The Missouri House has voted to limit the ability to file lawsuits against bankruptcy trusts in cases of asbestos-related illness.
Representative Bruce DeGroot (R-Chesterfield) said plaintiffs who sue solvent companies for an asbestos-related illness and are awarded money by a jury often then file claims against bankruptcy trusts for the same health issues – what he called “double dipping.” His legislation, House Bill 1645, would give plaintiffs 30 days from filing suit against a solvent company to disclose any potential claims against a bankruptcy trust.
DeGroot said the bill aims to protect bankruptcy trusts, which compensate those injured by defunct companies, and have finite resources.
“Once that money is depleted it’s gone, and if we are allowing the system as it currently stands to go on, what we’re doing is allowing those trusts to be depleted at a much quicker rate than what they should be,” said DeGroot. “Who this of course truly affects is that guy standing at the end of the line … by the way, we don’t even who those people are at this point, but by the time they get up and they’re ready to make their claim against the bankruptcy trust, that money won’t be in effect any longer.”
Jefferson City Republican Jay Barnes said current law already allows defendants in these cases to prevent “double dipping” by claimants. He argued that it could take claimants longer than 30 days to know whether they have a claim against a trust, and under DeGroot’s bill many sick with mesothelioma would die before they could get to a trial.
He also said DeGroot’s bill would do the opposite of protecting bankruptcy trusts.
“Under current law a claimant is not required to file a trust claim … they don’t have to take any assets from a trust under current law. And [Representative DeGroot], who says his bill is to protect trust assets, requires them to make claims from these trusts,” said Barnes. “Under current law there is a situation where there could be zero claim against the trust and if this bill passes, every person who has a claim against a trust must make a claim against a trust … it does the exact opposite of what [Representative DeGroot] says is the purpose of the bill.”
Representative DaRon McGee (D-Kansas City) said the concept that individuals who pursue claims against trusts after suing solvent companies is double dipping is a “myth.”
“If four defendants are responsible for an injury and you sue two solvent defendants and are forced to pursue the other two through trusts, this is not ‘double dipping.’ You’re getting the full dip that you’re entitled to,” said McGee.
Kansas City Republican Kevin Corlew said the bill would allow plaintiffs to pursue claims against trusts in a more efficient way while at the same time pursuing cases against solvent companies.
“It’s often not the plaintiff’s fault that this information isn’t brought forth, it’s the plaintiff’s lawyers who are trying to make sure that they get recovery here and then make sure that they get recovery later through the system. All this is saying is seek recovery at the same time,” said Corlew.
The House voted 96-48 to send the bill to the Senate, which is considering its own version of the proposal.