Drug Distributing ‘Pill Mill’ Is Entitled to Defense Coverage

An insurer was required to defend a pharmaceutical drug distributor over charges that it played a role as a “pill mill,” contributing to widespread drug addiction in the state.  The underlying claim was brought against a number of pharmaceutical distributors by the West Virginia attorney general’s office.  The claim alleged both intentional and negligent conduct. The insurer argued that coverage was precluded by virtue of the intentional and criminal conduct exclusion, but the court rejected that argument, noting that the distribution of drugs based on orders placed was not illegal and the insured could not have reasonably anticipated violation of laws in that regard.  The court also opined that the insured’s acts were accidental because the  alleged impact of its actions were beyond the insured’s control and there was no indication that they intended any harm. The court however noted that there would be no indemnity for the insured to the extent that its conduct was deemed intentional or illegal. For a copy of this decision, click here.

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