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Chubb units on hook for opioid defense costs



A state court in Delaware ruled Tuesday that Chubb Ltd. units are required to replace Rite Aid Corp. for defense costs in connection with multi-district disputes.

Camp Hill, Pennsylvania-based Rite Aid units have been sued in more than 1,143 lawsuits by state entities, third-party medical payers and individuals seeking reimbursement for costs incurred as a result of its distribution of opioids, according to the decision of Delaware Superior Court in New Castle, Delaware, Rite Aid Corp. et al. v. ACE American Insurance Co. et al.

The focus of the ruling is the "Track One" trials by state entities claiming that Rite Aid "chased profits while turning a blind eye to the devastating epidemic", according to the court.

The lawsuits charge Rite Aid knowingly distributing opioids to its own local pharmacies, and they "incorrectly distributed prescription opioids to their customers, contributing to and committing drug abuse, abuse and resulting harm or death," according to the decision.

Rite Aid sought coverage under a 201

5 policy issued by Chubb Ltd. which had a retention of $ 3 million 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 request for a partial summary judgment requiring Chubb to pay its defense costs in an amended complaint in July 2019 with charges including breach of contract, according to the decision.

"Rite Aid argues that the Track One trials are an event because the accusations are an immediate, uninterrupted and ongoing cause," the trial said.

ACE's argument stated that it had no obligation to provide a defense, for before "1 January 2015, because" Rite Aid had knowledge of personal injury, and the opioid epidemic was a known loss or ongoing loss, "they said.

the obligation to defend largely in favor of the policyholder, "the court finds that the Track One trials and all opioid claims claiming similar claims are potentially covered by the policy, triggering the ACE's obligation to defend," the court said.

The remaining dispute is whether the trials stem from a single incident, was mentioned in the decision. The ruling said they do. "Since the alleged damage was due to the inadequate action in both the distribution and distribution stages, where if there had been proper checks at any stage the damage could have been prevented, the alleged act should have been an event," they said, granting Rite Aid's proposal to partial summary judgment.

A Rite Aid spokesman had no comment while Chubb did not respond to a request for comment.

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