Order Code RS22081
Updated April 26, 2005
CRS Report for Congress
Received through the CRS Web
S. 852: The Fairness in Asbestos Injury
Resolution Act of 2005
Nathan Brooks
Legislative Attorney
American Law Division
Summary
This report provides an overview of S. 852, the Fairness in Asbestos Injury
Resolution (FAIR) Act of 2005. The bill would largely remove asbestos claims from
the courts in favor of the administrative process set out in the bill. The bill would
establish the Office of Asbestos Disease Compensation to award damages to asbestos
claimants on a no-fault basis from the Asbestos Injury Claims Resolution Fund.
Companies that have previously been sued for asbestos-related injuries — and insurers
of such companies — would be required to make contributions totaling roughly $140
billion to this Fund.
Claims of asbestos-related injury1 have flooded the courts since the 1970s, but
litigation has proven to be an inadequate means to resolving all the claims. The Supreme
Court has twice struck down attempted global asbestos settlements,2 in both instances
inviting Congress to craft a legislative solution.3 In response, various bills have been
introduced in past Congresses that would have removed asbestos claims from the tort
system in favor of an administrative claims resolution process,4 although none has passed.
On April 19, 2005, Senator Arlen Specter introduced S. 852, a bill building on earlier
efforts.
1 Asbestos exposure can cause a variety of serious health conditions, from asbestosis (build-up
of scar-like tissue in the lungs, inhibiting breathing) to mesothelioma (cancer of the membrane
surrounding the lungs).
2 Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997); Ortiz v. Fireboard Corp., 527 U.S.
815 (1999). In both of these cases, the Court held that the settlements did not satisfy Rule 23 of
the Federal Rules of Civil Procedure, which governs class actions in federal courts. For
background information on the history of asbestos litigation, see CRS Report RL32286, Asbestos
Litigation: Prospects for Legislative Resolution, by Edward Rappaport.
3 See, e.g., Amchem Products, Inc. v. Windsor, 521 U.S. at 628-629.
4 See, e.g., S. 2290 (108th Cong.). For a summary of that bill, see CRS Report RS21815, Fairness
in Asbestos Injury Resolution Act of 2004 (S. 2290, 108th Congress), by Henry Cohen.
Congressional Research Service ˜ The Library of Congress

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The Claims Process
The bill would establish within the Department of Labor the Office of Asbestos
Disease Compensation, which would award damages to claimants on a no-fault basis
according to their respective levels of injury and asbestos exposure.5 The Office would
be headed by an Administrator, who would be appointed by the President — with the
advice and consent of the Senate — to a five-year term and report directly to the Assistant
Secretary of Labor for the Employment Standards Administration.6 The Office would pay
awards from the privately funded Asbestos Injury Claims Resolution Fund7 (“the Fund”),
discussed in greater detail below. New asbestos claims — and most pending ones —
could no longer be pursued in federal or state court.8
Upon enactment of S. 852, all pending asbestos claims (other than some individual
actions at the evidentiary stage and actions with final verdicts, judgments, or orders)
would be stayed. If, after nine months, the administrative process outlined in the bill is
not up and running so that it can review and pay “exigent health claims” — i.e., claims
by those suffering from mesothelioma or having a life expectancy of less than one year
— at a reasonable rate, then those claims could be maintained in the same courts in which
the claims were pending when the Act was passed.9 The comparable time period for all
other asbestos claims (with the exception of the least serious claims) would be two
years.10 Claimants who decide to return to court in these situations would have the option
to remain in court even if the Fund were to become operational later.11
Any individual who suffers from an asbestos-related disease or condition meeting
the medical criteria listed in the bill (or, in the case of death or incompetence, that
person’s personal representative) could bring a claim under the administrative process
outlined in the bill. A claim would have to be filed no later than five years after the
claimant receives a medical diagnosis of an eligible disease or condition, or discovers
facts that would lead a reasonable person to seek a diagnosis.12 For claimants who have
asbestos claims pending in court, the statute of limitations would be five years from
enactment of the bill.13
5 S. 852, § 101.
6 Id.
7 Id. at § 221.
8 Id. at § 403(e).
9 Id. at § 106(f)(2)(B). The bill would also outline a process under which the parties to an exigent
health claim suit could execute a settlement before moving the claim to the administrative
process. Id. at § 106(f)(2)(A).
10 Id. at § 106(f)(3)(A).
11 Id. at § 106(f)(3)(E)(ii).
12 Id. at § 113(b). The statute of limitations would not apply to “the progression of nonmalignant
diseases once the initial claim has been filed.” Id. at § 113(b)(2).
13 Id. at § 113(b)(3).

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The Administrator would establish a claimant assistance program to, among other
things, provide to claimants information and legal assistance.14 Attorneys representing
claimants under the draft bill could charge their clients no more than five percent of the
final award for filing the initial claim, or twenty percent for claims under “administrative
appellate review.”15
Awards. In order to receive compensation, a claimant would have to show, by a
preponderance of the evidence, that the claimant suffers from an eligible disease or
condition.16 In addition, claimants would be required to demonstrate a minimum
exposure to asbestos.17 Claimants would be compensated according to the tiered
compensation scheme outlined in the bill. This scheme sets awards for nine levels of
asbestos-related injury, with awards ranging from medical monitoring for claimants in
Level I (asbestosis-related non-malignant disease and five years occupational exposure
to asbestos) to $1.1 million for claimants in Level IX (mesothelioma).18 The bill would
also allow claimants suffering from asbestos-related injuries that cannot fit into one of the
nine levels to seek compensation for their “exceptional medical claims.”19
One of the more controversial aspects of the effort to reach a legislative solution to
the asbestos problem has been the question of smoking. Levels VII and VIII of the tiered
compensation scheme both deal with lung cancer, and some have expressed concern that
smoking may have contributed to many of these claimants’ conditions.20 As a result, the
awards in Levels VII and VIII are pegged to each claimant’s smoking history, in that non-
smokers would get higher awards than ex-smokers, who would get higher awards than
smokers.21

14 Id. at § 104. In addition, the Administrator would be required to establish a program for the
medical screening and education of those with high risks of asbestos-related injuries. Id. at § 225.
15 Id. at § 104(e)(1).
16 Id. at § 111. A claimant suffers from an eligible disease and condition where the claimant can
satisfy the medical criteria in the bill. Id. at § 3(7).
17 Id. at § 121(c).
18 Id. at § 131(b)(1). Beginning in January, 2007, the award amounts would be adjusted annually
to account for cost of living increases. Id. at § 131(b)(6).
19 Id. at § 121(f).
20 Under S. 852, all claims of lung cancer would have to be supported by additional physical
indicia of asbestos exposure (e.g., pleural plaques, asbestosis). Previous versions of this
legislation, however, had one level of compensation reserved for claims of lung cancer, without
any other physical indication that asbestos caused the lung cancer. Some have strongly objected
to the inclusion of these claims, in that isolating the cause of the lung cancer (i.e., smoking vs.
asbestos) can be very difficult ( See, e.g., T.R. Goldman, Firefight: The Art of the Asbestos Deal,
Legal Times, April 19, 2005). Consequently, no such level is included in S. 852.
21 According to the bill, a “non-smoker” is someone who has never smoked or has smoked fewer
than 100 cigarettes (or the equivalent of other tobacco products) in his or her lifetime, while an
“ex-smoker” is someone who has not smoked in the twelve years preceding diagnosis of lung
cancer. S. 852, § 131(b)(2).

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The Administrator would be required to provide to the claimant a proposed decision
within ninety days of the filing of the claim. If unsatisfied with the proposed decision, the
claimant would be entitled to seek review by a “representative of the Administrator,” so
long as the request is made within ninety days of the issuance of the proposed decision.22
After a review, or if no review is requested within ninety days, the Administrator would
issue a final decision.23 A claimant would then have ninety days to seek judicial review
of the final decision in the U.S. Court of Appeals for the circuit in which the claimant
resides.24
Under the bill, a claimant would receive his or her award in structured payments over
a three-to-four year period.25 The amount of the award would have to be reduced by the
amount of collateral source compensation.26 “Collateral source compensation,” however
would include only compensation paid by defendants, insurers of defendants, and
compensation trusts pursuant to judgments and settlements;27 it apparently would not
include payments from disability insurance, health insurance, medicare/medicaid, etc.28
Another sticking point in the debate over previous asbestos bills has been the effect
any legislative resolution would have on so-called “mixed dust” (i.e., silica and asbestos)
claims. Some have expressed concern that, if these claims are not included in the
legislation (and therefore removed from the courts), asbestos claimants could avoid the
administrative process by re-filing their claims in court as mixed dust claims. S. 852
would remove silica claims from the courts to the bill’s administrative process unless
those bringing such claims establish by a preponderance of the evidence that exposure to
silica caused their impairments, and that asbestos did not significantly contribute to their
impairments. In addition, silica claimants would be required to submit specific
supporting evidence (e.g., x-rays, history of asbestos exposure, etc.).29
The Asbestos Injury Claims Resolution Fund
The Fund would be paid for by contributions from “defendant participants” and
“insurer participants.” Though these terms are not defined, they appear to refer to
companies that have been sued for asbestos-related injuries and the insurers of those
companies, respectively. Defendant participants would be required to contribute, in the
aggregate, no more than $90 billion,30 while insurer participants would be required to
22 Id. at § 114(d)(1)(A).
23 Id. at § 114(e).
24 Id. at § 302.
25 Id. at § 133.
26 Id. at § 134.
27 Id. at § (3)(6).
28 The bill also explicitly excludes from the definition of “collateral source compensation” those
benefits received pursuant to workers’ and veterans’ compensation programs. Id. at § 134(b).
29 Id. at § 403(b).
30 Id. at § 202(a)(2).

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contribute no more than $46.025 billion.31 The Administrator would be authorized to
borrow to enhance the Fund’s liquidity32 and to sue any participant for failure to pay any
obligation imposed under the bill.33
Under the bill, if the Administrator determines that the Fund does not have sufficient
resources, then the Fund would sunset34 and claimants with unresolved claims could
return to federal or state court.35 From the date of termination onward, any asbestos or
class action trust established to distribute funds pursuant to a final judgment or settlement
would be required to adopt the bill’s medical criteria.36
Defendant Participants. Defendant participants would be grouped into tiers and
subtiers according to prior asbestos expenditures, except that one tier would be reserved
for organizations that have filed for bankruptcy in the year preceding enactment of the
bill. These tiers and subtiers would determine the exact amount of each defendant
participant’s required annual contribution to the Fund, ranging from $27.5 million down
to $100,000.37 Defendant participants would be able to petition the Administrator for
adjustments of their obligations in cases of severe financial hardship or “demonstrated
inequity.”38 In addition, persons or businesses classified as “small business concerns”
under section 3 of the Small Business Act39 would be exempt from these payment
obligations.40
The aggregate annual payments to the Fund by defendant participants would have
to be no less than $3 billion for the first thirty years of the Fund.41 The bill would provide
for ten-percent reductions in this minimum amount following the tenth, fifteenth,
twentieth, and twenty-fifth years after enactment, unless the Administrator finds that a
reduction could endanger the Fund’s ability to satisfy future obligations.42 Further,
beginning ten years after enactment, the Administrator would be empowered to suspend
31 Id. at § 212(a)(2)(A).
32 Id. at § 221(b).
33 Id. at § 223.
34 Id. at § 405(f).
35 Id. at § 405(g).
36 Id. at § 405(f)(7).
37 Id. at §§ 202, 203.
38 Id. at § 204(d)(1).
39 15 U.S.C. 632.
40 S. 852, § 204(b).
41 Id. at § 204(h)(1). The bill would also establish a guaranteed payment account that could be
used for years in which the aggregate payments of defendant participants fall below the minimum
$3 billion. Id. at § 204(k).
42 Id. at § 205(a).

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all or part of the defendant participants’ payments in a given year in which the Fund
contains sufficient assets to satisfy that year’s obligations.43
Insurer Participants. S. 852 would establish the Asbestos Insurers Commission
— composed of five members appointed by the President with the advice and consent of
the Senate — charged with instituting a methodology for determining the amount to be
contributed to the Fund by each insurer participant.44 Insurer participants would be able
to appeal such determinations to the D.C. Circuit.45 The aggregate annual payments to the
Fund by insurer participants would be $2.7 billion for the first two years, $5.075 billion
for years three through five, $1.147 billion for years six through twenty-seven, and $166
million for year twenty-eight.46
Prohibition on Asbestos-Containing Products
The bill would require the Administrator to promulgate regulations prohibiting the
manufacture, processing, or distribution in commerce of products containing asbestos.47
The Administrator would be empowered to grant exemptions where doing so would not
unreasonably risk injury to the public health or the environment and those seeking the
exemptions have made good faith, unsuccessful efforts to find minerals to substitute for
asbestos in their products.48 The bill would specifically exempt from the prohibition two
asbestos-containing products: (1) asbestos diaphragms used in the manufacture of chlor-
alkali and its derivatives; and (2) roofing cements, coatings, and mastics containing
asbestos that is totally encapsulated by asphalt. The Administrator of the Environmental
Protection Agency (EPA), however, would be required to review and possibly revoke this
second exemption within eighteen months of enactment of the bill.49
The Administrator of the EPA would be required to grant exemptions to the Defense
Department and the National Aeronautics and Space Administration so long as the heads
of those agencies certify to Congress that, with respect to a particular asbestos containing
product, use of asbestos is vital to the agency’s “critical functions,” no reasonable
alternatives exist, and use of the product will not pose an unreasonable risk to health or
the environment.50
43 Id. at § 205(b).
44 Id. at §§ 211, 212. Insurer participants would be able to petition the Commission for
adjustments due to financial hardships. Id. at § 212(a)(3)(E).
45 Id. at § 303.
46 Id. at § 212(a)(2)(C).
47 Id. at § 501.
48 Id.
49 Id.
50 Id.

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