CT Children’s sues insurer over pandemic business interruption coverage
Photo | Contributed
Connecticut Children's Medical Center in Hartford.
Connecticut Children’s Medical Center (CCMC) is suing insurer Continental Casualty Company and its parent company CNA Financial for failing to pay business interruption claims related to the COVID-19 pandemic.
The lawsuit, filed U.S. District Court on March 5, concerns the hospital’s all-risk property insurance policy with CNA. The suit argues that pandemic losses and extra expenses incurred due to COVID-19 are covered under CCMC’s policy with CNA.
Unlike many policies, CNA’s policy with CCMC does not “exclude or limit coverage for losses caused by viruses, pandemics, or communicable diseases,” the suit states. “Defendants have breached the contract of insurance and the implied covenant of good faith and fair dealing by wrongfully failing to admit coverage for Plaintiffs’ claims,” the suit states.
In a statement Thursday, CCMC's lawyer Neil Danaher said: "Connecticut Children’s Medical Center and the Connecticut Children’s Specialty Group, while caring for patients with COVID-19 and focusing on efforts to contain the impact of the Pandemic, have incurred significant losses related to their operations and expenses. They had in place insurance coverage for business interruption losses and the expenses. Pursuant to the insurance policy, a claim was made. However, the insurer has not acknowledged coverage. As a result, Connecticut Children’s Medical Center and the Connecticut Children’s Specialty Group filed the lawsuit, seeking a ruling from the Court regarding the rights and responsibilities of the parties."
CNA didn't respond to a request for comment on the lawsuit.
Business interruption coverage, and whether insurers are responsible for claims related to COVID-19 related shut downs, has become a hot-button issue during the pandemic, particularly for Connecticut insurers and businesses.
Two of Hartford’s largest employers — The Hartford and Travelers Cos. — faced a barrage of lawsuits over the past year from policyholders, including popular restaurants and other small employers, who said their business interruption insurance claims filed in the wake of COVID-19 government shutdowns were wrongly denied.
Insurers, for the most part, have argued that most policies only cover physical damage to a commercial property.
CNA has been named in 57 lawsuits relating to pandemic insurance coverage, according to a litigation tracker run by the University of Pennsylvania Carey Law School. The Hartford Financial Services group is by far the largest target of the suits, with 225 cases.
Businesses in the “ambulatory health care services” sector are the second-most likely to file lawsuits, after restaurants and bars. But only 19 hospitals nationwide have filed actions against insurers, UPenn found.
The insurance industry has successfully argued in many cases that pandemic losses to businesses are not covered under most policies. Of the 213 cases ruled on in federal court as of February, 80.3% were fully dismissed with prejudice, according to the UPenn data.
“Viruses are generally outside the scope of business interruption coverage due to the absence of any physical damage,” The Hartford's CEO Christopher Swift said in a Hartford Business Journal article in June.
In response to numerous cases of business-interruption claims being refused or ignored, lawmakers in 16 states have proposed legislation to require insurers to cover pandemic-related losses.
No state has yet passed such a mandate, according to Insurance Journal, but the proposals are still pending in at least six states.
Most Recent
Most Recent
0 Comments