88–665 

Calendar No. 239

108TH CONGRESS REPORT " SENATE ! 1st Session 108–118 

THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT 

OF 2003

JULY 30 (legislative day, JULY 21), 2003.—Ordered to be printed 

Mr. HATCH, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL AND MINORITY VIEWS 

[To accompany S. 1125] 

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

(S. 1125) to create a fair and efficient system to resolve claims of 

victims for bodily injury caused by asbestos exposure, and for other 

purposes, reports favorably thereon, with amendments, and recommends that the bill, as amended, do pass.

CONTENTS 

Page 

I. Purposes ......................................................................................................... 2 

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

III. Votes of the Committee ................................................................................. 5

IV. Background and Need for Legislation .......................................................... 16

V. How S. 1125 Works ....................................................................................... 27

VI. Section-by-Section Analysis and Discussion ................................................ 35

VII. Critics’ Contentions and Rebuttals ............................................................... 58

VIII. Cost Estimate ................................................................................................. 73

IX. Regulatory Impact Statement ....................................................................... 73

X. Additional Views ............................................................................................ 74

Additional View of Senator Grassley ....................................................... 74

Additional Views of Senators Grassley, Kyl, Sessions, Craig, and 

Cornyn ................................................................................................. 75

Additional Views of Senators Kyl, Grassley, and Sessions .................... 78

Additional View of Senator Kyl ................................................................ 81

Additional Views of Senators Feinstein and Kohl .................................. 184

XI. Minority Views ............................................................................................... 188

2

Minority Views of Senator Leahy, Kennedy, Biden, Kohl, Feinstein, 

Schumer, Durbin, and Edwards ........................................................ 188

Minority View of Senator Biden ............................................................... 216

XII. Changes in Existing Law .............................................................................. 218

I. PURPOSES

The Fairness in Asbestos Injury Resolution Act of 2003 ‘‘FAIR 

Act’’ S. 1125, is essential legislation that is needed to fix a broken 

system. It will create an alternative, but fair and efficient system 

to resolve the claims of victims for bodily injury caused by asbestos 

exposure. It is intended to bring uniformity and rationality to the 

system so that resources are directed toward those who are truly 

sick. It is also intended to provide economic stability by stemming 

the tide of runaway asbestos litigation that has clogged our courts, 

bankrupted companies, compensated those who are not sick at the 

expense of those who are, and endangered the jobs and pensions 

of employees. 

The FAIR Act, S. 1125, has five key components: 

First—S. 1125 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 in under a year, not including appeals—which are 

also required to be timely resolved. In the tort system today, victims face delay and unpredictable results. Currently, victims must 

bear the burden of identifying a specific product, proving that it 

caused their illness and showing culpability of a particular defendant, usually years after the exposure occurred. Moreover, suits by 

unimpaired claimants have bankrupted companies and diminished 

the funds available for the truly ill. Often times there is no identifiable party for a claimant to sue, either because the culpable party 

has been driven into bankruptcy or it is impossible to identify the 

cause of the claimant’s exposure. And when a suit is filed, it is usually several years before claimants see resolution, and far from certain that they will obtain compensation. Under S. 1125, victims 

will receive timely and certain compensation on a ‘‘no fault’’ basis. 

They will not need to prove causation or culpability or find a solvent party in order to be compensated. Instead, with this legislation they need only satisfy the eligibility requirements under the 

Act in order to receive compensation or medical monitoring reimbursement. S. 1125 establishes fair and balanced eligibility criteria 

to ensure that the $108 billion privately financed Asbestos Injury 

Claims Resolution Fund (the ‘‘Fund’’) directs compensation to those 

who are truly sick as a result of their exposure to asbestos. The 

mass screenings and other abuses in the current litigation system 

will be replaced with a sound medical diagnosis of an asbestos-related disease by the claimant’s physician. The FAIR Act also takes 

into consideration that the most seriously ill should receive priority 

and provides for expedited payments. There are special exceptions 

for claimants in unique circumstances whose injuries are also asbestos-related, but who cannot, through no fault of their own, meet 

the requirements of the Act. The medical monitoring that will be 

available under the FAIR Act for those who have been exposed but 

are not sick preserves resources for those same claimants for the 

time, if and when, they become sick. The streamlined administraVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
3

1See Stephen J. Carroll, et al., Rand Institute for Civil Justice, ‘‘Asbestos Litigation Costs and 

Compensation: An Interim Report,’’ 35 (2002). [Hereinafter RAND 2002]. 2Thomas 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. 

tive process also diminishes the need for large attorney fees that 

currently can deplete claimant awards by as much as 40%. 

Second—S. 1125 provides certainty to asbestos victims. In the 

current system, claimants who are legitimately sick have no certainty they will ever be compensated due to the increasing number 

of bankrupt companies and the long delays of current litigation. 

While some may receive high awards, others receive nothing at all. 

S. 1125 sets up a $108 billion fund that is based on sound statistical data and is projected to be more than adequate to compensate 

all present and future eligible claims. To compound that certainty, 

S. 1125 includes several contingent additional funding mechanisms 

to address any unanticipated needs of the Fund. 

Third—S. 1125 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. Companies are unable to plan for 

asbestos litigation spending because of the irrationality and unpredictability of the current tort system. Even companies with the 

most tangential relationship to asbestos have been crushed under 

the weight of overwhelming litigation, driving many into bankruptcy and hurting employees and investors. The legal burden of 

compensating victims and paying unimpaired claims is distributed 

irrationally. With most of the original asbestos manufacturers 

bankrupt, companies with little relationship to asbestos are targeted with massive suits. Insurers and reinsurers are affected as 

well, increasingly threatened with insolvency due to the current 

crush of asbestos claims. Under S. 1125, in return for contributing 

significant amounts of money to the Fund, businesses will be able 

to move forward, a step that will preserve jobs and pensions and 

result in broad economic benefits. An administrative system will 

provide for fair, balanced, reasonable, and predictable allocation of 

payments by defendant companies and their insurers. 

Fourth—S. 1125 ensures that the fund will be administered simply, fairly, and efficiently. The tort system today is backlogged and 

manifestly unfair. 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.1 One such victim was 

Texas resident Ronald Bailey who died of mesothelioma in June of 

2000, about two months before his scheduled trial date.2 Under S. 

1125, claims will be processed efficiently and fairly by the U.S. 

Court of Federal Claims through a newly established Office of Special Asbestos Masters, pursuant to clear standards. Under this 

streamlined system, a Special Asbestos Master will determine eligibility and payments based on fair and balanced eligibility criteria, 

including a sound medical basis for all claims, and payments will 

be issued by the Fund which will be run by an Administrator solely 

for the benefit of asbestos victims. 

Finally—S. 1125 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 

4

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. 1125 would also require that prohibited asbestos-containing 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 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 litigation crisis has been under consideration by 

Congress for many years with several hearings and multiple legislative proposals. The most recent events that led to the introduction of S. 1125, The Fairness in Asbestos Injury Resolution Act of 

2003 (FAIR Act), began in the 107th Congress when then Chairman Leahy held a hearing on September 25, 2002, ‘‘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, General Counsel of the 

AFL–CIO Jonathan Hiatt, General Counsel of the Manville Personal Injury Settlement Trust David Austern, and former Solicitor 

General Walter Dellinger III. Chairman Hatch followed up with another hearing on March 5, 2003 ‘‘The Asbestos Litigation Crisis: It 

Is Time for Congress to Act’’ and testimony was given by 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. 

S. 1125 the ‘‘Fairness in Asbestos Injury Resolution Act of 2003 

(FAIR Act)’’ was introduced in the Senate on May 22, 2003 by 

Chairman Orrin Hatch (R–UT), 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) and reported to the Judiciary Committee. Chairman Hatch held a hearing 

on S. 1125 on June 4, 2003 ‘‘Solving the Asbestos Litigation Crisis: 

S. 1125 the Fairness in Asbestos Injury Claims Resolution Act of 

2003 (FAIR Act)’’ and 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. 

S. 1125 was considered by the committee during Executive Business meetings held on June 19, 24, 26, 2003 and July 10, 2003. The 

Committee approved S. 1125 on July 10, 2003 by a rollcall vote of 

10 yeas, 8 nays and 1 pass. The Committee then ordered S. 1125 

favorably reported with amendments. 

5

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 rollcall 

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

amendment. The Senate Judiciary Committee, with a quorum 

present, met on June 19, 24, 26, 2003 and July 10, 2003 at 9:30 

am to markup S. 1125. The following votes occurred on S. 1125. 

Vote on: Agreed Upon Amendments: Indexing all awards for future inflation; removing collateral source offsets; doubling the statute of limitations; coverage for claimant exposures on U.S. flag 

ships or while working for U.S. companies overseas; strengthening 

enforcement of contributions; recoupment authority for the administrator; criminal penalties for fraud or false information; bankruptcy certification; congressional oversight—administrator annual 

reports; and, Hatch technical amendments to S. 1125. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Agreed Upon Amendments: Hatch Asbestos Ban; Feinstein Second Degree to Hatch Asbestos Ban; Leahy FOIA amendment for the Commission; and, Leahy FOIA amendment for the Office of Asbestos Injury Claims Resolution. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

6

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Leahy/Hatch Medical Criteria Amendment. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Agreed Upon Amendments: Grassley/Leahy/Feinstein/

Durbin Asbestos Court Amendment; Grassley Federal Liability 

Amendment; Leahy Environmental Crimes Amendment; and Leahy 

Successor in Interest Amendment. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Durbin/Kyl Hardship Amendment that would double the 

caps for the financial hardship and inequity adjustments; permits 

7

the inequities panel to consider a participant’s litigation successes 

when assessing prior asbestos expenditures; and requires a reduction in contribution allocation if a participant’s exposure was remotely attenuated under certain circumstances. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Sessions Pro Bono Amendment that would require the 

Asbestos Court to provide information to claimants of the availability of pro bono representation. Attorneys would have to provide 

notice of pro bono representation. 

Date of markup: June 24, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Kohl/Feinstein Contingent Call Amendment, which 

would require reductions of participants’ contributions if the Administrator can certify the fund has and will continue to fully pay 

compensation awards. The amendment also allows the Administrator, if necessary, to request $1 billion in the aggregate from defendant participants and $1 billion from insurer participants beginning in the 28th year. This is a voluntary contribution, whereby 

8

non-payment subjects the participant to the tort system. If this occurs, the statute of limitations is tolled. This amendment was 

amended with a Hatch 2nd degree amendment, allowing defendant 

companies to continue paying into the fund after year 27 or else 

re-enter the tort system in Federal Court only. 

Date of markup: June 26, 2003.

[Approved—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig * ................................................................................................................................................................ X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn * ............................................................................................................................................................. X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... X 

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin * .............................................................................................................................................................. X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

* Members indicated opposed the Amendment. 

Vote on: Kyl Lock Box Amendment, that would insert a new Sec. 

223(e) into S. 1125, as amended with new Hatch criteria, that requires a ‘‘lock box account’’ to ensure compensation will be available for claimants who fall into specified medical criteria categories 

with more significant impairment. 

Date: June 26, 2003.

[Approved by a vote of 10 yeas, 9 nays] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... P ...................

Mr. Specter ...................................................................................................................................... X ...................

Mr. Kyl .............................................................................................................................................. X ...................

Mr. DeWine ....................................................................................................................................... X ...................

Mr. Sessions .................................................................................................................................... X ...................

Mr. Graham ...................................................................................................................................... X ...................

Mr. Craig .......................................................................................................................................... X ...................

Mr. Chambliss ................................................................................................................................. X ...................

Mr. Cornyn ....................................................................................................................................... X ...................

Mr. Leahy ......................................................................................................................................... ................... X 

Mr. Kennedy ..................................................................................................................................... ................... P 

Mr. Biden ......................................................................................................................................... ................... P 

Mr. Kohl ........................................................................................................................................... ................... P 

Mrs. Feinstein .................................................................................................................................. ................... P 

Mr. Feingold ..................................................................................................................................... ................... P 

Mr. Schumer .................................................................................................................................... ................... P 

Mr. Durbin ........................................................................................................................................ ................... P 

Mr. Edwards ..................................................................................................................................... ................... P 

Mr. Hatch, Chairman ....................................................................................................................... X ...................

Vote on: Hatch Insurance Commission Amendment that would 

amend the Asbestos Insurance Commission by broadening criteria 

considered in allocations, clarifying insurer and re-insurer obligations. 

9

Date of markup: June 26, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... ...................

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Agreed Upon Amendments: Hatch/Leahy Takehome Exposure Amendment; Revised Hatch Congressional Findings Amendment; Hatch Insurer Commission and Asbestos Ban Technical/Nontechnical Amendments and the Hatch Technical Amendment for 

Tier I Allocation. 

Date of markup: July 10, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. X 

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... ...................

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. ...................

Mr. Craig .................................................................................................................................................................. ...................

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. X 

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Leahy/Kennedy Claims Value Amendment would increase awarded values for the 10 disease categories under the bill. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... X 

Mr. Specter ...................................................................................................................................... ................... X 

Mr. Kyl .............................................................................................................................................. ................... X 

Mr. DeWine ....................................................................................................................................... ................... X 

10

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Sessions .................................................................................................................................... ................... X 

Mr. Graham ...................................................................................................................................... ................... P 

Mr. Craig .......................................................................................................................................... ................... P 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... X ...................

Mr. Biden ......................................................................................................................................... P ...................

Mr. Kohl ........................................................................................................................................... X ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... P ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... X ...................

Mr. Chairman ................................................................................................................................... ................... X 

Vote on: Feinstein $108 Billion Claims Values Amendment would 

raise the amount of money many victims can recover under the 

fund with an aggregate cost of $108 billion. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... X 

Mr. Specter ...................................................................................................................................... ................... X 

Mr. Kyl .............................................................................................................................................. ................... X 

Mr. DeWine ....................................................................................................................................... ................... P 

Mr. Sessions .................................................................................................................................... ................... X 

Mr. Graham ...................................................................................................................................... ................... X 

Mr. Craig .......................................................................................................................................... ................... X 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... P ...................

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... P ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... X ...................

Mr. Chairman ................................................................................................................................... ................... X 

Vote on: Graham/Feinstein/DeWine Claims Values Amendment 

with new values. 

Date: July 10, 2003.

[Approved by a vote of 14 yeas, 3 nays, 2 voting pass] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... P 

Mr. Specter ...................................................................................................................................... X ...................

Mr. Kyl .............................................................................................................................................. ................... X 

Mr. DeWine ....................................................................................................................................... X ...................

Mr. Sessions .................................................................................................................................... ................... P 

Mr. Graham ...................................................................................................................................... X ...................

Mr. Craig .......................................................................................................................................... X ...................

Mr. Chambliss ................................................................................................................................. P ...................

Mr. Cornyn ....................................................................................................................................... X ...................

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden * ...................................................................................................................................... ................... ...................

Mr. Kohl ........................................................................................................................................... P ...................

11

[Approved by a vote of 14 yeas, 3 nays, 2 voting pass] 

Members Yeas Nays 

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... P ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards * .................................................................................................................................. ................... ...................

Mr. Chairman ................................................................................................................................... X ...................

* Voting pass. 

Vote on: Kohl/Leahy Financing Amendment that would increase 

the amount of contributions to the Fund by defendant and insurer 

allocations from $45 billion to $52 billion each and strikes the ‘‘additional contributing participants’’ section (Sec. 225). 

Date of markup: July 10, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ ...................

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. X 

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Feinstein Start-up Amendment would provide that none 

of the preemption, removal or dismissal provisions of the bill would 

become effective until the Trust Administrator determines that the 

fund is fully operational and processing claims. This amendment 

was approved subject to Kyl provisions prohibiting claimant double 

dipping and the offsetting of payments made by defendants and insurers post enactment but prior to the fund being up and running. 

Date of markup: July 10, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. X 

Mr. Kohl .................................................................................................................................................................... ...................

12

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Durbin Mesothelioma Amendment would exempt from 

trust fund and leave in the tort system pending claims dealing with 

levels IV through VIII which were filed on or before the FAIR Act 

was introduced. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... P 

Mr. Specter ...................................................................................................................................... ................... X 

Mr. Kyl .............................................................................................................................................. ................... P 

Mr. DeWine ....................................................................................................................................... ................... X 

Mr. Sessions .................................................................................................................................... ................... P 

Mr. Graham ...................................................................................................................................... ................... X 

Mr. Craig .......................................................................................................................................... ................... X 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... X ...................

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... P ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... P ...................

Mr. Chairman ................................................................................................................................... ................... X 

Vote on: Durbin Federal Employers’ Liability Act (FELA) Amendment removes the FAIR Act’s preemption of FELA claims for asbestos injuries, and would leave those claims in the tort system. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... P 

Mr. Specter ...................................................................................................................................... ................... X 

Mr. Kyl .............................................................................................................................................. ................... P 

Mr. DeWine ....................................................................................................................................... ................... X 

Mr. Sessions .................................................................................................................................... ................... P 

Mr. Graham ...................................................................................................................................... ................... X 

Mr. Craig .......................................................................................................................................... ................... X 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... X ...................

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... P ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... P ...................

Mr. Chairman ................................................................................................................................... ................... X 

13

Vote on: Biden Sunset Amendment would insert into the bill a 

provision that requires the FAIR Act to immediately sunset after 

90 days if, in the Administrators’ annual report, he cannot certify 

that at least 95% of all of the previous years’ claims have been 

paid. Any applicable statute of limitations for filing asbestos claims 

will be deemed tolled. 

Date: July 10, 2003

[Approved by a vote of 15 yeas, 4 nays] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... P 

Mr. Specter ...................................................................................................................................... X ...................

Mr. Kyl .............................................................................................................................................. ................... P 

Mr. DeWine ....................................................................................................................................... X ...................

Mr. Sessions .................................................................................................................................... ................... P 

Mr. Graham ...................................................................................................................................... X ...................

Mr. Craig .......................................................................................................................................... X ...................

Mr. Chambliss ................................................................................................................................. X ...................

Mr. Cornyn ....................................................................................................................................... X ...................

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... X 

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... X ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... P ...................

Mr. Chairman ................................................................................................................................... ................... X 

Vote on: Biden Inequity Amendment would permit an inequity 

adjustment for a company whose contribution rate, as a percentage 

of gross revenues, is exceptionally high compared to the median 

contribution rate for other companies in the same tier. 

Date of markup: July 10, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. X 

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. X 

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Feingold Payments Amendment as modified to ensure 

all payments should be paid within 3 years, no more than 4 years. 

Date of markup: July 10, 2003.

14

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. ...................

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... X 

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. ...................

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... ...................

Mr. Cornyn ................................................................................................................................................................ ...................

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. X 

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Leahy Subrogation Amendment that would remove subrogation rights currently permitted under state laws of entities 

that may have provided benefits to a claimant. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... X 

Mr. Specter ...................................................................................................................................... ................... X 

Mr. Kyl .............................................................................................................................................. ................... P 

Mr. DeWine ....................................................................................................................................... ................... X 

Mr. Sessions .................................................................................................................................... ................... P 

Mr. Graham ...................................................................................................................................... ................... X 

Mr. Craig .......................................................................................................................................... ................... X 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... X ...................

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... X ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... P ...................

Mr. Chairman ................................................................................................................................... ................... X

Vote on: Leahy Reimbursable Medical Costs Amendment would 

expand the monitoring provision so that the award also covers the 

claimant’s initial diagnosis as well as monitoring regardless of insurance coverage. It would also expand monitoring provision so 

that award covers other tests that the doctor may deem appropriate for the initial diagnosis under 121, and every three years 

thereafter. 

Date: July 10, 2003.

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... ................... X 

Mr. Specter ...................................................................................................................................... ................... X 

15

[Defeated by a vote of 10 nays, 9 yeas] 

Members Yeas Nays 

Mr. Kyl .............................................................................................................................................. ................... P 

Mr. DeWine ....................................................................................................................................... ................... X 

Mr. Sessions .................................................................................................................................... ................... X 

Mr. Graham ...................................................................................................................................... ................... X 

Mr. Craig .......................................................................................................................................... ................... X 

Mr. Chambliss ................................................................................................................................. ................... X 

Mr. Cornyn ....................................................................................................................................... ................... X 

Mr. Leahy ......................................................................................................................................... X ...................

Mr. Kennedy ..................................................................................................................................... P ...................

Mr. Biden ......................................................................................................................................... X ...................

Mr. Kohl ........................................................................................................................................... P ...................

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... X ...................

Mr. Schumer .................................................................................................................................... P ...................

Mr. Durbin ........................................................................................................................................ X ...................

Mr. Edwards ..................................................................................................................................... P ...................

Mr. Chairman ................................................................................................................................... ................... X 

Vote on: Hatch Technical Amendment 2c that would revise the 

Durbin/Kyl amendment adopted previously in order to narrow the 

scope of the Kyl hardship language and ensure it does not place a 

substantial drain on the fund. 

Date of markup: July 10, 2003.

[Approved by unanimous consent—members indicated were present when the motion occurred] 

Members Present 

Mr. Grassley .............................................................................................................................................................. X 

Mr. Specter ............................................................................................................................................................... X 

Mr. Kyl ...................................................................................................................................................................... ...................

Mr. DeWine ............................................................................................................................................................... X 

Mr. Sessions ............................................................................................................................................................. X 

Mr. Graham .............................................................................................................................................................. X 

Mr. Craig .................................................................................................................................................................. X 

Mr. Chambliss .......................................................................................................................................................... X 

Mr. Cornyn ................................................................................................................................................................ X 

Mr. Leahy .................................................................................................................................................................. X 

Mr. Kennedy .............................................................................................................................................................. ...................

Mr. Biden .................................................................................................................................................................. ...................

Mr. Kohl .................................................................................................................................................................... ...................

Mrs. Feinstein ........................................................................................................................................................... X 

Mr. Feingold .............................................................................................................................................................. ...................

Mr. Schumer ............................................................................................................................................................. ...................

Mr. Durbin ................................................................................................................................................................ X 

Mr. Edwards ............................................................................................................................................................. ...................

Mr. Hatch, Chairman ................................................................................................................................................ X 

Vote on: Motion to report S. 1125 as amended. 

Date: July 10, 2003.

[Reported out by a vote of 10 nays, 8 yeas, 1 voting pass] 

Members Yeas Nays 

Mr. Grassley ..................................................................................................................................... X ...................

Mr. Specter ...................................................................................................................................... X ...................

Mr. Kyl* ............................................................................................................................................ ................... ...................

Mr. DeWine ....................................................................................................................................... X ...................

Mr. Sessions .................................................................................................................................... X ...................

Mr. Graham ...................................................................................................................................... X ...................

Mr. Craig .......................................................................................................................................... X ...................

Mr. Chambliss ................................................................................................................................. X ...................

Mr. Cornyn ....................................................................................................................................... X ...................

Mr. Leahy ......................................................................................................................................... ................... X 

Mr. Kennedy ..................................................................................................................................... ................... P 

16

[Reported out by a vote of 10 nays, 8 yeas, 1 voting pass] 

Members Yeas Nays 

Mr. Biden ......................................................................................................................................... ................... P 

Mr. Kohl ........................................................................................................................................... ................... P 

Mrs. Feinstein .................................................................................................................................. X ...................

Mr. Feingold ..................................................................................................................................... ................... X 

Mr. Schumer .................................................................................................................................... ................... P 

Mr. Durbin ........................................................................................................................................ ................... X 

Mr. Edwards ..................................................................................................................................... ................... P 

Mr. Chairman ................................................................................................................................... X ...................

* Voting pass. 

IV. BACKGROUND AND NEED FOR LEGISLATION

‘‘I don’t think there can be any doubt that the crisis in asbestos 

litigation is a serious problem, and it continues to get worse as the 

abuse continues and Congress fails to act.’’—Chairman Orrin 

Hatch, at a March 5, 2003 Senate Judiciary Committee Hearing. 

The testimony presented at multiple hearings on this issue, and 

the recent studies written by independent research organizations 

confirm the fact that the asbestos litigation crisis in the United 

States is real. It has failed deserving claimants, who are ill, often 

fatally ill, because of their occupational exposure to asbestos. First, 

these claimants must often wait years for compensation, and they 

may ultimately be denied any compensation at all because the defendant responsible for their injury has been bankrupted by lawsuits brought by others who are not sick. Second, the compensation 

that claimants do receive is arbitrary and inequitable. 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. Third, only a 

small percentage of the amount of money defendants and insurers 

spend on asbestos litigation reaches the claimants who have been 

injured. The majority of these funds find their way into the pockets 

of lawyers on both sides. 

The current asbestos litigation system does not serve the public 

interest. Since 1982, when the Johns-Manville Corporation entered 

Chapter 11, nearly 70 companies, large and small, have been driven into bankruptcy by asbestos litigation. 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. Many of these companies never made asbestos products 

and have been drawn into the litigation only because the companies truly responsible for asbestos injuries, the asbestos manufacturers, are no longer available to sue. 

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 

17

3See, e.g., Hearing on Solving the Asbestos Litigation 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 Dr. James D. Crapo and prepared testimony of Dr. John E. 

Parker). 4http://www.mantrust.org/history.htm 

recently a few months ago in Norfolk & Western Railway. Co. v. 

Ayers, 123 S. Ct. 1210 (2003). The Committee believes that it is 

time to answer that 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 necessary to national security. 

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 

some 30 years ago, and had been incorporated into thousands of 

products by this time. 

This Committee received testimony from a number of witnesses 

regarding the scope and effects of asbestos exposure.3 Asbestos is 

ubiquitous in the environment, and practically all Americans are 

exposed to some degree. Such everyday exposures do not usually 

result in health problems. But, substantial occupational exposure 

to asbestos can lead to a variety of medical conditions. Some of 

these conditions—for example, pleural plaques and most cases of 

pleural thickening—do not measurably interfere with the individual’s breathing. Similarly, most cases of asbestosis—scarring of the 

tissue inside the lung—do not result in impairment. Severe asbestosis, however, can cause very serious breathing impairment and 

even death. Asbestos-related illnesses also include some kinds of 

cancer, including mesothelioma and lung cancer (although smoking 

remains by far the most common cause of lung cancer). At this 

time, mesothelioma is almost invariably fatal within a short period 

of time after diagnosis. The diseases caused by asbestos can have 

long latency periods, sometimes up to 30 or 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, was unable to sustain the onslaught any longer, and in 1982 it filed for protection under chapter 11 of the bankruptcy laws. Six years later, the Manville bankruptcy resulted in the formation of a trust to pay asbestos claims, 

but after a brief (and disastrous) rush of claims on the trust in 

1988–89, the trust was forced to reorganize and reduce benefits to 

claimants to 10 cents on the dollar in 1995.4 Today, asbestos claims 

18

5 Id. 

6 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. 7 RAND Institute for Civil Justice, ‘‘Asbestos Litigation Costs and Compensation: An Interim 

Report,’’ September 2002, at 45 (RAND 2002). 8 Hearing on Asbestos Litigation, Before the Senate Comm. on the Judiciary 107th Cong. 

(Sept. 25, 2002) (FNS Unofficial Transcript of oral statement of David Austern). 

have so overwhelmed the Manville Trust that it pays only 5 cents 

on the dollar.5

Experts estimate that nearly 70 more companies have followed 

Manville into bankruptcy in the last 20 years—with more than a 

third of them filing in the last three years alone. 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 and often have only the most attenuated 

connection with it. 

The heaviest asbestos exposures occurred decades ago. After the 

federal government began regulating the use asbestos in the early 

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

of that decade, occupational exposures to asbestos have 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.’’ 6 Dr. James Crapo, a nationally renowned expert in asbestos 

diseases and former president of the American Thoracic Society, 

testified before the Committee on June 19, 2003, that in his practice, serious asbestosis cases, which still occurred in the early 

1990s, have now become exceedingly rare. At the same time, because of long latency periods, 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 

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

and less common during the 1990s. The RAND Institute for Civil 

Justice reports that ‘‘[a]lmost all the growth in the asbestos caseload can be attributed to the growth in the number of these claims 

[for nonmalignant conditions], which include claims from people 

with little or no current functional impairment.’’ 7 Furthermore, 

more than 90% of all filings with the Johns-Manville bankruptcy 

trust in 2001 were brought by individuals with non-cancer claims.8

The great majority of these non-cancer claims were brought by people with no impairment. This threatens funding available to compensate those who may become sick in the future. 

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 way. Judges, facing a tidal wave of asbestos 

cases, have adopted a variety of procedural short cuts to deal with 

19

9 Hearing on Asbestos Litigation, Before the Senate Comm. on the Judiciary, 107th Cong., 

(Sept. 25, 2002) (prepared testimony of Steven Kazan at 25–26) (Kazan, Sept. 25, 2003). 10 Hearing on Asbestos Litigation, Before the Senate Comm. on the Judiciary 107th Cong. 

(Sept. 25, 2002) (FNS Unofficial Transcript of oral statement of Walter E. Dellinger); see also 

Kazan Sept. 25, 2002, at 26. 11 RAND 2002, at 32. 12 Albert B. Crenshaw, For Asbestos Victims, Compensation Remains Elusive, The Washington Post, Sept. 25, 2002, at E01. 13See Kazan, Sept. 25, 2002, at 27. 

the flood of claims. By reducing the traditional scrutiny given to 

tort claims, these expedients have encouraged the filing of even 

more claims. 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 out-ofcontrol tort system has caused companies who never manufactured 

asbestos and who have little or no connection with it 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. 

Among distortions in the judicial system that work to deny justice to victims and defendants alike are venue shopping, consolidations, aberrations in individual courts, lax standards, and failures 

by the courts to provide the resources necessary to consider cases 

fully: 

• Forum Shopping: The evidence before the Committee showed 

a disturbing nationwide commerce in asbestos cases. These claims 

are not filed in the courts where claimants live or worked. Instead, 

they flow to the jurisdictions with the greatest potential for huge 

settlements and verdicts, even though those jurisdictions may have 

no connection whatsoever to the parties or to the factual basis of 

the case.9 Venue shopping warps the judicial system and results in 

delays for victims. Many plaintiffs’ lawyers only file asbestos cases 

in jurisdictions they identify as having the most sympathetic 

judges and juries. Former U.S. Solicitor General Walter Dellinger 

testified before this Committee that ‘‘increasingly one is able to 

forum shop and go to a jurisdiction, which will allow cases to be 

brought first of all by people who are not demonstrating that 

they’re sick.’’ 10 Five states—Mississippi, New York, West Virginia, 

Ohio and Texas—handled 66% of filings between 1998 and 2000.11

In Jefferson County, Mississippi—population 9,700—21,000 plaintiffs filed asbestos cases between 1995 and 2000.12 The concentration of a huge number of filings in a small number of jurisdictions 

only exacerbates the delays and inequities inherent in the current 

system—forcing victims to wait too long to receive benefits. 

• Mass Consolidations: Consolidated cases often compromise justice for individual claimants. The claims of seriously ill asbestos 

victims are often combined with claims made by people who are not 

sick into large consolidated cases. As a result, the most seriously 

injured victims receive less because they are forced to share awards 

with claimants who are not ill.13 In a recent West Virginia case, 

Mobil Corp. v. Adkins, 8,000 claimants with varying degrees of exVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
20

14See Application to Stay Mandate of the Supreme Court of Appeals of West Virginia and to 

Stay the Commencement of Trial Pending This Court’s Decision on Petition for Writ of Certiorari Or, in the Alternative, Suggestion to Expedite Decision on the Petition, Mobil Corporation v. Adkins, (No. 01–C–1847, Cir. Ct. Kanawha Cty, W. Va.), cert. denied, 123 S. Ct. 346 (Oct. 

7, 2002) (No. 02–132) (Application to Stay). 15David Cosey, et al. v. E.D. Bullard, et al., No. 99–60373, 5th Cir. and Leroy Rankin Jr., 

et al. v. A-Bex Corporation, et al., No. 99–0086, Miss. Super., Jefferson Co., at 3 (Jan. 28, 2000); 

See Jurisdiction and Injury Basis for CCR Settlement Agreement in Mississippi, Mealey’s Litigation Report: Asbestos, Feb. 17, 2000. 16 Hearing on The Asbestos Litigation Crisis Continues: It Is Time for Congress to Act, Before 

the Senate Comm. on the Judiciary, 108th Cong. (March 5, 2003) (prepared testimony of David 

Austern, at 2) (Austern March 5, 2003). 17Griffin B. Bell, Asbestos Litigation and Judicial Leadership: The Courts’ Duty to Help Solve 

the Asbestos Litigation Crisis, National Legal Center for the Public Interest, June 2002, at 15 

(Bell). 

posure and illness were grouped together for trial against 250 defendants.14

• Inequitable Compensation: The vagaries of the courts where 

victims’ cases are filed can have a greater impact on the outcome 

than the merits of a case. Current asbestos litigation payouts vary 

significantly by what state victims live in, which court their cases 

are tried in, and who the judge and jury are that day. For example, 

in late 1999, attorneys for 18 defendants reached a $160 million 

settlement with lawyers for almost 4,000 plaintiffs in cases filed in 

Jefferson County, Mississippi. Allocation of the settlement money 

was based on how far plaintiffs lived from the courthouse. The Mississippi residents each received $263,000, while plaintiffs from 

Ohio, Pennsylvania, and Indiana, despite having similar conditions, 

received only $14,000 each. The Texas plaintiffs recovered $43,500 

each.15 David Austern, the General Counsel of the Manville Personal Injury Settlement Trust told the Committee that ‘‘the amount 

of victim awards diverge wildly—some victims receive grand slam 

awards, while others receive little or nothing.’’ 16 The Committee 

concurs with that conclusion. 

• Abrogation of Tort Principles: The rights of defendants are also 

compromised by failures of the judicial system. First, many courts 

have made it easier for plaintiffs to pursue claims against companies without demonstrating that the companies’ actions or products 

directly caused a claimant’s illness. Causation is traditionally an 

element of tort law; in other words, a defendant’s product must 

have caused a plaintiff’s injury. In asbestos cases, however, ‘‘the 

system rarely accommodates a determination of whether plaintiffs 

made valid product identification, one of the most basic elements 

of establishing an asbestos tort.’’ 17 This abrogation of tort principles has led to arbitrary results. Companies that may, in reality, 

have played minimal or no part in causing a plaintiff’s disease are 

held liable, and in jurisdictions that adhere to joint and several liability rules, may end up responsible for the entirety of the plaintiff’s damages. 

Relaxed standards of proof enable plaintiffs to sue an ever broader range of peripheral defendants who, under traditional tort 

standards, would not ever be haled into court. In addition to causing arbitrariness in verdicts, the effective relaxation of standards 

of proof gives plaintiffs’ attorneys who represent large numbers of 

plaintiffs undue settlement leverage. Because they can choose 

which companies to bring to trial for plaintiffs with the most serious injuries, counsel have leverage to negotiate large settlements 

with particular defendants for their entire ‘‘inventory’’ of claims, inVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00020 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
21

18 Hearing on Asbestos Litigation, Before the Senate Committee on the Judiciary, 107th Cong. 

(Sept. 25, 2002) (FNS Unofficial Transcript of oral statement of Steven Kazan). 19 Bell, at 18. 20 Application to Stay, Mobil Corporation v. Adkins, at 5. 21See Hearing on H.R. 1283, The Fairness in Asbestos Compensation Act, Before the House 

Comm. on the Judiciary, 106th Cong. (1999) (prepared testimony of William N. Eskridge); 

Michelle White, The Role of Procedural Innovations in Mass Tort (NBER 2002). 

cluding those of unimpaired plaintiffs. This makes the filing of 

claims on behalf of the unimpaired persons profitable, which has 

been a factor in the acceleration of such filings in recent years. 

Oakland, California, lawyer Steven Kazan testified before this 

Committee that ‘‘we’ve gone from a medical model in which a doctor diagnoses an illness and the patient then hires a lawyer, to an 

entrepreneurial model in which clients are recruited by lawyers 

who then file suit even when there’s no real illness. These are not 

patients, they are plaintiffs recruited for profit.’’ 18

Second, defendants’ rights are further compromised when courts 

lack the resources to monitor medical evidence submitted by plaintiffs. A study by neutral academics showed that in 41% of audited 

claims of alleged asbestosis or pleural disease, the Trust’s physicians found that the claimant either had no disease or a less severe 

disease than alleged (for example, pleural disease rather than asbestosis).19 Such evidence contradicted the plaintiffs’ experts. This 

systematic overreading of x-rays by plaintiffs’ experts doubtless figured into the court cases filed by the same claimants. 

Third, large consolidated cases compromise the rights of defendants as well as victims. In Mobil v. Adkins, the 8,000 cases were 

consolidated against 250 diverse defendants for trial. Such circumstances offer little chance to present individual defenses. 

Compounding and exacerbating the unfairness, the court structured the trial essentially backward so that findings of fault and 

punitive damages would come before the finding of causation.20

Huge consolidations such as the West Virginia proceeding in 

Adkins put defendants in a ‘‘bet-the-company’’ situation that forces 

settlements of undeserving cases. But, even much smaller consolidations can make it impossible for juries to sort out the evidence 

in individual cases, significantly increasing the size of verdicts.21

One can only conclude that the current asbestos litigation system 

is a failure. 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. 

Attempts to solve the problem within the present tort system have 

been rejected by the Supreme Court. In one case, the parties 

agreed to a class action settlement that would have provided an alternative dispute resolution mechanism for asbestos claims against 

all defendants (who had stopped manufacturing asbestos products 

some 18 years before the settlement). The Supreme Court rejected 

the settlement. 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 recently, the Supreme Court rejected an attempt to limit damages in 

asbestos cases under federal law, holding 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 

22

22 Hearing on Asbestos Litigation, Before the Senate Comm. on the Judiciary, 107th Cong. 

(Sept. 25, 2002) (prepared statement of Jonathan Hiatt, General Counsel, American Federation 

of Labor and Congress of Industrial Organizations, at 1) (Hiatt Sept. 25, 2002). 23 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. (June 4, 2003) 

(prepared testimony of Jennifer Biggs, at 5) (Biggs June 4, 2003). 24 RAND, at 40. 25 Austern Sept. 25, 2002, at 4. 26 16–7 Mealey’s Litig. Rep. Asb. 2 (May 4, 2001) at 1. 27 RAND 2002, at 35. 28 Austern March 5, 2003, at 2. 

were bankrupt or otherwise unreachable, and that a person with 

only mild impairment due to asbestosis could receive a very large 

award based only on fear of developing cancer at some future date. 

Norfolk & Western Railway Co. v. Ayers, 123 S.Ct. 1210 (2003). 

In these cases, the Supreme Court 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

Jonathan Hiatt, General Counsel of the AFL–CIO, testified before this Committee in September of 2002 that, compounding the 

tragedy of asbestos illness, ‘‘the legal system has offered lengthy 

delays, followed by limited compensation, compensation that often 

comes too late.’’ 22 A flood of asbestos cases is overwhelming the 

courts, causing delays for victims. An estimated 300,000 cases are 

currently pending.23 More than 600,000 individuals have brought 

claims.24 Some experts estimate that as many as 2.7 million additional claims will be filed by people who were exposed to asbestos.25 While the majority of these claims are expected to be filed 

by unimpaired claimants, this onslaught will inevitably cause extensive delays. 

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

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

plaintiffs, died of mesothelioma before the Louisiana trial involving 

his claim even got underway.26 While some courts give priority to 

plaintiffs with mesothelioma, elsewhere plaintiffs with mesothelioma may die before they get to trial.27 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 nearly 70 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.28

23

29 Bell, at 14. 30 Austern Sept. 25, 2002, at 2. 31 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). 32 Austern March 5, 2003, at 2. 33Order 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. 34 Biggs, June 4, 2003, at 1–3. 

Not only do victims have to wait too long for compensation, 

awards are frequently inequitable, with large awards often going to 

claimants who are not sick. For example, in a recent Mississippi 

case, six plaintiffs who were not sick were awarded a total of $150 

million. The plaintiffs did not claim to have ever missed a day of 

work because of asbestos injury, they did not claim any medical expenses related to asbestos, and they did not have asbestos-related 

physical impairment. One plaintiff told the court he suffers no 

shortness of breath and walks up to four miles per day for exercise.29

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. 

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 is now paying victims just 

five cents on the dollar.30 Moreover, 63% of the funds paid out by 

the Manville trust have gone toward claims by those with non-malignant conditions.31 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.32

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.’’ 33

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

awards are diminished by high transaction costs. Plaintiffs’ lawyers 

fees alone are typically 40% of any settlement, and with expenses 

can take more than half of the claimants’ recovery. 

Today’s system is very costly, and victims could be well compensated under a more efficient system. Tillinghast-Towers Perrin 

actuary Jennifer Biggs testified before this Committee that the future loss and expense for asbestos liability will amount to $130 billion (to which might be added the $70 billion that has already been 

paid).34 Of that $130 billion, roughly $28 billion (21.5%) goes to defense costs and $41 billion (40%) to plaintiffs’ attorneys. So, while 

today’s system has a cost impact of $130 billion (future), less than 

24

35 RAND 2002, at 71. 36Keith M. Buckley, Asbestos: Impact on the U.S. Insurance Industry, Fitch Ratings, July 25, 

2002, at 13. 37 Joseph E. Stiglitz, The Impact of Asbestos Liabilities on Workers in Bankrupt Firms, Sebago Associates, Dec. 2002, at 10 (Stiglitz). 38 Hearing on Solving the Asbestos Litigation 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 Robert P. Hartwig, Insurance Information Institute, at 2). 39 RAND 2002, at 49. 

half—$61 billion—will actually reach claimants. A compensation 

system that removes these transaction costs could compensate victims while at the same time have the benefit of shepherding more 

funds to sick victims rather than to legal and other fees. S. 1125 

provides for $108 billion, nearly all of which would go directly to 

claimants. Contrasting these numbers with the $61 billion that 

would actually go to claimants under our current tort system, it becomes evident that S. 1125 is a far superior option. 

D. ECONOMY, JOBS SUFFER UNDER CURRENT SYSTEM

Almost all of the original asbestos manufacturers were driven 

into bankruptcy by asbestos litigation. Plaintiffs’ attorneys now 

seek to recoup funds ‘‘lost’’ to bankruptcy by targeting a widening 

list of solvent companies, thus triggering a new wave of bankruptcies. 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 our March 

5, 2003, hearing, ‘‘[n]ot 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 surrounding the litigation. * * * These bankruptcies created a lose-lose situation. Asbestos victims deserving fair compensation do not receive it and bankrupt companies cannot create new jobs nor invest in our economy.’’ Given that nearly 70 defendant corporations have filed for bankruptcy related to asbestos litigation, and as many as 2.7 million asbestos claims still may be filed, bankruptcies are likely to continue. 

More than 20 of the almost 70 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.35 Recent 

bankruptcies 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.36 Asbestos liabilities accounted for 84% of total contingent liabilities for Owens Corning, 

67% for W.R. Grace, and 93% for USG.37

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 our 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,38 up from 300 listed 

in 1983.39

25

40 Id., at 49–50. 41 Remarks of Judge Jack Weinstein, at a symposium held by the Bar Association of the City 

of New York titled: ‘‘Asbestos: What Went Wrong?’’ Oct. 21, 2002, at 12. 42 Hearing on Solving the Asbestos Litigation 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 Scott Kapnick, at 2). 43 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). 44Stiglitz, at 3. 45Dellinger Sept. 25, 2002. 46 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). 47Mark Truby, Asbestos Ruined Federal-Mogul, The Detroit News, Mar. 31, 2002. 

Asbestos litigation has reached nearly all parts of the U.S. economy. Companies representing 75 of 83 American industries (using 

the Commerce Department’s classifications) have been hit. ‘‘Nontraditional’’ defendants account for 60% of asbestos-related expenditures. Companies ranging from America’s largest corporations to 

small businesses with less than two dozen employees are now the 

target of asbestos litigation.40 According to Senior U.S. District 

Judge Jack Weinstein, ‘‘[i]f the acceleration and expansion of asbestos lawsuits continues unaddressed, it is not impossible that every 

company with even a remote connection to asbestos may be driven 

into bankruptcy.’’ 41

The negative impact of asbestos liability is so serious; the mere 

specter of it has the effect of chilling or even halting transactions. 

Goldman Sachs Managing Director Scott Kapnick told this 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.’’ 42 The asbestos problem also has serious consequences for 

insurers, who now pay about 57% 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.’’ 43

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 

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

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

in wages over his or her career.44 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.’’ 45

When asbestos defendant Federal-Mogul declared bankruptcy in 

2001, employees reportedly lost more than $800 million in their 

401(k)s.46 For example, one 82-year-old Federal-Mogul employee 

saw his $1 million retirement nest egg shrivel to $20,000.47 Bankrupt Owens Corning saw its shares lose 97% of their value in the 

26

48 Hearing on Asbestos Litigation, Before the Senate Committee on the Judiciary, 107th Congress, September 25, 2002. The Honorable Benjamin Nelson, United States Senator, Nebraska. 49 Hearing on Asbestos Litigation Crisis: S. 1125, the Fairness in Asbestos Injury Resolution 

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

at 2. 50Stiglitz, at 22. 51 Hiatt at 2, Sept. 25, 2002. 

two years before its filing. Approximately 14% of those shares were 

held by employees.48

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.’’ 49 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%.50

There is no question that the escalating numbers of claims and 

costs is a threat to workers’ jobs and retirement savings. The AFL– CIO testified that ‘‘[The tort system] is damaging business far more 

then it is compensating victims.’’ 51 Businesses with only a remote 

connection to asbestos are being targeted in the same way that 

original manufacturers were, despite the differences in culpability. 

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. Without it, the current system will continue exacerbating the devastating consequences it has 

wrought for over 20 years. 

E. ASBESTOS BAN

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 

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). 

F. CONCLUSION

It is evident that the asbestos litigation system is fundamentally 

flawed. Victims and defendants alike face inequity and uncertainty, 

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

27

only federal legislation can create a fair and efficient asbestos resolution system. The FAIR Act offers just such a resolution. 

V. HOW S. 1125 WORKS

The FAIR Act takes asbestos claims out of the existing broken 

tort 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 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. As long 

as these payments are made into the Fund, these contributing participants are immune from the tort system with regard to asbestos 

personal injury claims and its inherent pitfalls. 

A. THE FAIR ACT’S FUNDING MECHANISMS

To first ensure that claimants can be properly compensated, the 

FAIR Act requires defendant and insurers to capitalize the trust 

fund. This injection of funds is achieved through four layers of 

funding that break down as follows: (i) $108 billion in mandatory 

contributions from defendants and insurers spread over 27 years; 

(ii) the Administrator’s access to supplemental accounts and borrowing authority; (iii) the contingent call funding vehicle; and (iv) 

the back-end funding vehicle. Although the Committee believes 

that the first layer of mandatory funding contributions from defendants and insurers will be more than adequate to pay all pending and future asbestos claims, the FAIR Act contains these three 

additional layers of funding to ensure that the Fund adequately 

compensates eligible asbestos victims in the event of unanticipated 

contingencies. 

28

1. The $108 billion in mandatory funding 

The primary source of funding comes from mandatory annual 

contributions by defendant participants and insurers during the 

first 27 years of the Fund’s life. The aggregate level of mandatory contributions is established at $108 billion: $104 billion shared 

equally between defendants and their insurers and at least $4 billion from existing confirmed asbestos trusts. 

a. The $104 billion contribution from defendants and insurers 

The Fund will be financed through allocated contributions of $52 

billion each by defendants and insurers that have been exposed to 

asbestos claims in the tort system. Although insurers and defendants share this funding obligation equally, the mechanics of how 

these amounts will be assessed towards each contributing group 

necessarily differs. 

For defendants 

With respect to the defendants, the Administrator must first assign 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 assigned to tiers, the Administrator’s 

next step is to assign 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 with ease 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. 

The Committee believes that a dual tiering system that accounts 

for past asbestos expenditures and company revenues is a fair 

measure of a company’s ability to fund the assessments under the 

FAIR Act. But in the event a tiering assignment unduly burdens 

a contributing company, the FAIR Act provides for limited payment 

adjustments based on severe financial hardship or exceptional 

cases of demonstrated inequity. 

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 abundant 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 diviVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00028 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
29

sion 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. 

Moreover, to ensure that the Fund receives early funding while 

the Commission develops an allocation formula, the FAIR Act authorizes the Administrator to collect payments from the asbestos 

insurers in an amount that does not exceed the ultimate financial 

obligation of an insurer participant. Such payments are to be assessed on an equitable basis and credited against future payments 

that may be required after the Commission develops an allocation 

formula. 

b. The $4 billion contribution from existing bankruptcy trusts 

The remaining $4 billion is provided by 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 6 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. 

2. The administrator’s access to supplemental accounts and borrowing authority 

To ensure sufficient funds are available to compensate eligible claimants if funding is necessary beyond the mandatory $108 billion contribution, the FAIR Act provides a second layer of funding 

that contains three components. First, the Administrator holds access to additional funds through a guaranteed payment account. 

This account collects a mandatory surcharge (in addition to the assessed amount) on every defendant and insurer contribution made 

into the Fund. The proceeds from this surcharge are used to cover 

shortages attributable to the non-payment by any participant. Second, the Administrator holds access to an orphan share account 

that collects amounts paid in excess of the maximum aggregate 

contribution by insurers and defendants. These amounts are used 

to cover losses caused by participants that proceed with Chapter 11 

bankruptcies and for losses caused by financial hardship and inequity determinations made in favor of certain participants. Third, 

the Administrator holds authority to borrow from commercial lending institutions amounts to offset short term losses in an amount 

that does not exceed anticipated contributions for the following 

year. 

3. The contingent call funding vehicle 

This funding vehicle is the next line of defense to offset potential, 

though unlikely, shortages during the first 27 years of the Fund. 

The contingent call provision gives the Administrator the discretion 

to withhold step-downs after year 5 of the Fund. As currently 

structured, the Fund envisions a payment schedule that begins 

with at least $5 billion annually during years 1 through 5 with a 

gradual reduction in the amount of such payment beginning year 

30

6. But if the Administrator certifies that the Fund is encountering 

financial difficulties in paying claims, the Administrator is authorized to assess participants at the initial year 1–5 minimum contribution levels. 

4. The back-end funding vehicle 

As the term suggests, this funding vehicle addresses potential 

shortages to pay claims that may exist after year 27 of the Fund. 

The back end provision gives participants the option to either continue contributing into the Fund in an aggregate amount not to exceed $2 billion annually or have the remaining claims resolved in 

the tort system in Federal Court. 

B. FAIR ACT CLAIMS PROCESS

The FAIR Act 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. 

The FAIR Act’s nationalized, streamlined claims processing system provides compensation to eligible claimants promptly without 

creating a new or large bureaucracy. It works as follows: 

1. Court procedure 

The compensation system will be administered by the Court of 

Federal Claims, which will establish and supervise an Office of 

Special Asbestos Masters (OSAM) to process and make initial decisions on claims for compensation. OSAM will facilitate the claims 

handling process, so that the Court’s docket does not become backlogged as occurs in the current tort system. Claimants begin the 

process by filing a claim form listing their asbestos exposure, work 

history, medical records (including diagnoses and test results), tobacco use and prior claims and recovery. Claims are referred to 

claims examiners for an initial review. If the claim form is complete, a special asbestos master has 60 days to determine the 

amount of any award to which the claimant is eligible. The special 

asbestos masters, with recommendations by a Medical Advisory 

Committee made up of objective and experienced physicians when 

requested or where required, need only determine whether the 

claimant meets the diagnostic, latency, medical, and exposure criteria established in the Act. A claimant may appeal a decision to 

a panel of three Special Asbestos Masters within 30 days of receiving notice of a decision. The panel must make a determination 

within 60 days after receipt of an appeal. Claimants have 30 days 

to appeal this panel’s decision to a 3-judge panel of the Court of 

Federal Claims. When such panel is constituted, it is known as the 

Court of Asbestos Claims (‘‘Asbestos Court’’). Claimants then have 

30 days to file an appeal to the U.S. Court of Appeals for the Federal Circuit. 

Claims must be filed with the Court within 4 years from the date 

the claimant knew or should have known of the claim, and claimVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00030 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
31

ants have the right to seek appeal eligibility determinations. The 

FAIR Act establishes a claimant assistance program to provide assistance to claimants in preparing and submitting claims, including 

a legal assistance program to assist them with legal representation 

issues. Notification is provided of available pro bono legal services. 

The purpose of the FAIR Act is to establish an administrative 

compensation system to replace the tort system for asbestos victims, in much the same manner that workers’ compensation systems have replaced tort liability as a means of compensating workplace injuries. In accordance with this purpose, the FAIR Act preempts asbestos personal injury claims made under state or other 

federal law, including pending claims that have not proceeded to 

final judgment before the date of enactment. Pursuant to an 

amendment in committee, the preemption of pending claims will 

not become effective until the Fund is fully operational and processing claims. However, a participant’s contributions to the Fund 

shall be reduced by the amount of any claims made payable by the 

operation of this amendment after the enactment of this Act. Workers’ compensation and veterans’ benefits claims are excepted from 

preemption, because workers’ compensation and veterans’ benefits 

programs generally do not suffer from the uncertainties, unfairness, delay and expense of the tort system. 

2. Prompt payment of claims 

Unlike the current system, in which results are slow, inequitable 

and unpredictable, the Fair Act ensures rapid, fair, and predictable 

payments, while still maintaining the stability of the Fund. In contrast to the long delays associated with current asbestos litigation, 

payments are expected to be paid over a period of 3 years, and no 

longer than 4 years. Living mesothelioma claimants are entitled to 

accelerated payments. Expedited payments also may be provided in 

cases of exigent circumstances or extreme hardship caused by the 

asbestos related injury. The reduced transaction costs of the administrative system and the more than adequate funding provided 

under the FAIR Act ensure that eligible claimants receive the compensation to which they are entitled, unlike current bankruptcy 

trusts where claimants receive pennies on the dollar or current settlements and awards where claimants often lose more than half of 

the recovery in attorneys’ fees and expenses. Pursuant to an 

amendment in Committee, if in any year the Administrator is unable to certify that 95% of claim obligations owed in that year are 

being paid (and after a 90 day period to cure), the fund shall immediately sunset and return claimants to the tort system. 

In the event the claimant has a timely filed pending claim, the 

claimant has 4 years from the date of enactment of this Act to file 

the claim with the Court. Claimants who meet the statute of limitations under the FAIR Act, and have already received a prior settlement or judgment for their injury, will have any recovery from 

the Fund reduced by the amount of those prior recoveries. 

3. Diagnostic and latency criteria 

Claimants must meet diagnostic and latency criteria to be compensated by the Fund. The Committee intends the diagnostic criteria to reflect the typical components of a true medical diagnosis 

by a claimant’s doctor, including an in-person physical examination 

32

(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 true 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, the FAIR Act also requires that 

the claimant demonstrate that his or her first exposure to asbestos 

occurred at least ten years prior to the initial diagnosis. 

4. 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 

10 disease levels, 5 of which relate to nonmalignant asbestos-related diseases, such as asbestosis, and 5 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. 

5. 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 the FAIR Act compensates only asbestos-related diseases. 

The number of years of occupational exposure are 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 put in place. Such exposures often occurred in the manufacture of asbestos. Because mesothelioma can develop, in some instances, from more limited exposure, the exposure requirements for 

mesothelioma are the least stringent, requiring minimal exposure 

to asbestos. Nonetheless, the criteria are meant to ensure that only 

diseases caused by asbestos exposures versus other causes are compensated by the Fund. 

33

6. Exceptional and special cases 

The FAIR Act provides some limited 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 

Medical Advisory Committee, made up of objective, experienced 

physicians, to determine whether the claimant is eligible. 

Special provisions are established for review by the Medical Advisory Committee in other unique circumstances, including those 

related to ‘‘take home’’ exposures where asbestos was brought into 

the home by an occupationally exposed person and those related to 

the high levels of environmental exposures of residents and workers in Libby, Montana. Because the medical conditions of the residents of Libby are currently being studied by various agencies, 

claims filed by Libby claimants are to be automatically designated 

as exceptional medical claims and referred to the Medical Advisory 

Committee for review of the claimant’s eligibility. 

7. Claim values 

The FAIR Act 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. 

In the case of other cancers and lung cancers where smoking is 

considered a predominant or likely cause of the cancer, claims values are reduced for smokers. Lifetime nonsmokers and former 

smokers who had not smoked at least 12 years prior to diagnosis 

are eligible for increased compensation based on a review of their 

smoking history by the Medical Advisory Committee. Such claimants, however, bear the burden of providing sufficient evidence of 

the limits of their smoking behavior. This Fund is not intended to 

be a compensation system for tobacco-related diseases, which would 

overwhelm the Fund leaving no money for asbestos victims. 

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. 

8. Quality control 

Because of the subjectivity of many of these medical tests and because these illnesses have other causes, including smoking, industrial dusts, aging, etc., provisions are made to ensure the quality 

34

of the medical and exposure evidence submitted to support claims. 

The FAIR Act is designed to eliminate the abuses found in the current system, where mass screenings conducted by facilities associated with plaintiffs’ law firms often result in claims with questionable medical support. The FAIR Act requires the implementation 

of audit procedures as quality control on the evidence being submitted, which includes independent review by certified B-readers of 

x-rays submitted in support of claims. Similarly, in light of the history of abuse and the potential for misrepresentations by claimants 

or their representatives, the FAIR Act authorizes the Court to request additional information, including medical records and blood 

tests, to review and confirm a claimant’s declared smoking history 

and behavior. Finally, the FAIR Act also provides for criminal penalties in the event a claimant or other person (including contributors) submits false information related to compensation of an asbestos claim under the Fund. 

C. THE TIMING OF THE FAIR ACT UPON ENACTMENT

1. The funding 

The Fund will start receiving assets at least six months after the 

date of enactment. Confirmed bankruptcy and other trusts created 

to pay asbestos claims must transfer the bulk of their assets to the 

Fund within 6 months of the date of enactment, which is expected 

to infuse at least $4 billion dollars into the Fund at the outset. As 

a result, in less than a year the Fund will have substantial funding 

to begin the payment of claims 

The Administrator begins the defendant assessment process by 

sending notice within 60 days of appointment. This notice requires 

all recipients to provide the Administrator within 30 days information necessary to calculate the amount of required contributions 

into the Fund. Upon the Administrator’s receipt of such information, the FAIR Act gives the Administrator 60 days to make a determination assessing defendant contributions. Although a defendant participant has the right to obtain rehearing of the determination and has the right of review, the payment obligation is not 

stayed during this review.

The Asbestos Insurers Commission, which is established to expedite the assessments of contributions to the Fund from insurers, reinsurers, and run-off entities established to pay costs associated 

with asbestos claims, is under strict deadlines to assess contributions to insurer participants. Within 30 days of being appointed, 

the Commission is required to meet to begin the process of developing an allocation formula. Once the Commission develops the allocation formula and assesses contributions to the insurer participants, the insurer participants are given only 30 days to provide 

a consensus agreement on allocation, which may replace the Commission’s determination as long as the Commission certifies that it 

meets the requirements of the Act. 

2. The payment of claims 

The FAIR Act is designed to ensure that claimants are compensated quickly, and under the FAIR Act resolution of a claim can 

occur in less than a year. Upon filing a claim with the Court of 

Federal Claims, a claimant should receive an eligibility determinaVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00034 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
35

tion from a special asbestos master in less than three months. As 

discussed above, the FAIR Act requires the Court of Federal 

Claims to refer a claim to the Office of Special Asbestos Masters 

within 20 days of filing. The Special Asbestos Master must then 

make an eligibility determination within 60 days after receiving 

the claim and requisite medical information. 

In the event a claimant challenges an eligibility decision by a 

special asbestos master, the claimant is given a structured appeals 

process with established deadlines. A claimant may seek further 

review by a panel of three Special Asbestos Masters within 30 days 

of receiving notice of a Special Asbestos Master decision. The FAIR 

Act requires that this panel deliver its decision within 60 days of 

receipt of an appeal. 

The claimant may seek further review of a panel decision by appealing to a three judge panel of the Federal Court of Claims. This 

panel is referred to as the United States Court of Asbestos Claims 

and is required under the FAIR Act to make a decision within 60 

days of its receipt of an appeal. If the U.S. Court of Asbestos 

Claims remands the claim for further action, the special asbestos 

masters is given an additional 30 days to make a determination. 

Claimants are also given the option to pursue further judicial review before the United States Court of Appeals for the Federal Circuit upon filing an appeal within 30 days after issuance of a final 

decision by the U.S. Court of Asbestos Claims. Decisions by the 

Federal Circuit are subject to review by the United States Supreme 

Court. 

VI. SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Sec. 1. Short title 

Sec. 2. Findings and purpose 

Sec. 3. Definitions 

TITLE I. ASBESTOS CLAIMS RESOLUTION 

Subtitle A. United States Court of Federal Claims 

Sec. 101. United States Court of Federal Claims 

Office of Special Asbestos Masters: The United States Court of 

Federal Claims (‘‘Court of Claims’’), through the newly created Office of Special Asbestos Masters, shall have the authority to examine asbestos claims and make awards. The chief judge of the Court 

of Federal Claims appoints Special Asbestos Masters, including one 

Chief Special Asbestos Master, as necessary to facilitate claims 

processing. A concurrence of a majority of the court is required on 

all appointments and reappointments. No more than 20 Special Asbestos Masters may be appointed without Congressional approval. 

The Chief Special Asbestos Master serves for a term of 4 years, 

and may be reappointed for 2-year terms. The Chief Special Asbestos Master, in consultation with the Chief Judge, prescribes rules 

and procedures for claims processing, and appoints or contracts for 

services personnel to carry out the duties of the Office of Special 

Asbestos Masters. All special masters are subject to removal by the 

concurrence of a majority of the active judges of the court for good 

36

cause. The compensation of special masters is set by the chief judge 

and cannot exceed Level V of the Executive Schedule. 

Subtitle B. Asbestos Injury Claims Resolution Procedures 

Sec. 111. Filing of claims 

Claimants file claims with the United States Court of Federal 

Claims (the Court), through the Office of Special Asbestos Masters. 

The Chief Special Asbestos Masters, in consultation with the Chief 

Judge of the Court, issues rules as to who may file as a representative of another individual. Claims must be notarized and give detailed information about the claimant, including their asbestos exposure, medical records, tobacco use, collateral sources of compensation and any other information that the Court elects to add. 

Claims must be brought within 4 years from the time the claimants knew or should have known of their injury. Persons with 

pending claims in the tort system must file within 4 years of the 

date of enactment. Claimants who develop an additional condition 

or disease may file for additional benefits. 

Sec. 112. General rule concerning no-fault compensation 

It is the intent of the FAIR Act to provide a process to compensate claimants faster and with more certainty than the current 

system The FAIR Act therefore removes the burden a claimant 

would ordinarily have to overcome of establishing that the injury 

was the fault of a particular party. Under the FAIR Act claimants 

need not establish that his/her injury resulted from the negligence 

or other fault of another person. 

Sec. 113. Essential elements of eligible asbestos claim 

Claimants must prove by a preponderance of the evidence that 

they have an eligible disease or condition, and that they meet the 

latency and exposure criteria requirements. 

Sec. 114. Eligibility determinations 

Within 20 days of filing, claims are referred to a Special Asbestos 

Master. Claims examiners then make the initial review for each 

claim under the Special Asbestos Masters’ direction. Claims examiners will notify claimants if additional information is needed to determine eligibility, including requiring a medical examination and/

or tests. Once a claims examiner has all the necessary information, 

the claim and a recommendation are sent to a Special Asbestos 

Master who has 60 days after receipt of a completed claim to provide a written recommendation, including findings of facts. 

The Court will establish expedited procedures for exigent cases. 

Claimants must either waive their right to judicial review or have 

exhausted their judicial review to receive their award. The Court 

will establish audit procedures for reviewing the accuracy of the 

Special Asbestos Master’s recommendation. 

Appeal to 3 Special Asbestos Master panel: Within 30 days after 

receiving a notice of a decision by the Special Asbestos Master, a 

claimant may appeal to a panel of 3 Special Asbestos Masters. 

Such panel may reverse the decision of the individual Special Asbestos Master within 60 days if the decision was based on clear 

37

52See section 141 for claimant’s appeal of a decision by panel of 3 Special Asbestos Masters 

to panel of 3 Judges of the Federal Court of Claims. 53See, e.g., The Diagnosis of Nonmalignant Disease Related to Asbestos, Offical Statement of 

the American Thoracic Society, March 1986 (noting that ‘‘[a]ll alternative diagnoses must be 

considered before accepting the presumptive diagnosis of asbestosis’’). 

error or if new, material evidence is available. Accepting a payment 

extinguishes all claims related to such payment.52

Sec. 115. Medical evidence auditing procedures 

The Court will establish audit procedures for medical evidence 

submitted as part of claims to ensure accuracy of x-ray readings 

and pulmonary function tests. If the Court finds certain providers 

are not complying with prevailing medical practices, records from 

such providers will be deemed inadmissible for a claim. A provider 

who is deemed non-compliant may appeal such determination 

under procedures established by the Court. 

Sec. 116. Claimant assistance program 

This section authorizes the Court to establish a legal assistance 

program to aid claimants in legal representation issues. As part of 

this program, the Court will maintain a list of attorneys who are 

willing to provide their services on a pro bono basis and provide to 

claimants notice of and information relating to pro bono legal services available to those claimants and any limitations on attorney 

fees. Before a person becomes a client of an attorney with respect 

to an asbestos claim that attorney shall provide notice to that person of pro bono legal services available for that claim. 

Subtitle C. Medical Criteria 

Sec. 121. Medical criteria requirements 

This section establishes the latency, diagnostic, exposure and 

medical criteria required to establish an asbestos claim for each of 

10 disease levels. Levels I through V include nonmalignant asbestos-related disease or conditions and levels VI through X include 

malignant diseases. 

Latency: Although the latency period for asbestos-related disease 

can be as long as 30–40 years, part of the consensus agreement by 

the Committee was to require only a 10–year latency period in 

order to ensure that all potential asbestos victims were being compensated. Claimants must provide a statement from a doctor or a 

history of exposure that shows at least 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 recognizes that a medical diagnosis is a key component of the eligibility requirements in order to 

maintain the integrity of the Fund and to fulfill the purpose of the 

Act to compensate asbestos victims. 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 history by the claimant’s doctor, and a review of other potential causes of the claimant’s illness.53 Injuries due to other 

causes, such as smoking, can present themselves in similar ways 

as asbestos-related injuries. This Fund, however, is intended to 

38

compensate injuries caused by asbestos exposure, and, therefore, a 

diagnosis of an asbestos-related injury is required under the Act. 

For levels I through V, a diagnosis must be 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, 

and a pulmonary function test for levels III through V. Deceased 

claimants may provide a diagnosis supported by physician report 

based on pathological evidence or an x-ray reading by a certified 

B-reader. For disease levels VI through X, the diagnosis must be 

based on a physical examination or on findings by a board-certified 

pathologist. 

Exposure Criteria: A claimant must demonstrate meaningful and 

credible evidence of exposure to asbestos in the United States, or 

while a U.S. citizen employed by a U.S. company or employed on 

a U.S. flagged ship. There must be a causal link between the asbestos exposure related to the employment overseas for a U.S. company or on the U.S. flagged ship and the asbestos-related injury. 

Since asbestos fibers are present in the ambient air and water in 

very small amounts it is the intent of the committee that any exposure must be in excess of the amount of asbestos in the ambient 

air. 

‘‘Take-Home’’ Exposure: Claimants may alternatively satisfy the 

requirements under the Act based on exposures to asbestos brought 

into the home by an occupationally exposed person, i.e., take home 

exposures, if the occupationally exposed person can satisfy the exposure requirements of the disease or condition claimed and the 

claimant lived with the occupationally exposed person during the 

required exposure period. This requirement of ‘‘living with’’ a person requires that the claimant have used the residence of the occupationally-exposed person as his/her regular residence for the time 

period necessary to satisfy the exposure requirement for the disease level that the claimant is asserting. 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. Because take home exposures generally do not rise 

to the same level and intensity of exposure as the occupationally 

exposed worker, such claims will be referred to the Medical Advisory Committee for a determination as to whether the take home 

exposures are sufficient to establish a causal relationship to the 

claimed disease comparable to that of the occupational exposed person. 

Libby, Montana: In addition, the unique nature of the exposures 

to asbestos associated with the vermiculite mining and milling operations in Libby, Montana have resulted in a number of asbestosrelated injuries among the residents of Libby. Under the FAIR Act, 

the occupational exposure requirements are waived 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, 2003. The 

mining and milling operations in Libby ended in 1990, and the 

United States Environmental Protection Agency, among others, has 

been working to address and eliminate the environmental and 

health risks in Libby since 1999. 

39

Non-malignant Conditions: For nonmalignant 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 

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 that there are no other 

more likely causes of the claimant’s impairment than the claimant’s asbestos exposure. The Committee intends that such medical 

documentation would be provided by a physician with knowledge 

and expertise in diagnosing occupational lung disease. With respect 

to Nonmalignant Levels III, IV, and V the Committee intends to 

the extent feasible that the documentation would be provided by an 

appropriately board certified physician in occupational medicine or 

pulmonary medicine. The Committee recognizes, however, that access to appropriately board-certified physicians may not be feasible 

for all claimants due to geographical constraints. The exclusion of 

other more likely causes of the impairment is a typical component 

of a medical diagnosis due to the fact that there are a number of 

other potential causes for such conditions which may have similar 

characteristics of an asbestos-related condition. For example, individuals exposed to other dusts or airborne contaminants may be at 

risk for silicosis or other diseases which also may show up as an 

abnormality in the lung. 

In addition, Level I requires 5 years cumulative occupational exposure, while levels II through V require 5 years substantial occupational exposure weighted based on time and industry (‘‘weighted 

years’’). Because it is well recognized in the medical community 

that, except for mesothelioma, asbestos-related diseases are dose 

dependent, i.e., the risk increases as the amount of exposure increases, the industry and time weighting of years of exposure are 

necessary to act as a measure of dose. Certain industries and occupations involve higher levels of exposures to asbestos fibers due to 

the direct handling of the asbestos itself, and is reflected in the industry weighing component. On the other hand, persons who work 

with asbestos-containing products, such as auto mechanics who 

work on brakes and related occupations, are generally not exposed 

to asbestos fibers in harmful amounts in the course of their occupation. Such occupations do not involve the same type of exposure as 

a person who manufactured products using raw asbestos. 

The intent of the weighted exposure requirement is to recognize 

that federal regulations implemented in the 1970’s and 1980’s have 

dramatically reduced asbestos exposures and resulted in significantly less exposures to asbestos that simply do not compare to the 

levels of asbestos exposures that occurred prior to 1970. As found 

by the District Courts, ‘‘Mesothelioma and asbestos-related lung 

cancers are expected to result primarily from the sort of direct occupational exposure that was phased out as a result of increasingly 

40

54 In re Joint E & S Dists. Asbestos Litig., 237 F Supp.2d 297, 311 (E. & S.D.N.Y. 2002) (citations omitted). 55The Diagnosis of Nonmalignant Disease Related to Asbestos, Official Statement of the 

American Thoracic Society, March 1986. 56Testimony of Dr. James D. Crapo, Professor of Medicine, National Jewish Center and University of Colorado Health Sciences Center, Before the Senate Committee on the Judiciary Concerning S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 4, 2003, at 6. 57 Norfolk & W. Railway Co. v. Ayers, 123 S. Ct. 1210, 1222 (2003) (citing A. Churg & F. 

Green, Pathology of Occupational Lung Disease 343 (2d ed. 1998)). 58Testimony of Laura Welch, MD, Medical Director, Center to Protect Workers Rights, On Asbestos Related Diseases—Medical Criteria, Populations at Risk and Disease Projections, Before 

the Senate Judiciary Committee, June 4, 2003, at 7. 

stringent federal regulation.’’ 54 Also, as noted by the American 

Thoracic Society in its March 1986 guidance, ‘‘[w]ith exposures 

below the current recommended permissible exposure limit value 

[under OSHA standards], asbestosis is not likely to be found during 

the course of a working career. With proper engineering controls, 

work practice, and where necessary, personal respiratory protective 

devices, asbestosis should not occur.’’ 55 These differences in the exposure intensity and amount of exposure to asbestos fibers are reflected in the industry and time-weighting formula. 

Malignant Conditions: For malignant conditions (Levels VI to X), 

the medical criteria require a diagnosis of mesothelioma, primary 

lung cancer, or other cancer. For other cancers, level VI, requirements of a claim include (i) evidence of a bilateral asbestos-related 

nonmalignant disease; (ii) 15 weighted years of exposure to asbestos; and (iii) supporting medical documentation that the claimant’s 

exposure to asbestos was a contributing factor in causing the claimant’s other cancer. These claims are referred to the Medical Advisory Committee for a determination that the claimant’s asbestos 

exposure was a substantial contributing factor in causing the 

claimant’s other cancer. The intent behind this provision is to reflect the testimony before this Committee, which indicated that a 

majority of the medical community has found little association between asbestos exposure and other cancers, particularly colorectal 

cancer. Because there is some evidence that may support an association, the Committee has provided compensation for such cancers. 

Because of the evidence finding no association, however, the Committee believes it is reasonable to require that a claimant establish 

a causal connection between his/her asbestos exposure and his/her 

other cancer. The Committee may review any studies, including the 

Institute of Medicine study to be commissioned, in making this determination. 

Lung Cancer: The testimony before this Committee indicated 

that the majority of the medical community has found that lung 

cancer is generally not related to asbestos exposure unless the 

claimant has underlying asbestosis or, at least, sufficient exposure 

to asbestos to have caused asbestosis.56 The United States Supreme Court recognized that ‘‘studies provide strong support for 

the notion that asbestosis is crucial to the development of asbestosassociated lung cancers.’’ 57 Workers with only pleural plaques, on 

the other hand, have not been shown to be at a higher risk for lung 

cancer, although pleural plaques are considered a marker of prior 

exposure to asbestos.58 The consensus medical criteria established 

under this section thus provides three levels of lung cancers, with 

increasing evidence of causation. 

For lung cancer I, level VII, evidence of 15 weighted years of exposure to asbestos is required. For lung cancer II, level VIII, the 

41

59 ALA, Facts About Lung Cancer, available at www.lungusa.org/diseases/lungcanc.html. 

Radon is considered to be the second leading cause of lung cancer in the United States today. 

Id. 60See, e.g., Donald R. Shopland, et al., Smoking-Attributable Cancer Mortality in 1991: Is 

Lung Cancer Now the Leading Cause of Death Among Smokers in the United States?, 83 J. 

of the Cancer Inst. 1142, 1145 (1991); National Cancer Institute, SEER Statistics, Effect of Quitting Smoking on Lung Cancer Risk Among Male and Female Former Smokers, by Length of 

Time Off Cigarettes and Number of Cigarettes Smoked Daily, (Table 3, based on data in 

Shopland et al., 1991), available at http://seer.cancer.gov/publications/raterisk/risks71.html. 

requirements include (i) evidence of bilateral pleural plaques, bilateral pleural thickening or bilateral pleural calcification, and (ii) 12 

weighted years of exposure to asbestos. For lung cancer III, level 

IX, the claimant must provide either (i) a diagnosis of asbestosis 

and evidence of 8 or 10 weighted years, depending on the x-ray 

reading, or (ii) diagnosis of asbestosis by pathology and evidence of 

10 weighted years. Supporting medical documentation as used 

throughout this section refers to a medical diagnosis or opinion related to the claimant’s condition and does not include general medical literature related to the claimed disease or condition. 

All lung cancer claims are paid pursuant to a matrix of classes 

for each level which the Administrator develops. This matrix is 

based on the claimant’s smoking history, their age, and the intensity and duration of the exposure. A former smoker is defined as 

a person who quit smoking at least 12 years prior to date of diagnosis. A nonsmoker is a person who has never smoked at any time 

during his or her life. Because of the potential for misrepresentations related to one’s smoking behavior, the claimant bears the burden of producing meaningful and credible evidence of their smoking 

history as part of their claim submission. 

The intent behind paying less money to smokers is to reflect the 

fact that smoking also plays an important factor in causing lung 

cancers. According to the American Lung Association, about 87% of 

lung cancer cases are caused by smoking.59 Early studies showing 

a synergistic effect between smoking and asbestos exposure have 

not been substantiated by later studies. Studies have also shown 

that the risk of lung cancer, while diminished for those who quit 

smoking, never reaches the same levels as those for lifetime nonsmokers.60 This is particularly true where the claimant smoked 

40–50 packs of cigarettes a year for many years prior to quitting. 

The Fund is not intended to be a compensation system for smokers, 

which would otherwise overwhelm the Fund leaving no money for 

asbestos victims. 

For mesothelioma, level X, the claimant must provide credible 

evidence of identifiable exposure to asbestos based on occupational 

exposures, take home exposures, or exposures from living in the 

proximate vicinity of a plant or other industrial operation that has 

emitted asbestos fibers into the air resulting in asbestos being 

present in the environment well above normal background levels. 

Claimants may allege any other specific, identifiable exposure to 

asbestos as the cause of the mesothelioma, but such cases shall be 

referred to the Medical Advisory Committee for a determination as 

to eligibility. This identifiable exposure is not intended to include 

mere exposure to asbestos insulation in homes, except in the unusual circumstance that the claimant was exposed to friable asbestos in large amounts or on a repeated basis, in which case the 

claim shall be subject to review by the Medical Advisory Panel. 

42

Study of ‘‘other cancers’’ and causation: No later than 2 years 

after the date of enactment, the Institute of Medicine of the National Academy of Sciences must complete a study of the causal 

link between asbestos exposure and the other cancers: colorectal, 

laryngeal, esophageal, pharyngeal and stomach cancers. The study 

must be transmitted to Congress, the Court of Federal Claims and 

the Medical Advisory Committee. The Court and Medical Advisory 

Committee may consider the results of the report for purposes of 

determining whether asbestos exposure is a substantial contributing factor to causing claimant’s other cancer. The Court also may 

request additional study regarding other cancers if warranted by 

advancements of science. 

Exceptional Medical Claims: The FAIR Act recognizes that in 

some cases, through no fault of the claimant, claimants may not 

have certain medical tests that are required under the medical criteria, but may have results from comparable tests and that there 

may be advances in science that result in new testing methods not 

anticipated by the Committee at this time. As such, this provision 

allows a claimant to seek designation of his or her claim as an exceptional medical claim if the claimant states that claim does not 

meet medical criteria requirements 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 section 121, such as a diagnosis based on an 

in person physical examination that finds asbestos exposure as a 

contributing factor to causing the relevant disease, and which includes (i) a complete review of the claimant’s medical history and 

current condition, (ii) additional material as required by the Court, 

and (iii) a detailed explanation as to why the claim meets the 

standard for designating exceptional medical claims. 

All applications for designation as an exceptional medical claim 

are referred to the Medical Advisory Committee, which must find 

that the claimant, for reasons beyond his or her control, cannot 

meet the requirements but can through comparably reliable evidence establish a condition similar to one that would satisfy the requirements. The Medical Advisory Committee may request additional reasonable testing, and CT Scans may be submitted in addition to an x-ray. CT Scans are generally used only after an x-ray 

has already been taken and the physician believes a CT Scan may 

shed additional light on the claimant’s condition. In such cases, a 

CT Scan may be used to supplement the submission of an x-ray 

reading. Because of the lack of any clear, objective standards similar to those for x-ray readings, however, the Committee does not 

intend that CT Scans become normal practice for the filing of 

claims, and as such, they are limited to optional use by the Medical 

Advisory Committee in assessing exceptional medical claims. 

If the Medical Advisory Committee certifies a claim as an exceptional medical claim, it must designate the disease category for 

which compensation may be sought and refer the claim to a special 

asbestos master for a determination on eligibility on the remaining 

diagnostic, latency and exposure requirements. A claimant may resubmit application based on new evidence, stating the new evidence that is the basis of the resubmission. The Chief Judge will 

promulgate rules governing the procedures for seeking designation 

of a claim as an exceptional medical claim. Because the medical 

43

conditions of the residents of Libby, Montana are currently being 

studied by various agencies, claims filed by Libby, Montana claimants are to be automatically designated as exceptional medical 

claims and referred to Medical Advisory Committee for review of 

the claimant’s eligibility. 

Subtitle D. Awards 

Sec. 131. Amounts 

Because there are other causes for many of the illnesses that are 

compensated under the Act, claims values have been carefully constructed providing increased compensation not only for more severe 

degrees of illness, but also in those cases where there is increased 

confidence that the asbestos exposure was the cause of the claimant’s injury. Mesothelioma, where asbestos is currently considered 

the only known cause, and lung cancer claims where the claimant 

has been diagnosed with underlying asbestosis and is a nonsmoker, 

have been given the highest values. Claims value 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 seriously injured claimants whose injuries were 

caused by exposure to asbestos. 

With this purpose in mind, eligible claims will be paid as follows:

Disease/condition Amount of award 1

Level I .............. Asbestosis/Pleural Disease A ........................................................................... Medical Monitoring 2

Level II ............. ‘‘Mixed’’ Disease ............................................................................................... $20,000 

Level III ............ Asbestosis/Pleural Disease B ........................................................................... $75,000 

Level IV ............ Severe Asbestosis ............................................................................................. $300,000 

Level V ............. Disabling Asbestosis ........................................................................................ $750,000 

Level VI ............ Other Cancers ................................................................................................... $150,000 

Level VII ........... Lung Cancer I ................................................................................................... $25,000—$75,000 3

Former Smokers ....................................................................................... $75,000—$225,000 3

Nonsmokers .............................................................................................. $225,000—$600,000 3

Level VIII .......... Lung Cancer II .................................................................................................. $125,000—$225,000 3

Former Smokers ....................................................................................... $400,000—$600,000 3

Nonsmokers .............................................................................................. $600,000—1,000,000 3

Level IX ............ Lung Cancer III ................................................................................................. $300,000—$400,000 3

Former Smokers ....................................................................................... $550,000—$850,000 3

Nonsmokers .............................................................................................. $800,000—$1,000,000 3

Level X ............. Mesothelioma .................................................................................................... $1,000,000

1 Scheduled awards will be indexed for future inflation based on a cost of living adjustment. 

2 Claimants meeting Level I requirements are eligible for medical monitoring reimbursement only. 

3 All Lung Cancer values are to be determined based on a matrix which the Administrator must develop. This matrix will reflect different values based on a claimant’s smoking history, age and level and duration of exposure. An ‘‘ex-smoker’’ is someone who has not smoked in the 12-year period before diagnosis of lung cancer. A ‘‘non-smoker’’ is a claimant who has never smoked. There are some occupations, such 

as automotive repair, in which a claimant would meet the definition of ‘‘substantial occupational exposure,’’ ‘‘moderate exposure,’’ and ‘‘heavy exposure’’ because he or she was working with a product containing asbestos for a sufficient period of time—yet, because of the low level of 

asbestos fibers to which the claimant would be exposed during this period, the exposure would not in reality be substantial and would not be capable of causing an asbestos-related disease. The bill therefore requires the Administrator to make a determination, based on studies of industrial hygiene and epidemiology, of the industries and occupations in which the airborne fiber levels of asbestos would indeed be at a level where exposure is considered substantial. Claimants whose primary occupation falls outside those industries or occupations where exposure has been determined to be substantial should not be presumed to have met the exposure requirements but such claims may be evalu- ated by the Medical Advisory Committee as exceptional medical claims. 

Sec. 132. Medical monitoring 

Although the intention of the FAIR Act is to direct monies away 

from the unimpaired and to those truly sick from asbestos exposure, the Committee recognizes that claimants with significant occupational exposure to asbestos may be at risk of developing a serious asbestos-related illness in the future. As such, claimants meeting the criteria for Level I will be reimbursed for all reasonable 

44

costs (which are 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 shall not commence the 4 year statute of 

limitations for filing a claim for compensation for an eligible condition or disease. 

Sec. 133. Payments 

Payments should be disbursed over a period of 3 years and in no 

event more than 4 years from the date of final adjudication of the 

claim, and can be accelerated for mesothelioma claimants who are 

alive on the date of determination. Claimants may also elect to receive their benefits in the form of an annuity. All benefits are nontaxable and not deemed to be a Medicare benefit. 

Sec. 134. Reduction in benefit payments for collateral sources 

All awards will be reduced by the amount of collateral source a 

claimant has received, or is entitled to receive. Collateral source is 

defined in section 3 as compensation that the claimant received or 

is entitled to receive from a defendant or its insurer, or compensation trust as a result of judgment or settlement for an asbestos related injury that is the subject of a claim filed under section 111. 

Worker’s compensation and veteran’s benefits are not included as 

collateral sources. 

Subtitle E. Panel Review 

Sec. 141. Panel review 

United States Court of Asbestos Claims: Claimants may appeal 

determinations of a panel of 3 Special Asbestos Masters to a panel 

of 3 randomly-assigned judges from the United States Court of 

Federal Claims. Such panel shall be known as the United States 

Court of Asbestos Claims (‘‘Asbestos Court’’) and may sustain decisions, set aside arbitrary and capricious decisions, or remand for 

further action. Remands are limited to 30 days. The Administrator 

may appoint counsel to represent the Fund in oral arguments and 

to submit briefs. The Court will make its rulings based on the 

record, and not later than 30 days after oral argument, and in no 

event later than 60 days after receipt of the notice of appeal. Accepting payment of an award under this Act extinguishes all further right to appeal related to such payment. 

TITLE II. ASBESTOS INJURY CLAIMS RESOLUTION FUND 

Sec. 201. Definitions 

Sec. 202. Authority and tiers 

The Administrator shall identify all defendants with $1 million 

or more in prior asbestos expenditures and assign them to tiers as 

appropriate pursuant to this Act. Defendants will generally be 

placed in tiers based on historical expenditures on asbestos claims, 

45

61 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 good public policy. The Judiciary Committee and Finance Committee 

will work together to insert the appropriate language for Senate floor consideration of this bill. 

including costs related to defense and indemnity, and further subdivided based on revenues.61

Assessment of Defendant Participant Contributions: The Administrator shall determine the amount that each defendant participant 

will be required to pay into the fund to compensate claimants for 

asbestos injuries based on the following formula: 

(1) Tier I—Persons with Prior Asbestos Expenditures that have 

a case pending under a chapter of title 11 of the United States 

Code, before January 1, 2002, shall be assigned to Tier I if such 

Chapter 11 filing was caused by asbestos liability. 

Bankruptcies not caused by asbestos liability—However, it is the 

intent of the FAIR Act and the Committee that a bankruptcy not 

caused by asbestos liabilities be permitted to proceed with filing 

and approval of the bankruptcy reorganization plan. And any asbestos compensation trust established pursuant to such plan, will 

pursuant to other provisions in this Act, be incorporated in the Asbestos Injury Claims Resolution Fund. Therefore, for any company 

that filed for chapter 11 protection prior to the date of enactment 

of this Act and has not confirmed a plan of reorganization as of the 

date of enactment of this Act, it may petition to proceed with its 

bankruptcy filing if its bankruptcy was not caused by asbestos liabilities. The presiding bankruptcy court shall make the determination of whether or not the filing was caused by asbestos liabilities after notice and a hearing upon motion filed by the entity 

within 30 days of the effective date of this Act, which motion shall 

be supported by an affidavit or declaration of the Chief Legal Officer of the business entity, 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 entity’s 

motion, that entity may proceed with the filing, solicitation and 

confirmation of a plan or 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 confirmation is necessary to permit the reorganization of the company and assure 

that all creditors and the company are treated fairly and equitably; 

(2) an order confirming the plan of reorganization is entered 

by the bankruptcy court within nine months after the effective 

date of the Act, or such longer period approved by the bankruptcy court for good cause shown. To the extent such company 

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 insurVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
46

ers shall obtain a corresponding reduction in the amount otherwise payable by that insurer under this Act. 

(2) Other Tiers—Except as otherwise provided, Persons or Affiliated Groups shall be assigned to Tiers 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). 

Total Contributions: Defendants’ contributions shall total $52 billion collectively over a 27-year period, unless otherwise provided. 

Sec. 203. Subtier assignment 

Except as otherwise provided, the Administrator shall assess contributions to Persons or Affiliated Groups within Tiers I through 

VII as follows— Tier I—The Administrator shall assess an annual contribution to 

each debtor in Tier I based on a percentage of its revenues, according to the following tiers: 

Subtier 1: 1.5184% of its Revenues in years 1–5, declining 

gradually to .1518% of Revenues in year 27. 

Subtier 2: For non-operational companies—all of assets earmarked for asbestos contributed to fund. 

Subtier 3: Non-operational and no assets earmarked for asbestos—50% of all unencumbered assets contributed to fund. 

For Tiers II through VII—The Administrator shall assess annual 

contributions to each participant, according to the following allocation: 

Tier II—Based on Revenues the Person or Affiliated Group shall 

be assigned to subtiers and shall pay, on an annual basis, the following: 

Subtier 1: $25 million (those with highest revenues). 

Subtier 2: $22.5 million (those with next highest revenues). 

Subtier 3: $20 million (those remaining). 

Subtier 4: $17.5 million (those with the next to the lowest 

revenues). 

Subtier 5: $15 million (those with the lowest revenues). 

Tier III—Based on Revenues the Person or Affiliated Group shall 

be assigned to subtiers and shall pay, on an annual basis, the following: 

Subtier 1: $15 million (those with the highest revenues). 

Subtier 2: $12.5 million (those with the next highest revenues). 

Subtier 3: $10 million (those remaining). 

Subtier 4: $7.5 million (those with the next lowest revenues). 

Subtier 5: $5 million (those with the lowest revenues). 

Tier IV—Based on Revenues, the Person or Affiliated Group 

shall be assigned to subtiers and shall pay, on an annual basis, the 

following: 

Subtier 1: $3.5 million (those with the highest revenues). 

Subtier 2: $2.25 million (those with the next highest revenues). 

47

Subtier 3: $1.5 million (those remaining). 

Subtier 4: $0.5 million (those with the lowest revenues). 

Tier V—Based on Revenues, the Person or Affiliated Group shall 

be assigned to subtiers and shall pay, on an annual basis, the following: 

Subtier 1: $1 million (those with the highest revenues). 

Subtier 2: $0.5 million (those remaining). 

Subtier 3: $0.2 million (those with the lowest revenues). 

Tier VI—Based on Revenues, the Person or Affiliated Group 

shall be assigned to subtiers and shall pay, on an annual basis, the 

following: 

Subtier 1: $0.5 million (those with the highest revenues). 

Subtier 2: $0.25 million (those remaining). 

Subtier 3: $0.1 million ((those with the lowest revenues). 

Tier VII—In addition to an assignment in Tiers II through VI, 

persons who are assigned to Tier VII if they are subject to claims 

under FELA liability and shall pay, on an annual basis, the following: 

Subtier 1: Railroad common carriers with revenues of at 

least $5 billion shall pay $10 million. 

Subtier 2: Railroad common carriers with revenues of at 

least $3 billion but less than $5 billion shall pay $5 million. 

Subtier 3: Railroad common carriers with revenues of at 

least $0.5 billion but less than $3 billion shall pay $500,000. 

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. 

Sec. 204. Assessment administration 

Decreased contributions: Except as otherwise provided, the Administrator will assess contributions based on the values set forth 

for each Person or Affiliated Group covered by this subsection for 

the first five years of the Fund’s operation. After year five, the Administrator shall reduce the contribution amount for each Defendant Participant in Tiers II, III, IV, V, VI and VII. 

Small business exemption: 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 are exempt from any contribution requirement under this subtitle. 

Exceptions: Under expedited procedures established by the Administrator, a Defendant Participant may seek adjustment of the 

amount of its contribution based on severe financial hardship or 

demonstrated exceptional inequity. The administrator shall appoint 

two advisory panels—one on financial hardship and one on inequity 

adjustment—to make recommendations. 

Hardship adjustments—may not exceed in the aggregate 6% of 

the total annual contributions otherwise required of all Defendant 

Participants 

Inequity adjustments—may not exceed 4% of the total annual 

contributions otherwise required of all Defendant Participants. 

A defendant may qualify for an inequity adjustment by demonstrating that the amount of its contribution under the statutory 

allocation is exceptionally inequitable when measured against: 

48

(i) that percentage of the prior asbestos expenditures of the 

defendant that were incurred with respect to claims that neither resulted in an adverse judgment against the defendant 

nor were the subject of a settlement that required a payment 

to a plaintiff by or on behalf of that defendant; or 

(ii) the amount of the likely cost to the defendant of its future liability in the tort system in the absence of the Fund; or 

(iii) the contribution rate of the defendant is exceptionally inequitable when compared to the median contribution rate for 

all defendants in the same tier (contribution rate for purposes 

of this section is the contribution amount of the defendant as 

a percentage of such defendant’s gross revenues for the year 

ending December 31, 2002); or 

A defendant shall qualify for a two-tier main tier and a two-tier 

sub-tier adjustment reducing the defendant’s contribution based on 

inequity by demonstrating that not less than 95% of such person’s 

prior asbestos expenditures arose from claims related to the manufacture and sale of railroad locomotives and related products, so 

long as such person’s manufacture and sale of railroad locomotives 

and related products is temporally and causally remote. For purposes of this paragraph, a person’s manufacture and sale of railroad locomotives and related products shall be deemed to be temporally and causally remote if the asbestos claims historically and 

generally filed against such person relate to the manufacture and 

sale of railroad locomotives and related products by an entity dissolved more than 25 years prior to the date of enactment of this 

Act. 

Term and Renewal—The adjustments granted under this section 

shall apply for a period of 3 years and may be renewed. 

Recoupment Authority—Following expiration of the hardship or 

inequity adjustment period granted under this section, the 

Adminstrator shall annually determine whether there has been a 

material change in conditions which would support a finding that 

the allocation was not inequitable or that the defendant that was 

the recipient of a hardship is now capable of paying its full allocation amount plus past reduction amounts and if so reinstate the 

original contribution that was not paid during the inequity or hardship adjustment term. The intent of this section is to protect the 

integrity of the fund by permitting recoupment of prior adjustments. However, it is intended that this recoupment is not mandatory but that the Administrator shall have discretion to ensure that 

any such recoupment will not result in a hardship on the participant. 

Determination of Prior Asbestos Expenditures: Payments by 

indemnitors prior to December 31, 2002 shall be counted as part 

of the indemnitor’s prior asbestos expenditure. 

Statutory Minimum Contributions: Statutory minimums for the 

aggregate contributions of Defendant Participants to the Fund in 

any single year shall be as follows: 

(1) For each of the first five years of the Fund, the aggregate contributions of Defendant Participants to the Fund shall be at least 

$2.5 Billion. 

(2) After year five, the statutory minimum shall be reduced as 

follows: 

(A) For years 6 through 8, $2.25 billion; 

49

(B) For years 9 through 11, $2 billion; 

(C) For years 12 through 14, $1.75 billion; 

(D) For years 15 through 17, $1.5 billion; 

(E) For years 18 through 20, $1.25 billion; 

(F) For years 21 through 26, $1 billion; 

(G) For year 27, $250 million. 

Identification of Defendant Participants: The Administrator shall 

identify defendants that have paid or been assessed through legal 

judgment or settlement, greater than $1 million in defense and indemnity costs relating to asbestos personal injury claims and these 

defendants shall be mandatory participants in the fund. The Administrator shall directly notify all reasonably identifiable Defendant Participants of the requirement to submit information necessary to calculate the amount of any required contribution to the 

Fund; and publish in the Federal Register a notice requiring any 

person who may be a Defendant Participant to submit such information. 

Several Liabilities: Each Defendant Participant’s obligation to 

contribute to the Fund is several. There is no joint liability and the 

future insolvency of any Defendant Participant shall not affect the 

assessment assigned to any other Defendant Participant. 

Application of FOIA and confidentiality of information: The Freedom of Information Act shall apply to the Office of Asbestos Injury 

Claims Resolution. Any person may designate any record submitted 

under this section as a confidential commercial or financial record. 

Subtitle B. Asbestos Insurers Commission 

Sec. 211. Establishment of Asbestos Insurers Commission 

No later than 60 days after enactment, the President, in consultation with Congress, shall appoint five commissioners with sufficient expertise. The commissioners shall be appointed for the life 

of the Commission. No member of the Commission may be an employee or immediate family member of an employee of an insurer 

participant. No member of the commission may be a former employee or shareholder of any insurer participant unless that fact is 

fully disclosed. However, the meaning of shareholder is defined to 

exclude a broadly based mutual fund that may from time to time 

include the stocks of insurer participants. A commissioner shall not 

be an officer or employee of the Federal Government, except in relation to this commission. The Commission shall select a chairman 

from among its members. No later than thirty days after all the 

members have been appointed, the Commission shall hold its first 

meeting. Subsequently, the Commission shall meet at the call of 

the Chairman as necessary to carry out the duties. No business 

may be conducted or hearings held without the participation of all 

members of the Commission. 

Sec. 212. Duties of the Asbestos Insurers Commission 

Subsection (a)(1)—Determination of Insurer Liability for Asbestos 

Injuries: The Commission shall determine the amount that each Insurer Participant will be required to pay into the Fund to compensate claimants for asbestos injuries. The terms ‘‘Insurer Participant’’ and ‘‘Mandatory Insurer Participant’’ includes direct insurVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00049 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
50

ers, reinsurers and any run-off entity established to review and pay 

asbestos claims. 

Subsection (a)(2)—Allocation Agreement: Not later than 30 days 

after the Commission issues its initial determination, the direct insurers and reinsurers have the option of submitting an allocation 

agreement that establishes the respective insurer payments into 

the Fund. The agreement must be approved by all of the participants from both groups and submitted to the Congress. The Commission’s authority terminates on the day after the Commission 

certifies that an allocation agreement meets the requirements of 

Subtitle B. 

Subsection (a)(3)—General Provisions: The total aggregate con- tributions required of all Insurer Participants equals $52 billion. 

Unless provided otherwise, the annual contributions from Insurer 

Participants are expected to decline over time and the proportionate share of each Insurer Participant’s contributions will remain the same throughout the life of the Fund. Unless provided 

otherwise, each Insurer Participant’s obligation to contribute to the 

Fund is several. There is no joint liability and the future insolvency 

of any Insurer Participant shall not affect the assessment assigned 

to any other Insurer Participant. 

Subsection (a)(4)—Assessment Criteria: Insurers that have paid 

or been assessed through legal judgment or settlement, greater 

than $1 million in defense and indemnity costs relating to asbestos 

personal injury claims shall be considered Mandatory Insurer Participants to the Fund. Direct insurers licensed and domiciled in the 

United States shall be responsible for a portion of the total insurer 

fund contribution of $52 billion. All other Insurer Participants, 

shall also be responsible for a portion of the $52 billion in total contributions. In determining the respective allocations among these 

Insurer Participants, the Commission is required to apply the following factors: historic premium lines for asbestos liability coverage; recent loss experiences for asbestos liabilities; the likely 

costs to each Insurer Participant of its future liabilities under applicable insurance policies; and other factors the Commission 

deems relevant and appropriate. This subsection gives Insurer Participants the ability to seek hardship adjustments of the amount of 

its contribution based on severe financial hardship. This subsection 

also provides that captive insurers of Defendant Participants 

should not be assessed a funding obligation as Insurer Participants 

to the extent that their asbestos exposure remains within the corporate family. Payments are to be made annually into the Fund, 

however, direct insurers are required to pay 100% of their allocated 

amount within three years of the effective date of this Act. Unless 

provided otherwise, Insurer Participants who have fully paid their 

allocation obligations to the Fund shall have no further responsibilities under the Act. An interested party may obtain judicial review 

of any final regulation of the Commission with regard to an allocation formula under this subsection. 

Notification to and request for information from Insurer Participants: Subsection (b)(1)—Within 30 days after its initial meeting, 

the Commission is required to 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; and publish in the Federal Register a notice requiring 

51

any person who may be an Insurer Participant to submit such information. 

Response to the Commission: Subsection (b)(2)—Any person meeting the criteria established in the notice shall respond and submit 

the required information within thirty days after receipt of the direct notice or thirty days after the publication of the notice in the 

Federal Register. 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. 

Notice of Initial Determination: Subsection (b)(3)—Not later than 

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. 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. 

Review Period: Subsection (b)(4)(A)—Not later than 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. 

Additional Participants: Subsection (b)(4)(B)—If before the final 

determination of the Commission, the Commission receives information that an additional person may qualify as an Insurer Participant, the Commission shall require such person to submit information necessary to determine whether a contribution from that person should be assessed. 

Revision Procedures: Subsection (b)(4)(C)—The Commission is 

authorized to adopt procedures for revising initial assessments 

based on information received under subparagraphs (A) and (B). 

Subpoena Power: Subsection (b)(5)—The Commission may request the Attorney General to subpoena persons to compel testimony, records, and other information relevant to its responsibilities 

under this section. This subpoena power shall be enforced in the 

U.S. district court for the district in which the person to whom the 

subpoena was addressed resides, was served, or transacts business. 

Escrow Payments: Subsection (b)(6)—Notwithstanding an Insurer 

Participant’s allocation obligation, any escrow or similar account 

established before the enactment of this Act by an Insurer Participant in connection with an asbestos trust fund that has not been 

judicially confirmed by the date of enactment of this Act shall be 

returned to that insurer participant. 

Notice of Final Determination: Subsection (b)(7)—Not later than 

60 days after the notice of initial determination is sent to the Insurer Participants, the Commission shall send each Insurer Participant a notice of final determination of the assessment amount and 

payment schedule. A participant has a right to obtain judicial review of the Commissions final determination under Title III. 

Determination of Relative Liability for Asbestos Injuries: Subsection (c)—The Commission shall determine the percentage of 

total liability of each participant identified under subsection (a). 

Report: Subsection (d)—Not later than one year after the date of 

enactment of this Act, the Commission shall submit a report regarding the amount of the assessments and payment schedule of 

52

contributions to the Senate Judiciary Committee, the House Judiciary Committee and the U.S. Court of Federal Claims. 

Sec. 213. Powers of the Asbestos Insurer 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 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. 

In addition to establishing the powers of the Commission, this 

section establishes related powers of the Administrator. The Administrator may require Insurer Participants to make payments to 

the Fund prior to the Commission’s establishment of an allocation 

formula. Such payments shall be assessed on an equitable basis 

and equal, in total, the funding obtained from Defendant Participants for the same period of time. 

Enforcement—The Administrator also holds authority to pursue 

a civil action in federal court against any reinsurer that fails to 

comply with its obligations under the Act. The Administrator is authorized to seek treble damages and is authorized to seek relief 

against the direct insurer, an obligated party, if unable to collect 

from the reinsurer. 

Sec. 214. Personnel matters of the Asbestos Insurers Commission 

Each member of the Commission shall be paid a daily equivalent 

of the annual rate for level IV of the Executive Schedule. Members 

of the Commission shall be allowed travel expenses including per 

diem in lieu of subsistence consistent with that permitted for federal agency employees. The Chairman of the Commission may appoint and terminate an executive director and such other additional personnel as may be necessary to enable the Commission to 

perform its duties. The employment of the executive director shall 

be subject to confirmation by the Commission. The Chairman of the 

Commission may set the rate of compensation of staff but it must 

not exceed Level V of the Executive Schedule. Any federal government employee may be detailed to the Commission without reimbursement, and such detail shall be without interruption or loss of 

civil service status or privilege. The Chairman of the Commission 

may procure temporary and intermittent services at rates that do 

not exceed Level V of the Executive Schedule. 

Sec. 215. Application of FOIA and confidentiality of information 

The Freedom of Information Act shall apply to the Commission. 

Any person may designate any record submitted under this section 

as a confidential commercial or financial record. 

53

Sec. 216. Termination of the Asbestos Insurers Commission 

The Commission shall terminate 60 days after the date on which 

the Commission submits its report. 

Sec. 217. 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 

The office shall be responsible for administering the Fund, providing compensation from the Fund to asbestos claimants who are 

deemed eligible for such compensation; and any other activities 

deemed appropriate. The President shall appoint an Administrator, 

with the advice and consent of the Senate. The Administrator shall 

serve for a term of five years and may be removable for good cause. 

Sec. 222. Powers and duties of the Administrator and management 

of the fund 

The Administrator shall promulgate such regulations as the Administrator deems necessary to implement provisions of this title; 

appoint employees or contract for the services of other personnel; 

make expenditures as may be necessary and appropriate in the administration of this subtitle; and take all actions necessary to prudently manage the Fund. 

This section also 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, the Administrator of the EPA or the United 

States Attorney for possible civil or criminal prosecution and penalties. 

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. 223. Asbestos Injury Claims Resolution Fund 

There is established in the Office of Asbestos Injury Claims Resolution, the Asbestos Injury Claims Resolution Fund which shall be 

available to pay claims deemed eligible for compensation for an eligible disease or condition, reimbursement for medical monitoring, 

principal and interest on amounts borrowing, and administrative 

expenses under the authority of this subsection. Except as otherwise provided, the aggregate contributions of all mandatory participants to the Fund may not exceed $5 billion in any calendar year. 

The Administrator is authorized to borrow, in any calendar year, 

an amount not to exceed anticipated contributions to the Fund in 

the following year, for purposes of carrying out this Act. 

Orphan Share Reserve Account: To the extent the total amount 

of contributions of the Defendant Participants in any given year exceed the statutory minimum under section 204(h), the excess monies will be placed in an Orphan Share reserve account established 

54

by the Administrator. These excess contributions are not intended 

to include contributions from contingent call funding. Monies from 

the Orphan Share reserve account shall be preserved and administered like the remainder of the Fund, but shall be reserved and 

may be used only (A) in the event that a petition for relief is filed 

and not withdrawn for the Defendant Participant under title 11 of 

the United States Code after date of enactment and the Defendant 

Participant cannot meet its obligations under paragraphs (4) and 

(5) of sections 202 and 212, and (B) to the extent the Administrator 

grants a Defendant Participant relief for severe financial hardship 

or exigent circumstances under paragraph (9) demonstrated inequity under section 204(d). 

Guaranteed Payment Surcharge Account: The Administrator 

shall impose on each Mandatory Participant an amount in addition 

to contributions a reasonable surcharge to insure against the risk 

of nonpayment of required contributions. These amounts are to be 

put in a reserve account to be used in the event contribution obligations are not met. 

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, 

lung cancer with asbestosis, lung cancer with pleural disease, other 

cancer and disabling asbestosis. The Administrator shall allocate to 

each of these accounts a portion of contributions 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. 

Contingent Call for Additional Mandatory Funding: This section 

provides a contingent source of funding during the 27 year mandatory funding period. This contingent call authority is intended to be 

truly contingent and only used in the event that claims cannot be 

paid in a timely manner after other reserve funds are utilized, including borrowing authority. The section requires the Administrator to certify, before making any reduction adjustments to annual contributions under section 204(a) or section 212(a)(3)(B), that 

the Fund will have adequate funds available to compensate past, 

pending and projected future claimants at the scheduled award values provided in section 131(b) of the Act. If the Administrator fails 

to make such certification for any given 1 year, 3 year, or 6 year 

reduction adjustment period, the Administrator has the authority 

to delay or reduce any scheduled step-down. For example, if in year 

9 and defendant companies’ aggregate contributions are scheduled 

to go down to $2 billion from $2.25 billion. The Administrator has 

the discretion to allow the step down to go forward as projected to 

$2 billion, or the Administrator can reduce the contribution partially to $2.1 billion or keep the contributions at the year 8 level 

of $2.25 billion. To meet the contingent call, defendant companies 

have a prorated assessment based on their original section 203 

subtier funding levels. Insurer funding levels to meet contingent 

calls will be established by the Insurers Commission. 

Credit for surplus funds—The section also grants the Administrator the authority to provide contributing participants a credit for 

surplus funds that may be generated through a contingent call. 

These credits are applied by authorizing the Administrator to proVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00054 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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vide an additional reduction adjustment to participants in addition 

to any reduction adjustment already made. The total reduction adjustment, however, cannot exceed the amount of additional contributions required under this section. 

Back-End Payments: This section addresses funding shortages 

should they occur after expiration of the 27 year mandatory funding period. The section authorizes the Administrator to request annually $1 billion in the aggregate from Defendant Participants and 

$1 billion in the aggregate from Insurer Participants starting in 

year 28. The Administrator is required to determine, after consulting with appropriate experts, whether additional contributions 

are necessary to assure adequate funding for claimants eligible to 

receive compensation under the Act at the scheduled awards and 

the scheduled rates. Payments are voluntary. But if the participant 

decides not to make such voluntary payments, that participant 

would be subject to a civil action in federal court. For civil actions 

against participants that fail to make voluntary payments under 

this section, the statute of limitations is tolled until a qualified 

claimant knows or should have known that the participant failed 

to make a voluntary contribution. 

Sec. 224. Enforcement of contributions 

If any participant fails to make any payment in the amount and 

according to the schedule specified in the assessment, after demand 

and 30 days opportunity to cure the default, there shall be a lien 

in favor of the United States for the amount of the delinquent payment (including interest). 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 the Federal district court for 

the District of Columbia to enforce such liability. 

Availability of punitive damages and fines—In any action involving a willful refusal to pay, the Administrator is authorized to recover punitive damages, including costs and attorneys fees, and 

may collect a fine equal to the total amount of the liability not collected. In any enforcement proceeding, the participant shall be 

barred from bringing any challenge to the assessment if such challenge could have been made during the review period specified 

under section 102(b)(4)204(i)(8) or 112(b)(4), or a judicial review 

proceeding under Title III. 

TITLE III. JUDICIAL REVIEW 

Sec. 301. Judicial review of decisions of the Asbestos Court (which 

is within the U.S. Court of Federal Claims) 

The United States Court of Appeals for the Federal Circuit has 

exclusive jurisdiction over any action to review a final decision of 

the Asbestos Court. Appeals must be filed within 30 days of the 

final decision of the Asbestos Court. All decisions will be upheld 

unless deemed to be arbitrary and capricious, in which case they 

will be remanded to the United States Court of Federal Claims. 

56

Sec. 302. Judicial review of final determinations of the Administrator and the Asbestos Insurers Commission 

The U.S. District Court for the District of Columbia has exclusive 

jurisdiction over any action to review the final determinations of 

the Insurer Commission regarding contribution allocations, and 

contribution allocation decisions by the Administrator. Final determinations will be upheld unless arbitrary and capricious, in which 

case it will be remanded to the Administrator or the Commission 

with instructions to modify. No stays of payments pending appeal 

are allowed. 

Sec. 303. Exclusive review 

No judicial review other than as set forth in sections 301 and 302 

is allowed. Any decision of the federal court finding any part of the 

FAIR Act to be unconstitutional shall be reviewable as a matter of 

right by direct appeal to the Supreme Court within 30 days of such 

ruling. 

Sec. 304. Private right of action against reinsurers 

An insurer participant may bring an action in the U.S. District 

Court for the District of Columbia against any reinsurer that is 

contractually obligated to reimburse such insurer for some or all of 

its costs incurred in an asbestos related claim. Such claims must 

be decided within 30 days after filing, and will be reviewed under 

an arbitrary and capricious standard. Appeals may be filed in the 

Court of Appeals for the District of Columbia and will be reviewed 

under an arbitrary and capricious standard. 

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 Asbestos Insurers Commission and the Office of Asbestos Injury Claims Resolution, 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 

Court or U.S. 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 trusts, including 

524(g) trusts, will be incorporated into the Asbestos Injury Resolution Fund. The Administrator shall have discretion when transferring assets of these trusts. This incorporation is estimated to provide an additional $4–6 billion in contributions 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 S. 1125. Claims 

pending as of the date of enactment will be preempted by S. 1125, 

except those ‘‘actions for which an order or judgment has been duly 

entered by a court that is no longer subject to any appeal or judiVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00056 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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cial review. * * *’’ Nonfinal settlements and judgments that are 

still subject to appeal are included in the preemption. If a state 

court does not dismiss a claim, it may be removed to federal court, 

which will rule on the motion to dismiss. 

As amended in Committee, the preemption, removal and dismissal provisions of this section are not effective until the Administrator determines that the fund is fully operational and processing 

claims. However, any claims made payable by operation of this 

amendment will reduce a participant’s contribution obligations 

under this Act. 

Sec. 404. Administrator’s annual reports 

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 and recommendations. 

Fund Sunset provision—In the Annual Report, the Administrator 

is required to certify that 95% or more of eligible asbestos claimants who filed claims during the prior calendar year, have been 

paid and received compensation according to the terms of section 

133. If the Administrator fails to make such certification, the Administrator is given 90 days to remedy the situation. But if the Administrator fails to make the required certification after expiration 

of the 90 days, the Fund will terminate, and claimants will have 

the opportunity to pursue their claims in the appropriate court. 

The Committee is concerned that this Amendment was adopted 

without a full understanding of the actual language and the harsh 

consequences, ramifications and implications thereof. The sponsor 

of the Amendment, Senator Biden, has agreed to work with Members to develop appropriate language to mitigate any unintended 

consequences of this provision before floor consideration of S.1125. 

Sec. 405. Rule 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, other 

than funds for personnel or support as specifically provided in this 

legislation. 

Section 406. Effect of 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 insureds 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 

58

62Statement 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. 63 Id. at 1. 

obligations to the Fund by the insurer and reinsurer participants, 

and are deemed as of the date of enactment to erode remaining aggregate product limits available to a Defendant Participant in an 

amount of 74.51% of each Defendant Participant’s scheduled assessment amount. The erosion principles apply to the mandatory 

payment obligations to the Fund, the contingent call payments and 

back-end payments. 

TITLE V. PROHIBITION OF ASBESTOS CONTANING 

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 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. 

VII. CRITICS’ CONTENTIONS AND REBUTTALS 

Critics’ Contention No. 1: Critics contend that the funding provided for in S. 1125 is inadequate to pay all asbestos victims. 

Response: The FAIR Act as amended obligates defendant and in- surer participants to contribute $52 billion equally 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 $108 

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 convincingly before the Committee on June 4, 2003 that ‘‘$108 billion appears to be more than 

adequate * * *’’ 62

The total estimated cost of ultimate asbestos loss and expense, 

which includes both past payments and projected future payments, 

is $200 billion.63 The RAND Institute for Civil Justice recently estiVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00058 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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64Steve Carroll, RAND Institute for Civil Justice, ‘‘The Dimensions of Asbestos Litigation’’

presentation at the Spring Meeting of the Casualty Actuarial Society, May 19, 2003. 65See id; see also Biggs, supra Note 1 at 2–3. 66See Biggs, supra Note 1 at 2. 

mated that $70 billion has already been paid through year-end 

2002.64 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.65 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.66 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 $108 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. 

As an added protection against the unlikely risk of insufficient 

funding, the FAIR Act provides several funding safeguards to ensure Fund solvency. First, the Administrator holds access to additional funds through a guaranteed payment account. This account 

collects a mandatory surcharge (in addition to the assessed 

amount) on every defendant and insurer contribution made into the 

Fund. The proceeds from this surcharge are used to cover shortages 

attributable to non-payment by any participant. Second, the Administrator holds access to an orphan share account that collects 

amounts paid in excess of the maximum aggregate contribution by 

insures and defendants. These amounts are used to cover losses 

caused by participants that proceed with Chapter 11 bankruptcies 

and for losses caused by financial hardship and inequity determinations made in favor of certain participants. Third, the Administrator holds authority to borrow from commercial lending institutions amounts to offset short term losses in an amount that does 

not exceed anticipated contributions for the following year. 

In the unlikely event that these funding mechanisms are exhausted, the Administrator next holds access to a significant source 

of contingency funding. In addition to the obligation of defendant 

and insurer participants to contribute $108 billion to the Fund, the 

Administrator can assess additional contributions from the defendant and insurer participants, unless the Administrator of the Fund 

certifies that there are adequate funds available to compensate 

claimants in years six through twenty-seven of the Fund. This 

60

‘‘contingency call’’ authority would provide for up to an additional $45 billion of funding that would be available to compensate victims, if needed. Moreover, after year twenty-seven of the Fund, the 

Administrator will also have the authority to request additional 

contributions of up to $1 billion a year from both defendant and insurer participants, thereby providing for additional ‘‘back-end’’ contingency funding. But based on all reasonable cost estimates, it is 

not anticipated that any of the contingency funding will be necessary because the $108 billion will be more than adequate to meet 

all future claims. However, in combination with the $108 billion, 

these contingency provisions will provide more than enough funding to compensate asbestos claimants. 

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: This argument lacks merit because it completely ignores the FAIR Act’s explicit timing provisions that ensure Fund 

liquidity and operation. Upon enactment, the Fund will receive 

within the first 6 months at least $4 billion in assets from existing 

bankruptcy and other trusts that have been established to pay asbestos claims. The FAIR Act is also structured so that the Fund 

can start receiving the mandatory annual contributions from defendant and insurer participants within an estimated five months 

after the Administrator’s appointment by the President. If so, this 

source of funding will boost the Fund’s assets to at least $9 billion 

within the first year of the Fund’s existence. 

As for the insurers, the FAIR Act requires the Insurer Commission to begin developing an allocation formula within 30 days after 

appointment. In the interim, however, the legislation authorizes 

the Administrator to assess up-front contributions from insurer 

participants with the proviso that any amounts paid will be adjusted later to reflect the appropriate allocations formula that is 

later developed. 

To the extent the critics argue that potential delays will be 

caused by judicial challenges to the assessment decisions by the 

Administrator or Insurance Commission or constitutional challenges to the FAIR Act itself, these arguments are belied by the 

legislation’s expedited judicial review provisions. First, any judicial 

challenges to the assessment decisions of the Administrator or Insurance Commission must be filed within thirty days of a final decision with the United States District Court for the District of Columbia. To avoid further delays, the FAIR Act explicitly prohibits 

the district court from issuing any stay of payment into the fund. 

Second, any constitutional challenge to the Act is subject to a direct 

appeal process to the Supreme Court. The likelihood of a successful 

constitutional challenge is remote given the hearing testimony from 

several renowned constitutional experts who have opined on the 

constitutional validity of the Fair Act. 

Finally, these contentions are further undermined when compared with the significant delays that asbestos victims face in our 

tort system today. Indeed, the Supreme Court has practically 

begged the Congress to fix the widespread problems in the court 

system caused by the massive number of filed asbestos tort claims. 

It is typical for claimants to have to wait years before they are 

61

67The Committee is concerned that this Amendment was adopted without a full understanding of the actual language and the harsh consequences, ramifications and implications 

thereof. The sponsor of the Amendment, Senator Biden, has agreed to work with Members to 

develop appropriate language to mitigate any unintended consequences of this provision before 

floor consideration of S.1125. 

awarded compensation, if any. In some cases, victims die before receiving any compensation. One of the chief attributes of the FAIR 

Act is that it creates a streamlined, administratively simple claims 

processing system that compensates victims in an expedited manner. The specific time deadlines for claims processing included in 

the FAIR Act enable claims to be resolved in under a year, unlike 

the current tort system. The FAIR Act drafted specifically to expedite the process of getting the Fund up and running as quickly as 

possible after the enactment of the legislation. 

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. First, the Fund will have funding of $108 million in order to 

process and pay out what has been estimated to be a substantially 

smaller remaining outstanding liability for all future asbestos 

claims of $61 billion, after reducing the substantial transaction 

costs of the current tort system. Second, the Administrator holds 

access to supplemental accounts and borrowing authority. Third, 

although it is fully expected that the $108 billion will be more than 

necessary to meet all anticipated claims over the life of the Fund, 

the Administrator of the Fund will, in years five through twentyseven, have ‘‘contingency call’’ authority to collect additional funds 

from defendant and insurer participants if needed, as well as the 

authority, after year twenty-seven of the Fund, to seek additional, 

‘‘back-end,’’ contingency funding from the program participants. 

Therefore, the $108 billion funding, when combined with the additional contingency funding will ensure that the Fund has more 

than adequate monies to pay all deserving asbestos claimants. 

But in the extremely unlikely event the FAIR Act does not ultimately provide adequate funding to compensate all asbestos victims deemed entitled to compensation, S. 1125 provides victims the 

right to pursue their claims in the tort system. As amended, the 

FAIR Act provides that if the Administrator is unable to certify in 

any year that 95% of the claimants who were determined to be eligible to receive compensation have received the compensation for 

which they are entitled, and the Administrator is unable to remedy 

the situation within 90 days, the legislation would sunset and all 

claimants would be able to pursue their claims in the tort system.67

Additionally, after year twenty-seven of the Fund, if any participant fails to pay its back-end, contingency contribution determined 

by the Administrator to be necessary in order to be able to compensate victims, any claimant may pursue an action against that 

participant in federal court. 

Critics’ Contention No. 4: Critics contend that victims will be 

paid less under the FAIR Act than they could get in the tort system. 

62

68See Statement of David Austern, General Counsel for the Manville Personal Injury 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.

Response: The Committee has adopted S. 1125 in recognition that 

the tort system is broken and the status quo cannot be sustained 

for either victims or defendants. Under S. 1125, 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 million for Level X, 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. 

In sharp contrast to S. 1125, 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 67 companies have declared bankruptcy because of asbestos claims, with more than 20 

of these bankruptcies having occurred in the past two years. 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% 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 pay any more than a fraction of the value of the claims that will be presented.68

Also, importantly, another benefit of S. 1125 is that most claimants will receive compensation much faster than they would under 

the current system, where individual need and consideration is too 

often lost in the trial lawyers’ inventory of thousands and thousands of claims that are resolved on a wholesale bargaining basis 

that often plays out over a period of years. 

As noted in the response to Critic’s Contention No. 1, by reducing 

the substantial transaction costs of the current system and directVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00062 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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ing resources to those who are injured from asbestos related diseases, S. 1125 will deliver more compensation to victims in a timely 

and certain manner. 

The scheduled values of S. 1125 are some of the highest of any 

federal or state compensation program in existence. The values in 

S. 1125 compare very favorably to the statutory, maximum disability and death benefits of all other federal compensation programs. The values in S. 1125 are also 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 S. 1125, the benefit for Level X, Mesothelioma, is $1 million. 

The values in S. 1125 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 Manville Trust, but under S. 1125 would receive $1 million. While 

claimants typically sue a number of trusts, the results are likely 

to be similar. 

Critics’ Contention No. 5: Critics contend that S. 1125 is supposed to embody a ‘‘no fault’’ system, but the medical criteria are 

overly stringent. 

Response: S. 1125 establishes a truly 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. 

S. 1125’s medical criteria, the product of a bipartisan consensus 

of the Committee, are fair and reasonable and are appropriately 

designed to provide certainty to claimants. Indeed, the starting 

point for the medical criteria provided for under S. 1125 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. In such a system, the defendant 

does not have the opportunity to present contrary evidence or the 

testimony of its own, competent experts to refute the contentions 

of experts hired by the plaintiff’s attorneys. 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. 

64

69Testimony of Dr. James D. Crapo, Professor of Medicine, National Jewish Center and University of Colorado Health Sciences Center, Before the Senate Committee on the Judiciary Concerning S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 19, 2003, at 6. 70 RAND, Asbestos Litigation Costs and Compensation: An Interim Report, 2002, at 17. 71Testimony of Dr. James D. Crapo, Professor of Medicine, National Jewish Center and University of Colorado Health Sciences Center, Before the Senate Committee on the Judiciary Concerning S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 19, 2003, at 44. 72Tee L. Guidotti, Case Study 3: Apportionment of Asbestos-Related Disease, in Science on 

the Witness Stand 397, 398 (Tee L. Guidotti, MD, MPH and Susan G. Rose, MPH, JD, eds., 

2002). 73 Norfolk & W. Ry. Co. v. Ayers, 123 S. Ct. 1210, 1222 (2003) (citing A. Churg & F. Green, 

Pathology of Occupational Lung Disease 343 (2d ed. 1998)).

Critics’ Contention No. 6: Critics contend that smokers are receiving unfair discounts in compensation for lung cancer under S. 1125. 

Response: The Committee’s intention is to compensate victims 

who are sick as a result of their exposure to asbestos. While exposure to asbestos has been identified as increasing the risk of lung 

cancer, there are many other causes. Smoking is, by far, the predominant contributing factor to lung cancer, even where an individual has quit smoking for many years. Compensation for lung 

cancers in this context is particularly difficult to value due to the 

high incidence of smoking in the population that is estimated to 

have asbestos exposure. The absence of an underlying asbestos-related nonmalignant disease makes the causal connection between 

the asbestos exposure and the lung cancer tenuous, and the weight 

of the medical evidence does not show that risks are increased in 

the absence of exposures sufficient to have caused underlying asbestosis.69 Despite this evidence, S. 1125 does provide for a specific 

disease level, lung cancer one, that does not require an underlying 

disease for compensation, and lung cancer two, that only requires 

pleural plaques or thickening or calcification, all asbestos exposure 

markers. S. 1125, however, is meant to compensate victims of asbestos exposure and is not a compensation fund for tobacco use. It, 

therefore, appropriately adjusts the claims values for lung cancers 

based on the claimant’s smoking history, especially in the absence 

of asbestosis. 

It is not disputed that there was a high rate of smoking in the 

blue-collar industries where asbestos exposure was particularly 

high.70 There is a vigorous dispute, however, as to whether asbestos exposure alone, without underlying asbestosis, increases lung 

cancer risks. Critics often cite to early epidemiological studies conducted by Dr. Irving Selikoff or to reports that rely on these early 

studies for the proposition that there is a strong synergistic relationship between asbestos exposure and smoking, such that smokers with asbestos exposure alone face a multiplicative risk of lung 

cancer. These early Selikoff studies of lung cancer among smoking 

asbestos-exposed workers were based on much higher asbestos exposure levels than occur today and in the recent past. The Selikoff 

studies also did not adequately account or control for other disease 

risk factors, including smoking.71 Subsequent studies, particularly 

of chrysotile, ‘‘have shown fewer or no interactions.’’ 72

More importantly, Dr. Selikoff’s study did not look at the presence or absence of asbestosis in the study population. The United 

States Supreme Court has recognized, and the testimony of Dr. 

James D. Crapo before this Committee confirmed, that ‘‘studies 

provide strong support for the notion that asbestosis is crucial to 

the development of asbestos-associated lung cancers.’’ 73 In a letter 

to Senator Kyl responding to questions on his view of the current 

65

74Letter from Dr. James D. Crapo, National Jewish Medical and Research Center, to Senator 

Jon Kyl, July 22, 2003, at 8 (see Additional Views of Senator Jon Kyl). 75 Id. 76Lester Brickman, Asbestos Litigation: Malignancy in the Courts?, 40 Civil Justice Forum 

1, 10n.14 (Aug. 2000). (citing Dr. Joseph M. Miller, Benign Exposure to Asbestos Among Power 

Plant Workers (1990) (unpublished)). 77 Norfolk & W. Ry. Co., 123 S. Ct. at 1215 n.3. 78 29 C.F.R. §§ 1910, 1915.1001, and 1926.1101 (2003). 

values in the Committee bill, Dr. Crapo expanded on his testimony 

before the Committee, stating: 

From a medical perspective, the trust should not provide 

compensation to claimants who have lung cancer and exposure, but who do not have asbestosis (i.e., Malignant Levels VII and VIII). The medical literature shows that, while 

lung-cancer risk increases when significant asbestosis is 

present, there is no such increase in risk in workers who 

are exposed to asbestos, with or without pleural plaques, 

but who do not have asbestosis. [Weiss, W., Asbestos-related pleural plaques and lung cancer. Chest 103:1954–

1959, 1993; Weiss, W., Asbestosis: a marker for the increased risk of lung cancer among workers exposed to asbestos. Chest 115:536–549, 1999.] 

The medical literature also shows that asbestos exposed 

individuals who are at greatest risk of developing lung 

cancer are those with clinically diagnosable asbestosis. 

Prospective studies that have focused upon the question 

whether exposure alone, without accompanying asbestosis, 

is associated with increased lung cancer risk have found 

that lung cancer risk is associated with asbestosis and not 

with asbestos exposure alone. For example, Hughes and 

Weill separated asbestos cement workers into groups with 

and without chest x-ray evidence of asbestosis. * * * 

[W]orkers without asbestosis had no increased frequency of 

lung cancer while those with asbestosis had a significantly 

elevated lung cancer frequency.74

The results of these studies led Dr. Crapo to conclude that the 

categories without a requirement of underlying asbestosis will result in a large number of false positives.75

For example, one study of power plant workers exposed to asbestos found that ‘‘[o]nly when asbestosis was also detected in association with plaques did the risk of cancer increase, thus signifying 

heavier asbestos exposure as the cause of increased risk, rather 

than the mere presence of pleural plaques.’’ 76 Epidemiological 

studies show that the risk of lung cancer among smokers with asbestosis is much greater than that of non-smokers with asbestosis. 

The risk of mortality from lung cancer for smokers with asbestosis 

is 39%, while it is just 2.5% for nonsmokers.77 As noted, studies 

also suggest that, while quitting smoking reduces the risk, it will 

not reduce it to the same risk level as that for an exposed worker 

who has never smoked.78

While these claimants with lung cancer but no asbestosis are regrettably seriously ill, the cause of the injury cannot be shown to 

be related to asbestos exposure. Paying all lung cancer victims the 

same amount risks the financial viability of the Fund to pay true 

victims of asbestos exposure. The Manville Trust and subsequent 

66

79Manville 2002 TDP, at 10–11. 80 RAND, Asbestos Litigation Costs and Compensation: An Interim Report, 2002, at 17. 81See, e.g., Zarow-Smith v. N.J. Transit Rail Operations, 953 F. Supp. 581 (D. N.J. 1997). 

The jury in Zarow-Smith calculated plaintiff’s total damages to be $898,665.00, but then found 

that 95 percent of the cause of the claimant’s illness and death was attributable to his cigarette smoking, reducing the total damages award to $44,934.00. 82See, e.g., Bath Iron Works Corp. v. Office of Workers’ Compensation Programs, 137 F.3d 673 

(1st Cir. 1998) (reinstating denial of claim based on non-causation). 

trusts reduce awards for claimants that cannot show an underlying 

asbestos-related nonmalignant disease, especially in the case where 

the claimant is a smoker. Under the Manville Trust, claims under 

lung cancer one (Level VI), which show no evidence of an underlying asbestos-related nonmalignant disease or significant occupational exposure, are not expected to have any significant value, especially if the claimants are smokers. There is no presumption of 

validity for these claims. They have no scheduled value, and have 

a maximum value of $50,000.79 Lung cancer two in the Manville 

Trust (Level VII) requires a showing of both an underlying asbestos-related nonmalignant disease and significant occupational exposure. Claims in this level are not individually evaluated to take 

smoking into account, but the scheduled value is $95,000. 

In addition, the fund contemplates a no-fault system to reduce 

the burden on the claimant and to reduce transaction costs. This 

no-fault system gives claimants a large incentive to file claims. In 

the litigation context, defendants are able to present evidence regarding causation. Defendants often dispute causation in the case 

of smokers.80 Defendants do not have the same opportunity here. 

Defendants also do not have the opportunity to review or dispute 

the claimant’s evidence that he or she is a nonsmoker or former 

smoker. Treatment of causation varies by court, and smoking has 

often been used to reduce awards and/or the percent liability of defendant in a jury trial despite the presence of large verdicts in 

other jurisdictions. In one case, for example, the jury reduced the 

claimant’s award by 95%, finding that smoking was the cause of 

the claimant’s lung cancer.81 Similarly, compensation is reduced 

and even denied in workers’ compensation schemes on the basis 

that smoking was the cause of the lung cancer.82 The legislation 

attempts to reach a compromise and adjust this disparity, while ensuring that the Fund remains viable to provide fair and equitable 

compensation to all victims. 

The Fund cannot become a compensation system for smoking related diseases, directing funds away from those who are most clearly sick due to asbestos exposure. Because of the high incidence 

rates of lung cancers caused by smoking, the absence of an underlying bilateral asbestos-related nonmalignant disease and a claimant’s smoking history are appropriate to consider in reducing the 

compensation, especially for smokers. Otherwise, the Fund could be 

overwhelmed financially by lung cancer cases that are not attributable to asbestos exposures, but, instead, have other causes, such 

as smoking. 

Critics’ Contention No. 7: Critics contend that small businesses 

that rely on their insurance will be harmed under S. 1125 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 

67

83See Jennifer L. Biggs, supra at 2. 84See Statement of Frederick C. Dunbar, 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; See also Statement of Robert P. Hartwig, Insurance 

Information Institute, supra. 

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. 1125 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, S. 1125 provides the Administrator of the 

Fund the authority to adjust defendant participants’ contributions 

based on severe financial hardship and demonstrated inequity, further protecting the interests of all businesses of all sizes. 

Critics Contention No. 8: Critics contend that S. 1125 will primarily benefit businesses and insurance companies. 

Response: This contention is unwarranted. S. 1125 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. 1125 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. 1125, 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.83 In contrast, under S. 1125, $108 billion, with additional contingency 

funding, if necessary, will go directly to compensate victims. 

Victims will be much better protected once S. 1125 is enacted because the current awards some receive from the tort system are not 

sustainable into the future. With most of the original asbestos 

manufacturers bankrupt, companies with little or no connection to 

asbestos are increasingly targeted with a massive number of cases 

and often driven into bankruptcy. To date, over sixty companies 

have been driven 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.84 S. 1125 will ensure 

that asbestos victims no longer face the risk that their only reVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00067 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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course will be trusts created out of bankruptcies paying pennies on 

the dollar. 

In short, S. 1125 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. 

While defendants and their insurance companies will be provided 

a certain degree of economic certainty from the stability provided 

through implementation of the Fund. They will each be required to 

contribute $52 billion under S. 1125 and, if deemed necessary by 

the Administrator, could be required to contribute substantial contingency funding to ensure that victims will receive compensation 

for future asbestos-related illnesses. This is a substantial obligation 

by any assessment. For many of these defendants, particularly 

those with significant amounts of insurance coverage remaining, 

this represents a substantial increase in their out-of-pocket spending for asbestos liability because they cannot seek insurance coverage for their payments under S. 1125. 

Finally, there is an unfortunate misperception by some who believe defendant companies that have announced proposed settlements will be able to walk away from these settlements and pay 

substantially less under S. 1125. First, the intent of this bill is to 

fix a system that is broken and badly in need of repair. The vast 

majority of claimants with pending cases are the unimpaired who 

may be eligible for monitoring under S. 1125 but will not and 

should not be compensated at the expense of those who are sick. 

Second, pending settlements are exactly that, pending, and are as 

a matter of course contingent on a number of factors, and in some 

cases, any of the parties to the pending settlements are free to 

walk away from the settlements at anytime for any reason. Third, 

in comparing how defendants will fare under S. 1125 versus the 

current system, for many of the pending or announced settlements, 

insurance coverage constitutes a significant portion of the funding 

of the settlement and a portion of these settlements may also cover 

liabilities other than asbestos claims. Finally, in making comparisons to how asbestos victims would fare under S. 1125 as opposed 

to pending settlements, opponents of the legislation do not account 

for the substantial amounts of funding that will be siphoned away 

towards the costs of the bankruptcy and to plaintiffs’ attorneys’

fees. In many cases, claimants will be paid more under S. 1125 

than they would under their pending settlements. 

In conclusion, S. 1125 is fair and balanced and will produce substantial benefits for victims, workers, retirees, shareholders and 

the U.S. economy. 

Critics’ Contention No. 9: Critics contend that S. 1125 unfairly 

eliminates settlement agreements, jury verdicts and pending cases. 

Response: Before addressing the merits of fairness, the Committee believes that it is important to set the record straight concerning the misinformation in the Minority Views. S. 1125 is intended only to preempt those claims, verdicts and settlement agreements that are not final, i.e., no longer subject to appeal. The Minority Views assert that the FAIR Act would ‘‘completely negate all 

legally binding settlement agreements between asbestos manufacVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00068 Fmt 6659 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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85 Hearing on Asbestos Litigation, Before the Senate Comm. on the Judiciary 107th Cong. 

(Sept. 25, 2002) (FNS Unofficial Transcript of oral statement of Steven Kazan). 

turers and victims, even settlements that have been made by asbestos defendants with claimants that have already been partially 

paid would be voided under this legislation.’’ To the contrary, section 403(d)(2) of S. 1125 specifically excludes from preemption ‘‘actions for which an order or judgment has been duly entered by a 

court that is no longer subject to any appeal or judicial review 

* * * ’’. Court-approved settlements with an individual who has 

begun receiving payments would certainly fall within that exclusion. But to ensure that all such finalized settlement agreements 

receive the same protection as final judgments, the Chairman 

agreed during Committee markup that he would work with Members to clarify the language of that particular provision of the bill 

to eliminate any confusion. 

The purported unfairness of preempting non-final settlement 

agreements, jury verdicts and pending cases rests on the faulty 

premise that the existing system is somehow fair. Nothing could be 

further from the truth—especially from the perspective of the asbestos victims. Potential claimants who would potentially be 

awarded a higher dollar amount in a non-final settlement, judgment or existing claim will see their recoveries, if any, reduced significantly by plaintiffs’ attorney’s fees. 

S. 1125’s limited preemption of non-final settlements and judgments is important for yet another reason: to bring more stability 

and reason to the system. Included in the preemption are settlements of ‘‘inventory agreements’’ which are non-final settlement 

agreements that do not become effective for an individual claimant 

until they are ‘‘perfected.’’ Perfection occurs when a claimant comes 

forward and submits the information necessary to substantiate 

their claim under the criteria set forth in the settlement. The majority of these inventory agreement settlements are entered into 

with attorneys, not claimants. These agreements are typically not 

even binding on claimants, who in many instances have not yet 

been identified. 

These types of agreements make the filing of claims on behalf of 

the unimpaired persons profitable, which has been a factor in the 

acceleration of such filings in recent years. Steven Kazan, a California lawyer with a long history of representing true victims of asbestos exposure, testified before this Committee that ‘‘we’ve gone 

from a medical model in which a doctor diagnoses an illness and 

the patient then hires a lawyer, to an entrepreneurial model in 

which clients are recruited by lawyers who then file suit even when 

there’s no real illness. These are not patients, they are plaintiffs recruited for profit.’’ 85 As such, S. 1125’s preemption provision is designed to address these types of non-final settlement agreements. 

Moreover, many of these non-final settlement agreements, judgments and pending lawsuits include claims by those who are not 

even sick. The RAND Institute for Civil Justice reports that: ‘‘Almost all the growth in the asbestos caseload can be attributed to 

the growth in the number of these claims [for non-malignant conditions], which include claims from people with little or no current 

70

86 RAND, ‘‘Asbestos Litigation Costs and Compensation: An Interim Report,’’ Sept. 2002, at 

45. 87Senate Judiciary Comm. Hr’g on Asbestos Litig. (2002), FNS Unofficial Transcript of oral 

statement of David Austern. 88See Statement of Lawrence H. Tribe, 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, p. 2. 

functional impairment.’’ 86 More than 90% of all filings with the 

Johns-Manville bankruptcy trust in 2001, for example, were 

brought by individuals with non-cancer claims.87 Using the values 

cited by the minority for unimpaired claimants (from $40,000 to 

$125,000), allowing pending claims to continue could direct anywhere from $10.8 billion to $33.8 billion or more to unimpaired 

claimants. It simply defies fundamental fairness for the Minority to 

support a Trust Fund that deprives the truly sick of critical resources. 

When compared to what the current tort system provides via proposed settlements, non-final jury verdicts and even existing bankruptcy trusts, legitimately sick claimants will fare much better 

under the fund created by S. 1125. First, the claim award amounts 

provided in S. 1125 exceed the amounts provided in bankruptcy 

trusts and in these proposed settlements. The Manville Trust has 

a scheduled value of $350,000 for mesothelioma victims, but is only 

able to pay 5% of that or $17,500, both values far below the $1 million award provided under S. 1125. And what opponents conveniently ignore is that the claim values set forth in the proposed settlements are far below the amounts a legitimately sick claimant 

would receive under S. 1125. 

Second, claimants will have certainty that money will be available to pay their awards. No longer will claimants be left without 

a remedy because a defendant has gone bankrupt. Because S. 1125 

provides a streamlined no-fault process for resolving claims, the 

awards need not be reduced by large attorney fees, allowing more 

money to actually go to the claimant. Currently, claim awards may 

be reduced as much as 40% by attorney fees. It is clear that enforcing proposed, non-final, settlement agreements would not benefit 

the claimants, but instead benefit their attorneys, whose fees under 

S. 1125 would likely be drastically reduced. 

In addition to providing fairness from a policy perspective, S. 

1125’s preemption provision falls squarely within Constitutional 

mandates. Substantial judicial precedent, dating back to the early 

part of the 20th century, supports the constitutionality of Congress’

authority to preempt tort claims and to preempt settlement agreements entered under a pre-existing system that Congress has improved. Among others supporting the constitutionality of the Act, 

Harvard constitutional law scholar Professor Laurence H. Tribe, 

testifying before the Committee on June 4, 2003, concluded ‘‘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.’’ 88 Congress, 

therefore, should exercise the full reach of its ability, consistent 

with the goals of S. 1125 to target available resources toward true 

victims of asbestos exposure. 

71

89Griffin B. Bell, Asbestos Litigation and Judicial Leadership: The Courts’ Duty to Help Solve 

the Asbestos Litigation Crisis, National Legal Center for the Public Interest, June 2002, at 14. 

In a very real sense, the minority would ‘‘have their cake and eat 

it too.’’ By preserving pending claims and non-final settlements and 

judgments under the pretext of fairness, the Minority would allow 

the trial lawyers and the vast majority of unimpaired claimants to 

continue draining resources out of the system while forcing defendants and insurance companies to pay twice—once to perpetuate the 

current system through paying pending claims and proposed settlements and then again (through the trust) to compensate those 

truly ill from asbestos exposure. 

The minority would preserve the current inequities of asbestos 

litigation, where payouts vary significantly by what state victims 

live in, which court their cases are tried in, and who the judge and 

jury are that day. For example, in a recent Mississippi case, six 

plaintiffs who were not sick were awarded a total of $150 million. 

The plaintiffs did not claim to have ever missed a day of work because of asbestos injury, they did not claim any medical expenses 

related to asbestos, and they did not have asbestos-related physical 

impairment. One plaintiff told the court he suffers no shortness of 

breath and walks up to four miles per day for exercise.89 The minority would also preserve the windfalls to plaintiffs’ attorneys that 

result from these large jury verdicts where 40 to 50% of these recoveries go to attorney’s fees and expenses. As Senator DeWine 

noted at our September 25, 2002 hearing, ‘‘[t]he status quo is just 

not fair. 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.’’ It is these inequities that the FAIR Act is meant to 

address. 

As a final note, the Committee would like to respond to the Minority Views’ reference to high profile settlement agreements that 

have been reported in the media. The Minority’s attempt to equate 

the total amount of a proposed settlement to a company’s estimated 

obligations under the Fund is, at best, comparing ‘‘apples to 

oranges,’’ and at worst, misleading. Contrary to the Minority views’’

assertion that these settlement agreements are ‘‘legally binding,’’

they are in fact only proposed, and still contingent upon several 

factors, including court approval of a bankruptcy plan, a review of 

claims to determine if they meet the criteria set forth in the proposed agreement, confirmation of necessary financing and receipt of 

insurance proceeds among other things. In addition, when comparing the size of the proposed settlement to a particular company’s estimated contribution under S. 1125, it is important to recognize that a significant portion of the proposed settlement will be 

funded by insurers. From these proposed settlements, it is all but 

certain that the plaintiffs’ lawyers will recover handsome attorneys’

fees and other costs—amounts that victims will never see. As for 

the victims, it is the Committee’s understanding that most of these 

claimants who stand to gain from these proposed settlements are 

unimpaired or suffer from injuries unrelated to asbestos. 

Critics’ Contention No. 10: Critics contend that S. 1125 is unconstitutional and will lead to years of litigation over its constitutionality. 

72

90 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 

only answer’’ and suggesting ‘‘passage by Congress of an administrative claims procedure * * *’’) 91See also Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999). 91aSee 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.

Response: S. 1125 has been very carefully written to avoid running afoul of the U.S. Constitution. Indeed, it is important to note 

that more than ten years 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 * * * ’’ 90 Since that 

time, the U.S. Supreme Court has called repeatedly for an administrative solution as provided for in S. 1125. 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.’’ 91 Most recently, in March of this year, 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. 1125. 

In reviewing the constitutionality of S. 1125, 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.91a

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 

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92Tribe testimony at 6. 93 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). 

jured 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.92

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.’’93

Nevertheless, should the constitutionality of S. 1125 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. 1125 

to be unconstitutional. This ensures that any such litigation will be 

resolved quickly.

VIII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The cost estimate from the Congressional Budget Office requested on S. 1125 has not yet been received. Due to time constraints, the CBO letter will be printed in the Congressional 

Record. 

IX. REGULATORY IMPACT STATEMENT

Pursuant to Rule XXVI, of the Standing Rules of the Senate, the 

Committee, after due consideration anticipates that S. 1125 will 

have the following regulatory impact: 

A. (i) Businesses regulated.—Under S. 1125 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. 1125, 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. 1125 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 of 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 to make a determination of eligibility. It is anticipated 

that the impact will be comparable to requirements under the current tort system.

(74)

X. ADDITIONAL VIEWS

ADDITIONAL VIEW OF SENATOR GRASSLEY 

Although I support finding a solution to the asbestos litigation 

crisis, there are a number of problems with this bill as currently 

drafted regarding the tax treatment of the asbestos fund. These 

problems affect the tax treatment of the amounts paid into and received from the asbestos fund. If not remedied, there could be serious adverse tax consequences to the companies, the asbestos fund, 

and, most importantly, the beneficiaries. These tax issues are within the jurisdiction of the Finance Committee. Prior to and during 

the markup I requested that S. 1125 be referred to the Finance 

Committee so that we could fix these problems. If the bill is not 

referred to the Finance Committee, the Finance Committee may report a separate tax title for floor consideration. I will work with the 

Chairman of the Judiciary Committee, Senator Hatch, on how to 

proceed with this bill and hopefully address the tax issues raised 

in it. 

CHUCK GRASSLEY. 

(75)

ADDITIONAL VIEWS OF SENATORS GRASSLEY, KYL, 

SESSIONS, CRAIG AND CORNYN 

Although the goal of this legislation to compensate those harmed 

from asbestos exposure is both noble and necessary, the means chosen are susceptible to abuses that could bankrupt the fund and, ultimately, impose financial obligations upon the taxpayer. It is also 

troubling that the bill does not contain any limitations on attorneys’ fees or mandatory sanctions for abusive filings. The bill could 

also be underfunded if certain settlements are not accounted for by 

the fund, and it creates disturbing inequities among defendants 

and insurers. Finally, the bill includes a provision requiring certification of payment of claims that could prematurely dismantle the 

fund and return all claims to the tort system. These flaws must be 

corrected prior to final passage. 

The most significant failing of the bill is its medical criteria and 

claims values. Two categories in particular are ripe for abuse. 

First, claim level two allows payment of up to $20,000 for ‘‘mixeddust’’ cases. Exposure to multiple industrial elements is commonplace. A mixed-dust claimant’s respiratory injuries may well have 

been caused by something other than asbestos, yet under the bill’s 

medical criteria, that claimant can obtain an award simply by 

showing qualifying exposure. Second, claim levels seven and eight 

allow current and former smokers to obtain large awards for lung 

cancer that (according to expert testimony presented to the Committee) medical science conclusively links to smoking, not asbestos. 

Abuse of these two categories could rapidly bankrupt the fund and 

deny relief to truly injured claimants. The fact that bystander 

claimants can also recover from the fund only adds to the risk. 

In addition, the fund sets up a non-adversarial process, but does 

not place any limitation on attorneys’ fees. Attorneys will remain 

over-incentivized, and likely will file frivolous claims and appeals 

that could unnecessarily stress the fund. While any cap on attorneys’ fees must be generous enough to ensure that those who believe they need to hire legal representation are able to entice qualified counsel, it should also maximize award dollars for worthy 

claimants—and not act as an incentive to file frivolous suits. The 

majority of claims filed in this no-fault system should be routine 

and non-controversial, and not require significant legal work. Moreover, claimants may take advantage of pro bono services and the 

fund’s legal assistance office. Reasonable caps should be placed on 

attorneys’ fees to allow maximum recovery of awards for claimants. 

We are pleased that Senator Sessions offered and won acceptance 

of an amendment that requires attorneys to notify claimants of the 

availability of free legal services. This amendment will prevent 

claimants from being victimized twice—once by asbestos, and a second time by the trial bar. 

76

Limits on attorneys fees alone, however, will not prevent abuse. 

Appropriate sanctions should be available, and their use encouraged, to thwart abusive practices by attorneys. This is so because 

even a cap on attorneys fees of, for example, 10%, could provide 

$100,000 for an attorney claiming to represent an asbestos victim 

with lung cancer. The promise of a $100,000 payday may be too 

much incentive for an unscrupulous attorney to file a frivolous 

claim and, accordingly, sanctions will control abusive filings. The 

bill needs to clarify that sanctions will be mandatory for lawyers 

who abuse the asbestos fund claims process. 

Also, to preserve the integrity of the Fund, it is imperative that 

the only settlement agreements to be paid outside of the trust be 

final settlement agreements that are based on a current injury, 

where there is no contingency other than payment. Questions continue to be raised about what settlement agreements are covered 

by S. 1125. For example, some argue that inventory or matrix settlements—which bind defendant companies to pay future claims 

meeting specific criteria—or bankruptcy settlements subject to 

bankruptcy court approval are not included in the language of the 

bill. In either of these cases, failure to include the settlement in the 

trust will expose companies to dual liability and entitle claimants 

to dual recovery, by forcing defendant companies to both contribute 

to the Fund and pay settlement costs. As a result, billions of dollars, thousands of claimants, and the fundamental premise of the 

FAIR Act will be removed from the asbestos trust fund. 

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-ofpocket 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 issue is critical. 

In addition, the bill poses potential inequities particularly in the 

allocation of contingent call funding between defendant companies 

and their insurers. The contingent call funding provision of the bill 

charges additional billions to participants should the Fund run out 

of money during the mandatory funding period. We must make 

sure that the ultimate allocation is fair and reasonable between 

both sides. 

The potential of collusive default judgments against insurers 

under the bill also is troubling. These judgments are entered as a 

result of a defendant company’s agreement not to contest certain 

asbestos claims, in exchange for plaintiffs’ agreement to enforce the 

judgment only against insurers, not against the defendant company. One company, a distributor of asbestos products, allowed billions of dollars of default judgments to be entered against it in exchange for agreements from plaintiff’s counsel that enforcement 

would be sought only against insurers. The Insurer/Defendant Coverage Claims Amendment proposed by Chairman Hatch would 

remedy this problem by preempting collection of these judgments 

77

against insurers. In addition to this amendment, language prohibiting all direct actions against insurers should be considered to ensure that insurers enjoy the same kind of certainty that defendant 

companies and claimants receive under the bill. 

Finally, the Biden sunset amendment could seriously jeopardize 

the relief that the fund is intended to provide victims of asbestos. 

Senator Biden correctly noted that claimants could be left without 

recourse in the event that the Fund runs out of money prior to year 

27’s additional payments. Even those of us who voted for the Biden 

amendment, however, believe there are better ways to address this 

problem. The effect of the Biden amendment is to dismantle the 

Fund and return all claims to the tort system if income in a given 

year does not meet 95% of all claims—regardless of whether sufficient funds will be available in the next year of the Fund. The 

Biden amendment thwarts the purpose of the bill, which is to find 

a viable solution outside of the tort system. This issue should be 

revisited and corrected in order to allow the Fund to function and 

claimants to receive payments with some flexibility to address temporary funding shortfalls. 

CHUCK GRASSLEY. JON KYL. JEFF SESSIONS. LARRY E. CRAIG. JOHN CORNYN.

(78)

ADDITIONAL VIEWS OF SENATORS KYL, GRASSLEY, AND 

SESSIONS 

This bill must meet three criteria in order to be worthy of support: it must provide adequate compensation to persons with asbestos injures; its cost must be reasonable; and it must provide a permanent solution to the asbestos-litigation crisis. 

The bill meets the first criterion. It compensates those who have 

been made sick by asbestos exposure, though it errs towards compensating many people with no asbestos-related injury. With the 

inclusion of a lockbox amendment to protect victims with serious 

asbestos-related injuries, we can be confident that the bill will provide adequate compensation to those who are actually sick from asbestos. A letter from Dr. James Crapo, describing the need for this 

amendment, is attached to this statement. 

It is no longer clear if the committee-reported bill meets the second criterion. With the addition of the contingent-call amendment, 

the bill now may cost as much as $139 billion. As noted elsewhere, 

see infra lll, total asbestos tort judgments and settlements to 

date have amounted to approximately $70 billion, with much of 

that amount going to plaintiffs with no injury or impairment. Also, 

medical professionals agree that actual asbestos injuries have been 

declining for the last decade, see infra lll. It is not apparent 

to us that it is reasonable to pay twice as much in the future as 

has already been spent in the past to provide compensation for a 

health problem that peaked more than a decade ago. 

This is not to say that we do not think that the Trust Fund will 

exhaust the entire $139 billion available to it. Medical professionals already have warned us that much of the disease criteria 

employed by the bill is medically unsound and will compensate persons who are not sick from asbestos, see infra lll. Although this 

bill, unlike past bankruptcy trust funds, requires some evidence of 

impairment for all compensation levels, it is uncertain how many 

persons with common, non-asbestos-related diseases and injuries 

will qualify for awards under this bill’s criteria. 

Finally, with the addition of the sunset amendment, the bill 

clearly fails the last test: it does not offer a permanent or even stable solution to the litigation system. That amendment provides that 

if, in any year, the fund is unable to pay 95% of ‘‘eligible’’ claimants, the entire fund terminates and all claims are returned to the 

tort system. Particularly given the inflated claim values approved 

by the committee, and the bill’s compensation of people who are not 

sick from asbestos, it is very likely that ‘‘eligible’’ claims will in 

some year exceed the resources of the trust fund. 

Under the sunset amendment, defendants and insurers could pay 

into the fund for five years, for a total of $25 billion dollars, and 

then, in year six, if claims exceed funds, the whole system would 

be scrapped and everyone would be back where they started—but 

79

minus $25 billion. This amendment was adopted during the last 

hour of four days of Judiciary Committee executive consideration of 

the bill. It was one of a large number of amendments that had been 

filed but was never discussed before it was called up. We believe 

that our colleagues did not consider all of the details and ramifications of this amendment. We are confident that, in the full Senate, 

a majority will agree that a hair-trigger self-destruct mechanism 

should not be included in this bill, and will vote to remove the sunset amendment. 

JON KYL. 

CHUCK GRASSLEY. 

JEFF SESSIONS.

ATTACHMENT 

NATIONAL JEWISH MEDICAL AND RESEARCH CENTER, 

Denver, CO, June 23, 2003. 

Hon. JON KYL, 

Senate Hart Building, 

Washington, DC. 

DEAR SENATOR KYL: You have asked that I elaborate on my reasons for recommending that the proposed asbestos trust fund include a lock box to protect payments to victims with serious asbestos-related conditions 

As I stated in my answers to written questions from the Judiciary Committee, I believe that a lock box for the most seriously ill 

claimants ‘‘could prevent depletion of the trust by individuals with 

asymptomatic asbestos related diseases or processes which are not 

clearly associated with asbestos exposure.’’ Ideally, the lock box 

would protect funds needed to compensate claimants with mesothelioma, moderate and severe asbestosis, and lung cancer accompanied by clinically significant asbestosis. As I indicated during 

last Thursday’s hearing, these are the claimants who have a significant impairment that is most likely caused by asbestos. These 

conditions also have had a fairly steady incidence over the past 

decade and their frequency should decrease as more time passes 

since the federal controls on occupational asbestos exposure were 

implemented in the 1970’s and 1980’s. 

The other categories compensated by the bill, by contrast, either 

have fluctuated wildly when employed in past trust funds, or are 

too novel to be reasonably predictable. All of these other categories 

pay compensation for illnesses that, according to the clear weight 

of medical evidence, either are not caused by asbestos or do not result in a significant impairment—i.e., are not generally regarded by 

the medical profession as an illness. Projection of these claims is 

inherently uncertain. Simply put, when medical research concludes 

that a condition is not caused by asbestos, or is not an illness at 

all, medical research will not be able to predict the number of such 

claims. 

While political compromise may require you to compensate these 

other categories, you should not allow the uncertainty inherent in 

these claims to prejudice those with serious asbestos-related injuries. In my view, if the other compensation categories are included 

in the trust fund, a lock box-type mechanism is critical to proVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00079 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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tecting the rights of the most seriously ill claimants. The proposed 

trust fund should include such a guarantee to these claimants. 

Sincerely, 

Dr. JAMES CRAPO, M.D.

(81)

1Written Statement of Jennifer L. Biggs, FCAS, MAAA, Before the Senate Committee on the 

Judiciary Concerning S. 1125, The Fairness in Asbestos Injury Resolution Act of 2003 (June 4, 

2003); Michelle J. White, Why the Asbestos Genie Won’t Stay in the Bankruptcy Bottle, 70 U. 

Cin. L. Rev. 1319, 1320 (2002) (bankruptcy data); Stephen J. Carroll et al., Asbestos Litigation 

Costs and Compensation: An Interim Report 40, RAND/DB–397–ICJ (2002) (noting that ‘‘our 

total [estimate] of 600,000 claimants to date [i.e., end of 2000] is probably an understatement’’). 

ADDITIONAL VIEW OF SENATOR KYL 

Throughout this Committee’s consideration of this legislation, 

lobbyists for interests that favor the bill frequently have invoked 

the U.S. Supreme Court’s admonitions to Congress to address the 

asbestos-litigation crisis. Many have noted that in 1999, the Justices characterized asbestos lawsuits as an ‘‘elephantine mass’’ that ‘‘defies customary judicial administration and calls for national legislation.’’ (Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999).) 

Supporters also have reminded us that the Court had hinted, two 

years earlier, that a ‘‘sensibl[e]’’ argument could be made ‘‘that a 

nationwide administrative claims processing regime would provide 

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

of asbestos exposure.’’ (Amchem Products, Inc. v. Windsor, 521 U.S. 

591, 628–29 (1997).) And industry lobbyists surely must have found 

it propitious when, just four months ago, the Supreme Court elevated its call for federal legislation to a plea that ‘‘a national solution is the only answer.’’ (Norfolk & Western Ry. Co. v. Ayers, 123 

S.Ct. 1210, 1218 (2003).) 

I share the sense of urgency over the asbestos-litigation crisis felt 

by many supporters of this bill. Asbestos lawsuits have descended 

on the American economy like a plague of locusts. They have grown 

to include claims by more than 600,000 plaintiffs filed against at 

least 8,400 businesses, resulted in the payment of more than $70 

billion in legal judgments or settlements, and have devoured at 

least 78 companies through bankruptcy.1 Almost every industrial 

sector has been hit by this phenomenon. And, increasingly over the 

years and almost exclusively today, the companies being sued are 

ones that had no direct role in causing any asbestos injuries, and 

the plaintiffs filing suit do not have any asbestos-related injuries, 

diseases, or impairments. Yet, despite the size and seemingly unlimited scope of this litigation, many victims who do have serious 

asbestos-related injuries remain unable to secure adequate compensation. For these reasons, I would support a national legislative 

solution along the lines proposed by Chairman Hatch. As I explain 

in another statement issued with Senators Grassley and Sessions, 

it is only the presence of a few remediable but serious flaws that 

precludes me from supporting the committee-reported bill. 

I write separately here to discuss the asbestos-litigation crisis 

generally—and to offer a reply to the Supreme Court’s several entreaties to Congress. I believe that the Court fails to appreciate the 

true nature of the asbestos-lawsuit problem. The Court has stated, 

for example, that ‘‘the most objectionable aspects of asbestos litigaVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00081 Fmt 6604 Sfmt 6604 E:\HR\OC\SR118.XXX SR118
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2Lester Brickman, Asbestos Litigation: Malignancy in the Courts, Civil Justice Forum of the 

Manhattan Institute no. 40 (Aug. 2002), at 7 (hereinafter ‘‘Brickman, Malignancy in the 

Courts’’). 

tion’’ are the fact that ‘‘dockets in both federal and state courts continue to grow’’ and that ‘‘trials are too long.’’ (Amchem, 521 U.S. 

at 598.) I think that a better description of the most objectionable 

aspects of asbestos litigation is that provided by law professor Lester Brickman, who states that ‘‘asbestos litigation today is, for the 

most part, a massively fraudulent enterprise that can rightfully 

take its place among the pantheon of * * * great American swindles.’’ 2

This statement of additional views explains why I believe that 

Professor Brickman appears to be correct in his conclusion. The 

statement surveys the publicly available evidence that fraud is the 

predominant feature of asbestos litigation as it is conducted today. 

This 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. 

In pursuit of the last point, the statement also summarizes the 

best medical evidence about asbestos injury—including several letters that I have received from the nation’s most respected pulmonary-medicine specialists, explaining what types of injuries asbestos does and does not cause. This evidence also suggests that 

much of the criteria employed by the present bill for identifying asbestos injuries is medically unsupportable. Indeed, it appears that 

a majority of the compensation categories created by the committee-reported bill would only be used to pay people who we know 

are not sick from asbestos. 

This statement concludes by returning to the subject of the judiciary’s role in this crisis. Because the Supreme Court has shown 

such a sustained interest in asbestos litigation, and has even made 

recommendations for reform to this branch of government, I think 

it only fair to return the favor and offer some suggestions to the 

courts. The judiciary’s failure to police its processes has played no 

small part in this phenomenon. In particular, there are several 

gross violations of due process that make fraudulent asbestos litigation possible, and that deserve the attention of the highest court 

in the land. These include the practices of allowing unreliable and 

invalid medical testimony to be introduced before a jury, and allowing unrestricted intangible damages to distort a civil justice system 

that was designed only for allocating the costs of actual harms. 

The Disconnect Between Rates of Asbestos Injury and Asbestos 

Legal Claiming 

As an initial matter, in defense of the legislative and executive 

branches, it bears mention that Congress and the President have 

acted to address actual asbestos health hazards. Federal legislation 

and regulations virtually have eliminated the asbestos exposures 

that cause disease or injury. According to Dr. James Crapo, one of 

the nation’s leading specialists in pulmonary medicine, ‘‘[d]ue to 

83

3Written Statement of Dr. James Crapo, Professor of Medicine, Nation Jewish Center and 

University of Colorado Health Sciences Center, Before the Senate Committee on the Judiciary 

Concerning S. 1125, The Fairness in Asbestos Injury Resolution Act of 2003 (June 4, 2003). See 

also Carroll et al., supra note 1, at 13. Dr. Crapo served for more than 20 years on the medical 

faculty of Duke University; during 17 of those years, he served as Chief of the Division of Pulmonary and Critical Care Medicine. He is a past president of the American Thoracic Society 

and is the co-author of several leading textbooks on pulmonary medicine. 4 Roger Parloff, The $200 Billion Miscarriage of Justice: Asbestos Lawyers Are Pitting Plaintiffs Who Aren’t Sick Against Companies that Never Made the Stuff—And Extracting Billions 

for Themselves, FORTUNE, February 17, 2002. 5Lester Brickman, article forthcoming in a Pepperdine Law Review Symposium on Asbestos 

Litigation (hereinafter ‘‘Brickman, Pepperdine Symposium’’) (draft on file with the Judiciary 

Committee). 6 Alex Berenson, A Surge in Asbestos Suits, Many by Healthy Plaintiffs, The New York Times, 

A1, April 10, 2002. 7 Id. 

8White, supra note 1 (citing Barry I. Castleman, Asbestos: Medical and Legal Aspects 784 

(4th ed. 1996)). 9Parloff, $200 Billion Miscarriage of Justice, supra note 4.

10 Brickman, Pepperdine Symposium, supra note 5. 11White, supra note 1, at 1319 (citing S.J. Carroll et al., Asbestos Litigation in the U.S.: a 

New Look at an Old Issue, RAND DB–362.0–ICJ, August 2001). 12 Biggs, supra note 1, at n. 3. 

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.’’ 3

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.’’ 4

Therefore, ‘‘[b]ased upon the latency periods associated with asbestos-related disease, rates of disease manifestation and claims based 

on such manifestation should have begun to decline significantly by 

no later than the mid-1990s.’’ 5

With regard to disease manifestation, this is exactly what has occurred. According to the doctors, ‘‘the number of new cases of asbestos-related disease has been falling * * *. Very few new plaintiffs have serious injuries, even their lawyers acknowledge.’’ 6 ‘‘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.’’ 7 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.’’ 8 Indeed, 

almost a decade ago—in 1994—‘‘the medical text Occupational 

Lung Disorders describe[d] asbestosis as a ‘disappearing disease.’ ’’ 9

Asbestos-injury legal claims, on the other hand, have ‘‘prov[en] 

impervious to the predictions of medical science.’’ 10 ‘‘Contrary to 

expectations, the numbers of claims filed increased rapidly during 

the 1990s.’’ 11 Only ‘‘[a]pproximately 20,000 claims were filed annually against major asbestos defendants in the early 1990s.’’ 12 But 

in 2001, at least 90,000 new asbestos claims were filed—a threeVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00083 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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13 Brickman, Malignancy, supra note 2, at 1. 14 Biggs, supra note 1, at n. 5. 15White, supra note 1, at 1320. 16Dr. David Egilman, Asbestos Screenings, American Journal of Industrial Medicine 42:163 

(2002) (Letter to the Editor). 17The Manville bankruptcy trust pays claims on behalf of the former Johns-Manville Corporation, ‘‘which mined virtually all of the asbestos used in the United States and was, by far, the 

leading manufacturer of asbestos-containing materials.’’ Brickman, Malignancy in the Courts, 

supra note 2. Johns-Manville declared bankruptcy in 1982. It is generally believed that most— and probably two-thirds—of all asbestos plaintiffs file claims with the Manville bankruptcy 

trust. 18Letter from Steven Kazan to the Honorable Jack B. Weinstein, July 23, 2002 (included as 

Attachment ‘‘A’’ to this statement). Mr. Kazan is a plaintiffs attorney who specializes in representing asbestos claimants with cancer. 19 Carroll et al., supra note 1, at 45. 20 Id. at 46. See also id. at 64–65 (discussing Tillinghast-Powers Perrin estimate that ‘‘[n]onmalignant claims accounted for about 89 percent of claims and 65 percent of the dollars’’

awarded to asbestos claimants from 1991 to 2000); id. at 20 (citing studies concluding that 

unimpaired claimants account for two-thirds to 90 percent of all current claimants). See also 

Thomas Korosec, Enough to Make You Sick, Dallas Observer, September 26, 2002 (‘‘You could 

see as early as a decade ago this unnatural proliferation of nonmalignant cases being filed 

around the country * * * * [W]e have 10 times more nonmalignant cases being filed today than 

in 1990. A nonmalignant asbestos disease is whatever a willing physician says it is, so a lawyer 

fold increase over the number filed in 1999.13 Also, ‘‘[t]he number 

of defendants named in asbestos claims has risen dramatically 

from around 300 in the early 1980s to approximately 2,000 identified in 2001 to 8,400 cited in the most recent RAND findings.’’ 14

Bankruptcies also have increased sharply. Of the 78 firms driven 

to bankruptcy by asbestos lawsuits since 1982, 30 have filed between 2000 and 2002.15

Persuasive Evidence of Fraud 

How is it possible that asbestos-injury legal claims have skyrocketed during a period when rates of actual asbestos injury have 

declined sharply? An answer might begin with a letter to the 

American Journal of Industrial Medicine from Dr. David Egilman, 

a Clinical Associate Professor at Brown University. Dr. Egilman 

notes that ‘‘[f]or the past several years,’’ he has ‘‘served as an expert witness in areas related to state-of-the-art and liability primarily at the request of plaintiff lawyers,’’ and has ‘‘reviewed the 

medical records and X-rays of workers in the cases in which [he 

has] testified.’’ 16 He concludes that ‘‘[o]ver the past 2 years, I have 

noted that many of these individuals could not (due to inadequate 

latency or exposure) and did not manifest any evidence of asbestosrelated disease.’’ This phenomenon—of asbestos claims brought by people who are 

not sick—is quantified in several sources. It has been noted in the 

experience of the Manville Trust.17 According to a recent report, ‘‘90% of the Trust’s last 200,000 claims have come from attorneysponsored x-ray screening programs, * * * 91% of all claims allege 

only non-malignant asbestos ‘disease,’ and these cases currently receive 76% of all Trust funds.’’ 18 A recent RAND study has identified the same pattern in the tort system as a whole: ‘‘Claims for 

nonmalignant injuries grew sharply through the last half of the 

[1990s].’’ 19 The study notes that ‘‘[a]lmost all the growth in the asbestos caseload can be attributed to the growth in the number of 

these claims, which include claims from people with little or no current functional impairment.’’ These claims grew as a fraction of all 

claims ‘‘through the late 1980s and early 1990s, finally stabilizing 

at about 90 percent of annual claims in the late 1990s.’’ 20

85

and physician can go out and create however many cases they want’’) (quoting plaintiffs attorney Mark Iola). 21 Carroll et al., supra note 1, at 30 (emphasis in original). 22Samuel Issacharoff, ‘‘Shocked’’: Mass Torts and Aggregate Asbestos Litigation After 

Amchem and Ortiz, 80 Tex. L. Rev. 1925, 1930 (2002). See also Korosec, Enough to Make You 

Sick, supra note 20 (estimating that Baron & Budd and its subsidiaries ‘‘control a double-digit 

percentage of the roughly 250,000 asbestos claims pending nationwide’’). 

These data invite the question, how are plaintiffs able to recover 

money for asbestos claims if they have not been injured? The Supreme Court recently has noted that, ‘‘[i]n the 1970’s and 1980’s, 

plaintiffs’ lawyers throughout the country, particularly in East 

Texas, honed the litigation of asbestos claims’’ by ‘‘improving the 

forensic investigation of diseases caused by asbestos’’ and ‘‘refining 

theories of liability.’’ (Ortiz, 527 U.S. at 822.) The role of several 

other plaintiffs-lawyers practices and ‘‘refinements’’ also bears 

mention: 

1. Coaching Asbestos Plaintiffs to Lie 

Questions about how asbestos litigation is conducted today can 

be answered by examining the practices of just a limited number 

of law firms. A few plaintiffs firms dominate the field. According 

to a recent RAND study, ‘‘[b]y 1995, ten firms * * * represented 

three-quarters of the annual filings against the[] defendants’’ from 

whom RAND was able to obtain data.21 And one academic expert 

has estimated that just two law firms—Baron & Budd of Dallas, 

and Ness Mottley of South Carolina—‘‘probably account for half the 

asbestos docket in the country.’’ 22

Several years ago, a first-year associate at Baron & Budd accidentally produced to defense counsel a memo that provides a startling insight into how asbestos claims are created. The memo, titled 

‘‘Preparing for Your Deposition,’’ gives clients detailed instructions 

how to credibly testify that they worked with particular asbestos 

products. The memo also instructs clients to assert particular 

things that will increase the value of their claim, without regard 

to whether those things are true. The memo even informs clients 

that a defense attorney will have no way of knowing whether they 

are lying about their exposure to particular asbestos products. 

Baron & Budd has admitted that the memo was produced by its 

employees, but denies that the memo instructs clients to lie, and 

has argued that statements from the memo have been taken out 

of context by the press. In order to allow the reader to draw his 

own conclusions, I have included the entire memo as Attachment 

‘‘B’’ to this statement. 

The memo effectively resolves one mystery that has bedeviled asbestos defendants for several years. As the major asbestos producers have gone bankrupt, lawsuits have shifted to defendants 

with an increasingly minor role in the asbestos industry. These 

companies often produced only a small volume of asbestos-containing products, yet plaintiffs have been able to identify these 

products in very large numbers. ‘‘Many of the remaining asbestos 

manufacturers complain that they couldn’t possibly have sold 

86

23 Christine Biedermman, Thomas Korosec, Julie Lyons, and Patrick Williams, Toxic Justice, 

Dallas Observer, August 13, 1998. 

enough product to expose even a fraction of the men who claim to 

remember seeing their goods.’’ 23 According to one defense lawyer,

I’d be surprised if [my client] actually sold enough product to expose half the people who claimed to have been exposed. We know, for example, of locations where not only 

was our product not there, but [it] would have no function 

there. Yet in case after case, Baron & Budd sues us and 

gets product ID and comes up with at least three or four 

co-workers [who identify the products]. 

A. The Baron & Budd Script Memo 

‘‘Preparing for Your Deposition’’ shows how Baron & Budd gets 

that product ID. The first half of this 20-page memo consists of separate sections providing detailed descriptions of the uses of 14 different asbestos products: insulating cement, refractory cement, gun 

mix, pre-cut gaskets, sheet gaskets, rope packing, pipe covering, 

block insulation, plastic cement, fireproofing, asbestos boards and 

panels, joint compound, cloth and felt, and firebrick. 

For each of these 14 products, the memo gives a detailed account 

of which types of workers used the product, for what purposes, in 

what places, how it was mixed and applied, and what types of containers held the product. Each description goes well beyond what 

one would think necessary simply to refresh the memory of someone who had actually worked with the product. Instead, the memo 

appears to anticipate that clients will not have any previous familiarity with the product. For example, the memo reminds clients: 

‘‘Insulating cement is NOT like sidewalk concrete! * * * It was 

typically used to insulate steampipes.’’ The memo provides sufficient information about all aspects of the product to allow any person to credibly testify that he worked with the product. 

The memo also repeatedly reminds readers of the importance of 

memorizing the information about the products. It informs readers 

from the outset, ‘‘How well you know the name of each product and 

how you were exposed to it will determine whether that defendant 

will want to offer you a settlement.’’ Later, the memo continues:

Your responses to questions about asbestos products and 

how you were exposed to them is the most important part 

of your deposition. You must PROVE you worked with or 

around the products listed on your Work History Sheets. 

You must be CONFIDENT about the NAMES of each 

product, what TYPE of product it was, how it was PACKAGED, who used it and HOW it was used. You must be 

able to show that you were close to it often enough while 

it was being applied to have inhaled the fibers given off 

while it was being mixed, sanded, sawed, compressed, 

drilled or cut, etc. 

You will be required to do all this from MEMORY, which 

is why you MUST start studying your Work History 

Sheets NOW! * * * [I]t is best to MEMORIZE all your 

87

products and where you saw them BEFORE your deposition. 

* * * * *

You must be able to pronounce the product names correctly and know WHICH products are pipecovering, 

WHICH are insulating cements and WHICH are plastic cements, for instance. Many of the product names should 

sound very similar to each other (Kaylo and Kaytherm, or 

Raybestos and Unibestos, for instance), but they might be 

different products entirely! Have a family member quiz 

you until you know ALL the product names listed on your 

Work History Sheets by heart.

‘‘Preparing for Your Deposition’’ also gives instructions on what 

to do if defense attorneys suspect that you were coached, on blaming discrepancies on ‘‘the Baron & Budd girl,’’ and on letting the 

Baron & Budd lawyer fix your mistakes:

You may be asked how you are able to recall so many 

product names. The best answer is to say that you recall 

seeing the names on the containers or on the product 

itself. The more you thought about it, the more you remembered! If the defense attorney asks you if you were 

shown pictures of products, wait for your attorney to advise you to answer, then say that a girl from Baron & 

Budd showed you pictures of MANY products, and you 

picked out the ones you remembered. 

If there is a MISTAKE on your Work History Sheets, explain that the ‘‘girl from Baron & Budd’’ must have misunderstood what you told her when she wrote it down. 

* * * * * 

If you are answering a question and your Baron & Budd 

attorney interrupts you, STOP TALKING IMMEDIATELY! 

Your attorney is trying to fix something you said wrong, 

or stop you from saying something that contradicts your 

earlier testimony.

Perhaps the most disturbing parts of ‘‘Preparing for Your Deposition’’ are those that advise clients to say particular things that 

have clear import for various legal defenses and the value of the 

plaintiff’s claim. The memo instructs all clients to say these things, 

without regard to whether they are true. For example:

You will be asked if you ever saw any WARNING labels 

on containers of asbestos. It is important to maintain that 

you NEVER saw any labels on asbestos products that said 

WARNING or DANGER. * * * 

You will be asked if you ever used respiratory equipment 

to protect you from asbestos. Listen carefully to the question! If you did wear a mask for welding or other fumes, 

that does NOT mean you wore it for protection from asbestos! The answer is still ‘‘NO’’! 

* * * * * 

Make sure you concentrate on your exposure to asbestos 

products in the 1950s, 1960s and early 1970s. Do NOT 

88

talk about what went on at work in the 1980s and 1990s. 

The reason for this is that by the mid 1970s most insulating products being installed no longer contained asbestos. 

* * * * * 

Do NOT mention product names that are not listed on 

your Work History Sheets. The defense attorneys will 

jump at a chance to blame your asbestos exposure on companies that were not sued in your case. 

Do NOT say you saw more of one brand than another, 

or that one brand was more commonly used than another. 

At some jobs there may have been more of one brand. At 

other jobs there may have been more of another brand, so 

throughout your career you were probably exposed equally 

to ALL the brands. You NEVER want to give specific 

quantities or percentages of any product names. The reason for this is that the other manufacturers can say you 

were exposed more to another brand than to theirs, and so 

they are NOT as responsible for your illness! Be CONFIDENT that you saw just as much of one brand as all the 

others. All the manufacturers sued in your case should 

share the blame equally! 

* * * * * 

Unless your Baron & Budd attorney tells you otherwise, 

testify ONLY about INSTALLATION of NEW asbestos material, NOT tear-out of the OLD stuff. This is because it 

is almost impossible to prove what brand of material was 

being torn out, since heat probably destroyed any name 

printed on the product itself. You can only prove what the 

product name was when it was being installed in the first 

place, when the name was clearly marked on the material 

or on the container it came out of.

But undoubtedly the most damning parts of the script memo are 

its assurances to the client that defense attorneys will not be able 

to know if he is lying—and its warnings that no one must know 

about the memo itself:

Keep in mind that these [defense] attorneys are very 

young and WERE NOT PRESENT at the jobsites you 

worked at. They have NO RECORDS to tell them what 

products were used on a particular job, even if they act 

like they do. 

* * * * * 

The only documents you should ever refer to in your 

deposition are your Social Security Print Out, your Work 

History Sheets and photographs of products you were 

shown, but ONLY IF YOU ARE ASKED ABOUT THEM 

AND ONLY IF YOUR BARON & BUDD ATTORNEY INSTRUCTS YOU TO ANSWER! Any other notes, such as 

what you are reading right now, are ‘‘privileged’’ and 

should never be mentioned.

89

24 Brickman, Malignancy in the Courts, supra note 2, at 6. 25 Biederman et al., supra note 23. 

Professor Brickman makes the following assessment of ‘‘Preparing for Your Deposition:’’ ‘‘In my opinion, * * * this is subornation of perjury.’’ He also concludes that ‘‘[i]t is also a principal, if 

not the principal, method of processing unimpaired asbestos claims 

today.’’ 24

B. ‘‘What I was doing was fraudulent. There was never any 

doubt in my mind.’’

After ‘‘Preparing for Your Deposition’’ was discovered, the Dallas 

Observer, a weekly newspaper in Baron & Budd’s hometown, conducted an investigation of the firm’s practices. The Observer found 

that ‘‘a number of former Baron & Budd employees say that the information and techniques contained in the memo are widely used, 

even taught to employees. They say the * * * memo was not truly 

an aberration, but a written example of how the product-identification staff works at Baron & Budd.’’ 25 The Observer’s investigative 

stories provide additional insight into how asbestos litigation is 

conducted. Highlights include: 

• ‘‘[Two former paralegals who traveled] to upstate New York in 

the winter of 1991 to do ‘product ID’ interviews * * * both say that 

a client-coaching system was in place at the firm. Workers were 

routinely encouraged to remember seeing asbestos products on 

their jobs that they didn’t truly recall, the women say.’’

• ‘‘Paralegals say * * * that workers are selectively shown pictures of asbestos products they should identify. [One paralegal] 

says that in meetings with clients, she would bring a ‘3- or 4- or 

5-inch binder with pictures of asbestos products, divided up according to manufacturer. I’d go through page by page and encourage 

the client to recall the products they used. It would be pretty 

strong encouragement. Most of the time when I left, I had ID for 

every manufacturer that we needed to get ID for.’ She already had 

the answers, she says. [The paralegal] just needed the worker to 

agree she had the correct ones. Most would wise up pretty quickly, 

she says. ‘Clients understood that products needed to be ID’d for 

the manufacturers we sued,’ she says.’’

• ‘‘[The paralegal] says that in many cases, the client had no 

specific recollection of some products before she interviewed them. 

‘My original caseload was a thousand, but I didn’t interview that 

many people. It was in the hundreds. I’d say that probably in 75 

percent of those cases I had people identify at least one product 

they couldn’t recall originally.’ ’’

• ‘‘[According to the paralegals], their job didn’t stop with implanting memories; there were also the asbestos products they had 

to encourage clients not to recall. In New York, [the paralegal] 

says, ‘everybody could remember something from Johns-Manville,’

which was the largest U.S. distributor of asbestos products. But 

[the paralegal] claims that her supervisors, two lawyers, told her 

to discourage identification of Johns-Manville products because the 

Manville Trust was not paying claims rendered against it at the 

time. * * * Thus, when a client would say he saw, for instance, a 

Johns-Manville pipe covering, [the paralegal] says, she would hand 

90

them a line. ‘You’d say, ‘You know, we’ve talked to some other people, other witnesses, and they recall working with Owens Corning’s 

Kaylo. Don’t you think you saw that?’ And they’d say, ‘Yeah, maybe 

you’re right.’ Later, she says, Johns-Manville began paying settlements, and she was ordered to go out and ‘meet these guys again’ and get them once again to name Johns-Manville products.’’ • ‘‘[The paralegal] says she learned some of these methods and 

techniques from ‘other paralegals I worked with.’ But she has no 

doubt that her supervisors and at least one of the firm’s partners 

knew what was going on. ‘I remember specifically there was a case 

in the Mobile, Alabama, area that was set for trial, and I was specifically sent down there to get product ID. I was basically told, 

‘Don’t come back without the IDs.’ [One of two Baron & Budd attorneys] told me that.’ ’’ • ‘‘[According to the paralegal,] ‘There was at least one time, 

maybe more, that I went to [a particular Baron & Budd attorney] 

and said I didn’t think a particular settlement was right. That I 

can’t believe we’re doing this. I was basically told to be quiet or 

leave.’ * * * ‘There were clients we were getting money for, and 

some people just didn’t deserve a dime.’ ’’ • ‘‘[Another former paralegal] recalls being asked to falsify product-ID information the very first week she was on the job. ‘They 

were having me fill out the product IDs [forms that the paralegals 

had gathered from clients] . . . There was a man, he was some sort 

of contractor. He had absolutely no exposure to asbestos—none. 

There was nothing in his work history.’ As she scanned the paperwork, [a Baron & Budd partner] walked by the office she was working in. ‘I got up and walked out and said, ‘I don’t know what to 

do. This man has not had exposure at all.’ He looked at me and 

said, ‘Oh you’re a smart lady. Be creative,’ and he turned and he 

walked away.’ She says she then went to her immediate supervisor, 

who she recalls also told her to ‘fill it in, make up stuff.’ ‘I was 

shocked,’ she says. When she refused to fill in product names, the 

supervisor simply took over the file, she says. ‘I don’t know what 

happened to the case after that.’ ’’

• ‘‘[A former Baron & Budd attorney] describes * * * an atmosphere where attorneys and paralegals were not only taught that 

manufacturing testimony was their duty, but disciplined if the 

‘proper’ testimony was not obtained. She says she lasted a few 

years. ‘Slowly, you begin to question whether the means you are 

using to achieve the ends are legitimate. And if not, what is your 

involvement in that?’ she says. ‘And you either leave or you accept 

it.’ She still recalls one of the first depositions she ever defended 

at Baron & Budd by herself. ‘I knew my guy wasn’t prepared to tell 

the lie,’ she says. ‘This gentleman did not know Kaylo [a product 

manufactured by an important defendant], had never seen pipe 

covering and never worked with it. It was on his work-history 

sheet. And for me not to get the testimony that some paralegal got 

* * * I’d have caught shit for that if that group went to trial. I 

pulled him out [of the deposition],’ she says. ‘And I said, ‘Could you 

just read off your work-history sheet?’ * * * He goes, ‘I don’t know 

why it’s on there. It shouldn’t be on there. I don’t remember it.’ ‘

* * * And I was in fear and feeling totally inadequate and knowing that in getting what I needed to get, I was crossing the line.’

91

26 Biederman et al., supra note 23. 27Thomas Korosec, Homefryin’ with Fred Baron, Dallas Observer, March 29, 2001. 28 Biederman et al., supra note 23. 

She got the identification. ‘And this was a good man,’ she recalls—

though he wasn’t particularly sick.’’ 26

• ‘‘[Yet another former Baron & Budd paralegal] says he would 

at times be given rush jobs that took him out of his daily, witnessfinding duties. As the firm reached mass settlements with manufacturers, it needed to produce sworn affidavits from every client 

who had sued, he recalls. The mostly retired workers had to swear 

they had been exposed, 30, 40 or 50 years ago, to specific products 

the company made. Industry officials say they require the statements to validate claims and present them to insurers. [The paralegal] says some clients had already identified the products in prior 

talks with the firm, and sometimes they had not. Frequently, he 

says, he was the first person to mention the products, and clients 

who didn’t remember them were hesitant and worried about signing. ‘They’d ask, ‘‘Do I have to go court? Do I have to come to Dallas?’’ ’ [The paralegal] says he would assure them all they had to 

do was sign the document, have it notarized, send it in, and money 

would be coming their way. ‘It was like telephone marketing * * * 

a marketing approach,’ [the paralegal] says. But it didn’t take 

much savvy to close the sale. Everyone would sign, he says. ‘When 

you are offering someone the ability to get money in their pocket 

when they’re not expecting money for any particular reason, it’s not 

all that difficult.’ ’’

• ‘‘[The former paralegal also] says he was assigned to find witnesses who could support claims by Baron & Budd plaintiffs that 

they were exposed to asbestos products at various workplaces from 

the early 1940s until the late 1960s. The problem was, almost nobody could remember these facts without being told what to say, 

[the paralegal] recalled in an interview earlier this month. It was 

his job to get them to name 20 or 30 different products from the 

multiple companies Baron & Budd would typically sue. * * * [The 

paralegal] says he was pretty good at his job, and he’d usually end 

up getting many men to say many things they had no idea about 

before he called. ‘I’d get ’em to identify every one,’ he says of his 

list of 20 or more products. Clerical staff managers and a ‘product 

ID’ paralegal he worked under taught him his techniques. * * * 

Truth got lost in the process, he says, and [the paralegal] recalls 

being uncomfortable from the start with telling witnesses how to 

testify. ‘What I was doing was fraudulent. There was never any 

doubt in my mind about it.’ ’’ 27

Other documents obtained by the Dallas Observer ‘‘appear to 

track what these former paralegals say about how the firm’s product-identification process works’’—and provide instructions similar 

to those in ‘‘Preparing for Your Deposition.’’ For example, a document titled ‘‘P.I.D. Study Sheet,’’ written by a former paralegal, 

also contains detailed, deposition-relevant product-use information. 

In a handwritten 1993 memo to several attorneys, the Baron & 

Budd paralegal who produced the document ‘‘writes that she gives 

the attached ‘study sheet’ to ‘all my clients who can read [and] ask 

them to be familiar [with] the information for their deposition.’ ’’ 28

92

29 Id. 30 Id. 31Korosec, Enough to Make You Sick, supra note 20. 32 Biederman et al., supra note 23. 33 Id. 34 Id. 

Another document obtained by the Observer consisted of ‘‘handwritten notes apparently taken by [a Baron & Budd attorney] during an internal training session.’’ The notes state: ‘‘Warn [plaintiffs] 

not to say you were around it—even if you were—after you knew 

it was dangerous.’’ Elsewhere, under a section titled ‘‘name that 

product,’’ the notes state: ‘‘Show client filled out sheet showing 

what [client] picked out. Get him to agree he picked out * * * Products: explain in the context of who will be in depo[sition]—emphasize those products.’’ 29 Another set of notes obtained by the Observer, which were prepared by a Baron & Budd attorney, simply 

state: ‘‘If client is asked if any other doctors told him about his condition before the diagnosing doctor named in the [interrogatory], 

client should answer NO.’’ 30

Interestingly, statements made by former Baron & Budd employees even confirm what epidemiological studies have projected for 

asbestos disease generally—that as exposures were eliminated in 

the 1970s and latency periods lapsed, the number of sick workers 

diminished. This change was reflected in the composition of the 

firm’s caseload. One former paralegal noted that ‘‘she witnessed 

how, as the pool of very sick clients shrunk, the firm lowered the 

bar on which cases it would take.’’ The paralegal states: ‘‘Initially 

[in the late ‘80s], if somebody just had pleural plaques [benign 

spots on the pleura, or lining of the lung] or something like that, 

they wouldn’t take the case. Later on that’s all they had * * * Later 

on they made these into cases. I could see the shift during my period [with the firm].’’ Similarly, a former Baron & Budd attorney 

states: ‘‘As the ’90s went on, you got more and more people with 

marginal exposure to the stuff. You went from insulators and pipe 

fitters to having the maintenance guys in the paper mill. Yes, there 

was asbestos in that mill equipment, but they didn’t work with it, 

and the medical evidence you get reflects that.’’ 31 A former paralegal also effectively explains why means like the script memo were 

used: ‘‘Overall, she says, workers in asbestos plants and insulators ‘really did know the products * * * But when you got to the electricians and carpenters and the brick masons * * * they didn’t work 

with the products that much.’ ’’ 32

C. A Pattern of Intimidation and Retaliation 

Perhaps as disturbing as the script memo itself, and the statements of Baron & Budd’s former employees, is the firm’s partly 

successful efforts to suppress any investigation of its activities. 

After ‘‘Preparing for Your Deposition’’ was discovered, a state district judge referred the matter to the local district attorney’s office 

for criminal prosecution. According to the assistant district attorney in charge of the matter, local authorities did not act because 

‘‘our investigation has been taken over federally.’’ 33 The local U.S. 

attorneys office, however, gave a different account of why the local 

DA did not pursue the case: ‘‘Because of the politics of it, [the DA’s 

office] wanted to drop it, and so it ended up here.’’ 34

93

35Korosec, Homefryin’ with Fred Baron, supra note 27. 36 Id. 37 Id. 

That was in 1998. No federal investigation has ever taken place. 

In 2001, the Observer provided the following explanation:

Former U.S. Attorney Paul Coggins told the Observer recently he recused himself from participating in his office’s 

investigation of the memo because of a conflict of interest 

posed by the firm’s political contributions to his wife, Regina Montoya Coggins, in her run last year for Congress. 

He said contributions to his wife from the national trial 

lawyers group, where Baron earlier served as vice president, also drove his decision to remove himself from making decisions in the case. 

Baron’s critics question how vigorously Coggins’ troops 

pursued Baron & Budd without support from the top, and 

whether Baron’s massive fund raising for the Democrats, 

which stepped up in early 1998, might have influenced 

Coggins’ superiors in Washington as well. ‘‘In my humble 

opinion,’’ says one lawyer who provided information to the 

FBI, ‘‘that investigation was a joke.’’ 35

The Observer also provided the following account of what happened to the Texas state district judge who originally had referred 

the matter of the script memo to the District Attorney’s office:

[Judge John] Marshall, a lifelong Republican who drew 

no opponents when he ran in 1992 and 1996, found himself 

the next year in the fight of his life, with Baron leading 

the charge. Before the 2000 primary, Baron urged a Dallas 

trial lawyers group to target the judge with campaign 

money, enlisting the firm’s lawyers in his cause. Campaign 

records show Baron & Budd was an early donor to Marshall’s opponent, Mary Murphy, who said Baron was one 

of the first to urge her to run. 

* * * * *

Several lawyers interviewed for this story said Marshall’s defeat sent a signal that it’s hazardous to threaten 

Baron & Budd. ‘‘If I liked my comfortable seat on the 

bench, I’d think twice about ruling against them on these 

things,’’ says one attorney, who declined to be named. Says 

another who was close to the memo case, ‘‘No judge in Dallas will cross Baron & Budd after what happened in that 

election. They are scared to death.’’ 36

It bears mention, however, that Baron & Budd is not all stick 

and no carrot. The Observer also reports that Baron & Budd attorneys initiated an effort to hire a lobbyist to represent state judges 

in their requests for additional funding from the state legislature. 

Attorneys at the firm also led a drive to buy every civil judge in 

Dallas County a new personal computer.37 The firm also has managed to retain a University of Texas legal-ethics professor, who has 

written law-review articles about the script memo favorable to 

94

38 Id. 39 Id. 

Baron & Budd—without disclosing that he has been hired by the 

firm. 38

Some lawyers representing companies sued by Baron & Budd 

have attempted to pursue the matter of the script memo. Three 

lawyers who did so quickly found that ‘‘Baron & Budd stepped up 

asbestos litigation against [their] clients.’’ Two of these lawyers’ clients soon negotiated settlements with Baron & Budd. According to 

one of the lawyers, Elizabeth Pfifer, ‘‘I’ve never seen anything like 

them in my 17 years of practice. * * * Everyone understood that 

if we took them on, they would go after our clients.’’ The third lawyer, Bill Skepnek, eventually lost his client, Raymark Corp., when 

it went bankrupt. ‘‘[W]ithin months, Baron & Budd turned the tables on Skepnek. It filed contempt motions against him in 165 

courts * * * [and] tied up Skepnek’s legal fees from Raymark in a 

contentious bankruptcy fight that itself spawned a crop of lawsuits.’’ 39

Another company that has been driven into bankruptcy by asbestos litigation, G–1 Holdings, Inc., of Wayne, New Jersey, also has 

attempted to investigate Baron & Budd’s use of the script memo. 

G–1 Holdings has sued Baron & Budd, as well as South Carolinabased Ness Motley and New York asbestos litigators Weitz & 

Luxenberg, under the federal racketeering statutes in New York 

federal district court. Judicial opinions summarizing the pleadings 

in that case provide an excellent overview of the evolution of asbestos litigation, and describe significant additional misconduct by 

these law firms. Excerpts from two of those opinions are include as 

Attachment ‘‘C’’ to this statement.

G–1 Holdings also has encountered substantial difficulty in investigating Baron & Budd’s practices. According to the Dallas Observer:

To pursue its allegations that Baron & Budd has suborned perjury and fabricated evidence to produce dubious 

cases, G–1 dispatched investigators to Dallas in 1999. 

Baron & Budd met them head-on. The firm obtained a 

temporary injunction from state District Judge Merrill 

Hartman, forbidding them from ‘‘communicating in any 

manner’’ with former Baron & Budd employees. Such information was likely ‘‘privileged and confidential,’’ Hartman ruled. 

* * * * * 

This January [of 2001], after filing its racketeering lawsuit, G–1 employed a new set of investigators, Kroll & Associates, and by the end of the month, they were busy 

tracking down former employees. On January 30, they 

telephoned former Baron & Budd lawyer Amy Blumenthal, 

who in turn telephoned her former firm, which appears to 

have gone immediately on alert. 

* * * * * 

The next day, state District Judge Ann Ashby granted 

Baron & Budd’s quickly drafted motion for a temporary reVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00094 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
95

40Korosec, Homefryin’ with Fred Baron, supra note 27. The Observer’s investigative news stories also have drawn Baron & Budd’s attention to that newspaper. The Observer has characterized the firm’s actions toward the paper as ‘‘a pattern of intimidation and paranoia such as the 

Observer has never seen before.’’ Julie Lyons, The Control Freak, Dallas Observer, August 13, 

1998. 41See, e.g., G–1 Holdings, Inc. v. Baron & Budd, 213 F.R.D. 146 (S.D.N.Y. 2003). 42See Biederman et al., supra note 23. 43Lester Brickman, Lawyers’ Ethics and Fiduciary Obligation in the Brave New World of Aggregative Litigation, William and Mary Environmental Law and Policy Review 243, Winter 2001 

(hereinafter ‘‘Brickman, Aggregative Litigation’’). 44 Id. at 282 n. 110. 45 Brickman, Pepperdine Symposium, supra note 5 (quoting Written Statement of Steven 

Kazan (Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise), Hearing on Asbestos 

Litigation before the Committee on the Judiciary, U.S. Senate, Sept. 25, 2002). See also 

Egilman, Asbestos Screenings, supra note 16. 

straining order. It barred Kroll from contacting the firm’s 

employees and ordered Kroll’s investigators to submit 

themselves to questioning by Baron & Budd about what 

they had learned.40

G–1 Holdings’s RICO suit against Baron & Budd still is pending 

in a New York federal district court—and still is in the discovery 

phase.41

According to a 1994 estimate, Baron & Budd had, by that year, grossed more than $800 million from asbestos litigation.42

2. Fraudulent Pulmonary-Function Tests and Fraudulent XRay Interpretations 

Asbestos legal claims cannot be manufactured with witness testimony alone. Such claims also require evidence of reduced lung capacity and x-ray evidence of lung damage. 

A thorough description of how such evidence is produced is available in a recent law-review article by Professor Brickman.43 That 

article, for example, quotes from a complaint brought by OwensCorning Fiberglass, Inc., against businesses that administer pulmonary-function tests for asbestos plaintiffs lawyers. (A pulmonary-function test gauges lung impairment by measuring the 

subject’s ability to blow on a tube for different intervals.) The complaint describes how these testing companies systematically disregard well-established requirements for conducting a valid pulmonary-function test; charge plaintiffs attorneys ‘‘$700 if the tests 

were positive for diminished lung function but only $400 if the 

tests were negative;’’ and, on one occasion, have agreed to perform 

such tests for a 15% contingency fee from the attorney who would 

be using the results.44

Similar practices have infected the reading of chest xrays: 

One doctor who has evaluated 14,000 individuals for two 

different screening companies admitted under oath that he 

has no experience in diagnosing asbestosis, and that he is 

not even practicing medicine. That doctor has concluded 

that every single person that he has evaluated—all 

14,000—had asbestosis.45

Another example: 

A United States District Court judge, using impartial 

medical experts and excluding the parties’ use of their own 

experts, determined that of 65 plaintiffs claiming to have 

contracted asbestosis—who, but for the court’s order, 

96

46 Brickman, Aggregative Litigation, supra note 43, at 284–85 47Mr. Linton’s Letter to Senator Grassley, and an abstract of an article submitted for publication that describes his findings, is included as Attachment ‘‘D’’ to this statement. 48 Brickman, Pepperdine Symposium, supra note 5. 49 Roger Parloff, Mass Tort Medicine Men, The American Lawyer, January 15, 2003. See also 

Parloff, $200 Billion Miscarriage of Justice, supra note 4 (noting that ‘‘[j]ust eight screening docwould have offered their own medical experts’ testimony in 

support of their claims and on that basis would very likely 

have been awarded significant compensation by the jury— only 10 (15%) had in fact contracted asbestosis.46

An even more extreme example of consistent misdiagnosis of asbestosis was provided directly to this committee by Mr. Otha 

Linton, who served for 25 years on the principal staff of the American College of Radiology Task Force on Pneumoconiosis, and Dr. 

Joseph Gitlin, a faculty member of the department of radiology at 

the Johns Hopkins Medical Institutions. Mr. Linton and Dr. Gitlin 

were asked to review over 500 chest x-rays that originally had been 

provided by an asbestos plaintiffs firm. That firm’s medical experts 

had given 91.7% of these x-rays an ILO score of 1/0 or higher. 

(Which itself is only marginal evidence of asbestosis, see infra Attachment ‘‘E’’ (Letter of Dr. Crapo.).) Mr. Linton and Dr. Gitlin arranged for a blind reading of those same x-rays by six consultants 

in chest radiology who were also B readers. These independent experts gave the same x-rays an ILO score of at least 1/0 in only 4.5% 

of their reports.47

And the Manville Trust’s experience, again, has matched that of 

the wider asbestos-litigation world:

In 1995, the Trust instituted a medical audit program 

providing for a random audit of 5% of each law firms’

claims submitted per payment cycle. The core of the audit 

program was a process of review of claimants’ x-rays by 

independent medical experts.48

The initial results of the Trust’s review led it to conclude that it 

should audit all claims submitted by some law firms. Plaintiffs 

firms resisted this approach, and instead offered a proposal to 

audit the doctors directly.

Reasonable though that proposal might sound, [thenTrust Executive Director Patricia] Houser resisted it for 

* * * eyebrow-raising reasons * * * [that] stemmed from 

the trust’s early analyses of the audit data. In mid-1996, 

the trust had commissioned biostatisticians at Penn State 

University and the University of Pennsylvania to help 

them with that task. Houser quickly discovered that the 

failure rate of any given doctor often correlated with which 

law firm that doctor was working for at the time! A physician’s failure rate might be markedly elevated when working for one firm, but quite average when retained by another. In fact, the biostatisticians concluded, in a written 

report submitted to the trust in February 1998, that the 

particular law firm that submitted any given claim was ‘‘a 

strikingly significant predictor’’ of whether that claim 

would fail the audit, and that those findings exhibited 

‘‘huge levels of statistical significance.’’ 49

97

tors accounted for more than 70% of all claims filed with the Manville Trust between January 

1995 and April 1998’’). 50For an account of the consequences of Judge Weinstein’s actions, see Brickman, Aggregative 

Litigation, supra note 43, pp. 290–93. 51Parloff, Mass Tort Medicine Men, supra note 49. 52 Brickman, Pepperdine Symposium, supra note 5 (citing Deposition of Charles Lewis in In 

Re: Asbestos Cases (ACR XXIII Asbestos Cases), No. 89–2–18455–9–SEA, Superior Court, King 

County, Washington at 14, 29, 159 (Sept. 12, 2002); Deposition of Lloyd Criss in DeForest et 

al. v. American Optical, et al., Dist. Ct., Brazoria County, Tx. (Dec. 10, 2002); Deposition of 

Charles Foster, in Morehouse v. North American Refractories Co., et. al., Circuit Court, Mobile 

Cty, Ala. (Aug 6, 2002); Deposition of Dr. Jose E. Roman-Candelaria, in Koontz and Koontz v. AC&S, Inc., et. al., Superior Ct., Marion Cty., Ind., Cause No. 49D02–9601–MI–0001–668 (Oct. 

11, 2002); Deposition of Guy Wayne Foster, American Medical Testing, Inc., in Bentley v. Crane 

Co., Civ. Action No. 11–2064, Circuit Ct., Jasper Cty, Miss. (Dec. 12, 2001).) See also id. (quoting 

Andrew Schneider, Asbestos Lawsuits Anger Critics, St. Louis Post–Dispatch, February 9, 2003, 

at A1). 53 Id. Professor Brickman also notes that it is exceedingly difficult to gather evidence about 

the positive rates generated by these screening companies. Although such information must be 

readily available to these enterprises, company representatives and the doctors who make the 

diagnoses almost uniformly have refused to provide it. 

Ultimately, the Manville Trust was made to disband its audit 

program by U.S. District Court Judge Jack Weinstein.50 But during 

the time that the program was in place, the Trust was able to collect data on how often different doctors’ diagnoses ‘‘failed’’ a review 

by independent examiners. The failure rate was high. ‘‘According to 

an April 1998 Manville Trust memorandum, the 10 physicians 

most frequently used by plaintiffs’ firms at the time of the audits 

had an average failure rate of 63 percent. Nine had failure rates 

ranging from 50 percent to 70 percent, while the 10th failed 36 percent of the time.’’ 51

In a forthcoming law-review article, Professor Brickman also provides a detailed description of the operations of the testing enterprises that conduct mass screenings on behalf of asbestos plaintiffs 

firms. These businesses often are full-service providers: they recruit 

workers for screenings, conduct pulmonary-function tests, and 

make, develop, and read chest x-rays. These businesses find workers for screenings through labor unions, or sometimes by direct 

mail and mass advertisements. The article describes several enterprises that were started by individuals with no medical background—or any substantial education of any sort. These screening 

companies include: a company that produced test results in exchange for a 25% contingency fee from the lawyer using the result; 

a company that screened eight persons per hour; another company 

that charged lawyers $775 for a positive result, but only $175 for 

a negative result; a screening company that allowed plaintiffs attorneys to determine what predicted values should be employed in 

pulmonary function tests; and a screening-company owner who testified that test subjects openly discussed during pulmonary-function tests how failing to fully exhale would ‘‘earn’’ them a settlement check.52

Professor Brickman estimates that the number of workers who 

have undergone attorney-sponsored asbestos screenings since the 

mid-1980s exceeds 1,000,000 and may approach 2,000,000. He also 

concludes, based on the evidence that he has collected, that these 

screening companies identify positive evidence of asbestos-related 

disease in at least 40% and sometimes as many as 85% of the 

workers that they screen.53

To sum up all that has been discussed so far, I quote another 

commentator who, having reviewed evidence similar to that deVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00097 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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54 Robert J. Samuelson, Asbestos Fraud, Washington Post, November 20, 2002, A25. 

scribed here, has come to the following concise conclusion about the 

nature of asbestos litigation as it is conducted today: ‘‘Among ordinary people, there is a word for this: fraud. This is a legalized 

fraud.’’ 54

Medical Facts About Asbestos Injury 

At this point, it is appropriate to examine what modern medicine 

tells us about what types of injuries asbestos does and does not 

cause. There has been considerable uncertainty about this question 

both in this committee and in the legal community generally. For 

example, one Supreme Court Justice recently noted that ‘‘[a]bout 

half of the [asbestos] suits have involved claims for pleural thickening and plaques—the harmfulness of which is apparently controversial.’’ Amchem, 521 U.S. at 631 (Breyer, J., dissenting). 

Justice Breyer, of course, is limited to considering only those 

facts presented to him in the record by the parties. The Senate is 

not. Thus I have asked Dr. James Crapo, who has provided very 

helpful and credible testimony to this Committee, to analyze the 

final committee-reported bill, and to address several issues that 

have been controversial in this committee. His letter is include as 

Attachment ‘‘E’’ to this statement. I also have posed three questions to 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). Their responses are included as Attachments ‘‘F,’’ ‘‘G,’’ and ‘‘H’’ to this 

statement, respectively. 

I have selected these three doctors because they are eminent scientists who have done extensive reviews of the literature on asbestos and have written critical reviews that are highly regarded in 

the field. It is fair to say that no one knows more about the issues 

raised here than do these doctors. 

The three questions posed to all of these doctors are as follows: 

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 sufficient to cause clinically significant 

asbestosis, could it nevertheless have caused lung cancer? 3. Can 

asbestos exposure cause colorectal cancer, or cancer of the larynx, 

pharynx, esophagus, or stomach? 

Not every doctor addressed every question. The doctors’ answers 

are as follows: 

1. Do pleural plaques or pleural thickening constitute an injury 

or impairment? Are they a useful predictor of future injury? 

Dr. Gee: ‘‘[Plaques] generally do not cause impairment of either 

the lung or breathing apparatus nor cause any disease to the worker.’’

‘‘In summary, plaques (common) as opposed to diffuse pleural fibrosis (now rare) do not cause disease or impairment. Neither 

plaques alone nor diffuse pleural fibrosis imply an increased risk 

of malignancy.’’

Dr. Weiss: ‘‘Pleural plaques are an injury which generally does 

not cause any impairment unless they are very extensive. They do 

99

55Weiss, W: Asbestosis: A Marker for the Increased Risk of Lung Cancer Among Workers Exposed to Asbestos. Chest 115:536-549, 1999. 

not predict an increased risk of lung cancer. Pleural thickening is 

an injury which varies in degree and impairment from negligible 

to moderate and even severe.’’ Dr. Crapo: ‘‘Changes of the pleura, such as pleural plaques or 

pleural thickening, due to asbestos exposure should not be characterized as asbestosis. These pleural changes do not affect lung function unless they are extensive, and they do not increase the risk 

of an asbestos-related lung cancer.’’ (Citing studies.) ‘‘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.’’ 2. If an asbestos exposure was not sufficient to cause clinically 

significant asbestosis, could it nevertheless have caused lung cancer? 

Dr. Gee: ‘‘[A]sbestosis is clearly quantitatively the major associate of lung cancer risk.’’ ‘‘Where an asbestos exposure was not sufficient to cause clinical 

asbestosis, the chances of its being the cause of or a substantial 

contributing factor to lung cancer in smokers is between small and 

absent. In the absence of plaques, there is no reason to implicate 

asbestos in lung cancer.’’ Dr. Crapo: ‘‘From a medical perspective, the [proposed federal] 

trust should not provide compensation to claimants who have lung 

cancer and exposure, but who do not have asbestosis (i.e., Malignant Levels VII and VIII). The medical literature shows that, while 

lung-cancer risk increases when significant asbestosis is present, 

there is no such increase in risk in workers who are exposed to asbestos, with or without pleural plaques, but who do not have asbestosis.’’ ‘‘Prospective studies that have focused upon the question whether exposure alone, without accompanying asbestosis, is associated 

with increased lung cancer risk have found that lung cancer risk 

is associated with asbestosis and not with asbestos exposure alone.’’

‘‘In my view, medical science would support requiring asbestosis 

before a significant contribution of asbestos exposure to lung cancer 

risk is accepted.’’

Dr. Weiss: ‘‘No.’’

Dr. Weiss cites to his own review of the literature regarding this 

question, which was published in 1999.55 In that review, Dr. Weiss 

analyzed cohort studies that provided evidence bearing on ‘‘the hypothesis that excess lung cancer risk occurs only among those 

workers who develop asbestosis.’’

Dr. Weiss’ review concluded that:

Only a few cohort studies have addressed directly the 

issue of asbestosis as a marker for increased 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 coVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00099 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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56 Id. at 546.

horts 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 is 

much stronger than the association between cumulative 

asbestos exposure and the relative risk of lung cancer. 

The literature also contributes support for the hypothesis in two other lines of investigation: animal research 

and epidemiological studies of lung cancer risk in other 

diseases characterized by diffuse pulmonary fibrosis.56

3. Can asbestos exposure cause colorectal cancer, or cancer of the 

larynx, pharynx, esophagus, or stomach? 

Dr. Crapo: ‘‘Compensation by the FAIR Act for forms of cancer 

other than lung cancer and mesothelioma is not justified by current 

medical science. While the evidence suggests an association between asbestos and laryngeal carcinoma, no other form of cancer 

is clearly associated with asbestos exposure. Moreover, the suggested association between asbestos exposure and laryngeal cancer 

is suspect because of the absence of a dose-response relationship.’’ ‘‘While it is accepted that exposure to asbestos is associated with 

mesothelioma and lung cancer, there is no persuasive scientific evidence of meaningful association with cancer at other sites.’’ Discussing Dr. Goodman’s study, Dr. Crapo notes that ‘‘[b]esides 

lung cancer and mesothelioma, the only other cancer for which a 

possible association exists is laryngeal cancer, where the metaanalysis showed an SMR with latency of 1.57. (An SMR of 1.0 

would indicate an absence of any increased risk, while an SMR of 

2.0 would indicate a doubling of the risk.) However, variance in the 

studies relating to laryngeal cancer was so large that the possibility of no increased risk could not be excluded, 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.’’ Dr. Weiss: ‘‘For colorectal cancer the evidence indicates no causality between asbestos and colorectal cancer. I have not reviewed 

the studies on cancers of the larynx, pharynx, esophagus, or stomach so I will not comment on these.’’ Dr. Gee: 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.’’ With regard to esophageal cancer: ‘‘[T]here is no evidence relating them to asbestos.’’

With regard to kidney cancer, Dr. Gee quotes an analysis summarizing both published data and data from additional inquiries: 

‘‘this analysis pointed toward a lack of an association between asbestos exposure and renal cancer.’’

Discussing Dr. Goodman’s study, Dr. Gee concludes that it ‘‘noted 

an overall excess laryngeal cancer risk rate that was about 1.6 but 

101

57 Cancer Causes and Control 10:453-465, 1999. 

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 the 

lung and laryngeal cancer rates that is most likely due to a common smoking origin.’’

Dr. Goodman: He notes that his 1999 study, Cancer in AsbestosExposed Occupational Cohorts: A Meta-Analysis,57 ‘‘confirmed a 

causal link between asbestos exposure and lung cancer.’’

‘‘Data 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.’’

‘‘With respect to most cancers, the latency period is typically 20 

years or more. For this reason, studies that examine latency are 

considered more reliable and a true causal relationship is expected 

to become more evident after latency is taken into account. We reanalyzed the data by including only studies that took into consideration latency of at least 10 years. The results for lung cancer 

showed further elevation in risk, the risk of laryngeal cancer was 

somewhat higher, but was no longer statistically significant, while 

the risks of other cancers either decreased or remained essentially 

unchanged.’’

‘‘Another set of analyses in our study examined the exposure-response relationship between asbestos and cancer. If the risk of disease increases with increasing level of exposure, the relationship is 

more likely to be causal. * * * Our analyses demonstrated that 

lung cancer risk was strongly associated with and statistically significantly related to the proportionate mesothelioma mortality. 

However, this observation did not hold true for other cancers including laryngeal cancer and thus, did not support the causal association between asbestos exposure and other cancer sites.’’

‘‘It is important to point out that our meta-analysis is not the 

only publication reviewing the scientific evidence on the association 

between asbestos exposure and malignancies other than mesothelioma and lung cancer. For example, a 2000 article by Browne and 

Gee entitled, ‘Asbestos Exposure and Laryngeal Cancer’ concluded 

that the available evidence does not support the contention that asbestos causes laryngeal carcinoma. According to the authors of this 

article, their review is in agreement with five or six other reviews 

of this topic published since 1985. Similarly, a 1994 article entitled 

‘Asbestos and Colon Cancer: A Weight-of-the-Evidence Review’ by 

J. Gamble concluded that asbestos exposure, ‘does not appear to increase the risk of colon cancer.’ ’’

‘‘In summary, the epidemiological literature on balance does not 

support a causal association between asbestos exposure and the development of cancers other than mesothelioma and lung cancer.’’

102

58 Infra at Attachment ‘‘E.’’

4. The Medical Criteria Employed by the Committee-Reported 

Bill. 

The information provided by these doctors casts doubt on this 

bill’s standards for identifying asbestos injury. To all three of the 

questions discussed above, the doctors overwhelmingly answer 

‘‘no.’’ But the committee-reported bill appears to assume that the 

answer to each questions is ‘‘yes,’’ or at least ‘‘maybe.’’

First, the bill assumes that pleural plaques are meaningful indicia of injury. As Dr. Crapo notes:

The x-ray findings required for compensation in NonMalignant Levels III, IV, and V are generous. In the first 

place, it is possible to recover in each of these categories 

with an x-ray indicating pleural plaques or diffuse pleural 

thickening that register B2 on the ILO scale. It is rare, 

however, that people with only pleural conditions of this 

kind will have a genuine impairment.58

Second, the bill assumes that lung cancer can be attributed to asbestos even in the absence of clinically significant asbestosis. 

Again, Dr. Crapo notes: ‘‘From a medical perspective, the [proposed 

federal] trust should not provide compensation to claimants who 

have lung cancer and exposure, but who do not have asbestosis 

(i.e., Malignant Levels VII and VIII).’’

Dr. Crapo goes on to warn that the bill’s ‘‘Malignant Levels VII 

and VIII will allow a significant number of people to qualify for 

compensation who do not in fact have a lung cancer caused by asbestos exposure. In other words, there will be a substantial number 

of ‘false positives.’ ’’

Finally, the committee-reported bill assumes that other cancers—

including colorectal cancer—are caused by asbestos. Dr. Crapo 

bluntly notes that ‘‘[c]ompensation by the FAIR Act for forms of 

cancer other than lung cancer and mesothelioma is not justified by 

current medical science.’’ He goes on to state that ‘‘[i]n my view 

there is a danger that the limited resources of the Fund will be diverted to paying the claims of people with ‘other cancers,’ many of 

which are quite common and could give rise to numerous claims in 

a no-fault system.’’

The committee-reported bill’s inclusion of colorectal cancer is particularly disappointing. The original bill did not include this cancer. 

Indeed, during the introductory hearing on the bill, Dr. Crapo 

praised this omission, and specifically warned against awarding 

compensation for colorectal cancer. He noted that ‘‘[a]ccording to 

the National Cancer Institute, there are 147,500 colo-rectal cancers 

each year. To allow recovery based on nothing more than plaques 

and the requisite exposure could expose the Trust to considerable, 

unpredictable liabilities in future years.’’

Dr. Crapo also noted that including colorectal cancer ‘‘would be 

ironic, since asbestos litigation as it is today involves few ‘other 

cancer’ cases, presumably because of the difficulties of proof. There 

is a danger that the medical criteria in the bill would open the door 

to many more claims of this kind than are currently seen.’’

103

59 As for why this committee even began with a bill that compensates any ‘‘other cancers’’—

despite the clear weight of the medical evidence that none of these cancers is caused by asbestos 

exposure—the explanation is simple: the existing bankruptcy trusts, particularly Manville, are 

a natural political default for designing a national trust fund, and most of those trusts—including Manville—compensate claimants for ‘‘other cancer.’’ See White, supra note 1, at 1324–26 & 

n. 25. The explanation for why these trusts make awards for ‘‘other cancers’’ and other medically 

unsupportable claims is even simpler: ‘‘[b]ecause an asbestos firm’s bankruptcy reorganization 

plan must be approved by at least 75% of claimants, the [firm] managers’ [bankruptcy] decision 

* * * depends on whether more than or less than 75% of claims are fraudulent, i.e., whether 

the critical voter on the reorganization plan is a fraudulent or a valid claimant.’’ Id. at 1339. 

Those who contend that asbestos exposure causes stomach or colon cancer usually rely on 

studies published in the mid-1960s by Irving Selikoff. Though all subsequent studies were unable to confirm his results, Selikoff dominated the field of occupational medicine during his lifetime, and frequently participated in litigation as an expert witness on behalf of plaintiffs. Any 

marginal deference due from this committee to Selikoff’s findings certainly is further diminished 

by the fact that, as one scholar recently has noted, ‘‘in terms of medical education and qualification, Selikoff was a fraud.’’ P.W.J. Bartrip, Irving John Selikoff and the Strange Case of the 

Missing Medical Degrees, JOURNAL OF THE HISTORY OF MEDICINE AND ALLIED SCIENCE 28, Vol. 

58 (2003). The author discovered that Selikoff lacked the medical degree that he had always 

represented himself as having—though he did have a PhD, earned in one year, from ‘‘an 

unaccredited school of appalling quality on the verge of collapse.’’ Id. at 22. The author concludes 

that ‘‘[i]f Selikoff’s evasions had been uncovered [during his lifetime], his credibility would almost certainly have been destroyed.’’ Id. at 31–32. 60This letter is included as Attachment ‘‘I’’ to this statement. 61See infra at Attachment ‘‘I.’’

In other words, attributing ‘‘other cancers’’ to asbestos exposure 

is an argument that even the tort system does not accept. But it 

is an argument accepted by this bill. 

It was to be expected that this committee would give claimants 

the benefit of the medical doubt when developing a national trust 

fund that will bar access to the tort system. It was not to be expected that the committee would also cast aside the overwhelming 

conclusions of the last thirty years of medical research.59

One potential consequence of this committee’s inclusion in the 

trust fund of ‘‘other cancers’’ and other unjustified compensation 

categories is described in a letter received by Senator Sessions from 

Dr. E.B. Ilgren.60 Dr. Ilgren agrees with all of the conclusions 

reached by the doctors whose opinions are described above. He concurs that: ‘‘[t]he medical literature provides very strong evidence 

that asbestos does not cause or enhance an individual’s risk for 

cancer aside from mesothelioma and lung cancer,’’ and that ‘‘[t]here 

is no reason to include pleural plaques amongst the medical criteria of attributable changes that deserve compensation. Pleural 

plaques do not portend future malignancy.’’ He additionally notes 

that an ILO score of 1/0—one of the criteria that the bill relies on 

as evidence of asbestosis—is also consistent with long-term, heavy 

smoking. 

Dr. Ilgren also notes, however, that ‘‘[i]nclusion of pleuro-pulmonary malignancies in the medical criteria potentially undermines present day evidentiary standards.’’ Stated otherwise, this 

committee is setting a very bad precedent. Dr. Ilgren also points 

out—in the spirit of Jonathan Swift—that inclusion of these criteria argues for inclusion of numerous other premalignant conditions for numerous other cancers as well.61

Some Suggestions to a Coordinate Branch of Government 

Over the course of this committee’s consideration of this bill, Senators have heard from a large number of manufacturers, doctors, 

insurance carriers, union officials, and even trial lawyers about 

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62The Judiciary Committee encountered this very phenomenon during the first day of its executive consideration of this bill. In response to a question from a member of the committee, Dr. 

Laura Welch, a medical doctor affiliated with The Center to Protect Workers’ Rights, stated that 

in her ‘‘opinion, there are epidemiologic studies that show that substantial exposure to asbestos 

raises the risk of colon cancer.’’ This opinion easily could have been persuasive to committee 

members had Dr. Crapo not been present to respond. He explained: ‘‘There is really only one 

cohort or study that has really significantly shown an association [of asbestos exposure] with 

colorectal cancer. It was an early one done. The problem with that cohort was that—and it was 

Selikoff’s cohort of insulators—they had an 80 percent smoking incidence in that cohort, and 

the controls [the study] used to predict the rate of colorectal cancer in the group came from normal American males that had about a 40 to 50 percent smoking rate, and smoking is a major 

cause of colorectal cancer. So you can raise some concerns of, did they have the right control 

number when they estimated the increased rate? That epidemiological study has been redone 

in a total of 14 cohorts, and when you do a meta-analysis, which means [you] take all the cohorts, all the work that has been done on [the subject] * * * and say, is there an increased 

risk?, the answer is absolutely no. The SMR for that is 1.03, where no risk is 1.00. An elevated 

risk would be 2 or something. So you are talking about a profound amount of studies that say 

there is no increased risk if you properly control for smoking. And I would further add that if 

you go to most major medical textbooks under asbestosis and cancers and look it up, they will 

say colorectal [cancer] is not associated [with asbestos exposure].’’ See also infra, Attachments 

‘‘E,’’ ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ and ‘‘I.’’ 63See Patrick M. Hanlon, Asbestos Legislation, SH043, ALI-ABA Course of Study Materials 

(Sept. 2002) (‘‘Only a few thousand cancer cases are filed each year. If the judicial system merely had to resolve those cases, there would be no asbestos litigation crisis’’). See also id. (‘‘Most 

groups, which often have conflicting interests. Plaintiffs lawyers 

are divided between those who primarily represent cancer victims—and want strict medical limits placed on asbestos claims, in 

order to preserve funds for their clients—and those who pursue 

large numbers of manufactured claims, and who oppose any limits 

on the tort system. Business is divided between those facing massive asbestos liability (and possibly bankruptcy), who want a bill at 

any cost, and those who only will support legislation within certain 

limits. Each of these groups has its own story to tell. 

Members of this committee have been presented with a vast 

amount of information about asbestos litigation. We have heard numerous accounts, many of them first hand, about how these lawsuits are conducted. From all these accounts, certain patterns 

emerge, and certain aspects of the asbestos-litigation crisis come 

into relief. Two matters call out for the judiciary’s attention. 

First, it is apparent that the truth-seeking function of a trial is 

completely undermined when courts allow illegitimate expert testimony to be presented to a jury. As a matter of federal due process, 

all unreliable expert testimony should be excluded from the courtroom. 

Asbestos lawsuits repeatedly have confirmed the finds of 

Milgram’s experiment: that most people will believe what an expert 

tells them. When an expert testifies about scientific or technological facts, we believe what he says, not because of his credentials, or because we think ourselves obligated to do so, but because 

we believe that he has access to the truth. We believe that the expert is revealing to us a part of that truth. We are aware that we 

do not know as much as the expert does, and so we defer to him. 

Before an expert is allowed to exercise this power over a jury, the 

courts must be certain that he is, in fact, presenting the truth. The 

expert’s power over the jury is not diminished when he presents inaccurate information. Rather, it is the trial itself that is compromised.62

Had all courts been required to exclude expert testimony that 

has not been tested for validity and relevance, the asbestos-litigation crisis probably never would have become a crisis.63 The pleural 

105

defendants, including many of those who have filed for bankruptcy, could manage the problem 

of compensating cancer victims and people with serious asbestosis. Compensating hundreds of 

thousands of people who have no breathing impairment whatever is a task not many companies 

can handle’’). See also infra Attachment ‘‘I’’ (describing unsound medical theories employed in 

asbestos litigation) (Letter of Dr. Ilgren). 64 Common sense and practical experience suggest that these types of damages are interchangeable—where a jury can award one kind, it generally can find ways to award other kinds 

as well. See, e.g. Adam Liptak, Pain-and-Suffering Awards Let Juries Avoid New Limits, The 

New York Times, October 28, 2002, at A14 (noting that ‘‘[a]s all sorts of limitations have recently been placed on punitive damages, creative lawyers have shifted their attention to pain 

and suffering, a little-scrutinized form of compensation for psychic harm’’). See also Parloff, The 

$200 Million Miscarriage of Justice, supra note 4 (describing Mississippi jury award of $150 million in ‘‘compensatory’’—not punitive—damages to six asbestos plaintiffs with no injury or impairment). 65See also Thomas H. Dupree, Jr. & Theodore J. Boutrous, Jr., Successfully Challenging Punitive Damage Awards: Winning Strategies After State Farm v. Campbell, National Legal Center 

for the Public Interest (forthcoming 2003) (noting that punitive damages ‘‘do not serve a compensatory function, nor are they awarded with the protections of the criminal justice system’’). 66 Just four months ago, for example, a Madison County, Illinois jury awarded an individual 

asbestos plaintiff $250 million—an amount that certainly would threaten the viability of most 

businesses. See Alex Berenson, 2 Large Verdicts in New Asbestos Cases, The New York Times, 

April 1, 2002, at C4. For a discussion of punitive damages’ predominance in particular classes 

of cases, see Erik K. Moller et al., Punitive Damages in Financial Injury Verdicts, 28 J. Legal 

Stud. 283, 304 (finding, based on review of financial-injury cases in five large jurisdictions, that 

‘‘[u]niformly, punitive damages represent a large portion of the total damages awarded * * * 

: from 43 percent of all damages in other contract verdicts to over 70 percent of all damages 

in insurance verdicts’’). For data regarding the frequency with which punitive damages are 

awarded in particular classes of cases, see Erik K. Moller, Trends in Civil Jury Verdicts Since 

1985 54 Table A.9 (RAND 1996) (indicating that in some types of litigation, punitive damages 

are awarded in over a quarter of cases). 

plaques-phase of the litigation, which dominated the mid–1990s, 

never would have occurred. The clear weight of the medical evidence indicates that pleural plaques are not substantial evidence of 

either present harm or the threat of future harm. No expert evidence to the contrary should be admissible in an American court. 

Nor, were invalid expert testimony excluded from the courtroom, 

would law firms be able to employ slipshod medical diagnoses to 

identify asbestosis. 

Second, it is apparent that for many defendants, going to trial 

ceases to be an option when unrestricted intangible damages are 

threatened. By ‘‘intangible damages,’’ I refer to punitive damages, 

pain and suffering, and all other damages that are not based on 

a measurable harm and that are potentially unlimited in amount.64

These types of damages (particularly punitive damages) are at 

war with the principles and structure of the civil trial.65 The civiljustice system tolerates low standards of proof because it does not 

create or impose harm. Rather, it evaluates existing harms and determines which party most appropriately bears their costs. The 

civil-justice standard of proof is thus proportionate to the potential 

of compensatory liability. Because the harm at issue exists regardless of whether the court acts, it is appropriate to ask simply who, 

more likely than not, should bear the cost of that harm. 

But when unlimited intangible damages are permitted, the civiljustice system’s low standard of proof becomes an invitation to 

abuse. Now the court creates new harms—and imposes them despite reasonable doubt about the facts. And, unlike even in the 

criminal justice system, the potential liability is unknowable. In 

the classes of cases where punitive damages often are awarded, the 

defendant, in every case, risks putting his entire business at 

stake.66 Given the uncertainties of a jury trial, the typical defendVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00105 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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67For examples of this phenomenon, see Parloff, $200 Billion Miscarriage of Justice, supra 

note 4 (discussing bouquet trials and David Cosey litigation). 68See State Farm v. Campbell, 123 S.Ct. 1513 (2003). 69Dupree & Boutrous, supra note 65. 70See id. (discussing Trinity Evangelical Lutheran Church v. Tower Ins. Co., No. 01-1201, 

2003 WL 21205367 (Wis. May 23, 2003), and TVT Records v. The Island Def Jam Music Group, 

257 F. Supp. 2d 737 (S.D.N.Y. 2003)). 71Written Statement of Theodore B. Olson Concerning Civil Justice Reform, Before the U.S. 

Senate Subcommittee on Consumer Affairs, Foreign Commerce, and Tourism of the Committee 

on Commerce, Science, and Transportation, 1995 WL 152026 (April 4, 1995). See also id. (describing recent decade’s exponential growth in size of Alabama and Texas punitive-damages 

awards); Dupree & Boutrous, supra note 65 (describing Kentucky Supreme Court’s recent approval of a punitive-damages award ‘‘more than twice as large as the aggregate of all punitive 

verdicts approved on appeal in Kentucky history’’) (emphasis in original). 

ant will not take this risk, even if he believes that he can show 

that he is not liable. 

This clearly is what occurs in much asbestos litigation. The 

threat of massive intangible damages has vastly magnified the bargaining power of the plaintiffs firms. As a direct consequence, these 

firms are now able to impose coercive settlements. In exchange for 

settling its few legitimate claims, a large-inventory firm can demand that defendants also settle thousands of manufactured 

claims involving no credible evidence of impairment.67 Even large 

defendants are afraid (with reason) to go before a jury even on a 

small number of claims. 

The Supreme Court recently again has held that the federal 

guarantee of due process places limits on the amount of a punitivedamage award.68 Once again, however, the court’s analysis is restricted to formal punitive damages—it ignores other types of punitive-in-all-but-name intangible damages that have grown to massive size in recent years. Moreover, once again, the Court has 

‘‘eschew[ed] a bright-line limit’’ even for punitive awards.69 As commentators have noted, this ambiguity already has been exploited 

by some courts.70

The federal high court should restrict intangible-damage awards 

to the value of transactions costs—i.e., to the amount of a reasonable attorneys fee. And, where additional damages are authorized 

by statute, they should be limited to a small multiple of concrete, 

calculable damages. 

Some jurists have taken the view that because exemplary damages were allowed at the time that the Fifth and Fourteenth 

Amendments were adopted, the due-process guarantee places no 

limits on such awards today. It thus bears emphasis that truly 

massive intangible-damage awards are a creature only of the last 

thirty years. As one commentator has noted, for example, the largest reported punitive-damage award upheld on appeal in California 

before 1960 was $10,000.71 The size of awards allowed at common 

law was relatively small—in fact, comparable to the limits suggested here. The due-process clauses guarantee no ‘‘right’’ to these 

types of awards, unless one takes the view that our Constitution 

acquired its current meaning in the 1970s. 

For intangible damages—as for asbestos—it is the dose that 

makes the poison. The massive awards permitted today overwhelm 

the civil-justice system and frustrate its truth-seeking function. 

Unless these awards are cabined within their historical limits, all 

other process guaranteed to those who are sued becomes illusory. 

107

To conclude, I think that it is fair to say that asbestos litigation 

has warped the American civil-justice system. The courts have been 

used to commit abuses that one would not have thought possible 

in America. Congress may yet enact this bill, and put an end to asbestos lawsuits. Even if Congress does so, however, the asbestos 

model of litigation is now too well-practiced to permit hope that it 

will not reappear in some other form. The problems described here 

are ones that we will confront again in the coming years.

JON KYL.

ATTACHMENT A 

KAZAN, MCCLAIN, EDISES, ABRAMS, 

FERNANDEZ, LYONS, & FARRISE, 

July 23, 2002. 

Hon. JACK B. WEINSTEIN, U.S. District Court—EDNY, 

Brooklyn, NY. 

Hon. BURTON LIFLAND, 

U.S. Bankruptcy Court—Southern District, 

New York, NY. 

Re In Re Johns-Manville Corp., et al., Case Nos. 82 B11656 (BRL) 

through 82 B11676 (BRL), Inclusive, NYAL Index No. 4000. 

Bernadine K. Findley, et al. v. Leslie Gordon Fagen, et al.,

E.D.N.Y. 90 CV 9373 (JBW), NYAL Index No. 4000. 

DEAR JUDGE WEINSTEIN AND JUDGE LIFLAND: I had the privilege 

of attending the hearing held in your court on December 13, 2001, 

and the even greater pleasure of being asked to comment following 

the presentations by the Manville Trust, the Futures Representative, and counsel for the SCB. At the conclusion of those proceedings, you asked the Trust to meet and confer with Mr. Fagen 

and the SCB and report back in 30 days. I understand that you 

gave them at least one additional extension. Although we have 

heard various rumors about progress in those discussions from 

time to time, nothing very specific has surfaced. 

Seven and a half months have gone by. Nothing has changed. 

The Trust has received some 40,000 additional cases. Last week, I 

co-chaired Mealey’s ‘‘Wall Street Forum: Asbestos’’ seminar at 

which Mr. Austern presented some information. He reported that 

90% of the Trust’s last 200,000 claims have come from attorneysponsored x-ray screening programs, that 91% of all claims allege 

only non-malignant asbestos ‘‘disease,’’ and that these cases currently receive 76% of all Trust funds. 

In my submission for the December hearing, titled ‘‘Memorandum by Interested Attorney,’’ I made my own suggestions as to 

an appropriate revision of the disease matrix value system and also 

proposed as an alternative that the court consider taking steps to 

implement a useful and legitimate medical screening program. 

I do not write to point fingers at anyone, for I have no idea why 

nothing seems to have been accomplished to date, but simply to 

suggest with all respect that the time has come for your Honors to 

exercise the powers of the Chancellor and take whatever steps you 

think appropriate to fix this problem. Nothing you can do can make 

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things worse; any changes you make can only be an improvement 

of the current intolerable situation. 

Respectfully, 

STEVEN KAZAN.

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(184)

ADDITIONAL VIEWS OF SENATORS FEINSTEIN AND KOHL 

We write separate views on S. 1125, the FAIR Act, to clarify certain amendments passed in Committee and to highlight our priorities as the legislation proceeds to the Senate Floor. The legislation 

passed out of Committee reflects a substantial improvement over 

the FAIR Act as introduced. But we strongly believe that additional 

changes are necessary before the bill is ready for final passage. 

Without question, our State and Federal courts face an asbestos 

litigation crisis. An estimated 18.8 million U.S. workers were exposed to high levels of asbestos from 1940 through 1979. Claims resulting from related cancers and other ailments are expected to 

cost up to $210 billion. More than 500,000 cases have been brought 

in the past 20 years, targeting 8,400 companies. The court dockets 

are simply clogged with claims. As a result, the sickest victims 

must wait years before their claims are resolved and dozens of companies are filing for bankruptcy due to the overwhelming cost of 

lawsuits. The enormity of this crisis calls for a national solution. 

We support the concept of a comprehensive, no-fault national 

trust. However, any Trust Fund created by Congress must be fiscally responsible, establish fair compensation for asbestos victims, 

and provide certainty for all. We supported amendments in Committee to accomplish these goals, and many of those amendments 

passed. But there is more to be done. 

Financial Risk Amendment 

The Feinstein-Kohl contingent call amendment passed by the 

Committee provides an important financial reserve in case of unexpected contingencies. As introduced, the FAIR Act provided no 

mechanism to raise additional funds from defendant companies or 

insurers if claims outstripped the resources of the Trust Fund. Our 

amendment addresses this deficiency and is explained below. 

S. 1125 separates contributions from defendant companies into 

eight time periods stretched over 27 years. Each time period has 

an annual aggregate amount that applies to defendant company 

contributions. For example, years one through five total $2.5 billion 

a year to be paid by defendant companies. In subsequent time periods, the annual aggregate number is reduced according to scheduled step-downs. 

Our amendment would require that these reductions only be allowed if the Administrator can certify that the Trust Fund has paid 

and will continue to fully pay the compensation awards afforded to 

asbestos claimants. 

Specifically, the Administrator must consult with experts in determining whether or not to certify a reduction. A contributor to 

the Trust Fund (defendant company or insurer) is allowed an opportunity to comment and offer additional information to support 

185

a determination that additional contributions are not necessary 

and hence, a reduction is in order. 

Denying a reduction in one time period does not restrict the Administrator from allowing a reduction in the future to the value allotted that future time period. Furthermore, the Administrator is 

allowed flexibility to partially limit a reduction so long as the contributions will be sufficient to meet current and future claims. 

Our amendment is not a one-way street. It would permit the Administrator to reduce the aggregate contribution levels and give defendants a credit if the defendants were denied deductions in earlier time periods. These credits would not exceed the amount of 

extra payments received earlier. 

Under the FAIR Act as reported out by the Committee, insurance 

company contributions will be determined by the Asbestos Insurers 

Commission, but shall equal the total amount ($52 billion) paid by 

the defendant companies. For the purposes of our amendment, the 

insurance companies will be liable for the same amount for any 

contingent funding assessed upon defendant companies. 

Our amendment also offers a solution to the back-end problem. 

Namely, we need to address the possibility that the Trust Fund 

will require additional dollars beyond the initial 27 year period. 

Our amendment permits continued contributions past year 27 if 

the Administrator finds that more funds are needed to cover 

claims. We do not require companies and insurers to pay this further obligation. If they choose, they can return to the tort system. 

Working with Senator Hatch, we agreed that this return to the tort 

system be the federal court system. Alternatively, companies and 

insurers can maintain their immunity by making payments into 

the Trust Fund. The choice is theirs to make based on each company’s or insurer’s self-interests. 

There must be a check to ensure that we aren’t giving defendant 

companies and insurers a break on their contributions if we aren’t 

able to guarantee a full compensation award allowed for by the 

Trust Fund. The amendment is a common-sense approach that provides accountability that asbestos victims are fairly and fully compensated per the law. Furthermore, this amendment still provides 

a measure of certainty for the companies of what their total contribution could be, even if it is higher than what the bill allows for 

now. We are pleased that Chairman Hatch worked with us to include this amendment which we feel greatly improves the FAIR 

Act. 

Ban on Asbestos Products 

The legislation reported out of Committee includes an amendment we drafted with Senator Hatch banning the production, manufacture and distribution of asbestos-containing products. We believe this amendment is a crucial component of any comprehensive 

bill. Any resolution to the asbestos litigation crisis should also end 

the tragic legacy of disease and death that exposure to asbestos has 

wrought. We must minimize the creation of new asbestos victims 

by banning the use of this dangerous mineral in this country. The 

Judiciary Committee has become very familiar with the tremendous long-term human health, environmental and economic costs of 

reliance on asbestos. It makes no sense to develop a complex plan 

186

for mitigating these costs while still allowing this harmful substance to be used in workplaces across America. 

The asbestos ban amendment included in S. 1125 builds off of 

the asbestos phase-out and ban regulations that the Environmental 

Protection Agency (EPA) finalized in 1989 and that would have 

taken full effect by 1997. Unfortunately, the 5th Circuit Court of 

Appeals overturned these rules in 1991 and this decision was not 

appealed to the U.S. Supreme Court. The asbestos ban amendment 

also draws from Senator Murray’s Ban Asbestos in America Act, S. 

1115. The language requires the EPA within two years to finalize 

rules banning the manufacture, processing and distribution in commerce of asbestos containing products. The ban also applies to the 

importation of asbestos containing products from other countries. 

Prior to finalizing these rules, the EPA shall be required to conduct 

a study to determine whether certain roofing products should remain exempt from the ban. It is worth noting that in 1989, the 

EPA chose not to exempt this product category from its ban; however, in the spirit of compromise we agreed to defer this decision 

to EPA’s expertise. However, we must stress the importance of 

EPA conducting this study prior to finalization of the asbestos ban. 

Fair Claims Values 

As the bill goes forward, the legislation must ensure fair claims 

values. Senators Feinstein and Graham passed an amendment in 

Committee that substantially increases the award values for claims 

under the Trust Fund. Through these increased award values, the 

amendment would direct an estimated $11 billion additional dollars to victims (from $96.2 to $107.8 billion). 

The new claims values increase compensation for the more serious diseases. For example, under the Feinstein-Graham amendment, compensation for pleural disease rose from $60,000 to 

$75,000, Compensation for disabling asbestos went up from 

$600,000 to $750,000; and the maximum compensation for nonsmoking lung cancer victims went up sharply. Lung cancer victims 

with 15 years of exposure can now get maximum awards of 

$600,000 (instead of $100,000). Those with pleural disease or disabling asbestosis can get maximum awards of $1,000,000. 

After adoption of the claims awards amendment, Senators Leahy 

and Kohl proposed another amendment to truly fund the FAIR Act 

at its purported $108 billion level. The Leahy-Kohl amendment 

provides an additional $14 billion of mandatory contributions—$7 

billion each from defendant companies and insurers—and eliminates an ill-defined section that sought to raise $14 billion from 

companies that had less than $1 million in asbestos-related litigation expenses. We concur with the minority views of Senator Leahy 

that it is both the intention and the effect of this amendment that 

the contingent funding mechanism established by the Kohl-Feinstein amendment—and the amount of additional dollars available 

under that mechanism—remain unchanged. 

Transition to Trust Fund 

We remain very concerned about the adequacy of the bill’s provisions regarding the transition of the 294,000 pending asbestos lawsuits into the Trust Fund. The Committee took one step forward 

187

by adopting the Feinstein amendment that delays implementation 

of the tort preemption provisions of the bill until the Trust Fund 

is fully operational and processing claims. As the bill was originally 

drafted, pending claims were barred from the court system upon 

the date of enactment. This preemption would have deprived mesothelioma patients and other victims any legal remedy while the 

Trust Fund was being set up. Since individuals with mesothelioma 

typically live for only a matter of months after diagnosis, the bill 

as introduced would have essentially denied them any remedy 

while they were alive. Under the bill as amended, individuals with 

asbestos-related diseases will maintain their legal rights during the 

transition period. 

The bill still has not fully addressed issues raised by final settlements. During Committee mark-up, Senator Feinstein offered language that would exempt from the Trust Fund settlements that 

were valid under state law as well as claims upon which a court 

rendered a judgment to pay money. Senator Feinstein withdrew 

her amendment after Chairman Hatch agreed with Senators of 

both parties to put language excluding settlements from the Trust 

Fund into the manager’s package on the Floor. 

Many asbestos victims have reached settlements with corporate 

defendants that are only partly paid. The participants in these settlement agreements are counting on these payments to support 

their families and pay medical bills. Are we really going to replace 

a claimant’s current stream of income with a future promise to 

pay? In some cases, individuals getting compensated under current 

settlement agreements will get less money or even no money under 

the Trust Fund. Exclusion of these settlements is necessary to preserve basic fairness and to protect the bill against constitutional 

challenges. 

In sum, we applaud the Chairman and Ranking Member for 

their efforts in shepherding this enormously complex legislation 

through Committee. However, we have more work to do before this 

legislation can become law. 

DIANNE FEINSTEIN. HERB KOHL.

(188)

93We are particularly disappointed that the majority that passed the FAIR Act out of Committee has demanded that these minority views must be filed less than 24 hours after the text 

of the amended bill was available from legislative counsel. This has been a tremendously difficult piece of legislation to develop, and the long and involved mark-up in Committee included 

dozens of amendments and numerous agreements to work further on a variety of provisions. 

While it is not clear why the majority is forcing us to issue our views before we are permitted 

to carefully read the revised bill, it is clear that it makes no sense to do so. Nonetheless, we 

have drawn on the reserves of good will and energy that have characterized our efforts throughout the work on this legislation, and have drafted our views to the best of our ability given the 

extremely limited time the revised bill has been before us. 

XI. MINORITY VIEWS

MINORITY VIEWS OF SENATORS LEAHY, KENNEDY, BIDEN, 

KOHL, FEINGOLD, SCHUMER, DURBIN, AND EDWARDS 

I. INTRODUCTION

After weeks of Committee consideration of legislation to enact a 

national trust fund for victims of asbestos-related disease, we are 

disappointed that the Committee failed to reach consensus on S. 

1125, the Fairness in Asbestos Injury Resolution Act of 2003 

(‘‘FAIR Act’’). We had hoped a bipartisan dialogue over the past 

several months would result in the best means for providing fair 

and efficient compensation to the current victims and those yet to 

come, and we thank Senators on both sides of the aisle who have 

been working with us in good faith to try to achieve common 

ground.93

We have all learned a great deal about the harms wreaked by 

asbestos exposure since Senator Leahy convened the first hearing 

on the asbestos litigation crisis last September. What we face first 

and foremost, as Senator Kennedy reminded the Committee during 

our final markup, is an asbestos-induced disease crisis—and the 

much publicized ‘‘litigation crisis’’ has arisen only because thousands of workers and their families have suffered debilitating disease, and death, due to asbestos exposure. 

Asbestos is the most lethal substance ever widely used in the 

workplace. Between 1940 and 1980, more than 27.5 million workers 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. 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. 

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 asbestosVerDate jul 14 2003 06:05 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00188 Fmt 6604 Sfmt 6604 E:\HR\OC\SR118.XXX SR118
189

induced disease. These are the real victims of the asbestos nightmare and must be the first and foremost focus of our concern. 

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 60 

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.’’ Working with Chairman Hatch and others, we encouraged representatives from organized labor and industry to help us reach 

consensus on a national trust fund to fairly compensate asbestos 

victims and to provide financial certainty for asbestos defendants 

and their insurers. After much hard work, however, we have yet 

to craft a complete bill to create an effective and fair national trust 

fund. 

A successful trust fund—which would provide fair and adequate 

compensation to all victims and would bring reasonable financial 

certainty to defendant companies and insurers—includes four essential components: appropriate medical criteria, fair award values, 

adequate funding, and an efficient, expedited system for processing 

claims that enables eligible claimants to obtain prompt payments 

without the complications, time and expense of a traditional lawsuit. Of course, there are many other important aspects of such a 

fund, including a functional administrative system, but these four 

components are the core requirements necessary to the foundation 

of a fair fund. 

During the first full mark-up session of the Committee on the 

FAIR Act, we unanimously adopted the Leahy-Hatch amendment 

on medical criteria, as well as a number of other bipartisan amendments. We then tackled the issue of solvency and, again, were able 

to make a bipartisan improvement by adopting a proposal by Senator Feinstein, Senator Kohl and Senator Hatch. More remains to 

be done on this issue, but an auspicious beginning left us hopeful 

of future agreements. 

That hope turned to disappointment when we next turned to the 

critical issue of determining award values for victims of asbestosrelated diseases. Although the changes made to award values in 

the FAIR Act as introduced constitute movement in the right direction, the Committee did not move far enough toward providing fair 

compensation to all impaired victims of asbestos exposure. Indeed, 

seriously ill victims of asbestos exposure would receive less compensation, on average, under the current version of the FAIR Act 

than they would in the tort system. The FAIR Act is not yet fair. 

We are extremely disappointed that Senators from both parties 

have yet to reach consensus on this fundamental aspect of a fair 

and effective national trust fund. 

At times over the last month, we had genuine reason to believe 

that the Committee might agree upon a real solution to the asbestos crisis. We invested ourselves completely in a good faith effort 

to reach consensus. But that movement toward consensus stalled 

190

just as we addressed this fundamental issue of whether we were 

truly willing to compensate asbestos victims fairly. 

Since the first hearing on this issue, we have emphasized one 

bedrock principle: We cannot support a bill that gives inadequate 

compensation to victims. We will not adjust fair award values into 

some discounted amount just to make the final tally come within 

a pre-determined, artificial limit. Senator Leahy summed up this 

basic tenet during our markup of the FAIR Act: ‘‘We will have 

failed if we leave those poisoned by asbestos without fair compensation.’’ Of course, other aspects of the bill need correction and modification. We must be certain that the administrative system we establish is a fair, no-fault process. In our zeal to remove cases from the 

tort system, we do not want to create a process that leaves victims 

facing years of delay before the new system is operational. It would 

be cruel to lock the doors to our courthouses before the administrative process is ready to award compensation to victims. And, we 

must determine a way to avoid the administrative process being 

swamped by 300,000 claims on the day it theoretically opens its 

doors, and thus delay victims’ compensation for years. 

Given these serious problems, we believe that forcing the Act 

through the Senate, in its present form, would prove counterproductive, even fatal, to this legislative effort. The near party-line 

vote within the Committee on this legislation was more of a setback than a step forward. Proceeding without consensus would 

open this matter to weeks of debate on the floor, just as it has required weeks of consideration before the Judiciary Committee. Proceeding without consensus would likely result in numerous amendments and extended debate with no agreement emerging at the end 

of the process. 

We need to continue our work to achieve the common ground 

needed to enact a good law. Acting together through consensus remains, in our view, the best way to move a bill through the legislative process and into law. 

II. BIPARTISAN IMPROVEMENTS TO S. 1125

The Committee adopted more than 35 bipartisan amendments to 

improve S. 1125. We thank Chairman Hatch and other members 

of the Committee for working with us to achieve consensus on 

these improvements to the FAIR Act. 

A. Collateral Sources, Indexing Awards For Inflation, Banning Asbestos and Other Bipartisan Agreements 

During our first full mark-up of S. 1125, the Committee adopted 

numerous amendments to correct some of the unnecessarily harsh 

provisions in the original bill. For example, we unanimously adopted a Hatch-Leahy amendment to strike offsets to compensation for 

asbestos victims from previous payments from disability insurance, 

health insurance, Medicare, Medicaid, and death benefit programs. 

Left unchanged, these offsets would have marked a dramatic 

change from current law, and would have resulted in a cost shift 

of millions, or perhaps billions, of dollars from defendants and their 

insurers to other insurance companies, health care plans, and the 

federal government. 

191

94 In addition, roofing cements that are totally encapsulated with asphalt are exempt, subject 

to an EPA review. The amended bill would direct the EPA to review the exemption for roofing 

sealants within 18 months of passage of the Act in order to determine the risks posed by these 

products and whether there are reasonable alternatives. The amendment would also give the 

EPA the authority to revoke the exemption for these products based on the findings of its review. In 2001, 62% of the asbestos consumed in this country was in roofing products. That is 

why it is so important to direct EPA to revisit this question through a study within 18 months 

of passage of the Act and to give EPA the authority to revoke this exemption if EPA deems 

it appropriate to do so. 

Just as important, the use of these ‘‘collateral sources’’ in the 

original bill would have reduced or eliminated compensation 

pledged to asbestos victims. For instance, a mesothelioma victim, 

who had disability and medical insurance and who lived more than 

the usual 18-month survival time, might not receive any of the 

scheduled award under the original bill because of these collateral 

source offsets. Senator Durbin, Senator Feinstein, Senator Leahy 

and others pointed out this flawed approach at our June 4th hearing on the FAIR Act. We could not support reducing compensation 

to asbestos victims simply because they survived, or because they 

had the good fortune and foresight to purchase insurance. We are 

pleased that this section of the original bill has been revised to only 

offset past judgment or settlement payments for the same asbestosrelated injuries from any awards made under the national trust 

fund.

That first day of consideration of S. 1125, the Committee also 

adopted another bipartisan amendment authored by Senator 

Leahy, Senator Kohl and Senator Hatch to index the award values 

to asbestos victims for future inflation as a matter of basic fairness 

in a 50-year fund. 

We also announced an agreement by Senator Feinstein, Senator 

Kohl, Senator Hatch and Senator Murray that would ban the commercial manufacture, use and distribution of asbestos, which we 

were all pleased to support. Though many people believe asbestos 

is banned, it is in fact still commercially used today. As the Committee and the full Senate consider creating an alternative compensation system to address past exposures to asbestos, it is only 

sensible that we also prevent future asbestos-related illnesses from 

occurring by banning asbestos use. 

This bipartisan amendment directs the Environmental Protection 

Agency, within two years of enactment of the FAIR Act, to promulgate final regulations prohibiting the manufacture, processing, or 

distribution in commerce of asbestos-containing products. The provision allows affected companies to petition for an exemption from 

the ban for individual products if the product does not pose an unreasonable health risk and if there is no safer alternative.94 This 

ban will bring the United States into line with the 25 other countries that have already banned asbestos and with the European 

Union, which is slated to implement a similar ban in 2005. 

The Committee also adopted an amendment by Senator Leahy to 

ensure future accountability of corporate participants in the Fund 

that are sold, or otherwise change hands. The Leahy amendment 

defines 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 

192

95This ‘‘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. 

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.95

The Committee also adopted an amendment by Senators Durbin 

and Kyl, and later, a similar amendment offered by Senator Biden, 

to expand and clarify the scope of the financial hardship and inequity adjustments allowed for defendant participants’ contribution 

to the Fund. The Durbin-Kyl amendment doubled the annual cap 

for the financial hardship adjustment from 3% to 6% of the total 

annual contributions required of all defendant participants, and 

likewise from 2% to 4% for inequity adjustments. 

In determining who qualifies for an inequity adjustment, the 

Durbin-Kyl amendment distinguishes costs incurred defending 

claims that were lost or settled out of court from costs incurred defending claims that neither resulted in an adverse judgment 

against the defendant company nor settled requiring a payment to 

a plaintiff by that defendant company. The amendment mitigates 

the inequitable effect upon a defendant company with an exceptionally strong record of successfully defending asbestos claims that 

would be placed in a relatively high payment tier under the legislation only because significant defense costs were incurred in order 

to dispose of claims which ultimately turned out to be without 

merit. The amendment also recognizes that some corporate connections to the use of asbestos in manufacturing may be so remote, yet 

the impact of the FAIR Act may be so disproportionate that, as applied, it might have Due Process or Takings Clause implications. 

The amendment thus addresses this potential constitutional problem. 

The Biden amendment permits an inequity adjustment for a 

company whose contribution rate, as a percentage of gross revenues, is exceptionally high compared to the median contribution 

rate for other companies in the same tier, thereby bringing companies that are statistical outliers in terms of their contributions 

within the range of their peers. The amendment thus addresses the 

unfairness of the FAIR Act that allows large wealthy companies to 

receive a windfall, while smaller companies are asked to pay more 

than they would have spent in the tort system. 

In addition, the Committee adopted a number of other bipartisan 

amendments that address other matters in the bill, such as providing for annual Congressional oversight of the asbestos fund, imposing criminal penalties for false or fraudulent statements against 

the fund, establishing penalties for corporations that fail to make 

their contributions to the fund, establishing procedures for the families of deceased asbestos victims to apply for compensation, and 

applying the Freedom of Information Act to the new entities that 

will act like executive branch agencies—the Asbestos Insurance 

Commission and Office of Asbestos Injury Claims Resolution. 

193

B. Consensus Medical Criteria 

While pursuing a legislative solution to the asbestos crisis, all 

Senators have been sounding a consistent theme: fair compensation 

to the truly sick. At the beginning of our third week of consideration of the FAIR Act, we were pleased that the Committee unanimously adopted an amendment by Senators Leahy and Hatch establishing medical criteria requirements with the national trust 

fund to identify legitimate victims of asbestos exposure. This 

amendment properly defined the truly sick, dividing them into appropriate categories on the basis of sound medical diagnoses. Senator Graham declared that coming to this bipartisan agreement on 

medical criteria was a ‘‘breakthrough’’ for the Committee. We 

agree. 

We are grateful for the generosity of Dr. Laura Welch and Dr. 

James Crapo, who presented to the Committee an invaluable tutorial on the medical aspects of the asbestos problem during the 

Committee’s initial mark-up session on the FAIR Act. Our bipartisan medical criteria amendment reflects the Committee’s good 

use of their expertise. It defines ten categories of asbestos-related 

disease, five levels of non-malignant disease and five levels of cancer, which are described in the table below.

TABLE OF MEDICAL CATEGORIES 

Level Scheduled disease Description of disease and symptoms 

I Asbestosis/Pleural Disease A ................ These individuals clearly have asbestos-related disease with a history 

of exposure to asbestos, but their pulmonary function tests are 

within the normal range. They experience non-malignant conditions 

in which asbestos fibers are breathed into the lungs and (i) are 

transported to outside of lungs, causing scars to form on the pleural lining (the thin lining that surrounds the heart), or (ii) which remain inside the lungs, causing scarring, while retaining at least 

80% of lung capacity. 

1II Mixed Disease With Impairment ........... Every individual in this group has a medically significant impairment, 

as defined by the American Medical Association. They are impaired 

due to a combination of asbestosis and other causes, such as 

smoking or silicosis. The requirement for a 1/1 ILO reading on a 

chest x-ray ensures that asbestos exposure is an important contributing factor to the lung diseases and impairment. Victims experience increased scarring on lungs, with varying levels of impairment, 

ranging from shortness of breath to being homebound and requiring 

oxygen treatments. 

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% of normal. Victims with this level of impairment will 

not be able to continue working if they have a physically demanding 

job. Approximately half of these sick patients were in construction 

trades, e.g., plumbers and pipe fitters, and are prevented from continuing these jobs. 

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% and 60% of normal. Victims with this level 

of impairment will not be able to continue working, and will not be 

able to perform some activities of daily living. 

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96Letter from Homer A. Boushey, Jr. MD, President, American Thoracic Society, to Senator 

Hatch and Senator Leahy, June 19, 2003: ‘‘The ATS notes that stomach cancer is listed as a 

qualifying disease, but that colon cancer is not. Evidence supporting the link between asbestos 

exposure and colon cancer is at least as strong or stronger than evidence linking asbestos expoTABLE OF MEDICAL CATEGORIES—Continued

Level Scheduled disease Description of disease and symptoms 

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% of normal lung capacity. Victims with this level 

of impairment will not be able to perform most activities of daily 

living. These claimants will be unable to perform activities of daily 

life, such as getting dressed, taking a shower, cooking dinner, or 

doing even minimal work around the house. This category often becomes fatal. 

VI Other Cancer ......................................... The level of disability for this group is determined by the extent of the 

cancer. Victims suffer from colon, laryngeal, pharyngeal, stomach 

(i.e., non-lung) cancers, the risk of which is increased by asbestos 

exposure. While some cancers may be cured, many of the individuals in this group will undergo surgery, radiation, chemotherapy, 

and still eventually die of their cancer. 

VII Lung Cancer One ................................... These individuals suffer from asbestos-related lung cancer. For those 

not diagnosed early, the life expectancy is 12 to 18 months. These 

individuals develop progressive shortness of breath, loss of appetite, 

coughing up blood, chest pain, and severe fatigue, as well as other 

side effects of radiation or chemotherapy. 

VIII Lung Cancer With Pleural Disease ....... These individuals suffer from asbestos-related lung cancer with pleural 

scarring outside the lung. For those not diagnosed early, the life expectancy is 12 to 18 months. These individuals develop progressive 

shortness of breath, loss of appetite, coughing up blood, chest pain, 

and severe fatigue, as well as other side effects of radiation or 

chemotherapy. 

IX Lung Cancer With Asbestosis ............... These individuals suffer from asbestos-related lung cancer with pleural 

scarring inside the lung. For those not diagnosed early, the life expectancy is 12 to 18 months. These individuals develop progressive 

shortness of breath, loss of appetite, couching up blood, chest pain, 

and severe fatigue, as well as other side effects of radiation or 

chemotherapy. 

X Mesothelioma ......................................... These individuals suffer from a rare and fatal cancer of the chest lining (the pleura) and abdomen lining. Virtually all instances of 

mesothelioma in the U.S. are a result of past exposure to asbestos. 

This cancer is impossible to treat and usually fatal within 18 

months of diagnosis. The symptoms of this disease are similar to 

those of lung cancer—progressive shortness of breath, loss of appetite, coughing up blood, chest pain, and severe fatigue, as well 

as other side effects of radiation or chemotherapy. 

The Leahy-Hatch medical criteria amendment explicitly recognized that victims suffering from colorectal cancer related to asbestos exposure should be fairly compensated under a national trust 

fund in the Level VI, Other Cancer, category. The FAIR Act, as introduced, excluded colorectal cancer victims from any compensation, no matter how much exposure to asbestos those victims suffered. This surprised many members of the Committee given the 

fact that colorectal cancer is among one of the cancers that merit 

compensation in all of the asbestos trusts, including the Manville 

Trust. Indeed, the American Thoracic Society wrote to the Committee urging us to correct this injustice, which we are pleased was 

done as part of the consensus medical criteria with a strong presumption of eligibility for the scheduled value of compensation in 

this category.96

195

sure and stomach cancer. We strongly urge the Committee to consider the data linking asbestos 

exposure and colon cancer in drafting the list of qualifying diseases.’’

The Leahy-Hatch medical criteria provision also provides a mechanism for comparing various years of exposure, in various industries, on a correctly weighted basis. The amendment distinguishes 

between three time periods of asbestos exposure (pre-1976, 1976–

1986, and post-1986). This recognizes that asbestos use in the 

workplace was much more prevalent in the mid-20th Century than 

in more recent years. The amendment also delineates three levels 

of exposure defined by occupation, which acknowledges that some 

workers (e.g., insulators) experience much more exposure to asbestos than others (e.g., mechanics). Thus, the amendment officially 

creates a nine-segment grid, assigning greater weight to years 

spent in high exposure trades and earlier time periods, and lesser 

weight to more recent years of exposure and those spent in trades 

with less asbestos exposure generally. Thus, the years a shipyard 

worker worked during World War II—which were among the heaviest of asbestos exposures—will be counted as four times a normal 

year of exposure. Our ‘‘weighted occupational exposure’’ provision 

fairly accommodates the many scenarios that the victims of asbestos exposure will present to the fund to determine appropriate compensation. This weighting calculation will result in a significant assurance that victims receiving compensation from the Fund have 

experienced an indisputably harmful level of exposure, ensuring a 

medically sound basis for the classification of the victims into various disease categories. 

The Leahy-Hatch medical criteria amendment also requires inperson physician examinations to support the diagnoses of each victim, which will eliminate the mass screenings that have garnered 

so much attention in the asbestos litigation debate. The LeahyHatch medical criteria amendment also requires the use of the diagnostic tests and standards that the medical community agrees 

upon for diagnosing these lung diseases, to ensure the accuracy of 

the evidence presented to the Fund. Furthermore, it also permits 

the Fund Administrator to audit the doctors whose diagnoses are 

used by claimants, and to refuse to accept submissions from doctors 

whose diagnoses are not trustworthy. 

Finally, the amendment includes a ‘‘take home exposure’’ provision to allow recovery for spouses and family members who were 

exposed to asbestos from the work clothes of their loved ones and 

provides eligibility for compensation for victims of the community 

poisoning cases in Libby, Montana. During our June 4th hearing 

on the FAIR Act, we heard from Senator Murray about the importance of addressing ‘‘take home’’ exposure, and from Senator Baucus about the basic fairness of covering victims of tremolite asbestos exposure in Libby. We agree wholeheartedly with Senator Murray and Senator Baucus and we were pleased to include these provisions in the consensus medical criteria. 

C. Safeguarding The Solvency of the Trust Fund 

In our fourth week of Committee consideration, we began to address the critical questions of maintaining the solvency of the fund, 

and related issues of ensuring that claimants are paid in full in a 

196

timely manner. As passed out of Committee, this bill still shifts the 

financial risk of the trust fund approach from defendants and insurers to asbestos victims. Before a final bill is passed we must determine what will be done if the trust fund runs out—or runs 

short—of money at any time during the next 50 years. The one constant in our experience with projections of asbestos liabilities is 

that they have invariably been too low. The risk of insolvency in 

a national trust fund—and the risk of inadequate funding short of 

insolvency—must be addressed in order to provide certainty to asbestos victims as well as to defendants and insurers. 

Indeed, there is no more fundamental concern underlying this 

bill. Twenty years ago, all the experts predicted that the Manville 

Trust Fund would be paying asbestos victims full compensation for 

many years. Now, asbestos victims get 5 cents on the dollar because the Manville Trust Fund is nearly insolvent. What has 

doomed earlier efforts is the fact that they were all unfunded or 

drastically under-funded. 

We must be wary of the Committee Report’s repeated and erro- neous assertions that the trust fund will reach $108 billion in mandatory contributions from defendants and insurers. That $108 billion figure gained a life of its own in the mark-up of this bill, but 

we should remember that it is simply an analyst’s projection of the 

likely payments into the fund, not a guaranteed minimum funding. 

What the bill does provide is a schedule of contributions, broken 

out into tiers for the defendant companies, with determinations 

about those companies’ obligations to the fund depending on their 

revenues and their history of asbestos-related expenditures. But we 

do not even know which specific companies fall into these tiers 

since the amount of asbestos-related expenditures of most defendant companies is not publicly disclosed and efforts by members of 

the committee to obtain this information from representatives of 

the defendant companies has been futile to date. If analysts’ projec- tions are correct, the resulting contributions may reach $108 billion, but if the analysis is in error—or if the dire predictions of 

more bankruptcies among defendant companies come true—then 

that number may well be lower. 

Successful legislation cannot be predicated on a false promise. 

There must be money to compensate the victims. As Senator Feinstein pointed out during the markup: ‘‘If you just take the experience of the Manville Trust, which is paying 5 cents on the dollar, 

you know that this is not just pie in the sky, that this is real, and 

that the worry about inadequate funding is a real worry.’’

Addressing a key part of this critical issue, Senators Feinstein 

and Kohl joined together to craft an amendment that would create 

a contingent funding mechanism to bring in up to $45 billion in the 

first 27 years of the fund in case there is an unanticipated surge 

of claims. Defendant and insurance companies would split the responsibility ($22.5 billion each) for providing this contingent funding. These funds would only be called for in the event that the 

basic funding proved to be inadequate. 

In addition, the Feinstein-Kohl amendment permits the Administrator of the fund to request up to $2 billion annually to cover any 

funding shortfalls, beginning in year 28 of the fund. Up to $1 billion would come from insurer contributions and up to $1 billion 

197

would come from defendant company contributions. Companies and 

insurers could make the voluntary payments requested by the Administrator or instead could choose to opt-out of the fund and be 

subject to claims in Federal court under a compromise reached 

with Chairman Hatch. 

We supported the ultimate Feinstein-Kohl-Hatch amendment to 

help address the risk of trust insolvency, giving the trust Administrator limited authority to request additional funds from contributing insurers and defendant companies throughout the life of the 

fund. As a whole, this amendment gives victims of asbestos exposure greater certainty that they will receive compensation for their 

injuries. 

However, as discussed in Section III of these views, we are still 

concerned that the trust fund may become insolvent before providing all victims of asbestos exposure with fair compensation for 

their injuries. If Congress is to prevent an entire group of claimants from seeking justice in our courts, we must guarantee that a 

no-fault system established by this bill will not deplete its funds 

before the promise of this legislation can be fulfilled. 

D. Fairer Compensation for Asbestos Victims 

The third cornerstone of federal asbestos compensation legislation must be fair, timely, and certain compensation for victims of 

asbestos-related diseases. During the mark-up, the Committee 

reached unanimous agreement on the Leahy-Hatch medical criteria, which established ten categories of disease. The Committee 

also reached an agreement on the principle that the legislation 

should provide monetary compensation to claimants who had suffered impairment, and should provide medical monitoring to those 

individuals with less serious asbestos-related conditions. Having 

reached agreement on disease criteria and on the principle that 

only those who are ill should receive a monetary award—and bearing constantly in mind that the exposed but less impaired claimants are often receiving substantial sums in settlements of tort 

suits—it is imperative that the legislation provide fair levels of 

compensation to impaired individuals who develop the covered diseases. 

All of the individuals who qualify for monetary awards under S. 

1125 will have significant impairment from their asbestos-related 

disease. For many individuals these diseases will be fatal. Measured against the health impact and economic impact on victims 

and their family members, the compensation provided in the bill 

for many victims clearly is unfair. 

During the course of the markup, Senators Feinstein and 

Graham proposed, and the Committee approved, an amendment 

that increased claims values for most diseases over those originally 

proposed in S. 1125. We commend Senators Feinstein and Graham 

for working in a bipartisan manner to improve compensation values to asbestos victims. As discussed in Section III of these views, 

we believe the award values proposed by Senators Leahy and Kennedy, discussed in Section III of these views, would provide more 

appropriate levels of compensation for victims who meet the criteria established under this bill, and that for a number of diseases, 

and for most victims, the Feinstein-Graham amendment still does 

198

not provide fair compensation. We supported the Feinstein-Graham 

amendment, however, as a move towards the goal of providing fair 

and adequate compensation to victims. 

Following adoption of the Feinstein-Graham amendment, Senators Leahy and Kohl immediately proposed another amendment, 

to ensure that the increased promises of the new award values 

were not empty promises. The Feinstein-Graham schedule of award 

values would require another $14 billion in funding, so the LeahyKohl amendment provided a corresponding $14 billion of mandatory contributions—$7 billion each from defendant companies and 

insurers—and struck an illusionary section in the original bill that anticipated obtaining $14 billion in voluntary contributions from 

additional, unidentified participants that were ‘‘likely to avoid future civil liability as a result of this Act.’’ It is both the intention 

and the effect of this amendment that the contingent funding 

mechanism adopted in the Feinstein-Kohl amendment remain unchanged. As Senator Leahy said of the amendment, which was 

adopted by the Committee, ‘‘This just puts the money in the bank 

to cash the check that we just signed on the amendment of Senator 

Feinstein and Senator Graham.’’

E. Certainty for Asbestos Victims 

At our final markup, Senator Biden offered an amendment to 

complement the Feinstein-Kohl amendment adopted on June 26th. 

The Feinstein-Kohl amendment was a positive development to ensure solvency of the trust fund, with periodic checks of the funding 

levels, starting in 2010. As amended by Feinstein-Kohl, however, 

the FAIR Act requires a determination of the sufficiency of the 

trust’s funding prospectively only eight times, beginning in 2010. 

Senator Biden’s amendment would require a check on the funding of the system retrospectively every year by providing a sunset 

to the Act—and reverting asbestos claims to the tort system in the 

appropriate state or federal court—if the Administrator of the fund 

fails to certify for any given year that: • 95% or more of the asbestos claimants who filed claims in 

that year, and who were determined to be eligible to receive 

compensation, have received the compensation, and • 95% or more of the total obligations of the Fund owed to 

eligible claimants in that year have been paid. 

We supported the Biden sunset amendment, which the Committee adopted by an overwhelming vote of 15–4, because we believe this bill must ensure compensation for victims every bit as 

much as it provides certainty for corporations and insurers facing 

asbestos liability. If this legislation fails to achieve that goal, it is 

only fair to allow victims back into the tort system, seeking justice 

in state or federal court as appropriate under the applicable law 

before enactment of this Act.

In essence, we agree with Senator Specter, who during consideration of the Biden amendment summed up the need for certainty 

for asbestos victims:

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 

199

97Dr. Mark Peterson, one of the foremost analysts of asbestos litigation, testified at the Committee’s June 4, 2003 hearing on the FAIR Act, on the following average recoveries for asbestosrelated diseases in the tort system: 98The Washington Post, ‘‘An Asbestos Accord,’’ p. A22, July 10, 2003. 

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.

This principle received validation by the Committee, with only 

four Senators refusing to concede that if the trust proves an ineffective solution in paying deserving victims, the legislation must 

sunset so workers can attain just judgments in our state and federal courts. 

III. MORE IMPROVEMENTS NEEDED TO S. 1125

Senator Specter captured precisely the challenges we face, when 

he spoke so eloquently of the need for fair and effective alternative 

evaluative processes if we are to approve legislation that restricts 

the rights of those harmed by asbestos. Unfortunately, the FAIR 

Act as reported by the Committee falls short of achieving fairness 

for all asbestos victims. 

Perhaps Senator Biden made the point most aptly at the Committee’s first markup session on S. 1125: ‘‘Whenever we deny an 

American citizen a right they now possess under the law, the burden should be on us to make the case overwhelmingly why we are 

denying that right. Therefore, the benefit of the doubt should be 

given to the party whom you are about to disenfranchise in some 

way.’’

While we agree with the evaluation that, in the case of asbestos, 

meaningful change in the system is needed, we believe that the 

benefit of the doubt has not been given to asbestos victims under 

this legislation. 

A. Inadequate Compensation For Asbestos Victims 

Although the Committee improved the award values for asbestos 

victims on a bipartisan basis, and with our support, we believe the 

bill still fails to provide fair compensation to all victims of asbestosrelated diseases. 

The key test of any legislative proposal on asbestos claims is 

whether, by reducing transaction costs, it would put more money 

into the pockets of seriously injured workers and their families 

than under the current system.97 As a Washington Post editorial 

noted just prior to the final day of the mark-up, ‘‘The more fully 

Congress can ensure that the average asbestos victim will do better 

under the trust than in court, the more credibility this important 

reform will have.’’ 98

We believe that a properly designed and implemented trust fund 

can move us toward that goal. Such a trust must not only use medical criteria that cover all workers who have sustained real injuries, but must provide fair levels of compensation for all those injured workers. Moreover, the alternative system must guarantee 

that all injured workers who qualify for awards will receive that 

full compensation on a timely basis. 

200

99Testimony of Dr. Laura Welch, MD, Medical Director, Center to Protect Workers Rights, 

On Asbestos Related Diseases—Medical Criteria, Populations at Risk and Disease projections, 

Before the Senate Judiciary Committee, June 4, 2003. 

As it stands today, this legislation satisfies only one of these 

three criteria. Even with the Feinstein-Graham amendment, the 

bill sets levels of compensation that are substantially below what 

victims, especially those who are seriously ill, currently receive for 

their injuries. Furthermore, the current funding plan may well be 

inadequate to fully compensate all eligible victims in a timely manner. 

Proponents of this bill argue that in the tort system, too much 

money finds its way to victims who are not really impaired and not 

enough money is awarded to those who are truly sick. But their 

concern for the truly sick certainly finds no real expression in this 

bill. Lung cancer victims are ‘‘truly sick’’ by anyone’s definition and 

many of them will have their lives cut short by these diseases. Yet, 

even in these, the most compelling cases, S. 1125 provides grossly 

inadequate compensation. We are deeply troubled by the way this 

legislation treats those with the most severe illnesses. 

As we have already noted, victims of asbestos with lung cancer 

who smoked receive particularly inappropriate treatment. As reported by the Committee, this legislation unfairly holds victims accountable for the synergistic effects of smoking and asbestos. When 

smoking and asbestos are combined, the likelihood, as well as the 

severity of the resulting disease, is greater than the sum of its 

parts. Numerous medical experts—in person and in writing—informed the Committee of this harmful combination, and the mutually aggravating effects of smoking and asbestos exposure have 

been demonstrated at the highest levels of medical science.

AVERAGE VALUE OF ASBESTOS CLAIMS BY DISEASE CATEGORIES 

[Estimated total compensation across all asbestos defendants] 

$40,000 to $70,000 .................................................................................. Pleural plaques and thickening. 

$50,000 to $125,000 ................................................................................ Asbestosis, without loss of lung function. 

$200,000 to $400,000 .............................................................................. Asbestosis, with loss of lung function. 

$800,000 to $1,500,000 ........................................................................... Severe Asbestosis. 

$450,000 to $600,000 .............................................................................. Other cancers. 

$1,000,000 to $1,500,000 ........................................................................ Lung Cancer. 

$2,000,000 to $3,000,000 ........................................................................ Mesothelioma. 

As Dr. Laura Welch discussed in her testimony, the epidemiological studies conducted by Dr. Irving Selikoff have shown that for 

the more heavily exposed individuals (such as insulation workers), 

the risk of lung cancer from asbestos exposure is increased five 

times. Because there is a synergistic relationship between asbestos 

exposure and smoking, smokers who meet the bill’s exposure requirements face a risk of lung cancer that is up to 50 times greater 

than that of individuals without a history of asbestos exposure or 

smoking. Moreover, because of this synergistic relationship, the 

risk of lung cancer for asbestos-exposed workers who smoked is far 

greater than the risk of lung cancer among those with a similar 

smoking history who were not exposed to asbestos.99 In addition, 

the American Thoracic Society noted in a letter to Chairman Hatch 

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100Letter from Homer A. Boushey, Jr. MD, President, American Thoracic Society, to Senator 

Hatch and Senator Leahy, June 19, 2003, 2. 101Letter from Dr. L. Christine Oliver and Dr. Edwin C. Holstein, February 7, 2003, 2–3. 102 RAND Institute for Civil Justice, ‘‘Asbestos Litigation Costs and Compensation: An Interim 

Report,’’ 17. 

and Senator Leahy, ‘‘Asbestos-related lung disease may aggravate 

or complicate a second disorder, making it more severe than it 

might be otherwise or tipping a claimant with poor lung function 

into serious impairment.’’ 100

Had defendant corporations disclosed to workers the harmful effects of their occupations, victims would have been able to make 

more informed decisions about their lifestyles. As Doctors L. Christine Oliver and Edwin C. Holstein noted, ‘‘If workers had been informed that dust, specifically in the case of asbestos, in their place 

of work could cause pulmonary impairment * * * we would not be 

writing this letter.’’ 101 But in S. 1125 as passed by the Committee, 

a smoker diagnosed with Disease Level VII—an illness that requires 15 weighted years of occupational exposure to asbestos— might receive just four percent of the award granted to a nonsmoker. While we support award values that provide greater values where the causation is clearest, we cannot endorse the notion 

that smokers should find their awards unfairly reduced. 

The manner in which this bill treats smokers is particularly onerous in light of the association between asbestos exposure and the 

most dangerous jobs. As RAND’s analysis of asbestos litigation 

points out, ‘‘There were high rates of smoking in the blue-collar industries where asbestos exposure was particularly high.’’ 102 Yet 

this legislation automatically reduces awards for smokers, and thus 

fails to meet its stated goal of providing the most compensation to 

the sickest victims. 

We disagree with the claims made in the majority views on the 

scientific evidence establishing the relationship between asbestos 

exposure and lung cancer. Specifically, citing the testimony of Dr. 

James Crapo, the majority views state that ‘‘the majority of the 

medical community has found that lung cancer is generally not related to asbestos exposure unless the claimant has underlying asbestosis or, at least, sufficient exposure to asbestos to have caused 

asbestosis.’’ The majority views go on to claim ‘‘[e]arly studies 

showing a synergistic effect between smoking and asbestos exposure have not been substantiated by later studies.’’ As noted above, 

numerous medical experts who testified and wrote to the Committee do not share this view. Similarly, the current body of scientific evidence and scientific consensus on asbestos does not support these statements and claims. 

The Tenth Report on Carcinogens issued in December 2002 by 

the Department of Health and Human Services National Toxicology 

Program clearly and unequivocally found that exposure to asbestos 

causes lung cancer and that there is a synergistic relationship between asbestos exposure and lung cancer:

Asbestos and all commercial forms of asbestos are 

known to be human carcinogens based on sufficient evidence of carcinogenicity in humans (IARC 1982, 1987). Occupational exposure to chrysotile, amosite, anthophyllite, 

and mixtures containing crocidolite has resulted in a high 

202

103 National Cancer Institute, Cancer Facts—Asbestos Questions and Answers (updated July 

10, 2003) http://cis.nci.nih.gov/fact/——21.htm) (emphasis in original). 104 IARC Monographs on the Evaluation of the Carcinogenic Risk of Chemicals to Humans. 

Overall evaluations of Carcinogenicity. Supplement 7., IARC 1987.

incidence of lung carcinomas * * * Both cigarette smoking 

and occupational exposure to asbestos fibers increase lung 

cancer incidence independently. When present together, 

they act multiplicatively (IARC 1973, 1977, 1979, 1982).

This is also the view of the National Cancer Institute, which in 

its Cancer Facts—Asbestos Questions and Answers, states that asbestos exposure increases the risk of lung cancer, pointing out that 

‘‘although it is known that the risk to workers increases with heavier exposure and longer exposure time, investigators have found asbestos-related disease in individuals with only brief exposures.’’ The NCI document also states: ‘‘many studies have shown that the 

combination of smoking and asbestos exposure is particularly hazardous. Smokers who are also exposed to asbestos have a greatly 

increased risk of lung cancer.’’ 103

This is also the consensus scientific view internationally. The 

International Agency for Research on Cancer (IARC) in its 1987 

supplement to the monograph on asbestos found:

The studies of the carcinogenic effect of asbestos exposure, including evidence reviewed earlier [ref: 1], show 

that occupational exposure to chrysotile, amosite and 

anthophyllite asbestos and to mixtures containing crocidolite results in an increased risk of lung cancer, as does exposure to minerals containing tremolite and actinolite and 

to tremolitic material mixed with anthophyllite and small 

amounts of chrysotile * * * The relationship between asbestos exposure and smoking indicates a synergistic effect 

of smoking with regard to lung cancer [ref: 1]. Further 

evaluations indicate that this synergistic effect is close to 

a multiplicative model [ref: 52,109].’’ 104

The Leahy-Kennedy award values amendment offers a more reasoned and fair approach for compensating victims—smokers and 

non-smokers alike—throughout all ten disease levels established 

under the bill. The vast majority of claimants, those with Level I 

sickness, would receive only medical monitoring. While these individuals have clearly suffered the impact of asbestos exposure, the 

only compensation most will receive is the peace of mind in knowing that if their disease should become more serious, they will be 

able to seek both treatment and compensation quickly. 

The Leahy-Kennedy award values for the other nine levels provide more appropriate measures of compensation than those numbers calculated in the Feinstein-Graham amendment in the midst 

of the Committee’s markup. For example, those claimants suffering 

from Class II (Mixed Disease) would receive only $20,000 under the 

reported bill. These victims have real impairment, suffering from 

both restrictive disease and obstructive disease caused by a combination of asbestosis and other causes, such as smoking. Some of 

the people in this class will be totally disabled, unable to conduct 

activities of daily living. Providing only $20,000 for these victims 

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203

105Supporting Documentation for AFL–CIO Disease Distributions, Average Age Assumptions 

and Incidence projections, April 24, 2003. 

ably higher than nothing at all, which is what an earlier Hatch 

amendment would have granted these impaired victims, the award 

is far lower than what might be attained in the tort system, with 

payments on average of $35,000 to $50,000. The Leahy-Kennedy 

amendment proposes compensation at the low end of this range, offering $35,000 for these victims. 

It is estimated that more than 100,000 victims will file claims 

that will qualify for Level III compensation, which covers asbestosis or pleural disease that has resulted in a 20% to 40% loss of 

lung function. For these claimants, the Leahy-Kennedy amendment 

would pay $110,000. As introduced, S. 1125 set an award of 

$40,000, which the Feinstein-Graham amendment increased to 

$75,000—a step in the right direction, to be sure, but which will 

still leave victims to bear much of the cost of their asbestos exposure and its consequences. This is a group of workers with impairment so severe they might not be able to perform their labor-intensive jobs. Available claims data from the Manville Trust and the 

results of the Sheetmetal Workers asbestos disease screening program provided to the Committee by the AFL–CIO show that more 

than 40% of the individuals in this group are less than 57 years 

old, meaning that that many will lose years of employment and 

have significant economic loss.105

Level IV claimants suffer from severe asbestosis, and we think 

it only fitting to increase the $300,000 currently offered by S. 1125 

to the more reasonable $400,000 award under the Leahy-Kennedy 

values. For some reason, the Feinstein-Graham amendment actually lowered the award values for this disease as compared to the 

original bill. For many with severe asbestosis, their disease will 

prevent even the most basic daily activities, and these victims will 

in many cases require regular oxygen in order to alleviate the 

physical discomfort. 

For the sickest non-malignant victims, those in Level V disease, 

with very severe asbestosis, the Leahy-Kennedy Amendment proposes an $850,000 award. This category consists of individuals who 

are totally disabled. Many will die from their disease. They are 

quite literally suffocated by the asbestos fibers in their lungs and, 

without question, they deserve more than the $750,000 approved 

by the Committee. 

Level VI disease—Other Cancers—should have resulted in easy 

compromise in Committee. The Feinstein-Graham Amendment sets 

the compensation for these cancer victims at $150,000. Remarkably, this is less than the $200,000 award set in the bill as introduced. Many of the other asbestos-related cancers, including stomach cancer, will often be fatal or cause significant disability. In 

cases where there is a determination that asbestos caused or significantly contributed to the cancer, victims should be appropriately compensated. 

The gravest injustice done by the bill is to lung cancer victims. 

All of the medical categories established by the bill are for asbestos-related diseases, including the lung cancer categories. For each 

of these lung cancer categories, a significant history of asbestos exVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00203 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
204

posure is required, and for two of the lung cancer categories, underlying non-malignant asbestos disease must also be present, confirming that significant asbestos exposure has occurred. These individuals suffer due to their exposure to this toxin. For the lung cancer and mesothelioma disease levels (VII, VIII, IX, and X), the 

award values in the Leahy-Kennedy amendment are more in keeping with the severity of the illness and with what claimants would 

receive in the tort system. If the worker smoked—and unfortunately most of these workers did—the combination of tobacco and 

asbestos exposure dramatically increases the likelihood of contracting lung cancer. 

All of the individuals who would qualify for lung cancer compensation under S. 1125 are at greatly increased risk of lung cancer as a result of their asbestos exposure, and it is more likely than 

not that asbestos exposure significantly contributed to, or primarily 

caused, their lung cancer. Because there is a synergistic relationship between asbestos exposure and smoking, smokers who meet 

the bill’s exposure requirements face a risk of lung cancer that is 

20 to 90 times greater than that of individuals without a history 

of asbestos exposure or smoking. Moreover, because of this synergistic relationship, the risk of lung cancer for asbestos-exposed 

workers who smoked is far greater than the risk of lung cancer 

among those with a similar smoking history who were not exposed 

to asbestos. 

The compensation values for lung cancer claimants, in the bill as 

reported out of Committee, are woefully inadequate, particularly 

for individuals who smoked. S. 1125 as reported established three 

different categories of lung cancer—lung cancer with exposure 

(Level VII), lung cancer with pleural disease (Level VII), and lung 

cancer with asbestosis (Level VIII). For the victims with lung cancer who smoked, which is the vast majority of asbestos lung cancer 

claimants, awards are set at $25,000–$75,000 for Level VII, 

$125,000–$225,000 for Level VIII, and $300,000–$400,000 for Level 

IX. These award levels are unfair. For the majority of lung cancer 

victims, the disease will be fatal, usually within two years. Many 

of these victims will have significant medical costs associated with 

hospitalization, surgery, or chemotherapy. For some victims, S. 

1125 compensation awards will not even cover these medical costs, 

let alone provide compensation for a life-ending disease and financial assurance to those left behind. 

While it is reasonable to pay smokers less than non-smokers, 

they should receive substantial awards which reflect the devastating effect that the disease has had on their lives. The lung 

cancer compensation levels in the Fair Act as reported are shamefully low. The Leahy-Kennedy Amendment would increase them to 

more reasonable levels. These values are fair for the victims, and 

with the financial security offered by a trust, defendants and their 

insurers will be more than capable of paying these sums. 

Our medical criteria have already eliminated what businesses 

contended were the most troublesome claims. We all say that we 

need to compensate the truly sick. But fair compensation is not 

free. We now need to ensure fair compensation for all 10 categories 

of asbestos-related disease, the five levels of non-malignant disease 

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of increasing severity and the five levels of cancer, including 

colorectal cancer, lung cancer and Mesothelioma. 

The Committee’s bipartisan agreement on medical criteria will be 

meaningless if we, in effect, rewrite the categories by failing fairly 

to compensate many who fall within them. Even with consensus on 

medical criteria, if the award values are unfair, the bill will be unfair and unworthy of our support. 

The Leahy-Kennedy proposal on awards values addresses the 

shortcomings of the bill as approved by the Committee. No payment, from a tort suit or a trust fund, can ever really make someone who has lost their health, or their life, ‘‘whole’’ again, but we 

should be both compassionate and reasonable as we set these values. We believe the Leahy-Kennedy award values, discussed in Section III of these views, better accomplish this goal. If we fail to 

achieve fair award values for victims, the Committee’s bipartisan 

agreement on medical criteria will lose all meaning—determining 

who is truly sick is only useful inasmuch as it provides guidelines 

for adequately compensating those who suffer from asbestos-induced disease. We now know who is truly sick. We must next make 

certain that their compensation is fair. 

B. Disease, Claims, and Cost Projections 

Developing sound and effective public policy and legislation on 

asbestos compensation requires an assessment and understanding 

of the extent of future asbestos related disease, numbers of expected claims for compensation and the resulting costs. During our 

consideration of the FAIR Act, various projections were made about 

possible future disease incidence, claims and costs. While attempts 

were made to harmonize these different estimates and reach agreement on a common set of expected and possible high-end projections, unfortunately, this did not happen. This lack of an agreement on a common set of projections has resulted in constantly 

changing estimates, which has caused great confusion and impeded 

reaching a consensus on asbestos compensation legislation. 

Projected estimates of future asbestos disease claims provided to 

the Committee have generally ranged between 1 million and 2.5 

million future claims, with the large majority of these claims involving non-malignant asbestos-related disease with no impairment. Many of these estimates are based upon a model developed 

by Nicholson and Perkel in 1982 to estimate asbestos related cancer mortality. The estimates use this model to develop projected incidence of asbestos-related cancer mortality from mesothelioma, 

lung cancer and other cancers and based upon claims filing experience, develop estimates of numbers of expected claims. Estimates 

for non-malignant disease have come from ratios of the number of 

claims for non-malignant disease to claims for malignant disease. 

The major factor that drives all of the estimates is the assumption about filing rates, which has been based upon historical filing 

experience. As the number of claims for asbestos-related disease 

has increased over the years, so has the projected number of future 

claims. There is general agreement that the asbestos disease epidemic is now peaking, and that the number of future disease cases 

will decrease in coming years. What is less certain, however, is how 

many of these future cases will result in future claims. 

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In developing cost estimates for national asbestos compensation 

legislation, the majority relied upon cost estimates developed by 

Goldman Sachs based upon projections and assumptions provided 

by the Asbestos Study Group (ASG) and the insurance carriers. 

Early in the process, there appeared to be agreement between the 

ASG, carriers and labor unions on a common set of projections and 

assumptions that allowed for comparison of alternative proposals 

and claim values. Unfortunately as the mark-up proceeded, the 

projections and assumptions provided by the ASG and insurance 

carriers changed, in some cases dramatically and with no apparent 

justification, with great impact on projected costs and claim values 

for asbestos victims. 

For example, on July 8 Goldman Sachs provided cost estimates 

for the Leahy-Kennedy and Graham proposed amendments on 

claims values that estimated 48,023 total future lung cancer claims 

for the most likely scenario, and 90,092 for the ‘‘stress’’ case based 

upon modified projections from the ARPC. Two days later, on July 

10, Goldman Sachs provided cost estimates for the FeinsteinGraham claims values amendment that projected future 115,385 

lung cancer claims for the most likely case and 139,672 for the 

‘‘stress’’ case. No explanation was provided for this change, other 

than a footnote in the July 10 cost estimate that for the Lung Cancer VII category the cost estimate was utilizing projections provided by Navigant Consulting, not ARPC. This change more than 

doubled the number of estimated lung cancers. Since the GrahamFeinstein amendment was constructed based upon a fixed fund of 

$108 billion, the effect of this change was to significantly lower the 

award values that could be paid to claimants. 

Before final action is taken on any asbestos compensation legislation, it is imperative that a consensus be reached on a common set 

of disease, claims and cost projections for both the likely case and 

the high-end case. It is not possible or appropriate to make sound 

policy decisions or to craft responsible legislation without agreement on the fundamental issue of the extent of future asbestos-related disease and expected claims. With such an agreement, we can 

move to develop legislation that provides adequate funding to ensure payment of fair compensation for the expected number of 

claims and contingent funding in the event that the number of expected claims is exceeded. 

C. Retroactive Preemption of Settlement Agreements, Jury Verdicts 

and Pending Cases 

As presently written, the FAIR Act would completely negate all 

legally binding settlement agreements between asbestos manufacturers and victims, even settlements that have been made by asbestos defendants with claimants that have already been partially 

paid would be voided under this legislation. In other words, if a victim agreed to take payment of a settlement over a period of time 

from a defendant in return for dismissing the case, even though the 

settlement agreement is an enforceable contract, the defendant 

gets the right to walk away from their obligation under this bill. 

Needless to say, this result is of questionable constitutionality and 

will undoubtedly result in expensive, lengthy litigation over its vaVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00206 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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106See also The Wall Street Journal, ‘‘Halliburton to Request Extension on Stay for Asbestos 

obligations,’’ p. A3, July 21, 2003.

lidity. Victims are punished under this statute for agreeing to settlement terms proposed by asbestos defendants. 

Thousands of asbestos claimants entered into such settlement 

agreements with asbestos manufacturers and have released their 

claims against asbestos defendants in pending lawsuits. In executing these releases, asbestos victims waived their right to have 

their claim heard before a judge and jury in exchange for monetary 

payment. These settlement agreements constitute binding and enforceable contracts, but the FAIR Act negates them all. 

Most settlement agreements in asbestos litigation provide for 

payment terms. Defendants are routinely given a year or more 

after the cases are settled to pay the claims and installment payments are often made. The FAIR Act would totally absolve defendants from their obligation to honor their contractual commitments 

and reward double-dealing and delay. That is hardly fair. During 

markup, several members of the majority joined us in voicing their 

strong concerns on the inclusion of these unfair provisions in the 

bill, and Chairman Hatch committed to addressing the bipartisan 

objections. 

Absolving defendants of their contractual obligation to pay settled claims would confer a windfall upon some corporate defendants 

by absolving them of responsibility to pay for a benefit they already 

received. An example of this unfairness is the financial windfall 

conferred on the Halliburton Corporation under the bill as currently written. 

On December 18, 2002, Halliburton announced a global settlement of its entire asbestos liability, which would resolve over 

150,000 asbestos cases and involved agreements with more than 75 

law firms. Under the terms of the settlement Halliburton would 

pay $2.8 billion in cash to present victims of asbestos disease and 

turn over 59.5 million shares of stock to a trust established to care 

for asbestos victims in the future. In exchange, the plaintiffs have 

agreed to provide Halliburton and its affiliates with complete release from each of the 150,000 plaintiffs with pending cases and an 

injunction under section 524(g) of the bankruptcy code barring any 

future cases against Halliburton and its affiliates. 

But now it appears that Halliburton is refusing to implement the 

settlement in an attempt to bide time to determine whether Congress will enact legislation which gives it a better deal. A June 6, 

2003 press release from the company stated that:

Halliburton continues to track legislative proposals for 

asbestos reform pending in Congress. In determining 

whether to proceed with the global settlement, 

Halliburton’s board of directors will take into account the 

current status of these legislative initiatives.106

The enactment of the FAIR Act would confer a windfall on 

Halliburton’s bottom line. Jim Wicklund, an analyst at Banc of 

America Securities was quoted in Reuters as opining that 

Halliburton’s total liability under S. 1125 was $450 million. When 

one considers that Halliburton’s $450 million commitment is amortized over a 27-year period, the present value of Halliburton’s liVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00207 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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107See testimony of Dr. Mark Peterson, June 4, 2003 hearing on S. 1125. 

ability under S. 1125 is around $360 million. Because Halliburton 

is committed to pay $4.2 billion under the December 18, 2002 

agreement, enactment of S. 1125 would result in a 92% reduction 

of Halliburton’s asbestos liability. 

One does not have to be a securities analyst to predict what will 

occur to Halliburton’s stock if S. 1125 is enacted. If S. 1125 as currently drafted becomes law, Halliburton will be suddenly relieved 

of 92% of its contractual liability and its stock price will skyrocket. 

In all likelihood, the increase in Halliburton’s market capitalization 

accompanying the enactment of S. 1125 will greatly exceed 

Halliburton’s $360 million liability under the bill. 

Thus, S. 1125 not only represents a 92% bailout of Halliburton’s 

acknowledged and agreed to liability, but it will also enable Halliburton and its executives to enjoy a windfall as the company’s 

stock price shoots upward. Not only will S. 1125 enable Halliburton 

to pay 92% less than it agreed to; passage of the FAIR Act, as reported by the Committee, will result in a windfall for its executives 

and shareholders. Again, that is hardly fair. 

The FAIR Act would also retroactively extinguish all pending asbestos cases regardless of the stage in the litigation. Asbestos cases 

currently in trial, or on the verge of trial, would immediately be 

brought to a halt, case with jury verdicts would end, and all appeals suspended. Again, this is hardly fair. 

D. Front-End Funding and Payment Problems 

We are concerned that the FAIR Act, as presently written, fails 

to provide financial certainty for asbestos victims because of the 

structure of trust fund contributions and the wide fluctuations in 

projected estimates of future asbestos victims. As we have repeated 

again and again, financial certainty for asbestos victims is a fundamental foundation for an effective trust fund. 

In addition, the start-up of the national asbestos trust fund presents significant problems both from an administrative and a financial perspective. Unless the bill is amended to significantly contract the universe of claims pending in the tort system and in the 

bankruptcy trusts that will be extinguished under the bill as written, an estimated 300,000 pending claims will be transferred to the 

trust. Each will have to be processed regardless of their current 

status in the tort system. This may result in long delays in payments to victims and perhaps the administrative and financial collapse of the system within a short period. 

It will take at least several years for the trust fund to process 

the 290,000–300,000 asbestos cases that are currently pending. According to expert testimony before the Committee, under the current funding scheme, it might take at least 8 years to fully pay 

pending claims, even with the inadequate values provided in the 

reported bill.107 During this period an additional backlog of 

200,000–300,000 cases may develop as new claims come into the 

system. Many of these victims may never be paid. 

Professor Eric Green, who testified at the Committee’s June 4th 

hearing on the FAIR Act on behalf of all representatives of future 

asbestos victims in bankruptcy trusts, recently wrote to Senator 

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108 July 7, 2003 letter Dr. Green to Senator Leahy. 

Leahy about this potential front end problem in the trust fund. 

Professor Green wrote:

Another extremely important issue to us is the timing of 

the contributions to the Fund under the Act. We believe 

that the Act will be seriously underfunded from the outset 

and will never catch up. Our experience shows us that approximately 40% of the total funding under a 524(g) trust 

is needed within the first five years after the trust is established. The Act, on the other hand, calls for only 18% 

of the total funding to be available in the first 5 years. 

This will result in a payment backlog beginning on day 

one and increasing for years to come. Payments to future 

asbestos victims will be seriously delayed, if not put at risk 

entirely.108

If this solution is to work, it cannot be predicated on a false 

promise. There must be money to compensate the victims. We cannot allow the money to simply dry up, with the victims left holding 

the bag. 

E. Truly No-Fault Administrative System 

Any alternative compensation system must be truly no-fault to 

be fair to asbestos victims who will no longer have recourse to the 

courts. An effective, no-fault, non-adversarial system for processing 

compensation claims is as vital to the success of this legislation as 

ensuring adequate funding and fair compensation values, since if 

the claimants are unable to obtain the awards to which they are 

entitled in a timely and efficient manner, the system will fail. 

In its original version, S.1125 would have created an entirely 

new court, the U.S. Court of Asbestos Claims, to adjudicate claims 

for compensation from the Asbestos Injury Claims Resolution 

Fund. Under the bill as introduced, the President would have nominated a new slate of judges and the Senate would have needed the 

requisite time to review their backgrounds and consider them for 

confirmation. The time involved in appointing, confirming and 

funding a new court would have contributed to delays in processing 

victims’ claims. We appreciate the efforts of Senators Feinstein, 

Grassley and Sessions who joined us in striking these provisions 

from S. 1125. On a bipartisan basis, we agreed that a different approach was more desirable than merely clogging a new court with 

adversarial litigation proceedings. 

As amended, the FAIR Act would establish an Office of Special 

Asbestos Masters under the supervision of the existing U.S. Court 

of Federal Claims. These special masters are charged with making 

eligibility determinations within 60 days of receiving a completed 

file. An individual special master determination is initially reviewable by a panel of three Special Masters and subsequently reviewable by a panel of three judges from the Court of Federal Claims. 

These special asbestos masters would be under the supervision of 

the Court of Federal Claims. This structure mirrors the processing 

of claims under the Vaccine Injury Compensation Program. Only 

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appeals from determinations of special masters’ rulings would be 

heard in the court system. 

The FAIR Act as reported out of Committee, although an improvement over the bill as originally proposed, still falls short of 

providing an adequate administrative system for the following reasons. First, the proposed court-based system does not allow for centralized, uniform policy development. There is neither a representative board nor an administrator authorized to oversee the system, 

engage in substantive rulemaking, or guide policy development. Instead, there is only a chief special asbestos master, whose administrative authority is limited to prescribing procedural rules, contracting for necessary personnel and making expenditures necessary for the office to fulfill its functions. While the system is ostensibly intended to provide fair compensation in a non-adversarial 

manner, nothing in the structure appears to encourage or even permit the special masters or other personnel to engage in a consultative process that would assist individuals in filing claims and securing any compensation to which they are entitled. 

Second, delegating important rule-making authority to officers of 

the Court of Federal Claims is not the best method to ensure the 

unique goals of the FAIR Act. The court-based system in the existing bill does not involve a representative board or an administrator 

authorized to oversee the claims processing system. The same judicial officers who would be considering the victims’ claims would 

also be promulgating rules that might dramatically affect victims’ access to recovery. While the system is explicitly intended to provide fair compensation in a nonadversarial manner, nothing in the 

structure appears to encourage or even permit the special masters 

or claims examiners to engage in a consultative process that would 

assist individuals in filing claims and securing any compensation 

to which they are entitled. 

The Court of Federal Claims is not well-suited to develop methods for auditing medical evidence, to prescribe rules for implementing diagnostic criteria requirements, or to develop rules for 

identifying presumptive industries for significant occupational exposure determinations as is expressly required by the bill’s language. Nor is it an appropriate body for performing other administrative functions integral to the overall compensation system, including, for example, outreach activities, management of the trust 

fund, and rulemaking when, as a result of recommendations from 

the Medical Advisory Committee, it is necessary to update the medical or diagnostic criteria. 

To ensure a truly ‘‘no-fault,’’ non-adversarial system, with minimized transaction costs, this legislation should establish an independent agency or trust fund to administer the compensation program. The hallmarks of such a system would include: 

(a) Policy leadership by a board comprised of representatives 

of the parties to this process—i.e., claimants, defendant corporations and insurance companies, labor representatives, and 

public health professionals; 

(b) Centralized oversight of claims handling, to provide quality assurance, to ensure that claims are processed in a manner 

consistent with the fund’s objectives and are processed expeditiously; 

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(c) A non-adversarial, ‘‘user-friendly’’ process, in which personnel are charged with assisting the claimants in presenting 

their claims and securing necessary documentation, and decision makers are authorized to engage in a consultative process 

with claimants; 

(d) An independent process within the administrative system 

to resolve disputes arising from claims determinations; and 

(e) A final opportunity for judicial review on the record at 

the court of appeals level. 

If the goal of the FAIR Act is to resolve the vast majority of 

claims without clogging the courts, an administrative review process is a better solution. Amending the current legislation to include 

an administrative process would resolve more claims in less time. 

In addition, an administrative agency would be in a better position 

to adopt standards consistent with the express purpose of an alternative to the tort system and to manage the initial consideration 

of the large volume of claims. 

Inserting an administrative review process would uphold the consensus goals of claims resolution in a no fault, non-adversarial system. Judicial review would remain available but the need for such 

court-based resources would be reduced with the addition of an administrative process. 

F. Other Unfair Provisions in S. 1125 

The Committee-reported bill, while establishing a presumption 

that awards will be paid within three years, does not require that 

any portion of a claimant’s award be paid before the three years 

are up. Consequently, nothing in the bill would prevent the Fund 

from forcing claimants who have been determined to be eligible for 

an award to wait a full three years—and in some cases four 

years—before they are paid a penny of what they are due. If payments are to be spread out over a period of three years, there must 

be protections to ensure that they are spread at least evenly over 

that period, and that claimants begin receiving their compensation 

immediately upon receipt of a determination of eligibility. To enact 

this legislation without such protections would make a mockery of 

the bill’s promise of prompt compensation. 

If the FAIR Act were enacted in its current form, railroad workers would lose their only recourse against an employer for compensation for injuries resulting from exposure to asbestos while all 

other workers would see their injury compensation program remain 

intact. Under S. 1125, railroad workers would be unfairly singled 

out because the bill preempts The Federal Employers’ Liability Act 

(FELA). 

The FELA is both an injury compensation statute as well as a 

safety statute. Congress established the FELA for two primary reasons: (1) to provide compensation for injured railroad workers; and, 

(2) to provide an incentive to American railroads to operate safely 

by holding them accountable for the safety of their workers. 

The legislative effort to find a solution to the current asbestos 

crisis is laudable; however, any legislation aimed at providing a 

remedy should not come at the expense of one group of workers. 

S. 1125, as introduced, unfortunately does that by singling out railroad workers and treating their injury compensation rights difVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00211 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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109During Committee consideration of S. 1125, Senator Durbin offered an amendment to 

strike the preemption of FELA from the bill. Unfortunately, this amendment was defeated on 

a party-line vote, with all members of the majority voting against it and all members of the 

minority voting for it. 110During Committee consideration of S. 1125, Senator Leahy offered an amendment to strike 

the requirement that the victim first resort to his or her health insurance to pay monitoring 

costs and to include the cost of the initial diagnosis of asbestos-related disease as part of medical 

monitoring compensation. Unfortunately, this amendment was defeated on a party-line vote, 

with all members of the majority voting against it and all members of the minority voting for 

it. 111During Committee consideration of S. 1125, Senator Leahy offered an amendment to add 

the same anti-subrogation provisions from these three existing federal compensation programs 

to this bill. Unfortunately, this amendment was defeated on a party-line vote, with all members 

of the majority voting against it and all members of the minority voting for it. 

ferently than all other workers. S. 1125 should be amended to remove this obvious inequity for railroad workers.109

In addition, we believe that the provisions for medical monitoring 

in the FAIR Act need to be improved to be both effective and fair. 

We agree that medical monitoring is appropriate compensation for 

Level 1 disease victims, and if these victims become sicker, they 

will be compensated according to their illness as it progresses and 

their health declines. 

But to be effective and fair to these victims of asbestos exposure, 

medical monitoring should not be offset by a victim’s health insurance as is currently required by S. 1125. These costs are properly 

borne by the defendant and their insurers, and a worker should not 

be penalized because he or she had the foresight and means to purchase health insurance. Medical monitoring compensation by the 

Fund should also include the cost of the initial diagnosis of asbestos-related disease as a matter of basic fairness.110

Another clear unfairness in S. 1125 is that victims suffering from 

asbestos-related diseases may have their awards reduced to repay 

any insurance carrier, or any provider of workers’ compensation. 

The failure to protect compensation awards from this subrogation 

is contrary to many existing victim compensation programs. For example, the Radiation Exposure Compensation Act of 1990, the Energy Employees Occupational Illness Compensation Program Act, 

and the Ricky Ray Hemophiliac Relief Fund Act of 1998 all contain 

strong anti-subrogation language to protect awards to victims 

under these compensation programs.111

In addition, this bill fails to provide medical screening for highrisk workers. More than 27 million workers have been exposed to 

asbestos on the job. For an asbestos compensation program to be 

successful and truly serve workers, the program must provide a 

way to identify those workers at high risk and provide them information and medical screening and easy access to the system. The 

FAIR Act provides medical monitoring for individuals who have 

been diagnosed with pleural disease or asbestosis, but who are not 

yet ill, to evaluate if their conditions have worsened and if further 

medical treatment is needed. The bill, however, fails to provide 

medical screening of high risk workers to determine if they have 

developed disease. 

Medical screening of high-risk workers who have been exposed to 

toxic substances is an established practice. Virtually every health 

standard issued by the Occupational Safety and Health Administration requires medical surveillance of workers who are currently 

exposed above specified levels of toxic substances. The Mine Safety 

213

and Health Administration requires routine medical screening of 

coal miners to determine if they have developed coal workers pneumoconiosis. In 1993, the Department of Energy (DOE) established 

an outreach and screening program for former workers who had 

been employed at the DOE atomic weapons facilities who are at 

high risk of disease due to exposure to beryllium, radiation and 

other workplace hazards. Such initiatives are intended to identify 

possible health changes or disease as early as possible, so that 

steps can be taken to reduce exposures and risk and to facilitate 

appropriate medical treatment. While OSHA requires medical surveillance of workers currently exposed to asbestos, there is no requirement for medical screening for workers who were formerly exposed to asbestos and now at an increased risk of asbestos-related 

disease. 

Final asbestos compensation legislation should include provision 

for the establishment of an outreach and medical screening program for workers at high risk of disease. This program should be 

funded by the asbestos trust fund, but to ensure quality and independence should be overseen by the National Institute for Occupational Safety and Health (NIOSH), the government agency responsible for worker safety and health research. NIOSH should establish the medical protocols and standards for the screening program 

and identify those groups that should be included in a screening 

program due to their high levels of past exposures. In addition, 

NIOSH should identify and enter into contracts with qualified providers to carry out this screening. These providers should be organizations or institutions with experience and expertise that have 

the ability to reach individuals at high risk. 

Medical screening of workers who have had significant occupational exposure to asbestos and medical monitoring of claimants 

who meet the exposure and medical requirements for Category 1 

will help to ensure that these individuals receive timely diagnosis 

and treatment and are educated about actions they can take to reduce their future health risk. The public health benefits of these 

measures will, however, be undermined if workers who take advantage of these opportunities are discriminated against by health 

plan or health insurers because their participation in these programs identifies them as being at high risk for serious asbestos disease. 

In 1996, Congress enacted the Health Insurance Portability and 

Accountability Act (HIPAA), to prohibit health plans and health insurers from discriminating against individuals on the basis of 

health status and various enumerated health status-related factors. 

Although we believe that participation in medical screening or 

medical monitoring is a ‘‘health-related factor’’ that falls within the 

protection of that Act, there is some ambiguity in the statute. 

Therefore, we strongly support adding provisions to the FAIR Act 

to clarify that workers participating in any monitoring or screening 

program established in this bill cannot be denied or lose their 

health coverage for that reason. 

Moreover, we believe this legislation should exempt investment 

income in the fund from federal income tax in order to increase the 

funds available to compensate victims, much as the investment income in a 401(k) savings plan is currently treated under the InterVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00213 Fmt 6604 Sfmt 6602 E:\HR\OC\SR118.XXX SR118
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112 Indeed, in response to questions at Committee’s hearing on asbestos litigation last September, David Austern, President of the Manville Trust, estimated that exempting investment 

income from federal taxation would increase the funds available to pay asbestos victims by $100 

million for the Manville Trust alone. 

nal Revenue Code. This tax incentive is particularly appropriate 

given the federal government’s role in exposing so many veterans 

to asbestos-related products. Under current law, trusts established 

for the sole purpose of compensating asbestos victims are taxed at 

the high rate of 38%, thus limiting the funds available to asbestos 

victims.112 We also believe that defendant and insurer contributions and awards to claimants should be exempt from taxation. We 

look forward to working with Chairman Grassley and Ranking 

Member Baucus of the Finance Committee to increase asbestos victim compensation through appropriate tax treatment of the trust 

fund, contributions and awards. 

IV. CONCLUSION

Although we have authored and supported many bipartisan improvements to this legislation—from medical criteria to solvency 

safeguards to higher award values—this bill still has many problems that need to be worked out before we can support it. 

Our undertaking is complex and unprecedented. It has not been 

easy to work out the details necessary for consensus. But the 

stakes are too high for us to leave the field before trying our utmost to complete this task. We want to make every effort to solve 

this crisis, and we commend and encourage all who are working in 

good faith to help do that. 

Certainty for defendants and insurers is a fine objective but it 

must be coupled with fairness to the asbestos victims whose rights 

this bill takes away. We have emphasized again and again one 

basic, bedrock principle throughout this process: We will not support a bill that contains inadequate compensation for victims. 

As it currently stands, this is not a bill that reduces the high 

transaction costs in the current system, and puts more money in 

the pockets of injured workers while reducing the costs to businesses and their insurers. That would be a real solution. This is 

a bill which merely shifts more of the financial burden of asbestosinduced disease to the injured workers by unfairly and arbitrarily 

limiting the liability of defendants. Sick workers would receive 

lower levels of compensation than they receive on average in the 

current system, and payment of even those lower levels of compensation would not be guaranteed. That is no solution at all. For 

these reasons, we must vote ‘‘no.’’ We can do better than this. 

Because consensus remains the best hope for us to pass a bill 

this year, and because this matter is so important, as disappointed 

as we are in the final product of the Committee’s deliberations, we 

intend to continue working for a fair solution to this problem. We 

seek a bill that we can support and that we can in good conscience 

urge our colleagues to support. We are discouraged, but not resigned.

215

We need to continue our bipartisan work to achieve the common 

ground needed to enact a good law. Acting together through consensus remains, in our view, the only way to move a bill through 

the legislative process and into law.

PATRICK J. LEAHY. 

EDWARD M. KENNEDY. 

JOSEPH R. BIDEN, Jr. 

HERBERT KOHL. 

RUSSELL D. FEINGOLD. 

CHARLES E. SCHUMER. 

RICHARD J. DURBIN. 

JOHN EDWARDS.

(216)

MINORITY VIEW OF SENATOR BIDEN 

Senator Biden joins in the minority views of Senators Leahy, 

Kennedy, Biden, Kohl, Feingold, Schumer, Durbin and Edwards, 

but finds it necessary to express separate views with regard to the 

majority’s discussion of the sunset provision in Section 404 of S. 

1125 (the ‘‘Biden Sunset’’), as well as footnote 67’s discussion of the 

same provision. As accurately described in Senator Leahy’s minority views, the Biden Sunset complements the Feinstein-Kohl provision to ensure solvency of the trust fund, which provides periodic 

checks of the funding levels, starting in 2010. The Biden Sunset 

will check solvency every year and permit reversion to the traditional tort system, including state and federal courts, the year after 

the fund fails to make its payments. It is only fair to return the 

victims to where they were beforehand—the tort system. 

Specifically, the Biden Sunset amendment would sunset the fund 

and revert asbestos claims to the traditional tort system if the Administrator of the Office of Special Asbestos Masters fails to certify 

for any given year that: (1) 95 percent or more of the asbestos 

claimants who filed claims in that year, and who were determined 

to be eligible to receive compensation, have received the compensation, and (2) 95 percent or more of the total obligations of the Fund 

owed to eligible claimants in that year have been paid. 

S. 1125 would abridge victims’ rights as they currently exist 

under the tort system. If Congress abridges those rights, it must 

be certain that the solution it creates will work 100% as planned. 

The Biden Sunset makes certain that this legislation ensures compensation for victims to the same extent that it aids corporations 

facing asbestos liability. Just as corporations are to be granted certainty, victims must be granted the certainty that they will receive 

the compensation to which they are entitled. Under the Biden Sunset, if the legislation fails to achieve that goal, even after the various backstops and safety nets created by the fund have come into 

effect, it is only fair to put the victims back in the position they 

would have been in absent the legislation. 

Thus, the Biden Sunset serves as the ultimate backstop to insure 

fairness in the system, whether in year 1, or in year 29 when the 

fund continues to operate only on a voluntary basis. 

Senator Biden strongly disagrees with the following statement in 

the majority report’s discussion of Section 404:

The Committee is concerned that this Amendment was 

adopted without a full understanding of the actual language and the harsh consequences, ramifications and implications thereof. The sponsor of the Amendment, Senator 

Biden, has agreed to work with Members to develop appropriate language to mitigate any unintended consequences 

of this provision before floor consideration of S. 1125.

217

First, this provision was more carefully debated and analyzed 

than virtually all other provisions of the bill. Indeed, in a very rare 

move, the roll call vote on the amendment was suspended so that 

all Senators could fully understand the provision. When the vote 

resumed, it passed by an overwhelming, bipartisan margin of 15– 4. Second, the consequences of the provision are fairness, justice, 

and certainty, attributes that Senator Biden finds neither ‘‘harsh’’ nor ‘‘unintended.’’ Third, as the majority well knows, Senator Biden 

has not ‘‘agreed to work with Members to develop appropriate language to mitigate’’ the effects of the Biden Sunset. He has consented to no changes in the provision, but, in a private conversation with Chairman Hatch and Senator Graham of South Carolina, 

agreed to consider possible proposals to modify the way the Biden 

Sunset is applied at the outset of the Fund. 

JOSEPH R. BIDEN.

(218)

XII. CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 1125, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

* * * * * * *

TITLE 11—BANKRUPTCY

Chapter Section 

1. General Provisions ....................................................................... 101

3. Case Administration .................................................................... 301

* * * * * * *

CHAPTER 3—CASE ADMINISTRATION 

Subchapter Commencement of a Case 

* * * * * * *

Subchapter IV—Administrative Powers

361. Adequate protection. 

363. Automatic stay. 

* * * * * * *

§ 362. Automatic stay 

(a) Except as provided in subsection (b) of this section, a petition 

filed under section 301, 302, or 303 of this title, or an application 

filed under section 5(a)(3) of the Securities Investor Protection Act 

of 1970, operates as a stay, applicable to all entities, of—

* * * * * * *

(b) The filing of a petition under section 301, 302, or 303 of this 

title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—

(1) under subsection (a) of this section, of the commencement 

or continuation of a criminal action or proceeding against the 

debtor; 

* * * * * * *

(17) under subsection (a) of this section, of the setoff by a 

swap participant, of any mutual debt and claim under or in 

connection with any swap agreement that constitutes the setoff 

219

of a claim against the debtor for any payment due from the 

debtor under or in connection with any swap agreement 

against any payment due to the debtor from the swap participant under or in connection with any sway agreement or 

against cash, securities, or the property of the debtor held by 

or due from such swap participant to guarantee, secure or settle any swap agreement; øor¿

(18) under subsection (a) of the creation or perfection of a 

statutory lien for an ad valorem property tax imposed by the 

District of Columbia, or a political subdivision of a State, if 

such tax comes due after the filing of the petitionø.¿; or

(19) under subsection (a) of this section of the enforcement of 

any payment obligations under section 204 of the Fairness in 

Asbestos Injury Resolution Act of 2003, against a debtor, or the 

property of the estate of a debtor, that is a participant (as that 

term is defined in section 3 of that Act). 

The provisions of paragraphs (12) and (13) of this subsection shall 

apply with respect to any such petition filed on or before December 

31, 1989. 

* * * * * * *

§ 365. Executory contracts and unexpired leases 

(a) Except as provided in sections 765 and 766 of this title and 

in subsections (b), (c), and (d) of this section, the trustee, subject 

to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor. 

* * * * * * *

(o) In a case under chapter 11 of this title, the trustee shall be 

deemed to have assumed (consistent with the debtor’s other obligations under section 507), and shall immediately cure any deficit 

under, any commitment by the debtor to a Federal depository institutions regulatory agency (or predecessor to such agency) to maintain the capital of an insured depository institution, and any claim 

for a subsequent breach of the obligations thereunder shall be entitled to priority under section 507. This subsection shall not extend 

any commitment that would otherwise be terminated by any act of 

such an agency. 

(p) If a debtor is a participant (as that term is defined in section 

3 of the Fairness in Asbestos Injury Resolution Act of 2003), the 

trustee shall be deemed to have assumed all executory contracts entered into by the participant under section 204 of that Act. The 

trustee may not reject any such executory contract. 

* * * * * * *

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

Subchapter I—Creditors and Claims

Sec. 

501. Filing of proofs of claims or interests 

* * * * * * *

220

1So in original. Probably should be ‘‘an’’.

503. Allowance of administrative expenses. 

* * * * * * *

§ 503. Allowance of administrative expenses 

(a) An entity may timely file a request for payment of an administrative expense, or may tardily file such request if permitted by 

the court for cause. 

(b) After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502(f) of 

this title, including—

* * * * * * *

(c)(1) Claims or expenses of the United States, the Attorney General, or the Administrator (as that term is defined in section 3 of 

the Fairness in Asbestos Injury Resolution Act of 2003) based upon 

the asbestos payment obligations of a debtor that is a Participant 

(as that term is defined in section 3 of that Act), shall be paid as 

an allowed administrative expense. The debtor shall not be entitled 

to either notice or a hearing with respect to such claims. 

(2) For purposes of paragraph (1), the term ‘‘asbestos payment obligation’’ means any payment obligation under subtitle B of title II 

of the Fairness in Asbestos Injury Resolution Act of 2003. 

* * * * * * *

Subchapter II—Debtor’s Duties and Benefits

521. Debtor’s duties. 

* * * * * * *

523. Exceptions to discharge. 

* * * * * * *

§ 523. Exceptions to discharge 

(a) A discharge under section 724, 1141, 1228(a), 1228(b), or 

1328(b) of this title does not discharge an individual debtor from 

any debt—

(1) for a tax or a customs duty—

* * * * * * *

(e) Any institution-affiliated party of a 1 insured depository institution shall be considered to be acting in a fiduciary capacity with 

respect to the purposes of subsection (a)(4) or (11). 

(f) A discharge under section 727, 1141, 1228, or 1328 of this title 

does not discharge any debtor that is a participant (as that term is 

defined in section 3 of the Fairness in Asbestos Injury Resolution 

Act of 2003) of the payment obligations that is a debtor under subtitle B of title II of that Act.

§ 524. Effect of discharge 

(a) A discharge in a case under this title—

* * * * * * *

221

(h) Application to existing injunctions.—For purposes of subsection (g)—

* * * * * * *

(i) PARTICIPANT DEBTORS.—

(1) IN GENERAL.—Paragraphs (2) and (3) shall apply to a 

debtor who—

(A) is a participant that has made prior asbestos expenditures (as such terms are defined in the Fairness in Asbestos 

Injury Resolution Act of 2003); and 

(B) is subject to a case under this title that is pending— (i) on the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2003; or 

(ii) at any time during the 1-year period preceding 

the date of enactment of that Act. 

(2) TIER I DEBTORS.—A debtor that has been assigned to tier 

I under section 202 of the Fairness in Asbestos Injury Resolution Act of 2003 shall make payments in accordance with sections 202 and 203 of that Act. 

(3) TREATMENT OF PAYMENT OBLIGATIONS.—All payment obligations of a debtor under sections 202 and 203 of the Fairness 

in Asbestos Injury Resolution Act of 2003 shall—

(A) constitute costs and expenses of administration of a 

case under section 503 of this title; 

(B) notwithstanding any case pending under this title, be 

payable in accordance with section 202 of that Act; 

(C) not be stayed; 

(D) not be affected as to enforcement or collection by any 

stay or injunction of any court; and 

(E) not be impaired or discharged in any current or future case under this title. 

(j) ASBESTOS TRUSTS.—

(1) IN GENERAL.—A trust shall assign a portion of the corpus 

of the trust to the Asbestos Injury Claims Resolution Fund (referred to in this subsection as the ‘‘Fund’’) as established under 

the Fairness in Asbestos Injury Resolution Act of 2003 if the 

trust qualifies as a ‘‘trust’’ under section 201 of that Act. 

(2) TRANSFER OF TRUST ASSETS.—

(A) IN GENERAL.—Except as provided under subparagraphs (B) and (C), the assets in any trust established to 

provide compensation for asbestos claims (as defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 

2003) shall be transferred to the Fund not later than 6 

months after the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2003. Except as provided 

under subparagraph (B), the Administrator of the Fund 

shall accept such assets and utilize them for any purposes 

of the Fund under section 223 of such Act, including the 

payment of claims for awards under such Act to beneficiaries of the trust from which the assets were transferred. 

After such transfer, each trustee of such trust shall have no 

liability to any beneficiary of such trust. 

(B) AUTHORITY TO REFUSE ASSETS.—The Administrator 

of the Fund may refuse to accept any asset that the AdminVerDate jul 14 2003 04:40 Aug 01, 2003 Jkt 088665 PO 00000 Frm 00221 Fmt 6604 Sfmt 6603 E:\HR\OC\SR118.XXX SR118
222

istrator determines may create liability for the Fund in excess of the value of the asset. 

(C) ALLOCATION OF TRUST ASSETS.—If a trust under subparagraph (A) has beneficiaries with claims that are not 

asbestos claims, the assets transferred to the Fund under 

subparagraph (A) shall not include assets allocable to such 

beneficiaries. The trustees of any such trust shall determine 

the amount of such trust assets to be reserved for the continuing operation of the trust in processing and paying 

claims that are not asbestos claims. Such reserved amount 

shall not be greater than 3 percent of the total assets in the 

trust and shall not be transferred to the Fund. 

(D) SALE OF FUND ASSETS.—The investment requirements 

under section 222 of the Fairness in Asbestos Injury Resolution Act of 2003 shall not be construed to require the Administrator of the Fund to sell assets transferred to the 

Fund under subparagraph (A). 

(E) LIQUIDATED CLAIMS.—A trust shall not make any 

payment relating to asbestos claims unless such claims 

were liquidated in the ordinary course and the normal and 

usual administration of the trust consistent with past practices before the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2003.

(3) INJUNCTION.—Any injunction issued as part of the formation of a trust described in paragraph (1) shall remain in full 

force and effect.

* * * * * * *

Subchapter III—The Estate

541. Property of the estate. 

* * * * * * *

546. Limitations on avoiding powers. 

* * * * * * *

§ 546. Limitation on avoiding powers. 

(a) An action or proceeding under section 544, 545, 547, 548, or 

553 of this title may not be commenced after the earlier of—

* * * * * * *

(h) Notwithstanding the rights and powers of a trustee under sections 544, 545, 547, 548, 549, and 550 of this title, if a debtor is 

a participant (as that term is defined in section 3 of the Fairness 

in Asbestos Injury Resolution Act of 2003), the trustee may not 

avoid a transfer made by the debtor pursuant to its payment obligations under section 202 or 203 of that Act.

CHAPTER 11—REORGANIZATION 

Subchapter I—Officers and Administration

* * * * * * *

223

Subchapter II—The Plan

1121. Who may file a plan. 

* * * * * * *

1129. Confirmation of plan. 

* * * * * * *

§ 1129. Confirmation of plan 

(a) The court shall confirm a plan only if all of the following requirements are met: 

(1) The plan complies with the applicable provisions of this 

title.

* * * * * * *

(14) If the debtor is a participant (as that term is defined in 

section 3 of the Fairness in Asbestos Injury Resolution Act of 

2003), the plan provides for the continuation after its effective 

date of payment of all payment obligations under title II of that 

Act.

TITLE 18—CRIMES AND CRIMINAL 

PROCEDURE

Part Section 

I. CRIMES ......................................................................................... 1

* * * * * * *

PART I—CRIMES

Chapter Section 

1. General provisions ....................................................................... 1

* * * * * * *

39. Explosives and combustibles ..................................................... 831

39A. Ban of asbestos containing products ...................................... 838

* * * * * * *

CHAPTER 39—EXPLOSIVES AND OTHER DANGEROUS 

ARTICLES

Sec. 

831. Prohibited transactions involving nuclear materials. 

[832 to 835. Repealed.] 

836. Transportation of fireworks into State prohibiting sale or use. 

[837. Repealed.] 

838. Ban of asbestos containing products. 

* * * * * * *

CHAPTER 39A—BAN OF ASBESTOS CONTAINING 

PRODUCTS 

§ 838. Ban of asbestos containing products 

(a) DEFINITIONS.—In this chapter: 

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the 

Administrator of the Environmental Protection Agency. 

(2) ASBESTOS.—The term ‘‘asbestos’’ includes— (A) chrysotile; 

(B) amosite; 

224

(C) crocidolite; 

(D) tremolite asbestos; 

(E) winchite asbestos; 

(F) richterite asbestos; 

(G) anthophyllite asbestos; 

(H) actinolite asbestos; 

(I) any of the minerals listed under subparagraphs (A) 

through (H) that has been chemically treated or altered, 

and any asbestiform variety, type or component thereof. 

(3) ASBESTOS CONTAINING PRODUCT.—The term ‘‘asbestos containing product’’ means any product (including any part) to 

which asbestos is deliberately or knowingly added or used because the specific properties of asbestos are necessary for product use or function. Under no circumstances shall the term ‘‘asbestos containing product’’ be construed to include products that 

contain de minimus levels of naturally occurring asbestos as defined by the Administrator not later than 1 year after the date 

of enactment of this chapter. 

(4) DISTRIBUTE IN COMMERCE.—The term ‘‘distribute in commerce’’—

(A) has the meaning given the term in section 3 of the 

Toxic Substances Control Act (15 U.S.C. 2602); and 

(B) shall not include—

(i) an action taken with respect to an asbestos containing product in connection with the end use of the 

asbestos containing product by a person that is an end 

user, or an action taken by a person who purchases or 

receives a product, directly or indirectly from an end 

user; or 

(ii) distribution of an asbestos containing product by 

a person solely for the purpose of disposal of the asbestos containing product in compliance with applicable 

Federal, State, and local requirements. 

(b) IN GENERAL.—Subject to subsection (c), the Administrator 

shall, after consultation with the Assistant Attorney General for the 

Environmental and Natural Resources Division of the United States 

Department of Justice, promulgate—

(1) not later than 1 year after the date of enactment of this 

chapter, proposed regulations that—

(A) prohibit persons from manufacturing, processing, or 

distributing in commerce asbestos containing products; and 

(B) provide for implementation of subsections (c) and (d); 

and 

(2) not later than 2 years after the date of enactment of this 

chapter, final regulations that, effective 60 days after the date 

of promulgation, prohibit persons from manufacturing, processing, or distributing in commerce asbestos containing products. 

(c) EXEMPTIONS.—

(1) IN GENERAL.—Any person may petition the Administrator 

for, and the Administrator may grant an exemption from the requirements of subsection (b), if the Administrator determines 

that—

225

(A) the exemption would not result in an unreasonable 

risk of injury to public health or the environment; and 

(B) the person has made good faith efforts to develop, but 

has been unable to develop, a substance, or identify a mineral that does not present an unreasonable risk of injury to 

public health or the environment and may be substituted 

for an asbestos containing product. 

(2) TERMS AND CONDITIONS.—An exemption granted under 

this subsection shall be in effect for such period (not to exceed 

5 years) and subject to such terms and conditions as the Administrator may prescribe. 

(3) GOVERNMENTAL USE.— (A) IN GENERAL.—The Administrator of the Environmental Protection Agency shall provide an exemption from 

the requirements of subsection (a), without review or limit 

on duration, if such exemption for an asbestos containing 

product is— (i) sought by the Secretary of Defense and the Secretary certifies, and provides a copy of that certification 

to Congress, that— (I) use of the asbestos containing product is necessary to the critical functions of the Department; 

(II) no reasonable alternatives to the asbestos 

containing product exist for the intended purpose; 

and 

(III) use of the asbestos containing product will 

not result in an unreasonable risk to health or the 

environment; or 

(ii) sought by the Administrator of the National Aeronautics and Space Administration and the Administrator of the National Aeronautics and Space Administration certifies, and provides a copy of that certification to Congress, that— (I) the asbestos containing product is necessary 

to the critical functions of the National Aeronautics and Space Administration; 

(II) no reasonable alternatives to the asbestos 

containing product exist for the intended purpose; 

and 

(III) the use of the asbestos containing product 

will not result in an unreasonable risk to health or 

the environment. 

(B) ADMINISTRATIVE PROCEDURE ACT.—Any certification 

required under subparagraph (A) shall not be subject to 

chapter 5 of title 5, United States Code (commonly referred 

to as the ‘‘Administrative Procedure Act’’). 

(4) SPECIFIC EXEMPTIONS.—The following are exempted: 

(A) Asbestos diaphragms for use in the manufacture or 

chlor-alkali and the products and derivative therefrom. 

(B) Roofing cements, coatings and mastics utilizing asbestos that is totally encapsulated with asphalt, subject to 

a determination by the Administrator of the Environmental 

Protection Agency under paragraph (5). 

(5) ENVIRONMENTAL PROTECTION AGENCY REVIEW.—

226

(A) REVIEW IN 18 MONTHS.—Not later than 18 months 

after the date of enactment of this chapter, the Administrator of the Environmental Protection Agency shall complete a review of the exemption for roofing cements, coatings, and mastics utilizing asbestos that are totally encapsulated with asphalt to determine whether— (i) the exemption would result in an unreasonable 

risk of injury to public health or the environment; and 

(ii) there are reasonable, commercial alternatives to 

the roofing cements, coatings, and mastics utilizing asbestos that is totally encapsulated with asphalt. 

(B) Revocation of exemption.—Upon completion of the review, the Administrator of the Environmental Protection 

Agency shall have the authority to revoke the exemption for 

the products exempted under paragraph (4)(B) if warranted. 

(d) DISPOSAL.— (1) IN GENERAL.—Except as provided in paragraph (2), not 

later than 3 years after the date of enactment of this chapter, 

each person that possesses an asbestos containing product that 

is subject to the prohibition established under this section shall 

dispose of the asbestos containing product, by a means that is 

in compliance with applicable Federal, State, and local requirements. 

(2) EXEMPTION.—Nothing in paragraph (1)—

(A) applies to an asbestos containing product that—

(i) is no longer in the stream of commerce; or 

(ii) is in the possession of an end user or a person 

who purchases or receives an asbestos containing product directly or indirectly from an end user; or 

(B) requires that an asbestos containing product described in subparagraph (A) be removed or replaced.

* * * * * * *

CHAPTER 63—MAIL FRAUD

Sec. 

1341. Frauds and swindles.

* * * * * * *

1347. Health care fraud. 

1348. Fraud and false statements in connection with participation in Asbestos Injury 

Claims Resolution Fund.

* * * * * * *

§ 1348. Fraud and false statement in connection with participation in Asbestos Injury Claims Resolution Fund 

(a) FRAUD RELATING TO ASBESTOS INJURY CLAIMS RESOLUTION

FUND.—Whoever knowingly and willfully executes, or attempts to 

execute, a scheme or artifice to defraud the Asbestos Insurers Commission or the Office of Asbestos Injury Claims Resolution under 

title II of the Fairness in Asbestos Injury Resolution Act of 2003 

shall be fined under this title or imprisoned not more than 20 years, 

or both. 

(b) FALSE STATEMENTS RELATING TO ASBESTOS INJURY CLAIMS

RESOLUTION FUND.—Whoever, in any matter involving the Asbestos 

227

Insurers Commission or the Office of Asbestos Injury Claim Resolution, knowingly and willfully— (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; 

(2) makes any materially false, fictitious, or fraudulent statements or representations; or 

(3) makes or uses any false writing or document knowing the 

same to contain any materially false, fictitious, or fraudulent 

statement or entry, 

in connection with the award of a claim or the assessment of 

contributions under title I or II of the Fairness in Asbestos Injury Resolution Act of 2003 shall be fined under this title or imprisoned not more than 10 years, or both.

* * * * * * *

Æ