Immune from COVID-19 Liability?

The evolving pandemic response continues to produce a plethora of legal issues. One such issue is whether to provide legal immunity to certain industries from COVID-19 related litigation.  For health care providers and nursing home operators, legal immunity would stop claims resulting from acts taken and medical decisions made when providing care for somebody with confirmed, and presumed positive, cases of COVID-19.  For business owners, legal immunity would halt claims brought by patrons who potentially contracted COVID-19 on their premises and/or from their services.  Industry representatives and trade organizations/associations have already voiced their concerns about COVID-19 related litigation. For example, the Florida Chamber of Commerce, Florida Hospital Association, Associated Industries of Florida, Florida Justice Reform Institute, and a number of other trade associations sent a letter requesting legal immunity from civil and criminal liability resulting from treating COVID-19 patients.

On the federal level, The U.S. Chamber of Commerce, National Association of Manufacturers, and National Federation of Independent Businesses all recently sought legislation to shield their members from liability where certain health and safety guidelines are followed.

State Legislation:

States are already seeking to provide a shield from COVID-19-related claims for certain industries.

  • Utah recently enacted legislation to immunizes business owners “from civil liability for damages or an injury resulting from exposure of an individual to COVID-19” on their premises.
  • New York passed the Emergency Disaster Treatment Protection Act, which provides immunity to hospitals, nursing homes, physicians and nurses, and other health care providers for malpractice and negligence in the treatment of COVID-19 patients.
  • Pennsylvania (by Executive Order), Wisconsin, and North Carolina have also codified laws which provide legal immunity to certain industries.

This trend towards state-level legal immunity for businesses, the healthcare industry, and the nursing home industry is growing and many other States have indicated a willingness to entertain such legislation in the short term. For example, while nothing has been filed yet in Florida, State Senator Jeff Brandes has already indicated that he would be introducing legislation which will provide a safe harbor for businesses which follow recommended guidelines.

Federal Legislation:

Congress has also been contemplating legal immunity from COVID-19 related litigation. United States Senator Ben Sasse just recently introduced a bill which seeks to limit liability for actions taken by health care providers to combat COVID-19. While not necessarily legal immunity or a limitation of liability, United States Congressman Andy Biggs has also introduced a bill which would have a similar effect. Congressman Bigg’s bill provides that the act of opening a business (by itself) is not negligent within the context of federal civil actions that include a claim alleging negligence arising from the transmission of COVID-19.

High ranking government officials have also issued their support for legal immunity. Senate Majority Leader Mitch McConnell has indicated that a broad liability shield will be a top priority in the next COVID-19 relief package. When questioned about Senate Majority Leader McConnell’s proposal, President Donald Trump indicated he would support such legislation.

This trend towards granting legal immunity does not seem to be ending anytime soon. As a claimant, it is essential to know if your potential defendant is afforded immunity by state or federal law. Conversely, businesses and other industries covered by immunity laws must be aware of the procedures to be followed in order to keep said immunity.

Business Interruption Coverage Update:

As noted in our previous blog post, COVID-19 business interruption coverage has become a heavily contested issue. Multiple cases have been filed in both state and federal courts throughout the United States. While many have not yet reached a resolution, some courts have determined these cases on their merits. For example, the United States District Court in and for the Southern District of New York recently found that COVID-19 did not cause direct physical loss or physical damage to property. Therefore, there were no business interruption damages. See Social Life Magazine Inc. v. Sentinel Insurance Co. Ltd. (Case no.: 20-cv-3311-VEC, S.D. N.Y.). This decision represents the first significant victory for insurance carriers and will likely be cited in business interruption cases.

If you have any questions about legal immunity legislation and its effect on you, please feel free to contact our attorneys at (305)416-3180.

Business Interruption Coverage in Light of COVID-19

Business Interruption Coverage in Light of COVID-19

As COVID-19 continues to wreak havoc on the lives of the world’s population, substantial insurance issues have arisen in its wake. Most of these issues relate to whether commercial property insurance policies and/or other policies which include coverage for business interruption, extra income, and acts of civil authority cover losses as a result of the forced shutdown of U.S. businesses.

At their heart, policies of insurance are nothing more than contracts. We have already seen countless actions filed and anticipate there will be a flood of challenges from both a declaratory judgment and breach of contract perspective for any denials based upon:

  • the pandemic event exclusions that have been quietly inserted over the last several years after the SARS-CoV virus, as well as;
  • the general business interruption clause requiring the existence of direct physical loss to a business location.

While a strong argument exists that a virus that affects individuals is not a direct physical loss to a business, the virus itself has been studied and proven to survive on surfaces for a prolonged period of time. These arguments underpin the various state and federal actions filed throughout the U.S.

Notable Insurance Coverage Actions

Some of the more notable coverage actions relating to COVID-19 include:

  • El Novillo Restaurant et al. v. Certain Underwriters at Lloyd’s London et al. (Florida).  Filed as a class action by multiple south Florida restaurants and similarity situated parties and relying upon the civil authority provision of the commercial property policies at issue.
  • Cajun Conti, LLC, et al. v. Certain Underwriters at Lloyd’s et al. (Louisiana). Filed by a chain of New Orleans restaurants. Plaintiffs argue that contamination of the insured premises by COVID-19 would be a direct physical loss, which would trigger coverage under the relevant policy.
  • SCGM, Inc. et al. v. Certain Underwriters at Lloyd’s (Texas). Filed by a movie theater chain. The endorsement at issue (purportedly created after the Ebola Pandemic in or around 2014), allegedly covers business losses resulting from a “Pandemic Event.” Plaintiff alleges that the policy in question defines “Pandemic Event” to mean “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].” The endorsement also included named certain covered diseases and variations or mutations of said covered diseases. Plaintiff alleges that one named covered disease is Severe Acute Respiratory Syndrome – associated coronavirus (SARS-CoV) disease, and that COVID-19 is a variation/mutation of said SARS-CoV.

Legislative Remedies for Business Interruption Coverage

In light of these coverage actions, the U.S. federal government has already contemplated a number of legislative remedies, including:

  • The Pandemic Risk Insurance Act of 2020, which has been proposed by the United States House of Committee on Financial Services, seeks to create a federal backstop for pandemic insurance losses in excess of $250,000,000. Based on a discussion draft for the bill, losses in excess of an individual insurer’s deductible would be shared between the U.S. Government and the insurer, with the U.S. Government paying 95%. The program is modeled after the Terrorism Risk Insurance Act, which was enacted in light of the terrorism-related insurance claims following 9/11.
  • The Business Interruption Insurance Coverage Act of 2020, which provides that each insurer that offers or makes available business interruption insurance coverage shall cover losses resulting from any viral pandemic, any forced closure of business or mandatory evacuation, by law or order of any government or governmental officer or agency (including the federal government and state and local governments), or any power shut-off conducted for public safety purposes. Of note, the legislation would nullify any exclusion that excludes losses that are covered by the Act, and preempts any state approval of said exclusions. Carriers have the ability to reinstate these exclusions, but said reinstatement requires either authorization from the insured, or the insured fails to pay any increased premium charged for business interruption coverage (any notice is provided).

If you have any questions about COVID-19 and its effect on your business or operations, please contact our offices at (305)416-3180.