Theoretically, the concept of trust fund is a perfect solution to what is called the "worst industrial accident in American history". Although the trust fund is beneficial, many people see a problem with the idea.
Favorable Factors of Asbestos Trust Fund
1. With a trust fund, the companies responsible for the incident can plan their expenses for compensation.
2. The trust fund will come from mandatory contributions of companies who make profits out of asbestos.
3. The concept of trust fund was invoked in Congress' Chapter 11 proceedings for businesses who have filed for bankruptcy from the time Congress gave special handling for firms facing a huge burden from asbestos court proceedings. The company is required to commit a minimum of 50% of the reorganized equity to a trust fund which will finance asbestos claims.
4. As per the FAIR bills (Fairness in Asbestos Injury Resolution) that were brought to Congress, the trust will be funded by several entities whose contribution will be set by law based on their capacity and the extent of their liability.
Under-funding of Asbestos Trusts
Unfortunately, the trust fund that was proposed before Congress has been criticized as under-funded. The latest prediction of experts show an under-funding of $16 billion to more that $100 billion.
This is clearly illustrated in the Johns-Manville trust, where their committee gravely underestimated the number of victims who will be eligible for compensation. From the time it was conceptualized, the operations of the trust fund was twice suspended and the settlement amount was reduced to less than 10 cents for every dollar of the original benefits. Under these conditions, even a proven case of malignant mesothelioma with serious impairment cannot collect enough for medical bills.
Simplification of Payment
Indeed, trust fund concept results in simplified payments. Under this trust's provision, to have a "fair and equitable" system of payment, a schedule of benefits is established based on condition and degree of impairment. Hence, plaintiffs with malignant cases of mesothelioma are all entitled to the same amount of benefit. This also clears the criticism of the tort system that it bases its arbitrary awards on the skill of the attorney and the emotions of the jury.
A trust fund also ensures timely release of benefits which is great news for those who have been in a rather endless tort system, dealing with long delays. In a pending case where the company files for bankruptcy, the claimants need to wait five to seven years before receiving any compensation at all. With the current long list of asbestos cases pending in court, it could take years for a case to be heard and a lot longer for it to be settled.
The Flip Side: Backlog
Unfortunately, with a trust fund, all existing and pending claims will be shovelled into the trust payment system, which will start with a backlog of thousands of cases that need review and decision before any new case can be taken. You can imagine the years it would take before most claimants can see their benefits.
Funnelling the Amount to Victims
Under a trust fund system, costs such as proponents of trust fund will be rid of. This will mean more money to be awarded to the very sick and deserving of funds.
Other Concerns
There are other issues concerning the trust fund concept of compensation for asbestos cases. These are:
• Standard of Proof – The FAIR bill presently in Congress tightens the Johns-Manville trust standard of proof for claimants. For consideration for benefits, claimants have the burden of proof of impairment to the adjusters' satisfaction.
• Claimants with environmental exposure are excluded – Under the FAIR bills, the only ones eligible for compensation are those who can show proof of occupational exposure. Stricter standard of proof were set for those who had exposure after 1976. Apart from the victims of Hurricane Katrina in New Orleans, those who were exposed to asbestos during the 9/11 attacks, and the residents of Libby, Montana, those who are exposed outside of their workplace are not eligible for compensation. This includes secondary sufferers of mesothelioma because a house-mate was exposed to the hazardous chemical.
Latest News