Travelers Case Goes to the Supreme Court

Virtual Water Cooler, December 17, 2008

Washington — The U.S. Supreme Court has agreed to consider a case with major implications for insurance companies.

The justices will weigh two related cases that have been consolidated into one, The Travelers Indemnity Co. v. Bailey, 08-295, and Common Law Settlement Counsel v. Bailey, 08-307. The dispute arises from a rash of asbestos-related lawsuits Travelers incurred as a result of its coverage of asbestos maker Johns Manville Corp.

The genesis of the case stretches back over two decades. In 1986, the U.S. Bankruptcy Court for the Southern District of New York approved a plan that channeled hundreds of thousands of asbestos-related personal injury claims into a special trust fund for the benefit of injured workers and their families.

However, in Feb. 2008, the 2nd U.S Circuit Court of Appeals in New York ruled that the bankruptcy court lacked the authority to approve the deal struck in 1986.

Widely used as insulator and fire retardant until the mid-1970s, asbestos has been determined to be carcinogenic to humans.

Sources: Associated Press, www.supremecourtus.gov

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