A $140 billion asbestos compensation fund being considered in the U.S. Senate would be swamped by more than double that amount in claims and go broke within three years, according to a study released on Monday.
The proposed fund would face claims of between $301 billion and $561 billion, as people with lung and other cancers, who historically had not been compensated by asbestos lawsuits, file for their new entitlements, the study said.
The analysis was done by Bates White, a Washington D.C. economic consulting firm, at the request of the American Legislative Exchange Council (ALEC), an association of conservative state lawmakers.
Asbestos fibers have been used in building materials, auto parts and other products for decades, but are linked to cancer and other diseases. Hundreds of thousands of injury claims have pushed many companies into bankruptcy.
Pennsylvania Republican Sen. Arlen Specter and Vermont Democrat Sen. Patrick Leahy are sponsoring a bill to take asbestos injury claims out of the courts and pay them from a fund financed by asbestos defendant companies and insurers.
The Bates White estimate of the fund’s payouts was much larger than an estimate last month by the nonpartisan Congressional Budget Office. The CBO said the proposed fund would have to pay out between $120 billion and $150 billion in claims to people who were sickened by asbestos.
The new analysis said it differed with the CBO because the CBO had assumed that people with lung and other cancers would file claims to the new fund at the same rate that they had filed asbestos claims in court.
But the fund would create a new entitlement for people who historically were not compensated in court, the study said. Few individuals with these cancers have had viable claims in court, because asbestos was only one of the risk factors that may have caused their conditions, it said.
“In order for CBO to be correct, more than 85 percent of qualifying individuals with lung and other cancers would have to decide not to collect their (average) $500,000 entitlement” from the fund, the study said.
The American Legislative Exchange Council prefers state-level action to curb asbestos claims, said its director of legislation and policy, Sandy Liddy Bourne, in a statement accompanying the study.
Lawmakers in four states — Ohio, Texas, Florida and Georgia — have enacted laws establishing medical criteria that claimants must meet in order to bring asbestos injury lawsuits.
The asbestos fund bill was approved by the Senate Judiciary Committee in May. But with doubts about how much support it has in either party, it has not been brought to the Senate floor. Specter says he hopes it will come to the floor early in October.