Thursday, December 30, 2021

COVID-19 Business Interruption Coverage Claims by Medical Practice Dismissed by Pennsylvania Federal Court

In the case of Delaware Mgmt., LLC v. Continental Cas. Co., No. 2:20-CV-4309 (E.D. Pa. Nov. 11, 2021 Goldberg, J.), the court ruled that the insureds were not entitled to business interruption coverage for economic losses allegedly sustained due to COVID-19 Executive Orders where the coverage under the policy was only triggered by physical damage or loss of covered property. The court found that the Plaintiff had not pled any such damages or losses.

According to the Opinion, the Plaintiffs before the court owned and operated a group of thirteen (13) affiliated medical practices.

The court noted that the Plaintiffs’ facilities remained opened during the duration of the Executive Orders, although the operations of the business were limited. The court rejected the Plaintiffs’ interpretation of “loss” to include a partial loss of use of their facilities.

The court also rejected the Plaintiffs’ argument that the public fear of indoor establishments due to COVID-19 caused a “physical loss of or damage to” the property in order to trigger coverage. Rather, the court held that the physical loss of damage language in the policy required a tangible physical alteration of the property itself.

The court additionally ruled that the civil authority endorsement did not provide the Plaintiff with coverage as the endorsement required that the civil action be taken in response to any physical loss or physical damage. Because the Plaintiff had not alleged any such loss or damage to their property or to any nearby properties the court ruled that the Plaintiff could not rely upon the civil authority endorsement in this case.

Also, in footnote 1 of the Opinion, the court notably indicated that the University of Pennsylvania School of Law has been tracking these cases on a nationwide basis. That compilation can be found at this Link:

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.

Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Dec. 3, 2021).

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