Statement for the Senate Record by Senator Chuck Grassley of Iowa
Chairman, Senate Judiciary Committee
Justice Dept. Bringing Much-Needed Transparency, Accountability to Asbestos
President, I come to the floor today to highlight the excellent work being done
by the Justice Department under this administration in ensuring an accountable
asbestos bankruptcy trust system.
In 1994, in
response to widespread asbestos litigation in our Nation’s courts, Congress
created a system of asbestos bankruptcy trusts. The purpose of these trusts is
two-fold. First, they provide an effective means for victims of asbestos
exposure to obtain compensation from the companies they worked for years
earlier or whose products caused their injuries. This helps provide some
measure of justice for those whose lives have been dramatically impacted by
At the same
time, the companies—who otherwise face crippling liability—obtain a degree of
certainty as they emerge from bankruptcy and re-enter the stream of commerce.
importantly, these trusts are designed to ensure that all victims—current and
future—have access to compensation for their injuries.
But if the available
funds are depleted unfairly through fraudulent claims, abuse, or mismanagement,
it’s the future victims—or those whose injuries have yet to manifest—who
will feel the impact.
the asbestos bankruptcy trust system has largely lacked any meaningful,
independent oversight to ensure that trusts are not deceived into—or willingly
engage in—paying erroneous claims to unscrupulous lawyers. For years, I’ve
called out this problem and the need for more sunshine to deter potential abuse.
That’s why I
applaud the Justice Department’s recent actions to stand up for victims of
asbestos exposure by ensuring an accountable trust system.
In a recent
letter to 20 state attorneys general who had called for action, the Department
forcefully criticized the “problematic lack of transparency in the operation
and oversight of asbestos trusts” and acknowledged “alarming evidence” of
“fraud and mismanagement inside trusts.”
13, 2018, the Justice Department filed a Statement of Interest in a case
concerning a proposed asbestos bankruptcy trust in North Carolina. The
Department objected to the trust’s formation, arguing that the plans failed to
include sufficient safeguards to prevent fraud and abuse of the trust funds.
Department further stated that the United States will object to any plan
that “lacks critical provisions to ensure transparency and accountability and
to prevent fraudulent claims and mismanagement of the trust funds[.]” This
includes ensuring that trusts comply with any obligations under the Medicare
Secondary Payer Statute, avoid conflicts of interest, and prevent excessive
administrative costs and attorney’s fees.
thereafter, on September 26, 2018, the Justice Department’s U.S. Trustee
Program—for the first time ever—objected to the appointment of a proposed
Future Claimants’ Representative in a separate asbestos bankruptcy case based
on the candidate’s apparent conflicts of interest and close ties to lawyers
representing current claimants.
Principal Deputy Associate Attorney General Jesse Panuccio, “[t]o best protect
all victims, those appointed in asbestos cases should be held to the same
conflicts prohibitions and standards of independence that are required of other
fiduciaries under the Bankruptcy Code.”
bankruptcy trusts are created to compensate victims—not to line the
pockets of lawyers who file claims or administer the trusts. Fraudsters and
poor management cannot be allowed to cheat victims of asbestos-related diseases
out of the assistance Congress established for them.
pleased to see the Justice Department stepping up and using its existing
authority to push back against trust plans that fail to put the victims’
interests first. I applaud its commitment to investigate conduct related to
asbestos trusts that is illegal under federal law.
the asbestos trust system protects the interests of the victims, as Congress
To be sure,
however, Congress’s job isn’t finished. There are commonsense steps we can take
to better ensure that the Department has the tools and authority it needs to
police against fraud and mismanagement.
year, I co-sponsored S.2564, the PROTECT Asbestos Victims Act, which would
codify needed accountability measures for asbestos trust oversight. This bill,
introduced by Senator Tillis, deserves strong bipartisan support. Among other
reforms, it strengthens the U.S. Trustee’s statutory authority to investigate
the administration and operation of trusts. If the U.S. Trustee believes a
false claim or demand was paid by the trust, he or she may refer the matter to
the U.S. Attorney’s Office. It criminalizes a knowingly and fraudulently false
claim or representation to a trust. And it better ensures that the right people
are appointed as Future Claims Representatives—in other words, those who
understand that their duty is to future victims, not to their trial
commonsense reforms, and I invite all of my colleagues to join in support.
meantime, I fully expect the Justice Department to keep up its great work in
protecting asbestos victims—and the American taxpayer—by policing against
waste, fraud, and mismanagement in the asbestos bankruptcy trust system.
I yield the