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NEW YORK -- Mass tort suits are expected to continue to hit U.S. companies, costing them billions of dollars and diverting time and resources from their businesses.

"It's not all bad news, but mostly," said Jonathan Bank, a partner with Chadbourne & Parke L.L.P. in Los Angeles.

Despite a slowdown in the past decade in the number of suits filed, Mr. Bank said, the number will continue to be high and much higher than the number of lawsuits filed against companies outside the United States.

Mr. Bank spoke as part of a panel at the Managing Change in the Property-Casualty Industry conference in New York, sponsored by Coopers & Lybrand L.L.P.

Low public opinion of insurance companies is one reason Mr. Bank cited for the large awards against businesses in mass tort suits. Jury verdicts won't change, he said, until the public has a better impression of insurers, which juries know ultimately foot the bills.

As the insurers look to reinsurers for reinsurance payments, a schism has developed between the two, Mr. Banks said. As a result, sometimes an alliance forms between the insurer and policyholder aimed against the reinsurer.

For example, if an insurer loses in a coverage dispute with the policyholder, the insurer can go directly to its reinsurer, he said. But if a suit is settled, it's harder for the insurer to obtain reinsurance payment. So, he said, sometimes the insurer and policyholder word a settlement so that the insurer can more easily obtain reinsurance payment.

Donald Sullivan, vp-risk management for Baxter International Inc. in Deerfield, Ill., said mass tort exposures can come from unexpected areas. For example, the health care products manufacturer has been named in litigation as a result of a company it acquired but that no longer marketed silicone breast implants. Baxter now faces a large exposure to the class-action suit brought by women with the implants.

Mr. Sullivan estimates Baxter faces $1 billion in liability, of which 75% is covered by insurance.

"Basically the system works," he said, as Baxter has collected or has commitments for two-thirds of the insurance coverage. Baxter is negotiating the remainder.

Despite the insurance coverage in the silicone suit, the litigation has hurt the company in a number of ways.

Suits divert key workers from their jobs for long periods. "These people should be doing other things" than working on the suit, he said.

Also, mass tort suits immediately hurt the company's profitability and damage cash flow for years. This causes the stock price to drop.

When a mass tort suit hits, he said, a risk manager needs to take immediate action, he said.

"You cannot afford to bury your head in the sand," he said. "You need to address this as soon as possible."

He recommends that a company team with its insurer and work together to limit the damage.

Perry K. Huntington, senior vp of environmental claims for AIG Technical Services Inc. in New York, also spoke at the session.

Phillip N. Ben-Zvi, principal with Coopers & Lybrand L.L.P. in

New York, moderated the panel discussion.