There are also at least seven additional companies that filed Chapter 11 bankruptcy from October 2008 through July 2010 which are expected to propose new trusts in the coming years.

What’s Left?

According to the RAND report, the initial assets of all of the 54 trusts that were either formed or proposed from 1986 through 2010 are approximately $44 billion. Through 2008, the total amount of claims paid to asbestos injury claimants was approximately $11 billion. When accounting for additional claims made though 2010, administrative expenses incurred by the trusts and trusts which have not reported claims payment information, it is estimated that the current combined assets of all of the existing and proposed asbestos bankruptcy trusts still exceed $20 billion. This amount is expected to rise as assets are added to the current and future proposed trusts.

As indicated above, one of the ways in which trusts seek to ensure that funds are available for future claimants is to reduce the percentage of the claim value which is paid to the claimant. For many trusts formed in the 1980’s and 1990’s, the amount of funding believed to be sufficient to compensate victims turned out to be woefully insufficient, as the number of asbestos disease victims proved to be far more than anticipated. As a result, the payment percentages for many of these trusts have been lowered on many occasions.

According to the 2010 RAND report, the payment percentages run from a low of 1.1% for the Unarco Trust, to a high of 100% for the newly-formed THAN trust. The median payment percentages for the 29 trusts which were reviewed was 25%, with a sizeable group of trusts with payment percentages less than 25% and another sizeable group with payment percentages of 40% to 60%.

How Does the Asbestos Bankruptcy Claims Process Work?

Determining Which Claims to Submit

The first stage of submitting bankruptcy trust claims involves identifying the trust or trusts in which to submit a claim. A person’s work history—the places and products he or she worked with or around--determines the trusts to which a claim may be submitted. A claimant can only recover from a trust if he or she was exposed to asbestos that was produced, supplied or used by the trust’s debtor company.

For example, a person who worked with products manufactured by Johns-Manville could file a single claim with the Manville Trust. However, a person who used products made by Johns-Manville, Kaiser, U.S. Gypsum and J. T. Thorpe, could file with each of these company’s trusts. There is no limit on the number of trusts to which a person may submit claims; nor is there a monetary cap or limit to the amount a person can from asbestos bankruptcy trusts.

Furthermore, recovery of funds from asbestos bankruptcy trusts does not prevent claimants from recovering funds from solvent companies through a lawsuit. Many persons who submit claims to asbestos bankruptcy trusts are also parties to civil personal injury lawsuits.

Each trust has separate exposure requirements which must be met in order to qualify for compensation. Asbestos attorneys with experience in submitting asbestos bankruptcy claims can quickly determine whether a person will qualify for compensation from any of the 44 active bankruptcy trusts.

Determining the Level of Review for Each Claim

Next, a determination must be made regarding the method or level of review to be sought with respect to each trust in which a claim will be submitted. Almost all trusts have two main methods of review: expedited review and individual review. With some exceptions, a claimant may choose to proceed under either method.

The expedited review process is designed to pay claims quickly at a fixed value. Different diseases (such as mesothelioma and asbestosis) are valued differently, with the more-severe diseases valued more highly. The payment amount, known as the scheduled value, is published by the trust and known in advance. In order to qualify for the quick, fixed payment available through expedited review, the claimant must meet a set of criteria for medical evidence and work history published by the trust. Claims supported by documentation meeting these criteria are presumed by the trust to be valid.

The alternative individual review process gives claimants with certain diseases the opportunity to receive individual consideration of their specific medical condition and work history in hopes of justifying an assigned value in excess of the scheduled value available through expedited review. In addition, individual review is mandatory in cases where the claimant cannot meet the medical or exposure criteria required for expedited review as well as for certain medical conditions such as lung cancer in a claimant who was a smoker.

Under individual review, there are no presumptively valid claims. Because individual circumstances are taken into account, individual review claims typically require additional medical and work history evidence and take longer to process than expedited review claims.

Individual review claims do not have a scheduled value. The trust’s claims processing facility determines the liquidated value, or payment amount, based on the individual circumstances. The assigned value may or may not be greater than the scheduled value for a similar disease.

What Medical and Exposure Evidence Must be Produced?

Asbestos exposure has been linked to a variety of diseases. The Bankruptcy Code mandates that asbestos bankruptcy trusts equitably compensate claimants with similar diseases. To do this, trusts have established disease levels, or categories of asbestos-related disease. The trusts generally recognize eight disease levels. The most severe of the disease levels is mesothelioma and the least severe is asbestosis or pleural disease without significantly restricted pulmonary function.

For each disease level, there is a separate set of medical and exposure criteria. For mesothelioma, the typical medical requirements are diagnosis by a pathology report from a board certified pathologist or a pathology report from a hospital accredited by the Joint Commission. The criteria for non-mesothelioma lung cancer as well as non-malignant conditions are much more extensive, requiring such proof as a pulmonary function test with specified findings, medical documentation establishing asbestos as a contributing factor of the disease or a physician’s statement that at least ten years have elapsed between exposure to asbestos and diagnosis.

Evidence of an asbestos-related disease alone is not sufficient to entitle a claimant to compensation. Trusts also require credible evidence that the claimant worked with or around asbestos at the company’s facilities or worked with or around the company’s products during the time when they contained asbestos.

This evidence may provided in the form of a written statement from the claimant or a witness confirming that the claimant worked at a site or sites where the trust acknowledges that the company’s asbestos products were used. Many trusts publish a list of confirmed exposure sites which a claimant can review and determine if he or she ever worked there during the relevant time.

Other exposure evidence may consist of an affidavit, employment records, invoices or other business documents, or other evidence that the trust deems reliable. Certain disease levels may carry a higher standard for exposure criteria.

Trusts do not require a claimant or witness to appear personally or face questioning from trust personnel. In addition, trusts do not require specific evidence about the amount of asbestos dust that the claimant inhaled while working with the company’s products. Accordingly, the level of evidence necessary to receive compensation from trusts is often much less than what would be required if the claims were being presented in a personal injury lawsuit. The ability to recover compensation (albeit typically in a lesser amount) without the time, expense and personal involvement which is required in a lawsuit, are the primary advantages which bankruptcy trust claims offer to claimants.

How is the Claim Value Determined?

Once the trust determines that a claim is valid, through either expedited or individual review, the claim must be liquidated, or assigned a monetary value. Liquidating a claim is treated differently under expedited and individual review.

For expedited review, claims are liquidated according to the scheduled value published by the trust for the claimant’s specific disease level. It is a one-size-fits-all amount, as specific aspects of a claimant’s work history or medical situation are not used to tailor an award beyond classification by disease level. Trusts set the scheduled value at a level to encourage most claimants to choose expedited rather than individual review. Because individual circumstances can vary greatly, the scheduled value may or may not be significantly less than the amount a claimant would receive under individual review.

Individual review claims are assigned a value on a case by case basis based on factors including, among others, age, disability, number of dependents, noneconomic damages, and the settlement and verdict history of the claimant’s law firm. Trusts seek to assign a value to an individual review claim which resembles the amount which historically would have been awarded if the claim had been asserted in a lawsuit. Regardless of individual circumstances, however, the value assigned to the claim may not exceed the maximum value, or upper monetary limit, published by the trust.

How Much is Paid to the Claimant?

As explained above, most trusts do not have sufficient assets to pay the full amount of the claim value. This is the case whether it is the scheduled value for an expedited review claim or an assigned value for an independent review claim.

Ever since the reorganization of the Manville Trust, asbestos bankruptcy trusts have wrestled with the question of how to pay future claims out of the limited trust assets. If predictions regarding the number of future claims are too low, a trust runs the risk of insolvency (as was the case with the Manville Trust). To manage this problem, the trusts establish a system of pro rata discounts to the value of a claim offered to a current claimant. This pro rata share is known as the payment percentage. The payment percentage is the percentage of either the scheduled value or assigned value which is actually paid to the claimant. For example, if the claim value (either scheduled or assigned) is $100,000 and the trust’s payment percentage is 20%, the payment to the claimant would be $20,000.

As discussed above, the payment percentage varies a great deal across trusts and can change over time. For example, in 1995 the Manville Trust, which initially paid 100% of claim values, slashed its payment percentage to 10%. In 2001, as larger-than-expected claims volume continued to tax trust assets, the payment percentage was dropped to 5%. More recently, the Manville Trust increased the payment percentage to 7.5%.

Do I Qualify for Compensation From Asbestos Bankruptcy Trusts?

Asbestos bankruptcy claims may be asserted by living victims of mesothelioma or other forms of asbestos-related disease. Claims may also be asserted by the living heirs of deceased victims of asbestos disease.

Even if a number of years have passed since diagnosis or death, it may still be possible to submit claims. This is true even if the statute of limitations for filing a lawsuit has expired.

The asbestos lawyers at the Worthington Law Firm can quickly determine whether you are eligible to assert claims with any of the currently active trusts as well as any of the trusts which are expected to begin accepting claims in the coming years.

To find out if you qualify, or to learn more about asbestos bankruptcy trusts, contact us at info@mesothel.com or 800-831-9399.

Asbestos Bankruptcy Trust Update for October 22, 2010

Leslie Controls on the Fast Track to having its “Pre-Packaged” Bankruptcy Plan Approved Could Begin Paying Claims by Early 2011

Leslie Controls, Inc., a wholly-owned subsidiary of CICOR International, Inc., filed for Chapter 11 bankruptcy protection in July 2010 citing overwhelming liabilities for current and future asbestos injury claims.

Since the early 1900’s, Leslie was a major manufacturer of industrial water heaters and steam control systems. Leslie was a large supplier of valves and other steam equipment to the United States Navy during World War I and World War II. Leslie’s products, which were often equipped with asbestos gaskets, insulation and packing, were responsible for exposing thousands of Americans to harmful asbestos fibers.