$ 37 Million Bad Faith Verdict - Post-Claim Underwriting by a Health Insurer

So, after I finished up my first post this morning, Mike sent around this link to a blog post about a new
$ 37 million bad faith verdict against an insurer that uses "post-claim underwriting" as one of its business methods.  Plaintiff's counsel suggested $ 7 million in damages  - the jury awarded $ 37 million.

Is this a reasonable verdict ?  The more I see, the more I have to say: yes, it is a reasonable and logical verdict very precisely intended to deter bad corporate behavior. I say that after spending 25 years as a commerical litigator who has seen plenty of corporate behavior, most of it quite good and well intended, but sometimes there are in fact good faith misunderstandings and disputes. But, as to insurers, I keep seeing simply inexcusable behavior from some of them. For example, one corporate client has been battling insurers for 27 years (really !) to obtain coverage for asbestos claims that plainly are covered. In other situations, insurers appoint defense counsel who may be fabulous trial lawyers but cannot effectively represent my clients because they labor under conflicts of interest created by too many clients, with some of the clients having conflicting defense strategies. For example, most asbestos products contain white (chrysotile) asbestos fibers. Some experts say pure chrysotile cannot cause cancer because it breaks down quickly in the lungs. Whether or not one accept that defense completely, any decent defense lawyer for a seller of a chrysotile produce always looks for and wants to blame a particular plaintiff's disease on inhalation of  amphibole asbestos  fibers, which include but are not limited to the blue (crocidolite) and brown (amosite) asbestos fibers, not to mention tremolite and other asbestoform minerals and man made substances. Why blame the amphiboles ? Because amphibole fibers are FAR, FAR  more toxic than are chrystotile fibers. Numerically, that means perhaps a  500 - 1  potency ratio when comparing crocidolite to chrysotile. Indeed, even hard core plaintiff's expert Dr. Richard Lemen acknowledges that amphibole fibers are incredibly potent; he simply will not exonerate chrsyotile fibers, especially when they include tremolite or other amphibole contamints (go here to see an article on this topic by Dr. Lemen and others). 

To return to the point that started this post, some insurers should indeed see a message in the $37 million verdict.  Here are some key excerpts from the article:

"Longmont teacher Jennifer Latham and her husband Frank both suffered broken bones, internal injuries and brain injuries from the crash. But Time Insurance, also known as Fortis and Assurant Health, rescinded a health insurance policy Jennifer had recently taken out, claiming that she'd failed to disclose a complete and accurate health history on its application form--leaving her with more than $180,000 in medical bills.


Time is notorious in the health insurance industry for its "post-claim underwriting"--going back to the application after a claim is made to determine if misrepresentations were made that would warrant revoking the policy, even if the medical conditions involved have nothing to do with the claim. A similar case in South Carolina, in which the company rejected coverage for a teenager who discovered through a blood donation that he had AIDS, resulted in a $10 million punitive judgment. That verdict was upheld last fall by the state's supreme court.


In closing arguments of the two-week Boulder trial, Latham attorney Marc Levy asked for $2 million in economic damages and roughly $5 million in punitive damages. "You are the final stop," he told the Boulder County jury of four women and two men. "You are the conscience of the community. Is this the way we want health insurance companies to act?"

Time attorney Walter Wilson maintained that Latham had failed to disclose certain medical information on the application, including one trip to an emergency room for "shortness of breath" that Latham maintains was a panic attack. He argued that evidence of her "alleged emotional distress" from cancellation of her health insurance "is scant at best and nonexistent in reality."


***

Testimony from Time officials indicated that the company only rescinds half of one percent of its policies--but that resulted in more than 8000 rescissions over a five-year period, saving the company $150 million in unpaid claims.


The Latham case and the practice of rescission in the health insurance industry is the subject of an upcoming Westword feature. Stay tuned."

The Litigation Industry - Insurance Industry Behavior and Trials

A bit of shameless self-promotion today for my new law firm. One of my new partners, Mike Childress, had an interesting interview this past week with Larry Smith on the BulletProof Blog. The blog is written by the Levick Strategic Communications firm that focuses on crisis management issues, usually for corporations. As part of the work, the principals of Levick continually reach out to and ask questions of firms that do significant amounts of  plaintiff's work. CDG fits that model because we represent so many corporation and associations in battles with insurers.  Mike has spent 30 years suing insurers in a variety of cases, so he brings tremendous experience and insight to the topic.

The interview is online here, and provides Mike's insights on some of the current behavior of insurers. Here's my favorite part of the interview:

"We tried a seven-figure case last year after the insurance lawyer said that, if he could not win that particular trial, he should just return the rest of the files involving claims against that insurer. We have twelve cases against that same insurer, all of which involve the same type of loss. Our client won full damages at trial, but the insurer is still refusing to settle the remaining cases. In fact, it is the second case we have tried against this insurer and won. So, we will try the rest of the cases."

Drs. Frank and Lemen Part of Global Plaintiff's Advocacy Session for April 10 Asbestos Disease Awareness Conference in Chicago

Here is the entire press release (which includes links)  regarding an April 10, 2010 asbestos disease awareness conference set for April 10 in beautiful Chicago. The conference is organized by, among others, the Asbestos Disease Awareness Organization and Laurie Kazan-Allen, who is the sister of American plaintiff's lawyer, Steve Kazan. Through an entity commonly known as IBAS, Ms. Kazan-Allen has devoted well more than 15 years trying to ban the use of asbestos around the globe, and has achieved some signficant success.

Unlike many current and future defendants/corporations/makers/users, and their lawyers, the advocacy groups for victims/plaintiffs are thinking globally. Indeed, well-known plaintiff's experts are part of the advocacy effort. Thus, during the conference,  Dr Arthur Frank and Dr. Richard Lemen are part of a panel session on global advocacy, as is set out below from the conference agenda. Also set out below is a summary of all speakers, except the keynote speaker, who is to be designated later. 

______________________________________________________________________________
Session IV Global Advocacy and the Continuing Crisis - Chairperson: Arthur L. Frank, MD, PhD




3:15 - 3:35 Latin America's Asbestos Struggle!, Fernanda Giannasi, Brazil


3:35 - 3:50 Canadian Asbestos: A Global Concern, Canadian Member of Parliament, Pat Martin


3:50 - 4:05 Governmental Agencies Role in Protecting Public Health, Richard Lemen, PhD, MSPH


4:05 - 4:20 Progress Update: The Americas, Barry Castleman, ScD


4:20 - 4:35 A Victims' Call to Action!, Laurie Kazan-Allen, International Ban Asbestos Secretariat (IBAS)


4:35 - 4:45 Panel Q & A, Moderator Arthur: L. Frank, MD, PhD


"ADAO's 6th Annual International Asbestos Awareness Conference


REDONDO BEACH, Calif.--(BUSINESS WIRE)--The Asbestos Disease Awareness Organization (ADAO) will host its 6th Annual International Asbestos Awareness Conference in Chicago, IL, on Saturday, April 10, 2010, with activities throughout the weekend. The international conference will provide education and outreach to families, employers/employees, and scientists throughout the world as part of ADAO's continuing effort to educate the public about the dangers of asbestos, ban its use, and encourage research efforts to improve treatment options. Prominent physicians, scientists, and safety and health care professionals who are experts in the area of asbestos representing the United States, Canada, England, Brazil, and Germany will present current information regarding the status and impact of asbestos in the United States and globally. Discussion will include facts on exposure, asbestos-related diseases and how to prevent them, and where to turn for help. The international conference is made possible by ADAO, the Barbara Ann Karmanos Cancer Institute, and the International Ban Asbestos Secretariat.

WHERE:  Marriott Renaissance Hotel

1 Wacker Drive , Chicago, Illinois

WHY:     To share information and provide support to those affected by asbestos-related diseases, including survivors, families, and physicians. Prominent physicians, scientists, safety and health directors, and survivors will present current and up-to-date information regarding the status of asbestos in the United States and worldwide.

WHO:     Brad Black, M.D., medical director, Center for Asbestos Related Disease; Barry Castleman, ScD, environmental consultant; Jeff Camplin, CSP, CPEA; Sean Fitzgerald, PG; Arthur Frank, M.D., Ph.D., chair, Department of Environmental and Occupational Medicine, Drexel University's School of Public Health; Patrick Gerkin, Ph.D., assistant professor, Grand Valley State University; Fernanda Giannasi, ABREA; Michael Harbut, M.D., MPH, FCCP, co-director, National Center for Vermiculite and Asbestos-Related Cancers, Karmanos Cancer Institute; Tanis Hernandez, LCSW, Center of Asbestos Related Disease; Laurie Kazan-Allen, founder and coordinator, IBAS; Hedy Lee Kindler, M.D., University of Chicago, and president, International Mesothelioma Interest Group; Richard Lemen, Ph.D., MSPH, former Assistant Surgeon General; Terry Lynch, International Vice President, Insulators Union; The Honorable Patrick Martin, member, Canadian Parliament; Linda Reinstein, executive director and co-founder, ADAO; Kimberly Rowse, RN, Center for Asbestos Related Disease; Jordan Summer, musician; James Webber, Ph.D., research scientist, Wadsworth Center; Jordan Zevon, ADAO national spokesman and musician."

Trial Proceeding Ahead, Slowly, for Former Eternit Officials

Please look to the left under the heading "Eternit" for prior articles on the combined civil and criminal trial in Italy  involving former executives of Eternit. The charges - more or less - are reckless endangerment  of employees via unsafe conditions in facilities manufacturing asbestos-containing products. The coverage this month has been light as only one hearing was held, and apparently was limited to argument on motions. Go here for a summary from advocates for the sick.

Plaques Discussion Ahead in the House of Commons

Back to Europe for the day.

The House of Commons is anticipating discussions on pleural plaques vis a vis the apparent path of Scotland affirmatively acting to permit plaques claiming via legislation, but England and Wales not allowing compensation and other European countries taking divergent various views.  The following remarks are from January 28, and are courtesy of They Work for You. 

Stephen Hepburn (Jarrow, Labour)

Will the Leader of the House give us an early debate on pleural plaques? We need to be able to lay down a marker on any Government proposal that might allow future victims of pleural plaques in Scotland to be compensated by the British taxpayer, when future English victims will get nothing at all.

Harriet Harman (Lord Privy Seal, House of Commons; Camberwell & Peckham, Labour)

I thank my hon. Friend for raising this important issue. We are aware of the strength of feeling on this matter, and are firmly committed to ensuring that people suffering from asbestos-related diseases receive the help and support that they need. We hope to be in a position to give the Government's response on pleural plaques soon.

Non-Dry Looks at Business History, Including James Hardie - A New Book: "Killer Company"

Back to Australia, asbestos and James Hardie.

As described in this prior post, a rather dry paper by KPMG describes the history of James Hardie and its many intersections with asbestos and asbestos-containing products. That dry look is of course needed and appropriate in the sense that decisions need to be made based on technical information.

There are other sides to the story. A new expose/investigative journalism book is out regarding James Hardie. A book review is set out below from the Ban Asbestos web site run by Laurie Kazan-Allen, sister of an American plaintiff's lawyer, Steve Kazan. The review is by Jock McCulloch, who also has written books on "asbestos companies."  The words of the book review are  worth reading as a counterweight to the dry story told by KPMG.
_____________________________________________________________________________________

Book Review: Killer Company - James Hardie Exposed

Matt Peacock. Sydney: ABC Books, 2009

Reviewed by Jock McCulloch

Australia has the highest recorded incidence of mesothelioma in the world because in the period from 1945 until the mid 1970s Australia was one of the highest users of asbestos based products. The local market was dominated by a single firm James Hardie Asbestos and to a large degree the Australian asbestos story is the story of James Hardie.

James Hardie shares much in common with Johns Manville, Eternit and Turner & Newall. Hardie was a vertically integrated company which enjoyed great commercial success in the decades after 1945. That success was built on an ever widening range of building and insulation materials. Hardie owned asbestos mines in Australia, Canada and briefly in Zimbabwe and manufacturing plants in Australia, New Zealand, Malaysia and Indonesia. Like Johns Manville, it has survived the asbestos scandal to re-invent itself as a non-asbestos building materials manufacturer. Like Johns Manville, James Hardie has used a variety of strategies to inure itself from the people it has injured.

Killer Company is a major contribution to the literature on the asbestos industry. The book has grown out of Matt Peacock's sustained engagement with the issue of asbestos and health. It is based on long hours of archival work sorting through Hardie's internal correspondence. Peacock has also interviewed many of the key players. The result is an insight into the mentality and behaviour of an important asbestos company.

Matt Peacock has played a major role in publicising the risks of asbestos in Australia. In his work as a journalist he has helped to expose the behaviour of the asbestos industry toward its employees, and the consumers of its products. In 1977 Peacock broke the story of Baryulgil, a small chrysotile mine which Hardie operated in northern New South Wales. The work force at Baryulgil was drawn from the indigenous Bundjalung people who lived and worked under conditions every bit as severe as those endured by black workers in South Africa. It was Matt Peacock not James Hardie who warned the community of the risks of asbestos disease. He was also instrumental in forcing a Parliamentary enquiry into the operation of the Baryulgil mine.

In Killer Company Peacock reviews the extent to which Hardie's senior management engaged in the same kind of behaviour that has been documented in British and US courts about Cape Asbestos, T&N and Johns Manville. Hardie knew far more about the risks of asbestosis, lung cancer and mesothelioma than did regulatory authorities or trade unions. Armed with that knowledge it refused over a period of decades to reduce the risks faced by its employees or the users of its products. When a flood of litigation began in the mid 1970s Hardie avoided bad publicity by settling cases out of court. When that failed it sought to move its assets out of the reach of potential claimants. The bad publicity surrounding a move of assets to The Netherlands in 2004 has seen James Hardie become probably the most reviled corporation in Australia. Peacock shows that such a reputation is well deserved.

The health risk of asbestos has taken many forms from workplace exposure, to the dumping of waste and the use of fibre in the most unlikely of products such dental amalgam and children's play dough. Until the 1970s it was common for waste from Hardie's Adelaide factory to be used to dress domestic driveways, pathways and garage floors. In New South Wales thousands of tonnes of waste was dumped into rivers and creeks and on roadways and football ovals. Such waste is virtually indestructible but at least when deposited outdoors by-stander exposure to airborne fibre is sporadic.

Each year thousands of tonnes of crocidolite, amosite and chrysotile arrived at Hardie factories which resulted in the accumulation of hundreds of thousands of hessian bags. In Sydney and Melbourne the bags were recycled by market gardeners to carry potatoes, carrots and onions. In Western Australia wheat farmers received fertiliser in the same bags. Over the period from 1944 to 1966 the Wittenoom crocidolite mine in Western Australia produced 160,000 tonnes of fibre. That fibre was transported in 45 kilograms hessian bags. Matt Peacock has discovered that hundreds of thousands of those bags ended up in domestic dwellings as carpet underlay. Consequently, an unknown number of Australian homes have been contaminated and an unknown number of residents continue to live at risk, every hour of every day.

There is no easy way to estimate the human and commercial cost of the asbestos industry. That is because in parts of Asia and SE Asia the industry is alive and well. It is also because as Matt Peacock has shown the extent of by-stander exposure in the OECD states is still unfolding.

Killer Company is an important book.

Jock McCulloch

School of Global Studies

RMIT University,

Melbourne,  Australia.

January 21, 2010


_________________________________________________________________________________

There are several other "business history" books related to "asbestos companies." Most of them include significant footnotes and bibliographies:


Blue Murder, by Ben Hills, describes in detail the situation related to the Wittenoom crocidolite mine in Australia, a mine owned for decades by CSR. The book discusses many things, including corporate fiber purchasers and uses.

Asbestos House - The Secret History of James Hardie Industries, by Gideon Harris, is a comprehensive account of that company. Numerous mentions are made of relationships between James Hardie, Turner & Newall, Cape Industries, Johns-Manville, and CSR.

The Way From Dusty Death, by Peter Bartrip, is a comprehensive discussion of Turner & Newall and asbestos regulations in the UK from the 1890s through 1970. This book also discusses interactions between various industry titans, including Cape Industries.

Jock McCulloch has written two books on asbestos, focused primarily on mines in South Africa that were the sources for all of the world's amosite fiber, and much of the world's crocidolite fiber. The mines were owned by Cape Industries entities and various other entities. One book is: Asbestos: It's Human Cost, and was published in 1986. McCulloch's second book was published in 2002, and is titled: Asbestos Blues, Labour, Capital, Physicians and the State in South Africa.

Mr.  McCulloch and Geofrey Tweedale combined to write a 2008 book, Defending the Indefensible, the Global Asbestos Industry and It's Fight for Survival.

In addition, Mr. Tweedale also has written extensively regarding Cape Industries and Turner & Newall/T & N. One of his publications is the book titled Magic Mineral to Killer Dust, Turner & Newall and the Asbestos Hazard.

UK Asbestos Working Party More Than Doubles Estimate to 11 Billion Euros

A summary article from Insurance Business Review is online here, and is pasted below.
____________________________________________________________________________

UK Asbestos-Related Claims To Be Around £11bn For 2009 To 2050


Published:26-January-2010

By Staff Reporter

Total undiscounted cost of UK asbestos-related claims to the insurance market is expected to be around £11bn for the period 2009 to 2050, according to a research by Actuarial Profession's UK Asbestos Working Party.

The research identified that the proportion of people suffering from mesothelioma that subsequently make a claim for compensation has almost doubled between 2004 and 2008.

Of £11bn figure, 90% relates to mesothelioma and over £9bn relates to the period 2009 to 2040, compared to £4.7bn of the working party's 2004 estimate for the same period.

According to Actuarial Profession, the proportion of mesothelioma sufferers that have made a claim for compensation has increased from around one-third in 2004 to nearly two-thirds. This change, which was not expected in 2004, has become evident in recent years and explains most of the increase in total costs.

In addition, the working party has taken into account the Health and Safety Executive's statisticians' revised projections of the number of future deaths from mesothelioma in Great Britain, released in 2009, in conjunction with other projection models.


Brian Gravelsons, chairman of UK Asbestos Working Party, said: "Insurers will of course have already noticed the increased number of claims from mesothelioma sufferers, so these developments won't be a surprise to them. However, the working party's projections will provide the insurance industry with a consistent reference point to help it assess its asbestos liabilities.

"There is still considerable uncertainty surrounding the future cost of asbestos claims, as the number of people that will be diagnosed with mesothelioma many years into the future cannot be accurately predicted. The working party will continue to monitor the emerging experience and update its projections accordingly."

New Science - Sequencing Genomes of 600 Children With Cancer - " ...the largest and most powerful single initiative in the 50-year history of St. Jude"

From the January 26, 2010  NCI Cancer Bulletin is a story that provides the latest example of the dawning age of new science brought about by committed doctors, brilliant scientists, your donations, high speed computers and software, and the  desire  to save lives.

Recall that the Humane Genome project was announced in 1990 and completed in 2003. Now, less than seven years lateer, genomes are sequences in days.

Note that the results all will be made public at no expense.

This project illustrates why patents should not be allowed for gene sequences, a battle the ACLU and others are fighting right now.

_____________________________________________________________________________


St. Jude, Washington University Launch Genome Project for Childhood Cancers


Researchers at St. Jude Children's Research Hospital and the Washington University School of Medicine in St. Louis have launched the Pediatric Cancer Genome Project 1 to sequence the genomes of at least 600 children with cancer over the next 3 years. The collaboration marks the first time that whole-genome sequencing will be used on a large scale to discover genetic changes driving pediatric cancers.

"This is the largest and most powerful single initiative in the 50-year history of St. Jude," the research hospital's director, Dr. William E. Evans, said at a press briefing announcing the project yesterday. "DNA is being sequenced as we speak," he added.

St. Jude has a repository of biological samples and clinical information from children who have been treated there since the 1970s. The collection represents a treasure trove of information about cancer, and it can now be scrutinized using the latest genomic technologies at a cost that continues to decline substantially over time.

"This is a new era for pediatric cancers," NIH Director Dr. Francis Collins said at the briefing. "The study represents an opportunity to discover all the ways that a good cell in an innocent child goes wrong."


The project--estimated to cost $65 million and funded by St. Jude--aims to discover the genetic origins of pediatric cancers while creating knowledge that can be used to improve the care of young people with these rare diseases. Early results could reveal new uses for available drugs, and, over the long term, lead to targeted agents for these cancers, the researchers said.

New genetic signatures for classifying and treating patients are also anticipated. Knowing that a child has a subtype with a poor prognosis would allow physicians to select aggressive treatments early in the course of the disease. Similarly, doctors could safely withhold treatments from a patient who has a better prognosis, based on a genetic profile.

"These two great NCI-designated comprehensive cancer centers are demonstrating yet again their commitment to making a difference for kids with cancer," said NCI Director Dr. John Niederhuber.

Dr. Larry J. Shapiro, dean of the Washington University School of Medicine and a pediatric geneticist, said at the briefing: "This project will provide a detailed and complete picture of the mutations in the cancer cells."

In 2008, researchers at Washington University and their colleagues published 2 the first genome sequence of a person with cancer--a woman with leukemia. They have since published 3 the genome of a second person with leukemia, and they have also sequenced dozens of additional cancer genomes using the same whole-genome approach.

The new effort will focus on leukemias, brain tumors, and sarcomas (tumors of bone, muscle, and other connective tissues). To identify genetic changes associated with cancer, the researchers will sequence DNA from both the tumor cells and normal cells of each patient.

The project complements in every way the efforts of The Cancer Genome Atlas 4 (TCGA) Research Network, which focuses on adult cancers, noted Dr. Collins. Just last week, TCGA investigators identified new subtypes 5 of brain cancer using genomic and clinical data--an example of the kind of knowledge Dr. Collins expects to come from the pediatric project.

Another genome effort in pediatric cancer is the NCI-supported childhood cancer TARGET 6 initiative, which includes St. Jude investigators as well as other childhood cancer researchers. The initial discoveries from this project are being translated to the clinic through an early stage clinical trial that is in development for a newly described 7 type of acute lymphoblastic leukemia.

What distinguishes the new project from past efforts, said Dr. Richard Wilson, director of the Genome Center at Washington University, is that this one will be "all whole-genomes all the time." Most genome studies have been limited to sets of genes or genetic markers because of the costs of sequencing DNA. Those costs have now fallen to below $100,000 for a tumor-normal combination, and the sequencing can be done in about a week, Dr. Wilson said. (See "A Conversation with Dr. Elaine Mardis 8" in this issue.)

"There is a sense of urgency to make progress here, and it has now become affordable," said Dr. Evans. "We see this effort as a marathon, and the first 3 years are really just the beginning. I am certain there will be lots of unanswered questions at the end of this period, and there will be much more work to be done."

He acknowledged the enormous challenge of managing and making sense of as much as 100 trillion pieces of data (600 cases, 2 genomes per case, and each genome will be sequenced 30 times to ensure that nothing is missed). To meet this challenge, Washington University is adding new instruments and computational power, and the researchers are confident that they are ready.

"The data storage, management, and analysis problems are substantial," Dr. Wilson said in an interview. "But this project is coming along at just the right time in terms of our technical capabilities. We've really come a long way in just the last 6 months in terms of our data production technology."

St. Jude has, in effect, been preparing for this project for 45 years by creating the tissue repository and developing a capacity for preclinical research studies. The infrastructure and resources required for follow-up studies of the genomic data, such as mouse models, already exist at St. Jude, noted Dr. Elaine Mardis, co-director of the Genome Center at Washington University. "The genome project will fill these pipelines with new information to be analyzed."

In the future, the project will include other types of alterations in cancer, such as those involving RNA and epigenetic changes, which alter the activity of genes without causing a change in DNA sequence, the researchers said.

They stressed that the results will be made publicly available through a Web site once the information has been validated. The hope is that other investigators will bring their own expertise and perspectives to the data and help move the science forward.

"We view this as creating a resource not just for our efforts but for the world," said Dr. Evans. He quoted the founder of St. Jude, the entertainer Danny Thomas, who liked to say, "To cure one child in Memphis is to cure a thousand worldwide."

"It is always a good thing if our discoveries can be amplified and leveraged elsewhere," Dr. Evans added, "and that's what has to happen." (emphasis added)


--Edward R. Winstead

Asbestos Mining and South Africa - Unclosed Mines

This January 2010 article from South Africa reports on this new auditor general report raising major issues regarding failed clean up of mines, including old asbestos mines. As to asbestos mines, it says:

  • Abandoned asbestos mines constitute 3,84% of the total population of abandoned mines. As at April 2008 there were 144 asbestos mines: 45,83% had been rehabilitated, 8,33% had been partially rehabilitated and 45,83% had not been rehabilitated. The status of asbestos mines in the different provinces of South Africa is illustrated in graph 1.
 
 

Mass Tort Battles Ahead - New Thinking and Arguments, UK Report Endorses Litigation Funding, and Phillip Morris Hires David Bernick from K & E

I'm setting aside James Hardie and Australia for a few days. News on Friday provides a great springboard for some comments in the same general area of what's new in mass tort resolution thinking, and some points related to corporate actions to cope with/avoid/limit the corporate damage from mass tort claims.
_____________________________________________________________________________

How does big tobacco admit it  faces massive global tort warfare ahead ? By hiring David Bernick away from Kirkland & Ellis, as was announced Friday - see article at the bottom.

Why is hiring Mr. Bernick so telling ? Look at what he has done.  K &  E  teams headed up by Mr. Bernick have often (but not always) won some of the most  difficult battles in mass tort litigation, and have included various creative and massive efforts to buy time and/or survival for corporate defendants. For example, his team successfully defended Grace executives in a criminal trial involving asbestos regulations and "tremolite contamination" in mined products; that trial would have been easy to lose due to asbestos hysteria. The team also was winning the W. R. Grace asbestos bankruptcy trial by thoroughly discrediting the seamy side of asbestos claiming by the not sick, and so they capitalized by reaching a fantastic mid-trial settlement in the  bankruptcy. Bernick and others  also did a business-saving (albeit unconstitutional) deal  in chapter 11 to free Asea Brown (ABB ) from its Combustion Engineering asbestos liabilities, and obtained that result despite the stench from ABB's   $ 20 million payment to plaintiff's counsel.  Mr. Bernick and others also undertook an ill-fated but brilliant effort on behalf of car companies to use the Federal-Mogul bankruptcy to convene one massive  Daubert hearing in federal court regarding whether brake linings with asbestos actually cause cancers. Even though the latter effort did not succeed on the merits; it bought much needed time for car companies at a time when asbestos litigation was at one of its most frenzied points.

One cannot help but wonder the price. If Mr. Bernick can do for PM what he has done for other entities, the financial dividend for PM shareholders will be huge. Indeed, Mr. Bernick actually will add real value to the bottom line with actual creative thinking and hard work. That said, perpetuating smoking is anything but the work of angels.

What issues are out there to keep Mr. Bernick busy and challenged ? A recent example arises from the disastrous $294 million verdict entered last fall in one of the thousands of pending post-Engle tobacco cases that are being  set for trials in Florida.  If one took that verdict into bankruptcy court and handed it to the "liability estimators," they could generate a future liability range of numbers that probably would include numbers in the trillions of dollars. Those numbers also could be offered in bankruptcy court to support fraudulent conveyance claims involving various corporate moves by tobacco companies. Recall, for example, that Asarco was hit this past year with a $ 6 billion dollar bankruptcy court judgment based on fraudulent conveyance claims tied to corporate activities undertaken in anticipation of tort and environmental claims.

That said, the bankruptcy liability estimation process is not even close to scientific, as Mr. Bernick well knows. Indeed, the Grace bankruptcy included one of the strongest indictments issued to date regarding the lack science and due process in bankruptcy proceedings, That indictment is set out in the testimony of Professor Heckman,  a University of Chicago economist and Nobel prize winner, as described  in item 4 of this prior post.

Meanwhile, there is global cigarette litigation. In Nigeria, the tobacco companies are the subject of $ 45 billion government cost recovery claims, as described, for example, here and here. And, as noted on Saturday, there have even been tobacco claims in Japan, which are not noteworthy for any success but are note worthy for the statistics regarding the continuing smoking patterns in Asia.

Perhaps most significantly, the tobacco industry recently suffered a resounding loss as the Massachusetts Supreme Court endorsed in sweeping terms a medical monitoring class action case against tobacco companies. Due to Congressional hearings and the tobacco settlements, it's very plain that the cigarette manufacturing industry very closely follows science, and so its senior executives undoubtedly are aware of the indicators that their companies soon enough will face a wave of  expensive medical monitoring and therapy claims arising from new scientific discoveries. Soon enough, it will be routine to provide effective screening examinations to find cancers when they are still microscopic. Incredible new devices and techniques will be used to create innovative therapies that will be developed to "cure" or manage the tumors, all at some significant amount of expense. See generally the many papers of Professor Gary Marchant, most of which are collected on his law school's website at the page which is here. Those developments will make it practical for plaintiff's lawyers to bring claims on behalf of persons in developing countries for which the opportunity for expensive life-saving treatment will create enough economic value to incentivize litigating cases that will have significant emotional appeal to any judge or jury.


My bet? Mr. Bernick's will architect and oversee an effective defense across the broad range of pending cases, all while planning for future efforts to obtain absurdly favorable settlements that promote continuing tobacco use by sharing revenues with governments and lawyers, not to mention, litigation funders, to produce securitized cash flows. The settlement also produced ancillary litigation over access to information from state attorney's general on why and how they settled. Certainly Mr. Bernick is well suited by experience to lead PM through the issues ahead.

Mr. Bernick will have plenty of new challenges because more and more commentators are speaking out on the myriad problems with the handling of mass tort claims. Indeed, new commentators are emerging. Commentators include Prof. Erichson on "The Trouble With All or Nothing Settlements" and others who last year spoke on whether more mass tort claims need to be litigated instead of settled. Prof. Burch wrote a post this past Friday on Prof. Redish's new book arguing that many mass tort class action procedures are unconstitutional (an issue I've been litigating and arguing since the late 1980s.) She also links to a summary of contra papers by Prof. Issacharoff, who also is a paid partisan and advocate in asbestos litigation, including (among others) the THAN bankruptcy (click by the first screen and then you should land at the page for In re T H Agriculture & Nutrition, L.L.C., Case No. 08-14692 (REG). The THAN case is the asbestos bankruptcy that produced a declaration from an asbestos  plaintiff's lawyer regarding his understandings from chapter 11 plan negotiations regarding his firm's clients being paid an average of over 700k per claimant for future claims against the THAN trust.

Challenges also will arise due to commentary and new thoughts from overseas. Prof. Burch wrote this recent cogent post summarizing a new report from the UK on tort claiming. To tease you to go read more, here are two key excerpts from the post summary:

"Of additional import, the final report recommends that solicitors and barristers should be allowed to enter into contingency fee arrangements, which are currently prohibited. Before entering into such an arrangement, the report recommends that claimants receive independent advice. It also suggests capping the fees at 25%.



Finally, the report recommends making third-party funding available to personal injury claimants (including those involved in collective actions). It defines third party funding as "The funding of litigation by a party who has no pre-existing interest in the litigation, usually on the basis that (i) the funder will be paid out of the proceeds of any amounts recovered as a consequence of the litigation, often as a percentage of the recovery sum; and (ii) the funder is not entitled to payment should the claim fail." (Final Report at p. 17). Very interesting."

UK corporate and insurance company lawyers issued a January 19 report she links to; here's their bottom line:

"If Jackson LJ's recommendations are passed into law, it seems safe to predict that they will lead to an increase in the number of collective actions seeking damages for personal injury. In particular, group claims against the manufacturers of allegedly defective products, which are no longer routinely funded by legal aid as they were in the 1980s and 1990s, are likely to become more common. Claimants with an arguable claim of this type would generally be able to proceed under a contingency fee, CFA or third-party funding arrangement without the spectre of possibly having to pay, out of their own pockets, either their own lawyers' fees or the costs of their opponent.

Costs shifting would remain in place for most types of collective action, such as those involving claims for anti-competitive behaviour or consumers' claims for economic loss. In these cases, the loser-pays rule would remain a significant disincentive to claimants considering a group action and would protect defendants against frivolous or speculative lawsuits.

The big question now is whether these reforms will be implemented. Jackson LJ appears to hold the view that his recommendations, which he describes as "a coherent package of interlocking reforms", should not be viewed individually but as a comprehensive set of proposals. Some of these proposals could be introduced relatively easily by amendment to the Civil Procedure Rules, such as the introduction of a qualified one-way costs shifting regime, but for the most part primary legislation would be required in order to give effect to other recommendations, such as abolishing the recoverability of success fees from defendants. With the general election taking place this year, civil justice reform is unlikely to be high on the Government's agenda. The likely delay will provide a window of opportunity for those who have concerns about particular aspects of these recommendations to make them known before the reforms are finally implemented."


We surely are living in interesting times for mass tort claiming.
__________________________________________________________________________

Here is the article from the Chicago Tribune regarding Mr. Bernick; the text is pasted below.

Friday, January 22, 2010

Top litigator at Kirkland leaving for Philip Morris

David Bernick, a star litigator at Kirkland & Ellis, is leaving the firm to become general counsel at Phillip Morris International.

Bernick has been with Kirkland for 31 years and has been involved in nearly every type of complex litigation imaginable, from defending companies with asbestos liability to representing breast-implant manufacturers.

"I have spent my entire career at Kirkland & Ellis and I am proud to have contributed to the growth and success of one of the top law firms," said Bernick in a statement provided by the firm. "I will remain close to my many friends and colleagues at the firm, but I look forward to pursuing new challenges during the next phase of my career with Philip Morris International."

Kirkland's incoming chairman, Jeffrey Hammes, said: "David has been an integral part of our premier litigation practice, and his achievements during his 31 years at Kirkland are truly remarkable. We thank him for his varied and long-standing service to the Firm and we wish him success in his new role.

Bernick will join Philip Morris on March 1. As part of the move, he will relocate to Switzerland from New York.

Tip of the hat to Above the Law for breaking the news.

Published Reports - UK Government Seeking a Deal With Unions on Pleural Plaques

This article from a British newspaper reports that the UK government is trying to cut a deal with unions 1) to pay for more scientific research on cancer, and 2) require more compensation from insurers for asbestos victims, but without reinstating pleural plaques claiming. Apparently remaining insurers would be required to pay bills left behind by insolvent insurers. On reading the article, one wonders about linkage between this development and the insurance industry's 8 January 2010 resounding loss in Scotland as various insurers failed to overturn legislation reinstating claiming for pleural plaques in Scotland. 

According to today's article:

"Asbestos victims offered £70m support package


Unions divided on plan to set up a research centre and compensation fund - because of exclusions

By Emily Dugan

The Government is set to present a £70m package of help for asbestos victims to trade unions this week. The proposals include setting up a research centre into asbestos-linked diseases; insisting insurers fund compensation for dying victims unable to rely on their employers' insurance; and more money for sufferers of the deadly asbestos cancer mesothelioma.


The proposals, campaigned for by the IoS, are likely to receive a mixed reaction from campaigners seeking justice for thousands of workers who face painful deaths because of negligent exposure by their employers.


The fund and research centre were welcomed last night, but opponents were quick to criticise the Government's decision not to overturn a 2007 law lords' ruling which left sufferers of a condition known as pleural plaques ineligible for compensation. The condition is often a sign of the onset of deadly asbestos diseases.

The proposals were outlined in a private meeting between Gordon Brown, the Justice Secretary, Jack Straw, and concerned MPs last week. Sources confirmed that if accepted by the unions, the plans would be rapidly adopted. But the construction union UCATT called the proposals "morally indefensible".

*****


The establishment of an Employers Liability Insurance Bureau to maintain a "fund of last resort" for victims of asbestos exposure who cannot trace their employers' insurers is the most significant victory, as it will be mainly paid for by the insurance industry.
 
*****
Mr Straw is understood to have said that overturning the pleural plaque ruling would be too costly, with the Government already facing liabilities of up to £600m because so many public sector workers were exposed to asbestos in previously nationalised industries and in the Armed Forces. Critics believe ministers have surrendered to the powerful insurance lobby.

Andrew Dismore MP, who tabled two bills to overturn the 2007 ruling, said: "If you've got pleural plaques, there's nothing in this package for you. What's on offer is not chicken feed, but it will mean there are lots of people who will not get the compensation they deserve."





Tobacco Lawsuit in Japan - No Relief Obtained

An article is here regarding a tobacco suit in Japan http://www.washingtonpost.com/wp-dyn/content/article/2010/01/22/AR2010012203301.htmlfailing to garner any relief.

Tags:

Australia and Asbestos - The James Hardie Saga, Its Asbestos Claim Payment Foundation - A Viable Alternative to Ch. 11 ?

Now it's west (from Chicago) to Australia, asbestos and the public company fiber cement business commonly known as James Hardie.

 The short story is that James Hardie and its officers and directors have been through a wringer as several were convicted of securities violations in connection with information disseminated regarding "asbestos liabilities" and a foundation set up by various former Hardie entities to manage and pay asbestos claims.   The convictions are on appeal. For more specifics on the past, look to the left for prior posts indexed under the topic "James Hardie." 

Rapid Global Movement Makes Local Policy Hard to Enforce:   Hardies actions are noteworthy for multiple reasons other than the securities convictions. For one, note that Hardie's recent global corporate "citizenship"  translocations from Australia to The Netherlands and now Ireland, all in just 9 years. The point? Money and ownership will move to wherever financial engineering offers a material opportunity to avoid taxes, achieve tax benefits, or avoid or limit liabilities. This point needs to be understood by policy makers, tort claimants, tort case co-defendants and insurers because of its implications for tort claiming and risk spreading.  Simply put, parochial local  approaches to tort law may be politically attractive at times (e.g. take action to save local jobs) but one should expect the tort system will be gamed just as some financiers play games with states in the US for financial incentives to relocate -  for a few years -  the corporate headquarters or a manufacturing facility. The wills of state legislatures, the long term abstractions of tort law professors, and the opinions of slow moving appellate courts are all much less relevant when, as now, ownership, the corporate "home" and money, can all be moved in a matter of  months.  (One wonders when an enterprising tropical island will enact legislation favorable to companies facing long tail tort claims. One might look to the precedent set in the  UK with FSA legislation that helped the "the names" and the Lloyds insurance market run away from their insurance obligations. Or, one might also consider states that set up rules considered unduly favorable to one side or another - some might say that West Virginia, Texas, New York, South Dakota, and Delaware all provide classic examples of this approach  ... )

Private Tort Claim Foundation as an Alternative to Chapter 11 ?  By any reasonable standard, current and former Hardie entities  Hardie entities face claims for  at least a billion or two of claims, and maybe much more, depending on how one defines claims (do overseas claims count; what about property damages claims). In the US, the now-defined answer would be to file one or two subsidiaries file a Chapter 11 case in Delaware or New York. Then, via the parent company chipping in some money and/or rights related to some "shared insurance," the parent and all subsidiaries likely would end up with an injunction  purporting to protect them against a future claim anywhere in the world. Thanks to the rampant lack of due process and the resulting lack of objectors in chapter 11 cases (highlighted most recently by GM and Chrysler), most such plans succeed, at least in the sense that confirmation is obtained.

Hardie, however, did not pursue that path and instead set up a private foundation to manage and pay claims, backed by some conditional promises of future cash flow from Hardie entities. The foundation has now been in place for almost a decade. Future posts will explore some specific aspects of the Hardie foundation. For now, for 213 pages of Hardie facts and history as narrated by KPMG as advisors, go here and read/skim through a 2006 liability estimate.

While reading, note, among other things, that Hardie entities have been selling asbestos products since the early 1900s, owned a chryotile asbestos mine in Australia, sold products internationally, participated in various international joint ventures, and sold a wide range of asbestos-containing products. Sales included a asbestos-cement building materials, pipe insulation, and friction products, as well as sales of raw chrysotile asbestos fiber. Note also that some of Hardie's cement and insulation products included one or both of  two types of the highly lethal amphibole fibers, which are crocidolite (apparently mined in Australia at Wittenoom) and amosite from Cape or others in South Africa (amosite being a sort of a contraction for "asbestos from the mines of  South Africa").

More Litigation Funding News

Another litigation funding business is out there - this one (Arca) is said to have $ 110 million and a focus on Silicon Valley.

14 Lung Cancers Among 28 Asbestos Cases Filed in Madison County December 14-18

Go here to see the new filings summary from the Madison  County Record. Of 28 cases, 14 are said to be lung cancer cases and 14 are mesothelioma cases. 13 of the lung cancer cases are filed by Simmons, Browder et al and 1 by the Gori, Julian firm. One could infer that Simmons, Browder et al want to make sure they have plenty of work to fill slots in trial dockets, and want to guard against a falling rate for persons to develop mesothelioma.

Major Bankers and Financiers, Litigation and "Litigation Reform"

 With today being a holiday in the US for Dr. King's birthday, I decided to take a holiday on the usual torts in favor of a little excursis on bankers, litigation and "litigation reform." The main point? Recent events exemplify why some but not all of the "litigation crises" in the financial sector may be laid squarely at the door of major bankers and financiers.Therefore, one might well conclude that it's wise to think critically before drinking too much Kool-aid poured from the pitcher full of "litigation reform." It also seems wise to drink - carefully - from the pitcher full of real regulatory reform.

Today, the focus is on litigation and crises in the financial sector. A stunning body of evidence continues to mount to prove that litigation in the financial sector keeps growing because too many highly placed business persons consider litigation just natural fallout from money making activities. They see litigation and crises as just a part of the process, and really don't give a damn because the reality is they are making money from present deals, and don't care what happens in five years because by then they will have made a huge pile of cash, and may have exited the scene.

Proof ? Start with Paul Krugman's January 15  "Clueless Bankers" column in the NYT that dissects as follows some of last week's Congressional testimony from various leading luminaries on the Street:

"There were two moments in Wednesday's hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that "happens every five to seven years. We shouldn't be surprised." In short, stuff happens, and that's just part of life.

***

As an aside, it was also startling to hear Mr. Dimon admit that his bank never even considered the possibility of a large decline in home prices, despite widespread warnings that we were in the midst of a monstrous housing bubble.

Still, Mr. Dimon's cluelessness paled beside that of Goldman Sachs's Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted. Phil Angelides, the commission's chairman, was not amused: The financial crisis, he declared, wasn't an act of God; it resulted from "acts of men and women."

Was Mr. Blankfein just inarticulate? No. He used the same metaphor in his prepared testimony in which he urged Congress not to push too hard for financial reform: "We should resist a response ... that is solely designed around protecting us from the 100-year storm." So this giant financial crisis was just a rare accident, a freak of nature, and we shouldn't overreact."

To quote Colonel Potter: it is "horse hockey" to suggest the causes are not known and were not foreseeable. Numerous books and articles have documented the realities - I like best Judge Posner's book - A Failure of Capitalism. It seems pretty plain we need to listen when a University of Chicago "free markets" guru is telling us that the markets failed us and we need meaningful reforms. To Judge Posner and others, it's quite plain that the financial fiasco was predicted by some (who made a lot of money from doing so), it did arise from bankers and lawyers severing risk from responsibility via CDOs and various derivatives, it did arise from rating agencies issuing groundless ratings, and it did arise from AIG and other entities buying and selling purported contracts without regard for whether the parties could honor the obligations. And, all of that does not even address the outright frauds and intentional cheating exemplified by Parmalat, Madoff, Galleon, Enron, and so many others, not to mention the subprime scandals from the various banks that knew they were selling real junk.

I'll also cite a good friend who is probably one of the smartest people in the world when it comes to understanding and managing risks. He spent some 20 years in incredibly senior positions in banking and finance where he put to use his stunning grasp of math, combined with common sense and humble roots. His view? Much of the Street is rotten to the core (especially AIG) and it was eminently obvious to anyone smart who bothered to look (at the time, he was looking at g AIG's 2008 SEC filings and finding them completely inscrutable). He also says the financial system will melt down again "soon" unless derivatives and other like contracts are forced onto regulated exchanges.


A final piece of proof ?  Go to the Epicurean Dealmaker's latest priceless and candid post. The theme ? He largely accepts Mr. Krugman's rant about super giant financial entities taking society back towards future a financial fiasco, but then draws a line that only makes things worse  According to the Dealmaker, the global bankers are far from clueless. Instead, he says, most investment bankers simply don't give a damn,  and will work hard to find a way around the milk toast reforms presently on the table, as is set out in the following excerpts from the post:


"Wednesday, January 13, 2010

I'm Dancing as Fast as I Can

"Good morning, class.

* * *

I recalled this quote to mind today when I read Paul Krugman's latest broadside against all things--and people--financial in The New York Times. In his jeremiad, "Bankers Without a Clue," Mr. Krugman picks apart the recent testimony by four Wall Street CEOs at the Financial Crisis Inquiry Commission and asks the rhetorical question

Do the bankers really not understand what happened, or are they just talking their self-interest?

He concludes that it does not matter, and answers his own question thusly:

Wall Street executives will tell you that the financial-reform bill the House passed last month would cripple the economy with overregulation (it's actually quite mild). They'll insist that the tax on bank debt just proposed by the Obama administration is a crude concession to foolish populism. They'll warn that action to tax or otherwise rein in financial-industry compensation is destructive and unjustified.

But what do they know? The answer, as far as I can tell, is: not much.

By happy coincidence, I enjoyed a quiet morning in the office this past Wednesday free of client obligations. I took advantage of my liberty to view a good chunk of the televised testimony of Messrs. Blankfein, Dimon, Mack, and What's-his-name on C-SPAN. I have to admit that I too was underwhelmed by the bankers' grasp of and ability to explain the recent crisis. At one point, for example, Commissioner Johnson asked Jamie Dimon why the financial industry had attracted so many bright and talented individuals away from other, presumably more productive pursuits. The lackadaisical and uninformative reply Mr. Dimon returned revealed in stark detail a critical fact: he neither knew nor cared to know the answer.

And this example cuts to the heart of the matter: it's not his job to know such things.

* * *

Let there be no mistake: Mr. Dimon, Mr. Mack, and Mr. Blankfein are not stupid or uninformed. (The jury is still out on What's-his-name.) They are damn smart; scary smart, in fact. You don't get to the top of the greasy ladder of a major global investment bank's executive suite by being dull, incurious, or lethargic. People like that get sliced to ribbons and thrown into the chum bucket in my industry before they reach Managing Director, if they ever get inside in the first place. These guys got game, people. Serious game. You would be foolish to doubt it.

But they also have absolutely no interest whatsoever in the whys and wherefores of the financial crisis, the proper size and role of banks and investment banks in the domestic economy, or the moral imperatives inherent in stewarding the financial plumbing undergirding the daily lives and livelihoods of six billion people. For one thing, they don't have time to worry about such things. Most of a senior bank executive's time is consumed competing against other scary-smart investment bankers and executives at other firms, who are hell-bent on grinding his bones into dust beneath their bloody heels, while trying to prevent his own firm from flying apart under the internal stresses generated by thousands of egotistical prima donnas all scrapping for more than their fair share of the pie. There is too much going on, and unrelenting change comes too fast and furious to allow quiet contemplation of the order of things.

Most thoughtful people would agree: it's not wise to try to classify boreal flora and fauna when you have a tiger by the tail, much less think about how you would like to turn the forest into a time share resort.

For another thing--and because the volatile, high velocity nature of the business attracts such people--the people who go into the industry are not really interested in thinking deeply about why things are the way they are. You will almost never find an investment banker "sicklied o'er with the pale cast of thought." It's just not in their genetic makeup to be reflective, introspective, or speculative in an intellectual sense. Investment bankers have almost no interest in why things are the way they are. Rather, they spend all their considerable intellectual and psychological resources on understanding how they can take advantage of the way things are.

***

This explains not only their obvious lack of intellectual curiosity about the sources of the crisis--nothing remotely unconventional or even interesting on that topic left the mouths of any of the CEOs present at the hearing--but also their resistance to any major change in the way the industry or the markets are regulated. Why should they support change? It's hard enough just trying to keep ahead of the buzz saw of unbridled competition and unrelenting demands for profitability from lenders, shareholders, and employees without having to cope with changes in the rules as well. Of course they want to preserve their current profitability and size. Who wouldn't? But they do not assume--and neither, Dear Reader, should we--that changing regulations will necessarily make the industry less profitable. Investment bankers have well-justified confidence in their ability to turn new regulations to their advantage. It's just that, being in an industry that is constantly creating, reinventing, and destroying itself, investment bankers have a very healthy respect for change. You might even say we fear it.

So yes, Mr. Krugman, you are basically right. Don't look to investment bankers for answers on how we got here. We don't know and we don't care. We take the world as we find it and try to make money."

_____________________________________________________________________________

So, tell me again:  why it is our nation offers the financial sector the protections of  Iqbal/Twombly, CAFA and other "reforms?

Photos and Story of Old Asbestos Theater Curtain in Prescott, Arizona

Google caught a story and photos of an old, intricately painted asbestos theater curtain in Prescott, Arizona.
The article is here. A short video is here.

Insurers Appeal Pleural Plaques Ruling in Scotland

Insurers have filed an appeal of their loss on the pleural  plaques case in Scotland. See this BBC article , which essentially repeats this press release from the Association of British Insurers.

Seminar on European Class Actions

Who was the last person to assure you that Europe would never entertain class actions ?  Perhaps you should send them an email and invite them to attend this upcoming seminar in Frankfurt on March 12 and 13.

The summary below is from an email circulated by Mark Hilgard, chair of the program.

"Topics of the seminar will be, inter alia,

Class Actions in Canada

How Foreign Parties become involved in US Class Actions:

International Human Rights Class Actions

The Status of Class Actions, Mass Litigation and Collective Redress in Europe and the Pirate Bay Case

The European Initiative / Green Paper

Class Actions in Germany

• The Plaintiff's Perspective

• The Perspective of a Defence Lawyer

• Handling of Class Actions: The Perspective of a Judge

Class Actions in Austria

Class Actions in Mexico

Class Actions in Switzerland

Class Actions in Ireland

Class Actions in France

Class Actions in Italy - under new and old Law

Class Actions in Spain

Antitrust Class Actions

Securities Litigation

Collective Product Liability Claims

Panel Discussion

• Opt In or Opt Out - Are we heading into the Right Direction?

Funding of Class Actions

D&O and the Role of Liability"

Wide Ranging 2009 Article on Pleural Plaques in Europe

The UK is not alone in considering issues related to asbestos claiming and pleural plaques. Instead, the topic already is being addressed in various countries and no doubt will arrive on the table soon for other countries. The issue is unavoidable because asbestos use in the EU and elsewhere actually far exceeded asbestos use in North America  (for data go here to see Munich Re's charts summarizing data beginning at page 98 in the appendix). Moreover, the use of amphibole fibers appears to have been more extreme. Various national approaches to pleural plaques are reviewed  in a fall 2009 n article that includes papers on the UK decisions, and the law in France, Italy, The Netherlands, Norway, Slovakia, and Spain.  The article is here.

Thanks to Albert Azagra to alerting me to the article last fall - he is one of the authors.

Scottish Trial Court Upholds Legislation Reinstating Pleural Plaques Claiming for Scotland (Statute Also Applies to Asbestosis and Pleural Thickening)

A hat tip to Business Insurance for an email alert on Friday advising that a Scottish trial court had just issued an opinion rejecting insurer challenges to Scottish legislation reinstating claiming for pleural plaques. The article is here; it mainly says the insurers are not happy and may appeal. The opinion is online here at the court's website.

For those interested only in outcome, this is a potentially huge loss for both insurers and, in my view, for society. Set out below are some detailed comments on the opinion, and arguments apparently not made by the insurers. The short story is that the trial judge predictably upheld the law as a rational exercise of legislative judgment despite claims that the legislation violates Scottish law and EU law. Also bear in mind that the statute applies beyond pleural plaques and thus explicitly allows claiming compensation for "pleural thickening" and "asbestosis."

For more specifics on the opinion and some commentary see below. My personal view is that the legislation is misguided because societies have so many more pressing needs that we cannot afford to pay compensation for all biomarkers/conditions. Specifically, it seems to me lines must be drawn, and that societies and companies should not pay compensation for biomarkers/conditions that mark past "exposure" but do not impair day to day life, do not impair ordinary bodily function in general, and do not involve changes to the cellular mechanisms that actively regulate cells and, thus, regulate cancers and the endocrine system. Compensation instead should be reserved for the approaching waves of claims arising from new science and medical monitoring claims related to genetic alterations that really do matter.
On the topic of future claims and science, see Gary Marchant's many papers, which are for the most part collected here. Mr. Marchant is a lawyer, scientist, and former Kirkland litigator. He is now a professor of law at Arizona State University. His roles there include: Executive Director & Faculty Fellow, Center for the Study of Law, Science, & Technology, and Lincoln Professor of Emerging Technologies, Law and Ethics. See especially Marchant, Personalized Medicine and the Law, 44 Ariz. Att'y 12 (2007). See also Gary Marchant See Gary E Marchant, Robert J Milligan, & Brian Wilhelmi, Legal Pressures and Incentives for Personalized Medicine, 3 Personalized Medicine 391 (2006)(related topics in terms of litigation pressures)(the article is available here).

Overview

The opinion by Lord Emslie is long -- it runs about 116 pages and consists of 248 numbered paragraphs. The first 70 pages are devoted to some procedural history, and a significant amount of analysis regarding standing, with the latter encompassing analysis under applicable EU directives and UK law. The opinion also includes some interesting history and analysis regarding the role of the Scottish Parliament as a result of changes in the structure between the UK countries and the advent of EU law. For a US lawyer, the discussion was educational.

The scope of the legislation needs to be understood. To that end, here are key excerpts from the opinion.

"I. Introduction

General background

"[1] In these proceedings for judicial review the petitioners are major insurance companies. Together they challenge the lawfulness of a recent Act of the Scottish Parliament which came into force on 17 June 2009. Both prospectively and retrospectively the Damages (Asbestos-related Conditions) (Scotland) Act 2009 bears to make pleural plaques and certain other asbestos-related conditions actionable for the purposes of claims of damages for personal injuries. According to the petitioners, this unfairly burdens them with additional liabilities under indemnity insurance policies to the extent of hundreds of millions - perhaps billions - of pounds, and they now seek declaratory and reductive orders from the court in that connection. This is resisted by the compearing respondents who are (first) the Lord Advocate as representing the Scottish Ministers, and (third to tenth) a number of individuals with diagnosed pleural plaques who seek, or at least intend to seek, damages on that account from their former employers. A First Hearing on the parties' competing contentions has now taken place before me over periods totalling 22 days."

[11] So far as relevant for present purposes, the Damages (Asbestos-related Conditions) (Scotland) Act 2009 provides as follows:

"1. Pleural Plaques

(1) Asbestos-related pleural plaques are a personal injury which is not negligible.

(2) Accordingly, they constitute actionable harm for the purposes of an action of damages for personal injuries.

(3) Any rule of law the effect of which is that asbestos-related pleural plaques do not constitute actionable harm ceases to apply to the extent it has that effect.

(4) But nothing in this section otherwise affects any enactment or rule of law which determines whether and in what circumstances a person may be liable in damages in respect of personal injuries.



2. Pleural Thickening and Asbestosis

(1) For the avoidance of doubt, a condition mentioned in sub-section (2) which has not caused and is not causing impairment of a person's physical condition is a personal injury which is not negligible.

(2) Those conditions are -

(a) asbestos-related pleural thickening; and
(b) asbestosis.


(3) Accordingly, such a condition constitutes actionable harm for the purposes of an action of damages for personal injuries.

.....

3. Limitation of Actions

(1) This section applies to an action of damages for personal injuries -

(a) in which the damages claimed consist of or include damages in respect of -

(i) asbestos-related pleural plaques; or

(ii) a condition to which section 2 applies; and

(b) which, in the case of an action commenced before the date this section comes into force, has not been determined by that date.

(2) For the purposes of sections 17 and 18 of the Prescription and Limitation (Scotland) Act 1973 ... (limitation in respect of actions for personal injuries), the period beginning with 17 October 2007 and ending with the day on which this section comes into force is to be left out of account.

4. Commencement and Retrospective Effect

....

(2) Sections 1 and 2 are to be treated for all purposes as having always had effect.

(3) But those sections have no effect in relation to -

(a) a claim which is settled before the date on which subsection (2) comes into force (whether or not legal proceedings in relation to the claim have been commenced); or (b) legal proceedings which are determined before that date."

[12] As regards Scotland only, therefore, the Act confers on pleural plaques and on two other asymptomatic asbestos-related associated conditions the status of non-negligible and thus actionable injury. It is true that this mirrors the position de facto conceded in many claims over the previous twenty years or more but, given the asymptomatic, non-disabling, non-disfiguring and non-causative nature of these conditions, the petitioners now challenge this development as an unwarranted contravention of the established need for real or material "damage" in order to complete a cause of action in negligence. In this respect, according to the petitioners, the Scottish Parliament in passing the Act has contrived to do the opposite of many foreign legislatures which, faced with an intolerable escalation of claims by "... the worried well", have brought in measures to negate the actionability of pleural plaques. And, it is said, the Parliament has done so by means of a blatant controversion of established (and indeed agreed) medical fact."


Commentary

Insurers Held Back on Specifics


The opinion indicates the insurers held back on providing specifics on their policies, and on their estimates of the future amounts that will be paid as a result of this legislation. Thus, Lord Emslie explained as follows:

78] Another contention forcefully advanced by the respondents was to the effect that issues of locus standi could not be determined where the petitioners' position as insurers had not been the subject of detailed and precise averment, submission or vouching. Deficiencies in this area had, it was said, been flagged up months ago; calls for further specification had been made in the respondents' Answers; yet the petitioners had stubbornly declined to reveal their true hand. Even now only specimen policies had been produced (productions 6/65-68); there was no way of telling what policy terms would actually apply in any individual case; for the future, the petitioners had sought to reserve their position on the construction and application of policies; and, significantly, the proper law of relevant insurance contracts could not be ascertained. If such contracts were not subject to Scots law, so the argument ran, they might not even be engaged by the 2009 Act which had effect only in Scotland.

***
[218] Massive unresolved uncertainties as to cost levels: In the debate before me it was, I think, acknowledged on all sides that estimation of the overall costs associated with this legislation was far from straightforward. Given the long latency period for asbestos-related conditions including pleural plaques, it was hard to estimate the number of individuals who might have been exposed in past decades. Moreover no-one could predict what proportion would develop asbestos-related conditions, nor what percentage of asymptomatic conditions would actually come to light. Judging the number of pleural plaques claims which might emerge in future years was thus an inexact science with many uncertain variables. Even the approximate cost per claim was hard to pin down - understandable, perhaps, now that claims are apparently being intimated at levels several times higher than the pre-Rothwell average. Against that background, the Scottish Government's approach was largely based on evidence of the current situation as modified by actuarial and demographic considerations. The insurance industry, on the other hand, sought to rely on UK Government estimates (which were themselves uncertain) before taking a percentage which was said to represent Scotland. The latter approach may have allowed individual insurers to withhold commercially sensitive data which might be of value to competitors. In these circumstances, overall estimates ranged from perhaps £100 million, on the Government side, to the insurers' potential maximum of £8.6 billion. If the Scottish percentage were to be reduced, the figure of £8.6 billion would come down as well, but that would still leave an "order of magnitude" difference between the competing estimates.
(emphasis added)

The Insurers Standard Approach Produced a Predictable Result

The opinion is a disappointment in the sense that there is really very little that is "new" in the opinion for persons familiar with the debate regarding whether compensation should be paid for pleural plaques, and so the legislation was not struck down. The trial judge, Lord Emslie, of course is not responsible for whether the parties present anything new or instead simply present the usual arguments. The absence of anything new in the opinion gives one the impression the insurers simply presented the usual arguments without attempting to present NEW evidence or argument on science and pleural plaques as it relates to the number of pleural plaques cases waiting to be identified, and the potential costs. Plainly, the insurers made a conscious decision not to present a comprehensive analysis of the potential loss, a decision one assumes is driven by concerns regarding public disclosures, financial statements, and general reticence to commit to a particular position on a particular topic.

I certainly will not claim expertise on Scottish law or EU law, and so my comments are worth the price you are paying for the analysis. That said, the opinion presents in essence a question that is familiar to US lawyers -- when will a court strike down a legislative act? The opinion uses some words and phrases different than we might use in the use in arguing that issue here, but makes plain the reality that deference is owed to the judgments of the elected legislative branch. Indeed, from the words and analysis, I took away the impression that UL law calls for even more deference than is shown under US law. I also was left with the opinion that the insurers merely put forth a pro forma challenge to delay a probably inevitable affirmance of the legislation, and so are managing the process so that litigation expenses are far less than the savings obtained from delaying or inhibiting the future onslaught of pleural plaques claiming.

What else might have been done by the insurers? From the perspective of this armchair quarterback, the insurers might have had a real chance to win - and might have done some societal good - if they presented a compelling case on the science to show that society cannot afford to pay for the presence of biomarkers (plaques) that are biologically inactive and instead are mere markers of a past exposure, much like a scar marks a past physical insult. On that basis, one could (I think) rightly distinguish pleural plaques from biomarkers that show actual cellular level changes that actually disrupt ordinary bodily functioning (e.g. genomic changes caused by chemical). One might also try to help the Court see that thousands of biomarkers out there, and to understand the differences between pure markers of past exposure, and genomic changes that disrupt cell function. A small part of that potential argument is laid out at section X (pages 31-33) of this paper I submitted in opposition to the pleural plaques Consultation in England.

The argument I would have pressed also would have shown that there are ample reasons to expect that pleural plaques claiming in the UK actually may be far worse than it is has been in the US. Why? In short, because the UK has had such a large shipbuilding industry that used so much asbestos, because amphiboles were widely used in the UK thanks to Cape Industries and T & N (among others), because EU use of asbestos vastly exceeded use in North America, because new CT scanners find 60% plaques far better than do x-rays, and because pleural plaques claiming is driven by lawyers and entrepreneurial behavior instead of science. Id at sections 2.2, 3.1-3.3, 7.10.1, 9.8.

Finally, the opinion (and thus, apparently, the insurers' arguments) do not address the availability of payments from asbestos trusts (chapter 11 trusts, the T & N trust in the UK, or private trusts). Id. at sections 5.1-5.3.

$ 3.6 Billion of Global Government Antitrust Claims/Fines

Global antitrust claiming/fining by governments continues to increase, which probably is not a surprise when government expenses are up and tax revenues are down. Go here for the story summarizing $ 3.6 billion of fines last year.

While you are at it, consider also Professor Yeazell's wonderful article 2002 article explaining the economic forces and econonics that drive and create propensity to claim. Among other factors he explains, two are government's facing increasing expenses and shrinking revenues.

See:

SYMPOSIUM ARTICLE: THE CHANGING LANDSCAPE OF THE PRACTICE, FINANCING AND ETHICS OF CIVIL LITIGATION IN THE WAKE OF THE TOBACCO WARS: Seventh Annual Clifford Symposium on Tort Law and Social Policy: RE-FINANCING CIVIL LITIGATION , 51 DePaul L. Rev. 183 (2002). The paper can be downloaded here.

Conflict of Interests and International Tort Claims for Persons from Many Countries - The Libyan Terrorism Example

Here is an unexpected but interesting non-asbestos example of conflict of interest issues arising from efforts to resolve "mass torts" for various persons around the world. The example arises from the airplane crash and airplane hijacking blamed on Libyan terrorists. The article describes a recently filed lawsuit in which two victims of the crash object to the terms of the settlement with Libya. In brief, the two plaintiffs argue that the lawyers who represented the crash victims, Crowell & Moring, operated under conflicts of interest and that the agreement improperly commingles the interests of the various different categories of claimants, including US and non US claimants. The article includes a link to the complaint itself. The complaint, however, does not attach a copy of a "joint prosecution" agreement apparently signed by the plaintiffs and many others.

Here are excerpts from the article by Roger Alford:

"The facts as alleged in the complaint of Davé v. Crowell & Moring are complex. In brief, Libya has been implicated in terrorist activities on numerous occasions, most notably the hijacking of Pan Am Flight 73 in Karachi, Pakistan on September 5, 1986 and the bombing of Pan Am Flight 103 over Lockerbie, Scotland on December 21, 1988. In 2005, victims of these terrorist attacks and their heirs--including American and non-American victims--retained the law firm of Crowell & Moring--known for representing victims of terrorism--to pursue litigation against Libya. The Davés were among those who signed the Crowell & Moring retainer agreement. As part of retaining Crowell & Moring, every client was also required to sign a joint prosecution agreement ("JPA"), a provision of which provided that the proceeds recovered by any signatory to the JPA shall be shared on a sliding scale based on type of injury with all signatories to the JPA, without distinction as to nationality. Only 23% of the victims who signed the JPA were American. A Liaison Group consisting of one American and four non-Americans was established as agents for the victims in their dealings with litigation counsel. The Liaison Group was represented by Latham & Watkins. In 2008, the United States government entered into a bilateral treaty with Libya for an award of compensation for all U.S. nationals harmed by Libyan terrorism, including the victims of the Pam Am Flight 73 hijacking, which included plaintiffs Gargi and Giatri Davé. The treaty provided for distribution of these funds through the Treasury Department's Foreign Claims Settlement Commission ("FCSC"). After the Davés successfully received notice of their entitlement to millions under the FCSC process, Crowell & Moring issued a demand letter to the Davés contending that under the retainer agreement and the JPA the funds secured by the United States government pursuant to the U.S.-Libya treaty on behalf of American victims are to be shared among all of the victims of Libyan terrorism, American and non-American alike. In other words, the vast majority of the funds secured by American nationals under the U.S.-Libya treaty are--approximately 90% according to Crowell & Moring--required to be paid to non-Americans pursuant to these private agreements."

Chapter 11 Cases Fail to Properly Deal with Future International Claims Against Multinationals Heavily Involved in Selling Asbestos Fibers or Products

The point of today's post is to focus attention on issues and topics that arise from relationships between insolvencies and multinationals heavily involved in selling asbestos fibers and/or asbestos-containing products, and their implications for present and future tort claiming and the ability to enforce bankruptcy court injunctions. To illustrate that the topic is well-grounded in fact, the text below provides a specific example, plus the names of books that describe some multinationals which, in addition to Eternit (see last Friday's post), were very heavily involved in global sales of raw asbestos fiber and/or other products containing large amounts of asbestos.

The topic of multinational relationships vis a vis asbestos claiming and insolvencies has been largely free of careful, public attention during chapter 11 cases. As a result, when chapter 11 trusts were created, little or no provision was made for future international claims, meaning claims to be asserted from overseas against an entity now subsumed by a chapter 11 trust. Such claims were at most handled in name only, with virtually no specific anticipation of the volume of or value of future claims from other nations. What's my basis for saying that no one has ever publicly and specifically estimated the volume and value of overseas claims against US trusts? One basis is general knowledge from involvement in asbestos litigation for 25 years. But, more specifically, that also was the conclusion during an asbestos seminar panel discussion last year. The discussion was part of a March 2009 panel consisting of Steve Kazan (a senior member of the asbestos plaintiff's bar and a lawyer who is very active in international asbestos claiming), Francine Rabinovitz (a wonderful economics and policy expert who advises many trusts, companies and others on future asbestos claiming), and me.

Despite the absence of formal, public estimates of overseas claims, some of the chapter 11 cases have included broad injunctive orders granting debtor entities (and non-debtor entities) the widest possible injunctive relief to protect them against any and all possible future claims, on a global basis. Such orders purport to channel all such claims to the trust created in chapter 11. Issuing global injunctions without meaningful notice and due process is a procedure that is deeply flawed for all concerned, and so will not bind all future claimants, thereby leading to endless claiming and wasted attorney's fees.

On a short-term view, the broad shotgun injunction no doubt appeals to debtors because they (usually) want to exit chapter 11 quickly, and also seek maximum future certainty by obtaining the broadest injunctive protection against any and all future claims. But, the short term approach should be tempered by the reality that the company will not be able to enforce an overbroad, unconstitutional injunction issued without meaningful notice and due process. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812, n.24 (1985)(class action cannot bind persons who were not accorded due process); Stevenson v. Dow Chemical Co., 273 F.3rd 249 (2d Cir. 2001)(class action cannot bind persons who were not adequately represented). Thus, in fact, there is in fact uncertainty if a company is basing its future on an unenforceable injunction.

Overbroad injunctions issued without meaningful notice and due process procedures certainly are adverse for (and illegal as to) a future claimant whose claim may be enjoined when there was no person adequately representing the interest of the overseas claimants whose claims were not actually anticipated in and properly provided for in the insolvency proceedings . As described above, the chapter 11 cases to date have done nothing or very, very little to provide meaningful notice or fair compensation for future overseas claims or claims that arise from corporate interactions, such as joint ventures.

Recognize also that the future claimants also include other corporate entities that will or should be co-defendants in future underlying cases. Like future personal injury claimants, these entities also have not been given meaningful and timely prior notice of proceedings, much less an opportunity to be heard at a meaningful time. Accordingly, to my knowledge, there have not been any hearings to formally and publicly estimate the amount or value of contribution or indemnification claims that current and future co-defendants could or should assert against an insolvent multinational due to both allegedly contributing to the asbestos "exposures" that lead to "asbestos disease."

What kind of corporate interrelationships exist that ought to be carefully, explicitly and publicly considered in the insolvency cases? Consider, for example, the following excerpt from this paper on Eternit (see also last Wednesday's post on Eternit entities.) Specifically, note the assertion that Eternit entities had tight ties to two major asbestos producers that have now been through insolvency - Johns-Manville and T& N/Turner & Newall. Thus, the Eternit paper asserts:

"1960 Eternit Belgium, Johns-Manville (US), T&N and Eternit France together form TEAM, under whose auspices many new [asbestos-cement] firms are established in Asia.

"70-90 Influenced by the debate around the dangers of asbestos, British and American firms are the first to begin to withdraw from the market. T&N and Johns-Manville transfer their interests in TEAM to Eternit Belgium. In addition, Eternit Switzerland withdraws, selling a growing proportion of its interests to Eternit Belgium. By 1989 almost everything which was originally divided between a number of other firms is in Belgian hands. This includes the US firm Eternit Inc."

Want more? Plenty of facts on inter-corporate relationships are out there through books that describe extensive ties between multinational "asbestos companies." In general, the ties consists of joint ventures, sharing knowledge on manufacturing techniques, and sharing information on asbestos health effects. Companies also interacted with each other through inter-company sales of raw asbestos fiber and other products containing asbestos. All of these actions are ones that may give rise to shared liabilities and/or aiding and abetting liability. Here are some examples of the available books; most of them include significant footnotes and bibliographies:


Blue Murder, by Ben Hills, describes in detail the situation related to the Wittenoom crocidolite mine in Australia, a mine owned for decades by CSR. The book discusses many things, including corporate fiber purchasers and uses.

Asbestos House - The Secret History of James Hardie Industries, by Gideon Harris, is a comprehensive account of that company. Numerous mentions are made of relationships between James Hardie, Turner & Newall, Cape Industries, Johns-Manville, and CSR.

The Way From Dusty Death, by Peter Bartrip, is a comprehensive discussion of Turner & Newall and asbestos regulations in the UK from the 1890s through 1970. This book also discusses interactions between various industry titans, including Cape Industries.

Jock McCulloch has written two books on asbestos, focused primarily on mines in South Africa that were the sources for all of the world's amosite fiber, and much of the world's crocidolite fiber. The mines were owned by Cape Industries entities and various other entities. One book is: Asbestos: It's Human Cost, and was published in 1986. McCulloch's second book was published in 2002, and is titled Asbestos Blues, Labour, Capital, Physicians and the State in South Africa.

Messrs. McCulloch and Tweedale combined to write a 2008 book, Defending the Indefensible, the Global Asbestos Industry and It's Fight for Survival.

In addition, Mr. Tweedale also has written extensively regarding Cape Industries and Turner & Newall/T & N. One of his publications is the book titled Magic Mineral to Killer Dust, Turner & Newall and the Asbestos Hazard.

Contribution Claims Between Insurers After Paying Defense Expenses

Sometimes insurers pay all the defense expenses for underlying claims and then seek to apportion the costs among other insurers through contribution claims against the other insurers. In a recent case, a Massachusetts district court applied equity and ordered London insurers to pay 30% of expenses incurred for various underlying silica claims. The opinion is here.

Detailed Review of 2009 US Securities Class Actions

Here is a detailed review of 2009 securities class action, courtesy of Kevin LaCroix at the D & O Diary. Amazing, but not suprising, to see how much litigation is generated by companies that do not make anything tangible and instead are essentially finance companies.

Global Asbestos Claiming - Report on Asbestos Litigation in Nine Nations - Munich Re's Major Compilation of Information

Here is the online image of Munich Re's recent, comprehensive report on asbestos litigation, Asbestos: Anatomy of a Mass Tort. The 112 page report is authored by Nicholas Roenneberg, and is Order number 302-06142. The report can be downloaded and printed from this page.
The same page, on the right hand side, allows you to order a printed copy at no charge.

The report is quite good. It begins with a review of asbestos litigation in North America. The report goes on to explain and explore various factors relevant to reinsurers such as Munich Re.

Beginning at page 58, the report addresses asbestos claiming in other nations in the context of employers' liability. The report covers the UK, Ireland, Italy, Spain, France, Czech Republic, Japan and Brazil. These country-specific reports are well worth reading to better understand the global asbestos claiming situation.

_____________________________________________________________

I owe a hat tip and thanks to Christian Lahnstein of Munich Re for bringing the report to my attention this past fall, and for provding value contributions to dialog regarding mass tort claiming. Christian is a very thoughtful thinker and speaker on the subject of asbestos claiming and its consequences. Indeed, he is thoughtful enough that at a dinner before an international asbestos conference this past fall in London, a smart plaintiff's lawyer listened to Christian for a while and then commented that he was surprised to learn that Christian works in the insurance industry.

Two Easy New Year's Resolutions You Can Act On Now That May Well Save a Life - Cord Blood and Bone Marrow

For 2010, I wish you good health, and lives full of hope, peace, joy and love.

While you are thinking about New Year's Resolutions, please consider two that may actually save some one's life. Both resolutions are easy to fulfill. For one, please spread the word that cord blood donations at birth offer enormous opportunities to save lives because the blood contains life-saving stem cells. For another, please go here to register to become a potential bone marrow donor.

Please read on for more facts on why the needs are so great and why it's easy to accomplish both resolutions.

Cord Blood Can Save Lives


There is enormous medical value to donating cord blood and placentas when children are born. Why? Because they are chock full of pluripotent stem cells able to evolve into cells performing most any cellular role in the body. Why does that matter ? Because the cells may replace existing defective or failed cells that cause cancers and other dread diseases. Go here, for example, to read a November 15, 2000 Science Daily article about great new science in which cord blood is used to achieve tremendous results for patients who need bone marrow (stem cell) transplants to overcome leukemias and other cancer involving blood and bone marrow. Or go here to download the full medical article. The short version of the story is as follows:

"ScienceDaily (Nov. 15, 2009) -- A new study from the Masonic Cancer Center, University of Minnesota shows that patients who have acute leukemia and are transplanted with two units of umbilical cord blood (UCB) have significantly reduced risk of the disease returning."

Is there really a need to spread the word about the value of cord blood ? You bet - the science above is new, and so most people have no idea of the value of the cells, and are not aware of the critical needs. As a result, we are missing enormous opportunities to save lives. How do I know that ? Various ways, but most recently I heard it at a holiday gathering from my old roommate, Dwight, a brilliant and compassionate person who is a practicing OB GYN. The topic came up because several former college friends gathered for the holidays, and one brought up the topic of knowing way too many people with cancer even though we are all less than 55. After various comments about cancer treatments and hopes for "cures," Dwight the OB GYN stated his intense frustration that many parents to be and hospitals pay virtually no attention to cord blood donations. The result ? Every day, thousands of people and hospitals fail to preserve and use thousands of placentas and cord blood that collectively contain billions of stem cells that could save countless lives. So, please spread the word. It takes only a few seconds, for example, to forward an email or to cut and paste some of this text into an email to your existing list of friends and neighbors.

Register as a Potential Bone Marrow Donor

For a second resolution, please consider registering to become a bone marrow donor. It's easy to register with the nationally-recognized "Be the Match Foundation." Click on Be the Match or use your web browser to go to www.marrow.org. Contrary to what many people think, the need for bone marrow has not ended. To the contrary, there is a growing need for bone marrow donors, and the need is especially critical for children. Why ? Because diversity and "mixed marriages" mean that traditional ethnic lines are being crossed, thereby producing new genomes for which there are few or no matches because the existing potential donors are typically older and not so diverse. So, registering new, younger and more diverse potential donors is of critical importance for children with leukemias and other blood cancers. The Wall Street Journal covered the topic earlier this year; go here to read the full story or see the text pasted below. As a result. Mayo Clinic and others are running registration drives, as described here by Mayo.

Registering more potential donors also is critical because some cancer rates are soaring. As shown here, some of the stunning numbers are that for just 2009, and for just the United States, over 65,000 people will be diagnosed with non-Hodgkins lymphoma, and another 8,000 will be diagnosed with Hodgkin's lymphoma. For too many of these patients, the only real chance for life is a bone marrow transplant.
What's involved in registering ? Not much - the registration process is simple, painless and can be done through the mail. How? First, the potential donor registers online with contact information. The mail will then bring a small packet containing a couple of cotton swabs (Q-tips) that you use to gather some fluid/skin cells from the inside of the mouth. Rub the swabs on the inside of your mouth, mail the swabs back in, make a small donation, and that's all there is to it. After that, the registration group submits the q-tips to a lab that analyzes the DNA on the swab to indicate the genomic types for which the registrant perhaps could be a donor. Please click here to go the Be The Match website and register right now to start the new year off with action that may save a life.

Isn't bone marrow donation very painful ? NO, NO, NO - that used to be true, but it's not true anymore ! The typical bone marrow donation process today involves extracting the needed marrow cells through a blood donation/filtering process that takes a few hours. In essence, a needle is inserted, blood is slowly drained out to run through a filter, and the needed cells are collected through a process known as peripheral blood stem cell (PBSC) donation. You can easily talk, watch TV, or listen to music during the process. Or you could simply reflect on probably saving a life. Go here to read more myth busting about bone marrow donation.

Hopefully you are now resolved to take action? After all, how many other actions can you take this year that might actually save a life ?

But, if you need more motivation, here is a Wikipedia article on marrow donation and the various involved groups. Or, please read the full May 27, 2009 Wall Street Journal article below on the critical needs..

_____________________________________________________________________


• THE INFORMED PATIENT

• MAY 27, 2009
I. Building Diversity in Bone-Marrow Registries

• By LAURA LANDRO

Like thousands of patients battling blood cancers, Natasha Collins faces a needle-in-a-haystack search for a bone-marrow donor. But for the 26-year-old medical student with recurrent leukemia, the hunt is even more of a challenge because she is half African American and half Caucasian.

Transplants of bone marrow, which produces new blood cells, offer a potential cure for a growing number of cancers and other diseases, but only if the patient and donor are genetically compatible. Only 30% of patients have a sibling with the same genetic makeup who can provide marrow transplants. For other people, the best chance of a match is someone of their own race or ethnicity. That poses a special problem for minorities, and the growing number of people who identify themselves as multiracial, because for these groups there is a shortage of donor volunteers.

Some seven million people in the U.S. have signed up on a national registry to be potential bone-marrow donors. Even so, less than half the 10,000 patients who needed a transplant last year were able to find a genetic match that led to a transplant. While the odds of a white patient finding a match are 88%, the odds for most minorities can be as low as 60%. The odds of actually receiving a transplant are as low as 20% for some minorities because of other factors such as access to care in their communities.

Now, the National Marrow Donor Program, the nonprofit group that administers the registry with partial funding from the U.S. government, is stepping up efforts to recruit donors from different ethnic backgrounds. The 21-year-old program, which recently changed the name of its registry to Be the Match, is spreading its message through social media Web sites like Facebook and MySpace. It is trying to reach a younger generation that its research shows isn't aware of the program's mission or of medical advances that make it possible to screen potential donors by testing DNA with a simple cheek swab from a kit (available online at bethematch.org).

Marrow Transplant Myths

Be the Match also aims to shatter some myths about bone-marrow donation, such as the fear that it will hurt the donor. Traditionally, donors underwent general anesthesia so stem cells in the bone marrow could be collected from needles inserted into large bones in the back. About 20% of transplant donations are still conducted this way.

Now, in a relatively painless procedure that doesn't require anesthesia, some 60% of transplants are performed by harvesting a donor's peripheral blood stem cells, which are cells from bone marrow that circulate in the blood stream. These can be collected by circulating the donor's blood intravenously over several hours through a machine. The procedure also delivers a greater volume of stem cells to the recipient than a traditional bone-marrow transplant. The donor's body regenerates the stem cells within a few weeks. Donor costs are typically covered by the patient's insurance or by funds from the registry and other sponsors.

An additional 20% of transplants are performed using umbilical-cord blood cells that are donated after childbirth. This procedure, which doesn't require as close a genetic match between donor and recipient, is relatively new, and there isn't a large body of scientific evidence of its long-term effectiveness and complication rates.

Bone-marrow transplants, first offered in the 1960s, have been used to treat leukemia, aplastic anemia, lymphomas such as Hodgkin's disease, multiple myeloma, immune-deficiency disorders and some solid tumors such as breast and ovarian cancer. Before undergoing transplants, patients typically are treated with chemotherapy and sometimes radiation to destroy their diseased marrow. The donor's healthy blood-making cells are then infused directly into the patient's bloodstream, where they help to build a new blood supply.
But for a transplant to succeed, markers known as human leukocyte antigens, or HLAs, have to match between donor and recipient. The body uses the markers to recognize which cells belong in the body and which are intruders. A close match will reduce the risk that the patient's immune cells will attack the donor's cells or that the donor's cells will attack the patient's body after the transplant. Patients inherit half their HLA markers from each parent, and each sibling has a 25% chance of matching. But it is possible to have even a dozen siblings and no match.

Diagnosed With Leukemia

I was one of the lucky ones. When I was diagnosed with a form of leukemia in 1991 and needed a transplant, both of my brothers tested as identical matches on each of six HLA markers used to determine compatibility (though five are sometimes acceptable). Because some HLA types are found more often in certain racial and ethnic groups than others, the HLA markers of a donor can be close enough to be compatible with a patient from a similar ethnic background. People with mixed backgrounds, such as African and European ancestry, for example, have unique combinations of HLA types. "As long as we create more diversity [in the population], we will need more and more donors to reflect that," says National Marrow Donor Program Chief Executive Jeffrey Chell.

Ms. Collins, the medical student, had a transplant from donated cord blood cells in May 2007, but her cancer, known as acute myelogenous leukemia, has returned. Her doctors now believe a bone-marrow transplant offers Ms. Collins the best chance of a cure. Her classmates at Yale University have held bone-marrow drives, sent emails to other medical schools to recruit donors, and created a Facebook group with over 1,000 members and a YouTube video (both accessible at www.matchnatasha.org).
Ms. Collins is now undergoing chemotherapy, which weakens her immune system. She says she is trying to keep up with her class work by studying at home. "The good news is that we've found some potential matches," she says.

The National Marrow Donor program says it is seeing results from its minority recruitment efforts. Groups such as Historically Black Colleges and Universities conducted drives that have signed up 5,000 donors in a program launched last year. The donor program is also working with Hispanic groups and Asian and Pacific Islander organizations, as well as with blood centers in states that have large Native American populations. In 2008, it signed up 440,000 new donors, just under half of whom were from diverse racial and ethnic communities. The group also is working with international registries, with a total of five million potential donors, and is signing cooperative agreements with countries like Brazil.

Studies show that there are a number of reasons why different ethnic groups don't sign up as bone marrow donors, including a lack of educational resources devoted to those communities, fear of doctors and hospitals, concern about putting personal information in a database, and cultural taboos about donating a physical part of oneself.

In one effort to recruit Asian and Pacific Islander donors, 26-year-old acute leukemia patient Michelle Maykin founded Project Michelle, an online campaign that includes a Web site, projectmichelle.org, with blogs, photos and videos. The project has recruited more than 15,000 new donors by sponsoring bone marrow drives with the help of the national registry at Asian churches and student groups, among others.

Advances in Matching

Improvements in matching techniques, using DNA-based testing methods, can more precisely identify the best donor. Be the Match recently started offering an online search tool that patients and doctors can use to get an idea of how many potential matches may be in the registry.

In the past 18 months, the registry found matches for more than 5,000 transplants, an 18% increase over the previous period. More diseases, such as sickle cell anemia, are now treated with transplants. And patients 50 and older, for whom transplants were once considered too risky, are now eligible for the treatment. That's because of new, pre-transplant chemotherapy regimens that are less toxic, and better post-transplant care to prevent infections and rejection.

Ineligible Donors

Some medical conditions may eliminate potential donors, such as bleeding problems or heart disease. When Christopher Bartley, a classmate of Ms. Collins at Yale Medical School who has African-American, Caucasian and Honduran roots, tried to sign up, he found that he was ineligible because he suffers from sleep apnea, which causes pauses in breathing during sleep.

And even though the hope is that more minorities will provide matches for others in the same ethnic mix, it is also possible to find a match where there is no ethnic similarity. Victoria Namkung, a Los Angeles writer of Irish, Jewish and Korean origins, who signed up as a donor several years ago, was surprised to learn that she was the match for a Mexican-American man in Ft. Myers, Fla. Donors and recipients can communicate anonymously for the first year through the registry and then meet if they choose. Ms. Namkung says she and her recipient have met and keep in touch. The feeling of having provided him a life-saving transplant "changed my life," she says.

• Email informedpatient@wsj.com.

Printed in The Wall Street Journal, page D1