Institutional Response to Tort System Breakdown: Asbestos Enters a New Phase

21 July 2006
By Dr. Faten Sabry and Mary Elizabeth Stern with former NERA Senior Vice President Dr. Fred Dunbar

The failures in free enterprise and government safety regulation that created massive asbestos exposure were followed by litigation flooding a civil justice system that was ill-equipped to handle such a large influx of individual tort claims. By the mid-1990s, asbestos litigation was considered a crisis by the Supreme Court, as well as by many observers. Though Congress has made progress in recent years toward forming a national trust fund that would take asbestos out of the tort system, political conflicts have prevented the legislation from becoming final. Other institutions have had to make adjustments, including tort reform in a number of key states; Third Circuit decisions limiting the moral hazard aspects of asbestos defendant bankruptcy; changes in state court procedures limiting unimpaired claims; and the Silica Multi-District Litigation (MDL) decision, which attacked unfounded diagnoses of disease by the same doctors who are used by the asbestos plaintiffs' bar.

In this working paper, NERA Senior Vice President Dr. Faten Sabry, Vice President Mary Elizabeth Stern, and former NERA Senior Vice President Dr. Fred Dunbar discuss the current status of asbestos legislation. The authors analyze how asbestos litigation will be affected by the MDL decision, recent developments in bankruptcies, key tort reforms in states with the largest asbestos filings, and the impact of state tort reforms on filings and forecasting methodology.