Dust storm: a sudden rise in silicosis claims is reminiscent of asbestos litigation, but this time insurers are blocking the turbulence.

A dramatic increase in lawsuits by plaintiffs claiming injury from dust-related lung disease is sparking comparisons to the early days of asbestos litigation. With asbestos possibly causing insurance losses greater than Sept. 11 and Hurricane Andrew combined, these new cases have captured insurers attention, and they are taking steps to stop the new gust of silicosis claims from growing into an asbestos claims-sized storm.

The Illness

The cases are filed against various manufacturers by plaintiffs claiming they contracted silicosis, a lung disease caused by breathing in tiny particles of silica, or quartz dust, at the workplace. Like asbestosis, silicosis can be disabling and even fatal. It's caused by nonreversible scar tissue in the lung that results from an overexposure to dust that contains microscopic particles of crystalline silica.

Silica has dozens of industrial uses and is used to manufacture fiberglass, glass, paint and ceramics, as well as being created during foundry, sandblasting and construction work. But while the death rate from silica exposure has been falling steadily--down 80% since 1968--there's been a sudden spike in silica-related claims. One major silica producer said claims against it for the first half of 2003 tripled from 2002, and were 164 times greater than in 1997.

"It's fair to say this has all the earmarks of the fairly early stages of the asbestos litigation push." said David Landin, an insurance defense attorney based in Richmond, Va.

While silicosis claimants number about 30,000, still well below the estimated 730,000 claimants who have filed asbestos-related lawsuits, insurers are concerned about the sudden growth in claims. About 17,000 claims have been filed in Mississippi in the last year. The lawsuits tend to be multiparty litigation filed against several defendant companies at once. Often, as many as 160 companies are sued in a single suit. That's just a fraction of the more than 6,000 U.S. companies facing asbestos lawsuits. But insurers said the uptick in silica-related lawsuits coincides with Congress' considering a remedy to stem the flow of asbestos litigation. Also, recently adopted tort reform in two major plaintiff-friendly states--Texas and Mississippi--is expected to slow asbestos payouts, and courts there have seen an increase in cases before the tort reforms take effect.

"Like all other major insurers, we have seen a rise in these claims," said Vicki Russell, issue manager in major claims group for Ace INA.Ace reported claims increased from 300 or 400 a year to 6,000 in 2002, with another 17,000 being filed in 2003. Russell noted that about 17,000 claims were filed ha Mississippi this year, on the eve of tort reforms that prohibit out-of-state claimants. About a quarter of the claims were filed in Texas. Mississippi and Texas are considered to be two of the most plaintiff-friendly states in the country, according to the U.S. Chamber of Commerce.

Asbestos reform, including a proposal to create a trust to pay asbestos victims, has been a hot topic in Congress this year, but legislation is still pending. Silicosis can be a serious disease, but it's the legal system--not a group of victims--that's ill, insurers said.

"Plaintiffs are trying to get in front of federal and state reform efforts. and already have an enormous machinery in place for generating these claims," Russell said. Experienced asbestos attorneys are skilled in "drumming up" a pool of claims for asbestosis, and are now diversifying into silicosis claims, she said. "They are changing the name of the disease to get around the federal reform."

Most of the recent silicosis cases are being brought by the same eight law firms, Russell said. Many of the plaintiffs have also been involved with asbestos cases, and some have already, received an asbestos payout, Russell said. Deaths from silicosis have fallen from 303 in 1990 to 187 in 1999, according to the National Institute for Occupational Safety, and Health.

"There are 13,000 claims in the rest of the country and 17,000 in Mississippi. It's definitely a litigation result, not a medical result, that is driving this," Russell said.

That's a view shared by many in the insurance industry.

"The plaintiffs' bar that practices in asbestos is trying to diversify into other litigations," said Mark A. Behrens, a Washington-based insurance defense attorney with Shook, Hardy & Bacon. "There's no medical explanation that explains the sudden spike in claims. When you look at when the number of silica claims began to rise, it was at about the same time there began to be serious discussions in Washington about asbestos litigation reform. These firms ... don't want to put all of their eggs in one basket anymore." Behrens represents the Coalition for Litigation Justice, which was formerly known as the Coalition for Asbestos Justice, but changed its name to recognize the increase in silicosis claims. The group was launched by insurers as a nonprofit association to improve the asbestos litigation environment. "Pushing down the asbestos claims may increase the silica claims," Behrens said.

Some plaintiffs attorneys have taken portable X-ray machines to union halls to encourage workers to be X-rayed for possible asbestos and silicosis exposure, Behrens said. Often, workers end up as the plaintiffs in both types of cases. Also, some plaintiffs who have already received an asbestos settlement wind up also suing for silicosis, Behrens said.

"A good chunk of [plaintiffs] are being recycled," Russell said.

In many jurisdictions, plaintiffs can sue without revealing whether they've filed other cases, or received settlements, from claiming similar injuries from occupational exposures at the same work site.

Roger Cossack, a legal commentator on Court TV, said it's a "cheap shot to make a blanket condemnation of asbestos lawyers and say the 'well is running dry and now they've found something else.'" He said silicosis "has all the hallmarks of asbestos litigation. People end up with a disease caused by a dust, you get it from inhaling it, it conies from a product used in construction. It points out that asbestos litigation has really turned into a litigation like we've never seen before. How do you handle the economic impact that these lawsuits will have on companies that have no way of insuring themselves against the liability that might be out there? How do you establish a system that makes sure people who have legitimate claims get compensated?"

The trial bar said the insurance industry has done a good job In twisting the issue into one of lawyers' motivations, rather than injured workers. "The insurance industry doesn't want to pay claims, legitimate or not, under any circumstances," said Carlton Carl, a spokesman for the Association of Trial Lawyers of America. "Injuries to American workers and consumers are not created by lawyers. Unfortunately, too often companies and their insurers ignore the facts, cover their wrongdoing and change the subject."

Hartford Insurance also has been Involved with silica litigation for several years, and has noticed an increase ill claims activity in recent months, Sue Honeyman, a spokeswoman for Hartford, said. "These claims are being vigorously defended in the tort system," she said, noting the paid claims to date have not been material to the Hartford and represent a fraction of its average property/casualty loss costs.

Although silica-related claims are likely to affect the same insurers currently facing asbestos claims, several companies declined to comment on their silica exposure.

"If I was a carrier, I wouldn't talk about it," said Damian R. Testa, president of Kaye Insurance Associates, a brokerage. "Look what asbestos did to their stock prices. Look what it did to their earnings. The fact you are talking about silica, even if you say it isn't an issue, could make investors think that it is."

However, Jenni Biggs, a principal and consulting actuary with Tillinghast-Towers Perrin, said corporate defendants are required to disclose material issues on their financial statements. "Acknowledging you have silica exposure at this point in time is not as damaging as saying you have asbestos exposure."

Lessons Learned

Insurers need to take lessons learned from asbestos and apply them to the silica litigation, Russell said. One key component is educating the public and judges, she said, which is the mission of the Coalition for Litigation Justice.

When the coalition was formed in 2000, the perception of asbestos litigation was very different from the reality, Behrens said. The perception was asbestos litigation was largely a problem from the 1980s which was being effectively handled by state courts. The people who were suing were sick, and the companies being sued were at fault because they knew about the hazards of asbestos, but failed to warn people.

"The plaintiffs were very sympathetic and the defendants were unsympathetic," Behrens said. "But that doesn't reflect the reality."

About 90% of asbestos plaintiffs suing today aren't sick, but want to stake a claim before the asbestos money dries up. Ashestosis can take up to 40 years to develop after exposure. At least 60 companies have filed bankruptcy due to mounting asbestos claims, which has encouraged plaintiffs to widen the scope to seek out new defendants, including life insurer MetLife (see "Facing the Past," page 40) as well as companies that seem distant from any asbestos-related activity, including Campbell Soup, AT&T Ford Motor Co. and Sears.

The Claims

Joanne McMahon, a senior claims specialist with GE Reinsurance, said the company has seen silicosis claims for several years, but has never had a "great number of them, and I've personify not seen a significant increase in silica-related claims."

Some asbestos claims, however, also include silica exposures and are referred to as "mixed dust" claims, she said. Some companies that manufacture masks have been sued by plaintiffs who claimed the masks failed to protect them from mixed dust. That would trigger a product liability policy, which is often included in a commercial general-liability policy. Workers' compensation policies also could be triggered, she said.

Many insurers don't specifically track silica-related claims, said Biggs of Tillinghast. "In the past, plaintiffs could get more money pursuing an asbestos claim rather than a silicosis claim. The diseases are different."

Silicosis tends to have a much shorter latency period, 10 years as compared to up to 40 or 50 years for malignant asbestos diseases. Also, in extreme overexposure cases, silicosis can develop within five years, she said.

"The problem is that there is continuing occupational exposure to silica today. More than 1 million U.S. workers are exposed each year to respirable crystalline silica," Biggs said.

At least 1.7 million U.S. workers are exposed to respirable crystalline silica in a variety of industries and occupations, including construction, sandblasting and mining, according to the NIOSH.

That compares to about 1.3 million employees in construction and general industry who face significant asbestos exposure on the job. Heaviest exposures occur in the construction industry, particularly during the removal of asbestos in renovation or demolition work. Also, workers can be exposed during the manufacture of asbestos products (such as textiles, friction products, insulation, and other building materials) and during automotive brake and clutch repair work, according to NIOSH.

Both diseases can be prevented by using protective gear and other safety precautions, such as using water to keep the dust from becoming airborne and sealing off an area where the dust is being used or created.

The Remedies

There's no cure for silicosis, but industry experts say there are several steps insurers should be taking to fight the silicosis litigation.

One tool that's been effective in controlling asbestos claims, and could be used for silicosis as well, is a multidistrict litigation, or MDL. U.S. district court judges sit on a panel that decides when it would be appropriate for similar cases to be heard through the same judge, or an MDL. A plaintiff or defendant can ask the panel to appoint a single U.S. district court judge to hear pretrial motions in all cases deemed to be similar. It simplifies the litigation process by moving cases from various courts around the country into a single appointed court. This way the same witnesses only have to testify once, instead of hundreds or thousands of times. It saves time and money for both plaintiffs and defendants, and is intended to avoid inconsistent rulings, attorney Landin said.

When a case is ready to be tried, the designated MDL judge sends the case back to the jurisdiction where it was originally filed.

An MDL was created to deal with asbestos, and the judge handling the cases developed an "inactive" or "unimpaired" docket to handle the tremendous caseload. This "allows the judge to sort the cases and give priority to plaintiffs who are actually sick. Plaintiffs who aren't sick are placed in the "inactive docket," where their cases will stay until the plaintiffs become sick from asbestosis. Then they can petition the judge to place the case back on the active docket, and the cases could move to trim or settlement.

"The incentive for the plaintiffs bar to take X-rays and file court cases is completely gone," said Trish Henry, senior vice president of Ace INA's government affairs. She said "it's the right thing to do" because it allows the court system to deal with truly sick plaintiffs first.

In September, the federal court agreed to make an MDL for silicosis cases, Landin said. "We found the asbestos MDL basically shut down the asbestos cases, and we're hoping for the same thing here," Russell said.

"How many of these plaintiffs are seriously sick? It's going to be 2%, maybe 1%," Landin said. "Silicosis is actually a pretty rare disease these days. There have been government mandated controls in place for years, and the issue between high exposures of silica and the disease have been subject to industry and governmental activity since the 1930s."

The MDL is an example of insurers initiating, rather than just reacting to, litigation, Landin said.

A Good Defense

Insurers also need to take each case individually, and not be pressured into fighting or settling dozens or hundreds of cases that have been consolidated into one action, Ace's Russell said.

"We need to oppose these mass consolidations of causes so we can handle them one plaintiff at a time, and handle them in federal court," Russell said.

These cases often involve multiple defendants and multiple insurers, said Jeff McCart, executive vice president of the McCart Group, a broker who's involved with a number of these cases. He said the silicosis cases are often difficult to manage because of the number of parties involved. Many companies being sued have been in business for 10 or 50 years, and they've had various insurance companies over the history of their operations.

McCart said he tries to get the insurers to agree on a common defense and work through a common attorney.

"Plaintiffs are good at pitting one insurer against another. Insurers need to talk jointly," Landin said.

Ace INA's Russell said it's not always easy to get a group of insurers to agree on the same defense. "But having defendants work together saves costs, and gives you some settlement leverage. You have a combined voice against plaintiffs," she said.

Also, Landin said, insurers need to be more aggressive. "I'm not talking about a scorched earth policy, but we have to get away from the idea that settlement is the goal. We have to judge them one at a time. If settlement is your first order of priority, then you approach everything from that standpoint and I think you get a worse settlement. The insidious nature is that people think if I settle this one, I won't have any more cases ... and then there's the next group of 1,500."

Landin said insurers need to change the momentum of the litigation. "Plaintiffs count on insurers not being able to process all of these cases. It's easy for them to sue multiple defendants and keep up the pace. Insurers need to pick their fights. Let's be aggressive on this, and take a good hard look at the development of bad lessons from asbestos litigation. Asbestos taught the industry this: my calculator doesn't have enough zeros on it."

Not the Next Asbestos

Russell said silica won't he the next asbestos.

"We have some very good defenses available," Russell said. Such defenses include the sophisticated user doctrine and related bulk supplier doctrine. Bulk sand suppliers have labeled their bags with warnings for the last several decades, and sophisticated users--those commercial enterprises that used the sand--should have known about the dangers of silica. As bulk suppliers, sand suppliers can argue that they neither have a duty to warn people directly, nor to warn corporate purchasers to pass a warning along to the purchaser's employees.

Also, while the insurance industry implemented asbestos exclusion across the board, since the 1980s, the industry has also put silica exclusions on policies where silica exposure was a potential risk, Russell said.

Depending on the circumstances of the claim, Insurance Services Office's pollution exclusion, which mentions "particulate matter," also may apply to silicosis claims, said Dave Dasgupta of the Insurance Services Office. However, ISO doesn't interpret policy language, so the issue of whether coverage exists or is excluded in a particular situation would depend on an insurer's interpretation of the language, and the facts and circumstances of the specific claim, Dasgupta said.

One legal issue that contributed to the mass of asbestos claims was the theory of strict liability. Plaintiffs didn't have to prove that the defendant's products made them sick, just say they were exposed and are ill today.

"There aren't very big hurdles to reach to make asbestos claims," Biggs of Tillinghast said. "I'm not sure how that will work with silica. Some claims have already been successfully defended by suppliers on the grounds that the purchaser was a sophisticated user and should have known the dangers. The raw manufacturers have shifted the liabilities to the intermediary or end user."

McCart said he didn't think silica would be the next asbestos. "But there's going to be a significant amount of litigation that comes out of silica. Insurers are not being litigated for what they did today but for what they did in the past. The majority of them do not exclude silica, but I expect they will going forward."

RELATED ARTICLE: Coalition for litigation justice.

* What is it: Formerly called the Coalition for Asbestos Justice, the coalition is a nonprofit association that seeks to address and improve the asbestos and silica litigation environments.

* When Launched: 2000

* Mission: To encourage fair and prompt compensation to deserving current and future claimants by seeking to reduce or eliminate the abuses and inequities that exist under the current civil justice system.

* Members: Ace-USA Cos., Chubb and Son, CNA, Fireman's Fund Insurance Co., the Hartford Financial Services Group Inc., Argonaut Insurance Co., General Cologne Re, Liberty Mutual Insurance Group, the St. Paul Fire and Marine Insurance Co., and the Great American Insurance Co.

Source: Coalition for Litigation Justice

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Asbestosis vs. Silicosis

Caused by inhaling: Asbestos particles Silica particles Claimants: 730,000 at year-end 2002 30,000 by August 2003 Companies sued: 6,000 at year-end 2002 160 by August 2003 Latency period: up to 40 years 10 to 20 years Number of U.S. workers exposed: 1.7 million </TB>

Source: National Institute for Occupational Safety and Health: Rand Institute; Coalition for Litigation Justice.

Conflicting Numbers

Death rate from silica exposure is falling.

Silica Deaths 1990 to 1999

Although the number of silicosis and silica-related lawsuits has suddenly increased, deaths from the disease--which is caused by breathing quartz dust--have been dropping steadily for the past several decades.

[GRAPHIC OMITTED]

Source: National Center for Health Statistics 

One major silica producer said claims tripled from 2002.

Silica Claims 1997 to 2003

U.S. Silica, a leading producer of silica sand, said the number of plaintiffs suing the company has grown dramatically in the past several years For the first nine months of 2003 alone, the number of claims is four times what it was in 2002.

[GRAPHIC OMITTED]

Source: U.S. Silica, Coalition for Litigation Justice