Since New Jersey is a state where a lot of asbestos-related work was done, the citizens and businesses of our state have a keen interest in ensuring that the system that has been set up to compensate asbestos victims is not undermined by fraud and abuse. To that end, the New Jersey Civil Justice Institute is supporting Congressional efforts to rein in fraud in the existing system via H.R. 526, the Furthering Asbestos Claim Transparency (FACT) Act of 2015.
Significant litigation over asbestos-related ailments began in the 1970s when companies that mined asbestos or manufactured asbestos-based insulation products were taken to task for years of concealing and denying the harmful effects of asbestos. This first wave of asbestos litigation bankrupted most of the industry. In order to provide compensation for future claimants, each defendant was required to set up a bankruptcy trust from which victims of their products can seek compensation. Today, these trusts control assets worth an estimated $36 billion.
Several recent cases, including the ongoing litigation In re Garlock Sealing Technologies, LLC have revealed how some asbestos plaintiffs and their attorneys are gaming the asbestos trust system in order to maximize their recovery. Victims seek out still viable companies who had produced products containing minimal amounts of asbestos, like gaskets, and file suit against them. After that lawsuit settles or is tried to verdict, the plaintiff then files claims with various bankruptcy trusts, and in so doing, claims exposures to asbestos that they had not disclosed during their suit against the still-viable company.
This is a problem for two reasons. First, if the trusts are depleted by people who have already been compensated, future legitimate claimants will be out of luck when they fall sick. This is a serious concern since asbestos-related illnesses are rather unpredictable, often developing many years after exposure. Second, companies should not be forced to pay for injures they likely didn’t cause just because they have deep pockets. Double compensation and awards that do not match the injury are detrimental to the rule of law and compromise the entire legal system.
If the FACT Act is passed, plaintiffs will be required to disclose all exposures and seek compensation from the trusts before filing a lawsuit against solvent companies. As a result, the trusts would not be forced to compensate plaintiffs who have already been made whole and are draining the corpus of trusts by double-dipping, and defendants who caused no injury would be in a better position to introduce mitigating evidence at trial so they are not on the hook for harms caused by others.
For these reasons, NJCJI urged our Representatives to support H.R. 526. NJCJI is also working toward getting similar legislation introduced in New Jersey.