An insurance company is not obligated to protect a drug distributor from lawsuits filed by cities and counties that allege it failed to take appropriate steps to prevent prescription opioid abuse, the Ohio Supreme Court ruled Wednesday.
In a 5-2 decision, the Supreme Court stated that because the claims filed by cities and counties against Masters Pharmaceutical Inc. are for economic damages and not personal injury, the general commercial liability policy issued by Acuity does not apply to them. he will pay for “damage due to bodily injury”. The majority said that widespread coverage would be contrary to the Ohio precedent.
“Furthermore, if the purpose of the liability policy were to provide such broad coverage—with ‘damage due to bodily injury’ covering any claim for damages that is indirectly related to bodily injury sustained by a person—other wording was would be used to make that intent clear,” the conclusion reads.
The High Court overturned the decision of the First Circuit Court of Appeals and reinstated the decision of the Hamilton County Court of Common Pleas. The ruling exacerbates a growing disagreement among courts over whether insurers are required to protect drug dealers accused of facilitating the opioid overdose epidemic.
Numerous lawsuits have been filed against drug wholesalers and retailers. The case, which went to the Ohio Supreme Court, was initiated by 22 cities and counties in West Virginia, Michigan and Nevada that accused Masters and other wholesale drug distributors of improperly marketing and distributing prescription painkillers.
Masters asked Acuity to protect her under a liability policy it acquired from 2010 to 2018. Instead, Acuity filed suit seeking a declaratory ruling by the Hamilton County Court of Common Pleas that it was not obligated to defend Masters from the lawsuit.
The trial court agreed with Acuity, but the appeals court overturned this. It ruled that Acuity should defend itself against the lawsuits as they claim the economic damage was caused by physical harm from opioid addiction.
After the case was heard by the Supreme Court, the Ohio Insurance Institute, the Comprehensive Claims Litigation Association, and the American Property Accident Insurance Association filed amicus summaries in favor of the insurer. The United Insurers have filed a brief in support of the Masters.
Masters cited a 2016 Seventh Circuit Court of Appeals ruling that found an insurance company obligated to defend an insured opioid distributor against a West Virginia lawsuit. (Cincinnati Inc. Company v. HD Smith, LLC)
However, the majority of the Supreme Court cited a Delaware Supreme Court decision in another case, which found that an insurance company was not required to protect an insured pharmacy chain from lawsuits filed by Ohio counties seeking “economic damage” caused by the opioid addiction epidemic. (Ace Am. Inc. Co. v. Rite Aid Corp.)
“The Delaware Court found that the policy required “more than some connection between bodily injury and damages recoverable due to bodily injury, namely that the underlying claims stem from the bodily injury and the damage required to be attributed to it specific bodily injury. “.
The majority view is that the claims made against Masters are similar, if not identical, to the claims against Masters. Genesee County, Michigan, for example, alleges that Masters failed to take action to prevent the mishandling of opioid prescriptions and “greatly contributed to a massive increase in opioid abuse and dependence” that “directly caused a public health and law enforcement crisis.” which forced the county to “incur huge costs”.
The majority stated that the claims seek damages for the cumulative economic damage caused by the opioid epidemic, and not for any specific opioid-related bodily injury suffered by the citizen.
“Certainly, the opioid epidemic as a public health crisis is necessarily associated with bodily harm such as opioid addiction, hospitalizations and deaths,” the conclusion reads. “But personal injury claims alone cannot automatically initiate a claim under ‘damage due to personal injury’ coverage.”
Judges Melody Stewart and Jennifer Brunner disagreed. Stewart wrote that the wording of the policy does not limit claims to those seeking redress for their own personal injury. The majority opinion adds restrictions that are not specified in the policy, its dissenting opinion says.
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