Two decades into the opioid crisis, questions about insurance coverage are only beginning to be answered


As the world focused on the global COVID pandemic, the United States continued to battle its own unique epidemic. The opioid crisis has gripped the country for more than two decades and has only gotten worse in the past two years. Since the start of the COVID pandemic, nearly 179,000 Americans have died from opioids. The CDC estimates that about 250 Americans die every day from an opioid overdose. Beyond the devastating physical toll, the opioid epidemic has also taken severe economic toll on the country. A bipartisan congressional report released earlier this year found that the opioid epidemic is costing the United States an estimated $1 trillion a year.

It is therefore not surprising that the opioid crisis has produced a flood of litigation aimed primarily at manufacturers and distributors of opioids. Many of these lawsuits involve public entities suing opioid companies for increased utility costs associated with the opioid epidemic, such as law enforcement, emergency services and facilities. treatment. These disputes have already led to monumental settlements, most recently between various drug distributors and state attorneys general for nearly $26 billion. Faced with significant verdicts and settlements, as well as the heavy financial burden of defending these massive lawsuits, the targets of opioid lawsuits are looking to their insurers to defend and indemnify them. Cases interpreting the extent of the insurer’s obligations have been few and results have been inconsistent, which is likely to lead to an explosion of insurance coverage litigation while the dust settles.

For insurers and insurance law practitioners, substantial coverage issues are presented by these lawsuits under Commercial General Liability (CGL) policies which generally cover damages for or due to “bodily injury” caused by a ” event”. Although there are variations, an “event” is generally defined as “an accident, including continuous or repeated exposure to substantially the same harmful general conditions”. “Personal injury” is generally defined as “injury, disease or illness suffered by any person, including death resulting from any of these at any time”. Generally speaking, CGL policies are designed to provide coverage to the insured for accidental bodily injury to others. Whether an “event” or “bodily injury” has been alleged in opioid lawsuits is much more complicated than typical cases, because these lawsuits are not brought by the injured person seeking compensation for their injuries, but rather by entities seeking compensation for economic harm. consequences he suffered as a result of the epidemic. This nuanced question has been at the center of litigation over opioid coverage to date. Two recent decisions illustrate how the courts have grappled with these new issues.

In ACE American Insurance v Rite Aid, 2022 Del. LEXIS 9 (Del. Jan. 10, 2022), the Delaware Supreme Court found that claims brought by various Ohio counties seeking to recover economic damages caused by Rite Aid’s alleged contribution to the opioid epidemic n were not “for” or “because of” bodily injury” and were therefore not covered by the insurers’ CGL policies. Notably, in order to litigate around Ohio’s product liability law, the counties had expressly waived personal injury claims for individual residents. Applying Pennsylvania law, the Delaware Supreme Court ruled that while the counties’ economic losses – including for “medical care” – are arguably related to caring for Ohio residents suffering from bodily injuries from opioids, “bodily injury damages are only covered when asserted.” by the injured person, a recovering person on behalf of the injured person, or persons or organizations who treated the injured or deceased person, who demonstrate the existence and cause of the injuries”.

A few months after the Ritual Aid decision was made, the same issue was presented in the Northern District of California. This court came to the opposite conclusion. In AIU Insurance v. McKesson, 2022 US Dist. LEXIS 64242 (ND Cal. Apr. 5, 2022), the court rejected the insurers’ argument that because the government entities themselves suffered no bodily injury, claims against the insured opioid distributor would not were not “for” or “due to” bodily injury. Finding that the underlying lawsuits alleged opioid abuse, disease, addiction, overdoses and death, the court ruled that they “come within at least” within the meaning of bodily harm. The fact that the government entities further alleged that they incurred costs to provide services to mitigate the bodily harm suffered by residents was sufficient to potentially constitute “damages for … bodily injury”.

Although McKesson dismissed the insurers’ bodily injury argument, the court ruled in favor of the insurers on the event issue, finding that the government entities’ claims were based on deliberate conduct – the distribution of opioids – which produced the wounds. Under California law, “the investigation focuses on the acts causing the injury of the insured” and therefore it is “immaterial whether the insured intended to cause the resulting injury”. In so ruling, the court distinguished decisions from other jurisdictions that find an accident unless there is intent to injure. See for example, Cincinnati Insurance v Discount Drug Mart, 183 NE3d 538 (Ohio App 2021); Liberty Mutual Fire Insurance v. J. M. Smith, 602 Fed. Approx. 115 (4th Cir. 2015) (South Carolina law).

As the cases described above illustrate, court rulings on these critical issues of opioid insurance coverage tend to be jurisdiction-specific, and case law is still developing. As a result, policyholders and insurers are encouraged to seek a favorable forum to leverage precedents that favor their position. This will likely lead to an increase in insurance coverage disputes involving jurisdictional disputes, forum battles, and which state laws should apply to the dispute.

Although the majority of decisions regarding opioid claims coverage to date have been made in the context of CGL coverage, directors and officers (D&O) liability policies as well as professional liability (E&O) policies are also potentially implicated in these lawsuits. A&D insurance is primarily intended to protect the personal assets of corporate officers. Errors and omissions insurance generally covers claims arising from an alleged failure to provide professional services to a third party.

It’s important to note that for opioid lawsuits, D&O and E&O policies generally contain exclusions for any claims “based on or arising out of any actual or alleged bodily injury.” Thus, the crucial issue of coverage under CGL policies, whether claims involve bodily injury, can also be determinative of whether these policies provide coverage. This means that the coverage cases mentioned above regarding “bodily injury” in the context of public entity opioid lawsuits and CGL insurance may prove useful to D&O and E&O insurers reviewing the same claims under -lying. For example, while the Ritual Aid finding of the decision that there was no bodily injury would leave the door open to coverage under a D&O or E&O policy notwithstanding the existence of a bodily injury exclusion, the court’s finding in bodily injury in McKesson would support a D&O or E&O insurer’s argument that the bodily injury exclusion excludes coverage.

D&O and E&O policies are also generally “on demand” policies, meaning that they only provide coverage for the first claims made during the given policy period and often have a “grouping of claims” provision. which allows insurers to treat any claim submitted for coverage that arises out of the same “facts and circumstances” as a previously filed claim as a single claim. As factually similar lawsuits continue to be filed against companies involved in the opioid distribution chain, insurers D&O and E&O may have a basis for treating recently filed opioid lawsuits as a “related claim” to previously filed lawsuits. . If a claim is not made for the first time during the initial D&O and E&O policy term, insurance companies will likely take the position that the subsequent claim is excluded from coverage.

Although the issue of claims has not been specifically addressed by any court, a related “specific litigation exclusion” commonly found in D&O and E&O policies, has been the focus of Miami-Luken c. Navigators Insurance, 2018 US Dist. LEXIS 122009 (July 11, 2018 SD Ohio). There, a D&O policy issued to an opioid distributor named as a defendant in a 2012 West Virginia lawsuit contained a “litigation-specific exclusion” that excluded coverage for any claims “based on … the same or substantially the same facts.” , circumstances, or allegations that are the basis or subject matter” of the 2012 West Virginia lawsuit. In 2015, the distributor received a show cause order from the DEA alleging that it had failed to maintain effective controls against the diversion of opioids in West Virginia. Coverage was declined under the specific litigation exclusion. In the ensuing cover action, the court agreed with the insurer explaining that “in determining whether the facts, circumstances or allegations of the two actions are identical or substantially similar, the answer is clearly yes”.

While the opioid epidemic has raged for over 20 years and litigation against opioid manufacturers/distributors has dragged on for over a decade, the insurance coverage issues that arise are still developing and largely unresolved. What is clear is that these lawsuits have the potential for significant insurer exposure under multiple lines of coverage. Insurers should keep abreast of decisions such as those described above and consider the potential impact these decisions may have on various lines of insurance when bidding for opioid lawsuits. .

Michael Cassek is a partner of White and Williams. He has over 30 years of experience as a senior attorney in high-profile and complex litigation, including advanced insurance coverage and healthcare litigation.

Adam Berardi, a partner in the firm, represents major domestic and international insurance companies in coverage disputes and complex commercial litigation across the country. His practice primarily focuses on resolving coverage claims for long-term liabilities involving environmental cleanups, mass torts and product liability.


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