The Next Toxic Tort? Claims Based on Arsenic and CCA-Treated Lumber Are IncreasingSummer 2003
In recent years, consumer advocates and parents groups have become increasingly worried about the safety of the lumber used in residential projects such as decks and playgrounds. In particular, concerns have mounted about the use of CCA-treated lumber products, which are commonly used in such applications. CCA, or chromated copper arsenate, is a wood preservative containing arsenic used by lumber producers to protect wood from fungus, decay and insects. Opponents of the use of CCA have alleged that it raises both health and environmental-related risks, particularly to children, who may frequently come into contact with CCA-treated products.
Responding to pressure from these groups and from organizations such as the U.S. Consumer Product Safety Commission and Environmental Protection Agency, the major wood preservative manufacturers in the United States have agreed to partially phase out the production of CCA-treated wood products. Under that voluntary measure, no CCA-treated lumber would be produced for residential use after December 31, 2003. However, reserves of lumber products containing CCA will likely continue to be found on supplier shelves until mid-2004.
Claims based on the use of CCA-treated lumber are on the rise, thanks in part to several high-profile news stories on this topic. While most of the claims to date have been brought by individuals alleging health-related injuries, the use of CCA-treated lumber likely will spawn additional litigation regarding the use of that product. These lawsuits, naturally, eventually turn into insurance claims. While it is too early to tell if claims based on CCA-treated lumber will ever reach the levels experienced in asbestos cases, or, more recently, mold cases, insurance carriers should consider how their policies will respond. Identifying coverage issues early on, as well as designing procedures for responding to such claims, will ensure the most efficient and consistent handling of claims.
What is CCA-Treated Wood?
Lumber producers apply chemical preservatives to their products to protect against fungus, decay and insect infestation. The three most common types of wood preservatives are creosote, pentachlorophenol and CCA. Creosote is used primarily in the preservation of railroad ties and pentachlorophenol is used primarily on wood utility poles. CCA-treated wood is used on pressure-treated lumber in outdoor residential and commercial applications, including on decks, playground equipment, railings and porches. In the past, CCA-treated wood has also been recycled into wood chips and mulch to be incorporated into landscaping projects.
Many Types of Claims May Arise
Because of their use in consumer and child-oriented applications, most of the claims that have been brought to date have involved CCA-treated wood products. Typically, these claims involve a family who alleges they suffered health-related injuries from exposure to the family deck or swingset. Studies show that chronic exposure to arsenic, which is found in CCA, can cause cancer, neurological problems, numbness and paralysis. However, a link between exposure to CCA-treated wood products and these types of conditions has not yet been firmly established by medical professionals.
While it is currently unknown how many individual lawsuits have been brought by families in state and federal courts nationwide, at least six purported nationwide class action suits have been brought. The most active of these suits has been Jacobs et al. v. Osmose, Inc., et al., which was filed in the U.S. District Court for the Southern District of Florida. See Jacobs et al. v. Osmose, Inc., et al., No. 01-944, S.D. Fla. In that case, the purported class brought personal injury and property damage claims challenging the safety of CCA-treated wood as well as the adequacy of the defendants’ product warnings. In February of 2003 the court denied class certification to the purported nationwide class and many of the defendants have been dismissed. The case, however, remains pending against other defendants.
The claims in the Jacobs case were brought against the manufacturers of CCA-treated wood. However, similar claims could be brought against other parties involved in the sale and distribution of CCA-treated wood, including retailers, distributors and the end-users who purchase and install products containing treated lumber. In addition to claims filed by consumers, claims may also be brought by other parties, such as carpenters or construction workers who are exposed to CCA-treated lumber in the workplace.
Potential claims based on CCA-treated lumber are not limited to personal injury suits. The U.S. Environmental Protection Agency has raised concerns about threats to the environment posed by CCA-treated lumber, which the agency believes may, over time, leach arsenic into the soil and groundwater surrounding landfills. Environmental claims based on such contamination ultimately may develop into litigation. Such claims may be brought by state or federal environmental authorities or by private parties claiming to be affected by arsenic contamination.
Liability Insurance Coverage for CCA-Related Claims
The issues surrounding claims based on the use of CCA-treated lumber have yet to ripen. However, insurers should consider how their policies might respond to the different types of CCA-related claims that might be tendered to them by their policyholders. To assist them in predicting how courts might handle such claims, insurers may turn to cases involving claims in other areas for guidance.
Perhaps the most critical issue facing insurers faced with CCA-related claims is the appropriate trigger of coverage. CCA-related claims may involve allegations that the claimant was exposed to CCA-treated lumber over the course of years or decades, potentially spanning the coverage periods of multiple liability insurance policies. Determining which in a series of policies are triggered will allow carriers to determine the potential scope of liability they may face. With regard to this issue, analogies may be drawn to cases discussing the appropriate trigger of coverage in asbestos or environmental contamination cases, which present similar trigger issues.
Predictably, different jurisdictions have approached the trigger issues in different ways. Regarding claims for bodily injury, some states hold that injury begins on the date the offending product was installed, triggering the policy in effect on that date and, in addition, every successive policy so long as the exposure continues. Other courts hold that bodily injury, as defined under a typical CGL policy, does not occur until the disease becomes evident or manifests itself. Under this theory, only the policy in effect at the time of manifestation is triggered. A third theory holds that bodily injury occurs on the date of first exposure and continues through the date of manifestation, even if exposure ceases. Regarding claims for property damage, most courts hold that where there is proof of property damage during a particular policy period, that policy’s coverage is triggered.
Insurers should also consider whether any policy exclusions operate to bar coverage. The most relevant exclusion is the pollution exclusion, depending upon what version of that exclusion is present. In many jurisdictions, pollution exclusions incorporating the "sudden and accidental" language may not operate to bar coverage for claims alleging injuries from CCA-treated products, absent evidence that the contamination was intended by the insured. However, coverage might be barred under policies incorporating later pollution exclusions, often called "total" or "absolute" exclusions. Broadly stated, those exclusions bar coverage for claims related to the discharge or release of pollutants, as defined by the policies. Courts could conclude that claims alleging injuries from exposure to lumber treated with a chemical containing arsenic arise out of the discharge or release of a pollutant.
It is impossible to predict whether CCA-related claims will ever reach the levels seen in asbestos or mold-related cases. A careful consideration of insurance coverage issues is appropriate, however, in light of recent media attention on the safety of CCA-treated lumber.