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ADR Swiftly Compensates Parties in Mass Actions and Toxic Tort Cases

ADR Swiftly Compensates Parties in Mass Actions and Toxic Tort Cases

Source: New Jersey Law Journal
Date: April 12, 2016

Lester J. Levy, Esq.

Resolution Centers


By Lester J. Levy W e live in a world of ever- growing concern about environmental harm to our health and well-being. As the science of detection improves, so does our awareness of large-scale releases of contaminants into the air, water and soil, which can affect large numbers of people and their property. For example, high concentra- tions of lead were found in Flint, Michigan, and shortly thereaf- ter in drinking water systems in New Jersey and New York. Large volumes of natural gas were released into the soils be- low the homes of residents in a southern California subdivision, which volatized into the air, and remained uncapped for months. A spate of PFOA-contaminated groundwater issues have arisen throughout the Northeastern states; and, of course, we are all familiar with the widespread injuries and property damage caused by hurricanes Sandy and Katrina to tens of thousands of people living in their paths. In each of these cases, a single event or series of related events caused harm to large num- bers of people. Generally, the types of harm suffered—either to persons or to property—are similar in character, but can dif- fer enormously by degree among the affected population. While our judicial systems were neither designed nor are they equipped to handle cases involving thou- sands of litigants similarly af- fected—but in vastly differing measures—these matters provide a perfect opportunity to use ADR skills to resolve them intelligent- ly and effectively. A Solution to a Complex Web of Issues Mediation and other ADR processes have repeatedly been enormously effective in resolv- ing mass toxic-tort and environ- mental claims. ADR provides a way to condense many years of expensive court procedures into a precise, cost-effective and ef- ficient process that provides fair and individualized compensation to thousands of people that were affected by an accidental release or other tragic event. In addition, mediation provides the opportunity to weave together and settle at one time many inter- related disputes that may arise from a single event or contaminated area. april 12, 2016 njlj.com statewide legal authority since 1878 ADR Swiftly Compensates Parties in Mass Actions and Toxic Tort Cases Levy is a panelist with JAMS and one of the most experienced environmental mediators in the country today. Based in New York, he has resolved thousands of cases in most every area of environmental, toxic-tort and environmental insurance legal practice over the past 20 years.For example, one cluster of environ- mental conflicts may involve civil suits among the private parties seek- ing an allocation of fault and pay- ment for the cleanup, personal injury and property damage claims arising from the same contamination, regula- tory enforcement or penalty actions brought by environmental agencies and attorneys general, and lawsuits between individual parties and insur- ance companies that issued multiple pollution policies over the years. The outcome of each of these cases may affect the ability of the parties to re- solve the other cases. But no one court or administrative body ordinarily ex- ercises jurisdiction over all of them. Mediation, however, provides a sin- gle forum where all these cases can be resolved in a coordinated way. It may be achieved through separate agree- ments but the effect is the same—all moving pieces are brought to rest at a meeting point at the mediator’s con- ference table. It’s the point where a settlement can be reached that comes closest to meeting the collective best interests of all parties. Here, I will focus on class ac- tions and mass tort claims. The ADR processes I discuss below are equally applicable and effective in cases in which the contaminant was transported by surface or ground- water or through the air and soils. How a Mass Action ADR Process Can Benefit All Parties A useful example involved an accidental release at a petroleum refinery. The release lasted 16 days until corrected, causing a toxic sub- stance used in the refinery to be discharged and dispersed across an area covering several neighbor- ing towns. Ultimately, more than 11,000 people who lived or worked in the impacted area sought relief. A comprehensive settlement fund was created through mediation for distribution to affected persons and bargained-for releases were delivered to the defendants in return. Through continued mediation the parties de- signed a process to fairly and efficient- ly distribute that fund among different “categories” of claimants exhibiting different degrees of exposure and symptoms of injury. The ADR pro- cess was specifically designed to de- termine: (1) who would be eligible to participate in the settlement; (2) how much each person would receive in compensation or other relief; and (3) to elicit the specific criteria neces- sary to make these determinations. The process involved three tracks for the distribution of the funds: (1) automatic payments based on a claimant’s physical proximity to the point of release; (2) expedited, in- formal hearings for those claimants whose claims were significant enough to warrant in-person meetings; and (3) individual briefing, but not hear - ings, for “middle level” claims (those that fell between the serious injuries and automatic claims). Progressively higher levels of proof of exposure and injury were required to establish eligi- bility for and compensation from the various payment categories. To identify the zone of quali- fying impact and the differing contaminant concentration levels within the boundaries of the plume, the parties and their experts used testing data points, which showed the path the contaminants traveled during the period of release, to draw concentric exposure contours of the areas affected. These expo- sure contours were visually super- imposed on a map of the impacted area to provide a blueprint of all claimants’ location and probable exposure levels. This tiered approach was a suc- cess for a variety of reasons. First, claimants were part of the process; they were able to self-select (with assistance of counsel) into the dam- ages category that they believed best fit their own situation. Second, be- cause many claimants were not se- riously injured, a small percentage of the fund was used to compensate an extremely large segment of the population, leaving most of the fund available for those with provable in- juries. Third, because the allocation process was transparent, claimants overwhelmingly viewed the process as fair and just, which avoided mul- tiple-representation conflict-of-inter - est issues and complaints that mass- tort settlements frequently generate. Finally, funds were dispensed to claimants both quickly and cost effectively. Funds that were desig- nated for distribution to the effected population were not drained by ex- cessive fees and transaction costs. Importantly, more than 95 percent of the funds were awarded and dis- bursed to the claimants within three to 12 months after the process began, and fairly compensated the full spec- trum of injured claimants. In situations like Flint, where the injuries are more nuanced, soft- ware programs have been designed to provide a more thorough assess- ment of physical injuries and other compensable harms. Participants are required to substantiate their Reprinted with permission from the April 12, 2016 edition of the NEW JERSEY LA W JOURNAL. © 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877.257.3382, reprints@alm.com or visit www.almreprints.com. # 151-04-16-06 claims with medical records evi- dencing the alleged harm. A secure electronic platform can be estab- lished, into which claimants or their attorneys can upload copies of re- quired medical records. While near- ly all medical records are submitted electronically, programs must still make allowances for individuals who rely solely on paper files. The administrator is responsible for cataloging the medical records submitted by each claimant and as- sessing whether the required files are present. Next, the administrator will evaluate the evidence to deter- mine whether the claimant suffered an injury that qualifies him for ben- efits. In doing so, the administra - tor will extract relevant facts from the medical records and document those findings in the program’s da- tabase. These could include medi- cal diagnoses, surgical information, medications taken, or any other ele- ment that is significant to the spe- cific program. To ensure accurate outcomes and consistent treatment of all par- ticipants, a responsible administra- tor will develop a computerized al- gorithm to analyze the information taken from each claimant’s medi- cal records, determine whether the individual is eligible for an award, and calculate the amount to be paid. While this approach requires substantial effort in the develop- ment and testing of programming code, by automating this calcula- tion the administrator ensures the highest possible level of efficiency and accuracy in the assessment of claims. Clarity, Transparency and Consistency Much effort goes into the plan- ning and implementation of these processes. All participants must understand what the process is de- signed to achieve and what is ex- pected of them. This is critical for the claimants themselves to have confidence in its fairness. Clarity and transparency engenders trust that each claim will be decided fair- ly, on its own merit, under the gov- erning decisional standards. This is achieved through clear and user- friendly materials (hard copy and electronic), including descriptions of the process; forms for the submis- sion and review of data in support of each claim; eligibility criteria; approved decisional formats; and expected time frames for receipt, review, decision and payment. There must also be consistency in decision-making. Like claims must be decided alike. Claims de- cided on day one must be handled in the same manner as those decided on the last day. When individual adjudicators are used, the quality of their deci- sions must be closely monitored to ensure compliance with the writ- ten standards. Information regard- ing each adjudicator can be gath- ered through statistical analysis and review of sample decisions. In addition, each adjudicator must commit to the professional and productivity standards required of the project. These can be huge undertak- ings, with significant repercussions for all parties. There are many deci- sional formats that post-settlement proceedings can take—and should correspond directly to the aims of the settlement. Some process vari- ables to consider are: should the fund be a fixed amount or a claims- made; will the relief be predeter- mined or discretionary; will deci- sions be based on written or oral presentations; will the ADR process be adversarial; what elements of proof will be required and how will the claim form track the necessary data points; who will be the deci- sion-makers, lawyers, judges, medi- cal or environmental professionals, etc.; should there be an “appellate” process to correct particular awards; should the court retain jurisdiction over the settlement; and will there be a special master to oversee the process. These are but a few of virtually limitless variations on a similar theme. Just as no two environmental hazards are identical, so too each approach to mediation represents a distinct way to intelligently resolve a large-scale environmental or mass toxic-tort inci- dent, driven by the unique facts and circumstances of the case and the spe- cific needs of the parties. Created and implemented with care, they provide a superior alternative to traditional court-based procedures. •