Delaware Supreme Court Extends Rite Aid’s “Specific-and-Individualized Injury” Test to Property Damage and Endorsements

Introduction

In In re CVS Opioid Insurance Litigation, No. 482, 2024 (Aug. 18, 2025), the Delaware Supreme Court—sitting en banc—confronted a familiar but increasingly consequential question: when do general-liability insurers have to defend and indemnify defendants facing mass-tort opioid claims brought by governmental entities, hospitals, and third-party payors? CVS Health Corporation and CVS Pharmacy, Inc. (collectively “CVS”) sought coverage under scores of CGL policies issued by two principal insurer groups—Chubb and AIG (the “Insurers”).

The Court affirmed two Superior Court summary-judgment rulings that relieved the Insurers of both the duty to defend and the duty to indemnify. Crucially, the Court:

• Reaffirmed and extended its 2022 holding in ACE American v. Rite Aid, 270 A.3d 239 (Del. 2022), by making the “specific and individualized injury” requirement equally applicable to property-damage claims, not just bodily-injury claims.
• Held that pharmacist- or druggist-liability endorsements that broaden the definition of “occurrence” do not relax the threshold requirement that the damages be “because of” bodily injury or property damage.
• Clarified that Delaware courts may adjudicate the duty to indemnify at the summary-judgment stage—even under so-called “indemnity-only” policies—when the undisputed record shows no possibility of covered damages emerging later in the underlying actions.

Summary of the Judgment

The Court unanimously (1) found the Chubb and AIG policies materially indistinguishable from the policies at issue in Rite Aid; (2) declared that the various underlying opioid suits did not seek damages “because of” specific bodily injury or property damage suffered by identifiable persons or property; (3) ruled that the pharmacist- and druggist-liability endorsements merely expand what counts as an “occurrence” but leave untouched the causal “because-of” linkage; (4) extended Rite Aid’s analytical framework to property-damage allegations; and (5) approved the Superior Court’s dismissal of indemnity claims as ripe for resolution now because no factual development could transmute the governmental and private suits into covered claims.

Analysis

Precedents Cited and Their Influence

• ACE American v. Rite Aid (Del. 2022) – Established the “three-class” plaintiff taxonomy and the need for “specific and individualized injury.” It was the linchpin precedent; the Court repeatedly mapped each category of underlying plaintiff (government, hospital, TPP) onto the Rite Aid framework.
• In re Alexion Pharm. Inc. Insurance Appeals (Del. 2025) – Supplied interpretive guidance on the phrase “arising out of,” reinforcing that a “meaningful—but not tangential—linkage” is required.
• Brohawn v. Employers Commercial (Del. 1979) – Reaffirmed to distinguish duty-to-defend versus duty-to-indemnify.
• Premcor Refining Group v. Matrix (Del. Super. 2009) – Cited to explain when indemnity can be decided concurrently with defense.
• Federal and out-of-state opinions (HD Smith, Cincinnati Ins.; Arkansas trial-court decision in Walmart) were discussed mainly to distinguish their reasoning or label it inconsistent with Delaware law.

Legal Reasoning

1. Policy Language Parity with Rite Aid. The Court found the insuring agreements identical in all material respects: they obligate the insurers to pay “damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence.’”
2. Effect of Endorsements. The pharmacist and druggist endorsements deem bodily injury arising from pharmacy services to be an “occurrence.” But nothing in the endorsements deletes or relaxes the “because-of” requirement or the need for individualized injury/property damage. Therefore, the endorsements aid CVS only if the underlying suits already satisfied the Rite Aid test—which they did not.
3. Application to Government Suits. Reviewing exemplar complaints (Summit, Cuyahoga, Fresno, etc.), the Court held they seek reimbursement for broad public-expenditure harms (e.g., emergency-response costs, budget overruns) rather than damages arising from specific patients’ injuries; thus, they remain outside coverage.
4. Application to Hospital / Provider / TPP Suits. Even these arguably “Class Three” plaintiffs (entities that care for injured persons) pleaded only aggregate economic strain, not invoice-level costs for named patients whose injuries were caused by CVS. Hence, they too failed the Rite Aid specificity threshold.
5. Extension to Property Damage. Because policy wording treats “bodily injury” and “property damage” in tandem, and both are modified by “because of,” the Court held that the same specificity requirement applies to property-damage allegations. Generic references to “cleanup” or “loss of infrastructure value” were insufficient.
6. Dismissal of Indemnity Claims. No conceivable future factual development (short of amending the complaints wholesale) could transform the claims into covered ones. Consequently, the indemnity dispute was ripe and properly resolved for Insurers.

Impact of the Judgment

• Statewide Precedent. Delaware now authoritatively applies the “specific and individualized” test to all coverage triggers—bodily injury and property damage alike—quashing any argument that property-damage coverage is broader.
• Mass-Tort Insurance Strategy. Policyholders facing governmental or class-wide suits (opioids, PFAS, climate, data-privacy, etc.) must plead or produce patient- or asset-level damages if they expect Delaware-law insurers to defend.
• Drafting Endorsements. Endorsements that broaden “occurrence” or add professional-liability components must expressly alter the “because-of” language if broader coverage is intended. Otherwise, courts will read them as ornamental.
• Settlement Dynamics. Delaware courts will scrutinize national settlements for insurance-coverage language manipulation, limiting a defendant’s ability to leverage settlement allocations to compel insurer participation.
• Duty-to-Indemnify Timing. The ruling emboldens Delaware trial courts to grant summary judgment on indemnity where the underlying pleadings foreclose any covered theory, even if discovery has not fully concluded.

Complex Concepts Simplified

• “Because of” vs. “For.” Both phrases require a causal nexus: the damages must be sought on account of a covered injury, not merely related in some vague sense.
• “Occurrence.” Generally means an “accident.” Endorsements can deem certain professional acts to be accidents, but that only satisfies one prong—it does not override other insuring-agreement conditions.
• “Arising out of.” Delaware gives the phrase broad reach but still demands a “meaningful linkage” between the alleged conduct and the injury/damage.
• Duty to Defend vs. Duty to Indemnify. The former is triggered by the allegations; the latter by the actual facts. However, if allegations foreclose any covered scenario, courts may resolve both duties together.
• Class-Three Plaintiffs (per Rite Aid). Entities that directly treat injured persons. Coverage exists only for their out-of-pocket treatment costs tied to specific patients whose injuries are attributable to the insured.
• Indemnity-Only Policy. A policy that confers no duty to defend but still promises to pay covered judgments or settlements. Delaware will deem the indemnity question ripe when the pleadings can never give rise to covered liability.

Conclusion

The Delaware Supreme Court’s decision in In re CVS Opioid Insurance Litigation cements and expands its earlier Rite Aid framework. By insisting on specific, individualized allegations for both bodily injury and property damage, and by refusing to treat professional-liability endorsements as magic wands, the Court provides insurers and insureds with clearer, stricter guideposts. Going forward, policyholders engaged in wide-scale public-health or environmental litigation must be prepared to connect the dots—from a named claimant, to a documented harm, to the insured’s causative acts—if they wish to unlock defense and indemnity dollars under Delaware-governed CGL programs. The judgment thus stands as a potent reminder that broad social-cost litigation, however devastating in aggregate, does not automatically fit within the traditional contours of occurrence-based liability insurance.