The business of asbestos: Manhattan Institute releases report

By John O'Brien | May 7, 2008


NEW YORK - Jim Copland of the Manhattan Institute says his organization certainly doesn't oppose new business concepts. After all, the think tank's mission statement includes fostering new ideas that promote economic growth.

Still, he let it be known Tuesday that the Manhattan Institute considers one business model fiscally problematic -- the one used by trial lawyers to drum up asbestos lawsuits.

"The business model underlying such abusive litigation uses sophisticated marketing to attract thousands of claimants, generates cases with flimsy medical diagnoses and packages claims together to overwhelm defendants and courts," wrote Copland in the Institute's Center for Legal Policy's fifth installment of its Trial Lawyers, Inc., series.

"Ultimately, the attorneys bully besieged defendants into settlements that enrich Trial Lawyers, Inc., while genuinely injured claimants high and dry."

The report calls asbestos litigation the longest-running mass tort in American history and details its rise in the past 30 years. It also says 80 companies have been bankrupted by it, leaving companies with less direct ties to the use of the insulation product (known to cause the lung diseases mesothelioma and asbestosis) as the next generation of targets.

"Ironically, then, much of modern asbestos litigation has involved the filing of lawsuits by individuals who aren't sick against companies that never made the product alleged to have caused their sickness," Copland wrote. "Asbestos litigation today is thus exceptionally costly, extremely inefficient and unfair to defendants and legitimate plaintiffs alike."

Obviously, the trial attorneys would disagree. Ron Motley of South Carolina's Motley Rice called Johns-Manville, an asbestos manufacturer, "the greatest corporate mass murderer in history." Motley's firm has represented asbestos victims for more than 20 years.

The report calls the asbestos litigation process a "lawsuit assembly line" that features six steps:

-Television, radio, direct mail and Internet advertising by the attorneys: These forms of ads were approved by a U.S. Supreme Court decision in 1977 that classified them as commercial speech protected by the First Amendment;

-Screening potential clients: Law firms hired companies to find workers who may have been exposed to asbestos and also conducted screenings in vans to attract customers;

-Doctors rubber-stamping standard diagnoses: The results from 456 initial screenings, performed by what are called "B" readers, were somewhat discredited by a Johns Hopkins University study that compared the findings of "B" readers (95.9 percent found lung abnormalities) and the results of independent radiologists (4.5 percent);

-Bundling inventory and filing mass tort claims: Trial lawyers packaged their claims and filed them in plaintiff-friendly legal environments like Mississippi, West Virginia, Texas and Madison County, Ill.;

-Courts are overwhelmed and companies pay: From 1993-2001, only 1,598 out of hundreds of thousands of asbestos claims went to trial (Copland said it is cheaper for a company to settle than to investigate each claim);

-Trial lawyers get payday while claimants get little: Businesses and insurers have paid more than $70 billion in asbestos claims. Plaintiff lawyers have received $19 billion while claimants took in $30 billion (defense costs account for the rest).

"Jury awards continue to be really high," Copland said. "They went up dramatically in the late 1990s and early part of this decade.

"The deadly cancer types of cases, you see a spike in high jury awards, and those awards continue. I don't have the numbers, but there's no question each individual case is worth a lot more than it was 10 years ago."

The report also details instances of misbehavior by asbestos attorneys. Attorneys used the same individuals for asbestos suits and silicosis suits. Silica also can cause lung disease, though the two produce scars that look different.

Dr. George Martindale admitted in 2004 that he merely signed diagnoses prepared by a law firm.

In West Virginia, frequent asbestos defendant CSX Transportation found evidence that a Pittsburgh law firm and a doctor, Ray Harron, conspired to file fraudulent claims against the company. One plaintiff sued CSX and earned a settlement while using the X-ray of another man prepared by Harron.

Also, attorney Louis Robles admitted to keeping $13.5 million that should have gone to 4,400 claimants by inflating his legal bills.

The future of asbestos litigation, the report says, is ever-changing. Trial lawyers that formerly filed in states like Ohio, Texas and Mississippi have simply gone to other states because of tort reform measures.

The report says the solution to the asbestos problem is in both federal and state legislation, judges spending more time on the cases and punishing lawyers who engage in fraud.

"Originally forming the basis of a vital American industry, asbestos now forms the foundation of Trial Lawyers, Inc.'s most lucrative business," the report says.

"The product once dubbed the 'magic mineral' has killed tens of thousands, and those individuals genuinely injured deserve compensation. The problem with handling such compensation through the courts, without reforms, is Trial Lawyers, Inc.'s avaricious and unscrupulous business model, which too often transfers money to the lawyers' own bottom line by taking from real victims and innocent defendants alike.

"Eventually, the number of individuals injured by asbestos will dwindle to nothing. Unfortunately, Trial Lawyers, Inc.'s business model will be used in other litigation and is thus likely here to stay."

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