A new, first-of-its-kind study of claims made to asbestos bankruptcy trusts shows widespread inconsistencies in the information single asbestos plaintiffs provide to the different trusts. These trusts currently hold over $30 billion in assets. Despite these “red flags” and the strong financial incentive for abuse, the study found the trusts have apparently done nothing to investigate these discrepancies and the potential for fabrications.
“This study shows a system without accountability and demonstrates the urgent need for external oversight and reform of the asbestos bankruptcy trusts,” said Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR). “Twenty-three bankruptcy trusts have already had to reduce payments to asbestos claimants – with some trusts paying pennies on the dollar – and if we do nothing to rein in these abuses there is a very likely possibility some trusts will not have enough money to compensate future asbestos claimants.”
The new study, Insights & Inconsistencies: Lessons from the Garlock Trust Claims, analyzes information from 100 randomly selected personal information questionnaires submitted by asbestos plaintiffs in the bankruptcy proceedings of Garlock Sealing Technologies, Inc.
Review of the sample questionnaires showed:
- 69 percent of claimants did not list every place of employment, making it impossible for the trusts to verify the job site information provided to them;
- 15 percent of claimants did not list the specific products to which they were allegedly exposed;
- 55 percent of claimants had date discrepancies;
- And 21 percent of claims contained other troubling inconsistencies, such as differing medical diagnoses, conflicting job descriptions, and implausible exposure allegations.
The study’s authors say the bankruptcy trusts lack accountability because they are overseen by Trust Advisory Committees made up of plaintiffs’ lawyers or those appointed by plaintiffs’ lawyers. “In essence,” they write, “this system permits the same firms that stand to benefit when the bankruptcy trusts pay claims to write the requirements for payments by those trusts.”
The study was prepared for ILR by James L. Stengel and C. Anne Malik of Orrick, Herrington and Sutcliffe LLP.