Rite Aid filed its case against Ace and other insurance companies in April 2019 in the court's Complex Commercial Litigation Division after Ace refused to cover any of Rite Aid's legal costs. Rite Aid moved for partial summary judgment in July 2019, and the insurance companies did the same this January.

Davis' decision hinged on his interpretation of one particular paragraph in Rite Aid's insurance policy with Ace, which stipulated that Ace would pay "those sums that the insured becomes legally obligated to pay as damages because of 'personal injury' or 'property damage' to which the insurance applies." That section of the policy goes on to say Ace has a duty to defend Rite Aid against any suit seeking damages that fall under that category.

Rite Aid's policy with Ace specifies a $3 million cap on the amount Rite Aid itself would need to pay in defense costs before any coverage by Ace might kick in, and neither side disputed that Rite Aid had already exceeded that amount. The disagreement was over whether the lawsuits against Rite Aid's distribution and dispensing of opioids counted as a "single occurrence."

Davis sided with Rite Aid on that issue, determining that under Pennsylvania law—applicable alongside Delaware law because both states had significant interest in the suit, as both Rite Aid and Ace are based in Pennsylvania—the company's distribution and dispensing counted as a single occurrence, making Rite Aid responsible under the insurance policy for paying a single $3 million cap, rather than multiple.

Both sides also agreed that the cases against Rite Aid brought allegations of "bodily injury," which would fall under the category of "personal injury," and that physical harm resulting from opioid use would be considered "bodily injury." Ace argued that because the plaintiffs in the lawsuits in question were government entities, not the people who suffered bodily injury themselves, the cases in Ohio don't qualify for coverage under Rite Aid's policy.

Davis disagreed, finding that under the Ohio Product Liability Act, while economic loss—as alleged in the multidistrict litigation involving Rite Aid—doesn't count as harm on its own, it can if the allegations are that death or physical injury to a person caused that economic loss.

The opinion ruled against the insurer's claims that Rite Aid's policy wouldn't cover damages that occurred before 2015, stating that the effects of opioid use are often not seen completely until years later. Davis wrote that any prior knowledge Rite Aid might have had of the opioid epidemic, which began well before 2015, wasn't enough for coverage to be denied.

In recent months, Jody C. Barillare of Morgan, Lewis & Bockius has filed letters on Rite Aid's behalf detailing updates from other cases in the multidistrict litigation where insurance companies have also been held responsible.

The decision in the Rite Aid case was made less than two weeks after a court in Cuyahoga County, Ohio, similarly found that Cincinnati Insurance Co. had a duty to defend Discount Drug Mart Inc., a co-defendant of Rite Aid in litigation set to go to trial in November. And in June, an Ohio appellate court reversed and remanded a decision that had granted judgment in another insurance company's favor, a move Davis cited as having partially guided his opinion.

Chris Savarese, Rite Aid's director of public relations, said Tuesday the company would not comment on the pending litigation, and Marc S. Casarino of White and Williams, representing Ace, did not immediately respond for comment on the judgment.