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Government Accountability Office Refutes Asbestos Manufacturers’ Claims Over Trusts

statue with law imageThe U.S. Government Accountability Office (GAO) recently released a report that demonstrates the true role of asbestos trusts, suggesting that these trusts do, in fact, have measures to prevent fraud and are transparent.

According to the report, which was requested by House Judiciary Chairman Lamar Smith, asbestos trusts paid out approximately 3.3 million claims valued at approximately $17.5 billion from 1988 through 2010.

The GAO notes that asbestos litigation stems from the “lengthy” occupational exposure to the carcinogenic material experienced by a number of Americans, as such exposure has been linked to the development of asbestosis, lung cancer and the rare cancer malignant mesothelioma.

Due to negligence on the part of manufacturers and other companies that utilized asbestos products, approximately 100 firms have declared bankruptcy at least in part due to asbestos liability, the GAO found.

Transparency of asbestos trusts holds up

One of the major reasons why the GAO was called upon to complete the report on asbestos trusts was the fact that the U.S. Chamber and asbestos manufacturers had accused the trusts of not being transparent.

This, however, is not the case, according to the GAO, which noted 98 percent of the trusts it reviewed required a claims audit program and that defendant corporations have the ability to access information that may not be readily available to the public.

“Most asbestos trusts we reviewed publish for public review annual financial reports and generally include total number of claims received and paid,” the GAO report stated. “Other information in the possession of a trust, such as an individual’s exposure to asbestos, is generally not available to outside parties but may be obtained, for example, in the course of litigation pursuant to a court-ordered subpoena.”

Lack of fraud detected by GAO

In addition to the fact that asbestos trusts were found to be transparent, the GAO noted that none of the trust officials who had conducted the audits indicated that there were any instances of fraud, according to the report.

While asbestos manufacturers have fought to do away with these asbestos trusts claiming they can ultimately enable plaintiffs to receive extra compensation, the GAO also found that most trusts can’t pay the full value of a claim, with a payment percentage being determined.

Gary M. Paul, president of the American Association for Justice, said in a statement that the GAO report suggests asbestos producers must still be held accountable for their role in exposing employees to the carcinogenic substance.

“The GAO has found what we knew all along: this attack on asbestos trusts is just the latest attempt to shield asbestos manufacturers that knowingly killed their workers for decades,” Paul said.

Congress May Attack Trusts in Asbestos Litigation

Congress buildingWhile the issue of asbestos litigation is nothing new for members of Congress, lawmakers on the Hill have decided to initiate another examination of such cases, this time going after the trusts set up by companies to pay compensation to victims who deserve it.

According to a recent article in the National Law Journal, Republicans on Capitol Hill, led by Representative Trent Franks (R-Ariz.), are considering making changes to the trusts. The publication reports that the trusts – of which there are approximately 50 – were created in federal court by companies facing asbestos lawsuits that filed for bankruptcy.

One of the most prominent examples of this kind of trust, according to the Law Journal, is USG Corp., which originally funded its trust with $4 billion with the intention of being able to cover costs of asbestos litigation in the future. Corporations such as USG are not as concerned about their trusts anymore at this stage of the game.

Unlike USG, however, there are still some “solvent co-defendants” that face regular asbestos accusations, and still have a major stake in their trusts. Defendant attorneys for these companies have said that plaintiffs can sue the corporation in state court as well as the trust itself, while the lawyers have difficulty accessing information used in the cases against the trusts, according to the publication.

Attacking Trusts the Latest Attempt by Defendants to Shed Blame

As members of Congress debate the merits of requiring more transparency with trusts in asbestos litigation, the one certainty that remains is that defendant companies are still responsible in the long run.

Steven Kazan, the managing partner of Kazan, McClain, Satterley, Lyons, Greenwood & Oberman in Oakland, California, told the Law Journal that going after the trusts is just the latest example of defendant corporations trying to mask the blame that truly falls on them.

“None of them want to acknowledge their responsibilities,” Kazan explained. “They’ve been trying to get legislative relief for decades. That hasn’t worked. Now they’re talking about the trusts.”

Bottom line: Asbestos Exposure has Serious Consequences

The responsibilities of these defendant companies are as clear as the hazards posed by asbestos exposure.

Asbestos litigation is supported by decades of scientific research that has determined exposure to the carcinogenic material leads to the development of a number of serious illnesses.

These diseases, including asbestosis, lung cancer and malignant mesothelioma, typically do not manifest themselves until decades after initial exposure, with diagnoses often being made too late for effective treatment.

Still, asbestos attorneys and plaintiffs will closely monitor the discussion on Capitol Hill, with The Wall Street Journal reporting that years of talks have not yet led to any reform legislation.

Asbestos Litigation Today: Protecting Mesothelioma Victims in Bankruptcy Trusts

The history of asbestos litigation took a turn in the summer of 1982, when the first asbestos manufacturers filed for Chapter 11 bankruptcy protection to avoid paying compensation to the growing number of victims of asbestos diseases caused by exposure to its asbestos products.

A wave of asbestos bankruptcies followed over the course of the next couple of decades and the entire asbestos textile industry was in bankruptcy, as were several major asbestos insulation manufacturers.

In this video Steven Kazan discusses Kazan Law’s involvement in the history of asbestos bankruptcies and the critical reactions that have been necessary to protect the rights of mesothelioma victims.

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