By Mark A. Behrens, a Partner, and William F. Northrip, Of Counsel, with Shook, Hardy & Bacon L.L.P., Mr. Behrens in the firm’s Washington, DC office, and Mr. Northrip in the Kansas City, MO office. Mr. Behrens is also a Member of WLF’s Legal Policy Advisory Board.

In recent weeks, the U.S. Department of Justice has taken unprecedented steps to combat the “problematic lack of transparency in the operation and oversight of asbestos trusts.”1  Secrecy regarding trust filings has made it “nearly impossible to detect when plaintiffs are seeking recovery based on factual representations that may be incompatible with other representations previously made in other litigation or before other trusts.”2  The Department found “alarming evidence” of “fraud and mismanagement inside trusts.”3  It seeks to protect the interests of legitimate claimants and the United States, which may be entitled to reimbursement for medical treatments paid by Medicare if claimants collect from asbestos trusts. 

Statement of Interest Filed in New Asbestos Trust Proposal 

On September 13, 2018, the Department filed perhaps its first-ever Statement of Interest in an asbestos-related bankruptcy proceeding (In re Kaiser Gypsum Co.), asserting its concern that plans for the creation of an asbestos trust are lacking adequate safeguards against “fraud, mismanagement, or abuse.”4  DOJ’s notice gives the parties time to address its concerns to avoid “the need for the filing of objections.”5