On December 29, 2023, an Arkansas court in the case of Walmart, Inc. v. ACE Am. Ins. Co., 04CV-22-2835-4, 2023 WL 9067386, (Ark. Cir. Ct. Dec. 29, 2023) found that defendant insurers owe Walmart a duty to pay or reimburse defense costs that Walmart incurred while defending prescription opioid liability lawsuits.
Like many in the pharmaceutical supply chain, Walmart is a defendant in thousands of lawsuits filed by state and local government entities acting in their parens patriae capacity. These lawsuits allege that Walmart knowingly, recklessly, or negligently caused bodily injuries, like addiction, death, and property damage, by failing to monitor, detect and report suspicious orders of prescription opioids. In 2022, Walmart entered into a “National Settlement” that resolved many of those governmental suits. The settlement reimbursed costs the government plaintiffs alleged they incurred for treating its citizens’ bodily injury and property damage. Walmart sought defense and indemnity coverage from AIG and other insurance companies providing excess coverage under its general liability policies. The insurers denied coverage.
The recent order ruled that the insurers had to pay or reimburse Walmart’s defense costs. In reaching that conclusion, the court answered two predicate questions affirmatively: (a) whether the prescription opioid liability lawsuits seek to hold the distributor defendants liable for an “occurrence” within the meaning of general liability policies; and (b) whether the prescription opioid liability suits seek bodily injury damages within the meaning of those general liability policies. The court did not separately address allegations concerning property damage, presumably because such analysis was unnecessary given the court’s affirmative finding that the prescription opioid liability suits seek bodily injury damages.
The court’s finding on “occurrence”
The insurers’ initial argument was that the alleged injuries were foreseeable and could not constitute an “occurrence” or “accident”, which is required to establish coverage under general liability policies. According to, the insurers, the “true nature” of claims against Walmart in the underlying suits was that it knowingly distributed and dispensed too many opioids. The court rejected the insurers’ arguments, finding that although Walmart intended to distribute and dispense drugs, those intentional acts can constitute an “occurrence” or “accident” if the “resulting harm was due to alleged negligence and was not expected or intended.” Walmart, 2023 WL 9067386 at *4.
The court found insurers’ argument that their policies did not cover “foreseeable” harm unpersuasive, noting that insurers admitted that the policies cover negligence, and one of the elements of negligence is whether the alleged damage is reasonably foreseeable. The court reviewed the allegations of several “exemplar” complaints and confirmed that they were “replete” with negligence-based allegations, and that plaintiffs appeared to be proceeding on theories where liability could be premised on harms that Walmart did not expect or intend.
The court’s finding on “bodily injury”
The insurers also argued that the underlying prescription opioid liability lawsuits did not allege “bodily injury” damages, as such term is defined in the policies, and that coverage was limited to “personal injury claims brought by or on behalf of a particular, identifiable, injured person, for a specific, identifiable injury.” The court disagreed, stating that the representative suits “allege that Walmart’s dispensing and/or distribution of opioid medications was a direct proximate cause of bodily injuries to thousands of individuals” and characterized the suits as seeking damages to compensate the government plaintiffs for the costs of treatment, care, and related services to their injured citizens. Walmart, 2023 WL 9067386 at *7. The court found the insurers’ argument was contrary to the plain policy language, and that the insurers should have added additional language if it wanted to limit coverage to require the policyholder to provide specific detail regarding the injured person and their specific injury.
In reaching this conclusion, the court was persuaded, in part, by the terms of Walmart’s settlement agreement, which confirmed that Walmart’s settlement payment was expressly earmarked for the costs of treatment, care, and related services for injured individuals.
With this opinion, the Walmart court joins an increasing number of courts across the country weighing in on defense coverage for prescription opioid liability lawsuits. By affirming that the prescription opioid liability suits allege an “occurrence”, the court affirmed hornbook insurance principles in Arkansas and elsewhere that a policyholder’s awareness of a risk does not void insurance coverage. Indeed, awareness of risk is the very reason individuals and corporations buy insurance. For example, drivers buy car insurance to protect against the risk that the intentional act of driving a car might result in an unexpected accident. And, as the Walmart court recognized, coverage for liability arising from a business’ decision to distribute or dispense drugs would be meaningless if bodily injuries resulting from those activities were not covered.
The court also joins a growing number of jurisdictions addressing whether commercial general liability insurance cover negligence-like claims that government entities are bringing against participants in health care, fossil fuels, paint, and other industries seeking damages they allegedly have paid to remedy bodily injury and property damage suffered by their citizens under a “public nuisance” cause of action. Courts in West Virginia, California, Pennsylvania, and now Arkansas have found that these government entity lawsuits allege bodily injury and /or property damages “because of” bodily injury in multiple contexts, including liabilities arising from the manufacturing of firearms and lead-based paint.
Significantly, the Walmart court noted that Walmart’s settlement agreement for the exemplar cases “expressly earmarked” the settlement payment for treatment, care, and related services for allegedly injured individuals. As the cases concerning the duty to defend prescription opioid lawsuits continue to wind through state and federal courts, attention should now turn in the Walmart case and elsewhere to coverage for the liabilities incurred in that settlement.