Is the Proposed Asbestos Settlement Fair?

Congress is making its sixteenth attempt in 20 years to legislate an administrative solution to the asbestos claims problem. In a series of media presentations last spring, Dick Armey implied that sponsors of the asbestos trust fund bill S.R. 852, Arlen Specter and Patrick Leahy, propose to create a $140 million slush fund at the taxpayer’s expense. Specter responded in a May 16, 2005 op-ed article in the New York Times that the fund was one which “manufacturers … and their insurers have offered to create … to avoid further liability.” More recently, leaders of both parties, including Edward Kennedy of Massachusetts and President George W. Bush have issued statements urging the passage of legislation to deal with the asbestos litigation problem, though the former opposes S.R.852 and the latter has “serious concerns” about it, according to a White House statement of February 8, 2006.

The RAND Institute for Civil Justice, since the 1980s the voice of clear-eyed and level-headed reason in the desert of asbestos controversy, has issued another of its quietly shocking reports on just how thoroughly asbestos torts have undermined our economy and our justice system. Stephen Carroll and Deborah Hensler’s team of analysts tell us that “More than 730,000 people in the United States filed compensation claims for asbestos-related injuries from the early 1970s through the end of 2002, costing businesses and insurance companies more than $70 billion.” They go on to say that “Claimants have received about 42 cents of every dollar spent on asbestos litigation. Another 31 cents has gone to defense costs, and 27 cents has gone to plaintiffs' attorneys and other related costs.” Of the 83 sectors of the American economy represented by two-digit industrial classification codes, asbestos litigation has affected 75. At least 73 companies have declared bankruptcy, and between 60,000 and 128,000 jobs have been lost in this three-decade firestorm of litigation. Nevertheless, none of the parties struggling with this intransigent mess seem to have given serious thought to why any of this is necessary.

All the other industrial democracies on earth, by providing some form of universal health care to their citizens, have arranged matters so that sick people see doctors, not lawyers, and so that it is unnecessary to find somebody to blame for their illness in order to pay for treatment.

In fact, despite the claims of Specter and others that only “industry” will be paying asbestos claims from the proposed trust, it’s surely obvious that this $140 billion isn’t going to drop out of the sky like manna from heaven. Whether Congress passes S.R. 852 or not, we will all be paying for asbestos claims in the price of everything we buy, just as we have been with the $70 billion that has already been paid out since 1968. At this point, about 90 per cent of the claims we’re paying are for people who aren’t sick, another problem the other industrial democracies don’t have.

Asbestos has played an important role in saving lives since it first became an industrial material in the late nineteenth century. It has formed part of a system of fire safety that has reduced the number of Americans dying in fires from more than 10,000 a year in 1944 to about 3,300 in 2000, despite an enormous increase in population. The fire death rate per capita is down by three-quarters in the same period. Before we established the system of fire safety that includes asbestos, more children died in fires in than adults are now dying of asbestos-related disease. Fifty years ago, between 3,000 and 4,000 children a year died in fires in the U.S.—about ten a day. Today, 2500 to 3,000 adults die annually here from asbestosis and mesothelioma. We have made a tradeoff between these risks, and even if we had known everything then that we know now, I doubt we would have made a different decision.

For excellent reasons of fire safety, asbestos was specified in hundreds of Federal, state and local building codes between 1900 and 1988, including the model code of the National Board of Fire Underwriters (NBFU), now the American Insurance Association. Between 1938 and 1969, for example, no housing could be built or purchased with Federal financing or loan guarantees that did not conform to the NBFU code, including all housing mortgaged with Federal Housing Authority or Veterans Administration loans. The decision to use asbestos was made by all of us as a nation, at the level of local building code committees, school boards, and organizations of safety professionals. It seems only reasonable that those who are now suffering from asbestos-related disease, because we chose to save the lives of hundreds of thousands of other people from fire, should be supported by those who benefited from the decision, which is all of us.

There’s an ideological obstacle, of course, to anyone’s seriously proposing that we simply do as other nations have done, and see to it that everyone who is actually sick, regardless of the cause, has some means of getting treatment. The lobbyists and members of Congress who are most concerned with how much this is all costing the American economy seem to regard the idea of national health insurance as anathema, although it’s clearly the only viable long-term solution to the problem of asbestos claims. It would solve a lot of other problems, too, as other nations discovered long ago. But of course, everybody’s out of step in this but us.