THE BLOG

Asbestos-Victim Families May Face Govt. Repayment Issue

05/06/2015 12:41 pm ET | Updated May 06, 2016

In the hardball political world of mesothelioma litigation, the asbestos-related cancer that fuels all those commercials, it's getting hard to tell if some victims are going to be branded as Medicare "scofflaws" or embraced as important whistleblowers. If recent accusations of fraud against a handful of plaintiff's attorneys is true, you can make a case for both.

The issue plays out like this: It can take decades for asbestos to cause mesothelioma and many victims can be Medicare and/or Medicaid recipients. When victims who are receiving benefits also receive non-government compensation -- from legal settlements, jury awards or from Trust Funds set up by bankrupt companies -- there is a possibility that the government has claim to some of that payment.

While Individual cases vary, litigation insiders say that "liens" against payments to victims are a longstanding issue, but that "everyone is hesitant to go after victims."

Much of this debate is surfacing now because of a landmark North Carolina bankruptcy case called "Garlock," which NPR has reported offers a look into the "murky world of asbestos litigation."

Business groups have seized upon the findings as proof that some victims attorneys are less than forthcoming. Victims attorneys have countered that the companies just don't wish to meet their liability. Into that debate, for the first time, some Trust Fund payments are public record, and raising reimbursement questions.

I've written before about the potential for "perjury pawns," or people who may have been coached by their lawyers to "adapt" their testimony. In effect, it seems apparent that some decided to "not recall" certain asbestos exposures at certain times. Now we have to take into account whether victims were advised by lawyers about paying appropriate government agencies.

That was not a huge deal while it was being debated within the asbestos litigation "industry." Big companies and big law firms have plenty of resources to claim and counterclaim, and lawmakers felt little pressure. What happens now as new public debate threatens to drag families into the fray?

What seems clear is that these issues are moving beyond the "industry" into the halls of congress. The U.S. House of Representatives Judiciary Committee is holding hearings on new transparency for bankruptcy trusts. What are officials to make of the idea that asbestos litigation payments may have been more or less exempt from Medicare/Medicaid reimbursements?

Business interests have long sought transparency from bankruptcy Trust Funds because they want information they can use in court. Victims' lawyers have resisted and argued that such transparency should cut both ways.

Since few think federal legislation has a chance (for one thing, President Obama is not going to sign anything strongly opposed by the plaintiffs' bar), this is all about signals and posture.

The discussion so far has been mostly interesting in civil court circles and in Republican v. Democrat political terms. The congressional debate will only increase the public and media attention. So, will families and victims be seen as scofflaws or whistle-blowing potential sources of information?

Other questions will surface. How can business leaders, perhaps especially insurers, ignore the issue and still answer to shareholders? How can government officials look the other way with huge sums in question? Let's hope plaintiff attorney's weren't setting themselves up for malpractice claims, but what would the legal community do if they were?

As the questions develop, we should understand that it remains one thing to play hardball among lawyers and politicians. It's another when bystanders -- victims of a horrible disease at that -- face the threat of being clawed back into the debacle.