I've seen them do it without me firing a shot. Assumed it's either friendly fire or a glitch.
I'm pretty sure the molotov-carrying dudes *always* burst in flames when you shoot 'em as they're running towards you. I've had it happen so frequently that it can't be that I'm hitting the molotov-in-hand by accident (but then again they're all strapped up with the molotovs, so maybe it's that).
Accidentally discovered that you can shoot molotov cocktails when they're in someone's hand. Highly recommend trying this, the results are entertaining.