By Martin Kidston/Missoula Current

The Montana attorney general has joined 12 other states in filing a civil suit against four of the nation's largest asbestos bankruptcy trusts over allegations they're bilking the system and failing to reimburse states for Medicaid and Medicare expenses.

The suit, first filed by the attorney general of Utah, claims that more than 60 companies have established trusts, including the manufacturers of asbestos-containing products. Since 2008, the trusts have paid out $17 billion, according to the suit.

The trusts are overseen by Trust Advisory Committees, though the suit contends they represent a handful of prominent firms and have “outsized power over the billions of dollars in the trust system.”

“They represent a large proportion of current asbestos claimants, and so vote on their behalf in approving the governing documents,” the suit alleges. “Thus, the evidentiary requirements for claims – such as the claimants' work history and proof of exposure – are primarily controlled by the same attorneys who collect contingency fees on millions of dollars of claims paid from the trust each year.”

Filed in District Court in Salt Lake City, the suit names Armstrong World Industries, Babcock and Wilcox, DII Industries, and Owens Corning/Fiberboard as defendants. All four operate as asbestos injury trusts.

The attorneys general in 13 states, including Tim Fox of Montana, expressed concern over potential abuse of the asbestos trusts, suggesting their attorneys are using the trusts to obtain monetary recovery for claims that fail to meet legal justification.

“The abuse injures our states by improperly draining the trust assets, precluding future legitimate claimants from relying on the trust, and leaving states with the high cost associated with asbestos-related disease,” reads a letter signed by Fox.

The suit also contends that the trusts' lack of oversight raises questions as to whether their claimants' attorneys are reimbursing state Medicaid and Medicare systems after the trust pays the claim.

“As chief legal officers for our respective states, we are concerned about potential abuse of the asbestos trusts,” the letter says. “There are questions surrounding the Medicaid Secondary Payer statute and whether the trust handlers are ensuring that medical assistance programs are being reimbursed for payments made from the trust.”

In 2011, a Montana judge approved a $43 million settlement for more than 1,000 asbestos victims who said state officials knew that dust from a mine was killing people but failed to intervene.

Also last month, victims of asbestos-related disease reached a $25 million settlement over claims that Montana health officials failed to warn miners in Libby about the hazards of vermiculite mining.

The states behind the suit cite the case of Garlock Sealing Technologies, a North Carolina company that convinced a judge to probe into the practices of asbestos attorneys.

The company had uncovered evidence that asbestos attorneys engineered claims to recover money from trusts before filing lawsuits, often claiming work histories that conflicted with documents they filed with the trusts.

“The trusts have failed to give Medicaid payments when paying settlements that include the same medical expenses, as federal law requires,” said Kristen Ricciardelli with the Asbestos Double Victims Workgroup. “The AGs involved filed a civil suit to force discovery in Utah this month against several trusts after they failed to comply with a demand letter sent in December.”


The Montana Attorney General's Office couldn't immediately be reached for comment.