Montana negotiating $43 million asbestos settlement

The state of Montana is in the final stages of negotiating a $43 million settlement with Libby asbestos victims, according to legal papers obtained by the Daily Inter Lake.

In exchange for releasing the state and various state agencies from future claims related to the former vermiculite mine in Libby, more than 1,100 claimants with asbestos disease would get a portion of the settlement. Court approval is required before the settlement is final.

A confidential letter sent to clients by Kalispell attorney Jon Heberling noted that the state of Montana signed a memorandum of understanding for the proposed settlement on Oct. 19, 2010. The state’s insurance company reportedly has signed a parallel agreement with the state.

Terms of the settlement to satisfy the tort claim won’t be divulged until the court has approved the deal. Heberling said he can’t comment on the pending settlement.

Bill Gianoulias, an attorney with the state Risk Management and Tort Defense Division, also declined to comment because it’s ongoing litigation.

Kevin O’Brien with the Montana Attorney General’s Office said he was not familiar with the litigation since his office is not handling the claim.

Sarah Elliott, communications director for Gov. Brian Schweitzer, said because the Libby claims are in litigation, the governor is unable to comment further about them. If the claims are settled, state law “sets forth the procedure and describes the public’s right to know,” Elliott said. All settlements of tort claims against the state in excess of $10,000 require court approval under state law.

Clients have been warned not to share details of the settlement with anyone or the deal could be scrapped.

But one area victim with severe asbestos disease anonymously shared documentation with the Inter Lake, saying he’s concerned about the state being released from any further liability in the widespread death and disease caused by exposure to toxic asbestos dust from the vermiculite mine.

“They’re not admitting any guilt,” he said, referring to the state. “I feel like they’re gonna brush us under the mat.”

During a meeting with attorneys in November 2010 in Kalispell, asbestos victims were “congratulated for keeping their mouths shut,” he said, adding they were told “if this gets out in the press the deal’s off.”

The proposed settlement would release from liability the state and all of its past and present departments, boards, division, agencies, officers, employees, agents, attorneys and successors, including but not limited to the Department of Environmental Quality, Department of Public Health and Human Services, Department of Labor and Industry, Montana State Board of Health and the Division of Air Pollution Control and Industrial Hygiene.

The general description of the release notes that the state’s release is from Libby mine claims that include all lawsuits, claims and causes of action “that have been, could have been, or in the future could be asserted against releasees, including but not limited to any which arise out of, or are in way related to the actions, inactions or omissions of releasees relating to Zonolite Mining Co. or W.R. Grace & Co., or any of their predecessors or successors.”

The asbestos victims, whose numbers in the tort claim have increased from 807 individuals in earlier legal documents to a total of 1,125 clients last week, have been told the attorneys will get one-third of the proposed settlement, roughly $14 million.

About $500,000 will be held back for a contingency fund. In addition to the McGarvey, Heberling, Sullivan & McGarvey law firm, the Great Falls law firm of Lewis, Slovak, Kovacich & Marr has clients involved in the tort claim.

Because the number of claimants has increased, the amount each client will get has decreased from earlier proposals.

The latest distribution grid shows that clients with mesothelioma, one of the most severe asbestos-related cancers, would get $60,723 in the proposed settlement. That’s before attorney fees are subtracted. Those with lung cancer and other cancers would get $51,908.

The grid divides asbestos disease into severe, moderate and mild cases, with payments ranging $51,908 to $34,279. There are several other disease categories, including “death due to asbestos related disease with survival and/or wrongful death claim.” Chest X-rays were required.

It’s not clear how the attorneys derived which asbestos victims would be included in the settlement, or whether the proposed settlement prevents other victims not named in this claim from taking legal action against the state.

While the number of victims in this tort claim is somewhere around 1,125 victims, the Center for Asbestos Related Diseases, or CARD clinic, in Libby has a caseload of about 2,800 victims and has continued to add new patients.

When the severity of the asbestos poisoning came to light in November 1999 in stories published by the Daily Inter Lake, Libby residents began questioning the level of state oversight at the mine, and many blamed state agencies for allowing the asbestos exposure to continue occurring for decades until the mine closed in 1990.

According to the Inter Lake’s initial coverage of the Libby saga, company officials at the mine were told about the toxicity of asbestos in 1956 after an inspection by the state Board of Health.

Heberling, who represented Lester and Norita Skramstad in their 1997 jury trial against W.R. Grace, maintained during the trial that the 1956 state report noted that the exhaust capacity was not sufficient, but it was 1964 before the company added another exhaust fan.

A rash of lawsuits against the state was filed in the early 2000s, claiming the state failed to inform the public of the risks associated with asbestos-contaminated vermiculite.

In one complaint filed a decade ago, Great Falls attorney Tom Lewis referred to at least five industrial hygiene studies conducted by the state at the Zonolite/W.R. Grace vermiculite mine between 1956 and 1968.

“Rather than enforcing the law by compelling Zonolite and Grace to clean up its deadly operations, the state effectively became Grace’s accomplice and aided and abetted Grace’s concealment of this enormous public health problem,” Lewis said in that lawsuit filed on behalf of Walter and Valli Hume.

Legal wrangling and dozens of lawsuits against the state dragged on through the years.

In 2002, District Judge Jeffrey Sherlock dismissed claims from 23 lawsuits that had been combined. He said neither state law, the Montana Constitution nor common law required the state to warn the people of Libby that the mine waste could be hazardous.

He also noted that the claims against the state did not come up until after Grace filed for bankruptcy in 2001, effectively halting scores of lawsuits filed against the company.

‘‘The state of Montana ... should not become the default defendant in every case where the true wrongdoer has no money or is otherwise unavailable to satisfy the damage that he has caused,’’ he wrote.

In their appeal to the Montana Supreme Court, nine former mine workers and the wife of a miner contended the state stood by while a “human disaster of epic proportions unfolded in Libby.”

The Supreme Court in 2004 ruled the District Court erred in determining the state had no legal duty to the miners, so the high court reversed the District Court’s dismissal. At that point the high court said the case should be remanded to a fact-finder to determine whether the state breached its duty to the miners.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com.