Emerging and Latent Risks
for Commercial Liability:
Other than Asbestos
Smitesh Davé
Disclaimers
All opinions and views contained herein are
my own, and are not necessarily the views
of the Casualty Actuarial Society or the
American Academy of Actuaries, nor of the
Travelers.
Agenda
Environmental Liability
 Cumulative Injury Other than Asbestos
(CIOTA)

– Silica: A brief tour
– Lead: A Public Nuisance?

Emerging issues
Environmental Liability
Environmental Liability
Address the “unintended coverage” only, not the
covered (limited or sudden and accidental)
pollution claims
 CERCLA, enacted by Congress in 1980, assigned
liability to entities responsible for releases of
hazardous waste.
Comprehensive Environmental Response,
Compensation and Liability Act
 Courts have consistently found insurance
coverage for this in the “pre-pollution exclusion”
policies

Environmental Liability
Note: Claim Counts are only a representation
100
90
80
70
60
50
40
30
20
10
0
1984
1987
1990
1993
1996
1999
New Claims by Report Year
2002
2005
Environmental Liability

Courts have also frequently over-ruled the
pollution exclusions that have been in use
since the mid-1980’s
Environmental Liability
Note: %’s are only a representation
90
80
70
60
50
40
30
20
10
0
1984
1987
1990
1993
1996
1999
2002
2005
% of resolved claims that closed without payment
Environmental Liability

Overall, the trends are favorable:
– Major Superfund sites have been addressed
– Major “polluters” have been identified
– Fewer claims and smaller claims?

Uncertainties still remain:
– Courts
– Politicians

Remember – Dirt doesn’t die!
CIOTA – Silica
CIOTA – Silica
Silicosis (like asbestosis) is a scarring of the lungs,
caused by the inhalation of large quantities of silica
usually as fine sand dust.
 Like asbestosis, silicosis is a disappearing disease
because of strict governmental regulations and employer
practices.
 Deaths attributable to silicosis have dropped steadily
(NIOSH data)

1,157 deaths in 1968
448 deaths in 1980
308 deaths in 1990
187 deaths in 1999
148 deaths in 2002
CIOTA – Silica

Silicosis claim filings exploded in 2002,
especially in state courts in Texas and
Mississippi
CIOTA – Silica
Note: Claim counts are only a representation
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
1995
1997
1999
2001
2003
Claim Counts by Report Year
2005
CIOTA – Silica

Why?
– U.S. Senate (Hatch) started talking about
asbestos reform legislation
– Some states (TX, MS) enacted comprehensive
asbestos litigation reform
CIOTA – Silica
Plaintiffs were mostly sandblasters,
foundry workers, or other work involving
silica dust
 Defendants made products that contained
silica, were made for working with silica,
or protected workers from silica exposure

CIOTA – Silica MDL
MDL – Multi-District Litigation
 On 9/4/03, 22 actions were centralized
into a federal multi-district litigation
(MDL), presided over by U.S. District Court
Judge Janis Jack

– 85 additional actions were added, creating
one suit involving 10,000 plaintiffs seeking
damages from 250 corporate producers of
silica products
CIOTA – Silica MDL
Judge Jack had been a nurse and was
married to a doctor.
 12 doctors (B-readers) accounted for more
than 9,000 of the diagnoses
 Judge Jack allowed defense lawyers to
challenge the admissibility of these
medical experts’ testimony – VERY
UNUSUAL

CIOTA – Silica MDL

Dr. M
– responsible for 36%+ of the diagnoses
– under oath, recanted all of his diagnoses,
testifying that he “did not intend to make a
diagnosis of silicosis…” and that he did not
even know how to diagnose silicosis.
CIOTA – Silica MDL
Dr. H found lung opacities (consistent with
silicosis) in 99.6% of the 6,350 B-reads he
performed
 Earlier, Dr. H diagnosed 1,807 of the same
plaintiffs as having lung opacities consistent with
asbestosis
 This dual-disease phenomenon, while
theoretically possible, is a clinical rarity – experts
testified that they had never seen one

CIOTA – Silica MDL
The doctors involved in this MDL had
positive rates of over 92%
 Experts (Johns-Hopkins study) re-reading
a sample (492 of the X-rays used in the
litigation) had an average positive rate of
4.5%

CIOTA – Silica MDL
Judge Jack ruled that the case had been
improperly moved out of state courts and
into the federal court
 Judge Jack did make public all of the
findings
 Lester Brickman, Professor of Law, Yeshiva
University, NY, has written at length about
the applicability of this litigation to
asbestos litigation

CIOTA – Lead
CIOTA – Lead

Rhode Island verdict:
– “Cumulative presence of lead
pigments…constituted a public nuisance.”
– Three liable defendants “caused or
substantially contributed to the creation of the
public nuisance.”
– Three liable defendants “should be ordered to
abate the public nuisance.”

Future action: Appeal
CIOTA – Lead
Other States:
 Wisconsin – Appellate decision allowing
nuisance claim; trial in early 2007
 California – Appellate decision allowing
nuisance claim; no trial date scheduled
 New Jersey – Appellate decision allowing
nuisance claim; pending review by state
supreme court
CIOTA – Lead
What is a Public Nuisance?
“An unreasonable interference with a right
common to the general public” – The
Restatement (Second) of Torts
 Most of the questions in front of the
courts involve the “reasonableness” issue
 Examples:

– Erecting a gate across a public road
– Pouring toxic chemicals into a public water
source
CIOTA – Lead: Public Nuisance
Advantages to Plaintiff under this theory
– Statutes of Limitations/Contributory
Negligence/Comparative Negligence
unavailable to defendants
– State can bring one case to encompass a
large body of claims
– Standards are vague and malleable
– Focus on present harm rather than past
conduct
– No requirement of Product ID
– Availability of injunctive relief
CIOTA – Lead
Product ID
Initial wave of products liability litigation
against paint manufacturers failed
 Plaintiffs had difficulty proving symptoms
were caused by lead, or that this lead was
from paint (as opposed to gasoline, water,
soil, or any other source of lead)
 Plaintiffs could not prove which
manufacturer’s paint caused the alleged
injury

CIOTA – Lead
Is Public Nuisance a Covered Loss?
In theory, “equitable” remedies (as
opposed to “legal” remedies) are not
covered by a GL policy
 In reality, it depends on how the courts
define the parameters of the nuisance
cause of action

CIOTA – Lead
Is Public Nuisance a Covered Loss?
Precedents:
 Environmental – YES, in virtually all jurisdictions
 Gun – mostly NO; see 4th Circuit (2001)
decision: “As a general rule, comprehensive
general liability policies do not extend coverage
to claims for equitable relief.”
 “Your Product” exclusion has held up in the gun
litigation; both 1st and 4th Circuits.
CIOTA – Lead
Is Public Nuisance a Covered Loss?
Other coverage issues:
– Does the pollution exclusion bar coverage?
– Does the lead exclusion bar coverage?
– Number of occurrences?
– Trigger?
– Which policy or policies should respond?
– Were the injuries expected or intended
because the insured knew of the dangers of
the product?
CIOTA – Lead
Lead is no Asbestos!!
Why?
Insurers’ “Deep Pockets” have not been
successfully accessed:

– Products Liability approach has not worked –
thus far
– Public Nuisance may not be a covered loss
– Exclusions on GL policies
– General Aggregates on more recent GL
policies
Other Emerging Issues
Other Emerging Issues
Car Manufacturers (CA)
 Benzene
 Cotton Dust
 WTC


Don’t forget about the Trial Lawyers.