The rise in litigation in response to state and national responses to the COVID-19 public health crisis is something that Agency Checklists has been reporting on since the beginning of the crisis. In particular, on the rise of litigation lawsuits involving Business Interruption claims here in Massachusetts as well as legislation filed with the Massachusetts Legislature on this issue.

In continuing our reporting on this issue, Attorney Tricia Murray takes a look at a website that has been tracking COVID-19 Litigation nationally. What follows is what she learned from the site with respect to what is happening here in the Commonwealth.

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Tracking COVID-19 Coverage Litigation in Massachusetts

Covid Coverage Litigation Tracker (“CCLT”) is an insurance law analytics tool created by Insurance Law Analytics (“ILA”), a project run by Professor Tom Baker and the University of Pennsylvania Law School.

According to the CCLT website, CCLT contains the following data on insurance coverage cases related to the Covid 19 pandemic:

• the policyholder name and industry code;
• insurer name and AM Best number;
• policyholder and insurer law firms;
• the court in which the case is litigated;
• the coverage sought;
• the type of insurance policy and state of issue;
• the relevant insurance policy forms;
• whether class-action status is sought and, if so,
• the alleged class or classes; and information regarding key litigation events.

As of August 9, 2020, the CCLT website lists 868 cases in federal and state courts throughout the United States. Of that number, fifteen (15) of them have been filed in Massachusetts courts. Inspired by the work of Professor Baker and the CCLT, the following are some of the insights extrapolated from this data with respect to pending Massachusetts cases.

For those interested in a list or more information on the cases analyzed here, please contact Attorney Murray via the links in her bio below.

In which Massachusetts Courts are Plaintiffs filing their cases?

Thirteen of the fifteen Massachusetts cases filed between May 4, 2020, and July 17, 2020, are in the United States District Court in Boston. Of the remaining two cases, one case has been filed in the U.S. District Court in Worcester and one in the U.S. District Court in Springfield. 

Are The Cases Assigned To One Judge?

The cases filed in Boston are assigned to seven judges and two magistrate judges. No one of these judges has more than two of the cases.

Who are the Plaintiffs?

There is a range of plaintiffs, including six restaurants, two retail businesses, a convenience store, a dance center, a photography studio, a hair salon, a fitness franchise, a screen printing and embroidery business, a parent who purchased travel services for a school trip, and an early-intervention service provider for developmentally delayed children and their families.

Are all the Plaintiffs Massachusetts Citizens or Businesses?

No, the early intervention service provider is located in Philadelphia and is a Pennsylvia corporation. One of the retail businesses suing is located in Scottsdale, Arizona.

Are any of the filed cases class-action lawsuits?

Yes, four of the lawsuits seek to file on behalf of the named plaintiffs, as well as similarly situated class members throughout the United States. These include two of the restaurant plaintiffs, the screen printing and embroidery business (co-plaintiff with one of the restaurant plaintiffs), the hair salon, and the parent who purchased travel services.

Who are the Defendants?

Travelers is a named defendant in three of the actions.  The Hartford and Liberty Mutual are named defendants in two of the actions.  The remainder of the actions are against the following insurers:  Strathmore Insurance Company; Cincinnati Casualty Company; U.S. Fire Insurance; Greater New York Mutual Insurance Company; Ventapro Specialty Insurance Company; Philadelphia Indemnity Insurance Company; and MAPFRE (College Highway Insurance Agency).    

Under what policy provisions are the insureds seeking Coverage?

The Plaintiffs’ complaints allege that beginning in March, 2020, they have not been able to operate normally and have also sustained business income losses due to direct physical loss or physical damage at the premises of dependent properties.  Plaintiffs’ businesses have suffered a suspension of normal business operations as defined in the policies in terms of a significant slowdown of business activities, sustained losses of business income, and incurred expenses. Plaintiffs’ businesses also continue to incur normal operating expenses, such as rent and utilities. 

It is the Plaintiffs’ position that the Defendants provided “all-risk” policies which covered any loss not specifically excluded.  The Plaintiffs seek coverage for losses sustained due to the suspension of business operations, and coverage for closure by Order of Civil Authority.  The complaints all provide detailed histories of the various state and federal orders relating to Covid, as well as recommendations from the World Health Organization.  They also provide detailed information about the Covid-19 virus, the science of its transmission, including the impact of fomites on hard surfaces.  Most of the complaints also place the insured premises in close proximity to health care centers or other businesses which, presumably, suggest a high risk of exposure to the virus.

In addition, some of the Plaintiffs, including those whose policies became effective in the early part of 2020, raise the Defendants’ failure to use the ISO form exclusion developed in November, 2006 for losses “due to disease-causing agents such as viruses and bacteria”, arguing the existence of this ISO form is evidence the insurance industry has thus recognized that the presence of virus or disease can constitute physical damage to property since at least 2006.

Almost all the complaints include counts for Declaratory Judgment as to the duties and obligations of the Defendants relative to the above coverages.  They also include counts for Breach of Contract, arguing the Plaintiffs faithfully paid their premiums and the Defendants failed to pay for losses covered under the policies.  At least one case included a count for Unjust Enrichment.  Lastly, most of the complaints include claims for Violations of M.G.L. c. 93A for unfair claims settlement practices.  At least two of the Plaintiffs also allege misrepresentations by the insurers on the insurers’ website and claims materials as further evidence of unfair and deceptive trade practices.

What are the main defenses in these cases?

Where all these actions are relatively recent, many of the Defendants have yet to file an answer or an otherwise responsive pleading.  However, a careful reading of the complaints, and the attachments thereto, give us a preview of the defenses to be raised.

The Insurer Defendants’ position is that Coronavirus caused no physical loss of or damage to Plaintiffs’ property.  Since the Coronavirus did not cause property damage at the place of business or in the immediate area, the Business Income loss is not covered.

In addition, the policies’ Civil Authority coverage is not triggered because government orders did not “completely prohibit” all access to Plaintiffs’ insured premises.  In order for coverage to apply under the policy for Civil Authority, there must be a covered cause of loss to property in the immediate area which prohibits access to the scheduled premises by a Civil Authority.  There is no evidence that the orders were entered because of direct damage to property at other locations or dangerous physical conditions at other locations.  Additionally, the orders do not restrict access to the area immediately surrounding the insured premises.

Finally, at least one insurer, in its Answer, asserted “Ordinance and Law”, “Delay or Loss of Use” exclusions as Affirmative Defenses.  Expanding on these defenses in its Counterclaim, the Defendant alleged that its policy excludes coverage for the enforcement of governmental orders that regulate the use of insured premises.  In addition, the Defendantalleged its Delay or Loss of Use exclusion applies to exclude coverage.

Does the timing of the policy effective dates impact any of the arguments?

Yes.  The Plaintiffs with policies that became effective in February, 2020 or later point to what the Defendants “knew or should have known” about the impact of the Coronavirus and the opportunity they had to specifically exclude coverage for the same.  Because the Defendants failed to use the ISO Form exclusion for Virus related losses, and because the policies were “all-risk”, the Plaintiffs argue that the omission of the exclusion means the damages are covered.

One of these things is not like the other

Of the fifteen covid coverage cases profiled here, one is not a commercial insured suing under an all-risk policy.  Rather, she is a parent who purchased travel services for a school trip in April 2020 that was cancelled due to the travel restrictions which resulted from the pandemic.  This Complaint is plead as a proposed class action.  It will be interesting to follow, as there are likely many similarly situated parents or others who had trip insurance for themselves and are experiencing difficulty collecting on their claims.

What’s next?

The Defendants will file Motions to Dismiss or Answers to Plaintiffs’ Complaints in the coming weeks.  On July 30, 2020, the Judicial Panel on Multidistrict Litigation (“JPML”) held a hearing to about whether to consolidate hundreds of federal-court suits by insurance policyholders whose claims for business interruption coverage was denied.  It is clear that no matter who prevails, the economy will experience the economic impact from the Coronavirus for the years to come. 

Agency Checklists will keep its readers up to date on the latest developments in these and other Covid Coverage cases. 

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Other Agency Checklists Articles On COVID-19 Litigation

For those looking for additional information on the above including on current legislation and specific litigation analysis, the following are links to previous articles Agency Checklists has published on this issue:

• May A Mass. Statute Bar COVID-19 Business Interruption Claims?
• Legal Sea Foods Files A COVID-19 Business Interruption Coverage Suit Against Strathmore Insurance
• Will Insurers Be Required To Pay COVID-19 Business Interruption Claims?
• Business Interruption Coverage & The Coronavirus Pandemic
• Coronavirus in MA: Insurers Well-Positioned To Confront COVID-19’s Challenges Says III
• Class Action Filed Against The Hartford Seeking Business Interruption Coverage

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