Policyholders fight for COVID coverage

Lawyers for policyholders predict that a more balanced picture of victories will eventually emerge in litigation related to business disruptions linked to COVID-19.

To date, a large percentage of cases filed by companies seeking to cover closures linked to the pandemic have been dismissed, many of those decisions citing a lack of evidence that the virus has caused “direct physical damage.”

Lawyers for policyholders say many of the rulings rendered so far reflect early cases that have often been filed by unsophisticated attorneys who mistakenly focused on the issue of government-ordered closures as the reason for the coverage. should be granted, an argument generally viewed by courts as unconvincing.

They say better success is likely with more recent lawsuits that focus on scientific evidence to persuade courts that COVID-19 is causing physical harm.

They are also hoping for more success with upcoming rulings from state appeals courts, which they say tend to be more beneficial to policyholders.

The Ohio Supreme Court is expected to be the first state supreme court to rule on the matter, in Neuro-Communication Services Inc., etc. vs. The Cincinnati Insurance Co. A California intermediate appeals court ruled against the insured in November.

Insurers’ attorney Lee Siegel, a member of Hurwitz & Fine PC in Melville, New York, said: Supreme courts, as they review, will continue to determine that there is no coverage where there is no there is no physical loss. ”

At the end of November, the eight decisions of the federal courts of appeals on the matter were in favor of the insurers: three by the 6th United States Court of Appeals in Cincinnati; three by the 9th Circuit in San Francisco; one by the 8th Circuit in St. Louis; and one by the 11th Circuit in Atlanta, the other federal appellate courts have yet to rule.

According to statistics collected by the Carey Law School at the University of Pennsylvania, 291 more cases are pending.

Federal and state courts have ruled overwhelmingly in favor of insurers, although policyholder earnings percentages are better in state courts.

It is generally accepted that the end result of the litigation is likely to be a patchwork of different decisions, albeit less unbalanced in favor of insurers than at present.

“Each case depends on the facts of that case, and I don’t know if we’ve seen the best of those cases yet,” said Marshall Gilinsky, shareholder of Anderson Kill PC in New York City.

“You’re going to see some of the more sophisticated and fact-specific cases gain traction in the months and even years to come,” said K. James Sullivan, incumbent police attorney at Calfee, Halter & Griswold LLP in Cleveland.

In the first rulings favorable to insurers, policyholders did not allege the existence of the virus on their premises, nor “that there had been any physical impact or that the virus had physically altered the premises,” Paul said. Walker-Bright, attorney for Neal, Gerber & Eisenberg LLP in Chicago.

Instead, these cases “were based on the theory that the government orders on their own and were on their own sufficient to trigger coverage” and did not allege that parties had the virus for fear of triggering virus exclusions. Mr. Walker-Bright said.

Lawyers for policyholders say that guidance in previous rulings confirms that focusing on physical damage
The alleged causes of COVID-19 may be a more effective approach. (See related story).

Complaints which assert the presence of the virus at the scene and claim that it caused the loss of functional use of the property will be successful because “they fit perfectly into a 60-year line of cases in the country that existed long before COVID “which says toxic, hazardous or noxious substances in the air or on premises create property damage,” said Scott D. Greenspan, senior attorney at Pillsbury Winthrop Shaw Pittman LLP in New York City.

Advocates for policyholders are also optimistic that a greater percentage of cases brought before state supreme courts will go in the direction of policyholders. It is the courts “that make the law of their state, and the federal courts are required to follow it,” Gilinsky said.

Mr Walker-Bright said: “We have yet to see any state appeals court rulings on these matters, and we have yet to see any court rulings that have faced outright allegations. of coronavirus at the scene, so this may be something to watch out for as these cases progress.

Cary B. Lerman, policyholder attorney at Munger, Tolles & Olson LLP in Los Angeles, said he remains optimistic about the 9th Circuit, despite ruling against policyholders in three cases so far.

“I wouldn’t be surprised if we had a panel on the 9th Circuit that went the other way,” which would lead to a bench review of the matter by the full tribunal, he said.

Mr Walker-Bright said many earlier lower court decisions on the issue of sudden and accidental pollution coverage were initially unfavorable to policyholders, but the trend has changed over time.

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