CVS Opioid Insurance Loss Hits Companies Fighting Nuisance Suits

Companies looking for insurance carriers to pay for opioid-related lawsuits or other “public nuisance” litigation face an uphill climb in Delaware following a decision by the state’s top court siding with liability insurers over CVS Health Corp.

The Delaware Supreme Court on Aug. 18 ruled in favor of American International Group Inc. and Chubb Ltd. units, finding that suits alleging CVS contributed to the opioid crisis failed to meet the threshold for insurance coverage because they didn’t seek damages due to “specific and individualized” bodily injury caused by the retail pharmacy giant.

Commercial policyholders and their insurance carriers are locked in battle across state and federal courts over coverage for opioid and other “public nuisance” claims—including those stemming from gun violence and social media addiction litigation.

Insurers have scored several other high-profile wins on opioid liability claims in recent years, beating Publix Super Markets Inc. in Florida federal court and defeating McKesson Corp. in California.

The Delaware high court’s ruling adds to policyholder concerns that insurers could seek to wield the decisions to deny coverage for a wide range of claims.

“Delaware has made clear that liability insurance covers injuries to people, not the economic costs of a public health crisis,” said Matthew Bricker, a partner at TittmanWeix who represents insurers.

“Going forward, the same reasoning will likely apply to other government suits seeking to recover public expenditures, whether for climate change, environmental cleanup, pandemic response, or gun violence,” Bricker added.

The state’s high court rejected, among other things, CVS’ argument that its roughly $5 billion, 10-year national settlement with states and cities over opioid claims announced in 2022 demonstrates the company had been sued because of bodily injury.

“The national settlement agreement funds expenses in response to the opioid crisis at-large, but it does not change the fact that the underlying lawsuits do not seek specific damages tied to individualized injuries and trigger coverage,” Chief Justice Collins J. Seitz Jr. wrote for the court.

Policyholder Options

Several other opioid-related insurance disputes are still pending in Delaware, including cases involving Albertsons Cos., Cencora Inc., and McKinsey & Co.

But this week’s ruling leaves policyholders with few options to argue for coverage under commercial general liability policies unless they can find a way to prove their cases are distinct from the CVS suit.

“Coverage for settlements and judgments may be compromised if the coverage court is not presented with a full picture of the underlying litigation as it has developed,” said Cristen Rose, a policyholder-side partner at Haynes & Boone LLP. “This decision emphasizes the importance of using a more developed record from the underlying litigation to inform the coverage action.”

Because the ruling is based on the facts and underlying allegations CVS put before the court, companies facing different allegations could reach a different outcome in other coverage disputes, said Jenner & Block LLP partner David Kroeger, who represents policyholders.

The CVS decision could also serve as a roadmap for underlying plaintiffs seeking to plead into coverage, he added.

Expanding on Rite Aid

The Delaware high court’s decision builds on its landmark 2022 ruling against Rite Aid Corp., in which the justices also held that lawsuits brought by governmental entities over the opioid epidemic didn’t seek damages because of bodily injury.

This time around, the court rearticulated the “specific and individualized” standard, and clarified that it applies to claims for property damage as well as bodily injury.

The logic should apply in other contexts as well, Bricker said. “If the claim is for economic losses, not tied to a specific person’s injury, then there’s just no coverage under the standard CGL language.”

In addition to confirming governmental suits weren’t covered, the court ruled out coverage for lawsuits brought by hospitals, medicals, and third-party payors seeking to recover costs incurred treating patients with opioid-related conditions.

Policyholders may still be able to make the case for coverage in suits brought by individual claimants. For example, some of the social media addiction suits at issue in a coverage dispute between Meta Platforms Inc. and its insurers were brought by individuals alleging they suffered harm stemming from the social media giant’s platforms.

Other commercial policyholders actively litigating coverage for claims related to the opioid crisis in Delaware may be short on options.

“The tide seems to be shifting” in favor of insurers, Bricker said.

The case is In re CVS Opioid Insurance Litig., Del., No. 482,2024, 8/18/25.