Asbestos - Another attempt at tort reform legislation

Dateline: WASHINGTON:

Senate leaders will take one more shot at working out an asbestos litigation reform bill this year, following the failure last week of the latest effort.

The decision by Senate Majority Leader Bill Frist, R-Tenn., and Minority Leader Tom Daschle, D-S.D., to attempt to reconcile their differences came Thursday after the Senate failed to limit debate on a White House-backed reform bill. The Fairness in Asbestos Injury Resolution Act — S. 2290 — would have replaced the current litigation-based system for compensating victims of asbestos-related diseases with a national trust fund.

But supporters of the FAIR Act mustered only 50 of the 60 votes needed to invoke cloture, a parliamentary procedure that limits debate and heads off filibusters. The bill, which had only one Democratic co-sponsor, was then removed from the Senate's agenda.

The measure would have created a $114 billion trust fund, paid for by defendant companies and their insurers, to compensate victims of asbestos-related diseases who meet specific medical criteria. The amount of compensation would have depended on the nature of the disease, with victims of mesothelioma — a lung cancer associated with asbestos exposure — eligible for the maximum award of $1 million.

The bill drew criticism from some insurers and employers for leaving open the possibility that cases would revert to the courts if the fund were depleted. Organized labor also opposed the measure, arguing it would not provide adequate compensation for victims. An earlier version of the bill approved by the Senate Judiciary Committee last July drew similar criticism.

The White House did not formally endorse the bill until three days before the cloture vote and then did so with "concerns" about unspecified provisions.

After the cloture vote failed, Sens. Frist and Daschle announced that they would begin outside mediation this week to see if they could resolve outstanding differences. According to Sen. Daschle, retired U.S. Judge Edward R. Becker, a recognized expert in asbestos litigation, will oversee the mediation. Judge Becker, who had served as chief judge of the 3rd U.S. Circuit Court of Appeals in Philadelphia, has been working with Sen. Arlen Specter, R-Pa., and others in attempting to resolve differences over provisions in the FAIR Act.

Sen. Frist told the Senate that the mediation would initially focus on "the major issues," notably, funding. "If we can make progress on this front, I strongly believe we can resolve the others," he said. Sen. Daschle agreed, adding, "if we can't get a fair funding level that provides just compensation to victims and certainty to businesses, then we won't be able to resolve the other interlocking issues."

But funding — in particular, the allocation of financial responsibility among defendant companies and their insurers — has been one of the most contentious issues. For their part, insurers have said repeatedly that they will not pay more than $46.025 billion into a trust fund for asbestos-injury claimants. In addition, some insurers and businesses have rejected the trust fund concept entirely as it was presented in the bill.

Insurers welcomed Senate leaders' decision to continue negotiations.

"We commend the leaders for their efforts in view of the urgent need to find a solution to the asbestos litigation crisis that is causing harm for asbestos victims and the economy," said Charles Taylor, assistant vp-federal government relations for the Property Casualty Insurers Assn. of America in Washington.

"I commend Sens. Daschle and Frist for their efforts to bring some constructive closure to the asbestos litigation reform efforts. It remains to be seen whether the parties that have had trouble reaching agreement over the course of the last year can, in one week, find a breakthrough," said Franklin W. Nutter, president of the Reinsurance Assn. of America in Washington.

A spokesman for the American Insurance Assn. in Washington welcomed the senators' decision to keep talking, but he noted that a large gulf remains between the parties.

"It's good that the prospects of reform are not dead, but it's pretty obvious that, despite bipartisan acknowledgment that we need reform, Republicans and Democrats seem sharply divided about many aspects of the trust fund," the spokesman said. "We're not sure that there can be a positive outcome, but we're going to be supportive of this process and see how it plays out," he added.

The president of an employer group that had opposed S. 2290 because of the trust fund concept said that the failure of the cloture motion came as "no surprise." But Dirk Van Dongen, president of the Washington-based National Assn. of Wholesaler-Distributors, said in a statement that NAW "looks forward" to working with lawmakers and others "to arrive at a bill we can all support." He warned, however, that "if the coming process fails to address and adequately resolve the serious equity concerns we have expressed with regard to S. 2290 and its predecessor, NAW will not hesitate to oppose any asbestos litigation reform bill that will adversely affect our member companies."

The House of Representatives has declined to consider asbestos reform legislation until the Senate passes a measure.

'If we can't get a fair funding level that provides just compensation to victims and certainty to business, then we won't be able to resolve the other interlocking issues.'

Sen. Tom Daschle, D-S.D.

By Mark A. Hofmann