Partner Paul Rose Speaks to Law360 on Recent Opioid Ruling

Partner Paul Rose provided insight to Law360 for an article discussing the recent ruling in AIU Insurance Company et al v. McKesson Corporation, a case that was generally favorable for policyholders but was decided in favor of the insurers based upon its particular facts and distinct features of California law.

A U.S. District Judge in California on April 5 held that McKesson overdistributed opioids in a way that led to an inevitable diversion of the painkillers for illegitimate use. The judge found that under the particular facts presented in that case, and under California law, the increased costs on local and state governments that arose from the opioid epidemic were not in fact an accident covered under umbrella policies issued by AIG groups’ AIU Insurance Co., National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, and Chubb’s ACE Property & Casualty Insurance. Judge Jacqueline Scott Corley stated that, “McKesson’s alleged conduct facilitated diversion in ways that made it expected and foreseen as a matter of law…” The policyholder in that case strongly disagreed with these conclusions, and it has the opportunity to appeal.

When asked about the ruling, Paul told Law360 that he found it interesting Judge Corley agreed with the dissent in the Delaware Supreme Court’s decision in ACE American Insurance Co. v. Rite Aid Corp., a case in which the majority concluded that the insurers had no duty to defend suits brought against the national pharmacy chain by two Ohio counties. He said the dissent in the Rite Aid case, which concluded that the insurers would have had a duty to defend, was “much more analytically sound.” In discussing the McKesson case’s relation to an opioid coverage dispute currently being considered by the Ohio Supreme Court, Paul said the McKesson judge’s rulings on the more limited issues before the Ohio Supreme Court were consistent with arguments made by a former drug wholesaler he represents in that Ohio case, Acuity v. Masters Pharmaceutical Inc.

To read the full article click here.