(l-r) Courtney C.T. Horrigan, Elizabeth L. Taylor and Kya R. Coletta of Reed Smith. Courtesy photos Calif. Federal Court Misreads General Liability Insurance's Duty to Defend
The California court's interpretation turns the duty to defend on its head by going beyond the words in the complaint to infer the plaintiffs' case theory, rather than construing defense coverage broadly to protect the policyholder.
July 21, 2022 at 10:31 AM
7 minute read
In a recent case concerning insurance coverage for defense costs associated with prescription opioid lawsuits, the U.S. District Court for the Northern District of California granted two insurers' motion for partial summary judgment against pharmaceutical distributor, McKesson. Taking a strained view of California precedent, the court concluded that the insurers owe no duty to defend McKesson in three exemplar cases brought by government entities against distributors of pharmaceutical medicines seeking to hold them liable for the costs of medical care and treatment for opioid-addicted citizens. Specifically, the court analyzed two cases selected by the National Opioid MDL court as "bellwether" cases (Cuyahoga County and Summit County, Ohio) and a suit brought by the state of Oklahoma. The California federal trial court held that the suits do potentially seek damages because of bodily injury, but took an alarmingly narrow view of California law in concluding that the suits do not have potential to allege that an "accident" produced that injury. See AIU Insurance v. McKesson, 20-cv-07469 (N.D. Cal. Apr. 5, 2022). Accordingly, the California federal court concluded that ACE and AIG did not owe a duty to defend because there had been no "occurrence" under the insurance policies.
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