Medical device sterilization company Sterigenics is asking a federal judge to order its insurer to help fund its defense against hundreds of lawsuits brought by residents of Willowbrook and surrounding communities, saying the insurer has wrongly attempted to use a pollution clause to deny coverage for the lawsuits, which center on claims Sterigenics’ emissions allegedly caused cancer.
On Aug. 27, Sterigenics U.S. LLC filed suit in Chicago federal court against National Union Fire Insurance Company of Pittsburgh.
The complaint asserts National Union wrongly denied Sterigenics’ claims for coverage against the swarm of lawsuits it continues to contest in Cook County Circuit Court.
Those lawsuits assert emissions from Sterigenics’ former medical device sterilization plant in west suburban Willowbrook caused incidences of varying kinds of cancer in people living and working near the facility.
Sterigenics’ Willowbrook plant has been closed since February 2019, when Illinois state environmental regulators, under Gov. JB Pritzker, ordered the Willowbrook facility closed in response to a campaign from anti-Sterigenics activists, who voiced loud complaints over the company’s use of the chemical known as ethylene oxide (EtO.)
The controversy erupted in mid-2018, following the release of a report from the federal Agency for Toxic Substances and Disease Registry, which alleged Sterigenics’ EtO emissions had created heightened cancer risk in the region around Willowbrook.
In late 2018, as public pressure built against Sterigenics, the state of Illinois became involved, bringing a state action against Sterigenics in which the state asked a court to order Sterigenics closed.
At no point did the state accuse Sterigenics of violating clean air laws or emissions regulations, however. Sterigenics has repeatedly noted it never violated the terms of the operating permit the facility had obtained from the Illinois Environmental Protection Agency. The state had most recently renewed that permit and its attached emissions limits in 2015.
Rather, the state, mirroring complaints leveled in personal injury lawsuits, asserted Sterigenics had caused a “public nuisance” by emitting EtO at all.
Not content to wait on the courts to act, Pritzker’s EPA in early 2019 ordered Sterigenics closed, while state lawmakers passed legislation that its sponsors in Springfield said was intended to ensure Sterigenics could never reopen.
Sterigenics eventually negotiated a settlement with the state to end its litigation, agreeing to some of the strictest emissions controls ever placed on an EtO sterilization plant. But faced with the prospect of continued hostility from state and local government officials, Sterigenics opted not to reopen its Willowbrook plant.
That decision held true even after the federal Food and Drug Administration agreed the country faced a shortage of sterilized medical equipment and personal protective equipment as hospitals reeled in the faced of the COVID-19 pandemic.
Sterigenics has continued to deny the claims presented by plaintiffs in those lawsuits.
As it continues to defend itself, Sterigenics filed a claim for coverage with National Union. The insurer denied the claim, in part, citing a coverage exclusion for “pollution.”
Sterigenics, however, said that exclusion doesn’t apply to its situation.
First, Sterigenics said its emissions were explicitly authorized under a permit issued by the state of Illinois, meaning its alleged “pollution” was not issued without the knowledge of regulators, nor did the company violate any laws or rules.
“Illinois courts have established a common-law doctrine holding that this ‘standard’ Pollution Exclusion is set aside when the emissions are made pursuant to a lawfully issued permit,” Sterigenics wrote. “Consequently, when the allegations in the underlying claim are that at least some of the alleged emissions were made pursuant to a lawfully issued permit, the exclusion is not triggered, and the insurer is obligated to defend.
“So too here.”
Sterigenics further said National Union improperly denied coverage, as plaintiffs’ claims assert their cancers and other maladies were allegedly caused by “sudden and accidental” discharges of emissions from the plant. Sterigenics said the pollution exclusion clause specifically exempts the exclusion from being applied to claims over such “sudden and accidental” discharges.
“… Plaintiffs in the (personal injury lawsuits) repeatedly allege that there were negligent or ‘unintended’ alleged leaks of dangerously high levels of EtO, in turn resulting in alleged injuries to the (personal injury) plaintiffs,” Sterigenics wrote.
“Thus, ‘at least some counts in the underlying complaint are devoid of any allegation’ that any defendant ‘intended or expected to build and maintain’ a facility that ‘directly caused such injuries to its surrounding neighbors,’” Sterigenics wrote.
“Consequently, even if the Pollution Exclusion were triggered (and it is not given the allegations of permitted emissions), the sudden and accidental exception would reinstate coverage and obligate National Union to defend and indemnify Sterigenics U.S.”
Sterigenics is seeking a court order requiring National Union to provide coverage to help it pay for its defense in the personal injury lawsuits, plus pay unspecified damages worth more than $75,000.
Sterigenics is represented by attorneys Jill B. Berkeley, Andrew G. May and Paul Walker-Bright, of the firm of Neal Gerber Eisenberg, of Chicago, and K. James Sullivan and Matthew A. Chiricosta, of Calfee Halter & Griswold, of Cleveland.