The Ohio Court of Appeals ruled last week that liability insurers have to defend their policy holders who are defendants in opioid litigation. The result is part of a trend in this area of the law.
Governmental entities had named wholesale pharmaceutical distributor Masters Pharmaceutical, Inc., in numerous lawsuits. Most of those lawsuits have been consolidated into a federal multidistrict litigation court in Ohio’s Northern District.
The governmental entities accuse Masters of acting negligently in failing to report and investigate suspicious prescription opioid orders and in failing to refuse to fill these orders. The entities claim this alleged negligence helped contribute to the opioid epidemic and created damages including increased costs to governmental entities responsible for emergency and medical care services, substance abuse treatment, prison and public works expenditures, judicial expenditures and police patrols.
Acuity, Masters’ insurer, refused to defend Masters in the lawsuits, raising a defense that other insurers have raised in opioid litigation. They said that the governmental entities were only seeking damages for their own economic losses as opposed to “bodily injury.” Acuity argued that damages in these lawsuits are not “because of injury,” which is what is covered by their policies. Some courts agreed with this argument early on in the current rash of opioid litigation.
This argument has been rejected by more recent decisions, though. The United States Court of Appeals for the Seventh Circuit ruled in Cincinnati Ins. Co. v. H.D. Smith, LLC that governmental entities’ opioid litigation claims sought damages “because of bodily injury” because the insurance policies defined that phrase as involving “damages claimed by any person or organization for care, loss of services or death resulting at any time from the bodily injury.” This is obviously the kind of damages the governmental entities are trying to recover in opioid litigation.
The Ohio Court of Appeals adopted the reasoning of this decision, finding it to be “one of the most recent and persuasive decisions” on the issue. It also rejected the arguments used by earlier decisions that said insurers didn’t have to defend their policy holders against these claims.
Over 399,000 people died from opioid overdoses in the United States from 1999 to 2017. There were 47,600 opioid overdoses in the U.S. in 2017 alone. It is estimated that 130 people die in the U.S. each day from an opioid overdose. Opioid prescription rates are 40 percent higher in the United States than in any other developed country.