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Asbestos & Mesothelioma

FACT Act Passed in House of Representatives

— January 11, 2016

Corporate America and the politicians it owns scored a victory on January 8 when the FACT Act passed in House of Representatives after long debate and several Democrat-proposed amendments being rejected. It moves on to the Senate and, if passed there, has a hot date with a Presidential veto.

Corporate America and the politicians it owns scored a victory on January 8 when the FACT Act passed in House of Representatives after long debate and several Democrat-proposed amendments being rejected. It moves on to the Senate and, if passed there, has a hot date with a Presidential veto.

H.R. 1927 combines two awful pieces of… legislation into one. This mutant bill is a mash-up of the Fairness in Class Action Litigation Act and the Furthering Asbestos Claim Transparency Act (FACT). The Republican-controlled House passed this abomination 211-188. Sixteen Republicans voted against it and not a single Democrat voted in favor.

The FACT Act, as passed, is a “Get Out of Jail Free!” card for misbehaving corporations (VW, I’m looking at you! Bayer, you’re next!) and an engraved invitation to criminals everywhere to commit identity theft against those suffering from asbestos poisoning. Word to the wise: if you support FACT, don’t mention that to any veterans suffering from asbestos-related illnesses. They’re understandably unhappy about being victimized by FACT after risking their lives and ending up sick in the process.

The Fairness in Class Action Litigation chunk is a one-pager proposed last April by Rep. Bob Goodlatte (R-VA), the Chairman of the House Judiciary Committee. It makes class certification even more of a nightmare for federal judges. Boiled down to its essence, a class cannot be certified unless all of the class members have the same “type and scope” of injury as the named plaintiffs. Injured consumers to one side of the room and uninjured (but still somehow affected) to the other, making for multiple classes based on the same set of facts. Nothing like increasing efficiency in the justice system! Not.

Rep. Goodlatte claims that class action lawyers artificially inflate classes in order to increase their fees. Under Goodlatte’s bill, judges would have to make decisions early in the process as to which class members are comparably and “more” injured than others. Rep. Goodlatte said, “That’s fair to everyone.” His corporate masters must be so pleased right now.

Rep. John Conyers (D-MI) said Goodlatte’s bill only protects corporations “by making it more difficult for those who have been harmed by their [corporations’] actions from obtaining justice and allows these wrongdoers to further victimize their victims.”

Rep. Goodlatte’s bill was joined last month to the FACT Act, sponsored by Rep. Blake Farenthold (R-TX), shown in lead image. FACT originally passed the House in 2013, but didn’t go much further.

FACT’s reason for being is allegedly to make the asbestos trust system more transparent. The trust system is comprised of roughly 100 companies that were often sued and ended up declaring bankruptcy in order to set up trusts for victim compensation. Apparently, “transparency” means further victimizing those suffering from mesothelioma and other asbestos-related illnesses by placing dangerous reporting requirements on them if they want to be compensated.

Bill Murray in "Stripes," courtesy Paramount Pictures
Bill Murray in “Stripes,” courtesy Paramount Pictures

FACT requires information such as full name, exposure history (work history), basis for any payment to a claimant* and partial Social Security number. These reports, available publicly on the Internet, are made quarterly to the Bankruptcy Court by the trusts. Consumer advocates warn that this could pose a credible risk of identity theft to those whose information is listed in the reports.

*While FACT states that it does not require confidential medical records, information contained in such records is often the basis for the victims’ claims.

Rep. Farenthold became frustrated with Democrat-proposed amendments to FACT, finally rising to speak after one such amendment was proposed dealing with information security for minors’ claims. He said, “I am stunned by the amount of people who haven’t read this three-page bill.”

His claims that minors’ information is already protected in the form of listing the minors’ names as initials only, giving their exposure claim and the last four digits of their Social Security numbers and bank account numbers wasn’t very comforting. The amendment that prompted him to speak out was defeated, just like all the others.

FACT also requires the trusts to give information to defendants in asbestos suits so that they can be sure the plaintiffs’ lawyers aren’t blaming the defendants’ products as well as those of the companies that set up the trusts. Double dipping, in other words.

Sadly, this double dipping has happened in recent years. Garlock Sealing Technologies filed bankruptcy and, in the January 2014 proceeding, U.S. Bankruptcy Judge George Hodges found that plaintiffs’ attorneys withheld evidence that may have been submitted to trusts while in the process of suing Garlock. The reason? Double dipping, or as Judge Hodges put it, maximizing recovery using both systems.

The plaintiffs’ attorneys ended up facing racketeering suits and Garlock was ordered to establish a $125M trust, over $1B less than requested by plaintiffs’ attorneys. Ultimately, Garlock agreed to fund the trust with over $350M.

If FACT wanted to protect against such fraud by asking for the same information from asbestos victims, but allowed that information to be kept away from the public, there would be no problem. However, FACT as written, opens the doors to unscrupulous individuals looking for a free ride. And no, Rep. Farenthold, I don’t mean lawyers.

Hopefully, this will all amount to nothing more than a blog post if FACT is shot down in the Senate. If not, expect another post when President Obama breaks out the veto stamp.


U.S. House passes asbestos, class action reform bill under veto threat

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