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Law360 (August 17, 2020, 4:50 PM EDT) -- In a pair of filings in Pennsylvania federal court, a Somerset County hospital and its insurer pointed to dueling decisions out of Texas and Missouri that reached opposite conclusions over whether financial damage from pandemic-related business restrictions could be considered a covered loss for insurance purposes.
In filings before a Pennsylvania federal court Friday, Chan Soon-Shiong Medical Center at Windber and Travelers Property Casualty Co. of America said that the decisions they cited — among the first to address the closely watched question of whether business interruption insurance can be brought to bear on claims related to the pandemic — provided "further support" for their respective positions about the viability of the hospital's coverage suit.
In the decision cited by Windber, a Missouri federal judge ruled last Wednesday that the presence of coronavirus resulted in a group of restaurants and hair salons sustaining a "physical loss" of their properties as contemplated under their insurance policies.
On the other side, Travelers pointed to a Texas federal judge's ruling on Thursday agreeing that the lack of any "tangible injury of property" meant that a group of barbershops could not move forward with claims seeking coverage for financial losses they suffered after being forced to close their doors because of the pandemic.
Windber filed its proposed class action in April, claiming that Travelers wrongfully denied coverage for losses the 54-bed hospital said it suffered after Gov. Tom Wolf mandated in March the closure of non-essential businesses as coronavirus infections took off.
As a result, the hospital said it was forced to furlough several of its 450 employees.
Travelers moved for judgment on the pleadings in June as it argued that Windber had not claimed any "direct or physical" loss or damage, which the insurer said was required under the clear terms of the hospital's policy.
As litigation over coronavirus-related insurance coverage has exploded across the country, a key question has been whether the pandemic created the kind of "physical loss" generally required to trigger business interruption coverage.
In the Missouri case cited by Windber, the judge noted that the phrase "direct physical loss" was not directly spelled out under the operative policy, but that dictionary definitions supported a finding in favor of the plaintiffs.
"Applying these definitions, plaintiffs have adequately alleged a direct physical loss," the judge in Missouri said.
In Texas, however, the judge there pointed to previous decisions finding that businesses that were forced to shut down because of hurricane evacuation orders, but which ultimately were not damaged, were not entitled to business interruption coverage.
In both the Texas and Missouri decisions, however, the judges noted there were persuasive cases on both sides of the question.
Representatives for Windber and Travelers did not immediately return messages seeking comment on Monday.
Windber is represented by James C. Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC, and Scott Cooper of Schmidt Kramer PC.
Travelers is represented by Richard D. Gable Jr. of Butler Pappas Weihmuller Katz Craig LLP, and Stephen E. Goldman of Robinson & Cole LLP.
The case is Windber Hospital et al. v. Travelers Property Casualty Co. of America, case number 3:20-cv-00080, in the U.S. District Court for the Western District of Pennsylvania.
--Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.
