Presented by the Insurance Services Practice Group

Ohio Supreme Court Finds No Duty to Defend in Opioid Litigation

The Ohio Supreme Court issued its long awaited decision in Acuity v. Masters Pharmaceutical, Inc., 2022-Ohio-3092 on September 7, 2022, one year after the case was argued. In this closely watched decision, the court was asked to determine whether a CGL insurer was required to defend a pharmaceutical distributor that had been sued by certain cities and counties for economic loss caused by the opioid epidemic. The Hamilton County Common Pleas Court had found in favor of the insurer. However, the First District Court of Appeals reversed, finding that there was a reasonable argument that some of the damages sought by the governmental entities were “because of bodily injury,” thereby triggering the duty to defend. The Ohio Supreme Court reversed and entered judgment in favor of the insurer, finding no duty to defend. 

The insurer’s appeal to the Ohio Supreme Court raised two issues:

1.    Does a CGL policy that covers an insured’s liability for an “occurrence” causing “bodily injury” to specific persons provide coverage for the insured’s liability for corporate practices that allegedly caused governmental entities to sustain economic losses for increased governmental services? 
2.    Does the “loss-in-progress” provision bar coverage for bodily injury that the insured knows has occurred, in whole or in part, before the policy period began, regardless of whether the insured knows of the scope of any damages resulting from the bodily injury? 

Both of these issues of law were closely watched by insurers and policyholders’ attorneys because of their potential impact on a number of other cases. The Ohio Supreme Court has never fully addressed the “known loss doctrine,” and the scope of the duty to defend as it relates to the opioid litigation is a hotly contested issue throughout the United States. 

The court analyzed and discussed the decisions from other courts throughout the country that have ruled on the issue of insurance coverage for defendants in the opioid litigation. Ultimately, it agreed with the holding of the Delaware Supreme Court in ACE Am. Ins. Co. v. Rite Aid Corp., 270 A.3d 239, and ruled in favor of the insurer on the first issue presented, finding that: “Insurer of distributor of pharmaceutical products, including prescription opioids, does not owe a duty to defend its insured in lawsuits brought by governmental entities seeking economic damages for losses caused by the opioid epidemic—The insurance policies cover ‘damages because of bodily injury,’ and the damages sought by the governmental entities do not fall within that coverage.”

The court did not address the known loss doctrine, the second issue presented, because the decision on the first issue presented resolved the matter. This case will, no doubt, have far reaching impact, not only on the defense of governmental actions in the opioid litigation, but on other matters involving CGL policies.

Please contact me with any questions or for copies of the policy language of these decisions. 

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