Lawyers and medical experts yesterday proposed a "no-fault" system to handle billions of dollars in potential compensation claims from victims of exposure to asbestos, cotton dust, hazardous wastes, and other toxic substances.

In a day-long hearing before the House Science and Technology Committee's investigations and oversight subcommittee, witnesses said that without a system to expedite compensation, many victims with legitimate claims are unlikely to receive any money.

States have turned to no-fault auto insurance laws because the courts could not adequately handle accident claims cases. As these diseases -- which commonly take 10 to 30 years to manifest themselves -- afflict more Americans, witnesses said the traditional system will choke under the volume of new claims.

"Until we take fault out of the system, victims are not going to be compensated, I can tell you that for sure," Gary Schenk, a plaintiff's attorney from Grand Rapids, Mich., told the subcommittee.

Schenk testified about problems stemming from the 1973 contamination of Michigan cattle with polybrominated biphenyl (PBB), a flame retardant which was inadvertantly distributed to farmers in cattle feed.

Nine million Michigan residents now have measurable levels of the toxic PBB in their bodies and hundreds suffer from symptoms ranging from fatigue to seizures, Schenk told committee members.

Schenk said only two lawsuits involving human victims of PBB poisoning have been tried in Michigan. In both cases the victims lost because they couldn't legally prove that PBB caused the symptoms.

Victims of asbestos-related diseases do not face the same burden of proof as PBB victims because doctors can link clinically the symptoms of asbestos diseases with actual asbestos exposure, witnesses explained. Asbestos victims, however, must prove that absestos manufacturers were responsible for their illnesses. And they are now facing an additional problem.

Asbestos companies, confronted with escalating legal expenses of handling asbestos lawsuits, are running into financial trouble, raising the question of who will be liable for asbestos diseases if the asbestos manufacturers go bankrupt.

UNR Industries of Chicago, a former asbestos manufacturer, filed for protection under Chapter 11 of the federal bankruptcy law two weeks ago. It cited $30 million in asbestos-related legal expenses as a principal reason for its financial position.

The Chapter 11 filing places on hold the 12,000 lawsuits so far filed against UNR while the reorganization of the company is supervised by a Chicago bankruptcy judge.

Denver-based Johns-Manville Corp., the country's biggest asbestos manufacturer, eliminated its quarterly dividend last week for the first time since prior to World War II.

At the core of the testimony yesterday was concern that the problems of compensating asbestos victims will be repeated when victims of other toxic substances -- including cotton dust, Agent Orange and hazardous wastes -- begin to seek compensation by bringing damage suits in the courts.

"We've got a tiger by the tail but we don't know how big it is," said Frank Grad, professor of law at Columbia University. "The problem has not yet fully emerged and it's going to get a lot worse."

For asbestos, at least three plans to handle claims outside the courts have been proposed in Congress. They are stalled on the question of how much liability the federal government should assume and whether the states or a federal system should handle the claims.

"I don't think any of the plans are very good so far," said Dr. Irving Selikoff, director of the environmental sciences laboratory at Mt. Sinai School of Medicine in New York, after testifying before the subcommittee. "I think that we have the intelligence to develop a first-rate system."