Wisconsin has taken steps to force asbestos litigation plaintiffs to be more transparent and disclose claims to asbestos bankruptcy trusts. The mandated disclosures address the concerns raised in recent years by asbestos litigation defendants about the lack of transparency and possible gaming of tort and bankruptcy systems.
Litigation involving claims of injury due to exposure to asbestos has been ongoing in earnest since the late 1970s in the United States. Since that time, nearly 100 companies have filed for bankruptcy protection due in whole, or in part, to asbestos litigation-related liabilities. U.S. Gov’t Accountability Office, GAO-11-819, Asbestos Injury Compensation: The Role and Administration of Asbestos Trusts (2011). More than sixty such companies have created trusts pursuant to Section 524(g) of the Bankruptcy Code.
These asbestos bankruptcy trusts collectively hold over $18 billion in fund assets and have already distributed over $15 billion since they were first created.
These trusts distribute funds through a claims process that operates outside of the tort system. Hundreds of other companies, who have not sought bankruptcy protection, continue to face thousands of new lawsuits each year. As a result, individuals seeking monetary compensation for alleged asbestos-related injuries can make claims under two independent systems: the bankruptcy trusts system and the tort system.
In March, Wisconsin’s governor signed a bill designed to increase disclosure and transparency between these systems. The Wisconsin law attempts to prevent claimants from gaming the systems, or making disparate or conflicting statements in support of their claims for compensation to the trusts. The law, called the Asbestos Trust Fund Transparency Legislation requires plaintiffs in Wisconsin-filed lawsuits to disclose all bankruptcy trust claims they have filed or will file in the future, along with the supporting documents, to the defendants they have sued in the tort system. Ohio and Oklahoma have enacted similar legislation. Links to the statutes can be found here: Wisconsin, Ohio, Oklahoma.