Insurers Score Decisive Win in Illinois on Pollution Exclusion

An Illinois high court ruling that liability insurers can avoid paying for pollution litigation, even when a regulator authorized the emissions, will likely put an end to further coverage disputes in the state over mass tort cases alleging harm from ethylene oxide released by medical sterilization facilities.

In a Jan. 23 opinion, the Illinois Supreme Court held that a permit or regulation authorizing certain emissions had no bearing on the “traditional environmental pollution” analysis used to determine whether the pollution exclusion—a provision which has been heavily litigated since its inception—applies under the state’s law.

Laura Foggan of Lavin Rindner Duffield LLC, who frequently represents insurance industry groups in legal advocacy efforts, said the decision didn’t leave any open questions.

“The ruling is really a straightforward decision that enforces the pollution exclusion and reinforces the importance of applying contract terms,” she said.

The decision means that the policyholders will likely have to pay the tens of millions in legal defense costs incurred in the underlying litigation without help from their insurer.

Policyholder attorneys were critical of the opinion and said its reach may be limited.

“The Illinois Supreme Court really gave short shrift in its decision to the application of the pollution exclusion to these alleged damages resulting from permitted releases and permitted activities,” said Brian Friel, a partner at policyholder boutique firm Miller Friel PLLC.

“It was very light on examining the issue of whether the exclusion itself is ambiguous as it relates to whether permitted releases or activities are ‘traditional environmental pollution,’” he added.

Robert Horkovich, a managing shareholder at Anderson Kill PC who represents commercial policyholders, said the court had “missed the boat” on the purpose of the exclusion, which he said was originally drafted to preclude only “intentional” pollution from coverage.

‘Pollution Is Pollution’

Griffith Foods International Inc. and Sterigenics US LLC, which operated a medical sterilization facility in Willowbrook, Ill., and faced mass tort claims over ethylene oxide emissions spanning more than 30 years, were seeking coverage from an American International Group Inc. unit for the suits, which now have mostly been settled.

The US Court of Appeals for the Seventh Circuit asked the Illinois top court to review a certified question over government-authorized emissions after the insurer appealed a ruling for the sterilization companies.

It will be up to the parties and the federal appeals court to determine what the decision means for coverage, though several industry watchers said the ruling is likely a death knell for Griffith and Sterigenics’ case.

The ruling may also doom separate state court suits by other policyholders facing similar underlying EtO claims.

“The Supreme Court left no daylight for insureds to obtain coverage under general liability policies for their ethylene oxide emissions, even for defense costs,” Michael Marick, a partner at insurer-side firm Skarzynski Marick & Black LLP, said in an emailed statement.

“Pollution is pollution. Words are words. The so-called ‘permitted use’ end run on the pollution exclusion is now dead in Illinois,” he said.

Policyholder Lessons

Similar pending coverage disputes are likely to be dismissed or settle following the Illinois ruling, though there may not be many in the pipeline, said Jeffrey Stempel, an insurance law professor at the University of Nevada, Las Vegas.

The US Court of Appeals for the Third Circuit in a December 2025 unpublished opinion held that a different version of the pollution exclusion also precluded coverage for similar EtO litigation.

Most corporate policyholders that are likely to be targeted by environmental claims presumably already have other risk-management measures in place, such as separate insurance coverage for environmental impairment liability, Stempel said, and thus are unlikely to be affected by the Illinois ruling.

The decision’s impact outside of the EtO cases could be further limited because it focused narrowly on the Seventh Circuit’s certified question, without addressing other potential arguments in favor of coverage, policyholder attorneys said.

Still, the ruling offers a lesson for policyholders not to assume coverage will be available in the event of a claim merely based on compliance with environmental regulations, Horkovich said.

Commercial policyholders in Illinois won’t be able to rely on permitting as an argument to get around the pollution exclusion, but in general, coverage issues will depend on the specific facts and circumstances of each case, said Haynes & Boone LLP’s Cristen Rose, a partner representing policyholders.

The court reiterated that the exclusion is intended to apply only to traditional environmental pollution as envisioned when the insurance language was drafted decades ago, Rose said.

“If you have something that was not even contemplated at the time the exclusion was drafted, how can that be excluded?”

The case is Griffith Foods Int’l Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., Ill., No. 131710, 1/23/26.