Libby Asbestos Worker Wins Historic $36.5M Award from Cascade County Jury

Court finds insurance company worked with W.R. Grace to hide health information

By Darrell Ehrlick, Daily Montanan
Downtown Libby. Beacon file photo

Ralph Hutt worked at the W.R. Grace Co. vermiculite mill in Libby for just 18 months in 1968 and 1969.

His father helped him get the job.

Originally, he was given a paper mask to fight against the hazy, dusty conditions.

The paper mask, not so unlike today’s COVID-19 masks, quickly became overloaded with dust.

When he asked his supervisor about it, Hutt was told not to worry – it was just dust.

He requested a respirator. That request was denied by Grace officials.

He didn’t know it then, but his X-rays already showed signs of asbestos damage in his lungs.

He didn’t know, but Grace did – and so did the occupational safety program run by Grace’s insurance company, Maryland Casualty Company.

Hutt is currently tethered to oxygen in a modular home in Oregon, as an increasing amount of oxygen becomes slowly less effective. Asbestosis, a lung disease caused by the asbestos fibers found in vermiculite, will slowly suffocate him until he’s no longer able to breathe.

But a Cascade County jury delivered a $36.5 million verdict on Thursday, after it determined the insurance carrier wasn’t protected by the Grace bankruptcy in Libby more than two decades ago, and that it had a separate duty to warn workers like Hutt of the dangers. The court documents told Hutt’s story.

“It is further beyond genuine material dispute that the substantial efforts made by Maryland Casualty Company to influence Grace to abate or further reduce the hazard had no effect on Grace,” said a previous Montana State Supreme Court ruling pertaining to this suit. “We hold that the scope of duty owed by MCC to Hunt and other Grace workers was to use reasonable care under the circumstances to warn them of the known risk of exposure to airborne asbestos in and about Grace workplace(s).”

The award is $6.5 million in compensatory damages for Hutt and $30 million in punitive damages to be paid by Maryland Casualty Company, now a part of Zurich.

The case is also a landmark – showing conclusively that Maryland Casualty had designed a scheme for protecting workers just enough to ensure they didn’t get sick enough while working for the company, and that it worked with Grace to avoid legal liability after workers retired. It is the first large asbestos-related lawsuit in nearly two decades.

In a Montana Supreme Court decision that was handed down before trial in which Maryland Casualty argued that it should not be held liable for Libby operations, a unanimous court (with two concurring opinions) set the framework that guided the Cascade County ruling this week.

“MCC’s goal was to avoid having to pay occupational disease claims,” wrote Justice Dirk Sandefur in the opinion. “MCC also sought to accomplish this goal by concealing the extent of the danger the workers faced from asbestos-laden dust and by preventing workers from discovering that some of them were developing asbestos-related disease.

“…The record further indicates that not only did MCC fail to warn the workers, but it took affirmative actions to conceal this information from the workers, effectively increasing the risk of additional harm to mill workers from further asbestos exposure.”

Many claims that were brought by affected Libby workers were barred either because of Grace’s bankruptcy or because most of the workers had just one year from their last day of employment to bring a worker’s compensation claim against the insurance company, according to state statute at the time. In most cases, the effects of asbestos-related illness, which includes asbestos or mesothelioma, are latent and take years to develop.

However, a nine-day trial revealed the complicated and intentional ways that Grace and Maryland Casualty worked to downplay and discourage inquiries about conditions in Libby, which were beginning to be noticed as early as 1964.

Originally, Maryland Casualty claimed that it was just Grace’s worker’s compensation insurance carrier and shouldn’t be held liable for cases like Hutt’s. However, a deep dive into the records shows that Maryland Casualty had done far more than just provide worker’s compensation. There were repeated visits by industrial hygienists, doctors and workers’ safety experts who noted high amounts of airborne asbestos.

Grace asked Maryland Casualty to design a workers’ safety program, and it obliged, saying it had devised a plan from pre-employment to retirement. Largely, that plan centered around X-rays twice a year, and moving workers who showed early signs of lung problems to other jobs. However, documents shown at trial also show that neither Grace nor Maryland Casualty told workers or their doctors the results of the tests, or the dangers that the two companies, as well as state officials, had extensively documented.

Maryland Casualty’s 37-page safety plan, which was devised after a local Libby doctor wrote the company with concerns about the abnormally high number of workers with lung problems, never included the word “asbestos” once, and supervisors routinely referred to the air as “a dust problem.” Yet routine tests of the air by Grace, the state of Montana and Maryland Casualty revealed that as much as 80 percent of the dust was asbestos.

The court record also established several cases where Grace, in consultation with Maryland Casualty, urged local officials in Libby to settle with sick workers, rather than fight a legal case: “Counsel noted that the extent and severity of asbestos-related adverse health effects on Grace workers would make it ‘necessary to expose the entire situation to the Industrial Accident Board, whose records may well be available to unions and the general public.’”

Instead, the lawyers urged a course of settlement in 1964, wanting to avoid “the necessity of exposing of all of the more damaging aspects of our situation.”

Legal Strategy

The strategy Hutt’s legal team employed was championed by Allan McGarvey, who has worked for decades with victims of the Grace Company in Libby. McGarvey is based in Kalispell. Trial attorney Clifford Edwards, of Billings, managed the courtroom aspects of the trial.

Under state law at the time, workers had to file a worker’s compensation claim within one year of their last day of employment. That law presented a challenge for almost all the affected workers because they didn’t know they extent of their lung damage, and much of it takes years to become apparent. However, the state’s statute of limitations made it impossible to seek relief.

Maryland Casualty also was protected, in part, by the bankruptcy of Grace, which meant that the company would not be liable in place of Grace in many cases.

However, McGarvey argued for several years, in a case that took him to a bankruptcy court in Delaware and to the state Supreme Court, that Maryland Casualty had a common-law duty to inform workers of risks, especially when they knew what was happening to workers and that Grace was not following all of the safety plans.

Hutt’s case was not brought as a worker’s compensation claim or a claim against Grace. Instead, it alleged successfully that Maryland Casualty had a duty as the administrator of Grace’s safety plan in Libby to warn workers of the hazards.

“Grace and MCC worked together to transfer ill employees to areas with reduced concentrations of asbestos dust in order to avoid insurance liability,” wrote Justice Ingrid Gustafson in a concurring opinion. “MCC was not merely negligent in its failure to act; rather, in strategically recognizing the latency period for asbestosis to develop, MCC engaged in affirmative actions to conceal the asbestos exposure risk and worker injuries to avoid liability, effectively increasing the risk of additional harm to mill workers from further asbestos exposure.”

Gustafson also noted that employees probably were reassured of their safety precisely because of the testing that Maryland Casualty and Grace were performing.

“It is entirely reasonable under the facts for an employee such as Hutt to deduce that the safety program and medical testing that take place as a result of his workplace environment are designed to protect him,” Gustafson wrote. “His reliance on the lack of follow-up on his testing is focused on the doctor or other medical professional conducting the tests, irrespective of whether that medical professional was employed by MCC or Grace.”

This story originally appeared in the The Daily Montanan, which can be found online at dailymontanan.com.