Nation's Economy Burned By Double-Dipping Asbestos Lawyers

August 6, 2014- A recent court ruling is being called a big win for bringing transparency to cases involving trial lawyers who file bogus, bottom-feeding asbestos claims, which can harm legitimate claimants.

In their July 26, 2014 Policy: Law editorial, "Legal Newsline Scores Big Win For Asbestos Transparency," the WashingtonExaminer.com writes about a recently exposed scheme where, by "double-dipping," trial lawyers collected millions of dollars in hourly fees.

Here are the highlights of the Washington Examiner post, which details the demise of Garlock Sealing Technologies.

• Garlock Sealing Technologies was founded in 1887 to produce seals for rods in locomotive steam engines. In time it began using asbestos in its gaskets and valves, only to become deluged in nearly a million lawsuits. Although it successfully defended itself in some of the claims, eventually the company went into bankruptcy with 100,000 asbestos and 4,000 mesothelioma claims pending.

• The Washington Examiner writes that unlike some others, Garlock's products never represented a high risk of asbestos exposure. George Hodges, the federal judge presiding over the bankruptcy, noted that Garlock products “resulted in a relatively low exposure to asbestos to a limited population and … its legal responsibility for causing mesothelioma is relatively de minimis.”


• So how did Garlock become one of America's most-sued companies? Thanks to a court ruling last week, we now know that unscrupulous trial lawyers exploited the asbestos claims system to push Garlock to the edge, all the while hiding that their clients had probably become sick from other sources of asbestos.

• Legal Newsline, a publication owned by the U.S. Chamber of Commerce's Institute for Legal Reform, persuaded a federal district judge to order the unsealing of at least some of the records to the news media and the public. "Trial lawyers who file bogus, bottom-feeding asbestos claims harm legitimate claimants," writes the Washington Examiner. "They also cause real damage to the nation's economy."

• It appears that after winning judgments or settlements from Garlock, the unscrupulous attorneys would seek out additional compensation by making claims against those other companies' asbestos claim funds. These claimants weren't just double-dipping. "On average, the cases scrutinized in this bankruptcy case had dipped into 19 further sources of asbestos cash after their Garlock cases were resolved. It was an especially lucrative scheme for the trial lawyers who collected millions of dollars in hourly fees," the Washington Examiner writes.

• Judge Hodges came to understand the scheme as he was trying to determine how much Garlock should be made to set aside to cover future asbestos claims.
Astoundingly, depositions of 15 previous Garlock plaintiffs revealed that every single one had concealed evidence of other sources of asbestos exposure at trial, only to cite those alternative sources later when claiming compensation elsewhere. As Judge Hodges noted, "It appears certain that more extensive discovery would show more extensive abuse."

• Based on these findings, Hodges sharply reduced the amount Garlock had to set aside in bankruptcy for future asbestos claims.

• Garlock also launched RICO lawsuits against five of the asbestos law firms that had been churning out bogus claims. Unfortunately, Hodges also closed the trial and sealed the evidence that led him to his ruling, which has had the effect of protecting the perpetrators of the scam from the public eye.

• The Washington Examiner notes that although this particular story may have a happy ending, the public deserves a closer look at how these scams work, because there are surely many others not yet detected. They close the post by writing, "The more people know about these abuses of the tort system, the greater the chances state and federal governments will pass better laws to control them."

Read the full WashingtonExaminer.com post here.

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