Recently, a North Carolina federal judge decided whether Safety National Casualty, Corp., must pay $480 million to the mesothelioma fund. The fund was established in the Chapter 11 bankruptcy plan for Garlock Sealing Technologies, Inc., after Garlock declared bankruptcy in 2010, following years of asbestos litigation. Safety National claims that Garlock is not covered under the $5 million excess policy that Safety National issued to Garlock over 30-years ago.
Garlock manufactured gaskets, which caused cancer in workers. In Garlock’s bankruptcy case, the judge ruled that the company was minimally liable for lung damage caused by the asbestos. The type of asbestos used to seal the gaskets was not the type that leads to fatal asbestos-related disease. As such, the judge set Garlock’s asbestos liability at $125 million. However, due to continued pressure from asbestos victims, an eventual settlement rose to $480 million.
An asbestos trust fund for mesothelioma patients was created to pay the settlement. Two insurance companies agreed to pay approximately $10 million dollars in exchange for a release of all future claims by Garlock. But, Safety National argues that the policy requires that all coverage disputes go to arbitration, and therefore, the judge should compel arbitration in lieu of deciding the case.
Additionally, Safety National argues that it should not have to indemnify Garlock because Garlock had not exhausted its underlying coverage. The insurance company also claims that other legal and policy defenses preclude coverage, including Garlock’s failure to apply the policy’s per claim deductible. It remains to be seen whether Safety National must pay into the $480 million asbestos trust fund or whether the judge will compel arbitration. But, a future post will discuss the judge’s ruling.
As one can see, asbestos litigation is complicated. But, with the help of an experienced lawyer, asbestos victims can get help getting the compensation they need.
Source: Law 360, “$480M Garlock Asbestos Fund Not Covered, Insurer Says,” Rick Archer, August 2, 2017