WASHINGTON – A federal appeals court has upheld a lower court’s ruling that could limit the amount of money insurance companies have to pay out to workers who were injured by asbestos.
The published decision Wednesday, by a three-judge panel of the 4th U.S. Circuit Court of Appeals, upholds a 2002 district court ruling that insurance companies who covered an asbestos-installing firm were only liable for injuries sustained while they had policies in place.
None of the four attorneys who argued the 10-year-old case returned calls seeking comment Thursday. But one legal expert not affiliated with the case said the decision mirrors others that have limited the liability of insurance companies caught in asbestos litigation.
“Courts have tended to be very liberal in these cases about finding someone liable, but it seems as though that trend is being reversed,” said David Bernstein, a professor at the George Mason University School of Law.
The case involved four former Bethlehem Steel employees who said they were injured by asbestos installed at the Baltimore plant by Wallace and Gale, a construction firm that has since gone bankrupt.
In 1994, during the course of that bankruptcy proceeding, Travelers Casualty and Surety Co. filed suit in an attempt to determine its liability and the liability of the other seven insurance companies that wrote policies for Wallace and Gale over the years.
The workers contended that all of the insurers were responsible for “all sums” that were payable on asbestos claims for which Wallace and Gale was liable.
The insurers disagreed, countering that they should only be liable for bodily injuries that occurred while they had policies covering Wallace and Gale. They said they should only have to make a “pro-rata” contribution to a trust fund set up to compensate the injured workers, based on the length of their policies with the bankrupt company.
The district court rejected the pro rata argument in February 2002. It noted that state courts had not ruled definitively on the question, but that a “tie” should go to the injured workers.
But the Maryland Court of Special Appeals, in an unrelated case that summer, issued a decision that the federal appeals court said “adopted as the law of Maryland the pro rata allocation theory advanced by Travelers.” In light of that decision, the federal district court reversed itself in September 2002 and adopted the pro rata allocation approach.
On appeal, the circuit court panel agreed, saying it would be unfair to force insurers to assume all the costs incurred by their client.
“It is neither equitable nor fair to require an insurance company to pay for coverage during a period for which no effective coverage is in force,” said the opinion written by Judge H. Emory Widener Jr.
Louise Holcomb, a Middle River resident whose late husband, Cossie, was one of the original four plaintiffs, was not aware of the latest ruling. But she said she does not think the compensation she has received is fair.
“I got some (money) earlier this year, but I still think we need more,” Holcomb said.
-30- CNS 10-07-04