Home - Senate Panel OKs asbestos reforms

An ambitious asbestos liability reform bill approved last week by the Senate Judiciary Committee faces an uncertain future when it goes to the full Senate.

Amendments made to the Fairness in Asbestos Injury Resolution Act-S. 1125-during the July 10 marathon markup also led the American Insurance Assn. to publicly oppose the measure because of additional financial burdens it would place on insurers.

The measure, which was drafted by Judiciary Committee Chairman Orrin Hatch, R-Utah, would replace the current litigation-based system for compensating victims of asbestos-related diseases with a national no-fault trust fund. Claimants would have to meet specific medical criteria before they could receive payments from the $108 billion fund. Payments would be based on 10 levels of illness, with victims of mesothelioma-an asbestos-linked cancer-eligible for a maximum award of $1 million and other asbestos-related maladies eligible for lesser awards.

Sen. Hatch's original bill called for a maximum award of $750,000 for victims of mesothelioma, but a compromise reached with Sen. Dianne Feinstein, D-Calif., increased the maximum awards across nearly every of the 10 levels.

The measure had initially called for defendant companies and their insurers to each contribute a maximum of $45 billion over the life of the fund, with the rest of the funding coming from other sources. But the committee approved an amendment Thursday that increased the burden on defendants and insurers by $7 billion each. That came on top of a Feinstein amendment approved by the committee in June that would have allowed the fund administrator to levy an additional $45 billion on corporations and their insurers on a "contingent" basis if the fund appeared to be in danger of insolvency (BI, June 30).

Insurers complained at the time that many of the committee's Democratic members appeared to treat that contingent funding as automatic supplemental funding and wanted the committee to assure that the additional burden would indeed be contingent. They did not receive that assurance before the committee approved the bill.

"They slapped another $7 billion on us tonight," said Julie Rochman, a senior vp of the American Insurance Assn., after the committee's 10-8 vote in favor of the bill. "They did not address the contingency in that they did not make it truly contingent, so it's possible it remains supplemental. We feel that any contingent fund should fall more heavily on industrial companies than on insurers-that was not addressed, either. So we have no choice but to oppose this bill as it's currently drafted," she said.

The Risk & Insurance Management Society Inc. took a less critical view of the bill.

"RIMS is pleased that the bill is out of the committee," said Janice Ochenkowski, RIMS vp-external affairs. "We recognize that there are some changes that are needed, but we think that the bill is good for the health of the American economy and necessary to assist the victims of asbestos. It's important to get a good bill out, even if it's not perfect," said Ms. Ochenkowski, who is also vp-risk management for Jones Lang LaSalle, a Chicago-based commercial real estate management firm.

The bill also appears to face considerable-and perhaps insurmountable-opposition from Democrats when it reaches the Senate floor for a final vote. Sen. Feinstein was the sole Democrat to vote for the measure in committee, and several other members were quite vocal in their opposition. With supporters of the bill needing at least 60 votes to fend off any filibuster, a significant number of Democratic members would have to break with their leadership and vote for cloture to allow a final vote on the bill.