In Westfield National Insurance Co. v. Quest Pharmaceuticals, the Sixth Circuit held that two insurers owed no coverage obligations to Quest Pharmaceuticals in connection with 77 lawsuits filed against it alleging misconduct that contributed to a nationwide epidemic of opioid abuse. 57 F.4th 558 (6th Cir. 2023).
Quest Pharmaceuticals, a Kentucky-based distributor of generic drugs, faced an onslaught of lawsuits from cities, counties, a county health department, private health clinics, and the state of Illinois due to its role in distributing generic versions of drugs, including opioids. The allegations included violations of the RICO Act and state statutes, as well as common law claims of public nuisance and negligence due to Quest’s alleged contributions to the opioid crisis. Notably, the underlying plaintiffs “d[id] not seek damages for death, physical injury to person, emotional distress, or physical damages to property” nor were their claims based on, or derivative of, the rights of others. Instead, the plaintiffs sought economic damages due to alleged costs incurred in addressing the opioid crisis, such as damages for the costs of abatement of the ongoing public nuisance; the establishment of an “abatement fund” for future costs of abating the opioid nuisance; and actual damages relating to the increased costs borne by the underlying plaintiffs for the services they provided due to the opioid epidemic.
Quest subsequently reported the lawsuits to its insurers — Westfield National Insurance Company and Motorists Mutual Insurance Company — under their respective commercial general liability policies. The insurers, in turn, filed a declaratory judgment action seeking a declaration of no coverage.
Both policies contain similar language in their insuring agreements and definitions: the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies,” and “[d]amages because of ‘bodily injury’ include damages claimed by any person or organization for care, loss of services or death resulting in any time from the ‘bodily injury.’” “Bodily injury” was defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.”
According to the insurers, no coverage was owed because the damages sought were not “because of bodily injury,” particularly where the claims failed to allege any bodily injury, and sought only economic damages for costs incurred in addressing the opioid epidemic. Quest, in turn, argued that the damages were “because of bodily injury,” where they would not have been brought but for injuries caused by opioid abuse and addiction.
On appeal of the summary judgment granted in favor of the insurers, the Sixth Circuit affirmed summary judgment and held that the underlying actions were not “because of bodily injury” within the meaning of the commercial general liability policies. Specifically, the court determined that the plain language of the policies showed that they do not cover the underlying claims, and alternatively, that no insured would reasonably expect the policies to cover the kind of lawsuits at issue.
The court noted that, unlike other cases which adopted a broader interpretation of “because of,” the underlying plaintiffs here were not required to plead and prove the existence of a covered bodily injury to recover the economic damages alleged against Quest. Notwithstanding the tort claims, because the underlying theory of recovery was that Quest’s alleged misconduct resulted in economic harms, the court determined that “the lawsuits allege[d] no particular injury to any particular person [but rather] broadly describe[d] societal harms caused by opioid addiction.”
As such, the court concluded that lawsuits brought by local governments and other entities to recover costs incurred due to the opioid epidemic — but not to recover for any specific bodily injuries — did not trigger the insurers’ duties to defend or indemnify Quest.
