A federal appeals court has declined to rule on whether insurance companies must provide legal defense coverage for pharmacies facing numerous lawsuits related to their alleged role in the opioid crisis, instead referring the matter to state supreme courts in Georgia and Florida.
The 11th Circuit Court of Appeals panel, consisting of Judges Nancy Abudu, Robin Rosenbaum, and Britt Grant, determined that the complex legal questions at the heart of the dispute should be resolved by the highest courts in the respective states. The decision affects billions of dollars in potential liability and defense costs.
The case centers on whether liability insurance policies issued to pharmacies cover claims from government entities and healthcare providers seeking compensation for economic losses stemming from the opioid epidemic. At issue is the interpretation of policy language requiring coverage for damages “because of bodily injury.”
Two major insurance companies, Allied Property & Casualty Insurance Company and AMCO Insurance Company, have refused to provide coverage to their pharmacy clients, arguing that their policies do not extend to the types of claims being brought in opioid-related litigation. The insurers maintain that while opioid addiction and overdoses constitute bodily injuries under the policies, the lawsuits against pharmacies seek economic damages that are not directly “because of” those injuries.
Bloodworth Wholesale Drugs, an independent pharmaceutical distributor based in Georgia, has been named in 26 lawsuits since 2017. The complaints allege the company failed to properly monitor or investigate suspicious orders of opioid medications. After the insurers denied coverage, Bloodworth pursued legal action against them.
Similarly, Publix, the Florida-headquartered supermarket chain that operates retail pharmacies, has filed suit against the same insurers for breach of contract. The company faces more than 60 lawsuits related to the opioid crisis and has reportedly spent over $6 million in defense costs against claims that it contributed to an oversupply of opioid medications.
Federal district courts in both Georgia and Florida previously ruled in favor of the insurance companies, finding that the underlying litigation did not seek damages specifically “because of bodily injury” as required by the policy language. However, the appeals court noted significant ambiguities in how state law interprets these provisions.
The panel emphasized that Florida’s interpretation of the causation standard remains unclear, as the state’s supreme court has not yet provided definitive guidance. Both Florida and Georgia law typically require courts to interpret ambiguous insurance provisions in favor of providing coverage, but the federal judges stated it was not their place to determine whether the provisions in question are sufficiently ambiguous.
The lawsuits against pharmacies have been filed by state and local governments, hospital organizations, and healthcare providers seeking to recover costs associated with addressing the opioid crisis. These entities argue that pharmacies played a role in creating an oversupply of prescription opioids that contributed to widespread addiction and overdose deaths.
According to data from the Centers for Disease Control and Prevention, opioid-related deaths increased substantially between 1999 and 2023, though recent years have shown slight annual declines. The ongoing litigation represents efforts by public and private entities to recover some of the massive financial costs associated with responding to the epidemic.
The federal appeals court’s decision to certify these questions to state supreme courts reflects the significant stakes involved and the need for authoritative interpretation of state insurance law. The outcome will likely have far-reaching implications for insurance coverage in similar cases throughout Georgia and Florida.
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