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Judge says private insurer, not state, on hook for $43M in Libby - KPAX.com | Continuous News | Missoula & Western Montana

Judge says private insurer, not state, on hook for $43M in Libby asbestos claims

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HELENA - A state judge says a Nebraska-based private insurer is liable for an entire $43 million state settlement of 100 asbestos claims related to Libby’s defunct vermiculite mine – and the full cost to the company is likely more.

State District Judge Holly Brown of Bozeman ruled last last week that National Indemnity Co. – a subsidiary of Warren Buffet’s Berkshire Hathaway firm – improperly tried to deny coverage from an insurance policy held by the state 45 years ago.

By breaching it “duty to defend,” National Indemnity is blocked under state law from denying coverage, and therefore is liable for the $43 million settlement that the state agreed in 2011 to pay those who contracted fatal lung disease by asbestos at the former Libby mine, the judge said.

Those injured by asbestos had sued the state of Montana, beginning in 2000, alleging the state concealed its knowledge that harmful asbestos was in dust at the mine and failed to inform workers or the public.

But the state discovered it held a policy with National Indemnity from 1973-1975, insuring the state against personal-injury and other claims. It notified National Indemnity in early 2002 about the asbestos lawsuits and potential liability, and said the company should be liable for the suits’ costs.

The Nebraska firm argued it should not be liable for the Libby asbestos claims – and, even if it was, the total amount should be limited to $3 million, or based on pro-rated costs from the two years the policy was in effect.

Brown, however, disagreed, and said National Indemnity must pay for any settlement stemming from the Libby cases – and, all of the state’s defense costs after July 2005, any pre-judgment interest related to the cases and the state’s costs of the separate case on whether National Indemnity is responsible.

Lawyers for the state weren’t immediately available for comment Monday, on the decision or its full financial implications for the state.

Attorneys for National Indemnity also could not be reached for comment Monday.

The case involves scores of claims filed by people harmed by asbestos from a Libby vermiculite mine, which had been owned and operated by W.R. Grace & Co.

The asbestos-related lawsuits, filed starting in 2000, said the state had known as early as 1942 that dust from the mining and milling operation was “greatly in excess of safe limits.”

The suits also said the state had inspected the W.R. Grace operations in the 1950s and found asbestos in the air of “considerable toxicity,” and had issued death certificates in the 1960s that cited asbestos-related health conditions as the cause.

However, the state failed to inform workers or the public of the dangers of asbestos fibers at the Libby operations, the suits said.

An attorney for the state notified National Indemnity in 2002 about its possible liability, stemming from coverage the state had bought from the company from July 1973-June 1975.

National Indemnity argued it had limited liability, but in 2009, it agreed to pay $16 million of the $43 million settlement, while a court settled the issue of who would share the liability. The company filed action in state court in 2012 to resolve the matter, and Brown’s order last week ruled for the state.

National Indemnity can appeal the ruling to the Montana Supreme Court.

About Mike Dennison

MTN Chief Political Reporter Mike Dennison joined MTN News in August 2015 after a 23-year career as a newspaper reporter covering Montana politics and state government. While some may believe that politics are boring, Mike firmly believes that's not the case if you tell the story with pizzazz and let people know why the story is important.
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