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UPDATE 1-Labor hits U.S. asbestos bill as company bailout

(Recasts, adds detail, reaction to labor opposition)

By Susan Cornwell

WASHINGTON, May 20 (Reuters) - Organized labor on Tuesday denounced a Republican senator's proposal for curbing asbestos lawsuits as a "corporate bailout", while Democrats debated whether to co-sponsor the measure.

AFL-CIO General Counsel Jon Hiatt charged that Utah Republican Orrin Hatch's $108 billion plan was a deep disappointment after lengthy negotiations between unions, business, insurers and lawmakers on the thousands of asbestos claims clogging U.S. courts.

"As it stands, it's a joke," Hiatt told Reuters, saying the bill short-changed the victims of asbestos, a mineral widely used for fireproofing and insulation until the 1970s, when scientists concluded its inhaled fibers were linked to cancer and other lung diseases.

Hiatt stopped short of saying the union federation would abandon efforts to find a solution: "We remain committed to continue our efforts to find such a solution, but will not be able to do so if the goal has shifted to being one of a mere corporate bailout at the expense of hundreds of thousands of poisoned workers and retirees."

Lawsuits over asbestos are blamed for bankruptcy filings by more than 60 companies seeking protection from injury claims.

Hatch, chairman of the Senate Judiciary Committee, said no one in the negotiations particularly liked his bill.

"The unions are going to have to look at this and say, what's the art of the possible here? They will be hurt more than anyone else if this doesn't get through," Hatch told Reuters.

A draft of Hatch's proposal to establish a $108 billion national trust fund to pay asbestos victims was released on Monday evening. Funding would be divided between insurers and defendant companies, and compensation decisions would be made by a U.S. Court of Asbestos Claims.

MEDICAL STANDARDS

Union officials said the draft's medical standards for determining awards were too restrictive.

They were particularly upset by the draft's discrimination between victims who smoke, and non-smokers. One union official said smokers would be excluded from being compensated for asbestosis, a sometimes fatal lung scarring.

The top award of $750,000 for mesothelioma, a lethal form of cancer, was also considered low. The official said those victims could now get multi-million dollar awards in court.

Hatch has said he plans to formally introduce the legislation on Thursday, and will have at least one Democratic co-sponsor.

Nebraska Democrat Ben Nelson said Tuesday he had "every intention" of putting his name on the bill. Delaware Democrat Tom Carper said he hoped to be able to co-sponsor it, if some changes were made, and Connecticut Democrat Chris Dodd spoke positively of the draft, calling it a "work in progress."

But Sen. Patrick Leahy of Vermont, the ranking Democrat on the Judiciary Committee, refused to tell reporters what he thought of Hatch's proposal.