SDV Insights

The "Expected or Intended" Erosion of the Duty to Defend in Opioid Litigation

The opioid crisis in America is undoubtedly one of the most pervasive and unrelenting public health emergencies that our country has faced in recent memory. Consequently, our nation’s court system has been taxed with the unenviable job of weighing the moral and legal ramifications of the pharmaceutical industry’s actions in the context of an ever-growing number of opioid-related lawsuits. It is no secret that the pharmaceutical industry has taken a well-publicized, and arguably well-deserved, beating in connection with these lawsuits; however, what might not be immediately obvious are the significant implications these lawsuits may have on the duty to defend.

In AIU Insurance Co. et al. v. McKesson Corp.1, the Ninth Circuit recently joined a growing number of courts across the country which have sided with insurers by declining to extend the duty to defend to McKesson Corp. (“McKesson”) for claims that the drug distributor oversupplied opioids and inadvertently fueled the ongoing opioid crisis.

The Ninth Circuit affirmed a District Court ruling granting partial summary judgment in favor of National Union Fire Insurance Co. of Pittsburgh, Pa. and Ace Property & Casualty Insurance Co. (“Insurers”) who sought a declaratory judgment that they had no duty to defend McKesson against litigation (the “Exemplar Suits”) seeking to impose liability on McKesson for its role in the opioid epidemic. McKesson appealed the district court’s order, arguing that the trial court erred in finding that the Exemplar Suits failed to allege an “accident” and therefore, the Insurers had no duty to defend.

At all relevant times, McKesson held policies issued by its Insurers which covered any “Bodily Injury… caused by an Occurrence.”2  The policies defined an “Occurrence” as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.”3

In reaching its decision, the Ninth Circuit engaged in a two-part inquiry: did the Exemplar Suits allege anything other than strictly deliberate conduct? If not, did the allegations in the complaints countenance “some additional, unexpected, independent, and unforeseen happening” which may have produced the damage? The Ninth Circuit held that the answer to both questions was “no.”

Although the Exemplar Suit complaints include standalone causes of action for negligence, and the allegations are premised on what McKesson “should have known,” the Ninth Circuit determined that the allegations nevertheless describe exclusively deliberate conduct and therefore could not implicate an additional, unexpected, independent, and unforeseen happening. 

The Ninth Circuit determined that the Exemplar Suits specifically alleged that McKesson intentionally flooded the market with opioids and intentionally disregarded safeguards. As such, liability was premised on “the deliberate manner in which McKesson distributed opioids: by flooding the market, concealing facts, disregarding its duties, and ignoring risks.”4 Put plainly, the court concluded that McKesson’s conduct could not plausibly be construed as accidental or fortuitous.

Having determined that the Exemplar Suits alleged “strictly deliberate” conduct, the Ninth Circuit next considered whether the Exemplar Suits also alleged “some additional, unexpected, independent, and unforeseen happening” that may have caused the alleged damage. Again, the Ninth Circuit determined the Exemplar Suits did not.

In reaching this conclusion, the court held that the “alleged injuries in the Exemplar Suits stem from opioid ‘addiction, overdose, and death,’ which the complaints exhaustively demonstrate ‘were the direct result… of [McKesson’s] alleged scheme to increase the sale of opioids.”5  

Although McKesson argued that the conduct of other downstream actors was the more immediate cause of the alleged injuries and should be deemed an additional, unexpected, independent, and unforeseen happening, the court rejected this argument stating: "It is simply not credible that when doctors prescribed the drugs McKesson allegedly pushed, when pharmacists filled those prescriptions with drugs McKesson distributed, and when end users became addicted to those drugs, overdosed, resorted to heroin, and died, that was a mere 'matter of fortuity.’”6  Accordingly, the Ninth Circuit held that there was no potential for coverage and the Insurers had no duty to defend. 

In reaching these legal conclusions, the Ninth Circuit ignores the basic principles of insurance law. It is a fundamental tenet of insurance law that the duty to defend is broader than the duty to indemnify. As such, policyholders rely upon the fact that carriers are required to defend if the facts pled give rise to any possibility of coverage. This concept is known as litigation insurance. Simply stated, businesses pay significant insurance premiums for liability insurance for the peace of mind that they will receive a defense where broad allegations raise the potential for coverage.

The Ninth Circuit’s ruling in McKesson strikes a significant blow to the duty to defend, at least in the context of opioid litigation. Although the Exemplar Suits contained allegations of negligence, which generally tend to fall within coverage unless specifically excluded, the Ninth Circuit actively weighed the merits of the allegations and made what is seemingly both a moral and legal determination about their substance, which goes beyond the causes of action that were advanced. In doing so, the Court engineered an outcome which is arguably a morally correct one (i.e. the drug distributor was punished for its role in the opioid epidemic); however, it remains to be seen whether this decision, and decisions like it, have the potential to erode the traditionally expansive duty to defend by promoting the transformation of otherwise covered allegations into uncovered claims to achieve a desired goal.

For more information or to discuss this case alert, contact Amanda Stefanatos at

1AIU Insurance Co. et al. v. McKesson Corp., No. 22-16158, 2024 WL 302182 (9th Cir. Jan. 26, 2024)(unpublished).
2Id. at *1.
3Id. at *1.
4Id. at *2.
5Id. at *3.
6Id. at *4.


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