On September 7, 2022, the Supreme Court of Ohio decided that an insurance policy that provides coverage for “damages because of bodily injury” does not cover claims brought by counties and cities to recover economic costs they incurred as a result of the opioid epidemic. See Acuity v. Masters Pharmaceutical, Inc., Slip Opinion No. 2022-Ohio-3092.
Masters Pharmaceutical, Inc. (“Masters”) was a wholesale distributor that filled and shipped orders for prescription opioids from pharmacies across the country. Complaints were filed against Masters by counties and cities in West Virginia, Michigan, and Nevada that Masters failed to monitor and report suspicious orders of prescription opioids and to implement measures to prevent the filling of improper prescriptions. The governmental entities alleged that the wholesale distributor’s conduct contributed to an opioid epidemic and caused the governmental entities to suffer economic losses, including lost economic opportunity, and increased law-enforcement expenses, judicial expenditures, prison and public-works costs, emergency and medical-care-services costs, substance-abuse-treatment expenses.
Acuity, the distributor’s commercial general liability insurer for many years, sought a declaratory judgment that Acuity did not owe Masters defense or indemnity in these suits. Cross-motions for summary judgment were filed. The court of appeals reversed a trial court decision in favor of Acuity, and the Supreme Court of Ohio accepted Acuity’s discretionary appeal. In a 5-to-2 decision, the Court reversed the court of appeals, and reinstated the trial court’s decision that Masters was not owed defense or indemnity under Acuity’s commercial general liability policies.
The insuring agreement of Acuity’s standard commercial general liability (“CGL”) policies stated in pertinent part that:
[Acuity] will pay those sums that [Masters] becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies. [Acuity] will have the right and duty to defend [Masters] against any suit seeking those damages. However, [Acuity] will have no duty to defend [Masters] against any suit seeking damages for bodily injury or property damage to which this insurance does not apply.
In the majority opinion issued by the Supreme Court of Ohio, it was recognized that the counties and cities sought “damages for their own aggregate economic injuries caused by the opioid epidemic and not for any particular opioid-related bodily injury sustained by a citizen as a direct result of Masters’s alleged failures.” Id. at ¶23. The majority held that reading the standard CGL insurance policy before it as a whole, as the Court had to, the plain language of the policy did not support the broad interpretation of “damages because of bodily injury” that some other courts had adopted, and that was urged by the dissent. The majority found that the repeated use of the phrase “the bodily injury” suggested that the damages sought in the underlying suits have to be “tied to a particular bodily injury sustained by a person or persons in order to invoke coverage under the policies.” Id. at ¶31 (Emphasis supplied by the Court). The Court noted that if the phrase were interpreted as broadly as was urged “it would be rather difficult to determine whether the bodily injury occurred during the policy period, was caused by an occurrence in the coverage territory, or had occurred in whole or in part prior to the policy period.” Id.
The majority stated that “if the intent behind the liability policy had been to afford such broad coverage—with ‘damages because of bodily injury’ encompassing any suit seeking losses that tangentially relate to a bodily injury sustained by a person—different language would have been used to make that intent clear.” Id. at ¶35. The majority concluded that that the phrase “damages because of bodily injury” requires “more than a tenuous connection between the alleged bodily injury sustained by a person and the damages sought.” Id. at 36. The Court held that “a sufficient connection will likely be found to exist under standard commercial general liability policies when the damages sought in the underlying suit are for losses asserted by” (1) the person injured, (2) a person recovering on behalf of the injured person, or (3) a person or organization that directly suffered harm because of another person’s injury. Id.
If you have any questions please contact Gary L. Nicholson, Esq.
(Gallagher Sharp, L.L.P., and Gary L. Nicholson; Tucker Ellis, L.L.P., and Benjamin C. Sassé; Dean & Fulkerson, P.C., and Karen Libertiny Ludden; and Hanna, Campbell & Powell, L.L.P., and John Chlysta represented Acuity in the matter. A full copy of the Supreme Court of Ohio’s opinion may be found here.)