On June 7, 2006, Senator Arlen Specter, the chairman of the Senate Judiciary Committee, and co-sponsor Senator Patrick Leahy, convened a Senate Judiciary Committee hearing to consider proposed amendments to the Fairness in Asbestos Injury Resolution Act of 2006 (or the FAIR Act of 2006, S. 3274), the controversial asbestos reform legislation originally introduced on May 26, 2006. In November of 2005, the bill had fallen one vote shy of the 60 votes needed to waive objections that the FAIR Act would violate Senate budget rules. Notwithstanding the proposed amendments, the bill continues to face significant opposition from numerous parties, including small and medium-sized companies that have used insurance to pay asbestos judgments and assert that they would face financial hardship if forced to make annual contributions to the fund based on their past liability. The general consensus of a number of experts is that the bill will not pass Congress this year, and instead, a medical criteria bill may be the focus of Congress next year.

The FAIR Act’s stated purpose is to provide timely, fair compensation to claimants whose health has been adversely affected by exposure to asbestos, on a no-fault basis and in a nonadversarial manner. To accomplish this, the FAIR Act would create a $140 billion privately financed trust fund compensating asbestos claimants who agree to give up their right to sue. This fund would be financed with $46 billion from insurers, $90 billion from defendant companies and an additional $4 billion from trusts established to settle asbestos claims lodged against now bankrupt or defunct companies. Procedurally, if enacted, the FAIR Act would also stay any asbestos claim pending in a state or federal court on the date of its enactment, unless the presentation of evidence has begun before a jury or judge, or a verdict, final order, or final judgment has been entered by a trial court, and it would establish certain procedures for filing and determining any claims against the fund. The recently proposed amendments would take into account comments offered on the Senate floor in February 2006 and certain other changes. These amendments would allow rapid recovery for the sickest claimants, require stronger medical criteria, and improve the allocation formula for companies to contribute to the fund.

Additional information about the bill, including its complete text, can be found at http://thomas.loc.gov/

Authored by:

Mette H. Kurth

(213) 617-5501