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Plaintiffs’ lawyers have made hundreds of millions of dollars over claims of injuries caused by inhaling asbestos fibers. As a result of the litigation available insurance was exhausted and the manufacturers filed for bankruptcy protection to save what assets they had from further lawsuits.

Some of the suits have proved to be improper. Some cases have been filed with the same plaintiff claiming both asbestosis and silicosis, an impossibility. Expert physicians have been prosecuted for faking diagnoses. Lawyers have been sanctioned. Trust funds were set up to pay for the injured who have no available cause of action because of the bankruptcy of the defendant manufacturers.

According to lawsuits presently pending, U.S. personal injury lawyers allegedly concealed evidence and induced clients to commit perjury to drive up asbestos-related settlements and garner bigger fees in RICO suits filed by Garlock Sealing Technologies. The lawsuits were unsealed January 20, 2015 in the bankruptcy of a gasket maker.

The files, Garlock claimed, will show how plaintiff lawyers withheld evidence their clients were exposed to multiple asbestos products in order to extract higher settlements and court verdicts from Garlock. In one case that generated a $37 million verdict in California, Garlock says, a lawyer with prominent Dallas asbestos firm Waters & Kraus flatly denied exposure to dangerous insulation that his client had already admitted, under penalty of perjury, in another proceeding.

The records in racketeering lawsuits Garlock filed against several asbestos law firms were unsealed after a fierce battle by plaintiff lawyers to keep them secret. In January, U.S. Bankruptcy Judge George Hodges in Charlotte, North Carolina slashed Garlock’s estimated liability for asbestos exposure from $1.4 billion to $125 million after determining that the higher estimates were based upon court cases “infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” In a pattern long known to defense attorneys, plaintiff lawyers coach their clients to “remember” working with only products made by the company they are suing, then file claims with bankruptcy trusts alleging other exposures.

The plaintiff in this case later filed claims with the Armstrong and Harbison Walker trusts, as well as the Pittsburgh Corning bankruptcy. Garlock’s Chapter 11 case has drawn national attention due to the company’s allegations that

The allegations in the unsealed documents appeared to have already been discussed publicly in an opinion in 2014 by Judge George Hodges. That opinion set Garlock’s liability for asbestos at $125 million and said the company’s past settlements were tainted by fraud.

The others were Belluck & Fox of New York; and Waters Kraus & Paul; and Simon Greenstone Panatier Bartlett of Dallas. Mark Iola, a partner at Iola Galerston, also in Dallas, was also sued. Specifically, Garlock alleges that the defendants, through their representation of plaintiffs with asbestos-related injuries against manufacturers and distributors of asbestos-containing equipment, engaged in a scheme that involved willfully concealing material evidence in discovery in order to increase the potential for large judgments for their clients and to improve their clients’ positions in settlement negotiations. The newly unsealed racketeering complaints alleged that four law firms sued Garlock Sealing Technologies, which made asbestos-lined gaskets, while hiding evidence that their clients were exposed to asbestos products made by other companies.

The evidence was allegedly hidden because the other companies were bankrupt, making Garlock a much more attractive target for an asbestos lawsuit, according to the complaints. Garlock, a unit of EnPro Industries, filed for bankruptcy in 2010 in Charlotte, North Carolina, in the face of the mounting cost of asbestos lawsuits. The unsealed complaints cite many examples of alleged fraud, including the Shein Law Center’s handling of a lawsuit by Vincent Golini, who was diagnosed with deadly mesothelioma in 2009.

Golini allegedly told Philadelphia-based Shein he was exposed to 14 asbestos products made by bankrupt companies including Owens Corning and Armstrong World Industries. But when Golini sued Garlock he denied exposure to any products made by a bankrupt manufacturer. After Garlock settled with Golini, Shein had Golini file claims with the asbestos trusts that were set up by Owens Corning and other bankrupt makers of asbestos products. Those trusts often pay only a small fraction of a claim. Shein’s lawyer, Daniel Brier of Myers Brier & Kelly, said the racketeering lawsuit is completely without merit and Shein represented its clients “ethically and properly.”

The racketeering lawsuits were originally filed in early 2014. They were ordered unsealed last summer but only became available to the public January 20, 2015. The allegations in the unsealed documents appeared to have already been discussed publicly in an opinion in 2014 by Judge George Hodges which was reported about in ZIFL last year. That opinion set Garlock’s liability for asbestos at $125 million and said the company’s past settlements were tainted by fraud.

The others were Belluck & Fox of New York; and Waters Kraus & Paul and Simon Greenstone Panatier Bartlett of Dallas. Mark Iola, a partner at Iola Galerston, also in Dallas, was also sued. Attorneys for the law firms said Garlock was trying to relitigate settled cases and blame others for the consequences of its own conduct.

In Williams v. BASF Catalysts LLC, 765 F.3d 306, RICO Bus.Disp.Guide 12,531 (3rd Circuit, 2014) the opposite was charged and defense counsel were accused under a RICO action for fraudulent concealment and fraud and conspiracy to deprive the victims of recovery for their injuries. The Third Circuit concluded that the trial court erred in dismissing the complaint and allowed the case to go forward. The court concluded that the tort of fraudulent concealment, which encompasses claims of spoliation, does not require Williams to prove that she would have prevailed on the merits of her asbestos-injury case. The alleged facts of harmful reliance suffice to state the claim.

It seems, therefore, that there are competing charges of fraud. The difference is that the judge found that the plaintiffs’ were faced with fraudulent claims by plaintiffs’ counsel while the Williams case only allows them to try to prove the case.

The Wall Street Journal, and others, have reported on this and other fraud situations dealing with trial lawyers and legislators. For example, New York Assembly Speaker, Sheldon Silver, was last month arrested and accused by U.S. Attorneys of an elaborate kickback scheme.

Mr. Silver is alleged to have received more than $5 million in a deal where he allegedly directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names.

An equally powerful trial firm in Illinois, the Simmons Law Firm, has shuffled money to the same doctor to obtain its own plaintiffs. Indeed, it’s now common for asbestos firms to get claimants this way. And yet when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was “shocked” that Mr. Silver was engaged on the law firm’s behalf in a political version of standard industry practice.

Barry Zalma is an insurance coverage attorney, consultant, and expert witness. As a California attorney, Mr. Zalma limits his practice to transactional, rather than litigation, counsel concerning insurance coverage matters, mainly representing insurers and those in the business of insurance. Mr. Zalma was licensed to practice law in 1972 and has operated his own firm since 1979. He is admitted to practice before all California courts, California U.S. District Courts and the Ninth Circuit Court of Appeals. He has qualified as an expert in various state and federal courts across the U.S. and the British Cayman Islands.

Barry Zalma practices law as the Law Offices of Barry Zalma, Inc., 4441 Sepulveda Boulevard, Culver City CA 90230; phone 310-390-4455, fax: 310-391-5614, email: zalma@zalma.com. If you need an insurance claims handling, insurance coverage or insurance bad faith consultant and expert, contact Barry Zalma at Zalma Insurance Consultants using the aforementioned contact information.

Published by adjustercom with permission.