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S. HRG. 109–350

S. 852: A FAIR AND EFFICIENT SYSTEM TO

RESOLVE CLAIMS OF VICTIMS FOR BODILY

INJURY CAUSED BY ASBESTOS EXPOSURE, AND

FOR OTHER PURPOSES

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 26, 2005

Serial No. J–109–2C

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ARLEN SPECTER, Pennsylvania, Chairman 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

SAM BROWNBACK, Kansas 

TOM COBURN, Oklahoma 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

DAVID BROG, Staff Director 

MICHAEL O’NEILL, Chief Counsel 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

TUESDAY, APRIL 26, 2005

STATEMENTS OF COMMITTEE MEMBERS 

Page

Coburn, Hon. Tom, a U.S. Senator from the State of Oklahoma ........................ 29

Cornyn, Hon. John, a U.S. Senator from the State of Texas ............................... 26

Durbin, Hon. Richard J., a U.S. Senator from the State of Illinois .................... 31

Feingold, Hon. Russell D., a U.S. Senator from the State of Wisconsin ............. 34

Feinstein, Hon. Dianne, a U.S. Senator from the State of California ................. 27

Kennedy, Hon. Edward M., a U.S. Senator from the State of Massachusetts ... 23

Leahy, Hon. Patrick, a U.S. Senator from the State of Vermont ........................ 2

prepared statement .......................................................................................... 175

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama .......................... 21

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

WITNESSES 

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

Philadelphia, Pennsylvania ................................................................................. 4

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

Insurance Association, Washington, D.C. .......................................................... 15

Crapo, James D., M.D., Professor of Medicine, National Jewish Medical and 

Research Center, University of Colorado Health Sciences Center, Denver, 

Colorado ................................................................................................................ 40

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

of Manufacturers, Washington, D.C. .................................................................. 11

Gober, Hershel W., National Legislative Director, Military Order of the Purple Heart, McLean, Virginia ............................................................................... 43

Green, Eric D., Professor of Law, Boston University Law School, Boston, 

Massachusetts ...................................................................................................... 42

Landrigan, Philip J., M.D., Professor of Occupational and Environmental 

Medicine, and Chairman, Department of Community and Preventive Medicine, and Professor of Pediatrics, Mount Sinai School of Medicine, New 

York, New York .................................................................................................... 45

Morgan, Carol, President and General Counsel, National Service Industries, 

Inc., Doraville, Georgia ........................................................................................ 47

Peterson, Mark A., President, Legal Analysis Systems, Inc., Thousand Oaks, 

California .............................................................................................................. 48

Rabinovitz, Francine, Hamilton, Rabinovitz & Alschuler, Carmel, California ... 50

Reuther, Alan, Legislative Director, International Union, United Automobile, 

Aerospace & Agricultural Implement Workers of America (UAW), Washington, D.C. ........................................................................................................... 52

Seminario, Margaret, Director, Safety and Health Department, American 

Federation of Labor and Congress of Industrial Organizations (AFL–CIO), 

Washington, D.C. ................................................................................................. 13

QUESTIONS AND ANSWERS 

Responses of Edward Becker to questions submitted by Senator Durbin .......... 73

Response of Craig A. Berrington to a question submitted by Senator Cornyn .. 79

Responses of James D. Crapo to questions submitted by Senator Kyl ............... 80

Responses of Eric D. Green to questions submitted by Senator Cornyn ............ 86

Responses of Carol Ellis Morgan to questions submitted by Senator Specter ... 92

Responses of Mark A. Peterson to questions submitted by Senators Coburn, 

Cornyn, Specter and Kyl ..................................................................................... 97

Responses of Francine Rabinovitz to questions submitted by Senators Cornyn 

and Kyl .................................................................................................................. 114

Page

IV

SUBMISSIONS FOR THE RECORD 

Admiral Zumwalt & Consultants, Inc., James G. Zumwalt, Vice President, 

Reston, Virginia, statement ................................................................................. 118

Asbestos Disease Awareness Organization, Linda Reinstein, Executive Director, and Co-Founder, prepared statement .......................................................... 120

Asbestos Study, Group, Barry B. Direnfeld, Counsel, letter ................................ 123

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

Insurance Association, Washington, D.C., prepared statement ....................... 124

Blinded Veterans Association, Thomas H. Miller, Executive Director, Washington, D.C., letter ............................................................................................... 128

Center for Justice & Democracy, United Church of Christ Justice & Witness 

Ministries, USAction, and U.S. PIRG, joint letter and attachment ................. 130

Chemerinsky, Erwin, Alston & Bird Professor of Law, Duke University School 

of Law, Durham, North Carolina, letter ............................................................ 134

Crapo, James D., M.D., Professor of Medicine, National Jewish Medical and 

Research Center, University of Colorado Health Sciences Center, Denver, 

Colorado, prepared statement ............................................................................. 136

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

of Manufacturers, Washington, D.C., prepared statement ............................... 142

Gober, Hershel W., National Legislative Director, Military Order of the Purple Heart, McLean, Virginia, prepared statement ............................................ 147

Green, Eric D., Professor of Law, Boston University Law School, Boston, 

Massachusetts, prepared statement ................................................................... 151

International Association of Heat and Frost Insulators and Asbestos Workers, 

James A. Grogan, General President, Lanham, Maryland, press release ....... 164

International Association of Machinists and Aerospace Workers, R. Thomas 

Buffenbarger, President, Upper Marlboro, Maryland, prepared statement .... 166

Landrigan, Philip J., M.D., Professor of Occupational and Environmental 

Medicine, and Chairman, Department of Community and Preventive Medicine, and Professor of Pediatrics, Mount Sinai School of Medicine, New 

York, New York, prepared statement ................................................................. 168

Leaders of major asbestos victims’ and advocacy groups, joint letter ................. 173

Morgan, Carol, President and General Counsel, National Service Industries, 

Inc., Doraville, Georgia, prepared statement ..................................................... 179

Olson, Theodore B., Gibson, Dunn & Crutcher LLP, Washington, D.C., letter 

and attachments ................................................................................................... 184

Peterson, Mark A., President, Legal Analysis Systems, Inc., Thousand Oaks, 

California, prepared statement ........................................................................... 192

Phillips, Carter G., Sidley Austin Brown & Wood LLP, Washington, D.C., 

letter ...................................................................................................................... 202

Reuther, Alan, Legislative Director, International Union, United Automobile, 

Aerospace & Agricultural Implement Workers of America (UAW), Washington, D.C., letter and prepared statement ...................................................... 212

Seminario, Margaret, Director, Safety and Health Department, American 

Federation of Labor and Congress of Industrial Organizations (AFL–CIO), 

Washington, D.C., prepared statement and attachment .................................. 219

Strauss, David A., University of Chicago Law School, Chicago, Illinois, letters 235

Veterans of Foreign Wars of the United States, Robert E. Wallace, Executive 

Director, Washington, D.C., letter ...................................................................... 248

(1)

A FAIR AND EFFICIENT SYSTEM TO RESOLVE 

CLAIMS OF VICTIMS FOR BODILY INJURY 

CAUSED BY ASBESTOS EXPOSURE, AND FOR 

OTHER PURPOSES 

TUESDAY, APRIL 26, 2005

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, pursuant to notice, at 9:00 a.m., in room 

SR–325, Russell Senate Office Building, Hon. Arlen Specter, Chairman of the Committee, presiding. 

Present: Senators Specter, Hatch, Kyl, Sessions, Cornyn, Coburn, 

Leahy, Kennedy, Feinstein, Feingold, and Durbin. 

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

SENATOR FROM THE STATE OF PENNSYLVANIA 

Chairman SPECTER. Good morning, ladies and gentlemen. It is 

precisely 9 o’clock, the time scheduled for this hearing by the Senate Judiciary Committee. We meet in one of the most historic 

rooms on Capitol Hill, the Senate Caucus Room, where hearings 

were held on Teapot Dome, Army-MacArthur, Kefauver Crime 

Commission, McClelland Committee. President John F. Kennedy 

announced for the Presidency in this room. During fairly recent 

tenure, highly celebrated hearings with Judge Bork and Justice 

Thomas. And today we approach a subject of, I think, great importance to the United States for tens of thousands of asbestos victims 

who are suffering without compensation because their companies 

have gone into bankruptcy, and some 74 companies in bankruptcy 

are a tremendous drag on the economy. 

Senator Leahy and I, on April 19th, introduced Senate bill 852, 

joined by a group of Democrats with Senator Leahy and a group 

of Republicans with me, after working on a very, very carefully 

crafted bill to achieve certain core principles, and as previously 

stated, those principles will be maintained on the agreement that 

Senator Leahy and I have. They are subject to modifications on improvements which we can agree to. 

The discussion draft on this bill was circulated on February 7th, 

and an updated draft on April the 12th incorporating a great many 

changes, and the discussion draft was formulated after very, very 

extensive proceedings on legislation which was reported out of 

Committee by Chairman Hatch, who deserves an enormous amount 

of credit for moving forward on the trust fund concept. And that 

bill was reported out largely along party lines. Senator Feinstein 

2

joined Republicans at that time. And the bill had a great many 

problems, and I voted for it but said it was necessary to move the 

bill along. And I then enlisted the aid of the former Chief Judge 

of the Court of Appeals for the Third Circuit, Judge Edward Becker, who had taken senior status a couple of months before. Judge 

Becker convened a meeting of all the so-called stakeholders—the 

manufacturers, the AFL–CIO, the insurance industry, and the trial 

lawyers—in his chambers for 2 days in August. And that has been 

followed by a series of meetings totaling some 39, all counted, in 

my conference room where we have worked through many of the 

issues. Those meetings have been attended by some 27 Senators’ 

representatives, and discussions have been ongoing. 

I called Senators yesterday to see if there were any additional 

witnesses which they would like to have heard today. Yesterday we 

worked through many of the issues with representatives of AFL–

CIO in the morning and sat down with a group of my Republican 

colleagues in the afternoon. And we have worked through many, 

many of the issues, and we are prepared to consider other modifications which will supplement and be consistent with the core provisions. 

Our Judiciary calendar is very, very heavy, and it is well known 

generally we anticipate a Supreme Court nomination in the course 

of the next several months. This bill is a longstanding product, and 

it is not possible to satisfy everybody on everything. And on the 

four interested stakeholders, we have interested parties who have 

great strength and great courage in the political world of the 

United States Congress. If we are not successful, I do not see any 

time in the reasonably near future when we will again revisit this 

issue. 

I am going to yield back the one second and turn to my very distinguished colleague, Senator Leahy, who I want to compliment 

specially. He has taken on a very, very difficult job and a courageous job in dealing with many people on his side of the aisle. I 

have had a few on my side who do not like everything he has done. 

A lot of people do not like everything I have done. We are having 

a hard time finding people who like anything we have done. 

[Laughter.] 

Chairman SPECTER. Senator Leahy? 

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

FROM THE STATE OF VERMONT 

Senator LEAHY. Mr. Chairman, I like what you have done, if that 

is any help. But this is a bipartisan bill. It is the result of years 

of conscientious work, and the Chairman, who has worked so hard 

on this, called this one of the most complex issues he has ever tackled. I agree. I think in that regard we have been very fortunate to 

have Judge Becker join with us on this, and, Judge, I salute you 

for all the work you have done. But, Mr. Chairman, I salute you 

because I do not think we would be this far if you had not persevered as hard as you have. 

Among the other hearings held in this room which the Chairman 

did not mention was the hearing on the sinking of the Titanic. 

Now, in this case, we are bringing the ship back up. We are not 

putting it down. And we are bringing up a ship well worth saving. 

3

It is not the bill that I would have written if I was the only one 

to write it. It is not the bill that Senator Specter would have if he 

were the only one writing it. But you have to get consensus. Nobody should be surprised here that the interested groups—the 

labor organizations, industrial participants in the trust fund, the 

insurers, the trial bars—are each less than pleased with some portion or another of the bill. But that is the essence of legislative 

compromise. We either compromise or we have no bill. It is as simple as that. 

And this is a good compromise. We have tried to protect the ultimate goal of fair compensation to the victims. That is the lodestar 

of our efforts. We have all had to make sacrifices on a group of subsidiary issues as we moved forward. But what we have achieved is 

a significant step toward a better, more efficient way to compensate 

asbestos victims. 

This is the most lethal substance ever to be widely used in the 

workplace. Between 1940 and 1980, more than 27.5 million workers were exposed to asbestos on the job. Nearly 19 million of them 

had high exposure over long periods of time. We even know of family members who have suffered asbestos-related diseases just because they lived with the person, because they washed the clothes 

of loved ones. 

The economic harm caused by asbestos is real. The bankruptcies 

that resulted are a different kind of tragedy for everyone, for workers and retirees, for the shareholders, and for families who built 

these companies. In my own State of Vermont, the Rutland Fire 

Clay Company is among more than 70 companies nationwide to 

have declared bankruptcy. 

Now, I am encouraged by the favorable reaction this bill has generated among many. In the past week, we have received letters of 

support from United Automobile Workers, the UAW; the Asbestos 

Workers Union, certainly a union that has a great deal of interest 

in what happens; the Veterans of Foreign Wars of the United 

States, the VFW; the Asbestos Study Group; the Blinded Veterans 

Associations; and others, and I ask consent that all these letters be 

put in the record. 

Chairman SPECTER. Without objection, they will be made a part 

of the record. 

Senator LEAHY. The UAW notes in its April 13th letter to us, 

‘‘This will provide more equitable, timely, and certain compensation 

to victims of asbestos-related disease, and I am pleased that Alan 

Reuther, their legislative director, will be here today.’’

The VFW letter of April 14th says, ‘‘The national trust fund you 

are proposing offers our members who are sick and dying the opportunity to secure timely and fair compensation for the injury 

they suffered in the course of serving their country.’’

The National Association of Manufacturers also released a statement expressing their hope that the legislation will engender broad 

support. And I thank Governor Engler for NAM’s support, and I 

look forward to his testimony today. 

All unimpaired asbestos victims are eligible for medical monitoring, and unlike last year’s bill, the bill provides for medical 

screening for high-risk workers, a relatively low-cost way to help 

4

make sure that those most likely to be harmed as properly diagnosed and treated, and I thank the AFL–CIO for their help in this. 

Organized labor strongly supported the provision ensuring that 

victims’ awards under the new trust fund would not be subject to 

subrogation by insurance companies. The initial funding of the 

trust is more realistic and more substantial than the bipartisan bill 

that passed last Congress. 

And unlike the earlier bill, this bill ensures that all contributors 

in the fund will be a matter of public record, as are their obligations to the fund. And we guarantee that court cases that have 

reached judgment or attained verdicts will not be upset by the new 

trust fund, unlike last year’s. 

I want to thank the senior Senator from California, Senator 

Feinstein, for her tireless efforts. Under her approach we adopted, 

exigent cases may receive an immediate lump sum payment. The 

history of asbestos use in this country must come to an end. Senator Murray’s provision does that. 

So these are very complex things. I will close with this, and I will 

put my whole statement in the record. But Chairman Specter and 

I know that what we are attempting here rates off the charts in 

legislative degrees of difficulty. Neither of us were born yesterday. 

We have served a long time in the Senate. We have worked on 

compromises, Republican legislation, Democratic legislation, legislation that passes—not legislation that is put in to score points for 

one interest group or another, one party or another. But we have 

worked on legislation that passes because it benefits Americans, 

first and foremost. This is one of those pieces of legislation. 

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

Chairman SPECTER. Thank you very much, Senator Leahy. 

We turn now to Judge Edward R. Becker, former Chief Judge of 

the Court of Appeals for the Third Circuit, who wrote the opinion 

on the asbestos class action case, which was affirmed by the Supreme Court of the United States. He has had a very extraordinary 

judicial record, served on the United States District Court for the 

Eastern District of Pennsylvania for 12 years and for 23 years after 

that has been on the Court of Appeals for the Third Circuit. He last 

year received the Devitt Award as the Outstanding Federal Jurist 

in America. His academic background is extraordinary: Phi Beta 

Kappa of the University of Pennsylvania, where I first met him; 

Yale Law School graduate, where we attended at the same time. 

And he has undertaken a labor of love here in tackling this issue 

in addition to his regular judicial duties. 

The only major point where he and I have a substantial disagreement on what has happened is that he will not take reimbursement 

for travel or hotel lodging. 

Judge Becker, the floor is yours. 

STATEMENT OF EDWARD BECKER, JUDGE, U.S. COURT OF APPEALS FOR THE THIRD CIRCUIT, PHILADELPHIA, PENNSYLVANIA 

Judge BECKER. Thank you, Mr. Chairman, for the privilege of appearing again before the Committee, and I thank you and Senator 

Leahy for your kind words about me and about my stewardship. 

5

S. 852 is different in many important respects from the discussion bill about which I previously testified. As a result of many, 

many hours of negotiation in recent months, most of the loose ends 

that I identified in my previous testimony have been tied down. I 

do not represent that they have been tied down to the satisfaction 

of all the stakeholders any more than that the bill as a whole is 

satisfactory to all stakeholders. As you and Senator Leahy have 

said, a bill completely satisfactory to any one stakeholder or any 

on Senator could probably never pass. S. 852 represents a compromise. 

In my testimony, I will focus on the changes from the previous 

draft, the areas that have provoked the greatest controversy in recent months, and the issues that we are still working on. I will, 

however recapitulate the salient features of the bill, which, as we 

know, is a trust fund bill providing for a $140 billion trust fund. 

When I appeared previously, I represented that the financial experts had demonstrated that trust fund was more than adequate 

to pay the projected claims. New figures from Goldman Sachs represent that by reason of elimination of the Level VIIs, even with 

the increase in the claim values, the fund is at least $5 billion more 

secure than before, which I hope will give assurance to those Senators who have expressed concerns about the solvency of the fund. 

The total program cost in this current bill is estimated to be $120 

billion, and the fund is $140 billion. The first 5-year outflow is 

within the up-front money. Now, the $140 billion is based upon the Goldman Sachs translation of the projections of future asbestos disease of Dr. Fran 

Rabinovitz, which, when I examined them in our marathon sessions last May, impressed me as correct. I know that there will be 

testimony today that those figures are off. That is the testimony of 

Mr. Peterson, which will be countered, as I understand, by that of 

Dr. Rabinovitz. I note for the benefit of the panel that the recent, 

very recent figures show a significant decline in claims. Sangabam, 

one of the major companies with asbestos liability claims, are down 

70 percent in the last 2 years. 

The Peterson and Rabinovitz estimates have been examined in a 

judicial proceeding by one of the most experienced judges in the 

Federal system, Judge John P. Fullam, of the District Court for the 

Eastern District of Pennsylvania, a bankruptcy expert who reorganized the Penn Central. And with respect to the Owens-Corning estimation, Dr. Peterson’s estimate of $11 billion in future OCF liability was rejected by Judge Fullam as not sound, and he accepted 

Dr. Rabinovitz’s figures, which came up with a figure of $4 billion 

less. 

So it seems to me that there is at least credible evidence based 

upon Judge Fullam’s findings that the Goldman Sachs figures, 

which are based upon Dr. Rabinovitz’s projections, are sound and 

that we should have some confidence that the fund will be able to 

meet the claims. 

The huge projected numbers of 300,000, according to David 

Austern, who is the most experienced man in this field, who has 

administered the Manville Trust for decades now, tells me that the 

bulk of those figures are either unimpaireds who will not be filing 

early claims against the fund because, as you know, they are only 

6

entitled to medical monitoring, or they are people who are maxed 

out, that is, people who have already in other lawsuits achieved or 

secured the maximum amount that they could get under the fund. 

So it seems to me that based on the Manville figures and what 

I have talked about, the Peterson projections, which start above the 

actual experience, are questionable. The funding seems sound. It is 

guaranteed by business as a whole, Section 204(l) at page 162 of 

the bill, the guaranteed payment surcharge. I stress, too, that contrary to recent press reports, the Government and the taxpayers 

have no obligation to contribute to the fund. That is made very 

clear in Section 406 of the bill at page 287. And the up-front funding appears, as I said in my previous testimony, to be realistic. 

Now, what about getting the money up front first? Business and 

insurance will be putting up the lion’s share. The big guys can 

quickly determine the amount that they must contribute, and I anticipate that the bulk of the up-front money will be available within 

months of enactment. Section 204(i)(L), pages 148 and 149 of the 

bill, requires that Tier II to Tier VI defendant companies must provide the administrator within 120 days of enactment a good-faith 

estimate of past asbestos expenditures, their 2002 revenues, which 

is the CalPERS, and an initial payment specified in the bill of very 

substantial amounts, for example, in Tier II it must be at least $22 

million for each participant. Besides, the participants want the 

fund to work and not to sunset; hence, they have every motive to 

pay quickly. 

Professor Green will testify, has expressed concern about the 

companies paying up. For the reasons that I have stated, I think 

this concern is misplaced. The companies have every motive to pay 

up. In all events, contrary to Mr. Green’s testimony, there are very 

strong enforcement remedies in this bill. Section 225 of the bill at 

page 210 gives the Government liens, and it seems to me that with 

the availability of liens and action by the Justice Department, the 

companies will pay up, and will pay up when they are supposed to. 

That will cure the fund. 

The great advantage of the trust fund, of course, is that it removes asbestos litigation from the tort system, where it can languish for years and years, often with disastrous results for the victim because the defendants have gone into bankruptcy or the victim cannot identify the product to which he was exposed 30 years 

previous. And I know of cases where there was a mesothelioma 

case where the meso victim could not recover simply because the 

exposure having been 30 years previous, nobody could identify the 

product, and they simply could not pin it on any given defendant. 

Whereas, under this fund, which is no-fault, you do not have to get 

into the product identification. 

It also provides an administratively streamlined no-fault system, 

telescopes the process into the here and now with the money in 

place, and in my judgment this is far superior to the medical criteria approach under which litigation will continue for decades in 

the State tort system, mostly in State courts, attended by endless 

legal challenges in the State courts, which the Congress had in 

mind, would be imposing tort reforms. 

7

Now, under the bill, priority in payment goes to the exigents, the 

very sick people first, which means that they will get promptly 

paid. Will this, in fact, happen? I say yes. 

Now, I know that concerns have been expressed as to the ability 

of the Department of Labor to handle the anticipated volume of 

claims. The revised bill addresses those concerns. Senator Feinstein has offered a proposal which is in the bill for an offer for 

judgment, Section 106(f)(a) at page 38 of the bill. Additionally, to 

the extent that someone does not pursue the offer of judgment, the 

Labor Department is required to contract out—Section 106(c)(4) at 

page 33. Contract out to whom? Contract out to claims facilities. 

There are claims facilities, the Manville Fund, the Western MacArthur Trust, the Fuller-Austin Trust. This asbestos claims process 

has been in effect for years, and there are entities, claims facilities 

like Manville, which have hardware/software experience, experienced workers who can be used in connection with processing these 

claims, who can process them with great facility. The Manville 

Trust processed as many as 150,000 claims per year. Based upon 

my conversation with Mr. Austern in the early—in the first 9 

months, which is the start-up period for the exigents, there will be 

nowhere near that number of claims. 

So the expertise is out there. The Labor Department can contract 

those who want to pursue the offer of judgment and may do so. As 

I have said, the fund is solvent. The money will be in place, and 

I think that things will work. 

A proposal was made as an alternative for a private corporation 

to administer it in lieu of the Department of Labor. Careful research has suggested that there are serious constitutional, non-delegation problems with that, which would doubtless lead to litigation. The mandatory contracting is only for evaluation or settlement of the claims. It would then come back to the Labor Department for processing. The Labor Department would sign off on them 

so you don’t have a non-delegation problem there. 

Now, let me quickly turn to a number of areas where there has 

been controversy or disagreement among the stakeholders. One 

area is medical criteria. Senator Hatch and Senator Leahy I 

thought did a magnificent job of crafting medical criteria. We have 

not spent a great deal of time in our deliberations over medical criteria, which we had thought were untouchable; but, however, a 

number of points have been raised. 

As you know, under the medical criteria, which started with 

1125, those who were unimpaired do not get paid under the bill, 

as they do get paid large sums in the tort system. They get only 

medical monitoring. The most significant change in this new bill, 

S. 852, is the elimination of the Level VIIs. 

Insofar as the Level VIs are concerned, there is certainly significant medical evidence, as Senator Coburn and Dr. Crapo have 

pointed out, that there are a number of cancers. This is the Level 

VIs that are not caused by asbestos exposure: pharyngeal, laryngeal, esophageal, stomach, and colon cancer. There has been a proposal that level VI should be eliminated. 

Senator Specter’s proposal was and is, as in this bill, Section 

121(e) at page 87, for the Institute of Medicine of NIH to make a 

study which must be completed by April 1, 2006. That study is 

8

mandatory. If that study demonstrates that esophageal, laryngeal, 

stomach, colon, these other cancers are not caused by asbestos exposure, then Level VI is out of the bill. 

There was some concern that a lot of money would be paid out 

between now and then. The fact of the business is that under Section 121(e), the proof requirements are very rigorous. My guess is 

that very few, if any, people are going to be paid out under Level 

VI because they need tremendous medical backup and an opinion 

from a physician, which would be against the medical literature, or 

much of it, that these particular cancers were caused by asbestos 

exposure. So I don’t think that Level VI is a problem. 

The claims values have been increased, Section 131, page 92. The 

start-up has been modified, Section 106 at page 232. If the fund is 

not up and running and paying the exigents within 270 days, they 

can go back to the tort system. But as I have suggested, the offer 

of judgment and the contracting should solve that problem. 

Insofar as subrogation is concerned, Senator Leahy pointed out 

Section 134(b) at page 105, there is no subrogation in this bill. A 

lot of people are very unhappy about that, but it is a trade-off. As 

I said and Senator Specter and Senator Leahy said, this is not a 

bill that—no stakeholder or no Senator would write this bill. A bill 

that any particular stakeholder or Senator would write could probably not pass. There has to be a compromise. There has to be a 

trade-off. 

A lot of people are very unhappy about the Level VIIs being out 

of the bill, but the Level VIIs are out of the bill, and subrogation 

is in. It is a trade-off and, obviously, the Senators will have to decide, politics being the art of the possible, as to whether this is a 

fair compromise. 

In my last testimony, the last time I appeared, you will recall 

that there was also subsequent to that a hearing on the so-called 

mixed dust or silica. Section 403(i) at page 243 seems to have 

solved the so-called silica or mixed dust claims, which says that 

someone who honestly has a bona fide claim from silica exposure, 

so long as they can demonstrate it was not due to asbestos exposure and, therefore, they are not compensated under this bill, but 

they can demonstrate that it was due to exposure to silica, they can 

proceed in the tort system. But as a result of the hearing and interim developments, it seems to me—the situation which appeared 

in Texas and I believe in Mississippi seems to have evaporated or 

been mooted. 

An example of the process that we have engaged in here is the 

issue with respect to the rail workers. One of the problems that we 

thought intractable was dealing with the rail workers. As a result 

of, I think, about 12 or 13 negotiating sessions, we have worked out 

a solution to that, Section 131(b)(4), page 94, to the satisfaction of 

the Association of American Railroads and Rail Labor. I submit 

that this is probably the longest-running markup in the history of 

the United States Senate. It has been going on for at least a year 

and a half, and the 13 or 14 sessions which resulted in the special 

adjustment for rail workers, which will be a surrogate for the payments they would otherwise get under the Federal Employers Liability Act, is an example of that. 

9

Screening is another example of a controversial issue. Some want 

it in; some want it out. It is, in effect, a compromise, but we have, 

however, been able to limit the cost of medical screening, and I do 

credit a very wise suggestion of Dr. Coburn, who pointed out that 

the way we can control costs—and this is in Section 225(c)(6) at 

page 221—is to make payments limited by the CPT code, which is 

what Medicare pays and which is what private doctors pay for the 

kinds of procedures that they do and that would be involved in 

medical screening. 

Insofar as the counsel fee issues, according to the figures, the plaintiffs’ lawyers have gotten $3 billion in fees already over the 

history of asbestos in the tort system. Again a compromise. People 

on one side or the other will not be completely happy with it. The 

previous amounts have been reduced to 5 percent. Is that too 

much? Well, it can be a lot in a simple meso case; it can be too 

little in other cases where there may be causation issues. 

My concern, frankly, on the counsel fee issue is administrative 

convenience. I do not want to see the Secretary of Labor, the administrator, I don’t want to have to see the administrator get involved in complicated counsel fee determinations. I know how much 

time I spent—I just wrote a 107-page—it ended up a 95-page opinion on counsel fees. Now, it was in class action cases. I have another case I am working on right now. 

Obviously, these are not as complicated, but determination of individualized counsel fees can take a lot of time. And we have a 

streamlined administrative system, and there are enough burdens 

on the administrator that I think that it is preferable to have a 

fixed sum, maybe too much in some cases, too little in other cases. 

But it seems to me that administrative convenience is important. 

And, of course, the client can negotiate. We do have time record requirements. There are penalties for infractions by lawyers. Indeed, 

if you look at Section 401 at page 30, very severe sanctions for misconduct, for anyone who abused the system by false claims. 

There also is an extensive pro bono provision with a notice that 

has to be given to the putative client as to the availability of pro 

bono representation, and the administrator has to retain a pro bono 

roster. 

I know Senator Kohl, who is not here, was concerned about the 

mesothelioma research and treatment center. Section 222(c) at 

page 203 provides $1 million for each of the year 2005 to 2008 for 

each of up to ten mesothelioma research and treatment centers. 

Insofar as the sunset provision, we have a compromise, again, 

that was proposed by Senator Feinstein that in the event of sunset, 

which we think will not happen, but if it does, after extensive program review, the reversion goes either to the Federal court or the 

State court where the individual was exposed or where the individual lives so that it cannot go to the bete noire of Madison County, Illinois. And we are looking at a proposal by Senator Kyl that 

would tighten up program review. 

There are a number of open issues that we are still working on, 

and I am nearing the end of my testimony, Mr. Chairman. Senator 

Levin I know, among others, and Senator Feinstein expressed concern about the little guys. When I say the little guys, I don’t mean 

the small business folks, because they are exempt, but the wholeVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
10

sales and others who are not the real big guys who have been doing 

the negotiation at the table, and there is a proposal which is very 

close that will give some relief, and this is satisfactory to business, 

have in mind that business guarantees the fund. You say, well, 

what good is the guarantee? Well, General Electric and Viacom and 

Dow Chemical, you know, all these big companies, if they go down 

the tube, the American economy is down the tube, and we are all 

in big trouble. But as long as the American economy stays healthy, 

these businesses have guaranteed—and I gave you the section before—the solvency of the fund and have in mind that the little 

guys—the littler guys also have the availability of an inequity adjustment, Section 204(d) at page 138 of the bill, if the payments 

that would be imposed upon them would be inequitable. So that is 

still being looked at. We think we are close insofar as the issues 

posed. 

A number of you are familiar with the issues raised by Equitas, 

the Lloyd’s of London runoff, and the problems that some of the insurers had, or the orphan share issue. That is being worked on. We 

may be close to an agreement about that. 

There has also been some issue about what happens to the bankruptcy trust in the event of sunset. There is a proposal for a master 

trust that would address that issue, and as I said before, Senator 

Kyl has some proposals for more searching program review and a 

possible revision of the medical criteria if the fund runs into trouble. 

Let me conclude by saying that this is not only one of the most 

contentious—one of the most complicated bills, I think, in the history of the Senate, but one of the most contentious because the 

stakeholder groups are not monolithic; rather, individual insurers, 

businesses, and unions are affected differently by the bill. Most of 

the insurers, I believe, support it. Many insurers oppose. Most 

businesses, as reflected by the statistics you have, are for it, but 

there are some businesses who think they are adversely affected 

who are not for it. And the same is true with respect to the unions. 

And to the extent that each of them is motivated and looks to their 

own pocketbook, any coalition is fragile. We cannot avoid that. 

My hope is that the Senate will rise above the temptation to protect particular constituents and look instead to the good of the Nation, the economy, and the victims. The fact remains that asbestos 

litigation has wrought more havoc on the American court system, 

State and Federal, including the Federal bankruptcy courts, and on 

American business and on the economy and on victims than any 

other species of litigation in American legal history. The Supreme 

Court has stated in three opinions that a legislative solution is 

needed. As a toiler in the vineyards of the court system, I have witnessed with my own eyes the grapes turning sour. I hope that the 

Senate will summon the political will and courage to act. 

S. 852 is not perfect, but it is the product of years of toil and I 

believe a fair compromise, as good as we are likely ever to get, and 

I commend it to you. 

That concludes my statement. I would be pleased to answer any 

questions that any members of the Committee may have. 

[The prepared statement of Judge Becker appears as a submission for the record.] 

11

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

that summary, and thank you for the thousands of hours you have 

put into this matter. 

The bill is a complicated one, and it is our conclusion that we 

ought to have an explanation that is not really as detailed as it 

might have been, but he has covered all the points and has given 

you some feel for the trade-offs, for the complex issues that we 

have had to wrestle with. 

I would like now to call the balance of the first panel. Governor 

Engler, Ms. Seminario, and Mr. Berrington, if you would step forward. We have a custom of having opening statements, as a generalization, of 5 minutes and 5-minute rounds for Senators, and we 

will have multiple rounds to the extent it is practical. We labor 

under time constraints in the Senate. The Majority Leader has 

scheduled a vote for 11:45. I do not think it is possible to conclude 

before that time, so Senators will go and vote, or this Senator will 

go and vote and come right back. And it is my hope to avoid an 

afternoon session because we have briefings on transparency on 

this issue. But this is a very, very important hearing, and we will 

take whatever time is required to hear the witnesses and to have 

Senators with a full opportunity to question. 

Our first witness is John Engler, who is the President of the National Association of Manufacturers. Governor Engler comes to that 

position after a three-term status as Governor of the State of 

Michigan, served 20 years in the Michigan Assembly, 7 years as 

the Senate Majority Leader, the youngest man ever elected to the 

Michigan House of Representatives. 

Thank you for joining us, Governor Engler, and we look forward 

to your testimony, which will be at 5 minutes. Thank you. 

STATEMENT OF JOHN M. ENGLER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, D.C., ON BEHALF OF THE ASBESTOS 

ALLIANCE 

Governor ENGLER. Thank you, Mr. Chairman. 

Chairman Specter, Senator Leahy, members of the Committee, 

thank you for the opportunity to testify. Today I am speaking on 

behalf of the National Association of Manufacturers’ Asbestos Alliance, a broad-based coalition of companies and associations committed to seeking a fair resolution of the asbestos litigation crisis. 

Last week’s introduction of the bipartisan S. 852 represents a 

major step forward in the decades-long push for asbestos legislation, almost coinciding with my arrival in the legislature many 

years ago. It has been a long time. But I commend you, Mr. Chairman and Senator Leahy, along with Majority Leader Frist, Senator 

Hatch, and so many others who worked so hard on this legislation, 

for your strong leadership and incredible persistence in dedicating 

yourselves to crafting a bill that compensates victims, provides fairness and certainty to companies, and delivers a major boost to our 

Nation’s economy. Today I would like to focus on why passage of 

the trust fund legislation is so vital to our economy. 

In the last few years, we have seen numerous studies documenting the negative economic impact of asbestos litigation. This 

morning a new study, being released by NERA Consulting, quanVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
12

tifies for the first time the tremendous benefits of a legislative solution like S. 852. Here are some of the key findings: 

Enactment of trust fund legislation will reduce administrative 

costs, such as legal fees, and bankruptcy costs, including serious 

impacts on workers, by $85 billion. According to NERA, these costs 

and the cost to the economy of lost productivity have reached a 

staggering $343 billion. 

To date, productivity losses due to litigation represent $303 billion. This means that companies involved in asbestos litigation pay 

more to borrow to expand and create jobs. Companies also have expended significant resources on the lawsuits themselves, and they 

have lost countless opportunities perhaps for acquisitions or mergers, certainly less attractive to investors. A trust fund bill will 

eliminate these drags on productivity and substantially reduce productivity losses that in the past have been as high as $50 billion 

a year in these industries affected. 

Another plus cited by NERA is the near elimination of the transaction costs, such as legal fees, which have eaten up almost 60 percent of the billions spent on litigation. RAND previously reported 

that claimants are only getting 43 cents of every dollar today. 

NERA reports that the reduction in transaction costs means that 

with a $140 billion trust fund, claimants will receive up to $65 billion more in compensation than they would if we allowed the status 

quo to continue. 

Finally, NERA quantified the expected value of asbestos reform 

on Wall Street using stock market valuation of defendant companies. They note that Wall Street would value enactment of an asbestos trust fund bill at as much as $137 billion. By removing the 

cloud of uncertainty with the passage of asbestos legislation, stock 

market gains would benefit the pensions of millions of workers and 

retirees as well as other investors in the market. 

These new findings from NERA clearly demonstrate that the passage of asbestos trust fund legislation will provide an immediate 

and long-lasting boost to the economy. And, Mr. Chairman, I 

brought a copy of the full study to be made part of the record this 

morning. 

Chairman SPECTER. Without objection, it will be made a part of 

the record. 

Governor ENGLER. As I said earlier, other studies, Mr. Chairman 

and members of the Committee, have also detailed the significant 

economic effects of asbestos litigation. The impact on workers and 

jobs is particularly worth noting. According to a 2002 study by 

Nobel laureate Joseph Stiglitz, about 60,000 jobs, many in the 

manufacturing sector, have been lost due to asbestos bankruptcies. 

Many of those lost jobs were union jobs, and I note, as you did in 

your statement, that the UAW, which represents so many workers 

across this Nation, strongly endorsed the draft that formed the 

basis before the Committee. 

Now, the direct losses in the Stiglitz study are only part of the 

story. Communities are also affected as laid-off workers tighten up 

their spending or move away in search of new jobs and bankrupt 

companies cut operations, slash purchases, and, of course, reduce 

charitable and community giving. In fact, another NERA study 

13

showed that for every ten jobs lost due to an asbestos bankruptcy, 

a community loses as many as eight other jobs. 

The scope of the asbestos litigation scourge is quite clear. More 

than 8,000 companies have been dragged into this litigation. These 

are from the largest to small, family-owned businesses. For 30 

years, these companies have been paying an asbestos tort tax. That 

is estimated now to be about $70 billion. That is through 2002. 

Nearly 60 percent of that money went to the trial bar, defense lawyers, and court costs. And, unfortunately, this asbestos tax has 

been levied quite randomly. While defendants will certainly pay 

into a trust fund, these companies and their Wall Street analysts 

will at least get a clear picture of their liability, now and in the 

future. That certainly, Mr. Chairman, is a compelling reason for 

this legislation. 

Chairman SPECTER. Governor Engler, your time has expired. 

Your full statement will be made a part of the record. If you could 

summarize, we would appreciate it. 

Governor ENGLER. In summary, a major advantage of the trust 

fund solution ends the scandal of asbestos litigation by getting the 

problem out of the courts and into a no-fault system; complies at 

long last with the Supreme Court—and these are repeated exhortations, I think on four or five occasions—that Congress step in and 

solve the problem. It gets the asbestos issue to a point where the 

flow of the funds goes now to the people who are ill, not to the lawyers. It ends this random assessment of the asbestos tort taxes on 

certain companies. And, most importantly—well, let me say it restarts the growth of these individual companies, but most importantly, it provides for the people who are sick—and manufacturers 

acknowledge there are people who are sick—sure, fair, timely compensation to medical victims. 

And, Mr. Chairman, I thank you for the time and for the opportunity to summarize. 

[The prepared statement of Governor Engler appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, Governor Engler. 

We turn now to Ms. Margaret ‘‘Peg’’ Seminario, who is the Director of Occupational Safety and Health for the AFL–CIO, where she 

has been a key employee since 1977. She has a master of science 

in industrial hygiene from Harvard School of Public Health and a 

B.A. from Wesley College. Thank you for being here today, Ms. 

Seminario, and for attending so many, many, many long sessions 

of the so-called stakeholders. We look forward to your testimony. 

STATEMENT OF MARGARET SEMINARIO, DIRECTOR, SAFETY 

AND HEALTH DEPARTMENT, AMERICAN FEDERATION OF 

LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, 

WASHINGTON, D.C. 

Ms. SEMINARIO. Thank you very much, Senator Specter. We do 

appreciate the opportunity to testify on S. 852. I would first like 

to acknowledge the work that you and Senator Leahy have put forward, your tireless efforts and the efforts of many others, including 

Senator Feinstein, Senator Hatch, and, of course, judge Becker, to 

attempt to develop a fair and effective asbestos compensation bill. 

14

As you are well aware, the AFL–CIO has a long involvement in 

the asbestos issue, and for the last 3 years we have been deeply 

engaged in the discussions and process that have led to the current 

proposal. We have done so because we believe that many victims 

are not being well served by the current system and that hundreds 

of thousands of victims who will develop asbestos disease in the future could be better served by an alternative system that provides 

compensation to sick individuals in a more efficient and equitable 

manner. 

The AFL–CIO has consistently supported the establishment of a 

Federal asbestos trust fund to fairly compensate asbestos victims 

for their injuries, and we continue to support the establishment of 

such a trust fund. At the same time, we have made clear that we 

cannot accept a substitute to the current civil litigation system unless it would provide a means by which victims could obtain fair 

compensation on a timely basis. 

The legislation introduced last week includes a number of important improvements over past proposals. These include higher 

award values, no subrogation of awards, a medical screening program. And, again, we want to acknowledge the work of you, Senator Specter and Senator Leahy and your staffs, in securing these 

important changes. 

Unfortunately, in the AFL–CIO’s view, the bill still fails to ensure victims just and timely compensation and would leave tens of 

thousands of individuals with no remedy at all, and that is why we 

opposed the legislation as introduced. 

Over the past 3 years, as we have worked on this legislation, we 

have listened to the concerns and the proposals put forward by 

business and insurers, and we have attempted to be responsive. In 

the interest of reaching agreement on legislation, we have compromised on numerous aspects of the legislation, including accepting the $140 billion in overall funding, a much lower level of funding for the program than we think may be actually required to 

meet anticipated claims. 

But on the fundamental issue of insuring that the legislation will 

create a system that will, in fact, deal fairly with victims and pay 

timely compensation to those who are sick from asbestos disease, 

we cannot accept a compromise that does not achieve this basic objective. It is not in victims’ interest to trade one flawed system for 

another that has serious, identifiable problems and deficiencies and 

threatens to leave many individuals worse off. 

These serious problems include the exclusion of thousands of asbestos-related lung cancer claims, leaving most victims with no 

remedy during the start-up period; the inclusion of restrictions preventing individuals with both asbestos and silica disease from obtaining access to the courts or fair compensation from the fund; unworkable statute of limitations provisions that could bar tens of 

thousands of worthy claims; and program sunset provisions that 

could leave claimants in limbo should the fund run out of money. 

We continue to believe that the major problems with the bill can 

still be corrected, and we have put forward proposals to do so. 

Moreover, we believe that a primary reason they have not been address is due to objections by some business and insurer groups who 

15

want to limit claims and costs or make it difficult or impossible for 

individuals who are sick to receive compensation. 

If the goal is to truly enact a bill that provides prompt and fair 

compensation to victims who meet the eligibility requirements, 

then there is no valid reason not to fix the problems we identified. 

We have prepared detailed comments on the legislation, which we 

have included in an attachment to our testimony. For now I would 

just like to spend the remaining time that I have just to highlight 

a couple of the major problems in the bill. 

One of the first major problems is that the compensation for 

thousands of asbestos lung cancer victims is eliminated; that with 

the elimination of the Level VII lung cancer categories, based on 

CBO estimates, 40,000 individuals with lung cancer related to asbestos are no longer covered specifically by the bill. Provisions have 

been added that allow some of these lung cancer victims to use CT 

scans to show that they have asbestosis, but that does not apply 

to victims with pleural disease. The net result is about 25,000 asbestos lung cancer victims previously covered may not be eligible 

for compensation. 

The start-up provisions leave claimants in limbo for as much as 

2 years. An estimated 60,000 to 80,000 claimants currently pending 

who are sick will have nowhere to go for 2 years under the provisions of this fund, the bill. This is not fair. 

As I said, there are also problems with some of the other provisions related to silica, statute of limitations, and we have provided 

comments and proposals on those matters. 

Let me conclude by saying that we have spent years working on 

this legislation, and we believe that we have played a constructive 

and responsible role in the process. We intend to keep working to 

address the major problems with the bill, with the hope that 

changes will be made that will enable the AFL–CIO to support the 

bill. 

However, in its present form, the AFL–CIO must oppose S. 852 

since it fails to ensure asbestos disease victims the just and timely 

compensation they deserve. 

Thank you. 

[The prepared statement of Ms. Seminario appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, Ms. Seminario. 

We now turn to Mr. Craig Berrington, Senior Vice President and 

General Counsel of the American Insurance Association, extensive 

experience from the Department of Labor, including Deputy Assistant Secretary for Employment Standards, a law degree from Northwestern, and a graduate of the School of International Service at 

American University. 

Thank you, Mr. Berrington, for being a regular attendee at the 

numerous, lengthy sessions of the stakeholders and your contributions there, and the floor is yours for 5 minutes. 

STATEMENT OF CRAIG A. BERRINGTON, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, AMERICAN INSURANCE ASSOCIATION, WASHINGTON, D.C. 

Mr. BERRINGTON. Thank you, Mr. Chairman. I am testifying 

today on behalf of the AIA and the Reinsurance Association of 

16

America and have a written statement that I would appreciate having entered into the record. 

Chairman SPECTER. Without objection, your statement and all 

statements will be made a part of the formal record. 

Mr. BERRINGTON. Thank you so much. 

As always, we greatly value the opportunity to be here and to 

work with you and the Committee on this important legislation 

and, of course, to salute Judge Becker for his heroic efforts in this 

regard, not to mention his patience. 

Mr. Chairman, your bill as introduced makes some very important improvements in the medical criteria aspects of the legislation, 

in removing the Level VII cases, and, in addition, requiring that 

claimants establish their asbestos exposure was a substantial contributing factor to their disease. 

Unfortunately, other important problems remain that are critical 

to our evaluation of the legislation. I would like to touch on six of 

them quickly. 

First, litigation leakage from the trust fund. Captured in a 

phrase, a national trust fund must provide an exclusive remedy for 

resolution of all asbestos claims. Without that certainty, we will 

find ourselves paying both substantial sums into the fund and into 

the tort system for claims permitted to leak outside of the fund. In 

S. 852, leakage would occur before the fund gets operational certification, while the fund is fully up and running, and in the event of 

fund sunset. 

We are particularly concerned about leakage during the fund 

start-up. If the new law does not have a fast and effective startup, it will fail. Sure as shooting, it will fail. And with that failure 

will come recriminations all around. So this is no small matter. In 

our judgment, to make the start-up happen, all of the bill’s incentives must be aimed toward obtaining that fast, efficient implementation. 

S. 2290, introduced last year, met this test by having a legislative red light/green light approach, with the President’s signature 

resulting in an immediate red light for the old litigation system 

and an equally immediate green light for the new trust fund. Embedded in this approach was language giving the Labor Secretary 

all the authority she would need to enable the program to review 

and decide claims quickly, including the use of outside contractors 

and a priority for exigent claims. 

Moreover, S. 2290’s red light/green light approach made it crystal 

clear to everyone, including the trial bar, that once the bill was enacted, it was time to quit fighting over it and to get to work implementing it. 

S. 852 adopts a very different approach, therefore jeopardizing 

the ability of the new law to quickly and efficiently be implemented. Indeed, S. 852 actually provides incentives to those who 

believe that the loss of the legislative battle on the bill need only 

be a skirmish in the longer-term war over keeping the litigation 

system going. The result would be stress on this new law of enormous proportions, which should be avoided at all costs. 

This problem did not exist in the trust fund as laid out in S. 

2290. We believe the policy choice in S. 2290 which would have applied the exclusive remedy provisions to any litigation outstanding 

17

upon the date of enactment was much the better approach. It 

would have established an understandable, bright-line test, making 

it clear that the moment the President signed the new law, the old 

litigation system ended and the new trust fund system began, cutting off the opportunity for litigation game-playing. 

Second, the bill’s handling of exigent claims. Although part of the 

broader litigation leakage problem, the new exigent claims provision raises its own unique questions. Exigent claims are those, as 

we know, from individuals who have mesothelioma or whose asbestos illness is at a critical stage where they are likely with less than 

a year to live. We believe the trust fund, not continuing the litigation system, would work best for these cases. However, S. 852 does 

not follow this approach. Instead, it uses an offer of judgment provision to keep current exigent cases going in the litigation system 

after the bill is enacted and even allows new exigent cases to be 

filed in court. 

While the new offer of judgment provision was obviously done in 

good faith to speed review and payment of exigent claims, I don’t 

think the provision works. Not only does it provide an opportunity 

for new litigation, but with its 200-day litigation process for getting 

from beginning to end, it not only is unlikely to speed reviews for 

people with critical illnesses, but is also likely to be slower than 

the Labor Department’s processing of these very same claims. 

While it is unlikely to speed up the process for individuals getting their money, it does nothing to control attorneys’ fees. So if 

one assumes the normal attorney fee of perhaps a third of recover, 

it will reduce the amount of money that a claimant will get for 

himself and his family. 

Other issues that are of concern to us relate to the operational 

certification provisions in the bill. The bill’s prohibition on workers’ 

compensation subrogation, that issue has been well vetted, but we 

still do not understand why it is a problem, having the same system here that exists in the State workers’ compensation systems to 

prevent double recoveries. And, of course, the fifth issue is program 

sunset. We would prefer that all cases go to Federal court. We 

think that is what ought to happen. 

Mr. Chairman, we do applaud the improvements made in this 

version of the bill, but we have substantial concerns still that prevent us from being able to support it as currently drafted. 

Thank you very much. 

[The prepared statement of Mr. Berrington appears as a submission for the record.] 

Chairman SPECTER. Thank you very much, Mr. Berrington. 

We will now proceed with 5-minute rounds for members’ questioning. 

Ms. Seminario, with respect to the CT scans, which is an issue 

on the minds of a number of Senators, Senator Leahy and I worked 

through this after our first draft and came to the combination on 

CT scans for Category IX and not for Category VIII. And we are 

going to be hearing a good bit of medical testimony. We have added 

some extra witnesses today after you and I and others sat down in 

the afternoon and after consulting with Senator Coburn. 

The question that I have for you, on a bill which cannot put its 

arms around everything and we do find a major concession, which 

18

Senator Leahy and I worked on a long time on the number VIIs, 

on the smokers, and we were able to find a trade-off on some very 

key items like subrogation, whether it would not be sufficient 

under the exceptional medical claims section, where there can be 

CT scans submitted in addition to X-rays, wouldn’t that be a safety 

valve for the kind of injured party whom you have referred to? 

Ms. SEMINARIO. Well, we are looking for more than a safety 

valve. We are looking for a system that actually does, in fact, have 

criteria to compensate people that have asbestos-related disease. I 

will not go into our views at length on the Level VIIs, but we still 

believe that with the 15-year substantial occupational exposure 

that those lung cancers are attributable to asbestos. So we start 

from believing very firmly that the science supported the Level 

VIIs. 

Chairman SPECTER. We agree with you on moving in to get the 

lung cancers caused by asbestos. We really agree with you totally. 

I think there is no disagreement. But the question is—I did not 

mean to use safety valve in derogation. Coverage—let’s call it that 

instead of safety valve. 

Ms. SEMINARIO. What we tried to do with the medical criteria, 

if you remember, is to set up categories where if an individual had 

the diagnosis, they had the exposure, that they were covered. And 

it was not the exception, it was he rule. And I think if you do indeed look at both the epidemiology but also the latest American 

Thoracic Society guidelines on diagnostic techniques, you find that 

indeed the use of CT scans has become a routine diagnostic method 

for the non-malignant diseases. And if they are permitted as a presumptive diagnostic tool for asbestosis, we do not see why it should 

not be the same for the other categories. But I would leave it to 

the medical experts to have that more informed and knowledgeable 

discussion with you about the use of those—

Chairman SPECTER. Governor Engler—

Ms. SEMINARIO. —techniques. 

Chairman SPECTER. I do not mean to cut you off, Ms. Seminario. 

Ms. SEMINARIO. That is fine. 

Chairman SPECTER. But I want to cover a couple more issues 

here in the 5 minutes I have. 

The Committee thanks you for the very material assistance 

which Pat Hanlon has rendered in the Asbestos Study Group on 

Gary Slaiman and thank you for your letter. We are still working 

through some of the issues which you have reserved. 

Let me turn to Judge Becker at this point on an issue which is 

raised by the Chamber of Commerce, Thomas Donahue, a letter 

dated April 25th, which is generally laudatory and supportive and 

we want a bill and keep working, all of which we intend to do. And 

the one issue which is raised is the issue of leakage. Would you address the Herculean efforts which the stakeholders worked to try 

to find an accommodation on that issue? 

Judge BECKER. We spent many, many, many sessions, and I 

think the leakage is virtually gone. And, frankly, I do not understand the drama with which Mr. Berrington describes the leakage 

problem. Anything that has gone to judgment already, final judgment, well, obviously that is preserved. If a case is actually on trial 

before a judge or a jury, the case may continue. I mean, it just 

19

seems to me unfair, you are in the middle of a case, it has gone 

to the jury or the testimony has been going on, and all of a sudden 

the bill is signed, to say, okay, jury and lawyers, go home, we are 

not going to conclude the case. I mean, it is a very limited number 

of cases, and it is limited to individual cases, not consolidations. I 

mean, there are some instances where you have hundreds or thousands of cases consolidated. The bill very precisely says it is a oneon-one case and it is actually on trial. 

It seems to me reasonable to let it continue, and with respect to 

settlements, if a settlement has been negotiated—not an inventory 

settlement, the plaintiff’s asbestos lawyer has a deal that covers 

500 or 1,000 cases, the bill says a one-on-one settlement. And if it 

has got to be signed by the plaintiff and signed by the defendant 

or someone on behalf of a defendant, and there is 30 days after the 

Act, there are certain data that has to be supplied, so long as the 

settlement has already been signed, well, then there is 30 more 

days. And, frankly, I don’t see what the problem is. With respect 

to virtually everything else, the tort system is closed down and everything else goes into the fund. And it seems to me that these 

minimal examples with respect to cases actually on trial and settlements and, indeed, the insurance company can even protect itself 

or the defendant by putting in some requirement in the settlement 

agreement that the paperwork be submitted sooner. 

I just don’t see what the problem is. It seems to me the leakage 

issue is virtually gone. We had many, many, many sessions, and 

we have come up with provisions which are in the Act. 

Chairman SPECTER. Thank you, Judge Becker. The red light 

went on during the middle of your answer, so I will now turn to—

my red light went on. Yours did not go on, Judge Becker. Mine 

went on. 

I turn now to Senator Leahy. 

Senator LEAHY. Thank you, Mr. Chairman. 

Governor Engler, welcome, and I appreciate all the time you 

have spent on this. We did not want you to completely have to forget all the hours you had to spend with the Michigan Legislature. 

So we have tried to make up for that in your life. But I want to 

thank you for NAM’s support of this bipartisan legislation. And I 

agree with your assessment about the tremendous economic impact 

of the legislation to create jobs and get a more efficient compensation system. 

A major component of the bill is to ensure that the fund is operational through higher front-end funding, something you have 

looked at closely. In your testimony to the Committee in January 

and in some of the follow-up letters to me, you stated that you expect to have written commitments or letters from financial institutions regarding the availability of $20 billion in front-end funding 

once the legislation was introducing, including estimates of the interest costs on such potential borrowing. 

Now that we have introduced it, when do you expect to receive 

such written assurances from financial institutions? 

Governor ENGLER. The specificity of the draft makes this easier 

as it gets obviously closer, but we think by Thursday that from 

Goldman Sachs we may have a letter that gives us assurances. We 

have been talking to a lot of the different financial houses about 

20

how this gets done. We think this is clearly bankable, but we are 

anticipating that Thursday we would have something, you know, in 

time for markup, that you would have a commitment on, you 

know—

Senator LEAHY. And you have—

Governor ENGLER. It can still be couched, I suppose, as financial 

folks do, based on what exactly the mechanisms are, but we think 

that the Committee has done a nice job in the draft of trying to 

put a framework together that somebody like Goldman Sachs can 

kind of come in and say this is what we think it would be. 

Senator LEAHY. And, Governor, will you be able to share that 

with Senator Specter and me? 

Governor ENGLER. Yes. 

Senator LEAHY. And the Committee. Thank you. 

Ms. Seminario, you have probably felt that you have taken up 

residence up here on the Hill, but I appreciate all the work you and 

your staff have done with Senator Specter’s staff and with mine as 

we tried to craft this bill. So many of the victims of asbestos exposure, of course, are under the AFL–CIO umbrella. I might want to 

note, you have represented them tirelessly in this regard. 

I have been pleased we have been able to make many of the constructive changes that the AFL–CIO has promoted: higher awards 

values for victims, no subrogation, proof of exposure, medical 

screening program, new criminal penalties for willful OSHA violations and so on. I appreciate your comments, which have been constructive, on the statute of limitations and the need for ongoing 

oversight and planning and mechanisms hopefully to avoid termination of the fund. I know Senators Kyl and Cornyn have similar 

concerns about the drastic nature of the sunset provisions. I hope 

we can work out a refinement. 

Would you send me and Senator Specter any proposed language, 

legislative language you might have on this issue? 

Ms. SEMINARIO. We would be happy to, and we would also be 

happy to continue the discussions over the next couple days and 

weeks. 

Senator LEAHY. Thank you. If we have time, I am going to come 

back to you. 

Mr. Berrington, the last time you appeared before the Committee, in January, your testimony was in support of a medical criteria bill. I am pleased that you and the American Insurance Association have now joined the asbestos trust fund bandwagon. I want 

to welcome you aboard. I can see by the expression on your face 

how happy you are to be onboard. 

[Laughter.] 

Mr. BERRINGTON. I am just trying to recall my testimony. 

Senator LEAHY. I recall it very, very well. I strongly disagreed 

with your position of allowing insurers to reduce the awards to victims through subrogation. We have been very direct with each 

other on that. I do want to work with you and the insurance industry to find common ground on refinements for our bipartisan trust 

fund legislation. We need that as it moves forward in the legislative process, and I would ask you to continue to work with us. 

Mr. BERRINGTON. Mr. Leahy, if I might, just for a moment. 

Senator LEAHY. Sure. 

21

Mr. BERRINGTON. I believe my testimony in January said that if 

we could work out a good trust fund, we are all in favor of doing 

that, but if it were not possible to do that, that we would recommend alternatives to that. And we have been at the table. We 

plan to stay at the table, and we are certainly hopeful that we can 

work out a good bill. But it has to be a good bill from our perspective. 

Senator LEAHY. I understand. 

Now, I will include for the record, Ms. Seminario, some questions 

on chest X-rays, and that will sort of follow up on what you and 

the Chairman have talked about. But, again, I appreciate it. You 

and I want to help the Chairman keep to the time, too. 

Chairman SPECTER. Thank you very much, Senator Leahy. 

Senator Sessions? 

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM 

THE STATE OF ALABAMA 

Senator SESSIONS. Thank you, Mr. Chairman, and thank you for 

your leadership on this important issue. Asbestos litigation has 

been a colossal disaster for the litigation system in America. I cannot think of anything that is more embarrassing to me as someone 

who believes in a good, efficient legal system than a system that 

has paid out tens of billions of dollars, put companies in bankruptcy, but only 40 percent of the money being paid out going to 

the people who are sick, and many of those under this system 

today receiving money are not sick. Hundreds of thousands of lawsuits are pending in Federal courts today, and they have been 

pending. They are handled in huge groups. Individual plaintiffs are 

not often having their day in court. There is just no way physically 

to do that, as, Judge Becker, I think you have indicated now before 

us. 

So I am very concerned about this system. There is no doubt in 

my mind that we can create a trust fund that will allow people who 

are sick to receive compensation promptly, to receive it fairly, to 

get more than they would get under the current system, to relieve 

the stress on the courts, to end this aberrational thing where some 

plaintiff gets $50 million and some plaintiff gets $500,000 for the 

very same illness just because of a different jury and a different 

situation. I believe we can make improvements in the way we do 

that, and we should do that. 

This is not a perfect piece of legislation. It is not even a pretty 

piece of legislation. I don’t know how to make it pretty or better. 

I know we can get more money to the victims and we can get 

more money to the victims promptly. From my experience in the 

system, victims receive a check from some defendant, one of maybe 

300 they have sued for $250. The lawyer takes that 30, 40 percent 

of it, and they get this little check. Six months goes by, another 

one, another company sends in their check. Some fund sends in 

their check. The idea that today under the current system victims 

are getting substantial compensation promptly is just not so. I 

know, Ms. Seminario, you know that, and that is one reason you 

are interested in having a fund that would work better for the victims. 

22

Is it a tax? We need to talk about who is paying and how they 

are being paid? Is it an allocation of liability or a tax? I don’t know. 

Maybe it is a little bit of both, Judge Becker. What do you think? 

To assess the companies that are being held liable today in a trust 

fund, would you construe that as a tax? 

Judge BECKER. Well, to me, a tax is what is paid by the taxpayers, and under Section 406, nothing can be imposed on a taxpayer or on the Government. Loosely, you could call it a tax, but 

basically it is a contribution in lieu of what they would be paying 

in the tort system. It is a kind of fair approximation, and it seems 

to me within the power of Congress within the Commerce Clause 

to make these rough approximations, rough justice. Rough approximations based on policy judgments is what you folks do, and I 

think when you do it, it is not really right to call it a tax. 

Senator SESSIONS. Well, whatever, it is an assessment of some 

kind. We need to be careful how we do that and make it as fair 

as we possibly can. 

Under the attorneys’ fees provision, 5 percent of $140 billion is 

$7 billion. At one point this bill was up to 20 percent; that is $28 

billion of the fund going to attorneys. And I just do not believe that 

is necessary. These are going to be much more akin to workmen’s 

comp or Social Security claims where the attorneys follow the processes, and if they have medical proof that the person is sick, they 

are going to be paid. 

Mr. Berrington, would you agree with that? 

Mr. BERRINGTON. Absolutely. It is absolutely analogous to a 

workers’ compensation system. 

Senator SESSIONS. And they do not get big fees and do not need 

big fees. 

Mr. BERRINGTON. And, ideally, in the system, which I think is 

well laid out in the legislation, most people should not need an attorney at all. The Labor Department is obligated to provide assistance to help people work through their claims if they need that. 

And so attorneys’ fees, if they are necessary at all, should be not 

very high. 

Senator SESSIONS. Well, attorneys have made enough money in 

these cases. These attorneys, many of them, have just become incredibly rich over it. I don’t think even they are proud of the current system, and I think most trial lawyers know it needs to be 

fixed. 

With regard to exigent cases, such as mesothelioma, Judge Becker, just briefly how much does the fund contemplate today? 

Judge BECKER. $1.1 million. 

Senator SESSIONS. $1.1 million. What about the concern that—

normally, would they not be paid promptly, once this fund is up 

and running, how soon would it take before a claimant came in 

with a medical report that they had meso, they had exposure significantly to asbestos, and made their claim before they got the 1.1? 

Judge BECKER. I think it should not be more than a couple of 

months because the everything is going to go up—they are going 

to use websites, I assume, and you can download the form from the 

websites, and there is instruction, and we have a claims facility to 

process these. You do not have causation problems in mesothelioma. 

23

Senator SESSIONS. Right. 

Judge BECKER. The only known cause is asbestos exposure. 

Senator SESSIONS. Now, what about the concern that as the fund 

is coming online, the legislation is passed, there would be some 

delay—I have heard as much as 2 years—before the mesothelioma 

claimants would get their money? Is that correct? 

Judge BECKER. I don’t think that is true. I think you are talking 

maybe 60 to 90 days. 

Senator SESSIONS. Ms. Seminario, do you have a different view 

of that? 

Ms. SEMINARIO. The different view is that I think for mesothelioma victims, hopefully the start-up will be very quick. But most 

of the victims are not mesothelioma victims, but they are also very 

sick. And so the 2 years applies to everybody who is not terminally 

ill, and based upon the CBO estimates, you are talking about 

60,000 to 80,000 people who fall in that category, who are either 

pending or claims will come in in the first 2 years of the fund. 

So that I think is the bigger concern, this very large number of 

sick people who really will have nowhere to go perhaps up to 2 

years of time. And I would just point out that—

Senator SESSIONS. But right now you would admit that the average plaintiff that files a lawsuit is waiting 2 years or more before 

they begin to receive any substantial compensation? 

Chairman SPECTER. Senator Sessions, your clock—

Senator SESSIONS. You are right. I am sorry. 

Chairman SPECTER. It has defective wiring. Your red light has 

been on from the start, so you have not had a timer. We are trying 

to get that fixed. But your time has expired. But if you want to finish up that last question, go ahead. 

Senator SESSIONS. I would just ask—

Ms. SEMINARIO. I think generally for many of them it does, but 

some of them can get very quick access right now in the bankruptcy trust. They can go file a claim and get ready compensation. 

Those are going to be extinguished immediately. We think they 

should remain in place while the fund is getting up and going and 

give people at least a place to go to receive compensation from that 

source of—from that remedy. 

The other thing is a lot of these people have already been waiting 

for years because of the stays of Halliburton, Babcock and Wilcox, 

and others, and we don’t think it is fair that people who have been 

waiting 5 or 6 years have to wait another 2 years. So we think this 

2 years is too long and that there can be more work done on trying 

to deal with the issues for those victims. 

Chairman SPECTER. Thank you very much, Senator Sessions. 

Senator Kennedy? 

STATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR 

FROM THE STATE OF MASSACHUSETTS 

Senator KENNEDY. Thank you very much. 

Senator Specter and Senator Leahy have, as we have all noted, 

devoted an enormous amount of time and effort to negotiating this 

revised asbestos trust fund legislation, and they deserve great credit for their work. And I want to thank Judge Becker as well. 

24

But the bill before us still contains serious flaws which make it 

unfair and unworkable, and it does not provide a reliable guarantee of just compensation to the enormous number of workers who 

are suffering from asbestos-induced disease, as we have just been 

listening to. 

The problem is that powerful corporate interests responsible for 

the asbestos epidemic have fought throughout this process to escape full accountability for the harm that they have inflicted. The 

real crisis which confronts us is not an asbestos litigation crisis; it 

is an asbestos-induced disease crisis. All too often the tragedies 

these workers and their families are enduring become lost in a 

complex debate about the economic impact of asbestos litigation. 

We cannot allow that to happen. 

The litigation did not create these costs. Exposure to asbestos 

created them. They are the costs of medical care, the lost wages of 

incapacitated workers, the costs of providing for the families of 

workers who died years before their time. Those costs are real. No 

legislative proposal can make them disappear. All legislation can 

do is shift those costs from one party to another. Any proposal 

which would shift more of a financial burden onto the backs of injured workers is unacceptable to me, and it should be unacceptable 

to every one of us. 

The legislation before us would close the courthouse doors to asbestos victims on the day it passes, long before the trust fund will 

be able to pay their claims, as Peg Seminario just illustrated. Their 

cases will be stayed immediately. Seriously ill workers will be 

forced into legal limbo for up to 2 years. Even those victims who 

have less than a year to live will be forced to stop their cases for 

9 months, and many will die without receiving either their day in 

court or compensation from the trust fund. 

Experts tell us the asbestos trust created by the legislation is se- riously underfunded. It is $13 billion less than the amount provided in the Committee’s 2003 legislation, even though many of the 

award values have been increased. The funding plan in this bill relies on very substantial borrowing in the early years as the only 

way to pay the flood of claims. 

The result of this will be a huge debt service cost over the life 

of the trust fund that could reduce the $140 billion intended to pay 

the claims by 40 percent or more, according to testimony we will 

hear today. The amount remaining would be far too little to pay 

claims to cover all of those who are entitled to compensation under 

the terms of the bill. 

We cannot allow seriously injured workers with valid claims not 

to be paid fully in a timely manner by the trust. That would be a 

shameful injustice. 

I am particularly upset by the change in the way lung cancer victims are treated. Under the medical criteria adopted by the Committee overwhelmingly 2 years ago, all lung cancer victims who 

had at least 15 years of weighted exposure to asbestos were entitled to receive compensation from the fund. That provision now has 

been removed. Under this bill, the lung cancer victims who have 

had very substantial exposure to asbestos over long periods of time 

are denied any compensation unless they can show scarring on 

their lungs. 

25

The Committee heard expert medical testimony that prolonged 

asbestos exposure dramatically increases the probability that a person will get lung cancer even if they do not have scarring on their 

lungs. Deleting the Level VII category will deny compensation to 

approximately 40,000 victims suffering with asbestos-related lung 

cancer, and under that legislation as now drafted, these victims are 

losing their right to go to court but receiving nothing from the 

fund. How can any of us support such an unconscionable provision? 

The bill also tampers with the agreed upon medical criteria by 

raising the standard of proof for each disease category. The new 

language requires the workers to prove that asbestos was a substantial contributing factor to their disease instead of just a contributing factor. This is a major increase in the burden workers 

must overcome to receive compensation, and it is a serious step in 

the wrong direction, raising the bar even higher on injured workers. 

This bill shifts more of the financial burden of asbestos-induced 

disease to the injured workers by unfairly and arbitrarily limiting 

the liability of defendants. It does not establish a fair, reliable system that will compensate all those who are seriously ill due to asbestos, lacks a dependable funding stream which can ensure that 

all are entitled to compensation actually receive full and timely 

payment. These are very basic shortcomings. We cannot allow what 

justice requires to be limited by what the wrongdoers are willing 

to pay. Unless substantial improvements are made in the legislation to the Committee’s markup, I intend to vote no. 

I know my time is just about up, Mr. Chairman. I was just asking Peg Seminario about the Title 7 provision, if she could just describe briefly for the Committee why those victims were included 

in the original medical criteria and why they should be eligible for 

compensation in the trust fund. 

I thank the Chair. 

Ms. SEMINARIO. The original medical criteria had three categories of lung cancer. The Level VII lung cancers were those individuals diagnosed with lung cancer that was related—had 15 years 

of substantial occupational exposure to asbestos and a determination made that the lung cancer indeed was asbestos-related. And 

so it was a group that did not have scarring on the lungs that 

showed up on X-ray. And the medical studies and the epidemiologic 

studies will show that people without scarring, without these underlying markers indeed are at increased risk. It had a higher level 

of exposure when you did not have the X-ray changes than the exposure requirements for those individuals who had asbestosis or 

has pleural disease. And so there was a higher burden on them to 

show exposure, but they indeed were covered under this category. 

The other provision was in the bill that each of those cases had 

to be reviewed by a physicians panel, a three-member physicians 

panel, for confirmation. And so we felt pretty comfortable that the 

evidence was strong, but also that they would be reviewed and confirmed by experts before payment was made. 

Senator KENNEDY. I thank the Chair. My time is up. 

Chairman SPECTER. Thank you very much. 

26

Senator Cornyn? We have the early-bird rule, and I commented 

to Senator Cornyn that it was my error in not calling on him earlier. But now you have the floor, Senator. 

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

THE STATE OF TEXAS 

Senator CORNYN. Thank you, Mr. Chairman. And let me add my 

congratulations to you and the Ranking Member, Senator Leahy, 

and all the people on this Committee who have worked so hard 

with so many people here in this room to try to get us where we 

are today. 

I regret to say that I cannot support the bill in its current form, 

but I am committed to continuing to work with you and the Committee to try to get the bill to the point where I can support it and 

to encourage the legislative process to move forward. 

From my perspective, there are two major criteria by which this 

bill should be judged: number one, its ability to pay only people 

who are sick with asbestos-related disease; and, number two, that 

it provide the exclusive means to do so, completely supplanting the 

current dysfunctional system. And there are a number of provisions 

in this very lengthy bill, and, again, this has been a complex, contentious process, I think as Judge Becker said, and we have all 

tried very hard and will continue to try very hard to deal with 

some of the challenges here. 

I am concerned that we still do not yet have good, solid information that allows us to predict the viability of the fund. I would just 

note—and I look forward to additional testimony we will have here 

later—that the CBO, for example, on a previous version of this bill 

estimated that about 76 percent of the people who apply for benefits will not be eligible for compensation, but will be eligible for 

medical monitoring. Other estimates, from Goldman Sachs, for example, go up to 82 percent they estimate will be not eligible for 

compensation but will be eligible for medical monitoring. I think we 

need to drill down and understand better the basis for those estimates. 

And Judge Becker has said in previous testimony—and I again 

want to extend my appreciation to him for his hard work—we really do not have good information in many respects by which to estimate the number of claims that will actually be made. There are 

models that we have heard about and we will hear more about 

today which provide some comfort level, but none of us should be 

fooled into thinking that we actually know how many claims will 

be made and what the composition of those claims will be. 

We have heard in our previous testimony from representatives, 

for example, of the Manville Trust that has extensive experience 

with the claims composition of asbestos trusts who disagrees with 

the premise upon which this particular trust is made and whether 

it will be enough money. I worry because there are some who I 

have heard during the course of our proceedings who said, well, 

there is plenty of money and we have a cushion, so we should not 

worry about leakage. 

I agree with Mr. Berrington that there are still leakage concerns 

in this bill. For example, collateral sources, while ostensibly would 

be deducted from the bill, it makes clear also that there are signifiVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
27

cant exceptions to those collateral sources, statutory funds, and 

which would provide an opportunity for double-dipping, which I believe could potentially jeopardize the fund. 

If you look at the 9/11 fund, it was estimated there that if there 

were no collateral offset rule there, the fund’s cost would be decreased—or the fund’s benefits would be decreased by 29 percent. 

Now, here we have purported to deal with that, but at the same 

time what one page giveth, the other page taketh away. And that 

is an area that I think needs to be addressed as well. 

I am still concerned about the screening program contained here. There is, over the life of the fund, $600 million set aside for medical screening, and there is no area on this subject that has been 

more rife with abuse and productive of claims without any real 

medical or other justification than the medical screening programs 

that we have heard about during the course of these proceedings. 

This $600 million will pay for approximately 400,000 medical 

screenings under the course of this trust fund. 

So those are some of my concerns. I want to compliment again—

I know it sounds like I am being entirely negative. I am not. I 

think there has been substantial movement forward with regard to 

the elimination of Category VII and the holding of attorneys’ fees 

to a modest amount, which is commensurate with a no-fault, nonadversarial application and a trust fund process. 

Thank you, Mr. Chairman. 

Chairman SPECTER. Senator Feinstein? 

STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR 

FROM THE STATE CALIFORNIA 

Senator FEINSTEIN. Thank you very much, Mr. Chairman. 

Just to kind of relook at history for just a moment, the bill that came out of Committee sometime ago was $108 billion, with a $45 

billion contingent reserve, but that contingent reserve may or may 

not have been triggered. Then the Frist bill that went on the floor of the Senate was $104 

billion, with a $10 billion contingent reserve. 

This bill has no contingent reserve. It is a hard $140 billion. And 

essentially the affected business communities have pledged to 

make good that money. As I’ve said before, it is very important to 

me that there be transparency with respect to who is contributing 

what to this fund. It has to stand the test of public scrutiny. So 

I think that is important. 

One of the things that I think Judge Becker knows, and certainly 

the Chairman and the Ranking Member know, that has concerned 

me for some time is the possibility of a takings or a due process 

suit against the bill. There is an ad in this morning’s Washington 

Times which is put there by what I understand to be a coalition, 

the Coalition for Asbestos Reform, which I am told is a combination 

of trial lawyers and businesses that are opposed to the bill. And 

they make the takings argument. Also, a good friend of all of ours 

from the Chicago School of Law, Professor Chemerinsky makes 

that argument as well. And he says that he believes that, ‘‘The Act 

would violate the Takings Clause by taking property without just 

compensation, specifically violating the Constitution because it abrogates rights secured by valid contracts of insurance while requirVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
28

ing the firms that held those rights to contribute to the trust fund. 

This kind of double exaction requiring firms to contribute to the 

trust fund as a substitute for tort liability while simultaneously 

taking from firms the very assets they have accumulated in order 

to discharge those liabilities cannot, in my judgment, be squared 

with basic constitutional principles.’’

As Judge Becker knows, I have had some concern about that and have proposed that in the start-up, instead of taking the $4 billion 

from the asbestos trusts—Libby, Montana, Western-MacArthur, 

and I believe two others—that those monies be incorporated on a 

staggered basis over a 4-year period of time, a billion, a billion, and 

a billion each year, in the hopes to avoid that problem. But my suggestion was not accepted by others, and I would like to ask particularly the lawyers here—I have no doubt that there is going to be 

litigation against the fund. And it seems to me we ought to do everything we possibly can to see that the takings and the due process arguments are mooted since they are now being waged as 

major attacks against the bill. 

I would like to ask anyone who would care to answer, beginning 

with Judge Becker, how likely the takings/due process argument is 

to be successful, and whether the proposal that I made, which was 

rejected, might ameliorate it. 

Judge BECKER. Well, as all of you know, the $4 billion that is in 

the trusts has to be turned over to the fund. In the event that a 

constitutional challenge prevails, business guarantees the $4 billion. There is only $136 billion plus 4, but if that 4 is lost to the 

fund, business in the bill guarantees the other $4 billion. That is 

just background. 

Now, I have read the briefs, as it were, Senator Feinstein. I have 

not heard oral argument yet. I have read the arguments on both 

sides. There is a very convincing letter from Carter Phillips, a leading member of the Supreme Court bar from the Sidley Austin firm 

who says that there is no constitutional problem. I have also read 

Professor Tribe’s view. As I said, I have read the briefs. I have not 

heard oral argument. 

My inclination is that there is not a takings problem, there is not 

a due process problem. These trusts are the creations of the bankruptcy courts for the most part. To some extent, they are the creatures of contract. But they are all approved by the bankruptcy 

court and by Congress. But Congress has the overarching power 

under the Commerce Clause, it seems to me, to abrogate them. And 

there are benefits to the victims and benefits to the polity. 

Now, will there be a challenge? I suppose there will be a constitutional challenge. I don’t know how we can avoid it. The judicial 

review provisions impose upon the courts, including the United 

States Supreme Court, the obligation to give it expedite consideration, just as they did in McCain-Feingold. They did give it expedited consideration, and I would assume they would give this expedited consideration. 

My view is that the constitutional challenge will fail, and argument has been made that the trusts will not have enough money 

to fund the constitutional challenge. I don’t know how much the 

legal fees will be. I would be very surprised if you could not get 

lawyers who would take that case. 

29

Chairman SPECTER. Senator Feinstein has raised an important 

issue. You have asked for the other lawyers on the panel—Governor Engler, you are a lawyer. Do you want to answer that question? 

Governor ENGLER. Well, there are lawyers, and then there are 

judges who are retired heads of circuit courts. I do not want to add 

much to that, what I have heard. 

I would observe I understand that the Supreme Court in one of 

those exhortations to the body politic to act on this has even themselves suggested the possibility of a trust fund. But that is unsupported in terms of—that is not a legal brief, obviously, for it, but 

just a suggestion that came from on high. 

Chairman SPECTER. Thank you. 

Senator FEINSTEIN. Thank you very much. 

Chairman SPECTER. Senator Coburn? 

STATEMENT OF HON. TOM COBURN, A U.S. SENATOR FROM 

THE STATE OF OKLAHOMA 

Senator COBURN. Well, thank you, Mr. Chairman, and thank you 

for the work that you and Senator Leahy have done. And I appreciate the work. I was not here through the other 5 years of working 

on this bill, and I would not know that I would want to be here 

if it is going to take 5 more years to do this. 

I have real concerns about this bill. I have concerns that people 

who don’t have disease are going to get compensated under it, 

which just means it is going to lessen the compensation that should 

go to those people who truly have disease related to asbestos. I can 

tell you that the literature does not support the Section VIIs in 

anyway, and there will be medical testimony today to that effect. 

We have no measure in this bill for—we have exposure, but we 

have no measure of exposure in terms of particulate matter, which 

we know is important in terms of causation of disease and asbestos. There are a lot of assumptions in this bill both in Section 6 

and in Section 8 where there is not a requirement for particle exposure. And we must not forget that background basic lung cancer is 

high in this country, a lot of it associated with smoking. We are 

rewarding former smokers when that most likely was the cause of 

their lung cancer, and at a very high level. So, in fact, the bill’s 

medical criteria still lacks a lot in terms of where it should be to 

truly compensate people who have been injured by asbestos. And 

that is what we ought to be doing. 

I think it puts at risk the fund. I think a lot of the things in the 

bill, the presumed exposure, puts at risk in the fund, the fact that 

you can have a disease, early disease with asbestos, be compensated for it, and then if you end up with a major disease or malignancy, we pay you that, but we do not deduct the early compensation, which I think is wrong. That is still in the bill. So for 

a number of reasons, I am not to the point where I can support this 

bill yet. And more importantly, I worry about the small businesses. 

I know Governor Engler represents the National Association of 

Manufacturers. But, you know, I am not sure they are at the table, 

the small businesses, that they are going to be put out of business 

by this fund, who have not had any problems but yet might fall 

into the industry. And who are they? What are their names? How 

30

many people do they employ? And we are going to take from them, 

when, in fact, they may not have an exposure. 

I think we have to know who those people are before we finish 

up anything on this bill, and they need to be informed. And I would 

love for Governor Engler to answer the question. Who are these 

people? And are they members of NAM? Or are they members of 

the alliance? Or do they not even known this is happening to them? 

Governor? 

Governor ENGLER. Thank you, Senator. I think your argument is 

best argument for trust fund that has been made to date. The criticism of the medical criteria, because this is where I started. I 

thought, Why couldn’t we use criteria to fix the tort system and let 

these juries all over America handle the case? And the problem is 

we can’t. I mean, we are struggling with the medical criteria we 

are writing in this bill, and I think it is a lot better and becomes 

more of a uniform standard to apply across America than simply 

letting the tort system work with three-quarters of a million cases. 

As to your question about the unidentified businesses, one of the 

problems that we have out there, as this thing stays in the tort system, as the fees go to the—not to the injured people but to the legal 

process itself and we get literally hundreds of different standards 

being decided by different courts and juries out there, as more companies—and we are nearly 80 now. The last one was an Arizona 

company about 2 weeks ago that when into bankruptcy. It pushes 

out deeper and deeper. There are 8,400 defendants. We can provide 

a list of everybody who is a defendant today that we at least have 

found and identified. But as we send more people into bankruptcy, 

Senator, we get deeper into the roster of American companies. 

And so I am worried about small and large—most of the membership of the National Association of Manufacturers are small, you 

know, from 20 employees on up. But there are people we cannot 

identify, but we know they are going to get caught if we do not stop 

the hemorrhaging on this problem. 

Senator COBURN. I want to make another point. Part of my problem with what Congress does too often is they do not pay attention 

to what real science is. I am just going to put into the record—we 

have had testimony on pharyngeal and laryngeal cancer associated 

with asbestos, and the studies that are represented to take care of 

that show a slight increase in risk. But the science stinks there because the number one cause of both of those in this country is alcohol tobacco, and neither one of those confounding factors were in 

any of those studies. So the studies mean nothing. And yet we are 

going to try to put forward to pay people for diseases caused by 

something else and make those who are suffering from asbestos 

today not be compensated because we are going to pay for a disease 

that is not there. 

There are big problems with the medical criteria and including 

expanding that and not compensating—or not deducting for earlier 

disease against that. And my time is up and, Mr. Chairman, I yield 

back. 

Chairman SPECTER. Thank you, Senator Coburn. 

Senator Durbin? 

31

STATEMENT OF HON. RICHARD J. DURBIN, A U.S. SENATOR 

FROM THE STATE OF ILLINOIS 

Senator DURBIN. Mr. Chairman, I want to thank you and Senator Leahy not only for your hard work on this bill but also for 

your courtesy in allowing this hearing. When I suggested it last 

week, you were prompt to say yes, we should have a hearing, and 

I am heartened by that. You have been eminently fair throughout 

this process, and I thank you for that. 

Senator Leahy, though we may disagree on this bill, you are my 

friend and we have had a courteous and constructive relationship, 

which I am sure is going to continue even as we debate this bill. 

I also want to thank Judge Becker. I know you are not on the 

payroll, but you might as well be. You have done an awful lot of 

hard work to try to bring us to this day, and though I may disagree 

with your work product, I certainly respect your contribution and 

public service in so many different ways. 

What troubles me about this hearing is that it is so sterile and 

so bloodless. It is a hearing about money. Who pays? How much 

do they pay? I just see this issue so differently. This is about more 

than money. It is about justice. It is about fairness. And as Senator 

Kennedy has said, it is about innocent people who, among these 

victims, knowingly exposed themselves to deadly asbestos. At best, 

a small, small percentage may have. But most of the people who 

were victims of this illness did not even know they were being exposed at the time. They are innocent workers, innocent bystanders, 

innocent family members doing the laundry of workers. Through no 

fault of their own, they have been exposed to this deadly poison. 

And we know that companies like Libby and W.R. Grace knew long 

ago the danger of asbestos, kept mining it, kept producing it, kept 

making profits on it, willing to take the risk that no matter how 

much they were sued for, they were going to make more money 

selling the product. That is what it was all about. 

What is unfortunate in the hearing today is we don’t see the 

faces of victims who could tell us stories that may, just may touch 

the hearts of some of the members of this Committee to think 

twice, not just about how much companies and insurance companies are going to give to this fund or trust funds are going to give 

up but, rather, how much victims and their families will recover as 

a result of what we do today, saying to them that they can no 

longer go to the courtroom, no longer appeal to their neighbors and 

friends for fairness and justice but, rather, be turned into this administrative law system. 

A couple of those victims are here today, and since I have not 

spoken to them ahead of time, I am not going to ask them to stand 

unless they want to. But their stories, one in particular here, Paul 

Sigelbaum I believe is here today. Paul, if you want to stand up, 

you are welcome to. 

My friends on the Committee, this is the face of a mesothelioma 

victim, and if you look at it, look at Paul standing here, you may 

not know that a year ago he went through a surgery in Omaha, 

Nebraska, that lasted 10 hours, and as a result of that surgery, removing tumors and other organs and things from his body, he 

weighed 33 pounds less at the end of that 10-hour surgery. He is 

fighting mesothelioma. His wife is with him today, I believe. Not 

32

with you? But you have said in the statement that you said to me 

you think there are possibly four different exposures in your life 

that could have resulted in this mesothelioma. You have recovered 

some money from some. You are hoping to recover money from others so that your wife can be taken care of, you can be taken care 

of from this point forward. 

Understand what this bill does. Paul, thank you for standing up. 

But understand what this bill does. It says that whatever Paul has 

recovered from those who are culpable of exposure will be set off 

and deducted from the maximum amount he can receive under this 

bill. It means that even if there are companies still liable to him 

for what he has gone through, we are cutting off their responsibility to pay him and to pay his family. 

Ellen Patton is here from Annapolis, Maryland, and, Ellen, I 

thank you for standing up. This is the face of a mesothelioma victim, 45 years old. She was exposed to it, she believes, because her 

father did home repairs and used materials that exposed her to asbestos. She has been through five different bouts of aggressive 

chemotherapy, struggling at great expense to keep living every day, 

never knowing if this is going to come back. 

Ellen, thank you for being here today, and thank you for sending 

along this little blue band as a reminder that this debate is about 

people. Thank you for standing up. It is about what they will recover. And though $1.1 million seems so large and so generous, it 

is not. The medical bills which these people have incurred are in 

the hundreds of thousands of dollars. 

And so while we are saying that the companies and insurance 

companies are going to battle one another now as to who is going 

to pay into this trust fund, I would just say to Judge Becker: You 

said earlier if you have a meso case in trial, you are okay, finish 

your trial. But is it not true, Judge—and you know this for a fact—

if the defendant has successfully argued to continue the case beyond the date of signing this bill, you are finished. Your day in 

court is over. No matter how much you have been through, no matter how much you have worked to prepare your case, for companies 

that are liable for the illness which is slowly taking away your life, 

your days are over simply because one judge in one court has said, 

‘‘I will grant the defense motion for a continuance.’’ That is true, 

isn’t it, Judge? 

Judge BECKER. Yes, sir. 

Chairman SPECTER. Senator Durbin, you are well beyond time. 

Judge BECKER. Yes, that is correct. 

Senator DURBIN. I don’t think there is fairness and justice in 

that. Thank you. 

Chairman SPECTER. Senator Durbin, I am a little surprised by 

your complaint about victims not being called when you asked for 

three witnesses and you got three witnesses. If you wanted to call 

some of the victims, you had people to call. You chose instead to 

call Mr. Mark Peterson from the American Trial Lawyers Association, Dr. Philip Landrigan from the American Trial Lawyers Association and Professor Eric Green also on my sheet marked ATLA. 

Let the record also show that I personally met with Linda 

Reinstein and with Ellen Patton, and I understand their objections 

to the bill. And my staff met with them on many other occasions, 

33

and if it is to be testimony from victims, we would have been able 

to have many, many more than there are spaces for seats in this 

room. But it does surprise me that when you have three witnesses, 

you complain that no victims were called. 

Senator DURBIN. May I respond, Mr. Chairman? 

Chairman SPECTER. By all means. I would like to hear a response. 

Senator DURBIN. Well, I would like to give you a response. Thank 

you for this hearing. But understand we are planning on spending 

3 or 4 hours on this bill in a hearing. We should be spending much 

more time because of the gravity and severity of this issue and because it affects so many people. 

I had to choose, and I tried to bring in the expert testimony. But 

the point I am making to you, Mr. Chairman, is that there are 

many people who could be called, who should be called. It is interesting to me that the proponents of this legislation are not calling 

victims either because you understand, as I do, that many of them 

are disappointed with this legislation. 

Now, I could have called a victim. Maybe I should have. But I 

picked expert witnesses. The point I want to make to you is I wish 

this was more than just a 3- or 4-hour hearing. I think this bill and 

its importance and gravity require more. 

Chairman SPECTER. Well, Senator Durbin, when you say we 

should be spending more time on this bill, don’t include me. 

[Laughter.] 

Chairman SPECTER. Don’t include me. We had about 40 sessions 

on this bill. I didn’t see you attend one. 

Senator DURBIN. I beg your pardon, Mr. Chairman. When you 

have had hearings on this bill and Senator Hatch before you, I 

have been in attendance. I sat through the hearings a year or more 

ago. I will just wager to say with the exception possibly of the 

Chairman and Ranking Member, I spent more time at the table 

than any other member. And I wish that you would take a look at 

the record before you would make a statement like that. 

Chairman SPECTER. Well, the statement I heard you make was 

that we should spend more time on the bill. And the last time I 

looked, ‘‘we’’ was the plural first person. Don’t include me for 

spending more time. And I am not going to nitpick about how 

many hearings there have been, but this bill has not suffered from 

lack of analysis and consideration. And when you ask for a hearing 

and I give it to you immediately and you have got a lion’s share 

of the witnesses, three witnesses, I think it is just out of line for 

you to complain about no victims being called. 

Senator DURBIN. Mr. Chairman—

Chairman SPECTER. Senator Leahy, do you want recognition? 

Senator LEAHY. Just this, and maybe we should get back on the 

subject at hand. I know the Senator from Illinois is very concerned 

about the victims. Every Senator here is concerned about the victims. We would not be having these hearings if we were not. 

I have met with dozens and dozens of victims, many of whom 

have testified in previous hearings. My staff has met with them. 

We have had countless meetings with Judge Becker and others. 

Victims and those representing victims have been invited and have 

34

been in attendance at most if not all of these meetings, as have the 

trial lawyers, as have labor and insurance and industry. 

Like any piece of legislation, I suppose we could meet with every 

single person involved. We are talking about tens of thousands of 

people. But I think throughout I have not heard a single discussion 

where the question of the victims, especially those victims who are 

facing in effect a death sentence, have been discussed. 

Senator DURBIN. Mr. Chairman, may I say a word? 

Chairman SPECTER. You may. 

Senator DURBIN. I just want to say I understand the time that 

you have spent on and put in this bill, Senator Leahy as well. And 

I am not being critical of that. I think you will concede the fact that 

many of the meetings which you have had have not been open to 

the members of this Committee. 

Chairman SPECTER. No, that is not true. 

Senator DURBIN. Well, I will just tell you that your negotiations 

that led up to the presentation of this bill did not—there was not 

an open invitation to members of this Committee to come attend 

those meetings. 

Chairman SPECTER. Well, that simply is not true. 

Senator DURBIN. Well, Mr. Chairman, I am sorry, but it is true. 

And three weeks ago, we were handed this bill and saw it for the 

first time. 

Chairman SPECTER. Excuse me, excuse me, Senator Durbin. I am 

still the Chairman here. 

Senator DURBIN. I understand that. 

Chairman SPECTER. And 39 sessions presided over by Judge 

Becker and attended by me were open. Let’s move on. 

Senator Feingold? 

STATEMENT OF HON. RUSSELL D. FEINGOLD, A U.S. SENATOR 

FROM THE STATE OF WISCONSIN 

Senator FEINGOLD. Mr. Chairman, I want to compliment you and 

Senator Leahy and all the hard work—

Senator KENNEDY. Mr. Chairman? Mr. Chairman? 

Senator FEINGOLD. Mr. Chairman, do I have the floor? 

Chairman SPECTER. Senator Feingold is recognized. 

Senator KENNEDY. Could Judge Becker answer the last question 

that Senator Durbin asked? He had gone 52 seconds over. Sessions 

had gone a minute and a half over. So can’t we have Judge Becker 

answer Senator Durbin’s last question? 

Chairman SPECTER. Senator Durbin, do you have a question 

pending for Judge Becker? 

Senator DURBIN. I asked the judge for his comment about the 9-

month hiatus on these mesothelioma cases, and I want to make it 

clear—

Judge BECKER. Senator Durbin, I don’t really understand Peg 

Seminario’s you have got to wait 2 years. These claims are—the exigent claims, including the meso claims, get priority. And I do not 

anticipate that it is going to take 2 years to get around to these 

claims. These claims are going to be expedited. They have the offer 

for judgment proposal of Senator Feinstein, and there is the contracting out. So these claims are going to be expedited. 

35

The 9 months is if they are not—if the system is not up and running and processing the claims in 9 month, then they go back to 

the tort system. But that doesn’t mean the claims will wait 9 

months. I think these claims with the contracting and the offer for 

judgment will be moved ahead more quickly. And with respect to 

other sick people who are not exigents, it does not mean that they 

will wait 2 years. It just means that if the system is not up and 

running and processing the claim within that period, then they can 

go back to the tort system. But I would anticipate with an efficient 

administrative system, these claims will be processed well before 

the 9 months or well before the 2 years. 

Senator FEINSTEIN. Mr. Chairman, can I say one thing on this 

point? 

Chairman SPECTER. Senator Feinstein? 

Senator FEINSTEIN. If you would allow me, Senator Durbin, because I wrote this language, we wrote it with the view of trying to 

get the quickest consideration for the sickest victims. This was the 

goal of this legislative part of the bill. And I started at lesser 

months, but the view was that it could not be done, the system 

could not be gotten up and running in that period of time. So it 

is my belief that this is the shortest period of time in which the 

system could be up and running. 

Secondly, as Judge Becker pointed out, the private contracting 

out there is to minimize any chances that a mesothelioma victim 

will not be dealt with in this 9-month period. So we have got the 

shortest period and then we have got some additional protection for 

that. I want it, you know, to be just as soon as possible, and this 

was my overwhelming concern. And I just wanted to be able to say 

that to you. 

Chairman SPECTER. Senator Feingold? 

Senator FEINGOLD. Thank you, Mr. Chairman. I want to thank 

you and Senator Leahy for all the hard work you have put in on 

the bill. I know you have put your heart and soul into it and you 

are trying to accommodate many competing interests and seemingly irreconcilable points of view, and I do appreciate that kind of 

active leadership from a chairman. And I do want to thank Judge 

Becker as well for the enormous effort he has put into these negotiations. 

Mr. Chairman, you and I had a good conversation on the phone 

yesterday. I support the concept of a trust fund to pay victims of 

asbestos disease. I am not unalterably opposed to any asbestos bill 

that asbestos bill that might be brought forward. But I do find myself in much the same position that I was almost 2 years ago, when 

Senator Hatch made his proposal and we actually spent 6 weeks 

marking it up in the committee. I will only support a bill that in 

my judgment is fair to all parties, all parties involved, including 

most especially the victims of asbestos disease. That means not 

only do medical criteria and claims values have to be fair, but the 

design and funding of the system has to be adequate to pay the victims promptly and completely. 

And again, I know you have been working hard on this and so 

has Senator Leahy. But now that you have agreed on a bill, I don’t 

think that you should rush it through the committee. It is a complicated bill that varies in significant respects from the bill we saw 

36

last year. We need to examine it, we need time to examine it and 

propose changes to it. We need to have a real markup in this committee so that amendments can be offered. The bill we are considering today, in my view, is a marked improvement from the bill 

that was taken up on the floor last year, but it is also inferior in 

a number of respects to the bill that was reported out of committee 

in July 2003, and I had to vote against that bill because I didn’t 

think it went far enough to fairly and adequately compensate current and future victims of the horrible diseases that asbestos 

causes. 

Mr. Chairman, I want to ask some questions of our witnesses, so 

I won’t discuss all of the concerns I have. But let me mention one. 

There has been and will continue to be great disagreement about 

whether the trust fund will be adequate to keep paying victims 

throughout its life. Everyone is working on estimates and there are 

many variables that are simply not knowable with any certainty at 

this time. In some ways, it doesn’t really matter whether the fund 

is $120 billion or $140 billion or $200 billion. Any of these estimates could be too low or too high. So there are two key things we 

have to do absolutely. First, we have to be sure that there is adequate money right away to pay the approximately 300,000 claims 

that we know will almost be filed immediately. And second, there 

has to be a strong sunset provision that will allow victims in the 

future to file suit if this trust fund isn’t able to pay their claims. 

The risk that this trust fund will not work because it is not adequately funded at the front end cannot be borne by the victims. I 

want to say it again: The risk that this trust fund will not be adequately funded cannot be borne by the victims. I will not vote for 

any bill that does not recognize that basic principle of fundamental 

fairness. 

So let turn to a question that actually relates to the discussion 

that we were just having. One concern I have with this bill is the 

treatment of currently pending, including exigent, claims. The bill 

provides that when the President signs the bill into law, all pending claims are stayed. There are then differing provisions on how 

those claims are treated, depending on whether they were exigent 

or not, in other words, if the claimant has a terminal illness. There 

are very complicated provisions for cases going back to the tort system after a certain period of time if the fund is not up and running. 

What I don’t understand is why we need to stay any claims 

where someone is sick. As this bill currently stands, there will be 

50,000 people, who are now sick and who have now filed claims in 

court or through a bankruptcy trust, who have nowhere to go. I 

would like to hear from everybody on the panel, what would be 

wrong with a system that says that all the claims where the claimant is sick can continue in court or in the bankruptcy trust until 

the administrator certifies that the fund is ready for business; that 

is, that there is sufficient money available to pay claims and that 

the administrative structure is in place to handle those claims? 

And if the money is paid in settlements of court cases or by a bankruptcy trust through its claims process between the time the bill 

is signed and the day of that certification, then the entity making 

that payment gets a dollar-for-dollar credit against its eventual liVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
37

ability to the fund if the administrator determines that the payments were reasonable. 

If we do that, then it doesn’t matter whether it takes 9 months 

or 24 months or 36 months to get this fund up and running. And 

I would say Judge Becker’s reassurances of a few moments ago 

would be consistent with my point. If he is right, these cases are 

going to get immediate attention, fine; then there is not a problem. 

But why shouldn’t these cases go forward until we are sure? People 

whose claims are already advanced can get paid and the defendants are no worse off in their overall liability. 

So I would start with Judge Becker and like to hear each of the 

panelists’ comments on this point. 

Judge BECKER. First of all, Senator, with respect to the three—

you say the 300,000 claims we know will be filed. I addressed that 

in my testimony. I have discussed that with David Austern. Not 

only have the claims showed a sharp decline, but the vast bulk of 

the putative 300,000 are either Level I or people who are maxed 

out. And the number which, according to the most experienced person in this field, will be filed is considerably less. But there still 

will be a lot of claims. And I will say to you, Senator, that we have 

discussed this in our negotiations. And as we all know, this is a 

compromise. The business folks said that if we do that, the costs 

in the tort system and, unless you impose tort reform and say that 

the ones who are the unimpaired cannot get paid in the tort system—

Senator FEINGOLD. You say ‘‘do that,’’ you mean not stay the 

cases? 

Judge BECKER. If we don’t stay the cases, the tort system will 

continue. And the predictions as to the cost to the business and insurance folks in the court system are astronomical in terms of the 

verdicts in the tort system. When you say dollar-for-dollar credit, 

but the dollar-for-dollar credit would be on the verdicts in the tort 

system. 

The bottom line is, Senator, that in terms of concept and principle, what you say makes a lot of sense. In terms of the kinds of 

accommodations that are necessary—Senator Durbin says, well, it 

is a shame that it is all about dollars. And I understand and respect your concern, Senator Durbin, but at a certain level, if there 

is going to be a bill, it has to be about dollars because there has 

to be a level of funding that business pays and insurance pays. And 

unless this can be agreed upon, there simply isn’t going to be a bill. 

And in terms of the give-and-take and the kind of compromise, although what Senator Feingold proposes was suggested, it was simply a non-starter and the negotiations just totally failed. 

Senator FEINGOLD. Well, I appreciate that answer. I want to be 

clear. I am suggesting that only people who are sick can continue. 

Mr. Berrington? 

Mr. BERRINGTON. Yes, sir, thank you. We have a little bit different view, which is that we believe the trust fund is clearly the 

way to compensate victims quickly and fairly. Certainly the tort 

system has not been a great alternative for most victims; it takes 

years for them to get compensation. So we believe the trust fund 

will get started quickly, the cases can be taken care of quickly. And 

to have any incentives in the bill for litigation to continue afterVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
38

wards we think are very troubling, and will indeed encourage those 

who want to keep the tort system—want to keep the new system 

set up in the legislation from actually taking effect, to have an opportunity to do so. Let me give you an example. 

The Department provides operational certification, which doesn’t 

mean that there are not cases being processed prior to operational 

certification, it is a judgment under the bill that the program is operating sufficiently, that all litigation ought to be cut off. When the 

Department makes that operational certification judgment, even 

under the current bill, my guess is that those who want to keep 

the litigation system going will seek to tie up the Department in 

court. That is a very big problem with regard to the current version 

of the bill. The way that the bill works is that we will pay into the 

trust fund and then we will pay on top of that for all of these cases 

that will come into the tort system. That just isn’t acceptable. 

Your comment about having offsets—I didn’t read the language 

or the idea previously as being that the total amount of money that 

we would have to put into the trust fund would be reduced, but 

merely that the individual insurer or defendant that was paying 

would have an offset against its own payments. Well, the result is 

that that just gets passed around among everyone and we are paying above the $46 billion. I agree that the issue is about victims 

and about getting them compensation. The trust fund, if you let the 

trust fund concentrate and this legislation concentrate on getting 

this thing started, once the bill is enacted, rather than encouraging 

everyone to try to continue litigation in one way or another, the 

process will go much faster and victims will get compensation 

much more quickly. 

Senator FEINGOLD. This isn’t about discouraging the concept of—

Chairman SPECTER. Senator Feingold, you are almost 4 and a 

half minutes over. I know the answers you have been wanting. If 

you have one more question. 

Senator FEINGOLD. I am just trying to get answers to the one 

question that I asked. I haven’t asked an additional question. But, 

Mr. Chairman, if you—I would just like to hear Governor Engler’s 

response and the other responses. 

Governor ENGLER. The other point that, I agree with Mr. 

Berrington, the analysis — but one point that needs to be made if 

we stay in the tort system, we lose half to 60 percent of the 

awards. So even in the example the Senator from Illinois used earlier, if you net out at 1.1, you have actually had to win 1.6 or 1.7 

in today’s system because of the costs going to the lawyers on the 

other side. Now, maybe if you are suggesting that once this passes, 

the lawyers would forego the fees in order to pay net dollars, the 

net award, you know, you have a different ballpark here. But I 

think you can’t—conceptually, you want to move to the trust fund 

away from the tort system so that you are getting what I think is 

more money to the plaintiff. If it is about money, how much do they 

get? Today more than half of it is being lost. How fast can we resolve these? I think when it is up and running, it will be faster. 

There is that transfer period, but I think it is a bit unfair to suggest that you fund dual systems during that changeover. You have 

to stop one and start the other. And I think all of the concern about 

DOL or whatever department—agency, or, if it is independent, 

39

however it is set up—gets this up and going, we are very keen on 

getting it started very quick. 

Chairman SPECTER. Ms. Seminario, would you like to make a 

comment on that? 

Ms. SEMINARIO. Yes, I would. I would just point out that when 

the bill was reported out of this committee 2 years ago as S. 1125, 

it included an amendment that Senator Feinstein had offered and 

it was unanimously adopted by the committee, which said—it allowed that all victims could continue to go in court with their case 

until the fund was up and running and that there would be an offset by the defendants or the insurers against the money paid out. 

So the committee considered it, in the interest of justice it was 

unanimously adopted in the reported bill. The provisions in S. 2290 

were ones that were put in by the business people, insurers, who 

didn’t like that provision. 

So dealing with the issue of the transition is really, really important. As you said, Senator Feingold, the idea that we don’t know—

and we don’t know exactly how many claimants will come to the 

fund, what will happen 10 years out, 20 years out. We do know 

right away that there are thousands and thousands of people who 

are sick, who have pending claims, and when this fund is up and 

running, many of them will have nowhere to go as it is currently 

crafted. We think that is unfair. We think it does make more sense 

to allow people to go forward. They can make the choice as to 

whether it is in their interest to wait and go to the fund or continue with the litigation. 

And so, again, as a matter of fairness here for victims—and 

think about it from their perspective. What will they do, how will 

they pay their medical bills? You are even extinguishing the existing bankruptcy trust where people now have a right to go for no 

reason at all. And so you are leaving many of these victims with 

nowhere to go. We know there is going to be litigation from the 

bankruptcy trust, we know there is going to be litigation from the 

insurers over their formula of contributions. And so the idea that 

this will all get up and going very quickly, while we would all like 

that to happen, there is no certainty that that is the case. 

Senator FEINGOLD. Mr. Chairman, 10 seconds just to respond? 

I just want to say, I am trying to find a way here to resolve some 

of my concerns about the bill, and that was a perfect comment we 

just heard. My comments aren’t adverse at all to the idea of a trust 

fund. It is just at the front end—and these are people that may die 

before this thing is up and running. It is just making sure they get 

something. And it is no way an attempt to keep the tort system 

going. It is just this potential gap. And that is the spirit in which 

I asked the question. Thank you for the additional time. 

Chairman SPECTER. Thank you, Senator Feingold. 

Thank you very much, Judge Becker, Governor Engler, and Ms. 

Seminario, Mr. Berrington, thank you very much. 

We will turn now to our second panel, Dr. James Crapo, Professor Eric Green, National Legislative Director Hershel Gober, Dr. 

Philip Landrigan, Ms. Carol Morgan, Mr. Mark Peterson, Dr. 

Francine Rabinovitz, Mr. Alan Reuther. 

Senator COBURN. Mr. Chairman? 

Chairman SPECTER. Senator Coburn. 

40

Senator COBURN. I just want to put something in the record to 

make sure it is part of our testimony today. 

Chairman SPECTER. Go ahead. 

Senator COBURN. There is somewhere between 700 and 900 background cases of mesothelioma a year in this country that have absolutely nothing to do with asbestosis. And it is important as we 

consider all these claims that everybody is aware of that. Because 

to take away compensation from those that truly have asbestosisrelated mesothelioma without making sure that we are not paying 

for the idiopathic cases that we know are not related to that is important. I just wanted to make sure that that was in the record. 

Chairman SPECTER. Thank you very much, Senator Coburn. 

Our first witness on Panel II is Dr. James Crapo, professor of 

medicine at the National Jewish Medical and Research Center in 

Denver, Colorado. Medical degree from the University of Rochester, 

magna cum laude from Brigham Young University. 

Thank you for joining us, Dr. Crapo, and we look forward to your 

testimony. 

STATEMENT OF JAMES D. CRAPO, M.D., PROFESSOR OF MEDICINE, NATIONAL JEWISH MEDICAL AND RESEARCH CENTER, 

UNIVERSITY OF COLORADO HEALTH SCIENCES CENTER, 

DENVER, COLORADO 

Dr. CRAPO. Thank you, Chairman Specter, and members of the 

committee. It is an honor to be asked to appear here and comment 

on this bill. I testified regarding this bill about 2 years earlier and 

have taken the opportunity to reevaluate the new and revised bill 

being considered at this time, particularly with emphasis on the 

medical criteria. 

Now, I want to compliment Chairman Specter and Mr. Leahy on 

changes that have occurred in this bill that I think have significantly strengthened it. The deletion of the old Level VII, exposureonly lung cancers, is a significant improvement of this bill. I also 

compliment the addition of the concept of substantial occupational 

exposure as an important concept in this bill. 

On reviewing this, it is my opinion that the medical criteria still 

need to be additionally changed in order to appropriately represent 

the best scientific and medical evidence today and design this bill 

so that it will compensate those who are truly injured by asbestos 

without expending large amounts of the trust fund compensating 

individuals who are not injured by asbestos, and thus bringing the 

fiscal stability of the bill into question. 

So, now, the primary issues that I want to address are contained 

in my written statement. I am only going to summarize a couple 

today. The two areas that I think are major concerns that need to 

be addressed in the markup of this bill are, first, pleural changes. 

Pleural disease is really a reaction. Most of it is a small callous on 

the chest wall that does not involve the lung and, in the vast majority of cases, is not associated with impairment or disability. One 

of the problems I have with the way the medical criteria in this bill 

are constructed is that it allows pleural change to be a marker of 

impairment or injury that extends through seven of the nine levels 

in this trust. 

41

For example, Level I and Level II. The only difference in those 

two levels is that pleural disease is present, but in Level II the individual has evidence of mild obstructive lung disease. That is 

caused primarily by smoking. And one of the changes is to compensate Level II—instead of doing medical monitoring, creating a 

situation where a smoker with a pleural plaque then suddenly 

qualifies for substantial compensation under this act. At later 

stages, at Level IV and V, for example, pleural disease is allowed 

to be the primary radiographic marker to indicate the presence of 

severe or disabling asbestosis. And in fact, in Level V, with the 

changes of this bill, a person with pleural disease only, who smokes 

and develops a mild decrease in defusing capacity, could qualify as 

disabling asbestosis. 

These are some incongruities that could be easily and properly 

straightened out. For example, on Level V, it is not appropriate to 

call disabling asbestosis in the absence of any lung parenchymal 

changes on radiographic changes or significant pulmonary function 

changes as indicated by total lung capacity. The gold standards for 

asbestosis are a significant ILO reading on chest radiographs and 

a low total lung capacity with functional disability. Those should 

be the criteria used to look for the high levels of compensation that 

this trust intends for people with disabling asbestosis. 

A second area is in the area of other cancers. The current version 

of the bill under, I think, Level VI, would compensate a large number of GI cancers. And provided in my written report, on Table 4, 

when one does a thorough cohort analysis of all the cohorts in 

which asbestos and colon cancer have been evaluated, the metaSMR for that, as you will see on Table 4 in my report, is only 0.89. 

Now, what that means is when you do a meta-SMR, you are looking at all of the cohorts. SMR stands for ‘‘standard mortality ratio.’’ 

And a normal or no-change from control would be 1.0. For colon 

cancer, that meta-SMR, looking at all the available best medical 

data, is less than 1, which means there is no associated risk between asbestos exposure and colon cancer. And yet, there are over 

50,000 colon cancers in the United States today, and they would 

qualify, if they have evidence of exposure and some pleural disease, 

to compensation under the trust. I think that could deplete the values of the trust and I think we should re-look at that. 

And then finally, I have identified several areas that should be 

carefully looked at. Enhanced quality assurance, the use of chest 

CT scans, for which we don’t have the standards today to apply 

these to the field. And I have also encouraged them to look at the 

issue of substantial occupational exposure, where our definition is 

really good to start, but it defines it by exposure duration, not by 

exposure intensity, and it would allow individuals exposed to products where they have an encapsulated, let’s say, product, with very, 

very trivial exposures, to qualify as a heavy exposure under the criteria. We need to include in the criteria—

Chairman SPECTER. Dr. Crapo, your time is up. Could you summarize, please? 

Dr. CRAPO. Sure. Just one word—we need to include in the criteria not only duration of exposure, but intensity of the exposure, 

to define substantial occupational exposure correctly. 

Thank you. 

42

Chairman SPECTER. Thank you very much, Dr. Crapo. 

[The prepared statement of Dr. Crapo appears as a submission 

for the record.] 

Chairman SPECTER. We now turn to Professor Green, who is the 

court-appointed legal representative for future asbestos claimants 

in the Halliburton case. He is a professor of law at Boston University, graduate of Harvard Law School and, with honors, from 

Brown University. 

Thank you for joining us, Professor Green. We look forward to 

your testimony. 

STATEMENT OF ERIC D. GREEN, PROFESSOR OF LAW, BOSTON 

UNIVERSITY LAW SCHOOL, BOSTON, MASSACHUSETTS 

Mr. GREEN. Thank you, Senator Specter. You are Senator from 

my native State, and Senator Kennedy, Senator from my home 

State. 

I commend the committee for the work it has done, for all the 

effort Judge Becker and the rest of you have put in. I am a professor mediator as well as a law professor, and I have been mediating all kinds of commercial and personal injury disputes for 25 

years and I have been mediating every aspect of the asbestos litigation—every aspect of it—from single cases to class actions to insurance disputes to reinsurance disputes. I have served as a special 

master for courts. I recognize the necessity for consensus and compromise in trying to achieve anything. And I also recognize as a 

mediator the desire of the mediator, of the consensus-builders, to 

get something done. But one of the criteria for any good result is 

workability. I am very concerned that this bill as presently constructed will turn out not to be workable and we will be back here 

in a few years with a bigger problem and we will be sorry that we 

didn’t address the things that need to be addressed if this is going 

to be workable. 

I know you want it to work out. I know your motives and intentions are the highest and honorable. But there is a significant risk 

in this bill that the funding will turn out to be illusory or highly 

contested in court, that the actual funding will not be in place on 

time. Whether claims can be processed in 90 days, Senator Feinstein, or 9 months is not the issue, I think. The issue is when the 

claims will be processed and paid. And the funding has to be there 

to pay the claims once they are processed. 

I predict that the litigation that I have been struggling with at 

one level for all these years will simply be shifted to another level 

once this bill passes, because the funding is not specified and made 

clear and the commitments aren’t there. I have friends in industry, 

I have friends in the insurance industry, I have friends on the 

plaintiffs’ side. I am in the middle. I am a mediator. But I think 

this bill presents illusory protection for all of them because the ultimate responsibilities and amounts are not made clear and transparent ahead of time. I think the litigation that could ensue could 

result in delays of funding of the trust, delays in payment, incurring of huge debts, and ultimately a downward spiral for the trust 

that will then trigger the sunset provisions. Unfortunately, I think 

the sunset provisions are subjective, not automatically triggered, as 

in Senator Biden’s amendment, which was in a previous version of 

43

this bill, and will create a limbo which will then only ultimately be 

resolved by throwing the victims back into a tort system and a 

trust system that has been essentially annihilated for the asbestos 

victims. 

So I think these problems must be addressed and fixed. They are 

tough problems. The insurance industry deserves to know what 

they are going to pay and who is going to pay it. The manufacturers, all of them, the 1,500 small players as well as the 20 or 40 

big players, deserve to know exactly how much they are going to 

be assessed. They deserve to know whether they are going to have 

to pay supplemental assessments if this trust falls short. The taxpayers of America deserve to know whether there is truly a government backstop here, whether the Federal financing will be backed 

up by the taxpayers of the United States. All of these issues, I believe, are swept under the rug and the risks ultimately are thrown 

onto the least able to protect themselves, the individual victims, 

the people who stood up behind me, to whom I would gladly yield 

my time at this podium. 

Otherwise, my remarks, Senator Specter, with a great deal of respect for the work you have been doing on this, I would submit. 

Chairman SPECTER. Thank you, Professor Green. 

[The prepared statement of Mr. Green appears as a submission 

for the record.] 

Chairman SPECTER. We turn now to the Honorable Hershel W. 

Gober, national legislative director for the Military Order of the 

Purple Heart. Mr. Gober served as deputy secretary of the U.S. Department of Veterans Affairs and then acting secretary for some 8 

years, has a very distinguished military career, cum laude graduate from Alaska Pacific University, and someone I worked with 

extensively when I chaired the Veterans Affairs Committee, a considerably easier job than chairing this committee. 

Welcome, Mr. Gober, and we look forward to your testimony. 

STATEMENT OF HERSHEL W. GOBER, NATIONAL LEGISLATIVE 

DIRECTOR, MILITARY ORDER OF THE PURPLE HEART, 

MCLEAN, VIRGINIA 

Mr. GOBER. Thank you, Mr. Chairman. Members of the committee, I am honored to be here on behalf of the Military Order of 

the Purple Heart in strong support of S. 852. 

Tragically, the asbestos litigation crisis has hit veterans extremely hard. Men and women of our Nation’s armed forces were 

unknowingly exposed to asbestos due to its prevalent use by the 

military during and after World War II, particularly in the insulation products built into ships for the U.S. Navy, bulkheads, pipes, 

ceiling, floors, and machinery, which were all coated with asbestos. 

Moreover, those who worked in shipyards and dry docks building 

and repairing U.S. Navy vessels were also heavily exposed to asbestos. 

Due to the long latency period from the time of asbestos exposure 

to the first signs of symptoms of an asbestos-related disease, veterans who served before the 1980s are still being diagnosed with 

life-threatening and terminal illnesses. Individuals with military 

service make up a significant number of the total asbestos victims 

in the United States. The avenues open to veterans to seek comVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
44

pensation through the tort system, however, are very limited. The 

Federal Government, as you know, has sovereign immunity, thereby restricting veterans’ abilities to recover from the Government, 

and most of the companies that supplied the asbestos to the Federal Government have gone bankrupt or disappeared, or they are 

only providing a fraction of the compensation that should be paid 

to asbestos victims. 

Even if there is a solvent company for a veteran or his family to 

pursue, there remains a lengthy, costly, and uncertain ordeal of filing a civil lawsuit. Moreover, under the current system, far too 

much money is being diverted to claimants with no illness or injury. Victims too often receive widely divergent recoveries depending simply on where the lawsuit is filed or who their attorney is. 

And the attorney fees and other transaction costs are consuming 

far too much money that would otherwise be available to compensate those who are ill. 

The Department of Veterans Affairs continues to receive claims 

for benefits from veterans for illnesses related to asbestos exposure 

while serving in the military. However, due to the difficulty of 

proof, less than one-third of the known VA asbestos claimants receives service-connected compensation for those asbestos diseases. 

Veterans and their families with asbestos-related diseases desperately need and certainly deserve relief, as the current system is 

simply not meeting their needs or treating them fairly. The Military Order of the Purple Heart strongly supports S.852, the FAIR 

Act, because we believe it will provide an immediate and effective 

solution to the current asbestos litigation problem for victims and 

will provide many positive benefits for veterans. 

First, it will establish a new Federal Office of Asbestos Disease 

Compensation for the processing and payment of asbestos claims. 

Second, it will preserve the benefits currently available to veterans and exclude any recoveries under the Veterans Benefits Program from the requirement that awards under the act be reduced 

by prior recoveries. 

Third, there will be no requirement to prove exposure to a particular defendant’s asbestos product. And unlike veterans benefits, 

there will be no service-related requirement, easing the burden of 

proof for veterans. The bill will also include heavily weighing for 

pre-1976 and World War II shipyard exposures. 

Fourth, the bill will expressly apply to exposures to U.S. citizens 

occurring on U.S.-owned or flagged ships occurring overseas while 

working for U.S. entities. 

Fifth, the bill will provide medical monitoring. 

Sixth, the bill will establish a claimant and legal assistance program. 

And finally, the legislation will provide for $1 million in grant for 

each of fiscal years 2005 to 2009 for each of up to 10 mesothelioma 

disease research and treatment centers. These centers will be closely associated with the U.S. Department of Veterans Affairs medical 

centers to provide research and benefits. 

Mr. Chairman, the Military Order of the Purple Heart is joined 

by 18 other organizations in supporting the issues embodied in this 

bill. I would like to submit for the hearing record a copy of a letter 

45

sent to the Senate last week by 17 of those veterans organizations 

in support of the trust fund solution embodied in S. 852. 

In closing, Mr. Chairman, I want to thank you and the members 

of the committee for your hard work on this issue. I know that 

there may be still some work to do, but you are headed in the right 

direction. The current system is broke; it ain’t working. 

Thank you, sir. 

Chairman SPECTER. Thank you very much, Mr. Secretary. 

[The prepared statement of Mr. Gober and the letter appear as 

submissions for the record.] 

Chairman SPECTER. We turn now to Dr. Philip Landrigan, professor and chair of the Department of Community and Preventive 

Medicine, Mount Sinai School of Medicine, New York City. A very 

distinguished career. A degree from Harvard Medical School in 

1967 and a master of science in occupational medicine and industrial health from the University of London in 1977. 

Thank you for coming today, Dr. Landrigan, and we look forward 

to your testimony. 

STATEMENT OF PHILIP J. LANDRIGAN, M.D., PROFESSOR OF 

OCCUPATIONAL AND ENVIRONMENTAL MEDICINE; CHAIRMAN, DEPARTMENT OF COMMUNITY AND PREVENTIVE MEDICINE; PROFESSOR OF PEDIATRICS, THE MOUNT SINAI 

SCHOOL OF MEDICINE, NEW YORK, NEW YORK 

Dr. LANDRIGAN. Thank you, Mr. Chairman. It is a pleasure to be 

here and an honor. Senator Leahy and I have worked before on the 

Food Quality Protection Act. Senator Kennedy, of the State where 

I grew up, all Senators. 

I want to begin by commending you for having worked together 

to take on a terribly complex issue. Looking at this situation from 

the perspective of lung cancer, the issue that clouds the whole debate and makes it so difficult is the fact that there is a great deal 

of lung cancer in the American population. Of course we all know 

that the predominant cause of that lung cancer is cigarette smoking. Where it gets difficult is that there exists a powerful synergy 

between cigarette smoking and asbestos in the causation of lung 

cancer. Let me give you some numbers. 

People who smoke who have no exposure to asbestos have 10 or 

11 times the background rate of lung cancer. People who have been 

exposed to asbestos, but who never smoked have about 5 times the 

background rate of lung cancer. But people who have worked with 

asbestos and who have also smoked, who are at double jeopardy, 

have in fact 55 times the background rate of lung cancer. So one 

way to look at this is you could say that you could prevent 90 percent of those lung cancers by eliminating asbestos exposure and 

you could eliminate about 90 percent of those cancers by eliminating smoking. And parsing this out in issues of causality is 

fraught with difficulty, as I do not have to tell you. 

Another causal conundrum that confronts you here is the fact 

that, contrary to what some have said at this hearing, fibrosis is 

not on the critical pathway to the development of lung cancer. Or 

to say that in plain English, a person who has been exposed to asbestos, does not need to have asbestosis, to develop lung cancer. 

The development of fibrosis is one pathological process; the develVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
46

opment of a cancer is a second pathological process. The occurrence 

of asbestosis, either parenchymal or pleural, is most certainly a 

marker of exposure, but it is not an inevitable precursor of the development of cancer. I will come back to that point in a moment. 

Finally, it is important to remind us all that duration of exposure 

is only a surrogate for actual exposure. Actual exposure is a multiple of the duration of time a person was exposed and the intensity 

of their exposure. So when we talk about duration, I understand 

it is a necessary shorthand because we mostly lack information on 

levels of exposure; that is, the lack of exposure information is the 

Achilles heel of medical research in this arena. But we have to be 

mindful of the fact that when we are talking about duration, we 

are talking about an incomplete measure of the total reality. 

So that is by way of background. 

A couple of specific comments on the bill. First of all, I am worried about the criteria that have been proposed that discount more 

recent exposures. I have put some calculations into my written testimony indicating that a person who began exposure to asbestos in 

1974 would need 52 years of actual work with asbestos to meet the 

12-year weighted exposure criterion for lung cancer Level VII. For 

cancers other than lung, the so-called malignant Level VI, I calculate that for a person who started exposure in 1976, it is going 

to take him 105 years of work to meet the criterion. For some of 

us that might be possible, but probably for most of us not. It is a 

tough barrier to get over. 

Finally, coming back to the point that fibrosis is not an inevitable precursor of the development of cancer, I am very much concerned by the elimination of what was previously called Category 

VII, cases of lung cancer without fibrosis. I feel that setting aside 

the estimated 40,000 people that fall into that category is going to 

result in people who truly have lung cancer that was caused by asbestos being denied compensation. 

Final point, there is a lot of debate about whether cancers other 

than lung and mesothelioma are caused by asbestos. The evidence 

is certainly not so strong as for lung cancer or for mesothelioma, 

but I would certainly not go so far as my distinguished colleague 

has done to dismiss those cases out of hand on the basis of one 

meta-analysis. A meta-analysis is a procedure that lumps many 

studies together and reduces them to the lowest common denominator. Another way to present those data would be the way that 

Dr. Crapo presented the data for multiple studies on lung cancer, 

actually laying out the actual data. If we were to look at the data 

on, for example, pharyngeal or laryngeal cancer, in that modality 

we would see that there are some studies that show quite strong 

relative risks. 

Thank you, sir. 

Chairman SPECTER. Thank you very much, Dr. Landrigan. 

[The prepared statement of Dr. Landrigan appears as a submission for the record.] 

Chairman SPECTER. We turn now to Ms. Carol Morgan, who is 

president and general counsel of National Services Industries. Very 

distinguished career with that company since 1981. A bachelor’s 

degree with distinction from Rhodes College and a J.D. cum laude 

from the University of Georgia. 

47

Thank you for coming in today, Ms. Morgan, and the floor is 

yours. 

STATEMENT OF CAROL MORGAN, PRESIDENT AND GENERAL 

COUNSEL, NATIONAL SERVICE INDUSTRIES, INC., 

DORAVILLE, GEORGIA 

Ms. MORGAN. Thank you, Chairman Specter, and members of the 

committee. I appreciate the opportunity to be here. 

I am actually representing the Coalition for Asbestos Reform, 

and my focus today is on the issues of concern to smaller businesses. The coalition is actually made up of a very diverse array 

of businesses and insurance companies. But we all share one passionate interest; we want to reform and resolve the current asbestos litigation crisis. And we are particularly focused on being sure 

that funds are directed toward those who are truly injured, like the 

people who have been with us today. We know you share that concern and we applaud your efforts to date in trying to find a solution 

to this problem. 

We believe, though, that the trust fund, the FAIR Act as it is 

presented, is not the right solution and that in fact it will create 

more problems than it will solve. I want to cover three main points 

as it impacts the smaller businesses. 

The first point, as Senator Feinstein recognized earlier, is there 

is an issue about the constitutionality of this bill. We believe that 

there is an unconstitutional taking of private property. Insurance 

assets are private property. And smaller businesses have particularly relied on their insurance to pay their claims in the past. And 

the FAIR Act strips these companies of these assets. Without these 

assets, many of these companies will not be able to continue to survive. So this unconstitutional taking is much more eloquently explained in a letter that was written to Chairman Specter by Professor Strauss at the University of Chicago Law School, and I commend that letter to you. 

My second point, really, builds on the first one. Not only does the 

FAIR Act strip smaller companies of their insurance assets, but it 

adds insult to injury and requires disproportionate payments from 

smaller companies. These payments will force many smaller companies out of business, as Senator Coburn expressed concern earlier, and we appreciate that. 

Let me explain this. Because of their prior asbestos expenditures, 

many smaller companies are going to find themselves in Tier II. 

Now, they may be at the sub-tier, the bottom sub-tier of Tier II, 

but even so, their payment will be $16.5 million a year for 30 

years. Now, that single payment in one year is more than many of 

these companies have paid out of pocket during the entire life of 

asbestos litigation. But more importantly, many of these smaller 

companies simply can’t afford to make that payment. 

Now, ironically, in the same tier are some of the largest companies in the world. And these companies will be capped at the top 

of Tier II at $27.5 million a year. Well, let’s do the math. A $50 

billion company that pays $27.5 million a year will actually end up 

paying less than one-tenth of one percent of their annual revenues. 

And that is a pretty good deal. But a smaller company, say one 

with $400 million in annual revenues that is paying $16.5 million 

48

a year, will pay 4 percent of their revenues. And in today’s economy, that is more profit margin than many small companies make. 

They simply won’t be able to make the payment and they will go 

out of business. 

My question is, is that the kind of rough justice that Judge Becker was referring to earlier. It sounds to me like it is more of a bailout for the larger companies that are maybe less insured, and at 

the expense of smaller companies which are better insured. There 

are efforts in the FAIR Act to address this problem through the inequity and the hardship provisions, but they are woefully inadequate. They are discretionary, and there is no guarantee of funding for them. And as Senator Feinstein pointed out earlier, we are 

not really sure exactly what the source of funds is for the business 

contribution. We haven’t seen that data, and that needs to be scrutinized very carefully. But in any event, we are very concerned 

there won’t be sufficient funds for hardship and inequity to address 

the problem of the small businesses. 

We just don’t think these problems are fixable in the current 

FAIR Act. We believe it would be better to tackle the fundamental 

problem, which is payments to claimants who aren’t injured, and 

the medical criteria bills that are being passed now in States and 

being considered by the House of Representatives should address 

that in a way that actually cures the problem and doesn’t create 

more problems. 

Thank you. 

Chairman SPECTER. Thank you very much, Ms. Morgan. 

[The prepared statement of Ms. Morgan appears as a submission 

for the record.] 

Chairman SPECTER. Our next witness is Mr. Mark Peterson, who 

has had 20 years of experience in asbestos litigation and mass tort 

litigation; special advisor to the courts on the Manville Trust Fund 

and advisor to four district and bankruptcy courts. A Harvard Law 

School graduate, and a doctorate in social psychology from UCLA. 

Thank you for coming in today, Mr. Peterson. We look forward 

to your testimony. 

STATEMENT OF MARK A. PETERSON, PRESIDENT, LEGAL 

ANALYSIS SYSTEMS, INC., THOUSAND OAKS, CALIFORNIA 

Mr. PETERSON. Thank you, Chairman Specter, and thank you 

also to Senator Leahy for the work that you have done here. I have 

to say, although obviously I have issues with this bill, I think you 

have made amazing accomplishments in constructing a matrix and 

method for dealing with liabilities. I am impressed with the 

progress and the accomplishments, and hopefully that will continue 

to be something that can be built upon. 

I would also like to thank Senator Feinstein for her interest. She 

is my Senator. She is the Senator for Dr. Rabinovitz, too. 

I want to clear up one thing you said, Chairman Specter. I am 

not associated with ATLA. I am not here as an ATLA member. My 

work in this case is—I am not an ATLA member, although I once 

was because the RAND Corporation’s Institute for Civil Justice 

paid my dues because—

Chairman SPECTER. Did ATLA request your presence as a witness? 

49

Mr. PETERSON. No. Not to my knowledge. It was some Senators 

that requested my presence here. I have talked with persons from 

ATLA, but I have also spent time talking with the staffs of Senator 

Cornyn, previously Senator Nickles. My attempt is to speak to anyone that wants to speak to me. 

I would also like to take a bit a discursion and deal with an issue 

that Judge Becker mentioned about claims and forecasts and 

claims coming in. It is true that the Manville Trust claims experience in the last year have been reduced substantially because of 

the new trust distribution procedures and also, frankly, because of 

the specter of this bill—no pun intended. They have received 

roughly 120,000 claims, 60,000 claims average per year. The most 

recent forecast of claims by Manville is that they will receive in 

2005 and forward roughly 600,000 claims to 1,600,000 claims. 

When you add together the claims that they have already dealt 

with but which will be put in the billion, that brings it up to between 1 million and 2 million, which brackets the numbers that I 

have used and other people have used. And indeed, the ASG and 

proponents of the bill have repeatedly and consistently assumed 

that there were 300,000 claims pending prior to 2003, even when 

you have taken into account the collateral source rule. Since then, 

there have been a number of claims filed in 2003 and 2004. 

I would also note that although the Manville Trust recent filings 

are down, the number of mesothelioma claims are up greatly. And 

within the current claims distribution procedures with which Manville is dealing, fully 6.2 percent of the claims are for mesothelioma—compared to about 2 percent historically and 2 percent that 

I think we have all assumed here. 

So what is happening is that there may be some reduction in the 

number—it is different from what the judge said—some reduction 

in the number of less serious claims, but there is an increase in the 

number of the more serious claims. And there is no evidence that 

there has been much payment of collateral source in the last 2 

years because asbestos defendants who are in litigation now have 

no incentive to rush to settlement because they are not going to get 

any credit for the bill. They are paying money that they don’t have 

to pay. And the other consideration is that most of the major asbestos defendants are now in bankruptcy and not paying anything. 

Let me turn to the main point i wanted to make. This bill is a 

bill that transfers asbestos liabilities to the Federal Government. 

That is what it primarily does. There are going to be a huge number of claims filed initially, as I have just described, against the 

fund and little money initially, or frankly forever in comparison 

with the liability, from asbestos defendants in insurance companies. Virtually all of the money that will be paid to claimants from 

this fund is going to be money from the Federal Government. The 

relatively small amount of money that will be paid before the fund 

sunsets, that is paid by defendants and insurance companies, mostly goes to pay interest. When you add the debt load, the interest 

charges, and the indemnity payments, this fund will fail quickly, 

probably within 5 years but, even using optimistic assumptions put 

out by proponents of the legislation, within 10 years. It won’t be 

able to borrow any further because its liabilities exceed all of the 

income it will ever have. 

50

The fund will pay only a fraction of the claims of asbestos victims. It will pay less than half of the asbestos victims. Instead of 

being a $140 billion payment to asbestos claimants, only $70 billion 

will go to asbestos claimants. This is not a $140 billion payment 

fund for victims, this is a $70 billion—it is a lot of money, but it 

is a lot different. The remainder will be paid in interest. 

The one final thing I want to say is that when this bill sunsets, 

there will be obligations owed by this fund to the Federal Government of probably $60–70 billion, with little prospect that it will 

ever be repaid because the companies that will have to pay that 

over 30 years will now be subject to a double burden of asbestos 

litigation plus payment under the bills, and the companies that are 

depended upon to be major providers of funding for the bill, those 

that are now in bankruptcy will certainly go back to bankruptcy. 

Chairman SPECTER. Mr. Peterson, your time has expired. Could 

you sum up, please? 

Mr. PETERSON. The only point I have to say is I admire greatly 

the liability side of what you have done. If this committee and Congress want to set up a bill that is funded by the Federal Government, it is getting that, but it should recognize that it is doing that. 

And frankly, if that is the intention, there should be a more careful 

scrutiny and determination of how defendants and insurance companies would pay off that debt, because they are stiffing the taxpayers. 

Chairman SPECTER. Thank you very much, Mr. Peterson. 

[The prepared statement of Mr. Peterson appears as a submission for the record.] 

Chairman SPECTER. We have about 8 minutes left on the vote, 

so we will recess briefly to vote. And I shall return immediately, 

and that would be my request of the other members. 

We stand in recess for a few minutes. 

[Recess from 11:50 a.m. to 12:04 p.m.] 

Chairman SPECTER. Our next witness is Dr. Francine Rabinovitz, 

executive vice president of Hamilton, Rabinovitz & Alschuler. Extensive experience as an expert witness in administrative and financial management, a court-appointed expert in many asbestoscaused bankruptcies. A B.A. degree from Cornell and a Ph.D. from 

MIT. 

Dr. Rabinovitz, we appreciate your being here today, and the 

floor is yours. 

STATEMENT OF FRANCINE RABINOVITZ, HAMILTON, 

RABINOVITZ & ALSCHULER, CARMEL, CALIFORNIA 

Ms. RABINOVITZ. Thank you, Senator Specter. 

I am here today to speak about the reasonableness of the claims 

projections that support the FAIR Act. I want to address three 

issues: the starting point for the claims projections, the adjustments of those claims projections to conform with the disease categories under the FAIR Act, and perhaps most important, lessons 

learned from the claims filing experience over the last 2 years. 

At the outset, it must be said that there is uncertainty in forecasting asbestos claims under the fund. It stems from two factors 

primarily, but not exclusively. First, there is not national database 

or registry for asbestos claims, and second, there is no past experiVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
51

ence with the National Compensation Fund employing the medical 

criteria, diagnostic standards, and exposure requirements of S. 852. 

But that being said, the estimates of future asbestos-related claims 

expected to be made under the FAIR Act have been calculated by 

well-accepted methods, are reasonable, in my view, and are likely 

to be conservative in light of recent experience and changes in the 

FAIR Act. 

First, the starting point. The starting point was the substantial 

data and forecasts available from the Manville Personal Injury 

Trust. There is general consensus reflected in court rulings that 

the Manville Trust will eventually see virtually all of the asbestos 

personal injury claims in the current system. Because claims filed 

against Manville represent virtually all asbestos claimants, it is 

the best and most comprehensive for a future claims estimate. 

Second, as to the adjustments of the base figure for the FAIR Act 

criteria, because the Manville Trust estimate was not conducted 

with the disease levels and medical criteria of S. 852 in mind—indeed, it was created through a process completely independent of 

the legislation—the question is how did we adjust the forecast to 

reflect the FAIR Act’s disease categories. 

Two studies allow greater precision in the distribution of the 

claims. The first, with respect to non-malignant claims, is a study 

conducted by the AFL–CIO of sheet metal workers, which provides 

information on how the non-cancer claims will be distributed in 

categories I through V of the bill. The approach is conservative, 

and by ‘‘conservative’’ I here mean that it produces a higher estimate than I actually expect experience will produce. Because the 

sheet metal workers were more heavily exposed to asbestos than 

the population expected to make claims under the act and will be 

prone to more and more serious diseases. 

As to lung cancer cases, data from a study that I myself conducted for the Manville Trust was used to distribute claims in the 

lung cancer categories. Specifically, that study projects smoking 

rates and the degree of underlying asbestos-related disease for lung 

cancer claimants. I should add that eliminating the S. 2290 Category VII claims from a forecasting perspective—that is, the claims 

for lung cancer without evidence for underlying asbestos-related 

disease—removes a substantial source of uncertainty for the estimate. 

Those studies, thing with the existing Manville Trust claims 

data, allow us to project the number of claimants who will qualify 

in each of the categories under S. 852. 

Lessons from the past 2 years’ experience have to be brought to 

bear. To me, they suggest that the estimate based on Manville data 

will prove to be very conservative. The overall forecasts for those 

years are holding up very well against experience, and the claims 

are qualifying at Manville now in lower categories than previously. 

Comparing the Manville Trust overall projections for 2003 and 

2004 against its actual experience indicates that the aggregate estimate has been accurate. In addition, the experience of the trust 

and others in 2004 suggests that overall claim rates may very well 

be dropping. 

As to the distribution of those claims, Manville’s recent experience demonstrates the effect of more stringent medical and expoVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
52

sure criteria. In 2002, in the face of escalating claims, particularly 

by claimants with non-malignant conditions, the trust revised its 

eligibility requirements to strengthen the medical and exposure requirements. The trust recently completed an analysis of the change 

in claims filings under the new requirements, and the results are 

quite dramatic. Only one-third of the claims could meet the new requirements of showing substantial occupational exposure, and 

there was a significant failure to meet the more stringent medical 

criteria under the new eligibility requirements. 

These two factors operate independently and reduce the number 

of claimants qualifying in the more severe categories. As an example, under the old requirements, half of the qualified claimants 

were at the lowest categories. Under the new stricter standards, 84 

percent of claimants fall into the lowest categories. In addition, the 

new requirements would have reduced the claims compensation 

outflow from Manville by 40 percent. These current results provide 

evidence that the trust-weighted mean estimate is likely to be conservative. 

Chairman SPECTER. Dr. Rabinovitz, you are over time. Could you 

summarize, please. 

Ms. RABINOVITZ. Yes. I think these current estimates and the 

basis for the prior estimates should provide substantial comfort for 

those assessing the likely future cost of the FAIR Act. 

Thank you. 

Chairman SPECTER. Thank you very much, Dr. Rabinovitz. 

Our next witness is Mr. Alan Reuther, legislative director of the 

International Union, United Auto Workers. Held that position since 

1991. He is a graduate of the University of Michigan Law School. 

In 1982, he was transferred to the Washington office here to handle all legislative matters. 

Thank you for coming in, Mr. Reuther. I know you were before 

the Health, Education, Labor, and Pension Committee today. It is 

a busy day for you testifying. 

STATEMENT OF ALAN REUTHER, LEGISLATIVE DIRECTOR, 

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE 

& AGRICULTURAL IMPLEMENT WORKERS OF AMERICA 

(UAW) 

Mr. REUTHER. Thank you, Mr. Chairman. The UAW appreciates 

the opportunity to testify before this committee on S. 852, the asbestos compensation legislation introduced by yourself and Ranking 

Member Leahy. The UAW supports this legislation and urges the 

committee to give it prompt, favorable consideration. This bill provides $140 billion in private money for compensating 

the victims of asbestos-related diseases. Many of those victims 

would otherwise get little or no compensation. The bill establishes 

a system which promises to provide the money to victims more 

quickly, more consistently, and less wastefully than the current 

tort system. The bill spreads the cost among defendant corporations and insurance companies more equitably. 

There is widespread agreement that the current tort system does 

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

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

53

identified, the workers compensation system prevents them from 

suing their employer, or where their employer was the government 

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

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

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

received by victims. 

The UAW represents over a million active and retired employees 

in the automobile and other industries. Some of our members were 

exposed to asbestos in plants that produced brakes, in foundries, 

and among maintenance and service trades working with process 

insulation. Those members who have or will develop asbestos-related diseases as a result of this exposure may receive some inadequate compensation under State worker compensation statutes, 

but are barred by those statutes from suing their employer. 

As a result of the massive lawsuits filed against companies that 

produced or used products containing asbestos, a number of auto 

parts companies have been forced into bankruptcy. In addition, rising claims against major auto manufacturers threaten to expose 

them to significant liabilities in the future, posing a major longterm threat to their economic health and the jobs and benefits of 

hundreds of thousands of active and retired UAW members. 

The Specter-Leahy bill addressed these serious problems by replacing the current tort system with the National Asbestos Trust 

Fund to compensate the victims of asbestos-related diseases. This 

approach would ensure that the victims would receive the full 

amount of their award regardless of whether a particular company 

has filed for bankruptcy. By creating a no-fault administrative system for processing claims, this approach would provide victims 

with speedier compensation while reducing the substantial attorney’s fees and other transaction costs in the current adversarial 

litigation system. By compensating victims pursuant to a fixed 

schedule of payments for specified disease levels, this approach 

would also provide predictable awards to individuals with similar 

illnesses and ensure that the most compensation goes to the most 

seriously ill victims. 

The UAW is especially pleased that the Specter-Leahy bill does 

not permit any subrogation against worker compensation or health 

care payments received by asbestos victims. We believe this is essential to ensuring that victims receive adequate compensation. 

The UAW is also pleased that the Specter-Leahy bill establishes a 

transparent mechanism for defendant companies and insurers to 

contribute to the National Asbestos Compensation Fund, thereby 

spreading the cost of compensating victims across a broad section 

of the business and insurance community. 

Because the Specter-Leahy bill replaces the current adversarial 

litigation system with a no-fault administrative system for processing claims, the difficulties and costs involved in bringing asbestos claims will be greatly reduced. Thus, the UAW believes the attorney fees provided under the legislation are more than adequate 

to attract competent representation for asbestos victims. 

The UAW believes the Specter-Leahy bill can be improved in two 

areas. First, while the legislation provides that CT scans showing 

54

asbestosis may be considered as evidence qualifying lung cancer 

victims for compensation, it does not expressly allow CT scans 

showing pleural disease to be considered. We believe this distinction is contrary to the current state of medical science, and therefore urge the committee to make CT scans admissible as evidence 

for all categories of claims. 

Second, the criteria for triggering the statute of limitations for 

bringing claims should be clarified to make sure they are workable, 

and so individuals with non-malignant diseases that may get progressively worse are not forced to rush to file their claims in order 

to preserve their legal rights. 

In conclusion, the UAW firmly believes that the asbestos compensation system established under the Specter-Leahy bill would 

be vastly preferable to the current tort system. We therefore urge 

the Judiciary Committee to promptly approve this important legislation. 

Thank you. 

Chairman SPECTER. Thank you very much, Mr. Reuther. 

[The prepared statement of Mr. Reuther appears as a submission 

for the record.] 

Chairman SPECTER. This is a good point to put into the record 

the letter from the International Union of Operating Engineers 

dated April 20th in support of the legislation and a press release 

from the Asbestos Workers dated April 25th in support of the legislation. They go along with your testimony, Mr. Reuther, from 

UAW. 

Ms. Morgan, I note in this morning’s Hill newspaper there is a 

full-page ad for the Coalition for Asbestos Reform, and I note a representation of representing a coalition of manufacture, construction, energy, and insurance companies. And in your testimony, you 

commented about the unavailable information on who is in what 

tier. Are you able to provide to this committee a list of your members and what tier they fall in? 

Ms. MORGAN. We can provide a list of some of the members. 

Some of the members are not wanting to be public, just because 

they are concerned about being targeted as a defendant. But there 

are others of us who obviously are willing to be more public. 

Chairman SPECTER. So some of your people want to advertise but 

not tell us who they are? 

Ms. MORGAN. There are some members who are not willing to be 

public, but we are representing them as well. 

Chairman SPECTER. Some of them will tell? 

Ms. MORGAN. Yes, absolutely. I am here today. 

Chairman SPECTER. We would like to know that. 

Ms. MORGAN. But as far as knowing what tiers we are in, we 

really don’t know exactly where we will end up in terms of the subtiers until we have more information. 

Chairman SPECTER. Well, tell us the companies and perhaps we 

can tell you the tier. 

I note in your advertisement an assertion that ‘‘they will be creating the potential for liability for the U.S. Treasury to pay substantial sums in damages.’’ A little hard for me to understand that 

when we have a figure of $140 billion—which wasn’t my idea; that 

is a figure which was voluntarily suggested by the manufacturers 

55

and the insurers. The AFL–CIO wanted more. And last fall, Senator Daschle, who was leader of the Democrats, and Senator Frist, 

the majority leader, got together and agreed to the $140 billion figure, which met the amount which had been voluntarily agreed to. 

Now, if that proves to be insufficient, the bill is explicit that claimants go back to court. Once you take away the right to jury trial, 

which is a very major right in our society, if the money isn’t there, 

Senator Feingold made the point that it shouldn’t be the claimants 

who bear the burden if the fund doesn’t hold up—something I 

agree with him totally—what is the basis for your asserting that 

the Government will have a responsibility here? 

Ms. MORGAN. Well, I think there are some provisions about going 

back to companies with a guaranty payment surcharge in the event 

there are insufficient funds. 

Chairman SPECTER. Going back to companies—well, that has 

nothing to do with going to the Government. 

Ms. MORGAN. Well, the next point is if they weren’t able to get 

financing through the Federal Financing Bank that there would be 

an effort to go back to companies. And our concern is, though, ultimately this could fall on the taxpayers because there may not be 

enough money generated from the businesses in order to cover this 

funding. 

Chairman SPECTER. Well, that may be a concern, but there is no 

basis for it. 

Dr. Rabinovitz, your testimony about the amount of the fund, as 

I understand it, is that before the Section 7s were eliminated, your 

expert projections came in at a total cost to cover all the claims of 

$125 billion. Is that correct? 

Ms. RABINOVITZ. Yes, although the value side of that equation is 

estimated by Goldman Sachs. But you are right that the claims 

provided the values. 

Chairman SPECTER. And if you took out the Section 7 claimants, 

it would be down to $118 billion? 

Ms. RABINOVITZ. Yes. 

Chairman SPECTER. And if you added in the additional monies 

which we have increased at the request of Senator Kennedy and 

others on some of the tiers, it would go back to $120 billion? 

Ms. RABINOVITZ. Yes, as I understand it. 

Chairman SPECTER. Okay, well, we can all do the math. The 

cushion of a $140 billion contribution, as compared with a projection of a cost of $120 billion. 

Professor Green, your critique of the bill was scathing. But when 

you compare it to the present system, how would you evaluate it? 

Let me give you a two-part question, because after my red light 

goes on I meticulously observe it. The two-part question is, however 

bad this bill is, isn’t it a whole lot better than what we have now? 

And the second part of the question is, what is the answer if this 

isn’t the best possible answer? 

Mr. GREEN. Those are fair questions, Senator Specter. I appreciate them. I think it is a myth that this is better than the system 

we have now, for several reasons. First of all, Congress already established a system which is working pretty well, not perfect, with 

§ 524(g) of the Bankruptcy Code. 

56

Let me give you one example, Senator Specter. It is an example 

of a company which is kicked around a lot by liberals in my home 

State of Massachusetts, Halliburton. But they used Section 524(g) 

of the Bankruptcy Code to stand up to their entire full set of asbestos liabilities, past, present, and future. They negotiated with their 

insurers, they negotiated with the asbestos victims, and they negotiated with me as the representative of the future victims. And we 

negotiated a deal which has been completed in less than a year to 

pay all of those victims 100 percent using stock and insurance proceeds. The stock of Halliburton was given to the future claimants 

at $19 a share. We sold 59–1/2 million shares at $42.50 a share, 

making $2.5 billion, creating new money by lifting the asbestos uncertainty overhanging that company. 

Today that company has fully met and set up a trust for all of 

its victims into the future—no delays in payment, Senator Feinstein. They get paid immediately. The insurers have paid their 

share, by agreement. Halliburton has paid its share. And that stock 

today—I checked—is trading at $44 a share. 

That mechanism is available to lots of companies and would have 

been utilized by many more companies, especially these big ones, 

if they didn’t have the prospect for 2 years, 3 years of this legislation. This has put the brakes on that. 

Now, in the tort system, for a long time we have been processing 

and paying in the tort system exigent cases, mesotheliomas, in one 

year from start to finish in most jurisdictions across the country. 

California and Massachusetts led the way in courts, advancing the 

mesothelioma cases. Now, this bill, if some of the projections are 

right, Senator, is going to require $50–70 billion of the $140 billion 

to go to debt service, to banks. Is that any better than going to tort 

lawyers, which is some of the criticisms? I don’t think we are fixing 

the problem. 

Chairman SPECTER. My time is up, but provide us documentation 

on that point, would you please? 

Mr. GREEN. I am sorry—

Chairman SPECTER. Provide us documentation on that expansive 

debt service figure you just stated. 

Mr. GREEN. It is in Dr. Peterson’s projections, Senator Specter. 

Chairman SPECTER. Senator Kennedy? 

Senator KENNEDY. Thank you very much, and I welcome you, 

Professor Green. Just on this point, you have had extensive expertise in the field. A number of courts look to you for assistance in 

highly complex subjects, and we are fortunate to have your comments. But in your testimony, to get back to this point, you state 

that by its fourth year the fund would need to borrow $50 billion 

to meet its liabilities, the fund’s liabilities will outstrip its revenues. Also, Mr. Peterson, you had a similar kind of a comment. You 

are telling us the level of borrowing required will actually be huge. 

Interest rates will consume 40 or 50 percent of the entire fund. The 

fund would only have between 70 and 85 left to pay the claims. 

That is not nearly enough to compensate the victims. 

How do you get there? Maybe just each one of you respond. 

Mr. GREEN. Well, very quickly, Senator, it is not enough to just 

look at the absolute amounts of funding. You have to look at the 

57

cash flow. You have to look at payments in and what will be available and then payments out. 

Even if the trust is fully funded, all these contributions that have 

not been specifically identified to particular insurers or manufacturers, even if they all came in, if you look at the backlog of 

mesotheliomas alone at $1.1 million per and the 3,000 additional 

a year that will continue to come, the cash flow is not adequate. 

After a few years you have to start borrowing. And the borrowing 

curve simply goes up. And then, as we all know, when we are 

caught personally with debt that we are trying to pay off, the 

money is eaten up by the debt service, and you get further and further into debt. 

But it is even worse because the trust is not going to be fully 

funded by these companies. The insurers are going to sue. The 

trusts are going to sue. The companies are going to sue. It is going 

to take time. Even using the liens, Senator Specter, it is going to 

take—we know it is going to take time. And so there is going to 

be a delay of—what? Six months? A year? Two years? Three years? 

The debt service will mount. 

Senator KENNEDY. Is there anything you want to add to that, Mr. 

Peterson? 

Mr. PETERSON. Two things I would say. What Professor Green 

described, looking at cash flow analysis, is precisely what we have 

done, and we have looked at five different scenarios with regard to 

claims forecasts, one of which was the CBO forecast done last year, 

which we have updated for present value. 

The other thing I want to say is that fully 40 percent of the liabilities are from mesothelioma, and so when you are looking at 

this fund, the biggest chunk of money goes to the mesothelioma victims. That is great. That is what this bill should do. But it means 

these are—when we hear about being expedited claims and pushed 

forward and wanting rapid payment, they are going to put heavy 

pressure initially on there that need to be funded. 

Senator KENNEDY. Professor Green, in your written testimony, 

you make the point in the entire history of asbestos, only a handful 

of industrial firms and even fewer insurers have voluntarily faced 

up to the cost of resolving the full asbestos liabilities. The rest of 

the firms and insurers being counted on under this bill to pay their 

allocated contributions have by and large fought and resisted every 

attempt to hold them accountable. 

What makes anyone think that they will now accept their allocated responsibilities and pay up their shares on time and without 

any fuss? 

Mr. GREEN. Either just willful blindness or hopeless optimism. I 

think this is a little bit of a ‘‘Wizard of Oz’’ operation here. And 

I think we have to face the realities that the insurers have not willingly stepped up to pay ever. The companies have resisted for years 

and years and years. And we have already heard that the smaller 

companies think that the large companies are getting a bail-out. 

They are not going to do this willingly. 

I know that the trusts are gearing up and have hired Ted Olson 

to mount a constitutional challenge to the taking of their assets. So 

there is going to be—

58

Senator KENNEDY. What is the practical effect of this? How long 

can this go along? How long can this continued litigation go on? 

Mr. GREEN. Well, you know that the American lawyer can continue litigation as long as he is allowed to. There are provisions for 

the administrator to make interim payment allocations on, say, insurers and so forth, but those can be challenged as well. This can 

go on for—it will go on for many years. 

Senator KENNEDY. Just finally, Dr. Landrigan, particularly on 

the lung cancer VII, could you just expand on this point that asbestos exposure can be a contributing factor to a patient’s lung cancer 

even if there is no evidence of the bilateral pleural thickening or 

asbestosis? Can you elaborate on that? Is 15 weighted years of exposure to asbestos a sufficient level of exposure to cause lung cancer? 

Dr. LANDRIGAN. Yes, Senator, I would be glad to. The point here 

is that asbestos—the scarring that asbestos causes in the human 

lung is typically not symmetrical. Very often it begins on one side 

and only subsequently, and not in every case, does it spread to the 

other side. And so I am concerned that an insistence that runs 

through this bill that evidence of asbestosis be bilateral is creating 

a very high standard, a very high criterion that is going to serve 

as a barrier to people that clearly have had asbestos disease, that 

clearly have suffered lung injury, but by whatever fluke of the circulation of air in their lungs has not produced damage on both 

sides. 

Senator KENNEDY. My time is up. Thank you. 

Chairman SPECTER. Thank you, Senator Kennedy. 

Senator Cornyn? 

Senator CORNYN. Thank you, Mr. Chairman. 

Professor Green’s comments reminded me that I asked former 

Solicitor General Ted Olson to write me a letter expressing his concerns with the takings issue and other constitutional questions that 

he had with regard to the asbestos trust funds, which would be 

swept into this larger Federal asbestos trust fund, and I would like, 

Mr. Chairman, if there is no objection, to make that a part of the 

record. 

Chairman SPECTER. Without objection, it will be part of the 

record. 

Senator CORNYN. Thank you very much. 

And I know, Ms. Morgan, you mentioned other constitutional 

concerns that you have, and as I understood it, it is essentially for 

those companies who have potential asbestos liabilities but who believe they have adequate insurance to cover it, they would be 

forced, is it your contention, to basically give up that coverage and 

then pay a dollar figure into this fund in order to meet their allocation? Is that what your concern is? 

Ms. MORGAN. That is correct. The smaller companies are relying 

on their insurance assets today to pay their claims, and those insurance assets under the FAIR Act would be taken away, and they 

would be required to pay out of their own pocket for the trust fund 

payments. 

Senator CORNYN. Do you have any concept of how many companies we are talking about? I know a number of Senators have expressed concerns about the fairness of the allocation system with 

59

regard to smaller companies. There is a level below which you are 

exempted and do not have to pay any money into the fund. But 

from your standpoint, how clear is it what that cutoff is? And what 

kind of impact on those companies that do have adequate insurance but, nevertheless, would be forced to pay money under this 

fund, what kind of impact do you believe that would have on those 

companies and their ability to keep their doors open and employ 

people? 

Ms. MORGAN. Well, I know about those within the coalition who 

fall in that category who do have adequate insurance today in the 

tort system and would not be able to make payments going forward 

without their insurance assets. I know those that have come forward and are part of the coalition. 

We are concerned that there are a number of other companies 

who rely on their insurance entirely to defend their claims and 

really have no idea about the dire consequences of this Act. So we 

have not identified everyone. We certainly know of those that are 

part of the coalition. And there are a number of companies that are 

in this position. 

Senator CORNYN. Well, I know everyone on the Committee and 

in the Congress is doing the best they can to solve a very difficult 

and challenging problem. But I think that is certainly something 

we need more information on, and I would appreciate any additional information you might have that would shed light on that. 

With regard to the adequacy of the fund itself, I know, Mr. Peterson, you and Dr. Rabinovitz have a different view over the adequacy of the fund and in terms of the composition of claims that 

will actually likely be made against the fund. As I recall, Mr. Peterson, you do not think $140 billion is anywhere near enough, and, 

Dr. Rabinovitz, you think it is plenty. 

Part of my problem is that we have to resolve that difference in 

this bill and make the best decision we can as to who is right and 

who is wrong. At the same time, we have to decide between the 

physicians here, who is right here and who is wrong about matters 

of science and medicine. And we are not particularly well equipped 

to resolve those differences although I assure you we will continue 

to do the best we can. 

But if you would, Mr. Peterson, could you just speak briefly to 

the composition again of the fund? As I recall, you said that we 

may see a rate of mesothelioma claims that vastly exceeds the prediction that Dr. Rabinovitz has given, thus absorbing a lot of this 

money very quickly from those very serious claims? 

Mr. PETERSON. Yes, thank you. I think that the differences between the forecasts—I have not seen Dr. Rabinovitz’s forecast. I 

have seen earlier ones by ASG consultants and I have seen some 

by CBO that have used those. I assume that the numbers of mesothelioma claims would be fairly similar and they don’t differ much 

from my forecast. That is not the area of difference. 

The standard forecasting—I mean, this is something we do routinely—the standard forecasting for mesothelioma is that they are 

going to come in at a rate of 2, 2.5 percent of the claims. Manville, 

even with the reduced volume of claims they are getting—well, 

probably because of that, they are coming in at 6 percent. 

60

So when you multiply that out, the product of multiplying how 

many claims they say are going to be coming in, 1 million, 2 million, suggests that there are going to be something like 60,000 

mesothelioma claims, if you just do the math on that. ASG’s earlier 

forecasts were somewhere on the order of 40 to 45,000 

mesotheliomas. So there is a potential there that there may be a 

third again as much. That is Manville’s experience. 

Generally, the perception of what is going on is that the plaintiffs 

lawyers are concentrating on trying to get mesothelioma claims 

represented, and indeed they are advertising extensively on the 

Internet. 

Can I comment also on the 140? I think there are two reasons 

that are there are differences there. One is the underlying forecasts 

that we have distributed. The other is that I don’t believe that Dr. 

Rabinovitz takes into account interest costs, and let me give you 

an example. 

Last year, CBO estimated for the bill current at the time that 

there would be $139 billion of indemnity costs and $1 billion of administrative costs. I have taken the new values of the current bill, 

including the elimination of Category VIIs, just CBO’s numbers 

which derive from ASG’s earlier work, and now that 139 becomes 

147. So they are already over the 140 just on the liability. You add 

another $1 billion for administrative costs and that gets in there. 

But when you then add in the cost of interest, because the interest is inevitable—the claims are coming in at a big bulk at the beginning; the money is not there and they are going to have to borrow. When you add that in, they get to over $190 billion, with interest. 

Dr. Rabinovitz—I mean, I don’t know. If she believes there isn’t 

going to be interest, then her number would stick. But if there are 

going to be interest charges—it is hard to imagine there wouldn’t 

be some—it would add to it. 

Senator CORNYN. I know my time is up, Mr. Chairman. 

Chairman SPECTER. Thank you, Senator Cornyn. 

Senator Leahy.

Senator KENNEDY. Can she answer the question? 

Ms. RABINOVITZ. Just if I may—

Chairman SPECTER. Dr. Rabinovitz, if you would like to comment 

on that last question, go ahead. 

Ms. RABINOVITZ. Thank you. With respect to the mesothelioma 

forecasts, I want to straighten out one misconception. The Manville 

Trust had 100,000 claims in 2003, and last year, in 2004, it had 

14,000. From the first quarter of 2005, it suggests they will only 

have 20,000 this year. 

Well, of course, the percentage of mesothelioma claimants has 

given up. It has gone up because the number of non-malignancy 

claims has gone down radically. So more of their resources are 

going to be devoted to the mesothelioma claimants. 

If there is anything we have more modest uncertainty about, it 

is the projection of the mesothelioma claims. Those are projected 

according to work originally done at Mount Sinai. They are 

tracked, in actuality, from a series, the survey of epidemiology and 

end results, which shows what the actual experience of a sample 

61

of weighted sample of hospitals is experiencing with respect to 

mesothelioma claims. 

Those projections have held up extremely well, both based on epidemiology and also based on real-world experience from hospitals 

and a government series. So there is uncertainty about the projections, but I would say that with respect to the mesothelioma 

claims, relatively speaking, there is less uncertainty than about almost any other category of claims. Of course, the percentage has 

gone up, and that is good because the number of non-malignancy 

claims has gone down. 

Chairman SPECTER. Thank you, Dr. Rabinovitz. 

Senator CORNYN. Mr. Chairman, could I ask, perhaps, quickly 

that Dr. Rabinovitz provide us a table of projections over future 

years and across each claims level? That would be very helpful in 

resolving some of these questions. 

Chairman SPECTER. I think that is a good idea, Senator Cornyn. 

Senator CORNYN. Thank you very much. 

Chairman SPECTER. Can you do that, Dr. Rabinovitz? 

Ms. RABINOVITZ. Yes. 

Chairman SPECTER. Thank you very much. 

Senator Leahy.

Senator LEAHY. Thank you, Mr. Chairman. 

The hearing has been fascinating. In case you didn’t know it, you 

are on an internal channel here in the Senate, and I was able to 

follow a lot of your testimony even though I was out of the room 

for a short while. C–SPAN is carrying it, too. 

Mr. Reuther, I want to thank you, and I want to thank you also 

for what the leadership of the UAW did. They were the first labor 

union to endorse our bipartisan legislation. I agree with the statement in your testimony where you said, quote, ‘‘It is easy for critics 

who want to maintain the current tort system to point out shortcomings in the legislation.’’ I think we both know that if you craft 

legislation with some powerful interests involved, it is never easy, 

but the Supreme Court has called on the Congress many times to 

do just that. I believe—and obviously you do—that it is time to create a fair and more efficient compensation system for the thousands of people suffering from asbestos-related diseases. 

Your testimony alludes to the difficulties that many of your own 

UAW members face in the current tort system. Can you tell us 

about some of those problems and why you feel our legislation is 

preferable to the current tort system? 

Mr. REUTHER. Yes, Senator. Because of the worker’s comp statutes, most of our members are barred from suing their employers. 

So they have no recourse whatsoever there and they are limited to 

the inadequate payments under State worker compensation statutes. 

Also, of course, there is the difficulty that they, along with others, face that defendant companies often go bankrupt. So even if 

a lawsuit is filed against some other company that produced the 

product, there may be no recourse whatever. Your bill that you and 

Senator Specter have introduced would solve both of those problems. 

62

Senator LEAHY. I understand from your testimony that the protection against subrogation of victim awards is very important to, 

I guess, the nearly million members of the UAW. Is that correct? 

Mr. REUTHER. Yes. We believe that that is essential in order to 

assure that the overall amount of compensation received by victims 

is fair and adequate. 

Senator LEAHY. Thank you. 

Mr. Gober, I am always pleased when I see the Military Order 

of the Purple Heart come up here. The members have already 

proved their sacrifices. They have been awarded the Purple Heart. 

They have proved their service and sacrifices to our Nation. 

Could you tell me about the special problems—and I understand 

from the material we have received from you the special problems 

faced by the men and women of our Nation’s armed forces in the 

current tort system if they are trying to seek redress for asbestosrelated injuries that they received while they were in the military. 

Mr. GOBER. Yes, sir. The reason we got involved in this is people 

were not looking at the veterans, and if you stop and think about 

it, all of us served in—particularly people my age served in barracks where you had asbestos around the pipes and when they got 

ready to remodel, they just came in and knocked it off. They didn’t 

do an abatement or anything else. So we got involved. 

It is interesting because the Wall Street Journal says that 26 

percent of all meso cases are veterans, 16 percent of all other lung 

cancer cases are veterans, and 13 percent of all disabling lung diseases are veterans. So we think this is working. I personally know 

of cases—one, in particular, where a veteran died on Veteran’s Day 

in 2001. The case has not come to court. They haven’t even taken 

depositions, and he was diagnosed with mesothelioma. 

Senator LEAHY. With this bipartisan trust fund legislation, do 

you think we can finally provide our Nation’s veterans with the 

compensation they deserve? 

Mr. GOBER. Yes, sir. That is why there are 19 veterans organizations that have signed on. I gave Senator Specter’s staff member 

a copy of the letter listing all of the veterans groups that have 

signed on. The current system is just not working. 

Now, is this the best bill in the world? I am not a lawyer, so I 

don’t know that. All I know is that right now it is not working. Veterans are dying. The World War II guys that were aboard those 

ships are dying. Their families are not being compensated, and 

when they are, the lawyers are taking 40 percent of it, plus expenses. That isn’t fair. It is not working, it is broke. It needs to be 

fixed. With all due respect to the legal minds in the house, it is just 

not working. 

Senator LEAHY. Thank you, Mr. Gober, and thank you for your 

service to our country. 

Chairman SPECTER. Thank you, Senator Leahy. 

Senator Sessions.

Senator SESSIONS. Ms. Morgan, you represent a group, but what 

I am curious about—I will be frank with you. Are we dealing with 

a serious number of individual companies and entities that are 

openly opposed to this bill, or are we dealing with some people that 

are leveraging at the last minute to try to get the thing a little fairer for problems that they see in the bill? 

63

Would you be prepared to tell us who objects, who would like to 

see this bill fail? And do some in your coalition favor some sort of 

reform, but would just like to see it fixed? Who do you represent 

and how would you characterize that opposition? 

Ms. MORGAN. Well, I think first and foremost, as I said in my 

statement earlier, we are passionately interested in reforming the 

system. There is no question about that, and we want the focus to 

be on making sure that funds and resources are directed to those 

who are truly injured. That is clearly our focus. 

It is a wide variety of folks who range from business, as I said, 

and also to a very significant number of insurance companies. I 

think right now our members total somewhere between 30 or 40 

different companies that have come forward. 

Senator SESSIONS. Are they willing to put their names out and 

say they oppose this bill? 

Ms. MORGAN. Well, we have, we actually have. A number of folks 

have written letters to this Committee. Exxon is on the list. DuPont and Shell are some of the bigger companies. Some of the 

smaller companies are like Oglebay Norton, Hopeman Brothers, 

Foster Wheeler, Iuna Nosroc. 

Senator SESSIONS. The figure earlier was 8,000 companies. How 

many do you have on your list that may be paying into this? 

Ms. MORGAN. Well, everyone in the coalition would be paying 

into this. Everyone is an asbestos defendant. 

Senator SESSIONS. Would you agree with that number, about 

8,000, total? 

Ms. MORGAN. I have heard that. I don’t know that for a fact, but 

I do know that there are a lot of defendants who are being represented by insurance companies in their asbestos litigation and 

really probably are not aware of the impact of this bill. They have 

just been able to have all of their claims covered by insurance. 

Senator SESSIONS. Well, I have heard that, and this is a serious 

question that we have got people out here that unless they have 

been paying asbestos claims, or their insurance company has, they 

are not going to be covered and have to pay into this fund. Is that 

correct? 

Ms. MORGAN. No. As I understand it, any asbestos defendant, 

whether their claims have been paid by insurance or whether their 

claims have been paid out of their own pocket, would be subject to 

this fund. 

Senator SESSIONS. But if you haven’t been paying any claims, 

you are not going to be dragged into this and have to pay. 

Ms. MORGAN. No, I am not referring to those defendants. Those 

are some lucky defendants. 

Senator SESSIONS. I am serious about this question. We have 

been moving this bill for a number of years. The Chairman has had 

hearings and hearings and hearings. At the last minute, we have 

some people representing certain groups that object. I would like 

to see what companies are objecting and precisely what they object 

to. I think it is a bit late for some of the groups that have come 

in here to start complaining, frankly. 

Ms. MORGAN. Well, to your point about being late, we have actually been very vocal for a long time. In 2003—

64

Senator SESSIONS. Well, I accept that. Some have not. Who, and 

what are their claims, what are their objections? Can you give us 

objections that are fixable or is it to the whole bill that you think 

is hopeless? 

Ms. MORGAN. Well, our concern is as long as the premise is that 

insurance assets will be taken away, and as long as the premise 

is that there has to be a $90 billion funding by industry, mathematically we can’t get there based on the data we have today. 

Now, once we know more about the exact source of funds for that 

$90 billion, which is not certain right now—that is still a mystery, 

what companies, what their shares are, and most importantly 

whether they have the ability to pay. We don’t have that information yet. When we do, then we can talk meaningfully about is there 

a way to fix this. 

Senator SESSIONS. What is it that you lack to allow a company 

that knows the formulas and their own situation and how much 

they have had to pay so far—why can’t they figure out pretty close 

what their liability would be? 

Ms. MORGAN. Well, we can. We can estimate, we can guess. 

Senator SESSIONS. Okay. 

Ms. MORGAN. And based on that, we know what our personal, individual situations are, and there are a number of us, as I mentioned before, who would simply not be able to make the payments 

without our insurance assets. 

Senator SESSIONS. Well, I don’t know how to solve that problem, 

except I think we need people to step forward to show what they 

are paying and why they think it is too much, why they think it 

is unfair, put their names out there, and let’s see if we can fix it, 

Mr. Chairman. If they are not willing to do that, they don’t have 

as much credibility with me as they otherwise would. 

Chairman SPECTER. We have got quite a few good cross-examiners, former prosecutors, and Senator Sessions comes at the top of 

the list today. 

Senator Feinstein.

Senator FEINSTEIN. Thank you very much, Mr. Chairman. 

Just continuing this line of thinking, Ms. Morgan, I read the ad 

today in the Washington Times and I was very much struck by it. 

Now, apparently, there are a number of anonymous companies out 

there that are prepared to say they won’t be able to make the payments. 

I would like to ask each one of you to begin reading the bill from 

page 135 onward, and let me just summarize a few things about 

what the bill says. The first is that there is a small business exemption. As I understand it, no company with 500 or less employees would have to pay into this fund, period. Secondly, there is a $300 million—and the wording of the bill is 

‘‘the aggregate total of financial hardships adjustment under paragraph 2 and inequity adjustments under paragraph 3 in effect in 

any given year shall not exceed $300 million, except to the extent 

additional monies are available for such adjustments.’’ So there is 

ample provision, it seems to me, that the administrator has the 

power to make certain adjustments as things go on. 

Now, I would like to make the offer that any company that is unhappy with this come in and see me specifically with the specifics 

65

of your unhappiness. But, frankly, it doesn’t change my mind to 

read an ad that is filled with generalities that don’t have a backup 

in terms of the wording of the bill. So I would just like to make 

that statement. 

If I might, I wanted to ask a question. Mr. Berrington isn’t here, 

but—

Mr. BERRINGTON. Senator, that is not so. 

Senator FEINSTEIN. Well, I wanted to ask you on the exigents—

and I guess maybe somebody on the panel can answer this. In California law, and I think to some extent in Massachusetts law, 

exigents can have their cases heard in court within 120 days, and 

we have expedited administrative procedures. Even with those, I 

don’t know how you can ask Congress to tell terminal victims that 

they should be put in a worse position than they are now and have 

no place to have their claims resolved while the Department of 

Labor performs the necessary tasks to get the claims facility and 

the trust up and running. 

That was my understanding of what your written comments say, 

and this is the most important part of the bill for me to get the 

sickest people paid fairly the quickest on a no-fault trust medical 

judgment. I don’t know how we could do it any quicker. 

Mr. BERRINGTON. May I comment? 

Senator FEINSTEIN. If you would, and if anybody else would like 

to comment. 

Chairman SPECTER. Step to a microphone, Mr. Berrington. 

Mr. BERRINGTON. Thank you very much and I appreciate the opportunity to comment on it. Our goals are absolutely the same. The 

sickest people need to be compensated the fastest and the fairest. 

We spent weeks putting together the administrative structure in 

the bill working with friends from all the stakeholder groups to 

make sure that the administrative structure in the Labor Department would do that. 

I think Judge Becker said earlier, and I would agree with it, that 

the Labor Department can almost certainly be up and running, 

prepared to receive claims and to pay claims within just a couple 

of months. And I think that those are the easiest cases to decide. 

Those aren’t the toughest cases and they should move through very 

quickly. 

I think also I heard earlier that in one of the States—I am not 

an expert on the State laws that you have referenced—that you can 

move the mesothelioma cases through in about a year. Well, I don’t 

think that is acceptable in the court system, and the trust fund 

would have these cases move through much, much more quickly. 

I was struck in the offer of judgment provision, which I think 

was absolutely done in good faith with the effort to move this forward, that it is a 200-day process in the offer of judgment language 

dealing with these exigent claims. Well, the Labor Department is 

going to be resolving these cases way before 200 days are up, and 

I think it doesn’t work, therefore, to keep the litigation system 

going. I think it will work much better for the claimants to have 

the Labor Department move quickly and smartly ahead consistent 

with the processes that we have put in. 

Senator FEINSTEIN. My time is up, but let me just say if you 

don’t—

66

Chairman SPECTER. Go ahead, Senator Feinstein. 

Senator FEINSTEIN. —if you don’t have this weight over the companies’ heads, then I think there will be a problem. But I think the 

fact that these people can return to the courts immediately, as 

quick as possible, if they don’t have satisfaction or if they want to 

settle and a settlement isn’t granted—there is a specific process 

spelled out here. 

Mr. BERRINGTON. I am sorry. Should I respond? 

Senator FEINSTEIN. Yes, please, please. 

Chairman SPECTER. Go ahead. 

Mr. BERRINGTON. The way the bill is set up is that if there is not 

operational certification within nine months, which means not that 

claims aren’t being paid, but that certification isn’t given, people 

can go back to court. The offer of judgment provision continues litigation. It continues the litigation with regard to the individual 

claimants. It also continues litigation among potential defendants 

because the process that is laid out has all the defendants, then, 

who may be involved with one particular claimant then litigating 

among themselves as to their shares. 

Then, finally, the offer of judgment process that the bill has gets 

kicked off by an individual filing with the defendants exactly the 

same information that the plaintiff would file with the Labor Department. Well, filing it at one place, with all the quick procedures 

in the Labor Department, is going to work a lot better. 

I should also add, of course, that these are additional monies outside the trust fund. There is some contribution level, I understand, 

but these are funds that add to the $46 billion. And I think that 

clearly the fastest way will be through the Labor Department process. I had some experience with this many years ago. 

Senator FEINSTEIN. You are saying don’t allow a settlement? Is 

that what you are saying? 

Mr. BERRINGTON. I am saying once the—

Senator FEINSTEIN. Are you saying don’t allow—do you favor the 

ability to settle for a lump sum within 30 days? 

Mr. BERRINGTON. I think the bill has a general provision now 

with regard to settlements that occur prior to the enactment date 

and that are finalized within 30 days. So I think that is already 

taken care of in the bill, Senator. 

Chairman SPECTER. Thank you, Senator Feinstein. 

Senator COBURN.

Senator COBURN. Thank you, Mr. Chairman. I would note for the 

record that the CBO numbers on asbestosis were about a third less 

than Mr. Peterson’s estimate, and I think that needs to be in the 

record. 

I also would note that I am not a trial attorney and I am not 

good at cross-examination, but I can take a heck of a history from 

a patient and I want to do that. I also will note that after we had 

our hearing in January, I asked CRS to give me every study done 

in the world in relationship to cancers and asbestos outside of the 

lung. And I spent the two-week break we had reading 93 scientific 

articles on that and I want to say I am flabbergasted that if anybody would actually do the research and would ever think that 

there is a connection between any other area of the body and asVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
67

bestosis, based on what the scientific literature is today, I can’t see 

it and I can’t find it. 

I have been accused of not being the best doctor, but I have 

never been accused of being a dumb ringer who can’t read a scientific journal. I want to ask Dr. Crapo to refute some of the things 

that we have heard here today because I just flat don’t buy it based 

on the science I have read. 

But I want to make a point. When you talk about cancer of the 

larynx and you look at the meta-analysis of all the studies it has 

been done for associated with asbestos, not one of those studies 

took out the confounding variables that we know cause cancer of 

the larynx. So those studies have no value in terms of telling us 

whether or not cancer of the larynx is caused by asbestos. 

Now, it may be that we need to have a study, but the fact is that 

we can’t rely on the science that is out there. And for us to have 

testimony that says that there is a causation when there, in fact, 

is not any causation is wrong. When we are going to start moving 

the science to what we want rather than what science really reveals, which happens a lot up here, we are in trouble as a Nation. 

End of talk. 

Dr. Crapo, talk to us about markers, asbestos exposure and lung 

cancer, because what I have heard here today is something that I 

just don’t buy. 

Dr. CRAPO. Well, your question is on markers of asbestos exposure and lung cancer. There is clearly an association between asbestos exposure and lung cancer. That has been well demonstrated 

in the literature. But it has also been well demonstrated that it is 

not just exposure; it is those that are very highly exposed that contain the highest risk. 

For example, if you look at the cohorts of asbestos workers in 

which there is not significantly high enough exposures so that 

there are no deaths due to asbestosis, so these are the kinds of 

workers who have asbestos exposure, but nobody has died from it, 

there are at least eight cohorts that have been studied that meet 

that criteria—no deaths due to asbestosis. In those eight cohorts, 

there is no increased risk of lung cancer. There is actually a zero 

increased risk, not even a small one. 

What that demonstrates is it is not just exposure that creates the 

risk, but rather a substantial exposure that is on the very high 

end. And most of the studies have suggested that the association 

is with those who have X-ray evidence of fibrotic lung disease that 

carries the increased risk, and there are a large number of studies 

that demonstrate that. So it is erroneous to conclude that just exposure alone dramatically increases a person’s risk for lung cancer, 

according to the best scientific evidence as I read it. 

Senator COBURN. Some of our testimony today states that there 

is causation of exposure without evidence of any pleural signs of 

any asbestosis, any restrictive lung disease and lung cancer. How 

would you go about proving that? I mean, that is the testimony we 

have today. 

Dr. CRAPO. I don’t think you can prove it. 

Senator COBURN. I don’t either. 

Dr. CRAPO. There is no way to prove that. In fact, the proof is 

the other way. The proof is the medical evidence suggests that 

68

there is not an association in the absence of some other marker of 

lung disease, and that is only for lung cancer. It doesn’t apply to 

the other cancers. 

Senator COBURN. Right, and so you feel comfortable telling this 

Committee that without signs of significant disease from asbestos 

either through a marker or restrictive lung disease, or a combination of both of those, that it is highly unlikely that you are going 

to see—based on the science, you are going to see a primary lung 

cancer that is associated with that? 

Dr. CRAPO. I would agree with what you just said. Based on the 

science, that would be my conclusion. 

Senator COBURN. And, remember, we are not distinguishing the 

types of lung cancer, are we? 

Dr. CRAPO. No. 

Senator COBURN. No, and there are multiple types of lung cancer. So there is no association, and we have done nothing as far as 

the amount of exposure in terms of particle load in this criteria, 

which is probably something we should do. 

Dr. CRAPO. That is true, although in this kind of a trust you 

probably can’t assess particle load. But there is good evidence that 

the higher the particle load in terms of asbestos particles, the higher the risk of this type of disease occurring. 

Senator COBURN. Thank you very much. 

Chairman SPECTER. Dr. Landrigan, would you like to comment 

on what Dr. Crapo just said? 

Dr. LANDRIGAN. Thank you, sir. I would. One of the nice things 

about medicine as compared to economic modeling is you can turn 

to data. In our very large occupational medicine practice at Mount 

Sinai, we have seen cases—I can’t tell you how many, but I can 

provide them for the record—of lung cancer in asbestos workers 

with many years of substantive exposure to asbestos, as defined in 

the bill here, who have developed lung cancer who had no asbestosis visible on X-ray. I edit the American Journal of Industrial 

Medicine. I have for more than 15 years been editor-in-chief, and 

we have published cases of lung cancer in asbestos workers who 

had no radiographic evidence of asbestosis. 

Going beyond our own experience at Mount Sinai, I refer you to 

the Scandinavian Journal of Work, Environment and Health, arguably one of the three or four best journals internationally in the 

field of occupational medicine. Back in 1997, they convened an 

international expert meeting on asbestos to develop the so-called 

Helsinki Criteria for asbestos, asbestosis and cancer, which were 

published in the Scandinavian journal in 1997. It says right in 

here, a direct quote from page 6 of this article, ‘‘Heavy exposure, 

in the absence of radiological-diagnosed asbestosis, is sufficient to 

increase the risk of lung cancer,’’ a direct quote. 

Senator COBURN. Mr. Chairman, might I respond to that? 

Chairman SPECTER. Go ahead, Senator Coburn. 

Senator COBURN. It is very important because the statements 

that were just made show no association with the disease. You are 

trying to prove the negative. The observation that you have seen 

cases with lung cancer who have asbestos exposure, but don’t have 

asbestos disease does not prove that the asbestos caused the lung 

cancer. The background rate on lung cancer, we all know, in this 

69

country is high, not counting for those people who have never 

smoked and never had any exposure. 

So the assumption that it is caused by asbestos, with lack of 

proof, is a false assumption. That is the kind of study that we can’t 

use to make scientific decisions. Now, I have not seen that. I would 

be happy to read that and look at it, but if it is based on the same 

assumptions, anecdotal evidence of disease in the absence of true 

exposure or true markers of disease, you don’t know that that is 

not a background cancer anyway. 

Dr. LANDRIGAN. Well, if I may, Senator. 

Chairman SPECTER. Go ahead, Dr. Landrigan. 

Dr. LANDRIGAN. Senator, in this same article from the Scandinavian journal that I just cited, a couple of lines above the line that 

I just read you, it does say the following. Let me offer you a partial 

concession, but by no means a complete yielding to your point of 

view. 

It says, ‘‘Because of the high incidence of lung cancer in the general population, it is not possible to prove in precise deterministic 

terms that asbestos is the causative factor for an individual patient.’’ That is where the rub is, but what epidemiologists do—and 

I think having served for 15 years in the U.S. Public Health Service and directed epidemiology at NIOSH for 6 of those years, I can 

tell you that what we epidemiologists do is when we are looking 

at a population of people that have a cancer such as laryngeal cancer, we take into account the smoking history in those with the disease, the smoking history and the alcohol history in those without 

the disease. 

Though the exercise is no more perfect than the creation of legislation, there are techniques for holding the smoking history and 

the alcohol history steady and looking at the effect of asbestos. And 

what we see is very much what Dr. Crapo said that people with 

a heavier exposure are at the greatest risk of disease, and that is 

a cause and effect relationship that shines through the inevitable 

murk of those confounding exposures. 

Chairman SPECTER. Thank you. 

Senator COBURN. I just would make one comment. In the studies 

that I have seen that CRS gave to me, those confounding variables 

were not taken out of the studies to show causation in terms of 

pharyngeal and laryngeal cancer. I would love to see your studies 

that have those where that has been taken out as a confounding 

variable and considered appropriately so that you could see causation. 

Senator COBURN. Thank you, Mr. Chairman. 

Chairman SPECTER. Thank you, Senator Coburn. 

Senator Durbin.

Senator DURBIN. Thank you, Mr. Chairman. 

Let me follow up on this, Dr. Landrigan, because even if you concede Dr. Coburn’s point that there are some cases without scarring 

and there is a question as to whether it is related to lung cancer, 

that is not what this law says; that is not what the bill says. 

I have read your testimony and it goes further. If you have evidence of asbestos scarring and lung cancer, but only find the scarring in one lung, then you are disqualified from coverage under 

70

this bill. And you say, and I quote, ‘‘Requiring that the damage be 

bilateral, both lungs, has no basis in biology or medicine.’’

So even conceding Dr. Coburn’s point, I don’t see how we came 

up with a standard that says one lung is not enough; asbestos scarring in one lung is not enough. Can you respond to that? 

Dr. LANDRIGAN. I would agree with you, sir. 

Senator DURBIN. Well, that troubles me because it means a cohort of people with lung cancer and asbestos scarring in one lung 

will not have an opportunity to recover under this bill. 

Dr. LANDRIGAN. That is my read of the bill, yes, sir. 

Senator DURBIN. That is the way I read it, too. 

I also want to go to this question that has been raised repeatedly 

about whether there will be enough money to pay the claims. I am 

going to offer an amendment here, because it has been stated so 

often this morning, which says if this program is not prepared to 

pay meso victims in 60 to 90 days, they can return to court. We 

have heard that over and over again—60 to 90 days. Judge Becker 

said that. It has been said by Mr. Berrington from the insurance 

industry. 

Well, let’s make that part of this law. Sixty to 90 days—it sounds 

so simple. But then when I heard the explanations from Ms. Morgan, representing some businesses—Mr. Olson sent us some testimony representing others about the fact that this is going to be 

contested in court. I mean, it is likely that we are going to have 

protracted litigation. Professor Green mentioned that earlier. 

We are going to have meso victims who are going to be told you 

cannot even take a deposition in your lawsuit; you can’t take your 

own evidence deposition if you are near death for nine months 

while we wait and see if this is up and running. This 60 to 90 days, 

to me, seems like wishful thinking. I think it is going to be, unfortunately, a protracted period of litigation to determine the liability 

under this case. 

Mr. Peterson, let me go to your point. Are you arguing that in 

order for this fund to pay anything, it is going to have to borrow 

substantial sums of money at the outset, in the beginning, and 

start paying interest on that as the years go on? Is that correct? 

Mr. PETERSON. Well, that is not precisely true. It will have presumably some small billions of dollars to pay a few claims. 

Senator DURBIN. If you assume the trust funds worth $4 billion 

willingly pay over their money rather than contest it in court. 

Mr. PETERSON. Well, they are probably worth $7 billion. That is 

the current estimate of the values. But, yes, if they came in, but 

still the liability in the first year could be as high as $60 billion 

in the first year. Even using conservative estimates the CBO did, 

I think it is $35 to $40 billion. So there is going to be a shortfall. 

I did an analysis like this two years ago. If you don’t have borrowing, claims will have to wait decades to get paid. 

Senator DURBIN. So look at the situation here. You are telling 

people currently with cases pending in court, sick people with 

mesothelioma, suspend your court case, take no discovery, no depositions, don’t schedule a trail and wait. And if they wait, under the 

best of circumstances the question is whether or not this fund will 

have enough money to ever pay them within their lifetime, or certainly within the first several years, based on whether or not the 

71

money can be borrowed, whether there is ultimately going to be 

enough money in the fund. 

Your estimate, Mr. Peterson, is this fund, borrowing this money 

as anticipated, may only have a life of eight or nine years, maybe 

ten. 

Mr. PETERSON. I don’t believe that. I think it is too optimistic. 

That is using the optimistic assumptions that the proponents of the 

legislation were using a year ago. I don’t know what they are using 

now. They change from time to time as the law changes. 

But using their best estimate, the most optimistic and rosy picture—the rosy picture is you pay less than 25 percent of the claimants. That is the rosy picture. But with that rosy picture, you could 

get to ten years. If you pay 50 percent of the victims, you can get 

to maybe 4 or 5 years. 

Senator DURBIN. At which point the trust fund is exhausted. 

Mr. PETERSON. Yes. That is with the borrowing. 

Senator DURBIN. So four or five years from now, if this is signed 

into law, we may be in a position where there is no trust fund, 

where people have walked away from their litigation, their right to 

make a claim in court. And then I guess the theory is either the 

Federal Government steps in and bails out the fund—

Mr. PETERSON. Well, either that or these people go back in and 

start litigating again. 

Senator DURBIN. Back into the tort system and start all over 

again. 

Mr. PETERSON. More than half of the claimants will be in that 

position. 

Senator DURBIN. Well, that concerns me as we get into this in 

terms of whether or not this is going to be able to make the payouts. 

I see my time is expired. 

Chairman SPECTER. Dr. Rabinovitz, would you care to comment 

on the last exchange? 

Ms. RABINOVITZ. Just very briefly, I am not the person who estimates the borrowing and financial situation of the fund. Goldman 

Sachs is. With our claims projections and their estimation of the 

financial contributions and the flow of funds based on cash flow 

analysis, Goldman Sachs seems satisfied that the fund is sound. 

Chairman SPECTER. Thank you very much. Well, thank you all. 

Senator KENNEDY. Mr. Chairman, could I just include a statement by President Sweeney of the AFL–CIO expressing his concerns about this legislation? 

Chairman SPECTER. Without objection, it will be made a part of 

the record. 

Senator KENNEDY. I thank the Chair. 

Senator DURBIN. Mr. Chairman, I have a series of statements I 

would like to ask to be part of the record relative to constitutional 

issues and rights of victims. 

Chairman SPECTER. They will, without objection, all be made a 

part of the record. 

In conclusion, two of the comments I think might bear special 

scrutiny: Senator Feinstein’s comment about reading the bill and 

finding a lot of provisions in the bill which have answered many 

of the objections which were raised here today, and Senator SesVerDate 0ct 09 2002 11:30 Apr 20, 2006 Jkt 026841 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\26841.TXT SJUD4 PsN: CMORC
72

sions’ comments about who is interested in what, what are the interests behind a good bit of the testimony characterized by the Coalition for Asbestos Reform, but other testimony as well. 

When we come to the medical evidence, there has been a healthy 

exchange here. We have had some very, very healthy exchanges 

with the conferences that we have had. We should be able to come 

to some sort of terms on what the science portends. We are asking 

IOM to do a study, and Senator Coburn, who has very extensive 

medical experience in the field, is going to be adding on some criteria there. 

What we are facing essentially is whether the current system, 

which is racked in ruin, is preferable to go on to what we have in 

this legislation. And to repeat, Senator Leahy and I have crafted, 

after a lot of very tough work, the core principles, and we are continuing to work right along to see if we can find accommodations 

to many, many interests, and we have and we will continue to do 

that. 

Senator Lindsey Graham couldn’t be here today, but he just sent 

some good news. He wants to cosponsor the bill. 

Thank you very much, Dr. Crapo, Professor Green, Mr. Gober, 

Dr. Landrigan, Ms. Morgan, Mr. Peterson, Dr. Rabinovitz and Mr. 

Reuther. 

That concludes the hearing. 

Senator LEAHY. Mr. Chairman, I thank it has been a good hearing. I think it has moved the legislation forward. 

Chairman SPECTER. It is a good hearing, like a good bill, Senator 

Leahy. 

[Whereupon, at 1:18 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.]

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