Add Tennessee, Utah to the Growing List of States Combating Asbestos Fraud

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March 17, 2016

Last week, the Tennessee and Utah Legislatures each passed bills designed to stop the growing threat of fraud on asbestos trusts and keep true asbestos victims from being prey to plaintiffs’ lawyers.

The Utah Asbestos Litigation Transparency Act (HB 403) and the Tennessee Asbestos Bankruptcy Trust Claims Transparency Act (HB 2234) will curb what is known as trust “double dipping,” a tactic where plaintiffs’ lawyers file inconsistent claims that their clients were exposed to asbestos with several different trusts in order to receive multiple payouts.

The heart of the problem lies with the opaque nature of the trusts, which operate independently and do not share information with each other. This allows unscrupulous plaintiffs’ lawyers to “double dip” clients’ claims virtually undetected.  Furthermore, because trust claims are filed after any litigation is settled, information on claims is virtually never known to courts.

Billions of dollars have been set aside in federal trusts from the over 100 companies bankrupted by asbestos litigation in the last nearly 30 years. These funds were meant to provide compensation for victims for years to come, but are being depleted more rapidly than expected. Not surprisingly, experts say this is due to widespread fraud in claims filing.

A recent report sponsored by the Institute for Legal Reform (ILR) looks at the data from the Garlock Sealing Technologies asbestos bankruptcy and shows that plaintiffs’ firms had suppressed evidence of exposure from other manufacturers’ products in order to inflate claims against the company. The study looked at 100 individuals whose trust claims were disclosed during the Garlock case and found inconsistencies in method of exposure, lack of information on where the claimant was employed or the product they were exposed to, and even differing medical conditions.

Mass fraud on the asbestos trust system harms true victims of this disease. The symptoms of asbestos exposure often take years to surface, meaning many individuals who will one day need these trusts have yet to be diagnosed. Bills like those passed in Utah and Tennessee are critical to ensure that future victims won’t be victims to today’s unscrupulous plaintiffs’ lawyers.

If the governors of Tennessee and Utah sign these bills into law, they will join Arizona, Ohio, Oklahoma, Texas, West Virginia, and Wisconsin -- all states that have passed similar measures requiring plaintiffs’ lawyers to disclose key information on asbestos claims.