THE NEW YORK TIMES


By David Cay Johnston

OWENS CORNING SETTLING MOST
OF ITS ASBESTOS CASES

  December 16, 1998   During the last two decades, as thousands of people have learned each year that they were ill or dying because of exposure to asbestos, manufacturers that sold the versatile but deadly mineral have given up fighting and settled claim with the notable exception of Owens Corning, the building products company best known for its pink fiberglass insulation.
  But yesterday, Owens Corning said it was settling 176,000 cases, nearly 90 percent of those pending, for $1.2 billion. After paying their lawyers, plaintiffs will pocket an average of $4,600.
  The Toledo, Ohio, company said the settlement, with more than 50 law firms, would help it remove investor uncertainty about the nation's largest maker of building insulation.
   The change in policy had no effect on Owens Corning's stock price, however. It finished at $36.0625 share, unchanged.
  Plaintiff lawyers who did not participate in the settlement said the company faced years of litigation as about 3,000 people a month develop asbestos-related disease and sue the company, a trend expected to continue well into the next century even though Owens Corning last sold its Kaylo pipe insulation in 1972.
  Mr. Hiner said that was a fair assessment, but noted that "in January I brought in a new general counsel and things have changed."
  Maura Abnel, the new general counsel, worked out agreements with 50 law firms to pay claims based on previous awards in each court jurisdiction and on the record of the law firm in getting money for clients based on their illness or death. Under the settlement two people with the same illness from the same work site could get dramatically different amounts of money if they hired different lawyers.
   By 2030, nearly a century after the first asbestos case was reported in the United States, about 300,000 people will have died because of asbestos, said Dr. Philip J. Landrigan of Mount Sinai School or Medicine, a leading authority on asbestos-induced illness.
  Owens Corning sold $135 million worth of Kaylo between 1958 and 1972, Glen Hiner, its chief executive, said yesterday, but will spend nearly $5 billion on claims before the issue becomes history. He said the company made perhaps 1 percent of asbestos products over the years.
  Plaintiff lawyers said that at construction sites Kaylo was a major cause of deadly dust that caused mesothelioma, an always fatal cancer caused by exposure to asbestos; lung cancer, and asbestosis, a disease that impairs the ability of the lungs to bring oxygen to the blood stream and expel carbon dioxide.
  Thomas Hennessey, who for 10 years was the editor of Asbestos Litigation Reporter, an Andrews Publication newsletter in Wayne, Pa., said the company's refusal to settle was hurting it with juries.
  "Owens Corning had been notorious for years," he said, "for maintaining a scorched earth policy, a general refusal to settle, and consequently it was going to trial more than any other asbestos company and we were seeing trial after trial go against the company and they would appeal those verdicts."
  Mr. Hiner said that was a fair assessment, but noted that "in January I brought in a new general counsel and things have changed."
  Maura Abnel, the new general counsel, worked out agreements with 50 law firms to pay claims based on previous awards in each court jurisdiction and on the record of the law firm in getting money for clients based on their illness or death. Under the settlement two people with the same illness from the same work site could get dramatically different amounts of money if they hired different lawyers.
  Perry Weitz of Weitz & Luxenberg, a Manhattan personal injury law firm with 10,000 asbestos cases, said he was the first lawyer Owens Corning approached about a national settlement.
  "It is really important to emphasize that this will get the victims money much sooner, rather than later, and we will use money that would have gone to litigation to benefit clients," Mr. Weitz said. "Owens Corning now knows what it will owe and the company can now grow."
  Several plaintiff lawyers who are not participating in the settlement said that the company made no effort to settle the strongest cases involving death from mesothelioma.
   "This settlement creates tremendous breathing room for them and is a tremendous accomplishment and is good for them," said Shepard A. Hoffman, a Baltimore lawyer who has 30 cases of people who died from or are dying from mesothelioma. "But it comes at a cost because people who settle will do so at a discount while their lawyers will be assured payment, and if you are a plaintiff lawyer looking at getting, say, $50 million with no more risk it can be very attractive."
  The settlement, Mr. Hiner said, "dramatically reduces the high cost of legal defense and the risk of excessive verdicts against Owens Corning, makes more predictable the costs of our asbestos liability going forward, and enables the company to focus on capital-efficient growth."
  The company will issue new debt and a form of equity to finance two-thirds of the settlement and will generate the other third from cash flow, Domenico Cecere, chief financial officer, said.
  Mr. Hiner said that the company's average cost per case had been running about $13,000, but jumped last year to $19,000.

 

 



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