Bausch & Lomb, Inc. v. Lexington Insurance Company
(W.D.N.Y December 28. 2009)
Bausch & Lomb brought an action against defendant Lexington Insurance Company seeking a declaration that Lexington was obligated to provide insurance coverage to Bausch & Lomb with respect to claims made against it by consumers for alleged injuries arising out of the use of Bausch & Lomb contact lens solutions. Bausch & Lomb claimed that it purchased umbrella liability insurance policies from Lexington for yearly periods from January 1, 2004 through January 1, 2007, and that during this time, thousands of claims were made against the company for alleged injuries arising from consumers’ use of certain ReNu brand contact lens solutions. Bausch & Lomb maintained that it sought liability coverage from Lexington for these claims pursuant to the Lexington policies, as well as coverage for defense costs associated with these claims, but that Lexington denied coverage for all but a portion of the claims.
According to the policyholder, Lexington denied coverage because it deemed each alleged injury sustained by users of the solutions as separate “occurrences” under the terms of the policy, and as a result, agreed to provide coverage only when specified limits of liability have been met for each occurrence. Bausch and Lomb contends that Lexington improperly characterized the injuries as arising from multiple occurrences, and in doing so, ignored the portions of the Lexington Policies which specifically provide for grouping of claims. According to the policyholder, the grouping provisions of the Lexington policies required Lexington to treat the several injuries allegedly suffered by consumers as arising from a single occurrence.
Lexington maintained that its policies should be construed so as to provide that each alleged injury sustained by users of contact lens solutions be treated as a separate occurrence. According to Lexington, pursuant to such an interpretation, it would only be obligated to provide insurance coverage once certain liability thresholds (as stated in the policies) have been met in each individual case. Lexington further contended that because those thresholds had not been reached, and were not likely to be reached, it was not obligated to provide a defense for every claim, and was not obligated to insure liability losses that do not reach the policy thresholds.
The court found that the claims constitute separate occurrences under the terms of the Lexington policies, and as a result, Lexington was not obligated to insure B & L for losses arising from those claims, or defense costs arising from those claims, absent a showing that B & L has met the liability limits set forth in the policies. Relying upon the unambiguous definition of occurrence, the court reasoned that it is the exposure by consumers to the product that constitutes the “accident.”
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By Daniel W. Gerber and Jeffrey L. Kingsley