Fallout From Asbestos Crisis Still Clogs Courts, Defies Solutions : Lawsuits: Six decades after first alarms were raised, awards could pass $70 billion by the middle of the 21st Century.

More than 60 years after the first reports that asbestos may be dangerous, the legal fallout from the widely used insulator constitutes a national crisis with no foreseeable solution.

Personal injury litigation over asbestos--the heat-resistant mineral used in ancient Greece and Rome--could consume as much as $70 billion before new lawsuits cease in the first half of the 21st Century.

To date, more than 200,000 cases have been filed by workers or their relatives who claim that inhaling asbestos fibers caused maladies ranging from strained breathing to lung cancer. As many as 250,000 more cases are predicted.

Companies that made, sold or distributed asbestos products maintain that they don’t have enough money to compensate everyone, and more than a dozen of them have sought bankruptcy protection since the late 1970s.

But despite more than two decades of litigation, the same basic issues frame a seemingly intractable struggle between highly paid lawyers representing big manufacturing companies and blue-collar workers.

Many attorneys and judges warn that the lessons of asbestos must be learned now to prevent a similar debacle in the next mass tort crisis involving breast implants, lead paint, repetitive motion injuries or some other problem.

“We were not ready for this. Courts were not able to cope with the influx of victims and cases that hit the system,” said Mary Kay Kane, a law professor at the University of California’s Hastings College of the Law, who is working with a panel of federal judges on asbestos reform.

The result has been legal gridlock in states with shipyards, steel mills, utilities, chemical plants and other industries where asbestos was used from the turn of the century into the 1970s for its fireproofing and insulating powers.

Attempts at a nationwide solution to the tangle--from congressional legislation to a national trust fund--have been unsuccessful.

Cases continue to be filed at a rate of about 20,000 a year--by some estimates twice as many as get resolved--although a decline is expected by the late 1990s. Legal costs easily outstrip payments to victims.

Lehman Brothers Inc. analysts this year projected the future costs of asbestos litigation at up to $60 billion, on top of an estimated $10 billion already spent on payments to victims and for legal expenses.

Workers with serious diseases continue to face lengthy delays in receiving compensation, and many die before getting any money. Medical reports estimate that 200,000 to 365,000 Americans will have died from asbestos-related diseases by the year 2030.

But despite frustration with a seemingly overwhelming mission, there have been increasing state and federal efforts in the last 18 months to wrestle with asbestos.

Many of the moves occurred after a panel of federal judges in March, 1991, declared asbestos litigation a crisis the legal system could not handle, and called on Congress to devise a solution. Since then:

* House and Senate panels have held hearings, but no legislation is expected soon. One suggestion was to create a Chapter 14 of bankruptcy law for asbestos defendants and other toxic tort litigations.

* All pending federal asbestos cases were placed on hold and consolidated in July, 1991, before a Philadelphia judge in a bid to resolve pretrial issues, encourage settlements and devise a national solution. But plaintiffs lawyers have attacked the freeze, saying it has allowed companies to stonewall settlement talks.

* A panel of state judges has met regularly to coordinate strategy. State courts have held mass trials, ranked cases according to severity of illness, hired retired judges to help hear cases and restricted the length of legal memos.

Some states have made headway. A West Virginia judge has cleared most of his cases through consolidation. A Philadelphia jurist has succeeded in disposing of more cases than are filed. And Minnesota’s highest court recently approved a grouped trial of 11 cases.

In a major victory for 8,552 plaintiffs remaining in the nation’s largest asbestos trial, a Baltimore jury said four asbestos manufacturers and installers are liable for punitive damages. The firms involved are GAF Corp., Keene Corp., Porter Hayden Co. and Pittsburgh Corning Corp., a unit of PPG Industries Inc. and Corning Inc.

The Baltimore City Circuit Court jury will hear evidence Tuesday on the companies’ financial situations before determining a formula for awarding the punitive damages.

Judge Marshall A. Levin had earlier excluded AC and S Inc. and MCIC Inc. from consideration for punitive damages.

“We no longer have the luxury of one plaintiff having his case tried at one time,” said Judge Levin, whose consolidated case took two years to come to trial.

“If we use that theory, we’ll have a trial queue of 1,000 years,” Levin said in an interview.

When Sandra Mazer Moss, a judge in Philadelphia’s Court of Common Pleas, was handed the city’s asbestos docket four years ago, she faced 7,500 asbestos cases dating to 1975. Now the backlog is 5,650. In November, she will begin trying cases filed in 1985.

In asbestos litigation, that’s progress. Moss holds trials in groups of 10 cases, disposing of 160 to 180 a month, thanks to the addition of senior judges. Defense lawyers in Moss’s court agree to concede liability while plaintiffs agree to defer seeking punitive damages.

“I group cases because people were dying of old age before they got into the courtroom and companies were going bankrupt,” said Moss, who calls herself Philadelphia’s “queen of asbestos.”

New York State Supreme Court Justice Helen Freedman virtually cleared away 1,400 cases via two recent consolidated trials. But she said mass trials can force companies to pay large lump sums, reducing the amount they are willing to commit to settlements elsewhere.

Also, defense lawyers say consolidations encourage plaintiffs to add cases involving workers with minor illnesses who might not otherwise be compensated. Juries in large cases gloss over medical shortcomings, they say.

“When you’re dealing with cases in massive numbers, it’s very difficult for the court system to make a distinction between those who are truly sick and those who aren’t,” said James Restivo, a lawyer for Pittsburgh Corning Corp.

Only a small number of cases--possibly as few as 1%--make it to trial. Companies generally settle out of court with a tightly knit cabal of lawyers, many of whom have been filing asbestos cases since the 1970s.

But plaintiffs’ attorneys and some judges contend that companies seeking to preserve assets don’t settle until shortly before trial, in the process wasting millions of dollars on legal costs.

“Without firm trial dates and the specter of punitive damages, these cases will not move,” said Peter Angelos, who represented about 90% of the shipyard, steel and construction workers in the Baltimore case.

Defendants counter that plaintiffs balk at fair offers based on disease severity to chase multimillion-dollar jury verdicts.

“It is a tragedy of national proportions, but the fact of the matter is you have to have a system that deals with people fairly but doesn’t destroy companies in the process,” said Edward Houff, a lawyer for GAF Corp. in Baltimore.

Jury payouts can be big. In March, for instance, a Los Angeles jury returned a $12.4-million verdict for a former shipyard worker--including $8 million in punitive damages--against Owens-Illinois Inc. and Owens-Corning Fiberglas Corp.

In asbestos trials, the same arguments presented to juries for years continue to be made, at great expense; about 100 lawyers were involved at the start of the Baltimore case. Defense costs are estimated to consume as much or more than is paid to victims.

Asbestos defendants say they are willing to settle worthy cases. But they maintain that unless claims are prioritized by degree of illness, they will run out of money to compensate the tens of thousands of people yet to become sick.

Among the most outspoken executives is Glenn Bailey, chairman of Keene Corp., which says it has spent $400 million on asbestos claims stemming from its $8-million acquisition of a maker of thermal insulation in 1968.

“If the goal is to run the litigation until every defendant has been bankrupted, thousands of people left uncompensated and thousands of workers without jobs, then continue to do what is now being done,” Bailey told a panel of federal judges in April.

Of new asbestos claims filed today, defendants maintain at least 60% involve workers who were exposed to asbestos but whose health is unimpaired.

Plaintiffs’ lawyers dispute that figure. Along with victims, they say that in trying to delay compensating injured workers, corporate America is abrogating clear responsibility for a national industrial tragedy.

“My husband was cheated,” said Kitty Asbury, whose husband died of cancer at age 49 in 1988. He had removed insulation-covered pipes for part of 25 years with Bethlehem Steel in Baltimore.

“He had a right to know as a young boy of 21 when he was ripping all that asbestos out,” Asbury said. “If these companies knew and were negligent we need to be compensated for that loss.”