West Virginia Gov. Earl Ray Tomblin has signed into law a bill that seeks to coordinate asbestos claims that are filed both in litigation and trusts established in asbestos-related bankruptcy proceedings.

S.B. 411, which creates the Asbestos Bankruptcy Trust Claims Transparency Act and the Asbestos and Silica Claims Priorities Act, requires disclosure of existing and potential asbestos bankruptcy trust claims and also establishes medical criteria procedures and statute of limitations standards.

According to the legislation, which was signed into law Wednesday and takes effect June 9, about 100 employers have declared bankruptcy at least partially because of asbestos-related liability, which has resulted in a search for more solvent companies and more than 8,500 companies being named as asbestos defendants, including many small and medium-sized companies in industries that cover 85% of the United States of economy.

The bill states that scores of trusts have been established in asbestos-related bankruptcy proceedings to form a multibillion-dollar asbestos bankruptcy trust compensation system outside of the tort system, and new asbestos trusts continue to be formed.

Asbestos claimants often seek compensation for alleged asbestos-related conditions from solvent defendants in civil actions as well as from trusts, according to the legislation, and there is “limited coordination and transparency between these two paths to recovery.” This has resulted in “the suppression of evidence in asbestos actions and potential fraud.”

The purpose of the legislation is to provide transparency for claims made and prevent fraud and evidence suppression.

Among other provisions, the legislation requires plaintiffs who file asbestos actions in the state to file sworn statements identifying all asbestos trust claims they have filed.

In a statement issued last month after the bill unanimously passed the West Virginia Senate, majority leader Mitch Carmichael, one of its co-sponsors, said, “The bill would promote honesty in litigation and help juries reach fully informed decisions as to the causes of a person's asbestos related disease.”