Those dangers are highlighted by the fact that one person in the United States dies from an opioid overdose about every 11 minutes. (source) Prescription opioids were involved in just over a third of all overdose deaths in 2017. (source) Today, the odds of an American dying of a drug overdose outweigh the chances of dying in a car accident. (source)

The dramatic climb in overdose deaths mirrors the steady increase in opioid prescriptions from the mid 1990s through a peak in 2010. The surge in prescriptions came as opioids were increasingly used to treat chronic pain even as concerns about potential addiction were downplayed.* Hospitals, for instance, have found themselves under pressure to improve pain management, and while opioids helped achieve that goal, their emergency departments are now in the front lines of the overdose epidemic.

While opioid prescriptions have declined steadily since 2010 due to government efforts, overdose deaths have continued to climb. About 49,000 people died of opioid overdoses in 2017, up 16 percent from 2016. (source) Of patients prescribed opioids for chronic pain, between 8 and 12 percent develop an opioid use disorder. About one in 20 people misusing prescription opioids later use heroin. Besides the cost in lives, the total economic burden of prescription opioid misuse has been estimated at $78.5 billion a year by the Centers for Disease Control and Prevention.

Considering the human and economic costs, more than two dozen states, including Florida, Massachusetts, New Jersey, North Carolina and Texas, have filed lawsuits against opioid manufacturers, alleging deceptive marketing practices and seeking to hold them financially accountable. State attorneys general have accused opioid manufacturers of downplaying the addiction potential in their marketing efforts. It’s not just the manufacturers. All sectors of healthcare find themselves at risk of litigation. Hundreds of cities, counties and other public and private entities have filed lawsuits against manufacturers, distributors and retailers. Medical practitioners are facing malpractice suits.

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The current and potential lawsuits are having a significant impact on insurance coverage across the entire health care sector. Insurers are clearly concerned about having to defend lawsuits as well as the possibility of massive payouts for opioid claims they did not anticipate in their underwriting. The litigation may impact a wide range of coverage areas from general liability to products liability, professional liability, directors and officers and workers compensation. Some insurers are asking state and federal courts to rule that they are not required to defend or indemnify opioid manufacturers and others health companies named in such litigation because the suits seek recompense for economic losses rather than specific perils such as bodily injury or property damage named in the policies.

To limit future liabilities, more insurers are adding opioid exclusions to a variety of policies, complicating insurance coverage decisions for the healthcare clients. While some exclusions may not affect the coverage that an insured actually needs, others may have a real impact. That makes it crucial for brokers to understand the risks the healthcare industry faces in order to help their clients secure the most effective and cost-efficient insurance coverage.

BOTTOM LINE

The healthcare industry faces serious challenges stemming from the opioid crisis. State and local governments are increasingly seeking to recoup economic losses through lawsuits against pharmaceutical and health organizations. Insurers are trying to limit their own liabilities by proactively challenging claims in court and adding opioid exclusions. Working with a CRC Group producer who understands the risks and the coverage changes facing clients in the healthcare sector can ensure clients are properly protected by their insurance coverage.

Contributors:

Clay Segrest is a broker in CRC’s Birmingham, AL office and a member of the ExecPro Practice Advisory Committee.

Tom Levin is a broker in CRC’s Chicago, IL office and a member of the ExecPro Practice Advisory Committee.

ENDNOTES

* The U.S. Opioid Epidemic, an Evolving Challenge for Insurers, Swiss Re.