September 25, 2002

WASHINGTON, D.C. - Unless Congress takes action, asbestos litigation is on a path that will cripple U.S. economic viability along with the engine that drives it -- small businesses. These are the conclusive findings of a report submitted to the Senate Judiciary Committee on Wednesday by one of the nation's leading small business advocacy organizations.

The Small Business Survival Committee (SBSC) distributed copies of its study, "The Asbestos Threat," to members of the Senate Judiciary Committee, which today held a hearing on the issue of Asbestos Litigation Reform.  SBSC, along with many other groups, are in concurrence with the U.S. Supreme Court that reforms are urgently needed.

"With many of the traditional defendants, namely asbestos manufacturers, forced into bankruptcy, eyes have now turned to thousands of small businesses that at one time were considered peripheral defendants at best," wrote SBSC Chairman Karen Kerrigan to committee members.

"These small companies, many of them with fewer than 100 employees, never once marketed or manufactured asbestos, but  are now being targeted in these suits," Kerrigan added.

Kerrigan said most plaintiffs filing claims are "entirely healthy."  They may have been exposed to asbestos at one time in their life, but are "joining suits to hedge against possible future illness that may not be covered due to statutes of limitations."  The result, Kerrigan said, has been "a glut of filings, more than 200,000 cases pending today, leading to a depletion of funds set aside to deal with the truly sick individuals."

"In short, sick people are not getting the level of help they need and healthy people are receiving benefits with no guarantee of future assistance if they get sick later," Kerrigan said

Kerrigan said businesses are being overwhelmed by asbestos lawsuits because of the aggressive filings. The "avalanche of asbestos litigation," Kerrigan said, has forced more than 60 companies into bankruptcy, 18 of them in the last 24 months. The list includes Eastman Kodak, International Paper, Metlife and Pfizer. The problem is now shifting to small businesses, she warned.

"With the pool of big corporate targets 'drying up,' smaller firms are now under siege.  Small business owners can't afford the armies of lawyers that larger companies can employ," Kerrigan wrote. "Nor, can their insurance coverage handle the loss of a major lawsuit. Therefore, many small businesses simply elect to pay an unmerited settlement rather than risk losing a large-scale lawsuit and going bankrupt."

The Los Angeles Times recently estimated that the number of people expected to file injury claims could eventually reach 2.5 million, and "the economic toll of asbestos could run as high as $200 billion."  These and other figures concerning the potential costs of this legal problem can be found in the attached report compiled by SBSC's chief economist, Raymond J. Keating. For more information, or to read the report online, please visit http://www.sbsc.org.