An old threat comes back to revisit the industry.

Absent any unforeseeable catastrophe in the near term, the evening news may very well be dominated by a long-familiar but relatively unknown affliction that is eating away at the heart of industrial health.

The news: Asbestos litigation has reached unprecedented levels, with hundreds of the nation's key industrial producers staring down the barrel of a potential $200 billion in asbestos claims.

Over the past two decades, more than 40 companies have been forced to enter-and, in a few instances, emerged from-bankruptcy due to asbestos claims. Within the past year alone, nine major corporations filed for Chapter 11 protection, including construction manufacturing giants W.R. Grace and USG Corp. Other recent industry victims include Owens-Corning, Armstrong World Ind. and GAF Corp. With nearly half of the nation's industries exposed to potential asbestos claims, dozens more corporate giants of increasing stature are poised on the brink.

What's new is old

While it may seem odd that something we've been dealing with nearly four decades can be characterized as a "new" crisis, yet both the accelerating pace and scale of asbestos litigation in recent years has taken many by surprise.

Within the past five years, the amount of asbestos litigation filed in the U.S. has nearly tripled to more than 50,000 cases filed annually. An estimated 200,000 cases, representing millions of individual claims, are currently pending in state and federal courts.

For companies entangled in the mess of litigation, the size and scope of the problem is staggering. Halliburton Inc.-the oilfield services company once headed by Vice President Dick Cheney-has already settled more than 36,000 asbestos claims against it, yet the company still must come to terms with a backlog of more 270,000 unsettled claims, including a handful of recent judgements totaling more than $130 million. Post-It manufacturer 3M-which has settled more than 200,000 asbestos claims over the years-was recently stung with a $22 million judgement in asbestos litigation linked to its respirators.

The explosion of litigation threatens not only manufacturers and handlers of asbestos-related products, but it also may affect a number of unlikely corporate giants. According to a recent list published in Barron's magazine, companies facing asbestos claims include AT&T, IBM, Pfizer, Sears, Viacom and Walt Disney.

By one estimate, the total cost of asbestos litigation will exceed $200 billion dollars, all of it coming out of corporate America's pocket, at first, then ultimately working its way down to shareholders and consumers. In hopes that we're fortunate one day to look behind to the mountain of litigation and its effect on industry, we may also look upon what was achieved at that tremendous cost.

You do the math

According to published statistics from the Center for Disease Control and Prevention, the mortality rate for asbestosis reached its peak in the early 1990s, and has steadily abated in response to regularity restrictions and asbestos safety protocols. While the number of deaths attributable to asbestosis represent only a portion of those that can be attributed to asbestos exposure, the rate of change can be used to benchmark overall asbestosis mortality and injury.

According to the National Institute for Occupational Safety and Health, the rate of asbestosis mortality is one-third less that of silicosis, a lesser-known industry-related respiratory ailment. Another better known work-related hazard, coal workers pneumoconiosis, claimed more than five times as many victims over a 25-year period than did asbestosis, according to NIOSH.

In this light, the damages sought over current asbestos claims seems somehow disproportionate to the actual damage afflicted.

The cause of this is due to the changing nature of asbestos litigation over time. From the first asbestos lawsuit filed in 1962 through the early '80s, a majority of claims were serious in nature, reflective of actual damages suffered by the plaintiffs and they often resulted in substantial judgements. Over the past two decades, however, the majority of asbestos claims have come to be built upon the barest evidence of injury.

With the emergence of mass settlements in the early 1990s, the nature of asbestos litigation moved away from just compensation and started to take on the sophistication of cattle herding. Plaintiff's attorneys focused in on financially healthy companies, who were exposed to liability directly or indirectly, then gathered together aggregate pools of complainants to press their cases. By sheer numbers alone, litigators were able force corporations to settle, oftentimes without addressing the merits of individual cases.

In many of the claims awarded, the damages paid to plaintiffs often amounted to only a few hundred dollars, hardly a fair price for any deleterious health affect. But when multiplied by the number of plaintiffs embraced by the individual claim-and let's not forget the attorneys enriched by their slice of the judgements-the cost of asbestos litigation has proven to be crippling to even the biggest of corporate giants.

Litigation reform, say many, is long overdue. But placing legally arbitrary caps on a plaintiff's potential relief runs contrary to the most basic tenets of due process. If we are to find out way out of this asbestos litigation nightmare, we somehow must figure out a way to strike a balance between these opposing views.

Common sense would seem a good start, were it not so difficult to legislate and impossible to enforce. Yet, common sense would dictate that there has to be a better measure of legal claims in mass settlements than that employed today-or at least a better distribution of claims to those with actual injury. Until we can better weed out the sweepstakes entries from valid injury suits, the better for the overall health of industry.