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The Opioid Crisis Costs Billions: Will Insurance Pay for It? (Part 1)

There is an opioid crisis plaguing the United States. Millions of Americans are addicted, and tens of thousands die annually from overdoses. Nationally, the number of people who take prescription opioids for non-medical purposes is greater than the number who use cocaine, heroin, and hallucinogens combined.

To address this problem, hundreds of governmental entities have brought claims against the prescription opioid industry, including manufacturers, distributors, and retailers of prescription opioids (i.e., pharmacies), asserting that they caused and fueled the opioid crisis. The parties are actively litigating regarding defendants’ role in and liability for the crisis—dozens of motions to dismiss have been briefed, over a dozen have been denied, and discovery is ongoing.

Policy Analysis

As with any coverage analysis, the first step is to determine which policy types potentially apply and how the language of those policies interacts with the underlying claims.

Like most businesses, manufacturers, distributors, and pharmacies likely have more than one kind of insurance. With regard to coverage for opioid lawsuits, at least three types of policies are relevant: comprehensive general liability (“CGL”), errors and omissions (“E&O”), and directors’ and officers’ (“D&O”). Also of note is products liability coverage, which may be included within CGL, E&O, or D&O policies, or may stand alone.

Parties and counsel then should review the provisions in their policies that are the subject of the “typical” coverage dispute and compare them to the allegations of the relevant complaints. For CGL, this includes definitions of accident and occurrence, expected and intended provisions, limitations on coverage for intentional acts, products exclusions, definitions of bodily injury, and completed operations coverages. For E&O, consider at least language referring to wrongful conduct, fraud, civil fines, and penalties. For D&O, relevant provisions may include professional services exclusions, the extent to which coverage applies to an entity versus directors and officers, and the definition of loss.

Parties also should look closely at coverage parts, definitions, and exclusions that are less frequently the subject of coverage disputes but that an insurer might argue bar coverage for opioid-related claims. For example, some policies purport to exclude claims brought by governmental entities. Of course, as with all exclusions, the devil is in the details of the policy language—what it purports to exclude may not be what it actually excludes.

The final step of the language analysis is to consider a portfolio as a whole, rather than focusing on policy types in isolation. Depending on policy language, arguing that one type of coverage applies to opioid-related claims may preclude arguments that other types of coverage apply. Thus, failing to consider how coverage types interact can inadvertently result in minimizing limits.

Coverage Rulings

Of course, this analysis is not the end of the story—parties must also look to available coverage rulings to put their policies in context with the state of the law. Thus far, these rulings provide little clear guidance. They address limited categories of coverage, concern only certain types of underlying claims, and are divided on the application of key provisions. 

Click here to read Part 2 on “Occurrence.”

© 2020 Gilbert LLPNational Law Review, Volume IX, Number 141

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About this Author

Insurance Litigation Attorney, Gilbert Law Firm, Jenna Hudson
Partner

Jenna’s practice focuses on complex civil litigation and dispute resolution. She has represented policyholders in both federal and state trial courts with respect to a wide range of insurance coverage matters, including bodily injury and property damage, food-contamination, toxic tort, and directors’ and officers’ coverage. Jenna also advises post-bankruptcy trusts in the recovery of insurance proceeds. In this arena, representative transactions include:

Representative Transactions:

  • representing one of the...

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