The Hatch Asbestos Compensation Bill is Unfair to Workers

 Asbestos compensation legislation introduced by Senator Hatch is a regressive measure that relieves manufacturers, employers and insurers of liability and fails to provide fair compensation to victims of asbestos disease. The bill establishes restrictive medical criteria that are more stringent than those in the Manville and other bankruptcy trusts; imposes evidentiary burdens that are difficult, if not, impossible to meet; sets inadequate levels of compensation far lower than what victims now receive; and sets up a new asbestos court with broad unreviewable powers. Moreover, the bill sets an absolute cap on employers and insurers’ liability and provides no means for additional funding if the number of valid claims exceeds projections, leaving victims to bear all the risk. 

Review of the legislation shows that the bill is in essence the proposal put forward last month by the Asbestos Study Group, with evidentiary and procedural burdens that make it even worse. Senator Hatch’s asbestos compensation bill provides a windfall to companies and insurers’ at the expense of hundreds of thousands of asbestos victims. 

Here is a summary of the major shortfalls of the bill: 

Overly Restrictive Medical Criteria – The Hatch bill sets overly restrictive medical criteria that would exclude many workers with serious asbestos-related disease. The criteria are even more restrictive than those in the Manville Trust and other bankruptcy trusts, despite Senator Hatch’s statement that his bill was incorporating the Manville 2002 criteria. Specifically, for Asymptomatic Exposure (Level I) the exposure criteria are more restrictive (5 years of cumulative exposure versus any exposure); for Asbestosis/Pleural Disease (Level II), both the degree of disease required and exposure are more restrictive than Manville (b2 pleural disease and 5 years significant occupational exposure versus underlying pleural disease and 5 years cumulative exposure in Manville). Moreover, no compensation is provided for either category of these victims, which together accounted for more than 50 percent of the Manville Trust’s non-malignant disease claims during the past 5 years. These victims deserve some level of compensation.

The Hatch lung cancer categories create separate groups for smokers and non-smokers, which Manville does not. Under the Hatch criteria, 95 percent of all lung cancer claims (those among smokers) would be put in Level VI at a very low level of compensation ($50,000) that is much less than that provided to similar victims under Manville. (Under Manville smoking lung cancers which meet underlying disease and exposure criteria would be in Category VII, which is compensated at a maximum level of $400,000).

Moreover, the Hatch bill requires claimants to receive a diagnosis from a “treating” physician, instead of permitting diagnosis by a qualified physician as is required by the Manville Trust. The diagnosis must exclude other more likely causes of the injury. This is a much more stringent requirement than Manville, which for certain diseases requires supporting medical documentation establishing asbestos exposure as a contributing factor in causing the condition. 

Heavy Evidentiary Burdens - The Hatch Bill imposes heavy evidentiary burdens that are difficult if not impossible to meet. As part of the medical diagnosis, the bill requires independent verification of the duration, proximity, regularity and intensity of exposure. Physicians do not have any way of independently verifying exposures that occurred 30 – 40 years ago. There generally are no records, nor would there be any other practical way a physician could verify the victim’s exposure. Claimants are also required to submit a detailed description of their asbestos exposure, including product identification information. If this is a no-fault system, there is no need for product identification.

The bill also requires that original x-rays and spirometric tracings be submitted with every claim, which seems to indicate that every claim will be subject to independent medical review. Manville and other trusts require only the physician diagnosis and summary of exposure history. Detailed records are only required on a case-by-case when individual medical review is deemed to be warranted. Moreover, the bill grants the court broad, unreviewable authority to set rules to set new evidentiary requirements with no basis or public input. 

Unfair Compensation Levels – The Hatch Bill uses the “maximum” values from the Manville 2002 TDP for compensation levels for disease levels III – VIII. However, the Manville values represent only 25 – 33% of an actual claim value (based on Manville’s market share). The full value of claims in the present system far exceeds the claims values set forth in the Hatch bill. Lung cancer cases settled in the late 1990’s had total average values in excess of $400,000; settled mesothelioma cases had values well in excess of $1 million. In the last several years, the value of these claims has increased dramatically. The Hatch bill by comparison sets a flat level of $50,000 for the vast majority of lung cancer cases, and $750,000 for mesothelioma cases. No provision is made for any individualized treatment of claims for victims who suffer severe economic loss (e.g. for individuals who develop disease at a relatively young age).

Moreover, the Hatch bill would reduce payments made to claimants, if the claimant had received payments from disability insurance, health insurance or other sources. (In the current tort system, victims are compensated for pain and suffering, economic loss and medical expenses). The Hatch bill would not only result in much less money paid to claimants; it would shift the cost of paying for asbestos-related diseases to private health insurance (including union health funds) and other insurance programs. 

The Hatch bill would provide no compensation for the majority of asbestos victims – those with asbestosis (lung scarring) or pleural plaques, and those with lung disease caused by a combination of asbestos and other factors. These victims are currently being awarded compensation in the tort system, and are provided compensation under the Manville and other bankruptcy trusts. Many of these individuals have significant impairment. Moreover, once diagnosed with an asbestos-related disease these individuals often become uninsurable and are forced to bear all their medical costs. An equitable compensation system would provide some level of compensation for these individuals, particularly those with significant lung impairment. 

Sets Up an Adversarial Asbestos Court with Broad Non-Reviewable Powers – The Hatch Bill establishes a new Asbestos Court to review and process asbestos compensation claims. For a number of reasons, this mechanism does not seem well suited to implement a no-fault compensation system. 

First, by its very nature, a court suggests that the process will be adversarial, quite different than the non-adversarial no-fault administrative systems utilized by most compensation systems. The evidentiary burdens established by the bill coupled with the legally processes will make the claims process complex, requiring that claimants hire lawyers or seek other expert assistance.

Second, implementing the compensation program will require the development of substantive rules. Indeed, the Hatch Bill anticipates that the Court will establish an array of procedural and substantive rules, including developing methods and standards for auditing medical evidence submitted in support of claims; prescribing rules to implement diagnostic, latency and exposure criteria; and prescribing rules to identify work in specific industries, occupations, etc. as presumptively establishing “substantial occupational exposure.” These are issues that require the input of medical and other experts and a public process, with an opportunity for notice and comment. However, the bill does not appear to anticipate any public process, nor is it clear whether an Article I court would have the authority to engage in notice and comment rulemaking.

Claims processing is but one of the function of an asbestos compensation program. Equally important are the supplemental programs for outreach, claimant assistance, medical screening and monitoring. An Asbestos Court is not the appropriate body to conduct such functions.

An independent administrative agency, a government corporation or government established trust, appear to be more appropriate mechanisms for administering this compensation system. 

Sets an Absolute Cap on Companies’ Liability Leaving Workers to Bear the Risk – The Hatch bill sets a $108 billion cap on the liability of companies and insurers. No provisions are made to fund the system if this level is exceeded. The $108 billion level is insufficient to provide fair compensation to victims, even at the projected average number of claims that is expected. Indeed, at the average projected level of claims, A.M. Best, Fitch and other actuarial firms estimate under the current system, the future liability of asbestos claims to be an additional $150 – 200 billion. But, based on past experience, the projected numbers of claims is likely to be too low. Every projection made by Manville and other trusts has been exceeded, with insufficient funds available to pay victims. Manville now only pays 5 cents on the dollar of scheduled values due to the number of claims being filed. Any legislation must provide a funding mechanism to cover full payment for claims that are filed. Workers should not and cannot be left bearing the risk in any new compensation system.

AFL-CIO Fact Sheet
May 22, 2003