Court Rules Insurers Not Compelled To Defend Opioid Companies
A lawsuit between opioid companies and their insurance companies went the way of the insurance companies. The opioid companies hoped their insurers would pick up the tab for the lawsuits filed against them related to opioid addiction and overdose deaths, but the Ohio Supreme Court recently ruled that the insurers do not have a duty to defend the companies because the policy did not include, I don’t know, drug trafficking charges. Most policies will not pay out in the event of an intentional act of illegal conduct, so it is not surprising that the companies will have to defend themselves from these suits and pay their own expenses.
The decision was reached based on the terms of the policy. In this case, the policy defended the opioid companies against bodily injury and personal injury claims. However, various states have sued major pharmaceutical companies under public nuisance doctrine in an attempt to recover costs related to providing medical services to those facing addiction. So, the policy was never meant to cover government sanctions and fines. Rather, it was meant to cover lawsuits filed against the company on the basis of personal injury. Hence, the pharmaceutical companies will have to dig deep into their coffers to pay the fines themselves.
Analyzing the trajectory of the claims
So, this is what happened. The local governments filed lawsuits against pharmaceutical companies claiming that they incurred financial losses on the basis of providing addiction recovery services to the local population. The pharmaceutical companies lost these claims or settled them, and then asked their insurer to indemnify or take liability for the claim. The pharmaceutical companies sued their insurers. The circuit court ruled in favor of the insurer, but on appeal, the ruling was overturned and the court ruled that the insurer had a duty to defend the claims on the basis of causing bodily injuries. However, there is a big difference between causing a personal injury and causing a personal injury claim. The insurer had a duty to defend personal injury claims, and the government’s lawsuit was filed on the basis of public nuisance. The Supreme Court ruled 5-2 in favor of the insurers and now the matter is settled. The pharmaceutical companies will have to eat the bill themselves.
Now what?
Well, the pharmaceutical companies essentially have to pay for these public nuisance claims out of their own profits. The claims are high, unlike fines, and will run about $20 million per state on average. As more states pursue claims over pharmaceutical distributors, the tab will add up. Nonetheless, these pharmaceutical distributors are responsible for placing millions of doses of opioids in tiny rural communities that would need years to consume the amount of opioids in their community. This created widespread addiction in these communities as many of the doses were diverted to pill mills for sale on the black market. In other words, the companies are guilty of drug trafficking. Hence why they are being punished as severely as they are now. They created far more than $20 million worth of death and suffering. And they still have the personal injury lawsuits to pay off too. Their insurer should be able to help there.
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