11th Circuit skirts dispute over insurers defending pharmacies from opioid crisis lawsuits

ATLANTA (CN) — An 11th Circuit panel declined to answer Thursday whether insurers must defend pharmacies facing multiple lawsuits from government entities and healthcare providers over their role in the opioid epidemic.

Instead, the federal appeals court certified the question to the Supreme Court of Georgia and the Supreme Court of Florida.

“The questions in this appeal may have ‘significant consequences’ for the states’ insurance markets, with billions of dollars at stake for parties well beyond the players in these few cases,” the panel wrote in a per curiam opinion.

The three-judge panel wrote that because the case involves state law and there is no clear, controlling precedent on the issue, Georgia and Florida law authorize review from their highest courts.

The panel was made up of U.S. Circuit Judges Nancy Abudu, a Joe Biden appointee; Robin Rosenbaum, a Barack Obama appointee; and Britt Grant, a Donald Trump appointee.

Federal courts in Georgia and Florida both sided with the insurers, who insisted their liability insurance policies do not cover claims seeking compensation for economic losses that trace to the opioid crisis. Both courts concluded that the underlying litigation did not seek damages “because of bodily injury,” as defined by the language of the insurance policies.

While the insurers agree that opioid addiction and overdose fall under the policies’ definition of “bodily injuries," there is dispute over whether the lawsuits against the pharmacy policy holders are for damages “because of” those injuries.

Florida’s interpretation of the term is ambiguous and the state’s high court has yet to spell out which causation standard applies, the panel wrote.

They said that Florida law, similarly to Georgia’s, requires courts to construe ambiguous insurance provisions in favor of coverage, but whether the provisions at issue are sufficiently ambiguous is not for them to decide.

“As a federal court, we have no place in deciding difficult and important questions of state law,” the panel wrote.

The Georgia court relied on a state law case in which the 11th Circuit had held that an insurance policy did not cover a family’s breach of contract claim against a church for breaking its promise to provide “perfectly healthy” newborns for adoption.

But the appellate judges said in that suit, there was no connection claimed between the birth defects or “bodily injuries” giving rise to the family’s expenses and damages sought. Whereas, in this case, the insureds’ prescription practices are claimed to have caused the bodily injuries — opioid addiction and overdose — for which payment is sought.

“There is little to go on that directly addresses this coverage issue,” the panel wrote.

Allied Property & Casualty Insurance Company and AMCO Insurance Company sought a declaratory judgment that they lack both a duty to defend and a duty to indemnify under Georgia law.

When they refused coverage, Bloodworth Wholesale Drugs, an independent wholesale distributor of generic pharmaceuticals, including opioids, took them to court. The Georgia pharmacy was named in 26 lawsuits since 2017, arguing it failed to monitor for or investigate suspicious orders of opioid medications.

Publix, a supermarket chain that operates retail pharmacies, also sued the insurers for breach of contract under Florida law where the company is headquartered.

The supermarket chain faces more than 60 lawsuits related to the opioid epidemic, sparked by a national increase in overdose deaths involving opioid prescriptions. It has reportedly incurred more than $6 million dollars in defense costs against claims it contributed to an oversupply of opioids.

Representatives for the parties did not immediately respond to a request for comment.

The lawsuits against the pharmacies come from state and local government entities, hospital organizations and other healthcare providers left to deal with the huge financial burden of trying to combat rising deaths from prescription opioids.

Between 1999 and 2023, the number of opioid-involved deaths increased substantially, according to the Centers For Disease Control and Prevention. However, deaths have recently begun to see slight annual declines.

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