WASHINGTON – Hundreds of thousands of Americans have been sickened or even killed by diseases related to asbestos (search) while dozens of companies that manufactured the material have gone bankrupt paying damages. Other companies fear a similar fate.
The court system, groaning under still more related cases, has prompted Congress to intervene. But some say the cure is worse than the disease.
Asbestos, once a dangerous fiber used in building insulation, is now manufactured in safe, encased forms. But for years, human exposure to it led to closures, clean-ups and lawsuits.
Exposure to free-floating, spear-like asbestos fibers can lead to severe lung ailments such as asbestosis. The worst form — mesothelioma (search)— is a fatal cancer in the lining of lung. At least 2,000 new mesothelioma cases are diagnosed each year.
Asbestos litigation has clogged the courts. Real victims seek damages, but phony ones do, too. Seventy-seven companies have gone bankrupt paying damages to both real victims and frauds.
"We know there have been a lot of injustices that have occurred over the years," said Utah Republican Sen. Orrin Hatch.
Thousands of other asbestos cases are pending. Ten U.S. companies alone face $25 billion in projected liability.
"We clearly have a system that's being exploited for opportunistic reasons, and in the process you're having real people being harmed," said Wayne Brough, vice president of Freedom Works, which supports less government and lower taxes.
Congress wants to reduce corporate liability and compensate real asbestos victims. The proposed remedy: A bipartisan Senate bill that creates a $140 billion trust fund financed by asbestos companies and insurers. A special court would grant awards on a no-fault basis. The goals are to eliminate lawsuits, speed up compensation and use specific criteria to weed out phony claims.
"It will enable thousands of victims of asbestos, who've been able to collect nothing, to collect now from this fund. They've been unable to collect anything because their companies are bankrupt," said Sen. Arlen Specter (search), R-Pa., chairman of the Senate Judiciary Committee and chief sponsor of the legislation. The bill passed the panel last month, but more changes are expected before it goes to a full Senate vote.
Big manufacturers like auto companies support the bill, preferring predictable trust fund payments to years of unknown liability. When senators unveiled the legislation, companies with asbestos-related liability saw their stocks soar. That, liberal critics say, is evidence that the bill's a big corporate giveaway.
"Many companies that are liable for this problem are going to be let off the hook. They are only going to be paying pennies on the dollar into this trust fund," said Frank Clemente, director of Public Citizen's Congress Watch.
Senators concede that the trust fund can work only as long as it remains solvent. One huge variable — how many victims qualify for payments — will determine that. Right now, 100,000 damage claims are filed every year.
"This is an unprecedented fund. We don't know how many victims there are out there," said Sen. Dianne Feinstein, D-Calif.
Critics say they fear the trust fund won't last and Congress won't go back to big business to foot additional costs.
"They always underestimate the number of claims that come in, how much gets paid out and in the end the taxpayers end up paying for it," Clemente said.
The Senate bill, which passed out of committee by a wide margin, also caps lawyers fees at 5 percent, down from the 40 percent typically applied in asbestos cases. The White House calls it another potential tort reform victory.
Conservative critics are pushing a House bill that spells out what constitutes an asbestos-related disease. This approach, they say, protects companies, victims and taxpayers.
Click in the box near the top of the story to watch a report by FOX News' Major Garrett.