The insurance industry could learn as early as this week the broad outlines and ballpark costs of the so-called third wave of asbestos litigation.That's the timeline Sen. Orin Hatch, R-Utah, chairman of the Senate Judiciary Committee, has established for drafting proposed asbestos litigation legislation as he has woven his way between industry, insurer and labor interests in an effort to forge consensus legislation that will pass the Congress.

Two bills also have been introduced in the House in recent weeks, bills which will likely provide the basis for legislation to be crafted in that chamber, therefore setting the stage for passage of bipartisan legislation this year.

Laying the groundwork

Hatch met with industry, insurance and labor representatives in March and early April in preparation for drafting legislation that would establish medical criteria for paying those workers most affected by exposures to asbestos.

Sen. Chris Dodd, D-Conn., also has met several times with insurers in an effort to forge a consensus industry position on the issue.

Industry and insurer interests have taken Hatch's suggestion and proposed creation of a $108 billion trust fund to pay claims to those sickened by exposure to asbestos. Labor unions, on the other hand, are demanding a trust fund of between $180 billion and $500 billion. The establishment of the $108 billion trust fund under Hatch's proposal calls for insurers and industrial interests to each provides $45 billion, with the remainder deposited by companies which have already set aside reserves to pay asbestos claims-as well as other companies which seek to limit their potential future liability by getting in ahead of any litigation.

The funds would be deposited in the trust fund over a 20-year period as envisioned by industry, but sources say the current formula under discussion by industry would require payment into the fund over a 25-year period, with compensation being paid out to claimants over a 50-year period.

Representatives of the AFL-CIO have already told industry and insurer interests that far more funds will have to be made available in the fund to assuage labor interests, and there is some concern within the industry that over-reaching by labor could torpedo the talks. However, insurers in general privately say that some increase in their share would be acceptable.

Hatch remains intent on crafting a bill that would channel asbestos claims to a specialized federal court and use medical criteria to determine a claimant's eligibility for an award, congressional sources said. The bill would contain an administrative component, along the lines of a trust fund proposed by some of the defendant companies, which could be administered by special commissions.

House action

In the House, Rep. Calvin Dooley, D-Calif., plans to introduce legislation just before Congress departed April 11 for a two-week break that establishes a medical criteria for claims.

That bill constitutes an alternative to a separate reform bill introduced in late March by Rep. Chris Cannon, R-Utah.

The two bills have a medical criteria approach in common but Cannon's bill would limit the doctrine of "joint and several liability" as it applies to asbestos claims, on the grounds that too many "deep-pocket" companies that have nothing to do with manufacturing asbestos are being swept into the litigation system and bankruptcy.

Labor unions, meanwhile, are demanding creation of nine separate levels of injury, leading to mesothelioma, the highest category.

Chris Winans, a property/casualty analyst and principal at Williams Capital in New York, said that, based on the talks, it appeared to him that "the chances for asbestos reform this year is increasing."

Arthur D. Postal is Washington, D.C. bureau chief for Insurance Chronicle, a Thomson Media publication.

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