The first half of April 2020 has seen a new slate of COVID-19-driven coverage lawsuits filed throughout the country. We last reported on an initial wave of lawsuits filed by hospitality and retail entities, including the first putative class-action lawsuit filed against an insurer. We are now aware of lawsuits by professional service businesses, a second putative class-action lawsuit by a restaurant, a lawsuit concerning an endorsement affording affirmative cover for pandemics, the first wrongful death lawsuit allegedly caused by the spread of COVID-19, and several more lawsuits filed by those in the retail and hospitality industries. Below, we analyze some of the COVID-19-related coverage lawsuits that should be on your radar. If you would like a copy of any of these complaints, please contact us directly.
Professional service firms—a plastic surgeon, a law firm, and a dentist—are now among the commercial policyholders who have sued their property insurers to recover business income loss as a result of governmental shutdowns intended to flatten the curve. Like many of the prior suits by hospitality purveyors, these suits do not allege physical damage to insured property and instead focus on the civil authority provisions.
While the complaint’s allegations by a restaurant against its property insurer for recovery of business income loss are unremarkable, what is noteworthy about this lawsuit is its attempt to certify a class of all policyholders who purchased property policies from the insurer defendants “where such policies provide for business income loss and extra expense coverage and do not exclude coverage for pandemics, and who have suffered loss due to measures put in place by civil authorities to stop the spread of COVID-19.” Since this putative class is not limited by industry or geography, the potential scope of the class is enormous.
Unlike coverage disputes where a hospitality business has sued its property insurer for business income loss due to COVID-19, knowing full well that the policy at issue has a “virus exclusion,” this case is different. Here, the insured alleged that it purchased a “Pandemic Event Endorsement,” and the insurer still denied coverage. According to the complaint, the endorsement affords coverage for “pandemic events,” which is defined as “the announcement by a Public Health Authority that a specific Covered Location is being closed as a result of an Epidemic declared by the [Centers for Disease Control and Prevention] or [World Health Organization].” While the complaint is cagey about how the endorsement defines “Epidemic,” the endorsement (which is an exhibit) actually states that it is, in pertinent part, a “Covered Disease,” i.e., a list of 25 pathogens and “their mutations[ ] or variations.” COVID-19 is not one of the enumerated pathogens, but “Severe Acute Respiratory Syndrome-associated Coronavirus (SARS-CoV) disease” is. The plaintiff contends that COVID-19 is a mutation or variation of SARS-CoV disease. This endorsement may present novel issues, but this case bears monitoring.
This case does not present a coverage dispute, but as the first COVID-19 wrongful death case (at least the first that has been widely publicized), it certainly is worth attention, especially as such lawsuits and their attendant liability insurance claims become more prevalent. Filed on behalf of a deceased Walmart employee, the complaint alleges negligence and willful and wanton misconduct for the defendants’ alleged failure to cleanse and sterilize the store, implement “social distancing guidelines,” provide employees protective equipment, prevent workers displaying symptoms of COVID-19 from continuing to be present at the store, and more. How the plaintiff will try to avoid Illinois’ stringent workers’ compensation exclusive remedy, as well as prove causation, will be front and center as the case progresses.