A congressional proposal to establish a national trust fund for asbestos victims may fall short of covering all the claims, the Congressional Budget Office has reported.The Fairness in Asbestos Injury Resolution Act of 2005 is designed to raise a maximum of $140 billion over the next 50 years. But the fund’s actual revenues could vary widely, going as low as $120 billion but no higher than $150 billion, the Congressional Budget Office stated in its Aug. 25 report.
The most likely figure, according to the report, would be $132 billion.
The bill’s chief sponsors, Senate Judiciary Chairman Arlen Specter, R-Pa., and ranking Democrat Pat Leahy, D-Vt., said the Congressional Budget Office’s analysis satisfied their concerns that the bill would compensate asbestos victims fairly and sufficiently.
“Even in the range of that uncertainty, our legislation with $140 billion is reasonable and realistically calculated to cover the claims…” they said in a joint statement.
The bill, S. 852, would require asbestos companies and their insurers to finance the fund, distributing awards to as many as 1.6 million claimants across the United States. But uncertainty arises from the timing of the payments.
The Congressional Budget Office predicts the majority of victims would file claims amounting to about $70 billion within the first 10 years. This would exceed collections over the same period by about $6.5 billion. The Department of Labor then would have to borrow the difference to the tune of about $8 billion, with interest.
The writers of the report were quick to state that their analysis was less than precise. Epidemiological studies and the experience of private asbestos trust funds helped them narrow the potential costs of the fund into a range, but couldn’t reliably predict the total or the rate of expected claims.
“Consequently, the fund may have sufficient resources to pay all asbestos claims over the next 50 years,” they wrote, “but depending on claim rates, borrowing and other factors, its resources may be insufficient to pay all such claims.”
The prospect of failing to compensate victims for their injuries has been a point of contention among attorneys and labor groups because, if passed, the legislation would take away victims’ rights to sue the asbestos companies that caused their injuries. Instead, asbestos victims would be required to submit claims of injury to an office within the Department of Labor, which would screen applicants according to several medical criteria outlined in the bill.
While calling the bill an improvement over past versions, AFL-CIO President John Sweeney blasted the current medical screening provisions, saying the criteria are too strict and the awards insufficient. Furthermore, the bill would bar workers with both asbestos- and silica-related disease from seeking court redress for their silica-related injuries.
“It is now clear,” Sweeney said, “that defendant companies and insurers have succeeded in blocking almost every change to the draft bill that would have removed unfair and unnecessary barriers to valid claims…”
Asbestos companies and their insurers have supported the establishment of the trust fund, saying wrongful-injury lawsuits have driven many manufacturers into bankruptcy. Essentially, the bill would save defendants hundreds of billions in damages and legal fees by moving current and future claims out of the state and federal courts. Under the current formulation, asbestos companies would pay roughly two thirds of the $140 billion total and insurers one third.
“While the CBO said it was not possible to be precise on claims payments, it provided a range and estimated the total value of valid claims through the life of the fund to be $132 billion,” said Mike Baroody, chair of the steering committee of the Asbestos Alliance and executive vice president of the National Association of Manufacturers. “The $140 billion provided for in the legislation well exceeds that amount.”
The payments to claimants would be based on their medical illnesses. The bill outlines nine levels of injury, specifying a dollar value for each category.
Those with lung cancers, for example, would receive an average award of between $600,000 and $1 million, depending on the claimant’s history of tobacco use. Those with non-malignant conditions would receive average awards of between $26,000 and $38,000.
Other provisions of the bill would require the Institute of Medicine of the National Academy of Sciences to commission a study to determine a causal link between asbestos exposure and cancers other than lung cancer or mesothelioma. If no link were found, the number of claims for such conditions could decline significantly, the report stated.
The bill also would ban certain asbestos products, phasing out their manufacture within three years.
Finally, the legislation would require the Agency for Toxic Substances and Disease Registry to assess whether conditions at other contaminated sites across the country pose hazards similar to those faced in Libby, Montana. If such conditions were found, claimants in those areas would receive awards commensurate with the higher amounts given to those in Libby.
An Anniston Star series in March highlighted the dangers faced by Ragland residents who worked at an asbestos-cement pipe plant. The employees of Cement Asbestos Products Company, or Capco, later grew sick with asbestos-related diseases, and many of them died.
The Senate is expected to take up the bill for passage this fall.
