(Article from Insurance Law Alert, October 2026)
For more information, please visit the Insurance Law Alert Resource Center.
Holding
The Arkansas Court of Appeals affirmed a trial court’s partial summary judgment ruling that a primary insurer owed Walmart a duty to defend certain lawsuits brought by governments and other entities seeking monetary payments for alleged budgetary costs due to the opioid epidemic. The court held that the underlying complaints potentially allege an “accident” and seek damages “because of ‘bodily injury.’” The court also affirmed the denial of a quota-share insurer’s motion to compel arbitration. Ace Am. Ins. Co. v. Walmart, Inc., 2026 Ark. App. 476, 2026 Ark. App. LEXIS 521 (Ark. Ct. App. Oct. 7, 2026).
Background
Walmart was named as a defendant in thousands of lawsuits brought by governments and other plaintiffs seeking compensation for alleged budgetary costs due to the opioid epidemic. Walmart sued its liability insurers for coverage in Arkansas state court and sought partial summary judgment on primary insurer AIG’s duty to defend. AIG opposed Walmart’s motion, arguing that the underlying complaints do not allege an “occurrence,” defined in its policies as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Certain excess insurers moved for summary judgment, arguing that opioid suits brought by governments and other entities did not seek damages for or because of “bodily injury,” as required under their policies. Another insurer, QBE Insurance Corporation, filed a motion to compel arbitration, arguing that its quota-share excess policy incorporated an arbitration clause and a New York choice-of-law provision from the policies issued by a fellow quota-share insurer.
The trial court granted Walmart’s motion for partial summary judgment against AIG on the duty to defend, denied the excess insurers’ motion for summary judgment regarding the damages because of “bodily injury” issue, and denied QBE’s motion to compel arbitration.
Decision
The Arkansas Court of Appeals affirmed all three rulings. The court explained that, although “accident” is not defined in the AIG primary policies, Arkansas courts define “accident” as “an event that takes place without one’s foresight or expectation—an event that proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected.” Applying that definition, the court determined that the underlying claims against Walmart alleged an “accident” because “the essence of the Opioid Lawsuit complaints is not intentional malfeasance.” The court reasoned that “even if it is true that Walmart intentionally filled prescriptions and did not have proper procedures in place to recognize and report suspicious opioid prescriptions, the alleged result—a nationwide crisis in which people became addicted to and injured in other ways by heroin and fentanyl—could have been without foresight or expectation.”
Turning to the excess insurers’ motion, the court acknowledged that whether the opioid-related lawsuits brought by governments and other entities allege “bodily injury” covered by the policies presented “a closer question.” The court noted that the underlying complaints “do not allege a specific bodily injury to a specific person at a specific time” and do not seek “reimbursement for specific patients, but instead for the general increase in costs allegedly caused by the opioid crisis.” Nevertheless, the court affirmed the trial court’s determination that the lawsuits seek damages “because of bodily injury,” relying on policy language providing 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 court also observed that certain policies expressly exclude coverage for “certain firearm or pollution claims brought by governments” but contain “no clear and unambiguous language excluding claims relating to governmental lawsuits for damages because of bodily injuries in contexts outside of pollution and firearms.” Finally, the court distinguished two prior Arkansas Supreme Court decisions holding that suits by entities that sought to recover downstream costs did not seek damages “because of” “property damage,” reasoning that, unlike those cases, the lawsuits against Walmart do not assert breach-of-contract claims.
With respect to arbitration, the court held that the QBE quota-share policies do not incorporate the New York choice-of-law provision or arbitration clause contained in a fellow quota-share insurer’s policies. The court reasoned that QBE’s policies incorporated only those provisions that “further limit or restrict coverage,” which did not include the choice-of-law and arbitration clauses. The court added that, even if those clauses had been incorporated, Arkansas courts would not apply New York law because “[a]ny arbitration clause in an insurance contract is void” under Arkansas statutory law.
Comments
The decision departs from the prevailing approach in other jurisdictions. Numerous courts, including the Delaware Supreme Court, the Ohio Supreme Court, and the Sixth Circuit, have held that the budgetary costs that governments and other entities allegedly incurred as a result of the opioid epidemic do not constitute damages “for” or “because of” “bodily injury” sufficient to trigger coverage under liability insurance policies. Other courts, including the Ninth Circuit, have held that similar opioid lawsuits do not allege an “accident.” The Arkansas Court of Appeals did not address these contrary authorities.