step forward and say, yes, there is fraud here? 

Mr. INSELBUCH. No, but I would be confident that the trustees 

would. 

Mr. MARINO. You say that the court has a major say in this, is 

that correct? The bankruptcy judge has a major role in this. 

Mr. INSELBUCH. The bankruptcy judge has to approve the plan 

of reorganization. These are the central documents of that plan. 

Mr. MARINO. Can anyone on the committee oppose the judge’s 

ruling? 

Mr. INSELBUCH. On the committee? 

Mr. MARINO. Yes. 

Mr. INSELBUCH. Well, I would have to think back over 15 or 20 

bankruptcies, but, yes, I can think of one where Mr. Vari’s firm 

was concerned where we had opposition from members of the plaintiffs’ bar. I forget whether they were actually on the committee to 

the plan of reorganization itself. 

Mr. MARINO. What was the process for that? 

Mr. INSELBUCH. Well, when a plan of reorganization is presented 

to the bankruptcy court, a disclosure statement is sent to all creditors. And all creditors have an opportunity to file objections, and 

filed objections, and the objections were sustained. 

Mr. MARINO. Okay. If you are saying there is no fraud, what is 

the problem then with oversight so you could say, look, we told you 

there is no fraud here? What is the problem with looking into these 
125 

matters? You have heard time and time again that in many cases, 

Oklahoma and Maryland plaintiffs were disclosed to have filed inconsistent claims between asbestos trusts and the court. In Ohio, 

a judge described a plaintiff’s case as lies upon lies after discovering that the plaintiff received hundreds of thousands of dollars 

from asbestos bankruptcy trusts, yet alleged in court that a single 

product caused the illness. In Virginia, as the Chairman said, a 

judge stated that the case over which he presided was the worst 

deception he had seen in over 22 years. Do you not think in order 

to clear all this up, there should be some oversight and these matters looked into? 

Mr. INSELBUCH. Oversight by whom? Oversight by the defendants’ bar? That is hardly oversight. 

Mr. MARINO. I did not suggest that. 

Mr. INSELBUCH. That is putting a fox—— 

Mr. MARINO. Sir, I did not suggest that. Do you not think there 

should be some oversight? Perhaps the courts can get involved in 

that? 

Mr. INSELBUCH. I do not see any need for any oversight. I do not 

see any evidence of any rampant or systemic wrongdoing here. And 

all you are doing is doing the bidding of the asbestos defendants’ 

bar. 

Mr. MARINO. And I am going to go back to saying what I did say. 

Why not take the opportunity to make that known to the public 

based on what I just read here in this short synopsis? 

Mr. INSELBUCH. How am I supposed to prove to you that I am 

telling the truth? 

Mr. MARINO. You do not have to prove. I am saying that an oversight committee of some type looks into what documents, looks into 

testimony, looks into transcripts, looks into payouts, looks into the 

corporations to see if they held anything back and should be held 

accountable for it. 

Mr. INSELBUCH. Well, that is the job of these fiduciary trustees. 

That is exactly what they do. 

Mr. MARINO. It does not seem like it is working out, sir. 

Mr. INSELBUCH. What? 

Mr. MARINO. It does not seem like it is working out based on 

what has come to light over the past couple of months. 

Mr. INSELBUCH. Perhaps to you, sir. I am there with them all the 

time, and it seems to me that it is working out real well. The only 

people that are complaining about these trustees that I know of are 

the plaintiffs’ lawyers who say the trustees are too stringent. 

Mr. MARINO. And how about the judges? When you just said you 

wanted Mr. Brickman to make a statement, are you willing to 

stand up in front of these judges and simply say to them what you 

are saying is not true? 

Mr. INSELBUCH. This is not the place to re-litigate the Garlock 

case. 

Mr. MARINO. No, it is not the place to re-litigate—— 

Mr. INSELBUCH. Bear in mind what the Garlock case was 

about—— 

Mr. MARINO. What we are here to make sure is that it is fair all 

the way around. Look, there is no one that has more sympathy. I 

had a friend who lost a father to this, and I have seen what it does, 
126 

and my heart goes out. And anybody that even is just around this 

for a short period of time, particularly because of their employment, should receive compensation and good compensation. I am 

just trying to make sure that there is a way that we can preserve 

the dollars to make sure both sides are playing fair so future victims, who may not even know they will have it for 10 years, are 

compensated. That is all. 

Mr. INSELBUCH. Both sides are not playing fair. 

Mr. MARINO. Well, that is what we hope to find out, sir. So I 

thank you. 

Mr. INSELBUCH. Thank you. 

Mr. MARINO. Okay. Ladies and gentlemen, I do not see anyone 

else here, unless my good friend wants to ask another question. I 

am just joking. [Laughter.] 

Mr. JOHNSON. But I will refrain. 

Mr. MARINO. This concludes today’s—— 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. MARINO. You are welcome. This concludes today’s hearing, 

and thanks to all of you witnesses for attending. I want to thank 

the people in the gallery, and I do understand what you are going 

through. My heart goes out. I talk to people. I think I am going 

to talk to some victims after we are done here. 

And without objection, all Members will have 5 legislative days 

to submit additional written questions for the witnesses or additional materials for the record. 

Mr. Scarcella, Mr. Jeffries had to leave quickly because of a conflict. I think you may be contacted to write your answer down on 

his last question when his time expired. If you do not know what 

it was, someone from the Committee will contact you, all right? 

Mr. SCARCELLA. Certainly. Thank you. 

Mr. MARINO. This hearing is adjourned. Thank you. 

[Whereupon, at 3:17 p.m., the Subcommittee was adjourned.] 
(127) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Response to Questions for the Record from Elihu Inselbuch, Member, 

Caplin & Drysdale, Chartered, New York, NY 
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Response to Questions for the Record from Nicholas Vari, Esq., 

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Bates White Economic Consulting, Washington, DC 
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Response to Questions for the Record from Lester Brickman, Benjamin N. 

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