On March 3, 2021, the PROTECT Asbestos Victims Act, otherwise known as S.574, was introduced in the U.S. Senate by Senators Thom Tillis (R-NC), John Cornyn (R-TX), and Chuck Grassley (R-IA). This legislation attempts to reform the asbestos bankruptcy trust system by providing oversight of asbestos bankruptcy trusts, ensuring those harmed by asbestos receive fair and just compensation, and eliminating fraud and abuse within the trust system.
Since its creation in 1994, the asbestos bankruptcy trust system has received little independent oversight. This legislation hopes to change that by implementing several mechanisms to provide oversight and prevent the payment of fraudulent claims.
The PROTECT Asbestos Victims Act includes several reforms to achieve this goal. The act will empower the U.S. Trustee Program of the Department of Justice to investigate fraud against asbestos trusts. Currently, the Department of Justice is prevented from doing so under the present law. The act will also make it a crime to knowingly submit a false claim to a trust. Furthermore, trusts will be mandated to comply with subpoenas from state courts seeking information related to trust payments to better help prevent fraudulent claims in both state and federal proceedings. Under the act, the party requesting the information will pay reasonable costs to the trusts for such information.
Additionally, the act will mandate that trusts report information to CMS to ensure proper reimbursement to Medicare and Medicaid. The act will also allow for the appointment of a special, disinterested representative to advise future victims in a bankruptcy case.
Ultimately, the PROTECT Asbestos Victims Act seeks to create meaningful oversight of the asbestos bankruptcy trust system and preserve victims’ access to compensation. This recent legislation could prove groundbreaking and will likely alter the landscape of asbestos-related litigation and claims.
While similar legislation was introduced in 2019, it was never enacted. Most recently, the 2021 PROTECT Asbestos Victims Act was referred to the Committee on the Judiciary where it currently remains. While the bill moves through the Senate, we will continue to follow these developments and provide further updates.