Senator Hatch’s $108 Billion trust fund won’t meet future claims. What do victims do when the trust fund runs out of money?
Likely future claims range from 1.9 million to 2.4 million.
A trust fund designed to pay these claims could range as high as $245 billion (adjusted for inflation).
Workers today are still being exposed. Estimates don’t include current exposures. The U. S. Geological Survey estimates that more than 29 million pounds of asbestos were used in product manufacturing in 2001.
All victims receive much less then they would get in court –some get nothing at all. And money they have paid for life and health insurance counts against them.
No victims exposed after 1982 are compensated under Senator Hatch’s bill
The sickest victims -- those with mesothelioma, a fatal cancer -- would receive about one-third of their average compensation in court. This is barely enough to cover their health and hospital bills, and leaves virtually nothing for their families when they are gone.
Victims with asbestosis who are too sick to work receive nothing at all.
Victims with lung cancer who also smoked receive nothing at all – even though medical science has found that asbestosis makes it more likely someone will get lung cancer.
The value of health and life insurance coverage and other “collateral sources” are subtracted from the compensation amounts victims receive.
Payments would be delayed as long as eight to nine years in the future – well beyond the three years envisioned by the bill:
Because asbestos companies and their insurers will pay only $5 billion a year into the new trust fund, asbestos victims with current claims likely won’t receive full compensation until year 2011 or 2012.
Innocent victims, mostly women and children, who had no occupational exposure, would receive no compensation:
Spouses, children and entire communities whose asbestos exposure occurred outside the workplace will lose all rights and are ineligible for compensation.
Amanda Satterfield is a 23-year-old victim of mesothelioma. She was exposed from asbestos fibers brought home on her father’s work clothes. Under this bill, she would get no compensation at all.
The residents of Libby, Montana, would get nothing under the Hatch bill.
Under the Hatch bill asbestos companies that poisoned their workers escape their true liability
The worst offenders would pay only $675 million over 27 years ($391 million net present value—based on earning 4% interest of the unpaid balance over 27 years).
The bill divides companies into tiers. For non-bankrupt companies, the highest tier includes those with the most revenues that have already paid $75 million in claims to asbestos victims.
Some notable examples:
Halliburton -- $4 billion in asbestos liabilities vs. $675 million
Honeywell -- $3.4 billion in asbestos liabilities vs. $675 million
General Electric -- 90,000 pending claims
Ford -- 25,000 pending claims; costs will be “substantial”
Senator Hatch’s bill also would give insurance companies a huge break – they pay far less than they should and much less than they can:
While individual amounts have yet to be determined, the total payment for all insurers will be $45 billion (net present value of $26 billion based on spreading out the payments over 27 years at 4% interest---very close to current industry reserves of $19 billion).
Insurers can afford as much as $120 billion, based on their statutory surplus, non-asbestos reserves and limited contributions from future earnings.
Foreign insurers could put up as much as $80 billion.
State guaranty funds and insolvent insurers should also pay.
The Hatch bill also allows insurers to recover their fund contributions from their re-insurers –substantially reducing the $45 billion they are supposed to pay. If the Hatch bill won’t require reinsurers to contribute to the fund, then it should at least require that all rights to re-insurance proceeds should be assigned to the trust fund.
A notable example: GE alone has an insurance liability of $30 billion
(From SEC 10k including environmental clean up and asbestos)
Some small businesses will lose under Senator Hatch’s bill because it doesn’t allow defendant companies to count their insurance payments against what they owe.
This is a boon to large companies that have used up their insurance coverage or aren’t counting on it for their payouts.
Small companies that have to rely on their insurance may actually go bankrupt if they are forced to pay as much as $1 million dollars a year into the Trust Fund.
A New, Untested Federal Bureaucracy
Every existing and future asbestos claimant would be required to navigate a new, untested federal bureaucracy that does not exist today and has no employees or funding.
The logjam created upon enactment will likely delay any claimant compensation for two years or more. With the exception of Social Security and veterans’ benefits programs, there has never been a compensation program this large.
There is no reason to believe the federal government can efficiently run such a program. For example, Black Lung claims were delayed for years until the Department of Labor created a vast bureaucracy to process them.
Because it was under-funded, the Black Lung program has an $8 billion deficit (see Business Week article, “Why an Asbestos Deal May Falter,” May 28, 2003). Similar problems plague the Energy Employees Compensation program, which in three years has developed a 12,000 case backlog.
Burden of Establishing Eligibility Too Strict
A compensation system should simplify recovery for victims. The bill does the opposite by creating new harsh and unnecessary proof requirements.
For example, smoking history is required in order to reduce compensation amounts. Claimants must also provide detailed exposure information even if exposure information does not exist. No one who fails to prove occupational exposure will be eligible for compensation.
Physicians, who are generally not trained in industrial hygiene, must independently verify decades old exposure records. Doctors not trained in occupational medicine must also exclude other causes of disease before claimants receive compensation.
None of these requirements is consistent with a no fault system – and claimants are not currently required to file any of this information in order to initiate their claims in court.
Huge Cost Shift from Defendants to Employers’ Health Plans and Medicare
Currently workers repay employers, health plans or Medicare if they recover for asbestos injuries. Under the bill, these collateral sources become the primary payors for asbestos illnesses. Asbestos defendants and insurers will benefit while health plans and Medicare bear the increased costs.