House GOP looking to limit asbestos actions, frivolous lawsuits

House Republicans next week will call up two tort reform bills — one that seeks to crack down on fraudulent claims related to injury from asbestos, and another that limits frivolous lawsuits on any subject in federal court.

The asbestos-related bill is the Furthering Asbestos Claim Transparency (FACT) Act, H.R. 982. This bill from Rep. Blake Farenthold (R-Texas) would require the various asbestos trusts throughout the country to file quarterly reports with bankruptcy courts about who has filed a claim and how much was paid out.

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This reporting is meant to make it easier for trusts to see who has already filed for or received money from an asbestos injury claim, in order to stop duplicative or fraudulent claims.

Since a U.S. Appeals Court upheld an asbestos liability suit in 1973, billions of dollars worth of asbestos injury claims have been made, and more claims are made every year. A report accompanying the bill from the House Judiciary Committee says those claims are increasingly being made by people with no physical injury from asbestos, and that prior litigation has led to the bankruptcy of 100 companies.

In 1994, Congress passed legislation that sets up asbestos trusts, which can be set up by debtor companies to pay asbestos claims. Companies that set them up are able to avoid further litigation once they reorganize themselves out of bankruptcy.

There are about 60 in the country with assets of about $40 billion. Back in May, when the Judiciary Committee approved the bill, Chairman Bob Goodlatte (R-Va.) said the bill is needed to help preserve this money for valid claims.

"The FACT Act is common-sense legislation that is designed to promote transparency, discourage fraud, and ensure that funds meant to benefit legitimate future asbestos victims are not used to pay abusive claims," he said. "If asbestos trusts are to have assets available to pay the claims of deserving future claimants tomorrow, Congress must take steps to assure that trust assets will be better protected today."

Farenthold's bill has some bipartisan support — Reps. Steve Chabot (R-Ohio) and Jim Matheson (D-Utah) are cosponsors.

The second bill is the Lawsuit Abuse Reduction Act, H.R. 2655, from former Judiciary Chairman Lamar Smith (R-Texas). This bill allows judges to impose monetary fines against lawyers who file frivolous suits, including attorney fees and other costs borne by the defendant of those suits.

It also eliminates the ability of lawyers to avoid sanctions for frivolous lawsuits by withdrawing those actions within 21 days. Smith said in July that his bill would help curb the practices of lawyers who have "everything to gain and nothing to lose."

"Lawyers can file meritless lawsuits, and defendants are faced with the choice of years of litigation, high court costs and attorneys' fees or a settlement," he said. "This is legalized extortion."

Smith's bill has seven Republican cosponsors, including Goodlatte.