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S. HRG. 107–993

ASBESTOS LITIGATION

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

SEPTEMBER 25, 2002

Serial No. J–107–105

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

MARIA CANTWELL, Washington 

JOHN EDWARDS, North Carolina 

ORRIN G. HATCH, Utah 

STROM THURMOND, South Carolina 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

SAM BROWNBACK, Kansas 

MITCH MCCONNELL, Kentucky 

BRUCE A. COHEN, Majority Chief Counsel and Staff Director 

SHARON PROST, Minority Chief Counsel 

MAKAN DELRAHIM, Minority Staff Director 

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C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Brownback, Sam, a U.S. Senator from the State of Kansas, prepared statement ...................................................................................................................... 123

Cantwell, Hon. Maria, a U.S. Senator from the State of Washington ................ 35

DeWine, Hon. Mike, A U.S. Senator from the State of Ohio, prepared statement ...................................................................................................................... 167

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa, prepared 

statement .............................................................................................................. 174

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 11

Kohl, Hon. Herbert, a U.S. Senator from the State of Wisconsin, prepared 

statement .............................................................................................................. 222

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1

prepared statement .......................................................................................... 223

WITNESSES 

Austern, David T., General Counsel, Manville Personal Injury Settlement 

Trust, Fairfax, Virginia ....................................................................................... 15

Baron, Frederick M., Baron ad Budd, P.C., on behalf of the Association 

of Trial Lawyers of American, Dallas, Texas ..................................................... 17

Baucus, Hon. Max, a U.S. Senator from the State of Montana ........................... 5

Dellinger, Walter E., O’Melveny and Myers, LLP, Washington, D.C. ................ 19

Hiatt, Jonathan P., General Counsel, American Federation of Labor and 

Congress of Industrial Organizations, Washington, D.C. ................................. 21

Kazan, Steve, Kazan, McClain, Edises, Abrams, Fernandex, Lyons and 

Farrise, a Professioal Law Corporation, Oakland, California .......................... 24

Nelson, Hon. E. Benjamin, a U.S. Senator from the State of Nebraska ............. 8

Voinovich, Hon. George V., a U.S. Senator from the State of Ohio ..................... 13

QUESTION AND ANSWER 

Response of Mr. Austern to a question submitted by Senator Cantwell ............ 43

SUBMISSIONS FOR THE RECORD 

American Academy of Actuaries, Jennifer L. Biggs, Chairperson, Mass Torts 

Subcommittee, Washington, D.C., statement .................................................... 47

American Chemistry Council, Arlington, Virginia, statement ............................. 70

American Conservative Union, W. Stephen Thayor, Director of Legislative 

and Legal Policy, Alexandria, Virginia, letter ................................................... 80

American Shareholders Association, Grover Norquist, President, Washington, 

D.C., statement .................................................................................................... 82

Asbestos Alliance, Washington, D.C., statement .................................................. 84

Austern, David T., General Counsel, Manville Personal Injury Settlement 

Trust, Fairfax, Virginia, prepared statement .................................................... 87

Baron, Frederick M., Baron and Budd, P.C., Dallas, Texas, prepared statement ...................................................................................................................... 97

Baucus, Hon. Max, a U.S. Senator from the State of Montana, prepared 

statement .............................................................................................................. 107

Bergman, Matthew P., Partner, Senn Pageler & Frockt, Vashon, Washington, 

statement .............................................................................................................. 110

Coalition for Asbestos Justice, Inc., Washington, D.C., statement ..................... 129

Dellinger, Walter E., O’Melveny and Myers, LLP, Washington, D.C., prepared 

statement .............................................................................................................. 150

Page

IV

Heberling, Jon L., McGarvey, Heberling, Sullivan & McGarvey, P.C., Kalispell, Montana, letter ........................................................................................... 178

Hiatt, Jonathan P., General Counsel, American Federation of Labor and 

Congress of Industrial Organizations, Washington, D.C., prepared statement and attachment ........................................................................................... 181

Kazan, Steven, Kazan, McClain, Edises, Abrams, Fernandez, Lyons and 

Farrise, Oakland, California ............................................................................... 188

Manhatten Institute for Policy Research, Lester Brickman, Civil Justice 

Forum, New York, New York, article ................................................................. 226

National Association of Manufacturers, Washington, D.C., statement ............... 238

Nelson, Hon. E. Benjamin, a U.S. Senator from the State of Nebraska, prepared statement ................................................................................................... 245

Rutland Daily Herald, Ronald J. Gascon, commentary, September 25, 2002 .... 248

Small Business Survival Committee, Karen Kerrigan, Chairman, Washington, 

D.C., letter and attachment ................................................................................ 249

Washington Post, Albert B. Crenshaw, article, September 25, 2002 .................. 262 

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ASBESTOS LITIGATION 

WEDNESDAY, SEPTEMBER 25, 2002

U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, D.C. 

The Committee met, Pursuant to notice, at 10:09 a.m., in room 

SD–106, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Durbin, Cantwell, Edwards, Hatch, 

Grassley, Specter, DeWine, Brownback, Carper [ex officio], and 

Voinovich [ex officio]. 

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

FROM THE STATE OF VERMONT 

Chairman LEAHY. Good morning. Today, we are going to hear 

from experts representing all sides in asbestos litigation. We want 

to get a better understanding of how asbestos victims, defendants, 

and others fare in the courts. I hope today this can be the beginning of a bipartisan dialog that will result in a comprehensive review of the complex and competing issues involved in providing fair 

and efficient compensation to asbestos victims. 

I believe for a sense of history we should acknowledge the root 

cause of this litigation. For many years, many in America’s labor 

force were secretly poisoned. Unbeknownst to the men and women 

who worked in our Nation’s factories, shipyards, mines, and 

constructionsites, the worksite air was laced with a substance so 

harmful that they could become critically ill by simply breathing, 

and they risked contaminating their loved ones from their clothes 

after a hard day’s work. 

In 1906, England adopted the first labor regulation warning 

about the health effects of inhaling asbestos. In 1924, a national insurance company studied the health effects of asbestos exposure of 

Johns-Manville workers and then hid the results. 

In 1949, the American Medical Association Journal editorialized 

on the harm from asbestos exposure. In 1989, the Environmental 

Protection Agency banned asbestos in 3,500 products, only to see 

that overturned in an industry suit later on. Asbestos, a known 

carcinogen, is still used today in many products. 

Corporate America had been on notice that asbestos carried significant health risks for its workers and customers. Some corporate 

executives ignored these warnings and manufactured, mined, or 

used asbestos because it was inexpensive and profitable. As a result, the marketplace has punished more than 50 companies that 

2

knew or should have known about the health dangers of asbestos, 

forcing them into bankruptcy because of asbestos-related liabilities. 

Three thousand Americans die every single year from mesothelioma, a horrible cancer caused only by asbestos. In addition, hundreds of thousands of Americans suffer from other injuries caused 

by asbestos exposure, including lung cancer, throat cancer, and 

other diseases. 

Perhaps the worst part of the asbestos nightmare is that many 

victims do not know yet that they will get sick. That is because of 

the long latency period for asbestos-related diseases. Some cancers 

take 30 to 40 years to develop and it is a ticking time bomb during 

that time. It is a time bomb ticking in the bodies of thousands of 

innocent victims. 

Approximately 120 million Americans have been or continue to 

be exposed to asbestos. With the long latency period for most asbestos-related diseases, simple math tells us that some will be suffering for years to come. 

Asbestos victims who filed claims with the Manville Trust this 

year were, on average, first exposed to asbestos in 1961. Since production in the U.S. did not slow until well into the 1980’s and asbestos is still being used today, that means we have decades to go 

before we know who is going to be sick. Many more Americans will 

be seeking compensation for their asbestos-related injuries for decades. 

All this caused Supreme Court Justice Ruth Bader Ginsburg in 

the Amchem v. Windsor case to call for legislative intervention. I 

agree with Justice Ginsburg that Congress can provide a secure, 

fair, and efficient means of compensating victims. I believe that it 

is in the national interest to encourage fair and expeditious settlement between companies and asbestos victims, and that is why I 

have convened this hearing. Actually, it is the first full Judiciary 

Committee hearing since Justice Ginsburg urged congressional action. 

But it is not going to be easy. It is going to require a commitment by lawmakers and interested parties to conduct a full and 

open debate, an honest debate, to identify issues and craft possible 

solutions. 

Industry-related injuries have existed for a long time. Usually, 

industry eventually wakes up and takes steps to stop it from happening. Both of my grandfathers were stone cutters in Vermont, 

one emigrating to this country take up that work. Both died of silicosis of the lungs. It was at a time when many, many people knew 

the dangers, but did not want to spend the slight extra amount 

more to protect the workers from the dangers. Today, they are protected. 

We have to conduct a debate, something Congress has not done. 

The past failed efforts at legislative solutions were thinly veiled attempts by some to avoid accountability for their asbestos responsibilities through what they euphemistically called ‘‘tort reform.’’

We could have a debate on tort reform, and probably should, but 

let’s not lose sight of what we are talking about here. We are talking about these asbestos cases. If we keep it narrowed to that, we 

can come up with a legislative solution. 

3

Our first witness, Senator Nelson, talked to me over a year ago 

about that, or a couple of years ago, I think it was, and urged that 

why can’t we come together for a legislative solution. 

We should learn from the past that any compensation plan has 

to be fair to asbestos victims and their families. I applaud the business leaders who met with me recently for their recognition that 

victims have to come first in an alternative compensation system. 

I know we are going to have an honest and constructive debate. 

Senator DeWine and I have attempted to prove in our bipartisan 

asbestos tax legislation that if you encourage fair settlements, it is 

a win-win situation for businesses and victims. Chairman Baucus 

and Senator Grassley have included our legislation in their small 

business tax package to be considered soon by the Finance Committee. 

Senator Hatch has written to me that he wishes to work in this 

same bipartisan spirit on the asbestos litigation issue, on that narrow issue, and not to include a lot of other controversial areas in 

the debate. 

It is going to take full-faith efforts of all the people—the industry, workers, victims—to come to it. We are going to need full participation from the insurance industry. The press reported this 

month that many insurers have refused to pay claims that were related to the September 11 terrorist attacks, and even threatened to 

pull business coverage if such claims were filed. But we are going 

to need their participation and we are going to need cooperation to 

reach a better solution for asbestos litigation. 

I know the insurance industry enjoys a one-of-a-kind statutory 

exemption from our antitrust laws, but that special privilege has 

a special responsibility. I hope and expect that they will be up to 

the task. I hope this hearing will start us forward. 

I might add that a solution is not one that adds more corporate 

bankruptcies or creates artificial immunities or legal fees, but one 

that actually compensates victims. So I put all on notice on all 

sides of this issue that this chairman is primarily interested in the 

victims and that is what we will speak to. 

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

Chairman LEAHY. Senator Grassley, I understand you are just 

going to put a statement in. 

Senator GRASSLEY. Yes. 

[The prepared statement of Senator Grassley appears as a submissions for the record.] 

Chairman LEAHY. Senator DeWine, I know you are going to put 

a statement in, but you had something you wanted to say. 

Senator DEWINE. Yes, Mr. Chairman. Thank you very much. I do 

have a full statement which I would like to have included as part 

of the record. 

Chairman LEAHY. Without objection. 

Senator DEWINE. Let me Mr. Chairman, thank you for holding 

this hearing. Your comments were very well taken. I look forward 

to working with you and the other members of this committee in 

trying to deal with a problem that candidly we as a country have 

ignored too long, and I think this Congress has ignored too long. 

We are the only ones at this point in our history that can help proVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
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vide a solution, and the courts, as you have pointed out, have made 

that very, very clear. 

Just before I came here today, I was talking to a businessman 

from Ohio and I told him where I was going and what we were 

talking about, and he made the point to me—he actually grabbed 

me and he said, look, you need to understand this. One of the 

things that we always will have the great ability to make in this 

country is building material, he said, but that is an industry that 

is in peril and it is an industry, in all the jobs that it creates, that 

is in peril because of the asbestos problem, and you need to understand that. The current system, he said, is not fair to the victims 

and it is not fair to the people who are trying to create jobs. 

I must say, Mr. Chairman, that I totally agree. The status quo 

is just not fair. It is grossly unfair to the victims. What you find 

is an inconsistency in how victims are treated, a horrible inconsistency that I don’t think you will find anyplace else in our country 

or in our judicial system. 

You have a situation or a system today in which the victims are 

treated differently. Their compensation is certainly not fast and it 

is not complete. Very rarely is it ever complete. You also have, at 

the same time, a dwindling number of companies, as you have 

pointed out, and obviously that means fewer jobs that can be created. Companies go out of business and you lose those jobs. 

But it also means, when you have fewer companies, that they 

have more liability, and when they have more liability, it puts 

them in danger, as well. It also means that they are in a less good 

position. When you have fewer companies or fewer people that you 

can call upon to pay the compensation, then the victims suffer. 

So we are in this downward spiral, and candidly only the U.S. 

Congress can begin to stop that spiral. So I just appreciate very 

much the fact that you are holding this hearing. I know that the 

witnesses today will be very, very helpful. 

As all of us do, I have other hearings and other obligations. I will 

be in and out, but I just wanted to thank you for your attention 

to this matter and holding this very timely hearing. 

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

Chairman LEAHY. The Senator from Ohio has been one also who 

has encouraged me to do that. 

I will go to the first two witnesses by seniority, Senator Baucus 

and then Senator Nelson. 

Senator BAUCUS. Well, I appreciate that, Mr. Chairman, but actually Senator Nelson was here ahead of me and I would be fine 

to defer to Senator Nelson. 

Senator NELSON. Well, since I have some things I would like to 

get from Senator Baucus before he finishes his work with the Finance Committee, I would be very happy to defer to his seniority. 

[Laughter.] 

Chairman LEAHY. I will tell you what, guys. You go ahead and 

start. I am just going to stay out of this one. 

[Laughter.] 

5

STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM 

THE STATE OF MONTANA 

Senator BAUCUS. Well, I would be very honored to proceed first, 

then. 

Thank you, Mr. Chairman and distinguished members of the 

committee. I deeply appreciate, Mr. Chairman, your holding this 

hearing. I think we can all agree that asbestos litigation in this 

country is an enormous issue that will impact this Nation for many 

years to come, and I applaud your leadership in stepping up to address it head-on. 

I want the record to reflect my deep concern that we not lose 

sight of what is really at stake here, and that is making sure that 

people who are sick or people who are likely to become sick from 

exposure to asbestos are not denied the ability to fight for their 

rights against the companies or persons that injured them. That is 

absolutely the bottom line. 

I know you have all heard me talk about Libby, Montana, but 

Libby represents one of the grossest cases of corporate irresponsibility and down-right criminal negligence that I have ever seen. 

The extent of asbestos contamination in Libby, the number of people who are sick or who have died from asbestos exposure, is just 

staggering. The people of Libby suffer from the deadly asbestoscaused cancer, mesothelioma, at a rate 100 times greater than the 

rest of the Nation. One in 1,000 residents of Libby suffer from the 

disease. The national average is one out of a million. 

Mr. Chairman and Senator Grassley, I wish you were with me 

when I was in the living room of Les Scramstad. Les Scramstad 

and others in Libby were talking about coming down from the mine 

covered with dust from the mine, had no idea that they were affected with a cancer-causing disease. Les would go home, he would 

meet his wife, he would embrace his wife. His kids would jump into 

his lap. All of them are now dying from asbestos-related disease. 

I mean, just think of it. He is dying. The guilt he has in transferring the disease off to his wife and to his children—it is one of the 

most heart-wrenching experiences I have ever encountered. And I 

vowed to myself that day that I was going to do all I can to make 

sure that justice is given to them. 

The company knew what was going on. The company knew that 

the asbestos dust from tremolite was causing this problem, and yet 

they did not warn their employees. It is an outrage, and the people 

of Libby, Montana, desperately need the help of this committee and 

the Congress. 

I might add, Mr. Chairman, that the Agency for Toxic Substances and Disease Registry has found that Libby residents suffer 

from all asbestos-related diseases at a rate of 40 to 60 times the 

national average. 

Well, how could this happen? Well, a company named W.R. 

Grace owned and operated a vermiculite mining and milling operation in Libby. It just so happened that vermiculite was contaminated by a deadly form of asbestos called tremolite. 

W.R. Grace milling operations belched thousands of pounds of asbestos-contaminated dust into the air each day, dust that settled 

on the town of Libby, on cars, on homes, gardens, dust that settled 

on children. Workers brought the dust home on their clothes and 

6

exposed their families, as I mentioned. Hundreds have died and 

hundreds more are sick. 

The very worst part about this story is that W.R. Grace knew exactly what it was doing. It knew that vermiculite dust was contaminated with deadly asbestos. Yet, it told workers and the town 

that it was harmless. 

Now, W.R. Grace has filed for bankruptcy, wringing its hands 

over escalating asbestos claims involving the vermiculite products 

its produced, and shielding billions in assets from the bankruptcy 

proceedings. It is an outrage. Through all this, W.R. Grace has yet 

to step up and do the right thing in Libby. 

It has ungraciously fought any attempts to beg, plead, or cajole 

the company into living up to its responsibilities to the people of 

Libby, Montana. It is attempting to drastically scale back a paltry 

health care fund set up for former workers. All the while, Grace lawyers have filed for over $30 million in 

fees accumulated in the past year alone defending Grace in the 

bankruptcy proceeding. That $30 million would sure go a long way 

in Libby, Montana, where health care costs are increasingly rapidly, threatening the ability of that town to get back on its economic feet after the blow it took from W.R. Grace. 

More worrisome still, many folks who have been diagnosed with 

asbestos-related disease, some of whom are in their 30’s because 

they were exposed to asbestos as children, are now essentially 

ininsurable going forward, because the costs of securing private insurance are non-economical. 

The costs to the community and State government related to providing health coverage for uninsured sick people are creating significant pressures on the State Medicaid fund, and even causing 

workers’ compensation problems for some private business owners 

in Libby, like Stimson Lumber and Lincoln County private enterprises already at marginal operations. 

In addition, the Federal Government, through the U.S. Environ- mental Protection Agency, will spend over $100 million to clean up 

the contamination caused by W.R. Grace’s vermiculite mining operation. So everyone—taxpayers, local businesses, the State of Montana, and especially the victims themselves—everyone but W.R. 

Grace is bearing the burden and suffering the pain caused by W.R. 

Grace’s actions. Granted, we can all agree that the State and Federal Governments should have done more to protect the folks in 

Libby, but ultimately the buck stops with Grace. 

So I apologize if I am skeptical and find it hard to be sympathetic to companies like W.R. Grace who claim they are overburdened by asbestos lawsuits. I would agree, however, that it is also 

not fair for companies like W.R. Grace to shift the burden of their 

actions onto other companies that have not filed for bankruptcy 

and that do not share Grace’s liability or responsibility. 

But, again, this is where I would ask this committee to be very, 

very careful in how you address asbestos litigation. It would be so 

very easy to insulate bad actors like Grace from their fair share of 

liability and responsibility, and to cutoff rightful claimants like the 

Libby victims from ever receiving their fair share of compensation 

for the wrong done to them because, Mr. Chairman, it is a little 

too easy to say let’s cutoff those folks who aren’t sick yet. 

7

But we are talking about a disease that a 20- to 40-year latency 

period. Given the exposure of the folks in Libby and the type of exposure to deadly tremolite asbestos, it is very likely that many 

more people in Libby will become very sick in the future. We cannot cut them off. 

I am sure you remember my opposition, Mr. Chairman, to the 

Fairness in Asbestos Compensation Act of 2000. I believed very 

strongly at the time that the administrative procedures set up by 

that bill, particularly the medical eligibility criteria, would effectively eliminate the legal rights of many residents in Libby. 

I wrote you at that time letting you know that I would speak at 

length to any attempt to attach that legislation to bankruptcy legislation that would be on the floor. I would ask your permission to 

insert in the record a letter from some Libby representatives that 

raises similar concerns about what could be contained in revised 

asbestos litigation legislation that this committee my consider. 

Ultimately, Mr. Chairman, because W.R. Grace has filed for 

bankruptcy, the rightful claims of Libby victims may never be satisfied against W.R. Grace, no matter what this committee chooses 

to do about asbestos litigation reform. 

Perhaps part of this committee’s review should include a review 

of the injustices inherent in corporate bankruptcies, like W.R. 

Grace’s, that are related to asbestos litigation, particularly those 

injustices associated with the ease with which Grace hid a vast 

chunk of its assets from the reach of the bankruptcy court and, by 

extension, from Libby victims. Maybe some of those billions will be 

returned to the bankruptcy estate. Maybe not, but it is certainly 

an appropriate piece of the asbestos puzzle for this committee to 

take a very hard look at. 

Mr. Chairman, I have fought for every resource at the disposal 

of the Federal Government to help the people of Libby, Montana, 

get a clean bill of health. And despite W.R. Grace’s resistance, we 

have actually been making real progress on the ground in cleaning 

up the town of Libby, cleaning up contaminated homes and screening more than 8,000 current and former Libby residents for asbestos-related disease or exposure. 

I am pursuing all other avenues to address long-term health care 

costs for those who have been devastated by asbestos-related disease, and screening costs for those who are worried that they may 

become ill. This includes the possibility of setting up some type of 

white lung trust fund. 

These other avenues have to be pursued because W.R. Grace has 

side-stepped its responsibilities to the community of Libby. In your 

search for solutions to the real problems associated with asbestos 

litigation, Mr. Chairman, I would ask that you not make it easier 

for companies like W.R. Grace to shift their liability to others. In 

fact, I believe you should make it more difficult. 

The focus here should not be on cutting off the rights of victims, 

but on holding accountable those who are truly responsible for the 

pain and suffering of real people like the people of Libby, Montana. 

Thank you again, Mr. Chairman, for allowing me to testify. 

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

8

Chairman LEAHY. Thank you. I appreciate it very much, and I 

know that the Senator from Montana has been outspoken in his 

feelings on this for years, and very articulate and very knowledgeable. So I appreciate you coming here. I also know you have another committee meeting you are supposed to be at, so we appreciate that. 

Senator BAUCUS. Thank you, Mr. Chairman. 

Chairman LEAHY. Senator Nelson first approached me some time 

ago, actually almost from the time he came here, and said we have 

got to start looking at this asbestos issue, we have got to try to 

craft a legislative solution. He has been tireless in working with 

Senators on both sides of the aisle and I applaud him for that. It 

is in the best tradition of the Senate. 

Ben, we are delighted to have you here. 

STATEMENT OF HON. E. BENJAMIN NELSON, A U.S. SENATOR 

FROM THE STATE OF NEBRASKA 

Senator NELSON. Well, thank you very much, Mr. Chairman and 

members of the committee. I certainly appreciate, Senator Leahy, 

the way in which you have characterized the effort in compensating 

victims and making sure not only that the program that we will 

be talking about ultimately compensates victims, but making sure 

that at the end of the day they are, in fact, compensated. 

I want to thank you for this opportunity to appear here today. 

I was a little nervous when I saw Senator Grassley because I figured he would try to get some sort of a bet on the Nebraska-Iowa 

State game. I am relieved to see that he has now left and I will 

be able to escape that. 

I was also a little bit concerned about your reference to experts, 

and I was looking at the table and realized that you must be referring to somebody other than Senator Baucus and myself. 

I want to thank you, and Senator Hatch as well for his leadership as he walks in the door, for bringing together a group of individuals, I think, today who can share information that may lead to 

a legislative solution regarding the many issues surrounding asbestos litigation. 

These issues are of growing concern to people in my State and 

I suspect, as we have heard from Senator Baucus and from others, 

that the members of the committee have seen the same increase in 

letters and calls from constituents that I have about this issue. 

Historically, in the early 1970’s, lawsuits against asbestos manufacturers opened the door for victims suffering from asbestos-related diseases to be justly compensated for their injuries. When 

Johns-Manville, the largest asbestos manufacturer, filed for bankruptcy in 1982, there were less than 20,000 asbestos cases, most 

on behalf of individuals with severe asbestosis or mesothelioma, a 

vicious asbestos-related cancer. The system worked. Sick people 

and their families were given the financial security that they deserved. 

But the system doesn’t seem to be working anymore. It has been 

overwhelmed by a flood of cases, some from individuals who are not 

yet sick but could potentially get sick in the future. We don’t want 

to prevent those individuals from recovering down the road, but we 

9

also need to work toward allowing those who are sick now to recover now. 

With the current docket load, that doesn’t seem to be happening. 

Over 90,000 new asbestos lawsuits were filed in 2001, representing 

an increase of 30,000 from the previous year. However, the American Academy of Actuaries estimates that there are only about 

2,000 truly new mesothelioma cases filed each year, another 2,000 

to 3,000 cancer cases that are likely attributed to asbestos, and a 

smaller number of serious asbestosis cases. 

As a result, we must work toward finding a way to address the 

lawsuits of seriously ill individuals immediately, without eliminating the ability for those who may become sick in the future from 

having their case addressed at the appropriate time. 

The unfortunate result of these tens of thousands of lawsuits is 

that people who are seriously sick and dying from asbestos must 

wait longer to recover less money than they deserve, if they recover 

anything at all. After transactions costs and fees for both plaintiff 

and defense lawyers, only about one-third of the money spent on 

asbestos litigation actually reaches the claimants. Moreover, as insurance is depleted and an increasing number of asbestos defendants declare bankruptcy, it is inevitable that many asbestos victims 

who develop cancer in the future will go uncompensated. 

One such victim from my State was Val Johns. Mr. Johns was 

born and lived his whole life in Bloomfield, Nebraska. It is the egg 

capital of the world. It is in the northwest corner of the State. He 

and his wife, Sharon, raised their three children there. Two still 

live in the area and have their own families. 

For 19 years before his death, Mr. Johns maintained the town 

cemetery. He served in the U.S. Navy from 1957 to 1960 as an electrician and he was exposed to asbestos pipe insulation aboard the 

destroyer USS Charles Ware. Mr. Johns was diagnosed with malignant mesothelioma in January 2000, and unfortunately passed 

away on November 5, 2001. 

He filed a lawsuit to pay his substantial medical bills and to do 

something for his wife to support her after his death. But all but 

one of the companies that made the asbestos he was exposed to 

were already bankrupt. As a result, the settlement for his family 

was a fraction of what it should have been. 

The economic fall-out from this situation, though, extends beyond 

sick victims. Because every company that manufactured asbestos is 

now bankrupt, plaintiffs have been forced to seek alternative defendants to take their place. According to the RAND Institute for 

Civil Justice, 300 firms were listed as defendants in asbestos cases 

in 1983. By 2002, RAND estimates that more than 6,000 independent entities have been named as asbestos liability defendants. 

Many of these new defendants are small businesses located in 

every community with little or no direct connection to asbestos. I 

have heard from scores of small businesses in my State—local 

hardware stores, plumbing contractors, auto parts dealers, lumber 

yards. None of these businesses manufactured asbestos. None sold 

or installed asbestos products, but these businesses and the jobs 

they create are all at stake. They are now afraid that as primary 

asbestos defendants declare bankruptcy, they will be next in line 

10

for the thousands of cases being filed and their businesses will not 

survive. 

As the number of asbestos claims filed each year has nearly tripled in the last 5 years, the pace of asbestos-related bankruptcies 

has also accelerated dramatically. Since 1998, more companies 

have filed for bankruptcy protection than in the previous 20 years 

combined. And in the first 7 months of 2002, 12 companies facing 

significant asbestos liability filed for bankruptcy, more than in any 

other 3-year period before 1999. 

Firms declaring bankruptcy since 1998 employed more than 

120,000 workers prior to their filing, many of whom were significantly invested in their company’s stock, pension, and 401(k) plans. 

According to Fortune magazine, for example, at the time of Federal-Mogul’s bankruptcy filing last year, employees held 16 percent 

of the company’s stock, which had lost 99 percent of its value since 

January 1999. It was reported that Federal-Mogul employees lost 

over $800 million in their 401(k)’s. Similarly, about 14 percent of 

Owens Corning shares, which lost 97 percent of their value in the 

2-years before its filing, were owned by employees. 

I think we can all agree that those individuals with legal claims 

who are very sick need to be taken care of in the most timely and 

equitable manner possible. That should be our No. 1 priority. We 

must also work to ensure that those who are not sick now but may 

become sick in the future are not precluded from recovering, and 

that there are still funds available for such a recovery. 

Finally, we must consider the unpredictable economic impact the 

immense amount of pending litigation could have on secondary 

businesses and companies. The costs associated with increased 

bankruptcy filings to business owners, employees, and retirees 

could be devastating. 

In order to prevent future Enron disasters for our older workers 

nearing retirements, we must address the very real potential 

threat and adverse impact this type litigation can have on our 

economy if we don’t address these inequities now. We cannot afford 

to see more 401(k) and pension plans become worthless if there is 

action that we can take to prevent that. 

I am a strong believer that every American has a right to his or 

her day in court. I believe also that people dying of asbestos-related 

diseases deserve just compensation for themselves and their families. Achieving the latter does not require a change in our tort system. It requires the restoration of the system’s true purpose of providing relief to those who need it most. 

So, Mr. Chairman, I plan to work with you and the committee 

in any way that we possibly can for the remainder of the year and 

in the next Congress to help resolve these issues in a fair and comprehensive manner. I thank you for the opportunity and your attention to these very important issues today. 

Thank you very much. 

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

Senator HATCH. [presiding.] Thank you, Senator Nelson. We appreciate your testimony here today. 

11

We have a vote on, so the chairman has gone over to make the 

vote and I am supposed to make my statement. I think I only have 

about 6 minutes left, but let me see what I can do. 

If you would go vote and tell them to hold it for me until I get 

there——

Senator NELSON. I will. Thank you, Mr. Chairman. 

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 

THE STATE OF UTAH 

Senator HATCH. Thanks, Ben. I appreciate it. 

I appreciate the chairman holding this hearing today to examine 

the extremely important issue of asbestos litigation. I don’t think 

there are any serious doubts that our Nation faces an asbestos litigation crisis. Nor do I believe that it can be seriously disputed that 

some type of comprehensive solution is necessary. 

Over the past decade, a variety of developments have greatly intensified the need and the urgency for a Federal solution. An exponential increase in asbestos claims has resulted in a wave of asbestos-related bankruptcies, and consequently threatens to leave hundreds of thousands of claimants without fair compensation and 

hundreds of thousands of workers without jobs. Moreover, this crisis is impacting not only the claims of those who are truly sick, but 

also the jobs and pensions of employees of the defendant companies. The Supreme Court has twice called upon the Congress to act 

and it is time that we do so. 

The current crisis is not going to get any better and it will continue to worsen unless we act. In fact, as all of you are aware, the 

RAND Institute for Civil Justice today released their study of the 

asbestos litigation crisis. RAND identifies that the number of 

claims continues to rise and that, to date, over 600,000 people have 

filed claims typically against dozens of defendants. 

In addition, more than 6,000 companies have been named as defendants in asbestos litigation. RAND also notes that about twothirds of the claims are now filed by the unimpaired, while in the 

past they were filed only by the manifestly ill. Former Attorney 

General Griffin Bell recently denounced this type of ‘‘jackpot justice.’’

Because of this surge in litigation, companies, many of whom 

never manufactured asbestos nor marketed it, are going bankrupt 

paying people who are not sick, may never be sick, and who therefore may not need immediate compensation. Let me be clear. I do 

not advocate denying the deserving claimants timely and appropriate compensation, but I do think that we have to make some 

choices here about prioritizing who is paid now and who is paid 

later. If we don’t, there won’t be a ‘‘later’’ and true victims of asbestos exposure, as well as the companies, employees and pensioners, 

will pay the price. 

An editorial in the Wall Street Journal suggested, quote, ‘‘Seeing 

legislators pull their hair over Enron is a pleasant diversion, but 

if Washington is really interested in the jobs and livelihood of 

American citizens it might be better off paying attention to the 

runaway blob known as asbestos litigation,’’ unquote, in its characteristically interesting language. 

12

Why do the number of claims continue to increase when actual 

asbestos exposure has decreased over the years? Because the current litigation system has in some instances required that those 

who are not yet ill file their claims now or risk being barred by the 

statute of limitations later. This is coupled with a, quote, ‘‘enterprising,’’ unquote, trial bar that has orchestrated mass asbestos 

screenings to identify potential clients. 

Don’t get me wrong. Legitimate medical screenings can help to 

identify valid health concerns worthy of compensation. However, 

frequently these screenings are nothing more than an effort to generate large numbers of potential claimants in an effort to force a 

defendant to settle a case, regardless of culpability or causal relation to the claimants, rather than incur the costs of litigation. 

In a letter to the editor of the American Journal of Industrial 

Medicine in May of this year, Dr. David Egilman, M.D. relates that 

for the past several years, he has served as an expert witness in 

liability cases primarily at the request of plaintiffs’ attorneys. Over 

the past 2 years, he has, quote, ‘‘noted that many of these individuals could not (due to inadequate latency or exposure) and did not 

manifest any evidence of asbestos-related disease,’’ unquote. 

And he notes that, quote, ‘‘most of these cases are generated by 

’screenings’ which plaintiff lawyers have sponsored over the past 

several years to attract new asbestos clients for lawsuits,’’ unquote. 

He was, quote, ‘‘amazed to discover that in some of these 

screenings, the worker’s x-ray had been ’shopped around’ to as 

many as six radiologists until a slightly positive reading was reported by at least one of them,’’ unquote. And he points out that 

a payment plan for the reader is often based on the reading result—a higher price for a higher reading of exposure. Now, I doubt 

seriously that that encourages objectivity. 

In addition, the American Academy of Actuaries reports in its 

December 2001 Overview of Asbestos Issues and Trends that two 

recent estimates, quote, ‘‘indicate that the ultimate costs arising 

from U.S. exposure to asbestos could range from $200 to $275 billion,’’ unquote. By some estimates, this amount exceeds the current 

estimates for all Superfund clean-up sites combined, Hurricane Andrew, or the September 11 terrorist attacks. Now, that is incredible. 

As I am sure our chairman is aware, asbestos litigation has already bankrupted over 60 companies, and one-third of those bankruptcies have happened in the last two-and-half years. No one can 

credibly deny that this is a serious problem. 

As Mr. Austern will testify, the number of claims is outstripping 

the resources of bankruptcy trusts to pay the true value of a sick 

person’s claim. Trusts such as Manville are today only able to pay 

approximately 5 percent of a claim’s liquidated value because of the 

increased number of claims filed each year that defy all estimated 

projections. 

It is possible that some of these companies may be able to 

emerge from bankruptcy someday. However, what is the cost of the 

delay caused by a reorganization and approval of a bankruptcy 

trust? What about the vastly diminished resources available for deserving claimants? Those that are sick may die before they receive 

compensation. 

13

Incredibly, there are some who will attempt to claim that there 

is no crisis at all, even some who are here today. Some will contend 

that the current system will sort itself out and that therefore there 

is no need for reform. But the general consensus out there is that 

there is a real problem, and I refuse to bury my head in the sand. 

I am encouraged that there are those among the trial bar that 

recognize the problem and see the need for reform. I know that Mr. 

Kazan recognizes this problem, especially because it affects his clients most directly. I look forward to hearing him elaborate on how 

the current system results in those that are truly ill having their 

awards reduced. 

I am interesting in hearing about how the vast numbers of those 

who are not ill are draining the limited resources of the defendant 

companies, often driving them into bankruptcy, where the risk is 

that there will be little, if any, compensation left for the truly deserving. 

I submit for the record a copy of a full-page ad that was placed 

in Roll Call recently and signed by 20 of Mr. Kazan’s colleagues in 

the asbestos trial bar. The ad urges simple legislative reform to ensure that the truly sick are compensated, while also guaranteeing 

those who are healthy their day in court, if and when they become 

ill. 

Senator HATCH. I would like the written statements from the 

American Academy of Actuaries, the Coalition for Asbestos Justice, 

the National Association of Manufacturers, as well as several letters that I have received, to be submitted for the record. 

Without objection, they will be. I think the information they provide is helpful to our analysis and essential to the debate of this 

issue. 

In conclusion, I would like to say that I sincerely hope my colleagues will agree to work together so that we can attempt to resolve this issue in a reasonable and straightforward manner before 

its crippling effects further endanger our economy and cheat true 

victims out of compensation and innocent employees out of their 

jobs and pensions. 

I appreciate those who will testify here today and I hope we can 

shed some light on this issue and I hope that this statement has 

helped to do that. 

With that, we will recess until the chairman gets back. 

[The Committee stood in recess from 10:50 a.m. to 11:14 a.m.] 

Chairman LEAHY. Many of you, as I look around this room, are 

very familiar with the Senate and understand why the bells have 

been buzzing and the votes have been underway, a series of them. 

The one thing that will get us out of the room, of course, is the 

votes. 

I did say I would recognize Senator Voinovich, who, while not a 

member of this committee, is a very valued member of the Senate, 

a former Governor, and one whose views I respect. 

Senator you wanted to make a statement. 

STATEMENT OF HON. GEORGE V. VOINOVICH, A U.S. SENATOR 

FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Mr. Chairman. I want to thank 

you and Senator Hatch for holding this hearing and allowing me 

14

to sit in on it. I have had a longstanding interest in this issue since 

I was Governor of Ohio. I have had great concern about the victims 

of asbestos. 

I think the chairman will recall that I was in the forefront a couple of years ago of getting a worker’s compensation bill passed for 

the victims of the cold war, those people who worked in our uranium enrichment plants and others that had been treated shabbily 

by our Government. I have also been concerned about this issue. 

I lost my uncle at the age of 59 from leukemia, which I believe at 

the time would not have happened if he hadn’t been exposed to 

things where he was doing his maintenance work. 

The point is that we have got to strike a balance between the 

rights of aggrieved parties to bring lawsuits and the right of society 

to be protected against frivolous lawsuits and judgments that are 

disproportionate to compensating the injured and made at the expense of society as a whole. 

I think, Mr. Chairman, that most would agree that the issue of 

asbestos litigation is presenting a crisis in our country. More than 

50 companies have gone into bankruptcy, and I am really concerned about the companies in Ohio. I think it is hurting the victims and I think it is hurting society. 

Owens Corning, headquartered in Toledo, went bankrupt in 2000 

and lost 97 percent of the value of its stock; 14 percent of it was 

owned by the employees. Federal-Mogul was already mentioned by 

Senator Nelson, and they lost 99 percent of their stock value and 

16 percent was held by the employees. Of course, Babcock and 

Wilcox is also headquartered in Ohio, and another Ohio company, 

Owen Illinois, of Toledo, is faced with asbestos liability as well. 

These bankruptcies have had negative impacts on the victims who 

are really sick and who do not receive compensation. Employees in 

my State lose their pensions and jobs, and solvent companies face 

even more financial strain. 

The chairman knows that the Government required the use of 

asbestos in building materials from before World War II until 1986, 

long after the health risks were known. Consequently, the Government, I believe, has a role to play in making sure that the sick receive compensation without bankrupting all of corporate America. 

Again, Mr. Chairman, I thank you very much for allowing me to 

sit in on this hearing. 

Chairman LEAHY. Well, I thank you, and I thank you for your 

interest in this. 

The panel today includes David Austern, who is the President of 

Claims Resolution Management Corporation. He is General Counsel of the Manville Personal Injury Settlement Trust. The JohnsManville Trust is the bellwether for national asbestos claims. Mr. 

Austern has run the Trust since it first began paying asbestos 

claims in 1988. That was the result of the Johns-Manville bankruptcy. He is highly respected by all parties in the asbestos litigation debate as an independent voice with years of experience. 

He is joined by Fred Baron, who is a partner in the law firm of 

Baron and Budd, in Dallas, Texas. He represented his first claim 

with an asbestos-related illness in 1973. The National Law Journal 

named Mr. Baron as one of the most influential lawyers in the 

United States for his work in protecting the rights of victims of asVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
15

bestos. He has twice represented asbestos victims before the Supreme Court in the Amchem v. Windsor and Ortiz v. Fibreboard 

Corporation cases. 

Mr. Walter Dellinger is joining us today. He served as Solicitor 

General for the 1996–1997 term of the Supreme Court. He is now 

a partner with O’Melveny and Myers. He is well-known to this 

committee. He argued nine cases before the Supreme Court as Solicitor General, including physician-assisted suicide, the Brady Act, 

the Religious Freedom Restoration Act, and the line item veto. This 

past July, he testified at our hearing on class action litigation on 

behalf of the Chamber of Commerce, and we welcome him back. 

Jonathan Hiatt is the General Counsel of the American Federation of Labor and Congress of Industrial Organizations. The AFL–

CIO represents 13 million working men and women, many of them 

exposed to asbestos at shipyards, constructionsites, and other workplaces. Mr. Hiatt has served as General Counsel at the AFL–CIO 

since 1995, and committee members have relied on his expertise 

many, many times. 

Finally, Mr. Steven Kazan is a partner at the law firm of Kazan 

McClain, in Oakland. He represented for the first time an asbestos 

victim in 1974, if I am correct. He has represented thousands of the 

most seriously ill asbestos victims, and from 1998 to the year 2000 

he served as Co-Chair of the Mealey’s National Asbestos Litigation 

Conference. 

I thank you all. Mr. Austern, why don’t we begin with you, sir? 

And, again, I appreciate all of you coming here and I appreciate 

you taking the time on this hearing. 

STATEMENT OF DAVID T. AUSTERN, GENERAL COUNSEL, MANVILLE PERSONAL INJURY SETTLEMENT TRUST, FAIRFAX, 

VIRGINIA 

Mr. AUSTERN. Thank you, Mr. Chairman. As noted, I am president of the corporation which processes claims not only for the 

Manville Trust, for which I serve as general counsel, but we also 

handle asbestos claims for three other asbestos trusts. 

As reflected in my written submission to the committee, and as 

noted in the written in the written submissions of some other witnesses today, the Manville Trust has received more asbestos claims 

than any defendant in the tort system and more asbestos claims 

than any other asbestos trust. Thus far, we have received almost 

600,000 claims. 

Our extensive asbestos claims data base has between 25 percent 

and 30 percent more claims than any other entity. I would like to 

share with the committee some of what that asbestos claims data 

base shows. 

First, in addition to receiving almost 600,000 claims, we have 

paid almost 500,000 of these claimants approximately $2.9 billion. 

From the beginning of the Trust to date, 11 percent of the people 

we have paid have had cancer claims and 89 percent have had noncancer claims. 

Recently, the cancer versus non-cancer division has changed, so 

that in the year 2000, 9 percent of the claims we received were cancer claims and 91 percent were non-cancer claims. And in 2001, 

16

cancer claims were 6 percent of the claims filed and non-cancer 

claims were 94 percent of the claims filed. 

We pay claims as directed by our negotiated and court-approved 

trust distribution process, and we pay non-cancer and cancer 

claims as directed by that. To date, approximately $2 billion of our 

$2.9 billion in paid claims has gone to non-cancer claims, and we, 

of course, have no flexibility in this matter. 

With respect to disease progression and how many of the noncancers will eventually get cancer, of the over 400,000 non-cancer 

claimants who have been paid by the Trust, 2,947 of them, after 

they received the non-cancer payment, then developed an asbestosrelated cancer, for which they filed a claim. This is substantially 

less than 1 percent of all the non-cancer claims we have paid. 

Recently, there have been amendments to our claims processing 

system, and while these amendments, in my opinion, at least, are 

a substantial improvement over the existing system, they certainly 

don’t please everyone. Although in the administration of our claims 

processing system and indeed in the recent amendments to it we 

try to be sensitive to the concerns that I know Mr. Baron will 

speak to, as well as the concerns I know Mr. Kazan will speak to, 

trying to meet the concerns of all these parties means that inexorably we are not going to please everyone all the time. 

But so much for history. Where are we in the life cycle of asbestos claims filings? It is abundantly clear that predicting how many 

future claims there are going to be is very difficult. It has always 

in the past been inaccurate and it has always in the past invariably underestimated the number of future claims. 

My written submission, which by the way I recently discovered 

overstates the Tillinghast-Towers Perrin predicted total asbestos liabilities and claims—my written submission presents the dismal 

history of trying to predict future claims. 

However, based on the predictions, first, of the expert asbestos 

claims forecaster employed by the plaintiffs’ bar, we have received 

only about 45 percent of all the asbestos claims we will receive. 

Other forecasts of future asbestos claims suggest that we have received only 30 percent or so of the claims we will receive. And some 

future claims forecasts are even worse; that is, they predict we will 

receive over 3 million asbestos claims, such that we have received 

only 20 percent of the claims we will receive. Almost everyone 

agrees, however, with respect to asbestos claims we are not halfway there and we are looking at 20 years or so of substantial future claims filings, and thereafter even more years with some claim 

filings. 

Therefore, in exploring whether there is an appropriate legislative solution to this problem, I would encourage that the driving 

public policy consideration, first, not be constrained by the view 

that the asbestos claims filings are on their way down—they are 

not—and, second, that it not be constrained by how we or any 

other system processes asbestos claims. Rather, I would hope that 

the driving public policy consideration for any legislation and any 

legislative solution be based on an absolutely clean slate so that 

new ideas and new solutions can be considered. 

Thank you very much. 

17

[The prepared statement of Mr. Austern appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much. 

Mr. Baron? 

STATEMENT OF FREDERICK M. BARON, BARON AND BUDD, 

P.C., DALLAS, TEXAS, ON BEHALF OF THE ASSOCIATION OF 

TRIAL LAWYERS OF AMERICA 

Mr. BARON. Mr. Chairman, good morning. My name is Fred 

Baron. I am here today to present the views of the Association of 

Trial Lawyers of America on asbestos litigation, and, because of my 

own experience as a lawyer for asbestos victims for almost 30 

years, offer my own personal observations. We have submitted a 

comprehensive written statement of our position which summarizes 

the positions of ATLA on asbestos litigation. 

In a nutshell, Senator Leahy, as you have pointed out, the principal problem is the fact that for over 50 years, tens of millions of 

American workers were unknowingly exposed to asbestos fibers occupationally and hundreds of thousands, if not millions, have suffered injuries that are compensable under the State common laws 

of all 50 States. ATLA’s first and principal interest is to assure 

that there is a system in place that these victims can use to obtain 

adequate and expeditious compensation for their injuries. 

This morning, I would like to address three issues: first, the 

issue of the so-called court congestion; second, the issue of 

unimpaired claims; and, third, offer some suggestions as to what 

might be done to help asbestos victims. 

Let’s talk about court congestion first. I filed my first claim for 

an asbestos victim in 1973. It was a long, hard, expensive litigation. Indeed, the first 10 or 15 years of asbestos litigation involved 

enormously expensive, costly litigation between the victims and the 

defendants. But that only matched the long, lengthy, costly litigation between the asbestos defendants and their insurance carriers 

over whether or not there would be coverage for these claims. 

Studies that were undertaken in the 1980’s showed correctly that 

the amount of money that was being spent on asbestos litigation 

was enormous and the amount of compensation that was being 

paid to victims was relatively paltry in relation to that number. 

Over the last decade, after hundreds and hundreds of claims were 

tried to juries in the 1980’s, that has changed. 

Senator Leahy, I’d like to refer to a chart regarding asbestos 

trials. There are about 50,000 asbestos claims filed in the State 

and Federal courts each year. Of that 50,000, 90 percent of them 

are filed in the State courts rather than in the Federal courts, and 

85 percent of the claims are filed in only 10 States. 

As you can see from this chart, the total number of trials involving asbestos claims in the United States during the period January 

2000 to December 2000, was only 55 claims, and for last year, 

2001, it was only 61 claims. So in terms of court time, only 61 

trials were held in all of the State and Federal courts in the United 

States last year, and I believe that number will be less this year. 

That is matched against 50,000 asbestos claims being filed in the 

State and Federal courts and 50,000 asbestos claimants settling 

their claims. 

18

Second, most of the courts in these impacted jurisdictions, the 

ten or so States, have developed special litigation processes for asbestos cases. If an individual presents with a significant disease 

such as mesothelioma, that individual goes to the head of the line. 

When a client comes into my office today with mesothelioma, I 

can assure that client that they will receive their first compensation within 90 days, and the likelihood is strong that their trial will 

occur in 12 months. As to an asbestosis victim, again because of the 

enormous number of administrative settlements that we have 

reached, victims get compensated usually within 6 months and 

their case is often completed within 24 months. 

Next, I would like to visit the issue of the so-called flood of 

unimpaired claims. First, and most important, is a definitional 

issue. No State in the United States permits a person who is exposed to asbestos but who has not been diagnosed with an asbestos-related disease to successfully prosecute a claim. There is no 

such thing as a claim for concern about ‘‘I am worried that I’m 

going to get sick later.’’ None of the 50 States permit such claims 

to be successfully prosecuted. 

Recently, I took the deposition of a claims manager of the largest 

group of asbestos defendants, and he told me with a straight face 

under oath that he did not believe he had ever paid a dime to anyone who did not have a diagnosed asbestos-related disease. 

There are essentially three forms of asbestos-related disease. 

First is pleural disease. Pleural disease is a scarring of the lining 

of the lung. Admittedly, that does not cause disability, but it clearly is a diagnosed injury that is made by a physician. 

Second is asbestosis, which represents the largest number of 

claims. Asbestosis is a scarring of the lining of the lung and the 

interior of the lung. This is a disease that the medical textbooks 

say represent a significant problem. Asbestosis, by all accounts, is 

progressive, it is irreversible, and if it goes on long enough, it can 

be terminal. Certainly, victims of asbestosis deserve compensation. 

Third is cancer. Asbestos does indeed cause cancer. It causes 

mesothelioma and lung cancer. But in terms of the enormity of the 

problem, the National Cancer Institute believes there are only 

about 2,800 mesothelioma deaths a year in the United States. 

About 1,600 of those individuals file claims. I can tell you today 

that most victims of mesothelima receive compensation—not all of 

them—but most of them receive compensation in mid to high seven 

figures. 

As to the pleural claims, I have the numbers from the Manville 

Trust here on a chart and in terms of the percentage of all claims 

filed, it has gone from 24 percent, which was pre-1995, down to 14 

percent in 2001. And in terms of the dollars paid by the Manville 

Trust, pre-1995 it was 7 percent, and since then only 4 percent. So 

all the dollars paid by the Manville Trust, only 4 percent have gone 

to pleural claims. All other moneys have been paid to individuals 

who have presented a physician’s diagnosis of asbestosis or cancer. 

What can be done by Congress to help? It’s my opinion the most 

important thing that needed to be done has been accomplished 

with the passage of Section 524(g) of the Bankruptcy Code. That 

provision assures funding for future claimants and permits bankVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
19

rupt defendants to leave bankruptcy as solvent, reorganized companies. 

Remember, virtually every one of the asbestos bankruptcies has 

been a Chapter 11 bankruptcy, not a Chapter 7 bankruptcy. No 

jobs are lost. The best example is the Johns-Manville Company. 

When it emerged from bankruptcy in 1987, its assets, $2 billion, 

were placed into a trust for victims. To date, over $2.9 billion has 

been paid to victims, and over $2 billion still remains in the trust 

because of successful asset management. Berkshire Hathaway now 

owns Johns-Manville and it is a larger, healthier company than it 

was before it entered bankruptcy. 

Certainly, there are some things that can be done to help. Number one is tax relief for 524g trusts. There is no reason why the 

trusts who are paying money to victims should be taxed at the normal rates. 

I understand, Senator Leahy, you have sponsored a bill that 

would give a tax exemption to the asbestos-related trusts. That 

would be an excellent idea and a good start to provide more money 

for victims. 

Finally, there have been some suggestions involving the creation 

of a National compensation fund for asbestos victims. ATLA believes that such proposals are interesting and should be explored. 

But if this Committee is going to pursue such proposals the first 

and foremost thing that has to happen is a thorough investigation 

of the total resources that might be available from all sources. 

Again, ATLA believes the principal concern of this Committee 

should be to assure that victims of this unprecedented industrial 

tragedy are properly compensated. 

Thank you, Senator. 

[The prepared statement of Mr. Baron appears as a submission 

for the record.] 

Chairman LEAHY. Mr. Dellinger, you are here representing——

STATEMENT OF WALTER E. DELLINGER, O’MELVENY AND 

MYERS, LLP, WASHINGTON, D.C. 

Mr. DELLINGER. Mr. Chairman, I was invited to appear by Senator Hatch, which I was pleased to accept. But I should also note 

that the law firm with which I am a partner, O’Melveny and 

Myers, has among its clients a number of companies who are defendants in asbestos cases. 

I further note that I personally filed a petition with the U.S. Supreme Court asking the Court to review the trial plan in West Virginia and a so far unsuccessful application to stay that trial of——

Chairman LEAHY. I mention that because as we let Mr. Baron go 

over a couple minutes, we will let you go over a couple minutes for 

balance. 

Mr. DELLINGER. Thank you, Mr. Chairman. 

I think it is a great benefit to the Congress and to the country 

that you and Senator Hatch and the other members of the committee have set out to try to define the scope of this problem and 

to see if there is some bipartisan effort that we could make in order 

to ameliorate what I think everybody, with the possible exception 

of Fred Baron, thinks is a quite serious problem; indeed, what the 

U.S. Supreme Court has called a crisis. 

20

There are really several elements that have produced this as a 

crisis. Before I went into the Government in 1993, I looked at the 

asbestos situation and thought by the year 2002 that it would be 

beyond us. Since heavy use of occupational asbestos ceased in the 

1970’s, we would be at that time seeing the end of the process. But, 

in fact, we have a full-blown crisis that has caused 60 bankruptcies 

and is threatening the viability of claims by people who are seriously impaired. 

Here is what has happened. I do think, in spite of Mr. Baron’s 

statistics, that the system is being flooded by people who are not 

sick, and the RAND study which has been submitted to this committee shows that, as well as other claims. 

We know from the Manville Trust figures that we just heard this 

morning that 94 percent of the 2001 claims were non-cancer claims. 

Of that, there are no doubt some that are suffering from severe 

forms of asbestosis which indeed can impair a person. But every estimate—and I look in West Virginia—is that far and away there 

are claims of people who are not sick. 

Let me say precisely what I mean by that. I am using that term, 

‘‘people who are not sick,’’ as the American Medical Association and 

the RAND study that term; that is, an individual who experiences 

no decrease in the ability to perform the activities of daily lives; in 

other words, as RAND says, an individual who would be assigned 

a zero impairment rating, according to the American Medical Association’s definition. 

What has happened and the reason these claims are compensable is that, increasingly, one is able to forum-shop and go to a 

jurisdiction which will allow cases to be brought, first of all, by people who are not demonstrating that they are sick. The forum-shopping means that the problem is localized in a few States and a few 

counties which are themselves adopting a national legislative solution, when they are not a legislature and they haven’t been chosen 

by the people of the other 49 States and when the solution is itself 

flawed. 

What happens is that you have a mass-trial proceeding like the 

one in West Virginia where you set up a trial plan for 8,000 claims 

to be tried against over 250 defendants in a single proceeding. It 

is going to be impossible to get a fair trial. That means that settlements are forced, as they have been this week, when no one knows 

whether those 8,000 claims would indeed show up as being valid 

claims or impaired claims, or whatever, because so many companies cannot afford to go through that kind of process. When payments are made to people who are not impaired, that then in turn 

brings another set of cases that will never be examined closely and 

will go through a mass-trial process. 

What are the effects of this? There are adverse effects on the defendant companies, on their employees, on their shareholders and 

on pension programs. There are adverse effects on plaintiffs who 

are seriously impaired, and Mr. Kazan will speak to that this 

morning. 

While there are some very strong companies who have now been 

brought in as defendants in this case, that doesn’t help a victim 

suffering from severe mesothelioma or his or her survivors. Companies that they could sue have gone bankrupt. 

21

If you look at this morning’s Washington Post, Mr. Chairman, it 

notes the case of the widow of electrician Dale Dahlke on the front 

page of the Business Section. He died of mesothelioma. She has 

brought suit against 11 companies and all 11 have gone bankrupt. 

The fact that there are other companies out there in the economy 

whom she can’t sue and against whom she has no claim that could 

be sued by other people does her no good whatsoever. 

I think Mr. Kazan will demonstrate that point quite effectively 

that people now have claims they cannot get reimbursed against 

companies that are in bankruptcy, when many of those companies, 

nearly all of those companies, have made payments to people who 

are not sick. 

The trial process, finally, I think, not only causes a problem for 

the economy, but it also calls into question that fairness of the civil 

justice system. As the Committee on the Judiciary, I think that is 

something about which you ought to be concerned. 

As someone who has taught civil procedure for many of the years 

I was at Duke, I don’t see any semblance in a civil procedure book 

to the kind of trial plan that is going to go on where you have got 

hundreds of defendants trying to make defenses against thousands 

of plaintiffs at a single time. This trial plan doesn’t exist in the 

same universe as the Due Process Clause of the United States Constitution. It is a trial plan that was never designed to produce a 

fair result. It is a trial plan that produces settlements. And I do 

not take the comfort that Fred Baron takes in the relatively few 

number of trials. I think the relatively few number of trials we see 

reflects the fact that the trial process that is anticipated is fundamentally unfair. 

Let me conclude, Mr. Chairman, by saying that I am pleased 

that you and the other members of the committee want to help 

achieve a solution to this. We know what we have to have—full 

and timely compensation for those remaining victims and future 

victims who suffer from serious illnesses. We need to stop the hemorrhaging of hundreds of millions of dollars going to those who are 

not sick, to protect American jobs, pensions, and shareholders. Finally, we need to ensure that there is no asbestos exception to the 

United States Constitution, and that we can be confident that our 

system of justice operates in a manner that is fairly designed to 

achieve justice. 

Thank you. 

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

Chairman LEAHY. Thank you, Professor. 

Mr. Hiatt, as I noted earlier, the AFL–CIO has thousands of 

members. It also has a very large number of those members who 

have asbestos-related illnesses, and so we are glad to have you 

here and thank you very much. 

STATEMENT OF JONATHAN P. HIATT, GENERAL COUNSEL, 

AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, WASHINGTON, D.C. 

Mr. HIATT. Thank you very much, Chairman Leahy and members of the committee. I would like to thank the committee for providing this opportunity to present the Federation’s views on the deVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
22

ficiencies of our current litigation-based system of resolving asbestos claims and on the need for Federal legislation that would adequately address the rights of workers suffering from exposure to 

asbestos. 

As you mentioned, Mr. Chairman, the AFL–CIO’s member 

unions represent millions of active and retired workers who have 

been occupationally exposed to asbestos, hundreds of thousands of 

whom are living with the deadly consequences. For many, this exposure occurred while working in defense-related industries, in 

shipyards, for example, or in other public service, also in building 

and construction, in transportation, other manufacturing industries. 

More recently, we have seen an increase in asbestos-related diseases among those working in telecommunications and the service 

and maintenance trades. For far too many of these workers, the 

legal system has offered lengthy delays, followed by limited compensation, compensation which often comes much too late. 

The exposure of millions of working Americans to asbestos is one 

of the largest torts in this Nation’s history. In the recent very comprehensive study that Senator Hatch alluded to earlier this morning, the RAND Institute estimated that as of the end of the year 

2000, over 600,000 claims, as I think he said, have been filed, at 

a cost of $54 billion, less than half of which had actually been paid 

to the victims themselves. RAND now projects that up to 2.5 million more claims will be filed, at a potential cost of over $200 billion. 

I don’t agree with Mr. Baron that there is any evidence that 

these transaction costs are going down. In fact, on pages 60 and 61 

of this RAND Institute study, they address this and say that, of the 

total cost of every dollar up until the 1990’s, about 37 cents was 

going into the pockets of the victims. And in the 1990’s, that had 

only risen to about 43 cents on the dollar. So I think it is still a 

major problem. 

The labor movement has been actively involved in efforts over 

the past several years to craft solutions to the tragedy of asbestos. 

We have sought to work with all the interested parties, with manufacturers, insurers and other defendants, counsel for both plaintiffs 

and defendants, the Johns-Manville Trust, and congressional leaders of both parties. 

In the last major attempt here on the Hill to address this issue, 

we worked closely with then-Chairman Hyde of the House Judiciary Committee and Ranking Minority Member Conyers, who both 

sought to forge a consensus among the various parties. And for reasons I have outlined in my written testimony, those efforts didn’t 

succeed, but a lot was learned and we remain willing to participate 

in these efforts. 

We believe that there is a broad and growing recognition by all 

interested parties that there are serious problems with the way the 

civil litigation system has ultimately addressed the plight of asbestos victims. In addition to the high transaction costs and excessive 

delays that I have already alluded to, these problems include inequitable allocation of compensation among victims, caused in part 

by the so-called bundling of claims in consolidated mass settlements which Mr. Dellinger just talked about and a general climate 

23

of uncertainty that is damaging business far more than it is compensating victims. Also, uncertainty for workers and their families 

is growing as they lose health insurance and see their companies 

file for bankruptcy protection. 

Meanwhile, we think there is also a growing recognition that 

some of these problems could be eased by developing alternative 

methods of resolving the claims of asbestos victims. But we are 

convinced that any legislative solution to the asbestos crisis has to 

meet certain basic fairness tests. I have appended to my testimony 

the AFL–CIO’s Executive Council statement on asbestos which lays 

these out, and I would just like to conclude by saying a few words 

about some of them. 

First, anyone who has been measurably affected by asbestos exposure has suffered a wrong and should receive some amount of 

monetary compensation for that wrong. We completely agree that 

those with serious disease—cancer, mesothelioma, advanced-stage 

asbestosis—are in a completely different category and should be entitled to significantly more compensation than victims with less serious disease. 

Where one draws the line—that is, what medical criteria are employed—will be a critical determination. But for those elements of 

the business community who believe that asbestos reform simply 

means knocking out of the system victims with less serious forms 

of impairment, this is a non-starter as far as we are concerned. 

Here, I do agree with Mr. Baron and I don’t agree with Mr. 

Dellinger. I don’t think there are just two categories, people who 

are very, very sick and people who are not sick at all. It is not that 

simple, and I think there is a very large middle category of people 

who are impaired, who are sick, and who need to have some monetary compensation, even if they should be looked at differently from 

the most seriously impaired. 

Second, while an administrative system may have benefits for 

some classes of asbestos victims, those with serious asbestos-related medical conditions must have unimpeded access to the courts. 

Moreover, victims with early stages of asbestos-related disease 

should not be required or pressured to waive their right to additional compensation if their conditions worsen. 

Third, any substitute reform system should be cheaper, speedier, 

and less adversarial than the present system for plaintiffs as well 

as defendants, and it can’t be a device for re-litigating the broad 

issues that have effectively been settled in these past many years 

of litigation. 

Fourth, any new system has to provide for affordable testing and 

monitoring to all those who have been occupationally exposed. This 

is particularly important since, at present, the trial lawyer bar, as 

Senator Hatch mentioned, is offering this service at no cost to the 

workers in numerous locations throughout the country. So any substitute initiative which significantly reduces the need for legal services will remove this critical feature of the current system, leaving 

potential victims unable to adequately track the status of their 

medical condition. 

Finally, there has to be sufficient funding for any newly legislated system. As the RAND study that I cited earlier acknowledges, 

we are potentially talking about a very, very large amount of 

24

money that will be necessary to finance a substitute system. If the 

defendant community is unwilling, first, to provide the relevant financial information necessary to determine costs, which has been 

a continuing problem, and, second, to subsidize those costs, then it 

will be impossible to reach any sort of consensus solution. 

Of course, we strongly support a contribution from the Federal 

Government, which after all does bear its own significant share of 

responsibility for this catastrophe. But even with Government 

money, that will not remove the need for a major financial investment from the defendant community to fund any comprehensive solution, and that investment cannot be arbitrarily capped in such a 

way as to place the ultimate risk back on the victims, as we have 

seen with the Manville Trust experience. 

Even so, the goal would be for the costs to be more defined and 

more predictable than is true at present, and presumably the 

amounts involved would also be reflective of substantially reduced 

transaction costs in the asbestos compensation system, leaving 

more money for victims and for companies. 

Thank you, Mr. Chairman, and we are prepared, as I said at the 

outset, to work closely with you and the committee in trying to 

fashion a solution to this problem. 

[The prepared statement of Mr. Hiatt appears as a submission 

for the record.] 

Chairman LEAHY. Well, we thank you, and we thank you for all 

the hours you have spent up here with us and other committees 

in representing your membership. 

Mr. Kazan, I am sure I am mispronouncing your name. Please 

give me the pronunciation. 

STATEMENT OF STEVEN KAZAN, KAZAN, MCCLAIN, EDISES, 

ABRAMS, FERNANDEZ, LYONS AND FARRISE, OAKLAND, 

CALIFORNIA 

Mr. KAZAN. Well, it is Kazan, Mr. Chairman, but I have been 

called lots worse than Kazan. 

Chairman LEAHY. I try very hard to get names right. So, Mr. 

Kazan, I am delighted you are here and thank you for coming all 

the way across the country to join us. 

Senator HATCH. We all understand that situation of being called 

worse. 

[Laughter.] 

Chairman LEAHY. Except for Senator Hatch, whom we all speak 

reverentially to. 

Senator HATCH. I would like to hear a little bit more of that. 

[Laughter.] 

Mr. KAZAN. Thank you, Mr. Chairman and members of the committee. I am a plaintiffs’ lawyer. I represent people who are dying 

from cancer caused by asbestos exposure. I speak for myself and 

other members of the asbestos bar who stand up for the interests 

of asbestos cancer victims. Some of these victims, including Ms. 

Dahlke, are here with us today. 

Asbestos litigation has become a national nightmare, as well as 

a national disgrace, and cries out for your attention. The legacy of 

asbestos disease is a tragedy for my clients and their families, 

made only worse by a legal system that is compounding their 

25

plight. Everyday, we see people who are seriously ill. Many have 

just a few months to live. 

In the past, I could promise a man dying of mesothelioma, a progressively debilitating and incurable cancer that kills within a year 

or two, that his lawsuit would guarantee his family’s financial security after he was gone. Today, in many cases, I can no longer 

make that promise. 

How did we get here? It is a tragic tale that begins with outrageous corporate disregard for the health and safety of American 

workers and continues today with a betrayal by the justice system 

that is supposed to protect them. 

Industry knew by the 1920’s that asbestos could harm the lungs 

and cause death, but did not begin to warn workers until the mid1960’s. Public concern, the establishment of OSHA, and fears of liability finally led to a drastic reduction in asbestos use after 1973. 

However, the earlier exposures have left a wake of incubating devastation that will be with us for decades. 

The health effects of asbestos exposure vary. It causes some cancers and non-cancer conditions as well. The two principal cancers 

are lung cancer and mesothelioma. There are 2,000 or more mesothelioma cases expected each year for at least the next 15 years, 

with significant additional cases well into the 40’s of this century. 

Asbestos also contributes to another 4 to 5,000 lung cancers each 

year. In my view, any serious look at the asbestos crisis must first 

focus on the needs of these victims. 

Asbestos exposure also causes two non-cancer conditions—asbestosis and pleural changes. Asbestosis is a scarring of the lungs 

which can lead to disability and even death. Fortunately, such extreme cases are quite rare today. Pleural changes usually take the 

form of plaques, small thickened areas on the membrane between 

the lungs and the ribs. Plaques do not, however, cause any symptoms and have no effect on lung function. Neither asbestosis nor 

pleural plaques turn into lung cancer or mesothelioma. 

Asbestos victims began filing suit against manufacturers in the 

early 1970’s, and by the late 1970’s seriously ill victims were winning their cases. By the mid-1980’s, a disturbing new trend began 

to emerge. Some of my colleagues began filing thousands of claims 

for people who just were not sick. Three years ago, this trend accelerated rapidly. 

Today, these claimants are often treated like commodities, recruited and bundled by hired-gun operators of mobile x-ray equipment or through websites that proclaim to people ‘‘you may have 

million-dollar lungs.’’

We have gone from a medical model in which a doctor diagnoses 

an illness and the patient then hires a lawyer to an entrepreneurial model in which clients are recruited by lawyers, who then 

file suit even when there is no real illness. These are not patients; 

they are plaintiffs recruited for profit. 

Last year, some 90,000 asbestos claims were filed. Less than 7 

percent were for cancer and 75 percent or more were filed by lawyers for people without any asbestos breathing problem whatsoever. The burden of paying people who are not sick has sucked billions of dollars out of the defendant companies, pushing more than 

60 in bankruptcy; more than 20 since January of 2000 alone. 

26

I have no sympathy at all for the asbestos defendant companies. 

The wrongs they did are the cause of this public health catastrophe, but these companies provide the only resources to compensate my clients and other asbestos victims. Bankruptcies delay 

compensation for years and severely reduce the amounts awarded 

to the sick. 

In 1991, the U.S. Judicial Conference called asbestos litigation a 

‘‘crisis,’’ saying ‘‘the worst is yet to come.’’ If Congress did not act, 

they said, ‘‘all resources for payment will be exhausted in a few 

years,’’ leaving ‘‘many thousands of damaged Americans with no recourse at all.’’

They were right, and it just keeps getting worse. The U.S. Supreme Court has called on Congress several times to act. As you 

consider this problem and its potential solutions, I ask you to think 

about those hurt most by asbestos, people who are seriously and 

often terminally ill. Think of their husbands or wives and of their 

children. I urge you to act quickly to fix this broken and abused 

part of our justice system before the real victims of asbestos lose 

everything. Only Congress has the power to end this national 

nightmare. 

Thank you. 

[The prepared statement of Mr. Kazan appears as a submission 

for the record.] 

Chairman LEAHY. Thank you. 

Senator Carper, did you want to add something here before we 

go to the questions? 

Senator CARPER. I simply want to say, Mr. Chairman, my heartfelt thanks to you for scheduling this hearing and for our witnesses 

that are here. This is a very important issue. There is a reasonable 

compromise that can be found on this issue that is fair to those 

who have been harmed and to the businesses. There is a fair compromise and it is just incumbent on us to find that. 

I thank you for this hearing. 

Chairman LEAHY. I thank you, Senator, and I appreciate the 

time you have spent with us and the amount of time you have 

spent at these matters before this committee. 

Senator Voinovich, I thank you, too. 

Mr. Austern, let me ask you a question because I sort of think 

of you as the repository of a great deal of information, probably 

more than you would like to have, on these issues. 

We see all the things written about the types of victims filing 

claims, including these so-called unimpaired victims. As I read this, 

it almost depends upon who is writing it, what unimpaired means, 

so if I can ask you some specific questions about the unimpaired, 

especially as it refers to claims filed with the Manville Trust which 

is sort of the bellwether here. 

Some have claimed that anyone who does not have cancer has 

not been truly injured by asbestos. On the other hand, we heard 

what Senator Baucus said earlier about the family in Montana and 

some of the Libby, Montana, victims. 

Does the Trust have victims of asbestos exposure that don’t have 

cancer, but do have serious physical ailments? 

Mr. AUSTERN. In aggregate total, from inception to today, 11 percent of all claims were cancer and 89 percent were not. Accepting 

27

Mr. Baron’s pleural figures as I do, because they are accurate, of 

the actual claims filed in total thus far, 18 percent have been pleural. 

With respect to the issue of whether the remaining 59 percent 

suffer from impairment, I am not a medical doctor or a doctor of 

any sort. Clearly some do not, clearly some do. In our changed 

trust distribution process that I alluded to, the definition of a serious asbestotic has changed. It now requires that someone have a 

particular severity of the disease. 

We have attempted to model how many people that would be 

each year based on this new definition of severe asbestos disease. 

It would be 40 or 50. It is an irrelevant number in terms of how 

much we will be able to pay and all the others will not have a severe asbestos disease. 

Chairman LEAHY. Well, help me a little bit further on this. There 

is an increase in filings for people with disabling asbestosis. It was 

about 25 percent in 1999 and it went to 39 percent in 2000, and 

so on. 

What is disabling asbestosis and are these people impaired? 

Mr. AUSTERN. The definition of disabling asbestosis in the system 

that we now have, not the changed system, not the one that goes 

into effect, requires that a person have an x-ray result that shows 

that they have an asbestos disease. Candidly, it is a low severity, 

but nonetheless an asbestos disease. As Mr. Baron said, it is scarring of the lungs. 

And, second, for severe asbestosis, they must have had a breathing test and that breathing test must show that at least one of the 

scores was below 80 percent of what would be expected for their 

age, their height, their weight, and certain other factors. 

Chairman LEAHY. Let me start now at this end of the table and 

ask you about getting information. Mr. Hiatt had said that manufacturers and their insurers failed to provide full financial information on the funding needed to support an acceptable claims resolution system. 

Now, Mr. Kazan, I am going to ask you and Mr. Hiatt and Mr. 

Baron, could you comment on this and whether you agree that getting complete financial information from the manufacturers and insurers is critical to give any kind of intelligent evaluation of a reform proposal? 

Mr. Kazan? 

Mr. KAZAN. Well, Mr. Chairman, these are mostly publicly traded 

companies and my understanding is that they are, in fact, required 

to publish financial data. We have never had a problem that I 

know of finding out what their assets, and so on, are. 

I can tell you that in many bankruptcies the plaintiffs’ committees on which I and Mr. Baron usually serve vigorously investigate 

and go after hidden assets of the kind that Senator Baucus mentioned in his earlier remarks. 

Chairman LEAHY. Are you including insurance companies in this, 

too? 

Mr. KAZAN. Well, the insurance assets or the claims of insurance 

coverage are also discoverable and we know about them. I did come 

today, however, Senator, prepared to talk about the problem rather 

28

than the solutions because I thought that was what you had instructed us to do. 

Chairman LEAHY. That is fine, but we have got to find solutions. 

But would you say that in finding those solutions, it is also necessary to know what the financial backgrounds are? 

Mr. KAZAN. I think we have that information and I don’t think 

that is a problem. 

Chairman LEAHY. Mr. Hiatt? 

Mr. HIATT. Well, my concern, Senator, was not so much on a 

company-by-company basis, and I did not make my statement from 

the perspective of difficulty we have had in a particular piece of 

litigation where there are legal obligations that the attorneys can 

take advantage of to provide the information, but rather in terms 

of the wholesale scope of this problem and what the business community as a whole and the insurer community as a whole would 

need in order to subsidize this problem. 

Admittedly, that is a very difficult task because nobody does 

know, as the RAND people acknowledge, what the long-term scope 

of this is going to be. But we don’t want is another Manville situation where we start off thinking that we have a total sum that is 

a realistic figure, only to have within a few years that fund being 

able to pay only five cents on the dollar. That is what we are most 

concerned about. 

Chairman LEAHY. That is also my concern. As Justice Ginsburg 

suggested in her case, if we are going to find a legislative solution, 

and I would think if we are going to set up a system for victims, 

we also have to know that the financial wherewithal is there. That 

is a question I have. I will stop with that, but I will leave it to anybody else to speak—Mr. Baron, you can, or Mr. Dellinger or Mr. 

Austern—to that question. 

I should also note in this that we are using a lot of statistics, a 

lot of figures, and shorthand on some things. I only want the results of this hearing to educate all of us. Look at your testimony 

afterwards. I will make sure, and I am sure Senator Hatch will 

have no objection to this, that the record will stay open so that 

each one of you can amplify in any way that you wish to on your 

answers. 

Mr. Baron? 

Mr. BARON. Well, I think you hit the nail on the head, Mr. Chairman. I think complete financial disclosure is the first and most essential piece to this effort because if a fund is to be created, we 

need to know what the financial parameters of the fund are. 

Indeed, we are here because so many of these companies and 

their insurance companies claim that they don’t have adequate resources to cover the load. You need to look into that issue and identify what resources are available because it is essential that claimants have the ability to access a fund that is going to be adequate 

to pay fair compensation. 

Unfortunately, there have been numerous cases of fraudulent 

conveyances and years of litigation trying to bring back assets to 

companies that have been spun off or involved in a shell game essentially to eliminate liability exposure to asbestos claimants. I 

think that this investigation is going to be a long, tedious process, 

29

but I think it is the first thing that needs to happen before a fund 

is created. 

Chairman LEAHY. Thank you. 

Mr. Dellinger? 

Mr. DELLINGER. Mr. Chairman, just a personal word, speaking 

entirely for myself in this instance about the role of the Federal 

Government which I have reflected on for some years. 

In World War II, we faced a critical situation where we were 

going to lose control, I think, of both the Atlantic and the Pacific 

Oceans and we had to have ships. We asked shipyards to get ships 

out into the water to do battle in World War II, and we threw our 

workers into that situation, shipyard workers, and they got those 

ships out. There was huge exposure to asbestos. It is the source of 

some big portion of this claim. 

And we all benefited from that. Everybody in this room today 

benefits from the fact that we got those ships out there. So in 

terms of the appropriateness of a claim and that those of us in this 

generation have benefited from those World War II, there is actually a very good argument to be made that we as beneficiaries 

should contribute at least to that aspect of the problem that was 

caused by what we absolutely had to do in World War II. 

Chairman LEAHY. Thank you. 

Mr. AUSTERN. Mr. Chairman, if I could echo Mr. Dellinger’s comment, not for a solution today, but I would like to make available 

to the committee at a future time the very substantial record that 

the Manville Corporation had in suing the Federal Government for 

the exact liability that Mr. Dellinger just mentioned. I think it 

would be of interest to the committee to see just how much the 

Government, in fact, knew about the very dangers of asbestos that 

Mr. Baron and Mr. Kazan have just spoken about. 

Chairman LEAHY. Thank you. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. This is a very 

interesting hearing to me and I respect all of you greatly. But, Mr. 

Dellinger, I am having a hard time understanding how the court 

in West Virginia could consolidate or cojoinder the claims of 8,000 

plaintiffs against 250 defendants. 

Can you explain to me how this provides due process to any of 

the parties involved? 

Mr. DELLINGER. Senator, that is a good question. 

Senator HATCH. Does this compromise the rights of asbestos victims? 

Mr. DELLINGER. Here we have thousands of plaintiffs who 

worked at hundreds of locations all around the country. They 

worked in different kinds of jobs, they worked in different time periods over six decades. They had different individual health backgrounds. They were exposed to hundreds of different products with 

different applications, different instructions, different warning labels. They have, among the 8,000, different theories of recovery. 

But under the mass tort rule, the liability of hundreds of defendants to those thousands of plaintiffs was going to be resolved in a 

single mass proceeding where defendants would not have any opportunity to show that the claims against them had no relationship 

to the claims made against them, or to demonstrate the tremenVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
30

dous difference among defendants. In that setting, it is hard not to 

assume that the worst is going to happen and that you have to settle. 

Now, that has real consequences. If the tort system doesn’t operate fairly, it doesn’t achieve its goal of providing proper incentives 

to good conduct. If it is just a random shot as to whether you are 

found liable or not, so that companies that have little or no relationship to the exposure to asbestos are the ones that actually wind 

up paying a part of the costs, then the system simply won’t work 

as an incentive to avoid risky behavior because it simply is going 

to be irrelevant whether you are at risk or not. 

Senator HATCH. I understand that the majority of defendants in 

the West Virginia cases, or mass action should I say, have settled 

their claims. Do those settlements affect your appeal to the U.S. 

Supreme Court? 

Mr. DELLINGER. We still have our petition pending with the Supreme Court and the two claims we put before the Court are still 

there. One is that before you have a proceeding like this, you have 

to make a determination that the claims are sufficiently common, 

that they can be tried against this group of defendants in a way 

that allows the defendants to advance their rights without prejudice. West Virginia makes no such determination. They just throw 

the cases in. 

We are asking the Supreme Court to say, look, it could be that 

you can try cases of more than one plaintiff against more than one 

defendant, but it has always been the case that you have had to 

make a determination that could be done fairly. They have just dispensed with that in West Virginia. 

And the fact that there are a relatively few defendants left does 

not change the fact that no such determination was ever made, or 

the fact, Senator Hatch, that a Justice on the West Virginia Supreme Court estimates that at least 5,000 of the 8,000 cases have 

no connection to the State of West Virginia, the ones being tried 

there. So this is a West Virginia solution for the country. 

Senator HATCH. Mr. Kazan, where are all these new asbestos 

cases coming from? I thought that exposures had been reduced 

down to very low levels 25 years ago or more. How is it possible 

that we are seeing 90,000 new cases last year? 

Mr. KAZAN. It is a function, Senator, of the vigor and strength 

of the free market system. There is an economic opportunity for my 

colleagues in the plaintiffs’ bar and they are maximizing that opportunity. 

Senator HATCH. It sounds like a fairly strong indictment of the 

claimants’ bar. 

Mr. KAZAN. Well, it is not an indictment. If it was indictable, we 

would have a solution to the problem. 

[Laughter.] 

Senator HATCH. Are you suggesting that this legislation should 

provide some indictable——

Mr. KAZAN. Even I would not go that far. 

Senator HATCH. OK. 

Mr. KAZAN. The reality is, Senator, that well over 50 percent of 

the American adult population, if you took x-rays, would demonstrate changes that meet the requirements today to justify an asVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
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bestos lawsuit. That doesn’t mean they have changes in their lungs 

that have anything whatsoever to do with asbestos. 

The bulk of these cases that are being filed today come out of 

these screenings where a doctor who gets paid piecework doing volume business reads these films as simply consistent with asbestos 

disease. That is not a diagnosis. It would never get to a jury as 

more probable than not. 

There are over 150 medical causes that produce these changes in 

the lungs, and that is why they can only say ‘‘consistent with.’’ 

Nonetheless, those are the very claims that are being filed. They 

are being recruited. The Manville Trust and others are paying 

them. These are people who are not, by any rational definition of 

the word, sick. Their breathing is not affected, their lives are not 

affected. They simply have an x-ray that some for-hire doctor is 

prepared to say, in a medical-legal evaluation, not a physician-patient one, that there is a change that could possibly have come 

from asbestos. 

So, Senator, although the Manville Trust talks about 1 or 2 or 

3 million future cases, in fact, the number of potential future cases 

is virtually infinite—50 million, 70 million, 100 million cases. 

Senator HATCH. Of these cases, how many are brought by people 

who are basically unimpaired from asbestos? How much money has 

gone to these claimants and how does that impact your clients? 

Mr. KAZAN. Well, approximately, from what I understand from 

the Manville Trust, last year 75 percent of the claims filed were for 

people with no lung function impact of asbestos. There is a whole 

range of cases of people who have asbestosis that does affect their 

breathing, and I certainly believe those are legitimate cases. They 

have real value and they ought to be compensated. 

My guess is, based on the Manville data, there are 10 or 12 or 

15,000 of those cases a year nationwide, added to the maybe 10,000 

cancer nationwide each year, the 20 or 25,000 cases, which is the 

kind of volume we were getting up until 1997, 1998. 

The system worked fine. We were doing well. The courts could 

handle that without difficulty. We wouldn’t need your help if that 

were the case. The difference is mobile x-ray vans and entrepreneurial lawyers. 

Senator HATCH. Yes, Mr. Hiatt? 

Mr. HIATT. Senator Hatch, I just wanted to say whatever merit 

there is to the factors that Mr. Kazan has just described, I think 

that also leaves out a very important factor that contributes to the 

increase in claims that are being filed, and that is that there are 

new sectors where workers who had never before had to worry or 

thought they had to worry that they had been exposed or that their 

exposure had been significant enough to possibly result in asbestosrelated disease has now become clear. 

The Communications Workers of America union had never seen 

this as a major problem affecting their members, and recently they 

have done sampling and found extremely high exposure rates 

among installers, cable splicers, outside plant technicians, and auto 

mechanics who had been exposed to asbestos. This would be a 

whole category of workers that would not have known to even get 

themselves tested in the past. So I think that that is an important 

factor. 

32

We have just finished reading about the exposure by workers 

who helped with the clean-up of the World Trade Center disaster, 

and I am afraid that as long as asbestos is still around there are 

going to be new sectors and new places that these claims are going 

to come from. 

Senator HATCH. Well, maybe I should get down to real business 

here. I may be one of the few Members of Congress who really has 

worked around asbestos, because I worked in the building and construction trade unions for 10 years. Asbestos was used for pipe covering and I was a metal lather putting in suspended ceilings and 

partitions and corners and all kinds of other things. 

Mr. DELLINGER. I would recommend Mr. Baron, Senator. 

[Laughter.] 

Senator HATCH. That is what I am getting to. I am going to forget about you three. 

Mr. KAZAN. You don’t want me, Senator. I would just reassure 

you that you are fine. 

Senator HATCH. Mr. Baron, I think maybe I need to retain you 

because some people have said that I look sick from time to time. 

Mr. BARON. Senator, you are obviously in very good health. The 

issue, though, is a really important one in terms of the number of 

claims. 

There is another factor that hasn’t been mentioned. In addition 

to finding more workers who have been exposed to asbestos over 

their career that really didn’t know they were exposed and therefore adding another group to the litigation mix, there is another 

factor that we lawyers and some of the statisticians call ‘‘propensity to sue.’’

Harvard has studied propensity to sue in medical malpractice 

cases and found that maybe 10 or 12 percent of people who have 

sustained malpractice actually file suit. In automobile accidents, 

the generally accepted figure is about 15 percent of individuals who 

have potential claims actually pursue them. 

In asbestos litigation, because of the enormous amount of publicity and discussion of the issue in the public, we are seeing that 

the propensity of individuals who have contracted asbestos-related 

diseases to sue is high. Indeed, the most telling statistic is the 

number of mesothelioma cases filed. 

Every year in the United States for the past 25 years, between 

2,500 to 3,000 people have developed mesothelioma. That disease 

is caused only by asbestos and it is invariably fatal. Each individual arguably has a cause of action. 

Back in the 1980’s and into the early 1990’s, we would only see 

maybe 800 claims, 1,000 claims a year. Now, we are seeing 1,600 

to 1,800 claims. The propensity to sue among mesothelioma victims 

is very, very high. It is also getting higher among the victims of 

asbestosis and that accounts for the large number of filings. 

Senator HATCH. Well, my time is up, but let me just turn to Mr. 

Kazan. Do you have any response to that? I can see why Mr. Baron 

makes so much money every year. I mean, he is very persuasive. 

Now, what do you have to say about that? 

Mr. KAZAN. Well, aside from the fact that he is wrong, certainly 

more and more of the cancer victims are coming forward with litigation. Doctors are more aware of this. There is more publicity. 

33

The Internet has made a significant impact, as well, in disseminating knowledge to the public. 

At the end of the day, however, it is not people deciding that 

they want to bring claims. What is fueling the increase in the last 

3 years is lawyers going out and advertising for free screenings, 

sending out mobile vans, recruiting plaintiffs who feel fine, who 

don’t know they have any claim, who never would have thought 

about it until the lawyer gets the x-ray and has somebody read it 

as showing that it might possibly have something to do with asbestos. 

These are not diagnosed cases of asbestos disease in any sense 

that any of you would think of when you think about illness, where 

you go to a doctor and you tell him what is wrong and he orders 

tests and he evaluates your condition and thinks through the process and reaches a conclusion. These are simply people who have an 

x-ray that somebody says might be from asbestos. They don’t see 

a doctor in most cases, and when they do it is a for-hire screening 

doctor. 

Our materials include some depositions where there is an osteopath who has confirmed 14,000 consecutive diagnoses of asbestosis 

in people he has seen and he doesn’t even know what the word 

means. So it is a fiction. That is simply what it is. These are not 

real illnesses. They are not real cases in large degree. That is not 

to say there aren’t thousands of legitimate, non-cancer cases every 

year. There are. They deserve to be paid. That is not the problem. 

Senator HATCH. Mr. Baron, just one last comment. I have quite 

a bit of respect for you, but I agree with him; I think you are wrong 

in this area. I know that you must have been talking tongue-incheek when you said in June of this last year at the Mealey’s asbestos bankruptcy conference, quote, ‘‘I picked up my Wall Street 

Journal last night and what did I learn? The plaintiffs’ bar is all 

but running the Senate. Now, I really strongly disagree with that, 

particularly the words ’all but.’’’

Mr. BARON. Senator Hatch, that, as you correctly stated, was a 

comment I made very jokingly when somebody brought to my attention a copy of a Wall Street Journal editorial criticizing me for 

filing claims for asbestos victims. 

Senator HATCH. Look, don’t get so defensive. I took it as humor. 

I thought it was pretty good humor——

Mr. BARON. It was intended to be humorous. 

Senator HATCH [continuing]. Except that some of us do feel that 

the plaintiffs’ lawyers and the plaintiffs’ bar have an inordinate 

control in the Congress of the United States. Now, rightly or 

wrongly, we feel that way and I think we are pretty much right. 

I think that the plaintiffs’ bar is a very important bar in this 

country, and I think it is important that the plaintiffs’ bar realizes 

that there are all kinds of viewpoints up here and that we try to 

find some way of making sure that justice really occurs in this 

country. 

It is one thing to fight for the rights of people, to fight to correct 

injuries and wrongs. It is something that I applaud all of you for. 

It is another thing to make this a money-grubbing, political, powerseeking approach which some are criticizing our plaintiffs’ bar for. 

Mr. BARON. I agree with you, Senator Hatch. 

34

Senator HATCH. I belong to your organization. I was a plaintiffs’ 

lawyer. I started out as a defense lawyer and I found out that was 

too tough, so I became a plaintiffs’ lawyer. I found out that was 

just like rolling off a log compared to being a defense lawyer. 

But to make a long story short, I respect you and I respect the 

plaintiffs’ bar. But I suggest that this is a serious set of problems. 

We have got to solve these problems, and you and I both know that 

sometimes problems like these have to be solved by good people 

getting together and resolving them. 

I would like as many good ideas as you can give us as to how 

we might do this, because I am sure that you recognize that if not 

all of what Mr. Kazan is saying is true, part of it is. I would like 

your help in this committee and I would like to have a good relationship in arriving at that, but I want a solution here. 

This clearly is not right. It is clearly not working. There are 

clearly people getting compensation who don’t deserve it, while others are not getting compensation or won’t get compensation who do 

deserve it. We have got to find some way out of this and I would 

like some help from all of you. I think this hearing is very, very 

important to try and lay this all out. 

Thanks to all of you. I wish I had more time. 

Mr. BARON. Senator, may I say that ATLA as an institution is 

absolutely committed to working with this committee to find a solution to these very significant problems. I have to say that sometimes we say things tongue-in-cheek and we are sorry we say them, 

and I apologize to anyone that was offended by that statement. It 

was meant jokingly and it was taken out of context. 

Senator HATCH. I was having some fun myself. 

Mr. BARON. I apologize. But one only needs to look around this 

room to see that the manufacturers and the insurance carriers are 

very well represented in this city. And as far as ATLA is concerned, 

we are a voice for victims and we need to go the extra distance to 

be sure that voice is heard, and we appreciate the opportunity to 

provide information to this committee and you have our solemn 

promise that we will cooperate with the committee in all respects 

on this matter. 

Senator HATCH. I look forward to that. Thank you. 

Mr. DELLINGER. Can I make a 10-second comment? 

Senator HATCH. Sure. 

Mr. DELLINGER. I think it has been apparent what a well-balanced panel you have had today that you have collectively put together. 

The first essential question is, is there a serious asbestos litigation problem. Though the panel is well-balanced, I would note that 

four of the five people here today agree that there is a serious problem that makes a congressional response imperative. 

Senator HATCH. I apologize to Senator Cantwell for taking so 

long, but I felt that this is really a good panel. 

Chairman LEAHY. I think it is, and this is, since I have been 

here, the only time we have ever had a full Judiciary Committee 

hearing on this matter and I have tried to give extra time to each 

Senator and each witness. 

Mr. Dellinger mentioned the World War II ships and the use of 

asbestos. The State Adjutant for the Vermont Department of VetVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
35

erans of Foreign Wars, by coincidence, had an op ed piece in the 

Rutland Daily Herald, our Pulitzer Prize-winning, highly respected 

newspaper back home. 

He spoke of the insulation which continued even through the 

1960’s while the Navy knew of the dangers and they still kept on 

doing it. 

His op ed ends by saying, ‘‘Many victims of asbestos need his 

help, particularly veterans who already served their country—veterans who continue to fight battles every day against deadly illness 

and a system that doesn’t seem to care.’’

I will put Adjutant Gascon’s whole op ed piece in the record. 

Senator Cantwell, I appreciate you being here and I yield to you 

for whatever amount of time you would like. 

STATEMENT OF HON. MARIA CANTWELL, A U.S. SENATOR 

FROM THE STATE OF WASHINGTON 

Senator CANTWELL. Thank you, Mr. Chairman, and I also thank 

the Ranking Member for his questions and comments. I think it 

was very important that he get his questions out. And we found 

out some vital pieces of information that, in fact, Senator Hatch is 

not sick, and I think that was very important for us to establish. 

Mr. Chairman, this hearing is very important to my constituents. 

I think my State suffers from a disproportionate amount of sufferers from mesothelioma and a large number of cases because of 

our mill industry and because of our shipyard industry. 

Some of my constituents who suffer from this truly awful disease 

are here today and I want to thank them for making the trip. 

Brian Harvey, who, if not a medical miracle, I am sure he will be 

soon, is in his 36th month from diagnosis and serves as an inspiration to others who are undergoing experimental mesothelioma 

treatment. I would also like to thank Charisse Dahlke, who lost her 

husband in May, for being here as well and being part of giving 

input in this process. 

I would also like to enter into the record, Mr. Chairman, if I 

could, testimony from Matthew Bergman, an attorney from my 

State who has developed an expertise in this area, and I urge my 

colleagues to read his testimony. 

In my opinion, the most astounding part of this situation is that 

we have yet to ban asbestos. I have a colleague, Senator Murray, 

from Washington, who has a bill in the HELP Committee. I hope 

that this hearing today will encourage people to pass that bill out 

of the committee. 

In regard to compensation of those exposed to asbestos, I have 

reviewed the testimony of the various witnesses and I am convinced it is, in fact, a very complex issue. But I would remind my 

colleagues, and even those on the panel, there are the victims, and 

oftentimes those victims lose their lives, and then there are the victim survivors, oftentimes women, oftentimes young children, whose 

future lives will be determined by what this compensation outcome 

is. So I think it is very important that we not let the complexity 

of this issue deter us from getting to some of the specific solutions 

to the problem. 

Mr. Austern, you, I think, probably gave the best statistics that 

I just want to make sure I am reviewing correctly. Since the expoVerDate 0ct 09 2002 08:14 Nov 19, 2003 Jkt 090459 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\88289.TXT SJUD4 PsN: CMORC
36

sure to asbestos didn’t peak until 1973 and didn’t significantly decline until the mid-1980’s, am I correct that we are going to continue to see an increasing number of these cases? I think you number you have is until 2013, and that cases aren’t likely to decrease 

in number until 2025. 

Is that correct? 

Mr. AUSTERN. Based on our years of first exposure—and you can 

cut this almost any way you want, by industry, by injury—really, 

all the statistics show that the year of first exposure is rising very, 

very slowly and we are going to see significant claims filing based 

on the consumption of asbestos in this country in those previous 

years for at least 12 or 13 more years and then for a period of time 

thereafter. It is a very discouraging picture when you look at the 

amount of asbestos that was used and how we are looking at 

claims that were only exposed in the 1950’s and the 1960’s. 

Senator CANTWELL. Well, given that, I would like to ask Mr. 

Baron and Mr. Kazan a question about the fairness of this situation, given the two constituents that I have here today: one, Mr. 

Harvey, who was successful because the timing of his illness in actually receiving a settlement, and Ms. Dahlke. In both of these 

cases, some of the same companies now have declared bankruptcy 

and Ms. Dahlke’s ability to get resolution on this issue is mitigated 

significantly. 

So what is the fairness in that? The timing of the illness becomes 

the determining factor? 

Mr. BARON. Senator, I think you make a very, very good point. 

And might I say before I answer the question that I agree with you 

completely that it is outrageous that we have not banned the use 

of asbestos in this country and I think that has to be a priority for 

this Congress. 

But back to your question, it is unfortunate that there are so 

many victims, and the mismatch here is obviously the number of 

victims and the amount of money available to be paid. I respectfully submit that the first thing that this committee should do is 

carefully investigate what resources are available to pay claimants; 

in other words, how much money is really out there in insurance 

coverage and how much money the companies who created this 

problem have available to pay for the damage that they have 

caused. There is indeed a mismatch and it is unfortunate. 

By passing 524(g) of the Bankruptcy Code, Congress has required that when a company goes into bankruptcy it must be required that they set aside assets to pay future victims, not just the 

present victims. That is a very, very important consideration. 

Senator CANTWELL. But won’t there be an inherent disadvantage 

to Ms. Dahlke in the sense of, again, because Mr. Harvey entered 

into—basically because we found out at a time in this process, he 

was able to get a settlement. Ms. Dahlke may be 5 percent, so Mr. 

Dahlke’s surviving children will now be disadvantaged in this situation. 

I am very glad that my constituent, Mr. Harvey, has done so 

well, but I also think that we need to realize that there are other 

victims in this situation of those survivors and that they are going 

to receive a very, very small amount of what would be available 

compensation. 

37

Mr. BARON. It is not unlike the drunk driver who causes five or 

six different accidents and has no insurance. Maybe the first one 

or two victims will receive his assets, but the others may be left 

with nothing. Fortunately, it is my experience—and I represent almost 700 victims of mesothelioma—that only a very small number 

of mesothelima victims are left only with bankruptcy-related 

claims. 

Most mesothelioma victims were exposed to many different types 

of asbestos products and there are still solvent defendants who can 

pay these claims. Are they always going to get a hundred cents on 

the dollar? No, but that is also true of all of the other asbestos victims. They have the same problem to deal with. 

Senator CANTWELL. Mr. Kazan, do you agree with that assessment? 

Mr. KAZAN. Do I agree with Mr. Baron? No. Again, the problem 

is—you have put your finger on it—there is a very serious issue 

here. And the root cause of the fact that Ms. Dahlke is not getting 

paid now and is likely only to recover pennies in the future is that 

very bankruptcy provision that Mr. Baron speaks of, 524(g), which 

requires that when you set up a trust, you treat all claimants, 

present and future, alike, which means you have to estimate all the 

future claims so you can assign values to them and allocate their 

share. 

It is the problem that Mr. Austern has and it is the increasing 

trend in filings that causes revisions in projections which led Mr. 

Austern’s trust last year to cut its payment percentage in half. As 

long as we leave the system the way it is, there will be more and 

more claims filed. That, in turn, leads to higher and higher estimates in the bankruptcies, which means a smaller and smaller percentage of payment not only to the currently sick people and all 

current claimants but to all the future claimants. 

We know the numbers of the cancer cases. We are going to have, 

as Mr. Austern says, 2 to 3,000 a year. We can calculate that. We 

have been predicting cancer correctly in asbestos for 20 years, and 

the reason we have done that is it is science. It is based on medicine and epidemiology. 

We cannot predict the number of non-malignant, unimpaired, nofunctional-change cases because those are not based on medicine. 

They are based on entrepreneurial zeal. As a result—I hate to say 

it, especially in front of Ms. Dahlke, who is a lovely person that I 

have spent some time with—the chance of her getting significant 

recovery out of any of these bankruptcies is somewhere between 

slim and none. 

The tragedy here gets compounded every day in case after case. 

Mr. Harvey is an exception to the rule. I see clients all the time 

and I tell them I have good news and bad news. The good news 

is that you weren’t diagnosed until just now, so you have been 

healthy for the last 5 years. The bad news is you have been diagnosed now and although you have had those 5 years of good health, 

you don’t get any real compensation. If you had gotten sick 5 years 

ago, your case would have been worth a great deal of money. Unfortunately, you probably wouldn’t be here today. 

The real tragedy in this, Senator, is that while most of us sitting 

up here view this as a serious public health problem and a public 

38

policy issue, I am afraid that some members of the trial bar, including those who have great influence over ATLA’s policy—and I 

am an ATLA member for 30 years and it pains me to say this, but 

they view this simply as a business opportunity rather than a 

chance to deal with public policy issues. And I certainly hope this 

committee focuses on the public health issues. 

Senator CANTWELL. Well, I definitely think you have stirred 

some followup interest and response from some of our panelists 

and I do want to get to that, but I would like to pose a question 

to the panel, as well, in making your response to those statements. 

I just want a yes or no answer on should people with exposure 

but no symptoms be compensated at the same level as those that 

are sick? 

Mr. BARON. Of course not, and they aren’t in the present system. 

Senator CANTWELL. I think that is the fundamental question that 

we have here. I know that we are talking about a process, but I 

want to give Mr. Austern a chance and the other panelists because 

I think what we really need to do is boil it down to what we do 

agree on and take this process from there. 

I think we all think we have a very complex problem, but I 

would beg to say that what we are failing to recognize is—Mr. Harvey’s life is incredibly important, but the future opportunities for 

Mr. Dahlke’s son—maybe it is the difference between whether he 

will ever get to go to college or not, or whether Ms. Dahlke will be 

able to support the rest of the family. 

I don’t think you can treat them unfairly just because of an arbitrary date and time by which they found out that they were ill, 

when we know that there has got to be a better way to solve this. 

Mr. Austern? 

Mr. AUSTERN. Senator, if I could make two responses to that, 

first, as Mr. Baron and Mr. Kazan know, we and virtually every 

other asbestos trust recognize economic differences in terms of recovery based on disease severity. Mr. Baron is right. We pay those 

whose symptoms are less severe less than those, to take the highest example, mesothelioma victims. I fear, however, that the devil 

is in the details and it is the extent of the difference that is probably going to be in dispute. 

With respect to the dilemma with the people you recognized in 

the room, as noted, we have paid 10 percent of Manville’s liability, 

ordinarily recognized as 30 percent of the total liability because of 

Manville’s very large share of the market. We paid 10 percent of 

that liability up until last year. As Mr. Kazan pointed out, we had 

to halve it last year, cut in half, based on the number of claim filings. 

So let me turn to your constituents. We have paid through the 

end of last year $336 million to mesothelioma victims, but we have 

to look at the other side of that. What haven’t we paid? Well, the 

total Manville liability for that is $3,150,000,000. We will never 

pay that $3,150,000,000 to the people that you represent and to 

others because we have an asset/liability mismatch, and it is one 

that, as Mr. Kazan points out, is growing. 

Senator CANTWELL. And so your recommendation is keep going 

in the direction that we are going? 

39

Mr. AUSTERN. Well, I agree that looking at alternative sources of 

funding—and I was thinking when I said that, and continue to 

think, to look to the Government of the United States for the liability that might be appropriate for the reasons Mr. Dellinger mentioned. I fear, Senator, that when you look at the total potential 

victim population by disease and the total potential assets, there 

is going to continue, however, to be some asset/liability mismatch. 

Mr. DELLINGER. Just a brief comment to emphasize what David 

has just said. When you ask the question, are those who are not 

sick, not impaired—should they receive as much as those suffering 

from serious illness like mesothelioma, of course everybody agrees 

the answer is no and they should not. 

That is one notch removed from where the real problem is, which 

is people who are not impaired are nonetheless getting far too 

great resources that are depleting resources that ought to go. And 

on that, you have differences among members of the panel in terms 

of how you define impairment or ‘‘not sick,’’ Senator, but there is 

a disinterested source. 

The RAND study, at page 19, summarizes this point by saying 

simply it appears that a large and growing proportion of the claims 

entering the system in recent years were submitted by individuals 

who have not incurred an injury that affects their ability to perform activities of daily living. That is the RAND conclusion. 

Senator CANTWELL. Mr. Hiatt? 

Mr. HIATT. Senator, I think a helpful way of looking at the universe of victims who have been occupationally exposed to asbestos 

at one time or another is to divide them into three broad categories. 

On one extreme, you have victims who suffer from cancers, 

mesotheliomas, very advanced stages of asbestosis. I think leaving 

aside the problem of what medical criteria you use to place people 

there, everyone would agree those are people who are seriously ill 

and should be adequately compensated. 

At the other extreme, you have people who can show that they 

were occupationally exposed. And as earlier testimony showed, 

those are people who do need to fear that they are sitting on what 

somebody referred to as a ticking time bomb. And at the very least, 

those people should be given adequate access to continuing testing 

and monitoring. 

In the middle, you have a category of people who some would 

blithely say are not sick, but are indeed sick. They simply aren’t 

as impaired as those with cancers and the truly serious forms of 

disease. 

Now, admittedly, within that middle category there are gradations, and I think that is where, if this effort by Senator Leahy and 

your committee continues, there will have to be some real scrutiny 

paid. Where do you draw the lines in that middle category? 

I don’t think that the answer is that they should not be compensated at all. I think that a consensus has to be found for how 

much should that middle category be compensated. Maybe there 

are different levels for people within that category, but they are impaired to some extent. It may not be as much as the folks at the 

top end, but it is certainly more than people in the bottom category. 

40

Too many in the business community, I think, would just like to 

write that whole category off and say the solution to this problem 

is just to worry about the people with cancer. That is not an adequate response to this crisis. 

Mr. KAZAN. Senator, if I remember the question and your request 

for a one-word answer, the answer is no, but I can’t resist saying 

a couple of other things, if I might. Mr. Hiatt is right in one sense. 

You can usefully divide the asbestos claimant population into three 

groups. I would group them somewhat differently. 

One group would be cancers, about which everybody agrees. The 

second group, in my view, would be people without cancer, the noncancer claimants who have breathing problems, however you want 

to describe it, who from a physiologic or medical standpoint have 

some degree, however slight, of interference in their lives, in their 

breathing, as a result of asbestos exposure. I think those people 

also are entitled to compensation that is fair and adequate and reasonable in the light of the circumstances. 

My third group would be those who may or may not have some 

possible evidence of change in their lungs, but have no functional 

or physiological impairment whatsoever. They are not, by any ordinary definition of the word sick, what we would call sick. 

Mr. Austern is exactly right. The problem here is an asset/liability mismatch, if you will. It started out as one in Manville and that 

is the microcosm. The problem that brings us here is that this is 

now an industry-wide, America-wide mismatch which has led to all 

these bankruptcies. 

Most of the companies going in say that they have been spending 

more than half their money on precisely these unimpaired, no-functional-limit cases. And an interesting question that I would like 

you to consider asking Mr. Austern—you know, he is paying 10 

percent, then 5 percent, and he has this $3 billion liability that he 

acknowledges to mesothelioma victims alone. He has paid them 

$336 million. An interesting question would be how many dollars 

has he paid to people who have absolutely no pulmonary function 

limitation because if the sickest should go first, maybe that is an 

illustration of where the problem is. 

Senator CANTWELL. Well, I am sure that he heard your question 

and may respond. 

Chairman LEAHY. In a similar one-word answer. 

Go ahead. 

Mr. KAZAN. We are plaintiffs’ lawyers, Mr. Chairman. 

Senator CANTWELL. I am sure that the committee staff thought 

about that when they had all of you agree to being up here. 

There was a time in which we did have a fundamental agreement about medical impairment being demonstrated before compensation, right? 

Mr. BARON. May I speak to that, Senator? 

Senator CANTWELL. Yes. 

Mr. BARON. The issue of the word ‘‘impairment’’ is the stumbling 

block. We learned in law school that if someone negligently causes 

an injury, the injured party is entitled to recover damages. Now, 

if you jumped across the desk and stabbed me in the arm, I would 

have probably a very large scar on my arm, but I would not be impaired in any real way. Would that prevent me from filing a claim 

41

for my damages? No, of course it wouldn’t, as it would not if you 

caused scarring of my lungs. I may not have impairment because 

our lungs fortunately have extra capacity, but I would be just as 

damaged. 

And its true but that individuals who have minor injuries, like 

someone who breaks their arm in a car wreck, receive significantly 

less compensation than does someone who is rendered paraplegic 

in a car wreck or a mesothelioma victim. 

Today, a victim of pleural disease will generally recover, in the tort system, somewhere between $20,000 and $40,000. A victim of 

asbestosis usually recovers somewhere in the $50,000 to $100,000 

range. A victim of mesothelioma—and you can go directly to Mr. 

Kazan’s website to verity this—will recover between $5 and $15 

million, and occasionally more than $15 million. 

Senator CANTWELL. Are you guaranteeing that to Ms. Dahlke? 

Mr. BARON. In a case where there is an identifiable defendant 

that remains solvent, yes, I would almost guarantee to a mesothelioma victim a significant seven-figure recovery. That has been my 

experience with the hundreds and hundreds of mesothelioma victims or firm has represented. 

But, again, someone with pleural disease who comes into the office would be told to expect a $25,000 to $50,000 recovery. Whether 

those numbers are adequately balanced, I am not the one to say, 

but suffice it to say that there is an enormous difference. 

Anyone who says that the pleural cases are getting as much in 

the tort system as mesothelioma cases is just not telling the truth. 

If an identical victim with pleural disease sues the same defendants that the mesothelioma victim sues, the mesothelioma victim 

will get significanty more money, but it will remain at the same 

proportion in relation to the value of the claims. 

In other words, if the mesothelioma case has a value of $5 million and only has 50 percent of the defendants available to seek recovery from, the case will settle for $2.5 million. If the pleural case 

has a valve of $25,000 and has the same 50 percent of the defendants involved that case will receive, $12,500. And that is, in my 

judgment, an appropriate way to deal with it. 

Senator CANTWELL. I guess I disagree in this regard. I don’t 

think Ms. Dahlke now is the survivor of a victim that has been 

struck by mesothelioma. She is a victim of the calendar. She is a 

victim of an arbitrary date on the calendar by which a bankruptcy 

was filed. 

The difference between Mr. Kazan saying she is going to get pen- nies and you saying that somebody might get $15 million—I am 

sure she is more concerned about how to support her family today. 

Mr. BARON. I agree with you, Senator, and I think there should 

be a fund of some sort where people who have only claims against 

bankrupt defendants can go to receive benefits. My experience is 

that less than about 10 percent of the mesothelioma victims do not 

recover significant sums. As more companies go into bankruptcy, 

though, there may be more people in that position. 

Senator CANTWELL. Mr. Chairman, I do think this is a critically 

important issue for our committee. I think with the talent that is 

at the table today testifying, obviously if there was an easy solution 

we would have come up with it by now. 

42

Constituents’ lives are playing out before us, and I again just 

urge people not to forget the victim survivors and the consequences 

to their lives. Please help us in working on this issue. 

Thank you, Mr. Chairman. 

Chairman LEAHY. I would hope you may think about some of the 

other questions which I won’t raise here because the time has expired. What has always bothered me is the companies continued 

using products containing asbestos well into the 1980’s. Some even 

use such products today. They knew the grave dangers caused by 

this. 

The companies’ insurers continued to cover them, knowing the liability that was being assessed to the companies who used these 

products. That is troublesome. The Adjutant General from our 

VFW and the questions he raised about the Navy are bothersome. 

He asked the question whether vessels should be banned. 

I will put into the record a statement by Senator Brownback, and 

I will leave it open for anybody else. 

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

Chairman LEAHY. There has been reference to the RAND report 

that was raised today. I have a lot of respect for RAND. I have 

read their reports on many matters. I think it is only fair to note, 

because everybody keeps raising who is representing whom, that 

according to RAND’s annual report last year the following organizations were benefactors of RAND—that means they contributed 

$50,000 or more; they don’t say how much more—Allstate Insurance; State Farm Insurance; Chubb Insurance; Coalition for Asbestos Justice, made up of a group of insurance companies; Farmers 

Insurance Group; Hartford Financial Services; Liberty Mutual Insurance; Massachusetts Mutual Life Insurance; USAA Insurance; 

and Alcoa. 

I do appreciate, gentlemen, your taking all this time. I appreciate 

all the lobbyists and their representatives in the audience. Not 

wanting to cutoff anybody’s billable hours, I would point out that 

it is a very nice day outside and I hope you get a chance to also 

breathe the air and see the sights of Washington. It may be a little 

more hectic on the streets of Washington in the next day or so, so 

enjoy it today. 

All of you take my offer to add anything to your testimony or in 

reference to anybody else’s. This hearing is not intended as a 

‘‘gotcha’’ hearing. This is trying to find a way through a problem 

that, if I were given the power the write the solution today and had 

the whole Congress follow it, I am not sure what I would write. But 

I hope you understand that I and a number of other members on 

both sides of the aisle are trying to find an answer. 

We stand adjourned. 

[Whereupon, at 12:50 p.m., the committee was adjourned.] 

[Question and answers and submissions for the record follow.]

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