Insurance coverage

When do toxic exposures trigger insurance coverage? asks the court of appeal

  • Are insurers liable if resultant illnesses are discovered long after a policy has expired?
  • Answer to question certified by West Virginia’s highest court will be of “exceptional significance” to the chemical industry

(Reuters) – A federal appeals court has asked the West Virginia Supreme Court of Appeals for guidance on whether long-expired insurance policies cover liability for toxic exposures that allegedly occurred during the period of insurance but which cause illnesses diagnosed decades later.

The US 4th Circuit Court of Appeals said on Monday that the state High Court never addressed the issue and that its response would have implications far beyond the current dispute between Westfield Insurance Co and its former policyholder, Sistersville Tank Works (STW).

“Due to West Virginia’s long history of being home to a significant chemical industry, this matter is likely to be a matter of exceptional importance to the state,” the three-judge panel said in a by order of curiam.

Lawyers for the parties did not immediately respond to requests for comment Monday evening.

The 4th Circuit’s order came three weeks after hearing arguments in the case, which began when STW was hit with three lawsuits in state court in 2016.

Plaintiffs in state court were diagnosed with various forms of cancer between 2014 and 2016. They said STW provided and maintained chemical storage tanks at their workplace between 1960 and the early 1960s. 2000, and alleged that the tanks were faulty or poorly maintained, exposing workers. to carcinogenic toxins.

Westfield had insured STW against liability for “bodily injury” between 1985 and 2010, the 4th Circuit said. The insurer agreed to defend STW against lawsuits from cancer victims, but reserved the right to challenge coverage in a separate lawsuit, which it filed in U.S. District Court in Wheeling in 2018.

Among other things, Westfield argued that latent disease coverage is only triggered by the manifestation of the disease, which occurred after its policies expired.

STW instead argued for a “continuous trigger” theory. First developed for asbestos-related injury cases, this theory considers injury to occur throughout the exposure period.

U.S. District Judge John Preston Bailey ruled for STW to predict that the state high court would adopt the continuous triggering theory.

And it is possible, said the 4th Circuit. But, it could also adopt the manifestation trigger, or an “initial exposure” trigger, or an “injury-injury” trigger. Courts in the 4th Circuit, and indeed nationwide, have used all four theories, the panel said.

Therefore, “we certify the following question of law to the West Virginia Supreme Court of Appeals,” the 4th Circuit said. “When does a bodily injury occur to trigger insurance coverage for claims resulting from exposure to chemicals or other analogous damage that contributed to the development of latent disease?”

The case is Westfield Insurance Company v. Sistersville Tank Works Inc.; Robert N. Edwards; E. Jane Price, individually and as executor of the estate of Robert G. Price, deceased; Douglas L. Steele; Carol Steele, 4th US Circuit Court of Appeals No. 20-2052.

For Westfield Insurance: Ernest Hentschel II and Brent Kesner of Kesner & Kesner

For Sistersville Tank Works: Patrick Shannon Casey, Sandra Marie Chapman and Ryan Paul Orth of Casey & Chapman

For Edwards et al. : David Belknap Lunsford of Hartley Law Group

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