For those who harbor doubts about regulation of business, this is where government oversight starts and why it is necessary: Insurance companies on the hook for millions of dollars in judgments owed to suffering individuals made backdoor deals allowing them to avoid liability.
It’s disgusting conduct, unworthy of decent business leaders. They need to be made to pay up and, more than that, government needs to act to prevent anything like this from happening again. And it wouldn’t hurt if somebody wound up in jail.
The tragedy began with mesothelioma, attributed to asbestos exposure 40 years ago. Joe Muir died of the disease, but not before a Buffalo jury awarded him $5.7 million. His widow, Nancy Muir, hasn’t been able to collect that money because of deals that insurance companies cut, allowing them to avoid having to pay the money they would otherwise owe. The companies insured the asbestos manufacturer, Hedman Resources Inc., but decided after people started getting sick that they didn’t want to live up to the obligations of that business decision.
Too bad. The courts need to force the insurers to pay up and then punish them for their deviousness. And then state governments and Congress need to crack down on this kind of conduct, which ought to be criminal.
Now, Nancy Muir and three other women facing the same corporate atrocity are suing the insurers to claim the judgments owed them from their successful action against Hedman Resources, which provided raw asbestos to Durez Plastics Corp. in North Tonawanda, where their loved ones worked.
The failure to pay is why the women are suing. The heart of their complaint is their allegation that the insurers made the agreements after analyzing hundreds of pending asbestos cases against Hedman and didn’t like the potential for having to pay tens of millions of dollars in claims.
“The agreements were entered into in an effort to hinder, delay and avoid paying our clients,” said John N. Lipsitz, a lawyer for the widows. The deals “don’t pass the smell test,” said Michael A. Ponterio, another lawyer in the case. “We’ve never come across it in 30 years.”
The companies are Lamorak Insurance, Seaton Insurance and One Beacon American Insurance. In 2012, they struck agreements they say are legal and that insulate them from liability in the case. That is to say, years after making a deal to insure a company, they decided they didn’t like the look of it anymore and squirmed their way out. They don’t have to pay up, they insist, even though the company they elected to insure has been found to have blood on its hands.
The insurers deny all of this, of course. It’s just coincidence that Muir and the other women are being denied $13 million in settlement payments owed.
“Their hope is you’ll give up,” Muir said. “They just carry on and snub their nose at you while you sit back and confront death.”
It’s a terrible abuse, the kind of activity that can give an entire industry a bad name and that prompts government officials to intervene. That should be happening. Federal and state lawmakers need to look into what these companies have done, and so should New York Attorney General Eric Schneiderman.
And, after looking, they should respond. Ferociously.