A group of smaller and medium sized businesses and their insurance companies is using the recent settlement by USG over its asbestos claims to argue that a federal asbestos trust fund would provide a windfall for large companies facing asbestos claims.
USG announced an agreement to settle all personal injury asbestos claims against it by creating a $4 billion fund. At the same time, USG acknowledged that if legislation (S.852) under consideration by Congress to create a federal asbestos trust fund to pay claims passes, its will cost USG about $900,000, rather than $4 billion. USG supports the bill.
The Coalition for Asbestos Reform is claiming that the terms of the USG agreement “reveal plainly the enormous benefits S.852 offers to corporations supporting the legislation.” The group also said that USG’s earnings report showed that the company has prospered under bankruptcy.
“USG’s announcement of an agreement to resolve asbestos personal injury claims should show the U.S. Senate once and for all exactly why S.852 is a boon to a handful of Fortune 50 companies and a death knell to smaller and medium-sized companies,” said Tom O’Brien, chairman of the Coalition for Asbestos Reform. “It is rare that the financial benefits inherent in a piece of legislation for a single company are so clearly quantified — no wonder companies like USG are spending millions of dollars on advertising to get this bill passed.”
Under USG’s agreement, which requires court approval, the company will set up a trust for their claimants funded with $900 million in cash and a Contingent Note for another $3.05 billion. However, if S.852 passes, with its trust fund, the contingent note will be cancelled and “USG’s payments for personal injury claims … would be limited to $900 million, an amount USG… would have been required to pay into the national trust fund.” The agreement would protect USG from all current and future asbestos claims.
“The conclusion is inescapable that this legislation is worth $3.05 billion to USG,” O’Brien continued. “Unfortunately, the bill will shift those billions of dollars in benefits that USG and other major corporations stand to realize onto the backs of small and medium-sized businesses and victims. While companies, like USG will see their asbestos liability drop significantly, the cost to companies like those in CAR will increase dramatically forcing many out of business. Today’s announcement makes it perfectly clear who is driving the bus on this misguided legislation, and why.”
USG also released its first quarter earnings report, in which the company reported record sales during the period of its bankruptcy. CAR said the report undermines claims that jobs must be lost if asbestos settlements are not contained.
“USG’s other announcement today, its earnings report, also explodes the myths advanced by advocates of S.852, that the bill must be passed to save jobs lost through the enormous financial pain being endured by big corporate asbestos defendants,” O’Brien said. “In its press release, the company reports ‘Record Fourth Quarter 2005 Net Sales of $1.3 billion.’ That the Senate would now shower companies like USG with even more benefits from S.852 is mind-boggling.”
S.852 proposes a tiering system for corporate payments into the national injury fund. Under that tiering system, many Fortune 50 companies with annual revenues in excess of $100 billion will find themselves paying a fraction of their current asbestos liability into the trust fund, according to CAR.
“On the other hand, many smaller and medium sized companies, like those in CAR, have managed their asbestos liability appropriately. Yet, they will be forced to pay millions of dollars, over and above their current expenditures,” the group claims.
“While USG and companies like them will derive enormous benefits, many small and medium-sized companies that support hundreds of local communities around this nation will need to shut their doors,” continued O’Brien. “We urge U.S. Senators to finally recognize that S.852 is most definitely not a solution — but a giveaway to a few corporations with the biggest checkbooks and the loudest voices.”
CAR mobilized last June to launch a national campaign to oppose S.852.
Source: Coalition for Asbestos Reform
Was this article valuable?
Here are more articles you may enjoy.