Since the names of bankrupt companies do not appear on verdict sheets, asbestos plaintiffs can have double "recovery from two independent sources for the same harm," defense attorney John J. Hare, a shareholder with Marshall Dennehey Warner Coleman & Goggin, testified in a hearing Monday in Harrisburg.
Hare told lawmakers that claimants may seek compensation both through the tort system and from asbestos bankruptcy trusts set up in the wake of manufacturers’ bankruptcies.
Hare and several other defense attorneys testified in favor of a bill that would require fact-finders to take into account whether plaintiffs alleging injury from exposure to asbestos might be eligible to claim asbestos exposure from a product made by a company that paid into a bankruptcy trust. For example, the bill would require plaintiffs to disclose whether they have submitted a claim to a trust or are eligible to submit a claim to a trust.
State Representative Bryan Cutler, R-Lancaster, is sponsoring the legislation. In a somewhat unusual development, the hearing was held in the House of Representatives Judiciary Committee even as the bill is still being drafted and its exact scope is uncertain.
The trial lawyers group Pennsylvania Association for Justice is against the bill, as are members of the plaintiffs asbestos trial bar.
Lawrence R. Cohan, chair of Anapol Schwartz’s toxic tort litigation department, said that plaintiffs currently do not receive full compensation even with two systems in place, much less "double dip."
Requiring that claims against bankruptcy trusts be taken into account before plaintiffs can go to trial in state court will guarantee that plaintiffs will die before they get their day in court, Cohan said.
The only beneficiaries are the insurance "carriers and some of the defendants," Cohan said. "They will gain a few dollars in the process at the expense of plaintiffs."
Robert E. Paul, a plaintiffs attorney with asbestos firm Paul, Reich & Myers, said that the proposal that all of the defendants must consent to let a case go to trial if plaintiffs have not filed statements about their claims against bankruptcy trusts would mean defendants would control when plaintiffs went to court.
Some defendants take the position that they will fight all asbestos claims, and those defendants would take the positions that the plaintiffs should have applied to trusts that the plaintiffs do not think they need to, Paul said.
Cutler said in his memorandum seeking co-sponsors that the bill would apply the "Fair Share Act," which changed the traditional doctrine of joint and several liability so that defendants that are apportioned responsibility for causing a plaintiff’s injuries at 60 percent or less only pay the portion for which they were found liable, to asbestos litigation.
The bill would make it so asbestos defendants would only be apportioned liability based on their relative fault and during just one case in which all the proper parties are held responsible, Cutler said during the hearing Monday.
"What you essentially want to avoid is double payment for the same injury," Cutler said.
Nicholas P. Vari, a defense attorney for K&L Gates in Pittsburgh, also testified that bankruptcy trusts and the tort system represent "duplication compensation systems," even though there are estimates that there are $30 billion in assets held by bankruptcy trusts in the United States.
Tort-system defendants who are solvent are asked to pick up not only the share of liability allocated to them by a jury, but shares that would otherwise be allocated to bankruptcy trusts, Vari and Hare argued.
Many of the trusts are for industries that plaintiffs were never part of, Paul said. For example, some clients would never be entitled to money from a shipyard trust if they worked for a steel plant, he said.
While Marc Scarcella, an economic consultant on mass-tort litigation and of Washington, D.C.-based Bates White, testified that plaintiffs counsel have a lot of discovery available to them about the bankrupt firms that seeded the trusts from litigations that took place in the 1970s, 1980s and 1990s, and thus can file their claims quickly, Cohan countered that defendants do not want to tell plaintiffs counsel what products they supplied involving asbestos and how much money they have paid.
There are standing orders in Philadelphia and Allegheny counties that trust data has to be supplied, said Cohan and Charles J. McLeigh, a shareholder with asbestos firm Goldberg, Persky & White in Pittsburgh.
Both Scarcella from the defense side and Cohan from the plaintiffs side said that there is less money available to compensate plaintiffs from the bankruptcy trusts.
Representative Bryan Barbin, D-Cambria, said that it does not necessarily follow that a plaintiff’s total injury from all asbestos-related products has been satisfied by any single jury case that only ultimately goes against two or three defendants when there could be dozens of sources of a plaintiff’s exposure.
But Peter J. Neeson, a defense attorney with Rawle & Henderson, said that when plaintiffs’ total damages are evaluated to be a certain amount by juries, then "under any mathematical calculation" they receive more than what they deserve if they can recover from the defendants found liable in state court and then also file claims against some of the asbestos bankruptcy trusts.
Appellate courts made the decision a long time ago that it was impossible to apportion with "mathematical certainty" the liability of tortfeasors in asbestos cases, Paul argued.
Trusts also are "unfriendly to family member cases," Paul said. "They only want to pay worker cases."
Representative Jesse White, D-Washington, argued that the legislation would open the door for other industries to start doing business in Pennsylvania and to limit their liability for producing products that are toxic to people.
Representative Brandon P. Neuman, D-Washington, said it was important to note that none of the businesses in favor of the legislation are stating that they have no liability, only that they can prove that someone is more liable than they are. But constituents who are the victims of being poisoned by asbestos and end up dying painful deaths from cancer expect to be awarded the full amount of any recovery they receive, Neuman said.
Robert Byer, an appellate attorney with Duane Morris and testifying for the defense lawyers, opined that it would be within the power of the General Assembly to establish a substantive duty that bankruptcy trusts have to be considered in apportioning liability, but that it would be up to the courts to execute that procedurally.