Retro Date Applies to Bar Coverage Because Emissions Not Separate “Pollution Conditions”

The Appellate Court of Illinois, Second District, in an opinion written by Justice Zenoff, applying Illinois law, affirmed an order of the circuit court of Lake County granting judgment on the pleadings in favor of the plaintiff, Illinois Union Insurance Company (“Illinois Union”). The insured, Medline Industries, Inc. (“Medline”), a medical instruments sterilization facility, had tendered to the insurer lawsuits for injuries allegedly caused by emissions of ethylene oxide gas (EtO) from its Waukegan facility. The underlying plaintiffs alleged that Medline had been emitting EtO, a carcinogenic and mutagenic gas, since 1994, which caused cancers, miscarriages, birth defects and other deleterious health effects among those who lived nearby.

Medline obtained a claims-made premises pollution liability insurance policy from Illinois Union. The policy provided coverage for any claims arising out of a “pollution condition” that “first commence[d], in their entirety, on or after the retroactive date.” The “retroactive date” of the policy was September 29, 2008.

Illinois Union denied coverage for the claims against Medline, arguing that the Waukegan facility had been emitting EtO since 1994, and thus, that the pollution condition commenced prior to the retroactive date in the policy. Medline, on the other hand, argued that each discrete emission of EtO constitutes a new “pollution condition,” such that emissions occurring after the retroactive date would trigger coverage.

The Appellate Court, in ruling in favor of Illinois Union, focused on the “in their entirety” language of the policy to rule that the EtO emissions between 1994 and 2019 (the year of the underlying plaintiffs’ complaint) constituted just a single pollution condition, which began prior to the retroactive date. Whether the emissions were continuous or intermittent was irrelevant because the underlying plaintiffs had clearly alleged that the earliest emissions occurred in 1994. Moreover, the emissions prior to 2008 were material to the underlying plaintiffs’ claims.

Even though Medline did not own the Waukegan facility prior to 2008, they declined to obtain “full retroactive” coverage, which places no limitations on coverage for past occurrences. The policy they did obtain, however, did not cover emissions that began prior to the retroactive date, and, as such, the Appellate Court affirmed the lower court ruling for judgment on the pleadings in favor of Illinois Union. Illinois Union Ins. Co. v. Medline Indus., Inc., 2022 IL App (2d) 210175 (Mar. 4, 2022).