One year into the COVID-19 pandemic, courts have issued hundreds of rulings in COVID-19 business interruption lawsuits, many favoring insurers. Yet those pro-insurer rulings are not based on evidence, much less expert opinion evidence. For insurers, ignorance is bliss.
Despite early numbers in federal courts favoring insurers (state court decisions actually favor policyholders), the year ahead holds promise for policyholders. Fundamental science is the key. Indeed, as researchers continue to broaden their knowledge about COVID-19, it has become increasingly clear that scientific evidence supports coverage for policyholders’ claims.
Hunton Andrews Kurth Insurance Recovery partner Michael Levine was recently quoted in a Law360 article concerning this positive outlook. As Mike explained, science proves that COVID-19 causes direct physical loss and damage to property (both indoor air and surfaces) in the same way many courts across the country have for years interpreted those phrases in the context of property and business interruption insurance policies. According to Mike, “[t]he experts [he has] been working with—some of the best in their fields—are very clear about the mechanism by which COVID-19 causes a physical alteration of property, transforming it from a safe condition to a dangerous condition.” This type of evidence will prove critical in securing policyholder victories over the months to come.
The key, as Mike suggests, is getting courts past the initial pleading threshold so that evidence can actually be considered by the trier of fact. All too frequently in the COVID-19 space, federal judges are abrogating their jobs under FRCP 12(b) and 12(c) and the well-established Twombly/Iqbal pleading standards by requiring policyholders to both plead and prove their cases in their complaints. This is fundamentally wrong. As Mike emphasized,“[t]hose expert opinions should check the box … to meet the direct physical loss or damage threshold” once “cases develop to a point where pertinent facts and opinion evidence can be considered.”
Policyholders have already netted multiple wins under COVID-19 business interruption claims. With increasing scientific support and data to demonstrate the impacts of COVID-19 on persons and property, policyholders expect to see many more successful claims in the near future.