According to a recent report from the New York Civil Justice Institute (“NYCJI”), a leading tort-reform organization, approximately half of plaintiffs in 175 New York asbestos-related lawsuits failed to take advantage of potential funds by filing claims with asbestos bankruptcy trusts. Asbestos-related litigation has resulted in the establishment of numerous asbestos bankruptcy trusts on behalf of bankrupt entities whose products allegedly cause or caused asbestos-related illnesses. These trusts are a powerful mechanism from which sick claimants can obtain compensation for alleged exposure to an asbestos-containing product. Claimants are entitled to file lawsuits arising out of alleged asbestos exposure, and to also pursue claims with asbestos bankruptcy trusts simultaneously.
According to the NYCJI report, the 175 cases selected were cases that had actually proceeded to trial in New York in the previous six years. In every case selected, the plaintiff was eligible to receive compensation from an asbestos bankruptcy trust prior to filing suit. Only 54% of the plaintiffs disclosed during discovery that they had, in fact, filed claims with asbestos bankruptcy trusts. The remaining plaintiffs failed to disclose they had filed any such claims, despite being eligible. In fact, the NYCJI identified that three of these plaintiffs were entitled to an approximate award in excess of $1 million from the trusts. Thirteen of these plaintiffs could have made more than forty (40) bankruptcy trust claims. Around a fifth of the plaintiffs were eligible for at least $500,000 in trust proceeds. The average amount to which each plaintiff was entitled was in excess of $440,000.
Asbestos litigants may decline to file claims with the bankruptcy trusts, knowing that defendants in the centralized asbestos litigation will seek to use those claims to build stronger defenses, and allege alternative exposure to asbestos other than from the extant defendants’ products or trades. Alternatively, claimants might simply wait until late in the litigation to file such a claim, or even after the litigation has concluded. Trust claims submissions are useful to provide information regarding a plaintiff’s claimed exposures to asbestos, and to assist defendants and insurance carriers in properly valuing these claims. Trust submissions include information pertaining to the amount of exposure, the worksites causing the exposure, smoking history, and a variety of other types of important information. The NYCJI report expressed concern that litigation discovery responses in response to questions about applications to the bankruptcy trust were frequently stonewalled, with objections or non-responses, thus depriving defendants of real knowledge about whether plaintiffs have identified other potential sources of exposure, or other contributing factors to their illness.
Bill A00053 is presently pending with the New York State Assembly, and would require asbestos plaintiffs to file all of their trust claims no later than 45 days after the commencement of their lawsuit, and to notify all defendants in the civil action of the filing of each asbestos trust claim thirty days after the commencement of discovery. If passed, it might help alleviate this issue – but in the meantime, asbestos litigants must be aggressive in their pursuit of documentation and information relative to claims filed with asbestos bankruptcy trusts.