HARRISBURG – Hoping to drum up support for a bill that seeks to reform the way asbestos lawsuits proceed, Rep. Warren Kampf spoke May 9 to a crowd of fellow lawmakers about what he feels is an ongoing fraud in the legal system.
Kampf’s bill, the Fairness in Claims and Transparency Act, is similar to legislation that has already passed in several states, including neighboring Ohio and West Virginia. It requires those who wish to sue over their alleged asbestos-related injuries to provide certain information regarding their exposure history.
Asbestos claimants can both file lawsuits against companies that are still solvent and file claims for compensation from trusts established by companies through the bankruptcy process.
To some, the current system allows individuals to blame certain companies for their exposures to asbestos in court while blaming others in the trust system.
“A lot of times, the plaintiff’s lawyers will not even file claims (with trusts) until after they’ve gone to trial or gotten a settlement,” Kampf said to a crowd of approximately 40 that also included attorneys and business representatives.
“It’s just a fraud in the doing.”
Kampf made his remarks at a function held by the Pennsylvania Coalition for Civil Justice Reform during which an extended trailer for the documentary “UnSettled,” made by Paul Johnson and scheduled for release later this year, was shown. The film chronicles the actions of certain asbestos lawyers who have been accused of gaming the system.
Most pertinent to Kampf’s cause is the story of Garlock Sealing Technologies’ bankruptcy case, which is included in the film.
Garlock submitted evidence in 15 cases during an estimation trial to determine how much it would need to place in its trust.
That evidence showed asbestos firms had been delaying the submission of their clients’ claims to trusts so Garlock could not assign blame for the plaintiff’s disease to those companies, a judge ruled.
“These fifteen cases are just a minute portion of the thousands that were resolved by Garlock in the tort system,” U.S. Bankruptcy Judge George Hodges wrote.
“And they are not purported to be a random or representative sample. But the fact that each and every one of them contains such demonstrable misrepresentation is surprising and persuasive.
“More important is the fact that the pattern exposed in those cases appears to have been sufficiently widespread to have a significant impact on Garlock’s settlement practices and results… It appears certain that more extensive discovery would show more extensive abuse.”
Garlock’s evidence, which was originally sealed but eventually uncovered by a successful legal challenge from Legal Newsline, showed that after several dozen asbestos defendants established bankruptcy trusts, its own liabilities increased. The company’s average mesothelioma settlement rose from almost $10,000 in 1999 to nearly $80,000 by 2010.
One of the firms whose work was featured in the Garlock evidence was Philadelphia's Shein Law Center.
A racketeering complaint against Shein Law Center listed the case of Vincent Golini, who was diagnosed with mesothelioma in 2009 and hired the firm to represent him.
The complaint said Golini identified 14 different asbestos-containing products he either worked with or worked around. Each of those products was manufactured by a company that had already established a bankruptcy trust to compensate asbestos victims.
Shein Law prepared 14 statements detailing Golini’s exposures to those products before filing a lawsuit in Pennsylvania state court against other companies.
“This was the real story of workplace asbestos exposure that caused Golini’s mesothelioma, but Defendants decided it was not yet time to tell it,” the complaint says.
"Defendants conjured up a different story for Golini’s lawsuit against Garlock.”
Shein Law purposely concealed those exposures during the lawsuit and falsely answered interrogatories in which Golini swore he had no knowledge of exposure to any asbestos product produced by companies other than those he was suing, Garlock alleged.
Once Golini received settlements from the defendants, Shein Law used the statements Golini had prepared before the lawsuit was filed to submit at least 20 claims to bankruptcy trusts.
In a deposition, Shein admitted to the practice of delaying claims to trusts:
Q: Does your firm delay filing trust claims until after you resolved an underlying tort action?
A: We file trust claims after the completion of the tort litigation.
Q: Okay, is there a purpose for waiting until after the completion of the tort litigation?
A: My duty to these clients is to maximize their recovery, okay, and the best way for me to maximize their recovery is to proceed against the solvent, viable non-bankrupt defendants first, and then if appropriate, to proceed against the bankrupt companies.
Q: Why would it maximize your client’s recoveries to hold all filing trust claims?
A: Because under Pennsylvania law, if a bankrupt claim is paid, not only filed but paid, that bankrupt payment claim, that defendant, would go on the verdict sheet and be eligible to be a share which the jury could consider.
Q: Okay. Is that a practice that then – a general practice you would follow in cases that your firm prosecuted against Garlock?
A: It varies on a case-by-case basis, but my goal is to maximize the recovery for these families and these victims, and if that’s appropriate in that case, that’s what we do.
Ultimately, Garlock's racketeering claim was settled when it reached an agreement to put more than $350 million in its trust. John Crane Inc.
If Kampf’s bill were to become law, asbestos plaintiffs would be required to file all submissions with trusts before they go to trial in the civil courts system.
It would also apply the Fair Share Act to asbestos lawsuits in order to allow a jury to apportion a percentage of fault to each company.
“The jury would know about these other exposures in other claims and apportion liability,” he said.
Pittsburgh and Philadelphia have active asbestos dockets. In the Philadelphia Court of Common Pleas, more than 540 asbestos claims are pending, and the city’s federal court runs a multi-district litigation proceeding of claims concerning federal law.
Kampf’s bill is in the House Judiciary Committee. Other states that have passed similar litigation include Arizona, Oklahoma, Tennessee, Texas, Utah and Wisconsin.
From the Pennsylvania Record: Reach editor John O’Brien at email@example.com.