Fraud and Abuse in Mesothelioma Litigation
Yeshiva University - Benjamin N. Cardozo School of Law
Tulane Law Review, Vol. 88, No. 4, 2014
Cardozo Legal Studies Research Paper No. 433
Asbestos litigation continues apace. Sixty companies of the 100 that have been bankrupted to date by asbestos litigation have emerged or are in the process of emerging from bankruptcy by channeling their asbestos liabilities to trusts funded with their assets and insurance coverage. After having paid out over $15 billion in claims, these trusts still have assets exceeding $30 billion.
Asbestos litigation today differs in two major respects from what it was in the 1985-2003 period. First, hundreds of thousands of nonmalignant claims generated by litigation screenings have been replaced by 2500-3000 claims of mesothelioma filed annually and several thousand lung cancer claims that are rapidly increasing in number. Second, there are now dual compensation tracks: suits brought mostly in state courts alleging personal injuries and claims filed with the trusts.
This Article is about the interplay between trust payments to asbestos claimants and suits against solvent defendants in the tort system.
In previous publications, I have laid bare the massively fraudulent enterprise that lawyers, litigation screening companies and doctors perpetrated in nonmalignant asbestos litigation — findings that were largely corroborated in a report by U.S. District Court Judge Janis Jack who found that the litigation doctors hired by asbestos lawyers had “manufactured diagnoses for money.”
In this article, I lay bare the scheme used by lawyers in “big-dollar” mesothelioma cases to maximize tort recoveries by suppressing the fact that the plaintiffs they represent have claimed and will claim “meaningful and credible” exposures to the products of 20-25 reorganized companies when filing trust claims even as they deny, “under penalty of perjury,” all such exposures in the course of discovery and trial of their tort claims. Plaintiffs’ counsel are able to effectuate such a scheme because of (1) their effective control over the production of evidence of exposure to asbestos — containing products; and (2) their control over the creation and administration of asbestos bankruptcy trusts and their use of that control to include provisions in the trusts’ Distribution Procedures designed to limit, if not preclude, defendants’ ability to use discovery to access evidence that tort plaintiffs have filed multiple trust claims contradicting their sworn discovery responses and trial testimony.
My conclusion is supported by the findings of U.S. Bankruptcy Judge George R. Hodges in his estimation order on January 10, 2014 in the Garlock bankruptcy. Judge Hodges’ conclusions, based on very limited discovery that the debtor was permitted to conduct, has allowed us to peer behind the heretofore impermeable asbestos curtain that has shrouded the inner workings of the highly successful scheme to use the judicial system to defraud asbestos defendants in mesothelioma litigation out of billions of dollars.
Though plaintiffs’ counsel strenuously deny the occurrence of any fraudulent conduct in mesothelioma litigation (with the exception of a “one-off” case), after reading Judge Hodges’ order in the Garlock bankruptcy and this article, no one can now legitimately deny that mesothelioma litigation is permeated with fraud.
Number of Pages in PDF File: 83
Keywords: asbestos, civil justice system, mass torts, mesothelioma, bankruptcy, asbestos trusts
Date posted: June 25, 2014 ; Last revised: July 2, 2014