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Senate Debates Compensation for Asbestos Victims

February 9, 2006 at 12:00 AM EST
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SPENCER MICHELS: It took 30 years but this week the Senate finally agreed to begin debating legislation for a new way to compensate asbestos victims.

Some 700,000 people have claimed serious injury from exposure while working with or around the cancer-causing mineral that was commonly used in insulation and fireproofing until the mid 1970s. Many sued the companies they worked for and awards in those suits have bankrupted almost 80 firms. But some 300,000 cases are still pending.

The Senate bill would establish a privately supported $140 billion trust fund to pay victims of asbestos poisoning. Companies with claims against them and insurers would contribute to the fund. In return, victims would be required to end their lawsuits. They would receive compensation based on their illnesses — anywhere from $25,000 to $1.1 million for those with mesothelioma — a lethal cancer of the lungs. Lawyers’ fees would be capped at 5 percent of the final award.

After working in an asbestos-laced vermiculite mine in Libby, Mont. in the ’60s, Don Kaedin suffered from asbestosis, a scarring of the lungs. It destroyed his ability to breathe, and he died shortly after we interviewed him in 2001. He had said his superiors denied that he was being exposed to a hazardous material.

DON KAEDIN: They say, oh, it’s just a nuisance dust, it’ll — you can eat a ton of it and it’ll float right back out.

SPENCER MICHELS: Some 8,400 companies have had asbestos claims filed against them. The bill in the Senate faces a tough fight. Senators debated amendments to the bill today. One of its supporters was Republican Sen. Orrin Hatch of Utah.

SEN. ORRIN HATCH: This bill saves asbestos victims from unfair and untimely compensation. This bill saves ordinary Americans from a tremendous strain on our national economy.

SPENCER MICHELS: Minority Leader Harry Reid is among those who oppose the bill.

SEN. HARRY REID: The trust fund set up under this bill to pay for victims’ claims is woefully under funded. Expert after expert has opined that $140 billion will not be sufficient to satisfy expected claims and does not properly account for expected borrowing and administrative cost.

U.S.ACTION.ORG SPOKESMAN: Congress is moving to bail out the corporations who expose their workers –

SPENCER MICHELS: A well-financed advertising campaign is underway on both sides.

ASBESTOS ALLIANCE SPOKESMAN: It’s time to make it right.

SPENCER MICHELS: The Senate is expected to continue debating the legislation into next week.

JIM LEHRER: And to Margaret Warner.

MARGARET WARNER: We pick up the debate now over the asbestos bill with two principal leaders in this fight: Republican Sen. Orrin Hatch of Utah, whom we just heard, and Democratic Sen. Dick Durbin of Illinois. Welcome, Senators.

And Sen. Hatch to you first: Expand on the little clip we just ran from you. Why, after three decades of settling claims through the courts, does the country need to go to an entirely new system?

SEN. ORRIN HATCH: Well, there are 8,400 companies that have been sued, most of which never had anything to do with asbestos. Some just acquired other companies that had something to do with asbestos, and find themselves in hundreds of millions of dollars in damages.

Of the 700,000 claims now down to 300,000 lawsuits but going up every day, they claim it could go as high as a million — most of those people have never suffered from asbestos exposure.

There’s also been a lot of fraud in this manner. Basically around 12 law firms in this country have been bringing these suits and they have recovered almost $60 billion. The recoveries are only — they’re about 60 percent of the recoveries have gone to attorneys and transaction fees rather than to the people who were hurt. Plus, the ones who were really hurt, those who suffer from mesothelioma, and major lung scarring and disease, asbestosis, most of them can’t recover very much, if — or anything – because their companies, now, are a part of the approximately 80 companies that are bankrupt and companies going up every day in bankruptcy.

This is a very dangerous thing for our economy; it’s a dangerous thing for our country, and we’re trying to do something about it. And the best thing we can do is try to come up with a trust fund.

We first came up with $94 billion, then $108 billion, which they said would be enough to take care of this problem. Then they said a little less than $120 billion would do it, and now we’re at $140 billion. And, frankly, we believe that’s enough money to take care of most of the problems here and to do justice.

MARGARET WARNER: All right, Sen. Durbin, the way Sen. Hatch describes it, it sounds like the current system has got some serious problems. Why do you object to changing it?

SEN. DICK DURBIN: I don’t object to changing it. I think some of the things that he pointed out could be changed. But we’re suggesting is not just a modification of the current system. What we’re suggesting is completely replacing the court system in America, a system that has really, I think, served us well as a nation — Americans who were aggrieved or injured can go to court, and do every day, asking for justice.

This bill would take away the right to go to court and, instead, establish a trust fund. I want to salute Sen. Hatch and Sen. Specter and all of them for working hard to try to find a way to deal with the problem. But I think this trust fund is just doomed to fail.

$140 billion is not enough for a 50-year commitment to asbestos victims across America. And plus it’s being done without the full clarity that we need in this kind of debate. We’re not certain where $140 billion figure came from. And I’ve asked Sen. Specter repeatedly: tell me where you found this figure.

Equally, we can’t really come up with the sources of the funds that are going to pay for this $140 billion. There is a secret list of companies as to what they’re going to pay into it. Some have assumed how much they’ll pay in and they’re not sure, but this ought to be in full light of day; there ought to be full public disclosure.

MARGARET WARNER: Sen. Durbin, let me just ask you to follow up on something Sen. Hatch said and see if you agree or disagree. He said under the current system, and there were a couple of Rand studies that suggested this too – that really only about 42 cents of the money paid out actually goes to victims in the current system, and that, in fact, a lot of the money is going, two-thirds of it, to people who don’t yet have this cancer and don’t have severe impairments, I think, is the technical term. Is that the case, and, if so, why?

SEN. DICK DURBIN: Well, I think we can deal with both issues. They’re both important issues.

MARGARET WARNER: But are they both true?

SEN. DICK DURBIN: No. One of them isn’t. When it comes to people who are recovering, just for exposure with no symptoms, we have established in my state and other states what we call a plural registry. If you’ve been exposed and you’re not sick, sign up, so the statute of limitations won’t run against you. And I hope, God willing, that you never get sick, if you do you can file a lawsuit. That, I think, is a reasonable way to approach it.

Secondly, when they talk about 58 percent going to lawyers, they’re adding in the defense fees. The lawyers representing the victims receive on average 30 percent, 31 percent, which is about one third. And that’s about what contingent fees are across America today. So to add in the cost of defense fees as well, I think, really tips it to the point where you say, well, those poor victims get less than half the money that comes in the lawsuit. It’s a much different story if you look close enough.

MARGARET WARNER: Sen. Hatch, you can reply to that if you’d like, but also, maybe you could explain how under the new system, which I gather Labor Department would administer — how would it be determined who would get the money and how much?

SEN. ORRIN HATCH: Well, we have a medical criteria system that we in a bipartisan way agreed to a number of years ago. But this has been going on for better than 15 years. The Supreme Court has begged us on three different occasions to do something about this.

Like I say, about 12 law firms have already plucked about $20 billion and they are looking for another $40 billion in legal fees. When you talk about transaction costs, the reason they’re so high is because they’ve gotten, in some cases, phony B-reader X-ray people who will find anybody to be sick, even though there’s no evidence at all of their sickness. And now they’re — one judge in particular has ordered a review of some of those, and they’re finding that a high percentage of those B-readings are wrong.

So the only way you can straighten out this mess, it seems to me, is for Congress to take the bull by the horns and do what should be done. There are thousands of veterans who will never get a dime if we don’t do this trust fund approach. And I might add hardly any of the mesothelioma victims are going to be able to recover or their families.

Once you get mesothelioma, you’re dead. I mean, it’s only a matter of months until you die. It’s a virulent disease. We know it comes from asbestos and asbestosis. And frankly, look, the tort system is broken here. We have got to do something to do justice here. And the only way I can see we can do it is through some sort of a trust fund that works.

Now, let’s assume that the monies aren’t there. I don’t think you can assume that, because the lost, really I think careful review was —

MARGARET WARNER: You’re saying that — this came up today on the floor of the Senate — is the $140 billion enough, if not, would the taxpayer be on the hook down the line?

SEN. ORRIN HATCH: No, they would not because then they could go back to the tort system; however, one of the provisions in this bill would create an ability to stop the forum shopping that these personal injury lawyers in these 12 firms in particular have been doing. They go to these favorable jurisdictions where the judges are on the hook; they’ll do whatever they want them to do, and then they give these outrageous verdicts, and the people who are getting the money are people who aren’t sick. The people who need the money, who are sick, are not getting the money. And it’s all because of this so-called tort system, the court system that isn’t working, that the Supreme Court has pointed out to us.

MARGARET WARNER: All right. And, Sen. Durbin, if I understand your position, it’s — you don’t dispute that there’s some problems with the current system but you’d like to at least preserve people’s ability to go to court.

SEN. DICK DURBIN: Well, of course. Basically, Americans understand our court system. It served well for over 200 years. And what we hear now from the proponents of this bill is it doesn’t work any more.

MARGARET WARNER: So let me follow up and ask — let’s say you lose this fight on that big issue and they go to this trust fund. What is your view on the $140 billion? Is it enough? And, if not, then who will be on the hook after that?

SEN. DICK DURBIN: It’s not enough. And, understand, that the minute this bill if it is signed into law, all the pending court cases stop, if you aren’t in court in trial, that’s the end of the story. So you have to start over — even if you spent years building your case and making your medical record — you start over with this new government agency and this new trust fund. And, frankly, that’s not fair.

If $140 billion doesn’t make it, Sen. Specter said on the floor the other day, well, just cut the compensation for the victims or we’ll tell them to go back and sue in court now, start all over again. That’s not fair to a lot of people who are struggling with painful illnesses and fatal diseases to put them back into that situation.

MARGARET WARNER: I want to ask you both briefly, and if you could be a little brief. Sen. Hatch I’ll start with you, you’re both good vote counters, I imagine. Republicans are split on this bill; Democrats are split on the bill. Companies are split on this bill. You’ve been struggling on this for years. How do you rate the prospects for getting this basic concept through this year?

SEN. ORRIN HATCH: Well, the vast majority are companies involved, want this bill. I have to say that most of the Democrats don’t want the bill. Most of the Republicans do want the bill. And I think if we don’t have the bill we’re never going to solve this problem. But it’s certainly up hill for those of us who are trying to resolve this problem through this type of legislation.

MARGARET WARNER: Sen. Durbin?

SEN. DICK DURBIN: I think it could be a very close vote. And I think what it’s going to come down to are fundamental questions. There’s a question about a budget point of order pending on the floor now from a Republican senator who says this just doesn’t square with our basic budget requirements. You’re going to have obligations down the line to victims and maybe to taxpayers that haven’t been accounted for. And I think it’s raised concerns among liberals and conservatives in the Senate.

MARGARET WARNER: All right –

SEN. ORRIN HATCH: The Democrats are trying to kill the bill with, hopefully, with this budget plan of order because — and it is brought by a Republican. But the fact of the matter is that if they kill it, kill the bill on that basis, and there is no government expenditure involved, there’s no reason for this budget point of order, but technically there’s a technical budget point of order they can bring in. If they kill the bill on that basis, I can’t begin to tell you the dislocations that are going to occur in the country, the economic difficulties we’re going to have, the lack of help to the people who really need it, the mesothelioma victims and others who suffer from asbestosis, and the real destruction to our tort system – our court system as well.

MARGARET WARNER: All right. Senators both, thank you.

SEN. DICK DURBIN: Thank you very much.

SEN. ORRIN HATCH: You bet.