Asbestos and the Interface of Multiple Compensation Systems

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1 Asbestos and the Interface of Multiple Compensation Systems National Asbestos Litigation Conference San Francisco, CA Francis E. McGovern Professor of Law Duke Law School September 23, 2009

2 Multiple Compensation Systems Common Common Law Tort Workers Compensation Health Health and Other Insurance Asbestos Asbestos Trust Distribution Plans

3 Interface Common Law Workers Compensation Immunity Comparative Responsibility Collateral Source Subrogation

4 Interface Common Law Insurance Workers Compensation Collateral Source Subrogation

5 Asbestos Bankruptcy Trust Distribution Plans Trustees Administration Exposure Criteria Governance Diseases Medical Criteria Valuation Criteria Defenses Payment Limitations Court Access

6 Interface TDP s Common Law Workers Compensation Insurance Contribution Set Off Comparative Responsibility Joint and Several Liability

7 Approximate Asbestos Bankruptcy Trust Funding Bankruptcy Date Organization Est. Assets at Inception Bankruptcy Date Organization Est. Assets at Inception 1982 Amatex $ 10,000, Johns-Manville $ 4,000,000, UNR Industries $ 25,000, Wallace & Gale TBD 1985 Forty-Eight Insulations $ <5,000, Pacor, Inc. $ 15,000, Raymark/Raytech Industries $ 35,000, Celotex/Carey Canada $ 800,000, National Gypsum $ 600,000, Eagle-Picher Industries $ 500,000, H.K. Porter Co. $ 100,000, Keene Corp. $ 65,000, Lykes Brothers Steamship TBD 1996 Rock Wool Manufacturing $ <5,000, Fuller-Austin Co. $ 400,000, M.H. Detrick TBD 1999 Rutland Fire Clay $ <5,000, Armstrong World Industries $ 2,000,000, Babcock and Wilcox $ 1,900,000, Owens Corning/Fibreboard $ 3,700,000, Swan Transportation $ 30,000, U.S. Gypsum $ 4,000,000, U.S. Mineral $ 20,000, W. R. Grace (anticipated) $ 2,500,000, Harbison-Walker/DII $ 2,600,000, J.T. Thorpe Company $ 230,000, J.T. Thorpe Inc. $ 200,000, Kaiser Aluminum & Chemical $ 1,200,000, Plibrico Company $ 35,000, Porter Hayden $ 40,000, Shook & Fletcher $ 85,000, Western MacArthur $ 2,000,000, ABB Lummus Global $ 40,000, A-Best Products $ 15,000, Burns & Roe (anticipated) $ 150,000, C.E. Thurston $ 53,500, Combustion Engineering $ 1,650,000, Federal Mogul $ 700,000, Pittsburgh Corning (anticipated) $ 3,500,000,000 * Information to be verified from public sources

$ 15,000,000 1989 Raymark/Raytech Industries $ 35,000,000 1990 Celotex/Carey Canada $ 800,000,000 1990 National Gypsum $ 600,000,000 1991 Eagle-Picher Industries $ 500,000,000 1991 H.K. Porter Co.

8 Number of Asbestos Claims by Claimed Injury ( ) Year Mesothelioma Other Cancer Non-Malignant Total ,415 4, ,881 4, ,984 4, ,579 4, ,822 6, ,202 7,681 9, ,964 12,675 15, ,997 17,087 21, ,266 3,292 24,713 29, ,411 6,376 45,151 53, ,275 2,386 21,357 25, ,451 19,322 22, ,569 26,343 29, ,151 23,005 25, ,207 2,536 20,702 24, ,306 3,624 43,283 48, ,312 2,887 43,824 48, ,347 3,132 28,978 33, ,387 2,828 38,539 42, ,520 2,863 40,815 45, ,776 2,623 52,055 56, ,893 3,639 89,308 94, ,856 3,148 50,112 55,116 Source: Stephen J. Carroll, Deborah Hensler, Jennifer Gross, Elizabeth M. Sloss, Matthias Schonlau, Allan Abrahamse, J. Scott Ashwood. Asbestos Litigation. RAND Institute for Civil Justice, Available online at

2,386 21,357 25,018 1991 979 2,451 19,322 22,752 1992 971 2,569 26,343 29,883 1993 817 2,151 23,005 25,973 1994 1,207 2,536 20,702 24,445 1995 1,306 3,624 43,283 48,213 1996 1,312 2,887 43,824 48,023

9 Projection of Mesothelioma in the United States ( ) 2047) Projections of Mesothelioma in the United States ( ) 3,500 3,000 Walker et al. study Nicholson et al. study 2,500 Price study Number of Cases 2,000 1,500 1, Year of Occurrence Sources: Walker, A., J.E. Loughlin, E.R. Friedlander, K.J. Rothman, and N.A. Dreyer, "Projections of Asbestos-Related Disease ," Journal of Occupational Medicine, Vol.25, No.5, 1983, pp ; Nicholson, W.J., G. Perkel, and I.J. Selikoff, "Cancer from Occupational Asbestos Exposure: Projections ," in R. Peto and M. Schneiderman, eds., Quantification of Occupational Cancer, Banbury Report 9, Cold Spring Harbor, N.Y.: Cold Spring Laboratory, 1981, pp ; Price, B., "Analysis of Current Trends in United States Mesothelioma, American Journal of Epidemiology, Vol. 145, No. 3, 1997, pp

Friedlander, K.J. Rothman, and N.A. Dreyer, "Projections of Asbestos-Related Disease 1980-2009," Journal of Occupational Medicine, Vol.25, No.5, 1983, pp.409-425; Nicholson, W.J., G. Perkel, and I.J. Selikoff, "Cancer from Occupational Asbestos Exposure: Projections 1980-2000," in R.

10 Projection of Asbestos-Related Lung Cancer in the United States ( ) 2047) Projections of Asbestos-Related Lung Cancer in the United States ( ) 6,000 Number of Cases 5,000 4,000 3,000 2,000 Walker et al. study Nicholson et al. study 1, Year of Occurrence Sources: Walker, A., J.E. Loughlin, E.R. Friedlander, K.J. Rothman, and N.A. Dreyer, "Projections of Asbestos-Related Disease ," Journal of Occupational Medicine, Vol.25, No.5, 1983, pp ; Nicholson, W.J., G. Perkel, and I.J. Selikoff, "Cancer from Occupational Asbestos Exposure: Projections ," in R. Peto and M. Schneiderman, eds., Quantification of Occupational Cancer, Banbury Report 9, Cold Spring Harbor, N.Y.: Cold Spring Laboratory, 1981, pp

A. Dreyer, "Projections of Asbestos-Related Disease 1980-2009," Journal of Occupational Medicine, Vol.25, No.5, 1983, pp.409-425; Nicholson, W.J., G. Perkel, and I.J. Selikoff, "Cancer from Occupational Asbestos Exposure: Projections 1980-2000," in R.

11 Actual vs Predicted Asbestos-Related Non-Malignant Claims in the United States ( ) 2047) 60,000 50,000 RAND 2002 study Prediction - High Prediction - Low Number of Claims 40,000 30,000 20,000 10, Year of Occurrence Source: Stephen J. Carroll, Deborah Hensler, Jennifer Gross, Elizabeth M. Sloss, Matthias Schonlau, Allan Abrahamse, J. Scott Ashwood. Asbestos Litigation. RAND Institute for Civil Justice, Available online at

2032 2037 2042 Year of Occurrence Source: Stephen J. Carroll, Deborah Hensler, Jennifer Gross, Elizabeth M.

12 Attorney Calculus Equation N T ( S Present Value of Return to Counsel = ijaij Pij (1 r) j i 1 j 1 C ij ) i = Individual S = Probability of Success j = Year A = Counsel Fee N = Total Number of Individual Case P = Probability of Cost T = Number of Years to Payment C = Cost to Counsel R = Discount Rate

j = Year A = Counsel Fee N = Total Number of Individual Case P =

13 Effect of Asbestos TDP s on Attorney Calculus Number of years to payment Probability of success Probability of cost Cost to Counsel Present Value of Return to Counsel Total number of Individual Cases

Probability of cost Cost to Counsel Present Value

14 Other Effects Defendant Decision to Litigate Subrogation Claims Tort System Values TDP Payments Foreign Claims New Defendants

imig 2014 Cape Town Session 31.7 October 24, 9:30am

imig 2014 Cape Town Session 31.7 October 24, 9:30am U.S. Asbestos Bankruptcy Trusts Presented by Steven Kazan, Managing Partner Kazan, McClain, Satterley & Greenwood A Professional Law Corporation US Bankruptcy