S. 2564Senate115th Congress (2017-2019)In Committee

PROTECT Asbestos Victims Act of 2018

AI-Generated Summary

Updated April 15, 2026 at 8:45 PM UTC

The PROTECT Asbestos Victims Act of 2018 strengthens oversight of asbestos compensation trusts by giving the U.S. trustee broad authority to investigate, audit, and pursue fraud. It also creates a new role of future claims representative, requires trusts to share payment information, allows cases to be reopened for investigations, and adds criminal penalties for false claims. The changes affect asbestos trusts, claimants, and the courts that oversee them.

Key Provisions

Allows the United States trustee (or bankruptcy administrator) to investigate the administration of asbestos trusts, conduct discovery, audits, and refer suspected fraud to U.S. attorneys.
Requires asbestos trusts to provide information about payments and demands to parties in asbestos‑related lawsuits, subject to protective orders and reasonable cost recovery.
Mandates the appointment of a disinterested “future claims representative” to oversee future claims against the trusts, with authority to hire independent professionals.
Gives courts the power to issue orders needed to enforce the new investigation and information‑sharing rules and to prevent abuse of the trusts.
Authorizes reopening of closed bankruptcy cases at the request of the U.S. trustee to allow fraud investigations.
Adds criminal penalties for knowingly making false representations to a trust or filing false claims or demands against a trust.
Requires trust administrators to determine within 60 days whether claimants are eligible for Medicare benefits and to report required information to the Health and Human Services Secretary.

Legislative Activity

Stay on top of the latest movement without scrolling through every action

1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on the Judiciary.

Judiciary Committee

March 15, 2018

View full timeline

SenateIntro Referral

Introduced in Senate

March 15, 2018

SenateIntro Referral

Read twice and referred to the Committee on the Judiciary.

Judiciary Committee

March 15, 2018

Floor Debate

1 member

What members said about S. 2564 on the floor

1 Republican

Sen. Chuck GrassleyR-IA · Nov 15, 2018

Mr. President, today I wish to highlight the excellent work being done by the Justice Department under this administration in ensuring an accountable asbestos bankruptcy trust system. In 1994, in…

Mr. President, today I wish to highlight the excellent work being done by the Justice Department under this administration in ensuring an accountable asbestos bankruptcy trust system.

In 1994, in response to widespread asbestos litigation in our Nation's courts, Congress created a system of asbestos bankruptcy trusts. The purpose of these trusts is twofold. First, they provide an effective means for victims of asbestos exposure to obtain compensation from the companies they worked for years earlier or whose products caused their injuries. This helps provide some measure of justice for those whose lives have been dramatically impacted by asbestos exposure.

At the same time, the companies, who otherwise face crippling liability, obtain a degree of certainty as they emerge from bankruptcy and reenter the stream of commerce.

Most importantly, these trusts are designed to ensure that all victims, current and future, have access to compensation for their injuries.

If the available funds are depleted unfairly through fraudulent claims, abuse, or mismanagement, it is the future victims, or those whose injuries have yet to manifest, who will feel the impact.

Unfortunately, the asbestos bankruptcy trust system has largely lacked any meaningful, independent oversight to ensure that trusts are not deceived into--or willingly engage in--paying erroneous claims to unscrupulous lawyers. For years, I have called out this problem and the need for more sunshine to deter potential abuse.

That is why I applaud the Justice Department's recent actions to stand up for victims of asbestos exposure by ensuring an accountable trust system.

In a recent letter to 20 State attorneys general who had called for action, the Department forcefully criticized the ``problematic lack of transparency in the operation and oversight of asbestos trusts'' and acknowledged ``alarming evidence'' of ``fraud and mismanagement inside trusts.''

On September 13, 2018, the Justice Department filed a statement of interest in a case concerning a proposed asbestos bankruptcy trust in North Carolina. The Department objected to the trust's formation, arguing that the plans failed to include sufficient safeguards to prevent fraud and abuse of the trust funds.

The Department further stated that the United States will object to any plan that ``lacks critical provisions to ensure transparency and accountability and to prevent fraudulent claims and mismanagement of the trust funds[.]'' This includes ensuring that trusts comply with any obligations under the Medicare Secondary Payer Statute, avoid conflicts of interest, and prevent excessive administrative costs and attorney's fees.

Shortly thereafter, on September 26, 2018, the Justice Department's U.S. Trustee Program, for the first time ever, objected to the appointment of a proposed future claimants' representative in a separate asbestos bankruptcy case based on the candidate's apparent conflicts of interest and close ties to lawyers representing current claimants.

According to Principal Deputy Associate Attorney General Jesse Panuccio, ``[t]o best protect all victims, those appointed in asbestos cases should be held to the same conflicts prohibitions and standards of independence that are

required of other fiduciaries under the Bankruptcy Code.''

I couldn't agree more.

Asbestos bankruptcy trusts are created to compensate victims, not to line the pockets of lawyers who file claims or administer the trusts. Fraudsters and poor management cannot be allowed to cheat victims of asbestos-related diseases out of the assistance Congress established for them.

So I am pleased to see the Justice Department stepping up and using its existing authority to push back against trust plans that fail to put the victims' interests first. I applaud its commitment to investigate conduct related to asbestos trusts that is illegal under Federal law.

It is time the asbestos trust system protects the interests of the victims, as Congress intended.

To be sure, however, Congress's job isn't finished. There are commonsense steps we can take to better ensure that the Department has the tools and authority it needs to police against fraud and mismanagement.

Earlier this year, I cosponsored S. 2564, the PROTECT Asbestos Victims Act, which would codify needed accountability measures for asbestos trust oversight. This bill, introduced by Senator Tillis, deserves strong bipartisan support. Among other reforms, it strengthens the U.S. Trustee's statutory authority to investigate the administration and operation of trusts. If the U.S. Trustee believes a false claim or demand was paid by the trust, he or she may refer the matter to the U.S. Attorney's Office. It criminalizes a knowingly and fraudulently false claim or representation to a trust. It better ensures that the right people are appointed as future claims representatives, in other words, those who understand that their duty is to future victims, not to their trial lawyer friends.

These are commonsense reforms, and I invite all of my colleagues to join in support.

In the meantime, I fully expect the Justice Department to keep up its great work in protecting asbestos victims and the American taxpayer by policing against waste, fraud, and mismanagement in the asbestos bankruptcy trust system.

Bill Text

Latest available legislative text

Reading Mode

Raw Text PDF XML

Introduced in SenateIssued March 15, 2018

115th CONGRESS

2d Session

S. 2564

IN THE SENATE OF THE UNITED STATES

March 15, 2018

Mr. Tillis (for himself, Mr. Cornyn, and Mr. Grassley) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

A BILL

To amend title 11, United States Code, to promote the investigation of fraudulent claims against certain trusts, to amend title 18, United States Code, to provide penalties against fraudulent claims against certain trusts, and for other purposes.

Short title

This Act may be cited as the Providing Responsible Oversight of Trusts to Ensure Compensation and Transparency for Asbestos Victims Act of 2018 or the PROTECT Asbestos Victims Act of 2018.

Reduction of fraudulent claims and demands relating to certain trusts

(a)

In general

Section 524(g) of title 11, United States Code, is amended—

(1)

in paragraph (4)(B)(i), by striking the court appoints a legal representative and inserting the United States trustee or bankruptcy administrator appoints, under paragraph (10), a future claims representative; and

(2)

by adding at the end the following:

(8)

Investigation of fraudulent claims and demands

(A)

In general

Notwithstanding section 302(d)(3) of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note), rule 9035 of the Federal Rules of Bankruptcy Procedure, or any other provision of law, in any judicial district of the United States, the United States trustee may investigate the administration and operation of a trust described in paragraph (2)(B)(i), including a trust described in paragraph (2)(B)(i) that was created before the date of enactment of the PROTECT Asbestos Victims Act of 2018.

(B)

Authority of the United States trustee

In conducting an investigation under subparagraph (A), the United States trustee shall have the authority—

(i)

to conduct discovery, including by any means of discovery available to a trustee in an action under chapter 5 of title 11, relating to the trust, a claimant of the trust, or a claim against the trust, including a claim filed by a claimant against the trust in a bankruptcy court or other forum, notwithstanding the effect of any order purporting to limit the access of the United States trustee to any information relating to that discovery;

(ii)

to conduct an audit or contract for an audit of any claim or demand paid, or to be paid, in whole or in part by the trust;

(iii)

if the United States trustee has reasonable grounds to believe that a false claim or demand to be paid in whole or in part by a trust was made, to refer the matter to the United States attorney for the relevant judicial district, and, on the request of the United States attorney, assist the United States attorney in carrying out a prosecution based on that false claim or demand; and

(iv)

to request that the court exercise any authority and impose remedies available to it, including those—

(I)

under the terms of the plan of reorganization to prevent abuse or mismanagement of the trust; and

(II)

under section 105.

(C)

Standing

In carrying out this paragraph, the United States trustee shall have standing to raise, to appear, and to be heard on any matter for which the court has jurisdiction or for which the court has reserved jurisdiction under the terms of the plan of reorganization.

(9)

Accessing trust information

(A)

In general

Subject to section 107 and any appropriate protective order, a trust described in paragraph (2)(B)(i) shall, on written request, provide, in a timely manner, any information relating to any payment from, and any demand for payment from, the trust to a party to an action at law or equity if the action relates to liability for asbestos exposure.

(B)

Costs

A trust described in paragraph (2)(B)(i) may require, from the person making a request under subparagraph (A), payment of any reasonable cost incurred to comply with the requirements under subparagraph (A).

(10)

Appointment of future claims representatives

(A)

In general

On notification by a plan proponent of the intention of the plan proponent to seek an injunction under this subsection, the United States trustee or bankruptcy administrator, after consultation with parties in interest, shall appoint, subject to the approval of the court, a disinterested individual to serve as the future claims representative.

(B)

Support

(i)

In general

The future claims representative, subject to the approval of the court, may employ 1 or more attorneys, accountants, or other professional persons to represent the future claims representative or assist the future claims representative in carrying out the duties of the future claims representative under this subsection.

(ii)

Qualifications

An attorney, accountant, or other professional person employed under clause (i) to represent or assist the future claims representative—

(I)

shall be a disinterested person; and

(II)

may not represent any other entity having an adverse interest in connection with the case.

(11)

Power of the court

Notwithstanding any other provision of law, including paragraph (1)(B), sections 1127, 1141, and 1144 of this title, and section 157 of title 28, the court may issue any order, process, or judgment that is necessary and appropriate—

(A)

to carry out the provisions of paragraphs (8) and (9); or

(B)

to enforce or implement a court order or prevent an abuse of process relating to a trust described in paragraph (2)(B)(i).

(12)

Benefits under Medicare

(A)

Potential eligible claimants

Not later than 60 days after a claim is submitted to a trust described in paragraph (2)(B)(i), the administrator of the trust shall determine whether the claimant is entitled to benefits under the Medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.).

(B)

Required information

If a claimant is determined to be entitled to benefits under subparagraph (A), the administrator of the trust shall submit to the Secretary of Health and Human Services, in the form and manner (including frequency) specified by the Secretary of Health and Human Services, the information described in section 1862(b)(8)(B) of Social Security Act (42 U.S.C. 1395y(b)(8)(B)).

(b)

Compensation

Section 330(a)(1) of title 11, United States Code, is amended—

(1)

by inserting a future claims representative appointed under section 524(g)(10)(A), after section 333,; and

(2)

by inserting , 524(g)(10)(B), after section 327.

(c)

Reopening cases

Section 350 of title 11, United States Code, is amended by adding at the end the following:

(c)

Investigations by United States trustee

On the request of the United States trustee, a case shall be reopened in the court in which that case was closed in order to enable the United States trustee to conduct an investigation under section 524(g)(8).

Criminal penalties

Section 152 of title 18, United States Code, is amended—

(1)

in paragraph (8), by striking or after the semicolon;

(2)

by striking the comma at the end of paragraph (9) and inserting a semicolon; and

(3)

by inserting after paragraph (9) the following:

(10)

knowingly and fraudulently makes a false representation to a trust described in section 524(g)(2)(B)(i) of title 11, or any official of a trust described in that section, in relation to an investigation conducted under section 524(g)(8)(A) of that title; or

(11)

knowingly and fraudulently makes a false claim or demand to be paid in whole or in part by a trust described in section 524(g)(2)(B)(i) of title 11,

Authority of United States trustee

Section 586 of title 28, United States Code, is amended by adding at the end the following:

(g)

Investigation of fraudulent claims and demands

(1)

In general

The United States trustee may investigate the administration and operation of a trust, including a trust that was created before the date of enactment of the PROTECT Asbestos Victims Act of 2018—

(A)

described in section 524(g)(2)(B)(i) of title 11; or

(B)

established under section 105(a) of title 11 for the purpose of assuming the asbestos-related liabilities of a debtor.

(2)

Authority of the United States trustee

In conducting an investigation under subparagraph (A), the United States trustee shall have the authority—

(A)

(B)

to conduct an audit or contract for an audit of any claim or demand paid, or to be paid, in whole or in part by the trust;

(C)

(D)

to request that the court exercise any authority and impose remedies available to it, including those—

(i)

under the terms of the plan of reorganization to prevent abuse or mismanagement of the trust; and

(ii)

under section 105.

(3)

Standing

In carrying out this subsection, the United States trustee shall have standing to raise, to appear, and to be heard on any matter for which the court has jurisdiction or for which the court has reserved jurisdiction under the terms of the plan of reorganization.

(4)

Judicial districts established for Alabama and North Carolina

Notwithstanding section 302(d)(3) of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note), rule 9035 of the Federal Rules of Bankruptcy Procedure, or any other provision of law, the United States trustee for the appropriate region described in section 581(a) shall have the authority to carry out this subsection with respect to a trust described in paragraph (1) in a case that is filed in a judicial district established for the State of Alabama or North Carolina.