When workers negligently exposed to asbestos are diagnosed with malignant mesothelioma and other illnesses, their options for compensation include applying to one of the many asbestos trust funds created by companies who sought bankruptcy protection from continuing mesothelioma injury claims. A recent unanimous decision by the U.S. Supreme Court is likely to have an impact on how future Chapter 11 bankruptcy trusts are set up.
Supreme Court Decision Focuses on Kaiser Gypsum Mesothelioma Trust
In 2016, Kaiser Gypsum Company and its parent Hanson Permanente Cement filed for Chapter 11 bankruptcy after facing tens of thousands of mesothelioma and asbestos-related disease claims. The plan required the companies’ insurer, Truck Insurance, to pay the claims under the $50 million reorganization settlement plan, but did not offer the insurer a voice in how the applications would be processed. The company filed a lawsuit challenging the process.
When Truck Insurance Exchange challenged the plan in court, it argued that the process set up by the asbestos companies did not adequately review the claims submitted to the bankruptcy trust fund for fraud. Both a district court and the 4th Circuit Court of Appeals denied the company’s position, arguing that the insurer wasn’t a “party in interest.” The company then appealed the decision to the country’s highest court.
Court Agrees that Asbestos Companies’ Plans Provided Too Little Oversight of Mesothelioma Claims
Earlier in the Supreme Court’s session, the justices heard Truck Insurance argue that the way that the asbestos companies had set up the bankruptcy trust gave them no incentive to defend or reduce the cost of mesothelioma claims filed against it and that this resulted in a lack of oversight that negatively impacted the insurer. Writing for the court, Justice Sonia Sotomayor said that the idea that the insurer was not a party in interest made “little practical sense.”
Advocates for mesothelioma victims are predicting that this decision will have a significant impact on future claimants to bankruptcy trust funds, giving insurers a voice in what is required for victims to prove that they are entitled to compensation for the damages that they’ve suffered.
If you or someone you love has been diagnosed with malignant mesothelioma, the Patient Advocates at Mesothelioma.net are here to help. Contact us today at 1-800-692-8608.
