A Chubb Ltd. unit and 3M Co. each won a partial victory in coverage disputes in a complex product liability case.
St. Paul, Minnesota-based 3M is a defendant in more than 5,000 product liability cases stemming from the design and manufacture of the Bair Hugger Patient Warming System, according to Wednesday’s ruling by the U.S. District Court in Minneapolis in Federal Insurance Co. v. 3M Company.
The system, which was developed and sold by a company that 3M acquired in 2010, is designed to maintain a patient’s body temperature during surgery by forcing warm air through a blanket, according to the ruling.
That has led to thousands of product liability claims filed against 3M seeking damages for bodily injuries allegedly caused by the system, which were consolidated into multidistrict litigation in Minnesota, according to the ruling. Chubb̵7;s Federal Insurance unit issued product liability policies covering some, but not all, of the cases against 3M, according to the ruling.
Federal sued 3M and sought a declaration that 3M must pay a deductible for each injury; that the defense costs of the MDL litigation should be allocated based on the proportion of cases covered by Federal’s policies; and that the insurer need only pay the necessary and reasonable costs of the MDL defense after notice.
3M objected, seeking a declaratory judgment that it need only pay one deductible per policy period; that Federal is responsible for the fuel cost of the MDL defense; and that Federal is liable in breach of contract for failing to defend 3M as required by the policy contracts.
The court ruled in 3M’s favor on the deductible issue. It “is only responsible for one deductible per policy period, as the occurrence or occurrence language of the insurance deductible applies to the design and manufacture of the devices,” it said. It dismissed the breach of contract claim.
The decision said it was decisive on behalf of the insurer, however, on the issue of litigation defense costs. “Because the MDL is not a single, monolithic case, but rather the individual cases within an MDL remain distinct, Federal need only pay the defense costs associated with cases covered by the policies it issued, not the entire cost of the MDL defense,” the said.
The court said it will not decide which method is appropriate for calculating those costs at this time.
A 3M lawyer had no comment, while Chubb’s lawyers did not respond to a request for comment.