In Re National Gypsum Co.

Citations: 257 B.R. 184; 2000 Bankr. LEXIS 1604; 2000 WL 1909492Docket: 19-40348

Court: United States Bankruptcy Court, N.D. Texas; October 30, 2000; Us Bankruptcy; United States Bankruptcy Court

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The memorandum opinion and order from the United States Bankruptcy Court for the Northern District of Texas addresses the establishment of the Alternate Asbestos Disease Claims Resolution Facility as part of the First Amended and Restated Joint Plan of Reorganization for National Gypsum Company and Aancor Holdings, Inc. This plan, initially confirmed on March 9, 1993, created a new corporate entity, New National Gypsum Company, and reorganized the original debtor as the Asbestos Claims Management Corporation (ACMC). It also established the NGC Settlement Trust to manage claims related to asbestos exposure from National Gypsum products, providing benefits to both identified claimants and future unknown claimants.

The plan required equitable treatment of all beneficiaries and emphasized that the trust should pay claims for similarly-situated individuals fairly. A Legal Representative was appointed to advocate for unknown and future claimants, ensuring their interests are considered, while a Bodily Injury Trust Advisory Committee (BI TAC) was formed to represent known claimants. The court's order permanently enjoined asbestos disease claimants with valid claims under non-bankruptcy law as of the plan's confirmation from pursuing further claims against New National Gypsum Company, while noting that future claimants or those without cognizable claims at that time do not hold claims under the Bankruptcy Code.

The court determined that non-Bankruptcy Code claimants can pursue remedies only after exhausting the trust. Reorganized NGC’s liabilities to these claimants are confined to the trust, and New NGC is protected from litigation regarding unknown and future claims until the trust remedies are exhausted, effectively imposing a temporary injunction. To validate the plan against creditor objections, the court estimated New NGC’s enterprise value at $350 million on the plan's effective date, affirming asbestos-related litigation protections.

The plan introduced the 'Asbestos Disease Claims Resolution Facility' and named the Center for Claims Resolution as its administrator, with ACMC assuming membership. The trust later terminated ACMC's membership, transitioning to the 'Alternate Asbestos Disease Claims Resolution Facility,' which must resolve claims per the plan and specified procedures.

The plan mandates that asbestos disease claimants receive equitable treatment, allowing them to choose between an expedited review and payment process or an individualized review. The expedited process offers a single cash settlement determined by trustees, with different amounts for various claims not exceeding $1,000. Claimants with non-malignant conditions receiving expedited payments can later file for additional claims related to malignancies, with new payments adjusted accordingly. The individualized review requires a thorough evaluation of claims based on exposure and injury, including medical evidence that meets established standards for reliability.

Claims will be organized by disease and occupation, with values determined based on applicable tort law variables. A limited range of liquidated values will be established to reflect historical payments for similar claims. The trustees will identify extraordinary cases, defined as those where NGC asbestos products contributed significantly to a claimant's exposure or where damages exceed typical ranges. They will establish procedures for payments, auditing claims to ensure validity, and create forms with a declaration of accuracy under penalty of fraud.

Claims will be processed in chronological order based on documentation receipt, with expedited reviews prioritized. To minimize transaction costs, claims may be grouped for processing. Trustees will define extreme hardship claims for separate consideration and may suspend normal procedures to favor expedited claims when advisable. 

To ensure equitable treatment of all claimants, different payment forms and timings may be used, subject to revision based on experience. Payments may vary based on when a claim is processed, and no claimant will receive more than the trust's calculated percentage of full liquidated value. This percentage will be reassessed to reflect the number and type of claims, expected payments under insurance contracts, and necessary administrative expenses, ensuring sufficient funds for all claimants. Trustees will maintain flexibility in decision-making, avoiding a rigid approach solely based on worst-case scenarios.

All asbestos disease claims must demonstrate evidence of a diagnosis related to asbestos exposure from NGC products to support a legal cause of action. Trustees are tasked with evaluating claims while considering investigation costs to avoid impairing valid claims. They have discretion in assessing claim validity and can contest claims despite potential costs. Trustees may amend criteria as needed, subject to bankruptcy court approval, and are required to conduct audits to verify submitted information. If audits reveal invalid information, the trust can penalize claimants or their attorneys, including disallowing claims and seeking sanctions. The trust may also audit the reliability of medical evidence and refuse evidence from unreliable sources.

Settlements are preferred to minimize costs and ensure funds for valid claims. Trustees will establish alternative dispute resolution (ADR) processes, allowing claimants to engage in mediation or arbitration, with each side covering its own costs if needed. In absence of a settlement, claimants may initiate ADR as outlined by the trustees, with arbitrators determining compensation within set disease category limits or exceeding them in extraordinary cases. Accepted arbitration awards will define the claim's liquidated value, aligning payment processes accordingly. Notably, punitive damages and various types of interest (pre-judgment, post-judgment, or deferred) are not applicable to asbestos disease claims.

Claimants retain the right to a jury trial for liquidating their claims, particularly if they choose nonbinding arbitration and subsequently reject the awards. If a claimant declines a settlement or arbitration award and opts for the tort system, the liquidated value of their claim will equal any judgment obtained. For judgments exceeding the highest value range for specific diseases, claimants will receive a portion of this excess, payable no earlier than five years post-judgment entry, unless deemed detrimental to other claimants, in which case payments will be made in five annual installments starting five years after the judgment.

Pending lawsuits against the trust are stayed until an arbitration award rejection, and new claims can only be initiated after this rejection. The statute of limitations for trials is tolled from the claim filing date, with the trust as the defendant. The applicable law for claims will be either from the state of previous asbestos lawsuits or, if none exist, the state with jurisdiction over the claim. All claims and defenses under this law are available at trial, and the trust may waive defenses related to liability for asbestos-related diseases and concede product defects, limiting the introduction of evidence on these issues.

Arbitration awards and mediation recommendations are not admissible at trial and do not constitute admissions. The trustees can seek court orders to manage claims effectively, including offers of judgment and scheduling. For claims after the alternate facility's effective date, claimants will receive necessary materials by mail, and failure to submit a completed claim form within 12 months may result in disallowance unless justified. The trustees will determine the nature of releases to optimize recovery for claimants diagnosed with asbestos-related conditions linked to NGC's products while minimizing the risk of further indemnification claims against the trust.

Payment to claimants from the trust is contingent upon obtaining an appropriate release as dictated by applicable state law. If permitted, endorsing a check for payment serves as a release. Claimants must sign documentation enabling the trust to secure indemnity from NGC's insurers, relinquish any claims against the insurer, and retain payments made for the claim. The plan allows for court amendments and additional settlement guidelines as needed. The court may intervene to establish an alternate facility if trustees fail to do so, ensuring the trust meets its purpose and maintains NGC's enterprise value. Settlement procedures may reference the Class Action Settlement from *Amchem Products, Inc. v. Windsor*, considering factors such as evidence of asbestos exposure and medical categorization of diseases. The court can impose a payment schedule and may require trustees to formulate additional criteria for claims based on future projections and available assets. If trustees abandon the current participation, a timeline will be set for them to develop necessary criteria, or the court will assume this role. The trust's termination of ACMC's membership initiated the requirements for implementing an alternate facility, with hearings scheduled to evaluate proposals and additional settlement procedures submitted by the trust and New NGC.

On August 17, 2000, the trust and New NGC exchanged responses to proposals, and the Legal Representative also replied on that date. The trust notified the court on September 15, 2000, about scheduled conferences aimed at reconciling proposal differences. Subsequently, on September 18, 2000, an agreed alternate facility was submitted to the court by the trust, New NGC, and the Legal Representative, with certain disagreements noted. Earlier, on July 11, 2000, asbestos disease claimants filed a motion to cancel hearings on the alternate facility and terminate the channeling order, arguing that continued channeling and the related injunction were no longer justified. New NGC responded to this motion on August 18, 2000, while the Legal Representative had previously moved to terminate the channeling order on June 22, 2000, claiming that without New NGC funding the alternate facility, claimants should be considered to have exhausted their trust remedies.

Evidentiary hearings regarding the alternate facility and associated motions took place on September 18, 19, 20, 21, 26, 27, and October 17 and 18, 2000. The parties agreed that the evidentiary record would be applicable to multiple motions, including the cancellation of hearings and the termination of the channeling order. The court initially focused on evidence concerning the assets and liabilities of the trust and ACMC, assessing projected asbestos claims over the next 40 years. Hearings were then broadened to encompass all relevant factors as required by plan procedures. The establishment of the alternate facility and management of the channeling order and injunction are under the court's jurisdiction for a final ruling.

The court emphasized that the alternate facility's purpose is to ensure the trust fulfills its function in settling claims equitably among similarly situated claimants. Since confirmation, approximately 235,000 claims have been resolved through the Center, which operates within the tort system. At confirmation, an estimated 62,000 individuals had valid asbestos disease claims under non-bankruptcy law, nearly all of which have been settled. The court presumes that remaining claim beneficiaries do not hold Bankruptcy Code claims under the plan and have not been discharged, applying this presumption solely for analytical purposes without affecting any party's litigation rights regarding claim discharge.

The trust has addressed both discharged and non-discharged claims within the tort system, with initial court estimates of unknown and future claims ranging from 150,000 to 165,000, although recent events suggest this estimate was too low. The trust has continued to resolve claims until the termination of ACMC membership in the Center. A declaratory judgment previously established that the confirmed plan imposed liability on New NGC for non-discharged asbestos claims once trust remedies were exhausted. However, the Fifth Circuit Court of Appeals reversed this ruling, indicating that the plan only allows for potential successor liability for New NGC, necessitating claimants to pursue successor liability claims state by state after exhausting trust remedies.

As a result, the assurance of a tort system remedy for unresolved claimants has been removed. Claimants who received payments from the Center accessed tort system values, and the trust must determine the 'full liquidated value' based on these values. While the alternate facility must reflect tort system values, it cannot replicate the tort system. Funded facilities can pay a percentage that approximates tort system values, while unfunded facilities are limited to minimal percentages, making it difficult for claimants to receive comparable compensation. The Fifth Circuit’s ruling means that claimants wishing to pursue tort system values must access New NGC to explore successor liability options. Furthermore, ACMC, the trust, the Legal Representative, and New NGC have agreed on evidence to estimate remaining non-discharged asbestos disease claims and their tort system values, utilizing projections based on data from the Center and average group settlement values, although not all interested parties initially consented to this stipulation. The Center's allocation criteria for resolving claims also influenced these projections and settlement amounts without necessitating identification of National Gypsum asbestos-containing products for claimants.

The Center acted on behalf of its members, who decided how to distribute settlement payments. The court's estimation of future claims, based on claimants establishing exposure to National Gypsum asbestos products, suggested that future claims would be fewer than previous projections. However, the members considered various exposure factors to determine settlement amounts, potentially leading to higher average settlements if the focus was solely on National Gypsum products. Evidence of average settlements for trial-listed cases was presented, showing that the Center typically negotiated settlements approximately 90 days prior to trial. The Center also engaged in group settlements with different plaintiffs' attorney groups at various times, resulting in differing average settlement amounts. From 1998, group settlements were concentrated in states like New York, Texas, West Virginia, and Mississippi, which had the highest number of case filings, creating significant pressure for settlements. Although some criticized this concentration, the settlements were seen as reflective of current tort system developments. Group settlements encompassed broader negotiation factors compared to trial approaches. All parties ultimately agreed on the stipulation regarding settlement averages. New NGC suggested that average settlements should reference figures from 1995, which the court considered. The court reviewed average settlements from 1993 until the termination of ACMC's membership, with various factors influencing these averages, including changes in medical diagnostics and bankruptcy cases. The trust's executive director indicated that the alternate facility might take up to a year to become fully operational, with the first claims processing likely starting in late 2001. The trust expressed an intention to expedite the process by potentially contracting with existing facilities.

Settlement of claims will not resume for several months after the alternate facility is established, and factors affecting settlement averages have changed since 1993 and 1995, making those values unsuitable for current use. The court recognizes the Georgine settlement values, negotiated in 1993, but confirms they do not adequately reflect present tort system values due to inflation. To accurately reflect these values as the new facility operates, the court will utilize ACMC's share of group settlement averages billed from January 1, 1998, to August 28, 2000, along with Peterson's projections for future claims through 2039. Peterson estimates 415,887 claims with a projected settlement cost of approximately $2.19 billion and a present value of about $1.14 billion. Additionally, the trust identified 79,000 existing claims from June 16, 2000, not included in Peterson’s projections. Exhibit A, part of the memorandum opinion, is considered the best measure for liquidated values. 

A motion to cancel the hearings to establish the alternate facility has been filed by Lois Ganske and Marilyn Moore, representing the estates of Larry J. Ganske and Alfred Moore, respectively. They argue that the court cannot establish a facility for processing claims under the tort system without addressing the claims of unknown future claimants, as determined by the Fifth Circuit. Furthermore, they assert that the trust is insolvent and that establishing the facility would be futile without funding from New NGC, which has not committed to any funding. The establishment of the alternate facility is mandated by the plan following ACMC's withdrawal as a Center member, but the potential funding by New NGC remains uncertain.

The parties have agreed that potential claims over the next 40 years could total 415,887, with a settlement cost of $2,188,899,721, yielding a present value of $1,138,738,644. A dispute exists between the trust and the Center regarding a reimbursement agreement. The trust's assets are estimated at $216,161,880, which could increase to approximately $374,713,686 if the trust successfully recovers its reimbursement claim from the Center. Hilton indicated the trust owes $32,000,000 to asbestos property damage claimants, while the Center claims the trust owes $197,836,030 for previously settled claims, asserting a contractual obligation for payment. Some claimants question the binding nature of this obligation and the trust's decision to keep ACMC as a Center member, especially given the trust's financial position. New NGC proposed that the trust utilize its liquid assets for claims payments instead of settling. The court presumes that binding settlements were made while ACMC was a Center member and accepts the trust's stance on the contractual obligations related to those settlements. If these obligations are honored, the trust would have $144,877,656 available for future claims, potentially allowing it to pay only 4.1 to 6.5 percent of those claims without further funding. Hilton suggested that either the trust or ACMC could file for bankruptcy, which would release ACMC from its obligations to the Center but could lead to increased liabilities for the trust with settled but unpaid claims, allowing it to pay only 8 percent of the claims' value under such circumstances.

If the Center-negotiated group settlements do not impose binding obligations on the trust or ACMC, recoveries could increase from 4.1-6.5% to 8% of the claims’ value. The court will consider a bankruptcy petition if filed but refrains from speculating on its implications or on potential legal challenges to the settlements. A shift from 6.5% to 8% is deemed insufficient to significantly impact the court's evaluation of evidence concerning an unfunded facility.

Hilton indicated that if the Center made no payments under the reimbursement agreement while ACMC remained liable for prior settlements, the trust might be unable to pay future claimants. New NGC acknowledged that without its funding, claims could not be resolved, leading to the termination of the channeling order. Thus, the court does not give weight to a zero percent recovery scenario, as it would render the entire facility analysis irrelevant. 

New NGC proposed a scenario where claimants could recover 11.2% of their claims, contingent on several factors, including the assumption that Center-negotiated settlements were obligations of the trust and ACMC, and that the trust won its reimbursement dispute with the Center. Chambers believed the trust's obligations to asbestos property damage claimants were $20 million instead of $32 million and assumed no payments to unimpaired non-malignant claimants, who comprise about 80% of that group. 

The court finds this scenario unconvincing for several reasons: the trust would need to successfully litigate against property damage claimants, and the evidence does not support Chambers' estimates of unimpaired non-malignant claimants. Dr. Epstein testified that 95% of his non-malignant asbestosis patients would be impaired, providing more credible evidence than Chambers' assumptions, which lacked supporting literature. 

The court also cannot order that no payments be made to unimpaired non-malignant claimants, as the plan requires similarly situated claimants to receive equivalent treatment. Testimonies confirmed that these claimants have previously received recoveries and payments from the trust. The evidence showed they would incur actual damages for medical tests and treatments, necessitating at least some payment from the facility, even if minimal. Although Chambers mentioned other asbestos claims facilities that do not pay these claimants, she only referenced the RayTech Corp. facility, which is not sufficient to support her position.

A facility established under 11 U.S.C. § 524(g) had substantial claimant support, which is not applicable in this case, as the court does not operate under § 524(g). Chambers referenced the rejected Georgine settlement to justify no payments to claimants, noting that if the trust does not make any payments, the channeling order will terminate, leaving claimants without resolution. Chambers suggested that claimants could receive continued protection through tolling statutes of limitations, similar to the RayTech facility, but emphasized that the trust would not resolve their claims.

New NGC proposed an additional $100 million funding to the Trust, to be disbursed in ten annual payments of $10 million, contingent upon various conditions including the court's adoption of their exhaustion definition and a non-liability order for New NGC. However, this proposal does not constitute a financial contribution as no actual funds have been provided, rendering it an unenforceable promise. New NGC’s expected deductions for indemnity and expenses further diminish any actual contribution, potentially lowering it below $10 million annually. The court recognizes that if New NGC's conditions are not met, including the exclusion of unimpaired non-malignant claimants, the trust would not receive any meaningful contributions. Additionally, New NGC's requirement for claimants to exhaust trust remedies complicates the situation further, limiting the potential for actual funding to the trust.

The claimant must first submit a claim and engage in settlement negotiations, followed by mediation or arbitration. If those efforts fail, the claimant can proceed to trial against ACMC, obtain a judgment, and seek payment. If a settlement with the trust is not reached after this process, the claimant may request the court to terminate the channeling order. The court indicates that unless it interprets the plan's exhaustion requirement differently, New NGC will not contribute to the trust. The court explicitly states that the trust cannot resolve claims with payments limited to 4.1% to 6.5% of tort values, and therefore, the channeling order will terminate if the facility is not funded. If the facility is funded at the levels set by the court, it would pay tort values, eliminating the need for a binding exhaustion standard for all claimants.

Despite ongoing out-of-court negotiations for a global resolution of asbestos disease claims providing New NGC protection under 11 U.S.C. § 524(g), the court will not interpret New NGC's exhibit as a settlement offer and does not accept its definition of exhaustion of remedies. The court orders that if New NGC funds the facility, it would not imply any admission of liability, but it overrules other criteria proposed by New NGC. Consequently, New NGC is likely to determine that the conditions for contribution have not been met and will not contribute based on the exhibit, which the court disregards in evaluating the trust's financial resources for settling claims. The court gives preference to Hilton's asset projections, suggesting that without further funding, the trust cannot settle claims comparably to previous settlements. The court mandates the establishment of an alternate facility as part of the confirmed plan, which constitutes a contract requiring the court to direct the trustees accordingly. If funded by New NGC, the facility will comply with the plan; if not, the court will ensure an equitable distribution of trust assets and uphold claimants' rights as per the plan's provisions. The motion to terminate the channeling order is denied, allowing unknown claimants to pursue non-bankruptcy claims against any liable parties, including New NGC.

Claimants must exhaust the remedies provided by the trust before pursuing tort litigation, and the channeling order will terminate for those claimants only if the trust cannot resolve their claims. Prior to July 18, 2000, the court denied motions to terminate the channeling order, acknowledging the potential exhaustion of trust assets but maintaining that New NGC retained plan-imposed liability for unpaid asbestos disease claims. Consequently, claimants were required to exhaust their remedies as beneficiaries of the trust. Following a Fifth Circuit ruling on July 18, 2000, which held that New NGC did not have liability for asbestos claims and that liability would depend on state laws, the court later granted motions to terminate the channeling order upon the exhaustion of trust assets.

The Legal Representative argues that the rationale from prior rulings should apply to an alternate facility, asserting that without funding from New NGC, the trust could only settle claims at a fraction (4.1% to 6.5%) of their actual value. For instance, average settlements for mesothelioma and lung cancer claims would be significantly lower than their actual values. New NGC contends that the Legal Representative lacks standing to terminate the channeling order on behalf of all unknown future claimants, emphasizing that each claimant must seek individual relief. However, the Legal Representative argues that the exhaustion process would be futile for unknown claimants, justifying immediate access to the tort system. The court had previously recognized the Legal Representative as a party in interest, allowing him to advocate for unknown claimants. New NGC, having no obligation to fund the trust or liability to these claimants, cannot contest the Legal Representative's standing to advocate against the exhaustion requirement given the low settlement amounts likely available through an unfunded facility.

The Legal Representative has the standing to advocate for claimants exposed to National Gypsum's asbestos products. Individuals who lacked valid claims under non-bankruptcy law at the time of confirmation and future claimants do not hold claims under the Bankruptcy Code, necessitating that their claims be addressed under non-bankruptcy law. The court has established them as beneficiaries of a trust, allowing them to receive distributions similar to those of other claimants. 

To pursue claims against New NGC, these claimants must first exhaust trust remedies, following the principle that judicial relief cannot be sought until all administrative remedies have been exhausted. This principle, rooted in administrative law, states that claimants can bypass administrative processes only if no adequate remedy exists or if irreparable injury would ensue without immediate judicial intervention. 

The exhaustion requirement for trust remedies must align with this equitable standard: if the trust cannot provide adequate relief for asbestos disease claimants, or if accessing the trust would be futile, claimants may seek court intervention without exhausting trust processes. The Legal Representative argues that requiring claimants to pursue remedies from an unfunded trust is futile, warranting the termination of the channeling order. In contrast, New NGC asserts that claimants must first seek recovery from the trust, as mandated by the confirmation order. 

The trust includes a negotiated claims process, allowing 90 days for settlement offers, followed by options for alternative dispute resolution if necessary. Should these processes fail, claimants may litigate against ACMC, with provisions for the payment of any judgments over time.

A judgment exceeding the facility's claim value will delay payment for at least five years. New NGC contends that claimants must exhaust all trust remedies before seeking relief from the channeling order, even though the trust can only provide 4.1 to 6.5 percent of the claim value. This position could entrap claimants in a cycle of required actions—negotiations, mediation, arbitration, litigation, and a waiting period—before they are deemed to have exhausted trust remedies. If a claimant accepts a payment from the trust, it would require them to release ACMC and New NGC, effectively forcing acceptance of the low settlement and limiting further access to the tort system. New NGC's argument is untenable for an unfunded trust, as it could impose a futile process on claimants, who would not receive adequate relief. The channeling order was designed to route claimants through the trust, ensuring equal treatment, but if the trust cannot provide meaningful settlements, claimants should not be compelled to use a process that doesn’t offer real opportunities for relief. Therefore, an unfunded trust cannot adequately resolve claims for unknown and future asbestos disease claimants, necessitating the termination of the channeling order. Adopting New NGC's position could lead to an indefinite inability for claimants to demonstrate exhaustion of trust remedies, as the trust would always be able to offer minimal settlement amounts, ultimately coercing claimants into surrendering their rights in the tort system.

New NGC requires that a trust obtain a complete release of claims, including those against New NGC, which would create a permanent injunction that contradicts the existing plan and confirmation order. New NGC argues that claimants must exhaust their trust remedies before obtaining relief, but this is problematic because the trust is expected to have enough funds to make minimal payments (4.1 to 6.5 percent), preventing total exhaustion of trust assets. Consequently, claimants would be forced to accept inadequate payments, which do not fulfill the relief requirements of the plan. 

Additionally, New NGC's position suggests that claimants are trapped, unable to secure settlements reflective of tort system values or pursue tort claims against New NGC. While the Fifth Circuit allows for potential successor liability for non-Bankruptcy Code claimants, New NGC contends that these claimants are effectively permanently enjoined from such actions. The court could direct the trust to utilize its assets (approximately $144.8 million) to settle claims on a first-come, first-served basis, which might resolve claims from 2002, leading the trust to exhaust its assets and possibly dissolve, thus terminating the channeling order.

If New NGC retains liability for remaining claims, this could provide a remedy similar to what claimants would have had absent the bankruptcy case. However, the Fifth Circuit's ruling complicates this, suggesting that some claimants may have no available tort remedies. Consequently, the court must devise trust remedies for asbestos disease claimants, prompting the trust to distribute its assets even at the reduced payment levels while recognizing that it cannot resolve claims adequately. An alternative facility lacking funding from New NGC is unable to settle claims comparably to the tort system, leading to further disparities for claimants.

An unfunded alternate facility can treat similarly situated claimants equally in the future but cannot replicate how claims were previously settled before ACMC's membership termination. Claimants, facing a trust that pays only a fraction of their claims, must access the tort system to achieve equity as mandated by the plan and confirmation order. The Fifth Circuit ruled that claimants need this access to address successor liability in state courts. Given the trust's limited assets, the court concludes it cannot adequately resolve claims, leading to the exhaustion of trust remedies for claimants. If New NGC fails to fund the alternate facility, the channeling order will end for remaining claimants. While some evidence suggests that certain claimants might settle for minimal amounts with a release of New NGC, the court notes the lack of a scientific survey or interviews to substantiate these claims. Prior successful settlements in the tort system involved claimant-negotiated facilities, unlike the current unfunded facility, which does not guarantee adequate relief. The court emphasizes that the NGC plan does not force claimants into a futile process and maintains that asbestos disease claimants are likely to accept settlement offers if New NGC funds the trust appropriately, even at discounted rates recognized by the tort system.

The Legal Representative's motion to terminate the channeling order highlights issues surrounding an unfunded trust that can only offer minimal payouts to claimants. Claimants will pursue the trust only if they are not required to release New NGC. The court supports the Chambers' view that claimants would still seek recovery from the trust, regardless of its limited capacity to resolve their claims, which could provide approximately 4.1 to 6.5 percent toward claim resolution. Claimants, as beneficiaries of the trust, can pursue their share of trust assets without relinquishing their rights in the tort system. 

Unknown and future asbestos disease claimants can apply for trust distributions and continue to seek recovery from New NGC. If they receive a trust payment and also obtain a recovery from New NGC, the trust payment will be credited against their judgment or settlement. The alternate facility will accommodate New NGC's contribution claims related to payments made. 

The court has the authority to amend plan procedures to allow these claimants to recover from the trust, even if the channeling order is terminated due to New NGC's refusal to fund it. Claimants may recover 4.1 to 6.5 percent of their claims' tort value in exchange for releasing the trust and ACMC, while also retaining the right to pursue state law remedies against New NGC. The court modifies the plan to ensure claimants can seek their proportionate share of trust assets, addressing potential jurisdictional limitations and the Fifth Circuit's liability ruling. 

Should New NGC decide to fund the alternate facility, the trust would then have sufficient assets to provide settlements comparable to the tort system, allowing the channeling order to remain effective. Claimants would be expected to utilize trust remedies, ensuring that the process is viable and that New NGC is shielded from asbestos-related litigation while trust beneficiaries receive fair compensation for their injuries.

Counsel expressed hope that the court's decision would prompt New NGC to contribute to the trust. Significant discussions aimed at a binding resolution under 11 U.S.C. 524(g) have been ongoing, and the court appreciates these efforts. The exhibit "New NGC's Exercise of Funding Option" indicates New NGC's intent to engage in negotiations. The court will determine the contribution amount necessary for New NGC to maintain the channeling order and acknowledges that New NGC must evaluate whether the litigation protection justifies the cost. 

In settlement analyses, courts consider the litigation risks, referencing cases that outline bankruptcy court criteria for settlement approval. The plan does not obligate New NGC to fund the trust, nor does it impose liability for non-discharged claims, although successor liability may arise depending on state determinations. Without the channeling order, successor liability could lead to varied litigation outcomes across states. Additionally, if a state imposes such liability, it may disregard limitations on punitive damages set by the plan, as questioned by the Fifth Circuit regarding the court's jurisdiction.

Termination of the channeling order would also end the statute of limitations tolling for unknown asbestos claimants, which New NGC suggests may not be favorable for those claimants. The Legal Representative for unknown claimants has the duty to advocate for their interests. If an appellate court finds error in the court's stance that an unfunded trust cannot resolve claims leading to channeling order termination, the court will apply a specific standard to determine when claimants have exhausted their remedies. The court rejects New NGC's proposed standard as overly burdensome and contrary to its confirmation ruling that unknown and future claimants cannot be permanently barred from pursuing claims against New NGC. Once operational, the facility will extend settlement offers within 90 days of receiving claims information.

Claimants are permitted to file motions to terminate the channeling order 90 days after submitting claim information to the trust. The court expects that by the hearing date, settlement offers would have been made and negotiations initiated. If a claim remains unsettled or the claimant chooses not to proceed, the court will consider the trust remedy exhausted. An agreement was reached at the start of hearings involving the Alternate Facility ACMC, the trust, the Legal Representative, and New NGC, with additional parties later joining and agreeing to modifications. Disputes were identified and submitted to the court for resolution, with some issues deferred. Exhibit B, part of the findings and conclusions, outlines agreed provisions and remaining disputes, serving as the functional equivalent of bankruptcy claims processes for asbestos disease claims. The trust must publish public notices in relevant publications and provide claim filing information to anyone known to have a claim. The resolution procedures slightly differ from the plan but refine definitions and criteria, maintaining consistency. The facility adopts the term "allowed liquidated value" (ALV) and aligns payment percentages with tort system values. Payment percentage reviews are mandated at least every two years. The supervising court, not the bankruptcy court, oversees the trust, and the facility enhances claims processing for expedited and individual reviews, focusing on exposure to National Gypsum asbestos products.

The facility's provisions in Exhibit B establish exposure and medical criteria that align with the plan procedures. The confirmation bench ruling and order explicitly support these medical criteria, leading to the inclusion of a medical proof section in Exhibit B. The procedure states that claims not filed within 12 months of mailing will be disallowed unless justified by the claimant. Despite some claimants arguing for the ability to defer claim submissions, the trust requires timely claims management due to the large number of pending and projected claimants. Consequently, the court finds no need to modify the plan.

Regarding punitive damages and interest, the BI TAC argues that asbestos disease claims should include these elements where permitted by state law. However, the plan explicitly states that the alternate facility will not allow punitive damages, a decision unchallenged by the known and future claimants at confirmation. The elimination of punitive damages aims to protect trust assets and ensure equitable treatment of claimants. The court acknowledges jurisdictional concerns raised by the Fifth Circuit but clarifies that its focus is on the alternate facility's handling of asbestos claims, deferring to state courts on punitive damages for claimants outside the channeling order. Additionally, the plan procedures stipulate that the trust will not pay pre- or post-judgment interest, maintaining a balance between individual claimant rights and the interests of the broader claimant group to preserve trust assets.

No relief has been sought regarding the procedures in place, and these procedures will guide ACMC and the trust in evaluating claims without considering punitive damages or paying interest on claims, contingent upon the channeling order's validity. If the channeling order is terminated, state courts will address punitive damages and interest issues. The trust proposes that claimants should have the option to elect whether to file a claim for facilities lacking funding from New NGC, allowing them to opt out if they do not intend to accept low settlement offers (4.1 to 6.5 percent of established values). The Legal Representative and BI TAC support this proposal, though some claimants suggest the election should occur after a settlement offer. New NGC opposes this, insisting that claimants exhaust the alternate facility's process before seeking relief from the channeling order.

The court has determined that an unfunded trust cannot resolve claims, leading to the exhaustion of trust remedies, which would terminate the channeling order. If an appellate court disagrees, claimants must submit to the process, with exhaustion defined as not settling within 90 days of claim submission. These rulings render the trust's proposal unnecessary, and thus, the court rejects it.

Regarding settlement offers, fixed discounted payment schedules for ERC claims must be developed, with the trust determining the ALV for IRC claims. The court mandates that these settlement levels be established without postponement, and funding levels cannot be determined until settlement levels are set. The court will not accept differing base settlement averages for ERC and IRC claims; both must reflect tort system values with appropriate discounts. Additional hearings to determine these values are unnecessary due to the extensive evidentiary record already established. Consequently, ERC settlement amounts, ALV, and average values will align with the court's findings.

The court has adopted ACMC's share of group settlements negotiated for the period from January 1, 1998, to August 28, 2000, as reflective of the tort system during the facility's early implementation. Exhibit A lists the adopted settlement values: $1,781 for non-malignant I, $900 for non-malignant II, and $450 for non-malignant III. The breakdown for non-malignant diseases was extrapolated by Hilton, with Dr. Paul E. Epstein testifying on necessary medical testing costs for non-malignant II and III, ranging from $155 to $455 annually. Costs for various tests were detailed, and Chambers acknowledged the incurred expenses for these categories. 

New NGC argued against payments for non-malignant II and III, but Epstein indicated that patients would need prescribed medical tests, which are often recoverable in other jurisdictions' tort systems. Thus, the court mandated the trust to pay similarly situated claimants equitably. The court established fixed payment schedules for ERC claims based on the findings, while IRC claims will use ALV values, which will be negotiated subsequently. The court emphasized that the trust must consider historical payments made by National Gypsum in the tort system when determining these values. Unfunded facilities are expected to pay between 4.1% to 6.5%, and thus, certain discount factors would not apply.

Mesothelioma claims are exempt from a five percent discount applied to the Average Loss Value (ALV) for settlements reached earlier than the average resolution time in the tort system. Specifically, a five percent discount applies for settlements made six months to one year sooner than the average, an additional five percent for one to two years sooner, and another five percent for settlements made two or more years earlier. The average settlement time is documented in hearing exhibit 9, which the court has adopted as the standard. The facility aims to resolve claims within 90 days, and the ALV will be offered in less time than the average tort system settlement, necessitating a discount due to the time value of money.

The court accepts a fiduciary standard for a five percent annual discount, but limits the time value discount to two or more years to address jurisdictional anomalies reflected in exhibit 9. For mesothelioma claims, a present value discount is deemed inappropriate due to the swift and prioritized handling by various states.

The court references the Fifth Circuit ruling, indicating that settlements consider litigation risks. Between January 1998 and June 2000, the Center negotiated group settlements under the law of the case concerning unpaid asbestos disease claims. However, a change in the law on July 18, 2000, introduced litigation risks regarding successor liability across states, leading to a 25 percent ALV discount to reflect these risks. This discount accounts for the possibility of no recovery in certain jurisdictions, while potential punitive damages and interest reduce the need for a larger discount.

For claimants in a funded facility, the Expected Recovery Calculation (ERC) will be based on a fixed schedule, excluding micro factors. Claimants seeking to negotiate micro factors or pursue mediation, arbitration, or trial must choose the Individual Recovery Claim (IRC) process. New NGC argues that claimants accepting settlements should release New NGC regardless of funding the facility, supported by prior findings.

For an unfunded facility, the trust can settle claims in exchange for releases from both the trust and ACMC. Claimants may choose to release New NGC or settle with the trust without releasing New NGC. New NGC argues that if the channeling order is lifted to allow asbestos claims against it, this should apply to all parties involved. The plan stipulates that the channeling order applies universally, and New NGC has previously sought a motion to terminate this order for all parties, which the court partially granted. The court ruled that the channeling order should not hinder New NGC's defense against successor liability but clarified that New NGC does not need to initiate litigation against ACMC or the trust for contribution or indemnification claims, as these will be addressed through the facility. If the channeling order is lifted, it will be modified to allow New NGC to fully defend itself, but it cannot initiate litigation against ACMC or the trust concerning asbestos claims.

Regarding the statute of limitations, pending asbestos disease claims when ACMC ends its Center membership will be stayed until claimants reject an arbitration award, with other claimants allowed to file suits following such rejections. The exhibit sets forth a tolling formula for the statute of limitations, which must be adjusted to comply with the confirmation order. This order tolls the statute of limitations for unresolved Unknown Asbestos Disease Claims until the channeling order ends. The confirmation order also temporarily halts litigation against New NGC, necessitating that the statute of limitations against it be tolled until the channeling order is lifted.

Concerning payment of judgments, the facility's provisions differ from the plan procedures, with the BI TAC opposing these variations. The BI TAC insists that payment of judgments should align with the tort system and argues that the facility’s proposed payment schedule, which limits payments to three times the scheduled values, unfairly restricts payments compared to the plan. Other claimants argue that the court should intervene to ensure equitable treatment of all claimants when the trust disburses payments on judgments to protect trust assets.

The trust's plan procedures allow for payments on judgments exceeding the full liquidation value based on a percentage aimed at ensuring equitable treatment of similarly situated claimants while protecting the interests of other claimants. There is a five-year waiting period for such payments, with the possibility of payments being extended if they would negatively impact other claimants. The court upholds the existing plan procedures and mandates modifications to Exhibit B to align with these procedures.

Regarding contribution and indemnification claims from New NGC, any inconsistencies with this memorandum opinion will be governed by the opinion itself. Exhibit B stipulates that claimants must demonstrate exposure to asbestos or asbestos-containing products from NGC. New NGC argues for a requirement of occupational exposure only, but the exhibit allows for exposure during job responsibilities, avocational activities, or secondary exposure for household members. For diseases other than mesothelioma, claimants must show regular exposure over time in proximity to their work or equivalent exposure. The court finds that the requirement does not need to be limited to occupational exposure, and evidence of exposure from non-occupational contexts is acceptable. The need to demonstrate exposure remains a critical requirement, and the inclusion of avocational exposure in the exhibit is deemed appropriate. Chambers' testimony supports that most exposure to NGC’s products is occupational, but acknowledges non-occupational exposure scenarios, reinforcing the need for claimants to establish their exposure regardless of the context.

Chambers testified that adding an "avocational" description for exposure criteria would create vagueness and confusion, as other facilities did not use this terminology, complicating application for trustees. She recommended a broader approach to defining occupational exposure. The BI TAC asserted that individuals should not be excluded based on exposure unrelated to their primary occupation, with the "avocational" provision ensuring inclusion of those exposed in secondary roles. The court concluded that Exhibit B correctly describes the exposure requirement. 

New NGC argued that claimants must show "heavy" occupational exposure to asbestos, while the BI TAC contended that mere exposure suffices. The exposure requirement under section 9.B.2 offers an alternative qualification for lung cancer compensation, focusing on asbestos exposure in visible dust areas. The term "occupational" exposure was deemed redundant, as was the request for "heavy" exposure. A minimum of 15 years of exposure in relevant environments is needed.

Regarding medical proof, the BI TAC proposed that reports come from a "Qualified Physician," defined in Exhibit B, and Epstein acknowledged the importance of physician reports in diagnostics. New NGC and the trust insisted that internists and osteopaths must have appropriate subspecialties to ensure reliability in medical certifications. The court accepted alternative standards based on funding, requiring assurance of medical proof aligned with exhibit B for funded facilities. Claimants' expenses for diagnoses would be covered by settlement amounts. Counsel noted that rural claimants could rely on general practitioners, with the expectation that specialists would be consulted if necessary. The audit process was suggested as an adequate safeguard, allowing the trust to obtain reports from physicians with relevant subspecialty experience without invoking the audit.

New NGC's failure to fund the facility allows claimants to submit medical proof from certain specialists without requiring a subspecialty. The BI TAC argues against requiring a bilateral diagnosis for claims, noting that the tort system compensates unilateral diagnoses. Epstein emphasized the bilateral nature of breathing but did not assert that bilateral diagnoses are necessary for non-malignant conditions, leading the court to reject this requirement. Regarding pleural conditions, the BI TAC suggests using "pleural condition" instead of "pleural disease," and Epstein indicated that semantic distinctions should not restrict categorization. The BI TAC proposes merging non-malignant II and III categories, supported by a consensus among the trust, ACMC, Legal Representatives, and New NGC, despite a lack of scientific backing for separate categorization. The court affirms the categorization structure for settlements, addressing concerns about medical expenses for different conditions while agreeing to streamline recovery provisions for unfunded facilities. On confidentiality, the court supports New NGC's access to claims information but emphasizes that the facility should maintain confidentiality to foster settlement discussions, likening it to a court settlement conference. The court overrules New NGC's objections regarding confidentiality but mandates that New NGC retains access to information for claims it funds. Finally, New NGC's request for information on other asbestos products a claimant was exposed to is acknowledged, with the Center considering such exposures in claim settlements.

Chambers indicated that facilities utilize a wide array of information for effective negotiation with claimants, prompting the court to include specific provisions related to chest x-ray definitions. Claimant counsel challenged the definition, proposing that one view, taken at any time, and graded one or two, would suffice as trial evidence. The court agreed for unfunded facilities but maintained stricter standards for funded facilities, emphasizing the necessity of obtaining four views within one year to assure the trust and New NGC regarding settlement claims. For unfunded facilities, the court allows settlements based on one view of grade quality one or two, with revisions to exhibit B to reflect these conclusions.

The financial obligations of New NGC are also addressed, estimating a need for $900 million to $1 billion to fully fund the trust through 2039, contingent on after-tax returns of 3.75% to 5.85% annually. The court does not anticipate such a significant capital outlay now, citing the challenges in predicting claims and settlement amounts, as well as the potential for New NGC to achieve better investment returns than the trust. 

Moreover, the court rejected the idea of allowing New NGC to fund claims on a case-by-case basis, citing that such a process would be unfair and burdensome, causing delays and undermining the efficiency of the settlement process. Ultimately, if New NGC opts not to fund settlements, it would jeopardize the channeling order, negatively impacting all parties involved.

The court has determined that New NGC will fund a trust in two-year increments rather than fully funding it for 40 years or on a claim-by-claim basis. This approach balances competing interests by allowing for predictable claims and asset management. Short-term funding enables New NGC to retain control over its investments while ensuring claimants receive timely resolutions that reflect the tort system. The trust’s establishment justifies its expenses and ensures adequate asset levels for future distributions, with expected payouts between 4.1% and 6.5% for claimants.

Hilton indicated it may take up to one year for the facility to become fully operational and suggested exploring alternative administrative service providers. Once operational, the facility would start distributing claims forms, with initial payments potentially starting by the end of 2002. The court considers a conservative estimate for the facility’s start-up time, expecting a six-month claims processing period initially, which could shorten to 90 days.

By December 31, 2002, the court anticipates settlement offers for claims from 2000 and 2001, and at least half of the claims for 2002, using Peterson projections for claims and applying the ALV for the IRC claims process while accounting for time value and litigation risks. The total funding requirement for New NGC to maintain the channeling order through December 31, 2002, is established at $144,581,078, supported by detailed calculations for various cancer claims and non-malignant conditions.

The document outlines funding requirements and procedures related to a trust established for asbestos disease claims, specifically addressing the role of New NGC in providing financial support. A total of $144,581,078 is required from New NGC to ensure that the trust can settle claims in amounts reflective of the tort system while preserving assets for future claims. If New NGC deposits this amount by December 31, 2000, the channeling order will remain in effect, and the trust and ACMC will operate the alternate facility as a funded entity starting January 1, 2001. The court will review performance and determine future funding needs every two years.

Should New NGC fail to fund by the deadline, the channeling order will be terminated, and the facility will operate unfunded, leading to a significantly reduced payment capacity for claimants, estimated at only 4.1 to 6.5 percent of full settlement values. The court emphasizes the importance of maintaining sufficient trust assets to ensure that remaining beneficiaries are not worse off than they would be with an unfunded facility. The document notes that ongoing resolution of disputes and improved claim processing will benefit all parties involved. 

In conclusion, the motion to cancel hearings on the alternate facility is denied, and the motion to terminate the channeling order is noted for future consideration. The court expresses concern over the trust's ability to adequately resolve claims under potential unfunding scenarios.

The court rules that all unknown and future claimants will be considered to have exhausted their remedies under the trust without actively seeking payment. A motion will be granted if New NGC fails to transfer $144,581,078 to the trust by December 31, 2000. If the funding is completed by that date, the court will keep the Legal Representative's motion on the docket. Funding needs will be evaluated every two years in September, with New NGC given until the end of that year to provide necessary funds; failure to do so will result in the motion being granted on January 1 of the following year for unpaid asbestos disease beneficiaries.

The court adopts the alternative facility described in Exhibit B, which will incorporate settlement amounts and be modified according to the court's findings. If funding is not received by the deadline, the trust will revise the claims process and schedule a hearing on these changes by March 1, 2001. The modified facility aims to fulfill the asbestos disease claims provisions as effectively as possible under the circumstances, regardless of funding status. Counsel for the trust is tasked with submitting proposed orders to implement the court's decisions.

Additionally, data is provided on claims settled since January 1, 1998, detailing averages and totals for various types of asbestos-related claims, summing up to significant amounts across different claimant categories. The alternative claims facility must ensure equitable treatment of asbestos disease claimants per bankruptcy law, allowing for equivalent percentages of claims to be processed under expedited and individualized review procedures.

ADC claimants can select from methods for processing their claims as determined by the Trustees, specifically either an expedited review payment or an individual review and payment. All claims must demonstrate evidence of a diagnosis related to asbestos exposure from NGC products to support a legal cause of action. Liquidation values will adhere to established procedures, and claimants maintain their right to a jury trial for determining value. The Asbestos Disease Claims Resolution Procedures (ADCRP) aim to ensure fair compensation for valid claims, aligning with tort principles and available Trust resources. Claims will be treated similarly based on circumstances, with payments made as funds become available, while ensuring future claims can also be honored. The Trust may implement different payment forms and timing to maintain equitable treatment, subject to the inherent uncertainties of predicting future claims. Settlements are prioritized to minimize costs and conserve resources for all valid claims. Within one year of approval of these procedures, the Trust will distribute claim filing information to relevant individuals or attorneys. Claim forms will be developed by the Trustees in accordance with these procedures.

Trustees may accept claims submitted to other claims resolution organizations or obtain claims information from electronic databases, provided it allows for evaluation under required medical criteria. Claimants must return completed claim forms within twelve months of receiving them, or their claims will be disallowed unless they can justify their delay. 

For asbestos disease claims, the Trustees must assess total assets and liabilities to determine a Payment Percentage, ensuring equitable treatment of all claimants. This percentage must be based on estimates of claims, known collectible assets, expected administrative costs, and other relevant factors, and will be reviewed at least every two years. 

The Trustees are responsible for auditing and verifying claims to ensure payments are made only for valid claims. They have discretion to balance the costs of investigating claims against the need to ensure valid claims are processed efficiently and may contest claims as necessary. Procedures may be amended with court approval to reflect advances in scientific or medical knowledge.

Punitive damages are excluded from consideration in determining the value of claims, and ACMC and/or the Trust will not pay any form of interest (pre-judgment, post-judgment, or on deferred payments) on Asbestos Disease Claims (ADCs). BI TAC disagrees and supports allowing punitive damages and interest as state law permits. Claimants can choose to file an ADC with the NGC Settlement Trust Alternate Claims Facility (ACF) or irrevocably reject the resolution of their claim, which requires them to acknowledge understanding the potential payment and delays associated with the tort system. Rejections must be submitted using a designated form, and doing so fulfills the requirement to exhaust claims under the Channeling Order, preventing further remedies through the Trust. 

There are two filing methods for ADCs: Expedited Review Claims (ERC) and Individualized Review Claims (IRC). ERC is aimed at claimants with straightforward asbestos personal injury claims, allowing for quicker resolutions at a discounted rate based on historical settlement averages. This process results in fixed payments and a less burdensome application. IRC provides a more detailed evaluation for complex claims, resulting in potentially higher allowances than ERC but requiring more time for processing. Claims will be processed in the order received, with ERC claims prioritized over IRC claims submitted simultaneously, reflecting the expedited nature of the ERC process.

Valid claims under the IRC will be evaluated for settlement values aligned with ACMC's historical averages, considering factors such as medical criteria, claimant age, jurisdictional impacts, and other relevant elements. Above-average settlement values (ALVs) will be granted only to claimants providing credible evidence of severe injuries and damages, significant exposure to ACMC products, and a definitive causal link between their injuries and asbestos exposure without confounding factors. Trustees may consider additional criteria like wage and jurisdictional history when determining the applicable Payment Percentage for ALVs, which will be based on expert assessments of ACMC's present and future claims, claim processing costs, and Trust asset values, including commitments from New NGC. Due to inherent uncertainties in long-term asset and liability forecasts, Trustees will update these estimates at least every two years, assessing the percentage of ALV payable to AD Claimants with approved claims. Projected liabilities will encompass ultimate claims liability and Trust expenses, with Trustees having the authority to decide on payment timing and schedules. Payments to AD Claimants are anticipated to occur as single payments. Exigent claims will receive priority, particularly for living claimants with mesothelioma, while extraordinary claims must meet specific negotiated criteria, including age, dependents, economic factors, and evidence of asbestos exposure primarily from ACMC products. The Trust will consider all relevant factors when making settlement offers for extraordinary claims. Valid ERC claims will follow two fixed payment schedules based on the claimant's exposure context, with payments initiated promptly after claim review and release execution. Current fixed payment schedules for various conditions are yet to be determined.

The Trust will liquidate individualized review claims by determining their Allowed Liquidation Value (ALV), which reflects historical compensatory damages paid by ACMC for similar asbestos-related injuries. Holders of valid IRC claims will receive payments calculated by multiplying the ALV by the current Payment Percentage. The ALV will be derived from a statistical analysis of previously settled claims, focusing on characteristics that correlate with settlement values. While no published claim matrix will be used, factors considered will include confirmed injury, age, dependents, asbestos exposure details, economic losses, and medical evidence.

Claimants not meeting the Medical Criteria will not receive settlement offers but can request arbitration for claims they believe are compensable under tort law. Arbitration outcomes will establish ALV based on proof of compensable injury, capped at the Scheduled Value for the disease category. If a claimant opts for non-binding arbitration and rejects the award, they may pursue a jury trial for any resulting verdict.

The Trust will accept new claims from those previously disallowed due to not meeting Medical Criteria, provided the claims were not time-barred as of ACMC's withdrawal date (June 16, 2000). However, claims that were time-barred at that time may be rejected. Finally, claimants accepting offers for malignant disease claims must sign a full release of ACMC and the Trust in accordance with state law.

Claimants accepting an ERC or IRC offer for non-malignant asbestos disease claims must sign a limited release for ACMC and the Trust. They retain the right to file new claims for subsequently diagnosed asbestos-related malignancies. Claimants receiving IRC payments for Non-Malignant II or III claims may also file for Non-Malignant I claims, with any new payments adjusted for prior ERC or IRC amounts received. There is a disagreement regarding whether NGC should be released in all cases or only if it funds the facility. If a claimant opts not to file with the ACF, no release will occur.

Decisions from the ACF denying ERC payments cannot be appealed against the Trust or ACMC, but claimants can file IRC claims. If an IRC claim is rejected, mediation or arbitration options are available, with arbitrators determining awards within disease category limits. Acceptance of an arbitration award establishes the liquidated value of the claim, leading to payment similar to that of accepted Trust valuations. Lawsuits against ACMC or the Trust are stayed pending arbitration award rejection, with NGC asserting that the stay should also lift if the channeling order does.

Claimants may only sue after rejecting arbitration awards, and the statute of limitations is tolled under specific conditions related to Trust claim forms and arbitration award rejections. The right to a jury trial is preserved, with ACMC as the defendant. Venue remains unaffected by bankruptcy, and applicable law will be that of the state where the lawsuit is filed or, if none exists, the law of the state with jurisdiction. All claims and defenses under the applicable law are available at trial, and ACMC can waive defenses regarding NGC's liability for asbestos-related diseases from its products.

ACMC may acknowledge product defects and their role in causing asbestos-related injuries, which would prevent claimants from introducing further evidence on that issue. Awards from arbitrators or mediators, along with the parties' positions during alternative dispute resolution, are inadmissible in trial and are not deemed admissions. The Trustees may seek a U.S. District Court order to manage claims, including liquidating judgments and scheduling trials to avoid undue burdens on ACMC or the Trust.

If a claimant rejects the Trust's settlement offer and subsequently secures a judgment for damages, the liquidated claim will equal the judgment amount. However, payments on judgments against ACMC or the Trust will be delayed for five years, followed by payments in five equal installments over the next five years, capped at three times the Scheduled Value adjusted by the Applicable Payment Percentage for the relevant disease category. Claimants may enforce judgments per state law against other liable parties.

Contribution Claims against the Trust will only be processed if the claimant (Contribution Claimant) proves they have fully paid the Trust's obligations to the direct claimant, that both parties have released the Trust from liability, and that no more than 60 days have passed since the last payment. Contribution Claimants will not have superior rights over direct claimants regarding payment timing, amount, or method. The Trust will only pay Contribution Claimants once their liability to the direct claimant is fixed and settled, accompanied by a satisfactory release for the Trust. Trustees may establish a distinct proof of claim for asbestos-related personal injury Contribution Claims.

Contribution Claims that have not been previously disallowed or resolved will be processed according to procedures established by the Trustees. These procedures will determine the validity of claims following Section 502(e) of the Bankruptcy Code and will offer claimants the option of binding arbitration, a Trustee conference, or the tort system for resolving disputes related to disease categorization or treatment of claims. The processing and payment for these claims will be comparable to what the Trust would provide for valid underlying claims.

To initiate a claim, qualified claimants must complete and submit either an Expedited Review Claim Form (ERC Form) or an Individualized Review Claim Form (IRC Form), along with all required supporting documentation. Incomplete forms or missing information will lead to disallowance of the claim. Claimants are not required to retain attorneys for this process.

Claimants must demonstrate exposure to asbestos or asbestos-containing products from the National Gypsum Company, which could occur during work or avocational activities, or through secondary exposure for spouses or household members. For non-mesothelioma disease categories, evidence must show regular exposure over an extended period. Claimants should specify their occupation, job duties, industry, employer(s), exposure circumstances, and duration of exposure to NGC products.

To establish medical validity, claimants must provide a medical report from a Qualified Physician diagnosing an asbestos-related injury, along with additional proof based on the alleged injury. Importantly, at least 10 years must have elapsed between the first exposure to asbestos and the diagnosis of the injury. The Trust may request further documentation from claimants as needed.

Claims for asbestos-related diseases require meeting specific medical criteria based on the type of disease alleged. 

For **Mesothelioma**, the claimant must have a diagnosis by a Qualified Physician, supported by pathological findings from a board-certified pathologist, showing a malignant tumor linked to asbestos exposure in mesothelial cells. Alternatively, a reasonable clinical diagnosis can suffice if adequate tissue is unavailable.

For **Lung Cancer**, a diagnosis must be made by a Qualified Physician of a primary bronchogenic tumor attributed to asbestos exposure. Claimants must demonstrate primary asbestos-related lung cancer and provide evidence meeting one of the following criteria: medical reports indicating significant lung-related illnesses (such as bilateral interstitial lung disease or pleural disease of a certain severity) or proof of at least 15 years of significant occupational exposure to asbestos.

For **Other Cancers** (colon, larynx, esophagus, pharynx, stomach, or rectum), a diagnosis by a Qualified Physician must confirm a malignant tumor linked to asbestos, along with a clinical/pathological report meeting Non-Malignant I or II criteria.

**Non-Malignant I** claims require a diagnosis of bilateral Non-Malignant I disease. Asbestosis I involves meeting specific diagnostic criteria, including medical assessments that document lung capacity issues or the presence of asbestos-related lung tissue damage. Asbestosis I-B requires additional objective criteria regarding lung opacities and functional testing.

**Diffuse Pleural Thickening I** necessitates a certified report indicating specific x-ray findings alongside pulmonary function test results.

**Non-Malignant II** claims also require a diagnosis of bilateral Non-Malignant II disease, with Asbestosis II necessitating a certified report to confirm the diagnosis. 

Overall, each category has distinct medical documentation and diagnostic requirements necessary for compensation related to asbestos exposure.

Chest x-rays indicating small irregular opacities of ILO Grade 1/0 are necessary for claimants not meeting the pulmonary function testing criteria for Asbestosis I. B. Pleural Thickening II necessitates a certified B-reader report or a report from a Qualified Physician for x-rays of ILO Grade B-2 or C-1 or higher. Qualification for Non-Malignant III claims requires a diagnosis of Non-Malignant III qualifying condition by a Qualified Physician based on a certified B-reader report, which must show either: A. Fibrosis III with asbestos-caused abnormalities less than ILO Grade 1/0, or B. Pleural Changes III with documented bilateral pleural disease (plaques or thickening) diagnosed through imaging or pathological evidence. BI TAC proposes combining Non-Malignant II and III into one category, while the ACF may accept disease determinations from other asbestos claims resolution organizations.

The Trust will perform audits to verify claim information, ensuring compliance with recognized medical standards for reliability. Audits may require additional information like x-ray films or pulmonary function tests, and can lead to penalties for claimants or attorneys if invalid information is found, which could include disallowing claims or seeking sanctions. The Trust may refuse medical evidence from certain doctors or facilities post-audit and will consult with BI TAC and Legal Representatives on audit procedures.

Confidentiality is mandated for claims submissions, treating them as settlement discussions, thus not admissible in unrelated court proceedings. Claimants must submit a Claim Form and supporting documents, with ERC filing requirements being a subset of IRC filing requirements.

Injured parties must provide detailed personal information, including full name, Social Security number, gender, date of birth, and current living status. If deceased, the date of death and whether it was asbestos-related must be indicated. For living injured parties without legal representation, their mailing address and daytime phone number are required. If represented by counsel, detailed attorney information, including name, law firm, and contact details, is necessary.

Claimants must document diagnosed asbestos-related injuries, including the diagnosis date and relevant medical reports from a qualified physician. Information about dependents and beneficiaries, including their names, dates of birth, and financial dependency status, must also be provided.

Claimants claiming exposure to National Gypsum Company (NGC) products must specify the dates and nature of exposure, job duties, and specific NGC products involved. If exposure occurred through an occupationally exposed person, additional details regarding that individual and the exposure must be included.

Tobacco history must be documented, detailing the types of products used and corresponding dates. If there has been previous litigation regarding asbestos claims, claimants need to provide the original court details, defendants involved, settlement amounts, and the current status of the case.

Information on any workers' compensation or disability claims related to asbestos must include the granting organization, start date of benefits, and monthly stipend. Current employment details, including employment status, last annual wage, and date of last wage received, are also required.

Supporting documentation must accompany the claim, such as a death certificate (if applicable), medical records, proof of NGC product exposure, and tax documents for lost wage claims. Definitions and additional requirements for documentation may apply.

Average Value refers to the values established by Trustees based on historical averages in the tort system, updated to reflect Trust experience. "Basilar Crackles," or "rales," are defined by the American Thoracic Society, with specific observation criteria. A "Board-certified Pathologist" is a physician licensed in the District of Columbia or U.S. territories, certified in anatomic pathology, and primarily engaged in pathology practice. A "Certified B-reader" is someone who has completed the NIOSH-sponsored x-ray interpretation course and maintains current certification. "Chest X-rays" are defined as radiographs taken in four views within one year of a claim, with quality 1 grading required, though quality 2 may be accepted under certain conditions. "ILO Grade" refers to radiological ratings for lung changes from chest x-rays, as established by the International Labour Office. The "Latency Period" is the time from the first significant asbestos exposure to diagnosis or death. "Predicted Values" for pulmonary function tests are based on established publications, requiring tests with and without bronchodilators, and must consider race and other factors. "Primary" designates the original site of cancer; for asbestos-related claims, it must originate in the lung to be compensable. "Pulmonary Function Testing" includes spirometry, lung volume, and diffusing capacity assessments.

Testing must be conducted either at an accredited hospital or must meet the quality criteria set by the American Thoracic Society (ATS), using equipment that adheres to ATS standards as outlined in 20 C.F.R. 718.103 and its Appendix B, as well as the ATS guidelines from the 1991 American Review of Respiratory Disease. Backup data related to Pulmonary Function Testing for an exposed individual may be reviewed to verify compliance with these standards.

A "Qualified Physician" is defined as a physician certified in relevant specialties by the appropriate medical specialty board for diagnosing asbestos-related diseases, which includes the following specialties: 
- Internist (American Board of Internal Medicine) for cancer or non-malignant conditions (NGC objects to inclusion without a subspecialty),
- Oncologist (American Board of Internal Medicine with a subspecialty in medical oncology) for cancer,
- Pathologist (American Board of Pathology) for cancer or non-malignant conditions,
- Pulmonary Specialist (American Board of Internal Medicine with a subspecialty in pulmonary disease) for cancer or non-malignant conditions,
- Radiologist (American Board of Radiology) for cancer or non-malignant conditions.

Osteopaths with equivalent subspecialty certification may qualify as well, although NGC challenges their inclusion without specified subspecialties. Additionally, occupational physicians and a claimant's treating or personal physicians are also recognized as Qualified Physicians.

The NGC Settlement Trust outlines initial payment percentages and scheduled maximum values for various diseases:
- Mesothelioma: Initial payment of $1,600; Maximum payment of $3,200.
- Lung Cancer: Initial payment of $280; Maximum payment of $560.
- Other Cancer: Initial payment of $120; Maximum payment of $240.
- Non-Malignant Disease: Initial payment of $48; Maximum payment of $96.

A Rejection Form is provided for claimants to formally decline the Alternate Claims Facility (ACF) procedures. Claimants must provide personal and counsel information, acknowledge understanding of the ACF procedures and potential payments, and affirm the decision to reject any available payments from the ACF. They must indicate whether they are represented by counsel and confirm that they have discussed their options with their attorney or understand their choices independently.

A claimant has elected to reject any available payment from the Asbestos Compensation Fund (ACF) and irrevocably chooses not to file a claim with the ACF of the Trust. If an attorney holds power of attorney for the claimant, they may sign on their behalf. The document requires a certification by a Notary Public or the attorney of record, if applicable.

The court appointed Daniel M. Phillips as the Legal Representative, who passed away on August 22, 2000. Subsequently, Sander L. Esserman was appointed as the interim successor. A memorandum opinion on September 29, 2000, indicates that New-NGC would face unexpected litigation following the termination of the channeling order, which had implications for several claimants. The court emphasized that creditors of National Gypsum Company (NGC) had entered into a plan that created New NGC, valued at $350 million for asbestos litigation protections. 

While evidence suggested that estimated claims might be higher, other information indicated potential overestimation. The court acknowledged the challenge of predicting future claims, noting that approximately 25 million Americans had been exposed to asbestos, with 12 million still alive. The court expressed concern over Congress's inaction regarding asbestos exposure, highlighting that the likelihood of significant future litigation against New NGC was deemed minimal and would not affect its valuation. It also noted that after the effective date, New NGC's value reportedly increased substantially.

The court made several key observations regarding the argument presented. Firstly, the value analysis was limited to the context of 11 U.S.C. 1129. It noted that the market for New NGC's stock was aware that New NGC would not have permanent injunction protection, leading to independent risk assessments related to asbestos exposure, societal impacts, and litigation opportunities, which would not solely rely on the court's confirmation findings. Secondly, the court found that the trust assets were adequate to address the claims projected, although the actual claims have significantly exceeded the previously resolved 235,000. Thirdly, the court indicated that had the Georgine settlement been approved by the Supreme Court, the current hearings would not be necessary, emphasizing that the approval was beyond this court's jurisdiction. Fourthly, despite the legal representative's assertion that the channeling order had fulfilled its purpose, circumstances had evolved, and the plan allowed for amendments to trust remedy procedures. The responsibility for incorporating this authority into investment decisions lies with the market, not the court. Additionally, a prior district court order indicated New NGC's likelihood of success in appealing the termination of the channeling order, with New NGC being aware of the trust's financial status and projected liabilities, including $2.1 billion in asbestos claims. The requirement for contribution supports the court's view that claimants have exhausted trust remedies, as the plan's contribution provision must remain intact. Finally, the court considered New NGC's funding plan as indicative of its intention to pursue short-term funding rather than a long-term strategy.