The House of Representatives subcommittee on Regulatory Reform, Commercial and Antitrust Law is currently considering the “Furthering Asbestos Claims Transparency (FACT) Act.” The bipartisan legislation, introduced by Representatives Blake Farenthold (R-TX) and Jim Matheson (D-UT), aims to bring transparency to federal asbestos bankruptcy trusts. Bill H.R. 982 would require federal asbestos bankruptcy trusts to file quarterly reports concerning claims and other activities with bankruptcy courts. Supporters of the bill state that rooting out fraud and abuse of the asbestos bankruptcy trust system protects the “real victims who desperately need help.”
The “Fact Act” would amend the federal bankruptcy law to require federal asbestos bankruptcy trusts to publicly disclose quarterly reports that contain detailed information regarding the receipt of claims for asbestos-related injuries. The reports would include information regarding the name and exposure history of the claimant, and the basis for any payment made from the trust to the claimant. The Fact Act would, however, protect disclosure of any confidential medical records and the claimant’s full social security number.
Passage of the Fact Act will better allow defendants to properly assess a plaintiff’s complete exposure history. Peggy L. Ableman, a retired asbestos trial judge, testified that defendants are “often led to believe – erroneously – that their products were far more responsible for the plaintiff’s disease than what may have been the case, because they have no way of knowing the substance of an individual plaintiff’s claims.” Id (link above). Having the knowledge of a plaintiff’s complete exposure history will allow defendants to more effectively defend themselves against misleading or erroneous evidence of the potential cause of a plaintiff’s disease.
As asbestos liabilities force more companies to file for bankruptcy, lawmakers are focused on preserving funds for “legitimate victims.” The concern is that secrecy and abuse by claimant’s lawyers undermine the original purpose of the trusts.
“The trust fund system originated to resolve present and future asbestos injury claims for victims deserving of compensation…Unfortunately, the system is susceptible to abuse and payment of fraudulent claims to the detriment of legitimate claimants. This legislation’s transparency measures will protect claimants’ confidentiality while ensuring the continued viability of the asbestos trust fund system.”
The concern over fraudulent asbestos trust activity was recently highlighted in a Wall Street Journal article, which reported discrepancies between claims made to the trusts and claims in state lawsuits. Concerns about fraud with regard to asbestos bankruptcy trusts is not new. In fact, a similar bill introduced in 2012, never made it out of the Subcommittee on Courts, Commercial and Administrative Law for consideration. We will continue to keep our readers posted on the Fact Act of 2013 to see if this version of the bill can gain any traction among lawmakers.