The Illinois Court of Appeals (Second District) (“Court”) addressed in a March 4 opinion an insurance coverage issue involving a medical device sterilization facility (“Medline”). To see Ill. A.Ins. Co. v. Medline Indus., Inc.., 2022 Ill. App. 2d 210175, — NE3d — (Ill. Ct. App. 2022).
The question posed was whether the facility’s insurance policy provided coverage for injuries allegedly caused by ethylene oxide (“EtO”) emissions.
Illinois Union Insurance Company (“Illinois Union”) sued in Lake County Circuit Court for a declaration that it had no obligation to indemnify or defend Medline. The Circuit Court rendered judgment on the pleadings in favor of the Illinois Union.
Medline had purchased insurance from the Illinois Union to cover claims arising from a “pollution condition” that occurs at its facilities.
Illinois Union has declined to indemnify or defend Medline in nineteen underlying lawsuits. The lawsuits alleged allegations that Medline caused plaintiffs injuries as a result of its EtO broadcast. EtO is a carcinogenic and mutagenic gas. The plaintiffs alleged that the EtO broadcast occurred from 1994 to 2019 or 2020 when the lawsuits were filed.
The retroactive date for the insurance policy was September 29, 2008, the same day Medline acquired the facility. The importance of this date is that the first event likely to be covered by the policy must have occurred on or after this date.
The coverage question focused on the interpretation of the policy term “polluted condition”. Specifically, were the EtO emissions a continuous pollution condition that occurred before the retroactive date or multiple discrete pollution conditions that occurred both before and after the retroactive date.
Illinois Union argued that the plaintiffs alleged that the broadcasts took place before the retroactive date. Therefore, it was argued that this was a single, continuous pollution event. Accordingly, he argued that no obligation was owed to indemnify or defend Medline.
Medline argued that the underlying complaints alleged numerous discrete emissions over several years rather than a single continuous emission. It argued that each EtO emission constituted a separate new pollution condition under the policy. Therefore, these issuances would have occurred after the retroactive date and were covered by the policy.
The policy provided coverage for pollution conditions that “first commenced, in their entirety, on or after the retroactive date”. The Court found this fatal to Medline’s argument because whether a pollution condition is covered by the policy, whether intermittent or continuous, is determined by looking at when all of the emissions began. . Since the plaintiffs alleged that the emissions began as early as 1994, the pollution condition “commenced” before the retroactive date or, in other words, did not begin “in its entirety” after the retroactive date. .
Medline also argued that “in their entirety” meant the pollution conditions caused by Medline “in their entirety”. This argument was also rejected.
The Court ruled that preventing it from looking at events prior to the retroactive date would render the retroactive date meaningless.
The Court upheld the Circuit Court’s decision.
A copy of the notice can be downloaded here.