Trust Fund For Asbestos Criticized

Washington, DC, July 10--Eleven companies that are negotiating some of the largest potential asbestos-exposure payouts to victims, would pay $15 billion less under an alternative plan in Congress to create a trust fund, according to a study by some victims' attorneys. The companies would pay $21 billion under proposed bankruptcy reorganization plans and settlements with victims, compared with $6 billion under the congressional proposal, the study says. Among the companies that would save are Halliburton Co. and Honeywell International Inc. Opponents of the bill released the study yesterday to buttress their argument that the legislation would let companies escape obligations of settlements to victims, who would now have to stand in line with other claimants for lesser compensation. "To do that to these victims and at the same time to give a bailout and such a windfall to companies like Honeywell and Halliburton [is] just outrageous," said Perry Weitz, a New York lawyer who represents asbestos exposure victims but is not involved in the study. The study looked at 12 companies. It said only one, Federal-Mogul, maker of engine bearings and seals, would pay more under the congressional plan. The Senate Judiciary Committee, headed by Republican Orrin Hatch of Utah, is scheduled to resume deliberations today on a bill designed to end litigation that has bankrupted more than 60 U.S. companies in the last two decades. Workers who show evidence their asbestos exposure caused cancer or other diseases would be compensated under a formula being debated by the panel. Under the proposed legislation, manufacturers and insurance companies with major asbestos liability would pay $90 billion over 27 years, equally divided between the two industries. An additional $18 billion is expected from other sources. Shares of companies with asbestos liability have soared as Congress has made progress toward enacting the trust fund. Opponents of the fund argue it would strip victims of the right to sue without paying them enough for their suffering. Mark Peterson, a lawyer from Thousand Oaks, CA, who helped produce the study for the Washington law firm of Caplin & Drysdale, predicted that the proposed fund would lead to delays for victims in receiving compensation. It might take eight years for some victims to collect the money because the fund would be swamped by claims, he said. Angela Ruhl, 39, of Garden Grove, CA, who said she suffers from mesothelioma, a rare cancer, said she would receive $750,000 from the fund, less than she is due to get under a settlement negotiated by her attorneys, and the fund payments would be slow in coming. It "would literally be my death sentence," she said. The lawyers' study projected savings for such companies as Armstrong Holdings Inc., North America's largest maker of vinyl flooring, and chemical-maker W.R. Grace & Co., by comparing amounts they agreed to pay under bankruptcy recovery plans with their projected contributions to the fund. Halliburton, the world's second-largest oilfield services provider, once headed by Vice President Cheney, has announced plans to set up a $4.2 billion trust by putting its DII Industries L.L.C. and Kellogg Brown & Root units into bankruptcy protection. Under the legislation, however, the company would pay $675 million over 27 years, the study says. Halliburton, while seeking court approval of its bankruptcy plan, is a member of the Asbestos Study Group, a coalition of companies lobbying Congress to enact the trust fund. Honeywell, which has also announced a bankruptcy trust of more than $2 billion, including its NARCO unit, also would pay $675 million under the congressional plan. By stretching out their payments over 27 years, Halliburton and Honeywell would each save an additional $311 million.