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February 2006 Archives

By Lester Brickman

This is an updated version of an article that ran as a "Rule of Law" column in The Wall Street Journal on November 5, 2005. The Senate is set to begin debate on asbestos legislation shortly.

In the mid 1980s, court decisions dramatically enlarged insurance companies' liability for asbestos-related injury. At the same time, defendants and their insurers began to pay asbestos claims without demanding much in the way of proof of injury or liability. Plaintiffs' lawyers responded opportunistically.

As a consequence, asbestosis litigation, which had previously focused on malignancies and other debilitating injuries, shifted radically from the traditional model of an injured person seeking a lawyer to an entrepreneurial model. Lawyers spent millions to sponsor mass screenings of upwards of 750,000 industrial and construction workers. Of the 850,000 asbestos claimants that have so far brought suit against over 8,400 different defendants, about 600,000 have been recruited by these mass screenings.

Most of these 600,000 plaintiffs claim a mild form of asbestosis (a scarring of lung tissue), or other nonmalignant condition, but suffer no symptoms or lung impairment. They have no asbestos-related injury recognized by medical science and no significant probability of manifesting an asbestos-related malignancy in the future. Nevertheless, lawyers charging 40% contingency fees have extracted tens of billions of dollars in settlements, after hiring a comparative handful of doctors who consistently read X-rays and "diagnose" disease in 60% to 80% of those screened.

According to medical science, however, asbestosis is a "disappearing disease" and only 2% to 4% of claimants now generated by screenings have an actual nonmalignant condition resulting from asbestos exposure. This led me previously to conclude that the X-ray readings and "diagnoses" of these litigation doctors were a function of the millions of dollars paid to them by the lawyers. Overwhelming evidence in support of these conclusions about asbestos litigation has recently come to light in the not-unrelated litigation based on exposure to silica or sand.

Silicosis, like asbestosis, is a scarring of the lungs but is caused by the inhalation of large quantities of fine sand dust. Once a scourge, it is a disappearing disease because of strict government regulations and employer practices. Deaths attributable to silicosis have dropped over 80% in the past 30 years. But beginning in 2002, claim filings in state courts, mostly in Mississippi, reached "epidemic" proportions.

The reasons for the "epidemic" are that key states began to adopt comprehensive asbestos litigation reform and Congress took up consideration of a fund (paid for by defendants and insurance companies) to pay claims, as a way of taking asbestos litigation out of the tort system. Worried about the future of their enterprise, lawyers, doctors and screening companies abruptly shifted gears from ginning up claims based on asbestosis to claims based on silicosis. As one lawyer acknowledged, "why reinvent the wheel?"

This all became clear when 10,000 of the 35,000 pending silica claims were centralized into a federal multi-district litigation (MDL), presided over by U.S. District Court Judge Janis Jack, a Clinton appointee. During the course of the MDL, one of the doctors recanted all 3,617 of his diagnoses of silicosis, provoking Judge Jack to observe that "it's clear this . . . [diagnosing] business is fraudulent." She issued an unprecedented order allowing defendants to cross-examine, in her presence, every doctor who had provided a silicosis diagnosis, as well as the owners of the screening companies.

It turns out that 6,000 of the plaintiffs had previously filed asbestosis claims. Nevertheless, pulmonary experts testified at a U.S. Senate hearing that, while it was theoretically possible to have both asbestosis and silicosis, they had never seen a single dual disease case during their extensive practices. Moreover, many of the X-ray readings on which the silicosis diagnoses were based were made by the same doctors who had previously read the X-rays as "consistent with asbestosis"—but who had never mentioned silicosis.

Judge Jack concluded that "the lawyers, doctors and screening companies" were "all willing participants" in a "scheme [that] manufactured [diagnoses] for money"—the equivalent of a finding of pervasive fraud. If the same level of discovery were permitted in asbestos suits, I have no doubt of the outcome. The same screening companies, X-ray readers and diagnosing doctors excoriated by Judge Jack have been involved in asbestos litigation for almost 20 years. As Judge Jack observed, the "evidence of the unreliability of the [X-ray] reads performed for this MDL is matched by evidence of the unreliability of [X-ray] reads in asbestos litigation." The asbestos lawsuits have resulted in billions of dollars in settlements.

Sitting in Judge Jack's courtroom during the cross examinations was an assistant U.S. Attorney from the Southern District of New York. He was there because a federal grand jury had been convened in mid 2004 to consider possible criminal charges arising from claims of exposure to silica and asbestos, and the use of witness-coaching techniques to implant false memories about product exposure.

Asbestos litigation, meanwhile, prevented the creation of 500,000 jobs because of the diversion of capital in over 70 asbestos-related bankruptcies. Plaintiff lawyers have exercised undue influence over the bankruptcy process, essentially obtaining ratification of the claim-generation process that Judge Jack condemned. Here too, the worm appears to be turning. In a series of decisions, the Third Circuit Court of Appeals, echoing the exact words I used to describe the ongoing Congoleum bankruptcy proceeding, stated that to approve a reorganization plan tainted by lawyers' engaging in conflicts of interest and securing preferential treatment for their clients to generate additional fees, "would be a perversion of the bankruptcy process."

The next shoe to drop may be in federal court in New York. If indictments are forthcoming—and lawyers who sponsored the mass screenings and collected billions of dollars in fees are among those indicted—the ensuing process could shine a floodlight on a fraudulent scheme so massive as to qualify non-malignant asbestos litigation for entry into the pantheon of such great American frauds as Enron, WorldCom, OPM, Cr�dit Mobilier and Teapot Dome.

Lester Brickman is a professor at Cardozo Law School, Yeshiva University, and a contributor to Point of Law.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.