Page Updated December 26, 2021

Department of Justice scrutinizes asbestos trust funds, calls for more transparency so victims get rightful compensation

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Mesothelioma Attorney Paul Danziger

The United States Department of Justice (DOJ) is calling for asbestos trust funds handlers to provide more accountability and transparency after reportedly learning of alleged fraud and mismanagement inside asbestos trusts.

What is an Asbestos Trust Fund?

Asbestos trust funds are a way for victims to asbestos-related diseases to receive compensation without the hassle of going to trial. Almost all victims who receive compensation through a trust fund were exposed to asbestos at a worksite that used asbestos-containing materials (ACMs) in occupational settings.

Companies unable to handle the mounting lawsuits have the option to file for Chapter 11 bankruptcy, which, if approved, will offer protection from lawsuits. In turn, a judge may require the company to fund an asbestos trust with enough money to cover pending and future lawsuits. A trustee is assigned to manage asbestos trust funds and decides how much compensation each victim gets.

It seems like an ideal situation to ensure that qualified victims get rightful compensation. Yet, according to Peter Knudsen, spokesman for the American Association for Justice, there are companies claiming that there may be people who aren’t qualified for trust fund compensation engaging in fraud. It’s something Knudsen said he found “ironic.”

“There is incredible irony in the fact that an industry that covered up the dangers of a known carcinogen for decades, leading to the ongoing deaths of 15,000 Americans a year, is now claiming that its victims are committing systemic fraud against the trusts — even though no court has ever found evidence of such fraud,” Knudsen said, according to The New York Times.

Regardless, the claims caught the attention of the DOJ. The agency stepped in to ensure the process of creating new trusts and the screening process was going as smoothly as possible. DOJ got involved shortly after another company associated with asbestos, Kaiser Gypsum Company, filed for bankruptcy at the  U.S. Bankruptcy Court for the Western District of North Carolina.

Possible Fraudulent Claims

In a September statement, the DOJ indicated that asbestos-related victims should be able to “feel certain” they’ll receive the money they’re rightfully entitled to. Yet, isolated incidents could be hindering true victims.

“In recent years, alarming evidence has emerged of fraud and mismanagement inside asbestos trusts,” Principal deputy associate attorney general at the DOJ, Jesse Panuccio, said. “Asbestos victims should feel certain that they will receive compensation when they are promised, but fraudulent claims and mismanagement call that promise into question.”

The DOJ claimed that new trust creations “lacked critical details” on how it can be guarded against fraudulent activities. The department said it would object to any trust that failed to provide details on how much effort is put into preventing fraud, as well as “how asbestos claims will be evaluated, paid and reported.”

“The Department sends a clear message that we will not tolerate fraudulent conduct that cheats asbestos victims and the United States,” Panuccio added. “This is just one action the Department will take to increase transparency and accountability of asbestos trusts.”

DOJ challenged corporation Duro Dyne, stating that the company’s lawyer was “too conflicted” to represent victims who may file for compensation. Another trust, DII Industries, received an administrative subpoena that required them to produce settlement record and prove that Medicare was being properly reimbursed in regards to trust payments.

This isn’t the first time accusations of asbestos trust funds mismanagement has arisen. In 2014, a judge indicated that a “startling pattern of misrepresentation” occurred with a trust fund for a company that made gaskets filled with asbestos. The judge said that some reported victims and their lawyers first struck enormous settlement agreements with the company then after it filed for bankruptcy, also filed claims to get compensation from the trust.

Meanwhile, during a Statement of Interest, Panuccio made it clear that no form of fraud will be tolerated going forward.

“The Department sends a clear message that we will not tolerate fraudulent conduct that cheats asbestos victims and the United States. This is just one action the Department will take to increase transparency and accountability of asbestos trusts.”

Help for Victims

If you or a loved have mesothelioma, asbestos-related lung cancer, or asbestosis, you may be eligible for a large amount of compensation. Fill out our form to get a free Financial Compensation Packet. You’ll learn about the experienced mesothelioma lawyers in your area, how to get paid in 90 days, how to file a claim for the asbestos trust funds, and more. If you need additional assistance, contact us at 800-793-4540.