On March 10, 2025, the Circuit Court for the County of St. Louis, Missouri found that BatesCarey’s clients, Aspen Insurance UK Ltd. and Old Colony State Insurance Company, owe no coverage for over $1 billion in opioid liabilities faced by one of the nation’s largest opioid manufacturers, Mallinckrodt. The court ruled that Mallinckrodt’s “unbranded marketing,” which promoted the use of opioids without naming any specific product, still constitutes conduct that falls within the policies’ products-completed operations hazard provisions, which preclude coverage for such claims.

Mallinckrodt was one of the nation’s largest manufacturers of opioids and opioid ingredients used by other manufacturers. After Mallinckrodt was faced with thousands of opioid lawsuits beginning in 2017, Mallinckrodt eventually sought bankruptcy protection from what it believed to be billions of dollars in potential tort liability owed to governments and individuals having suffered losses from the opioid epidemic that Mallinckrodt helped create. Through resolution of the bankruptcy, a Trust was created to seek indemnity from Mallinckrodt’s insurers for the opioid liabilities that had been discharged. The Trust filed suit in Missouri state court, seeking such insurance recoveries. 

The Trust recognized that many of Mallinckrodt’s historic primary insurance policies contained a Products-Completed Operations Hazard (PCOH) exclusion that precluded coverage for injuries “arising out of” Mallinckrodt’s sales of and representations about its opioid products. Relatedly, Mallinckrodt’s pre-2017 umbrella and excess policies only provided PCOH coverage if such claims were first made against Mallinckrodt and reported to the insurer during a policy’s period. None of the thousands of opioid claims filed against Mallinckrodt were first made or reported during any of the policy periods at issue. In other words, if Mallinckrodt’s liabilities fell within the PCOH provisions, they would not be covered.

To find coverage, the Trust argued that Mallinckrodt’s liabilities did not necessarily all arise from individuals who had ingested a Mallinckrodt product. The Trust argued that Mallinckrodt was alleged to have engaged in “unbranded marketing” whereby Mallinckrodt promoted to the public the use of opioids in general, in a fashion that changed the standard for prescribing and that created a national opioid market from which its sales thrived. It was alleged that “unbranded marketing” made Mallinckrodt liable for some public harm that resulted from people having been driven to opioids that were manufactured and sold by other companies, and eventually some people who were even driven to illicit heroin use. The Trust argued that these liabilities traced to opioids that Mallinckrodt did not sell constituted liabilities that fall outside of the PCOH provisions and therefore must be insured.

In adopting the briefing and oral argument presented by BatesCarey, the court ruled that to the extent that Mallinckrodt’s “unbranded marketing” of opioids resulted in Mallinckrodt’s alleged liability for members of the public that ingested the pills of other companies or illicit heroin, such liability still “grew out of” or “originated from” Mallinckrodt’s conduct in successfully marketing and selling its own opioids and opioid ingredients. Because even the “unbranded marketing” allegations were part of Mallinckrodt’s successful efforts to have flooded the market with its own opioids, the resulting injuries and liabilities fell within the PCOH provisions of the policies. In other words, the PCOH liability was excluded by the primary policies, and the PCOH liability was not covered by the umbrella and excess policies, given that the PCOH claims made and reported provisions were not satisfied.

Aspen and Old Colony were represented by Adam H. Fleischer, Justin K. Seigler and Clay J. Goldman of BatesCarey LLP.