Opioid Crisis: Not an “Accident?”
Written by Kristin Lausten
At least one court has determined that the opioid crisis is not an “accident” for purposes of determining whether there is insurance coverage and whether the insurer has a duty to defend. See Traveler’s Property Cas. Co. of America, v. Actavis, Inc., Case No. G053749 (Cal. App. 4th Dist. November 6, 2017). There are, however, cases that have come to the opposite conclusion based on the allegations in the respective complaints and where the suits were brought: West Virginia and South Carolina. The legal lessons to note: check the policy, check the complaint, check the choice of law provision, and check the state’s law on what constitutes an “accident” or “occurrence” for purposes of coverage.
Louisiana Insurance Defense: Actavis
In the Actavis case, a group of pharmaceutical manufacturers and distributors were sued by the California Counties of Santa Clara and Orange on the basis of state law claims with respect to deceptive business practices and advertising. In particular, the counties alleged that the pharmaceutical companies (collectively called “Actavis”) engaged in a “common, sophisticated, and highly deceptive marketing campaign” promoting opioid products for treating long-term chronic, non-acute, and non-cancer pain. According to the allegations, Actavis and its owners and employees knew the opioids were not suited for those purposes, given the highly addictive nature of the opioids. Despite such knowledge, the pharmaceutical companies engaged in their marketing and sales campaign for the purpose of increasing market share and increasing the sale of said opioids to the financial betterment of the pharmaceutical companies. There was also a consolidated case filed by the City of Chicago based on similar Illinois state law claims.
The pharmaceutical companies had insurance policies through Traveler’s. Travelers denied Actavis coverage and sought declaratory judgment.
Louisiana Insurance Defense: Opioid Crisis Not an “Accident”
The trial court ruled that Travelers had no duty to defend. In pertinent part, the primary commercial general liability policy covered “accidents.” Under California law, an “accident” is “an unexpected, unforeseen, or un-designed happening or consequence from either a known or an unknown cause.” The trial court then compared the allegations in the complaint and held that facts alleged did not constitute an “accident,” but rather allegations of intentional behavior, coverage for which was excluded under the policies.
Actavis argued that there were additional, unexpected, and unforeseen happenings that had occurred – namely that doctors were required to prescribe the drugs. Actavis noted that California case law provided that an “accident” may exist if “any aspect in the causal series of events leading to the injury or damage was unintended by the insured and a matter of fortuity.” Actavis argued that the role of doctors in prescribing and/or overprescribing their opioid products was an intervening, unintended, and unforeseen causal factor, taking the allegations into the category of “accident.” The trial court, however, rejected the argument. According to the court, even assuming that physicians overprescribed or mis-prescribed the opioids, such was neither unforeseen nor a “matter of fortuity.”
The court of appeals affirmed saying that the allegations could only be read as being based on the deliberate and intentional conduct of the pharmaceutical companies which caused opioid abuse, overdose deaths and other harms that were neither unexpected nor unforeseen.
Louisiana Insurance Defense: Same Result Likely Under Louisiana Law?
As noted above, there are some cases that have come to contrary results. Indeed, the California Court of Appeals distinguished some of those cases based on the facts, what was pleaded and differences between the laws of California and those of West Virginia and South Carolina. The legal definition of “accident” varies from state to state. California seems to focus on the idea of “foreseeability,” whereas South Carolina seems to focus on the idea of “intent.”
Here in Louisiana, both intent and foreseeability factor into the question of “accident.” See, for example, Smith v. Perkins, 648 So. 2d 482 (La. App. 4th Cir. 1994) (child molestation is an intentional act and the resulting harm was foreseeable — not covered under homeowner liability insurance policies — damages were not caused by an “accident” or “occurrence” under the policies). To date, no cases are yet reported under Louisiana law considering insurance coverage issues for opioid manufacture and/or distribution.
Defending Against Opioid Cases in Louisiana: Contact New Orleans Attorney Kristin M. Lausten
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Kristin M. Lausten
This article is provided as an educational service for general informational purposes only. The material does not constitute legal advice or rendering of professional services.