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June 24, 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.

See the article here – 

Insurer Claims Asbestos Fraud Tainted Pittsburgh Corning Bankruptcy

Judge To Open Files Supporting Garlock Asbestos Fraud Claims Next Week

A long-secret trove of court filings that bankrupt gasket maker Garlock Sealing Technologies says illustrate a pattern of fraud in asbestos litigation is expected to be opened to public view next next week, possibly as soon as Monday.

The files, Garlock says, will show how plaintiff lawyers withheld evidence their clients were exposed to multiple asbestos products in order to extract higher settlements and court verdicts from Garlock. In one case that generated a $37 million verdict in California, Garlock says, a lawyer with prominent Dallas asbestos firm Waters Waters & Kraus flatly denied exposure to dangerous insulation that his client had already admitted, under penalty of perjury, in another proceeding.

The records in racketeering lawsuits Garlock filed against several asbestos law firms are to be unsealed after a fierce battle by plaintiff lawyers to keep them secret. In January, U.S. Bankruptcy Judge George Hodges in Charlotte, North Carolina slashed Garlock’s estimated liability for asbestos exposure from $1.4 billion to $125 million after determining that the higher estimates were based upon court cases “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” In a pattern long known to defense attorneys, plaintiff lawyers coach their clients to “remember” working with only products made by the company they are suing, then file claims with bankruptcy trusts alleging other exposures.

Plaintiff lawyers argued unsealing the records would violate the privacy rights of their clients, even though they largely consist of public court filings. Hodges initially went along with them, and even sealed part of Garlock’s bankruptcy proceedings from the public. But a federal judge sided with Legal Newsline on its First Amendment challenge and ordered the files opened in July.

Hodges agreed to open the entire record in October, in a move that could help other manufacturers and insurance companies including Ford, VW and Aetna Aetna as they try to recover money they’ve paid out to plaintiffs who made duplicative and often conflicting claims about their asbestos exposure. As early as December, the public will have access to records covering more than 100,000 people who filed claims against Garlock as well as hundreds of thousands more who filed claims against nearly every trust set up to process claims against companies forced into bankruptcy over asbestos.

Those files are being redacted now to remove confidential information, although they will retain the last four digits of the claimants’ Social Security numbers so claims can be quickly matched up to uncover evidence of double-dipping and conflicting claims.

In a filing this week contesting plaintiff lawyers’ attempt to reopen the bankruptcy case, Garlock offered a preview of what the public will be able to see as soon as Monday. According to that filing, lawyers at Waters & Kraus won a $36.7 million jury verdict in 2004 after Navy veteran Robert Treggett testified that he was exposed to the asbestos in Garlock gaskets, but not the asbestos in Unibestos pipe insulation, which experts say is a hundreds of times more potent cause of mesothelioma.

His attorney, Ron C. Eddins, also told the jury it was “not true” that Unibestos was on the ship he worked on, even though Treggett had filed a bankruptcy claim under penalty of perjury saying he’d been exposed to Unibestos. That verdict induced Garlock to enter an agreement to settle claims with Waters & Kraus under an annual “cap” of payouts and was among the verdicts plaintiff lawyers cited in their claim that Garlock owed more than $1 billion in bankruptcy. Garlock says it could have won the suit, or been assessed with much less liability, if it had known about the Unibestos evidence.

Source:

Judge To Open Files Supporting Garlock Asbestos Fraud Claims Next Week

The Judge Won't Call Asbestos-Lawyer Shenanigans Fraud, But It Sure Smells Like It

Asbestos (chrysotile)

License to mislead? (Photo credit: Wikipedia)

License to mislead? (Photo credit: Wikipedia)

There’s an old journalistic turn of phrase that keeps us on the right side of the libel laws, while getting the point across: Sometimes it’s a crime what’s legal.

That is an apt description for the shenanigans plaintiff lawyers have engaged in for years as they sucked billions of dollars out of otherwise solvent companies in search of money they say their clients are owed for asbestos-related diseases.

Hold your comments about how asbestos companies engaged in subterfuge. That is true, but it doesn’t relieve lawyers of the responsibility to act like professionals.

There are a few thousand mesothelioma deaths a year in the U.S. that can definitely be attributed to asbestos, and lawyers fight like sharks over those golden tickets, each of which is worth a couple hundred thousand dollars in fees. One measure of this is the word “mesothelioma” is one of the most expensive keywords on Google Google AdWords.

A bankruptcy judge’s 65-page order released late yesterday in the case of gasket manufacturer Garlock Sealing Technologies illustrates, in unambiguous detail, the depths lawyers are willing to plumb to go after those golden tickets. They routinely engage in the type of behavior that would subject them to the fiercest sort of liability were they practicing any other profession. It may be legal — indeed, U.S. Bankruptcy Judge George Hodges was careful to note he made “no determination of the propriety” of the practices he described — but that doesn’t remove the stench.

The law is supposed to be a profession devoted to finding out the truth. In that regard, lawyers are a lot like journalists, only they are also officers of the court, given special powers to ferret out information their opponents would prefer to leave hidden from view. What the Garlock bankruptcy shows is lawyers in the asbestos trade abused these powers to hide information from defendants as well as judges and jurors, to the point that they made a mockery of their duties as officers of the court. If they were engineers, doctors, or corporate executives, these shenanigans would probably cross the line into civil fraud. They might even lose their licenses. But lawyers are particularly bad at disciplining themselves, so I’ll just throw these examples out there for readers to decide whether their activities are compatible with retaining the license to practice law.

As I noted yesterday, Judge Hodges granted Garlock permission to perform full discovery on 15 closed asbestos cases against the company. He conducted this inquiry in secrecy, even throwing reporters out of his courtroom in Charlotte, N.C. when lawyers were discussing what they found. That led reporters like me to think maybe the judge wanted to sweep the evidence under the rug. But his ruling yesterday slashing Garlock’s asbestos liability to a tenth of what plaintiff lawyers were seeking was devastating, and shows that companies can disrupt the asbestos racket if they are willing to fight.

Some background: The game in the Garlock case was to convince the judge that a company whose products almost certainly never injured anyone were responsible for more than $1 billion in asbestos-related liability. In a fierce statement yesterday, one Dallas law firm Garlock is suing for fraud accused the company of being complicit in “deaths of thousands of Navy veterans.” To gin up the numbers, lawyers pointed to a string of jury verdicts and settlements, at escalating amounts, as evidence that Garlock would have to pay at least a couple hundred thousand dollars for each and every one of the 2,500 or so mesothelioma deaths in America each year.

The problem is Garlock made a product where the asbestos was of a type believed to have 1/100 the risk of straight amphibole fibers that lodge in the lungs and pleural cavity and eventually cause cancer. Garlock’s fibers were encased in plastic. And to get to those supposedly deadly gaskets, workers would typically have to peel away flaky pipe insulation exposing themselves to far more dangerous amphibole dust.

To get around these inconvenient facts, asbestos lawyers coached their clients to “forget” having worked with any products but Garlock gaskets when they were suing Garlock, then change their stories when they were suing somebody else. They were helped in this subterfuge by the peculiar nature of bankruptcy trusts set up to pay claims of insolvent manufacturers. Plaintiff lawyers control these trusts, and they have successfully resisted most attempts to open up their records to uncover fraud and double-dipping. That makes it easy for the lawyers to sue the companies that want to fight in court first, with their well-coached clients displaying a highly selective memory of whose products they handled. Then they tap the trusts for money using completely different stories of how they got sick.

Here’s some examples of what Judge Hodges found in the 15 cases he allowed Garlock to examine. In every one of the 15, lawyers withheld evidence of conflicting stories. Bear in mind this company has settled more than 20,000 cases so far.

  • A former Navy machinist won a $9 million jury verdict in California, claiming that 100% of his work in a nuclear submarine was on gaskets. He denied any exposure to amphibole insulation, after Garlock tried to prove he’d been exposed to Pittsburgh Corning’s Corning’s Unibestos amphibole insulation. His lawyers even told the jury there was no Unibestos insulation on the ship. What they didn’t tell the jury was seven months earlier, they’d filed, under penalty of perjury, a claim with Pittsburgh Corning that their client had been exposed to Unibestos. Once the verdict was in, they filed 14 more claims including several against insulation manufacturers.
  • A former pipefitter in Philadelphia settled a case for $250,000 after claiming he had “no personal knowledge” of exposure to other companies’ products. Apparently his lawyers found that not incompatible with his claim six weeks earlier with the Owens Corning Owens Corning bankruptcy trust, in which he “frequently, regularly and proximately breathed asbestos dust emitted from Owens Corning Fiberglas’s Kaylo asbestos-containing pipe covering.” This lawyer filed 20 different trust claims on his client’s behalf, 14 of them supported by sworn statements that contradicted what he said in the Garlock case.
  • A Texas plaintiff won a $1.35 million jury verdict by claiming his only exposure was to Garlock gaskets. He specifically denied even knowing the name “Babcock & Wilcox,” a boiler company that was driven into bankruptcy by asbestos claims. His lawyers told the jury there was no evidence of exposure to Owens Corning insulation. One day before the client denied knowing anything about Babcock & Wilcox, he’d filed a claim against that company’s trust. After the verdict, he filed a claim against Owens Corning. Both were paid, based on his sworn statements he’d handled raw asbestos on a regular basis.

These tales are old news by now, of course. And judging from the traffic on yesterday’s story, most readers just look at the headlines and yawn. But the behavior detailed above is exactly, precisely the sort of subterfuge that subjects companies to fraud lawsuits on a daily basis. Imagine what would happen if a corporate executive told shareholders her company was poised to record the best profits in its history at the same time as she was preparing a bankruptcy filing. Or a food executive who testified in a lawsuit that his products contained no toxins, at the same time as he was reviewing a consultant’s report detailing the exact amount of those toxins in his company’s products.

Lawyers can’t hide behind the claim of zealous representation here. They know what they’re doing is wrong. The shame is their profession lets them get away with it. Self-regulation is always a problem, and it is long since past the time when lawyers need the presence of non-lawyers on their disciplinary committees, as is the practice in the U.K. The asbestos racket shows what happens when lawyers are in charge of disciplining themselves.

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The Judge Won't Call Asbestos-Lawyer Shenanigans Fraud, But It Sure Smells Like It