New Orleans, LA, August 15--The U.S. Fifth Circuit Court of Appeals has ruled asbestos-related disease does not qualify as a "bodily injury by accident" under workers' compensation insurance, upholding an exclusion for injuries caused by disease.
The case stems from a $1.5 million settlement Graphic Packaging International Inc., which has a paperboard manufacturing plant in Louisiana, made with 260 employees and former employees of the plant.
According to court documents, the employees, beginning in 2000, sued Graphic (then known as Riverwood International Corp.) seeking damages for asbestos-related illnesses allegedly caused by asbestos exposure at the Louisiana plant.
After the settlement, Graphic sent notice letters of the asbestos claims to its insurers, including Employers Insurance of Wausau. The letters identified the claims as "bodily injury by disease" claims, according to court documents. Wausau denied coverage based on the 36-month exclusion provision in the policies, which excludes "bodily injury by disease" claims if they are not brought within 36 months after the end of the policy period.
Graphic filed suit against Wausau and argued the policy language was ambiguous as to whether an asbestos-related disease was a "bodily injury by disease" or a "bodily injury by accident." The lower court found in favor of Wausau, and the Court of Appeals upheld that decision.
"The policies are subject to only one reasonable interpretation -- that an asbestos-related injury is not a 'bodily injury by accident' under the policies in question," the Court of Appeals decision read.
The court found that an asbestos-related disease, which takes years to manifest after continued exposure, does not meet the workers' compensation law's definition of accident because it does not occur suddenly or violently nor produce "objective findings of an injury" at the time of exposure.
John Marlow, assistant vice president of the American Insurance Association's Southwest region, said the trade was pleased and "supportive of the court's decision. It's vital to the health of the workers' compensation system."
"This decision recognizes a contractual exclusion is exactly that: an exclusion that eliminates coverage," Robert Hurns, counsel for the Property Casualty Insurers Association of America, said in a statement. "This opinion should serve as solid guidance for other circuits currently examining the identical issue."
PCI and other trade groups filed a joint amicus brief in the case, arguing there is a statutory difference between "accidents" and "occupational diseases."
Currently under way in state Superior Court in New Brunswick, N.J., another case pits Princeton-area flooring manufacturer Congoleum Corp. against insurers such as Travelers Casualty, St. Paul Fire and Marine Insurance Co., Employers Insurance Company of Wausau and One Beacon America Insurance Co.
At issue is a $500 million settlement Congoleum was instructed by its lawyers to set aside to pay 79,000 claims filed by those who assert the asbestos contained within Congoleum's tiles made them sick. Congoleum claims the insurers breached their obligation to pay. The insurers contend they were excluded from the negotiation process and Congoleum entered into the "collusive deal" over insurers' express objections.
