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A Delaware state court ruled Tuesday that Chubb Ltd. units are obligated to reimburse Rite Aid Corp. for defense costs in connection with multidistrict opioid litigation.
Camp Hill, Pennsylvania-based Rite Aid units have been sued in more than 1,143 lawsuits by government entities, third-party payors of medical care and individuals seeking damages for costs arising out of its distribution of opioids, according to the ruling by the Delaware Superior Court in New Castle, Delaware, in Rite Aid Corp. et al. v. ACE American Insurance Co. et al.
The focus of the ruling is the “Track One” lawsuits by governmental entities alleging Rite Aid “chased profits while turning a blind eye to the devastating epidemic,” according to the ruling.
The lawsuits charge Rite Aid knowingly distributed opioids to its own local pharmacies, and they “improperly dispensed prescription opioids to its customers, which contributed and perpetrated drug abuse, addiction and resulting injuries or death,” according to the ruling.
Rite Aid sought coverage under a 2015 policy issued by Chubb Ltd. that had a $3 million retention for defense costs. Chubb denied coverage under the policy for any of Rite Aid’s costs incurred in defending any of the opioid lawsuits.
The pharmacy chain filed a motion for partial summary judgment requiring Chubb to pay its defense costs in an amended July 2019 complaint, with charges including breach of contract, according to the ruling.
“Rite Aid argues that the Track One Lawsuits are one occurrence because the allegations corner one proximate, uninterrupted and continuing cause,” the lawsuit said.
ACE’s arguments included that it had no obligation to provide a defense because prior to Jan. 1, 2015, because “Rite Aid had knowledge of personal injury, and the opioid epidemic was a known loss or loss-in-progress,” the ruling said.
Construing the duty to defend broadly in the policyholder’s favor, “the Court finds that the Track One Lawsuits and all Opioid Lawsuits alleging similar claims are potentially covered under the Policy, triggering ACE’s duty to defend,” the ruling said.
The remaining dispute is whether the lawsuits arise from a single occurrence, the ruling said. The ruling said they do. “Because the injuries alleged resulted from the inadequate action in both the distribution and dispensing stages, whereby if there had been proper controls in place in either stage the injury could have been prevented, the alleged act should constitute one occurrence,” the ruling said, in granting Rite Aid’s motion for partial summary judgment.
A Rite Aid spokesman said in a statement the company “does not comment on pending litigation,” while a Chubb spokesman said in a statement, “Per company policy, we do not comment on legal matters.”
(Reuters) — New York state filed civil charges on Wednesday accusing Endo International PLC of insurance fraud for misrepresenting the safety and efficacy of its opioid drugs, adding fuel to the nation's opioid crisis.