Chan Soon-Shiong Medical Center at Windber (CSSMCW), Pennsylvania, was considered an essential business during the early government-mandated closures to stop the spread of coronavirus. But the non-profit hospital still had to furlough dozens of its 450 employees.
CSSMCW turned to its insurance company seeking coverage for operating expenses through its business interruption insurance. But its insurer, Travelers Property Casualty Company, refused to help. The medical center has now joined throngs of other businesses who have filed lawsuits against their insurers for breach of contract.
Business interruption insurance is part of a business owner’s insurance policy. It provides coverage for payroll, bills, and other expenses in the event the business must temporarily shut down due to a disaster. For example, the insurance would cover operating expenses in the event of a fire that forced a business to temporarily close to repair damage. But insurance companies are telling businesses across the country that COVID-19-related closures and restrictions, even though ordered by states and local governments, are not covered because the businesses did not suffer physical damage.
In its filing in Pennsylvania federal court, CSSMCW cited a ruling in Missouri federal court just last week in which the judge found that restaurants and other establishments did suffer “physical loss” when coronavirus particles floated through the air and landed on their property. This rendered their establishments unsafe for consumers. Thus, the lawsuits were allowed to proceed.
Travelers’ cited a Texas federal judge’s ruling in which no “tangible injury of property” was found, stopping the lawsuits in their tracks.
Beasley Allen lawyers are actively investigating and filing claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic, and are involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise.