Cardinal Health keeps opioid coverage fight in state court

Cardinal Health keeps opioid coverage fight in state court

Tablets of the opioid-based Hydrocodone at a pharmacy in Portsmouth, Ohio, June 21, 2017. REUTERS/Bryan Woolston/File Photo

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  • 6th Circuit cites risk of state, federal court friction
  • Ohio state courts are considering other opioid coverage disputes

(Reuters) – Drug distributor Cardinal Health Inc on Wednesday won a bid to keep a lawsuit against its insurer over coverage of the costs of defending opioid litigation in Ohio state court.

The 6th US Circuit Court of Appeals ruled that a lower court was right to send the case back to the Franklin County Court of Common Pleas after National Union Fire Insurance Co of Pittsburgh had removed it to Columbus, Ohio federal court, noting that Ohio state courts were already considering related insurance disputes.

Lawyers for National Union and Cardinal Health did not immediately respond to requests for comment.

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Cardinal Health, one of the nation’s top three drug distributors, is facing numerous lawsuits by local and tribal governments, hospitals and health plans over its alleged role in the opioid epidemic.

In 2018, according to court documents, it began seeking coverage of its defense costs from National Union under liability policies covering the period from 1999 to 2004.

Cardinal Health sued in October 2020, alleging National Union had failed to provide coverage for any of the opioid laws on various grounds, including that Cardinal Health had to exhaust other policies and that the conduct alleged in the lawsuits – failing to report or stop suspicious opioid orders – is not an “occurrence” triggering coverage under the policies.

Cardinal Health sought a declaratory judgment that National Union must cover the defense.

National Union removed the case to the Southern District of Ohio on diversity grounds, but US District Judge Edmund Sargus declined to exercise jurisdiction. He found that taking the case could “increase friction between our federal and state courts,” as Ohio courts were considering similar insurance disputes. Cardinal Health appealed.

US Circuit Judge Julia Gibbons, joined by Chief Judge Jeffrey Sutton and US Circuit Judge Richard Griffin, on Wednesday wrote that Sargus had not abused his discretion. The panel noted that a similar dispute was pending before the Supreme Court of Ohio between insurer Acuity and drugmaker Masters Pharmaceutical, and that it made sense to allow that court to resolve disputed issues that could affect Cardinal Health’s case.

Cardinal Health, fellow distributors AmerisourceBergen Corp and McKesson Corp and drugmaker Johnson & Johnson have agreed to pay a combined $26 billion to settle opioid claims by local governments nationwide.

The case is Cardinal Health Inc v. National Union Fire Insurance Co of Pittsburgh, 6th US Circuit Court of Appeals, No. 21-3770.

For National Union: Joseph Davis of Willkie Farr & Gallagher

For Cardinal Health: Mark Andreini of Jones Day

Read more:

Drug distributors, J&J agree to finalize $26 bln opioid settlement

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Brendan Pierson

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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