Injury and Accident Law

Addressing Asbestos Claims

As noted in Chapter 2, claims for injuries resulting from asbestos exposure have grown rapidly over the past three decades, have involved larger amounts of damages than the average tort case, and have been implicated in the bankruptcies of dozens of defendants. Another notable feature of asbestos claims is that a large share of the plaintiffs have not yet become sick—that is, they are not functionally impaired—but nonetheless they are subject to statutes of limitations that begin when they discover (or should have discovered) bodily evidence of exposure. Thus, one option that the Congress has considered is to specify certain medical criteria that asbestos victims would have to satisfy in order to pursue claims.15 In effect, asbestos injury would be redefined in terms of impairment rather than exposure.

Limiting asbestos claims to those involving impairment would probably improve efficiency by reducing the number of cases and hence lowering total transaction costs. In addition, allowing injurers to avoid paying damages to people who have been exposed but are not notably impaired should have little adverse effect on the efficiency of incentives for precaution against future tort injuries. From the standpoint of equity, this option would benefit victims who are sick today by reducing the competition for court time and injurers’ compensation funds. Conversely, it would impose a loss on victims who are not yet impaired, many of whom will incur higher medical costs to monitor their condition over time. Moreover, those victims would not be guaranteed to benefit if they became impaired later, because the funds available to pay claims might be greatly diminished by then.

Another option that the Congress has considered would combine the approach of setting minimum criteria for impairment and establishing a public fund that would compensate victims according to a schedule reflecting the severity of injury and perhaps other relevant factors, such as smoking history.16 Such a fund would be a narrower variant of the idea of replacing tort liability with public insurance, but some of the pros and cons of the broader idea discussed above would be less relevant here. In particular, because asbestos exposures generally happened decades ago, using a public fund rather than the liability system to compensate victims would have little impact on incentives for precaution against future injuries. The main issues raised by proposals for a compensation fund are the potential savings in transaction costs and the adequacy and appropriateness of the funding sources and compensation schedule.

Next > Addressing Class-Action Claims

15. See, for example, the Asbestos Claims Criteria and Compensation Act of 2003 (S. 413).

16. See the Fairness in Asbestos Injury Resolution Act of 2003 (S. 1125). Another bill, the Asbestos Compensation Act of 2003 (H.R. 1114), takes an intermediate approach: like S. 1125, it would