Asbestos fund fails in Senate

WASHINGTON -- The Senate yesterday scuttled legislation designed to create a privately financed compensation fund for victims of asbestos exposure, with Republicans who are concerned about the fund's cost joining Democrats who want asbestos claims to continue to be handled by courts.

The measure, the product of more than a year of bipartisan compromises, fell one vote short of the 60 needed to move toward a final vote. Senate majority leader Bill Frist said before the vote that falling short would mean efforts to establish an asbestos trust fund would be shelved for the year, but he said later that the bill still has a ''heartbeat," and he may bring it up again at a later date.

The bill would establish a $140 billion trust fund to compensate asbestos victims, paid for by companies that exposed employees to the carcinogenic substance. Massive asbestos liability claims have bankrupted nearly 80 companies so far, and the trust fund has been billed as a way to control companies' financial liabilities and make it easier for victims to be compensated.

But many Democrats said the bill amounts to a bailout for big corporations, which would almost certainly be forced to pay far more to victims if cases go through the court system.

They were joined by several conservative Republicans, who said the trust fund would be too small and the bill leaves the door open to fraudulent claims because it doesn't establish strict medical criteria. The nonpartisan Congressional Budget Office issued a report Monday predicting that in its first decade, the fund would take in $57 billion and be forced to pay out $64 billion -- leaving a $7 billion gap that taxpayers could be forced to cover.

''If there is a problem with this trust fund. . .it will happen at a time where the Baby Boomers are about to retire," said Senator John Ensign, a Nevada Republican who led efforts to scuttle the bill via the procedural means used yesterday.

''The last thing that we can afford to do is enact a bill that potentially could have a major impact -- literally maybe in the hundreds-of-billions-of-dollars type of number -- that could have a drain on our government," Ensign said.

The measure has drawn intense interest and lobbying dollars from major corporations, labor unions, insurance companies, and trial lawyers. Some big companies support it enthusiastically, while others complain that they would be forced to pay too much into the fund. Several major insurers have said they worry that the fund won't be large enough.

Supporters of the trust fund implored fellow senators to respect the immense amount of work that went into crafting the bill. Senate Judiciary Chairman Arlen Specter, Republican of Pennsylvania, said perhaps no bill has ever been subjected to more scrutiny over three decades, with countless meetings and hearings over the past three years.

''To have it rejected on a technicality is just a terrible waste of time and effort," Specter said. He added that while the Department of Labor would administer the trust fund, it is funded entirely by private sources.

The procedural issue raised by Ensign cited an obscure Senate rule that requires 60 votes on measures that are expected to cost more than $5 billion over a 10-year period. Ensign and others argued that the trust fund was insufficiently funded, meaning taxpayers were highly likely to have to cover a shortfall.

Senator Patrick J. Leahy of Vermont, who worked closely with Specter in crafting the bill, said that killing the legislation would leave tens of thousands of victims without compensation.

''The victims of asbestos exposure will not benefit from this latest tactic to stop this legislation," said Leahy, the top Democrat on the Senate Judiciary Committee.

Many Democrats joined a handful of Republicans to stop the measure -- at least for the time being.

''The real crisis which confronts us is not an asbestos-litigation crisis, it is an asbestos-induced disease crisis," said Senator Edward M. Kennedy, Democrat of Massachusetts. ''We cannot allow the tragedy these workers and their families are enduring to become lost in a complex debate about the economic impact of asbestos litigation."

The measure initially got 59 votes, and one senator -- Democrat Daniel K. Inouye of Hawaii, who has not stated a position on the measure -- missed the vote. Because the vote was so close, Frist switched his vote to no, to give him the ability under Senate rules to bring the bill up again.

''In addition to being unfair to victims, the bill is unfair to federal taxpayers," said Senate minority leader Harry Reid, a Nevada Democrat. ''The current bill is not the answer."