PFAS and Insurance Coverage: Considerations and Updates on Recent Coverage Rulings
Alexander C. Lemke, Meissner, Tierney, Fisher & Nichols S.C.

The abundance of per- and polyfluoroalkyl substances (PFAS) litigation has brought significant challenges to both insureds and insurers, regarding the scope and applicability of insurance policies. As these “forever chemicals” continue to be the focus of environmental and health concerns, insurers and insureds need to understand the legal landscape and insurance implications. This article examines the current state of PFAS litigation, Wisconsin insurance considerations, and recent court decisions that provide guidance for insureds and insurers as they navigate this legal terrain.

PFAS litigation poses a two-part problem for insureds and insurers. First, there is a need to handle underlying PFAS litigation and, second, there is a need to resolve the insurer’s duty to defend and indemnify its insured.

I.              The Underlying PFAS Litigation for Insureds

With over 6,400 PFAS-related lawsuits filed in federal courts from July 2005 to March 2022,[1] PFAS have exposed insureds to an immense amount of liability. Some even predict that it will eclipse the tobacco and asbestos lawsuits from previous time periods. For instance, below are some recent examples of liability exposure based on PFAS exposure:[2]

• June 2023: 3M and DuPont, Chemours Co. and Corteva Inc. agreed to pay up to $12.5 billion and $1.18 billion, respectively, to settle lawsuits for PFAS contamination in U.S. water systems.
• October 2023: North Carolina judge allowed more than 100,000 plaintiffs to file lawsuits against Dupont and Chemours based on toxic water pollution.

In essence, there are two primary “liability threats” to insureds based on PFAS: (1) regulatory “threats” and (2) tort “threats.” Each will be discussed in turn.

First, in recent years, regulatory actions have intensified around PFAS. The Environmental Protection Agency issued a “PFAS Strategic Roadmap” in 2021,[3] setting the stage for a series of measures to control these substances. By 2023, the Environmental Protection Agency (EPA) finalized PFAS reporting requirements under the Toxic Substances Control Act (TSCA) and finalized the designation of PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 2024. State-level regulations have also gained significant momentum. Ten states[4] have imposed restrictions on PFAS in food packaging. Additionally, California, Maine, and New York have enacted “intentionally added” laws that effectively ban the addition of PFAS to products.

Second, there is the underlying “tort” liability. These types of claims are filed against the insured for various bodily injury and property damage caused by PFAS contaminants.[5]

Based on regulatory liability and tort liability theories, there have generally been four “buckets” of claims against PFAS manufacturers/producers. They are: 

(1)  claims by public and private water suppliers who allege that PFAS contamination has affected their water sources. As a result of this contamination, the water suppliers have incurred significant costs for obtaining alternate water sources, investigating and remediating PFAS, and conducting expensive ongoing monitoring and testing;

(2)  claims by firefighters who are generally filing product liability claims attributing their health issues to exposure to Aqueous Film Forming Foam (AFFF), which contains various PFAS. These plaintiffs report health problems such as thyroid disease, kidney issues, cancer, and other autoimmune disorders; 

(3)  traditionally environmental claims based on the fact that PFAS are pollutants. It is expected that this will substantially increase due to the fact that certain PFAS are now considered hazardous substances under CERCLA; and

(4)  states attorneys general lawsuits have been filed in 30 states.[6] These lawsuits typically allege only common law theories of liability (e.g., trespass, negligence, nuisance, product liability, etc.). The states are not (for the most part) relying on any state-level environmental regulations. 

However, courts have not blindly cut a “blank check” for lawsuits that only allege common law theories of liability and have dismissed claims against the PFAS producers, if warranted. For instance, in SUEZ Water New York Inc. v. E.I. du Pont de Nemours & Co.,[7] the plaintiff alleged that the defendants contaminated its water sources with PFAS chemicals over decades, leading to demands for financial compensation for upgrades to its New York water treatment facilities.[8] The lawsuit, filed in December 2020, included claims for public nuisance, private nuisance, negligence, trespass, and strict liability for defective design. However, a federal judge dismissed all claims against Chemours and most claims against du Pont on March 22, 2023, holding that the complaint failed to provide a notice of a claim under Federal Rule of Civil Procedure 12(b)(6). Specifically, lacking was any intent by the plaintiffs: “Plaintiff has failed to allege that Defendants substantially participated in the creation or maintenance of the nuisance and that they did so intentionally.”[9]

In sum, the plaintiff’s bar is focused on PFAS and views these so-called forever chemicals as a fertile source of lawsuits and large recoveries—it has largely been accurate in its assessment. 

II.            Wisconsin Insurance Considerations and Defenses

While a lot is unknown about PFAS, there is a bit of comfort in knowing that the fundamental principles governing the insurer and insured relationship as it relates to who is ultimately going to pick up the tab for the underlying liability are typically in-line with the well-known principles of Wisconsin insurance coverage. Here some things that need to be considered in every instance where the insured is seeking coverage for PFAS-related liability:

Known-Loss Doctrine and PFAS

Wisconsin adopts an objective standard in applying this doctrine,[10] examining whether the insured knew or reasonably should have known about PFAS-related bodily injury or property damage before seeking insurance coverage. There can be nuances applying this doctrine which depend on the specific details of the insurance policy. However, for many PFAS defendants, the operative factual question will be whether they knew of the PFAS-related losses (alleged bodily injury or property damage) before the inception of the insurance policy.

Trigger of Coverage

Wisconsin courts typically adopt and apply the continuous theory of coverage.[11] Under this trigger theory, all policies from the date of initial exposure through the manifestation of the injury are triggered. This theory assumes that damage occurs for that entire period.

In the PFAS context, there is at least one prominent case dealing with the trigger of coverage issue: Crum & Forster Specialty Insurance Co. v. Chemicals, Inc.[12]

There, the court held that the duty to defend was triggered, even though the complaints in the underlying cases did not allege either dates when the firefighters were first exposed to the products or when they first manifested symptoms of injury from the products. The court applied the Texas default rule which stated that “the duty to defend is triggered when the dates of loss are not alleged but could be determined in future proceedings and could fall within the policy period.”[13]

While this case may not be determinative in Wisconsin, it provides one with an insight as to how at least some courts are handling issues related to trigger of coverage in the PFAS realm.

Property Damage and Bodily Injury

In Wisconsin, soil and groundwater contamination constitute property damage.[14] Additionally, the burden is on the insured to establish that the property damage occurred during the policy period.[15] As for bodily injury, mere exposure without a resulting injury generally does not constitute bodily injury during the policy period. This will be a significant source of litigation regarding whether a tangible “bodily injury” even occurred.

Pollution Exclusions

The actual wording of the pollution exclusion in the policy is quite important and not all language is treated the same. 

For policies involving the “sudden and accidental” pollution exclusion, which was popular from 1972 to 1985, Wisconsin courts have treated the word “sudden” as ambiguous.[16] The word “sudden” just means unexpected and unintended and the word “accidental” means not intentional. Thus, for insurers seeking to exclude coverage based on this exclusion much of the case will be about whether the insured expected or intended the resulting bodily injury or property damage from manufacturing, selling and/or otherwise disposing of PFAS. In essence, what did the insured know, expect or intend at different points in time?

For policies involving the absolute pollution exclusion, which generally excludes coverage for any claim, action, judgment, liability, settlement or any obligation to defend a suit arising out of discharge, dispersal, release or escape of pollutants, Wisconsin courts have tended to recognize this type of language as binding on the insured—“This pollution exclusion is just what it purports to be—absolute.”[17] However, having this language does not automatically get an insurer out of the woods. For instance, some courts only apply this to “traditional environmental pollution” context or may be more hesitant to apply it if the pollution stems directly from a product containing PFAS.

Compliance with Policy Terms and Conditions and Notice Requirements

Non-compliance with notice, cooperation, and other policy terms, definitions, and conditions may bar or limit coverage in some instances; both the insurer and the insured should carefully evaluate their respective duties and obligations. 

For instance, insureds must adhere to notice requirements in their policies and provide timely notice as mandated by those policies. Some states strictly enforce these requirements, while others expect reasonable diligence from policyholders or require insurers to prove that delays caused them prejudice. Understanding these state-specific obligations can be critical in any coverage action.

Forum Selection

Which forum a coverage action is in could be determinative (at least partially) in whether a finding of coverage is made or not. In Admiral Insurance Co. v. Fire-Dex, LLC,[18] the dispute turned on a novel issue of Ohio insurance law: are illnesses arising from exposure to PFAS in a manufacturer’s finished products an “occupational disease” under Ohio law? The court declined jurisdiction and the Sixth Circuit affirmed noting that novel issues of state law are best decided by state courts.[19]

III.          Touchstone PFAS Coverage Cases

Given the enormous financial stakes, potentially reaching hundreds of millions or even billions of dollars, both insurers and policyholders face significant risks. The issues surrounding PFAS exposures are relatively new, and the application of pollution exclusions to these cases is still in its early stages. However, this area of law is expected to evolve rapidly in the coming years. However, perhaps given that uncertainly, coverage actions that go through to completion are relatively few and far between at this point. Here is a summary of the four most “prominent” cases to date:

Grange Insurance Co. v. Cycle-Tex, Inc.[20]

This is a helpful case for insurers and its principles could apply beyond Georgia where it was decided. The court held that there was “no doubt that the alleged contaminants in the underlying lawsuit — PFAS chemicals — are ‘pollutants’ within the plain meaning of [the insured’s] insurance policy.”[21] Based on that, the court applied the pollution exclusion in the policy and held that the insurer had “no duty to defend or indemnify [the insured] in the underlying pollution lawsuit . . . because the policy’s Total Pollution Exclusion unambiguously bars coverage.” (Emphasis added).[22]

Tonoga, Inc. v. New Hampshire Insurance Co.[23]

This case is also helpful for insurers in that court also determined that the insured’s policy excluded coverage under the “sudden and accidental” pollution exclusion. Looking at the allegations the court concluded that “a solution [that] was dumped over a period of many years suggests ‘the opposite of suddenness’ . . . and, as a matter of law, volitional, long-term discharge of a substance cannot be viewed as unintended or unexpected.”[24]

The decisions in both Grange and Tonoga arguably represent the application of pollution exclusions in a more “traditional” environmental context in light of the fact that the alleged injuries were caused by environmental exposure to PFAS chemicals that made their way into water supplies, air and soil. In both cases, the pollution exclusion served as an adequate basis to exclude coverage. However, that is not always the case. 

Wolverine World Wide, Inc. v. The American Insurance Co.[25]

This case serves as an example of courts taking a stricter view of the exclusions. The court held that the insurers had a duty to defend “until it is determined that every claim in the lawsuit involving pollution is conclusively determined to be intentionally discharged” in view of a policy that had the sudden and accidental exclusion.

Colony Ins. Co. v. Buckeye Fire Equipment Co.[26]

Buckeye has been sued in hundreds of underlying cases relating to its manufacture of fire equipment containing AFFF. The court held that there was no duty to defend the majority of toxic tort claims relating to AFFF under an absolute pollution exclusion which barred the majority of cases that alleged injury or damage solely from environmental exposure to PFAS. However, the insurer had a duty to defend those claims that alleged injury related to direct exposure of the PFAS containing AFFF.

IV.          Conclusion 

The evolving legal and regulatory landscape surrounding PFAS contamination presents significant challenges for various stakeholders, including manufacturers, regulatory agencies, affected communities, and the insurance industry. As regulatory actions intensify and litigation proliferates, the financial and legal ramifications of PFAS contamination will continue to unfold. Insurers and insureds must navigate the complex terrain of coverage disputes. 

Author Biography: 

Alexander C. Lemke is an attorney in Meissner Tierney’s litigation practice group. He focuses on assisting clients in complex commercial, intellectual property, regulatory, insurance, and employment litigation. Before joining Meissner, Tierney, Fisher & Nichols S.C., Alex handled complex intellectual property matters at a nationally ranked law firm. He also served as a Judicial Law Clerk for the Wisconsin Supreme Court under former Justice Daniel Kelly. While attending law school at the Tulsa College of Law, he received highest honors, graduating in the top 10% of his law class, and worked as the managing editor for the Tulsa Law Review.