opioid liability claims: coverage and litigation...
TRANSCRIPT
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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
Adam H. FleischerBatesCarey LLP
Neil MerklKelley Drye & Warren
mailto:[email protected]:[email protected]:[email protected]
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Faculty
Anna EnghCovington & Burling LLP
Adam H. FleischerBatesCarey LLP
Neil MerklKelley Drye & Warren
mailto:[email protected]:[email protected]:[email protected]
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Opioid Litigation: Overview
Anna Engh, Covington & Burling LLP
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Number of actions: Over 700 cases filed in 45 states.
Opioid Litigation: Overview
8
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
Categories of Plaintiffs
• Largely local government entities (cities
and counties)
• State attorneys general
• Third-party payors
• Hospitals
• Indian tribes
• Individuals
9
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
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
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
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
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
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
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
Remedies sought by plaintiffs include:
• Damages
• Costs of abating nuisance
• Treatment, recovery, and educational programs
• Statutory damages
• Injunctive relief
• Punitive damages
13
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Overview
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
Anna Engh, Covington & Burling LLP
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Opioid Litigation: Making
Headlines
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Anna Engh, Covington & Burling LLP
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Opioid Litigation: Making
Headlines
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Anna Engh, Covington & Burling LLP
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Opioid Litigation: Making
Headlines
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Anna Engh, Covington & Burling LLP
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Opioid Litigation: Making
Headlines
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Anna Engh, Covington & Burling LLP
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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
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Federal MDL Litigation:
Often the “face” of the issue
20
Adam H. Fleischer, BatesCarey LLP
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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
Adam H. Fleischer, BatesCarey LLP
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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
Adam H. Fleischer, BatesCarey LLP
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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
Adam H. Fleischer, BatesCarey LLP
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Insurance Coverage Issues
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
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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.
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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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:
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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Do the claims present an
“occurrence”?
Coverage applies to bodily injury “caused by an
‘occurrence.’”
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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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”?
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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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
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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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
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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Insurance Coverage Issues
Products-completed operations hazard exclusion
Are the opioid claims covered if the policies
contain products/completed operations
exclusions?
31
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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Insurance Coverage Issues
Definition of Products-completed operations hazard
exclusion
Are the opioid claims covered if the policies
contain products/completed operations
exclusions? (cont.)
32
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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Insurance Coverage Issues
• 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.)
Are the opioid claims covered if the policies
contain products/completed operations
exclusions? (cont.)
33
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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Insurance Coverage Issues
Practical Considerations
Notice
Cooperation
Confidentiality agreements
Opioid-related exclusions
34
Adam H. Fleischer, BatesCarey LLP Anna Engh, Covington & Burling LLP
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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
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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)
Neil Merkl, Kelley Drye & Warren
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Opioid Related Deaths
TOTAL DEATHS BY
OVERDOSE
2016: 63,600
• 20,000 - FENTANYL
• 15,000 - HEROIN
• 14,500 - in Opioids in
combination
Neil Merkl, Kelley Drye & Warren
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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.”
Neil Merkl, Kelley Drye & Warren
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Absent Parties From MDL
Patients
Doctors
FDA
DEA
Third party criminal actors
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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Public Health Problem
How do we treat pain
• Chronic long term
• Short lived
The addiction dilemma
Criminal conduct
Cost
Weighing benefit vs. costs
Neil Merkl, Kelley Drye & Warren
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In re: National Prescription
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
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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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.
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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In re: National Prescription
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
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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Insurance
Notify
• Cooperate
• Treat like excess loss
Monitor closely
Independent counsel
Aggressive control on fees
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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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
Neil Merkl, Kelley Drye & Warren
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Anna EnghCovington & Burling LLP
Adam H. FleischerBatesCarey LLP
Neil MerklKelley Drye & Warren