Enough to Make You Sick

In the struggle for a shrinking pot of money from asbestos litigation, the sickest victims are getting nickels and dimes while lawyers get their millions

This time around, reform proponents have dropped any hint of widespread legal reform and fashioned a narrow solution they think might pick up votes from moderate lawmakers, particularly Democrats who hold the swing votes.

Their proposal, which is yet to take the form of a bill, is to establish medical criteria defining who is sick from asbestos and guarantee people the right to sue if or when they become sick. The proposal would define anyone who has cancer or asbestos-related breathing impairment as defined under existing American Medical Association standards as eligible to file suit for compensation.

"No company has gone bankrupt paying people who are sick," says Mike Baroody, executive vice president of the National Association of Manufacturers, which is leading the reform push. "The awards that have been going to people who are not sick have turned into a scandal."

Lynne Bailey of Fort Worth lost her husband, Ronald, to mesothelioma, a rare and incurable form of cancer caused by asbestos exposure. Since his death in 2000, she has witnessed firsthand the results of a national battle over asbestos lawsuits.
Mark Graham
Lynne Bailey of Fort Worth lost her husband, Ronald, to mesothelioma, a rare and incurable form of cancer caused by asbestos exposure. Since his death in 2000, she has witnessed firsthand the results of a national battle over asbestos lawsuits.
Dallas attorney Mark Iola, who handled Ronald Bailey's case, believes that only people with serious health problems should be able to sue asbestos defendants.
Mark Graham
Dallas attorney Mark Iola, who handled Ronald Bailey's case, believes that only people with serious health problems should be able to sue asbestos defendants.

Multimillion-dollar verdicts in plaintiff-friendly venues such as Mississippi, Louisiana, West Virginia and South Texas, where jurors seem to relish clobbering Northern corporations, and accusations of fraud and cheating by plaintiffs' lawyers have made the topic popular in the general press.

Since 1998, when an internal memo got loose from the firm, Baron & Budd has been battling accusations that its staffers coach workers to lie about their claims and say they worked with products they never saw. In a civil case pending in New York, the former GAF, now G-1 Holdings, says it has evidence that Baron & Budd paralegals skipped the aggressive coaching altogether and simply "filled in the blanks" on workers' affidavits in about 200 cases. The suit alleges the clerks then forged the workers' signatures on the paperwork.

Baron says the accusations are baseless and, like others against the firm in the past, will be tossed out of court. A lawyer for G-1 did not return calls.

Whether or not false product identifications are to blame, claims from unimpaired workers tend to flood into solvent companies once others declare bankruptcy, toppling asbestos-troubled companies like dominoes. There is another perverse effect as well. Once a bankrupt company sets up a claims trust and streamlines its payments, as with Manville, it becomes a magnet for more and more claims.

Baroody concedes that the history of corporate behavior "does not endear us" on this issue. But the list of people affected by asbestos lawsuits extends beyond company executives and Wall Street investors to current and future victims, and union members whose retirement savings have been devastated when their companies have gone under. That's why he says he is optimistic his bill has a chance of passage, if not this election year, then the next.

"The plaintiffs' bar is not of one mind on this anymore, and that's significant," Baroody says.

Because problems confronting sick plaintiffs are novel and compelling, they have become the centerpiece for lobbying by the Asbestos Alliance, a group including the manufacturers, the American Insurance Association and the defecting trial lawyers. In July, they launched their campaign with a newspaper ad in Capitol Hill's Roll Call that centered on the human toll rather than the companies' economic woes. Meanwhile, some of the lawyers who signed the advertisement fanned out for meetings with lawmakers.

"I'm up there walking the halls of Congress and lobbying for a piece of legislation that in a vacuum is completely reasonable," Kraus says. "But it's a real eye-opener to see what power looks like. Democratic legislators are scared to death of getting crosswise with ATLA [the trial lawyer's lobby], and Fred Baron dictates to ATLA what their position will be on asbestos legislation."

Only a small percentage of trial lawyers has anything to do with asbestos, Kraus says. "It's only a tiny percentage of lawyers who thinks this legislation is a bad idea, but those people are Fred Baron, and Peter Angelos in Baltimore, and Perry Weitz in New York, and Joe Rice and Ron Motley in South Carolina. These are very wealthy, very powerful Democrats who can bring a lot of cash to bear for Tom Daschle and Dick Gephardt and rank-and-file Democrats. Nobody wants to get crosswise with those guys, so it's a tough fight politically."

According to the Center for Responsive Politics, a nonpartisan research group, Angelos, who got wealthy enough on asbestos to buy the Baltimore Orioles, contributed $2.3 million in soft money to the Democrats in the past two years; Baron & Budd, $1 million; Weitz & Luxenberg, $710,000; and Ness, Motley, $1.2 million.

Those totals don't include the $25,000 Baron & Budd and Silber Pearlman chipped in last year for the legal defense fund of New Jersey Senator Robert Torricelli, who sits on the key Senate Judiciary Committee. Or the $105,000 Baron gave a political action committee formed by North Carolina Senator John Edwards, who is considering a presidential bid in 2004.

On a recent afternoon, Baron said in the most muted terms that he plans to work against the reform proposal. He was more animated in a story that appeared the same day in the Financial Times of London. "There will be a jihad," he told the paper. "We will fight them with everything we've got."

Baron appears so confident he has Senate Democrats in his camp for the battle, he half-joked about the matter at a bankruptcy conference in June. Using a slide projector to highlight a line from a Wall Street Journal story, Baron read a sentence aloud: "It says, 'The plaintiffs' bar is all but running the Senate.'

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