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Congress Must Solve the Asbestos Litigation Process

Feb/Mar 06
One of the U.S. Senate's top priorities in 2006 is passage of an asbestos trust fund bill. This could not come a moment too soon - resolution of the asbestos litigation crisis is long overdue. It has exacted a heavy toll on American business, particularly manufacturers, while making it difficult for deserving victims and their families to receive fair compensation.

Asbestos litigation has become a big, corrupt business in America. Entrepreneurial trial lawyers have launched a tidal wave of lawsuits against companies, and worked with a handful of doctors to create a litigation machine, churning out thousands of claims on behalf of people who are not sick. These questionable claims have helped force nearly 80 companies into bankruptcy, damaged our economy, and resulted in delayed and reduced compensation for asbestos victims.

While none have suffered more than the truly sick, there are other victims of this litigation nightmare. For example, Kirk Liddell is one of the employee-owners of AC&S, a company that installed insulation but never manufactured any asbestos-containing product. Nonetheless, the company was hit with an $83 million jury award for five claimants who were not even sick nor had any had contact with AC&S. The award exceeded all the profits the company had made in its 40 years of existence. Appealing was not an option because the state would have required AC&S to post an "appeal bond" of $104 million. AC&S went into bankruptcy the following year.

Over the last 30 years, more than 700,000 claims have been filed, and more than $70 billion has been spent on asbestos litigation. But actual victims have only received 42 cents on the dollar. Trial lawyers and court costs have eaten up the lion's share of the money.

At least 60,000 jobs, many in the manufacturing sector, have been lost due to asbestos bankruptcies. But communities are also affected as laid-off workers tighten their spending or even move away in search of new jobs, and bankrupt companies cut their operations and reduce purchases. This has a significant impact on a wide range of local businesses.

Congress has attempted to legislate a solution at least 10 times since the late 1970s, failing each time. But in May 2005, the U.S. Senate Judiciary Committee passed a bipartisan bill that could pave the way for a legislative solution. The idea is to establish a $140 billion asbestos victims trust fund, financed entirely by defendant companies and insurers - no taxpayer money is involved. Instead of having to go through the court system, asbestos claimants would file a claim directly with the fund. Based on their exposure and certain medical criteria, they would receive fair compensation for their illness.

There is no doubt that enactment of the right legislative solution will greatly benefit victims, businesses, and the overall economy. Tremendous progress was made in 2005 and discussions continue on enhancing the bill and bringing it to the Senate floor for a vote early this year. We just cannot let his opportunity pass without action. Congress needs to get down to its business so more of our companies can grow their businesses.

John Engler is president of the National Association of Manufacturers (NAM), and the former governor of Michigan.

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