Chubb Ltd. has no duty to defend Rite Aid Corp. against lawsuits filed by two Ohio counties that allege the drug store chain’s failure to identify suspicious orders contributed to an oversupply of opioids that forced the plaintiffs to pay for addiction treatment and other public health costs, the Delaware Supreme Court ruled in a split decision on Monday.
Rite Aid contended that Chubb subsidiaries had a duty to defend it under a general liability policy issued in 2015 that covered any damages caused by bodily injury. But the Delaware Supreme Court said in its 4-1 decision that the plaintiffs had specifically excluded any claim for bodily injury from their civil complaints and were seeking compensation only for economic damages.
“The complaint must do more than relate to a personal injury—it must seek to recover for the personal injury or seek damages derivative of the personal injury,” the majority opinion says.
Chubb appealed after a Superior Court judge ruled that it was required to defend Rite Aid against the lawsuits filed by Cuyahoga and Summit counties. The action is considered a bellwether case among thousands of lawsuits that are before the U.S. District Court for Northern Ohio against companies in the pharmaceutical supply chain for their roles in the nation’s opioid epidemic.
The Superior Court found that the Chubb units had a duty to defend Rite Aid because the economic costs claimed related to injuries to individuals. But the Delaware Supreme Court majority said the plaintiffs expressly disclaimed any personal injury damages, while also acknowledging that other courts have decided the matter differently.
The majority said it disagrees with a decision by the Ohio 1st District Court of Appeals that found an insurer had to defend another pharmaceutical distributor from a similar opioid lawsuit “because the economic damages claimed was arguably a causal connection between the alleged conduct and bodily injury suffered by people who became addicted to opioids.”
The court said it agreed that an insurer’s duty to defend a policyholder is broader than its duty to pay damages, but the lawsuits against Rite Aid make no allegation of any specific bodily injury and seek to “recover for non-derivative economic loss.”
“This claim is not directed to an individual injury but to a public health crisis,” the majority opinion says. “It is analogous to a city suing an insured soda distributor for increasing its citizens’ obesity rates.”
Justice James T. Vaughn dissented, saying that the claims against Rite Aid do assert a bodily injury—that is, an epidemic of opioid addiction.
“It appears plain to me that the counties intend to prove that Rite Aid, along with other drug distributors and others, caused the personal injury, that is, the alleged opioid-addiction epidemic, that is at the heart of their claims,” the dissenting opinion says.