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Cincinnati Ins. Co. v H.D. Smith, LLC

829 F.3d 771 (7th Cir. 2016)

Words & Phrases

Duty To Defend: Damages

Trial Judge

Richard Mills

Appellate Judge



Insurer had duty to defend pharmaceutical company in action by State of West Virginia to recoup money spent treating addictions because insured was legally obligated to pay others “because of bodily injury,” .

Fact Summary

According to West Virginia, it faces an “epidemic of prescription drug abuse” that costs it hundreds of millions of dollars every year. West Virginia sued H.D. Smith and other pharmaceutical distributors, seeking to hold them liable for contributing to the state’s epidemic of prescription drug abuse. The complaint alleged that certain pharmacies—pejoratively called “pill mills”—knowingly provided citizens with hydrocodone, oxycodone, codeine, and other prescription drugs, not for legitimate medical uses but to fuel and profit from the citizens’ addictions. The pharmacies ordered the drugs from the defendant distributors in huge quantities—quantities so large that West Virginia contends the distributors should have known the drugs would be used for illicit and destructive purposes. West Virginia alleged that the defendant distributors “acted negligently, recklessly, and in contravention of West Virginia law,” and cost the state hundreds of millions of dollars every year. Among other things, that money was spent caring for drug‐addicted West Virginians who suffer drug‐related injuries and cannot pay for their own care.

One of the distributors, H.D. Smith, asked its insurer, Cincinnati Insurance Company, to defend the suit. Instead Cincinnati filed this suit seeking a declaration that its policy does not cover the suit filed by West Virginia. The district court agreed with Cincinnati and granted its motion for summary judgment. But the plain language of the policy requires Cincinnati to defend a suit brought by a plaintiff to recover money paid to care for someone who was injured by H.D. Smith. West Virginia’s suit fits that description so we reverse.