Asbestos Litigation Reform Bill Foundering
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The Wall Street Journal ($) is reporting that Senator Arlen Specter's proposal to pool industry resources (note: not tax dollars) to create a $140 billion fund to settle asbestos-related medical claims is headed for defeat. My previous posts supporting the fund are here.
This is unfortunate. The pool makes the best out of a bad situation and replaces the current allocation system -- namely "first to the courthouse wins" -- with one that will give partial payments to all those who now have -- or will have -- valid claims.
It's a dirty little truth of civil litigation: winning a judgment is not the same as collecting a judgment. If the defendant -- even a major corporation -- runs out of money, that's it for the plaintiff, just like creditors in a bankruptcy filing who recover only pennies on the dollar. A defendant can't pay what it doesn't have. Many of the companies tainted by asbestos liability have already gone bankrupt; most if not all of the remaining companies eventually will too.
If the remaining companies (i.e., those that haven't already been driven into bankruptcy) are not shielded from runaway litigation, if what assets they have are not rationed among all those who are entitled to at least some recovery, then the distribution of those monies among defendants becomes random -- who's "lucky enough" to get sick first, sue first and recover?
Such a rationing system is not only economically inefficient, it's also fundamentally unfair.
Remember, the Specter plan is not about "protecting big asbestos corporations." They're already doomed. And it's not about a taxpayer bailout. Instead, the asbestos fund is a common sense approach to making sure everybody who deserves compensation gets at least something.
The Senate should approve the Specter proposal and send it to House.
This is unfortunate. The pool makes the best out of a bad situation and replaces the current allocation system -- namely "first to the courthouse wins" -- with one that will give partial payments to all those who now have -- or will have -- valid claims.
It's a dirty little truth of civil litigation: winning a judgment is not the same as collecting a judgment. If the defendant -- even a major corporation -- runs out of money, that's it for the plaintiff, just like creditors in a bankruptcy filing who recover only pennies on the dollar. A defendant can't pay what it doesn't have. Many of the companies tainted by asbestos liability have already gone bankrupt; most if not all of the remaining companies eventually will too.
If the remaining companies (i.e., those that haven't already been driven into bankruptcy) are not shielded from runaway litigation, if what assets they have are not rationed among all those who are entitled to at least some recovery, then the distribution of those monies among defendants becomes random -- who's "lucky enough" to get sick first, sue first and recover?
Such a rationing system is not only economically inefficient, it's also fundamentally unfair.
Remember, the Specter plan is not about "protecting big asbestos corporations." They're already doomed. And it's not about a taxpayer bailout. Instead, the asbestos fund is a common sense approach to making sure everybody who deserves compensation gets at least something.
The Senate should approve the Specter proposal and send it to House.
Related Posts (on one page):
- Asbestos Litigation Reform Bill Foundering
- More Federal Tort Law, So Why Less Outrage?
- Is the Asbestos Fund a "Tax"?
- Specter on Asbestos
- Specter Proposes $140 Billion Asbestos Settlement Fund
Posted by Kip on
7 February 2006
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