Arkansas Appeals Court Says Insurers Must Defend Walmart in Opioid Suits

The Arkansas Court of Appeals ruled Wednesday that two American International Group units and dozens of excess insurers must pay to defend Walmart in more than 2,400 opioid lawsuits, affirming a Benton County Circuit Court order and splitting with a run of decisions that went the other way for several other pharmacy chains.

The unanimous three-judge panel decided the coverage question on a narrow ground: the ruling covers defense costs, not whether the insurers must also help fund settlements in the underlying cases. American Home Assurance Company and National Union Fire Insurance Company, Walmart's primary carriers, and the layers of excess insurers above them are required to pick up the cost of defending the litigation.

Why the insurers said the suits were not covered

The insurers argued that the lawsuits against Walmart allege intentional misconduct rather than the "accident" their policies require, and that no duty to defend follows from deliberate conduct. The panel disagreed. The core claim against the retailer, the lead judge wrote, is that it "failed to put proper controls in place to find and report suspicious opioid orders" — a failure of reasonable care rather than an intentional act. Even if Walmart did act intentionally, the court said, the resulting public health crisis could not necessarily have been foreseen or expected, which keeps the claims inside the policies' scope.

Excess insurers raised a second argument that has decided similar cases elsewhere. Suits brought by governments and health systems, they said, seek reimbursement for the cost of treating addiction and overdoses rather than damages for a covered bodily injury. The court read the policies' own language back at them. The policies state that "damages because of bodily injury include damages claimed by any person or organization for care, loss of services, loss of support or death resulting at any time from the bodily injury," the opinion notes, and it reasons from that text that coverage reaches damages suffered by entities that never experienced a bodily injury themselves — since an "organization" does not have a corporeal body.

A ruling that runs against the recent pattern

Insurers have mostly won this argument in the last several years. Delaware courts have absolved carriers from defending Albertsons, Rite Aid and CVS in opioid lawsuits filed by governments, largely on the grounds that the plaintiffs could not prove direct bodily injury, and a federal judge in Florida reached a similar conclusion in favor of Publix. Arkansas has now gone the other way at the intermediate appellate level, at least for a defendant whose exposure runs into the thousands of cases.

The panel also turned aside a procedural move by New York-based QBE Insurance, which shares a layer of coverage with another insurer and asked to move the dispute to arbitration. The court found that QBE's policy did not clearly adopt the other insurer's arbitration clause, keeping the dispute in the Arkansas courts.

The settlement sitting behind the litigation

Walmart sued its insurers in November 2022, about a week before it announced a $3.1 billion nationwide framework to settle opioid claims brought by state, local and tribal governments. The retailer denied wrongdoing. That figure includes money for treatment and care along with attorneys' fees and costs, and it represents only Walmart's share of a sprawling set of settlements involving manufacturers, distributors and pharmacy chains.

Defense costs in more than 2,400 separate lawsuits will run for years regardless of how the settlements land, which is why insurers fight tooth and nail over who writes the checks for law firms, expert witnesses and discovery. For the governments and health systems pursuing the cases, the practical effect is indirect but real: the more of the litigation's cost that insurers absorb, the more of the defendants' resources remain exposed to the underlying claims that fund opioid treatment and recovery services through settlement dollars.

Walmart has not said whether it will seek further review. The Arkansas Supreme Court would be the next stop, and the split between state and federal courts on the bodily-injury question is the kind of disagreement that eventually draws attention from higher courts.