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  • Writer's pictureKirk Hartley

Knowledge Transfer in Claiming – Rising Disability Claims and Expense in the US

Some interesting observations in A WSJ op ed piece on rising disability claims and expenses. The author is Michael J. Boskin, a Stanford professor with impressive academic credentials, but a chink in the intellectual portfolio for previously suggesting that it does not matter if a country produces computer chips or potato chips, a statement made while working for President Bush I.

One point that especially caught my attention is Professor Boskin’s suggestion to start rating and charging industries based on experience in terms of the numbers of persons disabled (or allegedly disabled) by the industry. According to Professor Boskin, the Netherlands showed reduced claiming after experience rating was adopted. One wonders what the financial impacts would be for industries such as the oil and gas industry, or significant users or consumers of "toxins," such as asbestos, beryllium, some pesticides, or some chemicals.

Another notable point is Professor Boskin’s observation that compensation systems are now "permeable." As he puts it:

"One fundamental lesson of the past decades is that the many overlapping benefit programs have become permeable. People figure out how to move from program to program, stretch boundaries and take the best option. When government is offering benefits—or green-energy corporate welfare, too-big-to-fail bank subsidies and tax breaks—people will find a way to take them."

The even larger point is that knowledge has become readily transferable and often very actionable. Thus, one might broadly observe that the litigation industry in general became more permeable, and the asbestos litigation industry in particular became more permeable over the last few decades. When Manville went into chapter 11, there were shifts in strategy for all members of the asbestos litigation industry. When class actions and mass filings were the rage, they grew. Then asbestos trusts grew, and the asbestos litigation industry changed again. Meanwhile, more and more plaintiff’s firms now exist.

The same principles also appear to apply to other specific subsets of litigation. For example, securities fraud claims, failed bank claims, and antitrust claims. The claimants and payors are continually shifting their focus. Another example arises from priest sex abuse cases. The claims exploded quickly and then many shifted from the tort system to a bankruptcy trust compensation system.

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