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Asbestos Update: Medical Criteria Bill and Specter Legislation Introduced; Georgia Law Passed

According to a recent report from the Motor & Equipment Manufacturers Association, there have been a number of developments concerning asbestos over the past few days. In addition, the Automotive Aftermarket Industry Association this week reported on a new study performed by NERA Economic Consulting, which estimates that asbestos litigation has cost the U.S. economy $343 billion to date and that proposed trust fund legislation (S. 852) currently under consideration by the Senate Judiciary Committee would save $71 billion in future administrative and legal costs alone.

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WASHINGTON — According to a recent report from the Motor & Equipment Manufacturers Association, there have been a number of developments concerning asbestos over the past few days.

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* Medical Criteria Bill: Rep. Chris Cannon (R-Utah) introduced H.R. 1957, the Asbestos Compensation Fairness Act of 2005, on April 28, joined by 41 original co-sponsors. The legislation seeks to establish medical criteria, derived from the American Medical Association’s “Guides to the Evaluation of Physical Impairment,” which must be met by all claimants before asbestos suits could be pursued in court. Cannon’s bill would still preserve the rights of claimants who have been exposed to asbestos and may exhibit symptoms of asbestos-related disease or become ill in the future. (He serves on the House Committee on the Judiciary.) However, House Judiciary Chairman Jim Sensenbrenner (R-Wis.) has indicated in the past that he will not move any asbestos legislation through his committee until the Senate takes action on its own bill.

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* Georgia Law: On April 13, Georgia Gov. Sonny Perdue signed into law H.B. 416. The law, the second significant asbestos reform litigation enacted in the states, would require individuals to meet certain select medical criteria in order to be eligible to file suits based on exposure to asbestos or to silica. The legislation specifically utilizes the medical criteria established by the American Medical Association. In addition, the bill mandates that Georgia residents are the only individuals who may file asbestos and silica claims in the state’s court system. HB 416 follows in the footsteps of the asbestos and silica reform legislation which was enacted in Ohio in 2004.

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* Specter Legislation: Senate Judiciary Committee members and staff continue to work through the more than 80 individual amendments that have been offered in relation to Chairman Arlen Specter’s (R-Pa.) asbestos reform bill S. 852. Capitol Hill sources have noted that Sen. Herb Kohl (D-Wis.) remains the focus of much of the lobbying efforts as he is seen as being instrumental to the bill’s fate. The Committee’s markup of the bill will continue on May 12.

In addition, the Automotive Aftermarket Industry Association this week reported on a new study performed by NERA Economic Consulting, which estimates that asbestos litigation has cost the U.S. economy $343 billion to date and that proposed trust fund legislation (S. 852) currently under consideration by the Senate Judiciary Committee would save $71 billion in future administrative and legal costs alone. S. 852 would establish a $140 billion no fault trust fund to compensate victims of asbestos exposure. The trust fund would be financed by contributions from companies and insurers with asbestos litigation exposure.

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The NERA study found that the costs to the economy have been nearly 10 times as great as the compensation paid to claimants historically. In addition, the productivity of the manufacturing sector would be improved by eliminating the uncertainty and inefficiency of asbestos litigation. Further, the trust fund approach could save an additional $13.7 billion in bankruptcy costs, for a total administrative and legal cost savings of $85 billion as opposed to the current litigation system. The reduction in costs would also benefit claimants, who would receive $65 billion more in compensation than if the current litigation system remains in place.

The NERA study was commissioned by the National Association of Manufacturers Asbestos Alliance which has strongly advocated the trust fund approach before Congress. The Senate Judiciary Committee is scheduled to continue its deliberations on the asbestos bill on May 12.

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For a copy of the study, visit: www.nera.com.

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