What Is a Mesothelioma Trust Fund?
The trusts are created through Chapter 11 bankruptcy, which is a form of corporate bankruptcy that requires companies to reorganize their finances in ways that allow them to continue doing business while paying off their debt.
Companies that successfully file are protected from lawsuits including class-action lawsuits. Asbestos companies establish the trusts, but trustees manage them and decide the amount of compensation paid to claimants.
Mesothelioma victims may be able to file claims against one or more trust. The process may require the person to provide a mesothelioma diagnosis, physician statement and an asbestos exposure summary.
An experienced asbestos lawyer can provide you a list of asbestos bankruptcy trusts and help you navigate the trust fund process. Asbestos trust funds help people with all types of asbestos-related diseases, but mesothelioma trust fund claims usually result in the highest compensation.
How Do You File an Asbestos Trust Fund Claim?
You must show evidence of an asbestos-related injury to file an asbestos bankruptcy trust claim. Most trusts categorize diseases eligible for various amounts of compensation. Trusts also may require claimants to satisfy certain medical criteria to file claims.
Trusts also set statutes of limitations that define time limits for filing a claim. Each trust sets its own time limits, usually around two to three years after a mesothelioma diagnosis or death.
Claimants must file a claim form or some other written statement about their asbestos-related injury. They also may be required to provide other evidence about their asbestos exposure, medical history and more.
These criteria help determine how much compensation a claimant should receive.
Evidence required to file a trust claim usually includes:
Patient’s Diagnosis
Medical documentation proving the claimant is diagnosed with mesothelioma or another asbestos-related disease. These documents may include pathology reports, biopsies and X-rays.
Physician Statement
A statement drafted by a qualified physician, such as a doctor or oncologist, confirming the diagnosis.
Exposure Site
Evidence confirming the company’s facilities or products exposed the claimant to asbestos. This may include witness affidavits, employment records and invoices.
Asbestos Involvement
Medical documentation describing the extent asbestos contributed to the claimant’s disease.
Can You Sue Bankrupt Asbestos Companies?
No. Companies that successfully file for bankruptcy reorganization under section 524(g) of the U.S. Bankruptcy Code are protected from asbestos lawsuits. However, the law required these companies to establish a fund to provide compensation for current and future asbestos claims.
Asbestos and mesothelioma trust fund claims are not lawsuits, but they can still pay significant compensation to workers injured by negligent companies that manufactured or sold asbestos products in the United States.
You may be able to file claims against more than one asbestos trust fund in addition to filing a lawsuit against one or more solvent companies that may have exposed you to asbestos.
A qualified mesothelioma or asbestos attorney can help you determine your legal options.
How Much Money Is Left in Asbestos Trusts?
There are currently 60 active asbestos trust funds with an estimated $30 billion available for claimants.
These trusts have paid claimants approximately $20 billion since the late 1980s. This figure includes an estimated $15 billion from 2006 to 2012.
Companies create the trusts, but trustees manage them and decide the amount of compensation paid to claimants.
List of Top 10 Asbestos Trust Funds Available in the US
| Company | Estimate of Initial Assets | Year Established |
|---|---|---|
| United States Gypsum | $3.9 billion | 2006 |
| Owens Corning Corporation | $3.4 billion | 2006 |
| Pittsburgh Corning Corporation | $3.4 billion | 2011 |
| W.R. Grace and Co. | $2.9 billion | 2001 |
| DII Industries | $2.5 billion | 2005 |
| Johns-Manville Corporation | $2.5 billion | 1988 |
| Armstrong World Industries | $2 billion | 2006 |
| Western Asbestos (Western MacArthur) | $2 billion | 2004 |
| Babcock & Wilcox | $1.8 billion | 2006 |
| Owens Corning Fibreboard Subfund | $1.5 billion | 2006 |
Source: RAND Institute for Civil Justice Asbestos Bankruptcy Trusts report, 2015 How Much Compensation Can Asbestos Trusts Pay Claimants? | ||
The amount of compensation a claimant can receive from an asbestos trust depends on the type of injury. Mesothelioma trust fund claims routinely pay in six figures, according to a 2016 Mealey’s Asbestos Bankruptcy report.
The payment schedule the trust established also plays a role. Each asbestos bankruptcy trust has its own schedule that assigns values to various types of asbestos injuries.
Certain types of asbestos-related diseases and levels of severity are eligible for more compensation. The values are based on the compensation payments made by the company before reorganization.
Most trusts do not have enough money to fully pay all present and future claims. As a result, they offer asbestos victims a set percentage of their claims.
Percentages Paid
The 26 largest trusts offer to pay 1% to 100% of a claim amount. As of 2019, the median percentage they offered to pay was 25% of a claim.
The amount of compensation is limited to ensure there is enough money to pay future claimants who will be diagnosed years from now.
The average amount paid by all trusts has decreased by 50% since 2008, according to a recent Mealey’s report.
Even though claimants receive a percentage of what their claim is worth, the compensation can help cover medical bills and make up for lost wages. Mesothelioma claimants can also consider other types of compensation such as lawsuits, Social Security Disability Insurance and veteran’s benefits.
How Are Asbestos Bankruptcy Trusts Created?
Bankruptcy trusts are created on behalf of companies with asbestos liabilities. But the companies do not operate the trusts. These companies do not review claims or make decisions based on the claimant’s evidence.
Trustees manage asbestos trust funds for the benefit of present and future claimants. The claims are processed and decided under preset procedures. Representatives of claimants must follow any changes to these procedures.
Bankruptcy reorganization is a lengthy process. Approval takes several years.
Trusts often publish additional information about:
- Rules
- Guidelines
- Qualifications
- A list of confirmed exposure sites
Trust Creation Process
Bankruptcy Court
Companies seeking reorganization must submit detailed plans to the bankruptcy court. These plans include the amount they will put aside to pay asbestos claimants and creditors.
The court holds estimation proceedings, which resemble court trials. These trials weigh input and objections to the plan by interested parties. The interested parties include lawyers of asbestos victims and asbestos company creditors.
Asbestos Claim Estimates
Each interested group offers its own estimate of how much money should be put aside for asbestos claims. They support their estimates with testimony from experts. This may include economists, social scientists or legal experts who are knowledgeable about the value of past asbestos lawsuit settlements.
The bankruptcy judge weighs estimates and expert testimony. The judge then determines how much money should be set aside for asbestos claims.
Reorganization Approval
Bankruptcy court may reject a company’s reorganization plan. It can take many years and multiple estimation proceedings for the court to grant approval. Once approved, the company sets aside money in the amount determined by the court to fund a mesothelioma trust.
Limitations on Filing Asbestos Trust Fund Claims
Knowing your legal options is an important factor when deciding on the type of compensation you seek. A qualified mesothelioma lawyer can help you through this process and determine if filing an asbestos trust fund claim is right for you.
State Laws
National asbestos laws do not exist. The federal government leaves it up to each state to form its own legislation.
State laws vary greatly on when trust claims must be made and how trust compensation affects the determination of lawsuit awards.
A qualified mesothelioma attorney can help you understand the process.
Setoffs
If claimants have already received trust payments, any defendant they sue may deduct the amount of that payment from a court award. These are called setoffs.
Some states, including Illinois, New York, Texas and West Virginia, may permit setoffs for trust payments. Other states do not allow, or sometimes limit, the use of setoffs.
Filing Multiple Claims & Lawsuits
In some cases, claimants can file asbestos trust claims and asbestos lawsuits at the same time. But filing a trust claim can affect the amount of compensation received from a lawsuit. Various state laws require claimants to disclose information about other claims they may have filed in the past.
Information Sharing
State courts have different rules about sharing trust claim information with lawsuit defendants.
Some courts require disclosure of any claim forms submitted to trusts during the discovery phase of a lawsuit. This requirement does not necessarily mean the plaintiffs must file their trust claims before trial. It just applies to any claims previously filed.
A few courts may require filing certain trust claims before trial. A few of these courts include those in New York City and Montgomery County, Pennsylvania.
Johns Manville: First Asbestos Trust
The first asbestos bankruptcy trust was created by Johns Manville in 1988. At the time, the $2.5 billion trust was considered underfunded. Since then, it suspended operations twice and reduced the amount paid to less than 10 cents on every dollar of the original benefit schedule.
According to the Manville Personal Injury Settlement Trust 4th quarter 2018 report, the trust has more than $654 million in total assets and had more than $54 million in total liabilities in 2018.
Since the Johns Manville case, about 100 asbestos companies have sought bankruptcy protection. Trust payouts remain significantly less than what claimants may be eligible to receive in court. Trusts have paid out about $20 billion for more than 3 million claims.
Bankruptcy Code proceedings help ensure payments for future claims.
The FACT Act and Asbestos Tort Reform
The Furthering Asbestos Claim Transparency (FACT) Act seeks to make asbestos trust funds report their payouts. The act also would put the personal information of claimants in a public database.
Proponents of the bill say it will prevent claimants from “double dipping,” theoretically leaving more funds available for future claimants.
Those who oppose the bill say there is little to no evidence suggesting claimants have received multiple payouts from the same trust. They believe rare, isolated cases of fraud aren’t sufficient to warrant the FACT Act.
The act would make asbestos victims’ private information available to the public, including the last four digits of their Social Security number.
On Feb. 15, 2017, the U.S. House Judiciary Committee approved the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 — one of several iterations of the legislation.
The bill repeatedly stalled in the legislature in previous years with a promised veto from former President Barack Obama. Supporters are hopeful President Donald Trump will support the legislation as part of a litigation reform package.
DOJ Cracks Down on Trust Claims
Since late 2018, the Department of Justice has increased scrutiny of asbestos trust funds, urging for more accountability.
The department believes trust funds lack adequate safeguards to prevent fraudulent claims and mismanagement.
In September 2018, the department filed an official Statement of Interest in the bankruptcy proceedings for Kaiser Gypsum Company. Shortly after, the department challenged the appointment of a trustee for the Duro Dyne company trust, claiming the attorney was too conflicted to represent the interests of future claimants.
“Asbestos victims should feel certain that they will receive compensation when they are promised, but fraudulent claims and mismanagement call that promise into question,” Jesse Panuccio, principal deputy associate attorney general at the DOJ, said in the Statement of Interest.
The Department of Justice is also looking for inconsistent evidence between multiple claim filings. Nineteen state attorney generals have cited issues regarding the transparency of the trusts, according to the department.
Will Asbestos Bankruptcy Trusts Have Enough Money to Pay Future Claims?
Trusts are established after rigorous estimation proceedings. These proceedings determine how much money should be set aside for current and future asbestos claims. They are also managed under procedures to make the money last long enough to compensate future claimants.
Given the long latency period of asbestos-related diseases, new claims are expected to emerge for several decades. An estimated $30 billion remain in asbestos trusts.
To ensure enough money is left, claimants typically receive a percentage of what they actually claim. But reorganized companies responsible for asbestos injuries can’t avoid paying future claimants.
There are no guarantees that you will obtain a specific amount of compensation if you file an asbestos trust claim. A mesothelioma attorney can explain the procedures and possible limitations on what you may recover from a trust claim.
