Opioid Liability Claims: Coverage and Litigation ...media.straffordpub.com/products/opioid-liability-claims-coverage-an… · 24.05.2018 · The audio portion of the conference may

Opioid Liability Claims: Coverage and

Litigation Considerations for Manufacturers,

Distributors, Third-Party Payors

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THURSDAY, MAY 24, 2018

Presenting a live 90-minute webinar with interactive Q&A

Anna P. Engh, Partner, Covington & Burling, Washington, D.C.

Adam H. Fleischer, Partner, BatesCarey, Chicago

Neil Merkl, Partner, Kelley Drye & Warren, New York

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Strafford Live CLE Webinar

May 24, 2018

OPIOID LITIGATION CLAIMS:

COVERAGE AND LITIGATION

CONSIDERATIONS FOR

MANUFACTURERS, DISTRIBUTORS, AND

THIRD-PARTY PAYORS

Anna EnghCovington & Burling LLP

[email protected]

Adam H. FleischerBatesCarey LLP

[email protected]

Neil MerklKelley Drye & Warren

[email protected]

mailto:[email protected]:[email protected]:[email protected]

Faculty


[email protected]


[email protected]


[email protected]

mailto:[email protected]:[email protected]:[email protected]

Opioid Litigation: Overview

Anna Engh, Covington & Burling LLP

7

Number of actions: Over 700 cases filed in 45 states.


8



Categories of Plaintiffs

• Largely local government entities (cities

and counties)

• State attorneys general

• Third-party payors

• Hospitals

• Indian tribes

• Individuals

9



Main Categories of Defendants:

1. Drug manufacturers

2. Drug distributors

3. Retailers, including grocers and big box retailers

with pharmacy exposures

4. Prescription benefit managers

5. Doctors and clinics

10



Venues

• Federal court: MDL in N.D. Ohio (Cleveland)

• State courts, including: California; West Virginia; New York;

Connecticut; Oregon; Pennsylvania; Texas; and New Jersey.

Others are possible, for instance, if remand motions are

granted.

11



Causes of actions/allegations include:

• Negligence

• Failure to follow state or federal Controlled

Substance Acts

• Public nuisance

• Unfair/deceptive business practices

• Negligent and/or fraudulent

misrepresentations

• Civil RICO

12



Remedies sought by plaintiffs include:

• Damages

• Costs of abating nuisance

• Treatment, recovery, and educational programs

• Statutory damages

• Injunctive relief

• Punitive damages

13



Legal defenses include:

No causation

No private right of action under federal or state

Controlled Substance Acts

Statute of limitations

No duty owed to plaintiffs; no breach of duty

(negligence)

No misrepresentation

Nuisance is not applicable theory of liability

No standing: no enterprise; no racketeering activity

Preemption

14


Opioid Litigation: Making

Headlines

15



Headlines

16



Headlines

17



Headlines

18


Federal MDL Litigation

What is this all about?

MDL consolidates lawsuits pending in many different

federal courts involving common facts.

A single judge and court decide pretrial issues, tries

to foster settlement. Trial in original court.

Governments request MDL. Efficiency, Consistent

Rulings.

MDL formed on Dec. 5, 2017, N.D. Ohio (Cleveland)

Over 700 federal opioid suits combined in MDL.

Adam H. Fleischer, BatesCarey LLP

19

Federal MDL Litigation:

Often the “face” of the issue

20


Federal MDL Litigation

What’s happened so far? What’s next?

Case Management Order (April 11, 2018)The initial hearing and the overview approach

“Briefing” and “Trial”/Bellwether Tracks

ARCOS Data DisclosureDEA ordered to produce ARCOS data for all 50 states

January 1, 2006 to January 1, 2015

Date, Buyer/Seller, Manufacturer, Quantity. Dosage

Protective Order (Entered May 15, 2018)Defendants in “Trial” Track must produce insurance policies

“Confidential Information” (Insurers may access)

“Highly Confidential Information” (Insurers can NOT access)

21


State Court Litigation

Cases pending in multiple state courts

• Cases tagged for transfer to MDL and waiting decision by

Judicial Panel on Multidistrict Litigation (JPML)

• Dispositive motions in several states

• New York Consolidated Opiate Litigation

The Plaintiff’s Paradox

• On One Hand: The governmental claims

• On the Other Hand: Svanstrom Suit (5/8/18)22


Insurance Coverage Issues

What types of policies?

Potentially Applicable

Policies

General Liability Policies

Media/Tech Policies

D&O Policies

Medical device/

professional policies

Bermuda Form

23



What is in a GL policy?

General Liability Policies

CGL policies typically cover all sums that the insured

becomes legally obligated to pay as damages because of

bodily injury caused by an occurrence.

Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP

24

Do gov. claims seek damages

“because of bodily injury”?

CGL policies

typically cover

damages

“because of

‘bodily injury,’”

as in the

following

excerpt from

the ISO primary

GL policy.


25

NO DUTY TO DEFEND

Cincinnati Ins. Co. v.

Richie Enterprises, 2014

WL 3513211 (W.D. Ky.

2014) ()

Do gov. claims seek damages

“because of bodily injury”?

DUTY TO DEFEND

Cincinnati Ins.

Co. v. H.D. Smith,

LLC, 829 F.3d 771

(7th Cir. 2016) ()

Compare the Cincinnatis:


26

Do the claims present an

“occurrence”?

Coverage applies to bodily injury “caused by an

‘occurrence.’”


27

Compare:• Liberty Mutual v. JM Smith Corp, 602 Fed. Appx. 115 (4th Cir. 2015) ()

• "No defendant, and certainly not the insured, has been accused of

providing prescription drugs to any person or entity knowing it was

enabling an abuser. At most, there was a risk that some of the drugs

might end up in an abuser's hands.“

• Travelers Property Cas. Co. of America v. Actavis, 16 Cal. App. 5th 1026

(2017)

• (, but review granted by the Supreme Court of California; on hold

pending the outcome of Ledesma appeal addressing whether an

intentional act with unintended consequences is an “accident”.)

Do the claims present an

“occurrence”?


28

Are remedies sought in the opioid

claims covered "as damages"?

Policies cover amounts insured obligated to pay “as damages”

• Courts have interpreted "damages" in CGL policies to include not only

monetary damages, but also remedial and injunctive relief and medical

monitoring.

• See, e.g., AIU Ins. Co. v. Superior Court, 51 Cal. 3d 807 (1990)

(environmental remediation constitutes covered damages); Baughman v.

U.S. Liab. Ins. Co., 662 F. Supp. 2d 386 (D.N.J. 2009) (medical

monitoring costs covered). 29


Courts have interpreted such exclusions to preclude coverage only for

injury that the insured subjectively intended or foresaw as practically certain

to be a result of its conduct.

Are the opioid claims excluded under

"expected/intended" exclusions?

30



Products-completed operations hazard exclusion

Are the opioid claims covered if the policies

contain products/completed operations

exclusions?

31



Definition of Products-completed operations hazard

exclusion



exclusions? (cont.)

32



• Travelers v. Anda, Inc., 658 Fed. Appx. 955 (11th Cir. 2016) ()

• Travelers Property Cas. Co. of America v. Actavis, 16 Cal. App. 5th 1026 (2017) (,

but on review to Supreme Court of California)

• Compare: Taurus Holdings, Inc. v. US Fidelity & Guaranty Co., 913 So.2d 528 (Fla.

2005) (: court held products-completed operations exclusion barred coverage for

municipalities suits against gun manufacturer seeking compensation for expenses

incurred for, among other things, police protection, hospital costs, emergency

medical services, and prosecution of violent crimes involving the use of handguns.)



exclusions? (cont.)

33



Practical Considerations

Notice

Cooperation

Confidentiality agreements

Opioid-related exclusions

34


Brand Name Opioids

• Abstral (fentanyl)

• Actiq (fentanyl)

• Avinza (morphine sulfate extended-release

capsules)

• Butrans (buprenorphine transdermal

system)

• Demerol (meperidine [also known as

isonipecaine or pethidine])

• Dilaudid (hydromorphone [also known as

dihydromorphinone])

• Dolophine (methadone hydrochloride

tablets)

• Duragesic (fentanyl transdermal system)

• Fentora (fentanyl)

• Hysingla (hydrocodone)

• Methadose (methadone)

• Morphabond (morphine)

• Nucynta ER (tapentadol extended-release

oral tablets)

• Onsolis (fentanyl)

• Oramorph (morphine)

• Oxaydo (oxycodone)

• Roxanol-T (morphine)

• Sublimaze (fentanyl)

• Xtampza ER (oxycodone)

• Zohydro ER (hydrocodone)

Neil Merkl, Kelley Drye & Warren

Combination Opioids

Anexsia (hydrocodone containing acetaminophen)

Co-Gesic (hydrocodone containing acetaminophen)

Embeda (morphine sulfate and naltrexone extended-release capsules)

Exalgo (hydromorphone hydrochloride extended-release tablets)

Hycet (hydrocodone containing acetaminophen)

Hycodan (hydrocodone containing homatropine)

Hydromet (hydrocodone containing homatropine)

Ibudone (hydrocodone containing ibuprofen)

Kadian (morphine sulfate extended-release tablets)

Liquicet (hydrocodone containing acetaminophen)

Lorcet (hydrocodone containing acetaminophen)

Lorcet Plus (hydrocodone containing acetaminophen)

Lortab (hydrocodone containing acetaminophen)

Maxidone (hydrocodone containing acetaminophen)

MS Contin (morphine sulfate controlled-release tablets)

Norco (hydrocodone containing acetaminophen)

Opana ER (oxymorphone hydrochloride extended-release tablets)

OxyContin (oxycodone hydrochloride controlled-release tablets)

Oxycet (oxycodone containing acetaminophen)

Palladone (hydromorphone hydrochloride extended-release capsules)

Percocet (oxycodone containing acetaminophen)

• Percodan (oxycodone containing aspirin)

Reprexain (hydrocodone containing ibuprofen)

Rezira (hydrocodone containing pseudoephedrine)

Roxicet (oxycodone containing acetaminophen)

Targiniq ER (oxycodone containing naloxone)

TussiCaps (hydrocodone containing chlorpheniramine)

Tussionex (hydrocodone containing chlorpheniramine)

Tuzistra XR (codeine containing chlorpheniramine)

Tylenol #3 and #4 (codeine containing acetaminophen)

Vicodin (hydrocodone containing acetaminophen)

Vicodin ES (hydrocodone containing acetaminophen)

Vicodin HP (hydrocodone containing acetaminophen)

Vicoprofen (hydrocodone containing ibuprofen)

Vituz (hydrocodone containing chlorpheniramine)

Xartemis XR (oxycodone containing acetaminophen)

Xodol (hydrocodone containing acetaminophen)

Zolvit (hydrocodone containing acetaminophen)

Zutripro (hydrocodone containing chlorpheniramine and pseudoephedrine)

Zydone (hydrocodone containing acetaminophen)


Opioid Related Deaths

TOTAL DEATHS BY

OVERDOSE

2016: 63,600

• 20,000 - FENTANYL

• 15,000 - HEROIN

• 14,500 - in Opioids in

combination


In re: National Prescription

Opioid Litigation

WHO IS RESPONSIBLE?

“And in my humble opinion, everyone shares some of the responsibility,

and no one has done enough to abate it. That includes the manufacturers,

the distributors, the pharmacies, the doctors, the federal government and

state government, local governments, hospitals, third-party payors, and

individuals, hospitals, third-party payors, and individuals. Just about

everyone we’ve got on both sides of the equation in this case.”


Absent Parties From MDL

Patients

Doctors

FDA

DEA

Third party criminal actors


Patients Who Use The Opioids

Properly

90 million+ use these drugs - chronic pain sufferers — cancer,

accidents, failed surgeries, degenerative conditions

1-2% adverse reaction

Risk for addiction is .07-.08% or less with proper care and screening

½ all veteran from combat zones report chronic pain

12% of the population: as many as and 50 million Americans suffer

from severe or persistent pain

Chronic pain – disability – 500 billion/year economic loss to economy

For persons under Doctors care who become addicted – there are

recognized treatment regimens


Look At The Abusers

20 million Americans – substance abuse disorder

• 2 million – prescription pain relievers

• 591,000 – abuse disorder involving heroin

Most abusers are not patients

e.g.: - Oxycontin:

• Study of persons seeking help for oxycontin addiction

• 78% never had a prescription

• 78% had a history of prolong drug abuse

Many misuse the products: do not follow instructions; take too many; crush pills

Many have serious mental illness issues

Many take them with other drugs

Pre-existing history of addiction to other drugs


Public Health Problem

How do we treat pain

• Chronic long term

• Short lived

The addiction dilemma

Criminal conduct

Cost

Weighing benefit vs. costs



Opioid Litigation

LITIGATION WILL NOT WORK

People aren’t interested in depositions, and discovery, and trials.

People aren’t interested in figuring out the answer to interesting

legal questions like preemption and learned intermediary, or

unravelling complicated conspiracy theories.

- Judge Dan A. Polster


City of New York v. Purdue

Pharma L.P.

COSTS RELATED TO OPIOID OVERUSE, ADDICTION AND

MISUSE

1. Health care

2. Emergency response

3. Addiction treatment

4. Care management

5. Law enforcement

6. Criminal justice costs

7. Victimization costs

8. Costs associated with prevention

9. Public health response and

10. Myriad social consequences


State of South Carolina v.

Purdue Pharma L.P., et al.

INJURY TO THE PUBLIC

1. A distortion of the medical standard of care for treating chronic pain, resulting in pervasive overprescribing of opioids

2. The failure to provide more appropriate pain treatment

3. High rates of opioid abuse and addiction, with which too many South Carolina residents will now struggle their entire lives

4. Overdoses

5. Serious diseases (like Hepatitis C)

6. And fatalities, with grievous consequences to South Carolina communities and families

7. Children removed from their homes and newborns born to addicted to opioids

8. Lost employee productivity due to opioid-related addiction and disability

9. Greater demand for emergency services, law enforcement, addiction treatment, and social services; and

10. Increased health care costs for individuals, families, and the State.


Solutions – Opioid Problem

LITIGATION CANNOT SOLVE THE OPIOID PROBLEM

Critical parties are not before the court

Single jurisdiction cannot control existing court actions

Legal costs

Adverse interests

Traditional tort remedies are unworkable

Causes of action dubious



Opioid Litigation

NO SIMPLE SOLUTION

But the resolution I’m talking about is really – what I’m interested in

doing is not just moving money around, because this is an ongoing

crisis. What we’ve got to do is dramatically reduce the number of the

pills that are out there and make sure that the pills that are out there

are being used properly. (Judge Dan A. Polster)

Number of pills is down

VA Study: Suicide Rate Increase

Doctors say Opioids are under prescribed


Solutions – Litigation Problem

Active management / observation

• These are not product liability cases

Early settlement opportunity if possible

Preemptive document/evidence control

Audit existing programs

Build defense

Public relations


Insurance

Notify

• Cooperate

• Treat like excess loss

Monitor closely

Independent counsel

Aggressive control on fees


Strong Defenses Exist Under

Traditional Legal Process

Actual causal connection to losses

Fault based liability

Confined to recognized causes of action

Discovery

Burden of proof


Settlement Problems

Need legislative involvement - Congress

Federal ability to marshal states / municipalities –

questionable

Look in terms of cutting off liability

No finality

All potential claimants are not accounted for



[email protected]


[email protected]


[email protected]

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