'Pass the FACT Act,' says SC civil justice group

The Senate Judiciary Committee will hold a hearing Wednesday on a bill that seeks to reduce fraud in asbestos claims and promote transparency between civil courts and asbestos bankruptcy settlement trusts.

The Furthering Asbestos Claims Transparency (FACT) Act recently passed in the U.S. House of Representatives with a 211-188 vote. On Wednesday, the Senate Judiciary Committee will be holding a hearing entitled, “The Need for Transparency in the Asbestos Trusts.” U.S. Sen. Lindsey Graham (R-SC) serves on that committee.

The FACT Act, S. 357, seeks to eliminate exploitation of asbestos claims by requiring asbestos trusts to disclose information to the civil courts pertaining to claims made against the trust and the amount subsequently paid to claimants.

The bill has been widely supported by many, including South Carolina Civil Justice Coalition Executive Director Earl Hunter.

“I think anytime you’re looking at a situation where there are obvious problems between the civil courts and people having access to trust information to find out who’s actually having access to those trusts, it only benefits to have that transparency,” Hunter told Palmetto Business Daily. “So we are hopeful that the Senate will pass the FACT Act, and bring some fairness and transparency to the overall system, and resolve the conflict that currently exists between the trusts and state civil courts.”

This is the third time a version of the FACT Act has been introduced into the Senate. Over the past four years, previous versions of the FACT Act have been passed in the House, only to stall in the Senate. The act, which is largely backed by Republicans, may face a more favorable fate this time around because the Senate has a Republican majority for the first time since the first version of the act was introduced.

Hunter said the Republican majority could help the bill, but acknowledged it isn’t a sure guarantee of passage.

“It’s hard to predict what will happen in the Senate sometimes, but I hope that they pass it this time,” Hunter said.

U.S. Sen. Jeff Flake (R-AZ) reintroduced the FACT Act in February 2015 stating that the act would give asbestos bankruptcy settlement trusts the ability to prevent fraud and compensate claimants fairly.

Flake encouraged fellow legislators to pass the FACT Act this time around.

“Congress must act now to increase transparency and combat fraud within the asbestos-settlement system if future victims of asbestos-related injuries are to be protected,” Flake said. “I commend my House colleagues for passing this legislation last Congress and for their continued interest in this issue. I hope both the House and Senate take up and pass this legislation without delay.”

Since 1988, more than 60 asbestos trusts holding approximately $37 billion in assets have been created to compensate asbestos victims, according to a Government Accountability Office (GAO) report. But due to the lack of transparency between the trusts and the civil court system, some claimants have filed multiple claims in various trusts and also sought compensation from the civil court system — which jeopardizes the amount of compensation available for future claimants.

The GAO reported in 2011 that, from its analysis of available trust payment data, between 1988 and 2010, “about 3.3 million claims valued at about $17.5 billion” had been paid out. This did not include the amount paid to asbestos victims by solvent companies.

Further complicating the governance over asbestos claims is the double dipping that occurs when claimants get compensation from a trust and the tort system with the help of their attorneys.

In a significant 2014 ruling, U.S. Bankruptcy Judge George Hodge reduced the amount Garlock Sealing Technologies was required to put in its trust by more than $1 billion less than plaintiffs’ attorneys had requested, after Hodge found that attorneys often delayed submitting claims to bankruptcy trusts when there were pending lawsuits against solvent defendants.

Under the FACT Act, asbestos trusts would be required to file quarterly reports on their public bankruptcy dockets, providing basic information on each demand the trust receives from claimants and the basis for any payout to the claimant. Trusts would also have to provide, upon written request, information regarding demands made to, and payments made by, the trust at the requesting party’s expense.

Hunter said that he hopes the knowledge and discussion surrounding the abuse of the asbestos trusts will encourage lawmakers to rally behind the bill and support it.

“I’m hopeful that the amount of information that has come to light showing that there’s an ongoing problem will convince some of the members of the Senate who may have not have understood the issues well enough to vote for it before, will do so this time,” Hunter said.

The Judicial Committee hearing will take place on at 10 a.m. Wednesday at the Dirksen Senate Office Building 226. Chairman Chuck Grassley (R-Iowa) will preside over the hearing.

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Organizations in this Story

South Carolina Civil Justice Coalition United States Senate Committee on the Judiciary

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