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|ISSN 1470-8108||Issue 50||Spring 2003|
Defendants post-Fairchild continue to employ discredited legal strategies whilst simultaneously developing alternative means to escape asbestos-related liabilities1. Presenting the US asbestos litigation crisis as a worst-case scenario, they portray UK plc as staggering under the burden of asbestos personal injury claims even though differences between the two legal systems mean that the explosion in the number and size of claims which has occurred in the US is unlikely to be repeated in the UK. In legal articles, media reports and conference speeches, the claim that defendants face financial ruin from run-away asbestos-related costs is repeated ad nauseam e.g. "the economic values involved in asbestos losses may far exceed the entire assets of the insurance industry." Everyone and everything is blamed: asbestos victims, ambulance-chasing solicitors, blasé government agencies and a growing "compensation culture;" everyone, that is, but the insurers and reinsurers who, having accepted premiums, remain unwilling to pay claims.
At the heart of the Fairchild appeal to the House of Lords was the issue of causation. While the High Court and the Court of Appeal agreed that, in the absence of scientific evidence identifying the precise fiber which caused a claimant’s mesothelioma, negligent employers could not be held liable, the Law Lords championed matters of public policy and justice over "exclusive criterion of causation" in cases where there were multiple guilty parties. Lord Bingham concluded:
"there is a strong policy argument in favour of compensating those who have suffered grave harm, at the expense of their employers who owed them a duty to protect them against that very harm and failed to do so, when the harm can only have been caused by breach of that duty and when science does not permit the victim accurately to attribute, as between several employers, the precise responsibility for the harm he has suffered."
Ruth Davies from John Pickering & Partners, the plaintiffs’ firm which represented two of the three Fairchild claimants, reports that despite their Lordships’ judgment, insurers in mesothelioma cases continue to press for proportionate reduction in damages for unsued exposures, that is, for periods during which exposure occurred with employers now insolvent or defunct. Ms. Davies is concerned over the implications of this legal strategy: "Damages could be reduced dramatically in some cases. Any appeal might again have the effect of delaying affected mesothelioma claims." Solicitor Adrian Budgen agrees: "Following Fairchild, we welcomed the clarity but ever since, the insurance industry has been trying to undermine it by seeking apportionment and also by lobbying the government to introduce some sort of scheme." The "apportionment argument" does not seem to be restricted to a small number of defendants; Ian McFall of Thompsons Solicitors notes: "Most defendants are now arguing that a principle of rateable apportionment should apply in all multiple employment asbestos cases irrespective of disease type… We have been vigorously opposing any apportionment argument in all mesothelioma and lung cancer cases which has led to some cases running up to the last few days prior to trial before defendants have eventually capitulated. Last minute settlements just before the trial have become the order of the day again." Both Ian McFall and Gareth Wheeler agree that "in the current climate, aggressive litigation remains the only effective way of servicing our clients’ best interests."
An interim solution to the inevitable delays caused by the use of the "apportionment argument" was imposed by High Court Judge Harris QC on June 14, 2002 in the case of Alfred George Boundy-v-Reppac Pipe Services Ltd. (formerly Capper Pipe Services Ltd.) and Roddell Mechanical Services Ltd. As the full written judgment of the House of Lords in the Fairchild case was not available at the time of the hearing, the claimant relied on a letter from the Judicial Office of the House of Lords dated May 30, 2002 written on behalf of Lord Bingham, the Chairman of the Committee adjudicating the Fairchild appeals. Andrew Morgan, Mr. Boundy’s solicitor, notes: "The letter stated that in those cases each of the defendants was liable for the full award of damages." In his Case Report, Morgan explained:
"the Judge (Harris) found that any liability that was established against either defendant would render that defendant liable for the whole of the damages. Rather than order that the case be given a trial window for July 2002, the Judge ordered that judgment be entered for the Claimant against the First Defendant and that the First Defendant make an interim payment to the Claimant of £50,000. The trial window of October would remain open for the trial of the issue of quantum, the issue of liability of the Second Defendant and any issue of contribution between the Defendants."
Mr. Boundy died on August 28 knowing that he had won his case against Reppac Pipes and having received the interim payment. Some months later, a further £120,000 was paid to his wife.
Throughout the Fairchild case, it was apparent that insurance companies and the body which represents them, the Association of British Insurers, were working together to ensure the early judgments were upheld. Since the House of Lords rejected (June 20, 2002) the "perverse and absurd" High Court ruling of Mr. Justice Curtis, the insurers have used the media to raise the profile of their campaign for legislative relief. It is no coincidence that articles with headlines such as the following appeared in the national press within weeks of the pro-claimants’ decision in Fairchild:
Fears of Asbestos Case Fall-out – The Financial Times, July 1, 2002
"The spectre of US-style litigation – with its trail of corporate bankruptcies and multi-billion dollar claims – hangs over asbestos-related personal injury claims worldwide…(the House of Lords’ ruling in Fairchild) could open the way for damages-sharing, based on market share…"
Current EL System Must Go, ABI Says – The Insurance Times, July 4, 2002
"The insurance industry has told the government that the current framework for employers’ liability in the UK is unsustainable… Among the key changes insurers are looking for is a change in EL legislation. ‘We would want to see the exclusion of industrial disease from any future legislation,’ Bell (Technical Manager of Royal & SunAlliance) said."
Treasury May Step in over Employers’ Liability Crisis – The Independent, August 22, 2002
"The Government yesterday signalled it was receptive to the idea of forcing employers to fund some of the escalating employers’ liability claims that are currently being paid by insurers. The move comes after repeated distress calls from insurers, who have argued they are close to being unable to afford the mounting claims."
Companies Fear Asbestos Claims Crisis – The Financial Times, September 9, 2002
"Actuaries estimate that asbestos-related cases will cost companies and their insurers Dollars 200bn-Dollars 275bn (Pounds 120m-Pounds 175m) in the US and between Dollars 32bn and Dollars 80bn in Europe…"
Rough Justice for those with the Deepest Pockets? – The Times, October 22, 2002
"Legal decisions on asbestos-related damages claims on either side of the Atlantic are leading to very different reactions in the boardrooms of companies facing the prospect of litigation.
In the UK, a decision by the House of Lords has potentially opened the way for rising numbers of claims and to feelings of ‘rough justice’ among businesses in the firing line… this verdict signals the concerning trend in asbestos litigation, not just in the US, but also in the United Kingdom, of the growth in claims and the potential cost to the insurance industry. In the UK this has been estimated to be between £6 billion and £8 billion, spread over the next 20 years."
On March 26, 2003, David McIntosh, a solicitor who has represented UK asbestos defendants for many years, told delegates to the Asbestos Risk Management Conference, that the cumulative asbestos bill could, indeed, reach "£80 billion plus." The one-day conference, intended to acquaint property owners, insurers, local councils and others with the intricacies of the new Control of Asbestos at Work Regulations (CAWR 2002), heard many complaints that the new "Duty to Manage Asbestos in Non-Domestic Premises" was "disproportionate" and "misguided." In his first four slides, McIntosh set the scene for his talk by highlighting the chaos and financial havoc caused by the asbestos free-for-all in the US. During the remainder of the presentation, McIntosh painted a bleak picture of the impending UK crisis suggesting that:
Just a few days after McIntosh’s gloomy pronouncements, a report entitled: Asbestos: Too Hot to Handle for European Insurers? 2 concluded that "several important factors … will limit the exposure of commercial insurers to European based asbestos claims although such claims will still be substantial." The fourteen page paper distributed by Fitch Ratings, an international rating agency, predicted that:
"the hardest hit firms will be specialist liability underwriters without the diversification to absorb asbestos losses. As with the US, the agency expects that asbestos exposure will continue to result in reserve deterioration through both shock losses and a ‘slow bleed’ into results."
Although the peak death rate will "be between three and five times greater in Europe than the US," the impact on insurers and reinsurers with European asbestos-related liabilities could be contained by several factors:
Even though the "total asbestos exposure of European insurance companies and groups" could reach €50bn-€120bn (approximately £33bn-£80bn/$50bn-$120bn), Fitch believes "exposure will be manageable for the vast majority of (European) insurers, particularly given the length of time until the peak of the disease." One exception, however, might be Equitas, "the European based insurer with the largest exposure to asbestos claims." There is "a significant risk" that Equitas, set up following the Reconstruction and Renewal program by Lloyd’s of London and the UK Government in the early 1990s: "will not be able to meet its obligations in respect of asbestos liabilities…"
In the post-Fairchild era, new avoidance strategies are being developed by defendants which include calls for: "a statutory scheme in relation to untraced or insolvent defendants and insurers," the reform of the workplace compensation system, the imposition of a no-fault compensation scheme and the off-loading of asbestos claims from insurers to the Government. John Parker, the Head of General Insurance at the Association of British Insurers, believes: "there are underlying issues that need to be considered in the review of EL insurance… In particular there is a need to explore the benefits and costs of no-fault compensation, and the practical implications of separating the funding of the compensation system for workplace accidents and occupational diseases." The Confederation of British Industry is advocating "urgent new curbs on the compensation culture" and demanding that the Government consider transferring "responsibility for latent disease claims from the private to public sector."
Responding to the growing campaign for legislative action, two Government agencies have announced urgent reviews. By the end of April, 2003, a preliminary report by the Office of Fair Trading (OFT) on the UK liability insurance market, including issues related to public, product, professional and employers’ liability insurance, is expected. The OFT market investigation was sparked by concern over whether large increases in premiums, reductions in underwriting capacity and increases in insurance excesses were symptomatic of a failing market. Simultaneously, the Department of Work and Pensions (DWP), in cooperation with the Treasury, the Department of Trade and Industry, the Lord Chancellor’s Department and the OFT, has been carrying out a more closely focused review of the operations of the Employers’ Liability Compulsory Insurance (ELCI) regime. In consultation with stakeholders, the DWP is trying to ascertain:
As government departments compete to assuage the economic damage wrought by asbestos on negligent UK employers and exposed insurers, no assistance is forthcoming for hundreds of former workers whose personal injury actions against T&N Ltd., formerly the country’s biggest asbestos group, have been frozen since the company went into administration on October 1, 2001. As the physical condition of the claimants deteriorates and their financial plight worsens, they watch insolvency lawyers, accountants, bankruptcy specialists, actuaries and administrators pick at the corporate carcass of T&N. The advisers receive timely payment for their services while the injured receive neither compensation nor apologies. An industry-funded scheme for interim payments to these victims of corporate malfeasance and greed should be established as a pre-condition of Government consideration of the asbestos grievances of UK plc. Only then, and not a moment sooner, should these reviews proceed.
The test case brought by Alan Robert Matthews against the Ministry of Defence (MOD) which suceeded in the High Court in January, 2002 has fallen at the final hurdle. On February 13, 2003, the House of Lords Appellate Committee of Lords Bingham, Hoffman, Hope, Millett and Walker upheld the ruling of the Court of Appeal which had reversed the earlier decision of Mr. Justice Keith (newsletter issue 45). Had the plaintiff’s judgment survived, thousands of other litigants could have benefited including: veterans of the Falklands war, service personnel exposed to radiation during nuclear tests on Christmas Island, individuals exposed to hazardous substances at Porton Down and other MOD asbestos victims. A Hull widow, Barbara Smith, was bitterly disappointed by the judgment; her husband, an engineer in the Navy from 1955-1968, died last year from mesothelioma. Mrs. Smith said: "I want justice. Our lives have been cut short, we have been robbed. They just have to take responsibility. We were just beginning to live life, going on holiday on our own to see the world a little bit and he has been snatched away. He was in their care, serving Queen and country."
Plaintiff Matthews, a 65 year old former sailor from Devon, alleged that from 1955-1968 he had been exposed to asbestos as an electrical mechanic on board seven Royal Navy ships; "by reason of his exposure to these (asbestos) fibres and dust, he has developed asbestos related injuries, namely pleural plaques and bilateral diffuse pleural fibrosis." The claimant maintained that Section 10 of the Crown Proceedings Act of 1947, the UK law which prevents former service personnel from bringing claims relating to pre-1987 occurrences, infringed his rights to a fair hearing and damages in tort as stipulated by the European Convention on Human Rights and the Human Rights Act. After the House of Lords decision was announced, Mr. Matthews pledged to continue: "I’m not going to throw in the towel. I always knew this was going to be a struggle, but the fight must go on. The livelihoods of too many people, including families and widows who have lost loved ones to the negligence of the armed forces, depend on the outcome of my case to give up now." He said that his lawyers would take the case to the European Court of Human Rights in Strasbourg.3
Within three weeks of this catastrophic ruling by the House of Lords, a historic decision was handed down by Mr. Justice Simon in Leeds High Court; he awarded the family of mesothelioma victim Anthony Farmer £4.37 million in compensation against negligent employers: Rolls-Royce Industrial Power (India), NEI Clarke Chapman and members of the Babcock and Mitsui Babcock Engineering Groups, all of whom had failed to protect Mr. Farmer from occupational exposure to asbestos pipe insulation and other asbestos products. The record amount of damages acknowledges Mr. Farmer’s meteoric rise from butcher’s boy to power station worker to gifted entrepreneur. Mr. Farmer, who died at 47, was co-owner of Tyre Technics, the world’s biggest tyre retread firm. In 1998, this company was sold for £30 million. Solicitor Adrian Budgen said: "The amount of damages reflects that his earning potential was very great and he would have continued to provide for his family as he had always done… The claim was unique because (his) income, and potential income, was very substantial indeed… his life was cut tragically short and, not only have his family lost a devoted husband and father, they are also now denied a significant income from the sale of companies [he] would have created."
On February 4, 2003, UK medical specialists informed members of the House of Commons Asbestos Sub-Committee that the current diagnosis and treatment of mesothelioma victims was woefully inadequate. According to Dr. Ken O’Byrne, the Head of the British Mesothelioma Interest Group, and Dr. Jeremy Steele, Consultant Physician from St. Bartholomew’s Hospital, London:
Dr. O’Byrne reported that even though there are now more than 1,600 mesothelioma deaths a year, widespread ignorance about the disease remains. In the absence of a well-funded national mesothelioma strategy and the political will to improve services, little will be achieved despite the dedication of medical personnel working at specialist centres. On February 11, 2003, Tony Lloyd MP called mesothelioma "a Cinderella in the world of cancer" stating: "Many cancer specialists argue that we need access to specialist facilities for mesothelioma so that people can be diagnosed promptly and receive rapid treatment. Survival rates would thus be pushed up massively, as they have been in other countries. The real issue is that mesothelioma sufferers are not diagnosed early enough." Responding to his comments, Ms. Hazel Blears, the Parliamentary Under-Secretary of State for Health, agreed that: "Diagnosis is difficult and there is controversy about the type of treatment that is appropriate." She added: "There are two clinical trials looking into chemotherapy, surgery and palliative care to find out which combination of those treatments is most effective."
In 2000, a pilot study (MESO-1), run by the British Thoracic Society and the Medical Research Council, began recruiting patients for a clinical study of malignant pleural mesothelioma. This program has now been expanded into "the largest, randomised national trial ever conducted into possible benefits of chemotherapy and active symptom control for mesothelioma." The new trial (MS01) is being run by the Medical Research Council Clinical Trials Unit with the approval of the British Thoracic Society and funding from Cancer Research UK. According to Dr. Martin Muers, principal investigator of MS01, "the aim of the trial is to compare the two chemotherapy groups against the standardised ASC (Active Symptom Control) in terms of survival, quality of life, symptom relief, toxicity, tumour response and recurrence/progression." As of January 8, 2003, 170 patients had been randomized between the three treatments on offer: ASC alone, ASC + 3 drug combination (MVP: Mitomycin, Vinblastin, Cisplatin) and ASC + a single drug (N: Navelbine). As the total number of patients required for this trial is 840, Dr. Muers and his team are hoping to recruit additional participants. Interested clinicians are requested to contact the Cancer Division of the Medical Research Council Clinical Trials Unit; point of contact: email@example.com
Research on the treatment of mesothelioma has been carried out at St. Bartholomew’s Hospital, London under the supervision of Consultant Medical Oncologists for Lung Cancer and Mesothelioma Drs. Robin Rudd and Jeremy Steele since 1997. Dr. Steele is optimistic about the results of current research protocols: "We are now treating mesothelioma patients as part of the Phase II Trial of IPM (Irinotecan, Cisplatin and Mitomycin) and initial results look encouraging with around 30-40% of patients experiencing substantial clinical benefits particularly with symptom relief. An earlier series of trials using Vinorelbine is still in current use and patients who have had IPM therapy respond on some occasions to further chemotherapy with Vinorelbine which remains a useful treatment because of the low incidence of side effects particularly for patients who are unsuitable for entry to clinical trials of more intensive treatment." For information on these trials, phone Dr. Steele at: 0207 601 7900 or email: firstname.lastname@example.org
1 For background information on the Fairchild litigation, see newsletter issues
Compiled by Laurie Kazan-Allen