The Coalition for Asbestos Reform, a coalition of manufacturing, construction, energy and insurance companies, said it strongly opposes S. 852, the Fairness in Asbestos Injury Resolution (FAIR) Act introduced this week by Senators Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.).
As the Coalition shared with Chairman Specter in a series of letters over the past several months, the Coalition believes that the FAIR Act leaves potentially hundreds of companies in a far worse position than they find themselves under the existing tort system by stripping them of their constitutionally-protected rights secured by valid insurance contracts and substituting an uncertain and unaffordable funding scheme that threatens their viability and the strength of the U.S. economy.
The FAIR Act has reportedly addressed none of the core concerns that prompted the vocal opposition of the Coalition, including:
— The Specter-Leahy bill will immediately be met with litigation challenging the unconstitutional taking of companies’ insurance assets in an arbitrary fashion — and their replacement with inequitable and unaffordable cash payments that could be catastrophic for countless companies;
— The secretive manner in which the trust fund allocation formula has been developed and promoted by a handful of large companies — with no transparency or communication with the vast majority of affected companies — endangers both the solvency of hundreds of smaller businesses as well as the future ability of asbestos victims to receive the fair and prompt compensation to which they are entitled;
— As an example of the inequity that shifts the burden of asbestos liability from big companies to smaller businesses, companies with annual revenues over $50 billion will pay no more than $27.5 million per year under the Specter-Leahy allocation formula whereas companies with less than $1 billion in revenues will pay at least $16.5 million per year; and
— The uncertainty of the funding scheme will make it extremely difficult for those companies paying into the trust fund to borrow funds or otherwise access the capital markets — undermining confidence in the economy, further exacerbating the negative economic impacts of the bill, and bringing about the bankruptcies of otherwise sound companies.
Tom O’Brien, spokesperson for the Coalition, stated that “the impact of this allocation scheme is that many companies in the Coalition would be driven into bankruptcy by this payment burden. Perhaps most troubling, given the flaws in the census data, there are likely to be scores of companies not yet aware of the impact of this bill — and who would face the same predicament.”
The Coalition for Asbestos Reform said it supports legislation that fairly and effectively addresses the most significant problem with the current asbestos litigation system – payments to claimants who are not currently impaired and may never become sick.
Specifically, Coalition members, along with the national trade associations representing insurers and reinsurers, support efforts to enact medical criteria legislation, an approach that has already proven at the state level to reduce costs and provide finality for defendants, neither of which will result from the Specter-Leahy FAIR Act.
Editor’s note: See related story in West News.