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									     For Victims’ Sake, New Congress Must Solve Asbestos Problem
                                        By Jerry A. Hodge

        A growing glut of lawsuits stemming from the widespread use of asbestos for
insulation and fireproofing decades ago has slowed the wheels of justice for too many
Americans with serious, asbestos-related illnesses. The good news is that, after years of
debate, the question of how to fairly and efficiently compensate asbestos victims may
finally be resolved in Congress next year.

       Until now, compensation for those made ill by asbestos exposure has come through
the judicial system. But real asbestos victims may wait years to receive compensation
because much of what Supreme Court Justice David Souter has called the “elephantine
mass of asbestos cases” grows from an increasing number of lawsuits filed by plaintiffs
who aren’t even sick but claim to “fear” becoming sick some day.

       In fact, a majority of asbestos
settlements now go to such “non-                                22 Years of Asbestos Litigation
malignant” claimants, most of whom are                  •   In 1982, there were only 300 asbestos
functionally unimpaired. The courts                         defendants. Today, there are more than
have become so clogged by the sheer                         8,400, including companies in nearly all
number of suits that many plaintiffs don’t                  types of industries in the U.S.
even live long enough to have their
                                                        •   By 1982, litigation had cost American
cases heard. And adding insult to injury,
                                                            businesses $1 billion. By 2002, costs
more than half the compensation                             jumped to more than $70 billion.
ultimately awarded to plaintiffs is
siphoned off by “transaction fees,” the                 •   On average, claimants only receive 43 cents
bulk of which go to lawyers.                                of every dollar; the rest goes to legal fees
                                                            and other “transaction costs.”
        On top of unconscionable delays                      SOURCE: RAND Institute for Civil Justice
and indignities suffered by the truly ill,
our economy is also suffering as trial
lawyers revel in this “litigation lottery.”
Nobel Prize winning economist Joseph Stiglitz has reported that more than 70 U.S.
companies and 60,000 jobs have already been lost as a direct result of asbestos litigation

        Retirees from bankrupted companies lose, too, when the value of their pensions,
401(k) plans and health coverage are slashed or disappear altogether. For every 10 jobs
lost to an asbestos bankruptcy, a surrounding community may lose another 8 jobs in the
aftershock. And Stiglitz predicts worse economic disruption to come if we don’t find a
better solution to our asbestos problem.

       The good news is that many lawmakers in Washington understand the huge human
and economic costs represented by the asbestos status quo and are trying to do
something about it. Working with industry and victims’ representatives, Senate negotiators
this year came close to agreeing on legislation that would have created a $140 billion trust
fund – paid for by industry and its insurers – from which standardized compensation could
be paid to asbestos victims who meet basic medical criteria.

       Roughing out such an agreement wasn’t easy. Some companies were much more
involved with asbestos than others, and some victims are much more impaired than
others. Many victims also smoked or worked with other hazardous substances that may
have contributed to their medical conditions. The process of determining who should pay
how much and to whom is inherently complicated.

        But progress has been made. And as a new, more pro-growth Congress prepares
to be sworn in next January, many observers are optimistic that the powerful trial lawyer
lobby will finally meet its match. A reelected President Bush has begun to map out a busy
legislative agenda for 2005 and there’s hope asbestos litigation reform will be included in
that agenda, along with other sorely needed legal reforms.

       The leadership of Senate Majority Leader Bill Frist (R-TN) will be critical in finishing
the job of asbestos reform and Pennsylvania’s Senators Arlen Specter (R) and Rick
Santorum (R), along with Delaware’s Senator Tom Carper (D) should be encouraged to
continue their support – hundreds of thousands of American jobs could be at stake. More
importantly, as a special asbestos committee of the U.S. Judicial Conference has
warned: “Unless Congress acts to formulate a national solution ... all resources for
payment will be exhausted. That will leave many thousands of severely damaged
Americans with no recourse at all."

Jerry A. Hodge is Senior Regional Manager for the National Association of Manufacturers based in
Pittsburgh, Pa. His region includes Pennsylvania, West Virginia, Maryland, Delaware, Kentucky and the
District of Columbia. The NAM is the nation’s largest industrial trade association, representing thousands of
member companies in every industrial sector and in all 50 states.

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