AAA Mass Tort
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Key features of asbestos litigation:
- original claimants were compensated through WC, subject to limits
- 1973 Borel v. Fibreboard was the first case where manufacturers were held liable
- most workers were exposed to multiple products at multiple sites, increasing complexity
- plaintiffs with different exposure are often joined to file claim against several defendants
- disproportionate # of claims filed in perceived pro-plaintiff state courts (forum shopping)
- many claims are filed against peripheral defendants
Factors likely to increase defence costs in the future:
- more defendants are involved, and defence is not longer routinely handled on joint basis
- many defendants have abandoned settlement strategies
- newer defendants are incurring significant discovery costs
- coverage disputes between defendants and insurers, insurers and reinsurers may increase
Changes in the litigation environment:
- some jurisdictions now restrict non-malignancy claims or extent to which it's combined
- venue reform and joint and several liability reform in some states
- emerging information challenged validity of some X-rays used to justify non-malignancy
- significant decrease in number of new non-malignancy claims
Changes in the claims environment
- more efforts to direct scare resources to the sickest claimants
- decrease in claim filing for more severe conditions
- additional bankruptcies, but at lower rate as pre-packaged bankruptcies are challenged
- heightened scrutiny of potentially fraudulent claims
Suggested funding approach
- no-fault trust fund to indemnify those meeting asbestos exposure and medical criteria
- proposed fund size is $140b
- would be funded by corporate defendants, insurers and existing bankruptcy trusts
Criticisms of the funding approach
- how many claims of different types will be filed?
- will the medical criteria appropriately identify victims?
- are the awards appropriate?
- is the funding adequate?
Complaints of each party
- seriously injured claimants: short life expectancy so place high importance on resolving claim quickly; high transaction costs and non-malignancy claims diminish funds; those exposed to future serious condition face risk of insolvency
- non-seriously injured and unimpaired claimants: if don’t proceed today, face insolvency / lack of funds / future health uncertainty and ongoing monitoring expenses
- plaintiffs’ attorneys: those representing serious claimants have been more supportive of legislative changes; in 2003 medical criteria must be met
- judges: trial docket pressures and fairness of results
- major defendants: grouping of claimants makes it difficult and costly to assess validity of each case; cannot get fair trial; consolidation of claims results in disproportionally high awards to non-seriously injured; uninjured plaintiffs may be compensated; want finality
- peripheral defendants: should not be held liable for encapsulated products; take on liability from bankrupt manufacturers; not same knowledge of accountability; named in suit last minute, so higher defence cost; want finality
- insurers and reinsurers: interpretation of contract; policyholder paying claimants; want predictability of financial results
- employees / retirees or firms with asbestos liabilities: lost wages and pensions
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