Governor Signs Chamber-Backed Legislation Targeting Abuses in Asbestos Litigation

April 16, 2018

Good news! Governor Snyder has signed legislation targeting abuses in asbestos litigation. By hiding evidence of exposure by the original manufacturers of asbestos, personal injury attorneys have made advantage of vulnerabilities in our legal system an art form, padding their pockets in the process. Legislation pushed by the Michigan Chamber, which was signed by the Governor on April 10, works to reverse these trends and save businesses of all sizes and types time and money in the process. 

House Bill 5456 (Rep. Wentworth), championed by the Michigan Chamber, would require transparency in asbestos litigation by requiring plaintiffs to file bankruptcy claims and disclose those claims 180 days before trial. Similar legislation has been enacted in 12 states, including Ohio and Wisconsin.

Asbestos bankruptcy trusts were created through federal bankruptcy law by companies most directly responsible for asbestos injuries, such as companies that mined asbestos or manufactured asbestos-containing thermal insulation. To date, more than 100 asbestos defendants have filed for bankruptcy protection and the US General Accounting Office has estimated there are roughly 60 trusts in operation today, holding some $25 billion to pay future claims. The average person alleging that asbestos exposure caused his or her mesothelioma will file claims with more than 20 trusts and collect about $500,000 in compensation through this process.

Plaintiffs often commonly sue companies that have not filed for bankruptcy through the regular tort system. These companies, though, are often peripheral to any wrongdoings. They may be local plumbing supply companies, hardware stores, auto dealers or manufacturers of secondary products. Richard Scruggs, a famous plaintiffs’ attorney, once called finding companies to sue in asbestos litigation an “endless search for a solvent bystander.”

The problem isn’t that plaintiffs’ attorneys are filing claims with both the trusts and courts, but rather that in the lawsuits against peripheral defendants, the plaintiff’s lawyers are sometimes hiding the fact from juries that they also blame bankrupt companies for their asbestos-related injury. Why is this a problem? Juries and judges cannot properly apportion fault if they are blindfolded from these other allegations, meaning solvent companies are often held fully liable for the wrongs of the original manufacturers. 

The legislation pushed by the Michigan Chamber solves this problem through basic disclosure requirements. It requires plaintiffs’ attorneys to disclose to the defendants the bankrupt trust claims they can file based on the plaintiff’s exposure history; to file those trust claims before trial; and to provide the trust claim forms to the defendants so that, at trial, the jury can hear all the facts, including their lifetime exposures, and properly determine fault.

HB 5456 does not impose caps on a plaintiff’s ability to receive compensation or limit claims against trusts. What the legislation attempts to do is accelerate the timing of asbestos trust claim filings to promote fairness and transparency.

For more information, contact Wendy Block, Senior Director, Business Advocacy, Health Policy & Human Resources, at wblock@michamber.com