Certain asbestos-related cases and legislative actions are notable for their impact on the insurance industry.
Cases
In
1982, Johns-Manville was forced by the volume and cost of asbestos
claims to file for bankruptcy protection. In 1988, Johns-Manville
reorganized and created the Manville Personal Injury Settlement Trust,
an asbestos trust intended to provide funds for future claims. As of
2016 the trust had paid out billions and was still paying out.
In
1985, the Owens-Corning Fiberglass Corporation created a vehicle for
resolving numerous coverage disputes with its producers and insurers
over pending asbestos litigation known as the Wellington Agreement. As
part of the Agreement, confidential arbitrations took place and much
evidence was created under the confidentiality umbrella, something that
led to new legal questions. In a 2016 Delaware state court case,
Continental Cas. Co. v. BorgWarner, No. N15M-05-009, 2016 Del. Super.
LEXIS 132 (Del. Super. Mar. 15, 2016), reconsideration denied, No.
N15M-05-009, 2016 Del. Super. LEXIS 344 (July 14, 2016), the issue was
one of access to evidence of industry custom and practice with respect
to how defense costs were typically paid in asbestos claims. A
non-signatory to the Wellington Agreement sought to obtain deposition
and trial testimony and other evidence from one of the Wellington
arbitrations to use in its own coverage dispute; of particular interest
was evidence from another insurer involved in the same defense costs
consent issue. Some of the sought-after materials had been discussed in a
case that came before the U.S. Court of Appeals for the Third Circuit
following a Wellington Agreement arbitration, North River Ins. Co. v.
CIGNA Reinsurance Co., 52 F.3d 1194 (3d Cir. 1995). Ultimately the court
required the production, under confidentiality, of the materials that
had been publicly disclosed, released or used in other litigation;
material that had not been previously made public was exempt from
disclosure.
Sec. 524(g) Trusts
The
impact of trusts set up by bankrupt asbestos manufacturers on asbestos
injury litigation has come under examination by state and federal
legislators.
Companies making asbestos-containing products
often file for bankruptcy protection using U.S. Bankruptcy Code Sec.
524(g) to establish trusts to pay claimants, bringing up the issue of
how to allocate fault to the non-bankrupt companies involved in
litigation. Generally, the company declaring bankruptcy creates a trust
distribution process (TDP) which does not assign fault and only
requires that allegedly injured parties file a claim form and diagnostic
medical report, after which a fixed-amount payment is issued. In some
cases, however, plaintiffs will make claims against the viable companies
but not a claim against a bankrupt company that has created a trust,
meaning that certain alleged exposures will not be discovered during
litigation. The plaintiff may attempt to recover the full amount
claimed from still-viable companies then later seek to recover
additional amounts from the bankruptcy trusts for the same injury,
effectively double-dipping.
In response, several states have
passed legislation requiring plaintiffs to disclose any claims made
against trusts during litigation; some states require the disclosure
before a trial date may be set.
In February 2017, HR 906, the
“Furthering Asbestos Claim Transparency (FACT) Act of 2017” was proposed
with the intention of amending the U.S. Bankruptcy Code to require that
524(g) trusts publicly disclose detailed information regarding the
receipt and disposition of claims for asbestos-exposure injuries. The
legislation did not pass.