Washington, D.C.—House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks during the House Judiciary Committee’s markup of H.R. 906, the Furthering Asbestos Claim Transparency (FACT) Act of 2017.
Chairman Goodlatte: The history of asbestos litigation is filled with human tragedy, culminating in what the Supreme Court described as an “asbestos litigation crisis” in the pivotal case of Amchem v. Windsor. As businesses were forced to declare bankruptcy as a last resort to manage their liabilities, the prospect of full compensation for asbestos victims—not to mention current employees’ livelihoods—grew dimmer.
Victims looked to the bankruptcy process to seek redress for their, or their loved ones’, injuries. Unfortunately, on too frequent an occasion, by the time asbestos victims assert their claims for compensation, the bankruptcy trust formed for their benefit has been diluted by fraudulent claims, leaving these victims without their entitled recovery.
The reason that fraud is allowed to exist within the asbestos trust system is the excessive lack of transparency created by plaintiffs’ firms. Due to a provision in the Bankruptcy Code, plaintiffs’ firms are essentially granted a statutory veto right over a debtor’s chapter 11 plan that seeks to restructure asbestos liabilities. Plaintiffs’ firms have exploited this leverage to prevent information contained within the asbestos trusts from seeing the light of day.
The predictable result from this reduced transparency has been a growing wave of claims and reports of fraud.
The increase in claims has caused many asbestos trusts to reduce the recoveries paid to asbestos victims who emerge following the formation of the trust.
In addition, instances of fraud within the asbestos trust system have been documented in news reports, state court cases and prior testimony before the Judiciary Committee. Most recently, news reports have described numerous accounts of fraud that were uncovered during a bankruptcy case in North Carolina.
I am very pleased that Mr. Farenthold reintroduced this important legislation this Congress. H.R. 906, the FACT Act of 2017, will protect trust assets reserved for current and future victims by striking the proper balance between much-needed transparency and preservation of the dignity and medical privacy of asbestos victims.
The FACT Act increases transparency through two simple measures.
First, it requires the asbestos trusts to file quarterly reports on their public bankruptcy dockets. These reports will contain very basic information about demands to the trust and payments made by the trusts to claimants.
Second, the FACT Act requires asbestos trusts to respond to information requests about claims asserted against, and payments made by, the asbestos trusts.
These measures were carefully designed to increase transparency while providing claimants with sufficient privacy protection. To accomplish this goal, the bill leverages the privacy protections contained in the Bankruptcy Code and includes additional safeguards to preserve claimants’ privacy.
The FACT Act also was deliberately structured to minimize the administrative impact on asbestos trusts.
I believe that the FACT Act strikes the appropriate balance between achieving the transparency necessary to reduce fraud in an efficient manner and providing claimants with sufficient privacy protections.
If asbestos trusts are to have assets available to pay the claims of deserving future claimants, Congress must take steps to assure that trust assets will be better protected today. I encourage all of my colleagues to support this legislation.
Click here to learn more about today’s markup.