Monday, May 19, 2014

AZ Senator Jeff Flake Introduces Bill to Increase Transparency, Reduce Fraud in Asbestos Settlement Trusts

Washington, D.C. U.S. Sen. Jeff Flake (R-AZ) introduced S. 2319, the Furthering Asbestos Claim Transparency (FACT) Act of 2014. The FACT Act would ensure that asbestos bankruptcy settlement trusts are able to fully compensate future claimants by preventing fraud through increased transparency.
The bill would require 524(g) asbestos bankruptcy settlement trusts to disclose the names and exposure history of those who have filed a claim with the trust. The bill prohibits the disclosure of confidential medical records and full Social Security numbers of claimants so that their privacy rights are not violated.
Background: According to a 2011 Government Accountability Office (GAO) report, since 1988, 60 company-created asbestos trusts have been established to pay claims, with about $37 billion in total assets. These trusts were created to compensate injured victims, but the lack of transparency and oversight of these trusts has resulted in a system where claimants can file inconsistent claims among the numerous trusts or against trusts and solvent companies in the tort system. This lack of transparency threatens the ability of future claimants to receive full compensation for their injuries.
The U.S. House of Representatives passed H.R. 982, a companion bill to the FACT Act, on Nov. 13, 2014. Following that vote, another example of fraud in the trust system emerged when a federal judge issued an opinion in which he described a “startling pattern of misrepresentation” in filings and withholding of evidence by plaintiffs’ attorneys in asbestos-related cases against a gasket maker. Echoing the requirements of the FACT Act, the judge ruled that certain information about the claimants must be disclosed in order to combat abuse of the system.
“Congress must act now to increase transparency and combat fraud within the asbestos-settlement system if future victims of asbestos-related injuries are to be protected,” said Flake.