Asbestos, the toxic industrial fiber, has ended the lives of individuals and companies alike. There are a great many people who are suffering from asbestos-related illnesses and seeking restitution from companies that exposed them to the material. However, there are a great many more who are not suffering from an illness, but are still seeking restitution.
If that left you scratching your head, you're not alone. You see, countless asbestos lawsuits have been brought by individuals simply because they came into contact with asbestos while on the job, regardless of whether that contact actually resulted in an asbestos-related illness.
Some of these bogus suits have resulted in huge verdicts over the years. Such awards have frequently forced the companies involved to file for bankruptcy protection, which ultimately leaves the true victims of asbestos with no hope of recourse.
Consider this: Asbestos claims have single-handedly resulted in the bankruptcy of more than 60 companies, causing the loss of tens of thousands of jobs, and countless other economic repercussions.
But the real tragedy here is that the bogus lawsuits have completely clogged the courts, making it nearly impossible for companies to quantify adequate compensation for those who are truly suffering. Indeed, numerous individuals have died while waiting for their cases to be heard.
Thankfully, the Senate took steps yesterday to stop the madness, establishing a bill that will put funds into the hands of those who truly need them, while excluding from compensation those who sue merely due to exposure.
Specifically, Congress has called for the establishment of a $108 billion restitution reserve, which would be funded by the companies and insurance firms involved in the litigation. Under the current guidelines, both groups would contribute approximately $45 billion to the reserve, and would thereafter be released from further asbestos-related liability. The Senate then established medical criteria to ensure the monies are distributed only to those who have a valid claim.
As you might expect, a number of companies saw their asbestos-battered shares soar on the news. Crown Holdings
If you've been following my six-pack portfolio, where I first spoke of this issue, you'll also be interested to know that RPM International
Some questions remain, such as how to determine payment amounts for victims with varying degrees of illness and how to keep the fund viable while it's needed (which some estimate to be as long as 50 years). However, Judiciary Committee Chairman Orrin Hatch (R-Utah) said he felt the most difficult parts of the deal were behind them (the Senate will reconvene Thursday to finalize the plan).
Sen. Hatch is also hopeful that both Houses will pass the bill in the coming weeks. If so, perhaps we'll finally see the days when companies can put their asbestos fears behind them, and the true victims of asbestos can get the restitution they deserve.
Mathew Emmert owns shares in RPM. The Fool has a disclosure policy.
