RS21815 -- Fairness in Asbestos Injury Resolution Act of 2004 (S. 2290, 108th Congress) Updated January 21, 2005 "Any individual [or, if he is deceased, his personal representative] who has suffered from a[n eligible] disease or condition . . . may file a claim with the Office for an award with respectto such injury" (� 113(a)). The claimant would have to "prove, by a preponderance of the evidence, that he suffersfrom an eligible disease or condition" (� 111(2)). He would not haveto prove that his injury "resulted from the negligence or other fault of any person" (� 112). The statute of limitations would be four years from the date the claimant first "received a medical diagnosis of an eligible disease or condition," or "discovered facts that would have leda reasonable person to obtain a medical diagnosis with respect to an eligible disease or condition" (� 113(b)(1)). If,however, a claimant had filed a timely claim that was pending infederal or state court on the date of enactment of the bill, such claim would have to be dismissed, and the statuteof limitations to file a claim under the bill would be four years from thedate of enactment of the bill (� 113(b)(2)). "Not later than 90 days after the filing of a claim, the Administrator shall provide to the claimant (and the claimant's representative) a proposed decision accepting or rejecting the claimin whole or in part and specifying the amount of the proposed award, if any" (� 114(b)). Any claimant not satisfiedwith the proposed decision of the Administrator would be entitled, onwritten request made within 90 days, to a hearing or to a review of the written record, by a representative of theAdministrator" (� 114(c)). After a hearing or review, or if no hearing orreview is requested within 90 days, the Administrator would issue a final decision (� 114(d)). A claimant wouldthen have 90 days to petition for judicial review of the final decision (�302(a)). Review would be by the U.S. Court of Appeals for the circuit in which the claimant resides at the time ofthe issuance of the final order (� 302(b)). The court would uphold thedecision unless it determined "that the decision is not supported by substantial evidence, is contrary to law, or is notin accordance with procedure required by law" (� 302(c)). The Administrator would "establish a comprehensive asbestos claimant assistance program" (� 104(a)), including a "legal assistance program" (� 104(d)). Attorneys could charge nomore than 2 percent of the amount of the award for filing an initial claim, and "10 percent with respect to any claimunder appellate review" (� 104(e)). The term "appellate review" isnot defined, so it is not clear whether it would include both the hearing or review by the representative of theAdministrator, and judicial review. The amount of an award under S. 2290 would be determined pursuant to the benefit table in section 131(b), which prescribes different amounts for different medicalconditions, and, in cases of lung cancer, different amounts for smokers, nonsmokers, and ex-smokers, as it definesthose terms. (5) Beginning in 2006, awards would beincreasedannually by a cost-of-living adjustment (� 131(b)(5)). Awards "shall be reduced by the amount of collateral source compensation" (� 134(a)). But the term "collateral source compensation" would refer only to "the compensation that theclaimant received, or is entitled to receive, from a defendant or an insurer of that defendant, or compensation trustas a result of a judgment or settlement for an asbestos-related injurythat is the subject of a claim filed under section 113" (� 3(6)). S. 2290 provides explicitly that collateralsource compensation would not include workers' compensation orveterans benefits (� 134(b)), but it would apparently also not include any other compensation, such as disability orhealth insurance payments, or medicare or medicaid, that was not paidby "a defendant or an insurer of that defendant, or compensation trust." A claimant, in other words, could receiveall these amounts in addition to his award from the Asbestos InjuryClaims Resolution Fund. Asbestos claimants would not receive lump-sum awards, but "should receive the amount of the award through structured payments from the Fund, made over a period of three years, andin no event more than four years after the date of final adjudication of the claim" (� 133(a)(1)). The Asbestos Resolution Claims Fund would be paid for by "defendant participants" and "insurer participants." Defendant participants would apparently be companies that have beensued for injuries caused by exposure to asbestos, and insurer participants would be the insurers of suchcompanies. (6) Subject to a "contingent call formandatory additional payments"(�204(m)), "the total payments required of all defendant participants over the life of the Fund shall not exceed" $57.5billion (�202(a)(2)). "[T]he aggregate annual payments of defendantparticipants" would be at least $2.5 billion for the first 23 years of the Fund, unless the $57.5 billion is receivedsooner (� 204(h)(1)). After the $57.5 billion has been paid, theAdministrator could, if necessary, issue a contingent call for mandatory additional payments of up to an aggregatemaximum of $10 billion. The Administrator would first, however,have to publish a notice in the Federal Register and consider comments from defendant participants on the necessityof additional payments (� 204(m)). "The total payment required of all insurer participants over the life of the Fund shall be equal to $46,025,000,000" (� 212(a)(2)(A)). Insurer participants would pay prescribed amountsfor 27 years (� 212(a)(3)(C)). The United States government would not be liable for any asbestos claims, even ifthe Fund is inadequate to pay them (� 406(b)). The Administrator would be authorized to sue any participant for failure to pay any liability imposed under the bill. In addition to the amount due, the Administrator could seek punitivedamages, the costs of the suit, "including reasonable fees incurred for collection, expert witnesses, and attorney'sfees," and "a fine equal to the total amount of the liability that has notbeen collected" (� 223(c)). "At any time after seven years following the date on which the Administrator begins processing claims, if the Administrator determines that . . . the Fund will not have sufficientresources," then the Fund would sunset (� 405(f)). If the Fund sunsets, then claimants could again file or pursuelawsuits. "[T]he applicable statute of limitations" would be deemedtolled for the time during which a claim had been pursued against the Fund, and "the applicable statute of limitationswould apply, except that claimants who filed a claim against theFund" before sunset would have two years after sunset to file a claim (� 405(f)(6)). Claims would have to be filedin federal district court, and "Federal common law" would govern,"except that where national uniformity is not required the court must utilize otherwise applicable state law . . ." (�405(g)). Defendant participants. "Defendant participants shall be liable for payments to the Fund . . . based on tiers and subtiers assigned to[them]" (� 202(a)(1)). "Tier I shall include all debtors that . . . have prior asbestos expenditures greater than$1,000,000" (� 202(b)). A "debtor" would be defined as a company,including its subsidiaries, that has filed in bankruptcy within a year preceding enactment of the bill, but a "debtor"would not include a company whose bankruptcy had been finallyadjudicated (� 201(3)). Tiers II through VI would include "persons or affiliated groups . . . according to the priorasbestos expenditures" they paid, ranging from $75 million or greaterfor Tier II, down to $1 million to less than $5 million for Tier VI (� 202(d)). An "affiliated group" would be definedas "an ultimate parent and any person [defined in � 3(12) asindividual or business] whose entire beneficial interest is directly or indirectly owned by that ultimate parent (�201(1)), and an "ultimate parent" would be defined as a person "thatowned, as of December 31, 2002, the entire beneficial interest, directly or indirectly, of at least 1 other person; and. . . whose own entire beneficial interest was not owned on December31, 2002, directly or indirectly, by any other single person (other than a natural person)" (� 201(9)). The term "prior asbestos expenditures" -- the amount of which would determine the amount that a defendant participant would have to contribute to the Fund -- would be defined as"the gross total amount paid . . . before December 31, 2002, in settlement, judgment, defense, or indemnity costsrelated to all asbestos claims against" the defendant, and would includepayments made by insurance carriers, but would not include payments made "by persons who are or were commoncarriers by railroads for asbestos claims" brought under the FederalEmployers' Liability Act (� 201(7)). (7) "A person or affiliated group that is a small business concern (as defined under section 3 of the Small Business Act (15 U.S.C. 632)), on December 31, 2002, is exempt from anypayment requirement under this subtitle" (� 204(b)). "[A] defendant participant may seek adjustment of the amountof its payment obligation based on severe financial hardship ordemonstrated inequity" (� 204(d)(1)). Insurer participants. S. 2290 would establish the Asbestos Insurers Commission, which would be composed of fivemembers, appointed for the life of the Commission, by the President, with the advice and consent of the Senate (�211). "The Commission shall determine the amount that each insurerparticipant will be required to pay into the Fund" (� 212(a)(1)(B)). "Insurers that have paid, or been assessed by a legal judgment or settlement, at least $1,000,000 in defense and indemnity costs before the date of enactment of this act in response toclaims for compensation for asbestos injuries . . . shall be insurer participants in the Fund" (� 212(a)(3)(A)). "TheCommission shall establish payment obligations of individual insurerparticipants to reflect, on an equitable basis, the relative tort system liability of the participating insurers in theabsence of this act . . . ." (� 212(a)(3)(B)(i)). (8) Judicial review. Defendant participants and insurer participants would be able to seek judicial review, in the U.S. Court of Appealsfor the District of Columbia, of a final determination by the Administrator or the Asbestos Insurers Commission(� 303(a)). The U.S. District Court for the District of Columbia wouldhave exclusive jurisdiction over any action for declaratory or injunctive relief challenging any provision of the bill(� 304). Title V of S. 2290 would add a section to the Toxic Substances Control Act that would require the Administrator of the Environmental Protection Agency to issueregulations that "prohibit persons, [sic] from manufacturing, processing, or distributing in commerce asbestoscontaining products." The Administrator would be permitted to grant anexemption if he determines that it "would not result in an unreasonable risk of injury to public health or theenvironment," and the person seeking the exemption "has made good faithefforts to develop, but has been unable to develop, a substance, or identify a mineral that does not present anunreasonable risk of injury to public health or the environment and may besubstituted for an asbestos containing product." The Administrator would also be able to grant exemptions to the Secretary of Defense and the Administrator of the National Aeronautics and Space Administration if "necessary to thecritical functions" of the Defense Department or NASA, "no reasonable alternatives" exist, and "use of asbestoscontaining products will not result in an unreasonable risk to health orthe environment." Finally, Title V would exempt the following two items from the prohibition: "(A) Asbestos diaphragms for use in the manufacture of chlor-alkali and the products and derivative [sic]therefrom. (B) Roofing cements, coatings and mastics utilizing asbestos that is totally encapsulated with asphalt,subject to a determination by the Administrator of the EnvironmentalProtection Agency . . . ."

Summary: This report provides an overview of S. 2290, 108th Congress, theFairness in Asbestos Injury Resolution Act of 2004 (or FAIRAct of 2004), as introduced by Senator Hatch on April 7, 2004 and placed on the Senate legislative calendar. S.2290 was a revised version of S. 1125, 108thCongress, as reported by the Senate Committee on the Judiciary (S.Rept. 108-188). (1) A cloture vote failed on April 22, 2004, and S. 2290 was never votedon. S. 2290 would have created the Office of Asbestos Disease Compensation, within the Department of Labor,to award damages to asbestos claimants on a no-fault basis. Damages would have been paid by the Asbestos Injury Claims Resolution Fund, which would have been fundedby companies that have previously been sued for asbestos-relatedinjuries, and by insurers of such companies. Asbestos claims could no longer have been filed or pursued under statelaw, except for the enforcement of judgments no longer subject toany appeal or judicial review before the date of enactment of the bill. For background information on the history of asbestos litigation and on other proposals to address the situation,see CRS Report RL32286, Asbestos Litigation: Prospects for LegislativeResolution, by Edward Rappaport.