Business Insurance: By Judy Greenwald – American International Group Inc and Chubb Ltd units do not have to pay McKesson Corp.’s defense costs in connection with three representative cases filed in the opioid litigation because the drug distributor’s alleged actions were accidental, a federal district court in San Francisco said Wednesday.
McKesson filed suit against AIG unit National Union Fire Insurance Co. of Pittsburgh and Chubb unit ACE Property and Casualty Insurance Co. seeking defense costs in litigation filed against it by two Ohio counties and the state of Oklahoma for its alleged liability in connection with the opioid epidemic, according to the ruling in AIU Insurance Co, et al v McKesson Corp.
The three cases are “exemplar suits,” according to the ruling by the district court.
The ruling focuses on the insurers’ duty to defend McKesson which, as it states, is broader than the duty to indemnify.
The lawsuits “bring claims based on alleged deliberate conduct – McKesson’s distribution of opioids – and allege that conduct produced the government plaintiffs’ injuries,” the ruling said.
“Because the claims are based on deliberate conduct, they do not allege an accident ‘unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage,’” it said in citing an earlier case.
“Resolving all doubts in McKesson’s favor…the complaints did not allege facts suggesting diversion was an additional, unexpected, independent, and unforeseen happening that produced the injuries, nor do they allege other facts suggesting an alternative additional, unexpected, independent, and unforeseen happening produced the injuries,” the ruling said, in ruling in the insurer’s favor.
Attorneys in the case had no comment or did not respond to requests for comment.
Last year, McKesson, with AmerisourceBergen Corp. and Cardinal Health Inc., were the three largest US drug distributors, along with drugmaker Johnson & Johnson, proposed paying up to $26 billion to resolve opioid-related litigation.
According to the Opioid Settlement Tracker, more than 3,000 cases filed by plaintiff cities, counties, and tribal sovereign nations against dozens of “big pharma” opioid defendants are participating in the opioid multidistrict litigation.
From 1999 to 2019, nearly 500,000 people died from an overdose involving any opioid, including prescription and illicit opioids, according to the Centers for Disease Control.