Claims
Arkansas appeals court orders AIG units and dozens of insurers to defend Walmart in opioid cases
By Insurance Wire Staff, . Insurance Wire.
The Arkansas Court of Appeals ruled Wednesday that American Home Assurance Company and National Union Fire Insurance Company, two units of American International Group, along with dozens of excess insurers, are obligated to fund Walmart's defense in more than 2,400 opioid-related lawsuits, Business Insurance reported. The case is ACE American Insurance Company v. Walmart, Inc.
The ruling upholds a trial court's earlier order and covers defense costs only. Whether those same insurers must contribute to any settlements remains a separate question the court did not decide.
Walmart filed suit against its insurers in November 2022, roughly a week before announcing a $3.1 billion nationwide settlement framework with state, local and tribal governments over opioid claims. The report noted that the figure covers treatment and care costs, attorneys' fees and related expenses, and that Walmart denied wrongdoing.
The insurers' central argument was that the underlying lawsuits allege intentional misconduct rather than an "accident" as their policies define it. A unanimous three-judge panel rejected that position. According to the report, the lead judge wrote that the core allegation against Walmart is that it "failed to put proper controls in place to find and report suspicious opioid orders," which the court characterized as a failure of reasonable care rather than deliberate wrongdoing. The panel added that even if Walmart's conduct was intentional, the resulting harm could not necessarily have been foreseen.
On the excess layer, insurers contended that government and health system plaintiffs seeking reimbursement for addiction treatment and overdose costs do not present claims involving covered bodily injury. The court disagreed, citing policy language the report quoted directly: "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 panel read that language as extending coverage to financial damages suffered by organizations that did not themselves sustain physical harm.
The Arkansas ruling sits in direct tension with decisions elsewhere. Delaware courts have relieved insurers of any duty to defend Albertsons, Rite Aid and CVS in government-filed opioid suits, largely because plaintiffs could not demonstrate direct bodily injury. A federal judge in Florida reached a similar conclusion in favor of Publix. The Arkansas court's willingness to extend the bodily injury trigger to third-party financial claimants is the sharpest point of divergence and the one that excess carriers in similar programs will be watching most closely.
In a separate portion of the ruling, New York-based QBE Insurance, which shares a coverage layer with another insurer, sought to move its dispute to arbitration. The court declined, finding that QBE's policy did not clearly incorporate the other insurer's arbitration clause.
The practical consequence for the market is that the duty-to-defend question in opioid litigation remains unsettled at a national level. Carriers writing commercial general liability for large retailers and pharmacy operators now face a split among state and federal courts on whether government cost-recovery suits trigger the bodily injury coverage grant. That split is unlikely to resolve without further appellate decisions or, eventually, a case that reaches a higher federal court. Underwriters pricing or renewing coverage for businesses with opioid-related exposure should treat the Arkansas outcome as a live variable rather than an outlier.
Source: https://www.businessinsurance.com/insurers-must-defend-walmart-in-opioid-lawsuits-appeals-court/
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