U.S. Chamber: GAO Report Confirms Asbestos Bankruptcy Trust System Is Broken | U.S. Chamber of Commerce

U.S. Chamber: GAO Report Confirms Asbestos Bankruptcy Trust System Is Broken

Tuesday, October 18, 2011 - 8:00pm

Lack of Transparency and Oversight Could Invite Fraud and Abuse

WASHINGTON, D.C.—Lisa A. Rickard, President of the U.S. Chamber Institute for Legal Reform, made the following statement regarding the release of Asbestos Injury Compensation: The Role and Administration of Asbestos Trusts, a Government Accountability Office (GAO) report to Rep. Lamar Smith (R-TX), Chairman of the House Judiciary Committee.

“I commend Chairman Smith for commissioning this report, which confirms that the asbestos trusts operate under a shroud of secrecy and without judicial or federal government oversight.

“It is becoming clear that rather than acting to prevent abusive claims, the asbestos trusts are effectively encouraging fraud by inhibiting claims information sharing between the trusts and the tort system. We hope that Congress’s growing attention to this important issue will ensure that the trusts operate in a manner fair to asbestos victims and job-creating businesses, not plaintiffs’ lawyers and fraudulent claimants.”

The GAO report explicitly acknowledges that the asbestos bankruptcy trusts, which are established by bankrupt companies and currently control over $36 billion in assets, do not make claimant filing information publicly available. The report also finds that 65% of trusts have implemented procedures that block the information sharing necessary to prevent fraudulent claims. In addition, only three of the eleven trusts interviewed by GAO have audited their claims, and only one has submitted medical evidence for external review.

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