Asbestos illness is a disease and not a bodily accident injurycovered by workers' compensation policies, the United States Courtof Appeals, Fifth Circuit, has ruled.

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The decision, by a three-judge panel of the New Orleans-basedcourt, upheld a lower court decision in Louisiana in the case ofGraphic Packaging International Inc. v. Employers Insurance ofWausau.

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Under their ruling there is an exclusion for "bodily injury bydisease" found in workers' compensation employers liabilitypolicies issued by Employers Insurance based in Wausau, Wis.

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The case developed in 2000 when Graphic Packaging InternationalInc., Marietta, Ga., made a $1.5 million settlement with 260 formerand current employees who claimed they were injured by exposure toasbestos at the company's paperboard manufacturing plant inLouisiana.

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When the employees filed suit, the company was known asRiverwood International Corp.

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Wausau, which had not provided coverage after 1984, denied theGraphic company's claims for "bodily injury by disease" citingpolicy language, which described "bodily injury by disease" claimsas excludable from coverage if not brought within 36 months afterthe end of the policy period.

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Graphic filed suit against Wausau arguing that the language isambiguous because the policy itself does not define the word"accident."

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The appeals court found that "an asbestos-related disease doesnot constitute a 'bodily injury by accident'" and the policylanguage is supported by Louisiana case law.

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