A proposed settlement in the W.R. Grace and Co. bankruptcy case would pay $19.5 million into a trust for people sickened by asbestos exposure from the company’s now-shuttered vermiculite plant in Libby, Mont. Jon Heberling, who is with McGarvey, Heberling, Sullivan and McGarvey in Kalispell, Mont., the lawyer representing the Libby claimants, says that the Libby Medical Plan Trust would ensure that the company doesn’t terminate the Libby Medical Program, which began in 2000 after news reports first documented widespread disease and deaths among residents of the northwestern Montana town. The Libby Medical Program is a voluntary plan that can be terminated whenever Grace chooses, though it has operated while bankruptcy proceedings have gone on since 2001.

When final settlement documents are approved by the bankruptcy court, all objections to the plan of reorganization from the Libby claimants will be settled and will be withdrawn. Claimants also will be eligible to receive distributions from the separate Asbestos Personal Injury Trust to be established as part of Grace’s reorganization plan.

The company said in a statement that the money for the trusts will come from a variety of sources, including cash, insurance, stock, payments from third parties, and deferred payment obligations. Grace said that its reorganization plan had been approved by the U.S. District Court of Delaware, but is subject to appeal. The settlements also are subject to the approval of the Libby claimants. The bankruptcy agreement came four months after a Montana judge approved a $43 million settlement for 1,128 asbestos victims who said state officials knew that dust from the mine was killing people but failed to intervene.

That settlement involves more than 200 lawsuits filed against Montana agencies for failing to protect victims in Libby. The state claimed in its defense that it had no legal obligation to provide warning of the mine’s dangers. An estimated 400 people have been killed by asbestos released from the vermiculite mine. Lethal dust from the mine once blanketed the small community about 40 miles south of the Canadian border, and asbestos illnesses were still being diagnosed more than two decades after the mine was shuttered. The Center for Asbestos Related Diseases in Libby has a caseload of more than 2,800 patients with asbestos disease and is still adding more patients.

Source: Claims Journal