Fraud and Abuse in Mesothelioma Litigation

This Article is about the interplay between trust payments to claimants and suits against solvent defendants in the tort system and how that is affected by plaintiffs’ counsel’s effective control over the production of evidence of exposure to asbestos-containing products and their use of that control to suppress evidence of plaintiffs’ exposures to the products of reorganized companies. Defendants seek to reduce the amount of compensation they pay to plaintiffs by asserting that (1) plaintiffs have received or will receive payments from trusts that should be credited against defendants’ tort liabilities; (2) in states such as California, New York, and Pennsylvania, which allow juries to allocate shares of the liability to the bankrupts, plaintiffs were exposed to the products of the bankrupts, thus reducing defendants’ liability share and therefore its trial risk; and (3) plaintiffs’ exposures to products of the reorganized companies that funded the trusts were so much more intense and extensive than the exposures to defendants’ products that defendants’ share of the total liability to plaintiffs should be determined to be significantly less than the share accorded to the reorganized companies.  Countering defendants’ efforts to reduce their share of liability, plaintiffs and plaintiffs’ counsel seek to suppress defendants’ access to evidence of plaintiffs’ exposures to asbestos-containing products manufactured, sold, or distributed by the reorganized companies that funded the trusts.  This practice of suppression of evidence of exposures increases tort claim values while often denying defendants a fair trial.  Judge Peggy L. Ableman, formerly the Delaware Superior Court judge responsible for all asbestos litigation in the state of Delaware, strongly denounced the practice of plaintiffs denying exposures to the products of reorganized companies when, in fact, plaintiffs and their counsel had asserted just such substantial exposures in claims submitted to trusts: In the final analysis, there can be no real justice or fairness if the law imposes any obstacles to ascertaining and determining the complete truth.  From my perspective as a judge, it is not simply the sheer waste of resources that occurs when one conducts discovery or trials without knowledge of all of the facts . . . although that circumstance is indeed unfortunate and one that courts can ill afford in this day and age. . . .  What is most significant is the fact that the very foundation and integrity of the judicial process is compromised by the withholding of information that is critical to the ultimate goal of all litigation—a search for, and discovery of, the truth.

After presenting evidence of suppression of exposure evidence and the corroborating views of Judge Hodges, I conclude that to provide “real justice or fairness” and restore the “integrity of the judicial process,” the many impediments erected by plaintiffs’ counsel to prevent defendants’ access to evidence of other exposures of plaintiffs to asbestos-containing products should be countered by policies to be adopted by courts and enacted by legislatures mandating the transparency of evidence of plaintiffs’ exposures to the products that make them eligible for payments from trusts.

In previous publications, I identified an “entrepreneurial” model used to generate the hundreds of thousands of nonmalignant asbestos claims that were supported by unreliable medical reports, which were not the product of good faith medical practice.  My conclusion that the vast majority of these nonmalignant asbestos claims were spurious was largely corroborated by a report issued by United States District Court Judge Janis Jack who presided over a multidistrict litigation (MDL) involving approximately 10,000 silica claims and found that the medical reports supporting the claims were “manufacture[d] . . . for money.”

After describing the entrepreneurial model, I then focus on a specific application of the model to mesothelioma litigation:  the systemic efforts of tort plaintiffs and their counsel to suppress defendants’ access to evidence of plaintiffs’ exposures to asbestos-containing products manufactured, sold, or distributed by reorganized companies.  In cases where defendants have been able to overcome the attempts to suppress evidence of other exposures, it has become apparent that the product exposures set forth in multiple trust claims differ markedly from, and are inconsistent with, the exposures being asserted by plaintiffs in the tort system.  The effects of this suppression are twofold.  First, even when defendants—over the strenuous objections of plaintiffs’ counsel—are able to obtain evidence of other exposures by engaging in extensive discovery—including filing subpoenas with trusts, motions to compel, and so on—or when plaintiffs’ counsel disclose trust claims on the eve of trial, because courts limit the amount of time available for discovery, the closer to trial that the evidence is uncovered, the less time is available to follow up the evidence with new interrogatories, demands for documents, and other discovery.  Defendants may therefore have to go to trial with an out-of-date trial plan and without having been able to investigate plaintiffs’ other exposures adequately and gather the necessary evidence to counter plaintiffs if they fail to disclose or deny other exposures in pretrial discovery or at trial.  The denial or late acquisition of this evidence increases defendants’ litigation risks, including their potential share of liability.  These extra burdens borne by defendants to overcome suppression efforts and uncover evidence of plaintiffs’ other exposures also drive up defense costs, which in a mesothelioma case can easily run $100,000 or multiples thereof.  Defendants are typically willing to settle claims for amounts determined by their expectations of the outcomes of trials and also their defense costs.  This calculation applies as well to claims they expect to win if taken to trial where settlement costs are lower than the cost to litigate the claim.  Thus, the higher the costs to defendants to resolve claims, the greater the willingness of defendants to settle claims, including nonmeritorious claims, for higher amounts than would otherwise be the case.  Second, several jurisdictions today require plaintiffs to prove not only exposure to a defendant’s asbestos-containing products but also to show that the products were a substantial factor in causing the plaintiff’s disease.  If defendants responsible for relatively insubstantial exposures had timely access to evidence of plaintiffs’ exposures to the asbestos-containing products of other companies—most especially to those of the reorganized companies—in appropriate cases, they could argue that plaintiffs’ other exposures, especially if they were to products with high percentages of asbestos, were so much more extensive than the exposures to defendants’ products that the latter could not have been a substantial factor in causing the plaintiffs’ diseases.  Denial of access to this evidence increases defendants’ litigation risk and, therefore, the amounts that defendants are willing to pay to settle claims.  The net effect of the suppression of evidence in mesothelioma litigation is to inflate the value of tort claims.