Pharmacies demand insurer defense against opioid crisis lawsuits

ATLANTA (CN) — Pharmacies urged an 11th Circuit panel Thursday to order their insurers to defend them in several underlying lawsuits filed by government entities, hospitals and medical management companies over the opioid crisis.

Publix, a supermarket chain that operates retail pharmacies, is named as a defendant in more than 60 lawsuits related to the opioid epidemic, sparked by a national increase in overdose deaths involving opioid prescriptions. It has incurred more than $6 million dollars in defense costs against claims it contributed to an oversupply of opioids.

Bloodworth Wholesale Drugs, an independent wholesale distributor of generic pharmaceuticals, including opioids, was named in 26 lawsuits since 2017, arguing it failed to monitor for or investigate suspicious orders of opioid medications.

County and municipal governmental entities filed 24 of the lawsuits at issue, while the remaining two lawsuits were filed by hospital organizations and medical management companies.

In their separate appeals, Publix and Bloodworth seek declarations that their insurers have a duty to defend and indemnify them in the pending actions.

“To me, the big question here is whether the policy requires the identification of a specific victim as opposed to bodily injury in general,” U.S. Circuit Judge Robin Rosenbaum said.

At issue for the three-judge circuit panel was whether the bodily injuries claimed in those lawsuits can be sought by the municipal entities or if the damages must be attributed to specific individuals.

“Individuals who were harmed, are who on behalf they are seeking to compensate,” U.S. Circuit Judge Nancy Abudu, a Joe Biden appointee, said. “There’s no getting around the fact that the underlying lawsuits are about a significant number of people.”

The underlying litigation seeks to recover costs spent on providing additional government services, healthcare administration and medical treatment to combat the opioid crisis and help those suffering addiction.

Federal courts in Georgia and Florida both sided with the insurers after concluding that the underlying litigation did not seek damages “because of bodily injury,” as defined by the language of the insurance policies. They held that although the claims refer to people injured by opioids, the plaintiffs do not seek reimbursement for the costs of those particular individuals’ medical treatment.

However, the appellate judges did not appear completely persuaded by this finding. “A fair reading would show the underlying lawsuits are related to bodily injuries,” Abudu said.

Attorney Lee Clayton, representing Allied Property and Casualty Insurance Company and AMCO Insurance Company, argued the plaintiffs in the underlying litigation do not claim any physical injuries, but instead seek to recover economic damages.

“But it is physical in nature,” Rosenbaum said.

Under the policies, “bodily injury” is defined as “sickness or disease sustained by a person, including mental anguish or death resulting from any of these at any time.”

“The disease is obviously the addiction,” the Barack Obama appointee added.

Faison Middleton, the lawyer representing Bloodworth Drugs, criticized the insurance companies for “abandoning” the pharmacy companies who paid for their premiums for decades.

Rosenbaum suggested potentially deferring the question to the Georgia Supreme Court, given the large volume of cases and companies involved in the matter.

The panel was rounded out by U.S. Circuit Judge Britt Grant, a Donald Trump appointee. They did not signal when they intend to issue a ruling.

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