Fixing a bankrupt system, one law at a time
The Texas Legislature is set to consider a bill to close a gaping loophole in asbestos litigation: forcing Plaintiffs to apply to asbestos bankruptcy settlement trusts BEFORE initiating litigation. There are dozens of bankruptcy trusts set up to pay people who have an asbestos-related disease. Many of these involve the largest asbestos companies in the country, such as Johns Manville, Celotex, H.K. Porter, etc. They are funded with billions of dollars.
Texas also has a statute to allow defendants to prove liability by third parties, including bankrupt companies. The plaintiffs have to submit applications to the bankruptcy trusts which allege exposure to the products of the bankrupt companies. The trust applications and dollar amounts paid are then admissible in the lawsuit. This works to make sure there isn’t a double recovery for one injury.
All that goes wrong, however, when the plaintiff waits until after their lawsuit is concluded before applying to the bankruptcy trusts. This becomes a big issue in Texas where we have a fast-track docket that allows dying individuals to have an expedited trial setting. There is a very real potential for a plaintiff to swear they have no idea who manufactured the insulation or gaskets or joint compound they were exposed to, or to not remember the brands of bankrupt entities. Then, after the lawsuit is over to suddenly remember and file the trust applications.
This loophole is finally being addressed.
