Asbestos Suits Find More Targets
Now a new wave of litigation threatens to break loose, and Congress is considering federal action to stem the flood of suits.
Historically, asbestos lawsuits targeted companies directly involved in asbestos mining or the manufacture of products containing asbestos. The first wave of asbestos personal injury litigation began in the 1970s and was limited to about 300 companies.
But this new litany of litigation is directed at companies that never made asbestos or asbestos-containing products in the first place.
More than 6,000 U.S. companies across a wide spectrum of industries — 75 out of 83 industry types to be exact — are now caught in the rising tide of asbestos litigation, according to a study released last fall by the RAND Institute for Civil Justice.
What’s more, the typical claimant in an asbestos suit today names 60 to 70 defendants, compared with an average of 20 two decades ago.
The litigation has spread to virtually all parts of the U.S. economy, from large, multi-billion dollar corporations to small firms with just a few million in annual revenues. Industries targeted most recently have been the food and beverage, textiles, paper, glass and automotive industries.
As of this time last year, some 60 companies nationwide had filed for bankruptcy due to their asbestos liability exposure.
There was a dramatic increase in filings in 2001 — some 90,000 cases nationwide — and it’s not yet clear how many were filed in 2002, said Eric Fleetham, a litigation partner with Varnum Ridering Schmidt and Howlett.
Why the surge?
First, Fleetham explained, because most of the traditional defendants — the original asbestos mining and manufacturing companies — are in bankruptcy and aren’t making payments any more. Thus, plaintiffs are attempting to shift the blame to a variety of new defendants — and open up new pools of compensation.
Secondly, he said, the period of time for manifestation of various types of asbestos diseases is quite lengthy; it can run anywhere from 15 to 40 years, he said.
“That’s one of the reasons we’re seeing a large increase in claims right now, because we’re still within that 40-year time frame.
“We could see the same pattern we’re experiencing now extended out 15 more years. That means more companies going into bankruptcy.”
He explained that court dockets are piling up with suits filed on behalf of healthy people who have been exposed to asbestos and are seeking compensation now for illnesses they may or may not develop later — illnesses from plaques on the lung to cancer.
Complicating the problem is the difficulty pinpointing with any degree of accuracy whether or not the illness was actually induced by asbestos exposure.
“A chest X-ray may show some abnormalities, but the problem is that there could be multiple reasons why the individual has that type scarring,” Fleetham explained.
“For most of these people, whether they have the condition is very debatable and whether they are impaired is very debatable. Is the condition caused by something else?
“Once they have an abnormal chest X-ray and once there is a history of asbestos exposure established, the theory is that if they don’t file a claim then they are going to be time-barred because of the statute of limitations.”
According to the RAND study, nearly two-thirds of the claimants filing suits are neither ill nor impaired, but are worried about settlement money drying up.
Between 1991 and 2000, nine in 10 claims were for non-malignant injuries, and thus far, about 65 percent of compensation has gone to nonmalignant claimants, the RAND study revealed.
The RAND study indicates that more than 600,000 people in the United States have filed claims for asbestos-related personal injuries. It’s estimated that at year-end 2000, asbestos liability had already cost businesses more than $54 billion.
The study projects that 500,000 to 2.4 million more claims could be filed in the next few years, hiking the cost to businesses by as much as $210 billion more.
“This surge challenges the notion that the litigation is manageable and raises new questions about whether there will be enough money to pay all the claims that are likely to be filed,” said Stephen Carroll, a RAND senior economist who headed the study.
Fleetham pointed out that Michigan companies are not immune to asbestos liability exposure. Asbestos lawsuits are now pending in counties throughout Michigan, including Kent and Muskegon counties.
He said at least one case is pending in Kent County while more than 50 are pending in Muskegon County. Wayne County has more than 1,600 cases on file against companies in Michigan.
Fleetham said each case typically names 50 or more defendants.
This new group of asbestos plaintiffs consists of construction workers, such as pipe fitters, boilermakers, insulators, electricians and plumbers, Fleetham added. He said even the spouses and children of construction workers are now suing, claiming exposure to asbestos fibers from the worker’s clothes.
These new claimants are suing both building and property owners and occupants where they worked as employees of independent contractors, Fleetham said. The fact that virtually every manufacturing facility built before the mid-1970s had asbestos-containing insulation, speaks to the potential magnitude of the problem.
“Any manufacturing facility that was in existence before the mid-1970s is at risk for being sued in an asbestos case,” he said, “because the use of asbestos pipe wrap, insulation and gasket material that went into pumps and valves on boilers and furnaces were almost exclusively made out of asbestos before then.
“Premises’ owners is a huge pool of new money. Typically, the ones they are targeting are the current owners of the building,” Fleetham said, adding that plaintiffs are also going after the distributors of products — the local suppliers that have sold pipe wrap to contractors.
Those seeking reform say the flood of claims from healthy plaintiffs jeopardizes compensation for those who are truly suffering from asbestos-related diseases.
The American Bar Association called for congressional action in February. That same month Senate Budget Chairman Don Nickles, R-OK, introduced a bill that would establish standard medical criteria a plaintiff must meet before being able to file a lawsuit. The criteria would distinguish between those who are genuinely sick from asbestos exposure and those who are not. The measure also would liberalize the statutes of limitation.
A competing bill, introduced in the House March 6, would require that plaintiffs meet medical eligibility, as well, and would establish a new bureaucratic structure, the Office of Asbestos Compensation, to conduct medical reviews.
The Asbestos Alliance, a nonprofit led by the National Association of Manufacturers, has also called on Congress to address the crisis. The Alliance includes the U.S. Chamber of Commerce and a cross section of America’s foremost industry groups and insurance companies.
The Senate Judiciary Committee held a hearing on asbestos litigation reform in March.“The goal is that there would be legislation enacted by the end of the year, which means they really have to get going,” Fleetham said.