39–010 

Calendar No. 131 

109TH CONGRESS REPORT " ! SENATE 1st Session 109–97 

THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT 

OF 2005 

JUNE 30, 2005.—Ordered to be printed 

Mr. SPECTER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL AND MINORITY VIEWS 

[To accompany S. 852] 

The Committee on the Judiciary, to which was referred the bill 

(S. 852) to create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure, and for other 

purposes, report favorably thereon with amendments, and recommend that the bill, as amended, do pass. 

CONTENTS 

Page 

I. Purposes ......................................................................................................... 1 

II. Legislative History ......................................................................................... 4 

III. Votes of the Committee ................................................................................. 7 

IV. Background and Need for Legislation .......................................................... 12 

V. How S. 852 Works ......................................................................................... 21 

VI. Section-by-Section Analysis and Discussion ................................................ 32 

VII. Critic’s Contentions and Rebuttals ............................................................... 79 

VIII. Cost Estimate ................................................................................................. 89 

IX. Regulatory Impact Statement ....................................................................... 90 

X. Additional Views ............................................................................................ 91 

XI. Minority Views ............................................................................................... 187 

XII. Changes in Existing Law .............................................................................. 227 

I. PURPOSES

S. 852, the Fairness in Asbestos Injury Resolution Act of 2005, 

is important legislation that responds to a badly broken system 

2 

1 Hearing on a Bill to Create a Fair and Efficient System to Resolve Claims of Victims for 

Bodily Injury Caused by Asbestos Exposure, and for Other Purposes, Before the Senate Committee on the Judiciary, 109th Congress (April 26, 2005) (testimony of Mr. Alan Reuther). 

that lacks the capacity to resolve the claims of asbestos victims. 

The bill will create an alternative compensation system within the 

Department of Labor to better resolve the claims of these victims 

and is intended to bring uniformity and rationality to the system 

of asbestos claims resolution so that resources are directed toward 

those who are impaired by their exposure. It is also intended to 

provide economic stability for businesses faced with asbestos liability by stemming the rising tide of asbestos litigation. The Committee believes that it is imperative to address the current asbestos 

crisis, which has diverted resources from the truly sick, clogged our 

federal and state courts, bankrupted companies, and endangered 

the jobs and pensions of employees. 

S. 852 has five (5) key components: 

First—S. 852 compensates legitimate asbestos victims faster and 

on a ‘‘no-fault’’ basis. Under the FAIR Act, asbestos victims’ claims 

are resolved under specific time limits that enable claims to be 

processed expeditiously. 

Victims currently face delay and unpredictable results. 

There is widespread agreement that the current tort system does 

not fairly compensate asbestos victims. Most unfair are the situations where victims receive little or no compensation because the 

defendant company is bankrupt, the source of the asbestos can’t be 

identified, the workers compensation system prevents them from 

suing their employer, or where their employer was the Government 

and is immune from any liability. In addition, there are often years 

of delay before victims receive any compensation. Awards to victims are highly unpredictable, with similarly afflicted individuals 

receiving vastly different amounts. Transaction costs, including attorney’s fees, are extremely high and reduce the amounts actually 

received by victims.1

Under the tort system, victims bear the burden of identifying a 

specific product, proving that the specific product caused their illness, and showing culpability of a particular defendant. Moreover, 

suits by unimpaired claimants have bankrupted companies and diminished the funds available for the truly ill. As a result, victims 

often face insurmountable obstacles in recovering for their injuries 

because many times there is no identifiable party for a claimant to 

sue, either because the culpable party has gone into bankruptcy or 

because it is impossible to identify the cause of the claimant’s exposure. Furthermore, under the current system, there is a lag of several years between the filing and resolution of a suit; and, even 

then, there is no assurance that the claimant will receive compensation for their injuries. 

Under S. 852, victims will receive timely and certain compensation on a ‘‘no fault’’ basis. They will not need to establish the culpability of a particular solvent party in order to be compensated. 

Rather, they will only need to satisfy the eligibility requirements 

in the Act to receive medical monitoring or monetary compensation. 

S. 852 establishes an unprecedented $140 billion privately funded 

trust fund, identified in the bill as the Asbestos Injury Claims Resolution Fund (the ‘‘Fund’’), for the purpose of directing compensation to individuals suffering identifiable injuries as a result of asVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
3 

bestos exposure. In order to receive compensation from the Fund, 

claimants must prove that they meet the eligibility criteria outlined 

in the Act. 

The FAIR Act also provides for an expedited claims processing 

and payment system for the most seriously ill individuals. Further, 

the Act provides special exceptions for claimants suffering from asbestos-related injuries, but who cannot meet the employment exposure requirements of the Act. Medical monitoring will be available 

for those who have been exposed to asbestos, but who are not suffering from an identifiable asbestos-related illness. Finally, the 

streamlined administrative process diminishes the need for large 

attorney fees, which currently deplete that amount that a claimant 

receives by as much as forty (40%) percent. 

Second—S. 852 provides certainty to asbestos victims. Claimants 

currently filing asbestos-related claims face a series of problems 

preventing them from being assured compensation for their injuries. While some may receive high awards, others receive nothing 

at all depending on their ability to prove culpability of harm that 

occurred decades in the past. S. 852 establishes a $140 billion fund 

that is projected to be more than adequate to compensate all 

present and future eligible claims. The compensation for victims as 

provided under the bill is based on disease categories and corresponding awards as follows: 

Level Condition/disease Award 

I ............................................ Asbestosis/Pleural Disease A .......................................... Medical Monitoring 

II ........................................... Mixed Disease with Impairment ..................................... $25,000 

III .......................................... Asbestosis/Pleural Disease B .......................................... $100,000 

IV .......................................... Severe Asbestosis ............................................................ $400,000 

V ........................................... Disabling Asbestosis ....................................................... $850,000

VI .......................................... Other Cancer ................................................................... $200,000 

VII ......................................... Lung Cancer with Pleural Disease ................................. smokers: $300,000 

ex-smokers: $725,000 

non-smokers: $800,000 

VIII ........................................ Lung Cancer with Asbestosis ......................................... smokers: $600,000 

ex-smokers: $975,000 

non-smokers: $1,100,000 

IX .......................................... Mesothelioma .................................................................. $1,100,000 

Third—S. 852 provides economic stability and preserves jobs and 

pensions by offering certainty to defendants and insurers. The FAIR 

Act ensures that the allocation of payments into the Fund will be 

fair, rational, and predictable. 

Currently, companies are unable to plan for asbestos litigation 

costs because of the unpredictability of the current tort system. 

Since most of the original asbestos manufacturers have gone into 

bankruptcy, companies with little relationship to asbestos are targeted with massive suits. As a result, these tangential companies 

have begun to feel the crushing weight of asbestos litigation. Insurers and reinsurers are affected as well. In sum, the current system 

has driven many companies to, or on the brink of bankruptcy. This 

hurts not only employees, but also investors. 

S. 852 provides defendant companies and insurers with a means 

to plan for future asbestos liabilities. By requiring the participants 

to contribute set amounts of money into the Fund on a predetermined time table, defendant companies and insurers will be able 

to move forward and plan for the future. By establishing an administrative system that provides for fair, balanced, reasonable, and 

4 

2See Stephen J. Carroll, et al., Rand Institute for Civil Justice, ‘Asbestos Litigation Costs and 

Compensation: An interim Report,’’ 35 (2002). [Hereinafter RAND 2002]. 3Thomas Korosec, Enough to Make You Sick: In the struggle for a shrinking pot of money 

from asbestos litigation, the sickest victims are getting nickels and dimes while lawyers get 

their millions, Dallas Observer, Sept. 26, 2002. 

predictable allocation of payments by defendant companies and 

their insurers, the Act will preserve the jobs and pensions of companies that might otherwise be forced into bankruptcy. 

Fourth—S. 852 ensures that the fund will be administered simply, fairly, and efficiently. The current tort system is backlogged 

and unfair to many of the sickest victims. The flood of lawsuits in 

the tort system, moreover, has led to unacceptable delays. Some seriously ill plaintiffs even die before their suits are resolved.2 One 

such victim was Texas resident Ronald Bailey who died of mesothelioma in June of 2000, about two months before his scheduled trial 

date.3

Under S. 852, claims will be processed efficiently and fairly by 

the Office of Asbestos Disease Compensation within the Department of Labor pursuant to clear standards and statutory timelines. 

Under this system, the Administrator will determine a claimant’s 

eligibility and compensation award based on fair and balanced criteria, including a sound medical basis for all claims. The awards 

will be paid out to eligible claimants over a period not to exceed 

four (4) years from the Fund that will be run by the Administrator 

solely for the benefit of asbestos victims. 

Finally—S. 852 bans harmful asbestos to help prevent future illnesses. Although the use of asbestos has largely been reduced by 

federal regulations it has not been eliminated. The FAIR Act seeks 

to eliminate the risks of future injuries from asbestos use by prohibiting any further manufacture, processing, and distribution in 

commerce of harmful asbestos-containing products, subject to certain exceptions. S. 852 would also require that prohibited asbestoscontaining products be disposed of pursuant to federal, state and 

local requirements within three years of the date of enactment to 

ensure that such products are no longer in the stream of American 

commerce. 

Above all, the purposes of this legislation are to ensure that people who become sick as a result of exposure to asbestos are compensated surely, fairly, and quickly, while protecting the economic 

viability of defendants, and the employees, investors, and the communities that depend on them. 

II. LEGISLATIVE HISTORY

The asbestos crisis has been considered by the Congress for decades. The issue has been evaluated through several hearings and 

addressed by numerous legislative proposals. 

In the 107th Congress, then Chairman Leahy held a hearing on 

September 25, 2002, entitled ‘‘Asbestos Litigation.’’ At that time, 

the Committee heard testimony from Senator Max Baucus (D–MT) 

and Senator Ben Nelson (D–NE), as well as witnesses Fred Barron, 

Steven Kazan, Jonathan Hiatt (General Counsel of the AFL–CIO), 

David Austern (General Counsel of the Manville Personal Injury 

Settlement Trust), and former Solicitor General Walter Dellinger, 

III. 

5 

During the 108th Congress, then Chairman Hatch followed up 

with another hearing on March 5, 2003, entitled ‘‘The Asbestos 

Litigation Crisis: It is Time for Congress to Act.’’ The Committee 

heard testimony from Senator Max Baucus (D–MT) and Senator 

George Voinovich (R–OH) and witnesses Melvin McCandless, Brian 

Harvey, David Austern, President-elect of the American Bar Association Dennis Archer, Steven Kazan, and Jonathan Hiatt. 

On May 22, 2003, Chairman Hatch introduced S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003 (FAIR Act)—legislation co-sponsored by Senator Ben Nelson (D–NE), Senator Mike 

DeWine (R–OH), Senator Zell Miller (D–GA), Senator George 

Voinovich (R–OH), Senator George Allen (R–VA), Senator Saxby 

Chambliss (R–GA) and Senator Chuck Hagel (R–NE). After its introduction, Chairman Hatch held another hearing on S. 1125 on 

June 4, 2003, entitled ‘‘Solving the Asbestos Litigation Crisis: S. 

1125, the Fairness in Asbestos Injury Claims Resolution Act of 

2003.’’ The Committee heard testimony from Senator Patty Murray 

(D–WA), Senator Chuck Hagel (R–NE) and from witnesses Professor Laurence H. Tribe, Dr. James Crapo, Dr. Laura Stewart 

Welch, Dr. John E. Parker, Jennifer L. Biggs (FCAS, MAAA), Dr. 

Mark A. Peterson, Prof. Frederick C. Dunbar, Prof. Eric D. Green 

and Dr. Robert Hartwig. 

The Committee then considered S.1125 during Executive Business meetings held on June 19, 24, 26, 2003 and on July 10, 2003 

discharged S. 1125 by a roll call vote of 10 yeas, 8 nays and 1 pass. 

In August of 2003, Senator Specter convened a series of meetings 

that were moderated by Third Circuit Senior Judge Edward Becker 

with the key stakeholders, including representatives of the defendant companies, insurance and reinsurance companies, the AFL– CIO, and the American Trial Lawyers Association (ATLA). The 

purpose of these meetings was to provide stakeholders a forum to 

express their views on the legislation and resolve contentious 

issues that the Committee identified during markup on S.1125. 

On April 7, 2004, Senator Hatch introduced S. 2290, the Fairness 

in Asbestos Injury Resolution Act of 2004, with Majority Leader 

Bill Frist (R–TN), Senator Zell Miller (D–GA), Senator Mike 

DeWine (R–OH), Senator Saxby Chambliss (R–GA), Senator George 

Voinovich (R–OH), Senator George Allen (R–VA), Senator Chuck 

Hagel (R–NE), and Senator Pete Domenici (R–NM). On April 20, 

2004, the Majority Leader moved to proceed to the consideration of 

S.2290. That motion, however, drew objections whereby a Cloture 

Motion was filed on April 20, 2004. The Senate failed to invoke cloture on April 22, 2004, by a vote of 50–47. 

After the unsuccessful cloture vote, Senator Specter reconvened 

the stakeholder meetings again under the stewardship of Judge 

Becker and in an effort to encourage progress on the bill. During 

these meetings, which were also attended by Republican and 

Democratic staff, the stakeholders expressed their concerns on a 

litany of issues involving many of the bill’s core provisions. Between August of 2003 and January of 2005, Senator Specter convened a total of thirty-six (36) meetings with Judge Edward Becker 

and the stakeholders. 

During the 109th Congress, Chairman Specter held a hearing on 

January 11, 2005, entitled ‘‘The Fairness in Asbestos Injury Resolution Act.’’ In the hearing, the Committee heard testimony from 

6 

the Honorable Judge Edward R. Becker (U.S. Court of Appeals for 

the Third Circuit), the Honorable John Engler (President and CEO 

of National Association of Manufacturers), Peg Seminario (Director 

of Occupational Safety and Health, AFL–CIO), Craig Berrington 

(Senior Vice President and General Counsel of American Insurance 

Association), Mike Forscey (American Trial Lawyers Association), 

Mary Lou Keener, Billie Speicher, and Jeff Robinson (Partner, 

Baach, Robinson, and Lewis). 

A little over a week later, on January 19, 2005, Chairman Specter circulated a discussion draft of the bill. In an effort to flush out 

outstanding concerns on the bill, Chairman Specter held a hearing 

entitled ‘‘Asbestos: Mixed Dust and FELA Issues’’ on February 2, 

2005. At the hearing, the Committee heard testimony from Dr. 

Laura Welch (Medical Director, Center to Protect Worker Rights), 

Michael B. Martin (Partner, Maloney, Martin and Mitchell, L.L.P.), 

Dr. David Weill (Associate Professor of Medicine, Division of Pulmonary and Critical Care Sciences, Lung Transplant Program at 

the University of Colorado Health Sciences Center), Professor Lester Brickman (Professor of Law, Cardozo Law School of the Yeshiva 

University), Dr. Theodore Rodman (Retired Professor of Medicine, 

Temple University), Dr. Paul Epstein (Clinical Professor of Medicine and Chief of Pulmonary and Critical Care Medicine, Penn 

Medicine at Radnor), Paul R. Hoeferer (Vice President & General 

Counsel of BNSF Railway Co.), and Donald F. Griffin (Director of 

Strategic Coordination and Research, BMWED-Teamsters). Thereafter, Chairman Specter circulated another discussion draft on February 7, 2005, to reflect agreements reached in negotiations and to 

encourage further progress on the bill. 

On April 19, 2005, S. 852, Chairman Specter introduced the Fairness in Asbestos Injury Resolution Act of 2005, with Ranking Member Patrick Leahy (D–VT), Senator Orrin Hatch (R–UT), Senator 

DeWine (R–OH), Senator Dianne Feinstein (D–CA), Senator Max 

Baucus (D–MT), Senator Charles Grassley (R–IA), and Senator 

George Voinovich (R–OH). On April 26, 2005, and at the specific 

request of Senator Durbin, Chairman Specter held yet another 

hearing entitled, ‘‘A Bill to Create a Fair and Efficient System to 

Resolve Claims of Victims for Bodily Injury Cause by Asbestos Exposure, and for Other Purposes.’’ The Committee heard testimony 

from Judge Becker, the Honorable John Engler (President and 

CEO of National Association of Manufacturers), Craig Berrington 

(General Counsel of the American Insurance Association), Peg 

Seminario (Director of Occupational Safety and Health, AFL–CIO), 

Dr. James Crapo (Chairman of the Department of Medicine, National Jewish Medical Research Center), Carol Morgan (President 

and General Counsel, National Services Industry, Inc.), Hershel 

Gober (Military Order of the Purple Heart), Dr. Fran Rabinovitz, 

Mark Peterson, Prof. Eric Green (Boston University Law School), 

Dr. Philip Landrigan, (the Mount Sinai Irving J. Selikoff Center for 

Occupational and Environmental Medicine), and Alan Reuther 

(United Automobile, Aerospace and Agricultural Implement Workers of America). 

The Committee considered S. 852 during Executive Business 

meetings held on April 28, 2005, and May 11, 12, 19, 25 and 26, 

2005. On May 26, 2005, the Committee discharged S. 852 favorably 

by a roll call vote of 13 yeas and 5 nays. 

7 

III. VOTES OF THE COMMITTEE

Pursuant to paragraph 7 of rule XXVI of the Standing Rules of 

the Senate, each Committee is to announce the results of roll call 

votes taken in any meeting of the Committee on any measure or 

amendment. The Senate Judiciary Committee, with a quorum 

present, met on April 28, 2005, and May 11, 12, 19, 25 and 26, 

2005 at 9:30 am to markup S. 852. The following votes occurred on 

S. 852: 

A Kennedy Amendment offered on May 11, 2005, to restore Level 

VII cases relating to lung cancer. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Manager’s Package offered on April 28, 2005, by Chairman 

Specter (R–PA) and Ranking Member Patrick Leahy (D–VT). Accepted by voice vote. 

A Feinstein Amendment offered on April 28, 2005, to clarify that 

expedited judicial review of constitutional challenges shall be modeled after the McCain-Feingold campaign finance law. Accepted by 

voice vote. 

A Durbin Amendment offered on April 28, 2005, to provide for 

equal treatment of spouses and children of deceased exigent claimants. Accepted by voice vote. 

A Feinstein Amendment offered on May 11, 2005, to modify the 

processing of claims and procedures relating to the stay of claims 

and return to the tort system, to establish timely payments for asbestos claimants, and for other purposes. Accepted by voice vote. 

A Specter/Leahy Amendment offered on May 11, 2005, to provide 

for the expedited resolution of claims brought by the spouses and 

children of deceased exigent claimants. Accepted by voice vote. 

A Coburn Amendment offered on May 11, 2005, to provide guidance to the Institute of Medicine in their study of Level VI cancers. 

Defeated 7–9, 2 pass. 

YEAS NAYS PASS 

Hatch DeWine Schumer 

Grassley Leahy Graham 

Kyl Kennedy 

Sessions Biden 

Cornyn Kohl 

Brownback Feinstein 

8 

YEAS NAYS PASS 

Coburn Feingold 

Durbin 

Specter 

A Feingold Amendment offered on May 11, 2005, to eliminate the 

limitation on the amount of certain exigent health claims. Defeated 

5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Manager’s Package offered on May 11, 2005, by Chairman 

Specter (R–PA) and Ranking Member Patrick Leahy (D–VT). Accepted by voice vote. 

A Kennedy Amendment offered on May 19, 2005, to provide for 

an Institute of Medicine Study to determine whether there is a 

causal link between asbestos exposure and lung cancer for individuals who have had substantial occupational exposure to asbestos 

but have no evidence of pleural disease or asbestosis. Defeated 5–

12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Manager’s Package offered on May 19, 2005, by Chairman 

Specter (R–PA) and Ranking Member Patrick Leahy (D–VT). Accepted by voice vote. 

A Kennedy Amendment offered on May 25, 2005, to allow persons with lung cancer who had substantial exposure to asbestos 

9 

but are not eligible for compensation from the Fund to pursue their 

asbestos claims in Federal or State court. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Biden Amendment offered on May 26, 2005, to ensure that asbestos claims are not stayed until the Administrator has met its 

public notice requirements, defendant participants have made their 

initial payments, and the Administrator has certified that defendant participants have made sufficient minimum annual payments 

to the Fund. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Biden Amendment offered on May 26, 2005, to provide that if 

the Act is stayed that asbestos claims shall continue in the court 

system. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

10 

YEAS NAYS PASS 

Feinstein 

Specter 

A Biden Amendment offered on May 26, 2005, to provide that 

settlement agreements between plaintiffs and defendants are not 

abrogated, if the settlement agreement was authorized by the settling defendant, and confirmed by, or with, counsel for the settling 

defendant, and to clarify the rules for settlement agreements dealing with 1 or more asbestos claims. Defeated without a quorum, by 

rule of the Chairman and consent of Senator Biden, 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Feinstein Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Kohl 

Specter 

A Manager’s Package offered on May 26, 2005, by Chairman 

Specter (R–PA) and Ranking Member Patrick Leahy (D–VT). Accepted by voice vote. 

A Kennedy Amendment offered on May 26, 2005, to extend benefits for claimants of Libby, Montana to certain other residents subject to community exposure to asbestos. Effectively vitiated by acceptance of substitute amendment presented by Senator Specter 

and Senator Leahy. 

A Graham Second Degree Amendment to the Kennedy Amendment offered on May 26, 2005, to create provide for Libby, Montana 

recovery model for future sites of community-wide contamination. 

Defeated 6–11, 1 pass. 

YEAS NAYS PASS 

Graham Hatch Schumer 

Kennedy Grassley 

Biden Kyle 

Kohl DeWine 

Feingold Sessions 

Durbin Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Specter/Leahy Substitute Amendment to the Kennedy Amendment offered on May 26, 2005, to create a Libby, Montana recovery 

11 

model for future sites of community-wide contamination. Accepted 

11–6, 1 pass. 

YEAS NAYS PASS 

Hatch Graham Schumer 

Grassley Kennedy 

Kyl Biden 

DeWine Kohl 

Sessions Feingold 

Cornyn Durbin 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Kennedy Amendment offered on May 26, 2005, to provide that 

certain exposure presumptions shall be based on asbestos exposure 

being a contributing factor and not a substantial contributing factor, and for other purposes. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Kennedy Amendment offered on May 26, 2005, to provide for 

exigent health claims to continue in court until the Fund is operational, and for other purposes. Defeated 5–12, 1 pass. 

YEAS NAYS PASS 

Kennedy Hatch Schumer 

Biden Grassley 

Kohl Kyl 

Feingold DeWine 

Durbin Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

12 

A Biden Amendment offered on May 26, 2005, to revise and 

strengthen the sunset provisions. Defeated 4–12, 2 pass. 

YEAS NAYS PASS 

Kennedy Hatch Kohl 

Biden Grassley Schumer 

Feingold Kyl 

Durbin DeWine 

Sessions 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Feinstein 

Specter 

A Motion to Report Favorable S. 852 offered on May 26, 2005. 

Accepted 13–5. 

YEAS NAYS 

Hatch Kennedy 

Grassley Biden 

Kyl Feingold 

DeWine Schumer 

Sessions Durbin 

Graham 

Cornyn 

Brownback 

Coburn 

Leahy 

Kohl 

Feinstein 

Specter 

IV. BACKGROUND AND NEED FOR LEGISLATION

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

20 years ago, when then-Senator Gary Hart of Colorado 

brought in Johns-Manville. And this very tough issue has 

been very elusive for more than two decades, and it has 

mounted in problems, reaching a situation where we now 

have some 74 companies which have gone into bankruptcy, 

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

who are not being compensated. And about two-thirds of 

the claims, oddly enough, are being filed by people who are 

unimpaired. 

The number of asbestos defendants has risen sharply 

from about 300 in the 1980s to more than 8,400 today, and 

most are users of the product. It spans some 85 percent of 

the U.S. economy. Some 60,000 workers have lost their 

jobs. Employees’ retirement funds are said to have shrunken by some 25 percent. And beyond any question, the issue 

is one of catastrophic proportions.—Chairman Arlen SpecVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
13 

ter, at a January 11, 2005, Senate Judiciary Committee 

Hearing. 

We have tried to protect the ultimate goal of fair compensation to the victims. That is the lodestar of our efforts. 

* * * This is the most lethal substance ever to be widely 

used in the workplace. Between 1940 and 1980, more than 

27.5 million workers were exposed to asbestos on the job. 

Nearly 19 million of them had high exposure over long periods of time. We even know of family members who have 

suffered asbestos-related diseases just because they lived 

with the person, because they washed the clothes of loved 

ones. The economic harm caused by asbestos is real. The 

bankruptcies that resulted are a different kind of tragedy 

for everyone, for workers and retirees, for the shareholders, and for families who built these companies.— Ranking Member Patrick Leahy, at a April 26, 2005, Senate Judiciary Committee Hearing. 

Each year, 10,000 victims will die of mesothelioma as a result of 

occupational asbestos exposure and tens of thousands of victims 

will suffer from lung conditions which make breathing so difficult 

that they cannot engage in the routine activities of daily life. Many 

have become unemployable due to their medical condition. These 

are the real victims of the asbestos nightmare and must be the first 

and foremost focus of our concern. And, because of the long latency 

period of these diseases, not only will the damage done by asbestos 

continue for decades but many of the exposed live in fear of a premature death due to asbestos-induced disease. 

Not only do the victims of asbestos exposure continue to suffer, 

and their numbers to grow, but the businesses involved in the litigation, along with their employees and retirees, are suffering from 

the economic uncertainty created by this litigation. More than 70 

companies have filed for bankruptcy because of their asbestos-related liabilities. As Senator Leahy observed at the Committee’s 

March 5, 2003, hearing on asbestos litigation: ‘‘These bankruptcies 

created a lose-lose situation. Asbestos victims deserving fair compensation do not receive it and bankrupt companies do not create 

new jobs nor invest in our economy.’’ The testimony presented at multiple hearings on the asbestos 

issue and studies written by independent research organizations 

confirm the fact that the asbestos crisis in the United States is 

real. It has failed the victims of occupational exposure. The current 

system forces claimants to wait years for their claims to be resolved. Even when their claims are resolved, many of these claimants are faced with the ultimate denial of compensation because 

the defendant responsible for their injuries has become bankrupted 

by previous lawsuits brought by unimpaired claimants. In the 

event that claimants do receive compensation, that compensation is 

often arbitrary and inequitable. For example, compensation can be 

dependant on a matter as arbitrary as the jurisdiction in which the 

suit is filed. People who bring their claims in certain jurisdictions 

can receive huge awards, even when they are not sick—while people fatally injured by asbestos exposure may receive far less and 

often nothing. Further, only a small percentage of the amount of 

money defendants and insurers spend on asbestos litigation actually reaches the claimants suffering from the ill effects of exposure 

14 

4 RAND Institute for Civil Justice, ‘‘Asbestos Litigation’’ May 2005, at 109 (RAND 2005). 5 Id. 

6 Id. (citing statistics that only one asbestos defendant entered bankruptcy in 1976, twenty in 

the 1980s, and fifteen in the 1990s—for a total of thirty-six bankruptcies between the years of 

1976 and 1999—while thirty-seven were filed between 2000 and 2004). 7See, e.g., Hearing on A Bill to Create a Fair and Efficient System to Resolve Claims of Victims for Bodily Injury Caused by Asbestos Exposure, and for Other Purposes, Before the Senate 

Committee on the Judiciary, 109th Congress (April 26, 2005) (prepared testimony of the Honorable Judge Edward Becker and prepared statement of Dr. Francine Rabinovitz); Hearing on 

Solving the Asbestos Litigation Crisis: S. 1125, the Fairness in Asbestos Injury Resolution Act 

to asbestos. In fact, statistics from the 2005 RAND report reveal 

that only forty-two (42¢) cents of every dollar spent on asbestos litigation actually go to asbestos victims. The rest of the money is 

split between plaintiff and defense attorneys fees. Specifically, thirty-one (31¢) cents of every dollar goes to defense costs and twentyseven (27¢) cents to plaintiff attorneys.4

The current asbestos litigation system does not serve the public 

interest. According to the 2005 RAND Institute Study, asbestos litigation has driven 73 asbestos defendant corporations into bankruptcy between 1982 and 2004.5 This number is expected to grow 

exponentially, especially considering the fact that more asbestos 

litigation pushed more asbestos defendant corporations into bankruptcy between the years of 2000 and 2004 than in all of the 1970s, 

1980s, and 1990s.6 These bankruptcies have had tragic consequences for employees, who have lost their jobs and often their 

savings, and for the communities that depended on the bankrupt 

firms. Moreover, this litigation is no longer confined to a few asbestos manufacturers. Asbestos litigation today touches thousands of 

companies in almost every sector of the American economy. 

Our nation’s state and federal courts simply cannot adequately 

manage the problems in the current asbestos litigation system. As 

the United States Supreme Court stated in Ortiz v. Fibreboard 

Corporation, 527 U.S. 815, 821 (1999), ‘‘the elephantine mass of asbestos cases * * * defies customary judicial administration and 

calls for national legislation.’’ The Court has called upon the Congress three times since 1997 to address this issue: in Amchem 

Products Inc., v. Windsor, 521 U.S. 591 (1977), in Ortiz, and most 

recently in Norfolk & Western Railway. Co. v. Ayers, 123 S. Ct. 

1210 (2003). It is time to answer this call. 

Today, asbestos is seldom used in comparison to its widespread 

use in the early 1970s. Nonetheless, the Committee believes that 

continued asbestos use, however limited it may be, should be 

banned except in those instances where it presents no reasonable 

risk to health and it has no reasonably safe substitute, or where 

it is among others necessary to critical functions. 

A. HISTORY OF ASBESTOS LITIGATION

Asbestos is a fibrous mineral used in many products due to its 

resistance to fire, corrosion, and acid. In the early part of the 20th 

Century, asbestos was regarded as a miracle fiber because it was 

versatile enough to weave into textiles, integrate into insulation, 

line the brakes of automobiles, and construct flame-retardant hulls 

for naval and merchant ships. Annual asbestos production climaxed 

approximately thirty (30) years ago, and was incorporated into 

thousands of products by that time. 

This Committee received testimony from a number of witnesses 

regarding the scope and effects of asbestos exposure.7 Asbestos is 

15 

of 2003, Before the Senate Committee on the Judiciary, 108th Cong. (June 4, 2003) (prepared 

testimony of Dr. James D. Crapo and prepared testimony of Dr. John E. Parker). 8http://www.mantrust.org/history.htm. 

9 RAND 2005 at 114. 

10 RAND 2005 at 109 (citing statistics that seventy-three defendant corporations have declared 

bankruptcy since 1976). 11 Neoplastic Asbestos-Induced Disease, in Pathology of Occupational Lung Disease (Churg & 

Green, ed., 2nd 1998) at 339, cited in ‘‘Babcock & Wilcox Company Report to the Court Regarding Asbestos Developments Generally and The Proofs of Claims Filed Here,’’ In re: The Babcock 

& Wilcox Company, et al., Civil Action No. 00–0558, 2000 U.S. Dist. Lexis 5626, Eastern Dist. 

Louisiana, decided April 17, 2000. 

ubiquitous in the environment. Although practically all Americans 

are exposed to asbestos to some degree, such everyday exposures 

do not usually result in health problems. However, substantial occupational exposure to asbestos can lead to a variety of medical 

conditions. The diseases caused by asbestos can have long latency 

periods, sometimes up to thirty (30) or forty (40) years. 

The first wave of lawsuits began in the late 1960s, when victims 

brought actions against asbestos manufacturers and suppliers. 

These lawsuits increased significantly in 1973 when the 5th Circuit 

Court of Appeals decided the Borel case, which applied strict liability in asbestos lawsuits. Borel v. Fibreboard Paper Prods. Corp., 

493 F.2d 1076 (5th Cir. 1973). By the early 1980s, the principal asbestos defendant, Johns-Manville filed for chapter 11 bankruptcy in 

1982. Six years later, the Manville bankruptcy resulted in the formation of a trust to pay asbestos claims, but after a rush of claims 

on the trust in 1988–89, the trust was forced to reorganize and reduce benefits to claimants to ten (10¢) cents on the dollar in 1995 

and then was forced to reduce the amount again in 2001 to five 

(5¢) cents on the dollar.8 Today, the Manville Trust has had to pay 

claims on a sliding scale—with payments to less seriously injured 

claimants reduced more than payments to more seriously injured 

claimants.9

Experts estimate that over seventy (70) more companies have followed Manville into bankruptcy in the last twenty (20) years—with 

more than a third of them filing in the last three years alone.10

Some of these bankruptcies have resulted in trusts for the payment 

of victims, and some have not. None of the existing trusts pay 

claims at their full value. By now, practically all of the former asbestos industry is bankrupt. As a result, asbestos litigation today 

affects companies that never made asbestos. 

The heaviest asbestos exposures occurred decades ago. After the 

federal government began regulating the use of asbestos in the 

early 1970s, and with the sharp decline in asbestos use towards the 

end of that decade, occupational exposure to asbestos has been 

drastically reduced in recent years. This has greatly reduced the 

incidence of significant non-malignant disease, especially asbestosis. A leading pathologist of asbestos diseases stated that the 

‘‘progressive lowering of standards for permitted occupational exposure to asbestos has markedly decreased the incidence and severity 

of asbestosis.’’ 11 Although serious asbestosis cases, which still occurred in the early 1990s, have now become exceedingly rare, because of the long latency period, there will be significant numbers 

of mesothelioma and lung cancer claims for many years to come. 

Asbestos claims steadily increased during the 1990s, and then 

exploded during the end of the decade. The vast majority of those 

claims, however, were filed by people who claimed non-malignant 

16 

12 RAND 2005 at Summary xx. 13 Bell, at 18. 

diseases such as asbestosis—the very diseases that had become less 

and less common during the 1990s. Many of these non-cancer 

claims were brought by people with no impairment. Such a trend 

threatens to deplete the amount of funds available to compensate 

future, legitimately impaired asbestos victims. This is exacerbated 

by the fact that parties involved and the courts have yet to reach 

a comprehensive agreement regarding the settlement and treatment of asbestos claims. Rather, ‘‘litigation has not only persisted 

over a long period of time but also continually reshaped itself, in 

the process presenting new challenges to parties and courts.’’ 12

B. COURTS UNABLE TO HANDLE VOLUME OF ASBESTOS LITIGATION

The tens of thousands of asbestos claims filed every year have 

overwhelmed the ability of the courts to provide fair, individualized 

justice in a timely manner. The result has been disastrous for deserving claimants and defendants alike. For claimants, the flood of 

cases has meant delay, inequitable compensation, and increasing 

uncertainty that the defendants responsible for their injury will remain solvent and able to compensate their claims. For defendants, 

the overwhelmed tort system has caused companies who never 

manufactured asbestos to face the possibility of devastating liabilities against which they have little practical defense. Asbestos litigation has touched almost every sector of American industry, and 

no company can be sure it is not at risk. 

Defendants’ rights are further compromised when courts lack the 

resources to monitor the medical evidence submitted by plaintiffs. 

A study by neutral academics showed that forty-one (41%) percent 

of audited claims of alleged asbestosis or pleural disease were 

found by trust physicians to have either no disease or a less severe 

disease than alleged by the plaintiffs’ experts (for example, pleural 

disease rather than asbestosis).13

The current asbestos litigation system is failing all of the parties 

involved. It is slow, expensive, and inequitable for both plaintiffs 

and defendants alike. The courts have used a variety of judicial 

management techniques to cope with the influx of asbestos cases 

and none have succeeded. Furthermore, all of the attempts to solve 

the problem within the present tort system have been rejected by 

the Supreme Court. In one case, the Supreme Court rejected a 

class action settlement that was agreed to by the parties that 

would have provided an alternative dispute resolution mechanism 

for asbestos claims against all defendants. Amchem Products, Inc. 

v. Windsor, 521 U.S. 591 (1997). The Supreme Court also rejected 

a class action settlement that would have required all claimants 

against the defendant company to seek compensation from a fund 

established by the defendant’s insurer. Ortiz v. Fibreboard, 527 

U.S. 815 (1999). And in 2003, the Supreme Court rejected an attempt to limit damages in asbestos cases under Federal law. Norfolk & Western Railway Co. v. Ayers, 123 S. Ct. 1210 (2003). The 

Supreme Court held that a defendant that played only a small part 

in the victim’s total exposure could be held liable for the entire 

damage where the firms primarily responsible were bankrupt or 

otherwise unreachable, and that a person with only mild impairVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
17 

14 Hearing on A Bill to Create a Fair and Efficient System to Resolve Claims of Victims for 

Bodily Injury Cause by Asbestos Exposure, and for Other Purposes, Before the Senate Comm. 

on the Judiciary, 109th Cong. (April 26, 2005) (prepared statement of Peg Seminario, AFL–CIO) 

(Seminario April 26, 2005). 15 Hearing on Solving the Asbestos Litigation Crisis: S. 852, the Fairness in Asbestos Injury 

Resolution Act of 2003, Before the Senate Comm. on the Judiciary, 108th Cong. (June 4, 2003) 

(prepared testimony of Jennifer Biggs, at 5) (Biggs June 4, 2003). 16 Austern Sept. 25, 2002, at 4. 17 16–7 Mealey’s Litig. Rep. Asb. 2 (May 4, 2001) at 1. 18 RAND 2002, at 35. 19 Austern March 5, 2003, at 2. 

ment due to asbestosis could receive a very large award based only 

on fear of developing cancer at some future date. Id. 

The Supreme Court has continually recognized that the asbestos 

problem ‘‘defies customary judicial administration and calls for national legislation.’’ Norfolk & Western, 123 S. Ct. at 1228, quoting 

Ortiz, 527 U.S. at 821. As far back as 1997, Justice Ruth Bader 

Ginsburg wrote for the Court that ‘‘[t]he argument is sensibly made 

that a nationwide administrative claims processing regime would 

provide the most secure, fair, and efficient means of compensating 

victims of asbestos exposure.’’ Amchem, 521 U.S. at 628. Specifically, the Court has endorsed the Judicial Conference’s recommendation that ‘‘[r]eal reform * * * require[s] federal legislation 

creating a national asbestos dispute-resolution scheme.’’ Id. at 598. 

The FAIR Act is the ‘‘real reform’’ called for by the Supreme Court. 

C. VICTIMS FACE LONG DELAYS, UNCERTAIN OUTCOMES

On April 26, 2005, a representative of the AFL–CIO testified that 

‘‘many victims are not being well served by the current system and 

that hundreds of thousands of victims who will develop asbestos 

disease in the future could be better served by an alternative system that provides compensation to sick individuals in a more efficient and equitable manner.’’ 14 A flood of asbestos cases is overwhelming the courts, causing delays for victims. An estimated 

300,000 cases are currently pending.15 More than 600,000 individuals have brought claims. Some experts estimate that as many as 

2.7 million additional claims will be filed by people who were exposed to asbestos.16

Some fatally ill victims die before their claims are resolved. As 

discussed above, one worker whose claim against Avondale shipyard in a consolidated case involving more than 1,000 plaintiffs, 

died of mesothelioma before the Louisiana trial involving his claim 

even got underway.17 While some courts give priority to plaintiffs 

with mesothelioma, elsewhere plaintiffs with mesothelioma may 

die before they get to trial.18 Senator Kohl noted at our September 

25, 2002, hearing that, ‘‘[s]imply put, some of the most seriously injured are just not getting their day in court quickly enough.’’ The flood of asbestos litigation has resulted in seventy-three (73) 

bankruptcies, which further diminish the prospect that truly ill victims will be timely and adequately compensated. The average 

amount of time between filing a bankruptcy petition and approval 

of a reorganization plan is about six years, during which time victims are not paid.19

Too many seriously ill victims do not fare so well, and many find 

that the defendants have filed for bankruptcy and will only pay 

pennies on the dollar, if anything. Senator DeWine noted at our 

September 25, 2002 hearing that ‘‘[t]he status quo is just not fair. 

18 

20 RAND 2005 at 114. 21 Claims Resolution Management Corporation, Hearing Exhibit No. 8 at 5, In re: Asbestos 

Litigation, (E.D.N.Y., Hearing on Dec. 13, 2001) (Nos. CV–91–875, CV–90–3973). 22 RAND 2005 at 114. 23Order of Judge Jack B. Weinstein, Senior District Judge, E.D.N.Y., In re: Johns-Manville 

Corporation et al., Nov. 7, 2001, Brooklyn, New York. 24 Hearing on A Bill to Create a Fair and Efficient System to resolve Claims of Victims for 

Bodily Injury Cause by Asbestos Exposure, and for Other Purposes, Before the Senate Comm. 

on the Judiciary, 109th Cong. (April 26, 2005) (prepared statement of Senator Patrick Leahy 

(D–VT)) (Leahy April 26, 2005). 

It is grossly unfair to the victims. What you find is an inconsistency in how victims are treated—a horrible inconsistency that I 

don’t think you’ll find anyplace else in our country or our judicial 

system.’’ Asbestos-related bankruptcies severely diminish the prospects 

that sick victims will be adequately compensated. Overwhelmed by 

the enormous number of claims by the unimpaired in recent years, 

the Johns-Manville bankruptcy trust now pays claims on a sliding 

scale—with less severely injured claimants having their payments 

reduced more than claimants with severe injuries.20 Moreover, 

sixty-three (63%) percent of the funds paid out by the Manville 

trust have gone toward claims by those with non-malignant conditions.21 The General Counsel of the Manville Personal Injury 

Trust, David Austern, testified before this Committee that none of 

the existing asbestos trusts, nor any of the 20 trusts pending in 

bankruptcy court, will pay any more than a fraction of the value 

of claims submitted to them.22

According to New York Senior District Judge Jack B. Weinstein, 

the flood of new claims, the reduction in amounts paid pro rata by 

the Johns-Manville bankruptcy trust on claims, and the increasing 

number of bankruptcy filings ‘‘suggests that there may be a 

misallocation of available funds, inequitably favoring those who are 

less needy over those with more pressing asbestos-related injuries.’’ 23

Even for those sick victims who are able to recover monies, those 

awards are diminished by high transaction costs. As stated before, 

awards can be broken down in the following manner—amounts are 

the number of cents per dollar: forty-two (42¢) cents to victims, 

thirty-one (31¢) in defense costs and twenty-seven (27¢) in plaintiff 

costs. Today’s system is very costly. An alternative system would 

provide victims with a more efficient means of compensation. The 

current tort system will only provide victims with $61 billion in 

compensation. Taking these numbers into account, it is apparent 

that S. 852 is the far superior option. 

D. ECONOMY, JOBS SUFFER UNDER CURRENT SYSTEM

The growth in litigation against this expanding list of defendants 

threatens jobs, workers’ 401(k) and retirement accounts, and the 

American economy. As Senator Leahy noted at the Committee’s 

April 26, 2005, hearing, ‘‘The economic harm caused by asbestos is 

real. The bankruptcies that resulted are a different kind of tragedy 

for everyone, for workers and retirees, for the shareholders, and for 

families who built these companies. In my own State of Vermont, 

the Rutland Fire Clay Company is among more than 70 companies 

nationwide to have declared bankruptcy.’’ 24

Given that seventy-three (73) defendant corporations have filed 

for bankruptcy related to asbestos litigation, and as many as 2.7 

19 

25 RAND 2005 at 109. 26Keith M. Buckley, Asbestos: Impact on the U.S. Insurance Industry, Fitch Ratings, July 25, 

2002, at 13. 27 Joseph E. Stiglitz, The Impact of Asbestos Liabilities on Workers in Bankrupt Firms, Sebago Associates, Dec. 2002, at 10 (Stiglitz). 28 Hearing on Solving the Asbestos Litigation Crises: S.852, the Fairness in Asbestos Injury 

Resolution Act of 2003, Before the Senate Committee on the Judiciary, 108th Cong. (June 4, 

2003) (prepared testimony of Robert P. Hartwig, Insurance Information Institute, at 2). 29 RAND 2002, at 49. 30 Hearing on Solving the Asbestos Litigation Crises; S. 1125, the Fairness in Asbestos Injury 

Resolution Act of 2003, Before the Senate Committee on the Judiciary, 108th Cong. (June 4, 

2003) (prepared testimony of Scott Kapnick, at 2). 31 Hearing on Solving the Asbestos Crisis: S. 1125, the Fairness in Asbestos Injury Resolution 

Act of 2003, Before the Senate Committee On the Judiciary, 108th Cong. (June 4, 2003) (prepared testimony of Frederick C. Dunbar, of the National Economic Research Associates, at 1). 

million asbestos claims still may be filed, bankruptcies are likely 

to continue. More than thirty-seven (37) of the seventy-three bankruptcies have been filed since 2000; as many asbestos-related bankruptcies have been declared in the last two years as in either of the 

past two decades.25 Bankruptcies occurring within the last five 

years include Armstrong World Industries, Owens Corning, Pittsburgh Corning, G–I Holdings Inc. (the successor to GAF Corp.), 

W.R. Grace & Co., U.S. Gypsum Co., Federal Mogul, Babcock & 

Wilcox, and Kaiser Aluminum.26 Asbestos liabilities accounted for 

eighty-four (84%) percent of total contingent liabilities for Owens 

Corning, sixty-seven (67%) percent for W.R. Grace, and ninetythree (93%) percent for USG.27

As the first wave of asbestos defendants filed for bankruptcy and 

their resources dried up, the number of companies named as defendants in asbestos suits began to rise. Increasingly, companies 

with a limited link to asbestos liability are being targeted. Senator 

Hatch noted at the Committee’s September 25, 2002, hearing that 

‘‘[b]ecause of this surge in litigation, companies—many of whom 

never manufactured asbestos nor marketed it—are going bankrupt 

paying people who are not sick and may never be sick, and who, 

therefore, may not need immediate compensation.’’ Approximately 

8,400 firms have been named defendants in asbestos suits,28 up 

from the 300 listed in 1983.29

The negative impact of asbestos liability is so serious that the 

mere specter of it has the effect of chilling or even halting transactions. Goldman Sachs Managing Director Scott Kapnick testified 

before the Committee that ‘‘the large uncertainty surrounding asbestos liabilities has impeded transactions that, if completed, would 

have benefited companies, their stockholders and employees, and 

the economy as a whole.’’ 30 The asbestos problem also has serious 

consequences for insurers, who now pay about fifty-seven (57%) 

percent of the cost of asbestos liability. 

A national economic research specialist testified before this Committee on the economic effects caused by asbestos litigation: ‘‘Asbestos-related bankruptcies and the associated layoffs will have 

ripple effects that harm many groups beyond company stockholders. Workers will suffer in many ways, including temporary or 

long-term unemployment, lower long-term earnings, and inadequate and/or more expensive interim health coverage.’’ 31

Asbestos-related bankruptcies have a devastating impact on 

workers’ jobs and their economic security. Companies that have declared bankruptcy related to asbestos litigation employed more 

than 200,000 workers before their bankruptcies. Asbestos-related 

20 

32Stiglitz, at 3. 33Dellinger Sept. 25, 2002. 34 Hearing on Asbestos Litigation, Before the Senate Committee on the Judiciary, 107th Cong. 

(Sept. 25, 2002) (FNS Unofficial Transcript of oral testimony of The Honorable Senator Benjamin Nelson, United States Senator, Nebraska) (Nelson Testimony). 35Mark Truby, Asbestos Ruined Federal-Mogul, The Detroit News, Mar. 31, 2002. 36 Hearing on Asbestos Litigation, Before the Senate Committee on the Judiciary, 107th Congress, September 25, 2002. The Honorable Benjamin Nelson, United States Senator, Nebraska. 37 Hearing on Asbestos Litigation Crisis: S. 852, the Fairness in Asbestos Injury Resolution 

Act of 2003, Before the Senate Committee on the Judiciary, September 25, 2002, Jonathan Hiatt 

at 2. 38Stiglitz, at 22. 

bankruptcies led to the direct loss of as many as 60,000 jobs. Each 

displaced worker will lose an average of $25,000 to $50,000 in 

wages over his or her career.32 The need for congressional intervention is clear, testified former U.S. Solicitor General Walter 

Dellinger: ‘‘We need to stop the hemorrhaging of hundreds of millions of dollars going to those who are not sick, to protect American 

jobs, pensions and shareholders.’’ 33

When asbestos defendant Federal-Mogul declared bankruptcy in 2001, employees reportedly lost more than $800 million in their 

401(k)s.34 For example, one 82-year-old Federal-Mogul employee saw his $1 million retirement nest egg shrivel to $20,000.35 Bankrupt Owens Corning saw its shares lose ninety-seven (97%) percent 

of their value in the two years before its filing. Approximately fourteen (14%) of those shares were held by employees.36

The AFL–CIO has told Congress that ‘‘[u]ncertainty for workers 

and their families is growing as they lose health insurance and see 

their companies file for bankruptcy protection.’’ 37 Many companies 

had high unionization rates when they filed for bankruptcy: JohnsManville, 42%; Eagle-Picher, 33%; Federal-Mogul, 33%; Armstrong, 

57%; and Todd Shipyards, 75%.38

There is no question that the escalating numbers of claims and 

costs is a threat to workers’ jobs and retirement savings. 

Six years ago, the Supreme Court endorsed a ‘‘national dispute 

resolution scheme’’ to remedy this crisis, and the FAIR Act is the 

vehicle to implement this mechanism. 

E. ASBESTOS BAN AND NATURALLY OCCURRING ASBESTOS

Dangers associated with exposure to asbestos fibers are well 

known, and have prompted efforts to reduce and in some cases ban 

asbestos use. EPA and OSHA have severely restricted the use of 

asbestos since 1986. In 1989, EPA attempted to finalize a ban on 

asbestos use in the United States; however, that ban was subsequently overturned on non-substantive grounds, by the United 

States Court of Appeals for the Fifth Circuit in 1991. A number of 

products and processes still use asbestos. Today, asbestos may be 

present in such products as brake pads and linings, roofing materials, ceiling tiles, garden materials containing vermiculite, and cement products. According to the United States Geologic Survey, approximately 13,000 to 15,000 metric tons of asbestos are consumed 

in the United States every year. Numerous countries have banned, 

or are working to ban, the manufacture and importation of asbestos. Despite its continued (albeit limited) use in the United States, 

some types of asbestos remain a dangerous substance. Therefore, 

a ban on the import and manufacture of harmful forms of asbestos 

and asbestos containing products is needed to prevent the well 

21 

known risks associated with these products, and to reduce the 

number of future victims of asbestos-related diseases. The only exceptions are for uses that present no unreasonable risks to health 

(e.g., diaphragms in chlorine solvent) and for national security (e.g., 

use in missile liners). 

Exposure to naturally occurring asbestos can occur when asbestos contained in rock or soil is released into the air by human activities, such as construction, or by normal erosion. The risks associated with exposure to naturally occurring asbestos have not been 

quantified. 

The potential for exposure to naturally occurring asbestos is a result of the rapid development and growth in areas where veins of 

asbestos exist in the natural rock. In the case of California, it is 

present in the ultramafic and serpentine rock found in many of the 

Sierra foothill counties. Naturally occurring asbestos has been reported at over 780 sites, including in 44 of California’s 58 counties, 

in parts of Oregon, Washington, Montana, Wyoming, Arizona and 

along the Appalachian Mountain range in the eastern United 

States. 

Left undisturbed, naturally occurring asbestos is believed to pose 

little threat to human health. The reality of growing development 

in areas where asbestos is present in the rock and soil, however, 

warrants the development of precautionary measures to limit the 

potential for asbestos exposure and to protect public health. This 

section provides that where naturally occurring asbestos has been 

detected at levels of potential concern in schools and public areas, 

the affected communities should receive financial assistance in the 

form of Federal matching grants, in order to remediate the asbestos contamination. 

In certain circumstances, environmental exposure to naturally 

occurring asbestos may pose health risks. This section focuses on 

efforts to assess the risks of exposure to naturally occurring asbestos; to standardize methods of sampling and measuring naturally 

occurring asbestos; to develop dust management guidelines for new 

construction in areas containing naturally occurring asbestos in 

order to minimize asbestos exposure; to understand where asbestos 

is naturally occurring; and to provide funds to communities for asbestos cleanup and for the development, implementation, and enforcement of State and local dust management regulations that 

States and localities may choose to adopt. 

F. CONCLUSION

It is evident that the current system is fundamentally flawed. 

Victims and defendants alike face inequity and uncertainty, which 

will only get worse. The Supreme Court has concluded that only 

federal legislation can create a fair and efficient asbestos resolution 

system. The FAIR Act offers just such a resolution. 

V. HOW S. 852 WORKS

S. 852 takes asbestos claims out of the existing system and processes them through a federally administered trust fund that compensates current and future asbestos claimants on a no-fault basis 

according to standardized medical criteria and corresponding 

claims awards. Reduced to its essence, and as discussed further 

22 

below, the trust fund operates on two fronts: (i) through the collection and management of contributions received from defendant and 

insurer participants and existing asbestos compensation trusts; and 

(ii) through the payment of such funds to compensate claimants 

who can show eligibility based on standardized medical criteria. 

The Committee believes that a national trust fund is the best answer to the current asbestos litigation crisis. By funneling existing 

asbestos tort claims into an administrative funding system, claimants should see quicker compensation while defendants and insurers benefit from increased economic certainty and stability—an outcome that the current tort system is ill-suited to provide. 

Claimants would benefit because the FAIR Act eliminates expensive and time consuming litigation. A claimant can recover from 

the trust fund if that person can meet the Act’s standardized medical criteria, which is categorized in various funding levels based on 

the severity of the asbestos-related disease. Unlike the current tort 

system, claimants would not be required to prove causation with 

respect to a pool of defendants or show that their claim was somehow not caused by their own negligence. 

Defendants and insurers would also benefit from a trust fund because their future asbestos liabilities become more predictable. The 

trust fund will be financed through a structured payment scheme 

involving defendants and insurers with asbestos liabilities. 

A. THE FAIR ACT’S FUNDING MECHANISMS

1. Mandatory payments from defendants and insurers 

The Fund will be financed through allocated mandatory and 

guaranteed contributions of $90 billion from defendant participants 

and $46 billion from insurer participants that have been exposed 

to asbestos claims in the tort system. Although insurers and defendants have specific aggregate sums earmarked towards the 

Fund, the mechanics of how these amounts will be assessed towards each contributing group differ. 

For defendants 

With respect to the defendants, the Administrator, after receiving company specific data as required by the Act, must first designate companies into tiers that are defined by prior company expenditures incurred defending asbestos claims in the tort system. 

These expenditures include defense, indemnity, judgment and settlement costs. In addition, the FAIR Act establishes separate tiers 

for debtor companies currently in bankruptcy and companies subject to claims under the Federal Employer’s Liability Act. 

Once companies have been designated to tiers, the Administrator’s next step is to designate companies into subtiers based on revenue levels—amounts calculated by each company’s reported earnings for the most recent fiscal year ending before December 31, 

2002. After a company is assigned to a subtier, the Administrator 

can then identify a corresponding annual contribution amount that 

the assigned company is obligated to pay into the Fund. In other 

words, each subtier identifies the annual contribution amount into 

the Fund. 

In the event a tiering assignment unduly burdens a contributing 

company, the FAIR Act gives the Administrator the authority to 

23 

adjust a defendant participant’s payment based on financial hardship or exceptional cases of demonstrated inequity. These adjustments in the aggregate can be made up to $300 million annually 

through a Guaranteed Payment Account, which the defendant participants guarantee in addition to the $3 billion mandatory annual 

funding figure. The Administrator is authorized to exceed the $300 

million cap on hardship and inequity adjustments (and assuming 

that this cap is exhausted) in the event a defendant participant is 

faced with insolvency as a result of their payment obligations to 

the Fund. 

For insurers 

Unlike the assessment formula for defendants, the FAIR Act 

takes a different approach with respect to the asbestos insurers. 

Rather than establish an allocation formula, the FAIR Act creates 

a separate Asbestos Insurers Commission, which holds responsibility to determine the amount that each insurer is obligated to pay 

into the Fund. The Committee believes that delegating such a task 

to a separately commissioned entity makes sense given the necessary technical expertise that is required in developing a fair and 

appropriate allocation formula. The FAIR Act requires the Commission to determine contributions based on several factors, including 

premiums from asbestos policies, losses paid, reserve levels, and future liability. However, if the insurers agree on a fair division of 

contributions among themselves, such an agreement may be used 

to determine the insurer allocation. This agreement is subject to 

approval by the Commission after a finding that the agreed upon 

allocation formula meets all of the requirements of the Act. 

2. The $4 billion contribution from existing bankruptcy trusts 

In addition to the aggregate $136 billion collected from defendant 

and insurer participants, the Administrator is authorized to collect 

roughly $4 billion from existing asbestos compensation trusts that 

have been established to compensate asbestos claims, including but 

not limited to those established under section 524(g) of the Bankruptcy Code. The Committee understands that the total amount of 

all existing bankruptcy and other asbestos compensation trusts is 

valued to be at least $4 billion. Because the FAIR Act requires that 

all trust assets be transferred to the Fund within months of the 

date of enactment pursuant to the provisions of the Act, these 

trusts represent an immediate source of funding for the Administrator to begin processing claims. 

In the unlikely event that the transfer of these trust fund 

amounts are held up through litigation or otherwise, the bill obligates defendant and insurer participants to guarantee an additional payment to the Fund equivalent to the amount of the declared assets of any non-paying bankruptcy trust. 

3. The administrator’s borrowing authority 

The FAIR Act gives the Administrator the authority to borrow 

from commercial lending sources and the Federal Financing Bank. 

The Committee deems such authority necessary especially during 

the start-up of the Fund. S. 852 also expressly obligates defendant 

and insurer participants to repay any amounts borrowed by the Administrator. 

24 

B. FAIR ACT CLAIMS PROCESS

S. 852 creates a no-fault system to compensate those who meet 

sound, fair and balanced eligibility criteria to establish the existence of a legitimate asbestos-related disease. The eligibility criteria 

include diagnostic, latency, medical and exposure requirements. 

Flexibility is built into the system, providing for exceptional claims 

and special cases. The FAIR Act then provides fair and equitable 

claim values to eligible claimants. To ensure the integrity of the 

system, however, auditing procedures and independent reviews by 

objective, experienced physicians are also provided. 

S. 852’s nationalized, streamlined claims processing system provides compensation to eligible claimants promptly without creating 

a new or large bureaucracy. It works as follows: 

1. Office of asbestos disease resolution 

Victims of asbestos exposure with pending cases in the tort system that are preempted by the FAIR Act and those with new 

claims arising after enactment will file their claims with the Office 

of Asbestos Disease Compensation (‘‘the Office’’). 

The Department of Labor was selected to house the Office because of its institutional experience with administering compensation programs and for its ability to utilize its existing technology, 

claims templates, and infrastructure to effectuate a quick start up 

period. The Department currently administers programs that involve the supervision of outside contractors who process claims for 

compensation. The Department has experience in establishing administrative appeals procedures and auditing programs for these 

compensation programs. It is the Committee’s belief that such experience will greatly assist the Department in quickly resolving asbestos claims in the early months after enactment. 

The Committee designed the administrative claims procedure in 

S. 852 to ensure a truly ‘‘no-fault’’, non-adversarial system with 

minimized transaction costs. The Office will assist claimants to receive the compensation to which they are entitled regardless of 

whether the claimant has outside representation. The Office should 

produce and post on-line ‘‘user-friendly’’ claims forms and filing 

guidelines to assist in prompt compensation for asbestos victims. 

Deadline to file claims with the Office—Victims of asbestos exposure with new asbestos claims have five (5) years from the date of 

a medical diagnosis and medical test results sufficient to satisfy the 

relevant criteria to file an asbestos claim with the Office. Victims 

with pending court claims that are preempted by this Act have five 

(5) years from the date of enactment to file an asbestos claim with 

the Office. 

Claims Processing—The Administrator shall promulgate regulations to establish the contents of claims filed with the Office. The 

intent of the Committee is that the claims process be streamlined 

and efficient. The enumerated information in the FAIR Act is sufficient to establish qualification under the medical criteria and exposure criteria. It was not the intent of the Committee to require 

claimants to bear the same evidentiary burdens they currently 

have in the tort system when seeking recovery within the Fund. 

If a claim filed with the Office is found to be incomplete, the Administrator will explain to the claimant the additional information 

25 

necessary to complete the claim and will see that the claimant receives help completing the claim so it can be processed. 

The Administrator may request the submission of medical evidence in addition to the minimum requirements of the medical criteria if necessary or appropriate. This discretion should not be exercised to intentionally delay or to place unreasonable burdens on 

claimants. Audits of claims submitted by victims and claims processing conducted by outside contractors and other quality control 

measures should be conducted by the Administrator by reviewing 

a statistically significant sampling of claims submitted and claims 

determinations. 

Once a claim is completed, a claims processor will review the 

claim to determine if it satisfies the medical criteria and other requirements for eligibility for an award and, if so, the value of the 

award. Within ninety (90) days of the filing of a complete claim, the 

Administrator or the Administrator’s designee will issue a proposed 

decision accepting or rejecting the claim in whole or in part and 

specifying the amount of the proposed award. This written decision 

will contain findings of fact and conclusions of law. It will also explain to the claimant how to appeal the decision. If the claimant 

waives appeal or 90 days passes and no appeal is filed, it will become the final decision and the claimant will be eligible to receive 

the relevant award. 

If the Administrator fails to issue a proposed decision within one 

hundred and eighty (180) days of a claimant’s filing with the Office, 

that claim shall be deemed to be accepted for the award level requested. Claimant will then be entitled to payment in accordance 

with the payment installments contained in the FAIR Act. This 

provision is incorporated as a safeguard so that claims do not languish for years without any processing or determination of eligibility. 

Administrative Review Process—If a claimant is not satisfied 

with the proposed decision, there are two possible avenues for administrative appeal. Both must be requested in writing within 

ninety (90) days of the proposed decision. The claimant may request a hearing or a review of the written record before a representative of the Administrator. The Committee envisions this 

representative to play the role of an administrative law judge and 

therefore the representative will be someone different than the person who initially reviewed the claim and issued the proposed decision. 

If a hearing is requested, the representative will receive the 

claimant’s oral evidence and written testimony to ascertain the 

claimant’s right to receive an award from the Fund and issue a 

final decision on the record as a whole within one hundred and 

eighty (180) days from the date of the hearing request. Alternatively, if a review of the written record is requested, the representative will receive any additional evidence or arguments that 

the claimant chooses to submit and issue a final decision on the 

record as a whole within ninety (90) days from the date of the request for review on the record. All final decisions by representatives will be in writing and will contain findings of fact and conclusions of law. 

Judicial Review of Final Decisions—Claimants may appeal final 

decisions of the Administrator with the U.S. Court of Appeals loVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
26 

cated in the state where they currently reside. Appeals must be 

filed within ninety (90) days of the issuance of a final decision. The 

Court shall review the administrative record as a whole and determine whether the final decision is not supported by substantial evidence, is contrary to law, or is not in accordance with procedures 

required by law. 

2. Prompt payment of claims 

Unlike the current system, in which results can be inequitable 

and unpredictable, S. 852 ensures rapid, fair, and predictable payments, while still maintaining the stability of the Fund. Once a 

final decision is rendered, payments are to be made by the Fund 

over a period of 3 years but in no case longer than 4 years. If no 

proposed decision is issued within 180 days of submitting a completed claim, that claim is deemed accepted and claimants are also 

entitled to begin receiving payments. 

An expedited payment schedule is available for exigent health 

claims. Living mesothelioma claimants are entitled to begin receiving accelerated payments within thirty (30) days, and other exigent 

claimants are entitled to receive their full recovery in less than a 

year. In addition, during Fund start-up there are special procedures in place to ensure that if the Fund or claims facility is unable to pay in these specified time periods the terminal individual 

may return to court. This is outlined in greater detail below. 

27 


Insert offset folio 30 here HR97.007
28 

3. Disease levels 

A claimant filing with the Fund must satisfy the eligibility requirements for one of the following nine (9) disease levels: 

Level I (Asbestosis/Pleural Disease A)—These individuals clearly 

have asbestos-related pleural disease or asbestosis, but their pulmonary function tests are within the normal range. Asbestos-related pleural conditions include discrete plaques on the pleura (the 

lining of the chest wall) or pleural thickening. Asbestosis involves 

scarring of the interstitial tissue within the lungs. 

Level II (Mixed Disease With Impairment)—Individuals in this 

group have significant respiratory impairment, as defined by the 

American Medical Association. They are impaired due to a combination of asbestosis and other causes, typically chronic obstructive pulmonary disease. The requirement for a 1/1 ILO reading on 

a chest x-ray helps ensure that asbestos exposure is a substantial 

contributing factor to the lung diseases and impairment. 

Level III (Asbestosis/Pleural Disease B)—These individuals have 

impairment that is primarily due to asbestosis. They develop asbestos-related respiratory disease with increasing losses of pulmonary 

function, with lung function decreasing to as low as 60 percent of 

predicted average. 

Level IV (Severe Asbestosis)—These individuals have impairment 

that is primarily due to asbestosis. They experience significant loss 

of pulmonary function, with lung function between 50 percent and 

60 percent of predicted average. Victims with this level of impairment are often disabled and cannot perform some activities of daily 

living. 

Level V (Disabling Asbestosis)—These individuals have impairment that is primarily due to asbestosis. They experience severe 

loss of pulmonary function, experiencing loss of more than 50 percent of predicted average lung capacity. Victims with this level of 

impairment will not be able to perform most activities of daily living. Impairment at this level can be fatal. 

Level VI (Other Cancers)—Individuals in this group have cancers 

of the colon, larynx, pharynx, or stomach, the risk of which may 

be increased by asbestos exposure. The bill commissions the Institute of Medicine to conduct a study on whether these cancers are 

caused by exposure to asbestos. 

Level VII (Lung Cancer With Pleural Disease)—Individuals in 

this category suffer from lung cancer. Asbestos-relatedness is demonstrated by substantial exposure requirements and the existence 

of asbestos-related pleural disease. 

Level VIII (Lung Cancer With Asbestosis)—These individuals suffer from lung cancer with asbestosis. Asbestos-relatedness is shown 

by the existence of substantial exposure and asbestosis (scarring 

within the lung). 

Level IX (Mesothelioma)—These individuals suffer from a rare 

and fatal cancer of the chest lining (the pleura) and abdomen lining. This cancer is usually fatal within 18 months of diagnosis although some victims can survive for years. Mesothelioma is a particularly debilitating disease whose victims typically endure great 

suffering. 

29 

4. Diagnostic and latency criteria 

Asbestos claimants must meet diagnostic and latency criteria to 

be compensated by the Fund. The diagnostic criteria should reflect 

the typical components of a true medical diagnosis by a claimant’s 

doctor, including an in-person physical examination (or pathology 

in the case where the injured person is deceased) and a review of 

the claimant’s medical, smoking and exposure history by the doctor 

diagnosing an asbestos-related disease. These requirements ensure 

that the claimant will be given a meaningful diagnosis related to 

the claimant’s condition. The diagnosis must also include consideration of other more likely causes of the condition to ensure that asbestos exposure was the cause of any claimed nonmalignant disease (as opposed to other industrial dust exposure) or a substantial 

contributing factor in causing a malignant disease. 

Because asbestos-related diseases have a long latency period before symptoms begin to manifest, S. 852 requires that the claimant 

demonstrate that his or her first exposure to asbestos occurred at 

least ten years prior to the diagnosis. 

5. Medical criteria 

Claimants must meet medical criteria to ensure that resources 

are protected for those who are currently suffering from asbestosrelated disease. The medical criteria establishes requirements for 9 

disease levels, 5 of which relate to nonmalignant asbestos-related 

diseases, such as asbestosis, and 4 of which relate to malignant diseases, such as lung cancer and mesothelioma. The medical criteria 

for three of the nonmalignant categories are based on increasing 

severity of the claimant’s impairment. Because these impairments 

may have other causes, such as other airborne contaminants including cotton dust, medical evidence is required to establish that 

asbestos exposure is the cause of the claimant’s impairment. The 

medical criteria for the malignant categories similarly reflect the 

need to have medical evidence to support a finding that the claimant’s exposure to asbestos is a substantial contributing factor in 

causing the claimant’s asbestos-related disease. 

6. Exposure criteria 

Claimants must meet exposure criteria to be compensated. Because the risk of developing an asbestos-related disease increases 

with the amount and intensity of exposure to asbestos, the Committee has set exposure requirements for each disease level to ensure that S. 852 compensates only asbestos-related diseases. The 

number of years of occupational exposure is weighted based on industry and occupations and by the dates of exposure, so as to serve 

as a proxy for approximating the dose of exposure associated with 

various types of occupational exposures typically associated with 

asbestos-related diseases. The intensity and regularity of asbestos 

exposures associated with certain industries and occupations were 

significantly greater prior to the 1970’s, at which time federal regulations limiting its use and for the protection of workers were first 

implemented. Such exposures often occurred in the manufacture of 

asbestos. The criteria were drafted to ensure that only diseases 

caused by asbestos exposures are compensated by the Fund. 

30 

7. Exceptional cases 

S. 852 provides exceptions to the above standards for compensation. Exceptional cases where the medical criteria under the Act 

cannot be met but the claimant has comparable and reliable medical evidence are eligible for review by a Physicians Panel, made 

up of objective, experienced physicians, to determine whether the 

claimant is eligible. 

Special provisions are established for review by a Physicians 

Panel in other unique circumstances, including those related to 

‘‘take home’’ exposures where asbestos was brought into the home 

by an occupationally exposed person, exposures due to naturally-occurring asbestos, and those related to the high levels of environmental exposures of residents and workers in Libby, Montana. 

8. Claim values 

S. 852 provides for carefully constructed, rational, and fair claims 

values. Many of the illnesses that are compensated under the Act 

could be caused or contributed to by factors other than asbestos exposure, such as smoking and other airborne contaminants. Therefore, claims values have been carefully constructed to provide increased compensation in those cases where there is greater confidence that the asbestos exposure was the cause of the claimant’s 

injury. To those ends, mesothelioma and lung cancer claims where 

the claimant has been diagnosed with underlying asbestosis and is 

a nonsmoker have been given the highest values. Claims values for 

claimants with severe asbestosis and other lung cancer claims 

where the causal connection between the asbestos exposure and the 

injury is more substantiated similarly reflect the purpose of the Act 

to direct monies to the most serious injuries caused by exposure to 

asbestos. 

The FAIR Act recognizes that claimants with significant occupational exposure to asbestos may be at risk of developing a serious 

asbestos-related illness. As such, claimants meeting the minimum 

exposure criteria will be reimbursed reasonable costs for medical 

monitoring. In the event these claimants develop into a compensable illness, they may then seek compensation from the Fund. 

C. THE FUND START-UP AND PAYMENT OF EXIGENT CLAIMS

S. 852 creates a streamlined process to ensure that exigent 

health claims are resolved and paid upon enactment of the Act. 

The Committee strongly believes that individuals with mesothelioma or a diagnosis of less than 1 year to live should have their 

claims addressed as quickly as possible. Therefore provisions were 

put in place so that exigent health claims can immediately be filed 

after enactment with the Fund or the claims facility and then be 

paid in a timely manner. 

S. 852 allows exigent health claims that arise before or after the 

date of enactment to be resolved through the following process: 

1. File 

Each exigent individual will file a claim or a notice of intent to 

seek a settlement with the Administrator (or claims facility). Notice 

shall be provided to all named or potential defendants. 

31 

2. Submit information 

Once the notice of intent has been submitted, each exigent individual has 60 days to provide all necessary information to support 

her claim, including who the relevant possible defendants would be 

if the claim arose after enactment. If the individual fails to provide 

all the information required, she will have 30 days to perfect her 

claim. 

3. Certification of claim 

Upon receiving all of the required information, the Administrator 

has 60 days to certify the claim—to certify the Administrator must 

evaluate if claim is exigent, and what disease level they qualify for. 

Upon certification, the Administrator must immediately notify defendants of approval of claim 

4. Payment 

Mesothelioma victims receive 50 percent of their award in 30 

days, and 50 percent in 6 months. Other terminal victims receive 

50 percent of their award in 6 months, and 50 percent in 11 

months. The Administrator has discretion to extend payment if 

time schedule would severely harm the solvency of the Fund. Once 

a claim has been paid in full the claimant shall release any outstanding asbestos claims. 

5. Failure to certify 

If Administrator fails to act on the claim for any reason, the Administrator must notify the claimant and the defendants within 10 

days. If the Administrator fails to make such notification the claimant may notify the defendants. Defendants then have 30 days to 

make a settlement offer for 100 percent of what the claimant would 

receive under the fund. 

6. Failure to pay 

If the Administrator certifies the claim, but fails to make the full 

payment within the payment schedule defendants have 30 days to 

make a settlement offer for 100 percent of what the claimant would 

receive under the fund. 

7. Appeal 

The claimant may appeal any decision of the Administrator in 

accordance with the appeals procedures provided for in the Act. 

8. Acceptance or rejection 

The claimant must accept a settlement offer if it equals 100 percent of what they are entitled to under the fund. If it is not, they 

may reject it. This decision must be made in 20 days in writing. 

9. Opportunity to cure 

If the claim was not certified by the Administrator or the defendant settlement offer was rejected; defendants have 10 business 

days to amend the offer. If it is still is not accepted, the individual 

would be entitled to a settlement of 150 percent of what they would 

receive under the fund. 

32 

10. Failure to make offer 

If the defendants fail to make a settlement offer then the individual is entitled to a settlement of 150 percent of what they would 

receive under the Fund. 

11. Failure to pay 

If the defendants or Administrator fails to make the payments 

within the required payment schedule then the individual is entitled to a settlement of 150 percent of what they would receive 

under the Fund. 

12. Return to court 

If 9 months after the claim is filed, the Administrator has not 

certified or paid the claim, or if the defendants have not paid the 

claim, and the Fund has not been certified as operational then the 

individual may pursue their claim in court where the case was 

pending or in the appropriate state or federal court if the claim 

arose after enactment. 

13. Recovery of costs 

Defendants, who pay the claim either through the settlement 

procedure or in a court action, would receive a credit with the fund 

up to 100 percent of what the fund would have paid the claimant, 

unless the Administrator finds that the defendant’s settlement 

offer was not in good faith. 

This streamlined process is fair to both victims and defendants. 

It ensures that claims for terminal individuals are handled in an 

expedited manner, and it provides businesses with the opportunity 

to resolve claims that the Administrator or claims facility cannot. 

VI. SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Sec. 1. Short title; table of contents. 

Sec. 2. Findings and purpose. 

Sec. 3. Definitions. 

TITLE I.—ASBESTOS CLAIMS RESOLUTION 

SUBTITLE A.—OFFICE OF ASBESTOS DISEASE COMPENSATION

Sec. 101. Establishment of Office of Asbestos Disease Compensation 

The FAIR Act establishes the Office of Asbestos Disease Compensation (the Office) within the Department of Labor for the purpose of providing timely and fair compensation to individuals with 

asbestos-related injuries in a no-fault, non-adversarial manner. If 

the Office does not sunset early (see sunset provisions in Title IV), 

then it shall terminate automatically no later than twelve (12) 

months after the Administrator certifies that the Asbestos Injury 

Claims Resolution Fund (the Fund) has not paid out claims in 

twelve (12) months and does not have any debt obligations to pay. 

An Administrator, appointed by the President with the advice 

and consent of the Senate, will head the Office for a term of five 

(5) years and report directly to the Assistant Secretary of Labor for 

the Employment Standards Administration. The Administrator is 

33 

charged with the following responsibilities: (1) paying all administrative expenses out of the Fund; (2) promulgating rules, regulations, and procedures necessary to implement the Act, including 

rules expediting the consideration and payment of claims for exigent claims as soon as possible after date of enactment; (3) contracting and appointing of services and personnel; (4) selecting 

Deputy Administrators, one to handle the claims administration 

and resolution process and one to handle the fiscal management of 

the Fund; and (5) managing the assets to ensure the financial integrity of the Fund. 

The Freedom of Information Act (FOIA) shall apply to the Office 

and Asbestos Insurers Commission. The Act provides a process by 

which a participant or claimant may seek an exemption from disclosing their confidential records under FOIA. The Act charges the 

Administrator and Chairman of the Asbestos Insurers Commission 

with establishing: (1) procedures for handling the commercial and 

financial records of participants marked confidential; (2) a pre-submission process determine the confidential nature of information 

pertaining to insurer reserves and asbestos-related liabilities of 

participants; and (3) procedures for determining the confidential 

nature of personnel and medical files of claimants. 

Sec. 102. Advisory Committee on Asbestos Disease Compensation 

The Administrator shall establish an Advisory Committee on Asbestos Disease Compensation (the Advisory Committee) no later 

than one hundred twenty (120) days after the date of enactment to 

advise the Administrator on all matters related to the functioning, 

maintenance, and administration of the Fund. The Advisory Committee shall be composed of twenty (20) members appointed for 

three (3) year terms, except that of the first members appointed, 

an equal number shall be appointed for one (1), two (2), and three 

(3) year terms. Of the members appointed, the Administrator shall 

designate a Chairperson and a Vice Chairperson. 

The Majority and Minority Leaders of the Senate, the Speaker of 

the House, and Minority Leader of the House shall each appoint 

four (4) members. Of the four, two (2) shall represent the interests 

of the claimants, at least one of whom having been recommended 

by national labor federations. The other two (2) shall represent the 

interests of the participants, one of whom shall represent the interests of the insurer participants and the other the interests of the 

defendant participants. The Administrator shall appoint four (4) 

members with qualifications and expertise in fields relevant to the 

administration of the Fund. None of the members may have earned 

more than fifteen (15 percent) of their income by serving in matters 

related to asbestos litigation as consultants or expert witnesses for 

each of the five (5) years before their appointments. 

The Advisory Committee shall meet at the call of the Chairperson, or the majority of its members, at least four (4) times per 

year during the first five (5) years of the asbestos compensation 

program and at least two (2) times per year thereafter. The Administrator shall provide such information and administrative support 

to the Advisory Committee as reasonably necessary to enable it to 

carry out its responsibilities. 

34 

Sec. 103. Medical Advisory Committee 

The Administrator shall establish a Medical Advisory Committee 

to provide expert advice regarding medical issues. None of the 

members may have earned more than fifteen (15 percent) of their 

income by serving in matters related to asbestos litigation as consultants or expert witnesses for each of the five (5) years before 

their appointments. 

Sec. 104. Claimant Assistance 

The Administrator shall establish a comprehensive claimant assistance program no later than one hundred eighty (180) days after 

the date of enactment to aid claimants in the claims process. The 

program shall provide for the establishment of resource centers. To 

the extent possible, the program shall locate the centers in areas 

within the Department of Labor, or other Federal agencies, in 

areas with large concentrations of potential claimants. The Administrator may enter into contracts with outside organizations that do 

not have a financial interest in the outcome of claims for the purpose of providing services to potential claimants. 

Legal Assistance: The Administrator shall establish a legal assistance program to aid claimants in legal representation issues. As 

part of the program, the Administrator will maintain a list of attorneys who are willing to provide their services on a pro bono basis. 

The Administrator shall provide claimants notice of and information relating to available pro bono legal services and any limitations on attorneys fees. Further, an attorney shall provide an individual notice of pro bono services for legal services available before 

the individual becomes a client with regard to an asbestos claim. 

An attorney may not receive in attorney’s fee awards any more 

than five (5 percent) of a final award made under the Fund. If a 

representative violates these provisions, that attorney will be fined 

the greater of five thousand ($5000.00) dollars or twice the amount 

received by the representative for services rendered in connection 

with the violation. 

Sec. 105. Physicians Panels 

The Administrator shall establish Physicians Panels for the purpose of making medical determinations and performing other such 

functions that are necessary to carry out the Act. The Administrator shall establish enough Panels to ensure the efficient conduct 

of the medical review and exceptional medical claims process. The 

Administrator may periodically adjust the number of Physicians 

Panels on the basis of a mandatory periodic review. 

To serve on a Physicians Panel, a person shall be a licensed physician in any State, board-certified in pulmonary medicine, occupational medicine, internal medicine, oncology, or pathology, and has 

earned no more than fifteen (15 percent) of their income as an employee of a participating defendant or insurer or law firm representing any party in asbestos litigation or as a consultant or expert witness for each of the five (5) years before appointment. Each 

panel shall be composed of three (3) physicians. The Administrator 

shall designate two (2) of the physicians on each panel to participate in each claim submitted to the Panel. The third physician 

shall only participate in the event of a disagreement. 

35 

39Pursuant to 121(d)(9), the claimant must submit a diagnosis of mesothelioma completed by 

a board certified pathologist and evidence that the claimant was exposed to asbestos while working, brought home by an individual exposed to asbestos at work, living in the vicinity of a operation that regularly released asbestos fibers in the air, or in some other manner. 40The physician must have examined the claimant within one hundred twenty (120) days of 

the date of completing the diagnosing document. 

Sec. 106. Program Startup 

Interim Regulations: The Administrator shall promulgate interim 

regulations and procedures for the processing of claims and the operation of the Fund no later than ninety (90) days after the date 

of enactment. 

Interim Personnel: This subsection grants the Secretary of Labor, 

the Assistant Secretary of Labor for the Employment Standards 

Administration, and the Administrator permissive authority to engage in certain activities that will ensure the swift start up of the 

Act. Specifically, the Secretary of Labor and the Assistant Secretary of Labor for the Employment Standards Administration may 

make such personnel and resources available to the Administrator. 

Further, the Administrator is authorized to contract with individuals and entities with experience handling financial matters and 

reviewing workers’ compensation, occupational disease, or similar 

claims. 

Exigent Health Claims: The Administrator shall develop procedures for the expedited categorization, review, and payment of exigent health claims. To qualify for treatment as an exigent health 

claim: (1) a claimant must provide a diagnosis of mesothelioma 

meeting the requirements of the Act 39 or documentation of diagnosis in the form of a declaration or affidavit by an examining physician of a terminal asbestos-related disease with the life expectancy of less than one year 40; or (2) if the spouse or child of a exigent claimant who was living when the claim was filed (or who was 

living on the date of enactment if the claim is filed before the implementation of interim regulations) but has since died of an asbestos-related disease, the spouse or child must provide information 

establishing that the claimant was eligible to receive compensation 

and has not already received compensation from the Fund. The Administrator may designate additional categories of claims that 

qualify as exigent health claims in final regulations. 

The Act authorizes the Administrator to contract with a claims 

facility to enter into settlements with claimants. The processing 

and payment of such claims shall be subject to the rules and regulations enacted under the Act. 

Extreme Financial Hardship Claims: The Act grants the Administrator permissive authority to give expedited treatment to additional categories of claim on the basis of extreme financial hardship. 

Interim Administrator: The Assistant Secretary of Labor for the 

Employment Standards Administration shall serve as the Interim 

Administrator until the Administrator is appointed and confirmed. 

The Interim Administrator shall perform the responsibilities and 

have the authority conferred on the Administrator by the Act. Prior 

to the promulgation of final regulations relating to claims processing, the Interim Administrator shall issue interim regulations 

and may prioritize claims processing based on the severity of illVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00035 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
36 

41See Section 403(d)(2). 

ness and likelihood that exposure to asbestos was a substantial 

contributing factor to causing the illness. 

Stay of Claims; Return to the Tort System: As of the date of enactment, any asbestos claim pending in State or Federal court shall 

be subject to a stay unless: (1) the presentation of evidence has 

begun before an impaneled jury or judge, as trier of fact, or (2) a 

verdict, final order, or final judgment has been entered by a trial 

court.41

Exigent Health Claims.—This section provides for the settling of 

exigent health claims filed before and after the date of enactment. 

Procedures for Settlement of Exigent Health Claims.—A claimant 

with an exigent health claim wishing to settle the claim may file 

a claim or a notice of intent to seek a settlement with the Administrator at any time prior to certification of an operational Fund or 

claims facility. If the individual files a notice of intent, the claimant 

then has sixty (60) days to provide the Administrator with the information necessary to file a claim. Filing a claim shall require 

submission of the following information: (1) the amount received or 

entitled to be received as a result of collateral source settlements 

and copies of all such settlements; (2) any information that the 

claimant would be required to submit in support of a claim against 

the Fund; (3) certification by the claimant that the information provided is true and complete; and (4) for exigent claims arising after 

the date of enactment, a good faith identification of every defendant that the claimant could have appropriately brought an action 

against in a civil action for the asbestos injury. 

If the claimant submits all of the required information on time, 

the Administrator then has sixty (60) days to determine whether 

the claim is an approved exigent claim. If so, then the Administrator shall issue a certification to all parties that the claim is an 

approved exigent health claim valued at a set amount (based on 

the award value under the Act subtracted by the amount of collateral source compensation) and pay the claimant in that amount. 

If the claimant fails to submit all of the required information on 

time or there is a deficiency in the application, then the claimant 

shall have thirty (30) days to perfect the claim. 

If the claimant fails to perfect the claim or is determined not to 

be eligible as an exigent health claim, then the claimant will not 

be allowed to proceed. 

The Administrator or claims facility must provide notice to the 

claimant within ten (10) days of failure to act if unable to process 

and certify the claim and must immediately refer the claim to affected defendants. If the Administrator or claims facility fails to 

provide such notice, then the claimant may provide notice to defendants to prompt a settlement. 

Within thirty (30) days of receiving such a notice from the plaintiff of failure to process or from the Administrator of failure to 

process or to pay, the defendant may serve a good faith offer. This 

amount—or the aggregate, if multiple offers are made—may not exceed the amount that the claimant would be entitled to under the 

Fund. 

The claimant must accept or reject the offer within twenty (20) 

days of receiving an offer. If the claimant accepts the offer, the setVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00036 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
37 

tlement is subject to court approval, which must be given within 

twenty (20) days of the acceptance. The court may only reject an 

offer upon a finding of bad faith or fraud. 

If the offer is rejected, then the defendant has ten (10) days to 

amend the offer. If the offer is the same of the amount that the 

claimant would receive under the Fund, then the claimant must accept the offer. If the claimant rejects the offer again (for example, 

because the offer was less than what the claimant is entitled to receive under the fund) or the defendant fails to amend the offer, 

then the amount the claimant is entitled to receive through the settlement is increased to one hundred fifty (150 percent) percent of 

the Fund award. If the claimant fails to make an offer at all, then 

the amount the claimant is entitled to receive through the settlement is increased to one hundred fifty (150 percent) percent of the 

Fund award. 

Payment Schedule.—The Administrator has the discretion to extend these time periods if paying out the claims on the protracted 

time table would severely harm the solvency of the Fund. The 

amount the claimant is entitled to receive through the settlement 

is increased to one hundred fifty (150 percent) percent of the Fund 

award if there is a failure to pay according to this section. 

Mesothelioma Claimants.—Initial payment of fifty (50 percent) 

percent of the award in thirty (30) days of acceptance and payment 

of the remaining fifty (50 percent) percent in six (6) months of acceptance. Administrator’s discretion allows for payments to be extended to 50 percent in six (6) months and 50 percent eleven (11) 

months after acceptance; 

Other Terminal Claims.—Initial payment of fifty (50 percent) 

percent of the award in six (6) months of acceptance and payment 

of the remaining fifty (50 percent) percent in eleven (11) months of 

acceptance. Administrator’s discretion allows for payments to be extended to 50 percent in first year and 50 percent second year after 

acceptance; 

Recovery of Costs.—A defendant who pays out a claim in accordance with this section may recover the cost of settling by deducting 

it from future payments to the Fund. 

Continuation of Health Claims.—After 9 months an exigent 

claimant may pursue their claim in the court where the case was 

stayed or in the appropriate state or federal court for claims arising 

post enactment so long as the Fund is not operational, and if the 

claim has not been settled or if the claim has not been paid in full. 

The continuation of an exigent claim in the tort system shall not 

be subject to capped damages or attorney’s fees caps, and shall not 

be cut off by a certification that the fund has become operational. 

Asbestos Claims.—Pursual of Asbestos Claims in Federal or State 

Court—If the Administrator cannot certify to Congress that the 

Fund is fully operational and handling all asbestos claims within 

twenty-four (24) months of the date of enactment, then persons 

with asbestos claims, except for those with Level I claims, may pursue their claims in the State or Federal court located within the 

State where the claimant resides or where the asbestos exposure 

arose. If the defendant cannot be found in one of these forums, 

then the claimant may pursue the claim in the Federal or State 

court in the State where the defendant may be found. If the plaintiff alleges that asbestos exposure occurred in more than one counVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00037 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
38 

ty or Federal district, the trial court will determine the most appropriate forum for the claim. If the court determines that another 

forum is most appropriate, then the court shall dismiss the claim. 

Any relevant statute of limitations shall be tolled during this time. 

This section does not preempt or supersede State venue requirements that are more restrictive. 

Credit of Claim and Effect of Operational or NonOperational 

Fund.—If the claimant receives any compensation as a result of 

pursuing a claim in the court system, then such recovery shall 

count as collateral source compensation for purposes of handling 

the claim under the Fund. Any participant who pays a claimant 

through a court proceeding may recover the cost of the payment by 

deducting an amount from subsequent payments into the Fund up 

to the amount that the claimant would have received from the 

Fund. 

Operational Preconditions and Certification.—The Administrator 

may not certify that the Fund is operational and paying out claims 

at a reasonable rate until sixty (60) days after the Administrator 

has published in the Federal Register information pertaining to the 

funding allocation of defendant participants and the funding methodology of insurer participants (to be done within thirty (30) days 

of the date of enactment). Upon certification, the Administrator 

shall publish a notice in the Federal Register that the Fund is 

operational and paying out claims at a reasonable rate. 

Effect of Certification on Claims.—Any non-exigent claim in Federal or State court that has not begun the presentation of evidence 

before a judge or impaneled jury or is the subject of a verdict, final 

order, or final judgment by a trial court shall be null and void and 

reinstated as a claim against the Fund upon the Administrator’s 

certification that the Fund is operational. Claimants may pursue 

all asbestos-related claims in court upon the Administrator’s certification that the Fund cannot become operational. 

Non-Operational Certification.—Claimants may pursue all asbestos-related claims in court upon the Administrator’s certification 

that the Fund cannot become operational. 

Sec. 107. Authority of the administrator 

This section grants the Administrator the authority to issue subpoenas for and compel the attendance of witnesses within a 200 

mile radius, administer oaths, examine witnesses, require the production of books, papers, documents and other evidence, and request the assistance from other Federal agencies with the performance of the duties of the Administrator. 

SUBTITLE B.—ASBESTOS DISEASE COMPENSATION PROCEDURES

Sec. 111. Essential elements of eligible claim 

Claimants must timely file a claim with the Fund and prove by 

a preponderance of the evidence that they have an eligible disease 

or condition as demonstrated by evidence that meets the requirements established in the claims procedures. 

Sec. 112. General rule concerning no-fault compensation 

It is the intent of the FAIR Act to provide a process to compensate victims in a faster and more certain manner than provided 

39 

by the current system. The FAIR Act, therefore, removes the burden that a claimant would ordinarily bear to establish that the injury was the fault of a particular party. Further, under the FAIR 

Act, claimants do not have to prove that an injury resulted from 

the negligence or other fault of any other person. 

Sec. 113. Filing of claims 

A claimant, or the personal representative of a deceased or incompetent claimant, must file claims with the Office within five (5) 

years from the time the claimant received a medical diagnosis and 

medical test results sufficient to satisfy the criteria for the disease 

level for which the claimant is seeking compensation. If the Act 

preempts a timely filed pending asbestos claim, then the asbestos 

claimant has five (5) years from the date of enactment to file with 

the Fund. Failure to file with the Office within the prescribed time 

period has the effect of extinguishing the claim and prohibiting recovery. This section specifically provides that the Act shall not 

treat a claim against a bankruptcy trust that has received initial 

payments and due to receive future payment from such a trust as 

a pending claim for purposes of filing against the Fund. 

The Act does not bar a claimant who receives an award for an 

eligible disease level from receiving additional awards for higher 

disease levels. Further, the Act does not impose a statute of limitations on the claimant for filing claims for additional awards relating to the progression of a non-malignant disease. However, any 

malignant disease level claim must be filed with the Fund within 

five (5) years of receiving a medical diagnosis and medical test results sufficient to satisfy the disease level. 

The Act contains provisions addressing the effect of multiple injuries for Libby, Montana claimants. Pursuant to this section, if the 

nonmalignant condition of a Libby, Montana claimant progresses 

and can prove that the condition has progressed by providing pulmonary function tests, the claimant will qualify for an additional 

award from the Fund. The Administrator shall offset any previous 

awards from the Fund against an award granted to a Libby, Montana claimant for the progression of a nonmalignant claim. A 

Libby, Montana claimant shall qualify for treatment as a Level IV 

claim if the claimant: (1) provides a diagnosis of a bilateral asbestos-related disease; (2) evidence of TLC or FVC less than eighty 

(80%) percent; and (3) medical documentation establishing exposure to asbestos as a substantial contributing factor to causing the 

condition in question to the exclusion of other more likely causes. 

A Libby, Montana claimant shall qualify for treatment as a Level 

V claim if the claimant: (1) provides a diagnosis of a bilateral asbestos-related disease; (2) evidence of TLC or FVC less than sixty 

(60%) percent; and (3) medical documentation establishing exposure to asbestos as a substantial contributing factor to causing the 

condition in question to the exclusion of other more likely causes. 

The provisions outlined above regarding the effect of multiple injuries on asbestos claims shall apply if a Libby, Montana claimant 

develops a malignant level disease. 

A claimant must include at a minimum the following information 

with the claim: (1) name and information pertaining to the identity 

of the claimant; (2) information pertaining to the identity of any 

dependants and beneficiaries; (3) relevant employment history, (4) 

40 

the asbestos exposure of the claimant, (5) the tobacco use of the 

claimant; (6) medical records identifying the asbestos-related disease; (7) any prior asbestos-related claims, including information 

pertaining to any collateral sources of compensation, and (8) evidence of non-smoker or ex-smoker status if the claimant asserts 

such status and seeks compensation under a malignant level. 

If the claimant files an incomplete claim, the Administrator shall 

notify the claimant that the incomplete status of the claim and 

shall indicate information missing from the claim. Further, the Administrator shall also notify the claimant of assistance services 

available through the Claimant Assistance Program. The claimant 

then has a year to supply the missing information. However, failure to provide the information within this timeline will result in 

the dismissal of the claim. 

Sec. 114. Eligibility determinations and claim awards 

This section lays out the time period for considering and paying 

a claim. 

When evaluating and determining the eligibility of a claim 

against the Fund, the Administrator shall consider: (1) the factual 

and medical evidence presented by the claimant; (2) the medical 

determinations of the Physicians Panel; and (3) the results of any 

investigation conducted determining whether the claim satisfies 

the eligibility criteria. 

The Administrator has ninety (90) days after the filing of the 

claim to provide the claimant with a proposed decision on the 

claim. If the Administrator fails to provide the claimant with a proposed decision within one hundred eighty (180) days after filing the 

claim, then the claim shall be deemed accepted and the claimant 

entitled to payment. However, if the Administrator subsequently 

rejects the claim in whole, then the claimant shall receive no further payments. Alternatively, if the Administrator subsequently rejects the claim in part, then future payments shall be adjusted accordingly. 

A claimant has ninety (90) days from the date of issuance of a 

proposed decision: (1) to submit a written request for a hearing on 

the decision; or (2) to make a written request for a review of the 

written record. A representative of the Administrator shall conduct 

the hearing in a manner as to best ascertain the rights of the 

claimant. It is within the discretion of the Administrator’s representative to grant a subpoena requested by the claimant. The Administrator shall issue a final decision no later than: (1) one hundred eighty (180) days after receiving the request for a hearing on 

the decision; or (2) ninety (90) days after receiving the request for 

review on the written record. If the claimant does not make a request for obtaining a review either on the written record or in a 

hearing, then the Administrator shall issue a final decision. If the 

final decision materially differs from the proposed decision, then 

the claimant is entitled to review of the final decision. 

A claimant may authorize an attorney or other individual to represent the claimant in any proceeding under this Act. 

41 

Sec. 115. Medical evidence and auditing procedures 

This section authorizes the Administrator to establish procedures 

to ensure that accuracy of medical evidence submitted in support 

of a claim against the Fund. 

The Administrator will establish procedures: (1) to audit medical 

evidence submitted as part of claims ensuring the accuracy of x-ray 

readings and pulmonary function tests; (2) to consider the appeal 

by a provider of a finding of non-compliance with medical standards; (3) to evaluate x-rays submitted in support of a claim; (4) to 

maintain a list of at least fifty (50) certified B readers that may 

participate in independent reviews of x-rays; and (5) to audit pulmonary function test results submitted as part of claim. The Office 

shall pay for the cost of all additional evaluations and tests required under this section. 

The Administrator has the authority to find the x-ray readings 

of certain providers inadmissible if the Administrator determines 

that the provider fails to comply with prevailing medical practices. 

A non-compliant provider may appeal the Administrator’s determination pursuant to procedures established by the Administrator. 

Pursuant to procedures established by the Administrator, independent certified B readers shall evaluate x-rays submitted in support of a claim on a random basis. If the independent B reader disagrees with the grading of the submitted x-ray, then a second independent certified B reader shall review the x-ray. The Administrator shall take into account the findings of the two independent 

B readers when considering the submitted claim. 

When assessing the smoking status of Malignant Level VI–IX 

claimants, the Administrator shall have the authority to obtain 

records of past medical treatment and evaluation, affidavits of appropriate individuals, applications for insurance and supporting 

materials, and employer records of medical examinations. Further, 

the Administrator may require the performance of blood tests—including the performance of a required serum cotinine screening—

or other appropriate medical tests on Malignant Level VI–VIII 

claimants who assert that they are non-smokers or ex-smokers. 

Any false information submitted under this section shall be subject to criminal or civil penalties. 

SUBTITLE C.—MEDICAL CRITERIA

Sec. 121. Medical criteria requirements 

This section establishes the latency, diagnostic, exposure and 

medical criteria required of an asbestos claim for each of the nine 

(9) disease levels. Levels I through V include nonmalignant asbestos-related disease or conditions and levels VI through IX include 

malignant diseases. 

Latency: Claimants must provide a statement from a doctor or a 

history of exposure stating that at least ten (10) years elapsed from 

the date of the initial exposure to the date of the initial diagnosis 

of any asbestos-related injury. 

Diagnostic Criteria: This section sets forth diagnostic criteria 

that track the typical elements of a medical diagnosis, such as an 

in-person physical examination by the claimant’s doctor, a thorough review of the claimant’s medical, smoking and exposure hisVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00041 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
42 

tory by the claimant’s doctor, and a review of other potential causes 

of the claimant’s illness. 

For levels I through V, the claimant must provide a diagnosis 

based on an in-person physical examination by the claimant’s doctor providing the diagnosis, an evaluation of smoking history and 

exposure history before making a diagnosis, an x-ray reading by a 

certified B-reader. Level III through V claims must also include a 

pulmonary function test. For deceased Level I through V claimants, 

the claim must include a physician’s report based on pathological 

evidence or an x-ray reading by a certified B-reader. For levels VI 

through IX, the claimant must provide a diagnosis based on a 

physical examination or on findings by a board-certified pathologist. For deceased Level VI through IX claimants, the claim must 

include a diagnosis of the disease by a board-certified pathologist 

and a physician’s report based upon a review of the claimant’s 

medical records. 

Exposure Criteria: A claimant must demonstrate meaningful and 

credible evidence of exposure to asbestos in the United States, its 

territories or possessions, or while a United States citizen, while an 

employee of an entity organized under any Federal or State law regardless of location, or while a United States citizen while serving 

on any United States flagged or owned ship, provided the exposure 

results from such employment or service. 

Proof of Exposure—The claimant may demonstrate exposure to 

asbestos by affidavit of the claimant (or, if deceased, a co-worker 

or family member of the claimant) or by alternative documentation, 

such as invoices, construction or similar records, or other reliable 

evidence. ‘‘Take-Home’’ Exposure—Alternatively, the claimant may satisfy 

the exposure criteria by demonstrating that the claimant was exposed to asbestos brought home by an occupationally exposed person. A claimant establishing ‘‘take home’’ exposure must demonstrate that: (1) the claimant lived and used the residence of an 

occupationally exposed person during the required exposure time; 

and (2) the occupationally exposed person can satisfy the exposure 

requirements for the level claimed. It is understood that household 

members may travel to a certain extent for work or vacation and 

still be considered as ‘‘living with’’ another member of the household. Except for Level IX claims, a Physicians Panel will review all 

‘‘take home’’ exposure claims determine whether the causal relationship between the take home exposure to asbestos is comparable 

to the occupationally exposed person. 

Libby, Montana—The Administrator shall waive the occupational 

exposure requirements for workers in the mining and milling operations in Libby, Montana, and persons who lived or worked within 

a 20-mile radius of Libby, Montana for at least 12 consecutive 

months prior to December 31, 2004. 

Exposure Presumptions—The Administrator shall set exposure 

presumptions prescribing time periods in which workers employed 

in specific industries or occupations were substantially exposed to 

asbestos. A claimant must demonstrate that the claimant worked 

in the industry for the relevant time period to be entitled to the 

presumption. However, these presumptions are not conclusive of 

substantial exposure to asbestos and may be rebutted by information to the contrary. Further, even if the claimant can demonstrate 

43 

entitlement to a presumption of exposure, the claimant must still 

satisfy the exposure and medical criteria requirements. 

For the first five (5) years of the operational Fund, the presumptions will at a minimum include those identified in the 2002 Trust 

Distribution Process of the Manville Personal Injury Settlement 

Trust as of January 1, 2005. Thereafter, the Administrator may 

modify the presumptions on the basis of supporting evidence. These 

presumptions are not conclusive of substantial exposure to asbestos. 

Asbestos disease levels 

Non-malignant Conditions—For non-malignant conditions (Levels I to V), the medical criteria generally require a diagnosis of bilateral pleural plaques or thickening, bilateral pleural calcification, 

diffuse pleural thickening, bilateral pleural disease of grade B2, or 

asbestosis based on x-ray readings or pathology. Level II includes 

claimants with mixed obstructive and restrictive disease based on 

pulmonary function testing and supporting medical documentation, 

such as a written opinion by the examining or diagnosing physician 

according to diagnostic guidelines establishing that asbestos exposure was a contributing factor to the disease. Mild, moderate and 

severe impairment is required for Levels III, IV, and V, respectively, based on pulmonary function test results and supporting 

medical documentation, such as a written opinion by the examining 

or diagnosing physician according to diagnostic guidelines establishing that the claimant’s asbestos exposure is a substantial contributing factor in causing the pulmonary condition in question. 

Level I requires five (5) years cumulative occupational exposure, 

while levels II through V require five (5) years substantial occupational exposure weighted based on time and industry (‘‘weighted 

years’’). 

Malignant Conditions—For malignant conditions (Levels VI to 

IX), the medical criteria require a diagnosis of mesothelioma, primary lung cancer, or other cancer. 

Level VI (other cancers) claims include (i) a diagnosis of primary 

colorectal, laryngeal, esophageal, pharyngeal, or stomach cancer; 

(ii) evidence of a bilateral asbestos-related nonmalignant disease; 

(iii) fifteen (15) weighted years of exposure to asbestos; and (iv) 

supporting medical documentation , such as a written opinion by 

the examining or diagnosing physician according to diagnostic 

guidelines establishing that the claimant’s exposure to asbestos 

was a substantial contributing factor in causing the claimant’s 

other cancer. Level VII claims must include: (i) a diagnosis of primary lung cancer; (ii) evidence of bilateral pleural plaques, thickening, or calcification as established by chest x-ray or any such diagnostic methodology supported by the findings of the Institute of 

Medicine; (iii) evidence of twelve (12) or more weighted years of 

substantial occupational exposure; and (iv) medical documentation, 

such as a written opinion by the examining or diagnosing physician 

according to diagnostic guidelines, establishing asbestos exposure 

as a substantial contributing factor in causing the cancer. Level 

VIII claims must include: (i) a diagnosis of a primary lung cancer 

disease; (ii) evidence of asbestosis based on a chest x-ray showing 

irregular opacities and the relevant weighted years of exposure; 

and (iii) supporting medical documentation, such as a written opinVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00043 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
44 

ion by the examining or diagnosing physician according to diagnostic guidelines establishing that the claimants exposure to asbestos for ten (10) or more weighted years was a substantial contributing factor in causing the claimant’s cancer. Level IX claims shall 

include: (i) a diagnosis of malignant mesothelioma; and (ii) credible 

evidence resulting from occupational, take home, or other identifiable exposure to asbestos. Diagnosis of all of the malignant disease 

levels must be made by a board certified pathologist. 

Study of ‘‘other cancers’’ and causation: This subsection calls for 

the Institute of Medicine (IOM) to complete a study no later than 

April 1, 2006 of causal link between asbestos exposure and the 

other cancers: colorectal, laryngeal, esophageal, pharyngeal and 

stomach cancers. Congress, the Administrator, the Advisory Committee on Asbestos Disease Compensation or the Medical Advisory 

Committee, and the Physicians Panels shall receive a copy of the 

study. The findings of the study shall have a binding effect on the 

Administrator and the Physicians Panels when determining whether asbestos exposure is a substantial contributing factor to causing 

Level VI cancers. If the study finds that asbestos is not a substantial contributing factor to causing any one of the Level VI cancers, 

then claims may not be filed or compensated for the relevant Level 

VI diseases. 

Study of CT Scans: This subsection calls for the IOM in conjunction with the National Institutes of Health (NIH) to complete a 

study no later than April 1, 2006 of using CT scans as a diagnostic 

tool of asbestos indicators. Specifically, the study will determine 

whether the medical profession accepts the use of CT scans as a 

tool to detect asbestos indicators and whether professional standards of practice exist for the Administrator to rely on CT scan evidence. Congress, the Administrator, the Advisory Committee or 

Medical Advisory Committee, and the Physicians Panels shall receive a copy of the study. The findings of this report shall have a 

binding effect on the Administrator and Physicians Panels in determining what constitutes reliable and acceptable evidence for Level 

VII claims. 

Exceptional Medical Claims: This provision allows a claimant to 

have a claim designated an exceptional medical claim if the claim 

does not meet the medical criteria requirements of the bill or has 

been found ineligible for compensation based on the failure to meet 

the medical criteria only. The claimant must provide a report from 

a physician meeting the requirements of this section which includes (i) a complete review of the claimant’s medical history and 

current condition, (ii) additional material as required by the Administrator, and (iii) a detailed explanation as to why the claim 

meets the standard for designating exceptional medical claims. 

A Physicians Panel shall review all applications for designation 

as an exceptional medical claim. For the claim to receive treatment 

as an exceptional medical claim, a Physicians Panel must find that 

the claimant cannot meet the requirements for reasons beyond the 

individual’s control, but can through comparably reliable evidence 

establish a condition similar to one that would satisfy the requirements. In reaching its determination, a Physicians Panel may request additional reasonable testing. Further, the claimant may 

submit CT scans in addition to an x-ray. 

45 

If a Physicians Panel certifies a claim as an exceptional medical 

claim, it must designate the disease category for which the claimant may seek compensation and refer the claim to the Administrator for a determination on eligibility on the remaining diagnostic, latency and exposure requirements. In making this determination, the Administrator shall give due consideration to the recommendation of the Physicians Panel. If a Physicians Panel denies 

claimant’s application for designation as an exceptional medical 

claim, then the claimant may resubmit application based on new 

evidence, specifying the new evidence that serves as the basis of 

the resubmission. 

Libby, Montana—Due to ongoing studies regarding the medical 

conditions of the residents of Libby, Montana, such claimants have 

the option to have their claims designated as exceptional medical 

claims. A Physicians Panel shall review all such applications made 

by Libby, Montana claimants. 

Nonmalignant Levels II–IV Libby, Montana claimants that receive a certificate of medical eligibility from the Administrator or 

a Physicians Panel shall receive an award no less than the amount 

awarded to Level IV asbestosis claimants ($400,000). Malignant 

level Libby, Montana claimants shall receive an award corresponding to the malignant disease category designated by the Administrator or Physicians Panel. To qualify for Level IV compensation, a Libby, Montana claimant must provide a diagnosis and evidence of an asbestos-related disease as well as supporting medical 

documentation establishing that asbestos exposure as a substantial 

contributing factor to causing the condition to the exclusion of 

other causes. 

Study of Vermiculite Processing Facilities—This subsection calls 

for the Agency for Toxic Substances and Disease Registry (ATSDR) 

to conduct a study in conjunction with the ongoing National Asbestos Exposure Review (NAER) of all Phase 1 sites that: (1) received 

vermiculite ore from Libby, Montana; (2) the Environmental Protection Agency (EPA) has mandated further action on the basis of 

contamination; and (3) was an exfoliation facility that processed at 

least one hundred thousand (100,000) tons of vermiculite from the 

Libby, Montana mine. The study shall determine whether the overall nature of these sites is substantially equivalent to that of Libby, 

Montana. The findings of this study shall have a binding effect on 

the Administrator in determining whether the claims of residents 

at these sites deserve the same rights as Libby, Montana claimants. 

Naturally Occurring Asbestos—Claimants exposed to naturally 

occurring asbestos may file and seek designation as an exceptional 

medical claim. 

Guidelines for CT Scans: This subsection calls for the American 

College of Radiology to develop guidelines and methodology for the 

use of CT scans as a diagnostic tool. The American College of Radiology shall develop these guidelines after consulting with the 

American Thoracic Society, American College of Chest Physicians, 

and IOM. 

46 

SUBTITLE D.—AWARDS

Sec. 131. Amount 

Eligible claims will be paid as follows: 

Disease/condition Amount of award † 

Level I .................................. Asbestosis/Pleural Disease A .......................................... Medical Monitoring 

Level II ................................. ‘‘Mixed’’ Disease ............................................................. $25,000 

Level III ................................ Asbestosis/Pleural Disease B .......................................... 100,000 

Level IV ................................ Severe Asbestosis ............................................................ 400,000 

Level V ................................. Disabling Asbestosis ....................................................... 850,000 

Level VI ................................ Other Cancers ................................................................. 200,000 

Level VII ............................... Lung Cancer with Pleural Disease .................................

Smokers ........................................................................... 300,000 

Ex-Smokers ...................................................................... 725,000 

Nonsmokers ..................................................................... 800,000 

Level VIII .............................. Lung Cancer with Asbestosis .........................................

Smokers ........................................................................... 600,000 

Former Smokers ............................................................... 975,000 

Nonsmokers ..................................................................... 1,100,000 

Level IX ................................ Mesothelioma .................................................................. 1,100,000

† Scheduled awards will be indexed for future inflation based on a cost of living adjustment. 

Level IX Adjustments: This subsection grants the Administrator 

discretionary authority to adjust Level IX awards. The Administrator may adjust Level IX awards upon a determination that such 

an adjustment would have a neutral effect on the revenue. Specifically, the Administrator may choose to increase the awards for 

Level IX claimants under 51 and decrease the awards of Level IX 

claimants who are 65 or older. However, before making such adjustments, the Administrator must publish notice of and plan for 

such adjustments in the Federal Register. 

FELA Adjustments: This subsection provides for the development 

of special FELA adjustments. Representatives of railroad management and labor have forty-five (45) days after the date of enactment to submit to the Administrator a joint proposal on the eligibility requirements for special FELA adjustments, which the Administrator shall promulgate into regulations no later than ninety 

(90) days after the date of enactment. 

If railroad management and labor are unable to agree on a joint 

proposal, then the Administrator shall appoint an arbitrator acceptable to both railroad management and labor to determine the 

benefits available under the special adjustment. After meeting with 

the representatives of management and labor, the arbitrator shall 

submit the benefits levels to the Administrator no later than thirty 

(30) days after appointment, which the Administrator will then 

promulgate into regulations. The parties to the arbitration may file 

with the U.S. District Court for the District of Columbia to review 

the Administrator’s order. The court may affirm, set aside (in 

whole or in part), or remand the order of the Administrator for further action. 

To qualify for a special FELA adjustment, a claimant filing an 

asbestos-related FELA claim, or otherwise eligible to bring such a 

claim, must demonstrate: (i) employment in the railroad industry; 

(ii) exposure to asbestos as part of employment; (iii) the nature and 

severity of the asbestos-related injury; and (iv) evidence establishing eligibility for a disease level of Level II or greater. The 

amount of the special adjustment shall reflect the type and severity 

47 

of the disease and shall be one hundred and ten (110%) percent of 

the average amount a person with the disease would have received 

in the five (5) year period prior to enactment. 

Sec. 132. Medical monitoring 

This section provides that Level I claimants will receive reimbursements for all reasonable costs (not covered by insurance) for 

x-rays, physical examinations, and pulmonary function tests every 

three years, which will provide the claimant with information as to 

whether he or she has a compensable illness. Although the claimant may choose which physician conducts such tests, the Administrator will provide eligible claimants with a list of providers in the 

claimant’s area that can provide such services. Filing a claim for 

reimbursement of medical monitoring costs does not start the clock 

on the five (5) year statute of limitations for filing a claim for compensation for an eligible condition or disease. 

Sec. 133. Payment 

This section provides for the payment of asbestos awards. A 

claimant shall receive payment of their award over a period of 

three (3) years and in no event more than four (4) years, if necessary to ensure the overall solvency of the Fund, from the date of 

final adjudication of the claim. The Act establishes a presumption 

that the claimant shall receive forty (40%) percent of the payment 

in year 1, thirty (30%) percent in year 2, and thirty (30%) percent 

of the total amount in year 3. However, the claimant shall in no 

event receive less than fifty (50%) percent of the award in the first 

2 years of the payment period. Claimants may also elect to receive 

their benefits in the form of an annuity. All benefits are non-taxable and not deemed to be a Medicare benefit. Payment of the asbestos claim shall have the effect of completely satisfying the claim. 

As such, any claimant receiving payment of an award under the 

Fund may not later pursue a claim for the same injury in the tort 

system. 

Lump Sum Payments—If a mesothelioma claimant is alive on the 

date that the Administrator receives notice of eligibility, then the 

claimant shall receive the full payment of the award in the form 

of one lump sum no later than thirty (30) days from the date the 

Administrator approves the claim. If this shortened timeline would 

threaten the timeline of the Fund, then the Administrator may adjust the time period for paying the claim. However, the Administrator shall ensure that the claimant receives payment no later 

than the shorter of: (1) six (6) months from the date that the Administrator approves the claim; or (2) eleven (11) months from the 

date the claimant filed the claim. 

Expedited Payments—Exigent health claimants with a terminal 

diagnosis of less than a year and the spouses or children of exigent 

health claimants who were living when the claim was filed with 

the Fund and has since died from an asbestos-related disease shall 

receive full payment of their claims no later than the shorter of: 

(1) six (6) months from the date the Administrator approves the 

claim; or, (2) one (1) year from the date that claimant filed the 

claim. If this shortened timeline would severely harm the solvency 

of the Fund, then the Administrator may adjust the time period for 

paying the claim. However, the Administrator shall ensure that the 

48 

42 It is the intent of the Committee that the amounts contributed by defendants and insurers 

be tax deductible and that claim awards and the growth of the Asbestos Claims Resolution Fund 

be tax-free, consistent with the good public policy. The Judiciary Committee and Finance Committee will work together to insert the appropriate language for Senate floor consideration of 

this bill. 

claimant receives payment no later than the shorter of: (1) one (1) 

year from the date Administrator approves the claim; or (2) two (2) 

years from the date the claimant filed the claim. 

Sec. 134. Setoffs for collateral source compensation and prior 

awards 

This section provides for the reduction of claimant awards by an 

amount equal to any collateral source or prior award that the 

claimant has received or may receive. This includes any amounts 

that the claimant has received as a result of judgment or settlement for an asbestos related injury serving as the basis for the underlying claim from a defendant, its insurer, or compensation trust. 

Collateral sources do not include worker’s compensation and veteran’s benefits. Further, prior awards from the Fund for non-malignant disease shall not set off subsequent awards for malignant diseases unless the claimant received a diagnosis of the malignant 

disease before receiving compensation for the non-malignant disease. 

Sec. 135. Certain claims not affected by payment of awards 

This section provides that payment of an award shall not affect 

a claimant’s claim against a party relating to insurance payments 

or workers’ compensation. As such, the payment of an award shall 

not be considered a form of compensation or reimbursement for a 

loss for the purpose of imposing liability on any such party. The 

section is intended to preserve asbestos claimants’ ability to obtain 

payments such as life or health insurance or workers compensation 

for asbestos-related injuries and to make clear that claimants will 

not be required to provide reimbursement of such payments if they 

receive an award under the Fund. The section is not intended to 

permit asbestos claimants to pursue direct actions or other litigation in the tort system against insurance companies, based on insurance provided to defendants that is preempted under the Act. 

No subrogation is allowed as a result of a claimant receiving an 

award from the Fund. 

TITLE II.—ASBESTOS INJURY CLAIMS RESOLUTION FUND 

SUBTITLE A.—ASBESTOS DEFENDANTS FUNDING ALLOCATION

Sec. 201. Definitions 

Sec. 202. Authority and tiers 

The Act required defendant participants, in accordance with 

their assigned tiers and subtiers, to pay over the life of the Fund 

no more than $90 billion, less any bankruptcy trust credits. Defendant participants will generally be placed in tiers based on historical expenditures on asbestos claims, including costs related to 

defense and indemnity, and further subdivided based on revenues.42 The Administrator shall assign each defendant to a tier 

and determine the amount that each defendant participant shall be 

49 

required to pay into the Fund according to the guidelines below. 

Any appeal of the Administrator’s determination shall receive an 

expedited review. 

Bankruptcies Not Caused by Asbestos Liability: This section allows a company to proceed with its bankruptcy if it was not caused 

by asbestos liabilities. Specifically, the debtor company is permitted 

to proceed with the filing and approval of the bankruptcy reorganization plan. And any asbestos compensation trust established 

pursuant to such plan, will be pursuant to other provisions in this 

Act, be incorporated in the Asbestos Injury Claims Resolution 

Fund. Therefore, any company that filed for chapter 11 protection 

prior to January 1, 2003 and has not substantially consummated 

a plan of reorganization as of the date of enactment of this Act, 

may petition to proceed with its bankruptcy filing if asbestos liability was not the sole or precipitating cause of its bankruptcy. The 

presiding bankruptcy court shall make this determination after notice and a hearing upon motion filed by the entity within 30 days 

of the date of enactment of this Act, which motion shall be supported by an affidavit or declaration of the Chief Executive Officer, 

Chief Financial Officer, or Chief Legal Officer of that company, and 

copies of the entity’s public statements and filing for chapter 11 

protection that asbestos liability was not the sole or precipitating 

cause of the entity’s chapter 11 filing. The bankruptcy court shall 

hold a hearing and make its determination within 60 days of when 

the motion is filed. Any judicial review of this determination must 

be an expedited appeal and limited to whether the decision was 

against the weight of the evidence presented. 

If the bankruptcy court’s determination is in favor of the company’s motion, that company may proceed with the filing, solicitation, confirmation, and consummation of a plan of reorganization, 

including a trust and channeling injunction pursuant to section 

524(g) of the bankruptcy code, notwithstanding any other provisions of this Act, provided that: (1) the bankruptcy court determines that such confirmation is required to avoid the liquidation 

or the need for further financial reorganization of that company; (2) 

an order confirming the plan of reorganization is entered by the 

bankruptcy court within nine months after the date of enactment 

of the Act, or such longer period approved by the bankruptcy court 

for good cause shown. To the extent such company or a debtor successfully confirms a plan of reorganization including a 524(g) trust 

and channeling injunction that involves payments by insurers who 

are otherwise subject to this Act, such insurers shall obtain a corresponding reduction in the amount otherwise payable by that insurer under this Act. 

Tier I: Includes all debtors that, together with all of their direct 

or indirect majority-owned subsidiaries, have prior asbestos expenditures greater than $1 million. The definition of ‘‘debtor’’ in 

Sec. 201 includes persons that have a case pending under a chapter 

of title 11 of the United States Code on the date of enactment of 

the FAIR Act or at any time during the 1-year period immediately 

preceding that date, irrespective of whether the debtor’s case under 

that title has been dismissed. Any appeal of determination shall receive an expedited review in the U.S. Circuit Court of Appeals for 

the circuit in which the bankruptcy is filed. 

50 

Other Tiers: Except as otherwise provided, persons or affiliated 

groups are included in Tier II, III, IV, V, VI or VII according to 

their prior asbestos expenditures as follows: 

Tier II: $75 million or greater. 

Tier III: $50 million or greater, but less than $75 million. 

Tier IV: $10 million or greater, but less than $50 million. 

Tier V: $5 million or greater, but less than $10 million. 

Tier VI: $1 million or greater, but less than $5 million. 

Tier VII: $5 million or more in FELA liability. (Note: Tier 

VII is discussed in Sec. 203.) 

A defendant participant shall remain in the tier and the subtier 

that they are assigned to for the life of the Fund, regardless of subsequent events, unless the Administrator finds sufficient evidence 

to conclude that inclusion within a tier was inaccurate. 

Superseding Provisions: The FAIR Act shall supersede all of the 

following: (i) The treatment of any asbestos claim in a plan of reorganization with respect to a debtor included in Tier I; (ii) any asbestos claim against a debtor in Tier I; and (iii) any agreement, understanding, or undertaking by a debtor or third party with respect 

to the treatment of any asbestos claim filed in a debtor’s bankruptcy case. Further, any plan of reorganization, agreement, understanding, or undertaking by any debtor (including any pre-petition 

agreement, understanding, or undertaking that requires future performance) or any third party relating to an asbestos claim shall be 

of no force or effect and no person shall have any right or claim 

with respect to such agreements. 

Specifically, Section 202(f)(2) provides that agreements by debtors relating to asbestos claims are of no force and effect under this 

Act, regardless of whether such agreements were entered into prepetition or as part of the reorganization process. Section 202(f)(2) 

also expressly provides that Section 403(c)(3), which preserves preenactment settlement agreements that meet certain criteria, does 

not apply to agreements relating to the asbestos claims of debtors, 

even if such agreements were entered into prior to the bankruptcy 

filing. The differential treatment of settlement agreements entered 

into by solvent entities and debtors is both logical and entirely consistent with the current expectations of parties to those agreements 

under existing law. Asbestos claimants who have fulfilled all of the 

conditions to payment under settlement agreements with solvent 

entities have a defined right to payment on certain terms; if the 

Act were to abrogate such agreements, it would be effecting a substantial change in the parties’ rights and expectations. By contrast, 

asbestos claimants with claims against debtors under pre-petition 

settlement agreements have no such settled expectations. By operation of the Bankruptcy Code, the rights and obligations of the parties to such agreements were subject to substantial modification 

once the debtor filed for bankruptcy, and claimants were faced with 

uncertainty as to how much and when, if at all, they would be paid 

under any Plan of Reorganization and/or Trust Distribution Plan. 

One of the benefits of the Act is that it resolves that uncertainty 

by providing such claimants, if they meet medical and eligibility 

criteria, with a certain and timely remedy that is not dependent on 

the complex byways of the bankruptcy process. 

51 

Sec. 203. Subtiers 

Defendant participants in Tiers II through VI shall be assigned 

a subtier on the basis of their revenues. Except as otherwise provided, persons or affiliated groups included within Tiers I through 

VII shall pay the following amounts to the Fund: 

Tier I: Tier I debtors shall pay the following amounts according 

to subtier assignment: 

Subtier 1—Operational companies—In general, 1.67024 percent 

of the debtor’s 2002 revenues. However, a debtor otherwise in 

Subtier 1 shall annually pay $500,000 if it falls within a limited 

engineering and construction exception. The Administrator may 

allow a Subtier 1 debtor to meet its payment obligation with other 

assets if the Administrator determines that an all cash payment 

would render the debtor’s reorganization infeasible. If a debtor with 

a case pending under chapter of title 11, United States Code, fails 

to pay its payment obligation on time, the Administrator may seek 

payment of all or any portion of the amount due from any direct 

or indirect majority-owned subsidiaries. 

Right of Contribution—The liquidation, cancellation, or termination of a debtor participant’s interest in a direct or indirect majority-owned foreign subsidiary resulting from foreign liquidation 

proceedings shall not affect a participant’s obligation to the Fund. 

However, the debtor participant shall have a claim against the foreign subsidiary, as determined by a court of competent jurisdiction, 

in an amount greater of: (i) the estimated amount of the subsidiary’s asbestos liabilities; or (ii) the subsidiary’s allocable share of 

the participant’s obligations to the Fund. 

Maximum Annual Payment Obligation—Subject to the assessment provisions of the Act and the contributions of debtors in Tier 

I, Subtiers 2, 3 and the Class Action Trusts, the annual payment 

obligation of a Tier I, Subtier 1 debtor shall not exceed 

$80,000,000. 

Subtier 2—Non-operational company debtors other than class action trusts must assign all of the unencumbered assets earmarked 

for the settlement of asbestos claims to the Fund no later than 

ninety (90) days after the date of enactment. 

Subtier 3—Non-operational companies with no assets earmarked 

for the settlement of asbestos claims shall contribute fifty (50%) 

percent of all unencumbered assets to the Fund no later than ninety (90) days after the date of enactment. 

Calculation of Unencumbered Assets—Unencumbered assets shall 

be calculated as the total assets, excluding insurance related assets, jointly held, in trust or otherwise, with a defendant participant less all allowable administrative expenses, allowable priority 

claims under section 507 of title 11, United States Code, and allowable secured claims. 

Class Action Trust—The assets of any class action trust established by a court before the date of enactment for the settlement 

of asbestos claims of any Tier I debtor shall be transferred to the 

Fund no later than sixty (60) days after that date of enactment. 

Tier II: A person or affiliated group in Tier II shall pay the following amounts into the Fund on an annual basis: 

Subtier 1—$27.5 million (highest revenues). 

Subtier 2—$24.75 million (next highest revenues). 

Subtier 3—$22 million (remaining). 

52 

Subtier 4—$19.25 million (next to the lowest revenues). 

Subtier 5—$16.5 million (lowest revenues). 

Each subtier shall contain as close to an equal number of the total 

defendant participants as possible. 

Tier III: A person or affiliated group in Tier III shall pay the following amounts into the Fund on an annual basis: 

Subtier 1—$16.5 million (highest revenues). 

Subtier 2—$13.75 million (next highest revenues). 

Subtier 3—$11 million (remaining). 

Subtier 4—$8.25 million (next to the lowest revenues). 

Subtier 5—$5.5 million (lowest revenues). 

Each subtier shall contain as close to an equal number of the total 

defendant participants as possible. 

Tier IV: A person or affiliated group in Tier IV shall pay the following amounts into the Fund on an annual basis: 

Subtier 1—$3.85 million (highest revenues). 

Subtier 2—$2.475 million (next highest revenues). 

Subtier 3—$1.65 million (remaining). 

Subtier 4—$550,000 (lowest revenues). 

Each subtier shall contain as close to an equal number of the total 

defendant participants as possible. 

Tier V: A person or affiliated group in Tier V shall pay the following amounts into the Fund on an annual basis: 

Subtier 1—$1 million (highest revenues). 

Subtier 2—$500,000 (remaining). 

Subtier 3—$200,000 (lowest revenues). 

Each subtier shall contain as close to an equal number of the total 

defendant participants as possible. 

Tier VI: A person or affiliated group in Tier VI shall pay the following amounts into the Fund on an annual basis: 

Subtier 1—$500,000 (highest revenues). 

Subtier 2—$250,000 (remaining). 

Subtier 3—$100,000 (lowest revenues). 

Each subtier shall contain as close to an equal number of the total 

defendant participants as possible. 

If a participant’s required subtier payment under Tier VI would 

exceed the amount the participant paid in asbestos expenditures 

during the eight (8) years prior to the enactment of the Act for settlements and judgments, then the participant shall make the payment of the immediately lower subtier. Alternatively, if the participant paid less than $100,000 in annual asbestos expenditures for 

the eight (8) years prior to the enactment of the Act for settlements 

and judgments, then the participant shall not have to make payments into the Fund. 

If a participant receives an adjustment under this subsection, 

then the participant may not also receive a hardship and inequity 

adjustment. 

Tier VII—In addition to an assignment in Tiers II through VI, 

a person or affiliated group shall also be included in Tier VII if it 

is, or has at any time been subject to, asbestos claims under FELA 

and has paid not less than $5 million in costs relating to such 

claims. Such persons or affiliated groups shall pay, in addition to 

their other tiered payment obligations and on an annual basis: 

53 

Subtier 1: $11 million (Railroad or common carriers with revenues of $6 billion or more). 

Subtier 2: $5.5 million (Railroad or common carriers with 

revenues of less than $6 billion, but more than $4 billion). 

Subtier 3: $550,000 (Railroad or common carriers with revenues of less than $4 billion, but more than $500 million). 

Revenues: Revenues shall be determined by reported earnings for 

the year ending December 31, 2002, or if applicable, the earlier fiscal year that ends during 2002. Any portion of revenues of a defendant participant derived from insurance premiums shall not be 

used to calculate the payment obligation. 

Sec. 204. Assessment administration 

This section requires each defendant participant to pay the 

amount required of its tier, subtier assignment on an annual basis 

until the defendant participant has either satisfied its obligations 

during the 30 annual payment cycles of the Fund or the Fund receives $90 billion from the defendant participants, excluding any 

amount rebated. 

Small Business Exception: This subsection exempts from payment requirements and subtier allocations all persons or affiliated 

groups meeting the definition of ‘‘small business’’ as defined by the 

Small Business Administration pursuant to the Small Business 

Act, 15 U.S.C. § 632, on December 31, 2002. 

Adjustments: Under expedited procedures established by the Administrator, a defendant participant may seek an adjustment of the 

amount of its payment obligations, either in the form of forgiveness 

of a portion of the payment or a rebate, based on severe financial 

hardship or demonstrated inequity. The decision of the Administrator whether to grant the adjustment and the size of such an adjustment is subject to judicial review pursuant to section 303. 

The Administrator shall appoint a Financial Hardship Adjustment Panel and an Inequity Adjustment Panel to advise the Administrator in granting adjustments. 

Hardship Adjustments—A defendant participant may apply for 

such an adjustment during any period in which a payment obligation to the Fund remains outstanding. To qualify for the adjustment, the defendant participant must demonstrate that the amount 

of the payment obligation would constitute a severe financial hardship. 

Inequity Adjustments—To qualify for an inequity adjustment, a 

defendant participant must demonstrate that the amount of its 

payment obligation is exceptionally inequitable: (1) when measured 

against the amount of the likely cost of its future liability in the 

tort system in the absence of the Fund, (2) when compared to the 

payment rate for all defendant participant in the same tier, or (3) 

when measured against the percentage of prior asbestos expenditures that were incurred with respect to claims that neither resulted in an adverse judgment nor the subject of a settlement that 

required a payment to a plaintiff. Additionally, a defendant participant shall qualify for a two-tier main tier and a two-tier sub-tier 

adjustment reducing the payment obligation by demonstrating that 

not less than ninety-five (95%) percent of such person’s prior asbestos expenditures arose from claims related to the manufacture and 

sale of railroad related products, so long as the sale of such prodVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00053 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
54 

ucts is temporally and casually remote. The phrase ‘shall qualify 

for’ in Sec. 204(d)(3)(A)(ii) shall have the same meaning as ‘shall 

be granted’ in the following paragraph. 

Term and Renewal—Hardship and inequity adjustments granted 

shall have a term of three (3) years. A defendant participant may 

seek renewal of the adjustment by demonstrating continued qualification. 

Reinstatement Authority—Following the expiration of the hardship or inequity adjustment period granted under this section, the 

Administrator shall annually determine whether there has been a 

material change in the financial condition of the defendant participant such that the Administrator may reinstate part or all of the 

defendant participant’s payment obligation that was not paid during the adjustment term. 

Limitation of Adjustments—The aggregate total of financial hardship and inequity adjustments in any given year shall not exceed 

$300 million, except to the extent (1) additional monies are available for adjustments as a result of carryover of prior years’ funds 

or made available under the Defendant Guaranteed Payment Account; or (2) the Administrator determines that additional adjustments are needed in excess of the cap to address situations that 

would otherwise render defendant participants insolvent by its payment obligations. 

Bankruptcy Relief—This subsection provides a special adjustment for defendant participants that would be rendered insolvent 

upon paying the amount due to the Fund. A defendant participant 

may apply for this adjustment at any time during which such a 

payment is due to the Fund. To qualify for such an adjustment the 

defendant participant must provide the Administrator with information sufficient to establish that the payment would render the 

defendant participant insolvent as required by the Bankruptcy 

Code. 

The Administrator may grant a defendant participant an adjustment of its payment into the Fund sufficient to prevent the defendant participant from becoming insolvent and unable to pay its 

debts. The defendant participant shall have the adjustment for a 

term of a year but may seek renewal of the adjustment on an annual basis by demonstrating that the adjustment or modification of 

its payment remains justified. The Administrator shall review such 

adjustments on an annual basis for a material changes in the condition of a defendant participant warranting the reinstatement of 

a defendant participant’s payment obligation. 

Several Liability: Each defendant participant’s payment obligation to the Fund is several. There is no joint liability and the future 

solvency of any defendant participant shall not affect the assessment assigned to any other defendant participant. 

Consolidation of Payments: This subsection provides for the consolidated reporting of defendant participants and such affiliated 

groups as elect to report in such a manner for the purpose of determining payment obligations to the Fund. If such groups choose to 

report on a consolidated basis, then the Administrator shall treat 

the group as a single defendant participant. In such a case, sole liability for annual payments to the Fund shall rest with the ultimate parent of the group. However, notwithstanding the subsection 

immediately preceding this section, members of the group may purVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00054 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
55 

sue actions against affiliated members for joint payment into the 

Fund. 

Determination of Prior Asbestos Expenditures: Payments by 

indemnitors prior to December 31, 2002, shall count as part of the 

indemnitor’s prior asbestos expenditures. However, prior asbestos 

expenditures shall not be for the account of either the indemnitor 

or indemnitee if the indemnitor entered into a stock purchase 

agreements in 1988 that involved the sale of stock of businesses 

that produced friction and other products where the agreement provided that the indemnitor indemnify the indemnitee and affiliates 

for losses arising from matters, including asbestos claims, asserted 

before the date of the agreement and filed after the date of the 

agreement and prior to the ten (10) year anniversary of the sale. 

Minimum Annual Payments: As an aggregate, defendant partici- pants shall pay at least $3 billion annually into the Fund for thirty 

(30) years. To the extent such annual payments fail to meet this 

minimum after taking into account hardship and inequity adjustments for defendant participants and applicable adjustments for 

distributors, then monies from the defendant guaranteed payment 

account shall pay the balance. To the extent that there are insufficient monies in the guaranteed payment account to meet the minimum net, the Administrator shall assess a guaranteed payment 

surcharge to pay the balance of the minimum requirement unless 

the Administrator has implemented a funding holiday. 

Procedures for Making Payments: This section outlines the materials defendant participants must submit to the Administrator for 

the purpose of determining the amount that such defendant participant must pay into the Fund. 

Initial Year: Tier I—Each debtor shall file with the Administrator no later than ninety (90) days after the date of enactment: 

(1) a statement identifying the bankruptcy cases associated with 

the debtor, a statement of whether its prior asbestos expenditures 

exceed $1 million; and (2) a statement of whether the debtor is 

operational and holds any assets. Additionally, debtors falling within the subtiers shall file as follows: (1) those within subtier 1 shall 

file with their payment, a statement of the 2002 revenues or a 

statement of prior asbestos expenditures and the nature of business operations if the defendant participant qualifies for the payment exception, (2) those within subtier 2 shall assign its assets to 

the Fund, (3) those within subtier 3 shall include with their payment a statement of how such a payment was calculated, and a signature page personally verifying the truth of the statements and 

estimates as required by section 404 of the Sarbanes-Oxley Act. 

Initial Year: Tiers II–VI—Each participant included within Tiers 

II through VI shall file with the Administrator no later than one 

hundred eighty (180) days after the date of enactment: (1) a statement of whether it elects to report on a consolidated basis; (2) a 

good faith estimate of prior asbestos expenditures; (3) a statement 

of 2002 revenues; (4) payment in the amount specified for the lowest subtier of the tier within which the defendant participant falls; 

and (5) a signature page personally verifying the truth of the statements and estimates as required by section 404 of the SarbanesOxley Act. 

Relief—The Administrator shall establish procedures to grant defendant participants relief from its initial payment obligation 

56 

where the participant shows that it is likely to qualify for a financial hardship adjustment and failure to provide relief would cause 

severe irrevocable harm. 

Initial Year: Tier VII—Each defendant participant shall file with 

the Administrator no later than ninety (90) days after the date of 

enactment: (1) a good faith estimate of all asbestos-related FELA 

payments; (2) a statement of revenues; and (3) payment in the 

amount specified by the subtier. 

Notice: The Administrator shall directly notify all reasonably 

identifiable defendant participants no later than two hundred and 

forty (240) days after the date of enactment that the defendant participant must submit certain information necessary to calculate the 

amount that the participant must pay into the Fund. Further, the 

Administrator must publish a notice in the Federal Register that 

any possible defendant participant must submit such information 

necessary to calculate the amount that such a participant would be 

required to pay into the Fund. Such a notice shall include a list of 

all defendant participants that the Administrator has directly notified of this requirement. Upon receiving notice of this requirement, 

the defendant participant has thirty (30) days to submit such information to the Administrator. 

Initial Determination—Once the Administrator has received this 

information from the defendant participant, the Administrator has 

sixty (60) days to send such a participant a notice of initial determination identifying the tier and subtier into which the participant 

falls and the annual payment obligation. The Administrator then 

has seven (7) days to publish a notice in the Federal Register listing all of the defendant participants that the Administrator has 

sent such an initial determination. 

Payments—The defendant participant must then pay the Administrator the amount required under this initial determination no 

later than thirty (30) days after receiving the initial determination. 

Rehearing—A defendant participant seeking a rehearing of the 

Administrator’s inclusion of the participant within a given tier and/ 

or subtier must file such a request within thirty (30) days of receipt 

of notice of the Administrator’s determination. The Administrator 

shall publish a notice of any change of a defendant participant’s 

tier or subtier assignment or payment obligation in the Federal 

Register. 

New Information: The Administrator shall adopt procedures for 

requiring the payment of additional amounts, or refunding 

amounts already paid, based on new information received. Additionally, if the Administrator receives information that an additional person may qualify as a defendant participant, the Administrator shall require such person to submit information necessary to 

determine whether the person is required to make payments. 

Defendant Hardship and Inequity Adjustment Account: This subsection provides for the creation of a defendant hardship and inequity account. The Administrator shall deposit any excess monies 

(not to exceed $300 million) received in a given year that exceed 

the minimum aggregate payment of $3 billion. 

Use of Funds—The money in this account may only be used to 

balance any hardship and inequity adjustments, distributor tier adjustments, or to reimburse defendant participants granted relief 

after payment. 

57 

Carryover of Unused Funds—Any unused funds in a given year 

in the account shall be carried over for adjustments in subsequent 

years. 

Defendant Guaranteed Payment Account: The Administrator 

shall place any monies paid in excess of the minimum annual 

amount of $3 billion into a defendant guaranteed payment account. 

The Administrator may then use this money to grant additional adjustments, not to exceed $50 million in any given year. 

Guaranteed Payment Surcharge: Unless the Administrator grants 

a funding holiday, if there are insufficient funds in the defendant 

guaranteed payment account to meet the minimum aggregate payment into the fund of $3 billion, then the Administrator shall impose a guaranteed payment surcharge on defendant participants 

sufficient to attain the minimum aggregate annual payment. 

Limitation—The Administrator shall not impose a surcharge on 

defendant participants in Tier V, Subtier 3 or Tier VI, Subtier 3. 

This amount shall be reallocated on defendant participants. 

The Administrator shall impose any such a surcharge on a pro 

rata basis against a defendant participant’s relative liability, taking into account any adjustments granted by the Administrator. 

Further, the subsection requires the Administrator to certify that 

all reasonable efforts have been extended to collect the minimum 

annual payment of $3 billion from the defendant participants before imposing such a surcharge. The Administrator shall not issue 

a final certification until after publishing a proposed certification 

in the Federal Register and providing for a public comment and notice period. 

Adjustments for Distributors: This section provides a definition of ‘‘distributor’’ and procedures for distributor tier reassignments. 

Specifically, after a final determination by the Administrator of tier 

assignment, a distributor may submit an application, prepared in 

accordance to promulgated rules, for a tier adjustment. A distributor submitting an application for tier adjustment shall pay 

amounts into the Fund according to its assignment until the Administrator makes a final decision on the adjustment application. 

The Administrator’s decision and designation on the application 

shall be final. However, if the defendant participant has a right to 

a rehearing of the Administrator’s decision pursuant to the procedures in the Act. If the Administrator’s adjustment decision results 

in a lower payment obligation, then the Administrator shall grant 

a refund or credit of excess payments. 

But that for this provision of the bill, a distributor that: (1) 

would be assigned to Tier IV, shall be assigned to Tier V; (2) would 

be assigned to Tier V, shall be assigned to Tier VI; and (3) would 

be assigned to Tier VI, shall be assigned to no tier at all and shall 

have no payment obligation to the Fund. However, a distributor 

shall not be eligible for an inequity adjustment. 

The total number of adjustments available under this provision 

shall not exceed $50 million. If the total number of adjustments 

will exceed this limit, then each distributor’s adjustment shall be 

reduced pro rata until the aggregate does not exceed $50 million. 

Sec. 205. Stepdowns and funding holidays 

Stepdowns: The Administrator will reduce the minimum aggregate funding obligations of the defendant participants by ten (10%) 

58 

percent of the initial minimum aggregate at the end of the tenth, 

fifteenth, twentieth, and twenty-fifth years of the life of the Fund. 

The Administrator will apply these reductions on a pro rata basis 

to all of the defendant participants, except with regard to tier 1, 

sub-tiers 2–3 defendant participants and class action trusts. However, the Administrator may suspend, cancel, reduce, or delay any 

reductions if he/she finds that such is necessary to ensure that sufficient assets in the Fund are present to pay future obligations. 

Funding Holidays: This section grants the Administrator the authority to reduce or waive all or part of the payment obligations. 

However, such a funding holiday may not be granted in the first 

ten (10) years of the life of the Fund. Further, such a funding holiday may only be granted after the tenth year of the Fund if there 

are sufficient assets in the Fund to fulfill its obligations. 

Each year after the tenth year of the Fund, the Administrator 

shall conduct an annual review of the Fund to determine whether 

the Fund contains sufficient assets to satisfy all of its payment obligations and grant a funding holiday. Upon such a finding, the Administrator shall award a funding holiday on a pro rata basis on 

the relative payment obligations the defendant participants, except 

with regard to the tier 1, sub-tiers 2–3 participants and class action trusts. However, should the Administrator receive new information that leads him/her to believe that the funding holiday will 

cause the Fund to be depleted to the point that there will not be 

sufficient assets to satisfy future obligations, then the Administrator may revoke all or part of the funding holiday on a pro rata 

basis. 

Certification: The Administrator must certify through a written 

notice in the Federal Register, including a thirty (30) day comment 

period, that any stepdown or funding holiday satisfies the requirements of the section. After consideration of the submitted public 

comments, the Administrator must make a final certification of the 

stepdown or funding holiday and notify each defendant participant 

of such within thirty (30) days of the final certification. 

Sec. 206. Accounting treatment 

Payment obligations shall be subject to accounting discounting 

for each defendant participant. However, this discounting shall not 

reduce the amount of monetary payments to the Fund. 

SUBTITLE B.—ASBESTOS INSURERS COMMISSION

Sec. 210. Definition 

Sec. 211. Establishment of Asbestos Insurers Commission 

The President, with the advice and consent of the Senate, shall 

appoint 5 members to serve on the Asbestos Insurers Commission 

(the Commission) and shall select a Chairman from among its 

members. No member may be an employee, immediate family 

member of an employee, or shareholder of an insurer participant 

and may not be an officer of the Federal Government, except by 

reason of membership on the Commission. Further, a former officer, director, employee, or shareholder of an insurer participant 

within the two years prior to appointment may not sit on the Commission unless such information is fully disclosed. Any vacancy 

shall be filled by Presidential appointment. 

59 

Not later than 30 days after the date on which all members of 

the Commission have been appointed, the Commission shall hold 

its first meeting and shall thereafter meet at the call of the Chairman as necessary. No business may be conducted without a majority of the member participating. 

Sec. 212. Duties of Asbestos Insurers Commission 

Determination of Insurer Payment Obligations: Insurer participants shall be responsible for a total aggregate contribution of 

$46.025 billion, less any bankruptcy trust credits. The Commission 

shall determine the amount required of each insurer to pay into 

the Fund. The Commission’s first rulemaking shall promulgate the 

methodology for allocating payments among the participants. This 

rule shall also include a methodology for adjusting payments by insurer participants to make up in the first five (5) years, and any 

other years as provided for, any failure to meet the minimum aggregate annual payment to the fund resulting from: (1) financial 

hardship and inequity reductions; (2) the failure or refusal of an insurer participant to make the required payment; or (3) any other 

reason causing the payments to fall below the required amounts. 

Within the time constraints of this provision, the Commission shall 

conduct a thorough study to determine the reserve allocation of 

each insurer participant, including requesting information from the 

Securities and Exchange Commission (SEC) if necessary. 

Not later than one hundred twenty (120) days after the initial 

meeting, the Commission shall commence a rulemaking procedure 

to propose and adopt a rule providing for the allocation of contributions among the insurers. The Commission may provide for one or 

more allocation formulas to be applied to all insurer participants 

or groups of similarly situated participants. After adopting such a 

rule, the Commission shall then apply that formula to determine 

the amount that each insurer participant shall be required to pay 

into the Fund. 

This section also grants the Commission and Administrator authority over every insurer, reinsurer and run-off entity to enforce 

the provisions of the Act and ensure the payment of such an insurer participant’s full contribution obligation without regard to 

whether it is licensed in the United States. Insurer participants are 

severally liable for payments to the Fund, unless otherwise provided. There is no joint liability and the future insolvency of any 

insurer participant shall not affect the assessment assigned to any 

other insurer participant. 

Reinsurers who issued retrospective policies to an insurer participant after 1990 that provides for a risk or loss transfer to insure 

for asbestos and other losses shall make payments into the Fund 

on behalf of the insurer participant. The insurer participant holding the policy shall direct the reinsurer to pay all or a portion of 

the payment directly into the Fund within ninety (90) days after 

the scheduled date to make an annual payment into the Fund, subject to the enforcement procedures of the Fund. 

Payment Criteria—Insurers that have paid or assessed at least 

$1 million in defense or indemnity costs by a legal judgment or settlement for asbestos-related personal injury claims shall be considered insurer participants only. It is not the intent of the Act to submit insurer participants to double liability and so no insurer particVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00059 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
60 

ipant shall be liable for payment obligations as defendant participants as well. 

The Commission shall consider and weigh the following when establishing the allocation formula: (1) historic premium for lines of 

insurance associated with asbestos exposure; (2) recent loss experience for asbestos liability: (3) reserves for asbestos liability; (4) the 

likely cost of future liabilities; and (5) any other relevant factors. 

The Commission may establish procedures and standards for determination of asbestos reserves of insurer participants. 

Payment Schedule—The aggregate annual amounts shall be as 

follows: 

Years 1 and 2: $2.7 billion 

Years 3 through 5: $5.075 billion 

Years 6 through 27: $1.147 billion 

Year 28: $166 million 

Certain Runoff Entities—A runoff entity shall include any direct 

insurer or reinsurer whose asbestos liability reserves have been 

transferred, directly or indirectly, to the runoff entity and on whose 

behalf the run off entity handles, adjusts, and/or pays asbestos 

claims. 

Financial Hardship and Exceptional Circumstances Adjustments—Insurer participants may seek adjustments by demonstrating that the set contribution poses an exceptional circumstance or severe financial hardship to the insurer participant. 

The Commission may determine whether to grant and the size of 

any such adjustment. However, such adjustments shall not affect 

the aggregate payment obligations of insurer participants, except 

as provided in the allocation methodology rule by the Commission, 

shortfall assessment credits, or the shortfall analysis. 

Funding Holidays—At any time after the first ten (10) years of 

the Fund, the Administrator shall reduce or waive part or all of the 

payments required by the insurer participants if the Administrator 

determines that the assets of the Fund at that point in time and 

expected future payments satisfy the anticipated obligations of the 

Fund. However, such a funding holiday shall only be made: (1) to 

the extent that the Administrator determines that the Fund will be 

able to satisfy the Fund’s obligations; and (2) will be applied on an 

equal pro rata basis to the insurer participants. The Administrator 

shall conduct an annual review to determine whether to reduce or 

waive insurer participant payments. If the Administrator receives 

information at any time that indicates that the reduction or waiver 

may cause the assets of the Fund and the expected future payments to decrease, then the Administrator shall revoke all or part 

of the reductions or waivers on a pro rata basis to ensure the 

Fund’s obligations. 

Procedure for Notifying Insurer Participants of Individual Contribution Obligations: This section provides the timeline and process for determining the amount that each insurer participant is obligated to pay into the Fund. 

Within thirty (30) days after its initial meeting, the Commission 

must directly notify all reasonably identifiable insurer participants 

of the requirement to submit information necessary to calculate the 

amount of any required contribution to the Fund. The Commission 

shall also publish a notice in the Federal Register requiring any 

person who may be an Insurer Participant to submit such informaVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00060 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
61 

tion along with a list of all notified insurer participants. Upon publication of this notice, there will be thirty (30) days public comment 

period regarding the completeness and accuracy of the list of identified insurer participants. Insurers meeting the criteria of insurer 

participants shall respond to such notice. The response shall be 

signed by a responsible corporate officer, general partner, proprietor, or individual of similar authority, who shall certify under penalty of law the completeness and accuracy of the information submitted. 

Not later than one hundred and twenty (120) days after the initial meeting of the Commission, the Commission shall send each 

participant a notice of the initial determination assessing a contribution to the Fund. The Commission then has seven (7) days to 

publish a notice of initial listing of insurer participants, along with 

their initial determination. If no response is received from the participant, or if the response is incomplete, the initial determination 

assessing a contribution from the participant shall be based on the 

best information available to the Commission. Not later than thirty 

(30) days after receiving notice of the initial determination from the 

Commission, an insurer participant may provide the Commission 

with additional information to support limited adjustments to the 

assessment received to reflect exceptional circumstances. 

The Commission has the authority to conduct examinations of 

the books and records of insurer participants to determine the completeness and accuracy of the information submitted for the purpose of determining required contributions. The Commission may 

request the Attorney General to subpoena persons to compel relevant information. Additionally, any escrow account established in 

connection with an asbestos trust fund that has not been judicially 

confirmed by the date of enactment shall be the property of and returned to the insurer participant. 

Not later than sixty (60) days after the notice of initial determination is first sent out, the Commission shall send a notice of 

final determination. 

Insurer Participants Voluntary Allocation Agreement: Direct insurers and reinsurers have thirty (30) days from the day of the 

Commissions proposed rulemaking on the allocation formula to 

submit their own allocation agreement, approved by all the participants in the applicable group, to the Commission. Upon receipt of 

this agreement, the Commission must determine whether the allocation agreement meets the requirements of the Act and certify the 

agreement. Once the Commission certifies the agreement, the Commission no longer has authority over insurer participant. At this 

point, the Administrator shall assume the responsibility of calculating individual contribution obligations. 

Commission Report: Until the Commission is terminated, though, 

the Commission shall submit an annual report stating the amount 

that each insurer participant is required to contribute to the Fund, 

including the payment schedule, to the Administrator and the 

Committees on the Judiciary of the Senate and the House of Representatives. 

Interim Payments: Insurer participants must submit a certified 

statement to the Administrator of its net reserves for asbestos liabilities within thirty (30) days of the date of enactment. The Administrator must allocate this interim payment—which must be 

62 

made within ninety (90) days of the date of enactment and in an 

amount not to exceed fifty (50%) percent of the insurer participants’ first year payment obligation—according to the amount that 

the participants hold in reserves. The Administrator must publish 

this allocation in the Federal Register within sixty (60) days of enactment. The Administrator’s final allocation is appealable under 

Section 303. Insurer participants must then make a payment into 

the Fund within the first ninety (90) days of the date of enactment 

of an amount not to exceed fifty (50%) percent of the first year’s 

total payment obligation. 

Transfer of Authority from the Commission to the Administrator: 

Upon termination of the Commission, the Administrator shall assume the responsibilities and authority of the Commission, except 

that the Administrator shall not have the power to modify the established allocation formula. 

Financial Hardship and Exceptional Circumstances Adjustments—The Administrator shall have the authority to make adjustments for financial hardships and exceptional circumstances as 

provided for in the Act for a term not to exceed three (3) years. 

Upon the grant of any adjustment, the Administrator shall increase 

the payments of all other insurer participants in accordance with 

the allocation methodology established by the Commission. 

Credits for Shortfall Assessments—The Administrator shall grant 

any insurer participant required to make up for a shortfall pursuant to the allocation methodology within the first five (5) years of 

the Fund a credit against its annual payments in year 6 and thereafter. The credit will equal amount in the amount the insurer participant made in shortfall assessments and granted on a pro rated 

bases over the same number of years that the participant paid such 

assessments. However, the Administrator shall not grant a credit 

for short fall assessments imposed by the Administrator as a result 

of the shortfall analysis. 

Accounting Treatment: Insurer participant payment obligations 

to the Fund shall be subject to discounting under applicable accounting guidelines but shall in no way reduce the required payments into the Fund. 

Judicial Review: The Commission’s established allocation formula, its final determinations of contribution obligations and other 

final actions shall be judicially reviewable. 

Sec. 213. Powers of the Asbestos Insurers Commission 

This section authorizes the Commission to conduct rulemakings 

for the purpose of implementing its authority under the Act. The 

Commission may hold hearings, sit and act at such times, take testimony and receive evidence as it considers advisable. The Commission may secure directly from any Federal or State department or 

agency such information as the Commission considers necessary to 

carry out this act, and may use the United States mails in the 

same manner and under the same conditions as other departments 

and agencies of the Federal government. The Commission may not 

accept, use, or dispose of gifts or donations of services or property. 

The Commission may also enter into contracts as it deems necessary to obtain expert advice and analysis. 

63 

Sec. 214. Personnel matters 

This section provides for certain personnel matters relating to 

the performance of the duties of the Commission, such as: (1) the 

pay of members of the Commission; (2) the appointment of additional personnel necessary to perform its duties; (3) the compensation rate for such additional staff; and (4) the detailing of individuals serving in other branches of the Federal government. 

Sec. 215. Termination of Asbestos Insurers Commission 

The Commission shall terminate sixty (60) days after the date on 

which the Commission submits its report. 

Sec. 216. Expenses and costs of commission 

All expenses and costs of the Commission shall be paid by the 

Asbestos Injury Claims Resolution Fund. 

SUBTITLE C.—OFFICE OF ASBESTOS INJURY CLAIMS RESOLUTION

Sec. 221. Establishment of the office of asbestos injury claims resolution 

This section provides for the establishment of the Office of Asbestos Disease Compensation within the Asbestos Injury Claims Resolution Fund. 

Borrowing Authority: This subsection gives the Administrator 

borrowing authority. However, in any calendar year, the Administrator may not borrow an amount in excess of all amounts expected 

to be paid by participants during the subsequent ten (10) years, 

taking into account previous payment obligations of the Fund for 

amounts already borrowed and other payment obligations of the 

Fund. The purpose of this provision is to ensure that the Fund does 

not sunset early as a result of unforeseen circumstances, such as 

an unexpected surge in claims filed in a single year. This subsection also gives the Administrator the authority in the first five 

(5) years of the Fund to borrow amounts necessary for the performance of the Administrator’s duties from the Federal Financing 

Bank in accordance with section 6 of the Federal Financing Bank 

Act of 1973. Again, the purpose of this provision is to ensure that 

the Fund does not sunset in the early years that it becomes operational and assist in the smooth start up of the Fund. 

Repayment of monies borrowed by the Administrator shall be 

made in full by Fund contributors to the extent there is either current or prospective amounts available in the Fund. 

Lockbox for Severe Asbestos-Related Injury Claimants: This section authorizes the Administrator to establish four separate 

lockbox accounts to protect the funds needed to compensate the victims with the most severe asbestos-related injuries: mesothelioma 

(Level IX), lung cancer (Level VIII), severe asbestosis (Level V), 

and moderate asbestosis (Level IV). The Administrator shall allocate to each of these accounts a portion of payments to the Fund 

to compensate anticipated claimants for each account. Funds will 

be allocated to these accounts based on the best epidemiological 

and statistical studies. Within sixty (60) days after the date of enactment and periodically during the life of the Fund, the Administrator shall determine an appropriate amount to allocate to each 

account. 

64 

Audit Authority: This section grants the Administrator audit authority to examine data, summon persons and materials, and take 

testimony for the purpose of ascertaining the veracity of information provided, determining outstanding liabilities, or inquiring into 

any offense connected with the administration or enforcement of 

payment obligations. 

False, Fraudulent, or Fictitious Statements or Practices: If the 

Administrator determines that materially false, fraudulent, or fictitious statements or practices have been submitted or engaged in by 

persons submitting information to the Administrator or Commission, then the Administrator may impose a civil penalty not to exceed $10,000. 

Identity of Certain Defendant Participants; Transparency: A person, as defined by the Act, having knowledge that either they are 

an affiliated group has prior asbestos expenditures of $1 million 

dollars or more shall submit to the Administrator within sixty (60) 

days of the date of enactment the name, or ultimate parent, of the 

person with such liability and the likely tier to which the group 

may be assigned. The Administrator, or Interim Administrator, 

shall publish in the Federal Register no later than twenty (20) days 

after this sixty (60) day period a list of submissions received. After 

this list is published, a person may submit information to the Administrator relating to the identity of others with prior asbestos liability of $1 million dollars or more. 

No Private Right of Action: There shall be no private right of action under any State or Federal law against any participant based 

on a claim of compliance or noncompliance with the FAIR Act or 

the involvement of any participant in the enactment of the FAIR 

Act. 

Sec. 222. Management of the Fund 

The Administrator shall hold monies in the Fund for the exclusive purpose of providing benefits to asbestos claimants and their 

beneficiaries and to otherwise defray the reasonable expenses of 

administering the Fund. The Administrator shall invest amounts 

in the Fund in a manner that enables the Fund to make current 

and future distributions to or for the benefit of asbestos claimants, 

taking into account the nature of the Fund and relevant outside 

factors. 

Bankruptcy Trust Guarantee: To ensure the liquidity of the Fund, 

the Administrator shall have the authority to impose a pro rata 

surcharge on all participants if the assets of a bankruptcy trust established before July 31, 2004, are not available to be transferred 

because a non-appealable final judgment has enjoined the transfer 

of funds from the trust or the borrowing authority is insufficient 

because it would likely increase the possibility that the Fund will 

sunset on the basis of reasonable claims projections. Such a surcharge may not exceed the total aggregate amount of the enjoined 

assets of the relevant bankruptcy trusts of four ($4,000,000,000) 

billion dollars. Any surcharge shall be applied over a period of five 

(5) years on a pro rata basis on the relative aggregate funding obligations of all participants, taking into account any hardship, inequity, or exceptional circumstances adjustments granted by the 

Administrator. Before the Administrator may apply such a surcharge, he/she must publish notice in the Federal Register that inVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00064 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
65 

cludes information relating to the reasons why a surcharge is necessary, the amount of the assets enjoined from a bankruptcy trust, 

the total aggregate amount of the surcharge, and the amount of the 

surcharge for each tier and subtier of participant. After the thirty 

(30) day comment period, the Administrator shall publish a final 

certification in the Federal Register. 

Bankruptcy Trust Credits: If the Fund receives assets from a 

bankruptcy trust established after July 31, 2004, then the Administrator shall credit the aggregate payment obligations of all participants. The Administrator shall allocate the credits in amongst the 

defendant and insurer participants. 

Sec. 223. Enforcement of payment obligations 

If any participant fails to meet its payment obligations to the 

Fund, then the Administrator must make a demand of payment 

and provide the participant with thirty (30) days to cure the default. If the participant fails to cure the default, then the United 

States shall have a lien for an amount equal to the participant’s 

payment obligation. In the case of a bankruptcy or insolvency proceeding, the lien shall be treated in the same manner as a lien for 

taxes due and owing to the United States. 

In any case where there has been a refusal or neglect to pay an 

assessment, the Administrator may bring a civil action in any appropriate United States District Court, or other appropriate lawsuit 

or proceeding outside of the United States. In any action involving 

a willful refusal to pay, the Administrator may seek punitive damages, including costs and attorneys fees, and may collect a fine 

equal to the total amount of the liability not collected. 

Enforcement Authority as to Insurer Participants: In addition to 

other enforcement provisions, the Administrator may seek to recover amounts in satisfaction of a contribution not timely paid by 

an insurer in the following manners: 

Subrogation—The Administrator shall be subrogated to the contractual rights of participants to recover payment obligations from 

non-paying foreign insurer payments. The Administrator may then 

bring an action or arbitration against the nonpaying participant 

pursuant to those rights. 

Recoverability of Contribution—In any action brought under this 

section, the nonpaying insurer participant shall not be entitled to 

a credit or offset for amounts collectable from any participant or a 

right to collect any sums payable from a participant. 

Intervention/Cooperation—An insured party of a nonpaying insurance party shall cooperate with the Administrator in enforcement proceedings against the nonpaying participant. The Administrator shall have the power to settle or compromise any claims 

against an insurer participant. 

Bar on U.S. Business—Unless the participant complies, if any insurance participant refuses to pay a contribution obligation, then 

in addition to other penalties, the Administrator shall issue an 

order barring such entity and its affiliates from conducting business within the United States. Further, if any insurer participant 

does not supply requested information, then the Administrator 

shall bar the participant from doing business in the United States 

or from obtaining a license from any State to write insurance until 

payment of all contributions. 

66 

43This ‘‘substantial continuity’’ rule has been routinely applied in cases involving tort plaintiffs and the beneficiaries of federal statutes, such as the NLRA (labor relations), the Family 

Leave Medical Act (FMLA), CERCLA (environmental crimes), Title VII (EEOC) and the Veterans’ Readjustment Assistance Act. 

Credit for Reinsurance—If a reinsurer insurer participant defaults on its payment obligation to the Fund or otherwise fails to 

comply with the Act, then the Administrator may issue an order 

barring any direct insurer participant from receiving credit for reinsurance purchased from the defaulting reinsurer after the date of 

the Administrator’s determination of default. 

Defense Limitations: A participant must raise any challenges 

available to the participant regarding the constitutionality of the 

FAIR Act or determinations of payment obligations made by the 

Administrator or Commission during administrative or judicial review proceedings provided under the Act. If the participant fails to 

raise these challenges at that point, then the Act bars the participant from later raising such a challenge during enforcement proceedings. 

Deposit of Funds: The Administrator shall deposit in the Fund 

any monies collected as a fine equal to the total amount of the participant liability. 

Proposed Transactions: The FAIR Act incorporates language from 

an amendment by Senator Leahy last Congress designed to ensure 

future accountability of corporate participants in the Fund that are 

sold, or otherwise change hands. The Leahy amendment defined 

participants in the trust fund to include so-called ‘‘successors in interest’’ based on the ‘‘substantial continuity test’’ to determine 

whether it is fair and appropriate to require a company to take on 

the obligations of its predecessor. This amendment adopts the 

precedent of number courts that have generally looked to a number 

of factors in determining ‘‘substantial continuity’’: whether the new 

company retains the same assets and facilities, the same employees 

and supervisors, the same jobs and working conditions, the same 

products and services, and the same customers and investors.43

The FAIR Act includes a comprehensive and specific provision 

designed precisely to ensure that successors-in-interest to the participants in the Fund are held just as responsible as the participants were, so that the Fund will not suffer any financial harm as 

the result of merger-and-acquisition activity. This provision of the 

FAIR Act also requires reporting on all such activity to the Administrator, and just as importantly creates the opportunity for the Administrator—or another interested party—to bring a lawsuit to 

force compliance with the successor-in-interest provision and the 

obligations of such successors. 

Notice and Contents of Notice—A participant must provide the 

Administrator notice of a proposed transaction(s) that would result 

in the transfer of a significant portion of the participant’s assets. 

The Administrator shall protect information contained in the notice 

as confidential commercial information if: (1) the participant requests such treatment; (2) the participant does not publicly disclose 

the transaction(s); and (3) the Administrator does not believe that 

the true nature of the transaction merits action against the participant. 

The Administrator shall prescribe by rulemaking the information 

necessary for the participant to include such notice. The AdminisVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00066 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
67 

trator will use this information to determine whether: (1) the party 

acquiring the assets of the participants should be considered a successor in interest of the participant; or (2) the transfer would allow 

a trustee in Chapter 11 proceedings to avoid the payment obligations of the participant to the Fund. 

The participant must also include a statement in the notice regarding whether a person has or will become a successor in interest 

to the participant and whether that person has acknowledged such. 

Timing— Notice of Transaction—The participant must give the Administrator notice of such a transaction no later than thirty (30) 

days before the consummation of the proposed transaction. If 

the process involves a series of transactions, then the participant must give the Administrator notice of the series of transaction no later than thirty (30) days before the consummation 

of the first transaction in the series. As such, any proposed 

transaction may not be consummated until at least thirty (30) 

days after the Administrator receives such notice, unless otherwise provided by the Administrator. 

Certification Statements—The participant shall submit a certification of notice compliance to the Administrator by the date 

of the participant’s payment obligation. 

Right of Action—This subsection provides for the right of action 

against a participant engaging in such a transaction or any party 

to the transaction on the grounds that: (1) the participant and person has not stated or acknowledged that the person has or will become a successor in interest as a result of the transaction; or (2) 

the transfer would allow a trustee in Chapter 11 proceedings to 

avoid the payment obligations of the participant into the Fund. The 

Administrator or other participant may bring such an action in the 

appropriate United States district court or, otherwise, any forum 

appropriate outside of the United States. 

Relief—In such an action, the Administrator or participant may 

seek: (1) declaratory judgment of whether a person is a successor 

in interest of the participant; or (2) a preliminary restraining order 

or any other appropriate relief as determined by the court against 

the transaction if the transaction would allow a Chapter 11 trustee 

to avoid the payment obligations of the participant into the Fund. 

Sec. 224. Interest on underpayment of nonpayment 

If a participant fails to meet its payment obligation on or before 

the last date prescribed for payment, the liable party shall pay interest on that amount at the Federal short-term rate determined 

under section 6621(b) of the Internal Revenue Code of 1986, plus 

5 percentage points until the date paid. 

Sec. 225. Education, consultation, screening, and monitoring 

The Administrator shall establish a program for the education, 

consultation, medical screening, and monitoring of persons exposed 

to asbestos out of the assets of the Fund. 

Outreach and Education: No later than one year after the date 

of enactment, the Administrator shall establish an outreach and 

education program to provide information about asbestos-related 

conditions to members of the population who are at-risk of exposure. 

68 

Medical Screening Program: The Administrator shall establish a 

medical screening program for individuals who are at high risk of 

incurring an asbestos-related disability between the eighteenth and 

twenty-fourth months that the Fund is fully operational. The Administrator shall adopt regulations establishing: (1) criteria for participation in the screening program; (2) protocols conducting the 

medical screening process of participants; and (3) the frequency 

that participants may receive medical screening services. The program shall receive annually at least $20,000,000 and no more than $30,000,000 for the first five (5) years of the program. 

However, the Administrator may suspend funding of the program 

if continued funding would cause the Fund to sunset. After the program is fully implemented, the Administrator may reduce the annual amount the program receives to less than $20,000,000. At the 

conclusion of the fourth year, the Administrator shall conduct a review of the program to recommend the amount to be allocated to 

the program for an additional five (5) years, not to exceed six hundred $600,000,000 million dollars. All contracts with medical 

screening providers shall provide for the reimbursement of those 

services and the termination of such contracts if the Administrator 

determines that the provider does not meet the provider qualifications. 

Medical Monitoring Program: The Administrator shall establish 

a medical monitoring program for persons exposed to asbestos and 

approved for level I compensation. Procedures for the administration of the program shall include: medical tests, such as the distribution of a health evaluation and work history questionnaire, 

physical examinations, chest x-rays, and spirometry; qualifications 

of medical providers who are to provide the tests; and administrative provisions for the reimbursement from the Fund for costs of 

monitoring. 

Sec. 226. National mesothelioma research and treatment program 

This section requires the Administrator of the Fund and the Director of the National Institutes of Health (NIH) to allot respectively $1.5 million from the Fund and $1 million from funds available to the Director annually for the years 2006–2015 to establish 

ten (10) mesothelioma disease research and treatment centers. The 

Director of the NIH shall, in consultation with the Medical Advisory Committee, select sites for the centers that are, amongst other 

requirements: (1) distributed in areas of high concentration of 

mesothelioma cases; and (2) closely associated with the Department 

of Veterans Affairs medical centers. The Administrator of the Fund 

and the Director of the NIH shall allot respectively $1 million from 

the Fund and $1 million from amounts available to the Director for 

the years 2006–2015 to establish a National Mesothelioma Registry. No less than $500,000 of these amounts shall be allocated for 

the collection and maintenance of tissue specimens. Each of the ten 

(10) mesothelioma centers shall participate in the registry. The Administrator of the Fund and the Director of the NIH shall allot respectively $1 million from the Fund and $1 million from funds 

available to the Director for the years 2006–2015 to establish a 

Center for Mesothelioma Education, with the advice and consent of 

the Medical Advisory Committee. The Director of the NIH shall 

publish and provide Congress a report and recommendations on the 

69 

results gained through the Program no later than September 30, 

2015, which shall contain such information as the Act requires. 

TITLE III.—JUDICIAL REVIEW 

Sec. 301. Judicial review of rules and regulations 

The United States Court of Appeals for the District of Columbia 

Circuit shall have exclusive jurisdiction over any action to review 

rules or regulations promulgated by the Administrator. A petition 

for review shall be filed not later than sixty (60) days after the date 

notice of such promulgation appears in the Federal Register. The 

United States Court of Appeals for the District of Columbia shall 

provide procedures for expedited review. 

Sec. 302. Judicial review of award decisions 

Any claimant adversely affected or aggrieved by a final decision 

of the Administrator regarding compensation may petition for judicial review of the decision by filing a petition of review in the 

United States Court of Appeals for the circuit in which the claimant resides within ninety (90) days of the issuance of a final decision of the Administrator. The court shall uphold the decision of 

the Administrator unless the court determines, upon review of the 

record as a whole, that the decision is not supported by substantial 

evidence, contrary to law, or is not in accordance with procedure 

required by law. This review will be subject to expedited procedures. 

Sec. 303. Judicial review of participants’ assessments 

The United States Court of Appeals for the District of Columbia 

Circuit shall have exclusive jurisdiction over any action to review 

a final determination regarding the liability of any person to make 

a payment to the Fund, including a notice of applicable subtier assignment, notice of insurer participant obligation, a notice of financial hardship or inequity determination, and notice of a distributors 

tier adjustment. A petition for review shall be filed not later than 

sixty (60) days after a final determination giving rise to the action 

and will be subject to an expedited review. Any defendant participant who receive notices of its applicable subtier assignment and 

any insurer participant who receives notice of a payment obligation 

must commence any action within thirty (30) days of receiving such 

notice. 

Sec. 304. Other judicial challenges 

The United States District Court for the District of Columbia 

shall have exclusive jurisdiction over any action for declaratory or 

injunctive relief challenging any provision of the FAIR Act. Such 

action shall be filed not later than sixty (60) days after the date 

of enactment or sixty (60) days after the final action by the Administrator giving rise to the action, whichever is later. 

A final decision in the action shall be reviewable on appeal directly to the Supreme Court of the United States and shall be 

taken by filing a notice of appeal within thirty (30) days, and the 

filing of a jurisdictional statement within sixty (60) days, of the 

entry of a final decision. 

70 

Such actions shall be advanced on the dockets and subject to an 

expedited review process. 

Sec. 305. Stays, exclusivity, and constitutional review 

The courts may not issue a stay of a payment obligation pending 

its final judgment. Further, the courts may not issue a stay or injunction on the basis of a challenge to the whole or any portion of 

the FAIR Act until the all judicial avenues have been exhausted. 

An action for which review is otherwise provided for by the FAIR 

Act shall not be subject to judicial review in any other proceeding. 

Constitutional Review: The original action shall be filed in the 

United States District Court for the District of Columbia and shall 

be heard by a three (3) judge court. A final decision on the action 

shall be reviewable only by an appeal directly to the Supreme 

Court of the United States, which shall be taken by filing a notice 

of appeal within ten (10) days and a jurisdictional statement within 

thirty (30) days after entry of the final decision. The United States 

District Court for the District of Columbia and the Supreme Court 

of the United States to expedite the disposition of such an action. 

If the transfer of any asbestos trust of a debtor or class action 

trust, or the Act as a whole, is held to be unconstitutional, then the 

Fund shall transfer the remaining balance of such assets back to 

the appropriate trust within ninety (90) days after the final decision is ordered. 

TITLE IV.—MISCELLANEOUS PROVISIONS 

Sec. 401. False information 

This section amends Title 18, Chapter 63 of the U.S. Code by 

adding a new section 1348 to impose criminal penalties for fraud 

against the Office of Asbestos Compensation, and false statements 

made against the Asbestos Injury Claims Resolution Fund by any 

party. 

Sec. 402. Effect on bankruptcy laws 

Contribution obligations are not dischargeable and may not be 

stayed when a participant files for bankruptcy. Claims by the Administrator against a participant are allowed even in bankruptcy. 

Participants’ payment pending bankruptcy or in bankruptcy are 

not avoidable as preferences or executory contract. 

Transfer of Existing Asbestos Trusts: Existing asbestos trusts, including 524(g) trusts, will be incorporated into the Asbestos Injury 

Resolution Fund. The assets of such trusts shall be transferred to 

the Fund no later than six (6) months after the date of enactment. 

The Administrator shall have discretion when transferring assets 

of these trusts and may refuse to accept any asset that may create 

liability for the Fund in excess of the value of the asset. For trusts 

with beneficiaries that are not asbestos claims, the assets transferred to the Fund shall not include assets allocable to non-asbestos-related beneficiaries. Incorporation of trust assets is estimated 

to provide an additional $4–6 billion in contributions to the fund. 

Effect on Insurance Receivership Proceedings: In any insurance 

receivership proceeding involving an insurer participant, there 

shall be a lien in favor of the Fund for the amount of any assessment and any such lien shall be given priority over all other claims 

71 

against the participant in receivership, except for the expenses of 

the receivership. Payment of any assessment shall not be subject 

to any stay in any insurance receivership proceeding. 

Standing in Bankruptcy Proceedings: The Administrator shall 

have standing in any bankruptcy involving a debtor participant. 

Further, no bankruptcy court may require the return of property 

seized by the Administrator to satisfy participant obligations to the 

Fund. 

Sec. 403. Effect on other laws and existing claims 

This section provides that there will be no other forum for recovery of an asbestos injury claim other than under the Act and addresses the effect that the Act has on particular areas of the law 

as it relates to the asbestos problem. 

Effect on silica claims 

In General—An individual seeking to recover on the basis of suffering a silica-related injury must plead with particularity and establish by a preponderance of the evidence that: (i) the individual 

has not asserted or filed a claim for an asbestos-related injury and 

that the individual is not eligible for a monetary award under the 

Fund; (ii) the injury was caused by exposure to silica; and (iii) asbestos was not a significant contributing factor. To establish that 

the individual is suffering a ‘‘functional impairment’’ due to silica 

and not because of exposure to asbestos, the plaintiff must establish that they would not meet the exposure requirements set in 

Section 121 of this Act. If an individual is not able to meet these 

requirements, then the claim is preempted by the Act. 

Required Evidence—The initial pleading must be accompanied 

by: (1) admissible evidence relating to an individual’s condition and 

exposure to asbestos; (2) notice of a previous lawsuit or claim asserting an asbestos-related injury; and (3) copies of all medical and 

lab reports pertaining to the individual’s exposure to asbestos. 

Statute of Limitations—State law shall apply regarding the statute of limitations for filing a silica claim. However, the clock will 

begin to run on the statute of limitations for any claim filed under 

this subsection when the plaintiff becomes impaired. 

Superseding Provisions: Except as provided below and in provisions relating to the settlement of claims during the start up of the 

Fund, the Act shall supersede obligations imposed by any agreement, understanding, or undertaking relating to an asbestos claim 

that requires future performance. Such ‘‘future performance’’ is not 

intended to include obligations to defend, indemnify or hold harmless parties making payments under insurance coverage settlement 

agreements, or to maintain the confidentiality of such agreements, 

where the other financial terms and conditions have been satisfied. 

Exception—This Act shall not abrogate a binding and legally enforceable written settlement between a participant and a named 

plaintiff if before the date of enactment the settlement was executed directly by: (1) the settling defendant or insurer and the specific individual plaintiff, the immediate relatives of the plaintiff, or 

an authorized legal representative on behalf of the plaintiff if the 

plaintiff is incapacitated; (2) the settlement contains an express obligation by the participant to make future definite payments; and 

(3) all of the conditions to payment have been fulfilled, including 

72 

court approval, within thirty (30) days of the date of enactment. 

However, if a settlement agreement is prepared in anticipation of 

this Act, then the exception of this provision shall not apply. 

The exception shall not apply to bankruptcy-related agreements. 

Any settlement payment under this provision shall be considered 

a collateral source. This subsection shall not abrogate a settlement 

agreement reached in anticipation of the Act and anticipates the effects of the Act. Further, this subsection shall not abrogate an otherwise enforceable settlement agreement executed before the date 

of enactment between a settling defendant or insurer and a named 

plaintiff for the payment or the health care insurance or expenses 

of the plaintiff. 

Exclusive Remedy: The remedies provided under the Act shall be 

the exclusive remedy for an asbestos claim. However, the Act shall 

not apply to any individual civil action in State or Federal court 

that on the date of enactment: (i) has commenced the presentation 

of evidence to an impaneled jury or a judge, sitting as a trier of 

fact; or (ii) a verdict, final order, or final judgment has been entered by a trial court. This exception to the preemption provisions 

of the Act is intended to permit the completion of civil trials involving plaintiffs in which the presentation of evidence has already 

begun on the date of enactment, as well as to preserve jury verdicts 

or judgments on all issues following the completion of such a trial. 

The exception is not intended to apply to mass trials such as class 

actions, consolidations, or other trials involving multiple plaintiffs 

not related by marriage or other family relationship, or to proceedings related to a bankruptcy. 

Bar on Asbestos Claims: As of the date of enactment, no new or 

pending claims may be pursued in State or Federal court, except 

those that meeting a limited exception preserving certain insurance 

claims or those filed during the start up to the Fund before it is 

fully operational. An exception to the preservation of insurance 

claims under Section 403(e)(2) concerns insurance coverage obligations relating to claims that are preempted, barred, or superseded 

by Section 403. Insurance coverage obligations relating to such 

claims are commuted under the Act so that insurers are permitted 

to take down reserves relating to these claims in order to be able 

to make their contributions to the Fund. 

The only judgment that a trial court may enter for a pending 

claim after the date of enactment is that of a judgment of dismissal. If a State court does not dismiss a claim, it may be removed 

to Federal court, which will determine whether removal was proper 

and whether the claim presented is a pending asbestos claim as defined by the Act. 

Notwithstanding the express preemption of pending cases, if a 

court determines that an asbestos claim for which there has been 

no order or judgment duly entered before the date of enactment is 

not subject to the preemption provisions and requires a participant 

to satisfy a judgment with respect to the claim, then the participant will receive a credit against any assessment owed to the Fund 

equal to the amount of the payment made with respect to the judgment. The Administrator shall require participants seeking credit 

to demonstrate that the participant pursued timely remedies, including dismissal of the claim. The participant must have also notified the Administrator of the denial of a motion to dismiss within 

73 

twenty (20) days of the expiration of the period to seek appeal. The 

Administrator may require as much further information as is necessary and appropriate to establish eligibility for and the amount 

of such a credit. 

Sec. 404. Effect on insurance and reinsurance contracts 

Because most insurance policies cover multiple liabilities, it was 

necessary to account for ‘‘erosion’’ of a policy that covers not only 

asbestos liabilities, but potentially other liabilities such as property 

or other environmental liabilities when assessing contribution obligations to the Fund in order to avoid depriving an insured of coverage for other non-asbestos related claims. This section establishes 

how contributions to the Fund by insurers and reinsurers reduce 

the limits of existing insurance policies held by the defendant participants. The quantum of erosion is based on the collective payment obligations to the Fund by the insurer and reinsurer participants. The payment obligations are deemed as of the date of enactment to erode remaining aggregate product limits available to a defendant participant in an amount of 38.1% of each defendant participant’s scheduled assessment amount. The erosion principles 

apply to the mandatory payment obligations to the Fund. However, 

any contingent payment required by the Administrator of any defendant participant shall not be deemed to erode remaining aggregate product limits. 

Restoration of Aggregate Product Limits Upon Early Sunset: In 

the event of an early sunset of the Fund, any unearned erosion 

amount will be deemed restored as aggregate product limits available to the defendant participant as of the date of enactment. Such 

amounts will be deemed restored to each policy in such a manner 

that the last limits deemed eroded at enactment of the Act are to 

be the first limits restored at the early sunset. The applicable statute of limitations and contractual provisions for filing claims under 

any insurance policy with restored aggregate product limits shall 

be deemed tolled from the date of enactment through six (6) 

months after the date of the early sunset. 

Finite Risk Policies Not Affected: Notwithstanding any other provision of this Act, except subject to Sec. 212(a)(1)(D), the Act shall 

not affect or impair any rights or obligations of any party to an insurance contract that expressly provides coverage for governmental 

assessments imposed to replace insurance or reinsurance liabilities 

in effect on the date of enactment. 

Notwithstanding any other provision of this Act, except subject 

to Sec. 212(a)(1)(D) and Sec. 404(d)(2), the Act shall not affect or 

impair any rights or obligations of any person with respect to any 

insurance purchased by a participant after December 31, 1990 that 

expressly provides coverage for asbestos liabilities, including finite 

risk policies. Subject to Sec. 212(a)(1)(D), which governs the obligations of certain reinsurers to their reinsureds under reinsurance 

policies commonly referred to as finite risk policies, aggregate stop 

loss, aggregate excess of loss, or loss portfolio transfer policies, Sec. 

404(d)(1)(B) addresses the insurance obligations under so-called ‘‘finite risk’’ insurance contracts purchased by a participant after 

1990 and that expressly provide coverage for asbestos liabilities. 

These two sections have distinct purposes. 

74 

Effect on Certain Insurance and Reinsurance Claims: Subject to 

Section 212(a)(1)(D), a participant may not pursue an insurance or 

reinsurance claim against another participant for payments to the 

Fund. However, Section 404(e) provides a limited exception to this 

bar. A participant may pursue a claim against an insurer or reinsurer on the basis of a written agreement specifically providing insurance, reinsurance or other reimbursement for required payments to (i) a Federal trust fund established by Federal statute to 

resolve asbestos injury claims or (ii) where applicable under 404(d). 

Any assignment of any rights to coverage for asbestos claims to 

any person who has asserted an asbestos claim prior to the effective date, or to any trust, person, or entity established to pay asbestos claims, shall be null and void. 

The Act does not affect or impair any rights or obligations of any 

person for amount that is obligated to pay with respect to asbestos 

or other claims except as otherwise provided by the FAIR Act. 

Sec. 405. Annual report of the administrator and sunset of the act 

This section requires the Administrator to submit an annual report to the Senate Committee on the Judiciary and House Committee on the Judiciary concerning the operation of the Asbestos 

Injury Claims Resolution Fund. The section specifies the contents 

of the report which includes summaries, estimates, recommendations, and an analysis of the financial condition of the fund, including the ability of the Fund to pay claims for the subsequent five 

(5) years in full and as required. 

Contents of Report: The annual report shall include an analysis 

of the claims experience of the Fund during the fiscal year, including among other factors a statement of the percentage of asbestos 

claimants who filed, determined to be eligible, and received compensation to which they were eligible. The report shall also include 

a statement as to the administrative performance, financial condition, and financial prospects of the Fund. 

Claims Analysis and Verification of Unanticipated Claims: On 

the basis of the annual report, the Administrator will conduct a review based on the best available medical evidence: (1) of qualifying 

claims under a disease level to determine whether all or a significant number of qualified claimants under the class level suffer 

from an asbestos exposure related disease if the number of qualifying claims under a disease level exceeds the Congressional Budget Office (CBO) projected claims by one hundred twenty-five (125%) 

percent, or; (2) of ineligible claims under a disease level to determine if a significant number of claimants that were denied compensation but should have qualified on the basis of an asbestos exposure related disease if the number of qualifying claims under a 

disease level falls below the CBO projected claims by seventy-five 

(75%) percent. 

Determination—The Administrator shall examine the best available medical evidence and any recommendation made by the Advisory Committee and Medical Advisory Committee regarding the 

improvement of diagnostic, exposure, and medical criteria to determine the nature of the claims submitted and awarded compensation under a disease level. Specifically, the Administrator shall determine whether claimants suffering from injuries that were not 

substantially contributed to exposure to asbestos received comVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00074 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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pensation under a claim level or whether claimants suffering from 

injuries that were substantially contributed to exposure to asbestos 

were denied compensation under a claim level. Further, the Administrator shall determine the accuracy of CBO projections of the 

number of expected claimants. 

Recommendations Concerning Claims Criteria—On the basis of 

these findings, the Administrator shall issue a recommendation to 

Congress of changes to compensation criteria to ensure that the 

Fund compensates the claims of claimants suffering from injuries 

that are substantially contributed to exposure to asbestos. 

Recommendations of Administrator and Advisory Committee: Any 

recommendations of the Administrator to Congress shall be referred to the Advisory Committee, which shall hold expedited public hearings on such recommendations and any alternatives to come 

to its own recommendations to be submitted to the Senate and 

House Committees on the Judiciary no later than ninety (90) days 

after receiving the Administrator’s recommendations. 

Shortfall Analysis: If the Administrator concludes after conducting the annual report that the Fund may not be unable to pay 

claims at any time within the next five (5) years, then the Administrator shall include an analysis explaining why and when the Fund 

will no longer be able to pay out claims. The Administrator must 

also include recommendations as to alternatives for responding to 

the situation and a statement as to which of the alternatives he/ 

she believes would be the best. 

Beginning in year 6 of the life of the Fund, if the Administrator 

determines that a shortfall in payments by insurer participants 

would cause the termination of the Fund, then the Administrator 

may impose shortfall assessments on insurer participants in addition to the amounts required under the allocation methodology. 

However, the Administrator shall not impose shortfall assessments 

if they would be insufficient to avoid a recommendation of termination of the Fund. These shortfall assessments may not exceed 

the amount necessary to account for any shortfall in meeting the 

required aggregate amount to be paid into the Fund by insurer 

participants. 

In formulating recommendations, the Administrator shall consider the reasons for the short fall, including: (1) financial factors 

such as the returns on investments, borrowing capacity, interest 

rates, and ability to collect contributions; (2) the operation of the 

Fund, such as the administration of claims process, collection of obligations, programs, and potential areas of fraud; (3) the appropriateness of the diagnostic exposure and medical criteria; the actual incidence of asbestos-related injuries based on data; and (4) 

the compensation of injuries with alternative causes. If the Administrator recommends the termination of the Fund, such a recommendation must be accompanied by a plan for winding up the 

Fund. 

Sunset of Act: The Fund shall terminate after the Administrator 

has: (i) begun processing claims; and (ii) conducted an operational 

review of the Fund in preparation for the annual report and found 

that there are insufficient monies in the Fund to consider additional claims and still satisfy all of the Fund’s outstanding obligations, such as satisfying resolved claims and paying incurred debt. 

76 

The Fund shall terminate one hundred eighty (180) days after the 

Administrator’s determination of termination. 

Extinguished Claims—A claim that is extinguished for failure to 

file with the Fund within the prescribed statute of limitations or 

otherwise preempted shall not be revived after the sunset of the 

Act. 

Continued Funding—The Act requires participants to continue 

making payments to the Fund. However, if the full payment obligation of the participants is not required to pay off the obligations of 

the Fund, then the Administrator may reduce the payment levels. 

Any such reduction shall be allocated among the participants in the 

same manner as required by the Act above. 

Sunset Claims—This provision relates to remaining unsatisfied 

claims upon termination of the Fund and persons asserting those 

claims. Upon determination of termination of the Fund, the applicable statute of limitations shall be tolled for the filing of sunset 

claims. For those who chose to pursue their claims in court, the relevant statute of limitations shall continue to run, except those who 

filed a claim with the Fund before termination of the Fund shall 

have two (2) years after the date of termination to file a claim in 

court. 

Asbestos Trusts and Class Action Trusts—After termination, the 

trust distribution program of an asbestos trust and class action 

trust will be replaced by the medical criteria requirements of Section 121. 

Payment to Asbestos Trusts and Class Action Trusts—The 

amounts determined to be paid to asbestos trusts and class action 

trusts must be transferred to the respective trusts of the debtor 

within ninety (90) days. 

Nature of Claim After Sunset: After termination of the Fund, any 

individual, who has not had an asbestos-related claim satisfied by 

the Fund, may bring a claim in Federal district court, State court 

in where the claimant resides, or any State court where the asbestos exposure occurred. If a defendant cannot be found in the State 

where the plaintiff resides or where the asbestos exposure occurred, then the claim may only be brought in the Federal or State 

court where the defendant may be found. In suits where asbestos 

exposure occurred in more than one county or Federal district, the 

trial court will determine the most appropriate forum for the claim. 

If the court determines that another forum is most appropriate, 

then the court shall dismiss the claim. Any relevant statute of limitations shall be tolled during this time. 

An individual whose claim was resolved by the Fund may not 

bring a claim after the sunset of a Fund. However, if the individual 

recovered for a non-malignant asbestos-related disease from the 

Fund that has progressed, then the individual may bring a claim 

for the subsequent progressive disease unless the claimant knew or 

should have known about the disease at the time of filing with the 

Fund. Further, an individual, who recovered for a non-malignant or 

malignant asbestos-related disease from the Fund that has progressed to mesothelioma, may bring a suit on the basis of his/her 

mesothelioma unless the individual knew or should have known of 

the disease when he/she filed with the Fund. 

Exclusive Remedy—After the Fund sunsets, a suit brought in this 

manner shall be the exclusive remedy for any asbestos claim, reVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00076 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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gardless of whether the claim arose before or after the date of enactment or termination of the Act. 

Class Action Trusts—An asbestos-related claim may not be maintained against an established asbestos liability class action trust 

after the assets of the class action trust have been transferred into 

the Fund. If the Act sunsets, then the only remedy for claims 

against that class action trust will be to bring a claim against the 

class action trust established by the Administrator for the purpose 

of paying asbestos claims. 

Expert Witnesses—This provision allows for the introduction of 

qualified expert testimony meeting certain requirements if the testimony will assist the trier of fact in reaching a determination on 

a claim. 

Sec. 406. Rules of construction relating to liability of the United 

States government 

Except as otherwise specifically provided in this Act, nothing in 

this Act may be construed as creating a cause of action against the 

United States government, any entity established under this Act, 

or any officer or employee of the United States government or such 

entity. In addition it should not be construed in any way to create 

an obligation of funding from the United States government, including any authorized borrowing. 

Sec. 407. Rules of construction 

Nothing in this Act shall preclude the formation of a fund for the 

payment of eligible medical expenses related to treating asbestosrelated disease for current and former residents of Libby, Montana. 

Any such payment shall not be considered a collateral source. 

Nothing in this Act shall be construed to preclude any eligible 

claimant from receiving health care from the provider of their 

choice. 

Sec. 408. Violations of environmental and occupational health and 

safety requirements 

This section requires the Administrator to refer any information 

relating to violation of the Toxic Substances Control Act, the Clean 

Air Act, or the Occupational Safety and Health Act to the Secretary 

of Labor, to the Administrator of the EPA or the United States Attorney for possible civil or criminal prosecution and penalties. The 

Act also amends the Occupational Safety and Health Act of 1970 

to provide enhanced criminal penalties for willful violations of occupational standards for asbestos. 

This section also directs the United States Sentencing Commission to review and amend, as appropriate, the United States Sentencing Guidelines regarding environmental crimes relating to asbestos to ensure that the penalties are sufficient to deter and punish future activity and for other reasons. 

Sec. 409. Nondiscrimination of health insurance 

A health insurer may not deny, terminate, or alter the terms of 

coverage of the health plan of a claimant or beneficiary of a claimant because of participation in a medical monitoring program or as 

a result of information discovered as a result of medical monitoring. This section amends Section 702(a)(1) of the Employee ReVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00077 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
78 

tirement Income Security Act of 1974, Section 2702(a)(1) of the 

Public Health Service Act, and Section 9802(a)(1) of the Internal 

Revenue Code of 1986 to conform with this provision. 

TITLE V.—ASBESTOS BAN 

Sec. 501. Prohibition on asbestos containing products 

This section amends chapter 39 of Title 18 to prohibit the manufacture, distribution and importation of consumer products to 

which harmful asbestos is deliberately or knowingly added. This 

section provides a specific exception for the manufacture, processing, or distribution of asbestos-containing products by or for the 

Department of Defense if the Secretary of Defense certifies and 

provides a copy of the certification to Congress that: (1) the use of 

the product is necessary to the critical functions of government (as 

defined); (2) there are no other reasonably available and equivalent 

alternatives to the product; and (3) the use of the product will not 

result in a known unreasonable risk to health or the environment. 

Further, the provision provides an exemption without a review or 

limit on duration for any asbestos containing product requested by 

the Administration of the National Aeronautics and Space Administration if the Administrator certifies and provides a copy of the 

certification to Congress of the necessity of the product. 

The provision also contains specific exemptions and authorizes 

the Administrator to hear and grant exemptions on a case by case 

basis. The Committee found precedence and structured this section 

in large part on an asbestos ban implemented by the Environmental Protection Agency in 1989. Although this regulatory ban 

was invalidated by the Fifth Circuit on mainly procedural grounds, 

this section implements it legislatively and it is the Committee’s intent that the Administrator use the 1989 Environmental Protection 

Agency regulations as a guide towards implementing the ban and 

relevant exceptions under this section. The Committee recommends 

that the EPA consider, consistent with its prior regulations, among 

other issues: 1) whether to create a two-stage ban with a manufacturing ban first and a distribution in commerce ban phased in after 

a proper time delay; 2) whether to provide a labeling mechanism 

to identify an asbestos containing product as soon as practicable 

after date of enactment; and 3) whether to provide an enforcement 

standard that requires a violation under the ban to be knowing and 

willful. 

Sec. 502. Naturally occurring asbestos 

This section calls for the Administrator of the Environmental 

Protection Agency (EPA) to conduct a study and submit a report 

within twelve (12) months of the date of enactment to assess the 

risks of exposure to naturally occurring. Given the uncertainties 

concerning naturally occurring asbestos, including the potential 

multiple sources of asbestos in communities and the uncertainties 

associated with the durations of activity-based exposure, the EPA 

shall evaluate the appropriateness of the existing risk assessment 

values for asbestos and methods of assessing exposure. 

Within eighteen (18) months of the date of enactment, the Administrator of the EPA shall establish dust management guidelines, and model regulations that States or localities can choose to 

79 

adopt, after consulting with appropriate Federal and State agencies 

and other interested parties after appropriate notice. These guidelines and model regulations shall include site management practices to minimize the disturbance of naturally occurring asbestos, 

air and soil monitoring programs to assess exposure levels as development sites, and appropriate disposal options. Further, not later 

than eighteen months after the date of enactment, the Administrator of the EPA shall establish comprehensive protocols for testing the presence of naturally occurring asbestos after consulting 

with appropriate State agencies. For existing buildings and areas, 

the Administrator of the EPA shall issue public education materials, recommended best management practices and recommended 

remedial measures for areas containing naturally occurring asbestos no later than one (1) year after the date of enactment. 

This section also calls for the following: 

(1) the Secretary of the Interior to collaborate with the California 

Geological Survey and any other appropriate State agencies to 

produce final, publicly available maps of asbestos zones, 

prioritizing relevant portions of California counties with significant 

amounts of naturally occurring asbestos that are experiencing 

rapid population growth, and also identifying and mapping other 

areas of significant concern in other States; 

(2) the Director of the National Institutes of Health to administer 

one or more research grants to qualified entities for studies that 

focus on better understanding the health risks of exposure to naturally occurring asbestos, where grants are awarded through a competitive peer-reviewed, merit-based process; 

(3) the participation of representatives of the EPA and Health 

and Human Services in any task force convened by the State of 

California to evaluate policies and adopt guidelines for the mitigation of risks associated with naturally occurring asbestos; 

(4) the Administrator of the EPA to award fifty (50%) percent 

Federal matching grants for the remediation of naturally occurring 

asbestos in schools, parks, other public areas, and public or private 

serpentine roads that generate significant public exposure to naturally occurring asbestos; and to establish criteria to award such 

grants within four (4) months of the date of enactment; and 

(5) an allotment of $40 million from the Fund for the purpose of 

carrying out the requirements of the section. 

VII. CRITICS’ CONTENTIONS AND REBUTTALS

Critics’ Contention No. 1: Critics contend that the funding provided for in S. 852 is inadequate to pay all asbestos victims. 

Response: S. 852 as amended obligates defendant and insurer 

participants to contribute an aggregate of $136 billion to the Asbestos Injury Claims Resolution Fund (hereinafter ‘‘Fund’’). In addition, at least another $4 billion would be contributed to the Fund 

from confirmed bankruptcy and other asbestos compensation 

trusts, bringing the total level of mandatory contributions to the 

Fund to at least $140 billion. The size of the Fund is based on 

sound statistical data and economic models, and is more than adequate to compensate all victims of asbestos-related disease. Indeed, 

a leading actuary with Tillinghast-Towers Perrin, testified convincVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00079 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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44Statement of Jennifer L. Biggs, FCAS, MAAA, Tillinghast-Towers Perrin, Hearing Before 

the Senate Committee on the Judiciary, ‘‘Solving the Asbestos Litigation Crisis: S. 1125, the 

Fairness in Asbestos Injury Resolution Act of 2003,’’ 108th Cong., June 4, 2003, at 7. 45 Id. at 1. 46Steve Caroll, RAND Institute for Civil Justice, ‘‘The Dimensions of Asbestos Litigation’’

presentation at the Spring Meeting of the Casualty Actuarial Society, May 19, 2003. 47See id; see also Biggs, supra Note 1 at 2–3. 48See Biggs, supra Note 1 at 2. 

ingly before the Committee on June 4, 2003 that ‘‘$108 billion appears to be more than adequate * * *’’ 44

The total estimated cost of ultimate asbestos loss and expense, 

which includes both past payments and projected future payments, 

is $200 billion.45 The RAND Institute for Civil Justice estimated 

that $70 billion has already been paid through year-end 2002.46 By 

reducing the total estimated cost of asbestos-related loss and expense by the $70 billion already paid out through 2002, the remaining future cost of asbestos-related loss and expense is an estimated $130 billion. 

One of the most beneficial features of the FAIR Act is that it will 

significantly reduce the substantial transaction costs of the current 

tort system—amounts which most experts agree currently consume 

more than half of the total costs.47 By substituting the tort system 

for an administrative no-fault system for compensation, the FAIR 

Act will wring out these transaction costs and further reduce the 

future projected costs. Of the $130 billion of asbestos-related spending remaining outstanding, Tillinghast-Towers Perrin estimates 

that approximately $28 billion (or 21.5%) is attributable to defense 

costs. Of the remaining $102 billion, Tillinghast estimates that approximately $41 billion (or 40%) will go to plaintiffs’ attorneys. In 

the current system, as a result of these transaction costs, only $61 

billion of the $130 billion estimate of future asbestos-related loss 

and expense, or less than half, is expected to be paid to asbestos 

victims.48 Moreover, the FAIR Act will correct the current 

misallocation of payments being made to unimpaired claimants 

who are flooding the court system today. Therefore, the $140 billion 

to be contributed to the Fund by defendant and insurer participants will be more than double the $61 billion, thus giving victims 

the certainty that they will receive compensation under the new 

system. 

Finally, as an added protection against the unlikely risk of insufficient funding, the FAIR Act gives the Administrator authority to 

borrow from commercial and government lending institutions 

amounts to offset short term losses. 

Critics’ Contention No. 2: Critics contend that given the significant amount of time that will be involved in establishing the Fund 

and getting it funded and fully operational, asbestos victims may 

have to wait years before they receive any compensation. 

Response: Currently, when cases enter the tort system many individuals are forced to wait significant periods of time before their 

case is brought before a judge or jury. Some states, however, have 

enacted expedited procedures to address cases of terminal individuals in an expedited timeframe. In these states, cases are filed and 

either settled or heard within 6 months. In addition, these cases 

are often paid within 30 days to 6 months. 

Given the expedited processes available in many states, provisions were added during Committee consideration of the FAIR Act 

81 

to establish several safeguards to ensure that terminal individuals 

have their claims paid as quickly as or quicker than the current 

system. 

A process was created whereby exigent claimants, individuals 

who have mesothelioma or have been diagnosed with less than one 

year to live, may have their claims resolved in as little as sixty (60) 

days and receive their first payment in thirty (30) days. 

The process created under the bill allows exigent claimants to 

immediately file their claim with the Fund or with the claims facility, or they may file a notice of intent to seek a settlement. In either case the exigent claimant must provide the necessary information to the Administrator. The Administrator then has up to sixty 

(60) days to make a determination if the claim qualifies for payment. Upon approval the Administrator must pay the claim on an 

expedited basis. 

In addition, there are several additional provisions to ensure exigent claimants are paid quickly. If for whatever reason the Administrator or claims facility is unable to process or pay the claim, the 

defendants and the claimant must be notified within ten (10) days. 

Upon notification, the defendants may make a settlement offer. If 

the offer is rejected defendants have twenty (20) days to perfect the 

offer. If the offer is again rejected, or if no offer is made, the claimant’s settlement must then be bumped up to 150% of the award 

value under the trust. If after nine (9) months the exigent claimant 

has not had their claim processed or fully paid, then they may return to court where their case was originally filed, or if their claim 

arose after enactment they may file their case in the appropriate 

state or federal court. 

This process ensures that terminal individuals receive fair and 

timely payment as quickly as possible, and in many cases in a 

timelier manner than if they proceeded in the courts. 

Critics’ Contention No. 3: Critics contend that if the Fund runs 

out of money, asbestos victims will have no place to turn for compensation. 

Response: As explained in detail in response to Critics’ Contention No. 1, based on all reasonable estimates, the Fund will not run 

out of funds or be unable to meet all of its obligations to all claimants. But in the event the FAIR Act does not ultimately provide 

adequate funding to compensate all asbestos victims deemed entitled to compensation, S. 852 provides victims the right to pursue 

their claims in the tort system. 

Critics’ Contention No. 4: Critics contend that victims will be 

paid less under the FAIR Act than they could get in the tort system. 

Response: The Committee has approved S. 852 in recognition 

that the tort system is broken and the status quo cannot be sustained for either victims or defendants. Under the bill, claimants 

will receive fair, consistent and equitable compensation without the 

delays inherent in litigation. Moreover, most appropriately, those 

that are most seriously ill and whose diseases have the most direct 

causal link to asbestos will receive the most compensation under 

the legislation, including up to $1.1 million for Level IX, Mesothelioma. Those individuals who have been exposed to asbestos but 

are not impaired will be eligible for medical monitoring, and their 

claims will be preserved should they later develop impairment. 

82 

49See Statement of David Austern, General Counsel for the Manville Personal Inquiry Settlement, Trust, Hearing before the Senate Committee on the Judiciary, The Asbestos Litigation 

Crisis Continues—It is Time for Congress to Act, 108th Cong., March 5, 2003. 

In sharp contrast to the bill, the current tort system is unfair to 

asbestos victims and plagued with uncertainty. Whether asbestos 

victims receive compensation at all, and, if so, how much they 

might receive, depends on where and when they file claims, who 

the defendants happen to be, whether those defendants are solvent, 

and the leverage and skill of their trial lawyers. The amount of 

compensation victims receive diverges widely, with some victims 

receiving very large amounts, and others receiving little or nothing. 

And sadly, some victims die before their cases can be heard in 

court. These distortions in the current tort system are further exacerbated by jurisdictional idiosyncrasies. Only five states had twothirds of all asbestos case filings between 1998 and 2000. The concentration of an overwhelming number of filings in a small number 

of jurisdictions only increases the delays and inequities inherent in 

the current system. 

While the tort system bestows large awards for some victims, it 

all too often leaves the unfortunate without fair compensation, and 

the system is only getting worse with time. In order for victims to 

be compensated, they need to be able to look to solvent companies 

for resources. However, to date, at least 73 companies have declared bankruptcy because of asbestos claims. While bankruptcy 

trust funds can be an efficient way of compensating victims, a 

study of a number of major asbestos defendant bankruptcies 

showed that the average time from petition to confirmation of a reorganization plan was six years. During these proceedings, claimants are not paid. Even worse, after a company declares bankruptcy, it has very limited resources with which to compensate victims. The Manville Trust, for example, can only pay victims 5 percent of the value of their claims. Moreover, not one single existing 

asbestos trust or any of the 20 or more trusts currently pending in 

bankruptcy court can or will be able to pay any more than a fraction of the value of the claims that will be presented.49

As noted in the response to Critic’s Contention No. 1, by reducing 

the substantial transaction costs of the current system and directing resources to those who are injured from asbestos related diseases, S. 852 will deliver more compensation to victims in a timely 

and certain manner. 

The scheduled values of S. 852 are some of the highest of any 

federal or state compensation program in existence. The values 

compare very favorably to the statutory, maximum disability and 

death benefits of all other federal compensation programs and are 

higher than the benefits offered under state workers’ compensation 

programs. In January of 2002, of the 23 states reporting a calculated, maximum death benefit, the lowest reported amount was 

$46,900 in Maryland; the highest reported amount was $390,000 in 

Minnesota. By contrast, under the bill, the benefit for Level IX, 

Mesothelioma, is $1.1 million. 

The values in S. 852 also compare favorably to the other bankruptcy trusts. By example, the Manville Trust provides for a scheduled value of $350,000 for mesothelioma claimants, and is only able 

to pay 5 cents on the dollar on all claims. A mesothelioma claimant 

would, therefore, only receive a payment of $17,500 from the ManVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00082 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
83 

ville Trust, but under S. 852 would receive $1.1 million. While 

claimants typically sue a number of trusts, the results are likely 

to be similar. 

Finally, the S. 852 prohibits the subrogation of a claim as a result of a claimant receiving an award from the Fund. 

Critics’ Contention No. 5: Critics contend that S. 852 is supposed 

to embody a ‘‘no fault’’ system, but the medical criteria are overly 

stringent. 

Response: S. 852 establishes a non-adversarial, no-fault system in 

which claimants, in sharp contrast to the tort system, will not have 

to prove fault on the part of defendants or have to provide specific 

product identification in order to receive compensation. In addition, 

those individuals that have been exposed to asbestos but are not 

ill will be eligible for medical monitoring and will remain eligible 

to receive compensation at a later time should they become ill in 

the future. 

The bill’s medical criteria are fair and reasonable and appropriately designed to provide certainty to claimants. Indeed, the 

starting point for the medical criteria provided for under S. 852 

were those from the Manville Trust, which were adopted with the 

overwhelming support of the claimants and their counsel and 

which have been substantially followed by other bankruptcy trusts 

because of their credibility. 

In exchange for establishing a no-fault, non-adversarial system, 

however, the criteria in the Act require a medical diagnosis by the 

claimant’s doctor and sufficient evidence to establish that the 

claimed illness is asbestos related. Such criteria are also necessary 

to keep the problems associated with mass screenings and the current abuses found in the tort system from being transferred to the 

Fund. To ensure the integrity of the Fund and to promote the purpose of the bill to direct funds to those claimants who are truly ill 

from their exposure to asbestos, therefore, the criteria in the bill 

reflects compromises, yet is based on sound, diagnostic, medical, latency and exposure criteria. 

Critics’ Contention No. 6: Critics contend that small businesses 

that rely on their insurance will be harmed under S. 852 because 

they will be forced to contribute to the Fund and will not be able 

to use their insurance in order to do so. 

Response: Under the FAIR Act, small businesses, as defined 

under Section 3 of the Small Business Act, are explicitly exempt 

from having to contribute to the Fund, but will receive the very 

protections provided to all of the other defendant participants 

under the legislation. Also, small companies that have not incurred 

asbestos liability-related payments of $1 million or more before December 31, 2002 are exempt from having to contribute to the Fund. 

For those companies that are not exempt from having to contribute 

to the Fund, S. 852 tiers companies by size and liability, such that 

no company would have to contribute to the Fund an amount out 

of line with their resources. In stark contrast, the current tort system provides no protections for small businesses and allows any 

company of any size, no matter how small, to be sued into bankruptcy. Furthermore, the bill authorizes the Administrator to adjust defendant participants’ contributions based on severe financial 

hardship and demonstrated inequity, further protecting the interests of all businesses of all sizes. 

84 

50See Jennifer L. Biggs, supra at 2. 51 Report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation 3 (March 1991); 

see also id. at 42 (dissenting statement of Hogan, J.) (agreeing that ‘‘a national solution is the 

Critics’ Contention No. 7: Critics contend that S. 852 will primarily benefit businesses and insurance companies. 

Response: This contention is unwarranted. The bill benefits victims who have been inadequately served by the current tort system 

while providing economic stability to businesses that have been 

overwhelmed by abusive litigation in the current tort system, driving many into bankruptcy and impacting the jobs and pensions of 

their employees. 

S. 852 will benefit victims significantly because they will receive 

fair, certain and equitable compensation without the delays and 

uncertainties inherent in the current tort system. Moreover, claimants will not have to worry whether their defendant is or will become bankrupt, and they will not bear the burden to prove liability, 

causation or to establish product identification as in litigation. 

Further, under the funding provisions in S. 852, more resources 

will be available to compensate victims than under the current system. As estimated by leading actuaries, because of the substantial 

transaction costs of the current tort system, only a total of about 

$61 billion will go to asbestos victims in the future, while an estimated $69 billion will go to plaintiff and defense lawyers.50 In contrast, under S. 852, $140 billion will go directly to compensate victims. 

Victims will be much better protected once S. 852 is enacted because the current awards some receive from the tort system are not 

sustainable into the future. To date, over seventy (70) companies 

have gone into bankruptcy as a result of asbestos liability, and 

without reform, more companies will be at risk in the future. The 

Committee’s hearing record is replete with the devastating impact 

the current asbestos crisis is having on businesses, workers, retirees, shareholders and the U.S. economy. S. 852 will ensure that asbestos victims no longer face the risk that their only recourse will 

be trusts created out of bankruptcies paying pennies on the dollar. 

In short, S. 852 provides fair compensation to those who are injured by asbestos exposure and ensures that scarce resources will 

not be spent on the unimpaired at the expense of those with asbestos-related injuries now and into the future. Too often those most 

deserving do not get their fair share out of the current system. Victims will benefit substantially from the new system. S. 852 is fair 

and balanced and will produce substantial benefits for victims, 

workers, retirees, shareholders and the U.S. economy. 

Critics’ Contention No. 8: Critics contend that S. 852 is unconstitutional and will lead to years of litigation over its constitutionality. 

Response: S. 852 has been very carefully written to avoid running 

afoul of the U.S. Constitution. Indeed, it is important to note that 

more than a decade ago a committee of the United States Judicial 

Conference, appointed by the Chief Justice of the U.S. Supreme 

Court, studied the special features of asbestos litigation and concluded that the ‘‘ultimate solution should be [federal] legislation 

recognizing the national proportions of the problem and creating a 

national asbestos dispute resolution scheme * * *. ’’ 51 Since that 

85 

only answer’’ and suggesting ‘‘passage by Congress of an administrative claims procedure *** ’’) 52See also Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999). 53See Statement of Lawrence H. Tribe, Hearing Before the Senate Committee on the Judiciary, Solving the Asbestos Litigation Crisis: S. 1125 The Fairness in Asbestos Injury Resolution 

Act of 2003, 108th Cong., June 4, 2003, at 2. 54Tribe testimony at 6. 

time, the U.S. Supreme Court has called repeatedly for an administrative solution as provided for in S. 852. 

In 1997, in Amchen Prods., Inc. v. Windsor, 521 U.S. 628–629 

(1997), Justice Ginsburg wrote: ‘‘The argument is sensibly made 

that a nationwide administrative claims processing regime would 

provide the most secure, fair, and efficient means of compensating 

victims of asbestos exposure.’’ 52 In March 2003, in writing for the 

Court in Norfolk & Western Ry. v. Ayers, 123 S.Ct. 1210, 1228 

(2003), Justice Ginsburg again stated: ‘‘The ‘elephantine mass of 

asbestos cases’ lodged in the state and federal courts, we again recognize, ‘defies customary judicial administration and calls for national legislation.’ ’’ The Committee has heeded the explicit call of 

both the U.S. Judicial Conference and the U.S. Supreme Court in 

establishing the no-fault, publicly-administered, privately-funded 

administrative claims process provided for in S. 852. 

In reviewing the constitutionality of S. 852, at the specific request of the Committee, preeminent Harvard constitutional law 

scholar Professor Laurence H. Tribe, testifying before the Committee on June 4, 2003, confirmed the constitutionality of the legislation: 

My conclusion, in brief, is that the FAIR Act is well 

within Congress’ authority to enact and does not offend the 

constitutional guarantees of due process, equal protection, 

or right to jury trial. Nor does it represent an uncompensated taking of private property, an unconstitutional impairment of contracts, or a violation of the separation of 

powers.53

With regard to the concerns of some that the preemption of common law tort claims may violate due process or create a claim 

under the Takings Clause of the Constitution, Professor Tribe testified further on the ability of Congress to preempt common law tort 

claims: 

The legislative precedents illustrate the breath of Congress’ power to adjust, restrict, or even abolish commonlaw and statutory causes of action. Thus, Congress has 

ample authority to rationalize asbestos claims, by creating 

an Article I procedure in the asbestos court for the orderly 

payment of such claims and thereby avoiding a race-to-thebottom situation in which relatively unimpaired plaintiffs 

are overpaid, transaction costs are high, and grievously injured plaintiffs risk getting little or no compensation at all 

* * *. It has long been settled, ever since the states began 

adopting workers’ compensation statutes, that a legislature 

is free to modify or abolish common-law causes of action 

without violating due process or creating a claim for compensation under the Takings Clause.54

86 

55 Hearing on Solving the Asbestos Litigation Crisis: S. 1125, the Fairness in Asbestos Injury 

Resolution Act of 2003, Before the Senate Comm. on the Judiciary, 108th Cong. 4 (2003) (testimony submitted for the record by Seth P. Waxman, Wilmer, Cutler & Pickering). 

In written testimony submitted to the Committee by former Solicitor General Seth Waxman supports this analysis, he explains that 

‘‘[t]here is further no doubt that in pursuing proper national goals, 

Congress may, to the extent it deems necessary or desirable, preempt and supersede the operation of state law.’’ 55

Nevertheless, should the constitutionality of S. 852 be challenged, the legislation explicitly provides for an expedited appeal 

directly to the Supreme Court as a matter of right within thirty 

days of any decision of a federal court finding any part of S. 852 

to be unconstitutional. This ensures that any such litigation will be 

resolved quickly. 

Critics’ Contention No. 9: Critics contend that the FAIR Act will 

become another black lung fund with the government having to put 

money into the Fund to compensate victims. 

Response: The FAIR Act establishes a trust fund for the compensation of asbestos claims that is privately funded. (Section 

221(a)). Although the program is housed in the Department of 

Labor, the Act ensures that all administrative expenses, as well as 

claims, are paid by the Fund. (Section 101(a)(3)). The FAIR Act expressly provides that nothing in the Act shall be construed to create any obligation of funding from the United States or to require 

the United States to satisfy any claims if the amounts in the Fund 

are inadequate. (Section 406(b)). As such, industry, not the U.S. 

Treasury, will be paying the bills. 

In response to an inquiry from Senator Nickles on S. 1125, as reported out of the Senate Judiciary Committee in 2003, the GAO 

recognized that S. 1125 explicitly provides that any borrowing by 

the Fund would not be supported by the U.S. Government. The 

GAO noted, however, that ‘‘[t]o ensure that the government incurs 

no liability for repayment of borrowing under the act, Congress 

may wish to explicitly state that repayment of borrowing is limited 

solely to amounts available in the Fund.’’ The GAO’s recommendation has now been incorporated into the FAIR Act. Under the Specter draft, any borrowing is limited to monies expected to be paid 

into the Fund, and section 221(b)(4) of the FAIR Act expressly provides that ‘‘[r]epayment of monies borrowed by the Administrator 

under this subsection is limited solely to amounts available in the 

[Fund].’’ (Section 221(b)). 

In addition, the problems of the Black Lung Disability Trust 

Fund being chronically under-funded have been considered, and 

FAIR Act has been carefully crafted so as not suffer from the same 

problems as the Black Lung program. Many of the companies 

obliged to pay for workers’ illnesses under the black lung fund 

were, soon after the enactment of the legislation creating the fund, 

acquired by other corporate interests. The legislation had not contemplated this scenario, and the successors-in-interest were not obligated to continue the payments that the original companies had 

made. The FAIR Act, by contrast, includes a comprehensive and 

specific provision designed precisely to ensure that successors-in-interest to the participants in the Fund are held just as responsible 

as the participants were, so that the Fund will not suffer any finial 

harm as the result of merger-and-acquisition activity. This proviVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00086 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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sion of the FAIR Act also requires reporting on all such activity to 

the Administrator, and just as importantly creates the opportunity 

for the Administrator—or another interested party—to bring a lawsuit to force compliance with the successor-in-interest provision and 

the obligations of such successors. 

Further, unlike the Black Lung program, which is financed by a 

tax imposed solely on coal mining companies, the asbestos compensation fund has a much broader funding base because asbestos 

litigation has affected virtually every sector of industry. Moreover, 

the funding obligations are not dependent on a fixed tax on a few 

companies, but are instead guaranteed collectively by all of the defendants and insurers. In addition, unlike the Black Lung program 

the total amount of funding is based on a long history of claims filing with bankruptcy trusts, which is the best available data upon 

which to estimate funding obligations, and the most reliable claims 

projections by experts in the field. 

The Black Lung program also has been criticized as being based 

on overly broad, ill-considered presumptions, creating what has 

been characterized as a runaway program. The medical criteria in 

the FAIR Act are based on detailed medical standards and require 

credible and reliable medical evidence to be filed with all claims. 

The Act also provides for Physicians Panels to review claims that 

have a more tenuous relationship to asbestos exposure. There are 

also independent reviews of certain claims and audit provisions to 

address any potential fraud and abuse. These safeguards were 

made to ensure that the FAIR Act does not establish a runaway 

program, while still providing compensation to the true victims of 

asbestos exposure. Finally, the FAIR Act also now excludes claims 

previously called Level VII claims, the so-called exposure-only lung 

cancers. 

Also unlike the Black Lung program, the FAIR Act provides the 

Administrator with greater flexibility to address short-term funding problems without incurring undue debt, and, as previously 

noted, any debt incurred must be based on expected monies to be 

paid by defendants and insurers. If the guaranteed funds are not 

sufficient to pay all of the Fund’s obligations, including administrative expenses and debt repayments, when due, the Fund will sunset and asbestos victims will be able to pursue their claims in 

court. (Section 405(f)). The funding requirements are to continue 

even after sunset if necessary to pay off any debt. (Section 

405(f)(5)). The taxpayers will not be left holding the bill. 

The Black Lung Benefits Act only required that a program be 

created for coal miners with pneumoconiosis, and the statute merely outlined presumptions of those who should be eligible and delegated authority to determine eligibility requirements to the Department of Labor. See, e.g., 30 U.S.C. § 921. Section 121 of the FAIR 

Act, on the other hand, prescribes detailed medical, diagnostic, latency, and exposure requirements to determine eligibility for compensation of asbestos claims. Consequently, Congress itself in the 

FAIR Act prescribes the criteria for eligibility for compensation, 

and these criteria are designed to compensate only those truly ill 

from asbestos exposure and not other causes. Unlike the Black 

Lung Benefits Act, the FAIR Act does not authorize the Department of Labor to promulgate new eligibility criteria or to change 

the criteria reflected in the statute. Indeed, as part of the annual 

88 

report to Congress required by the FAIR Act, the Administrator 

must review claims filings and eligibility determinations to ensure 

the purposes of the Act are met and that the Fund is compensating 

true victims of asbestos exposure and not compensating claims for 

injuries that are not caused by asbestos. (Section 405(c)). Based on 

experience gained in implementing the program, the Administrator 

can recommend changes to the eligibility criteria, but any such recommended changes must first go through a special commission and 

then be approved by Congress. (Section 405(e)). The Administrator 

is not authorized to change the eligibility criteria through regulations. 

Moreover, the bill expressly mandates Department of Labor the 

authority to contract out with a claims handling facility to help alleviate the initial influx of claims. (Section 106(c)(4)). Currently, 

there are a number of private sector claims handling facilities in 

existence with experience managing asbestos claims. For example, 

the Claims Resolution Management Corporation (‘‘CRMC’’) handles 

the claims processing for the Manville Trust and three other bankruptcy trusts. CRMC reportedly has been able to handle over 

150,000 asbestos claims annually from law firms filing with the 

Manville Trust. In addition to CRMC, there are a number of claims 

management facilities that handle a multitude of cases every year 

on behalf of insurance companies and defendants. Existing claims 

handling facilities are very efficient. For example, in 2002, CRMC 

adopted a sophisticated electronic claims submission system. These 

entities (or new entities drawing upon the expertise of these entities) would be available to handle claims on behalf of the Department of Labor and/or to assist in training of claims handling personnel. The costs of retaining such entities would be borne entirely 

by the Fund. 

Critics’ Contention No. 10: Critics contend that legislation that 

imposes a set of medical criteria in the tort system would be preferable to the trust fund created in S. 852. 

Response: The Committee received significant testimony establishing that the current system for compensating asbestos victims 

is broken. Victims are dying while they wait for their day in court. 

When they finally receive their day in court, victims often receive 

only a small percentage of the costs involved in our tort system, or 

if the defendant has been forced to file for bankruptcy, then victims 

receive little or no compensation. This dire situation cries out for 

a solution outside of the court system that streamlines the claims 

process for victims; ensures that they receive timely and fair compensation relative to the severity of their injuries; and protects 

compensation they receive from subrogation by insurance companies. 

According to the most recent RAND study, asbestos victims receive an average of only 42 cents for every dollar spent on asbestos 

litigation. Thirty-one cents of every dollar have gone to defense 

costs, and 27 cents have gone to plaintiffs’ attorneys and other related costs. Enactment of a medical criteria bill for asbestos would 

fail to reduce the high transaction costs of the asbestos tort system. 

Medical criteria bills do nothing to protect businesses from going 

bankrupt or victims who were injured by bankrupt companies from 

receiving fair compensation. Many asbestos manufacturers are in 

bankruptcy proceedings and therefore are immune from suit. VicVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00088 Fmt 6659 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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tims like our nation’s veterans are unable to recover for asbestos 

exposure they received while serving the country in the current 

tort system. The Judiciary Committee recently received the following testimony from Hershel W. Gober, National Legislative Director, Military Order of the Purple Heart: 

The avenues open to veterans to seek compensation 

through the tort system, however, are very limited. The 

Federal government, as the members of this Committee 

know, has sovereign immunity, thereby restricting veterans’ ability to recover from the government; and most of 

the companies that supplied asbestos to the Federal government have either disappeared or are bankrupt and, 

therefore, are only able to provide a fraction of the compensation that should be paid to asbestos victims, if anything at all. Even if there is a solvent defendant company 

for a veteran or his/her family to pursue, there remains 

the lengthy, costly, and uncertain ordeal of filing a civil 

lawsuit and going through discovery and trial, where the 

plaintiff bears a heavy burden of proof and often has the 

very difficult to impossible task of establishing which defendant’s product caused their injuries. 

Criteria bills would do nothing to compensate victims like our nation’s veterans who were injured by bankrupt companies during 

their service to our country. 

Legislation imposing medical criteria in the tort system is inherently unfair to victims. Such measures do not alleviate the delays 

victims face when confronted with overwhelmed court dockets. Criteria bills will impose new hurdles for plaintiffs and continue to require the identification and proof of the manufacturer or entity responsible for exposing them to asbestos decades ago. In contrast, 

the FAIR Act Fund will not require victims to identify and prove 

the manufacturer or entity that exposed them to asbestos. Under 

the FAIR Act Fund, victims will not have to hope that the entity 

responsible for their exposure is financially solvent. They will recover compensation under the Fund in proportion to their impairment or disease. 

The current system for compensating victims of asbestos exposure is inefficient and inequitable. A medical criteria bill is not a 

solution because it operates within the same tort system. A true alternative will avoid the problems with the current asbestos tort 

system and bankruptcy compensation process. The Fund created by 

S. 852 will provide fair and timely compensation to all victims impaired by asbestos exposure and would bring financial certainty to 

defendant companies and insurers. Medical criteria proposals that 

would operate within the existing tort system simply would not. 

VIII. COST ESTIMATE

Due to time constraints, the Congressional Budget Office estimate was not included in the report. When received by the Committee, it will appear in the Congressional Record at a later time. 

Language for filing Congressional Budget Office estimate in the 

Record: 

90 

CBO ESTIMATE ON S. 852

Mr. SPECTER: Mr. President, on June 30, 2005, I filed a committee report to accompany S. 852, a bill to provide for education 

and training, and for other purposes. At the time the report was 

filed, the estimates by the Congressional Budget Office were not 

available. I ask that a complete copy of the CBO estimate be printed in the Record. 

IX. REGULATORY IMPACT STATEMENT

Pursuant to Rule XXVI, of the Standing Rules of the Senate, the 

Committee, after due consideration anticipates that S. 852 will 

have the following regulatory impact: 

A. (i) Businesses regulated—Under S. 852 companies and insurers with asbestos liability will be required to submit necessary financial documentation to the Asbestos Injury Claims Resolution 

Fund and the Insurers Commission respectively for proper assessment of contributions. With respect to the ban on certain asbestos 

containing products in S. 852, it is anticipated the regulatory burden will be minimal especially in light of regulation promulgated 

in the late 1970’s and early 1980’s that limited occupational exposure to asbestos. 

(ii) Individuals regulated—Individuals seeking compensation 

from the Asbestos Injury Claims Resolution Fund will be required 

to submit necessary documentation to support their claim. 

B. Economic Impact—S. 852 will have a positive economic impact 

on businesses by providing greater certainty with regard to asbestos liability exposure, which in turn will enable businesses to preserve jobs and pension for employees. 

C. Personal Privacy Impact—Claimants must provide written 

consent for claims examiners to obtain information necessary to 

evaluate their claim, including their medical and smoking history 

in order for a determination of eligibility. It is anticipated that the 

impact will be comparable to requirements under the current tort 

system. 

(91) 

1Stephen J. Carroll, Asbestos Litigation, Rand Inst. for Justice, xvii (2005). 

X. ADDITIONAL VIEWS 

ADDITIONAL VIEWS OF SENATORS SESSIONS, CORNYN, 

GRASSLEY, KYL, GRAHAM, BROWNBACK, AND COBURN 

The asbestos litigation explosion of recent years has caused untold harm to asbestos victims, has cost billions of dollars and has 

bankrupted over 70 businesses. The RAND Institute notes that asbestos litigation is ‘‘the longest-running mass tort litigation in the 

United States.’’ 1 Today, it continues to deny many victims timely 

compensation, serves as a significant drain on the national economy, and hinders America’s competitiveness on the global stage. 

This albatross should not be allowed to continue. 

S. 852 represents a step forward in our efforts to craft legislation 

that would offer a national solution to this problem. The bill includes a number of important improvements over the legislation we 

considered in the 108th Congress, S. 1125 and S. 2290. These improvements combined with the considerable efforts of the Chairman to advance the bill compelled us to vote it out of Committee. 

However, we continue to hold serious reservations about a number of important aspects of the current legislation. These concerns 

generally can be summarized as follows: (1) the medical criteria as 

written do not ensure that the trust fund will pay only the claims 

of individuals who are truly sick from asbestos exposure; (2) the 

trust fund does not create a complete and permanent alternative 

to litigation, particularly in that it allows a large number of claims 

to remain in or return to the courts; (3) the trust fund is not adequately protected from much of the abuses and fraud that has contributed a great deal to the existing situation; (4) it is neither clear 

that the cost of the trust fund can be sustained nor that the allocations formula is structured fairly; (5) the level of available information for our study and analysis is not sufficient to conduct adequate 

due diligence; and (6) the trust fund does not enjoy the level of 

broad support from the victims and the parties who are contributing to it that we would prefer. 

1. The medical criteria are not sufficient 

Because claimants may suffer from diseases that may or may not 

have been caused by asbestos exposure, and because asbestos exposure may leave markers without impairment or illness, it is essential that this Fund contains medical criteria and exposure requirements that distinguish claimants, based on medical and scientific 

standards, who have disease caused by asbestos exposure from 

those who do not. Unfortunately, S. 852, as written, will result in 

92 

2See Generally, Goodman, M., Cancer in Asbestos-Exposed Occupational Cohorts: A MetaAnalysis, Cancer Causes and Control, 10: 453–65 (1999). 3 Carroll, supra note 1, at 105. 

many individuals receiving compensation who are not, in fact, sick 

from asbestos exposure. 

For example, Level VI provides compensation for claimants suffering from ‘‘other cancers’’, including colorectal, laryngeal, esophageal, pharyngeal and stomach cancer. These cancers commonly affect the general public, and according to the overwhelming weight 

of the medical evidence, are not caused by exposure to asbestos.2

In addition, the use of CT Scans for diagnoses is fraught with potential abuse and problems. These and other problems could bankrupt the fund, leaving inadequate funds to compensate those victims who are truly sick from asbestos exposure. 

In order to ensure that true victims of asbestos exposure are 

compensated fairly, we believe that the medical criteria should be 

improved. Doing so would greatly increase the chances of the trust 

fund’s success and help bring resolution to thousands of asbestos 

victims. 

2. S. 852 does not provide a complete alternative to litigation 

One of the key benefits of a trust fund should be exiting the current broken asbestos litigation system—one where attorneys’ fees 

and other administrative costs are consuming approximately 58% 

of all asbestos-related litigation costs.3 Unfortunately, the current 

version of the trust fund in S. 852 leaves potentially thousands of 

claims outside of the trust fund and undermines the ability of the 

fund to operate properly. 

At virtually every turn throughout the life of the fund, the possibility of a claim remaining in the tort system is an option. At startup, claimants may choose to stay in court if the trust fund is not 

certified as operational by the Administrator within a certain time 

frame. Similarly, rather than putting all claims pending at the 

time of enactment that do not have a final judgment or verdict into 

the trust fund, S. 852 leaves many current claims in court. Finally, 

and potentially most troubling, the current legislation would allow 

a complete reversion to the tort system in the event the Administrator finds the trust fund is insolvent. Below, we discuss the likelihood, or at least potential, that the fund’s viability may be in question, but the prospect of spending billions of dollars to create a federal trust fund only to return to the current, albeit slightly modified, court system is troubling. 

Virtually everyone agrees that the current system is badly broken. Accordingly, we would prefer that S. 852, or any trust fund 

legislation, place as many claimants as possible into the newly created fund in order to prevent their continuation in the current 

fraudulent, broken asbestos litigation system. 

One of the advantages of a no-fault compensation system, such 

as the asbestos trust fund, is the ease with which claims may be 

filed. Instead of forcing claimants or their attorneys to fully litigate 

their claim against the defendant companies, the current trust 

fund only requires them to submit the requisite paperwork and 

documentation to the Administrator. While S. 852 limits attorney’s 

fees to 5% of the award paid to the claimant, we believe that an 

93 

4Senate Comm. on the Judiciary, 180th Cong., The Fairness in Asbestos Injury Resolution 

Act of 2003, (Comm. Report 2003) (additional views of Sen. Kyl). 5 Jonathan D. Glater, Civil Suits Over Silica in Texas Become a Criminal Matter in New York, 

N.Y. TIMES (May 18, 2005). 

attorney, representing a mesothelioma victim who recovers $1.1 

million from the trust fund, should not be entitled to $55,000 in attorney’s fees for simply filing paperwork with the Administrator. 

3. The trust fund does not sufficiently avoid current fraudulent 

practices 

The level of fraud underlying the current asbestos litigation crisis is well documented and troubling.4 One of the primary benefits 

of a trust fund should be eliminating these fraudulent practices 

from continuing. S. 852 goes a long way toward eliminating those 

abuses but does not go far enough. 

Specifically, we are very concerned about the potential abuses 

with regard to silica litigation and the on-going Multi-District Litigation (MDL) in Corpus Christi, Texas. What has transpired there 

is more than alarming. The details of the fraud and corruption are 

covered in the additional views offered by Senators Kyl, Cornyn 

and Coburn within this document. However, it can be summarized 

by Judge Janice Jack, who is presiding over this litigation, when 

she referred to ‘‘great red flags of fraud’’ with respect to numerous 

doctors signing off on claimants’ medical records as consistent with 

diseases related to silica exposure without performing appropriate 

analysis.5

The trust fund currently takes some steps to address this specific 

concern—requiring plaintiffs to demonstrate by a preponderance of 

the evidence that, in short, they are not trying to ‘‘double-dip’’ and 

obtain a trust fund award while also pursuing a silica claim 

through the court system. Our concern is that the current language 

in the bill is not sufficient. It allows a claimant to show that he 

would only receive Level One medical monitoring and, thus, not a 

monetary award, and then be eligible to pursue a silica claim in 

court. This provision opens the door to extension of the existing 

fraudulent system. 

Finally, we remain concerned that one of the key avenues for 

abuses, the ‘‘medical screening’’ programs, remains a part of S. 852. 

While improved in many respects—that is, limiting compensation 

to Medicare rates, requiring screeners to be approved and to not 

have excessively profited from screening historically—the mere existence of the medical screening program is troubling. At a lifetime 

cost of $600 million, this program calls into question the soundness 

of the trust fund and continues a practice that caused much of the 

problems we are attempting to solve in the first place. 

4. The financial structure of the trust fund still causes us concern 

The trust fund depends on a comprehensive understanding of the 

cash inflows and cash outflows. Unfortunately, while we await the 

analysis of the CBO, at the present we are satisfied neither that 

the allocations formula (inflows) is fair and adequate nor that the 

cost of the trust fund (outflows) will be sustainable. 

The allocations to be assessed upon the insurance companies 

have been left to an insurance commission. While this remains disVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00093 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
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concerting to us and many insurance companies, the allocations 

against defendant companies under the trust fund is particularly 

troubling. We should never be so careless as to place what amounts 

to a substantial tax burden on companies without knowing whether 

this burden is fair and whether it accurately reflects the amount 

the company would owe under the tort system. 

The bill’s current funding allocations have the potential to create 

substantial hardship for companies that have adequately insured 

themselves against asbestos litigation exposure. Since the fund will 

strip companies of their insurance coverage and it uses past asbestos expenditures, including those covered by insurance, to determine tier placement, certain companies who have paid no out-ofpocket expenses due to adequate insurance coverage stand to pay 

substantial sums. For example, the fund’s allocations formula will 

require one company, which has $110 million in total past asbestos 

expenditures but no out-of-pocket expenses and, it believes, adequate insurance to cover all projected future expenses, to pay $16.5 

million per year into the fund equaling $495 million over the life 

of the fund. Many companies predict that this inequity in funding 

allocations will drive them into bankruptcy. One of the goals of this 

legislation is to prevent more companies from going into bankruptcy. In addition, if companies cannot pay their required allocation under the fund, the ultimate viability of the fund may be questionable. 

However, our concerns with the outflows or cost of the trust fund 

center more directly on the effect of medical criteria and the likely 

number of claimants. As previously discussed, failure to further improve the medical criteria will lead to an increased number of payouts to claimants who are not truly sick from asbestos exposure 

and, potentially, to the eventual bankruptcy of the fund. In addition, we are concerned that the data we were given regarding 

claims predictions may be insufficient and outdated. At the 

present, we are relying solely on one person’s projections, those of 

Dr. Fran Rabinowitz, and the analysis of one company, Goldman 

Sachs, to determine the total cost of the Trust Fund. Should the 

claims predictions data, upon which the entire fund is based, prove 

incorrect; the overall viability of the fund will be jeopardized. Finally, the provisions providing Level IV compensation to residents 

of Libby, Montana without requiring proof of occupational exposure 

are problematic and call into question the possibility that other 

sites throughout the country where significant quantities of asbestos have been mined or processed will qualify, or ask to qualify, for 

the same benefits. The proposition of this alone could add significant stress to the Trust Fund and potentially lead to its insolvency. 

We are also concerned that potential problems created by locating the asbestos trust fund within the Department of Labor will 

place additional and unnecessary financial strain on the trust fund. 

As the Department of Labor’s experience with the Black Lung 

Trust Fund shows, housing the asbestos trust fund within the Department of Labor will lead to the inefficient processing of claims 

and will create an expectation that the federal government guaranVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00094 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
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6The history of the Department of Labor’s Black Lung Trust Fund demonstrates that the risk 

of a federal government bail-out is very real. The fund, which had access to financing from the 

Treasury to cover early claims, owed $2.8 billion to the Treasury by the end of 1985. What is 

worse, any default by the fund in ultimately repaying its debt—which now exceeds $8 billion— will represent an additional charge to taxpayers. 

tees the solvency of the fund.6 Instead, we believe that a private, 

non-profit corporation would alleviate these concerns by processing 

claims quickly and efficiently and by preventing the expectation of 

a taxpayer bailout should the fund become insolvent. 

5. Available information has been insufficient to perform adequate 

due diligence 

One particularly concerning problem has been the lack of information that is available to the Committee with regard to the underlying financial analysis of the trust fund. We have repeatedly 

requested more information on the financial analysis upon which 

this trust fund is based. The proponents of the trust fund have provided us with only cursory data. We have inadequate information 

regarding the identity of the companies required to pay into the 

fund and their allocations; the past asbestos expenditures of those 

companies; and whether these companies have received notification 

of their impending liability. We, as a Congress, should take great 

care not to enact legislation of this magnitude without performing 

due diligence adequate enough to ensure that it is based on sound 

financial analysis. 

6. Trust fund support should be stronger among victims and contributing companies 

While the potential overall economic benefit to ending the current abusive litigation environment is readily apparent and while 

the goal to streamline and improve compensation for victims is 

laudable, support for the fund remains tepid. In fact, for all its potential benefits, the fund has met resistance from both victims and 

business groups. 

Determining the level of support for the trust fund is a difficult 

task. Among victims’ groups, support for the trust fund varies. 

Some groups are supportive to be sure, but we have received many 

letters of concern as well. Some victims do not believe it is fair to 

cap their potential damages—a common complaint for a no-fault 

system. Still, others recognize that a no-fault system will increase 

the likelihood they will receive compensation quickly and efficiently. 

Among those paying for the fund, again, opinions are mixed. The 

fund imposes a significant assessment (only semantically different 

from a tax) upon American businesses to pay for it. Yet, many companies are so desperate for reform that they would support virtually any reform we might enact. Conversely, numerous companies are either opposed or, at best, neutral to our consideration of 

S. 852. Among the most important concerns are the start-up of the 

fund and the associated ‘‘leakage’’ from the fund; concerns about 

the fairness of the allocations formula; concerns about the medical 

criteria and how the costs associated with that criteria will impact 

the viability of the trust fund; and concerns about the lack of subrogation. 

96 

For a trust fund of this magnitude, we would prefer to see a 

much broader spectrum of support among victims and those contributing to the Fund. After all, while these groups often have competing interests, they are the intended beneficiaries of the legislation and we would hope that we could engender as much support 

as possible from them. 

In summary, our support for this legislation out of Committee 

should not be viewed as an indication of its readiness for final passage. Instead, it represents a commitment to continue working to 

improve it. There are two indispensable characteristics to enacting 

any type of asbestos litigation reform: predictability and finality. 

The reform must provide predictability for victims of asbestos-related injuries as well as for the insurers and defendant companies 

paying for it. In addition, it must provide finality to those paying 

for it by ensuring that they will not be forced to pay under dual 

tracks or into the trust fund only to revert back to the same broken 

tort system. Unfortunately, at this time, this bill provides neither 

predictability nor finality to the extent needed to ensure the viability of the fund. 

While we support the admirable goal behind this legislation—enhancing benefits to victims who are truly sick from asbestos exposure by compensating them generously, quickly and efficiently and 

by limiting administrative costs and attorney’s fees while providing 

finality for American businesses—we believe that a significant 

number of important issues must be addressed for it to be successful. 

JEFF SESSIONS. 

JOHN CORNYN. 

CHARLES E. GRASSLEY. 

JON KYL. 

LINDSEY O. GRAHAM. 

SAM BROWNBACK. 

TOM COBURN. 

(97) 

1 Responses to Questions of Dr. James D. Crapo, Professor of Medicine, National Jewish Medical and Research Center, Submitted to the Senate Committee on the Judiciary, May 25, 2005, 

at 4 (Attachment A). Dr. Crapo is certified in Internal Medicine and Pulmonary Diseases. He 

is currently Professor of Medicine of the National Jewish Medical and Research Center in Denver, Colorado. National Jewish is a specialty hospital that is the nation’s top ranked hospital 

in pulmonary disease. Dr. Crapo is also a Professor of medicine at the University of Colorado 

Health Sciences Center. He is a Past President of the American Thoracic Society. He is currently the President of the Fleischner Society, a leading international society of selected specialists in radiology and pulmonary medicine. He has more than 25 years of experience with asbestos-related issues, including medical research and clinical treatment of patients suffering from 

asbestos-related diseases. He has served as expert witness on behalf of defendants involved in 

Continued 

ADDITIONAL VIEWS OF SENATORS COBURN, GRASSLEY, 

KYL, AND CORNYN 

The Committee states that the purpose of the Asbestos Injury 

Claims Resolution Fund (‘‘Fund’’) is to ‘‘address the current asbestos crisis, which has diverted resources from the truly sick, clogged 

our federal and state courts, bankrupted companies, and endangered the jobs and pensions of employees.’’ Our goal is to compensate those individuals who are truly sick from diseases caused 

by asbestos exposure, while also establishing a solution to the litigation crisis created by asbestos injury claims. Many businesses 

have gone bankrupt or have otherwise suffered great financial difficulties, not just because many sick people have sought compensation for their injuries, but because smart trial lawyers have learned 

to game the system and file phony claims. It is time for that to end. 

However, we must be certain that the solution we reach is the 

right one. We must create a process that provides finality to this 

crisis. First, we must ensure that we have a Fund that will get on 

its feet as quickly as possible. Next, we must be certain that the 

Fund is compensating the correct people. This will require good 

medical criteria and exposure requirements so that only those 

claimants who are sick from asbestos exposure are compensated. 

We also need to know who is paying into the Fund and how their 

participation is going to affect their viability. We also must ensure 

that quality assurance is built into the system to prevent it from 

being gamed—such as limits on attorneys’ fees and the fees that 

doctors receive for screenings, and good auditing procedures of the 

claims. Finally, the Fund should not sunset before the intended 

end of its life. Claimants should not return to the broken tort system. Finally, under no circumstances should there be a dual-track 

system where claims are being paid by the Fund at the same time 

that litigation is proceeding. 

There is no reason why this Fund should become insolvent. Asbestos use has declined dramatically in the last few decades, and 

is currently heavily regulated. Therefore, very few individuals are 

presently exposed to asbestos that could cause illness. In fact, Dr. 

James D. Crapo stated that ‘‘[m]ost pulmonologists rarely or never 

see a case of new asbestosis today.’’ 1 Dr. Crapo estimates that the 

98 

asbestos litigation, and he has testified before the United States Senate Judiciary Committee 

twice. 2 Id. 

3 Congressional Budget Office Cost Estimate, 2. 1125, Fairness in Asbestos Injury Resolution 

Act of 2003, 16 (2003). 4Letter from Congressional Budget Office to Senator Don Nickles of April 20, 2004, at 6. 

5Letter from David Austern to Senate Committee on the Judiciary. 

6Testimony of Dr. James D. Crapo, Professor of Medicine, National Jewish Medical and Research Center, before the Senate Committee on the Judiciary, April 26, 2005, at 1 (Attachment 

B). 7 Id. at 2. 

decline of asbestosis began in the mid 1980s, following the implementation of stricter guidelines for occupational asbestos exposure.2

Improvements were made to S. 852 in Committee to ensure that 

all of these requirements are met. However, more changes to the 

bill must be made. Otherwise, we will see the end of this Fund in 

as early as 2 to 3 years, leaving a tremendous amount of debt in 

its wake. CBO noted in October 2003 that ‘‘[t]he revenue stream 

that would be generated by this legislation is highly uncertain.’’ 3

Today, we still do not know everyone who will pay into the $140 

Billion Fund. 

One of the greatest threats facing this Fund is insolvency. Insolvency is most likely to result from the Medical Criteria in S. 852. 

In April 2004, CBO had a sunny forecast for last year’s bill. CBO 

made optimistic assumptions that fewer than one in four claimants 

would qualify for payment under the medical criteria.4 However, 

David Austern, the Manville Trust’s General Counsel noted in a 

letter to the Senate Judiciary Committee that under a previous 

version of this bill ‘‘there is almost no likelihood that as many as 

85% of the nonmalignant claims filed pursuant to S. 1125 will qualify only for Level I * * * Our best estimate * * * is that over twothirds and as many as three-quarters of the nonmalignant claims 

filed pursuant to S. 1125 will qualify for compensation at Level II 

or higher.’’ 5 Additionally, Dr. Crapo has stated repeatedly that 

thousands of claimants will qualify inappropriately for payment 

under two of the malignant claims levels, Level VI and VII. 

These forecasts are deeply troubling. If we do not make some significant changes to the Medical Criteria in S. 852, this Fund will 

go under in 2–3 years, leaving a larger mess than exists now. 

Changes needed to the disease levels 

Substantial occupational exposure to significant levels of inhaled 

asbestos may cause a number of diseases. These diseases include 

Mesothelioma, Lung Cancer, and the nonmalignant lung conditions 

Asbestosis and Pleural Reactions. However, ‘‘[i]ndividuals may develop similar diseases but without contributory causation from asbestos exposure.’’ 6 Also, individuals who are exposed to asbestos 

may develop pleural reactions that are asymptomatic, such as a 

pleural plaque which ‘‘can be characterized as a callus on the chest 

wall’’ but ‘‘does not involve the lung. Pleural plaques are a marker 

of asbestos exposure but do not cause impairment. Pleural plaques 

or thickening, unless extensive, do not affect lung function. In medical textbooks these are most commonly referred to as ‘benign pleural plaques’ and not ‘pleural disease.’ ’’ 7

99 

8 Id. 

9Fairness in Asbestos Injury Resolution Act of 2005, S. 852 109th Cong. §§ 121(d)(2)(A), 

121(d)(3)(A). 121(d)(4)(A), 121(d)(5)(A) (2005). 

Because claimants may suffer from diseases that may or may not 

have been caused by asbestos exposure, and because asbestos exposure may leave markers without impairment or illness, it is essential that this Fund contains medical criteria and exposure requirements that distinguish claimants, based on medical and scientific 

standards, who have disease caused by asbestos exposure from 

those who do not. Unfortunately, S. 852, as written, will result in 

many individuals receiving compensation who are not, in fact, sick 

from asbestos exposure. Many changes need to be made to the medical criteria to ensure that the Fund remains viable, so that those 

individuals who are truly sick from asbestos exposure receive compensation. 

THE NONMALIGNANT LEVELS

As mentioned above, the presence of benign pleural plaques in a 

claimant’s chest, while indicating asbestos exposure, does not necessarily indicate asbestos-related illness. As Dr. Crapo explained 

before the Senate Judiciary Committee: 

In certain rare cases, very extensive pleural thickening 

can lead to entrapment of the lung and cause impairment. 

This is called diffuse pleural thickening and is properly 

termed a disease. Fortunately, new cases of asbestos-induced diffuse pleural thickening are extremely rare since 

high-level occupational exposures have been virtually 

eliminated for almost 20 years. In addition, the presence 

of pleural plaques or pleural thickening due to asbestos exposure does not increase the risk of developing either asbestosis or lung cancer. When compared to other individuals with similar asbestos exposure but no pleural manifestations, patients with pleural plaques have not been 

shown to be at increased risk of more serious asbestos-related diseases.8

Because the presence of pleural plaques or pleural thickening 

does not indicate that someone is impaired or likely to become impaired, ‘‘bilateral pleural disease’’ should be deleted as a qualification for compensation in Levels II, III, IV, and V.9 Additional 

changes are needed to these levels to ensure that they compensate 

the appropriate claimants. 

Nonmalignant level II (mixed disease with impairment) 

In the Committee Report, the stated purpose of Nonmalignant 

Level II is to compensate individuals who are ‘‘impaired due to a 

combination of asbestosis and other causes, typically chronic obstructive pulmonary disease.’’ However, the Fund would allow individuals who have obstructive pulmonary disease to receive compensation by the Fund even when they do not have asbestosis, 

which is a restrictive pulmonary disease. Section 121(d)(2)(B) allows someone to receive compensation under Level II who has ‘‘evidence of TLC less than 80 percent or FVC less than the lower limVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00099 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
100 

10S. 852 § 121(d)(2)(B). 11See Email from Dr. James D. Crapo to Senator Tom Coburn (Attachment C); Crapo, James 

D., supra note 1, at 2. 12 Email from Dr. James D. Crapo to Senator Tom Coburn. 13S. 852 §§ 121(d)(3)(A), 121(d)(4)(A), 121(d)(5)(A). 14 Crapo, James D., supra note 6 at 5. 15 Id. Dr. Crapo also notes that ‘‘DLCO is most commonly influenced by smoking.’’ Email from 

Dr. James D. Crapo. 16 Roger Parloff, Diagnosing for Dollars, Fortune Magazine, June 13, 2005, at 102. 

its of normal, and FEV1/FVC ratio less than 65 percent.’’ 10 However all cases of mild obstruction, including those commonly found 

in smokers, show an FVC less than the lower limit of normal and 

an FEV1/FVC ratio less than 65%. As drafted, non-malignant II 

does not compensate individuals with mixed restrictive and obstructive disease, as intended. Instead, it compensates smokers 

who also have pleural plaques (but not asbestosis or any impairment related to airway restriction). Consequently, the Fund allows 

a smoker with airway obstruction to receive Level II compensation.11

Level II should therefore be stricken from the Fund, or in the alternative, the ‘‘or’’ in Section 121(d)(2)(B) should be changed to 

‘‘and.’’ This will ensure that a claimant under Level II truly has 

mixed disease—both restrictive and obstructive pulmonary disease. 

Non-malignant levels III (Asbestosis/Pleural Disease B), IV (Severe 

Asbestosis) and V (Disabling Asbestosis) 

As discussed above, for non-malignant levels III, IV, and V, ‘‘[t]he 

presence of pleural disease should not be allowed to substitute for 

a radiographic diagnosis of asbestosis * * * Pleural plaques do not 

cause a severe restrictive lung disease. There are no studies or 

publications that would support this concept.’’ 12 Nonetheless, this 

Fund would allow compensation under levels III, IV, and V with 

‘‘diffuse pleural thickening, or bilateral pleural disease of B2 or 

greater’’ without a radiographic diagnosis of asbestosis.13 This 

quoted language should be stricken so that only those individuals 

who truly have asbestosis are compensated under Levels III, IV, 

and V of the Fund. 

Additionally, Level V of the Fund allows the use of the singlebreath diffusing capacity of the lung (carbon monoxide) technique 

(DLCO). Instead, the Fund should rely on decreases in TLC and in 

FVC, which is the ‘‘gold standard,’’ to determine disabling asbestosis.14 In contrast, ‘‘DLCO is more highly variable, non-specific 

and is not closely correlated with functional disability. It should 

not be used as a substitute for decreases in TLC and FVC to qualify for Level V. Keeping DLCO as an alternated criteria for PFT 

changes in Level V will result inappropriately qualifying individuals for Level V that should be Level IV.’’ 15

Notably, claims against the Manville trust decreased from 

101,000 in 2003 to 14,500 in 2004 due to reforms done by the 

trust.16 One of the reforms was to remove the DLCO as a payment 

criterion. The DLCO was removed because it was one of the tests 

easily abused. S. 852 should not allow this abuse to begin, by striking the use of DLCO from the Fund. 

101 

17 Crapo, James D., supra note 6 at 5. 18 Id. at 4. 19 Id.. 20S. Rep. No. 108–239, at 98–103 (3003). To supplement his additional views in the Committee Report for S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003, Senator Jon 

Kyl posed three questions to four experts, Dr. James D. Crapo (Professor of Medicine of the National Jewish Medical and Research Center), Dr. William Weiss (Emeritus Professor of Medicine, Drexel University), Dr. Michael Goodman (Senior Managing Scientist, Exponent Health 

Group), and Dr. J. Bernard L. Gee (Emeritus Professor of Medicine Yale University School of 

Medicine). The questions were: (1) Do pleural plaques or pleural thickening constitute an injury 

or impairment? Are they a useful predictor of future injury? (2) If an asbestos exposure was 

not significant enough to cause clinically significant asbestosis, could it nevertheless have cause 

lung cancer? (3) Can asbestos exposure cause colorectal cancer,or cancer of the larynx, pharynx, 

esophagus, or stomach? 

THE MALIGNANT LEVELS

Malignant level VI (other cancer) 

Dr. Crapo succinctly stated in his written testimony to the Judiciary Committee that Level VI ‘‘would result in large compensations to large numbers of individuals who develop a cancer for 

which there is no established causal relationship to asbestos exposure.’’17 While some have argued that there are studies to support 

the claim that asbestos exposure may be linked to other cancers, 

such as cancer of the gastrointestinal tract, larynx, kidney, liver, 

pancreas, ovary, and hematopoietic systems, Dr. Crapo explained 

the problems with the studies that these individuals cite: 

Many of those studies involved case-reports or case-control studies. The best assessment of risk association is 

done with cohort studies and not case-control studies since 

exposure assessment in case-control studies is usually derived from questionnaires and is frequently inaccurate. 

Since those early studies, a substantial number of additional studies of this issue were undertaken, and the 

weight of current medical and scientific information suggests no clear association between asbestos and cancers 

other than lung cancer and mesothelioma.18

According to a meta-analysis of appropriately conducted studies, 

‘‘there is either no evidence of a significant association with asbestos exposure or no dose-response effect * * * Besides lung cancer 

and mesothelioma the only cancer for which a possible association 

with asbestos exists is laryngeal cancer[,] * * * however, variance 

in these studies was large and there was no evidence of a dose-response effect, raising serious question as to whether cancer of the 

larynx has a true correlation with asbestos exposure,’’ without the 

elimination of the confounding variables of alcohol and tobacco 

use.19

Other physicians agree. Dr. J. Bernard L. Gee stated for the 

record in 2003, with regard to cancer of the larynx and pharynx: 

‘‘The confounding factors previously mentioned, namely smoking 

and alcohol, remain major often-unadjusted factors in these diseases * * * We reviewed 24 prospective and 17 retrospective studies out of which only three or four showed any excess risk. We concluded that asbestos exposure does not cause these cancers, as did 

Liddell reporting for the U.K. health authorities.’’20 Regarding 

esophageal cancer, he stated that ‘‘there is no evidence relating 

them to asbestos.’’ For kidney cancer, he stated that ‘‘analysis 

102 

21 Id. See also, S. Rep. No. 108–239, at 144–183 (2003) (Letters submitted to the Committee 

Report at the Request of Senator Jon Kyl). 22See also, John F. Gamble, Asbestos and Colon Cancer: A weight-of-the-Evidence Review, 

Environ Health Perspect. 1994 Dec; 102(12):1038–50, 1038 (‘‘Population-based case-control studies of colon cancer do not show any consistent risk associated with asbestos exposure. Long-term 

ingestion studies show no evidence of an increased incidence of colon cancer in animals by this 

route of exposure and do not provide biological plausibility for a causal association between asbestos exposure and colon cancer.’’); David H. Garabrant, Ruth K Peters, & David M. Homa, 

Asbestos and Colon Cancer: Lack of Association in a Large Case-Control Study, Am J Epidemiol 

1992; 135:843–53, 843 (‘‘Previous studies linking exposure to asbestos with human colon cancer 

have used mortality rather than incidence as their endpoint and have neither assessed nor controlled for confounding by diet, genetic factors, or other risk factors for colon cancer * * * This 

study suggests not only that occupational exposure to asbestos is not a risk factor for colon cancer in the general population of Los Angeles, but also that observed associations between asbestos and colon cancer should not be interpreted as causal unless confounding by nonoccupational 

factors has been evaluated and controlled.’’); Joshua E. Muscat & Ernst L. Wynder, Tobacco, 

Alcohol, Asbestos, and Occupational Risk Factors for Laryngeal Cancer, May 1, 1992, Vol. 69, 

No 9 2244–2251, 2249 (‘‘With regard to asbestos exposure, our study adds evidence to the body 

of literature that does not show a significant relationship with laryngeal cancer.’’); Robert W. 

Morgan, Donna E. Foliart & Otto Wong, Asbestos and Gastrointestinal Cancer, West J. Med 

1985 Jul; 143:60–65, 60 (‘‘We conclude that more studies are required before stomach and 

colorectal cancers are documented as asbestos-related diseases.’’). 

pointed toward a lack of an association between asbestos exposure 

and renal cancer.’’ Dr. William Weiss stated that ‘‘[f]or colorectal 

cancer the evidence indicates no causality between asbestos and 

colorectal cancer.’’ Dr. Michael Goodman stated that ‘‘[d]ata for urinary cancers (bladder, kidney, prostate), gastrointestinal cancers 

(esophagus, stomach, colon, rectum) and lymphohematopoietic cancers (lymphoma, myeloma, leukemia) failed to demonstrate a consistent statistically significant increase in risk. Analysis for laryngeal cancer was suggestive of a causal association, but not as conclusive as the analysis for lung cancer.’’ However, Dr. Gee made 

the following comment on Dr. Goodman’s study: 

[The study] noted an overall excess laryngeal cancer risk 

rate that was about 1.6 but there was no dose response, 

no correlation with increasing mesothelioma rates and importantly, no adjustment in the original cohort data for the 

confounding effects of smoking, alcohol or their combination. Thus, this value of 1.6 is suspect and the absence of 

a dose response with asbestos exposure suggests alternative factors cause these cancers. Other data show a correlation between lung and laryngeal cancer rates that is 

most likely due to a common smoking origin.21

Because there is truly no reliable science that links asbestos exposure to forms of cancer besides Lung Cancer and Mesothelioma, 

these cancers should not be compensated in the Fund.22 S. 852 provides for a study by the Institute of Medicine to determine whether 

there is a causal link between asbestos exposure and other cancers. 

If the study determines that there is not a link, then no claimants 

should be compensated under Level VI. However, keeping Level VI 

in the Fund without knowing if there is a causal link is the same 

as putting the cart before the horse. Level VI should be removed 

from S. 852 unless and until the Institute of Medicine’s study is 

completed and shows a causal link. 

Additionally, specific criteria should be included in S. 852 to 

guide IOM in their study. The Institute of Medicine evaluation 

should be based only on one of three criteria: (1) multicentered, 

double-masked, placebo-controlled, randomized clinical trials with 

explicit data safety and monitoring boards incorporated into the 

103 

23 Crapo, James D., supra note 12. 24 Id. 25William Weiss, Asbestosis: A Marker for the Increased Risk of Lung Cancer Among Workers 

Exposed to Asbestosis. Chest 115:536–549, 1999. 26 Id. at 546. 27See also, S. Rep. No. 108–239, at 98–103 (2003). 

data acquisition process, or; (2) on a single-centered, masked, nonrandomized clinical trials, or; (3) by using meta-analysis of all 

available studies. The Institute of Medicine should not consider any 

studies that did not take out the confounding variables. 

Malignant level VII (lung cancer with pleural disease) 

Level VII is another compensation level that will lead to thousands of inappropriate claims and will lead to the insolvency of this 

Fund. Malignant Level VII allows for compensation for lung cancer 

when there has been exposure to asbestos and pleural plaques are 

present on the lungs. However, Dr. Crapo stated that pleural 

plaques ‘‘do not predict enhanced risk of lung cancer.’’ 23 Rather, ‘‘[t]he enhanced lung cancer risk is with very high level of asbestos 

exposures that cause asbestosis. This will be compensated in Level 

8.’’ 24

Dr. William Weiss agrees. He stated in an article that adequately 

designed studies in the literature support the hypothesis that ‘‘excess lung cancer risk in worker cohorts exposed to asbestos occurs 

only among those with asbestosis.’’ 25 His review concluded that: 

Only a few cohort studies have addressed directly the 

issue of asbestosis as a marker for increased risk of lung 

cancer among workers exposed to asbestos. What evidence 

exists supports the hypothesis that asbestosis is such a 

marker as reviewed in the first section above. Additional 

circumstantial evidence has been described in subsequent 

sections: (1) there is no excess risk of lung cancer in cohorts with no deaths from asbestosis; (2) workers with 

pleural plaques but no asbestosis have no increased risk of 

lung cancer in well-designed studies; and (3) the association between asbestosis and excess lung cancer rates in 

much stronger than the association between cumulative 

asbestos exposure and the relative risk of cancer.26

Therefore, Level VII should be eliminated.27

Malignant level VIII (lung cancer with asbestosis) 

There is an increased risk of lung cancer in individuals who have 

asbestosis. Therefore, it is appropriate for Level VIII to compensate 

individuals suffering from lung cancer and asbestosis, who meet 

the appropriate exposure requirement. However, the CT scan 

should not be used for diagnostic purposes in Malignant Level VIII, 

because its use will lead to the inappropriate compensation of 

many claimants. ‘‘The use of Chest CT as a diagnostic criteria is 

problematic because it is highly sensitive and there are no scientific standards or criteria for reliably using subtle CT findings to 

define individuals with enhanced risk for lung cancer. The chest 

radiograph should remain the standard for defining this relationship.’’ Dr. Crapo elaborated that ‘‘[v]irtually all heavy smokers who 

are those for greatest risk for lung cancer would have CT changes 

104 

28 Crapo, James D., supra note 1. 29 Crapo, James D., supra note 1, at 5. 30S. 852, § 121(f). 31S. 852, § 121(h). 32S. 852, § 121(g). 33S. 852, § 105. 

showing small markings in the lower lung fields and can qualify 

under the criteria of the bill if CT were included. In the absence 

of standards for interpretation of CT for the diagnosis of early asbestosis, this test should be eliminated from the Trust.’’ 28 If the 

use of the CT scan is not eliminated, its use ‘‘will bankrupt the 

trust rapidly.’’ 29

In the alternative, guidelines should be developed for the use of 

the CT Scan for the detection of early asbestosis. However, until 

these guidelines are completed, CT Scans should not be used for diagnostic purposes under the Fund. Presently, S. 852 provides for 

an Institute of Medicine Study on the use of CT Scans ‘‘as a diagnostic tool for bilateral pleural plaques, bilateral pleural thickening, or bilateral pleural calcification.’’ 30 S. 852 also provides that 

the Administrator ‘‘shall commission the American College of Radiology to develop, in consultation with the American Thoracic Society, American College of Chest Physicians, and Institute of Medicine, guidelines and a methodology for the use of CT scans as a diagnostic tool for bilateral pleural plaques, bilateral pleural 

thickenings, or bilateral pleural calcification under the Fund. After 

development, such guidelines and methodology shall be used for diagnostic purposes under the Fund.’’ 31 While the inclusion of these 

provisions is commendable, CT scans should not be used until the 

American College of Radiology’s guidelines are completed. 

EXCEPTIONAL CLAIMS

This Fund provides for exceptions to the medical and exposure 

requirements. These ‘‘exceptional cases’’ exist where ‘‘[a] claimant 

who does not meet the medical criteria requirements’’ may seek 

compensation by providing comparable medical evidence.32 In order 

to determine if these claimants are eligible for exceptional claims, 

they must be reviewed by a Physicians Panel made up of ‘‘physicians with experience and competency in diagnosing asbestos-related diseases.’’ 33 However, there is no point having medical criteria if claimants are able to seek compensation under the Fund 

without meeting that criteria. Every person who does not qualify 

for the medical criteria will have nothing to lose by trying to qualify for an exceptional medical claim. While Physicians Panels will 

examine these claims, physicians are patient advocates. They will 

always err on the side of supporting their patient’s claim for compensation. Furthermore, the Fund is not set up as an adversarial 

body. The Administrator will largely be forced to rely on the recommendations of the Physicians panels. 

As long as medical criteria are part of this bill, they should be 

followed. The exceptional claims provision should be stricken from 

the Fund. 

105 

34S. 852, § 121(c)(3). 35See Crapo, James D., supra note 1, at 5. 36S. 852, § 12(c)(5). 

Take-home exposure 

S. 852 provides an alternative to satisfying the medical criteria 

requirements for those individuals who suffer from ‘‘take-home exposure.’’ These individuals must ‘‘allege their exposure to asbestos 

was the result of living with a person who, if the claim had been 

filed by that person, would have met the exposure criteria for the 

given disease level, and the claimant lived with such person for the 

time period necessary to satisfy the exposure requirement, for the 

claimed disease level.’’ 34 These claims are submitted as exceptional 

medical claims and are reviewed by a Physicians Panel. 

This provision provides a huge problem for the Fund. Take-home 

exposure criteria greatly expand the number of claimants who will 

meet the criteria for standard and heavy asbestos exposure. Any 

individual born prior to 1971, whose mother or father was a worker 

or a bystander in workplace that used virtually any type of asbestos-containing product would have met most of the exposure criteria in the Trust by the time they were five years old. Further, 

the group of individuals who were born in the three decades between 1941 and 1971 are now the principal group developing lung 

cancer. The majority of these people were raised in families where 

one or more parents worked in an environment that would qualify, 

under the trust, as either standard or heavy exposure. If a physician diagnoses these individuals with lung cancer, and finds small 

changes in the lung parenchyma on a chest CT scan, they will 

qualify for payment under the Trust.35

The provision allowing compensation for take-home exposure 

should be stricken from the Fund. 

EXPOSURE CRITERIA, THE ASBESTOS BAN, AND NATURALLY OCCURRING

ASBESTOS

As the Committee Report states, the Fund includes exposure criteria for each disease level. A claimant must meet the appropriate 

exposure criteria to qualify for a certain disease level. The Committee is correct in stating that such criteria are necessary because 

someone is more likely to develop asbestos-related disease if they 

have had long- term and intense exposure to asbestos. However, 

there are two large problems with the exposure criteria as they are 

written. 

First, the Fund creates a presumption that individuals who 

worked for certain industries had sufficient exposure to receive 

compensation under the Fund, based on the Manville Personal Injury Settlement Trust.36 While this presumption is mitigated by 

part (C) of the provision, which states that ‘‘nothing in subparagraphs (A) or (B) shall negate the exposure or medical criteria requirements in section 121, for the purpose of receiving compensation from the fund,’’ the presumption present in the Fund may still 

effectively undermine the exposure requirements in the bill. The 

Fund does not set up an adversarial system. The burden should not 

be on the Fund to rebut the presumption that each claimant who 

worked for a certain industry in a certain job received substantial 

106 

37See email from Dr. James D. Crapo. 38 Crapo, James D., supra note 6, at 5. 39 Id. 40 Id. 41S. 852, Title V. 42Letter from James M. Inhofe and James M. Jeffords to Chairman Arlen Specter and Ranking Minority Member Patrick Leahy, April 27, 2005. 43 Id. 

occupational exposure. Furthermore, the Manville Trust is a bad 

example to follow. The Manville Trust included broad categories 

defining who qualified for compensation, but gave out smaller payments. The Manville Trust’s exposure criteria will break this Trust. 

Second, an individual who worked with asbestos containing products where the fibers are encapsulated should not qualify for substantial occupational exposure.37 Instead, the definition of ‘‘substantial occupational exposure’’ should ‘‘include a requirement that 

the regular exposure to asbestos fibers must also be to a substantial concentration of airborne fibers.’’ 38 As Dr. Crapo explained in 

his testimony, someone who uses a product with a fiber release 

under work conditions that are ‘‘equivalent to or even an order of 

magnitude less than the current OSHA PEL’’ should not be able to 

receive compensation.39 Dr. Crapo recommends that ‘‘a minimum 

exposure fiber concentration be specified using a time weighted average. This exposure level should be on the order of 2–5 fibers per 

cc if it is to apply to work durations as short as 5 weighted years. 

This concept should also be included in the definitions of Moderate 

and Heavy exposure.’’ 40 Dr. Crapo’s recommendation should be incorporated into the exposure requirements. 

In what is a closely associated issue, the ban on asbestos is unnecessary because not all use of asbestos is hazardous.41 Furthermore, it might be shortsighted to completely ban a product that 

might be needed in the future. Finally, this ban is outside of the 

Judiciary Committee’s jurisdiction. Any changes to OSHA regulations of asbestos, much less an outright ban, should be decided by 

the Committee on Environment and Public Works (‘‘EPW’’). Chairman James M. Inhofe and Ranking Minority Member James M. 

Jeffords requested that Title V, Section 501 of S. 852 be removed 

or sequentially referred to their Committee.42

Finally, the EPW also objects to the Judiciary Committee’s jurisdiction over Title V, Section 502 of S. 852. This provision requires 

the U.S. Environmental Protection Agency (EPA) to conduct a 

study to determine the feasibility of establishing national ambient 

air quality standards (NAAQS) for naturally occurring asbestos and 

implement interim standards while the study is being completed, 

as well as create guidelines, testing protocols, best management 

practices, remedial measures, and a grant program. The EPW objects because authorization and direction of EPA activities and resources is within the purview of the EPW. Again, Senators Inhofe 

and Jeffords request that this provision be removed or sequentially 

referred to their Committee.43

107 

44 Crapo, James D., supra Note 1, at 2. 45 Id. at 2–3. 

WHAT ALL OF THIS MEANS TO THE VIABILITY OF THE FUND

Without the changes recommended above, ‘‘the trust fund could 

go bankrupt in three to five years.’’ 44 Dr. Crapo explains the largest problems best: 

Under Level V compensation for disabling asbestos ($850,000) is allowed for claimants with only pleural 

changes (a common finding in minimally exposed asbestos 

workers), a low DLCO and five years of weighted exposure. 

DLCO is a highly variable parameter that is decreased in 

many diseases—and in many smokers—and for which 

there is high variability between laboratories. Thus, large 

numbers of people would qualify as having ‘‘disabling asbestosis’’ with only five years weighted exposure, pleural 

changes and a low DLCO. 

Level VI: Colorectal, laryngeal, esophageal, pharyngeal 

and stomach cancer have not been clearly associated with 

asbestos exposure. The compensation of these cancers 

($200,000) when the individual has evidence of benign 

pleural changes and 15 years of weighted exposure will 

allow large numbers of individuals to qualify for compensation under the Trust. This problem is magnified by 

the fact that both bystander exposure and take-home exposure (which could be to a bystander) will markedly expand 

the number of individuals who meet the required 15-year 

exposure criterion (Note: Most Americans older than 44 

years whose parent was a blue collar worker would meet 

the exposure criteria). 

Malignant Level VIII: The minimal criteria for com- pensation ($600,000, $975,000 or $1,100,000) at this level 

are a diagnosis of lung cancer, a finding of asbestosis by 

chest CT scan and ten years of weighted exposure. Since 

most lung cancers are in heavy smokers with substantial 

inflammatory changes in their lungs, one can expect their 

CT scans to be read as qualifying under the criteria of this 

Trust. There are no rigorous criteria for the diagnosis of 

early asbestosis by chest CT scan. One would expect the 

diffuse markings seen on chest CT scans of smokers to 

rapidly become the standard for acknowledging the possibility of early asbestosis in these subjects, qualifying virtually all of them for payment under this Trust.45

This analysis leads to the question—what does this mean for the 

fund? The attached table (Attachment D) provides the number of 

new cases per year of lung cancer and each of the cancers compensated under Level VI of the Fund. These numbers are then 

multiplied by 10% (of cases per year), 5% (of cases per year), and 

1% (of cases per year). The resulting numbers are multiplied by 

how much recovery is available under the Fund. The results are 

staggering. If 10% of new lung cancer patients claim the lowest 

level of compensation available to lung cancer patients, $300,000, 

that will cost the fund $5,213,100,000.00 per year. Over the course 

108 

of 30 years, it will cost the fund $156,393,000,000.00. In other 

words, lung cancer compensation alone will swallow the 140 billion 

dollar trust fund. Even a more moderate approach is devastating. 

If only 1% of Patients with Lung, colorectal, stomach, Esophageal, 

Laryngeal, and Pharyngeal cancers claim the lowest level of compensation available under the Fund, that will cost the fund 

$891,010,000.00 per year. Over the course of 30 years, that amount 

adds up to $26,730,300,000.00, or nearly 20% of the Fund. This is 

not even counting payments to Mesothelioma and nonmalignant 

claimants, or administrative costs. If 10% of these patients seek 

compensation, that will equal $267,303,000,000.00 over the course 

of 30 years, $107,303,000,000 more than is planned for the Fund. 

This bleak outlook for the solvency of the Fund demonstrates 

why improvements to the medical criteria are desperately needed. 

CONCLUSION

There is no question that many individuals have lost their lives 

or are presently suffering because of occupational exposure to asbestos. There is also no question that asbestos-related litigation—

much of it legitimate, but much of it frivolous—has led to bankruptcy for many companies in the United States. The system needs 

to change. Stronger medical criteria are essential to our goal of 

compensating those ill from asbestos exposure and providing finality for companies. 

TOM COBURN. JOHN CORNYN. JON KYL. CHARLES GRASSLEY. 

NATIONAL JEWISH MEDICAL AND RESEARCH CENTER, 

Denver, Colorado, May 25, 2005. 

Senator ARLEN SPECTER, 

Chairman, U.S. Senate Committee on the Judiciary, 

Washington, DC. 

DEAR SENATOR SPECTER: I am enclosing my responses to the 

questions provided to me by Senator John Kyl arising from the 

United States Senate Judiciary Committee hearing entitled ‘‘Asbestos’’ on April 26, 2005. 

Please let me know if I can provide further assistance. 

Sincerely, 

JAMES D. CRAPO, M.D., 

Professor of Medicine. 

RESPONSE TO QUESTIONS ON SENATE BILL S. 852

Question 1: What portion of American industries do you believe 

operate under conditions that create the possibility of the type of 

occupational exposure to asbestos that would satisfy the exposure 

criteria of S. 852? Can you cite examples of common, high-volumeemployment industries that would satisfy the bill’s exposure criteria? 

The asbestos exposure criteria described in S. 852 are sufficiently 

liberal that they will enable workers in a substantial proportion of 

109 

American industries to qualify under the bill’s exposure criteria. A ‘‘substantial occupational exposure to asbestos’’ is defined in Section 121(a)(14)(iii) as altering, repairing or otherwise working with 

an asbestos-containing product that involves regular airborne emission of fibers. No minimal fiber release level is required. Thus work 

with almost any asbestos-containing product would qualify. If the 

worker directly works with the asbestos-containing product, it is 

defined as a heavy exposure and each year of exposure counts for 

two years under the weighting criteria. If the worker works in the 

vicinity where another worker handles an asbestos-containing 

product, he would be a bystander and each year of work would 

count as one year under the weighted criteria. 

Asbestos products were used ubiquitously on pipes and in heating facilities in virtually all factories and industrial work places. 

Asbestos was used as insulation on electrical wire and cable, as 

fillers in construction materials, adhesives, roofing material and 

tiles. Asbestos was used for friction materials and for fabrics. All 

of these materials were common in most industrial work places. 

Examples of major industries that would satisfy the bill’s exposure 

criteria include all construction trades, factory environments, and 

automotive service. In addition, sales employees who regularly 

enter storage or repair facilities could qualify under the criteria in 

this bill. 

Question 2: In addition to the medical criteria required by the 

bill, S. 852 also requires that a claimant obtain a doctor’s diagnosis 

that his otherwise-compensable condition is caused by exposure to 

asbestos. Even if the bill’s medical criteria are too liberal and 

would compensate large numbers of people without an asbestos-related injury or illness, wouldn’t the requirement of a doctor’s diagnosis protect the Fund against successful claims by persons who do 

not suffer from a condition that is actually caused by occupational 

asbestos exposure? If not, why not? 

The requirement for a doctor’s diagnosis would not protect this 

fund against claims by individuals who do not suffer from an injury 

caused by occupational asbestos exposure. It is well known that 

doctors commonly function as patient advocates and often have little experience in the subtleties of legal proceedings independent 

from the practice of medicine. A physician’s natural tendency is to 

support patients in making application for compensation for workrelated injuries. It would be foolish to expect physicians to protect 

the Trust from having too liberal medical criteria. In the current 

litigation setting, plaintiffs have had no difficulty finding large 

numbers of physicians who will support frivolous claims. 

Question 3: Do any of the medical criteria in S. 852 include flaws 

that pose a substantial risk of bankrupting the Trust Fund? 

There are a number of serious flaws in the medical criteria of S. 

852 that will likely lead to bankrupting the trust fund. The major 

flaws I identify are: 

1. Exposure criteria that allow a bystander to the above 

worker to also qualify as a ‘‘moderate exposure.’’

2. Exposure criteria that allow a bystander to the above 

worker to also qualify as a ‘‘moderate exposure.’’

3. Exposure criteria that allow a take-home exposure to the 

above bystander to qualify. 

110 

4. Allowing smoking-induced airway obstruction to move a 

claimant from Level I to Level II. 

5. Allowing DLCO of less than 40% predicted to show functional disability in Level V. 

6. Providing for compensation of laryngeal, pharyngeal, 

esophageal and stomach cancer to be compensated in Level VI. 

7. Allowing CT scans to be used for the diagnosis of asbestosis in Level VIII. 

Question 4: Viewed as a whole, do you expect the S. 852 version 

of the Fund to go bankrupt? If yes, how many years do you estimate that it might take for the Fund to go bankrupt? 

In a worst case analysis the trust fund could go bankrupt in 

three to five years. The greatest risks for anticipated costs against 

the fund are in Levels V, VI and VIII. 

Under Level V compensation for disabling asbestosis ($850,000) 

is allowed for claimants with only pleural changes (a common finding in minimally exposed asbestos workers), a low DLCO and five 

years of weighted exposure. DLCO is a highly variable parameter 

that is decreased in many diseases—and in many smokers—and for 

which there is high variability between laboratories. Thus, large 

numbers of people would qualify as having ‘‘disabling asbestosis’’ with only five years weighted exposure, pleural changes and a low 

DLCO. 

Level VI: Colorectal, laryngeal, esophageal, pharyngeal and stomach cancer have not been clearly associated with asbestos exposure. 

The compensation of these cancers ($200,000) when the individual 

has evidence of benign pleural changes and 15 years of weighted 

exposure will allow large numbers of individuals to qualify for compensation under the Trust. This problem is magnified by the fact 

that both bystander exposure and take-home exposure (which could 

be to a bystander) will markedly expand the number of individuals 

who meet the required 15-year exposure criterion. (Note: Most 

Americans older than 44 years whose parent was a blue collar 

worker would meet the exposure criteria.) 

Malignant Level VIII: The minimal criteria for compensation 

($600,000, $975,000 or $1,100,000) at this level are a diagnosis of 

lung cancer, a finding of abestosis by chest CT scan and ten years 

of weighted exposure. Since most lung cancers are in heavy smokers with substantial inflammatory changes in their lungs, one can 

expect their CT scans to be read as qualifying under the criteria 

of this Trust. There are no rigorous criteria for the diagnosis of 

early asbestosis by chest CT scan. One would expect the diffuse 

markings seen on chest CT scans of smokers to rapidly become the 

standard for acknowledging the possibility of early asbestosis in 

these subjects, qualifying virtually all of them for payment under 

this Trust. 

There are 100,000 lung cancers in the United States today. If 

one-half of them were blue collar workers in industries with some 

type of asbestos exposure (or bystanders or families of those workers) and if only half of these lung cancers had the expected ‘‘positive’’ CT scan, 25,000 cases per year would qualify. This would cost 

the Trust $15 billion to $25 billion per year for this level alone. 

Question 5: In his testimony before the Judiciary Committee, Dr. 

Philip Landrigan cited a Scandinavian study that he says shows 

111 

that a history of asbestos exposure alone—without evidence that 

the patient has clinically significant asbestosis, or even physical 

evidence of exposure such as pleural plaques—can reliably point to 

asbestos exposure as the cause of a lung cancer. Are you familiar 

with this study? Can you describe the nature of this study? Do you 

believe that this study’s conclusions are supported by medical literature? 

I cannot identify the study cited by Dr. Landrigan. A number of 

studies have demonstrated that workers in industries with high 

levels of asbestos exposure have a higher incidence of lung cancer 

than do unexposed individuals. However, when a study divides the 

asbestos-exposed individuals into those with asbestosis and those 

without, the findings have consistently shown that asbestos-exposed individuals without asbestosis have no elevated risk of lung 

cancer. It is those asbestos-exposed individuals who develop asbestosis who have a substantially increased risk of lung cancer. 

Question 6: The attorneys’ fee limits in S. 852 have presented as 

a feature of the bill that will reduce the incentive for large numbers of claims to be filed against the Fund. In light of these fee limits, and in light of other aspects of the Fund, do you believe that 

a large number of claimants will learn of and choose to file claims 

against the Fund? 

In my opinion the requirements for application for compensation 

under the Trust are sufficiently simple that large numbers of 

claimants will choose to file claims on their own. This is particularly true given the increasing access and use of the internet. I 

would expect simplified, how-to-do-it forms for claims applications 

to be available on the internet once this Trust is formed. Second, 

the bill provides for a possible $7 billion of attorneys’ fees (5% of 

$140 billion). Given the simplicity of finding and filing claims 

under this Trust, I would expect that a $7 billion incentive will be 

sufficient to drive that process. 

Question 7: How many individuals on an annual basis in the 

United States today do you estimate contract significant or substantial cases of asbestosis? Do you believe that the annual incidence of asbestosis in the United States has been increasing or decreasing? If you believe that the annual number of cases has been 

increasing or decreasing, since approximately what years do you 

believe that increase or decline in the rate of cases has been occurring? 

Very few individuals in the United States are developing new 

cases of asbestosis today. In the 1960s, 1970s and 1980s these 

cases were common. Most pulmonologists rarely or never see a case 

of new asbestosis today. The decrease in exposure that occurred as 

a result of federal regulations in 1970s and 1980s incidence of asbestosis to have begun in the mid 1980s (i.e., a few years following 

the implementation of stricter guidelines for occupational asbestos 

exposure). 

Unfortunately the medical criteria in the bill for severe asbestosis (Level IV) and disabling asbestosis (Level V) are so flawed 

that many claims will occur by individuals having only pleural 

plaques—a very common occurrence today. 

There are a large number of fibrotic lung diseases that look similar to asbestosis. For example, lung fibrosis occurs in non-asbestosVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00111 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
112 

related collagen vascular diseases, rheumatoid arthritis, and idiopathic pulmonary fibrosis. These interstitial lung diseases occur 

commonly. Under the criteria of the Trust, many of these individuals will qualify for payment under Levels IV and V. Such individuals would have a fibrotic lung disease not related to asbestos but 

would qualify under the liberal exposure criteria of the Trust. 

Question 8: I understand [that] Mr. Irving Selikoff, in his study 

of a cohort of asbestos workers with no clinically significant asbestosis, originally did not find that those workers suffered from an 

elevated incidence of lung cancer. Later, however, reviewing the 

same dat[a], Selikoff found that those same workers did in fact suffer from an elevated incidence of lung cancer. Do you have a view 

as to why Selikoff was able to later reach a new conclusion from 

the same data? 

I have not been able to explain why Dr. Selikoff modified his 

opinions on this subject in his later publications. Numerous subsequent studies that have looked at the incidence of lung cancer in 

asbestos-exposed workers with and without asbestosis have found 

that workers without asbestosis do not have an increased incidence 

of lung cancer. 

Question 9: The latest version of S. 852 allows the use of CT 

scans to identify sign of asbestosis in claimants seeking compensation from the Fund for lung cancer. Do you believe that this is a 

reliable technique for identifying asbestos exposure as a cause of 

lung cancer? What do you believe will be the effect of allowing the 

use of CT scans to prove that asbestos exposure played a role in 

a lung cancer? 

The addition of the use of CT scans to identify asbestosis in 

Level VII is the largest flaw in the medical criteria of S. 852 that 

makes this Trust vulnerable to rapid bankruptcy. Chest CT scans 

are far more sensitive than chest x-rays in detecting small changes 

in the lung. Unfortunately, these small changes are also less specific and the etiology of such small changes is generally not discernible by chest CT scan. Findings on chest CT scan have not 

been correlated with a risk of developing lung cancer in asbestosexposed workers. There are no established criteria for using chest 

CT scans to define early asbestosis in individuals with lung cancer. 

I believe the effect of allowing a chest CT scan diagnosis of early 

asbestosis to qualify a lung cancer case to be compensated under 

this Trust will bankrupt the trust rapidly. 

Question 10: S. 852 allows compensation from the Fund to be 

based on ‘‘take home’’ exposure to asbestos. By how much do you 

believe that the ‘‘take home’’ exposure provision expands the number of potential claimants who can meet the bill’s criteria for 

‘‘heavy exposure’’ to asbestos? 

The take-home exposure criteria in S. 852 dramatically expand 

the number of potential claimants who will meet the criteria for 

both heavy and standard exposure to asbestos. Any individual born 

prior to 1971 and whose mother or father was a worker or a bystander in a factory or workplace that used virtually any type of 

asbestos-containing product would have met most of the exposure 

criteria in this Trust by the time they were five years old. 

This criterion is not included in the Manville Trust, whose demographics are used to estimate the financial liabilities under the 

113 

Trust. It will open up the Trust to large numbers of claims by individuals who do not have an asbestos-related disease. The cohort of 

individuals who were born in the three decades between 1941 and 

1971 are now the primary group developing lung cancer. The majority of these people will have been raised in families where one 

or more parents worked in an environment that would qualify as 

either standard or heavy exposure under this Trust. These individuals will require only the diagnosis of lung cancer, and the finding 

of small changes in the lung parenchyma on a chest CT scan to 

qualify for payment under the Trust. 

WRITTEN STATEMENT OF DR. JAMES D. CRAPO

INTRODUCTION

My name is James Crapo, M.D. I am certified in Internal Medicine and Pulmonary Diseases. I am currently Professor of Medicine 

at the National Jewish Medical and Research Center in Denver, 

Colorado. National Jewish is a specialty hospital that is the nation’s top ranked hospital in pulmonary disease. I am also a Professor of Medicine at the University of Colorado Health Sciences 

Center. I am a Past President of the American Thoracic Society. I 

am the current President of the Fleischner Society, a leading international society of selected specialists in radiology and pulmonary 

medicine. A copy of my curriculum vitae is attached. I have more 

than 25 years of experience with asbestos-related issues, including 

medical research and clinical treatment of patients suffering from 

asbestos-related diseases. I have published in the field of environmental toxicology, including the basis of asbestos-induced lung injury. My research involving asbestos was funded by the National 

Institute of Environmental Health Sciences. My current research is 

funded by the National Heart Lung and Blood Institute, and I currently serve on the Board of External Advisors for this Institute. 

I have previously served as an expert witness on behalf of defendants involved in asbestos litigation. 

This written statement is intended to supplement the statement 

I provided to the Senate Committee on the Judiciary on June 4, 

2003, related to S.1125, The ‘‘FAIR Act of 2003.’’ I have reviewed 

the Medical Criteria in S. 852 and will confine my comments to assessment of these Medical Criteria. 

MEDICAL CRITERIA FOR IDENTIFYING ASBESTOS-RELATED DISEASES

Occupational exposure to significant levels of inhaled asbestos 

causes a number of diseases including: 

• Mesothelioma 

• Lung Cancer 

• Nonmalignant Lung Conditions 

—Asbestosis 

—Pleural Reactions 

The challenge in writing medical criteria for a national trust is 

that the above conditions are not always related to asbestos exposure and some do not involve functional impairment. Individuals 

may develop similar diseases but without contributory causation 

from asbestos exposure. Distinguishing non-asbestos-related cases 

114 

from those caused by asbestos exposure, based on scientific and 

medical standards, is an important element in setting up a valid 

trust. 

One of the Primary challenges for this trust is to ensure that 

those individuals with a significant injury and impairment from exposure receive an appropriate compensation while minimizing inappropriate compensation of individuals who have no impairment due 

to asbestos exposure including those whose disease or injury is 

similar to, but not caused by asbestos. If large amounts of trust 

funds are distributed to individuals who do not have an asbestos 

related injury it puts the entire trust at risk and could lead to 

those with asbestos related injury not being compensated. 

I have review the medical criteria in the current version of S. 

852. There are a number of changes from S. 1125 that lead to my 

comments below. To begin, two important changes that strengthen 

S. 852 are the addition of the concept of requiring a ‘‘substantial 

occupational exposure’’ to asbestos, and the deletion of compensation for Exposure-only lung cancers (old Level VII). 

There remain two major areas in the proposed bill that in my 

opinion will lead to high level compensation for large numbers of 

individuals who do not have an asbestos related injury or impairment. These involve those with pleural reactions and those with 

‘‘other cancers.’’

PLEURAL REACTIONS AND DISEASES

S. 852 should include medical criteria for payment of claims for 

pleural reactions only when there is evidence of significant impairment related to extensive pleural disease. 

Pleural reactions in the lungs are different than asbestosis. Most 

pleural reactions are asymptomatic (i.e., do not have any discernible physical effect). For example, a pleural plaque can be characterized as a callus on the chest wall. It does not involve the lung. 

Pleural plaques are a marker of asbestos exposure but do not cause 

impairment. Pleural plaques or thickening, unless extensive, do not 

affect lung function. In medical textbooks these are most commonly 

referred to as ‘‘benign pleural plaques’’ and not ‘‘pleural disease.’’

In certain rare cases, very extensive pleural thickening can lead 

to entrapment of the lung and cause impairment. This is called diffuse pleural thickening and is properly termed a disease. Fortunately, new cases of asbestos-induced diffuse pleural thickening are 

extremely rare since high-level occupational exposures have been 

virtually eliminated for almost 20 years. 

In addition, the presence of pleural plaques or pleural thickening 

due to asbestos exposure does not increase the risk of developing 

either asbestosis or lung cancer. When compared to other individuals with similar asbestos exposure but no pleural manifestations, 

patients with pleural plaques have not been shown to be at increased risk of more serious asbestos-related diseases. 

I would recommend deleting bilateral pleural disease as a qualification for compensation in the following Levels: 

• Level II: Pleural plaques do not cause the airway obstructive disease that would meet the PFT requirements in Level II. 

A smoker with mild airway obstruction and who has pleural 

115 

plaques would qualify for Level II, but would not have an impairment due to asbestos exposure. • Levels III, IV and V: These Levels describe increasing levels of restrictive impairment due to asbestosis. To qualify for 

these levels the claimants should have asbestosis as defined by 

radiographic and clinical data. Bilateral pleural disease does 

not cause this type of impairment and should not be used to 

meet the radiographic criteria for these levels. • Level VII: Pleural plaques and pleural thickening are not 

independent risk factors for enhancing the risk of lung cancer. 

This level will primarily compensate smoking induced lung 

cancers. 

OTHER CANCERS

S. 852 should not include claims for cancer other than lung cancer and mesothelioma because current medical science does not establish a causal relationship between asbestos exposure and these 

other cancers. 

At least 69 cohorts have been studied for the risk of lung cancer 

from occupational exposure to asbestos. Of those, nine cohorts were 

larger than 5,000 persons. The lung cancer risk of those nine cohorts is shown in the table below. Note that two of the cohorts 

showed no increase of lung cancer risk (Relative Risks (RR) of 0.84 

and 1.03). Five of the cohorts showed modest increases in lung cancer risks (RR’s ranging from 1.25 to 1.96), and two cohorts showed 

high lung cancer risk (RR’s 2.64 and 3.7). 

TABLE.—LUNG CANCER RISK IN ASBESTOS COHORTS >5000 

N Observed Expected RR 

Rossiter and Coles, 1980 .............................................................. 6,292 84 100.0 0.84 

Newhouse and Sullivan, 1989 ....................................................... 8,404 229 221.4 1.03 

McDonald et al., 1980 ................................................................... 11,379 230 184.0 1.25 

Hughes et al., 1987 ....................................................................... 6,931 154 115.5 1.33 

Clemmesen et al., 1981 ................................................................ 5,686 47 27.3 1.72 

Raffin et al., 1989 ......................................................................... 7,996 162 89.8 1.80 

Acheson et al., 1984 ..................................................................... 5,969 57 29.1 1.96 

Armstrong et al., 1988 .................................................................. 6,916 91 34.5 2.64 

Selikoff et al., 1991 ....................................................................... 17,800 1,008 269 3.70 

Goodman et al. in 1999 did a meta-analysis on all 69 cohorts to determine the magnitude of association between asbestos exposure and 

lung cancer. He found that overall the increased risk of lung cancer associated with asbestos exposure was about 50%, as shown in the 

table below. (A RR (Relative Risk) of 1.00 means no increased risk over that of a non-exposed population.) 

TABLE.—LUNG CANCER MORTALITY—ASBESTOS COHORTS META-ANALYSIS 

Asbestos Exposure RR 

69 Cohorts ...................................................................................................................................................... 1.48–1.63 

M. Goodman et al., Cancer Causes and Control 10:453, 1999 

While it is well accepted that exposure to asbestos is associated 

with mesothelioma and lung cancer, no meaningful association 

with other cancers has been established. In the past, several epidemiological studies suggested a relationship between asbestos and 

malignancies at sites such as the gastrointestinal tract, larynx, kidney, liver, pancreas, ovary and hematopoietic systems. Many of 

those studies involved case-reports or case-control studies. The best 

assessment of risk association is done with cohort studies and not 

116 

case-control studies since exposure assessment in case-control studies is usually derived from questionnaires and is frequently inaccurate. Since those early studies, a substantial number of additional studies of this issue were undertaken, and the weight of current medical and scientific information suggests no clear association between asbestos and cancers other than lung cancer and 

mesothelioma. 

As of 1999, fourteen cohorts had been evaluated for various aspects of gastrointestinal cancer and its relationship to asbestos exposure. In addition, three cohorts evaluated kidney and/or bladder 

cancer. Two cohorts evaluated prostate cancer and one cohort has 

evaluated leukemia and other lymphatic or hematopoietic malignancies. A recent meta-analysis of these cohorts shows that for 

these cancers there is either no evidence of a significant association 

with asbestos exposure or no dose-response effect. The table below 

shows the results of that meta-analysis. Besides lung cancer and 

mesothelioma the only cancer for which a possible association with 

asbestos exists is laryngeal cancer where the meta-analysis showed 

an SMR of 1.57. However, variance in these studies was large and 

there was no evidence of a dose-response effect, raising serious 

question as to whether cancer of the larynx has a true correlation 

with asbestos exposure. (Note: A Standard Mortality Ratio (SMR) 

is similar to Relative Risk with the normal or control value being 

1.00 and a 50% increase in death due to that disease being expressed as 1.50.) 

TABLE.—POOLED ANALYSIS OF STUDIES OF THE RISK OF CANCER IN ASBESTOS EXPOSED 

COHORTS 

Cancer Sites by 

Systems and Organs 

With Latency of at Least 10 Years 

No. of Cohorts Meta-SMR 95% CI 

Respiratory 

Lung ....................................................................................................... 37 1.63 1.58–1.69 

Larynx ..................................................................................................... 4 1.57 0.95–2.45 

Gastrointestinal 

Esophagus .............................................................................................. 2 — —

Stomach ................................................................................................. 9 0.92 0.77–1.10 

Colorectal ............................................................................................... 9 0.89 0.72–1.08 

All gastrointestinal ................................................................................ 14 1.03 0.95–1.11 

Urinary/Reproductive 

Kidney ..................................................................................................... 3 1.20 0.88–1.60 

Bladder ................................................................................................... 3 0.98 0.73–1.78 

Kidney and Bladder ............................................................................... 3 1.07 0.87–1.30 

Prostate .................................................................................................. 2 — —

Goodman et al., Cancer in asbestos-exposed occupational cohorts: a meta-analysis. Cancer Causes and Control 10:453–464, 1999. 

With regard to ‘‘Other Cancers’’ I would recommend the following: 

• Delete Level VI since this level would result in large compensations to large numbers of individuals who develop a cancer for which there is no established causal relationship to asbestos exposure. 

117 

OTHER RECOMMENDATIONS ON CHANGES TO THE MEDICAL CRITERIA

TO IMPROVE THE FUNCTION OF THE TRUST TO BE ESTABLISHED

UNDER S. 852

Make the requirements for Quality Assurance more rigorous. Reliable data is the cornerstone to ensuring that claims under S. 852 

correctly meet the medical criteria. Currently S. 852 provides only 

for random audits. A comprehensive audit procedure to review all 

claims, including an independent B read of chest films would significantly strengthen the function of this proposed trust. No Quality Assurance is specified for Pulmonary Function testing. The 

medical criteria state that PFTs should substantially conform to 

the ATS criteria. These criteria are quite rigorous and many 

screening PFTs fail to meet these standards. The PFTs to be used 

by the proposed trust need a standardized audit procedure to ensure quality. 

Expand the definition and requirement to demonstrate ‘‘Substantial Occupational exposure.’’ The definition of this term needs to include a requirement that the regular exposure to asbestos fibers 

must also be to a substantial concentration of airborne fibers. As 

written a claimant could qualify by doing repair or other work 

using a product with encapsulated asbestos fibers and which has 

fiber release under work conditions that are equivalent to or even 

an order of magnitude less than the current OSHA PEL. I would 

recommend that a minimum exposure fiber concentration be specified using a time weighted average. This exposure level should be 

on the order of 2–5 fibers per cc if it is to apply to work durations 

as short as 5 weighted years. This concept should also be included 

in the definitions of Moderate and Heavy exposure. 

Delete the use of DLCO in Level V—The gold standards for demonstrating functional disability in severe asbestosis (Level V) are 

decreases in TLC and in FVC. DLCO is more highly variable, nonspecific and is not closely correlated with functional disability. It 

should not be used as a substitute for decreases in TLC and FVC 

to qualify for Level V. Keeping DLCO as an alternated criteria for 

PFT changes in Level V will result inappropriately qualifying individuals for Level V that should be Level IV. 

Delete the use of Chest CT scans—Level VIII appropriately recognizes the enhanced risk for lung cancer in individuals with asbestosis. The use of Chest CT as a diagnostic criteria is problematic 

because it is highly sensitive and there are no scientific standards 

or criteria for reliably using subtle CT findings to define individuals with enhanced risk for lung cancer. The chest radiograph 

should remain the standard for defining this relationship. 

CONCLUSIONS

S. 852 is an appropriate approach to address the arbitrary and 

wasteful manner in which our current court system operates to 

compensate asbestos victims. The medical criteria in the current 

form of the bill will offer compensation to all individuals have an 

asbestos related disease or impairment, but unfortunately will also 

expend a large portion of the proposed trust’s assets compensating 

individuals with pleural plaques and no impairment or with cancers that are not caused by asbestos exposure. These issues should 

118 

be addressed to preserve the assets of the trust to compensate 

those who are truly impaired by a occupational exposure to asbestos. 

JAMES D. CRAPO, M.D. 

DEAR SENATOR COBURN: I appreciate the opportunity to meet 

with you and your staff yesterday and am in strong support of your 

position to improve the medical criteria in S. 852. The following are 

my thoughts about important changes that should be made in the 

medical criteria. Please feel free to use these concepts as you deem 

appropriate. 

PLEURAL DISEASE

—The only meaningful difference between Levels 1 and 2 is the 

requirement in Level 2 or ‘‘evidence of TLC less than 80% or FEC 

less than the lower limits of normal with an FEV1/FVC ratio less 

than 65%. This is billed as indicating mixed lung disease but, in 

fact, only identifies obstructive lung disease. All cases of mild obstruction show an FVC less than the lower limit of normal and an 

FEV1/FVC ratio less than 65%. This occurs commonly in smokers. 

Non-malignant 2, as written, does not compensate individuals with 

mixed restrictive and obstructive disease. It compensates smokers 

who also have pleural plaques. You should either argue for elimination of this level or in this phrase above change the word ‘‘or’’

to ‘‘and’’. If you require a low TLC and evidence of obstruction, 

then there is evidence of mixed disease. One does not have mixed 

disease by only requiring one or the other—that would then point 

to the common element of simple obstructive disease. 

—For non-malignant levels 4 and 5, these are defined as severe 

asbestosis and disabling asbestosis under the awards schedule. The 

presence of pleural disease should not be allowed to substitute for 

a radiographic diagnosis of asbestosis in these two levels. Pleural 

plaques do not cause a severe restrictive lung disease. There are 

no studies or publications that would support this concept. 

—Under Level 5, the use of DLCO as an alternative criterion for 

meeting pulmonary function requirements should be deleted. 

DLCO is highly variable between laboratories. It is very sensitive 

and goes down markedly early in lung diseases of all types. It has 

no reproducible correlation with functional disability. It cannot be 

used to establish disabling asbestosis. DLCO is most commonly influenced by smoking and its use in this trust would allow large 

numbers of inappropriate claims under Level 5. 

—Level 6—Other Cancers. This level should be deleted for all the 

reasons that we have previously discussed and that you know. 

—Malignant Level 7—Lung Cancer. Association with bilateral 

pleural plaques. This entire level should be deleted for the same 

reason that the old Level 7 was deleted. Plaques are a marker of 

exposure. They do not predict enhanced risk of lung cancer. The enhanced lung cancer risk is with very high level of asbestos exposures that cause asbestosis. This will be compensated in Level 8. 

The analysis of the literature showing that asbestosis is required 

for enhanced risk of lung cancer is somewhat complex and best laid 

out in a recent article by Dr. Weiss. A copy of that article is atVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00118 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
119 

tached as a PDF. The data summarized by Dr. Weiss clearly show 

that there is not a credible scientific basis for compensation of lung 

cancer in individuals with pleural plaques but no evidence of asbestosis. 

—Malignant Level 8. The use of CT scans in this level should be 

deleted. CT scanning is highly sensitive but not specific in terms 

of etiology for small changes in the lung parenchyma. Virtually all 

heavy smokers who are those for greatest risk for lung cancer 

would have CT changes showing small markings in the lower lung 

fields and can qualify under the criteria of this bill if CT were included. In the absence of standards for interpretation of CT for the 

diagnosis of early asbestosis, this test should be eliminated from 

the Trust. 

OTHER SIGNIFICANT ISSUES

On page 5 of my report, I delineated two additional issues that 

should be addressed in modifying the Trust. 

1. Require quality assurance to be more rigorous and, in particular, require that there be quality assurance for the pulmonary 

function tests. The vast majority of PFTs used in litigation today 

would fail to meet ATS standards, yet these criteria are essential 

elements of the classification for payment under the Trust. 

2. Change the concept of substantial occupational exposure to include not only duration but intensity of dose. Work with asbestos 

containing products where the fibers are encapsulated should not 

qualify an individual for a substantial occupational exposure. 

Please give me a call if I can provide further assistance. 

JAMES D. CRAPO, M.D. 

Cancer No. of new 

cases per year 

Payment per claim- ant 

10% of cases per 

year multiplied by 

payment/claimant 

5% of cases per year 

multiplied by payment/claimant 

1% of cases per year 

multiplied by payment/claimant 

1 Year: 

Lung ..................... 173,770 $300,000.00 $5,213,100,000 $2,606,550,000 $521,310,000 

Colorectal ............. 130,000 200,000.00 2,600,000,000 1,300,000,000 260,000,000 

Stomach ............... 21,860 200,000.00 437,200,000 218,600,000 43,720,000 

Esophageal ........... 14,520 200,000.00 290,400,000 145,200,000 29,040,000 

Laryngeal .............. 9,880 200,000.00 1,976,000,000 98,800,000 19,760,000 

Pharyngeal ............ 8,590 200,000.00 171,800,000 85,900,000 17,180,000 

Total ................. .................... .............................. $10,688,500,000 $4,455,050,000 $891,010,000 

Note.—The payment per claimant for Lung Cancer is for Level VII smokers—the lowest payment available for lung cancer. 

Cancer 

No. of new 

cases per 

year 

Payment per claimant 

10% of cases per 

year multiplied by 

payment/claimant 

multiplied by 30 

5% of cases per year 

multiplied by payment/claimant multiplied by 30 

1% of cases per year 

multiplied by payment/ 

claimant multiplied by 30 

Cancer: 

Lung ................... 173,770 $300,000.00 $156,393,000,000 $78,196,500,000 $15,639,300,000 

Colorectal ........... 130,000 200,000.00 78,000,000,000 39,000,000,000 7,800,000,000 

Stomach ............. 21,860 200,000.00 13,116,000,000 6,558,000,000 1,311,600,000 

Esophageal ......... 14,520 200,000.00 8,712,000,000 4,356,000,000 871,200,000 

Laryngeal ............ 9,880 200,000.00 5,928,000,000 2,964,000,000 592,800,000 

Pharyngeal .......... 8,590 200,000.00 5,154,000,000 2,577,000,000 515,400,000 

Total ............... ................ .............................. $267,303,000,000 $133,651,500,000 $26,730,300,000.00 

* New Case statistics provided by the American Cancer Society (2005), and National Cancer Institute (2004). 

(120) 

1Senate Report No. 108–118, p. 82 (Additional Views of Senator Kyl). 2Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation, 31 Pepperdine L. 

Rev. 33 (2004) (hereinafter ‘‘Theories of Asbestos Litigation’’). 3 Id. 

ADDITIONAL VIEWS OF SENATORS KYL, CORNYN, AND 

COBURN 

In July 2003, a statement of additional views to the report for 

a previous version of this bill ‘‘survey[ed] the publicly available evidence that fraud is the predominant feature of asbestos litigation 

as it is conducted today.’’ The additional concluded that ‘‘[t]his evidence indicates that the large asbestos-litigation plaintiffs firms 

routinely coach their clients to lie under oath about their exposure 

to asbestos products; that these law firms routinely rely on fraudulent readings of chest x-rays and pulmonary-function tests, in order 

to manufacture false evidence of asbestos injury; and that invalid 

medical testimony routinely is employed in litigation to support the 

existence of asbestos injuries that do not or could not exist.’’ 1

In December 2003, Professor Lester Brickman of Cardozo School 

of Law published a law-review article on asbestos lawsuits that 

began by noting that ‘‘the weight of the evidence * * * indicates 

that much asbestos litigation today involves the production and use 

of specious evidence including PFT [Pulmonary Function Test] 

printouts, other medical evidence produced by a small number of 

B-readers and doctors hired for their propensity to find high rates 

of asbestosis, and testimony of claimants according to prepared 

scripts.’’ 2 Professor Brickman concluded that ‘‘for the most part, asbestos litigation consists of a massive client recruitment effort 

which relies on the creation and use of specious evidence in a process which has corrupted the civil justice system.’’ 3

On January 7 of this year, the President of the United States 

participated in a public dialogue about asbestos litigation with Professor Brickman. The President noted that in U.S. asbestos litigation, ‘‘those with no major medical impairment now make up the 

vast majority of claims.’’ He then asked Professor Brickman to ‘‘tell 

us what the problem is.’’ This is what Professor Brickman told the 

President: 

‘‘[L]awyers have taken [the asbestos-exposure medical] 

tragedy and turned it into an enormous moneymaking machine, in which, as you say, baseless claims predominate. 

In the year 2003, 105,000 new claimants came into the 

asbestos litigation system. * * * [M]ore than 90,000 of 

these claimants have no illness related to asbestos exposure, as recognized by medical science. These are truly 

meritless claims. Nonetheless, they’re supported by medical testimony from a handful of medical experts routinely 

selected by plaintiff lawyers who are not acting in good 

faith, in terms of supplying diagnosis, but are, in fact, reVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00120 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
121 

4 A transcript of this conversation is available on the White House internet website, in the 

news releases section, at http://www.whitehouse.gov/news/releases/2005/01/20050107-8.html. 

sponding to enormous financial incentives, which is to say, 

millions of dollars in fees that they generate for reading 

the X rays in the right way. 

These meritless claims are also supported by the activities of screening companies hired by the plaintiff lawyers, 

who administer pulmonary function tests, which fail to adhere to medical standards, and produce false evidence of 

lung impairment. And finally, these meritless claims are 

supported by false witness testimony. Witnesses in asbestos litigation, including claimants, are prepared to testify 

by their lawyers. It’s a remarkable fact that every time a 

company goes bankrupt, the witness testimony about what 

their exposure was, what products they were exposed to, 

immediately shifts to inculpate new defendants, new deep 

pockets. 

I have written about this extensively, and I’ve called it 

subornation of perjury. * * * The consequence is that 

we’ve had, out of approximately 850,000 claimants since 

asbestos litigation began, perhaps 600,000 of these are 

largely baseless claims. Nonetheless, they have generated 

tens of billions of dollars in payments, and billions of dollars in fee income for lawyers, which is why they’re 

brought.4

On April 6 of this year, Thomas Donohue, the President of the 

U.S. Chamber of Commerce, sent a letter to United States Attorney 

General Alberto Gonzales in which he noted that ‘‘over the last several years, considerable evidence has emerged indicating the existence of substantial and systematic fraud in asbestos litigation.’’

The letter continued: 

A handful of asbestos plaintiffs’ lawyers have hired a 

small number of doctors with an extraordinary propensity 

to diagnose asbestosis. The specious evidence for which the 

doctors are responsible, coupled with medical testimony 

supporting the existence of asbestos injuries that do not or 

could not exist, has led to enormous settlements and judgments. 

Mr. Donohue’s letter then cited the following evidence of widespread fraud in asbestos litigation: 

(1) the recent Gitlin study, which examined x-rays submitted by plaintiffs lawyers in support of asbestosis claims 

and discovered, in Mr. Donohue’s words, ‘‘a gaping disconnect between asbestos claims and actual asbestos illness.’’

In [the Gitlin] study of 492 chest x-rays obtained by 

plaintiffs’ lawyers and entered as evidence in lawsuits 

against former employers, the original x-ray readers 

claimed to find evidence of possible asbestos-related lung 

damage in 96 percent of cases. In contrast, when the same 

x-rays were re-read by six unbiased physicians, unaware of 

the original findings or that the x-rays were part of court 

122 

cases, the doctors found only 4.5 percent showed signs of 

asbestos injury. 

The Gitlin study concludes by noting that ‘‘[t]here is no support 

in the world literature on x-ray studies of workers exposed to asbestos and other mineral dusts for the high levels of positive findings recorded by the initial readers in this report.’’

(2) the recent silica MDL in the Southern District of 

Texas, in which plaintiffs’ doctors disavowed their own diagnoses when deposed, leading the district judge to note 

the presence of ‘‘great red flags of fraud.’’ Mr. Donohue 

noted that: 

[t]he stunning revelations in the silica MDL directly 

bear on the asbestos litigation because many of the doctors 

who have repudiated their own silica findings also have diagnosed thousands of patients with an asbestos related 

disease, often using essentially the same techniques that 

are used to diagnose asbestosis. In fact, it appears that virtually 60% of the [tens of thousands of] plaintiffs in the 

silica MDL had made prior asbestos claims, many times 

diagnosed by the same physicians with asbestosis and silicosis. These asbestos related diagnoses are particularly 

troubling because experts agree that there is only a small 

likelihood that an individual could have both asbestos-related and silica-related disease; 

and 

(3) ‘‘evidence of asbestos plaintiffs’ lawyers coaching 

their clients to lie’’ about their exposure to asbestos products. 

Mr. Donohue’s letter to Attorney General Gonzales concludes as 

follows: 

Based on the evidence outlined in these materials, I request that the Justice Department immediately open a formal investigation into the conduct of lawyers, doctors and 

others who are responsible for the explosion of meritless 

and abusive asbestos claims across the country in recent 

years. 

* * * The longer the government waits to act, the greater the harm. I strongly encourage the Department of Justice to take immediate action to investigate the compelling 

evidence of fraud underpinning the ongoing asbestos litigation across the country. 

Mr. Donohue’s letter also notes why it is necessary for the Justice Department to investigate this matter—i.e., why the remedies 

available to private parties in litigation are inadequate: 

Unlike private law firms, the U.S. Department of Justice 

is immune to the threats and tactics that have been employed by the asbestos plaintiffs’ bar to squelch efforts to 

challenge the practices that are outlined in this memorandum. In addition, the Department’s subpoena power is 

a critical tool in assembling the evidence that will connect 

the dots and expose the systemic problems with asbestos 

123 

5 Roger Parloff, Diagnosing for Dollars, Fortune Magazine, June 13, 2005, at 98. 

litigation. Accordingly, a formal government investigation 

is critical to exposing and bringing an end to the extensive 

pattern of highly questionable behavior that continues to 

occur in asbestos litigation. 

Today, we add our voice to this request. We join the U.S. Chamber of Commerce in its call for a federal investigation into the practices of the large asbestos plaintiffs’ law firms and their retained 

physicians and screening companies. Evidence of routine fraud in 

the creation of asbestos legal claims is now overwhelming. Further, 

these practices may violate federal criminal statutes. This matter 

demands further inquiry. When this nation’s leading academic expert on asbestos litigation publicly confronts the President of the 

United States with allegations that an enormous economic fraud is 

being perpetrated against the American people, and when the premier trade association for American business formally requests a 

federal investigation into the same activities, it is appropriate for 

the Attorney General to act. 

There is little to add here to the publicly available record of evidence of the need for an investigation into asbestos fraud. In particular, Professor Brickman’s law-review article Theories of Asbestos Litigation, described by others as ‘‘prodigiously researched,’’ 5

provides a useful compendium of the most recent evidence of widespread asbestos fraud, as well as a guide to possible avenues of investigation. 

This statement of views elaborates on only the following additional points: first, there is a complete disconnect between the 

number of asbestos injury legal claims filed in recent years and the 

actual amount of asbestos injury in the U.S. population. This gap 

recently has grown so massive that litigation fraud is the only possible explanation for its existence. Second, this statement briefly 

describes the enormous costs imposed on the U.S. economy by asbestos litigation fraud: tens of billions of dollars stolen, tens of 

thousands of manufacturing jobs destroyed, and pension plans devastated. Third, the statement describes some of the revelations 

from the recent hearings in the silica MDL in Texas. These hearings suggest that silica litigation has the potential to become an 

ugly offshoot of asbestos litigation. And finally, the statement briefly discusses why a federal investigation is the appropriate means 

of addressing this crisis. 

THE MISSING ASBESTOSIS EPIDEMIC

At the time that the 2003 Additional Views were published, it 

was noted that: 

Asbestos-injury legal claims * * * have ‘‘prov[en] impervious to the predictions of medical science.’’ ‘‘Contrary to 

expectations, the numbers of claims filed increased rapidly 

during the 1990s.’’ Only ‘‘[a]pproximately 20,000 claims 

were filed annually against major asbestos defendants in 

the early 1990s.’’ But in 2001, at least 90,000 new asbestos 

124 

6S. Rep. 108–118 at 83–84 (citations omitted). 7Statement of Lester Brickman, Subcommittee on Commercial and Administrative Law of the 

U.S. House of Representatives Committee on the Judiciary, July 21, 2004 (hereinafter Brickman 

2004 Testimony). 8S. Rep. 108–118 at 82–83 (citation omitted). 9Theories of Asbestos Litigation, 62 & n.85 (citations and quotations omitted). See also id. 

at 36 & n.5; Brickman 2004 Testimony at 7, 8. 

claims were filed—a three-fold increase over the number 

filed in 1999.6

Since that time, the 2001 record has been broken. ‘‘In 2003, more 

than 110,000 new claimants surfaced—the most ever in a single 

year.’’ 7

As described in the 2003 Additional Views, the recent years’ surge in asbestos claims is utterly contrary to the expectations of 

medical science: 

According to Dr. James Crapo, one of the nation’s leading specialists in pulmonary medicine, ‘‘[d]ue to federal 

regulation of asbestos that began in the early 1970s, current occupational exposure levels are a tiny fraction of 

those that existed in the 1940s and 1950s. All of the asbestos-related diseases are considered dose-dependent, and 

the pre-1973 exposures to asbestos that resulted in severe 

asbestosis and lung cancer are not present today.’’ Today, ‘‘[i]t has been more than 30 years since the government began imposing strict limits on workplace exposure to asbestos dust,’’ and ‘‘[i]t has been 20 to 30 years 

since most asbestos-containing products were phased out 

of production completely.’’ ‘‘John Dement, an associate professor for environmental 

and occupational medicine at Duke University and the 

former deputy director for lung disease research at the National Institute for Occupational Safety and Health, [has] 

said there were far fewer cases of serious asbestosis today 

than 5 to 10 years ago.’’ According to Dr. Dement, ‘‘What 

we’re seeing right now is the downswing.’’ Epidemiological 

data confirm these observations. ‘‘[C]ancer deaths in the 

United States attributable to asbestos exposure are already falling, and are estimated to have peaked in 1992 at 

9700 per year.’’ Indeed, almost a decade ago—in 1994—the 

medical text Occupational Lung Disorders describe[d] asbestosis as a ‘‘disappearing disease.’’ 8

Since the publication of the 2003 Additional Views, additional 

evidence has emerged that suggests that the 110,000 asbestos injuries purported to have manifested themselves in 2003 are a medical impossibility. 

Theories of Asbestos Litigation cites several sources in support of 

the proposition that ‘‘almost no new actual cases of asbestosis have 

manifested in the past ten years.’’ 9 These sources include a 1994 

study of asbestos-exposed workers whose authors, doctors specializing in the field, note that ‘‘we have not seen a single case of significant asbestosis with first exposure [to asbestos occurring] during the past 30 years;’’ a 1988 study that notes that ‘‘[a]sbestosis 

appears to be a disappearing disease;’’ and an interview with a 

Harvard Medical School professor indicating that ‘‘medical students 

125 

10 Eddie Curran, ‘‘Myster Companies, Massive Payouts,’’ Mobile Register, March 28, 2004. 

have recently started questioning their professors as to why asbestosis is even part of the curriculum, since it is virtually never seen 

in patients outside of mobile x-ray trailers set up by plaintffs’ lawyers.’’ The same medical reality is described by a Mobile, Alabama 

pulmonologist who has treated shipyard workers for asbestosis. In 

an interview with the Mobile Register, this doctor also comments 

on the asbestos-testing companies that are employed by plaintiffs’ lawyers: 

Dr. Marc S. Gottlieb, a Mobile pulmonologist, said he 

and his professional colleagues in the area are well aware 

of the testing companies and have little regard for their 

work. 

* * * * * * * 

Gottlieb frequently sees people who make appointments 

after receiving letters from screening companies informing 

them they tested positive. ‘‘Unfortunately, the percentage 

of people who go through these testing mills and test positive is probably real high, like 75 percent,’’ he said. ‘‘If they were going to clinical physicians—somebody 

who’s not trying to make a buck off of it—the percentage 

of those people who really have it would be on the order 

of 20 to 25 percent, and people who are really disabled by 

it, like 5 to 10 percent.’’

* * * * * * * 

Gottlieb, who has practiced medicine in Mobile since 

1981, said he saw far more serious cases of asbestosis during his first 10 or 15 years than he does now. 

‘‘Thousands and thousands of men who worked in the 

shipyards in World War II were exposed, and they have no 

safeguards. There were lots and lots of warships along the 

Gulf Coast. 

‘‘The old-timers would wrap pipe, and the air was all 

white, and they came out looking like snowmen’’ from the 

asbestos, he said. 

But these days, when Gottlieb makes a diagnosis of asbestosis, it’s usually a mild case with no disability or with 

disabilities caused by other factors, like heavy smoking, he 

said.10

The same Mobile Register article also provides the following account of recent statements about asbestos litigation made by the 

American Bar Association: 

[T]he ABA stated that asbestosis claims were substantial in the early 1990s—about 15,000 to 20,000 per year— but ‘‘were fairly predictable.’’ The statistics suggested that 

non-malignant claims might begin trailing off as ‘‘the period of most intensive industrial use of asbestos had drifted further into the past.’’

The ABA continued: ‘‘In retrospect, however, it is clear 

that a countervailing trend was emerging and accelerating 

126 

11 id. 12Dr. James Crapo, Professor of Medicine, National Jewish Medical and Research Center, Response to Questions on Senate Bill S. 852, May 25, 2005. A copy of Dr. Crapo’s answers to written questions is included as an attachment to Senator Coburn’s additional views to this report. 13S. Rep. 108–118 at 92. For information about pleural plaques, see id. at 98–99. 

in the 1990s: for-profit litigation screenings began systematically generating tens of thousands of non-malignant 

claims each year by individuals who had some degree of 

occupational asbestos exposure, but did not have, and 

probably would never get, an impairing asbestos-related 

disease.’’ 11

One month ago, Dr. James Crapo repeated his previously expressed views about the actual incidence of asbestos disease in the 

United States, in his answers to written questions that Senator Kyl 

posed to him following this committee’s April 26, 2005 hearing regarding the asbestos bill. Dr. Crapo stated: 

Very few individuals in the United States are developing 

new cases of asbestosis today. In the 1960s, 1970s, and 

1980s these cases were common. Most pulmonologists rarely or never see a case of new asbestosis today. The decrease in exposures that occurred as a result of federal regulations in the 1970s and 1980s has virtually eliminated 

new cases of asbestosis. I would thus state the decline in 

the incidence of asbestosis to have begun in the mid 1980s 

(i.e., a few years following the implementation of stricter 

guidelines for occupational asbestos exposure).12

Dr. Crapo and other medical experts’ observations are confirmed 

by an unexpected additional source: former paralegals and attorneys of Baron & Budd, one of the principal plaintiffs’ law firms behind the wave of asbestos lawsuits. In interviews with Dallas newspapers, these sources have confirmed that over the course of the 

1980s and 1990s, the firm encountered fewer and fewer clients 

with significant asbestosis. As one former paralegal notes, in the 

late 1980s, if a potential client only had pleural plaques—benign 

spots on the lining of the lung that indicate exposure to asbestos 

but do not constitute a disease or even predict future development 

of disease—the law firm would not take the case. But in later 

years, ‘‘that’s all they had.’’ 13

Running as it may from the best medical research facilities in 

the nation to the paralegals of Baron & Budd, the view that incidence of asbestosis has been declining in the United States in recent decades is not unanimously held. One report, recently issued 

by the Department of Labor and entitled ‘‘Work Related Lung Diseases Surveillance Report,’’ purports to show an increase in incidence of asbestosis in the United States over the past ten years. 

The Labor Department’s findings, if they were correct, would be 

noteworthy for several reasons. Not only would these findings suggest that the best physicians currently performing research and 

practicing in the field of pulmonary medicine utterly have failed to 

detect a revival of asbestosis incidence in the United States; these 

findings also would suggest that the occupational health regulations that universally were thought to have sharply limited asbestos exposures after 1972 have in fact failed to do so, and that the 

127 

14 A copy of Dr. Crapo’s letter to Senator Kyl is attached to this statement. Unfortunately, 

the Labor Department’s data are uncritically reproduced in the most recent RAND Corporation 

Continued 

problem of occupational exposure to asbestos actually has grown 

worse since the time when those regulations were implemented. Either that would have to be the case, or the Labor Department’s 

findings would suggest that everything that modern medicine 

thought that it knew about asbestosis is in fact wrong—that the 

disease is not dose-dependent, or is not even caused by exposure 

to asbestos at all. 

Or the Labor Department could be wrong. A persuasive case for 

the latter interpretation is made by Dr. James Crapo. In a letter 

response to an inquiry from Senator Kyl, Dr. Crapo notes the following about the Labor Department report: 

This report is in conflict with the general experience in pulmonary medicine throughout the United States today, which is that 

the incidence of patients with clinically significant asbestosis is declining. In the 1980s it was common to see patients with asbestosis 

and many of these cases were severe or disabling. In my experience 

and in that of most pulmonologists I know, the incidence of such 

patients has declined steadily during the 1990s. It is now rare to 

see severe, disabling asbestosis except as cases that developed 

much earlier and who are returning for chronic follow-up. 

The problem with the NIOSH report is that its data is contaminated by the large-scale screenings done by law firms during the 

1990s looking for cases of asbestosis that could enter our legal system. These screenings have been shown to lead to large numbers 

of inappropriate diagnoses of asbestosis (see Gitlin JN, LL Cook, 

OW Linton and E Garrett-Mayer. Comparison of ‘‘B’’ readers’ interpretations of chest radiographs for asbestos related changes. Acad 

Radiol 11:843–856, 2004). 

In the NIOSH Report, Appendix A, page A–3, it states that their 

multiple cause of death data came from the National Center for 

Health Statistics (NCHS): ‘‘Each death record includes codes for up 

to 20 conditions listed on the death certificate including both underlying and contributing causes of death.’’ Appendix B, page B 1, 

in describing the methods states: ‘‘in this report the number of 

deaths for each occupational respiratory condition is the number of 

decedents for which the condition was coded as either underlying 

or contributing cause of death.’’ For this purpose, International 

Classification of Diseases (ICD) codes were used. 

In my judgement, it is likely that mass screenings done by law 

firms in the 1990s resulted in large numbers of patients being 

given an incorrect diagnosis of asbestosis and assigned an ICD9 

code for this diagnosis. With the enhanced used of computer technology during the 1990s, ICD9 codes were often permanently 

tracked for each patient and ultimately included in death certificate or hospital discharge information. In the case of asbestosis, 

this likely indicates only that the individual had participated in a 

mass screening exercise, not that asbestosis was identified by the 

treating physician as a significant cause of death. 

In my judgement, the actual incidence of clinically significant asbestosis in the United States has been steadily decreasing throughout the 1990s.14

128 

report on asbestos litigation. Because the RAND reports routinely are used as a reference source 

by many commentators on asbestos litigation, it is likely that the Labor Department’s dubious 

data will be repeated again and again. RAND even speculates in its report that the current rise 

in asbestosis ‘‘reflects the delayed effects among workers exposed to asbestos during its peak use’’ in the United States. It bears mention that virtually everyone agrees that the types of sustained exposures to friable asbestos that cause asbestosis were substantially eliminated in the 

United States after 1972, and experts generally agree that the latency period for asbestosis is 

15 to 30 years. Simple math thus suggests that the last wave of exposures in the late 1960s 

and early 1970 would have begun to cross the 15- to 30-year latency threshold in the mid-1980s, 

and that most of the tail of this final large exposed cohort would have crossed that threshold 

by 2003. Again, assuming that the controls imposed by 1972 did have some effect on exposure, 

the Labor Department data on which RAND relies make sense only if one is willing to believe 

that asbestosis is not primarily caused by exposure to asbestos. 15 Electronic message to Senator Jon Kyl, June 29, 2005 (on file with the Judiciary Committee). 

Dr. Murray Janower, the past chairman of American College of 

Radiology Committee on Ethics, reviewed Dr. Crapo’s analysis of 

the Labor Department report and concluded that he ‘‘could not 

agree with Dr. Crapo more.’’ Dr. Janower further states: 

I trained and was on the staff at the Massachusetts 

General Hospital for the decade of the sixties. Initially we 

saw a number of cases from the plumbers and pipe fitters 

at the Boston ship yards, but the cases were only a trickle 

at the end of the decade. In fact, when I wrote the first (or 

second) paper on mesothelioma in the American literature 

in 1970 (AJR:Vol. 108; p 53–59), we only had six cases. 

Again, asbestosis is a dying disease. * * * Almost all of 

the money being paid out [in the litigation system] goes to 

perfectly well people and the trial lawyers. 

Dr. Janower also notes: 

While it has been estimated that about 90% of claimants 

are walking well, based on my experience, I would say that 

the number is closer to 95% or higher and that there are 

very few cases of true disease. 

[T]here have been no workers exposed to significant concentrations of asbestos in over thirty years, and most exposure occurred prior to that in shipyards and related industries during the second world war. Most of the war workers have passed away, as expected given their old age. And 

of course, the cause of death of the dying workers is the 

usual causes of death, including heart attacks, strokes, accidents, etc. 

Dr. Janower concludes: 

If one were to survey the 126 university radiology departments, one would find that the departments probably 

see less than 6–10 cases per year. Community hospitals 

only see a case or two per year. I always tell my medical 

students and residents not to study asbestosis as it is such 

a rare disease.15

The fact that 110,000 asbestos-injury legal claims were filed in 

2003—over 90% of which asserted asbestosis and were generated 

by attorney-sponsored screenings—is itself nearly conclusive evidence of widespread fraud in asbestos litigation. The actual medical experience of asbestos-related injury in the United States simply cannot account for the sharp rise in, and sheer volume of, reVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00128 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
129 

16 Brickman 2004 Testimony, supra, at 3–4. 17 Brickman, Theories of Asbestos Litigation, at 59 n.66. 18 Id. at 132. 19 Id. at 37 n.10. 

cent asbestos-injury legal claims. Fraud is the only plausible explanation for this phenomenon. 

ASBESTOS FRAUD HAS COST THE UNITED STATES TENS OF BILLIONS OF

DOLLARS AND TENS OF THOUSANDS OF JOBS

In his testimony last year before the House Commercial and Administrative Law Subcommittee, Professor Brickman gave an overview of the current and projected impact of asbestos litigation on 

the United States economy: 

In 2003, more than 110,000 new claimants surfaced—the 

most ever in a single year. Since each claimant files claims 

against approximately 30–60 different defendants and 

bankruptcy trusts, this translates into approximately 

5,000,000 new claims which will have been generated by 

just these claimants. While approximately 750,000 claimants have so far filed claims against over 8500 different 

defendants, it is estimated that 1,600,000 to 2,100,000 new 

claimants will yet emerge. Moreover, while defendants and 

their insurers have so far paid out over 70 billion dollars, 

it is estimated that former asbestos-containing product 

manufacturers, owners of premises containing asbestos, 

and their insurers will have to pay out an additional $130–

$140 billion before the litigation is concluded. 

So far the litigation has accounted for approximately 70 

bankruptcies including, in recent years, such companies as 

Owens Corning, W.R. Grace, Armstrong World Industries, 

Babcock & Wilcox, Federal Mogul, and Combustion Engineering. I note that negotiations are currently underway 

in the Senate to remove the litigation from the judicial system and provide an alternative administrative resolution. 

No end is yet in sight, however, as what has become a 

weapon of mass business destruction cuts deeper and deeper into the American industrial process and product distribution system. If the litigation continues along its current path, many more bankruptcies will ensue—scores if 

not hundreds of companies, big and small, will almost certainly succumb as will a number of insurance companies.16

Professor Brickman has estimated that ‘‘[m]eritless asbestos 

claiming thus far approaches $28.5 billion.’’ 17 ‘‘One researcher has 

calculated that * * * the [Manville] trust alone may have paid 

$190 million dollars for inauthentic or inflated claims between 

1995 and 2001.’’ 18

This economic devastation exacts a human toll. According to a 

RAND Corporation study, ‘‘the number of jobs that [asbestos] defendants would have created if they had not had to reduce their 

capital investments by $33 billion is estimated to be 423,000.’’ 19

Moreover, ‘‘[b]ecause of the [asbestos] bankruptcies, an estimated 

52,000–60,000 employees of asbestos defendants lost both their jobs 

130 

20 Id. 21 Id. 

and an average of 25% of the value of their 401(k) accounts.’’ 20 For 

example, ‘‘the value of Federal Mogul stock in the accounts of its 22,000 employees declined by more than $70 million.’’ 21

Real people are being hurt by what is happening with asbestos 

litigation. Tens of billions of dollars have been stolen, tens of thousands of workers have lost their jobs, and billions of dollars have 

been confiscated from workers’ pension plans. This is a massive 

scandal. 

SILICA FRAUD

Today, no discussion of fraud in asbestos litigation is complete 

without a discussion of silica. The committee has good reasons to 

include in the trust-fund bill a provision that seeks to prevent asbestos claimants from also filing silica claims. Again, Professor 

Brickman provides a useful summary of events—in testimony before this committee earlier this year: 

Only recently has silica litigation exploded. In the first 

half of 2003 alone, more than 17,000 plaintiffs filed suit. 

While one company was facing 3,505 claims in 2002, the 

next year it was facing 22,000 silica claims. Similarly, as 

of September 2003, one insurer identified 30,000 silica 

cases brought against its insureds, compared to 2,500 

cases it had one year earlier. Illustrating this trend is the 

Federal Silica MDL 1553 (‘‘MDL’’) that now involves over 

10,000 plaintiffs predominately from cases initially filed in 

the Mississippi state courts and removed to Federal court. 

This rise in silica claims in the last few years seems incompatible with observations in the medical literature. I 

am not a medical doctor, but a few examples from the 

medical literature demonstrate the lack of a medical epidemic. From 1950 to 1979, for example, Massachusetts 

General Hospital reported only 15 cases of silicosis and 

coal worker’s pneumoconiosis. From 1980–1987, the Mayo 

Clinic found only 10–25 cases of silicosis per year from the 

approximately 250,000 patients seen annually. Between 

the two periods of 1969 to 1981 and of 1982 to 2001, the 

death rate for silicosis had dropped 70%. As one journalist 

noted, ‘‘litigation is rising at the same time deaths from 

silica are falling ***.’’

Further, prior to 2001, there had never been a year in 

which more than 1,000 plaintiffs filed suit for silica related 

injuries. Yet in 2003 alone, 19,389 plaintiffs filed suit—

more than in the previous thirty years combined. 

* * * * * * * 

One obvious question is why has there been such a 

marked increase in silica claims in the last few years when 

the medical evidence points to a disappearing disease. The 

answer is simple. It involves the same reasons that account for the hundreds of thousands of non-malignant asbestos claims which I describe in my Pepperdine article. It 

131 

22Statement of Lester Brickman, U.S. Senate Committee on the Judiciary, February 2, 2005. 

For an excellent overview of the explosion of fraud in silica litigation, see also Roger Parloff, 

Diagnosing for Dollars, Fortune Magazine, June 13, 2005, at 98. 23 Recent Screening Developments: The Silica MDL 1553 Daubert Hearing, Harris Martin 

Publishing 12, 2005. 24 Neal Falgoust, Defense Goes After Doctors—Physicians Paid to Read X-Rays, Work Histories, Corpus Cristi Caller-Times, February 17, 2005. 25This and the subsequent testimony is from the hearing entitled Asbestos: FELA and MixedDust Issues, U.S. Senate Committee on the Judiciary, February 2, 2005. 

is the application of the entrepreneurial model to silica, beginning with mass screenings sponsored by lawyers who 

have the economic incentive to convert asbestos claims to 

silica claims—perhaps motivated by the concern that the 

asbestos litigation end game has begun. Heath Mason, the 

co-owner of the mass screening entity N&M, Inc., testified 

that the reason his company started focusing on silica 

cases was because of a previous version of the very legislation that is before this Committee: 

Q. With respect to testing that’s being done by N&M 

these days, would you say that N&M is doing more silica 

testing versus asbestosis or what is the breakdown? 

* * * * * * * 

A. I would say at the particular time that we did those 

tests we were doing more silica than we were doing asbestos. 

Q. And is that true today? 

A. As of the last month with the Hatch bill, yes, sir, I 

would say that it is. 

Q. And has the Hatch bill influenced your business? 

A. For sure.22

Professor Brickman also notes that the silica plaintiffs’ attorneys ‘‘are following the same practices and procedures that have been 

used to generate the massive number of non-malignant asbestos 

tort claims.’’ One particularly noteworthy aspect of the silica litigation is the 

large number of silica claimants who also have filed asbestosis 

claims. ‘‘One plaintiffs’ law firm admitted that it represents over 

3,500 MDL silicosis plaintiffs who had prior asbestosis diagnoses.’’ 23 And just one doctor—Ray Harron—has ‘‘diagnosed about 

1,500 patients with silicosis after he had earlier found them to be 

suffering from asbestosis.’’ 24

These dual diagnoses are noteworthy in light of the fact that several experts have testified before this committee that such overlap 

is virtually nonexistent in the real world. Dr. Paul Epstein, a pulmonary physician and Clinical Professor of Medicine at the University of Pennsylvania who has wide experience in treating occupation lung disease, noted that ‘‘[s]ilicosis has quite a different appearance [from asbestosis] on the chest x-ray.’’ 25 He continued: 

‘‘When people have both diseases, (that is, both asbestosis and silicosis) the characteristic clinical and x-ray manifestations are each 

discernible as separate features and the diagnosis of dual disease 

process can be made with relative ease.’’ Dr. Epstein concluded: 

Over the course of the past 30 years I have personally 

examined approximately 17,000 individuals who have been 

132 

occupationally exposed to asbestos. These workers have 

held many different jobs, including those of shipyard workers, oil refinery employees, construction workers, steel mill 

employees, chemical workers, insulators, electricians, 

painters, and riggers, to name a few. Additionally, I have 

evaluated many workers who were occupationally exposed 

primarily to silica, including coal miners, sandblasters, 

stone-quarry workers, glass makers, and refractory brick 

manufacturers. A large number of these workers were exposed to both silica and asbestos. 

While it is theoretically possible to have combined disease consisting of asbestosis and silicosis, it has been my 

clinical experience that the overwhelming majority of patients I have seen with asbestos-related diseases have had 

no evidence of silicosis. In fact, I can recall no more than 

a dozen or so individuals who have had combined asbestosis and silicosis and these were people who had substantial occupational exposure to silica, often in jobs that were 

separate from their subsequent jobs that involved exposure 

to asbestos. For this reason, it is my professional opinion 

that the dual occurrence of asbestosis and silicosis is a 

clinical rarity. 

Similar testimony was presented to the committee by Dr. Theodore Rodman, a retired professor of medicine at Temple University 

who has 50 years’ experience in medical practice, teaching, and research. Early in his career, Dr. Rodman developed an interest in 

occupationally related lung diseases—he examined hundreds of 

such patients, and reviewed the x-rays of thousands. He concluded: 

Of the hundreds whom I examined, I can remember only 

one or two who gave a clear-cut history of significant occupational exposure to both asbestos and silica—not surprising considering the disparity in occupations in which 

asbestos and silica exposure commonly occur. 

Among the thousands of chest x-rays which I reviewed 

in asbestos and silica exposed individuals, I cannot remember a single chest x-ray which showed clear-cut findings of 

both asbestos exposure and silica exposure. 

During the decades of the seventies, eighties, and nineties, in connection with the asbestos litigation, I evaluated 

a large number of litigants. 

Not one of them had medical records suggesting a history of significant silica exposure. 

I found evidence of asbestos related changes in many. 

I found no evidence of silica related changes in any. 

I found no evidence in the reports of any physician—

whether retained by the plaintiff or the defendants—that 

concluded that the patient had silica related changes. 

On the basis of this personal experience, I have concluded that both asbestos and silica related changes and 

disease are common but rarely occur in the same patient. 

The medical literature and textbooks with which I am 

familiar are consistent with my conclusion. 

133 

Finally, the committee heard testimony from Dr. David Weill, an 

associate professor in the Division of Pulmonary and Critical Care 

Medicine at the University of Colorado Health Sciences Center. He 

stated: ‘‘silicosis and asbestosis are different diseases; they are not 

easily confused in practice; and it is very rare for one person to 

have both diseases.’’ Dr. Weill also indicated that ‘‘[i]n the Spring of 2004, I had the 

privilege of serving as a visiting professor at the National Institute 

of Occupational Medicine and Poison Control in Beijing, China.’’ He 

noted: ‘‘During my time in China I saw hundreds of cases of asbestosis and silicosis, many involving very serious and advance stages 

of the disease. The Chinese experience is sobering, and far different 

from what I have seen in the U.S., where genuine cases of these 

diseases are quite rare.’’ Regarding the dual-disease litigation phenomenon, Dr. Weill commented that: 

Although asbestosis and silicosis are different diseases 

that look different on x-ray films, it is theoretically possible for one person to have both diseases. A person could 

be exposed to both silica and asbestos in sufficient quantities to cause either disease, but it would be extremely unusual for one person in a working lifetime to have sufficient exposure to both types of dust to cause both diseases. 

In my clinical experience in the United States, I have 

never seen a case like this and colleagues who saw patients in periods where exposure levels were much higher 

have difficulty recalling an individual worker who had 

both asbestosis and silicosis. Even in China, where I saw 

workers with jobs involving high exposure to asbestos and 

silica (such as sandblasting off asbestos insulation), I did 

not see anyone or review chest radiographs of anyone who 

had both silicosis and asbestosis. 

Dr. Weill also reviewed 300–400 case files from the Texas silica 

MDL. He testified with regard to that litigation that: 

From a medical standpoint, it is puzzling to see so many 

ostensible silicosis cases in such a short period of time. In 

my clinical practice and those of colleagues in the occupational medicine field, it is unusual to see new silicosis 

cases, at least in the United States, largely because of the 

workplace regulations that have been put in place by 

OSHA. The situation in China, and the rest of the developing world, is very different. 

Although statistical evidence is incomplete and imperfect 

from a methodological point of view, few would question 

the proposition that industrial dust control mechanisms 

have made silicosis much less common today than it was 

a generation ago. 

* * * * * * * 

Silicosis and, for that matter, all pneumoconioses are 

dose-dependent, meaning that increased level and total 

amount of exposure results in increased risk and/or severity of the diseases. Conversely, as workplace exposures 

have been substantially reduced in the last several decVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00133 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
134 

26 Neal Falgoust, Doctor Decries Testing Process, Corpus Christi Caller-Times, February 19, 

2005. 27 Id. 28 Neal Falgoust, ‘‘Red Flags of Fraud’’ Are Raised, Corpus Christi Caller-Times, February 18, 

2005. 29See Brickman, Theories of Abestos Litigation, at 76 n. 20, 141 n. 399, 164 n, 503. 30See Brickman, 2004 Hearing Testimony, at 55–57, See also S. Rep. 108–118 at 95 (describing difficulties encountered by private investigators collecting evidence of asbestos fraud). 

ades, silica-related health effects have become less prevalent. The declining incidence of silicosis should be associated with fewer and fewer silica lawsuits, but in my experience exactly the opposite is taking place. Silica lawsuits 

are sharply increasing even though from a medical perspective silicosis is declining. 

During a Daubert hearing in the Texas silica MDL, one witness—a former fellow of pulmonary diseases at the National Institute for Occupational Safety and Health—testified that the doctors 

who had diagnosed the claimants as having silicosis were not ‘‘intellectually and scientifically honest.’’ He characterized these diagnoses as ‘‘stunning and not scientifically plausible.’’ 26

Another doctor also described the sheer medical impossibility of 

the thousands of silicosis cases asserted in the MDL: 

Defense witness Dr. Gary Friedman, a Houston physician who has testified on behalf of silicosis patients in 

other lawsuits, said he could not offer a plausible explanation for the apparent outbreak of silicosis that had arisen through the litigation. 

The worst outbreak of the disease occurred in the 1930s 

in West Virginia, when hundreds of workers drilling a tunnel died from inhaling the dust. Some documentaries have 

called it the nation’s worst industrial disaster. 

Friedman said that disaster pales in comparison to the 

10,000 cases of silicosis reported in this set of lawsuits.27

Judge Janis Jack, the federal district judge presiding over the 

MDL, summed up the import of all this evidence: it raises ‘‘great 

red flags of fraud.’’ ‘‘This is extremely serious.’’ 28

THE NEED FOR A FEDERAL INVESTIGATION

Again, as the Chamber of Commerce noted in its letter to the Attorney General, only the Justice Department has the investigative 

tools that are needed to conduct an unimpeded investigation into 

fraudulent practices in asbestos litigation. Professor Brickman 

makes the same point in his 2004 law-review article; he repeatedly 

notes that only grand-jury subpoenas could uncover various critical 

evidence about dishonest practices among asbestos plaintiffs’ bar.29

He also suggests that a governmental investigation is the only way 

to uncover corresponding evidence that likely is in the possession 

of the asbestos bankruptcy trusts.30

What is happening with asbestos litigation is not happening by 

accident and it is not happening spontaneously. Indeed, there already is substantial evidence that, in addition to the screening 

companies and physicians involved, the attorneys at the top of the 

asbestos-litigation pyramid are fully aware that the legal claims 

that comprise this litigation are being filed on behalf of individuals 

135 

31S. Rep. 108–118 at 85–92. 

who are not sick and who were not even exposed to the products 

of the manufacturers who are being sued.31 If these attorneys are 

aware of the practices of which their own paralegals suggest that 

they are aware, these attorneys may be violating federal criminal 

statutes. 

Asbestos litigation has become a cancer on the American economy and a disgrace to the American justice system. As the 2003 

claims-filing data and the developments in silica litigation demonstrate, this cancer is not receding—it is spreading. Even if Congress enacts an asbestos trust fund and preempts all future asbestos litigation, the patterns and practices developed in asbestos litigation inevitably will migrate to other toxic-torts litigation—unless 

the cancer is cured at it source. This is a problem that will not go 

away on its own. It is a problem that must be addressed. 

JON KYL. 

JOHN CORNYN. 

TOM COBURN. 

(136) 

ADDITIONAL VIEWS OF SENATORS CORNYN, KYL, AND 

COBURN 

One particularly concerning problem has been the lack of information that is available to the committee with regard to the underlying financial analysis of the trust fund. Further, and on a related 

note, we are concerned that the underlying assumptions regarding 

those expected to pay into the fund, the amount to be paid into the 

fund and the total cost of the fund have not been sufficiently explained to us. 

While each of us supports the mission and objectives of this legislation, the success of the trust fund requires that the financial 

analysis be sufficiently thorough and performed by an adequate 

number of objective parties to give us a high degree of confidence 

that the trust fund is sustainable. Sustainability of the trust fund 

is absolutely imperative if we are to treat victims fairly and get 

them the awards they deserve. Unfortunately, the two primary 

analyses we have seen to date vary significantly as we await the 

opinion of the Congressional Budget Office (CBO) with regard to S. 

852. 

At its core, the trust fund boils down to cash inflows and cash 

outflows. Inflows, scheduled to be capped at $140 billion over the 

life of the trust fund, consist of payments by defendant companies, 

insurers and, possibly, existing asbestos trusts. Outflows consist of 

all expenses associated with the trust fund, including all victim 

compensation payments, all administrative expenses and, at least 

as currently contemplated, all debt and interest expenses. 

Our responsibility to perform basic due diligence dictates that we 

have at our disposal, at a minimum, a comprehensive understanding of the history of asbestos-related payments by defendant 

and insurance companies expected to pay into the fund, a reasonable idea of the expected defendant and insurance companies that 

will pay into the trust fund by tier and the amount each will pay, 

a firm understanding of the expected numbers of victims to be paid 

by claims level per year, a thorough projection of the costs associated with managing the trust fund at the Department of Labor, a 

comprehensive projection of potential interest expense and, generally, a comprehensive year-by-year financial analysis that details 

the expected cash flows for the trust fund. 

In virtually all respects, the information available to us is less 

comprehensive than we would prefer in order to be confident in the 

viability of the trust fund. In addition, based on what we know, the 

fairness of the allocations formula is questionable and the likelihood that the trust fund will remain solvent currently is, at best, 

a guess. 

137 

1 Verbal presentation from the National Association of Manufacturers Asbestos Alliance and 

the Asbestos Study Group on April 12, 2005. 2 Congressional Budget Office Estimate, S. 1125—Fairness in Asbestos Injury Resolution Act 

of 2003, October 2, 2003, at 1. 

LACK OF AVAILABLE INFORMATION

As of the writing of this committee report, we have been able to 

analyze only limited information. Senators have made repeated requests to see greater detail but only with limited success. Accordingly, we are left in the uncomfortable position of largely guessing 

about the impact of any proposals offered to deal with many of the 

issues we face on this bill. 

Perhaps most troubling is our fundamental lack of understanding 

of those expected to pay into the trust fund and the amounts they 

are expected to pay. We have seen two separate, but significantly 

different, presentations of the estimated numbers of companies expected to pay into the trust fund by tier. We know that Tier 1, representing bankrupt companies that have filed for Chapter 11, has 

approximately 20 companies in it. Beyond that, however, the story 

is less clear. We have been told that Tier 2 companies number between 30 and 78; Tier 3 between 28 and 80; Tier 4 between 230 

and 360; Tier 5 between 150 and ‘‘hundreds;’’ and Tier 6 simply between 400 and ‘‘hundreds.’’ 1 Generally, we have heard estimates of 

total contributing companies from fewer than 1000 to over 1700.2

While a few companies have volunteered the tier and subtier in 

which they expect to fall, for the most part we have very little idea 

about the amount most companies will pay. 

Additionally, we have very little information detailing the estimated historic asbestos-related expenses for any companies to give 

us a reference point from which to compare the effective fairness 

of the trust fund tier values. Without knowing who will be paying, 

it is difficult to know what their past expenditures have been. 

Moreover, even public companies don’t always have the most information available, so until companies are required to or volunteer 

to submit their data in full, we will not have enough information 

to analyze. 

Information with regard to the trust fund outflows also could be 

more readily available. So far, we have seen only a high-level analysis produced by the investment bank, Goldman Sachs, who was 

retained by the pro-reform Asbestos Study Group. This analysis, 

though very helpful for us to understand the theory behind the 

fund, is not the level of detail we require. At a minimum, we 

should be able to see year-by-year cash flow summaries with best 

and worse case scenarios—including the impact of possible interest 

expense if there is ‘‘a run’’ on the trust fund at any point. Further, 

while we finally were given the baseline projection on which the 

entire model appears to be based, we have not seen any of the detailed modeling and analysis built upon those projections. 

We are sympathetic that the information is quite difficult to obtain given the complexity of the legislation, the number of parties 

involved and the amount of information involved. Nevertheless, it 

would seem that the burden of proof should fall upon those most 

supportive of the trust fund to show that fund will be adequately 

funded and that it will be fairly allocated. As United States SenVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00137 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
138 

3 Verbal presentation from the National Association of Manufacturers Asbestos Alliance and 

the Asbestos Study Group on April 12, 2005. 4Letter from the Congressional Budget Office to Chairman of the Budget Committee Don 

Nickles dated April 20, 2004 at 3. 

ators voting on a trust fund of this magnitude, we should have 

more information than is available to us at this time. 

TOTAL COST OF THE FUND

To ensure that those sick from asbestos exposure are treated 

fairly and effectively, we must ensure that the fund remains viable. 

As of the time of this report, we have only two analyses on which 

to base our assessment regarding the fund until the CBO provides 

its analysis in the coming weeks. We have the model from Goldman 

Sachs described above which focuses on S. 852 and we have last 

year’s valuation of S. 2290 by the CBO. 

According to Goldman Sachs’ analysis, we are told that the trust 

fund will pay out claims of approximately $118 billion.3 We have 

only been provided limited detail regarding the assumptions underlying this model, have seen only limited summaries of the model 

and are not certain if it represents a best-case, expected or worsecase scenario. The other analysis we have is a CBO analysis from 

April 2004 that indicates the fund would cost approximately $140 

billion.4 Clearly these represent a sizable discrepancy. 

To be sure, there have been a number of significant changes in 

the legislation. But some of these changes subtract costs and some 

add costs. For example, since S. 2290 last year, we have improved 

the medical criteria considerably by removing from the trust fund 

the ‘‘Level 7’’ claims value which would have made payments to individuals without the necessary indicia of illness related to asbestos exposure. In addition, the number of claimants expected to be 

paid necessarily has changed over time, the claims levels are markedly higher than in S. 2290 and other changes in the medical criteria may actually increase costs significantly. For example, the 

use of CT Scans may cause a substantially larger group of claimants than we have contemplated previously. Detailed discussion 

about the issue of medical criteria is contained in separate views 

in this document. 

Making a sound evaluation regarding the overall cost of the trust 

fund is a difficult task. Indeed, the CBO pointed out a number of 

these difficulties with regard to S. 2290, at least, in a letter to then 

Chairman Hatch just last year: 

Any budgetary projection over a 50-year period must be 

used cautiously, and as we discussed in our analysis of S. 

1125, estimates of the long-term costs of asbestos claims 

likely to be presented to a new federal fund for resolution 

are highly uncertain. Available data on illnesses caused by 

asbestos are of limited value. There is no existing compensation system or fund for asbestos victims that is identical to the system that would be established under S. 

1125 or S. 2290 in terms of application procedures and requirements, medical criteria for award determination, and 

the amount of award values. The costs would depend heavily on how the criteria would be interpreted and impleVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00138 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
139 

5 Id. at 6. 

6Letter from the Congressional Budget Office to Chairman of the Judiciary Committee, Orrin 

Hatch. October 2003 at. 7Letter from the Congressional Budget Office to Chairman of the Budget Committee Don 

Nickles dated April 20, 2004 at 6. 

mented. In addition, the scope of the proposed fund under 

this legislation would be larger than existing (or previous) 

private or federal compensation systems. In short, it is difficult to predict how the legislation might operate over 50 

years until the administrative structure is established and 

its operations can be studied.5

In truth, the success of the asbestos legislation depends almost 

entirely on the estimates on which the financial assessments are 

based. Thus far, we have seen a one page table of what we believe 

to be the projections on which the Goldman Sachs model is based. 

We have not seen, however, any detail that would demonstrate 

whether these projections are reasonable nor how the model then 

assesses the impact of these projections. In an October 2003 letter 

to Senator Orrin Hatch regarding S. 1125, CBO noted its concerns 

about the claims and potential costs, writing that ‘‘there is a risk 

that the actual number of claims could exceed our estimate.’’ 6

We note that there is a great deal of uncertainty regarding the 

expected number of claimants that actually would qualify for an 

award as opposed to receiving medical monitoring. Again, the CBO 

opined about some of these problems with regard to S. 2290: 

One area in which the potential costs are particularly 

uncertain is the number of applicants who will present evidence sufficient to obtain a compensation award for nonmalignant injuries. CBO estimates that about 15 percent 

of individuals with nonmalignant medical conditions due 

to asbestos exposure would qualify for awards under the 

medical criteria and administrative procedures specified in 

the legislation. The remaining 85 percent of such individuals would receive payments from the fund to monitor 

their future medical condition. 

If that projection were too high or too low by only 5 percentage points, the lifetime cost to the Asbestos Fund 

could change by $10 billion. Small changes in other assumptions including such routine variables as the future 

inflation rate could also have a significant impact on longterm costs.7

Further, we have great concerns about the necessary funding in 

the early years of the trust fund. As we describe separately, the 

medical criteria give us great concern that the trust fund cannot 

sustain the potential cost. The proposed up-front funding of approximately $42 billion over the first 5 years may very well not be 

enough to cover the cost of the pending claims existing today, notwithstanding the additional claims that no-doubt will enter the 

fund right away. 

We eagerly await the CBO’s updated analysis and are hopeful 

that it can shed greater light on the expected cost of the fund, but 

regardless of their determination, we stress the many concerns we 

have regarding the current process for estimating the cost. 

140 

ALLOCATIONS CONCERNS

The Allocations formula for both defendant companies and insurers remains as much a mystery as the process for determining the 

total cost of the fund. Insurers, unable to come to any agreement 

thus far regarding a fair allocation formula, will leave their fate to 

an insurance commission if they cannot agree. This is not the preferred situation, but even worse, the current allocations scheme in 

place for defendant companies strikes us as somewhat arbitrary 

and arguably unfair in at least certain instances. 

Determining a fair allocations formula for defendant companies 

is an extraordinarily complex proposition. The current formula attempts to do that, but many companies have raised significant concerns that they are not being treated fairly. Specifically, the primary concerns seem to be that there are a number of companies 

that believe they will be forced to pay significantly higher amounts 

into the fund than they would have paid or expect to pay in the 

current litigation environment. Further, many companies are well 

insured and believe themselves to be sufficiently insured against 

future claims. 

No system we can devise will be perfect. However, we make a 

number of observations: 

• A hypothetical company with as much as $1 billion in total 

previous asbestos-related expenditures would be required to 

pay no more than $27.5 million per year in future years. A 

similar size company with as few as $75 million in total previous asbestos-related expenditures would pay the same 

amount. 

• A well insured company that has paid few, if any, claims 

out of pocket and believes itself to be well insured against any 

possible future claims could be forced to pay millions of dollars 

into the federal trust fund. 

• At least three companies of which we are aware have 

spent historically just over $100 million in total previous asbestos-related expenditures, and less than $2 million has come 

out-of-pocket. Under the trust fund, these companies would be 

expected to pay, most likely, $16.5 million per year into the 

trust fund. 

• Premises companies, often self-insured, make a case that 

their asbestos liability is not the same as products defendants. 

According to information we have seen, many of these companies would be expected to pay into the trust fund as much or 

more than twice the amount they have been spending historically. 

We could offer additional observations, but the point is clear that 

while certain companies will benefit from the legislation it is probable that some companies will be made worse off by the trust fund, 

not better. Much is made of the ‘‘hardship and inequity’’ provisions 

as a way to offset the concerns these business have. No doubt these 

provisions may provide the needed relief in some, if not all, instances. However, it is of no comfort to the Board of Directors, 

CEO, shareholders and other stakeholders of a corporation that 

they ‘‘may’’ get an offset from some future Administrator when they 

are seeking access to the public markets, loans from banks, ratings 

141 

8Letter from the Coalition for Asbestos Reform to Chairman of the Judiciary Committee, 

Arlen Specter, April 6, 0025 at 1. 

from Standard and Poor’s or Moody’s, or any other critical business 

transaction they care to make. 

The Coalition for Asbestos Reform is a coalition of businesses opposed to the legislation that includes a number of businesses and 

we are told it is growing. In a letter to Senator Specter dated April 

6, 2005, the coalition reiterated its concerns about the cost burden 

on small and medium sized businesses, calling it a ‘‘manifestly unfair allocation formula,’’ and adding: 

The formula for assigning mandatory payments is almost certain to be the direct cause of a number of bankruptcy filings for otherwise financially sound companies. 

Each version of the FAIR Act has increased the payment 

burden on defendant companies, and has based each company’s ability to pay on its historic asbestos defense costs. 

These allocations—across all tiers of the FAIR Act—fail to 

recognize that many defendant companies have paid only 

insurance premiums related to asbestos defense, and 

would be obligated to make payments to the trust fund 

that far exceed their anticipated liabilities under the current tort system. By shifting the burden of paying for asbestos claims from the companies with the greatest asbestos exposure to a host of other businesses—including many 

small and medium sized entities—the legislation creates a 

substantial likelihood that a cascading series of defaults 

will rapidly lead to the insolvency of the trust fund.’’ 8

In addition, we are concerned that should the trust fund face insolvency, as we fear may be possible given the limited analysis we 

have been able to conduct, that many of these businesses would 

face the difficult task of paying off the debt accumulated by the 

trust fund at the same time they attempt to deal with additional 

litigation upon reversion to the court system. 

Finally, we note that the current funding formula contemplates 

a ‘‘guarantee surcharge’’ to ensure that the entire $3 billion annual 

payment is available. Our primary concern is that if there remain 

serious issues with the underlying allocations formula, any pro-rata 

surcharge will simply exacerbate the problem for companies facing 

an unfair assessment. 

We feel that any allocation formula must be structured in such 

a way as to give companies the actual finality the fund contemplates and that to do so requires as hard and as objective a 

trigger as is possible. We have offered a number of alternative solutions, but we prefer anything that will cap, for at least smaller 

companies or companies with smaller historic expenditures, annual 

assessments at an amount reasonably related to what they would 

have expected to pay were the trust fund not enacted. 

CONSTITUTIONAL CONCERNS

The allocations issue raises at least two notable constitutional 

questions relating to the taking of existing bankruptcy trust assets 

and placing them into the national trust; and the abrogation of exVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00141 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
142 

isting insurance contracts. We cannot be certain how these questions would be resolved. Nevertheless, any analysis we conduct 

about a ‘‘worse case scenario’’ should take into account the possibility that some aspects of the trust fund could be held unconstitutional. 

Existing bankruptcy trusts 

The first concern deals with the issue of taking existing bankruptcy trusts and placing those funds directly into the national 

trust fund. The existing trusts, in many cases, are a significant 

part of the current broken system. Often times, asbestos victims 

are paid only pennies on the dollar through these trusts. Yet, some 

of the bankruptcy trustees feel that any forced transition of trust 

assets to a national trust fund would be a serious constitutional 

problem. In a letter addressed to Senator John Cornyn from former 

Solicitor General Ted Olson, he makes the following points: 

In short, the FAIR Act would take resources belonging 

to victims of asbestos exposure and alter, often in material 

ways, their rights to recover for their injuries. In the event 

the bill is not modified—by allowing trusts to opt out of its 

coverage—the trustees whom we represent would seem to 

have no choice but to bring a lawsuit challenging these 

provisions as unconstitutional. 

He then went on to describe that there would be three main arguments. First, that the FAIR Act violates the Takings Clause of 

the Fifth Amendment. Second, that the FAIR Act violates separation-of-powers principles by ‘‘tampering with final judgments of the 

judicial branch.’’ Third, the Act violates equal protection principles 

by ‘‘specifically excluding bankruptcy-related recoveries from the 

Act’s general protection of recoveries arising out of prior settlements and final judgments.’’ Without considering the merits of the possible litigation, our concern is that there is a very real possibility that the litigation will, 

in fact, occur and that there is at least the possibility that these 

existing trust fund assets will not be available for the national 

trust fund. Without these funds, the liquidity of the trust fund 

within the earliest years would be seriously jeopardized. We are 

concerned that this likelihood has not adequately been contemplated in the current funding analysis. 

Furthermore, it still is unclear to us the extent of the moneys in 

question in the existing bankruptcy trust funds. Often times, a 

value of $4 billion is quoted as the amount in question. However, 

this amount was the amount in question at the time negotiations 

were taking place on previous legislation in the 108th Congress. 

Now, as a result of the Halliburton bankruptcy and other ‘‘wrapped 

up’’ bankruptcy trusts, there may be as much as $7 to 10 billion 

in question. Again, we simply seek a full explanation as to the likely impact of these monies becoming unavailable. 

Abrogation of insurance contracts 

As explained above, we are concerned about the impact this legislation will have on businesses being forced to pay into the fund 

despite previously having only minimal out-of-pocket expenses as a 

143 

9Senate Report No. 108–118, 108th Congress, 1st Session 76 (July 30, 2003). 10Letter from Professor David Strauss to Chairman of the Judiciary Committee Orrin Hatch, 

3/5/2004. 

result of being well insured (or otherwise). This is not a new concern. Some of us raised these concerns in the Additional Views 

signed by Senators Grassley, Kyl, Sessions, Craig and Cornyn included in the Committee Report on S. 1125 in the 108th Congress: 

The bill also has the potential to create hardships for 

companies who adequately insured themselves against asbestos litigation exposure. Certain companies could have 

expected minimal out-of-pocket exposure, but, by virtue of 

previous litigation expenses that insurance covered, will 

qualify for a more expensive tier. One company, which expected only ten million dollars in out-of-pocket expenses, 

calculates that its obligation under the bill would be 

$500,000,000 over the 27 year life of the fund. During the 

markup, the Chairman committed to working to resolve 

this problem prior to floor action because of this type of 

gross unfairness. Resolution of this is critical.9

But the issue is heightened further by the possibility of a constitutional challenge. Again, without commenting on the merits of 

the arguments, we are concerned that a number of companies will 

challenge the trust fund on the grounds that the legislation ‘‘could 

be declared unconstitutional, as applied to certain defendants, 

under the Takings and Due Process Clauses of the Fifth Amendment.’’ 10 This is the contention of at least one law professor and 

constitutional scholar, David Strauss, who has been retained by 

National Service Industries, Inc. Such a challenge could, as any 

other possible constitutional challenges, undermine the viability of 

the trust fund. 

We believe that the allocations concerns explained here must be 

resolved for the trust fund is to be successful. The well being of victims of asbestos exposure depends on the long term viability of the 

trust fund and the trust fund cannot succeed without a fair allocations formula applied to those paying for the fund. We would like 

to note that Chairman Specter has been committed throughout the 

debate over this legislation to working out all serious issues, and 

that is true regarding this problem as well. We will continue to 

work to solve these serious problems in hopes that we can end the 

disastrous effects of the current broken asbestos litigation system. 

JOHN CORNYN. 

JON KYL. 

TOM COBURN. 

(144) 

1 11 U.S.C. § 1126(c) & (f) 2 11 U.S.C. § 1129(b) 

ADDITIONAL VIEWS OF SENATORS CORNYN, KYL, AND 

COBURN 

A significant concern that the Trust Fund fails to address is the 

issue of 524(g) bankruptcies and a current flaw in the statute that 

should be resolved. A simple fix is required to fix the unintended 

result of inequity among creditor classes created by the 524(g) provisions added to the bankruptcy code in 1994. Such a fix simply 

would add language to that provision which would make clear that 

a class created by 524(g) is subject to the so-called ‘‘cramdown’’ procedures provided under 11 U.S.C. § 1129(b). 

While the Trust Fund ostensibly eliminates the concern going 

forward with respect to the creation of 524(g) trusts, the problem 

should not be left unresolved for two reasons. First, it is bad policy 

to leave such an apparent and troublesome flaw in the code. Second, because the Fund as currently written contemplates a reversion to the tort system, even if the Trust Fund is enacted it will 

be reasonably possible for the 524(g) provisions to one day again 

have an effect. 

BACKGROUND

At the end of the Chapter 11 process emerges a reorganization 

plan. The plan outlines the recovery that each class of creditors or 

stockholders will receive so that the company can emerge as a viable entity. For the plan to be adopted, it must be approved by each 

class, with each class requiring approval by two-thirds of the total 

amount and more than half of the number, subject to the judge’s ‘‘cramdown’’ power described below.1

Cramdown is the judge’s power to impose a reorganization plan 

over the objections of a class of creditors if the court finds it ‘‘fair 

and equitable.’’ 2 Cramdown thus provides a critical ‘‘safety valve’’ to prevent a creditor or stockholder class from vetoing a plan and 

holding up the proceedings. Without the cramdown provision, each 

creditor or stockholder group could hold the process hostage and 

refuse to allow the bankrupt company to emerge from Chapter 11 

until its demands are met. The prospect of cramdown keeps the 

parties honest, prevents any one class from holding a ‘‘veto’’ and 

generally encourages consensus. 

The 524(g) bankruptcy code changes 

The 103rd Congress passed the Bankruptcy Reform Act of 1994, 

an omnibus law directed at a wide variety of bankruptcy issues. 

One of those changes was the addition of section 524(g) and (h) to 

deal with asbestos bankruptcies. These amendments, among other 

things, create ‘‘channeling injunctions,’’ which channel all present 

145 

3 11 U.S.C. § 524(g) 4 Report of the National Bankruptcy Commission p. 19. 

5See Mark D. Brodsky, Fixing the Asbestos Mess: Step One, January 14, 2003 at 4 

6The 2004 Bankruptcy Year and Almanac, p. 71. 

7The 2004 Bankruptcy Yearbook and Almanac, p. 195. In addition, this is based on available 

data and does not include, for example the recent wrap-up of Halliburton and certain other prepackaged asbestos bankruptcies where there were no significant commercial creditors. 

and future claims to the bankruptcy trust and discharges the debtor from liability. In addition, for asbestos claimants, Section 524(g) 

increased the required class approval to 75 percent of asbestos 

claimants (and requires one person, one vote).3

Most troubling, however, lawyers have argued that asbestos 

claimants created under Section 524(g) are exempt from cramdown. 

Unfortunately, at least one judge has interpreted it along these 

lines and it appears that many now are interpreting Section 524(g) 

as preventing the application of cramdown to any asbestos class.4

Further, there appears to be no legislative history supporting congressional intent to cause this result, rather it seems to have been 

either an oversight whereby the drafters of Section 524(g) failed to 

cross-reference the cramdown section that would make clear the 

same judicial override should apply or a simple assumption that it 

would so apply.5 It seems highly unlikely that Congress would 

have granted an exemption from such a fundamental tenet of the 

bankruptcy code without any discussion whatsoever. 

Result 

Because of the perceived exemption from cramdown, lawyers representing the asbestos classes are able to make significant demands of other classes and hold the process hostage if these demands are not met. Take, for example, the duration of asbestos 

bankruptcies since passage of 524(g) in 1994 as compared to the 

average duration of all bankruptcies since that time. 

The average length of time it has taken for companies to emerge 

from bankruptcy reorganization since enactment of 524(g) in 1994 

has been slightly less than 15 months.6 In stark contrast, asbestos 

related bankruptcies have taken almost 3 times as long, averaging 

more than 41 months and counting, as most remain pending.7

Some of the most complex bankruptcies in American history, including Worldcom and Enron, have been initiated and concluded 

subsequent to the filing of the largest contested asbestos bankruptcies, all of which languish unresolved. 

As a result of the asbestos cramdown exclusion, companies in 

bankruptcy, their commercial creditors and their shareholders possess very little negotiating power. Even financially sound companies with asbestos exposure are detrimentally affected as they encounter difficulties in raising funds due to their unequal bargaining 

position in the event of a bankruptcy. 524(g) was intended to protect future asbestos claimants while allowing companies to emerge 

from Chapter 11 bankruptcy as viable entities. Instead, 524(g) has 

created a stalemate on both these fronts—preventing all parties to 

a bankruptcy from realizing a positive outcome. 

SUMMARY

The Asbestos Trust Fund contemplated under S.852 should include a fix to this seemingly unintended result. To do so would reVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00145 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
146 

store some sanity to the process in the unfortunate, but possible, 

event of a reversion to court should the Trust Fund become insolvent. 

JOHN CORNYN. 

JON KYL. 

TOM COBURN. 

(147) 

ADDITIONAL VIEWS OF SENATORS KYL AND COBURN 

When this committee reported an asbestos-trust fund bill in 

2003, some members proposed three criteria for evaluating such a 

bill: the trust fund must be fair to people with asbestos injuries; 

its cost must be reasonable; and it must provide a permanent solution to the asbestos-litigation crisis. 

We have voted to report this bill out of committee, in no small 

part out of appreciation for the Chairman’s extensive efforts to address our concerns about the bill. We particularly appreciate his assistance in adding to the bill a gatekeeper mechanism for certifying 

exigent claims seeking an early settlement. Any startup provision 

that threatens to prematurely return the trust fund to court is bad 

for victims, bad for participant businesses, and bad for the U.S. 

government. Once this fund is started, it needs to work—we cannot 

shift victims back and forth between the tort system and the fund, 

especially those with malignant conditions who likely do not have 

long to live. 

Nevertheless, when we voted for this bill, we each expressed reservations about the final product. One concern about this bill looms 

above all others, and it directly threatens all three of the abovestated criteria for evaluating the bill: solvency. We remain deeply 

concerned that this fund will run out of money and prove unable 

to pay all qualifying claimants. Allow us to explain why we are concerned about the fund’s finances. 

In written questions to Dr. Francine Rabinovitz, who has been 

retained by trust-fund backers to estimate future claims under the 

Fund, Senator Kyl asked her about the experience under the asbestos bankruptcy trust funds. Those bankruptcy funds are the closest 

analog to what we are doing here—no-fault funds that compensate 

all asbestos claimants that meet particular exposure and medical 

criteria. Indeed, the criteria for this Fund explicitly are borrowed 

from the latest version of the Johns Manville bankruptcy fund. 

We thank Dr. Rabinovitz for her candor. This is what she had 

to say: 

To my knowledge, none of the bankruptcy trust created 

prior to 2002 have been able to pay over the life anywhere 

close to 50% of the liquidated value of qualifying claims. 

Of the current generation of bankruptcy trusts, the expected payout of those trusts, to my knowledge, ranges 

from a low of 5% (Manville) to a high of 31.7% (Western 

McArthur). The only currently operating Trust to pay 

100% of its scheduled values is the Mid-Valley Trust. 

These percentages are sensitive, of course, to the eligibility 

criteria the trusts apply. Under its original eligibility criteria, Manville was forced to drop its initial 100% payout 

first to 10% and then 5% of liquidated value. There will be 

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148 

centage in the near future by virtue of the impact of its recently imposed more stringent eligibility criteria. 

These figures should disturb us all. We are legislating a $140 billion trust—one that must work, because the costs of failure would 

be catastrophic. And yet the model for this Fund is one that has 

failed every time that it has been tried. The miserable performance 

of the bankruptcy trusts should, at the very least, make us very 

cautious in proceeding down the same no-fault trust-fund path. 

While we recognize that this Fund is not exactly like the bankruptcy trusts—that it is designed better in some ways—in other 

ways the compensation criteria employed by this Fund are worse. 

And the award values are high enough, with many categories in 

the hundreds of thousands of dollars, and several approaching or 

exceeding $1 million, that there inevitably will be intense interest 

among potential claimants in seeking an award from the Fund. 

Another precedent for this Fund that also should give us pause 

is the Black Lung Fund, which is designed to compensate miners 

with CWP, a coal-mining-induced lung disease. That Fund is now 

$8.7 billion in debt. It finally has enough revenue to pay current 

claimants, but is unable to service its debt—each year’s interest is 

simply added on to the total debt. This is no way to run a trust 

fund. 

It is telling to read the history of this Fund and why it has become so overburdened. The narrative should sound familiar to anyone who has closely followed the proceedings in this committee. A 

June 12, 2002 report from the Congressional Research Service provides the following account: 

Defining and diagnosing the medical conditions that 

should qualify one for compensation have been contentious 

issues throughout the legislative, regulatory, and adjudicative history of the [Black Lung] program. The statutory 

definition of black lung is less specific than the currently 

accepted medical criteria for CWP. The law makes a person eligible if one has ‘‘a chronic dust disease of the lung 

and its sequelae, including respiratory and pulmonary impairments, arising out of coal mine employment’’ (30 

U.S.C. 902(b)). This clearly includes clinically-defined CWP 

but it could also include chronic obstructive pulmonary disease (COPD), e.g., bronchitis, emphysema or asthma. 

While CWP is almost always associated with mine employment, COPD has many other common causes, including 

smoking. The current Department of Labor regulation (20 

C.F.R. 718.201) explicitly allows for COPD to be compensated as black lung, but the Department emphasizes 

that the burden of persuasion lies with the claimant to 

show that the disease arose out of his coal mine employment. 

In other words, the Black Lung Fund’s drafters ignored medical 

science when setting the Fund’s compensation criteria. As is predictable for Congress, criteria were developed in the spirit of political compromise rather than under the guidance of hard science. 

The results have been unfavorable. The same CRS report goes on 

to note: 

149 

Virtually all of the expectations for the Black Lung Benefits Act when it was enacted in 1969, e.g., the numbers 

of claims submitted or approved, were contradicted by subsequent experience. Corrective legislation was adopted in 

1972, 1977, and 1981, including the establishment of trust 

fund financing in 1977, but results have continued to be at 

variance with expectations. As a consequence, the trust 

fund has perennially been in a position of growing deficit. 

[It was expected when the Black Lung Fund was created 

that] the number of new cases would rapidly dwindle due 

to the dust control measures mandated by the mine safety 

act, and in the interim a federal ‘‘Part C’’ benefit, administered by the Labor Department and funded mostly by the 

employers of the claimants (‘‘responsible operators’’), would 

serve as a temporary backstop. What happened, though, 

was that claims were much more numerous than expected, 

while it proved difficult to find responsible operators, litigate their challenges, and collect from them. Even so, the 

rate of claim rejections was high enough to produce widespread dissatisfaction and elicit a liberalization of criteria 

via the 1972 and 1977 amendments. 

In other words, even at a time when the Black Lung Fund’s liberal compensation criteria were generating a surplus of claims, political pressures nevertheless pushed Congress to further liberalize 

those criteria and further bankrupt the fund. 

The committee already has repeated the first part of the Black 

Lung Fund story. Our concern is that as we continue down this 

path, we risk repeating the rest of the story as well. 

But this Fund is different from Black Lung in one key respect: 

it is much, much more expensive. This Fund has the potential to 

burn through scores of billions of dollars, rack up $30 billion in 

debt, and throw us back into the tort system—all within one decade. Such a result truly would make the Black Lung fiasco seem 

insignificant. It would be an utter disaster. We cannot let it happen. 

We wish that the committee had learned more from the Black 

Lung experience—that we could at least recognize that a no-fault 

trust fund must be run as a tight ship, with rigorous compensation 

criteria and no leakage of claims. Unfortunately, that does not describe the bill that has been produced by this committee. 

In his recent testimony before this committee, Dr. James Crapo 

described how we are repeating the same mistake made in the 

Black Lung Fund: we are compensating diseases that are not 

caused by occupational exposure to asbestos. Dr. Crapo criticized 

the Fund’s compensation of persons with pleural reactions, which 

are not regarded as a disease and are not even a predictor of future 

disease. He also criticized the fund’s claim level for persons with 

colorectal, stomach, and other cancers, noting that it would ‘‘result 

in large compensation to large numbers of individuals who develop 

a cancer for which there is no established causal relationship to asbestos exposure.’’

And just as was the case with Black Lung, despite the asbestos 

fund’s use of criteria that are far more liberal than what can be 

justified by medical science, we already are hearing arguments that 

150 

the Fund should go further, that its compensation criteria should 

be even more liberal. For example, the medical literature strongly 

demonstrates that the only marker for asbestos-related lung cancer 

is clinically significant asbestosis. The cohort studies overwhelmingly show that unless a person has at least some asbestosis, asbestos exposure played no role in his lung cancer. But in this bill, 

we go further than compensating lung cancer in the presence of asbestosis. We also compensate lung cancer with pleural plaques. 

Pleural plaques are evidence of asbestos exposure, but are not a 

valid marker for asbestos-related lung cancer. 

And yet, even this has not satisfied some fund critics. This committee was even forced to vote several times on an amendment that 

would have obligated the fund to pay compensation for lung cancer 

when the claimant did not even have pleural plaques. The committee did defeat that amendment by a vote of more than 2 to 1, 

showing some respect for medical science. Nevertheless, the 

amendment is a harbinger of the political pressures that this Fund 

ultimately will face over its life. 

Several other aspects of this bill also cause us concern: 

The Sunset. The bill still contains a provision that would prematurely terminate the Fund and return all claims to state and 

Federal court, with no mechanism for fixing problems even if the 

reason that the Fund is running out of money is because it is paying non-meritorious claims. Once the Fund is started, it must work. 

Going back to court is not a realistic option. As the bill now stands, 

the Fund would borrow $30 billion prior to any sunset. Once companies are back in court defending against asbestos claims, they 

would also be paying down this debt. This would require full trust 

Fund assessments for at least a decade. These payments, combined 

with renewed litigation and no (or heavily eroded) insurance policies, would be unaffordable for many companies. The effects of such 

a sunset likely would be so devastating that companies would demand that the federal government begin directly subsidizing the 

Fund. This is a prospect that we should do all that we can to avoid. 

The Fund should have a self-correction mechanism that makes 

sure that a sunset will never happen. 

Allocation. This is an emerging problem, the scope of which we 

are only gradually becoming aware. The bill requires companies to 

pay into the Fund based on their past ‘‘asbestos expenditures’’—

judgments and settlements and litigation costs—even if those payments in the past were all absorbed by insurance. Companies’ insurance will not cover their trust-fund payments; insurers pay into 

the fund separately. The fact that the bill effectively invalidates 

these companies’ insurance contracts creates colorable takings 

claims against the Fund. It also creates some serious inequities. 

Companies which had found their asbestos liabilities to be manageable for many years suddenly will find themselves facing 

unaffordable Fund assessments. We still lack adequate data about 

who is actually paying for this Fund. Until such data is available, 

it is impossible to attempt to reallocate the Fund’s burdens in order 

to assess inequities and other problems. 

Start Up. Much progress was made during the last days of mark 

up toward fixing the Fund’s start-up provisions. Nevertheless, the 

Fund still ultimately allows claims to return to court if there are 

151 

delays in start up, with no limits on awards and no offset from future Fund payments for participants. Other, much simpler trust 

funds, such as that for radiation workers, have taken 18 months 

to start functioning. We cannot dismiss the possibility that this 

Fund will require more than 2 years to begin paying all claims. 

Without an offset and limits, such a start-up reversion would be 

disastrous for many companies. 

Pending Claims. The Fund allows claims that already have advanced to trial to remain in the tort system, with no offset and no 

limits on damages. Already, some trial lawyers have begun seeking 

acceleration of their trial dates in order to take advantage of this 

provision. For the same reasons as apply to the start-up provisions, 

such continued litigation could be very damaging. 

Medical Criteria. Although improved over the 2003 committee 

bill—especially with regard to the removal of Level VII smokers— the Fund still pays people with very common diseases that were 

not caused by exposure to asbestos. Credible medical experts have 

expressed the view to us that these problems will bankrupt the 

Fund. For example, the continued use of CT scans to diagnose asbestosis in lung-cancer patients could alone devour all of the 

Fund’s revenues. The Fund also still allows payments for 

colorectal, stomach, and other common cancers with no proven relation to asbestos exposure. These flaws in the bill would be less severe if the Fund contained some self-correction mechanism that allowed tightening the medical criteria in the event of insolvency 

caused by non-meritorious claims, but the Fund currently contains 

no such mechanism. 

This bill remains a work in progress, and we are committed to 

addressing its problems as it advances through Congress. The bill 

is important to many people—to mesothelioma and other asbestos 

victims seeking compensation that might at least take care of their 

families, to businesses with only marginal connections to asbestos 

that nevertheless face bankruptcy through litigation, and to workers and pensioners who see their jobs and retirement accounts destroyed by the litigation juggernaut. This bill is too important for 

us to let it fail. 

JON KYL. 

TOM COBURN. 

(152) 

1 I focused on the period prior to 2003 specifically because in that year, during the 108th Congress, this body began in earnest to search for a comprehensive, permanent legislative solution 

to the problem of asbestos litigation. See S. 1125, 108th Cong., 1st Sess. (2003). This, of course, 

has been the path recommended repeatedly by the Supreme Court, most recently in Norfolk & 

Western Ry. Co. v. Ayers, 538 U.S. 135 (2003). It seems proper to assume that 2002 was the 

latest year in which plaintiffs, manufacturers, and insurers faced litigation incentives and made 

settlement decisions which were relatively unaffected by expectations of Congressional action. 

ADDITIONAL VIEWS OF SENATORS BROWNBACK AND TOM 

COBURN 

The Senate Judiciary Committee’s passage of a legislative solution to the asbestos litigation crisis long was thought—and for 

some time, properly so—to be impossible. The Chairman’s hard 

work, willingness to compromise, and ability to accommodate myriad interested parties overcame the substantial odds against 

progress and enabled Members to report favorably S. 852, the Fairness in Asbestos Injury Resolution Act of 2005, to the Senate floor. 

I write separately for two purposes: first, to commend the inclusion in the reported bill of two amendments I offered in Committee; 

and second, to promote for future consideration one amendment I 

circulated to my Judiciary Committee colleagues but refrained from 

formally introducing during the Committee’s deliberation on S. 852. 

I. IMPROVEMENTS MADE: EXPLANATION OF BROWNBACK AMENDMENTS

TO S. 852 WHICH WERE ADOPTED

A. Tier VI contributors 

S. 852 appropriately separates contributors to the Asbestos Injury Claims Resolution Fund (hereinafter, ‘‘Fund’’) into different 

tiers, with assessments to be made on the general principle that 

contributions should be proportionate to a contributor’s asbestos-related liability, as measured by its average annual expenditure on 

claims of injury from occupational asbestos exposure. While I approve of this principle, I was concerned that the bill as introduced 

could work an unfairness and/or hardship on Tier VI contributors, 

whose required contributions in some cases could greatly outstrip 

the amounts they had spent to fulfill settlements and satisfy judgments of asbestos exposure claims before 2003.1

In order to preserve the general principle of proportionality in 

contributions, I circulated and introduced the following amendment: 

In section 203, page 132, line 13, insert after ‘‘following:’’

the following: 

Notwithstanding any other provision of subsection (g), 

any person or affiliated group within Tier VI whose required subtier payment in any given year would exceed 

such person’s or group’s average annual expenditure on 

settlements and judgments of asbestos disease-related 

claims over the ten years prior to enactment of this Act 

153 

shall make the payment required of the immediately lower 

subtier or, if the person’s or group’s average annual such 

expenditure over the ten years prior to enactment of this 

Act is less than $100,000, shall not be required to make 

a payment under this Act. 

To ensure that the core of this amendment was included in the 

bill, I agreed to both a slight modification of the amendment and 

the inclusion of the modification in the Second Managers’ Package 

of amendments, which ultimately was accepted by voice vote on 

May 11, 2005. The modified amendment, inserted within section 

203(g) of the bill as reported, read as follows: 

(3) OTHER PAYMENT FOR CERTAIN PERSONS AND AFFILI- ATED GROUPS.— (A) IN GENERAL.—Nothwithstanding any other provision 

of this subsection, and if an adjustment authorized by this 

subsection does not impair the overall solvency of the 

Fund, any person or affiliated group with Tier VI whose 

required subtier payment in any given year would exceed 

such person’s or group’s average annual expenditure on 

settlements, and judgments of asbestos disease-related 

claims over the 8 years before the date of enactment of 

this Act shall make the payment required of the immediately lower subtier or, if the person’s or group’s average 

annual expenditures on settlements and judgments over 

the 8 years before the date of enactment of this Act is less 

than $100,000, shall not be required to make a payment 

under this Act. 

(B) NO FURTHER ADJUSTMENT.—Any person or affiliated 

group that receives an adjustment under this paragraph 

shall not be eligible to receive any further adjustment 

under section 204(d). 

I am pleased that the amendment was adopted as part of the 

Second Managers’ Package. The reported bill now clearly provides 

that any Tier VI contributor whose subtier contribution exceeds its 

average annual expenditure on asbestos-related settlements and 

judgments during the eight-year period preceding enactment is entitled to a one-subtier stepdown (e.g., a Tier VI, subtier 1 contributor would instead make a subtier 2 level contribution). For a Tier 

VI, subtier 3 contributor whose required contribution ($100,000, 

per section 203(g)(2)(C)) exceeded its average annual expenditure 

on asbestos-related settlements and judgments, no contribution 

would be required, given that this is the lowest subtier within Tier 

VI. 

This amendment provides fairness to small businesses and to 

other companies that have carefully managed their asbestos liabilities, and I laud its ultimate inclusion in the bill as reported. 

B. Post-certification opt-out 

The most obvious and fundamental purpose of every asbestos litigation reform bill in recent memory, including this one, is to provide a complete and predictable substitute to the idiosyncratic vagaries of the tort system. Yet S. 852 as introduced contained a 

major loophole that, if not filled, would have created an 

154 

unsustainable dual-track recovery system which would be worse 

than the status quo. 

Specifically, section 106(f)(3)(E)(ii) of S. 852 originally provided 

that after the Administrator certified to Congress that the Fund 

was operational and was paying valid asbestos claims at a reasonable rate, claimants who had filed a lawsuit that had not yet proceeded to trial could still choose to stay in the tort system, instead 

of being required to channel that claim into the Fund (the bill 

deemed such claims to be ‘‘reinstated’’ against the Fund). 

Thus, even after the Fund was up and running, hundreds of 

thousands of claimants who previously filed complaints in the tort 

system could have decided to opt out of the Fund altogether. The 

risk of this result would have been all the greater because plaintiffs’ attorneys would have had a strong incentive post-certification 

to advise their clients against opting into the Fund: attorneys 

would receive one-third or more of their clients’ recovery in litigation, but five percent at most in the Fund (as S. 852 consistently 

has provided). 

To fix this flaw, I circulated an amendment which stated simply 

as follows: ‘‘In section 106(f)(3)(E)(ii), page 45, lines 14–15, strike 

‘, may, at the option of the claimant,’ and insert ‘shall.’ ’’ This provision aimed to prevent the combined chaos of an unpredictable tort 

system and a leaking Fund by requiring claims to be deemed reinstated against the Fund once the Administrator certified to Congress that the Fund is operational. Under my amendment, claimants would receive prompt and just recovery under the Fund for 

their injuries, and defendants and insurers would avoid the prospect of paying billions of dollars into both the Fund and the tort 

system at the same time. 

I am pleased that this amendment was included as part of the 

Second Managers’ Package, which was accepted on May 11, 2005. 

The bill now clearly precludes the post-certification opt-out of the 

Fund by asbestos claimants whose cases have not reached trial. 

II. AN AREA FOR IMPROVEMENT: ADMINISTRATION OF THE FUND BY A

PRIVATE, NON-PROFIT CORPORATION

Although I voted for S. 852 on final passage in Committee, I believe the bill could be made better. One particular item on which 

I recommend future consideration involves private administration 

of the Fund. 

Both as introduced and as reported, S. 852 provides for the administration of the Fund by the Department of Labor. See S. 852, 

109th Cong., 1st Sess., at §101(a)(1); Committee Report, supra at 

36 (‘‘The FAIR Act establishes the Office of Asbestos Disease Compensation (the Office) within the Department of Labor for the purpose of providing timely and fair compensation to individuals with 

asbestos-related injuries in a no-fault, non-adversarial manner.’’). It 

is my belief that housing the Fund in the Department of Labor 

would not be the best way to achieve the laudable goals of just 

compensation for victims, certainty for manufacturers and insurers, 

and efficiency. Rather, administration of the Fund by a private, 

non-profit corporation would accomplish each of these goals much 

more effectively. I circulated an amendment which would have creVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00154 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
155 

2Specifically, the Fund will be able to borrow up to five years’ worth of anticipated assessments from the Federal Financing Bank. 3Pub. L. 91–173, 83 Stat. 792–798. 4 Black Lung Benefits Reform Act of 1977, Pub. L. 95–239, 92 Stat. 95. 5 Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99–272, §13203(b). 

ated such a non-profit corporation; the text of this amendment is 

included with these Additional Views as Appendix A. 

A. Dangers of public administration 

Administration of the Fund by a federal agency could create an 

expectation that the federal government stands behind the Fund 

and is committed to ensuring its long-term solvency. That, in turn, 

would create a serious risk that taxpayers ultimately may have to 

bear huge unintended costs. Moreover, S. 852 as reported provides 

that the Fund may borrow directly from the Treasury, creating the 

danger that any default would come at the taxpayers’ expense. See 

§221(b).2

Extended experience with the Black Lung Trust Fund, also administered by the Department of Labor, demonstrates that the 

risks enumerated above are significant. In 1969, Congress passed 

the Coal Mine and Safety Health Act,3 which established a black 

lung compensation program to be administered by the Secretary of 

Labor. Separate legislation in 1977 established a trust fund for the 

payment of black lung disability benefits.4 That Fund was to be financed by excise taxes levied on coal extracted and sold within the 

United States. But the Fund also could access financing from the 

Treasury to cover early claims. Proponents expected that the Fund 

would repay early advances from the Treasury (with interest) within a few years. But that did not happen. Instead, the Fund owed 

$2.8 billion to the Treasury by the end of 1985. Congress then instituted a five-year moratorium on interest charges by the Treasury, transferring a significant portion of the ongoing costs of the 

Fund to U.S. taxpayers by effectively requiring them to subsidize 

the Fund’s financing.5 And the worst may still be to come: The 

Fund’s debt currently exceeds $8 billion, and should the Fund default in ultimately repaying its debt, the taxpayers will again have 

to pay the charge. For further information on the problems which 

have attended the Black Lung program since its inception, see generally CRS Report for Congress, ‘‘The Black Lung Benefits Program’’ (June 12, 2002) (included as Appendix B); Id. at CRS–2 

(‘‘The program is administered by the Division of Coal Mine Workers’ Compensation, which is a component of the Office of Workers’

Compensation Programs in the Department of Labor.’’); id. at CRS–

4 (‘‘Virtually all of the expectations for the Black Lung Benefits Act 

when it was enacted in 1969 * * * were contradicted by subsequent experience. * * * As a consequence, the trust fund has perennially been in a position of growing deficit,’’ which is financed 

at taxpayer expense.). 

B. Advantages of private administration 

Private administration of the Fund would yield several advantages. First, a non-profit corporation would process claims more efficiently than a government agency and would speed up the process 

for delivering justice to victims. A primary reason is that a corporaVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00155 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
156 

tion could adopt streamlined personnel, management, regulatory, 

and government contracting processes. For example, the corporation would be able to use time-saving personnel mechanisms from 

the private sector, such as hiring temporary personnel from employment agencies and hiring personnel who have outstanding 

qualifications without having to wait until a certain amount of time 

had passed before the positions could be filled. Because the new 

corporation would be staffed more quickly than a government agency, it is likely that the corporation would also be able to pay the 

most meritorious and exigent claims more quickly than a federal 

government agency could. 

Next, the corporate governance of the non-profit would be structured to insulate the start-up process so that those charged with 

administering the Fund would be focused solely on doing so responsibly. The corporation would be run by a Board of Directors appointed by the President (perhaps cabinet secretaries serving ex 

officio, as with the Pension Benefit Guaranty Corporation). The 

day-to-day operations of the corporation would be managed by a 

Chief Executive Officer appointed and removable by the Board— thus ensuring a high level of accountability and responsiveness. 

Administering the Fund responsibly, and compensating victims 

fairly and expeditiously, would be the only priorities of the corporation’s directors and officers. 

Additionally, a non-profit corporation, much more so than a traditional federal program, could be set up to minimize the potential 

for changing course mid-stream. Unfortunately, compensation 

schemes run by the federal government have a history of changing 

the rules in the middle of the game. Most recently, for example, the 

energy workers compensation program has expanded substantially 

in size and scope. In the asbestos context, private stakeholders 

have signaled their willingness to participate in a trust fund solution precisely because it provides the certainty they need to resume 

job-creating activities. Private administration would minimize the 

risk of disrupting contributors’ reliance on the Fund’s sound operational structure. 

Third, a non-profit corporation provides the best hope for ensuring that the Fund will not end up requiring a taxpayer bailout of 

private defendants and private insurance companies. Legislation 

can be crafted to impose structural controls and constraints on the 

corporation to ensure even-handed administration of the Fund and 

institutional discipline to prevent defaults and shortfalls. 

Administering the fund through a non-profit corporation, as my 

amendment would have provided, would give Congress the flexibility of allowing the corporation to borrow from alternative 

sources, and would have reduced the likelihood of depending, during any part of the life of the Fund, upon the public fisc. 

C. Ample precedents for private administration 

Creating a non-profit corporation to serve important governmental objectives would hardly be unprecedented. To the contrary, 

Congress has routinely created non- profit corporations of various 

types. Perhaps the most well known is the Corporation for Public 

Broadcasting. The Public Broadcasting Act of 1967 ‘‘authorized to 

be established a nonprofit corporation * * * which will not be an 

157 

6See 47 U.S.C. § 396. 7P.L. 93–355; 42 U.S.C. § 2996. 8P.L. 95–557; 42 U.S.C. § 8101. 9P.L. 107–204; 15 U.S.C. § 7201. 10See 29 U.S.C. § 1302. 11See 47 U.S.C. § 396. 12See 16 U.S.C. § 831. 

agency or establishment of the United States Government.’’ 6 The 

Corporation was established under the laws of the District of Columbia and operates as a nonprofit, non-political organization. 

Similarly, Congress established the Legal Services Corporation as 

a 501(c)(3) ‘‘private nonmembership nonprofit corporation,’’ 7 and 

created the Neighborhood Reinvestment Corporation, which ‘‘shall 

not be considered a department, agency, or instrumentality of the 

Federal Government.’’ 8 Non-governmental features of these nonprofits include exemptions from the Freedom of Information and 

Federal Advisory Commission Acts, the ability to sue and be sued, 

and to invest funds and acquire property. Each congressionally created non- profit has its own unique governance structure, but all 

perform functions in the public interest. And each non-profit corporation embodies a legislative judgment that Congress’s objectives 

could best be met outside the normal federal bureaucracy. 

More recently, in the Sarbanes-Oxley Act of 2002, Congress created the Public Company Accounting Oversight Board (‘‘the 

Board’’), as a private-sector, non-profit corporation that ‘‘shall not 

be an agency or establishment of the United States Government.’’ 9

The Board oversees the auditors of public companies in order to 

protect the interests of investors and further the public interest in 

the preparation of informative, fair, and independent audit reports—a decidedly public function. Congress provided that funds to 

cover the Board’s annual budget are to be collected from ‘‘issuers’’

in the form of an ‘‘accounting support fee.’’ Once each year, the 

Board computes the fees based on the Board’s budget for that year, 

as approved by the Securities and Exchange Commission. Using its 

discretion, the Board allocates fees based on the average monthly 

U.S. equity market capitalization of publicly traded companies, investment companies and other equity issuers. Thus, like the Asbestos Injury Claims Resolution Corporation my amendment envisioned, the Board plays a substantial role and exercises significant 

discretion both in the collection of fees and the expenditure of resources. 

The record of other congressionally created non-profit corporations confirms that operations would begin quickly. For example, 

the Pension Benefit Guaranty Corporation, which was established 

on September 2, 1974,10 received its first premium from a participating employer less than three weeks later. The Corporation for 

Public Broadcasting, which was established on November 7, 1967,11

made its first broadcast just over three months later. And the Tennessee Valley Authority, which was established on May 18, 1933,12

began work on its first construction project less than five months 

later. As these examples show, the non-profit corporation’s initial 

steps would be taken almost immediately. 

158 

D. The constitutional propriety of private administration 

Despite the fact that Congress has routinely created various nonprofit corporations, some critics might suggest that creating a nonprofit to administer the asbestos trust fund might offend the Constitution. That criticism is based on the premise that the non-profit 

corporation would be ‘‘private’’ for constitutional purposes. As 

Chairman of the Subcommittee on the Constitution, Civil Rights, 

and Property Rights, I do not take that criticism lightly. Careful 

review, however, reveals that the premise upon which it rests is legally flawed. 

Under the rule laid down by the Supreme Court in Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995), a non-profit 

corporation created to house the asbestos trust fund would be 

deemed part of the federal government for constitutional purposes. 

The Court stated in Lebron that ‘‘where * * * the Government creates a corporation by special law, for the furtherance of governmental objectives, and retains for itself permanent authority to appoint a majority of the directors of that corporation, the corporation 

is part of the Government * * *.’’ Id. at 400. The creation of a nonprofit corporation to administer the asbestos trust fund would satisfy both prongs of the Lebron test. First, there is no dispute that 

the non-profit corporation would be created by Congress to further 

specific ‘‘governmental objectives.’’ Second, the government would ‘‘retain[ ] for itself permanent authority to appoint a majority of the 

directors’’ under the proposal, which provides for Presidential appointment of the Board of Directors. For constitutional purposes, 

then, the non-profit corporation would be deemed a part of the federal government and would stand on the same footing as an office 

located in a federal agency. 

For this reason, objections to the corporation on grounds that it 

violates the Seventh Amendment and the non-delegation doctrine 

are misplaced. As to the former, the Seventh Amendment guarantees the right to a jury trial in suits involving common-law claims, 

but the Seventh Amendment does not apply to claims brought 

against the government. See, e.g., Glidden Co. v. Zdanok, 370 U.S. 

530, 572 (1962). Where, as here, ‘‘the United States abolishes a 

cause of action and then sets up a separate administrative remedy 

against itself, * * * the seventh amendment does not require that 

it must also provide a jury trial.’’ In re Consolidated U.S. Atmospheric Testing Litigation, 820 F.2d 982, 992 (9th Cir. 1987) 

(quoting Hammond v. United States, 786 F.2d 8, 15 (1st Cir. 

1986)). Because any claim against the corporation would be one 

against the United States for constitutional purposes, the Seventh 

Amendment does not apply. 

As to the latter objection, the non-profit corporation would be 

deemed part of the federal government for constitutional purposes 

and therefore would not trigger the heightened scrutiny under the 

non-delegation doctrine accorded to private entities. Rather, were 

my amendment adopted, the legislation establishing the corporation would be subject only to the traditionally lenient standard that 

applies to congressional delegations to the executive branch, which 

the legislation would satisfy. 

In sum, nothing in the Constitution or laws of the United States 

bars Congress from creating an asbestos trust fund administered 

159 

by a non-profit corporation, and good government militates in favor 

of such administration. It is therefore my hope that this amendment will receive due consideration in future deliberation on S. 

852. 

SAM BROWNBACK. TOM COBURN. 

(161) 

APPENDIX A 

On page 6, strike lines 19 through 22, and insert the following: 

(1) CHIEF EXECUTIVE OFFICER.—The term ‘‘Chief Executive Officer’’ means the Chief Executive Officer for 

the Asbestos Injury Claims Resolution Corporation appointed under sections 101(b) and 109(b). 

On page 15, line 1, strike all through page 16, line 11, 

and insert the following: 

TITLE I—ASBESTOS CLAIMS 

RESOLUTION 

Subtitle A—Asbestos Injury Claims 

Resolution Corporation 

SEC. 101. ESTABLISHMENT OF ASBESTOS INJURY CLAIMS 

RESOLUTION CORPORATION. 

(a) IN GENERAL.—

(1) ESTABLISHMENT.—There is established an Asbestos Injury Claims Resolution Corporation (referred to 

in this Act as the ‘‘Corporation’’ to undertake a program on compensation for injuries suffered by exposure to asbestos. The Corporation shall undertake the 

performance of the duties in this Act. 

(2) PURPOSE.—The purpose of the Corporation is to 

provide timely, fair compensation, in the amounts and 

under the terms specified in this Act, on a no-fault 

basis and in a non-adversarial manner, to individuals 

whose health has been adversely affected by exposure 

to asbestos. Compensation amounts provided by the 

Corporation shall be subject to the availability of 

funds in the Asbestos Injury Claims Resolution Fund. 

(3) EXPENSES.—There shall be available from the 

Asbestos Injury Claims Resolution Fund to the Chief 

Executive Officer sums reasonably necessary for the 

administrative and legal expenses of the Corporation, 

not to exceed $100,000,000 for the first 6 years, 

$50,000,000 for the following 10 years, and 

$25,000,000 thereafter. 

(b) APPOINTMENT OF THE CHIEF EXECUTIVE OFFICER.— (1) IN GENERAL.—The Chief Executive Officer shall 

be appointed by the Board of Directors of the Asbestos 

162 

Injury Claims Resolution Corporation, to serve for a 

term of 5 years. 

(2) REMOVAL.—The Chief Executive Officer may be 

removed at any time by the Board of Directors for any 

reason the Board determines sufficient. 

(c) DUTIES OF CHIEF EXECUTIVE OFFICER.— (1) IN GENERAL.—The Chief Executive Officer shall 

be responsible for—

On page 18, line 21, strike all through page 19, line 12, 

and insert the following: 

(2) CERTAIN ENFORCEMENTS.—For each infraction relating to paragraph (1)(H), the Chief Executive Officer also refers such matters to the Attorney General who may impose a civil penalty not 

to exceed $10,000 on any person or entity found to 

have submitted or engaged in a materially false, 

fraudulent, or fictitious statement or practice 

under this Act. The Attorney General shall prescribe appropriate regulations to implement paragraph (1)(H). 

(3) SELECTION OF DEPUTY CHIEF EXECUTIVE OFFICERS.—The Chief Executive Officer shall select a 

Deputy Chief Executive Officer for Claims Administration to carry out the Chief Executive Officer’s 

responsibilities under this title and a Deputy 

Chief Executive Officer for Fund Management to 

carry out the Chief Executive Officer’s responsibilities under title II of this Act. The Deputy Chief 

Executive Officers shall report directly to the 

Chief Executive Officer. 

On page 46, strike lines 3 through 14, and insert the following: 

SEC. 107. AUTHORITY OF THE CHIEF EXECUTIVE OFFICER. 

The Chief Executive Officer on any matter within the jurisdiction of the Chief Executive Officer under this Act 

may subpoena persons to compel testimony, records, and 

other information relevant to the responsibilities of the 

Chief Executive Officer under this section. The subpoena 

may be enforced in appropriate proceedings in the United 

States district court for the district in which the person to 

whom the subpoena was addressed resides, was served, or 

transacts business. 

SEC. 108. ESTABLISHMENT OF CORPORATION. 

(a) FEDERAL CHARTER.—There is established a corporation to be known as the Asbestos Injury Claims Resolution 

Corporation (‘‘Corporation’’). 

(b) NATURE OF CORPORATION.—The Corporation is a nonprofit corporation and shall have no capital stock. The Corporation is not an agency or establishment of the United 

States Government. 

(c) TERMINATION OF CORPORATION.—The Corporation 

shall dissolve 40 years after the date of enactment of this 

163 

Act, unless dissolved sooner by the Board. All remaining 

funds held by the Corporation shall be distributed to the 

defendant participants and insurer participants in proportion to the percentage of assessments paid into the Corporation. 

SEC. 109. BOARD OF DIRECTORS; OFFICERS AND EMPLOYEES; 

CONFLICTS. 

(a) BOARD OF DIRECTORS.—There shall be in the Corporation a Board of Directors. The Board shall appoint the 

Chief Executive Officer and formulate the policies of the 

Corporation. 

(b) APPOINTMENT.—The Corporation shall have a Board 

of Directors (‘‘Board’’), consisting of 7 members. The Board 

shall be appointed as follows: 

(1) DESIGNATED MEMBERS.—The Secretary of the 

Treasury, the Attorney General, and the Secretary of 

Labor shall serve as members of the Board. 

(2) APPOINTED MEMBERS.—The remaining 4 members of the Board shall be appointed by the President. 

The members of the Board shall not, by reason of such 

membership, be deemed to be officers or employees of 

the United States. 

(3) INELIGIBILITY.—None of the Directors shall be individuals who, for each of the 5 years before their appointments, earned more than 15 percent of their income by serving in matters related to asbestos litigation as consultants or expert witnesses. 

(c) OPERATION OF THE BOARD.—

(1) CHAIR.—The Board shall be chaired by a member 

elected by the Board, but the Chairperson may not be 

a full-time Federal employee. 

(2) MEETINGS.—Meetings of the Board may be convened by the Chairperson upon reasonable notice, but 

the Board shall meet at least once per year. 

(3) QUORUM.—A quorum shall consist of all of the 

Directors or their representatives. 

(4) COMPENSATION.—The compensation of each 

member of the Board shall be paid by the Corporation 

as current expenses. Each member other than members serving by virtue of their Federal office shall be 

compensated at the daily equivalent of the highest 

rate payable under section 5332 of title 1, for each day 

(including travel time) during which the member is 

engaged in the actual performance of duties as a member of the Board. Members of the Board shall be reimbursed by the Corporation for actual, reasonable, and 

necessary expenses (including traveling and subsistence expenses) incurred by them in the performance of 

the duties vested in the Board by this Act. 

(e) OFFICERS AND EMPLOYEES.—

(1) STATUS.—Officers and employees of the Corporation are not employees of the Federal Government as 

a result of their service with the Corporation. 

164 

(2) CHIEF EXECUTIVE OFFICER.—There shall be in 

the Corporation a Chief Executive Officer who shall be 

responsible for carrying out the functions of the Corporation as described in section 101(c) and in accordance with policies established by the Board. The Chief 

Executive Officer shall be appointed by the Board of 

Directors under section 101(b) and on such additional 

terms as the Board may determine and may be removed by the Board of Directors in accordance with 

section 101(b)(2). The Chief Executive Officer shall receive compensation at the rate provided by law for the 

Vice President of the United States. 

(3) APPOINTMENT.—The Chief Executive Officer 

shall appoint, remove, and fix compensation for all 

subordinate officers and employees of the Corporation 

as determined necessary. 

(4) COMPENSATION.—No officer or employee of the 

Corporation, other than the Chief Executive Officer, 

may be compensated by the Corporation at an annual 

rate of pay which exceeds the rate of basic pay in effect for level I of the Executive Schedule under section 

5312 of title 5, United States Code. 

(f) CONFLICTS OF INTEREST.—No part of the Corporation’s revenue, income, or property shall inure to the benefit of its directors, officers, and employees, and such revenue, earnings, or other income, or property shall be used 

for the carrying out of the corporate purposes set forth in 

this Act. No director, officer, or employee of the corporation 

shall in any manner directly or indirectly participate in 

the deliberation upon or the determination of any question 

affecting his or her personal interests or the interests of 

any corporation, partnership, or organization in which he 

or she is directly or indirectly interested. 

(g) REGULATIONS.—

(1) AUTHORITY.—The Attorney General, after consultation with the Secretaries of the Treasury and of 

Labor, shall issue regulations imposing on the Chief 

Executive Officer, the Deputy Chief Executive Officers, 

and the Board a fiduciary duty to manage the affairs 

of the Corporation with prudence in order to provide 

timely compensation to eligible claimants, giving appropriate priority to those most ill, while also preserving the funds available to the Corporation in order 

to compensate all eligible claimants. 

(2) SUNSET.—Effective 2 years after the enactment 

of this Act, all authority to issue and revise regulations under this section shall terminate. 

(h) PERSONAL LIABILITY.—The Chief Executive Officer, 

Deputy Chief Executive Officers, and members of the 

Board shall be exempt from civil liability for any act or 

omission committed within the scope of their employment 

with the Corporation, except for acts that constitute gross 

negligence or intentional wrongdoing. 

(i) CORPORATE COMPLIANCE OFFICER.—

165 

(1) IN GENERAL.—The Board of Directors shall establish within the Corporation a Corporate Compliance 

Office headed by a Chief Compliance Officer selected 

by the President on the basis of integrity and demonstrated ability in accounting, auditing, financial 

analysis, law, management analysis, public administration, or investigations. 

(2) INDEPENDENCE.—Neither the Board nor the 

Chief Executive Officer shall prevent or prohibit the 

Chief Compliance Officer from initiating, carrying out, 

or completing any audit or investigation during the 

course of any audit or investigation. 

(3) STAFF.—The Board shall authorize the Chief 

Compliance Officer to obtain sufficient staff and other 

resources to carry out the function of the position. 

(4) DUTIES.—It shall be the duty and responsibility 

of the Chief Compliance Officer to— (A) provide policy direction for, and to conduct, 

supervise, and coordinate audits and investigations relating to the programs and operations of 

the Corporation; 

(B) recommend policies for, and to conduct, supervise, or coordinate other activities carried out 

or financed by the Corporation for the purpose of 

promoting economy and efficiency in the administration of, or preventing and detecting fraud and 

abuse in, its programs and operations; 

(C) recommend policies for promotion of economy and efficiency in the administration of, or the 

prevention and detection of fraud and abuse in, 

programs and operations administered or financed 

by the Corporation, or the identification and prosecution of participants in such fraud or abuse; 

(D) keep the Chief Executive Officer, the Board, 

and Congress fully and currently informed concerning fraud and other serious problems, abuses, 

and deficiencies relating to the administration of 

programs and operations administered or financed 

by the Corporation; and 

(E) recommend corrective action concerning 

such problems, abuses, and deficiencies, and report on the progress made in implementing such 

corrective action. 

(5) CRIMINAL VIOLATIONS.—In carrying out the duties and responsibilities established under this section, 

the Chief Compliance Officer shall file a criminal complaint with the Attorney General whenever the Chief 

Compliance Officer has reasonable grounds to believe 

there has been a violation of Federal criminal law. 

SEC. 110. POWERS; OFFICES; TAX LAWS; AUDIT; ANNUAL REPORT. 

(a) POWERS.—In furtherance of the purposes of the Corporation, the Corporation may—

(1) adopt bylaws consistent with law; 

166 

(2) adopt, alter, use, and destroy a corporate seal; 

(3) sue and be sued, complain and defend, in its corporate name and through its own counsel, in courts of 

competent jurisdiction; 

(4) enter into contracts and modify, or consent to the 

modification of, any contract or agreement to which 

the Corporation is a party or in which the Corporation 

has an interest; 

(5) make advance, progress, or other payments; 

(6) own and dispose of property; 

(7) issue written policies and statements; and 

(8) exercise any and all powers established under 

this Act and such incidental powers as are necessary 

to carry out its powers, duties, and functions under 

section 101 and other provisions of this Act. 

(b) PRINCIPAL AND BRANCH OFFICES.—The Corporation 

shall maintain its principal office in the metropolitan 

Washington, DC, area. The Corporation may establish offices in any place or places in which the Corporation may 

carry on all or any of its operations and business. 

(c) TAX LAWS.—The Corporation, including its franchise 

and income, shall be exempt from the tax laws and from 

taxation now or hereafter imposed by the United States, or 

any territory or possession thereof, or by any State, county, municipality, or local taxing authority. 

(d) AUDIT.—The programs, activities, receipts, expenditures, and financial transactions of the Corporation shall 

be subject to audit by an independent certified public accounting firm under generally accepted accounting principles that would apply to a private not-for-profit corporation. The auditing firm shall have access to such books, accounts, financial records, reports, files, and such other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they 

shall be afforded full facilities for verifying transactions 

with the balances or securities held by depositories, fiscal 

agents, and custodians. A report on each such audit shall 

be made by the auditing firm to the Board of Directors, to 

the Secretary of the Treasury, and to Congress. 

(e) ANNUAL REPORT.—Within 6 months after the close of 

each fiscal year, the Corporation shall submit to the President and to the Committees on the Judiciary of the Senate 

and the House of Representatives the report on the activities of the Corporation during the prior fiscal year required 

under section 405 of this Act. 

(f) ANNUAL REPORT CERTIFICATION.—Before submission 

of the annual report required under section 405 of this Act, 

the Chief Executive Officer and the Deputy Chief Executive Officers, in regard to their particular areas of responsibility, shall certify that— (1) the signing officer has reviewed the report; 

(2) based on the officer’s knowledge, the report does 

not contain any untrue statement of a material fact or 

omit to state a material fact necessary in order to 

167 

make the statements made, in light of the circumstances under which such statements were made, 

not misleading; 

(3) based on such officer’s knowledge, the financial 

statements, and other financial information included 

in the report, fairly present in all material respects 

the financial condition and results of operations of the 

Corporation as of, and for, the periods presented in the 

report; 

(4) the signing officers— (A) are responsible for establishing and maintaining internal controls; 

(B) have designed such internal controls to ensure that material information relating to the Corporation is made known to such officers by others 

within the Corporation, particularly during the 

period in which the periodic reports are being prepared; 

(C) have evaluated the effectiveness of the Corporation’s internal controls as of a date within 90 

days before the report; and 

(D) have presented in the report their conclusions about the effectiveness of their internal controls based on their evaluation as of that date; 

(5) the signing officers have disclosed to the Comptroller General and to the independent auditing firm— (A) all significant deficiencies in the design or 

operation of internal controls which could adversely affect the Corporation’s ability to record, 

process, summarize, and report financial data and 

have identified any material weaknesses in internal controls; and 

(B) any fraud, whether or not material, that involves management or other employees who have 

a significant role in the Corporation’s internal controls; and 

(6) the signing officers have indicated in the report 

whether or not there were significant changes in internal controls or in other factors that could significantly 

affect internal controls subsequent to the date of their 

evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 

Make all technical and conforming amendments changing references from the Administrator to the Chief Executive Officer and 

from the Office of Asbestos Disease Compensation to the Asbestos 

Injury Claims Resolution Corporation. 

168 

APPENDIX B 

169 


Insert offset folio 237 here SR97.001
170 


Insert offset folio 238 here SR97.002
171 


Insert offset folio 239 here SR97.003
172 


Insert offset folio 240 here SR97.004
173 


Insert offset folio 241 here SR97.005
174 


Insert offset folio 242 here SR97.006
(175) 

ADDITIONAL VIEWS OF SENATOR HERB KOHL 

I write separate views on S. 852, the FAIR Act, to highlight certain amendments that passed in Committee and to specify my reasons for supporting this legislation. This version of the FAIR Act 

represents an improvement over the bill as introduced, and a major 

improvement over past asbestos bills considered in the 108th Congress. 

That said, given the complexity of this issue, no bill will be a 

panacea. Perfection is not the standard, rather, the proper test is 

to compare the current tort system with the proposed legislation 

and then determine which will be better for victims—both now and 

in the future. That is the bottom line. Despite the bill’s shortcomings, I believe that victims will be better served by this trust 

fund than by the tort system. 

We would do well to step back and look at why Congress got involved in this issue in the first place. A significant problem exists 

for many asbestos victims who simply do not receive proper compensation for their injuries. Let me explain why. Bringing an asbestos lawsuit today is no easy assignment. First, you have to find 

a company that caused your asbestos exposure and then hope that 

company has not gone bankrupt. Considering the fact that many 

exposures took place decades ago and that many of the primary defendants went bankrupt long ago illustrates just how difficult it is 

to find someone to sue. 

Even if the injured person finds someone to sue, many victims 

find themselves stuck in line—oftentimes behind those who are not 

yet sick from asbestos—and wait years for their day in court. Even 

then, if they win a verdict or receive a settlement, receiving that 

money can be delayed by appeals and further bureaucratic logjams. 

And finally, after waiting years for compensation, some awards are 

slapped with subrogation suits that seek to reimburse insurance 

companies that picked up the tab for medical bills. Quite simply, 

this system is broken and cannot sustain itself. 

A legislative alternative presents a more optimistic picture for 

victims so long as certain principles are met. First and foremost, 

we must be convinced that victims will get a better deal in the 

trust fund than they do now. Second, some of us are concerned that 

the current bill eliminates compensation for certain lung cancer 

victims. Finally, we all should be concerned that the money pledged 

to this trust fund is actually going to be there if and when this bill 

becomes law. 

These primary considerations are highlighted below, including 

comments on my amendments that have addressed some of these 

concerns. 

176 

No subrogation of awards 

There have been several improvements to this bill that favor victims. For example, it is very important that there will be no subrogation of a victim’s award received from the trust fund. This 

means that an award will be a real dollar amount as promised 

under this legislation and will not be subject to legal hassles to pay 

back past claims and diminish the amount of money in the pockets 

of the victims. 

Mesothelioma research funding 

We must do more for victims than simply writing them a check. 

We owe current and future victims a significant effort to find a 

cure and better treatment options for the deadliest asbestos disease, mesothelioma. That is why I worked with Senators Specter 

and Leahy to include an amendment that will provide $290 million 

to support efforts to better diagnose, treat, and find a cure for 

mesothelioma. Specifically, The amendment will provide $29 million a year (funded jointly by the trust fund and the NIH) for ten 

years for the following: $25 million for ten meso research centers 

across the country ($2.5 for each center); $2 million for a meso registry and tissue bank which are crucial for research; and $2 million 

for a meso education center that will better educate meso victims 

on treatment options and assistance. My amendment has the support of the Mesothelioma Applied Research Foundation (MARF) 

who we worked closely with in drafting this plan. Quite simply, if 

we are going to create a $140 billion trust fund to compensate the 

mass casualties of asbestos exposure, we must also commit resources to find a cure and better treatment options for the deadliest asbestos disease. This will be money very well spent and it 

also represents some hope for future victims. 

Institute of Medicine study regarding CT scans 

If we are interested in compensating true victims of asbestos-related disease, then we should allow the best and most modern medicine to make those determinations. It is difficult to accept that 

some lung cancer victims who were exposed to asbestos will not be 

eligible for compensation under this legislation. But, we have done 

the next best thing by adopting my amendment which simply instructs the Institute of Medicine (IOM)—which is part of the nonpartisan National Academies—to find out whether CT scans can be 

appropriately used to detect scarring of the lung caused by asbestos. 

In particular, the IOM would study if CT scans should be used 

to detect this sort of asbestos-caused lung scarring in lung cancer 

victims eligible for compensation under the trust fund (the ‘‘Level 

VII’’ claims). The IOM’s determination on this issue will be binding 

upon the Administrator. And if the Institute makes CT scans available for diagnosing scarring of the lung, we expect that the Institute will create a uniform, reliable and consistent standard for the 

use of CT scans. 

Funding methodology 

It is the $140 billion question to ask whether or not the money 

pledged to the fund is going to be there for victims. It is unsettling 

177 

to think of this trust fund never getting off the ground because the 

money does not come into the fund as envisioned. In an ideal 

world, I would prefer to delay the start-up of the Fund after enactment and allow pending cases to continue in the tort system until 

we have the entire list of defendant and insurer contributors and 

the size of their contributions made public. That said, I have studied this issue extensively and I feel that Chairman Specter and 

Senator Leahy have made responsible decisions and that the funding methodology is as certain as possible. 

The evidence on this point supports the bill. A recent RAND report estimates that there are 8400 companies that have been 

named as defendants in asbestos litigation—and the RAND report 

concludes that is a conservative estimate. Combining the large 

number of contributors with the guarantee that this pool of defendant companies will contribute $3 billion in the aggregate each year 

for the next thirty years boosts my confidence that the money will 

be there for the victims. The guarantee is jointly and severally 

shared by all companies. This ensures to a significant degree the 

solvency of this fund. In addition, tough enforcement provisions are 

in place to hold contributors accountable for their obligation to pay 

into the fund. And, if we are wrong about all of this and the entire 

system fails, then the victims will be able to return to the tort system. Clearly, given the dire state of the current system, it is in everyone’s best interests to see this trust fund work. 

To be sure, voting in favor of this trust fund is a calculated risk. 

And when one considers that we are risking the well-being of thousands of asbestos victims, we had better be very sure that we get 

this right. I think we do a good job of ensuring that victims will 

get paid. 

Though this bill is complicated, my support rests on very simple 

and straightforward reasoning. First and foremost, the trust fund 

will put more money in the pocket of the victim than the current 

system. The same RAND study cited earlier also found that of all 

the money spent in the current system—an estimated $70 billion—

roughly 42 cents of every dollar winds up in the victim’s pocket. 

The trust will give at least 95 cents of every dollar to the victim, 

and in pro bono cases or those where no lawyer is needed, 100 

cents of every dollar. Further, the trust fund will provide certainty 

that the money will be there, whereas the current system is 

fraught with uncertainty. Between moving court dates, settlement 

delays, appeals, attorney fees and the subrogation of court awards, 

no one with a straight face can tell you how much you will get in 

the current system and when you will get it. 

This legislation and the trust fund it creates is a better approach 

than the current system for making victims whole in a timely, predictable and reliable fashion. I look forward to continuing to work 

with Chairman Specter, Ranking Member Leahy, and others to 

make this bill the best possible product it can be for asbestos victims and to see it passed on the Senate floor. 

HERB KOHL. 

(178) 

ADDITIONAL VIEWS OF SENATOR DIANNE FEINSTEIN 

I write separate views on S. 852, the FAIR Act, to clarify amendments that I authored and that were adopted in Committee and to 

highlight the specifics about why I believe these amendments were 

important to the underlying legislation. The bill that passed out of 

Committee reflects a substantial improvement over the FAIR Act 

as introduced and over the bills that were under consideration in 

the 108th Congress. 

Throughout the Committee’s consideration of asbestos legislation 

the record has been filled with examples of why reform is needed. 

The State and Federal courts face a litigation crisis, businesses and 

insurers continue to go bankrupt, and too often victims are left 

without recourse either because of the backlog of cases or the inability to have their awards paid in full. As a result, the sickest 

victims can often wait years before their claims are resolved and 

paid. 

In California, however, the legal system has served many victims 

well by ensuring that terminal individuals have their cases heard 

in a timely manner. The procedures in my state have also led to 

quick payments and settlements for the most serious claims. However, some states do not employ these same procedures. 

During consideration of asbestos legislation, I have been concerned with two major goals: (1) to ensure that the sickest individuals are compensated in a timely and fair manner; and (2) to do 

all that we can to ensure that the trust fund is successful for all 

parties and stakeholders. With these goals in mind, I offered several amendments that were adopted. 

Transparency amendment 

One of the major concerns with the legislation has been regarding whether the amount of money that is expected to be paid will 

actually materialize. This concern has lead to questions about 

which companies are paying; how much they are paying; and when 

the payments will be made. 

The Chairman and Ranking Member have made several improvements to the bill to ensure that protections are in place in case the 

underlying assumptions prove inaccurate or in case the funding 

formula has flaws or unintended consequences. In addition, they 

have added numerous ‘‘transparency’’ provisions to ensure there is 

wide disclosure and ability to correct any inaccurate information 

that is submitted to the Administrator. 

However, there were many Senators, including myself, that expressed concern about passing legislation that relies on private 

funding without knowing the actual sources of the funding and 

without having the ability to have public scrutiny before the legislation is passed. While I recognize there were a variety of reasons 

this information could not be produced, I continued to believe that 

179 

there needed to be an additional incentive for the participant companies and insurers to get their contributions into the fund. 

Therefore, the language I authored would prevent the Administrator from certifying the Trust as operational until sixty days after 

publication in the Federal Register of all the required information 

necessary to determine each company that must pay into the trust 

and how much they will be required to pay under the bill. My language also made clear that insurers must provide their information 

to the Administrator within 30 days from enactment and that the 

insurer information must also be published in the Federal Register 

with sixty days provided for public scrutiny. Only once both of 

these preconditions are met, may the Administrator take steps to 

certify that the fund is operational and paying all valid asbestos 

claims at a reasonable rate. 

Other amendments with a similar goal were offered which would 

have prohibited the legislation from taking effect until a certain 

time period after the information was produced. These approaches, 

however, could slow down the collection of money into the trust and 

could weaken the ability of the Administrator to get the trust operational as quickly as possible. 

My amendment was a compromise that allowed the Administrator and the Department of Labor to move forward with the implementation of the legislation, but prohibited complete operation 

of the fund until there is full and public disclosure as well as time 

to review. 

Start up amendment 

The committee report explains operation of the start up in detail; 

however, I believe it is important to succinctly summarize the provision and further explain the evolution of the language and the intent behind it. 

The language I drafted creates a streamlined process to ensure 

that exigent health claims are resolved and paid on an expedited 

basis following enactment of the Act. Exigent health claims are 

specifically defined to include individuals with mesothelioma or a 

diagnosis of less than one year to live. To get their claims resolved, 

an exigent individual would file their claim with the Administrator 

or claims facility; or they could file a notice of intent to seek a settlement. There are specific requirements regarding what information that is required to file a claim, and the individual is given 60 

days to complete their claim application. 

The language clarified that the claims facility shall operate as an 

outside contractor of the Administrator and that the Administrator 

is ultimately responsible that the processes provided in the legislation is adhered to by the claims facility. Specifically, the language 

states that the regulations promulgated under the act will apply to 

the claims facility. This further clarifies that the claims facility is 

acting as an arm of the Administrator and may not act on its own 

accord outside of the statutory requirements or the interim regulations issued by the Department of Labor. 

Once the exigent claimant provides all the required documentation, the Administrator must determine whether the claimant does 

have an exigent health claim, and if so, what their payment must 

be. Upon certification that the claim is exigent, there must be noVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00179 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
180 

tice to the claimant and the defendants. If, for any reason, the Administrator cannot certify a claim or pay a claim, then the defendants or insurers may pay the terminal individual directly. 

If they fail to do so, there is a penalty, and the amount the individual is entitled to receive automatically increases to one-hundred-and-fifty percent of what the individual is entitled to receive 

under the trust. If the exigent health claim still fails to be paid 

within the nine month stay, then that individual may return to 

court without any limitations on their rights or recovery. 

In addition, the language specifies that Administrative appeals 

can be made from a determination made by the claims facility 

under the same process as is made available when a proposed decision is made by the Administrator. Therefore, if an exigent individual disagrees with any decision made by the claims facility, they 

may appeal to the Administrator and they maintain the same 

rights to further judicial review as an individual whose claim is 

processed by the trust fund. 

This process should provide terminal individuals an expedited 

path to have their claims paid quickly. I felt this was important for 

a variety of reasons. 

Under California’s Rules of Civil Procedure, if a doctor certifies 

that there is ‘‘substantial uncertainty’’ about whether the individual will live for another six months, those cases may be given 

preferential treatment to be set for trial within 120 days. This provision has ensured that terminal individuals in California have 

their cases before a court or settled quickly. In addition, it has 

served to ensure timely payment to terminal individuals as well. 

Given that these victims are terminal, I have consistently advocated that their cases be prioritized under the legislation. Congress 

is taking a step to strip individuals of their fundamental right to 

a trial, and in doing so, we must take every precaution to ensure 

that those who are sick and dying from asbestos exposure are compensated in a fair and timely manner, especially individuals who 

have a short life expectancy. 

During the previous Congress, I had originally proposed allowing 

all claims to proceed in the court system until the trust fund becomes operational. I felt this was important to provide an incentive 

for businesses and insurers to get their money in quickly and for 

the trust to do all it can to become operational as quickly as possible. This also ensured that victims would not have their rights 

abrogated and left without recourse for an extended period of time. 

My amendment that incorporated this policy was unanimously 

adopted by the Judiciary Committee. 

However, the amendment ultimately met with significant opposition from both the business and insurer communities. There was 

a real concern about the ability of companies to simultaneously pay 

into the trust while continuing to face the current caseloads in the 

courts. In addition, concerns were raised about the potential drain 

on the trust fund and the subsequent impact on its stability. In an 

effort to address these issues, I sought to find a compromise that 

would address cash flow limitations of the companies while at the 

same time maintaining necessary protections for victims, especially 

for terminal individuals. 

181 

My initial compromise would have provided a ninety-day window 

to the Administrator to get the trust fund operational. If the Administrator was unable to meet this deadline, then terminal individuals could proceed in court. I provided an extended timeframe 

to the Administrator for other non-terminal victims. This too met 

with strong opposition and fundamentally provided an unrealistic 

amount of time for the new trust to become fully functioning. 

After many negotiations and conversations with stakeholders and 

other members of the Committee, the compromise that is now in 

the bill was struck. This compromise attempts to balance the legitimate concerns of all sides. Clearly, it is not what any one stakeholder would prefer. Victims and labor organizations continue to 

strongly advocate that my original proposal should remain intact, 

and businesses and insurers continue to advocate that victims 

should never be allowed to proceed in the courts during the start 

up, or that if they are their rights should be severely restricted. 

Neither of these extremes are feasible. Instead, a real compromise 

is the only way to get a bill enacted and to achieve a workable solution. 

My amendment combines the changes that were requested by 

business, insurers, and other Senators to narrow the scope of the 

start up provisions to limit the risk businesses and insurers must 

face, while at the same time provide a timely process for terminal 

victims, a safety valve for all individuals, and a strong incentive for 

businesses and insurers to cooperate with the Administrator. This 

was a tough balance to achieve, but the language in the bill does 

just that. 

The biggest change in the start up provisions is to allow a claims 

facility to pay terminal individuals the amount they would receive 

under the trust, and to let a successful operation of such claims facility serve as a trigger to stop cases from proceeding in court. This 

provision should help ensure that claims are processed quickly. It 

should also serve to limit and alleviate the flood of claims that 

could overwhelm the fund in the initial years. 

In addition, by allowing defendants and insurers the opportunity 

to pay claims directly, the ability to avoid higher costs and a possible court case is in their hands and under their control. The bill 

provides that the settlement amount automatically rises to onehundred-and-fifty percent of the amount required under the trust 

if the company tries to avoid or delay payment. In addition, the bill 

provides victims with an opportunity to return to court if the company or insurer still refuses to pay their claim. 

If the company or insurer does not settle the claims as directed 

under the legislation, it is the company and insurer’s choice to take 

that risk and face larger expenses and possibly much larger damages in court. Significantly, if an individual is forced to return to 

court to receive their payment, they cannot later have their case 

pulled out of court, nor will there be any limits on their rights to 

recover or secure representation. 

Finally, the expedited payment language serves to ensure that 

mesothelioma victims and individuals who have been diagnosed 

with a life expectancy of less than one year receive their awards 

quickly and not force them to wait years for their payment. One 

of the principle purposes of doing this legislation and setting up a 

182 

trust fund is to provide victims with a system that takes less time, 

energy and resources and, at the same time, expedites the payments they need and deserve. The start up language should assist 

in achieving this goal. 

Judicial review 

Another concern that has consistently been raised is whether the 

courts will determine that the provisions directing the trust fund 

to appropriate the monies from the confirmed bankruptcy trusts 

will be held to be constitutional. Clearly, there are strong held beliefs on both sides and the record contains legal opinions from 

many scholars. 

Regardless of how the courts ultimately decide, one thing is 

clear—there will be a constitutional challenge. In order to ensure 

that cases challenging the act do not serve to undermine the efficacy of the legislation there must be specific provisions in place to 

ensure enough funding is available to cover the costs and claims 

while a court review is underway. The Chairman and the Ranking 

Member included various provisions to address this goal, including 

a ‘‘guarantee surcharge.’’ This would raise additional funds to cover 

the liquidity needs of the trust should the bankruptcy trust monies 

be held up in court or fail to materialize altogether. 

In addition, I was concerned that the bill must contain a strong 

and efficient judicial review procedure to ensure cases are decided 

upon as quickly as possible. While language was included in the 

bill as introduced, the McCain-Feingold campaign finance legislation that was recently enacted into law has had its judicial review 

provisions tested and proven effective. Therefore, I offered an 

amendment to modify the bill to provide that any constitutional 

challenge of the act or its provisions shall be filed in the United 

States District Court for the District of Columbia and heard by a 

three-judge court panel. 

A final decision in the action shall be reviewable only by appeal 

directly to the Supreme Court of the United States. Such appeal 

shall be taken by the filing of a notice of appeal within 10 days, 

and the filing of a jurisdictional statement within 30 days, of the 

entry of the final decision. Since this is a tested and successful 

model it should serve to resolve constitutional questions efficiently 

and effectively. 

It is also important to clarify how this provision intersects with 

the start up provisions. The start up provisions as I drafted should 

proceed even if a court suspends operation while it determines constitutional questions. This means that the claims facility should 

continue to make settlements with exigent claimants to the extent 

permitted by the court, because the timelines for processing exigent 

claims would remain intact. Therefore, the Administrator must 

continue to work towards ensuring that the claims facility and the 

national trust become operational in order to avoid a reversion to 

the courts. If this administrative process cannot be accomplished 

because of a court order, businesses and insurers should on their 

own initiative, continue to make settlement offers to avoid a reversion to the tort system since the timelines for when a claim may 

return to court cannot be tolled. 

183 

Settlements 

Contamination of asbestos has occurred for decades, and individuals who were exposed have been getting sick or dying from its use 

and distribution. Given its significant history, a sizable number of 

victims have already sought relief investing years of time and resources to having their situations addressed. 

While the trust is designed to provide a more efficient and satisfactory solution, there are some claims that should not be preempted and should remain in tact. Where to draw the line on 

which claims must go to the trust and which may stay out was the 

subject of much negotiation and many different proposals. Finally, 

a compromise was reached that in principle would allow enforceable settlements to remain outside the trust. 

However, defining this principle proved to be complicated and it 

involved several additional layers of negotiations. In the bill as introduced, some interpreted the language as wiping out enforceable 

settlements that were not intended to be eviscerated. For example, 

I was concerned that the language could be read to eliminate an 

enforceable settlement between a mesothelioma victim and a defendant company simply because the company had their outside 

lawyer sign the settlement rather than their CEO. This is a ridiculous outcome and certainly was not the intent of the compromise. 

To remedy this, I authored an amendment that would preserve 

settlements even if they were not signed ‘‘directly’’ by the insurer 

or the business. My amendment deleted the word ‘‘directly’’ to clarify that the CEO does not need to sign the agreement for it to be 

valid and remain outside the trust. In addition, the amendment 

added language to clarify that settlements secured by ‘‘immediate 

family’’ members would also remain outside the trust even though 

they too are not signed ‘‘directly’’ by the plaintiff. 

Criminal acts 

Drafting comprehensive asbestos reform legislation has been a 

significant undertaking, and even upon enactment it is clear that 

those who want to maintain the current tort system will continue 

their attacks. In addition, there are provisions that could raise various constitutional challenges, like the previous bankruptcy trusts 

discussion. I continue to believe that the Congress should do all it 

can to ensure the trust fund is successful and protected from legal 

challenges that are an attempt to induce failure. 

This year the Committee received a letter from Professor Erwin 

Chemerinsky expressing his belief that the provision in the bill 

that would provide a $400,000 floor to individuals exposed to 

vermiculite in Libby, Montana would raise an Equal Protection 

problem. 

He stated, ‘‘I believe that the courts would invalidate this provision as violating the Fifth Amendment guarantees of equal protection and due process.’’

Whether the courts eventually agree with his assessment, I was 

concerned that the legislation be tightened as much as possible to 

prevent an Equal Protection challenge. Initially, I sought to offer 

an amendment that would apply the $400,000 floor to any individual whose claim is based on asbestos exposure arising from a 

184 

company’s actions that have been the subject of a criminal indictment. 

However, this proved to be an ineffective solution since the distinguishing characteristics of the exposure in Libby, Montana was 

not simply limited to the type of vermiculite mined from the W. R. 

Grace’s plant, but also included the uniqueness of the exposure, the 

proliferation of asbestos fibers, and the direct actions that impacted 

the community. 

Therefore, I worked with the Chairman and the Ranking Member and Senator Baucus to strengthen the language in the bill and 

to further develop the record establishing the uniqueness of Libby. 

In the end, as part of a manager’s package, new language was included in the bill that further outlined why the Libby-specific provisions should be protected from an equal protection challenge. 

Expedited payments amendment 

As discussed in the start up section, one of my primary concerns 

has been to ensure that terminal individuals have their claims resolved and paid quickly. I have consistently stated that if Congress 

is going to take an action that would eliminate an individual’s fundamental right to a trial, we must ensure that individuals are 

being protected and provided a system that does not further exacerbate the injustices they have already endured. 

I was very concerned when I re-read the bill as introduced and 

realized that the structured payment provisions covered individuals 

with exigent health claims. This meant that mesothelioma victims 

and individuals who have been diagnosed as being terminally ill 

from asbestos-related diseases with a life expectancy of less than 

one year could have their payments stretched out over three years, 

and possibly four years. 

This was unacceptable. How can we tell an individual who has 

less than one year to live they are going to have to wait for three 

years to get their full payment? While the bill language provided 

the Administrator with flexibility to establish ‘‘accelerated payments’’ for mesothelioma victims and ‘‘expedited payments’’ for exigent cases, there were no time frames to quantify these provisions. 

Therefore, my amendment established specific payment time 

frames. Mesothelioma victims would be paid in one lump sum within 30 days from the time the claim was approved or six months 

from when the claim was filed, whichever is shorter. Other exigent 

victims would be paid within six months after the claim was approved, or one year after the claim was filed, whichever is shorter. 

In addition, my amendment addressed concerns raised by the 

business and insurance communities that expedited payments 

could cause a cash flow problem. To respond, my amendment provided the Administrator with flexibility to extend payments if she 

determines that solvency of the fund would be severely harmed. If 

such a determination is made payments may be extended for mesothelioma cases to six months from the date the claim is approved 

by the Administrator, or eleven months from the date when the 

claim is filed, which ever is shorter; and for other exigent cases, 

one year from the date the claim is approved by the Administrator; 

or two years from the date the claim is filed; which ever is shorter. 

185 

Naturally occurring asbestos amendment 

As time marches on, unfortunately, new concerns about asbestos 

exposure have come to light. In my home state of California, and 

in some other states across the country, communities are discovering veins of naturally occurring asbestos in the ground. These 

veins are not new; however, the medical risks associated with them 

remain unquantifiable and raise real concerns. 

With the discovery of naturally occurring asbestos in California, 

I realized that the definition of asbestos contained in the legislation 

did not include the type of asbestos found in my state. Clearly, the 

intent of the legislation is to cover all forms of asbestos. Therefore, 

I authored an amendment that modified the language to include 

asbestiform amphibole minerals to ensure individuals from my 

home state who would qualify under the medical criteria are not 

prohibited from receiving an award simply because of an error in 

the definition of asbestos. 

In addition, there has been much confusion about the section of 

the bill entitled ‘‘exceptional medical claims’’. The intent of this 

language is to provide a separate path for those individuals who do 

not meet the precise medical criteria under the bill, yet do suffer 

from the specific asbestos-related diseases enumerated and defined 

in the bill, to have their cases reviewed and evaluated by a medical 

panel. This process would eliminate the presumptions provided to 

those who do qualify under the medical criteria, but it would give 

victims an opportunity to be compensated by the Fund for their asbestos-related conditions. 

This exceptional medical claims provision would provide the opportunity for those who are exposed to naturally occurring asbestos 

that has been released into the air either because of developers or 

other activities to have their cases considered by the trust. However, there were some who felt the language was not clear. Therefore, I authored an amendment that made this explicit. 

Finally, I authored a comprehensive amendment to more thoroughly address the problem of naturally occurring asbestos exposure and potential medical health risks to individuals and communities. My amendment was initially conceived to address the situation in California, however, as I looked into the situation I realized 

that many states across the country are dealing with this problem. 

Some have argued that nothing should be done in this area because there are not clear cases of individuals getting sick or dying 

from naturally occurring asbestos; this position is shortsighted. 

Congress has sat by for too long watching the asbestos crisis grow 

to outrageous proportions. Rather than again sitting back and failing to act unless thousands more become sick from a new asbestos 

threat, Congress should take proactive steps in evaluating whether 

there are potential health risks associated with exposure to naturally occurring asbestos. 

It is critical that the government evaluate whether there are 

health risks associated with exposure levels to naturally occurring 

asbestos in the communities where it exists. Then if there are levels of fibers that create risks, then communities need the appropriate tools to determine whether these risks are present in their 

neighborhoods and the tools necessary to protect the public from 

exposure. 

186 

In a recent exposure assessment conducted by the Environmental 

Protection Agency (EPA) in areas of the Sierra foothills in California, asbestos fibers were found in almost all samples collected in 

an effort to measure personal exposures levels to naturally occurring asbestos during simulated recreational activities. The EPA has 

acknowledged concern over the measured exposure levels because 

of the potential for long-term development of asbestos-related diseases and the higher toxicity of amphibole asbestos present in the 

area. 

The citizens of the California Sierra foothill areas are becoming 

increasingly concerned and have demanded a clarification about potential health risks associated with exposure in their communities. 

The problem is the current risk assessment models used to evaluate health risks to asbestos are inadequate. They were designed to 

address the cancer risks associated with low-level occupational exposures over long periods of time and are insufficient to address 

variable exposures to naturally occurring asbestos or estimate noncancer risks. Given the lack of sufficient information, study and 

evaluation are necessary. 

My amendment addressed this urgent need by requiring the EPA 

to evaluate within one year the appropriateness of the existing risk 

assessment values for naturally occurring asbestos and methods of 

assessing exposure, and to establish risk assessment models that 

incorporate the latest knowledge of exposure, toxicity of amphibole 

asbestos, and understanding of non-cancer risks. I urge EPA to 

complete this evaluation and establish a revised risk assessment 

model as quickly as possible. 

This amendment also provides the communities with the information, tools, and resources they need to understand how to minimize their exposure to naturally occurring asbestos and address existing contamination in their schools, public buildings and parks, 

and homes. My amendment also ensures that individuals residing 

in these areas may participate in the medical screening programs 

to detect any health risks early and then, hopefully, prevent further damage. 

It is often quoted that an ounce of prevention is worth a pound 

of cure. The time for Congress to move on this issue is long overdue 

and I believe proactively working to prevent further asbestos-related diseases from debilitating individuals and families is the 

right place to begin. 

DIANNE FEINSTEIN. 

(187) 

XI. MINORITY VIEWS OF SENATORS KENNEDY, BIDEN, 

FEINGOLD, AND DURBIN 

OUTLINE OF ARGUMENTS

I. Introduction 

II. Background 

III. Problems with the Bill 

A. Inadequate Funding 

1. Number of Future Claims Remains Impossible to 

Ascertain 

2. Up-Front Funding is Inadequate 

3. Resulting Additions to the Budget Deficit and Taxpayer 

Burden 

B. Unanimously Adopted Medical Criteria Abandoned 

1. Exclusion of Lung Cancer Victims with Substantial 

Asbestos Exposure 

2. Raising Standard to ‘‘Substantial Contributing Factor’’

3. Requirement for Bilateral Impairment Not Based on 

Science 

4. Other Problems 

C. Requirement of Occupational Exposure 

D. Fairness Among Contributors 

E. A Risky Startup 

F. Lack of Transparency 

G. A Sunset in Name Only 

H. Inadequate Claims Values 

I. Replacing One Adversarial Process with Another 

J. Collateral Source Rule Not Fair to Victims 

K. Unfair Treatment of Asbestos Victims with Pending or 

Settled Cases 

1. Even Exigent Cases Are Subject to a Stay 

2. Impact of Multiple Stays and Venue Rules 

3. Abrogating Existing Settlements 

L. Labor Department Delays in Administering the Trust 

Fund 

M. Litigation Delays 

N. Unfair Restrictions Placed on Victims of Silica Disease 

O. Special Interest Provisions and Changes During Markup 

IV. Winners and Losers 

V. Conclusion 

I. INTRODUCTION

We offer these dissenting views on S. 852 because of our strong 

belief that the bill is seriously flawed. The Asbestos Trust Fund it 

creates is both unfair and unworkable. It completely excludes large 

numbers of seriously ill victims who are suffering and, in many 

188 

1Testimony of Mark A. Peterson, Before the Senate Committee on the Judiciary, ‘‘Hearing on 

a Bill to Create a Fair and Efficient System to Resolve Claims of Victims for Bodily Injury 

Caused by Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005, at 2–3. 

cases, dying from asbestos-induced diseases, providing them with 

no compensation at all. Nor does the Trust Fund have adequate 

funding to ensure that all of those asbestos victims who are eligible 

to receive compensation under the terms of the bill will actually receive what the bill promises them. 

We would readily support a properly designed and adequately 

funded trust fund bill. It would have to fairly compensate all the 

victims of asbestos-induced diseases in a timely way. Unfortunately, S. 852 is not such a bill. In fact, S. 852 will leave a substantial number of the most seriously ill victims worse off than they are 

under current law. 

The real crisis which confronts us is not an ‘‘asbestos litigation 

crisis;’’ it is an asbestos-induced disease crisis. Asbestos is the most 

lethal substance ever widely used in the workplace, and it has left 

an unparalleled legacy of illness and death in its wake. All too 

often, the tragedy these seriously ill workers and their families are 

enduring becomes lost in a complex debate about the economic impact of asbestos litigation on defendant corporations. We should not 

allow that to happen. 

The litigation did not create these costs. Exposure to asbestos 

created them. They are the costs of medical care, the lost wages of 

incapacitated workers, and the cost of providing for the families of 

workers who died years before their time. Those costs are real. No 

legislative proposal can make them disappear. All bill can do is 

shift those costs from one party to another. Any proposal which 

would shift more of the financial burden onto the back of these seriously ill workers and their families is unacceptable to us. 

It is not enough to say that there are serious inadequacies in the 

way asbestos cases are adjudicated today. That does not mean that 

any legislative solution is better than the current system. Our first 

obligation is to do no harm. We regret to say that, despite the best 

intentions of its sponsors, this bill will do harm. We are compelled 

to oppose S. 852 for the following main reasons: • The Asbestos Trust Fund created by this bill is seriously 

underfunded. The funding plan in this bill relies on very substantial borrowing in the early years as the only way to pay 

the hundreds of thousands of initial claims that will flood the 

system. The result will be huge debt service costs over the life 

of the Trust that could reduce the $140 billion intended to pay 

claims by as much as 40 percent or more.1 The amount remaining would be far too little to pay the claims of all of those 

who are entitled to compensation under the terms of the bill. 

The bill does not guarantee that sufficient resources will be 

available to keep the commitments which this bill makes to eligible victims, and it fails to adequately protect these victims 

should sufficient funds not be available to compensate them. 

• Seriously ill victims are not allowed to continue their cases 

in court until the Trust Fund is ready to process and pay 

claims. These victims will be left in a legal limbo, unable to recover either in the courts or from the Trust Fund, while time 

is running out for them. Tragically, many of these claimants 

189 

2 As discussed further below, numerous time-consuming legal challenges to the bill are likely. 

See Letter from Theordore B. Olson to the Honorable John Cornyn, April 18, 2005; and Letter 

from Robert A. Falise, Chairman and Managing Trustee, Manville Personal Injury Settlement 

Trust, October 21, 2003. See also, Testimony of Eric D. Green, Professor of Law, Boston University School of Law, Before the Senate Committee on the Judiciary, ‘‘Hearing on a Bill to Create 

a Fair and Efficient System to Resolve Claims to Victims for Bodily Injury Caused by Asbestos 

Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005, at 7–8. 3See www.EWG.org for entire list of communities that received 10,000 tons or more of asbestos-containing material from Libby, Montana. 

will die from mesothelioma or other cancers while they wait for 

the Trust Fund to become operational and for the expected constitutional challenges to be resolved.2

• Tens of thousands of lung cancer victims who have had 

very substantial asbestos exposure are denied any compensation from the Trust Fund. Under the bill, these victims would 

lose their right to go to court, but receive nothing from the 

Trust Fund. • The bill makes it harder for asbestos victims to recover 

compensation from the Trust Fund by unfairly raising the 

standard of proof. Victims should simply have to prove that asbestos exposure was a contributing factor to their disease. That 

is the standard used in most state courts and workers’ compensation proceedings today. This bill requires a much tougher 

standard. • Compensation levels for the most severely ill victims of asbestos-induced disease are too low. The amounts were determined more on the basis of what companies are willing to pay 

than on the basis of what the victims deserve. • The current bill does not honor all existing court settlement agreements. By voiding these settlements, the bill will 

force some victims whose claims have been resolved in court to 

pursue their claims all over again in the Trust Fund. That 

means they will have to wait years to receive any compensation for their injuries. • The bill lacks a clear, automatic sunset that allows victims 

to quickly seek compensation in the courts if the Trust Fund 

becomes insolvent and unable to pay their claims. The bill the 

Committee approved in 2003 contained such a provision, but 

the current version of the bill does not. Under the current bill, 

workers could end up trapped in the Trust with reduced benefits and long delays before receiving their payments. • There is no compensation category for victims of asbestosinduced diseases, other than mesothelioma, whose exposure 

did not occur on the job. Their illnesses were also caused by 

asbestos, and it is unfair to ignore their plight. Their current 

right to seek compensation through the courts is being taken 

away, but they will receive no right to compensation from the 

Trust Fund in return. • Residents of other asbestos-contaminated communities are 

denied the same opportunity to receive compensation from the 

Trust Fund that the residents of Libby, Montana, have under 

the bill. These residents of Arizona, California, Illinois, Louisiana, Massachusetts, Michigan, New Jersey, Oregon, Pennsylvania, Texas and elsewhere 3 are permitted to file an ‘‘exceptional medical claim’’ seeking compensation only if a study conducted by the Agency for Toxic Substances and Disease RegVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00189 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
190 

4See http://www.ewg.org/reports/asbestos/documents. 

istry finds their community contamination to be ‘‘substantially 

equivalent’’ to Libby, Montana. Even assuming these sick residents of contaminated communities can overcome all of the 

bill’s hurdles, the amount proposed for the Trust Fund has 

never been calculated to include these individuals. During 

Committee discussions, it became clear that they have been excluded from compensation solely because it is ‘‘too expensive’’ to cover them. • Victims with complex cases will be unable to find a qualified attorney to pursue their claims because the bill imposes an 

inflexible cap on attorneys’ fees that ignores the amount of 

work that the case would actually require. • The bill takes away rights from victims of silica disease 

even though they are not eligible to receive any benefits from 

the Trust Fund. • Despite much discussion in Committee regarding the importance of transparency, the bill fails to require full disclosure 

of the corporations and insurers who will fund the Trust and 

the amounts each of them will pay before victims lose their 

right to proceed in court. That information is essential to determine whether the promised $140 billion in funding will actually be provided. 

• The financial burden of funding the Trust Fund is not fairly apportioned amongst the affected businesses. Many smaller 

companies would be required to pay more than they have historically paid in the court system, while some of the largest 

corporations with the greatest exposure would receive a huge 

windfall. 

These shortcomings cannot be overlooked. They are too fundamental. They will end up hurting the seriously ill victims of asbestos disease who we are trying to help. As evidenced by the aforementioned list of problems with S. 852, the bill focuses too much 

on providing relief to corporate defendants, and not enough on securing fair compensation for the thousands of victims of asbestos 

exposure, and their families. 

We are perplexed at the Committee’s decision to report S. 852 in 

its current form for Senate consideration. Even the bill’s proponents recognize that their proposal is flawed and needs work. We 

believe that the bill’s deficiencies are so significant that it will be 

impossible to correct them on the Senate floor. 

II. BACKGROUND

Hundreds of thousands of men and women, including many patriotic war veterans and defense workers, have died or become severely ill by exposure to asbestos. These deaths and illnesses were 

entirely preventable. Asbestos manufacturers, distributors and 

many employers, including the United States government, have 

known asbestos exposure was deadly since at least the 1930s, but 

workers were not told of the hazards they faced until it was too 

late.4

Asbestos is the most lethal substance ever widely used in the 

workplace. Between 1940 and 1980, more than 27.5 million workVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00190 Fmt 6604 Sfmt 6604 E:\HR\OC\SR097.XXX SR097
191 

5See http://www.ewg.org/reports/lungcancer/. 6See http://www.ewg.org/reports/asbestos/facts/fact4.php. 

ers in this country were exposed to asbestos on the job, and nearly 

19 million of them had high levels of exposure over long periods of 

time. That exposure has irrevocably changed many of their lives. 

Each year, 10,000 of these victims die from lung cancer and other 

diseases caused by asbestos.5 Each year, hundreds of thousands of 

them suffer from lung conditions which make breathing so difficult 

that they cannot engage in the routine activities of daily life. Even 

more have become unemployable due to their medical condition. 

Because of the long latency period of these diseases, not only will 

the damage done by asbestos continue for decades but many of the 

exposed live in fear of a premature death due to asbestos-induced 

disease. In addition, many of the spouses and children of these 

workers, and their neighbors, have now been diagnosed with asbestos-related diseases.6 The real victims of the asbestos nightmare 

must be the first and foremost focus of our concern. 

Despite the magnitude of the preventable tragedy that has been 

inflicted on working men and women throughout the United States, 

the debate in Committee has, in our view, been focused mostly on 

the harm of asbestos litigation to the economic fate of corporate defendants, some of which knowingly exposed workers to danger. We 

believe the innocent victims of asbestos exposure deserve as much, 

if not more, attention. Our position has been that appropriate funding for all the victims of these horrible diseases should be the precondition for creating a trust fund. 

III. PROBLEMS WITH THE BILL

S. 852 proposes to replace the current court system with a national Trust Fund that would resolve asbestos civil disputes and 

compensate those who have been injured by asbestos exposure. Accordingly, it would eliminate the rights of asbestos victims to a jury 

trial and compel them to seek compensation from the newly created 

Federal program. 

The Trust Fund is to be financed by assessments on corporations 

and businesses that have had previous asbestos liabilities or have 

been the subject of asbestos litigation. As it stands, it is unclear 

who this class of businesses includes. Supporters of the bill claim 

that it covers as many as 10,000 American businesses, including 

many small and medium-sized businesses. 

The general aim of the Trust Fund is to provide victims fair and 

timely compensation on a no-fault basis, relieving them of the legal 

delays and costs associated with the court system, while relieving 

business firms of greater costs than they would face in the litigation system. The problem with S. 852 is that it fails to meet these 

goals with respect to victims of asbestos-induced disease, as well as 

many of the affected business entities. It also likely creates new 

burdens for Federal taxpayers. 

In its current form, S. 852 not only fails to solve the asbestos litigation challenges facing the nation today, but it would exacerbate 

them for the overwhelming majority of groups that are directly affected by the issue. 

192 

The bill artificially caps defendant and insurer liability at levels 

too low to provide full compensation to victims over the expected 

life of the Trust Fund, while explicitly excluding tens of thousands 

of cancer victims from receiving compensation in order to protect 

the financial interests of participating corporations. We believe this 

is the wrong approach. 

We believe that a Trust Fund paying timely, adequate compensation to all victims would be a good idea. But this asbestos bill is 

not, strictly speaking, a Trust Fund at all. It is not designed to 

fully fund payments to all beneficiaries. 

Congress has never before acted to limit compensation to victims 

when the court system was compensating them. S. 852 is unique 

among the compensation programs Congress has considered, in 

that for many victims its effect would be to eliminate a right to 

compensation rather than to create one. Past compensation programs have been designed to ensure that victims receive compensation when the courts have failed to provide relief. In the case of asbestos, Congress is stepping in not to protect victims, who some 

proponents of S. 852 claim receive too much, but to protect hundreds of companies from having to pay the full costs of the health 

effects they have caused. 

The essential components of such a fair Trust Fund would include: • Adequate funding to fully compensate present and future 

victims; • Medical criteria which fairly reflect the asbestos-related 

diseases currently compensated by the court system; • Claims values which reasonably reflect the amount of compensation victims would receive in court; and • A non-adversarial, efficient claims processing system 

which would speed payment of claims. 

We do not believe S. 852 meets this test. 

Rather, we believe that S. 852 represents a financial windfall for 

many asbestos defendants and insurers, while providing too little 

to victims of asbestos exposure. We believe this Trust Fund will 

leave many victims worse off than they are today. In many respects, S. 852 represents a retreat from the bill reported by the 

Committee during the last Congress. 

A. Inadequate funding 

In our view, ensuring full funding for the best estimate of expected claims is a critical precondition before taking away an individual’s right to a jury trial. Past efforts to resolve the asbestos litigation dilemma, both private and public, have foundered over the 

question of whether there would be enough money to pay benefits 

to future victims. S. 852 suffers from the same limitation because 

it fails to include adequate funding to ensure future victims will receive compensation. 

The proposed total funding of $140 billion over 30 years, and a 

proposed $42 billion of up-front funding in the first 5 years, while 

large sums, are almost certainly going to prove inadequate to ensure fair compensation for asbestos victims over the short and long 

term. Just based on the hundreds of thousands of claims the program will face right away, the proposed $140 billion is insufficient. 

193 

7See e.g. Oral Statement of Senator Arlen Specter, Senate Committee on the Judiciary, Executive Session, 109th Cong., May 19, 2005, at 48. 8See letter from Douglas Holtz-Eakin, Director, Congressional Budget Office, to Senator Don 

Nickles, April 20, 2004, at 5. 9 Analysis of Mark Peterson, April 13, 2005, p. 1; see also Statement of Mark A. Peterson Before the Senate Judiciary Committee Hearing of S. 852 ‘‘Fairness in Asbestos Injury Resolution 

Act of 2005,’’ p. 6. April 26, 2005. 10See letter from Douglas Holtz-Eakin, Director, Congressional Budget Office, to Senator Don 

Nickles, April 8, 2005, at 3. 

This insufficiency has resulted from the fact that the figure of $140 

billion was determined based on what companies were willing to 

pay, not how much the Trust Fund is likely to require to fairly 

compensate individuals. 

Funding for the Trust should be tailored to increase or decrease 

as the needs of the Trust Fund demand. In other compensation 

programs, such as workers’ compensation, payors must increase the 

amount they contribute when more claims than expected are approved. Under the Trust Fund proposed in S. 852, however, victims 

are faced with the threat that benefits will be reduced or medical 

criteria changed if funding for the Trust proves inadequate. 

Throughout Committee consideration of S. 852, many suggestions 

for improvements to the proposal were rejected, apparently because 

of the view that there isn’t enough money7. We do not believe that 

is an adequate answer. Congress has an obligation to protect the 

rights of the claimants to fair compensation—especially if the bill 

is going to take away their right to proceed in court. 

As it stands, the bill does not contain sufficient funding to adequately compensate all victims. The bill lacks transparency regarding what the companies will pay, leaving in great doubt whether 

the proposed funding will ever be raised. Additionally, it imposes 

higher costs on thousands of medium and small businesses than 

they face in the present court system. It also involves Federal outlays of tens of billions of dollars, thereby placing taxpayers at risk 

of having to absorb these costs without repayment because of the 

strong possibility of the Trust Fund’s failure. 

When the Committee considered this issue during the last Congress, the Committee- reported bill, S. 1125, included up to $153 

billion in funding. However, corporate defendants and insurers objected to paying that much money. Accordingly, following the Committee’s action, S. 1125 was rewritten without the benefit of Committee deliberations, and re-introduced directly on the floor of the 

Senate as S. 2290. 

The revised bill, S. 2290, included only $118 billion in funding, 

even though the Congressional Budget Office (CBO) estimated that 

its benefits would cost $139 billion,8 not counting interest payments on any amounts that the Trust Fund would have to borrow, 

which have been estimated to be $32 billion or more.9

CBO’s cost estimate and analysis assumed that only 10 to 15 percent of non-malignant claims would qualify for payment.10 Yet, 

well-qualified outside experts, such as David Austern of the Manville Trust, and Dr. Mark Peterson formerly with the RAND Corporation, predict that at least 55 percent or as high as 75 percent 

of claimants will qualify for compensation under the Trust Fund. 

Importantly, CBO admits its estimate is uncertain, and notes that 

if the expected claims are underestimated by merely 5 percent, the 

194 

11See Nickles letter, April 20, 2004, at 5. 12See Peterson testimony at 3–5. 13See Nickles letter, April 20, 2005, at 5. 14See also Peterson testimony at 3–5. 

Trust Fund would require an additional $10 billion of funding to 

operate.11

The funding problem is worse under S. 852. This year’s bill includes $140 billion as the cap on funding. While this amount was 

agreed to outside the Committee’s jurisdiction in private negotiations between Senators Frist and Daschle at the end of the last 

Congress, it was part of a negotiated compromise that they undertook for a different bill, with different medical criteria, and different claims values. According to experts, $140 billion bears no relationship to the amount truly needed to fully fund the benefits 

provided under S. 852.12 Indeed, the Committee has repeatedly 

narrowed the benefits provided to victims to try to ensure that the 

cost of S. 852 never exceeds $140 billion. 

We believe this approach is backwards. The Committee should 

have retained the same set of medical criteria that were unanimously agreed to in a bipartisan manner by this Committee during 

the last Congress. This year’s bill also should have developed reasonable claims values and insisted on the funding necessary to pay 

those benefits. Even accepting CBO’s unrealistic estimate of a 10 

to 15 percent approval rate for filing of non-malignant claims, outside experts believe that S. 852 will cost at least $189 billion.13

Moreover, estimates of the number of asbestos claims and the 

amount necessary to pay those claims have proven woefully understated throughout the history of such predictions. Simply put, if 

corporate defendants and insurers pay no more than $140 billion, 

the Trust Fund will not be able to pay the promised benefits to 

present and future victims.14

CBO has not yet analyzed S. 852. However, it has already prepared cost estimates of previous similar bills, S. 1125 and S. 2290, 

which can be helpful in evaluating the solvency of the Trust Fund 

to be created by S. 852. S. 1125, the version approved by the Committee in the last Congress, would have required a maximum of 

$153 billion from corporate defendants and insurers to pay into the 

Trust Fund. That bill provided compensation levels which were significantly lower than those contained in S. 852. 

That bill, S. 1125, also allowed pending cases with a value of approximately $5 billion to remain in the court system. However, 

these pending cases have been brought into the Trust Fund by 

later versions of the bill, thereby creating an additional demand on 

the Trust Fund. CBO estimated that the cost of paying all the 

claims covered by S. 1125 at the claims values set in that bill 

would be $123 billion. 

It is worth noting that even with the exclusion of the $5 billion 

of pending cases and the relatively low claims values in S. 1125, 

CBO nevertheless found that the amount of money needed to pay 

all the claims and to fund other operating expenses during the first 

10 years would virtually equal the amount collected from corporate 

defendants and insurers during that period. If the $5 billion pending cases had not been left outside the Trust Fund, the costs would 

have exceeded revenues. CBO cautioned: 

195 

15 CBO Cost Estimates for S. 1125, October 2, 2003, at 2. 16See Nickles letter, April 20, 2005, at 4. 17See Kickles letter, April 20, 2005, at 6. 

There is a risk that the actual number of claims received 

could exceed our estimate. There is also a risk that revenues collected could be less than we estimate. If either 

event were to occur, the amounts collected could be insufficient to pay all claims.15

This simply highlights what we all know—the Trust Fund will 

suffer from serious financial demands during the first decade of operation and we must ensure that the funds will be sufficient to 

cover those expenses. Otherwise, we are legislating certain failure. 

As indicated above, S. 2290 was introduced by Senator Frist to 

address various dissatisfactions raised by the corporate defendants 

and insurers with provisions of S. 1125. That revised bill sharply 

reduced the amount of money available to pay the claims of asbestos victims to a maximum of $118 billion, which was $35 billion 

less than the amount approved by the Committee. 

At the same time, S. 2290 increased the compensation levels for 

some of the disease categories. CBO’s analysis of S. 2290 determined that the Trust Fund would face claims totaling about $140 

billion, far more than the total available funding. As a result, CBO 

concluded that the Fund would need to borrow substantially in its 

early years of operation and that ultimately, ‘‘the sunset provisions 

* * * would have to be implemented by the Asbestos Fund’s administrator.’’ 16

The CBO’s letter emphasized the uncertainty of projecting Trust 

Fund finances: 

One area in which the potential costs are particularly 

uncertain is the number of applicants who will present evidence sufficient to obtain a compensation award for nonmalignant injuries. CBO estimates that about 15% of individuals with nonmalignant medical conditions due to asbestos exposure would qualify for awards under the medical criteria and administrative procedures specified in the 

bill. The remaining 85% of such individuals would receive 

payments from the Fund to monitor their future medical 

condition. If that projection were too high or too low by 

only 5 percentage points, the lifetime cost to the Asbestos 

Fund could change by $10 billion.17

CBO’s estimate of the percentage of nonmalignant claims that 

would qualify for a monetary award is extremely low compared to 

the experience of the Manville Trust and other studies. This assumption alone could result in a very substantial underestimation 

of the actual cost of the Trust Fund’s financial liability. The $140 

billion estimate of S. 2290’s cost may well be too low. 

CBO’s analysis of S. 2290 raises serious doubt about the solvency 

of S. 852. Many of the claims values in S. 852 have been raised 

above the levels set in S. 2290. While S. 852 has eliminated one 

disease category, the overall cost of payments is likely to be higher 

than under the earlier bill. Interest costs resulting from large scale 

borrowing by the Trust Fund are also likely to be higher. 

196 

S. 852 provides a maximum of only $140 billion in contributions 

from corporate defendants and insurers, which is exactly the 

amount CBO estimated to be the cost of the less generous compensation provided for by S. 2290. Yet the current bill, S. 852, provides no cushion at all, and no margin for any financial error. As 

a result, the probability is more than great that the Trust Fund to 

be created by S. 852 will be seriously underfunded from the beginning and will remain so throughout its operation. 

1. Number of future claims remains impossible to ascertain 

The only way to ensure an adequate funding level is to base the 

total amount of the Trust Fund on some rational estimate of current and future claims activity. However, the bill fails to link the 

proposed funding to any reasonable estimate of claims. Without 

this information, or some meaningful mechanism to tailor the funding and assessments to the actual number of claimants, there is no 

assurance that sufficient funding will be available to adequately 

compensate victims. That means either the Trust Fund is doomed 

to fail, or claimants will be shortchanged down the line. 

In its analysis of S. 1125, CBO raised several red flags concerning the potential claims and liability costs: 

• ‘‘Estimates of future claims * * * contain a number of potential sources of error in forecasting.’’

• ‘‘Forecasts of asbestos claims * * * have failed to accurately predict the magnitude, scope and evolution of asbestos 

claims.’’

• ‘‘Projections * * * in recent decades of the number of asbestos claims * * * were, in hindsight, much too low, suggesting that there is a significant risk of underestimating the 

number of future asbestos claims.’’

• ‘‘Furthermore, there is uncertainty about how claims 

would qualify under the criteria of the bill.’’

• ‘‘Various projections of the number of nonmalignant cases 

and their distributions among the categories specified in the 

bill vary greatly.’’

However, neither CBO nor the Asbestos Study Group, the primary proponent of this legislative solution and the likely source of 

the underlying data that were used in the CBO estimates, has provided evidence of the assumptions they rely upon, that only 15 percent of nonmalignant claims, and fewer than one in four of all 

claimants would qualify for payment. Instead, past experiences 

contradict the assumption. Lessons from the Manville Trust, one of 

the first major asbestos trusts, are revealing. In testifying before 

the Committee, Manville Trust’s general counsel, David Austern 

warned: 

[T]here is almost no likelihood that as many as 85% of 

the nonmalignant claims filed pursuant to S. 1125 will 

qualify only for Level I (the non-paying medical monitoring 

category). Our best estimate * * * is that over two-thirds 

and as many as three-quarters of the nonmalignant claims 

197 

18Letter from David Austern, General Counsel to the Manville Trust, to Rebecca Seidel and 

J. Edward Pagano, Committee on the Judiciary, October 9, 2003, emphasis added. 19 Charles E. Bates, Ph.D., ‘‘Expert Report,’’ Prepared for Babcock & Wilcox Insurers Joint Defense Group, August 18, 2003. 20Letter from Douglas Holtz-Eakin, Director, Congressional Budget Office, to Senator Orrin 

G. Hatch, April 24, 2004, at 1–2. 21Peterson testimony at 4. 22Letter from Robert A. Falise, Chairman and Managing Trustee, Manville Personal Injury 

Settlement Trust, October 21, 2003. 

filed pursuant to S. 1125 will qualify for compensation at 

Level II or higher.18

It should be noted that, while the criteria in S. 852 for malignant 

lung cancer claims has changed from the criteria in S. 1125 and 

S. 2290, the criteria for non-malignant claims has not been disturbed. Moreover, an insurance study of 225,000 claims filed in the 

Babcock and Wilcox bankruptcy also contradicts CBO’s previous estimates. This study found that 70 percent of nonmalignant claims 

would qualify for payment under the criteria of S. 852 at Level II 

or higher.19

Additionally, CBO’s previous assumptions did not take into account claims that have arisen in 2003 and 2004.20 CBO assumes 

that the Trust Fund will receive 300,000 claims arising before 

2005, which is the same number of claims that all parties have accepted as pending at the end of 2002 in their analyses made since 

early 2003. CBO’s 2004 forecasts include no new claims filed in 

2003 and 2004, even though substantial numbers of claims arose 

in those years. The Manville Trust alone has received about 

120,000 claims in those two years, including over 6,700 new claims 

for mesothelioma.21

Historically, assumptions regarding future asbestos claims have 

proven exceedingly inaccurate. For example, during 1986, expert 

claims forecasters testified in the Manville bankruptcy court that 

between the late 1980s and 2049, the Manville Trust would receive 

between 83,000 and 100,000 claims.22 The Manville Trust began 

operations in 1988, yet as of today, only 17 years later, the Manville Trust has received over 620,000 claims. 

During 2001, the Manville Trust commissioned the fourth future 

claims forecast it has undertaken during its history. That forecast 

predicted that by 2049 the Manville Trust would receive between 

750,000 and 2.7 million claims, in addition to the nearly 620,000 

claims it had already received. 

Likewise, S. 852 is predicated on calculations from numbers that 

are literally impossible to ascertain. The actuarial estimates are 

educated guesses, at best, and thus now provide broad ranges of 

potential future claims. Currently the Manville Trust is paying 

mesothelioma victims only $17,500, instead of the $1,050,000 it 

predicted at its inception. It is now apparent that the guessing 

game of 1988 did not work. What, if anything, will prevent the program envisioned in S. 852 from becoming another Manville debacle 

when the methods used by the actuaries to calculate the Trust 

Fund has not changed? 

The CBO’s 2004 letter noted that if the number of non-malignant 

claims qualifying for payment at Level II or higher exceeds their 

projections by only five percent, it could increase costs by $10 billion. CBO also stated: ‘‘Small changes in other assumptions—inVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00197 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
198 

23 Nickles letter, April 20, 2004, at 5. 24Dr. Peterson was a founding member of the RAND Corporation’s Institute for Civil Justice, 

has worked for four District and Bankruptcy Courts as an expert, and has served as ‘‘Special 

Advisor to the Courts’’ for the Manville Trust for over 14 years. 25Peterson testimony at 3. 26Statement of Mark A. Peterson Before the Senate Judiciary Committee Hearing of S. 852 

‘‘Fairness in Asbestos Injury Resolution Act of 2005,’’ p. 6. April 26, 2005. See Table 3. 27Statement of Mark A. Peterson Before the Senate Judiciary Committee Hearing of S. 852 

‘‘Fairness in Asbestos Injury Resolution Act of 2005,’’ p. 6. April 26, 2005. 

cluding such routine variables as the future inflation rate—could 

also have a significant impact on long-term costs.’’ 23 Unfortunately, 

future claimants will suffer greatly if the current calculations again 

prove inaccurate. Since the bill has no provisions to increase the 

total amount of funding for the Trust Fund, future claimants are 

likely to face decreased benefits or a bankrupt Trust Fund. Congress should not knowingly enact bill with so many uncertainties. 

Finally, we note that asbestos is still not banned in the United 

States. This means that today, many more thousands of workers 

and others continue to be exposed to this deadly substance. According to the Occupational Safety and Health Administration, 1.3 million workers are currently being exposed to asbestos. Consequently, 

there is major uncertainty as to how many victims there will be in 

the future and whether the Trust Fund will be able to compensate 

them. 

Moreover, the Trust Fund has a proposed life of only 30 years. 

Thus, it is a cruel reality that people who are being exposed today 

and in the future will have no source of compensation for asbestosrelated injuries they suffer after the Trust Fund’s demise in 30 

years, or perhaps even sooner. 

2. Up-front funding is inadequate 

As noted, S. 852 contemplates up-front funding of approximately $42 billion in the first five years. According to the testimony of Dr. 

Peterson before this Committee,24 the Trust Fund will face between 15,000 and 19,000 mesothelioma claims at its inception. 

Based on the proposed awards values in the bill, these claimants 

alone will be entitled to approximately $20 billion of the up-front 

funding at inception. Simply put, the monies will not be there. Dr. 

Peterson also estimates it will take at least two years to establish 

the bureaucracy required to administer the Trust Fund, and that 

it will not contain sufficient assets to pay the pending claims until 

2011 or 2012 at the earliest.25

Dr. Peterson testified that the Trust Fund will have to pay tens 

of billions of dollars of interest under every set of assumptions.26

He stated that: 

The Fund’s interest costs exceed $57 billion for all models except CBO’s original, optimistic forecast when it is 

coupled with the assumption that revenues will arrive precisely on time and in the amounts specified in the Act. Except for this single, extremely optimistic model, over 40% 

of the $140 billion that is supposed to be paid asbestos 

claimants would instead go to service the Trust Fund’s 

enormous indebtedness. For seven of the fifteen simulations, half or more of the $140 billion will be spent on interest.27

199 

28Statement of Mark A. Peterson Before the Senate Judiciary Committee Hearing of S. 852 

‘‘Fairness in Asbestos Injury Resolution Act of 2005,’’ p. 6. April 26, 2005. 29Peterson testimony at 3. 30Peterson testimony at 3. 

Dr. Peterson concluded his testimony by warning that: 

[U]nder the assumptions of both supporters and opponents, using realistic and rosy assumptions, the FAIR Act 

will fail. In failing the Act will impose great risks and 

costs on taxpayers, it will exacerbate the circumstances for 

asbestos defendants and insurers and will provide no compensation for the vast majority of asbestos victims. The 

Act is an empty promise to both sides of the asbestos litigation and it is fiscally irresponsible.28

A lack of necessary up-front funding from the corporate defendants and insurers will necessitate massive borrowing by the Trust 

Fund to pay pending claims. Using CBO’s model for up-front funding needs, it appears that interest payments alone could equal $49 

billion, which is 35 percent of the total amount of the Trust 

Fund.29 Yet, Dr. Peterson testified that $49 billion in interest is a 

best case scenario. He believes interest payments will certainly exceed $57 billion and could exceed $76 billion, under 15 different 

models which simulate claims filings under the Trust Fund.30 The 

reality is that more money could go to interest payments than to 

victims. Why would Congress create such a poorly-designed program that is sure to fail? 

3. Resulting additions to the budget deficit and taxpayer burden 

Notwithstanding any assurances by the bill’s sponsors, it seems 

clear that S. 852 will require major Federal financial assistance. 

The bill already allows for massive borrowing from the Federal government, including over $40 billion in the early years. Many observers are skeptical that private borrowers will lend this money 

to the Trust Fund, and expect that Federal Government will become the principal lender to the Trust Fund. 

The borrowing allowed by the bill includes generous terms, including allowing repayment to be made decades later. Yet, because 

of the unstable funding mechanisms in the bill, there is a strong 

potential that these funds borrowed from the U.S. government or 

elsewhere will never be repaid. Moreover, given the strong likelihood of the program’s failure—which even the bill’s supporters acknowledge is a possibility—Federal taxpayers may absorb costs 

much higher than even the borrowed amounts. 

Congress’ recent experience with another national compensation 

fund is an example of what could go wrong. The Black Lung Fund 

was designed to compensate coal miners with pneumoconiosis on a 

no-fault basis. Within a few years, however, the Department of 

Labor was granting awards in only 8 percent of cases while the Social Security Administration paid 70 percent. Despite the large 

number of denials, $8 billion in claims was paid during the first 

five years. Yet, prior predictions had pegged the total cost of the 

200 

31Peter S. Barth, Professor Emeritus, The University of Connecticut, ‘‘Commentary on the 

Creation of a Fund for Victims of Asbestos Caused Diseases’’, February 15, 2005. Available at 

www.usaction.org 

fund between $1.5 and $3 billion.31 The real number of claims necessitated a massive government bailout of tens of billions of dollars. 

One of the reasons for this massive failure is that the corporate 

interests who sought the legislative solution relied upon the Federal program to substantially reduce their own costs, not just to 

settle claims and to seek finality. This is the same scenario we are 

facing with asbestos corporate defendants and insurers who are advocating for S. 852. 

B. Unanimously adopted medical criteria abandoned 

In the many years that this Committee has deliberated on creating an asbestos Trust Fund, no single provision received more 

broad bipartisan support than the medical criteria agreed upon by 

this Committee in 2003. These criteria were carefully worked out 

by Senators Hatch and Leahy with the help from expert medical 

advisors provided by both businesses and labor unions. When presented to the Committee during its consideration of S. 1125, this 

bipartisan medical criteria amendment was approved unanimously 

and hailed by all sides as a major constructive step. This bipartisan 

criteria amendment became the bedrock of the bill, and in all of the 

legislative proposals put forth since, the criteria remained unchanged, until now. S. 852 for the first time abandons the bipartisan consensus on medical criteria, leaving these lung cancer victims with no remedy. 

1. Exclusion of lung cancer victims with substantial asbestos 

exposure 

While S. 852 purports to establish a compensation fund for all 

victims of asbestos- induced disease, it excludes tens of thousands 

of lung cancer victims who have had more than fifteen years of 

substantial occupational exposure to asbestos. These severely ill individuals were included in previous versions of the trust fund bills, 

S. 1125, and S. 2290, from the last Congress. Under S. 852, they 

are denied any compensation from the Trust Fund and barred from 

pursuing their claims in court. 

The consensus medical criteria in S. 1125 recognized three categories of lung cancer victims, all of whom would have been eligible 

for compensation from the Trust Fund: 

1. Malignant Level VII—lung cancer victims who had 15 or 

more weighted years of exposure to asbestos; 

2. Malignant Level VIII—lung cancer victims who had 12 or 

more weighted years of exposure to asbestos and evidence of 

bilateral pleural plaques, or bilateral pleural thickening or bilateral pleural calcification; and 

3. Malignant Level IX—lung cancer victims who had 10 or 

more weighted years of exposure to asbestos and evidence of 

asbestosis. 

Asbestos exposure is a probable cause of the lung cancers in all 

three categories. Each category required evidence of a causal link, 

with more extensive evidence required at higher levels. Those lung 

201 

32Testimony of Dr. Philip J. Landrigan, MD, Professor of Occupational and Environmental 

Medicine, The Mount Sinai School of Medicine, Before the Senate Committee on the Judiciary, 

‘‘Hearing on a Bill to Create a Fiar and Efficient System to Resolve Claims of Victims for Bodily 

Injury Caused By Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005; See 

also Testimony of Dr. Laura Welch, Medical Director, Center to Protect Worker Rights, Before 

the Senate Committee on the Judiciary, ‘‘Asbestos: The Mixed Dust and FELA Issues,’’ 109th 

Cong. February 2, 2005, at 8. 33Landrigan testimony at 117–119. 

cancer victims in Malignant Level VII were required to show a 

greater number of years of weighted exposure to asbestos since 

they could not show scarring from non- malignant asbestos disease 

on their lungs. They were also required to go through an individual 

case review before a panel of physicians to verify that asbestos was 

a contributing factor to their disease. Those victims qualifying 

under Level VII would have received a lower level of compensation 

than those who could demonstrate either pleural thickening or asbestosis. That was a reasonable way to proceed. 

Unfortunately, S. 852 rejects the consensus medical criteria and 

completely eliminates compensation for the lung cancer victims in 

the original Malignant Level VII. (S. 852 renumbers the original 

Level VIII as Level VII, and the original Level IX as Level VIII.) 

It denies these victims all relief despite the fact that they had very 

extensive occupational exposure to asbestos over a long period of 

time. They are excluded despite the testimony of two distinguished 

medical experts—Dr. Laura Welsh and Dr. Philip Landrigan—that 

prolonged exposure to asbestos can cause lung cancer even if the 

victim does not also have markers of nonmalignant asbestos disease. In their testimony,32 they cited numerous medical authorities 

supporting their position. They even described their experience 

treating lung cancer victims whose disease was caused by asbestos 

but who had neither pleural thickening nor asbestosis. 

Dr. Landrigan, a nationally recognized expert in this highly specialized field of occupational medicine, testified at the Committee’s 

April 26, 2005 hearing: 

Fibrosis is not on the critical pathway to the development of lung cancer. Or to say that in plain English, a person does not need to have asbestosis, who has been exposed to asbestos, to develop lung cancer. The development 

of fibrosis is one pathological process; the development of 

a cancer is a second pathological process. The occurrence 

of asbestosis, either parenchymal or pleural, is most certainly a marker of exposure but it is not an inevitable precursor of the development of cancer * * * 

I am very much concerned by the elimination of what 

was previously called Category VII, the person who had 

lung cancer without fibrosis. I feel that setting aside the 

estimated 40,000 people that fall into that category is 

going to result in people who truly have lung cancer that 

was caused by asbestos being denied compensation 

*** 33

At a later point in the hearing, he reemphasized this point: 

In our very large occupational medicine practice at 

Mount Sinai, we have seen cases * * * of lung cancer in 

asbestos workers with many years of substantive exposure 

202 

34Landrigan testimony at 177. 35Statement of Dr. Philip J. Landrigan, Before the Senate Committee on the Judiciary, ‘‘Hearing on a Bill to Create a Fair and Efficient System to Resolve Claims of Victims for Bodily Into asbestos, as defined in the bill here, who have developed 

lung cancer who had no asbestosis visible on x-ray. I edit 

the American Journal of Industrial Medicine. I have for 

more than 15 years been editor-in-chief, and we have published cases of lung cancer in asbestos workers who had no 

radiographic evidence of asbestosis. 

Going beyond our own experience at Mount Sinai, I refer 

you to the Scandinavian Journal of Work, Environment, 

and Health, arguably one of the three or four best journals 

internationally in the field of occupational medicine * * * 

It says right in here, a direct quote from page 6 of this article, ‘‘Heavy exposure (to asbestos), in the absence of radiological-diagnosed asbestosis, is sufficient to increase the 

risk of lung cancer,’’ a direct quote.34

While there are some doctors who hold a contrary view, we believe that the clear weight of the evidence supports the conclusion 

that asbestos can be a substantial contributing factor to lung cancer in persons who were exposed to high levels of asbestos over 

long periods of time, even if they do not also have visible markings 

from nonmalignant asbestos disease on their lungs. Certainly, all 

of those lung cancer victims should not be categorically excluded 

from seeking compensation under the Trust Fund as a matter of 

law. The Trust Fund should be authorized to consider their claims 

for relief and provide appropriate compensation, as it was under S. 

1125. In a situation where people are undeniably severely ill and 

undeniably had 15 or more years of weighted exposure to asbestos, 

it is terribly unjust to legislatively deny them all opportunity for 

compensation. 

One of the arguments we hear most frequently in favor of creating a Trust Fund is that in the current system, too much money 

goes to people who are not really sick and too little goes to those 

who are seriously ill. Lung cancer victims who have years of exposure to asbestos are the ones who are seriously ill. They are the 

ones this bill is supposed to be helping. Yet, they are being completely excluded. 

The rationale given by those who oppose inclusion of the Level 

VII lung cancer victims is that their disease is more likely to have 

been caused by smoking than by asbestos exposure. This argument 

does not withstand scrutiny. 

First, all Level VII lung cancer victims are removed from eligibility under the Trust Fund, even those who were nonsmokers. Victims with 15 or more weighted years of exposure to asbestos who 

had never smoked are denied compensation by S. 852. Their ineligibility obviously cannot be justified based on the relationship between asbestos and smoking. 

Second, Dr. Landrigan testified that smokers who have substantial exposure to asbestos have 55 times the background risk of developing lung cancer, while smokers who were not exposed to asbestos have 10 times the background risk of developing lung cancer.35 This relationship is well-established. Similar findings are 

203 

jury Caused by Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005, at 

2. 36 ‘‘The Health Consequences of Smoking: Cancer and Chronic Lung Disease in the Workplace,’’ Report of the Surgeon General, U.S. Department of Health and Human Services, at x. 

(1985) 

documented in the Surgeon General’s 1986 Report on Cancer in the 

Workplace, which determined that smokers with asbestos exposure 

have a 50-fold increased risk of developing lung cancer, while the 

risk from smoking alone was only ten times.36 Clearly, the asbestos 

exposure makes a huge difference. 

There is a powerful synergistic effect between asbestos and tobacco in the causation of lung cancer. Both are substantial contributing factors to the disease. We agree that a lung cancer victim 

with substantial asbestos exposure who smoked should receive less 

compensation from the Trust Fund than a nonsmoker with lung 

cancer. That principle appears throughout the bill. But smoking is 

not a valid reason to exclude the victim from all compensation, 

when he or she also had substantial asbestos exposure. 

Asbestos and tobacco companies are analogous to joint 

tortfeasors. Each is partly responsible and each should pay a proportionate share of the compensation. The involvement of one 

tortfeasor does not absolve the other tortfeasor from all responsibility. Without prolonged exposure to asbestos, the smoker would 

have been far less likely to contract lung cancer. 

The real reason for eliminating the Level VII lung cancer victims 

was not medical science, it was money. Precisely because there are 

tens of thousands of lung cancer victims in this category, the cost 

of compensating them is high. The inadequate scope of this bill was 

dictated by how much money the corporate defendants and insurers were willing to pay. Instead of first determining the cost of fairly compensating all the seriously ill victims of asbestos-induced disease and then setting the size of the Trust Fund at a level that 

would meet the need, the reverse was done. The $140 billion size 

of the Trust Fund was negotiated with the business community 

first, and then the medical criteria were narrowed to fit within the 

available funding. The result is that many deserving victims—including tens of thousands of lung cancer victims—are denied compensation. 

During Committee consideration, Senator Kennedy offered three 

amendments to address this glaring deficiency in the bill. The first 

would have restored the eligibility for compensation of lung cancer 

victims with fifteen or more weighted years of exposure to asbestos. 

When that proposal was rejected, Senator Kennedy offered a second amendment that would have provided for a study by the Institute of Medicine ‘‘to determine whether there is a causal link between asbestos exposure and lung cancer for individuals who have 

had substantial exposure to asbestos but have no evidence of bilateral pleural disease or of asbestosis.’’ If the IOM report determined 

there was substantial scientific evidence demonstrating a causal relationship between asbestos exposure and these lung cancers, the 

Administrator of the Trust Fund was directed to establish an additional eligible disease category to compensate them. 

The Committee also rejected the proposal for an IOM study, vividly illustrating that the reason for excluding the lung cancer vicVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00203 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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37Landrigan testimony at 2. 

tims in the original Malignant Level VII from the Trust Fund was 

not medical but monetary. If the majority of the Committee really 

wanted the best scientific determination of whether a causal link 

exists between asbestos exposure and these lung cancers, they certainly would have approved this amendment. The amendment’s defeat shows that the prime motivation of the supporters is to keep 

the cost of claims against the Trust Fund below the arbitrary financial ceiling that had already been negotiated with the corporate 

defendant and insurers who want this bill. 

Senator Kennedy’s third amendment would have preserved the 

right of these lung cancer victims to seek compensation through 

the judicial system since they were being excluded from the Trust 

Fund. This, too, was rejected. In essence, these severely ill victims 

who have had very substantial exposure to asbestos are being told 

to suffer in a legally imposed silence with no recourse whatsoever. 

If S. 852 is not going to provide compensation for these lung cancer victims under the Trust Fund; justice requires, at the very 

least, that the bill not foreclose their right to seek compensation in 

the courts. They have that right today, and their cases have real 

value. 

When the victim has had substantial asbestos exposure and was 

not a smoker, the likelihood that the lung cancer was caused by asbestos is very high. When the victim has had substantial asbestos 

exposure and also smoked, the likelihood is that both contributed 

to the lung cancer. The interaction of asbestos exposure and smoking greatly increases the probability of lung cancer beyond the risk 

posed by either substance individually. 

As noted earlier, a smoker who was never exposed to asbestos 

has 10 times the background risk of developing lung cancer. A 

smoker who had substantial exposure to asbestos has 55 times the 

background risk of developing lung cancer.37 Clearly, asbestos exposure makes a very substantial difference. The two substances 

are, in essence, joint tortfeasors in causing the disease. Those responsible for the asbestos exposure are partially liable for the lung 

cancer, and are obligated to compensate the victim accordingly. 

S. 852 as written would take away the right of those victims to 

bring their cases to court, while providing them no right to recover 

from the Trust Fund. Congress has the right to substitute one remedy for another. But, it does not have the right to arbitrarily foreclose the existing remedy and provide no new remedy in exchange. 

To do so violates fundamental principles of due process. It is not 

only morally wrong, it is legally wrong. 

If the Trust Fund does not provide a remedy for a certain class 

of asbestos victims, then it cannot be the exclusive remedy for that 

category of claim. Victims who are categorically excluded from compensation under the Trust Fund cannot be precluded from seeking 

compensation in the judicial system. That principle is well established. 

Similar issues have arisen in a number of states regarding the 

scope of their workers’ compensation statutes. Two recent state supreme court decisions illustrate this principle. The Oregon Supreme Court addressed this issue in the case of Smothers v. GreshVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00204 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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am Transfer, Inc., 332 Ore. 83 (2001). The court ruled that a person with work-related injuries that were not compensable under 

the state’s workers’ compensation laws had a right to bring a civil 

action in the courts. Even though the statute provided that the 

workers compensation system was to be the exclusive remedy for 

work-related injuries, it could not deprive an injured worker of his 

remedy in court when it was not providing an alternative remedy 

for that worker in the administrative system. 

The Virginia Supreme Court came to a similar conclusion in 

Adams v. Alliant Techsystems Inc., 261 Va 594 (2001). It held that 

the Virginia Workers’ Compensation Act does not bar a plaintiff 

from bringing a common-law cause of action against his employer 

to recover damages for hearing loss resulting from cumulative trauma when such a hearing loss was not a compensable injury or disease under the Act. 

The same principle applies here. Lung cancer victims with substantial exposure to asbestos who are categorically ineligible for 

compensation under the Trust Fund should not be precluded from 

seeking a remedy in the courts. If these victims can prove a causal 

link between asbestos exposure and their disease, they should be 

able to receive compensation through the courts in the future, just 

as they can today. That is only fair. Due process and fundamental 

principles of justice require nothing less. 

Raising standard to ‘‘substantial contributing factor’’

A second major change in the consensus medical criteria made 

by this bill relates to the standard of proof which victims must 

meet to receive any compensation. Each of the medical criteria has 

been changed from S. 1125 to require the worker to prove that asbestos was a ‘‘substantial contributing factor’’ to his disease, rather 

than ‘‘a contributing factor.’’ This will raise the bar even higher for 

injured workers. 

It is a significant increase in the burden they must overcome to 

qualify under the Trust Fund. There is no question that the change 

was made to make it harder for victims to receive compensation. 

Rather than having to show that asbestos exposure was ‘‘a contributing factor’’ to their illness, victims will now have to address the 

relative impact of asbestos and other potential factors. That hurdle 

will be difficult for many of them. 

The original standard requiring that asbestos be ‘‘a contributing 

factor’’ has a history. It is the proof standard used in most state 

worker compensation laws involving exposure to toxic substances. 

‘‘Workers’ Compensation Policy Review,’’ a respected journal in this 

area of law, stated in an article examining statutory compensability standards: 

Under traditional standards, for either an accidental injury or an occupational disease, a workers’ compensation 

claim is compensable if the work contributed to or aggravated a preexisting condition. That is, the general rule has 

been that the work does not have to be the sole, major, or 

206 

38Sara T. Harmon, ‘‘Statutory Compensability Standards.’’ Workers’ Compensation Policy Review, 1, 2 (2001): 15–28, at 15. 39John Crane, Inc. v. Jones, 604 SE 2d 822, 825 (2004). 

primary cause of a disability in order for the worker to receive workers’ compensation benefits.38

That is still the majority rule in state workers’ compensation 

laws and it is the standard we should enact for the Trust Fund in 

S. 852. 

Even in litigation, the victim only needs to prove that asbestos 

was a contributing factor to his disease. In a unanimous decision 

rendered just last year, the Georgia Supreme Court spoke to exactly this issue. The court considered and rejected the concept of 

elevating the standard of proof in asbestos litigation from ‘‘contributing factor’’ to ‘‘substantial contributing factor.’’ The court stated: 

It would be a departure from (tort law) analysis to add the 

requirement that the causal connection must be substantial * * * Once the term ‘‘substantial factor’’ is employed 

in the general negligence law vocabulary, there is the danger that it will be used not only to describe a general approach to the legal cause issue, but will turn into a separate and independent hurdle that the plaintiff will have to 

overcome in addition to the standard elements of a claim 

of negligence. So, too, has there been great difficulty and 

disparity in courts’ definition of ‘‘substantial factor * * * 

Thus, refusing to endorse the additional hurdle that 

each individual tortfeasor’s conduct must constitute a ‘‘substantial’’ contributing factor in the plaintiff’s injury in 

order to be considered a proximate cause thereof will neither subject defendants like John Crane to unjust liability 

nor open the floodgates of asbestos litigation.39

By adding ‘‘substantial,’’ the current language in S. 852 goes beyond what would be required to establish proximate cause in a 

court case. It would create, in the court’s words, ‘‘a separate and 

independent hurdle’’ that victims of asbestos-induced disease would 

have to overcome. Certainly, it should not be harder for a victim 

to receive compensation from the Trust Fund in a supposedly nofault system than it currently is in an adversarial court system. 

That is exactly what this bill will do—set a more burdensome 

standard to recover from the Trust Fund than to recover in the 

courts. That would go against the entire concept of a Trust Fund. 

It is unfair and unreasonable. 

The bill should not be erecting additional barriers to compensation under the Trust Fund. This is supposed to be a no-fault system. It is supposedly minimizing the need for each claimant to 

have an attorney, making the system non-adversarial. This language change—requiring proof of ‘‘substantiality’’—will make the 

process of qualifying for compensation much more complex than it 

should. It will create serious proof problems in many cases. Many 

victims will need to obtain legal representation to overcome this 

additional burden. 

The medical criteria in this bill retain the requirement from S. 

1125 that there be proof that the asbestos exposure was substantial. Many of the disease categories require a minimum number of 

207 

40Dr. Philip J. Landrigan, April 26, 2005 testimony before the United States Senate Committee on the Judiciary, pp. 3–4. 41 Id at p. 4. 

weighted years of exposure before the worker can even apply for 

compensation. But requiring substantial exposure is not the same 

as requiring that the exposure be a substantial contributing factor. 

Under the terms of the Trust Fund, the Administrator will know 

the victim is seriously ill, he had substantial exposure to asbestos, 

and his medical condition is consistent with asbestos- induced disease. That should be sufficient. Creating an additional hurdle for 

seriously ill workers to jump is inconsistent with the stated goals 

of the bill. 

During Committee consideration, Senator Kennedy offered an 

amendment to restore the ‘‘contributing factor’’ standard of proof 

contained in the consensus medical criteria unanimously adopted 

by the Committee in 2003. Unfortunately, it was defeated. The supporters of this bill seem intent on erecting new and difficult hurdles for injured claimants. That is wrong. 

3. Requirement for bilateral impairment not based on science 

In another example of how S. 852 is not based on sound medical 

science but rather on economic expediency, the bill’s medical criteria include a requirement of ‘‘bilateralism’’ that makes no sense. 

The bill is replete with references to the need for ‘‘bilateral’’ pleural plaques, ‘‘bilateral’’ thickening, ‘‘bilateral’’ calcification, and 

‘‘both lower lung zones’’ but nowhere in the bill is there an explanation for why both lungs of a victim need to be affected with asbestos-related injury. Neither can the sponsors of S. 852 explain 

why such a requirement is in the bill. 

On the contrary, medical experts have indicated that there is no 

medical or scientific basis for requiring both lungs to be impaired 

before a claimant can qualify under this bill. For example, Dr. Philip Landrigan of the Mount Sinai School of Medicine who testified 

before the Committee on April 26, 2005, stated: 

The requirement that pleural disease be bilateral to be 

considered the consequence of exposure to asbestos is not 

warranted by medical evidence. Asbestos-related scarring 

often develops unevenly and almost always begins unilaterally. Miller and Lilis showed a clear relationship between degree of pleural scarring and loss of FVC independent of whether the pleural changes were bilateral.40

Dr. Landrigan also testified that ‘‘requiring that the damage be 

bilateral, has no basis in biology or medicine.’’ 41 The only possible 

reason for including this is to make the medical criteria as tough 

as possible in order to limit the number of claimants who may 

qualify under the bill. 

On numerous occasions throughout the hearing and Committee 

consideration of the bill, Senator Durbin pointed out this illogical 

requirement, yet the language of the bill as passed by the Committee still contains this flaw. 

208 

42 ‘‘Diagnosis and Initial Management of Non-malignant Diseases Related to Asbestos,’’ American Thoracic Society, published in American Journal of Respiratory Critical Care Medicine, Vol. 

170, pp. 691–715, 2004. 43Landrigan testimony at 3. 44Landrigan testimony at 3. 

4. Other problems 

Under the revised medical criteria, asbestos-related cancers of 

the larynx, esophagus, stomach and colon may also receive no compensation. Each claim for such cancers must be reviewed by a physician’s panel which may deny compensation. Based on a future report of the Institute of Medicine, compensation for these cancers 

may be completely eliminated. 

Although the Committee has narrowed the medical criteria to 

prevent victims from receiving compensation, where the medical 

criteria are outdated and the scientific consensus of the American 

Thoracic Society suggests the criteria should be broadened, the 

Committee refused to do so. Currently, the criteria require 5 years 

of occupational exposure to qualify for non- malignant compensation. American Thoracic Society’s guidelines currently provide that 

5 years occupational exposure is not necessary for a diagnosis of 

non-malignant asbestos disease.42 In this regard, the medical criteria are too stringent and should be loosened. 

Another problem with the medical criteria is that some years of 

exposure are discounted and count for less than other years of exposure. Workers exposed after 1986 are required, as a practical 

matter, to have decades of exposure to asbestos before they can 

qualify for any compensation. For instance, ‘‘a person with lung 

cancer and pleural plaques who began occupational exposure to asbestos in 1974 would need 52 years of work exposure (through 

2025, or ‘until’ 2026) to meet the 12-year weighted exposure in the 

bill.’’ 43 Few workers will be able to show such long exposure, and 

this ‘‘discounting’’ of ‘‘weighted years’’ again seems an effort simply 

to restrict compensation to individuals, rather than rely on hard 

science.44

C. Requirement of occupational exposure 

Initially, S. 852 was crafted to compensate only those individuals 

who were clearly exposed to asbestos in the workplace. Reluctantly, 

the spouses and children of these workers, if they could prove a 

link to occupational exposure, were given some limited rights of recovery under the bill if they become ill. Then, the residents of 

Libby, Montana, were afforded special provisions under this bill. 

But, unfortunately, thousands of others who may develop asbestosrelated diseases have only been provided a weak study which will 

determine whether they can recover under S. 852. Again, the financial concerns of the defendants are overriding common sense and 

fairness. 

Why should people who have resided near asbestos processing 

plants for decades, and who have reported clouds of asbestos dust 

in their neighborhoods, or the use of donated asbestos- laden products in their yards or schools, be denied any right of recovery under 

the Trust Fund or through court? We believe that is unjust. 

These are individuals who may not have worked at these plants, 

but who lived near places that received 10,000 tons or more of asVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00208 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
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45See Environmental working group, ‘‘Asbestos Hot Sports,’’ April 26, 2005, available at 

www/ewg.org/issues/asbestos/20050426/hotspots.php. 46 As a matter of simple mathematics and the definitions in S. 852, every company in Tiers 

3–6 would be required to pay more over the next 30 years (and without the benefit of insurance 

to cover the claims) than each such company has paid over its entire history in asbestos litigation. Some Tier 3 and Tier 4 companies will pay into the proposed National Fund more than 

six times their historical expenditures in asbestos litigation, while many Tier 1 and Tier 2 companies who have much greater historical liability for asbestos claims will pay only a fraction 

of their historical expenditures. See Sections 201–203. 

One reason these lower tiers are paying more into the Fund than they (or their insurers on 

their behalf) have paid historically is because other, mostly larger corporations are paying less. 

Many of the Tier 2 companies have historic asbestos expenditure in excess of $100 million per 

year. These companies are reducing their liability from paying out $50–$200 million (or more) 

per company per year in the court system to no more than $27.5 million per year under the 

Trust. 

bestos materials from the Libby, Montana, mine over the past few 

decades. Now, they have been told they will only be able to pursue 

a claim against this criminally-indicted corporation if future air 

sampling shows asbestos exposure levels equal to those in Libby, 

Montana. In other words, Congress is seeking to set up an impossible standard—especially since most of these plants have been 

closed for a decade or more, and the Libby contamination level is 

far above the level that can cause asbestos diseases. Some individuals in these communities have already developed asbestos-related 

diseases without working in these plants, and they are barred by 

this bill from seeking redress in court. 

We believe fairness dictates that the residents of these other 

communities, which received 10,000 tons or more of asbestos or 

more of asbestos-containing material from Libby, Montana, should 

be afforded the same rights as those residing in Libby. 

The bill provides no rational basis for making the distinction between the residents of the following communities and residents of 

Libby: Beltsville, MD; Dallas, TX; Dearborn, MI; Denver, CO; 

Easthampton, MA; Edgewater, NJ; Ellwood City, PA; Glendale, AZ; 

Honolulu, HI; Los Angeles, CA; Marysville, OH; Minneapolis, MN; 

Minot, ND; New Castle, PA; New Orleans, LA; Newark, CA; 

Omaha, NE; Phoenix, AZ; Portland, OR; Portland, OR; Santa Ana, 

CA; Spokane, WA; St. Louis, MO; Tampa, FL; Trenton, NJ; 

Weedsport, NY; West Chicago, IL; Wilder, KY.45

D. Fairness among contributors 

Limiting funding to $140 billion creates a financial windfall for 

those corporations most vocally advocating for the Trust Fund. For 

example, Tier 1 defendants with pending bankruptcies would pay 

$25.9 billion to asbestos victims if their bankruptcies were completed; yet, under S. 852 they will pay only $5.6 billion. Similarly, 

a handful of Fortune 500 corporations will save billions under the 

Trust Fund, while many small businesses and others with limited 

asbestos liability exposure will pay more than their fair share.46

Based on the proposed payment Tiers in the bill, many medium 

and small businesses already have determined that the bill will impose higher costs on them than what they currently endure in the 

court system. Many of these businesses had adequately insured 

themselves against any asbestos liabilities. However, S. 852 will 

not allow the crediting of such insurance. Consequently, these entities will lose their insurance coverage under the bill without any 

compensation from the government, and in turn, will have to meet 

210 

47Letter from Coalition for Asbestos Reform to Senator Arlen Specter, January 3, 2005, at 

1 (emphasis added). 

the assessments that will be imposed on them to finance the Trust 

Fund. 

The constitutionality of this approach is expected to be a heavily 

litigated issue that may take years to resolve. Many of these businesses perceive the evisceration of their insurance premiums without due compensation as a Fifth Amendment Property Takings violation, and the new assessments as a tax on their businesses. 

In addition, S. 852 lumps asbestos ‘‘premises’’ defendants into 

the same contribution tiers and subtiers as asbestos ‘‘products’’ defendants. These two groups are treated as if there were no difference between them, even though the level of culpability for a 

company that manufactured asbestos is clearly higher than for one 

that, for example, merely had a boiler wrapped in asbestos on its 

premises. 

The Coalition for Asbestos Reform is a broad coalition of businesses and insurers who oppose S. 852. This group, which includes 

many small and medium businesses, has written to Chairman 

Specter on several occasions expressing their concerns about the 

bill. In a letter dated January 3, 2005, the group focused on two 

key weaknesses of the bill: 

The Allocation of Payment Obligations on Defendant 

Participants: As presently drafted, the Trust funding arrangement would impose payment obligations on our companies that would substantially exceed the asbestos-related costs we reasonably anticipate under the existing 

tort system, while simultaneously stripping many of us of 

our insurance coverage. Each of us can demonstrate that 

we would fare better under the existing tort and judicial 

system than under the proposed funding mechanism. Indeed, the proposed arrangement would impose inequitably 

large obligations on companies with limited asbestos-related liabilities. For some smaller companies, such obligations would mean bankruptcy. 

The Separation of Companies From Their Insurance Coverage: The proposed Trust funding arrangement would 

eliminate many companies’ rights to access long-held insurance assets; in some cases such rights would be eliminated even though the companies have insurance sufficient 

to address their current and projected asbestos liabilities. 

The abrogation of these insurance contracts for which premiums have been paid—and the transfer of those assets to 

the Trust—may well represent an unconstitutional taking. 47

In an April 6, 2005, letter to Chairman Specter, the group reiterated its concerns about the cost burdens on small and mediumsized businesses: 

Manifestly Unfair Allocation Formula: The formula for 

assigning mandatory payments is almost certain to be the 

direct cause of a number of bankruptcy filings for otherwise financially sound companies. Each version of the 

211 

48Letter from Coalition for Asbestos Reform to Senator Arlen Specter, April 6, 2005, at 1. 49See Peterson testimony at 3, 5. 50See Peterson testimony at 3, 5. Note: On October 2, 2003, the Congressional Budget Office 

estimated there were 300,000 claims pending, without counting claims arising in 2003 and 2004. 51See Peterson testimony at 3, 5. 

FAIR Act has increased the payment burden on defendant 

companies, and has based each company’s ability to pay on 

its historic asbestos defense costs. These allocations— across all tiers of the FAIR Act—fail to recognize that 

many defendant companies have paid only insurance premiums related to asbestos defense, and would be obligated 

to make payments to the Trust Fund that far exceed their 

anticipated liabilities under the current tort system. By 

shifting the burden of paying for asbestos claims from the 

companies with the greatest asbestos exposure to a host of 

other businesses—including many small and medium sized 

entities—the bill creates a substantial likelihood that a 

cascading series of defaults will rapidly lead to the insolvency of the Trust Fund * * * 48

Moreover, if the Trust Fund does become insolvent as many believe it will,49 employers will face a return to the court system 

without the benefit of their insurance coverage. Under the bill, they 

must continue to make contributions to the Trust Fund for the 

final twenty-plus years to pay off the bonds. Since the post-sunset 

court claims will be paid out of pocket, a torrent of bankruptcies 

will surely follow. 

E. A risky startup 

The funding shortfall is most acute in the early years of the 

Trust Fund when the 400,000 to 500,000 pending claims will be immediately transferred to the Trust Fund for payment.50 Rather 

than make defendants and insurers actually pay the costs of the 

Trust Funds’ early years, S. 852 relies on borrowing against the 

Trust Fund’s future assets to pay present claims. Interest costs 

generated by this early borrowing will be huge, representing a significant reduction in the monies available to pay claims.51 We are 

skeptical that private borrowers will lend this money to the Trust 

Fund, and expect the Federal government will become the principal 

lender to the Trust Fund. 

This concern about the Trust Fund’s viability during the start up 

was raised at the Committee’s April 26, 2005, hearing by Professor 

Eric Green of Boston University Law School, who serves as a courtappointed Legal Representative for future asbestos claimants in 

four asbestos-related bankruptcy proceedings and as a Special Master in several major state and federal court asbestos cases: 

The delays that are all but built into the Bill are especially troublesome because the Fund will face a tremendous backlog of claims and a correspondingly burdensome 

payment obligation in its early years * * * Given the 

number of estimated pending claims against all companies, 

by its fourth year the Fund would need to borrow $50 billion to meet its liabilities—an amount that is approxi- mately $10 billion more than the maximum permitted 

under the Bill. Such a loan would cause all future conVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00211 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
212 

52Testimony of Eric Green, Before the Senate Committee on the Judiciary, ‘‘Hearing on a Bill 

to Create a Fair and Efficient System to Resolve Claims of Victims for Bodily Injury Caused 

by Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005, at 9–10. 

tributions—assuming they are timely made—to go to debt 

service. The Fund’s liabilities will outstrip its revenues 

from the beginning. 

For the Fund to be economically feasible, the precise 

contributions must be determined before its enactment, 

and binding commitments must be obtained from the contributing firms. Currently, these do not exist. A substantial number of expected contributors from industry and insurance are on public record as rejecting any commitment 

to Fund the bill. Their resistance will result in years of 

post-enactment rancor, controversy, and litigation. The 

delay and uncertainty that will dog the Fund under the 

current Bill should not be accepted, since the intended 

beneficiaries of the Bill, asbestos victims, will be made to 

wait still longer for compensation, while their conditions 

worsen, their medical costs increase, and their number escalates. 

Absent a federal guarantee, the Bill’s uncertain funding 

and weak enforcement provisions shift onto the backs of 

the sick and needy asbestos victims, especially those in the 

future, the risk of delay and failure.52

F. Lack of transparency 

S. 852 continues to lack transparency regarding who the participants will be and what they will be required to contribute. While 

this bill, in some areas, such as the medical criteria and the claims 

values, is very specific, in other areas, such as funding requirements, it remains frustratingly vague. In fact, the bill does not require a specific determination of the amounts to be paid, by whom, 

or when, until after the Trust Fund is up and running. 

This order of events is clearly backward. As Senators charged 

with understanding and voting on this bill, we need to know—not 

just estimate, assume, or guess—that this Trust Fund will have the 

assets to work before it forcibly removes people from the courts 

where they currently have the right to seek compensation. 

Because asbestos victims will be losing their common law right 

to a trial by their peers, they at least deserve to know that the 

Trust Fund will have adequate funds to compensate them. How can 

we even begin to assure them of this fact if we do not even know 

how much various companies are really going to pay into the Trust 

Fund? 

When we repeatedly asked for this crucial information, we did 

not receive it. For this reason, Senator Biden offered an amendment in Committee to require the application of the transparency 

provisions already in the bill—which determine who is paying how 

much, and therefore whether there really will be as much money 

as is currently assumed—before the Trust Fund goes into effect. 

The amendment would have ensured that there is a responsible, 

viable funding plan in place and that the Trust Fund will really 

work. After all, who would start a $140 billion business without a 

specific, viable financial plan? Unfortunately, proponents of the bill 

213 

refused to acknowledge this weakness in the bill, and defeated the 

amendment. 

The bill would bring within its ambit thousands of small companies that are not even aware they will be expected to pay into the 

Trust Fund. A number of companies have already announced their 

plans to sue to prevent any assessments or taking of their property 

and resources. The challenges by these businesses alone could keep 

the program mired in litigation for several years. 

Unfortunately, the proposed formulas for determining the 

amounts that defendant corporations and insurance companies will 

pay provide no guarantee that the payments will produce the proposed $140 billion in overall funding, or the annual contributions 

of $5 billion. In fact, the payment formulas for insurance companies will not even be determined until after enactment of the bill. 

Nor are there sufficient enforcement provisions in the Act to ensure 

the parties contribute their required sums. 

G. A sunset in name only 

A guiding principle for us in considering asbestos litigation reform bill has always been to make sure that victims are treated as 

well as possible given the constraints of a Trust Fund system. A 

second guiding principle has been that, if the Trust Fund fails to 

operate as promised, the victims’ rights should be restored to their 

status under the common law system; they should exit a failed system no worse off than they entered it. 

Supporters of this bill have recited the ‘‘need for certainty,’’ that 

is, the need to know that (1) they will pay a set amount of money 

into the Trust Fund, and (2) they will not be subject to the vagaries 

of litigation down the road. We believe that asbestos victims are 

entitled to the same certainty as corporations and insurers. 

It is for this reason that Senator Biden offered an amendment 

during the Committee’s deliberation of S. 1125 in the last Congress 

to create a sunset of the Trust Fund if it ran out of money. That 

amendment, which passed the Committee with the largest bipartisan majority of any amendment during that markup session, provided that if the Trust Fund ever failed to pay 95 percent of its 

claims value, or 95 percent of its claimants, the Trust Fund would 

sunset and victims would return to the court system from which 

they had been removed. 

S. 852 includes a ‘‘sunset’’ provision, but it is a sunset in name 

only. Under the new provision, if the Administrator of the Trust 

Fund thinks that there will be a shortfall of monies in the Trust 

Fund, he—an individual with a vested interested in maintaining 

the solvency of Trust Fund—can recommend any number of measures to salvage the Trust Fund. These include lowering the award 

values or making the medical criteria even more stringent. Under 

either scenario, victims of asbestos disease would do even worse 

under the revised Trust Fund than they would under the law as 

enacted. 

During this year’s consideration in Committee, Senator Biden offered an amendment to ensure that the Administrator could not 

save the solvency of the Trust Fund on the backs of the victims. 

Specifically, the Administrator would have been limited to two options: (1) sunsetting the Trust Fund to permit victims to return to 

214 

53S. Rep. No. 109–118, at 198 (2003) 

court; or (2) raising more money from those making contributions 

to the Trust Fund, so the program could remain operational. 

In addition, the Biden amendment would have required not 

merely a vague analysis of the Trust Fund by the Administrator; 

it would have required the Administrator to certify his findings, 

not unlike the requirements of corporate executives under the Sarbanes-Oxley corporate accountability law and similar laws. 

Also, while the sunset in the bill would return cases only to federal court, the state court where the exposure occurred, or the state 

court where the claimant resides—a provision far more restrictive 

than the current laws allow, Senator Biden’s amendment would 

have permitted a return to the state court where the defendant is 

headquartered or has its principal place of business, or the state 

court of any state where the defendant has at least 10 percent of 

its employees or conducts 10 percent of its sales. 

Thus, this year’s Biden sunset amendment was a far cry from 

what this Committee adopted two years ago. It was significantly 

weaker, a compromise. Yet, it was still defeated. 

The key concept adopted by the Committee in the last Congress—that the Trust Fund must terminate and permit victims to 

return to court if it does not pay substantially all of its claims—

has been abandoned. We believe Chairman Specter was correct two 

years ago, when he spoke forcefully in favor of a mandatory, selfexecuting sunset: 

We are taking away a right to jury trial, which is very 

substantial, it is a fundamental right, and I think in the 

interest of the workers who are injured and not being compensated that it is a tough balancing act * * * But I want 

to be sure, Mr. Chairman, that if the companies do not put 

up the money or whatever point the Trust is out of money 

and there is no more money to be collected by injured people, at least at that stage, they have access to the courts. 

Unfortunately, under the current sunset formula, claimants are likely to be stuck in a faltering system while the 

Administrator seeks to stiffen the medical criteria and/or 

reduce the compensation for claimants. Since Congress will 

have to approve these recommendations, we had better be 

prepared to re-open this debate in the next several years. 

Maybe then my colleagues will see the wisdom of encouraging increased contributions to the Fund by including a 

real sunset provision in the Act.53

In addition, the chaos that would result if there was, in fact, a 

sunset and assets had to be redistributed back to the current bankruptcy trusts is not addressed by the bill. Given that these existing 

trusts would have been completely shutdown (assuming the bill 

survived constitutional challenge) it would take years to reconstitute them. 

As Professor Green testified: 

In its current form, the Bill requires that all the monies 

now held in Trust for current and future claimants be 

transferred to the national fund. This transfer would cause 

215 

54Statement of Eric Green, Before the Senate Committee on the Judiciary, ‘‘Hearing on a Bill 

to Create a Fair and Efficient System to Resolve Claims of Victims for Bodily Injury Caused 

by Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 2005, at 11–12. 55 It bears noting, however, that not all values have increased. The consensus value included 

in draft bill for Category II with $35,000 but was inexplicitly lowered to $25,000 in S. 852. In 

addition, while the claims value for mesothelioma victims has been increased by a meager 

$25,000 from S. 2290, in real terms, that is a reduction in value. See http://www.aier.org/cgiaier/colcalculator.cgi. Thus, the lowest and highest categories of claims values have been reduced by S. 852 as compared to earlier versions of this bill, and they are far below what victims 

would receive in the court system. 

the existing Trusts, with assets in the billions, to be shut 

down. The hundreds of skilled employees around the country who have been processing claims would be fired. In 

some cases, those Trusts and their claims processing units 

have been adjusting claims for nearly twenty years with 

considerable expertise. For the sake of efficiency and 

economies of scale, many of the Trusts have combined facilities * * * 

If the national fund’s projected shortfall becomes a reality, then the Trusts that exist today are to be revived. 

But it will take tens of millions of dollars to recreate what 

already exists in the private sector today. The Trusts’ claims adjustment facilities will have been dismantled, 

their claims adjusters fired, their Trustees discharged, and 

their final tax returns filed. The Bill provides no practical 

transition plan to enable claimants to go back to the tort 

system or to the Trusts.54

H. Inadequate claims values 

The principal argument of supporters, that S. 852 represents an 

improvement over S. 1125, rests on the idea that claims values 

have been increased and subrogation has been prohibited to preserve the value of awards for the victims. These are certainly positive steps. However, many of the compensation values, especially 

for the most seriously ill victims, are still too low. The victims in 

many cases will receive less than they would get in court today, 

even after attorney’s fees are deducted.55

Further, new medical treatments for mesothelioma are now 

being implemented. These treatments are very expensive. As medical costs for mesothelioma victims increase, their awards under 

the Trust Fund have not risen proportionately. An amendment to 

provide medical benefits to mesothelioma victims, similar to the 

medical benefits provided to successful claimants under the Energy 

Employees Occupational Illness Compensation Program Act 

(‘‘EEOICPA’’), to ensure that treatment expenses would not reduce 

their awards, was not acted on by the Committee. 

Other efforts to allow for extraordinary medical or family expenses to be considered, were also rejected. The only concession has 

been to authorize the Administrator to consider increasing compensation to younger mesothelioma victims with dependants, but at 

the expense of older victims. But even this is not guaranteed under 

S. 852, nor are there additional funds provided for to make such 

payments. 

In addition, the court system currently compensates workers 

with substantial asbestos exposure and lung cancer regardless of 

whether the patient also has nonmalignant disease. The Trust 

216 

56Testimony of Judge Edward Becker, Before the Senate Committee on the Judiciary, In the 

Matter of: Fairness in Asbestos Injury Resolution Act, 109th Cong., January 11, 2004, at 14–

15. 

Fund will not. Our efforts to reinstate compensation for this group 

of asbestos victims were rejected in Committee. Since one of the 

major justifications for asbestos reform is to provide more money 

to those who are truly sick, we believe there is no justification for 

denying compensation to victims with lung cancer or other diseases 

currently being compensated through the courts. 

I. Replacing one adversarial process with another 

S. 1125 and S. 2290 from the last Congress aimed to streamline 

the administrative process, in order for victims to recover compensation more easily. Both bills relied on medical presumptions 

and simplified proof of exposure to facilitate recovery. However, S. 

852 reintroduces an adversarial environment by making proof of 

claims more difficult and by removing some presumptions favoring 

compensation. 

As discussed above, whereas previous bill required victims to 

prove that asbestos was a ‘‘contributing factor’’ to their disease, 

under S. 852 victims are now required to prove that asbestos was 

a ‘‘substantial contributing factor’’ to their disease. In many instances, however, it is not possible to gauge the relative contribution of different environmental factors. This is a much higher burden than victims have to meet in court. 

On top of the new and difficult burden, S. 852 requires claimants 

to, among other things, demonstrate substantial occupational exposure and employment history; catalog all collateral source payments; set forth evidence to support an assertion of non-smoking, 

and even in the case of exigent claimants, identify each appropriate 

defendant as if the claim could be heard in court, consistent with 

Rule 11 standards for attorneys under the Federal Rules of Civil 

Procedure. 

One of the justifications for setting up an administrative system 

has been to simplify and ease the burden of proof for victims, as 

a tradeoff for giving up their common law rights. As the administrative burden rises for victims, the tradeoff becomes less fair. 

While S. 852 has made the claims process more adversarial and 

has layered on more review by the Physician’s Panel than previous 

iterations, it has simultaneously made it more difficult for victims 

to engage professional advocates to plead their case. The bill imposes a severe cap on fees for victims’ attorneys, 5 percent of the 

amount awarded to claimants. This will complicate, if not make it 

impossible, for many victims to engage quality attorneys to aid 

them in presenting complex claims both before the Administrator 

and before the Physician’s Panel, and challenging adverse decisions, including low awards or total rejections. 

Even United States District Judge Edward Becker—the chief architect of the bill—in his January 11, 2005, testimony before the 

Judiciary Committee, warned against severe attorneys’ fee caps, on 

the grounds that Congress would hinder the ability of persons to 

obtain effective legal counsel.56

In contrast, the bill contains no caps on the attorneys for the corporate defendants or insurers. Thus, these entities will be free to 

217 

57 Executive Business Meeting, Senate Committee on the Judiciary, May 25, 2005, pp 8–9. 

challenge any adverse decisions and the constitutionality of the 

program without such restrictions. 

J. Collateral source rule not fair to victims 

S. 852 requires any payment made to a claimant from the Trust 

Fund be reduced by the amount of any ‘‘collateral source’’ compensation the claimant may have received from previous court proceedings or settlements relating to asbestos injuries. It is fair and 

reasonable to offset the sum that a claimant has actually received 

from other sources for asbestos injury, in order to avoid a situation 

of ‘‘double dipping’’ with the Trust Fund. But it is completely unfair 

to offset from the claimant money that never ended up in the 

claimant’s pocket. 

It is a standard practice in litigation for jury awards or settlements to often include costs and expenses in addition to attorney’s 

fees as part of the total amount of money awarded to the plaintiff. 

However, these extra costs, fees, and expenses are not for the victim but for his legal representatives. If such items are included 

under the bill’s collateral source rule, then it has the effect of reducing the amount of payment provided by the Trust Fund to the 

victim dollar for dollar for amounts that the victim never received. 

During Committee consideration, Senator Durbin offered an 

amendment that would have corrected this problem by amending 

the definition of collateral source compensation in the bill to make 

it clear that the calculation of collateral source offset is based on 

‘‘net’’ compensation, not ‘‘gross.’’ That way, an asbestos victim who 

loses his right to a jury trial and is forced into making a claim with 

the Trust Fund is not penalized further by having additional 

amounts offset from a claim payment that he never received. 

Unfortunately, in another example where the interests of the corporate defendants trumped the interests of asbestos victims, the 

Committee rejected this amendment. Senator Durbin argued that 

‘‘if we are going to have a fair set-off, it would be a set-off of the 

money actually received by the victim * * * as opposed to the gross 

amount which was subject to attorneys’ fees and costs.’’ But Chairman Specter asserted that, ‘‘there is really the companion issue of 

how much the defendants ought to be credited.’’ 57

K. Unfair treatment of asbestos victims with pending or settled 

cases 

Under S. 852, the victims of asbestos disease are asked to bear 

the burden of the multi-year delay anticipated before the Trust 

Fund becomes operational and ready to pay victims. It will take 

time to promulgate rules and to set up the elaborate bureaucratic 

structure created by the bill. It will take time to determine which 

companies are obligated to pay into the Trust Fund and how much 

each one must contribute. It will take time for the insurance industry to develop a formula apportioning its funding obligation 

amongst the individual insurers. Finally, it will take a great deal 

of time to resolve the myriad of legal challenges that will inevitably 

confront this bill should it be enacted. 

218 

58Statement of Margaret Seminario, Director, Safety and Health Department, American Federation Labor and Congress of Industrial Organizations, Before the Senate Committee on the 

Judiciary, ‘‘Hearing on a Bill to Create a Fair and Efficient System to Resolve Claims of Victims 

for Bodily Injury Caused by Asbestos Exposure, and for Other Purposes,’’ 109th Cong., April 26, 

2005, at 3. 

Rather than permitting asbestos claims to continue to be adjudicated in the courts until the Trust Fund is able to process and 

pay them, the bill imposes an immediate two year stay on nearly 

all asbestos personal injury cases. According to CBO estimates, at 

least 60,000 to 80,000 claimants with serious asbestos disease will 

be subject to this two-year stay.58 This will create an extreme hardship on many seriously ill victims with cases already pending in 

the courts. With their health deteriorating and unable to work, 

medical bills and other expenses are steadily mounting. It is wrong 

to put them into a two-year legal limbo. 

Even the sickest victims—those with less than a year to live—

will see their cases halted should S. 852 become law. While the 

stay imposed on them is for nine months, rather than two years, 

it can still have a devastating impact. 

There is no compelling reason why all asbestos cases should be 

stayed as soon as the bill passes. The provision is the result of the 

insistent demands of corporate defendants and insurers who want 

a two year payment holiday. Yet, S. 1125, the bill approved by the 

Committee in the last Congress, did not give in to this unreasonable demand by the business community. It recognized the principle that the courts should remain available to asbestos victims 

until another system of compensation is in place and ready to process claims. It expressly provided that cases in the court system 

could continue uninterrupted until the Administrator certified that 

the Trust Fund was operational. That is the right standard, and 

the Committee was wrong to abandon it in S. 852. 

1. Even exigent cases are subject to a stay 

Under the bill as drafted, even exigent health claims currently 

pending in the courts will be automatically stayed for nine months 

as of the date of enactment. An exigent health claim is one in 

which the victim has been diagnosed ‘‘as being terminally ill from 

an asbestos-related illness and having a life expectancy of less than 

one year.’’

By definition, these cases all involve people who have less than 

a year to live due to mesothelioma or some other disease caused 

by asbestos exposure. Their cases would all be stayed for nine 

months. Nine months is an eternity for someone with less than a 

year to live. 

The stay language is written so broadly that it would stop all forward movement of a case in the court system. A trial about to 

begin would be halted. An appellate ruling about to be issued 

would be barred. Even the deposition of a dying witness could not 

be taken to preserve his testimony. The stay would deprive victims 

with less than a year to live of their last chance at a day in court. 

We cannot believe that the authors of this bill intended such a 

harsh result. At the markup, several members expressed deep concern about this provision. 

219 

The bill does contain language allowing an ‘‘offer of judgment’’ to 

be made during the period of the stay in the hope of producing a 

settlement. However, this provision is unlikely to resolve many 

cases because it requires the agreement of the defendants. There 

is little incentive for defendants to agree to a settlement when the 

case has been stayed. Those who have tried cases know that it is 

only the imminence of judicial action which produces a settlement 

in most cases. Delay is the asbestos defendant’s best ally; and 

under this bill, the case is delayed for at least nine months and 

may never be allowed to resume if the Trust Fund becomes operational. If, however, these exigent cases were not stayed, and judicial proceedings could continue, there would be far more likelihood 

of cases settling under the offer of judgment process. 

We strongly believe that, at a minimum, all exigent cases should 

be exempted from the automatic stay in the bill. Victims with less 

than a year to live certainly should be allowed to continue their 

cases in court uninterrupted until the Trust Fund becomes operational. Their ability to recover compensation in court should not 

be halted until they are able to receive compensation from the 

Trust Fund. It is particularly unfair to leave these dying victims 

in a legal limbo. For them, the old adage is especially true—justice 

delayed is justice denied. 

Under the bill, defendants would receive a credit against what 

they must contribute to the Trust Fund for whatever payments 

they make to these dying victims; so they would not be ‘‘paying 

twice,’’ as some have claimed. 

Allowing the exigent cases to go forward in the courts without 

interruption is a matter of simple fairness. Staying the cases of victims who have less than a year to live is bureaucratic insensitivity 

at its worst. Most of these victims will not live to see the doors of 

the Trust Fund open. At the markup, an amendment was offered 

by Senator Kennedy to strike the provision staying exigent cases, 

but it was defeated. 

We should not deprive these dying victims of their last chance—

their only chance—to receive some measure of justice before asbestos-induced disease silences them. They should be allowed to receive compensation in their final months to ease their suffering. 

They should be allowed to die knowing that their families are financially provided for. S. 852 in its current form takes that last 

chance away from them. 

Incidentally, S. 852, as introduced, did not specify whether the 

benefits of an exigent claimant who pass away while awaiting such 

benefits under the Trust Fund could be passed on to the surviving 

widow or children. Senator Durbin offered an amendment, which 

the Committee adopted unanimously, that would provide such benefits to the surviving family members. Yet even such a non-controversial change to the bill set off an active round of deliberations 

among the corporate defendants supporting the bill, which forced 

the Chairman to revisit the issue in two additional sessions of 

Committee consideration. The language that survived in S. 852 is 

not as clean as the original Durbin amendment, but it nevertheless 

addresses the core concerns raised by Senator Durbin, to provide 

compassionate benefits to the surviving family members of asbestos 

victims. 

220 

59The only circumstance in which a representative of the plaintiff is permitted to sign on his 

or her behalf in where the plaintiff is ‘‘incapacitated.’’ See section 403(c)(3)(A)(i)(II)(bb). 

2. Impact of multiple stays and venue rules 

Other aspects of the treatment of pending cases are also troublesome. If the Trust Fund is not operational after two years, the stay 

is lifted for all claimants. However, asbestos victims cannot necessarily return to the courts where their cases were pending. New, 

restrictive venue provisions are put in place by S. 852 which will 

require some of these seriously ill victims to start their cases from 

scratch in a new court. This will further postpone, in some cases 

by years, the day when they finally receive compensation for their 

injuries. 

Finally, even if the stay is lifted and court proceedings resume, 

the cases will be halted again if and when the Trust Fund finally 

becomes operational, forcing victims to play an absurd game of ‘‘red 

light-green light’’ with their right to a day in court. Imagine the 

frustration of an asbestos victim whose case is stayed on the verge 

of trial by the enactment of S. 852. For two years, he has nowhere 

to go for financial relief while his health steadily worsens. After 

two years, the Trust Fund is still not up and running, so he can 

finally return to court. 

However, because of the new venue rules, he cannot return to 

the same court that was ready to hold his trial. Instead, he must 

refile in a new court and begin the litigation process anew. After 

spending a year pursuing this new court case, it is stayed because 

the Trust Fund is finally ready to process claims, three years after 

passage of the bill. Of course, the Trust Fund will be swamped 

with claims the day its doors open, so that unfortunate victim may 

wait another year or more before his claim is reached. It is difficult 

to imagine a more arbitrary and unfair system. Yet, that is the system which S. 852, if enacted, will impose on thousands of seriously 

ill asbestos victims. 

3. Abrogating existing settlements 

S. 852 also abrogates many existing asbestos settlement agreements. A number of victims have settled claims with defendants in 

the court system and are counting on those settlements to pay 

their medical bills and take care of their families. Although the 

bill’s proponents suggest that final settlements in which the only 

remaining act is payment will be honored, the proposed language 

actually excludes many such settlements. 

The language in the current bill requires that a written settlement agreement be signed directly by the defendant or the insurer, 

as well as the individual plaintiff.59 As permitted by state agency 

and contract law, most settlements are finalized either orally or by 

a confirming letter from counsel and require a release that is 

signed by the plaintiff but not the companies or insurers. This new 

requirement is likely to delay many pending settlements, thereby 

adding further to the large number of cases that will have to be 

adjudicated when the Trust Fund becomes operational. 

The bill would also overturn settlement agreements awaiting 

court approval. In situations where the parties have agreed to a 

settlement but are awaiting court approval, the settlement will be 

221 

voided. The bill also includes a complicated and ambiguous provision that may void settlements entered into by companies that 

later filed for bankruptcy but that would likely emerge from bankruptcy if the bill passes. 

Under S. 852, a victim, having assumed his or her case was settled, will suddenly have to start all over in the new Trust Fund 

system, without any compensation for the cost and hardship of having his or her settlement superceded by the terms of the Act. Victims who have already settled their cases but have yet to receive 

payments will be compelled to relinquish the money that defendants have agreed to pay. 

Victims have a vested property right in these settlement contracts, and this bill would unconstitutionally deprive them of that 

property right without due process of law. Many of these cases 

have been entirely resolved, yet the victims will be forced to surrender the unpaid dollars to the wrongdoers who injured them. We 

cannot support these policies, which clearly favor the defendants 

over the injured parties. 

The purported purpose of the bill is to quickly and efficiently resolve claims. Instead, the bill will reopen old cases that all parties 

agreed were fairly and entirely resolved. Many of these people have 

passed up their day in court to reach a settlement and were counting on receiving those promised dollars quickly. Now that settlement will be taken away as well as their right to a trial. 

Processing claims for thousands of victims with settlement agreements will put an enormous burden on the Trust Fund. It is likely 

to delay compensation for all victims. We believe this is unnecessary and that existing settlements should be honored. 

In Committee, Senator Biden attempted to address some of these 

shortcomings by offering an amendment providing that a settlement agreement or confirmation of settlement would suffice to be 

considered final if it ‘‘was authorized by the settling defendant or 

the settling insurer, and confirmed by, or with, counsel for the settling defendant or settling insurer.’’

Moreover, to address the criticism that his amendment would 

have opened the door to permitting so-called inventory settlement 

agreements—agreements that settle claims for future, or even hypothetical claimants, in advance—he included a provision in the 

amendment that would have required that the specific asbestos 

claim be settled for a specific sum with a specific named plaintiff. 

It simply aimed to recognize in the bill settlement agreements that 

are universally recognized in the courts as legitimate and enforceable. The amendment was rejected. 

L. Labor department delays in administering the trust fund 

Despite repeatedly seeking assurances that the Department of 

Labor (‘‘DOL’’) can administer S. 852, we have received no such assurances. There is reason to believe DOL cannot have the Trust 

Fund up and running as quickly as S. 852 contemplates. 

For example, S. 852 calls for regulations governing the Trust 

Fund to be issued within 90 days, but courts are unlikely to enforce 

such a deadline, and the bill provides no penalty if the goal is not 

met. The Office of Management and Budget also has a right to review and revise the regulations under the Executive Order. In past 

222 

60Peter S. Barth, Professor Emeritus, University of Connecticut, February 15, 2005, ‘‘Commentary on the Creation of a Fund for Victims of Asbestos Caused Diseases,’’ at 5. Available 

at www.usaction.org. 

61 Barth at 13. 62 Barth at 11. 63 Barth at 8–9. 64 Barth at 9. 65 Barth at 9. 

compensation programs, much simpler to administer than the Asbestos Trust, DOL has taken longer than 90 days to develop implementing regulations. 

Disease compensation has consistently proven to be extremely 

difficult to administer. Other compensation programs adopted by 

Congress and administered by DOL have each cost more, faced a 

higher volume of claims, and faced greater claims processing delays 

than proponents of the program acknowledged during Congressional consideration. 

Though supporters of the Black Lung law argued that there 

would be several thousand claimants in total, in fact, in the first 

two years of the program, 350,000 claims were submitted.60 In the 

case of EEOICPA, approximately 3,000 successful claimants were 

forecast when the law was advocated in 2000.61 Yet, by December 

31, 2004, over 60,000 claims had been submitted to DOL, almost 

13,000 claims had been paid, and many others were in the process 

of adjudication.62 Clearly the advocates of these programs greatly 

underestimated the number of individuals who would file valid 

claims. 

A consequence of this massive underestimating of potential 

claims was that the forecasted costs by the proponents proved exceedingly low—including the federal government’s compensation 

costs for each program. For example, at the time of enactment, supporters of the Black Lung program estimated the maximum annual 

costs would be approximately $100 million.63 Yet, in the first 10 

years of the program, the Social Security Administration alone had 

expended $8 billion.64 Moreover, a Trust Fund to pay DOL’s share 

has a debt to the U.S. Treasury that currently exceeds $8 billion.65

Clearly, the actual costs have far exceeded the expected future 

costs. We believe the same is likely to happen with this proposed 

Trust Fund. 

In addition, the initial underestimation of the actual number of 

claims contributed greatly to the delays in providing compensation 

to claimants. Moreover, in some cases, it resulted in payments 

being received after the applicant had died from the relevant disease. Other delays were the result of more time being needed to develop appropriate regulations, and to evaluate the evidence submitted by claimants or their survivors. 

M. Litigation delays 

If S. 852 is enacted into law, the program contemplated by this 

legislation will surely face numerous immediate court challenges 

from a variety of interested parties, including defendants, insurers 

and victims’ groups. Over 8,500 defendants, insurers, and private 

trusts are currently involved in the asbestos litigation. Several of 

these entities, including the Manville Trust, have indicated they 

223 

66Green statement at 6–7. 67Letter from Professor Davis Strauss to the Honorable Arlen Specter, April 20, 2005. 

may challenge the bill as a ‘‘taking’’ of their property without due 

process of law. 

This concern about delay due to protracted legal challenges was 

discussed at length at the Committee’s April 26, 2005, hearing by 

Professor Green: 

My greatest concern about the bill is its lack of certainty 

and clarity regarding whether, and when, the necessary 

contributions will be made by industry and insurers. In its 

current form, the Bill sets forth total contribution amounts 

but fails to address the resistance that will stand in the 

way of ever collecting those amounts. Based on statements 

that persons in the industry and insurance sectors have already made with respect to this Bill and prior versions, the 

resistance to collection will be as stubborn and as timeconsuming to overcome as possible. 

It is wishful thinking and a major mistake to underestimate this problem. In the entire history of asbestos litigation, only a handful of industrial firms and even fewer insurers have ever voluntarily faced up to the cost of resolving their full asbestos liabilities. The rest of the firms and 

insurers that are being counted on under this Bill to pay 

their allocated contributions have by and large fought and 

resisted every attempt to hold them accountable. What 

makes anyone think they will now accept their allocated 

responsibilities and pay up their shares on time and without a fuss?’’ 66

The following are among the other expected constitutional challenges to S. 852: • Cancellation of Businesses’ Insurance Contracts. In an 

April 20, 2005 letter to the Committee, Professor David 

Strauss of the University of Chicago law school contends the 

taking of a defendant’s insurance proceeds, combined with a 

required contribution to the Trust Fund, could prove to be unconstitutional.67 The medium and small-sized businesses that 

would be adversely affected by the bill include entities that 

have sufficiently insured themselves against future asbestos liabilities. However, S. 852 will not allow the crediting of such 

insurance. Consequently, these entities will lose their insurance coverage under the bill without any compensation from 

the government, and in turn, will have to meet the assessments that would be imposed on them to finance the national 

Trust Fund independently. This is expected to be a heavily litigated issue that may take years to resolve, as many perceive 

the evisceration of premiums they have paid without due compensation as a Fifth Amendment Property Takings violation, 

and the additional assessments as a tax. 

• Confiscation of Assets of Settled Trusts. According to an 

April 18, 2005, letter from former Solicitor General Ted Olson 

to Senator Cornyn, the taking of the assets of the bankruptcy 

Trusts is also unconstitutional. In his letter, Mr. Olson indicated that his firm represents such Trusts and plans to file 

224 

68Letter from Theodore B. Olson to the Honorable John Cornyn, April 18, 2005. 

suit to protect their assets if the bill continues to allow for the 

confiscation of those Trusts.68 The bill’s supporters, however, are relying on the $7.4 billion from those Trusts to meet the 

Trust Fund’s initial funding needs. If a court rules for Trusts in this challenge, the Trust Fund will be short $7.4 billion of 

the $42 to $60 billion required for an effective startup period. 

On the other hand, if the bankruptcy Trusts’ funds are allowed 

to be transferred to the new Trust Fund, and the funds are 

paid to claimants, then the U.S. Treasury could be responsible 

for reimbursing these Bankruptcy Trusts, with interest. • Suits by Businesses over the Allocation Formulas. The Coalition for Asbestos Reform has already advised Congress that 

its members will challenge the proposed assessments on them 

as well as the cancellation of their insurance coverage. And it 

is likely that even some of the companies advocating for the 

bill will challenge their particular assessments as unfair to 

them. • Legal Challenges by Victims’ Groups. Court challenges are 

also expected by victims who are not covered by the Trust 

Fund but who, nevertheless, will have their rights to a jury 

trial eviscerated. This will surely include some lung cancer victims with substantial asbestos exposure who have been excluded from the Trust Fund and others who have suffered environmental or community-based exposure to asbestos. Individuals residing outside Libby, Montana, but similarly affected by 

environmental exposure to asbestos, are likely to have strong 

claims based on the Fourteenth Amendment’s Equal Protection 

clause. And individuals with enforceable settlement agreements may challenge the bill’s voicing of those agreements. 

S. 852 borrows the procedures for expedited judicial review from 

the Bipartisan Campaign Reform Act of 2001 (McCain-Feingold). 

The constitutional challenge under that law took 20 months before 

the Supreme Court’s final resolution. McCain-Feingold’s expedited 

review provision is similar to the provision in the Cable Television 

Consumer Protection and Competition Act of 1992, amending the 

Communications Act of 1934. The constitutional challenge to that 

law took four and a half years to resolve. Clearly, the proposed ‘‘expedited review’’ standard is no guarantee of quick resolution of 

these likely multiple legal claims against S. 852. 

During the course of Committee consideration, a question arose 

as to what would happen if this bill were enacted and subsequently 

stayed by a court reviewing its constitutionality. Specifically, is it 

possible that victims, who will have been pulled out of court by the 

new law, will then neither be able to sue for damages nor pursue 

a claim against the Trust Fund for a period of years while the constitutional challenges are pending? The answer to that question is 

almost certainly yes—in the event of a judicial stay of S. 852, victims will be stuck in litigation ‘‘no man’s land.’’ That is patently 

unfair to these seriously ill claimants. 

For these reasons, Senator Biden offered an amendment to guarantee that, in the event of a judicial stay of this law, victims would 

be permitted to continue to pursue their claims in court until the 

225 

challenge is resolved. That amendment, like so many others that 

sought to provide some basic fairness for claimants, was defeated. 

N. Unfair restrictions placed on victims of silica disease 

This bill has provisions that impose arbitrary conditions for the 

filing of silica claims in court. It seriously restricts the legal rights 

of individuals who are suffering from diseases caused by exposure 

to silica dust even though it offers those victims no compensation 

whatsoever under the Trust Fund. That is not fair. 

The rationale is to prevent asbestos claims from being recycled 

as silica claims. The sponsors fear that lawyers will try to turn asbestos claims into silica claims. These fears are greatly exaggerated. Medical experts from both businesses and labor unions testified before the Committee that disease caused by exposure to silica 

is easily distinguishable from disease caused by exposure to asbestos. While someone whose lung disease was actually caused by asbestos may file a silica claim, there is very little likelihood of the 

case succeeding. The real cause of their illness would become apparent as soon as the defendant’s doctors reviewed the medical evidence. 

While it is reasonable to establish a procedure to identify prior 

asbestos claims brought by persons filing silica lawsuits, the current provision goes too far. There are serious problems with the 

way the bill currently handles this issue. It severely limits the 

rights of some people who are suffering with real silica disease, 

preventing them from going to court and obtaining the compensation they deserve. 

One major problem is that the bill creates an entirely new medical criterion for filing a silica claim. It requires that someone who 

has both silica disease and asbestos disease must have functional 

impairment from their silica disease before they can go to court. 

This bill is not supposed to be a medical criteria bill for diseases 

in the court system. But that is what this does to silica cases. It 

dramatically raises the evidentiary bar that a victim of silica disease must clear in order to recover in court. Such a provision has 

no place in an Asbestos Trust Fund bill. 

O. Special interest provisions and changes during markup 

S. 852 contains several provisions that appear vague and ambiguous, yet probably will tremendously benefit certain ‘‘stakeholders.’’

These special interest provisions include financial exemptions for 

foreign and off-shore insurers, a significant offset credit for certain 

insurers, exemption for the largest companies from having to disclose prior asbestos expense history, exemption for a certain transaction involving the sale of friction products, and perhaps others 

we have yet to identify. 

Because these provisions are drafted in generic language, it is 

difficult to determine which corporate defendants and insurers 

would benefit financially or be harmed in comparison to other similarly situated entities. 

In addition, during the Committee consideration of S. 852, there 

were a myriad of major provisions added in a series of hastily 

drafted managers’ amendments, and substantial substantive 

changes made to the bill that have not received careful examinaVerDate Aug 04 2004 06:05 Jul 03, 2005 Jkt 039010 PO 00000 Frm 00225 Fmt 6604 Sfmt 6602 E:\HR\OC\SR097.XXX SR097
226 

tion. We hope the full Senate pays particular attention to these 

provisions, should the bill move forward. 

IV. WINNERS AND LOSERS

S. 852 will provide a huge financial windfall to a few large corporations that have substantial asbestos liabilities and those that 

failed to adequately insure for their liabilities. These include the 

companies that are largely responsible for the asbestos health and 

litigation problem that the country faces today. 

Included among these entities is the W.R. Grace Company, which 

is now under a federal criminal indictment for its asbestos actions. 

S. 852, if enacted, will relieve the costs and liabilities of these firms 

in two ways: (1) by significantly reducing the amount of compensation asbestos victims receive—in many instances the proposed compensation will not even equal cancer victims’ medical and economic 

losses; and (2) by imposing greater costs on many small and medium-sized businesses, and American taxpayers, than they would 

be responsible for under the present system. 

The groups that will be most adversely impacted by the bill include: 

• Millions of victims of these horrible diseases caused by asbestos, including deadly lung cancers such as mesothelioma, 

who will be under-compensated by the Trust Fund; 

• Thousands of lung cancer victims and community exposure 

victims who will have no means of recovery once this bill is enacted; 

• Thousands of small and medium-sized businesses, including many that are unaware that they will be compelled to finance the program out of their own pockets and without any 

acceptance of liability insurance coverage or credit; and 

• American taxpayers, who also will likely be compelled to 

subsidize the program at a cost of tens of billions of dollars. 

V. CONCLUSION

For the reasons stated above, we believe that this bill is not the 

proper solution to the asbestos health and litigation problem. In its 

present form, the bill would be unfair to victims, small and medium-sized businesses and taxpayers. The advantages of the bill 

would flow to the corporations that have been most responsible for 

causing the problem that we face today. Congress should not be 

supporting such a one-sided bill. 

EDWARD M. KENNEDY. 

JOSEPH R. BIDEN, Jr. 

RUSSELL D. FEINGOLD. 

RICHARD J. DURBIN. 

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XII. CHANGES IN EXISTING LAW

The Committee has determined that it is necessary, in order to 

expedite the business of the Senate, to dispense with the requirements of rule XXVI, paragraph 12, of the Standing Rules of the 

Senate, with regard to this legislation. 

Æ