Claims Update: Per/Poly-Fluoroalklys

PFAS is the commonly used international abbreviation for chemicals that are oil/water/heat resistant such as Teflon and Scotchgard. Used in fire suppression, insulation, surface coatings, non-stick cookware and cosmetics, the problem with PFAS is they build up in the environment and the human body and they are linked to adverse medical outcomes.

New studies reveal higher than expected levels of PFAS in drinking water, food, and consumer products. The Centers for Disease Control found 97% of Americans have PFAS in their blood, while Colombia University found 100x more micro-plastic particles than they had expected in bottled water.

Further studies show adverse medical impacts of such concentrations. Already linked to kidney & testicular cancers, ulcerative colitis, thyroid disease, pregnancy, hypertension and high cholesterol, more links can be anticipated as the research continues.

Increased public concern leads to:

• Increased Federal/State scrutiny – the Environmental Protection Agency has limited PFAS in public drinking water to 4 parts per trillion, required monitoring to be in place by 2027 and remediation by 2029. Other regulations  create ‘potentially responsible parties’ to clean up two PFAS identified as hazardous under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
• Increased litigation – claims were first made against the manufacturers and distributors of PFAS. More recently general retailers and fast food chains have been sued under strict product liability theories that allege a failure to disclose/warn against PFAS. Two early cases worth noting are:
  • Leach vs. du Pont de Nemours (2004) which alleged a chemical plant contaminated local water supplies, leading to increased cancer rates and other health problems. Ongoing monitoring of the local population was part of the settlement, the findings from which have supported numerous subsequent cases. The case was the subject of 2019’s movie ‘Dark Waters’)
  • Minnesota vs. 3M (2010) while the state allegation of damage to natural resources settled in 2018 (for $850 million to remediate drinking water) the Attorney General released documents showing 3M knew about and concealed the dangers. The papers both heightened public awareness/concern and provided supporting material for further claims
  • The Multi-District Litigation (“MDL”) involving a fire suppressant, Aqueous Film Forming Foam, in South Carolina’s Federal District Court is being closely monitored. Claims include property damage, bodily injury, and medical monitoring.

We anticipate major litigation, regulation, and remediation developments to continue:

Regulation – Federal/State regulators and lawmakers continue to address the prevalence of PFAS in the environment.

Litigation – as the MDL moves to the trail phase, expect PFAS-related bankruptcies to increase. Also expect plaintiffs to expand their theories of liability to include more downstream PFAS defendants.

Remediation – given the EPA’s interest and public concern, new remediation efforts and science will continue to develop to treat contamination more effectively.

Several questions arise around general liability cover:

• Does the allegation amount to an ‘occurrence’?
• Is there property damage/bodily injury as defined by the policy?
• How will a pollution exclusion be treated? Cases such as Wolverine Worldwide v. American Insurance Co.,(2021) and Colony Insurance v. Buckeye Fire Equipment (2020) found coverage despite hazardous materials exclusion clauses. As a result ISO has issued approved wordings for commercial general liability and umbrella programs (May 2023). New wordings for business owners and auto dealers will take effect this year
• As courts interpret new ISO and proprietary PFAS exclusions – decisions will be made on the duty to indemnify for damages, the trigger and the allocation methodology between multiple policy periods and complex coverage towers

PFAS is already ‘the next big thing’ in mass torts. This is already having implications for insureds and re/insurers.