Tackling the 'Runaway Job-eating Blob': The ABA Calls on Congress to Rein in Asbestos Claims

Indeed, bankruptcies have claimed more than 60 defendant companies, 35 since just 1998. The new victims of the asbestos litigation are the displaced workers whose retirement savings are erased when their employers buckle under the weight of their asbestos liabilities.

The costs of asbestos litigation are astronomical. A Rand Institute for Civil Justice study determined that there were 600,000 claims pending at the end of 2000. By that time, $54 billion had been spent on asbestos defense and indemnity. Over 90,000 claims were filed in 2001 alone. Some have predicted that even though asbestos is now used only sporadically in the United States, claims could continue unabated until at least 2030 due to long latency periods associated with asbestos-related disease ' there could be nearly 3.1 million claims pending by 2030. By that point, defense and indemnity costs could soar to between $200 and 275 billion, more than the costs associated with cleanup of all of the nation's Superfund sites, the Hurricane Andrew disaster and the September 11th attacks ' combined.

The Need for Reform

The need for federal legislation to reform the asbestos litigation crisis is well established. The 1991 Report of the U.S. Judicial Conference Ad Hoc Committee on Asbestos Litigation, appointed by U.S. Supreme Court Chief Justice William Rehnquist, described the “most objectionable aspects” of asbestos litigation as follows: “Dockets in both federal and state courts continue to grow; long delays are routine; trials are too long; the same issues are litigated over and over; transaction costs exceed the victims' recovery by nearly two to one; exhaustion of assets threatens and distorts the process; and future claimants may lose altogether … The worst is yet to come … unless Congress acts to formulate a national solution.” Similarly, in Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), the majority opinion, and the opinion that concurred in part and dissented in part, chronicled the long history of asbestos litigation, the problems the litigation has posed for decades for the federal courts and for legitimate victims, and the need for a federal legislative response. Likewise, in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), Justice Souter, writing for the Court, observed that “the elephantine mass of asbestos cases … defies customary judicial administration and calls for national legislation.” In a concurring opinion, Chief Justice Rehnquist agreed that the asbestos litigation crisis “cries out for a legislative solution.”

Despite the Supreme Court's repeated invitation, Congress has failed in the past to address the growing asbestos litigation crisis. In view of historical congressional inaction, recent editorials in prominent national newspapers such as The Wall Street Journal, The Washington Post, The Chicago Tribune, and The Los Angeles Times, have demanded federal legislation to respond to the ever-expanding asbestos litigation crisis and the variety of problems it creates for the economy, American businesses, employees, shareholders, investors, and deserving victims and their families. Even several prominent plaintiffs' lawyers who represent seriously ill asbestos claimants have joined the rising chorus of voices calling for a national legislative solution to the asbestos litigation problem. These lawyers emphasize that the current system drains resources and fails to ensure that deserving victims receive fair compensation and their day in court. For example, Steven Kazan, a leading California plaintiffs' attorney who represents asbestos cancer victims exclusively, recently testified before a U.S. Senate Judiciary Committee hearing that: “[U]nless Congress acts now, those who do become sick [because of asbestos exposure] will suffer a double misfortune ' when they contract cancer and again when they fail to receive the compensation they are entitled to because people who aren't sick have taken all the money.” Kazan and other plaintiffs' lawyers have joined forces with the group of asbestos defendant companies, trade associations, and third parties that is pushing hard for federal legislation to address the crisis.

The ABA Enters the Fray

Against this backdrop, the then-President-Elect of the American Bar Association (ABA), Dennis Archer, commissioned a task force in November 2002 to study the current state of asbestos litigation and make recommendations for legislative reform. The ABA Commission on Asbestos Litigation (“Commission”) was led by the Honorable Nathaniel R. Jones, retired Judge of the Sixth U.S. Circuit Court of Appeals, and included representatives of both the plaintiffs' and defense bars. In addition to analyzing previous studies of the asbestos litigation system, standing orders of courts that have attempted to limit suits by unimpaired claimants and numerous settlement agreements covering non-malignant claims, the Commission conducted extensive interviews of ten pulmonologists who have testified in asbestos litigation for both plaintiffs and defendants. The Commission decided that the most effective way to reform the system was to set a medical criteria threshold that nonmalignant claimants must meet to access the courts. Furthermore, to discourage the filing of premature claims by unimpaired claimants, the Commission determined that the statute of limitations should be tolled until claimants can demonstrate objective evidence of impairment.

The Commission recommended a resolution to the House of Delegates, the policy-making body of the ABA that would establish the following pre-conditions to suit for any nonmalignant claimant:

• The claimant's diagnosing physician must submit a detailed report describing the claimant's entire occupational and exposure history as well as medical and smoking history;
• The diagnosing physician must verify that at least 15 years have elapsed between the claimant's first exposure and diagnosis;
• The diagnosis must be based upon an X-ray analyzed by a Certified B-reader who finds lung irregularities of at least 1/0 on the ILO (International Labor Organization) scale;
• The claimant must demonstrate pulmonary impairment based upon pulmonary function tests taken with equipment certified by the American Medical Association; if not, then a certified B-reader finding of 2/1 or greater;
• The diagnosing physician must conclude that the claimant's medical findings and impairment were in all probability caused by exposure to asbestos;
• The B-reading, the results of the pulmonary function tests and the diagnosing physician's detailed narrative report and diagnosis must be attached to any complaint alleging nonmalignant disease; otherwise, the complaint will be dismissed without prejudice on motion;
• The applicable statute of limitations shall not begin to run until the above medical criteria are established.

The ABA House of Delegates considered the resolution on February 11, 2003. The proponents argued that the proposed standard would, if adopted by Congress, significantly reform the current asbestos litigation system and ensure reform where it is needed most, ie, in courts around the country clogged with lawsuits filed by unimpaired individuals. The opponents, led by Mary Alexander, the President of the American Trial Lawyers Association, who was granted special privileges by the ABA to address the House of Delegates, argued that the resolution would unduly restrict access to the courts. After considerable debate, the House of Delegates passed the resolution by 70% of the delegates voting, or by a vote of 223-97.

Congress Responds to the ABA

Two days after the ABA vote, Senator Don Nickles, Republican from Oklahoma and Chairman of the Senate Budget Committee, introduced an asbestos litigation reform bill, the “Asbestos Claims Criteria and Compensation Act of 2003.” The Nickles legislation mirrors the ABA approach on medical criteria and statute of limitations, but is more comprehensive in several respects. The legislation would require the following:

• Nonmalignant claimants must show permanent respiratory impairment under the American Medical Association's Guides to the Evaluation of Permanent Impairment, supported by the diagnosing physician's written report and test findings;
• The diagnosing physician must opine that exposure to asbestos is a substantial contributing factor in the plaintiff's impairment;
• Asbestotic claimants must proffer a certified B-reader finding of at least 1/1 on the ILO scale; if there is no evidence of impairment, then at least 2/1;
• Consolidations of unimpaired claims can be brought only by the exposed person and members of his household;
• Nonmalignant plaintiffs can file suit only where the plaintiff resides or was exposed;
• A defendant may remove the case to federal court if a state court fails to apply any of the provisions of the legislation;
• The statute of limitations will not begin to run until the aforementioned medical criteria are met;
• Nonmalignant claimants cannot obtain damages for fear or risk of developing cancer;
• The bill would apply to future claims, and pending claims that have not yet commenced trial.

Under the Nickles legislation, as well as the ABA standard, nonmalignant claimants who are sick are entitled to file lawsuits. Those diagnosed with cancer are not affected by either the legislation or the ABA standard. By contrast, healthy, unimpaired individuals who were exposed to asbestos at some point in their working lives would be able to pursue their claims when, but only if, they become sick – and need not fear that their causes of action will be barred by the statute of limitations if they delay suit until they are impaired. By establishing objective medical criteria as a requirement for pursuing claims, the legislation and the ABA standard would prevent healthy, unimpaired plaintiffs from filing suit until they develop objective harm and, thereby, help to conserve compensation resources for claimants actually suffering from asbestos-related disease.

The Time Is Now

Since the mid-term Congressional elections of November 2002, it has been widely suggested that asbestos reform legislation might finally have a real chance of enactment because President Bush was a noted tort reformer while Governor of Texas and because Republicans have regained control of both houses of Congress. Indeed, now is also an excellent opportunity for Congress to act because several prominent members of the plaintiffs' bar, who have traditionally been vigorously opposed to asbestos litigation reform, have joined the chorus of defendants, insurance companies, and trade associations that have been lobbying for a federal legislative solution for years. Even the ABA, a noted opponent of tort reform in the past, is now on record calling for federal legislative reform.

Even though the stars may now appear aligned for asbestos litigation reform, the debate will undoubtedly be contentious and protracted. Whether the proposed legislation will resolve the myriad problems associated with asbestos litigation will undoubtedly be subject to debate. In that regard, some have argued for more far-reaching reform such as caps on punitive damages, overhauling procedures for judicial elections in problem jurisdictions, codifying a standard of causation that would apply in all asbestos cases filed in the nation, a limitation on contingent fees and a federal or industry fund to compensate claimants. Nonetheless, the main features of the ABA standard and the Nickles bill, ie, medical criteria and liberalization of the statutes of limitations, have been heralded by many as the most practical prescription for Congressional reform. Those two provisions alone would greatly reduce the asbestos dockets around the country and would help to conserve compensation for legitimate victims of asbestos exposure. Indeed, some have suggested that with these provisions alone, up to 90% of the asbestos dockets in the country could be eliminated or deferred until the claimants can meet the new criteria.

To be sure, courts can take action now to rid their dockets of unimpaired claims. Some courts have done so ' most notably in New York City, Chicago, Baltimore, and the states of Massachusetts and Ohio ' and have placed unimpaired claims on pleural registries or inactive dockets. Additionally, some plaintiffs' firms have agreed to settlements with defendants where unimpaired claims are shelved until claimants can prove impairment. Yet, these scenarios are the exception in a system that almost everyone can agree is proving too costly. As the old adage goes, “if it ain't broke, don't fix it.” This is the flip side. The system is broken ' and only Congress can fix it now.

The Crisis

The following phrases have been used recently to define the current state of asbestos litigation in the United States ' a “pit,” an “endless saga,” a “runaway job-eating blob,” an “elephantine mass.” For those who practice in this litigation, the phrases ring true. The “crisis,” by which it has accurately become known, is multi-faceted. Dockets are clogged; the vast majority of claims are brought by unimpaired individuals who prematurely sue to avoid the bar of the statute of limitations; claims are brought against new “target” defendants that never manufactured asbestos-containing products; claims are forum-shopped to plaintiff-friendly jurisdictions where the claimants never lived or worked to maximize damage verdicts; and plaintiffs are consolidated with thousands of other claimants whose lawsuits are wholly unrelated in respect to occupation, method of exposure, or disease. These tactics create an unwieldy mass that often puts defendants in the untenable position of having to pay to buy their peace, even where there has been no discovery. Enough said. The system has run amuck.

Even worse, legitimately ill claimants suffering from asbestos-related cancer or mesothelioma cannot get their day in court because bloated dockets of unimpaired claimants force the sick to wait. Meanwhile, the pot of available compensation shrinks as the shrinking numbers of defendants seek bankruptcy protection.

Indeed, bankruptcies have claimed more than 60 defendant companies, 35 since just 1998. The new victims of the asbestos litigation are the displaced workers whose retirement savings are erased when their employers buckle under the weight of their asbestos liabilities.

The costs of asbestos litigation are astronomical. A Rand Institute for Civil Justice study determined that there were 600,000 claims pending at the end of 2000. By that time, $54 billion had been spent on asbestos defense and indemnity. Over 90,000 claims were filed in 2001 alone. Some have predicted that even though asbestos is now used only sporadically in the United States, claims could continue unabated until at least 2030 due to long latency periods associated with asbestos-related disease ' there could be nearly 3.1 million claims pending by 2030. By that point, defense and indemnity costs could soar to between $200 and 275 billion, more than the costs associated with cleanup of all of the nation's Superfund sites, the Hurricane Andrew disaster and the September 11th attacks ' combined.

The Need for Reform

The need for federal legislation to reform the asbestos litigation crisis is well established. The 1991 Report of the U.S. Judicial Conference Ad Hoc Committee on Asbestos Litigation, appointed by U.S. Supreme Court Chief Justice William Rehnquist, described the “most objectionable aspects” of asbestos litigation as follows: “Dockets in both federal and state courts continue to grow; long delays are routine; trials are too long; the same issues are litigated over and over; transaction costs exceed the victims' recovery by nearly two to one; exhaustion of assets threatens and distorts the process; and future claimants may lose altogether … The worst is yet to come … unless Congress acts to formulate a national solution.” Similarly, in Amchem Products, Inc. v. Windsor , 521 U.S. 591 (1997), the majority opinion, and the opinion that concurred in part and dissented in part, chronicled the long history of asbestos litigation, the problems the litigation has posed for decades for the federal courts and for legitimate victims, and the need for a federal legislative response. Likewise, in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), Justice Souter, writing for the Court, observed that “the elephantine mass of asbestos cases … defies customary judicial administration and calls for national legislation.” In a concurring opinion, Chief Justice Rehnquist agreed that the asbestos litigation crisis “cries out for a legislative solution.”

Despite the Supreme Court's repeated invitation, Congress has failed in the past to address the growing asbestos litigation crisis. In view of historical congressional inaction, recent editorials in prominent national newspapers such as The Wall Street Journal, The Washington Post, The Chicago Tribune, and The Los Angeles Times, have demanded federal legislation to respond to the ever-expanding asbestos litigation crisis and the variety of problems it creates for the economy, American businesses, employees, shareholders, investors, and deserving victims and their families. Even several prominent plaintiffs' lawyers who represent seriously ill asbestos claimants have joined the rising chorus of voices calling for a national legislative solution to the asbestos litigation problem. These lawyers emphasize that the current system drains resources and fails to ensure that deserving victims receive fair compensation and their day in court. For example, Steven Kazan, a leading California plaintiffs' attorney who represents asbestos cancer victims exclusively, recently testified before a U.S. Senate Judiciary Committee hearing that: “[U]nless Congress acts now, those who do become sick [because of asbestos exposure] will suffer a double misfortune ' when they contract cancer and again when they fail to receive the compensation they are entitled to because people who aren't sick have taken all the money.” Kazan and other plaintiffs' lawyers have joined forces with the group of asbestos defendant companies, trade associations, and third parties that is pushing hard for federal legislation to address the crisis.

The ABA Enters the Fray

Against this backdrop, the then-President-Elect of the American Bar Association (ABA), Dennis Archer, commissioned a task force in November 2002 to study the current state of asbestos litigation and make recommendations for legislative reform. The ABA Commission on Asbestos Litigation (“Commission”) was led by the Honorable Nathaniel R. Jones, retired Judge of the Sixth U.S. Circuit Court of Appeals, and included representatives of both the plaintiffs' and defense bars. In addition to analyzing previous studies of the asbestos litigation system, standing orders of courts that have attempted to limit suits by unimpaired claimants and numerous settlement agreements covering non-malignant claims, the Commission conducted extensive interviews of ten pulmonologists who have testified in asbestos litigation for both plaintiffs and defendants. The Commission decided that the most effective way to reform the system was to set a medical criteria threshold that nonmalignant claimants must meet to access the courts. Furthermore, to discourage the filing of premature claims by unimpaired claimants, the Commission determined that the statute of limitations should be tolled until claimants can demonstrate objective evidence of impairment.

The Commission recommended a resolution to the House of Delegates, the policy-making body of the ABA that would establish the following pre-conditions to suit for any nonmalignant claimant:

• The claimant's diagnosing physician must submit a detailed report describing the claimant's entire occupational and exposure history as well as medical and smoking history;
• The diagnosing physician must verify that at least 15 years have elapsed between the claimant's first exposure and diagnosis;
• The diagnosis must be based upon an X-ray analyzed by a Certified B-reader who finds lung irregularities of at least 1/0 on the ILO (International Labor Organization) scale;
• The claimant must demonstrate pulmonary impairment based upon pulmonary function tests taken with equipment certified by the American Medical Association; if not, then a certified B-reader finding of 2/1 or greater;
• The diagnosing physician must conclude that the claimant's medical findings and impairment were in all probability caused by exposure to asbestos;
• The B-reading, the results of the pulmonary function tests and the diagnosing physician's detailed narrative report and diagnosis must be attached to any complaint alleging nonmalignant disease; otherwise, the complaint will be dismissed without prejudice on motion;
• The applicable statute of limitations shall not begin to run until the above medical criteria are established.

The ABA House of Delegates considered the resolution on February 11, 2003. The proponents argued that the proposed standard would, if adopted by Congress, significantly reform the current asbestos litigation system and ensure reform where it is needed most, ie, in courts around the country clogged with lawsuits filed by unimpaired individuals. The opponents, led by Mary Alexander, the President of the American Trial Lawyers Association, who was granted special privileges by the ABA to address the House of Delegates, argued that the resolution would unduly restrict access to the courts. After considerable debate, the House of Delegates passed the resolution by 70% of the delegates voting, or by a vote of 223-97.

Congress Responds to the ABA

Two days after the ABA vote, Senator Don Nickles, Republican from Oklahoma and Chairman of the Senate Budget Committee, introduced an asbestos litigation reform bill, the “Asbestos Claims Criteria and Compensation Act of 2003.” The Nickles legislation mirrors the ABA approach on medical criteria and statute of limitations, but is more comprehensive in several respects. The legislation would require the following:

• Nonmalignant claimants must show permanent respiratory impairment under the American Medical Association's Guides to the Evaluation of Permanent Impairment, supported by the diagnosing physician's written report and test findings;
• The diagnosing physician must opine that exposure to asbestos is a substantial contributing factor in the plaintiff's impairment;
• Asbestotic claimants must proffer a certified B-reader finding of at least 1/1 on the ILO scale; if there is no evidence of impairment, then at least 2/1;
• Consolidations of unimpaired claims can be brought only by the exposed person and members of his household;
• Nonmalignant plaintiffs can file suit only where the plaintiff resides or was exposed;
• A defendant may remove the case to federal court if a state court fails to apply any of the provisions of the legislation;
• The statute of limitations will not begin to run until the aforementioned medical criteria are met;
• Nonmalignant claimants cannot obtain damages for fear or risk of developing cancer;
• The bill would apply to future claims, and pending claims that have not yet commenced trial.

Under the Nickles legislation, as well as the ABA standard, nonmalignant claimants who are sick are entitled to file lawsuits. Those diagnosed with cancer are not affected by either the legislation or the ABA standard. By contrast, healthy, unimpaired individuals who were exposed to asbestos at some point in their working lives would be able to pursue their claims when, but only if, they become sick – and need not fear that their causes of action will be barred by the statute of limitations if they delay suit until they are impaired. By establishing objective medical criteria as a requirement for pursuing claims, the legislation and the ABA standard would prevent healthy, unimpaired plaintiffs from filing suit until they develop objective harm and, thereby, help to conserve compensation resources for claimants actually suffering from asbestos-related disease.

The Time Is Now

Since the mid-term Congressional elections of November 2002, it has been widely suggested that asbestos reform legislation might finally have a real chance of enactment because President Bush was a noted tort reformer while Governor of Texas and because Republicans have regained control of both houses of Congress. Indeed, now is also an excellent opportunity for Congress to act because several prominent members of the plaintiffs' bar, who have traditionally been vigorously opposed to asbestos litigation reform, have joined the chorus of defendants, insurance companies, and trade associations that have been lobbying for a federal legislative solution for years. Even the ABA, a noted opponent of tort reform in the past, is now on record calling for federal legislative reform.

Even though the stars may now appear aligned for asbestos litigation reform, the debate will undoubtedly be contentious and protracted. Whether the proposed legislation will resolve the myriad problems associated with asbestos litigation will undoubtedly be subject to debate. In that regard, some have argued for more far-reaching reform such as caps on punitive damages, overhauling procedures for judicial elections in problem jurisdictions, codifying a standard of causation that would apply in all asbestos cases filed in the nation, a limitation on contingent fees and a federal or industry fund to compensate claimants. Nonetheless, the main features of the ABA standard and the Nickles bill, ie, medical criteria and liberalization of the statutes of limitations, have been heralded by many as the most practical prescription for Congressional reform. Those two provisions alone would greatly reduce the asbestos dockets around the country and would help to conserve compensation for legitimate victims of asbestos exposure. Indeed, some have suggested that with these provisions alone, up to 90% of the asbestos dockets in the country could be eliminated or deferred until the claimants can meet the new criteria.

To be sure, courts can take action now to rid their dockets of unimpaired claims. Some courts have done so ' most notably in New York City, Chicago, Baltimore, and the states of Massachusetts and Ohio ' and have placed unimpaired claims on pleural registries or inactive dockets. Additionally, some plaintiffs' firms have agreed to settlements with defendants where unimpaired claims are shelved until claimants can prove impairment. Yet, these scenarios are the exception in a system that almost everyone can agree is proving too costly. As the old adage goes, “if it ain't broke, don't fix it.” This is the flip side. The system is broken ' and only Congress can fix it now.