Products Exclusions Precluded Coverage, Eleventh Circuit Finds

September 21, 2016 | Insurance Coverage

The U.S. Court of Appeals for the Eleventh Circuit has ruled that products exclusions in commercial general liability (“CGL”) insurance policies precluded coverage for claims against an insured pharmaceutical company that its products had led to widespread prescription drug abuse in West Virginia.

The Case

The State of West Virginia sued Anda, Inc., and other pharmaceutical companies in West Virginia state court setting forth various causes of action related to the state’s epidemic of prescription drug abuse and its costs to the state.

Anda sought defense and indemnification in the action from insurance companies that had issued it CGL insurance policies.

The insurers went to court, seeking a declaratory judgment that they had no duty to defend or indemnify Nada in the West Virginia action.

The district court agreed that the insurers had no duty to defend Anda, and Anda appealed to the Eleventh Circuit.

The Eleventh Circuit’s Decision

The circuit court affirmed, ruling that the policies’ products exclusions precluded coverage.

In its decision, the Eleventh Circuit explained that one insurer’s products exclusion precluded coverage for bodily injury “arising out of” Anda’s products and another insurer’s exclusion eliminated coverage for damage that “results from” Anda’s products.

It then found that the injuries alleged by West Virginia in its lawsuit had, at the very minimum, a “connection with” Anda’s products, given that the state sought to enjoin the way Anda distributed its products and that the state sought monetary damages arising from the injuries it alleged had been caused by Anda’s products.

At its essence, the circuit court continued, West Virginia claimed that Anda and other pharmaceutical distributors had so flooded the market with their products that West Virginia suffered from an opioid epidemic. The Eleventh Circuit concluded that the “causal connection between Anda’s products and the injuries” alleged by West Virginia meant that the state’s claims, if covered at all, were embraced within the policies’ products exclusions.

The case is Travelers Property Cas. Co. of America v. Anda, Inc., No. 15-11510 (11th Cir. Aug. 26, 2016).

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  • Robert Tugander

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