Asbestos Trust Funds

Companies set up trust funds to finance these cases and reach settlements. They filed for bankruptcy protection, but with the stipulation that they could still operate as a functioning company. The size of the trust is determined by a bankruptcy court. There have been billions of dollars set aside in these trusts as compensation for patients and their families.

Anyone who has mesothelioma or has a family member diagnosed with mesothelioma can file a claim to receive compensation. This compensation may cover lost wages, treatment costs, funeral bills, and restitution for pain and suffering.

Compensation Facts

• As of 2013, there is an estimated $30+ billion set aside in trust funds for mesothelioma patients.
• About 27.5 million people were exposed to asbestos while working.
• Only 2.5 percent of those 27.5 million have filed for compensation.
• From the years 1980-2002 there was a $70 billion dollar payout to victims of asbestos-related illnesses.

The Johns-Manville Corporation

Originally founded in New York City in the mid-19th century, the Johns-Manville Corporation was once a leading manufacturer of insulation and roofing materials. These insulation and roofing materials, unsurprisingly, contained substantial quantities of asbestos. Employees of Johns-Manville started filing for disability for lung diseases as early as 1929, and the corporation was even involved in a violent strike at one of its supplying asbestos mines in Asbestos, Canada.

In the 1980s, the corporation would be one of the first companies to file bankruptcy as a result of asbestos lawsuits. The company subsequently established the first asbestos trust fund in 1987. This created a precedent that led many major manufacturing companies to file for bankruptcy, thus reorganizing their assets and establishing similar asbestos trusts.

What is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy is a form of corporate bankruptcy that allows companies to reorganize their finances in order to continue doing business, while also continuing to pay their debt. Victims of asbestos exposure must file their claims against trust funds if the company responsible for their illness has filed for bankruptcy.

Bankruptcy code doesn’t limit victims from how many trust funds they may file a claim against, nor does it set a limit on how much money the victim may claim. If the victim can prove a work history at several different companies who used asbestos they can legally file a claim against each trust fund responsible.

In fact, many victims file claims against more than one trust and receive payment from each. However, victims may not, in some cases, receive the full amount they claim. This depends on how much funding is available through the trust.

Trust agreements are financial relationships between two parties; in this case, the asbestos companies at fault and their trustees. Trusts are traditionally set up to allow trustees to manage the property of another party. The property being managed by trustees of asbestos trust funds is the money set aside to pay victims of asbestos exposure.

The responsibilities of the trustees include:

• Managing investment of the trust
• Filing tax returns
• Filing annual reports to the bankruptcy courts
• Standing in as the defendant in place of the debtor (the asbestos company at fault) in bankruptcy courts

If the parties involved cannot reach an agreement on their own, the claim is settled in court. However, this is very rare when filing a claim against an asbestos trust fund.

The claims process, assuming out-of-court settlement, is broken up into a 4-step procedure.

• 1
  Filing Claims – Filing begins with determining which companies in the claimant’s (i.e. the victim of asbestos exposure) occupational history are responsible for their illness. During filing, claimants select the method of review as either expedited or individual review.
• 2
  Claim Review – There are two separate procedures for reviewing claims.

  • Expedited reviews

    These reviews settle claims quickly and the payout is a fixed value. This procedure is used when claimants know the fixed value and meet a set of criteria established by the trust, providing medical evidence and occupational history. If the evidence is determined to be sufficient, the claim is valid and the process proceeds to liquidation. If not, claimants can file an individual review.

  • Individual reviews

    These reviews are required when claimants do not meet the criteria set up by the trust for an expedited review. Payout values for individual claims may be greater or less than the fixed values established for expedited claims. Good law firms always try to file for individual review to avoid being restrained by fixed values associated with expedited claims. Therefore, claims tend to be much higher.

• 3
  Claim Liquidation – Liquidation is the assignment of a monetary value to the claim. Valid claims filed as expedited already have a monetary value scheduled by the trust. Liquidation for individual claims, on the other hand, is determined by negotiation of the trustee and the claimant’s lawyer.

  • Extraordinary claims

    These are special cases where the claim meets the criteria of an expedited claim, but liquidation is allowed to be determined like an individual claim. These claims are used in cases where the claimant was a victim of one specific company under certain employment circumstances, such as being an employee who worked for the company for a significant amount of time (30 years, for example).

• 4
  Claim Payment – After an offer is made and accepted, payment is the final step of the procedure.

Payment Percentages

Unfortunately, paying out claims is not always a straightforward procedure. Asbestos trusts set up by companies that no longer exist have a limited amount of funds available to claimants.

Predictions of how many workers might develop mesothelioma per any given company are naturally flawed.

Payment percentages are the proportion of the fund entitled to the claimant. This is predominantly set up to avoid huge individual claims from exhausting the fund. Therefore, if a claimant’s claim was hypothetically liquidated at $100,000 with a payment percentage of 25 percent, the trust would pay the claimant $25,000.

Payment percentages can change over time, and are different for each trust. Some trusts have a payment percentage of 100 percent, while others have egregiously low payment percentages of 1 to 2 percent.

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