Asbestos Trust Transparency Legislation Moves Forward


Recently, the United States House Committee on the Judiciary passed the Furthering Asbestos Claim Transparency (FACT) Act of 2012 (H.R. 4369), which requires asbestos bankruptcy trusts to file quarterly reports to the bankruptcy courts containing information regarding claimant demands, exposure history, and payments. The Act also requires trusts, upon written request from parties in asbestos litigation cases, to timely provide information regarding claimant demands and payments.

The Fact Act would assist defendants in asbestos cases by making bankruptcy trust records more accessible. Asbestos defendants generally seek such records in discovery to establish post-verdict set-offs, lack of causation, and inconsistencies in the plaintiff's testimony, but plaintiffs often resist, claiming that they are privileged and confidential.

The Fact Act is a bipartisan bill, which is intended to prevent the "double dipping" that occurs when asbestos claimants allege exposure to one set of products in their bankruptcy trust filings and another in their complaints filed in court. Proponents of the Act believe it will preserve trust funds for future claimants with legitimate claims, noting at a hearing earlier this month that the funds "are being depleted by the filing of fraudulent claims." Following the hearing, the House Judiciary Committee voted to send the bill to the full House of Representatives for consideration.

The problems with the current bankruptcy trust system recently came to the fore when Judge Peggy L. Ableman of the Delaware Superior Court reprimanded a plaintiff's attorney in open court for failing to disclose several bankruptcy trust claims until three days before trial. Judge Ableman voiced strong displeasure, stating that this was "seriously egregiously bad behavior" and an attempt "to defraud." The Fact Act would prevent this type of conduct, promote transparency, and allow asbestos defendants to obtain documents to which they are entitled.

For more information regarding the Fact Act, please contact David Governo ([email protected]) or Corey Dennis ([email protected]).