Mesothelioma victims die while investment conglomerate drags its feet in pursuit of profit

10 Oct 2013 by under Legal, News, Organizations, People

Berkshire Hathaway 100x100 Mesothelioma victims die while investment conglomerate drags its feet in pursuit of profitThere are allegations of “bad faith” swirling around multinational conglomerate holding company Berkshire Hathaway Inc. Lawyers representing both asbestos victims and manufacturers say two of the company’s subsidiaries – and Resolute Management Inc. – which are supposed to handle asbestos and pollution insurance policies, are purposely delaying paying claims in order to benefit Berkshire’s bottom line.

The allegations were uncovered in a investigative report, Risky Business, which reports the Warren Buffett-owned investment -management company has a policy of prioritizing financial goals above all else, including paying valid claims. According to the Scripps report, Berkshire executives say they were told to make decisions about paying claims based on the company’s financial goals instead of on the merits of the case under review.

Louis Accurso, an attorney who represented mesothelioma sufferer Nancy Lopez, told Scripps asbestos companies often follow a practice he terms “delay, deny until they die,” drawing out litigation until plaintiffs who would be sympathetic to a jury have passed away. He says the insurance company under the direction of Berkshire-owned Resolute Management followed a similar strategy, and never made a single effort to proceed with litigation or settle her claim until it was too late.

The delay tactic is tied to a common insurance practice known as the “float.” Basically, this is the term for the time period between which an insurance company collects premiums from its customers and the time it may have to pay out a claim on the insurance policy. The longer the float, the more time the insurance company has to use or invest the money. The difference with Berkshire, Scripps sources say, is that the float is generally intended to be used to “make policies cheaper for people buying insurance.”

However, Scripps sources said Berkshire intended to hold the float as long as possible. In a 2011 letter to shareholders obtained by the news agency, Buffett even specifically tells investors he intends to use the float “for our own benefit.”

Berkshire began acquiring asbestos and pollution liability policies 15 years ago. Because environmental diseases like mesothelioma, which is a result of asbestos exposure, often have very long latency periods – up to as much as 40 years between exposure and the development of symptoms – they naturally present a long float, or a long investment opportunity.

In a 2009 message to shareholders, Scripps says Buffett noted Berkshire’s float grew from $16 million in 1967, when he started the business, to $62 billion at the end of 2009. At the end of 2012, Scripps reported the fund had grown to $73 billion.

An unusual situation exposed by the Scripps investigation was the rare instance of asbestos victim and asbestos company being on the same side of the playing field. In addition to allegedly delaying claims to asbestos victims, Berkshire and its holdings reportedly also delayed claims payments to companies that relied on its insurance companies to cover their verdicts and settlements owed to asbestos victims.

New York asbestos attorney Joe Belluck told Scripps, “Rarely in asbestos litigation are the injured victims and the asbestos companies on the same side.”

As for plaintiff Nancy Lopez, it is believed she contracted mesothelioma after being exposed to asbestos dust in her workplace in 1983, when she cleaned up her work area after renovation work left the deadly dust on her desk. It was not until 2009, at age 54, that she was diagnosed with mesothelioma. She died just 18 months later. It was more than a year afterward before attorney Louis Accurso was able to get any compensation for her family – too late for her day in court.

Sources:

Scripps News, ABC 15 report
WPTV
Wall Street Journal

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