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Court rules for insurance company in lead poisoning dispute

Posted On: Feb. 7, 2012 12:00 AM CST

Court rules for insurance company in lead poisoning dispute

RICHMOND, Va.—An insurance company involved in a lead poisoning case in Baltimore is only liable to indemnify its insured for the period of lead exposure covered under the terms of the insurance contract, a federal court has ruled.

The 4th U.S. Circuit Court of Appeals in Richmond, Va., last week ruled in Pennsylvania National Mutual Casualty Insurance Co. vs. Lakia C. Roberts and Attsgood Realty Co., et al. that it was against Maryland law to hold an insurance company to a contractual provision to which it never agreed and would undermine the insurer's ability to precisely gauge risk and determine coverage pricing.

In the underlying case, Ms. Roberts sued Attsgood in Maryland state court for sustaining lead poisoning from 1991 to 1995 as a result of negligent management of one Attsgood's properties. In 1993, Attsgood sold the property to Gordon Gondrezick.

Attsgood sought coverage under its liability insurance policy with Penn National, covering the period from 1992 to 1994.

According to court documents, Ms. Roberts, who suffered permanent brain damage from lead poisoning, in 2009 was awarded $2 million, which was reduced to $850,000 under Maryland's noneconomic damages cap. She sought to recover the entire judgment amount from Penn National.

A three-judge panel of the 4th Circuit decided that Penn National only was liable to indemnify Attsgood for 40% of the judgment amount, which covered Attsgood from 1992 to 1993, ending once Attsgood sold the property to Mr. Gondrezick.

“Roberts' misfortune cannot be laid at Penn National's feet, for that company has not disputed that it must pay that portion of the judgment to which its policy applied,” Judge J. Harvie Wilkinson III wrote in the opinion. “To place the entire judgment on the insurer would be chaotic, rewarding those who decline to purchase adequate coverage and ultimately punishing those who do,” he said.