By design, this legislation would eliminate most of the pending claims in the United States, create procedural delays for those claims that remain, impose numerous legal obstacles in the path of any claimant who is bold enough to prosecute a claim, and would, at the same time, obliterate existing incentives for defendants to settle cases.

The bill creates the Asbestos Resolution Corporation, which is not a compensation board but simply a screening device to decide who may file law suits against asbestos defendants. Unless a claimant obtains a certificate of medical eligibility, access to the courts is completely foreclosed. Even when an individual receives a certificate of eligibility, no award or benefit is paid. That certificate merely entitles a claimant to participate in a lengthy and inconclusive mediation and arbitration procedure after which the claimant will likely be left with nothing-no money, no good faith, no timely settlement offer. The Corporation's procedures are open-ended and certain to provide almost endless opportunity for delay.

The medical criteria themselves are arbitrary, do not represent mainstream scientific opinion, and would leave thousands of desperately ill individuals with no legal remedies whatsoever. Most draconian is Section 203, which requires 15 years of exposure to asbestos prior to 1979 for eligibility for non-asbestosis lung disease. OSHA standards did not adequately protect workers from significant asbestos cancer risk until 1994, and millions of workers continue to be exposed to this day. Yet the bill conclusively determines that asbestos exposures after 1979 are not harmful. Lung cancer victims are denied eligibility unless twelve years have elapsed from their first exposure. In addition, a cancer victim must show either asbestos or bilateral pleural thickening before a certificate of eligibility is awarded. This is contrary to the mainstream medical literature on this issue. The consensus view is that asbestosis is not a precondition required before lung cancer can be attributed to asbestos. Numerous scientific studies indicate that less than five years latency to asbestos can cause asbestos-related lung cancer. A twelve year latency period is required to establish eligibility for non-malignant asbestos-related diseases. This is particularly unfair in light of the heavy exposures that have occurred in recent years as workers have removed asbestos from public buildings, and since the scientific literature has established that de minimis exposure to asbestos can cause the most lethal disease. Finally, even victims who successfully run the gauntlet of the bill's procedures and meet its medical criteria get nothing but the right to re-litigate their case in court under highly prejudicial procedural rules. Moreover, because the legislation applies to any case that has not gone to final judgment by the date of enactment, the bill would retroactively nullify awards in cases that have already been resolved by jury verdict or which are on appeal.

Taken together, the administrative labyrinth established under the bill and the highly prejudicial changes in tort law will make pursuing asbestos-related damage claims substantially more time consuming and expensive, will greatly reduced the number of claims that defendants face and will significantly reduce the value of those claims.

It is most important for this committee to realize that procedural changes in H.R.1283 inevitably will condemn the courts to relive the problems that created courthouse gridlock in the 1980s. In the early 1980s, the courts were unable to resolve asbestos cases because the industry used procedural tools available to it at that time to delay trials and avoid settlement. It is axiomatic that delay serves the interests of the industry defendants. It allows firms to pay very few claims and permits them to use their superior economic power to force claimants to accept discounted settlements. Backlogs of thousands of cases are the inevitable result when legislation tips the scale in favor of the defendants' side of the bargaining table. By superimposing a bureaucratic, adversarial administrative mechanism on top of a reconstituted, pro-defendant court regime, H.R. 1283 will recreate a court crisis which the parties themselves have already resolved. To cite but one of many concrete examples, by eliminating the risk of joint and several liability H.R. 1283 will encourage each defendant to litigate its individual market share liability in individual cases, thereby greatly increasing the number and duration of litigated claims.

In short, H.R. 1283 would eliminate any incentive for defendants to continue their negotiated settlement agreements. These agreements ensure prompt, voluntary payment to tens of thousands of presently-impaired victims. Although this year's bill (in contrast to last year's version) appears to preserve the ability of the parties to enter private settlements, it nevertheless destroys the incentives for defendants to do so.

Constitutional Problems

The peculiar structure of H.R. 1283 requires this Committee carefully to consider its potential constitutional defects. The most serious areas of concern include the re

writing of state tort law and those provisions which eliminate the right to seek compensation through the courts without providing an alternative remedy such as a fund for the payment of claims. As the Supreme Court indicated in Duke Power Co. v. Carolina Environment Study Group, 428 U.S. 59, 86-87, 91-93 (1978), and in other decisions, the abolition of common law tort remedies without providing alternative means of redress for injury violates due process. That appears to be precisely what H.R. 1283 does.

A second serious constitutional defect involves the rights of those asbestos victims who surmount the bill's procedural obstacles, obtain a certificate of medical eligibility and file a civil action. When they finally arrive at state court, they will find that their state's tort law has been rewritten specifically to limit their rights and that these changes were imposed by Congress, rather than their state courts or legislatures. While Congress may create a federal asbestos cause of action, it cannot write state tort law that must be applied by the states. As the Supreme Court Stated in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938), the cornerstone of federalism in our civil justice system:

"There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a State, whether they be local in their nature or “general,” be they commercial law or part of the law of torts." Mr. HYDE. Thank you, Mr. Middleton.

Mr. Heyman.

STATEMENT OF SAMUEL J. HEYMAN, ESQ., CHAIRMAN AND CEO, GAF CORPORATION, WAYNE, NJ

Mr. HEYMAN. Thank you, Mr. Chairman. Good morning. GAF's involvement as an asbestos defendant is typical of the story of hundreds of companies who today find themselves enmeshed in this asbestos nightmare. Our only connection to the production of asbestos insulation occurred when it acquired in 1967, Ruberoid, which included at the time a small non-core business which produced an asbestos insulation product Calcilite.

After publication in the late 1960's of an important medical study concerning the dangers of asbestos, GAF closed its Calcilite operation and has not produced these products for almost 30 years. Although there is no one left with our company today who had responsibility for the production or marketing of the product, we have taken responsibility for what went before at GAF. We regret more than I can say the harm these products have caused, and we are committed to fair, full, and prompt compensation for the sick.

Since the late 1970's, GAF has paid out as a result of the Ruberoid acquisition whose asbestos insulation business incidentally had profits over a 30-year period of no more we would estimate than an aggregate total of $1 million and sales of only approximately a million dollars per annum during the same period, we have paid out now more than $1.2 billion in asbestos claims and expenses, a substantial portion of which has gone to people who are not sick and will never become sick.

We are here today not in search of a bailout or to avoid responsibility for any harm our products have caused and we come here to Congress because our industry's experience over the last 20 years has underscored that asbestos litigation has defied all other solutions. One might logically ask why do we settle the non-sick cases and I would cite for you an example of a current situation which is typical of what we face. We now have some 5,000 cases which have been consolidated in one State courtroom. By way of background you should know that GAF and other co-defendants went to trial on 12 other cases in this same courtroom only a year

ago and the 12 plaintiffs, a number of whom were not sick, received a jury award of $48 million and now emboldened by that result, the asbestos lawyers are looking for a billion dollars to settle the remaining cases. And now let's assume that of the 5,000 cases, and I don't think this is far from the truth. We don't have exact numbers-but at least 2,500 involve sick claimants while the other 2,500 are not sick. The asbestos lawyers take the position that if the defendants are not willing to settle the 2,500 non-sick cases, they will insist on taking to trial the 2,500 sick cases. And your lawyer relates, let's suppose that there is a high probability of the jury awarding punishing compensatory awards to the unimpaired as well as the sick and even the possibility of a punitive damage award which could bankrupt any defendant. What would you do? Would you settle the non-sick cases or would you bet the company and the jobs and careers of your more than 3,400 employees around the country on what happens in a courtroom in any one of hundreds of jurisdictions around the country.

I ask you to draw your own conclusions about a system where the following are common occurrences. Thousands of cases involve questionable lab test results and medical affidavits. Two, because of the opportunity for plaintiffs to forum shop, cases have a habit of migrating to courtrooms which are viewed as particularly favorable to plaintiffs. And three, claimants appear to have an uncanny knack of remembering that the label on the bag of asbestos to which they were exposed corresponds only to those companies who still remain in the particular case.

The asbestos insulation litigation nightmare demonstrates not only the fragility of our legal system but how a handful of asbestos trial lawyers who play by a different set of rules managed to control and dominate it. And finally, while our focus is on the critical importance of reform for sick claimants, we make no bones about the fact that this legislation will also be helpful for the many hundreds of defendant companies and we would hope that the interest of defendants, their employees, shareholders, the communities who depend on them and elemental fairness are worthy of Congress' consideration as well.

Thank you.

[The prepared statement of Mr. Heyman follows:]

PREPARED STATEMENT OF SAMUEL J. HEYMAN, ESQ., CHAIRMAN AND CEO, GAF CORPORATION, WAYNE, NJ

Mr. Chairman and Members of the Committee:

Good morning. My name is Samuel Heyman. I am Chairman and Chief Executive Officer of GAF Corporation.

GAF's involvement as an asbestos defendant is, I believe, typical of the story of literally hundreds of companies, ranging from some of the largest Fortune 500 corporations to local hardware stores, building supply distributors and many other small, private, and family businesses, who today find themselves enmeshed in this asbestos mess. GAF's only connection to the production of asbestos insulation occurred when it acquired, in 1967, Ruberoid, a company engaged primarily in the manufacture of roofing materials.

Ruberoid happened at the time to be operating a small, marginally profitable noncore business, whose sales were no more than 1% of the Company's total sales or approximately $ 1 million per annum, which produced an asbestos insulation product, Calcilite. In point of fact, the United States Navy had asked Ruberoid during World War II to develop this product for use as an insulation material in its ships. After the United States Public Health Service concluded that Calcilite was safe, Ruberoid began to supply the product to our country's Naval shipyards around the

Country, pursuant to requisition in accordance with Government specifications, and a not insubstantial portion of GAF's total Calcilite sales over the years were made to the United States Government.

Shortly after the Ruberoid acquisition, GAF designed an asbestos-free product, but the Navy rejected it. And finally, after an important medical study by Dr. Selikoff was published in the late 60's outlining the dangers of asbestos, GAF promptly closed its asbestos insulation operation and has never produced asbestos insulation products again.

I do not recount this background to excuse our Company's conduct in any way. For although GAF has not produced these asbestos products for almost 30 years, and there is no one left with our Company today who had responsibility for the acquisition of the business or the manufacturing or marketing of the product, you should know that we take full responsibility for what went before at GAF, we regret, more than I can say, the harm these products have caused thousands of Americans, and we are absolutely committed to making sure that any one who may become genuinely sick a result of our products will be fairly, fully, and promptly compensated.

Since the late 1970's when asbestos litigation as we know it today began, GAF has paid out, as a result of the Ruberoid acquisition, whose asbestos insulation business had profits over a 30 year period of no more, we would estimate, than an aggregate total of 1 million, more than 1.2 billion dollars in claims and expenses, a substantial portion of which has gone to people who are not sick. Despite both GAF and the industry having settled almost 300,000 cases, more than 200,000 asbestos cases remain pending nationwide, 100,000 of which involve claims against GAF, with new claims being filed now at the rate of 50,000 per annum-with more to come and no end in sight.

We come here today not in search of a bailout in any way, shape or form. Nor do we seek legislation which would impose caps on our liability or provide the right to continue to manufacture and market a dangerous product, like another industry sought to do here in the Congress last year. Rather, the asbestos defendants have taken the consistent, simple, straightforward position that they accept their responsibility to fully, fairly, and promptly compensate those who are sick and were exposed to their products, with the proviso that those who are not sick be required to wait until they become sick.

And we come here to Congress not only because the Supreme Court has suggested that we do so, but so also because our former industry's experience with the asbestos litigation mess over the last 25 years has underscored that it has defied all other solution. In this connection, we have tried, on the one hand, resisting the non-sick claims through litigation and, at other times, aggressively settling these claims in an attempt to substantially reduce the backlog of cases against our Company-each of which strategies I might add have proven disastrous and have only encouraged the further escalation of non-sick claims.

We have been asked by members of Congress over the last year-why do we settle the non-sick cases?-Why don't we just draw a line in the sand and refuse to settle these cases? And in response, I would cite for you a concrete example of a current situation we face, which by the way is not unlike others we have encountered before, and ask you all to think what you would do if you were a CEO.

We currently have some 5,000 cases, which have been consolidated in one_state courtroom in Mississippi. By way of background, you should know that GAF and other co-defendants went to trial on 12 other cases in this same courtroom only a year ago, and the 12 plaintiffs, a number of whom were not sick, received a jury award of $48 million. And now emboldened by that result, the asbestos lawyers are looking for a billion dollars to settle the remaining cases. And now let's assumeand I do not know this for a fact, but it can't be far from the truth-that of the 5,000 cases, 2500 involve sick claimants, while the other 2,500 are unimpaired.

In a recent effort to settle the cases on the courthouse steps before trial, the asbestos trial lawyers took the position, consistent with others they have taken in similar situations around the Country, that if the defendants were not willing to settle the 2,500 unimpaired cases, they would insist on taking to trial the 2,500 sick cases. And your lawyer relates, let's suppose, that there is a high probability of the jury awarding punishing, compensatory awards to the unimpaired, as well as the sick, and even the possibility of a punitive damage award which could bankrupt any defendant. And given that situation, what would you do? Would you settle the nonmeritorious cases, which are inherently worth nothing, or would you "bet the company", and the jobs and careers of your more than 3,000 employees around the country, on what happens in a courtroom in a small, far-away town where the local lawyer on the other side is well-known to, and highly regarded by, the judge and jury.

The most disturbing aspect of the story about the asbestos litigation mess in our court system today relates to the manipulation of the system by a small handful of asbestos trial lawyers. And I raise this to provide you with some sense of what happens in the asbestos world today and why neither plaintiffs nor defendants can any longer afford the status quo.

I ask you to draw your own conclusions about a system, where for example, the following are common occurrences:

Thousands of cases involve questionable lab test results and medical affidavits and are generated not by doctors but by attorney-sponsored screening companies who have a financial incentive to "discover" pleural changes.

Because they usually can sue a sufficient number of asbestos defendants, from their potential list of hundreds, in virtually any jurisdiction at the touch of a word processing button, cases have a habit of migrating from all parts of the Country to friendly courtrooms in small towns in a handful of states.

When a defendant goes into bankruptcy, plaintiffs stop identifying the bankrupt company's product, focusing instead on the products of the remaining solvent companies; and,

Claimants appear to have an uncanny knack of remembering the label on a bag of asbestos which does not bear the name of any of the companies that have already settled the particular case but rather the name of the one company remaining.

Another aspect of the absolute dominion and control of the asbestos trial lawyers relates to the fact that there are no bright lines in asbestos litigation as to a particular defendant's share of the total award vis-à-vis his co-defendants in the case. Since the tort took place as much as 30-40 years ago, claimant's identification of a particular defendant's product to which he was exposed is often malleable, and market share statistics are generally unavailable, asbestos trial lawyers have enormous power and control. For by their choice of whom to target or when to make a small, peripheral "player" into a large player, and vice versa, the asbestos trial lawyers regularly utilize this power to keep defendants in line.

While I could recount other examples which I think would make your hair stand on end, suffice it to say that the asbestos litigation mess dramatically demonstrates not only the fragility of our legal system and how a handful of asbestos trial lawyers, who play by a different set of rules, manage to control and dominate the asbestos litigation system as it has evolved over the past 25 years, bending it to their own ends.

Finally, while our focus is primarily on the critical importance of reform for sick claimants both now and in the future, and I really do believe that this is first and foremost a victims' rights bill, we make no bones about the fact that this legislation will also be helpful for the many hundreds of companies caught up in this asbestos litigation mess. Companies currently facing asbestos litigation are estimated to employ more than 5 million Americans and have payrolls in the billions of dollars. And while to be sure the rights of sick claimants are paramount here, we would hope that the interests of defendants, their employees, shareholders, the communities who depend on them, and elemental fairness are worthy of Congress'consideration as well.

Mr. HYDE. Thank you, Mr. Heyman.
Dr. Oliver.

STATEMENT OF CHRISTINE OLIVER, M.D., ASSOCIATE PHYSICIAN, MASSACHUSETTS GENERAL HOSPITAL, ASSISTANT PROFESSOR, HARVARD MEDICAL SCHOOL, BOSTON, MA Ms. OLIVER. I want to thank you, Mr. Chair, and Congressman Conyers as well as the other members of the committee for the opportunity to appear before you to speak on H.R. 1283. My purpose in being here today is to offer testimony that addresses the fairness aspect of the claims. Specifically I will offer testimony on sections 105, 201 through 204, and 801. My comments will summarize my written testimony. These are offered on the basis of my experience over the past 20 years taking care of patients with asbestos-related disease and carrying out epidemiologic studies of populations of