Actuaries Urged to Look out for Emerging Tort Claims: Benzene, Lead Paint, and Welding Rods
10/10/2007 — SAN DIEGO, CA, September 10 – Actuaries need to closely monitor emerging mass tort claims related to benzene, lead paint, and welding rods, even though significant legal hurdles in these cases remain, attendees of the Casualty Loss Reserve Seminar were told.
According to Daniel Bodell, partner, Gordon & Rees, the large pool of potential litigants, the fact that there is some scientific support on causation, and litigation driven by plaintiffs’ attorneys are among the top reasons why benzene could become the new toxic tort.
“If you do a Google search on benzene, you see a lot of advertising from attorneys nationwide. Benzene is an emerging and sexy toxic tort,” Bodell said.
A number of legal successes are also driving new litigation, he noted. “There have been some big seven or eight figure verdicts in California and elsewhere. It always takes substantial early verdicts to drive new litigation.”
Newspaper press workers, painters, printers and refinery workers are among the occupations potentially exposed to benzene. “Our best estimate is that approximately 238,000 people in the U.S. may have been occupationally exposed to benzene,” Bodell said.
However, a number of the diseases associated with benzene have a latency period of five to 10 years, so the potential pool of exposed workers is much larger. “How big is it? We don’t know,” Bodell added.
Acute Myeloid Leukemia (AML) is the disease most commonly associated with benzene exposure. “A number of studies have shown a fairly strong link between benzene exposure and AML,” he said. Multiple myeloma (MM), though not as prevalent, is also being cited, as well as non-Hodgkin’s lymphoma.
Bodell noted that benzene exposures are not just occupational. “The Environmental Protection Agency (EPA) says benzene is the most significant air toxin of which cancer risk can be estimated.”
Because of these factors, he predicted further benzene-related litigation in the future, but cautioned: “It’s not yet clear whether there is gold in benzene. We’ll have to see.”
Peter Suranyi, vice president, claims and liability management, Swiss Reinsurance America Corporation said among other mass torts, lead has reached an interesting point in the last several years. “But it is hard to say where it will go.”
Citing recent news stories about lead-based paint in toys manufactured in China, Suranyi said it was significant that large U.S. toy manufacturers are petitioning the federal government to establish safety standards for all toys marketed in the U.S.
Suranyi noted that after failing to prevail under product liability law, attorneys more recently have been pursuing public nuisance claims against lead paint manufacturers, an area that potentially could expand the coverage implications for insurers.
A landmark case in Rhode Island decided in February 2006 held three lead paint manufacturers liable under this theory. “The Rhode Island case essentially determined that the manufacturers used lead-based paint for so long it created a public nuisance. That’s one of the novel theories used by the plaintiff’s bar to try to defeat defenses available under well-established product law,” he said.
But while the Rhode Island case was a wake-up call to businesses, Suranyi said significant legal hurdles remain to judgments against manufacturers and their insurers. He cited three recent court decisions in New Jersey, Missouri, and Ohio that rejected the public nuisance theory that had succeeded in Rhode Island.
Turning to welding rods, Gary Wingo, vice president, Analysis Research Planning Consulting, said this emerging mass tort is not intensifying. “The welding rod plaintiffs have had only marginal success in court over the past few years,” he said.
Wingo noted that since January 2006, the total number of cases pending against welding rod manufacturers has dropped by more than 50 percent and all five of the welding fume trials in 2006 resulted in a defense verdict. “This includes cases in Illinois, Texas and Arkansas, the more unpopular jurisdictions that are problematic for mass tort defendants,” he added.
The link between welding rod fumes and Parkinson’s has also not been established. “There is only one study that indicates there is any causal link between manganese exposure and the arising of Parkinson’s. So, the health studies don’t support the link and the legal trends are down in terms of plaintiff success,” Wingo said.
Notwithstanding these factors, panelists agreed that actuaries need to work closely with their claims departments to monitor how many insureds might be exposed to any litigation related to benzene, lead paint, or welding rods.
The session was moderated by Sandra Santomenno, senior consultant, Towers Perrin. The Casualty Loss Reserve Seminar is jointly sponsored by the Casualty Actuarial Society and American Academy of Actuaries.
The Casualty Actuarial Society fulfills its mission to advance actuarial science through a focus on research and education. Among its 4,400 members are experts in property-casualty insurance, reinsurance, finance, risk management, and enterprise risk management.
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