(Recasts, adds reaction, more details)
By Susan Cornwell
WASHINGTON, May 22 (Reuters) - Declaring the United States faced an asbestos litigation crisis, a key Republican senator introduced bipartisan legislation on Thursday to set up a $108 billion fund to compensate victims of exposure and said he wanted Congress to pass it within a month.
The degree of support for the measure by Utah Republican Orrin Hatch was unclear. He has two Democratic co-sponsors -- Sen. Ben Nelson of Nebraska and Sen. Zell Miller of Georgia -- but more Democrats than that will be needed to get the measure through the closely-divided Senate.
Even before he announced it, Hatch's measure was strongly criticized as a "corporate bailout" by organized labor, whose backing is essential to getting more Democratic votes.
But Hatch, the chairman of the Senate Judiciary Committee, said that after months of being "nickeled and dimed to death" by the competing demands of business, insurers and labor in negotiations, he could wait no longer to launch legislation.
"There can be no doubt our country faces an asbestos litigation crisis," he declared on the Senate floor. Over 8,400 U.S. companies have been named as defendants -- and over 60 have gone bankrupt -- in asbestos lawsuits clogging courts, he said.
"If we don't solve this problem within the next month, I believe we will have many more companies headed towards bankruptcy ... There are going to be hundreds of thousands of union jobs lost" while money to compensate the sick ran out."
Asbestos, a heat-resistant mineral, was widely used for fireproofing and insulation until the 1970s, when scientists concluded that inhaled fibers could be linked to cancer and other diseases.
SEEKS JUNE 3 HEARING
Asbestos is still used in some products and another group of senators led by Sen. Patty Murray of Washington introduced a bill on Thursday to ban its use entirely; a companion bill in the House is sponsored by Rep. Henry Waxman of California.
Hatch said he would set a notice of hearing for the June 3, and call a vote in his committee the following week. He said he would still give others a chance to change the measure.
Earlier Thursday, AFL-CIO General Counsel Jonathan Hiatt said he did not want to participate in any more talks if Hatch's bill was introduced. But he stopped short of slamming the door on it, saying a consensus may "still be possible."
The bill was welcomed by asbestos companies represented in the Asbestos Alliance and insurers in the Alliance of American Insurers. Business and insurers would provide most of the funds. They might otherwise face twice the cost from lawsuits.
The proposal would create a $108 billion trust fund to cap company liability and compensate asbestos victims over the next 25 years via an asbestos claims court. The top payment would be $750,000 for victims of mesothelioma, a lethal form of cancer.
The AFL-CIO labor federation said the Hatch plan fails to compensate victims adequately and provides no backstop if the fund runs out of money. Hatch said he intended to find a backstop, but it could not be the federal government.
Two separate asbestos reform bills have been introduced by a Republican and a Democrat in the House of Representatives, but both focus on establishing medical criteria for filing lawsuits instead of setting up a fund to pay claims. (Additional reporting by Thomas Ferraro)