ASBESTOS CRIME

IN ASBESTOS CASE, PLAINTIFFS' LAWYERS FACING SCRUTINY OF PROSECUTOR

By Jonathan D. Glater The New York Times

THURSDAY, JULY 21, 2005

Plaintiffs' lawyers in the United States, long accustomed to public criticism and the wrath of lawmakers, now face a new and more dangerous adversary in federal prosecutors.

The latest evidence that the U.S. government may be increasingly willing to pursue these lawyers comes in the case of the bankruptcy of a company overwhelmed by asbestos claims. Recently filed court documents show that federal prosecutors in New York may have begun to investigate the conduct of three law firms.

The documents, which surfaced in the bankruptcy case of G-1 Holdings, formerly GAF, a manufacturer of roofing material, show that lawyers for G-1 have met with prosecutors from the U.S. Attorney's Office in Manhattan in recent months.

The documents also show that the company's lawyers have turned over records of extensive interviews with former employees of the three plaintiffs' firms in which some employees described coaching potential claimants and noted efforts to influence doctors' diagnoses.

The investigation is potentially explosive because asbestos litigation has been an extremely costly problem for companies and a hugely profitable business for plaintiffs' lawyers.

About 730,000 people have filed claims for asbestos-related injuries, costing a total of $70 billion as of 2002, according to Rand, a nonprofit research organization, which estimates that a little less than a third of the total went to plaintiffs' lawyers. And since 1976, asbestos liability has contributed to the bankruptcy of more than 70 companies, including Bethlehem Steel, Owens Corning and W.R. Grace.

"Our system of justice depends on lawyers' processing cases and making representations that are based on their sound judgment about the facts," said Stephen Younger, a lawyer at Patterson Belknap Webb & Tyler in New York. "As a result, if lawyers are charged with inflating or falsifying claims, it is a bad day for the legal profession."

The current criminal investigation is the latest example of a new willingness by prosecutors to look into the conduct of plaintiffs' lawyers. Last month, the U.S. Attorney's Office in Los Angeles announced the first indictments related to a three-year-old investigation of Milberg Weiss Bershad & Schulman, a law firm known for its frequent shareholder class-action lawsuits.

Last month, Kroll investigators, after receiving a subpoena from prosecutors, turned over their findings; the subpoena suggests that prosecutors are interested in the asbestos claims. Lawyers say at least one insurance company has also received a subpoena.

G-1 was driven to seek Chapter 11 bankruptcy protection in 2001 as a result of about 150,000 asbestos claims. The court filings, in which lawyers describe the activities that generated their bills, indicate that lawyers for G-1 have spoken or met with assistant U.S. prosecutors several times in recent months.

The U.S. Attorney's Office in Manhattan is also pursuing an investigation into thousands of claims filed on behalf of people who said they had been injured by exposure to silica, another dangerous material. Some of the same law firms that brought those claims also brought asbestos claims, some of the same doctors who diagnosed the silica claimants also diagnosed asbestos claimants, and many of the same people claiming they were hurt by silica previously claimed they were harmed by asbestos.

The criminal investigation could have broad implications for the civil justice system that compensates victims of personal injuries. If it proceeds to an actual case, it could also force some lawyers who file what are known as mass tort claims to change their tactics.

Defense lawyers, who have often been reluctant to take on plaintiffs' lawyers armed with thousands of claims in open legal battle, could be emboldened.

The investigation, raising the specter of fraud, will almost certainly be seized on by advocates of changes to the civil justice system. Lawyers who represent people who are sick as a result of asbestos exposure said they worried that any such changes might make it harder for legitimate asbestos victims to recover damages.

The spreading investigation could unleash a new wave of litigation over claims that were already paid. People who are genuinely sick, and who recovered less money than they might have if so much of the asbestos compensation funds had not been used to pay fraudulent claims, could sue the firms that filed those false claims.

http://www.iht.com/articles/2005/07/20/business/lawyer.php

BILKED ASBESTOS PLAINTIFFS SUE FLORIDA BAR ASSOCIATION
by John Stadler

Numerous litigation abuses have been associated with the “elephantine mass” of asbestos lawsuitsthat have inundated the federal and state courts over the past several decades. Those abuses, especially inthe form of litigation-driven mass medical screenings and “manufactured for money” diagnoses, weremethodically exposed by Judge Janis Graham Jack in her decision last year in In Re Silica Products Liability Litig., 2005 WL 1593936 (S.D. Tex.). Judge Jack found that, as a consequence of medical fraud and plaintiff attorneys’ “micro-management of the diagnostic process,” a substantial number of persons filing asbestos claims have been misdiagnosed with asbestos or silica-related lung injuries or, incredibly, both. Medical audits conducted over the past few years by various asbestos bankruptcy trusts have also revealed rampant erroneous, and possibly fraudulent, diagnoses in asbestos claim submissions. See Roger Parloff, Mass Tort Medicine Men, AMERICAN LAWYER, Jan. 2003 at 98. One of the unfortunate but least publicized effects of such litigation abuse is that many plaintiffs participating in x-ray screenings may become unnecessarily alarmed when told that they have a serious asbestos-related illnesses when no such conditions exist. See Beware the B-Readers, WALL ST. J., Jan. 23, 2006, at A14.

It now appears that unscrupulous litigation practices may have gone beyond front-end intake of screening-generated clients to back-end handling of settlement payments. The latter is the focus of a class action recently filed in Florida federal court on behalf of some 4,000 people for whom Miami plaintiff lawyer Louis Robles had filed asbestos lawsuits, had received settlement payments from defendants, but then allegedly never paid plaintiffs any of the settlement proceeds before he filed for bankruptcy and was disbarred for misappropriating clients’ settlement funds. See Alexander v. The Florida Bar, No. 06-20046 (U.S.D.C., S.D. Fla., filed Jan. 10, 2006). The class action was brought against the Florida Bar Association after it refused the class plaintiffs’ claims for restitution from the Florida Bar Client Security Fund, a fund created by the Florida Bar to compensate victims of fraud and defalcations by members of the Florida Bar.

In Alexander, the class plaintiffs allege they are entitled to recover from the Security Fund because from 1992 to 2002 attorney Robles misappropriated some $13.5 million in settlement proceeds that he obtained from defendants in exchange for submitting releases signed by his clients, the class plaintiffs. The allegedly misappropriated funds far exceed the $3 million now in the Security Fund. See Asbestos Clients Sue Florida Bar For Millions, MIAMI HERALD, Jan. 11, 2006 at 1B. In their complaint, the class plaintiffs assert that Robles told them that settlements had been reached in their particular cases but that they would not receive any money until sufficient funds had been received to pay all of his asbestos clients. The Alexander plaintiffs further allege that while making these representations to his unsuspecting clients, Robles embezzled the funds and used them “to support his flagrant lifestyle and his production of a series of ‘B’ movies.” According to their filing, the Alexander plaintiffs began complaining to the Florida Bar about Robles’ activities as early as 1998, but the Florida Bar did not file a formal complaint for misconduct against Robles until May 2001. The Florida Bar later filed specific disciplinary charges against Robles in which it asserted that he had misappropriated over $800,000 in settlement funds earmarked for 296 of his asbestos clients and that he had charged his asbestos clients with excessive and improper costs inviolation of the Florida Bar’s rules. In May 2003, some eleven years after Robles allegedly beganstealing settlement funds from his clients, and five years after his clients first complained, the Florida Bar finally ordered Robles disbarred. At the same time, the Florida courts appointed an Inventory Attorney to take physical possession of the files of the Robles clients. The Inventory Attorney subsequently conducted a review of the Robles’ firm records and, as alleged in the Alexander complaint, “determined that Robles has stolen over $13.5 million in settlements from 4,393 clients [from December 1992 to September 2002]…” Unfortunately, the Alexander plaintiffs and the Florida Bar will now try to sort through the mass tort mess left behind by Robles. Such an effort promises to be a large undertaking as, according to the Alexander complaint, “[i]n October of 2002, when the exposure of his fraud was imminent, Robles closed his law firms and dumped his client files in a warehouse. Client x-rays, vital to the clients’ remaining asbestos claims, were left in a pile on the concrete warehouse floor.” Whether those x-rays and related reports can now be recovered and, if so, whether there is any medical or scientific merit to support plaintiffs’ claims, remains to be seen. Moreover, if those claims were generated from the type of for profit mass screenings criticized by Judge Jack and others, the medical basis for the claims may be open to serious question. In these circumstances, defendants who have not yet reached settlements on such cases will likely take great care in determining whether they are legitimate and worthy of any compensation.
____________________
John S. Stadler is Counsel in the Boston office of the law firm Nixon Peabody LLP.

http://www.wlf.org/Publishing/pubsbytopic.asp?topic=3

Lawyer charged with defrauding asbestos clients

He lived high on $13.5-million in settlement money after telling clients he couldn't collect it, U.S. prosecutors say.

ST. PETERSBURG TIMES  (ASSOCIATED PRESS)  May 24, 2006

MIAMI - A disbarred lawyer pleaded not guilty Tuesday to federal charges that he defrauded thousands of clients out of $13.5-million in settlement money from lawsuits claiming they were sickened by exposure to asbestos.

Louis S. Robles, 58, faces 41 counts of mail fraud contained in a grand jury indictment unsealed Tuesday. Robles, who was disbarred in 2003 after an investigation by the Florida Bar into his financial practices, surrendered to U.S. authorities on Monday.

The indictment claims Robles took money from his asbestos clients' trust fund accounts and used it to pay for personal real estate, including a 9,000-square-foot waterfront mansion on Key Biscayne, apartments in New York and Los Angeles and a condominium in Telluride, Colo. Robles also used the settlement money to invest in movie production and a waste management firm and to pay alimony to his ex-wife, the indictment said.

U.S. Magistrate Judge Stephen T. Brown set Robles' bail at $1.25-million. Because his property has now been sold and his bank and investment accounts frozen, a federal public defender, Hector Flores, was appointed to represent him. The charges carry maximum prison sentences totaling well over 200 years.

Prosecutors say Robles had more than 7,000 clients in litigation against various asbestos companies, some of them bankrupted by an avalanche of personal injury lawsuits.

From January 1989 until Sept. 30, 2002, Robles collected more than $164-million from 75,000 settlements on behalf of his clients, according to court records. At least 4,500 of his 7,000 asbestos clients were victims of theft, prosecutors said.  Robles allegedly concealed his theft of asbestos settlement money by telling clients their money hadn't been received because of the companies' struggles with bankruptcy.  An unidentified widow in Louisiana received just $420 from Robles when the lawyer had gotten more than $61,000 on her behalf. Another widow in Florida was entitled to $175,000 but got nothing, prosecutors said.
http://www.sptimes.com/2006/05/24/State/Lawyer_charged_with_d.shtml

Victims' advocate sues asbestos attorneys for gypping her

MADISON COUNTY RECORD   July 13, 2006   Steve Gonzalez

Victims' advocate Judy Buckles once said, "Madison County is the best when it comes to representing asbestos victims and their families." On Wednesday she filed a legal malpractice suit against two of the county's busiest asbestos litigators.

Buckles, whose husband died from mesothelioma in 1997, alleges her former lawyers entered into secret agreements with asbestos defendants to settle claims for absurd predetermined amounts of money when the "reasonable value" of mesothelioma claims were worth millions of dollars.

Asbestos lawyers Hopkins Goldenberg -- now known as Goldenberg, Heller, Antognoli, Rowland, Short & Gori -- John Simmons, William Miller and SimmonsCooper LLC were named as defendants in the lawsuit filed July 12 in Madison County Circuit Court.

Buckles is represented by Roy Dripps of the Lakin Law Firm of Wood River. Ironically, asbestos litigator extraordinaire John Simmons -- a defendant in this matter -- has worked "of counsel" for the Lakin firm.

Buckles is one of the founders of the now defunct Victims and Families United, which actively campaigned in the 2004 Illinois Supreme Court race. She became an advocate because she was tired "of hearing groups funded by Corporate America complain about justice in Madison County," according to a Feb. 17, 2004, Alton Telegraph article.
http://www.stclairrecord.com/news/newsview.asp?c=181684

June 8, 2006

Dismissal of thousands of asbestos suits sought

CLARION LEDGER (PA.) By Jerry Mitchell

In litigation filed today in U.S. District Court in Pennsylvania, defense attorneys are seeking to dismiss tens of thousands of asbestos lawsuits, many of them filed on behalf of Mississippians.

Each lawsuit involves patients diagnosed by six screening doctors, who have since refused to testify or have disavowed their diagnoses of more than 140,000 patients.

In April, judges in Ohio threw out about 35,000 asbestos claims for the same reasons.

Through 2002, asbestos litigation cost $70 billion, according to the RAND Institute for Civil Justice, with up to $195 billion to be spent if current lawsuits go forward as planned.

"There is a gaping disconnect between the number of asbestos claims filed and the incidence of actual asbestos illness in the population of mass tort cases," wrote attorneys for the Forman Perry Watkins Krutz & Tardy law firm in Jackson. "This great divide is the direct and absolute result of 'medical' screenings which are simply massive recruitment programs established for the sole purpose of finding potential litigants in an effort to tap into the perceived multi-billion asset pools controlled by defendants and insurance companies involved in the litigation."

Allegations of fraud arose last year during hearings on silica litigation by U.S. District Judge Janis Graham Jack of Corpus Christi, Texas, who concluded in a 249-page opinion that in "the majority of cases, these diagnoses are more the creation of lawyers than of doctors."

Thousands of cases were returned to Mississippi and dismissed.

A federal grand jury in New York is now investigating allegations of fraud, and so is a congressional committee.

On Tuesday, the House Energy and Commerce Oversight Subcommittee held a hearing in which owners of two screening companies invoked their Fifth Amendment rights against self-incrimination.

A physician paid to conduct physicals, Dr. Glyn Hilbun, testified that N&M Inc. of Moss Point fraudulently edited his results to include a silicosis diagnosis.

Robert Goff, director of the division of radiological health at the state Department of Health, who also testified, told The Clarion-Ledger that the department cited four screening companies for deficiencies, including N&M, which had registered for a mobile x-ray unit, but had failed to register as a screening company.

The department never knew anything about a screening company Occupational Diagnostics, he said. "They were operating illegally in the state of Mississippi."
http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20060608/NEWS/60608021

MADISON COUNTY (MISSISSIPPI) JOURNAL

Bad Judges

By BRIAN PERRY

When the US Attorney’s Office, the FBI, the Mississippi Attorney General’s Office, the Harrison County District Attorney and banking regulators combine to look at attorney campaign contributions and loans made to judges from the local to the highest state courts, you have the makings of an intriguing John Grisham novel. Except this story is not fiction; the investigation really exists. The news blowing in from the Coast could be the largest political hurricane to hit Mississippi since Operation Pretense two decades ago.

Currently the matter is under investigation and the allegations are just that, unproven matters of suspect. However, a federal grand jury is expected to convene on the matter soon.

Investigators are looking into allegations that prominent trial lawyers have repaid loans taken out by judicial candidates for their campaigns, and that they may have looked for favors in return. Federal bribery and state campaign finance laws may have been broken, as well as federal bank regulations.

The cast of characters appearing in published reports of the investigation reads like a who’s who in Mississippi politics. You have Richard Scruggs, the prominent trial attorney who made millions in asbestos lawsuits before teaming up with Mississippi Attorney General Mike Moore to take on the tobacco industry, where he earned $1 billion in fees. You have Paul Minor, a fellow prominent attorney (even by national standards)…

Both make significant contributions to judicial candidates and other elected officials. In his last three campaign finance reports showing contributions from and since the 1999 gubernatorial race, Governor Ronnie Musgrove shows gifts of over $105,000 from Scruggs and over $175,000 from Minor. On the Coast, some court officials refer to Minor as “the judge maker.”

Next comes Supreme Court Justice Oliver Diaz, appointed by Musgrove, and winning a full term in 2000 after raising and spending then a record amount for a Mississippi judicial race.

Other names associated with the investigation include former Harrison County Circuit Court Judge John Whitfield and Harrison County Chancery Court Judge Wes Teel. Teel was acquitted in June of pocketing $3,700 in state funds used to reimburse vendors for goods and services for his office. A source familiar with the investigation suggests that as many as two-dozen more judges could be under the federal microscope, as well as Governor Musgrove. Investigators are scrutinizing Musgrove’s campaign contributions, which appear to spike from attorneys before some of his judicial appointments including those of Judge Jim Brantley to the Court of Appeals, Chancery Judge Carter Bise of Gulfport, and Supreme Court Judges James Graves and George Carlson.

Now here is where the Grisham novel would get really interesting. Scruggs and Minor are being investigated by, among others, the Attorney General’s office. Mike Moore, the attorney general, hired Scruggs and Minor to assist in the take down of the tobacco industry. Both are campaign supporters of Moore. Both are friends of Moore. Scruggs and Moore are hometown friends and Ole Miss classmates. They’re also movie stars, of a sort. You may have seen Scruggs and Moore in the movie “The Insider” starring Al Pacino and Russell Crowe.

Many of the scenes were shot at Scruggs’ home. Colm Feore played Scruggs; Moore played himself; Scruggs played an extra. Scruggs and Minor are also being investigated by the US Attorney’s office. This is a federal office under the Republican Bush Administration.

Though typically a Democrat, Scruggs gave $250,000 to Republicans and the Bush Campaign and only $20,000 to Democrats during the 2000 Election. Meanwhile his brother-in-law, US Senator (once and future Majority Leader) Trent Lott, has reportedly been looking in the Bush Administration for an appointment for Scruggs. Rumors last year suggested an ambassadorship.

How about this for an ending to the Grisham novel: Half a state’s judiciary goes down along with a governor controlled by campaign contributors and a senator exerting influence in a federal investigation; meanwhile, millionaire attorneys go to jail. The state gets its first female governor as the lieutenant governor assumes the higher office, where she fills the bench with her own appointments, fills her former position of lieutenant governor, and picks a new senator that could potentially control the balance of power in the United States Senate. Hold on now, this last paragraph is fiction. But with politics in Mississippi, you can see where Grisham gets his ideas.
http://www.onlinemadison.com/Main.asp?SectionID=3&SubSectionID=3&ArticleID=10288

June 8, 2006

Exposing the truth behind silicosis

To attorneys who had earned millions from asbestos settlements, it represented the next potential windfall. But it all came undone in a haze of dust and deception.
By MIKE TOLSON  Copyright 2006 Houston Chronicle

…In the speculative world of high-stakes lawsuits, where the right idea or the right illness can mushroom into a financial windfall, Carl Thomas was the next big thing. Not Thomas personally, as he was neither dead nor catastrophically injured — but Thomas the blue-collar worker, the X-ray, the everyman who, because he was interchangeable with so many others, could bring large corporations to their knees. Thomas' value lay in his claim of silicosis, an occupational lung disease caused by exposure to silica, a variant of ordinary beach sand used by industry in dozens of ways. He was a victim, or so his lawyer asserted. He and thousands just like him deserved to be compensated.

And so it began. First came a few dozen lawsuits, then a few hundred, then thousands. In the span of two years, a waning and somewhat obscure disease was transformed into monster court dockets in Mississippi, where most of the suits were filed. To the stunned corporate targets, it looked like asbestos all over again: The lawsuits threatened to take on a life of their own simply because there were so many of them. Never mind that Thomas, a 61-year-old Pearland longshoreman, like most of the others, showed no ill effects from the alleged silicosis. Never mind that he, like the majority of them, had years earlier filed lawsuits claiming an entirely different lung ailment, asbestosis. What mattered was that Thomas had an abnormal X-ray and a doctor offering a diagnosis. Small settlement checks from Thomas' first lawsuit came in every so often. He had no reason to think the silicosis claim wouldn't pay similar dividends.

"I think it's just attached to the asbestosis," Thomas said of his newest disease. "It's like getting one kind of cancer, and the next thing you know you've also got another cancer."

To Thomas, the idea of having both ailments makes perfect sense. He spent years inspecting cargo inside the dusty holds of arriving ships. Sometimes he was around bags of asbestos waiting to be unloaded. He figures there must have been some sand in there, too.
From a medical perspective, the chance of coming down with both — a pulmonary daily double — is remote. A thickening of the lungs' lining, which Thomas cited as evidence for his asbestosis, is not even characteristic of silicosis.

But to the handful of lawyers along the Gulf Coast who represented Thomas and clients like him, the absence of medical support was nothing to worry about. They did not need sick people, only doctors who would issue diagnoses. With a little luck, they would walk away with billions of dollars in settlements.

In 2001 and 2002, they began beating the bushes for anyone who had been employed where silica might have been used. If that meant trolling through lists of old asbestos clients like Thomas, so be it. The extent of these so-called "asbestos retreads" was not widely known. Then again, for silica litigation to pay off the way they hoped, the fewer details disclosed the better.
The result of their effort was an explosion of lawsuits the likes of which is rarely seen. Texas got its share, close to 4,000, but nothing like Mississippi. In just one year, 2002, one of the smallest states in the country went from 76 new silicosis suits to 10,642. By the end of 2004, the state's total topped 20,000.

How were so many "victims" found so quickly? The answer lies not in luck or previous medical oversight but in a well-oiled litigation machine run by an aggressive band of entrepreneurial lawyers. Operating in the shadows of the civil justice system, the machine's sole purpose is to turn people like Carl Thomas into case numbers.

X-rays in vans
Like the best machines, the marvel of this one is its simplicity. The law firm hires a medical screening company. The screening company hires a doctor. The two go to work, one bringing people through the front door, the other stamping them as sick. At the end of the day, a clerk at a law firm fills in a few blanks, punches a button and produces a lawsuit.

It's the job of the screening company to connect with workers. It owns a mobile van, maybe several, that shows up in parking lots to conduct X-ray sessions. By the time the van arrives, thousands of potential claimants have been reached by direct mail, fliers put up in union halls and ads placed in hundreds of small-town newspapers and occasionally on television.

The X-rays are done at no cost, with the understanding that the results are given to lawyers for the purpose of litigation. The screening company receives a set fee per person tested, as does the doctor who receives the X-rays along with a brief work history of the potential client….Our marketing efforts have brought thousands of new cases to plaintiff law firms," the letter stated. "Prior to the year 2000, Lloyd Criss was employed by the Foster and Sear law firm, and in a one-year period approximately 7,000 new cases were added to that firm's inventory."

A legal dance
When the screeners are done, the pressure is on the doctors to keep the numbers up. Most of them have worked with the same lawyers for years; few, if any, even have a regular medical practice. The X-rays are read quickly, sometimes more than 100 in a day. A large number are found to be slightly abnormal.

In a short amount of time, thousands of people who were unaware they were "sick" are deemed to be suffering from a serious lung ailment. In the case of silica, the newly minted "victims" were not sent to physicians for treatment and follow-up. But because they had signed papers allowing legal representation, they began to receive care of a different sort.

Suddenly, courthouses began to fill up with bare-bones lawsuits against hundreds of companies, thus beginning the protracted legal dance that has become the staple of mass torts. Committees of lawyers for the various parties are formed. Demands are made. A few trials are scheduled for the sickest of the plaintiffs. Settlement talks begin.

Overwhelmed by so many lawsuits that they could never try them all, the defendants have a powerful incentive to dispose of them quickly. Typically, the majority of the defendants are asked to contribute small amounts per case, from a few hundred to a few thousand dollars, so that it's cheaper to settle than fight.

Checks are cut. Most of the plaintiffs get modest sums. A handful of genuinely sick ones get six figures. And the lawyers make millions because of the sheer number of cases. Rarely does a case reach a jury trial.

Far from being the end of things, as asbestos litigation showed, the first round of lawsuits inspires law firms to look for new clients, new venues to make claims and even more defendants. More screenings take place, more lawsuits are filed, and the process starts again. For the lawyers, screeners and doctors in on the ground floor, the prospect is good for an endless stream of paydays.
And so it was with silicosis. Then a strange thing happened. The truth began to leak out. In late 2004 and early 2005, in a federal district courtroom in Corpus Christi, far from the routine scrutiny of the national media, U.S. District Judge Janis Jack watched as a pair of Mississippi defense lawyers, Fred Krutz and Danny Mulholland, managed to expose the litigation machine and peel off layer after layer of one of the great legal hoaxes in American history.

When the hearings were done and all the briefs filed, Jack had her say. The silicosis claims before her defied all medical knowledge and logic, she concluded, and reeked of outright fraud.

"It is apparent that truth and justice had very little to do with these diagnoses," Jack wrote. "The diagnoses were manufactured on an assembly line ... manufactured for money. There is simply no (other) rational explanation."

For all its heated rhetoric, Jack's opinion had little legal force. She decided most of the cases belonged back in the Mississippi courts where the suits were first filed, so her comments were only advisory. But the moral force of her words was enormous.
In the time it took for the legal world to read all 249 scathing pages of Order No. 29, the next big thing for the plaintiff bar became the worst thing that could have happened. The Texas plaintiff lawyers and their Mississippi associates who had ventured a small fortune in up-front expense were all but accused of being crooks. Most of the lawsuits that Jack wrote about were on a fast track to dismissal. And so widespread was the publicity that silicosis quickly became a dirty word when mentioned in the same breath as lawsuit.

Asbestos suits in jeopardy
Although older silica cases are threatened by a taint that will not soon go away and new ones face serious skepticism, the ripple effects of Jack's ruling are much bigger than that.

In real jeopardy is the original cash cow for plaintiff lawyers — asbestos lawsuits — because of increased scrutiny from judges and resistance from managers of the trust funds created by bankrupt companies to pay claims.

A three-judge panel in Ohio last month dismissed more than 4,000 asbestos suits in which the diagnosing doctors were among those discredited because of bogus silicosis claims. A number of asbestos trusts also have begun rejecting claims from those same doctors. Tens of thousands of diagnoses are involved.

Defendants disgusted by years of failure to staunch the flow of asbestos litigation, which kept increasing at a time when logic suggested it should diminish, are now on the attack.

Judges are listening.
In Pennsylvania, U.S. Bankruptcy Judge Judith Fitzgerald was shocked when lawyers from the Houston firm of O'Quinn, Laminack and Pirtle tried to get diagnoses from the discredited doctors accepted as the basis for silica claims against Mid-Valley Inc., a bankrupt subsidiary of Halliburton.

"I can't imagine why, as lawyers, you would be going forward with anything that these doctors submitted," Fitzgerald said during a February hearing. "I absolutely will not, under any circumstances, give (them) one iota of credence."

In Florida, Circuit Judge David Krathern has vowed to "ride herd" on more than 100 pending silicosis claims in his court. "Look at all the companies that are represented by all the lawyers in this room, all the money that is being spent on this litigation," he said in a recent hearing. "It's mind-boggling the effect that it has on our economic well-being in this country. They are not legitimate cases."

Microscope reversed
Meanwhile, the defendants' crusade against the doctors who issued diagnoses in bulk keeps mounting. It could get a significant boost from the U.S. Attorney's Office in the Southern District of New York, which is investigating the silicosis screeners and physicians for possible criminal acts. Another unexpected ally is Congress. Inspired by Judge Jack's findings, a committee of the U.S. House of Representatives is looking into both the screening operations that provided the fodder for the lawsuits and more than a dozen law firms that paid them to do it.

"This is a story of medical mercenaries who allege cases of disease for the purpose of legal action and great financial gain," said U.S. Rep. Joe Barton, R-Ennis, at a March 8 hearing by the House Subcommittee on Oversight and Investigations.

Three physicians who figured prominently in the rise of silicosis lawsuits were subpoenaed to appear before the subcommittee but refused to testify, citing their Fifth Amendment protection.

Two of them, Ray Harron and James Ballard, also were responsible for more than 62,000 asbestos diagnoses used by claimants demanding compensation from the Manville Trust, a fund set up by the bankrupt asbestos manufacturer Johns-Manville Corp.
They are among nine doctors whose diagnoses Manville no longer will accept. Harron and Ballard didn't return calls from the Houston Chronicle seeking comment….
http://www.chron.com/disp/story.mpl/front/3845841.html

ASBESTOS SCANDAL 

Wall Street Journal  2006 (multiple excerpts)

Texas grand jury has convened in Corpus Christi to investigate Judge Janis Graham Jack's findings of pervasive fraud last year…  According to a subpoena we've seen, the jury was convened under the auspices of the criminal division of federal grand jury in Manhattan probing silicosis suits.

Medical screening companies, RTS and Occupational Diagnostics, invoked their Fifth Amendment rights, bringing to five the number of people who've refused to answer Congressional questions. Mr. Whitfield noted that
co-owner of another screening company couldn't be found.

Doctors admitted to certain kinds of fraud; other doctors missing.

Plaintiffs request dismissal of @ 150,000 assbestos cases in one jurisidiction: Philadelphia.

Asbestos diagnosis "Fifth Amendment doctors,"  repeatedly refused to testify in depositions and in front of Congress in March. Defense lawyers are arguing with cause that it is "black letter" law that taking the Fifth is enough to get the diagnoses these doctors submitted dismissed from court.

Dr. Levine only last month signed an affidavit disavowing every asbestosis diagnosis he'd issued, claiming that he had no training in diagnosing the disease. Dr. Levine, who had previously defended his "diagnoses" under oath.

The six combined have authored an astonishing 140,911 asbestos "diagnoses" -- and the number is probably much higher. According to Dr. Harron's own testimony, he's reviewed X-rays in "between six and seven hundred thousand cases."

At least one law firm, Cherry Campbell of Texas, seems to have seen this train coming and is voluntarily dismissing 12,500 of its federal asbestos claims.

Miss. Judge Declines to Sanction O'Quinn, Laminack & Pirtle

Monday July 10, 2006

Mary Alice Robbins, Texas Lawyer

A federal judge's findings about suspect diagnoses in thousands of silicosis cases in multidistrict litigation in Corpus Christi, Texas, did not convince a state judge in Mississippi to sanction a Houston firm representing some plaintiffs in those cases.

On June 27, Circuit Court Judge Isadore W. Patrick of Vicksburg, Miss., denied motions for sanctions against the former firm of O'Quinn, Laminack & Pirtle, now called the O'Quinn Law Firm. In March, a dozen of some 72 defendants in McDuff, et al. v. Aearo, et al. and Braxton, et al. v. Aearo, et al. filed motions in the Circuit Court of Sharkey and Issaquena counties, seeking about $165,000 in sanctions from O'Quinn Laminack for allegedly pursuing frivolous claims on behalf of clients and submitting allegedly unreliable diagnoses to support those claims.

The 12 defendants argued in their motions that Patrick should apply findings that U.S. District Judge Janis Graham Jack of Corpus Christi made in the MDL proceeding and sanction O'Quinn Laminack. The Mississippi circuit court need not engage in independent fact-finding to recognize that O'Quinn Laminack's conduct in the silicosis litigation necessitates sanctions, the defendants argued.

Jack oversaw pretrial matters for about 120 silicosis cases involving an estimated 10,000 plaintiffs from eight states, including Mississippi and Texas. Alleging they were injured by inhaling fine silica dust while engaged in sandblasting or similar occupations, the plaintiffs originally filed most of the suits in Mississippi state courts, but the defendants removed the cases to federal courts. Acting on motions by the defendants, the Judicial Panel on Multidistrict Litigation consolidated the suits in September 2003 and assigned Jack to oversee pretrial discovery. But Jack remanded most of the cases to state courts in Mississippi last year after criticizing the mass screening process that resulted in thousands of plaintiffs being diagnosed with silicosis, a chronic lung disease. In a June 2005 order in In Re: Silica Products Liability Litigation, Jack accused screening companies, doctors and plaintiffs lawyers of being willing participants in a "scheme" involv! ing those plaintiffs.

"In a majority of cases, these diagnoses were more the creation of lawyers than of doctors," Jack wrote in the 249-page order.

Acting on a motion by the defendants in Alexander, et al. v. Air Liquide America Corp., et al., Jack also assessed $8,250 in sanctions against O'Quinn Laminack, finding that the firm "micromanaged" the diagnostic process and "has multiplied the proceedings unreasonably and vexatiously." Jack subsequently ruled at a Nov. 14, 2005, hearing that she did not have jurisdiction over Alexander, but O'Quinn Laminack already had paid the sanctions by that time and did seek to recoup the money, Abel Manji, an associate with the O'Quinn Law Firm, says.

Patrick, who heard arguments on the defendants' sanctions motions in a June 9 hearing, wrote in his order that he found "insufficient proof," other than suppositions, to warrant sanctioning the firm and found no actions we took that are in violation of any code of ethics or rules," Manji, who represents plaintiffs in the firm's silicosis cases, says of Patrick.

Manji says the defendants based their motions for sanctions on the fact that Jack had sanctioned the firm.
Daniel J. Mulholland, an attorney representing the defendants who filed the motions for sanctions, says his clients will appeal Patrick's decision to the Mississippi Supreme Court.

"We believe the conduct of O'Quinn [Laminack] was sanctionable, as found by Judge Jack and as demonstrated by the evidence outlined in her opinion, and we will continue to pursue that claim," says Mulholland, an associate with Forman Perry Watkins Krutz & Tardy in Jackson, Miss.

Referring to the mass screening process, Patrick wrote in the order that O'Quinn Laminack "relied upon a nationally accepted method used in prior mass tort cases." Patrick found that a physician who holds a national certification to do such screenings diagnosed the plaintiffs, and that the Mississippi courts accepted the screenings.

Patrick further found that there have been no charges, indictments, convictions or sanctions by the appropriate Texas authorities or the State Bar of Texas for fraud against O'Quinn, Laminack & Pirtle in connection with the screenings. Manji says the O'Quinn Law Firm has filed motions with Patrick to dismiss the McDuff and Braxton suits, which, together, involve 183 plaintiffs. He says the firm plans to refile individual suits for the plaintiffs. Richard Laminack, a former partner in O'Quinn, Laminack & Pirtle, says he's not surprised by Patrick's decision.

"What we're finding out is it was really much ado about nothing," Laminack, now a partner in Laminack, Pirtle & Martines in Houston, says of Jack's order. "Judge Jack was in over her head," Laminack contends.

But Lester Brickman, a professor at the Benjamin N. Cardozo School of Law at Yeshiva University in New York City who is an expert on asbestos and silica litigation, says he independently reached conclusions "pretty much the same" as Jack later reached in the MDL proceeding.

Brickman, who testified before the U.S. Senate Judiciary Committee on silica claims in February 2005, says doctors had diagnosed many of the plaintiffs in the suits with asbestosis and silicosis. While it's possible for a person to have both diseases, "it's an extremely rare event," he says.

But Brickman says he's not surprised that the Mississippi court declined to sanction O'Quinn Laminack. "The research I had done on asbestos litigation in Mississippi indicates there is no disciplinary enforcement of any kind for clear infractions -- if not outright violations -- of ethical rules and even criminal statutes," Brickman says.

"There is no suspense here. One knows the answer before the motion is filed," he says
http://biz.yahoo.com/law/060710/4534381150bf7884975ea2ccf4757b71.html?.v=1

Former New York Asbestos Contracting Firm and Owners Convicted of Organized Crime and Other Charges

April 7, 2004. AAR Contractor, Inc., a former asbestos abatement firm located in Latham, N.Y. and two former AAR owners, Alexander Salvagno of Loundonville, N.Y., and Raul Salvagno of Ormand Beach, Fla., were convicted on March 29 of a ten-year conspiracy (1990-1999) to violate the Racketeer Influenced and Corrupt Organization Act (RICO), the Clean Air Act and the Toxic Substances Control Act. In addition, the jury found that Alexander Salvagno committed multiple acts of obstruction of justice, money laundering, mail fraud and bid rigging under the RICO charge and also convicted him of three counts of tax fraud. AAR was one of the largest asbestos abatement companies in New York State. The Salvagnos used Analytical Laboratories of Albany, Inc. (ALA) to create fraudulent laboratory analyses indicating that buildings remediated by AAR were free of harmful levels of asbestos. In reality, AAR and the Salvagnos had used illegal "rip and run" techniques to remove the asbestos, and released "snow storms" of asbestos in the process. The workers employed by AAR were not provided with proper protective equipment. In addition, dangerous levels of residual asbestos contamination were found by investigators at locations ALA determined were safe. Collusion between AAR and ALA occurred at more than 1,555 New York facilities and involved falsification of up to 75,000 laboratory samples. Improperly removing asbestos and falsely certifying a building to be free of asbestos contamination can lead to workers and other people inhaling asbestos fibers, which can cause lung cancer, the lung disease "asbestosis," and mesothelioma, cancer of the chest and abdominal cavities. The case was investigated by the New York Area Office of EPA's Criminal Investigation Division, the Internal Revenue Service, the U.S. Army Criminal Investigation Division, and the New York State Office of Inspector General. Investigative assistance was provided by the New York State Department of Labor, the New York State Department of Health and EPA's National Enforcement Investigations Center. The case is being prosecuted by the U.S. Attorney's Office in Syracuse.
http://www.mesotheliomacenter.org/news/2004-04-07.php

W.R. Grace Indicted in Libby Asbestos Deaths

By Andrew Schneider, St. Louis Post-Dispatch, Tuesday 08 February 2005

Mine company and seven executives face criminal charges.

 MISSOULA, Mont. -- W.R. Grace & Co. and seven of its current or former executives have been indicted on federal charges that they knowingly put their workers and the public in danger through exposure to vermiculite ore contaminated with asbestos from the company's mine in Libby, Mont.

Hundreds of miners, their family members and townsfolk have died and at least 1,200 have been sickened from exposure to the asbestos-containing ore. The health effects also threaten workers, their families and residents everywhere the ore was shipped, including Seattle, and people living in millions of homes nationwide where it was used as insulation.

Yesterday, on the steps of the county courthouse here, U.S. Attorney Bill Mercer announced the 10-count indictment, alleging conspiracy, knowing endangerment, obstruction of justice and wire fraud.

"A human and environmental tragedy has occurred," he said. "This prosecution seeks to hold Grace and its executives responsible."

 "This is one of the most significant criminal indictments for environmental crime in our history," said Lori Hanson, special agent in charge of the Environmental Protection Agency's environmental crime section in Denver.

In a statement released for Grace by a public-relations firm, the company "categorically denies any criminal wrongdoing."

Grace criticized the government for releasing the indictment before providing a copy to the company. "We are surprised by the government's methods and disappointed by its determination to bring these allegations ... . We look forward to setting the record straight."

Federal environmental officials began examining the hazards in Libby after Nov. 19, 1999, when the Seattle Post-Intelligencer began publishing a series of stories about what the government has called "the nation's biggest environmental disaster." Within three days of the P-I's first report, an EPA emergency team arrived in the tiny northwestern Montana town.

Present at the announcement yesterday were Libby victims Lester and Norita Skramstad and Gayla Benefield.

Lester Skramstad has asbestosis, as does his wife, Norita, and two of their children. He spoke softly but forcefully, struggling for breath to launch his words into the wind on a blustery winter afternoon. "I've waited a long time for this," he said. "It's a great day to be alive."

If found guilty, the individual defendants face from five to 15 years in prison on each count, which for some of the executives could be as much as 70 years.

Grace could be fined up to twice the profits from its alleged criminal acts or twice the losses suffered by victims. According to the indictments, Grace made more than $140 million in after-tax profits from the Libby mine, which would mean a fine of up to $280 million. Alternatively, the court could fine the company twice what it computes the loss to be from more than a thousand Libby victims. In addition, the court could order restitution for the victims.

"This criminal indictment is intended to send a clear message: We will pursue corporations and senior managers who knowingly disregard environmental laws and jeopardize the health and welfare of workers and the public," said Thomas Skinner, EPA's acting assistant administrator for enforcement, yesterday.

The executives charged are Alan Stringer, formerly general manager of the Libby mine and Grace's representative during the government's Superfund cleanup; Henry Eschenbach, formerly director of health, safety and toxicology in Grace's industrial chemical group; Jack Wolter, formerly Grace vice president and general manager of its construction products division; Bill McCaig, also formerly general manager of the mine; Robert Bettacchi, formerly president of the construction products division and senior vice president of Grace; O. Mario Favorito, former Grace general counsel; and Robert Walsh, formerly a Grace senior vice president.

The 49-page indictment accuses Grace of knowingly releasing asbestos into the air, placing miners, their families and townspeople at risk, and of defrauding the government by obstructing the efforts of various agencies including the EPA, increasing profits and avoiding liability for damages by doing so.

P-I's investigation

Tens of thousands of pages of internal Grace documents and court papers were the basis of scores of stories in the P-I on Libby and the deadly ore that Grace shipped throughout the world.

Those documents show years of extensive communication among Grace's top health, marketing and legal managers and mine officials in Libby about concealing the danger of asbestos in the ore and consumer products that were made from it.

They discussed methods to keep federal investigators from studying the health of the miners, the potential harm to Grace sales if asbestos warnings were posted on its products, and the effort to mask the hazard of working with the contaminated ore.

"The prosecution cannot eliminate the death and disease in Libby," said John Heberling, a lawyer with McGarvey, Heberling, Sullivan and McGarvey. "But there is comfort in the hope that criminal convictions will say to corporate America ... managers will be held criminally accountable if they lie and deny and watch workers die."

For years, the Kalispell, Mont., firm has been fighting for damages from Grace on behalf of the families of the dead and the dying from Libby.

Mine's Huge Production

Opened in 1913, the mine is six miles from Libby. Grace bought it in 1963 and closed it in 1990. In its heyday, the mine produced 80 percent of the world's vermiculite. The company still operates smaller vermiculite mines in South Carolina.

Vermiculite, a mineral similar to mica, expands when heated into featherweight pieces that have been used commercially for decades in attic and wall insulation, wallboard, fireproofing, and plant nursery and forestry products. It was also used in scores of consumer products, such as lawn and garden supplies and cat litter.

Exposure to the tremolite asbestos fibers, which contaminate the vermiculite ore, has caused hundreds of cases of asbestosis, lung cancer and mesothelioma in Libby and an untold number at hundreds of other sites across North America where the ore was processed.

Criminal investigators and lawyers from the EPA, the Internal Revenue Service and the U.S. Attorney's offices in Montana often put in 12- to 15-hour days while preparing the case. Investigators and lawyers from the Justice Department and the EPA's headquarters also assisted.

The haste was required because prosecutors were up against a five-year statute of limitation, based on the arrival of the first federal team in Libby after the P-I stories. They gained a three-month extension of that limitation.

A Troubled Past

The EPA said that over the years it had filed several complaints against Grace over the company's environmental practices. The only previous criminal charge against the Columbia, Md.-based corporation was in the mid-'80s. Grace was indicted on two counts of lying to the agency about the quantity of hazardous material used in its packaging plant in Woburn, Mass.

In 1988, the company pleaded guilty to one count and was fined $10,000, the maximum at that time. The charges were brought after Grace and another company were sued after being accused of illegally dumping toxic chemicals, contaminating two wells and, some believe, resulting in the deaths of five children from leukemia. Grace paid the families $8 million to settle the suits. The book and movie "A Civil Action" were based on the Woburn case.

Grace, which produces construction materials, building materials and packaging, filed for Chapter 11 bankruptcy protection in 2001 because of the "sharply increasing number of asbestos claims," Paul Norris, Grace's chairman and CEO, said at the time.

In May 2002, the Justice Department intervened in Grace's bankruptcy, the first time it had entered such a case, alleging that before Grace filed for Chapter 11, it concealed money in new companies it bought. Justice Department lawyers said Grace's action was a "fraudulent transfer" of money to protect itself from civil suits.

In November of that year, just before the trial was to begin, the St. Louis Post-Dispatch reported that the companies returned almost $1 billion to the bankruptcy judges holding Grace's assets.

Grace is far from out of business. Norris said the company has annual sales of about $2 billion, more than 6,000 employees and operations in nearly 40 countries.

Mercer refused comment on whether there would be more indictments from other locations where Grace had operations. Hanson said she had been discussing the investigation with her counterparts in EPA regions throughout the country.

Libby victim Benefield said yesterday that as she watched the announcement of the indictments, her thoughts were with her parents, Perley and Margaret Vatland, both of whom died of asbestosis. She wore on her coat a costume-jewelry pin her mother, who sold Avon products, bought from Avon for herself.

"Somewhere today they're smiling," she said, fingering the pin. "I just know it."
http://www.truthout.org/cgi-bin/artman/exec/view.cgi/34/8844