Wall Street Journal, December 25, 2014
Despite the ability of plaintiff attorneys to achieve faster compensation for their clients through the bankruptcy trust system (claimants can be paid in 30-60 days), plaintiff attorneys today intentionally delay trust claim submissions for months and even years until after the civil tort case concludes to inflate their own fees. Plaintiffs’ lawyers have collected billions in fees from bankruptcy trust payments since 2006, on top of similar fees they collected on behalf of their same clients in the tort system. Some of these attorneys suppress evidence of bankrupt exposures in the tort system so no liability will be allocated to bankrupt parties and tort recovery, and fees, are maximized against solvent defendants. Following tort resolution, those same attorneys then file bankruptcy trust claims and collect payments and fees again for the same injury. For more information, click here.
The Truth, Fairness & Transparency in Asbestos Litigation Act (S.2511) would solve the problem by requiring anyone who has filed a civil action in the New York courts for an asbestos-related injury to file all the claimant’s asbestos trust claims no later than 45 days after the commencement of the civil action. This simple fix discourages lawyers from falsifying their client’s exposure history to maximize recoveries and inflate their fees. The legislation can be found here.
The current system preys on those afflicted with asbestos-related illnesses, favoring bigger paydays for trial lawyers over quick monetary relief for suffering families.
“It is a national problem that threatens the very integrity and fairness of our court proceedings… In asbestos litigation, the civil justice system in our country is facing a real crisis. For too long, our courts have been manipulated by the withholding of vital evidence from judges and juries.”
Former Delaware Superior Court Judge Peggy Ableman, Congressional Testimony, February 3, 2016
“Transparency has been a critical component of reforms aimed at unwinding and preventing abuse. The absence of comparable transparency in asbestos bankruptcy proceedings and trust administration necessarily raises concerns about whether these funds are, in practice, administered in a manner consistent with the objectives.”
University at Buffalo Law Professor S. Todd Brown, Congressional Testimony, March 13, 2013
“Given the disturbing findings to date by several federal bankruptcy courts concerning misrepresentations in claims made on asbestos trusts, the public has a right to know how far and how deep these problems may or may not extend, and the courts need to know more about claims filed in other forums by the claimants who come before them.”
Former Washington Attorney General Robert McKenna, Congressional Testimony, February 3, 2016
“Plaintiff asbestos lawyers use the millions of dollars of fees obtained from the system they were instrumental in building, to run countless advertisements designed to obtain more clients so that they can submit more claims and obtain more fees. Thus, institutionalized fraud, as built into the system, allows the system to perpetuate itself.”
Attorney Thomas Wilson helped create some of the asbestos trusts he now accuses of facilitating fraud, Mealey’s Litigation Report, May 7, 2014
This bill is supported by veterans, lawmakers, business advocacy organizations and numerous members of the legal community, legal scholars and practicing attorneys, including:
Progressive Policy Institute
Veterans of Foreign Wars of the United States
New York State Business Council
The Capital District Chamber of Commerce
Manufacturers Association of Central New York
The Buffalo-Niagara Partnership
National Federation of Independent Businesses
New York Insurance Association
This reform has already been enacted in Ohio, Oklahoma, Wisconsin, Arizona, Texas, West Virginia, Tennessee, South Dakota, North Dakota, Utah, Iowa, and Mississippi—with broad support from local and national organizations including the U.S. Chamber Institute for Legal Reform and the American Legion.
Q: How is this fraudulent?
A: Here’s how it works: lawyers file a civil complaint alleging exposure to asbestos-containing products manufactured by one or more companies. Following recovery from all or some of these companies, the lawyers then file multiple bankruptcy trust claims alleging exposure to a different asbestos-containing product manufactured by a number of now bankrupt companies. The client can recover twice for the same injury and the attorneys pocket fees for both the civil suits and many bankruptcy trust claims.
Q: Will this discourage victims from seeking settlements?
A: The clearest evidence that the courthouse doors remain open is the fact that asbestos related lawsuits continue to be filed in jurisdictions that have enacted similar legislation. In the 12 states that have already closed this loophole, asbestos-related lawsuits continue to be filed and compensation has not been delayed or denied.
It is important to sift through the rhetoric some plaintiffs’ law firms are voicing in opposition to this bill and to recognize that the bill will not limit nor eliminate in any way recovery for any valid claim. It will however, eliminate the manipulation of the New York judicial system and the facts in a scheme designed to provide double (or more) recoveries for the same underlying injury. It will also eliminate some Plaintiffs’ firms’ ability to take their contingency fee multiple times for the same injury.
Q: Will the bill delay case proceedings and compensation to asbestos plaintiffs?
A: No. Any delay in case proceedings under S.2511 will be caused by a New York plaintiff law firm’s failure to make a good faith effort to timely file bankruptcy trust claims. Moreover, an asbestos plaintiff today can receive compensation from bankruptcy trusts (approximately 50% of their overall compensation) well in advance of a trial date in the tort system. In this respect, the true delay in compensation to the asbestos plaintiff occurs when some asbestos plaintiff attorneys don’t timely file claims with asbestos bankruptcy trusts concurrently with the tort case in order to preserve their ability to seek duplicative recoveries. Trusts are designed to pay claims expeditiously with minimal administrative and transactional costs. As a result, receiving compensation for multiple qualifying trust claims is an efficient process. A properly completed claim form with required supporting documentation can be quickly evaluated by experienced claim reviewers. Once a claim has been approved for payment, an offer release is consummated and payment is normally sent within 30-60 days. In contrast, tort system compensation to a plaintiff, either through settlement or trial, generally takes at least 6 months if not years.
Q: Is this Tort Reform?
A: No. This is about closing a procedural loophole that is being exploited by a few politically powerful law firms, which are making huge sums by presenting two (or more) contradictory stories on behalf of the same client in civil court and then in their asbestos bankruptcy trust claims.
Q: Can’t the courts manage this? Why is legislation needed?
A: The court system does not have the resources to police these practices, especially given the volume of cases brought each year. Further, even in the face of a Case Management Order that requires disclosure, certain firms routinely game the systems by stating they did not develop an “intent” to file trust claims until after judgment or settlement in the civil suit. All this bill requires is that attorneys be transparent and stop the delay of filing multiple bankruptcy trust claims until after the civil suit has resolved. In addition, certain plaintiffs’ law firms exert enormous pressure on the judiciary and legislature to resist any attempt at transparency and to preserve their ability to collect fees for double (or more) recoveries.
“The Garlock Decision Should Be Required Reading for All Trial Court Judges in Asbestos Cases,”
American Journal of Trial Advocacy
“A Look Behind the Curtain: Public Release of Garlock Bankruptcy Discovery Confirms Widespread Pattern of Evidentiary Abuse Against Crane Co.,”
Mealey’s Litigation Report: Asbestos
“The Waiting Game: Delay and Non-Disclosure of Asbestos Trust Claims,”
U.S. Chamber Institute for Legal Reform