Jonathan L. Schwartz Quoted in “7th Circ. ‘Pill Mill’ Ruling Ushers in Nuisance Coverage,” Law 360 July 20, 2016

Jonathan L. Schwartz, a partner in Goldberg Segalla’s Global Insurance Services Practice Group, spoke to Law360 in reaction to a potentially influential Seventh Circuit ruling that could impact the insurance industry unfavorably. In this case, the court ruled an insurer must defend a national supplier of health care products in a suit brought by West Virginia that alleged the supplier contributed to the state’s prescription drug abuse epidemic.

The insurance company had argued that the commercial general liability (CGL) policy is intended to cover only injuries suffered directly by an injured party and, therefore, it was not obligated to compensate West Virginia. The court rejected that approach and held that while the state had not experienced any bodily injuries, it did pay for the medical treatment of uninsured individuals who are addicted to the drugs the supplier provides.

Jonathan told Law360 he was “troubled by the finding of coverage” and that CGL policies are not indented to cover those types of damages.

"The causal nexus between bodily injury and the damages requirement is very important in these types of situations," Jonathan told Law360. "The 'because of' language is crucial for insurers to avoid paying for economic loss, which is not what a CGL policy is designed to do. CGL insurance is instead intended to cover losses that are fundamentally fortuitous and tortious in nature."

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