WASHINGTON, D.C. – Today, Senators Thom Tillis (R-NC), John Cornyn (R-TX), and Chuck Grassley (R-IA) introduced the PROTECT Asbestos Victims Act, commonsense legislation that provides much-needed oversight of asbestos bankruptcy trusts to ensure victims receive just compensation.
“Asbestos bankruptcy trusts were created to compensate asbestos victims, not trial lawyers,” said Senator Tillis. “The PROTECT Asbestos Victims Act will reform the asbestos bankruptcy trust system by adding in layers of oversight, accountability and transparency, which in turn will help eliminate fraud and ensure that trusts are able to compensate present and future asbestos victims.”
“Those affected by asbestos-related diseases deserve compensation free from mismanagement by the bankruptcy system,” said Senator Cornyn. “This legislation would criminalize the submission of fraudulent claims and allow the Justice Department to conduct the oversight necessary to ensure asbestos victims receive the payments they are due.”
“Fraudsters and poor management cannot be allowed to cheat victims of asbestos-related diseases out of the assistance Congress established for them years ago through the Asbestos Bankruptcy Trust system,” said Senator Grassley. “We need commonsense accountability measures to ensure that the trust fund is not syphoned away from the victims it was intended to help. And we need independent oversight to protect against any waste, fraud, and abuse. This bill accomplishes these much needed reforms.”
In 1994, Congress created a system of bankruptcy trusts to ensure that current and future victims of asbestos-related diseases could receive compensation from corporations with liability exposure. Unfortunately, the asbestos bankruptcy trust system lacks any independent oversight by a neutral third party to ensure that the trusts are not deceived into paying erroneous or false claims for compensation.
Because there is no effective oversight of the trusts, there are widespread reports of fraud and mismanagement. In fact, one former trial lawyer turned whistleblower has described the schemes used to cheat trusts as “institutionalized fraud.” Fraudulent claims deplete the fixed amount of money in the trusts, potentially causing compensation for future victims to be reduced or unavailable altogether.
The PROTECT Asbestos Victims Act protects future asbestos victims by implementing several key reforms to the bankruptcy trust system.
- Empowers the US Trustee Program of the Department of Justice to investigate fraud against asbestos trusts, which they are prevented from doing under current law.
- Makes it a crime to knowingly submit a false claim to a trust.
- Allows for the appointment of a special representative to advise future victims in a bankruptcy case – this person must be completely disinterested to ensure the most effective advocacy for future victims.
- Mandates that trusts report claims information to CMS to ensure Medicare and Medicaid are properly reimbursed. Currently, the Medicare and Medicaid programs are being financially harmed because asbestos trusts have failed to reimburse the programs.
- In order to prevent fraudulent claims in both state and federal proceedings, requires trusts to comply with subpoenas from state courts seeking information (under seal) related to trusts payments and ensures that the party requesting the information pays reasonable costs to the trust.