Asbestos

Question 1

3 reasons that if asbestos usage were to immediately cease, exposure would continue:

Answer 1

1. Previously manufactured asbestos containing products in use
2. Asbestos dust in environment from previous use
3. Erosion of deposits in asbestos bearing rocks

Question 2

Briefly explain why grouping of multiple plaintiffs and defendants has increased costs & complexity:

Answer 2

Defendant companies argue this has forced them to make settlements on claims that were not necessarily deserved, in order to avoid the possibility of having to pay substantial punitive damages due to juries hearing mesothelioma cases

Question 3

Provide statistics to demonstrate that asbestos litigation has been inefiicient:

Answer 3

• Defense costs made up about 31% of the payments

- Only 42% was paid to the claimants as net compensation

Question 4

List 4 reasons that defense costs may increase going forward:

Answer 4

1. More defendants now involved in the litigation
2. Many defendants have abandoned settlement strategies
3. Newer defendants are incurring significant discovery costs, because they need to understand their exposure & potential
   defenses
4. Coverage disputes between defendants & insurers; and insurers & reinsurers may increase

Question 5

List 4 changes in the litigation environment since 2001:

Answer 5

1. Some jurisdictions now restrict nonmalignancy claims or restrict the extent to which claimant’s actions may be
   combined
2. Venue reform and joint and several liability reform
3. Validity of some chest X-rays to justify nonmalignancy claims has been challenged
4. Signicant decrease in the number of new nonmalignancy claims

Question 6

List 5 concerns of Seriously Injured Claimants:

Answer 6

1. Those with detectable & indisputable injuries (deserve to be compensated)
2. It is important for them to resolve their claims quickly, due to their short life expectancy
3. High transaction costs reduce the funds available for their needs
4. Those that develop serious illnesses in future years are exposed to the risk that the companies responsible go bankrupt
5. Since funds are limited, it is possible that awards used to pay nonmalignancy claims will leave less to pay these more serious diseases

Question 7

List 4 concerns of Nonseriously Injured & Unimpaired Claimants:

Answer 7

1. Currently unimpaired, although they may have an X-ray that indicates pleural changes
2. May be concerned that if they do not begin a lawsuit today, may be prevented from recovering damages in the future if
   serious conditions occur, due to the Statute of Limitations.
3. Also concerned that if they do not le a lawsuit, funds may not be available later
4. Faces uncertainty about future health, and will require ongoing expenses for medical monitoring

Question 8

Describe the concerns of Plaintiffs Attorneys:

Answer 8

1. Issues for attorneys are generally the same as their clients
2. Those who represent seriously injured claimants have been more supportive of legislative changes

Question 9

List 2 concerns of Judges:

Answer 9

1. Primarily concerned with trial docket pressures, and fairness of results
2. Feel that trial docket pressures force actions that speed up the trial process, and result in potentially less fair outcomes

Question 10

Describe the concerns of Major Asbestos Defendants:

Answer 10

1. State that they can’t get a fair trial in state court
2. May have had to pay inflated awards due to injury consolidation
3. Believes that at least part of the awards should be funded by other parties
4. Concerned that uninjured plaintiffs are being compensated
5. Concerned that the current compensation system is prohibitively expensive
6. Wants closure (put the consequences of past business practices behind them)

Question 11

Describe the concerns of Peripheral Asbestos Defendants:

Answer 11

1. Some believe that they should not be held liable since the asbestos in their product was encapsulated
2. Concerned that they are going to be responsible for liability that was borne by the now bankrupt manufacturers of asbestos
   containing products
3. Claim that it is unfair to hold them accountable for the same knowledge of health risks as the major defendants.
   Also concerned that the majority of trials occur at locations favorable to plaintiffs
4. Claim that the court does not use objective evidence to evaluate
   the credibility of claims of injury
5. Concerned that they may be held responsible for liability that should be borne by non US companies.
6. Wants closure (put the consequences of past business practices behind them)

Question 12

Explain why the defense costs for peripheral defendants may be considerably higher

Answer 12

• Can be named in suits at little/ no cost to plaintiff
• Because discovery often takes place just before trial, it is very difiicult to get dismissed from the case without incurring significant costs
• Often settle suits where they may not be liable, as the risk of being subject to adverse judgments when other parties have settled is quite high

Question 13

Describe the concerns of Insurers & Reinsurers:

Answer 13

1. Concerns are generally the same as policyholders: major & peripheral defendants
2. Concern about interpretation of the contracts
3. Concern about making settlements with claimants who have no clearly identifiable injury
4. Wants predictability of financial results, and nality with respect to quantifying their expected liabilities

Question 14

Describe the concerns of Employees/ Retirees of Firms with Asbestos Liabilities:

Answer 14

1. Bankruptcies lead to loss of 52K-60K jobs

2. Average worker lost over $8K on average in pension losses

Question 15

Describe the trust fund approach:

Answer 15

No fault trust established, from which the claimants meeting asbestos & medical criteria will be compensated . Trust funded
with $140b from corporate defendants, insurers & existing bankruptcy trusts

Question 16

List some examples of areas of debate about the trust fund approach:

Answer 16

1. How many claims of various disease types will be led?
2. Will the criteria appropriately identify victims of asbestos related diseases?
3. Are the proposed awards appropriate?
4. Is the proposed funding adequate?
5. Will the proportion of funding from the various classes of contributors be viable & fair, and will it provide a final release from future claims?
6. Will the fund be operated efficiently?
7. Will any proposed statute withstand constitutional challenges?

Question 17

List 4 State Reforms

Answer 17

1. Judicial & legislative reforms required to improve the tort claims process (focus courts resources on the most serious injury claims)
2. Inactive Dockets
3. Medical Criteria Statutes (Requires asbestos claimants to satisfy specific medical criteria to make a claim)
4. Restrictions of Case Consolidation & Venue Rules

Question 18

Describe the Inactive Dockets reform:

Answer 18

This will preserve the right of those who do not currently meet the specific medical criteria to pursue litigation in the future.
Asbestos litigation will likely become a more individualized process, involving single
plaintiff claims, and by the most severely injured claimants

Question 19

List 2 types of actions that many defendants have decided to take rather than waiting for federal and state reforms:

Answer 19

• Negotiated settlements and/ or

- Sought bankruptcy protection

Question 20

State two findings from RAND Corporation’s May 2005 comprehensive study of asbestos litigation.

Answer 20

• Number of claims led annually increased sharply beginning in mid-to-late 1990s
• Nonmalignant injuries account for most of growth
• Some evidence suggest most nonmalignant claimants are currently unimpaired
• Concerns regarding depletion of funds available to pay future claimants and burdens placed on courts

Question 21

State two notable changes since 2002 not included in the RAND report.

Answer 21

• More efforts to direct scarce resources to the sickest claimants
• Includes changes to the Manville Trust Distribution Process (TDP) and state reforms imposing medical criteria to make a claim
• Decrease in claim lings during 2004-2005 for less severe medical conditions
• Continued federal and state reform efforts
• Heightened scrutiny of potentially fraudulent claims