Decades of uncontrolled use of asbestos and a deliberate cover up of its dangers have resulted in a disease crisis in the United States of mammoth proportions. Hundreds of thousands of workers and their family members have suffered and died of asbestos related cancers and lung disease. In 2003, an estimated 10,000 people died of asbestos related diseases. Millions of more will suffer or die in the future.

Victims of asbestos disease need and deserve compensation for their injuries. The labor movement recognizes that there are problems with the current legal system, and we have supported in principle federal legislation that would provide victims fair and timely compensation through a no fault system.

However, the asbestos compensation bill (S. 1125) being pushed by Senate Republican leaders and business groups is grossly unfair to workers. Discussions are underway among Senators and interested parties, including the AFL CIO, to see if these flaws can be remedied and agreement reached on fair legislation. Some progress has been made, including an agreement on the major aspects of an alternative administrative system (which would establish a non adversarial asbestos compensation system at the Department of Labor). But huge problems remain with the bill and there is no agreement on many key issues, including levels of compensation for victims and the overall size of the compensation fund.

Despite these major problems, Senate Majority Leader Bill Frist (R TN) announced that he intends to bring asbestos compensation legislation to the floor the last week in March or first week in April, whether or not agreement has been reached. The AFL CIO strongly opposes S. 1125 in its current form and urges Senators to vote against any bill that does not fully remedy all the flaws in S. 1125 and provide fair compensation to asbestos victims.

Major Flaws in S. 1125
Unfair Compensation for Victims. Any federal asbestos compensation bill must provide victims fair and timely compensation. But for many of the disease categories and for many victims, compensation awards under S. 1125 are far too low, particularly when measured against the health impact and economic impact on victims. For example, awards for lung cancer victims who have more than 15 years of exposure to asbestos are limited to $25,000 $75,000, even though most victims will die within a year. Victims with asbestosis who have lost 20 to 40% of their breathing capacity many who will be disabled for work will receive only $75,000, far less than lost wages and medical costs. Moreover, the bill allows for a lien on these awards by workers compensation insurers and health insurers. Any final legislation must provide fair compensation, with values at least as high as those contained in the Leahy Kennedy amendment that was offered in committee and eliminate any subrogation that would reduce overall benefits to victims.

Inadequate Funding and Solvency Problems. Funding for the Asbestos Compensation Fund is inadequate to cover expected claims. S. 1125 as reported from the Judiciary Committee provided $104 billion in base funding and $45 billion in contingent funding, with a total funding of $153 billion, to be split equally between defendants and insurers. But, insurers objected, and in October, a new funding "agreement" between defendants and insurers that reduced funding contributions was brokered by Senator Bill Frist. This new "agreement" provided only $114 billion in total funding, including $10 billion in contingent funding. If the money were exhausted, there would be a return to the tort system under yet unspecified conditions. The terms of this agreement are inadequate to cover even the cost of the expected claims, which the Congressional Budget Office has estimated at $136 billion (for the inadequate claim values in S. 1125), let alone to cover the costs if claims exceed projected estimates. It provides a huge bailout for firms like Halliburton and W.R. Grace who have billions of dollars of liability under the current system. Any asbestos bill must provide certain funding to cover expected claims at a fair value and adequate contingent funding or real legal remedies if claims exceed expectations.

No Disclosure or Guarantee of Funding. S. 1125 and the Frist proposal set funding levels and funding tiers, but neither proposal provides any specific information on where the funding will come from. There is no guarantee that funding at even the deficient levels in the bill will be produced. The funding proposals have been privately negotiated between defendants and insurers. Moreover, there are no provisions for joint and several liability, so if defendants or insurers refuse to pay or not enough money is collected, there is no way to make up the shortfall. No asbestos bill should be allowed to proceed unless there is full disclosure on the sources of funding and provisions made for contributors to be jointly and severally liable for funding.

Unfair Treatment of Victims with Pending Claims. There are now more than 300,000 asbestos victims who have claims pending in the current system, many of whom have been waiting for years as companies like Halliburton used the bankruptcy code to freeze pending litigation. S. 1125 would wipe out all pending claims, even those with jury verdicts under appeal, and make victims start all over. Allowing victims with pending claims to proceed under the current system would be much fairer. It would also relieve a huge administrative and financial burden from a new asbestos trust, allowing the fund to get up and running and focus on processing new claims.

No Provision for Medical Screening Of High Risk Workers. Millions of workers have been exposed to asbestos and are at high risk of developing asbestosis, lung cancer or mesothelioma. Programs are needed to identify, educate and screen these workers so disease can be detected early and appropriate medical intervention made. Asbestos compensation legislation must provide for the establishment of high quality medical screening and education of high risk workers, similar to programs established by the government for coal miners and energy workers.

Preempts FELA the Workers' Compensation System for Rail Workers. S. 1125 would preempt the right of rail workers to file claims under the Federal Employees Liability Act (FELA) their workers' compensation system for asbestos related diseases. But all other workers maintain their full rights to seek workers' compensation from their employers for asbestos related diseases. This leaves rail workers at a real disadvantage when compared to all other workers under the bill. Asbestos legislation should not take away benefits and rights from rail workers or any workers to seek compensation from their employers for asbestos related diseases.

CONCLUSION
S. 1125 is a fatally flawed bill that bails out asbestos defendants and their insurers at the expense of victims of asbestos disease. Any legislation that fails to address each and all of these flaws, and fails to provide victims fair, timely and certain compensation should be strongly opposed.

Prepared by: AFL CIO Safety and Health Department, March 2004