Scripps News recently released the results of an extensive, nationwide investigation into allegations that some victims of illnesses caused by asbestos and other pollutants were experiencing suspicious delays in the payment of their compensation. Surprisingly, the first thing Scripps learned was that Warren Buffett’s Berkshire Hathaway Inc. is one of the biggest players in toxic pollution litigation.
Why? According to the investigation, some of the world’s largest insurance companies, including AIG, CNA Financial Corp. and Lloyd’s of London have hired Berkshire and a couple of its subsidiaries to assume their risk in future pollution- and asbestos-related illness lawsuits. The insurers could potentially be liable for tens of billions of dollars in toxic tort compensation to victims, so this reinsurance business has been very lucrative for Berkshire.
Yet Berkshire doesn’t appear to be doing a good job paying out on the lawful claims — unless their goal is to profit off money owed to of sick and dying people. According to Scripps, dozens of bad faith lawsuits have been filed against Berkshire and its subsidiaries for wrongfully denying or delaying legitimate compensation claims merely to boost their own profits. Multiple cases have resulted in rulings that Berkshire’s subsidiary Resolute Management Inc. has been intentionally unfair and deceptive.
In fact, Scripps obtained the video testimony of a former claims executive who revealed that decisions on payouts were not driven by the merits of the claims but by ruthless financial targets.
“They wanted to hit the projected numbers in the books of business so they could maximize their return on investment,” he said under oath.
An interesting aspect of these lawsuits is that not all of them are brought by victims of pollutant- or asbestos-related illnesses. Among those suing Berkshire or its subsidiaries for bad faith are major corporations, as well — Ford Motor Co., Celanese International Corp. and Estee Lauder Inc.
“Rarely in asbestos litigation are the injured victims and asbestos companies on the same side,” said an attorney quoted by Scripps.
In its defense, a spokesperson for Berkshire’s Reinsurance Division said, “There are powerful vested interests that prefer to see claims settled at inflated levels rather than defended.”
People with mesothelioma, lung cancer and other such diseases are not among the powerful. They are merely sick and dying because other parties — often big corporations — exposed them to dangerous and deadly toxins despite the risks.
Source: Reuters, “Berkshire firms said to deny/delay insurance payouts to cancer victims,” Mark Greenblatt. Scripps News (press release), Oct. 7, 2013