Mesothelioma is a particularly virulent form of lung cancer. From the date of diagnosis the average life expectancy of a person with the disease is just 155 days.
There is only one way a person can contact mesothelioma: by exposure to the fine particles of asbestos dust that cannot be seen by the naked eye.
The latent period from exposure to diagnosis can be many decades. So the first battle for sufferers seeking compensation was overcoming the legal hurdle in Commonwealth and state jurisdictions known as the statute of limitations.
These prescribe the periods within which proceedings to enforce a right must be taken. If a person did not commence an action within that time, the action could not be taken.
If the statute limit was three years for personal injuries the defendant company could plead the statute and have the case dismissed. But it might take 30 years before injured workers know that they have an incurable disease — 27 years too late to claim compensation.
After this hurdle was overcome by changes to the law, the next problem for a person with mesothelioma was getting to trial before they died and their claim died with them.
Just how difficult this could be was described by the prominent personal injury lawyer, Peter Gordon, who told Australian Doctor in 2007 that: “We had to fight even for the right of dying cancer victims to get a speedy trial. I recall sitting in the WA Supreme Court in an interlocutory hearing for the test cases involving Wittenoom miners Mr Peter Heys and Mr Tim Barrow. CSR was represented by Julie Bishop (then Julie Gillon). She was rhetorically asking the court why workers should be entitled to jump court queues just because they are dying.”
Bishop, who is now foreign minister, denies that this took place.
The largest manufacturer of asbestos cement building products in Australia was James Hardie. After an epic battle that involved unions and asbestos victims’ support groups, memorably lead by Bernie Banton, an agreement covering victims of asbestos disease was entered into by the NSW government and James Hardie in 2006.
This agreement, which set up the Asbestos Injuries Compensation Fund (AICF), estimated James Hardie’s future liabilities at $1.5 billion. This was based on estimates provided by the accounting firm KPMG which calculated the likely future instances of asbestos-related disease in Australia.
In 2006, they predicted that the peak level for mesothelioma claims would occur in 2014, but in their latest report to the compensation fund KPMG now say that this peak will occur in 2016 and 2017, adding the caveat that these dates could blow out because of an increasing number of claims.
In 2013, KPMG estimated that that the number of claims from mesothelioma sufferers in 2014 would be 300. The number of claims was actually 370, an increase of almost 30%.
Under the compensation agreement, James Hardie pays 35% of its “free cashflow” to the fund each year. To date this has amounted to about $700 million. But when its cashflow was negative in 2007, 2009 and 2013 it paid nothing into the fund, while payouts came to more than $800 million.
When the compensation fund was set up, it had a mechanism to deal with shortfalls that gave it access to a loan facility with the NSW and federal governments. This allowed it to borrow an agreed amount of up to $320 million to meet its payments.
The amount that is currently available through this scheme is $214 million, which is not enough to meet its obligations. So in September last year, the fund said that given expected shortfalls in coming years, it would apply to the NSW Supreme Court to be allowed to pay asbestos disease claims by instalments.
It also said that this could be avoided if the NSW government allowed it to increase its borrowings to $320 million. In October, NSW treasurer Andrew Constance indicated that he was not inclined to lend the fund more money and suggested that James Hardie accept its moral obligation.
The prospect of the resumption of a campaign by asbestos victims that coincided with an election campaign seems to have changed his mind. At the end of February, he agreed to lend the fund an extra $104 million and gave his government a pat on the back for doing so while gently reminding James Hardie of its responsibilities.
What he might better have pointed out is that since the compensation fund was established the company has made a profit of more than $US2.5 billion, paid out $556 million in dividends, and has set aside $200 million a year for the next three years to expand its very profitable operations in the US. CEO Louis Gries, who wanted to pay the dying the money they owed to them by instalments, receives a salary in excess of $11million a year.
Profits before people every time.