A federal judge ruled that The Travelers Cos. doesn't have to pay more than $500 million in settlements for thousands of people claiming asbestos-related health problems linked to one of the insurer's former policyholders.
At issue are people suffering maladies stemming from asbestos that was used in many household, industrial and military products from roofing shingles and car brakes to floor tiles and Navy vessel insulation. Travelers provided general liability coverage and other insurance between 1947 and 1976 to Johns Manville Corp., the largest manufacturer of asbestos products and raw asbestos in the U.S. for much of the last century.
The court decision is the latest in a legal volley that has already resulted in aU.S. Supreme Courtdecision in 2009. Yet, aspects of it continue to be challenged. The case pits Travelers against 26 state-court actions that were bundled into three settlements and mediated by former New York Gov. Mario Cuomo between 2002 and 2004.
Those settlements were fought by outside parties, including Chubb Indemnity Insurance Co., which said it didn't want Travelers to be off the hook for future liabilities as a condition of the settlements. In the most recent ruling, the federal judge said that as a result of other court decisions, the Cuomo settlements do not absolve Travelers of future claims from Chubb and other insurers. As a result, Travelers is not required to pay the thousands of people sickened from inhaling microscopic asbestos fibers.
"While Travelers was willing to pay the additional $500 million to obtain complete peace through a clarification that any and all claims against it related to its handling of asbestos claims were enjoined ... this is not the relief Travelers obtained," U.S. District Court Judge John G. Koeltl of the Southern District of New York wrote in a Feb. 29 decision.
"Moreover, there is nothing unfair about not requiring Travelers to make the payments under the settlement agreements if it is not contractually bound to do so," Koeltl said.
Manville declared bankruptcy in 1982 as it faced a tidal wave of lawsuits from people who had various health problems associated with asbestos.
Asbestos is a generic name for six minerals in nature that were used during much of the 20th century in the manufacture of thousands of products: wallboard, floor tiles, roofing shingles, ceiling tiles, cement, textile products, automotive brakes, paper products and other items, according to the federal Centers for Disease Control and Prevention and the Environmental Protection Agency.
Asbestos materials can break apart into microscopic particles easily inhaled, and people who were exposed to asbestos on a regular basis for work have developed several types of life-threatening diseases, including lung cancer, according to the CDC.
The federal government has banned asbestos for different uses in several stages starting in 1973 through the National Emissions Standards for Hazardous Air Pollutants.
The three settlements in the most recent lawsuit are separate from, and in addition to, an initial settlement in 1986 when Travelers agreed to pay $80 million to a bankruptcy estate to cover Manville's asbestos liabilities. The 1986 court orders intended "to fully and finally extricate Travelers from the Manville morass," according to court files.
Many new lawsuits emerged after the 1986 court orders, however, with new victims pursuing different legal claims based on state consumer statutes and common law theories. Those lawsuits were based on the underlying premise that Travelers "acquired knowledge about the dangers of asbestos from claims in the 1950s, recognized the potential for future escalation of asbestos litigation and began to influence Manville's purported failure to disclose knowledge about asbestos hazards," court documents say.
The lawsuits filed after 1986 were bundled by U.S. Bankruptcy Court and mediated by Cuomo.
In the federal court ruling last week, Judge Koeltl reversed a decision signed Dec. 16, 2010, by U.S. Bankruptcy Judge Burton R. Lifland, who said the dispute had "gone on for too long, especially for those asbestos victims who have yet to be fully compensated."
Lifland compared the legal plight of people with asbestos-related health problems to a "Sisyphean cycle," a reference to the endless and unavailing task of the mythological Greek king Sisyphus who pushed a rock up a hill only to have it escape and roll downhill repeatedly and forever.
"The same parties that were present thirty years ago are again before this court in this long-standing saga," Lifland said in his 2010 decision. "The relief sought by the parties is still the same — compensation for the thousands of asbestos victims who continue to await their agreed-upon settlement payments."
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