19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–687 

FURTHERING ASBESTOS CLAIM TRANSPARENCY (FACT) 

ACT OF 2012 

SEPTEMBER 21, 2012.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. SMITH OF TEXAS, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 4369] 

[Including cost estimate of the Congressional Budget Office] 

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

(H.R. 4369) to amend title 11 of the United States Code to require 

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

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

exposure to asbestos, and the filing of such reports with the Executive Office for United States Trustees, having considered the same, 

reports favorably thereon with amendments and recommends that 

the bill as amended do pass. 

CONTENTS 

Page 

The Amendments ..................................................................................................... 2 

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

Background and Need for the Legislation ............................................................. 3 

Hearings ................................................................................................................... 15 

Committee Consideration ........................................................................................ 15 

Committee Votes ...................................................................................................... 15 

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

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

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

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1Furthering Asbestos Claim Transparency (FACT) Act of 2012, H.R. 4369, 112th Cong. § 2 

(2012). 2 Id. 

Performance Goals and Objectives ......................................................................... 26 

Advisory on Earmarks ............................................................................................. 26 

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

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

Dissenting Views ..................................................................................................... 29 

The Amendments 

The amendments are as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2012’’. 

SEC. 2. AMENDMENTS. 

Section 524(g) of title 11, United States Code, is amended by adding at the end 

the following: 

‘‘(8) A trust described in paragraph (2) shall, subject to section 107— 

‘‘(A) file with the bankruptcy court, not later than 60 days after the end 

of every quarter, a report that shall be made available on the court’s public 

docket and with respect to such quarter— 

‘‘(i) describes each demand the trust received from, including the name 

and exposure history of, a claimant and the basis for any payment from the 

trust made to such claimant; and 

‘‘(ii) does not include any confidential medical record or the claimant’s 

full social security number; and 

‘‘(B) upon written request, and subject to payment (demanded at the option 

of the trust) for any reasonable cost incurred by the trust to comply with such 

request, provide in a timely manner any information related to payment from, 

and demands for payment from, such trust, subject to appropriate protective orders, to any party to any action in law or equity if the subject of such action 

concerns liability for asbestos exposure.’’. 

SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

(a) EFFECTIVE DATE.—Except as provided in subsection (b), this Act and the 

amendments made by this Act shall take effect on the date of the enactment of this 

Act. 

(b) APPLICATION OF AMENDMENTS.—The amendments made by this Act shall 

apply with respect to cases commenced under title 11 of the United States Code before, on, or after the date of the enactment of this Act. 

Amend the title so as to read: 

A bill to amend title 11 of the United States Code to require the public disclosure by trusts established under section 524(g) of such title, of quarterly reports 

that contain detailed information regarding the receipt and disposition of claims for 

injuries based on exposure to asbestos; and for other purposes. 

Purpose and Summary 

H.R. 4369, the Furthering Asbestos Claim Transparency (FACT) 

Act of 2012, adds a paragraph to subsection (g) of section 524 of 

the Bankruptcy Code, 11 U.S.C. §§ 101 et seq., to require a trust 

established pursuant to that subsection to file, each quarter, a public report with the bankruptcy court listing the name and exposure 

history (viz. exposure to asbestos) of those who have filed a claim 

with such trust.1 It further requires each such trust to provide, 

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

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3MANHATTAN INSTITUTE, A REPORT ON THE ASBESTOS LITIGATION INDUSTRY, 4 (2008), available at http://www.triallawyersinc.com/pdfs/TLI-ASBESTOS.pdf (last visited Aug. 1, 2012). 4 Id. (‘‘The asbestos industry in the United States grew astronomically in the twentieth century: asbestos consumption went from only 956 metric tons in 1890 to a peak of 803,000 tons 

in 1973.’’). 5STEPHEN J. CARROLL ET AL., ASBESTOS LITIGATION, xvii (2005). 6LLOYD DIXON ET AL., ASBESTOS BANKRUPTCY TRUSTS: AN OVERVIEW OF TRUST STRUCTURE

AND ACTIVITY WITH DETAILED REPORTS ON THE LARGEST TRUSTS, xi (2010). 

Background and Need for Legislation 

A. ASBESTOS AND ASBESTOS-RELATED HEALTH CONDITIONS

Asbestos is the name given to a number of naturally occurring 

fibrous minerals that were widely used in the United States in industrial products throughout much of the 20th Century. Humans 

have used asbestos for centuries. The word ‘‘asbestos’’ comes from 

the Greek word for ‘‘indestructible,’’ and the ancient world used asbestos for everything from fabrics to lamp wicks.3 In the 1860’s, it 

was first commercially used in the United States as insulation. Because asbestos is strong, durable, and has excellent fire-retardant 

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

miracle fiber, versatile enough to weave into textiles, integrate into 

insulation, line the brakes of automobiles, and construct flame-retardant hulls for naval and merchant ships. Asbestos consumption 

in the United States peaked in 1973 and then dropped dramatically 

over the next three decades.4

Despite the usefulness of asbestos in industrial products, asbestos fibers are toxic when inhaled. Inhalation of asbestos fibers has 

been linked to a number of injuries, including mesothelioma, lung 

cancer, asbestosis, and pleural abnormalities. Mesothelioma is a 

deadly cancer of the lining of the chest or abdomen for which asbestos is the only known cause. Lung cancer is the other frequently 

claimed malignant disease that can be caused by asbestos, although some other forms of cancer may be related to asbestos exposure. Asbestosis, a chronic lung disease resulting from inhalation 

of asbestos fibers, can be debilitating and even fatal. Pleural 

plaques, pleural thickening, and pleural effusion are abnormalities 

of the pleura, the membrane that lines the inside of the chest wall 

and covers the outside of the lung. 

B. ASBESTOS LITIGATION

Asbestos litigation is the longest-running mass tort litigation in 

the United States.5 Personal injury litigation related to asbestos 

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

with hundreds of thousands of claims filed and billions of dollars 

in compensation paid.’’ 6 Asbestos litigation’s distinguishing feature 

has been its tendency to reshape itself over time. The focus of the 

litigation has shifted from Federal to state courts, and now, increasingly, to asbestos bankruptcy trusts. 

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

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

product manufacturers’ failure to protect workers against exposure 

and failure to warn their workers to take adequate precautions 

against exposure. Over time, asbestos litigation ‘‘has been shaped 

by changes in substantive and procedural law, the rise of a sophisticated and well-capitalized plaintiff bar, heightened media attenmstockstill on DSK4VPTVN1PROD with HEARINGS

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7 CARROLL, supra note 5, at xvii. 8 Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 1973). 9 Id. at 1109. 10 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997). 11David C. Landin et al., Lessons Learned from the Front Lines: A Trial Court Checklist for 

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

(internal citations omitted). 12The Fairness in Asbestos Compensation Act of 1999: Hearing on H.R. 1283, Before the H. 

Comm. on the Judiciary, 106th Cong. 67 (1999) (statement of Christopher Edley, Jr., Professor, 

Harvard Law School). 13 Carroll et al., supra note 5, at 71. 14 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, ASBESTOS INJURY COMPENSATION: THE ROLE

AND ADMINISTRATION OF ASBESTOS TRUSTS, GAO-11-819 (2011), at 2. 

tion to litigation in general and toxic tort litigation in particular, 

and the information science revolution.’’ 7

The U.S. Court of Appeals for the Fifth Circuit upheld the first 

successful asbestos liability suit in 1973.8 A worker sued the manufacturers of asbestos-containing products on a theory of product liability (a strict liability tort); the defendants’ affirmative defense 

that their products contained ample warning about the dangers of 

using the product proved insufficient.9 Prior to the Fifth Circuit’s 

decision, employees exposed to asbestos had recourse only to workers’ compensation claims to recover for their asbestos-related injuries. After the Fifth Circuit’s decision, the volume of asbestos litigation exploded—so much so that in 1990, the Chief Justice of the 

United States Supreme Court appointed the Ad Hoc Committee on 

Asbestos Litigation to address what the Court later referred to as 

the ‘‘asbestos-litigation crisis.’’ 10

The crisis has not abated. By the early 2000’s, ‘‘the overwhelming 

majority of claims—up to 90 percent—were filed on behalf of plaintiffs who were ‘completely asymptomatic.’ These claimants may 

have had some marker of exposure, such as changes in the pleural 

membrane of their lungs, but ‘are not now and never will be afflicted by disease.’ ’’ 11 Conversely, when asbestos litigation first 

arose in the 1960’s, most claimants were ‘‘workers suffering from 

grave and crippling maladies.’’ 12

Thus, the hallmark of the litigation has been the mass filing of 

lawsuits by plaintiffs with little or no physical impairment and 

claims made by plaintiffs without reliable proof of causation, both 

of which have helped force scores of defendant companies into 

bankruptcy and have threatened payments to the truly sick. A 

2005 RAND report estimated that, through 2002, approximately 

730,000 people had filed asbestos claims against at least 8,400 corporate defendants.13 These defendants included miners and manufacturers of asbestos or asbestos-containing products, purchasers of 

asbestos products, insurers, and businesses that used asbestos or 

asbestos-containing products in the course of their industry. 

Awards, legal fees, and other claim-related costs have risen into 

the tens of billions of dollars. To date, asbestos-related liabilities 

and litigation have driven approximately 100 companies into bankruptcy.14

Inundated with cases involving thousands of plaintiffs and dozens of defendants, courts had great difficulty in resolving asbestos 

cases. Several factors contributed to the courts’ difficulty in resolving the litigation: ‘‘the widespread use of asbestos, which exposed 

as many as 27.5 million Americans to asbestos in the course of 

their employment; a long latency period for asbestos diseases; a 

segment of the plaintiffs’ bar that sought to capitalize on the asbesmstockstill on DSK4VPTVN1PROD with HEARINGS

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15Dixon et al, supra note 6, at 2. 16See e.g. Asbestos Compensation Fairness Act, H.R. 1957, 109th Cong. (2005); Fairness in 

Asbestos Injury Resolution (FAIR) Act, S. 852, 109th Cong. (2005). 17 Id. 18 Elise Gelinas, Asbestos Fraud Should Lead to Fairness: Why Congress Should Enact the 

Fairness in Asbestos Injury Resolutions Act, 69 MD. L. REV. 162 (2009). 19 Id. 20Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 723 (D. Del. 2005). 21Lester Brickman, The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?, 61 SMU L. REV. 1221, 1233 (2008). 22Griffin B. Bell, Asbestos & The Sleeping Constitution, 31 Pepp. L. Rev. 1, 5 (2003). 23Pamela Sherrid, ‘‘Looking for Some Million Dollar Lungs,’’ U.S. News & World Rep., Dec. 

17, 2001, at 36. 24See Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation: The Disconnect 

Between Scholarship and Reality, 31 PEPP. L. REV. 33, 69 (2003). 

tos litigation boom by seeking settlements for plaintiffs with no 

known diseases; and the failure of global settlements through classaction lawsuits.’’ 15

Various Federal reform efforts have been offered in order to better manage the resolution of the massive number of asbestos claims 

and to provide compensation for asbestos claimants.16 But 

‘‘[d]espite the judicial remedies, legislative wrangling, and more 

than 40 years of lawsuits, asbestos claims continue to this day.’’ 17

C. ASBESTOS LITIGATION FRAUD

Courts, overwhelmed by asbestos claims developed special asbestos rules to facilitate the management of the asbestos claims on 

their dockets. These special rules, however, ‘‘tipped the scale of justice in favor of plaintiffs by compelling defendant companies to settle mass quantities of claims at one time.’’ 18 With the scale tipped 

in their favor ‘‘plaintiffs’ firms responded opportunistically to their 

success by developing screening measures to recruit hundreds of 

thousands of claimants, asbestos litigation reached crisis status.’’ 19

Asbestos lawyers hired screening companies to recruit potential 

claimants who, although not currently suffering from asbestos-related injuries, exhibited symptoms of exposure. ‘‘Labor unions, attorneys, and other persons with suspect motives caused large numbers of people to undergo X-ray examinations (at no cost), thus triggering thousands of claims by persons who had never experienced 

adverse symptoms.’’ 20 These screening companies used mobile Xray vans to seek out potential clients in the parking lots of hotels 

and restaurants. The sole object of these screenings was to generate evidence—X-rays, pulmonary function tests, and medical reports—to support claims of asbestos-related injuries.21 As former 

United States Attorney General Griffin Bell has observed, ‘‘[t]here 

often is no medical purpose for these screenings and claimants receive no medical follow-up.’’ 22

These mass screening were wildly successful and generated massive numbers of claims for plaintiffs’ attorneys. The claimant recruiting process was described by U.S. News & World Report: ‘‘To 

unearth new clients for lawyers, screening firms advertise in towns 

with many aging industrial workers or park X-ray vans near union 

halls. To get a free X-ray, workers must often sign forms giving law 

firms 40 percent of any recovery. One solicitation reads: ‘Find out 

if YOU have MILLION DOLLAR LUNGS!’ ’’ 23 It is estimated that 

more than one million workers have undergone attorney-sponsored 

screenings.24 As one worker explained, ‘‘it’s better than the lottery. 

If they find anything, I get a few thousand dollars I didn’t have. 

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25 Andrew Schneider, ‘‘Asbestos Lawsuits Anger Critics,’’ St. Louis Post-Dispatch, Feb. 11, 

2003, at A1. 26Lester Brickman, Lawyers’ Ethics and Fiduciary Obligation in the Brave New World of Aggregative Litigation, 26 WM. & MARY ENVTL. L. & POL’Y REV. 243, 273 (2001). 27Mark A. Behrens and Phil Goldberg, The Asbestos Litigation Crisis: The Tide Appears to 

be Turning, 12 CONN. INS. L.J. 477, 480 (2006). 28 ABA COMM’N ON ASBESTOS LITIGATION, ABA REPORT TO THE HOUSE OF DELEGATES 8 

(2003). 29 Id. 30 Joseph N. Gitlin et al., Comparison of ‘B’ Readers’ Interpretations of Chest Radiographs for 

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

13 (2003) (quoting Lawrence Martin, M.D.). 32Owens Corning, 322 B.R. at 723. 33Lester Brickman & Harvey D. Shapiro, ‘‘Asbestos Kills—And More than Just People: Jobs, 

Ethics, and Elementary Justice,’’ Nat’l. Rev., Jan. 31, 2005. 

If they don’t find anything, I’ve just lost an afternoon.’’ 25 According 

to legal scholars, ‘‘without these claims, the ‘asbestos litigation crisis’ would never have arisen.’’ 26

An American Bar Association Commission on Asbestos Litigation 

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

for-profit screening companies whose sole purpose was to identify 

large numbers of people with minimal X-ray changes consistent 

with asbestos exposure.27 The Commission, with the help of the 

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

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

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

the aggregate by the litigation screening companies due to the volume of films read.’’ 28 The Commission also reported that litigation 

screening companies were finding X-ray evidence that was consistent with asbestos exposure at a ‘‘startlingly high’’ rate, often exceeding 50% and sometimes reaching 90%.29

Researchers at Johns Hopkins University compared the X-ray interpretations of B Readers employed by plaintiffs’ counsel with the 

subsequent interpretations of six independent B Readers who had 

no knowledge of the X-rays’ origins. The study found that, while B 

Readers hired by plaintiffs claimed asbestos-related lung abnormalities in almost 96% of the X-rays, the independent B Readers 

found abnormalities in less than 5% of the same X-rays—a difference the researchers said was ‘‘too great to be attributed to 

inter-observer variability.’’ 30

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

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

Dr. Martin has said, ‘‘the chest X-rays are not read blindly, but always with knowledge of some asbestos exposure and that the lawyer wants to file litigation on the worker’s behalf.’’ 31 In 2005, Senior U.S. District Court Judge John Fullam said that many B Readers hired by plaintiffs’ lawyers were ‘‘so biased that their readings 

were simply unreliable.’’ 32 As Dr. James Crapo, a leading medical 

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

being compensated ‘‘for illnesses that, according to the clear weight 

of medical evidence, either are not caused by asbestos or do not result in a significant impairment—i.e., are not generally regarded by 

the medical profession as an illness.’’ 33

Professor Lester Brickman, an expert on asbestos litigation, concluded that 

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34Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality, 31 PEPP. L. REV. at 33. 35 In re Silica Products Liability Litigation, 398 F.Supp.2d 563 (S.D. Tex. 2005). 36 Id. at 635. 37The Silicosis Story: Hearings Before the Subcomm. on Oversight and Investigations of the 

Committee on Energy and Comm., 109th Cong. (2006). 38 Adam Liptak, Defendants See a Case of Diagnosing for Dollars, N.Y. Times, October 1, 2007, 

available at http://www.nytimes.com/2007/10/01/us/01bar.html (last accessed Sep. 18, 2012) (‘‘A 

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

silicosis cases. . . .’’). 39See e.g., Ohio Rev. Code Ann. § 2307.91 et. seq. (enacted 2004), Tex. Civ. Prac. & Rem. 

§ 90.001 et. seq. (last amended 2007). 40 How Fraud and Abuse in the Asbestos Compensation System Affect Victims, Jobs, the Economy, and the Legal System: Hr’g Before the Subcomm. on the Constitution of the H. Comm. on 

the Judiciary, 112th Cong. 5–6 (2011) [hereinafter Constitution Subcommittee Hr’g] (testimony 

of Professor Lester Brickman). 41See Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 N.Y.U. ANN. SURV. AM. LAW

525, 593 (2007); Lester Brickman, On the Applicability of the Silica MDL Proceeding to Asbestos 

Litigation, 12 CONN. INS. L.J. 10 (2006); Lester Brickman, Ethical Issues in Asbestos Litigation, 

33 HOFSTRA L. REV. 833, 833–34 (2005). 42Kenneth M.Goldstein, Panel discussion at U.S. Chamber Institute for Legal Reform’s 12th 

Annual Legal Reform Summit (October 26, 2011) (associated slides available at http:// 

www.instituteforlegalreform.com/sites/default/files/LawyerslMasslTortlSolicitationlAdvertisinglOct2011.pdf). 43 Id. 44See New Media Strategies, The Plaintiffs’ Bar Goes Digital (January 2012), available at; 

http://www.instituteforlegalreform.com/doc/the-plaintiffs-bar-goes-digital-0 (last accessed Sep. 18, 

2012). 

Asbestos litigation has become a malignant enterprise 

which mostly consists of a massive client-recruitment effort that accounts for as much as 90 percent of all claims 

currently being generated, supported by baseless medical 

evidence which is not generated by good-faith medical 

practice, but rather is primarily a function of the compensation paid, and by claimant testimony scripted by lawyers to identify exposure to certain defendants’ products.34

Screening programs declined in prominence following a landmark 

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

plus page order detailing methods used to generate fraudulent asbestos and silica claims in 2005.35 In the wake of Judge Jack’s 

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

money,’’ 36 Congress convened hearings on fraud and abuse in asbestos litigation.37 A Federal grand jury was empanelled in the 

Southern District of New York.38

Many believed the decline of mass screenings and enactment of 

medical criteria statutes in major asbestos venue states marked 

the beginning of a new, fairer asbestos compensation system;39

however, the Committee has recently received testimony suggesting 

that screening programs are being used to generate asbestos trust 

claims.40

The asbestos bar is also using new techniques to recruit potential 

trust claimants. While screenings were often advertised in break 

rooms, in local papers, and on local broadcast stations,41 the modern asbestos plaintiffs’ bar spends billions of dollars on mass media 

advertisements designed to recruit potential asbestos tort plaintiffs 

and trust claimants.42 Experts estimate that asbestos plaintiffs’ 

firms spent over $950 million on television advertising in 2011.43

Trial lawyers’ ad campaigns extend beyond television, and experts 

estimate that the asbestos bar spends tens of millions each year on 

sophisticated online advertising campaigns.44 ‘‘Mesothelioma’’ has 

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45 Id. at 7 (‘‘Trial attorneys spend as much as $80 per click on mesothelioma-related search 

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

Google AdWords’’). 46See e.g. Weitz & Luxenberg P.C. Television Ad, http://www.youtube.com/watch?v= 

6yrieyZtfr4 (last visited September 18, 2012) (‘‘You are entitled to compensation even if you’ve 

been a smoker!’’). 47The David Law Firm—Lung Cancer, http://www.calldavid.com/lung-cancer.html (last visited 

Sept. 18, 2012). 48 Bankruptcy Reform Act of 1994, § 111, 103d Cong. (1994) (codified at 11 U.S.C. § 524). 49 11 U.S.C. 524(g)(2)(B). 50 Id. § 542(g)(2)(B)(ii)(V). 51See, e.g., HISTORY OF JOHNS MANVILLE TRUST, http://www.mantrust.org/history.htm (last 

visited September 18, 2012). 

become the single most expensive keyword on Google’s auctionstyle AdWords platform.45

Many asbestos firms’ advertisements are designed to attract the 

attention of unimpaired individuals, smokers stricken by lung cancer, and others whose claims would be difficult to pursue in the 

modern tort system.46 At least one firm advises lung cancer victims 

that billions of dollars have been set aside in ‘‘U.S. Compensation 

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

while making no mention of asbestos.47

D. ASBESTOS CLAIMS IN BANKRUPTCY

The accumulation of liability on the part of asbestos defendants 

throughout the 1980’s and early 1990’s, and the widespread use by 

those companies of chapter 11 bankruptcy to manage their liability, 

led Congress in 1994 to amend the Bankruptcy Code to include a 

section, 11 U.S.C. § 524(g), to provide for the resolution of asbestos 

liability claims against the debtor.48 Under that section, a debtor 

is permitted to create, in its plan of reorganization, a trust that is 

to be the exclusive source of post-confirmation compensation for the 

debtor’s future asbestos liability. If the trust meets certain prescribed requirements, the debtor, after its successful reorganization, is granted a channeling injunction that prohibits any asbestos 

plaintiff from suing the reorganized debtor for asbestos liability.49

The current requirements for obtaining a channeling injunction 

include, but are not limited to, the trust’s ability, at the time of 

confirmation, to prove to the court that 

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

numbers and value of present claims and future demands, 

or other comparable mechanisms, that provide reasonable 

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

position to pay, present claims and future demands that 

involve similar claims in substantially the same manner.50

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

a provision in its reorganization plan requiring it to file periodic 

disclosures with the court of the financial health of the asbestos liability trust.51 Missing from these disclosures, however, is any statutory requirement that the trust identify claimants who seek compensation from the trust, the nature of their alleged injury, and the 

amount the trust paid them. 

The trusts’ limited disclosures are a result of the structure of section 524(g), which grants considerable control over asbestos bankmstockstill on DSK4VPTVN1PROD with HEARINGS

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52See generally S. Todd Brown, Section 524(g) Without Compromise: Voting Rights and the 

Asbestos Bankruptcy Paradox, 2008 Colum. Bus. L. Rev. 841 (2008); see also RAND Corporation, 

Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity with Detailed Reports 

on the Largest Trusts, TR-872-ICJ (2010) at 43 (listing asbestos firms most frequently represented on TAC’s; Weitz and Luxenberg P.C. sits on TAC’s of 11 trusts that control, combined, 

approximately 74% of all asbestos trust assets). 53 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb). 54 In re Combustion Engineering, Inc., 391 F.3d 190, 234 (3d Cir. 2004) (‘‘[A] debtor must satisfy the prerequisites set forth in § 524(g) in addition to the standard plan confirmation requirements.’’). 55 11 U.S.C. § 1129(b)(1) (allowing confirmation of a plan over the objection of a class of creditors). 56 In re Congoleum Corp., 426 F.3d 675, 679 (3d Cir. 2005). 57Lester Brickman, Ethical Issues in Asbestos Litigation, 33 HOFSTRA L. REV. at 868–69 (discussing asbestos bar’s de facto control of bankruptcy process). 58 Brown, supra note 52, at 121. 59 11 U.S.C. § 1126(c) (‘‘A class of claims has accepted a plan if such plan has been accepted 

by creditors . . . that hold at least two-thirds in amount and more than one-half in number 

of the allowed claims of such class held by creditors. . . .’’). 60See Brown, supra note 52, at 150. (‘‘[A]n attorney can obtain a considerable negotiating position and sizeable fees by simply dumping their asbestos claim ‘‘inventory’’ on a debtor [with] 

little to no prospect of sanctions for filing even grossly fraudulent or, at best, wholly unsubstantiated claims.’’). 61 Id. 62 11 U.S.C. § 524(g)(2)(B)(ii)(V). 63Mark D. Plevin, Pre-Packaged Asbestos Bankruptcies, 44 S. TEX. L. REV. 883, 911–13 (2003). 

ruptcies and resulting asbestos trusts to plaintiffs’ attorneys.52 In 

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

only if three-quarters of current asbestos claimants support a proposed plan of reorganization.53 This requirement is distinct from 

the usual requirements for plan confirmation, which must also be 

satisfied.54 This is a departure from traditional bankruptcy procedures, which allow a plan to be confirmed over the objection of an 

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

supported by another impaired class.55

As courts have noted, ‘‘[a] unique feature of asbestos . . . litigation is the fact that a small group of law firms represents hundreds 

of thousands of plaintiffs.’’ 56 Consequently, single firms or small 

groups of firms may effectively block confirmation of a plan of reorganization.57 And as Professor S. Todd Brown has observed, ‘‘[asbestos firms] hold an unassailable veto power [that] leaves debtors 

and other parties in interest with a classic Hobson’s choice—reorganization on the [f]irms’ terms or no reorganization at all.’’ 58

Another unique feature of 524(g) is that it looks only to the number of current asbestos claimants who support a proposed plan of 

reorganization. In contrast, a majority of class members and members who represent a majority of the debtor’s liabilities to the class 

must both support plan confirmation in order to satisfy section 

1129(a)(8) in a traditional bankruptcy.59 Plaintiffs’ firms exploit 

section 524(g)’s express preference for claimant quantity over claim 

quality by asserting their large numbers of claims in bankruptcy 

regardless of their likely value or merit.60 Plaintiffs’ firms that 

have historically filed few tort cases against a debtor company 

sometimes file claims on behalf of their entire client list once bankruptcy has been declared.61

Despite Congress’ clear intent that asbestos trusts ‘‘pay[] present 

claims and future demands . . . in substantially the same manner,’’ 62 current claimants’ counsel used their leverage to secure 

‘‘two tiered’’ trusts solutions in a number of pre-2008 bankruptcies, 

63 with their clients’ claims directed to a limited-duration ‘‘pre-petition’’ trust that paid nearly full value and future claims channeled 

to a ‘‘post-petition’’ trust that paid only a fraction of full value and, 

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64 Id. 65See In re Congoleum Corp., 426 F.3d at 693 (criticizing pre-petition conduct of asbestos 

plaintiffs’ attorneys and debtor and noting that ‘‘leaving the procedures for allocation of resources predominantly in the hands of private, conflicting interests has led to problems of fair 

and equal resolution.’’). 66See Kirk T. Hartley, Pre-packaged plan of inequity: the financial abuse of future claimants 

in the T H Agriculture & Nutrition 524(g) asbestos bankruptcy, 11:4 MEALEY’S ASBESTOS BANKR. 

REP. 34 (Nov. 2011). 67 Id. 68 Id. 69 Id. at 39–40. 70 11 U.S.C. § 524(g)(4)(B)(i). 71Mark D. Plevin, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: 

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

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

[has been granted] a presumptive right to select . . . an FCR acceptable to the current claimants.’’). 72See Brown, supra note 52, at 158–59 (discussing parties’ incentive to propose weak representative). 73Lester Brickman, Ethical Issues in Asbestos Litigation, 33 HOFSTRA L. REV. at n. 144 (noting that Halliburton’s pre-petition futures representative was nearly $5 million and retained by 

the resulting trust). 74See Richard A. Nagareda, Mass Torts in a World of Settlement 177 (2007). 75Mark D. Plevin, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: 

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

62 N.Y.U. ANN. SURV. AM. L. at 292–93. 76See RAND CORPORATION, ASBESTOS BANKRUPTCY TRUSTS: AN OVERVIEW OF TRUST STRUCTURE AND ACTIVITY WITH DETAILED REPORTS ON THE LARGEST TRUSTS, TR-872-ICJ (2010) (FCR’s 

for largest trusts set forth in Appendix A). 77 Hartley, supra note 66, at 35 (discussing asbestos experience of THAN FCR and valuation 

experts). 

often, subjected claims to more rigorous criteria.64 Although it appears that courts now frown on such staggered trusts,65 inequality 

between current and future claimants persists. For example, the T 

H Agriculture & Nutrition (‘‘THAN’’) trust was created in November 2009 and promptly began distributing payments to ‘‘Qualified 

Asbestos [Personal Injury] Voting Claims’’ at full value.66 Consideration of claims filed by individuals who had not participated in the 

THAN bankruptcy was deferred.67 By the time the trust opened its doors to future claimants, in April 2011, over $325 million had 

been paid to the plan’s supporters and the trust lacked the funds 

needed to settle further claims at full value. 68 In less than eighteen months, the THAN trust was forced to decrease its payment 

percentage to a mere 30%.69

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

asbestos trust in the future.70 Courts generally appoint an individual suggested by the current claimants and the debtor company.71 Congress envisioned the appointment of an FCR as a due 

process protection for future claimants; however, the debtor company and the attorneys representing current claimants stand to 

benefit from the appointment of a weak or pliant representative.72

Moreover, FCR work can be extremely lucrative,73 and academic 

commentators have expressed concern that FCR’s are ‘‘punch-pulling’’ 74 in an effort to be seen as ‘‘reliable negotiating partners who 

[will] not ‘rock the boat’ ’’ 75 and increase the likelihood of future 

FCR appointments. Indeed, many representatives serve several 

trusts concurrently,76 and an FCR well versed in asbestos compensation matters supported the plan that resulted in the inequitable distribution of the THAN trust’s funds.77

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

the trustee to seek approval of a post-confirmation FCR and a commstockstill on DSK4VPTVN1PROD with HEARINGS

11 

78 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, supra note 14, at 22 (noting that TAC must 

consent to, among other things, modifications to a trust’s distribution plan or audit procedures). 79 RAND CORPORATION, supra note 76, at 14. 80 Id. at 32. 81 Constitution Subcommittee Hr’g, supra note 40, at 94–95, 100–101 (written testimony of 

James Stengel). 82Legal redlines of TDP’s amended after confirmation are on file with the Judiciary Committee. 83Furthering Asbestos Claim Transparency(FACT) Act of 2012: Hearing Before the Subcommittee on Courts, Commercial and Administrative Law of the Committee on the Judiciary, 

112th Cong. 207 (2012) [hereinafter CCAL Subcommittee Hr’g] (‘‘The Manville Personal Injury trust offer[ed] a data extract of claim level information . . . to anyone willing to pay a $10,000 

licensing fee. Prior to 2002 the data could be purchased outright. . . .’’). 84Manville Trust Single Use Data License Agreement, http://www.claimsres.com/documents/ 

MT/DataAgreement.pdf (last updated February, 2010) (last accessed Sep. 18, 2012). 85 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, supra note 14, at 23; RAND CORPORATION, 

supra note 76, at 45. 

mittee composed of current claimants’ representatives, most often 

characterized as a trust advisory committee (‘‘TAC’’), before amending the trust’s distribution plan or audit procedures.78 The asbestos 

bars’ pre-confirmation influence extends to operating trusts, as 

many TAC seats are held by plaintiffs’ attorneys who represented 

large numbers of claimants in bankruptcy proceedings.79

Members of the asbestos bar who represent current claimants in 

bankruptcies and on TAC’s have frequently benefitted from trusts’ 

lack of transparency. A majority of the trusts’ distribution plans affirmatively require claims to be treated as confidential settlement 

negotiations.80 As a result, tort litigants must engage in lengthy 

and expensive discovery disputes in order to gain access to basic 

information—including exposure information—routinely disclosed 

by defendant companies before they created trusts and exited the 

tort system.81 In many instances, trusts’ distribution procedures 

were amended to include confidentiality provisions after tort litigants demanded and received access to documents filed in support 

of individual trust claims.82

There was a time when asbestos trusts were willing to share 

claims information relatively freely. Prior to Judge Jack’s exposure 

of fraud in mass screened silica and asbestos cases, the Manville 

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

companies.83 The trust also licensed its data to occupational health 

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

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

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

data recipients from revealing information regarding an individual 

claimant, and is otherwise structured to ensure that any analysis 

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

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

claims.84

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

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

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

are unlikely to identify and decline payment of improper claims, including claims that are supported by ‘‘altered work histories’’ or allege inconsistent exposure patterns.85 The trusts, the plaintiffs’ 

bar, and the post-confirmation future claims representatives nonetheless contend that the trust system is free from fraud and that 

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86See e.g. CCAL Subcommittee Hr’g, supra note 83, at 224–36 (letter signed by six FCRs). 87 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, supra note 14, at 16. 88 CCAL Subcommittee Hr’g, supra note 83, at 25 (testimony of S. Todd Brown). 89See e.g., Nedra Pickler, ‘‘Ex-naval officer gets prison time for 9–11 fraud,’’ Associated Press 

(Dec. 12, 2011); DEEPWATER HORIZON (BP) OIL SPILL FRAUD, http://www.justice.gov/criminal/oilspill/(last accessed Sep. 18, 2012) (collecting cases involving fraud on the Gulf Coast Claims Facility). 90 CCAL Subcommittee Hr’g, supra note 83, at 25 (testimony of S. Todd Brown). 91 Kananian v. Lorillard Tobacco Co., No. CV 442750 (Ohio Ct. Com. Pl. Cuyahoga County 

2007). 92 Id. at 5, 9. 93 Id, at 6. 94 Constitution Subcommittee Hr’g, supra note 42, at 94–95, 103–105 (written testimony of 

James Stengel). 

more robust anti-fraud measures would be costly and reduce the 

funds available to fulfill the trusts’ core mission—claimant compensation.86

Although the eleven trusts interviewed by GAO in the course of 

its investigation reported that their audits have never identified an 

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

combined, have paid 3.3 million alleged asbestos victims nearly 

$17.5 billion since the Manville Trust was established.87 Fraud and 

abuse have been uncovered in virtually every compensation and relief program undertaken in modern America, whether privately 

funded or government sponsored.88 Fraudulent claims against the 

9/11 Victim’s Compensation Fund and BP’s gulf oil fund, for example, were detected and prosecuted.89 As Professor Brown has observed, asbestos trusts are not ‘‘magically different’’ from other 

compensation trusts; that asbestos trusts’ audits have uncovered no 

fraud whatsoever suggests that their internal controls are lacking.90

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

quality of medical evidence and the consistency of the allegations 

made by alleged asbestos victims are sometimes tested in the tort 

system. Although the trusts’ confidentiality provisions and the generally combative nature of asbestos litigation have combined to 

limit the disclosure of trust information, defendants have successfully identified a number of cases of inconsistent and potentially 

fraudulent claiming. 

In the best known example of fraud uncovered through the tort 

system, Kananian v. Lorillard Tobacco, a tort plaintiff claimed that 

he developed mesothelioma solely from smoking asbestos-filtered 

cigarettes and that he only passed through a naval ship yard while 

being deployed elsewhere by the navy.91 He simultaneously filed 

claims against multiple asbestos trusts alleging exposure to marine 

products while working as a ‘‘shipyard laborer.’’ 92 Despite the inconsistency of his tort and trust claims, which the court described 

as a ‘‘fiction,’’ Kananian received substantial payments from asbestos trusts.93

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

inconsistent claiming in other jurisdictions, including Maryland 

cases in which inconsistent exposure information was presented in 

the tort system and trust systems in an attempt to circumvent 

state-law caps on damages.94 Further examples of inconstant 

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95 CCAL Subcommittee Hr’g, supra note 83, at 9 (testimony of Leigh Ann Schell); e.g., Montgomery v. Foster Wheeler, Case No. 09C-11-215 ASB, Pretrial Hr’g Trans. (Del. Super. Ct. Nov. 

7, 2011). 96 CCAL Subcommittee Hr’g, supra note 83, at 16 (written statement of Leigh Ann Schell). 97Montgomery, supra note 95, at 7–8. 98 Id. at 25. 99Letter dated November 22, 2010, from Lisa A. Rickard, President, U.S. Chamber Institute 

for Legal Reform, to Peter G. McCabe, Secretary, Committee on Rules of Practice and Procedure, 

Judicial Conference of the United States (on file with Committee). 

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

Oklahoma, and Virginia.95

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

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

smoked and included detailed asbestos exposure information. When 

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

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

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

father about his exposures to asbestos.96

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

attorney disclosed a number of trust claims shortly before trial 

even though he had repeatedly represented to the defendant and 

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

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

behavior’’ and lamented that ‘‘it happens a lot.’’ 97 The court further 

observed that: 

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

whole litigation is based on who was responsible. Nobody 

can say which fibers did what. But the most important 

thing is that a plaintiff disclose what they think caused 

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

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

don’t even let the defendant know about that, that’s so dishonest. It is just so dishonest.98

The lack of meaningfully transparent trust disclosures, combined 

with published research, court decisions suggesting fraud on behalf 

of claimants/plaintiffs who sometimes use two completely different 

fact patterns to support claims against asbestos trusts and other 

related solvent defendants in the state tort system, and the prevalence of attorney advertising designed to cultivate trust claims 

raises the question of whether Congress should require 524(g) asbestos trusts to disclose information that, when analyzed with 

other data, would facilitate analysis to determine the extent and 

cost of any fraud between the two systems. Similarly, some lawmakers question whether asbestos trusts ought to be required to 

produce third-party discovery under the Federal Rules of Civil Procedure when a defendant in the state tort system seeks information 

that is probative of its civil liability. 

In March 2011, the Subcommittee on Business Issues of the Advisory Committee on Bankruptcy Rules considered a proposal to 

add a new Federal Rule of Bankruptcy Procedure to require 542(g) 

trusts to disclose the particulars of each demand for payment received by a trust during the preceding quarter.99 That subcommittee, in a memo to the Advisory Committee, examined the 

merits and demerits of the proposal, but ultimately concluded that 

if 

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100Memorandum dated March 10, 2011, from Subcommittee on Business Issues to Advisory 

Committee on Bankruptcy Rules (on file with Committee). 101Memorandum dated September 19, 2011, from Subcommittee on Business Issues to Advisory Committee on Bankruptcy Rules (on file with Committee). 102See generally Constitution Subcommittee Hr’g, supra note 40. 103See CCAL Subcommittee Hr’g, supra note 83, at 85–89 (memorandum regarding Congress’ 

power to enact legal reform legislation prepared by former Solicitor General Paul D. Clement). 104See generally CCAL Subcommittee Hr’g, supra note 83. 105See id. (testimonies of Leigh Ann Schell, Prof. S. Todd Brown, and Marc Scarcella). 106 Id. at 81. 

it is determined that the trusts should be providing more 

information than they currently are, the Subcommittee’s 

preliminary thought was that this may be a matter more 

appropriately addressed by a legislative solutions—such as 

an amendment of § 524(g) that imposes additional requirements on trusts created under that provision.100

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

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

which ultimately supported the proposal, subject to a few qualifications. Others who submitted comments, including the future claims 

representatives, opposed the proposal.101

E. THE FURTHERING ASBESTOS CLAIMS TRANSPARENCY (FACT) ACT

OF 2012

The Subcommittee on the Constitution of the House Judiciary 

Committee held a hearing entitled ‘‘How Fraud and Abuse in the 

Asbestos Compensation System Affects Victims, Jobs, the Economy, 

and the Legal System.’’ 102 In light of the testimony received at 

that hearing, the study of the Advisory Committee on Bankruptcy 

Rules, and the experience of debtors who have used the Bankruptcy Code to manage their future asbestos liability and their attorneys, Rep. Quayle (R-AZ), together with Reps. Matheson (D-UT) 

and Ross (R-FL), introduced H.R. 4369, the Furthering Asbestos 

Claim Transparency (FACT) Act of 2012, on April 17, 2012. 

The bill amends section 524(g) of the Bankruptcy Code to require 

asbestos trusts to file quarterly reports with the court and the 

United States Trustee for the respective region that detail claimants’ names, the amount paid to each claimant, and the basis for 

such payment. The bill specifically provides that sensitive identifying information, such as Social Security numbers and confidential 

medical records, should not be published. The FACT Act also requires trusts to provide information requested by parties to traditional asbestos tort litigation. The reporting and information sharing requirements are fall squarely within Congress’ bankruptcy 

power.103

The Subcommittee on Courts, Commercial and Administrative 

Law of the House Judiciary Committee held a hearing on the 

FACT Act on May 10, 2012.104 Three of the four witnesses testified 

that transparency was sorely needed in the 524(g) asbestos trust 

compensation system.105 The fourth witness, Mr. Siegel, conceded 

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

of a claim with or receipt of compensation from a trust.106 He did 

argue that the FACT Act would impose ‘‘onerous’’ new administrative burdens on the trusts—a hypothesis controverted by Mr. 

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107 Id. 

Scarcella’s experience working on claims processing department at 

one of the largest trusts.107

Hearings 

On May 10, 2012, the Subcommittee on Courts, Commercial and 

Administrative Law held a legislative hearing on H.R. 4369 and 

heard testimony from: Leigh Ann Schell, Esq., a partner at Kuchler 

Polk Schell Weiner & Richeson, LLC; S. Todd Brown, Professor of 

Law, SUNY Buffalo Law School; Charles S. Siegel, Partner, Waters 

& Kraus LLP; and Marc Scarcella of Bates White Consulting. 

Committee Consideration 

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

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

amendment by a rollcall vote of 15 ayes to 14 noes, a quorum being 

present. 

Committee Votes 

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

House of Representatives, the Committee advises that the following 

recorded votes were taken during the Committee’s consideration of 

H.R. 4369. 

1. Amendment offered by Mr. Johnson to limit the terms upon 

which a trust may disclose information. Not agreed to by vote of 

10 ayes to 12 noes. 

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan ..............................................................................................

Mr. Poe ...................................................................................................

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin ..............................................................................................

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams ............................................................................................. X 

Mr. Quayle .............................................................................................. X 

mstockstill on DSK4VPTVN1PROD with HEARINGS

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ROLLCALL NO. 1—Continued 

Ayes Nays Present 

Mr. Amodei ............................................................................................. X 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ...................................................................................... X 

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch .............................................................................................

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 10 12 

2. Amendment offered by Mr. Conyers to limit the quarterly publication of information to statistics on demands received and claims 

paid by the trust. Not agreed to by vote of 10 ayes to 11 noes. 

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan ..............................................................................................

Mr. Poe ...................................................................................................

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin ..............................................................................................

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei ............................................................................................. X 

mstockstill on DSK4VPTVN1PROD with HEARINGS

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ROLLCALL NO. 2—Continued 

Ayes Nays Present 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 10 11 

3. Amendment offered by Mr. Scott to treat certain medical information in the quarterly reports as protected health information 

under the Health Insurance Portability and Accountability Act. Not 

agreed to by vote of 10 ayes to 11 noes. 

ROLLCALL NO. 3 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan ..............................................................................................

Mr. Poe ...................................................................................................

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin ..............................................................................................

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei ............................................................................................. X 

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ROLLCALL NO. 3—Continued 

Ayes Nays Present 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 10 11 

4. Amendment offered by Mr. Watt to require a GAO study on 

fraudulent claims made against asbestos trusts. Not agreed to by 

vote of 10 ayes to 13 noes. 

ROLLCALL NO. 4 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ........................................................................................... X 

Mr. Jordan ..............................................................................................

Mr. Poe ................................................................................................... X 

Mr. Chaffetz ...........................................................................................

Mr. Griffin .............................................................................................. X 

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei ............................................................................................. X 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

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ROLLCALL NO. 4—Continued 

Ayes Nays Present 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 10 13 

5. Amendment offered by Ms. Jackson Lee to require the filing 

of certain certifications concerning claims against a third party before it may seek discovery from asbestos trust. Not agreed to by 

vote of 10 ayes to 11 noes. 

ROLLCALL NO. 5 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks ..............................................................................................

Mr. Gohmert ........................................................................................... X 

Mr. Jordan ..............................................................................................

Mr. Poe ................................................................................................... X 

Mr. Chaffetz ...........................................................................................

Mr. Griffin .............................................................................................. X 

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei .............................................................................................

Mr. Conyers, Jr., Ranking Member ......................................................... X 

mstockstill on DSK4VPTVN1PROD with HEARINGS

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ROLLCALL NO. 5—Continued 

Ayes Nays Present 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 10 11 

6. Amendment offered by Ms. Jackson Lee to require the filing 

of certain certifications concerning asbestos-containing products before a third party may seek discovery from asbestos trust. Not 

agreed to by vote of 8 ayes to 14 noes. 

ROLLCALL NO. 6 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ........................................................................................... X 

Mr. Jordan ..............................................................................................

Mr. Poe ................................................................................................... X 

Mr. Chaffetz ...........................................................................................

Mr. Griffin .............................................................................................. X 

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei .............................................................................................

Mr. Conyers, Jr., Ranking Member ......................................................... X 

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ROLLCALL NO. 6—Continued 

Ayes Nays Present 

Mr. Berman ............................................................................................

Mr. Nadler ..............................................................................................

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 8 14 

7. Amendment offered by Mr. Cohen to except from quarterly reporting trusts that already have an internal audit mechanism in 

place. Not agreed to by vote of 11 ayes to 11 noes. 

ROLLCALL NO. 7 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................ X 

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King ................................................................................................. X 

Mr. Franks .............................................................................................. X 

Mr. Gohmert ........................................................................................... X 

Mr. Jordan ..............................................................................................

Mr. Poe ...................................................................................................

Mr. Chaffetz ...........................................................................................

Mr. Griffin .............................................................................................. X 

Mr. Marino .............................................................................................. X 

Mr. Gowdy .............................................................................................. X 

Mr. Ross .................................................................................................

Ms. Adams .............................................................................................

Mr. Quayle .............................................................................................. X 

Mr. Amodei .............................................................................................

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

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22 

ROLLCALL NO. 7—Continued 

Ayes Nays Present 

Mr. Nadler .............................................................................................. X 

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis .................................................................................................

Total ..................................................................................... 11 11 

8. Amendment offered by Mr. Nadler to limit third party discovery to those parties who disclose information pertaining to the 

public safety or health to a law enforcement agency. Not agreed to 

by vote of 7 ayes to 10 noes. 

ROLLCALL NO. 8 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................

Mr. Chabot .............................................................................................

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King .................................................................................................

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan .............................................................................................. X 

Mr. Poe ................................................................................................... X 

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin ..............................................................................................

Mr. Marino ..............................................................................................

Mr. Gowdy ..............................................................................................

Mr. Ross ................................................................................................. X 

Ms. Adams ............................................................................................. X 

Mr. Quayle .............................................................................................. X 

Mr. Amodei .............................................................................................

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

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23 

ROLLCALL NO. 8—Continued 

Ayes Nays Present 

Mr. Nadler .............................................................................................. X 

Mr. Scott ................................................................................................ X 

Mr. Watt .................................................................................................

Ms. Lofgren ............................................................................................

Ms. Jackson Lee .....................................................................................

Ms. Waters .............................................................................................

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ...........................................................................................

Mr. Polis ................................................................................................. X 

Total ..................................................................................... 7 10 

9. Amendment offered by Mr. Polis to limit third party discovery 

only to to contexts in which applicable nonbankruptcy discovery 

law is insufficient to produce disclosure. Not agreed to by vote of 

11 ayes to 12 noes. 

ROLLCALL NO. 9 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte .........................................................................................

Mr. Lungren ............................................................................................

Mr. Chabot ............................................................................................. X 

Mr. Issa ..................................................................................................

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King .................................................................................................

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan .............................................................................................. X 

Mr. Poe ...................................................................................................

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin ..............................................................................................

Mr. Marino ..............................................................................................

Mr. Gowdy .............................................................................................. X 

Mr. Ross ................................................................................................. X 

Ms. Adams ............................................................................................. X 

Mr. Quayle .............................................................................................. X 

Mr. Amodei ............................................................................................. X 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................

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24 

ROLLCALL NO. 9—Continued 

Ayes Nays Present 

Mr. Nadler .............................................................................................. X 

Mr. Scott ................................................................................................ X 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu ..................................................................................................

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ...........................................................................................

Mr. Polis ................................................................................................. X 

Total ..................................................................................... 11 12 

10. Motion to report H.R. 4369, as amended, favorable to the 

House of Representatives. Agreed to by vote of 15 ayes to 14 noes. 

ROLLCALL NO. 10 

Ayes Nays Present 

Mr. Smith, Chairman ............................................................................. X 

Mr. Sensenbrenner, Jr. ...........................................................................

Mr. Coble ................................................................................................

Mr. Gallegly ............................................................................................ X 

Mr. Goodlatte ......................................................................................... X 

Mr. Lungren ............................................................................................

Mr. Chabot ............................................................................................. X 

Mr. Issa .................................................................................................. X 

Mr. Pence ...............................................................................................

Mr. Forbes .............................................................................................. X 

Mr. King .................................................................................................

Mr. Franks .............................................................................................. X 

Mr. Gohmert ...........................................................................................

Mr. Jordan .............................................................................................. X 

Mr. Poe ...................................................................................................

Mr. Chaffetz ........................................................................................... X 

Mr. Griffin .............................................................................................. X 

Mr. Marino ..............................................................................................

Mr. Gowdy .............................................................................................. X 

Mr. Ross ................................................................................................. X 

Ms. Adams ............................................................................................. X 

Mr. Quayle .............................................................................................. X 

Mr. Amodei ............................................................................................. X 

Mr. Conyers, Jr., Ranking Member ......................................................... X 

Mr. Berman ............................................................................................ X 

Mr. Nadler .............................................................................................. X 

Mr. Scott ................................................................................................ X 

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25 

ROLLCALL NO. 10—Continued 

Ayes Nays Present 

Mr. Watt ................................................................................................. X 

Ms. Lofgren ............................................................................................

Ms. Jackson Lee ..................................................................................... X 

Ms. Waters ............................................................................................. X 

Mr. Cohen ............................................................................................... X 

Mr. Johnson, Jr. ......................................................................................

Mr. Pierluisi ............................................................................................ X 

Mr. Quigley ............................................................................................. X 

Ms. Chu .................................................................................................. X 

Mr. Deutch ............................................................................................. X 

Ms. Sa ́ nchez ........................................................................................... X 

Mr. Polis ................................................................................................. X 

Total ..................................................................................... 15 14 

Committee Oversight Findings 

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

House of Representatives, the Committee advises that the findings 

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

New Budget Authority and Tax Expenditures 

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

budgetary authority or increased tax expenditures. 

Congressional Budget Office Cost Estimate 

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

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

the bill, H.R. 4369, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 2, 2012. 

Hon. LAMAR SMITH, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2012.’’ 

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26 

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

to provide them. The CBO staff contact is Martin von Gnechten, 

who can be reached at 226–2860. 

Sincerely, 

DOUGLAS W. ELMENDORF, DIRECTOR. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 4369—Furthering Asbestos Claim Transparency (FACT) 

Act of 2012. 

As ordered reported by the House Committee on the Judiciary 

on August 2, 2012. 

H.R. 4369 would require trusts set up through a Chapter 11 

bankruptcy reorganization caused by asbestos liabilities to submit 

quarterly reports to the bankruptcy court on damage claims and 

payments. Based on information provided by the Administrative 

Office of the U.S. Courts (AOUSC), CBO estimates that implementing H.R. 4369 would have no significant impact on the Federal 

budget because the AOUSC would incur only minor costs to make 

that information publicly available. Enacting H.R. 4369 would not 

affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply. 

H.R. 4369 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

H.R. 4369 would impose private-sector mandates as defined in 

UMRA by requiring asbestos trusts to submit quarterly reports. Information from the Government Accountability Office and the 

RAND Corporation indicates that about 60 asbestos trusts existed 

in 2011. Based on that information, CBO expects that the cost to 

comply with the reporting requirements in the bill would fall well 

below the annual threshold established in UMRA for private-sector 

mandates ($146 million in 2012, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Martin von 

Gnechten (for Federal costs) and Paige Piper/Bach (for the impact 

on the private sector). The estimate was approved by Theresa 

Gullo, Deputy Assistant Director for Budget Analysis. 

Performance Goals and Objectives 

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

of the Rules of the House of Representatives, H.R. 4369 amends 

title 11, United States Code, to require the publication of certain 

data by trusts created in a chapter 11 plan of reorganization pursuant to section 524 of that title. 

Advisory on Earmarks 

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

of Representatives, H.R. 4369 does not contain any congressional 

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27 

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

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

Section-by-Section Analysis 

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

as the ‘‘Furthering Asbestos Claim Transparency Act of 2012,’’ or 

‘‘FACT Act of 2012.’’ 

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

Code a requirement that asbestos liability trusts publish quarterly 

public reports identifying claimants, amounts paid, and basis for 

paying claims on the court’s public docket. Further provides that 

trusts must comply with third-party discovery demands subject to 

third-party’s payment of reasonable discovery costs. 

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

amendments made by the act apply retroactively and prospectively. 

Changes in Existing Law Made by the Bill, as Reported 

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

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

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman): 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

* * * * * * * 

SUBCHAPTER II—DEBTOR’S DUTIES AND BENEFITS 

* * * * * * * 

§ 524. Effect of discharge 

(a) * * * 

* * * * * * * 

(g)(1) * * * 

* * * * * * * 

(8) A trust described in paragraph (2) shall, subject to section 

107— 

(A) file with the bankruptcy court, not later than 60 days 

after the end of every quarter, a report that shall be made 

available on the court’s public docket and with respect to such 

quarter— 

(i) describes each demand the trust received from, including the name and exposure history of, a claimant and 

the basis for any payment from the trust made to such 

claimant; and 

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28 

(ii) does not include any confidential medical record or 

the claimant’s full social security number; and 

(B) upon written request, and subject to payment (demanded at the option of the trust) for any reasonable cost incurred by the trust to comply with such request, provide in a 

timely manner any information related to payment from, and 

demands for payment from, such trust, subject to appropriate 

protective orders, to any party to any action in law or equity 

if the subject of such action concerns liability for asbestos exposure. 

* * * * * * * 

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(29) 

1Furthering Asbestos Claims Transparency Act: Hearing on H.R. 4369 Before the Subcomm. 

on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary, 112th Cong. (2012) 

(testimony of Charles S. Siegel, Waters & Kraus LLP) 2 11 U.S.C. § 524(g)(2)(B)(i)(I) (2012). 

3Letter from Linda Reinstein, President & Co-Founder, Asbestos Disease Awareness Organization, to Representative Lamar Smith, Chair, & Representative John Conyers, Jr., Ranking 

Member, H. Comm. on the Judiciary (June 5, 2012) (on file with H. Comm. on the Judiciary 

Democratic staff). 4Letter from Heather B. White, Chief of Staff & General Counsel, Environmental Working 

Group, to Representative Lamar Smith, Chair, & Representative John Conyers, Jr., Ranking 

Member, H. Comm. on the Judiciary (June 4, 2012) (on file with H. Comm. on the Judiciary 

Democratic staff). 5Letter from Joanne Doroshow, Executive Director, Center for Justice & Democracy, to Representative Lamar Smith, Chair, & Representative John Conyers, Jr., Ranking Member, H. 

Continued 

Dissenting Views 

INTRODUCTION

H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2012,’’ as amended, is problematic because it would give asbestos defendants ‘‘new rights and advantages to be used against 

asbestos victims in state court’’ and it would ‘‘add new burdens’’ to 

asbestos bankruptcy trusts that would cripple ‘‘their ability to operate and pay claims.’’ 1 Congress established asbestos trusts under 

the Bankruptcy Code to pay the claims of asbestos claimants 

through a court-authorized process that permits these trusts to assume the liabilities of an entity that is ‘‘a defendant in personal injury, wrongful death, or property-damage actions seeking recovery 

for damages allegedly caused by the presence of, or exposure to, asbestos or other asbestos-containing products.’’ 2 H.R. 4369 inteferes 

with this longstanding process in two ways. First, the trust would 

have to file with the bankruptcy court publicly available quarterly 

reports disclosing personal information about asbestos victims who 

seek payment from these trusts, including their names and exposure histories. Second, the trust would have to provide any information related to payment from and demands for payment from 

such trust to any party to any action in law or equity if such action 

concerns liability for asbestos exposure. 

H.R. 4369 is troubling because: (1) its reporting and disclosure 

requirements are an assault against asbestos victims’ privacy interests; (2) it is fundamentally inequitable in that it requires disclosure by the trusts, but does not require solvent defendant companies to disclose their confidential settlement agreements; (3) it is 

not necessary given the absence of any evidence of systemic fraud 

with asbestos trusts; (4) it is nothing more than an end run by asbestos defendants around the discovery process available under 

non-bankruptcy law; and (5) it will divert critical funds and further 

decrease compensation to asbestos victims by forcing bankruptcy 

trusts to prepare burdensome reports. In light of these concerns, 

the Asbestos Disease Awareness Organization,3 the Environmental 

Working Group,4 the Center for Justice and Democracy,5 and varmstockstill on DSK4VPTVN1PROD with HEARINGS

30 

Comm. on the Judiciary (June 5, 2012) (on file with H. Comm. on the Judiciary Democratic 

staff). 6See, e.g., Letter from Douglas A. Campbell, counsel for various asbestos settlement trusts, 

to Representative Lamar Smith, Chair, H. Comm. on the Judiciary, et al. (June 5, 2012) (signed 

by six future claims representatives) (on file with H. Comm. on the Judiciary Democratic staff); 

Letter from Michael J. Crames, Future Claims Representative for Owens Corning/Fibreboard 

Asbestos Personal Injury Trust, et al. to Representative Lamar Smith, Chair, H. Comm. on the 

Judiciary, et al. (May 9, 2012) (signed by six future claims representatives) (on file with H. 

Comm. on the Judiciary Democratic staff). 7 Unofficial Tr. of Markup of H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2012,’’ by the H. Comm. on the Judiciary, 112th Cong. 40–41 (June 9, 2012) [hereinafter 

June 8 Markup Transcript]. 8 11 U.S.C. § 524(g) (2012). 

ious legal representatives for future asbestos personal injury claimants with respect to asbestos bankruptcy trusts 6 all oppose H.R. 

4369. 

For these reasons and those described below, we respectfully dissent and urge our colleagues to reject this seriously flawed bill. 

DESCRIPTION AND BACKGROUND

Under the guise of promoting transparency with respect to 

claims made against trusts established under the Bankruptcy Code 

to compensate asbestos victims, H.R. 4369 imposes burdensome reporting and disclosure requirements on these trusts. Specifically, 

the bill would require a trust to submit quarterly reports to the 

bankruptcy court, which would be posted on the court’s public case 

docket, and to respond to virtually unlimited discovery demands by 

any party to litigation concerning asbestos exposure. The only 

beneficiaries of this measure will be the very entities that produced 

or utilized asbestos, a toxic substance that killed or seriously injured unsuspecting American consumers and workers. In particular, H.R. 4369’s reporting requirements will impose additional 

costs and burdens on the trusts, notwithstanding changes made in 

the substitute amendment, diminishing the available pools of 

money and other resources to compensate the victims of bankrupt 

asbestos defendants. Additionally, this bill would allow 

unsuspecting asbestos victims to be further victimized by requiring 

information about their illness to be made available publicly to 

anyone who has access to the Internet. 

Representative Ben Quayle (R-AZ) introduced H.R. 4369 on April 

17, 2012 together with Representatives Jim Matheson (D-UT) and 

Dennis Ross (R-FL) as original cosponsors. Thereafter, the Subcommittee on Courts, Commercial and Administrative Law (CCAL) 

held a hearing on the bill on May 10, 2012 at which Professor S. 

Todd Brown, SUNY Buffalo Law School; Marc Scarcella, Bates 

White Economic Consulting; and Leigh Ann Schell, Kuhler Polk 

Schell Weiner & Richeson, testified on behalf of the Majority. The 

Minority witness was Charles S. Siegel, Esq., a partner with the 

law firm of Waters & Kraus. The Committee marked up the bill 

over two days, during which the Majority voted down every amendment offered by the Minority. Thereafter, the Committee ordered 

the bill to be reported favorably as a single amendment in the nature of a substitute by a vote of 15 to 14, along party lines, on June 

8, 2012.7

A summary of the bill’s substantive provisions as amended by 

the substitute amendment follows. Section 2 of the bill amends 

Bankruptcy Code section 524(g) 8 to add a provision comprised of 

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31 

9 11 U.S.C. § 107 (2012). 

10 U.S. Government Accountability Office, Report on Asbestos Injury Compensation: The Role 

and Administration of Asbestos Trusts, GAO-11-819, at 1, 24 (Sept. 2011) [hereinafter GAO Report]. 11 Id. at 17. 12 Id. at 4, note 7. 13 Id. at 24–25. 

two components. First, it requires a trust to file with the bankruptcy court not later than 60 days after the end of every quarter 

a report that must be made available on the court’s public docket. 

The report must describe each demand the trust received from a 

claimant, including the claimant’s name and exposure history as 

well as the basis for any payment from the trust made to such 

claimant. The claimant’s confidential medical records or full Social 

Security number cannot be included in this report. 

Second, Section 2 requires the trust, upon written request, to 

provide in a timely manner any information related to payment 

from and demands for payment from the trust, subject to appropriate protective orders, to any party to any action in law or equity 

if the subject of such action concerns liability for asbestos exposure. 

Section 2, as amended, authorizes the trust to require the entity 

seeking such information to pay the trust for the cost of providing 

it. The bill’s reporting and information disclosure requirements are 

subject to Bankruptcy Code section 107, which authorizes the 

bankruptcy court to restrict public access to any document filed in 

a bankruptcy case if the information contained in such document 

would create an ‘‘undue risk of identity theft or other unlawful injury.’’ 9

CONCERNS WITH H.R. 4369

I. H.R. 4369’S REPORTING AND DISCLOSURE REQUIREMENTS ARE AN

ASSAULT AGAINST ASBESTOS VICTIMS’ PRIVACY INTERESTS

One of H.R. 4369’s most fundamental flaws is that it would require the disclosure of personal information about victims who seek 

payment for injuries from an asbestos bankruptcy trust and that 

such information would have to be made available in a public 

forum, namely, the bankruptcy court’s case docket. As a result, this 

bill could further victimize unsuspecting asbestos victims by requiring information about their illness to be made publically available 

to anyone who has access to the Internet. 

Trusts already generally provide annual financial reports to the 

bankruptcy court, but the information disclosed typically consists of 

the total number of claims paid and the aggregate value of these 

claims, thus protecting claimants’ privacy.10 Some reports are publically available, while others are filed under seal with the bankruptcy court ‘‘for reasons deemed appropriate by the court.’’ 11 Such 

reasons include protecting the interests of the reorganized company 

and its competitiveness.12 In fact, of the 47 trust annual reports 

that the Government Accountability Office (GAO) reviewed, only 

one reported the amount paid to each individual and listed these 

individuals’ names.13 Nevertheless, 65 percent of the trusts reviewed by GAO (33 out of 52 trusts) specifically provide that 

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32 

14 Id. at 26. 15 Id. at 30. 16 Id. at 30. 17Memorandum from Legal Representatives for Future Asbestos Personal Injury Claimants 

with Respect to Certain Asbestos Settlement Trusts to Prof. Troy McKenzie, Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States, at 2 (Aug. 10, 2011) 

[hereinafter Legal Representatives Memorandum]. 18GAO Report at 29. 19 Id. 20 Id. at 30. 21 Id. 22Legal Representatives Memorandum at 2. 

ing compensation is confidential and should be treated as a settlement negotiation.’’ 14

Proponents of more disclosure argue that it may reduce the ‘‘asbestos-related litigation burden on the remaining solvent defendants by demonstrating that the trusts have increased claimants’ 

overall compensation beyond the amount justified in relation to the 

harm caused.’’ 15 They also assert that the current system’s lack of 

transparency ‘‘could enable plaintiffs to file contradictory claims to 

different trusts while also pursuing recovery through the tort system.’’ 16 Trust representatives, however, are very concerned about 

the ‘‘privacy rights of hundreds of thousands of individuals who did 

nothing except successfully seek compensation from a trust.’’ 17

The proponents’ arguments are without merit. As the GAO observed, ‘‘parties in the tort system are not required to disclose settlement negotiation or agreement information outside of the subpoena process’’ and that ‘‘trusts are analogous to any other settling 

party and related negotiations and payments are privileged.’’ 18

Equally important, the GAO noted that ‘‘all of the potentially relevant information in the trusts’ possession is available to the defense through pretrial discovery.’’ 19

In addition, trust representatives state that the trusts are often 

required to keep such information confidential and they are concerned about the substantial costs involved in responding to requests for such information.20 For example, one trust reported that it incurred $1 million in attorneys’ fees to respond to a request to 

disclose every document on every claimant, according to the GAO.21

Several legal representatives for future asbestos personal injury 

claimants fear that ‘‘unnecessary and unreasonable reporting and 

discovery obligations would divert resources from the trusts’ limited funds, which were specifically created to pay the claims of individuals stricken with asbestos-related diseases, for the benefit of 

third party defendants in non-bankruptcy, asbestos-tort litigation.’’ 22

H.R. 4369’s reporting requirements would irretrievably release 

into the public domain asbestos claimants’ sensitive personal information, such as their names and exposure histories. Under the bill, 

this information would have to be posted on the court’s public docket, which is easily accessibly through the Internet with the payment of a nominal fee. This information could then be used by data 

collectors and other entities for purposes that have absolutely nothing to do with compensation for asbestos exposure. 

It is readily apparent that these reports would provide a treasure 

trove of data that could be accessed by insurance companies, prospective employers, and lenders who could then use that information to the detriment of asbestos victims. In effect, this bill would 

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33 

23 Unofficial Tr. of Markup of H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency 

(FACT) Act of 2012,’’ by the H. Comm. on the Judiciary, 112th Cong. 206 (June 6, 2012) [hereinafter June 6 Markup Transcript]. 24 Id. at 215. 25Pub. L. No. 104–191, 110 Stat. 1936 (1996). 

allow unsuspecting asbestos victims to be further victimized, all in 

the name of helping those who harmed these victims in the first 

place. 

To rectify this flaw in the bill, Representative Hank Johnson (DGA) offered an amendment replacing the bill’s reporting and document production provisions with a requirement that the trust file 

a report describing demands it received, including the names and 

exposure histories of the claimants, as well as the basis for any 

payments, on a confidential basis. Access would have been restricted to a party that is a defendant in an action concerning asbestos exposure, with the access limited to the information in the 

report that was relevant to the plaintiff in such action, and only 

when such information is relevant to such action. This amendment 

would have ensured that the privacy interests of asbestos victims 

are respected by restricting access to the information contained in 

the reports to only those parties that have a ‘‘need to know.’’ This 

amendment, however, failed by a vote of 10 to 12.23

Similarly, Judiciary Committee Ranking Member John Conyers, 

Jr., (D-MI) offered an amendment that would have amended the 

bill to require the quarterly reports to contain only aggregate information and deleted the bill’s burdensome discovery requirement. 

This would have ensured victims’ privacy by not making public individualized claimant information. It also would have ensured that 

trusts could focus their resources on their primary mission of assuring fair compensation for asbestos victims, rather than participating in the discovery process for outside lawsuits. Notwithstanding these benefits, this amendment failed by a vote of 10 to 

11.24

In yet another attempt to address the bill’s privacy flaws, Representative Bobby Scott (D-VA) offered an amendment that would 

have deleted the bill’s requirement that the names of asbestos victims be identified in the quarterly report. The amendment would 

have also stricken the bill’s discovery provisions and replaced them 

with a requirement that the trust treat any information contained 

in the report pursuant to the privacy protections set forth in the 

Health Insurance Portability and Accountability Act (HIPAA).25

This amendment would have simply ensured that trusts comply 

with the HIPAA Privacy Rule that, according to the U.S. Department of Health and Human Services: 

[E]stablishes national standards to protect individuals’ 

medical records and other personal health information and 

applies to health plans, health care clearinghouses, and 

those health care providers that conduct certain health 

care transactions electronically. The Rule requires appropriate safeguards to protect the privacy of personal health 

information, and sets limits and conditions on the uses and 

disclosures that may be made of such information without 

patient authorization. The Rule also gives patients rights 

over their health information, including rights to examine 

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26 U.S. Dep’t of Health & Human Services, Health Information Privacy—The Privacy Rule, 

available at http://www.hhs.gov/ocr/privacy/hipaa/administrative/privacyrule/index.html (last visited June 21, 2012). 27 June 6 Markup Transcript at 228. 28 Asbestos Litigation Crisis in Federal and State Courts: Hearings Before the Subcomm. on 

Intellectual Property and Judicial Administration of the House Comm. on the Judiciary, 102nd 

Congress 1 (1975) [hereinafter Asbestos Litigation Hearings]. 29 Id. 30 Id. at 2. 31 Id. 32 Id. 33 Report of the Judicial Conference of the U.S. Courts Ad Hoc Committee on Asbestos Litigation, at 2 (Mar. 1991). 34 Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir. 1973). 35GAO Report at 8 (emphasis added). 

and obtain a copy of their health records, and to request 

corrections.26

Although asbestos victims who seek compensation for their injuries should be accorded at least the same privacy protections that 

are given to every other patient, this amendment failed by a vote 

of 10 to 11.27

II. H.R. 4369 IS FUNDAMENTALLY INEQUITABLE BECAUSE IT REQUIRES

DISCLOSURE BY THE TRUSTS, BUT DOES NOT REQUIRE SOLVENT DE- FENDANT COMPANIES TO DISCLOSE THEIR CONFIDENTIAL SETTLE- MENT AGREEMENTS

H.R. 4369 is fundamentally inequitable because it will impose 

additional burdens on asbestos bankruptcy trusts while easing the 

process by which solvent defendant companies can obtain discovery. This is particularly galling given the history of asbestos 

manufacturers in concealing the dangers of their product from the 

public for many years. 

Asbestos is a fibrous material, extracted from the earth, that has 

been used for centuries because of its tensile strength and its heat 

resistence.28 The modern industrial use of asbestos began around 

1860, and the world’s annual use of raw asbestos increased from 

some 500,000 tons to 2.5 million tons between the years 1934 and 

1964.29 The Department of Labor estimates that approximately 21 

million Americans have been significantly exposed to asbestos.30

Asbestos fibers, when released into the atmosphere and inhaled 

by humans, may cause various diseases, including asbestosis (a 

clogging and scarring of the lungs that can produce a reduced 

breathing capacity) and mesothelioma (a cancer of the lining of the 

chest and abdomen that is typically fatal).31 Lung cancer and other 

diseases have also been associated with the inhalation of asbestos 

fibers.32

Although a link between asbestos and lung cancer was first reported in 1935, millions of Americans were exposed to asbestos 

over the ensuing years and injuries began to manifest in the 

1960’s.33 The first appellate opinion upholding a product liability 

judgment against a manufacturer of asbestos-containing products 

was rendered in 1973 by the Fifth Circuit.34 As reported by the 

GAO, ‘‘In the course of the first successful personal injury lawsuits 

against asbestos manufacturers, plaintiffs’ attorneys introduced 

evidence that these manufacturers had known but concealed 

information about the dangers of asbestos exposure or that 

such dangers were reasonably foreseeable.’’ 35

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36Lloyd Dixon & Geoffrey McGovern, Report: Asbestos Bankruptcy Trusts and Tort Compensation, Rand Institute for Civil Justice, at xi (2011). 37Lloyd Dixon et al., Report: Asbestos Bankruptcy Trusts—An Overview of Trust Structure 

and Activity with Detailed Reports on the Largest Trusts, Rand Institute for Civil Justice, at 

xi (2010). 38GAO Report at 1. 39 June 8 Markup Transcript at 13. 

As of 2002, approximately 730,000 individuals filed asbestos-re- lated lawsuits and $49 billion had been paid in compensation.36 In 

the nearly four decades since 1973, litigation over personal injuries 

resulting from exposure to asbestos has resulted in ‘‘hundreds of 

thousands of claims filed and billions of dollars in compensation 

paid,’’ according to the Rand Institute for Civil Justice.37 ‘‘Asbestos 

litigation,’’ according to the GAO, ‘‘has been the longest-running 

mass tort litigation in U.S. history.’’ 38

As this history illustrates, the asbestos industry, like some other 

industries, tried to hide the dangers of its product from the public. 

In the context of settlement agreements, cases are too often settled 

by defendant companies specifically in order to prevent evidence of 

their wrongdoing from becoming public. More importantly, because 

of the secrecy of these settlements, other people who have been injured have no way of gaining important information about their exposure, their illnesses, or the settled liability of the companies that 

made them sick. Information about the concealment of wrongdoing 

never becomes public, and the people who have suffered have no 

way of knowing about that wrongdoing or its extent. Governmental 

agencies that are charged with protecting the public health— 

whether in the workplace or in the home—are deprived of the information they need to enforce the laws Congress has enacted. 

There has been too long a record, over too many decades, of concealment, dissembling, and lawlessness, and too many lives destroyed because of that illegal conduct. 

To highlight the problem of inequitable disclosure obligations 

under H.R. 4369, Representative Jerrold Nadler (D-NY) offered an 

amendment requiring a party that requests information from a 

bankruptcy asbestos trust to meet certain criteria. Under the 

amendment, such party would have been required to agree to disclose information relevant to such action that pertains to the protection of public health or safety to any other person or to any federal or state agency with authority to enforce laws regulating an 

activity relating to such information upon request of such party or 

agency. The goal of this amendment was to ensure that the transparency that H.R. 4369’s proponents demand from the victims of 

the asbestos industry would also apply to the corporations that inflicted so much damage and so much suffering over the years. The 

amendment would have addressed the longstanding efforts by 

these corporations to conceal the facts from the public, from their 

victims, and from government agencies charged with enforcing our 

health and safety laws. Notwithstanding the equitable value of this 

amendment, it failed by a vote of 7 to 10.39

Similarly, Representative Sheila Jackson Lee (D-TX) offered an 

amendment that would have provided balance to the bill’s reporting requirements and ensured privacy. Her amendment would have 

required the report to be filed under seal and mandated that the 

party requesting such report certify the following: 

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40 June 6 Markup Transcript at 254. 41 Id. at 265. 42See, e.g., Editorial, St. Francis of Asbestos, WALL ST. J., June 14, 2004, at A14 (recommending that the House and Senate ‘‘bankruptcy subcommittees . . . [conduct] a full and public 

investigation of the rigged asbestos mess’’); The Latest Asbestos Scam—The Lawyers Are Now 

Rigging the Bankruptcy Process, WALL ST. J., June 1, 2004, at A16 (observing that the ‘‘latest 

asbestos scandal is threatening the integrity of the judicial system itself’’). 

(1) that it is a party in an action seeking compensation for asbestos exposure; 

(2) the number of claims made against such party for injuries 

resulting from asbestos; 

(3) the name of the state in which such claim arose; 

(4) the condition for which the claim for injury is alleged; 

(5) the amount of the payment sought in such action; and 

(6) the history of exposure and occupation of the claimants in 

such action. 

In addition, the amendment specified that the certification could 

not include any personally identifiable information. Finally, the 

amendment struck the bill’s document production provisions. This 

amendment, however, failed by a vote of 10 to 11.40

Representative Jackson Lee offered a second amendment in another effort to add some parity to H.R. 4369. This amendment 

would have required the report to be filed under seal and mandated that the party requesting such report certify: 

(1) that it is a party in an action seeking compensation for asbestos exposure; 

(2) the names of asbestos containing products that the party 

manufactured; 

(3) the locations where those products were sold or in use; 

(4) an estimate of the number of individuals in the U.S. who 

were exposed to each asbestos product; and 

(5) product identification affidavits for every case ever settled 

by such party. 

The amendment specified that the certification must not include 

any personally identifiable information. In addition, the amendment also struck the bill’s document production provisions. Representative Jackson Lee’s amendment, however, failed by a vote of 

8 to 14.41

III. H.R. 4369 IS NOT NECESSARY GIVEN THE ABSENCE OF ANY

EVIDENCE OF SYSTEMIC FRAUD

H.R. 4369’s proponents have failed to provide any evidence of 

systemic fraud in the asbestos bankruptcy trust system. Therefore, 

this bill is a solution in search of a problem. 

In 2004, reports of allegedly fraudulent claims being made 

against asbestos bankruptcy trusts and solvent companies surfaced.42 The CCAL Subcommittee conducted an oversight hearing 

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43The Administration of Large Business Bankruptcy Reorganizations: Has Competition for Big 

Cases Corrupted the Bankruptcy System?: Hearing Before the Subcomm. on Commercial and 

Admin. Law of the H. Comm. on the Judiciary, 108th Cong. (2004). 44Telephone interview with William Jenkins, Director, Homeland Security and Justice Issues, 

et al., U.S. Government Accountability Office (May 7, 2012); GAO Report at 23. 45GAO Report at 23. 46 Id. 47 Id. 48 Id. at 3. 49 Id. Each trust establishes its own process by which claims are assessed and paid. Claims 

that meet the requisite criteria are paid a percentage of the scheduled value based on the nature 

of the asserted injury. The payment ratio varies among the trusts based on the availability of 

assets and anticipated present and future claims. According to the GAO, the range of payment 

ranges from 1.1 percent to 100 percent for certain diseases, such as mesothelioma or asbestosis. 

The GAO found that the median payment percentage among the various trusts was 25 percent. 

Id. at 17, 21. 

50 Id. at 18. 51 Id. 

into that issue as well as others presented with respect to the 

treatment of mass torts in bankruptcy cases.43

GAO, however, informed Minority Committee staff that it was 

unaware of any subsequent reports of endemic fraud with respect 

to asbestos claims and that it did not uncover any evidence of overt 

fraud during its examination of asbestos trusts last year.44 In fact, 

the GAO reports that 98 percent of the 52 trusts that it reviewed 

required a claims audit program to be conducted. Based on interviews held with representatives from 11 trusts, GAO found that all 

the trusts ‘‘incorporate quality assurance measures into their intake, evaluation, and payment processes.’’ 45 GAO also found that 

‘‘each trust is committed to ensuring that no fraudulent claims are 

paid by the trust, which aligns with their goals of preserving assets 

for future claimants.’’ 46 In addition, it found that none of the trusts 

‘‘indicated that these audits had identified cases of fraud.’’ 47

Indeed, trusts maintain an elaborate process for determining 

whether a claim is legitimate. Once operational, the trust implements ‘‘a nonadversarial administrative process—independent of 

the court system—to review claimants’ occupational and medical 

histories before awarding compensation.’’ 48 The GAO explains that 

the ‘‘trustees are to manage the trust for the sole benefit of the 

present and future claimant beneficiaries.’’ 49

To establish entitlement to compensation, the claimant completes 

a claim form supported with documented evidence of exposure to 

asbestos products. Such evidence may consist of the claimant’s 

work history, employer records, Social Security records, and deposition testimony taken during any litigation, the GAO reports.50 The 

claimant must also submit medical records ‘‘sufficient to support a 

diagnosis for the specific disease being claimed or, if applicable, a 

copy of a death certificate.’’ 51

Notwithstanding the obvious lack of any empirical evidence of 

endemic fraud, and notwithstanding the existence of trust processes designed to ensure the validity of claims, H.R. 4369’s proponents argue that its reporting and other information-sharing requirements are necessary in order to ensure that asbestos victims 

are not committing fraud by recovering money from trusts and 

through the tort system, thereby ‘‘double dipping.’’ At most, however, they were only able to identify isolated instances of fraud, 

which were promptly addressed through the court system. As 

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52Furthering Asbestos Claims Transparency Act: Hearing on H.R. 4369 Before the Subcomm. 

on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary, 112th Cong. (2012) 

(testimony of Charles S. Siegel, Waters & Kraus LLP) 53 June 6 Markup Transcript at 243. 54 June 8 Markup Transcript at 243 

Charles Siegel, the Minority witness, testified at the hearing on 

this legislation: 

The few examples that we have of fraud in the system 

today I think show that the system works. The Kananian 

case is a terrible example. That lawyer was disbarred, and 

that claim was dismissed. And so once in a while we have 

a situation like that, the system deals with it, and the parties go on down the road.52

To underscore the obvious lack of evidence of any endemic fraud 

and why it is premature to consider H.R. 4369, Representative Mel 

Watt (D-NC) offered an amendment that would have replaced the 

bill with a directive to the GAO to quantify the extent to which 

fraudulent claims are, in fact, made against asbestos bankruptcy 

trusts and the extent to which they are paid. This amendment, 

however, was defeated by a vote of 10 to 13.53

IV. H.R. 4369 IS NOTHING MORE THAN AN END RUN BY ASBESTOS DEFENDANTS AROUND THE DISCOVERY PROCESS AVAILABLE UNDER

NON-BANKRUPTCY LAW

H.R. 4369 improperly allows asbestos defendants to circumvent 

state and federal discovery procedures. Its reporting and document 

production requirements for asbestos bankruptcy trusts are designed to allow defendants to obtain information that they can already obtain under existing law. From this, it is evident that the 

bill’s true intent is simply to hamper trusts from fulfilling their obligation to compensate asbestos victims appropriately. 

In response to this particular flaw in the bill, Representative 

Jared Polis (D-CO) offered an amendment that would have required the trust to provide information relating to payments made 

by the trust and demands for such payment to any party to an action concerning asbestos liability exposure only if such party cannot 

otherwise obtain such information under applicable non-bankruptcy law. The amendment further provided that the information 

must relate to a trust claimant who is also a party to such action 

against the requesting party. Representative Polis’s amendment, 

however, failed by a vote of 11 to 12.54

V. H.R. 4369 WILL DIVERT CRITICAL FUNDS AND FURTHER DECREASE

COMPENSATION TO ASBESTOS VICTIMS BY FORCING BANKRUPTCY

TRUSTS TO PREPARE BURDENSOME REPORTS

H.R. 4369’s reporting and document production requirements on 

trusts will raise their administrative costs significantly, notwithstanding changes that the substitute amendment made to the bill’s 

base text. Money used to pay these costs ultimately means less 

money to compensate asbestos victims. This is particularly problematic in light of the fact that defendants can already obtain the 

information they want using existing discovery tools without undermining compensation for legitimate claims. The GAO, for exammstockstill on DSK4VPTVN1PROD with HEARINGS

39 

55GAO Report at 27. 56 Id. at 16. 57 June 6 Markup Transcript at 276. 

ple, noted that one trust reported that it incurred $1 million in attorneys’ fees to respond to a request to disclose every document on 

every claimant, according to the GAO.55

H.R. 4369’s retroactive application only adds to this unnecessary 

burden. It is important to note that the vast bulk of asbestos trusts 

that would be affected by this legislation have long been in existence, one of which dates back to 1988. According to the GAO, these 

trusts have already paid 3.3 million claims valued at about $17.5 

billion.56 Yet, after the passage of more than 20 years since the 

first trust was established, the proponents of H.R. 4369 now insist 

that these trusts issue reports and provide documentation. 

The only beneficiaries of H.R. 4369 will be the very entities that 

knowingly produced a toxic substance that killed or seriously injured unsuspecting American consumers and workers. This bill 

would effectively shift the cost of discovery away from solvent asbestos defendants to the bankruptcy trusts, ultimately diminishing 

the available pool of money to compensate the victims of bankrupt 

asbestos defendants. 

To reduce the cost of compliance imposed by H.R. 4369, Representative Steve Cohen (D-TN), CCAL Subcommittee Ranking 

Member, offered an amendment that would have exempted from 

the bill any trust that has an internal fraud detection program. 

Had this commonsense amendment been adopted, H.R. 4369 would 

not have applied to a trust that has an internal claims audit program, which ensures that claims are valid and supported. Meanwhile, trusts that had such anti-fraud measures in place would not 

have to bear the costs, burdens, and privacy risks presented by HR. 

4369’s requirements. Indeed, this amendment would have provided 

a meaningful incentive for trusts to ensure that they have a viable 

claims audit program. This amendment balanced the need to be 

vigilant against potential fraud with the underlying purpose of asbestos trusts, which is to ensure adequate compensation for asbestos victims. Notwithstanding this balanced approach, Representative Cohen’s amendment narrowly failed by a vote of 11 to 11.57

CONCLUSION

H.R. 4369 is troubling because: (1) its reporting and disclosure 

requirements are an assault against asbestos victims’ privacy interests; (2) it is fundamentally inequitable in that it requires disclosure by the trusts, but does not require solvent defendant companies to disclose their confidential settlement agreements; (3) it is 

not necessary given the absence of any evidence of systemic fraud 

with asbestos trusts; (4) it is nothing more than an end run by asbestos defendants around the discovery process available under 

non-bankruptcy law; and (5) it will divert critical funds and further 

decrease compensation to asbestos victims by forcing bankruptcy 

trusts to prepare burdensome reports. More broadly, H.R. 4369 is 

just the latest in a string of bills advocated by the asbestos industry to prevent or delay adequate compensation for victims of the industry’s dangerous product and its efforts to hide information 

about such dangers from the public. 

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We urge our colleagues to stand on the side of justice for asbestos 

victims and to oppose H.R. 4369. 

JOHN CONYERS, JR. 

HOWARD L. BERMAN. 

JERROLD NADLER. 

ROBERT C. ‘‘BOBBY’’ SCOTT. 

MELVIN L. WATT. 

ZOE LOFGREN. 

SHEILA JACKSON LEE. 

STEVE COHEN. 

HENRY C. ‘‘HANK’’ JOHNSON, JR. 

MIKE QUIGLEY. 

JUDY CHU. 

TED DEUTCH. 

LINDA T. SA ́ NCHEZ. 

JARED POLIS. 

Æ 

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