The Great Asbestos Swindle

“Issue one” for the new Congress should be the rescue of the U.S. economy from a lethal threat invisible to most Americans.

While the public expresses justifiable outrage over corporate corruption, another fraudulent enterprise is flying beneath radar screens -- one that has already cost investors and employees with 401(k) plans more than the Enron debacle, drained the economy, and killed thousands of jobs. Asbestos lawsuits -- now expected to cost the U.S. more than $200 billion -- will one day undoubtedly take a place in the pantheon of great American swindles, next to the Yazoo land frauds, Credit Mobilier and Teapot Dome.

Ninety thousand new asbestos claims were filed last year -- triple the number filed two years ago. The explosion came two decades ago when plaintiffs’ lawyers were forced to retarget their litigation as first the leading defendant, and then other defendants, went bankrupt. Like the proverbial frog in a pot brought to a slow boil, courts grew increasingly comfortable with the uncritical acceptance of radical changes in claimants’ testimony about product exposure.

Courts did their share to directly further asbestos litigation by developing a “special asbestos law” -- allowing seriously injured plaintiffs to prevail, without having to prove causation under standard tort-law principles. Making matters worse, the law is now not only applied to cases of dubious injury, but to cases with no injury.

For plaintiff lawyers, this development was like the discovery of gold at Sutter Creek. But these hordes of prospecting lawyers soon ran into a wall -- the actual numbers of sick people. At the rate of 4,000 malignancy claims a year, it would take too long to accommodate the pecuniary interests of tort lawyers. The universe of claimants had to be expanded.

Presto: tens of thousands of claimants who were neither sick nor impaired but who won the asbestos lottery when mass x-ray screenings showed collagen deposits -- benign lung abnormalities related to many environmental causes -- were signed up. The claimants were then given scripts with blatant falsehoods to memorize and repeat in sworn testimony. For practical purposes, the supply of such plaintiffs claiming workplace exposure to asbestos but no injury is essentially infinite. Asbestos litigation will go on until the last dollar is extracted from an ever-widening group of defendants.

Asbestos litigation today has come to consist, mainly, of unimpaired people reaping compensation at the expense of the genuinely injured, on the basis of prepared scripts with perjurious contents, backed by bogus medical evidence. Even though most asbestos cases today are risk free, especially when settled in huge batches, lawyers’ effective rates run from $5,000 to $25,000 an hour.

Rampant fraud in asbestos litigation calls for a prosecutorial response. But so far, no prosecutor has been willing to take on the high-rolling lawyers. In the meantime, Congress should legislatively limit fraudulent claiming. Those with no illness or impairment should not be able to destroy entire companies, wiping out shareholder value, employees’ 401(k) plans and thousands of jobs.