CONTENTS:
Maryland Setoff Issue Remanded to the District Court
On February 21, 1996, the United States Court of Appeals for the Second Circuit affirmed in part and remanded in part the decision of the United States District Courts for the Eastern and Southern Districts of New York approving the Trust's class action settlement (In re Joint Eastern and Southern Districts Asbestos Litigation, 878 F.Supp. 473). Except for the Maryland setoff rules, the Court affirmed the decision of the Court below "in all other respects." With respect to the non-Maryland appeals, the Court found that: (a) the District Court was not required to allow District of Columbia plaintiffs to opt out of the class; (b) United States Fidelity & Guaranty's appeal was dismissed for a lack of standing to challenge the settlement, and (c) the appeals by two pro se litigants were also dismissed. With respect to the Maryland setoff issue, the Second Circuit directed the District Court to determine the appropriate setoff rules that should be developed with respect to the Trust in connection with claims arising under Maryland law.
Status of the Medical Audit Program
During April of 1995, the Trust implemented its medical audit program. The Trust considers this TDP-authorized program to be a high priority because of the Trust's responsibility to pay only bona fide claimants from its limited assets.
The Trust selected a small random selection of claims for medical audit from the second, third and fourth quarters of 1995, the first quarter of 1996, and claims which received updated medical information. We will make subsequent requests similarly. As we develop a track record of results, "targeted" areas that may cause concern are being identified and requests may be forthcoming. A number of options are available to comply with the audit program, including providing appropriate co-defendant settlement information, or to supply the claimant's x-ray for review by up to two independent medical experts.
Medical Audit Affects Schedule for 1996 Offers
The Trust had to postpone issuance of the offers scheduled for February 1996 until sufficient responses to our medical audit requests had been received and analyzed. A sufficient number of results are in and analyzed, and the Trust will be contacting all participating law firms to discuss their results by mid-April. At that point the Trust will issue offers (and denial letters) to eligible claims within the FIFO range of 106,401 to 136,400. We plan to get back on our original quarterly schedule with the second quarter 1996 offers issued in June.
Trust to Receive $772 Million Dividend from Manville Corporation
On March 28, 1996, Manville Corporation disposed of its shares of Riverwood International Corporation. In conjunction with the disposition, Manville Corporation changed its name to Schuller Corporation and declared a special cash dividend of $6 per share on the company's common stock, payable April 12, 1996. On April 5, 1996, the Trust exchanged its right to 20% of the company's profits for approximately 32 million additional shares of Schuller Corporation common stock, giving the Trust approximately 128 million common shares (approximately 79% on a fully diluted basis). The Trust will receive approximately $772 million in dividends.
"These actions enable the Trust to preserve its asset base and to capitalize on opportunities to enhance its value to beneficiaries," said Mr. Robert A. Falise, the Trust's Chairman. "Including this transaction, the Trust has generated cash available for distribution of more than $1.8 billion since January 1, 1992. Distributions to beneficiaries since that date totaled more than $700 million. Upon receipt of the Manville special dividend on April 12, the Trust's cash and marketable securities will total approximately $1.2 billion," he added.
Important Notice: Matrix Criteria
When the TDP matrix criteria call for the claimant to "document" or "demonstrate" the claimed disease, we cannot accept a diagnosis that is put in such terms as: "...shows evidence of possible..." "...may possibly be..." "...may represent..." The doctor needs to make a firm diagnosis that is "documented" or "demonstrated" by proper documentation. Several categories require a "bilateral" process. If the x-ray or high resolution CT scan report does not SPECIFY or IMPLY a bilateral process, then, the requirement has not been met.
Trust Begins Individual Evaluation Process
After several months of planning and preparation, the Trust has begun individual evaluations on claims opting not to accept a matrix offer. Claims will be reviewed, and offers made, in the order in which requests for individual evaluation were received. Through mid-March, approximately 2,400 claims were in the queue for individual evaluation. The pace at which Trust staff can make offers and settle claims will depend on the quality of information contained in the claim files they are reviewing and the timeliness of law firm responses to requests for supplemental or explanatory information.
Summary of 1995 Settlement Activity
As of December 31, 1995, approximately 10 months following District Court approval of the class action settlement, the Trust had made offers or sent deficiency notices to 103,551 claimants, and had settled and paid over 55,000 claimants in excess of $270 million. In achieving these goals, the Trust processed over 43,000 responses to offers and deficiency letters, 42% of which included additional information and requests for claim recategorization. Interestingly, the approximately 25,000 offers and deficiency notices sent in March 1995, immediately after Court approval of the settlement, had resulted in a 79% settlement rate during the ten month period with only slightly more than 3% of that group choosing to have their claims individually evaluated. At the end of 1995, approximately 4,200 claimants had allowed the offer or deficiency notice to expire upon the 180-day deadline, resulting in the claim being taken out of active processing.
New Proof of Claim Form to be Released in May
The Trust is in the process of replacing the current proof of claim form with one that incorporates the criteria in the TDP. We expect to mail the new form in early May to all law offices. We will allow a one month overlap period so that any work in progress can be completed on the old form. We hope that law firms will find the new form more relevant and easy to prepare than the one currently in use.
New Claim Filings in 1995 and 1996
New claim filings during 1995, which totaled almost 40,000, were the highest yearly total since 1989. The increase in monthly filing rates from an average of approximately 1,800 per month to over 4,000 a month, began in July of 1994, when the class action settlement was announced. This higher monthly average began to decline in July of 1995, with the downward trend continuing to the end of the year. During January and February 1996, new claim filings averaged about 2,400 per month.
As of December 31, 1995, the Trust had approximately $403 million in unrestricted cash and marketable securities and almost $114 million in outstanding offers to approximately 29,000 claimants. During 1995, the Trust settled over 55,000 claims under the Trust Distribution Plan, disbursing in excess of $270 million to claimants. Trust settlements and offers reduced Net Claimants' Equity by $382 million in 1995. At the same time, Net Claimants' Equity was increased by $384 million to $1.6 billion due to the unrealized gain in the carrying value of the Manville common stock. Net Claimants' Equity is the amount of assets currently available to pay current and future claimants after outstanding offers and obligations have been deducted. Manville's common stock price increased $4.00 a share from $9.00 in December 1994 to $13.00 at the end of 1995.
During 1996 the Trust will continue to perform audits of claim payments. As in the past, the Trust will select, at random, check offers which have been accepted and request counsel to provide a copy of the release signed by claimant, a settlement sheet which indicates that the contingency fee was 25% or less, and evidence, usually a copy of the canceled check, that the claimant received the proper amount. Past results indicate general compliance with the above, but several firms failed to retain copies of releases and retained an amount in excess of the 25% fee.
As of the end of February, the Trust had received over 100 requests for arbitration. Of those requests, only 10 claims have formally begun the arbitration process. One of the issues facing the ADR program is the amount of time it takes for claimants or their counsel to submit the arbitration forms and other requested documentation.
After an arbitration request is received by the Trust, the ADR Administrator sends an arbitration election form package to the claimant's counsel. The Administrator will notify counsel of the deadline for their submissions and provide a targeted arbitration date. The claimant's submission deadline will be not less than 60 days from the date of the cover letter, and the targeted arbitration date will be not less than 120 days from the cover letter date.
If claimant's counsel does not return the ADR election form and claimant's submissions by the deadline, the claim will be removed from the active ADR queue. The claim may be returned to active ADR status, upon written request, at a later date; however, the request will be reviewed and addressed in the order in which return to active status is sought.
Claimant's counsel may request that an arbitration be held prior to the targeted arbitration date. The ADR Administrator will make the necessary arrangements upon written request. Prior to the start of arbitration, claimant's counsel may withdraw a claim or accept the Trust's last offer.
Note that these deadlines are not intended to restrict counsel's ability to adequately prepare a claim for arbitration; they are meant to ensure that arbitration requests progress through the ADR process toward a timely resolution.
If you have questions concerning this policy, please contact Donna Sandifer, ADR Administrator, at (703) 205-0838.
Manville Trust Moves on to the Information Superhighway
As of March 1st, the Trust completed two Internet projects. First, we have connected our internal e-mail system with the outside world. You can now communicate with anyone at the Trust by e-mail. Also, we have set up some mail boxes for specific questions. To get answers to questions concerning the Trust's medical audit program direct your mail to "medaud@claimsres.com". For all other general inquiries, send e-mail to "inquiry@claimsres.com".
We have also launched our site on the World Wide Web. It can be reached at "http://www.claimsres.com". Currently, two information areas are available: background material on the Trust and details of our medical audit program. Future enhancements will include: excerpts/explanations of the TDP, past/current newsletters and a section on frequently asked questions. Please feel free to let us know what you think of our site and give us your suggestions on future content. Comments can be sent to "webmaster@claimsres.com".
FIFO Sequence Ranges for Future Payment
The Trust's planned schedule for issuing offers during 1996 is shown below. To provide reference points we list the ending FIFO number and corresponding date for each offer cycle.
Offer End FIFO End FIFO Cycle Number Date4 Q 95 106,400 11/20/89 1 Q 96 136,400 08/22/90 2 Q 96 166,400 12/23/91 3 Q 96 196,400 03/30/93 4 Q 96 226,400 01/23/95