Asbestos Trusts Assess and Pay Claims in Accordance with Trust Distribution Procedures
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Trusts typically offer claimants two options for claim review, either expedited review or individual review.
Trust payment data
Analysis of available trust payment data show that trusts have paid about 3.3 million claims valued at about $17.5 billion and that each trust has trust distribution procedures (TDP) that govern its administration and establish the process for assessing and paying claims. Typically, TDPs include sections related to the intake and evaluation of claims, payment processes, and audit programs. Claims that meet the TDP’s criteria for a particular disease are paid in the amount specified in the TDP.
2
Asbestos litigation arose out of millions of Americans’ lengthy occupational exposure
Asbestos litigation arose out of millions of Americans’ lengthy occupational exposure to asbestos which is linked to malignant and nonmalignant diseases. To date, about 100 companies have declared bankruptcy at least partially due to asbestos-related liability. In accordance with Chapter 11 and § 524(g) of the federal bankruptcy code, a company may transfer its liabilities and certain assets to an asbestos personal injury trust, which is then responsible for compensating present and future claimants. Since 1988, 60 trusts have been established to pay claims with about $37 billion in total assets
3
Millions of Americans’ lengthy and widespread occupational exposure to asbestos
Asbestos litigation has been the longest-running mass tort litigation in U.S. history and arose out of millions of Americans’ lengthy and widespread occupational exposure to asbestos, which has been linked to malignant and nonmalignant diseases.1 Asbestos is a term used to describe naturally occurring silicate minerals that had wide industrial, commercial, and household usage in the United States during the 20th century because of its flame-retardant and insulating properties. Even with U.S. asbestos consumption peaking in 1973 and dropping over the next 3 decades, estimates of the number of individuals exposed to asbestos in the U.S. range from approximately 27 million to 100 million.
4
History of asbestos-related diseases
As a result of an incomplete history of asbestos-related diseases and because of the long latency period of these diseases, it is difficult to estimate the future trends of these diseases. Although estimating the number of past and future mesothelioma incidence is difficult, experts believe that the mesothelioma epidemic is receding with the peak number of incidence per year reaching approximately 2,500 in the United States in the early 2000s.
5
Asbestos-related bankruptcies increasing
In the last decade, with the number of asbestos-related bankruptcies increasing, the number of asbestos personal injury trusts increased from 16 trusts with a combined total of $4.2 billion in assets in 2000 to 60 with a combined total of over $36.8 billion in assets in 2011. In addition to companies that have reorganized through the bankruptcy process, there are other solvent companies that remain vulnerable to asbestos-related lawsuits as defendants in the tort system. These companies, as well as their insurance carriers whose policies are often responsible for paying amounts awarded by settlement or verdict to asbestos victims, are interested in amounts paid to individuals by trusts because these amounts may be used to offset the amounts owed to prevailing plaintiffs by solvent companies.
6
History of Asbestos Use and Litigation
Asbestos is a naturally occurring silicate mineral that was widely used in the United States in the 20th century for industrial, commercial, and residential purposes primarily for its flame-retardant and insulating properties. Examples of products containing asbestos included roofing shingles, ceiling and floor tiles, paper and cement products, and friction products such as automobile clutch, brake and transmission parts. Figure 1 below provides an illustrative example of asbestos and some of the products in which asbestos was used.
7
Products that have contained asbestos.
Attic and wall insulation. • Steam pipes, boilers, and furnace ducts insulated with an asbestos blanket or asbestos paper tape. • Vinyl floor tiles and the backing on vinyl sheet flooring and adhesives. • Asbestos paper, millboard, or cement sheets used to protect walls and floors around woodburning stoves. • Door gaskets in furnaces, wood stoves, and coal stoves. • Soundproofing or decorative material sprayed on walls and ceilings. • Patching and joint compounds for walls and ceilings, and textured paints. • Asbestos cement roofing, shingles, and siding. • Artificial ashes and embers sold for use in gas-fired fireplaces. • Fireproof gloves, stove-top pads, ironing board covers, and certain hairdryers. • Automobile brake pads and linings, clutch facings, and gaskets.
8
Establishment of Personal Injury Trusts
Asbestos personal injury trusts, established in accordance with the federal bankruptcy code, implement compensation plans that, in general, recognize and protect the interests of present and future claimants, prioritize more seriously ill claimants, and establish processes for resolving disputes between the claimants and the trusts. A 1994 amendment to § 524 of the federal bankruptcy code in effect codified an approach for addressing a debtor company’s asbestos-related liabilities while eliminating the possibility of that company being found liable for future asbestos-related personal injury claims.an asbestos personal injury trust that, by way of a channeling injunction, assumes the asbestos- related liabilities of the debtor company that will compensate present and future asbestos claimants. Filing for bankruptcy halts all civil lawsuits
9
To resolve their asbestos liabilities
To resolve their asbestos liabilities while at the same time continuing with general business operations, companies may seek to reorganize their debts by filing for bankruptcy under Chapter 11 and in accordance with § 524(g) of the federal bankruptcy code. In accordance with these provisions, a debtor company, creditors (that is, parties with claims against the debtor, including asbestos claimants), and as appropriate, other interested parties, such as insurance companies that may have issued liability insurance policies to the debtor company, will develop and propose a plan of reorganization. The plan will provide for the establishment of an asbestos personal injury trust to assume the asbestos-related liabilities of the debtor company and compensate present and future claimants for harm caused by exposure to asbestos.
10
The TA
The TA is the instrument that creates a trust and that describes the trust’s purpose, acknowledges the transfer and acceptance of assets from the debtor company in exchange for assuming the debtor’s liability, and describes key actors in the trust’s administration. The TDP contains the processes that govern the review, valuing, and payment of asbestos- related personal injury claims.18 Among other things, the TDP coordinates claim processing, assigns payment values for various asbestos-related diseases, sets medical criteria for the different diseases, prescribes procedures for reviewing the claims, and establishes a dispute resolution process. These provisions function to ensure that all claimants, both current and future, receive equitable compensation for their asbestos- related injuries.
11
The asbestos trusts are privately managed
The asbestos trusts are privately managed and are generally comprised of at least one or more trustees, a trust advisory committee (TAC), and a future claimants’ representative (FCR). Trustees manage the daily operations of the trusts, including managing the trusts’ investments, hiring and supervising support staff and advisers, filing taxes, and submitting annual reports to the bankruptcy court, as required by the trusts’ TA. The trustees are to manage the trust for the sole benefit of the present and future claimant beneficiaries, who are represented by the TAC and the FCR, respectively. The TAC, a group established by the TA, and the FCR, a position statutorily required by § 524(g), both advise the trustees on and must generally consent to significant changes in trust administration and the implementation of the TDP
12
Asbestos Trusts Have Paid at Least $17 Billion in Claims
Although 60 companies subject to asbestos-related liabilities have filed for bankruptcy under Chapter 11 and established asbestos bankruptcy trusts in accordance with § 524(g), asbestos claimants can also seek compensation from potentially liable solvent companies (that is, a company that has not declared bankruptcy) through the tort system. Insuch instances, trust compensation as well as a claimant’s occupational exposure and medical evidence submitted to trusts may be taken into consideration. RAND’s Institute for Civil Justice released a report in August 2011 addressing the potential effects of asbestos bankruptcy trusts on compensation in the tort system
13
Asbestos Bankruptcy Trust Payments
Since the establishment of the first trust in 1988 through 2010, available data indicate that asbestos trusts have paid about 3.3 million claims valued at about $17.5 billion. Trusts typically report the number of claims paid and the value of these claims in annual reports submitted to the bankruptcy court, which are generally available to the public. In 2010, the RAND Corporation reported that from 1988 through 2008, trusts paid about 2.4 million claims totaling $10.9 billion with about 575,000 claims totaling $3.3 billion in 2008.21 We reviewed available 2009 and 2010 annual financial reports and found that these trusts paid approximately 443,000 additional claims totaling $3.6 billion in 2009 and approximately461,000 more claims totaling $3 billion in 2010.
14
The number and value of claims paid
The number and value of claims paid presented above provides a conservative estimate of total trust payments since 1988. RAND Corporation reported that its data provide the lower bounds because data on the number and value of claims paid are incomplete for some trusts’ payments prior to 2006. Although we were able to collect 47 (84 percent) of the 56 trusts’ annual reports for 2009 and 47 (81 percent) of the 58 trusts’ annual reports for 2010, some trusts’ annual reports may not be publicly or readily available. Four of the trusts did not have 2009 annual reports because the trusts were newly established or were established in 2010 or 2011. Two of these trusts also did not have 2010 annual reports available because the trusts were newly established or were established in 2011. In addition, annual reports may have been filed under seal with the Bankruptcy Court for reasons deemed appropriate by the court, according to U.S. Bankruptcy Court judges we interviewed.
15
Asbestos Bankruptcy Trust Payments
Since the establishment of the first trust in 1988 through 2010, available data indicate that asbestos trusts have paid about 3.3 million claims valued at about $17.5 billion. Trusts typically report the number of claims paid and the value of these claims in annual reports submitted to the bankruptcy court, which are generally available to the public. In 2010, the RAND Corporation reported that from 1988 through 2008, trusts paid about 2.4 million claims totaling $10.9 billion with about 575,000 claims totaling $3.3 billion in 2008.21 We reviewed available 2009 and 2010 annual financial reports and found that these trusts paid approximately 443,000 additional claims totaling $3.6 billion in 2009 and approximately461,000 more claims totaling $3 billion in 2010. The number and value of claims paid presented above provides a conservative estimate of total trust payments since 1988
16
evidence
The claimant, or attorney acting on the claimant’s behalf, also submits medical reports or records sufficient to support a diagnosis for the specific disease being claimed or, if applicable, a copy of a death certificate.23 As an alternative to expedited review, individual review provides a claimant the opportunity to receive individual consideration of his or her medical condition and of the claim’s value. Compensated only through individual review (i.e., lung cancer without underlying asbestosis). In the individual review process, the trust may be able to take into account factors relevant to the individual claimant (dependants, pain and suffering, for example) and factors relevant to the litigation posture of the claim were it to have been pursued in the tort system (such as the jurisdiction and the track record of the law firm representing the claimant). Payment for an individual review claim can be higher or lower than a claim in the expedited pro
17
Evidence
Trusts typically offer claimants two options for claim review, either expedited review or individual review. Under expedited review, claims that meet the medical and exposure criteria for the alleged disease (referred to as the disease level) are to be assigned a scheduled value for the disease. The trusts seek to achieve relative equity among claimants by establishing these scheduled values. A claim that meets the criteria ended in the TDP typically includes a completed claim form with documented evidence of exposure to asbestos products. Such evidence of exposure may consist of the claimant’s work history, Social Security records, invoices, employer records, or deposition testimony of the claimant or coworkers taken in asbestos litigation.
18
A claimant can demonstrate exposure to an asbestos-related product in a variety of ways.
For occupational exposure evidence, the claimant may provide a trust with Social Security records in support of the claim to document where the claimant was employed at the time of exposure. The record may indicate that the claimant was employed by a specific company that was known to have used asbestos products; however, there may not be a direct link between the claimant’s exposure to the product at the company. Under these circumstances, trusts may solicit work histories from the claimant’s company in support of the claim. However, it is possible that accurate work records may not exist due to, for example, the passing of a substantial amount of time between exposure and the date a claim is filed, and the trust, therefore, may have to rely on depositions from other parties or even professional judgment that considers all available information.
19
Evaluation of claims.
The process for evaluating claims varies across trusts. Seven of the eight large trusts we interviewed told us they rely on claims processing companies to assess claims against the criteria outlined in the trusts’ TDPs. Officials we interviewed at 9 of the 11 trusts said they have internal claims reviewers to determine whether the claimant’s medical and exposure evidence satisfies the requirementsoutlined in the TDP. If a trust has any concerns about a claim, the trust may request the claimant provide additional documentation, such as other independent medical records. Officials we interviewed at 5 of the11 trusts told us they also track public information and court filings to determine if questions are raised in the tort system about the authenticity of information and claims filed by a particular lawyer or claimant. In cases where questions are raised about the validity of claims from particular individuals, trusts officials stated that they will further inspect such claims.
20
Payment process.
If a trust determines that a claim meets the criteria documented in the TDP, the trust is to make the claimant an offer based on a percentage of the scheduled disease value specified in the TDP.Periodically, trustees will calculate what the trust can afford to pay based on the assets it has on hand, and what those assets are expected to earn in the future. For example, a trust with a scheduled disease value of $100,000 for a specific disease type, such as mesothelioma or asbestosis, that applies a payment percentage of 44 percent would pay a claimant $44,000. In arriving at a payment percentage, the trustees, the TAC, and FCR review the trust’s claim statistics and compare those to the original forecasts made of the volume and value of claims at the time the trust was created. The trustees review the payment schedule periodically and may adjust it, up or down, based on what assets are available to meet a trust’s present and future
21
Quality Assurance and Audit programs
Another trust we contacted reported conducting an external audit with claims selected randomly to identify claims that required further review for potential fraudulent activities. The objective of the audit was to ensure that appropriate amounts of money were paid to the proper claimants and medical documentation was valid. As part of the audit, a sample of x-rays was sent to an independent doctor who evaluated the x-rays to determine whether the disease existed based on the evidence submitted to the trust. According to the trust, any irregularities identified by the audit were addressed and all of the randomly selected claims were supported by sufficient medical and exposure evidence and found to be processed and paid in accordance with trust procedures.
22
Each claim meets the criteria
Each trust is committed to ensuring that no fraudulent claims are paid by the trust, which aligns with their goals of preserving assets for future claimants. Although the possibility exists that a claimant could file the same medical evidence and altered work histories with different trusts, each trust’s focus is to ensure that each claim meets the criteria defined in its TDP, meaning the claimant has met the requisite medical and exposure histories to the satisfaction of the trustees. Of the trust officials that we interviewed that conducted audits, none indicated that these audits had identified cases of fraud.
23
A prevailing plaintiff
Following a verdict, a prevailing plaintiff would generally not be precluded from subsequently filing claims for compensation to those trusts to which the harm is attributable. In addition, a solvent company found liable for damages in the court system could file an indirect claim with a trust seeking compensation for that trust’s (or, the debtor company’s) contribution to the underlying harm suffered by the plaintiff.The court, however, may adjust any amounts awarded by way of a verdict to account for compensation that the claimant has already received from trusts or through settlements with other parties. Efforts to offset amounts awarded by verdict with an amount received from trusts constitute a method for managing contributions from multiple defendants and accounting for other sources of compensation related to the harm deemed to have been inflicted.
24
Asbestos trusts typically protect the confidentiality of claimants’
Asbestos trusts typically protect the confidentiality of claimants’ submissions to the trust in accordance with the trust’s TDP, unless specifically given permission by the claimant or subpoenaed by a court of jurisdiction. Thirty-three (65 percent) of the 52 TDPs we reviewed included sections related to protecting the confidentiality of claimants’ information and these sections often state that the trusts will only disclose information to outside parties with permission of the claimant or in response to a valid subpoena
25
Plaintiff and defense attorneys, trustees
Stakeholders, including plaintiff and defense attorneys, trustees, and other interested parties expressed differing views on the extent to which additional individual claimant information should be made available to outside parties. Those who oppose additional disclosure of individual claimant information note that parties in the tort system are not required to disclose settlement negotiation or agreement information outside of the subpoena process. For example, during the expert panel discussions at a conference on asbestos bankruptcy proceedings and trust operations, three plaintiff attorneys stated that all potentially relevant information about an individual’s exposure to asbestos, work history, or other evidence submitted to the trusts may be available through the pretrial discovery process, during which time a subpoena may have been used to obtain the information.
AUTHOR: Howard Roitman
Copyright Howard Roitman & Associates - Google+
More information about Howard Roitman & Associates
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Analysis of available trust payment data show that trusts have paid about 3.3 million claims valued at about $17.5 billion and that each trust has trust distribution procedures (TDP) that govern its administration and establish the process for assessing and paying claims. Typically, TDPs include sections related to the intake and evaluation of claims, payment processes, and audit programs. Claims that meet the TDP’s criteria for a particular disease are paid in the amount specified in the TDP.
2
Asbestos litigation arose out of millions of Americans’ lengthy occupational exposure
Asbestos litigation arose out of millions of Americans’ lengthy occupational exposure to asbestos which is linked to malignant and nonmalignant diseases. To date, about 100 companies have declared bankruptcy at least partially due to asbestos-related liability. In accordance with Chapter 11 and § 524(g) of the federal bankruptcy code, a company may transfer its liabilities and certain assets to an asbestos personal injury trust, which is then responsible for compensating present and future claimants. Since 1988, 60 trusts have been established to pay claims with about $37 billion in total assets
3
Millions of Americans’ lengthy and widespread occupational exposure to asbestos
Asbestos litigation has been the longest-running mass tort litigation in U.S. history and arose out of millions of Americans’ lengthy and widespread occupational exposure to asbestos, which has been linked to malignant and nonmalignant diseases.1 Asbestos is a term used to describe naturally occurring silicate minerals that had wide industrial, commercial, and household usage in the United States during the 20th century because of its flame-retardant and insulating properties. Even with U.S. asbestos consumption peaking in 1973 and dropping over the next 3 decades, estimates of the number of individuals exposed to asbestos in the U.S. range from approximately 27 million to 100 million.
4
History of asbestos-related diseases
As a result of an incomplete history of asbestos-related diseases and because of the long latency period of these diseases, it is difficult to estimate the future trends of these diseases. Although estimating the number of past and future mesothelioma incidence is difficult, experts believe that the mesothelioma epidemic is receding with the peak number of incidence per year reaching approximately 2,500 in the United States in the early 2000s.
5
Asbestos-related bankruptcies increasing
In the last decade, with the number of asbestos-related bankruptcies increasing, the number of asbestos personal injury trusts increased from 16 trusts with a combined total of $4.2 billion in assets in 2000 to 60 with a combined total of over $36.8 billion in assets in 2011. In addition to companies that have reorganized through the bankruptcy process, there are other solvent companies that remain vulnerable to asbestos-related lawsuits as defendants in the tort system. These companies, as well as their insurance carriers whose policies are often responsible for paying amounts awarded by settlement or verdict to asbestos victims, are interested in amounts paid to individuals by trusts because these amounts may be used to offset the amounts owed to prevailing plaintiffs by solvent companies.
6
History of Asbestos Use and Litigation
Asbestos is a naturally occurring silicate mineral that was widely used in the United States in the 20th century for industrial, commercial, and residential purposes primarily for its flame-retardant and insulating properties. Examples of products containing asbestos included roofing shingles, ceiling and floor tiles, paper and cement products, and friction products such as automobile clutch, brake and transmission parts. Figure 1 below provides an illustrative example of asbestos and some of the products in which asbestos was used.
7
Products that have contained asbestos.
Attic and wall insulation. • Steam pipes, boilers, and furnace ducts insulated with an asbestos blanket or asbestos paper tape. • Vinyl floor tiles and the backing on vinyl sheet flooring and adhesives. • Asbestos paper, millboard, or cement sheets used to protect walls and floors around woodburning stoves. • Door gaskets in furnaces, wood stoves, and coal stoves. • Soundproofing or decorative material sprayed on walls and ceilings. • Patching and joint compounds for walls and ceilings, and textured paints. • Asbestos cement roofing, shingles, and siding. • Artificial ashes and embers sold for use in gas-fired fireplaces. • Fireproof gloves, stove-top pads, ironing board covers, and certain hairdryers. • Automobile brake pads and linings, clutch facings, and gaskets.
8
Establishment of Personal Injury Trusts
Asbestos personal injury trusts, established in accordance with the federal bankruptcy code, implement compensation plans that, in general, recognize and protect the interests of present and future claimants, prioritize more seriously ill claimants, and establish processes for resolving disputes between the claimants and the trusts. A 1994 amendment to § 524 of the federal bankruptcy code in effect codified an approach for addressing a debtor company’s asbestos-related liabilities while eliminating the possibility of that company being found liable for future asbestos-related personal injury claims.an asbestos personal injury trust that, by way of a channeling injunction, assumes the asbestos- related liabilities of the debtor company that will compensate present and future asbestos claimants. Filing for bankruptcy halts all civil lawsuits
9
To resolve their asbestos liabilities
To resolve their asbestos liabilities while at the same time continuing with general business operations, companies may seek to reorganize their debts by filing for bankruptcy under Chapter 11 and in accordance with § 524(g) of the federal bankruptcy code. In accordance with these provisions, a debtor company, creditors (that is, parties with claims against the debtor, including asbestos claimants), and as appropriate, other interested parties, such as insurance companies that may have issued liability insurance policies to the debtor company, will develop and propose a plan of reorganization. The plan will provide for the establishment of an asbestos personal injury trust to assume the asbestos-related liabilities of the debtor company and compensate present and future claimants for harm caused by exposure to asbestos.
10
The TA
The TA is the instrument that creates a trust and that describes the trust’s purpose, acknowledges the transfer and acceptance of assets from the debtor company in exchange for assuming the debtor’s liability, and describes key actors in the trust’s administration. The TDP contains the processes that govern the review, valuing, and payment of asbestos- related personal injury claims.18 Among other things, the TDP coordinates claim processing, assigns payment values for various asbestos-related diseases, sets medical criteria for the different diseases, prescribes procedures for reviewing the claims, and establishes a dispute resolution process. These provisions function to ensure that all claimants, both current and future, receive equitable compensation for their asbestos- related injuries.
11
The asbestos trusts are privately managed
The asbestos trusts are privately managed and are generally comprised of at least one or more trustees, a trust advisory committee (TAC), and a future claimants’ representative (FCR). Trustees manage the daily operations of the trusts, including managing the trusts’ investments, hiring and supervising support staff and advisers, filing taxes, and submitting annual reports to the bankruptcy court, as required by the trusts’ TA. The trustees are to manage the trust for the sole benefit of the present and future claimant beneficiaries, who are represented by the TAC and the FCR, respectively. The TAC, a group established by the TA, and the FCR, a position statutorily required by § 524(g), both advise the trustees on and must generally consent to significant changes in trust administration and the implementation of the TDP
12
Asbestos Trusts Have Paid at Least $17 Billion in Claims
Although 60 companies subject to asbestos-related liabilities have filed for bankruptcy under Chapter 11 and established asbestos bankruptcy trusts in accordance with § 524(g), asbestos claimants can also seek compensation from potentially liable solvent companies (that is, a company that has not declared bankruptcy) through the tort system. Insuch instances, trust compensation as well as a claimant’s occupational exposure and medical evidence submitted to trusts may be taken into consideration. RAND’s Institute for Civil Justice released a report in August 2011 addressing the potential effects of asbestos bankruptcy trusts on compensation in the tort system
13
Asbestos Bankruptcy Trust Payments
Since the establishment of the first trust in 1988 through 2010, available data indicate that asbestos trusts have paid about 3.3 million claims valued at about $17.5 billion. Trusts typically report the number of claims paid and the value of these claims in annual reports submitted to the bankruptcy court, which are generally available to the public. In 2010, the RAND Corporation reported that from 1988 through 2008, trusts paid about 2.4 million claims totaling $10.9 billion with about 575,000 claims totaling $3.3 billion in 2008.21 We reviewed available 2009 and 2010 annual financial reports and found that these trusts paid approximately 443,000 additional claims totaling $3.6 billion in 2009 and approximately461,000 more claims totaling $3 billion in 2010.
14
The number and value of claims paid
The number and value of claims paid presented above provides a conservative estimate of total trust payments since 1988. RAND Corporation reported that its data provide the lower bounds because data on the number and value of claims paid are incomplete for some trusts’ payments prior to 2006. Although we were able to collect 47 (84 percent) of the 56 trusts’ annual reports for 2009 and 47 (81 percent) of the 58 trusts’ annual reports for 2010, some trusts’ annual reports may not be publicly or readily available. Four of the trusts did not have 2009 annual reports because the trusts were newly established or were established in 2010 or 2011. Two of these trusts also did not have 2010 annual reports available because the trusts were newly established or were established in 2011. In addition, annual reports may have been filed under seal with the Bankruptcy Court for reasons deemed appropriate by the court, according to U.S. Bankruptcy Court judges we interviewed.
15
Asbestos Bankruptcy Trust Payments
Since the establishment of the first trust in 1988 through 2010, available data indicate that asbestos trusts have paid about 3.3 million claims valued at about $17.5 billion. Trusts typically report the number of claims paid and the value of these claims in annual reports submitted to the bankruptcy court, which are generally available to the public. In 2010, the RAND Corporation reported that from 1988 through 2008, trusts paid about 2.4 million claims totaling $10.9 billion with about 575,000 claims totaling $3.3 billion in 2008.21 We reviewed available 2009 and 2010 annual financial reports and found that these trusts paid approximately 443,000 additional claims totaling $3.6 billion in 2009 and approximately461,000 more claims totaling $3 billion in 2010. The number and value of claims paid presented above provides a conservative estimate of total trust payments since 1988
16
evidence
The claimant, or attorney acting on the claimant’s behalf, also submits medical reports or records sufficient to support a diagnosis for the specific disease being claimed or, if applicable, a copy of a death certificate.23 As an alternative to expedited review, individual review provides a claimant the opportunity to receive individual consideration of his or her medical condition and of the claim’s value. Compensated only through individual review (i.e., lung cancer without underlying asbestosis). In the individual review process, the trust may be able to take into account factors relevant to the individual claimant (dependants, pain and suffering, for example) and factors relevant to the litigation posture of the claim were it to have been pursued in the tort system (such as the jurisdiction and the track record of the law firm representing the claimant). Payment for an individual review claim can be higher or lower than a claim in the expedited pro
17
Evidence
Trusts typically offer claimants two options for claim review, either expedited review or individual review. Under expedited review, claims that meet the medical and exposure criteria for the alleged disease (referred to as the disease level) are to be assigned a scheduled value for the disease. The trusts seek to achieve relative equity among claimants by establishing these scheduled values. A claim that meets the criteria ended in the TDP typically includes a completed claim form with documented evidence of exposure to asbestos products. Such evidence of exposure may consist of the claimant’s work history, Social Security records, invoices, employer records, or deposition testimony of the claimant or coworkers taken in asbestos litigation.
18
A claimant can demonstrate exposure to an asbestos-related product in a variety of ways.
For occupational exposure evidence, the claimant may provide a trust with Social Security records in support of the claim to document where the claimant was employed at the time of exposure. The record may indicate that the claimant was employed by a specific company that was known to have used asbestos products; however, there may not be a direct link between the claimant’s exposure to the product at the company. Under these circumstances, trusts may solicit work histories from the claimant’s company in support of the claim. However, it is possible that accurate work records may not exist due to, for example, the passing of a substantial amount of time between exposure and the date a claim is filed, and the trust, therefore, may have to rely on depositions from other parties or even professional judgment that considers all available information.
19
Evaluation of claims.
The process for evaluating claims varies across trusts. Seven of the eight large trusts we interviewed told us they rely on claims processing companies to assess claims against the criteria outlined in the trusts’ TDPs. Officials we interviewed at 9 of the 11 trusts said they have internal claims reviewers to determine whether the claimant’s medical and exposure evidence satisfies the requirementsoutlined in the TDP. If a trust has any concerns about a claim, the trust may request the claimant provide additional documentation, such as other independent medical records. Officials we interviewed at 5 of the11 trusts told us they also track public information and court filings to determine if questions are raised in the tort system about the authenticity of information and claims filed by a particular lawyer or claimant. In cases where questions are raised about the validity of claims from particular individuals, trusts officials stated that they will further inspect such claims.
20
Payment process.
If a trust determines that a claim meets the criteria documented in the TDP, the trust is to make the claimant an offer based on a percentage of the scheduled disease value specified in the TDP.Periodically, trustees will calculate what the trust can afford to pay based on the assets it has on hand, and what those assets are expected to earn in the future. For example, a trust with a scheduled disease value of $100,000 for a specific disease type, such as mesothelioma or asbestosis, that applies a payment percentage of 44 percent would pay a claimant $44,000. In arriving at a payment percentage, the trustees, the TAC, and FCR review the trust’s claim statistics and compare those to the original forecasts made of the volume and value of claims at the time the trust was created. The trustees review the payment schedule periodically and may adjust it, up or down, based on what assets are available to meet a trust’s present and future
21
Quality Assurance and Audit programs
Another trust we contacted reported conducting an external audit with claims selected randomly to identify claims that required further review for potential fraudulent activities. The objective of the audit was to ensure that appropriate amounts of money were paid to the proper claimants and medical documentation was valid. As part of the audit, a sample of x-rays was sent to an independent doctor who evaluated the x-rays to determine whether the disease existed based on the evidence submitted to the trust. According to the trust, any irregularities identified by the audit were addressed and all of the randomly selected claims were supported by sufficient medical and exposure evidence and found to be processed and paid in accordance with trust procedures.
22
Each claim meets the criteria
Each trust is committed to ensuring that no fraudulent claims are paid by the trust, which aligns with their goals of preserving assets for future claimants. Although the possibility exists that a claimant could file the same medical evidence and altered work histories with different trusts, each trust’s focus is to ensure that each claim meets the criteria defined in its TDP, meaning the claimant has met the requisite medical and exposure histories to the satisfaction of the trustees. Of the trust officials that we interviewed that conducted audits, none indicated that these audits had identified cases of fraud.
23
A prevailing plaintiff
Following a verdict, a prevailing plaintiff would generally not be precluded from subsequently filing claims for compensation to those trusts to which the harm is attributable. In addition, a solvent company found liable for damages in the court system could file an indirect claim with a trust seeking compensation for that trust’s (or, the debtor company’s) contribution to the underlying harm suffered by the plaintiff.The court, however, may adjust any amounts awarded by way of a verdict to account for compensation that the claimant has already received from trusts or through settlements with other parties. Efforts to offset amounts awarded by verdict with an amount received from trusts constitute a method for managing contributions from multiple defendants and accounting for other sources of compensation related to the harm deemed to have been inflicted.
24
Asbestos trusts typically protect the confidentiality of claimants’
Asbestos trusts typically protect the confidentiality of claimants’ submissions to the trust in accordance with the trust’s TDP, unless specifically given permission by the claimant or subpoenaed by a court of jurisdiction. Thirty-three (65 percent) of the 52 TDPs we reviewed included sections related to protecting the confidentiality of claimants’ information and these sections often state that the trusts will only disclose information to outside parties with permission of the claimant or in response to a valid subpoena
25
Plaintiff and defense attorneys, trustees
Stakeholders, including plaintiff and defense attorneys, trustees, and other interested parties expressed differing views on the extent to which additional individual claimant information should be made available to outside parties. Those who oppose additional disclosure of individual claimant information note that parties in the tort system are not required to disclose settlement negotiation or agreement information outside of the subpoena process. For example, during the expert panel discussions at a conference on asbestos bankruptcy proceedings and trust operations, three plaintiff attorneys stated that all potentially relevant information about an individual’s exposure to asbestos, work history, or other evidence submitted to the trusts may be available through the pretrial discovery process, during which time a subpoena may have been used to obtain the information.
AUTHOR: Howard Roitman
Copyright Howard Roitman & Associates - Google+
More information about Howard Roitman & Associates
View all articles published by Howard Roitman & Associates
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
