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
Multiple Compensation Systems Common Common Law Tort Workers Compensation Health Health and Other Insurance Asbestos Asbestos Trust Distribution Plans
Interface Common Law Workers Compensation Immunity Comparative Responsibility Collateral Source Subrogation
Interface Common Law Insurance Workers Compensation Collateral Source Subrogation
Asbestos Bankruptcy Trust Distribution Plans Trustees Administration Exposure Criteria Governance Diseases Medical Criteria Valuation Criteria Defenses Payment Limitations Court Access
Interface TDP s Common Law Workers Compensation Insurance Contribution Set Off Comparative Responsibility Joint and Several Liability
Approximate Asbestos Bankruptcy Trust Funding Bankruptcy Date Organization Est. Assets at Inception Bankruptcy Date Organization Est. Assets at Inception 1982 Amatex $ 10,000,000 1982 Johns-Manville $ 4,000,000,000 1982 UNR Industries $ 25,000,000 1984 Wallace & Gale TBD 1985 Forty-Eight Insulations $ <5,000,000 1986 Pacor, Inc. $ 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. $ 100,000,000 1993 Keene Corp. $ 65,000,000 1995 Lykes Brothers Steamship TBD 1996 Rock Wool Manufacturing $ <5,000,000 1998 Fuller-Austin Co. $ 400,000,000 1998 M.H. Detrick TBD 1999 Rutland Fire Clay $ <5,000,000 2000 Armstrong World Industries $ 2,000,000,000 2000 Babcock and Wilcox $ 1,900,000,000 2000 Owens Corning/Fibreboard $ 3,700,000,000 2001 Swan Transportation $ 30,000,000 2001 U.S. Gypsum $ 4,000,000,000 2001 U.S. Mineral $ 20,000,000 2001 W. R. Grace (anticipated) $ 2,500,000,000 2002 Harbison-Walker/DII $ 2,600,000,000 2002 J.T. Thorpe Company $ 230,000,000 2002 J.T. Thorpe Inc. $ 200,000,000 2002 Kaiser Aluminum & Chemical $ 1,200,000,000 2002 Plibrico Company $ 35,000,000 2002 Porter Hayden $ 40,000,000 2002 Shook & Fletcher $ 85,000,000 2002 Western MacArthur $ 2,000,000,000 2003 ABB Lummus Global $ 40,000,000 2003 A-Best Products $ 15,000,000 2003 Burns & Roe (anticipated) $ 150,000,000 2003 C.E. Thurston $ 53,500,000 2003 Combustion Engineering $ 1,650,000,000 2003 Federal Mogul $ 700,000,000 2003 Pittsburgh Corning (anticipated) $ 3,500,000,000 * Information to be verified from public sources
Number of Asbestos Claims by Claimed Injury (1980-2002) Year Mesothelioma Other Cancer Non-Malignant Total 1980 222 528 3,415 4,165 1981 264 587 3,881 4,732 1982 291 604 3,984 4,879 1983 324 657 3,579 4,560 1984 423 879 4,822 6,124 1985 519 1,202 7,681 9,402 1986 660 1,964 12,675 15,299 1987 972 2,997 17,087 21,056 1988 1,266 3,292 24,713 29,271 1989 2,411 6,376 45,151 53,938 1990 1,275 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 1997 1,347 3,132 28,978 33,457 1998 1,387 2,828 38,539 42,754 1999 1,520 2,863 40,815 45,198 2000 1,776 2,623 52,055 56,454 2001 1,893 3,639 89,308 94,840 2002 1,856 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, 2005. Available online at www.rand.org.
Projection of Mesothelioma in the United States (1982-2047) 2047) Projections of Mesothelioma in the United States (1982-2047) 3,500 3,000 Walker et al. study Nicholson et al. study 2,500 Price study Number of Cases 2,000 1,500 1,000 500 0 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 Year of Occurrence Sources: Walker, A., J.E. Loughlin, E.R. 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. Peto and M. Schneiderman, eds., Quantification of Occupational Cancer, Banbury Report 9, Cold Spring Harbor, N.Y.: Cold Spring Laboratory, 1981, pp.87-111.; Price, B., "Analysis of Current Trends in United States Mesothelioma, American Journal of Epidemiology, Vol. 145, No. 3, 1997, pp. 211-218.
Projection of Asbestos-Related Lung Cancer in the United States (1982-2047) 2047) Projections of Asbestos-Related Lung Cancer in the United States (1982-2047) 6,000 Number of Cases 5,000 4,000 3,000 2,000 Walker et al. study Nicholson et al. study 1,000 0 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 Year of Occurrence Sources: Walker, A., J.E. Loughlin, E.R. 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. Peto and M. Schneiderman, eds., Quantification of Occupational Cancer, Banbury Report 9, Cold Spring Harbor, N.Y.: Cold Spring Laboratory, 1981, pp.87-111.
Actual vs Predicted Asbestos-Related Non-Malignant Claims in the United States (1982-2047) 2047) 60,000 50,000 RAND 2002 study Prediction - High Prediction - Low Number of Claims 40,000 30,000 20,000 10,000 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 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, 2005. Available online at www.rand.org.
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
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
Other Effects Defendant Decision to Litigate Subrogation Claims Tort System Values TDP Payments Foreign Claims New Defendants