The 3rd U.S. Circuit Court of Appeals decided a recent asbestos injury case against St. Paul Travelers Companies, potentially exposing the company to more than $1 billion in claim payments, a lawyer involved in the case contends.

Washington attorney David Killalea -- representing the insulation firm of ACandS, which went bankrupt under a mountain of asbestos claims -- called the ruling a "very important victory" for his client against the insurer.

The ruling by a three-judge panel of the court in Philadelphia -- which included U.S. Supreme Court nominee Samuel Alito -- voided a 2003 arbitration that went against ACandS, which had been upheld by the U.S. District Court in Philadelphia.

The insurer has argued that all operations should be treated as one occurrence with a $1 million per occurrence limit, while ACandS argued that each claim should be a separate occurrence. The operations policy has no aggregate cap.

The insurer, in a statement, said that it would continue to litigate the case. According to Killalea, their only avenue now is an appeal to the U.S. Supreme Court.

St. Paul Travelers also said it was analyzing the decision for its impact on its previously announced review of its asbestos reserves. The company said it will discuss the matter in the near future.

Before the arbitration was completed ACand S had settled $2.6 billion worth of asbestos claims.

The policies at issue in the case were issued by Travelers between 1976 and 1979 before the insurer's 2003 merger with St. Paul.

This article originally appeared in The National Underwriter P&C. For the complete article, please click here.

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St. Paul Travelers Loses Asbestos Decision

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