Originally published June 1, 2005
After a month-long mark-up, on May 31, 2005, the Senate Judiciary Committee favorably reported S.852, the "Fairness in Asbestos Injury Compensation Act of 2005" or "FAIR" Act out of committee for consideration by the full Senate. Goodwin Procter attorneys are playing a key role in shaping the asbestos reform debate and legislation, and we will provide additional information as S.852 winds its way through the Congress.
The bill, sponsored jointly by Committee Chairman Arlen Specter (R-PA) and ranking member Patrick Leahy (D-VT), would establish an administrative compensation program for people impaired by asbestos-related diseases, funded by insurers, defendants, and bankruptcy trusts. The total cost of the program could reach $140 billion, although many projections show the cost of the program to be less. Once the program is underway, it would provide an exclusive remedy for asbestos claims, preempting civil actions in state and federal courts.
Asbestos reform is one of three major items on the Congressional "tort reform" agenda, along with the recently enacted Class Action Fairness Act and medical malpractice reform. Asbestos reform is by far the most ambitious and complex of these issues, as it seeks to replace the tort system, not fix it. Supporters of the bill emphasize that it could also have the greatest economic impact – putting an end to the stream of asbestos bankruptcies that have occurred since 2000, protecting jobs and communities, and opening up access to credit markets for companies with asbestos liabilities.
The bill’s surprisingly wide 13-5 margin as it was voted out of committee may mask some major difficulties ahead. Three of the Republican members of the committee expressed reservations about the bill and said that they would not support it unless significant changes were made. Their concerns included:
- Fairness of the system for allocating the costs of the program among asbestos defendants;
- Fears that the bill’s provisions for "start up" could allow too many cases to remain in the tort system during the initial transition;
- Problems with the necessary medical criteria for potential claimants; and
- Assuring that taxpayers would not be on the hook if the program ran out of money.
Senate Democrats led by Senators Ted Kennedy (D-MA) and Joe Biden (D-DE) expressed concern that the bill’s medical criteria are too limited (e.g., they exclude deserving lung cancer claimants), and that the start-up provisions of the bill would stay asbestos claims for too long while the government gets the program underway. Asbestos trial lawyers and the AFL-CIO have also taken this view, although individual unions including the UAW and Molded Glass Workers have announced support for the bill.
According to Chairman Specter, the FAIR Act might reach the Senate floor this month, although the Senate does have a heavy schedule in June. Floor action by the end of July is likely. If the bill passes the Senate, it will be taken up in the House of Representatives, which has been waiting for the Senate to move first. House action next fall followed by a successful conference committee could put the FAIR Act on the President’s desk by the end of this year.
Goodwin Procter partner Patrick M. Hanlon, for the past four years, has been representing one of the two major industrial groups pressing for asbestos reform legislation. He has worked closely with Chairman Specter, Judge Edward Becker of the U.S. Court of Appeals for the Third Circuit (a major author of the bill), and the various stakeholder groups in helping to forge the agreements that made the committee’s action possible. Mr. Hanlon continues to work with others as well, both inside and outside Congress, to resolve many of the remaining issues. If you have any questions about this legislation and its potential implications for your business, please contact:
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