No one likes to eat with a double dipper. People like to litigate with them even less. Little wonder, then, that a bankruptcy judge’s opinion exposing double dipping in asbestos litigation has parts of the legal community demanding reform.
The controversy arose after a flood of asbestos claims forced Garlock Sealing Technologies, a gasket manufacture, to declare bankruptcy and set up a trust to pay off its asbestos liability. During the subsequent litigation, it came to light that the plaintiff attorneys had manipulated evidence on how their clients were exposed to asbestos.
Attorneys would file conflicting claims about their client’s asbestos exposure and collect payments from multiple companies for the same asbestos-related disease. Thus, even as attorneys blamed Garlock in court for their client’s illness, they were filing claims against other companies that attributed their client’s asbestos exposure to a non-Garlock product in an attempt to get paid twice.
Judge Hodge, who oversaw bankruptcy proceeding, observed that the practice succeeded because of a “startling pattern of misrepresentation.” He lamented that the plaintiff attorneys had control over exposure evidence and used that control to make evidence disappear when it proved inconvenient.
Out of the 161 cases in which Judge Hodge allowed further discovery, “almost half” involved misrepresentation.
Of course, fraud in asbestos litigation is hardly a new phenomenon. Experts are quick to point out that the very structure of asbestos trusts facilitates double dipping since the trusts operate in secrecy and make it difficult to cross-check inconsistent claims.
As the Wall Street Journal noted,
“For years lawyers have deluged courts with claims, confident that neither defendants nor courts will have the time or money to sort through the scams.”
But, don’t expect this to change any time soon. The U.S. House passed a bill last year that would have opened trust records in order to help courts filter out illegitimate claims, but the bill is expected to fail in the Senate. The President has also come out in opposition.
Instead, companies must turn to the legal system for relief. Some companies, like Garlock, have chosen to pursue their own lawsuit against prominent asbestos law firms. The rest will rely on individual judges to push back against fraud.
With respect to that, the Wall Street Journal stated it best,
“Judge Hodges’s fresh look is a reminder to other judges that their courtrooms are supposed to be places that render justice, not rubber stamps for plaintiff scams.”
Asbestos bankruptcy trusts were established to provide compensation to those who genuinely suffered a grievous debilitation from asbestos exposure, not to offer trial attorneys a second scoop of the sauce.
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