Order on opioids

Walmart told to give up files on pharmacy handling of painkillers.

Walmart Inc. must disclose some internal files related to alleged mishandling of opioid painkillers sold through the company’s in-store pharmacies, after a judge ruled in favor of investors who claim directors failed in their oversight.

Two pension funds “quite clearly have a credible basis” to investigate whether board members wrongfully turned a blind eye to excessively large sales of the highly addictive medicines, Delaware Chancery Judge Travis Laster ruled Monday.

Walmart must turn over board discussions about opioid issues stretching back to 2010.

“I don’t think this is a close call,” Laster said during a video hearing. “I don’t think you can say with a straight face there isn’t any evidence of wrongdoing.”

States and local governments are suing numerous drug makers, distributors and pharmacies over the U.S. opioid epidemic, including Walmart. The retailer faces a November trial in Ohio in which municipalities will seek billions of dollars in damages for alleged failures to recognize “red flags” about heavily repeated sales of the painkillers.

Randy Hargrove, a Walmart spokesman, rejected claims that the company’s board members or execu

tives fumbled their handling of opioid issues. “Walmart takes its responsibility to shareholders seriously,” Hargrove said in an emailed statement. “We continue to believe that the evidence will show neither Walmart nor its board engaged in any misconduct.”

The funds, which own Walmart shares, contend in court filings that some of the chain’s executives ensured a steady stream of the painkillers to doctor-run pill mills that routinely wrote hundreds of prescriptions for opioid painkillers. To support their claims, the investors cite evidence that emerged in the opioid cases consolidated before a federal judge in Cleveland, as well as media reports.

When the federal government moved to investigate and then prosecute Walmart, the retailer used its political clout to “thwart any such enforcement action, causing career public servants to quit their jobs in frustration and disgust,” the funds alleged.

David Wales, a lawyer for the funds, told the judge during the hearing Monday that the plaintiffs are seeking the internal files to get a better handle on the board’s oversight of opioid distribution. The company agreed with the federal government in 2010 to beef up monitoring of sales of the highly addictive pills.

Still, the company failed to keep an eye on excessively large opioid sales within its 2,700 in-store pharmacies, Wales said. The investigation would focus on whether Walmart “lived up” to its agreement with the government, he said.

The judge overseeing the consolidated opioid claims against Walmart and other pharmacy chains rejected the companies’ bid to have the suits thrown out, saying there was enough evidence of lax oversight to raise questions about Walmart’s liability, Wales said.

For example, in a January ruling, the judge in Cleveland said Walmart started flagging excessive opioid orders in 2011, but that didn’t stop them from being shipped. “It’s unclear what, if any, due diligence was done on these flagged orders,” the judge said.

“It appears Walmart simply shipped the flagged orders and didn’t report them” to federal regulators, according to the decision.

Ray Dicamillo, one of Walmart’s lawyers, told the judge Monday the funds have no evidence directors were involved in the opioid issue and sales of the painkillers was a minuscule part of the chain’s business. He said the health and wellness unit that sells the pills generates about 8% of the retailer’s revenue, according to a transcript of the hearing.

Sean Berkowitz, a former Enron prosecutor who is now part of Walmart’s defense team, derided part of the funds’ document requests as amounting to a “fishing expedition.”