Faced with thousands of lawsuits from local governments responding to the opioid epidemic, the makers, distributors, and suppliers of prescription painkillers have turned to their business insurance providers for help. A case before the Ohio Supreme Court could help determine whether insurance companies will be responsible for paying parts of the billions of dollars in damages sought.

The Ohio Insurance Institute notes the disputes between business insurance provider Acuity and Hamilton County-based prescription drug distributor Masters Pharmaceutical are “not taking place in a vacuum, but instead are taking place against the backdrop of one of the largest, most complicated litigation phenomena this nation has ever seen.”

The Supreme Court will hear oral arguments next week in Acuity’s appeal of a First District Court of Appeals decision. The appellate court ruled that the insurer sold a general commercial liability policy to Masters requiring it to defend Masters against lawsuits from the state of West Virginia, as well as local government bodies in Michigan and Nevada.

Insurer Says Policy Doesn’t Cover Government’s Costs
Acuity’s policies have an insurance-industry standard clause stating Acuity will pay “those sums that the insured becomes legally obligated to pay as damages because of a bodily injury or property damages to which this insurance applies.” The policy also states Acuity won’t defend Masters or pay damages “to which this insurance does not apply.”

The case before the Court began when West Virginia and local governments in Michigan and Nevada sued Masters and other painkiller distributors in 2012. They sought to be compensated for costs associated with increased police patrols, court expenditures, substance abuse treatment, emergency responses, medical services, and other epidemic-related expenses.

In an amicus curiae brief, the Ohio Insurance Institute notes the West Virginia case spawned thousands of state and local government lawsuits against multiple businesses sought to be held responsible for the opioid epidemic. Most of those cases are now pending in what is known as the federal multi-district litigation before Judge Daniel Polster in the United States District Court for the Northern District of Ohio. However, additional lawsuits are still taking place across the nation.

Several courts have weighed in on the issue of whether standard, general commercial liability policies cover the damages sought by the governments. Acuity, and insurance industry supporters, say they don’t.

Meanwhile Masters and United Policyholders, a non-profit founded in 1991 that advocates for individual and business policyholders’ rights, have noted the standard policies have covered businesses for years in nuisance suits brought by governments ranging from deaths from firearms, poisoning from lead paint, and environmental damages. United Policyholders urges Ohio to take the same positions as several courts around the nation that have upheld the insurance companies’ “duty to defend” the policyholders.

“It is critical to policyholders that this Court secure Ohio consumers’ and business’ ability to rely on an insurance company’s promise to fund their defense when these claims are raised,” United Policyholders states in its amicus brief.

The parties note they are still contesting the potentially more expensive issue of whether the insurer must pay a portion of the damages sought by governments if Masters is forced to pay. However, at this point in the case, the Court is considering only the question of whether Acuity must provide a defense to Masters.

Government Expenses Not Related to Identified Injuries, Insurer Asserts
Acuity argues the policy restricts payment of damages for bodily injuries incurred by specific persons who are injured by the insured business. The insurer maintains the government bodies aren’t claiming to recover the costs of care for specific people impacted by prescription painkillers in their communities, but rather their overall costs associated with additional expenditures made to address unidentified people involved in the crisis. To extend the policy coverage from the costs of bodily injury to all societal costs associated with addressing those addicted to opioids would extend the obligation of the insurance company far beyond what the insurance contract contemplated, Acuity asserts.

Policy Covers Business against Plausible Claims, Distributor Maintains
Masters notes the appellate court determined some of the government claims, especially those for emergency services and medical care, relate directly to bodily injuries suffered by residents in their communities. Insurance companies must provide a defense if there are plausible claims against the insured for the damages they allegedly inflicted, Masters maintains, and if some damages are plausible, then the insurance company is required to defend the insured against every claim made in the case. Masters argues the insurance policy doesn’t state the damages must be limited directly to the bodily injuries suffered by named people, and notes that if the government bodies were required to identify who they treated, they could.

Oral Argument Details
The Court will hear Acuity v. Masters Pharmaceutical on Sept. 8, and seven other cases during a two-day session on Sept. 7 and 8. Oral arguments begin each day at 9 a.m.

The arguments will be streamed live online at sc.ohio.gov and broadcast live, and archived, on The Ohio Channel.

In addition to these highlights, the Court’s Office of Public Information released preview articles today about each case, available through the case-name links.

Tuesday, Sept. 7
Since 2009, motorists who drove leased vehicles have challenged Cleveland’s law on the use of automated traffic cameras to catch red-light and speeding violators. Although voters disbanded the photo enforcement program in 2014, a Cuyahoga County court certified a class-action lawsuit against the city, and estimated the city must refund drivers of leased vehicles about $4.1 million in fines. An appeals court ruled the Cleveland law as written in 2009 allowed the city to ticket those who owned cars, but not those who leased them. In Lycan v. Cleveland, the city and violators who leased vehicles and paid the tickets debate whether the motorists were required to exhaust the administrative appeals process before being allowed to seek further legal action against the city.

An employee who lost four fingers in 2019 while working for a Stark County milk processor sued his employer in court for damages. The employer and the employee union have a collective bargaining agreement mandating that certain disputes be resolved through arbitration. The employer in Sinley v. Safety Controls Technology contends that the collective bargaining agreement “clearly and unmistakably” requires the employee’s claim to first go through the arbitration process. The employee responds that the agreement doesn’t state that claims of intentional torts under Ohio law must be arbitrated, and this type of claim falls outside of employment-related matters.

A one-year suspension is recommended in Cleveland Metropolitan Bar Association v. Whipple for a Cleveland-area attorney based on his conduct while handling a heated estate dispute between a man in a nursing home, his wife, and their relatives. The parties had arrived at a settlement, but a few months later, the opposing counsel raised concerns about the wife’s competency to serve as her husband’s power of attorney and to partly control a trust. The couple’s attorney responded with a public motion on the court docket stating his opposing counsel was unfit and should be referred to a lawyer assistance program. The attorney opposes the proposed disciplinary sanction, arguing he was genuinely worried for the lawyer and needed to alert the judge.

A lawsuit involving two partners that own a microbrewery was appealed. A three-judge panel ruled 2-1 in favor of one partner. On the day the decision was entered, one of the three judges resigned from the bench. The losing microbrewery partner applied for reconsideration of the decision. The court, with a new judge appointed to fill the seat of the resigning appellate judge, voted 2-1 to reverse the earlier decision. In Jezerinac v. Dioun, the Court will consider if the appellate rules allow a judge that didn’t hear the case originally to vote to reconsider the case.

Wednesday, Sept. 8
A man convicted of two 1996 murders in Columbus and sentenced to death filed varied motions after his convictions. In two of the court filings, the man argued that statements made to law enforcement before his trial implicated other individuals in the murders. However, those statements weren’t given to his defense lawyers, he maintained. In State v. Bethel, he points to U.S. Supreme Court precedent that concludes the prosecution’s suppression of evidence favorable to him violates his constitutional rights and entitles him to a new trial. He argues that he isn’t required to dig for hidden evidence. The Franklin County prosecutor contends that the defendant and his lawyers weren’t “unavoidably prevented” from discovering the statements.

A Franklin County attorney objects to a proposed two-year, fully stayed suspension. The attorney filed a lawsuit for a Toledo man whose insurance claim was denied. The insurance company’s lawyers complained to the court that neither the attorney nor his client was cooperating with their requests for information. The delays ultimately led to the lawsuit’s dismissal. In Disciplinary Counsel v. Hillman, the attorney argues that he repeatedly informed his client of the need to cooperate and that he shouldn’t be sanctioned for his client’s misconduct. The disciplinary counsel counters that the attorney didn’t prove he kept his client reasonably informed about the status of the case and the actions the client needed to take to prevail.

A Chagrin Falls attorney faces a two-year suspension for having sex with two clients. In Disciplinary Counsel v. Porter, the attorney represented a woman for her divorce and related legal matters and had sex with her after two hearings. He also signed her name to an affidavit and notarized it. The attorney had sex with another client while representing her in divorce and criminal cases. The attorney argues for a shorter suspension, noting the relationships were consensual and he had trouble finding counseling during the pandemic. The disciplinary entity that investigated the grievances counters that the attorney didn’t support his difficulties in finding mental-health treatment with evidence and he continues to shift the blame for the inappropriate relationships to his victims.