W. R. Grace trial to test validity of claims

Reports of speculators paying up to $25 per share for stock in W. R. Grace & Co., which is said to be an unusually high amount for a company in bankruptcy, and suggestions that W. R. Grace & Co. is willing to gamble the company on the decision of a lone bankruptcy judge seems to rest on the company's belief that there is medical evidence to test the validity of claims.

The question is how much the Columbia, Md.-based company owes for injuries, death and other damages linked to its asbestos products. The trial will begin Jan. 14 in a Delaware bankruptcy court and will determine the Chapter 11 exit plan.

Chief Bankruptcy Judge Judith Fitzgerald's estimate of asbestos liabilities will determine if Grace is "wiped out" or if the company can cover valid asbestos claims and have something left over for shareholders.

This is the same judge who wrote, according to Andrew Schneider in the Baltimore Sun on Dec. 22, 2006, "evidence established that the risk of exposure from (Zonalite Attic Insulation) in the home is less than that of dying in a bicycle accident."

Allan McGarvey, an attorney representing hundreds of people who have filed personal injury claims against Grace said, "Judge Fitzgerald's opinion merely concluded that there was insufficient evidence that typical homeowners would more likely than not face exposures which would cause disease."

David Bernick, a lawyer with Kirkland and Ellis said "Grace is the last circumstance in which a bankruptcy court has the ability to say which claims are good and which claims are bad."

"Grace is intent on invoking medical evidence to test the overall validity of claims," Bernick said.

The term "junk science" appears in several news stories about the upcoming trial. The Environmental Protection Agency responded to demands that toxicology studies should have been done eight years ago and initiated several scientific studies that are currently underway.

ATSDR (Agency for Toxic Substance and Disease Registry) conducted a cross-sectional interview and medical testing in Libby from July through November 2000 and July through September 2001. The State of Montana continued the screening activities at MASSA (Montana Asbestos Screening and Surveillance Activity) from March 2003 to date.

While these studies, which supported government actions, including the then Gov. Judy Martz decision to use her Silver Bullet to declare Libby a Superfund site, cannot be called "junk science," there certainly were limitations in the design.

Participants were self selected rather than at random. Selection bias may have occurred. Those volunteering may have experienced symptoms, or to have been "worried well." Those who did not participate may have had little or no exposure or were unable to travel to the test site.

Another potential limitation was that the B-readers (radiologists who are specially trained to identify asbestos related disease in film) knew the X-rays were from the Libby medical screening programs. Control films were not included.

The results of the Libby community medical testing program was designed primarily to identify illnesses experienced by participants exposed to asbestos but the results are thought to have broader implications because of vermiculite expansion plants, and asbestos-contaminated vermiculite placed in millions of homes and businesses across the country as insulation.

Those implications may be negated by the decisions of one Federal Bankruptcy Judge on Jan. 14.