59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 114–352 

FURTHERING ASBESTOS CLAIM TRANSPARENCY (FACT) 

ACT OF 2015 

NOVEMBER 30, 2015.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. GOODLATTE, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 526] 

[Including cost estimate of the Congressional Budget Office] 

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

(H.R. 526) to amend title 11 of the United States Code to require 

the public disclosure by trusts established under section 524(g) of 

such title, of quarterly reports that contain detailed information regarding the receipt and disposition of claims for injuries based on 

exposure to asbestos; and for other purposes, having considered the 

same, reports favorably thereon without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2 

Background and Need for the Legislation ............................................................. 2 

Hearings ................................................................................................................... 17 

Committee Consideration ........................................................................................ 18 

Committee Votes ...................................................................................................... 18 

Committee Oversight Findings ............................................................................... 25 

New Budget Authority and Tax Expenditures ...................................................... 25 

Congressional Budget Office Cost Estimate .......................................................... 25 

Duplication of Federal Programs ............................................................................ 26 

Disclosure of Directed Rule Makings ..................................................................... 27 

Performance Goals and Objectives ......................................................................... 27 

Advisory on Earmarks ............................................................................................. 27 

Section-by-Section Analysis .................................................................................... 27 

Changes in Existing Law Made by the Bill, as Reported ..................................... 27 

Dissenting Views ..................................................................................................... 40 


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1Furthering Asbestos Claim Transparency (FACT) Act of 2013, H.R. 982, 113th Cong. § 2 

(2013). 2 Id. 

3S. REP. NO. 110–189, at 1 (citing Asbestos, NATIONAL INSTITUTE FOR OCCUPATIONAL SAFETY

AND HEALTH, www.cdc.gov/niosh/topics/asbestos (last visited June 18, 2015)); see also Wylie, A 

Report on the Asbestos Litigation Industry, MANHATTAN INSTITUTE’S CENTER FOR LEGAL POLICY, 2008, at 4, available at http://www.triallawyersinc.com/pdfs/TLI-ASBESTOS.pdf (last visited 

June 18, 2015) (Wylie). 4Wylie, supra note 3, at 4. 5 Asbestos, HERITAGE RESEARCH CENTER, http://www.heritageresearch.com/ourlibrary/histories/ 

asbestos.html (last visited June 18, 2015). 6Wylie, supra note 3, at 4. 7 Asbestos Fibers and Other Elongate Mineral Particles: State of the Science and Roadmap for 

Research, NATIONAL INSTITUTE FOR OCCUPATIONAL SAFETY AND HEALTH, Apr. 2011, at 1, available at http://www.cdc.gov/niosh/docs/2011-159/pdfs/2011-159.pdf (last visited June 18, 2015). 8 Id. 

9 Asbestos Health Effects, AGENCY FOR TOXIC SUBSTANCES & DISEASE REGISTRY, http://www. 

atsdr.cdc.gov/asbestos/asbestos/health_effects/(last visited June 18, 2015). 

Purpose and Summary 

H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2015,’’ or the ‘‘FACT Act,’’ amends the Bankruptcy Code to 

require transparency from bankruptcy trusts formed to pay asbestos claims. Specifically, the FACT Act adds a paragraph to subsection (g) of section 524 of title 11 of the United States Code to 

require a trust established pursuant to that subsection to file, each 

quarter, a public report with the bankruptcy court listing the name 

and exposure history of those who have filed a claim with such 

trust and any payments made to claimants and the basis for such 

payments.1 It further requires each such trust to provide, upon 

written request, information related to payment from, and demands for payment from, such trust to any party in an action involving liability for asbestos exposure.2

Background and Need for Legislation 

I. THE HISTORY OF ASBESTOS AND ASBESTOS-RELATED

HEALTH CONDITIONS

Asbestos is a commercial name given to six minerals—amosite, 

crocidolite, tremolite, actinolite, anthophyllite, and chrysotile—that 

were widely used in the United States in industrial products 

throughout much of the 20th Century.3 Humans have used asbestos for centuries.4 The word ‘‘asbestos’’ comes from the Greek word 

for ‘‘indestructible,’’ and the ancient world used asbestos for everything from fabrics to lamp wicks.5 In the 1860’s, it was first commercially used in the United States as insulation. Because asbestos 

is strong, durable, and has excellent fire-retardant capability, it 

was widely used in industrial and other work and residential settings through the early 1970’s. It was regarded as a miracle fiber, 

versatile enough to weave into textiles, integrate into insulation, 

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

for naval and merchant ships. Asbestos consumption in the United 

States peaked in 1973 and then dropped dramatically over the next 

three decades.6

Despite the usefulness of asbestos in industrial and residential 

products, it was discerned that asbestos fibers cause serious diseases when inhaled.7 Inhalation of asbestos fibers has been linked 

to a number of diseases, including mesothelioma, lung cancer, asbestosis, and pleural abnormalities.8 Mesothelioma is a deadly cancer of the lining of the chest or abdomen.9 Exposure to asbestos is 


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10 Id. 11See generally H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2012’’: 

Hearing Before the Subcomm. on Courts, Commercial and Administrative Law of the H. Comm. 

on the Judiciary, 112th Cong. (2011) (Courts Subcomm. Hearing) (testimony of Charles S. 

Siegel). 12 Agency for Toxic Substances & Disease Registry, supra note 9. 13 Id. 14 Id. 15 Id. 16Stephen J. Carroll et al., Asbestos Litigation, RAND INSTITUTE FOR CIVIL JUSTICE, 2005, at 

xvii (Carroll). 17Lloyd Dixon et al., Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity 

with Detailed Reports on the Largest Trusts, RAND INSTITUTE FOR CIVIL JUSTICE, 2010, at xi 

(Dixon). 18 Carroll, et al., supra note 16, at xx. 19 Id. 20 Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 1973). 21 Id. at 1109. 22 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997). 

the cause for most cases of mesothelioma.10 Lung cancer is the 

other frequently claimed malignant disease that can be caused by 

asbestos, although some other forms of cancer may be related to asbestos exposure.11 Asbestosis, a chronic lung disease resulting from 

inhalation of asbestos fibers, can be debilitating and even fatal.12

Exposure to asbestos has been claimed to cause pleural abnormalities.13 Pleural plaques, pleural thickening, and pleural effusion are 

abnormalities of the pleura, the membrane that lines the inside of 

the chest wall and covers the outside of the lung.14 These abnormalities can affect breathing and may be an early warning sign for 

mesothelioma.15

II. ASBESTOS LITIGATION

Asbestos litigation is the longest-running mass tort litigation in 

the United States.16 Personal injury litigation related to asbestos 

exposure ‘‘has continued for over 40 years in the United States 

with hundreds of thousands of claims filed and billions of dollars 

in compensation paid.’’ 17 Throughout this period, asbestos litigation has evolved presenting different challenges to the parties and 

courts involved.18 The focus of the litigation shifted from Federal 

to state courts, and now, increasingly, to bankruptcy courts and the 

resulting bankruptcy asbestos trusts.19

Asbestos litigation arose as a result of individuals’ long-term and 

widespread exposure to asbestos, and as a result of many asbestos 

product manufacturers’ failure to protect workers against exposure 

and failure to warn their workers to take adequate precautions 

against exposure. The U.S. Court of Appeals for the Fifth Circuit 

upheld the first successful asbestos liability suit in 1973.20 A worker sued the manufacturers of asbestos-containing products on a 

theory of product liability (a strict liability tort); the defendants’ affirmative defense that their products contained ample warning 

about the dangers of using the product proved insufficient.21 Prior 

to the Fifth Circuit’s decision, employees exposed to asbestos had 

recourse only to workers’ compensation claims to recover for their 

asbestos-related injuries. 

After the Fifth Circuit’s decision, the volume of asbestos litigation exploded—so much so that, in 1990, the Chief Justice of the 

United States Supreme Court appointed the Ad Hoc Committee on 

Asbestos Litigation to address what the Court later referred to as 

the ‘‘asbestos-litigation crisis.’’ 22 The volume of claims filed against 


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23 Carroll et al., supra note 16, at xxiv. 24 Id. 25The Fairness in Asbestos Compensation Act of 1999: Hearing on H.R. 1283 Before the H. 

Comm. on the Judiciary, 106th Cong. 67 (1999) (statement of Christopher Edley, Jr.) (Edley Testimony). 26 Carroll et al., supra note 16, at xxiv. 27 Editorial, The Asbestos Blob, Cont., WALL ST. J., Apr. 6, 2004, at A16. 28 Carroll et al., supra note 16, at xxiv. 29David C. Landin et al., Lessons Learned from the Front Lines: A Trial Court Checklist for 

Promoting Order and Sound Policy in Asbestos Litigation, 16 J.L. & POL’Y 589, 595–96 (2008) 

(internal citations omitted) (Landin). 30 Edley Testimony, supra note 25. 31Landin, supra note 29, at 597. 32 Carroll et al., supra note 16, at xxv (noting that the 8,400 figure likely was conservative 

given the reporting methodology). 33Dixon et al., supra note 17, at 2. 34See Amchem Products; see Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999); see e.g., Asbestos 

Compensation Fairness Act, H.R. 1957, 109th Cong. (2005); Fairness in Asbestos Injury Resolution (FAIR) Act, S. 852, 109th Cong. (2005). 

asbestos defendants has not abated over time.23 On the contrary, 

annual claims filed against defendants have risen steadily, with 

sharp increases in recent years.24 During the 1990’s, the number 

of asbestos cases pending nationwide doubled from 100,000 to more 

than 200,000.25 By 2002, approximately 730,000 claims had been 

filed,26 with more than 100,000 claims filed in 2003 alone—‘‘the 

most in a single year.’’ 27

The recent growth in the number of asbestos claims is largely attributable to the significant increase of claimants with nonmalignant injuries, including those with little or no current functional 

impairment.28 By the early 2000’s, ‘‘the overwhelming majority of 

claims—up to 90 percent—were filed on behalf of plaintiffs who 

were ‘completely asymptomatic.’ These claimants may have had 

some marker of exposure, such as changes in the pleural membrane of their lungs, but ‘are not now and never will be afflicted 

by disease.’ ’’ 29 Conversely, when asbestos litigation first arose in 

the 1960’s, most claimants were ‘‘workers suffering from grave and 

crippling maladies.’’ 30

The number of asbestos litigation defendants has grown in commensurate fashion with the burgeoning asbestos claims. In 1983, 

there were approximately 300 asbestos litigation defendants.31 By 

2004, the number of asbestos litigation defendants increased to 

over 8,400, with over 90 percent of American industries subject to 

asbestos lawsuits.32 These defendants included miners and manufacturers of asbestos or asbestos-containing products, purchasers of 

asbestos products, insurers, and businesses that used asbestos or 

asbestos-containing products in the course of their industry.33

Under the backdrop of amassing asbestos claims and an expanding defendant constituency, courts and affected parties have initiated several attempts to achieve a comprehensive resolution to asbestos litigation. Notwithstanding these efforts, no resolution has 

been reached. The Supreme Court rejected two comprehensive class 

action settlements and draft Federal legislative reforms were never 

enacted.34 Accordingly, asbestos claimants and defendants likely 

will continue to operate within the existing state and Federal asbestos framework for the foreseeable future. 

III. ASBESTOS CLAIMS IN BANKRUPTCY

Asbestos litigation has driven nearly 100 companies into bankruptcy, with more than half of such companies filing since the beVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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35Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 N.Y.U. Ann. Surv. Am. L. 525, 

526–7 (2007) (Hanlon & Smetak); see also Dixon et al., supra note 17, at xii. 36 Id. (citing Carroll et al., supra note 16, at 121 (data through 2002) and Joseph E. Stiglitz 

et al., The Impact of Asbestos Liabilities on Workers in Bankrupt Firms, SEBAGO ASSOCIATES, 

2002, at 27–29, 42). 37 Hanlon & Smetak, supra note 35, at 541. 38 Bankruptcy Reform Act of 1994, § 111, 103d Cong. (1994) (enacted) (codified at 11 U.S.C. 

§ 524). 39 11 U.S.C. § 524(g)(2)(B). 40 H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2015’’: Hearing Before 

the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 

Judiciary, 114th Cong. (2014) (RRCAL Subcomm. Hearing) (testimony of Lester Brickman), at 

2. 41 Id. 42 How Fraud and Abuse in the Asbestos Compensation System Affect Victims, Jobs, the Economy, and the Legal System: Hearing Before the Subcomm. on the Constitution of the H. Comm. 

Continued 

ginning of the year 2000.35 The cost of these bankruptcies is largely immeasurable but has been estimated to cost the American economy approximately 60,000 jobs and between $1.4 and $3.0 billion.36

One of the most prominent bankruptcies was that of Johns Manville Corporation, the dominant American producer of asbestos 

products. The Manville bankruptcy redefined many aspects of the 

asbestos litigation system, including the inception of a trust system 

to compensate asbestos claimants in exchange for a broad injunction against future asbestos liability.37

Following the Manville model and in response to a rising tide of 

asbestos defendants seeking relief from liability through chapter 11 

bankruptcies, Congress amended the Bankruptcy Code in 1994 to 

include a provision, 11 U.S.C. § 524(g), to allow for the resolution 

of asbestos liability claims against a debtor through a trust-based 

system.38 Under that section, a debtor is permitted to create, in its 

chapter 11 plan, a trust that is to be the exclusive source of postconfirmation compensation for the debtor’s asbestos liability. If the 

trust meets certain prescribed requirements, the debtor, after its 

successful reorganization, is granted a channeling injunction that 

prohibits any asbestos plaintiff from suing the reorganized debtor 

for asbestos liability.39 The balance intended by section 524(g) is 

simple—the asbestos claimants receive a trust funded in an 

amount and administered in a manner that is satisfactory to the 

presiding bankruptcy court and a majority of the debtor’s known 

asbestos claimants in exchange for the debtor’s ability to gain certainty regarding its asbestos liability exposure and a shield against 

future claims in order to allow the debtor to continue its business 

operations. 

The institution of an asbestos trust has become a virtual inevitability in recent chapter 11 cases involving asbestos defendants. 

There are 60 asbestos trusts with current and anticipated assets 

totaling between $30 billion and $37 billion.40 The asbestos trusts 

review and pay damages on account of millions of claims a year; 

between 2007 and 2008, selected asbestos trusts satisfied over four 

million claims.41

IV. FRAUD IN ASBESTOS LITIGATION THROUGH MASS SCREENINGS

A commentator likened the scale of fraud in asbestos litigation 

to that of the scandals of ‘‘Credit Mobilier, Teapot Dome, the Savings and Loan debacles, WorldCom, Enron and the vast Ponzi 

schemes that have recently unfolded.’’ 42 Fraud in asbestos litigaVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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on the Judiciary, 112th Cong. 8 (2011) (hereinafter Constitution Subcomm. Hearing) (testimony 

of Professor Lester Brickman). 43Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 723 (D. Del. 2005). 44Lester Brickman, The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?, 61 SMU L. REV. 1221, 1233 (2008). 45Griffin B. Bell, Asbestos & The Sleeping Constitution, 31 PEPP. L. REV. 1, 5 (2003). 46Pamela Sherrid, Looking for Some Million Dollar Lungs, Best of Asbestos, U.S. NEWS &

WORLD REP., Dec. 17, 2001, at 36. 47See Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation: The Disconnect 

Between Scholarship and Reality, 31 PEPP. L. REV. 33, 69 (2003) (Brickman). 48 Andrew Schneider, Asbestos Lawsuits Anger Critics, ST. LOUIS POST-DISPATCH, Feb. 11, 

2003, at A1. 49Lester Brickman, Lawyers’ Ethics and Fiduciary Obligation in the Brave New World of Aggregative Litigation, 26 WM. & MARY ENVTL. L. & POL’Y REV. 243, 273 (2001). 50Mark A. Behrens & Phil Goldberg, The Asbestos Litigation Crisis: The Tide Appears to be 

Turning, 12 CONN. INS. L.J. 477, 480 (2006). 

tion largely stems from plaintiffs’ lawyers utilizing mass screening 

measures to recruit hundreds of thousands of claimants. 

Asbestos lawyers were found to have hired screening companies 

to recruit potential claimants who, although not currently suffering 

from asbestos-related injuries, exhibited symptoms of exposure. 

‘‘Labor unions, attorneys, and other persons with suspect motives 

caused large numbers of people to undergo X-ray examinations (at 

no cost), thus triggering thousands of claims by persons who had 

never experienced adverse symptoms.’’ 43 These screening companies used mobile X-ray vans to seek out potential clients in the 

parking lots of hotels and restaurants. The sole object of these 

screenings was to generate evidence—X-rays, pulmonary function 

tests, and medical reports—to support claims of asbestos-related injuries.44 As former United States Attorney General Griffin Bell has 

observed, ‘‘[t]here often is no medical purpose for these screenings 

and claimants receive no medical follow-up.’’ 45

These mass screenings were wildly successful and generated 

massive numbers of claims for plaintiffs’ attorneys. The claimant 

recruiting process was described by U.S. News & World Report: 

To unearth new clients for lawyers, screening firms advertise in towns with many aging industrial workers or park 

X-ray vans near union halls. To get a free X-ray, workers 

must often sign forms giving law firms 40 percent of any 

recovery. One solicitation reads: ‘‘Find out if YOU have 

MILLION DOLLAR LUNGS!’’ 46

It is estimated that more than one million workers have undergone 

attorney-sponsored screenings.47 As one worker explained, ‘‘it’s better than the lottery. If they find anything, I get a few thousand dollars I didn’t have. If they don’t find anything, I’ve just lost an afternoon.’’ 48 According to legal scholars, ‘‘without these claims, the ‘asbestos litigation crisis’ would never have arisen.’’ 49

An American Bar Association Commission on Asbestos Litigation 

confirmed that claims filed by the non-sick generally arose from 

for-profit screening companies whose sole purpose was to identify 

large numbers of people with minimal X-ray changes consistent 

with asbestos exposure.50 The Commission, with the help of the 

American Medical Association, consulted prominent occupationalmedicine and pulmonary-disease physicians to craft legal standards 

for asbestos-related impairment. The Commission found: ‘‘[s]ome Xray readers spend only minutes to make these findings, but are 

paid hundreds of thousands of dollars—in some cases, millions—in 

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51 HON. NATHAN R. JONES, ABA COMM’N ON ASBESTOS LITIGATION, ABA REPORT TO THE

HOUSE OF DELEGATES 8 (2003) available at http://www.cdc.gov/niosh/docket/archive/pdfs/NIOSH015/020103-Exhibit12.pdf. 52 Id. 53 Joseph N. Gitlin et al., Comparison of ‘B’ Readers’ Interpretations of Chest Radiographs for 

Asbestos Related Changes, 11 ACAD. RADIOLOGY 843, 852 (2004). 54David E. Bernstein, Keeping Junk Science Out of Asbestos Litigation, 31 PEPP. L. REV. 11, 

13 (2003) (quoting Lawrence Martin, M.D.). 55Owens Corning, 322 B.R. at 723. 56Lester Brickman & Harvey D. Shapiro, Asbestos Kills—And More than Just People: Jobs, 

Ethics, and Elementary Justice, NAT’L. REV., Jan. 31, 2005. 57 Brickman, supra note 47 at 33. 58 In re Silica Prods. Liab. Litig., 398 F.Supp.2d 563 (S.D. Tex. 2005). 

ume of films read.’’ 51 The Commission also reported that litigation 

screening companies were finding X-ray evidence that was consistent with asbestos exposure at a ‘‘startlingly high’’ rate, often exceeding 50% and sometimes reaching 90%.52

Researchers at Johns Hopkins University compared the X-ray interpretations of professionals who are certified by the National Institute for Occupational Safety and Health to interpret pulmonary 

X-rays, referred to as ‘‘B Readers,’’ employed by plaintiffs’ counsel 

with the subsequent interpretations of six independent B Readers 

who had no knowledge of the X-rays’ origins. The study found that 

while B Readers hired by plaintiffs claimed asbestos-related lung 

abnormalities in almost 96% of the X-rays, the independent B 

Readers found abnormalities in less than 5% of the same X-rays— 

a difference the researchers said was ‘‘too great to be attributed to 

inter-observer variability.’’ 53

One physician, Dr. Lawrence Martin, has explained the reason 

why plaintiffs’ B Readers seem to see asbestos-related lung abnormalities on chest X-rays in numbers not seen by neutral experts. 

Dr. Martin has said, ‘‘the chest X-rays are not read blindly, but always with knowledge of some asbestos exposure and that the lawyer wants to file litigation on the worker’s behalf.’’ 54 In 2005, Senior U.S. District Court Judge John Fullam said that many B Readers hired by plaintiffs’ lawyers were ‘‘so biased that their readings 

were simply unreliable.’’ 55 As Dr. James Crapo, a leading medical 

expert on asbestos-related diseases, has observed, claimants are 

being compensated ‘‘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.’’ 56 Professor Lester Brickman, 

an expert on asbestos litigation, concluded that ‘‘[a]sbestos litigation has become a malignant enterprise which mostly consists of a 

massive client-recruitment effort that accounts for as much as 90 

percent of all claims currently being generated, supported by baseless medical evidence which is not generated by good-faith medical 

practice, but rather is primarily a function of the compensation 

paid, and by claimant testimony scripted by lawyers to identify exposure to certain defendants’ products.’’ 57

Screening programs declined in prominence following a landmark 

ruling by U.S. District Court Judge Janis Jack, who issued a 300- 

plus page order detailing methods used to generate fraudulent asbestos and silica claims in 2005.58 In the wake of Judge Jack’s 

opinion, which noted that many asbestos and silica cases are ‘‘driven neither by health nor justice’’ and are instead ‘‘manufactured for 


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59 Id. at 635. 60The Silicosis Story: Hearings Before the Subcomm. on Oversight and Investigations of the 

Comm. on Energy and Commerce, 109th Cong. (2006). 61 Adam Liptak, Defendants See a Case of Diagnosing for Dollars, N.Y. TIMES, Oct. 1, 2007, 

available at http://www.nytimes.com/2007/10/01/us/01bar.html (last accessed May 31, 2013) (‘‘A 

grand jury was convened in Manhattan more than 2 years ago to look into potential fraud in 

silicosis cases. . . .’’). 62See, e.g., Ohio Rev. Code Ann. § 2307.91 et. seq. (enacted 2004), Tex. Civ. Prac. & Rem. 

§ 90.001 et. seq. (last amended 2007). 63 Constitution Subcomm. Hearing, supra note 42 (testimony of Professor Lester Brickman). 64See Hanlon & Smetak at 593; Lester Brickman, On the Applicability of the Silica MDL Proceeding to Asbestos Litigation, 12 CONN. INS. L.J. 10 (2006); Lester Brickman, Ethical Issues in 

Asbestos Litigation, 33 HOFSTRA L. REV. 833, 833–34 (2005) (Brickman Ethical Issues). 65Kenneth M. Goldstein, Panel Discussion at U.S. Chamber Institute for Legal Reform’s 12th 

Annual Legal Reform Summit (Oct. 26, 2011) available at http://videos.uschamber.com/detail/ 

videos/legal-reform-summits/video/1268850944001/access-to-justice-or-the-bottom-line-the-growing-commercialization-of-the-practice-of-law?device=mobile&page=2. 66 Id. 67See NEW MEDIA STRATEGIES, THE PLAINTIFFS’ BAR GOES DIGITAL 3 (January 2012) available at http://www.instituteforlegalreform.com/uploads/sites/1/The_Plaintiffs_Bar_Goes_Digital_ 2012_0.pdf (last visited June 18, 2015). 68 Id. at 7 (‘‘Trial attorneys spend as much as $80 per click on mesothelioma-related search 

terms, far exceeding industry averages for search terms . . . ranked as most expensive by 

Google AdWords’’). 69The David Law Firm—Lung Cancer, http://www.calldavid.com/lung-cancer.html (last visited 

June 18, 2015). 

money,’’ 59 Congress convened hearings on fraud and abuse in asbestos litigation.60 A Federal grand jury was empanelled in the 

Southern District of New York.61

Many believed the decline of mass screenings and enactment of 

medical criteria statutes in major asbestos venue states marked 

the beginning of a new, fairer asbestos compensation system.62 The 

Committee, however, has received testimony suggesting that 

screening programs may be, or soon will be, used to generate asbestos trust claims.63 The asbestos bar is using new techniques to recruit potential trust claimants. While screenings were often advertised in break rooms, in local papers, and on local broadcast stations,64 the modern asbestos plaintiffs’ bar spends billions of dollars on mass media advertisements designed to recruit potential asbestos tort plaintiffs and trust claimants.65 Experts estimate that 

asbestos plaintiffs’ firms spent over $950 million on television advertising in 2011.66 Trial lawyers’ advertising campaigns extend 

beyond television, and experts estimate that the asbestos bar 

spends tens of millions each year on sophisticated online advertising campaigns.67 ‘‘Mesothelioma’’ has become the single most expensive keyword on Google’s auction-style AdWords platform.68

There are signs that the suspect practices deployed in traditional 

asbestos state court tort litigation have been utilized against asbestos trusts. At least one firm advises lung cancer victims that billions of dollars have been set aside in ‘‘U.S. Compensation Trust 

Funds . . . to financially assist individuals with lung cancer’’ while 

making no mention of asbestos.69 Further, with the advent of enhanced information technology tools, plaintiffs’ firms have the ability to focus their claimant recruiting efforts on a broader audience. 

The indications of fraud coupled with an environment conducive for 

fraud, as provided in more detail below, is cause for alarm. 

V. THE OPAQUE ASBESTOS TRUST SYSTEM AND RELATED FRAUD

While the prerequisites for establishing a bankruptcy asbestos 

trust typically compel certain disclosures, these disclosures are significantly lacking. To obtain the principal benefit of the asbestos 


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70 11 U.S.C. § 542(g)(2)(B)(ii)(V) (2011). 71 Carroll et al., supra note 16, at 24. 72See generally S. Todd Brown, Section 524(g) Without Compromise: Voting Rights and the 

Asbestos Bankruptcy Paradox, 2008 COLUM. BUS. L. REV. 841 (2008); see also Dixon et al., supra 

note 17, at 43 (listing asbestos firms most frequently represented on TAC’s; Weitz and 

Luxenberg P.C. sits on TAC’s of 11 trusts that control, combined, approximately 74% of all asbestos trust assets); see also Searcey & Barry, As Asbestos Claims Rise, So Do Worries About 

Fraud, WALL ST. J., Mar. 11, 2013 (Searcey & Barry). 73 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb) (2011). 74 In re Combustion Engineering, Inc., 391 F.3d 190, 234 (3d Cir. 2004) (‘‘[A] debtor must satisfy the prerequisites set forth in § 524(g) in addition to the standard plan confirmation requirements.’’). 75 11 U.S.C. § 1129(b)(1) (2011) (allowing confirmation of a plan over the objection of a class 

of creditors). 76 In re Congoleum Corp., 426 F.3d 675, 679 (3d Cir. 2005). 77 Brickman Ethical Issues at 868–69 (discussing asbestos bar’s de facto control of bankruptcy 

process). 

trust—the channeling injunction—a debtor must demonstrate to 

the court, among other things, that at the time of confirmation: 

the trust will operate through mechanisms such as structured, periodic, or supplemental payments, pro rata distributions, matrices, or periodic review of estimates of the 

numbers and value of present claims and future demands, 

or other comparable mechanisms, that provide reasonable 

assurance that the trust will value, and be in a financial 

position to pay, present claims and future demands that 

involve similar claims in substantially the same manner.70

In many cases, this requirement has caused the debtor to include 

a provision in its chapter 11 plan requiring it to file periodic disclosures with the court of the financial health of the asbestos liability 

trust.71 Missing from these disclosures, however, is any statutory 

requirement that the trust identify claimants who seek compensation from the trust, the nature of their alleged injury, and the 

amount the trust paid them. 

The trusts’ limited disclosures are a result of the structure of section 524(g), which grants considerable control over asbestos bankruptcies and resulting asbestos trusts to plaintiffs’ attorneys.72 In 

particular, section 524(g) allows a channeling injunction to issue 

only if three-quarters of current asbestos claimants support a proposed chapter 11 plan.73 This requirement is distinct from the 

usual requirements for plan confirmation, which must also be satisfied.74 The requirement to gain the consent of a specified class is 

a departure from traditional bankruptcy procedures, which allow a 

chapter 11 plan to be confirmed over the objection of an impaired 

class so long as the plan is fair, non-discriminatory, and supported 

by another impaired class.75

In other words, the asbestos claimants class has a statutory 

blocking right to a proposed chapter 11 plan, which results in representatives of that class having considerable influence over the 

chapter 11 plan and the formation of any resulting asbestos trust. 

Generally speaking, representation of asbestos claimants is concentrated within a select group of law firms. As courts have noted, 

‘‘[a] unique feature of asbestos . . . litigation is the fact that a 

small group of law firms represents hundreds of thousands of 

plaintiffs.’’ 76 Consequently, single firms or small groups of firms 

may effectively block confirmation of a chapter 11 plan.77 As Professor S. Todd Brown has observed, ‘‘[asbestos firms] hold an unassailable veto power [that] leaves debtors and other parties in interVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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78 Brown, supra note 73, at 121. 79 11 U.S.C. § 1126(c) (2011)(‘‘A class of claims has accepted a plan if such plan has been accepted by creditors . . . that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors. . . .’’). 80See Brown, supra note 73, at 150 (‘‘[A]n attorney can obtain a considerable negotiating position and sizeable fees by simply dumping their asbestos claim ‘‘inventory’’ on a debtor [with] 

little to no prospect of sanctions for filing even grossly fraudulent or, at best, wholly unsubstantiated claims.’’). 81 Id. 82 11 U.S.C. § 524(g)(4)(B)(i) (2011). 83Mark D. Plevin, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: 

Conflicts of Interest, Strange Alliances, and Unfamiliar Duties for Burdened Bankruptcy Courts, 

62 N.Y.U. ANN. SURV. AM. L. 271, 301 (2006) (‘‘In almost every . . . case to date . . . the debtor 

[has been granted] a presumptive right to select . . . an FCR acceptable to the current claimants.’’) (Plevin). 84See Brown, supra note 51, at 158–59 (discussing parties’ incentive to propose weak representative). 85 Brickman Ethical Issues at n. 144 (noting that Halliburton’s pre-petition futures representa- tive was nearly $5 million and retained by the resulting trust). 86See Richard A. Nagareda, Mass Torts in a World of Settlement 177 (2007). 87Plevin, supra note 83 at 292–93. 88See Dixon et al., supra note 17 (FCR’s for largest trusts set forth in Appendix A). 89 Carroll et al., supra note 16, at 22 (noting that TAC must consent to, among other things, 

modifications to a trust’s distribution plan or audit procedures). 

est with a classic Hobson’s choice—reorganization on the [f]irms’ 

terms or no reorganization at all.’’ 78

Another unique feature of section 524(g) is that it looks only to 

the number of current asbestos claimants who support a proposed 

chapter 11 plan. In contrast, a traditional bankruptcy requires a 

majority in number and two-thirds in amount of a particular class 

in order to confirm a chapter 11 plan.79 Plaintiffs’ firms exploit section 524(g)’s express preference for claimant quantity over claim 

quality by asserting their large numbers of claims in bankruptcy 

regardless of their likely value or merit, which typically will be 

evaluated following the voting period on a debtor’s chapter 11 

plan.80 Plaintiffs’ firms that historically have filed few tort cases 

against a debtor company sometimes file claims on behalf of their 

entire client list once bankruptcy has been declared.81

Section 524(g) also requires the appointment of a legal representative on behalf of individuals who may file claims with a proposed 

asbestos trust in the future, referred to as a ‘‘future claims representative’’ or an ‘‘FCR.’’ 82 Courts generally appoint an individual 

suggested by the current claimants and the debtor company.83 Congress envisioned the appointment of an FCR as a due process protection for future claimants; however, the debtor company and the 

attorneys representing current claimants stand to benefit from the 

appointment of a weak or pliant representative.84 Moreover, FCR 

work can be extremely lucrative,85 and academic commentators 

have expressed concern that FCR’s are ‘‘punch-pulling’’ 86 in an effort to be seen as ‘‘reliable negotiating partners who [will] not ‘rock 

the boat’’ 87 and increase the likelihood of future FCR appointments. Indeed, many representatives serve several trusts concurrently.88

Although asbestos trusts are nominally managed by court-approved trustees, virtually all trusts’ founding agreements require 

the trustee to seek approval of a post-confirmation FCR and a committee composed of current claimants’ representatives, most often 

characterized as a trust advisory committee or ‘‘TAC,’’ before 

amending the trust’s distribution plan or audit procedures.89 The 

asbestos bars’ pre-confirmation influence extends to operating 

trusts, as many TAC seats are held by plaintiffs’ attorneys who 


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90Dixon et al., supra note 17, at 14. 91Dixon et al., supra note 17, at 32. 92 Constitution Subcomm. Hearing, supra note 42, at 94–95, 100–101 (written testimony of 

James Stengel). 93 Carroll et al., supra note 16, at 28. 94 Courts Subcomm. Hearing, supra note 11, at 14. 95 Courts Subcomm. Hearing, supra note 11, at 207 (‘‘The Manville Personal Injury trust offer[ed] a data extract of claim level information . . . to anyone willing to pay a $10,000 licensing fee. Prior to 2002 the data could be purchased outright. . . .’’). 96Manville Trust Single Use Data License Agreement, http://www.claimsres.com/documents/ 

MT/DataAgreement.pdf (last visited June 18, 2015). 97 Carroll et al., supra note 16, at 23; Dixon et al., supra note 17, at 45. 98See, e.g., Courts Subcomm. Hearing, supra note 11, at 224–36 (letter signed by six FCRs). 

represented large numbers of claimants in bankruptcy proceedings.90

The trust documents governing the operation of the asbestos 

trusts often include restrictions on sharing trust data, facilitating 

a lack of transparency in the trust system. A majority of the trusts’ 

distribution plans affirmatively require claims to be treated as confidential settlement negotiations.91 As a result, tort litigants must 

engage in lengthy and expensive discovery disputes in order to gain 

access to basic information—including exposure information—routinely disclosed by defendant companies before they created trusts 

and exited the tort system.92 In many instances, trusts’ procedures 

require a valid state-court-issued subpoena in order to provide information to state litigants.93 Even in cases where a valid subpoena is served upon an asbestos trust, an asbestos trust may attempt to defeat the subpoena or require an additional subpoena 

from the presiding bankruptcy court judge.94

There was a time when asbestos trusts were willing to share 

claims information more freely. Prior to Judge Jack’s exposure of 

fraud in mass screened silica and asbestos cases, the Manville 

Trust sold its data to actuarial firms, law firms, and defendant 

companies.95 The trust also licensed its data to occupational health 

researchers and provided custom datasets to academics upon request. But in the wake of Judge Jack’s opinion, the Manville Trust 

limited access to its data. Its current data license prohibits use of 

the trust’s data to process or contest trust and tort claims, prevents 

data recipients from revealing information regarding an individual 

claimant, and is otherwise structured to ensure that any analysis 

of the data is strictly empirical, unusable in litigation, and may not 

serve as a basis for other trusts to reject inconsistent or improper 

claims.96

Because the trusts’ current confidentiality provisions and practices make data sharing difficult, individual trusts and the trust 

system as a whole are susceptible to fraud and abuse. The GAO 

and the non-partisan RAND Corporation, in their respective reports on the trusts, both concluded that asbestos bankruptcy trusts 

are unlikely to identify and decline payment of improper claims, including claims that are supported by ‘‘altered work histories’’ or allege inconsistent exposure patterns.97 The trusts, the plaintiffs’ 

bar, and the post-confirmation FCRs nonetheless contend that the 

trust system is free from fraud and that more robust anti-fraud 

measures would be costly and reduce the funds available to fulfill 

the trusts’ core mission—claimant compensation.98

Although the eleven trusts interviewed by GAO in the course of 

its investigation reported that their audits have never identified an 

instance of fraud, the trusts paid over $4 billion in 2010 alone and, 


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99 Carroll et al., supra note 16, at 16. 100 Carroll et al., supra note 16, at 23. 101 Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. Todd Brown). 102See e.g., Nedra Pickler, Ex-naval officer gets prison time for 9-11 fraud, ASSOCIATED PRESS

(Dec. 12, 2011), available at http://www.washingtontimes.com/news/2011/dec/12/ex-naval-officergets-prison-time-911-fraud/; DEPT. OF JUSTICE, DEEPWATER HORIZON (BP) OIL SPILL FRAUD, 

http://www.justice.gov/criminal/oilspill/(last visited June 18, 2015) (collecting cases involving 

fraud on the Gulf Coast Claims Facility). 103 Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. Todd Brown). 104 Kananian v. Lorillard Tobacco Co., No. CV 442750 (Ohio Ct. Com. Pl. Cuyahoga County 

2007). 105 Id. at 5, 9. 106 Id. at 6. 107 Constitution Subcomm. Hearing, supra note 42, at 94–95, 103–105 (written testimony of 

James Stengel). 

combined, have paid 3.3 million alleged asbestos victims nearly 

$17.5 billion since the Manville Trust was established.99 The GAO 

Report stated that the internal audits of the asbestos trusts were 

designed to ensure compliance with internal trust procedures and 

not generally designed to detect duplicate or inconsistent claims 

among different asbestos trusts and the state courts.100 Further, 

the complete absence of fraud reported by the eleven trusts interviewed in the GAO Report runs contrary to historical experiences 

with compensation and relief programs. Fraud and abuse have 

been uncovered in virtually every compensation and relief program 

undertaken in modern America, whether privately funded or government-sponsored.101 Fraudulent claims against the 9/11 Victim’s 

Compensation Fund and BP’s gulf oil fund, for example, were detected and prosecuted.102 As Professor Brown has observed, asbestos trusts are not ‘‘magically different’’ from other compensation 

trusts; that asbestos trusts’ audits have uncovered no fraud whatsoever suggests that their internal controls are lacking.103

While the trust system operates with near-complete secrecy, the 

quality of medical evidence and the consistency of the allegations 

made by alleged asbestos victims are sometimes tested in the state 

court tort system. Although the trusts’ confidentiality provisions 

and the generally combative nature of asbestos litigation have combined to limit the disclosure of trust information, defendants have 

successfully identified a number of cases of inconsistent and potentially fraudulent claiming. 

In the best known example of fraud uncovered through the state 

court tort system, Kananian v. Lorillard Tobacco, a tort plaintiff 

claimed that he developed mesothelioma solely from smoking asbestos-filtered cigarettes and that he only passed through a naval 

ship yard while being deployed elsewhere by the Navy.104 He simultaneously filed claims against multiple asbestos trusts alleging 

exposure to marine products while working as a ‘‘shipyard laborer.’’ 105 Despite the inconsistency of his tort and trust claims, 

which the court described as a ‘‘fiction,’’ Kananian received substantial payments from asbestos trusts.106

Kananian is not an isolated incident; the Committee received testimony detailing several additional examples of fraud, abuse, and 

inconsistent claiming in other jurisdictions, including Maryland 

cases in which inconsistent exposure information was presented in 

the tort system and trust systems in an attempt to circumvent 

state-law caps on damages.107 Further examples of inconsistent 


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108 Courts Subcomm. Hearing, supra note 11, at 9 (testimony of Leigh Ann Schell); e.g., Montgomery v. Foster Wheeler, Case No. 09C–11–215 ASB, Pretrial Hearing Trans. (Del. Super. Ct. 

Nov. 7, 2011). 109 Courts Subcomm. Hearing, supra note 11, at 16 (written statement of Leigh Ann Schell). 110Montgomery, supra note 108, at 7–8. 111Montgomery, supra note 108, at 25. 112Searcey & Barry, supra note 72. 113Searcey & Barry, supra note 72. 114 In re Garlock Sealing Techs. LLC, Case No. 10–BK–31607 (Bankr. Ct. W.D.N.C. 2014). 115 Editorial, The Double-Dipping Legal Scam, WALL ST. J., Dec. 25, 2014. 

claiming have been identified in Delaware, Louisiana, New York, 

Oklahoma, and Virginia.108

Counsel in a Louisiana case, Mary A. Robeson et al. v. Amatek, 

Inc. et al, filed sixteen trust claims that denied the plaintiff’s father 

smoked and included detailed asbestos exposure information. When 

the plaintiff was deposed, however, he claimed his father was a 

smoker and that he had no knowledge of the exposures alleged in 

the claims. He also testified that counsel had never spoken to his 

father about his exposures to asbestos.109

In Montgomery v. Foster Wheeler, a Delaware case, the plaintiff’s 

attorney disclosed a number of trust claims shortly before trial 

even though he had repeatedly represented to the defendant and 

the court that his client had no such claims. The court described 

the plaintiff’s disclosure failure as ‘‘really seriously egregiously bad 

behavior’’ and lamented that ‘‘it happens a lot.’’ 110 The court further observed that: 

The core of this case had been fraudulent. . . . [T]his 

whole litigation is based on who was responsible. Nobody 

can say which fibers did what. But the most important 

thing is that a plaintiff disclose what they think caused 

their disease. And if they don’t disclose honestly when 

they’re asking [for] money from another company and they 

don’t even let the defendant know about that, that’s so dishonest. It is just so dishonest.111

In addition to the fraud uncovered through the state court system, 

the Wall Street Journal conducted an investigation that detailed 

numerous anomalies between individuals’ state court filings and 

asbestos trust claim filings.112 The Wall Street Journal found that 

individuals had claimed exposure to asbestos through industrial 

jobs that they held while under the age of twelve, disparate medical diagnoses asserted among different asbestos trusts and state 

court cases, and claims asserted by individuals that simply did not 

exist.113

Recently, a number of discrepancies between bankruptcy and 

state court claims were uncovered in a bankruptcy case in North 

Carolina.114 In the bankruptcy case of In re Garlock Sealing Techs. 

LLC, Case No. 10–BK–31607 (Bankr. Ct. W.D.N.C. 2014), plaintiffs’ counsel requested $1.3 billion in asbestos claims damages.115

In a series of rulings, the presiding judge dramatically reduced the 

requested damages award from $1.3 billion to $125 million and 

noted a number of alarming discrepancies between the claims filed 

against Garlock in state court and claims filed by the same plaintiffs against other bankruptcy asbestos trusts. As reported by the 

WSJ, in fifteen cases filed in state court against Garlock, the plainVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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116 Id. 117 Id. 118 RRCAL Subcomm. Hearing, supra note 40 (testimony of Lester Brickman), at 29. 119 Id., at 30. 120 Id. 121Letter from Lisa A. Rickard, President, U.S. Chamber Institute for Legal Reform, to Peter 

G. McCabe, Secretary, Committee on Rules of Practice and Procedure, Judicial Conference of 

the United States (Nov. 22, 2010) (on file with Committee). 

tiffs disclosed that they were exposed to a total of 32 products.116

However, as uncovered in subsequent Garlock court documents, 

these same plaintiffs asserted claims in other forums that asserted 

exposure to 284 different products.117

Some particularly egregious examples of fraud from the Garlock 

case include a California case in which the plaintiff settled with 

Garlock for $9 million in state court litigation. The plaintiff affirmatively denied exposure to any other asbestos products. Nevertheless, the court later discovered that this plaintiff had filed fourteen 

bankruptcy asbestos trust claims, and included in those claims 

were statements made under penalty of perjury that directly contrasted with statements made to the jury in the state court case.118

In another Garlock example, a plaintiff’s lawyers responded to 

written interrogatories that the plaintiff had ‘‘no personal knowledge’’ of exposure to any other asbestos products. Yet 6 weeks earlier, those exact same lawyers filed a statement in connection with 

an asbestos bankruptcy trust claim that the plaintiff ‘‘frequently, 

regularly, and proximately’’ was exposed to other asbestos products. In that case, the plaintiff filed claims against twenty other asbestos products and made statements that contradicted state court 

pleadings in fourteen of the asbestos bankruptcy trust claims.119

Other Garlock examples include a plaintiff denying any exposure 

to other asbestos products in a state court case and then filing asbestos bankruptcy trust claims within 24 hours of settling the case, 

and a plaintiff denying exposure to a particular asbestos product 

in state court only for it to be uncovered later in discovery that his 

lawyers had filed an asbestos bankruptcy trust claim against that 

very product the day before his denial statement.120 These instances of fraud have been uncovered in spite of the current lack 

of transparency, and are a clear indication of the potential for significant, currently undetected fraud. 

The lack of meaningfully transparent trust disclosures, combined 

with published research, court decisions and investigations suggesting and highlighting fraud within the asbestos trust system, 

provided the framework for bankruptcy-bar and Congressional inquiry into potential mechanics to reduce and prevent fraudulent activity within the state court and asbestos trust systems. In March 

2011, the Subcommittee on Business Issues of the Advisory Committee on Bankruptcy Rules of the Administative Office of the 

Courts considered a proposal to add a new Federal Rule of Bankruptcy Procedure to require 524(g) trusts to disclose the particulars 

of each demand for payment received by a trust during the preceding quarter.121 That subcommittee, in a memo to the Advisory 

Committee, examined the merits and demerits of the proposal, but 

ultimately concluded that if: 

it is determined that the trusts should be providing more 

information than they currently are, the Subcommittee’s 

preliminary thought was that this may be a matter more 


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122Memorandum from Subcommittee on Business Issues to Advisory Committee on Bankruptcy Rules (Mar. 10, 2011) (on file with Committee). 123Memorandum from Subcommittee on Business Issues to Advisory Committee on Bankruptcy Rules (Sept. 19, 2011) (on file with Committee). 124See generally Constitution Subcomm. Hearing, supra note 42. 125See generally Courts Subcomm. Hearing, supra note 11. 126See id. (testimonies of Leigh Ann Schell, Prof. S. Todd Brown, and Marc Scarcella). 127 Id. at 81. 128 Id. (‘‘As somebody who worked at a trust, the largest asbestos trust, the Manville Personal 

Injury Trust, back in 2001 as their quantitative data analyst and statistician, I can tell you that 

I understand Mr. Siegel’s concern, and I think it is a legitimate concern, but I can assure everybody that it is not a problem.’’) 

appropriately addressed by a legislative solution—such as 

an amendment of § 524(g) that imposes additional requirements on trusts created under that provision.122

A second memo from the Subcommittee, dated September 19, 2011, 

collects comments the Subcommittee solicited from various bankruptcy and nonbankruptcy legal groups. The chair of the ABA Business Bankruptcy Committee established a task force to review the 

proposal, which ultimately supported the proposal, subject to a 

small number of qualifications. Others who submitted comments, 

including the FCRs, opposed the proposal.123

VI. THE FURTHERING ASBESTOS CLAIMS TRANSPARENCY

(FACT) ACT OF 2015

During the 112th Congress, the Subcommittee on the Constitution of the House Judiciary Committee held a hearing entitled 

‘‘How Fraud and Abuse in the Asbestos Compensation System Affects Victims, Jobs, the Economy, and the Legal System.’’ 124 In 

light of the testimony received at that hearing, the study of the Advisory Committee on Bankruptcy Rules, and the experience of debtors who have used the Bankruptcy Code to manage their future asbestos liability and their attorneys, Rep. Quayle (R-AZ), together 

with Reps. Matheson (D-UT) and Ross (R-FL), introduced H.R. 

4369, the Furthering Asbestos Claim Transparency (FACT) Act of 

2012, on April 17, 2012. 

The Subcommittee on Courts, Commercial and Administrative 

Law of the House Judiciary Committee held a hearing on H.R. 

4369 on May 10, 2012.125 Three of the four witnesses testified that 

transparency was sorely needed in the 524(g) asbestos trust compensation system.126 The fourth witness, Mr. Siegel, conceded that 

no provision of the FACT Act would impede a claimant’s filing of 

a claim with or receipt of compensation from a trust.127 Mr. Siegel 

did argue that the FACT Act would impose ‘‘onerous’’ new administrative burdens on the trusts—a hypothesis that was contradicted 

by Mr. Scarcella’s testimony founded in his experience working at 

a claims processing department at one of the largest trusts.128

On June 8, 2012, the Committee met in open session and ordered 

the bill H.R. 4369 to be reported favorably to the House with a 

manager’s amendment. The amendment adopted during the Committee’s consideration of H.R. 4369 incorporated comments received 

during its legislative consideration and clarified that section 107 of 

the Bankruptcy Code applies to the new requirements of the asbestos trusts and that asbestos trusts could require payment for costs 

related to third-party discovery requests. H.R. 4369 was not considVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00015 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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129See generally H.R. 982, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2013’’: 

Hearing Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. 

Comm. on the Judiciary, 113th Cong. (2013) (Reg. Subcomm. Hearing). 130See id. (testimonies of Hon. Peggy L. Ableman, Prof. S. Todd Brown, and Marc Scarcella). 131 Id.; see also H.R. 982. 132See generally RRCAL Subcomm. Hearing. 133See id. (testimonies of Nicholas Vari, Marc Scarcella, and Prof. Lester Brickman). 134See id. (testimonies of Elihu Inselbuch, Nicholas Vari, Marc Scarcella, and Prof. Lester 

Brickman). 135 H.R. 982 § 2. 136 Id. 137 U.S. CONST. art. I, § 8, cl. 4; see Court Subcomm. Hearing, supra note 11, at 85–89 (memorandum regarding Congress’ power to enact legal reform legislation prepared by former Solicitor 

ered by the Full House of Representatives during the 112th Congress. 

During the 113th Congress, on March 6, 2013, Rep. Farenthold 

(R-TX), together with Rep. Matheson, introduced H.R. 982, the Furthering Asbestos Claim Transparency (FACT) Act of 2013, which 

was identical to H.R. 4369 as reported out of the Committee during 

the 112th Congress. The Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law held a hearing on H.R. 982 on 

March 13, 2013.129 Three of the four witnesses testified that the 

current asbestos trust system lacked transparency and was conducive to fraudulent activity.130 The fourth witness, Mr. Inselbuch, 

argued that the FACT Act would abrogate state discovery laws and 

would create administrative burdens on the trusts notwithstanding 

a record to the contrary on both accounts.131 On May 21, 2013, the 

Committee met in open session and ordered the bill H.R. 982 to be 

reported favorably to the House without amendment. On November 

13, 2013, the House considered H.R. 982 and passed the bill. H.R. 

982 was not considered by the Senate during the 113th Congress. 

Given the continued necessity for transparency and the significant legislative record, on January 26, 2015, Rep. Farenthold, together with Rep. Tom Marino (R-PA), introduced H.R. 526, the 

Furthering Asbestos Claim Transparency (FACT) Act of 2015, 

which is identical to H.R. 982 as passed by the House during the 

113th Congress. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing on H.R. 526 on February 

4, 2015.132 Three of the four witnesses testified that the current asbestos trust system continues to lack transparency and that additional reports of fraudulent activity require Congressional action on 

the FACT Act.133 The fourth witness, Mr. Inselbuch, argued that 

the FACT Act is unnecessary and would create administrative burdens on the trusts, notwithstanding the Committee’s record to the 

contrary on both accounts.134

H.R. 526 amends section 524(g) of the Bankruptcy Code to require asbestos trusts to file quarterly reports with the presiding 

bankruptcy court that detail claimants’ names, demands made by 

the claimants to the asbestos trust, and the basis for any payments 

made to claimants.135 To be clear, the quarterly reporting requirements do not require the disclosure of the amounts of settlement 

funds paid to claimants. The FACT Act also requires asbestos 

trusts to provide information requested by parties to traditional asbestos tort litigation, subject to payment from the requesting party 

for costs associated with such a request.136 As the bill amends a 

provision of the Bankruptcy Code, the reporting and information 

sharing requirements contained therein fall squarely within Congress’ bankruptcy power.137


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General Paul D. Clement); see also Reg. Subcomm. Hearing, supra note 123 (testimony of Prof. 

S. Todd Brown). 138 H.R. 982 § 2. 139 11 U.S.C. § 107(c) (2011); 18 U.S.C. § 1028(d) (2011); Fed. R. Bankr. P. 9037. 140 H.R. 982 § 2. 141P.L. No. 110–173. 

The FACT Act includes several privacy protections. The bill provides that sensitive identifying information, such as complete Social Security numbers and confidential medical records, should not 

be published in the quarterly reports.138 Additionally, the FACT 

Act subjects both the quarterly reporting requirements and the 

written discovery requests to section 107 of the Bankruptcy Code. 

Section 107 of the Bankruptcy Code and related Rule 9037 of the 

Federal Rules of Bankruptcy Procedure grant the presiding bankruptcy judge broad discretion to exclude confidential or sensitive information from the quarterly reports or in response to a written 

discovery request. Specifically, section 107(c) of the Bankruptcy 

Code provides a bankruptcy court with discretion to exclude from 

disclosure broad categories of information contained in any document filed in a chapter 11 case that would ‘‘create undue risk of 

identity theft or other unlawful injury. . . .’’ 139 Further, responses 

to written discovery requests are subject to any applicable protective orders.140

The FACT Act does not disturb or supersede any applicable state 

discovery laws or rules. On the contrary, any information received 

pursuant to a written request would remain subject to the discovery laws and rules applicable in the relevant state court proceeding. 

The enhanced reporting requirements for asbestos bankruptcy 

trusts required by the FACT Act may result in improvements and 

cost savings in the Medicare program. Specifically, the information 

provided under the FACT Act may improve the reporting of reimbursement payments under Medicare. Section 111 of the Medicare, 

Medicaid, and SCHIP Extension Act of 2007 141 added mandatory 

reporting requirements for Medicare patients who receive settlements, judgments, awards, or other payment from liability insurance. The increased reporting requirements under the FACT Act 

may result in the availability of information to the government regarding Medicare beneficiaries who receive payments from asbestos 

bankruptcy trusts. 

The FACT Act is a measured amendment to the Bankruptcy 

Code provision governing asbestos trusts that will promote greater 

transparency among the asbestos trusts and the state court system. 

This information will reduce the potential for fraud and help to 

unveil any existing fraudulent activity. A reduction in fraud will 

help to ensure that the asbestos trusts achieve their designed 

goal—administering and preserving their funds to provide substantially similar recompense to future claimants that have been truly 

aggrieved by exposure to asbestos. 

Hearings 

The Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a legislative hearing on H.R. 526 on 

February 3, 2015. Testimony was received from Marc Scarcella, 

M.A., Manager, Bates White Economic Consulting; Nicholas P. 


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Vari, Esq., Partner, K&L Gates LLP; Lester Brickman, Professor 

of Law, Benjamin N. Cardozo School of Law; and, Elihu Inselbuch, 

Esq., Member, Caplin & Drysdale. 

Committee Consideration 

On May 14, 2015, the Committee met in open session and ordered the bill H.R. 526 favorably reported, without amendment, by 

a rollcall vote of 19 ayes to 9 nays, a quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the following 

recorded votes were taken during the Committee’s consideration of 

H.R. 526. 

1. Amendment #1, offered by Mr. Conyers, to replace the bill’s 

substantive provisions with a requirement that asbestos trusts report only aggregated information on demands received and payments made from the asbestos trusts. The amendment was defeated by a rollcall vote of 5 to 14. 

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) .............................................................

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) ..............................................................

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) .........................................................

Mr. Labrador (ID) ......................................................

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................

Mr. Cohen (TN) .........................................................

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................


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ROLLCALL NO. 1—Continued 

Ayes Nays Present 

Ms. Chu (CA) .............................................................

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) .......................................................

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 5 14 

2. Amendment #2, offered by Mr. Nadler, to limit third party 

discovery to those parties who disclose information pertaining to 

the public safety or health to a law enforcement agency. The 

amendment was defeated by a rollcall vote of 6 to 16. 

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) .............................................................

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) ..............................................................

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) .........................................................

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................


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ROLLCALL NO. 2—Continued 

Ayes Nays Present 

Ms. Chu (CA) .............................................................

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) .......................................................

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 6 16 

3. Amendment #3, offered by Ms. Jackson Lee, to require the filing of certain information regarding settlement amounts paid by a 

third party before such third party can seek discovery from an asbestos trust. The amendment was defeated by a rollcall vote of 7 

to 17. 

ROLLCALL NO. 3 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) .........................................................

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) .....................................................

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ...........................................................

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 


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ROLLCALL NO. 3—Continued 

Ayes Nays Present 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) .............................................................

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) .........................................................

Total ............................................................. 7 17 

4. Amendment #4, offered by Mr. Johnson, to exclude personally 

identifiable information from the bill’s public reporting and document production requirements. The amendment was defeated by a 

rollcall vote of 9 to 20. 

ROLLCALL NO. 4 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 


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ROLLCALL NO. 4—Continued 

Ayes Nays Present 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) .............................................................

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 9 20 

5. Amendment #5, offered by Mr. Jeffries, to replace the quarterly reporting requirements with a requirement that a trust provide discovery, upon written request, to a party to an action concerning liability for asbestos exposure if the requesting party cannot obtain such information under non-bankruptcy law. The 

amendment was defeated by a rollcall vote of 8 to 18. 

ROLLCALL NO. 5 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ......................................................

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) .....................................................

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................


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ROLLCALL NO. 5—Continued 

Ayes Nays Present 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) .............................................................

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 8 18 

6. Amendment #6, offered by Mr. Peters, to exclude members of 

the Armed Forces and their families and civilian employees of the 

Department of Defense and their families from the requirements of 

the FACT Act. The amendment was defeated by a rollcall vote of 

9 to 18. 

ROLLCALL NO. 6 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ......................................................

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) .....................................................

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................


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ROLLCALL NO. 6—Continued 

Ayes Nays Present 

Ms. Jackson Lee (TX) ................................................

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 9 18 

7. Motion to report H.R. 526 favorably to the House of Representatives. The motion was agreed to by a rollcall vote of 19 to 

9. 

ROLLCALL NO. 7 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) ............................................................. X 

Mr. Forbes (VA) ......................................................... X 

Mr. King (IA) .............................................................

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ......................................................

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) .............................................................. X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) ..................................................... X 

Ms. Walters (CA) ....................................................... X 

Mr. Buck (CO) ........................................................... X 

Mr. Ratcliffe (TX) ...................................................... X 

Mr. Trott (MI) ............................................................ X 

Mr. Bishop (MI) ......................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ........................................................ X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................


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ROLLCALL NO. 7—Continued 

Ayes Nays Present 

Mr. Cohen (TN) ......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Pierluisi (PR) ......................................................

Ms. Chu (CA) ............................................................. X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) .....................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Ms. DelBene (WA) ..................................................... X 

Mr. Jeffries (NY) ....................................................... X 

Mr. Cicilline (RI) .......................................................

Mr. Peters (CA) ......................................................... X 

Total ............................................................. 19 9 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

New Budget Authority and Tax Expenditures 

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

Congressional Budget Office Cost Estimate 

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 526, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, May 27, 2015. 

Hon. BOB GOODLATTE, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 526, the ‘‘Furthering Asbestos Claims Transparency (FACT) Act of 2015.’’ 


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If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Marin Burnett, who can 

be reached at 226–2860. 

Sincerely, 

KEITH HALL, 

DIRECTOR. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 526—Furthering Asbestos Claims Transparency (FACT) 

Act of 2015. 

As ordered reported by the House Committee on the Judiciary 

on May 14, 2015. 

H.R. 526 would require trusts set up through a Chapter 11 bankruptcy reorganization caused by asbestos liabilities to submit quarterly reports to the bankruptcy court concerning the damage claims 

and payments made by the trust. Based on information provided by 

the Administrative Office of the U.S. Courts (AOUSC), CBO estimates that implementing H.R. 526 would have no significant effect 

on the Federal budget because the AOUSC would incur only minor 

costs to make that information publicly available. Enacting H.R. 

526 would not affect direct spending or revenues; therefore, pay-asyou-go procedures do not apply. 

H.R. 526 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. 

H.R. 526 would impose a private-sector mandate as defined in 

UMRA by requiring asbestos trusts to submit quarterly reports. According to studies by the Government Accountability Office (GAO) 

and the RAND Corporation, only a small number of asbestos trusts 

currently exist. Further, the GAO study indicates that the information to be submitted under the bill is already tracked by many of 

the asbestos trusts. Therefore, CBO expects that the incremental 

cost to comply with the reporting requirements in the bill would 

fall below the annual threshold established in UMRA for privatesector mandates ($154 million in 2015, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Marin Burnett (for 

Federal costs) and Paige Piper/Bach (for the private-sector effects). 

The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

Duplication of Federal Programs 

No provision of H.R. 526 establishes or reauthorizes a program 

of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 


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Disclosure of Directed Rule Makings 

The Committee estimates that H.R. 526 specifically directs to be 

completed no specific rule makings within the meaning of 5 U.S.C. 

551. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 526 amends title 

11, United States Code, to require the publication and disclosure 

of certain data by trusts created in a chapter 11 plan pursuant to 

section 524 of that title. 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 526 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(e), 9(f), or 9(g) of Rule XXI. 

Section-by-Section Analysis 

The following discussion describes the bill as reported by the 

Committee. 

Section 1. Short Title. Provides that the bill may be referred to 

as the ‘‘Furthering Asbestos Claim Transparency Act of 2015,’’ or 

the ‘‘FACT Act of 2015.’’ 

Section 2. Amendments. Adds to section 524(g) of the Bankruptcy 

Code a requirement that asbestos liability trusts publish quarterly 

public reports identifying the claimants, the demands made by 

claimants and the basis for such demands, and the basis for any 

payments from the trust to claimants. Further provides that trusts 

must comply with third-party discovery demands subject to thirdparties’ payment of reasonable discovery costs. 

Section 3. Effective Date; Application of Amendments. Sets the effective date of the Act as date of enactment. Provides that the 

amendments made by the act apply retroactively and prospectively. 

Changes in Existing Law Made by the Bill, as Reported 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italics 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

* * * * * * * 


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Subchapter II—DEBTOR’S DUTIES AND 

BENEFITS 

* * * * * * * 

§ 524. Effect of discharge 

(a) A discharge in a case under this title— 

(1) voids any judgment at any time obtained, to the extent 

that such judgment is a determination of the personal liability 

of the debtor with respect to any debt discharged under section 

727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived; 

(2) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect, recover or offset any such debt as a personal liability 

of the debtor, whether or not discharge of such debt is waived; 

and 

(3) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect or recover from, or offset against, property of the 

debtor of the kind specified in section 541(a)(2) of this title that 

is acquired after the commencement of the case, on account of 

any allowable community claim, except a community claim 

that is excepted from discharge under section 523, 1228(a)(1), 

or 1328(a)(1), or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of 

this title, in a case concerning the debtor’s spouse commenced 

on the date of the filing of the petition in the case concerning 

the debtor, whether or not discharge of the debt based on such 

community claim is waived. 

(b) Subsection (a)(3) of this section does not apply if— 

(1)(A) the debtor’s spouse is a debtor in a case under this 

title, or a bankrupt or a debtor in a case under the Bankruptcy 

Act, commenced within six years of the date of the filing of the 

petition in the case concerning the debtor; and 

(B) the court does not grant the debtor’s spouse a discharge in such case concerning the debtor’s spouse; or 

(2)(A) the court would not grant the debtor’s spouse a discharge in a case under chapter 7 of this title concerning such 

spouse commenced on the date of the filing of the petition in 

the case concerning the debtor; and 

(B) a determination that the court would not so grant such 

discharge is made by the bankruptcy court within the time and 

in the manner provided for a determination under section 727 

of this title of whether a debtor is granted a discharge. 

(c) An agreement between a holder of a claim and the debtor, 

the consideration for which, in whole or in part, is based on a debt 

that is dischargeable in a case under this title is enforceable only 

to any extent enforceable under applicable nonbankruptcy law, 

whether or not discharge of such debt is waived, only if— 

(1) such agreement was made before the granting of the 

discharge under section 727, 1141, 1228, or 1328 of this title; 

(2) the debtor received the disclosures described in subsection (k) at or before the time at which the debtor signed the 

agreement; 


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(3) such agreement has been filed with the court and, if 

applicable, accompanied by a declaration or an affidavit of the 

attorney that represented the debtor during the course of negotiating an agreement under this subsection, which states 

that— 

(A) such agreement represents a fully informed and 

voluntary agreement by the debtor; 

(B) such agreement does not impose an undue hardship on the debtor or a dependent of the debtor; and 

(C) the attorney fully advised the debtor of the legal 

effect and consequences of— 

(i) an agreement of the kind specified in this subsection; and 

(ii) any default under such an agreement; 

(4) the debtor has not rescinded such agreement at any 

time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later, by giving 

notice of rescission to the holder of such claim; 

(5) the provisions of subsection (d) of this section have 

been complied with; and 

(6)(A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an 

agreement under this subsection, the court approves such 

agreement as— 

(i) not imposing an undue hardship on the debtor or 

a dependent of the debtor; and 

(ii) in the best interest of the debtor. 

(B) Subparagraph (A) shall not apply to the extent that 

such debt is a consumer debt secured by real property. 

(d) In a case concerning an individual, when the court has determined whether to grant or not to grant a discharge under section 727, 1141, 1228, or 1328 of this title, the court may hold a 

hearing at which the debtor shall appear in person. At any such 

hearing, the court shall inform the debtor that a discharge has 

been granted or the reason why a discharge has not been granted. 

If a discharge has been granted and if the debtor desires to make 

an agreement of the kind specified in subsection (c) of this section 

and was not represented by an attorney during the course of negotiating such agreement, then the court shall hold a hearing at 

which the debtor shall appear in person and at such hearing the 

court shall— 

(1) inform the debtor— 

(A) that such an agreement is not required under this 

title, under nonbankruptcy law, or under any agreement 

not made in accordance with the provisions of subsection 

(c) of this section; and 

(B) of the legal effect and consequences of— 

(i) an agreement of the kind specified in subsection (c) of this section; and 

(ii) a default under such an agreement; and 

(2) determine whether the agreement that the debtor desires to make complies with the requirements of subsection 

(c)(6) of this section, if the consideration for such agreement is 

based in whole or in part on a consumer debt that is not secured by real property of the debtor. 


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(e) Except as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any 

other entity on, or the property of any other entity for, such debt. 

(f) Nothing contained in subsection (c) or (d) of this section prevents a debtor from voluntarily repaying any debt. 

(g)(1)(A) After notice and hearing, a court that enters an order 

confirming a plan of reorganization under chapter 11 may issue, in 

connection with such order, an injunction in accordance with this 

subsection to supplement the injunctive effect of a discharge under 

this section. 

(B) An injunction may be issued under subparagraph (A) to enjoin entities from taking legal action for the purpose of directly or 

indirectly collecting, recovering, or receiving payment or recovery 

with respect to any claim or demand that, under a plan of reorganization, is to be paid in whole or in part by a trust described in 

paragraph (2)(B)(i), except such legal actions as are expressly allowed by the injunction, the confirmation order, or the plan of reorganization. 

(2)(A) Subject to subsection (h), if the requirements of subparagraph (B) are met at the time an injunction described in paragraph 

(1) is entered, then after entry of such injunction, any proceeding 

that involves the validity, application, construction, or modification 

of such injunction, or of this subsection with respect to such injunction, may be commenced only in the district court in which such 

injunction was entered, and such court shall have exclusive jurisdiction over any such proceeding without regard to the amount in 

controversy. 

(B) The requirements of this subparagraph are that— 

(i) the injunction is to be implemented in connection with 

a trust that, pursuant to the plan of reorganization— 

(I) is to assume the liabilities of a debtor which at the 

time of entry of the order for relief has been named as a 

defendant in personal injury, wrongful death, or propertydamage actions seeking recovery for damages allegedly 

caused by the presence of, or exposure to, asbestos or asbestos-containing products; 

(II) is to be funded in whole or in part by the securities of 1 or more debtors involved in such plan and by the 

obligation of such debtor or debtors to make future payments, including dividends; 

(III) is to own, or by the exercise of rights granted 

under such plan would be entitled to own if specified contingencies occur, a majority of the voting shares of— 

(aa) each such debtor; 

(bb) the parent corporation of each such debtor; or 

(cc) a subsidiary of each such debtor that is also 

a debtor; and 

(IV) is to use its assets or income to pay claims and 

demands; and 

(ii) subject to subsection (h), the court determines that— 

(I) the debtor is likely to be subject to substantial future demands for payment arising out of the same or similar conduct or events that gave rise to the claims that are 

addressed by the injunction; 


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(II) the actual amounts, numbers, and timing of such 

future demands cannot be determined; 

(III) pursuit of such demands outside the procedures 

prescribed by such plan is likely to threaten the plan’s 

purpose to deal equitably with claims and future demands; 

(IV) as part of the process of seeking confirmation of 

such plan— 

(aa) the terms of the injunction proposed to be 

issued under paragraph (1)(A), including any provisions barring actions against third parties pursuant to 

paragraph (4)(A), are set out in such plan and in any 

disclosure statement supporting the plan; and 

(bb) a separate class or classes of the claimants 

whose claims are to be addressed by a trust described 

in clause (i) is established and votes, by at least 75 

percent of those voting, in favor of the plan; and 

(V) subject to subsection (h), pursuant to court orders 

or otherwise, the trust will operate through mechanisms 

such as structured, periodic, or supplemental payments, 

pro rata distributions, matrices, or periodic review of estimates of the numbers and values of present claims and future demands, or other comparable mechanisms, that provide reasonable assurance that the trust will value, and be 

in a financial position to pay, present claims and future 

demands that involve similar claims in substantially the 

same manner. 

(3)(A) If the requirements of paragraph (2)(B) are met and the 

order confirming the plan of reorganization was issued or affirmed 

by the district court that has jurisdiction over the reorganization 

case, then after the time for appeal of the order that issues or affirms the plan— 

(i) the injunction shall be valid and enforceable and may 

not be revoked or modified by any court except through appeal 

in accordance with paragraph (6); 

(ii) no entity that pursuant to such plan or thereafter becomes a direct or indirect transferee of, or successor to any assets of, a debtor or trust that is the subject of the injunction 

shall be liable with respect to any claim or demand made 

against such entity by reason of its becoming such a transferee 

or successor; and 

(iii) no entity that pursuant to such plan or thereafter 

makes a loan to such a debtor or trust or to such a successor 

or transferee shall, by reason of making the loan, be liable 

with respect to any claim or demand made against such entity, 

nor shall any pledge of assets made in connection with such a 

loan be upset or impaired for that reason; 

(B) Subparagraph (A) shall not be construed to— 

(i) imply that an entity described in subparagraph (A)(ii) 

or (iii) would, if this paragraph were not applicable, necessarily 

be liable to any entity by reason of any of the acts described 

in subparagraph (A); 

(ii) relieve any such entity of the duty to comply with, or 

of liability under, any Federal or State law regarding the making of a fraudulent conveyance in a transaction described in 

subparagraph (A)(ii) or (iii); or 


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(iii) relieve a debtor of the debtor’s obligation to comply 

with the terms of the plan of reorganization, or affect the 

power of the court to exercise its authority under sections 1141 

and 1142 to compel the debtor to do so. 

(4)(A)(i) Subject to subparagraph (B), an injunction described 

in paragraph (1) shall be valid and enforceable against all entities 

that it addresses. 

(ii) Notwithstanding the provisions of section 524(e), such an 

injunction may bar any action directed against a third party who 

is identifiable from the terms of such injunction (by name or as 

part of an identifiable group) and is alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the 

debtor to the extent such alleged liability of such third party arises 

by reason of— 

(I) the third party’s ownership of a financial interest in the 

debtor, a past or present affiliate of the debtor, or a predecessor in interest of the debtor; 

(II) the third party’s involvement in the management of 

the debtor or a predecessor in interest of the debtor, or service 

as an officer, director or employee of the debtor or a related 

party; 

(III) the third party’s provision of insurance to the debtor 

or a related party; or 

(IV) the third party’s involvement in a transaction changing the corporate structure, or in a loan or other financial 

transaction affecting the financial condition, of the debtor or a 

related party, including but not limited to— 

(aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; 

or 

(bb) acquiring or selling a financial interest in an entity as part of such a transaction. 

(iii) As used in this subparagraph, the term ‘‘related party’’ 

means— 

(I) a past or present affiliate of the debtor; 

(II) a predecessor in interest of the debtor; or 

(III) any entity that owned a financial interest in— 

(aa) the debtor; 

(bb) a past or present affiliate of the debtor; or 

(cc) a predecessor in interest of the debtor. 

(B) Subject to subsection (h), if, under a plan of reorganization, 

a kind of demand described in such plan is to be paid in whole or 

in part by a trust described in paragraph (2)(B)(i) in connection 

with which an injunction described in paragraph (1) is to be implemented, then such injunction shall be valid and enforceable with 

respect to a demand of such kind made, after such plan is confirmed, against the debtor or debtors involved, or against a third 

party described in subparagraph (A)(ii), if— 

(i) as part of the proceedings leading to issuance of such 

injunction, the court appoints a legal representative for the 

purpose of protecting the rights of persons that might subsequently assert demands of such kind, and 

(ii) the court determines, before entering the order confirming such plan, that identifying such debtor or debtors, or 

such third party (by name or as part of an identifiable group), 


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in such injunction with respect to such demands for purposes 

of this subparagraph is fair and equitable with respect to the 

persons that might subsequently assert such demands, in light 

of the benefits provided, or to be provided, to such trust on behalf of such debtor or debtors or such third party. 

(5) In this subsection, the term ‘‘demand’’ means a demand for 

payment, present or future, that— 

(A) was not a claim during the proceedings leading to the 

confirmation of a plan of reorganization; 

(B) arises out of the same or similar conduct or events that 

gave rise to the claims addressed by the injunction issued 

under paragraph (1); and 

(C) pursuant to the plan, is to be paid by a trust described 

in paragraph (2)(B)(i). 

(6) Paragraph (3)(A)(i) does not bar an action taken by or at 

the direction of an appellate court on appeal of an injunction issued 

under paragraph (1) or of the order of confirmation that relates to 

the injunction. 

(7) This subsection does not affect the operation of section 1144 

or the power of the district court to refer a proceeding under section 157 of title 28 or any reference of a proceeding made prior to 

the date of the enactment of this subsection. 

(8) A trust described in paragraph (2) shall, subject to section 

107— 

(A) file with the bankruptcy court, not later than 60 days 

after the end of every quarter, a report that shall be made available on the court’s public docket and with respect to such quarter— 

(i) describes each demand the trust received from, including the name and exposure history of, a claimant and 

the basis for any payment from the trust made to such 

claimant; and 

(ii) does not include any confidential medical record or 

the claimant’s full social security number; and 

(B) upon written request, and subject to payment (demanded at the option of the trust) for any reasonable cost incurred by the trust to comply with such request, provide in a 

timely manner any information related to payment from, and 

demands for payment from, such trust, subject to appropriate 

protective orders, to any party to any action in law or equity if 

the subject of such action concerns liability for asbestos exposure. 

(h) APPLICATION TO EXISTING INJUNCTIONS.—For purposes of 

subsection (g)— 

(1) subject to paragraph (2), if an injunction of the kind described in subsection (g)(1)(B) was issued before the date of the 

enactment of this Act, as part of a plan of reorganization confirmed by an order entered before such date, then the injunction shall be considered to meet the requirements of subsection 

(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if— 

(A) the court determined at the time the plan was confirmed that the plan was fair and equitable in accordance 

with the requirements of section 1129(b); 


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(B) as part of the proceedings leading to issuance of 

such injunction and confirmation of such plan, the court 

had appointed a legal representative for the purpose of 

protecting the rights of persons that might subsequently 

assert demands described in subsection (g)(4)(B) with respect to such plan; and 

(C) such legal representative did not object to confirmation of such plan or issuance of such injunction; and 

(2) for purposes of paragraph (1), if a trust described in 

subsection (g)(2)(B)(i) is subject to a court order on the date of 

the enactment of this Act staying such trust from settling or 

paying further claims— 

(A) the requirements of subsection (g)(2)(B)(ii)(V) shall 

not apply with respect to such trust until such stay is lifted or dissolved; and 

(B) if such trust meets such requirements on the date 

such stay is lifted or dissolved, such trust shall be considered to have met such requirements continuously from the 

date of the enactment of this Act. 

(i) The willful failure of a creditor to credit payments received 

under a plan confirmed under this title, unless the order confirming the plan is revoked, the plan is in default, or the creditor 

has not received payments required to be made under the plan in 

the manner required by the plan (including crediting the amounts 

required under the plan), shall constitute a violation of an injunction under subsection (a)(2) if the act of the creditor to collect and 

failure to credit payments in the manner required by the plan 

caused material injury to the debtor. 

(j) Subsection (a)(2) does not operate as an injunction against 

an act by a creditor that is the holder of a secured claim, if— 

(1) such creditor retains a security interest in real property 

that is the principal residence of the debtor; 

(2) such act is in the ordinary course of business between 

the creditor and the debtor; and 

(3) such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien. 

(k)(1) The disclosures required under subsection (c)(2) shall 

consist of the disclosure statement described in paragraph (3), completed as required in that paragraph, together with the agreement 

specified in subsection (c), statement, declaration, motion and order 

described, respectively, in paragraphs (4) through (8), and shall be 

the only disclosures required in connection with entering into such 

agreement. 

(2) Disclosures made under paragraph (1) shall be made clearly 

and conspicuously and in writing. The terms ‘‘Amount Reaffirmed’’ 

and ‘‘Annual Percentage Rate’’ shall be disclosed more conspicuously than other terms, data or information provided in connection 

with this disclosure, except that the phrases ‘‘Before agreeing to reaffirm a debt, review these important disclosures’’ and ‘‘Summary 

of Reaffirmation Agreement’’ may be equally conspicuous. Disclosures may be made in a different order and may use terminology 

different from that set forth in paragraphs (2) through (8), except 

that the terms ‘‘Amount Reaffirmed’’ and ‘‘Annual Percentage Rate’’ 

must be used where indicated. 


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(3) The disclosure statement required under this paragraph 

shall consist of the following: 

(A) The statement: ‘‘Part A: Before agreeing to reaffirm a 

debt, review these important disclosures:’’; 

(B) Under the heading ‘‘Summary of Reaffirmation Agreement’’, the statement: ‘‘This Summary is made pursuant to the 

requirements of the Bankruptcy Code’’; 

(C) The ‘‘Amount Reaffirmed’’, using that term, which shall 

be— 

(i) the total amount of debt that the debtor agrees to 

reaffirm by entering into an agreement of the kind specified in subsection (c), and 

(ii) the total of any fees and costs accrued as of the 

date of the disclosure statement, related to such total 

amount. 

(D) In conjunction with the disclosure of the ‘‘Amount Reaffirmed’’, the statements— 

(i) ‘‘The amount of debt you have agreed to reaffirm’’; 

and 

(ii) ‘‘Your credit agreement may obligate you to pay 

additional amounts which may come due after the date of 

this disclosure. Consult your credit agreement.’’. 

(E) The ‘‘Annual Percentage Rate’’, using that term, which 

shall be disclosed as— 

(i) if, at the time the petition is filed, the debt is an 

extension of credit under an open end credit plan, as the 

terms ‘‘credit’’ and ‘‘open end credit plan’’ are defined in 

section 103 of the Truth in Lending Act, then— 

(I) the annual percentage rate determined under 

paragraphs (5) and (6) of section 127(b) of the Truth 

in Lending Act, as applicable, as disclosed to the debtor in the most recent periodic statement prior to entering into an agreement of the kind specified in subsection (c) or, if no such periodic statement has been 

given to the debtor during the prior 6 months, the annual percentage rate as it would have been so disclosed at the time the disclosure statement is given to 

the debtor, or to the extent this annual percentage 

rate is not readily available or not applicable, then 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of each such balance included in the 

amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under subclause 

(I) and the simple interest rate under subclause (II); 

or 

(ii) if, at the time the petition is filed, the debt is an 

extension of credit other than under an open end credit 

plan, as the terms ‘‘credit’’ and ‘‘open end credit plan’’ are 

defined in section 103 of the Truth in Lending Act, then— 


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(I) the annual percentage rate under section 

128(a)(4) of the Truth in Lending Act, as disclosed to 

the debtor in the most recent disclosure statement 

given to the debtor prior to the entering into an agreement of the kind specified in subsection (c) with respect to the debt, or, if no such disclosure statement 

was given to the debtor, the annual percentage rate as 

it would have been so disclosed at the time the disclosure statement is given to the debtor, or to the extent 

this annual percentage rate is not readily available or 

not applicable, then 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of such balance included in the amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under (I) and the 

simple interest rate under (II). 

(F) If the underlying debt transaction was disclosed as a 

variable rate transaction on the most recent disclosure given 

under the Truth in Lending Act, by stating ‘‘The interest rate 

on your loan may be a variable interest rate which changes 

from time to time, so that the annual percentage rate disclosed 

here may be higher or lower.’’. 

(G) If the debt is secured by a security interest which has 

not been waived in whole or in part or determined to be void 

by a final order of the court at the time of the disclosure, by 

disclosing that a security interest or lien in goods or property 

is asserted over some or all of the debts the debtor is reaffirming and listing the items and their original purchase price that 

are subject to the asserted security interest, or if not a purchase-money security interest then listing by items or types 

and the original amount of the loan. 

(H) At the election of the creditor, a statement of the repayment schedule using 1 or a combination of the following— 

(i) by making the statement: ‘‘Your first payment in 

the amount of $lll is due on lll but the future payment amount may be different. Consult your reaffirmation 

agreement or credit agreement, as applicable.’’, and stating 

the amount of the first payment and the due date of that 

payment in the places provided; 

(ii) by making the statement: ‘‘Your payment schedule 

will be:’’, and describing the repayment schedule with the 

number, amount, and due dates or period of payments 

scheduled to repay the debts reaffirmed to the extent then 

known by the disclosing party; or 

(iii) by describing the debtor’s repayment obligations 

with reasonable specificity to the extent then known by the 

disclosing party. 

(I) The following statement: ‘‘Note: When this disclosure 

refers to what a creditor‘may’do, it does not use the 

word‘may’to give the creditor specific permission. The 


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word‘may’is used to tell you what might occur if the law permits the creditor to take the action. If you have questions 

about your reaffirming a debt or what the law requires, consult 

with the attorney who helped you negotiate this agreement reaffirming a debt. If you don’t have an attorney helping you, the 

judge will explain the effect of your reaffirming a debt when 

the hearing on the reaffirmation agreement is held.’’. 

(J)(i) The following additional statements: 

′′Reaffirming a debt is a serious financial decision. The law 

requires you to take certain steps to make sure the decision is 

in your best interest. If these steps are not completed, the reaffirmation agreement is not effective, even though you have 

signed it. ′′1. Read the disclosures in this Part A carefully. Consider 

the decision to reaffirm carefully. Then, if you want to reaffirm, sign the reaffirmation agreement in Part B (or you may 

use a separate agreement you and your creditor agree on). ′′2. Complete and sign Part D and be sure you can afford 

to make the payments you are agreeing to make and have received a copy of the disclosure statement and a completed and 

signed reaffirmation agreement. ′′3. If you were represented by an attorney during the negotiation of your reaffirmation agreement, the attorney must 

have signed the certification in Part C. ′′4. If you were not represented by an attorney during the 

negotiation of your reaffirmation agreement, you must have 

completed and signed Part E. ′′5. The original of this disclosure must be filed with the 

court by you or your creditor. If a separate reaffirmation agreement (other than the one in Part B) has been signed, it must 

be attached. ′′6. If you were represented by an attorney during the negotiation of your reaffirmation agreement, your reaffirmation 

agreement becomes effective upon filing with the court unless 

the reaffirmation is presumed to be an undue hardship as explained in Part D. 

′′7. If you were not represented by an attorney during the 

negotiation of your reaffirmation agreement, it will not be effective unless the court approves it. The court will notify you 

of the hearing on your reaffirmation agreement. You must attend this hearing in bankruptcy court where the judge will review your reaffirmation agreement. The bankruptcy court must 

approve your reaffirmation agreement as consistent with your 

best interests, except that no court approval is required if your 

reaffirmation agreement is for a consumer debt secured by a 

mortgage, deed of trust, security deed, or other lien on your 

real property, like your home. 

′′Your right to rescind (cancel) your reaffirmation agreement. You may rescind (cancel) your reaffirmation agreement 

at any time before the bankruptcy court enters a discharge 

order, or before the expiration of the 60-day period that begins 

on the date your reaffirmation agreement is filed with the 

court, whichever occurs later. To rescind (cancel) your reaffirmation agreement, you must notify the creditor that your reaffirmation agreement is rescinded (or canceled). 


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′′What are your obligations if you reaffirm the debt? A reaffirmed debt remains your personal legal obligation. It is not 

discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is 

over, your creditor may be able to take your property or your 

wages. Otherwise, your obligations will be determined by the 

reaffirmation agreement which may have changed the terms of 

the original agreement. For example, if you are reaffirming an 

open end credit agreement, the creditor may be permitted by 

that agreement or applicable law to change the terms of that 

agreement in the future under certain conditions. ′′Are you required to enter into a reaffirmation agreement 

by any law? No, you are not required to reaffirm a debt by any 

law. Only agree to reaffirm a debt if it is in your best interest. 

Be sure you can afford the payments you agree to make. 

‘‘What if your creditor has a security interest or lien? Your 

bankruptcy discharge does not eliminate any lien on your property. A‘lien’is often referred to as a security interest, deed of 

trust, mortgage or security deed. Even if you do not reaffirm 

and your personal liability on the debt is discharged, because 

of the lien your creditor may still have the right to take the 

property securing the lien if you do not pay the debt or default 

on it. If the lien is on an item of personal property that is exempt under your State’s law or that the trustee has abandoned, you may be able to redeem the item rather than reaffirm the debt. To redeem, you must make a single payment to 

the creditor equal to the amount of the allowed secured claim, 

as agreed by the parties or determined by the court.’’. 

(ii) In the case of a reaffirmation under subsection (m)(2), 

numbered paragraph 6 in the disclosures required by clause (i) 

of this subparagraph shall read as follows: 

‘‘6. If you were represented by an attorney during the negotiation of your reaffirmation agreement, your reaffirmation 

agreement becomes effective upon filing with the court.’’. 

(4) The form of such agreement required under this paragraph 

shall consist of the following: 

′′Part B: Reaffirmation Agreement. I (we) agree to reaffirm 

the debts arising under the credit agreement described below. 

′′Brief description of credit agreement: 

′′Description of any changes to the credit agreement made 

as part of this reaffirmation agreement: 

′′Signature: Date: 

′′Borrower: 

′′Co-borrower, if also reaffirming these debts: 

′′Accepted by creditor: 

‘‘Date of creditor acceptance:’’. 

(5) The declaration shall consist of the following: 

(A) The following certification: 

′′Part C: Certification by Debtor’s Attorney (If Any). 

′′I hereby certify that (1) this agreement represents a fully 

informed and voluntary agreement by the debtor; (2) this 

agreement does not impose an undue hardship on the debtor 

or any dependent of the debtor; and (3) I have fully advised the 

debtor of the legal effect and consequences of this agreement 

and any default under this agreement. 


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‘‘Signature of Debtor’s Attorney: Date:’’. 

(B) If a presumption of undue hardship has been established with respect to such agreement, such certification shall 

state that, in the opinion of the attorney, the debtor is able to 

make the payment. 

(C) In the case of a reaffirmation agreement under subsection (m)(2), subparagraph (B) is not applicable. 

(6)(A) The statement in support of such agreement, which the 

debtor shall sign and date prior to filing with the court, shall consist of the following: 

′′Part D: Debtor’s Statement in Support of Reaffirmation 

Agreement. 

′′1. I believe this reaffirmation agreement will not impose 

an undue hardship on my dependents or me. I can afford to 

make the payments on the reaffirmed debt because my monthly income (take home pay plus any other income received) is 

$lll, and my actual current monthly expenses including 

monthly payments on post-bankruptcy debt and other reaffirmation agreements total $lll, leaving $lll to make the 

required payments on this reaffirmed debt. I understand that 

if my income less my monthly expenses does not leave enough 

to make the payments, this reaffirmation agreement is presumed to be an undue hardship on me and must be reviewed 

by the court. However, this presumption may be overcome if I 

explain to the satisfaction of the court how I can afford to 

make the payments here: lll. 

‘‘2. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation 

agreement.’’. 

(B) Where the debtor is represented by an attorney and is reaffirming a debt owed to a creditor defined in section 19(b)(1)(A)(iv) 

of the Federal Reserve Act, the statement of support of the reaffirmation agreement, which the debtor shall sign and date prior to filing with the court, shall consist of the following: 

‘‘I believe this reaffirmation agreement is in my financial 

interest. I can afford to make the payments on the reaffirmed 

debt. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation 

agreement.’’. 

(7) The motion that may be used if approval of such agreement 

by the court is required in order for it to be effective, shall be 

signed and dated by the movant and shall consist of the following: 

′′Part E: Motion for Court Approval (To be completed only 

if the debtor is not represented by an attorney.). I (we), the 

debtor(s), affirm the following to be true and correct: 

′′I am not represented by an attorney in connection with 

this reaffirmation agreement. 

′′I believe this reaffirmation agreement is in my best interest based on the income and expenses I have disclosed in my 

Statement in Support of this reaffirmation agreement, and because (provide any additional relevant reasons the court should 

consider): 

‘‘Therefore, I ask the court for an order approving this reaffirmation agreement.’’. 


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(8) The court order, which may be used to approve such agreement, shall consist of the following: 

‘‘Court Order: The court grants the debtor’s motion and approves the reaffirmation agreement described above.’’. 

(l) Notwithstanding any other provision of this title the following shall apply: 

(1) A creditor may accept payments from a debtor before 

and after the filing of an agreement of the kind specified in 

subsection (c) with the court. 

(2) A creditor may accept payments from a debtor under 

such agreement that the creditor believes in good faith to be 

effective. 

(3) The requirements of subsections (c)(2) and (k) shall be 

satisfied if disclosures required under those subsections are 

given in good faith. 

(m)(1) Until 60 days after an agreement of the kind specified 

in subsection (c) is filed with the court (or such additional period 

as the court, after notice and a hearing and for cause, orders before 

the expiration of such period), it shall be presumed that such 

agreement is an undue hardship on the debtor if the debtor’s 

monthly income less the debtor’s monthly expenses as shown on 

the debtor’s completed and signed statement in support of such 

agreement required under subsection (k)(6)(A) is less than the 

scheduled payments on the reaffirmed debt. This presumption shall 

be reviewed by the court. The presumption may be rebutted in 

writing by the debtor if the statement includes an explanation that 

identifies additional sources of funds to make the payments as 

agreed upon under the terms of such agreement. If the presumption is not rebutted to the satisfaction of the court, the court may 

disapprove such agreement. No agreement shall be disapproved 

without notice and a hearing to the debtor and creditor, and such 

hearing shall be concluded before the entry of the debtor’s discharge. 

(2) This subsection does not apply to reaffirmation agreements 

where the creditor is a credit union, as defined in section 

19(b)(1)(A)(iv) of the Federal Reserve Act. 

* * * * * * * 

Dissenting Views 

INTRODUCTION

H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2015,’’ would require a trust—established under bankruptcy 

law to pay the claims of asbestos victims—to publicly disclose sensitive, personal information of these victims, including their names 

and exposure histories. As a result, asbestos victims’ private information will be irretrievably released into the public domain and 

available via the Internet. We oppose this offensive bill because: (1) 

its reporting and disclosure requirements are a blatant assault on 

asbestos victims’ privacy interests; (2) it is fundamentally inequitable in that it mandates disclosure by the trusts, but does not impose comparable disclosure demands on defendant companies, even 

though they exposed millions of unsuspecting Americans to their 

toxic products; (3) it addresses a non-existent problem as there is 


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1See, e.g., Op. Ed., Susan Vento, Asbestos Victims Call on Congress to Stop Fast-Tracking Legislation That Would Violate Victim’s Privacy, ROLL CALL, May 14, 2015, at 11 (describing the 

bill as ‘‘offensive’’); Letter from Susan Vento widow of Rep. Bruce Vento (D_MN), et al. to U.S. 

House of Representative Members (May 13, 2015) (on file with H. Comm. on the Judiciary 

Democratic staff) (warning that H.R. 526 ‘‘will make it harder for victims to seek justice and 

easier for asbestos companies to delay cases and pay less to victims’’); Michael Valach, son of 

deceased victim of mesothelioma, to Representative Tom Marino (R-PA), Chair, Subcomm. on 

Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary (May 13, 

2015) (on file with H. Comm. on the Judiciary Democratic staff) (expressing concern that the 

legislation will ‘‘place personal information about asbestos victims and their families . . . on a 

public database accessible to the entire world’’). 2Letter from J. Patrick Little, National Commander, Military Order of the Purple Heart, to 

Representative John Boehner (R-OH), Speaker of the U.S. House of Representatives, et al. (Feb. 

4, 2015) (on file with H. Comm. on the Judiciary Democratic staff) (stating that H.R. 526 ‘‘was 

written to benefit asbestos corporations and their insurers, not their victims’’ and that 

‘‘[d]elaying justice for any veteran suffering from the fatal effects of these diseases is offensive 

to our brave men and women in uniform’’). 3Letter from William Samuel, Director, Government Affairs Department, American Federation of Labor and Congress of Industrial Organizations, to U.S. House of Representative Members (Feb. 3, 2015) (on file with H. Comm. on the Judiciary Democratic staff). 4Letter from Scott Frey, Director, Federal Government Affairs, American Federation of State, 

County and Municipal Employees, to U.S. House of Representative Members (Feb. 3, 2015) (on 

file with H. Comm. on the Judiciary Democratic staff). 5Letter from Linda Reinstein, President & Co-Founder, Asbestos Disease Awareness Organization, to Representative Bob Goodlatte (R-VA), Chair, & Representative John Conyers, Jr. (DMI), Ranking Member, H. Comm. on the Judiciary (May 13, 2015) (on file with H. Comm. on 

the Judiciary Democratic staff). 6Press Release, Environmental Working Group, EWG Action Fund: FACT Act Favors Asbestos Industry Over Justice, Public Health (Jan. 28, 2015) (on file with H. Comm. on the Judiciary 

Democratic staff). 7Press Release, Public Citizen, FACT ACT Adds Insult to Injury for Asbestos Victims (Jan. 

27, 2015) (on file with H. Comm. on the Judiciary Democratic staff). 8Press Release, Alliance for Justice, AFJ: FACT Act Delays Justice for Asbestos Victims (Jan. 

28, 2015), available at http://www.afj.org/press-room/press-releases/afj-fact-act-delays-justice-forasbestos-victims. 9These organizations include Consumer Act, Consumer Watchdog, the National Association 

of Consumer Advocates, and the National Consumers League. Letter from Alliance for Justice 

et al. to Representative Bob Goodlatte, Chair, H. Comm. on the Judiciary, et al. (May 12, 2015). 10See, e.g., Letter from Douglas A. Campbell, counsel for various asbestos settlement trusts, 

to Representative Bob Goodlatte, Chair, H. Comm. on the Judiciary, et al. (Jan. 30, 2015) (on 

file with H. Comm. on the Judiciary Democratic staff). 11 11 U.S.C. § 524(g) (2015). 

no evidence of systemic fraud; (4) it is an end-run by defendant 

companies around the discovery process available under non-bankruptcy law; and (5) it will divert critical funds and further decrease 

compensation to asbestos victims by forcing bankruptcy trusts to 

prepare burdensome reports. Not surprisingly, H.R. 526 is opposed 

by asbestos victims and their families,1 the Military Order of the 

Purple Heart,2 the AFL-CIO,3 the American Federation of State, 

County and Municipal Employees,4 Asbestos Disease Awareness 

Organization,5 the Environmental Working Group,6 Public Citizen,7 the Alliance for Justice,8 various consumer organizations,9

and legal representatives for future asbestos personal injury claimants with respect to asbestos bankruptcy trusts.10

DESCRIPTION AND BACKGROUND

DESCRIPTION

Section 524(g) of title 11 of the United States Code authorizes a 

company struggling with overwhelming asbestos tort claims to establish and fund, as part of its plan of reorganization in bankruptcy, a trust to pay such claims, under certain circumstances.11

In exchange for funding this trust, the company is released from 

liability for such claims once the bankruptcy court confirms the 

plan of reorganization. Upon confirmation, the trust must make the 


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12 11 U.S.C. § 107(c) (2015). 13 Asbestos Litigation Crisis in Federal and State Courts: Hearings Before the Subcomm. on 

Intellectual Property and Judicial Administration of the House Comm. on the Judiciary, 102d 

Congress 1 (1975) (Opening Statement of Chairman Hughes) [hereinafter Asbestos Litigation 

Hearings]. 14 Id. 15 U.S. Government Accountability Office, Report on Asbestos Injury Compensation: The Role 

and Administration of Asbestos Trusts, GAO–11–819, at 6 (Sept. 2011) [hereinafter GAO Report]. 16 Asbestos Litigation Hearings at 2. 17GAO Report at 1–2. 18 Id. 

required payments, but is not subject to the bankruptcy court’s supervision. 

H.R. 526 amends section 524(g) in two significant respects. First, 

it requires the trust to file with the bankruptcy court a quarterly 

report that must be made available on the court’s public docket. 

The report must describe each demand the trust received from a 

claimant, including the claimant’s name and exposure history as 

well as the basis for any payment from the trust made to such 

claimant, but not any confidential medical record or the claimant’s 

full Social Security number. Second, the measure requires the 

trust, upon written request and subject to payment for any reasonable costs incurred in responding to such request at the option of 

the trust, to provide in a timely manner any information related 

to payments and demands for payment from the trust, subject to 

appropriate protective orders, to any party to any action in law or 

equity if the subject of such action concerns liability for asbestos 

exposure. The bill’s reporting and information disclosure requirements are subject to Bankruptcy Code section 107, which authorizes the bankruptcy court, for cause, to restrict public access to any 

document filed in a bankruptcy case if the court finds that the disclosure of such information would create an ‘‘undue risk of identity 

theft or other unlawful injury.’’ 12

BACKGROUND

A. The Lethal Effects of Asbestos 

Asbestos is a fibrous material, extracted from the earth, that has 

been used for centuries because of its tensile strength and heat 

resistence.13 The modern industrial use of asbestos dates back to 

around 1860. Between 1934 to 1964, the world’s annual use of raw 

asbestos increased from about 500,000 tons to 2.5 million tons.14

Asbestos was often used as an insulator and as a fire retardant by 

the construction and ship-building industries. Examples of asbestos-containing products include attic and wall insulation, roofing 

shingles, ceiling and vinyl floor tiles, paper and cement products, 

and ‘‘friction products such as automobile clutch, brake and transmission parts.’’ 15 The Department of Labor estimates that approximately 21 million Americans have been significantly exposed to asbestos.16

Asbestos fibers, when released into the atmosphere and inhaled 

by humans, may cause various diseases, including asbestosis (a 

clogging and scarring of the lungs that can produce a reduced 

breathing capacity) and mesothelioma (a cancer of the lining of the 

chest and abdomen that is typically fatal).17 Lung cancer and other 

diseases have also been associated with the inhalation of asbestos 

fibers. 18


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19 Report of the Judicial Conference of the U.S. Courts Ad Hoc Committee on Asbestos Litigation, at 2 (Mar. 1991). 20Letter of transmittal dated July 21, 1983, Chronic Hazards Advisory Panel on Asbestos, Report to the U.S. Consumer Product Safety Commission (July 1983). 21 U.S. Environmental Protection Agency, EPA Study of Asbestos-Containing Materials in Public Buildings: A Report to Congress, at 5 (Feb. 1988). 22Pub. L. No. 94–469, 90 Stat. 2003 (1976) (codified in 15 U.S.C. §§ 2601 et seq. (2015)). Section 6 of the Act authorizes the agency to prohibit the manufacture of certain products ‘‘[i]f the 

Administrator finds that there is a reasonable basis to conclude that the manufacture, processing, distribution in commerce, use, or disposal of a chemical substance or mixture, or that 

any combination of such activities, presents or will present an unreasonable risk of injury to 

health or the environment[.]’’ 15 U.S.C. § 2605 (2015). 23 Corrosion Proof Fittings v. Environmental Protection Agency, 947 F.2d 1201 (5th Cir. 1991). 24 U.S. Environmental Protection Agency, U.S. Federal Bans on Asbestos—Regulatory History 

of Asbestos Bans, available at http://www2.epa.gov/asbestos/us-federal-bans-asbestos (last visited 

May 7, 2015). 25See, e.g., 16 C.F.R. Parts 1304–05 (2015) (banning the use of asbestos in certain spackling 

compounds). 26Other products that are permitted to be manufactured with asbestos include: cement corrugated sheets, cement flat sheet, pipeline wrap, roofing felt, cement shingle, millboard, cement 

pipe, automatic transmission components, clutch facings, friction materials, drum brake linings, 

brake blocks, and gaskets. U.S. Environmental Protection Agency, U.S. Federal Bans on Asbestos, available at http://www2.epa.gov/asbestos/us-federal-bans-asbestos (last visited May 7, 

2015). 27 Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir. 1973). 28GAO Report at 8. 29Lloyd Dixon et al., Report: Asbestos Bankruptcy Trusts—An Overview of Trust Structure 

and Activity with Detailed Reports on the Largest Trusts, Rand Institute for Civil Justice, at 

xi (2010). 

Although a link between asbestos and lung cancer was first reported in 1935, millions of Americans were exposed to asbestos 

over the ensuing years and their injuries began to manifest in the 

1960’s.19 For example, the Occupational Safety and Health Administration stated in 1986 that it was ‘‘aware of no instance in which 

exposure to a toxic substance more clearly demonstrated detrimental health effects on humans than has asbestos exposure. The 

diseases caused by asbestos exposure are life-threatening or disabling.’’ 20 The Environmental Protection Agency (EPA) in 1988 

published a study of asbestos in public schools and found that its 

presence was ‘‘extremely hazardous.’’ 21

In 1989, the EPA issued a regulation pursuant to the Toxic Substances Control Act 22 (TSCA) banning most asbestos-containing 

products. This regulation, however, was remanded by the Fifth Circuit Court of Appeals 23 and, ‘‘[a]s a result, most of the original ban 

on the manufacture, importation, processing, or distribution in 

commerce for the majority of the asbestos-containing products 

originally covered in the 1989 final rule was overturned.’’ 24 Currently, the use of asbestos is banned in the manufacture of certain 

products,25 but it continues to be used in many other products, 

such as disk brake pads, vinyl floor tiles, and clothing.26

The first appellate opinion upholding a product liability judgment against a manufacturer of asbestos-containing products was 

rendered in 1973 by the Fifth Circuit.27 As reported by the Government Accountability Office (GAO), ‘‘In the course of the first successful personal injury lawsuits against asbestos manufacturers, 

plaintiffs’ attorneys introduced evidence that these manufacturers 

had known but concealed information about the dangers of asbestos 

exposure or that such dangers were reasonably foreseeable.’’ 28 In 

the more than four decades since, litigation over personal injuries 

resulting from exposure to asbestos has resulted in ‘‘hundreds of 

thousands of claims filed and billions of dollars in compensation 

paid,’’ according to the Rand Institute for Civil Justice.29 ‘‘Asbestos 


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30GAO Report at 1. Approximately 100 companies have filed for bankruptcy relief at least in 

part due to asbestos-related liability. Id. at 2. 31Kane v. Johns-Manville Corp., 843 F.2d 636 (2nd2nd Cir. 1988). 32 11 U.S.C. § 524(g)(2)(B)(ii) (2015). 33The provision defines ‘‘demand’’ as a demand for payment, present or future, that— 

(A) was not a claim during the proceedings leading to the confirmation of a plan of reorganization; 

(B) arises out of the same or similar conduct or events that gave rise to the claims addressed by the injunction issued under paragraph (1); and 

(C) pursuant to the plan, is to be paid by a trust described in paragraph (2)(B)(I). 

11 U.S.C. § 524(g)(5) (2015). 34 11 U.S.C. § 524(g)(1)(B) (2015). 35 11 U.S.C. § 524(g)(2)(B)(i) (2015). 36 11 U.S.C. § 524(g)(2)(B) (2015). 37GAO Report at 13. 38 Id. at 3. 39 Id. at 15. 40 Id. 

litigation,’’ according to the GAO, ‘‘has been the longest-running 

mass tort litigation in U.S. history.’’ 30

B. Overview of Bankruptcy Asbestos Trusts 

In 1994, Congress amended the Bankruptcy Code to authorize 

the imposition of a channeling injunction in chapter 11 cases involving asbestos claims. Codified as section 524(g), this provision 

allows a debtor, under certain circumstances, to shift its asbestos 

liabilities to a trust fund. Modeled on the injunction issued in the 

Johns-Manville bankruptcy case,31 section 524(g) authorizes a 

court in a chapter 11 case, after making certain findings,32 to issue 

an injunction preventing any entity from ‘‘taking legal action for 

the purpose of directly or indirectly collecting, recovering, or receiving payment’’ for any claim or demand 33 that is to be paid in full 

or in part by a trust established under a confirmed plan of reorganization.34 The trust is typically funded with newly issued securities of the recapitalized debtor and by the debtor’s obligation to 

make future payments.35 Upon confirmation, the trust assumes all 

of the debtor’s liabilities for personal injury, wrongful death, or 

property damages allegedly caused by the presence or exposure to 

asbestos or asbestos-containing products.36 As the GAO observes, 

‘‘neither the courts nor the U.S. Trustees have any specific statutory or other requirements to oversee a trust’s administration.’’ 37

Once operational, the trust implements ‘‘a nonadversarial administrative process—independent of the court system—to review 

claimants’ occupational and medical histories before awarding compensation.’’ 38 The trusts are privately managed and typically consist of a trustee, a trust advisory committee, and a future claims 

representative.39 The GAO explains: 

Trustees manage the daily operations of the trusts, including managing the trusts’ investments, hiring and supervising support staff and advisors, filing taxes, and submitting annual reports to the bankruptcy court, as required 

by the trusts’ [trust agreement]. The trustees are to manage the trust for the sole benefit of the present and future 

claimant beneficiaries.40

Each trust establishes its own process by which claims are assessed and paid. Claims that meet the requisite criteria are paid 

a percentage of the scheduled value based on the nature of the asserted injury. The payment ratio varies among the trusts based on 


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41 Id. at 17. 42 Id. at 21. 43 Id. at 16. 44 Id. at 15. 45 Id. at 18. 46 Id. 47See, e.g., Editorial, St. Francis of Asbestos, WALL ST. J., June 14, 2004, at A14 (suggesting 

that the House and Senate ‘‘bankruptcy subcommittees . . . [conduct] a full and public investigation of the rigged asbestos mess’’); The Latest Asbestos Scam—The Lawyers Are Now Rigging 

the Bankruptcy Process, WALL ST. J., June 1, 2004, at A16 (observing that the ‘‘latest asbestos 

scandal is threatening the integrity of the judicial system itself’’). 48The Administration of Large Business Bankruptcy Reorganizations: Has Competition for Big 

Cases Corrupted the Bankruptcy System?: Hearing Before the Subcomm. on Commercial and 

Admin. Law of the H. Comm. on the Judiciary, 108th Cong. (2004). 49 In re Garlock Sealing Technologies, LLC, 504 Bankr. 71, 85–86 (Bankr. W.D.N.C. 2014). 50Telephone interview with William Jenkins, Director, Homeland Security and Justice Issues, 

et al., U.S. Government Accountability Office (May 7, 2012); GAO Report at 23. 51GAO Report at 23. 52 Id. 

the availability of assets and anticipated present and future 

claims.41 According to the GAO, payments range from 1.1 percent 

to 100 percent for certain diseases, such as mesothelioma or asbestosis and the median payment percentage among the various trusts 

was 25 percent.42 The GAO reports that since the establishment of 

the first trust in 1988, ‘‘asbestos trusts have paid about 3.3 million 

claims valued at about $17.5 billion,’’ as of 2010.43 In addition to 

seeking compensation from an asbestos bankruptcy trust, asbestos 

claimants may seek compensation from liable companies that are 

not in bankruptcy through the tort system.44

To establish entitlement to compensation from a bankruptcy asbestos trust, the claimant completes a claim form supported by documented evidence of exposure to asbestos products. Such evidence 

may consist of the claimant’s work history, employer records, Social 

Security records, and deposition testimony taken during any litigation, the GAO reports.45 The claimant must also submit medical 

records ‘‘sufficient to support a diagnosis for the specific disease 

being claimed or, if applicable, a copy of a death certificate.’’ 46

In 2004, reports of fraudulent claims made against asbestos 

trusts and solvent companies emerged.47 The Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law 

(RRCAL Subcommittee) examined this issue as well as others presented with respect to the treatment of mass torts in bankruptcy 

cases as part of an oversight hearing conducted that same year.48

More recently, a bankruptcy court found a pattern by asbestos 

claims of ‘‘demonstrable misrepresentation’’ of exposure evidence in 

the chapter 11 bankruptcy case of Garlock Sealing Technologies, an 

asbestos manufacturer,.49

Nevertheless, GAO, as part of its 2011 review of bankruptcy asbestos trusts, found neither any evidence of endemic fraud with respect to asbestos claims nor any proof of overt fraud over the 

course of its examination.50 The GAO reported that 98 percent of 

the 52 trusts that it reviewed required a claims audit program to 

be conducted. Based on interviews held with representatives from 

11 trusts, GAO observed that all the trusts ‘‘incorporate quality assurance measures into their intake, evaluation, and payment processes.’’ 51 GAO also noted that ‘‘each trust is committed to ensuring 

that no fraudulent claims are paid by the trust, which aligns with 

their goals of preserving assets for future claimants.’’ 52 In addition, 


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53 Id. 54 Id. 55 Id. at 16, 24. 56 Id. at 17. 57 Id. at 4, note 7. 58 Id. at 24–25. 59 Id. at 26. 60 Id. at 29. 61 Id. 62See, e.g., Unofficial Tr. of Markup of H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2015,’’ by the H. Comm. on the Judiciary, 114th Cong. (2015), at 92– 

94 [hereinafter ‘‘Tr. at ___’’]. 63See text accompanying notes 47–49. 64See, e.g., Dionne Searcey & Rob Barry, As Asbestos Claims Rise, So Do Worries About 

Fraud, WALL ST. J., Mar. 11, 2013, at A1. 

it found that none of the trusts ‘‘indicated that these audits had 

identified cases of fraud.’’ 53

With respect to reporting, the GAO states that these trusts ‘‘operate without judicial or Federal Government oversight, but generally provide annual financial reports to the U.S. bankruptcy court 

of jurisdiction in accordance with provisions set forth in each 

trust’s trust agreements.’’ 54 These reports typically set forth the 

total number of claims paid and the aggregate value of these 

claims.55 While some reports are publicly available, some are filed 

under seal with the bankruptcy court ‘‘for reasons deemed appropriate by the court.’’ 56 These include protecting the interests of the 

reorganized company and its competitiveness.57 Of the 47 annual 

trust reports reviewed by GAO, only one reported the amount paid 

to each individual and listed these individuals’ names.58 On the 

other hand, 65 percent of the trusts reviewed by GAO (33 out of 

52 trusts) specifically provide that ‘‘claimant information submitted 

to the trust for purposes of obtaining compensation is confidential 

and should be treated as a settlement negotiation.’’ 59

There is a sharp divide between those who support additional 

disclosure, namely the defense bar, and those who oppose it, namely the plaintiffs’ bar and trusts. The principal arguments against 

disclosure of individual claimant information, as summarized by 

the GAO, are that ‘‘parties in the tort system are not required to 

disclose settlement negotiation or agreement information outside of 

the subpoena process’’ and that ‘‘trusts are analogous to any other 

settling party and related negotiations and payments are privileged.’’ 60 They further argue that ‘‘all of the potentially relevant information in the trusts’ possession is available to the defense 

through pretrial discovery.’’ 61

CONCERNS WITH H.R. 526

I. H.R. 526 IS NOT NECESSARY GIVEN THE ABSENCE OF ANY EMPIRICAL

EVIDENCE OF SYSTEMIC FRAUD

In order to justify the onerous new requirements the bill would 

impose on the asbestos trusts and the victims they serve, proponents of H.R. 526 allege that there is pervasive fraud and abuse 

in the asbestos trust compensation system.62 In truth, however, 

there have been only isolated reports of fraudulent claims over the 

years, as previously noted.63 Although the Wall Street Journal published an article in 2013 purporting to document ‘‘numerous apparent anomalies’’ regarding various asbestos claim,64 a close reading 

of the article shows that these instances typically resulted from 

human error or that protocols for rooting out fraud were working 


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65 Id. 66 Joan Claybrook, Fraud Made the Asbestos Illness Situation Much Worse, Letter to the Editor, WALL ST. J., (May 19, 2013, at A16). 67Telephone interview with William Jenkins, Director, Homeland Security and Justice Issues, 

et al., U.S. Government Accountability Office (May 7, 2012); GAO REPORT, supra note 14, at 

23. 68GAO Report at 18. 69 Id. 70 Id. at 23. 71 Id. 72 Id. 73Tr. at 148. 

as intended.65 As noted in her response to this article, Joan 

Claybrook, president of Public Citizen from 1982 to 2009 and head 

of the National Highway Traffic Safety Administration from 1977 

to 1981, observed: 

There is no evidence to support assertions of significant 

fraud in claims by asbestos victims. Human error in data 

entry is not fraud. Out of millions of claims filed at the 

company asbestos trusts, the Journal’s extensive investigation identified an error and anomaly rate of only 0.35%, 

much of that due to mistakes by the trusts, not the victims.66

It is also important to note that the GAO is not aware of any 

subsequent reports of endemic fraud since 2004 with respect to asbestos claims and it did not uncover any evidence of overt fraud 

during its examination of asbestos trusts.67 Instead the GAO has 

detailed an already robust set of procedures that a claimant must 

follow to establish entitlement to compensation. The claimant completes a claim form supported with documented evidence of exposure to asbestos products. Such evidence may consist of the claimant’s work history, employer records, Social Security records, and 

deposition testimony taken during any litigation.68 The claimant 

must also submit medical records ‘‘sufficient to support a diagnosis 

for the specific disease being claimed or, if applicable, a copy of a 

death certificate.’’ 69 In addition, 98 percent of the 52 trusts that 

the GAO reviewed required a claims audit program to be conducted. Based on interviews held with representatives from 11 

trusts, GAO found that all the trusts ‘‘incorporate quality assurance measures into their intake, evaluation, and payment processes.’’ 70 GAO also found that ‘‘each trust is committed to ensuring 

that no fraudulent claims are paid by the trust, which aligns with 

their goals of preserving assets for future claimants.’’ 71 It is noteworthy that even with this heightened scrutiny, none of the trusts 

‘‘indicated that these audits had identified cases of fraud.’’ 72

To draw attention to the fact that the current asbestos trust 

claims processing generally has adequate fraud detection systems 

in place, RRCAL Subcommittee Ranking Member Steve Cohen (DTN) offered an amendment that would have excluded trusts that 

have a claims audit program from the bill. This thoughtful amendment, however, was defeated by voice vote.73

With the knowledge that there is no empirical evidence of fraud 

in the system, we are led to conclude that this measure is nothing 

more than an attempt to improperly allow asbestos defendants to 

circumvent state and Federal discovery procedures. As the Minority 

witness explained during a hearing on a substantially identical bill 

held before the RRCAL Subcommittee in 2013, ‘‘Solvent asbestos 


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74Furthering Asbestos Claim Transparency (FACT) Act of 2013: Hearing on H.R. 982 Before 

the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 

Judiciary, 113 Cong. 64 (2013) (prepared statement of Elihu Inselbuch). 75Tr. at 193. 76Letter from Susan Vento, widow of Rep. Bruce Vento (D-MN), et al., to Members of the 

House of Representatives (Feb. 4, 2015), at 2 (on file with Comm. on the Judiciary Democratic 

staff). 

defendants remaining in the tort system are currently able to learn 

all information relevant to a claim against them, including information about a victim’s trust claims, under state discovery 

rules.’’ 74 Any information that would be relevant to claims against 

asbestos defendants—including information related to a victim’s 

trust claims—can be obtained using normal discovery tools available under state law, like interrogatories, document requests, and 

depositions. Nonetheless, the bill’s proponents offer no explanation 

as to why the bill’s potentially costly and burdensome information 

request provision is necessary or why Federal law should subvert 

state law discovery processes. 

In response to this particular flaw in the bill, Representative 

Hakeem Jeffries (D-NY) offered an amendment that would have required the trust to provide information relating to payments made 

by the trust and demands for such payment to any party to an action concerning asbestos liability exposure only if such party cannot 

otherwise obtain such information under applicable non-bankruptcy law. The amendment further provided that the information 

must relate to a trust claimant who is also a party to such action 

against the requesting party. Representative Jeffries’ amendment, 

however, failed by a vote of 8 to 18.75

II. H.R. 526 WOULD HARM ASBESTOS VICTIMS IN MULTIPLE WAYS

A. The Bill’s Reporting and Disclosure Requirements Constitute an 

Assault on Asbestos Victims’ Privacy Interests 

H.R. 526’s mandatory reporting and disclosure requirements 

would violate asbestos victims’ privacy when they seek payment for 

injuries from an asbestos bankruptcy trust. Specifically, the bill requires their personal information, such as their names and exposure histories, to be made part of the bankruptcy court’s public 

case docket, which is easily accessible through the Internet with 

the payment of a nominal fee. As a result, information concerning 

claimants’ sensitive personal information would be irretrievably released into the public domain. 

It is readily apparent that these reports would provide a treasure 

trove of data that could be accessed by insurance companies, prospective employers, lenders, and data collectors who could then use 

such information for purposes having absolutely nothing to do with 

compensation for asbestos exposure and that could be used to the 

detriment of asbestos victims. In effect, this bill would allow 

unsuspecting asbestos victims to be further victimized, all in the 

name of helping those who harmed these victims in the first place. 

As the widow of our former Judiciary Committee colleague, Representative Bruce Vento (D-MN), who died of mesothelioma in 

2000, warned, ‘‘The information on this public registry could be 

used to deny employment, credit, and health, life, and disability insurance. We are also concerned that victims would be more vulnerable to identity thieves, con men, and other types of predators.’’ 76


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77GAO Report at 30. 78 Id. 79 Id. at 29. 80 Id. 81Memorandum from Legal Representatives for Future Asbestos Personal Injury Claimants 

with Respect to Certain Asbestos Settlement Trusts to Prof. Troy McKenzie, Advisory 

Comm.ittee on Bankruptcy Rules of the Judicial Conference of the United States, at 2 (Aug. 10, 

2011) (on file with the H. Comm. on the Judiciary Democratic staff). 82Tr. at 126. 83Federal Trade Commission: Identity Theft Once Again the Top Consumer Complaint, CNN 

Wire Service (Mar. 1, 2015), available at http://fox6now.com/2015/03/01/federal-tradecommission-identity-theft-once-again-the-top-consumer-complaint. 

Proponents of more disclosure argue that it may reduce the ‘‘asbestos-related litigation burden on the remaining solvent defendants by demonstrating that the trusts have increased claimants’ 

overall compensation beyond the amount justified in relation to the 

harm caused.’’ 77 They also assert that the current system’s lack of 

transparency ‘‘could enable plaintiffs to file contradictory claims to 

different trusts while also pursuing recovery through the tort system.’’ 78

These arguments, however, lack any merit. As the GAO observed, ‘‘parties in the tort system are not required to disclose settlement negotiation or agreement information outside of the subpoena process’’ and that ‘‘trusts are analogous to any other settling 

party and related negotiations and payments are privileged.’’ 79

Equally important, the GAO noted that ‘‘all of the potentially relevant information in the trusts’ possession is available to the defense through pretrial discovery.’’ 80 Trust representatives are also 

very concerned about the ‘‘privacy rights of hundreds of thousands 

of individuals who did nothing except successfully seek compensation from a trust.’’ 81

In an attempt to protect asbestos victims from this unwarranted 

invasion of privacy, Ranking Member John Conyers, Jr. (D-MI) offered an amendment specifying that the quarterly reports required 

to be filed under the bill contain only aggregate information. In 

support of his amendment, Representative Conyers argued that the 

bill would, in effect, subject unsuspecting asbestos victims to possible future abuse. The amendment also struck the bill’s burdensome discovery requirement. This amendment would have ensured 

victims’ privacy by not making individualized claimant information 

public. It also would have ensured that trusts could focus their resources on their primary mission of assuring fair compensation for 

asbestos victims, rather than participating in the discovery process 

for outside lawsuits. Notwithstanding these benefits, this amendment failed by a party line vote of 5 to 14.82

In another attempt to mitigate the bill’s privacy flaws, Representative Henry C. ‘‘Hank’’ Johnson, Jr. (D-GA) offered an 

amendment that would have ensured that personally identifiable 

information about an asbestos victim claimant is protected from 

disclosure. It included within the amendment’s definition of personally identifiable information, information pertaining to the claimant’s health and finances. As Representative Johnson argued, the 

unfettered release of personally identifiable information facilitates 

identity theft. According to the Federal Trade Commission (FTC), 

identity theft is one of the top complaints received by the agency. 

Last year, for example, the FTC received nearly 160,000 of these 

complaints, which was 100,000 more than it received in 2013.83 AlVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00049 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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84See text accompanying note 76. 85Tr. at 180–81. 86 Id. at 92. 87See, e.g., Op. Ed., Susan Vento, Asbestos Victims Call on Congress to Stop Fast-Tracking 

Legislation That Would Violate Victim’s Privacy, ROLL CALL, May 14, 2015, at 11 (describing 

the bill as ‘‘offensive’’); Letter from Susan Vento widow of Rep. Bruce Vento (D-MN), et al. to 

U.S. House of Representative Members (May 13, 2015) (on file with H. Comm. on the Judiciary 

Democratic staff) (warning that H.R. 526 ‘‘will make it harder for victims to seek justice and 

easier for asbestos companies to delay cases and pay less to victims’’); Michael Valach, son of 

deceased victim of mesothelioma, to Representative Tom Marino (R-PA), Chair, Subcomm. on 

Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary (May 13, 

2015) (on file with H. Comm. on the Judiciary Democratic staff) (expressing concern that the 

legislation will ‘‘place personal information about asbestos victims and their families . . . on a 

public database accessible to the entire world’’). Vento Letter. 88See, e.g., Furthering Asbestos Claims Transparency (FACT) Act of 2015: Hearing on H.R. 

526 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law, 114th Cong. 

(2015); Furthering Asbestos Claims Transparency (FACT) Act of 2013: Hearing on H.R. 928 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law, 113th Cong. (2013); 

Furthering Asbestos Claims Transparency (FACT) Act of 2012: Hearing on H.R. 4369 Before the 

Subcomm. on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary, 112th Cong. 

(2012); How Fraud and Abuse in the Asbestos Compensation System Affect Victims, Jobs, the 

Economy, and the Legal System: Hearing Before the Subcomm. on the Constitution of the H. 

Comm. on the Judiciary, 112th Cong. (2011). 89Letter from Susan Vento widow of Rep. Bruce Vento (D_MN), et al. to U.S. House of Representative Members (May 13, 2015), at 1 (on file with H. Comm. on the Judiciary Democratic 

staff). 90 Id. 

though, as previously noted, identity theft is a serious concern of 

asbestos victims,84 this amendment failed by a vote of 9 to 20.85

B. Asbestos Victims Vigorously Oppose this Legislation 

The proponents of this legislation assert that it is intended to assist asbestos victims. For example, Committee Chairman Bob 

Goodlatte stated at the outset of the markup of H.R. 526 that the 

bill ‘‘will help asbestos victims.’’ 86 Yet, we are unaware of a single 

asbestos victim who supports H.R. 526. In fact, we received letters 

from asbestos victims in vigorous opposition to this bill.87 Tellingly, 

the Majority failed to call an asbestos victim to testify at the hearing on this legislation held in this Congress or in the last two Congress when similar measures were considered.88 And, ‘‘[t]o add insult to injury,’’ the relatives of asbestos victims who were sitting 

silently in the audience at the hearing held on H.R. 526 were asked 

by Representative Darrell Issa (R-CA) to stand and then to shake 

their heads ‘‘yes or no’’ in response to his question, which then 

sought to use to support his arguments in support of the legislation.89

The victims observed, ‘‘Not one of us was given an opportunity 

to voice our opinions of the legislation, and yet, a member of the 

committee was permitted to use our presence in the hearing room 

to further his own position that is in direct contravention of our 

views.’’ 90

C. H.R. 526 Will Be Particularly Harmful to Veterans 

Although vast swaths of unsuspecting Americans have been exposed to asbestos, there are certain populations who had greater 

levels of exposure as the result of their work. For example, members of the Armed Forces of the United States have been disproportionately affected by asbestos. Even though veterans make up only 

eight percent of the population, they comprise 30 percent of all 


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91Military.com, Asbestos and the Military, History, Exposure & Assistance, available at http://www.military.com/benefits/veteran-benefits/asbestos-and-the-military-history-exposureassistance.html (last visited Oct. 27, 2015). 92 Id. 93 John Hedly-Whyte & Deborah R. Milamed, Asbestos and Ship-Building: Fatal Consequences, 77(3) ULSTER MEDICAL J. 191 (Sept. 2008), available at http://www.ncbi.nlm.nih.gov/ 

pmc/articles/PMC2604477. 

According to the White Lung Association: 

During World War II a new Liberty Ship hit the water in Baltimore every 37 hours 

and a few hundred miles South, in Hampton Roads Virginia, three ships hit the water 

each day. Trucks and ships delivered thousands of pounds of asbestos and asbestos 

products to the shipyards. . . . Workers in all trades breathed the asbestos used by 

insulators, boiler mechanics, carpenters, machinists, painters and joiners. 

James Fite, U.S. Shipyards: A History of Massive Asbestos Exposure and Disease, World Asbestos Report (2004), available at http://worldasbestosreport.org/conferences/gac/gac2004/ws_H_ 

2_e.php. 

94Tr. at 206. 

mesothelioma deaths.91 Military.com, the largest military and veteran membership organization in the United States, explains: 

Virtually every ship commissioned by the United States 

Navy between 1930 and about 1970 contained several tons 

of asbestos insulation in the engine room, along the miles 

of pipe aboard ship and in the walls and doors that required fireproofing. The sailors that manned these ships 

and the men who repaired them in Navy shipyards were 

prime candidates for asbestos exposure, a fact borne out by 

the disease statistics.92

In addition, civilian Department of Defense workers, such as shipbuilders and dockworkers, were extensively exposed to asbestos. 

For example, it has been reported that ‘‘[s]hipbuilding in World 

War II is a significant aetiology of the malignancies caused by asbestos.’’.93

In response to the special concerns presented by servicemembers 

and asbestos exposure, Representative Scott Peters (D-CA) offered 

an amendment that would have exempted claimants who have or 

who are currently serving in the Armed Forces of the United 

States, or who are currently or were previously civilian Department 

of Defense workers, and their families from the bill’s disclosure requirements. The amendment, however, failed by a vote of 9 to 18.94

III. H.R. 526 IS FUNDAMENTALLY INEQUITABLE BECAUSE IT REQUIRES

DISCLOSURE BY THE TRUSTS, BUT DOES NOT REQUIRE SOLVENT DEFENDANT COMPANIES TO DISCLOSE THEIR CONFIDENTIAL SETTLEMENT AGREEMENTS

H.R. 526 is fundamentally inequitable because it will impose additional burdens on asbestos bankruptcy trusts while easing the 

process by which solvent defendant companies can obtain discovery. This is particularly galling given the history of asbestos 

manufacturers in affirmatively concealing the dangers of their 

product from the public. 

Many defendant companies insist on confidentiality agreements 

before entering into settlement agreements specifically in order to 

prevent evidence of their wrongdoing from becoming public. More 

importantly, because of the secrecy of these settlements, other people who have been injured have no way of gaining important information about their exposure, their illnesses, or the settled liability 

of the companies that made them sick. Information about the conVerDate Sep 11 2014 04:32 Dec 04, 2015 Jkt 059006 PO 00000 Frm 00051 Fmt 6659 Sfmt 6601 E:\HR\OC\HR352.XXX HR352

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95 Id. at 142. 96 Id. at 163. 97GAO Report at 30. 

cealment of wrongdoing never becomes public, and the people who 

have suffered have no way of knowing about that wrongdoing or its 

extent. Governmental agencies that are charged with protecting 

public health—whether in the workplace or in the home—are deprived of the information they need to enforce the laws Congress 

has enacted. 

To highlight the problem of H.R. 526’s inequitable disclosure obligations, Representative Jerrold Nadler (D-NY) offered an amendment requiring a party that requests information from a bankruptcy asbestos trust to meet certain criteria. Under the amendment, such a party would have been required to agree to disclose 

information relevant to such action that pertains to the protection 

of public health or safety to any other person or to any Federal or 

state agency with authority to enforce laws regulating an activity 

relating to such information upon request of such party or agency. 

The goal of this amendment was to ensure that the transparency 

that H.R. 526’s proponents demand from the victims of the asbestos 

industry would also apply to the corporations that inflicted so much 

damage and so much suffering over the years. The amendment 

would have addressed the longstanding efforts by these corporations to conceal the facts from the public, from their victims, and 

from government agencies charged with enforcing our health and 

safety laws. Notwithstanding the equitable value of this amendment, it failed by a vote of 6 to 16.95

Similarly, Representative Sheila Jackson Lee (D-TX) offered an 

amendment that would have provided balance to the bill’s disclosure requirements. This amendment would have required an asbestos defendant seeking information from the trust about a plaintiff 

to first make available to the plaintiff and trust information about 

the median settlement amount paid by that defendant for claims 

settled or paid within 5 years of the date of the request, by disease 

category, for the State in which the plaintiff’s action was filed. This 

amendment, however, failed by a vote of 7 to 17.96

IV. H.R. 526 WILL DIVERT CRITICAL FUNDS AND FURTHER DECREASE

COMPENSATION TO ASBESTOS VICTIMS BY FORCING BANKRUPTCY

TRUSTS TO PREPARE BURDENSOME REPORTS

H.R. 526 would effectively shift the cost of discovery away from 

solvent asbestos defendants to the bankruptcy trusts, ultimately diminishing the available pool of money to compensate the victims of 

bankrupt asbestos defendants. By imposing reporting and information demand requirements on trusts, H.R. 526 could significantly 

increase the administrative costs of trusts in meeting these requirements and force them to divert their limited resources from 

paying the claims of asbestos victims to satisfying the information 

requests of those who caused injuries to millions of Americans. For 

example, trust representatives state that the trusts are often required to keep such information confidential and they are concerned about the substantial costs involved in responding to requests for such information.97 In fact, one trust reported to the 

GAO that it incurred $1 million in attorneys’ fees to respond to a 


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98 Id. at 27. 99Memorandum from Legal Representatives for Future Asbestos Personal Injury Claimants 

with Respect to Certain Asbestos Settlement Trusts to Prof. Troy McKenzie, Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States, at 2 (Aug. 10, 

2011). 100GAO Report at 16. 

request to disclose every document on every claimant.98 Several 

legal representatives for future asbestos personal injury claimants 

also fear that ‘‘unnecessary and unreasonable reporting and discovery obligations would divert resources from the trusts’ limited 

funds, which were specifically created to pay the claims of individuals stricken with asbestos-related diseases, for the benefit of third 

party defendants in non-bankruptcy, asbestos-tort litigation.’’ 99

The bill includes only a modest compensation provision with respect to its information demand requirements, which allows a trust 

to seek payment for ‘‘any reasonable cost’’ that it incurred in responding to such demands. The ‘‘reasonableness’’ of reimbursement 

requests, of course, can be subject to dispute and litigation. Ultimately, the trusts will incur costs to implement the bill’s requirements, leaving less money to compensate asbestos victims. This is 

particularly problematic in light of the fact that defendants can already obtain the information they want using existing discovery 

tools. 

H.R. 526’s retroactive application only adds to this unnecessary 

burden. The vast bulk of asbestos trusts that would be affected by 

this legislation have long been in existence, one of which dates 

back to 1988. According to the GAO, these trusts have already paid 

3.3 million claims valued at about $17.5 billion.100 Yet, after the 

passage of more than 20 years since the first trust was established, 

the proponents of H.R. 526 now insist that these trusts issue reports and provide documentation. 

CONCLUSION

The only beneficiaries of H.R. 526 will be the very entities that 

knowingly produced a toxic substance that killed or seriously injured millions of unsuspecting American consumers and workers. 

The legislation does nothing to protect victims or to improve the 

claims process and is based on the false assertion that there is endemic fraud in the asbestos trust system that must be addressed. 

In truth, this legislation is simply an end run by defendants 

around the discovery process that threatens to prevent or delay 

adequate compensation for asbestos victims. 

Further, H.R. 526’s reporting and disclosure requirements are an 

assault on asbestos victims’ privacy interests and are fundamentally inequitable because solvent defendant companies are not similarly required to disclose their confidential settlement agreements. 

Finally, these burdensome new reporting requirements will divert 

critical funds and further decrease compensation to asbestos victims. 

Accordingly, we urge our colleagues to stand on the side of justice for asbestos victims and to oppose H.R. 526. 

MR. CONYERS, JR. 

MR. NADLER. 

MS. LOFGREN. 

MS. JACKSON LEE. 


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MR. COHEN. MR. JOHNSON, JR. MS. CHU. MR. DEUTCH. MR. GUTIERREZ. MS. BASS. MR. RICHMOND. MS. DELBENE. MR. JEFFRIES. MR. CICILLINE. MR. PETERS. 

Æ 


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