American asbestos manufacturers yesterday suffered what was described as a major defeat in their efforts to recoup hundreds of millions of dollars from the federal government to compensate workers for asbestos-caused illnesses.
In the nation's first court test of the issue, a U.S. judge in Norfolk ruled the the asbestos industry was not entitled to federal reimbursement for damages paid to a disabled worker. The worker retired after developing lung fiborosis, attributed to asbestos fibers.
Neil R. Peterson, a Justice Department lawyer specializing in asbestos suits, hailed the ruling by U.S. District Court Judge John A. MacKenzie as a landmark decision. He said it would be cited by government lawyers in lawsuits across the country, in which asbestos manufacturers are seeking federal reimbursement for court-ordered awards paid to asbestos workers.
Yesterday's ruling, Peterson said, may prevent the asbestos industry from obtaining government reimbursement amounting to "at least hundreds of millions [of dollars] -- and possibly into the billions."
At issue is who should provide financial compensation to workers at shipyards and other government projects who become disabled or die from asbestos-caused diseases.
The asbestos manufacturers have accused the government of taking indequate steps to protect workers from asbestos-related illnesses. They have argured that the government should, therefore, be required to bear the costs of compensating disabled workers and their families.
The federal government contends that the industry itself was long aware of the potential harmfulnss of asbestos and failed to institute measures to safeguard its use. "The manufacturers themselves were responsible," Peterson said yesterday.
In his ruling, Judge MacKenzie held on, what is considered a key issue, that the manufacturers were actively -- rather than passively -- negligent in failing to take steps to avoid asbestos-inflicted harm to workers. Therefore, the judge ruled, the financial burden for compensating asbestos victims could not be shifted from the industry to the federal government.
It is this aspect of MacKenzie's ruling that Peterson cited as giving it broad applicability to other asbestos lawsuits throughout the United States. The industry is, nevertheless, expected to challenge Peterson's interpretation and is considered likely to appeal yesterday's court ruling.
"While round one as gone to the government, we're certainly not going to give up our convictions," said Dennis H. Markusson, associate general cousel for the Johns-Manville Corp., a major asbestos manufacturer involved in the Norfolk lawsuit. He said the company is considering an appeal or other legal action.
MacKenzie's 35-page decision was issued late yesterday afternoon in Norfolk. No text was immediately available in the Washington area. Peterson, however, provided a summary of key points in the decision in a telephone interview, and his account was confirmed by other sources.
The lawsuit centered on the 1975 disability retirement of a Norfolk Naval Shipyard pipe coverer, William B. Glover. Glover, who worked with asbestos for 35 years, was paid $69,000 in an out-of-court settlement by Johns-Manville and other asbestos manufactureers. The companies, in turn, sought to recover the $69,000 plus legal fees from the government decided yesterday.
Asbestos -- long a widely used insulating material -- has become the focus of mounting controversy in recent years. It has been described as a severe occupational hazard linked to a number of diseases, including cancer and asbestosis, a frequently fatal, scarring of lung tissue by asbestos fibers. a
Critics have charged that asbestos manufacturers concealed evidence of health hazards from asbestos workers for several decades.
Numrous law suits have been filed by shipyard and other workers in Norfolk, Groton, Conn., Long Beach, Calif., and elsewhere. Court awards have been increasingly steep. A week ago, a federal jury in Norfolk awarded $435,000 each to four shipyard workers claiming asbestos-caused ailments.