On The Case

Are asbestos filings another COVID-19 casualty?

(Reuters) - When the Securities and Exchange Commission announced a $950,000 settlement Wednesday with the auto parts maker BorgWarner to resolve an investigation of the company’s erroneous accounting of asbestos liability between 2012 and 2016, I started wondering about the state of asbestos litigation, for decades the driving force of tort reform – and arguably the wellspring of modern mass torts.

Based on a study released earlier this month from the corporate consulting firm KCIC, it look like asbestos litigation is yet another casualty of COVID-19. KCIC found that only 1,688 asbestos suits were filed in the first half of 2020, down 17% from 2019’s pace. (KCIC says it is confident its docket monitoring captures more than 90% of all asbestos filings nationwide.) The decline encompassed every category of asbestos suit, from claims involving the asbestos-linked cancer mesothelioma and other kinds of lung cancer to a 54% plunge in suits by plaintiffs alleging non-cancer injuries. Mesothelioma and lung cancer cases comprised 90% of 2020 filings.

KCIC analyst Megan Shockley attributed the sharp drop so far this year to COVID-19 court closures, although she also highlighted the decline in non-malignancy cases in Baltimore and Wayne County, Indiana, which are among the top jurisdictions for asbestos plaintiffs. Asbestos defense counsel Mark Behrens of Shook, Hardy & Bacon told me by email that Baltimore city courts, in particular, have discouraged non-cancer suits in recent years.

Looking back at several years of KCIC reports on asbestos litigation, it appears that COVID-19 has only accelerated a steady decline in filings. In 2014, KCIC reported about 5,500 suits. In 2016, according to KCIC reports, the number was 4,600 and in 2019, 4,062. The biggest declines, over the years, have been in non-cancer cases – the very cases that prompted defendants in the 1990s to denounce plaintiffs’ lawyers for filing opportunistic suits. Mesothelioma filings have also declined, from 2,413 in 2014 to a low of 2,087 in 2018.

KCIC’s 2019 report did not offer a rationale for the decline, although it did note that some state legislatures and state courts have acted to address issues in the litigation. The average age of asbestos claimants has held steady at 74 in the last few years.

There are still asbestos trials, including a controversial trial under way via Zoom this month in Alameda County, California. And the business lobby continues to argue that plaintiffs are naming unwarranted defendants in their complaints. But as a bogeyman, asbestos litigation seems to be shrinking in potency.

Perhaps in recognition of the smaller docket, tort reformers have shifted their focus in the past several years to asbestos trusts, which Congress enabled asbestos defendants to establish through the Chapter 11 process to wall off their liability to asbestos plaintiffs. The U.S. Chamber of Commerce’s Institute for Legal Reform has prodded U.S. House and Senate lawmakers to enact federal oversight of the private trusts, which, according to its 2018 report, have paid out more than $15 billion and still contain more than $20 billion.

Asbestos trust oversight bills introduced in 2017 and 2018 have failed to pass – in fact, the House’s most recent asbestos hearings were on a bill to ban asbestos – but the Trump administration took several actions in the fall of 2018 to put plaintiffs lawyers on notice of its interest in the business lobby’s arguments. DOJ filed a statement of interest in Kaiser Gypsum’s Chapter 11, alleging that the company and the plaintiffs’ lawyers on its creditors’ committee had not established adequate safeguards for the prospective asbestos trust. It also sought to block the appointment of well-connected asbestos lawyers to serve as representatives for future claimants in two other asbestos bankruptcies and sent out civil investigative demands to established trusts, citing the federal government’s interest in policing Medicare reimbursements.

Asbestos defense lawyer Behrens said DOJ’s actions “have not produced meaningful changes but they are raising awareness in the judiciary about problems in the asbestos trust system.”

Reporting by Alison Frankel