Insurance groups are welcoming the introduction of Senate legislation designed to require more transparency in asbestos bank-ruptcy trust funds.
The Furthering Asbestos Claim Transparency Act of 2014 — S. 2319 — would “ensure that asbestos bankruptcy settlement trusts are able to fully compensate future claimants by preventing fraud through increased transparency,” according to a statement by its sponsor, Sen. Jeff Flake, R-Ariz.
“Congress must act now to increase transparency and combat fraud within the asbestos-settlement system if future victims of asbestos-related injuries are to be protected,” Sen. Flake said in the statement when he introduced the bill earlier this month.
The measure would require asbestos bankruptcy settlement trusts to disclose the names and exposure history of those who have filed a claim with the trust. The bill prohibits the disclosure of confidential medical records and full Social Security numbers of claimants so their privacy rights are not violated.
A companion measure won approval in the House of Representatives in November.
The idea, however, faces powerful opposition from the nation's largest plaintiffs' attorneys group and the Obama administration. Although the White House has not directly addressed the Senate bill, it issued a statement of administration policy opposing the House bill in November, holding that “the legislation is based on the false assertion that there is endemic fraud in the asbestos trust system.”
Supporters of the Flake bill and its House counterpart, including insurance groups, hold that greater transparency is necessary to prevent claimants from receiving restitution from multiple trust funds for the same injury.
“It's an important first step to get a bill introduced in the Senate,” said Melissa Shelk, vice president of federal affairs at the American Insurance Association in Washington. Ms. Shelk noted that although the House has approved trust fund transparency bills twice, the Flake bill is the first to be introduced in the Senate.
She said the Senate usually prefers to move its own bills. “They don't often take up House bills,” said Ms. Shelk.
She said claimants who are not ill are receiving payments from the trust funds, and “some of the trust funds are starting to run out of money.”
The Flake bill will bring transparency to the process, she said. “From our viewpoint, the trusts are there for the people who are truly ill, and because there is no transparency, some people are filing with the trust funds and then filing lawsuits.”
“Bankruptcy trusts are a black box, and we're just trying to bring some transparency to it,” she said.
“We see it as common-sense bipartisan legislation. We think it would be a valuable resource in combating fraud,” said Jon Bergner, federal affairs director in the National Association of Mutual Insurance Companies' Washington office.
Mr. Bergner said NAMIC had been “very pleased” when the House passed its bill last year.
“We see the Senate as potentially a much more uphill climb, so we were very pleased that Sen. Flake has taken up the mantle. We think it's a great step forward,” he said.
“PCI supports this common-sense legislation,” said Nat Wienecke, senior vice president of federal government relations in the Property Casualty Insurers Association of America's Washington office in an email.
“As we said when the House passed The FACT Act of 2013, legislation is needed to ensure that trust funds established to resolve asbestos claims are free from waste, fraud and abuse,” Mr. Wienecke said. “By implementing a transparent system that provides the courts with the information they need to properly adjudicate asbestos litigation, we can preserve trust fund assets for legitimate asbestos victims and protect still-solvent tort defendants, many of whom were only peripherally involved in the asbestos business, from being driven into bankruptcy by asbestos claims that are being resolved, in whole or in part, by the existing asbestos trusts.”
However, the Washington-based American Association for Justice, which represents plaintiff attorneys, made its opposition to the measure clear in a statement emailed to Business Insurance.
“It is offensive that the same corporations that hid the dangers of asbestos for decades and caused the deaths of hundreds of thousands of Americans — including thousands of veterans — are now trying to evade accountability,” association President Burton LeBlanc said in the statement. “This bill would violate victims' privacy and waste limited trust assets by placing unnecessary burdens on the trusts.”