Asbestos News. [ accident compensation ] The latest Australian and international news

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1 d finitive [ accident compensation ] Keeping you informed. DECEMBER 2014 Asbestos News The latest Australian and international news The last six months have seen many developments in the asbestos area. This d finitive covers key news items, including: >> A feature article on Mr Fluffy developments since June 2014 >> The continuing adverse James Hardie claims experience, with its potential medium term funding implications >> Asbestos Awareness Month focus on home renovator risks >> Investigation of exposure around old asbestos factories in Melbourne and Brisbane >> Various studies offering some hope for mesothelioma victims Key: Disease and research Court outcomes Compensation and insurance Asbestos use and management Read on for these stories and more in asbestos news from across the world. finity.com.au Sydney Auckland Melbourne d finitive DECEMBER 2014

2 Australia >> Jun 2014 Question of expertise: Howard Smith & Patrick Travel v Comcare The victim worked for a stevedoring company and died of mesothelioma in He settled his claim against Comcare, which then sought a recovery in the DDT from Howard Smith & Patrick Travel Pty Ltd, a successor of the victim s employer. The DDT ordered Howard to pay 75% of the damages, and Howard appealed. Evidence for the victim s exposure came from his statement and accounts given by three other waterside workers. All four claimed that the victim inhaled asbestos dust, though they could not say which type of asbestos. Howard challenged whether this evidence was admissible. The NSW Court of Appeal distinguished between two types of expert opinion: opinions based on formal training and study, and expertise based on experience (as in this case). The court dismissed the appeal, finding the workers evidence was admissible. The judgement said that whether formal training and study is required in order to be considered an expert depends on the circumstances. >> Jul 2014 Record NSW general damages asbestos award: Dunning v BHP Mr Dunning was awarded $2.2 million in the Dust Diseases Tribunal. He had worked at BHP s Newcastle steelworks from 1979 to 1981, starting at age 19, and is now 54. The award included $1.6 million in economic loss. Kearns J awarded a record $500,000 for general damages, noting the claimant s young age and that he had undergone torrid surgery and was now in a miserable situation. In October BHP Billiton said it intends to appeal. >> Jul 2014 Serial asbestos dumper will pay fines until 2072 Mr Dib Hanna is a waste removal contractor who dumped eight truckloads of asbestos-containing waste on residential land. Mr Hanna is currently paying off hundreds of thousands of dollars in fines at a rate of $300 per month. The fines are projected to be repaid by >> Jul 2014 NSW Householders Asbestos Disposal Scheme Over 20 Western Sydney and Illawarra councils have participated in an asbestos removal trial, which tested cheaper and easier disposal for small amounts of asbestos from home renovators. The average price for disposal was $109 per tonne, compared to a previous average of $290 per tonne. The NSW Environmental Protection Authority is using the results to target a reduction in illegal dumping of asbestos waste. >> Aug 2014 Mesothelioma in Australia 2013 published The Australian Mesothelioma Registry published its annual report, covering cases reported in The key findings are: >> 575 cases of mesothelioma were reported. Of these 19% are females, and 80% were aged 65 years or older at the time of diagnosis. 2 d finitive DECEMBER 2014

3 >> Based on past experience we expect late reporting of another 30 or so 2013 diagnoses. However, the overall trend in reported mesothelioma cases has been relatively flat, with fewer than 700 cases each year since 2007 and the 2013 count is likely to be the lowest over this period. >> The highest per capita rate of Mesothelioma in the country was in WA (3.9 per 100,000 people, compared to 2.2 nationally). >> Sep 2014 Immunotherapy cocktail destroys mesothelioma tumours Researchers at the University of Western Australia have successfully cured mesothelioma in mice using immunotherapy. The study suggests that a cocktail of drugs given to stimulate the immune system can eradicate mesothelioma tumours, by turning off the production of specific proteins associated with cancer. Immunotherapy is an emerging area offering promising treatment of a disease which is resistant to more standardised radiation and chemotherapy treatments. >> Sep 2014 AICF funding shortfall projected Questions have been raised about the funding position for the asbestos liabilities of the former James Hardie companies. The Asbestos Injuries Compensation Fund (AICF) is seeking NSW Supreme Court approval to pay compensation by instalments from 1 July AICF s actuary, KPMG, estimated that AICF may suffer a cash deficit of $184 million in AICF anticipates paying $500 million in claims in the next three years before the projected shortfall materialises. The funding challenge has been driven by the rising number of mesothelioma claims received by AICF. >> Nov 2014 Residents allegedly exposed near Melbourne asbestos factory Health officials are reviewing cancer records after it was revealed 16 people who lived near a Melbourne factory died from asbestosrelated diseases in the 12 years to 2013, according to the Victorian Cancer Registry. Land on which children played near the Wunderlich asbestos factory in Sunshine North allegedly contained asbestos dust from the 1950s to 1970s. In 2014 the Health Department tested air quality at local schools, finding no evidence of abnormally high asbestos exposure. The Environment Protection Authority (EPA) also tested the factory site and nearby neighbourhoods. The EPA found no detectable levels of asbestos that could be inhaled. Valid claims alleging asbestos exposure from the site have been paid for over 25 years. Similar investigations have been launched in Brisbane, around the old Wunderlich plant in Gaythorne and the former James Hardie site in Newstead. >> Nov 2014 Asbestos awareness month November was National Asbestos Awareness Month, while Friday 28 November was Asbestos Awareness Day. The campaign paid tribute to Australians who have died from asbestos-related diseases, while reminding all about the continuing dangers of asbestos. This year s slogan was Don t Play Renovation Roulette! The promotion 3 d finitive DECEMBER 2014

4 focused on the rising number of home renovations, often without adequate precaution against asbestos exposure. More than one in three Australian homes contains asbestos in some form. A survey reported in the Medical Journal of Australia found 60% of home renovators had been exposed to asbestos; 53% said their partner had been exposed and 40% claimed their children had been. Insight Communications, a public relations and communications firm, ran a similar campaign in This received a prestigious international award for public awareness in September >> Nov 2014 James Hardie mesothelioma claims up James Hardie reported that in the half year ended 30 September 2014 mesothelioma claim reports were 10% above actuarial estimates and 5% higher than the corresponding period a year before. The elevated experience in FY14 has continued into 1H15. However, the average size of settlements in 1H15 was 6% lower than the prior period, due to fewer large settlements. >> Nov 2014 Asbestos in Australian hospitals Unions and plaintiff lawyers say that asbestos in Australian hospitals is endangering staff and the public, alleging that asbestos is present in hospital service tunnels, around steam pipes and in ceiling cavities. Often asbestos has been detected after being disturbed by tradesmen. Similar exposures have been reported in the UK in recent years. >> Nov 2014 Labor vows to remove asbestos from Victorian schools Under a Labor plan estimated to cost $100 million, asbestos would be removed from 1,200 Victorian schools by The proposal was made in the latter stages of the state election campaign. Labor conceded it was an ambitious target; the Coalition suggested the ultimate cost would be closer to $1 billion. New Zealand >> Oct 2014 No prosecutions in Christchurch investigation An investigation by WorkSafe New Zealand into asbestos management after the 2011 Christchurch earthquake found some deficiencies but no reason for prosecutions. The risk of harm to workers and residents was assessed as very low. 4 d finitive DECEMBER 2014

5 North America >> Jul 2014 Every exposure theory rejected A Louisiana judge rejected the every exposure theory in an asbestos case, concluding that the plaintiff s expert testimony was internally inconsistent. Dr David Schwartz said that each and every exposure contributed to the plaintiff s injury. However, in his reports Dr Schwartz opined that every fibre does not contribute to mesothelioma development rather, the disease is dose-related. >> Sep 2014 Aggressive therapy offers hope for peritoneal mesothelioma patients A recent analysis of outcomes for 161 peritoneal mesothelioma patients at the Washington Cancer Institute shows that those with 2-3 repeats of cytoreductive surgery and hyperthermic intraperitoneal chemotherapy are living five or more years beyond their initial prognosis. >> Sep 2014 New risk for US employers liability insurers Employers liability cover in the US fills the gap between general (public) liability and workers compensation cover. The latter, covering most employment related injuries, is bound by state workers compensation laws and is outside the tort system. Two recent cases in Illinois and Pennsylvania confirmed that asbestos victims may bring tort claims against their former employers, outside relevant workers compensation rules. Employers and their employers liability insurers should be alert to this risk. >> Oct 2014 Employers asbestos liabilities do not extend to spouses Two federal judges dismissed claims in Oklahoma and Pennsylvania made by spouses of workers who allegedly carried asbestos fibres home from work. In each case the judge ruled that the employer did not owe a duty of care to the spouse, because the employer could not have reasonably foreseen the potential harm to the spouse. UK >> Jul 2014 Gratuitous Services: Knauer v Ministry of Justice A Gillingham man was awarded nearly 650,000 after his wife died of mesothelioma; this included 417,000 for past and future services dependency, which is similar to payments for gratuitous services awarded for some claims in NSW and SA. The defendant (the UK Ministry of Justice) admitted liability but contested the award for services dependency. >> Aug 2014 UK Justice Select Committee reports on mesothelioma claims The Committee observed that average legal costs for mesothelioma claims in England and Wales are around 20,000; this relatively high amount was linked to the fact that more than half of cases are litigated. The high litigation rate was attributed to the inadequate framework for pre-litigation conduct of claims. 5 d finitive DECEMBER 2014

6 >> Sep 2014 Asbestos link to pulmonary fibrosis British researchers claim to have found evidence of a link between asbestos exposure and idiopathic pulmonary fibrosis (IPF), a disease in which the lung tissue thickens or is scarred. The team, led by Dr Carl Reynolds, said that IPF is often diagnosed, rather than asbestosis, where a patient cannot recall past asbestos exposure. >> Oct 2014 Compensation victory for UK asbestos victims Cancer sufferers won a High Court victory against the UK government. Chris Grayling, the Lord Chancellor and Justice Secretary, planned to deduct up to 25% from victims damages to pay for insurance premiums and costs, and the High Court declared this unlawful because a proper review of its impact had not been carried out. >> Oct 2014 Victims can claim against third parties Asbestos victims won a landmark case in the Supreme Court. Mr McDonald, a former delivery driver, died from mesothelioma which was attributed to asbestos exposure at Battersea Power Station. The judges found that his family could claim against the power station, even though he was employed by another company. This is already a well-established compensation route for Australian victims. Other international >> Aug 2014 Protein could be critical biomarker for mesothelioma A team of Italian researchers (led by Dr Manola Comar) claim that a cytokine (signalling protein) called RANTES may help in risk assessment and early detection of mesothelioma for those with asbestos exposure. >> Oct 2014 Winemaker s mesothelioma blamed on asbestos filter Italian researchers Alessandro Nemo and Stefano Silvestri have reported the first mesothelioma case where the victim s only known asbestos exposure came from winemaking. The winemaker treated the wine for impurities using an asbestos filter during the period >> Nov 2014 Swiss billionaire wins asbestos court battle Billionaire Stephan Schmidheiny was acquitted of complicity in 3,000 deaths resulting from asbestos use in factories that were formerly part of his chemicals empire. The Italian Supreme Court overturned a previous ruling which had sentenced Schmidheiny to 18 years prison, as reported in Finity s December 2013 asbestos newsletter. 6 d finitive DECEMBER 2014

7 Today 1,012 identified homes in the ACT retain some Mr Fluffy fibres. Focus on Mr Fluffy It is an innocuous name, but Mr Fluffy asbestos has left many Australian residents most in the ACT potentially exposed to loose-fill asbestos. This feature article describes the Mr Fluffy history, and recent events in the ACT and NSW. No exposure in other states has been reported to date. ACT Background From 1968 to 1979 loose-fill asbestos fibres were installed as insulation in many ACT homes by a business called Mr Fluffy. Today 1,021 homes in the ACT retain some Mr Fluffy fibres. The ACT Government has mandated tagging exposed homes. This involves affixing warning stickers to meter boxes or switch boards. A clean-up in saw fibre removed from the ceilings of many houses, at a total cost of about $100 million. The Commonwealth part-funded this program, as it governed the ACT when exposure occurred. Imperfect information meant that some exposed homes were missed. Others remained contaminated as loose fibres had been blown into wall cavities and sub-floor spaces; about half of all Mr Fluffy homes have had fibres detected in living areas. Some experts have called for inspections of every house in areas where Mr Fluffy fibre has been identified. The ACT Government established the Asbestos Response Taskforce on 25 June The taskforce advises the ACT Chief Minister, Katy Gallagher. The taskforce s initial report in September informed the ACT s negotiations with the Commonwealth. Two residents exposed to Mr Fluffy have been diagnosed with mesothelioma in One has died, while the other is making a landmark claim against the Commonwealth Government, which if successful could pave the way for many more claims. The ACT Government has mandated tagging exposed homes. This involves affixing warning stickers to meter boxes or switch boards. The discreet tagging balances the need to alert tradespeople while protecting the privacy of residents. Based on the taskforce s advice, the ACT government found the only enduring solution is to demolish all exposed houses and remediate the sites. The buyback scheme Based on the taskforce s advice, the ACT government found the only enduring solution is to demolish all exposed houses and remediate the sites. It announced a voluntary buyback of all Mr Fluffy homes. A formal letter was issued to homeowners in early December, outlining terms. The scheme is expected to run for up to five years. Affected homeowners will also be offered up to $14,000 per household towards alternative accommodation costs. Remediated blocks will be offered for sale in due course, and it is estimated this will recoup around 70% of the initial outlay. Many remediated blocks will be subdivided to improve the resale value. Current owners will be given the first option to buy their land back (albeit a smaller subdivided block in some cases). The buyback price of each property will be based on two independent market valuations. 7 d finitive DECEMBER 2014

8 The scheme is expected to be Australia s largest mass acquisition of residential properties. The scheme is expected to be Australia s largest mass acquisition of residential properties. About 500 residents have opted into the scheme to date and valuations are underway, with 800 valuations due to be completed by Christmas. A representative for residents estimates that more than 60% of home owners will want to rebuild on their current sites. Around 40 families have already moved out. Between February and September 2014, 22 homes had sold, including the first openly marketed Mr Fluffy home; owners were advised to delay selling until the compensation package was known. By November many Mr Fluffy homeowners were inspecting new properties and registering to bid at auctions. Some homeowners and tenants are unhappy with the scheme, fearing they will not be able to afford to rebuild on their old land, or that it will take too long. Finally, measures will be used to limit compensation for those who knowingly bought affected properties, to discourage profiteering. The net cost to the ACT of the buybacks, demolition and remediation is projected to be over $300 million. In September a compulsory buy back of affected homes was suggested by some commentators. The government, however, prefers to avoid compulsory acquisition, in order to avoid setting a precedent for a widespread compulsory acquisition, thus maintaining confidence in the ACT s land ownership system. If it is made compulsory, some elderly residents may be permitted to remain in their homes for a few years. Financial implications The net cost to the ACT of the buybacks, demolition and remediation is projected to be over $300 million. The ACT sought a funding contribution from the Commonwealth, citing a memorandum of understanding from the clean up; the Commonwealth argued that this had expired. In October, however, the Commonwealth Government agreed to a concessional loan of $1 billion to the ACT Government, which will support the ACT s large up-front funding requirements. Due to the large financial implications for the ACT budget, a number of ACT infrastructure projects have been delayed. Some banks are offering support to property owners; ME bank, for example, has a system for identifying Mr Fluffy houses. Other banks are providing support, including flexible loan arrangements and fee waivers. However some banks are refusing to lend using Mr Fluffy homes as collateral. In October, the Commonwealth Government agreed to a concessional loan of $1 billion to the ACT Government. 8 d finitive DECEMBER 2014 Criticism Until 2013 the government had thought that Mr Fluffy posed similar risks to bonded asbestos, and had issued general warnings about asbestos. This changed when the government deconstructed a home in 2013 which had been missed in the clean-up. Its severe contamination led to a reassessment of risk, and the government wrote to warn all Mr Fluffy residents in February Throughout 2014 the ACT government has been criticised for not acting earlier on the Mr Fluffy issue. The government has defended its record on asbestos, drawing attention to a number of ACT asbestos safety and awareness initiatives. While the ACT opposition has offered broad bipartisan support for the Government s approach, it had previously called for a board of inquiry (equivalent to a royal commission).

9 Mr Fluffy was used in NSW homes in a number of locations: near the ACT, on the NSW south coast and in parts of Sydney. The future The list of 1,021 Mr Fluffy homes will be made public in the first half of Homeowners have until June 2015 to opt into the buyback. Maurice Blackburn is currently investigating a potential class action on behalf of Mr Fluffy owners. A class action may not be possible due to statute of limitation constraints, though individuals may engage lawyers. When the demolitions commence, up to 150,000 tonnes of waste will be disposed of at a tip in West Belconnen. Waste will be covered by at least three metres of clean soil and the site secured. NSW Mr Fluffy was used in NSW homes in a number of locations: near the ACT (e.g. Queanbeyan), on the NSW south coast and in parts of Sydney. A Sydney-based company was thought to have offered a similar service to Mr Fluffy, though this has now been discounted. Possibly up to 100 properties are now thought to have been exposed in NSW. Possibly up to 100 properties are now thought to have been exposed in NSW. The NSW government is offering free testing for homeowners in 26 local government areas identified as potentially at risk; properties need to have been built before The take-up rate may be reduced because there will be no financial support for the high costs of asbestos removal. WorkCover NSW says the Heads of Asbestos Coordination Authorities (which it leads) is advising those 26 councils. WorkCover has found records for tests in the 1980s that identified loose fill asbestos in homes in Warringah, the Hills District, Bankstown and Lithgow. In October 2014, 21 properties were confirmed as having exposure; of these five have since been treated and two demolished. By 27 November, a further 831 homeowners had registered for testing. In total 285 houses had been inspected, but none returned a positive result. In June 2014 NSW Health advised that Mr Fluffy exposure is safe provided the exposed cavities (e.g. ceiling space) are well maintained and fibres are contained. However, exposure in the affected homes is likely to be greater than in the ACT, because there has been no widespread clean-up to date. Peter Tighe, head of the Asbestos Safety and Eradication Agency, has criticised the NSW Health advice. By 27 November, in total 285 NSW houses had been inspected, but none returned a positive result. Many have also criticised the NSW Government for inaction on this issue, and in September 2014 the NSW parliament set up a cross-party inquiry. The committee has already taken submissions and held public hearings, and is due to report in February The Commonwealth government has not extended a loan to NSW at this time, as it has for the ACT. NSW has not yet announced its approach. In June 2014 Queanbeyan City Council wrote to residents and landlords of around 15 properties with confirmed loose fill asbestos, reminding them of their exposure. Based on ACT data, the council estimates that up to 60 homes in the area could be exposed. The council wants the NSW government to institute a remediation plan similar to the ACT s. Alternatively, the council suggested that a $50 million extension to the Commonwealth s loan to the ACT would be sufficient to fund Queanbeyan s remediation. However any actions are a state government responsibility, so options for councils are limited at this time. 9 d finitive DECEMBER 2014

10 finity.com.au d finitive [ accident compensation ] At Finity, we love to receive feedback. If you have any comments on this edition, or suggestions for future editions, let us know! Finity & asbestos Finity s dedicated asbestos team advises government agencies, insurers, reinsurers and other companies on their asbestos-related liabilities. Our experienced consultants remain at the forefront of actuarial research into compensation for asbestos-related diseases in Australia. Since 1991, we have collected and analysed data on asbestos-related disease claims arising from industrial, environmental and product-related exposures; this extensive historical database represents a key resource for the provision of our advice. We regularly update our modelling approach, responding to changes in disease incidence as well as trends in the claims and litigation environment. Contacts Brett Riley brett.riley@finity.com.au David McNab david.mcnab@finity.com.au Claire White claire.white@finity.com.au Asbestos News is a summary of information from the media and other public sources. Finity takes no responsibility for the accuracy of the content. This newsletter does not constitute actuarial or professional advice. Our consultants can provide further detail. Contact the Author Brett Riley Tel brett.riley@finity.com.au Sydney Office If you would like to be added to the mailing list for future editions of Asbestos News, please contact Renae Hoskins on or at renae.hoskins@finity.com.au Australian & New Zealand Insurance Industy Award Service Provider of the Year 2006, 2007, , 2011, 2014 (NZ). Australian Insurance Industry Awards Inaugural Inductee into the Hall of Fame 2012 Australia Sydney Tel Level 7, 155 George Street The Rocks, NSW 2000 Melbourne Tel Level 3, 30 Collins Street Melbourne, VIC 3000 New Zealand Auckland Tel Level 5, 79 Queen Street Auckland 1010 Finity Consulting Pty Limited ABN