Document NxO0bo3Rm01Rb2p4zdwMKkV8

FILE NAME: Shipbuilders Council of America (SHIP) DATE: 1978 Nov 2 DOC#: SHIP085 DOCUMENT DESCRIPTION: Meeting Minutes of the Ad Hoc Committee on Asbestos with Attachments PLAINTIFF'S E EXHIBIT | u ---S--B--C--A---5--0-9--0---- | SHIPBUILDERS COUNCIL OF AMERICA Ad Hoc Committee on Asbestos Minutes . A meeting of the Ad Hoc Committee on Asbesto s was held on November 2, 1978 at the offices of the Shipbui lder s Council of America in Washington, DC. Present we re : David R. Lavalette, Chairman Joseph Bogni, M.D. George L. Bowen French Caldwell John A. Chantrey, Jr. Vernon E . Duke Stephen Gould . Russell Guy Charles K. Klein Daniel Whichard Frank R. Kesterman General Dynamics Corp. General Dynamics Corp., Quincy Shipbuilding Bethlehem Steel Corp. Litton/Ingalls Shipbuilding Ogden/Avondale Shipyards, Inc. Alabama Drydock & Shipbuilding Company National Steel S Shipbuilding Co. Bethlehem Steel Corp. Newport News Shipbuilding Litton/Ingalls Shipbuilding Shipbuilders Council of America ASBESTOS STUDY Mr. Lavalette provided the Committee with a summary report on the Council's survey of employment and asbestos related disease claims since 1941. It was the consensus of .the Committee that the number of workers compensation claims and third party litigation actions is increasing exponential ly as can be seen from the results of the SCA asbestos q u e s tionnaire attached. The potential liability for workers compensation alone is in the $billions. For example, it has been estimated that for claims where the last exposure occurred before the 1972 amendments to the Longshoremen's and Harbor Workers' Act, the claim value will probably be under $100,000 per claim. However, where exposure last occurred after the 1972 amendments, the value of a claim will probably be in the range of $250,000- $ 750,000 including escalation and litigation costs. Even the most conservative assumptions made about claim experience in the future will produce a figure which could be potentially ruinous for the industry. CONSULTANTS REPORT _ Versar, Inc. has been retained by Avondale Shipyards, Inc. to provide an overview of the asbestos problem. Dr. Michael Markels, President of Versar, Inc. provided the Committee with background information comprised of two volumes (1) legislation proposed in the 95th Congress relat ing asbestos-related diseases and (2) documents relative to 2 "black lung" legislation and the parallel to "white lung" legislation for shipyards, Dr. Markels noted in his presentation that various government agencies are researching their own historical involvement with asbestos regulation. These agencies in clude the U .S N a v y , Department of Labor, General Accounting Office and the Maritime Administration. LITIGATION PATTERN The. Navy had on file $2.1 billion in pending asbestos claims as of Octob er 1, 1978. It appears that the claimants in priv at e and nav al shipyards file workers compensation claims ag ainst the ir employers and also fill lawsuits agains t asbesto s suppliers . The suppliers are in turn seeking indemni fi cation fr om the shipyards and the Government. Two recent se ttlements are mentioned below: In May 1978, a former employee of AMOCO Refinery was given an jury award of $750,000. This case was settled out of court for $275,000 under threat of appeal. On October 4, 1978, Gwaltney, former employee of Norfolk Naval Shipyards settled out of court with Johns Manville the day before trial for $157,000. Johns Manville is suing the Navy for full recovery under the indemnification theory. Johns Manville claimed the shipyard was negligent in the use of the product and in failing to warn employees of hazards. The shipyard defense is that workers compensation payments are the exclusive remedy of their employees. RECOMMENDATIONS TO THE BOARD OF DIRECTORS ' After considerable discussion, the Committee agre ed that they would recommend to the Board of Directors, on December 13, 1978 that indemnification legislation be pursued. The indemnification sought could be in the form o f "white lung" legislation or a National Toxic Substance s Indemnification bill. The Committee recommended that, the Council pursue Toxic Substances Indemnification legisl ation because of the increasing danger of more occupational diseases being discovered and growing to.epidemic proportions, In addition to asbestos, shipyards must be prepared to de al with welding fumes, silicosis, lead, hydrocarbons and carci nogens yet undiscovered. The mechanics of such a legislative remedy have not been thought out. The proposed legisl ation would have to have sufficient safeguards on presumptio n of responsibility, m a l - a dm i n i s t r a t i o n , and offsets to wor ker s compensation and social security programs. The source of funds would be the U.S. Treasury and most likely a gen er al tax on industry. 3 The principal argument for such legislation is that the shipbuilding/ship repair industry could not have known of the dangers of asbestos until the 1960's or later. In fact, the U.S. Government required asbestos to be used, provided specifications and maintained responsibility for public health standards. Therefore, the Government is the ultimate "responsible party", even more responsible than asbestos manufacturers. The Committee believes that the case for Government responsibility should be documented for possible use in litigation, and to convince the G o v e r n ment that it should support some type of indemnification of shipyards. It was also noted that government indemnifi cation may be the only recourse for former employees of the many shipyards that have gone out of business. After proper preparation, it was recommended that meetings be held with the Department of Defense, Department of Labor and the M a r i time Administration to gain their support for this approach. ADJOURNMENT . There being no further business, the meeting was adjourned at 3 PM. / L ------- F5 ank R. Kesterman Vice President and Secretary v SUMMARY RESULTS ALLEGED ASBESTOS RELATED DIS*EASE QUESTIONNAIRE A. 'EMPLOYMENT (1) Years Tot. Avg. No. Employees on Payroll (as of Dec . 31) Tot. Avg. Employed Annually (Including turnover) (2) Estimated Total Different Employees 1941 - 1945 1946 - 1950 1951 - 1960 1961 - 1970 1971 - 1975 440,200 80,000 81,000 104,000 146,000 704,300 128,000 129,600 166,400 - 233,500 1,760,800 320,000 567,000 728,000 584,000 GRAND TOTAL 4,563,800 B. WORKERS' COMPENSATION CLAIMS Period of Filinq No. Claims Filed for Alleged Asbestos Related Diseases 1960 - 1965 5 1966 - 1970 10 1971 - 1975 . 159 1976 - 1978 294 THIRD PARTY AND LIABILITY ACTIONS (4) Period of * Filinq No. of Actions I960 - 1965 1966 - 1970 1971 - 1975 1976 - 1978 0 3 5 ' 125 (1) Insufficient data was reported regarding approxi mate average age of workforce. (2) Turnover rates assumed to be 6 0 % / y r . or column 1 X 160% (3) Column 1 payroll at start of each period plus 60%/yr. x y r s . in period ( 4 ) This includes actions brought by or on behalf of members of employees family and other actions such as enjoinment by asbestos producers and/or suppliers regardless of merit or result. ` ASBESTOS SURVEY - REPORTING COMPANIES ALABAMA AVONDALE BATH BETHLEHEM (ALL) GENERAL DYNAMICS (ELECTRIC BOAT) GENERAL DYNAMICS (QUINCY) JACKSONVILLE LITTON-INGALLS NASSCO NEWPORT NEWS NORFOLK ROHR SEATRAIN SUN ' TODD (ALL)