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79–879 PDF 2013

FURTHERING ASBESTOS CLAIM TRANSPARENCY 

(FACT) ACT OF 2013 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

ON

H.R. 982 

MARCH 13, 2013 

Serial No. 113–39 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

MARK AMODEI, Nevada 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, FLORIDA 

KEITH ROTHFUS, Pennsylvania 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

SPENCER BACHUS, Alabama, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

KEITH ROTHFUS, Pennsylvania 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DANIEL FLORES, Chief Counsel 

JAMES PARK, Minority Counsel 
(III) 

C O N T E N T S 

MARCH 13, 2013 

Page 

THE BILL 

H.R. 982, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2013’’ . 4 

OPENING STATEMENTS 

The Honorable Spencer Bachus, a Representative in Congress from the State 

of Alabama, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ........................................................................................ 1 

The Honorable Blake Farenthold, a Representative in Congress from the 

State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 17 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law .......................................................................... 99 

WITNESSES 

S. Todd Brown, SUNY Buffalo Law School 

Oral Testimony ..................................................................................................... 18 

Prepared Statement ............................................................................................. 21 

The Honorable Peggy L. Ableman, McCarter & English, LLP 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

Elihu Inselbuch, Member, Caplin & Drysdale, Chartered 

Oral Testimony ..................................................................................................... 53 

Prepared Statement ............................................................................................. 56 

Marc Scarcella, Bates White, LLC 

Oral Testimony ..................................................................................................... 72 

Prepared Statement ............................................................................................. 75 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Suzan DelBene, a Representative in 

Congress from the State of Washington, and Member, Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law 

Prepared Statement of the Honorable Steve Cohen, a Representative 

in Congress from the State of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ......... 7 

Opposition Letters ............................................................................................ 9 

Material submitted by the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Ranking Member, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law 

Letters from the trust of future claimants’ representatives ......................... 108 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary ................................................................................ 122 

Opposition Letters ............................................................................................ 129 
Page

IV 

Material submitted by the Honorable Blake Farenthold, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law 

Prepared Statement of the Honorable Bob Goodlatte, a Representative 

in Congress from the State of Virginia, and Chairman, Committee 

on the Judiciary ............................................................................................ 145 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Blake Farenthold, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 148 

Prepared Statement of the Honorable Hakeem S. Jeffries, a Representative 

in Congress from the State of New York, and Member, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law ................................... 150 

Response to Questions for the Record from S. Todd Brown, SUNY Buffalo 

Law School ............................................................................................................ 151 

Response to Questions for the Record from the Honorable Peggy L. Ableman, 

McCarter & English, LLP ................................................................................... 156 

Response to Questions for the Record from Elihu Inselbuch, Member, Caplin 

& Drysdale, Chartered ......................................................................................... 162 

Response to Questions for the Record from Marc Scarcella, Bates White, 

LLC ........................................................................................................................ 184
(1) 

FURTHERING ASBESTOS CLAIM 

TRANSPARENCY (FACT) ACT OF 2013 

WEDNESDAY, MARCH 13, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 3:37 p.m., in room 

2141, Rayburn Office Building, the Honorable Spencer Bachus, 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Bachus, Farenthold, Marino, Holding, 

Collins, Rothfus, Cohen, Johnson, DelBene, and Garcia. 

Staff present: (Majority) John Hilton, Counsel; Ashley Lewis, 

Subcommittee Clerk; (Minority) James Park, Minority Counsel; 

Susan Jensen-Lachmann, Counsel. 

Mr. BACHUS. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law hearing will come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Committee at any time, and that may not be necessary now, 

hopefully. 

I apologize for the delay in the hearing, but the President visited 

the Republican conference, and that is always good when the two 

sides are talking. 

We welcome all our witnesses today. 

Let me begin by thanking Vice Blake Chairman Farenthold of 

Texas and Congressman Jim Matheson of Utah for introducing this 

important bipartisan legislation, the Furthering Asbestos Claim 

Transparency Act of 2013, or the FACT Act for short. 

Let me say this. We are here for one purpose and one purpose 

only, and that is to protect those victims of asbestos exposure. That 

is our only motivation. We are not here to protect companies, we 

are not here to protect the defense bar, plaintiffs’ bar. We are here 

for the victims, and we are here to protect their rights and to ensure that justice is served. We are not here to protect those who 

are not victims. 

Having said that, the Subcommittee on Courts, Commercial and 

Administrative Law held a hearing on this bill’s predecessor, H.R. 

4369, in the last Congress, and the Committee reported that bill 

favorably to the full House. It is important to have a workable sys-
2 

tem that provides appropriate compensation to individuals whose 

health has been harmed by asbestos exposure. 

Congress became directly involved in this matter during the 

early 1990’s in the midst of what the Supreme Court described as 

an asbestos litigation crisis. As a result of this crisis, many companies facing potentially massive liability claims began to file for 

bankruptcy. This was not a good situation for asbestos victims 

seeking assistance, or for companies and their employees. No benefits can be paid by a company that has gone broke or shut down. 

The same thing is true of a trust that has been depleted. 

In 1994, Congress amended the bankruptcy code to allow companies in Chapter 11 to create and fund asbestos trusts which would 

be responsible for asbestos victims’ claims after the companies were 

reorganized. The trust system was meant to ensure that current 

and future asbestos victims would be compensated, while allowing 

companies to continue operations. By 2011, 60 trusts have been founded, with over $36 billion in 

assets earmarked for asbestos victims. At this point, half of that 

money has been paid out in claims. 

The enemy of any just compensation system is fraud and abuse. 

Fraud and abuse takes money away from real victims who desperately need help. This is an especially important issue with regard to the asbestos trust funds, which still face huge future claims 

and where every penny counts. 

The Wall Street Journal reported on Monday that nearly half of 

all trusts have reduced payments to new victims at least once since 

2011 partially in an effort to preserve assets for future victims. 

That same Wall Street Journal article raised serious questions 

about waste and fraud in the current system. It disclosed that after 

virtually no examination, a $26,500 claim was awarded to a person 

who did not exist. The article also said that according to a review 

of claims made to the Manville trust, more than 2,000—I think the 

number is closer to 2,700—applicants could not have been older 

than 12 years of age at the time they said they were exposed to 

asbestos in an industrial job. 

One attorney quoted in the report suggested that preventing 

fraud is too expensive and would leave less money to pay claims. 

Let me say that I could not disagree with that more strongly. My 

experience is that if you do not stop fraud, it only gets more egregious and more costly. 

The trust system is an efficient way to handle asbestos. Companies who have been the biggest defendants in these cases have 

been able to fund these trusts and remain in business. It is very 

disturbing that we are increasingly seeing attorneys aggressively 

pursue claims outside this process, effectively establishing a system 

of double compensation. 

Many lawsuits have been filed against small businesses whose 

connections to asbestos products in question may be tenuous at 

best and who are least able to afford protracted litigation. That has 

serious ramifications for our overall economy. 

The trust funds were created with a process designed to prevent 

this kind of costly and unproductive legal free-for-all. The best way 

to combat fraud and abuse is to increase transparency and accountability. The FACT Act sets out several commonsense steps to en-
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sure that consistent, verifiable claims are made in the trust system 

and civil litigation. Through better information sharing, it will improve the evaluation of claims and help ensure that funds from the 

trust are spent on the deserving. This can be done while fully respecting privacy, which we all know is very important when personal health is involved. 

America is a caring country. We help deserving people when they 

are in need. In the case of asbestos exposure, a system has been 

specifically put in place to compensate individuals whose health 

has been harmed. Fraud, abuse, and inconsistent claims that drain 

trusts prevent money from going where it properly should go, to 

those with true and demonstrable health needs. 

In conclusion, thank you all for coming today, and thanks especially to the witnesses for sharing their time and expertise. This 

promises to be an informative and illuminating hearing. 

[The bill, H.R. 982, follows:] 
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Mr. BACHUS. At this time, I recognize the gentlelady from Oregon? From Washington. I keep saying Oregon. 

Ms. DELBENE. We are close. 

Mr. BACHUS. That is right. 

Ms. DELBENE. Thank you, Mr. Chairman. I would like to ask 

unanimous consent for the Ranking Member’s opening statement, 

Mr. Cohen’s opening statement, to be submitted to the record. 

Mr. BACHUS. Absolutely. 

[The prepared statement of Mr. Cohen follows:] 

Prepared Statement of the Honorable Steve Cohen, a Representative in 

Congress from the State of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law 

The debate over the necessity to fully compensate victims of asbestos exposure is 

very personal to me. One of my best friends was Warren Zevon, the great singer 

and songwriter. Warren died of mesothelioma—a cancer of the chest and abdominal 

lining that often results from asbestos exposure—almost a decade ago. So, I come 

at today’s discussion of H.R. 982, the ‘‘Furthering Asbestos Claim Transparency Act 

of 2013’’ or ‘‘FACT Act,’’ with a bit of a prejudice—one on the side of asbestos victims. 

At first blush, the FACT Act seems reasonable enough. Yet as I learned about the 

FACT Act during a hearing on and markup of a substantially identical bill last Congress, the more readily I came to conclude that this legislation may be a solution 

in search of a problem. 

More problematically, it could end up hurting asbestos victims by denying them 

full compensation for the harms that they have suffered as a result of the product 

that many asbestos manufacturers peddled for decades knowing that they were dangerous. 

H.R. 982 would impose a number of new reporting and other information-sharing 

requirements on trusts that have been established under section 524(g) of the Bankruptcy Code. These trusts are designed to compensate current and future victims 

of asbestos exposure by ensuring that those asbestos manufacturers and other related defendants that have filed for bankruptcy cannot escape their responsibility 

for the harm they have caused. 

The bill would require 524(g) trusts to file quarterly reports with the Bankruptcy 

Court and the United States Trustee describing each demand for payment from a 

claimant, including the claimant’s name and exposure history, and the basis for any 

payment made. The Court must make this report part of its public docket. 

The bill also would require trusts to provide information regarding payments and 

demands for payments to any party in an asbestos-exposure related civil action 

upon that party’s written request. 

Under section 524(g), asbestos defendants can re-organize under bankruptcy protection and shift their liability for asbestos exposure to these trusts in exchange for 

agreeing to fund the trusts. 

In turn, these trusts pay claimants who seek compensation for harm caused by 

the bankrupt defendant’s actions. Importantly, the trusts owe a fiduciary duty to 

all beneficiaries to ensure that only proper claims are paid in light of the universe 

of current and anticipated future claimants. 

While not perfect, the trusts have worked reasonably well. 

Yet H.R. 982’s proponents assert that its additional reporting and informationsharing requirements for 524(g) trusts are needed to prevent fraud by asbestos victims and to eliminate the risk that such victims will be over-compensated. Proponents claim that asbestos victims engage in fraud by ‘‘double dipping’’—that is, 

presenting claims to a 524(g) trust and, simultaneously, seeking relief against another asbestos defendant by filing a state-court civil action. 

In weighing this assertion, the most objective source that I could find was a study 

of 524(g) trusts conducted by the Government Accountability Office at former Judiciary Committee Chairman Lamar Smith’s request. 
8 

The GAO was not able to find any instances of overt fraud. Moreover, GAO found 

that trusts take appropriate steps to ensure that fraudulent claims are not paid. 

But even accepting that fraud by asbestos victims is a real problem with respect 

to asbestos trusts, I fear that H.R. 982’s additional requirements on trusts will raise 

their administrative costs significantly. 

Even with its provision that a party requesting information from a trust could be 

required to pay ‘‘any reasonable cost’’ of the trust for complying with an information 

request, the cost burden on a trust may not be relieved. 

For instance, the bill does not define what a ‘‘reasonable’’ cost is, nor does it specify who would make such determination, thus opening the door to litigation over 

these issues and less-than-full payment of costs. 

Money used to pay these costs ultimately means less money to compensate asbestos victims. 

In light of this risk, I would like to know from H.R. 982’s proponents why defendants who are concerned about potential fraud by asbestos victims could not simply 

seek trust payment information using procedures allowed under existing discovery 

rules. 

Defendants can already obtain the information they want, without undermining 

compensation for legitimate claims. 

Finally, the reporting requirement in H.R. 982 raises privacy concerns. 

While I recognize that the bill specifically prohibits trusts from making public any 

medical records or full Social Security numbers, the bill still would require trusts 

to make public a claimant’s name and exposure history. 

Once out in public, such information can be used for any purpose. Potential employers, insurance companies, lenders, and even those who may seek to harm an asbestos victim in some way can have access to this information without the victim’s 

permission or knowledge. 

For these reasons, I remain opposed to the FACT Act and I urge my colleagues 

to oppose this misguided bill. 

Ms. DELBENE. I would also like to acknowledge the presence of 

three asbestos victims in the audience today: Susan Vento, widow 

of the late Congressman Bruce Vento; Judy Vann Ness; and Genevieve Bosilevac, and ask that their letters to the Committee in opposition to H.R. 982 be entered into the record. 

Mr. BACHUS. Thank you. So be it. 

We extend our welcome to you and, Ms. Vento, to Bruce. 

Ms. DELBENE. And I would also like to ask that the letters of two 

additional asbestos victims, Bill Cawlfield and Julie Gundlach, in 

opposition to H.R. 982 also be entered into the record. 

Mr. BACHUS. Absolutely. 

[The information referred to follows:] 
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Ms. DELBENE. Thank you, Mr. Chair. 

Mr. BACHUS. Thank you. 

Is there anyone on the Democratic side who wishes to be heard? 

If not, we will go to Mr. Farenthold for an opening statement, 5 

minutes. 

Mr. FARENTHOLD. Thank you very much, Mr. Chairman. My 

service on this Committee and on the Committee on Government 

Oversight and Reform are dedicated to eliminating waste, fraud 

and abuse in our government, and to that end I have introduced 

H.R. 982, the ‘‘Furthering Asbestos Claims Transparency Act of 

2013.’’ The victims of asbestos-related diseases deserve full compensation for their injuries, and I am extremely sympathetic to 

these claims. 

However, the trusts set up to provide justice are shrouded in secrecy and are frequently abused by claimants and, more accurately, 

their lawyers wasting money intended for mesothelioma and other 

asbestos-related injury sufferers. Unfortunately, these trusts are 

not limitless, bottomless pits of money. 

The problem with fraud in the asbestos compensation system has 

been well documented over the past several decades. Often, fraud 

is committed when plaintiffs and their attorneys rely on one set of 

facts in state court and another set of facts in the bankruptcy 

court. This type of abuse can take place when the system provides 

no transparency with payouts. 

Therefore, this legislation would amend section 524(g) of the 

bankruptcy code to require asbestos trusts to file quarterly reports 

with the bankruptcy court detailing the claimant’s name and the 

amount paid to each claimant, the basis for each payment. We specifically narrowed this bill to protect the privacy of plaintiffs to the 

greatest extent possible. 

This legislation is fair to all parties and has bipartisan support. 

I co-introduced it with Mr. Matheson of Utah. 

It is absolutely imperative that we make sure that those who 

truly have claims are taken care of, but we have also got to make 

sure that we stop the waste, fraud and abuse, and make sure that 

there is money there to pay all the claims. Congress must act to 

cut back abuse of this system. 

Thank you very much, and I will yield back. 

Mr. BACHUS. Thank you. 

Are there other Members wishing to make an opening statement? 

Thank you. At this time, we will welcome our witnesses. 

Professor Steven Todd Brown teaches at the SUNY Buffalo Law 

School—That is the State University of New York, that is what 

SUNY stands for—where he also serves as director of the school’s 

Center for the Study of Business Transactions. Professor Brown’s 

research and teaching draws on his experience managing a small 

business and in private practice. His recent academic work focuses 

on the constitutional limits and institutional dynamics of aggregate 

litigation, including bankruptcy and procedural devices for consolidating mass tort cases. 

Professor Brown received his J.D. from the Columbia School of 

Law and his LLM from the Beasley School of Law at Temple Uni-
18 

versity. He earned his undergraduate degree from Loyola University in New Orleans. 

Do you know the Pope? Have you been following that? 

Mr. BROWN. I have. 

Mr. BACHUS. You know we have a new Pope? 

Mr. BROWN. I just became aware of that. 

Mr. BACHUS. Yes. But we thank you for your testimony, professor. 

Judge Ableman is special counsel at McCarter and English LLP 

in Wilmington, Delaware. Before joining McCarter and English, 

Judge Ableman spent over 29 years as a state trial judge, first in 

the Delaware Family Court and then on the Delaware Superior 

Court, where she presided for 2 years over the asbestos litigation 

docket. She has authored thousands of judicial opinions that have 

helped shape Delaware law for the past three decades. 

Judge Ableman received her B.A. with distinction from Simmons 

College in Boston and her J.D. from the Emory University School 

of Law, where she was Notes and Comments Editor of the Emory 

Law Journal. 

Thank you, Your Honor, for your testimony today. 

Our third witness is Mr. Elihu Inselbuch. How do you say that? 

Okay. He practices law at Caplin and Drysdale’s New York City office. His practice focuses on complex litigation, including extensive 

asbestos creditors’ rights litigation and commercial and securities 

fraud litigation. 

He is past president of the Princeton University Alumni Association, where he received his A.B., holds an LLP from Columbia University Law School and an LLM from New York University School 

of Law. 

I thank you for your testimony. 

Our final witness is Mr. Marc Scarcella. Mr. Scarcella is a manager at Bates White, an economic consulting firm in Washington, 

D.C. He specializes in quantitative methods and their application 

in dispute resolution, settlement negotiations, and litigation management and strategy. Prior to joining Bates White, Mr. Scarcella 

was managing director at an analysis and research planning corporation, where he provided economic analysis and consultative 

services in 524(g) Chapter 11 bankruptcy reorganization in the 

areas of asbestos liability estimation and insurance allocation. 

He has an M.A. in financial economics from American University 

and a B.A. degree in economics and public affairs, also from American University. 

Thank you for your testimony today. 

Professor Brown, we will start with your testimony, but let me 

say this. Each of the witness’ written statements will be entered 

into the record in their entirety. I ask that each witness summarize 

his or her testimony in approximately 5 minutes. I am not going 

to read this about the yellow light and the green light and the yellow light. We will turn them on, but I don’t want you to stop in 

mid-sentence. 

TESTIMONY OF S. TODD BROWN, SUNY BUFFALO LAW SCHOOL 

Mr. BROWN. Thank you, Chairman Bachus and Members of the 

Committee. I appreciate the opportunity to discuss the FACT Act 
19 

with you today. I will begin by discussing trust performance data 

and then turn to a discussion of the fraud question. 

Bankruptcy trusts are established as limited funds for paying all 

current and future asbestos-related claims of the debtor. The idea 

here is that it is equitable to bind absent future claimants, notwithstanding the fact that they are not present and cannot ensure 

the loyalty of those who represent them in the process, as long as 

their claims will be valued and paid in substantially the same manner as similar current claimants who can speak for themselves. 

Since it is a limited fund, if a trust overpays initial claims in 

number, in value, or both, the amount left for future victims is necessarily lower. When that happens, trusts reduce payment percentages. The percentage of a claim’s settled value is actually paid for 

all claims going forward. A low payment percentage may reflect 

that a trust is and always was underfunded. But the sheer volume 

of reductions since 2010, approximately half of all active trusts, 

tells us something more. 

First, malignancy and other claims continue to exceed even relatively recent projections. Second, past claimants have been overcompensated relative to current and future claimants. 

As other defendants leave the tort system and establish their 

own trusts, which appear likely to follow the same pattern, should 

we really expect future victims to fare better than plaintiffs who 

are already grossly underfunded and undercompensated? 

Why are there so many more claims than are projected? 

The further criteria get away from testing the intrinsic merit of 

claims, the more volumes are based on client recruiting decisions, 

which are exceptionally difficult to predict. This becomes more difficult as practices target claim standards. 

This brings me to the question of fraud. If we are talking about 

fraud, we need to understand what exactly we are talking about. 

Are we talking about civil or criminal fraud in the legal sense? If 

so, we are talking about something that is very narrow and very 

difficult to prove, even in the best of circumstances. Legal fraud is 

hard to distinguish from honest mistakes. That makes it hard to 

prosecute. 

I think what we are focusing on when people say fraud in this 

area is not legal fraud. They are talking about the popular use of 

the term, the idea that the claims appear so specious that they contradict themselves internally or they contradict something that has 

been said elsewhere that many would look at them and wonder 

how did that claim even get paid. It is a normative assessment of 

the likely merit of the claim and goes to the policy question more 

than whether some lawyer or professional has committed a crime. 

Notwithstanding the limited empirical evidence, a survey of trust 

terms indicates that they will accept a broader range of claims 

than in the tort system, and also probably accept claims that a lot 

of us would look at and scratch our heads over. 

So even if we cannot demonstrate legal fraud in a case, we still 

may reasonably infer that those who make such mistakes frequently are not merely making mistakes, but they have set up 

their procedures so that these happy accidents occur with some 

regularity. In the alternative, we might infer that some are just 
20 

careless, with the cost of this carelessness being shifted to the trust 

and ultimately to future victims. 

Suspicious patterns are often the first clue that something like 

this is happening. Such patterns led the judge in the silica MDL 

to authorize additional discovery, discovery that unveiled the 

depths of dubious claim development patterns and practices in that 

litigation. Many of these practices were borrowed from asbestos litigation. Many of the professionals involved were also very active in 

asbestos litigation. 

Although trusts at the time had far more data at their disposal, 

they either did not discover or were effectively prevented from investigating these practices to a sufficient level to fully understand 

and counter them. Prior to the close of the silica MDL, witnesses 

testifying on the FAIR Act and discussing the act elsewhere told 

us that there was nothing to see there, claims of fraud were anecdotal, that everything was just fine. 

The problem from my perspective really doesn’t go to protecting 

defendants. It goes to protecting the integrity of the bankruptcy 

process that established the trust. It goes to protecting the integrity of the state courts that manage asbestos tort litigation and ask 

for this information. And it goes to whether the compensation 

frameworks that will be available should my loved ones or yours 

need to resort to them 5, 10, or 20 years from now, if they do, heaven forbid, that they will be adequate. 

I believe that greater transparency can lead to a better system. 

I respect that others may disagree, but I welcome the fact that we 

are having this dialogue, and I thank you for inviting me. 

[The prepared statement of Mr. Brown follows:] 
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Mr. BACHUS. Thank you, Mr. Brown. 

Judge Ableman. 

TESTIMONY OF THE HONORABLE PEGGY L. ABLEMAN, 

McCARTER & ENGLISH, LLP; 

Judge ABLEMAN. Thank you, Chairman Bachus and Members of 

the Subcommittee, for the opportunity to address you this afternoon. Prior to my retirement last December, I served for more than 

29 years as a trial judge in the Delaware state court system. During the last few years of my term on the Delaware Superior Court, 

I was solely responsible for the asbestos litigation docket, which 

comprised approximately 500 to 600 pending cases filed by plaintiffs from all over the United States, and even by foreign nationals. 

My experience in one particular case gave me a unique insight 

into the inherent unfairness associated with a system that permits 

plaintiffs’ filings of bankruptcy trust claims to remain secret and 

undisclosed while a plaintiff is also actively engaged in tort litigation. What transpired in that case is illustrative of the problems 

that occur when transparency is compromised. 

In April 2009, June Montgomery was diagnosed with mesothelioma. Her son, Brian Montgomery, retained the law offices of 

Brent Coon. Brian expressly understood that the Brent Coon firm 

would assist his parents in finding counsel in Florida, where they 

lived. Ultimately, they hired Florida attorneys. In November of 

that year, a lawsuit was filed by Delaware counsel on behalf of 

Florida counsel in the Superior Court in Delaware on behalf of 

June and Arthur Montgomery against 22 defendants alleging that 

June’s mesothelioma was caused by exposure to asbestos from 

products or conduct of the named defendants. 

Asbestos-related suits in Delaware are governed by a standing 

order which sets forth mandatory disclosure obligations related to 

bankruptcy trust claims. Despite this order and specific interrogatories directed to plaintiffs requesting this information, from the 

outset of this case and up until the week before trial, nowhere did 

plaintiffs identify exposure through any of the 20 entities to whom 

bankruptcy claims were submitted. Instead, plaintiffs claimed that 

Mrs. Montgomery was exposed to asbestos solely through the laundering of her husband’s work clothing throughout his career, as opposed to any work she performed herself with or around products 

outside of the home. 

The impression garnered from the complaint, the answers to 

written discovery, and Mr. Montgomery’s sworn testimony in his 

deposition was that the bulk of his exposure occurred when he 

worked as an electrician during a short period at the Everglades 

power plant. Under Florida law, jurors are permitted to allocate 

fault to parties not present at trial, including bankrupt entities. 

The defendant in my case filed a motion in advance of trial requesting that the court order disclosure of all pretrial settlements, 

including monies received from bankruptcy trusts. Counsel for 

plaintiff emphatically reported to me at the pretrial conference that 

no bankruptcy trust submissions had been made and no monies 

had been received. Two days before a 2-week trial in this case was 

scheduled to begin, plaintiff’s counsel advised that his client had 
44 

received two bankruptcy settlements of which he was previously 

unaware. 

This disclosure was directly inconsistent with his unequivocal 

representations to the court and to opposing counsel at the pretrial 

conference. 

By late afternoon the following day, the day before trial was to 

begin, counsel for the defendant learned that a total of 20 bankruptcy trust claims had been submitted. Although the defendant 

had been led to believe that Mrs. Montgomery’s exposure was solely the result of take-home fibers on her husband’s clothing, at this 

late point in the litigation it became obvious that one or more of 

plaintiff’s attorneys had been claiming exposure through Mrs. 

Montgomery’s own employment. That is, she worked with and 

around these products herself. 

In essence, the representations to the bankruptcy trust painted 

a much broader picture of exposure to asbestos than either plaintiff 

or plaintiff’s attorneys had acknowledged during the entire course 

of the litigation in Delaware. 

On the first day of the scheduled trial, with the jury already selected and waiting to serve, the court learned of plaintiff’s failure 

to disclose the trust submissions. This circumstance dramatically 

affected the entire litigation, including a lengthy discovery process 

and trial preparation which had been conducted without knowledge 

of the true facts, not to mention the waste of the court’s time and 

resources. 

In my opinion, transparency of the bankruptcy filings goes to the 

very core of what this litigation is about. The crux of the Montgomery case, as in virtually all asbestos litigation, was a determination of responsibility for Mrs. Montgomery’s exposure. Where 

20 manufacturers of asbestos and asbestos-containing products are 

removed from the equation, a true determination of fault cannot 

occur. 

In the final analysis, there can be no real justice or fairness if 

the law imposes any obstacles to ascertaining and determining the 

complete truth. From my perspective as a judge, it is not simply 

the sheer waste of resources that occurs when one conducts discovery or trials without knowledge of all the facts. What is most 

significant is the fact that the very foundation and integrity of the 

judicial process is compromised by the withholding of information 

that is critical to the ultimate goal of all litigation, a search for and 

discovery of the truth. 

[The prepared statement of Judge Ableman follows:] 
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Mr. BACHUS. Thank you. 

Mr. Inselbuch. 

TESTIMONY OF ELIHU INSELBUCH, MEMBER, 

CAPLIN & DRYSDALE, CHARTERED 

Mr. INSELBUCH. Thank you, Mr. Chairman. I would like to thank 

the Subcommittee for the opportunity to testify here today. My 

name is Elihu Inselbuch. I’m a member of the firm of Caplin and 

Drysdale. I was first retained by the Asbestos Creditors Committee 
54 

in the Manville reorganization in 1985, and since then I have been 

active in the asbestos bankruptcies and in the formation of these 

trusts and in the operation of these trusts. I have some experience 

with how they do operate. 

Mr. Scarcella says that if this bill is enacted it will cost nothing, 

relatively speaking, and be quite easy for the trusts to comply with 

its provisions. I was in Wilmington yesterday and I met with the 

senior managers of the Delaware claims processing facility, which 

actually does the trust processing for five or six of the largest bankruptcy trusts, asbestos trusts. And it ain’t as simple as Mr. 

Scarcella would suggest. 

This bill would require that each claim be looked at and a narrative be prepared describing who the claimant is, his exposure history, and the basis for payment. But even if Mr. Scarcella is correct 

and it took no more than 5 minutes for the trusts to do this work, 

and a reviewer could do 80 a day, that is about equal to the number of claims that these trusts get every day. So you would need 

one full-time employee working all the time just to respond to Part 

A of this provision. 

Now, the Chairman has told us that every penny counts, and I 

couldn’t agree more. If it took 10 minutes, you would need two employees to do that. Section B of the proposed bill would require that 

in response to a request, a trust would have to provide the same 

information for all the claims basically it has on file. 

Well, take any one of the current trusts. They have 400,000 

claims on file. If someone could do 80 a day, that would require 

5,000 person days. If there were 250 workdays in a year, that 

would take 20 years for one person to do. If you wanted to do it 

in a year to comply with the statute, you would have to hire 20 

people. So this is not cost free, even on Mr. Scarcella’s assumption 

that it will take only minutes to get it done. 

And what will this do with the trust? It will create delay. At the 

very least, it will create delay. What does delay matter? Most of us 

think about delay in terms of interest rates, and interest rates are 

pretty low today. But delay really matters to someone who is sick 

and dying from mesothelioma. 

We ran a test some years ago. We made a proposal that we 

would pay a claimant $50 now and $50 3 years from now, or rather 

$70 now. And overwhelmingly, the sick and dying people who 

would like to organize their lives would take the $70. So every day 

of delay is a weapon that the defendants have to drive the settlement prices down. 

Why do we have this legislation? What is transparency seeking 

to find? In any court that I know of in the United States, all the 

defendant has to do is serve a subpoena on the plaintiff, and the 

plaintiff is responsible to produce all the material that the plaintiff 

filed with the trusts in response to that subpoena. 

Are there lawyers who may misbehave? I’m sure there are. I’m 

sure there are some. In 50 years of practice, I haven’t seen many, 

but I am sure there are some that misbehave either as plaintiffs 

or defendants. 

But Judge Ableman will catch them. That is the proof that when 

abuse occurs, the court system, the state court system around the 

country is perfectly able to find the abuse. 
55 

Fraud? Everybody talks about fraud and abuse. This Committee, 

this Committee asked the GAO to investigate whether or not there 

was fraud in the trust system, and the GAO did a long study, and 

they did an investigation, and they filed a report, and they said 

they couldn’t find any fraud. The Wall Street Journal found discrepancies in something less than four-tenths of a percent of the 

filings at the Manville trust over a 20- or 30-year period. This is 

not proof of fraud. 

Transparency. It strikes me as outrageous that this industry 

wants to talk about transparency. This is an industry that not only 

hid the facts of asbestos exposure but positively concealed it for 40 

years, so that we now have hundreds of thousands of people dying 

from exposure to asbestos, and they want to talk about trust transparency. Who is the sheep? Who is the wolf? 

Thank you. 

[The prepared statement of Mr. Inselbuch follows:] 
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Mr. BACHUS. Thank you. 

Mr. Scarcella. 

TESTIMONY OF MARC SCARCELLA, BATES WHITE, LLC 

Mr. SCARCELLA. Chairman Bachus, Members of the Subcommittee, thank you for holding today’s hearing on the FACT Act 
73 

and allowing me the opportunity to provide testimony in support 

of this bipartisan, commonsense legislation. 

I also want to thank Mr. Inselbuch for prompting me to change 

my oral testimony at the last moment. But I think it’s important 

to address some of the concerns Mr. Inselbuch raised. 

When I spoke in May of 2012 on the FACT Act, I intended that 

the quarterly reporting requirements of the FACT Act to provide 

data disclosing who has filed a claim and under what allegations 

of exposure they are seeking payment, and I made comments of 

how little time and effort it would take to produce this information, 

I believe Mr. Inselbuch has misunderstood me. I did not mean to 

intend that it would take minutes to produce per claim. I meant 

it would take minutes to produce for all claims. 

There is a simple fact that people need to understand about discovery on trust data. As a former statistician of the Manville Asbestos Trust, I can tell you that this data is available. Asbestos facilities in trust receive data, process data, and pay claims through 

electronic databases and processing systems. These databases allow 

pertinent information to be parsed out about each claim. 

It is very easy for anybody with a general competency on database and programming skill that all these trust and claim facilities 

have at their disposal to write a simple code that allows them to 

generate a disclosure of every claimant, when they file the claim, 

and their allegations of exposure asserting payment for their 

claims, without disclosing any personal information, private medical information, home addresses, or any other privacy concerns 

that Mr. Inselbuch or the plaintiff attorneys have shared in the 

past. This is a very simple procedure. 

So when I say it would take minutes and be a minimal cost to 

produce the quarterly reporting requirements of the FACT Act, I 

mean for all claims, not just one claim per time. And this is based 

on my experience as not only the statistician of the Manville trust, 

but over 7 years of experience working in bankruptcy reorganizations for legal representatives of asbestos claimants, as well as 

with the trust once they were confirmed. 

I consulted on issues of data management and report generation, 

and I know how these data systems work. That is why I am confident in my previous statements, and I am very confident that the 

requirements proposed by the FACT Act will not bear a huge cost 

burden on the trust, if any at all. In fact, the recent markup of the 

FACT Act since I last spoke on it in May 2012 allows provisions 

for the trust and their facilities to charge third parties who are requesting information reasonable fees in order for the trust to concur and comply with those requests. 

This is a cost shift that will help relieve burden on the trust and 

help preserve money in the funds for victims. 

Now, I have gotten a little bit off script because I felt it was necessary to address some of those issues, but I just want to talk 

about a few other items that I think are also important to know. 

Mr. Inselbuch spoke in his oral testimony, as well as his written 

testimony, about this idea that in order to respond to the reporting 

requirements of the FACT Act, this is going to take so much resources away from the trust and their facilities that claimants are 

going to experience a delay in claim payments. 
74 

This is a myth. This has been spoken about for quite some time, 

dating back to last year’s hearing in May of 2012. When I was the 

statistician for the Manville trust, I was responsible for handling 

data requests both internally and externally. My work and the 

items that I had to produce both internally and externally had no 

bearing on the professionals employed by the trust in the facility 

who were responsible for reviewing, processing, and paying claims. 

So any reporting requirements that I would have had to have dealt 

with in no way would delay the processing and payment of claims 

to the people who deserve it most. 

Ultimately, one of the issues I wanted to get across here today 

is that transparency helps trusts. It is difficult to detect fraud or 

inconsistent claiming when you operate in a vacuum, as most 

trusts do. They do not share information with each other. Trust 

transparency will allow trusts to actually have auto procedures 

that can compare claim allegations made across multiple trusts. 

This will cut down on inconsistent claiming, and that will preserve 

money for the victims who deserve it the most. 

Thank you very much. 

[The prepared statement of Mr. Scarcella follows:] 
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ATTACHMENT 
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Mr. BACHUS. Thank you. 

Mr. Cohen, did you want to give an opening statement? I will accord you that opportunity, if you would like. 

Mr. COHEN. Thank you, Mr. Chairman. 

Mr. BACHUS. I will tell you that I served with Bruce Vento. He 

died. He and I were on the Financial Services Committee around 

2000. He was suffering from mesothelioma at the time. 

She is here. She is one of three victims. 

Mr. COHEN. I see. Thank you. 

This is a very personal issue for me because Warren Zevon was 

one of my closest of friends, and he was a great singer-songwriter 

and, unfortunately, a victim of mesothelioma, dying in the year 

2003. Some decades before he had exposure to asbestos, and exactly how it happened, we are not sure. So I come certainly with 

a feeling that the victims of asbestos need a voice. 

The FACT Act at first blush has certain characteristics that 

make you think it is reasonable. Yet, I learned about the FACT Act 

during a previous hearing that we had in the previous Congress 

and the markup of a substantially similar bill in this Congress, the 

more readily you come to conclude that this legislation may be a 

solution in search of a problem. 

More problematically, it could end up hurting asbestos victims by 

denying them full compensation for the harms that they have suffered as a result of the product that many asbestos manufacturers 

sold for decades, knowing that they were dangerous. 

H.R. 982 would impose a number of new reporting and other information-sharing requirements on trusts that have been established under Section 524 of the bankruptcy code, trusts designed to 

compensate current and future victims of asbestos exposure by ensuring that those asbestos manufacturers and other related defendants that have filed for bankruptcy cannot escape the responsibility 

for the harm they have caused. 

The bill would require those trusts to file quarterly reports describing each demand for payment per claimant, including the 

claimant’s name and exposure history as part of its public docket. 

It would also require the trusts to provide information regarding 

payments and demands for payments to any party in an asbestos 

exposure-related civil action upon the parties’ written request. 

Under this bill, the asbestos defendants can reorganize under 

bankruptcy protection and shift their liability for asbestos exposure 

to these trusts in exchange for agreeing to fund the trusts. In turn, 

these trusts pay claimants who seek compensation for harm caused 

by the bankrupt defendant’s actions. Importantly, the trusts owe a 

fiduciary responsibility to all beneficiaries to ensure that only proper claims are paid in light of the universe of the current and anticipated future claimants. 

While not perfect, the trusts have worked reasonably well, and 

H.R. 982’s proponents assert that additional reporting and information-sharing requirements be put on these trusts in order to prevent fraud and eliminate risk to such victims of being overcompensated. Proponents claim that there could be double dipping. 

In weighing this assertion, the most objective source I could find 

was a study of 524(g) trusts was conducted by the Government Accountability Office at the request of the former Chairman of this 
100 

Committee, the Honorable Lamar Smith. The GAO was not able to 

find any instances of fraud. Moreover, the GAO found that trusts 

take appropriate steps to ensure that fraudulent claims are not 

paid. 

But even accepting that fraud by asbestos victims could be a real 

problem with respect to asbestos trusts, I fear that H.R. 982’s additional requirements of the trusts will raise their administrative 

costs considerably as well. Even with the provision that a party requesting information could be required to pay a reasonable cost of 

a trust for complying, the cost burden could not be relieved. 

For instance, the bill does not define what reasonable is or specify who would make such determinations, opening the door to litigation over that issue and others. Any money used to pay the cost 

means less money to compensate victims. 

In light of this risk and others, I would like to know from the 

proponents and hope they did explain why defendants who are concerned about potential fraud by asbestos victims cannot simply 

seek trust payment information, easing procedures around our existing discovery rules. I believe it has been testified by the Judge 

that she had seen one case of fraud, but she had seen hundreds 

and hundreds and hundreds of cases, and I presume that in most 

of those, there is no fraud. One case does not make all 600 bad. 

Defendants can already obtain the information they want without undermining compensation for the others, and a reporting requirement raises privacy concerns. While I recognize the bill specifically prohibits trusts from making public any medical records or 

full Social Security numbers, the bill still would require trusts to 

make public the name and the exposure history. Once out, that information can be used for other purposes, by potential employers, 

insurance companies, lenders, and even those who may not seek to 

harm asbestos victims who may use the information without the 

victim’s permission or knowledge. 

For these reasons, I remain opposed to the FACT Act and urge 

my colleagues to oppose this bill. 

I would like to take a moment to say that at the last hearing we 

had on this bill, Mr. Chairman, I made an unfortunate statement 

concerning an attorney who had tried to contact my friend, Warren 

Zevon. It was a passionate statement because of the friendship that 

I had for him, but it certainly should not have been seen as certain 

activists from the Chamber of Commerce crowd and others took it, 

and they have republished that statement in tweets. 

To this day, about every third day, I get some tweet, and I sometimes look at where it comes from, and it comes from India, or it 

comes from Indonesia, or it comes from Hushpuckenny. Most of 

them are outside the country. 

I wish they would stop. It is long enough that it makes the 

Chamber look really ridiculous and simplistic, and it looks like 

they take advantage of a simple statement that you made a mistake on. It doesn’t reflect my feeling for trial lawyers, and it doesn’t 

need to be repeated with Warren Zevon’s name attached to it. So 

I would ask the Chamber to clean up their act, because they are 

obviously behind it. 

With that, I yield back the balance of my time. 

Mr. BACHUS. Thank you. 
101 

At this time, we will proceed under the 5-minute rule with questions for the witnesses. 

Mr. Inselbuch, you were saying that GAO found no fraud, basically? 

Mr. INSELBUCH. That’s what they said. 

Mr. BACHUS. How do you account for the Wall Street Journal 

that put two reporters on an investigation for four or 5 months, 

and they came up with 2,700 people who claimed to be injured by 

asbestos injuries while working in shipbuilding mainly, or chemical 

plants, but their ages, they were 12 years of age or under? 

Mr. INSELBUCH. Well, first of all, the Wall Street Journal itself 

didn’t say that any of these filings were fraudulent. They found 

what they said were discrepancies, and they found them, out of 

850,000 claim files, they found them in such a small number that 

it is almost not measurable. 

Mr. BACHUS. Well, of course, I would say 2,700 claims by people 

that were 12 years or under—— 

Mr. INSELBUCH. That just could mean that the individual working at the Manville trust keyed in the wrong number in the computer. 

Mr. BACHUS. That is incredibly sloppy, isn’t it? You worked for 

that trust. 

Mr. INSELBUCH. Well, it happened, Mr. Chairman, in less than 

four-tenths of a percent of the cases. 

Mr. BACHUS. Well, okay. I did hear that. That means just 1 out 

of every 200. 

Mr. INSELBUCH. I understand that. 

Mr. BACHUS. Okay. Now, let’s take that, 1 out of every 200, and 

that is your testimony, of course. I am sure that Mr. Scarcella 

would say—— 

Mr. INSELBUCH. Those are the Wall Street Journal’s numbers. 

Mr. BACHUS. But let’s take yours, 1 out of every 200. Let me just 

say I agree with you. That is one every two-and-a-half days, because you said 80 a day. 

Mr. INSELBUCH. No. That is 80 a day to do the report here. 

Mr. BACHUS. But you said that 80 claims come in a day. 

Mr. INSELBUCH. That is right. 

Mr. BACHUS. Okay. So—— 

Mr. INSELBUCH. Eighty come in a day. Yes, sir. 

Mr. BACHUS. Okay, 80 come in a day. So two-and-a-half days, 

200 come in. One of those is fraudulent. 

Mr. INSELBUCH. No, it is not fraudulent. There may be something 

wrong with it, but that doesn’t mean it is fraudulent. 

Mr. BACHUS. Well, okay, there is something wrong with it. 

Mr. INSELBUCH. It may well be picked up by the trust. 

Mr. BACHUS. It may be that the claimant claims to be under 12 

years of age, and we won’t know why. But let’s say that is what 

it does say. 

Mr. INSELBUCH. Well, we can hypothesize what we want. 

Mr. BACHUS. Well, let’s just say they file a claim and their 

birthdate says they are 12 or under. To me, that is pretty serious. 

And then your average claim for mesothelioma is $17,500, just in 

one trust. So if every 2 days you pay out a claim for $17,500, over 

a year that is $2 million. Now, this is using your figures. 
102 

Mr. INSELBUCH. No. You are using your assumption that there 

was something wrong with the filing. 

Mr. BACHUS. Well, I am using your testimony that 1 out of every 

200 claims—— 

Mr. INSELBUCH. There was a discrepancy. 

Mr. BACHUS. Let’s just call it a discrepancy. 

Mr. INSELBUCH. But a discrepancy—— 

Mr. BACHUS. They actually found cases where a person never existed. 

Mr. INSELBUCH. Yes, there was one of those. 

Mr. BACHUS. But these are just two reporters. 

Mr. INSELBUCH. And how would this act fix that? I don’t see how 

it would make any difference. 

Mr. BACHUS. They would report. It would have them go over and 

review that and report. 

Mr. INSELBUCH. But it wouldn’t say what year they were born. 

Mr. BACHUS. You had 300 people just on one trust that claimed 

they had mesothelioma when actually, publicly, what they had was 

lung cancer. Now, that is a difference of $12,000. Would you 

admit—— 

Mr. INSELBUCH. Again, Mr. Chairman, even the Wall Street 

Journal didn’t assume that these were errors made deliberately by 

the claimant. 

Mr. BACHUS. I am not saying that—— 

Mr. INSELBUCH. All of these could have been errors made by the 

Manville trust. 

Mr. BACHUS. Well, yes. But let me say this, let’s just call them 

errors; okay? 

Mr. INSELBUCH. All right. 

Mr. BACHUS. Payments were made based on errors. Now, that is 

money, whether it is based on an error, whether it is based on a 

clerical mistake—— 

Mr. INSELBUCH. Yes. 

Mr. BACHUS [continuing]. Whether it is based on fraud, you’re 

talking about $17,500 that—— 

Mr. INSELBUCH. Then you should have this bill expanded so that 

you will require every bit of data that is filed with the trust to be 

supplied somewhere in a public record. 

Mr. BACHUS. Well, you know, let me ask you this. You also say, 

wait, they can get it with a subpoena anyway. 

Mr. INSELBUCH. Yes, sir. 

Mr. BACHUS. They don’t even need this bill. 

Mr. INSELBUCH. That is correct. 

Mr. BACHUS. Why would you be arguing against a bill that they 

already have every legal right to get the information? 

Mr. INSELBUCH. Because the burden is being placed on the trust 

to do something. The second part of this bill—— 

Mr. BACHUS. Well, the burden—— 

Mr. INSELBUCH [continuing]. Provides a reference library to these 

defendants in the tort system. They call it transparency. They don’t 

provide any transparency. Why don’t you require the defendants in 

the tort system to divulge what they have paid to settle other 

cases, or where their products are when they were there when they 

were killing people? 
103 

Mr. BACHUS. Well, you know, you argued—— 

Mr. INSELBUCH. If you want transparency, have transparency. 

Mr. BACHUS. Let me say this. You argued, hey, these folks, the 

companies, were guilty of fraud. But that is—— 

Mr. INSELBUCH. No, they were not guilty of fraud. They were 

guilty of murder. 

Mr. BACHUS. Murder. Okay. Genocide, okay? Let’s call it genocide. Now, does that mean that people that don’t have a right to 

recovery have a right to recovery? 

Mr. INSELBUCH. No, sir. 

Mr. BACHUS. So two wrongs don’t make a right, do they? 

Mr. INSELBUCH. This was not two wrongs. 

Mr. BACHUS. So your argument really doesn’t—it is one of those 

two wrongs make a right. 

Mr. INSELBUCH. Not to me, sir. 

Mr. BACHUS. Oh. You mean you think because a company that 

is no longer in existence, bankrupt—and let me say this, not all of 

them committed fraud, because I can tell you a company in Birmingham only built two liberty ships in 1943 and in 1985. Because 

they built two liberty ships for the government and put asbestos 

in it, they went bankrupt and put 120 people out of business. So 

let’s not stereotype all these companies. 

Mr. INSELBUCH. I am sorry, but how many people in the holds 

of those ships were exposed to asbestos and died? 

Mr. BACHUS. Every one of them. And would you blame the company when the U.S. Government told them to build a ship, and in 

1943 no one knew that it was harmful? Would you blame that company? 

Mr. INSELBUCH. Everybody knew it was harmful in the industry. 

Mr. BACHUS. In 1943? 

Mr. INSELBUCH. Absolutely. They had meetings in the 1930’s in 

Saranac Lake where they discussed how to conceal it. 

Mr. BACHUS. Why did the U.S. Government allow ships to be 

built? That is a question—— 

Mr. INSELBUCH. That is a very good question, and it is a very 

good question why the United States Government hasn’t stepped 

up to its own responsibility to pay these bills. 

Mr. BACHUS. Well, let me say this. 

Mr. INSELBUCH. But the United States Government argued sovereign immunity. 

Mr. BACHUS. Okay. You know, I am interested in that. Let me 

say this. I am a former member of the American Trial Lawyers Association. I had the largest jury verdict in the state of Georgia in 

a wrongful death case. So I am not one that stereotypes plaintiffs’ 

lawyers, defense lawyers, or companies. They are not all alike. 

But I would love to see some of that testimony, and I don’t doubt 

it. But this is a first, the first time I have heard it. 

Mr. INSELBUCH. I would come and testify for that legislation. 

Mr. BACHUS. I really would like to explore that with you, because 

just take Bruce Vento. I have never met a nicer gentleman in my 

life, and it is something that we need to know. The Wall Street 

Journal needs to do an article and go back. I applaud them. They 

found something that apparently the GAO couldn’t find, just two 

reporters. It is kind of amazing. 
104 

Mr. Cohen. 

Mr. COHEN. Thank you, Mr. Chair. 

I have been pleased with our staff, but I found some troubling 

numbers that I saw today, Mr. Chairman. Their statistics suggest 

this woman graduated law school in 1975. I think that is a mistake. How did they come up with that year? 

I mean, were you born in 1975, Judge? 

Judge ABLEMAN. I love you. You could be my friend for life. 

[Laughter.] 

Mr. BACHUS. Well, I will actually tell you that as I read how long 

she had been on the bench, it made no sense whatsoever. 

Judge ABLEMAN. I have great genes. 

Mr. BACHUS. But I have a wife that everybody keeps saying she 

had to be somebody I married in old age, and she and I are the 

same age. So we sometimes—— 

Mr. COHEN. Well, I will excuse the staff, but it did seem 

uncharacteristically errant of them. 

Let me ask you, did you know Alan Lubell at Emory law School? 

Judge ABLEMAN. Pardon me? 

Mr. COHEN. Alan Lubell? 

Judge ABLEMAN. Yes. 

Mr. COHEN. Well, then you did go to Emory that year. That is 

good. 

Judge ABLEMAN. I swear, I should have brought my diploma. 

Mr. COHEN. Yes. I will ask him. I will check you out. 

Let me ask you about this. You said you had all these cases, and 

I missed your testimony. I apologize for that. But there was one 

particularly bad case. But in most of the cases, were most of the 

cases, in your opinion, legitimate cases? 

Judge ABLEMAN. Well, I don’t know, because most of the cases 

don’t end up going to trial and to verdict. So I don’t know what 

goes on in the settlement process, and I don’t know what information is or is not available to all of the litigants while the discovery 

process is going on and while the settlement negotiations are going 

on. 

So my concern about the lack of transparency is that I think it 

is anathema to any judge not to have a fair playing field and not 

to have justice depend upon the full truth. The problem is that 

there are missing parts that will never be detected if the cases 

never get to trial. 

This one happened to be ready for trial, and it just so happened 

that we discovered the inequities and the dishonesty that occurred. 

I could have just as easily tried that case without ever having discovered it. 

But most of the cases, I don’t even get to that point. So I don’t 

have any control over what is going on. 

Mr. COHEN. But you don’t have any knowledge of fraud in those 

other cases? 

Judge ABLEMAN. No, but I think that there is an incentive, when 

there is nobody there to catch you, there is an incentive to do 

things like delaying claims to the trust, to be able to make a case 

a little bit different from what it really is. I am not sure that that 

does not occur more often than not. I hate to say it, but I don’t feel 

real comfortable saying it was a one-time situation. 
105 

Mr. COHEN. Are there parts of this bill that you think are not 

necessary and are bad? 

Judge ABLEMAN. No. I think the bill is very fair, and I don’t 

think—— 

Mr. COHEN. You endorse it 100 percent? 

Judge ABLEMAN. Well, if you changed it, I would be willing to let 

you know what my opinion is too. I mean, I am sure there could 

be modifications to it. 

I think that the confidentiality issue is a little bit of a red herring because there is no confidentiality in any of these tort cases. 

I mean, once you file a lawsuit, there is no confidentiality. So if 

these same defendants were not in bankruptcy, they would be sued 

in a court of law and they would not be entitled, the plaintiffs 

would not be entitled to—— 

Mr. COHEN. Mr. Inselbuch, let me ask you this. I thought your 

facts were wrong too, because you were practicing law in the 

1950’s, which seems hard to comprehend as well. That was my 

other concern. But where would you—— 

Mr. INSELBUCH. I am older than I look. 

Mr. COHEN. Obviously, obviously. You have had quite a spectacular career. 

Where would you suggest to the Honorable Judge that this bill 

should be changed, or scuttled? 

Mr. INSELBUCH. For starters, I would scrap the whole bill because it seeks information that, to the extent it is legitimately useful to defendants, they can get anyway. It creates burdens, notwithstanding what Mr. Scarcella has told the Committee. I spoke 

to the people who would have to do it, and they told me how difficult it might be, that there is no button to push and no program 

to do. You are creating burdens. You are creating costs. You are 

creating delay. 

The justification for it is what Judge Ableman and others would 

call transparency. On the other hand, there is no transparency that 

comes from the other side. 

The trust process is the settlement process. If these trust forebears had been still in the tort system and they settled a case with 

a plaintiff, the other defendants would not get that information. 

They would not get any information that was exchanged in the settlement process. Nowadays, the same defendants won’t exchange 

any of their settlement information with anybody else, nor will 

they voluntarily tell anybody where their products were. 

To the extent that the court may not have the true picture, it 

may not be getting the true picture from either side because in our 

tort system it is the burden of the plaintiff to get the facts from 

the defendant, and it is the burden of the defendant to get the facts 

from the plaintiff, and that is how we have an adversarial system 

that gets the materials to the court. 

This would like to change that adversary system. This would, in 

effect, change the way discovery would be done by defendants in 

the tort system in 50 states of the United States. I don’t see any 

need for it or any purpose to it. 

Mr. COHEN. Thank you. I yield back the balance of my time. 

Mr. FARENTHOLD [presiding]. Thank you, Mr. Cohen. I will now 

yield myself 5 minutes for questioning. 
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Mr. Inselbuch, I am an attorney as well, and I am overall troubled by your general assertion that getting to the truth and doing 

what is right is too burdensome and too expensive. I understand 

the need for getting the settlement money to the victims in as reasonably a prompt fashion as possible, but the trusts also have a fiduciary duty, do they not, to as yet undiscovered victims to not pay 

out fraudulent claims? 

Mr. INSELBUCH. Absolutely, and they do a pretty good job of that. 

I observe how those trusts operate. Indeed, the trusts have paid 

less than 50 percent of the claims that have been filed with them 

up to now. This is not a revolving door for claimants. I have seen 

how these trusts have done audits, how they have uncovered discrepancies, far more interesting discrepancies than the Wall Street 

Journal found, how they investigated those, how they audited the 

law firms that were involved in those discrepancies, and I don’t see 

any need for a filing place or for this Congress to interfere in what 

is a working system that is working very efficiently and very inexpensively, as opposed to the tort system. 

Mr. FARENTHOLD. Having filed this bill, I am going to disagree 

that it is working. One of the things we look at consistently is making information available. Again, I am a strong believer in the 

truth will set you free, and I was concerned—and I guess Mr. 

Scarcella addressed the fact of how burdensome it would be to create these reports. I can’t believe, certainly on an ongoing basis— 

I assume these things are filed electronically. You just have the 

lawyers requesting the claim put in a summary of the case, and 

you review it. 

To me it seems like it could all be done, and Mr. Scarcella agrees 

with me, this is all just a data function that for the most part is 

already in place and wouldn’t be that burdensome. I just want to 

make sure the record is clear on that. Is that not correct, Mr. 

Scarcella? 

Mr. SCARCELLA. Yes. I think the important distinction here is to 

understand that the picture that is being painted by Mr. Inselbuch 

is this idea that attorneys for the trust and paralegals and claim 

reviewers are going to have to sit in rooms with stacks of documents redacting information before it is turned over, and that is 

why it would take so long. 

Mr. FARENTHOLD. They are not the Federal Government. They 

actually have computers that work? 

Mr. SCARCELLA. Yes, it is not that way. The professionals he 

speaks about that he has met with recently at the claims processing facilities, I used to work with these people as an outside consultant, and I used to have to analyze their data for doing future 

claim projections, which is one of the backbones of a bankruptcy 

trust and how they distribute their money, both currently and in 

the future. And in my experience, whenever I needed to request 

data, far more extensive data than what the FACT Act is proposing 

here, I was able to get it in virtually no time at all. It took no time, 

maybe a day lag for them to produce to me a data set far more robust than what the FACT Act is seeking here, so I could do my 

analysis to try to help the trust figure out how they should pay 

claims in the future. 
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Mr. FARENTHOLD. We could probably spend the rest of the afternoon going into the details of this, but I do want to talk about the 

bill in particular. I want to ask Judge Ableman, as we produced 

this bill, do you think it strikes a fair balance between addressing 

the needs of those who suffer from asbestos-related diseases now 

and need to get their claims paid promptly and the need for protecting those in the future? 

Judge ABLEMAN. I absolutely do think that it does. I don’t see 

how you can argue against openness and transparency, because 

that just makes the judicial process what it is supposed to be, 

which is a fair process where both sides are playing on a level playing field. I think the bill protects the rights of the victims who have 

succumbed to this dreadful disease, but I also think that it probably provides more protection in terms of confidentiality of their 

records than the legal system is able to do. 

Mr. FARENTHOLD. Great. I want to ask Professor Brown, again 

just setting up the record for this, could you expand on your testimony on the FACT Act? Is it an appropriate exercise of congressional authority given that the Section 524(g) trusts are authorized 

by the bankruptcy code but authorized under state law? 

Mr. BROWN. Of course. I find it kind of interesting that that is 

even a question. In the course of my research last year, one of the 

lead firms in New York came in and argued that the state courts 

should not be demanding this information in discovery and otherwise because it was a violation of the sovereignty—excuse me—the 

supremacy clause. 

But when we look at it from just a matter of the bankruptcy 

power, any conception of the bankruptcy power, even the narrowest 

conception, is a restructuring of the debtor’s affairs with its creditors, and any act related to that falls under the bankruptcy clause. 

I don’t think that is even seriously in question here. 

Mr. FARENTHOLD. All right. I just wanted to make sure we got 

that on the record. Thank you, Professor Brown. 

Thank you to the rest of our panel. 

We will now go to the gentleman from Georgia, Mr. Johnson, for 

5 minutes. 

Mr. JOHNSON. Thank you. 

Mr. COHEN. If I could interrupt for 1 minute, I would like to ask 

for unanimous consent to introduce letters from the trust of future 

claimants’ representatives opposing this for the record, and also I 

think Mr. Conyers’ opening statement for the record. 

Mr. FARENTHOLD. Without objection, so ordered. 

[The information referred to follows:] 
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Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 

H.R. 982, the Furthering Asbestos Claim Transparency Act, or FACT Act, burdens 

asbestos trusts while giving asbestos defendants new rights and advantages to be 

used against asbestos victims in state court. 

This is particularly troubling given that asbestos defendants come to this issue 

with unclean hands. For instance, there is the well-documented harm caused by asbestos—including a form of cancer known as mesothelioma, as well as a debilitating 

clogging and scarring of the lungs known as asbestosis—and the history of asbestos 

manufacturers in concealing the dangers of their product from the public for many 

years. 

And yet these very same manufacturers now want Congress to help them by passing H.R. 982. 

This legislation is extremely problematic for several reasons. 

To begin with, the bill’s reporting and disclosure requirements are an assault 

against asbestos victims’ privacy interests. 

While the bill prohibits disclosure of an asbestos claimant’s confidential medical 

records and full Social Security number, it also mandates that the trusts publically 

report the claimant’s name and exposure history, as well as the basis of any payment that the trust made to the claimant. 

Given the fact that all of this information would potentially be available on the 

internet, just imagine what insurers, potential employers, prospective lenders, and 

data collectors could do with this private information. 

Essentially, this bill would allow asbestos victims to be re-victimized by exposing 

their health information to the public. 

Another problem with the bill is that it is fundamentally inequitable. 

This legislation demands that the trusts make these disclosures, but makes no 

comparable demands on the very companies that injured millions of Americans and 

concealed the dangers of their product for many years. 

The bill essentially shifts some of the costs of discovery away from these defendants to asbestos bankruptcy trusts, which in turn diminishes the amount of funding 

available to compensate asbestos victims. In doing so, it provides an end-run by asbestos defendants around the discovery process available under non-bankruptcy law. 

While not perfect, the trust system set up under Bankruptcy Code section 524(g) 

has generally proven to be beneficial to both asbestos victims and to corporations 

facing mass tort liability for causing asbestos injuries. 

In exchange for agreeing to fund these trusts, companies are able to shed their 

massive asbestos tort liability and re-enter the business community on a competitive 

basis for the benefit of their creditors and those who they injured. 

These trusts, in turn, owe a fiduciary duty to all beneficiaries to ensure that only 

proper claims are paid and that such payments are ratably equitable given the universe of known and anticipated future claimants. 

But, H.R. 982 does nothing to improve the trusts or advance the interests of asbestos victims. 

And, finally, there is absolutely no evidence of endemic fraud warranting such 

an invasive measure as H.R. 982. 

That is not just my opinion. The Government Accountability Office reported that 

there is no empirical evidence of such fraud with respect to the trusts’ claims processing system. 

Sure, the Majority’s witnesses will claim today that the system is rife with fraud 

based on isolated instances and anecdotes, and that asbestos bankruptcy trusts need 

to be more transparent to deter dishonest claims practices. 

This argument is not persuasive. Existing discovery rules already require an extensive amount of disclosure with respect to compensation received by asbestos 

claimants. 

These are just a few of the concerns that I have with this legislation. And I am 

not alone in having serious misgivings about this measure. With respect to a nearly 

identical bill considered in the last Congress, the following entities expressed strong 

opposition to the measure: 
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• the Asbestos Disease Awareness Organization, the Environmental Working 

Group, 

• the Center for Justice and Democracy, 

• and various legal representatives for future asbestos personal injury claimants with respect to asbestos bankruptcy trusts. 

I thank our witnesses for being here and hope that they can adequately address 

my concerns. 

Mr. COHEN. Thank you. 

Mr. FARENTHOLD. Thank you, Hank. 

Mr. JOHNSON. Yes, thank you. 

Ms. Ableman, are you appearing today in your personal capacity? 

Judge ABLEMAN. I am appearing in my capacity as a judge for 

29 years and—— 

Mr. JOHNSON. And also a lawyer with a 400-lawyer law firm. 

Judge ABLEMAN. I am, but I don’t—I just started there, and 

they—— 

Mr. JOHNSON. They do a lot of—— 

Judge ABLEMAN [continuing]. Marching orders. 

Mr. JOHNSON. They do a lot of asbestos litigation for that firm, 

do they not? 

Judge ABLEMAN. They do. 

Mr. JOHNSON. McCarter and English is the name? 

Judge ABLEMAN. Yes. 

Mr. JOHNSON. In fact, product liability is the largest practice 

area for that firm; correct? 

Judge ABLEMAN. I think it—I am not really sure, but I think it 

may be. I thought it was bankruptcy. 

Mr. JOHNSON. But it is a pretty large part, would you say? 

Judge ABLEMAN. Yes. 

Mr. JOHNSON. And, of course, asbestos and other toxic tort litigation comprises the bulk of the product liability litigation that the 

firm handles; is that correct? 

Judge ABLEMAN. Yes. 

Mr. JOHNSON. Now, your firm, does it currently represent the 

company Foster and Wheeler? 

Judge ABLEMAN. No. 

Mr. JOHNSON. Or any of its subsidiaries or associates? 

Judge ABLEMAN. No. I don’t believe so, no. 

Mr. JOHNSON. Are you on the clock right now for your testimony? 

Judge ABLEMAN. No. 

Mr. JOHNSON. You are not making any money right now? 

Judge ABLEMAN. No. 

Mr. BACHUS. I think we are all on the clock up here. We are getting paid. 

Mr. JOHNSON. We certainly are, but we are trying to get to the 

truth. I just want to make sure that our witnesses are credible in 

that regard as well, that they don’t have a motive to testify in a 

biased way so as to create more business for the law firm. 

But let me ask you, Mr. Scarcella, your firm—— 

Mr. BACHUS. A point of personal privilege. 

Mr. JOHNSON. If it doesn’t apply to my time, if we can stop that. 

Mr. BACHUS. We will suspend the time. 
124 

Mr. FARENTHOLD. We will suspend the time. 

Mr. BACHUS. I think it is the customary rules of the House not 

to impugn the witness’ character. 

Judge ABLEMAN. May I respond? 

Mr. JOHNSON. Well, my response would be that this witness is 

appearing as an expert, and I think it is fair game to ask—— 

Mr. BACHUS. Well, all our witnesses appear as experts, and all 

of them—— 

Mr. JOHNSON. And all of them are subject to the same questioning to determine whether or not they have an interest or bias 

in the case. 

Mr. BACHUS. Well, let me say this. I will close this by saying that 

Mr. Inselbuch also is employed, but I would never—— 

Mr. JOHNSON. And I was going to ask you—— 

Mr. BACHUS. I would never impugn his character or his interests. 

Mr. JOHNSON. He is employed. He works on a—— 

Mr. BACHUS. I think he testified to the best of his ability, and 

that all of the witnesses testified truthfully. 

Mr. JOHNSON. He works on a contingent fee basis, but the others 

work on probably an hourly basis. Certainly, one of your colleagues 

on the other side of the aisle is entitled—Mr. Inselbuch has been 

subjected to a thorough and sifting cross-examination thus far, and 

he still has four people that he has to go through. 

Mr. BACHUS. I didn’t impugn his character, his truthfulness, or 

his veracity. 

Mr. JOHNSON. Well, it was a scathing type of cross-examination, 

I think, and I don’t want to do that to the Honorable Judge 

Ableman, but I am just asking some questions to get at whether 

or not I can believe her testimony or not, or what weight I should 

give to it. 

Mr. FARENTHOLD. We did stop the clock. We will go on. I would 

like to remind the Members that we should certainly be courteous 

to our witnesses who are appearing, while still looking for the 

truth. 

We will continue your time. Thank you. 

Mr. JOHNSON. Thank you. 

Mr. FARENTHOLD. And I believe the judge would also—did you 

ask to respond? We won’t start the clock. 

Judge ABLEMAN. I want to just say simply that I was asked to 

do this before I even accepted employment by McCarter and 

English. 

Mr. JOHNSON. You were asked by the Republicans to do this? 

Judge ABLEMAN. I was—someone got hold of the transcript from 

my hearing after the debacle in that case. 

Mr. FARENTHOLD. Okay, we will go ahead and start the clock 

back up now. 

Mr. JOHNSON. Okay. All right. Now we are here talking about 

the FACT Act. Would any of your firm’s clients benefit from the 

passage of that act? 

Judge ABLEMAN. Well, I think everyone would benefit from it because it means that the judicial process is going to be more fair. 

Mr. JOHNSON. Everyone would not benefit from a financial aspect 

of it, though; right? 
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Judge ABLEMAN. I think everyone benefits from having a fair and 

impartial judicial decision-making process. 

Mr. JOHNSON. It should be fair and impartial, there is no doubt. 

Judge ABLEMAN. Everyone benefits from the truth. 

Mr. JOHNSON. This legislation, though, would impose, as we have 

heard from Mr. Inselbuch, it would impose hardship on claimants, 

people who have been injured, due to no fault of their own, as a 

result of unhealthy and unsafe products. 

Mr. Inselbuch, you mentioned the fact that—and, by the way, 

you are plaintiffs’ lawyer; correct? 

Mr. INSELBUCH. Am I an attorney? Yes, I am an attorney. 

Mr. JOHNSON. You are plaintiffs’ lawyer? 

Mr. INSELBUCH. No, I am not. 

Mr. JOHNSON. You are not? You represent some—— 

Mr. INSELBUCH. I represent many of the committees in the bankruptcies, the committees that act for the plaintiffs that are injured. 

I represent trustee advisory committees that advise the trustees in 

the bankruptcy. But I don’t do the tort cases, and I am paid by the 

hour, not on a contingency fee basis. 

Mr. JOHNSON. And paid with monies from the Federal Treasury? 

Mr. INSELBUCH. No, I don’t get any money from the Federal 

Treasury. 

Mr. JOHNSON. You don’t get any money—who do you get money 

from? 

Mr. INSELBUCH. My clients in a bankruptcy, the committee counsel are paid for—all committee counsel fees are paid by the debtor. 

Mr. JOHNSON. I see. So you have actually been paid by the asbestos industry, or your fees are generated through your work, which 

is for plaintiffs and for defendants in the asbestos litigation. 

Mr. INSELBUCH. I don’t look at it quite that way, Congressman. 

I look at the fees of these bankruptcies basically are coming out of 

the asbestos victim’s hide. 

Mr. JOHNSON. Okay. So what I am saying, though, you are going 

to get paid regardless. The other witnesses here, including Mr. 

Scarcella—Mr. Scarcella, you are with a firm that serves as an expert witness in these asbestos-related cases; is that correct? 

Mr. SCARCELLA. Yes, that is one of the things we do. 

Mr. JOHNSON. And you can look forward to receiving more business as a result of your testimony today; isn’t that correct? 

Mr. SCARCELLA. I don’t necessarily know if there is a direct correlation there. In this work that I do, testifying on issues of trust 

transparency, doesn’t have a direct correlation to the work that we 

do on bankruptcy estimation and financial reporting, insurance allocation work. 

Mr. JOHNSON. Okay. Now, I will tell you, Judge Ableman, you 

said today in your testimony or you have said in your written testimony, you have talked about the fact that you had this one episode 

where a plaintiff’s counsel was held in contempt? 

Judge ABLEMAN. No, I did not. 

Mr. JOHNSON. You did not say that? Or something happened 

with the one plaintiff’s lawyer that appeared before you in your 

many years of practice as a Federal court judge or, excuse me, a 

state court judge? 
126 

Mr. FARENTHOLD. The gentleman’s time has expired. I apologize 

for being so quick with the gavel, but we are trying to get this 

hearing completed before votes go. 

Mr. JOHNSON. All right. 

Mr. FARENTHOLD. So we will move on to Mr. Marino. 

He left, it looks like. So we will go down to Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. I appreciate it. 

Let’s get back to the FACT Act instead of who you are here with 

and how you make your money, which is absolutely irrelevant to 

this conversation today. 

One of the questions I have that comes up in this is dealing with 

transparency, and this is sort of an interesting act because it is not 

dealing overall. In a few of the jurisdictions, plaintiffs are required 

to make their trust submissions prior to trial—New York City, 

Montgomery County, Pennsylvania. There are several in that. 

Doesn’t this delay the ability of the plaintiffs to delay their trust 

submissions until after—it is essentially a double dipping episode? 

I know there’s probably disagreement here, but I would like to hear 

both accounts. 

Mr. INSELBUCH. Is that addressed to me? 

Mr. COLLINS. You can go first, and the Judge can go second. 

Mr. INSELBUCH. Well, it is one of the principles of the tort system 

that a plaintiff gets to decide who the plaintiff sues, who the plaintiff settles with, and on what basis. When you move that into the 

trust system, the same theory should say that a plaintiff should be 

able to decide if and when the plaintiff will file a claim with the 

trust. To the extent that under state law settling with a trust 

would have a detrimental effect on the plaintiff’s ability at verdict 

to collect from an existing solvent defendant, that choice under 

state law should be left to the plaintiff, because the issue really is 

who bears the shortfall. 

Is the shortfall—in other words, the lack of ability of these 

insolvents to pay—should that shortfall be paid for by the other 

culpable co-defendants, or should it be paid for by the innocent 

plaintiff? That is a question of policy that is decided in 50 legislatures around the country. 

Mr. COLLINS. I want to follow up here. Isn’t it also a principle 

of judicial work also that disclosure and discovery are also elements of this as well? You made a comment earlier that I thought 

really oversimplified it, that the plaintiff’s job was to get what they 

need, and the defendant get that, and you have made this sort of 

the case for the FACT Act at that point, just basically saying put 

into play what is available or what should be available in normal 

discovery. 

Judge, the question I had for you is—and you made the comment 

that it should be handled at the judge level. Explain to this Committee how that is difficult from the judge’s perspective in issues 

where there is a problem with discovery. 

Judge ABLEMAN. Well, the problem isn’t—first of all, we as 

judges, or as former judges, as a former judge I can tell you is very, 

very time-consuming to cite an attorney on a Rule 11 violation for 

not being honest with the court. It requires that you have hearings, 

it requires that you write an opinion, it requires you to detail with 
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great specific precision what it is this attorney has done or not 

done or should have done. 

So judges are loath to take on that extra responsibility in addition to their caseload. It is not just, oh, you are in contempt, and 

that is the end of it. It becomes a big project and a very distracting 

project. So it is not done very often. 

But more importantly, I don’t think that the victims in these 

cases should not be fully compensated by every single entity that 

has caused exposure. My problem is that without full transparency, 

the facts that the case is based on are sometimes not the full facts. 

Mr. COLLINS. And I agree completely, the compensation ought to 

be there. 

There are some other issues around this, and I appreciate that 

I need to move to a couple of quick things. One, I want to ask this 

question because we are dealing with asbestos, and reporting and 

not reporting. The Asbestos Information Act of 1988, you may or 

may not be familiar with it, which requires manufacturers and 

processors of certain asbestos products to disclose the asbestos 

products they made, as well as the years of manufacture. 

From my understanding, from what I have learned so far, this 

law is rarely complied with or enforced. Why is that? 

Mr. INSELBUCH. You are asking me? 

Mr. COLLINS. I will ask anybody who wants to answer the question. You have done well answering so far today. I appreciate your 

candor. 

Mr. INSELBUCH. I can’t say that I have any familiarity with that 

statute. But if what we are interested in is transparency, as Judge 

Ableman would say, then why don’t we have reciprocal transparency? Why do we just assume that it is the plaintiffs’ lawyers 

who don’t disclose what should be disclosed in the discovery system? Why don’t we have a system where the defendants are required to provide public information about where their products 

were so that we can check what their answers are in the discovery 

process? 

Mr. COLLINS. Well, part of that, as an attorney, it’s part of the 

legal process here. I mean, the plaintiff brought the case, and there 

is an issue here that they would have to describe on both sides to 

discovery, ask what they are looking for as well. Again, they 

brought the case. The burden is going to be on them to make their 

case. So that is an issue, and defendants are putting a different format. 

One last question, Professor Brown. Do you believe that the information required under the FACT Act compares to—how does it 

compare to other information that is normally disclosed in bankruptcy or tort? Is this really requiring anything all that unique? 

Mr. BROWN. I will refer to my written statement, where I go into 

that in great detail, but I don’t believe that it really requires any 

additional information. In fact, if you were an individual tort claimant and trying to seek damages or seek recovery in a bankruptcy 

case, you may be required to file this, though the provisions that 

I also mention under 107, Section 107 of the bankruptcy code may 

be applied there, just as they could be to—— 

Mr. COLLINS. Thank you. 

Mr. Chairman, I yield back. 
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Mr. FARENTHOLD. Thank you very much. 

Mr. Cohen, you needed a second? 

Mr. COHEN. Thank you. I have an asbestos victim’s letter and a 

number of public interest groups opposed to the Act. I would ask 

that their letters and statements be made a part of the record. 

Mr. FARENTHOLD. Without objection, so ordered. 

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Mr. COHEN. Thank you, sir. 

Mr. FARENTHOLD. Without objection, Chairman Goodlatte’s statement will also be 

admitted to the record. So ordered. 

[The prepared statement of Mr. Goodlatte follows:] 

Prepared Statement of the Honorable Bob Goodlatte, a Representative in 

Congress from the State of Virginia, and Chairman, Committee on the Judiciary 

The history of asbestos litigation is filled with human tragedy, culminating in 

what the Supreme Court described as an ‘‘asbestos litigation crisis’’ in the pivotal 

case of Amchem v. Windsor. As businesses were forced to declare bankruptcy as a 

last resort to manage their liability, the prospect of full compensation for asbestos 

victims—not to mention current employees’ livelihoods—grew dimmer. 

In 1994, Congress attempted to address the crisis through legislation. Section 

524(g) was added to the Bankruptcy Code, to allow companies in Chapter 11 to form 

a trust that would become responsible for receiving, processing and paying all future 

claims by asbestos victims. This trust system was designed to relieve pressure on 

the courts, allow businesses to emerge from Chapter 11 and continue operations, 

and streamline the compensation process for asbestos victims. 

Most of the largest and deepest-pocketed defendants have gone through bankruptcy and formed trusts under Section 524(g). So now plaintiffs’ attorneys have 

moved on to suing secondary targets in courts while filing separate claims with the 

trusts—continuing the process that one plaintiff’s lawyer described as the ‘‘endless 

search for a solvent bystander.’’ 

Unfortunately, there is evidence of fraud and abuse in the asbestos trust compensation system. The law provides that victims of tortious conduct should be made 

whole, and this is no less true for asbestos victims—they should receive 100% of the 

compensation they are due. But no one should be able to recover twice—or more 

than twice—by pleading one set of facts in court and then a different, perhaps contradictory, set of facts to an asbestos trust. Bringing greater transparency to the asbestos trust system will discourage this sort of conduct in the first place, and help 

to expose it when it happens. 

The Subcommittee on the Constitution examined these matters in a September 

2011 hearing. In addition, H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency 

Act of 2012,’’ or the FACT Act, was the subject of a legislative hearing before the 

Subcommittee on Courts, Commercial and Administrative Law in May 2012. That 

bill was ultimately ordered reported by the Full Committee with an amendment last 

June. 

I am very pleased that Mr. Farenthold has reintroduced this important, bi-partisan legislation this Congress. H.R. 982, the FACT Act of 2013, will protect trust 

assets reserved for current and future victims by striking the proper balance between much-needed transparency and preserving the dignity and medical privacy of 

asbestos victims. I encourage all of my colleagues to support this legislation, and 

I look forward to hearing from the witnesses today. 

Mr. FARENTHOLD. We now have 7 minutes and 44 seconds remaining in a vote on the Floor. I don’t think we have any more 

Members looking to ask questions at this time. 

But without objection, all Members will have 5 legislative days 

to submit additional written questions for the witnesses, or additional material for the record. 

With that, this concludes today’s hearing, and we are adjourned. 

[Whereupon, at 5:05 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Prepared Statement of the Honorable Blake Farenthold, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law 
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Prepared Statement of the Honorable Hakeem S. Jeffries, a Representative 

in Congress from the State of New York, and Member, Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law 

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Response to Questions for the Record from S. Todd Brown, 

SUNY Buffalo Law School 
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Response to Questions for the Record from 

the Honorable Peggy L. Ableman, McCarter & English, LLP 
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Response to Questions for the Record from Elihu Inselbuch, 

Member, Caplin & Drysdale, Chartered 
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Response to Questions for the Record from Marc Scarcella, 

Bates White, LLC 
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