Friday, April 23, 2021
As we have written here previously, businesses across the country have brought lawsuits against their insurers seeking coverage for losses related to COVID-19. According to the COVID Coverage Litigation Tracker at the University of Pennsylvania Carey Law School, over 1,500 suits have been filed since March 2020 in state and federal court. Some interesting statistics based on that information:
Over one third of the cases have been filed by food services establishments.
Almost one quarter of the cases were brought as class actions.
Approximately one third of the cases involved insurance policies that did not contain a virus exclusion.
Insureds have been much more successful in state court than federal court. Insurers have obtained a dismissal in 93% of the 241 cases decided in federal court, but only 54% of the 58 cases decided in state court.
Plaintiffs in Some States Defy Insurer Winning Streak in COVID Lawsuits
To anyone keeping score, it appears that insurers are crushing policyholders who sued for business income lost because of COVID-19 restrictions.
As of Tuesday, insurers had won 147 motions for dismal or summary judgment in state and federal courts, according to a litigation tracker maintained by the University of Pennsylvania’s Carey Law School. Policyholders had won only 34 cases in early rounds less than one out of five.
But if you look closer, glaring outliers emerge.
In Ohio, insurers had won only two of 11 motions to dismiss or for summary judgment, as of Tuesday. In one case, Henderson Road Restaurant Systems et al v. Zurich American Insurance Co., a federal judge actually granted summary judgment in favor of the policyholder.
Viewpoint: Ohio at Epicenter in Quest for COVID-19 Business Interruption Cover By K. James Sullivan | February 2, 2021
In our original first alert about COVID-19 business interruption insurance coverage that we authored at the pandemic’s outset, we predicted extreme rigidness by insurance companies and coverage denials galore. Regrettably for policyholders, our prediction came true, with myriad insurance coverage lawsuits following in U.S. state and federal courts. To date, the vast majority of federal and state courts have sided with the insurance industry – nearly 83% of rulings on the merits have favored insurers so far.
Did Ohio Just Turn the Tide, or Did It Set the Stage for U.S. Policyholders’ Final Act?
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An Ohio federal court ruled that a restaurant group was entitled
to Business Income insurance coverage, allowing it to
recover its lost net income and certain continuing expenses
resulting from government shutdown orders, and that the
policy s Microorganisms (or virus) exclusion and Loss of Market or Delay exclusion did not apply.
Henderson Road Restaurant Systems, Inc. v. Zurich American
Insurance Company, No. 1:20-CV-1239 (N.D. Ohio Jan. 19, 2021).
The case has been certified for an immediate appeal.
The decision has four key holdings.
First, the court rejected the insurer s argument that the