The Sixth Circuit Court of Appeals recently decided that two insurers do not owe either the duty to defend or the duty to indemnify to Quest Pharmaceuticals, a Kentucky-based company defending itself against nearly 80 lawsuits based on its promotion and distribution of opioid prescriptions. The case is Westfield Nat'l Ins. Co. v. Quest Pharms., Inc., 2023 U.S. App. LEXIS 851 (6th Cir. 2023).
Quest Pharmaceuticals, Inc. (Quest) is but one of the wholesale drug distributors currently in court for its alleged contribution to the nationwide opioid crisis. When cases were filed against Quest, the company promptly notified its CGL insurers: Motorists Mutual Insurance Company (Motorists), who insured Quest from 2004 to 2015, and Westfield National Insurance Company (Westfield), who was the company's insurer from 2015 to 2017. The suits had been filed by various cities, counties, health departments, private clinics, and even the State of Illinois, seeking damages for "significant expenses for police, emergency, health, prosecution, corrections, rehabilitation, and other services." (internal quotes, citation omitted). Though Motorists and Westfield insured Quest under different policies, the relevant policy language, including definitions for both "bodily injury" and "damages because of bodily injury," was identical. Both Westfield and Motorists sought declaratory judgment that neither company owed the duties of defense and indemnity to Quest as soon as they heard of the lawsuits. In each case, the insurer filed for and was granted summary judgment, which Quest appealed; both appeals were denied. The cases were consolidated for argument and opinion before the Sixth Circuit.
Quest, Motorists, and Westfield all agreed on two important points: the opioid suits against Quest were seeking damages under the respective policies, and the damages sought were not "directly for bodily injury." The debate before the Sixth Circuit rested on a single difference in opinion: were the damages sought in the opioid suits against Quest "because of bodily injury" under the respective insurance policies? In applying Kentucky law to the situation, the judges performed separate analyses for the plain-language meanings of "because of" and "bodily injury."
Quest alleged the damages from the opioid suits would be "because of" bodily injury because they had only been filed due to injuries occasioned by opioid abuse and addiction. Motorists and West field argued the cases were seeking damage for purely economic harm; indeed, many of the complaints filed for the opioid suits clearly and specifically stated they were not seeking damages for death, bodily injury, emotional distress, or property damage of any one specific person.
To support its position, Quest cited two Kentucky cases that had, in essence, applied an insurance policy's "because of" bodily injury clause in the broader manner for which Quest advocated. The judges were quick to point out that one of those cases had involved clean-up costs for property damage caused by a specifically-covered peril; the other case, in which the opinion was unpublished, had had its rationale rejected by another court deciding the same general issue. What these cases had in common, however, was that the plaintiffs had been required to prove actual bodily injury or property damage in order to recover from the defendant. The plaintiffs in the opioid suits, according to the Sixth Circuit, would not need to make such proof to recover from Quest. The judges agreed with the district court that the opioid suit damages were not "because of" bodily injury.
The "bodily injury" analysis met the same fate. The Motorists policy and the Westfield policy contained identical definitions for "bodily injury": "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." The court pointed out that the phrase "sustained by a person" was a heavy indicator that claims for "damages because of bodily injury" had to be related to the bodily injury of a specific person or persons. As described above, most of the complaints for the opioid suits specifically stated they were not seeking damages for any specific person's bodily injuries.
The Sixth Circuit affirmed the verdict in favor of Motorists and Westfield.
Editor's Note: An insurer's duty to defend is much broader than the duty to indemnify, which is why the duty to defend can be separated from the duty to indemnify, but the duty to indemnify cannot be separated from the duty to defend. An insurer only owes the duty to defend if there is a possibility that the claims for which the insured is seeking coverage could be covered by the policy. In this case, the court compared Quest's complaint to each insurer's policy to determine whether any the slew of opioid suits against Quest could require either insurer to indemnify Quest for damages. Since the court did not find any case that might lead to a coverage situation, neither Motorists nor Westfield has to defend Quest in the opioid suits.
Read More: