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S. HRG. 108–141

ASBESTOS LITIGATION CRISIS

HEARINGS

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

MARCH 5 AND JUNE 4, 2003

Serial No. J–108–4

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

MAKAN DELRAHIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

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C O N T E N T S 

WEDNESDAY, MARCH 5, 2003

STATEMENTS OF COMMITTEE MEMBERS 

Page

DeWine, Hon. Mike, a U.S. Senator from the State of Ohio ................................ 34

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 1

prepared statement .......................................................................................... 111

Kennedy, Hon. Edward M., a U.S. Senator from the State of Massachusetts ... 36

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

statement .............................................................................................................. 147

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 4

prepared statement .......................................................................................... 149

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama .......................... 39

WITNESSES 

Archer, Dennis, President-Elect, American Bar Association, Chicago, Illinois .. 21

Austern, David T., Claims Resolution Management Corporation, and General 

Counsel, Manville Personal Injury Settlement Trust, Fairfax, Virginia ......... 19

Baucus, Hon. Max, a U.S. Senator from the State of Montana ........................... 6

Harvey, Brian T., Marysville, Washington ............................................................ 17

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

and Congress of Industrial Organizations, Washington, D.C. ......................... 23

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

Farrise, Oakland, California ............................................................................... 25

McCandless, Melvin, Plymouth, North Carolina .................................................. 14

Voinovich, Hon. George V., a U.S. Senator from the State of Ohio ..................... 11

QUESTIONS AND ANSWERS 

Responses of David Austern to questions submitted by Senators Leahy and 

Kohl ....................................................................................................................... 46

Responses of Steven Kazan to questions submitted by Senators Leahy and 

Kohl ....................................................................................................................... 51

SUBMISSIONS FOR THE RECORD 

Archer, Dennis, President-Elect, American Bar Association, Chicago, Illinois, 

prepared statement .............................................................................................. 61

Asbestos Study Group, statement .......................................................................... 88

Austern, David T., Claims Resolution Management Corporation, and General 

Counsel, Manville Personal Injury Settlement Trust, Fairfax, Virginia, prepared statement ................................................................................................... 93

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

statement .............................................................................................................. 102

Harvey, Brian T. Marysville, Washington, prepared statement .......................... 107

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

and Congress of Industrial Organizations, Washington, D.C., prepared 

statement and attachment .................................................................................. 114

Kapnick, Scott B., Managing Director, Goldman, Sachs & Co., New York, 

New York, statement ........................................................................................... 124

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

Farrise, Oakland California, prepared statement ............................................. 136

McCandless, Melvin, Plymouth, North Caroline, prepared statement ............... 151

Page

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National Association of Manufacturers, Michael Elias Baroody, Executive Vice 

President, Washington, D.C., prepared statement ............................................ 154

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

statement .............................................................................................................. 157

WEDNESDAY, JUNE 4, 2003

STATEMENTS OF COMMITTEE MEMBERS 

Page

Durbin, Hon. Richard J., a U.S. Senator from the State of Illinois .................... 183

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 159

prepared statement .......................................................................................... 362

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

prepared statement .............................................................................................. 365

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

statement .............................................................................................................. 370

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 163

prepared statement .......................................................................................... 372

WITNESSES 

Biggs, Jennifer L., Tillinghast-Towers Perrin, St. Louis, Missouri ..................... 207

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

University of Colorado Health Sciences Center, Denver, Colorado ................. 189

Dunbar, Frederick C., Senior Vice President, National Economic Research 

Associates, New York, New York ........................................................................ 214

Green, Eric D., Professor, Boston University School of Law, Boston, Massachusetts ................................................................................................................. 216

Hagel, Hon. Chuck, a U.S. Senator from the State of Nebraska ......................... 166

Hartwig, Robert P., Senior Vice President and Chief Economist, Insurance 

Information Institute, New York, New York ..................................................... 219

Murray, Hon. Patty, a U.S. Senator from the State of Washington ................... 181

Parker, John E., M.D., Professor and Chief, Pulmonary and Critical Care 

Medicine, Robert C. Byrd Health Sciences Center of West Virginia University, Morgantown, West Virginia ........................................................................ 195

Peterson, Mark A., Legal Analysis Systems, Thousand Oaks, California .......... 210

Tribe, Laurence H., Professor, Constitutional Law, Harvard Law School, Cambridge, Massachusetts .......................................................................................... 170

Welch, Laura, M.D., Medical Director, Center to Protect Workers Rights, 

Silver Spring, Maryland ...................................................................................... 192

QUESTIONS AND ANSWERS 

Responses of Jennifer L. Biggs to questions submitted by Senators Hatch, 

Specter and Leahy ............................................................................................... 228

Responses of James D. Crapo, M.D. to questions submitted by Senator Specter .......................................................................................................................... 238

Responses of Frederick C. Dunbar to questions submitted by Senator Hatch ... 242

Responses of Robert P. Hartwig to questions submitted by Senator Specter ..... 249

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

Hatch and Specter ................................................................................................ 251

Responses of Laurence H. Tribe to questions submitted by Senators Kyl, 

Durbin and Specter .............................................................................................. 264

Responses of Laura Stewart Welch, M.D. to questions submitted by Senators 

Hatch, Leahy and Specter ................................................................................... 271

SUBMISSIONS FOR THE RECORD 

Baucus, Hon. Max, a U.S. Senator from the State of Montana, statement ........ 282

Biggs, Jennifer L., Tillinghast-Towers Perrin, St. Louis, Missouri, prepared 

statement .............................................................................................................. 287

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

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

statement .............................................................................................................. 297

Dunbar, Frederick C., Senior Vice President, National Econimic Research 

Associates, New York, New York, prepared statement .................................... 313

Feinstein, Hon. Dianne and Hon. Herb Kohl, additional views on S. 1125 ........ 329

Page

V

Green, Eric D., Professor, Boston University School of Law, Boston, Massachusetts, prepared statement and attachment .................................................. 334

Hartwig, Robert P., Senior Vice President and Chief Economist, Insurance 

Information Institute, New York, New York, prepared statement .................. 358

Murray, Hon. Patty, a U.S. Senator from the State of Washington, prepared 

statement .............................................................................................................. 376

Parker, John E., M.D., Professor and Chief, Pulmonary and Critical Care 

Medicine, Robert C. Byrd Health Sciences Center of West Virginia University, Morgantown, West Virginia, prepared statement and attachment ......... 378

Peterson, Mark A., Legal Analysis Systems, Thousand Oaks, California, prepared statement ................................................................................................... 398

Phillips, Carter G., statement ................................................................................ 405

Tribe, Laurence H., Professor Constitutional Law, Harvard Law School, Cambridge, Massachusetts, prepared statement ...................................................... 414

Waxman, Seth P., Wilmer, Cutler, & Pickering, Washington, D.C., prepared 

statement .............................................................................................................. 440

Welch, Laura, M.D., Medical Director, Center to Protect Workers Rights, 

Silver Spring, Maryland, prepared statement ................................................... 449

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THE ASBESTOS LITIGATION CRISIS CONTINUES—IT IS TIME FOR CONGRESS TO ACT 

WEDNESDAY, MARCH 5, 2003

U.S. SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, Pursuant to notice, at 2:05 p.m., in room 

216, Hart Senate Office Building, Hon. Orrin G. Hatch, Chairman 

of the Committee, presiding. 

Present: Senators Hatch, Specter, DeWine, Sessions, Chambliss, 

Cornyn, Leahy, and Kennedy. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. Good afternoon. I would like to welcome everyone to this hearing as the Committee continues its examination of 

the asbestos litigation crisis. 

At the outset, I want to make everybody know or I want everybody to know that I intend to make every effort to resolve this 

issue, this Congress. We simply cannot wait any longer, and we 

have to resolve it. 

I am encouraged by the level of interest in this issue as expressed to me by my colleagues on both sides of the aisle, and I 

hope that the Ranking Member, Senator Leahy, and I along with 

other colleagues will be able to work in a bipartisan manner to resolve this issue. 

As he indicated at the last hearing, Senator Leahy also recognizes that this is a situation that requires our attention, and he 

conducted a very good hearing as Chairman of this Committee. 

It is not too often that an issue has such bipartisan interest in 

Congress, but this one does. The question is can we put it together. 

It is very complex and that is one reason for this follow-on hearing, 

and this will be the last hearing that we are going to hold that I 

can think of. 

I don’t think there can be any doubt that the crisis in asbestos 

litigation is a serious problem, and it continues to get worse as the 

abuse continues and Congress has failed to act, even as the Supreme Court has suggested that we must act in order to resolve 

this train wreck. 

It is my sincere hope that we can do better this time around. As 

I stated in our hearing last fall, which Senator Leahy chaired, skyrocketing bankruptcies of companies being sued hurt not only those 

who are truly sick and deserving of appropriate compensation, but 

2

also those many hardworking Americans whose jobs and pensions 

are lost or put at serious risk. 

We have all heard the statistics by now, but they bear repeating, 

and I would like to use some charts here. Chart No. 1, as the New 

York Times has reported, the number of cancer cases has remained 

virtually stable sine 1995, while the number of non-cancer cases 

has spiked dramatically just in the last few years. This defies common sense. 

Let me go to Chart No. 2. According to a recent study published 

by RAND, almost 90 percent of the pending asbestos claims are 

brought by persons with nonmalignant injuries. Nonmalignant 

cases get 65 percent of the compensation awards compared to 17 

percent for mesothelioma and 18 percent for other cancers. 

Now, there is something wrong with that, and the consequence 

is that more than 67 companies have been forced into bankruptcy, 

67 companies and thousands and thousands of jobs, and more than 

20 of those bankruptcies have occurred in just the last few years, 

as you can see from Chart No. 3. 

Moreover, the scope of the litigation has increased exponentially 

and is mind-boggling to anyone. This has become such a gravy 

train for some abusive trial lawyers that over 2,400 additional companies were named in the last year alone as defendants. 

One company recently shared their story with me. This company 

never engaged in the business of manufacturing, producing, distributing, or selling asbestos or asbestos-containing products, nor did 

this insurance company ever issue liability or worker’s compensation insurance to companies in the business of manufacturing, producing, distributing, or selling asbestos or asbestos-containing 

products. 

They did, in fact, lead the way in researching and issuing one of 

the first reports that exposed the true health risks of asbestos, a 

report that is actually cited by many plaintiff’s attorneys in current 

cases and has saved lives. And how are they rewarded? They have 

been named in thousands of cases, more than 60,000 per year, alleging that they were not aggressive enough in revealing these 

dangers of asbestos, and they have been brought in as coconspirators. 

Now, they told me it is cheaper for them to settle frivolous cases 

than to defend them in court. They could win every one of these 

60,000 cases, but the last one they defended cost, just in defense 

costs alone, $1.4 million. So it is cheaper to pay a few thousand 

bucks per case and to pay what really is extortion money in order 

to resolve what really is a horrendous problem to them. This 

sounds ridiculous, and it is, but it is what is happening. 

We have a tort system that is out of control here, especially in 

these asbestos cases, and I am encouraged by some recent developments that illustrate more widespread recognition of the problem. 

The American Bar Association recently adopted the findings of the 

Special Committee on Asbestos Litigation. 

I look forward to hearing from our witness, Dennis Archer, the 

president-elect of the ABA, on their findings regarding medical criteria, which would defer the claims of those who are not currently 

sick in favor of those who are truly ill and require urgent compensation. That just seems logical. It just seems right. 

3

We will also hear from David Austern, trustee of the Manville 

Trust, on the problems encountered by Manville and his ideas on 

how to resolve this issue. 

We look forward to hearing from organized labor. Jonathan Hiatt 

kindly is making a return appearance before our Committee on this 

issue, as is Steven Kazan, an attorney who represents the truly 

sick claimants who are most adversely affected by this current system. 

I know Senator Leahy joins me in my concern that the current 

system is hurting the victims of asbestos. 

Our panel of witnesses include two physically impaired individuals, Brian Harvey and Melvin McCandless. We very much appreciate the effort it must have been for them to come here today to 

share their stories. 

In addition, we have victims of another sort present in the audience, people like Mike Carter of Monroe Rubber and Gasket, who 

flew here from Louisiana. He is a small businessman whose business is being threatened by endless asbestos litigation. 

In addition, and perhaps most importantly, we will hear from 

some victims who could not make it here today, victims who were 

unable to be here. 

The video you are about to see, which we are putting on this 

video player here, was provided to us by an attorney representing 

these victims. Perhaps we can just take time and play that right 

now. 

[Videotape shown.] 

Chairman HATCH. Well, in conclusion of my remarks, let me just 

say that I believe that today’s hearing is an important step toward 

finding the right solution, and I am committed to doing so. 

I am going to keep an open mind about how to approach the best 

solution or solutions to this problem. We have heard from some 

who have proposed the creation of a trust fund. We also have heard 

from those who would support a court proposal requiring medical 

criteria, among other things, to manage the cases and to minimize 

abuses. Both are very intriguing matters to me, and I am looking 

at those and I know Senator Leahy is as well. 

I have asked the various interested parties to meet over the past 

month and provide the Committee with their suggestions. We have 

received some recommendations as late as this past week, and I 

would encourage the various interest groups to take the next 2 

weeks to try to come to a single approach that all can support, the 

sick victims, the companies who are targeted and their insurance 

companies who are at risk, and hopefully the labor unions who 

would be affected by the loss of jobs, the loss of pensions that result 

from these abusive suits. 

Folks, time is running out before literally thousands of our most 

productive companies in this country and hundreds and thousands 

of jobs are put at serious risk by these suits, and there are enough 

people who have suffered enough here that we have got to try and 

figure out how to resolve this problem without having all the moneys supped up by those who aren’t sick and by runaway juries. 

Now, it is time to get together. It is time to come up with a solution. I will invite your input and look forward to working with anybody toward a solution here, but we have got to find a solution and 

4

if we don’t have the help from the folks in this audience and others, then we are going to find ourselves and we are going to come 

up with a bill here within the next short while, hopefully before the 

end of the month of March, and we are going to proceed with it. 

I hope that we can come up with something that will have the vast 

majority on board that we can proceed with and we can get these 

problems resolved. 

With these remarks, I will turn it over to our distinguished ranking minority member, the former Chairman of this Committee, 

Senator Leahy, and then will look forward to hearing our witnesses. 

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

FROM THE STATE OF VERMONT 

Senator LEAHY. Thank you, Mr. Chairman, and also thank you 

for the video you showed. I know for some here, that was probably 

difficult to watch, but I thank you for allowing us to do it. 

Today’s hearing is aptly titled. It is a time for Congress to act 

on a fair and effective solution to the asbestos litigation crises. 

Thousands of workers and their families have suffered debilitating diseases and death resulting from exposure to asbestos, and 

with the latency periods for asbestos-related illness of up to 40 

years, the damage done by asbestos will not end for decades. 

As the chairman said, I called the first Senate Judiciary Committee hearing last September on this to see if we could get a bipartisan dialog going about the best means to provide fair and efficient compensation to the current victims, but also those yet to 

come. When we had the hearing last year, Senator Hatch and I discussed the fact that at that time, we knew we could not go forward 

with legislation because of the time of the year, but that we ought 

to work on this in this year. 

Senator Hatch and I have had a number of discussions on this, 

and I think it is fair to say we both want legislation to pass. I 

would join with the chairman in urging all of the interested parties 

to get together if they can. 

I spend a lot of time with people who are involved in this from 

victims to insurance companies to manufacturers to labor unions to 

lawyers to everybody involved in it, and I think it is possible. I 

really do think it is possible to come together on a piece of legislation. 

It will not be everything that every single side wants, not by any 

means. In fact, if anybody gets everything that they want, it means 

that enough others will be disappointed that nothing will pass. 

This is not a magnet for every single special interest from the left 

to the right by any means. If that happens, the legislation just 

would not be able to get through, and no matter how well-intentioned it is, we have to work together. 

Mr. Chairman, you and I have worked together on this, and I 

would suggest, Mr. Chairman, that your staff and my staff just 

continue to work as closely together because, if we came out with 

a piece of legislation that both you and I supported, I have a feeling that it would pass the Senate. I really do. 

Chairman HATCH. We will certainly work with you, Senator, and 

we hope we can put it together. 

5

Senator LEAHY. I know you are committed to that, and I appreciate that. 

We have all learned a great deal about the harms wreaked by 

asbestos exposure since last fall. Not only do the victims continue 

to suffer and their numbers to grow, but the businesses involved 

in the litigation, along with their employees and retirees, are suffering from the economic uncertainties surrounding this litigation. 

More than 50 companies have filed for bankruptcy because of their 

asbestos-related liabilities. These bankruptcies, of course, create a 

lose-lose situation. Asbestos victims deserving fair compensation do 

not receive it, and the bankrupt companies cannot create new jobs 

nor invest in the economy. 

Now, as a general matter, our tort system is well-equipped to 

handle the resolution of conflicts. I have long battled the misguided 

attempts, hidden beneath the guise of ‘‘tort reform,’’ to limit the access that American people have to courts, and I will continue to do 

so because one of the distinguishing characteristics of our judicial 

system is its openness to legitimate claims of injury, its availability 

to all aggrieved plaintiffs, but in this case, because of the particular 

circumstances of the harm caused by asbestos, the system is not 

working as it should. 

These circumstances are causing the failure of asbestos litigation 

to meet the needs of many victims and the capabilities of many defendants. That is why, as I have said, if we work in good faith toward a bipartisan solution, we can meet the challenge created by 

this litigation. I agree with the U.S. Supreme Court’s conclusion 

that the number of claims defies ‘‘customary judicial administration 

and calls for national legislation.’’ The Supreme Court is right. We 

can put together such legislation. It is going to have to be one 

where people on both sides of the aisle and across the political 

spectrum come together or it won’t work. 

An effective solution is not one that would create more corporate 

bankruptcies. It would not erect arbitrary barriers to recovery, and 

it would not generate excessive legal fees. An effective solution will 

fairly and efficiently compensate victims. It will eliminate the financial uncertainty that hinders defendants and their insurers 

from resolving their liabilities. That is what we have to find. It is 

going to take creative ways to do that in a fair and efficient manner, and I am wide open to such suggestions and solutions. 

As I said earlier, the one thing that could kill any chance for a 

real bipartisan reform is overreaching by special interests for immunity from legitimate asbestos claims. For Congress to enact reforms this year, all the stakeholders are going to have to come to 

the table. They have got to be willing to work with open minds toward a realistic and reasonable solution. The answer will require 

the full participation, both of the victims and the corporate defendants and then their insurers as well. It is not going to be a stacked 

solution that attempts to shoot the moon for one side to the other. 

It has to be narrowly targeted. It has to be balanced. 

We began this discourse last September on the problem of asbestos injuries and the litigation that has ensued. It has been a good 

one. Senator Hatch and I and others—I see Senator Baucus here, 

Senator Voinovich, Senator Ben Nelson, and others—have worked 

with us on this. We want a solution that is going to bring fair and 

6

adequate compensation to victims in a timely fashion, one that will 

resolve the financial uncertainty for corporate defendants and one 

that is going to enable insurers to predictably meet the obligations 

of the policies. 

So, Mr. Chairman, you know, as I had before, I will continue to 

work with you. I think you and I have an opportunity, if all the 

parties will cooperate, to bring legislation that can not only pass 

the Senate and the House, but then could go to the President and 

be signed. 

Chairman HATCH. Thank you, Senator. We are honored to have 

with us the Honorable Max Baucus of Montana and the Honorable 

George V. Voinovich of Ohio. Both of them, I know, share our concern for this issue. So we will hear first from Senator Baucus. Then 

we will hear from Senator Voinovich. We welcome both of you to 

the Committee. 

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

THE STATE OF MONTANA 

Senator BAUCUS. Thank you, Mr. Chairman and Senator Leahy. 

Thank you for allowing me to testify before your Committee. 

This is an issue that raises a lot of passion on both sides because 

so much is at stake, and I applaud you for continuing to address 

and to examine the status of asbestos litigation in this country and 

where it may or may not be appropriate for Congress to become involved. 

However, Mr. Chairman, I am concerned that in a rush to address a real or perceived crisis in our courts, Congress may do an 

injustice to hundreds or thousands of injured people by arbitrarily 

denying those people the ability to protect their rights. Our number-one concern here should be justice, how do we ensure that asbestos victims, all asbestos victims, are treated fairly and compensated for their injuries. 

Why am I so concerned about where we are headed? Because we 

seem to continue to circle back to the idea of requiring all claimants to meet strict medical criteria before they can file an asbestosrelated claim. It sounds clean, orderly, and logical. People can’t file 

for compensation until they are actually sick, theoretically allowing 

defendant companies to protect their assets and ensuring a greater 

chance that victims will be able to recover some compensation if 

and when they become sick. 

Mr. Chairman, as with all issues as complicated as this one, the 

devil is in the details. What constitutes an injury? What does being 

sick mean? How can we know that money will be around the next 

5, 10, 15, 20 or more years to compensate those who become sick 

in the future? And how do we address the concern that some people 

are far more likely to become seriously sick than others, depending 

upon when, where, or how they were exposed to asbestos? And 

frankly, how do we address the fact that there is still a lot that we 

just don’t know about the causes and the effects of different types 

of asbestos exposure? 

As I understand it, a major concern about the current asbestos 

litigation crisis is the repeated attempts to reduce procedural bars 

to claims. Too often, hundreds and thousands of people are being 

lumped together in a class action, even though those people may 

7

have little relation to each other in terms of when and where they 

were exposed to asbestos, how they were exposed, how long they 

were exposed, and what kind of injuries they suffered. 

The Supreme Court has noted that this approach in many cases 

was unfundamentally unfair to the claimants involved. Yet, the asbestos litigation reform that the American Bar Association and others have proposed would have exactly the same effect. 

Strict medical criteria would treat all people in the same manner, regardless of their circumstances, regardless of when, where, 

and how they were exposed to asbestos, and in many cases, regardless of what kind of injury they have suffered. The proposal would 

narrowly define an acceptable injury, but also impose significant 

costs on claimants before they have any assurance that they can 

file a claim for compensation. The point is no matter how a medical 

criteria standard is developed, Congress will have to choose a, more 

or less, arbitrary standard that will cutoff people who have been 

injured or who ar about to be injured. 

We had better be very, very sure that this is the only just way 

to address the asbestos litigation, and I have a hard time believing 

we can’t be more creative. 

I have spoken in detail about the little town of Libby, Montana, 

before this and other Committees, and on the floor of the Senate. 

I won’t go back into the details of the terrible things that happened 

to the people of this town, that is, at the hands of a company called 

W.R. Grace, but this town and the people who live there, or used 

to live there, dramatically illustrate the points I have been trying 

to make. So I would like to touch upon a couple of facts. 

The vermiculite mining and milling operations at W.R. Grace 

blanketed the town of Libby with asbestos-tainted dust for decades, 

until the early 1990’s. The dust was everywhere, on clothes, on 

cars, on children, on the clothes of workers when they came home 

from the mine. 

I can remember seeing miners years ago come off the mine, got 

off the bus. The bus itself was just one big dust bag, and the miners themselves were lots of little smaller dust bags, just covered 

with vermiculite dust. 

It was on the high school track, this stuff, on the Little League 

field, in people’s homes, in their gardens. They didn’t know the 

dust was poison, but W.R. Grace new. What W.R. Grace knew was 

that this dust was contaminated not just with asbestos, ordinary 

asbestos, but with deadly tremolite asbestos fibers, much worse 

than the chrysotile asbestos that most of us are aware of. These fibers have killed hundreds of current and former Libby residents. 

Hundreds more are sick, and many of these people will die from 

asbestos-related diseases and cancers. Thousands may become sick 

in the future, and unlike most any other place in the country, 

many of these people were significantly exposed not as workers, 

but as children. 

W.R. Grace lied to these people. Now the town of Libby is watching their families. Their friends and neighbors die or steadily become more sick. They have to watch them struggle to tend to their 

gardens or just take a walk to the local cafe. They have to watch 

them struggle to provide a secure future for their children, all the 

while wondering if their children will become sick, too. 

8

At the same time, these people are struggling to rebuild their 

community, to make it a vibrant, prosperous town, to keep local 

businesses and help their friends and neighbors. Many of them 

wonder if and when they will become sick. 

They have to do all of this with little or no help from W.R. Grace. 

I have requested that a letter from the representatives of many 

of the Libby claimants, as well as two letters from doctors who 

have treated or screened many of the folks in Libby for asbestosrelated disease, be included in the hearing record. These documents 

outline how the experience of the people in Libby, Montana, is 

unique and demonstrate that the pattern and progression of their 

disease—and this is very important—does not fit within the ABA 

or other proposed medical criteria. 

These documents speak for themselves, including illustrating the 

simple fact that tremolite-related lung disease does not appear on 

a chest x-ray like chrysotile-related lung diseases. Chrysotile is the 

most common form of asbestos that most people have been exposed 

to in this country. 

I would like to quote in detail from Dr. Brad Black’s letter because he makes some very important points. Dr. Black is the medical director of the Center for Asbestos-Related Disease in Libby, 

Montana, and Dr. Black states, ‘‘I entered medical practice in the 

[Libby] community in 1977. . .At that time, like most physicians, 

I was trained to recognize disease due to chrysotile asbestos, from 

which significant lung disease manifested as. . .scarring in the 

lung tissues. This [scarring in the lung tissues] has a characteristic 

pattern on a chest x-ray. . . .’’

Continuing the letter, ‘‘During the period of 1979 to 1999, asbestos-related disease was incubating in a large number of Libby residents, but remained undiagnosed. Why did our community physicians not recognize it? Simply because tremolite-related lung disease does not appear on a [chest x-ray] like chrysotile-related lung 

disease. . .[T]remolite usually causes scarring in the lining 

around the lungs (pleura) and infrequently shows up on x-ray as 

scarring inside the lung, even in the heavily exposed’’ W.R. Grace 

‘‘workers. . .and is much better seen on’’ a CT scan. 

Continuing the letter, ‘‘In the last 18 months, I have observed 

the diagnosis of five mesotheliomas, with three individuals already 

having died. Four of these individuals (nurse, office receptionist, 

forest service administrator, a no-resident who traveled to Libby 

for basic services) were exposed to tremolite simply by living and 

working in Libby.’’ That is the only reason they got it, just because 

they are living there. 

Continuing, ‘‘Another gentleman who lived near a vermiculite 

processing facility in the residential area of Libby died from progressive pleural fibrosis. His spouse has advanced asbestos-related 

disease. A significant number of residents who were exposed environmentally are experiencing advancing lung disease, some of 

whom require supplemental oxygen. Based on past observations 

with chrysotile exposure, one would not expect non-occupationally 

exposed individuals to develop such extensive asbestos-related disease. . .The relative potency of tremolite fibers in causing disease 

(progressive lung disease, mesothelioma, and lung cancer) has been 

striking,’’ end quote, end Dr. Black’s letter. 

9

This is all included in Dr. Black’s letter. It is only two pages 

long, and I would respectfully ask that all members of the Committee personally read Dr. Black’s letter. It will be very instructive 

to a solution. 

Mr. Chairman, medical criteria, such as that proposed by the 

ABA or in the Fairness in Asbestos Compensation Act of 1999, 

would devastate the people of Libby, Montana. The standard in the 

1999 Act would exclude 73 percent of the Libby patients from filing 

a claim for compensation. The remaining 27 percent are either 

dead or in the end stages of asbestos-related disease and in the 

process of dying. 

It has been made clear to me that we have likely lost ground 

under the ABA medical standard, with even more Libby patients 

barred from filing a claim under the ABA standard than were 

barred under the 1999 Act. I would refer members of the Committee to a letter from Dr. Whitehouse that I have submitted for 

the record where he describes in detail the arbitrary nature of the 

ABA standard as applied to tremolite asbestos patients. 

I would also like to include in the record a list of 10 people in 

Libby who would be excluded from seeking compensation under 

medical criteria such as that proposed by the ABA, so that the 

Committee can get some idea of the human cost here. 

Mr. Chairman, we are no better off today than we were in 1999 

when we battled the Fairness in Asbestos bill. The differences between tremolite and chrysotile continue to be ignored. The sheer 

magnitude of the tragedy in Libby illustrates how hard it is to define the nature of an asbestos-related injury. 

Am I frustrated when I hear about the thousands of people who 

have had little or no real exposure to asbestos, but who have filed 

asbestos-related claims for compensation? Yes, because I know that 

many of those people will be competing against the folks in Libby 

for compensation. However, do I know with any real certainty that 

some of those people aren’t sick now, or won’t become very sick, depending on where they are from, when they were exposed and for 

how long? Do I know if most of those people will be treated fairly 

by medical criteria such as that proposed by the ABA or the Fairness in Asbestos Act or similar legislation proposed in this Congress? No, and neither does the Congress. 

I have stated before that I am sympathetic to the concerns of 

companies that have not filed for bankruptcy. These companies 

may not share W.R. Grace’s or other defendants’ liability or responsibility for asbestos-related disease and death, but they have been 

tagged with liability precisely because they are solvent. These companies are also being treated unfairly and unjustly by the actions 

of W.R. Grace and other companies that are able to hide their assets and declare bankruptcy; in essence, shifting their rightful 

share of liability and responsibility to other businesses. 

I have also told this Committee before that I think a review of 

the injustices inherent in corporate bankruptcies would be an appropriate piece of the asbestos puzzle for this Committee to take 

a hard look at. 

It is pretty clear that W.R. Grace hid a vast amount of its assets, 

up to 4- to $6 billion, from the reach of the bankruptcy court and, 

by extension, from Libby victims. About a billion of those assets 

10

will be returned to the bankrupt estate, but W.R. Grace didn’t suffer for this. The Department of Justice had to do all the work, at 

taxpayer expense, to unravel this transaction. 

At the end of all this, W.R. Grace will likely emerge from bankruptcy lean and whole and able to continue to prosper as a business. The Libby victims, unless we are able to protect them in some 

fashion, will receive pennies on the dollar. This is just disgusting. 

Add to this the fact that many of them can’t get medical insurance, and that the total cost of treating all those who have been 

sick, who are sick or who will become sick, as a result of their exposure to asbestos in Libby is just staggering. The cost of treating the 

former W.R. Grace mine workers alone threatens to bankrupt the 

State of Montana’s Medicaid program, another case of W.R. Grace 

masterfully shifting liability and responsibility to someone else. 

So many people have come together to do the right thing in 

Libby. The Montana delegation, the State of Montana, the Federal 

Government, the community of Libby, and many concerned private 

citizens have been working so hard to bring new economic development and much-needed health care resources to Libby. This has 

been our, practically, number-one goal for the last couple or 3 

years, I must tell you, all four of you. It is that important. Federal 

dollars have flowed to Libby for cleanup, for health care, and revitalizing the economy. There has been significant progress for the 

community. 

Dr. Brad Black has called for developing a leading-edge, worldclass research facility with the mission of 1 day developing cures 

for asbestos-related diseases. The silver lining is that Libby’s tragedy could be used to protect the health of men, women, and children across the country. 

It is just amazing to see how everyone has come together in 

Libby to create something positive from a terrible situation, everyone, that is, except W.R. Grace. 

I say all of this because I want to circle back to the idea of making sure that when we attempt to step into the middle of the asbestos litigation debate that we are doing justice by the people of 

Libby and by the people of this country. 

We keep being drawn away from the key issue here, which is 

that asbestos companies like W.R. Grace caused the death and serious illness of hundred if not thousands of people. We shouldn’t be 

overly concerned about protecting companies like W.R. Grace. However, are there others who ultimately bear a share of responsibility 

for what happened to these hundreds and thousands of people? 

There is a good argument to be made that the Federal Government 

does share some of the responsibility for failing to take action to 

protect its citizens when the hazards of asbestos became known 

many decades ago. That is something for this Committee to consider. 

Clearly, we won’t be able to come up with an acceptable resolution to the problems that is perfect or where everyone will agree, 

but we have to do our best. We have to put the victims first. That 

is the key. 

The medical criteria put forward by the ABA and others does not 

meet this standard. Their criteria are arbitrary. They are unfair, 

excessively burdensome, particularly to the people like those in 

11

Libby who have every right to demand that W.R. Grace make their 

town whole and pay for their medical expenses and suffering. 

Thank you, again, Mr. Chairman, Senator Leahy, ranking member of the Committee. I apologize for such a long statement. I 

thank you for your indulgence, but I can tell you that this is critically important. 

If you could sit in the living room of Les Scramstad, as I did a 

couple, 3 years ago, and other people from Libby who are suffering 

from termolite-related asbestos diseases, you would understand 

why I am so passionate about this. I pledged to myself that moment that I was going to do everything humanly possible to make 

sure the people of Libby, Montana, are made whole again, and I 

am going to do my very best until it happens. 

I ask the Committee, I beseige the Committee, in drafting legislation, recognize the main points I have made, namely that the 

medical criteria proposed by the ABA will exclude most of the people of Libby, Montana, who through no fault of their own have just 

gone through the biggest tragedy and are suffering the greatest calamity that I have ever seen in my State. 

Thank you. 

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

Chairman HATCH. Thank you, Senator. We appreciate having 

your powerful testimony. 

Senator LEAHY. Mr. Chairman? 

Chairman HATCH. Yes. 

Senator LEAHY. Mr. Chairman, I just wondered if I could put in 

the record a statement by Senator Kohl and the testimony of The 

Asbestos Study Group, whose members include Dow and Ford 

Motor Company. 

Chairman HATCH. Without objection, we will put that all in the 

record. 

Senator Voinovich, we will turn to you. 

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 Leahy for holding this hearing and allowing me 

to testify. 

I am most impressed with your remarks and Senator Leahy’s remarks about a bipartisan solution to this problem that is confronted by the victims and also the businesses in this country. I 

think that everyone involved has to understand that they have a 

symbiotic relationship with each other, and if everyone could get in 

the room and work together, that somehow we could come up with 

something that is fair. 

I would say it would help also if The Asbestos Study Group and 

the Asbestos Alliance would get together and speak with one voice, 

so that you would have a clear point of view from their perspective. 

I want to preface my remarks by saying that my thoughts are 

with the victims of asbestos exposure. Those families who have lost 

loved ones and have to live with the debilitating illness caused by 

asbestos, they are in the forefront of my mind and in my heart as 

I discuss the issue of asbestos liability. 

12

I want to be sure that the solution we craft is one that will ensure that these truly sick individuals are allowed fair and just compensation, and, Senator Baucus, you have done a marvelous job of 

speaking eloquently on their behalf. 

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

of asbestos litigation and its aftermath is presenting a crisis in our 

country. With over 50 companies already in bankruptcy and a slew 

of bankruptcies soon to follow, the U.S. Supreme Court had it right 

when they called this an ‘‘elephantine mess.’’ What people need to 

understand, though, is that the mess has far-reaching effects, and 

the ripples are being felt way beyond the corporate board rooms. 

Corporate bankruptcies affect victims’ compensation so that truly 

sick asbestos victims, in too many cases and more and more frequently, only receive pennies on the dollar. 

Employees of bankrupt companies suffer as they watch their jobs 

disappear and their pensions in 401(k) plans decrease dramatically. 

For example, take the case of Federal Mogul, a company that employs over 1,200 people in six cities throughout my State. Employees held 16 percent of the company’s stock and then watched as 

that stock lost 99 percent of its value. Not only current employees, 

but also retirees are feeling the effect of these bankruptcies. Many 

retirees depend on company stock and dividends for income. When 

this value heads south, retirees feel it immediately. 

Ohio is a manufacturing State, and along with agribusiness, our 

manufacturers are the back bone of our economy. In fact, when you 

compare Ohio’s manufacturing production with New England 

States, Ohio’s gross State manufacturing is higher than all six of 

our New England States combined. Unfortunately, we have lost a 

lot of companies facing asbestos liability in many instances only because of companies that they acquired. 

One company which does a lot for the Toledo area is Owens Corning. As Governor, I worked hard to get Owens Corning to put 

their new corporate headquarters in downtown Toledo to help facilitate the city’s renaissance. Owens Corning unfortunately went 

bankrupt in 2000. In the 2 years preceding this bankruptcy, the 

stock lost 97 percent of its value, and 14 percent of the stock was 

owned by company employees. 

Now Owens Corning has been making a comeback, and I recently 

read an article in the Toledo Blade stating that they saw their 

sales rise to $4.9 billion in 2002. This is a well-managed, profitable 

company. However, accounting charges to cover their asbestos liability expenses contributed to be what the Toledo’s firm’s biggest 

loss has been, a report of $2.8 billion for the year. The biggest factor in the loss, a $2.4-billion charge taken in the third quarter to 

reflect estimates of its asbestos liability over the next 50 years, and 

more and more companies, Mr. Chairman, are going to have to be 

reporting those liabilities and you are going to see a lot more of 

what has happened to Owens Corning in this country. 

Another company recently spoke to me off the record about its 

growing asbestos liability. When this company announced that it 

had limited asbestos liability, the stock dropped by about 20 percent and its debt rating was lowered. This began a chain ripple effect, which included the loss of over 100 jobs, the sale of assets, a 

13

50-percent cut in capital investments, and a huge cut in the 

amount of contributions to the surrounding community. 

As a former mayor, I know firsthand the impact of decreased 

contributions to the community. Many of us forget that these companies make significant contributions to the tax revenues of the cities in which they are located and the States, contributions to the 

United Way, arts, education, health care, and many other forms of 

community involvement. 

As I have said before, companies like this one make up the back 

gone of our State’s economy. They don’t want to shirk their responsibilities to those victims who have or will become sick because of 

asbestos exposure. They just want to know that they are not compensating those individuals who are unimpaired. 

What I am hearing from Ohio companies is they support taking 

the medical criteria approach advocated by the American Bar Association. As you probably know, in coming to this decision, the ABA 

formed a commission chaired by Judge Nathaniel Jones, a distinguished Federal jurist from Ohio and former general counsel of the 

NAACP. This commission included seven members of the legal 

community representing the plaintiff, defense, and corporate bars. 

The commission heard extensive medical testimony from the Nation’s leading physicians in the area of pulmonary function, and the 

ABA’s end result, one that I support, is one that prevents resources 

from being misdirected because of a flood of premature claims. It 

helps companies avoid bankruptcy, and most importantly of all, it 

protects the rights of victims who suffer from a serious or functionally impairing asbestos-related disease. 

I am not going to go into the details of that recommendation. Mr. 

Archer, who is on the next panel, can explain it much more eloquently than I can. 

I am sure that there must be some way to accommodate the concerns that Senator Baucus raised here today before this Committee. 

On a broader scale, the litigation crisis in this country is like a 

tornado ripping its way through our economy, an economy already 

on the ropes primarily because of the geopolitical situation that we 

are confronted with. 

The American Tort Reform Association published a study last 

year of impact of litigation on my State and found that it cost every 

Ohioan $636 per person. A large part is due t the issue before you 

today, asbestos. 

We need, Mr. Chairman, to move immediately on this issue. In 

my opinion, passing responsible asbestos reform legislation to ensure that the truly injured receive fair and just compensation and 

to prevent more companies from sliding into bankruptcy will do far 

more for my State than any of this so-called stimulus proposals 

that we are hearing about today. 

We must stop the hemorrhaging for our victims of asbestos and 

the companies, their employees, their retirees, and their communities. 

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

to testify here today. 

[The prepard statement of Senator Voinovich appears as a submission for the record.] 

14

Chairman HATCH. Thank you. We appreciate having the testimony of both of you fine Senators, and we appreciate the efforts 

that you have made to be here with us and to give us these statements. They are important, and we are paying strict attention to 

them. Thank you very much. 

Senator VOINOVICH. Thank you. 

Chairman HATCH. Our first panel will be made up of Melvin 

McCandless. Mr. McCandless came here from Williamston, North 

Carolina, to be here today. We want to thank him for agreeing to 

be with us. I know it is not easy for him. So we are grateful to have 

him here. 

The second witness will be Mr. Brian Harvey. He has traveled 

all the way from Marysville, Washington, with his wife to share his 

story with us today, and we are very appreciative, especially given 

the hardship it must be with his medical condition. I know that 

mesothelioma is a very terrible disease. So we will listen to these 

two. 

Plus, David Austern, Esquire, he is president of the Claims Resolution Management Corporation and general counsel for the Manville Personal Injury Settlement Trust in Fairfax, Virginia, which 

as we know has been dealing with asbestos claims for years. 

Dennis Archer, Esquire, the president-elect of the American Bar 

Association. We are honored to have you with us, Mr. Archer. He 

is currently chairman of the firm Dickleson Wright in Detroit, 

Michigan. Mr. Archer initiated the ABA’s Committee on Asbestos 

Litigation. 

Jonathan Hiatt, Esquire, is general counsel for the American 

Federation of Labor and Congress of Industrial Organizations, the 

AFL–CIO, in Washington, D.C. 

We are pleased to have all of you here with us today. 

Finally, once again, Mr. Kazan, we are very pleased—am I pronouncing that name right? 

Mr. KAZAN. ‘‘Kazan,’’ Your Honor. 

Chairman HATCH. ‘‘Kazan.’’ That is what I thought. 

You are a partner with the firm Kazan, McClain, Edises, et al., 

in Oakland, California. Mr. Kazan has represented asbestos cancer 

victims for years, has testified before. We decided to bring him 

back because of his tremendous experience in this area and his 

ability to help this Committee to try and arrive at, hopefully, some 

solutions. I intend to get there, and, hopefully, I will have the cooperation of our colleagues on both sides of the table. 

So we will start with Mr. McCandless. Then we will go to you, 

Mr. Harvey, Mr. Austern, Mr. Archer, Mr. Hiatt, and then Mr. 

Kazan. 

STATEMENT OF MELVIN MCCANDLESS, PLYMOUTH, NORTH 

CAROLINA 

Mr. MCCANDLESS. Mr. Chairman and Honorable Members of the 

U.S. Senate Judiciary Committee, let me thank you for the opportunity to be here today to tell you about my family and my story. 

My name is Melvin McCandless, and I am from Williamston, North 

Carolina. 

I am here today to address the unfairness in the bill that has 

been introduced by Senator Nickles, the Asbestos Claims Criteria 

15

and Compensation Act of 2003, Senate bill 413, and in the medical 

criteria proposed by the American Bar Association. 

I suffer from asbestosis, and I was found by the deputy assigned 

by the North Carolina Industrial Commission to be permanently 

and totally disabled because of my asbestosis. Although I have been 

found permanently and totally disabled by the deputy who heard 

my case, I would be unable to recover in a court of law for the very 

same disease if this bill or the ABA proposal became law. 

I worked for one of the largest employers in North Carolina, a 

large mill in eastern North Carolina. It is lined literally with miles 

of asbestos-containing insulation around pipes, conduits, turbines, 

and boilers. I worked there 35 years, and for years, almost every 

day, you could see the dust in the air. 

I worked there as a supervisor. None of us had any idea about 

how dangerous asbestos was. We worked around it every day. 

Down in eastern North Carolina, the plant where I worked is one 

of the few places where you could get a good-paying job. 

None of the workers had respiratory protection. We were not 

given any special clothing to keep the asbestos off of us or to prevent us from taking it home to our families. I did not know asbestos was dangerous until after I already had the disease. I was required every month to have a safety meeting, but at no time did 

the company ever mention anything, nothing about asbestos, in 

any meeting that I ever attended. I did not see any warnings on 

any boxes of asbestos products. 

For several years before I went out of work, I was short of breath 

while trying to do my job. At any time I was in dust or steam, 

which was really every day at work, it would affect my breathing. 

At any time I was in the heat or around the steam insulation, the 

coughing would be the same. 

As a supervisor, I had to walk around various parts of the mill, 

including up and down stairs. I got to where I could not do my job 

anymore because I was so short of breath. At any time I had to 

exert myself, I would get winded almost immediately. my work environment aggravated all my breathing problems. In fact, because 

of my breathing, I couldn’t wear a respirator because it would suffocate me. 

To work as long as I did, I had the other guys help me do my 

job, and that was not right. 

Although the company gave me a couple of chest x-rays, no one 

ever told me of any abnormalities. I did not know what was wrong 

with me, but my employer did. See, they had been monitoring my 

lungs sine 1985. In 1989, they started seeing changes on the x-rays 

the company doctor took, but they never told me. They just moved 

me out of the mill onto the woodyard. Then, 4 years later in 1993, 

they moved me back into the dust inside the mill, and that is 

where my breathing went downhill. 

My doctors testified that I should not have been further exposed 

to asbestos after the chest x-ray showed I was developing the disease. After my chest x-ray showed up, the company took me out of 

the medical monitoring program. 

There is not a lung doctor in my county or a B reader. The few 

doctors that are there are just general doctors who usually don’t 

stay long because of our location. The only reason I ever found out 

16

what was wrong with me is because I contacted a lawyer who I 

heard represented by coworkers. 

I was sent to a pulmonologist first and then to an independent 

State doctor who is an associate professor of pulmonary medicine, 

who also confirmed that I had asbestosis. I also had the B reader 

who read chest films for the company confirm that I had it, as did 

other B readers. Yet, my lawyer tells me that despite all this, I 

wouldn’t qualify to even file a claim for compensation in a court of 

law under the Nickles bill or the ABA proposal. 

The North Carolina Industrial Commission found the reason I 

cannot work is because of my asbestosis. I am short of breath, and 

I cannot do my job. I could not do my job. 

In fact, the dust was so bad, it would come home on my clothes. 

While washing these clothes and being around me, my wife of 37 

years, Janice, started inhaling the asbestos as well. In fact, now my 

wife has been diagnosed with asbestosis, too. She is having breathing problems which are getting worse, and she has a terrible cough. 

I am here today because my lawyer told me that if Senate bill 

413 or the ABA proposal is passed, neither I nor my wife nor most 

of our friends would be able to recover in a court of law for asbestosis. Even though the North Carolina Industrial Commission has 

ruled I am permanently and totally disabled, I couldn’t recover because my pulmonary function test is ‘‘within the range of normal,’’ 

and I would, therefore, be excluded under the Nickles bill or the 

ABA proposal. 

I cannot do any amount of exertion for over a very short period 

of time. Just pushing the garbage from the house to the road 

makes me short-winded and uneasy. My wife’s condition is similar 

to mine, but she also would be excluded under the Nickles bill or 

the ABA proposal. 

I had not planned to be here today because one of my coworkers 

was going to testify, but he was put in the hospital last week due 

to his asbestosis. He is on oxygen. Like me, his chest x-ray report 

would not allow him to qualify for access to a court under the Nickles bill or the ABA proposal. 

I have worsening shortness of breath, a dry cough, and I am severely limited in what I can do. I cannot be around dusts, fumes, 

chemicals, and I truly believe that I may 1 day be like my friend 

who could not be here because he is on oxygen in the hospital. 

That is wrong. It is wrong for me, it is wrong for my wife, and 

it is wrong for my friends at the mill and all the others whose lives 

have been hurt by asbestos. 

Thank you for this opportunity to be here today to tell you my 

family’s story and the story of a lot of my coworkers who my lawyers say would also not be allowed access to a court under the 

Nickles bill or the ABA proposal. Thank you. 

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

Chairman HATCH. Thank you, Mr. McCandless. 

We will turn to you, Mr. Harvey, and look forward to getting 

your testimony as well. If you will pull that mic up close to your 

mouth, that will help a little bit for everybody. 

17

STATEMENT OF BRIAN T. HARVEY, MARYSVILLE, 

WASHINGTON 

Mr. HARVEY. Mr. Chairman, my name is Brian harvey, and it is 

a privilege for me to address you here today. 

In some respects, this is a little bit like being at home. My wife 

has already had the first word about being at this testimony, as 

you may have noticed in the video. That is not all bad. I should 

be dead today. The reason I am not dead today is my wife loved 

me enough to push me, prod me, and all but carry me across the 

State of Washington until I got to the chest clinic at the University 

of Washington Medical Center. 

After I was in the center, 8 days later, I was presented with the 

fact that I was a victim of mesothelioma. I now had to face the 

facts as we knew them about mesothelioma. It has been considered 

a death sentence, and that is what I felt. 

Then I was told, well, if you fight it, you might be able to string 

it out from 8 months, which is what they expected if you didn’t 

fight, to maybe 18 months, but only one in 20 ever make it to 5 

years. The doctor who is responsible for my care said due to the 

fact your diagnosis was early and your tumor is not too advanced, 

I have a very aggressive campaign that you would qualify for. I 

chose that course. That course included, first, chemotherapy to try 

to reduce size of the tumor and reduce its activity, follow that with 

surgery where he removed my entire left lung, the left side of my 

diaphragm, the left side of my pericardial sack, rebuilt the diaphragm with gortex. 

Chairman HATCH. With what? 

Mr. HARVEY. With gortex. 

Chairman HATCH. I see. I missed that. 

Mr. HARVEY. So that my left chest is now filled with fluid. You 

want the fluid there. If that were air, I would have trouble with 

infection. And he now followed that with neutron radiation in an 

effort to clean out any single cell of the mesothelioma tumor that 

might remain. 

I am now 42 months from the time of my diagnosis, and I don’t 

plan on checking out any time soon. 

Every 6 months, I return to the University of Washington for a 

CAT scan, blood work, and a general checkup. It is a lot like playing Russian roulette. All of the treatments I was given were an effort by the doctors of the University of Washington to remove the 

bullets from the cylinder of the gun, but every time I go back, it 

is like the technicians take out the gun, spin the cylinder, and 

hand it to my doctor. He points it at my head and pulls the trigger. 

I have been lucky so far. It has always gone ‘‘click,’’ and I remain 

at no evidence of disease. 

Every day, I rejoice in the fact that I am alive, that I can still 

hear the birds in the park behind my house and the children playing in the yard across the street, and I have at least one more day 

to be with my family. 

After being diagnosed with mesothelioma, I hired a lawyer and 

filed a lawsuit against several companies who manufactured some 

of the asbestos products that I worked around. Neither my wife nor 

I had ever filed a lawsuit before. However, when we learned that 

the asbestos industry had been aware of the dangers of their prodVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
18

ucts by the 1930’s, I felt justified in seeking compensation for my 

family and myself. After 6 months of litigation, my lawyers were 

able to obtain several significant settlements in my case. 

My wife and I aren’t wealthy. My wife still works so that she can 

maintain my health insurance. However, our settlement enabled us 

to relocate to Seattle where I could be close to the doctors who are 

responsible for my still being alive and to put some money away 

so that my wife and family are covered if I die. 

Over the past several years, I have worked with the University 

of Washington and the Mesothelioma Applied Research Foundation 

to counsel other mesothelioma victims. I discuss possible treatment 

options and try to prepare the victims for the devastating effects 

of the disease. Many victims talk to me about financial disruption 

that follows a mesothelioma diagnosis. When I suggest that they 

pursue legal remedies, I am saddened to hear that all the companies from whom I received compensation have filed for bankruptcy 

in the past 2 years. 

I have read many articles and magazines that tell me that the 

vast majority of asbestos claims filed in America today are brought 

by people who are not currently sick as a result of asbestos disease. 

It makes me angry that these cases are forcing the defendants into 

bankruptcy and diverting funds from the people who are truly sick 

and dying from asbestos disease. I am angry that the true victims 

of asbestos are not getting the compensation they need and deserve. 

Congress must act comprehensively to address the asbestos crisis 

in America at four different levels: prevention, detection, treatment, and compensation. 

Congress must act to ban asbestos in America. It is unbelievable 

that asbestos is still being used in this country when its dangers 

are so well known. My Senator, Patty Murray, has proposed legislation to ban the use of asbestos in America, and I ask the members of this Committee to join Senator Murray in this effort and 

stop people from being exposed to this deadly material. The best 

way to solve the asbestos litigation crisis is to prevent people from 

getting sick in the first place. 

Detection. Asbestos disease is very difficult to diagnose and even 

more difficult to treat. Congress needs to establish a medical monitoring program to ensure that the 40 million Americans who have 

been exposed to asbestos receive regular examinations by qualified 

physicians. Most Americans were exposed to asbestos while serving 

in the military or, like myself, as a union member working in the 

trades. The Veterans Administration and AFL–CIO could provide 

the organization to administer an asbestos monitoring program for 

millions of these exposed individuals. 

Treatment. Many individuals diagnosed with mesothelioma are 

simply told by their physicians to go home and prepare to die. Congress needs to appropriate funds for the research and treatment of 

asbestos-related disease. Asbestos victims need real treatment options when they become ill. 

Compensation. Although the hazards of asbestos were well documented from the 1930’s, asbestos was widely used by manufacturers through the 1970’s, and it is still used by some today. People 

whose lives are disrupted or destroyed by asbestos disease should 

19

be able to seek compensation from the responsible companies for 

their injuries. Individuals who are not suffering a real disease 

caused by asbestos should be eligible for medical monitoring, but 

not monetary compensation. The American Bar Association has developed criteria to distinguish individuals suffering from a real asbestos disease from those who are not impaired. Congress should 

act now to enact the ABA standards into law. 

Asbestos has had a devastating impact on the lives of countless 

Americans. I ask that Congress adopt this comprehensive approach 

to the asbestos crisis for the benefit of all Americans. 

Thank you. 

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

for the record.] 

Chairman HATCH. Thank you. We appreciate both of your testimonies. They are very dramatic and important to us on the Committee. 

For the remaining witnesses, I have these lights. We have given 

each of you 5 minutes, and when that red light goes on, I would 

sure like you to wrap up, if you could, because we do have a lot 

of questions and we would like to be able to elucidate this matter 

a little bit more with some of the questions we have. If you need 

more time, just ask me, but if you can do it within the 5 minutes 

we have allotted, I would appreciate it. 

We will start with you, Mr. Austern. 

STATEMENT OF DAVID T. AUSTERN, PRESIDENT, CLAIMS RESOLUTION MANAGEMENT CORPORATION, AND GENERAL 

COUNSEL, MANVILLE PERSONAL INJURY SETTLEMENT 

TRUST, FAIRFAX, VIRGINIA 

Mr. AUSTERN. Chairman Hatch, Ranking Member Leahy, and 

members of the Committee, thank you for the opportunity of being 

here today. I am David Austern, and I am president of the Claims 

Resolution Management Corporation, and I am also general counsel of the Manville Personal Injury Settlement Trust, which is the 

oldest and at least right at the moment the trust with the most 

money. 

I appeared here 5 months ago and testified about the status of 

asbestos litigation and particularly claims, and I had some rather 

dire numbers at that time. I must tell you, after 5 months, things 

have not improved one single bit. 

The CRMC has received on behalf of the Manville Trust well 

over 600,000 claims in the last 15 years. We have paid 520,000 of 

these people over $3 billion, and that sounds like a lot of claims 

and a lot of money, but we are not halfway there. Our future 

claims forecasters tell us we will receive between 1 million and 2.5 

million additional claims. So, arguably, we are not halfway there. 

We are barely a quarter there. 

Most distressing of all, numbers aside, this is a fortuitous system, and, unfortunately, the victims are a function of that fortuity. 

Whether a victim is paid and how much or, for that matter, if at 

all is a function of whether defendants are solvent, where those defendants are, whether they are in bankruptcy court, who the lawyer is, and a whole host of other idiosyncracies including jurisdiction. 

20

In fact, that fortuity is before you here today. Both Mr. McCandless and Mr. Harvey have filed claims, and I will tell you that they 

have both been paid, but because of the fortuitous-ness of this, one 

of them was paid at a 10-percent rate by the Manville Trust because we only pay at a 10-percent rate at that time, and because 

of the increase in claims, we had to cut that pro rata rate to 5 percent. And one of these gentlemen, disease aside, got only 5 percent 

of the value of his claim, and that is so with every single extant 

asbestos trust. We pay 5 percent for the Manville Trust, and, yet, 

Manville, it is generally thought, had 30 percent of the liability for 

asbestos exposure in this country, and not one single, solitary extant asbestos trust pays more than a fraction. Indeed, one of them 

pays, if I remember my math right, less than a fraction because 

they pay less than 1 percent of the liquidated value of those claims. 

And by the way, we have 18 trusts in bankruptcy court about to 

be formed, and not one single one of them will pay anything more 

than a small fraction of the liquidated value of those claims. 

Why is there so little money for Mr. Harvey and Mr. McCandless 

and the other victims of asbestos? Well, you have been told before, 

and I will not reiterate, that the tort system eats up about 50 percent of all of the funds that get spent. 

Let me turn to something else. We have 18 bankruptcies ongoing, 

and they are chewing up substantial sums. In the Manville bankruptcy, which emerged in 1988, the costs of the bankruptcy were 

$100 million in 1988 funds, and if you look at the market cap of 

the 18 companies that are now in the bankruptcy courts and try 

and figure out what it will cost, I predict for you, never mind future bankruptcies, those 18 bankruptcies are going to chew up in 

excess of $1 billion in trying to resolve the bankruptcy itself and, 

thus, Mr. McCandless and Mr. Harvey and their colleagues will 

have less than that billion dollars. 

You have before you what are arguably some competing legislative initiatives, and I don’t think it is particularly keen advocacy 

for me to sit here and be critical of one or the other. Others may 

have a different view of that, but U.S. policymakers have some 

tough decisions. So I would like to spend the rest of my time on 

the trust fund or what some call a national asbestos claims facility 

because I feel that, by far, it is the better of the proposals. 

It would, in fact, create a one-payer system, and by the way, 

based on no fault, it would be private funded. It would, in fact, 

prioritize diseases, and it, in fact, would set, with your help, legislative standards for funding and for funding caps. 

I would like to be able to sit here and tell you what I do for a 

business in paying claims requires the knowledge of a rocket scientist, but in candor, it does not. This can be done fast. It can be 

put together expeditiously, and I would guarantee to you that from 

the date of enactment to the payment of claims would probably not 

exceed 90 days. In short, those who criticize this proposal because 

they think it is complicated simply have never run an asbestos 

trust, as I have for 15 years. I promise you, it is not that difficult 

to do this sort of thing. 

Let me make one last point before that red light goes on. We are 

in a situation in which we are paying fractions of asbestos trusts, 

and we will continue to do so. This is the only proposal that will 

21

remove these cases from a litigation and bankruptcy system, the 

only proposal that will provide criteria that are meaningful to the 

payment of claims. 

Now, competing, I realize, legislative initiatives before you lead 

to hard choices. This is the only one that, in fact, will save the 

money from bankruptcies and will save the money from the tort 

systems that Mr. Harvey and Mr. McCandless and their colleagues 

can look to further payments in the future. 

Thank you. 

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

for the record.] 

Chairman HATCH. Thank you, Mr. Austern. That was interesting 

testimony. 

Mr. Archer, we are honored to have you here now. I understand 

you have Dr. Crapo with you. Feel free, Dr. Crapo, to advise him 

anywhere through is testimony or questions. 

STATEMENT OF DENNIS ARCHER, PRESIDENT-ELECT, 

AMERICAN BAR ASSOCIATION, CHICAGO, ILLINOIS 

Mr. ARCHER. Thank you, Senator Hatch, Senator Leahy, Senator 

Kennedy, and all Senators present. 

My name is Dennis Archer, and I am president-elect of the 

American Bar Association. I appear before you today in that capacity on behalf of the American Bar. 

As you have noticed, Mr. Chairman, in the audience with me 

today is Dr. Robert Crapo, an expert in pulmonary testing and pulmonary physiology. He chairs the American Thoracic Society Committee that sets these standards. He has been chair for 15 years. 

He is currently on the Committee that is writing international 

standards. He was one of 10 physicians interviewed by our Commission on Asbestos Litigation when it developed a medical criteria 

standard. Also in the audience is Philip McGuine, a member of the 

ABA Commission on Asbestos. 

We cannot protect victims of asbestos like Brian Harvey and his 

wife unless we fix the system. Asbestos litigation, as both you and 

Senator Leahy pointed out in your remarks, is spiraling out of control. 600,000 claims have been filed, with 200,000 currently pending, and in New York City alone approximately 30,000 cases. Increasing caseloads lead to longer delays, which means people are, 

frankly, dying before they get their day in court, as 65 companies 

have bankrupted. Sometimes bankrupt companies can only pay, as 

you heard, pennies on the dollar. Workers have lost 60,000 jobs 

and an average of $8,000 in pension accounts. The courts are overwhelmed, and there may not be anyone left to pay victims. 

There is a simple principle here: Help people who are sick when 

they are actually sick. We need to triage the mass of cases. Sick 

people are not getting the help they need. For victims, short-term 

windfalls can cause massive, long-term shortfalls. We should use 

more than three decades of medical and scientific research to craft 

a medical standard for sickness, concentrate on those who are sick 

and need our help today. 

We need to implement a medical standard which will restore 

order to the system, and there needs to be a change of the Statute 

of Limitations. Implementing a Federal medical standard, a clear, 

22

consistent, medically sound standard for those who are sick, change 

the Statute of Limitations that the clock will not start ticking when 

and if a person actually gets sick. 

Debate should be about the system. Today, the system says file 

now or never. A better way is to file when you actually need it. Too 

often, there is no justice for victims or for corporations. 

The American Bar Association House of Delegates is made up of 

lawyers who come from small law firms. They do plaintiff’s work. 

They do general practice work. There are representatives there 

from State and local bar associations. There are representatives 

there from sections and divisions like labor and employment and 

litigation and health law, and 70 percent of the lawyers were 

present who heard the debate. I might add that we are a very engaging body. 

We invited and had privileges of the floor, the president, the distinguished president of the American Trial Lawyers, Mary Alexander, who came in and shared her views as to why the standards 

should not be passed by the House. 

There was an outstanding lawyer, I believe his name is, Roger 

Sullivan, who represented plaintiffs from Libby, Montana, who 

shared his views. 

There was a young woman whose name escapes me, but she was 

from California, and her partner, interestingly enough, was a 

board-certified physician who shared their views. She shared their 

collective views as to why it should not be passed. 

There was a former president of the State Bar of West Virginia 

who stood at the well of the House and said why he felt the standard should not be passed. 

On the other hand, there were others who advocated the reason 

and rationale for the medical standards, and 70 percent of the people who voted, voted in favor of the standard. 

I believe, as Mr. Austern has said, that perhaps one of the key 

elements to solve this may very well be a trust fund, but a trust 

fund without medical standards will have them going back to the 

well and having him paying 5 percent on a claim, and his prediction is others who are in bankruptcy and coming out with trust 

funds will be paying even less. 

I believe you can solve this. You should know that I spoke to 

Senator Baucus’ staff, and I spoke to the Senator. I have indicated 

to him that we believe, as I close, that the medical standards actually cover and respect the concerns of his constituency in Libby, 

Montana, but if, for some reason, that is not the case, I have offered and the Commission has offered to work with him to find a 

solution so that his constituents in Libby, Montana, and those similarly situated can be protected, but not to denigrate the standards 

in such a way that the status quo remains. 

Thank you. 

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

for the record.] 

Chairman HATCH. Thank you, Mr. Archer. We are really pleased 

you would take time from a busy schedule to be with us today. 

We are honored to have you, Mr. Hiatt, here representing the 

AFL–CIO, and we appreciate you taking time to be with us. 

23

STATEMENT OF JONATHAN P. HIATT, ASSOCIATE GENERAL 

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

Mr. HIATT. Thank you very much, Chairman Hatch. Thank you, 

Ranking Member Leahy, and the other members of the Committee. 

I am very pleased and honored to be invited back, and I do want 

to thank the Committee for its interest in this major public policy 

issue and its clear intention and desire to see if we can’t figure out 

some fashion of reaching closure and one that is, most importantly, 

based on as much consensus as possible. 

Last fall, when you were kind enough to invite me to appear, you 

may recall I talked about three things. First, as a representative 

of the AFL–CIO that estimates having well over a million active 

and retired members of our affiliated unions who are victims of asbestos-related disease, we acknowledge that the system, as it presently stands, is broken. 

We talked about how it is a system that does not, with very few 

exceptions, provide fair compensation to the people who deserve 

compensation. It doesn’t provide compensation quickly enough. It 

doesn’t provide it with the certainty that is necessary, the predictability, and it isn’t providing with the certainty in predictability to 

companies either that is necessary. 

We indicated, second, that we were open to a legislated solution 

as long as it wasn’t imposing a system that was as bad or worse 

than the current system, that it would only make sense to go 

through this exercise if we could end up with a solution that did 

truly represent an improvement. We didn’t espouse any one particular approach, but we shared with you a set of principles that 

the AFL–CIO’s executive counsel had passed at its meeting last 

summer in which we talked primarily about the importance of reducing costs, reducing delay, reducing uncertainty, No. 1; No. 2, a 

system that, while it would make distinctions in terms of compensation levels based on severity of sickness, it wouldn’t just take 

out of the system completely victims who may not be as sick as the 

mesothelioma victims or the victims represented by Mr. Kazan in 

many cases, but would still provide compensation as deserved to 

compensation victims who are still, indeed, sick, like Mr. McCandless, even if they are for the moment at a lower level of severity. 

We talked about the need to make sure that testing and monitoring is built into the system to make sure that victims have a 

way of learning when their disease progresses. We talked about 

how any system should have at the end of the day some form of 

ultimate access to the courts, and we talked, finally, about the 

value of some role for the Federal Government, given the Federal 

Government’s involvement in the early stages of this whole problem. 

Since the hearing last fall, we have, at your urging, been very 

engaged with defendants, with defendant companies, with insurers, 

with trial lawyers, and with other interested parties across the 

board, but I want to report today on what really has for us become 

the most hopeful, I think, set of discussions that we have been having with a range of major asbestos defendants and insurers on a 

very comprehensive reform proposal, and it is the one that Mr. 

Austern described as the so-called trust fund approach. 

24

It is extremely complicated. There are many still-unanswered 

questions, but I do feel that we are more optimistic that it would 

be possible to reach some form of a consensus approach here than 

I would have thought and certainly than is the case with respect 

to the Nickles bill or some of the other approaches that have also 

been proposed. 

You have not only the testimony of Mr. Austern, but you have 

the written testimony from the so-called Asbestos Study Group, 

which consists of a large number of major companies, including, 

Dow, Viacom, Ford, General Motors, General Electric, Honeywell, 

Halliburton, and a number of major companies that have taken a 

very serious role in these discussions. I would urge that you read 

carefully their written testimony because I think that what is most 

notable is that we do at least in concept have agreement on a number of very basic features that this no-fault administrative compensation approach would have to have. 

First of all, that the basic payment structure would, indeed, be 

a national no-fault administrative system with a payment schedule 

for asbestos-related conditions that would provide victims with fair 

compensation. 

Second, with reference to Mayor Archer’s comments, even in this 

trust fund approach, the payments would have to be based on medical criteria, we completely agree with that. We don’t agree with 

the medical criteria that the ABA and the Nickles bill contain. We 

think that they are too restrictive in a number of ways, which I 

would be happy to discuss, but even there, it seems to me that it 

should be possible to reach consensus if you truly bring in representative doctors from the different groups. It should be possible 

to reach an agreement on what medical criteria should be used to 

distinguish between the different types of asbestos-related disease 

and the different levels of severity within certain types of asbestosrelated disease. 

Third, I think we have an agreement in concept that, while the 

schedule would take account of victims whose condition may have 

involved a variety of causes, it wouldn’t deny compensation to those 

with asbestos-related disease who also smoked or were exposed to 

other harmful substances, which the ABA’s approach and the Nickles’ approach would eliminate. 

Fourth, the administrative system would be funded by statutorily 

mandated payments from asbestos defendants and insurers, including the bankrupt defendants, and existing asbestos trusts, and that 

is something where I understand there is a good deal of discussions 

going on right now among the insurers, among the corporate asbestos parties as well. 

Fifth, the Statute of Limitations would be revised so that the victims who received a payment for one asbestos-related condition and 

then developed a second condition would receive another payment 

for a different condition. 

Sixth, that there would be some ultimate access to the court 

structured in, so as not to undermine, but one that wouldn’t undermine the overall integrity of the system. 

Seventh, that companies contributing to the funding of the system would have no standing to contest eligibility issues, such as 

25

product identification or causation, and that this would truly be a 

no-fault system. 

Finally, that the Federal Government would hopefully be able to 

play some significant role if we could find one that the Federal 

Government agreed made sense. 

I want to just conclude by saying there are two critical issues 

that we still are working on very much and would be of utmost importance to us. One is the risk issue. We believe that all parties 

have a legitimate concern about bearing the ultimate risk here and 

not miscalculating how much this is going to cost and what that 

would mean 10 years from now, 20 years from now. However, we 

would not be able to agree to a system that risks ending up where 

Manville is today, where in 3 years we find ourselves, the victims 

only receiving 50 cents on the dollar and in 10 years receiving a 

nickel on the dollar. So the risk issue is clearly a critical one. 

Finally, as I said at the beginning, any system has to really address the fairness of the compensation schedule. We recognize that 

no compensation schedule can meet the highest levels of compensation that some of the most successful lawsuits have resulted in, but 

by the same token, the numbers have to be fair. They have to be 

fair not only to those who have the most serious illnesses, such as 

mesothelioma and cancer, but also to others who are, indeed, impaired and cannot participate in regular life activities the way that 

you and I expect to be able to do. 

Thank you very much. 

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

for the record.] 

Chairman HATCH. Thank you. 

Mr. Kazan, we were very appreciative when you testified before. 

We had kind of a give-and-take between you and Mr. Baron, who 

differed, but we would like to hear from you again because you 

have been representing a lot of people who really suffer from this 

disease, and we would like to have your viewpoint once more and 

anything else you can add to what you said before. 

STATEMENT OF STEVEN KAZAN, KAZAN, MCCLAIN, EDISES, 

ABRAMS, FERNANDEZ, LYONS AND FARRISE, OAKLAND, 

CALIFORNIA 

Mr. KAZAN. Thank you, Mr. Chairman, and members of the Committee. I am honored to join you again as you consider this important issue. 

The title of this hearing——

Chairman HATCH. Please pull your mic over just a little bit so 

everybody can hear you. That is good. 

Mr. KAZAN. The title of this hearing says it best: It is time for 

Congress to act. As I emphasized when I sat here 5 months ago, 

asbestos litigation has become a national nightmare as well as a 

national disgrace, and it cries out for your attention. I sincerely 

hope that this hearing will be a springboard for action and that 

meaningful legislation soon reaches the President’s desk. 

At that September hearing, all of the panelists from the AFL–

CIO to the Association of Trial Lawyers of America agreed that asbestos litigation was a serious problem requiring congressional 

26

intervention, and we all pledged to work with you to find a solution. 

Since then, others have joined the chorus, including your colleague, Senator Nickles, who has introduced an asbestos bill, and 

the American Bar Association. As Mr. Archer explained, the ABA 

recently adopted recommendations for asbestos legislation. So the 

debate has now shifted. 

We are not just talking about the problem anymore. We are discussing how to solve it, and that is what I will address today from 

the point of view of someone who has represented asbestos victims 

for nearly 30 years. 

My view is simple. Like Senator Leahy, I believe in our civil justice system. It is the best in the world, and we can solve the asbestos litigation nightmare simply by making some small adjustments 

in that system. 

The heart of the asbestos problem is that tens of thousands of 

questionable claims, many generated by mass, for-profit x-ray 

screening programs are filed every year. These are not diagnosed 

cases of asbestos disease in any real sense. The vast majority of the 

claimants today have no real illness and no real symptoms. All 

they have is an x-ray that shows marks that could have been 

caused by asbestos. In most cases, they have not even seen a doctor. In short, Mr. Chairman, they aren’t really sick. If they were 

your children, you would not even keep them home from school. 

Unfortunately, in many States, this x-ray report can trigger Statutes of Limitations, forcing the premature filing of thousands of 

claims. These claims prevent the courts from doing their job, resolving the cases of those really injured by asbestos. 

The first essential step toward solving this problem is to defer 

the claims of those who are not yet sick, but preserve their rights 

to sue if and when they become sick in the future. Congress could 

make this possible by tolling the Statutes of Limitations. This 

would allow the courts to focus on the 10 to 15 percent of current 

claims where the plaintiff has cancer or some breathing problems 

caused by asbestos. These claims would continue as they are today, 

without limitation. I know our courts can provide fair and evenhanded justice in those cases. 

Another important element of any legislation is the establishment of medical criteria to distinguish between those who are sick 

from asbestos exposure and those who are not. Unlike other proposals which would take claims out of the courts, this simple approach would create the conditions that would allow the civil justice system to work. 

It is also the approach taken by Senate bill 413 and the ABA. 

Their criteria are very similar and address the unique problems involved in integrating medical standards into the legal system. 

Any legislation should require that a doctor obtain information 

about the plaintiff’s work exposure and medical history. The doctor 

should also examine the plaintiff, review x-rays and lung function 

tests, and write a report that includes a medical diagnosis. Believe 

it or not, there is no real medical diagnosis made in most of today’s 

claims, and, Senator, that is a travesty. 

It is also important that Congress set out some sort of workable 

standard to objectively measure whether someone is functionally 

27

impaired and whether that impairment is actually related to asbestos exposure. Unfortunately, many sick asbestos claimants are not 

sick from asbestos. They may have been smokers or have some 

other illness which has caused their problems. While the ABA resolution and Senate bill 413 differ in specifics, they both take a reasonable approach to this question. 

The bottom line is that reasonable medical criteria will ensure 

that the truly sick have immediate access to the courts and will get 

the compensation they deserve. This would go a long way toward 

putting the brakes on the bankruptcies that delay and reduce compensation to those who deserve it the most. 

It would also ensure that those companies already in bankruptcy 

could allocate their resources toward the truly sick claimants and 

emerge more quickly from reorganization. Since your last hearing, 

we have seen more studies quantifying the crisis, a lot of great discussions about solutions, and even proposed legislation, but in 

those same few months, more defendants have filed for bankruptcy 

and thousands more Americans have learned that they have serious asbestos disease. They face devastating illness and great uncertainty about whether they will receive just and fair compensation 

so that their families will be taken care of. 

Congress cannot let this scandal continue. I urge you to pass legislation establishing medical criteria, and I urge that it be done 

soon. 

Thank you, Mr. Chairman. 

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

for the record.] 

Chairman HATCH. Thank you, Mr. Kazan. 

We will have 5-minute rounds, so each of us will have a crack 

at this. 

As I have been listening here—and we have listened to our two 

folks who are suffering—it suggests that there is a split in the 

business community on this issue. 

I think the only difference is in approach, but it is difficult to get 

to unanimity on any particular problem or a recognition. There ia 

unanimity that we need to reform. The question is what form to 

we reform in. 

I am going to go to you, Mr. Austern, because you have been 

dealing with these type of problems, and you made a pretty dramatic statement on why the victims are really getting the short 

end of the stick here. 

First of all, it looks to me like we are talking about coming up 

with some reasonable medical criteria that really will say who is 

sick and who isn’t, and, yet, at the other end of that spectrum is 

the hope that we can maybe have an actuarily sound trust fund. 

And I presume that all of you would agree that trust fund is going 

to have to have a finality to it, so that all of these companies know 

just what their limits of liability are in the end. That is going to 

be hard to do. 

In fact, I am not quite sure that the trust-fund approach is as 

easy as some have said, but I am very interested in it because, if 

we could get a finality to it and we have enough money there—let 

me just ask you this. Do you agree that this is kind of a generalized statement of where we are, that we have got to find some way 

28

of melding those two things together or at least try to come up with 

some way of adding finality to this, while getting most of the 

money to the victims rather than to the lawyers? 

Mr. AUSTERN. I think that is exactly right. 

Let me say to you that the finality approach can be looked at in 

two different ways. One of them is a paper delivered to this Committee by a representative—in fact, I guess not a representative, a 

partner of Goldman Sachs makes the point—and makes several 

points, but makes the point that certainty or a lack of certainty is 

what is driving the stock market and driving the financial community. 

Chairman HATCH. If we could solve this problem alone, it would 

be very helpful, it seems to me. 

Mr. AUSTERN. If you could give certainty to what the total liability will be in some meaningful way, that would be very productive. 

May I also point out—and I realize how inexcusably self-serving 

this is, but that is not going to deter me—a national fund can dispose of these cases and can pay fair compensation much more 

cheaply than the tort system. It costs the beneficiaries of the Manville Trust, including Mr. Harvey and Mr. McCandless, 3 cents on 

the dollar to, in fact, pay the claims, 3 cents on the dollar compared 

to 50 percent. Now, that is the transaction cost when you have a 

trust fund, 3 cents. 

I am not here to criticize good-faith efforts that are otherwise, 

but the ABA proposal does not remove anything from the tort system, and my fear is that were you to merely adopt medical criteria, 

we would be right back here in 3 years. 

Chairman HATCH. Well, if I understand you correctly, you are 

saying that it would be wise to have a trust fund if we could bring 

one about. It would be wise to have medical criteria. Would you accept the ABA’s recommendations on medical criteria? 

Mr. AUSTERN. I would not. 

Chairman HATCH. OK. Why? 

Mr. AUSTERN. Well, Senator, I have a fair number of problems 

with it. Let me mention just two. 

Chairman HATCH. Can I ask one other question that you can 

weave into your discussion? How would this trust fund work? 

Would it be an opt-in situation where people can opt in and become 

part of it and have a finality to their obligations and be free of 

them in that sense once they have paid their money to the trust 

fund, or would you try to get every company that is involved—and 

I understand there are a thousand or so companies—to sign on 

right off the bat? How would you work that? 

Mr. AUSTERN. Can I answer the criteria question first? 

Chairman HATCH. Sure. 

Mr. AUSTERN. Because the second one is much more difficult. 

With respect to the criteria, Mr. Chairman, a 2/1 ILO profusion 

level, which is the way the ABA approaches the problem that Mr. 

McCandless has of not qualifying for pulmonary function tests, 

with all due respect, is not an escape clause. It is absolutely not 

an escape clause. 

We got 56,000 claims last year. 51,000 of them were from people 

with some form of asbestosis. We didn’t have thirty-five 2/1’s. We 

are not talking about a way of creating a system that, in fact, will 

29

excuse people that they do not qualify, as Mr. McCandless doesn’t, 

with respect to the PFTs. 

And second and even more importantly, as some people behind 

me in this room know, because they sued me over this question, 

we used to have medical criteria in which we hired our own B readers and our own B readers looked at x-rays, and they determined 

whether the x-rays submitted by the other B-readers who represented the claimants were correct. 

Senator this is not an exact science. Our own B readers had a 

50-percent inter-reader variability. It was 50 percent of the time, 

our own B readers disagreed with each other as to whether somebody would have qualified under the ABA standard. Essentially, 

the ABA standard is a binary system. You are in or you are out, 

and if you are out, you are out because somebody looking at a softtissue disease x-ray has reached a decision and that is a decision 

about which reasonable people can disagree. 

Now let me turn to the second question. You can have an optin program in which people with asbestos liabilities can opt in, and 

then you have to get to a certain number of what the political scientists call decision trees. Are you going to make it an opt-in program in which everyone is eligible, no matter what their liability 

is? Are you going to make it compulsory so that you have to opt 

in? And although I realize there are constitutional limitations on 

that, I am much more concerned with the opposite end of the spectrum, and that is, are you going to have eligibility criteria for people to opt in, but if they are too small, they can’t. 

Chairman HATCH. Well, if they don’t opt in and we don’t provide 

a means for them to opt in, then they can be sued. 

Mr. AUSTERN. That is correct, and, obviously, there will be important incentives, not to be sued——

Chairman HATCH. Sure. 

Mr. AUSTERN [continuing]. To opt in. 

My own view of this—and, Senator, I am not an economist, but 

my own view of this is that there are sufficient funds out there to, 

in fact, have enough people opt in and to have some finality to this 

system. I do not suggest, as I sit here, that in 4 hours we can solve 

that problems in terms of shares and in terms of the amount of 

money, but we can certainly have an opt-in system that will work. 

Chairman HATCH. Mr. Archer, my time is up, but if you would 

care to comment about any of that——

Mr. ARCHER. Thank you, Senator. 

Chairman HATCH.—I think all of us would appreciate it. 

Mr. ARCHER. Let me just concede at the outset, by the very nature of having some standards, there will be those, depending upon 

the level of standards, that will be omitted. They will be deferred. 

Chairman HATCH. You have indicated some flexibility, though. 

Mr. ARCHER. Absolutely. 

The other thing that I think is important to acknowledge is that 

what is going on in our State courts right now in New York, Baltimore, Chicago, other cities, is that judges, without any guidance 

from this Congress or anybody else, they have got so many cases 

that have been filed that they have simply said to the lawyers that 

are representing the plaintiffs, if your client is not sick, we are 

going to put them on a deferred status because we need to get to 

30

the cases where people are sick and are dying. We are merely talking about deferring. When the person becomes sick, they are able 

to come into the system, so that there will be money there for them 

when they are sick. 

As it relates to Mr. McCandless, we care deeply about Mr. 

McCandless and his concerns and his health care, but I can tell you 

sitting here, I can’t admit or deny or suggest that the doctor or his 

lawyer, who is not a doctor I don’t believe, was accurate in whether 

or not he would meet the medical standard or not. I don’t know 

about Mr. McCandless’ history, whether he happens to be someone 

who has emphysema or someone who smokes or didn’t smoke or 

what his history might be, but we want to make sure that the victims who are sick are compensated. 

If you have ever prayed with, prayed over someone who is dying 

of cancer, you would have an appreciation of the deep sensitivity 

that I and others in the American Bar Association share, even if 

they are not dying, but their lives are impaired so that the quality 

of their lives are impacted. We care about them, and so we want 

money there. 

Chairman HATCH. We appreciate that. 

What I wanted to just establish is that you are flexible. 

Mr. ARCHER. Yes. 

Chairman HATCH. We have got to put something together here 

that will work. 

Mr. ARCHER. But the flexibility, Senator—I apologize. The flexibility is not to weaken the standard, so that the status quo remains 

the same. 

Chairman HATCH. I understand. Sure. 

Senator Leahy? 

Senator LEAHY. Thank you. 

The chairman had mentioned Mr. Kapnick’s statement. Can we 

make sure that is part of the record? I have it here. 

Chairman HATCH. Yes. Without objection. 

Senator LEAHY. Mr. Mayor, I understand the scope of the ABA 

Commission report, and resolution on asbestos litigation was narrow. Am I correct? It only considered medical criteria and Statute 

of Limitations issues. Is that a fair statement? 

Mr. ARCHER. That is correct. 

Senator LEAHY. So the ABA Commission did not consider how 

victims of asbestos exposure might be compensated, such as medical monitoring for some of the asbestos victims? 

Mr. ARCHER. That is correct. 

Senator LEAHY. Mr. Mayor, incidentally, I also appreciate you 

taking the time to come here. I imagine you have more than 

enough to say grace over, and we appreciate you being here. 

Some concerns have been raised—and I am sure you have heard 

them—that the composition of the ABA Commission may revise its 

recommendations. The commission did not include an attorney who 

represents organized labor, and, yet, so many of the members of organized labor have been exposed to asbestos. It did not have a 

member of the labor and employment section of the ABA. I wonder 

why that is so, and why didn’t the ABA Commission include an attorney who represents nonmalignant asbestos victims? Should the 

ABA Commission have been broader in its representation? 

31

Mr. ARCHER. With all due respect, no. As it relates to lawyers 

who represent those who have asbestos, but may not have the cancers and more serious problems, let me suggest that there were 

several, including Mr. Kazan. He didn’t start practicing law on the 

complex cases. He gravitated through and tried other cases and 

handled other cases. So, therefore, that aspect was quite covered, 

and I was completely satisfied. 

Let me also say that the House of Delegates was completely satisfied. The employment and labor section was given every opportunity to be heard, to speak on the floor of the House, as would 

anyone. 

In fact, if Mr. Hiatt, for example——

Senator LEAHY. If I might on that——

Mr. ARCHER. Sure. 

Senator LEAHY.—Mayor Archer. I offer the chance to speak, certainly. Somebody from the antitrust section could speak, somebody 

from the juvenile justice, but that is a little bit different than being 

part of the commission where a lot of the negotiations go on long 

before the matter is ever on the floor. Isn’t that correct? 

I mean, I think it is like here. At any time we bring up a piece 

of legislation on the floor, this piece if it comes out of here, any 

member of the Senate, all 100, can speak on it, but it is going to 

be those of us in this Committee who are going to craft the basic 

part of the legislation before it goes there. 

Mr. ARCHER. Well, we work just a little bit different, Senator, 

and that is, that members of the House or sections and divisions 

have every opportunity in the well of the House to raise issues and 

concerns that they felt were not there, as well as to make amendments, to make amendments——

Senator LEAHY. We do, too, in the Senate. We do, too, in the Senate, but it still gets written primarily here. 

Mr. ARCHER. Well, it has been primarily written by a commission 

that I believe was quite fair. 

Senator LEAHY. And you don’t think it needed somebody representing organized labor, even though they had so many members 

exposed? 

Mr. ARCHER. Senator, let me just simply suggest that in 1983, 

when the American Bar Association issued its first policy and said 

that there needs to be Federal legislation, the labor and employment section, to my knowledge, has never advanced not one resolution before the House to have a policy. Others who have the same 

opportunity did not do so. 

I chose to make sure that this was brought before it so we would 

have a voice at the table to work with this honorable Committee 

and the Senate, to make sure that we had a voice. 

Senator LEAHY. Thank you. 

Mr. McCandless, I was greatly moved by your testimony. We 

have heard a lot today about preventing unimpaired people from 

filing lawsuits based on asbestos exposure, either under the ABA 

proposal or Senator Nickles’ bill. Do you consider yourself or your 

wife or your coworkers to be unimpaired, or would you consider 

yourself impaired? 

Mr. MCCANDLESS. I am impaired. 

32

Senator LEAHY. I think so. Based on your testimony, I would 

agree with you. 

The use of asbestos has been banned in 20 countries, Argentina, 

Australia, Belgium, Chile, Croatia, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Latvia, the Netherlands, Norway, Poland, Saudi Arabia, Sweden, Switzerland, and the United Kingdom. 

Most of the European Union have banned it by 2005. Asbestos is 

still being used in some consumer industrial products in this country. 

Let me ask you, yes or no: Should asbestos be banned here in 

the U.S., like it has been in all these other countries? 

Mr. McCandless? 

Mr. MCCANDLESS. Yes. 

Senator LEAHY. Mr. Harvey? 

Mr. HARVEY. Yes. 

Senator LEAHY. Mr. Austern? 

Mr. AUSTERN. Yes. 

Senator LEAHY. Mr. Archer? 

Mr. ARCHER. It is going to be up to this Senate. 

Senator LEAHY. Do you have any feeling? You are a citizen of 

this country. What would you want? 

Mr. ARCHER. Oh, I am a citizen of this country. We have no policy on it for me to speak to. 

Senator LEAHY. I am asking you individually. Do you think it 

should be banned? 

Mr. ARCHER. I think it is going to be up to our national interests 

and what you best decide. You will have more knowledge base on 

this issue than I will have. 

Senator LEAHY. Fair enough. 

Mr. Hiatt? 

Mr. HIATT. Your Honor, I think I will pass on this because I am 

just a lawyer, and I would be a little nervous taking a position that 

might be at odds with the Federation’s official position. So I think 

I had better hold back. 

Senator LEAHY. I understand. 

Mr. Kazan? 

Mr. KAZAN. My sister who lives in London is the executive director of an organization called the International Ban Asbestos Secretariat. 

Senator LEAHY. And you want to go to the next family gathering. 

Is that about the way you are leading here? 

Mr. KAZAN. She is my smarter, younger sister, and I think it 

would be great, but I hesitate to go down the road that both you 

and the chairman promised each other last year, that we are not 

talking about broad issues and Christmas tree bills. I would be 

happy if we solve this problem——

Senator LEAHY. No, I am not——

Mr. KAZAN [continuing]. But I want to come back to talk about 

the ban. 

Senator LEAHY. I understand. I am not suggesting to go in this 

bill, and no matter how I might feel about it, I would not want it 

in this bill because I do not want this to be a Christmas tree bill. 

But I am just curious while you are here. I remember what Mr. 

33

Harvey said very strongly. I happen to agree with him, but I don’t 

want it in this bill. 

In the last Congress, Senator Hatch and Senator DeWine, who 

is here, and I introduced legislation to exempt investment income 

in asbestos bankruptcy trust funds from Federal income tax, doing 

this to increase the funds available to compensate victims and the 

like, investment income and 401(k) is treated. I thought it was particularly appropriate, given the Federal Government’s role in exposing veterans to asbestos-related products. Should we exempt investment income from Federal income tax in order to increase the 

funds available under these things? 

If I might just ask this of Mr. Austern and Mr. Hiatt. 

Mr. AUSTERN. Senator, I cannot think that this would constitute 

a Christmas tree or bells and whistles, and I would strongly urge 

you to do this. 

I will give you an example. The Manville Trust has about a $1.7 

billion left. Our tax liabilities for capital gains and income tax over 

the next years if we do not get relief will be $100 million. If we 

can have that $100 million without paying taxes, then, in fact, it 

would make a big difference to Mr. McCandless and Mr. Harvey. 

Now, we are just one trust, and we happen to pay a lower tax 

rate than other trusts. So I can tell you, speaking for the other 

trusts, you will provide hundreds of millions of dollars to victims 

of asbestos if that legislation is passed. 

Senator LEAHY. I take it that you agree with Senator DeWine, 

Senator Hatch, and myself on this one? 

Mr. AUSTERN. I cannot tell you how strongly I agree. 

Senator LEAHY. Mr. Hiatt? 

Mr. HARVEY. Yes. I think we agree, Senator, and I think this also 

goes to the question that Senator Hatch was asking about at the 

end of the day, any kind of a trust-fund approach is going to have 

to minimize if not completely do away with the risk factor that all 

the parties are going to be expected to bear. And the kind of cushion that this kind of a measure would be provide I think will certainly not be the entire answer, but would be helpful in that regard. 

Senator LEAHY. Put my other questions in the record. 

Chairman HATCH. Yes. 

I am not convinced that this trust-fund approach can be put together. I have met with a lot of people who think it can be, and 

if it can, that is an interesting thing, but you are still going to have 

to have the other side of that coin, too. We are going to have to 

split the baby, so to speak, in order to figure out what to do to 

make this as reasonable and good as we possibly can for the benefit 

of those who are victims. 

Senator LEAHY. But, Mr. Chairman, I am convinced that it is 

possible to get a legislative solution. I truly am convinced of that. 

Chairman HATCH. I didn’t say that. 

Senator LEAHY. I know you are not. I know you are not. 

Chairman HATCH. Legislation solution, I think it is possible. The 

question is what. 

Senator LEAHY. You and I have been working on that, and I am 

convinced. And I just urge that all our staffs work closely together 

on this. I think you and I can work on that. 

34

Chairman HATCH. I am going to count on us working together. 

Senator DeWine? 

STATEMENT OF HON. MIKE DEWINE, A U.S. SENATOR FROM 

THE STATE OF OHIO 

Senator DEWINE. Well, Mr. Chairman, let me just thank you for 

holding this hearing and salute you for that, and also Senator 

Leahy. Senator Leahy held a hearing last year on this, and I know 

how interested he is in this issue. 

I can’t think there is much more important this Committee is 

going to do this year than get a bill out, and I appreciate your commitment not only to hold a hearing, but to move a bill. 

The status quo is simply intolerable. It is unfair to the victims. 

It is unfair to the employees of the companies that are being hurt. 

We need to worry about, first of all, the victims. The victims need 

to be paid fully and they are not, and they need to be paid quickly 

and they are not. We need to worry about the companies that don’t 

really have much of a future because of the uncertainty and the 

employees who work for these companies who don’t have much of 

a future because of the uncertainty. 

This has a tremendous impact, as Senator Voinovich has indicated, on many, many States. It certainly has an impact on my 

homestate and Senator Voinovich’s State of Ohio. We have a number of victims in Ohio who this directly affects. 

We also have a number of companies who this impacts. Let me 

just give an example. In one county in the State of Ohio, Cuyahoga 

County, there are 745 companies that have been sued in Cuyahoga 

County, and this is the list just in Cuyahoga County. None of these 

companies, Mr. Chairman, not one of these companies ever manufactured asbestos, not one company. 

We talked about several different options. I don’t know what is 

the most viable option. I think either option would be a vast, vast 

improvement over the status quo. I suspect that the medical criteria bill is probably the easiest bill to pass, but I certainly have 

an open mind about this. I am going to continue to listen to the 

testimony. I think the testimony so far today has been very, very 

helpful and very, very enlightening, and I am going to ask some 

additional questions beyond those that have already been asked. 

Mr. Archer, let me start with you, if I could. You heard the testimony of Senator Baucus, and you commented a little bit on that. 

Let me just ask you and maybe Mr. Kazan about that, if I could, 

if you would go on a little bit further. 

In the Senator’s written testimony, he says: It has been made 

clear to me that we have likely lost ground under the ABA medical 

standard with even more Libby patients barred from filing a claim 

under the ABA standard than were barred under the 1999 Act. 

I would refer members of the Committee to the letter from Dr. 

Whitehouse that I have submitted for the record, and this is a very 

lengthy letter. I am not going to reference it. It is in very tough 

medical language, but I don’t know whether the two of you have 

had an opportunity to look at the letter. I would reference it to you, 

if you haven’t. The Committee would appreciate your taking a look 

at the letter, and I would wonder if the both of you and any other 

members of the panel could comment on that. 

35

Mr. ARCHER. Senator, at the time the doctor’s letter was released, it was at a press conference in Seattle, Washington, during 

the midyear meeting of the American Bar Association. There was 

a dynamic trial lawyer by the name, I believe, of Roger Sullivan 

who is representing Libby, Montana, clients. They were there tethered to oxygen, and Mr. Sullivan asked of the six patients or clients 

who were there, how many would not meet the ABA standards and 

all six raised their hand. 

At that press conference, there was a lawyer from Chicago, the 

chair-elect of the Illinois State Bar, Mr. Lavin, who practices law 

as a plaintiff and represents sick people who have been exposed to 

asbestos. He was asked after the press conference what he thought. 

His observation was: On the basis of what I see, these people are 

sick. 

We took a look at the letter. In fact, one of the members of our 

commission, Robert Clifford, the immediate past chair of the litigation section of the American Bar, called several doctors, one of 

which was a physician at Northwestern University, who came in 

and offered testimony to our commission. He said under the facts 

that you were just reading to me, every one of these people are sick 

and they would clearly qualify under the standards. 

It is consistent with what I shared with Senator Baucus that we 

believed that on the basis of the standards that have been set forth 

by the American Bar Association that the good citizens and the 

people who have suffered so badly in Libby, Montana, would be 

taken care of, but if, for some reason, that after looking at it further and if he had some physicians——

Senator DEWINE. You are willing to work with him. 

Mr. ARCHER. Absolutely. 

Senator DEWINE. All right. Thank you. Mr. Archer, thank you 

very much. 

Mr. Kazan? 

Mr. KAZAN. Senator, I have not ever seen that letter. I would be 

glad to look at it in writing. 

Senator DEWINE. We would like for you to look at it. 

Mr. KAZAN. I have, however, reviewed Dr. Whitehouse’s past 

work and an article he has in press, and I can tell you that Dr. 

Whitehouse himself recognizes that people with clear x-ray abnormality, such as the pleural plaques that we have been talking 

about that are caused by asbestos, that that is very different from 

considering those people to be sick. He, in fact, has recognized that 

those findings alone really are not a form of sickness, without pulmonary function abnormalities. 

To talk for a moment about Senator Baucus’ concern, if this is 

the appropriate time to address that, I don’t know, but, clearly, he 

has a passionate concern for the people of Libby, and I share that 

concern. 

I have been representing people like his constituents for 30 

years, and I have represented factory workers, asbestos manufacturing workers by the hundreds who have been in a similar situation. I would agree with every bad thing he wants to say about 

W.R. Grace, and I could add things that he doesn’t even know 

about that make it sound even worse, but the irony is that the only 

hope for any compensation of meaningful amounts for the people 

36

of Libby, unless you all want to pass some separate appropriations 

provision, is, in fact, the enactment of something like the ABA criteria because what is going to happen with the Libby people is they 

have claims only against W.R. Grace which is in bankruptcy. 

W.R. Grace has historically gotten about 75 percent of the volume of cases filed against it that the Manville Trust gets. What 

that means is that in that bankruptcy, the bankruptcy trust, unless 

we change the rules, will have to make provision to compensate 

something like a 1.25 million future claims or more. By the time 

you do that, everybody in that trust will get pennies or fractions 

of pennies on the dollar. 

If you impose the medical criteria, as the president of ATLA herself said to the ABA, that will eliminate 90 percent of pending 

claims, you will then concentrate the available moneys for those 

who are ill, who have symptoms, not only cancers, but people with 

real breathing problems. 

Further, what Dr. Whitehouse makes clear is that the people in 

Libby, because of the tremolite exposure and the kind of disease 

they get, have an unusually virulent and progressive form of disease, and he says at least 75 percent of those people progress to 

have significant impairment. What that means, then, is that the 

great majority of people in Libby will qualify right now under the 

ABA criteria. They will share in a fund with far fewer people, and 

those of them who don’t yet qualify will have a fund available for 

when they do get sick if they are unfortunate enough to progress. 

I have done some rough calculations, and I can tell you that the 

ABA criteria will increase the payments to the citizens of Libby 

who have any level of functional impairment somewhere between 

10fold and 20fold at a minimum. That is the way to take care of 

the people of Libby, and while it may be counterintuitive, that is 

just the reality. 

Senator DEWINE. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman HATCH. Thank you, Senator. 

Senator Kennedy? 

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

FROM THE STATE OF MASSACHUSETTS 

Senator KENNEDY. Thank you very much, Mr. Chairman, and 

thank you for having the hearing. A panel such as this has been 

enormously helpful. 

I listened carefully to the testimony of Mr. McCandless and Mr. 

Harvey. Both of the stories are compelling, and both of them deserve access to justice. And both of them are entitled to fair compensation. No proposal that would make us choose between them, 

I think, deserves the consideration by this Senate. Only reforms 

which would provide fair and timely compensation to both of them 

and to the thousands of victims with similar conditions deserves 

our support. 

Nice to see you, Mayor Archer. 

I am concerned, Mayor Archer, your proposal about the criteria 

which you have included, and we have heard concerns that have 

been expressed. You have indicated a willingness to consider alterVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
37

natives, but on the other side, you have also said that you had to 

have some kind of a standard. 

What kind of assurance can you give to those who, in the future, 

may not reach your standard, but still may get sick in the future, 

that there is going to be some resources or funding that will be 

available to them for their compensation? 

Mr. ARCHER. Senator, I think on the basis of what you have 

heard here today and from the comments made by your colleagues 

on the Senate Judiciary Committee that there are a number of lawsuits being filed today without any standard, where people are not 

sick, and what has not been discussed is what occurs if they happen to be a publicly traded company, where an analyst reviewing 

their report suggests that—and I think Senator Voinovich did say 

this, that they downgrade their stock price and it becomes a selffulfilling prophecy, that they are forced to either settle the cases, 

try the cases en masse, and ultimately what occurs is that the companies go out of bankruptcy. It is being driven, regrettably, by people who, frankly, are doing what they think is right, and the lawyers, frankly, representing them think that they are doing right. 

If they have some evidence that they have been exposed to asbestos and under the present system the Statute of Limitations begins 

to run, they file. By setting up a standard, if the Senate Judiciary 

Committee and then the House and Senate were to concur and the 

President signs, it would prevent bankruptcies in the way that they 

have been coming. It would preserve assets, much like Steve Kazan 

I think has just responded to the last question from Senator 

DeWine, and that there would be more dollars there. I wish I could 

promise you and say this is what is going to occur. I don’t know 

what is going to happen in the near future. We are all waiting, for 

example, to see what occurs as to the concerns of the Middle East 

and what is occurring in Korea and what is occurring in our economy. All of those kind of things will impact how we live now and 

in the future, and so I can’t give you the kind of assurances that 

I wish I could. 

But if all goes well, as I believe it will, for America, I think you 

will have the funds there. 

Senator KENNEDY. We all hope that is going to be the outcome, 

but we wanted to try to make sure in terms of eligibility, that it 

is going to be there. 

Are we looking at a problem where there is just too many legitimate claims and too little money, resources? 

Mr. ARCHER. Senator, what we are looking at is you have got 

some entrepreneurs who drive up in a tractor trailer rig next to a 

Holiday Inn or next to a union hall. Everybody is invited to go in. 

They take a look at the x-ray. If there is something there and they 

are told that there might be something there, you ought to see a 

lawyer because there is a Statute of Limitations and people are not 

sick. If they are joggers, they still jog. If they walk up and down 

the steps, as Mr. McCandless used to be able to do before he became breathing-impaired, that is what is driving the system. 

In an effort, I think someone stated, if it was not Senator Hatch, 

that it is cheaper for some of these companies to settle the case 

than for——

38

Senator KENNEDY. Let me—OK. I hear you. I see Mr. Hiatt. Did 

you want to make a comment? 

Mr. HIATT. Thank you, Senator. 

We have had conversations with numerous companies and business associations, the major business associations. Each one of 

them tells us, it is not a question of there not being enough money 

in the system. 

The problem is the predictability and the certainty issue. This 

year, we may not need to spend more than a small fraction of what 

we will have to spend the year after, but we don’t know that ahead 

of time. So everyone claims that they are looking for a system not 

that will reduce the total amount that is now being spent, but rather that will spread it out in a more rational way, in a more predictable way, and a more certain way. 

The problem with the medical criteria bill is I think it keeps getting hung up on this false dichotomy of sick and not sick. It is very 

easy to say that not-sick people shouldn’t be compensated under 

any of these approaches, but that is begging the question. As you 

say, it shouldn’t be having to choose between a Mr. McCandless 

and a Mr. Harvey. These are both sick individuals. They have different levels of severity, but we are not talking about false claims. 

We are not talking about claims of people who do not have any 

kind of impairment. Those are the easy ones. 

The way that Mr. Kazan and even the ABA criteria would have 

it is that you would virtually limit claims to people who are clients 

of Mr. Kazan or people who are of that level of severity and everyone else would have to take a back seat. 

Furthermore, the problem with the medical criteria approach as 

it is now structured is we would go back to a system where companies would not be incentivized to pay claims quickly, in the 60 to 

90 days as Mr. Austern talks about, but rather they would be 

incentivized to start raising all of the old product identification 

issues, the old causation issues, all of these other defenses that 

they haven’t been raising in the context of the settlements which 

I agree have major problems with them as they now stand. But 

that has meant that people like Mr. McCandless and Mr. Harvey 

haven’t had to prove which company’s asbestos was it, which actually did the causing, if they have a history of smoking and asbestos, how much of it was one and how much of the other. 

The medical criteria bill is going to open up all of those issues 

again in a way that I don’t think is good public policy. 

Senator KENNEDY. My time is up, but, Mr. Hiatt, one of the 

areas that you indicated is the Federal Government should accept 

a share of the responsibility of harm caused by the use of asbestos 

in the workplace. I assume this would require substantial appropriations of public dollars. Has any various work been done in 

terms of what would be a fair contribution from the Federal Government in dollars or in percentage terms? 

Mr. HIATT. Not in terms of actual dollars, but, for example, Senator, we have talked about how critical it is that testing and monitoring be built into any approach. The fact that we have an infrastructure, for example, with VA hospitals around the country or 

other types of facilities where possibly there would be a major economy of scale that could be served by having the Government play 

39

some role in some aspect of this such as in the testing and monitoring functions might be an area that would be worth exploring 

with your respective staffs. That just comes to mind as one possible 

area. We don’t have any actual dollars. 

Senator KENNEDY. Thank you, Mr. Chairman. 

Mr. ARCHER. Senator, may I just respond, just briefly? And that 

is, I believe that part of the policy that has come out of the AFL–

CIO on principles of asbestos compensation reads in part—and this 

was passed out, I believe, in Chicago on August 7th, 2002, and I 

quote from the paragraph on the first page, ‘‘However, the labor 

movement has long recognized, and under current law and legal 

processes, many asbestos victims are not being treated fairly or receiving fair and timely compensation. Some victims with early 

stage asbestosis are settling their claims prematurely. Some victims who are dying from asbestos-related diseases are unable to get 

timely resolutions of their cases.’’

‘‘On the second page, it reads in pertinent part dealing with asbestos-related principles or initiatives: While administrative payment systems have benefits for some classes of asbestos victims, all 

those who suffer from serious conditions as cancers, mesothelioma, 

and advanced asbestosis much have unrestricted access to the 

courts. There should not be incentives for victims with early stages 

of asbestos-related diseases to give up their right to compensation 

should their condition worsen. Asbestosis is a disease that progresses, and you run the real risk of getting sicker’’

What happens is you have victims who accept little money from 

a settlement or from a jury verdict because it is commensurate 

with their disease, but when they get sick later, there is nothing 

there for their families or for them. That is wrong. There needs to 

be something in place. 

We said we believe our standards are fair, but we have also said, 

Senator Kennedy, or other similar standards. I am not saying this 

is the Bible, the Torah, or the holy Koran, but what I am saying 

is that there needs to be a medical standard that will preserve at 

the end of the day, if there is a trust fund, those kinds of dollars, 

so that there will be something there for the victims. 

Chairman HATCH. And allocate the funds for those who are sick. 

I mean, that just makes sense to me. 

Senator Sessions? 

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

THE STATE OF ALABAMA 

Senator SESSIONS. Thank you, Mr. Chairman. 

You know, this is a matter that I became first acquainted within 

the late 1970’s. I represented a shipyard worker who had worked 

in submarines, and that is a very closed area. He sawed asbestos 

as they sealed it around the pipes for insulation, and I remember 

tears coming to my eyes as he described it being so thick you 

couldn’t breathe. They would let you go out for periods of time to 

get some air, and then you had to go back in there to do that work. 

Here he was in his early fifties on oxygen. 

Somebody at that time knew that asbestos was far more damaging to health, and they should have made that known. This was 

40

a Government ship. The Government should have known and 

helped to put the word out. So there is a real problem here. 

But it was bizarre how the cases proceeded. People just simply 

copied the defendant list that somebody else in their lawsuit had 

filed and sued 60 people because somebody may have at one time 

sent asbestos to Engel Shipyards. So it was a bizarre thing as it 

developed to me. 

All of which I would say, I have watched this thing now through 

the years. It seems to me that it is a fortuitous occurrence who gets 

paid and who doesn’t. There is too little certainty and structure 

here. We have had 600,000 lawsuits filed, expecting another 1.2 

million to be filed, people that are dying and ill or having compensation not be paid or dying before it gets paid, people who ar 

at this point healthy are being paid and clogging the system. 

As you said, Mr. Archer, I can’t blame a lawyer from filing a lawsuit. I mean, I went out and filed it within days because I didn’t 

know when the Statute of Limitation was going to run, and I didn’t 

want to be the one who failed to file the lawsuit because the statute had run. 

Mr. Chairman, when they come in to you and they have a tendency to asbestos and exposure to asbestos, lawyers feel almost obligated, since they are on notice, the client is on notice, the Statute 

of Limitation is running, to file the lawsuit, but we can fix that 

through statutes. 

We can create a statute that says if you have been exposed, you 

can come forward, the statute doesn’t start running until you reach 

a certain degree of illness, and then you can seek compensation. 

I have felt that we need to do something different in this country 

about a mass tort. For example, it took a while, a lot of lawsuits, 

and a lot of battles—and I have to give some of the plaintiff lawyers that I associated with in that day some credit because they 

proved the companies knew and they proved that the companies 

should have informed the people, but once the facts are all clear, 

every case then becomes basically how much they should be compensated. 

So I think we need to create a system in which compensation can 

be readily made to the victims. Frankly, if someone has mesothelioma, I think they ought to be able to just file a claim and get a 

check. I mean, I just don’t understand this, why this is happening 

the way it is. 

I charged a legal fee, and I suspect at that time I had no idea 

what would happen, but as I look at it now, I can’t justify morally 

a legal system that says only 40 percent of the money paid out by 

the asbestos companies actually gets to the victims. 

And I think that is, Mr. Archer, what the ABA has realized, and 

I salute them for it. You just simply can’t justify that when there 

is no dispute about liability. It is just a question of damages. 

So I think, Mr. Chairman, you are wise to pursue this. We 

should have done something earlier. We got to stay at it until 

something gets done. I don’t think anybody here will say we don’t 

need to fix it. We disagree some about how to do that, and that is 

understandable, but it is time to bring this to a conclusion. 

Mr. Austern, let me ask you. On the differences between the national trust and the criteria bill, wouldn’t the national trust also 

41

need some sort of medical criteria to distinguish people who have 

impairments and who don’t? Aren’t we always faced with that challenge? 

Mr. AUSTERN. Certainly, we would have to have criteria, and I 

would like to suggest that I think that the ABA criteria can be improved upon, but Mr. Archer has already said that he is willing to 

work with us on this and I think it can be solved. 

Senator SESSIONS. So, in your view, then, that puts us in a route 

to maximizing an amount of money, the percentage of money paid 

out by the defendants, maximizing the percentage they pay out, 

that actually gets to the victims, and it would improve the distribution by ensuring that the money got to those most needy? 

Mr. AUSTERN. It would assure that it would get to those most 

needy. It would do it expeditiously, and, in fact, we would be very 

close to what you just described. You could file a mesothelioma 

claim, and you could get a check. 

Senator SESSIONS. Well, I think we have got to get to that point. 

These cases no longer require long, complicated jury trials. I mean, 

they are just not that way. The law is settled. We know what the 

cases are about. 

Mr. Harvey here, if he were just filing his claim, you know meso 

is called by asbestos, and he ought to get a check and it ought not 

to be years going by and tremendous amounts of expense. 

Thank you, Mr. Chairman. 

Chairman HATCH. Thank you, Senator. 

Let me just wind this up this way. First, Mr. Hiatt, I would just 

like to ask you one question that still sticks in my mind. You mentioned that the trust that you envision would compensate claimants 

based on medical criteria. Does the AFL–CIO support deferring any 

of these cases? 

Mr. HIATT. We would agree, just as Mr. Austern has just said, 

that while there should be a compensation schedule that is differentiated based on levels of severity, that the quickness of payments, the expeditiousness of the payment system should very 

much be triggered toward the most seriously sick. 

Chairman HATCH. What I am concerned about here is that Mr. 

Kazan says that you can pretty definitely determine who is sick 

and who isn’t. Now Mr. Austern says that that is true, too, except 

that you have got to have the right medical criteria to be fair, 

which is I think basically the way I interpret your thing. 

Mr. HIATT. I think that is correct. 

Chairman HATCH. I have been very impressed with Mr. Archer. 

I always have been, before he got here today, but especially today. 

I think the ABA is very fortunate to have you as their upcoming 

president. 

Isn’t it wonderful that Republicans are finding all kinds of good 

things, and the Democrats are finding all kinds of rotten things 

about you? I will tell you, it is just wonderful. I am working on you, 

I will tell you. 

Let me just say this. You have expressed an interest in modification here. Let me just throw it out here. There are a lot of people 

in this audience who could help on this. I have real questions 

whether a trust could be done. I have real questions what the medical criteria should be that everybody agrees we ought to have. I 

42

mean everybody on this panel certainly does. There are others who 

feel like if you do a strict medical criteria bill, you are not going 

to make it. If you do a strict trust, you are not going to make it 

because it is hard to get people together. 

We understand that there are splits within the business community. There are splits within the insurance community, and there 

are splits even in labor. Perish the thought, but there are. There 

are a number of companies, a number of labor unions that are really concerned about their employees losing their jobs, their pensions, 

and everything else, and there are some in the labor union movement, unless it is done in such an expensive way that nobody can 

really do that they are not for it. 

Look, this is almost an impossible job unless I throw out this 

challenge. I am going to get a bill here. I believe as Senator Leahy 

has indicated, he will work very closely with me on a bill. That 

means you are covering two ends of the spectrum, to a large degree. I would hope Senator Kennedy and other Democrats would 

help on this as well. I would hope my colleagues on the Republican 

side would help. 

But I am going to challenge the business community. I am going 

to challenge the insurance community. I am going to challenge the 

unions. I got to have some help here because I have no desire to 

hurt anybody. I don’t have any desire to leave anybody out of the 

system, but I will tell you this. What we have is a doggone stinking 

mess. We have got all kinds of people getting compensation, sometimes exorbitant compensation, while really hurt people, really sick 

people aren’t getting anything, or if they get anything, it is pennies 

on a dollar. The costs of this thing are just astronomical because, 

I understand, it is about 60 percent that really goes for the costs 

and attorney’s fees. 

Now, you are looking at the guy who helped put together something that was unputtable together. I think that is a phrase that 

can be used. It was the radiation compensation matter. That took 

years. Today, all over the world, they use those standards that we 

set for radiation compensation. That was a very difficult thing, but 

that was a Government thing, and I am not so sure our Government should be paying for this. In fact, I am pretty sure the Government should not be paying for this, even though we might say 

the Government should have known, just like everybody else 

should have known. 

I am going to challenge the various factions here. You had better 

get together, and I want support for whatever we come up with. I 

don’t want to have to go to all of this work and then have little, 

itty-bitty arguments and fights and infights that destroy this because this is the year to do it, if it is going to be done. If we can’t 

do it this year—and it is going to be within the next month—if we 

can’t do it within that period of time, it ain’t going to be done. That 

means that thousands and thousands of people who should have 

rights aren’t going to have them the way they should have them. 

I will put it that way. It means that many people who are sick are 

not going to get compensated, while others who don’t have a claim 

that is legitimate are going to get money because of this really outof-control tort system. 

43

I belong to ATLA, and I support ATLA when they are right, but 

it is not right to have 50 to 60 percent of these moneys going to 

lawyers. If we have a no-fault system, that means we can have a 

reasonable set of attorney’s fees, but it is not going to be 50 or 60 

percent of whatever this pot is, and I think everybody needs to understand. Lawyers will be able to make a very good living by a nofault system if they have people who are truly sick. 

I think you would agree with that, Mr. Kazan, although you 

would prefer it in the regular system. 

Mr. KAZAN. Well, Senator, what I would say about that is that 

the concept of a trust fund has implicit in it the need for medical 

criteria, just like we have been talking about. The irony is that if 

you had the medical criteria, you probably don’t need the trust 

fund because every company that has gone bankrupt has said if it 

weren’t for the volume of the unimpaired cases they were facing, 

they would be able to handle the relative small number of people 

with illness in the ordinary course. 

Chairman HATCH. That may be so, except that I believe there are 

those who believe that a pure medical criteria bill might be very 

difficult to get through, probably because organized labor might not 

go for it and might not agree with it or other groups might not go 

for it. I don’t know. I don’t know, but I just think of one case that 

everybody talks about, and that is that $150 million was awarded 

to six plaintiffs who claimed that asbestos exposure might some 

day make them ill. I mean, they weren’t even sick, and now we 

have doctors fleeing Mississippi because 71 companies stopped 

writing insurance in the State. 

Mr. KAZAN. And, Senator, those cases would not have qualified 

under——

Chairman HATCH. That is right. 

Mr. KAZAN [continuing]. The ABA or other criteria. 

The idea of finding a way to assess the contributions to a trust 

fund for the 8,400 presently active defendants, to say nothing of all 

the other companies who have not yet been sued, and getting that 

done this sessions seems to me to be rather a daunting task, and 

I think that is the problem. A trust fund would either have to be 

a defined benefit plan which leaves open-ended contribution issues 

or a defined-contribution plan which leaves the risk of a shortfall 

on the victims. They both have problems, and I, frankly, don’t 

know that you can square that circle. 

Chairman HATCH. Well, I am not for a trust fund that has an 

open-ended situation because——

Mr. ARCHER. Senator, if I may interject, and I apologize for doing 

so. 

Chairman HATCH. Sure. 

Mr. ARCHER. I think your admonition to everyone should be 

heeded. You have a very fine staff. Senator Leahy has a very fine 

staff. They have obviously been working together prior to this, witness the fact that there was a hearing in September——

Chairman HATCH. Right. 

Mr. ARCHER [continuing]. Where you both spoke. I think the insurance industry, I think those who are involved in the study 

group ought to be given every opportunity to see if they cannot 

come to the table, to see whether or not, in fact, a trust fund could 

44

be put together, whether or not the medical standards that the 

American Bar Association or something similar to it would be able 

to put something together, and given the timeframe that you have 

given and the fact that if something is going to be done, it should 

be done as quickly as possible, may be just the initiative to bring 

everybody, to get them closer. 

As I hear Jonathan Hiatt say, they were close on almost every 

issue, but two, and perhaps with your observation and that of Senator Leahy, there might be enough incentive to do the right thing. 

Chairman HATCH. Is today the 5th? It is the 5th of March. I am 

just going to challenge the business community and the labor community and the insurance community and any others who are interested, including the legal community, you better make your case 

to us within the next 2 weeks because that is going to be the time 

we are going to come up with a bill. When we come up with it, it 

is going to be your last chance to have this thing resolved, as far 

as I am concerned. 

Nobody wants to be more fair than I, but on the other hand, you 

have to cut the rug sometimes and you got to get things done. 

I would like to do it. I would like to do it so that victims are 

helped. I would like to do it so that there is some stability in the 

marketplace. I would like to do it so companies can come out of 

bankruptcy. The unions would benefit greatly from that. I would 

like to do it so that this system will start to work. I would like to 

do it so that attorneys aren’t continuously maligned because of 

what appears to be a milking of a system. 

I like having the American Bar Association work with us, and I 

commend you for leading out on this issue. We will look at the criteria situation that you have called for and see if it can be modified 

or it can be improved, and we would appreciate you looking at it 

again with your expertise and your Committee’s expertise and let’s 

see what we can do. 

I would like some help from labor here because you are the ultimate beneficiary if we can get this done, but I will tell you this. 

I am not for a trust fund if there isn’t a finality to it because, if 

you don’t have that, you don’t have anything. These businesses are 

all going bankrupt because they don’t have any choice, and union 

jobs are being lost because these businesses are going bankrupt. 

The more they go bankrupt, the less people are going to get, and 

I would like to see those businesses knowing actuarily where they 

stand and what they can do and how they factor that into a business plan. I would like to see the insurance companies factor this. 

If they have time to pay, they can do a lot of things that they can’t 

do by asking for big, whopping judgments right now. 

I would like to see the legal community shape up its act a little 

bit. I am very appreciative of you, Mr. Kazan, because I think you 

have made some very, very important points here. Mr. Baron, who 

was here before, if I recall it correctly, he said he would try and 

help me with this. 

I am going to count on ATLA waking up and realizing that they 

are killing our profession if they continue to go the way they are 

currently going on matters like this. I have a lot of respect for a 

number of the attorneys in ATLA who are leading plaintiff’s attorneys, but these are attorneys who understand that the system has 

45

to be a fair and adequate and right system and not just a windfall 

for attorneys, which is what this is turning out to be. 

When I think of this one company that has never had an asbestos—and you heard other Senators talk about this—never done 

anything with asbestos, never insured for asbestos, never had anything to do with it other than they were the ones that came up 

with the medical knowledge that mesothelioma comes from asbestos and they are brought in as a coconspirator and wind up with 

an extortion of 60,000 claims, where they just, as a business matter, have to pay blood money just to get rid of those claims, even 

though they don’t owe a dime and would win every one of those 

cases with a fair jury, I mean, that is just not right. It is one of 

the things that makes this such an intriguing and difficult thing 

for me. 

So I am asking everybody to get your act in order and get with 

us. We are going to come up with a bill, and I just hope that it 

will be something, even though it won’t be perfect, as Senator 

Leahy has said, that all of you will be able to get behind and help 

us to resolve. It is the art of the doable. It is the art of doing what 

we can. 

This has been a very good hearing. It has sharpened up some 

things for me that I was worried about, and it has raised some 

other issues that I will be working on as we work on this bill. 

I want to thank each of you for coming. I want to thank you, victims, for taking time out. I know it has been an inconvenience to 

you. It has been a very, very difficult thing for you, and I appreciate you coming very much. We all do, and not only do we welcome 

you, but we are very appreciative that you would take time to be 

with us. 

With that, we are going to keep the record open for 2 weeks. We 

want everybody who has an interest in this to help us on this. 

Thanks so much. 

[Whereupon, at 4:37 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

[Additional material is being retained in the Committee files.]

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(159)

SOLVING THE ASBESTOS LITIGATION CRISIS: 

S. 1125, THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2003

WEDNESDAY, JUNE 4, 2003

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, D.C. 

The Committee met, Pursuant to notice, at 10:07 a.m., in room 

SH–216, Hart Senate Office Building, Hon. Orrin G. Hatch, Chairman of the Committee, presiding. 

Present: Senators Hatch, Specter, DeWine, Sessions, Leahy, 

Feinstein, Feingold, Durbin. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. Could I have your attention? I would like the 

officers to let in as many people as they can within the fire safety 

rules. There are a lot of people out there who have not gotten in, 

so if we can line them up along the side, let as many people in as 

we can because this is an important bill, maybe one of the most 

important bills that we could possibly do. 

Good morning and welcome to this very important hearing on 

possible solutions to resolve the asbestos litigation crisis. 

I want to thank all of our witnesses for providing their expertise 

and suggestions to the Committee so that we can arrive at the best 

possible solution as soon as possible. And time really is of the essence in this matter. This bill may not make it if we do not move 

with expedition. 

Also, I want to thank my partner on this Committee, the leading 

Democrat on the Committee, Senator Leahy, the ranking member, 

for his continued efforts and interest in this subject matter. He 

along with Senators Dodd, Feinstein, Levin, and others continue to 

provide helpful suggestions that will help us all arrive at a bill that 

will truly help the hundreds of thousands of victims of asbestos exposure who currently get pennies on the dollar in compensation 

and whose pensions are in serious jeopardy as more and more companies continue to file for bankruptcy. 

In addition, these workers are losing their health care, their pensions, their salaries, and we have got to find some way of solving 

this problem. 

I have to say that I want to pay particular tribute to Senator 

Nelson and Senator Miller, who have been prime cosponsors on 

this bill, and also to Senators DeWine and Voinovich. We have not 

160

tried to get a number of cosponsors, but these are people who have 

been concerned about this right from the beginning and who deserve a lot of credit. 

Senator Leahy along with Senator Dodd, Senator Kennedy, and 

others have shown true courage in standing up and tackling the 

complex policy issues involved. And they are complex. To get this 

resolved, we have to dig deep, face the realities of the alternatives, 

and work together in a bipartisan manner to come up with the best 

possible solution, one that is fair to the claimants, one that recognizes the limitations of our economy. 

The private sector has been trying to resolve the asbestos situation for nearly 25 years. Several times major settlements were 

challenged by a few members of the trial bar and various efforts 

have been curtailed, prompting the Supreme Court, among others, 

to call on Congress to ‘‘fix’’ this serious problem. We are very fortunate today to have one of our top constitutional experts in the 

country, Larry Tribe, Professor Tribe, here today to educate us on 

the constitutional implications of this pending legislative solution 

and perhaps on the private efforts in the past that have failed. 

The private sector and the labor movement have had very important and constructive dialogues, and much has been gained by 

their efforts, and we have gained a lot from them. But we are now 

at a stage where, given the importance of this issue to our victims, 

our workforce, and our economy, we have to act. Now, it is time 

for legislators to legislate in the public interest, and that is why 

we are here today at our third hearing on this issue and why I 

commend my colleagues for their interests and courage to support 

efforts to arrive at an acceptable solution. 

I should also say that the legislation we are examining today, S. 

1125, is a product of much discussion and input from all interested 

parties. We introduced S. 1125, the bipartisan Fairness in Asbestos 

Injury Resolution Act of 2003, in an effort to move the legislative 

process along. I have said that we are open to constructive suggestions to aid us in improving this bill. I have heard many suggestions from outside affected parties and from my colleagues here on 

the dais and elsewhere. This has been very positive, and I think 

the legislative process is working and working well. 

We had to bring it to a head. That is why we filed the bill, knowing that it is not going to be the absolute final bill. And we are 

open to these suggestions and to your suggestions. 

Keep in mind, though, we have to get it through both Houses of 

Congress. We have to bring together a bunch of disparate people 

who do not agree on a lot of these things. So it is a tough, tough 

issue and battle as well, or at best, I should say. 

This bipartisan bill, as I noted when we introduced it, is not 

without flaws, and this hearing today is intended to provide expert 

advice on how best to improve the bill. With that, I would hope 

that all of our witnesses today will provide specific solutions to possible problems or flaws they believe the legislation may have. It 

will not help anyone to point out flaws without suggesting reasonable and workable solutions for those flaws. In short, we want constructive criticism if there is going to be any criticism. Now, there 

is always the other kind and we can live with that, too, but we 

would prefer constructive criticism. If we all commit to that and to 

161

be open on solutions, we will get a bill and we will get one soon, 

and we will be on our way to helping our economy immeasurably 

and helping our workers and our businesses. 

On S. 1125, I want to say that the support around the country 

we have gotten has been overwhelming. Many recognize that it 

may not be the perfect solution, but it is close to being one of the 

best workable solutions. It establishes a system to pay victims faster, ensure that it is the truly sick getting paid, and provide the 

business community with the stability it needs to protect jobs and 

pensions. Now, I appreciate the bipartisan support of the cosponsors of the bill so far. Prior to introduction of this bill, we incorporated a number of very constructive suggestions by Senators 

Leahy and Dodd, and I look forward to continuing to work with 

them and our other colleagues so that we can win full support for 

this bill. 

Moreover, we continue to address other helpful suggestions and 

concerns raised since we introduced the bill. For example, we are 

working with Senator Baucus to address the compensation for 

those victims who are in Libby, Montana. Senator Baucus testified 

at our two prior hearings on this issue, and I know that it is a serious concern for his constituents. We have also heard from some of 

those who are truly sick and suffering from asbestos-related diseases who are concerned that this bill as currently drafted would 

require reductions in awards for amounts received from collateral 

sources. We will look to address as many of those concerns as possible. 

Now, I should note on that point that prior to introduction of the 

bill, at Senator Leahy’s suggestion, we specified that life insurance 

proceeds would not be offset. Others, including Senator Murray, 

who will provide testimony today, have asked us to look at enacting 

a ban on asbestos and provide for research funding to find cures 

for these horrible diseases caused by asbestos exposure. All are 

laudable, all are well intentioned, and I would like to work with 

my colleagues to see if we can address these issues. 

Unfortunately, I also recognize that there will be special interest 

groups who benefit handsomely from the current broken system 

and have every incentive to stop our efforts on behalf of victims. 

That is their right, and I know we will hear all sorts of parades 

of horribles on anything we do. I hope their efforts will not succeed 

and that we do what is best for the country and the victims as a 

whole. We need to recognize where we will be if we do not get this 

done. 

I want to say to labor, already you have very sick members that 

are either being shortchanged in the current tort system due to the 

flood of claims and dwindling resources or those who may receive 

nothing at all, and members whose jobs and pensions and health 

care have suffered as a result of the skyrocketing bankruptcies. 

What will your union membership say if that is allowed to continue 

because we do not have the guts to do what we have to do here 

today and thereafter? 

To the business community, I ask, how many of you will still be 

around in the next few years if we do not do something to resolve 

this crisis now? These are large companies, employing a lot of people, mostly union people. Let me caution that many that have gone 

162

before you thought that they would survive, that they would not be 

flooded with claims, or that they had enough insurance to cover 

their claims. 

Almost 70 companies have gone bankrupt, nearly a quarter of 

which occurred in just the last 2 years. And I should note, those 

companies thought it would not happen to them. I know. I worked 

with some of them on a legislative solution 5 years ago, which I introduced with Senators Lieberman and Dodd. And the insurance 

companies, I know you have exactly the same concerns. There has 

to be some certainty in this process or you cannot live with it. 

One insurance company I know of never had anything to do with 

asbestos other than they did some of the medical research that said 

that mesothelioma may come from asbestos exposure. They are 

now brought in as a co-conspirator in some 60,000 cases. They can 

win every case; but, the last one they tried, they paid out $2 million in defense costs. They should not have to pay a dime, but they 

are part of this group trying to find some solution and some certainty to be able to continue in their business. And, unfortunately, 

I think they are going to have to pay something. And there are a 

number of companies in that same category who are just going to 

have to participate in order to help bring about and effectuate this 

settlement of these problems. 

All of that being said, I hope this hearing and the fact that we 

have a bill to work from will encourage the interested parties to 

work with us to support a workable solution that will benefit the 

common good. We need to ensure that the truly sick get compensated first and foremost. But we can do that without bankrupting companies so that jobs and pensions will not suffer needlessly. 

Now, I look forward to all of the constructive criticisms and 

views to be presented here today. I also invite anyone in the public 

and victims groups to provide any suggestions and improvements 

that you have to us by the close of business this week. As the interest from each member of this Committee indicates, we are serious 

about this, and we intend to get this done and make tough policy 

calls, where necessary. 

Now, this is the last hearing we are going to hold on this, and 

we are going to go to a markup probably next Thursday—not this 

Thursday but the Thursday after this one. Now, we will see what 

happens at that markup. It may be put over for one other week, 

but that is going to be the due date. And I hope we don’t have to 

put it over because I hope we can get enough consensus to be able 

to really go and get this done in this time frame where we have 

to get it done or perhaps it will never be done. 

So we are very appreciative to have all of you here, all of you 

witnesses, and we look forward to hearing your testimony and hope 

that we can move on from here. 

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

The only other opening remarks before we go to Senator Hagel 

will be the ranking member of the Committee, Senator Leahy. 

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

FROM THE STATE OF VERMONT 

Senator LEAHY. Well, thank you, Mr. Chairman, and I thank you 

my friend from Utah for calling this hearing on the asbestos litigation crisis. This is the third hearing we have had since the one I 

convened last September. Last fall, I had hoped to begin a bipartisan dialogue about the best means for providing fair and efficient 

compensation to the current victims and those yet to come. 

I have a simple message for everybody who is here today, and 

I know you are all very interested in the outcome of this legislation, so I am going to say it right up front: To end this crisis we 

need to restart negotiations among the stakeholders and interested 

Senators to finish hammering out the details of an effective national trust fund for victims of asbestos-related diseases. 

Our knowledge of the harms wreaked by asbestos exposure has 

certainly grown since last fall, and so have the harms themselves. 

Not only do the victims of asbestos exposure continue to suffer and 

their numbers to grow, but the businesses involved, along with 

their employees and their retirees, are suffering from the economic 

uncertainty surrounding this litigation. More than 60 companies 

have filed for bankruptcy because of their asbestos-related liabilities. These bankruptcies create a lose-lose situation. Asbestos victims deserving fair compensation do not receive it, and the bankrupt companies can neither create new jobs nor invest in our economy. 

Chairman Hatch and I have been working for months with Senators Dodd, DeWine, Carper, Ben Nelson, Feinstein, and others to 

encourage representatives from organized labor and industry to 

reach a consensus solution, and to bring our own ideas and efforts 

to the table. And I want to say the stakeholders have made real 

progress in finding common ground around a national trust fund. 

But they have not yet reached consensus. Without consensus—and 

I would say this to my friends on all sides of this. Without consensus, we are not going to end this crisis. 

I do commend Senator Hatch for his hard work in drafting this 

legislation. I agree with him that the most effective solution to the 

asbestos litigation crisis is taking all the asbestos cases out of the 

tort system and establishing a national trust fund. Our courts cannot handle these, and you are not going to get finality if we leave 

these in the normal tort system. That is what I urged at our last 

hearing. I still believe this. And I am continuing to work to develop 

medical criteria for use with such a trust fund that is going to be 

fair to all asbestos victims and can lead to the quick compensation 

of legitimate claims, but will also weed out frivolous claims. 

Now, there are some areas where I disagree with the legislation 

before, and, thus, I do not support it as it is currently written. And 

I know, as the Chairman said, it is a work in progress. Senator 

Hatch has asked for suggestions to improve the legislation, and I 

know he is sincere in that. I have made a number of detailed suggestions already, but I want to point out a few of the remaining 

major issues. 

First, this bill shifts the financial risk from defendants and insurers to victims. The bill guarantees businesses a lifetime of absolute legal and financial certainty, but it leaves asbestos victims 

164

completely out of luck if the trust fund runs out of money at any 

time in the next five decades. The one constant in our experience 

with projections of asbestos liabilities is that the projections of 

today are going to be wrong tomorrow. Twenty years ago, all the 

experts predicted that the Manville Trust Fund would be paying 

asbestos victims full compensation for many years. Now, as they 

testified here, asbestos victims get 5 cents on the dollar because 

the Manville Trust Fund is nearly insolvent. The risk of insolvency, 

in fact, the risk of inadequate funding short of insolvency, in a national trust fund must be addressed in order to provide certainty 

to asbestos victims as well as certainty to defendants and insurers. 

The bill does not cover victims, not yet, who were exposed to asbestos outside the workplace, such as spouses and family members 

who get exposure from workers’ clothes and community poisoning 

cases like the one the Chairman has referred to in Libby, Montana, 

something Senator Baucus has spoken about. And I have heard 

from Senator Murray about the importance of addressing ‘‘take 

home’’ exposure, and Senator Murray will be testifying here later 

today. And I commend the Chairman for his usual courtesy in making the time available. We have talked with Senator Baucus about 

the basic fairness of covering victims of tremolite asbestos exposure 

in Libby. 

I think the bill raises unnecessary hurdles that would bar many 

legitimate asbestos victims from receiving any compensation. For 

example, the bill does not compensate anyone who was exposed to 

asbestos in the workplace after December 31, 1982. Now, I see no 

reason to deny asbestos victims their rightful recovery because 

their exposure occurred after an arbitrary date, particularly because asbestos is still used today. An arbitrary cutoff in a national 

trust fund will just create more injustices later on. 

The bill offsets any compensation to asbestos victims by collateral sources such as previous payments from disability insurance 

or health insurance, Medicare, Medicaid, and death benefits programs. This is really a dramatic change from current law, and it 

would result in a cost shift of millions, even billions of dollars. The 

cost shift is from defendants and their insurers to other insurance 

companies or health care plans and the Federal Government. 

The use of these collateral sources would also reduce or eliminate 

compensation pledged to asbestos victims. For instance, a mesothelioma victim who had disability and medical insurance and who 

lived more than the usual 18-month survival time might not receive any of the aware under the bill because of these collateral 

source offsets. I cannot support reducing compensation to asbestos 

victims simply because they survived or because they had the good 

fortune and foresight to purchase insurance. 

Moreover, the bill requires a physician to independently verify a 

victim’s exposure to asbestos that may have occurred 10, 20, 30, 

even 40 years ago. That is an impossible bar to clear to be eligible 

for compensation. 

Finally, I believe that any alternative compensation system must 

be truly no-fault to be fair to those victims who will no longer have 

recourse to the courts. Under this bill, before the thousands of 

pending asbestos victims may receive any compensation, Congress 

would have to create and put together the bureaucracy of a brandVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00170 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
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new asbestos court and do it at the Federal taxpayers’ expense. If 

this is truly no-fault, we do not need that. I think such a court appears to be inconsistent with a no-fault system, and if past experience is any predictor, it would be unworkable. 

So we need to work with all the stakeholders to resolve the remaining complex and interrelated issues—such as medical criteria, 

award values, and insolvency risks—necessary to enact an effective 

trust fund solution. I look forward to hearing from our expert witnesses as we try to craft that kind of a bipartisan piece of legislation. 

Our undertaking is complex. It is unprecedented. It is not going 

to be easy to work out the details necessary for consensus. But I 

would tell everybody in the room the stakes are too high for us to 

leave the field before we try our utmost to complete this. I would 

urge everybody—industry, labor, victims, lawyers, everybody involved—keep on working for a consensus. If we have consensus, we 

pass a piece of legislation. If we don’t have consensus, we don’t. 

You know, my two grandfathers were stonecutters in Vermont. 

One grandfather emigrated to this country from Italy, not speaking 

any English, worked as a stonecutter until he earned enough 

money to bring his wife and children over. My paternal grandfather, my Irish grandfather, whose grandfathers themselves were 

immigrants, worked as a stonecutter. They both died of silicosis of 

the lungs because of their workplace exposure to stone dust. I 

never knew my paternal grandfather. He died long before my parents met at a very young age. I do know his tombstone in Barre, 

Vermont, where it says ‘‘Patrick J. Leahy.’’ Every time I see that, 

it reminds me that we can do better in the workplace. So I think 

of them. I think of the hundreds of thousands of present and future 

asbestos victims. I want to make every effort to solve this crisis, 

and I commend and encourage all those who are working in good 

faith to do it. 

If we act together, if we encourage the private negotiations to resume, in my view that is the best way to move a consensus bill 

through the legislative process and into law. Both the Chairman 

and I want very much to get a piece of legislation on the President’s desk that he can sign. There are a number of important 

issues on which we need to find common ground. But if we work 

together as we have in the past, we have the best chance of success. Our guiding principles should be fairness to the victims and 

certainty for the corporations involved, through a workable process 

that will function effectively over time. 

Mr. Chairman, I look forward to continuing to work with you, 

Senator Dodd, Senator Hagel, Senator Murray, Senator DeWine, 

Senator Carper, Senator Nelson, Senator Feinstein, and other 

members of this Committee to craft an effective solution to the asbestos litigation crisis. 

Mr. Chairman, there are a whole lot of other things you could be 

doing with your time. I applaud you for holding the hearing and 

keeping us moving forward. 

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

Chairman HATCH. Well, thank you, Senator. 

166

We have a variety of witnesses, so we are going to limit witnesses to 5 minutes, although, Senator Hagel and Senator Murray, 

we will grant more time to you. We are honored to have Senator 

Hagel here with us, and Senator Murray, when she does show up, 

regardless of who is testifying, we will interrupt to allow her to testify. Since we are all so busy around here, I want to accommodate 

her. 

We are honored to have you here, Senator Hagel. You have a lot 

of experience in this area since you worked with Manville Trust, 

and we will be interested in what you have to say about this bill. 

So we will turn the time over to you. 

STATEMENT OF HON. CHUCK HAGEL, A U.S. SENATOR FROM 

THE STATE OF NEBRASKA 

Senator HAGEL. Mr. Chairman, thank you, and to the distinguished ranking member, Senator Leahy, and all the distinguished 

members of this Committee, I appreciate an opportunity to share 

some thoughts with you on a subject that is very important, I 

would say even critically important. 

Chairman HATCH. Would you pull the mike up a little bit closer, 

Chuck? 

Senator HAGEL. As you noted, Mr. Chairman, I served as a trustee of the Manville Personal Injury Settlement Trust for over a year 

and a half, between February 1994 and June 1995. I was appointed 

by the trustees on the recommendation of the Honorable Jack B. 

Weinstein, U.S. District Judge for the Eastern District of New 

York. 

Judge Weinstein and I were first acquainted in the 1980’s when 

he appointed me chairman of the $240 million Agent Orange Settlement Fund. I am not an expert, Mr. Chairman, on any of this, 

but I do have some real-life experience in making a number of mistakes, knowing a little bit about what works, what does not work, 

and how imperfect the process is and how there are always questions and concerns, just as Senator Leahy noted. But this is an 

issue that affects hundreds of thousands of Americans, and we 

need to come to some resolution with some assistance that is realistic and practical and workable. 

I would like to discuss today some of my experiences and 

thoughts on this subject and how it relates to your legislation, S. 

1125, the Fairness in Asbestos Injury Resolution Act of 2003. Mr. 

Chairman, I am pleased that the medical and exposure criteria 

contained in your legislation are based on the 2002 Manville Trust 

Distribution Process, because I think that process, as imperfect as 

it is, was arrived at over years of experience in dealing with a very 

complicated issue. 

The history of the Manville Trust illustrates the problems facing 

asbestos claimants and defendants everywhere. And because the 

Manville Trust is the largest and the oldest of the asbestos trusts, 

it is in the unique position of being the bellwether for asbestos 

claims filings. I would like to share with you some of what I 

learned based on my experience on that trust and why I believe 

Federal legislation is needed to correct the shortcomings of the current system. 

167

Allow me to begin by discussing three of the major problems facing the Manville Trust and others like it: first, insufficient payments to claimants, as we heard this morning; second, inability to 

accurately predict the number of future claims, as also heard this 

morning; and, third, depletion of resources by non-sick claimants. 

First, insufficient payments to claimants. During the 15 years of 

the Manville Trust existence, the trust has received over 620,000 

claims and has paid over $3.1 billion to approximately 530,000 

claimants. This is substantially more than any other asbestos trust 

has paid to beneficiaries. 

Unfortunately, only 27,000 of the total 530,000 paid claimants 

have received the full value of their claims. The remaining 500,000 

claimants have received far less than the fair value of their claims 

as determined by the courts that established the trust. Because of 

a very serious asset/liability mismatch, approximately 400,000 

claimants have been paid only 10 percent of the value of their 

claims, while an additional 100,000 claimants—those who have 

most recently filed claims—have been paid only 5 percent of the 

value of their claims. Like the Manville Trust, none of the existing 

asbestos trusts pay more than a few cents on the dollar when compared to the court-approved claim values. It appears that none of 

the 20 or so asbestos trusts pending bankruptcy confirmation will 

pay anywhere near full claim value. 

Why does the Manville Trust and every other asbestos trust pay 

only a few cents on the dollar? And why do they all have an asset/

liability mismatch? Again, the history of the Manville Trust illustrates the second problem affecting the fairness and solvency of the 

trust: the inability to predict future claims. 

The Johns Manville Corporation declared bankruptcy in 1982 because of its asbestos litigation lawsuits. Since then, over 60 corporations have also declared bankruptcy because of asbestos liabilities. During 1986, expert claims forecasters testified in the Manville bankruptcy court that between the late 1980’s and 2049, the 

Manville Trust would receive between 83,000 and 100,000 claims. 

The trust began operations in 1988 and as of today, only 15 years 

later, the Manville Trust has received, as I mentioned, over 

620,000 claims, and 2049 is almost half a century away. 

During 2001, the Manville Trust commissioned the fourth future 

claims forecast it has undertaken during its 15-year history. That 

recent forecast predicted that by 2049 the trust would receive between 750,000 and 2.7 million additional claims, in addition to the 

nearly one-half million claims it already has received. As you can 

imagine and know, a future claims forecast of between 750,000 and 

2.7 million additional claims is essentially a useless prediction if 

you are trying to adjust claims payments on a pro-rata basis. 

We learned from the Manville Trust that forecasting future asbestos claims is, at best, very difficult. When considering the pending legislation, all of us should try to become comfortable with the 

inevitable uncertainty associated with trying to determine the 

number of future asbestos claims. This hangs heavy over any final 

determination of legislative remedies. 

The third problem, depletion of resources by non-sick claimants. 

In the morass of asbestos claims data and statistics, we must remember that behind the numbers are real people. Senator Leahy 

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mentioned how close he and his family are to this point, using examples of his grandparents. Some of these people are suffering 

from the inevitably fatal illnesses caused by their asbestos exposure. These claimants, drawn from a claimant population with an 

average age of over 66, have had their lives shortened by their asbestos exposure. Other claimants, while not terminally ill with an 

asbestos-related disease, nonetheless have had the quality of their 

lives destroyed. 

These claimants have not received the full value of their Manville compensation. I noted earlier that the trust has paid its beneficiaries over $3.1 billion, almost all of that at either a 10-percent 

or a 5-percent share of claim value. Currently, the unpaid portion 

of the Manville claim values is over $23 billion. Every asbestos 

trust also has billions of dollars of unpaid and never-to-be-paid liabilities. While it is true that some underpaid claimants may have 

received funds from defendants in the tort system, it is doubtful 

that very many, if any of them, have or will receive the fair value 

of their claim. 

Why do these huge liabilities remain unpaid? There is, of course, 

an ongoing debate as to whether all of the claimants who have 

been paid were impaired; what ‘‘impairment’’ means; whether too 

much money has been paid to claimants with non-malignant diseases versus the dollars paid to claimants with malignant diseases; 

and how many manufacturing and insurance dollars this country 

can afford to pay to the victims of one toxic substance. 

Regardless of the definition of impairment, some claimants are 

seriously ill, and the proposed legislation you are addressing today 

appears to strike an appropriate balance between those potential 

asbestos victims who are seriously ill and those who are not, by 

codifying the Manville medical and exposure criteria. 

Mr. Chairman, because S. 1125 incorporates the Manville Trust 

2002 Trust Distribution Process, I wish to discuss briefly what I believe the trust has done right and should be emulated in any Federal legislation. 

During 2002, the trust’s administrative costs were less than 3 

percent of claims payments. This is lower than the administrative 

costs of any other asbestos trust and lower than the administrative 

costs of practically all casualty insurance companies. The Manville 

trustees are appropriately proud of these very low administrative 

costs. The principal reason these costs are low is that the trust’s 

operating subsidiary, the Claims Resolution Management Corporation, employs an interactive, web-based electronic claim filing system. Federal legislation, in my opinion, should maintain as low an 

administrative burden as possible. 

Finally, I would like to conclude with a few short comments regarding why I believe your legislation, the FAIR Act, is needed. 

Some have raised relevant questions related to your legislation, 

and many more questions will be raised and should be raised. You 

will hear from the experts behind me, as you know, and they will 

raise questions and, I hope, provide some solutions and answers. 

I also hope we can work through these issues and move toward a 

solution to this critical and urgent problem. 

With six operating asbestos trusts and with 20 or so companies 

pending bankruptcy confirmation, a national trust and its singleVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00174 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
169

payer format, such as the one in S. 1125, is long overdue. No useful 

purpose is served by having multiple asbestos trusts, each with 

their administrative burden, coupled with the economic burden of 

the tort system. Such a system depletes the funds that are available for victims of asbestos exposure, as I previously discussed. 

Where bankruptcies have not occurred, asbestos plaintiffs and 

defendants are left to the tort system. In addition to being costly, 

the tort system is very uncertain. The tort system has many equitable attributes, but its uncertainties and unfairness for some asbestos personal injury victims, particularly under circumstances 

where there are insufficient funds for tens of thousands of injured 

asbestos workers, is not a system that should be perpetuated. To 

say it straight, Mr. Chairman, some claimants are doing very well 

under the system, yet others—many—equally deserving, are receiving little or nothing. It is obvious that a single-payer system is 

needed to bring equity and fairness to current and future asbestos 

injury claimants. 

In conclusion, I encourage this Committee to focus on the fact, 

as you have, that the fair resolution of our asbestos crisis is not 

the province of one political party or one economic point of view 

but, rather, is an issue that should unite all of us in a common 

goal. I believe that S. 1125 accomplishes this objective in an imperfect but yet realistic and efficient way. And I applaud, Mr. Chairman, you and Senator Leahy and your Committee for taking this 

difficult task on. It is not only complicated, but it has many tentacles wrapped around it, and it is one that is confounding. And 

many of us appreciate the leadership this Committee has given to 

this issue and wish you well and stand by to serve or consult or 

advise in any way we can. 

Once again, I appreciate an opportunity to share my thoughts 

with the Committee. 

Chairman HATCH. Well, thank you, Senator Hagel. As I understand it, you are a cosponsor of the bill. 

Senator HAGEL. I am, yes, sir. 

Chairman HATCH. We are honored to have you on this bill and 

appreciate your testimony. 

With that, we know how busy you are. We will let you go. 

Senator HAGEL. Mr. Chairman, I would be very glad if any of 

your colleagues on this Committee would have questions—I have 

got to get back to another committee meeting, but I would be very 

happy to respond to those personally or in writing, and my staff 

would as well. I am available to any members of your committee. 

Chairman HATCH. Thank you, Senator. We will keep the record 

open until the end of the day. 

Senator HAGEL. Thank you. 

Chairman HATCH. Thanks so much. We are grateful to have you 

here and grateful for your experience as well. 

Our next witness, we would like to welcome to the Committee 

Professor Laurence Tribe. He is the Ralph S. Tyler, Jr., Professor 

of Constitutional Law at Harvard Law School and is known here 

and throughout the country as one of the most respected constitutional scholars and practitioners. 

Professor Tribe graduated summa cum laude from Harvard College and magna cum laude from the Harvard Law School, clerked 

170

for Supreme Court Justice Potter Stewart, and has authored what 

many of us feel are countless books and scholarly articles regarding 

many issues under our Constitution. 

Professor Tribe has also argued asbestos matters before the Supreme Court in the landmark cases Ortiz v. Fibreboard Corporation

and Amchem Products v. Windsor. I think it is safe to say that his 

practical experience here gives him a unique perspective on the 

constitutional issues presented by the bill. 

Professor Tribe, we know you are a very busy man, and we are 

very grateful that you would take time from your busy schedule to 

come and be with us today and help to educate the Committee on 

where we are in this bill and what we might be able to do in the 

future. So we will turn the time over to you. 

STATEMENT OF LAURENCE H. TRIBE, TYLER PROFESSOR OF 

CONSTITUTIONAL LAW, HARVARD LAW SCHOOL, CAMBRIDGE, MASSACHUSETTS 

Mr. TRIBE. Chairman Hatch, Senator Leahy, members of the 

Committee, I think I am the one who should be grateful. I am really very honored that the Committee is interested in hearing my 

views. And I certainly would join Senator Hagel and the many others who applaud the effort that you, Mr. Chairman, and the ranking member and others have made to untie this terrible Gordian 

knot, a really intractable problem. 

I have a rather lengthy prepared statement that I will hopefully 

just have read into the record so that I——

Chairman HATCH. Without objection, we will put all prepared 

statements in the record, but we are happy to hear from you. 

Mr. TRIBE. Thank you, Mr. Chairman. And I would like to speak 

really very briefly and want to focus on answering whatever questions members of the Committee may have. 

The sole subject of both the statement that I have submitted in 

the prepared form and of my brief oral presentation this morning 

is whether the Constitution of the United States prevents Congress 

from doing what the United States Supreme Court on three occasions within the past half-dozen years—Amchem in 1979, Ortiz in 

1999, and most recently, in Norfolk & Western just this year—implored, almost begged Congress to do, and that is, to replace a 

plainly dysfunctional system for processing what the Court itself 

called ‘‘an elephantine mass’’—the word is almost as awkward as 

the use of the judicial system to achieve it—an elephantine mass 

of asbestos cases lodged in the State and Federal courts, to replace 

that mass with a more streamlined and certain administrative procedure for the orderly payment of newly created, exclusively Federal claims, claims against a national trust fund where the system 

rests on the recognition that the reality of approximate justice, 

swiftly and surely delivered, is sometimes vastly preferable to the 

illusion of precise justice, that is often delayed until the most grievously injured risk receiving no justice at all, because by the time 

the wheels of litigation grind their way to the most deserving victims, the finite funds available to satisfy their claims will often 

have been used up by payments to the relatively unimpaired, or 

used up by the absolutely enormous transaction costs, as the economists call it, often payments to lawyers, and often amounting to 

171

about $1 of payments on the side for every $1 that any victim ever 

sees. It is really a case of the classic race to the bottom. 

Now, I yield to, I think, very few in my admiration for the judicial system. I think it does a marvelous job with many problems. 

But this is not among them. And I think if there is anything on 

which there is consensus, it is surely that the illusory search for 

perfection, for absolute certainty, for making sure that everyone 

with a just claim can get every cent on the dollar or is somehow 

satisfied is nothing more than the hopeless attempt to seek perfection. And I think in this area, as in many others, the perfect is the 

enemy of the good. 

This particular proposal, as you have said, Mr. Chairman, is a 

work in progress; it is not meant to be the final version of a final 

bill. But many of those whose real objection is that they think they 

could do better in the litigation system somehow, or that they could 

do better with a bill that is tweaked in one way or another—many 

of those people couch their objection in constitutional terms. I think 

those who make the objection forthrightly in policy terms, who propose constructive ways of moving the bill in a favorable direction, 

are to be commended. But those who cheapen the constitutional 

currency by suggesting somehow that Congress is without power to 

provide a rational administrative scheme here, simply because in 

some instances and for some claims the theoretical availability of 

relief under the judicial system is replaced with no relief under this 

scheme. Or for some people who might get $3 million, possibly, 

under the existing system, they may end up with less than $1 million under this scheme. 

The fact that those things happen is simply testament to the absence of perfection in any administrative operation. And if one were 

to fine-tune the administrative process to the point where it tries 

to replicate what the idealized judicial system can achieve, if you 

imagine just one case and with all the time in the world, the 

thought that you can do that is itself a profound illusion. Because 

if you replicate the way common law claims for tort or contract are 

treated in the judicial system within the administrative apparatus 

that you have created, you will simply replicate all of the problems, 

all of the delays, all of the transaction costs. 

And so it is unfortunately necessary that in order to make an 

omelet, some eggs are going to be broken. And I feel terrible for 

the victims who are not going to ultimately achieve the full measure of justice that a perfect system would deliver. But the Constitution does not promise perfection and can’t deliver it. And the fact 

that some of the lines that have to be drawn in this bill are merely 

approximate, the fact that people could argue about whether the 

amount of money that the insurers pay and the amount of money 

that the asbestos defendants pay should be exactly equal, or whether some other ratio is better, the fact that people can argue about 

the precise formulas by which these tiers of defendants are established, should not distract attention from the proposition that this 

is a classic case of economic regulation and economic distribution. 

And it is in that area where the Constitution is most forgiving 

of approximation and least demanding of perfection, that area 

where the watchword is rationality. And unless it can be argued 

that this scheme actually takes property from some people in order 

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to achieve the common good when, in fact, the taxpayers should be 

picking up the bill, the beleaguered taxpayer, unless it can be 

shown that there is a confiscation of private property—and I don’t 

think there is that confiscation here—it seems to me that all of the 

other objections, whether they are couched in terms of equal protection or substantive due process or the non-delegation doctrine by 

some who would like a more precise set of guidelines as to how 

these burdens are to be allocated, whatever the label, it comes 

down to the same thing, the counsel of perfection, which I think 

the Chairman and the ranking member and those who have 

worked hard on this legislation have realized would be the death 

knell for any realistic solution. 

I think I have overstayed my 5 minutes. I probably could lean 

harder on the Chair for more time, but I do not want to. I would 

rather be responsive to whatever questions any member of the 

Committee might have. 

Chairman HATCH. I could listen to you all day. We appreciate 

your testimony because I think on the constitutional issues some 

people have been very concerned about that, and, you know, I believe you are right. But, Professor Tribe, we will ask some questions. Maybe we can elucidate even a little bit further, which would 

be, I think, pleasing to you. 

People who know you think of you—and so do I—as a champion 

of victims rights because you have argued and won two leading Supreme Court decisions about the right of asbestos claimants to 

have their day in court. And you are now working with our colleagues, Senator Feinstein and Senator Kyl, on a victims rights 

amendment to the Constitution. Yet you are here today defending 

the constitutional validity of this legislation, which has been openly 

criticized as allegedly depriving victims from having their day in 

court even though we give all legitimate victims a quick and efficient access to the newly created fund. 

Now, some may think that this represents a departure from your 

basic approach to the rights of victims to be fully and fairly heard, 

and I would just like to have you respond for the benefit of everybody here. 

Mr. TRIBE. Well, I do care very much about victims, including the 

victims of crime; it is for that reason that, to the dismay of many 

people both to my right and my left, I favor a victims’ rights 

amendment to the Constitution. And I care about the victims of 

torts and the victims of all kinds of injustice. But it is one thing 

to believe in somehow vindicating the rights of victims, and it is 

another thing to believe that you can get blood from a stone, that 

you can somehow make everyone whole by a system that promises 

100 cents on the dollar but does not deliver; that is, a real concern 

for victims and their welfare, I think, has to be tempered with a 

measure of pragmatism. 

I think it was Justice Jackson who talked about the illusory 

promise, a ‘‘promise to the ear to be broken to the hope, like a munificent bequest in a pauper’s will’’. That is the promise that the 

present system has made to victims, the promise that many of the 

asbestos trusts make. And as we have already heard, they promise 

100 and they deliver 5. 

173

I think that a realistic concern for victims means that one must 

be open to accommodation and compromise, and to insist on purity 

for the sake of purity when in the end people are more grievously 

hurt I think would be a terrible mistake. 

And let me add one other thing. I think that the most important 

system that this country has for protecting those who are genuinely 

victimized is ultimately in the most extreme cases the judicial system. Of course, as you point out, Mr. Chairman, it is not as though 

people are completely frozen out of adjudication here. They have 

access to an Article III court to review the determinations of the 

administrative body. But in the end, the ability of the Article III 

judiciary, which is in some ways the last stop on the train before 

people are ultimately abandoned to their fate, the utility of the 

Federal judiciary is compromised by the kind of cynicism and corrosion that is generated by the avalanche of asbestos cases. 

I am not one who always agrees with the tort reform movements 

and putting this or that kind of cap on damages. Sometimes it is 

a good idea, sometimes not. But when you really do have an area 

where the experience of well over a quarter century plainly demonstrates that to promise that we will take care of victims through 

the judicial system and then simply to overwhelm the courts and 

give people who want to take potshots at the courts an excuse by 

saying, look, look how terribly the courts perform, we have got to 

get rid of judicial processing, that I think is a terrible mistake. 

And one of the most serious costs of the asbestos crisis, a cost 

not measured in dollars, not measured in bankruptcies, not measured always in unsatisfied victims’ claims and in more and more 

bankruptcies and in harm to the economy, is the cost of essentially 

using the scarce resource of our judiciary to solve a problem that 

it was never adapted to solve, leading more and more people to be 

cynical about its ability to do what it is ultimately best at doing, 

and that is, protecting ultimate human rights. 

Chairman HATCH. Well, the bill that I have proposed would not 

affect any of those cases that have gone all the way to judgment. 

But it would require the dismissal of asbestos cases that are still 

pending in various stages of litigation, and it would direct those 

claims to the fund itself, which I would like to have $108 billion. 

Now, the companies are not happy with that, and naturally the labor movement is not happy with that. But it is about $18 billion 

more than the companies are willing to pay, but that is what it is 

going to be, and less than what the trade unions would like, in any 

event. But some have argued that this interferes with the judicial 

process in those cases. 

Now, do you have any concerns about Congress’ authority to do 

this under the separation of powers principles? 

Mr. TRIBE. No, I don’t, Mr. Chairman. It seems to me well established through a series of cases, including those involving environmental law and those involving financial matters, that even where 

Congress takes aim at a number of pending cases by docket number and by name, as opposed to generically as you are doing here, 

as long as it affects those pending cases by changing the underlying rule of law that is to be applied, there is no invasion of the 

judicial province, no usurpation of the judicial power. That is, it is 

not a matter of telling the courts how to decide a pending case. It 

174

is a matter of pulling the rug out from under those cases by saying, 

look, that rug is well worn, it won’t support the weight that people 

are putting on it. We have got to change the law, replace the State 

and Federal bodies of law, primarily State, on which people have 

rested asbestos claims with a new Federal cause of action under a 

statute with an administrative remedy. And because the law itself 

is being changed, the fact that those cases disappear the way Cinderella turned into a pumpkin—I guess it wasn’t Cinderella. It was 

her chariot, wasn’t it? 

[Laughter.] 

Senator LEAHY. Don’t you have grandchildren, Professor? 

Mr. TRIBE. Not yet. Not yet. And this proves that my children 

are a little bit too old for me to remember the stories that I used 

to tell them. 

The point is that when these claims evaporate, they don’t evaporate because Congress has zapped them one by one, sort of taking 

potshots at specific cases pending in the courts. It is because Congress has said the body of law on which they rest really won’t bear 

the weight. So we are supplanting with a new body of law, and as 

such, of course, that body of law is processed administratively without juries, no invasion of the separation of powers. 

Chairman HATCH. Thank you, sir. 

I am going to turn to Senator Leahy. I will submit other questions in writing that you have, I think, more than answered, perhaps, but I will still submit some. 

Senator Leahy? 

Senator LEAHY. Professor, if and when the grandchildren arrive, 

I have a whole library of books that——

Mr. TRIBE. I will take you up on it. 

Senator LEAHY [continuing]. Mine are going through, and I will 

send them on to you. 

Chairman HATCH. If only he would study the law books, you 

know, we would——

[Laughter.] 

Chairman HATCH. I am only kidding. 

Mr. TRIBE. I think he has done pretty well. 

Chairman HATCH. Yes, he does very well. I am just kidding. 

Senator LEAHY. Professor, you have experience in litigating a 

number of these asbestos cases, and that is valuable. And, of 

course, here we are asking about your constitutional experience. 

And what you are doing is you are—I want to make sure I understand. Your opinion today is that this legislation is constitutional. 

You are not going into all the policy aspects of it. Is that correct? 

Mr. TRIBE. That is right, with one exception, Senator. I am saying that I think as a policy matter, which is sometimes a little hard 

to separate from the issue of fairness, as a policy matter a national 

trust of some kind with an administrative streamlined procedure 

makes sense. The Supreme Court has called for it. Observers on all 

sides think it is necessary. To that degree, I am offering, I guess, 

an opinion where I am not exactly an expert. 

The one thing that I guess I learned in those asbestos cases I litigated, they weren’t cases of individual claimants. They were whole 

class actions, and they were class actions in which the people involved were not fairly and effectively represented. They weren’t 

175

represented because the classes were so heterogeneous and so diverse that only a legislative body under a rule of one person, one 

vote could represent them. And that is why I think the Court basically said you can’t do it this way in the judicial system. You can’t 

appoint a few champions for this kind of class. You have got to do 

it legislatively. 

Senator LEAHY. Of course, the reason we are here is we are trying to do something legislatively. Justice Ginsburg and others have 

suggested that. But you are not necessarily saying, for example, 

that we have to create a whole new court just to handle something 

that we work out as a no-fault type of recompense. Is that correct? 

Mr. TRIBE. No, I do not have an opinion on whether a court is 

necessary, but just calling it no-fault doesn’t——

Senator LEAHY. I understand. 

Mr. TRIBE. It doesn’t mean it is going to solve itself. It is not selfexecuting. 

Senator LEAHY. Let me ask you this: The bill offsets compensation to asbestos victims by collateral sources, for example, previous 

payments from disability insurance or health insurance, Medicare 

and so on. Now, that is a shift of millions of dollars, maybe even 

billions of dollars. Nobody knows for sure. The cost shift is from defendants and their insurers to other insurance companies and 

health care plans. It could reduce or eliminate compensation to asbestos victims. 

Do you have any take on that part of the legislation? 

Mr. TRIBE. Certainly I believe that it is constitutional. Whether 

it is the best solution, given that the resources are finite and that 

one is trying to conserve them, is something I don’t have any expertise in or opinion on. 

Senator LEAHY. You talked about the propriety of eliminating a 

traditional common law claim in the State court systems. I just 

want to make sure I understand your testimony correctly. You say 

that Congress has the power to do away with these kind of suits, 

replace them with claims in an Article I tribunal. Those new claims 

involve public rights. Am I correct so far? 

Mr. TRIBE. Yes, you are, Senator. 

Senator LEAHY. And you say these public rights are rights 

against the Federal Government or they are closely intertwined 

with the regulatory scheme? 

Mr. TRIBE. Correct. 

Senator LEAHY. In S. 1125, what particular characteristics of it 

give that Federal nexus? 

Mr. TRIBE. That it is a cause of action which is entirely a creature of Federal statute and not a derivative of some preexisting 

common law right. That is, there is a resemblance, a family resemblance between the torts claim of an asbestos victim, whether one 

who comes down with mesothelioma or something less severe, and 

a claim through the asbestos trust fund, but it’ll be a pretty disparate and far-flung family, because claims against the statutory 

fund are not based on any finding of fault. These claims also do not 

require an attribution of causation to any particular company. They 

do not require the same kind of proof. They are claims every bit 

as novel and statutory in origin as those in the Atlas Roofing case. 

176

Senator LEAHY. But is it enough that the Congress just directs 

assets into the fund; is that enough to do it? 

Mr. TRIBE. Well, the mere movement of assets, if it was the same 

old claims, and we said, well, those old claims are simply going to 

be moved to a new place, no change, they are grounded in State 

law. That probably would not be enough, but that is something like 

this statute. 

Senator LEAHY. You have probably seen the plan based on the 

United Mine Workers Combined Pension Fund. As a practical and 

constitutional matter, would that work in the asbestos context? 

Mr. TRIBE. Well, you say as a practical and constitutional matter. 

First of all——

Senator LEAHY. Let me ask you as a constitutional matter. 

Would it work in the asbestos context? 

Mr. TRIBE. I have to admit, Senator, you will have to remind me 

of more of the details of the United Mine Workers solution, but it 

is certainly not a solution that I think could easily be extrapolated 

to the whole Nation with all of the diversity that exists in the 

sources of harm and the nature of exposure. 

Senator LEAHY. I have been advised that my time is up. I am 

going to submit that to you, because I realize this is something that 

came out of the blue for you, and I will submit it for the record, 

and if you could get back to me on that. 

Mr. TRIBE. I would be delighted to. 

Senator LEAHY. Thank you. 

Chairman HATCH. Thank you, Senator Leahy. 

Senator—Is Senator DeWine here? Senator Sessions. 

Senator SESSIONS. Thank you, Mr. Chairman. 

Mr. Tribe, I thank you for your wise insights. I think they are 

full of value for all of us. I think it was Justice Macklin Fleming 

in California that wrote that perfect justice is a mirage. In the pursuit of perfect justice we lose the possibility of what justice we can 

achieve. I do not know how we are going to do this and how we 

will get to it, but when we have a legal system that is unable to 

compensate adequately victims, and when our analysis of that legal 

system shows that as much as 60 percent of the amount paid out 

by the defendant companies does not get to the victims, we have 

really got something that is indefensible morally. 

Would you not agree that is the fundamental problem, one of the 

fundamental problems we are dealing with is that we are not getting enough of the limited resources to the victims in need? 

Mr. TRIBE. I completely agree, Senator. 

Senator SESSIONS. And this Congress would have a moral obligation to try to create a system that gets as much of those limited 

resources to the people in true need as possible? 

Mr. TRIBE. I think that is right. 

Senator SESSIONS. I have a difficult with the concept that somehow the Government should be a last payer here, resource of last 

resort. I think about the case, I represented a young widow whose 

husband was killed in an automobile accident. People had crossed 

the center line and hit him head on. They had no money. They 

were not compensated. You could not recover against those victims, 

and all over America there are thousands and hundreds of thouVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00182 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
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sands of cases brought or even not brought because there is no 

money by the criminal or whoever committed the act against them. 

So do you see an erosion of that—do you see a problem if the 

Government becomes a payer for the wrongdoing of an individual 

actor, and does it impact our whole philosophy of jurisprudence? 

Mr. TRIBE. Well, I suppose it would if it relieved the actor of liability, but I think I said earlier that you cannot get blood from a 

stone. When it turns out that these funds, maybe even the $108 

billion, prove at the end of the day not to be enough, it is not inconceivable to me that some creative solution might be worked out in 

which the Government, in the end, provides some kind of backstop 

so that the concern of insufficient funds that Senator Hagel expressed is in some way met. I mean I think personal responsibility 

and corporate responsibility are things we have given insufficient 

attention to, but responsibility is one thing and leaving people completely out in the cold is another. 

Having said that, I recognize that there are lots of competing demands for scarce public dollars. The taxpayer can be squeezed only 

so much. And so in the end there may have to be some problems 

that are left undealt with for the time being. That is sad but not 

always avoidable. 

Senator SESSIONS. These companies that are in bankruptcy, the 

creditor committees that work with the bankruptcy judges and 

have certain powers, those committees could sell the assets of that 

company, eliminate it if they chose, but they are allowing them to 

continue to function, I assume, on the theory they will get more 

money that way than selling them. 

Mr. TRIBE. Well, that is sometimes the case. That is liquidation, 

and a fire sale is not necessarily the best way to maximize resources, and so the whole theory of replacing the liquidation with 

a debtor in possession and a confirmed plan of reorganization is to 

try to maximize asset value. But even having done that, sometimes 

there is not enough there to meet the just demands of various concerned individuals with rights at stake. 

Senator SESSIONS. I guess just for those that suggest that companies have not paid all they can pay, they are under the gun right 

now, they are under the power of the bankruptcy courts, at least 

60 of them are, and all their assets could be liquidated if the court 

and the creditors thought that was the best way to maximize their 

resources; is that not correct? 

Mr. TRIBE. That is correct, but of course, part of what we are trying to do, Senator, I assume, what you are trying to do, is keep 

that number of 60 from mounting without limit. And the way we 

are going now, of course, the number of bankruptcies is going to 

escalate dramatically, and that certainly is not a way of maximizing the effective use of assets, returning on the investors’ investment and ultimately satisfying the claims of those who have 

been injured by the companies involved. 

Senator SESSIONS. Finally, it seems to me that this mass tort—

and we have had others of breast implants and certain medications, mass tort cases. Should we as a Congress now, separate from 

this, maybe in the cool light of day, create a system from which 

once liability has become clear and it is a question of damages and 

payment, that we could create some sort of system that would 

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apply in these kind of cases in the future? Is that possible in your 

opinion? 

Mr. TRIBE. I think trying to do it, Senator Sessions, in a very 

generalized way, would move very far in the direction of having 

sort of a mass tort administrative body, some court of a rather—

it might become an elephantine court in itself, a hydra-headed 

court. It seems to me that dealing with problems in a somewhat 

more surgical way, targeted way, when we have had the kind of experience that we have had with asbestos so that we now can see 

to the horizon and recognize that there is no end in sight, that it 

is a mushrooming, ballooning problem, a problem in which compromise is indispensable, and we now know that the judicial system cannot handle it. 

There are very few mass torts of which we can say with that 

kind of confidence that it is beyond the capacity of the judiciary. 

When we come to that point, it seems to me then it is time for Congress to act. I think we have come to that point with respect to asbestos, but I do not think it is the case that the whole tort system 

is broken, that the system is broken for all cases of mass exposure 

to injury. I would be hesitant to reach that conclusion, and trying 

to create a machine that is sufficiently diversified and flexible, that 

it could address all of those problems, would make the political bargaining that you are having to engage in here look like child’s play. 

That is, getting agreement on a system to replace really the judicial system in a much broader way I think might be just about impossible. 

Chairman HATCH. Senator, your time is up. 

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

leadership and hard work on this issue. 

Chairman HATCH. Thank you, Senator. I can assure you it is not 

child’s play. 

Mr. TRIBE. I say it would look like——

Chairman HATCH. No, no. I know. I thought you were supportive. 

Mr. TRIBE. I am sure it is not, no. 

Chairman HATCH. Senator Feinstein, we will turn to you. 

Senator FEINSTEIN. Thanks very much, Mr. Chairman. I want to 

thank you and the ranking member as well for your work in this 

area. I know the frustrations that both of you have had. I know a 

little bit about the discussions that you have had, and I know the 

extraordinary difficulty that rests in this in finding a solution to 

this. 

I wanted to just make a couple of comments, and then welcome 

an old friend, Professor Tribe, and ask him a question about the 

backstop. 

But I have just been reading Senator Murray’s bill, her congressional statement, record statement, as well as the May 30th letter 

that she wrote to you, Senator Hatch, and she actually had developed I think a very positive bill to ban the use of asbestos in America. It is amazing I think to many of us to know that asbestos is 

still used, despite the fact of all the problems we have, and the long 

line that is outside this door waiting to come into this Committee 

room. I would just like to indicate that it would be my intention 

to move her bill as an amendment in markup to any bill that does 

come out. 

179

Chairman HATCH. Senator, Senator Murray is here. If I could, as 

soon as Senator Feinstein is finished, maybe I could call on Senator 

Murray because of her busy schedule. 

Senator FEINSTEIN. I think that would be excellent. 

Chairman HATCH. And if you will stay there for Senator Durbin’s 

questions. Do you mind if we do that? 

Senator DURBIN. That will be fine. 

Chairman HATCH. Okay, I appreciate that. 

Senator FEINSTEIN. I really want to salute her for her work in 

this area, because I think it is also very timely right now. 

Now to Professor Tribe. One of the problems is the concern that 

$108 billion is not enough, and we are just talking about occupational asbestos. We are not talking about all the other people out 

there, whether they be children or housewives or anyone else that 

comes into contact with asbestos and gets very sick from it, but the 

question that I have is how do we provide after the 25 years is up? 

And in 1996 the Supreme Court decision in U.S. v. Winstar may 

offer an option. As I understand the case, Winstar held that future 

congresses may be prohibited from passing regulations that interfere with an existing contract between the Government and a private business, which might offer the opportunity to make a contract for a voluntary payment from year 26 to year 50 from defendant companies, and that we would set the level of that voluntary 

payment, and the exchange would be a nonreturn for that period 

to the tort system. Would that be held legally viable? 

Mr. TRIBE. I think with one qualification I would say that it 

would be. Let me just go back for a moment to the description you 

gave of the Winstar case. It is not so much, as I understand that 

decision, that Congress can be prevented from passing new rules 

and new laws because someone’s contract with the Government 

says that they have a special deal. That is, Congress is always free 

to legislate, and one Congress cannot bind a succeeding Congress. 

But what Congress can do is authorize an official of the United 

States unmistakably and clearly, like the administrator in a 

scheme of this kind, or an insurance commission that is set up, the 

Asbestos Insurance Commission, to make specific arrangements 

with particular parties under which the risk of financial loss resulting from new congressional legislation no longer falls on the private contracting party. In effect, the Government insures that 

party against the loss that the party will incur if a future Congress 

changes its mind. That kind of arrangement can be binding on the 

United States, and the holding in Winstar was that, even though 

Congress acted within its rights in passing FIRREA, despite various promises about goodwill, those particular savings and loan institutions that were induced by government’s specific loss-shifting 

promise to take steps in reliance on that promise were to be held 

harmless, and could sue the United States for the damages that 

they experienced when, because Congress saw a different or a better way of doing business, they suffered losses. That kind of arrangement, I think, could achieve the sort of thing you are talking 

about, that is, it could make the voluntary bilateral agreements effectively enforceable no matter what Congress did because the 

United States Treasury would make good the loss. 

180

Senator FEINSTEIN. So you are saying the Treasury would become the bank, so to speak, at the end of the 25 years. That is not 

what I am suggesting. What I am suggesting is could there be a 

contract entered into after that period of time, that voluntary payments from the defendants would continue? 

Mr. TRIBE. There is no question that could be done. The defendants would certainly be bound, but I am wondering what the quid 

pro quo is, that is, what are they getting in return? 

Senator FEINSTEIN. If I understand it, the concerns is that the 

companies involved, after the 25-year period do not want to return 

to the tort system. Ergo——

Chairman HATCH. They do not want to have unlimited liability. 

That is what the companies are concerned about. 

Senator FEINSTEIN. I beg your pardon? 

Chairman HATCH. They want to have certainty. They do not 

want to have unlimited liability. They want to have certainty in 

what—if they are going to put up this kind of money, $108 billion, 

they sure as heck want certainty that that is all they have to put 

up. 

Senator FEINSTEIN. But let me just—I see the red light. Just for 

1 minute. The fact is, asbestos is still legal. It is still being used 

in building materials in one way or another, and yet—so the possibility of this becoming an ongoing and continuing problem is there. 

So to say just for 25 years we are going to solve the problem and 

then it is all gone, I do not think that works, Senator. It seems to 

me there have has to be some proviso——

Chairman HATCH. Let me assure the Senator that I understand 

there is an end game here that I have to resolve. The trade union 

movement is upset about it, and frankly, we are going to have to 

come up with some way of resolving that. I have to resolve it in 

a way that brings people together, not tears us apart. 

Senator FEINSTEIN. All I am asking is if that is legal, if it would 

be legal to have an ongoing voluntary contribution commitment for 

another period of time. 

Chairman HATCH. He said it is. 

Mr. TRIBE. I do not have any problem with that. 

Senator FEINSTEIN. Thank you. Thank you, Mr. Chairman. 

Chairman HATCH. But the companies do, as you can see. That is 

the problem. And I have got to be able to bring both sides together 

to pass this so we can get it through the House. 

Senator LEAHY. As we have always said, everybody has got to 

give a little bit or even a lot of bit to get a bill through here. We 

are not quite there yet. I am encouraged that we are getting closer 

all the time. I think people of goodwill on both sides of the aisle, 

as well as all of the affected parties, are trying to bring us together. 

Chairman HATCH. Well, good. I intend to come up with some sort 

of an end game. We are going to have to do that to bring everybody 

together, but hopefully that will bring them together if we can do 

that. And we will just have to see what we can do and what will 

get us the most Senators voting for this because I would like to be 

able to get it through the Senate and then hopefully get the House 

to take it as well. It is a tremendously difficult set of problems. 

Mr. TRIBE. I do not envy you the task. 

181

Chairman HATCH. It is a tough task. If you do not mind waiting, 

just stay there at the table. 

Mr. TRIBE. I do not mind at all. 

Chairman HATCH. I would like to call on Senator Murray. I 

apologize, Senator Murray. I thought we would be through——

Mr. TRIBE. I would be happy to move. 

Chairman HATCH. Stay right there, stay right there. 

I thought we would be through a little earlier, and I apologize 

to you, so we will take your statement. 

Senator LEAHY. Mr. Chairman, Senator Feinstein mentioned 

Senator Murray’s legislation, which I have also co-sponsored, and 

I thought Senator Feinstein’s comments were ones I certainly ascribe to. 

Chairman HATCH. Senator Murray. 

STATEMENT OF HON. PATTY MURRAY, A U.S. SENATOR FROM 

THE STATE OF WASHINGTON 

Senator MURRAY. Thank you very much, Mr. Chairman, for allowing me to testify at this important hearing today on an issue 

that obviously has consequences for thousands of Americans. 

And I do want to thank Senator Leahy for his support for my bill 

to ban asbestos, and Senator Feinstein for her comments just previously to this as well. 

Mr. Chairman, I do have a longer statement I would ask to add 

to the record. As you know, I have already outlined many of my 

concerns in a letter to the Committee dated May 30th. 

Chairman HATCH. Without objection, we will put it in the record. 

Senator MURRAY. But today let me emphasize my greatest concern, and that is, if we are going to protect companies from asbestos lawsuits well into the future, then we must also protect all current and future asbestos victims into the future as well. If Congress is going to prevent any future lawsuits, then Congress must 

try to prevent any more asbestos casualties by banning the use of 

asbestos. More than 30 other countries have banned asbestos. 

Mr. Chairman, this is the elephant in the room for this legislation. It is the most obvious, yet least discussed aspects of asbestos. 

In 2001 America consumed 13,000 metric tons of asbestos in 

brake pads, gaskets and roofing sealants. Like most Americans I 

thought asbestos was already banned. The Environmental Protection Agency banned it in 1989, but the asbestos industry sued and 

that ban was overturned in 1991. That is why I introduced the Ban 

Asbestos in America Act, S. 1115. My bill would finally ban the use 

of asbestos and prohibit the import of asbestos products. S. 1115 

creates a National Mesothelioma Registry to track where Americans are still developing this deadly disease. The bill would require 

us to raise awareness through an education campaign. In addition, 

it would require Federal agencies to improve protections for workers and consumers, and I greatly appreciate the support from Senators Leahy and Baucus, who are co-sponsors. 

I do not believe that asbestos can be safely used in most consumer products. The terrible legacy of asbestos disease has shown 

us all that. According to the Occupational Safety and Health Administration, about 1.3 million workers are still today exposed to 

asbestos on the job. Between fiscal years 1996 and 2001, 3,000 of 

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OSHA’s inspections and more than 15,000 of its violations involved 

asbestos. Ultimately, the best way to protect people from asbestos 

is to ban it. I do not see how Congress can end liability for companies that used asbestos while still allowing asbestos to be legal in 

America. Congress needs to pick up where the EPA and the courts 

left off by finally fully banning the deadly material. 

Mr. Chairman, let me just talk briefly about my other concerns 

about S. 1125, which is before your Committee today In order for 

an asbestos liability reform bill to be truly fair to victims, it must 

ensure adequate compensation for all the people that are hurt by 

asbestos. 

I want to share with the Committee today a photo that I brought 

from the late 1970’s, and it is of Justin and Tim Jorgensen. These 

boys, as you can see, are climbing on waste rock. It is from the 

Western Minerals Plant in Minneapolis, Minnesota. This plant 

processed asbestos contaminated vermiculite from W.R. Grace’s 

plant in Libby, Montana. The company knew, when it bought that 

mine in 1963, years before this photo was taken, that the mine was 

full of asbestos, but chose not to warn the workers or their families. 

The Jorgensens’ grandparents lived across the street from Western 

Minerals. The pile that you see Justin and Tim playing on contains 

up to 10 percent friable tremolite asbestos. Their father, Harris 

Jorgensen, died at the age of 44 from asbestosis and lung cancer. 

Under the bill being considered, if Justin and Tim get sick from 

asbestos from playing on this rock, neither one will receive a dime. 

Mr. Chairman, this picture breaks my heart. These kids were just 

playing outside and they were exposed to asbestos like many other 

children in Libby until last year. We should not abandon them in 

this bill. 

Asbestos exposure can also occur when people work on their cars 

or in their homes. I have a constituent in Spokane, Washington, 

Mr. Ralph Busch, who while renovating his home, unknowingly 

was also regularly disturbing asbestos contaminated attic insulation. He is now very fearful that 1 day in the future he will suffer 

from asbestos related diseases. And Ralph Busch is not alone. As 

many as 35 million homes, schools and businesses could have this 

asbestos tainted zonolite insulation. In fact, just a few weeks ago, 

EPA, finally after much urging, launched an education campaign 

warning people not to disturb this material if it is in their attics. 

Mr. Chairman, under the bill before you people like the 

Jorgensens and Ralph Busch would not get any compensation, and 

companies like W.R. Grace, which knowingly exposed workers and 

their families to asbestos, would be protected. I hope you will consider amending your bill to take in a much larger universe of existing and future asbestos victims. 

In addition, the legislation sets restrictive medical criteria to determine who would qualify for compensation. I strongly urge the 

Committee to redraft the medical criteria section of this bill. The 

Committee should base the criteria on the latest information from 

the American Thoracic Society and from the doctors who have been 

working in Libby and know this better than any of us. 

Finally, the total size of the trust fund, even at 108 billion, may 

not be sufficient. There is no Federal backstop to guarantee compensation like the FDIC does for a bank, to ensure that future vicVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00188 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
183

tims would be covered, and furthermore, the funding levels to me 

seem arbitrarily low. Any legislation to fix the litigation crisis must 

be balanced in its protections for present and future asbestos victims. Protecting these people is at least as important as protecting 

companies from liability. We need to ensure that an end to asbestos 

liability also means an end to the creation of new asbestos victims. 

This should be the charge to this Committee. 

Thank you very much, Mr. Chairman, for allowing me to testify 

before you today on an issue that is of great importance to me and 

to my constituents. 

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

Chairman HATCH. Well, thank you, Senator. As you know, your 

staff is working with our staff to see what we can do. And there 

is only so much we can do, but we are going to try and do the very 

best we can. 

Senator MURRAY. Thank you very much. 

Chairman HATCH. Thank you for coming. 

Senator LEAHY. And, Mr. Chairman, I thank you also for your 

courtesy in making sure Senator Murray could testify. I think it is 

very important what she is saying. If we don’t have a bill that covers spouses and children who were exposed to asbestos outside the 

workplace, as we see in this picture, home or in the community, 

that bill is not going to have my support. And I would not work 

to pass it unless it does have the spouses and children covered. So 

I thank you very much for your statement. 

Senator MURRAY. Thank you very much. 

Chairman HATCH. Thank you. 

Senator LEAHY. Mr. Chairman, could I put into the record statements by Senators Baucus and Kohl? 

Chairman HATCH. Without objection, we will put those in the 

record at the appropriate place. 

Senator Durbin? Or, excuse me, we better go to Senator DeWine. 

I didn’t realize——

Senator DEWINE. I don’t have any questions. 

Chairman HATCH. Okay. Senator Durbin? 

STATEMENT OF HON. RICHARD J. DURBIN, A U.S. SENATOR 

FROM THE STATE OF ILLINOIS 

Senator DURBIN. Thank you very much, Mr. Chairman, and 

thank you for your efforts on this bill. 

Let me say at the outset that my background before coming to 

Congress many years ago was in trial law practice, and I don’t profess to be an expert at it, but I was exposed to it for some period 

of time. 

Mr. TRIBE. Like being exposed to asbestos? 

Senator DURBIN. I hope it was a more salutary——

Chairman HATCH. It was worse than that. 

[Laughter.] 

Senator DURBIN. But I do want to commend Senator Hatch, 

though I have some serious disagreements with major portions of 

this bill. I think that he has provoked the debate which needs to 

take place. Twenty years ago, when I came to Congress in the 

House, I was invited by a company known as Johns Manville to 

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come out to their national headquarters in Colorado. Of course, 

they are long gone now. Two years ago, U.S. Gypsum Company in 

Chicago, Illinois, came to me and said unless something is done 

about asbestos, we will be gone. And they are. 

I believe in the court system. I believe in the tort system. I believe that people have a right to recover. We have reached a national crisis when it comes to asbestos, and I do believe that if 

there is going to be any compensation for the many victims, we 

have to do something. And I am looking for that solution, and that 

is why I come to this discussion with an open mind in the hopes 

that we can truly have a markup of this bill that is bipartisan and 

open. And I have said this to Senator Hatch personally, and I will 

repeat it now. I want to be a positive and constructive part of that 

conversation. I hope we can reach that point. 

Let me address two or three points here that particularly stand 

out as I look at the first draft on the Hatch bill, Section 134, the 

collateral source rule. I remember collateral sources as a practicing 

attorney because it basically said we are not going to penalize you 

as a plaintiff if you had the foresight to buy protection. If you decided that you were going to have health insurance to pay your 

medical bills or life insurance to protect your family, if someone 

wrongly injured or killed you, that person, the defendant in the 

lawsuit, won’t benefit from your good judgment and your personal 

sacrifice. 

But this bill, unlike the law in every State in America, says exactly the opposite. It says that the defendant corporations found responsible and liable for the injury, for the death, will benefit if the 

person who was injured had the foresight and made the sacrifice 

to have collateral sources of compensation: health insurance, life 

insurance, Medicare, Medicaid. The list is pretty long. The only exception, as I understand it, is workers’ compensation and veterans’ 

benefits. 

Tell me, Professor Tribe, how does this square with due process 

and equal protection that we would say in this one law we will provide that collateral sources can be deducted from a defendant’s liability? 

Mr. TRIBE. Well, until you came to your question, Senator Durbin, I was troubled because, as a matter of policy, I think there is 

much to be said for the trend in the States not to penalize people 

for having foresight, and certainly not to reward someone who has 

been found liable for the foresight of the victim. 

Of course, in this case, we don’t have a finding of liability. We 

don’t have a finding at all. We have an administrative scheme in 

which approximation is the name of the game. And when you ask 

not is it a good idea but how does it square with due process and 

equal protection, I think there, whether one likes it or not, one 

would have to turn the clock back to well before 1937, at a time 

when the Supreme Court of the United States treated the Constitution as imposing very stringent limits on the kinds of lines that 

could be drawn, the kinds of compromises that could be reached 

with respect to economic matters. 

The law now looks very different. The law now basically says 

that unless the legislature is drawing a classification that is itself 

suspect in the sense that it draws on characteristics that have been 

185

the source of prejudice and victimization—race, religious minority, 

perhaps disability—or, on the other hand, the law deals with fundamental personal rights—speech, religion, certain aspects of privacy—unless one of those things is true, the fact that the law may 

draw lines that the ideal legislator in the sky with infinite resources might never draw, the fact that it might not seem optimal 

not to reward foresight, that doesn’t bear on constitutionality. 

Take the railroad retirement system. In a case called Railroad 

Retirement Board v. Fritz, Congress drew some very rough and 

ready lines. It drew distinctions ultimately between a group of railroad workers who were lucky enough to have an effective lobbyist 

at the bargaining table and, therefore, they were ruled in, and a 

bunch of others were ruled out. Congress was literally bamboozled 

in that case. There was no particular rationale for that line, but 

the Supreme Court by an overwhelming majority said if that was 

the test, that you have to have a really good reason for each line 

that is drawn when you are making these difficult economic compromises, and that Congress has to know exactly what it is doing 

in every detail, very few laws would survive. That was the Chief 

Justice of the United States speaking. I don’t think there is a constitutional problem. 

Senator DURBIN. Well, Professor Tribe, you are the acknowledged 

expert, and it has been many years since I took my con law course 

a few blocks away, so I am not going to quarrel with that. But I 

am going to tell you that I think there is something fundamentally 

wrong then with this bill. If we can take an established precedent, 

an established rule of law that has been found by 50 States to be 

a fundamental of fairness in America, that says if you make the 

sacrifice, if you have the foresight to have health insurance, you 

will not be penalized, you will not lose your right to recover as a 

person would have in a court of law when you find out that someone else has injured or killed you. And this bill, this proposed law, 

would make that distinction. And I think—let me just give you a 

couple examples, and, frankly, they are not my own. They come 

from a witness who will be testifying later, but I have read through 

them, and they are compelling. 

A mesothelioma victim who receives medical treatment in excess 

of $750,000, which I do not believe is out of the realm of possibility, 

that is covered by their own medical insurance that they had would 

receive nothing under this bill. 

A 49-year-old non-smoking lung cancer victim who underwent 

$350,000 in surgery and chemotherapy and radiation would have 

his compensation capped at $50,000 because he has already received $350,000 from his own health insurance. 

That just isn’t the case in any State in the Union in any physical 

personal injury case or a wrongful death case. 

Mr. TRIBE. Senator, without undertaking to defend the policy of 

this part of the bill, I just want to say that you are comparing apples and oranges a little here. It is not the case within the tort system when we are trying to do something very different. We are trying to figure out who is really responsible for this person’s harm 

and whether the responsible party fell below a certain level of care. 

We are putting all kinds of burdens of proof on the plaintiff, which 

186

this system doesn’t do. And we have a whole bunch of rules that 

go along with that. 

Now, the fact that in that kind of system the States have 

marched to a different drummer and have said when you are going 

to be—trying to achieve individualized justice, it just isn’t fair to 

penalize someone in this way, you can’t quite jump from that to the 

conclusion that when you are trying to achieve a degree of certainty and a degree of predictability and conserving finite resources, that some of the compromises that you make are not going 

to be very fair. 

Senator DURBIN. I don’t disagree with you——

Mr. TRIBE. It doesn’t make it analogous to the tort system. 

Senator DURBIN. I don’t think the creation of a no-fault system, 

which clearly benefits a plaintiff—and you have outlined it. The 

burden of proof is dramatically less in a no-fault system. But I 

don’t think creating a no-fault system means that the aggrieved, 

injured, perhaps deceased party gives up everything. And in this 

bill——

Mr. TRIBE. Surely not. 

Senator DURBIN [continuing]. They clearly give up a lot because 

they are capped in their recovery, their individual recovery. There 

is a limit to how much they can recover under the system. 

And yet we have added another factor here with the collateral 

source rule that I think goes beyond penalizing. It really is totally 

and fundamentally unfair under the system to ignore the reality 

that some defendants and this system will get off the hook because 

a union bargained and bought health insurance to protect an employee who died an excruciating and long death with lung cancer. 

Mr. TRIBE. You are preaching to the converted if you are asking 

me if I had the power, if I were the legislator of the world, would 

I avoid that? Sure. But no one of us has that power. 

Senator DURBIN. Well——

Mr. TRIBE. And if you solve this problem, the question is what 

other problem are you going to create. That is, if you give these 

added dollars—which I would love to see these victims get—where 

are they going to come from exactly? They might come from another set of asbestos victims. I don’t know that they will. But I take 

it that the problem that all of you have is to figure out how best 

to minimize the total of injustices, and there are going to be plenty 

no matter what is done. 

Senator DURBIN. Fair enough. But I think we have that responsibility 

Chairman HATCH. Senator, your time is up. 

Senator DURBIN. I think we have to stand behind some fundamental principles that 50 States agree on in collateral sources. 

Thanks for your testimony. 

Chairman HATCH. Senator, your time is up. 

Let me just mention one thing before I go to Senator Feingold. 

You know, Carter Phillips, who also is an excellent lawyer and constitutional expert, wrote to us and sent a statement in, and basically he said, ‘‘In order to address the underlying causes of the asbestos litigation crisis and bring some rationality and equity to 

compensation of the injured, Congress must engage in some linedrawing.’’ And then he quotes directly from the Beach CommunicaVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00192 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
187

tions case, which said, ‘‘This necessity renders the precise coordinates of the resulting legislative judgment virtually unreviewable.’’

Do you agree with that? 

Mr. TRIBE. Well, I agree with that, but I do want to say—and I 

imagine you agree with this, Mr. Chairman. Even if you knew for 

sure that no court in the world would touch this law, because perhaps somebody would say, oh, this is all a political question, you 

still have to worry, obviously, about the Constitution as a fundamental charter that binds this body as well as the court. So that 

if I thought it was fundamentally a deviation from principles of 

rock-bottom fairness, even in an administrative scheme, I think 

that would bear ultimately on the constitutional question, even 

though Carter Phillips and I agree that as a matter of judicial institutional role, the courts are simply not going to touch that kind 

of calibration. 

Chairman HATCH. So it is constitutional. Let me just say this: 

We can’t solve every problem with this bill. You have made that 

case, I think, very persuasively. With regard to children and families who may or may not ever suffer from asbestosis, this bill would 

not, I do not believe, prevent them later, if they actually could 

make a case, from utilizing the system. 

So what we are trying to do here is solve the problem for workers 

who have been exposed to it. And, you know, it is—like you say, 

perfection can sometimes be the enemy of the good. And if we could 

get this done, it would be very good for society. And we intend to 

do it. 

I think Senator Murray brings forth a good point when she think 

that asbestos ought to be banned, and probably she will win on 

that, and we may very well put that in this bill. But that is where 

we are. 

Let me go to Senator Feingold. 

Senator LEAHY. When you bring that up, if I might, Mr. Chairman, we also have the concern that this might repeal FELA for 

railroad worker asbestos claims. I don’t know if that is what is intended or should be intended. I definitely don’t want it to be intended. But the way it is written, it would effectively repeal the 

Federal Employees Liability Act with respect to Federal workers’ 

claims for injuries, for railroad workers’ claims for injuries due to 

asbestos. That is why we want to be very careful when we write 

this because if you start taking care of people’s rights, that is important, but if you also cut off other people’s rights, that has its 

own consequences. 

Chairman HATCH. Okay. Senator Feingold? 

Senator FEINGOLD. Mr. Chairman, I hope to come to ask some 

questions of panel three, and I don’t have any at this point for Professor Tribe. It is good to see you again. 

Mr. TRIBE. Good to see you, Senator. 

Chairman HATCH. That would be fine. 

Senator FEINGOLD. Let me just comment briefly. I certainly agree 

with Senator Durbin’s remarks. It is really quite exceptional to 

hear the level of concern on this issue from all sides. It is almost 

like a fever pitch kind of issue. And so I am hoping to spend more 

time at the hearing later, and I am very pleased that the hearing 

is being held. 

188

This is a very important issue with very difficult and complex 

problems to try to work through. I think most of us can agree that 

it would be a wonderful result if we could craft a global solution 

to the asbestos liability issue. But that solution must be fair and 

equitable to all the stakeholders, companies that face liability, 

their insurers, and, of course, those who have been injured by asbestos, whether their illness is now apparent or will arise in the 

future. 

And I also acknowledge that a lot of people have been working 

very hard on this, and I commend them for their efforts. It seems 

to me, though, that the current bill falls short in a number of ways 

from being the actual global solution that we can all unite around. 

But I am hopeful still that the process will yield a consensus bill 

that we can all support. 

Thank you, Mr. Chairman. 

Chairman HATCH. Thank you, Senator. 

We have been delighted to have Senator Carper here, who has 

taken a particularly important interest in this bill, and we are glad 

to have you here, Senator. 

Senator CARPER. Thank you very much. 

Chairman HATCH. Thank you. 

Well, Professor Tribe, let me just say this: Fortunately, as the 

Supreme Court’s repeated calls to action on this particular issue 

suggest, the Constitution does give Congress broad powers to address national economic issues such as the current asbestos litigation morass. Seth Waxman wrote a statement as well, the former 

Solicitor General under the Clinton administration, for whom I 

have a very high opinion, as I do of you. He said, ‘‘Some claimants 

might argue that they will receive less under the new national system than they might have recovered, even net of attorney’s fees 

and other costs, by pursuing their claims against various potentially responsible defendants through the tort system. The courts 

should not, however, be receptive to such arguments if they are 

raised in an attempt to challenge the constitutionality of the act. 

No individual claimant has any vested right in the continued existence or application of any particular rule of law when Congress has 

otherwise validly chosen to preempt that law as part of its decision 

to enacted a comprehensive national solution to a national problem.’’

Do you differ with any of that? 

Mr. TRIBE. Not at all. 

Chairman HATCH. He also said, ‘‘While the funding allocation 

mechanisms must not, of course, be arbitrary, irrational, or fundamentally unfair, the courts clearly would not hold them to any 

standard of ‘mathematical precision.’ There is, accordingly, no constitutional requirement that Congress allow the perfect to become 

the enemy of the good in the process of designing a comprehensive 

solution to this complex national problem.’’

You agree with that as well? 

Mr. TRIBE. It is very much my view, Senator. 

Chairman HATCH. Well, the two of you are great leaders in this 

field, and we are just very grateful that you would take time from 

what we know is a busy schedule to come here and help us to understand this better. Thank you, sir. 

189

Mr. TRIBE. I am grateful to you, Senator. 

Chairman HATCH. We are honored to have you here. 

Mr. TRIBE. Thank you, Mr. Chairman. 

Chairman HATCH. Thanks so much. 

Senator LEAHY. Take care. 

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

for the record.] 

Chairman HATCH. We are going to keep going until about 12:30, 

and we will break for about an hour. I apologize to those of you 

who are here to testify, but let’s go to panel three. 

Dr. James Crapo is Professor of Medicine at National Jewish 

Medical Research Center Hospital in Denver, Colorado. He has 

treated many patients exposed to asbestos and has extensive experience in asbestos-related illnesses. 

Dr. Laura Welch is the Medical Director for the Center to Protect 

Workers Rights. She has treated many workers with asbestos-related disorders as part of her medical practice. 

Dr. John E. Parker is Chief of Pulmonary and Critical Care Medicine at West Virginia University Hospital. In addition to treating 

numerous asbestos patients, he has extensive experience with the 

ILO classification system and the NIOSH B-reader program. 

So you doctors, we are very grateful to have you here today to 

help us to understand this better and appear before the Committee. 

So why don’t we get started with Dr. Crapo and move to each witness in the order that they were introduced, Dr. Welch, then Dr. 

Parker. 

I have to step out for a minute, but I will be right back, and I 

naturally have read your statements. So we will turn to you, Dr. 

Crapo; then as soon as he is through, Dr. Welch; as soon as she 

is through, Dr. Parker. 

STATEMENT OF JAMES D. CRAPO, M.D., PROFESSOR OF MEDICINE, NATIONAL JEWISH CENTER AND UNIVERSITY OF COLORADO HEALTH SCIENCES CENTER, DENVER, COLORADO 

Dr. CRAPO. Thank you. Good morning, Chairman Hatch, Ranking 

Member Leahy, and members of the Committee. I really appreciate 

the opportunity to be here to share my views today. I am Dr. 

James Crapo. I am currently professor and chairman of the Department of Medicine at the National Jewish Medical and Research 

Center in Denver, Colorado. It is affiliated with the University of 

Colorado. I am a board-certified physician in internal medicine and 

in pulmonary disease. 

I am here to speak to you about some of the provisions of S. 

1125, and I have provided a more detailed written statement, 

which I ask be included in the record. 

Senator LEAHY. [Presiding] Without objection. 

Dr. CRAPO. Upon review of the medical criteria in S. 1125, it is 

my opinion that this legislation is drafted to appropriately include 

those individuals who are genuinely sick from asbestos exposure 

and who should recover from this fund. 

One of the primary diseases caused by asbestos exposure are asbestosis. It is a type of pulmonary fibrosis that can produce severe 

breathing impairment and even death in some individuals. However, in most cases it has few or minimal symptoms. Second, asbesVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00195 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
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tos exposure causes lung cancer and it causes mesothelioma, which 

is a very rare tumor of the lining of the chest cavity and the lining 

of the abdomen. 

These are the major health effects of asbestos, and they are the 

ones to which this bill is appropriately targeted. There are also asbestos-related pleural changes—pleural plaques and pleural thickening—that are considered markers of asbestos exposure. These 

generally do not have an association with impairment, and they 

have not been identified as a cause or a precursor of more serious 

conditions. In addition, there are a variety of other cancers that 

have been associated with asbestos, but there, in my opinion, is not 

clear scientific or medical evidence that asbestos exposure is the 

cause of those cancers. 

The medical criteria in this bill, while in some cases a little bit 

overbroad, are appropriate and reasonable in the context of a national solution to the asbestos litigation crisis, in my opinion. I 

would like to discuss some of the diagnostic criteria in the bill. 

As a physician, I believe the criteria to be, in general, appropriate. In particular, I agree that the diagnosis of an asbestoscaused disease should be made with the requirement that a physician exclude other likely causes of the claimant’s condition. This is 

important because asbestos is only one of the causes for each of the 

diseases being considered. 

With respect to medical criteria, the bill establishes eight categories of asbestos-related diseases. Levels I through IV generally 

address non-cancerous conditions, while Levels V through VIII deal 

with cancers. Levels I and II cover asymptomatic conditions, including pleural plaques and pleural thickening, for which medical 

monitoring is provided but no other compensation. Compensating 

individuals in these categories could divert funds away from people 

who are genuinely sick and transfer them towards people who are 

basically unimpaired. 

Level III is the first category that provides a compensatory 

award, and the medical criteria for Level III seem appropriate in 

the context of a compromise to me. The measure of impairment, 

however, is fairly broad and would allow many people to qualify for 

an award even though their breathing impairment is due to diseases caused by factors such as smoking. 

In addition, the diagnosis of significant occupational exposure is 

quite broad, and it treats persons in various occupations and industries today as if they were the same as occupations and industries 

that had vastly different exposures. For example, exposures in the 

1980’s and 1990’s are not equivalent to the heavy exposures that 

occurred in the 1940’s, 1950’s, and 1960’s, primarily due to Federal 

regulations that were put in place that brought down the levels of 

occupational asbestos exposures. In fact, the Federal regulations 

largely eliminated the really high levels of exposures were initially 

strongly associated with very high incidences of asbestosis and lung 

cancer. Because the types of exposures are different in different 

decades in our country, the bill should probably be designed to account for those historic differences in exposure conditions. 

Cancer claims are also divided into four levels. Level V consists 

of other cancers, primarily cancers of the larynx, the pharynx, the 

esophagus, and the stomach. I think it is important to recognize 

191

that the weight of the medical evidence is that asbestos is not a 

cause of these cancers, many of which are very prevalent today. Including this category in a national asbestos program, if not constrained appropriately, creates the risk of compensating claimants 

whose medical condition is not associated with asbestos exposure. 

I think it is fortunate that Level V does not include colorectal cancer, which is also has a very weak link to asbestos exposure and 

is a very widespread cancer in the country today. 

Levels VI and VII deal with lung cancer, and I have concerns 

with Level VI because it requires neither a significant occupational 

exposure nor underlying asbestosis as an indicator of an asbestosrelated cancer. There is no causal link to asbestos as a cause of the 

lung cancer in Level VI, and the weight of the medical evidence is 

that lung cancer cannot be attributed to asbestos unless asbestosis 

is present or at least enough exposure to have caused asbestosis. 

Also, there is some concern that compensation is limited to nonsmokers, defining non-smokers as individuals who have quit smoking 12 years prior to diagnosis. This is problematic because heavy 

smokers continue to have an elevated risk of cancer even decades 

after stopping smoking. 

Level VII, on the other hand, I think is appropriate and subject 

to my reservations of the broad definition of significant occupational exposure, I think it is appropriate. 

Level VIII addresses mesothelioma claims and requires only 

some exposure to asbestos prior to December 31, 1982. Although 

the language of the bill is not clear, I think the bill should be interpreted as requiring a discrete and identifiable exposure for mesothelioma that goes beyond background. A majority of mesothelioma 

cases in men are caused by asbestos exposure, but a majority of the 

cases in women are considered to be idiopathic, or not caused by 

asbestos exposure. 

So, in summary, I believe that S. 1125 will allow compensation 

for virtually all asbestos victims, although some provisions in the 

bill should be tightened to protect the integrity of the fund and 

avoid compensating those whose medical problems are not related 

to asbestos. 

The medical criteria in the fund appropriately allow most fund 

resources to be directed to the appropriate categories, which are severe asbestosis, lung cancer, and mesothelioma. I think this is an 

excellent first step to providing a solution to our asbestos litigation 

crisis and should result in fair compensation to victims of asbestos 

exposure. 

Thank you for listening to my testimony. I look forward to your 

questions. 

[The prepared statement of Dr. Crapo appears as a submission 

for the record.] 

Chairman HATCH. Well, thank you so much, Dr. Crapo. We know 

that you are personally serving as chairman and professor of the 

Department of Medicine at the National Jewish Center and University of Colorado Health Sciences Center. Dr. Crapo graduated 

from the University of Rochester School of Medicine in 1971, subsequently trained at the Harbor General Hospital in California, the 

National Institute of Environmental Health Sciences, and Duke 

University. And prior to his tenure at the National Jewish Center, 

192

he served for over 20 years on the medical faculty at Duke University. Of those 20 years, Dr. Crapo served for 17 as chief of Duke’s 

Division of Pulmonary and Critical Care Medicine. And, of course, 

you do maintain affiliation with several professional societies. You 

are board-certified in internal medicine and pulmonary diseases 

and have published all kinds of articles and several textbooks. So 

we are honored to have you here. 

We are also honored to have Dr. Welch here. Dr. Welch also has 

a great deal of experience, and I don’t quite have the same information on Doctor—well, I have got it. Dr. Welch is the director for 

the Center to Protect Workers Rights. She has personally treated 

many workers with asbestos-related disorders as part of her medical practice, and so we are very interested in your testimony as 

well here today, and we will turn to you at this time. 

STATEMENT OF LAURA WELCH, M.D., MEDICAL DIRECTOR, 

CENTER TO PROTECT WORKERS RIGHTS, SILVER SPRING, 

MARYLAND 

Dr. WELCH. Thank you. Thank you, Chairman Hatch, Senator 

Leahy, and other members of the Committee. I want to thank you 

for the opportunity to testify here today. As you mentioned, asbestos-related disease is an area that I have been involved in the 

whole time I have been practicing medicine. 

My name is Laura Welch. I am a physician. I am board-certified 

in internal medicine and occupational medicine. I have been on the 

faculty at Yale University and at George Washington University 

School of Medicine prior to my current position as medical director 

for the Center to Protect Workers Rights here in the Washington, 

D.C., area. 

I think it would help, before I really talk about the specifics of 

the bill and medical criteria, to just state a couple sentences why 

we are here today. 

From 1940 to 1979, more than 27.5 million workers were exposed 

to asbestos in shipyards, manufacturing operations, and construction work, among other activities. Hundreds of thousands of workers and their family members have suffered or died from asbestosrelated cancers and lung disease, and more than a million more 

cases are expected. In this year alone, over 10,000 people will die 

of asbestos-related disease. These are not insignificant cases. These 

are not people without impairment. These are people who are going 

to die, and we can use all sorts of different projections, and everybody agrees on those numbers. 

So let me turn to the medical diagnosis, and I want to thank you, 

Chairman Hatch, and everyone else on the Committee for your 

hard work up to now to getting this bill to this point. As you know, 

I have been involved in some of the discussions that were going on 

to try to develop a consensus in this area. 

The current bill mirrors in large measure the medical criteria, 

the Manville 2002 Trust Distribution Process, but I am concerned 

that it adds some additional requirements in addition to the medical criteria that narrow the group of workers who are eligible and 

make the application process more burdensome on people who are 

currently applying to the Manville Trust. It also sets levels of compensation that are lower than the total claims values and awards 

193

that are available. So, in my opinion, we have to first look at the 

medical criteria, see what compensating those people fairly will 

cost, and set a bill that is based on fair medical and claims values. 

As now constructed, I think the bill will exclude the vast majority of workers with asbestos-related diseases from receiving any 

compensation and provide relatively low levels of compensation for 

workers with significant impairment and fatal diseases. 

The Manville 2002 TDP criteria were a revision from 1995, and 

I think that the 1995 Manville medical criteria were medically 

sound. The changes between 1995 and 2002 remove the tests that 

are most sensitive for the diagnosis of asbestos-related diseases, 

which include oxygen diffusion and CT scans. Such changes may be 

appropriate in the context of a bankruptcy trust that is running 

out of money and has to decide how to allocate limited resources, 

and that is a decision to be made by that trust. But a new system 

should be soundly based in medicine and use the medically recognized diagnostic tests that are recommended by the American Thoracic Society and by the American Medical Association. 

The American Medical Association has guidelines for the evaluative impairment for lung disease, and I think that any bill that is 

crafted should be based on those guidelines. I think the current bill 

does deviate in some significant ways from the AMA guidelines. 

Let me give you an example. The Manville 2002 TDP and S. 

1125 require what is called a 2/1 film as part of the definition of 

severe asbestosis. That is using a classification system that is used 

internationally to grade the amount of scarring on x-ray. And a 2/

1 film is very significant scarring. But using that as a determination of the amount of impairment in the lung is really not medically based. The density of scarring from asbestos on the chest xray doesn’t correlate well with impairment, and we can use pulmonary function tests to measure impairment. The x-ray can be 

used to determine that asbestos-related disease is present, but I 

think we should then use the approach recommended by the AMA 

to determine if impairment is present and how significant the impairment is. 

Let me give you an example of the impact of this. If you use the 

AMA Guides, at the highest level of impairment you can have a 

worker who has lost more than 50 percent of his lung function, and 

in that guide they describe the worker would be unable to perform 

activities of daily living, such as getting dressed, taking a shower, 

cooking dinner, or doing any minimal work around the house. 

If you take a man with clear asbestosis using ATS criteria for diagnosis and have him in that impairment category, he could still 

have a very high likelihood of still being in Class III under S. 1125. 

The payment schedule is $40,000. He will have received more than 

$40,000 from Social Security disability because he will be eligible 

for SSDI given those pulmonary function tests. So you are taking 

someone who has asbestosis, has a significant impairment, and he 

gets no compensation under the bill, and that is because it is keyed 

to that x-ray criteria for entry. It is something we can fix. It is 

something that is in the Manville Trust. But it is really not medically based, and I think we have to go back to the beginning and 

make sure that these criteria are very medically based. 

194

One other thing that I am really concerned about is this bill 

states that the physician should independently verify the duration, 

proximity, regularity, and intensity of exposure. The physician has 

no way of knowing what that individual worker did 30 years before. There is not air monitoring. There are no independently 

verifiable ways, and it is generally not something the physician 

does. The physician takes a history from the worker and uses his 

or her experience and judgment to determine whether that history 

of asbestos exposure is sufficient to cause a disease. So a requirement for independent exposure verification I think is really an impossible one that could be a real problem in this bill. 

This bill incorporates the 2002 criteria for lung cancer, which are 

probably in some ways okay, but sets different levels of compensation for those. This essentially would set a value of $100,000 for 

lung cancer in a smoker, where in the current system, in the Manville system as well, it is more in the range of $300,000. Smoking 

and asbestos act in concert together to cause lung cancer, each 

multiplying the risk conferred by the other. And it is important to 

treat smokers fairly. We should not assume that every lung cancer 

that occurs in a smoker is not contributed to by asbestos. And any 

compensation system really must affirm when a worker has significant exposure to asbestos, however we define that, he is eligible for 

compensation for lung cancer. 

Then the Level II, as defined by S. 1125, includes workers with 

significant impairment. There are people in there—it is not people 

who are asymptomatic. The way the bill is defined, people with significant impairment can be in that category, and I am particularly 

concerned about people who have definite asbestosis but have asbestosis combined with some other lung disease. This group of 

workers who may have a combination of asbestosis and disease 

from smoking are currently getting compensation in the Manville 

Trust, from the current tort system, and I don’t think it is appropriate that we should completely deny those people compensation. 

But under the current bill, someone with definite asbestosis but 

who also has some disease from smoking would receive no compensation. 

Then finally, we must remember that not everybody is going to 

fit the specific criteria set by the legislation. The Manville Trust 

and other bankruptcy trusts have a physician panel that allows individuals to come in for medical review if they can demonstrate 

that they meet in essence the criteria that—the intent of the legislation, even though they may not have the specific x-ray finding of 

a specific pulmonary function finding. And I think we should be 

sure that that is included because you can’t write medicine into a 

bill. There needs to be a way for an independent review for people 

who don’t meet the criteria. 

So I appreciate the opportunity to appear before the Committee 

today, and I hope I have helped you understand that these diseases 

are real and affecting thousands of Americans, and that we can use 

the accepted medical criteria set by the AMA and the American 

Thoracic Society to guide us. I think a system that is based on 

these medical criteria will provide fair, timely, and good compensation to workers and others who have been made sick as a result 

of asbestos exposure. So thank you very much. 

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[The prepared statement of Dr. Welch appears as a submission 

for the record.] 

Chairman HATCH. Well, thank you, Dr. Welch. 

We will turn to Dr. Parker now. 

STATEMENT OF JOHN E. PARKER, M.D., PROFESSOR AND 

CHIEF, PULMONARY AND CRITICAL CARE MEDICINE, ROBERT C. BYRD HEALTH SCIENCES CENTER OF WEST VIRGINIA 

UNIVERSITY, MORGANTOWN, WEST VIRGINIA 

Dr. PARKER. Thank you, Mr. Chairman. I appreciate the opportunity to talk to the Committee, and I am flattered by the invitation. Again, I am John Parker. I am a board-certified internist as 

well as a pulmonologist and a NIOSH-certified B-reader. I am currently the professor and chief of Pulmonary and Critical Care Medicine at West Virginia University. In my current position, I care for 

patients at the hospital and also teach medical students, residents, 

and fellows. From 1976 through 1998, I held various positions in 

the United States Public Health Service, including positions in the 

Indian Health Service, the CDC, and NIOSH. While at NIOSH, I 

assisted in the administration of the B-reader certification program, and I also have conducted research on the respiratory system, on lung disease and chest imaging issues, and published articles and presented a number of invited presentations about the 

ILO classification system as well as the NIOSH B-reader program, 

and high-resolution CT scanning and other imaging techniques. I 

am also the co-author of a textbook on occupational lung diseases, 

and I have typically not served as an expert witness in asbestos 

litigation. 

I want to address certain medical aspects of the bill, mainly 

those involving the non-malignant claims, and at the outset let me 

make it clear that I firmly believe that the medical science overwhelmingly confirms serious adverse health effects do indeed result 

from significant asbestos exposure. These, of course, include lung 

cancer, mesothelioma, and two non-malignant diseases of the pulmonary parenchyma and the pleura. 

Overall, the proposed medical criteria in this bill create a medical criteria in this bill create a medically supportable system to 

compensate those that have been substantially exposed to as well 

as those substantially injured by exposure to asbestos. Importantly, 

this legislation adequately protects the rights of those who are sick 

and impaired while providing safeguards and balance against 

spending limited resources on claims by individuals who are not 

impaired. 

It does this by requiring a person who is seeking compensation 

for non-malignant claims to meet several criteria. These, of course, 

include a detailed occupational and exposure history. They also include an abnormal chest radiograph as well as breathing impairment, as shown by pulmonary function tests; and, finally, a physician’s conclusion that the impairment was not more probably the 

result of other causes. 

In order to explain why these criteria are necessary, I would, of 

course, refer you to an attached paper to the submitted written information. 

196

The first requirement for a respiratory history includes a detailed work and exposure history to identify exposure to contaminants at the workplace, including asbestos. And, unquestionably, 

the chest x-ray is also a valuable tool in diagnosing asbestos-related disease. And the International Labor Office in Geneva has attempted to standardize the reading of chest x-rays when establishing this classification system. 

The ILO system consists of written guidelines, standard or reference films, as well as a specific form for recording the interpretation. For asbestos, the important findings include abnormalities of 

the lung parenchymal as well as abnormalities of the pleura. 

NIOSH through the years has made attempts to improve upon 

the ILO classification system by administering a program of training, testing, and certification of physicians, and it was this training 

and testing that I helped oversee during my NIOSH career. This 

experience has provided me with firsthand knowledge of the ILO 

classification system as well as certain issues about variability 

among people that interpret chest radiographs. 

Although the chest x-ray remains an important component in 

any medical criteria, over-reliance on the chest x-ray has its flaws. 

First, any interpretation of a chest x-ray remains at times inconsistent and subjective. The interpretation is subject to inter- and 

intra-reader variability. 

Another problem with relying too heavily on chest x-rays is the 

x-ray interpretation is not specific to asbestos exposure or injury. 

There are many abnormalities associated with asbestos that are actually the same as abnormalities seen on the chest x-ray in other 

pulmonary diseases. For these reasons, the chest x-ray alone cannot support a finding of asbestos-related disease. And although 

computer tomography may be useful in many cases and add detail 

that the chest x-ray may miss, there is no universally accepted 

standardized interpretation scheme for CT scans. They are also expensive and do introduce additional radiation risk. 

A third requirement in this current scheme is to have lung function that demonstrates impairment through the use of pulmonary 

function tests. Asbestos-related diseases cause a specific form of 

lung injury called ‘‘restriction,’’ and it is because the lungs are fibrotic are scarred that breathing is restricted, and pulmonary function tests that include spirometry, lung volumes, and diffusing 

tests can separate obstructive from restrictive lung diseases. 

Lung fibrosis such as asbestosis causes primarily this form of restriction, whereas chronic tobacco smoke exposure causes primarily 

expiatory air flow obstruction. Clearly, some asbestos-exposed 

workers have also been chronic smokers, and the separation of 

these two functional injuries is rarely difficult as the overwhelming 

injury from severe fibrosis causes restriction with a reduction or 

decrease in the forced vital capacity or total lung capacity. 

When using pulmonary function tests, it is important that these 

test results are determined to be normal or abnormal based upon 

a statistical determination of lower limits of normal. The lower limits of normal are published reference values that are adjusted by 

a statistical confidence interval. The use of arbitrary cutoffs such 

as 80 percent of predicted for FVC and total lung capacity has no 

197

statistical basis, and most would agree are medically and statistically unreliable. 

The final requirement in the current proposal that I would like 

to mention is the requirement that a physician concludes that the 

impairment was not more likely the result of other causes. As I 

have mentioned, there are other causes for abnormal chest x-rays 

as well as impairment, and a physician must, as he or she would 

in any clinical setting, rule out other more probable causes. 

In closing, I would like to reiterate that it is my opinion the proposed medical criteria are medically supportable, and I welcome 

this opportunity to answer any questions that you may have to further help explain these medical criteria or the lung injury that is 

associated with asbestos exposure. 

[The prepared statement of Dr. Parker appears as a submission 

for the record.] 

Chairman HATCH. Thank you so much. You three doctors have 

been excellent, and we really appreciate the advice that you have 

given. 

I guess a big question that we want to ask—and you have tried—

I think you have address it to a degree, is: How do we know who 

is sick and whose sickness is due to asbestos and whose is not? 

What is the best way to ensure that those sick due to asbestos get 

paid? Why don’t we just start with you, Dr. Welch, and then go 

across the table? 

Dr. WELCH. Well, I think that is a good way to divide it up. I 

think we can—we know who is sick primarily by using their pulmonary function test to measure impairment. And I mentioned 

that the American Medical Association has a series of guidelines 

for using pulmonary function tests for impairment of lung disease 

and puts people into different categories, because the pulmonary 

function tells you if they are sick or not, and then you know they 

are sick, you have to independently decide whether this sickness is 

related to asbestos. And I think it is important to keep them separate. That was my concern about the severe asbestosis, is it is trying to mix both at the same time. 

Determining whether someone is sick from asbestos, has asbestos-related disease is the x-ray findings in the setting of a history 

of exposure to asbestos, and there are some characteristic pulmonary function abnormalities that are due to asbestos, although 

I was making the point before—and I do think it is important—

that in people who have history of exposure to asbestos and an xray that shows asbestosis, their pulmonary function tests may 

show mixed disease. It may show some evidence of restriction from 

asbestos and some evidence of obstruction from smoking. And those 

are people that I think require medical evaluation. But they can 

have a very significant impairment, and in a physician’s opinion, 

the impairment could be substantially contributed to by asbestos 

because in a way they already have smoking-related disease; the 

asbestos disease on top of that makes them sicker. 

But the pulmonary function test really is most valuable for saying what level of impairment they have, and then the exposure and 

the x-rays, and the pulmonary functions for the pattern of impairment they have, and exposure and the x-rays tell you whether it 

is asbestos-related, in my opinion. 

198

Chairman HATCH. Thank you. 

Dr. Crapo, do you differ with any of that? 

Dr. CRAPO. I would agree with Dr. Welch that the pulmonary 

function tests are the critical element that we should use to determine if the patient is impaired or an assessment of how sick they 

are. The biggest problem we have here is making the proper diagnosis and knowing the causation related to asbestos. For the three 

major diseases we are talking about—for example, asbestosis is a 

fibrotic disease of the lung. Asbestosis is only one of about a hundred different causes of lung fibrosis. And if we go into one of my 

clinics that have—let’s say a pulmonary fibrosis clinic at National 

Jewish, the vast majority of the patients there would not have asbestosis. And the challenge is determining which ones are caused 

by asbestos. 

For lung cancer, the biggest cause is smoking. By far and away 

most cancers are caused by smoking compared to asbestos exposure. And for mesothelioma, a small component are idiopathic and 

not caused by asbestosis or asbestos exposure. 

So the challenge——

Chairman HATCH. Most of them are? 

Dr. CRAPO. In men, most mesotheliomas are caused by asbestos 

exposure. In women——

Chairman HATCH. Especially if they have been working around 

asbestos, you would probably be readily able to conclude that. 

Dr. CRAPO. That is correct, and that is why I am coming to the 

critical aspect of the diagnostic criteria which is to determine if a 

disease is caused by asbestos is the exposure history. There are 

some other pathologic ways we can do it, but they require lung biopsy, and we cannot—it is not really feasible in the context of this 

type of settlement. 

Absent that, the exposure history is the critical element that lets 

the physician determine whether the disease is more likely than 

not associated with asbestos exposure. 

Chairman HATCH. Dr. Parker, anything you care to add? 

Dr. PARKER. I fundamentally agree with both the other panelists. 

Chairman HATCH. Let me ask you this: Dr. Parker, are Level I 

and Level II claimants impaired, in your view? Do you think they 

require compensation? 

Dr. PARKER. In the bill that I have seen, Level I and Level II do 

not have functional impairment as measured by lung function testing. So most would say those are unimpaired, and currently the existing AMA guidelines would say those are unimpaired individuals. 

Chairman HATCH. Dr. Crapo? And then I will come back to——

Dr. WELCH. Could I comment on that, though? Because if their 

FEV1/FVC ratio is lower than 65 percent, they are in Level II. If 

they don’t meet the other criteria, then Level II, so you can have 

people with significant medical impairment where the pattern is 

more obstructive. 

Now, you may say that is fine, but I don’t think it is fair to say 

people in Level II have no impairment. People in Level II have no 

impairment and have obstructive disease or mixed obstructive-restrictive because they can only move up to Level III if they meet 

this requirement. And we know what we are talking about. 

Chairman HATCH. I have an idea. 

199

Dr. PARKER. And Level II makes a provision for medical monitoring of those individuals. 

Chairman HATCH. Yes, in our bill we do provide for medical monitoring, but we treat those levels, I guess, as unimpaired or not sick 

and not compensable under those circumstances. But we do monitor them, and we provide the money to monitor them, too, which 

is, I think, the right thing to do. 

Dr. Crapo, can you add anything to this? 

Dr. CRAPO. Yes. I think that when we are looking at a chest xray which shows minimal changes or early diagnostic changes that 

are consistent with this diagnosis, when the patients have pulmonary function changes that are primarily obstructive, that tells 

us that the primary disease driving that process is an obstructive 

disease, the most common of which is smoking-induced lung disease. In my experience, when these patients have significant asbestosis that will also contribute in a significant way to their impairment, the FEVI/FVC ratio moves upwards toward normal, and it 

is generally higher than a ratio of 65 percent. It is generally in the 

70- to 80-percent range. 

I agree with Dr. Welch, though, that diagnosing the mixed diseases is the most challenging thing that the physician faces. 

Chairman HATCH. Let me ask you this, starting again with you, 

Dr. Welch. Would a finding that x-rays are consistent with a particular condition constitute a medical diagnosis? And, if not, what 

else is needed? 

Dr. WELCH. Well, I think Dr. Parker did cover that in his testimony in a way. I mean, as a physician, I don’t think any of us 

would say an x-ray is consistent with, is the same as saying I am 

diagnosing. It is very different, because the diagnosis takes into account all the information you have. 

You could have some x-ray findings that are 99 percent likely to 

be one particular thing. I mean, sometimes you look at an x-ray, 

and although you don’t have pathology, you say that is a lung cancer. You know, it is hard to be anything else. 

But, generally, we don’t like to work with just one piece of information. You have a medical history and, for asbestos, exposure history is really very important. 

Chairman HATCH. Medical history and exposure are very, very 

important. 

Dr. WELCH. And then the x-ray and then the pulmonary function 

tests, and the pulmonary function tests serve both the purpose of 

looking at the pattern of disease and also telling you the level of 

impairment. 

Chairman HATCH. We provide for monitoring under this bill for 

those who think they might have or have feared that they might 

have asbestosis-causing diseases. 

Let me ask you this, Dr. Crapo: What level of exposure to asbestos do you believe is required in order to contract an asbestos illness? 

Dr. CRAPO. It is widely different depending on which disease you 

are talking about. For mesothelioma, fairly low levels of asbestos 

exposure can cause it. If we are talking about the disease asbestosis and its contribution to lung cancer, it takes a fairly substantial exposure. And most people that have developed those diseases 

200

as a result of asbestos exposure have something in the range of 100 

fibers/cc-years or more. That is a fairly high level. 

Generally I think a fairly good consensus for a cutoff that would 

not cause those diseases would be about 25 fiber/cc-years. 

Chairman HATCH. Should anyone with a change in a x-ray be entitled to compensation? 

Dr. PARKER. If the chest x-rays reflect a pulmonary malignancy, 

I believe—and it is evaluated—that they should be, and the bill 

would do so, yes. 

In the case of non-malignant pulmonary disease, the radiograph 

alone being abnormal as proposed would not compensate individuals. 

Chairman HATCH. How can somebody reading an x-ray distinguish between asbestos-related diseases and those due to other 

causes? Hasn’t it been—or isn’t it possible to have abnormalities in 

x-rays from other sources than asbestos? I think you have basically 

said that, but I just want to get that out again. 

Dr. PARKER. If it is addressed to me, we agree with that. What 

clinicians use——

Chairman HATCH. If anybody disagrees, feel free to respond. 

Dr. PARKER. Frequently, clinicians, when looking at asbestos-related parenchymal disease or considering if you see pleural disease 

and have the history of exposure, it is quite common to attribute 

the exposure to asbestos, both disorders being caused by——

Chairman HATCH. And if you add to that the pulmonary tests, 

then you can pretty well definitively conclude that that is asbestosrelated. 

Dr. PARKER. A medical history is also helpful. I suppose if a person had extensive collagen vascular disease, you might wonder if 

it was caused by that. 

Dr. CRAPO. I think that is very important to put in here, because 

you need to—you really need to rule out other diseases that cause 

that illness. And there are, as I said earlier, a large number, almost 100 different diseases that cause pulmonary fibrosis. And the 

diagnosing physician needs to consider the other diagnoses and 

rule them out as part of this process. 

Chairman HATCH. Let me ask one last question before I turn to 

Senator Leahy, and that is this: Would all of you or each one of 

you support a heightened exposure requirement for other cancers 

due to the lack of medical evidence establishing a causal link between asbestos exposure and other cancers? 

Dr. WELCH. Can you tell me what you mean by ‘‘heightened’’ 

when you say ‘‘heightened exposure requirement’’? Number of 

years, for example? 

Chairman HATCH. Sure, years or exposure in other forms, tobacco, et al. 

Dr. WELCH. I think that to link lung cancer to asbestos it is really based on exposure, and I think that is what—the other doctors 

would agree that as your exposure goes up, at a certain level of exposure you can essentially say if you know that exposure occurred 

that asbestos contributed to that lung cancer. 

Chairman HATCH. What is the level of exposure that you could 

say with pretty much certitude that that probably contributed? 

201

Dr. WELCH. Well, I think if you want to construct something like 

that——

Chairman HATCH. Would a worker have to work his or her whole 

life around asbestos, or could 1 day of exposure cause this? 

Dr. WELCH. One-day exposure is not going to cause lung cancer. 

One-day exposure may cause mesothelioma, although we hardly 

ever see cases that are that low. But leave out——

Chairman HATCH. That is highly unlikely? 

Dr. WELCH. Leave out mesothelioma because that does occur 

from short—but for lung cancer, I think you can construct from existing guidelines and consensus criteria, you can construct an occupational exposure history that would say this amount of years in 

this kind of job significantly increases the risk of lung cancer. 

Chairman HATCH. So we could actually, under this bill, the way 

it is drafted, be able to pretty well tell who deserves compensation? 

That is what we have tried to do. 

Dr. WELCH. I think what you do is you need to agree on—in 

some ways, state explicitly what your assumptions are. Do you 

think somebody has to have a 20-fold more likely to be lung cancer 

that you know that lung cancer is 99 percent——

Chairman HATCH. We are leaving it up to the doctors. 

Dr. WELCH. I mean, I think that in your written testimony you 

said 25 fiber years crosses a threshold, and there is this international group called the Helsinki criteria that came up with the 

same number. A lot of people have used that number. And we don’t 

have that monitoring data for all individual people, so you have to 

create an occupational history that matches that. But it is possible 

to do that. 

Chairman HATCH. How do we get rid of the dishonest doctor who 

is willing to come in and say this guy really has mesothelioma or 

cancer caused by—when there is no cancer at all or, you know, it 

is very difficult to prove and there is really no real exposure? How 

do we stop that? We face that all the time in personal injury cases. 

Dr. WELCH. Well, I think the cancer diagnosis is easier because 

that is——

Chairman HATCH. It is there. 

Dr. WELCH [continuing]. Available pathologically. Generally people have that. I think the debate about——

Chairman HATCH. So we should be able to definitively do this 

for——

Dr. WELCH. For the cancers, yes. I think that the concern that 

comes up is about what you were expressing to some degree, an xray reading that is consistent with asbestos. 

Chairman HATCH. And with history. 

Dr. WELCH. But it hasn’t necessarily reached a medical diagnosis. 

Chairman HATCH. Okay. What I want all three of you to do for 

us is look over our language. You know, we are not stuck with any 

language. I don’t want to make this so broad that everybody who 

gets a cough gets compensation. Naturally, we don’t want to do 

that. That takes money away from the honest people who do, in 

fact, have problems. But give us any suggestions you have, and we 

will take a look at them. But we think we have written this section 

pretty well. But especially you, Dr. Welch, we would like to see how 

202

we can improve it, and especially you, Dr. Crapo, and you, Dr. 

Parker. All three of you have extensive experience in this area. So 

we would like to have the best really look this over. 

I have no axes to grind on any part of this bill. I just want to 

get it done, get this problem behind us. I think it would help this 

country and these workers better than anything we could do this 

year, and maybe for the next 30 years. But it would certainly lay 

the groundwork to take care of some of these very, very difficult 

problems. And as you can see, we have to split the differences and 

come with a bill sooner or later. Now, this bill is there and we are 

interested in any changes that anybody would care to make that 

are willing to be constructive changes not just ideological changes. 

So if you will do that, we would be very grateful. 

Senator Leahy? 

Senator LEAHY. Thank you, Mr. Chairman. I would note—and I 

think everybody would agree with this, certainly from the testimony—that exposure can also be the so-called take-home exposure, 

too. 

Dr. WELCH. Absolutely. 

Senator LEAHY. Is that not correct? 

Dr. WELCH. Right. 

Senator LEAHY. It is interesting reading the bill, and I understand from the Chairman that this, again, is a work in progress. 

But it doesn’t compensate anybody who is——

Chairman HATCH. Can I interrupt you just on that take-home exposure situation? Because I have been wanting to say something, 

and I think since you raised it, this bill—you know, it is my understanding that those affected by take-home exposure—a father who 

brings home clothes that the kids gets asbestosis from—they will 

be considered under this bill to have occupational exposure. So they 

will be covered, those children. 

Now, we are going to look at that language and see if we can correct that language or make it better. Now, when they start throwing around figures like 32 million people might have exposure, I 

mean, you know, we can’t resolve that problem. But I have to say 

if they don’t fit in the category of take-home exposure, then they 

have got the regular tort system still available to them. 

Now, I think they are going to be pretty tough cases, between 

you and me, but, nevertheless, that is where it is. And that doesn’t 

stop dishonest lawyers from bringing cases that cost a fortune to 

defend that aren’t valid. That happens. That is one of the problems 

with overutilization of our tort system today. And we have got to 

find some reasonable ways to bring Democrats and Republicans together so that our system doesn’t destroy us. 

So I would like your help on this, and I want to thank my colleague for letting me interrupt on this. But we will take care of 

those that have taken exposure because of their father or mother 

who has worked around asbestos. And this bill I think does take 

care of them. But if our language isn’t good enough there, help us 

to know how to write it. Okay? 

Go ahead. I am sorry. 

Senator LEAHY. Well, of course, all personal injury cases related 

to asbestos are covered by the bill, and take out the tort system 

203

and occupational or not, as it is written. So that is why we are having these hearings, and that is why it is a work in progress. 

I notice the bill, I started to say, doesn’t compensate anybody exposed to asbestos in the workplace after December 31, 1982. It is 

a puzzlement to me why we would deny asbestos victims their 

rightful recovery because the exposure occurred after an arbitrary 

cutoff date, New Year’s Eve 1982. I mean, a great celebration for 

New Year’s Eve, especially when you still use asbestos today, as 

Senator Murray and others have pointed out. You have an arbitrary cutoff in a national trust. It seems to me that only compounds the problems of this arbitrary cutoff. 

Is there any medical reason for the December 31, 1982, cutoff? 

That should be easy to answer yes or no. I realize there may be 

policy reasons. There may be other reasons. But is there a medical 

reason for the December 31, 1982, cutoff? 

Dr. WELCH. No. 

Dr. CRAPO. There is not a medical reason. It has to do with exposures changing. 

Senator LEAHY. I understand, but there is no medical reason. 

Chairman HATCH. Keep in mind the reason we did that is we 

adopted the Manville approach which sets 1982. 

Senator LEAHY. I understand. 

Chairman HATCH. We are not necessarily bound by that approach. 

Senator LEAHY. We are not going to follow everything of the 

Manville because they are getting 5 cents on the dollar right now. 

Dr. Parker, any medical reason? 

Dr. PARKER. Not that I am aware of. 

Senator LEAHY. Okay. So there would be—and we will debate all 

the other policy reasons, of course, but no medical reason. 

Now, Dr. Welch and Dr. Parker, if I could direct this to you, you 

are both occupational physicians. As I listened to you today and as 

I have read your testimony, you both have discussed the importance of exposure history in the diagnosis of asbestos-related disease. I think we would all agree that is important. 

Now, S. 1125 as it is drafted requires a diagnosis be independently verified with respect to the duration, the proximity, regularity, and intensity of the asbestos exposure involved. A lot of 

these exposures took place 30 or 40 years ago. I am wondering how 

you independently verify such exposures 30 or 40 years ago. Is that 

something that physicians would normally do in diagnosing occupational diseases with long latency periods? Is it possible to do that? 

Dr. Parker, how about you? 

Dr. PARKER. I am flattered to have been given some honorary occupational medicine training. I actually have to say that my occupational medicine training is on the job. But I do consider myself 

expert in occupational lung disease. And the reconstruction of exposures that occurred many years ago in the workforce, primarily we 

take the history, how intense the exposures may have been, how 

long they worked in jobs that are historically associated with potentially high exposures; and then if there is a health effect, we try 

to sort out in our own mind whether that health effect is a result 

of that exposure. 

204

They are difficult to reconstruct in individuals. They are also difficult to construct and reconstruct for research. But there are methods to do that. But certainly it would be very difficult to individually verify, yes. 

Senator LEAHY. Dr. Welch, would you agree with that? 

Dr. WELCH. I would agree. You know, as part of the practice of 

medicine, occupational medicine, you take the occupational history 

from the individual. And for a history of exposure to asbestos, we 

know so much. I can fill in so much about what the worker is telling me from the existing epidemiology, all the research that has 

been done, that there is no need to try to look for other data to 

verify that an insulator used asbestos. I mean, he is telling me 

that. I know it to be true independently, for example. You couldn’t 

do it, but it is not standard practice. People don’t do that in this 

kind of circumstances where the exposure history from the worker 

clearly represents a certain level of exposure. You can understand 

if you understand the work that was done in the literature. 

Senator LEAHY. Thank you. Well, I know the Chairman has an 

event at 12:30, and he has also announced we are going to have 

a break at this time. And I realize under our normal practice he 

would extend me more time. But I think that we ought to be——

Chairman HATCH. Sure. 

Senator LEAHY. I do have several other questions, as you can 

imagine, but if I might submit them for the record. 

Chairman HATCH. Without objection. We will keep the record 

open for any questions until this evening at 6 o’clock, any questions 

that any member of this Committee would care to make. We would 

hope that you would get your answers right back because we intend to put this on a markup next week. 

Now, we also intend to make——

Senator LEAHY. Also, I have a statement by Senator Kennedy. 

Chairman HATCH. And we will put Senator Kennedy’s statement 

in. 

Also, we are looking for ways of improving the bill and changing 

it between now and then, and hopefully we could have some support from everybody involved, because there is no way that we can 

please everybody. All we can do is try to be as fair as we possibly 

can. And when you are talking $108 billion, you are talking a lot 

of money. Frankly, I understand I have got to come up with some—

we have got to come up with some sort of an end situation here. 

We will do our best to do that. But I also have to bring together 

disparate political viewpoints. And unless we have a very acceptable bill to the majority of Members of Congress—and I am saying 

a significant majority—I think we are just climbing the wrong tree 

and we are basically going to fail. 

So it is important that everybody get together. I don’t have any 

axes to grind. Some feel that I have leaned too far in favor of the 

unions. Some of the unions feel I haven’t leaned far enough. The 

trial lawyers are all mad at me. We have united them apparently 

with this bill. 

[Laughter.] 

Chairman HATCH. That is not hard to do, by the way. However, 

they were split. And, frankly, some trial lawyers like some of the 

aspects of this bill, but as a general rule, they are not real happy 

205

with it. That ought to please a lot of people out there, but it doesn’t 

please the trial lawyers. 

We have 800-some companies who probably are going to go into 

bankruptcy if we don’t resolve these problems, and we have got a 

bunch of insurance companies who can’t afford to go into bankruptcy, but who either will have to go into bankruptcy or quit. And 

I don’t want to see that happen when we have at our fingertips a 

chance to resolve this. 

So you three are very important to us, and we would like your 

best advice as to how we might refine this bill further with regard 

to the medical aspects of it, health care aspects of it, or anything 

else you would care to weigh in on. And the next panel is going to 

be a very interesting panel that will have some differences, and I 

look forward to hearing from them. But we won’t be back until 

about 1:30. 

Senator LEAHY. Mr. Chairman, if I might, I agree with all of this, 

that we have to put together—we are much further along than we 

were a year ago. We have got a lot of parties in the room. We still 

have a way to go. When I was first in the Senate, I believe it was 

Senator Mansfield who said something about running the Senate 

was like trying to move around a wheelbarrow full of bull frogs. 

And maybe this is the same thing. But people——

Chairman HATCH. I like the analogy. I thought it was very good. 

[Laughter.] 

Senator LEAHY. You have never had that problem with the Committee, though, Mr. Chairman. 

Chairman HATCH. Especially the ‘‘bull’’ part. 

Senator LEAHY. We do whatever you tell us to. 

[Laughter.] 

Senator LEAHY. But on this——

Chairman HATCH. I think it is about time, is all I can say. We 

would all be better off. 

[Laughter.] 

Senator LEAHY. I will make a note of that should I forget. 

But——

Chairman HATCH. Don’t worry. You will forget. 

[Laughter.] 

Senator LEAHY. What I would suggest is that when we do finish 

this hearing today—and there have been good questions and good 

answers—that once again we get those parties back in the room 

that we had before and continue negotiations, because we all know 

that there is not going to be a bill that is going to be perfect for 

everybody. No one group is going to find it perfect, and I understand that because there is no way you can do that. But we are 

getting closer. And a consensus bill with broad bipartisan support 

will pass the Senate, and the House may well take it with a sigh 

of relief. A fractured bill where the major parties are in opposition, 

where we don’t have that kind of broad, real bipartisan support, 

that means across the political spectrum, doesn’t pass and we all 

know that. We all know that, especially as we come into the summer months and the appropriations bills season and all the rest. 

So I wouldn’t have held that hearing last year if I didn’t have 

hope this could be done. Senator Hatch has spent an enormous 

amount of time on this, as have I. Both of us have a million other 

206

things on our agenda. We want it done. I don’t have any major parochial interests in Vermont on this. I do have an interest, though, 

as a legislator in wanting to see this done and wanting to see a 

solution that we can all agree on. 

I am committed to continue working with the Chairman, but I 

would hope that we can get the parties, once this hearing is over 

and we know where the main differences are, we get the parties 

back together. 

Chairman HATCH. Well, I appreciate that, Senator. Let me just 

say that I have succeeded in irritating everybody, which is probably 

good. It means this must be a bill that is firming up. 

Senator LEAHY. Except me. 

Chairman HATCH. I am not going to answer that. 

[Laughter.] 

Chairman HATCH. Because I had something in mind. And I still 

have high hopes we will get you on the bill. But the fact of the matter is that we are to the point where this is rug-cutting time. I just 

don’t think we will have the time after this month. I am certainly 

not going to kill myself any further. I mean, I have worked on it, 

a number of us have worked on it day and night, and I have met 

with literally hundreds if not thousands of people on this and, 

frankly, have tried to bring everybody together the best way I can. 

And I can’t give a great advantage to anybody. We have got to try 

and get this so that we don’t destroy the good because we desire 

perfection so much. And there is no way we can get to perfection 

on this and have a bill. In fact, there is no way you can get to perfection, like most things in life. 

But this bill, even in its current form, would do an awful lot of 

good for an awful lot of people. For this hearing, the remaining 

purpose will be to get all the help we can to rewrite what has to 

be written and then bring it up next Thursday after this one, and 

hopefully pass it out of the Committee and get some time on the 

floor, which is going to be very difficult, because the last 2 weeks 

of this month are set up for Medicare. And that is extremely important to all of us. 

So it is a timing thing as well as a cooperative thing, and I have 

just got to have cooperation from everybody in order to get this 

done. And if not, we are going to fail. 

So let’s not fail. Let’s get this done, and we will be back here—

I better make it quarter to 2 because we are 15 minutes late, and 

I have got to go be with Senator Kennedy at this time. So I don’t 

have any choice. I have to be with these guys whether I want to 

be or not. 

Senator LEAHY. We love you. 

Chairman HATCH. We will recess until further notice. 

[Whereupon, at 12:48 p.m., the Committee was adjourned, to reconvene at 1:45 p.m., this same day. Afternoon Session [2:02 p.m.] 

Chairman HATCH. I apologize to all of you for all the delays that 

we have had here. I haven’t been able to do anything better. So we 

appreciate all of you being here today and being here to help us 

to understand what we should do and to understand it better, because we certainly need to resolve some of these conflicts. 

Now, we have an excellent panel here today. It is a diverse 

panel. 

207

Jennifer L. Biggs. Ms. Biggs is a consulting actuary with 

Tillinghast-Towers Perrin and is a principal of Towers-Perrin. Her 

practice focuses on quantifying asbestos liabilities incurred by the 

insurance industry and corporate defendants named in asbestos 

lawsuits. 

Dr. MARK A. Peterson. Dr. Peterson has been a special adviser 

to the courts regarding the Manville Trust and has studied asbestos litigation and is the founding member of the RAND Corporation’s Institute for Civil Justice. 

Dr. Fred Dunbar is the senior vice president and senior economist for National Economic Research Associates. He is a certified 

expert in the area of mass torts and claims valuation. 

Professor Eric Green. Professor Green teaches negotiation, mediation, and resolution of mass torts at Boston University School of 

Law. He has served as special master in multi-district asbestos litigation and is court-appointed legal representative for future claimants in asbestos-related bankruptcies. 

And Dr. Robert Hartwig. Dr. Hartwig is chief economist and senior vice president for the Insurance Information Institute, a property, casualty insurance trade association. 

We are very grateful to have all of you here. We welcome you 

and we look forward to hearing your testimony, so we will start 

with you, Ms. Biggs, first. 

STATEMENT OF JENNIFER L. BIGGS, TILLINGHAST-TOWERS 

PERRIN, ST. LOUIS, MISSOURI 

Ms. BIGGS. Mr. Chairman, thank you for allowing me to testify 

today. My name is Jenni Biggs. I am a consulting actuary with 

Tillinghast-Towers Perrin and a principal of Towers Perrin. I am 

a Fellow of the Casualty Actuarial Society and a member of the 

American Academy of Actuaries. My consulting practice, as you 

mentioned, focuses on quantifying the asbestos liabilities of insurance and reinsurance companies as well as corporate defendants 

named in asbestos lawsuits. 

In May of 2001, my colleagues and I released our estimate of the 

ultimate loss and expense projected to result from U.S. exposure to 

asbestos. Our estimate of $200 billion has since been widely 

quoted. During this testimony, I will explain to you how we anticipate our $200 billion estimate will change if Senate Bill 1125, the 

Fairness in Asbestos Injury Resolution Act of 2003, or the ‘‘FAIR 

Act’’, is enacted. 

Tillinghast’s $200 billion estimate of ultimate asbestos loss and 

expense includes both past payments and projected future payments. The RAND Institute for Civil Justice recently estimated 

that $70 billion in asbestos claims were paid through year-end 

2002. Thus, our $200 billion ultimate figure translates to $130 billion of estimated future payments. This $130 billion estimate is 

based on assumptions consistent with the deterioration in the asbestos litigation environment observed by 2001. 

An important feature of the proposed legislation is the elimination of plaintiff and defense attorney fees. To put this into perspective, Tillinghast’s $200 billion estimate of ultimate asbestos 

loss and expense is significantly reduced when these frictional costs 

are removed. Of the $130 billion remaining to be paid, we estimate 

208

that approximately $28 billion, or 21.5 percent, relates to defense 

costs. Of the remaining $102 billion, we estimate that approximately $41 billion, or 40 percent, will go to plaintiff attorneys. 

Therefore, out of the original $130 billion estimate of future payments, less than half, or only $61 billion, is expected to reach the 

claimants. Our conclusion is consistent with the findings of RAND: 

Transaction costs have consumed more than half of total spending. 

In order to project indemnity awards under the proposed legislation, estimated claim filings are multiplied by the specific awards 

for each of eight disease levels under the Act. We did this separately for estimated future claims and for the refiling of existing 

claims. We then added a component for the cost of medical monitoring. 

Tillinghast projected future claim filings using three disease categories: mesothelioma, lung cancer, and all other. Therefore, we relied on information provided by the Claims Resolution Management Corporation, or the CRMC, to split our original projections in 

the three disease categories into the eight disease levels under the 

Manville 2002 Trust Distribution Process, which are generally used 

in this Act. There are some differences in the medical criteria. 

However, with the exception of Disease Level VI Lung Cancer One 

claims, my analysis assumes that any differences between the 2002 

TDP and the bill are unintentional, and that the proposed legislation will be modified. 

We also increased the projected number of future mesothelioma 

claims to reflect that the increase in publicity relating to asbestos 

claims and compensation, as well as the potential ability to bring 

claims to a trust in a non-litigious environment with pro bono legal 

assistance will likely increase the propensity for victims to seek 

compensation. 

For pending claim filings, as an upper bound we assumed that 

there are currently 300,000 claims pending in the U.S. court systems. Of these pending claims, we assumed that 230,000 will meet 

the minimum medical criteria and be refiled under the Act. 

The proposed legislation outlines specific claim awards that 

range from zero for Disease Levels I and II to $750,000 for a mesothelioma victim. 

As currently drafted, the proposed legislation does not address 

increases in the awards to reflect future inflation. However, we 

tested the sensitivity of the prospective payments to indexed 

awards increasing at 2.5 percent a year. 

Under the proposed legislation, the claim awards will be reduced 

by the amount of benefits already received. We are not aware of 

any publicly available data that would allow us to estimate the settlement amounts that may have been achieved with specific defendants. Recall that a single plaintiff may sue as many as 60 different defendants. Therefore, we have conservatively assumed no 

offset to the prospective payments in the estimates that I will be 

discussing today. 

We estimated medical monitoring costs based on current Medicare reimbursement schedules, and in total we projected relatively 

small medical monitoring costs of only $400 million. 

Reflecting these provisions of the FAIR Act, we calculated the 

prospective payments from the trust as only $46.7 billion using the 

209

scheduled claim awards and $60.2 billion if you assume a 2.5-percent annual increase in the claim awards. Thus, the $108 billion 

appears to be more than adequate compared to Tillinghast’s best 

estimate of future costs, given a more stringent definition of Lung 

Cancer One claims, which is consistent with the Manville 2002 

TDP. 

We note that our estimates are on a nominal or undiscounted 

basis. Nominal estimates are appropriate for comparison with the 

nominal value of the trust of $108 billion. Discounted estimates 

would be lower; however, discounted estimates should be compared 

to the net present value of the trust, recognizing that the entire 

$108 billion will not be placed into the trust at inception. 

Estimates of the prospective payments are very sensitive to assumptions regarding the number of future claims, especially mesothelioma, the potential indexing of future awards, and the definition of Lung Cancer One claims. 

Therefore, for comparison, we also projected the prospective payments using future claim projections prepared for and provided by 

the Manville Trust which range from 600,000 to 2.4 million. In 

total, these future claim projections are higher than the Tillinghast 

claim projections contained herein, but the number of mesothelioma claims are very similar. 

We also added the provision of 230,000 refiled pending claims to 

the Manville scenarios. The resulting Manville projections range 

from $36.8 billion to $72.3 billion, assuming no indexing of future 

awards, and that Lung Cancer One claims will be defined consistently with the 2002 TDP. 

If future awards are indexed at 2.5 percent a year, then the prospective payments based on the Manville filing projections increase 

to $47.2 to $94.5 billion, still assuming a more stringent definition 

of Lung Cancer One claims: that they satisfy the requirement of either an underlying non-malignant asbestos-related disease or significant occupational exposure of 5 years. 

As currently drafted, the FAIR Act does not require underlying 

asbestos-related disease and merely requires 6 months of occupational asbestos exposure prior to year-end 1982. Thus, potentially 

tens of thousands of claimants that weren’t historically eligible for 

compensation under the Manville Trust will be eligible for compensation under the FAIR Act. 

We have projected an additional 172,000 Lung Cancer One 

claims for non-smokers. Each of these additional claimants would 

be awarded $50,000 for a potential additional $8.6 billion of indicated payments (or $11.8 billion if the future awards are indexed 

at 2.5 percent a year). 

We also increased the Manville projections to include our estimate of additional Lung Cancer One claims. If these additional 

cancer costs are added, then the Tillinghast estimate increases to 

$72 billion and the Manville projections increase to $56.4 billion 

under the minimum estimate, $77.6 billion under the mid-point estimate, and reach $108.4 billion under the maximum projection 

when future awards are indexed at 2.5 percent a year. 

In conclusion, while the estimates are sensitive to the number of 

future claim filings, the indexing of future claim awards, and the 

definition of Disease Level VI Lung Cancer One claims, reasonable 

210

projections of prospective payments under the Act are at or below 

$108 billion if future awards are trended at 2.5 percent or less. 

Thank you. 

[The prepared statement of Ms. Biggs appears as a submission 

for the record.] 

Chairman HATCH. Thank you. I appreciate your testimony, and 

it was very interesting to me. 

Mr. Peterson, we will turn to you. 

STATEMENT OF MARK A. PETERSON, LEGAL ANALYSIS 

SYSTEMS, THOUSAND OAKS, CALIFORNIA 

Mr. PETERSON. Thank you, Senator. I appreciate the opportunity 

to be here. It is a privilege to address the Committee. One of my 

major areas of research and professional activity for the last 20 

years has been an attempt to develop a fairer and more efficient 

system for handling asbestos claims. And so I appreciate the opportunity to assist the Committee in dealing with those issues. 

I want to go through and really take your invitation to identify 

areas of the bill that I think may create problems and make suggestions of how the Committee might want to deal with them. I 

want to do this in a constructive fashion to aid the Committee. 

The first area I want to comment on is about the timing of payment. There have been repeated references today to the importance 

of swift payment of claims, swift provision of justice, and I think 

that is a particularly important area here given the age of the victims of asbestos diseases we are considering. 

One of the major problems, I think, with the present bill is it 

won’t be swift. It won’t provide swift justice. And I think there are 

two reasons why both can be addressed. The first is that it sets up 

an extremely complicated process for paying claims, and not only 

does it set up a new bureaucracy to pay those claims with a variety 

of different courts and levels for doing so, an untested process, but 

it also sets up two taxing systems to bill and raise the money necessary to pay those claims. And it sets up a new court system. So 

it is a complicated proposal like nothing I have ever seen, and my 

own experience with regard to establishing and working with asbestos trusts is that the much simpler procedures that they have 

take several years, typically, to set up. 

I am concerned here that this process will take more than several years to establish despite the requirements in the bill for timing. And I think as you go forward, you should try and seek advice 

from people that have worked and set up trusts that do these same 

kinds of processes. The attempt here is essentially to have procedures that are very similar to Manville. Manville has been paying 

claims under this process. One can learn and try and adopt a system that is closer to what is going on with the existing trust that 

doesn’t have all the complications, expense, difficulties, and inertia, 

essentially, in setting this up. That is one area, source of delay. 

The other area that really I think is the bigger problem with regard to delay is there is a mismatch in timing between the obligation of the fund and the money that will be available to pay claimants. The funding provisions of the bill are limited to $5 billion a 

year over the course of 22 or 23 years. Unfortunately, the liabilities, the obligations are not steady over time. They are front-loadVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00216 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
211

ed. It is true of any asbestos trusts we have set up. The reason is 

twofold: one is that there are, as Ms. Biggs suggests, around 

300,000 claims pending today that will be seeking compensation; 

and in addition to that, if there is a two-, three-, four-, 5-year, 

whatever delay in setting up this process and beginning to get the 

revenue necessary, you are going to be accruing claims during that 

entire period of time. So you have to anticipate that when this fund 

opens its doors, it would have 400,000, 500,000, 600,000 claims 

there. 

There are two issues with regard to that. Obviously that is an 

enormous number of claims to deal with in an administrative process, so it creates administrative burdens. But more problematic is 

you will be dealing with—you need $30, $40, $50 billion immediately to pay those claims, but the fund will only have $5 billion 

a year for 5, 6 years. It will need to wait 5 or 6 or more years in 

order to accumulate the money that is necessary to pay claimants 

who already have claims today. And, in the meantime, these people 

will now be waiting up to a decade to get payment. And I don’t 

think anyone—I assume the Committee or anyone else—would be 

satisfied with setting up a procedure that is going to require elderly present claimants to have to wait 10 years to get paid. So that 

is one issue. 

The second that I wanted to mention was the amount of money 

that is provided, the level of compensation in this bill. The answer, 

of course, to dealing with the problem of the mismatch and timing 

of liabilities and payments is to make more of the cash available 

immediately. I understand—well, I don’t understand, but I can 

sympathize with the difficulties in working with the insurance and 

business community to get them to provide money sooner rather 

than later. But it will be necessary in order to avoid the delays I 

have been talking about. 

With regard to the amounts of money, there were references earlier about attempting to have perfection and provide the highest 

amounts of money that victims might expect to receive in the tort 

system. I have no such expectations about asbestos litigation. Perfection is not something that is much there. But the average payment for mesothelioma claims, not the extremely highest, the average is $2 to $3 million today, as opposed to $750,000 in this plan. 

So this plan will cut those payments by a third. It will cut lung 

cancer claimants to a tenth because the average payment for lung 

cancer claimants, including most of whom are smokers, is about $1 

million a claim. So this fund will greatly reduce the compensation 

levels that claimants get. Again, of course, there are some compromises necessary, but that is a very steep discount. 

The next point I wanted to make is that the $108 billion I do not 

believe is enough money. It is not enough money to pay the claims. 

I have seen Ms. Biggs’ forecasts, and I have done those of my own. 

I anticipate that using reasonable alternative forecasting assumptions, the liabilities are between $150 and $250 billion, well in excess of the $108 billion number. And I note that really the only difference between Ms. Biggs’ forecast and mine is the number of future claimants. She anticipated that there will be a million future 

claimants; I forecast that there will be likely 1.9 million future 

claimants. And I would comment that the million—while I agree 

212

with much of Ms. Biggs’ work, I would comment that the 1 million 

future claimants is based, even though she notes in her report or 

statement that the Manville Trust got 200,000 claimants in the 

last 3 years, so in a world in which 200,000 claimants come in 3 

years, I don’t think it is reasonable to expect that there will only 

be a million future claimants. 

The problem with that—and I have outlined it in my statement—

is that this is a closed-end fund. So if the liabilities are greater, if 

they are at the level that I have suggested they might be as opposed to what Ms. Biggs suggests, then the claimants will bear the 

burden. At some point this fund will run out of money, and it will 

not be able to pay anyone anymore. It is the back end problem that 

Senator Feinstein referred to. 

Chairman HATCH. Of course, if we don’t do something about it, 

we are going to run out of money in the next few years. 

Mr. PETERSON. I am assuming the criteria and the levels in this 

funding. I am not assuming any payments of the Level Two’s. I am 

saying that based upon the provisions of this bill, with the numbers of claims that I am forecasting, there could be $150 to $250 

billion of liability for the very bill you are considering. And there 

is a risk of that and the risk will be borne by the claimants. 

Chairman HATCH. There is certainly going to be that if we continue with the tort system the way it is. As I understand it, about 

60 percent of the people bringing litigation are people who aren’t 

sick, but who have the fear of sickness, which the Supreme Court 

seems to have upheld. 

Mr. PETERSON. I think that that is not a correct——

Chairman HATCH. Am I wrong on that? 

Mr. PETERSON. Sixty percent is——

Chairman HATCH. I would be happy to have you give me the real 

figures on that. 

Mr. PETERSON. I will try and respond to that. It certainly is 

much lower than that. 

Yes, the tort system is expensive, no doubt about it. In the tort 

system, essentially the tort system is moving toward a series of 

independent trusts that are being run in a couple of facilities. The 

kind of process that you are talking about in your bill is occurring 

now within kind of the legal system. It is happening on a case-bycase basis in bankruptcy. 

One of the things that the Committee might consider is making 

that process available to defendants without having to file bankruptcy, essentially to be able to have defendants negotiate 

Georgine, Amchem, the kinds of cases that the Supreme Court 

overturned. 

Chairman HATCH. The problem is they can’t make those kinds of 

payments and still operate the way they are used to operating. 

They are going to have to cut back on employees and everything 

else. That is why they go into bankruptcy so that they can reach 

some reasonable standard that might possibly keep their business 

alive. 

I have got to say your figures that you have raised and some that 

I have got are completely disparate. 

Mr. PETERSON. Well, I think you have raised an important issue, 

and that is that there is such uncertainty about the forecasts. I 

213

can’t tell you that my numbers are definitely right. Ms. Biggs can’t 

tell you that her numbers are definitely right. 

We don’t know with certainty what the future would be. We don’t 

know how many future claims there are going to be against all defendants, as I described in my statement. We don’t know how this 

process would be carried out, but there is a substantial risk that 

the numbers could be greater than $108 billion, and that risk will 

be borne by the victims, not by the defendants and insurance companies. 

Chairman HATCH. Let me ask you to do me a favor and do the 

Committee a favor. You know, your testimony does not specify how 

you are reaching these figures and these numbers. For instance, I 

have been led to believe that even with attorney’s fees and everything else, the average award would be about $900,000 on a serious 

case, and that includes a whopping amount of money that the attorneys are going to get, which has been estimated at between 40 

and 50 percent here. It would be wonderful if we could give everybody $3 million, but we can’t. 

Mr. PETERSON. I appreciate the difficulty of trying to get a compromise here. 

Chairman HATCH. I mean, there is no way we can have a bill and 

do that, but we are trying to come up with a way that everybody 

who is sick and who has these problems is going to be compensated, where right now, we know there is going to be a dry-up 

of funds and a lot of companies in bankruptcy and a lot of loss of 

pension funds and a lot of loss of health care and a lot of loss of 

jobs if we keep going in the current system. So what I am trying 

to do, as you know, is come up with something that hopefully everybody can swallow and accept. 

Mr. PETERSON. I understand. 

Chairman HATCH. I don’t know what else to do, and I can tell 

you that if you are right and it is 1.9 million claims that ultimately 

have to be settled, then we are going to have to do it within this 

fund. 

Now, to me, if I am sitting there in the audience and I am one 

of the businesses that has got to pony up part of $108 billion, I am 

not happy about that. 

Mr. PETERSON. I can imagine. 

Chairman HATCH. And they are certainly not going to be able to 

do it in the first two or 3 years. I understand some of these cases 

go back 20 years now and they are still sitting there, in Philadelphia in particular. 

Mr. PETERSON. There are probably some cases that hang around 

that long. They are not being pursued by the plaintiffs. 

Chairman HATCH. That is right. The courts aren’t doing the job, 

the attorneys aren’t doing the job, and in the process justice isn’t 

occurring. 

I didn’t mean to get into questions right now, but your testimony 

has been very interesting to me, as has Ms. Biggs’. I would like you 

to supplement that testimony with what you have used to arrive 

at these figures because that would be helpful to us. 

Mr. PETERSON. I have described them in my statement, but I will 

see if there is some supplemental description that I can give you. 

214

Chairman HATCH. If you can give some definitive economic analysis that backs up what you are saying, I would be very interested. 

And even if you could prove those figures, we are still faced with 

a limited ability to get this done, and that means that we are going 

to have to have people swallow hard if they want this done and 

help us to get it done. 

I don’t want the union members to be hurt, I don’t want the companies to be hurt, I don’t want the insurance companies to do 

broke. Frankly, I don’t particularly want to hurt the trial lawyers, 

but, by necessity, we know the transaction costs do amount to almost 50 percent. That means that half the monies are going to people who aren’t sick, and that is not counting the people who aren’t 

sick who are getting some of the money. So you can imagine how 

that concerns, I think, any reasonable person who is looking at it. 

But please give us more back-up, and we are open to it, but unfortunately we need you to do it soon because I am planning on 

marking this bill the Thursday after this. 

Mr. PETERSON. Sure. The part of it that is most difficult, of 

course, is anticipating what is going to be the distribution of claims 

under the procedures and criteria that have been established. 

Chairman HATCH. And our efforts may have to be on how do we 

solve this end game; I mean, how do we solve it if the fund runs 

out of funds. Now, admittedly, I want to solve that. I know one 

thing. If I have Government do it, this bill is dead. I can just tell 

you that right now. We don’t have enough votes to get it through 

here or the House. 

You are looking at the guy who put through the radiation compensation exposure bill, who has had Government do it. The Government needed to do it because they were the ones responsible for 

it. So you can see some of the difficulties that we have here. It is 

not an easy matter. 

Mr. PETERSON. Senator, I understand very well the problems and 

implications of my testimony. I share with you the desire to have 

some efficient and fair resolution, and I appreciate the problems 

that asbestos generates and I am providing these numbers in that 

spirit. 

I share with you the desire to try and do something, but I wanted to make the Committee aware of the implications of the very 

proposals that they are making. 

Chairman HATCH. Well, back up your numbers with more facts 

and we will look at them very seriously. 

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

Chairman HATCH. Let’s go to Mr. Dunbar. 

STATEMENT OF FREDERICK C. DUNBAR, SENIOR VICE PRESIDENT, NATIONAL ECONOMIC RESEARCH ASSOCIATES, NEW 

YORK, NEW YORK 

Mr. DUNBAR. Thank you, Chairman Hatch and Senator Leahy. 

Chairman HATCH. Of course, if any of you have comments to add 

to either of the first two witnesses, that would be fine, too. 

Mr. DUNBAR. I am very grateful to have been invited to present 

the work of me and my colleagues. The research that I am going 

to talk to you about was based in part on the research of Sebago 

215

Associates, with Professor Joseph Stiglitz, a Nobel Laureate economist who is teaching at Columbia. 

As you mentioned, I am a Senior Vice President of National Economic Research Associates. We are the largest firm employing 

micro economists studying policy and legal issues. We were formed 

about 40 years ago by Professor Alfred Kahn. I and others at the 

firm have been studying asbestos issues for 12 years. 

The focus of my comments today is really on workers, and it is 

not necessarily those workers which show up in asbestos claims 

statistics. Rather, it is those workers who are employed by firms 

bankrupted by asbestos, as well as those workers who supplied the 

goods and services to the bankrupt firms and their employees’ families. 

Now, the statistics that I can present will seem mind-numbingly 

dry, but they have a special meaning for people; in fact, people like 

me who grew up in a working-class home. In such a home, economic security is always a concern, and I and the others know 

firsthand how fine the line is between having economic security 

and adverse fortuity where it is lost. 

Who are the workers? These are people that are your constituents. More precisely, they are the constituents of 94 members of 

the Senate because the 60-or-so bankrupt firms examined by Sebago had facilities with employees in 47 States. 

What happens to these employees when a firm goes bankrupt? 

The lucky ones stay on, but 25 percent are really not so lucky. 

They become unemployed and, on average, they lose $30,000 to 

$60,000 in lost income while being unemployed and taking lowerpay jobs. 

Sebago Associates estimates that, to date, 50,000 such workers have lost their jobs and borne costs that total $1.4 to $3 billion. In 

addition, 200,000 of your constituent workers of these bankrupt 

companies lost retirement benefits of $1,000 each, for a total adding up to another $200 million to their losses. 

These are what economists call the direct costs. Those are the 

losses that people directly bear caused by the bankruptcies. There 

are also multiplier effects in the communities where these facilities 

were located. These are of two types. 

The first type comes from the bankrupt firms that are buying 

less of the inputs for their production, things like equipment, office 

supplies and services, from the other firms that serve them. The 

second is that the families of the unemployed and displaced workers are buying fewer goods and services. 

These effects can be quantified. In the communities involved, 

there are eight lost jobs for every 10 jobs that were lost by the 

bankrupt firms; that is, there has, to date, been a total of 90,000 

workers that have been displaced, 50,000 direct workers, plus 

40,000 from the multiplier effects. 

When we add the costs together of the multiplier effects and the 

direct impacts, the total borne by these workers is anywhere from 

$2.2 billion to $5.2 billion. I will end by making three observations 

of why these are underestimates, and potentially vast underestimates. 

The RAND study which has been mentioned here before, using 

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rupt firms, estimated that lost job opportunities were nearly three 

times larger than those given by the Sebago estimates. 

Also, these numbers exclude other costs to society—retraining 

costs, the fact that when an individual is unemployed they have to 

pay more for their health insurance, bankruptcy costs that have 

been estimated to be in the hundreds of millions of dollars, and 

then the legal costs which were mentioned before, which are, in 

fact, 60 percent of total claims which are now in the tens of billions 

of dollars and act like a tax on our goods and services. 

Chairman HATCH. Just for our information, when you mention 

Sebago, you mean Stiglitz, right? 

Mr. DUNBAR. That is correct. 

Chairman HATCH. Okay. 

Mr. DUNBAR. And then, third, these costs will definitely continue 

in the future unless something is done to correct the current system. 

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

for the record.] 

Chairman HATCH. Thank you. I have to say that I can see why 

economics is the dismal science. 

[Laughter.] 

Chairman HATCH. But this has been really interesting to us. It 

will be interesting to see what we can do here. 

Professor Green, we will turn to you. 

STATEMENT OF ERIC D. GREEN, PROFESSOR, BOSTON 

UNIVERSITY SCHOOL OF LAW, BOSTON, MASSACHUSETTS 

Mr. GREEN. Thank you, Mr. Chairman, Senator Leahy. I appreciate the opportunity to testify before the Committee. 

I would like to address the impact of this Act on the rights of 

the as yet unknown victims of exposure to asbestos. These victims 

are commonly referred to as the ‘‘future claimants’’. They are people who have been exposed, but they have not yet brought any personal injury claim or lawsuit, but they might or will in the future. 

They might not even know that they have a claim right now. 

These are the overwhelming majority of the people who are going 

to be affected by this Act, any legislation we do. Estimates of their 

numbers vary. You have heard the range of estimates from the actuaries and epidemiologists, but the future claimants are two to 

five times the number of current claimants, anywhere from 1.5 million to 2.5 million claims. 

I am currently the court-appointed representative for the future 

claimants in the Fuller-Austin, the Federal-Mogul, and the Babcock & Wilcox bankruptcies. And I am a professor of law at Boston 

University, where I have specialized in alternative dispute resolution, and specifically the resolution of mass torts. I have assisted 

courts in various capacities in the asbestos litigation. 

There are 13 other individuals such as myself who are the courtappointed future reps around the country in the 18 pending bankruptcy cases. I will be representing my own views here, but I think 

my views are shared by most, if not all of them. 

The future reps support a national legislative resolution to the 

asbestos litigation crisis that can provide an efficient, low-cost and 

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bestos victims. But our support is reserved only for legislation that 

produces a result for future asbestos victims as good as or better 

than what those victims will obtain absent legislation. 

We are not looking for the perfect solution. We want to do good 

for the future victims, but we want to avoid doing bad, and we 

know that that is what everybody wants to do. And we want to 

work with the Committee in a constructive way to try to achieve 

a good result, better than the ‘‘no agreement’’ alternative, in negotiation parlance. But we know we can’t achieve ideal justice or perfect justice. 

It is critical that we do everything we can in this legislation, in 

the short amount of time we have to work on it, to make sure that 

the future victims are protected from risks of error and uncertainty 

associated with a limited national fund. 

None of us are perfect, Mr. Chairman. None of us have a perfect 

vision of what the future will be, and in this particular area everybody has been wrong more often than they have been right. And 

if we enact this legislation, my role will disappear; the future reps 

will be history. 

Now, we don’t mind that. We support this initiative even though 

we will be made redundant, but it must be noted that there will 

no one left with any statutory authority to protect the interests of 

the future claimants. If a single national fund is going to be the 

sole source of compensation for future claimants, it must have access to sufficient resources to pay all the future claims that we 

think we are going to get, and it must be designed in a way that 

will operate to ensure that future claimants are paid in full what 

we want to pay them in a timely manner. 

In short, we must make sure the fund doesn’t run out of money 

before all these future victims of asbestos are identified and paid 

or that will make them wait for payment for long years. That 

would be very sad and disappointing, I am sure, to the Chairman 

and to everybody involved in this effort. It would be an embarrassment and a danger to everybody. 

So our concerns fall into three categories. Will the fund have the 

resources to timely pay future claims? Two, will the administrative 

procedures established under the Act be efficient, or will they be 

unduly burdensome and will they create a backlog of claims, with 

long delays in payment? 

Unfortunately, Senator Hatch, the history through this litigation 

has been reform attempts, reform attempts, reform attempts. You 

are talking about Manville II here, not Manville I. Many, many attempts that were well-intentioned have resulted in long backlogs 

and delay, and made the problem worse. 

Our third area of concern is whether the compensation criteria 

are fair and consistent with those currently applied. 

We support your work. We would like to work with you constructively to make it good, if not perfect. The Act in its present form 

has some problems and concerns. We would like to work with your 

people and make it better. I will submit a full statement for the 

record at the end of the day. 

Our greatest concern, I think, is what you have referred to as the 

back-end problem. It is a tough problem, Senator Hatch. 

Chairman HATCH. Tell me about it. 

218

[Laughter.] 

Mr. GREEN. I mediate cases every single day, and people want 

to put it behind them and they want certainty. We are dealing with 

something that is going to be very difficult to supply certainty to 

people without at the same time taking risk and squeezing it and 

putting it on other people. 

There are ways to do it and we offer some suggestions. One way 

would be to authorize the administrator of the fund to impose contingent calls on insurer and defendant participants after the fund 

has had some actual experience with the handling and paying of 

claims. 

I am not prepared to put my money down on any of these experts’ estimates on the future victims. Let’s see how these new criteria for Manville II play out for a while. The people from Manville 

II will tell you they are so new that they don’t really have any idea 

of what the claims filing is going to be under them. 

All the future reps want to make sure of is that the proponents 

of whatever numbers are being proposed in funding are prepared, 

as they used to say in Pennsylvania where I grew up, to put their 

money where their mouth is. If it is not enough, if there needs to 

be a contingent call, there has to be some provision for it or there 

would have to be a Federal backstop. I understand you when you 

say that that is not likely to happen, so we have to look elsewhere 

to deal with that risk. 

Chairman HATCH. Well, the reason I say it is not going to happen is because I can’t get the votes. 

Mr. GREEN. I understand. 

Chairman HATCH. And if we don’t have the votes, this bill isn’t 

going to go anywhere anyway. That doesn’t mean that some future 

Congress might not remedy that, but this one is not going to. 

Mr. GREEN. If the worst happened and it turned out that these 

predictions were inaccurate, that they were low, and there is not 

some mechanism that we work out now to deal with that contingency, then I am sure that the pressures that would build would 

destroy the very stability and finality that the companies and the 

insurers are looking for. 

Chairman HATCH. We will be interested in your suggestions. I 

have some ideas, as well, and so do others on this Committee. We 

realize we have to face that problem somehow or other, and I hope 

Ms. Biggs is right on this. She did a very good job of presenting 

her testimony, but I just hope she is right on it. 

A hundred and eight billion dollars is a lot of money. If I can get 

all the companies to do what they are supposed to do there, that 

is a very, very substantial achievement by the companies. 

Mr. GREEN. A hundred and eight billion dollars is a lot of money 

by any standard, but when one compares it to the reserves and expectations that many of these companies deep in this litigation 

have now, it might not be so large as some have claimed. 

Chairman HATCH. Well, that is highly debatable, as you know, 

but I appreciate your testimony. We will look forward to your suggestions. 

Mr. GREEN. Thank you. 

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

for the record.] 

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Chairman HATCH. Mr. Hartwig, we will turn to you. 

STATEMENT OF ROBERT P. HARTWIG, SENIOR VICE PRESIDENT AND CHIEF ECONOMIST, INSURANCE INFORMATION 

INSTITUTE, NEW YORK, NEW YORK 

Mr. HARTWIG. Thank you, Mr. Chairman and Mr. Leahy, for the 

opportunity to testify before the Committee today. My name is Robert Hartwig and I am Chief Economist for the Insurance Information Institute, a property/casualty insurance trade association. 

I have been asked to testify before the Committee regarding several of the most important economic considerations surrounding the 

asbestos debate. As an economist, I am particularly interested in 

eliminating the extraordinary inefficiencies associated with asbestos litigation, as well as the severe economic and financial dislocations associated with these inefficiencies, within a framework that 

is fair and equitable for all parties involved. 

The macroeconomic implications associated with the current outof-control asbestos litigation system are not in dispute. As we have 

heard several times today, nearly 70 companies have been pushed 

into bankruptcy by asbestos litigation. Approximately 8,400 companies in almost every industry have had claims filed against them. 

And as we just heard from Mr. Dunbar, between 52,000 and 

60,000 jobs have already been lost as a result of these bankruptcies. To echo again Mr. Dunbar, for shattered communities and 

families, these statistics are only the beginning of the story, as 

thousands of jobs are lost in industries dependent on these bankrupt firms. 

If nothing is done to resolve what has already been described by 

the U.S. Supreme Court as the elephantine mass of asbestos litigation, scores, if not hundreds of additional businesses will be forced 

into bankruptcy and tens of thousands of workers will find themselves unemployed. Retirees and workers who have spent decades 

saving for retirement will continue to see their life savings and economic security vanish. 

The inefficiencies associated with asbestos litigation stem largely 

from abuse, which has led to a rapid upward spiral in tort costs. 

Legislation now before the Committee will address these abusive 

practices. 

Under the present tort system, hundreds of thousands of victims, 

up to 90 percent of whom are unimpaired by any asbestos-related 

illness, are able to move from State to State, setting their sights 

on the most sympathetic jurisdictions and judges. 

As State and Federal policymakers have determined previously, 

there are some public policy crises so profound, or certainly so 

vital, as to require quantum legislative actions. These include, for 

example, the September 11 Victims Compensation Fund, funds for 

black lung disease, vaccine compensation, or State workers’ compensation funds. 

The trust fund proposal would be more efficient and rational 

than the current system for the following reasons. Only individuals 

who are impaired by asbestos exposure would be entitled to compensation under the fund. Transaction costs would be radically reduced in the new no-fault framework. According to the RAND Institute, up to 50 percent of asbestos litigation dollars go to cover 

220

transaction costs rather than toward direct compensation of the 

victims. 

Wild jury verdicts would be eliminated, such as the recent $250 

million verdict handed down in Illinois or recent cases in Texas and 

West Virginia which have allowed plaintiffs to obtain millions of 

dollars without any asbestos-related impairment, or, in fact, to win 

cases that have allowed them to sue purely on the basis of fear of 

developing an asbestos-related illness. 

Major insurers and manufacturers have been working with some 

of the best financial, actuarial and legal resources available to construct a privately-funded facility that will bring certainty, finality 

and equity to the country’s asbestos problem. 

Based on these analyses, insurers believe that $45 billion, contributed from both the insurance and policyholder sectors, will fund 

a facility that approaches $100 billion, and that that is sufficient 

to compensate present and future claimants based upon need, not 

when or where they file their suits. 

Insurers are willing to perfect such a mechanism so that the annual cash flows run unimpeded and that the solvency risk is extinguished. The proposed insurer contribution of $45 billion is large 

and constitutes by far the largest pay-out in the history of the 

property/casualty insurance industry, and will inflict true financial 

pain on the two dozen or so companies who will pay the bulk of 

this amount. Forty-five billion dollars is approximately 50 percent 

more than insurers hold in reserves for asbestos claims today, and 

it is equal to about one-third of all the capital held by commercial 

insurance companies presently. 

In conclusion, it is important to note that the consequences of inaction are grave. As previously mentioned, a large swath of corporate America is at risk, jeopardizing the jobs of thousands of employees, impoverishing retirees, and shattering families and communities. America’s clear national interest lies in making sure asbestos funds are available for those who become sick and in lifting 

an ominous cloud of litigation from our troubled economy. 

Thank you for the opportunity to appear at today’s hearing and 

I look forward to answering any questions you might have. 

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

for the record.] 

Chairman HATCH. Thank you. 

I have been asking some questions throughout, so I am going to 

turn to Senator Leahy first and recognize him. 

Senator LEAHY. Thank you, Mr. Chairman. 

Let me direct this first at Dr. Peterson and then Professor Green. 

When you read over Senator Hatch’s legislation, it does not have—

first, I should emphasize everybody up here wants to get asbestos 

legislation. We also all know that we either all hold hands on 

something eventually or nothing goes through. 

I am worried that this legislation doesn’t provide for any adjustments for inflation in the award values for asbestos victims, even 

though the trust fund provides for the next 50 years. 

Should the award values for asbestos-related diseases be indexed 

for inflation to maintain the present value of compensation to victims? 

221

Mr. PETERSON. I think absolutely, it should. Any kind of fund 

like this that goes over such a long period of time needs an inflation adjustment; I mean real inflation, not some speculation of 

what it might be. It just needs to keep track of inflation. Otherwise, someone coming 10, 15 years from now is only going to get 

a reduced portion of what someone gets today. It introduces the 

kind of present and future dichotomy that the people like Professor 

Green have been appointed to deal with. 

I should note that both in my analysis and Ms. Biggs’ analysis, 

we have assumed that a fund like this would have inflation adjustment. It is surprising that it doesn’t, although I understand that 

if you add it, I mean it is another cost item, Chairman Hatch. It 

probably is another $15, $20 billion, or depending on what your assumption is, $10 billion. 

Senator LEAHY. Professor Green, do you feel the same way? 

Mr. GREEN. Yes, Senator Leahy, and it is tied up with two related issues. One perhaps little-noticed provision of the current Act 

is that all the existing trusts will be folded into this national trust. 

Now, that may well be a good idea, but all the existing trusts have, 

thanks to 524(g) of the Bankruptcy Code which you enacted in 

1994 and the work of the future reps—all of those trusts have provisions which guarantee the future claimants, the far-out future 

claimants, that there will be money for them there when you get 

in those years. 

Now, you take those trusts and you fold them in. That guarantee, that protection could disappear if the estimates are wrong. 

And if there is no adjustment for inflation, you are taking that 

away as well, and then if there is no interest on the payments, if 

there does turn out to be a backlog because of the $5 billion-a-year 

funding, now you have got a triple whammy on the futures, who 

are currently protected to some extent in the current trusts against 

those things. 

Senator LEAHY. You also say that you get an additional $14 billion to be collected from the additional contributing participants. I 

tend to agree. I wonder how the administrator of the fund is going 

to identify future tort defendants. We have already eliminated a 

tort regime for these claims. Doesn’t it make it pretty well impossible for the administrator to credibly assess such future defendants? 

Mr. GREEN. It might be possible, Senator Leahy, to offer a voluntary—an invitation to voluntarily become a contributing member 

and provide some incentives for these peripheral defendants to do 

that, but providing that if they choose not to. The free market, so 

to speak, of the tort system can still operate with regard to those 

companies who do not come into the system and provide some 

mechanism where, if they think better of it, they could join up and 

pay their share and then get the protections of being a member of 

the national trust. 

Senator LEAHY. I kind of worry about just who is in and who is 

out. For example, in S. 1125, all tort claims for asbestos-related injuries are taken out of the tort system. It also immunizes all future 

defendants. 

Now, suppose if a company 5 years from now decides, well, we 

can cut a corner here, make life easier for us, we will use asbestos, 

222

we have poisonings of our people, now they are immunized. 

Shouldn’t at the very least only the contributors to the fund be immunized? 

Mr. GREEN. That is the point I was making, Senator. Of course, 

if Senator Murray’s bill passes, that situation might not happen. 

But there may be companies out there who, for one reason or another, haven’t been identified. One of the things the tort system 

has done is it has been an efficient, perhaps aggressive identifier 

of responsible companies. 

Senator LEAHY. Well, you have all looked at these future projections over the years. I have never found that any of the future projections that come out being on the high side. They are usually on 

the low side. Some have talked about the Manville Trust, simply 

tripling it, but back in the early 1980’s, the Manville Trust represented about 25 percent of the liability of asbestos defendants. It 

is now 15 percent. So if we tripled that, we are still only at 45 percent. That is not—it might sound like a nice, easy formula, but it 

doesn’t work, does it? 

Mr. GREEN. Dr. Peterson is the world’s leading expert on that. 

Senator LEAHY. Over to you, Dr. Peterson. 

Mr. PETERSON. It is hard to use Manville as the standard for dollar values because it hasn’t participated in any kind of litigation 

now for 20 years. And even when it was, what percentage it was 

depended upon what your interests were in asserting that it was. 

But certainly given the ascendancy, if you will, of other defendants 

now since Manville has been unavailable, Manville is a much diminished part of the total compensation that people get. And even 

the full values of their claims I don’t believe represent anywhere 

near the quarter that it did historically. So the 15 percent seems 

a correct number to me. 

Senator LEAHY. Thank you. 

Chairman HATCH. But most claimants file with Manville, and 

then they file a separate suit to begin with. 

Mr. PETERSON. Well, Senator, we actually did a calculation of 

that. I have databases for the Manville Trust and a number of 

other companies that are in bankruptcy now. And we looked at a 

period of time when there were kind of current filings, so they were 

all the same era of database. And Manville constituted only about 

two-thirds of all the names we could identify. 

There are a substantial number of people who haven’t sued Manville or made claims against Manville. They may eventually. Part 

of that is affected by the joint and several rules and contribution 

rules in States. But Manville isn’t—it is sometimes regarded as the 

universe of all claims, but I think that is not correct. 

Chairman HATCH. Mr. Dunbar, you have done an excellent job of 

illustrating the consequential impact of these bankruptcies, the 

loss of jobs and pensions, not to mention economic impact on the 

community and the loss of other jobs that naturally arise because 

of the loss of the jobs with regard to asbestos. 

Have you ever given any thought to the future impact? And 

would it be fair to say that the current system operates essentially 

as a tax on workers? 

Mr. DUNBAR. Yes. Let me take the last question first. I think 

what is lost in the discussion is the fact that 60 percent of the dolVerDate 0ct 09 2002 09:02 Oct 16, 2003 Jkt 089326 PO 00000 Frm 00228 Fmt 6601 Sfmt 6601 S:\GPO\HEARINGS\89326.TXT SJUD4 PsN: CMORC
223

lars that go into the asbestos problem go to professionals such as 

attorneys, both for plaintiffs and defendants. That operates—the 

entire amount, the $70 billion, operates like a tax, and the question 

that economists often ask is: Who eventually pays a tax? And taxes 

are usually backed into what are called the factors of production: 

land, labor, and capital. 

Now, capital can move back and forth globally very quickly, so 

that leaves land and labor, and labor is by far then the biggest participant in that tax. 

I mentioned some of the ways that labor is taxed, but generally 

how labor does get taxed and has to pay more than the 40 percent 

that it gets back in claims is because of the reduced demand and 

the higher prices that they have to pay on goods and services. That 

money comes eventually from—much of that money eventually 

comes from the workers. So it is basically the workers transferring 

their assets to other workers, but also in large to the defense bar 

and the plaintiffs’ bar. 

Chairman HATCH. If I am interpreting you correctly, what you 

are saying is that this $108 billion trust fund, settling the whole 

matter would be a very advantageous thing over the long run if we 

can solve that end game problem for workers as well as the companies. 

Mr. DUNBAR. I think if you lower the transactions costs and if 

you lower bankruptcy costs, it is going to be advantageous to workers as a whole, yes. 

Chairman HATCH. You are talking about lowering the transaction costs and bankruptcy costs, you are talking about the expenses of bringing the suits, the attorney’s fees primarily, and then 

bankruptcy costs, which are quite extensive. 

Mr. DUNBAR. That is correct. 

Chairman HATCH. And this is where all this money has gone up 

the flue, to so speak, rather than for the people who are really 

hurt. 

Mr. DUNBAR. That is correct. 

Chairman HATCH. Do you believe that this particular bill that we 

have here would solve that problem? 

Mr. DUNBAR. I think this bill is definitely a step in the right direction, and I hope that something works out to get it through this 

session. 

Chairman HATCH. What you seem to be saying is that, yes, so 

far we have lost upwards of 70 companies. 

Mr. DUNBAR. Yes. 

Chairman HATCH. If a whole lot more go, this compounds even 

worse, doesn’t it? 

Mr. DUNBAR. That is right. These impacts will continue into the 

future under the current system. There are going to be more bankruptcies, more jobs lost, more of our——

Chairman HATCH. Not just direct jobs but spin-off jobs as well 

that rely on the direct jobs. 

Mr. DUNBAR. That is right. The effects are going to be you are 

moving plants offshore, out of the United States entirely, and what 

is more, there will be communities—I think the median size community in a facility of a bankrupt company is 27,000 people. 

224

Chairman HATCH. Well, I am obviously concerned about and very 

troubled about how asbestos litigation has hurt our national economy. If we could pass this bill, there is no question in my mind it 

would benefit the national economy greatly. But I am equally concerned, as you have just noted in your testimony, that smaller communities are perhaps the hardest hit. 

Mr. DUNBAR. That is right. Whenever a——

Chairman HATCH. In terms of lost jobs. Can you give me some 

more details on some of these smaller communities? 

Mr. DUNBAR. Yes. The median community in one of the facilities 

for a bankrupt company has a population of 27,000. That means 

that the multiplier effect of these bankruptcies is much greater because the ability for somebody who is displaced to find another position within a smaller community is much more limited. So what 

you are having then, because of the nature of the asbestos producers, is a disparate impact on smaller communities throughout 

the country. 

Mr. GREEN. Mr. Chairman, may I add something? 

Chairman HATCH. Go ahead. 

Mr. GREEN. The futures reps who don’t have a stake on the 

plaintiffs’ or defendants’ side are concerned about the viability and 

the health of the companies. But I am afraid you might be operating under the misperception that these companies who come 

through the Chapter 11 proceeding and set up asbestos trusts disappear and go out of business. They don’t. The ones that I have 

been associated with reorganized, and they start——

Chairman HATCH. They become like Manville where they pay 5 

cents on the dollar, and the people get nothing out of it. 

Mr. GREEN. In the trusts, they are paying the victims 5 cents on 

the dollar, but Manville continued to operate. It was a successful 

and thriving building products company. Warren Buffet bought the 

company. Federal-Mogul, Babcock and Wilcox, the companies that 

I am involved in——

Chairman HATCH. That is because they came up with a trust 

that theoretically helps in this situation. 

Mr. GREEN. Yes. 

Chairman HATCH. But we are talking about 840 companies here, 

not all of whom are as well situated as Manville. And we are talking about at least 15 insurance companies that really can’t go into 

bankruptcy. In other words, if they do they are gone. And so this 

is not some little itty-bitty problem here, and this bill I think goes 

a long distance in solving that problem. 

Yes, Mr. Dunbar? 

Mr. DUNBAR. I think Professor Green is a little serendipitous on 

this. It is true that the firms keep operations going, but they lose 

25 percent of their employees. I mean, that is an impaired company, on average, the bankrupt companies. 

Chairman HATCH. Well, and by losing——

Mr. DUNBAR. Moreover, I happen to know about some of these 

companies, and when they go into Chapter 11, it is very difficult 

for them to explain to a potential customer, especially a customer 

in Asia, yes, I am in bankruptcy but don’t worry, everything is fine. 

They are losing business as a result of going into bankruptcy. 

225

Chairman HATCH. I think it is much more complex than has 

been stated. But let me just—we have got to get over to a vote, 

Senator Leahy and I. But, Professor Green, you have concerns 

about whether future claimants will receive adequate compensation 

under the FAIR Act, the bill we are talking about. 

Now, in your statement you hold up current asbestos bankruptcy 

trust funds as a way to ensure that all victims will be compensated. But according to the testimony we have received, these 

trusts are paying just pennies on a dollar, as I had mentioned. And 

assuming these assertions were correct, it is difficult for me to understand how they would be better off—how the claimants are better off under a system where claimants get nothing, others have no 

one to sue, so others have to wait years before the case is even 

heard; and for those who receive awards, a significant portion must 

be paid to their attorneys. 

Now, is it your position that the current tort system is a better 

way to compensate these victims? 

Mr. GREEN. Senator, we agree with you in your direction to set 

up a national trust. We think it should be better; it will be better. 

But the devil is in the details. 

Chairman HATCH. That is right, but let me go back here to some 

of my original comments, and that is, the companies struggled to 

come up with $90 billion from the manufacturers and the insurance companies. And there is a reinsurance problem that is a big 

problem as well that has to be resolved here. 

I was led to believe that if I could get that fund up higher, we 

would probably please organized labor. So I moved it to $108 billion, $18 billion more than they felt was reasonable for them—they 

didn’t feel $90 billion was reasonable for them to pay, but they felt 

they could pay. 

The unions came in at $120 billion a while back, but they are 

now at $130 billion, and some are even talking $200 billion. Well, 

$200 billion is gone, $130 billion is gone, $120 billion I think is 

gone as well. A hundred and eight billion bucks is where I think 

we can maybe get a consensus to put this through, which certainly 

is going to take care, according to Ms. Biggs, everybody, according 

to Mr. Hartwig, everybody who deserves compensation. 

Now, maybe they are wrong. So there has to be in the eyes of 

you and Mr. Peterson and a few others, there has to be perhaps 

some sort of an end game where we can see if there is some way 

of having monies there if there aren’t funds when we get to the end 

of 25 years. 

Now, that is a problem that Senators Leahy and Nelson and Zell 

Miller and others and I have to solve. But I can tell you, anybody 

who thinks we can get this over $108 billion and get a huge vote 

in the United States Senate, which will hopefully get it through the 

House, I think has rocks in their head. And we have got to figure 

out a way of solving these problems, and I could use and I know 

Senator Leahy could use and others on this Committee could use 

some help in how do we solve that end game problem without saddling the Federal Government with it, which is a non-started. 

Senator LEAHY. Mr. Chairman? 

Chairman HATCH. Yes, Senator Leahy? 

226

Senator LEAHY. I know you have worked very, very hard on this, 

as I have and so many others have. We actually want to get a consensus bill. Senator Hatch and I have served in the Senate long 

enough to know that there is a certain time, especially coming closer to both the congressional elections and a Presidential election 

where things slow up, except for those things that have to go 

through. 

Chairman HATCH. Or it won’t get done. 

Senator LEAHY. And so this could be—if this is complex, if it is 

something where everybody is sniping at it, it doesn’t go through 

because it is just not going to be the time to do it. 

I think we have a chance of doing something. During the break, 

there was kind of an informal discussion about getting the parties 

back into negotiations, have Senator Hatch’s staff, my staff there 

with them. I think that is a good idea. We have the basic guiding 

principles. You have got to be fair to the victims, and you have got 

to give certainty to the corporations. 

This is something we are united on. Now we just want to find 

a way to make sure we do that. This is not an area—all the statistics you want, this is not an area where there is a huge parochial 

interest in my State for this. But I do see the court systems being 

clogged with this. I see a lot—I mean, your hearts have to go out 

for the victims who are here testifying. You have a lot of corporations, a lot of corporate leaders whom I respect highly who would 

like to put a certain amount of money out here and say, okay, that 

is our share, now let’s get on and invest in new plants or business. 

And I agree with all of them. 

So let’s hope we can get together. Let’s hope we can work together. I am committed to do that. But I want to make sure that 

we are going to have, as I said at the beginning of this hearing, 

both fairness for the victims and certitude for the corporations. I 

think it is possible. We are not quite there. We will keep working. 

Chairman HATCH. Well, let me just end with these comments. 

This is a very important thing to our Committee, very important 

to me personally. I have met with hundreds if not thousands of 

people on this issue. I almost lost my health on it. I will be honest 

with you. I have worried about it so much. And, to be honest with 

you, nobody is totally happy, but everybody realizes that this may 

be the only way it is going to be resolved. And we have got a week 

to do it in. 

Now, I just don’t see going back to try and get all the companies 

together who basically have said, yes, we will go along if we have 

to, we don’t like it but we will do it. But our offices are open. Our 

staffs are open. We have asked you for suggestions and ideas. But 

come next Thursday, there is going to be a bill put together, hopefully with even an end game. I would like to have the representatives of organized labor come and visit with me. I am not against 

them. In fact, if anything, we have moved it towards their direction 

from where it began. And I would like to resolve this. 

But you have got about a week, maybe 2 weeks in which to get 

it resolved. If we don’t get it done in the month of June—I mean, 

I personally believe we have a very uphill job to get it done this 

month. I thought last month had to be the window. But I think we 

could get it done if we just have a lot of cooperation. 

227

And, look, that is what compromise is all about. We can’t please 

everybody on this bill, and we can’t please anybody on this bill. We 

have got to please everybody by getting a bill that hopefully will 

work a lot better than the current system, which is not working. 

And that is what we intend to do, and if we don’t have cooperation—and we have had some companies that, yes, they are not paying much in so they are willing to make the others pay a lot more. 

I just don’t see that negotiation going on and being effectively conducted. And there are others who are paying a lot more and don’t 

want to give one dime more, you see. 

Then there are some who just plain don’t think we should be 

paying anybody if there is the slightest proof that they are not sick 

at all. 

These are all complex issues. We could go on and on here. But 

this hearing has been very helpful to me, and I just want to thank 

everybody who has participated in it. But come next Thursday, we 

are going to have a bill that is either going to go or it is not going 

to go. I can live with either, between you and me. I don’t think the 

country can. I don’t think the employees can. I think they are the 

ones who are going to get hurt the worst. And I frankly think the 

organized labor will be hurt the worst, because who is going to pick 

up the health care for all these people? Who is going to make up 

for the lost pensions? Who is going to make up for the lost jobs and 

the hurts of these small communities because we can’t come together on a bill that is outrageously expensive to some and I think 

very, very importantly expensive to people like myself. 

So we have got to go vote. With that, we will recess until further 

notice. Please send in your ideas. 

[Whereupon, at 3:10 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.]

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Æ


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