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Eli Lilly & Co. v. Home Ins. Co.

Supreme Court of Indiana

September 12, 1985, Filed

Supreme Court No. 685 S 243

Opinion

 [*468]  This cause comes before this Court on the certification of three questions of state law by the United States Court of Appeals for the District of Columbia Circuit. Eli Lilly and Co. v. Home Insurance Co. (D.C. Cir. 1985), 246 U.S. App. D.C. 243, 764 F.2d 876. This Court has jurisdiction to answer the certified questions. Ind.R.App.P. 15(O).

On March 9, 1982, Eli Lilly and Company filed this declaratory judgment action in the United States District Court for the District of Columbia. Named as defendants were the various insurance companies that insured Lilly from 1947, when Lilly first manufactured and sold the drug diethylstilbestrol (DES), to 1976, when the insurers refused to insure DES risks. The suit involves the scope of products liability insurance coverage for claims arising from DES-related illnesses.  [**4]  Id. at 878. The basic dispute concerns what must happen during a particular policy period to invoke insurance coverage for that period, described by the insurers as the trigger of coverage.

From the late 1940's until 1971, DES was prescribed to pregnant women for the purpose of preventing spontaneous miscarriages. In 1970, researchers reported a significant statistical connection between ingestion of DES by pregnant women and the later development of vaginal clear-cell adenocarcinoma, vaginal adenosis and other reproductive tract disorders in daughters of DES users who were in utero at the time of the DES ingestion.

For a twenty-year period commencing in 1947, Lilly was one of the major manufacturers and sellers of DES. Lawsuits arising from DES-related illnesses began in 1972. At the time Lilly filed for summary judgment in this action, approximately 650 lawsuits had been filed against Lilly, and additional suits have since been filed.

On April 12, 1984, the District Court, in a memorandum opinion, granted Lilly's motion for summary judgment. The court determined that a conflict of laws existed and that Indiana law should govern. The court also determined that ] under [**5]  Indiana law the extrinsic evidence offered by the insurers was not relevant in construing the  [*469]  insurance contracts. The court also held that the Indiana courts would follow Keene Corp. v. Insurance Co. of North America (D.C. Cir. 1981), 215 U.S. App. D.C. 156, 667 F.2d 1034, cert. denied (1982), 455 U.S. 1007, 102 S. Ct. 1644, 71 L. Ed. 2d 875, 102 S. Ct. 1645, and adopt a multiple trigger interpretation of the insurance contracts. Under the Keene approach, originally applied in the context of asbestos-related illnesses, each insurer on the risk at any time between the initial ingestion of DES and the subsequent manifestation of a DES-related illness would be liable to Lilly for indemnification. See Id. at 1041.

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482 N.E.2d 467 *; 1985 Ind. LEXIS 953 **

ELI LILLY AND COMPANY, Appellee, v. The HOME INSURANCE COMPANY, et al., Appellants

Prior History:  [**1]   Certified Question from the United States District Court for the District of Columbia Circuit.

Disposition: This cause is remanded to the United States Court of Appeals for the District of Columbia Circuit for further proceedings.

CORE TERMS

policies, insurers, trigger, coverage, manifestation, courts, extrinsic evidence, illnesses, ambiguous, insurance policy, policy language, ingestion, exposure, terms

Insurance Law, Policy Interpretation, Parol Evidence, General Overview, Claim, Contract & Practice Issues, Ordinary & Usual Meanings, Ambiguous Terms, Unambiguous Terms, Plain Language, Reasonable Expectations, Reasonable Person, Construction Against Insurers, Question of Law, Coverage, Triggers, Multiple Triggers, Commercial General Liability Insurance, Products & Workmanship, Manifestation Triggers