WASHINGTON (Legal Newsline) - The House Judiciary Committee on Friday passed a bill that would require asbestos bankruptcy trusts to provide more information on exposure claims made to them.
House Resolution 4369 would allow defendants in asbestos lawsuits to seek information on a plaintiff's claims made to asbestos bankruptcy trusts. It was introduced by Republicans Ben Quayle of Arizona and Dennis Ross of Florida and Democrat Jim Matheson of Utah.
"The trust funds are being depleted by the filing of fraudulent claims," Quayle told the committee Wednesday.
The trust system operates independently of the tort system. More than 90 companies have gone through bankruptcy as a result of asbestos litigation, creating at least 60 trusts.
Those claiming asbestos exposure can submit claims to the trusts while simultaneously suing solvent companies in civil court. Some defendants argue they should be allowed to see the trust claims made by their accusers.
The committee voted 10-7 against an amendment proposed Wednesday by Jerrold Nadler, D-N.Y., that would require parties in asbestos cases that seek trust information to make available public health and safety information they have upon written request.
The committee then voted 12-11 against an amendment proposed by Jared Polis, D-Colo., who said the bill as written would unfairly override state discovery laws. Quayle responded that the trusts are a function of federal bankruptcy court.
Quayle also reiterated that the amendment he introduced Wednesday would require asbestos defendants to pay the costs of discovery. He also added to the bill privacy standards for individuals who make claims to the trusts.
After a 13-13 vote on the bill, Smith kept the voting period open. Two more Republicans and one more Democrat showed up, producing the 15-14 result. Mel Watt, D-N.C., said the "rules are being twisted and turned and used for the benefit of the chairman."
An October report by the Government Accountability Office said the trusts operate in secrecy and the possibility exists that a claimant "could file the same medical evidence and altered work histories with different trusts."
A Delaware judge recently voiced her displeasure with the system when it was alleged that Texas attorney Brent Coon had submitted 20 claims to trusts on behalf of a Florida woman's estate after he had referred the case to Florida attorneys who sued, among other, Foster Wheeler Energy Corp. in Delaware.
The company did not know about the bankruptcy trust claims until 36 hours before a trial was scheduled to begin.
"This is really seriously egregiously bad behavior," New Castle County Superior Court Judge Peggy Ableman said in a November hearing. "This is misrepresenting. This is trying to defraud.
"I don't like that in this litigation, and it happens a lot. And I'm trying to put an end to it. This is an example of the games that are played."
In Quayle's opening remarks, he referenced an oft-cited 2007 instance in Ohio, where in Cuyahoga County the California law firm of Brayton Purcell claimed the late Harry Kanania died in 2000 of mesothelioma solely from smoking cigarettes made by Lorillard Tobacco, while simultaneously seeking compensation from multiple asbestos trusts, claiming their products led to Kanania's fatal lung condition.
And on Monday, Garlock Sealing Technologies accused a Houston law firm of creating a different story for its client's exposure history in the trust system than the one it put forward in the civil lawsuit against it.
The U.S. Chamber Institute for Legal Reform supports the bill. Legal Newsline is owned by the ILR.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.