Asbestos “Transparency” Act

WV Association for Justice Seminar
SB 411 Asbestos “Transparency” Act

By William K. Schwartz

A new law was signed by the governor on March 18, 2015. SB 411 created an Asbestos Bankruptcy Trust Claims Transparency Act and Asbestos and Silica Claims Priorities Act. It imposes new bankruptcy trust disclosure requirements on claimants and penalties for failure to comply. It makes it more difficult for a victim of asbestosis to bring a claim, but removes the most onerous requirements of the original bill regarding cancer victims. It is helpful to understand some background of the litigation before going further on the details of the new law.

Asbestos litigation in West Virginia dates back to the early 1980s, but in America it can be dated from the Fifth Circuit case Borel v. Fibreboard 493F2d 1076(5th Cir.1973). In Borel the Fifth Circuit ruled that the industry’s major corporations had information and studies urging precautionary measures and eliminating hazardous exposures from at least the 1930s – yet Mr. Borel had no warnings resulting in the fatal cancer mesothelioma. Asbestos insulation material has been produced commercially since at least 1874. Its use in the United States and West Virginia expanded greatly from World War II forward.

As a federal court noted, asbestos is a natural fibrous mineral with organic heat resistant and fire retardant properties, which has a number of applications, including insulation around cold or hot air, liquid conductors or boilers; noise absorption in wall insulation and acoustical ceiling tile; as well as the covering of structural steelwork of buildings to guard against fire. “The massive use of asbestos in industrial, commercial and household contexts exposed millions of people to its insidious dangers.” (Joint E&S Dist. Asbestos Litig. 129 B.R. 710, 743-736(E&SDNY 1991) modified 993 F2d 7 (2nd Cir. 1993). This was particularly true in West Virginia with its high concentration of chemical, glass and steel industries.

The National Institute for Occupational Safety and Health has determined that more than one million American workers face significant asbestos exposure on the job. According to OSHA’s 2004 Worker Health Chartbook, West Virginia tied Delaware for the state with the highest asbestos mortality rate in the country based on the causes of death reported on death certificates. Industrial asbestos exposure in West Virginia led to, at first hundreds and ultimately thousands of claims being filed in the 1980s and 1990s.

The result of large filings of asbestos cases was several consolidated and mass trials in West Virginia. Some defendants argued that mass trials violated the constitutional rights of defendants. Other defendants proved no defect in certain products and were dismissed from thousands of cases. The West Virginia Supreme Court of Appeals created a Mass Litigation Panel (“MLP”) through the enactment of Trial Court Rule 26.01. The Supreme Court has given the MLP the responsibility for development and implementation of “case management and trial methodologies for mass litigation and to fairly and expeditiously dispose of civil litigation which may be referred to it by the Chief Justice.” [Trial Ct. R. 26.01(b) (1) (Michie 204)]. This culminated in a Case Management Order (“CMO”) regarding all asbestos cases filed in West Virginia.

As certain defendants have stated, “The existing CMO was an exhaustive, joint effort by the vast majority of defendants and plaintiffs to develop a comprehensive system to address the large number of asbestos cases filed in West Virginia.” On August 7, 2003, the Chief Justice of the West Virginia Supreme Court of Appeals entered an Administrative Order identifying all asbestos cases filed after September 6, 21001, as cases included in Kanawha County Civil Action No. 03-C-9600 and transferring all of those cases to the Mass Litigation Panel. Through an Administrative Order, Chief Justice Starcher noted his review and approval of the CMO for the Civil Action No. 03-C-9600 cases. As a result of the Administrative Order, all asbestos cases filed after September 6, 2001 are Civil Action No. 03-C-9600 cases that are governed by the CMO.

The CMO states that “trial groups of twenty (20) have been established after due consideration of the position of all the attorneys who chose to address this issue.” Once a trial group is designated a Scheduling Order setting forth trial group deadlines applies. Each plaintiff must complete a Plaintiff’s Fact Sheet, including all questions asked, the list of medical providers and other sources of information, the request for production of documents and the request for authorizations. It provides for a bankruptcy proceeding affidavit, employment information and authorization, as well as exposure information. In addition, a defendant may provide to plaintiff’s counsel a “No Evidence Letter” requesting dismissal from the action based on the required disclosures. There is a procedure as to how a plaintiff may properly object to dismissal or agree to dismiss at an early stage in the litigation.

The CMO sets up a system to prioritize cases. Living mesothelioma cases receive priority followed by living lung cancer, deceased mesothelioma and so on. Any plaintiff who has been diagnosed with a malignant mesothelioma or asbestos-related lung cancer by a board-certified pathologies and who is living at the time of a trial group is designated, is a Category I case and is considered as first priority in any trial group. This is the exigent docket. It provides a schedule for discovery on each individual case prior to trial, including expert reports, co-worker depositions and document productions. Every few months attorneys for the plaintiffs cooperate through court assigned liaison to designate 20 cases for trial. Each case is subject to the disclosure and discovery rules of the CMO as well as motions regarding exposure to a specific product and other substantive and procedural points any party may raise regarding a specific plaintiff or a specific defendant. All parties are served documents that have been electronically submitted through the Lexis Nexis File and Serve system. The CMO has been revised from time to time to address the concerns of the court or any party. Sixty to eighty cases, involving the most seriously injured, are resolved each year this way. Railroad claims, which are brought under the Federal Employer Liability Act or FELA, are handled in a separate court using different procedures. The new legislation sought to alter the procedures

The Findings and purpose for SB411 or now §55-7E-2 include:

(1) The United States Supreme Court in Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 598 (1997) described the asbestos litigation as a crisis;
(2) Approximately one hundred employers have declared bankruptcy at least partially due to asbestos related liability;
(3) These bankruptcies have resulted in a search for more solvent companies, resulting in over eight thousand five hundred companies being named as asbestos defendants, including many small and medium-sized companies, in industries that cover eighty-five percent of the United States economy;
(4) Scores of trusts have been established in asbestos-related bankruptcy proceedings to form a multi-billion dollar bankruptcy trust compensation system outside of the tort system, and new asbestos trusts continue to be formed:
(5) Asbestos claimants often seek compensation for alleged asbestos-related conditions from solvent defendants in civil actions and from trusts or claims facilities formed in asbestos bankruptcy proceedings;
(6) There is limited coordination and transparency between these two paths to recovery;
(7) An absence of transparency between the asbestos bankruptcy trust claim system and the civil court systems has resulted in the suppression of evidence in asbestos actions and potential fraud;
(8) West Virginia’s Mass Litigation Panel has previously entered case management orders that apply substantive transparency provisions requiring plaintiffs to disclose, among other things, any claims that may exist against asbestos bankruptcy trusts; and
(9) It is in the interest of justice that there be transparency for claims made in the asbestos bankruptcy trust claim system and for claims made in civil asbestos litigation
(b) It is the purpose of this article to:
(1) Provide transparency for claims made in the asbestos bankruptcy trust claim system and for claims made in civil asbestos litigation; and
(2) Reduce the opportunity for fraud or suppression of evidence in asbestos actions.

The legislation glossed over procedures for transparency entered several years ago as a result of negotiations when lawyers for victims faced a similar Bill. The original draft of the SB 411 provided immunity to an entire class of defendants such as pumps and valves manufacturers that incorporate asbestos. Also premises owners were immune from claims brought by housewives and children of workers bringing home contaminated clothing. These dreadful provisions were eliminated and onerous requirements on medical experts were also eliminated. There are still more strict disclosure requirements on cancer victims, but the automatic stays from the original draft have been removed. A claimant can lose a trial date for failure to comply, but he or she will not lose a trial date simply at a defendants request or automatically.

The new law imposes new requirements on all asbestos cases. On June 9, 2015 new asbestos cases filed must provide a sworn statement identifying all asbestos trust claims filed or that could be filed no later than 120 days prior to trial. The plaintiff shall make available to all parties all trust claims materials. Failure to do so costs you a trial date. No claims of privilege apply. Not less than 90 days before trial defendants can identify more asbestos trusts for you to file. There is a procedure to object but this could cause delay of trial. Not less than 30 days prior to trial the court enters a trust claims document. The defendants may use this to seek set off and establish other causes of the injury.

If you file a non-cancer asbestos claim after June 8 2015 the new procedures are very difficult. There is establishment of a prima facie case, detailed medical, social and exposure history requirements and restrictions on medical evidence and limitations on consolidation. The new law does establish a two disease rule. A former asbestos case may file a new action should he or she develop cancer. The primary change for cancer cases are the disclosure requirements, but it is now more difficult than ever for an asbestosis victim to bring a claim.