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House of Representatives
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted:	April 2, 2013 10:07 AM
From:	Representative Bryan Cutler
To:	All House members
Subject:	Fairness in Claims and Transparency (FACT) Act

In the near future, I plan to introduce legislation creating the Fairness in Claims and Transparency (FaCT) Act. This bill is intended to address a glaring loophole in our current system of assessing responsibility for damages in asbestos-related suits which is imposing job-crushing liabilities on many Pennsylvania businesses. Asbestos lawsuits date to the 1970’s when companies that mined and milled asbestos or that incorporated significant percentages of the material in products used in the workforce were the primary targets of damage suits. Beginning in the 1980’s and substantially accelerating in the last decade through today, however, many of those companies have used federal bankruptcy laws to shield them from suit in exchange for funding stand-alone trusts. These trusts, formed by asbestos miners, manufacturers and fabricators of asbestos products, make an estimated $30-60 billion available to qualifying injured parties through a simplified asbestos claim process. However, some claimants who receive money from these trusts have also filed civil lawsuits against businesses down the supply chain. These businesses are not part of the federal bankruptcy trust system, as they remain solvent, and therefore they can be held civilly liable even after the claimant has already received compensation from the trust. These businesses, often with peripheral connection to any injury, have in some cases been forced to shoulder massive liability as a result of these lawsuits. Some may think asbestos litigation is waning, but these crippling liabilities continue to affect businesses throughout Pennsylvania, from small businesses that work with asbestos products to large manufacturers and employers who are successor companies to the original asbestos miners from the 1970’s. A recent report showed that just between September and December 2010, 45 Pennsylvania-based companies were named as defendants in new asbestos lawsuits. The enormous burden of these cases drains resources from these businesses that could otherwise be used for economic growth and job development. Two problems have arisen based on the operation of the asbestos trust claim system and the civil tort system in tandem. First, clever manipulation of the litigation and claims processes can result in "double-dipping" by which an asbestos claimant can recover twice for the same injury – once through tort litigation, and a second time through the asbestos trust claim process. Second, because the representations made by asbestos claimants in the asbestos trust claim system are not public and are difficult to obtain through civil discovery, it is possible for asbestos claimants to make inconsistent statements within the different systems. For example, a claimant may represent a particular set of facts regarding asbestos exposure to the bankruptcy trust in order to qualify for compensation from the trust, while simultaneously asserting a contradictory set of facts in that claimant's civil litigation against a solvent entity. My bill corrects these two problems in the following manner. First, the bill would apply the principles of our Fair Share Act to asbestos litigation such that asbestos defendants would be apportioned liability based only on their relative fault, including in a manner that takes into account the recoveries paid by asbestos bankruptcy trusts. Second, the bill would require plaintiffs to disclose all asbestos exposure information and to indicate whether they have submitted a claim based on asbestos exposure to a trust or are eligible to submit a claim for asbestos exposure to a trust. Disclosure of this information will allow a judge or jury to consider all asbestos exposures, claims which have been or could be submitted to a trust and claims which have been paid by a trust, in some cases as much as $1.6 million per claimant, as part of an asbestos-related suit.

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