Asbestos Trusts Facing Heat As DOJ Ramps Up Oversight

October 19, 2018Media Mention

Brian Davidoff was quoted in Alex Wolf’s Law360 article on October 18, 2018, about recent steps by the DOJ to increase government oversight into the asbestos bankruptcy trust system over concerns that trusts are paying fraudulent claims and/or mismanaging funds for those sick from exposure to asbestos.

According to the article, the federal government's effort to crack down on fraud and abuse in the multibillion-dollar asbestos bankruptcy trust system includes probing appointed claimant representatives and investigating trusts for potential violations of the False Claims Act for failure to reimburse Medicare for victims' medical treatments.

The integrity of the asbestos trust system has come into question since the discovery in 2014 in the bankruptcy case for Garlock Sealing Technologies that claimants in several instances had misrepresented or withheld evidence about their asbestos exposure. As a result, plaintiffs’ attorneys and trust professionals are facing the blame and drawing scrutiny as many of the plaintiffs’ lawyers who are involved in asbestos lawsuits are also trust advisors.

Davidoff, who served as debtors' counsel in the asbestos bankruptcy for manufacturer J.T. Thorpe Inc., said that the plaintiff-side lawyers who participate in these cases are especially adept in this area of law.

"Trying to help a company on the debtors' side through their process becomes a difficult task because to a large extent you are at the whim of a skilled group of lawyers who have been doing this for a long time and who understand the process and how far they can go," he said.