A wave of insurance claims related to the nation’s opioid crisis is coming ashore, and insurers are trying to make sure they’re not stuck with the bill.
Navigators Specialty Insurance Co. is just one of the insurers arguing it shouldn’t have to defend or indemnify policy holders against opioid-related claims. It’s asking a California federal court to rule it doesn’t have to defend or cover drug company Assertio Therapeutics Inc. (formerly Depomed Inc.) in approximately 38 separate lawsuits brought between March and December 2018 against it and other makers of opioids.
How the U.S. District Court for the Northern District of California and other courts rule on this issue could affect the availability of insurance defense costs and coverage for companies seeking reimbursement of opioid-related litigation costs. Given the overwhelming number of opioid-related suits that have been filed so far, a huge amount of money is at stake and coverage decisions could affect the possibility of reaching settlements in these suits.
Because its comprehensive general liability (CGL) policies don’t cover economic losses connected with opioid-related injuries, Navigators claims it has no duty to defend or indemnify Assertio under its 2017 or 2018 policies. And its 2018 policy specifically excludes opioid-related claims, Navigators says.
“It really is a core question about how insurance works and whether this type of case can be shoe-horned into the insurance policy,” Laura A. Foggan, an insurance coverage lawyer with Crowell & Moring LLP in Washington, told Bloomberg Law. Foggan represents insurers.
Claims that manufacturers intentionally misrepresented the risks of opioid use to boost sales are not the accidental or unexpected events CGL policies typically have been held to cover, Foggan said. And there are myriad other questions, including whether the products exclusion and medical services exclusions would apply to bar coverage of such suits and whether public regulatory actions over opioid harm seek “damages” for “bodily injury” as defined in insurance contracts.
Handful of Decisions
So far, there have only been a few decisions in the area of insurance coverage for opioid-related claims, and the cases have gone both ways.
“It’s not over by a long shot,” Barry Buchman, an attorney with Haynes & Boone in Washington, told Bloomberg Law. Buchman represents businesses in insurance coverage disputes. “There will be more decisions,” he said.
In the meantime, Buchman said, policy holders should make sure they don’t overlook older policies that might provide broader coverage because they have less-restrictive exclusionary language and/or contain lower deductibles. “Don’t just look at recent policies,” he said.
While insurers and policy holders wait for the law to develop, the Navigators’ filing is just the tip of the iceberg for potential insurance coverage claims related to the opioid crisis.
Lawsuits Pile Up
Lawsuits alleging drug companies, distributors, and retail pharmacies misled health-care providers and consumers about opioid painkillers’ addiction risks continue to pile up.
Multiple lawsuits against drugmakers, distributors, and others filed in federal courts have been consolidated in massive multidistrict litigation in the U.S. District Court for the Northern District of Ohio. There are now about 1,500 cases in the MDL, more than 1,200 of which were filed by various government entities. And that doesn’t take into account similar suits filed in state courts across the country.
The availability of insurance coverage may ultimately affect the settlement calculations of the drug companies, distributors, and retailers involved in the opioid-related cases, Buchman said.
“The amount of coverage will affect when and whether and for how much these kinds of cases settle,” he said. “You can’t completely separate the settlement analysis from the coverage.”
The case is Navigators Specialty Insurance Co. v. Depomed Inc., N.D. Cal., No. 3:19-cv-00255, 1/14/19.