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Recent Coverage Cases on Opioid Lawsuits

Laura Hanson


  • More decisions that are unique to the underlying lawsuits and nuances of state law are likely.
Recent Coverage Cases on Opioid Lawsuits

The year 2022 has brought insurance practitioners a mixed bag on coverage issues for opioid litigation.

In early 2022, the Delaware Supreme Court addressed coverage for an underlying opioid lawsuit against an insured. The court in Ace American Ins. Co. v. Rite Aid, 270 A. 3d 239 (Del. 2022), held that two lawsuits that had been brought by Ohio counties against Rite Aid did not allege damages “for” or “because of” personal injury. The lower court found that Ace had a duty to defend its insured. The Delaware Supreme Court reversed that decision and held that the counties alleged their own economic damages and did not allege damage for injuries to any person or damages for medical treatment to any person. Therefore, the court reasoned, the plaintiff counties did not allege damages for or because of personal injury. The court followed a Kentucky federal district court decision, Cincinnati Ins. Co. v. Richie Enterprises, LLC, 2014 WL 3513211 (W.D. Ky. July 16, 2014), which held that in the underlying lawsuits, the State of West Virginia did not seek damages “because of” bodily injury. Rather West Virginia sought damages for costs incurred because the defendants (including Richie) distributed drugs in excess of medical need.

The Rite Aid court also rejected the Seventh Circuit’s decision in Cincinnati Ins. Co. v. H.D. Smith, 829 F. 3d 771 (7th Cir. 2016) that held the opposite. Instead, the Rite Aid court followed an earlier Seventh Circuit decision, Medmarc Cas. Ins. Co. v. Avent America, Inc., 612 F. 3d 607 (7th Cir. 2010), which held that the insured Avent had no coverage for lawsuits brought by parents for economic loss because they could not use baby bottles they had purchased that were allegedly contaminated. The damages were not sought “because of” bodily injury.

In California, on April 5, 2022, a federal court held that opioid lawsuits against pharmaceutical company McKesson alleged only intentional conduct and thus did not allege an “occurrence” under California law. The court in AIU Ins. Co. v. McKesson Corp., No. 20-7469 (C.D. Cal. 2022) was not persuaded by the negligence counts in the complaint or the “knew or should have known” language in those counts. The court focused instead on the alleged deliberate conduct—distributing opioids in excess of medical needs—when it held that there was no allegation of an “occurrence.” Interestingly, before reaching the “occurrence” issue, the court first addressed whether the claims against McKesson were “for” bodily injury or “because of” bodily injury. The court distinguished the Delaware Supreme Court’s decision in Rite Aid because California law draws no distinction between claims by a person who suffered bodily injury and claims made by the government for such harm. Moreover, the McKesson court also opined that the California Supreme Court was not likely to follow the Delaware Supreme Court on its policy interpretation analysis.

As these cases percolate through state and federal appellate courts, more decisions that are unique to the underlying lawsuits and nuances of state law are likely.