Every day in the United States, 130 people die from opioid overdoses. To date, the opioid epidemic, as it has been termed, has claimed the lives of more than 420,000 people and affected the lives of many more. Because the drugs involved—codeine, oxycodone, and fentanyl, among others—are physically addictive, anyone can become dependent and everyone is at risk. The epidemic is even affecting our nation’s newborns, with neonatal abstinence syndrome increasing five-fold between 2004 and 2014.
While the human cost of the opioid epidemic is undeniably tragic, its impact is felt economically as well. The National Institutes of Health’s National Institute on Drug Abuse estimates costs associated with overdoses, medical care, addiction treatment, lost productivity, criminal justice expenditures, and family support services at $78.5 billion per year. Aligned with that figure, the non-profit health research and consulting organization Altarum has projected opioid-related costs, in the aggregate, to reach $1.5 trillion by 2020.
Driving the epidemic, at least in part, is the fact that, beginning the 1990s, a number of the “big pharma” opioid manufacturers mounted marketing campaigns designed to persuade doctors to proscribe opioids for chronic, non-cancer pain. These campaigns suggested that opioids were safe and that the risk of patient addiction could be mitigated. The arguable falsity of those claims is now at the center of the massive multi-district litigation (“MDL”) assigned to Judge Dan Polster of the U.S. District Court for the Northern District of Ohio.
At present, the MDL includes more than 2,300 individual cases brought by states, local governments, Native American tribes, and others. The defendants include manufacturers responsible for allegedly deceptive marketing campaigns and distributors who allegedly failed to prevent the diversion of opioids to illegal markets. And there are more than 300 other suits that have not been consolidated into the MDL, including several suits for increases in health insurance costs caused by the epidemic.
The scope of this litigation and, perhaps more important, its most conspicuous results thus far—the bankruptcy of two defendants, Purdue Pharma (Purdue Frederick Company, Purdue Pharma Inc., and Purdue Pharma L.P.) and Insys (Insys Manufacturing LLC, Insys Pharma, Inc., and Insys Therapeutics, Inc.)—should give insurers pause. How, in light of these developments, are insurers to conduct business in the midst of the ongoing crisis and its fallout? Because if the history of asbestos claims is any indicator, the MDL is unlikely to bring an end to litigation, and the consequences for insurers, insureds, and other interested parties may last decades.
Consider, first, the implications of various defendants filing for Chapter 11. Where there are bankruptcies, there are bankruptcy plans and, for these corporations, almost certainly releases. Although it is, as yet, unclear who will be released from what future claims, there is sure to be a search for further defendants. Who will be next, and what policies do they hold? Other manufacturers and distributors? Corporate officers? The doctors running “pill mills”? Healthcare facilities? Employers by way of workers’ compensation claims?
Relatedly, consider the challenges of subrogation in light of these bankruptcies. How might insurance companies go about establishing a subrogation claim for an individual insured, or for their insureds in the aggregate? How might they prove the amount of their claims? And, if they can prove both a claim and its amount, does it even make sense to pursue subrogation? Recall that such a claim will be unsecured and, under federal law, may be subordinated to the claim of an associated creditor.
And, finally, there are policy allocation issues to contend with. Given that the epidemic has been decades in the making and will likely take decades to resolve, how many insurance periods might be at issue? How many insureds? And are other insurers involved? While the answer to the first question will depend on the particular facts of each case, many opioid-related cases will involve multiple insureds and insurers, increasing the complexity and cost of litigation considerably.
And of course, the coverage issues are complex and far reaching. How far will the intentional act exclusion stretch in cases dealing with opioids? Will exclusions dealing with criminal acts apply? Does the conduct even fall into that of an occurrence? These issues are no longer hypothetical and a plan to deal with them is needed.
Even in individual cases insurers will need to plan. Where abuse of prescription drugs was once upon a time viewed as a factor which would mitigate damages, addiction issues are now popping up as a possible aggregator. Insurers need to consider the need for experts in the areas of addiction, consider the possibility that life care issues concerning drug dependency may become part of the damages in individual cases and consider that defense counsel may need training on how to respond to such concerns.
Another headline-grabbing topic, cannabis, presents a different—though not entirely unrelated—a set of planning issues for insurers. Now legal for medicinal use in 33 states and for recreational use in 11 states, the District of Columbia, Guam, and Puerto Rico, marijuana is cropping up in new ways in civil litigation and insurance claims. In light of the steady progress of legalization, insurers should be wondering in particular about their insureds’ workplace drug policies and the potential for cannabis-related damages.
While these areas present very much open questions, there are compelling clues from around the country. New York City, for example, now prohibits employers under certain circumstances from requiring job applicants to take marijuana drug tests. Nevada generally limits employers from denying applicants employment based on a positive test for marijuana. In Florida, the plaintiff in a car-accident suit claimed—and was awarded—more than $25,000 in medical marijuana costs as part of her damages. And in Maryland, a public school employee who abused legally prescribed marijuana was permitted to retain his position, despite the fact that his continued employment put the school’s federal funding at risk.
The present uncertainty about how various uses and abuses of cannabis will play out in court will be resolved in time by how, as a society, we ultimately regard the drug: More like alcohol, as a recreational activity to be indulged in moderation? Or more like opioids, as a medicine to be carefully doled out under certain circumstances? In the interim, insurers face tough questions with respect to the sheer variety of claims that might arise in the context of cannabis legalization and the damages that those claims might entail in litigation.
There are so many questions with so few answers at this point in time. But as Lewis Carroll noted, “if you don’t know where you are going, any road will get you there.” So insurers in particular need to determine what roads to take by planning–planning how to deal with the pending bankruptcies, planning how to deal with the possible “who is next” defendant scenarios, and determining how to deal with issues relating to cannabis both as a work place issue, a brand issue and as a coverage concern. As noted by Benjamin Franklin, “if you fail to plan, you are planning to fail.” Insures should not plan to fail.
 NIH/NIDA, Opioid Overdose Crisis (Jan. 2019), https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdose-crisis#one (citing CDC/NCHS, National Vital Statistics System, Mortality (2018), https://wonder.cdc.gov).
 James G. Hodge, Jr., et al., From Opioids to Marijuana: Out of the Tunnel and into the Fog, 67 U. Kan. L. Rev. 879, 882 (2019).
 CDC, 2018 Annual Surveillance Report of Drug-Related Risks and Outcomes – United States, 6 (2018), https://www.cdc.gov/drugoverdose/pdf/pubs/2018-cdc-drug-surveillance-report.pdf.
 NIH/Nat’l Library of Medicine, Opioid Addiction (Oct. 15, 2019), https://ghr.nlm.nih.gov/condition/opioid-addiction; Anuj Shah, et al., Characteristics of Initial Prescription Episodes and Likelihood of Long-Term Opioid Use – United States, 2006–2015, CDC Morbidity and Mortality Weekly Report (Mar. 17, 2017), https://www.cdc.gov/mmwr/volumes/66/wr/mm6610a1.htm.
 NIH/NIDA, Addressing the Opioid Crisis Means Confronting Socioeconomic Disparities (Oct. 25, 2017), https://www.drugabuse.gov/about-nida/noras-blog/2017/10/addressing-opioid-crisis-means-confronting-socioeconomic-disparities; Laxmaiah Manchikanti, et al., Opioids in Chronic Noncancer Pain: Have We Reached a Boiling Point Pet? Pain Physician (2014), https://pdfs.semanticscholar.org/2b05/06722c741dd71660b7779cd4df52b67fc2e0.pdf.
 NIH/NIDA, Dramatic Increases in Maternal Opioid Use and Neonatal Abstinence Syndrome (Jan. 2019), https://www.drugabuse.gov/related-topics/trends-statistics/infographics/dramatic-increases-in-maternal-opioid-use-neonatal-abstinence-syndrome.
 NIH/NIDA, supra note 1.
 Altarum, Economic Toll of Opioid Crisis in U.S. Exceeded $1 Trillion Since 2001 (Feb. 13, 2018), https://altarum.org/news/economic-toll-opioid-crisis-us-exceeded-1-trillion-2001.
 NIH/NIDA, supra note 1; Nicholas Hagemeier, Introduction to the Opioid Epidemic: The Economic Burden on the Healthcare System and Impact on Quality of Life (May 11, 2018), https://www.ajmc.com/journals/supplement/2018/combating-opioid-epidemic/intro-opioid-epidemic-economic-burden-on-healthcare-system-impact-quality-of-life.
 Manchikanti, supra note 5.
 In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804 (N.D. Ohio 2019).
 See, for example, Pls.’ Am. Compl. At 3, Cherokee Nation v. Purdue Pharma et al., No. 1:18-MD-46325 (N.D. Ohio Aug. 12, 2019), consolidated under In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804 (N.D. Ohio 2019).
 Sara Randazzo, New Front on Opioid Litigation: Suits Over Rising Premiums, Wall Street Journal (May 2, 2018), https://www.wsj.com/articles/new-front-on-opioid-litigation-suits-over-rising-premiums-1525279402.
 Berkeley Lovelace, Jr., OxyContin Maker Purdue Pharma Files for Bankruptcy Protection, CNBC (Sep. 15, 2019), https://www.cnbc.com/2019/09/16/oxycontin-maker-purdue-pharma-files-for-bankruptcy-protection.html.
 See Paul Carrington, Asbestos Lessons: The Consequences of Asbestos Litigation, 26 Rev. Litig. 583 (2007), https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2343&context=faculty_scholarship.
 See 11 U.S.C. 509(c).
 Governing, State Marijuana Laws in 2019 Map (Jun. 25, 2019), https://www.governing.com/gov-data/safety-justice/state-marijuana-laws-map-medical-recreational.html.
 See Teresa Beck & Jay Majitov, The Blame Game: Cannabis Edition, CLM Magazine (Sep. 2019), http://online.pubhtml5.com/adfn/pwaa/#p=38.
 Dan Hyman, When the Law Says Using Marijuana Is O.K., but the Boss Disagrees, New York Times (Jul. 19, 2019), https://www.nytimes.com/2019/07/19/business/marijuana-employer-drug-tests.html.
 Beck, supra note 19.
Ms. Lambert has over 35 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration.