Do Bacteria and Other Living Things Qualify as "Pollution" Under Insurance Policies?
Many insurance policies, including commercial general liability policies and professional liability policies contain a standard "pollution exclusion" to bar coverage for damages the insured suffers as a result of pollution. Depending on the broadness with which the insurance company reads this language, however, and the jurisdiction interpreting the policy language, such exclusions may prevent recovery for damages arising out of incidents not typically thought of as "pollution."
The traditional pollution exclusion is lengthy, but generally speaking, it holds that coverage is not provided for damages arising out of the actual, alleged or threatened existence of "pollutants," on premises owned, occupied, controlled or used by the insured. For purposes of the exclusion, a specific definition of "pollutant" is used, which reads:
Pollutants means any substance exhibiting hazardous characteristics or as may be defined and identified on any list of hazardous substances issued by the United States Environmental Protection Agency or any state or local or foreign counterpart. Pollutants also means any solid, liquid, gaseous or thermal irritant or contaminant, including without limitation, smoke, vapor, soot, fumes, acids, alkalis, chemicals (toxic or otherwise), waste (including materials to be recycled, reconditioned or reclaimed, and including infectious waste, medical waste, radioactive waste and other waste), air emission, odor, waste water, oil and oil products, formaldehyde for formaldehyde products, medical and pharmaceutical supplies, lead or substances containing lead, asbestos or substances containing asbestos, or any noise;
Waste includes materials that are intended to be or have been disposed of, recycled, reconditioned, or reclaimed.
The pollution exclusion was created in the 1970s to prevent coverage for "large scale industrial pollution," which was beginning to attract public attention and which appeared to be covered by most insurance policies. Those policies, having been drafted before industrial pollution was widely discussed, caused concern for insurers. While the exclusion may have been drafted with industrial pollution in mind, the exclusion has been interpreted more broadly as time goes by to encompass a wider variety of incidents, some of which may be directly applicable to hospitals and other medical facilities.
Some insurers have read the pollution exclusion broadly enough to include incidents wherein damages caused by living things — specifically bacterial or viral infections — would be excluded from coverage. Examples include cases where the exclusion was used to deny coverage for damages from Salmonella, "microbial populations" and water contaminated with fecal coliform bacteria.
In these cases, judicial interpretation of the pollution exclusion varies tremendously. At least one reviewing court, seeking a nationwide consensus, came away from the analysis disappointed. "To say that there is a lack of unanimity as to how the clause should be interpreted is an understatement." Generally speaking, courts appear to interpret the clause either broadly or narrowly. While the dichotomy has been thoroughly analyzed, at least one court collecting cases was unable to declare either side to have a majority. Once a court has made the decision of whether to read the exclusion broadly or narrowly, however, an insurer's ability to deny coverage for infections caused by living organisms becomes clearer.
Among those jurisdictions that read the exclusion broadly, it is held that living things like bacteria can be considered "contaminants," and the pollution exclusion can serve as a bar to coverage. They consider microbes to be "solid objects" under the exclusions definition of "pollutants" and thus subject to the exclusion's terms. Hospitals in such jurisdictions would have a difficult time objecting to denial-of-coverage decisions that rely on the exclusion.
Conversely, in jurisdictions reviewing the exclusion narrowly, bacteria are specifically held not to be "contaminants." These jurisdictions hold that the pollution exclusion was intended to eliminate coverage only for damages "traditionally associated with environmental pollution," and resist further extensions. Because living things contain all states of matter, these jurisdictions consider them to resist classification as either "solid, liquid, gas or thermal," and therefore would not apply the pollution exclusion to damages caused by them. Some even read the exclusion so narrowly that they apply it only to knowing polluters, such as a company that "knowingly dumps its wastes."
The disparity between these two positions, along with the large number of jurisdictions that reside along each side of the divide, suggest that a national consensus on this issue will not be forthcoming anytime soon. For now, insureds should inform themselves as to the position taken by the jurisdiction(s) relevant to them, and keep it in mind when buying new policies if bacterial or viral infections are a concern. Insurers should take caution before using the pollution to exclude damages caused by living organisms until it can be sure that taking such a position will not be overturned by the courts. All parties should consult with legal representation if there is any doubt as to whether or not particular claims could be held subject to any insurance exclusion.
John Pollom is an attorney in Stites & Harbison's Lexington office and a member of the Business Litigation Service Group. He is experienced in matters related to insurance coverage and civil litigation defense, including toxic tort, medical and professional malpractice and product liability matters.
 Again, the actual text of the exclusion is long, and an in-depth analysis of all its various components is beyond the scope of this article. The draft exclusion is readily available, but when dealing with a specific incident, one is advised to review the particular policy language.
 The EPA’s List of Hazardous Substances and Reportable Quantities runs nearly 84 pages, and is publicly available at http://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=20009NRZ.txt
 Morton Int’l v. General Accident Ins. Co., 629 A.2d 831, 850 (N.J. 1992). The Morton Court does a good job of tracing the history of the exclusion. Id. at 849-851.
 Indian Harbor Ins. Co. v. Factory Mutual Ins. Co., 419 F.Supp.2d 395 (S.D.N.Y. 2005).
 Nova Cas. Co. v. Waserstein, 424 F.Supp.2d 1325 (S.D. Fla. 2006).
 Keggi v. Northbrook Prop. & Cas. Ins. Co., 13 P.3d 785 (Ariz. App. 2000).
 MacKinnon v. Truck Ins. Exchange, 73 P.3d 1205, 1208 (Cal. 2003).
 Apana v. TIG Ins. Co., 574 F.3d 679, 682-683 (9th Cir. 2009).
 Markel Int’l Ins. Co. v. Fla. W. Covered Rv & Boat Storage, LLC, 437 Fed. Appx. 803 (11th Cir. 2011) (holding that damages arising from bacterial infection would be covered by pollution exclusion);
 Waserstein, supra, 424 F.Supp.2d at 1335 (S.D. Fla. 2006).
 Keggi, supra, 13 P.3d at 791.
 Westport Ins. Corp. v. VN Hotel Group, LLC, 2011 U.S. Dist. LEXIS 117215, *9 (M.D. Fla. Oct. 11, 2011)
 Motorists Mutual Ins. Co. v. RSJ, Inc., 926 S.W.2d 679, 681-682 (Ky. App. 1996).
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