Justia Insurance Law Opinion SummariesArticles Posted in Drugs & Biotech
Acuity v. Masters Pharmaceuticals, Inc.
The Supreme Court reversed the decision of the court of appeals reversing the judgment of the trial court concluding that Acuity, an insurer, did not owe Masters Pharmaceutical, Inc. a duty to defend it in the several lawsuits brought by cities and counties in three states (the governments) for losses caused by the opioid epidemic, holding that Acuity did not owe Masters a duty to defend.Cities and counties in West Virginia, Michigan, and Nevada brought the underlying lawsuits against Masters, a wholesale distributor of pharmaceutical products, including prescription opioids, alleging that Masters's conduct contributed to the opioid epidemic. Acuity filed an action for a declaratory judgment that it owed no duty to defend or indemnify Masters in the underlying suits. The trial court granted summary judgment for Acuity. The court of appeals reversed. At issue was whether the governments sought damages for their own economic losses and not "damages because of bodily injury." The Supreme Court reversed, holding (1) the governments did not seek "damages because of bodily injury"; and (2) therefore, Acuity did not owe Masters a duty to defend it in the underlying suits. View "Acuity v. Masters Pharmaceuticals, Inc." on Justia Law
ACE American Insurance Company v. Rite Aid Corporation
Appellees, Rite Aid Corporation, Rite Aid Hdqtrs. Corp., and Rite Aid of Maryland, Inc. (collectively, “Rite Aid”), held a general liability insurance policy underwritten by defendany Chubb, Limited ("Chubb"). Rite Aid and others were defendants in multi-district litigation before the United States District Court for the Northern District of Ohio (the “MDL Opioid Lawsuits”). Plaintiffs in that suit filed over a thousand suits in the MDL Opioid Lawsuits against companies in the pharmaceutical supply chain for their roles in the national opioid crisis. Certain suits were bellwether suits - including the complaints of Summit and Cuyahoga Counties in Ohio (“the Counties”) which were at issue here. The question this case presented for the Delaware Supreme Court was whether insurance policies covering lawsuits “for” or “because of” personal injury required insurers to defend their insureds when the plaintiffs in the underlying suits expressly disavowed claims for personal injury and sought only their own economic damages. The Superior Court decided that Rite Aid’s insurance carriers were required to defend it against lawsuits filed by two Ohio counties to recover opioid-epidemic-related economic damages. As the court held, the lawsuits sought damages “for” or “because of” personal injury because there was arguably a causal connection between the counties’ economic damages and the injuries to their citizens from the opioid epidemic. The Supreme Court reversed, finding the plaintiffs, governmental entities, sought to recover only their own economic damages, specifically disclaiming recovery for personal injury or any specific treatment damages. Thus, the carriers did not have a duty to defend Rite Aid under the governing insurance policy. View "ACE American Insurance Company v. Rite Aid Corporation" on Justia Law
St. Paul Fire & Marine Insurance Co. v. AmerisourceBergen Drug Corp.
The Supreme Court held in this case that the circuit court had the power to enter an order precluding a party to a West Virginia lawsuit from instituting or prosecuting collateral litigation in a sister state.This lawsuit was brought by a pharmaceutical distributor against the insurance companies that provided it with liability insurance. At issue on appeal was the West Virginia circuit court's "anti-suit injunction" prohibiting the insurance companies from pursuing parallel litigation against the distributor in California. The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court clearly had the authority to enter an anti-suit injunction; but (2) an anti-suit injunction was not narrowly tailored to protect the court's authority while respecting the sister state court, necessitating remand. View "St. Paul Fire & Marine Insurance Co. v. AmerisourceBergen Drug Corp." on Justia Law
Rutledge v. Pharmaceutical Care Management Association
Pharmacy benefit managers (PBMs) reimburse pharmacies for the cost of drugs covered by prescription-drug plans by administering maximum allowable cost (MAC) lists. In 2015, Arkansas passed Act 900, which requires PBMs to reimburse Arkansas pharmacies at a price at least equal to the pharmacy’s wholesale cost, to update their MAC lists when drug wholesale prices increase, and to provide pharmacies an appeal procedure to challenge MAC reimbursement rates, Ark. Code 17–92–507(c). Arkansas pharmacies may refuse to sell a drug if the reimbursement rate is lower than its acquisition cost. PCMA, representing PBMs, sued, alleging that Act 900 is preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1144(a).Reversing the Eighth Circuit, the Supreme Court held that Act 900 is not preempted by ERISA. ERISA preempts state laws that “relate to” a covered employee benefit plan. A state law relates to an ERISA plan if it has a connection with or reference to such a plan. State rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage are not preempted. Act 900 is a form of cost regulation that does not dictate plan choices. Act 900 does not “refer to” ERISA; it regulates PBMs whether or not the plans they service fall within ERISA’s coverage. Allowing pharmacies to decline to dispense a prescription if the PBM’s reimbursement will be less than the pharmacy’s cost of acquisition does not interfere with central matters of plan administration. The responsibility for offering the pharmacy a below-acquisition reimbursement lies first with the PBM. Any “operational inefficiencies” caused by Act 900 are insufficient to trigger ERISA preemption, even if they cause plans to limit benefits or charge higher rates. View "Rutledge v. Pharmaceutical Care Management Association" on Justia Law
Commonwealth v. Stirlacci
In this case involving the indictments of Dr. Frank Stirlacci and his office manager, Jessica Miller, for violations of the Controlled Substances Act and for submitting false health care claims to insurance providers, the Supreme Judicial Court affirmed in part and reversed in part the superior court's judgment dismissing several of the indictments, holding that there was sufficient evidence to indict Shirlacci on twenty-six counts of improper prescribing and to indict both defendants on twenty of the twenty-two counts of submitting false health care claims.The charges against Defendants included twenty-six counts each of improper prescribing, twenty counts each of uttering a false prescription, and twenty-two charges each of submitting a false health care claim. The trial judge dismissed the indictments for improper prescribing and uttering false prescriptions and dismissed six of the indictments against each defendant for submitting false health care claims. The Supreme Judicial Court reversed in part, holding (1) the evidence was sufficient to indict Stirlacci on all counts of improper prescribing, but Miller's status as a nonpractitioner precluded her indictment on improper prescribing; (2) there was insufficient evidence to indict either defendant for uttering false prescriptions; and (3) there was sufficient evidence to indict both defendants on twenty counts of submitting false health care claims. View "Commonwealth v. Stirlacci" on Justia Law
The Traveler’s Property Casualty Company of America v. Actavis, Inc.
To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law
Stryker Corp. v. National Union Fire Insurance Co.
In the 1990s, Stryker purchased a Pfizer subsidiary that made orthopedic products, including the “Uni-knee” artificial joint. It was later discovered that those devices were sterilized using gamma rays, which caused polyethylene to degrade. If implanted past their five-year shelf-life, the knees could fail. Expired Uni-Knees were implanted in patients. Stryker, facing individual product-liability claims and potentially liable to Pfizer, sought defense and indemnification under a $15 million XL “commercial umbrella” policy, and a TIG “excess liability” policy that kicked in after the umbrella policy was fully “exhausted.” XL denied coverage, arguing that the Uni-Knee claims were “known or suspected” before the inception of the policy. Stryker filed lawsuits against the insurers, then unilaterally settled its individual product-liability claims for $7.6 million. Stryker was adjudicated liable to Pfizer for $17.7 million. About 10 years later, the Sixth Circuit held that XL was obliged to provide coverage. XL paid out the Pfizer judgment first, exhausting coverage limits. TIG declined to pay the remaining $7.6 million, arguing that Stryker failed to obtain “written consent” at the time the settlements were made. Stryker claimed that the policy was latently ambiguous because XL satisfied the Pfizer judgment first, Stryker was forced to present its settlements to TIG years after they were made. The district court granted Stryker summary judgment. The Sixth Circuit reversed, finding the contract unambiguous in requiring consent. View "Stryker Corp. v. National Union Fire Insurance Co." on Justia Law
Cincinnati Ins. Co. v. H.D. Smith, LLC.
West Virginia sued pharmaceutical distributors, seeking to hold them liable for contributing to the state’s epidemic of prescription drug abuse. The complaint alleged that certain pharmacies, “pill mills,” knowingly provided citizens with hydrocodone, oxycodone, codeine, and other prescription drugs, not for legitimate uses, but to fuel and profit from their addictions. The state contends that those pharmacies ordered drugs in quantities so large that the distributors should have known they would be used for illicit purposes. H.D. Smith, a distributor, had a general commercial liability insurance policy issued by Cincinnati Insurance. The policy covered damages that H.D. Smith became legally obligated to pay “because of bodily injury,” defined as “bodily injury, sickness or disease sustained by a person, including death.” “[D]amages because of bodily injury” include “damages claimed by any person or organization for care, loss of services or death resulting at any time from the bodily injury.” Cincinnati refused to defend the suit and obtained a declaratory judgment. The Seventh Circuit reversed summary judgment. The plain language of the policy requires Cincinnati to defend a suit brought by a plaintiff to recover money paid to care for someone who was injured by H.D. Smith. West Virginia’s suit fits that description. View "Cincinnati Ins. Co. v. H.D. Smith, LLC." on Justia Law
Sandoz, Inc. v. Mississippi
The State of Mississippi brought a civil action against generic pharmaceutical provider Sandoz, Inc., alleging that Sandoz impermissibly exploited Mississippi’s Medicaid reimbursement program by routinely and exponentially reporting fictitious “Average Wholesale Prices,” a key data factor in the federally supervised formula used by the Mississippi Division of Medicaid to reimburse pharmacies serviced by Sandoz. The trial court, sitting as fact-finder, found Sandoz in violation of the Mississippi Consumer Protection Act and liable for common-law fraud. Sandoz appealed, and the State cross-appealed. On a deferential standard of review, the Supreme Court affirmed the trial court in full. View "Sandoz, Inc. v. Mississippi" on Justia Law
Sidney Hillman Health Ctr. of Rochester v. Abbott Labs., Inc.
From 1998 to 2012 Abbott marketed the anticonvulsant medication Depakote for applications that had not been FDA-approved (off-label uses). Physicians may prescribe drugs for off-label uses, but pharmaceutical companies are generally prohibited from marketing drugs for those same applications. Qui tam actions were filed under the False Claims Act. In 2009, Abbott disclosed in an SEC filing that the Department of Justice was investigating its marketing. Abbott pleaded guilty to illegally promoting Depakote from 2001 through 2006 and agreed to pay $1.6 billion to settle the criminal and qui tam actions. Employee benefits funds filed suit 15 months later, alleging that Abbott misrepresented Depakote’s safety and efficacy for off-label uses, paid kickbacks to physicians, established and funded intermediary entities to promote the drug for off-label uses, and concealed its role in these activities, in violation of the Racketeer Influenced and Corrupt Organizations Act. The district court dismissed, finding that the statute of limitations for the RICO claim began to run in 1998, when the funds initially reimbursed a prescription for off-label use. The court refused to toll the limitations period until the guilty plea, finding that Abbott’s concealment efforts were not designed to hinder potential lawsuits. The Seventh Circuit reversed, finding that dismissal was premature without an opportunity for discovery into when a reasonable fund should have known about its injuries from off-label marketing. View "Sidney Hillman Health Ctr. of Rochester v. Abbott Labs., Inc." on Justia Law