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Owens Corning Strikes Back at Asbestos Damage Claims

From Reuters

Owens Corning struck back at tens of thousands of asbestos-related damage claims Thursday, announcing it is suing three medical testing companies for racketeering and fraud.

Chairman and Chief Executive Glen Hiner said the civil suit--as well as a possible global settlement for other claims and a $545-million charge for claims arising after 1999--would help the fiberglass and insulation company put years of asbestos-related litigation behind it.

“We have now put a fence around the asbestos liability of Owens Corning,” Hiner told a news conference in New York.

The Toledo, Ohio-based company has been dogged for years by claims stemming from alleged health damage caused by asbestos, a fibrous mineral used in insulation and known to cause lung damage when inhaled. It faces about 150,000 asbestos-related claims and has a $1.1-billion current reserve to cover possible damages. It stopped producing asbestos materials in 1972.

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The company filed suit in U.S. District Court in New Orleans late Wednesday against three companies in the Southeast that test people’s lungs for health problems.

Owens Corning’s general counsel, Chris Campbell, said the companies falsified about 25,000 claims in two or three years. An additional 15,000 claims from other, unidentified companies could also have been intentionally rigged, he said.

The medical testing companies sued are Pulmonary Advisory Services Inc., Pulmonary Advisory Services of Louisiana Inc. and Pulmonary Advisory Services of Mississippi Inc. Four people associated with the companies were also named in the suit.

The defendants could not be reached immediately to comment.

Owens Corning said a sampling of tests submitted by the defendants showed 95% of 1,672 claimants had significantly diminished lung capacity.

By contrast, the company said, in a sampling of claimants tested at a Salt Lake City hospital, only 13% had the same diminished capacity--the inability to exhale for at least six seconds.

Campbell also said Owens Corning is negotiating with 30 law firms over a possible global settlement of asbestos claims. The firms represent about half of the 150,000 claims against the company.

The talks are taking place during a “standstill” period in which no further asbestos claims would be filed. The period, which started May 1, runs to the end of the year.

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An umbrella deal also depends on rulings by federal appeals courts in Philadelphia and Texas that would set precedents for asbestos settlements involving other companies.

Owens Corning has also been bolstered by a Philadelphia federal judge’s dismissal last month of 15,000 asbestos claims by shipbuilders in which the company was a party.

Hiner said the company would record a $545-million charge against earnings, or $9.56 a share, in the second quarter of this year. The money would be used as a reserve against asbestos claims received after 1999, and payments from the charge will begin to be paid after 2000.

Owens Corning stock closed up 1.125 cents to $41.875 in trading on the New York Stock Exchange.

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