Fairness In Asbestos Injury Resolution Act of 2003

B-301397, Fairness In Asbestos Injury Resolution Act of 2003, September 4, 2003

B-301397



September 4, 2003

Fairness In Asbestos Injury Resolution Act of 2003
The Honorable Don Nickles
Chairman, Committee on the Budget
United States Senate

Dear Mr. Chairman:

This is in response to your request that the General Accounting Office prepare a comparison of the program that would be created by S. 1125, the –Fairness In Asbestos Injury Resolution Act of 2003 (FAIR Act),— recently reported in the Senate, and the existing National Vaccine Injury Compensation Program and Black Lung Benefits Program. You also asked that we comment on the borrowing authority in S. 1125. Enclosed is a chart comparing the two statutory programs and S. 1125. In response to your second request, we offer the following observations regarding the borrowing authority in S. 1125.

FAIR Act

Subsection 223(c) of the bill provides as follows:

–(c) BORROWING AUTHORITY—The Administrator [of the Office of Asbestos Injury Claims Resolution] is authorized to borrow, in any calendar year, an amount not to exceed anticipated contributions to the [Asbestos Injury Claims Resolution] Fund in the following calendar year for purposes of carrying out the obligations of the Fund under this Act.—

commercial See also id



A Glossary of Terms Used in the Federal Budget Process See generally Budget Issues: Inventory of Accounts With Spending Authority and Permanent Appropriations, 1996 [1] see Principles of Federal Appropriations Law



See See e.g.


See e.g.



[2] see create any obligation of funding from the United States Government.— [3] See S. Rep. No. 108-118, above, at 57. To ensure that the government incurs no liability for repayment of borrowing under the act, Congress may wish to explicitly state that repayment of borrowing is limited solely to amounts available in the Fund.

[4] See e.g.

		National Vaccine Injury Compensation Program. (42 U.S.C. 300aa-10 et seq.)	Black Lung Benefits Program (30 U.S.C. 901 et seq.)	S. 1125, 108th Cong. (as reported July 30, 2003), –Fairness in Asbestos Injury Resolution Act of 2003.—
Type of Benefits Payable		For an injury: past and future unreimbursable medical, custodial care and rehabilitation costs, actual and projected pain and suffering and emotional distress (capped at $250,000), lost earnings, and reasonable attorneys' fees and costs. For a death: payment capped at $250,000. 42 U.S.C. 300aa-15.[5]	Monthly income maintenance payments (augmented based on beneficiary's number of dependents) and medical benefits related to treatment for black lung disease. 30 U.S.C. 922.[6]	Cash award, payable over 3-4 years, derived from –benefit table— based on medical condition. 131, 133. –Medical monitoring— costs for patients with –nonmalignant disease— and –minimum exposure criteria,— 132. (Report[7] at 43-44.)
Benefit Eligibility		Petitioners who can prove that (1) an injury listed on the –Vaccine Injury Table— occurred within the applicable time period, (2) the vaccine significantly aggravated a preexisting condition, or (3) the covered vaccine caused the condition. 42 U.S.C. 300aa-11(c).[8]	Miners –totally disabled— due to pneumoconiosis (black lung disease) or related disease and their survivors. 30 U.S.C. 902, 931-32.[9]	Any individual who has suffered from an eligible disease or condition that is believed to meet the requirements. 111. See –Medical Criteria Requirements,— 121; –Essential Elements of Eligible Asbestos Claim,— 113. (Report at 36-43.)
Source of Benefits Funding		The Vaccine Injury Compensation Trust Fund.[10] Claims may be paid only from the Fund. See 26 U.S.C. 9510(d)(1).	Claims are funded by –responsible operators,— i.e., mining companies, or by the Black Lung Disability Trust Fund when the employment was before Jan. 1, 1970 or when no coal mine operator can be held liable.[11] 26 U.S.C. 9501(d), 30 U.S.C. 932.[12]	The Asbestos Injury Claims Resolution Fund. 133. All claims must be paid from the Fund. 133(a)(1). (Report at 44.)
TRUST FUND
–Trust Fund— Established		–There is established in the Treasury of the United States a trust fund to be known as the 'Vaccine Injury Compensation Trust Fund' . . . . — 26 U.S.C. 9510(a).	–There is established in the Treasury of the United States a trust fund to be known as the 'Black Lung Disability Trust Fund'. . . .— 26 U.S.C. 9501.	–There is established in the Office of Asbestos Injury Claims Resolution, the Asbestos Injury Claims Resolution Fund . . . .— 223(a). (Report at 53.)[13]
Sources of Fund Income		An excise tax of 75 cents is collected on every dose of covered vaccine purchased. 26 U.S.C. 4131. Upon payment of compensation to a petitioner, the Fund is subrogated to all rights of the petitioner. Collections under this provision are deposited in the Fund. 42 U.S.C. 300aa-17. Interest income. 26 U.S.C. 602(b)(3).	Excise tax on coal mining companies based on each ton of coal mined, amounts recovered from –responsible operators,— and certain penalties assessed under the Act. 26 U.S.C. 4121. Interest income. 26 U.S.C. 9602(b)(3).	Assessments of –contributions— from –defendant participants— ( 202(a)(1)) and from –insurance participants.— ( 212(a)). Additional contributions from asbestos-related civil trusts. ( 402) (Report at 29, 56.)[14]
Investment of Funds permitted or required?		Yes. Treasury is required to invest funds not required to meet current withdrawals –only in interest-bearing obligations of the United States.— 26 U.S.C. 9602(b).	Yes. Treasury is required to invest funds not required to meet current withdrawals –only in interest-bearing obligations of the United States.— 26 U.S.C. 9602(b).	Yes. The Administrator is required by section 222 to invest the assets of the Fund consistent with a –prudent person— standard. 222(a), (b). (Report at 53.)
Specific limitation of government liability for claims?[15]		Yes. Claims may be paid only out of the Fund. 26 U.S.C. 9510(d)(1).	Yes. The Fund is specifically designated as the source of benefit payments, making other sources unavailable. 26 U.S.C. 9501; 30 U.S.C. 932(a).	Yes. The bill specifically provides that nothing in it –may be construed as creating a cause of action against the United States— or –construed to create any obligation of funding from the United States Government.— 405. (Report at 29, 60.)
Other costs payable from Fund?		Expenses incurred by the federal government in administering the program, capped at no more than $9,500,000 for any fiscal year. 26 U.S.C. 9510(c)(1) (B).	Administrative costs incurred by agencies that administer benefits and operate the trust fund. 26 U.S.C. 9501(d)(5).	Principal and interest on borrowings and administrative expenses necessary to carry out activities of the Office of Asbestos Injury Claims Resolution and the Asbestos Insurers Commission. 217, 223(a). (Report at 53.)
Explicit[16] fiduciary responsibility?		No. But see 26 U.S.C. 9602, –Management of Trust Funds.—	No. But see 26 U.S.C. 9602, –Management of Trust Funds.—	Yes. Fund is to be administered –in a fiduciary capacity— with –care, skill, prudence, and diligence,— to a –prudent person— standard. 222(a), (b). (Report at 53.)
	Borrowing Authority	None.[17]	If tax revenues are insufficient to cover expenditures, Congress may appropriate –repayable advances— to the Fund. Such advances are repayable with interest. 26 U.S.C. 9501(c).	The Administrator is authorized to borrow, in any calendar year, an amount not to exceed anticipated contributions to the Fund in the following calendar year for purposes of carrying out the obligations of the Fund. 223(c).[18] (Report at 29, 53.)
CLAIMS PROCEDURES
Filing and Processing Procedures		Individual files a –petition for compensation— with the U.S. Court of Federal Claims. A Health and Human Services physician conducts a medical review of the petition and makes a recommendation. A Justice attorney reviews the petition to determine whether it meets the legal requirements for compensation. These reviews are provided to the Court. The HHS position is represented by a Justice attorney in hearings before a –special master,— appointed by the Court. 42 U.S.C. 300aa-12.[19]	Miners and their survivors apply to the DOL for benefits. DOL obtains a medical and employment history and identifies –operators— who may be liable for the claim and makes an initial determination. Parties, including claimants or operators, may appeal and submit additional evidence. Informal conferences may be held to try to resolve differences. DOL then prepares a proposed –Decision and Order— which is subject to appeal as set forth below. [20]	Claims system will be administered by the Court of Federal Claims, which will establish an Office of Special Asbestos Masters to process and make initial decisions on claims. Claims filed under the bill will be referred to claims examiners for an initial review. Once a claim is complete, a special asbestos master has 60 days to determine the amount of any award. 111-115. (Report at 30, 36-7.)
–No Fault— claims process?		Yes. The petitioner is not required to show that a particular vaccine manufacturer or administrator was negligent. 42 U.S.C. 300aa-11.[21]	Yes, although the Act contemplates that –responsible operators— will be the primary funding source. 30 U.S.C. 932. Claimants or mine operators dissatisfied with the initial DOL decision can appeal. The appeals process is adversarial.[22]	Yes. Claimants –shall not be required to demonstrate that the asbestos-related injury for which the claim is being made resulted from the negligence or other fault of any other person.— 112. (Report at 36.)
Appeal of Decisions		The decision on entitlement or compensation by the –special master— may be appealed to the Court of Federal Claims and subsequently to the U.S. Court of Appeals for the Federal Circuit and the Supreme Court. 300aa'12(e), (f).	Decisions can be appealed to the Office of Administrative Law Judges at DOL, to the independent Benefits Review Board at DOL, to the U.S. Circuit Court of Appeals with jurisdiction where the miner was exposed to coal mine dust, and finally to the Supreme Court. See DOL Employment Law Guide. [23]	Decisions of the –special master' on claims may be appealed to a U.S. Court of Asbestos Claims, which would be a three judge court established by the Court of Federal Claims. 141(a), (b). Decisions of the Asbestos Court could be appealed to the Federal Circuit and the Supreme Court. 301. (Report at 44, 55.)
Alternate avenues of redress available?		Yes, although under the Act an individual alleging a vaccine-related injury or death must first file a claim before pursuing a tort claim. After pursuing a petition under the Program, a petitioner can elect to bring a suit in civil court by 1) withdrawing the petition under certain conditions or 2) electing to reject the decision and judgment of the Court. 42 U.S.C. 300aa-21. If the petitioner does elect to bring suit, the Act limits the claims the petitioner can make against the manufacturer. 42 U.S.C. 300aa-22, 23.	Yes. There is no explicit provision in the Black Lung legislation prohibiting tort lawsuits by miners afflicted by Black Lung disease.[24]	No. Section 403(c) provides that Act is the –exclusive remedy— for –personal injury— asbestos claims. –No asbestos claim may be pursued in any Federal or State court, except for enforcement of claims for which an order or judgment has been duly entered by a court that is no longer subject to any appeal or judicial review . . . . 2(3); 403(c)(1). (Report at 56-57.)
OTHER PROVISIONS
Provision for early termination?		No.[25]	No.[26]	Under section 404, Administrator must certify annually that 95 % of eligible claimants who filed claims during the prior calendar year have received compensation to which they were entitled and 95% of the obligations of the Fund owed to eligible claimants in the prior calendar year have been paid. If Administrator cannot so certify, he or she has a 90 day period to remedy this situation. Otherwise, program sunsets and claimants may litigate claims. (Report at 57, 61.)
Current Status of the Fund		The Fiscal Year 2004 Budget indicated that the estimated balance of the Fund at the end of Fiscal year 2003 was $1.907 billion. See FY 04 Budget at 409.[27]	Coal taxes have been chronically inadequate to cover expenditures and the Fund has borrowed extensively from the General Fund.[28] The outstanding debt at the end of FY 2003 was estimated to be over $8 billion. See FY 04 Budget at 653, 665-667.

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[1] See et seq. See Financial Audit: Federal Financing Bank's 1993 and 1992 Financial Statements See also
[2] See e.g. See also Budget Issues: Agency Authority to Borrow Should Be Granted More Selectively
[3]



[4] Under section 2286 of Title 12, U.S.C., –the prior approval of the Secretary of the Treasury— is required with respect to methods, source, timing and financing of –obligations issued or sold by any Federal agency.— Whether this section would be applicable to borrowing by the Administrator is open to question due to an explicit exception in the statute for –obligations issued or sold pursuant to an Act of Congress which expressly prohibits any guarantee of such obligations by the United States.— 12 U.S.C. 2286(a); see also, 12 U.S.C. 2288(3) (definition of –guarantee— as –any guarantee, insurance or other pledge with respect to the payment of all or part of the principal or interest of any obligation . . . .—). As indicated above, section 405 of the bill create any obligation of funding from the United States Government.—
[5] See See
[6] See Employment Law Guide
[7]
[8] See
[9] Black Lung Deskbook
[10] See Vaccine Injury Trust Fund: Revenue Exceeds Current Need for Paying Claims See also Budget of the United States Government, Fiscal Year 2004
[11] Black Lung Program: Further Improvements Can Be Made in Claims Adjudication
[12] See
[13] See Federal Trust and Other Earmarked Funds: Answers to Frequently Asked Questions see Principles of Federal Appropriations Law A Glossary of Terms Used in The Federal Budget Process: Exposure Draft See also
[14] See e.g.
[15] See e.g. see
[16] United States v. Mitchell
[17] See
[18] See
[19] See Vaccine Injury Compensation: Program Challenged to Settle Claims Quickly and Easily
[20] See See also
[21] See
[22] See
[23] See also
[24]
[25] See
[26] Elliot Coal Mining, Inc. v. Director, Office of Workers' Compensation Programs See also
[27] See
[28] See