January 18, 2019

Unsealed U.S. lawsuits tell of alleged fraud by asbestos law firms

By Tom Hals

Jan 20 (Reuters) – U.S. personal injury lawyers allegedly concealed evidence and induced clients to commit perjury to drive up asbestos-related settlements and garner bigger fees, according to lawsuits unsealed on Tuesday in the bankruptcy of a gasket maker.

The unsealed racketeering complaints alleged that four law firms sued Garlock Sealing Technologies, which made asbestos-lined gaskets, while hiding evidence that their clients were exposed to asbestos products made by other companies.

The evidence was allegedly hidden because the other companies were bankrupt, making Garlock a much more attractive target for an asbestos lawsuit, according to the complaints.

Garlock, a unit of EnPro Industries, filed for bankruptcy in 2010 in Charlotte, North Carolina, in the face of the mounting cost of asbestos lawsuits.

The unsealed complaints cite many examples of alleged fraud, including the Shein Law Center’s handling of a lawsuit by Vincent Golini, who was diagnosed with deadly mesothelioma in 2009.

Golini allegedly told Philadelphia-based Shein he was exposed to 14 asbestos products made by bankrupt companies including Owens Corning and Armstrong World Industries. But when Golini sued Garlock he denied exposure to any products made by a bankrupt manufacturer, according to the complaint.

After Garlock settled with Golini, Shein had Golini file claims with the asbestos trusts that were set up by Owens Corning and other bankrupt makers of asbestos products. Those trusts often pay only a small fraction of a claim.

Shein’s lawyer, Daniel Brier of Myers Brier & Kelly, said the racketeering lawsuit is completely without merit and Shein represented its clients “ethically and properly”.

Garlock’s Chapter 11 case has drawn national attention due to the company’s allegations that personal injury lawyers fraudulently inflated judgments and settlements.

The racketeering lawsuits were originally filed in early 2014. They were ordered unsealed last summer but only became available to the public on Tuesday.

The allegations in the unsealed documents appeared to have already been discussed publicly in an opinion in 2014 by Judge George Hodges. That opinion set Garlock’s liability for asbestos at $125 million and said the company’s past settlements were tainted by fraud.

The others were Belluck & Fox of New York; and Waters Kraus & Paul and Simon Greenstone Panatier Bartlett of Dallas. Mark Iola, a partner at Iola Galerston, also in Dallas, was also sued.

Attorneys for the law firms said Garlock was trying to relitigate settled cases and blame others for the consequences of its own conduct.

(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by Jessica Dye in New York)

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Unsealed U.S. lawsuits tell of alleged fraud by asbestos law firms

Embattled Gasket Maker Sues Asbestos Lawyers For Fraud

Asbestos lungs

Whose asbestos did this? (Photo credit: Wikipedia)

Gasket manufacturer Garlock Technologies has sued four prominent asbestos law firms for fraud as it awaits a bankruptcy judge’s decision on how much money the company must set aside to settle thousands of claims against it.

The company says the law firms sued it on behalf of clients who had already made conflicting claims about their asbestos exposure against other companies.

The complaints “allege that these firms concealed evidence about their clients’ exposure to asbestos products and concealed it in litigation against” Garlock, said Don Washington, a spokesman for Garlock parent EnPro Industries. “In essence they double-dipped.”

Named in the lawsuits are: Belluck & Fox and Shein Law Center in Philadelphia; and Simon Greenstone and Waters & Krause in Dallas. Waters & Krause, in a statement, said the lawsuit against it “represents just the latest in a series of actions by Garlock to avoid being held accountable for helping to cause the deaths of thousands of Navy veterans and others from the asbestos found in the company’s products.”

Garlock entered bankruptcy in 2010 after its cost of settling asbestos suits skyrocketed from $5,000 per claim past $70,000, in a familiar cycle as other defendants went bankrupt and lawyers escalated their demands against the few remaining solvent manufacturers. Garlock says it owes plaintiffs nothing because its products contained small amounts of a less dangerous form of asbestos; plaintiff lawyers have suggested the firm owes $1.4 billion. EnPro has said it believes the bankruptcy shields the parent company from asbestos against Garlock division.

Garlock has fought to make evidence of fraud public, but U.S. Bankruptcy Judge George Hodges in Charlotte, N.C. has refused. Hodges even ejected reporters from his courtroom during proceedings this summer in which Garlock’s lawyers presented evidence that plaintiffs making claims against it had denied its products caused their illness when suing other companies. Hodges agreed with plaintiff lawyers that those claims were confidential medical records. To comply with the judge’s rulings, Garlock filed the lawsuits late yesterday under seal.

EnPro said yesterday it expects Judge Hodges to release his opinion estimating its liability after 4 p.m. today.

By suing the asbestos lawyers who are suing it, Garlock is following in the steps of CSX, which in 2012 won a $429,000 fraud verdict against Pittsburgh lawyers Robert Peirce and Louis Raimond after uncovering evidence the lawyers had used phony diagnoses from discredited Dr. Ray Harron to fabricate asbestos cases against the railroad. Evidence in that case included internal memos suggesting the lawyers knew Harron was “very, very liberal” with his diagnoses, but, Peirce said in one letter, “even a disputed diagnosis case has some value.”

The lawyers also hired an unlicensed tech to run a mobile X-ray screening program, and let a doctor use an automatic signature stamp to sign medical reports.

It isn’t clear what’s in the complaints Garlock filed under seal, but attorney Samuel Tarry with McGuire Woods in Richmond, who represented CSX, told me fake diagnoses lie at the core of most such cases.

“If we’re going to see more of this litigation it’s because there are unfortunately still doctors who are willing to say whatever lawyers ask them to say,” said Tarry, who declined to comment directly on the CSX case because it is on appeal.

Garlock previously accused another law firm of fraud for making conflicting stories about how its client was exposed to asbestos. Plaintiff lawyers accused the company of trying to game its bankruptcy by disrupting long-settled methods of assessing liability based upon previous court verdicts.

Pursuing law firms for fraud is difficult because plaintiff lawyers try to shield all of their documents under the attorney-client privilege.

“It’s a challenge to prove intent unless you have smoking-gun documents,” Tarry said.

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Embattled Gasket Maker Sues Asbestos Lawyers For Fraud

Chain-Smoking Congresswoman's Asbestos Suit Shows New Trend

Beschreibung: Konventionelles Rntgenbild des ...

Uh-oh. (Photo credit: Wikipedia)

If anybody should understand what caused her lung cancer, it’s New York Congresswoman Carolyn McCarthy. The 69-year-old Democrat spent 30 years as a nurse before being elected to the U.S. Congress, and reportedly was a heavy smoker for more than 40 years.

Yet McCarthy is seeking money from more than 70 asbestos companies, saying she was actually sickened by asbestos fibers carried home on the clothes of father and brothers, who worked on navy ships and in utilities.

McCarthy’s suit has drawn well-deserved criticism, both for the implausibility of her claims and because her lawyers are the politically connected firm of Weitz & Luxenberg, which employs the speaker of the New York General Assembly, Sheldon Silver. Odds are most of the companies she’s suing will settle for that reason alone.

But McCarthy also illustrates a potentially disturbing new trend for both corporate defendants and the true victims of asbestos-related disease. Having exhausted the pool of mesothelioma claimants, plaintiff lawyers are turning to lung cancer again, reviving a strategy that fell into disuse after courts started removing cases not directly claiming asbestos disease from the docket. They’re filing thousands of cases on behalf of smokers who claim that stray asbestos fibers, not cigarettes, made them sick.

If the strategy works, plaintiff lawyers will succeed in draining bankruptcy trusts set up for the benefit of asbestos victims, leaving less money for people with mesothelioma and asbestosis, which are both directly linked to asbestos exposure. It may even set up a conflict between lawyers who pay millions of dollars for TV and Internet advertising to get the 2,500 or so patients diagnosed with mesothelioma each year, and higher-volume law firms representing lung cancer plaintiffs.

Lung-cancer claims in Madison County, Ill. and Delaware, two of the most active venues for asbestos litigation, have more than doubled since 2010, to more than 600 a year in each court system, according to a new article in Mealey’s Asbestos Bankruptcy Report. Southern California courts are also seeing an upturn. And an analysis of claims in the Philadelphia Court of Common Pleas found that 75% of the claimants suing over asbestos-related lung cancer revealed a smoking history, with three-quarters of them smoking at least a pack a day for an average of 39 years.

The report, by Peter Kelso and Marc Scarcella of Bates White Economic Consulting and Joseph Cagnoli, a partner with the defense firm of Segal McCambridge Singer & Mahoney, says lung-cancer claims have fluctuated up and down over the years, not because of changes in the rate of cancer — new diagnoses run around 200,000 a year in the U.S. and are declining steadily — but due to “changing economic incentives for plaintiff law firms.”

Lawyers made billions of dollars in the 1980s and 1990s by setting up mobile X-ray screening sites at union halls and other locations with concentrations of industrial workers, l0oking for claimants with lung scarring or other signs of asbestos-related disease. Because lung cancer is clearly caused by smoking, workers with cancer and a history of smoking were considered to have lower-value cases than n0n-smoking workers with asbestosis.

Using a time-honored strategy, lawyers bundled those weak and strong cases together, leveraging larger overall settlements than if the cases were presented separately. The most valuable cases have always involved mesothelioma, a cancer of the chest lining that is closely linked to asbestos exposure (although it clearly has other causes; the death rate has been rising in recent years despite a steep decline in industrial asbestos use since the 1970s.). In one example cited by the authors, G-I Holdings G-I Holdings settled 160,000 cases in the 1990s in groups of 250 or more, paying out two-thirds of the money to non-mesothelioma claimants.

So-called n0n-malignant cases plunged a decade ago after courts around the country stopped allowing them on their active dockets, thus removing them from the pool of cases lawyers could bundle for settlement. Non-malignant claims fell from 90% of claims and 50% of payments to 2% of settled cases. Mesothelioma grabbed the vast majority of the money from court settlements.

Since lawyers spent an estimated $500-$1,000 per plaintiff for mass screenings, the authors say, the decline of non-malignant claims made it less economically viable to perform mass screenings. One side effect was fewer lung-cancer claims.

But at the same time, many asbestos manufacturers declared bankruptcy and set up trusts, typically under the control of plaintiff lawyers, to pay out claims. Those trusts, now with more than $30 billion in assets, often provide “expedited review” that allows plaintiffs to collect small awards — $4,000 to as little as $250 — with minimal paperwork and no requirement to disclose smoking history.

The authors say the trusts have paid out $1.2 billion in lung-cancer claims since 2009, and estimate that each claimant might hit 20-30 trusts for payment, meaning as much as $106,000 for a case of lung cancer likely caused by smoking. That provides enough fee income for lawyers to start mass screenings again, the authors say. Out of 1,000 workers screened, lawyers could be expected to turn up 40 cancer claims worth about $3 million in fees after expenses, compared with perhaps 10 cases of asbestosis.

Without judicial mechanisms to more carefully vet these cases, they write, “there is nothing preventing plaintiff law firms from bringing mass quantities of meritless lung cancer cases against asbestos defendants.”

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Chain-Smoking Congresswoman's Asbestos Suit Shows New Trend

Asbestos found at site of June 5 collapse

But Geppert Bros. Inc., hired by STB after the collapse to clear the debris, brought in a certified asbestos removal firm last week to do limited work on the site.

City Councilman James F. Kenney has expressed concern about asbestos since the building went down, killing six people in an adjacent Salvation Army thrift shop.

Kenney said he had been told that asbestos was removed from the site last week. He said he wants detailed explanations from everyone involved. A source familiar with the cleanup, who spoke on condition of anonymity because of not being authorized to release information, confirmed Kenney’s assertion.

Of five companies asked for bids on the demolition work, Kenney said, at least one had mentioned asbestos removal in its bid proposal and sought $40,000 to deal with asbestos alone. STB went with the lowest of the bidders, Griffin Campbell Construction Co., which was willing to do the job for less than half the amounts sought by the other bidders, Kenney said.

“It’s starting to look like the asbestos report to the Health Department isn’t worth the paper it was written on,” Kenney said. “The firefighters, police, and others who dove into that debris to try to rescue people, those people need to have that information.”

Most of those involved – Hudson, Marinakos, and attorneys for the building owner and for Griffin Campbell – did not return telephone calls seeking comment. Hudson’s former employer, an environmental firm based in Delaware, said he had performed the inspections without the firm’s knowledge or consent.

A spokeswoman for Geppert Bros., Mary Pat Geppert, said, “There’s no story here,” but declined to provide any information, referring a reporter to the city’s Division of Air Management Services, an arm of the Health Department that handles asbestos issues.

Calls to the Health Department were referred to the mayor’s press office, which has so far failed to answer any questions about asbestos at the site – even to release a copy of the asbestos inspection report that Marinakos filed with L&I in January. (NBC10 obtained a copy of the asbestos report two weeks ago from undisclosed sources and has posted it on its website.)

Asbestos, long used as an insulation and fire-retardant material, is known to cause certain kinds of cancer. Because of that, its handling and removal has been regulated in the United States since the 1970s.

The extent of the contamination at 22d and Market is not known, because most of the debris has been carted off. Airborne particles – the most dangerous because they can be inhaled – may have blown away.

Edward M. Nass, a Philadelphia lawyer who specializes in asbestos-related personal-injury claims, said the likely hazard from the collapse was not great. Most people who develop asbestos-caused cancers were exposed to the material for years, in such work as shipbuilding, pipe fitting, or insulation installation, he said.

There are rare cases, he said, of people developing mesothelioma, a cancer caused only by asbestos, after only a day or two of exposure. He put the risk of anyone with direct exposure, either first responders or victims who were rescued, at “one in a million or less.”

It normally takes at least 10 years after exposure for victims to develop asbestos-related diseases, he said.

Another personal injury lawyer, Benjamin Shein, concurred. “I would not have cause for concern,” he said.

The Inquirer has filed a request under the state Right-to-Know Law for any reports dealing with asbestos found at the demolition site, before or after the building collapse, but the administration has not yet responded – a continuing theme since the June 5 accident.

For the last four weeks, the administration has said that it could not release documents related to the failed demolition because of the district attorney’s grand jury investigation.

But the District Attorney’s Office issued a statement this week saying that the grand jury probe did not supersede the state’s public records law and that the office had not instructed the city to withhold public records.

“The grand jury proceedings will of course be conducted in secrecy,” said the statement, released by Tasha Jamerson, spokeswoman for District Attorney Seth Williams. “But this incident has obviously provoked extensive public discussion, and there is no reason that public officials cannot discuss issues of public policy arising from publicly available facts and materials. Materials that were public information before the collapse should still be considered public information now.”

Other material withheld by the Nutter administration since the collapse includes a current list of licensed demolition sites; the successful application for city demolition work filed by Sean Benschop, the equipment operator facing involuntary manslaughter charges in the mishap; two iPhone videos recorded by Ron Wagenhoffer, an L&I inspector who apparently took his own life a week after the collapse; and the settlement memos explaining $878,000 in city tax dollars spent on demolition-related claims over the past five years.

Contact Bob Warner at 215-854-5885 or warnerb@phillynews.com.

Inquirer staff writer Paul Nussbaum contributed to this article.

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Asbestos found at site of June 5 collapse