Hi Anthony, they are classified as non-toxic. Yes, there is a theoretical fire hazard, and there are certainly cases of Li-ion cells from certain manufacturers igniting. Li is a highly oxidizing element - think Na from high school chem lab with the crazy teacher who'd toss some pure Na into a beaker of water - Li falls into the same category of metals, it is on the same side of the periodic chart as Na:

https://sciencenotes.org/wp-content/uploads/2015/09/MutedPeriodicTable.pdf

There's a phenomenon called thermal runaway that can happen in Li-ion cells if they are not controlled or designed properly - and that separator, and other devices are used to prevent and to detect and shut down cells that are at risk of themal runaway.