Insurer Denies Coverage for Lawsuit Over Nitrous Oxide Canister Sales

Carrier argues vape shop’s insurance policy does not include injuries to consumers that occurred off-property, or involved drug use.

An insurance company is asking a federal judge to rule that it is not responsible for covering a Louisiana smoke shop in a recent lawsuit filed over the sale of nitrous oxide canisters that were intended for illicit inhalation, arguing that the store’s policy excludes injuries linked to drug use.

The dispute stems from a nitrous oxide class action lawsuit filed last year by Jenna Combel, who says she became addicted to Galaxy Gas and other similar products that were purchased from Mr. Binky’s Superstore, a business owned by Tahoe Investments.

Although the products were labeled for culinary use, Combel alleges that the store clearly sold them for inhalation, which she alleges caused her to develop a nitrous oxide addiction that caused her to suffer partial paralysis, nerve damage and brain damage.

Late last month, United Specialty Insurance Company and Century Surety Company filed a separate complaint (PDF) in the U.S. District Court for the Eastern District of Louisiana, asking the court to confirm they do not have to pay for Tahoe’s defense or any potential damages. The insurers point to policy language that excludes coverage for harm caused by “psychotropic substances,” a category that includes nitrous oxide when used recreationally.

Health care professionals use nitrous oxide in medical and dental procedures as a sedative, and it is widely sold over-the-counter and online for use in commercial kitchens, as a propellant for whipped cream dispensers. In these regulated environments, the gas is handled in controlled doses for legitimate therapeutic or culinary purposes.

However, nitrous oxide is also commonly known as “whippets” or “laughing gas” and has become increasingly popular among teens and young adults in recent years as a party drug, since it can cause a brief high and euphoric effects. As a result, the products are now widely sold in vape shops and smoke shops throughout the U.S., often in flavored varieties or with brand names designed to promote recreational use.

The increase in recreational use has resulted in an increasing number of adverse event reports being submitted to the U.S. Food and Drug Administration (FDA) involving serious health problems, such as nerve damage and even death. There are now a growing number of nitrous oxide lawsuits being filed against retailers throughout the U.S., and manufacturers who clearly packaged and marketed their products for recreational inhalation.

In this latest complaint, United Specialty Insurance Company (USIC) and Century Surety Company, also known as just Century, seek a declaratory judgment affirming that they are not responsible for covering personal injury damages linked to Tahoe Investments’ sale of nitrous oxide canisters.

The insurance companies say their policy only protects the store against bodily injury or property damage that occurs on the premises. It does not cover injuries caused by the sale of psychotropic substances, the lawsuit argues.

“This exclusion applies to the actual, or alleged furnishing of psychotropic substances to any person and to the actual, or alleged violation of any statute, ordinance or regulation relating to the sale, gift, distribution or use of any psychotropic substances.”

–United Specialty insurance Company et al v. Tahoe Investments LLC et al

The policy indicates that psychotropic substances are defined as “whippets, laughing gas, poppers, and any other legal or illegal drug or substance that affects the mind, mood or other mental process or that impacts the brain or central nervous system or that is hallucinogenic.”

The insurers argue they are not liable because Combel’s injuries involved a psychotropic drug, did not occur on the store’s premises, and fall outside the policy’s coverage.

Nitrous Oxide Canister Lawsuits

Nitrous oxide lawyers are now investigating potential claims like Combel’s for individuals throughout the U.S. who developed addictions to laughing gas leading to nerve damage, paralysis or other injuries.

The nitrous oxide lawsuits allege that these laughing gas canisters were deceptively marketed through vape and smoke shops using sweet flavors and youth-oriented packaging, while failing to warn users about the severe neurological risks.

Free legal consultations and case evaluations are being provided for individuals who:

• Used flavored nitrous oxide canisters sold in vape or smoke shops
• Inhaled the gas recreationally and developed an addiction
• Suffered nerve damage, cognitive impairment or partial paralysis
• Lost a loved one due to nitrous oxide-related complications