If anyone ever doubted that the growing epidemic of asbestos
lawsuits on behalf of non-sick plaintiffs poses a greater threat
to the nation's economy than the threat of global terrorism, a
recent Wall Street Journal story1
ought to resolve all doubts.
The April 25 front-page piece by Susan Warren conclusively showed how the greed of plaintiffs' attorneys is short-changing tens of thousands of legitimate asbestos victims.
While the media has provided excellent coverage of the litigation stemming from al Qaeda's acts of treachery, it previously has given short shrift to the burgeoning number of asbestos lawsuits that could remove three times as much - more than $200 billion - from the U.S. economy.2
Most people thought that the tidal wave of lawsuits filed against asbestos producers such as Johns Manville began receding in the 1980s. By then insurers had paid out more than $20 billion in claims and asbestos manufacturers and distributors added billions more - so much, in fact, that more than 20 were pushed into bankruptcy3 - raising to over 50 the number of firms rendered bankrupt by this litigation.4
However, as Warren's story shows, the asbestos wars have re-erupted
in the last few years. Desperately ill patients, many with cancer,
increasingly are being shoved aside by "a huge and growing
number of relatively health people seeking awards for possible
Asbestos claims this year are up 54 percent compared to a year ago.
Since January 2000, the wave of claims by healthy plaintiffs has pushed at least 20 companies that once sold or used asbestos products into bankruptcy protection.
The Mansville Personal Injury Trust, which pays almost all asbestos claims, reports that nearly 90,000 new claims were logged against it last year alone.5
Over 1,000 corporate defendants have already been named in asbestos lawsuits. When insurance industry payouts are combined with corporate asbestos lawsuit-related costs, the total price tag is likely to reach a staggering $275 billion.6
The latest wave of asbestos cases has the potential to do far more damage to America's economy than lawsuits related to the September 11 terrorist attacks and the collapse of Enron combined.
With 50,000 new claims filed by personal injury lawyers in
each of the last three years, Wall Street analysts now estimate
a total potential payout of more than $200 billion.7
That money they say eventually will be divided among 2.5 million
plaintiffs8 and a handful of personal
The nearly 50 companies already forced to seek bankruptcy protection because of asbestos litigation include such illustrious corporate names as Owens-Corning, W.R. Grace, U.S. Gypsum and GAF.
A host of other companies with only peripheral connections to asbestos - they relied on the experts of the day in handling the material - are now under full-scale attack.
Asbestos, it should be noted, was once considered an industrial godsend. Because certain varieties do not burn, conduct heat or electricity and are resistant to chemicals they were once widely used for making fireproof materials, electrical insulation, roofing and a number of filtering devices.
They include the Big Three auto makers (asbestos was once the mainstay of brake linings), most of the nation's electric utilities, shipbuilders oil refineries, construction firms, textile mills and even such far removed companies as Gerber, Campbell Soup and Gallo.
A study last year by the RAND Corp., the California-based think-tank, found more than 1,000 companies have been sued, and projects that more than half of all U.S. industries will wind up in asbestos courtrooms if lawsuits continue to be filed at their current rates.9
Worse, many of the damage awards seem excessive at best. A prime example was a $150-million verdict returned by a rural jury in Lexington, Mississippi last October in a case against three companies. The money was divided among six plaintiffs and, of course, their lawyers.10
None of the six workers had ever been in asbestos manufacturing
or even distributed it. Indeed, they only handled products containing
asbestos occasionally in jobs as laborers, janitors, maintenance
men or plant workers.
Four doctors who examined them found no signs of any asbestos-related disease or condition in the men, and none of them claimed they incurred any medical expenses or ever lost a day of work due to asbestos exposure.
Such outrageous cases of "jackpot justice" ought to concern every American with money in an individual retirement account, a 401k or a pension fund. The chances are overwhelming that their retirement nest eggs includes stock in a number of companies already harmed, or on the hit list, of the asbestos lawyers.
As John Forelli, senior vice president at the Boston investment firm Independence Investment, told the Wall Street Journal in a February story, investors have been scared off by "tort lawyers and short sellers."
The Journal quotes Forelli: "Investors have lost a lot of money on this issue, there's no doubt about that."11
The prospects of meaningful reform legislation passing a divided Congress anytime soon are slim at best. But judges and juries can help thwart the pending economic disaster by standing up to personal injury lawyers' attempts to enrich themselves by huckstering bad science and junk medicine.
Judges, particularly, bear a responsibility to weed out frivolous
lawsuits filed on behalf of healthy patients so the truly suffering
can be compensated for their exposure to asbestos. And so that
the employees and stockholders of companies that never harmed
anyone can be secure in their jobs and retirement funds.
Amy Ridenour is President of The National Center for Public Policy Research, a Washington, D.C. think tank. Comments may be sent to [email protected].
1 Susan Warren, "As Asbestos Mess Spreads, Sickest
See Payouts Shrink," Wall Street Journal, April 25,
2 Eryn Gable, "Manufacturers, Lawyers Ask Congress To Control Spiraling Lawsuits," Greenwire, Environment and Energy Publishing, LLC, March 14, 2002.
4 Eric Roston with reporting by Laura Bradford, "The Asbestos Pit: An Old Issue Is Back, And The Lawsuits Are Killing Shares," Time (Bonus Section: Inside Business/Litigation), March 11, 2002.
6 Erin Schulte, "Asbestos: It Could Be Hiding Somewhere in Your Portfolio," Wall Street Journal, February 4, 2002, downloaded from http://online.wsj.com/article/0,,SB1012577521144617160,00.html?mod=article-outset-box on April 26, 2002. The article cites the "Rand Institute, Mealey Publications," as the source for this information.
8 Peter Ferrara, "Asbestos - Killing Your Job?" United Press International, February 8, 2002.
10 Christopher Edmonds, "Asbestos Verdict Tarnishes Halliburton's Future," TheStreet.com, October 31, 2001, downloaded from http://www.thestreet.com/comment/chrisedmonds/10003273.html on April 26, 2002.
11 Erin Schulte, "Asbestos: It Could Be Hiding Somewhere in Your Portfolio," Wall Street Journal, February 4, 2002, downloaded from http://online.wsj.com/article/0,,SB1012577521144617160,00.html?mod=article-outset-box on April 26, 2002.
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