Michael Cook provides a guided tour through the significant cases that have shaped UK asbestos claims to date
For many years, asbestos-related activities were relatively uneventful in the UK insurance industry with few legal cases. Most insurers were paying claims provided that injury and liability could be established. The burden of that proof, however, was a major problem for claimants. Establishing liability was difficult since they needed evidence to determine that a specific employer had exposed them to the particular asbestos fibre(s) that caused their injury. It was this issue that led to arguably the first major landmark UK asbestos case - Fairchild v Glenhaven Funeral Homes.
Fairchild was a House of Lords decision in 2002 that established a claimant was under no burden of proof as to which period they were exposed to asbestos that caused the manifestation of mesothelioma. Each employer, and their respective insurers, were held to be jointly and severally liable for all damages awarded. This ruling gave rise to the potential for individual employers and insurers to be targeted by claimants for 100% of their compensation. The whole issue relating to which fibre caused the disease could no longer be used as a defence; therefore, anybody diagnosed with mesothelioma should be able to receive compensation, providing they can prove an employer has exposed them to asbestos. It was acknowledged that the decision may not ultimately be fair to the employers or their insurers but the logic that drove the decision was that it was much fairer than victims of mesothelioma receiving nothing at all.
Later, in 2004, insurers Norwich Union and Zurich - along with the Department of Trade and Industry - brought 12 test cases to court to establish whether sufferers of pleural plaques should be compensated in the UK. In 2007, the House of Lords enforced the original 2006 decision that pleural plaques are asymptomatic, have no adverse effect on appearance and have no effect on any bodily function. Therefore, those claiming should not be compensated.
The HoL decision essentially ended compensation in the UK for this asbestos-related condition. However, with the first line of defence against mesothelioma claims removed by Fairchild, the volumes of mesothelioma claims impacting the insurance industry increased. This fact, among several others, provided insurers with the incentive to look at other issues surrounding UK asbestos claims and subsequently led to a number of cases going through the English courts which have been pivotal in the evolution of asbestos litigation and legislation.
Barker v Corus
In Barker v Corus (2006), the courts were again asked to look at the classic insurance problem of joint and several liability, which had been before the HoL in Fairchild. In this matter, the court opined that a defendant held liable under the Fairchild principle should only be held severally liable and, therefore, only pay the proportion of the claimant's damages relating to that defendant's contribution to the risk of injury - that is to say, time on risk. Barker essentially overturned aspects of Fairchild and would have allowed individual insurers to reduce their potential liability to the share allocated to the years they provided insurance - if the government had not then stepped in.
Intervention came in the form of the Compensation Act 2006. The original intent of this Act was to regulate claims management companies or 'claims farmers' to prevent such things as mobile scanners being used to carry out mass screenings in order to detect any asbestos-related condition. However, following the Barker decision, the government - in record time - amended its Bill to reverse the impact of the case. In essence, this returned the law to its position after Fairchild - employers were jointly and severally liable for any compensation due to employees who have suffered injury as a result of exposure to asbestos fibres by more than one employer.
Bolton v MMI and CU
The Bolton v MMI and Commercial Union case, ruled on by the Court of Appeal in 2006, differs from most other recent UK asbestos cases because the dispute centred on claims against public liability policies and not employers' liability. The case clarified the generally accepted insurance industry practice for awarding damages in relation to PL claims - with the judges determining that the policy in force at the time of the manifestation of the disease (of it 'occurring') would be the one triggered to pay out. This is in contrast to the historical EL situation, whereby the policy in force at the time the claimant was exposed to asbestos pays out. The relevance with regard to mesothelioma cases is that these two dates - exposure and manifestation - can be decades apart.
The impact of Bolton initially seemed relatively minor. It was a PL case after all. But, as some insurers, notably those in run-off or insolvent, digested the basis of the court's decision, they realised the decision was also applicable to the wording in their EL policies. The specific provisions and potential ambiguity in policy wordings meant that some insurers chose to deny coverage. This caused division in the insurance industry and led to a second group of test cases being submitted to the court in order to determine on what basis EL policies are triggered.
Trigger test cases
This group of cases, heard last year by the High Court, focused on the situation where an EL policy has been provided to an employer during the period in which their employee was exposed to asbestos - prior to that employee subsequently developing mesothelioma - and whether this exposure date should remain the trigger regardless of specific wordings.
The policy wordings in question are expressed as providing cover with respect of injuries 'sustained', 'contracted' or 'occurring' (or some other similar provision) during the period of cover provided by the policy. In very simplistic terms, those insurers seeking to deny coverage were essentially taking the 'Boltonite' position - that the manifestation date would trigger their policy wording, decided in Bolton as occurring approximately 10 years before symptoms but quite possibly decades after the exposure. Therefore, the argument was that they were not 'on risk' at the date of original exposure.
The court did not accept the arguments put forward by these insurers. Rather, it affirmed the existing principle for EL - the policies in force at the time of employee exposure to asbestos pay compensation. This decision is set for appeal in November.
The government has also been active of late. Following its amendment of the Compensation Act, the Scottish parliament passed a bill earlier this year overruling the HoL decision on pleural plaques. As a result, plaques are now compensatable in Scotland but not England and Wales, which has promoted a judicial review by insurers to try to prevent this taking effect. Westminster is watching. So, despite all these cases, the landscape of asbestos claims in the UK is still far from certain. Will the UK follow the many years of litigation seen in the US or are there some lessons to be learned to prevent this and bring some form of solution to this long-running problem?
- Michael Cook is director of Navigant Consulting Insurance Practice.
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