In Congress, NY's Silver Case Becomes Asbestos Reform Political Football

It will be months before Sheldon Silver, the ousted New York Assembly Speaker facing federal corruption charges, finally gets his day in court. But Mr. Silver, or at least his case, got a few hours of judicial review in the halls of Congress last week.

While the discussion was legislative, involving asbestos liability and committee approval of a bill with little chance of becoming law, it illustrates how the high-profile New York indictment is becoming a tort reform talking point. Along with other developments, it also suggests the political climate around the asbestos litigation industry -- which we've argued has annual revenue in the same neighborhood as the National Football League -- is changing against the plaintiff's bar while putting actual asbestos victims at new risk.

Those risks might include creating "perjury pawns" and even un-addressed debts to government agencies.

At issue this month at the House Judiciary Committee was a Republican-backed bill requiring increased disclosures from dozens of federally approved trust funds set up to meet bankrupt company's asbestos liability exposure. That idea is supported by business interests with asbestos liability, in part, because they believe it improves chances to more fairly distribute liability. The plaintiff's bar, which of course contributes heavily to Democrats, opposes the bill.

Rep. Blake Farenthold (R) of Texas introduced the proposal and pointed out that limiting fraud protects "limited funds" for future claims. He also suggested that anyone saying there's no abuse of the current liability process might look toward Speaker Silver's charges, which The New York Times, citing prosecution sources, described thus: "... an even more lucrative scheme, according to prosecutors, involved clients whom Mr. Silver referred to Weitz & Luxenberg, a large personal injury law firm where he has worked for more than a decade."

"The referrals came from a doctor who directed possible asbestos victims to Weitz & Luxenberg. Mr. Silver then secretly funneled state grants, worth $500,000 in total, to finance the doctor's research. The relationship was lucrative for Mr. Silver: He received more than $3 million in fees for the patients referred to Weitz & Luxenberg, prosecutors said."

The reference brought an instant response from Democrats on the Judiciary Committee, who accurately noted that Mr. Silver has not been convicted of anything. Mr. Silver's fellow New Yorker, Rep. Jerry Nadler (D), who represents part of Manhattan, noted that referencing Mr. Silver was not an argument for the bankruptcy bill and that it only proves that "... yes, lawyers can make a lot of money."

The actual bill, called the "Furthering Asbestos Claims Transparency," or FACT Act, has little chance of passing. This bill is identical to one passed by the full House last year but lost momentum in the Senate. Even if circumstances should change this time around, there's no chance President Obama signs this bill.

It's worth noting that a half-dozen states have either passed or are seriously considering their own version of FACT legislation, and at least one leading 2016 presidential figure, Wisconsin Gov. Scott Walker, has signed it into law.

While the Speaker Silver case might be of limited relevance until his day in court, the House committee also debated the North Carolina "Garlock" bankruptcy case, which certainly involved allegations of "double dipping" by telling one story to trust funds and another story in liability lawsuits. That case is not only still under way, but has also prompted civil RICO lawsuits based on a judge's findings of hijinks in some 15 specific cases.

It is the Garlock case findings, not the New York kickback allegations, that should fuel any asbestos trust fund reform. The House Judiciary Democrats dutifully stepped up to propose amendment after amendment to fine-tune the Republican measure, but eventually the measure cleared the committee with a vote along party lines.

What was not mentioned was the one amendment that might garner bipartisan support and protect actual asbestos victims. One would have to assume that only Democrats are positioned to champion those families. Party lines aside, I think both sides might agree that there should be an exemption for citizens getting and following bad legal advice, especially if that advice led them to commit perjury. The option of suing your attorney is lengthy, arduous, and expensive.

Eventually, this debate will move beyond how Mr. Silver raked in his millions or how many fibs Garlock litigants did, or did not, tell during their lawsuits -- this is going to involve tragic asbestos victims and their families facing allegations of perjury and failure to Uncle Sam.

Trust me, that will not be "inside baseball" at all, and my fellow Democrats should get well in front of that scandal.