IN RE: CVS OPIOID INSURANCE LITIGATION
Consol. C.A. No. N22C-02-045 PRW CCLD
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
Submitted: July 24, 2023; Decided: August 25, 2023
WALLACE, J.
OPINION AND ORDER
GRANTED
Garrett B. Moritz, Esquire, and R. Garret Rice, Esquire, ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; Michael S. Shuster, Esquire, Daniel M. Sullivan, Esquire, Blair E. Kaminsky, Esquire, and Daniel M. Horowitz, Esquire, HOLWELL SHUSTER & GOLDBERG LLP, New York, New York, Attorneys for ACE Property and Casualty Insurance Company, Federal Insurance Company, Indemnity Insurance Company of North America, Vigilant Insurance Company, and Westchester Fire Insurance Company.
Robert J. Katzenstein, Esquire, and Julie M. O’Dell, Esquire, SMITH KATZENSTEIN & JENKINS LLP, Wilmington Delaware; Christopher J. St. Jeanos, Esquire, WILLKIE FARR & GALLAGHER LLP, New York, New York, Attorneys for American Home Assurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, P.A., and New Hampshire Insurance Company.
Bruce W. McCullough, Esquire, BODELL BOVÉ, LLC, Wilmington, Delaware; Karen M. Dixon, Esquire, SKARZYNSKI MARICK & BLACK LLP, Chicago, Illinois, Attorneys for American Zurich Insurance Company, Zurich American Insurance Company, and American Guarantee & Liability Insurance Company.
Joseph B. Cicero, Esquire, CHIPMAN BROWN CICERO & COLE, LLP, Wilmington, Delaware; Adam H. Fleischer, Esquire, R. Patrick Bedell, Esquire, and Allyson C. Spacht, Esquire, BATESCAREY LLP, Chicago, Illinois, Attorneys for Great American Alliance Insurance Company, Great American Insurance Company of New York, Great American Insurance Company, and Tamarack American, Inc.
Louis J. Rizzo, Jr., Esquire, REGER RIZZO & DARNALL LLP, Wilmington, Delaware; Monica T. Sullivan, Esquire, Matthew J. Fink, Esquire, Leena Soni, Esquire, and Stephanie M. Flowers, Esquire, NICOLAIDES FINK THORPE MICHAELIDES SULLIVAN LLP, Chicago, Illinois, Attorneys for Endurance American Insurance Company, and North American Capacity Insurance Company.
Sean J. Bellew, Esquire, BELLEW LLC, Wilmington, Delaware; Michael A. Kotula, Esquire, RIVKIN RADLER LLP, Attorneys for Allianz Insurance Company, Fireman’s Fund Insurance Company, Interstate Indemnity Company, and National Surety Company.
Wade A. Adams, III, Esquire, LAW OFFICES OF WADE A. ADAMS, III, Newark, Delaware; Bryce L. Friedman, Esquire, and Matthew C. Penny, Esquire, SIMPSON THACHER & BARTLETT LLP, New York, New York, Attorneys for Discover Property and Casualty Company, St. Paul Fire and Marine Insurance Company, Gulf Underwriters Insurance Company, United States Fidelity and Guaranty Company, and The Travelers Indemnity Company.
Thad J. Bracegirdle, Esquire, Sarah T. Andrade, Esquire, and Emily L. Skaug, Esquire BAYARD, P.A., Wilmington, Delaware; Edward B. Parks, II, Esquire, and Sara Hunkler, Esquire, RUGGERI PARKS WEINBERG LLP, Washington, D.C., Attorneys for First State Insurance Company, and Twin City Fire Insurance Company.
Peter B. Ladig, Esquire, Elizabeth A. Powers, Esquire, BAYARD, P.A., Wilmington, Delaware; Kevin T. Coughlin, Esquire, Suzanne C. Midlige, Esquire, and Patrick K. Coughlin, Esquire, Tanya M. Masсarich, Esquire, Zachary M. Sherman, Esquire, COUGHLIN MIDLIGE & GARLAND LLP, Morristown, New Jersey, Attorneys for Arrowood Indemnity Company.
Kevin. J. Connors, Esquire, MARSHALL DENNEHEY WARNER COLMAN & GOGGIN P.C., Wilmington, Delaware; Cheryl P. Vollweiler, Esquire, SKARZYNSKI MARICK & BLACK LLP, New York, New York, Attorneys for AXIS Insurance Company.
Philip Trainer, Jr., Esquire, and Marie M. Degnan, Esquire, ASHBY & GEDDES, Wilmington, Delaware; Robert A. Kole, Esquire, and Caroline M. Trusty, Esquire,
CHOATE, HALL & STEWART LLP, Boston, Massachusetts, Attorneys for Liberty Insurance Underwriters, Inc., Liberty International Underwriters, and The Ohio Casualty Insurance Company.
Marc S. Casarino, Esquire, KENNEDYS CMK LLP, Wilmington, Delaware; Christopher R. Carroll, Esquire, Jillian D. Dennehy, Esquire, and Joshua S. Wirtshafter, Esquire, KENNEDYS CMK LLP, Basking Ridge, New Jersey, Attorneys for TIG Insurance Company.
Kathleen M. Miller, Esquire, and Robert K. Beste, Esquire, SMITH KATZENSTEIN & JENKINS LLP, Wilmington Delaware; Keith Moskowitz, Esquire, DENTONS US LLP, Chicago, Illinois; Kathryn Guinn, Esquire, DENTONS US LLP, Denver, Colorado; Deborah J. Campbell, Esquire, DENTONS US LLP, St. Louis, Missouri, Attorneys for XL Insurance America, Inc., Greenwich Insurance Company, and The Continental Insurance Company.
David J. Baldwin, Esquire, Peter C. McGivney, Esquire, and Zachary J. Schnapp, Esquire, BERGER HARRIS LLP, Wilmington, Delaware; Kirk Pasich, Esquire, PASICH LLP, Los Angeles, California; Jeffrey L. Schulman, Esquire, and Peter A. Halprin, Esquire, Tae E. Andrews, Esquire, PASICH LLP, New York, New York, Attorneys for CVS Health Corporation.
WALLACE, J.
I. INTRODUCTION
The opioid crisis in the United States has produced countless lawsuits brought by governmental entities against suppliers, manufacturers, and distributors of opioids (the “Opioid Lawsuits”). To recoup the costs of defending against and settling these lawsuits, those dеfendants have sought coverage from various insurance companies. Early last year, the Delaware Supreme Court in ACE American Insurance Co. v. Rite Aid Corp. (“Rite Aid”) issued a key ruling in the insurance landscape
With respect to Plaintiffs Chubb and AIG (the “Insurers”), at issue are nine Opioid Lawsuits where CVS Health has been named as a defendant. Two of the lawsuits (Summit and Cuyahoga) are “Track One Suits” that are part of the consolidated multi-district litigation styled In Re: National Prescription Opioid Litigation, 17-md-2804 (N.D. Ohio) (the “MDL”).2 Seven of them (Florida, Philadelphia, Cherokee, Lake, Trumbull, Suffolk, and Nassau) are the Insurers’
Additional Representative Suits (the “Additional Representative Suits”).3 This Court has carefully reviewed each underlying complaint in those suits.
Present before the Court is Insurers’ motion for partial summary judgment, seeking a declaration that they owe no duty to defend CVS for the Track One Suits and the Additional Representative Suits (the “Insurers’ Motion”).4 Additionally, Defendant Insurers named in CVS’s Third-Party complaint (the “Joining Insurers”) have joined in the Insurers’ Motion (the “Joinder Motion”).5 They seek a declaration that they have no duty to defend or indemnify CVS for the Track One Suits and the Additional Representative Suits.6
For the reasons explained below, the Insurers’ Motion is GRANTED, and Joining Insurers’ Motion is also GRANTED.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. THE PARTIES
There are a significant number of parties to this consolidated action. The relevant parties are referred to generally as the Insurers, the Joining Insurers, and
CVS. The parties from the original complaint include Insurers Chubb7 and AIG,8 as well as CVS. CVS is a Delaware corporation with its principal place of business in Woonsocket, Rhode Island.9 CVS also filed a Third-Party Complaint against a number of insurers,10 included among them are the Joining Insurers.11
It is well-known that the United States has grappled with the opioid addiction crisis for many years. The Centers for Disease Control and Prevention has described it as a “national epidemic,”12 and states, counties, municipalities, and Native American tribes have filed thousands of Opioid Lawsuits against opioid manufacturers, distributors, and retailers.13 Many of the Opioid Lawsuits are consolidated in the MDL; others are pending in state courts around the country.14 On November 2, 2022, CVS announced it had reached an agreement in principle to “substantially resolve all opioid lawsuits” brought “by states, political subdivisions,
such as counties and cities, and tribes in the United States.”15
1. The Track One Suits
The MDL court designated two Opioid Lawsuits—the Track One Suits—as bellwether cases for purposes of discovery and trial.16 Those plaintiffs, which include the Ohio Counties of Summit and Cuyahoga, seek to recover from retail pharmacies (among other defendants) losses allegedly incurred in responding to the opioid crisis.17 Both the Cuyahoga and Summit complaints make clear that the plaintiffs, in their assertion of common law nuisance claims, “do not seek damages for death, physical injury to person, emotional distress, or physical damages to property, as defined under the Ohio Product Liability Act.”18 The complaints instead allege those plaintiffs suffered “unique harms” that “are of a different kind and degree than Ohio citizens at large…[and that] [t]hese…harms…can only be suffered by [Cuyahoga and Summit counties].”19 Additionally, the complaints “assert[] their own rights and interests and [their] claims are not based upon or derivative of the
rights of others.”20
a. The Summit suit
The Summit complaint contains allegations that “national retail pharmacy chains earned enormous profits by flooding the country with prеscription opioids…and instead of taking any meaningful action to stem the flow of opioids into communities, they continued to participate in the oversupply and profit from it.”21 Moreover, according to the Summit plaintiffs, defendants “disregarded their reporting and due diligence obligations,”22 and cite to increased government expenditures for emergency, medical and social services in response to increased rates of opioid addiction, overdose deaths, and other opioid-related fatalities.23 To illustrate, those plaintiffs allege that:
-
1,053 residents died from drug overdoses between mid-August 2017 and 2022;24 - overdoses spiked to 19 a day in July 2016;25
- from 2012 to 2017, the County’s Children Services Board incurred nearly $24 million in costs;26 and
- the Alcohol, Drug, Addiction, and Mental Health Services Board incurred more than $10 million in costs.27
The Summit plaintiffs assert a variety of tort and statutory-based claims, including statutory and common law nuisance and negligence claims.28
b. The Cuyahoga suit
The Cuyahoga complaint contains substantively identical allegations and claims.29 It identifies increased levels of overdose deaths, and other opioid-related fatalities as well as increased county expenditures in the form of emergency, medical and social services, addiction-related treatment, and incarceration costs.30 It further identifies specific providers, and gives data on the number of opioids distributed in the county from 2006 and 2014.31 In terms of costs to the county, it alleges that Cuyahoga has spent “approximately $1.45 billion” in its annual budget to address the opioid crisis,32 and provides illustrative examples including:
- treatment in 2016 of 1,440 individuals for opioid-use disorder or dependence;33
- increased budget expenditures of $39.4 million by Cuyahoga’s Alcohol, Drug Addiction and Mental Health Services;34
- increased costs of providing treatment beds from $4.9 million in 2014 to $9.9 million in 2017;35
- administration by Cuyahoga County EMS of 1,903 doses of naloxone in 2015, 5,100 doses in 2016, and 6,643 doses in 2017;36
- treatment and recovery services for 82 patients “at a cost of $10,190 per patient (a cost of more than $835,000);37
- participation of 105 patients in addiction counseling at a rate of $87.28 an hour;”38
- an estimated “$185,000 a year for medication assisted treatments for jail inmates;”39
- “$100,000 in vivitrol shots” in 2017;40 and
- a “$3.5 million contract in 2017 for the county’s more than 2,300 inmates.”41
2. The Additional Representative Suits
There are seven Additional Representative Suits. Two are brought by counties in Ohio—Lake and Trumbull Counties (“Track Three Suits.”).43 Two are brought by counties in New York—Nassau and Suffolk Counties.44 And the three other lawsuits are brought by the Cherokee Nation, the City of Philadelphia, and the State of Florida.45 Like the Track One Suits, each Additional Representative Suit is brought by a governmental entity and seeks to recover from CVS (and other defendants) losses allegedly incurred in responding to the opioid crisis.46 Some of the Additional Representative Suits have been settled by CVS;47 others went to trial.48
a. The Track Three Suits
The Track Three Suits largely mirror the allegations in the Track One Suits. Plaintiffs in the Track Three Suits raise common law nuisance claims against distributors and pharmacies, and seek “abatement of the nuisance” they allege defendants created.49 These suits take:
“aim at a primary cause of the opioid crisis: a supply chain scheme, pursuant to which distributors and pharmacies failed to design and operate systems to identify suspicious orders of prescription opioids, maintain effective controls against diversion, and halt suspicious orders when they were identified, and instead actively contributed to the oversupply of such drugs аnd fueled an illegal secondary market.”50
The Track Three plaintiffs allege defendants’ conduct has resulted in a variety of costs, including “handling of emergency services to overdoses, providing addiction treatment, handling of opioid related investigations, arrests, adjudications, and incarceration, treating opioid-addicted newborns in neonatal intensive care units, burying the dead, and placing thousands of children in foster care placements.”51 The complaints allege county-specific facts such as the number of opioid deaths, increase in opioid cases, data on the number of opioids prescribed in the county, and identification of “problematic” prescribers.52 For example, in Lake County, 240 deaths due to heroin or fentanyl overdoses occurred from 2013 to 2017, and opioid cases increased from 296 to 863 during that time period.53
b. The New York suits
The New York suits provide the least-particularized county-specific information in comparison to the Track One and rest of the Track Three Suits, but
nonetheless allege the same generаl pattern of misconduct. The New York plaintiffs allege distributors at the retail level “flooded [the] county with opioids, failed to detect suspicious orders, and failed to prevent diversion of these dangerous products.”54 These
c. The Cherokee suit
The Cherokee complaint is brought by the Cherokee Nation against retail pharmacies and includes allegations that defendants’ distribution and dispensing of prescription opioids on and around the Cherokee nation have significantly harmed its citizens.58 The Cherokee plaintiff alleges damages ranging from increased costs of medical care, law enforcement measures, rehabilitation services, welfare and property damage and public blight.59 Plaintiff states “costs were incurred . . . to address public harm caused by a persistent course of deceptive and unlawful conduct
by defendants.”60 And the Cherokee plaintiff alleges that:
- CVS shipped 8,456,500 dosage units of prescription opioids from 2006 to 2014;61
- between 2012 and 2014, 484 deaths occurred from unintentional overdoses in Cherokee Nation;62 and
- there were 5,700 opioid related visits to Cherokee Nation’s Behavior Health Department “in recent years.”63
This plaintiff brings claims of nuisance, negligence/gross negligence, unjust enrichment and conspiracy.64 The damages sought are for “harm to Cherokee Nation as a tribal sovereign, including recovery of the funds Cherokee Nation had to spend on opioid-related care.”65 But, as explained in the Cherokee complaint, the claims asserted do not “belong to individual Cherokee citizens,” nor does the Cherokee plaintiff seek “to recover on behalf of individual citizens based on those individuals’ personal injuries or wrongful deaths.”66
d. The Philadelphia suit
In the Philadelphia complaint, the City of Philadelphia asserts claims against defendants to “redress the hazard to public health and safety,” “abate the nuisance,”
and “recoup . . . monies that have been spent” as a result of the opioid epidemic and the alleged misconduct of defendants in unlawfully diverting prescription opioids.67 The City of Philadelphia asserts сlaims on behalf of itself and argues they are “wholly independent of any claims that individual users of opioids may have against defendants.”68 Philadelphia further alleges the following city-specific opioid-related statistics:
- 963 opioid-related overdose deaths in
2019;69 - identification of specific CVS pharmacies and purchase rates;70
- treatment of approximately 14,000 people for opioid disorder from October 2015 through September 2016;”71
- 651 hospitalizations due to opioid poisoning in 2018;72
- administration by the Philadelphia Fire Department over 4,000 times by the Philadelphia Fire Department, 200 times by the Philadelphia Police Department, 5,000 in 2018 and 3,000 in 2019 by Philadelphia emergency medical services (EMS);73
- 1,161 cases of Hepatitis C virus, which is an adverse effect common to opioids with treatment costs of approximately $84,000 per patient in 2016;74
- increased homelessness, and arrests related to opioids;75
- treatment of 17,500 people in the publicly-funded health system for opioid-use disorder in 2019, which incur costs from the administration of methodone ($150 per month per person), suboxone ($450 per month per person), and Vivitrol ($1,000 per month per person).76
The Philadelphia complaint contains claims of public nuisance, statutory violatiоns, and unjust enrichment.77
e. The Florida Suit
In the Florida complaint, the State of Florida asserts statutory and tort-based claims, including public nuisance and gross negligence, against manufacturer and distributor defendants that plaintiff alleges “cooperated to sell and ship ever-increasing quantities of opioids into Florida.”78 The State of Florida seeks “to hold Defendants accountable for having created and exacerbated the opioid crisis,”79 and having “caus[ed] the devastating public health and financial effects that have followed.”80 The complaint alleges 779 heroin overdose deaths in Florida in 2015,81
and 21,700 opioid-related emergency department visits in 2014.82 The complaint additionally avers these “societal and economic injuries incurred by the State of Florida” were foreseeable to the defendants.83
C. THE POLICIES84
CVS seeks indemnification and/or defense costs in connection with the Opioid Lawsuits under the policies at issue in this action. CVS says 229 policies are implicated between the Insurers’ Motion and the Joinder Motion.85 This dispute centers on
1. The Chubb Policies
Chubb issued annual insurance policies to CVS from 1993 to 2005 and 2008 to 2018 (the “Chubb Policies”).86 CVS purchased at least 26 Chubb Policies
during the relevant period.87 And the parties have now identified the relevant provisions of the Chubb Policies.
Chubb promised to pay on behalf of CVS “those sums in excess of the ‘retained limit’ that [CVS] becomes legally obligated to pay as damages because of ‘bodily injury’ [or] ‘property damage.’”88 Under the Chubb policies “[d]amages because of ‘bodily injury’ include damages claimed by any person or organization for care, loss of services or death resulting at any time from the ‘bodily injury.’”89 “Bodily injury” means “bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time.”90 It can include “mental anguish or mental injury resulting from bodily injury.”91 “Property damage” is defined as “[p]hysical injury to tangible property, including all resulting loss of use of that property,” and “[l]oss of use of tangible property that is not physically injured. All such loss of use will be deemed to occur at the time оf the physical injury that caused it.”92
If the bodily injury or property damage is caused by an “occurrence” during
the “policy period,” the insurance will apply.93 An “occurrence” means “an accident, including continuous or repeated exposure to substantially the same general harmful conditions. All such exposure to substantially the same general conditions shall be considered as arising out of the same ‘occurrence,’ regardless of the frequency or repetition thereof, or the number of claimants.”94
Certain policies also contain the “Pharmacist . . . Liability Endorsement.” (“Pharmacist Liability Endorsement”).95 The Pharmacist Liability Endorsement states in relevant part that Chubb agrees to pay on behalf of CVS “all sums in excess of the Schedule of Insured’s Retained Limits that [CVS] shall become legally obligated to pay as damages because of ‘bodily injury’ arising out of a ‘pharmacist liability incident.’”96 A “pharmacist liability incident” is an “actual or alleged negligent act, error or omissions, . . . in
2. The AIG Policies
The AIG Policies mirror the Chubb Policies in many respects. AIG issued annual policies to CVS from 1995 to 2000 and 2002 to 2017 (the “AIG Policies”).100 CVS purchased 36 policies from AIG.101 AIG promised to pay:
“those sums that [CVS] becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. [AIG] will have the right and duty to defend [CVS] against any ‘suit’ seeking those damages. However, [AIG] will have no duty to defend [CVS] against any ‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which insurance doesn’t apply.”102
“Bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.”103 “Property damage” is defined as “[p]hysical injury to tangible property, including all resulting loss of use of that property.”104 “Property damage” is further defined to mean “[l]oss of use of tangible property that is not physically injured.”105
The AIG Policies apply to “bodily injury” and “property damage” only if the “bodily injury” or “property damage” is caused by an “occurrence” during the policy
period.106 An “occurrence” is “an accident, including continuous or repeated exрosure to substantially the same general harmful conditions.”107 Further, “[d]amages because of ‘bodily injury’ include damages claimed by any person or organization for care, loss of services or death resulting at any time from the ‘bodily injury.‘”108
CVS additionally points to a “Druggists – Broadened Coverage” Endorsement (the “Druggist Endorsement“). The Druggist Endorsement reads that “‘[b]odily injury’ or ‘property damage’ arising out of the rendering of or failure to render professional health care services as a pharmacist shall be deemed to be caused by an ‘occurrence.‘”109
Separately, the Insurers point to 24 AIG Policies with a “Self-Insured Retention Endorsement” that says AIG will pay on behalf of CVS “those sums in excess of the ‘Retained Limit’ that [CVS] becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. [AIG] will have the right but not the duty to defend any ‘suit’ seeking those damages.”110
The Joining Insurers issued 167 policies to CVS during the relevant period (the “Joining Insurers’ Policies” and together with the Chubb Policies and the AIG Policies, the “Policies“).111 CVS purchased these policies from 37 Joining Insurers, and the Joining Insurers’ Policies include primary, umbrella, and excess coverage.112
The Joining Insurers say their policies include “terms substantially similar to those in the Chubb and AIG Policies.”113 CVS says “[a]t least some of [the Joining Insurers’ Policies] impose a defense obligation and all of them impose a duty to indemnify CVS.”114
D. OUR SUPREME COURT‘S DECISION IN ACE INSURANCE V. RITE AID
Last year, the Delaware Supreme Court reversed this Court‘s decision interpreting policy language similar to that here.115 In Rite Aid, the Supreme Court held that underlying claims seeking non-derivative economic loss did not allege damages because of bodily injury and therefore were not subject to coverage under the relevant insurance policies.116
The action arose after insurers denied coverage to Rite Aid for the thousands of lawsuits seeking damages for costs arising out of Rite Aid‘s distribution of opioids.117 Given the multiplicity of lawsuits, the Supreme Court focused on the claims asserted in the Track One Lawsuits to determine whether the claims alleged damages because of bodily injury.118 The insurance policies provided that the Insurer will “pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal injury’ or ‘property damage’ to which this insurance applies.”119 “Personal injury” was defined in part as “bodily injury.”120 The policy defined “[d]amages because of ‘personal injury’ [to] include damages claimed by any person or organization for care, loss of services, or death resulting at any time from the ‘personal injury.‘”121
Accordingly, coverage for damages because of personal injury was only available to (a) the person injured, (b) a person recovering on behalf of the person injured, or (c) people or organizations that treated the person injured or deceased, who demonstrate the existence of and cause of the injuries.122 The Supreme Court found that the plaintiffs in the Track One Lawsuits did not fall under category (a) because the governmental entities themselves could not
And, with respect to category (c), the Court found that the plaintiffs were not seeking to recover for damages for the care or death of a person resulting from bodily injury, because the claims were “not directed to an individual injury but to a public health crisis.”125 To qualify for coverage then, the organization, “must show that it treated an individual with an injury, how much that treatment cost, and that the injury was caused by the insured.”126 In short, the alleged damages must “depend on proof of bodily injuries,” and could not be for general, non-derivative economic loss.127
The Supreme Court further explained it was insufficient for claims to merely allege a “causal connection between the counties’ economic damages and the injuries to their citizens from the opioid epidemic.”128 “There must be more than some linkage between the personal injury and damages to recover ‘because of’ personal injury: namely, bodily injury to the plaintiff, and damages sought because of that specific bodily injury.”129 The bodily injuries alleged in a given complaint must do more than “explain and support” any economic loss the counties suffered.130
The individual physical injury must be “the basis of the claims,” “independently proven, and shown to be caused by the insured.”131 Hence, the Supreme Court found that “the Track One [Suits] have no claims for personal injury—just facts that support the economic loss claims.”132
E. THIS LITIGATION
Beginning in October 2017, CVS notified the Insurers of thousands of Opioid Lawsuits, including the Track One Suits and Additional Representative Suits in which CVS is named as a defendant.133 CVS has sought defense and indemnification under the Policies.134 The Insurers in return sent coverage position letters wherein they reserved their “rights” to deny coverage under the Policies and explained why they believe the Opioid Lawsuits aren‘t covered by the Policies.135
In the wake of Rite Aid, indeed, less than a month after that decision, Chubb filed its complaint in this action seeking three declarations: (1) that Chubb has no duty to defend CVS against the Opioid Lawsuits; (2) that Chubb has no duty to indemnify CVS for the Opioid Lawsuits; and, (3) of rights and obligations, if any, of other insurers if Chubb is found to have a duty to defend or indemnify CVS.136 Within days, AIG filed a similar action against CVS seeking declarations that AIG had no duty to defend or indemnify CVS for the Opioid Lawsuits.137 The Court then consolidated
Thereafter, the Court denied CVS‘s motion to dismiss or stay this cоnsolidated action; that motion argued forum non conveniens.139 The Court noted that there was likely no true conflict between Delaware and Rhode Island law, but concluded it did not need to choose between the two states’ law on the motion to dismiss.140
The next month, CVS filed its third-party complaint, counterclaims, and cross-claims. CVS asserts causes of action for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) statutory bad faith under Rhode Island statutory law, and (4) a declaration that CVS has a right to have its losses covered by the Insurers and Joining Insurers.141
Now before the Court is the Insurers’ motion seeking partial summary judgment suggesting that under Rite Aid they have no duty to defend CVS for the Opioid Lawsuits. The Joining Insurers, too, seek partial summary judgment that they have no duty to defend or indemnify CVS on the same grounds. CVS opposes both motions.
III. STANDARD OF REVIEW
IV. PARTIES’ CONTENTIONS
The Insurers rely on the Supreme Court‘s decision in Rite Aid as grounds for partial summary judgment. They insist they have no duty to defend or indemnify CVS for the Track One Suits and Additional Representative Suits because the Policies cover damages incurred “because of bodily injury,” whereas the Opioid Lawsuits seek generalized economic damages.148 And the Insurers say Rite Aid controls because CVS has failed to identify any real or relevant conflict between Rhode Island and Delaware law.149
V. DISCUSSION
A. DELAWARE OR RHODE ISLAND LAW?
The first step in a conflict-of-law analysis is “to decide whether a conflict truly exists, comparing ‘the competing jurisdictions to determine whether the laws actually conflict on a relevant point.‘”155 “In determining whether there is an actual conflict, Delaware state courts . . . answer a single and simple inquiry: does application of the competing laws yield the sаme result?”156 If the answer is “yes,” then the Court “should avoid the choice-of-law analysis altogether.”157 Moreover, the competing laws must actually conflict to require a choice-of-law analysis.158
When one state‘s laws do not address a particular issue, “it cannot conflict with the laws of another state.”159 “Where one state fails to address a particular issue, the Court should apply the settled law.”160
Rite Aid is the precedential Delaware decision interpreting whether claims seeking damages because of bodily or personal injury extend to generalized economic losses suffered by governmental entities in seeking to abate the opioid crisis. CVS attempts to avoid application of Rite Aid here by identifying certain dicta in Rhode
CVS argues McEvoy v. Amica Mutual Insurance Company is controlling law in Rhode Island and in conflict with Rite Aid on this point of damages.161 In McEvoy, the defendant insurer issued an automobile policy to the plaintiff.162 The McEvoy plaintiff‘s minor daughter died from injuries sustained in a car accident. The little girl was a passenger in one of the plaintiff‘s cars covered by the policy, and the plaintiff sought damages for both the wrongful death claim that survived the deceased child and a loss-of-consortium claim.163 The Court found that thе automobile policy‘s “each person” liability limit applied—and not the higher, “each accident” liability limit—because in the wrongful death claim and loss-of-consortium claim, the bodily injury occurred to only one person (the deceased child), as oppose to two people (the deceased child and parent).164 The Court explained that the loss-of-consortium claim was derivative of the wrongful death claim because “all damages for such bodily injury” include “derivative and consequential damages payable to persons other than the one who sustains the bodily injury,” and the loss of the deceased‘s society to plaintiff derived from the wrongful death.165 Thus, the “each person” limit of liability applied.166
CVS misreads McEvoy as holding that all “derivative and consequential damages payable to persons other than the one who sustains the bodily injury” are damages because of bodily injury. The trial court in McEvoy wrote “all damages for bodily injury” include derivative and consequential damages, not “all derivative and consequential damages” are damages for bodily injury.167 More importantly, the claims in McEvoy are the very type of derivative claims that “depend on proof of personal injury” that the Supreme Court in Rite Aid distinguished from claims by governmental entities seeking generalized economic losses in responding to the opioid crisis.168 In McEvoy, the plaintiff parent brought a claim on behalf of the deceased daughter that was directly related to and predicated upon the individual injury of the daughter. Under Rite Aid, coverage for damages because of bodily injury extended to these types of personal injury claims asserted on behalf of other individuals. The governments in Rite Aid simply had not brought such particularized claims. CVS fails to demonstrate an actual conflict exists between Rite Aid and McEvoy.169
B. THE POLICIES AND “BODILY INJURY”
Whether the Policies fall within the scope of Rite Aid depends on the language of the Policies and a reasonable reading of the complaints in the Track One Suits and the Additional Representative Suits.
“In construing the language of [an insurance policy,] the Court should interpret the language in the same manner as it would be understood by an objective, reasonable third party.”172 The Court first should “seek to determine the parties’ intent from the language of the insurance contract itself—the ‘mutual intent at the time of contracting.‘”173 “Absent ambiguity, contract terms should be accorded their plain, ordinary meaning.”174
The duty to defend is “broad.”175 “An ‘insurer has an obligation to defend its insured, even if the action against the insured is groundless, whenever the complaint . . . may potentially come within the coverage of the policy.‘”176 This is true “even when the complaint has only ‘one allegation that falls within the scope of the policy‘s coverage . . . [and] even if an insured is ultimately found to be not liable.‘”177
Furthermore, “when the complaint alleges ‘facts which would support a recovery that is covered by the policy, it is the duty of the insurer to defend until such time as the claim is confined to a recovery that the policy does not cover.‘”178
Under Rite Aid, the Track One Suits are not subject to coverage.
First, the Cuyahoga and Summit complaints are substantively identical. Both assert claims against CVS based on CVS‘s alleged role in distributing and dispensing opioids, and both provide allegations illustrating the harm and costs incurred in each county in responding to the crisis.179 Both also assert similar statutory and common law nuisance and negligence claims.180 While the Rite Aid court focused on the Cuyahoga complaint, that complaint provided more particularized allegations than Summit. And so, the Rite Aid holding that applied to Cuyahoga applies just as well to Summit—if not with greater force. For example, while Summit includes allegations of the specific number of deaths, overdoses and overall costs incurred by county departments, Cuyahoga goes further and provides the specific costs of treatments and the number of individuals treated for opioid-related use.181
Second, the policy language the Supreme Court interpreted in Rite Aid is substantively identical to the policy language at-issue here. In Rite Aid, the insurers contracted to pay damages “because of ‘personal injury‘” or “property damage.”182 Too, covered damages “because of ‘personal injury’ include[d] damages by any person or organization for care, loss of services or death resulting at any time from the ‘personal injury.‘”183 And “personal injury” was defined as “bodily injury” meaning “bodily injury, sicknеss or disease sustained by a person, including death resulting from any of these at any time.”184
Here, the Chubb and AIG Policies (and Joining Insurers’ Policies) contain nigh-on identical language. They cover damages “because of ‘bodily injury’ or ‘property damage,‘” and in some cases, “‘bodily injury‘, ‘property damage‘, or ‘personal or advertising injury.‘”185 “Bodily Injury” is consistently defined across the Policies as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time,” and may “include mental anguish or mental injury resulting from bodily injury.”186 Given that “personal injury” is defined as “bodily injury” under the policies in Rite Aid, the Policies here are in all substantive respects identical with those in Rite Aid. For these reasons, Rite Aid extends to the Track One Lawsuits asserted against CVS.
Under Rite Aid, damages for bodily injury are covered losses only when asserted by (a) the person injured, (b) a person recovering on behalf of the person injured, or (c) people or organizations that treated the person injured or deceased, who demonstrate the existence of and cause of the injuries.187 The claims in the Cuyahoga and Summit complaints are brought by governmental entities seeking recovery of economic losses in rеsponding to the opioid
2. Insurers Have No Duty to Defend CVS for the Additional Representative Suits Because the Plaintiffs Do Not Seek Damages “Because of Bodily Injury.”
A review of the Additional Representative Suits shows there are no substantial differences from the Track One Suits. Each Additional Representative Suit alleges similar misconduct by CVS in its failure to properly distribute and/or dispense opioids. Thus, Rite Aid extends to the Additional Representative Suits.
Like the Track One Suits, the claims in the Additional Representative Suits do not fall under any of Rite Aid‘s three categories of coverage. They are claims brought by governmental entities seeking a combination of common law or statutory negligence or nuisance claims. They do not seek to recover for personal injury those entities themselves have suffered. And, they either specifically disclaim that they seek to recover on behalf of others.190 Or, if they do not, the nature of the allegations and the specific damages they seek again impart that they are seeking to recover generalized economic losses in responding to the opioid crisis.191
What‘s more, though each Additional Representative Suit makes allegations specific to each governmental entity, even the most detailed of those аllegations move the needle no further in showing that the claims fall under any one of the three categories defined in Rite Aid.192 For example, CVS highlights allegations in the Philadelphia complaint that specify the number of people the city treated with opioid disorders year-over-year; the number of doses of naloxone administered and the approximate cost per dose; and the
In sum, none of the Additional Representative Suits comprise the personal injury claims Rite Aid would recognize as triggering coverage under the requirement that such claims must truly be seeking damages because of bodily injury to an individual.
3. Inclusion of Pharmacist Liability Endorsement and Druggist Endorsement Is of No Moment; The Threshold Requirement That Damages Must Be Because of Bodily Injury or Property Damage Adheres Thereto.
CVS contends the Pharmacist Liability Endorsement in the Chubb Policies and the Druggist Endorsement in the AIG Policies broaden coverage. The Pharmacist Liability Endorsement states in relevant part that Chubb agrees to pay on behalf of CVS “all sums in excess of the Schedule of Insured‘s Retained Limits that [CVS] shall become legally obligated to pay as damages because of ‘bodily injury’ arising out of a ‘pharmacist liability incident.‘”196 A “pharmacist liability incident” is an “actual or alleged negligent act, error or omissions, . . . in the performance of a ‘pharmacist professional service.197‘” A “pharmacist professional service” includes the “preparation, selling, handling or distribution of drugs.”198
CVS says the “arising out of” language should be construed broadly under Delaware law.199 Additionally, give CVS argues it made allegations related to the preparation, selling, handling or distribution of prescription drugs, it believes the Chubb Policies are triggered.200
Yet the problem with CVS‘s construction is that the claims must first satisfy the threshold requirement that they seek “damages because оf bodily injury.” If the claims ab initio seek damages because of bodily injury, then the next question is whether the damages arose from “an occurrence.” The Pharmacist Liability Endorsement modifies the “occurrence” requirement. It does not expand the scope of—nor in any other way alters—the separate threshold requirement that claims must seek damages because of bodily injury. Because the Track One Suits and Additional Representative Suits don‘t assert claims seeking damages because of bodily injury, the inclusion of the Pharmacist Liability Endorsement changes nothing.
The same with respect to the Druggist Endorsement. That Endorsement allows “‘[b]odily injury’ or ‘property damage’ arising out of the rendering of or failure to render professional health care services as a pharmacist shall be deemed to be caused by an ‘occurrence.‘”201 Again, the “occurrence”
4. CVS Fails to Demonstrate That the Policies’ Language Warrants a Departure from Rite Aid.
In a last-breath attempt to draw distinctions in the policy language, CVS makes poorly developed arguments that the differences in language such as “sustain,” “claim” and the inclusion or omission of words such as “any,” “a” and “the” have transformative significance here.202 The Policies define bodily injury to include “bodily injury, sickness or disease sustained by a person” and “damages claimed by any person or organization for care, loss of services, or death resulting at any time from the ‘bodily injury.‘”203 CVS argues that “damages ‘claimed‘” by any person or organization cannot mean the same thing as “damages ‘sustained‘” by a person.204 But CVS does little to explain why this difference is significant. It says blithely that the phrasing just cannot mean the same thing.
It is unclear what exactly CVS is arguing, but in an effort to address CVS‘s objections, one point: to the extent CVS is arguing that the difference in the policy language shows that the policies were intended to extend to the Opioid Lawsuits where governmental entities “claim” damages for bodily injury that they did not themselves “sustain,” CVS is essentially describing derivative claims. Those claims, however, must directly relate to and be predicated upon a particular bodily injury.
None of the complaints seek to recover for damages because of the individual injuries sustained by a person. Indeed, the complaints expressly belie such as their grounds—they seek redress for the communal economic losses suffered.
CVS also argues the omission of “the” preceding “bodily injury” is significant because it suggests no “direct link” between the bodily injury and the person is required.205 CVS then claims the Policies’ grants have no such link.206 But that‘s not true. Damages for bodily injury include “damages claimed by any person or organization for care, loss of services, or death resulting at any time from the ‘bodily injury.‘”207 In addition, CVS says the omission of “the” in damages that “include mental anguish or mental injury resulting from bodily injury” also suggests that no direct link is needed.208 But CVS is not contending the complaints seek recovery of damages for mental anguish or mental injury.
C. THE POLICIES AND “PROPERTY DAMAGE”
The property damage allegations in the Track One Suits and Additional Representative Suits do not independently trigger coverage under the Policies.209
The rationale in Rite Aid concerning the requirement to assert claims that seek recovery of damages because of bodily injury is the same when it comes to property damage.
The Court is not alone here. In West National Insurance v. Quest Pharmaceuticals,213 the Sixth Circuit analyzed its earlier decision in Lenning v. Commercial Union Insurance214 that “purely economic damages” are “too attenuated from a specific covered injury” to trigger coverage “‘because of’ . . . property damage.”215 Under the opioid-related claims pled in Quest, the governmental entities did not need to prove the underlying injury to the property in order to recover for the costs associated in repairing the damaged property.216
Aсcordingly, the court determined the plaintiffs were seeking “purely economic damages that related to but did not directly implicate the covered injury of property damage.”217
Same here. The Opioid Lawsuits seek nothing more than economic damages that relate to but do not directly implicate the covered injury of property damage. Consequently, there is no duty to provide coverage.
D. JOINING INSURERS DO NOT OWE A DUTY TO INDEMNIFY
To be sure, the duty to defend “may be broader than the duty to ultimately indemnify.”218 The Insurers argue that if there is no duty to defend CVS for the Track One and Additional Representative Lawsuits, there is necessarily no corresponding duty to indemnify.219 CVS responds that only the Joining Insurers’ moved for partial summary judgment on the duty to indemnify, and that moving for summary judgment is premature.220
As has been shown, the nature of the claims and the relief plaintiffs seek in the Track One and Additional Representative Suits do not depend on proof of personal injury. It is therefore unclear how development of the facts as it relates to any alleged individual‘s personal injury in the underlying nine Opioid Lawsuits would happenеd or could trigger the Insurers’ duty to indemnify. Indeed, the cases relied upon by CVS demonstrate this point.
For example, CVS cites to Premcor Refining Group, Inc. v. Matrix Service Industrial Contractors, Inc., for the proposition that “indemnification is ultimately determined upon the facts as revealed during discovery or are ultimately
On the duty to defend, the court found no allegations in the underlying complaints tying the contractor‘s work to potential liability, and without that allegation, the insurance company had no duty to defend the lawsuits raised against the refinery operator.230 But with respect to the duty to indemnify, it denied summary judgment because later discovery could show the extent of the contractor‘s involvement.231
There, reserving a ruling for indemnification later in the proceedings made sense because the estates of the deceased workers were bringing individual derivative claims and sought damages directly based on the personal injuries аnd deaths of the workers. But here, the development of allegations illustrating the extent of the opioid crisis will not change the fact that the plaintiffs in the underlying complaints have asserted claims for general, economic losses to respond to the opioid epidemic, not personal injury claims. In other words, nothing can come about that will transmute or transform the various governmental claims into those for bodily injury or property damage covered by the Policies. Accordingly, because there is no duty to defend the Track One and Additional Representative lawsuits, there is also no corresponding duty to indemnify.
VI. CONCLUSION
For the reasons stated above, the Insurers’ Motion for Partial Summary Judgment is GRANTED, and Joining Insurers’ Motion for Partial Summary Judgment is also GRANTED.
IT IS SO ORDERED.
Paul R. Wallace, Judge