Court upholds insurers’ win over opioid trust coverage

(Legal Newsline) — The Missouri Court of Appeals for the Eastern District has affirmed a St. Louis Circuit Court judgment in favor of insurers that denied coverage sought by the Opioid Master Disbursement Trust II for claims tied to opioid-related litigation against Mallinckrodt and related entities.

In a July 21 opinion, the three-judge panel concluded that the bodily injuries at issue arose from the debtors’ products under the insurance policies’ language, including representations made in an alleged unbranded opioid marketing campaign.

The court also found that the trust could not obtain coverage under the umbrella and excess policies because the required claims were neither made nor reported during the applicable policy periods.

The trust was created in March 2022 through the debtors’ bankruptcy proceeding to administer settlements of opioid-related claims involving people and entities purportedly harmed by the companies’ actions.

Mallinckrodt and its related entities manufactured, marketed and distributed branded and generic opioid products, as well as active pharmaceutical ingredients used by the companies and other manufacturers to make finished opioid products.

More than 3,000 lawsuits named the debtors as defendants, according to the opinion.

Government entities, third-party payors and individuals alleged harm caused by opioids. The debtors filed for bankruptcy in October 2020 under the financial weight of the litigation, and transferred their insurance coverage rights to the trust as part of the bankruptcy proceeding.

The trust selected 11 cases as exemplars of the debtors’ pre-bankruptcy liability. Those cases included suits brought by government entities, personal-injury cases, wrongful-death claims and cases involving children diagnosed with neonatal abstinence syndrome, a condition the opinion says can affect infants after chronic in-utero opioid exposure.

The underlying lawsuits alleged that the debtors used unbranded marketing to understate the risks of opioid use, encourage overprescribing and increase opioid use.

Government plaintiffs including Mississippi, Georgia, Florida and St. Charles County, Mo., alleged the companies used physicians, professional societies, publications, sales representatives and patient advocacy groups to spread misinformation about addiction risks, opioid safety for chronic pain and dosage information.

Some complaints also alleged that the campaign sought to avoid Food and Drug Administration regulations applicable to branded marketing.

The trust argued on appeal that the injuries for which it sought coverage did not arise out of the debtors’ specific products.

It maintained that the injuries instead were caused by other companies’ opioid products or illicit opioids, and argued that the policies’ terms created an ambiguity that should be interpreted in favor of coverage.

The appeals court rejected that position. It said the phrase “arising out of” in an insurance policy requires only a causal connection, rather than direct and proximate causation.

The court also said the policies’ definition of “your product” expressly includes warranties and representations about products, along with the provision or failure to provide warnings or instructions.

The primary policies issued by the AIG insurers excluded bodily-injury claims occurring away from premises owned or rented by the insured and arising out of the insured’s products.

The umbrella policies covered certain claims within that exclusion only when a claim was first made in writing and reported to insurers during the policy or an extended reporting period. Eight excess policies followed the umbrella policies’ form.

The court found that all 11 exemplar cases contained allegations regarding the debtors’ unbranded marketing campaign.

Those allegations included assertions that opioids were non-addictive, safe for chronic pain treatment and effective at high doses, and that patient advocacy organizations, physicians, publications and other media disseminated those representations.

According to the opinion, the claims alleged that the representations increased opioid use and allowed the debtors to profit from sales of branded opioids, generic opioids and active pharmaceutical ingredients.

The court concluded that the alleged injuries therefore arose from the debtors’ products and fell within the policies’ exclusion.

The court further held that the umbrella and excess policies independently barred coverage because the exemplar lawsuits were filed years after the policies expired and no claims had been reported during the policy periods.

The court affirmed the circuit court’s March 10, 2025, summary judgment for the insurers.

Missouri Court of Appeals, Eastern District, case number: ED113635