An Inactive Asbestos Docket: Understanding The Risks

The drumbeat for a Congressional solution to the asbestos crisis has never been louder. The reason for such noise is likely the result of several factors taking place simultaneously - the woes of asbestos becoming a staple in the mainstream press, including frequent mentions of studies predicting that the total bill could reach an eye-popping $275 billion; an insurance industry struggling for various reasons, with ever-increasing asbestos reserves seen as an important one of them; a growing list of corporate bankruptcies tied to asbestos; studies linking the asbestos crisis to lost jobs and other negative economic consequences; the White House occupied by a tort-reformer with a track record; and the U.S. Senate under Republican control, with this being a non-election year. If a Congressional solution can't be found under these circumstances, it is reasonable to wonder if it ever can.1

While there is more than one possible national solution to the asbestos crisis currently being floated, the one garnering the most attention is the establishment of federal medical criteria that must be met for a nonmalignant asbestos claim to be maintained.2 This is effectively what is known in asbestos circles as an "inactive docket."3 The premise is simple enough. Most of the cases being filed today are by people that may have been exposed to asbestos, but suffer no present asbestos-related impairment.4 The argument is that, if these "unimpaired" cases are allowed to proceed, then their drain on remaining settlement dollars and judicial resources will prevent those who are "truly sick" from being adequately compensated and in a timely manner. The proposed solution - allow "unimpaired" plaintiffs to file their cases, enabling them to toll the statute of limitations, but then immediately transfer their cases to an "inactive docket," where they wait until their asbestos-related injury is serious enough to warrant the court's time. Imagine a trip to the deli, but instead of taking a number and simply waiting your turn to be served, you would also have to prove that you are hungrier than most of the other people in line.

There is nothing new about the concept, and, in fact, the use of inactive asbestos dockets. Some courts formally adopted them long ago, while others have created de facto inactive dockets - the natural result of channeling all of their resources to those asbestos plaintiffs with the most serious injuries. Historically, inactive dockets in Massachusetts, Chicago, Baltimore5 and the federal court system have received the bulk of the attention.6 Most recently, courts in New York and Washington have jumped on board.7

Even when asbestos litigation in only one jurisdiction is at stake, the creation of an inactive docket is an extremely controversial subject. Indiana is currently considering how to manage its asbestos docket and that question was the topic of a February 2003 symposium held in Indianapolis.8

When talk turns to the creation of a nationwide inactive asbestos docket, the debate, needless to say, intensifies.

On one side of the national debate, understandably, are plaintiff's attorneys with large inventories of cases involving individuals that would likely be relegated to the inactive docket. Hence, for many of their cases, a recovery and corresponding fee would enter a state of suspended animation, perhaps never to be realized. Fred Baron, a well-known asbestos plaintiff's attorney, testifying on September 25, 2002 before the United States Senate Judiciary Committee, on behalf of the Association of Trial Lawyers of America, described ATLA's position on federal medical criteria for asbestos claimants as one of If the system ain't broke, don't fix it. Specifically, Mr. Baron put it this way:

ATLA believes that there is no valid basis for providing legal relief to solvent asbestos defendants or their insurers. Thirty years of actual experience in the state tort law systems, where over 500,000 asbestos victims have sought and obtained compensation for their injuries, is conclusive evidence that there is and (sic) no more effective mechanism for ensuring that victims get compensation than the tort system. Workers who have been injured by asbestos exposure are entitled to seek receive (sic) compensation under the laws of each of the 50 states in the tort system. Any proposed legislation should not include medical standards more restrictive than those used by state courts today, otherwise many injured workers who would otherwise be entitled to benefits will be left without a remedy for the harm they have suffered.

On the other side of the national inactive docket debate are asbestos defendants,9 the insurance industry and asbestos plaintiff's attorneys that don't bother with what they likely perceive as the unripe fruit of asbestos litigation, instead limiting their practices to clients that were unquestionably impaired when they walked in the door. One such outspoken asbestos attorney is Steve Kazan of Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise, who also testified before the Senate Judiciary Committee on September 25, 2002. Interestingly, Mr. Kazan also took an If it ain't broke, don't fix it attitude with respect to the current asbestos litigation system, but not so when it came to the attorney participants.10

In my view, what is wrong with asbestos litigation is due almost entirely to the huge number of claims filed each year by lawyers who have found people who are not sick. The problem is not the cancer cases or the serious asbestosis cases. There are only a few thousand cancer cases filed every year in the entire country and an even smaller number of asbestosis claims involving death or significant impairment. The courts and the defendants could deal with those cases, if they did not have to deal with many tens of thousands of claims brought by people who are not sick.

Mr. Kazan echoed a similar sentiment in his March 5, 2003 testimony before the Senate Judiciary Committee.

I believe in trial by jury. I believe that the courts do a good job in dealing with claims brought by injured people against the people or companies that injured them. If asbestos litigation involved only 7,000-8,000 cancer cases a year and a few thousand more non-cancer claims involving real breathing impairment, no one would be arguing the need for significant reforms. Certainly I would not.

There are numerous law reviewesque issues that go into the decision and permissibility of adopting an inactive docket.11 It is not the purpose of this Commentary to examine such issues, or the nuts and bolts of any inactive asbestos docket proposal that is currently being debated. Rather, this Commentary will provide a brief summary of two current inactive docket proposals (one federal and one state) and a discussion of whether they will live up to their promise.

Current Inactive Docket Proposals

On February 13, 2003, Senator Don Nickles (R-Okla.) introduced the Asbestos Claims Criteria and Compensation Act of 2003 (S. 413) ("the Federal Asbestos Act"). The Federal Asbestos Act starts out with a lengthy Findings and Purposes section, full of facts and figures (which many would dispute) that outline why the current state of asbestos litigation has reached the point of requiring Congressional intervention.12 At the heart of the Federal Asbestos Act is section 4, which provides as follows:

SEC. 4. PHYSICAL IMPAIRMENT

(a) IMPAIRMENT ESSENTIAL ELEMENT OF CLAIM - Physical impairment of the exposed person, to which asbestos exposure was a substantial contributing factor, shall be an essential element of an asbestos claim. For purposes of this section, cancer shall be presumed to involve physical impairment.

(b) PRIMA FACIE EVIDENCE OF PHYSICAL IMPAIRMENT -

(1) IN GENERAL - No person shall bring or maintain a civil action alleging a nonmalignant asbestos claim in the absence of a prima facie showing of physical impairment as a result of a medical condition to which exposure to asbestos was a substantial contributing factor.

The Federal Asbestos Act goes on to define, using specific objective medical criteria, what is required to establish a prima facie showing of physical impairment as a result of a medical condition to which exposure to asbestos was a substantial contributing factor. Under the Federal Asbestos Act, a person that has not yet discovered that they are physically impaired by an asbestos-related nonmalignant condition need not file a claim out of concern over the statute of limitations. Thus, the Federal Asbestos Act is not an "inactive docket" statute per se. Rather, it operates to create a de facto "inactive docket."

In addition, the Federal Asbestos Act contains important provisions governing consolidations of cases, venue, statute of limitations and retroactivity. It is beyond the scope of this Commentary to discuss these provisions in detail, each one of which is hugely controversial and has enormous potential consequences on the state of asbestos litigation. In general, the Federal Asbestos Act precludes the consolidation of cases without all parties' consent; limits venue to the plaintiff's home state or state of exposure (with the exception of cancer cases with a life expectancy of less than three years); creates federal jurisdiction for any case in which a state court refuses or fails to apply the Act...