March 26, 2004

Dear Senator:

On behalf of the 1.4 million members of the United Food and Commercial Workers International Union (UFCW), I am writing to express our opposition to any asbestos compensation legislation that enshrines the deficiencies of S. 1125 into law, and permanently shuts the door on justice for victims of asbestos exposure.

As you may be aware, Senate Majority Leader Bill Frist has threatened to schedule floor time at the end of this month for consideration of the Fairness in Asbestos Injury Resolution Act (S. 1125), introduced last June by Senator Orrin Hatch (R-UT) and reported from the Senate Judiciary Committee in July. We strongly urge your opposition to this legislation at this time.

Over the past decades, tens of thousands of UFCW members, retirees, and their family members have suffered exposure to asbestos. Many of them are now suffering from the effects of the exposure or have died from mesothelioma, lung cancer, asbestosis, and other related illnesses. Where were our members exposed? They were exposed in the chemical plants, manufacturing facilities, grocery stores, retail and wholesale establishments, warehouses, hospitals, and schools where asbestos was commonly used as insulation for piping, boilers, and structural building materials, and also used as fireproof acoustical treatment and in other building materials. In chlorine plants, it was often used in the manufacturing process—being dumped and mixed by hand. In other facilities, it was a filtering aid. In some specialty textile facilities, it was woven into the fabric, and then sewn into fire retardant clothing. It was even used in the government-owned, contractor-operated Department of Energy (DOE) weapons facilities in Tennessee, Idaho, New Mexico, Illinois, California, Washington, and other states. With a twenty-year or greater latency period for most asbestos-caused illnesses, many more workers and family members will become ill.

We recognize the problems with the current legal system, and we have supported the principle of compromise federal legislation that would attempt to provide victims with fair and timely compensation. Victims of asbestos disease need and deserve compensation for their injuries. This principle has also been supported by the manufacturers and employers. We believe that most Senators share that view. However, the pre-emptive attempt to enact S. 1125 is incompatible with the ongoing effort to achieve this mutually agreed upon goal and cannot be accurately described as a compromise.

As reported, S. 1125 would bail out insurers and those defendants who are responsible for these illnesses—at the expense of victims of asbestos disease. This bill deprives victims of their right to seek redress in court and does not leave them an alternative remedy that would assure them fair and timely compensation.

S. 1125 also sets compensation levels for many victims that are far too low and the funding is inadequate to provide fair compensation or to cover likely claims. There is no disclosure or guarantee of the sources of funding. We fear that these victims will suffer declining compensation for illness as the fund goes dry. In addition, the proposed claims-handling process is hostile to claimants, overly complex, and expensive. All pending claims will be wiped out and victims who have been waiting for years must start a whole new process. And finally, there are no provisions for medical screening for the tens of thousands who are at high risk of developing disease. Unfortunately, after the bill was marked up, it got even worse under a new funding "agreement" worked out by Senator Frist, which reduced total funding available by an additional 25 percent.

We remain opposed to any legislation dealing with asbestos compensation that may be brought to the floor that fails to remedy the many serious deficiencies that remain in the reported bill. We are aware that there are ongoing, serious discussions underway by Senators and interested parties, including the AFL-CIO, to rectify these problems and to reach consensus agreement on legislation. Some progress has been made, including an agreement on an alternative no-fault administrative system for handling claims. We have enclosed with this correspondence a fact sheet which outlines the remaining outstanding issues. Regardless, Senator Frist recently announced that he intends to bring the asbestos bill to the floor the last week in March or first week in April, whether or not agreement has been reached.

As currently written, S. 1125 is highly deficient and would leave these victims far worse off than under the current legal system. Additionally, Senate passage would undermine ongoing discussions to resolve the outstanding issues and ensure that asbestos victims are victimized once more.

Once again, I urge you to strongly oppose S. 1125 or any bill that does not address the remaining crucial problems in S. 1125 and provide fair compensation to asbestos disease victims. Thank you for your consideration of this request. If you have questions or need more information, please feel free to contact us.

Sincerely,

International President

The Hatch – Frist Asbestos Compensation Bill (S. 1125) is Unfair to Asbestos Victims

Decades of uncontrolled use of asbestos and a deliberate cover-up of its dangers have resulted in a disease crisis in the United States of mammoth proportions. Hundreds of thousands of workers and their family members have suffered and died of asbestos-related cancers and lung disease. In 2003, an estimated 10,000 people died of asbestos-related diseases. Millions of more will suffer or die in the future.

Victims of asbestos disease need and deserve compensation for their injuries. The labor movement recognizes that there are problems with the current legal system, and we have supported in principle federal legislation that would provide victims fair and timely compensation through a no-fault system.

However, the asbestos compensation bill (S. 1125) being pushed by Senate Republican leaders and business groups is grossly unfair to workers. Discussions are underway among Senators and interested parties, including the AFL-CIO, to see if these flaws can be remedied and agreement reached on fair legislation. Some progress has been made, including an agreement on the major aspects of an alternative administrative system (which would establish a non-adversarial asbestos compensation system at the Department of Labor). But huge problems remain with the bill and there is no agreement on many key issues, including levels of compensation for victims and the overall size of the compensation fund.

Despite these major problems, Senate Majority Leader Bill Frist (R-TN) announced that he intends to bring asbestos compensation legislation to the floor the last week in March or first week in April, whether or not agreement has been reached. The AFL-CIO strongly opposes S. 1125 in its current form and urges Senators to vote against any bill that does not fully remedy all the flaws in S. 1125 and provide fair compensation to asbestos victims.

Major Flaws in S. 1125

Unfair Compensation for Victims

Any federal asbestos compensation bill must provide victims fair and timely compensation. But for many of the disease categories and for many victims, compensation awards under S. 1125 are far too low, particularly when measured against the health impact and economic impact on victims. For example, awards for lung cancer victims who have more than 15 years of exposure to asbestos are limited to $25,000 - $75,000, even though most victims will die within a year. Victims with asbestosis who have lost 20 to 40% of their breathing capacity – many who will be disabled for work – will receive only $75,000, far less than lost wages and medical costs. Moreover, the bill allows for a lien on these awards by workers compensation insurers and health insurers. Any final legislation must provide fair compensation, with values at least as high as those contained in the Leahy-Kennedy amendment that was offered in committee and eliminate any subrogation that would reduce overall benefits to victims.

Inadequate Funding and Solvency Problems

Funding for the Asbestos Compensation Fund is inadequate to cover expected claims. S. 1125 as reported from the Judiciary Committee provided $104 billion in base funding and $45 billion in contingent funding, with a total funding of $153 billion, to be split equally between defendants and insurers. But, insurers objected, and in October, a new funding "agreement" between defendants and insurers that reduced funding contributions was brokered by Senator Bill Frist. This new "agreement" provided only $114 billion in total funding, including $10 billion in contingent funding. If the money were exhausted, there would be a return to the tort system under yet unspecified conditions. The terms of this agreement are inadequate to cover even the cost of the expected claims, which the Congressional Budget Office has estimated at $136 billion (for the inadequate claim values in S. 1125), let alone to cover the costs if claims exceed projected estimates. It provides a huge bailout for firms like Halliburton and W.R. Grace who have billions of dollars of liability under the current system. Any asbestos bill must provide certain funding to cover expected claims at a fair value and adequate contingent funding or real legal remedies if claims exceed expectations.

No Disclosure or Guarantee of Funding

S. 1125 and the Frist proposal set funding levels and funding tiers, but neither proposal provides any specific information on where the funding will come from. There is no guarantee that funding at even the deficient levels in the bill will be produced. The funding proposals have been privately negotiated between defendants and insurers. Moreover, there are no provisions for joint and several liability, so if defendants or insurers refuse to pay or not enough money is collected, there is no way to make up the shortfall. No asbestos bill should be allowed to proceed unless there is full disclosure on the sources of funding and provisions made for contributors to be jointly and severally liable for funding.

Unfair Treatment of Victims with Pending Claims

There are now more than 300,000 asbestos victims who have claims pending in the current system, many of whom have been waiting for years as companies like Halliburton used the bankruptcy code to freeze pending litigation. S. 1125 would wipe out all pending claims, even those with jury verdicts under appeal, and make victims start all over. Allowing victims with pending claims to proceed under the current system would be much fairer. It would also relieve a huge administrative and financial burden from a new asbestos trust, allowing the fund to get up and running and focus on processing new claims.

No Provision for Medical Screening Of High Risk Workers

Millions of workers have been exposed to asbestos and are at high risk of developing asbestosis, lung cancer or mesothelioma. Programs are needed to identify, educate and screen these workers so disease can be detected early and appropriate medical intervention made. Asbestos compensation legislation must provide for the establishment of high quality medical screening and education of high-risk workers, similar to programs established by the government for coal miners and energy workers.

Preempts FELA – the Workers’ Compensation System for Rail Workers

S. 1125 would preempt the right of rail workers to file claims under the Federal Employees Liability Act (FELA) – their workers’ compensation system - for asbestos related diseases. But all other workers maintain their full rights to seek workers’ compensation from their employers for asbestos related diseases. This leaves rail workers at a real disadvantage when compared to all other workers under the bill. Asbestos legislation should not take away benefits and rights from rail workers – or any workers – to seek compensation from their employers for asbestos-related diseases.

S. 1125 is a fatally flawed bill that bails out asbestos defendants and their insurers at the expense of victims of asbestos disease. Any legislation that fails to address each and all of these flaws, and fails to provide victims fair, timely and certain compensation should be strongly opposed.