THE BLOG
09/09/2014 04:49 pm ET Updated Nov 09, 2014

Asbestos Litigation Summit Tackles Issues of Trust

The insular and well-heeled world of American asbestos litigation is gathering atop San Francisco's Nob Hill this week for what amounts to an annual current-events snapshot, and this year things may get a bit testy in the industry triangle of plaintiff attorneys, defense firms and insurance companies.

Granted, if outsiders know anything about asbestos litigation, it's likely limited to those ubiquitous mesothelioma advertisements. However, "meso" is just the most horrible and deadly of several asbestos-related illnesses, which inflict thousands and fuels the nation's longest-running liability litigation industry.

Asbestos liability has played a role in about 100 U.S. companies going bankrupt, according to a 2011 report from the U.S. Government Accountability Office, which also noted that those firms have set aside more than $37 billion for mesothelioma victims since the 1980s.

Of course, the several thousand asbestos lawsuits filed annually are worth many times that amount.

The San Francisco gathering, held at the historic Fairmont Hotel, is organized by the Perrin Conference company and includes discussions among insurance experts, from both the plaintiff and defense sides of the lawsuit equation, and even a smattering of active asbestos judges -- a group not exactly known for discussing their policies in public.

In fact, conference organizers say 11 judges from across the country will speak at the event.

Discussion will no doubt include two fast-emerging trends hitting the nation's civil courts.

One is how a spate of new cases link asbestos with lung cancer, including claims from longtime tobacco smokers who blame asbestos exposure for their illness. The other is how bankruptcy trust information is handled. Both are strongly identified with a "signature" case.

In the lung cancer claim trend, the case is U.S. Rep. Carolyn McCarthy, the nine-term congresswoman from Long Island, New York, who is famous for advocating for increased gun control. A smoker for decades, she sued about 70 asbestos-related companies over getting lung cancer. The New York Times columnist Joe Nocera was among those writing about her situation.

But it is the bankruptcy issue that threatens to move beyond the asbestos world to impact national policy. At issue is how victims make claims against "trusts" set up by those bankrupt companies, and allegations that some people are telling different exposure stories to different trusts -- all to secure more payments.

The high-profile bankruptcy signature case involves a gasket-making company called Garlock, and it shook up the asbestos world earlier this year when a federal judge in North Carolina issued a strong ruling that the plaintiff's liability estimate was "infected with the impropriety of some law firms..."

In other words, they told different stories under oath in different situations. NPR reported some of the court's findings: "In Texas, a plaintiff said his only exposure to asbestos was from Garlock after his lawyers filed a claim with another company. In California, a plaintiff's lawyers misled a jury to make Garlock look worse. And in Philadelphia, lawyers made evidence disappear of their client's exposure to 20 different asbestos products.'

As part of its bankruptcy case, Garlock was allowed to review 15 old asbestos cases, and the judge allowed access to bankruptcy trust information. The judge eventually ruled that "evidence was withheld in each and every one of them."

Asbestos plaintiffs not only think the judge got it wrong, but argue that the court was misled by Garlock's arguments and by what one attorney called "... its failure to produce evidence that it was required to produce." The implications are stark. If the judge is right, then there might be perjury on nothing short of an industrial scale. If the plaintiff's side is right, this is just an outlier; nothing to see here.

Insurance companies have certainly taken notice. The NPR coverage quotes Cynthia Michener, a spokeswoman for Aetna, which is among those seeking court-held information from the Garlock case: "If another party, like a company or an individual, is responsible for causing your illness or injury, that party should be paying for your medical care."

In effect, Aetna (and no doubt other insurance companies) want to see if they paid out insurance claims that a bankrupt company has already covered. The North Carolina judge gave Aetna access to some records, and requests by several other companies haven't been decided yet. Eventually, this could mean victims, including surviving family members, will have to face litigation over issues they believed were settled long ago.

Because the military uses asbestos, it is more than worth noting, many of these meso victims will be veterans and their families. Many are no doubt under nondisclosure agreements with some of their settlements, but you can still bet this will not play well on the nightly news.

I have called such victims "perjury pawns," because there's no way they intentionally set out to lie under oath and were no doubt trying to get through what must have been one of the toughest times of their lives -- or even the end of their life. (It's hard to care about the fine print of your legal documents when you can't breathe.)

That's where the Nob Hill summit becomes important, because decades of "how it's done" is about to be strained by conflicting interests and the stress of just what to do if those "perjury pawns" become as common as the Garlock case suggests they might be.

Sara Corcoran Warner is publisher of the California Courts Monitor website, "Your Daily Ration of Civil Justice Rationing," and a frequent commentator on national legal policy and civil courts issues.