Asbestos Victims’ Compensation May Take Years

For legions of Americans who are sick and dying from exposure to asbestos on the job, compensation might come years or even generations after they are dead.

At least 80,000 lawsuits against asbestos companies clog 500 state and federal courts. A multibillion-dollar trust fund established by No. 1 producer Manville Corp. to pay victims is temporarily broke.

Exasperated judges are lumping together thousands of cases and urging settlements. Claims filed in the early 1980s are scheduled for trial in the late 1990s.

For people who have proved that they qualify for compensation, the waits reach absurd lengths. In New York, for example, workers diagnosed up to 20 years ago as having lung cancer, mesothelioma, asbestosis and other severe and often fatal diseases only now are on the road to receiving some redress.

“I’ve got clients who die every single day, and I have a lot of sick people,” said Perry Weitz, a plaintiffs’ attorney handling 2,000 asbestos cases. “I want to get money to those people.

“When you have a positive medical report and you have a documented work history, these companies should ‘fess up to their responsibility,” Weitz said.

Asbestos, the miracle insulation mineral once considered as harmless as dirt, represents the largest product liability action in history.

Cases began multiplying in the 1970s as workers who spent years repairing boilers, making vehicle brakes or constructing buildings suffered respiratory ailments.

Manville, formerly the nation’s largest asbestos producer, was driven into Chapter 11 bankruptcy refuge in 1982 by thousands of lawsuits claiming that the company failed to warn workers that asbestos fibers were hazardous, despite medical evidence that first surfaced at the turn of the century.

The Denver building materials company, which no longer produces asbestos, emerged successfully from Chapter 11 in 1988, shielded from further lawsuits by the creation of a separate $2.5-billion trust designed to compensate past, present and future victims.

The Manville Personal Injury Settlement Trust already has paid $975 million to settle more than 22,000 claims, but 130,000 more are pending.

Although court statistics show that the number and severity of asbestos claims appear to be receding, the trust still estimates that people who file claims this year won’t get money until 2025.

“Everyone wants to be paid today,” said Theodore Kleinman, the trust’s chief financial officer. “There just isn’t enough money to do that.”

A main reason is the nature of Manville’s bankruptcy restructuring. Its architects grossly underestimated average settlements--$42,000 compared to a projected $25,000--and the number of claims--152,000 so far, compared to an estimated 110,000.

While officials always anticipated temporary shortfalls, few expected the trust to be tapped out.

When the trust was established, it was funded by an initial contribution of Manville assets and stock. Manville doesn’t make its first $75-million annual payment to the trust until 1991. It also must contribute 20% of annual net income until all claims are paid, but that requirement isn’t effective until 1992.

In an unprecedented move, two judges in New York in early June ordered the trust to return to bankruptcy court to rework its payment plan. They said remaining claims require an estimated $6.5 billion, and with incoming claims and costs, the trust needs at least $7.5 billion. Trust assets now are worth only about $1.5 billion, they said.

Among their chief criticisms was a requirement that claimants get paid based on the order in which lawsuits were filed, rather than financial need or severity of sickness.

Manville isn’t the only business carrying a stigma of asbestos liability. Dozens of companies that produced asbestos are struggling to cope as well.

Some, like Raymark Industries, now in bankruptcy proceedings, and Celotex Corp., have balked at settlements. Plaintiffs lawyers say others, including Owens-Corning Fiberglas Corp. and Owens-Illinois Inc., have dragged out litigation before settling. Others have formed trusts on the Manville model.

Individual verdicts in asbestos cases have exceeded $1 million, and some smaller companies have been forced into bankruptcy-court protection because of exposure to asbestos litigation.

“Many defendants are not making offers simply because they say if they start paying the claims now, they will be forced out of business,” said Carl A. Green, a plaintiffs attorney in Buffalo, N.Y.

But the jammed court calendars, foot-dragging companies and zealous plaintiffs lawyers have angered judges. At a recent hearing, U.S. District Judge Jack Weinstein, supervising 571 cases involving former workers at the Brooklyn Navy yard, chided stallers.

“These cases have been pending for years and it’s time to either settle them or try them,” he said. “We are not going to allow those widows and these injured people to be without compensation and we are not going to allow cases without any merit to back up our dockets.”

The Manville trust’s problems have complicated matters. Lawyers for other asbestos producers contend that victims’ attorneys are inflating claims against them because they know the Manville trust can’t pay promptly.

Since Manville was the largest supplier, settlements typically have required the trust to pay the biggest share.

“Plaintiffs lawyers don’t care where the money comes from, they generally only care how much. When Manville doesn’t pay, plaintiffs try to make other companies pay,” said Andrew Berry, a Newark, N.J., attorney who represents several defendants.

The frustrations in asbestos litigation have been aggravated by the complex relationship between the trust and Manville, which are legally independent yet financially intertwined.

Last year, for example, the trust refused an offer by the company to buy back $500 million worth of Manville stock. That would have enabled the trust to pay more claims immediately, but trust officials said it would have reduced the overall ability to pay in the long run by lowering the value of the trust’s assets.

When Weinstein recommended that Manville advance the trust $200 million to $300 million to make more payments, company officials balked at the idea, not wanting to venture into the issue of who gets paid and when.

“Manville has not, will not and cannot speak to how the claims are being settled,” Manville chief executive Thomas Stephens said in an interview. “That’s not our business. Our job is to create as much shareholder value to make sure we meet our obligations to the trust.”

Manville officials often respond to criticism by saying the only alternative to the trust would have been to liquidate and pay off as many claims as possible. Under that option, they say, tens of thousands of victims now benefiting from some compensation wouldn’t have received a dime.

Still, the present situation leaves victims who haven’t been compensated vulnerable as well. Every piece of bad news about the trust threatens to depress the price of Manville stock, which in turn reduces the value of the trust’s assets and makes it less able to pay.