AIG Beats Medical Sterilization Firms in Illinois Top Court (1)

An insurance provision barring coverage for pollution claims could apply even to emissions that were explicitly permitted by a regulator, Illinois’ top court ruled, handing a win to an American International Group Inc. unit.

The Illinois Supreme Court’s Friday ruling means the insurer is likely off the hook for tens of millions in legal defense costs incurred by companies that operated a medical sterilization facility in Willowbrook, Ill., and faced mass tort claims over ethylene oxide emissions.

A federal appeals panel had asked the state’s top court to review whether a permit or regulation authorizing certain emissions had any bearing ...