NCPA - National Center for Policy Analysis


October 1, 2004

Injuries from asbestos have brought the highest legal costs of any type of personal injury litigation in U.S. history. Research from the National Bureau of Economic Research (NBER) suggests government legislation will likely be the only solution to this crisis:

  • It is estimated that from 1.1 million to 3 million people will eventually file claims, with costs ranging from $200 to $265 billion.
  • The bulk of the benefits -- some 66 percent of the asbestos compensation paid to during the 1980s and 60 percent during the 1990s -- ended up going to lawyers.
  • Thus far, 85 corporations have filed for bankruptcy because of asbestos liabilities and several insurances companies have either failed or are in financial distress.

Yet despite the massive penalties delivered by judges and juries, asbestos lawsuits continue to grow. This has come about due to a number of reasons, says NBER, among them:

  • Courts have allowed uninjured claimants to collect damages and allowed asbestos liability to spread to defendants with little asbestos involvement.
  • Courts have, in effect, rewritten old insurance policies to increase insurers' liability.

Ultimately, Congress will have to pass legislation to resolve the asbestos crisis because the two methods the U.S. legal system has developed to collectively resolve mass torts -- bankruptcy of defendants and class action lawsuit settlements -- have not worked for asbestos litigation, explains NBER.

Plaintiffs' lawyers have had an easy time finding non-bankrupt defendants to sue when others have become insolvent, thus shifting the litigation pressure to new sectors of the economy. Also, the large number of interests involved has made voluntary agreements on a class action settlement nearly impossible, says NBER.

Source: David R. Francis, "Asbestos and the Future of Mass Litigation," NBER Digest, July 2004; based upon Michelle J. White, "Asbestos and the Future of Mass Torts," Working Paper No. 10308, National Bureau of Economic Research, February 2004.

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