A slow-motion train wreck in one of America's longest running personal injury communities is expanding beyond legal theory, potentially dragging hundreds of families back into lawsuits they thought were settled -- families that already endured heartbreaking litigation over asbestos-related cancers.
At issue is a North Carolina bankruptcy case involving a company called Garlock Sealing Technologies, which makes gaskets, some of which contained asbestos and were used by the Navy and others.
Facing thousands of asbestos-related claims, Garlock is seeking bankruptcy protections.
A federal judge named George Hodges came out of retirement to oversee the case and, as the Reuters wire service reported, has "...found what he called a 'startling pattern' of abuse by plaintiffs' lawyers may have shifted the landscape of asbestos litigation with a ruling in favor of manufacturers."
In effect, the court decreed that lawyers had "manipulated" evidence to get more money. Bankrupt companies have created court-approved "trust funds" to address current and future liabilities. This is particularly common in asbestos-related liabilities. In what may be a legal first, the court allowed defense lawyers extensive access to bankruptcy trust information. The outcome was alarming, suggesting a pattern of perjury.
On first blush, it appears that victims may have told one story to one trust, another story to another trust, and sometimes even a different story to juries. This could result in what defense attorneys call "double dipping."
Plaintiff's lawyers say "no big deal," the decision only addresses mesothelioma, a cancer linked to asbestos, not all debts, and that this is an outlier case where the judge ignored decades of precedent.
Who cares, right?
After all, it's just what NPR called a "murky" legal fight between big plaintiff firms and bigger corporations over huge money. In Garlock, plaintiff's sought $1.3 billion for victims of mesothelioma and the court ordered only $125 million.
But you detect the looming problem in stories like a National Law Journal report about insurance companies jumping onto the Garlock bandwagon.
Insurers point out that some of the money paid by those trusts was likely owed to them to offset claims paid. Guess what? They want it back, and "Garlock" fuels that effort, threatening to reopen cases believed "final." The NLJ ominously quotes one insurance company filing that includes "... this [Garlock] court's opinion suggests pervasive fraud on the part of asbestos claimants and their counsel."
That's right. Not just "counsel" but "claimants" -- or what we might think of as "victims."
As families get drawn into the fray, it is bound to catapult this issue into the political spotlight, as it's no secret trial lawyers underwrite much of the Democratic party.
Look, as a Democrat in a mostly Republican family, I've always defended victim's attorneys as champions in offsetting certain bad business behavior. But even my liberal relatives admit, if only privately, that some attorneys have become greedy in the absence of financial transparency and public-company style reporting. Hey, we Democrats welcome oversight, right?
"Garlock" could be a game changer because it drives a wedge between attorneys and their clients -- I've called them "perjury pawns."
Or maybe not. We've actually seen a similar situation a decade ago involving exposure to silica dust, which can cause fatal disease.
That blew up when United States District Judge Janis Jack of Corpus Chrisi, Tex., blasted lawyers in a 249-page decision citing thousands of bogus cases while slamming the entire process, sanctioning plaintiffs'-side law firms and calling medical findings "worthless."
Federal prosecutors even got involved. The New York Times wrote that the "tort wars" were at a turning point. The Times was wrong.
But, the silica fiasco had relatively many plaintiffs seeking lower payouts. That made it difficult to go after individuals. When it comes to mesothelioma, we're talking about relatively few clients getting relatively large payouts -- usually in the millions of dollars.
And in the silica cases, you did not have huge insurance companies with a virtual fiscal responsibility to recover money already paid.
I'm not the first to say that the Democrats and the plaintiff's bar need to lead in discovering what, if anything, has gone wrong in tort litigation. We know the GOP-controlled House of Representatives will hold hearings. State lawmakers have already taken note: Both Ohio and Wisconsin have passed asbestos trust transparency legislation.
What's missing is a focus on victims. We all know that victims and their families did what their lawyers advised them to do. They should not find themselves facing perjury claims on top of their tragedy.
A hearing in the Democratically-controlled Senate Judiciary Committee might help; Chairman Sen. Patrick Leahy (D-Vermont) would be a strong voice to insulate families from revisiting old wounds.
It's one thing to embrace political allies like the trial lawyers, but I'm hoping my fellow Democrats shed light on this gray area. By doing so, and by focusing on protecting victims, we can avoid some of the election-year debris from this particular train wreck.
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