Following in Ohio’s Footsteps: The Expansion of Asbestos Transparency Legislation

more+
less-
more+
less-

Asbestos personal injury trusts proliferated after many of the early primary asbestos product manufacturers reorganized under bankruptcy law. It is estimated that nearly 100 companies have declared bankruptcy in the face of asbestos-related liability, and companies continue to seek bankruptcy protection. In April 2013, Saberhagen Holdings and Yarway Corp. both filed petitions for relief in U.S. Bankruptcy Court. The explosion of bankruptcy trust claims resulted in two separate paths for claimants to seek compensation for exposure to asbestos: the bankruptcy trust claim process and traditional civil litigation. Until recently, there was little coordination between the two paths, potentially resulting in “double dipping,” as bankruptcy trusts pay out billions of dollars each year to claimants who allege exposure to particular asbestos-containing products, independently of any civil litigation.

In December 2012, Ohio enacted the first legislation aimed at remediating the chasm between civil asbestos litigation and the asbestos bankruptcy trust claim process. Since the passage of Ohio’s HB 380, other states and the federal government have followed suit.

On March 6, 2013, the Furthering Asbestos Claim Transparency (FACT) Act of 2013 was introduced to the U.S. House of Representatives. The proposed federal legislation would amend bankruptcy law and require asbestos bankruptcy trusts to file quarterly reports detailing trust payments made to claimants and would further mandate that asbestos bankruptcy trusts timely provide information related to previous claims and payments made. It is worth noting that previous efforts to address the double-dipping problem have been unsuccessful.

Pennsylvania has also followed suit, and its Legislature is currently considering HB 1150, the Fairness in Claims and Transparency Act. HB 1150 would allow civil defendants to apportion liability and allocate fault to all implicated asbestos defendants, regardless of their solvency. The legislation would require the designation of “apportionment nonparties,” where the court determines by a preponderance of the evidence that the plaintiff has filed or has a reasonable basis for filing a claim with an asbestos bankruptcy trust. Under the proposed legislation, if liability is apportioned, the court is directed to calculate the amounts paid by each apportionment nonparty and “mold the verdict.” In addition to the apportionment scheme, HB 1150 contemplates a disclosure system similar to the FACT Act. HB 1150 would require plaintiffs to provide a listing of all potential and existing asbestos bankruptcy trust claims and funds received from bankruptcy trusts at least 90 days before trial.

A Wisconsin assemblyman has also proposed a bill staying all asbestos litigation until civil plaintiffs identify the bankruptcy trusts with which they will file claims. While it is unclear whether the Wisconsin proposal will gain any traction, it appears that there is an expansive effort to address the issues created by the dual track of asbestos bankruptcy trusts and traditional civil litigation.