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August 18, 2018

Judge To Give Aetna Access To Asbestos Claim Files

Aetna Aetna won a judicial ruling giving it access to filings made by asbestos claimants in the bankruptcy of gasket maker Garlock Sealing Technologies, opening a new front in the battle between plaintiff lawyers and companies that accuse them of double-dipping and fraud.

In a hearing yesterday, U.S. Bankruptcy Judge George R. Hodges granted the motion of Aetna to examine so-called Rule 2019 statements lawyers have filed in the Garlock bankruptcy. The statements, named after a provision of the federal bankruptcy code, require lawyers to identify clients with claims against the bankrupt company as well as the nature of those claims. Aetna is one of several insurers seeking asbestos claims information to try and recover medical expenses from customers who have been paid for the same costs through litigation.

Hodges denied similar requests from Ford, Volkswagen, and other companies that are seeking access to other sealed documents from a trial over Garlock’s asbestos liabilities. The judge deferred that request, saying it is already being considered by a federal court weighing an appeal by Legal Newsline, a publication funded by the U.S. Chamber Institute for Legal Reform.

“Get all of these things done at once,” Hodges said, according to a report in Legal NewsLine. “I don’t know about y’all, but I would find that helpful.”

The companies want access to Rule 2019 filings and evidence from the estimation proceedings to bolster their own defenses against asbestos claims. Garlock has sued several law firms for fraud, accusing them of deliberately withholding evidence that their clients had been exposed to other sources of asbestos in order to win larger settlements from Garlock.

Hodges appeared to agree in a Jan. 10 ruling slashing more than $1 billion from the amount plaintiff lawyers were seeking after a close examination of 15 of the thousands of claims against Garlock. In every case lawyers had withheld evidence of other exposures, making it look as if their clients had only worked with Garlock gaskets.

“The fact that each and every one of them contains such demonstrable misrepresentation is surprising and persuasive,” the judge said, slashing Garlock’s estimated liability to $125 million.

Plaintiff lawyers objected to Aetna’s request, saying they and their clients “have legitimate interests in the continued confidentiality of those materials.” But Hodges overruled them, said a Garlock attorney who attended the hearing in Charlotte, N.C. A federal court in Delaware considering this issue last year ruled the filings are public judicial records and that using such information in litigation is a “quintessentially proper purpose.”

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Know your fibers. (Photo credit: Asbestorama)

Plaintiff lawyers, operating as the Official Committee of Asbestos Personal Injury Claimants, also said Aetna had no use for the information in 2019 filings because it already knew the names and addresses of its customers and could obtain details about their asbestos suits from public court records. If their purpose is to file subrogation claims to recover money spent on treating asbestos-related diseases, the lawyers said, several states including New York and Arizona don’t allow insurers to sue for reimbursement of the money their customers win in litigation.

“Their stated purpose does not square, logically or practically, with the requested relief, which may suggest that their real motivation is unstated.” the plaintiff lawyers said.

The plaintiff lawyers aren’t being completely forthcoming with their motives, either. A comprehensive database of filings by asbestos claimants might show, as Judge Hodges found in his examination, that lawyers are tailoring the stories their clients tell in order to maximize recoveries at the expense of the facts.

Lawyers frequently sue solvent companies like Ford and Volkswagen first with claims that would stand little chance of surviving if jurors knew that the plaintiff was exposed to far more dangerous concentrations of asbestos made by bankrupt companies. They then file claims with bankruptcy trusts that are set up and overseen by plaintiff lawyers and generally refuse to share claim details with each other, let alone the public. This one-two strategy has helped drive otherwise solvent companies like Garlock into bankruptcy as plaintiff lawyers ratchet up their settlement demands, confident that conflicting evidence of exposure won’t appear in court.

Another reason lawyers might not want the 2019 filings made public is they could show how they are splitting fees among referral firms, which run ads on TV and the Internet to bring in potential clients, and firms that specialize in litigating and settling cases. Ethics rules prohibit lawyers for collecting a fee simply for referring a client; they are supposed to perform meaningful work on the case. The 2019 forms might show how many law firms are sharing in the fees from a single, lucrative mesothelioma client and raise questions about whether they are complying with ethics rules.

Hodges will determine next week how to provide Rule 2019 filings to Aetna. Among other concerns, some of the forms might contain Social Security numbers and other data that could facilitate identity theft. Plaintiff lawyers say the forms also contain confidential medical data, but no more than each plaintiff has already included in public lawsuits.

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Judge To Give Aetna Access To Asbestos Claim Files

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