Legal experts predict a wider trend that will require improved risk mitigation for organizations that handle PFAS, as well as for the insurers that write their coverage.

 

PFAS – short for per- and polyfluoroalkyl substances – is an umbrella term for a group of more than 4,000 individual substances that are primarily used in products designed to resist heat, oil, grease, stains, or water, such as those used for nonstick cooking gear, food packaging, firefighting foam, and more. It is estimated that more than nine out of 10 Americans have been exposed to PFAS, and many of us carry them in our blood. The problem with PFAS is that we don’t quite understand how they affect humans and the environment. What we do know is that PFAS can last for a very long time; in some instances, it can take more than 1,000 years for PFAS to break down, which is why they are also called “forever chemicals.” (To learn more about PFAS, click here).

While PFAS have been commonly used in the production of many everyday products since the 1930s, the substances are at the center of a growing litigation trend. Related lawsuits mainly include claims involving property damage, water pollution, cleanup cost issues, landfill cleanup, and personal injury.

According to Praedicat, a business that focuses its work on finding emerging trends that affect different industries, as of April 29, 2022, there were 6,434 cases involving PFAS. The Wire reached out to Praedicat General Counsel Stephen Jones and Vice President of Emerging Risk Dr. Adam Grossman for more insight into these cases. They shared information from Praedicat’s litigation tracker, which showed that those cases mostly involve bodily injury and property damage complaints, are filed in 86 different courts, and involve 252 different companies from 110 different industries.

 

Where It Began: The Case Against DuPont

The issues surrounding PFAS began to come to light following a complaint filed in the Southern District of West Virginia in 1999. Wilbur Tennant, a farmer, claimed that DuPont’s Washington Works Plant near Parkersburg, WV, was dumping hazardous waste into the Ohio River, which contaminated the surface and groundwater on his property. He argued that this contamination caused his family to become ill and led to the sickening and death of his cattle. During the discovery portion of the case, it was found that the chemical perfluorooctanoic acid (PFOA), also known as C8, was being used at the plant in development of DuPont’s Teflon products and the waste being dumped by the plant contained that chemical.

While that case settled in 2001, it spurred a historic class action lawsuit against Dupont, which led to the creation of the C8 Science Panel. That panel found “probable links” between the PFAS in question and eight diseases.

According to Praedicat, it was the C8 Science Panel and its findings that led to the first jump in PFAS litigation between 2012 and 2015. The Environmental Protection Agency’s (EPA) 2016 action to lower the PFOA and perfluorooctanesulfonic acid (PFOS) drinking water health advisory threshold led to another jump in litigation, with many municipalities and water districts tying water contamination to aqueous firefighting foam (AFFF), and another multidistrict litigation was consolidated around AFFF causes of action in late 2018.

 

Fast Forward to Today: Public Attention

Steve Casey, Partner at Jones Walker LLP

Steve Casey, Partner at Jones Walker LLP

Steve Casey, attorney and partner at Jones Walker LLP, handles PFAS litigation. He says that about half of his work now involves PFAS claims against his clients. Currently, he’s working on seven mass tort cases in just one city in Alabama.

Casey argues that there is no specific medical proof that PFAS exposure harms anyone – and he’s in good company with this statement, as even the EPA currently acknowledges that we’re living through a time in which he have to “increase our understanding” of the health risks that are caused by PFAS.

Casey says that “the language that came out of the C8 Science Panel and epidemiological evidence are what continue to fuel the complaints.” On top of that, public and regulatory attention is growing in the United States, as the Biden administration has committed to regulate and study PFAS.

According to Praedicat, the proposed actions and regulations in the EPA PFAS Strategic Roadmap are wide-ranging and detailed, with a quick timeline for action, and involve eight federal agencies. It highlighted three of the proposed actions and regulations and their implications:

Due to this added attention on PFAS, Casey expects his clients will face more claims in the future, especially involving water pollution. He warns, “I think there is potential for PFAS water pollution claims to become as numerous as other recent litigation involving other chemical products.” It’s a warning that both manufacturing companies and casualty insurers need to heed. Casey says there are steps both companies and insurers ought to take as the PFAS litigation environment continues to grow.

  1. Designating PFOA and PFOS as hazardous under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) will require significant cleanup activities, but this leaves out many PFAS chemicals that may be designated as hazardous further down the road.
  2. Setting enforceable national standards for PFAS in drinking water and (potentially) in biosolids could be difficult to comply with in areas that are heavily impacted by PFAS pollution.
  3. New backward-looking reporting requirements and Food and Drug Administration investigations into PFAS in food and water supplies could reveal new PFAS uses and exposure pathways that may find their way into future complaints.

 

A Greater Responsibility for PFAS-Producing Companies

“Companies that use PFAS or manufacture the chemicals that are considered precursors need to monitor their industrial discharge, particularly if they discharge to bodies of water, especially those used for drinking purposes,” Casey says. “These companies need to make sure they are complying with discharge permitting requirements; and if they dispose of industrial waste to landfills or to public operated treatment works (POTW), they need to know what else is in their waste and how those POTWs deal with that.”

Casey also says companies need to make sure the POTWs they use to dispose waste have insurance coverage in case something arises on their end. If they don’t silo the PFAS-filled waste properly, there may be runoff, and the POTW could become a target of litigation. If that POTW doesn’t have proper coverage, the company that disposed of the waste could then become a target for lawsuits over the problems that arise from the POTW’s mismanagement of waste.

As far as insurers go, underwriting for PFAS risk is becoming more challenging as the litigation landscape broadens. Insurers must decide how to best assess and place PFAS risks.

Casey suggests that insurers examine policies to make sure they have proper language to protect against catastrophic loss or claims. He adds, “They ought to consider if they are going to provide pollution coverage that might be called into play in PFAS litigation, and they may want to consider reinsurance or any other step that would protect against catastrophic loss or help spread their risk.”

Praedicat, on the other hand, notes that the insurance industry exists to transfer risk and that there is almost always a scope for which that’s possible, including for PFAS. It adds, “Insurers obviously should not take on the proverbial ‘burning building’; however, they could select which aspects of this risk profile they are willing to take on.”

Deborah Pugatch is an editor for The Wire and the Content Marketing Manager at Guidewire. Connect with her via email or on LinkedIn.