Background
Mallinckrodt and related entities manufactured, marketed, and distributed branded and generic opioids, as well as active pharmaceutical ingredients used to make opioid products. More than 3,000 lawsuits accused the companies of contributing to opioid-related harms through unbranded marketing that allegedly understated addiction risks, encouraged overprescribing, and increased opioid use.
After the companies filed for bankruptcy, the Opioid Master Disbursement Trust II was created to administer opioid-related claims and received the debtors’ insurance-coverage rights. The Trust selected eleven exemplar lawsuits—including government actions, wrongful-death cases, and neonatal-abstinence-syndrome cases—and sought coverage under 30 primary, umbrella, and excess policies. The circuit court granted summary judgment to the insurers, and the Trust appealed.
The Court’s Holding
The Missouri Court of Appeals affirmed. It held that the bodily injuries alleged in the exemplar suits arose out of the debtors’ products and therefore fell within the primary policies’ products-completed operations hazard exclusion. The policies defined “your product” to include warranties, representations, warnings, and instructions concerning the insured’s products. Because “arising out of” requires only a simple causal relationship, the exclusion was not limited to injuries directly or proximately caused by a specifically identified Mallinckrodt product.
The court rejected the Trust’s argument that unbranded representations about opioids generally were disconnected from the debtors’ products. The underlying suits alleged that the marketing campaign increased opioid use and thereby increased sales of the debtors’ branded opioids, generic opioids, and active pharmaceutical ingredients. The court found the policy language unambiguous and concluded that the alleged injuries originated from or flowed from those representations.
The umbrella and excess policies independently provided no coverage because their products-completed operations endorsements required claims to be both made against the insured and reported to the insurers during the applicable policy periods. The exemplar suits were filed years after the policies expired, and no claims were reported during the policy periods.
Key Takeaways
- Under Missouri insurance law, “arising out of” requires a simple causal connection rather than direct or proximate causation.
- A definition of “your product” that includes warranties, representations, warnings, and instructions can encompass unbranded marketing about a product category generally.
- Claims-made-and-reported requirements are enforceable when unambiguous, and coverage is not triggered when both the claim and notice occur outside the policy period.
Why It Matters
The decision applies products-completed operations language broadly to opioid litigation based on industry-wide promotional conduct. An insured cannot avoid such an exclusion merely because the alleged marketing did not name its own branded products or because some injuries involved competitors’ opioids, heroin, or other illicit opioids.
The ruling also underscores that separate policy provisions may independently defeat coverage. Even apart from the primary-policy exclusion, the Trust could not access the umbrella and excess layers because the underlying claims were neither made nor reported within the required periods.