When a company is unable to pay liabilities related to asbestos exposure, it may file for Chapter 11 bankruptcy protection. Companies that successfully file are protected from lawsuits.
Asbestos defendants approved for bankruptcy reorganization under section 524(g) of the U.S. Bankruptcy Code must fund these trusts with enough money to pay current and future asbestos claims.
Companies establish the trusts, but trustees manage them and decide the amount of compensation paid to claimants. In total, all asbestos bankruptcy trusts hold more than $37 billion. Many of these have paid claimants about $18 billion since the late '80s.
How Much Compensation Can Asbestos Trusts Pay Claimants?
The amount of compensation a claimant can receive from an asbestos trust depends on the type of injury and payment schedule the trust established. Each asbestos bankruptcy trust has its own schedule that assigns values to various types of asbestos injuries. Certain types of diseases and levels of severity are eligible for more compensation. The values are based on the compensation payments made by the company before reorganization.
Because most trusts do not have enough money to fully pay all present and future claims, they offer asbestos victims a set percentage of their claims. The 26 largest trusts offer to pay 1.1 percent to 100 percent of a claim amount. As of 2010, the median percentage they offered to pay was 25 percent of a claim. The amount of compensation is limited to ensure there is enough money to pay future claimants who will be diagnosed years from now.
Johns Manville and the Largest Asbestos Trusts
Johns Manville created the first asbestos bankruptcy trust in 1988. At the time, the $2.5 billion trust was widely considered underfunded. Since then, it suspended operations twice and reduced the amount paid to less than 10 cents on every dollar of the original benefit schedule.
Since the Johns Manville case, nearly 100 companies with asbestos liabilities have sought bankruptcy protection. While trust compensation remains significantly less than what claimants may be eligible to receive in court, trusts have paid out about $18 billion for more than 3 million claims.
Bankruptcy Code proceedings help ensure payments for future claims.
How Are Asbestos Bankruptcy Trusts Created?
Bankruptcy trusts are created on behalf of companies with asbestos liabilities, but the companies do not operate the trusts. These companies do not review claims or make determinations based on the claimants evidence.
Trustees manage asbestos trusts for the benefit of present and future claimants. The claims are processed and decided under preset trust distribution procedures. Representatives of current and future claimants must consent to any significant changes to these procedures.
Trusts often publish additional information about their rules, guidelines, qualifications and a list of confirmed exposure sites.
Bankruptcy reorganization is a lengthy process. Approval takes several years.
Trust Creation Process
Bankruptcy Court
Companies seeking reorganization must submit detailed plans to the bankruptcy court, including amount they will put aside to pay asbestos claimants and creditors. The court holds estimation proceedings, which resemble litigation trials, to weigh input and objections to the plan by interested parties. The interested parties in asbestos bankruptcy reorganizations include representatives of current and future claimants, as well as the asbestos defendants' creditors.
Asbestos Claim Estimates
Each interested group offers its own estimate of how much money should be put aside for asbestos claims. They support their estimates with testimony from experts, such as economists, social scientists or legal experts, knowledgeable about the value of past asbestos lawsuit settlements. The bankruptcy judge weighs estimates, expert testimony and determines how much money should be set aside for asbestos claims.
Reorganization Approval
Bankruptcy court may reject a company's reorganization plan. It can take many years and multiple estimation proceedings for the court to grant approval. Once approved, the company sets aside money in the amount determined by the court to fund a mesothelioma trust.
How Do You File an Asbestos Bankruptcy Trust Claim?
You must show evidence of an asbestos-related injury to file an asbestos bankruptcy trust claim. Most trusts identify categories and levels of diseases eligible for various amounts of compensation. Trusts also may require claimants to satisfy certain medical criteria to file claims.
In addition to filing a claim form or some other written statement concerning an asbestos-related injury, claimants also may be required to provide other evidence about their exposure, medical history and more. These criteria help trust fund administrators determine how much compensation a claimant should receive.
Evidence required to file a trust claim usually includes:
Patient's Diagnosis
Medical documentation, such as pathology reports, biopsies and X-rays, proving the claimant is diagnosed with mesothelioma or another asbestos-related disease.
Physician Statement
A statement drafted by a qualified physician, such as a personal doctor or oncologist, confirming the diagnosis.
Exposure Site
Evidence, such as witness affidavits, employment records and invoices, confirming the company’s facilities or products exposed the claimant to asbestos.
Asbestos Involvement
Medical documentation describing the extent asbestos contributed to the claimant's disease.
Trusts, Lawsuits and Veterans Benefits Claims
Trust claims are different from lawsuits and veterans benefits claims. All three can provide compensation to people with mesothelioma, but each requires different paperwork, eligibility requirements and protocols.
Attorneys with experience representing clients with mesothelioma can best handle filing claims and asbestos lawsuits. Veterans benefits claims are best filed with the assistance of a veteran familiar with the ins and outs of the VA health benefits system.
Lawsuits
Bankruptcy Claim vs Lawsuit Process Infographic Thumbnail
Click to Open Infographic on Bankruptcy vs. Lawsuit Process.
Asbestos injury lawsuits, including personal injury claims and wrongful death suits, can lead to larger compensation compared to trust claims because they are filed against manufacturers and other companies still in operation. Patients and loved ones can also file lawsuits against multiple defendants.
Bankruptcy Trust Claims
Trust claims are typically handled out of court. The trusts, created by bankrupt asbestos companies, contain enough money to pay out current and future claims on those exposed to asbestos. While claimants usually only receive a percentage of what they actually claim, the funds are typically dispersed faster than in lawsuits.
Claims for VA Benefits
Military veterans may be eligible for a variety of VA benefits, including disability compensation and health care. Veterans must provide a complete history of asbestos exposure while in the military and other benefits. Compensation is also available to surviving spouses and children of veterans who died of service-related disabilities.
Limitations on Filing for Mesothelioma Compensation
Knowing your legal options, including potential compensation limitations, is an important factor when deciding on the type of compensation you seek. A qualified mesothelioma lawyer with experience representing clients filing trust claims or lawsuits can help you through this process.
Statutes of Limitations
Filing a lawsuit is a complicated and a time-sensitive procedure. Statutes of limitation only allow a certain amount of time to file a lawsuit. Most states feature a two-year statute of limitation that starts from the time a person is diagnosed with mesothelioma, but some states vary. If your time to file a lawsuit has expired, you may be able to file it in a different state or file an asbestos trust claim.
Setoffs
If claimants have already received trust payments, any defendant they sue may deduct the amount of that payment from a court award. These are called setoffs. Some states, including Illinois, New York, Texas and West Virginia, may permit setoffs for trust payments. Other states do not allow, or sometimes limit, the use of setoffs.
State Laws
National asbestos laws do not exist. The federal government leaves it up to each state to form its own legislation. State laws vary greatly on when trust claims must be made and how trust compensation affects the determination of lawsuit awards. A qualified mesothelioma attorney can help claimants understand the process specific to their state.
Filing Multiple Claims & Lawsuits
In some cases, claimants can concurrently file asbestos trust claims against bankrupt manufacturers and asbestos lawsuits against existing companies or manufacturers. But filing a trust claim can affect the amount of compensation received from a lawsuit. Various state laws require claimants to disclose information about other claims they may have filed in the past.
Information Sharing
State courts have different rules about sharing trust claim information with lawsuit defendants. Some courts require plaintiffs to disclose any claim forms they have submitted to trusts during the discovery phase of litigation. This requirement does not necessarily mean the plaintiffs must file their trust claims before trial. It just applies to any claims previously filed. A few courts, including New York City and Montgomery County, Pennsylvania, may require filing certain trust claims before trial.
The FACT Act and Asbestos Tort Reform
The Furthering Asbestos Claim Transparency (FACT) Act of 2015 seeks to make asbestos trust funds report their payouts and the personal information of claimants in a public database.
Proponents of the bill say it will prevent claimants from “double dipping,” theoretically leaving more funds available for future claimants.
Those who oppose the bill say there is little to no evidence suggesting claimants have received multiple payouts from the same trust. They believe rare, isolated cases of fraud aren’t sufficient to warrant the FACT Act, which would make asbestos victims’ private information available to the public, including the last four digits of their Social Security number.
In 2013, a version of this act was originally proposed in the U.S. House of Representatives. It passed the House and went to the U.S. Senate, where a similar bill was introduced in 2014. Both versions of the bill were archived in 2015.
According to GovTrack, a website that reports on the status of U.S. legislation, there is an 11 percent chance the FACT Act will be enacted into law.
Will Asbestos Trusts Have Enough Money to Pay Future Claims?
Trusts are established after rigorous estimation proceedings to determine how much money should be set aside for current and future asbestos claims. They are also managed under procedures to make the money last long enough to compensate future claimants.
However, given the long latency period of asbestos-related diseases, new claims are expected to emerge for several decades. As of 2011, asbestos trust funds have combined assets of $36.8 billion in 60 trusts established on behalf of companies that filed for reorganization.
To ensure there are enough assets left, claimants typically receive a percentage of what they actually claim. However, reorganized companies responsible for asbestos injuries can't avoid paying future claimants.
If you were diagnosed with an asbestos-related illness, speak with a mesothelioma attorney today about asbestos trust funds and other options for compensation. Although there are no guarantees that you will obtain a specific amount of compensation, a mesothelioma attorney can explain the procedures and possible limitations on what you can recover from a trust claim.
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Source: http://docphy.com/business-industry/health-care/mesothelioma-asbestos-trust-funds.html
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