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[House Report 106-782]
[From the U.S. Government Publishing Office]

                                                                       
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-782

======================================================================

 
                   ASBESTOS COMPENSATION ACT OF 2000

                                _______
                                

 July 24, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1283]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1283) to establish legal standards and procedures 
for the fair, prompt, inexpensive, and efficient resolution of 
personal injury claims arising out of asbestos exposure, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           2
Purpose and Summary........................................          15
Background and Need for the Legislation....................          15
Hearings...................................................          21
Committee Consideration....................................          22
Votes of the Committee.....................................          22
Committee Oversight Findings...............................          31
New Budget Authority and Tax Expenditures..................          31
Congressional Budget Office Cost Estimate..................          31
Constitutional Authority Statement.........................          40
Section-by-Section Analysis and Discussion.................          41
Operating Cost Analysis....................................          64
Agency Views...............................................          66
Judicial Calls for Federal Legislation.....................          76
Dissenting Views...........................................          79

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Asbestos 
Compensation Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

                  TITLE I--ESTABLISHMENT AND PROCEDURE

Sec. 101. Establishment of the Office of Asbestos Compensation.
Sec. 102. Medical eligibility review.
Sec. 103. Election of administrative process; settlement offers.
Sec. 104. Claimant's choice of forum.
Sec. 105. Administrative adjudication.
Sec. 106. Appeals; judicial review.
Sec. 107. Gathering and maintenance of information.
Sec. 108. Legal assistance program.
Sec. 109. Time limits for dispositions.

          TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.

Sec. 201. Medical eligibility.
Sec. 202. Damages.
Sec. 203. Statute of limitations or repose.
Sec. 204. Come back rights.
Sec. 205. Class actions, aggregations of claims and venue.
Sec. 206. Joint and several liability.
Sec. 207. Core claims
Sec. 208. Special rules applicable to section 105 adjudications.
Sec. 209. Special rules applicable to the trustee.

                TITLE III--ELIGIBLE MEDICAL CATEGORIES.

Sec. 301. Eligible medical categories.
Sec. 302. Asbestos-related non-malignant conditions with impairment.
Sec. 303. Asbestos-related mesothelioma.
Sec. 304. Asbestos-related lung cancer.
Sec. 305. Asbestos-related other cancer.
Sec. 306. Medical testing reimbursement.

                           TITLE IV--FUNDING.

Sec. 401. Assessment and enforcement.
Sec. 402. Fiscal and financial management of the asbestos compensation 
fund.
Sec. 403. Authorization for appropriations and offsetting collections.

                          TITLE V--TRANSITION

Sec. 501. Applicability; transitional civil actions.

                         TITLE VI--DEFINITIONS

Sec. 601: Definitions.

                  TITLE VIII--MISCELLANEOUS PROVISIONS

Sec. 701. Relationship to other laws.
Sec. 702. Annual reports.
Sec. 703. Enforcement.
Sec. 704. Qualifying national settlement plan.
Sec. 705. Severability.

                  TITLE I--ESTABLISHMENT AND PROCEDURE

SEC. 101. ESTABLISHMENT OF THE OFFICE OF ASBESTOS COMPENSATION.

    (a) Establishment of Program; Administrator.--There is established 
in the Department of Justice the Office of Asbestos Compensation (OAC) 
to be headed by an Administrator. The Administrator shall be appointed 
by the President by and with the advice and consent of the Senate. The 
Administrator shall serve for a term of 10 years, and may be removed by 
the Attorney General only for good cause. The Administrator shall have 
authority to promulgate all procedural and substantive rules necessary 
to administer this Act. All claims and other filings under this Act 
shall be lodged with the office designated by the Administrator.
    (b) Exclusive Jurisdiction.--Except as otherwise provided in this 
Act, the OAC shall have exclusive jurisdiction over proceedings to 
determine if a claimant is entitled to compensation for an asbestos 
claim and the amount of such compensation. The foregoing shall not 
apply to any claim brought under any workers' compensation law or 
veterans' benefits program.
    (c) Medical Director.--The Administrator shall appoint the Medical 
Director and may remove the Medical Director for good cause. The 
Medical Director shall, under the supervision of the Administrator, 
manage the medical review process under section 102 and shall have the 
authority to appoint or to contract for the services of claims 
examiners, physicians, and such other personnel as may be necessary or 
appropriate for the efficient conduct of the medical review process and 
to create the exceptional medical claims panel.
    (d) Asbestos Compensation Fund.--There is established in the OAC an 
Asbestos Compensation Fund for the purpose of providing payments to 
claimants under this Act. The Administrator shall appoint the Trustee 
of the Asbestos Compensation Fund and may remove the Trustee for good 
cause.
    (e) Office of Administrative Law Judges.--There is established in 
the OAC an Office of Administrative Law Judges for the purpose of 
providing expedited administrative adjudication of asbestos claims 
pursuant to section 105. The Administrator shall have authority to 
appoint Administrative Law Judges on a temporary or emergency basis and 
to remove such judges for good cause.
    (f) Medical Advisory Committee.--The Administrator shall appoint a 
Medical Advisory Committee which shall periodically evaluate this Act's 
medical review process and medical eligibility criteria. The 
Administrator shall set a term of appointment for members of the 
Medical Advisory Committee. The Committee shall make appropriate 
recommendations as and when it deems appropriate and shall submit an 
annual report to the Administrator and the Congress.

SEC. 102. MEDICAL ELIGIBILITY REVIEW.

    (a) Determination of Eligibility.--All claims when filed shall be 
immediately referred to the Medical Director. The Medical Director 
shall determine whether the claimant meets the requirements for medical 
eligibility in section 301 or the requirements for medical testing 
reimbursement in section 306
    (b) Information for Medical Review.--The Administrator shall issue 
rules for the expeditious conduct of the medical review process. Such 
rules at a minimum shall provide for the following:
            (1) Submission of the following information where relevant 
        and feasible: smoking history; occupational history; 
        description of the circumstances, intensity, time, and duration 
        of exposure; medical test results necessary for a decision as 
        to whether an exposed person meets the requirements for one or 
        more medically eligible categories under sections 301, 302, 
        303, 304, 305, or 306, including all of the supporting data for 
        any pulmonary function tests on which the claimant relies 
        (including all flow volume loops, spirographs, and any other 
        tracings for any test that is performed). The claimant shall 
        also provide such medical releases as the Administrator may 
        require allowing the OAC to obtain any and all medical 
        information relevant to the determination of medical 
        eligibility.
            (2) The Medical Director may require additional non-
        invasive medical tests at the expense of the OAC if necessary 
        for a determination of medical eligibility.
    (c) Procedures.--Upon receipt of a complete medical application, 
the Medical Director shall send notice to the claimant confirming the 
OAC's receipt of the claim. The Medical Director shall make an initial 
decision within 30 days of such receipt. If the application is 
initially denied, the claimant shall be so notified and, at the 
claimant's request, the application shall be immediately referred to--
            (1) a review panel of 2 qualified physicians, with a third 
        qualified physician available to resolve any disagreement 
        between the initial 2 qualified physicians; or
            (2) an exceptional medical claims panel.
The Medical Director shall be bound by a panel's decision. The rules 
shall also provide for the prioritization of claims, including enhanced 
priority for claimants who have mesothelioma, and set a time limit for 
a determination by the review panel.
    (d) Exceptional Medical Claims.--The rules of the medical review 
process shall provide the claimant with an opportunity to apply to an 
exceptional medical claims panel for a determination of whether the 
exposed person meets the requirements under section 301(b) for an 
exceptional medical claim for any category. This opportunity shall be 
provided both at the initial filing of a claim and after a claim has 
been denied under this subsection. The exceptional medical claims panel 
shall decide whether the claimant qualifies as an exceptional medical 
claim within 30 days of receipt of the claim. This time limit may be 
extended by the Administrator only for good cause. The Medical Director 
shall be bound by the decision of the exceptional medical claims panel. 
The Medical Director shall issue a final denial, along with a brief 
statement of reasons, if the claimant is found ineligible following an 
opportunity to submit the claim to a medical review panel and an 
exceptional medical claims panel.
    (e) Monitoring Accuracy of Determinations.--The Medical Director 
shall establish audit and personnel review procedures for evaluating 
the accuracy of medical eligibility determinations, including both 
erroneous approvals and erroneous denials.
    (f) Opt-Out.--After receiving a certificate of eligibility, a 
claimant may opt out of settlement proceedings provided for under 
sections 103 and 104 and elect to file suit in any State or Federal 
court of competent jurisdiction.

SEC. 103. ELECTION OF ADMINISTRATIVE PROCESS; SETTLEMENT OFFERS.

    (a) Naming and Notification of Defendants.--Medically eligible 
claimants, other than those who elect to file suit in court under 
section 102(f), shall name defendants. Defendants shall receive notice 
from the Administrator.
            (1) Identification of Defendants Associated with Work 
        Sites.--At the claimant's request, the Administrator will 
        provide information concerning person who may have provided 
        asbestos or asbestos-containing products or materials to work 
        sites named by the claimant and when such asbestos or asbestos-
        containing products or materials may have been provided as well 
        as the time such products or materials were located at the 
        named work sites The Administrator may implement this paragraph 
        through rulemaking.
            (2) Verified Particularized Statement.--Within such time 
        after receiving a certificate of medical eligibility as may be 
        provided by rule, a claimant shall provide, with respect to 
        each person that the claimant alleges is responsible for the 
        injury claimed, a verified particularized statement of the 
        basis for the allegation that the person is or may be 
        responsible for the injury. The particularized statement shall 
        include such information as the Administrator may require for 
        the purpose of providing the defendant with a reasonable basis 
        for making an offer of settlement. The claimant may incorporate 
        by reference any information required by this paragraph that 
        may already have been submitted to the OAC.
            (3) Notice.--Upon finding that the claimant's 
        particularized statement meets the requirements of paragraph 
        (2), the Administrator shall provide notice to each named 
        defendant. The defendant shall at the same time be furnished 
        with a copy of all particularized statements submitted by the 
        claimant under paragraph (2) and, subject to reasonable rules 
        protecting the confidentiality of information provided by the 
        claimant, a copy of all information submitted by the claimant, 
        records and other information obtained by the Medical Director 
        relating to the claim and the results of any medical tests 
        administered at the direction of the Medical Director. Any 
        defendant may provide any information relevant to the amount of 
        any recommended settlement under subsection (b), including 
        information regarding product identification, exposure, and 
        damages.
            (4) Third-Party Practice.--Defendants may assert third-
        party claims in accordance with rules adopted by the 
        Administrator. Third-party claimants shall provide a verified 
        particularized statement, meeting the requirements of paragraph 
        (2), substantiating the allegation that the third-party 
        defendant may be liable to the third-party plaintiff, wholly or 
        in part, for the claimant's injury. For good cause shown and 
        subject to reasonable limitations, an Administrative Law Judge 
        may allow discovery for the purpose of obtaining information 
        necessary to allow the claimant or any third-party plaintiff to 
        provide a particularized statement under paragraph (2) or this 
        paragraph.
    (b) Settlement Offers; Offer of Compensation by the Trustee.--
            (1) Mandatory offer from defendants.--Within 21 days 
        following the naming of all defendants, each defendant shall 
        provide to the claimant in writing a good faith settlement 
        offer, and shall provide a copy to the Trustee.
            (2) Mandatory offer from Asbestos Compensation Fund.--
        Within 10 days of receiving all of the defendants' offers, the 
        Trustee shall make an offer of compensation to the claimant, 
        based on a compensation grid which shall be established and 
        regularly revised by rule.

SEC. 104. CLAIMANT'S CHOICE OF FORUM.

    (a) In General.--The claimant shall notify each defendant and the 
Trustee whether the claimant accepts or rejects the defendant's 
settlement offer under section 103(b)(1). If the claimant accepts any 
such offer, or any other settlement offer, the Trustee's offer of 
compensation shall be automatically reduced by the amount of such 
settlements.
    (b) Notice.--The claimant shall notify the Trustee and any 
defendant within 60 days whether the claimant accepts or rejects an 
offer that has been provided pursuant to section 103(b)(1) or 
103(b)(2).
    (c) Orphan Shares.--The Trustee shall not make an offer to the 
claimant under section 103(b) if no solvent defendant has been named.
    (d) Acceptance.--If the claimant accepts the Trustee's offer of 
compensation, the Trustee shall assume the claim. The Trustee may 
accept any defendant's settlement offer under section 103(b)(1) or may 
prosecute the claim against any defendant as provided in section 105, 
or may prosecute the claim in any State or Federal court.
    (e) Rejection.--If the claimant rejects any defendant's settlement 
offer and also rejects the Trustee's offer of compensation, the 
claimant may elect an administrative adjudication under section 105 or 
opt out of further administrative proceedings and file suit in a State 
or Federal court.

SEC. 105. ADMINISTRATIVE ADJUDICATION.

    If a claimant elects adjudication under this section, the OAC shall 
assign an Administrative Law Judge to conduct a hearing on the record 
and to determine whether compensation is to be provided and the amount 
of such compensation. The Administrative Law Judge shall adhere to the 
law applicable to asbestos adjudications as contained in sections 201 
through 210. The Administrative Law Judge shall issue a decision, 
containing findings of fact and conclusions of law, as expeditiously as 
possible, but not later than 90 days after the case is assigned.

SEC. 106. APPEALS; JUDICIAL REVIEW.

    Any person aggrieved by a final decision of the Administrator under 
section 105 or a final denial by the Medical Director under section 
102, may seek review of that decision or denial in the United States 
Court of Federal Claims, which shall uphold the decision or denial if 
it is supported by substantial evidence and is not contrary to law. A 
decision by the Medical Director that a claimant has an eligible 
medical condition is not a final decision under this section. Decisions 
of the United States Court of Federal Claims are appealable, without 
regard to the amount in controversy or the citizenship of the parties, 
to a United States Court of Appeals for a judicial circuit.

SEC. 107. GATHERING AND MAINTENANCE OF INFORMATION.

    (a) Product Identification.--The OAC shall collect and regularly 
update information regarding product identification and shall make such 
information publicly available. The data base maintained by the OAC 
under this section is for information purposes only, and the presence 
of information in that database shall not lead to any presumption.
    (b) Settlements, Judgments, and Awards.--The OAC shall collect data 
on settlements, judgments, and awards in connection with asbestos 
claims and shall make such data publicly available. The OAC may require 
this data to be reported in such form as it may prescribe.
    (c) Subpoena Power.--The OAC may compel, by subpoena or other 
appropriate process, information from any person regarding past 
settlements or product identification for purposes of developing and 
maintaining a compensation grid under section 103(b)(2) and maintaining 
a database for purposes of naming defendants under section 103(a)(1). 
In addition, the subpoena power under this subsection may be used by 
the OAC in order to secure financial information from any defendant.
    (d) Confidentiality.--Any information or documentary material 
concerning settlements which is specific to a company, law firm, or 
plaintiff that is provided to the OAC pursuant to subsection (b) or 
(c), whether by subpoena or otherwise, shall be exempt from disclosure 
under section 552 of title 5, United States Code, and the disclosure of 
such information by the OAC or any person is prohibited.

SEC. 108. LEGAL ASSISTANCE PROGRAM.

    (a) In General.--The OAC shall implement a legal assistance program 
for the purpose of providing legal representation to claimants. The OAC 
shall maintain a roster of qualified counsel who agree to provide 
services to claimants under rules, practices, and procedures 
established by the Administrator.
    (b) Free Choice of Counsel.--Claimants shall not be required to use 
counsel provided or recommended by the OAC, but shall retain their 
right to be assisted by counsel of their choice.
    (c) Legal Assistance.--The OAC shall adopt rules concerning the 
reasonableness of fees, and all legal representation of persons 
asserting asbestos claims shall comply with such rules.

SEC. 109. TIME LIMITS FOR DISPOSITIONS.

    (a) In General.--If the Medical Director fails to meet the time 
limits for an initial decision provided under this Act with respect to 
more than 30 percent of claims, then the Administrator shall take such 
action as may be necessary, including increasing staff and 
administrative assessments under section 401, to ensure compliance with 
such time limit with regard to at least 70 percent of claims
    (b) No Offer.--If the Trustee fails to make an offer within 120 
days after the Administrator's receipt of a complete application under 
section 102 with respect to more than 30 percent of claims, then the 
Administrator shall take such action as may be necessary, including 
increasing staff and administrative assessments under section 401, to 
ensure compliance with such time limit with regard to at least 70 
percent of claims.
    (c) Duties.--The duties established by subsections (a) and (b) 
shall be non-discretionary and enforceable by an order of mandamus from 
any judge of the United States Court of Federal Claims.
    (d) Exceptions.--The Administrator may by rule establish exceptions 
to the time limits in this section. Such rules shall take into 
consideration the complexity of the case, the extent to which delays 
are attributable to the fault or neglect of the claimant or the 
claimant's attorney and other factors that are beyond the control of 
the OAC.

          TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.

SEC. 201. MEDICAL ELIGIBILITY.

    A claimant may recover compensation for damages caused by an 
eligible medical condition only if the claimant presents a certificate 
of medical eligibility establishing its existence. A certificate of 
medical eligibility shall be conclusive unless rebutted by clear and 
convincing evidence. However, a certificate of medical eligibility 
shall not be conclusive as to allegations regarding exposure to 
asbestos or when medical eligibility is established pursuant to section 
304(b).

SEC. 202. DAMAGES.

    A claimant who establishes an eligible medical condition shall be 
entitled to compensatory damages to the extent provided by applicable 
law, including damages for emotional distress, pain and suffering, and 
medical monitoring where authorized. Such damages shall not include 
punitive damages or damages solely for enhanced risk of a future 
condition, except as provided in section 208(d).

SEC. 203. STATUTE OF LIMITATIONS OR REPOSE.

    No defense to an asbestos claim based on a statute of limitations 
or statute of repose, laches, or any other defense based on the 
timeliness of the claim shall be recognized or allowed, unless such 
claim was untimely as of the date of enactment of this Act. No claim 
shall be deemed to have accrued until and unless the claimant's 
condition would have qualified as an eligible medical condition under 
section 302, 303, 304, or 305.

SEC. 204. COME BACK RIGHTS.

    Notwithstanding any other provision of law, a judgment or 
settlement of an asbestos claim for a non-malignant disease shall not 
preclude a subsequent claim with respect to the same exposed person for 
an eligible medical condition pursuant to section 301(b), 303, 304, or 
305

SEC. 205. CLASS ACTIONS, AGGREGATIONS OF CLAIMS AND VENUE.

    (a) Consolidations.--No joinder of parties, aggregation of claims, 
consolidation of actions, extrapolation, or other device to determine 
multiple asbestos claims on a collective basis shall be permitted 
without the consent of all parties, except as provided in subsection 
(b) or unless the court, pursuant to an exercise of judicial authority 
to promote the just and efficient conduct of asbestos civil actions, 
orders such procedures, including the transfer for consolidation, to 
determine multiple asbestos claims on a collective basis.
    (b) Class Action Suits.--In any civil action asserting an asbestos 
claim, a class action may be allowed without the consent of all parties 
if the requirements of Rule 23, Federal Rules of Civil Procedure are 
satisfied.
    (c) Venue.--At the election of the claimant, an asbestos claim may 
be filed in any jurisdiction where the claimant is alleging that the 
claimant was exposed to asbestos or where the claimant is currently 
domiciled.
    (d) Removal.--Any party in a civil action that involves a violation 
of subsection (a), (b) or (c) of this section may remove such action to 
an appropriate district court of the United States. The district courts 
of the United States shall have jurisdiction of all civil actions 
removed pursuant to this section without regard to diversity of 
citizenship or amount in controversy.
    (e) Administrative Proceedings.--In any proceeding under section 
105, the Administrative Law Judge may order adjudication of claims on a 
collective basis.

SEC. 206. JOINT AND SEVERAL LIABILITY.

    This Act shall not be construed to limit joint and several 
liability under applicable Federal or State law. In any core claim that 
is successfully asserted against a defendant, such defendant shall be 
held jointly and severally liable for full compensatory damages to the 
claimant notwithstanding any contrary provision of law.

SEC. 207. CORE CLAIMS.

    In any core claim, the issues to be decided shall be limited to--
            (1) whether the exposed person with respect to whom a claim 
        is made has or had an eligible medical condition;
            (2) whether the exposure of the exposed person to the 
        product of the defendant was a substantial contributing factor 
        in causing that eligible medical condition; and
            (3) the amount of compensation to be provided.

SEC. 208. SPECIAL RULES APPLICABLE TO SECTION 105 ADJUDICATIONS.

    (a) Applicable Law.--Unless otherwise provided in this Act, in 
claims based on State law, the Administrative Law Judge shall, with 
respect to each defendant, apply the substantive law of the State which 
has the most significant relationship to the exposure and the parties.
    (b) Full Compensatory Damages in Wrongful Death Cases.--
Notwithstanding any contrary provision of State law, full compensatory 
damages, including damages for non-economic loss, shall be awarded in 
wrongful death claims involving mesothelima. In all other cases, 
damages for non-economic loss may be awarded to the extent that they 
are available pursuant to applicable law.
    (c) Penalty for Inadequate Offer.--In any proceeding against a 
defendant by a claimant under section 105, and in any proceeding by the 
Trustee, if the final offer made by any defendant is less than the 
share of the total liability awarded against that defendant, a penalty 
shall be added to the award equal to 100 percent of the difference 
between the defendant's settlement offer under section 103(b) and the 
lesser of--
            (1) the defendant's share of the offer made by the Trustee 
        under section 103(b); or
            (2) the defendant's share of the award made under section 
        105.
    (d) Punitive Damages.--Punitive damages may be awarded against a 
defendant if the claimant establishes by clear and convincing evidence 
that the conduct carried out by the defendant with a conscious, 
flagrant indifference to the rights or safety of others was the 
proximate cause of the harm that is the subject of the asbestos claim. 
Punitive damages may not exceed 3 times the amount of the award 
pursuant to a section 105 adjudication plus any penalties added to that 
award pursuant to subsection (c).

SEC. 209. SPECIAL RULES APPLICABLE TO THE TRUSTEE.

    In an action by the Trustee as assignee of the claimant, the award 
under section 104(d) shall include compensatory damages for the 
claimant's injury and all punitive damages under section 208(d), any 
penalties for inadequate offers by defendants, and the Trustee's costs 
in establishing the claim, including reasonable attorneys' fees and 
expenses and an allowance for interest on the amount paid by the Fund 
to the claimant under section 104. Interest shall be calculated from 
the time of such payments, and in accordance with Title IV. All 
economic and non-economic damages recovered by the Fund in excess of 
200 percent of the amount paid to the claimant pursuant to section 104 
and all punitive damages under section 208(d) shall be paid to the 
settling claimant. The fact that the claimant has accepted an offer of 
compensation by the Trustee, and the amount and terms of such offer, 
shall not be admissible in any adjudication of a claim brought by the 
Trustee against any defendant.

                TITLE III--ELIGIBLE MEDICAL CATEGORIES.

SEC. 301. ELIGIBLE MEDICAL CATEGORIES.

    (a) In General.--The eligible medical categories under this Act are 
asbestos-related non-malignant conditions with impairment, asbestos-
related mesothelioma, asbestos-related lung cancer, and asbestos-
related other cancer.
    (b) Establishing Existence.--A claimant may establish the existence 
of an eligible medical condition either by demonstrating that the 
exposed person meets the standard criteria provided in sections 302, 
303, 304, and 305 or by demonstrating to an exceptional medical claims 
panel, through reliable evidence, that the exposed person has an 
asbestos-related impairment that is substantially comparable to the 
condition of an exposed person who would satisfy the requirements of a 
given medical category. The Administrator, after consultation with the 
Medical Advisory Committee, may adopt rules consistent with this 
section to assure consistency and efficiency in the designation of 
claims as exceptional medical claims.

SEC. 302. ASBESTOS-RELATED NON-MALIGNANT CONDITIONS WITH IMPAIRMENT.

    (a) In General.--The standard criteria for asbestos-related non-
malignant conditions with impairment shall include--
            (1) clinical evidence of asbestosis,
            (2) pathological evidence of asbestosis, or
            (3) evidence of bilateral pleural thickening with 
        impairment.
    (b) Obstructive Lung Disease.--A claimant shall not be disqualified 
from compensation under this category solely because an exposed person 
who otherwise meets the requirements for impairment has a reduced FEV1/
FVC ratio indicating obstructive lung disease. In that event, the 
exceptional medical claims panel shall determine, giving due regard to 
the evidence that any impairment is related to obstructive disease and 
taking into consideration all available evidence, whether an asbestos-
related restrictive disease substantially contributes to the impairment 
of the exposed person. Such a contribution shall be presumed if the 
panel concludes, based upon the findings of a certified B-reader, that 
the exposed person's chest x-ray is ILO Grade 2/1 or more.

SEC. 303. ASBESTOS-RELATED MESOTHELIOMA.

    The standard criteria for asbestos-related mesothelioma shall 
include a diagnosis by a qualified physician of a malignant 
mesothelioma caused or contributed to by exposure to asbestos with a 
primary site in the pleura, peritoneum, or like tissue, or reasonably 
equivalent clinical diagnosis in the absence of adequate tissue for 
pathological diagnosis.

SEC. 304. ASBESTOS-RELATED LUNG CANCER.

    (a) In General.--The standard criteria for asbestos-related lung 
cancer shall include--
            (1) a diagnosis by a qualified physician of lung cancer 
        that the physician concludes was caused or contributed to by 
        exposure to asbestos;
            (2) a latency period of at least 10 years; and
            (3) either--
                    (A) evidence of asbestosis or bilateral pleural 
                thickening with impairment sufficient to meet the 
                requirements of section 302 or to qualify as an 
                exceptional medical claim under section 301(b); or
                    (B) chest x-rays which, in the opinion of a 
                certified B-reader, demonstrate asbestos-related 
                bilateral pleural plaques or thickening, and 7.5 
                equivalent-years of exposure to asbestos-containing 
                materials in employment regularly requiring work in the 
                immediate area of visible asbestos dust.
    (b) History of Smoking.--If a finding of asbestos-related lung 
cancer is made pursuant to paragraph (3)(B) and the exposed person has 
a substantial history of smoking, which shall be defined by rule, the 
claimant shall be medically eligible for compensation, but the finding 
of asbestos-related lung cancer shall not be conclusive as to causation 
for purposes of section 201.

SEC. 305. ASBESTOS-RELATED OTHER CANCER.

    The standard criteria for asbestos-related other cancer shall 
include a diagnosis by a qualified physician of a malignant primary 
tumor of the larynx, oral-pharynx, gastro-intestinal tract, or stomach, 
caused or contributed to by exposure to asbestos, together with 
evidence of a condition sufficient to meet the requirements of section 
302 or to qualify as an exceptional medical claim under section 301(b).

SEC. 306. MEDICAL TESTING REIMBURSEMENT.

    (a) Level A.--A claimant with at least 4 equivalent-years of heavy 
exposure to asbestos, whose chest x-ray shows either small irregular 
opacities of ILO Grade 1/0 or bilateral pleural thickening of ILO Grade 
B/2, shall be eligible for reimbursement of 100 percent of out-of-
pocket expenses for any medical testing required under section 102, up 
to a ceiling of $1500. Level A claimants shall be eligible at 3 year 
intervals for similar reimbursement of future medical testing expenses 
for up to 2 additional occasions. Level A reimbursements shall be 
treated as administrative expenses of the OAC and paid for by 
defendants under section 401.
    (b) Level B.--The Administrator shall, subject to the availability 
of appropriated funds, reimburse up to 100 percent of the out-of-pocket 
expenses for any medical testing required under section 102, up to a 
ceiling established by rule, with the approval of the Trustee, for any 
claimant with at least one equivalent-year of heavy exposure to 
asbestos who meets the medical but not the exposure requirements of 
Level A. Level B claimants may be eligible for similar reimbursement of 
future medical testing expenses for up to 2 additional occasions at 
least 3 years apart. The Administrator shall adjust periodically the 
amount of the cash payment to reflect changes in medical costs. Level B 
reimbursements shall be treated as administrative expenses of the OAC 
and paid for by defendants under section 401.
    (c) Certified Labs.--The Administrator is authorized to establish a 
program for the certification of laboratories to provide medical 
testing under this section.
    (d) Exposure Verification.--The Administrator shall establish audit 
and other procedures to provide reasonable assurance that statements 
concerning exposure made by claimants seeking medical testing 
reimbursement under this section are accurate.
    

                           TITLE IV--FUNDING.

SEC. 401. ASSESSMENT AND ENFORCEMENT.

    (a) Rules.--The Administrator shall adopt rules for calculating and 
collecting from defendants all costs associated with the determination 
of claims and payments to claimants.
    (b) Trustee.--The Trustee shall have authority to bring an action 
in the district courts of the United States to enforce any obligation 
imposed on any person by this section and such courts shall have 
exclusive jurisdiction of such actions without regard to the amount in 
controversy or citizenship of the parties. The district court shall not 
entertain any defense other than lack of jurisdiction in any action by 
the Trustee under this subsection.
    (c) Trustee Prevails.--In any action under subsection (b) in which 
the Trustee prevails, the Trustee shall be entitled to costs, including 
reasonable attorneys' fees, and interest on any unpaid amount.
    (d) Judicial Review.--A defendant may challenge the legality or 
amount of any assessment only by seeking judicial review in the United 
States Court of Federal Claims after paying the disputed amount. If 
successful, the defendant shall be awarded interest.

SEC. 402. FISCAL AND FINANCIAL MANAGEMENT OF THE ASBESTOS COMPENSATION 
                    FUND

    (a) Applicability of Credit Reform Act Principles; Fiscal 
Management Rules.--Except as provided in this section, the operations 
of the Fund related to settlement payments under section 104, and 
associated recoveries from defendants, shall be governed by the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), notwithstanding the 
status of the Fund as a governmental entity. The Administrator shall 
promulgate rules, approved by the Office of Management and Budget, for 
the fiscal management of the Fund. Such rules and their application 
shall not be subject to judicial review and shall, as regards payments 
under section 104--
            (1) provide all reasonable assurance that, over an 
        appropriate time period, the subsidy rate associated with the 
        net litigation risk of the Fund is zero;
            (2) provide all reasonable assurance that, in any given 
        year, the subsidy rate associated with the net litigation risk 
        of the Fund is no more than 2 percent;
            (3) provide for the allocation of receipts from defendants 
        to various Fund accounts, including the Fund's financing 
        account, program account, and an account for salaries and 
        expenses (which shall include litigation costs); and
            (4) provide specific instructions for the Trustee to reduce 
        payments by the Fund when necessary to meet the solvency 
        requirements of this subsection.
    (b) Financing of the Fund, Settlement Payments to Claimants.--
            (1) Credit reform principles.--The Fund is authorized to 
        receive from defendants, as offsetting receipts, any amounts 
        related to settlements or judgments, including damages, 
        interest, litigation costs, specific administrative costs that 
        may be required by the Administrator through rulemaking, and 
        interest costs incurred by the Fund in connection with payment 
        of settlement offers made under section 103. Amounts received 
        from defendants as interest shall be sufficient to pay interest 
        costs due to the United States Treasury from the financing 
        account, plus the subsidy costs of the program account, 
        provided that the latter amounts may not exceed 3 percent of 
        the amount of any settlement or award. Recoveries on a claim by 
        the Fund in excess of the settlement amount paid to the 
        claimant and other costs of the Fund which are not paid to the 
        claimant under section 209 shall be available to the program 
        account as a reduction to subsidy costs in the current or any 
        subsequent year.
            (2) Authority.--The program account shall have permanent 
        indefinite authority, not subject to further appropriation, to 
        transfer funds to the finance account in accordance with 
        principles of the Credit Reform Act.

SEC. 403. AUTHORIZATION FOR APPROPRIATIONS AND OFFSETTING COLLECTIONS.

    (a) In General.--There are authorized to be appropriated--
            (1) to the OAC such sums as may be required to perform 
        responsibilities under this Act;
            (2) to the United States Court of Federal Claims, such sums 
        as may be required to carry out its responsibilities under this 
        Act; and
            (3) to the OAC an amount not to exceed $100 million, for a 
        one-time loan to the Fund in connection with startup expenses, 
        such loan to be repaid by the Fund with interest;
The total of appropriations provided under this subsection in the first 
year after the date of enactment not exceed $250 million and in any 
subsequent year not exceed $150 million.
    (b) Offsetting Collections of Administrative Assessments.--The OAC 
is authorized to receive and to expend in any year, as offsetting 
collections, all administrative assessments or prepaid administrative 
assessments and all costs and penalties paid to it.

                          TITLE V--TRANSITION

SEC. 501. APPLICABILITY; TRANSITIONAL CIVIL ACTIONS.

    (a) In General.--This Act shall be effective upon its date of 
enactment with respect to any civil action asserting an asbestos claim 
in which trial has not commenced as of that date.
    (b) Pending Claim.--A claimant with a pending civil claim on the 
date of enactment shall not be required to obtain a certificate of 
medical eligibility or otherwise exhaust the procedures set forth in 
title I if trial commences within 6 months of the date of enactment of 
this Act. This 6-month period may be extended by the Attorney General 
for up to an additional 6 months if required for the orderly 
implementation of this Act, and after reporting to the Congress the 
reasons for any such extension.
    (c) Right to Sue Letter.--If a claimant with--
            (1) a pending civil action on the date of enactment of this 
        Act, and
            (2) a scheduled trial date within one year after the date 
        of enactment of this Act
does not receive an initial decision on medical eligibility within the 
time period prescribed in section 102(c), the claimant may request a 
right-to sue letter from the Administrator at any time prior to the 
issuance of that initial decision. If the Attorney General determines 
that the 6-month period in subsection (b) should be extended, the one-
year period in the preceding sentence shall be similarly extended. The 
Administrator shall issue a right-to-sue letter or an initial decision 
under section 102 within 10 days following the receipt of the 
claimant's request. A claimant who receives a right-to-sue letter may 
assert the claimant's asbestos claim in any competent forum 
notwithstanding section 101(b).
    (d) Claim in Another Forum.--Any claimant who asserts his claim in 
a forum other than the OAC under subsections (b) or (c) must 
demonstrate that the exposed person has qualified for medical 
eligibility under section 301, 302, 303, 304, 305, or 306.

                         TITLE VI--DEFINITIONS

SEC. 601: DEFINITIONS.

    In this Act:
            (1) Asbestos claim.--The term ``asbestos claim'' means any 
        claim for damages or other relief, arising out of, based on, or 
        related to the health effects of exposure to asbestos, 
        including any claim for personal injury, death, mental or 
        emotional injury, risk of disease or other injury, or the costs 
        of medical monitoring or surveillance, and including any claim 
        made by or on behalf of any exposed person or any 
        representative, spouse, parent, child, or other relative of any 
        exposed person. The term does not include any claim for 
        workers' compensation benefits, or any claim by an employer or 
        insurer for reimbursement from a third-party for benefits paid 
        under a workers' compensation plan, or any claim for benefits 
        under a veterans' benefits program.
            (2) Asbestos trust.--The term ``asbestos trust'' means a 
        court-supervised trust established to resolve asbestos claims 
        arising directly or indirectly from exposure to asbestos or 
        asbestos-containing products, including a trust created 
        pursuant to the bankruptcy laws of the United States or Rule 23 
        of the Federal Rules of Civil Procedure.
            (3) Certificate of medical eligibility.--The term 
        ``certificate of medical eligibility'' means a certificate 
        issued to a claimant pursuant to this Act certifying that an 
        exposed person meets the requirements of one or more eligible 
        medical categories or qualifies as an exceptional medical 
        claim.
            (4) Certified B-reader.--The term ``certified B-reader'' 
        means an individual qualified as a ``final' or ``B-reader'' 
        under 42 C.F.R. 37.51(b) (1997) (and any subsequent revisions 
        thereof) whose certification is current.
            (5) Chest X-rays.--The term ``chest x-rays'' means chest 
        radiographs taken in at least 2 views (Posterior-Anterior and 
        Lateral) and graded quality 1 for reading according to the 
        criteria established by the ILO. If the claimant is unable to 
        provide quality 1 chest x-rays because of death or because of 
        an inability to have new chest x-rays taken, chest x-rays 
        graded quality 2 will be acceptable.
            (6) Civil action.--The term ``civil action'' means any 
        action, lawsuit, or proceeding in any State, Federal, or tribal 
        court, but does not include--
                    (A) a criminal action; or
                    (B) an action relating to State or Federal workers' 
                compensation laws, or a proceeding for benefits under 
                any veterans' benefits program.
            (7) Claimant.--The term ``claimant'' means any exposed 
        person or the person's legal representative, and any relative 
        of an exposed person or their legal representative, who asserts 
        an asbestos claim.
            (8) Clinical evidence of asbestosis.--The term ``clinical 
        evidence of asbestosis'' means a diagnosis of pulmonary 
        asbestosis by a qualified physician based on the minimum 
        objective criteria of--
            (A) Chest x-rays for which a B-reader report is furnished 
        showing small irregular opacities of ILO Grade 1/0 and 
        pulmonary function testing and physical examination that show 
        either--
                    (i) FVC FVC* 75% 
                (actual value); or
                    (ii) TLC  
                76% of predicted value or bilateral basilar crackles, 
                and also the absence of any probable explanation for 
                this DLCO result or crackles finding other than the 
                presence of asbestos lung disease; or
            (B) Chest x-rays for which a B-reader report is furnished 
        showing small irregular opacities of ILO Grade 1/1 or greater 
        and pulmonary function testing that shows either--
                    (i) FVC FVC* 72% 
                (actual value) or, if the individual tested is at least 
                68 years old at the time of the testing, with FEV1/FVC* 
                65% (actual value); or
                    (ii) TLC 2 with pulmonary function testing and physical 
                examination that show either--
                            (i) FVC 
                        FVC* 75% (actual value) or
                            (ii) TLC  76% of predicted value or 
                        bilateral basilar crackles, and also the 
                        absence of any probable explanation for this 
                        DLCO result or crackles finding other than the 
                        presence of asbestos lung disease; or
                    (B) Chest x-rays for which a B-reader report is 
                furnished showing bilateral pleural thickening of ILO 
                Grade C/2 or greater; and pulmonary function testing 
                that shows either--
                            (i) FVC 
                        FVC* 72% (actual value) or, if the individual 
                        tested is at least 68 years old at the time of 
                        the testing, with FEV1/FVC* 65% (actual value); 
                        or
                            (ii) TLC 0 reading 
on the ILO scale) together with pulmonary function tests that 
demonstrate ``restrictive'' impairment--the type of breathing 
abnormality typical of asbestos-related disease. If the x-ray 
evidence is stronger (a 1/1 or greater on the ILO scale), the 
PFT requirements are somewhat relaxed.
    Pulmonary functions tests measure impairment and help to 
distinguish restrictive impairment, which may be associated 
with asbestos exposure, from impairment due to ``chronic 
obstructive pulmonary disease,'' which is typically caused by 
smoking. Breathing impairment is indicated by a lung capacity 
(either ``forced vital capacity'' (FVC) or ``total lung 
capacity'' (TLC)) that falls even minimally below the normal 
range. The principal indicator of obstructive disease is the 
ratio of the amount of air the exposed person can breath out in 
1 second (FEV1) compared to the amount of air he can breath out 
in a single forced breath (FVC). A ratio of less than 75 
percent indicates obstructive rather than restrictive lung 
disease.\18\ In addition, an abnormally low total lung capacity 
indicates restrictive rather than obstructive disease, since in 
the early stages, at least, obstructive lung disease leads to 
overinflation of the lung and thus an abnormally high total 
lung capacity.\19\
---------------------------------------------------------------------------
    \18\ See American Thoracic Society, Evaluation of Impairment/
Disability Secondary to Respiratory Disorders, Am. Rev. Respir. Dis. 
1986; 134:1205-1209, 1205.
    \19\ See American Thoracic Society, Lung Function Testing: 
Selection of Reference Values and Interpretive Strategies, Am. Rev. 
Respir. Dis. 1991; 144:1202-1218, 1210 (``A restrictive ventilatory 
defect is characterized physiologically by a reduction in TLC.'').
---------------------------------------------------------------------------
    The bill's criteria for clinical diagnosis of asbestosis 
are more favorable to the plaintiffs than the diagnostic 
criteria adopted by the American Thoracic Society (ATS) in 
1986.\20\ The ATS requires an ``appropriate'' latency period--
generally a minimum of 15 years--while the bill does not have 
any latency requirement at all.\21\ Moreover, the ATS states 
that a chest x-ray rated 1/1 or greater is indicative of 
asbestosis, and ``considerable caution'' should be observed 
before arriving at a diagnosis of asbestos if that criterion is 
not met.\22\ The bill, however, requires only a 1/0 x-ray.
---------------------------------------------------------------------------
    \20\ See American Thoracic Society, The Diagnosis of Nonmalignant 
Diseases Related to Asbestosis, Am. Rev. Respir. Dis. 1986; 134:363-368 
[hereinafter ``ATS, Diagnosis''].
    \21\ Id. at 365, 367.
    \22\ Id. at 367.
---------------------------------------------------------------------------
    Asbestosis can also be demonstrated through Pathological 
Evidence. ``Pathological evidence of asbestosis'' is defined in 
Section 601(27). The key elements of this definition are a 
pattern of scarring (fibrosis) in the lungs together with the 
presence of characteristic asbestos bodies. This definition is 
similar to the College of American Pathologists of the National 
Institute for Occupational Safety and Health (CAP-NIOSH) 
criteria for pathological diagnosis of asbestosis. CAP-NIOSH, 
in an influential joint study, adopted the following guideline: 
``[T]he minimal features that permit the diagnosis [of 
asbestosis] are the demonstration of discrete foci of fibrosis 
in the walls of respiratory bronchioles associated with 
accumulations of asbestos bodies.'' \23\ This standard has been 
formally adopted by the ATS.\24\ The act's pathological 
criteria similarly require discrete occurrences of 
peribronchiolar or parenchymal scarring (that is, fibrosis) in 
association with asbestos bodies. The additional requirement 
that there be no more likely cause does not significantly 
deviate from the CAP-NIOSH standard, but merely represents 
prudent diagnostic practice.
---------------------------------------------------------------------------
    \23\ Craighead et al., supra, at 559 (emphasis in original)
    \24\ See ATS, Diagnosis, supra, at 364-65.
---------------------------------------------------------------------------
    Claimants may also recover by showing evidence of 
``Bilateral Pleural Thickening with Impairment,'' which is 
defined in section 601(14). This definition is similar to the 
definition of clinical evidence of asbestosis. A claimant with 
x-ray evidence of pleural changes (B/2 chest x-ray on the ILO 
scale) is medically eligible if his pulmonary function tests 
meet the same requirements that apply to asbestosis claimants 
with a 1/0 x-ray. If the x-ray evidence of pleural thickening 
is stronger (a C/2 on the ILO scale), the pulmonary function 
requirements are reduced, as they are for asbestosis claimants 
with stronger x-ray evidence.
    Claimants suffering from obstructive diseases will not be 
disqualified from qualifying for asbestosis. In some cases, 
breathing impairment may be caused by both obstructive lung 
disease (smoking) and restrictive disease (asbestos). Section 
302(b) directs the exceptional medical claims panel to qualify 
claimants in this situation if it finds, on the basis of all 
the evidence, that asbestos-related disease is a substantial 
contributing factor to the claimant's impairment. The panel 
must presume that asbestos is a substantial contributing factor 
if the exposed person's chest x-ray is graded 2/1 or higher on 
the ILO scale. This will ensure that claimants will be 
medically eligible if asbestos is a substantial contributing 
factor to their breathing impairment, even if smoking is also a 
cause.
Section 303. Asbestos-related mesothelioma
    Section 303 designates mesothelioma as an eligible medical 
category. Where possible, diagnosis of mesothelioma should be 
based upon pathological evidence; however, clinical evidence 
may be used in the absence of adequate tissue for a 
pathological diagnosis.
Section 304. Asbestos-related lung cancer
    Section 304 designates asbestos-related lung cancer as an 
eligible medical category. The act provides two independent 
ways for a claimant with lung cancer to show that the cancer is 
related to asbestos. The first is by showing that, in addition 
to cancer, the exposed person has a qualifying non-malignant 
condition--the claimant also has asbestosis or bilateral 
pleural thickening that would meet the requirements of section 
301(b) or 302. The second is to show substantial exposure, 
which is measured by work history in certain occupations in 
which exposure is likely, and confirmed by pleural plaques, 
which are a biological marker of exposure.
    When eligibility is established on the basis of exposure, 
the amount of exposure required is measured in equivalent-
years, as defined in Section 601(13), which adjusts real-time 
years of employment to reflect typical levels of exposure in 
different occupations. Individuals who received non-
occupational exposures would apply for medical eligibility 
through the exceptional medical claims panel. Similarly, 
individuals with indirect occupational exposure who could show 
that they were exposed to levels of asbestos comparable to the 
exposure levels of people who worked directly with asbestos 
could make that case to the exceptional medical claims panel.
    Individuals whose lung cancer is attributed to asbestosis 
on the basis of exposure, without a qualifying non-malignant 
disease, are entitled to a certificate of medical eligibility 
regardless of their smoking history. See Section 304(b). 
However, because of the causation problems that arise when lung 
cancer victims were exposed both to tobacco and to asbestos, 
smokers without a qualifying non-malignant disease do not 
receive the benefit of a presumption of an asbestos caused 
illness under Section 201. The Administrator will promulgate 
rules to define what constitutes a ``substantial history of 
smoking.''
Section 305. Asbestos-related other cancer
    Section 305 establishes other cancers as an eligible 
medical category. Claimants can recover for asbestos-related 
other cancer if they can demonstrate (1) the presence of a 
cancer set forth in this section that is caused or contributed 
to by asbestos exposure, and (2) evidence of a non-malignant 
condition that would satisfy either Section 301(b) or Section 
302.
Section 306. Medical testing reimbursement
    Section 306 establishes a medical testing reimbursement 
benefit for claimants who have a chest x-ray consistent with 
asbestosis or substantial pleural thickening but who are not 
yet impaired. The benefit allows reimbursement of 100 percent 
of out-of-pocket expenses for medical tests required under 
Section 102. These expenses include radiographic exams and 
pulmonary function tests and will not duplicate payments from 
other sources, including Medicare, Medicaid, private insurance, 
or employer-provided medical benefits This benefit would be 
available for up to three testing occasions at least 3 years 
apart. All benefits under this section will be funded by 
administrative assessments against defendants under Section 
401.
    Claimants who have at least four equivalent-years of 
exposure, the medical testing reimbursement is capped at $1500 
per occasion. The Administrator will establish by rule a cap 
for claimants with less exposure. The Administrator is required 
under section 306(d) to establish procedures to ensure accuracy 
in statements by claimants concerning their history of 
exposure. The Administrator is authorized under section 306(c) 
to establish a certification program for laboratories that 
provide medical testing for claimants under this act. The 
purpose of the certification program is to ensure that testing 
done under this section is performed at laboratories that meet 
industry standards for the administration and interpretation of 
tests, including appropriate quality assurance and control. 
Claimants are not required to use certified laboratories under 
Section 102, although they will be encouraged to do so. 
Standards for certification of laboratories will be developed 
in consultation with the Medical Advisory Committee.

                           Title IV. Funding

Section 401. Assessments and enforcement
    This section directs the Administrator to adopt rules for 
calculating and collecting from defendants all costs associated 
with the determination of claims and payments to claimants. 
Rules will allocate costs in accordance with a general 
principle of proportionality and will provide an exclusion for 
defendants whose involvement in asbestos litigation is de 
minimis. Also, while costs will be deferred for select 
defendants pursuant to Section 704, administrative costs for 
these defendants are limited to those claims that are not 
covered by the approved Qualifying National Settlement Plan.
    Section 401 further provides special procedures for 
streamlined collection actions. The Trustee is empowered to 
bring an action in any Federal district court to enforce a 
section 401 assessment, notwithstanding amount in controversy 
or citizenship of the parties, and subject only to 
jurisdictional defenses. A defendant may challenge the legality 
or amount of the assessment only by seeking review in the 
United States Court of Federal Claims, and only after paying 
the disputed amount. Moreover, the Trustee is entitled to costs 
and reasonable attorneys' fees in any successful action under 
this section. Rules and procedures for calculating and 
developing assessments will ensure that Funds for the 
administration of the OAC will be made available from 
defendants rather than the Federal Government.
Section 402. Fiscal and financial management of the Asbestos 
        Compensation Fund
    This section governs the operations of the Asbestos 
Compensation Fund relating to settlement payments by the Fund 
under section 104, and associated recoveries by the Fund from 
defendants. Except as otherwise provided in this section, the 
operations of the Fund will be governed by the Federal Credit 
Reform Act of 1990, notwithstanding the status of the Fund as a 
governmental agency. The Federal Credit Reform Act governs a 
wide range of Federal funding programs, including SBA loans, 
farm loans, Federal student loans, and various forms of foreign 
credit assistance.
    Under this section, the Fund is required to recover 
sufficient amounts from defendants to offset all payments made 
under section 104 together with all other associated costs of 
the Fund. The Administrator must promulgate rules, which are to 
be approved by the Office of Management and Budget, for the 
fiscal management of the Fund. Those rules will not be subject 
to judicial review and must provide, among other things, that 
over a reasonable period of time there will be no net taxpayer 
subsidy to the program.
    The Fund may borrow from the Treasury, under Credit Reform 
Act principles, amounts sufficient to pay claimants under 
section 104. The Fund is authorized to receive, as offsetting 
receipts, any amounts paid by defendants in connection with 
settlements and judgments of the claims assigned to the Fund 
under that section. These amounts include, among other things, 
damages, interest, litigation costs, and administrative costs. 
These amounts will offset amounts borrowed from the Treasury to 
finance section 104 payments to claimants together with a 
premium for all of the Fund's litigation risk.
    The Trustee will be seeking, at a minimum, to recover from 
defendants the amount it borrowed from the Treasury to pay 
claimants, plus interest, plus its litigation costs. The Fund 
assumes the litigation risk when it settles with individual 
claimants, and that risk includes both the possibility that 
recovery will fall short of the settlement amount and the 
possibility that it will be higher. The Trustee is allowed to 
use amounts recovered from defendants, over and above the 
amount paid to claimants (but subject to a cap of 200 percent 
of that amount), to offset the Fund's litigation risk. In 
addition, the Trustee is entitled to prejudgment interest, 
litigation expenses, and in appropriate cases a penalty for 
inadequate offers by defendants. Finally, the Trustee has full 
flexibility to adjust the settlement amount it offers any 
claimant to reflect not only the litigation risk in the 
specific claim, but also the financial condition of the Fund. 
Accordingly, the Fund can and should be managed so that, over 
an appropriate period of time, the risk that the Fund will be 
unable to recover from defendants the full amount that it paid 
to claimants plus its costs.
Section 403. Authorization for appropriations and offsetting 
        collections
    Section 403(b) authorizes the OAC to receive as offsetting 
collections, and spend, the administrative assessments, costs, 
and penalties paid to it under section 401. This is the basic 
funding mechanism for administrative expenses under the bill.
    Section 403(a) authorizes additional appropriations to the 
OAC and the United States Court of Federal Claims for carrying 
out their responsibilities under the act. These appropriations, 
if approved by Congress, would supplement administrative 
assessments against defendants. These appropriations are not 
essential, the OAC can function perfectly well using funds 
available to it from defendants under section 403(b). The 
consequence of an appropriation under section 403(a) (1) for 
administrative expenses of the OAC would be to reduce the 
amounts otherwise assessed against defendants.
    In addition, section 403(a) authorizes a one-time loan of 
$100 million to defray start-up costs for the fund, which will 
be repaid with interest from amounts collected from defendants. 
Total appropriations under section 403(a) may not exceed $250 
million during its first year of operation and $150 million 
thereafter.

                          Title V. Transition

Section 501. Applicability; transitional civil actions
    Section 501 provides that the bill will be effective on the 
date of enactment with respect to all claims that have not 
begun trial by that time.
    There are two exceptions to the application of the 
provisions of this section. First, claimants with pending 
claims as of the date of enactment would not have to obtain a 
certificate of medical eligibility if a trial begins within 6 
months. This 6-month transition period may be extended by the 
Attorney General for an additional 6 months. Claimants covered 
by this provision would be required to show medical eligibility 
(as defined in the bill) at trial, but would not be required to 
receive a certificate of medical eligibility from the Medical 
Director. In addition, a claimant who has a trial date within 6 
months after the end of the formal transition period may 
receive a right-to-sue letter if the OAC is not able to meet 
the 30-day statutory deadline for issuing an initial decision 
on medical eligibility. At trial, claimants who have a right to 
sue letter would have to prove medical eligibility, which does 
not include claims for medical expenses.

                         Title VI. Definitions

Section 601. Definitions
    Section 601 defines terms used in the act. The most 
important of these terms are described here. Terms relating to 
medical eligibility, procedure and administration, and 
applicability are discussed separately.
            Terms Relating to Medical Eligibility
    A number of the definitions in Section 601 are important 
for determining medical eligibility. Certain terms--e.g., 
clinical evidence of asbestosis, pathological evidence of 
asbestosis, and evidence of bilateral pleural thickening with 
impairment--have been discussed in connection with title III, 
and that discussion will not be repeated here.
    ``Chest x-ray,'' under paragraph (5), means chest 
radiographs taken in at least two views (Posterior and Lateral) 
and graded quality 1 for reading according to the criteria 
established by the ILO. If the claimant is unable to provide 
quality 1 x-rays, chest x-rays graded quality 2 are acceptable. 
Because of the importance of x-rays in the medical eligibility 
process, the committee believes that where possible those x-
rays should be of sufficient quality to minimize the risk of 
interpretive errors.
    ``Equivalent-years,'' under paragraph (13), are used to 
calculate periods of exposure for purposes of the lung cancer 
criteria in section 304 and medical testing in section 306. 
Equivalent-years are used rather than real-time years to 
reflect the fact that levels of asbestos exposure varied 
between different occupations. A year spent in occupations 
involving direct installation, repair, or removal of asbestos 
products is the standard. Years spent in occupations 
characterized by very high levels of exposure--e.g., 
shipbuilding in World War II and manufacturing of asbestos 
products--are weighted more heavily, while years in occupations 
involving only indirect exposure to asbestos are weighted less 
heavily.
    Some individuals exposed in non-occupational settings may 
have received exposures equivalent to workplace exposures. 
Similarly, some who received indirect exposure may have had a 
level of exposure typical of workers who directly installed, 
repaired, or removed asbestos. Claims of this kind should be 
addressed by the exceptional medical claims panels.
    The ``latency period,'' under paragraph (21), of a disease 
is the time between first exposure to asbestos and 
manifestation of the disease. The first exposure to asbestos 
under this definition does not need to meet any threshold of 
``significance,'' but exposure to background levels of 
asbestos, similar to those to which the public generally is 
exposed should not be considered a first exposure under this 
definition.
    ``Physician,'' under paragraph (29), means a licensed 
medical doctor who has not, in the 5 years prior to the date of 
enactment, spent more than half of his professional time, or 
derived more than half of his professional income, either 
annually or in total, on medico-legal issues related to 
asbestos. This definition will help ensure that the doctors who 
serve vital functions under the bill will be impartial treating 
physicians, and not doctors whose professional life has come to 
center on asbestos litigation, usually as witnesses testifying 
predominantly for one side or the other.
    ``Predicted value,'' under paragraph (30), means a 
published reference to the normal breathing capacity of healthy 
populations based on age, height, and gender. Such values must 
be generally accepted in the medical community, and may not be 
adjusted by race. The Medical Director will approve such 
predicted values by rule adopted within 120 days of the date of 
enactment.
    ``Pulmonary function testing,'' under paragraph (31), means 
tests for forced vital capacity, lung volume, and diffusing 
studies, using equipment, tests, and standards generally 
accepted in the medical community. The results of pulmonary 
function testing may not be adjusted by race. The Medical 
Director will adopt rules relating to pulmonary function 
testing within 120 days after the date of enactment. The 
Medical Director will take into consideration, as applicable, 
existing rules on pulmonary function testing adopted by the 
Department of Labor in consultation with NIOSH and published in 
20 CFR 718.013 (1997) and Appendix B thereto. Information 
provided to the OAC must be sufficient to enable the agency to 
determine whether pulmonary function tests were properly 
administered. This will require submission of all spirometry 
tests including the designated ``best test,'' both volume time 
graphs and flow volume loops, and values for any other attempt 
or trial.
            Procedural and Administrative Terms
    ``Compensatory damages,'' under paragraph (9), include both 
economic damages and non-pecuniary losses like pain, suffering, 
inconvenience, or emotional distress.
    ``Core claim,'' under paragraph (10), means an asbestos 
claim against certain primary asbestos defendants--i.e., (a) 
defendants who manufactured an asbestos-containing product to 
which the exposed person was exposed and who have paid out $50 
million cumulatively over the 10 years prior to the filing of 
the claim or (b) defendants who were not manufacturers, and 
whose liability is not based on ownership or control of 
property, who have paid out $100 million over the preceding 10 
years. The bill subjects these primary defendants to joint and 
several liability, notwithstanding contrary State law, and it 
eliminates most of the those defendants' traditional defenses.
            Applicability
    ``Asbestos claim,'' under paragraph (1), means any claim 
for damages or other relief arising out of, based on, or 
relating to the health effects of exposure to asbestos. It 
includes claims for personal injury, death, emotional distress, 
and medical monitoring. It also includes claims brought by 
family members, such as loss of consortium. It does not, 
however, include claims for workers' compensation benefits, or 
any claim by an employer or insurer against the third party for 
reimbursement of workers' compensation benefits, or any claim 
for veterans' benefits.
    ``Asbestos Trust,'' while this definition excludes certain 
trusts established to pay asbestos claims, other trusts that 
may or may not be court-supervised which have also been 
established to pay asbestos claims are not excluded by this 
definition. In particular, trusts that essentially function as 
an escrow account for purposes of paying asbestos claims or 
trusts established pursuant to class action settlements are not 
intended to be excluded by this definition. Only those trusts 
that are active participants in asbestos litigation would 
qualify as an ``asbestos trust''.
    ``Claimant,'' under paragraph (7), means the exposed person 
or that person's legal representative, and any relative of an 
exposed person, or their legal representative, who asserts an 
asbestos claim. The committee notes that the claimant will 
often not be the exposed person himself, but rather family 
members and personal representatives.
    ``Defendant,'' under paragraph (11), means any person who 
is or may be responsible for the asbestos-related condition of 
the exposed person and who is named under title I. The term 
does not include asbestos trusts, the Federal Government, or 
State Governments. The committee intends that asbestos claims 
against the Federal Government and State Governments will not 
be subject to the jurisdiction of the OAC but may be brought in 
other forums with jurisdiction under other law.
    ``Qualifying National Settlement Plan,'' under paragraph 
(34), sets forth the criteria that a defendant's settlement 
plan must satisfy in order to qualify for a 7-year exemption 
from the act under section 704. Defendants may reapply for an 
extended exemption.
    ``State,'' under paragraph (35), includes any State of the 
United States, the District of Columbia, Commonwealth of Puerto 
Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
American Samoa, and any other territory or possession of the 
United States. The term also includes any political subdivision 
of the foregoing.

                  Title VII. Miscellaneous Provisions

Section 701. Applicability to Other Federal Laws
    This section specifies the manner in which the bill is 
intended to interact with other laws as well as with existing 
trusts and settlements or settlement offers. First, the 
Administrator may waive personnel and procurement laws and 
regulations with the approval of the Director of the Office of 
Management and Budget. Any such waivers granted by OMB must be 
periodically reconsidered. The flexibility to be exempt from 
certain of these statutes and regulations is indispensable if 
the OAC is to address over 200,000 asbestos claims and achieve 
the bill's strict time limits for processing claims. OMB should 
act expeditiously and favorably on such requests, in 
consultation with interested agencies such as The Office of 
Personnel Management and the General Services Administration. 
Second, the bill will not apply to existing asbestos trusts 
(such as the Manville Trust) unless the trust elects to be 
subject to the bill and notifies the Administrator of that 
decision in writing. A trust's decision to be subject to the 
bill cannot be revoked. Third, the bill does not invalidate any 
settlement of asbestos claims entered into before the date of 
enactment or revoke or negate any standing offer to settle 
claims. This preserves both actual settlements and so-called 
``futures agreements'' between defendants and certain law firms 
representing asbestos claimants. Fourth, the bill does not 
affect the scope or operation of either workers' compensation 
or veterans benefits programs. In particular, the bill would 
not authorize any lawsuit that is barred by the exclusive 
remedy provision of workers' compensation laws. ``Workers' 
compensation laws'' includes the Federal Longshore and Harbor 
Workers Compensation Act, 33 U.S.C. sections 901-944, 948-50, 
but it does not include the Federal Employer's Liability Act 
(FELA), 45 U.S.C. chapter 2. FELA applies to occupational 
injuries arising out of railroad work and resembles tort 
litigation more than traditional workers' compensation 
programs. See Metro-North Commuter R.R. Co. v. Buckley, 521 
U.S. 424 (1997). Fifth, the bill does not affect any law 
governing successor or transferee liability.
Section 702. Annual Reports
    Section 702 requires the Administrator of the OAC to submit 
an annual report to the President and the Congress.
Section 703. Enforcement
    This provision allows the Administrator to seek enforcement 
of the bill's provisions in Federal district courts. The 
Federal courts have exclusive jurisdiction over such 
proceedings without regard to amount in controversy or 
diversity. If the Administrator's action is successful, the 
Administrator will be entitled to costs and attorney's fees. 
Thus, this provision gives the Administrator the authority to 
enforce administrative assessments against defendants and, 
through the award of costs and attorneys fees, provide another 
incentive for defendants to avoid engaging in litigation with 
the Administrator.
Section 704. Qualifying National Settlement Plan
    The bill permits a defendant who is part of a Qualifying 
National Settlement Plan to apply with the Administrator to 
defer application of the bill to that defendant for up to 7 
years. The term ``Qualifying National Settlement Plan'' is 
defined in section 601(34) and would include, for example, the 
``National Settlement Plan'' concluded between Owens Corning 
Fibreboard and numerous plaintiffs' attorneys in 1998-1999. The 
Administrator will determine whether to accept a defendant's 
request for deferral according to rules that the Administrator 
will promulgate. If the deferral is granted, claims against 
that defendant will not be subject to the provisions of the 
bill, except for those provisions relating to medical 
eligibility, damages, the statute of limitations, come back 
rights, class actions, joint and several liability, core claims 
and the transition period. See Sections 201-207 and 501. 
``Deferral applies to all costs for claims covered by the 
deferred defendant's Qualifying National Settlement Plan. This 
includes administrative costs. However, a deferred defendant 
may not be assessed administrative costs for claims that are 
resolved by the approved Qualifying National Settlement Plan.''
Section 705. Severability
    If any part of the bill is found to be invalid, the 
remainder of the bill will remain in effect.
Section 706. Settlement
    For a period of 7 years after the date of enactment, a 
claimant or a defendant may specifically enforce any written 
settlement agreement that was agreed to by the claimant, or the 
claimant's attorney, and the defendant before the date of 
enactment. Such enforcement actions must be brought in a 
Federal or State court where the claimant is currently 
domiciled or where the claimant alleges exposure to asbestos. 
Where the claimant is not the exposed person (as happens, for 
example, with loss of consortium claims), that enforcement 
action may be brought where the exposed person was exposed.

                         Operation of the Bill

                        Operating Cost Analysis

                      Introduction and Background

    Operating costs under the committee bill fall into three 
broad categories:
         LOverhead and medical review costs;
         LCosts of administrative adjudications; and
         LCosts to the Trustee of administration and 
        litigation associated with the Trustee's settlement or 
        prosecution of claims against the defendants.
The bill contemplates that all of these operating costs (in 
addition to any amounts paid to claimants in settlements or as 
damages) will be borne by the defendants.
    Peterson Worldwide (``Peterson''), a wholly owned 
subsidiary of Navigant Consulting, Inc., has prepared an 
analysis of these operating costs to defendants. Peterson's 
analysis estimates start-up costs and annual operating costs 
for each of the first five years after the Office of Asbestos 
Compensation (OAC) becomes operational. Settlement payments 
would not be treated as operating costs under Credit Reform Act 
principles, and thus are not included in the Peterson analysis 
because those costs must be accounted for in the credit 
analysis of the Fund's costs and risks under that distinct 
feature of the legislation. (See sections 103(b)(2) and 403. 
The Fund's administrative and litigation costs, however, are 
included.) Peterson also does not try to estimate the costs of 
the medical testing program under section 306. The assumptions 
that Peterson used to prepare its analysis were based on 
industry experience, available data from defendants and others, 
and estimates of projected impaired claimants prepared by 
Chambers Associates.
    Peterson concludes that the total cost of the program to 
defendants, including start up and the first five years of 
operation, would be $287 million. Start up expenses account for 
$23.8 million of this total. The program would cost $85.2 
million annually in the first two years of operation, which is 
the amount of time the OAC will need to process the existing 
backlog of pending cases. In the next three years, costs drop 
to $30.9 million per year. During the last three years of 
operation, the program will require 326 full time equivalent 
(FTE) personnel. During the first two years, extra personnel 
will be required to handle the existing backlog of claims and 
the anticipated initially high rate of new filings.

                              Assumptions

    Claim Flow Assumptions. The OAC will process the current 
backlog of 200,000 cases within two years, not including some 
months of startup time to hire and train staff. In the first 
year, new claims will be filed at current levels (about 
40,000), but new filings will decline over time. This is a 
conservative assumption, since some portion of the current 
backlog and the first year's new filings will consist of 
unimpaired claims that will not be filed.
    Peterson then projects the number of claims that will 
qualify under the medical criteria of the bill, based on 
Chambers Associates' projection of the incidence of impairing 
asbestos-related disease. Peterson then estimates the number of 
claimants who will opt out at various stages of the process, 
the number who will settle with defendants or the trustee, and 
the number that will proceed to administrative adjudication by 
an Administrative Law Judge.
    Organizational Assumptions. The Peterson model makes some 
assumptions about how the OAC will be organized to process 
claims efficiently and conveniently. Among these assumptions 
are the following:
         LThere will be one headquarters and six 
        regional offices.
         LThe Administrator, Medical Director and 
        Trustee of the Asbestos Compensation Fund will each 
        head a division of the OAC with sufficient support 
        staff to perform their duties.
         LMuch of the OAC's work, including medical 
        review, optional settlement proceedings involving the 
        Trustee of the Asbestos Compensation Fund, and hearings 
        before Administrative Law Judges, will take place in 
        the regional offices.

                              Conclusions

    Peterson concludes that the following full time equivalent 
(FTE) personnel will be required to handle the steady stream of 
new asbestos cases following the first two years (after the OAC 
has processed the existing backlog of cases):

------------------------------------------------------------------------
                                                Total Personnel (FTE)
------------------------------------------------------------------------
Administrator's Office.....................   41
ALJ Offices (including Legal Assistance       60
 Program).
Medical Director's Office..................  169
Trustee of Asbestos Compensation Fund......   44
  Total OAC................................  314
U.S. Court of Federal Claims...............    7
National Medical Advisory Committee........    5
  Total....................................  326
------------------------------------------------------------------------

    In order to handle the existing backlog of pending claims 
and claims for medical testing reimbursements during the first 
two years of operation, an additional 380-390 personnel (FTE) 
will be required on a temporary basis. (Moreover, Peterson 
estimates an initially higher rate of new filings that will 
require 46 and 31 additional personnel (FTE), respectively, in 
the first and second years of the program.) Under section 
701(a), the OAC may, with the approval of the Office of 
Management and Budget (OMB), waive personnel and procurement 
laws and regulations to expedite the handling of asbestos 
claims. The OAC is expected to use this authority, as 
necessary, to hire additional short term staff and contract for 
the needed facilities to meet the objective of processing the 
backlog of pending claims as soon as possible, but in any event 
within the first two years of operations.
    Peterson estimates the cost of salaries and benefits for 
the required positions--as well as the cost of necessary 
equipment and facilities--based on price data in the locations 
where the OAC is expected to have offices. Peterson concludes 
that in the first two years the overall cost of the program 
will be approximately $85 million per year. This declines to 
$31 million per year in the last three years, after the backlog 
of pending claims and claims for medical testing reimbursements 
has been processed. The report's estimates of cost are as 
follows:

------------------------------------------------------------------------
                Year                                 Costs
------------------------------------------------------------------------
Start-Up............................  $23.8
1 (including backlog)...............  $85.2
2 (including backlog)...............  $85.2
3...................................  $30.9
4...................................  $30.9
5...................................  $30.9
Total Start-Up plus 5 Years.........  $286.9
------------------------------------------------------------------------

    In conclusion, Peterson predicts that the total operating 
costs of the Asbestos Compensation Act of 2000, will be $287 
million for start up and the first five years of operation. In 
its size and scope, the OAC would be roughly comparable to the 
Federal Mediation and Conciliation Service, which assists labor 
and management in resolving disputes through mediation and 
arbitration services. The Federal Mediation and Conciliation 
Service has an annual budget of $39 million, and personnel of 
292 (FTE).

                              Agency Views

                        U.S. Department of Justice,
                             Office of Legislative Affairs,
                                     Washington, DC, March 8, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: This letter presents the views of the 
Administration, updating the preliminary views of the 
Department of Justice presented to you on October 26, 1999, 
regarding H. R. 1283, the ``Fairness in Asbestos Compensation 
Act of 1999.'' H.R. 1283 has changed considerably since our 
last letter, which raised a number of issues and questions that 
we have spent the last several months analyzing. In recent 
weeks, we have received several amendments, including the 
latest amendment, in the nature of a substitute, on March 3.\1\ 
We understand that the Committee has spent substantial time 
crafting the legislation, and we have met with your staff and 
others working on behalf of the proposed legislation. As we 
have informed your staff, we remain interested in continuing 
our dialogue about these very important and difficult issues.
---------------------------------------------------------------------------
    \1\ While the latest amendment has not yet been introduced, we 
understand that the Committee intends to make it a substitute for the 
currently pending bill. Therefore, in this letter, ``H.R. 1283'' refers 
to this amendment, entitled ``Asbestos Compensation Act of 2000.''
---------------------------------------------------------------------------
    Like the Committee, the Department of Justice wants to see 
asbestos claims processed fairly, efficiently, and quickly. We 
share the same concerns and sympathies for the victims of 
asbestos exposure. As the Committee knows, the diseases that 
result from exposure to asbestos can cause great suffering, and 
often lead to quick and painful deaths. Like the Committee, we 
have considered at great length the question of how to ensure 
prompt and appropriate compensation for individuals harmed by 
exposure to asbestos. The question for both the Department and 
the Committee, we believe, is whether the proposed solution 
improves upon the status quo by ensuring faster and more 
equitable compensation to asbestos victims. We could not 
support any proposal that fails to improve the present system 
or hinders the progress made in compensating asbestos victims.
    We oppose H.R. 1283 for a number of reasons, including:
         LThe process of compensating asbestos victims 
        has improved since the 1980s, when the last 
        comprehensive study on asbestos litigation was 
        completed. While the current system is not ideal, we 
        believe a new administrative process would undermine 
        progress that has been made.
         LH.R. 1283 would deprive asbestos victims of 
        fair compensation, including victims who are 
        demonstrably sick as a result of exposure to asbestos;
         LH.R. 1283 would transfer costs now borne by 
        defendant companies--who have been found legally 
        responsible for the harm caused--to asbestos victims 
        and the taxpayers; and
         LH.R. 1283 would delay and worsen, rather than 
        accelerate and improve, compensation to the sick.

I. The Asbestos Litigation and Compensation Process Has Improved

    Like the Committee, we have been concerned by reports that 
the asbestos litigation and compensation process is an 
``elephantine'' morass in need of reform.\2\ In evaluating the 
state of asbestos litigation, the Supreme Court relied on a 
study using data from the mid-1980s. For the past several 
months, we have attempted to analyze the situation in asbestos 
litigation today. To some extent, our efforts have been 
hampered by the paucity of data and the absence of any more 
recent comprehensive study of asbestos caseloads, settlements 
and the like. Nevertheless, we are persuaded that the process 
for compensating victims of asbestos exposure has improved 
since the mid-1980s.
---------------------------------------------------------------------------
    \2\ See Ortiz v. Fibreboard, 119 S. Ct. 2295, 2302 (1999).
---------------------------------------------------------------------------
    First, in recent years the parties to the asbestos 
controversy have settled hundreds of thousands of claims, a 
marked improvement over the more adversarial culture that 
permeated much of asbestos litigation at the time of the last 
major study. Working together, the plaintiff and defense bars 
have created a number of these private settlement mechanisms 
and national settlement programs, all of which have hastened 
the payment of claims to sick individuals, reduced the burden 
on the courts, and brought greater financial certainty to a 
number of defendants. For example, as the Committee was 
informed in its July 1999 hearing, Owens Corning alone has 
settled over 200,000 claims through the National Settlement 
Program it initiated in 1998. Another example is the Louisiana 
settlement agreement entered into by plaintiffs and defendants 
in 1998, which is creating numerous additional settlements.
    Second, as to the claims that do remain on the court 
dockets, the courts have made considerable progress in managing 
these caseloads. In particular, state and federal courts around 
the country have instituted several case management controls 
that harness the volume of asbestos claims and permit the 
claims of the sickest victims to be expedited. These tools 
include multi-district consolidation in the Federal courts, the 
consolidation of similar claims for discovery and trial, and 
procedures for those with less serious diseases to file claims 
in court without actively prosecuting them (i.e., pleural 
registries). This latter technique has resulted in a de facto 
stay for many claims of the less impaired. Thus, in courts 
utilizing pleural registries, even though the cases of the less 
impaired constitute a large part of the pending case backlog, 
they consume comparatively few judicial resources. In addition, 
several states have created distinct causes of action for 
different asbestos-related injuries, eliminating the incentive 
for victims to rush to court at the first physical sign of 
injury and permitting those who initially recover small amounts 
for minimal injury to return to court if their condition 
subsequently deteriorates.
    Third, asbestos has become a ``mature'' tort, with many of 
the basic liability questions resolved. Over the past decade, 
the litigants have clarified some of the medical issues, made 
progress on product identification, causation, and 
apportionment of liability issues, and the defendant companies 
have resolved a number of disputes with their insurers. This 
has resulted in fewer disputes, less discovery, less repetition 
in depositions and trials, and, as a consequence, a higher 
percentage of available dollars going to the victims.
    This is not to say, however, that the present state of 
asbestos litigation is ideal. There are still a large number of 
cases pending in the courts, and not every court system has 
instituted the case management and prioritization techniques 
used successfully by other courts. As a consequence, some cases 
migrate to forums that are historically more favorable to 
plaintiffs, resulting in inconsistent verdicts and settlements, 
and some deserving victims are still compensated too slowly.
    For the Administration, a key question is whether the 
imperfections in the current system justify the substitution of 
untested administrative procedures and standards for the 
traditional court system. Given our concerns that the system 
would not work as hoped and would benefit culpable defendants 
at the expense of the victims and taxpayers, we think the case 
for this untested system has not been made.

II. H.R. 1283 Would Exclude Many Asbestos Victims From Fair 
        Compensation

    H.R. 1283 would create medical criteria according to which 
asbestos victims would be determined to be medically eligible 
or ineligible for compensation. At the outset, we note that 
legislating medical criteria to limit recipients of asbestos-
related compensation sets standards that overstate the 
precision of existing diagnostic testing; and it precludes the 
incorporation of advances in medical knowledge by prescribing 
standards that may soon be outdated. Further, the proposed 
legislation does not foster fairness for people with diseases 
resulting from asbestos exposure.
    First, the medical criteria in H.R. 1283 would result in 
sick people being denied compensation for their injuries. Even 
if we were to accept the proponents' avowed purpose of 
eliminating the claims of the non-sick while preserving the 
claims of the sick, the medical criteria in H.R. 1283 would not 
accomplish that goal. Experts from the Department of Health and 
Human Services, as well as many in the medical community, have 
indicated that the proposed medical criteria are too 
restrictive and would result in the denial of compensation to 
many injured and impaired patients.
    For example, the proposed medical criteria for asbestosis 
would require a claimant with evidence of obstructive disease 
on lung function testing to demonstrate high levels of fibrosis 
on chest x-rays as well. Yet, as our colleagues at HHS have 
informed us, asbestos exposure may cause a mixed obstructive 
and restrictive pattern and, in some instances, cause 
predominantly obstructive disease. In addition, the use of 
objective norms to measure the lung function of every claimant 
treats all claimants as if their normal lung function is 
identical. This, of course, is not the case. Some patients may 
have pre-exposure lung functions well above average and may 
lose more than 20% of their lung capacity, yet fail to meet the 
lung function criteria in the proposed bill. H.R. 1283 would 
deny compensation to these people who have been demonstrably 
impaired by their exposure to asbestos. Further, patients with 
asbestosis may have shortness of breath with exertion and 
functional impairment demonstrated by reduced arterial 
oxygenation during exercise, yet not meet the lung function 
criteria in the bill. In addition, H.R. 1283 understates the 
degree of injury experienced by individuals with pleural 
disease who fail to meet the lung function criteria, and does 
not adequately provide screening for these individuals. As a 
result of the proposed medical criteria, we are informed that 
physically impaired asbestos victims would be denied 
compensation.
    Second, the medical criteria of H.R. 1283 would eliminate 
many existing causes of action and injuries compensable under 
current state law. In many jurisdictions, for example, 
plaintiffs are entitled to sue and recover for scarring of the 
lungs or for an increased risk of lung cancer as a result of 
exposure to asbestos, regardless of impairment. Under H.R. 
1283, those claims would no longer be recognized, prohibiting 
claimants exposed to asbestos from obtaining compensation. At 
best, the claimants alleging such injuries could recover 
reimbursement of medical monitoring costs, as compared to the 
significant compensation they might receive today. Section 
306(a). In a system in which those who are not yet physically 
impaired are denied the right to bring a claim, it is unlikely 
that the plaintiffs' bar, which currently finances and 
facilitates much of the medical monitoring of the less 
seriously impaired, would have the necessary financial 
incentive to pursue claims for medical monitoring. As a result, 
many victims who today receive the peace of mind and prompt 
medical attention that results from medical monitoring--at 
little or no cost to the victims--would be denied that benefit.
    Third, H.R. 1283 would make it effectively impossible for 
many victims of asbestos exposure, who also were smokers, to 
recover compensation from asbestos defendants for the damage 
done to them by asbestos. H.R. 1283 would prohibit presumptive 
eligibility for lung cancer victims, where the claimant has a 
``substantial history of smoking'' and does not have a 
qualifying non-malignant condition. Section 304(b). As many 
experts have stated, the interaction of smoking and asbestos 
exposure is synergistic, and smokers exposed to asbestos are at 
an exponentially greater risk of developing lung cancer than 
smokers without asbestos exposure. Among those heavily exposed, 
for example, 80% of all lung cancers would have been eliminated 
in the absence of asbestos exposure, even had smoking habits 
not been changed.\3\ Thus, contrary to the implication of H.R. 
1283, many lung cancers involving both a substantial history of 
smoking and significant asbestos exposure would not have 
occurred but for the asbestos exposure. As for the requirement 
that lung cancer be accompanied by a qualifying non-malignant 
condition, HHS advises us that many studies have clearly shown 
that asbestos is a carcinogen and causes cancer independent of 
causing non-malignant disease, again contrary to the 
implication of H.R. 1283. In short, H.R. 1283 would prevent 
many victims of lung cancer from recovering compensation for a 
primary cause of their cancer--asbestos exposure.
---------------------------------------------------------------------------
    \3\ See, e.g., A. Ritzen and L. Rosenstock, The Misuse of 
Epidemiology and Apportionment in Compensation for Occupational 
Disease, New Solutions, Winter 1993, at 29-36. R. Saracci, Interaction 
and Synergism. 12 American Journal of Epidemiology 465-466 (1980).
---------------------------------------------------------------------------
    Fourth, H.R. 1283 would prohibit courts from awarding 
punitive damages to victims. Section 202. Under H.R. 1283, 
punitive damages would be available only in administrative 
adjudications, thus diluting any right to opt out to a 
traditional court and eliminating the already-rare phenomenon 
of court-imposed punitive damages. Yet, even in the 
administrative context, where any possible concerns over jury-
applied punitive damages would be eliminated, the legislation 
would make punitive damages available only where a ``conscious, 
flagrant indifference'' to a claimant was ``the proximate 
cause'' of the injury. And even if the claimant could satisfy 
this standard, he or she would be severely limited as to the 
amount of punitive damages available for past bad acts by 
culpable companies. Section 208(d). As we have stated with 
regard to other tort reform legislation, punitive damages serve 
an important deterrent function.

III. H.R. 1283 Would Impose Unwarranted Costs on Asbestos Victims and 
        Taxpayers

    In addition to our concerns with the medical criteria and 
the exclusion of asbestos victims, we have a number of concerns 
with the economic impact of the legislation. Specifically, we 
believe that H.R. 1283 would provide unwarranted benefits to 
asbestos companies to the detriment of victims of asbestos and 
the taxpayers.
    First, to the extent that it is unable to recover from 
defendants the recommended aggregate settlement that it has 
already paid to claimants, the Asbestos Compensation Fund--the 
entity charged with paying claimants--would be required to 
reduce future recommended aggregate settlements, taking into 
account the outstanding deficit. Section 402(a)(4). This 
provision, in effect, creates an incentive for defendants to 
avoid paying the government in a timely manner, if at all, on 
the assumption that a deficient Fund reduces settlement values 
and therefore defendants' ultimate expense. Ultimately, this 
would lead to lower settlement values for deserving victims.
    Second, although the stated intention of the program is for 
defendants ultimately to cover all expenses, under H.R.1283, 
the Federal Treasury could advance the Office of Asbestos 
Compensation (the ``OAC'') up to $100 million in start-up 
funds. Section 403(a). Past programs in which the Federal 
government has advanced funds have been largely unsuccessful in 
trying to recover from responsible parties. In programs such as 
the Black Lung Benefits Act and the Comprehensive Environmental 
Response, Compensation and Liability Act (the CERCLA 
Superfund), the government spent considerable resources to seek 
reimbursement from responsible parties, and yet in many 
instances failed, leaving the taxpayers to subsidize the 
programs, or reducing future settlements to cover the 
shortfall. Similarly, we are concerned that the defendant 
companies may not pay for all of the costs associated with the 
administration of the OAC.
    Third, to the extent that less seriously injured claimants 
seek medical monitoring expenses, it is likely that the U.S. 
government would be left holding the bill. Unlike other parts 
of the legislation, no mechanism is even proposed for the 
defendants to fund medical monitoring. By contrast, the bill 
contemplates yearly non-administrative appropriations by the 
U.S. of up to $150 million, which would not be reimbursable. 
Section 403. It appears that payment for medical monitoring 
would be drawn from these appropriations.\4\ In the coming 
years, therefore, the government could be required to pay 
billions of dollars for injuries caused by the asbestos 
companies. We see no justification for the taxpayers to assume 
such a liability from the defendant companies, particularly in 
light of the fact that courts consistently have found the 
asbestos companies legally responsible for asbestos-related 
harm.
---------------------------------------------------------------------------
    \4\ An earlier draft of the bill specified appropriations of $200 
million annually for certain medical monitoring reimbursements. That 
provision has been excised from the current draft with no new provision 
to provide such funding.
---------------------------------------------------------------------------
    As we understand it, one of the justifications offered for 
this taxpayer subsidy is that the United States should share in 
paying for the asbestos problem. This argument does not fully 
account for the substantial sums that the United States already 
has spent as a result of the asbestos problem. Over the past 
thirty years, the government has paid billions of dollars in 
health, medical, research, and abatement costs to address the 
problems created by the marketing and sale of asbestos 
products. Similarly, in the coming years U.S. taxpayers can 
expect to pay additional billions in such costs, without the 
additional financial burden placed on them by this legislation. 
To the extent the Committee believes the government should pay 
even more because the United States shares culpability with the 
asbestos companies for the sale and distribution of asbestos 
products, we believe that premise is misguided. Virtually every 
court has rejected the assertion that the United States is 
culpable for the harms inflicted by asbestos. Significantly, 
these rulings were based not on immunity doctrines but on 
factual findings that the liability of asbestos defendants 
should not be placed upon the United States. As one court 
concluded, the effort by the asbestos companies to transfer 
culpability to the government is a ``grossly misplaced'' 
attempt to ``impose the woes of asbestos compensation upon the 
customer [the United States] whom they actively pursued.'' \5\ 
Another court, after conducting a six-week trial on the issue, 
rejected the assertion that ``the Government sacrificed the 
health of shipyard workers to the war effort.'' Instead, the 
court concluded, based on the facts, that ``the Government took 
reasonable health and safety measures regarding asbestos use in 
the shipyard environment. . . .'' \6\
---------------------------------------------------------------------------
    \5\ Glover v. Johns Manville, 525 F. Supp. 984, 986 (E.D. Va. 
1979), aff'd in part, vacated in part and remanded, 662 F.2d 225 (4th 
Cir. 1981).
    \6\ Johns Manville v. United States, 13 Cl. Ct. 72, 133 (1987), 
vacated on jurisdictional grounds, 855 F.2d 1571 (Fed. Cir. 1988); see 
also GAF v. United States, 19 Cl. Ct. 490, 499 (1990) (rejecting GAF's 
assertion that ``the Government knowingly exposed its employees to 
asbestos hazards''), aff'd, 932 F.2d 947 (Fed. Cir. 1991), cert. 
denied, 502 U.S. 1071 (1992).
---------------------------------------------------------------------------
    Taken together, these various provisions, along with the 
elimination of many claims through the imposition of H.R. 
1283's medical criteria, result in a massive transfer of 
funds--billions of dollars--to the defendant companies, 
financed by asbestos victims and taxpayers. We see no 
justification for such a significant subsidy, particularly 
given the fact that so many courts and juries have found 
asbestos companies liable to the people who have been exposed 
to their products.
    We understand that some have asserted that cost-shifting is 
required to ensure the continued viability of defendant 
companies so that they will continue to have the capacity to 
compensate sick victims in the future. We agree that preserving 
the assets of companies in order to compensate sick victims is 
vital. However, proponents of H.R. 1283 have not demonstrated 
that the financial health of asbestos defendants, taken as a 
whole, is so dire as to require a large subsidy of the sort 
envisioned by H.R. 1283. The Treasury Department has examined 
publicly available information regarding a number of asbestos 
defendants. While the industry has seen bankruptcies in the 
past two decades, public filings (10K and 10Q reports) by many 
major industry participants do not indicate financial distress; 
to the contrary, their statements often inform shareholders and 
others that asbestos-related liabilities will not have a 
material impact upon the present or future financial 
performance of the companies. In fact, over the past decade, 
many of these companies successfully have recovered, or made 
agreements to recover, billions of dollars in insurance 
coverage. We do not doubt that some companies may be in 
distress due to asbestos-related liabilities, but we have not 
seen the kind of compelling financial data, on an industry-wide 
basis, to justify shifting the economic responsibility of these 
injuries from the culpable corporate defendants and their 
shareholders to the victims and the taxpayers. In addition, the 
Treasury Department informs us that some companies that have 
chosen to work cooperatively with plaintiffs to resolve their 
asbestos-related liabilities could be placed at a competitive 
disadvantage by H.R. 1283. Public policy should not seek to 
reward defendants that have chosen not to settle at the expense 
of those firms that have acknowledged their responsibility.

IV. H.R. 1283's Administrative System Would Delay Compensation to the 
        Sick, Not Make It Better or Faster

    While one of the stated goals of H.R. 1283 is to speed 
compensation to deserving claimants, our analysis of the 
proposal indicates the opposite. In our view, H.R. 1283 would 
delay compensation to sick victims of asbestos exposure.
            A. Start-up Delays
    The creation of an administrative structure to handle a 
large number of claims inherently requires a multitude of steps 
and decisions before that structure can begin to process the 
claims of the sick. Of necessity, these steps and decisions 
delay the processing of claims for those cases that are already 
pending. Based on our experience administering several 
compensation programs, we are convinced such delay would result 
were H.R. 1283 to be adopted.
    First, we believe it would take a considerable amount of 
time to establish and effectively operate the proposed Office 
of Asbestos Compensation (``OAC''), which would serve both 
administrative and adjudicatory functions. As we read H.R. 
1283, the OAC likely would need to hire and/or contract with 
hundreds, and perhaps over a thousand employees--including 
lawyers, physicians, claims reviewers, and administrative 
personnel--before it could adequately handle the large number 
of cases that would confront the OAC initially.
    In this regard, a comparison to the National Vaccine Injury 
Compensation Program, established more than a decade ago, is 
instructive. That program processes cases that, while often 
medically complex, are nevertheless more streamlined than the 
average asbestos case in that vaccine cases do not require 
resolution of difficult and fact-intensive issues such as 
allocation, apportionment, or the exercise of subrogation 
rights against the industry. Yet, the vaccine program utilizes 
approximately 100 staffers in various agencies to handle the 
approximately 700 cases currently pending before it, and has 
resolved approximately 5,000 cases in its entire eleven-year 
history. We are concerned that, given similar staff-to-claim 
needs and even assuming some economies of scale accompanying 
the larger volume of asbestos cases, the OAC may need to hire a 
very large number of people to process the tens of thousands of 
claims that would be filed upon the commencement of OAC 
operations.
    Second, in addition to hiring and training all of these 
people, the OAC, no matter how well-intentioned and diligent in 
purpose, would face further delays in opening due to the 
complex and controversial rules that would have to be 
promulgated before any claim could be processed. For example, 
as we read H.R. 1283, before processing a claim, the OAC must 
develop, based on difficult-to-obtain historical data, a 
``compensation grid'' on which offers to the asbestos claimants 
would be based. Section 103(b)(2). The legislation appears to 
recognize the difficulty of this exercise by providing the OAC 
with subpoena power to collect information about prior 
settlements. Section 107(c). It is almost certain that 
litigants would challenge the process of developing this grid. 
This is precisely what occurred in the vaccine program, which 
has developed and modified its own compensation grid. 
Litigation and disputes over the development of the 
compensation grid would further delay compensation to the sick.
    Third, the processing of asbestos claims would be further 
delayed by satellite litigation on at least two significant 
issues. First, even once developed, the ``compensation grid'' 
would lead to more litigation when affected parties were not 
satisfied by the outcome. Second, the medical criteria, and the 
controversy surrounding them, would lead to new litigation and 
multiple appeals. For example, the parties to the asbestos 
claims process almost certainly would litigate and appeal 
multiple questions involving claimants with asbestos-related 
lung cancer and a history of smoking. The uncertainty resulting 
from this litigation over new questions--which the parties, not 
the OAC, would initiate--would further delay compensation to 
asbestos victims facing progressive asbestos-related illness.
    This delay in establishing the OAC is crucial because 
during this interim, start-up period, most of the pending 
asbestos claims would almost certainly grind to a halt. 
Although the bill allows for current claimants to continue with 
their case in court if trial commences within six months of the 
bill's enactment (Section 501(b)), only a marginal percentage 
of asbestos cases currently make it to trial, let alone within 
six months. Similarly, although the bill permits claimants to 
demand ``right to sue'' letters from the OAC if they do not 
receive an initial decision on medical eligibility quickly, 
that right is limited to those rare claimants with ``a 
scheduled trial date within one year'' after enactment. Section 
501(c). In any event, even if a few claimants could return to 
court before the OAC was operational, the prospective change in 
the law that the bill represents (and, in particular, the 
development of the compensation grid) almost certainly would 
alter the defendants' litigating positions and create 
incentives to defer litigating and settling the pending cases 
until the OAC process sorted itself out. Therefore, for the 
years that it would take for the OAC to become operational, 
while many victims' disease would progress, their claims would 
not.
    Again, a comparison to the vaccine program is illuminating. 
Although the National Childhood Vaccine Injury Act was passed 
by Congress in 1986, the vaccine program did not issue its 
first award for several years. In the interim, during the years 
it took to establish the vaccine office, most cases were stayed 
by the courts and little settlement progress was made. Once the 
vaccine claims resolution process commenced, it took twice as 
long to resolve claims as was predicted at the time the 
legislation was drafted (two years instead of one). Indeed, 
with the backlog created by the initial filing of approximately 
4,300 cases by 1990, the vast majority of vaccine cases were 
not resolved in even two years. Thus, our experience indicates 
that, with the erection of any new administrative structure, 
pending cases tend to be delayed far longer than anticipated, 
no matter how well intentioned or diligent the staff. The 
result is delayed justice for deserving victims.
            B. Delays in the Claims Resolution Process
    Once the OAC was finally up and running, the proposed 
claims resolution process would not, in our view, materially 
improve upon the traditional court system. H.R. 1283's claims 
processing procedures would require a number of steps for each 
individual. First, as we understand the bill, a claimant would 
have to submit a detailed, complete medical file before a claim 
was considered filed. Section 102(b). Our experience with 
asbestos litigation indicates that it would often take months 
to complete such a file. Second, once the claim was 
successfully filed, the claimant would be required to wait up 
to thirty days for the Medical Director to make an initial 
decision regarding eligibility. If initially denied, the 
claimant would then be obligated to petition for review by a 
panel of two qualified physicians or an exceptional medical 
claims panel. Section 102(c). If the denial were affirmed by 
the review panel, the claimant would then seek further review 
through an appeal to the Court of Federal Claims, and 
ultimately to a U.S. Court of Appeals. Section 106.
    Third, for a claimant determined to be medically eligible, 
if the claimant decided to use the administrative system, he/
she would have to name all defendants and submit a verified, 
particularized statement providing, with respect to each 
defendant, the basis for the allegation. The amount of time 
permitted for such a filing is not yet determined. Section 
103(a)(2). Fourth, upon finding that the claimant's statement 
met the requirements of the bill, the Administrator would have 
to provide notice to each named defendant. The Administrator is 
not given a deadline for doing so. Section 103(a)(3).
    Fifth, each named defendant in turn would have the right to 
assert third party claims, and likely would be entitled to 
discovery for the purpose of obtaining information necessary to 
identify all such additional defendants. This discovery, to be 
determined by an Administrative Law Judge, would not be subject 
to statutory or regulatory deadlines and could itself take 
months, particularly given the history of disputes regarding 
the allocation of responsibility among asbestos defendants. 
Section 103(a)(4).
    As we read H.R. 1283, it is only after these five events 
occur that the claimant would be entitled to receive a good 
faith settlement offer from the named defendants. It is 
entirely likely that a claimant under the new administrative 
system would face a substantial wait before receiving even an 
initial settlement offer, let alone full compensation. That is 
not a material improvement over the current system. Indeed, for 
many claimants, the wait to work their way through the system 
would follow the wait for the system to be erected, resulting 
in years of delay in compensation to the sick.
    Moreover, even if a claimant is able to resolve his or her 
claim, H.R. 1283 would create the likelihood of bitter 
litigation over one of the most contentious issues in asbestos 
suits: apportionment of liability among the defendant 
companies. In many cases, it is this dispute which occupies the 
most time and resources. Rather than attempt to reduce this 
litigation, the legislation would insert the U.S. government 
further into the maelstrom, by obliging the Trustee to litigate 
against defendants in an effort to recover the funds awarded to 
the claimant. Section 104. The Trustee would be prohibited from 
even acknowledging in court the fact or the amount of the 
settlement for which it is seeking reimbursement. Section 209. 
Meanwhile, the defendants would remain as capable and likely as 
they are today to attempt to elude paying their appropriate 
share of liability. Given the litigation history over 
apportionment of liability, we believe years of litigation 
would be likely, involving the U.S. government in matters that 
previously have remained a private dispute, and--to the extent 
the defendants were successful individually in defeating U.S. 
attempts to recover the full settlement amount--leaving the 
taxpayer to pay the difference and reducing the funds available 
to victims in future settlements.
    Finally, one aspect of H.R. 1283 raises constitutional 
concerns. H.R. 1283's provision for the appointment of the 
OAC's Medical Director by the Administrator of the OAC, Section 
101(c), appears to run afoul of the Appointments Clause. The 
Director is an inferior officer whose appointment must be 
vested ``in the President alone, in the Courts of Law, or in 
the Heads of Departments.'' Because the Attorney General may 
remove the Administrator of the OAC for cause (see Section 
101(a)), we do not believe the Administrator to be the head of 
a department for purposes of the Appointments Clause.\7\
---------------------------------------------------------------------------
    \7\ In addition to this concern, and the constitutional concern we 
raised in our letter of October 26, 1999, H.R. 1283 contains no 
congressional findings regarding the problems caused by the current 
approach to asbestos litigation, including its impact on victims, on 
the judicial system, and, most importantly, on interstate commerce. 
This may make it less likely that H.R. 1283 would withstand 
constitutional challenge under the Commerce Clause.
---------------------------------------------------------------------------
    To be clear, the concerns we express about H.R. 1283 do not 
stem from a ``can't-do'' attitude, or from any objection that 
the Department of Justice, as opposed to another federal 
agency, is tasked with developing this proposed administrative 
process. If this bill were enacted, the Department of Justice 
would embrace this challenge with dedication to our statutory 
responsibilities and to the need to speed compensation to 
deserving claimants. Our concerns arise, regrettably, from our 
experience with similar administrative systems and our decades-
long experience with asbestos litigation.

                                    * * * *
    As we noted at the outset, we remain interested in a 
dialogue with the Committee on how to improve the present state 
of asbestos compensation, which is far from perfect. However, 
to the extent that any legislation would improve the process, 
one might do better by building upon developments in the 
current system than by erecting new structures of the type 
proposed by H.R. 1283. As we have informed your staff, we 
remain willing to work with the Committee on this issue and to 
evaluate any other proposal for improving the present state of 
asbestos compensation.
    Thank you once again for this opportunity to present our 
views. The Office of Management and Budget has advised us that 
from the standpoint of the Administration, there is no 
objection to submission of this letter. Please do not hesitate 
to call upon us if we may be of further assistance.
            Sincerely,
                  Robert Raben, Assistant Attorney General.

cc:
        Honorable John Conyers, Jr.
        Ranking Minority Member

                 Judicial Calls for Federal Legislation

    Federal Courts. Many in the judiciary have long recognized 
the need for legislative action to resolve the asbestos 
litigation crisis. In 1991, the U.S. Judicial Conference Ad Hoc 
Committee on Asbestos Litigation, appointed by Chief Justice 
William Rehnquist, found that the typical asbestos case took 31 
months--nearly three years--to wind its way to resolution 
through the court system, compared with 18 months for the 
typical liability suit. The report issued by the Ad Hoc 
Committee called on Congress to address the asbestos litigation 
crisis, writing that ``the ultimate solution should be 
legislation recognizing the national proportions of the 
problem,'' and that ``[i]n the final analysis . . . 
Congressional action is necessary.'' These findings were 
supported by statistics developed by the Rand Institute for 
Civil Justice, which found that attorneys' fees and other 
transaction costs consumed sixty-one percent of asbestos 
litigation, leaving only thirty-nine percent to compensate 
claimants.
    In 1993, the Third Circuit in Dunn v. HOVIC, 1 F.3d 1371 
(3d Cir. 1993)(en banc), the court wrote that:
        ``. . . both state and federal courts have recognized 
        that no single court can fashion an effective response 
        to the national problem flowing from mass exposure to 
        asbestos products.'' Id. at 1386.

    Again in 1996, the Third Circuit in Georgine v. Amchem 
Prods., Inc. 83 F.3d 610, (3d Cir. 1996), stated that asbestos 
litigation required:

        ``innovation in the management of mass tort litigation 
        . . . But reform must come from the policy-makers, not 
        the courts. . . . The most direct and encompassing 
        solution would be legislative action.'' Id. at 633.

    In 1997, the United States Supreme Court in Amchem Prods., 
Inc. v. Windsor, 117 S. Ct. 2231 (1997), ruled that a massive 
global settlement of asbestos-related claims was invalid under 
the Federal Rule of Civil Procedure 23 (b)(3)--the rule 
governing class actions in federal courts. Justice Ginsburg, 
writing for the Majority, stated:

        ``The argument is sensibly made that a nationwide 
        administrative claims processing regime would provide 
        the most secure, fair, and efficient means of 
        compensating victims of asbestos exposure. Congress, 
        however, has not adopted such a solution. And Rule 23 . 
        . . cannot carry the large load . . . heaped upon it.'' 
        Amchem, 117 S. Ct. at 2253.

    Justice Stephen Breyer, concurring in part and dissenting 
in part, observed that asbestos litigation has weakened the 
judiciary while leaving victims uncompensated. Id. at 2252. 
Justice Breyer pointed to the overwhelming evidence provided by 
the Ad Hoc Committee, which detailed the chaos asbestos 
litigation has levied upon the judiciary, to suggest that if 
the majority was unwilling to accept the global settlement as a 
means to fix the problem, some other solution was necessary. 
Id.
    In 1998, the Fifth Circuit in Cimino v. Raymark Industries, 
Inc., 151 F.3d 297, 313 (5th Cir. 1998) (quoting Jackson v. 
Johns Mansville Sales Corp, 750 F.2d 1314, 1327 (5th Cir. 
1985), cert. denied, 478 U.S. 1022 (1986)), the court wrote 
that:

        ``[T]here is no doubt that a desperate need exists for 
        Federal legislation in the field of asbestos 
        litigation. Congress' silence on the matter however, 
        hardly authorizes the federal judiciary to assume for 
        itself the responsibility for formulating what 
        essentially are legislative solutions.''

    In 1999, the United States Supreme Court in Ortiz v. 
Fibreboard Corp., 119 S. Ct. 2295 (1999), ruled that a massive 
global settlement of asbestos-related claims was invalid under 
the Federal Rule of Civil Procedure 23 (b)(1)(B)--the rule 
governing ``limited fund'' class actions in federal courts. 
Justice Souter, writing for the majority, stated:

        ``this case is a class action prompted by the 
        elephantine mass of asbestos cases, . . . this 
        litigation defies customary judicial administration and 
        calls for national legislation.'' Id. at 2302.

    Chief Justice Rehnquist, writing the concurring opinion, 
stated:

        ``Under the present regime, transactional costs will 
        surely consume more and more of a relatively static 
        amount of money to pay these claims . . . the 
        `elephantine mass of asbestos cases,' cries out for a 
        legislative solution.'' Id. at 2324.

    State Courts. State Courts, too, have recognized that a 
federal legislative solution to the asbestos litigation morass 
is required.
    In 1986, the Supreme Court of New Jersey in Fischer v. 
Johns-Manville Corp., 512 A.2d 466, 480 (N.J. 1986), wrote 
that:

        ``[a]t the state court level we are powerless to 
        implement solutions to the nationwide problems created 
        by asbestos exposure and litigation arising from that 
        exposure.''

    In 1994, the Supreme Court of Florida in W.R. Grace & Co.--
Conn. v. Waters, 638 So.2d 502, 506 (Fla. 1994), wrote that:

        ``[a]ny realistic solution to the problems caused by 
        the asbestos litigation in the United States must be 
        applicable to all fifty states. It is our belief that 
        such a uniform solution can only be effected by federal 
        legislation.''

    In 1996, the West Virginia Supreme Court of Appeals in 
Appalachian Power Co. v. MacQueen, 479 S.E.2d 300, 304 (W. Va. 
1996), also cited the need for Congressional action:

        ``Congress by not creating any legislative solution to 
        these problems, has effectively forced the courts to 
        adopt diverse, innovative and often non-traditional 
        judicial management techniques to reduce the burden of 
        asbestos litigation that seem to be paralyzing their 
        active dockets.'' Id.

    In 1998, the Supreme Court of Texas in Owens-Corning 
Fiberglass Corporation v. Malone, 972 S.W.2d 35, 53 (Tex. 
1998), wrote that:

        ``it may be that a truly uniform solution can only be 
        fashioned by either the Supreme Court or Congress.''
                            Dissenting Views

    We strongly oppose H.R. 1283, the so-called ``Asbestos 
Compensation Act of 2000.'' H.R. 1283 is an unjustified Federal 
intrusion into State tort law that purports to resolve the 
``asbestos litigation crisis'' by cutting off viable claims of 
exposed workers. Instead of creating an administrative 
alternative to the civil justice system to provide fair and 
speedy compensation to injured workers, the effect of this bill 
would be to free corporations from their responsibility to 
compensate victims injured by asbestos exposure. H.R. 1283 is 
opposed by the Department of Justice,\1\ the AFL-CIO,\2\ Public 
Citizen,\3\ the National Council of Senior Citizens \4\ and the 
Association of Trial Lawyers of America,\5\ among others. The 
legislation is expected to be vetoed should it reach the 
President's desk.
---------------------------------------------------------------------------
    \1\ See Letter from Assistant Attorney General Robert Raben, U.S. 
Department of Justice, Office of Legislative Affairs, to Chairman Henry 
Hyde, (March 8, 2000) (on file with the minority staff of the House 
Judiciary Committee) [hereinafter DOJ Letter].
    \2\ See Letter from Peggy Taylor, President, AFL-CIO, to Chairman 
Henry Hyde, (February 14, 2000) (on file with the minority staff of the 
House Judiciary Committee) [hereinafter AFL-CIO Letter].
    \3\ See Letter from Joan Claybrook, President, Public Citizen, to 
Ranking Member John Conyers, (March 7, 2000) (on file with the minority 
staff of the House Judiciary Committee) [hereinafter Public Citizen 
Letter].
    \4\ See Letter from George J. Kourpias and Steve Protulis, National 
Council of Senior Citizens, to Members of Congress, (February 9, 2000) 
(on file with the minority staff of the House Judiciary Committee).
    \5\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of Richard Middleton, Jr., President, ATLA) [hereinafter 
ATLA Testimony].
---------------------------------------------------------------------------
    H.R. 1283 establishes an Office of Asbestos Compensation 
(``OAC''), headed by an Administrator in the Department of 
Justice (``DOJ''), in which all asbestos complaints must be 
filed. Once the program is set up--which is likely to take 
several years--and a complaint is filed, a Medical Director 
determines whether a claimant meets the restrictive medical 
criteria outlined in the bill. If the criteria are met, the 
named defendants are then required to make settlement offers to 
the claimant. The Trustee of the Asbestos Compensation Fund is 
also required to make an offer of compensation to the claimant, 
based on a compensation grid to be established by rule. If the 
claimant accepts the defendants' offers, the claim is settled. 
If the claimant accepts the Fund's offer, the Trustee may then 
enforce the claim against the defendant companies through 
litigation before a DOJ administrative law judge or in State or 
Federal Court. If the claimant rejects both the Fund's offer 
and the defendants' offers, he may pursue the claim either 
before a DOJ administrative law judge or in State or Federal 
court, subject to numerous restrictions on their rights under 
State tort law. The legislation has a retroactive effective 
date and would preempt all asbestos claims currently pending in 
Federal and State court.
    In our view, the test for crafting asbestos legislation is 
whether it improves the situation of the victims of asbestos as 
a whole. Unfortunately, H.R. 1283 does not meet this test in a 
number of important respects. First and foremost, the bill's 
medical criteria provide that many victims who would be 
eligible for recovery under the longstanding traditions of tort 
law in our States would be shut out arbitrarily by Congress. 
The minimum exposure and latency requirements will deny 
compensation to many asbestos supervisors and clean-up workers. 
The criteria will also exclude many spouses and children of 
workers who contracted cancer from their contact with asbestos 
workers and their clothes--like those in Libby, Montana.
    In addition, we believe opt-in is effectively laying your 
fairness cards on the table. If you really believe this bill is 
fair, then why not give the victims the right to make that 
determination themselves? Under Amchem Products, Inc. v. 
Windsor (Georgine),\6\ a model the proponents of this bill 
repeatedly invoke, all of the victims had an absolute right to 
choose whether to opt into the plan, and 170,000 chose not to. 
However, the proponents propose a perverted version of this. 
You can ``opt-out'' of the administrative system and into the 
courts only if you survive the contorted medical criteria. That 
means that tens if not hundreds of thousands of victims will 
never get any choice.
---------------------------------------------------------------------------
    \6\ Amchem Products, Inc. v. Windsor, 117 S.Ct. 2231 (1997).
---------------------------------------------------------------------------
    Moreover, the new administrative maze will create more, not 
fewer, delays. Under the bill, every single claim--no matter 
how sick the victim--will be placed in legal limbo for as long 
as it takes to create the massive new legal bureaucracy, 
promulgate and litigate a dozen new rules, and obtain funding. 
Even once the bureaucracy is set up, the delays will go on and 
on. Claimants will face nearly a dozen separate steps--each one 
subject to lengthy delay and litigation--before they can obtain 
any compensation.
    The legislation's regressive new ``tort reforms'' will 
reduce the value of the few claims which become eligible for 
compensation. The bill narrows and caps punitive damages, 
limits legal fees, limits class actions, and narrows venue all 
on behalf of a special interest. Harm caused by asbestos 
constitutes perhaps the most grievous tort in American 
history--to date hundreds of thousands of individuals have been 
killed, and millions more have been harmed. Given that asbestos 
manufacturers have known since the early part of the 1900's 
that the fiber would kill workers and harm their families, and 
that they have sought to avoid responsibility for their actions 
and fight efforts to ban its use, these tort reforms send a 
shocking message about corporate accountability.
    We also strongly object to the legislation's retroactive 
effective date, which will preempt all 200,000 cases pending in 
the courts today. The so-called exemption for cases which reach 
trial within the next 6 months is next to worthless, since even 
these cases will be subject to the restrictive new medical 
criteria. The net effect will be to bail out wrongdoers and 
shift liability to victims and the Federal Government. For 
these and the following reasons, we dissent from this 
legislation.
I. The ``litigation crisis'' is vastly overblown and based on dated 
        information.
    The principal purported justification for this legislation 
is that we are in the midst of an asbestos litigation crisis, 
with a supposed ``elephantine mass'' of pending cases which 
will lead to the bankruptcy of most of the remaining asbestos 
companies.\7\ We cannot agree with this contention. First, 
there is no data showing that asbestos litigation is any more 
time consuming or expensive than any other type of product 
liability case. Indeed, because of the widespread harm caused 
by these products and the 25 years of litigation that have 
settled the major liability issues, asbestos is now a mature 
tort. Thus, asbestos cases today are less time consuming and 
less expensive to pursue than other types of tort actions. The 
vast majority of these cases are being settled--with the 20 
companies in the Center for Claims Resolution settling 
approximately 99.8% of their cases, and with defendants such as 
Owens Corning having agreed to a voluntary settlement program 
for 180,000 of its claims. At the committee hearing on H.R. 
1283, Owens Corning's General Counsel, Maura Abeln, stated that 
``there is a viable alternative to legislation--a settlement 
process which protects the rights of individual claimants and 
permits companies to manage their own financial destiny.'' \8\
---------------------------------------------------------------------------
    \7\ Ortiz v. Fibreboard Corp., No. 97-1704, 1999 WL 412604, at 5 
(U.S. June 23, 1999).
    \8\ See ATLA Testimony at 4.
---------------------------------------------------------------------------
    Moreover, Federal court procedures are particularly 
streamlined, with all Federal cases having been consolidated 
for procedural purposes in a single court in Philadelphia. 
According to ATLA President Richard Middleton:

        [I]t is simply inaccurate to any longer claim that 
        asbestos litigation is placing an undue burden on the 
        courts. As statistics clearly show, claims filed do not 
        translate into cases tried. The vast majority of cases 
        do not take up the time of the courts. Although many 
        new cases are filed each year, large numbers are placed 
        on inactive dockets and most other claims are settled 
        under private agreements. In fact, according to 
        Mealey's Asbestos Litigation Report, during 1998 only 
        55 asbestos cases involving 125 individuals proceeded 
        to verdict in the 50 States and all Federal courts, a 
        45% decline from 1997--and clearly a negligible number.

    We also note that the courts are already providing the 
needed flexibility so that cases involving persons who are 
seriously ill may move to the front of the litigation line. A 
Public Citizen survey has found that, at both the State and 
Federal levels, courts have adopted ``gatekeeper'' mechanisms 
which prioritize the claims of plaintiffs with more advanced 
illnesses and allow stays for less impaired individuals. This 
has been accomplished through the use of pleural registries 
(which allow persons with less serious diseases to file claims 
in court without actively prosecuting them) and by the 
widespread allowance of distinct causes of action for different 
asbestos-related injuries. Thus, it appears that because many 
of the problems that the courts confronted during the last 
decade have been eliminated, the federally mandated 
administrative system proposed in H.R. 1283 will only serve to 
create new and lengthy delays for injured asbestos victims.
    We also find little evidence to support the proponents' 
claim that the legislation is needed because we will otherwise 
face a growing stream of bankruptcies by defendant companies. 
It is instructive to note that the Treasury Department has 
examined publicly available information regarding a number of 
asbestos defendants and found the Majority's arguments 
unpersuasive. They concluded, ``[w]hile the industry has seen 
bankruptcies in the past two decades, public filings (10K and 
10Q reports) by many major industry participants do not 
indicate financial distress; to the contrary, their statements 
often inform shareholders and others that asbestos-related 
liabilities will not have a material impact upon the present or 
future financial performance of the companies. In fact, over 
the past decade, many of these companies successfully have 
recovered, or made agreements to recover billions of dollars in 
insurance coverage.'' \9\
---------------------------------------------------------------------------
    \9\ See DOJ Letter at 7.
---------------------------------------------------------------------------
    Our review of the specific liability statements by publicly 
traded asbestos defendants confirms that the principal 
remaining asbestos defendants are not facing any significant 
threat of bankruptcy. For example, in March of this year, Paul 
Norris, the Chairman and Chief Executive Officer of W.R. 
Grace--one of the largest remaining asbestos defendants, and 
the company allegedly responsible for the Libby, Montana 
asbestos deaths and illnesses--acknowledged that ``Grace 
generates ample cash to cover its asbestos-litigation burden.'' 
\10\ Similarly, Owens-Corning, another major asbestos 
defendant, admitted in a March 1, 2000 SEC filing that ``. . . 
we believe that the costs which may be associated with [the 
asbestos] matter will not have a materially adverse effect on 
Owens Corning's financial position or results of operations.'' 
\11\ The situation is much the same with other significant 
asbestos defendants--U.S. Gypsum,\12\ Federal Mogul,\13\ 
Armstrong World Industries,\14\ and Pfizer (parent company of 
Quigley) \15\ all have indicated there is little likelihood 
that asbestos liability could lead to bankruptcy.
---------------------------------------------------------------------------
    \10\ See Susan Warren, W.R. Grace Has New Business, but Needs a New 
Image, Wall Street Journal, March16, 2000, at B4.
    \11\ Owens Corning, SEC 10k filing, March 1, 2000; Yahoo! Finance 
(December 31, 1999) /quote.yahoo.com/?u>.
    \12\ U.S. Gypsum acknowledged in its quarterly report filed with 
the SEC that, ``asbestos litigation is not expected to have a 
significant impact on [U.S. Gypsum's] liquidity or cash flows during 
1999.'' U.S. Gypsum Corporation, SEC 10Q filing, March 1, 2000.
    \13\ In its most recent securities filing with the SEC, Federal 
Mogul admitted, ``. . . [M]anagement believes that asbestos claims 
pending against the Company . . . will not have a material effect on 
the Company's financial position.'' Federal Mogul, SEC 10k filing, 
March 1, 2000. Federal Mogul has estimated a maximum of $1.1 billion in 
future asbestos liability while at the same time it reported 
shareholders' equity of more than 20 times that liability. Yahoo! 
Finance (December 31, 1999)/quote.yahoo.com/?u>.
    \14\ In its annual report filed with the SEC, Armstrong World 
Industries characterized the cost of asbestos claims as not having, ``. 
. . [A]ny material after-tax effect on the financial condition of 
Armstrong or its liquidity.'' Armstrong World Industries, SEC 10k 
filing, March 1, 2000.
    \15\ Pfizer, the parent corporation of Quigley Company, Inc., a 
producer of asbestos, has stated that costs incurred in defending and 
ultimately disposing of the asbestos personal injury claims, as well as 
other asbestos-related costs, will be covered by insurance policies and 
ultimately will have no materially adverse effect on its financial 
position. Pfizer Inc., SEC 10k filing, March 1, 2000. At year end, 
Pfizer had a market value of approximately $122.6 billion. Yahoo! 
Finance (December 31, 1999)/quote.yahoo.com/?u>.
---------------------------------------------------------------------------
    If the Majority was truly concerned that Congress' failure 
to legislate could cause these firms to file for bankruptcy, we 
would have expected them to have subpoenaed, or at least 
investigated the financial situation of these companies. 
However, that has not occurred, and the Majority has chosen 
instead to rely on self-serving statements of financial 
distress, rather than the companies' statements made to the SEC 
and their own shareholders.
II. Medical criteria will unfairly reduce the number of claimants.
    There are several problems with regard to the medical 
criteria.\16\ As a general matter, the medical criteria are not 
consensus standards generally accepted in the medical community 
as demonstrated by communications submitted to the committee by 
distinguished experts in the field.\17\ Rather, they represent 
litigation-driven standards, promoted by defendants, which are 
unsupported by the medical literature. Further, despite the 
majority's repeated attempts to characterize the criteria as 
merely representing a codification of negotiated private 
settlement standards ``agreed to by all the parties,'' the 
proponents have chosen the least favorable and the most 
restrictive standards from a menu of settlement agreements, the 
most restrictive of which was Amchem. At the same time, they 
have ignored whole cloth more liberal standards contained in 
numerous other settlements and judicially approved plans.\18\
---------------------------------------------------------------------------
    \16\ The original substitute would have allowed for racial 
profiling by referring to an article that provided that African 
Americans have worse lung functioning and therefore should have a 
higher bar to establish recovery (The original substitute's definition 
of ``pulmonary function testing'' referenced standards requiring race 
corrections and encouraged physicians to apply different standards 
blacks than whites). Fortunately, these concerns were alleviated as a 
result of an amendment offered by Representatives Scott, Conyers and 
Hyde which requires the Medical Director to eliminate predicted values 
and pulmonary function tests that incorporate adjustments based on 
race.
    \17\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of Christine Oliver, M.D.).
    \18\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and 
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir. 
1996).
---------------------------------------------------------------------------
    Moreover, we believe it is inappropriate for Congress to 
specify detailed and fixed medical criteria governing tort 
actions. To the extent there is any role for the Federal 
Government in this regard, it would be far preferable to assign 
the responsibility to an entity with actual expertise in the 
area, such as the National Institute of Occupational Safety and 
Health (``NIOSH''), rather than Congress.\19\ Also, under the 
bill, the value to a victim of meeting the medical criteria is 
somewhat limited, given that the medical certificate is subject 
to rebuttal by defendants,\20\ and even if it is not rebutted, 
it does not automatically entitle the claimant to 
compensation.\21\
---------------------------------------------------------------------------
    \19\ Representatives Conyers, Scott and Nadler offered an 
amendment, which the Majority rejected, that would have required the 
Department of Justice, in consultation with NIOSH, to draft medical 
criteria.
    \20\ Sec. 201. The certificate can be rebutted by ``clear and 
convincing evidence.'' The defendants could easily argue that a 
contradictory diagnosis obtained from their own experts would meet this 
standard. Accordingly, the required procedure for obtaining a 
certificate of eligibility simply delays the adjudication of the 
plaintiff's claim and coerces him to disclose his entire medical case 
and all of his evidence of exposure before he is permitted to file 
suit. This effectively gives the defendants an unlimited time to 
prepare its defense.
    \21\ Sec. 207.
---------------------------------------------------------------------------
    A related concern is that under the procedures in the bill, 
asbestos manufacturers would appear to be guaranteed a right to 
a jury trial with regard to the claimant's medical condition, 
but the claimant's right to a jury trial may be eliminated by 
the medical panels or the Federal court of claims. 
Additionally, the medical review process unfairly prevents some 
of the most qualified physicians--e.g., those who have spent a 
significant amount of their time working as asbestos experts--
from serving as an eligible physician for medical review 
purposes and requires thousands of workers to submit themselves 
to new chest x-rays to meet the bill's more stringent testing 
requirements.\22\ Finally, we take issue with the notion that 
the so-called ``less sick'' or ``unimpaired'' should be barred 
from receiving any compensation.
---------------------------------------------------------------------------
    \22\ Sec. 601(28). Sec. 601(5) requires quality one rather than 
quality 2 x-rays.
---------------------------------------------------------------------------
    We also have a number of specific problems with the 
individual categories of asbestos related harm, particularly 
with regard to lung cancer and non-malignant conditions (i.e., 
``less sick'' or ``unimpaired'' individuals).
            A. Lung cancer
    The criteria for asbestos related lung cancer is unduly 
restrictive and discriminatory. Even if a claimant meets the 
arbitrary exposure requirement, the whole issue of medical 
eligibility and causation may be fully relitigated at trial if 
the lung cancer claimant has a history of smoking. Thus, for 
these claimants, the certificate of medical eligibility is 
illusory in that it does not establish even a rebuttable 
presumption of eligibility.\23\ This presumption against 
smokers is inconsistent with the jurisprudence \24\ and could 
leave tens of thousands of workers with little chance of 
obtaining compensation from either the asbestos or tobacco 
industry (notwithstanding determinations by OSHA and the 
Surgeon General which have found that persons exposed to 
asbestos who smoke have a 50 times greater likelihood of 
contracting lung cancer than ordinary individuals).\25\
---------------------------------------------------------------------------
    \23\ Sec. 304(b).
    \24\ See Brisboy v. Fibreboard, 418 N.W. 2d 650 (1988, MI Sup. Ct); 
Alvin J. Acosta v. Babcock & Wilcox, No. 90-3714 (5th Cir. 1992) 
(applying ``substantial causation'' standard for asbestos claims 
brought by smokers, rather than the bill's suggested standard that 
asbestos exposure must be the sole and ``but for'' cause).
    \25\ An individual with asbestos exposure who is a non-smoker has a 
5x greater risk of contracting lung cancer than an unexposed person. 
Regular smokers have a 10x greater risk of contracting lung cancer than 
persons who do not smoke. However, persons with both asbestos exposure 
history and a smoking history have an increased risk of lung cancer 
that is 50 to 90 times greater than normal. Health Consequences of 
Smoking and Cancer, report of the Surgeon General (1992), pages 189-
190. See also Bldg. & Construction Trades Dept. v. Brock, 838 F.2d 
1258, 1265-66 (D.C. Cir. 1986) (citing OSHA Regulations, 51 Fed. Reg. 
22,612 et seq., finding that non-smokers exposed to asbestos have a 2x 
greater risk of contracting lung cancer than the general population, 
smokers have a 10x greater risk, and smokers exposed to asbestos have a 
20x greater risk).
---------------------------------------------------------------------------
    Another concern is that the legislation denies compensation 
to lung cancer victims who cannot show a latency period from 
their first exposure to asbestos to the date of illness of at 
least 10 years. In addition, victims who are unable to 
establish they were regularly exposed to visible asbestos dust 
in their workplace for at least 7.5 years (and as a practical 
matter, in most cases, 15 years) \26\ unless their lung cancer 
is accompanied by a qualifying non-malignant disease, are also 
denied compensation under H.R. 1283. These time requirements 
bar recovery by persons subject to shorter latency or exposure 
periods (the scientific literature contains numerous examples 
of individuals developing lung cancer with shorter latency and 
exposure periods),\27\ and make it almost impossible for 
spouses and children exposed as a result of contact with an 
asbestos worker to recover.
---------------------------------------------------------------------------
    \26\ Sec. 304(a). As a general matter, asbestos dust is not visible 
except at levels that are 1,000 times greater than the OSHA standard of 
.1 fibers per cubic centimeter of air. Sec. 304. Further, exposure to 
asbestos is often mixed with exposure to other nuisance dusts making 
the percentage of asbestos dust present hard to determine. Workers are 
unlikely to have access to exposure records of dust levels. Also, with 
regard to the issue of ``equivalent years of exposure'' which is 
defined in Sec. 601(13), the only persons who would qualify to obtain 
full year exposure for each year of work are those persons whose 
primary occupation involved the direct installation, repair, or removal 
of asbestos-containing products (this would include supervisors, 
bystanders, clean-up workers, inspectors, or anyone else who worked in 
the same area and breathed the same dust).
    \27\ Letter from L. Christine Oliver, Assistant Clinical Professor 
of Medicine, Harvard Medical School, et al., to Congressman John 
Conyers, Jr., Ranking Minority Member, U.S. House Judiciary Committee, 
(February 1, 2000) (on file with the Judiciary Committee Minority 
Staff).
---------------------------------------------------------------------------
    Asbestos-related lung cancer can be caused by minimal 
exposure. The medical criteria in H.R. 1283 will result in the 
exclusion of a substantial proportion of the lung cancer 
victims that are currently compensated in the tort system for 
their injuries. The provisions of the bill, therefore, only 
serve to emphasize that the proposed medical criteria are not 
designed to be fair to exposed victims, but simply to cut off 
liability for the defendants. As the Department of Justice 
wrote in its letter to the committee, ``HHS advises us that 
many studies have clearly shown that asbestos is a carcinogen 
and causes cancer independent of causing non-malignant disease, 
again contrary to the implication of H.R. 1283.\28\
---------------------------------------------------------------------------
    \28\ See DOJ Letter at 4.
---------------------------------------------------------------------------
    Yet another concern with regard to the lung cancer medical 
criteria is that claimants must either have a qualifying non-
malignant condition or evidence of pleural plaques and many 
years of very heavy exposure to visible asbestos dust.\29\ The 
weight of scientific evidence is that the presence of 
asbestosis or other non-malignant disease is not a precondition 
for asbestos-related lung cancer.\30\ Lung cancer, asbestosis 
and pleural disease are separate and distinct diseases, each of 
which are caused by asbestos exposure. They are not a continuum 
or progression of a simple disease. Consequently, there is no 
scientific or logical basis for requiring one to be a 
precondition for eligibility to receive compensation for 
another. Moreover, private settlement agreements such as In re 
Asbestos Litigation v. Gerald Ahearn \31\ provide compensation 
for lung cancer without regard to whether the claimant has a 
non-malignant condition.
---------------------------------------------------------------------------
    \29\ Sec. 304.
    \30\ David Egilman, Lung Cancer and Asbestos Exposure: Asbestosis 
is Not Necessary, American Journal of Industrial Medicine 30:398-406 
(1996).
    \31\ 90 F.3d 963 (5th Cir. 1996) (prior class action settlement 
with Fiberboard corporation).
---------------------------------------------------------------------------
            B. Non-Malignant conditions
    The criteria for non-malignant conditions are based on the 
flawed notion that no recovery should be permitted unless an 
asbestos victim can show they are impaired. Tort law 
traditionally has provided compensation for those injured by 
the wrongdoing of another. The amount of damages varies with 
the level of harm caused to the victim. Under H.R. 1283, 
asbestos victims would have to show greater damage to obtain 
recovery--proof of impairment rather than injury--than would 
other victims of wrongdoing. We do not agree that asbestos 
victims should be held to such a high standard of proof.
    Even if impairment, and not injury, were the proper 
standard for recovery, the medical criteria in the bill could 
deny compensation (other than reimbursing a portion of some 
medical tests) for many persons suffering from pleural 
thickening and pleural plaques, which are an alteration to the 
lining of the lung, based on arbitrarily defined limits on lung 
functioning.\32\ Again, this flies directly in the face of 
established court precedent,\33\ and private settlements \34\ 
and will operate to deny justice to persons facing real 
suffering--both from the fear of the increased likelihood of 
dying as well as from pleural thickening in their lungs and 
plaques leading to shortness of breath.
---------------------------------------------------------------------------
    \32\ Sec. 302.
    \33\ See e.g,. Verryke v. Owens-Corning Fiberglass Corp., 616 N.E. 
2d 1162 (Ohio Ct. of App. 1992) (rejecting defendant's assertion that 
pleural thickening cases should not be compensable, because ``a pleural 
plaque or thickening meets the definition of `bodily harm,' which is a 
subspecies of `physical harm,' and thus satisfies the injury 
requirement of the Restatement of Torts.''); In Re Cuyahoga County 
Asbestos Cases, 713 N.E. 2d 20 (1988); Sullivan v. Combustion Eng., 590 
A.2d 944 (Md. Ct. Of Special Appeals 1998).
    \34\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and 
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir. 
1996), settlements.
---------------------------------------------------------------------------
    The medical criteria are also unduly restrictive in denying 
compensation to those with asbestosis. The bill requires 
asbestosis victims to meet arbitrary, rigid x-ray and lung 
function criteria to qualify for compensation. These medical 
criteria do not conform to the diagnostic guidelines of the 
American College of Chest Physicians and the America Thoracic 
Society. Experts in chest disease and pulmonary function agree 
that there is no clear and consistent correlation between chest 
x-ray findings, pulmonary function, and clinical signs such as 
basilar crackles, yet H.R. 1283 requires such a rigid 
correlation as a prerequisite to medical eligibility.
    In this regard, scholarly studies have found that 
``[i]ndividuals with pleural plaques and thickening . . . 
generally . . . have between 2\1/2\ and 3 times increased risks 
of cancer.'' \35\ Another study found that breathlessness of 
exertion was reported by 95% of subjects found to have 
asbestos-related pleural thickening and a history of wheezing 
was found in 55% of subjects, with a regular cough in 53% and 
occasional sputum production in 47%. 56% of this population of 
individuals with only pleural thickening noted chest pain and a 
history of pleural effusions was elicited in 37%.\36\ Yet 
another study determined that ``subjects with pleural 
thickening appear to have more shortness of breath as assessed 
by questionnaire and more dyspnea with major activities such as 
walking up a steep hill or climbing two flights of stairs.'' 
\37\
---------------------------------------------------------------------------
    \35\ Fletcher, A Mortality Study of Shipyard Workers with Pleural 
Plaques, 29 Bit. J. Industr. Med 142 (1972) & Hillerdal, Pleural 
Plaques and Risk for Bronchial Carcinoma and Mesothelioma, 105 Chest 
144 (1994).
    \36\ Yates, et al, Asbestos-related Bilateral Diffuse Pleural 
Thickening: Natural History of Radiographic and Lung Function 
Abnormalities, 153 Am. J. Respir. Crit. Care Med. 301 (1966).
    \37\ Borbeau, et al, The Relationship Between Respiratory 
Impairment and Asbestos-Related Pleural Abnormality in an Active Work 
Force, 142 Am. Rev. Respir. Dis. 837 (1990).
---------------------------------------------------------------------------
            C. Other cancers
    In terms of asbestos related ``other cancer,'' the bill 
only identifies certain types of cancers for which there can be 
compensation (e.g., larynx, oral-pharynx, gasto-intestinal and 
stomach).\38\ To our knowledge, no basis exists--nor has any 
evidence been proffered--for excluding any additionally 
recognized asbestos-related cancers from eligibility for 
compensation.
---------------------------------------------------------------------------
    \38\ Sec. 305.
---------------------------------------------------------------------------
III. The tort limitations will unfairly reduce the size of the 
        settlements without any meaningful offsetting benefit to 
        claimants and will protect reckless and dangerous misconduct.
            A. Nature of tort reform
    We also object to the inclusion of a number of extraneous 
``tort reforms'' in the legislation, which include: (1) limits 
on claimants legal fees (sec. 108(c)); (2) elimination of 
damages from enhanced risk of a future condition (sec. 202); 
(3) limitations on class actions to those that meet Federal 
requirements (sec. 205); (4) limiting venue to jurisdictions 
where the exposure occurred or the claimant resides (sec 205 ( 
c); (5) mandating choice of law (sec. 208(a)); and (6) 
increasing the evidentiary standard for establishing punitive 
damages and capping punitive damages at three times 
compensatory damages for administrative proceedings (sec. 
208(d)) and totally eliminating punitive damages in court 
proceedings (sec. 202).\39\
---------------------------------------------------------------------------
    \39\ Representative Scott offered unsuccessfully an amendment to 
strike all of the tort reform provisions in the bill.
---------------------------------------------------------------------------
    These ``tort reforms'' tilt the playing field against 
workers and unfairly shield defendants from legal 
responsibility for their past misconduct. For example, the 
restrictions on legal fees (which could include bans on 
contingency fee arrangements), constitute a limitation on an 
asbestos victim's ability to obtain the most competent legal 
advice and are also discriminatory because they apply to 
claimants but not defendants. The limits on class actions will 
limit victims' access to the courts and prevent States from 
being able to resolve mass asbestos claims in the manner they 
deem most efficient. The venue limits preclude actions in 
defendants' home States or where they are found to be doing 
business--even though these may be the only locales where 
jurisdiction may lie or service of process can be effectuated.
    Finally, the limits on punitive damages will mitigate the 
liability of the most egregious offenders. AFL-CIO General 
Counsel John Hiatt emphasized this point in his hearing 
testimony when he suggested that the committee be mindful of 
incentives it creates for industrial decision makers as it 
considers whether to create exceptions to State tort law: ``I 
am sure the committee would not want to suggest to business 
executives making decisions in the future that if the scale of 
the risk their product poses is truly awe inspiring, Congress 
will step in to save them from the consequences of their 
actions under State tort law.'' \40\
---------------------------------------------------------------------------
    \40\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of John Hiatt, General Counsel, AFL-CIO at 8).
---------------------------------------------------------------------------
            B. No offsetting benefit
    Traditionally, workers' compensation programs have been 
based on a quid pro quo with both injured workers and employers 
giving up some common law rights in exchange for administrative 
compensation programs. Under this quid pro quo, workers receive 
prompt, limited administrative compensation but forfeit their 
right to common law remedies for negligence. Employers give up 
their right to raise certain defenses to recovery in exchange 
for greater certainty as to the amount of recovery. By 
contrast, H.R. 1283 contains no quid pro quo. Workers give up 
their right to common law recovery, but gain neither prompt 
remedy nor certainty as to the amount of compensation. Further, 
asbestos defendants give up few of the defenses to recovery 
they may currently raise. A victim who obtains a medical 
certificate must continue on a long, contentious road before 
compensation is provided and is subject to many defenses 
including rebuttal of medical eligibility, and causation and 
product identification.\41\
---------------------------------------------------------------------------
    \41\ Sec. 207.
---------------------------------------------------------------------------
    There is also little analogy between the legislation and an 
insolvency proceeding--bankruptcy only applies to businesses 
whose debts exceed their assets and requires debtors to subject 
themselves to a number of legal and financial constraints. By 
contrast, H.R. 1283 fails to ascertain in advance whether the 
defendants are able to pay their obligations, and fails to 
include any protection against fraudulent conveyances to 
insiders or limitation on other transactions which could impair 
the defendants' ability to make asbestos payments.
            C. Previous reckless conduct
    It is particularly inappropriate to mandate limitations on 
legal liability in asbestos cases, given the perniciousness and 
long term harm caused, and the culpability of the industry. In 
contrast to previous tort reform bills approved by this 
committee, which at least purport to limit ``frivolous suits'' 
against blameless defendants, this legislation would safeguard 
reckless conduct which has already killed and harmed hundreds 
of thousands of individuals.
    For example, medical articles detailing the dangers of 
asbestosis appeared as early as 1902, with a landmark article 
by Dr. Merewether published in 1930 that describes in detail 
the clinical characteristics of asbestosis, the dust control 
requirements that are necessary to prevent the disease, the 
importance of educating workers about the hazards of asbestos, 
and the future risk to industries such as shipbuilding.\42\ In 
1932, medical personnel discovered over 300 cases of asbestosis 
at the Johns-Manville plant.\43\ By the 1940's, even more 
widespread evidence of asbestos harm was published by the 
medical community.\44\
---------------------------------------------------------------------------
    \42\ Barry I. Castleman, Asbestos: Medical and Legal Aspects 1,12 
(3d ed. 1990).
    \43\ Id. at 24.
    \44\ Id. at 59.
---------------------------------------------------------------------------
    Culpability in the asbestos industry extends well beyond 
Manville. For example, in the 1950's and 1960's, Owens Corning 
Fiberglass distributed pipe covers and block known as Kaylo, 
even though the final report on the product in 1952 concluded, 
``Kaylo dust is capable of producing a peribroncheolar fibrosis 
typical of asbestosis . . . the results of the study indicate 
that every precaution should be taken to protect workers 
against inhaling the dust.'' \45\ In the early 1960's, Philip 
Carey Manufacturing Company, a producer of asbestos 
pipecovering, hired Dr. Thomas Mancuso to investigate its 
asbestos problem.\46\ After the completion of his study, 
Mancuso advised the Philip Carey officials to end their 
practice of putting sub-contractors and insulators on the 
payroll because of the occupational disease liability.\47\ 
Philip Carey ignored Dr. Mancuso's warning and continued 
manufacturing asbestos insulation without labels, throughout 
the 1960's.\48\
---------------------------------------------------------------------------
    \45\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on 
Trial 151 (1985).
    \46\ Id. at 195.
    \47\ Id. at 196.
    \48\ Id. at 197.
---------------------------------------------------------------------------
    In 1964, Dr. Irving Selikoff convened an international 
conference of doctors and scientists in New York City to sound 
the alarm about epidemic levels of asbestosis, lung cancer and 
mesothelioma that he found in a study of 17,000 industrial 
workers in the New York/New Jersey area.\49\ The study 
concluded that up to 80% of asbestos insulators were 
contracting asbestosis after a latency period of 20 years, that 
the risk of lung cancer for asbestos workers (especially that 
who smoked) was 90 times greater than expected, and that 
asbestosis was killing hundreds of asbestos insulators.\50\ 
Immediately after the Selikoff Conference, John Brown, 
President of the Asbestos Textile Institute, writes to J.T. 
Griffus of H.K. Porter Company (an asbestos textile 
manufacturer): ``This subject [the Selikoff Conference on 
asbestosis and lung cancer] should not be brought to the 
attention of [persons] other than management of our several 
companies, as any discussion of this situation by sales 
personnel with users of our products could possibly aggravate 
the situation and result in individual opinions which could be 
damaging.'' \51\
---------------------------------------------------------------------------
    \49\ Annals of Industry: Causalities of the Workplace, The New 
Yorker, October 29, 1973, at 49.
    \50\ Id. at 48-49.
    \51\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on 
Trial (1985).
---------------------------------------------------------------------------
    Also, through the 1960's, W.R. Grace appears to have 
intentionally and knowingly exposed vermiculite mine workers 
(and their families) to dangerous levels of asbestos. 
Vermiculite was mined in Libby, Montana--where at least 192 
people have died and another 375 have been diagnosed with 
asbestosis--and shipped to expansion sites throughout the 
country.\52\ Testimony to date indicates that Grace knew of the 
problem, yet continued to expose workers and their families 
while covering up the dangers.\53\
---------------------------------------------------------------------------
    \52\ In a letter to Judiciary Committee Ranking Member John 
Conyers, Jr., the attorney for 125 Libby asbestos disease patients 
(suffering from mesothelioma, asbestosis and lung cancer) stated that 
the medical criteria in H.R. 1283 could shut out 74% of the victims he 
represents. See Letter from Roger M. Sullivan, Esq., McGarvey, 
Heberling, Sullivan & McGarvey, to The Honorable John Conyers, Jr., 
U.S. House Judiciary Committee Ranking Member, (March 8, 2000) (on file 
with the minority staff of the House Judiciary Committee). See also 
Letter from Senator Max Baucus (Montana) to The Honorable Henry J. Hyde 
and the Honorable John Conyers, Jr., (February 29, 2000) (urging the 
committee to take more time to find out whether the medical criteria in 
H.R. 1283 unreasonably restricts and clearly screens out large numbers 
of individuals exposed to asbestos) (on file with the minority staff of 
the House Judiciary Committee).
    \53\ See Finstadt v. W.R. Grace, No. DV-98-139 (19th Dist. Mont. 
1999).
---------------------------------------------------------------------------
    Although most asbestos products were discontinued in the 
mid-1970's, after OSHA mandated a series of employer 
safeguards, the threat from asbestos is still ongoing. In 1983, 
the value of imported asbestos was $80.6 million.\54\ In 1992, 
the U.S. consumed 31.6 thousand metric tons of asbestos,\55\ 
and despite widespread knowledge of asbestos dangerous effects, 
its use remains. Moreover, industry objections delayed OSHA 
action to prevent cancer risk until 1986 when a Federal appeals 
court found further regulation necessary to prevent worker 
exposure to significant risks.\56\ EPA's 1989 efforts to ban 
the manufacture, importation, and distribution of asbestos 
products failed in the face of industry legal challengers.\57\
---------------------------------------------------------------------------
    \54\ OSHA RIA at II-3, 1986.
    \55\ 59 Fed. Reg. 41026.
    \56\ Building & Constr. Trades Dept. v. Brock, 838 F.2d 1258 (D.C. 
Cir. 1986).
    \57\ Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 
1991).
---------------------------------------------------------------------------
    Finally, the courts have consistently held that the 
asbestos industry demonstrated reckless, if not intentional, 
misconduct. In Fischer v. Johns-Manville,\58\ the Superior 
Court, Appellate Division of New Jersey held: ``The jury here 
was justified in concluding that both defendants, fully 
appreciating the nature, extent and gravity of the risk (in 
exposing plaintiffs to asbestos), nevertheless made a conscious 
and cold-blooded business decision, in utter and flagrant 
disregard of the rights of others, to take no protective or 
remedial action.'' Similarly, the Supreme Court of New Jersey, 
in Fischer v. Johns-Manville,\59\ stated ``[i]t is indeed 
appalling to us that the company had so much information on the 
hazards to asbestos workers as early as the mid-1930's and that 
it not only failed to use that information to protect these 
workers but, more egregiously, that it also attempted to 
withhold this information from the public.'' And, in Ballard v. 
Owens-Corning Fiberglas Corp.,\60\ the Supreme Court of Florida 
held: ``The clear and convincing evidence in this case revealed 
that for more than thirty years the company concealed what it 
knew about the dangers of asbestos. In fact, the company's 
conduct was even worse than concealment, it also included 
intentional and knowing misrepresentations concerning the 
danger of its asbestos containing products.'' Despite this 
unconscionable conduct, we are considering unprecedented 
legislation written, in large part, by that very industry.
---------------------------------------------------------------------------
    \58\ 472 A.2d 577 (N.J. Super. 1984).
    \59\ 512 A.2d 466 (N.J. 1986).
    \60\ 1999 WL 669026 (Fla. 1999).
---------------------------------------------------------------------------
IV. The new bureaucracy will severely delay payment of claims.
    Rather than expediting claims, H.R. 1283 will delay the 
payment of compensation, including payments to victims who are 
seriously ill and at or near death. As the AFL-CIO complained, 
``the proposed legislation would slam the courthouse door shut 
on hundreds of thousands of poisoned workers to the benefit of 
the very companies that poisoned them.'' \61\ In essence, the 
legislation will overturn a court system which has adapted over 
time to the massive load of asbestos cases, and substitute a 
completely new and untested legal regime.
---------------------------------------------------------------------------
    \61\ See AFL-CIO letter at 1.
---------------------------------------------------------------------------
    Under the legislation, every single claim--no matter how 
compelling the merits or how sick the victim--will be placed on 
hold for as long as it takes to create the massive new legal 
bureaucracy. The prejudice from this delay will be especially 
severe for living victims of lung cancer and mesothelioma who 
currently can expect to receive prompt trial dates because of 
preferential treatment the courts give to these cases. 
Moreover, H.R. 1283 cuts off these claimants' right to trial 
and provides no mechanism to preserve their testimony by 
videotape or any other method. At a minimum, tens of thousands 
of victims will now need to schedule new physical examinations 
under new standards in an attempt to comply with the numerous 
requirements of H.R. 1283. These examinations will be costly 
and time-consuming and will provide no benefit to the claimant.
    Setting up the OAC will require hiring hundreds if not 
thousands of new employees within four separate Justice 
Department divisions. Public Citizen has noted that questions 
have been raised about the Federal Government's ability to 
create and run such a large bureaucracy: ``While the National 
Vaccine Injury Compensation Program is held up as model, it has 
only dealt with 5,735 cases over 11 years, not the hundreds of 
thousands of asbestos cases that would have to be processed 
immediately.'' \62\ In addition, the OAC will not be able to 
begin to process any claims until it adopts at least 11 complex 
new administrative rules,\63\ which are subject to notice and 
comment, and in most cases, to extensive legal review and 
appeals. It is likely that this hiring and rulemaking process 
will take several years at a minimum, by which time scores of 
thousands of new claims will be waiting in line for 
compensation.
---------------------------------------------------------------------------
    \62\ See Public Citizen Letter at 4.
    \63\ See Secs. 102(b); 103(b)(2); 108(c); 109(d); 301(b) [likely 4 
separate rules]; 304(b); 306(a); 306(b); 401(a); 402(a); & 704.
---------------------------------------------------------------------------
    Even once the OAC is set up and running, it will be subject 
to further delays. The legislation envisions from 10-15 
proceedings before a claimant's case can finally be resolved, 
with some steps scheduled to take up to 90 days.\64\ Even 
worse, in some cases no deadline is imposed and there is no 
legal guarantee that any of the formal deadlines will be 
observed for individual claimants, because they are subject to 
waiver by the OAC \65\ and because there is no individual 
enforcement remedy or mechanism.\66\ The fact that the 
legislation includes a mandamus mechanism in the event 
deadlines are not complied with more than 30% of the time 
constitutes a tacit admission that delays are fully expected 
and anticipated.\67\
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    \64\ The possible proceedings include:

       1. GFiling of Claim.
       2. GDetermination by Medical Director regarding Medical 
      Criteria within 30 days (sec. 102(c)).
       3. GPossible appeal of Medical Director's decision to 
      review panel of physicians, no deadline (sec 102(c)).
       4. GPossible appeal to exceptional medical claims panel, 
      determination due within 30 days (sec. 102(d)).
       5. GClaimant must file particularized statement for each 
      defendant (sec. 103(a)(2)).
       6. GNotice to defendants (sec. 103(a)(3)).
       7. GOpportunity for defendants to bring in third parties 
      (sec. 103 (a)(4)).
       8. GEach defendant to make ``good faith offer,'' due 
      within 21 days of naming all defendants (sec. 103(b)(1)).
       9. GTrustee to make offer of compensation to claimant 
      based on compensation grid. (sec. 103(b)(2), due within 10 
      days of receiving defendants offers.
      10. GClaimant to accept or reject defendant and trustee 
      offers within 60 days (sec. 104).
      11. GIf claimant accepts, Trustee must decide whether to 
      accept defendant offer or prosecute claim administratively 
      or in court (sec. 104(d)).
      12. GIf claimant rejects, may elect administrative 
      resolution or file suit in court (sec. 104(e)).
      13. GAdministrative decision on claimant's claim due within 
      90 days (sec. 105).
      14. GALJ decision subject to appeal to Court of Federal 
      Claims by either claimant or defendant, no deadline (Sec. 
      106).
      15. GIf claimant elects to pursue claim in court, no 
      deadline specified.
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    \65\ Sec. 109(d).
    \66\ Representative Scott offered an amendment, which the Majority 
rejected, that, among other things, provided that if specified time 
limits in the bill are not met, the claimant could leave the 
administrative system and file a claim in State or Federal court.
    \67\ Sec. 109. And even this mechanism is designed merely to get 
the OAC to start working on the problem, not to fix it.
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    Rather than simplifying the processing of asbestos claims, 
H.R. 1283 gives defendants the power to make the prosecution of 
these claims more complex than they have ever been in the tort 
system. The vehicle for this complexity is a specific statutory 
allowance for third-party practice \68\ injected into the 
government bureaucracy that was allegedly conceived to speed 
payments to claimants. This procedure gives asbestos 
manufacturers the ability to add unlimited numbers of third-
party defendants to each and every claim for the purpose of 
either denying, delaying or diluting their liability to the 
claimant and the OAC. Although the committee belatedly acted to 
remove the United States government as one of these third-
parties, virtually every other entity can and will be named 
including employers (who currently have immunity and a 
subrogation lien), tobacco companies, peripheral suppliers and 
manufacturers of asbestos products, insurance companies and 
others. As the recent experience with the Compensation and 
Liability Act (CERCLA/Superfund) has amply demonstrated, 
mechanisms such as this when incorporated either directly or 
otherwise into statutory schemes inevitably lead to decades of 
judicial gridlock.
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    \68\ Sec. 103(a)(4).
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V. The retroactive effective date will deny court access to thousands 
        of pending claims.
    Another major concern with the bill is that it will force 
all existing cases to proceed under the new legal regime 
beginning with the date of enactment. This retroactivity 
provision--which is unprecedented in scope and application--
provides a very significant financial and tactical benefit to 
all asbestos defendants. Efforts to modify the manifest 
injustice of the provision have been only cosmetic and provide 
nothing meaningful for victims.
    H.R. 1283's effective date provision will terminate the 
processing of virtually every asbestos case pending in the 
courts today (estimated at 200,000) and render worthless the 
work product of the pretrial preparation in every such 
case.\69\ The problem derives from the fact that the 
legislation applies to all cases for which a trial is not 
commenced within 6-12 months of the date of enactment.\70\ Even 
the few claims which proceed to court within the 6-12 month 
time period will be impaired because they will be subject to 
the bill's medical eligibility criteria \71\ (even though such 
claims will not benefit from any of the nominally pro-claimant 
provisions, such as the restriction on defenses (sec. 207), 
comeback rights for the non-sick (sec. 204), and penalties for 
inadequate offers (sec. 208(c)). Even worse is the fact that 
the legislation appears to create a dangerous ``Catch-22'' 
situation for victims, because it requires a determination of 
whether the medical criteria apply before a trial may commence, 
yet it may take longer than the statutory deadline of 6-12 
months before the OAC issues the medical criteria rules and it 
can be determined whether they apply in a pending case.\72\
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    \69\ Sec. 501.
    \70\ Sec. 501(b). The Attorney General may extend the initial 6 
month period for an additional 6 months if required for ``orderly 
implementation of the Act.''
    \71\ Sec. 501(d).
    \72\ The right to sue letter provided in section 501 to the 
Attorney General offers little protection to victims, since it is 
totally discretionary.
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    It is highly unusual for tort legislation to ``change the 
rules in the middle of the game'' by applying to pending 
claims. For example, the Volunteer Protection Act--signed into 
law during the 105th Congress--only applies to claims filed 
more than 90 days after the date of enactment, and only if the 
harm that is the subject of the claim occurred after such 
effective date.\73\ Other recently enacted tort laws, such as 
the General Aviation Reform Act of 1994,\74\ the Bill Emerson 
Good Samaritan Food Donation Act,\75\ and the Biomaterials 
Access and Assurance Act of 1998 \76\ were all written to apply 
prospectively. The most recent tort reform bills approved by 
this committee--the Small Business Liability Reform Act (H.R. 
2366),\77\ the statute of repose bill (H.R. 2005),\78\ and the 
class action bill (H.R. 1875) \79\--were all drafted to 
safeguard pending claims from the proposed new statutory 
restrictions.\80\
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    \73\ 42 U.S.C. Sec. 14501.
    \74\ 49 U.S.C. Sec. 40101 note.
    \75\ 42 U.S.C. Sec. 1791.
    \76\ 21 U.S.C. Sec. 1601-06.
    \77\ H.R. 2366, sec. 301.
    \78\ H.R. 2005, sec. 4.
    \79\ H.R. 1875, sec. 5.
    \80\ In an effort to address the concerns about the bill's effect 
on pending cases, Representative Berman offered an amendment to make 
the effective date the date of the markup of the bill, and 
Representative Scott offered an amendment to make the effective date 
the latter of the date the of the appointment of the Administrator, the 
Medical Director and the Trustee, the date the rules are promulgated, 
and the date on which the authorized monies have been appropriated. 
Neither of the amendments, however, were accepted by the Majority.
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VI. The funding mechanisms are illusory.
    We also have deep-seated concerns regarding the reliability 
of the bill's funding mechanisms. The entire legal regime rests 
on three highly questionable sources of revenue--discretionary 
Federal funding, legal reimbursement actions brought against 
defendants, and defendant assessments of administrative costs 
and payments made to claimants. Although the legislation 
authorizes Federal funds ranging up to $150-250 million/year 
(in order to set up the legal bureaucracy and loan funds to the 
Asbestos Compensation Fund),\81\ there is no guarantee that any 
funding (let alone the full amount) will be forthcoming. The 
legislation is written in this manner in order to avoid being 
subject to a budget point of order, yet the provision raises 
the very real risk that the OAC will not be funded or will be 
severely underfunded, leaving plaintiffs with little ability to 
pursue their claims.
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    \81\ Sec. 405.
---------------------------------------------------------------------------
    A second far larger source of funds is to be derived from 
the defendants by way of government reimbursement litigation. 
Here again, there is little certainty that such funds will 
materialize, as real life experience with reimbursement schemes 
in the context of the Black Lung Benefits Act and the 
Comprehensive Environmental Response and Superfund have not 
been promising. To the extent there is a shortfall in such 
reimbursements, claimants will again be left at risk and facing 
reduced or no payments, even though they will have already 
forfeited their common law rights under the legislation.
    An alternative funding mechanism, which vastly improved the 
bill, was introduced by Representative Weiner (D-NY), and 
accepted by the committee. The effect of the Weiner amendment 
is twofold: first, it requires the Administrator to promulgate 
rules for calculating and collecting from defendants all costs 
associated with the determination of claims and payments to 
claimants. Second, if the amount assessed through the 
Administrator's rules is inadequate to cover the payments to 
claimants, the trustee must bring an action against the 
defendant company to recoup payments by the Fund. In addition, 
the Weiner amendment removed from the defendants the ability to 
assert any defense in such a proceeding other than lack of 
jurisdiction.\82\ Notwithstanding the adoption of this 
amendment, there remains a major concern that the bill imposes 
undue financial risks on claimants (e.g., if a defendant 
company contests its assessed amount or if the government 
reimbursement litigation is protracted or unsuccessful).
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    \82\ The original funding scheme allowed a defendant to litigate 
whether so-called ``core claims'' had been asserted against it in order 
to obtain an exemption from or reduction in its assessment by the 
Administrator.
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VII. The opt-out is illusory.
    We also do not believe the legislation's supposed ``opt-
out'' under section 102(f), offers meaningful relief for 
victims. First, the opt-out is only available to persons who 
obtain a certificate of medical eligibility--perhaps the most 
onerous statutory requirement imposed under the bill. Second, 
even those claimants who receive a medical certificate and 
bring their claim in court would continue to be subject to many 
of the bill's ``tort reform'' provisions (such as the 
elimination of punitive damages and special statutory 
limitations on class actions and venue),\83\ even though they 
would not benefit from any of the bill's nominally pro-victim 
provisions. The net result is an ``opt-out'' right which will 
be very difficult to exercise and will be of very little real 
value. While the Majority rejected an amendment that 
Representatives Conyers, Scott, Lofgren and Watt offered to 
make the administrative system completely voluntary, we believe 
that if the legislation provided a demonstrably streamlined and 
fair administrative procedure, a true opt-out would not be 
problematic.
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    \83\ Sec. 205(d).
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VIII. The medical monitoring benefits are inadequate.
    Under Sec. 306, medical testing benefits are provided only 
to those who can show certain amounts of ``heavy'' \84\ 
exposure to asbestos at work and establish certain radiographic 
injury. Therefore, spouses and children who have been exposed 
when asbestos dust was brought home cannot get compensation for 
medical monitoring. In addition, it would appear that 
supervisors, cleanup workers, inspectors and any other trade 
that did not directly have hands-on use of the asbestos product 
would not be eligible for medical monitoring.
---------------------------------------------------------------------------
    \84\ The bill includes no definition of ``heavy exposure'' to 
asbestos (as opposed to ``equivalent years of exposure'').
---------------------------------------------------------------------------
    The medical monitoring benefits provide for a maximum of 3 
sets of medical tests during a victim's lifetime. By contrast, 
OSHA regulations require more frequent medical testing for 
workers exposed to asbestos, and for workers with 10 years of 
exposure over age 45, annual physicals with chest x-ray are 
required by rules.\85\
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    \85\ 29 C.F.R. 1910.1001(L)(3)(ii) Table 2.
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    Another concern is that exposure verification is required 
by the bill to qualify for medical testing. Yet, few companies 
have exposure monitoring records for asbestos before the mid-
1970's. Exposure records may have been lost or destroyed, and 
imposing on workers the obligation to prove the levels of their 
exposure means many will not be able to obtain medical 
monitoring benefits.
IX. H.R. 1283 raises serious constitutional concerns.
    Finally, the Federal Government's intrusion into State tort 
law raises very serious federalism and constitutional concerns. 
Since Congress has traditionally deferred to the States 
regarding tort law in general and product liability law in 
particular, preempting State law in the area of asbestos 
litigation would constitute a dramatic shift in this balance. 
And given the direction of recent Supreme Court decisions, the 
attempts to impose rules on State court civil justice systems 
raises serious constitutional questions. The bill--which 
contains no interstate commerce jurisdictional requirement--may 
run afoul of the constitutional requirement under the Commerce 
Clause. The Commerce Clause limits congressional authority to 
the regulation of interstate commerce and under the Tenth 
Amendment, which reserves all of the unenumerated powers to the 
States. This is a particular concern in light of the recent 
Supreme Court decisions such as Lopez v. United States 
(striking down a Federal gun-free school zone law which had no 
interstate commerce requirement),\86\ and New York v. United 
States \87\ and Printz v. United States \88\ in which the Court 
showed extreme scepticism regarding Congress' ability to 
dictate State legal policies.
---------------------------------------------------------------------------
    \86\ 514 U.S. 549 (1995).
    \87\ 505 U.S. 144 (1992) (invalidating a Federal law requiring 
States to assume ownership of radioactive waste or accept legal 
liability for damages caused by the waste because it was found to 
``commandeer the legislative processes of the States'').
    \88\ 521 U.S. 898; 117 S.Ct. 2365; 138 L.Ed. 2d 914; 65 U.S.L.W. 
4731 (U.S. June 27, 1997) (invalidating portions of the Brady Act 
requiring local law enforcement officials to conduct background checks 
on prospective gun purchasers).
---------------------------------------------------------------------------
    There is also an apparent constitutional flaw under the 
``Appointments Clause.'' According to the Department of 
Justice, ``H.R. 1283's provision for the appointment of the 
OAC's Medical Director by the Administrator of the OAC, Section 
101(c), appears to run afoul of the Appointments Clause. The 
Director is an inferior officer whose appointment must be 
vested in the President alone, in the Courts of Law, or in the 
Heads of Departments. Because the Attorney General may remove 
the Administrator of the OAC for cause (see Section 101(a)), we 
do not believe the Administrator to be the head of the 
Department for purposes of the Appointments Clause.'' \89\
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    \89\ See DOJ Letter at 11.
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Conclusion
    We oppose H.R. 1283 because it constitutes an unjustified 
corporate bail-out at the expense of victims and taxpayers. The 
legislation creates an unmanageable Federal bureaucracy, 
excludes hundreds of thousands of individuals from eligibility 
for compensation, reduces and delays compensation payments to 
those who remain eligible, throws most if not all existing 
cases out of court, and unfairly preempts State law. We cannot 
support this extreme legislation, which rewards the 
perpetrators of one of the country's most serious and deadly 
torts, while punishing the victims and their families.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Rick Boucher.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Steven R. Rothman.
                                   Tammy Baldwin.
                                   Anthony D. Weiner.

                                   - 
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