Pa. House Judiciary Committee mulls over asbestos-related Fairness in Claims and Transparency Act

The state House Judiciary Committee recently held a hearing on House Bill 1150, also

known as the Fairness in Claims and Transparency Act, or FACT, which would provide for transparency of claims made against asbestos bankruptcy trusts and in the tort system.

The bill is being sponsored by state Rep. Bryan Cutler, a Lancaster County Republican.

It appears to have close to 30 cosponsors.

Records show that those who were scheduled to testify on April 8 included Sam Marshall, the president and CEO of the Insurance Federation of Pennsylvania; Sam Denisco, vice president of government affairs for the Pennsylvania Chamber of Business and Industry; Kevin Shivers, executive director of the Pennsylvania chapter of the National Federation of Independent Business; as well as a handful attorneys, such as Nicholas P. Vari, of K&L Gates LLP; Peter J. Neeson, of Rawle & Henderson; Marc Scarcella, of Bates White LLC; and Larry Cohan, of Anapol Schwartz.

The bill is designed to address a “glaring loophole in the current system of assessing responsibility for damages in asbestos-related suits which is imposing job-crushing liabilities on many Pennsylvania businesses,” Cutler had said in his memorandum to fellow House members, which was sent out on April 2.

The bill is supported by the likes of the Pennsylvania Chamber of Business and Industry, and is opposed by groups including the Pennsylvania Association for Justice, which represents trial lawyers.

The measure, which would require plaintiffs in asbestos lawsuits to disclose claims they had previously filed against the asbestos bankruptcy trust funds, is similar to a law that was passed by the Ohio legislature last year called the Asbestos Transparency Act.

It also mirrors a federal bill titled the Furthering Asbestos Claim Transparency, or FACT, which was initially introduced in 2012 and reintroduced this year.

The federal measure was debated during a House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law hearing in Washington last month.

At that time, the panel’s chair, Spencer Bachus, an Arizona Republican, said that the “enemy of any just compensation system is fraud and abuse,” and FACT needs passage in order to preserve assets for future victims of asbestos injuries.

While the federal bill still sits in committee, some states are moving ahead with their own version of the legislation, such as Ohio.

Darren McKinney, of the American Tort Reform Association, told Legal Newsline late last year that the Ohio law may be the first of its kind in the nation.

At the time, McKinney was quoted as saying that, “with the scandal that is double-dipping in the court systems and in trust funds, a statutory response is the only solution.”

Here in Pennsylvania, Cutler hopes his bill, the Fairness in Claims and Transparency Act, will put an end to the process known as “double-dipping,” whereby people recover damages through asbestos trust funds and the civil court system.

“Some may think asbestos litigation is waning, but these crippling liabilities continue to affect businesses throughout Pennsylvania, from small businesses that work with asbestos products to large manufacturers and employers who are successor companies to the original asbestos miners from the 1970’s,” Cutler wrote in his memo to fellow lawmakers.

Cutler claims that recent reports showed that between September and December 2010, 45 Pennsylvania-based companies were named as defendants in asbestos suits.

“The enormous burden of these cases drains resources from these businesses that could otherwise be used for economic growth and job development,” Cutler wrote.

The legislator pointed to the problems with so-called “double-dipping,” in which an asbestos claimant can technically recover twice for the same injury – once through tort litigation and a second time through the asbestos trust claim process involving since-bankrupt companies who have set up trust funds to compensate victims.

Cutler says his bill would correct the “double-dipping” problem in two ways.

First, it would apply the principles of Pennsylvania’s Fair Share Act to asbestos litigation such that asbestos defendants would be apportioned liability based only on their relative fault.

And secondly, FACT would require plaintiffs to disclose all asbestos exposure information and to indicate whether they have submitted an asbestos injury claim to a trust fund set up by insolvent companies.

“Disclosure of this information will allow a judge or jury to consider all asbestos exposures, claims which have been or could be submitted to a trust and claims which have been paid by a trust, in some cases as much as $1.6 million per claimant, as part of an asbestos-related suit,” Cutler stated in his House memorandum.