One of the scams going on in America over the past few decades is bogus asbestos injury claims. A fair and just judicial system is one of the requirements of a successful country. Lately the United States has been failing the test, with a judicial system that has become increasingly more of a lottery than one of justice. A lot of small companies have been put out of business because they could not defend themselves against bogus asbestos claims. Many small auto parts companies were put out of business because they sold replacement brake linings that contained asbestos, never mind that all brake linings originally in all automobiles contained asbestos. Here is an article from the Wall St Journal about the asbestos lawsuit industry.



Some Asbestos Grace

March 8, 2008; Page A8

The asbestos lawsuit blob has grown so large that many companies have simply given up fighting it. Then there's W.R. Grace, which is on the verge of making legal history with a trial proceeding that could alter the federal asbestos bankruptcy landscape forever.

A building materials company, W.R. Grace was among the firms swept up in a second round of asbestos litigation in the late 1990s. Having chewed their way through asbestos manufacturers, trial lawyers went after companies that had only a marginal asbestos link. By blanketing these firms with an avalanche of claims they recruited, the tort bar pushed at least 30 of these second-tier players into bankruptcy.

Most companies then followed the usual asbestos bankruptcy script. They cut a deal with the plaintiffs attorneys, handing over a big sum to pay current and future claims. Federal bankruptcy judges happily went along, because most view their jobs as getting companies out of bankruptcy quickly and few want the hassle of investigating tens of thousands of individual asbestos claims.

Enter W.R. Grace, and its lead attorney, David Bernick, a veteran of the tobacco and breast-implant wars. Mr. Bernick has taken the unheard-of position that federal rules of evidence apply even in bankruptcy court. He has argued that the only way Judge Judith Fitzgerald can make a legitimate ruling on Grace's liability is for her to decide first how many claims have scientific merit. This is revolutionary stuff.

To her credit, Judge Fitzgerald has allowed Grace to investigate those claims, and present her with its results. The stakes are enormous. At the end of this process, Judge Fitzgerald will make a finding on W.R. Grace's ultimate liability. The plaintiffs claim it is as much as $6 billion, a figure that would make Grace insolvent. The company claims the money necessary to cover legitimate claims is closer to $500 million, a number that would allow it to rejoin the land of the living.

On the evidence so far, Grace's number is correct. The company entered Chapter 11 with some 120,000 pending claims. But Judge Fitzgerald allowed it to send a medical questionnaire to those plaintiffs, and to request proof of a claim. Some 35,000 didn't bother to finish that process.

The judge has also seen a videotape of the "doctors" who diagnosed many of the remaining 85,000 claims. These are some of the same characters from the recent silicosis legal scam, and the court was treated to scenes of doctors recanting their diagnoses or invoking the "Fifth Amendment" to avoid answering questions. One doctor admitted that he charged $35 for a negative X-ray reading, but $70 for a positive one. A retired epidemiologist from the Centers for Disease Control testified there were no more than 28,000 medically plausible cases of asbestosis in the U.S. male population between 1989 and 2001. Grace was hit with more than 200,000 claims over that period.

In another instance, a doctor presented a study involving 807 X-rays from Grace claimants. Doctors hired by the plaintiffs lawyers had found evidence of asbestosis in about 80% of those X-rays. In a double-blind study in which doctors didn't know the purpose of the work, they found evidence in only 7% of X-rays.

All of this underscores what has long been obvious: The vast majority of asbestos claims are bogus. The plaintiffs lawyers know it, which is why, instead of trying to defend these claims, they've fought every attempt by Grace to examine them. Now that they've lost that battle, they argue that because Grace settled such claims in the past, they should continue to pay them going forward.

That decision now rests with Judge Fitzgerald. Comparisons are being made to federal Judge Janis Jack, who several years ago blew up bogus silicosis claims. But unlike the recent silica fraud, some Grace plaintiffs do have asbestos-related disease. Judge Fitzgerald has to weed out the many false claims from the few legitimate ones, but she does have the tools to do it. The medical community long ago established diagnosis criteria that account for dosage, exposure, and work and medical histories. Plaintiffs lawyers have tried to keep these common-sense standards out of courtrooms, but they clearly belong in any court whose goal is just compensation.

If Judge Fitzgerald does discount most of these claims, it could mark the beginning of the end of the bankruptcy racket. Other judges will find it difficult to ignore the evidence and procedures here. As important, trial lawyers might be reluctant to push more companies (in asbestos or other mass torts) into bankruptcy court if they think false claims may be exposed.

This clean-up would obviously come too late for the dozens of companies that have already surrendered to asbestos trusts now run by the tort bar. But it's encouraging that courts are finally investigating sham asbestos claims. It's never too late for real justice.