A bankruptcy court judge has ordered Travelers to pay at least $445 million into claims funds set up by a 2004 asbestos settlement.
The funds were set up to resolve a number claims brought in state courts over asbestos liability for the Johns Manville Corp., a major manufacturer of asbestos-containing product that Travelers began insuring in the 1940s.
The mineral has been linked to variety of health ailments such as asbestosis and mesothelioma, a form of lung cancer. Pending claims over asbestos liability have been a major financial issue for insurers for years.
In this latest decision, filed yesterday, U.S. Bankruptcy Court Judge Burton Lifland said the amount owed by Travelers may rise, too. There is still the pending questions of whether interest must be added — a legal question which Lifland vowed to take up in the next few months if Travelers and the plaintiffs cannot come to an agreement through a mediator.
Lifland’s ruling follows nearly three decades of legal wrangling that included a 2009 trip to the Supreme Court. The decision will “hopefully… end this Sisyphean cycle… that has gone on for too long, especially for those asbestos victims who have yet to be fully compensated,” Lifland wrote.
The settlement was reached in 2004 between Travelers and groups of plaintiffs who had sued the insurer in state courts for asbestos-related claims. Bankruptcy had been a major sticking point in the asbestos litigation. Johns Manville declared bankruptcy in 1982, and in 1986, a federal bankruptcy court barred lawsuits against the insurer for asbestos liability.
Despite the ruling, at least 26 different state lawsuits were filed. The 2004 settlement called for Travelers to pay at least $445 million into three different claims funds that would handle asbestos-related payments. The settlement also released the insurer from future lawsuits related to those claims. But Travelers never paid, and more legal complications followed when Chubb sued Travelers over asbestos settlements. More legal battles led to a June 2009 ruling by the Supreme Court that essentially OK’s the $445 million settlement.
Lifland ruled that Travelers has been legally obligated to pay the $445 million since the Supreme Court’s decision that total may be subject to interest.
“We’re in the process of reviewing the opinion and considering our next steps — including whether we will appeal,” Travelers Spokesman Shane Boyd said. “The court decision was one outcome we knew was possible. At the time of the settlement, we reserved the settlement amount for future payments, if and when the conditions were satisfied. Accordingly the payment of the settlement amount would not have significant impact on our results or operations.”
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