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Mesothelioma Poisoning

Frist Hatch Bill

April 20th, 2004

Contact: Margarita Tapia (202) 224-5225

FLOOR STATEMENT: "S.2290, FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT 2004"

Statement of Sen. Orrin G. Hatch
before the
United States Senate
THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2004
S. 2290 Improves the Bill Reported by the Senate Judiciary Committee

Mr. President, I would like to take a couple of minutes to talk briefly about some of the improvements in the Fairness in Asbestos Injury Resolution (FAIR) Act. This bill was reported by the Senate Judiciary Committee after a lengthy committee markup that spanned four separate meetings. S. 1125, the bill reported out of committee, included, among other unprecedented achievements, a major bipartisan solution with respect to medical criteria, where all of the Committee members agreed on eligibility requirements for determining asbestos-related injuries compensable under the Act, and over 50 other consensus-building provisions. It and other bipartisan agreements remain in S. 2290, the bill we are discussing today.

S. 2290, as many have noted, makes additional, significant improvements over the Committee bill. The improvements reflect agreements reached in continued negotiations among representatives of organized labor and industry that were mediated by our colleague from Pennsylvania Senator Specter and the Chief Judge Emeritus of the Third Circuit Court of Appeals, Edward Becker.

First, let me briefly highlight some of the key provisions of this important legislation. Let me next summarize some of the additional improvements that have been made subsequent to the markup to address other concerns. This represents a good faith effort to improve this vital legislation. No piece of legislation is perfect, but I am certain that with these changes, a very good piece of legislation got better.

In short, this new bill:

(1) increases compensation going to victims;

(2) revises the funding provisions to help guarantee funding, and to protect the solvency of the Fund while ensuring that any risk of shortfalls rests on defendants and insurers, not on claimants;

(3) establishes a more-streamlined, less-adversarial, and less-burdensome administrative system than that provided in S. 1125, that will be up and running more quickly; and

(4) provides grants for mesothelioma research and treatment to help find a cure for this deadly disease.

I emphasize that S. 2290 puts even more money in the hands of victims than provided in S. 1125 as reported by the Committee, which was already estimated to put over one and one-half times more money into the pockets of victims than they would have received in the current tort system, where more than half of the resources now go into the pockets of attorneys. I am pleased to say that with the leadership of our majority leader, Senator Frist, S. 2290 raises award values in certain categories, focusing on those diseases that are most clearly caused by exposure to asbestos. I might add that as a thoracic surgeon, Senator Frist brings a unique perspective on this legislation. I think it is fair to say that he is the only member of this body who has performed surgery on mesothelioma patients. The values from the negotiations conducted by Senator Frist led to an increase of $100,000 for severe and disabling asbestosis, among other increases. Values for smokers and ex-smokers with lung cancer under Levels VIII and IX were also notably increased. I commend Senator Frist for his insight and efforts in this process.

Although some Democrats and some affected parties assert the values in S. 2290 are not enough, they generally only focus on the values for exposure-only lung cancers. Most experts believe these claimants have no clearly established link that the lung cancer was caused by asbestos exposure, such as underlying asbestosis, and may have been heavy smokers all their lives. Some of these experts provided testimony to the Judiciary Committee that an exposure-only lung cancer disease category runs an extremely high risk that lung cancer cases falling within this category are, in fact, not conclusively attributable to asbestos exposure. Providing increased compensation for these smoking-related claims could frustrate the purpose of the Fund and put the Fund at risk. In fact, lung cancer claimants with no markers or impairment from asbestos currently receive nothing from today’s bankruptcy trusts. Indeed, these claims with no markers and no impairment from asbestos almost always result in defense verdicts in today’s tort system.

Upon close consultation with organized labor, S. 2290 contains additional changes to ensure that more money is put into the hands of victims more quickly. Specifically, this entailed locating the program at the Department of Labor. This is a major change from the bill as reported by the committee – which assigned the claims processing function to the Court of Claims. It is no secret that the administration has serious reservations about this change. In fact, I have questions about these provisions, but in the spirit of good faith and compromise, we decided to include this new administrative mechanism in order to attempt to put more funds in the hands of the families suffering from asbestos-related illness.

Moreover, reimbursement of costs for physical examinations are now provided as part of the medical monitoring program, and structured payments are now required to be made in a 40/30/30 split over a three-year period, unless a stretch out to 4 years is required to protect the solvency of the Fund.

The Hatch/Frist/Miller FAIR Act also improves the committee bill by providing more secure funding and additional protections of the Fund’s solvency, while maintaining that the risk of insolvency falls onto industry. The mandatory funding from defendants is guaranteed, and monies from the insurers are infused into the Fund in the early years where the most claims are anticipated. The increased enforcement authority of the Attorney General to compel payment, and other additional safeguards, such as requiring a priority for payment obligations to the Fund in state insurance receivership proceedings, further bolsters the Fund’s solvency. Also, increased borrowing authority provides more liquidity, and will help with short-term funding problems.

Because of these new financial safeguards, the Hatch/Frist/Miller bill was able to modify the amendment proposed by Senator Biden and adopted in Committee, which allowed for a reversion to the tort system in the event the Fund becomes insolvent. Many members of the committee, and I thought Senator Biden himself, recognized that the provisions in his amendment, voted on late with little discussion by the Committee, needed further review. We are pleased that our new language satisfies the problem that the Biden amendment addressed in the first place, but do so in a more flexible and deliberative fashion.

Simply stated, the Hatch/Frist/Miller bill replaces these provisions with an alternative program review that will give the Administrator more time and more flexibility to address any unanticipated short-term funding problems. Under the new bill, full payment of all resolved claims is required. To create a smoother transition, and to avoid re-creating the current manifest shortcomings in a handful of state courts, the Fund will revert to the federal court system. We must not lose sight of the fact that it is the aberrational result in the courts of a few states, especially Mississippi, Illinois and West Virginia, that has triggered this national crisis.

Let me emphasize that under the new language, any risk that the funding is insufficient would still fall on defendants with claimants able to get their day in court. Members and other interested parties need not worry that any risk of insolvency will fall on the claimants.

Another significant change that I would like to discuss further is the new administrative structure and claims handling procedures provided in the Hatch/Frist/Miller bill. While the committee bill created a more accessible and simpler claims processing system for claimants than found in the tort system, organized labor continued to express concerns that the administrative structure under S. 1125 was too adversarial and cumbersome. The agreement mediated by Senator Specter and Judge Becker, to move claims processing from the Court of Federal Claims to an executive office situated in the Department of Labor, included numerous refinements made in consultation with labor union representatives. In addition to placing the office within the Department of Labor – against the preference of DOL, I might add – or in an independent executive agency, as requested by industry, the new language also includes

• simplifying the claims application process,

• expanding the claimant assistance program, and

• requiring the creation of exposure presumptions to reduce the burden of proof for claimants with high-risk employments.

We made further refinements addressing concerns raised by Senator Feinstein and others that there may be an undue delay in starting up a new claims system, forcing mesothelioma victims and victims whose claims have been sitting in court for years to wait even longer to receive compensation. Senator Feinstein’s amendment, could have unintentionally threatened the Fund itself by diverting resources away from the Fund and to unimpaired claimants.

Instead, the Hatch/Frist/Miller bill provides interim regulations for the processing of claims, including exigent claims, interim authority, upfront funding and increased borrowing authority, which all go towards ensuring the system is up and running as soon as possible after the date of enactment. Good public policy demands expedited termination of the broken tort system and preservation of funds so that payments can go to the most worthy claimants, as defined by the consensus medical criteria.

As a final note, proposals for research monies for mesothelioma were circulated in Committee. Mesothelioma victims generally live only a year or so after diagnosis of this horrible disease. More research is needed on mesothelioma to find better treatments and even a cure, and I am pleased that this bill will help this problem.

Our bill now provides up to $50 million dollars – and I’m willing to consider increasing that amount – in grants for mesothelioma research and treatment centers. In addition, these centers must be associated with Department of Veterans’ Affairs medical centers to provide research benefits and care to veterans, who have suffered excessively from mesothelioma. This, along with the asbestos ban, are important and vital pieces of legislation that must not be overlooked.

Again, I have highlighted the major changes from S. 1125 as reported, many of which were made to address the concerns raised by various members in committee. These revisions are aimed at ensuring that the program established under the FAIR Act is fair to victims.

In short, the Hatch/Frist/Miller bill represents a reasonable and fair solution to the asbestos litigation crisis. Members from both sides of the aisle have recognized that an equitable compensation program is necessary. Mr. President, I believe S. 2290, the Hatch/Frist/Miller bill meets the test. I urge all of my colleagues to support debate on this bill so that it may considered by the full Senate.

Asbestos

Mesothelioma Poisoning