The Asbestos Fund Are Inadequate

Is there a mismatch between the contributions to be paid into the fund and the payments to be made from the fund?
CBO expects that about half of the fund’s obligations would be incurred during the 2006-2015 time period, but that contributions to the fund would be nearly evenly spread over the first 30 years of the fund’s operations. As a result, we expect that the fund would have to borrow to pay claims in those early years of its existence. As noted in our August 25 cost estimate, it is uncertain whether fund revenues would be adequate to pay all claims.

Why is the estimate of the fund’s revenues also uncertain?
S. 852 is designed to collect about $140 billion from defendant firms and insurers. Actual collections could be less than that amount, but could not be significantly more. In addition the timing of some payments to the fund is uncertain because there are no firm deadlines in the bill concerning the Asbestos Insurers Commission, which would be charged with determining the distribution of assessments among insurance firms. Finally, the number, identity, and characteristics of the firms that would be required to make payments into the Asbestos Trust Fund are largely unknown. Over a 30-year period, some firms in this group could be expected to liquidate and go out of business. The legislation anticipates that some firms may face bankruptcy and provides for surcharges to guarantee payment amounts, but the success of such mechanisms depends on the ability of the fund administrator to forecast attrition among this group of liable firms.

What is the risk that amounts in the U.S. Treasury outside of the Asbestos Trust Fund would be used to pay asbestos claimants?
S. 852 would authorize the Asbestos Fund Administrator to collect and borrow funds to pay valid claims and expenses. The bill would limit the amount of borrowing and would require the fund to use its resources to repay borrowed funds and interest costs. Under the provisions of section 405, the fund would have to stop accepting new claims if its current and future resources become inadequate to fulfill all existing and anticipated obligations, including its debt obligations. As stated in our August 25 cost estimate, as long as the fund’s Administrator does not borrow from the U.S. Treasury beyond the means of the fund to repay such borrowing, the government’s general funds would not be used to pay claims. Furthermore, section 406 states that the legislation would not obligate the federal government to pay any part of an award under the bill if amounts in the Asbestos Fund are inadequate.

If you have ever been exposed to asbestos directly or indirectly, you may need an attorney specializing in the field of Asbestos and Asbestos related litigiation. Contact an Asbestos Lawyer in Queens now and obtain a free case review!

	Did You Know?
	Asbestos is a widely used, mineral-based material Asbestos is resistant to heat and corrosive chemicals. Depending on the chemical composition, fibers may range in texture from coarse to silky. The properties that make asbestos fibers so valuable to industry are its high-tensile strength, flexibility, heat and chemical resistance, and good frictional properties.