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Laura Foggan Discusses Supreme Court's Refusal to Hear Appeal on CERCLA Costs

Law360
January 21, 2014

Laura A. Foggan, chair of Wiley Rein’s Insurance Appellate Group, was quoted by Law360 on January 16 regarding a decision by the Supreme Court of the United States not to review an appeals court ruling that prevented Chubb Insurance Co. from recouping Superfund costs.

The Supreme Court declined to hear Chubb’s challenge to a ruling by the U.S. Court of Appeals for the Ninth Circuit on subrogation claims brought under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).  Chubb had sued to recoup $2.4 million it paid on behalf of a policyholder for a cleanup.  Chubb sought the reimbursement from the companies responsible for the pollution, under Section 107 of CERCLA.

The Ninth Circuit ruled that insurers cannot bring subrogation claims under Section 107.  Rather, they must pursue reimbursement under Section 112, which requires policyholders to make a claim against other potentially responsible polluters before their insurers can bring subrogation claims, Law360 reported.

Ms. Foggan said many insurance policies require policyholders to take steps to protect the insurer’s subrogation rights, and carriers will rely on those terms more often. “There may be more requirements for policyholders to act to protect insurers’ rights,” she said.

While insurers pursuing subrogation suits in the Ninth Circuit will have to meet the requirements of CERCLA Section 112 for the time being, that may not be the case in other jurisdictions, she added.

“The question posed about the interpretation of CERCLA Section 107 was one of first impression,” Ms. Foggan said. “Insurers may well continue to pursue all theories for recovery, including possible Section 107 claims, in other circuits, where the case law remains undeveloped.”