BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
An insurer must defend a pharmaceutical wholesaler distributor being sued by governmental entities in connection with its distribution of opioids, even though the entities themselves did not suffer bodily injuries, says an Ohio appeals court, in overturning a lower court ruling.
Cincinnati-based Masters Pharmaceutical, which filled and shipped orders of prescription opioids to pharmacies around the country, was sued by various cities and counties from West Virginia, Michigan and Nevada for costs incurred combating the opioid epidemic, according to Wednesday’s ruling by the Ohio appeals court in Cincinnati in Acuity v. Masters Pharmaceutical, Inc.
In the underlying suits, most of which have been transferred to federal court as part of the “National Prescription Opioid” litigation, the governmental entities allege Masters acted negligently in failing to investigate, report and refusing to fill suspicious orders of prescription opioids, thereby failing to maintain effective controls in violation of federal and state laws, the ruling said.
When the underlying suits were filed, Masters was insured under eight commercial general liability policies it had purchased between July 2010 and July 2018 from Acuity Insurance, based in Sheboygan, Wisconsin.
Acuity filed suit in state court, seeking a declaration it does not have a duty to defend or indemnity Masters in the underlying litigation. The lower court ruled in Acuity’s favor but was overturned by a unanimous three-judge state court panel.
The trial court held Acuity did not have a duty to defend the company under its coverage because the governmental entities are not seeking damages for bodily injury, which is required under its coverage, said the ruling.
“It is not unprecedented for insurers to defend insureds against claims asserted by governmental entities even where the government itself did not sustain bodily injury for property damage,” the ruling said.
“The governmental entities are seeking their own economic losses, but some of those losses (such as medical expenses and treatment costs) are arguably ‘because of’ bodily injury.
“Acuity has failed to show that its interpretation of the policies is ‘the only one that can fairly be placed on the language in question’” said the ruling, in citing an earlier case.
“Some of the claims in the underlying suits are potentially within the policies’ coverage,” it said, in holding the trial court had erred.
The trial court also said Acuity was excused from defending against the underlying suits because if a “loss-in-progress” provision in its coverage. It held that Masters knew of the opioids epidemic before it was insured by Acuity, and yet continued to fill suspicious orders.
“We agree that (Masters) may have been aware there was a risk that if it filled suspicious orders, diversion of its products could contribute to the opioid epidemic, thus causing damages to the governmental entities. But we hold that mere knowledge of this risk is not enough to bar coverage under the loss-in-progress provision,” the ruling said.
The court also held that because it holds the insurer has a duty to defend, “a decision on its duty to indemnify would be premature until a final judgment in the underlying suits.” The case was remanded for further proceedings.
Masters attorney, Paul A. Rose, a partner with Brouse McDowell LPA in Akron, Ohio, said the ruling “comports with prior Ohio law.” He said, “There was no real surprise about the analysis the court undertook.”
Acuity’s attorneys did not respond to a request for comment.
Earlier this month, a federal district court affirmed an earlier order stating a Hiscox PLC unit must pay legal costs under a directors and officers liability policy it issued to a bankrupt pharmaceutical distributor accused of unlawful distribution of opioids.
Travelers Cos. Inc. and Arch Capital Group Ltd. units are not obligated to defend and indemnify a Louisiana construction company because the “intentional and malicious” behavior alleged in the underlying lawsuit was not an occurrence under their coverage, says a federal appeals court, in affirming a lower court ruling.