Part A4 ACTEX Qs

Question 1

Describe two reasons why the expenses involved in defending asbestos litigation cases could increase in the future

Answer 1

1. More defendants are now involved in the litigation and defence is no longer routinely handled on a joint basis
2. Many new defendants have abandoned settlement strategies
3. Newer defendants are incurring significant discovery costs as they work to understand their exposure and potential defences.
4. Coverage disputes between defendants and their insurers, as well as between insurers and their reinsurers, might increase

Question 2

Describe the solution proposed by the Fairness in Asbestos Injury Resolution Act. What is the funding mechanism

Answer 2

The legislation would establish a no-fault trust from which claimants meeting asbestos exposure and medical criteria would be compensated for their injuries. The opposed trust would be funded with $140 billion of contributions from corporate defendants, insurers, and existing bankruptcy trusts.

Question 3

Briefly describe two trends in asbestos claim activity identified in the RAND study

Answer 3

1. The number of claims increased sharply beginning in the mid to late 1990’s
2. Claimants with non-malignant injuries account for most of the growth
3. Some evidence exists that most non-malignant claimants are now unimpaired

Question 4

The RAND study does not include info beyond 2002. Briefly describe two notable changes related to asbestos claims since that time.

Answer 4

1. More efforts to direct scarce resources to the sickest claimants
2. a decrease in claim filing during 2004-2005 for less sever medical conditions
3. Additional bankruptcies, but lower annual rate as pre-packaged bankruptcies are challenged and other potential solutions are pursued
4. Continued federal and state reform efforts
5. Heightened scrutiny of potentially fraudulent claimsi

Question 5

Briefly describe two concerns of either insurers or the public with no-fault trust fund approach to settling asbestos claims

Answer 5

1. how many claims of different types will be filed
2. will the medical criterial appropriately identify victims
3. are the awards appropriate
4. is the funding adequate
5. will the allocation to the different contributors be fair
6. will the fund be efficient
7. will the statute be constitutional
8. Will defendants, insurers, and reinsurers accept a less than final solution

Question 6

Briefly describe two judicial or legislative state reforms affecting the asbestos tort claim process

Answer 6

1. Some jurisdictions have created inactive dockets, which preserve the right to sue for those who do not currently meet the specific medical criteria.
2. Some states have passed legislation that requires asbestos claimants to satisfy medical criteria in order to bring a claim
3. Some states have revised laws relating to case consolidation and forum, tightening the connection between a plaintiff and the venue of the case
4. Other state reforms relate to innocent sellers, successor liability, and caps on non-economic and punitive damages.

Question 7

Briefly describe two difficulties in assessing the validity of asbestos claims

Answer 7

1. Many claimants in a single lawsuit making it difficult to verify each one.
2. Use of mass screening to diagnose claims, therefore high frequency of fraudulent claims and errors in expert opinions.
3. High cost to assess validity
4. Claimants claiming sickness from asbestos worked for many different companies so it is difficult to verify which company is liable.
5. Cancer could have been caused by smoking not asbestos
6. Unimpaired claimants with exposure

Question 8

Briefly describe two factors that tend to cause the asbestos litigation system to become more inefficient over time.

Answer 8

1. more defendants have abandoned settlement strategies
2. higher discovery costs because of newer defendants
3. coverage disputes between defendants and their insurers
4. errors in expert evidence due to mass screenings
5. only 41% of total spending reached claimants
6. venue shopping by claimants overloading courts in jurisdictions with favourable laws for claimants

Question 9

ATRA has made a number of recommendations for the reform of punitive damages awards.
Define punitive damages and briefly discuss their purpose.

Answer 9

damages awarded not to compensate a plaintiff but to punish a defendant for intentional or malicious misconduct and to deter similar future misconduct.

Question 10

ATRA has made a number of recommendations for the reform of punitive damages awards.
Identify two issues that led to the recommendations.

Answer 10

difficulty of predicting whether punitive damages will be awarded by a jury in any particular case. The marked trend toward astronomically large amounts when they are awarded.

Question 11

ATRA has made a number of recommendations for the reform of punitive damages awards.
Briefly describe three of the recommended reforms.

Answer 11

1. establishing a liability ‘trigger’ that reflects the intentional tort origins and quasi-criminal nature of punitive damages awards - ‘actual malice’
2. requiring ‘clear and convincing evidence’ to establish punitive damages liability
3. requiring proportionality in punitive damages so that the punishment fits the offence
4. enacting federal legislation to address the special problem of multiple punitive damages awards.