ADVWG applauds investigation into asbestos bankruptcy trusts

The Asbestos Double-Victims Workgroup (ADVWG) is calling on additional state officials and federal authorities to join 13 states investigating whether several large national asbestos bankruptcy trusts are mismanaging funds, including if they failed to reimburse Medicaid and other medical providers as required in federal secondary payer laws.
 
In March, attorneys general from the states of AlabamaArkansasKansasLouisianaMichiganMontanaNebraskaNevadaSouth CarolinaSouth DakotaUtahWest Virginia, and Wisconsin joined forces in issuing a Civil Investigation Demand (CID) to four of the nation’s largest bankruptcy trusts. The trusts did not comply with the CID which led to the Utah-based lawsuit asking the court to require compliance.
 
Those trusts are formed under a law allowing companies with asbestos liability to emerge from a bankruptcy process solvent while creating trusts to pay currents and estimated victims. The AGs are concerned that negligent management of the trusts is cutting the amounts available to help victims, a disproportionate number of whom are veterans, and may not be repaying health care costs. Those victims may be unaware of possible claw-back actions coming down the pike.
 
The multi-state investigation comes on the heels of the “Garlock” case in North Carolina when a federal judge disclosed that evidence had been suppressed in all 15 cases where he had allowed specific discovery. Both the CID and the Utah lawsuit make clear links to the Garlock case and represent the first law enforcement action on the judge’s findings.
 
Sara Warner, Courts Monitor publisher, is a founding member and spokesperson for the ADVWG.
 

Texas Lawsuit-Reform Group Issues Comprehensive Asbestos White Paper

The “Texans for Lawsuit Reform Foundation” has released a deep-dive into the ongoing role of the Lone Star state in asbestos litigation. The document notes that Texas has played a leading role, first on the side of victims’ attorneys and then on the side of tort reform and now in the ongoing litigation. While written from a decidedly pro-business tort-reform point of view, the paper still notes that some victims became “pawns” in the system and gives a good timeline on the litigation’s evolution.

(The National Courts Monitor has recent agreed to facilitate a victim’s group “investigative” effort to determine the extent that asbestos victims might have become litigation victims. Check out the website at http://www.asbestosdoublevictims.org/)

In its press release on the paper, TLR Foundation President Hugh Rice Kelly is quoted saying that a “handful” of “… lawyers’ activities were carried out at the expense of the judicial system, thousands of plaintiffs who were pawns in the litigation game, and hundreds of defendants who paid settlements to uninjured plaintiffs.”

The white paper is also a sort of greatest hits of asbestos litigation issues, noting recent trust-claim controversies and the infamous “witness coaching memo.” To view the full paper:
http://www.tlrfoundation.com/sites/default/files/pdf/TLR_Asbestos_Foundation_Paper_02.2017 _Web.pdf.

CCM Publisher in HuffPo: 2016 Civil Courts Issues ‘Hung Over’ From 2015

Sara Cocoran Warner, Founding Publisher of the California Courts Monitor

CCM publisher, Sara Warner, looks back on her 2015 predictions about the top civil justice issues and highlights several issues to watch in 2016. Marijuana legalization, CSST piping, and litigation against police make the 2016 list. Civil justice issues hung over from 2015 are asbestos litigation and immigration. Read it in her latest Huffington Post blog post.

‘Outlier': Garlock Case Gives Traction to Asbestos Fraud Claims

Originally featured in the Huffington Post. 

Even if all you know (or ever want to know) about the world of asbestos litigation business comes from those unavoidable “if you or a loved one has been diagnosed with mesothelioma” commercials, you still ought to know that big changes are coming to what is called the longest-running personal injury litigation in the United States; some estimates (okay, mine) say it does about $10 billion a year, making it as big as the “industry” of pro football, the NFL.

Multiple defense lawyers have been alleging institutional and operational fraud for years, but lately those charges are gaining some credence. From North Carolina to New York, cases that were initially discredited by victims’ attorneys as mere “outliers” are gaining traction as federal courts allow lawsuits to advance.

For example, politically savvy New Yorkers are likely aware that Manhattan’s Sheldon Silver resigned his longtime post as State Assembly Speaker earlier this year after he was indicted on fraud and extortion charges in a $4 million influence-peddling scheme. However, they may not have made the connection that his fraud charges stemmed from how victims of mesothelioma, the “asbestos cancer,” found legal help. Prosecutors allege Speaker Silver steered taxpayer money to a clinic in exchange for the clinic steering victims to his law firm, in turn receiving millions of dollars in referral payments from a prominent asbestos litigation firm. Such referral fees are common, but the taxpayer implications are not.

Meanwhile, on a key civil litigation front, a North Carolina bankruptcy case initially branded as an “outlier” is gaining credibility. An NPR report noted that “Garlock” offered a look inside the “murky world” of asbestos litigation and a key issues was telling one story in civil cases and another story to any of some 60 to 100 “trust funds,” which were set up when companies declared bankruptcy over asbestos liability.

Judge George Hodges, in the Garlock case, identified significant issues in 15 of 15 cases. In his decision, Judge Hodges said that more research would no doubt have found more problems, although he stopped well short of what the lawyers call “the F bomb,” which to them is “fraud.” But Garlock has brought a civil RICO suit against several asbestos victim’s firms, alleging a pattern of misrepresentation over many years.

At first, the whole Garlock case, and its ancillary issues, were more or less dismissed by the plaintiff’s bar. The talking point was that the judge was new to the litigation and the allegations against the firms would dissolve upon contact with appeals courts. But the opposite has happened so far: Garlock has been upheld through multiple appeals, getting victories even from Democratic-appointed judges – it’s worth noting that asbestos litigation is so political that which party appointed your judge can be a big deal.

Just this month, U.S. District Judge Graham Mullen (a President George H. W. Bush appointee) upheld a lower court ruling that Trust Fund records being sought by Garlock Sealing Technologies should be produced. He also agreed with the complaint that the “requests are broad” but added: “Yet, so is the fraud in which plaintiffs are alleged to have engaged.”

The firm in that case — New York’s Belluck & Fox — made an argument that no doubt illustrates the strategy for those making cases of the Garlock discoveries, stating:

It is now clear that, while the complaint includes allegations about just 11 cases, plaintiffs are seeking to expand discovery to include all the trust claims of virtually every Belluck & Fox client that ever brought a claim against Garlock – whether the case was litigated in the tort system or not.

Belluck & Fox is not alone. Big national firms, like Dallas-based Simon Greenstone and Waters & Kraus and Philadelphia’s Shein Law Center, are also targets and no doubt will face similar discovery efforts.

Those court victories are likely to play a huge role as the U.S. House of Representatives takes up debate on what’s called the “FACT Act,” for “Fairness in in Asbestos Claims Trust,” later this month. That legislation has little chance that President Obama will ever sign it into law, but it does offer a platform and rallying point for those who would change how victims sue over asbestos. The FACT movement may be for “show” in Washington, but six states – Oklahoma, Wisconsin, West Virginia, Texas and Ohio – have passed some form of the legislation.

In what might be a “first use” in Texas, a judge in Harris County has granted a “stay” motion based on that state’s FACT Act legislation. The case involves a Navy veteran with mesothelioma and the judge has agreed that claims against bankruptcy trusts must be considered, even if those concerns are NOT part of the current trial.

Whatever asbestos “scandal” there is may be a slow-motion crisis, but I’ve made the argument that it’s about to exit the litigation world to involve hundreds or even thousands of innocent victims’ families. Some lawyers have turned their clients intoperjury pawns. Others may discover they might owe Uncle Sam some of their hard-won settlement and judgment money. And I truly believe that Democrats, who benefit from the plaintiff bar’s donations, are being slow to realize the gravity of the situation.

The common theme is that focus needs to shift to what it all means to victims.

I’m not the only one who thinks so. The journalist Paul Johnson, best known as a Washington correspondent for Canada’s Global TV and his documentary reporting from Afghanistan, is making asbestos litigation the topic of his next U.S.-based film. He says the project so far has been eye-opening.

“Our story begins with a small car dealership in central California getting sued for what seems to be no good reason,” says Johnson. “We follow that 7-year battle involving all kinds of twists and some serious allegations against a major firm; I will say that it shows that sometimes you might need a lawyer to keep an eye on your lawyer.”

Johnson said the movie, slated for 2016, is “… most unsettling when you find yourself sitting in a New York conference room at one of the more liberal universities on earth, and a professor is assuring you that this [asbestos litigation] scandal will one day be seen as bigger than Teapot Dome or Enron, but it’s what you want as a reporter to find a huge scandal that almost nobody outside the trade press is covering.”

We are anxiously awaiting the release of this film for the topic that “nobody is covering” could very well be the one “everyone is watching” in 2016.

(Sara Warner is publisher of the National Courts Monitor and California Courts Monitor. Disclosure: Although Ms. Warner has not participated in the Paul Johnson film mentioned, some Courts Monitor contract researchers and contributing editors have contributed to the documentary and the National Courts Monitor is in discussions to host the Washington, D.C. premier of the movie.)