When Injuries Occur Over Time: Pharmaceutical Claims & The Continuous Trigger Theory

In most liability scenarios, an injury occurs at a fixed point in time that can be calculated for purposes of determining whether coverage applies. There are, however, certain situations when an injury does not take place at one point in time but gradually over an extended period.

Perhaps the most common example of such an injury occurring over time is exposure to toxic substances, such as asbestos inhalation. Injury over time can also arise with pharmaceutical-based injuries. A person ingesting or otherwise receiving a pharmaceutical that results in harm may not perceive that harm until well after the pharmaceutical was taken.

In these instances, the injury may not be discovered for some time following the initial exposure. This presents a problem when determining whether a claim submitted by the injured party against the insured falls within the policy period of a liability policy. This problem has led courts and state legislatures to craft various theories of coverage triggers, including the increasingly popular “continuous trigger theory.”

Trigger Theories & The Continuous Trigger Theory

A “trigger” for coverage purposes refers to the event used to determine whether a claim falls within the time an insurance policy is in effect. Several trigger theories have been developed to determine when a policy provides coverage for a claim.

Under the “exposure theory,” a policy is triggered if it was in effect during the claimant’s first exposure to the harm, regardless of when the claimant discovers or manifests an injury. Under the “manifestation theory,” a policy is triggered if it was in effect when the claimant discovers the injury or the injury otherwise manifests itself, regardless if the injury began prior to the time of discovery or manifestation. Under the “injury-in-fact theory,” a policy is triggered if it was in effect when the injury actually began even if it was not discovered or did not manifest for some time afterward. Lastly, under the “continuous trigger theory,” a policy is triggered if it was in effect either during the claimant’s exposure to the harm, during the time the injury actually occurred, or at the time the injury was discovered or manifested itself.

The continuous trigger theory is the most expansive trigger theory and encompasses the three lesser trigger theories to favor an all-encompassing view of affording coverage for injuries occurring over time. Several courts have applied the continuous trigger theory under various circumstances. The majority of the caselaw on continuous trigger theory involves application of the theory to asbestos or construction defect claims, but there are a handful of cases applying the theory to pharmaceutical injury cases. This line of cases could present support for courts to apply the theory in pharmaceutical injury cases involving professional liability policies.

Pharmaceutical Continuous Trigger Caselaw

The Fourth Circuit Court of Appeals in Pharmacists Mut. Ins. Co. v. Scyster, et al., 232 Fed.Appx. 217 (4th Cir. May 7, 2007) addressed a case in which the pharmacy and lead pharmacist defendants allegedly compounded and distributed contaminated methylprednisolone resulting in injuries to several patients. Following an investigation by the state board of pharmacy resulting in determinations of multiple violations, the professional liability insurer for the defendant pharmacist filed a declaratory judgment action, seeking an order determining the policy did not afford coverage for the patients’ claims. On appeal from the district court’s order finding coverage did extend to the patients’ claims, the insurer argued that the claims of three of the injured patients arose from methylprednisolone injections that were administered prior to the policy’s effective date. The Fourth Circuit disagreed, reasoning that the continuous trigger theory applied when the claimant’s damages are continuing. Because the patients at issue had sustained continuing damages extending within the policy period of the professional liability policy, the policy extended to the patients’ claims.

Medical Protective Co. of Fort Wayne, Indiana v. South Carolina Medical Malpractice Liability Ins. Joint Underwriting Assoc., 648 F.Supp.2d 753 (D. SC Aug. 17, 2009) involved a malpractice claim in which the insured provider performed hip replacement surgery on a patient. The surgery resulted in an alleged infection, and the provider allegedly continued with the same course of inadequate wound care over an excessive period of time. The surgery occurred in 2002, and the patient’s condition continued to worsen until at least March 2004. Over the relevant period, the provider was covered by two separate malpractice policies. From August 2002 to October 2003, the provider was insured by the first insurer. From October 2003 to October 2006, the provider was insured by the second insurer. The claim was submitted to the second insurer in 2006.

The second insurer settled the claim and filed an action against the first insurer, seeking an order apportioning complete liability for this incident to the first insurer, as the patient’s harm was the result of a course of treatment beginning during the first policy term. The first insurer argued the two insurers should be jointly liable under the continuous trigger theory because the patient’s harm initiated during the term of the first policy but continued beyond this into the second policy period. The court agreed with the first insurer that the continuous trigger theory applied and, to the extent the patient’s harm could not be pinpointed to either policy, both insurers should bear responsibility jointly for the patient’s harm.

In American Home Products Corp. v. Liberty Mut. Ins. Co., 748 F.2d 760 (2nd Cir. May 22, 1984), however, the Second Circuit Court of Appeals rejected the use of the continuous trigger theory when the express terms of the policy supported a different trigger theory. The case involved a plaintiff drug manufacturer that brought a declaratory judgment suit against the defendant liability insurer, seeking an order determining whether the insurer was required to extend coverage to the claims of several patients who were allegedly injured by drugs manufactured by the plaintiff. The insurer claimed it was not required to cover the claims because, under the manifestation trigger theory, the patients’ injuries did not manifest until after the policy period ended. The plaintiff argued the continuous trigger theory should apply based on the terms of the underlying policy. The United States District Court for the Southern District of New York found that the injury-in-fact trigger theory applied to the claims, and both parties appealed. On appeal, the Second Circuit agreed with the District Court in its application of the injury-in-fact trigger theory based on the express terms of the policy.

These cases demonstrate the willingness of certain courts to apply the continuous trigger theory to pharmaceutical injury claims. While only a handful of courts have applied the theory in this context, other courts handling these claims involving pharmaceutical injuries occurring over an extended time may find these existing cases persuasive and apply the theory in their own jurisdictions. Ultimately, policy language can be crafted in a way to guide courts toward applying a different trigger theory, as the American Home case makes clear.

Conclusion

The continuous trigger theory’s use in pharmaceutical cases should be on the radar of professional liability insurers, insureds, and patients to fully understand the potential scope of coverage in cases involving pharmaceutical injuries occurring over time. Whether a court opts to apply the theory to a given case can drastically alter the coverage landscape and may be the difference between nonexistent or complete coverage of pharmaceutical injury claims.

Topics Claims