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					                                  WORKING DRAFT

                                    March 24, 2004

                     ABA/TIPS Task Force on Asbestos Litigation

                                By Leo J. Jordan, Esq.
                                Co-Chair of Task Force

This paper represents the continuing work of this task force. It is intended as a
working and reference document. It is not intended to represent the view of the
American Bar Association, The Tort Trial and Insurance Practice Section, or any
other ABA entity.      Comments on the draft are welcome.                Write to
leojordan@comcast.net

       Fair in Asbestos Injury Resolution Act of 2003 – S. 1125, 108th Congress
                   Funding Proposal – Role of Federal Government

I. Introduction

   S. 1125 was reported favorably (10-8) out of the Senate Judiciary Committee on July
   30, 2003. This legislation takes asbestos claims out of the existing tort system and
   administers them through a federally administered trust fund. This plan will
   compensate present and future claims on a non-fault basis according to
   standardized medical criteria and designated claim awards. Claimants need only to
   satisfy the eligibility requirements under the Act. (The House of Representatives has
   not yet taken formal action on asbestos legislation, apparently preferring the Senate
   to take the lead.)

   The trust fund will operate on two fronts: first, through the collection and
   management of assessments against corporate defendant and insurance
   companies, as well as a smaller part from existing asbestos compensation trusts;
   and second, through the payment of such funds to compensate claimants who can
   establish eligibility based upon legislatively approved medical criteria.         The
   legislation proposes differing funding levels based upon the severity of the asbestos-
   related disease.

   The issues presented in this paper include (1) whether the funding anticipated by
   this legislation is adequate to satisfy pending and future claims; and (2) if funds are
   deemed insufficient, should the federal government contribute to the fund as either a
   “responsible party” or in its overall role to provide for the public welfare?

II. Number of Asbestos Cases, Present and Future

   According to a 2002 study by the RAND Corporation Institute for Civil Justice, more
   than 600,000 asbestos claims have been filed to 20021.
                                           -2-



   It is estimated that there are currently almost 300,000 asbestos-related bodily injury
   claims pending in state and federal courts. Roughly 50,000-70,000 new claims were
   filed per year from 2000-2002.3

   Moreover, there are currently about 2,000 new mesothelioma cases filed each year.
   There are another 2,000-3,000 cancer cases that are likely attributable (at least in
   part) to asbestos. There are a smaller number of asbestosis cases. The remaining
   cases are either pleural injuries or from claimants who do not presently show signs
   of injury. It is estimated that more than 90 percent (or more than 54,000 claims filed
   during 2002) are for claimants alleging nonmalignant injuries.4

   There is no agreement as to the ultimate cost of asbestos-related injuries.
   Estimates range from a low of $108 billion to a high of $275 billion. The former
   estimate was reported by the Senate Judiciary Committee. The latter estimate is
   from a leading actuarial firm.5

III. Funding Mechanism(s)

   The bill, as approved by the Senate Judiciary Committee in July 2003, would require
   $108 billion in aggregate contributions. Insurers and defendant corporations would
   each contribute $52 billion and $4 billion from existing bankruptcy trusts. An
   amendment by Senator Diane Feinstein (D. CA) provided additional contingency
   funding amounting to $45 billion to be raised from corporations and insurers. S.
   1125 as reported out of Senate Judiciary would therefore have an overall
   capitalization of $153 billion.

   Insurers balked at the contingency funding and walked away from the debate. 6
   Senate Majority Leader Bill Frist (R. TN) later took personal charge of the legislation
   and insurers and corporations appear in agreement on the following funding
   mechanism.

   A. An approximate $105 billion in mandatory contributions from defendants and
      insurers spread over 27 years. Insurers will be responsible for $46 billion.
      Corporations would contribute $57.5 billion. Existing bankruptcy trusts would
      contribute $1.5 billion. Insurer contributions would be front-loaded to provide for
      adequate funding in the early years. Defendant corporations would be expected
      to pay $2.5 billion each year over this period, or perhaps a shorter period.
   B. Defendant corporations would also be required to participate in a contingency
      funding proposal of $10 billion.
   C. Under the Frist proposal the total funding base would be about $114 billion. This
      is $6 billion above the basic funding reported by the Judiciary Committee.
      Absent from the Frist proposal is the $45 billion Feinstein contingency measure.
      The $6 billion increase over the original $108 billion capitalization is reportedly to
      be used to increase benefit amounts.
                                         -3-


IV. Adequacy of the Funding Mechanism

  The negotiations initiated by Senator Frist apparently included only representatives
  from corporate defendants and the insurance industry. Left out of these discussions
  were representatives of labor and the plaintiffs personal injury bar. It seems patently
  unlikely that legislation will be enacted unless there is greater agreement among all
  effected interests as to a reasonable evaluation of outstanding liabilities.

  The current legislative direction mandates that the asbestos trust funding is the
  primary responsibility of defendant companies and insurers. Sec. 405(a) of S. 1125
  specifically exempts the federal government from any funding obligation.

  The RAND Corporation Institute for Civil Justice estimated the ultimate cost of
  asbestos claim payments and expenses at $200 billion. RAND reported that $70
  billion had been paid through 2002, and estimated the future cost at $130 billion.
  The Judiciary Committee Report relied heavily on the anticipated savings in legal
  transaction costs to meet its goal of $108 billion7.

  How Much Money is Needed?

  From what we have seen, there remains a great deal of uncertainty as to the ultimate
  dollars needed to resolve the outstanding claims. There is neither agreement as to
  the number of claims or the final cost to resolve the more serious as well as the less
  impaired-type claims. Failure to narrow differences on the estimated number of
  future claims, as well as agreement on funding adequacy, could well impair the
  efforts of Senator Frist and others to move this legislation forward.

  We have seen the estimates of costs for pending and future claims ranging from:
    a) S. 1125 original estimate of $143 billion. (front-end $108 billion – contingent
       $45 billion)
    b) S. 1125 – Frist revision changed to $114 billion. (front-end $104 billion –
       contingent $10 billion)
    c) Congressional Budget Office (CBO) estimate $136 billion.
    d) Rand estimate $130 billion8.
    e) Tillinghast-Towers Perrin and Milliman $200-275 billion9.

  At the end of 2002, U. S. insurers and reinsurers had paid approximately $25.5
  billion and held $19 billion in reserves to pay future claims, as disclosed in the
  Annual Statements filed with state insurance departments10.

V. Role of the Federal Government

  The federal government appears willing to serve as the catalyst for a final resolution
  of the long-standing asbestos crisis. It is willing to take asbestos claims out of the
  tort system and have them administered by a federally administered trust fund. The
                                        -4-


government will also have borrowing authority in any calendar year in an amount not
to exceed anticipated contributions to the fund in the following year11.

The Wall Street Journal recognized this limited role of government when it reported
recently that “there is an empty chair at the Senate’s asbestos-settlement talks. It
belongs to Uncle Sam.” The paper reported that some of the most lethal exposures
to asbestos occurred in U.S. Navy shipyards. The Wall Street Journal cited industry
data showing that claims from individuals exposed in military and shipyard
construction accounted for 26 percent of mesothelioma cases, 16 percent of lung
cancer cases and 13 percent of disabling lung disease cases.12

The New York Times in 1982 reported on the adverse impact on shipyard workers
exposed to asbestos in Bethlehem Steel Corporation Key Highway Shipyard in
Baltimore, Maryland. According to the Times, a 1979 study found that more than
86% of Key Shipyard workers suffered lung abnormalities associated with
asbestos.13

A recent report of the Environmental Working Group has released a study of the
impact of asbestos-related injuries upon former shipyard workers in the San Diego
and Los Angeles areas. This report revealed that San Diego County had the eight-
highest number of asbestos-related deaths in the country. The report also ranks Los
Angeles County as No. 1 in asbestos deaths nationally. The study placed the blame
for these injuries primarily upon asbestos insulation in old Navy ships.14

A 1992 NYU Law Review article by Susan L. Barna contains a comprehensive
overview of the history of asbestos-related claims and the role of the federal
government as a major factor in the genesis of these claims.15

Barna writes that there is an historical record dating from as early as 1930 of
asbestos-related injuries due to exposure to a variety of dust particles, created in the
process of manufacturing asbestos-related products. Even as early as 1928
asbestos manufacturers were soliciting the U.S. Navy to secure a list of products
that could be sold to the Navy.16

The use of asbestos-rated products in naval shipbuilding accelerated greatly during
World War II. About 4.5 million shipyard workers were employed during World War
II. The number of shipyards either owned by the Navy or used predominantly by the
Navy increased from 32 to 131 during the period of the war. The Navy entered
contracts with many asbestos manufacturers during WWII. Many shipyard workers
contracted asbestosis and other asbestos-related diseases. Extended latency
periods delayed the actual manifestation or diagnosis of disease until many years
following the ending of the war.17

Manufacturers of asbestos products initially attempted to shift responsibility for
asbestos claims to the federal government. A number of studies pointed directly to
the federal government as the primary source and cause of these injuries. One
                                       -5-


study found that shipyard workers whom the federal government exposed to
asbestos during World War II have filed one-half of the compensation claims
pending against asbestos companies.18 Moreover, the Department of Health,
Education and Welfare reported that asbestos exposure occurred to 4.5 million
shipyard workers during World War II.19

While shipyard workers might well have chosen to bring suit against the government,
many found it far easier to sue the manufacturer in strict liability. Injured employees
wanting to bring suit in tort against the government faced insurmountable difficulties:

   1. The United States enjoys sovereign immunity and cannot be sued without its
      consent.
   2. Congress has waived sovereign immunity in tort by enacting the Federal Tort
      Claims Act. (FTCA)20
   3. Although the government is subject to suit under the FTCA, most
      government-employed      shipyard   workers    instead    sued    asbestos
      manufacturers. Government employees are not generally eligible to sue
      under the FTCA. The usual path of recovery for injuries suffered by
      government employees is under the Federal Employees Compensation Act.
      (FECA)21

Federal workers compensation protection did not work well for injured shipyard
workers especially those suffering not from accidental injury but from occupational
diseases:

          (a) The time requirements for filing a claim are often shorter than the
              latency period for asbestos-related diseases.
          (b) Causation is difficult to prove in asbestos-related cases to establish
              the disease was work-related.
          (c) Even where workers compensation claims are successful,
              compensation is likely to be inadequate.22

Because of the difficulties inherent in the FTCA, employees brought actions in strict
liability directly against asbestos manufacturers. Manufacturers in turn sought
contribution or indemnity from the federal government for liability resulting from the
use of asbestos in government products. This path also proved to be difficult. 23 In
order to obtain contribution under the FTCA, manufacturers must show that the
government owed an independent duty to the original plaintiffs, the shipyard
employees. Government is statutorily immune from suit from first-party employee
liability.

Manufacturers subsequently filed their claim in contract against the government
under the Tucker Act.24         The U. S. Claims Court has been given exclusive
jurisdiction over contract claims (over $10,000) against the government.
                                          -6-


   Many asbestos cases were brought against the government alleging various
   expressed or implied warranties by the government to its contractors. Most were
   dismissed for lack of subject matter jurisdiction. Ultimately, several important cases,
   although not consolidated, were considered under one heading.

   In GAF Corporation v. the United States25 the manufacturer filed a claim against the
   government for damages sustained as a result of lawsuits by government-employed
   shipyard workers to recover for injuries or death due to exposure to asbestos.

   The principal argument advanced by GAF was under the “superior knowledge”
   doctrine. This doctrine sets out the government’s duty to its suppliers to disclose
   information essential to successful contract performance. There was evidence that
   the government withheld important information relating to the dangers of asbestos
   exposure. This doctrine assumes the contractors would not have agreed to the
   contract terms if the government had not withheld certain information.

   Barna in the NYU Law Review outlines the GAF arguments regarding the
   government’s early knowledge:

      1. There was considerable evidence that the government, through its
         investigation of workers’ complaints at shipyard facilities, had substantial data
         on such hazards as early as 1943.
      2. Instead of informing the workers and manufacturers, the government
         classified the results of its investigation under the Espionage Act, making it a
         criminal act to review the results.
      3. Naval documents show the government not only knew of shipyard dangers,
         but also made a conscious effort to suppress the information, thus raising
         serious questions about the government’s conduct.26

   Despite this evidence establishing government involvement, the Claims Court
   granted summary judgment dismissing the GAF claim. The court determined the
   Navy had no contractual duty to warn an asbestos producer of hazards contained in
   its own products. The Court of Appeals for the Federal Circuit affirmed; the
   Supreme Court refused to review the case. These Claims Court decisions
   essentially ended further efforts to hold the federal government responsible under
   either a tort or contract basis.

VI. History of Federal Government Programs Caused by Injury or Disease

   Despite the government’s refusal to accept responsibility for asbestos-related
   injuries, there is recent history of the federal government’s role in resolving public
   policy issues associated with injury or disease. The role of government is set out in
   a letter from the General Accounting Office to Sen. Don Nickles (R. OK).27

   The GAO offered a comparison of funding mechanism offered under two somewhat
   comparable federal programs. They are the National Vaccine Injury Compensation
                                      -7-


Program28 and the Black Lung Benefits Program29 GAO then compared these
programs with S. 1125, as reported July 30, 2003.

Under the Vaccine Program

   1. For an injury: past and future medical care, pain and suffering (capped at
      $250,000), lost earnings and reasonable attorney fees. Death payments
      capped at $250,000.
   2. The source of benefit funding is the Vaccine Injury Trust Fund. Claims may
      be payable only from the Fund.
   3. A trust fund was established in the U.S. Treasury.
   4. Sources of fund income came from an excise tax of 75 cents on every dose of
      vaccine purchased.
   5. Treasury is required to invest funds only in interest bearing obligations of the
      U.S. and claims are payable only out of the Fund.
   6. There is no designation of explicit fiduciary responsibility under the Fund.
   7. No borrowing authority is permitted.
   8. The claim process is on a “no fault” basis.
   9. The current status of the vaccine fund was $1.9 billion (FY 2003)

Under the Black Lung Program

   1. Monthly income maintenance payments and medical benefits are allowed.
   2. The source of benefit funding is from “responsible operators” or by the Trust
      Fund where no coal mine operator can be held liable. Under the current
      practice, claims are processed by the Department of Labor and benefits paid
      by the mine operators or from the Fund.
   3. Source of Fund income is an excise tax on coal mining companies.
   4. Treasury is required to invest funds only in interest-bearing obligations of the
      U.S.
   5. There is no explicit fiduciary responsibility.
   6. If tax revenues are insufficient, Congress may appropriate “repayable
      advances” to the Fund. 26 U.S.C. Sec. 9501 (c).
   7. There is no explicit provision in the Black Lung legislation prohibiting tort
      lawsuits by miners; however, they are problematical.
   8. Coal taxes have been inadequate to cover expenditures and the Fund has
      borrowed extensively from the General Fund. The outstanding debt at the
      end of FY 2003 was over $8 billion.

Under the proposed Asbestos Fund (S. 1125) as described in GAO letter

   1. Benefits payable include cash awards payable over 3-4 years, derived from
      “benefit table” based upon medical conditions. “Medical monitoring” costs for
      patients with “nonmalignant disease” and “minimum exposure.” Sec. 132.
   2. The Source of Benefits Funding is the Asbestos Injury Claims Resolution
      Fund. All claims must be paid from the Fund. Sec. 132 (a) (1).
                                          -8-


      3. A “Trust Fund” is established in the Office of Asbestos Injury Claims
         Resolution’ unlike Vaccine and Black Lung where funds are established in the
         U. S. Treasury.        (GAO stresses that while S. 1125 shares many
         characteristics of a federal trust fund, it is not designated as a “trust fund” in
         the bill.)
      4. Sources of income are assessments from defendant corporations and
         insurers. Additional contributions may come from asbestos-related civil
         trusts.
      5. Fund investments are permitted under a “prudent person” standard, but no
         specific role for Treasury. Sec. 222 (a), (b).
      6. There is a specific limitation on government liability, “nothing my be construed
         to create any obligation of funding from the U.S.” Sec. 405 (a).
      7. The Fund is to be administered “in a fiduciary capacity.” (Sec. 222) (a), (b).
      8. The Administrator is authorized to borrow from commercial lending
         institutions, in any calendar year, an amount not to exceed anticipated
         contribution to the Fund in the following calendar year. (Sec. 223) (a).
      9. There is no alternate avenue of redress available. No asbestos claim may be
         pursued in Federal or State court, except for enforcement of claims for which
         an order or judgment has been entered. (Sec. 2(3); 403 (c) (1). 31

VII. Legislative Efforts to Force A Government Solution 1977-2001

   Numerous legislative efforts have been underway for the past 25 years to make the
   federal government participate in the overall resolution to what is now known as the
   “asbestos crisis.” Following is a summary of these efforts:

   Beginning in 1977 Rep. M. Fenwick (R. NJ), serving the legislative district of Johns-
   Manville introduced legislation to compensate asbestos victims from a federally
   administered central fund. This bill was reintroduced in 1981 and, again, failed to
   pass. 32

   Sen. Gary Hart (D. CO) in 1980 introduced the Asbestos Health Hazards
   Compensation Act. This bill left the administration of asbestos-compensation with
   the states. It also called for the establishment of federal minimum standards for
   compensating asbestos victims. The Hart proposal also called upon contributions
   from the federal government to fund the additional cost of compliance with the
   enhanced federal standards. This proposal reintroduced in 1981 was unsuccessful.33

   (The American Bar Association (ABA) in its 1983 meeting advocated appropriate
   legislation to provide adequate compensation for asbestos injuries. In a subsequent
   hearing before the Senate Commerce Committee, the Chairman of the ABA Section
   on Torts and Insurance Practice formally recommended federal legislation in areas
   such as asbestosis.)

   In 1994, Congress enacted the Bankruptcy Reform Act. This enabled some
   asbestos manufacturers to reorganize and establish a trust to channel future
   asbestos-related liability.
                                              -9-



      In 1999-2000, H.R.1283 was introduced and would establish the Asbestos
      Resolution Corporation. This bill would provide full compensatory awards, including
      pain and suffering.     The corporation would receive funding from defendant
      corporations, not through tax revenue. This effort was unsuccessful.

      In 2001, H.R. 1412 Retroactive Tax Relief provided that no tax be imposed on any
      settlement fund to resolve present or future asbestos claims. Did not pass.

VIII. Judicial Calls for Legislative Action Through 2001

      1990 – U.S. Supreme Court panel appointed by Chief Justice Rehnquist said in
             1991, “(This) situation has reached critical dimensions and is getting worse,”
             and the courts were ill-equipped to address the mass of claims in an
             effective manner.”34

      1996 – State v. Mac Queen, “Congress. . . has effectively forced the courts to adopt
            diverse, innovative and often nontraditional judicial management techniques
            to reduce the burden of asbestos litigation that seems to be paralyzing the
            active dockets.”35

      1997 – Amchem v. Windsor, The Supreme Court observed that, “the argument is
            sensibly made that a nationwide administrative claims processing regime
            would provide the most secure, fair, and efficient means of compensating
            victims of asbestos exposure. Congress, however, has not adopted such a
            solution.”36

      1999 – Ortiz v. Fibreboard, Supreme Court again calls on Congress, says existing
            asbestos litigation is an “elephantine mass. . . that calls for national
            legislation.”37

      2003 – Norfolk & Western Railway Co. v. Ayers, the court repeated the call for
            legislation.38

IX.   Arguments for Federal Government Contribution
      There are several arguments available to conclude that the federal government
      should contribute its financial resources toward an ultimate and final resolution of the
      asbestos crisis.

      A. Legal Arguments

         We have reviewed earlier decisions arising under the FTCA and the Tucker Act
         (actions in contract) that essentially insulated the federal government from
         responsibility for contributions to the resolution of this asbestos problem. Even
         though substantial evidence was available showing the government intentionally
                                   - 10 -


exposed its shipyard employees to danger of which it was fully aware, the courts
have been generally unsympathetic to claims for contributions.

The government was held immune to suit under the FTCA because of the
exclusive right of government employees to compensation under the FECA.
Asbestos manufacturers attempts to seek indemnity under the FTCA from the
government were not successful.

Later efforts by asbestos manufacturers to seek indemnification from the federal
government in the Claims Court under Tucker Act were also unsuccessful. In
GAF the plaintiff manufacturer alleged that (1) the government promulgated
mandatory specifications, encouraged development of, purchased and had
control of the conditions under which GAF products were used; and (2) the
government implied by warranty that the specifications and use of the products
would not expose GAF to liability for damages.

While other variations of this implied warranty were also alleged, they essentially
came down to this: the government made an implied warranty to sellers that its
own use of the product would not expose the sellers to unforeseen defective
product liabilities to persons who might be injured.

These arguments were rejected by the Claims Court and by the Federal Circuit.
Even though there is evidence that the government failed to disclose information
regarding shipyard asbestos hazards, the Claims Court refused to accept the
implied warranty standard. Even if the government possessed “superior
knowledge” of the product, GAF was unable to overcome the presumption of the
“experienced manufacturer.” Barna in the NYU Law Review article forcefully
argues that the designation of the “experienced manufacturer” is, in effect, an
irrebuttable presumption and is contrary to existing contract law. GAF essentially
established an “irrebuttable presumption that the government never had
knowledge “superior” to that of an experienced manufacturer.”

In her law review article, Barna argues that if the government did have “superior
knowledge,” this should result in government liability. Asbestos manufacturers
argued that had they been aware of the inside information possessed by the
government they would have revised the price of their services as well as
changing the nature of their products insurance coverage.

Despite determined efforts by asbestos manufacturers to hold the government
responsible for injuries to government employees, these efforts have been
unsuccessful. It appears almost certain now that asbestos manufacturers may
never be able to use judicial means to shift some of the financial burden of
asbestos tort claims to the federal government.

Public Policy Arguments
                                        - 11 -


     While the legal arguments for holding the federal government responsible for
     injuries inflicted on its government workers, as well as employees of government
     contractors, have not been persuasive, public policy arguments may press
     government to own up to its responsibilities.

     It is patently obvious today that the injured claimants cannot receive adequate
     compensation without government contribution. While the federal courts have
     avoided stating they might have ruled differently if manufacturers could show
     absolute funding inadequacy, it may be only because this is not the role of the
     courts. But surely it is the role of Congress and this has been reportedly voiced
     by the courts, including the Supreme Court on several occasions.

     Finally, Barna in the NYU Law Review article argues that manufacturers should
     be allowed to sue the government for two additional reasons: First, the financial
     strain of litigation has caused a number of asbestos manufacturers to file for
     bankruptcy. If government were found liable and forced to contribute, the added
     funds could be used to provide greater compensation to victims. Second, in the
     absence of Congressional action regarding government responsibility, keeping
     the legal channel open for manufacturers to sue the government may be the only
     way of forcing government disclosure of its inside information.

     Perhaps there is no better public policy argument supporting government
     financial participation in the asbestos trust fund than the pleas of the Supreme
     Court, as well as other judicial pronouncements. The conclusion from these
     sources is one of absolute frustration. The federal courts, including the Supreme
     Court, have refused to hold the government responsible under either the Federal
     Tort Claims Act or the Tucker Act. Efforts to seek approval of an enormous class
     action settlement by the Supreme Court were equally unsuccessful. It is highly
     unlikely that the courts will reverse present lawn and hold the government
     responsible for its own misconduct under either a tort or contract basis.

X. Conclusion and Recommendation

  The asbestos crisis has been a formidable issue for over 25 years. Multiple efforts
  to resolve the crisis through government and private sources have failed for many
  reasons. Efforts failed in part because asbestos manufacturers and insurers could
  not agree on a solution. Organized labor and the plaintiffs’ trial bar had sufficient
  resources to thwart whatever proponents offered.

  However, the time may be closer when the interests of all relevant parties have
  begun to merge. Several corporations have found at least temporary relief in
  bankruptcy proceedings. Others may be viewing this path as a possible resolution.
  With the advent of unknown thousands of claims from exposed but unimpaired
  victims, there simply may not be available the operational or financial resources to
  force a solution to a serious public policy issue. Surely this has been recognized as
  well by jurists from the lowest to the highest courts of our nation.
                                      - 12 -



There is at hand, within the boundaries of S. 1125, the beginnings of a solution.
Two of the four major interests are for the first time aligned. The remainder,
organized labor and plaintiffs lawyers, have not yet acquiesced in the trust fund
approach. Labor has not agreed mainly because of a lack of confidence in the
adequacy of the funding. Plaintiffs’ lawyers are not on board for differing reasons.
Some because of possible funding inadequacy; others because they simply dislike
the fund approach, preferring the traditional litigation route.

While the parties are earnestly searching for a solution to what is probably the most
serious occupational disease problem ever facing this country, Congress remains no
more than a spectator. Employees and insurers have agreed to commit massive
resources ($114 billion) toward a resolution. Organized labor, and claimants through
their attorneys are moving to close the elusive gap between promised funding and
their reasonable expectation of funds needed to provide adequate compensation to
over 600,000 victims.

The best estimate of the required funding over time to meet asbestos liabilities is
about $135 billion. This estimate results in a $20 billion shortfall between what has
been promised and what is reasonably expected. This situation cries out for federal
funding in an amount of $20 billion over approximately twenty-five years.

This task force should make the following determinations:

 1. The task force should seek to agree upon the amount of anticipated present
    and future liabilities arising out of asbestos-related injuries.

 2. The task force should then recommend that the federal government contribute
    its financial resources to bridge the gap between this estimate of asbestos
    liabilities and the anticipated participation by insurers and corporate
    defendants. The Task Force should also consider whether any federal
    government contribution should be on a direct or contingent basis.

 3. If at some future point it is determined that despite private and government
    funding, there remains claimants who are uncompensated, this task force
    should consider whether an “exit to tort” as prescribed in S. 1125 is appropriate.
                                       - 13 -




                                     Endnotes

1.
          Asbestos Litigation Costs and Compensation, an Interim Report, RAND
          Institute for Civil Justice, 2002, at 40.
2.
          Statement of Jennifer L. Biggs, FCAS, MAAA, Chair, Mass Torts
          Subcommittee American Academy of Actuaries, before the Committee on
          Property/Casualty Insurance National Conference on Insurance Legislators
          Hearing on “Proposed Resolution Regarding the Need for Effective
          Asbestos Reform, Jul 10, 2003, at 4.
     3.
          Id.
     4.
          Id.
     5.
          Biggs, supra, at 5.
     6.
          CQ Today – Legal Affairs, October 18, 2003.
7.
          Senate Report 108-118, Calendar No. 239, 108th Congress, 1st session, The
          Fairness in Asbestos Injury Resolution Act of 2003, S. 1125, at 59.
8.
          CQ Today – Legal Affairs, October 15, 2003.
9.
          Senate Report 108-118 at 58.
10.
          Biggs, supra at 5.
11.
          S. 1125, 108th Congress, 1st Session, Sec. 223 (a).
12.
          Wall Street Journal, November 11, 2003.
13.
          New York Times, September 5, 1982. page 22.
14.
          Study blaming Navy ships for asbestos deaths, Dana Wilkie, Copley News
          Service, March 15, 2004.
15.
          Susan L. Barna, Abandoning Ship: Government Liability for Shipyard
          Asbestos Exposure, 67 NYU L.R. 1034 (1992), hereafter cited as Barna or
          Barna 67 NYU L.R.
                                    - 14 -

16.
      Id at 1040.
17.
      Id at 1043.
18.
      Special Project, 36 Vanderbilt L.R. 573, 786. N. 1431 (1983).
19.
      Id citing National Cancer Institute Estimates.
20.
      28 U.S.C. Secs. 1346(b), 2671 et seq.
21.
      5 U.S.C. Secs. 8101 et seq.
22.
      Barna, NYU L.R. supra at 1048.
23.
      Barna, supra at 1049.
24.
      28 U.S.C. Sec. 1491.
25.
      19 Cl. Ct. 490 (1990); affd. 932 F. 2d 947 (1991); cert. denied, 112 S. CT.
      965 (1992).
26.
      Barna, supra at 1057.
27.
      GAO Letter, B30139, September 4, 2003.
28.
      42 U.S.C. Sec 30 aa-10 et seq.
29.
      30 U.S.C. Sec 901 et seq.
30.
      Senate Report 108-118 at page 29, section 2.
31.
      Id at page 56.
32.
      Biggs, supra at 40.
33.
      Id.
34.
      Report of the Judicial Conference Ad Hoc Committee on Asbestos
      Litigation. March 12, 1991, at 26.
35.
      479 S.E. 2d 300, 304 (W. VA 1996)
36.
      521 U.S. 591 (1977)
37.
      527 U.S. 815, 821 (1999)
                                  - 15 -

38.
      155 L. Ed. 2d 261, 123 S. CT. 1210 (2003).

				
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