March 23, 2018

Insurer Claims Asbestos Fraud Tainted Pittsburgh Corning Bankruptcy

An insurer that was required to help fund the $3 billion bankruptcy of Pittsburgh Corning Corning has filed court papers seeking the case to be reopened, saying “pervasive fraudulent conduct” by asbestos plaintiff lawyers tainted the proceedings.

The filing by Everest Re and its Mt. McKinley Insurance unit follows the opening of millions of pages of documents in the Garlock Sealing Technologies bankruptcy, which revealed how lawyers representing asbestos plaintiffs deliberately delayed filing claims against bankrupt companies until they had completed cases against solvent ones, in order to avoid cluttering the record with potential evidence of exposure to other firms’ products.

Everest is among the insurers ordered to pay $1.7 billion into the bankruptcy trust formed to settle claims against Pittsburgh Corning, a joint venture of PPG Industries PPG Industries and Corning that made asbestos insulation widely used in ships, refineries and other industrial settings. A judge approved the bankruptcy plan in 2013 and last year a federal district court judge rejected Everest’s challenge to the plan.

Everest’s claims mirror the findings of the bankruptcy judge who slashed Garlock’s estimated asbestos liability from $1.3 billion to $125 million last year after a detailed examination of 15 claims by several different law firms revealed every single one had withheld information about alternative exposures in order to mount a stronger case against Garlock. In that case, Judge George R. Hodges said the evidence suggested a process “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.”

In its filing, Everest accuses several law firms by name of manipulating or hiding evidence including Waters Waters & Kraus of Dallas, New York’s Belluck & Fox Fox, and Motley Rice, the South Carolina firm most famous for helping to engineer the $200 billion master tobacco settlement with state attorneys general in 1998. Some of those same firms are being sued by Garlock for civil racketeering for allegedly withholding evidence to drive up settlement values.

The lawyers say the accusations against them are baseless. Under the terms of most bankruptcy trusts, which are set up and overseen by plaintiff lawyers, evidence of asbestos exposure can be as simple as a work history at a site where asbestos was known to be used. They say companies like Garlock made a business decision to settle lawsuits, frequently in bulk, in order to avoid the cost of litigation. It’s not the job of plaintiff lawyers to help them obtain evidence to reduce the value of those claims, those lawyers say; if manufacturers wanted evidence of other exposures, they could have questioned coworkers or used shipping records and other documents to show the presence of insulation, for example, which most independent medical experts say is far more dangerous than other forms of the mineral.

Garlock was able to question some of the lawyers under oath, however, and got revealing admissions about how lawyers delayed filing trust claims until after they’d concluded cases against solvent companies. In its filing, Everest cites a few examples, including that of Robert Treggett, a Waters & Kraus client who won a $24 million jury verdict against Garlock after a trial in which his attorneys repeatedly deflected questions about whether Treggett had been exposed to dangerous Unibestos insulation.

Garlock “didn’t bring proof that there was Unibestos on that ship. They couldn’t. It’s not true,” Treggett’s attorney said in closing arguments, and he was able to keep Unibestos off the jury form. Yet Treggett filed a claim in the PPG bankruptcy, attesting to the same exposure he’d denied at trial.

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Insurer Claims Asbestos Fraud Tainted Pittsburgh Corning Bankruptcy

Case Sheds Light On The Murky World Of Asbestos Litigation

hide captionCompanies have set aside more than $30 billion for victims of mesothelioma, a form of cancer linked to asbestos exposure, since 1980.


Companies have set aside more than $30 billion for victims of mesothelioma, a form of cancer linked to asbestos exposure, since 1980.

Companies have set aside more than $30 billion for victims of mesothelioma, a form of cancer linked to asbestos exposure, since 1980.


This is a case about a bankrupt company, legal shenanigans, and a rare type of cancer.

You may have seen TV commercials about mesothelioma, mainly caused by inhaling asbestos — minerals many companies once used in insulation and other products.

According to a 2011 report from the U.S. Government Accountability Office, companies have set aside more than $30 billion for mesothelioma victims since the 1980s. Asbestos lawsuits have played a role in about 100 companies’ going bankrupt.

One of those is a gasket manufacturer called Garlock. Its parent company, EnPro Industries, is based in Charlotte, N.C. As part of Garlock’s $1 billion bankruptcy case, a judge has slashed what the manufacturer owes asbestos victims after finding that the victim’s lawyers abused the system.

Some call Garlock’s bankruptcy case a watershed moment.

“It’s laid bare the massive fraud that is routinely practiced in mesothelioma litigation,” says Lester Brickman, a Cardozo law school professor who has researched asbestos litigation for more than 20 years and who testified on behalf of Garlock.

In Texas, one plaintiff said his only exposure to asbestos was from Garlock — after his lawyers filed a claim with another company. In California, a plaintiff’s lawyers misled a jury to make Garlock look worse. And in Philadelphia, lawyers made evidence of their client’s exposure to 20 different asbestos products disappear.

Those are just a few of the old cases that federal bankruptcy judge George Hodges gave Garlock’s lawyers permission to re-examine back in late 2012.

“As [Hodges] says in his order,” says Rick Magee, one of Garlock’s attorneys, “we were able to demonstrate in all — each and every one of those 15 cases — that there was extensive suppression of exposure evidence.”

In doing so, Garlock persuaded Hodges to drastically reduce the estimate for how much the company still owes victims.

No one argues that people suffering from mesothelioma shouldn’t get compensated. Instead, it’s a matter of the right companies paying the right amounts.

The victims’ lawyers argued that the company still owes about $1 billion, based on Garlock’s past settlements. But in his January decision, Hodges wrote that that estimate is “infected with the impropriety of some law firms and inflated by the cost of defense.”

The head of one of those firms, Peter Kraus, managing partner of Waters & Kraus in Dallas, disagrees.

“There are some of those cases that involve my firm,” he says. “So I know for a fact from those cases that the judge’s description of what happened is simply not correct.”

Kraus says Hodges took a radical approach with his decision. “It’s very, very different from the rulings and findings by judges with a good deal more experience in this area.”

But that argument doesn’t fly with folks at the Institute for Legal Reform at the U.S. Chamber of Commerce.

“When you start building the case, when you start seeing more and more of these instances, you got to really question whether this is an outlier or not,” says Harold Kim, the organization’s executive vice president.

Judges in Delaware, Ohio and Virginia have also noted dubious legal maneuvering in asbestos litigation, though not on the scale of the Garlock case. Kim says the case will be a wake-up call for other judges, which will lead to more accurate estimates of what companies really owe.

For Garlock, the judge estimates that’s $125 million. But the case isn’t finished, and victims’ lawyers are likely to challenge that amount.

In the meantime, Garlock is suing some of the people who are suing it. The company is going after six law firms for the types of practices it uncovered in its bankruptcy case.


Case Sheds Light On The Murky World Of Asbestos Litigation