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What does the DOJ investigation mean for asbestos trust funds?

| Nov 20, 2018 | Uncategorized |

Recently, the Department of Justice filed a Statement of Interest regarding the establishment of a new asbestos trust fund. While filing for bankruptcy, the Kaiser Gypsum Company also established funds for an asbestos trust to compensate former employees who got sick after working with asbestos.

This is not the first time that the DOJ has filed a Statement of Interest into a matter like this one. Below are the most frequently asked questions about the DOJ’s interest in the matter.


What are asbestos trust funds?

As people discovered just how dangerous asbestos was for people who worked with it, lawsuits against companies who knowingly exposed workers to danger began to pour in. These companies began to seek protection in bankruptcy.

Part of those bankruptcy settlements was the formation of trust funds for the people who were harmed by exposure to asbestos while they were working. The trust funds allowed these companies to proceed with bankruptcy, save on litigation expenses and help people who were hurt while working with asbestos. It was a win-win situation.

Why is the DOJ looking into the issue?

If there are too many fraudulent claims, these trust funds could conceivably fail to pay on legitimate later claims.

Asbestos trust funds are also a resource for reimbursing Medicaid for the medical treatment some people receive. Medicaid spends a lot of money each year helping people with asbestos-related illnesses pay for their medical care. The Department of Justice wants to make sure that the asbestos trust funds continue to fulfill this role so that there is Medicare money for people who are not able to get money from one of the trusts.

What is going to happen?

The Department of Justice is not looking to shut down the trust fund system, which has been an historically successful system. Some argue that fraud is an issue in the distribution of these trust funds; others maintain the system is working fine, and making it more difficult for victims to get compensation isn’t going to help anything. It remains to be seen what the DOJ’s actions will be.

Should asbestos victims worry?

While the press on this issue can be confusing, the bottom line is that asbestos victims can still get the compensation they deserve. There remains over $30 billion in asbestos bankruptcy trusts for distribution. There is no cause for panic. Certainly, no one wants fraud and mismanagement of funds. However, there are still many legitimate asbestos victims who need and deserve compensation after developing mesothelioma. Fortunately, as of today victims can still access those funds by filing a proper legal claim. 

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