Texans for Lawsuit Reform

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In the News

Government Says Bankrupt Manufacturer’s Asbestos Payout Plan Is Ripe for Abuse

The Wall Street Journal, September 13, 2018

By: Katy Stech Ferek & Sadie Gurman

The compensation plan for people who said they were sickened by asbestos in cement products made by Kaiser Gypsum Inc. doesn’t do enough to protect against fraudulent claims, said Justice Department officials who want more power to monitor the payout process.

In court papers filed Thursday, the Justice Department said the proposed plan to compensate thousands of people who have filed asbestos-related claims against Kaiser Gypsum “lacks sufficient safeguards” to detect fraudulent claims from people who aren’t ill or otherwise harmed by the toxic substance. The company and its affiliates have been named in more than 38,000 asbestos-related lawsuits since 1978, the year that the now-defunct manufacturer sold its operations.

Without oversight, the company’s proposed trust could pay “potentially millions of dollars of personal injury claims, with little continuing supervision by this court and with little ability for interested parties to prevent—or even detect—fraud, abuse, or mismanagement,” Justice Department officials said in a statement filed in U.S. Bankruptcy Court in Charlotte, N.C.

Justice Department officials cited a 2010 study from nonprofit think tank Rand Corp. that found that 86% of claims filed to get money from the country’s 26 largest asbestos trusts were from people who had asbestos-related lung illnesses but didn’t have cancer. The Justice Department said people who have noncancerous lung illnesses usually shouldn’t be compensated but have, in fact, been paid by trusts.

The filing comes amid growing concern about fraud in the asbestos bankruptcy trust system.

Last year, a group of 19 state attorneys general urged U.S. Attorney General Jeff Sessions to investigate whether any fraud has occurred, and lawmakers also have been seeking changes to the bankruptcy trust system. The Kaiser Gypsum case presented the first opportunity for the Justice Department to intervene, officials said. As part of the initiative, the department is encouraging people to report potential misconduct.

The U.S. bankruptcy code allows companies under court protection to form and fund trusts designed to compensate asbestos victims. A 2011 report from the U.S. Government Accountability Office estimated that the trusts established in bankruptcy cases had paid about $17.5 billion on more than 3.3 million claims from victims from 1988 to 2010.

Kaiser Gypsum stopped operating in 1978 and has solely focused on dealing with asbestos claims since then. It entered bankruptcy protection in September 2016 with plans to set up a trust to deal with thousands of asbestos-related lawsuits. The filing came shortly after a jury awarded $8.75 million in damages to an Oregon carpenter who was diagnosed with asbestos-related cancer.

The company submitted its plan to create and administer the trust two months ago. It still needs approval from Judge J. Craig Whitley.

In Thursday’s filing, Justice Department officials said the plan is missing important details on how asbestos claims will be evaluated, paid and reported. They want the power to see who has filed claims and received payments from the trust as an added safeguard.

The government has an interest in protecting against fraud because some people who get money from Kaiser Gypsum’s trust will have an obligation to reimburse Medicare for health-care costs, they said. Money paid to fraudulent claims drains the pool of money that claimants use to reimburse the government insurance program.

Kaiser Gypsum representatives didn’t immediately respond to a request for comment on the Justice Department’s filing.

Officials at the U.S. Chamber of Commerce praised the department’s statement, calling it a “historic step to confront the systemic fraud and mismanagement in asbestos litigation” in a press release late Thursday.

Asbestos was used in an array of building and industrial products for many years before it was banned in the 1970s. Illnesses can take decades to manifest, according to the Centers for Disease Control and Prevention, so lawsuits over asbestos damages have outlasted the material itself.

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Texans for Lawsuit Reform

9 hours ago

Texans for Lawsuit Reform

When 30-year-old Quinnton Allen violated his parole for possession of a firearm, a Houston judge not only allowed him to stay on parole but granted him a PR bond for a felony. Unfortunately, the decision to release him on bond may have cost a man’s life. Read and share: bit.ly/3OvDU5z ... See MoreSee Less

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29-year-old man murdered after judge grants felony PR bond to armed robber recently paroled from prison

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HOUSTON – “I’ve never had any of these defendants we’ve profiled on Breaking Bond on parole and on a felony PR bond charged with murder,” said Andy Kahan with Crime Stoppers. “This is a fi...
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That judge should be held accountable

His family should get a good lawyer & sue the city & the judge…

The judge should be held as an accomplice to the murder before the fact and sued in civil court for his contribution to the death of the citizen.

Texans for Lawsuit Reform

1 day ago

Texans for Lawsuit Reform

Texas ports are thriving today, but in the early 2000s, abusive personal injury lawsuits threatened to shut them down. As the Port of Houston begins a long-awaited expansion, read more about the common-sense lawsuit reform in 2007 that saved our state’s shipping industry in this week’s TLR blog, For the Record: bit.ly/3aeTy6n ... See MoreSee Less

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Texans for Lawsuit Reform

2 days ago

Texans for Lawsuit Reform

Wishing everyone a very happy Fourth of July! ... See MoreSee Less

Wishing everyone a very happy Fourth of July!
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Happy Independence Day America Today we celebrate our Republic 🇺🇸


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lawsuitreform avatarTLR@lawsuitreform·
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When 30-year-old Quinnton Allen violated his parole for possession of a firearm, a Houston judge not only allowed him to stay on parole but granted him a PR bond for a felony. The decision to release him on bond may have cost a man’s life. Read & RT:

29-year-old man murdered after judge grants felony PR bond to armed robber recently paroled from prison

HOUSTON – “I’ve never had any of these defendants we’ve profiled on Breaking Bond on parole and on a felony PR bond charged with m...

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