A New Day: Texas Asbestos Reform

By | June 20, 2005

The newspapers say that a new era in Texas asbestos and silica litigation began on May 19, 2005, when Gov. Rick Perry signed the comprehensive reform legislation, referred to as Senate Bill 15, already approved by the Texas House and Senate. We shall see. The stated purpose of SB 15 is to eliminate or greatly reduce claims brought by individuals who have been exposed to asbestos or silica but have no physical impairment from asbestos- or silica-related disease, while allowing persons with existing injuries to pursue their claims in a fair, but more efficient manner.

SB 15 describes in full the problems with the current system for handling asbestos-related claims, and places blame for the situation in large part on the fact that persons who are told they have detectable markings on their lungs consistent with asbestos- or silica-related disease must file suit in order to avoid the running of limitations. The bill quotes statistics indicating that the increasing numbers of asbestos and silica lawsuits is forcing employers, manufacturers and suppliers into bankruptcy, and it says that this in turn is causing workers to lose their jobs and the values of their 401(k) plans. The impact on the insurance industry is equally grave.

To remedy the problems of the “asbestos-litigation crisis” and the yearly tripling of silica-related claims since 2001, SB 15 sets out three major changes to the system, which will greatly affect both pending and future asbestos and silica lawsuits in Texas:

(a) It adopts medically accepted standards for differentiating between individuals with nonmalignant asbestos-related or silica-related disease causing functional impairment and individuals with no functional impairment;

(b) It provides a method for dismissal of lawsuits in which the exposed person has no functional impairment, while at the same time protecting a person’s right to bring suit on discovering an impairing asbestos-related or silica-related injury; and

(c) It creates an extended period before limitations begin to run in which to bring claims for injuries caused by the inhalation or ingestion of asbestos or by the inhalation of silica to preserve the right of those who have been exposed to asbestos or silica but are not yet impaired to bring a claim later in the event that they develop an impairing asbestos-related or silica-related disease or injury.

Significantly, under SB 15, Chapter 90 is added to Title 4 of the Texas Civil Practices and Remedies Code. Section 90.002 requires pulmonary function testing to be interpreted by a licensed physician who is board certified in pulmonary medicine, internal medicine, or occupational medicine. Section 90.003 requires reports in asbestos malignancy cases to be served by a doctor board certified in pulmonary, internal, or occupational medicine, or in oncology or pathology. The doctor must say that the malignant mesothelioma or other malignant asbestos-related cancer was caused by exposure to asbestos.

Several other interesting provisions appear in SB 15. For example, under new Section 90.009, claims relating to more than one exposed person may not be joined for a single trial. In addition, a new section provides that an action for wrongful death or personal injury based upon exposure to asbestos or silica accrues on the earlier date of either the exposed person’s death or the date on which the claimant serves a report that complies with the statute.

Also of interest is a new article which prohibits most insurers from rejecting, denying, limiting, canceling, refusing to renew, increasing the premiums for, or otherwise adversely affecting eligibility for health or life insurance due to exposure to asbestos fibers or silica.

Multidistrict litigation
The new law also has many other important aspects, and those changes will likely be the focus of much discussion in the insurance industry. One new section you should be aware of addresses multidistrict litigation (MDL) proceedings. The new Section 90.010 provides that the MDL rules will apply to all actions pending on Sept. 1, 2005, where the claimant alleges personal injury or death from exposure to asbestos or silica, except under certain circumstances. The MDL rules will not apply to actions filed before Sept. 1, 2003, where trial has commenced or is set to commence on or before Nov. 30, 2005, (unless such trial does not so commence), or where the claimant serves a proper medical report on or before Nov. 30, 2005. The MDL rules also will not apply to actions filed before Sept. 1, 2003, where the exposed person has been diagnosed with mesothelioma or cancer or other asbestos- or silica-related cancer. Where, however, a claimant fails to serve a proper medical report by Nov. 30, 2005, a defendant may file a notice of transfer to the appropriate MDL.

The MDL court will retain jurisdiction over cases transferred to it, if it determines that a proper report was not filed. Additionally, with respect to cases filed after Sept. 1, 2005, where a case has been transferred to the MDL and the claimant fails to timely file the required medical report, the court shall dismiss the case on a defendant’s motion unless the same reporting and verification requirements are met.

MDL courts will expedite all mesothelioma, malignant cancer and acute silicosis cases that are transferred to them. Finally, on another note, all MDL judges must provide to the governor, lieutenant governor, and speaker of the House of Representatives by Sept. 1, 2010, a report containing information relating to the number of cases on their dockets, the number of cases that do not meet the criteria of Sections 90.003 and 90.004, the court’s evaluation of the effectiveness of the medical criteria, and the court’s recommendation as to how the medical criteria should be applied.

So how will SB 15 actually affect asbestos and silica litigation in Texas? According to several of my friends with the Plaintiffs’ bar, matrix deals where large numbers of claims are settled as a group will be eliminated completely, because cases must be tried individually, and there must be a real medical diagnoses for each individual claimant. Consequently, Plaintiffs’ firms that seldom prepare and try cases will be in trouble, but good firms with solid claims will spend more time working up their cases and will actually try them. This may cut out thousands of weak asbestos and silica claims, which will be a positive change, but the good claims will continue to be valuable and will often proceed to trial.

Second, the MDL process will likely create many efficiencies and drive down defense costs. This, above all, will have a positive impact for insurance carriers. In particular, many claims that would normally be brought in Texas will be filed elsewhere. Watch for increased filings in nearby states, such as Louisiana and Mississippi.

Texas has made a solid first step towards true asbestos reform. Let’s see where it goes.

Brian S. Martin is a partner in the Insurance and Coverage Section of the Houston office of Thompson, Coe, Cousins & Irons, L.L.P. He has extensive experience in insurance coverage and defense matters, specializing in environmental, toxic tort and products cases. Martin is a frequent author and CLE speaker on insurance topics, including coverage and bad faith issues.

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Insurance Journal West June 20, 2005
June 20, 2005
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