ELGIN - An appeals court has ruled a Chicago insurer does not have to cover a suburban medical device distribution company, against a suit claiming ethylene oxide emissions may have caused cancer for nearby residents, saying the emissions began before the policy took effect.
The ruling was penned by Justice Kathryn Zenoff, with concurrence from Justices George Bridges and Susan Hutchinson, of the Illinois Second District Appellate Court. The decision favored Illinois Union Insurance Company in its dispute with Medline Industries. Illinois Union is based in Chicago and Medline is located in suburban Northfield.
In 2019, Kathleen Koch, Chandra Sefton, Patty Bennett, Dennis Brebner and Dawn Rex, on behalf of her minor son, sued Medline in Cook County Circuit Court. They alleged emissions of ethylene oxide (EtO) from Medline's facility in suburban Waukegan have caused cancers, miscarriages, birth defects and other adverse health effects. The EtO compound is used to sterilize medical devices and instruments. The medical device industry has said EtO is almost essential to keep patients safe.
Medline took out a pollution liability policy for the Waukegan site, with a retroactive date of Sept. 29, 2008, the date on which Medline acquired the facility. That date is the date of the earliest occurrence for which a claim would be covered, according to Illinois Union.
Illinois Union filed court papers in Lake County — Waukegan is in that county — saying it would not pick up the tab for the claims made in the suit, because the suit alleged EtO emissions began in 1994, which is before the policy's retroactive date. For coverage to apply, the alleged emissions must have "commenced, in their entirety, on or after the retroactive date," the insurer argued.
Medline countered alleged emissions occurred before and after the retroactive date, so the policy is in force because alleged emissions did not commence in their entirety before Sept 29, 2008.
In March 2021, Lake County Associate Judge Luis Berrones agreed with Illinois Union, declaring the company off the hook. Medline then appealed.
The appellate justices found Berrones was right.
"We are mindful that Medline purchased a policy containing a retroactive date rather than one affording full retroactive coverage. We cannot rewrite an insurance policy to suit a party’s needs. Now, faced with multiple lawsuits alleging pollution conditions prior to the retroactive date, Medline wants to convert its policy into one with full retroactive coverage," Zenoff wrote.
Zenoff added: "Medline knew that its predecessor released EtO from the Waukegan facility," but chose not to buy a policy retroactive to the "beginning of time."
In Zenoff's view, "Medline got the coverage that it paid for."
Illinois Union pointed out the policy provided coverage only to "pollution conditions" that "first commence, in their entirety, on or after the retroactive date." In light of this, Illinois Union contended that alleged pollution, taking place over many years from a single source, constitutes a single pollution event. On the other hand, Medline maintained each alleged emission was a single event.
Zenoff determined that given the policy's language, she was obliged to "look at the totality of the releases of EtO" and could not treat each emission as separate from others, as Medline would have it.
Illinois Union has been represented by James J. Sanders, Matthew J. Dostal, Alexander W. Ross and Ryan M. Murnighan, of Clyde & Co US, of Chicago.
Medline has been defended by John S. Vishneski III, Stanley C. Nardoni and Adrienne N. Kitchen, of the Chicago firm Reed Smith; Lowndes Christopher Quinlan, of McGuireWoods, of Charlotte, N.C.; and Sean A. McClelland, of McGuireWoods, of Washington, D.C.
There have been more than 100 EtO suits lodged since 2019, most of them in Cook County, against Medline. The company has another policy with Evanston Insurance, of suburban Deerfield. Evanston is also arguing in court it has no duty to cover Medline, on grounds the policy is restricted to "sudden" or "abrupt" emissions, rather than long-running emissions as claimed by plaintiffs.
Evanston additionally maintained Medline is trying to use the policy, which took effect in mid-2021, to cover costs from suits filed two years earlier.
Evanston Insurance is represented in that case by Stacey Petrek, Monica T. Sullivan and Christopher J. Nadeau, of the Chicago firm Nicolaides Fink Thorpe Michaelides Sullivan.