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Abbott Labs' $84M insurance award in claims dispute over obesity drug upheld


An Illinois appeals court has upheld an $84.5 million insurance award to drugmaker Abbott Laboratories in a breach-of-contract claim against several Lloyd’s of London syndicate underwriters.

The case concerns the question of who should bear the cost of the Italian government’s March 2002 recall of a prescription anti-obesity drug, Meridia, that had been manufactured by Knoll Pharmaceutical Co., which Abbott Laboratories acquired in 2000, according to Monday’s ruling by the Illinois Appellate Court in Chicago in Certain Underwriters at Lloyd’s, London et al. v. Abbott Laboratories.

The Lloyd’s underwriters sued Abbott Park, Illinois-based Abbott Laboratories seeking to rescind polices they had issued Abbott. Abbot counterclaimed, seeking a declaratory judgment regarding coverage and damages.

Two bench trials were held. In June 2013, the state court in Chicago awarded Abbott $84.5 million, the limits of the insurance policies at issue, and an additional $2.8 million in costs and postjudgment interest. It denied, however, Abbott’s request for prejudgment interest. All the parties appealed.

A three-judge appeals panel upheld the lower court’s ruling Monday. The plaintiffs had claimed that Abbott lied on its insurance application regarding Synthroid, a drug used to treat hypothyroidism, and therefore it cannot seek coverage for Meridia claims.

“There was ample evidence to support the trial court’s findings,” said the ruling. “The evidence showed that Abbott’s insurance policies automatically covered the Knoll purchase,” said the ruling.

It also held, however, that the trial court’s denial of pre-judgment interest to Abbott was not an abuse of discretion.

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