Laura A. Foggan and Michael Lee Huggins
America's opioid epidemic has reached the courts. States and local governments have filed suits against pharmaceutical manufacturers and distributors to recover expenses from responding to the public's opioid addiction, allegedly caused by the pharmaceutical companies. Companies facing such suits have begun tendering claims to their insurance carriers under commercial general liability (CGL) policies, which has prompted high-profile coverage disputes, including in California. Such coverage disputes have included common issues regarding whether the relief sought is "for" or "because of" bodily injury, whether the act or the injury alleged must have been unintentional to constitute an "occurrence," and whether the products exclusion in CGL policies applies. The California Supreme Court this year granted review of one such case, joining only a handful of states leading the discussion on such coverage issues.
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One coverage issue that has arisen is whether the action seeks relief "for" or "because of" bodily injury. CGL policies commonly define "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Many policies cover "all damages that the insured becomes legally obligated to pay for bodily injury," or "because of bodily injury." There are significant questions about what loss is at stake in state and local government claims seeking to recover costs associated with the opioid epidemic. Do government public nuisance claims seek relief for purely economic harm, or do they seek recovery "for" or "because of" bodily injury?
Two opioid coverage cases have held that the relief that the government plaintiff sought (i.e., costs the government had spent to address opioid addiction) constituted purely economic harm, and therefore, was not covered under CGL policies that provided coverage "for" or "because of" bodily injury. In the first such case, Richie, the government had stated in the underlying action against the pharmaceutical company that "the only monetary damages asserted in this action are those that inure to the state, alone. There are no monetary damages sought in this action based on damages suffered by individual West Virginia citizens." (Cincinnati Ins. Co. v. Richie Enter. LLC (W.D.Ky. 2014) 2014 WL 3513211, at *4.) Therefore, the Kentucky federal court concluded that West Virginia was seeking to recover economic losses—not damages "because of" bodily injury.
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In a related case, Anda I— where West Virginia alleged that the pharmaceutical company had violated consumer-protection laws by "distributing controlled substances without sufficient monitoring and controls," including by selling to pharmacies "such large quantities of prescription drugs that the number of prescription drugs in some communities is far greater than the population could actually warrant"—a Florida federal court followed Richie in determining that the underlying action sought...
