Asbestos Trust Hearings Are Wrapped Up : Health: Manville’s fund for victims must be replenished. Sufferers testify in San Francisco that they haven’t had enough say in the process.

SAN FRANCISCO —  Labeling as “a failure” a trust set up to compensate sufferers of asbestos poisoning, an official of the White Lung Assn. has contended that the victims have not been given adequate say in how and when they should be reimbursed.

James Fite, co-founder and executive director of the Baltimore-based organization for asbestos victims, said at a hearing in San Francisco on Friday that discussion about a plan to revamp the cash-starved Manville Personal Injury Settlement Trust represents “a continuation of the stalling” that has ensured millions of dollars in billings for lawyers but has delayed payments to sufferers.

“Month after month, everyone is paid but the asbestos victims,” Fite told U.S. District Judge Jack B. Weinstein.

Weinstein, visiting from New York, presided at the last of four hearings held around the country to take testimony about the fairness of the proposed settlement, announced in November. The hearings began Jan. 2 in Brooklyn and continued in Washington, D.C., and New Orleans.

The Manville Personal Injury Settlement Trust was set up in 1988, when Manville Corp., for decades the nation’s leading asbestos producer, emerged from six years of Chapter 11 bankruptcy proceedings.

At the time, Manville turned over about $2.5 billion in assets to the trust for payment to former workers and others suffering injuries such as lung cancer and asbestosis caused by inhaling asbestos fibers.

However, the number of claims filed exceeded by three times what lawyers had expected. Moreover, the trust was paying claims on a first-come, first-served basis and at a far higher rate than anticipated. By July, 1990, the fund was effectively depleted.

In November, Manville Corp. announced a comprehensive settlement designed to get the trust back on track and to speed equitable payments to the 130,000 to 150,000 victims still awaiting funds.

Under the plan, most lawsuits against the trust would be dismissed, resulting in big savings on legal fees. Manville would make additional payments of as much as $520 million over seven years to the trust.

The most seriously ill--an estimated 23,000 victims with cancer and other grave illnesses--would be given priority and would begin receiving money within the first two years of the plan. And fees for victims’ lawyers, which have totaled tens of millions of dollars over the years, would be reduced to no more than 25% of any settlement that the clients received, from the current 33% to 40%.

The new plan retains a provision in the original settlement that entitles the trust to 20% of Manville’s annual profits beginning in 1992, for as long as needed.

The overhaul agreement was in response to an order by Weinstein, who became involved last May when he began hearing 500 cases from Brooklyn’s naval shipyards. He appointed Mark Peterson, a consultant with RAND Corp. in Santa Monica, to study ways to restructure the trust.

Peterson, who worked with lawyers for victims and the trust to come up with the plan, said in an interview that those afflicted with asbestos-related illnesses probably would receive only 35% to 45% of the amounts claimed.

At the all-day hearing, Weinstein also heard complaints from lawyers representing companies other than Manville Corp. that made asbestos and that stand to be hurt by the proposal if victims take them to court. An injunction prohibits any asbestos-related suits from being filed against Manville.

Although plaintiffs’ attorneys generally favor the plan as the best way out of a bleak situation, other lawyers say the new plan is unfair to less seriously ill victims who would be forced to wait longer for payments.

Some parties favor scrapping the trust and going back to the drawing board to figure out ways to fund the trust. Miles O’Malley, executive director of the White Lung Assn. of New Jersey, suggested that Weinstein allow victims to go after funds from Manville’s former insurers. Such suits are not now allowed.

Manville, based in Denver, no longer makes asbestos, a white, flaky fire-retardant once widely used in construction, shipbuilding and the manufacture of appliances.