An insurance company will have to cover a pharmaceutical distributor's defense costs in a West Virginia lawsuit attempting to hold it and others liable for the state's prescription drug abuse epidemic, a federal appeals court ruled Tuesday.
H.D. Smith's insurance policy stated that Cincinnati Insurance Co. would be responsible for suits and damages stemming from “bodily injury,” and the Seventh Circuit determined (PDF) the state of West Virginia's complaint included that issue.
West Virginia sued the Springfield,Ill.-based pharmaceutical distributor in 2012—along with several other distributors—claiming their negligent and reckless dealings with “pill mill” pharmacies contributed to the state's drug abuse epidemic and cost it hundreds of millions of dollars per year.
The state alleges H.D. Smith and other pharmaceutical distributors sold huge quantities of hydrocodone, oxycodone and other prescription drugs to the pill mills, and they had to have known that the products would have been used illicitly, according to court documents.
Documents in the underlying West Virginia case show H.D. Smith shipped 12.4 million hydrocodone pills and 3.2 million oxycodone pills to the state over five years, including 39,000 tablets in two days to two pharmacies in Mingo County, W.Va., according to the Charleston Gazette-Mail. The county's population is nearly 27,000, according to 2010 U.S. census data.
Although a lower court sided with Cincinnati Insurance, a three-judge Seventh Circuit panel overturned the prior decision because West Virginia's suit claimed it spent money caring for bodily injuries to drug abuse patients.
“The policy that Cincinnati issued to H.D. Smith covers suits seeking damages 'because of bodily injury,'” the Seventh Circuit opinion said. “Such a policy provides broader coverage than one that covers only damages 'for bodily injury.'”
Representatives for both parties did not respond to requests for comment.