01 Apr 2003 A Federal Asbestos Trust Fund: Better for Victims, Better for the Economy
Amid the happiness and perhaps relief within the White House that the war in Iraq has been so successful is this unsettling fact: President Bush is reenacting the political scenario that doomed his father’s 1992 reelection bid.
The senior President Bush completed a successful war in Iraq two years and two months after taking office. The current President has matched this timetable, completing his own Gulf War two years and three months into his term.
It took 20 months for a poor economy and the inability get an economic plan through Congress to change the first President Bush from “unbeatable” to “beaten.”
As Yogi Berra used to say, its déjà vu all over again. With 19 months to go before the election, the younger Bush can’t seem to get Congress to adopt his economic plan.
But Bush need not pin all his economic stimulus hopes on a $726 billion tax cut. There’s another option: legal reform. Wall Street analysts say solving the legal liability crisis could make the President’s proposed dividend tax cut seem like small change.
Says Morgan Stanley’s Steven Galbraith: “We can safely say that tort reform would be one of the most positive changes we can imagine for markets. Conversely, lack of progress could be every bit as damaging to market confidence as last year’s corporate perp walkathon.”1
Enter the asbestos litigation crisis, a legal and financial emergency that won’t be solved without federal action, but which, if properly solved, could give a huge boost to the U.S. economy, provide better compensation to victims of asbestos-related illnesses, and not cost the taxpayer one red cent.
In short, everybody – except perhaps lawyers – wins.
Asbestos-related litigation already has bankrupted over 60 companies and thrown 60,000 people out of work.2 It may cost the economy more than $300 billion – by most estimates, more than the war in Iraq.
Scandalously, despite the financial damage, genuine asbestos victims are not being properly compensated. 60 percent of the awards in asbestos lawsuits have gone to lawyers and court costs, not plaintiffs.3 65 percent of the money that does reach plaintiffs goes to people who aren’t sick.4
The system works well for no one but lawyers. Victims face jackpot justice or none at all, companies – including many with only a scant association with asbestos – are facing bankruptcy, employees are being laid off and retirement portfolios are suffering. Wall Street and our entire economy have been hard hit.
The damage now is so bad that congressional compromise is possible. Republican Senate Judiciary Committee Chairman Orrin Hatch says an asbestos bill is a top priority. Democrats, usually shy about legal reform, seem to be concluding that the asbestos crisis cannot be swept under the rug.
But what’s the best route to reform? Some propose the establishment of medical standards an asbestos victim must meet in order to sue. But that proposal lacks important benefits.
A far better alternative is for Congress to establish a federal trust fund through which genuinely sick asbestos victims could receive prompt compensation.
A trust fund, which should be funded solely by companies facing asbestos lawsuits, would have the following benefits:
* All funds awarded would go to asbestos victims, not to lawyers, trial costs or healthy people with good lawyers.
* Victims would receive compensation far faster – nearly immediately, in dire cases.
* Victims who become ill from exposure at a bankrupt company would receive the same compensation as a person exposed at a thriving firm.
* Asbestos-related corporate bankruptcies would cease, as firms would know the exact extent of their legal liability, and could plan for it.
* Victims would be fairly treated based on their suffering, not on their state of residence or which lawyer they hire.
* Sick persons could more easily prove eligibility for compensation, as they would not need to prove a specific defendant caused their illness.
* The economy would receive a substantial shot in the arm, benefiting all Americans.
Heavy, unpredictable legal costs related to asbestos litigation and trial lawyer excesses have undermined business confidence, left business investment and expansion underfunded and undercut America’s ability to recover economically from September 11. And this damage has been done without fairly serving those who have been hurt, and who need help.
There’s a better way. A privately-funded federal asbestos trust fund offers prompt and fair compensation for victims and economic recovery for us all.
Amy Ridenour is president of The National Center for Public Policy Research, a Washington, D.C. think tank.
Footnotes1 Rebecca Byrne, “Legal Reform Tempts Wall Street,” The Street.com, February 19, 2003, available at http://www.thestreet.com/pf/markets/rebeccabyrne/10069426.html as of April 21, 2003.
2 Bruce Bartlett, “Toll of Torrential Torts,” The Washington Times, March 3, 2003, available at http://www.washtimes.com/commentary/20030303-21304835.htm as of March 15, 2003.
3 “Asbestos Litigation Costs and Compensation,” Rand Institute for Civil Justice, Santa Monica, California, 2002, page 61.
4 “Asbestos Litigation Costs and Compensation,” page vii.