Failure to disclose “double dipping” in 92% of cases sampled
A new report released today by the Illinois Civil Justice League - Illinois Asbestos Trust Transparency - reveals systemic manipulation of the timing of asbestos personal injury lawsuits that subject small businesses and other defendants to artificially high legal costs, further eroding the state’s business environment.
Illinois, especially Madison County, has long been “ground zero” for asbestos-related personal injury lawsuits, while only a small percentage of these plaintiffs are residents of the state. “Madison County received almost one-third of all new asbestos cases filed nationwide in 2016, and almost one-half of the highest value cases involving a type of cancer called mesothelioma. Cook and St. Clair Counties also receive significant numbers of asbestos cases,” said John Pastuovic, president of the Illinois Civil Justice League.
In addition to filing asbestos-related lawsuits against increasingly remote defendants, claimants typically file multiple claims against trusts that were created when the major asbestos producers declared bankruptcy years ago. These trusts exist to compensate individuals harmed by exposure to asbestos-containing thermal insulation and other products manufactured or sold by the historically most culpable companies. Through bankruptcy, the companies are now exempt from asbestos-related lawsuits.
“Plaintiffs’ lawyers have learned to exploit a disconnect that exists between the asbestos trust and personal injury lawsuit systems. At the core of this disconnect is the longer time period in which a claimant has to file a claim with an asbestos trust as compared to filing a tort lawsuit.
By intentionally delaying the filing of asbestos trust claims until after a personal injury case is resolved, plaintiffs can withhold information that, if disclosed, could lead a jury to conclude that a bankrupt entity was the sole proximate cause of the plaintiff’s alleged harm and not the small business that was, at most, a peripheral player in the litigation,” Pastuovic said.
Further, “protections created to avoid the double payment of plaintiffs are being avoided, resulting in overpayment of current plaintiffs to the detriment of future claimants,” he added. Additionally, the “lack of transparency between the asbestos trust and tort systems makes it hard to police inconsistent and potentially fraudulent claiming,” Pastuovic continued.
These issues were at the core of a landmark case involving gasket and packing manufacturer Garlock Sealing Technologies, LLC. After extensive discovery, the bankruptcy judge determined that Garlock’s payments in the tort system were infected by the manipulation of exposure evidence by plaintiffs and their lawyers. “The findings in Garlock prove that the lack of consistent and timely trust disclosures by plaintiff law firms is not only systemic but impactful in terms of inequitable tort outcomes,” said Marc Scarcella, MA, one of the new report’s authors and Lead of the Economic & Complex Analytics Practice of Roux Associates, Inc.
As part of the new study, the law firm of Maron Marvel Bradley Anderson & Tardy, LLP conducted an asbestos trust review and analysis on a sample of 100 asbestos cases recently filed in Illinois. “The results of the review are similar to those uncovered in the Garlock Data. On average, plaintiffs in the sample could have made sixteen trust claims; thirty-seven plaintiffs could have made more than twenty trust claims. More significantly, of the 100 cases sampled, only eight disclosed having made trust claim submissions,” Scarcella stated.
Perhaps the most critical finding of the Maron Marvel review was their comparative analysis of asbestos trust disclosures in states that currently lack trust transparency legislation, such as Illinois, with states that have adopted such legislation in recent years. “In their experience, cases filed in states with trust transparency legislation disclose an average of ten to fifteen trust claims, whereas more than ninety percent of plaintiffs in the Maron Marvel sample of 100 Illinois cases failed to identify or disclose even one trust claim submission,” study co-author Peter Kelso, a Principal with Roux Associates, commented.
To help illustrate the aggregate findings in both the Garlock Data and the Maron Marvel review, the study also detailed two contemporary Illinois case examples.
“The Illinois cases and evidence from the Garlock bankruptcy provide further examples of the clear need to integrate trust claims into the Illinois civil justice system,” Kelso continued. “Illinois judges and juries should have full information as to the totality of a plaintiff’s exposures to asbestos to decide if trust-related exposures were the sole proximate cause of the plaintiff’s harm. Further, trust claim submissions should be required before trial to preserve the integrity of the set-off mechanism to prevent double recoveries,” he concluded.
“The report shows that Illinois should enact legislation similar to a dozen other states to address the disconnect between the asbestos trust and tort systems by requiring plaintiffs to file their asbestos trust claims before trial,” stated Mark Behrens, a co-author of the report and nationally recognized asbestos litigation expert with the law firm of Shook, Hardy & Bacon, L.L.P.
Added Travis Akin, Executive Director of Illinois Lawsuit Abuse Watch, “Missouri just enacted common sense lawsuit reform legislation. The ‘Show Me State’ is showing Illinois how to make an abused lawsuit system fairer and more attractive to employers. If Illinois doesn’t follow Missouri’s lead, we can expect to see Illinois businesses leaving the ‘Sue Me State’ and crossing the Mississippi River for a state where they won’t have a lawsuit target on their backs.”