The U.S. Government Accountability Office has determined the value of all assets in asbestos-related bankruptcy trusts is $36 billion. Over five decades, asbestos litigation is the longest running mass tort litigation area in the history of the United States. With over 730,000 lawsuits filed and $50 billion paid out in compensation over that time period it is also among the most expensive. However, 730,000 lawsuits could be just the beginning as some experts have estimated that there could be 2.6 million more lawsuits over the next three decades with a cumulative $270 billion in liabilities. Congress has perennially tried to pass legislation meant to keep asbestos-related trusts solvent and reduce litigation.

The current piece of legislation before Congress is the Furthering Asbestos Claim Transparency (FACT Act) of 2015. The bill seeks to amend title 11 of the U.S. Bankruptcy Code to require asbestos-settlement trusts to release information on victims seeking compensation due to asbestos-related injuries in quarterly reports. This disclosure is seen by many as a remedy to the major problem of fraudulent, inflated, or duplicative checks that find their way to plaintiffs’ mail boxes around the country. This problem is largely due to the lack of a mechanism in the Bankruptcy Reform Act of 1994 for asbestos trusts to share claims data with each other and the courts in order to stop attorneys and claimants from using this lack of transparency to receive duplicative benefits.

The bill is currently in the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law. The subcommittee held a hearing in mid-February that highlighted the fraud this bill seeks to remedy. Specifically, much of the testimony was focused on In Re Garlock Sealing Technologies. In this case the asbestos plaintiffs’ attorneys withheld evidence of exposure to asbestos containing materials manufactured by companies that have bankruptcy asbestos trusts in order to maximize plaintiffs’ (and counsel’s) recoveries by increasing Garlock’s settlement costsHowever, Garlock proved the settlements were inflated and this eventually led the company to file four racketeering lawsuits against the plaintiff law firms. No other hearings are schedule at this time.

Further Reading: Law prof’s Garlock testimony details asbestos lawyers’ change in strategy: Legal Newsline Legal Journal, February 23, 2015.