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June 13, 2003 1:33 PM
Workers’ Compensation News - June 14, 2002 Volume 1 Issue 14

Congoleum Corporation Amends Agreement to Settle Asbestos Claims Congoleum Corporation (AMEX:CGM) reported ... 6/11/2003 

Senator Leahy Objects to Federal Asbestos Legislation As Unfair to Workers I thank Chairman Hatch for calling this ... 6/4/2003 

Harkin Finds Nuclear Worker Files Sitting For Months With No Action In letters to Health and Human Services ... 6/4/2003 

For these stories and more visit www.gelmans.com

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CASES
"Amputation Bonus"
"...a worker, who suffers a work-related amputation of fingers that qualifies for an award of benefits for loss of a hand under N.J.S.A. 34:15-12(c)(8), also qualifies for an award of an amputation bonus under N.J.S.A. 34:15-12(c)(21)."
Martinez v Silverline 2003 WL 21305487 (N.J. Super. AD) Decided 6.9.03
http://lawlibrary.rutgers.edu/courts/appellate/a6057-01.opn.html

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ASBESTOS BILL COULD BE WINDFALL FOR BUSINESS



The Senate has taken a major step toward setting up a national fund to compensate people whose health has been ruined by asbestos, but the first and biggest beneficiaries of the plan may be companies such as Halliburton - the Texas oil services firm - which could save $3.5 billion of its pending liability for asbestos claims. On a 10-8vote, the Senate Judiciary Committee sent to the floor a plan to close the courts to all asbestos claims. Instead, the claims would be transferred to a newly created federal trust fund. Over its 27-year life, the fund is supposed to have$108 billion to pay people who develop cancer or other health impairments from their exposure to asbestos in the workplace. The money in the trust fund would come from about 8,500 companies that made or sold asbestos products directly or through their subsidiaries, as well as the companies' insurers. But most of the firms would pay no more than $25 million a year. In February, Halliburton and its insurers reached a "global settlement" of 200,000 asbestos claims. They agreed to pay $4.2 billion to settle the claims. But the Senate bill would cancel all such pending settlements.*****David G. Savage, Los Angeles Times, 07/14/2003For complete story, search http://www.latimes.com/archives

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Just Published! WORKERS’ COMPENSATION REFERENCE MANUAL 2003 Edition - NEW JERSEY PRACTICE SERIES™
The NEW Worker’s Compensation Reference Manual, for use in conjunction with New Jersey Practice, Gelman, Workers’ Compensation Law, Volumes 38-39A. 

The Reference Manual is designed to augment and assist research using New Jersey Practice, Workers’ Compensation Law, Volumes 38-39A. To this end, you will find in the Reference Manual: 
(1) The text of pertinent statutes referenced in Volumes 38-39A; 
(2) Immediate cross-references from each statute back to the text of Volumes 38-39A, where that the statutes are discussed; and 
(3) Case annotations for each of the statutes in the Reference Manual. 
In one convenient package, the Workers’ Compensation Reference Manual, used along side New Jersey Practice, Workers’ Compensation Law, Volumes 38-39A, provides the researcher with statutory text and case annotations for the statutes discussed in Volumes 38-39A, cross-referenced to where these discussions take place. 

West Group is certain you will find the confluence of primary source material and treatise analysis, facilitated by the Workers’ Compensation Reference Manual, enhances the utility of New Jersey Practice, Workers’ Compensation Law, Volumes 38-39A, and materially assists in your research.
If you would like to inquire about related West publications or placing an order, please contact us at 1-800-328-9352. 
http://www.westgroup.com

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Medical Privacy - Genetic Information Nondiscrimination Act of 2003
Genetic discrimination bill moving ahead in Senate
http://www.amednews.com/content/pick_03/gvsb0616.htm
For status and text search S.1053
http://thomas.loc.gov/
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Insurance Industry Poblems
Industry Insiders Admit Over and Over Again:
Insurance Business Practices and Investment Cycle to Blame for Insurance Liability “Crisis”
http://www.centerjd.org/air/pr/Investments.pdf

Best Places Ratings of Atlantic Mutual Companies Under Review with Negative Implications
www.ambest.com

Best Downgrades Ratings of Kemper Insurance Companies 
Best Co. has downgraded the financial strength ratings to D (Poor) from C++ (Marginal) of the participants in the Kemper Insurance Companies (Long Grove, IL) inter-company pool, eight reinsured affiliates and one domestic affiliate.
www.ambest.com

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Smallpox Vaccinatins Begin Again - Phase 2
Medical experts renew call to freeze smallpox vaccinations 
http://www.govexec.com/dailyfed/0503/052703w1.htm

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Asbestos: Hatch Bill to be marke up "Next Week"
We have been told that Senator Hatch intends to mark up S 1125 next week. Attached is a letter sent by the AFL-CIO to members of the senate and a copy of their fact sheet stating their reasons for opposing the bill.

Action is needed immediately to stop this legislation. You are urged to contact the Senate Judiciary Committee.

June 10, 2003
Dear Senator:

I am writing to express the strong opposition of the AFL-CIO to S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003,introduced by Senator Orrin Hatch (R-UT). Despite the sponsors desire to craft a bill acceptable to all parties, the legislation is a restrictive measure that fails to provide fair, timely and certain compensation to victims of asbestos-related disease, while relieving manufacturers, employers and insurers of all liability. S. 1125 unfairly shifts the burden and risk of paying for asbestos related disease to victims and their families. I urge you not to co-sponsor or support this legislation. 

Decades of uncontrolled use of asbestos, even after its hazards were known, have resulted in an occupational disease crisis in the United States and throughout the world of monumental scope. In this country, from 1940 to 1979, more than 27 million workers were occupationally exposed to asbestos in shipyards, manufacturing operations, construction work and a wide range of other industries and occupations. As a result hundreds of thousands of workers and their family members have suffered or died of asbestos-related cancers and lung disease, and more than a million more future cases are expected. In this year alone, in 2003, almost 10,000 people in the United States are expected to die from asbestos-related diseases. Because of the long lag between exposure and the development of cancer or other asbestos diseases, the asbestos disease epidemic is only now peaking, and will be with us for decades to come. 

While some asbestos victims have received compensation in the courts, many victims have faced years of delay. The labor movement has in the past supported a variety of efforts to improve asbestos compensation. Since the beginning of this year the AFL-CIO has been engaged in serious detailed discussions with employers and insurers on the establishment of a national asbestos trust fund to provide fair and timely compensation to asbestos victims. Unfor-tunately, those ongoing discussions were aborted with the introduction of S.1125. While the bill may have been an attempt to move the process forward, its effect has been to move it backwards. The terms of the bill are far more restrictive than those initially outlined by industry several months ago, and since the bills introduction all discussions among the parties have ceased.

The shortcomings of S. 1125 are extensive and severe. (See the enclosed fact sheet for a detailed review of the bill). The bill sets restrictive medical criteria and evidentiary require-ments, even stricter than those in the Manville bankruptcy trust, which would exclude many victims with serious asbestos-related diseases from receiving compensation. Among those excluded are workers with significant impairment who also suffer from other lung diseases, victims with colorectal cancer and family members who develop disease from take-home exposures. 

Compensation levels set for diseases are grossly unfair, far lower than the claims values in the current system. For the vast majority of victims with non-malignant diseases, S. 1125 provides no compensation. For most workers with asbestosis and lung impairment who qualify for compensation, the maximum award is set at $40,000. Because of the bills restrictive medical criteria, this group will include many individuals with severe asbestosis who are totally disabled. 

Awards for cancer victims are also unfair. For the vast majority of lung cancer victims - those with asbestos related cancer who also smoke - compensation is limited to $100,000 far less than awards and settlements for similar claims in the tort system and far less than the claims values under the Manville trust. 

Moreover, the bill requires that these low awards be further reduced, if the claimant had received or was eligible for payments from collateral sourcesincluding disability insurance and health insurance. Thus, the bill would not only result in much less money paid to claimants many of whom would receive no payment; it would shift the cost of paying for asbestos-related diseases to private health insurance, including union health funds, other insurance programs and claimants. While the bill does not affect workerscompensation or veterans benefit payments for most workers, it totally pre-empts all asbestos-related compensation for railroad workers covered by FELA. 

S. 1125 establishes a new asbestos court as the body to review and process asbestos compensation claims. 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. 

One of the bills most objectionable features is that it sets an absolute cap on companiesliability and leaves workers to bear all the risk if claims projections are exceeded. The $108 billion funding cap, while a large amount of money, is not sufficient to provide fair levels of compensation, even for projected likelynumbers of claims, let alone high-endestimates. Any legislation must provide a funding mechanism to cover full payment for claims that are filed. Workers should not and cannot be left to bear the risk in any new compensation system.

The AFL-CIO supports the establishment of a national asbestos trust as a replacement for the current system, but only if it provides victims of asbestos-disease fair, certain and timely compensation based on sound medical criteria, and leaves victims as a whole better off than in the current system. Unfortunately, S. 1125 does not meet this measure of fairness or equity for asbestos victims. I, therefore, urge you not to co-sponsor, and to oppose this bill. 

Sincerely,

William Samuel, Director
DEPARTMENT OF LEGISLATION
AFL-CIO Fact Sheet

The Hatch Asbestos Compensation Bill (S. 1125) is Unfair to Workers

Decades of uncontrolled use of asbestos, even after its hazards were known, have resulted in an occupational disease crisis in the United States and throughout the world of monumental scope. In this country, from 1940 to 1979, more than 27 million workers were occupationally exposed to asbestos in shipyards, manufacturing operations, construction work and a wide range of other industries and occupations. As a result hundreds of thousands of workers and their family members have suffered or died of asbestos-related cancers and lung disease, and more than a million more future cases are expected. In this year alone, in 2003, almost 10,000 people in the United States are expected to die from asbestos-related diseases. Because of the long lag between exposure and the development of cancer or other asbestos diseases, the asbestos disease epidemic is only now peaking, and will be with us for decades to come. 

Asbestos compensation legislation (S. 1125) introduced by Senator Hatch (R- UT) 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 insurersliability and provides no means for additional funding if the number of valid claims exceeds projections, leaving victims to bear all the risk. 

Senator Hatchs asbestos compensation bill provides a windfall to companies and insurersat the expense of hundreds of thousands of asbestos victims. 

Here is a summary of the major shortfalls of the bill: 
Overly Restrictive Medical Criteria 

S. 1125 sets overly restrictive medical criteria that would exclude many workers with serious asbestos-related disease from receiving compensation. Indeed, the bills medical criteria are even stricter than the criteria in the Manville trust, which have been recently tightened because of the trusts severe financial constraints. The bill excludes the vast majority of non-malignant asbestos diseases from compensation, even workers with significant impairment who also suffer from other lung diseases. Colorectal cancer, which is covered by Manville and the other trusts, is excluded from coverage. Key diagnostic tests - CT scans and oxygen diffusion that are the most sensitive for diagnosing asbestos-related diseases and that were included in Manvilles 1995 criteria may not be used as the basis for diagnosis under the bill. 

In addition, S. 1125 requires that all claims must meet restrictive diagnostic criteria that will severely limit the ability of victims to receive compensation. For example, as part of the medical diagnosis, the bill requires independent verification of the duration, proximity, regularity and intensity of exposure. This is simply not possible, and would disqualify the vast majority of claimants. Physicians do not have any way of independently verifying exposures that occurred 30 40 years ago.

S. 1125 limits compensation to those individuals who meet the medical and exposure criteria set forth in the bill. There is no provision for medical exceptions or for individuals to seek individual evaluation for their claims. The bill also excludes family members who develop disease as a result of take-home exposures or community exposures, such as those in Libby, Montana. The Manville Trust and other trusts provide for medical exceptions, individual evaluation of claims, and compensation for family members and others who develop asbestos-related diseases. Any fair federal asbestos compensation legislation should do the same.

In addition, S. 1125 requires that all claims must meet restrictive diagnostic criteria that will severely limit the ability of victims to receive compensation. The Hatch bill requires claimants to receive a diagnosis from a treatingphysician, instead of permitting diagnosis by a qualified physician as is required by the Manville Trust. The term treatingphysician is not defined, but may mean that diagnoses obtained through established union sponsored screening programs, such as the Sheet Metal Workers asbestos screening program, may not qualify if the examining physician is deemed not to be treating the worker. 

As part of the medical diagnosis, the bill requires independent verification of the duration, proximity, regularity and intensity of exposure. This is simply not possible, and would disqualify the vast majority of claimants. 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 victims exposure. 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 other heavy evidentiary burdens that are difficult if not impossible to meet. Claimants are 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 asbestos court created by the bill, broad, unreviewable authority to set rules to set new evidentiary requirements with no basis or public input. 

Unfair Compensation Levels 
S. 1125 sets unfair levels of compensation that are far less than average claim values in the current system, even for workers who have disabling and fatal diseases. The bill uses the maximumvalues from the Manville 2002 Trust Distribution Process (TDP) for compensation levels. However, the Manville values now represent less than 25% of a full claim value. 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. 

For those workers with asbestosis or pleural disease with impairment who qualify for Level III compensation, the maximum award is set at $40,000. Because of the bills restrictive medical criteria, this group will include many individuals with severe asbestosis who are totally disabled, but will not qualify for greater compensation under Level IV. 

Awards for cancer victims are also unfair. Victims with colorectal cancer are excluded from the bill and receive no compensation. For the vast majority of lung cancer victims - those with asbestos related cancer who also smoke - compensation is limited to $100,000. Most of these victims will die from their disease. This compensation is far less than awards and settlements for similar claims in the tort system, and far less than the value of a lung cancer claim under the Manville 2002 TDP. Manville assumes the baselung cancer claim to be a smoking lung cancer, which is a reasonable assumption since 90 95% of all asbestos related lung cancers occur among smokers. The Manville scheduled value for these claims is equivalent to a total claim value of $380,000, (assuming Manville represents 25% of the full claim value). Similarly, compensation for the fatal cancer mesothelioma, set at $750,000, is far less than the mesothelioma awards in the current system, which average between $1 million and $5 million depending on the state. 

It is important to point out that the claims values outlined in S. 1125 represent maximum compensation awards. 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), as is the case in the current system. Moreover, the Hatch bill would reduce payments made to claimants, if the claimant had received payments from disability insurance, health insurance or other collateralsources. Thus, the bill would not only result in much less money paid to claimants many of whom would receive no payment; it would shift the cost of paying for asbestos-related diseases to private health insurance (including union health funds) and other insurance programs. While the bill does not affect workerscompensation or veterans benefit payments for most workers, it totally pre-empts all asbestos-related compensation for railroad workers covered by FELA. 

Sets Up an Adversarial Asbestos Court with Broad Non-Reviewable Powers S. 1125 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 prescribin g 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 CompaniesLiability Leaving Workers to Bear the Risk 
The Hatch bill sets a $108 billion cap on the liability of companies and insurers. For many major asbestos defendants liability is capped at $25 million dollars a year, with companies relieved of billions of dollars of potential liability. This includes Halliburton, who would pay $3.5 billion less under S. 1125 than under the tentative settlement it has recently negotiated. 

No provisions are included in the bill to fund the system if the $108 billion cap is exceeded. This funding level is insufficient to provide fair compensation to victims, even at the projected likelynumber of claims that is expected, let alone at the high-endestimates. Indeed, at the likelyprojected 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 may well 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.

Revised June 10, 2003

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Calendar
- 6.14.03 NJ ICLE Seminar on Lindquist
http://www.njicle.com/cgi-bin/njicle?SessionID=30&doc=/Seminars/Evidence_6-14-03.htm

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