(Reuters) – In the first federal appeal ruling on business interruption insurance coverage for COVID-19-related losses, the 8th U.S. Court of Appeals said on Friday that the policy all Cincinnati Insurance Co’s risks to Oral Surgeons PC (OSPC) did not cover loss of use of mandatory closings.
â€œThe police here are clearly demanding ‘physical loss’ or ‘physical damage’ to trigger business disruption and additional expense coverage,â€ the 8th Circuit said. “Accordingly, there must be some materiality to the loss or damage of property – for example, physical alteration, physical contamination, or physical destruction.”
OSPC, represented by Peddicord & Wharton, filed a complaint for declaratory judgment, breach of contract and bad faith in July 2020, alleging that four of its locations had been closed to everyone except emergency services for six weeks due to the Iowa governor’s shutdown linked to pandemic order.
The district court dismissed the action in September, agreeing with Cincinnati attorneys at Litchfield & Cavo that the OPSC had not alleged any “property damage” that would trigger the coverage.
The OPSC’s appeal garnered amicus support from the Restaurant Law Association, represented by Jenner & Block, while the National Association of Mutual Insurance Companies and the American Property Casualty Insurance Association filed an amicus brief. spouse supporting the insurer. They were represented by Robinson & Cole, Zelle and Crowell & Moring.
The 8th Circuit heard arguments in April, becoming the first appeals court to do so in a COVID coverage case. Circuit 3 heard two cases later in April but have yet to decide them. The 7th and 9th circuits have arguments planned for later this year.
According to the Covid Coverage Litigation Tracker from the Carey Law School at the University of Pennsylvania, 167 federal appeals remain pending, of which 57 are in the 9th Circuit alone. At least 27 are pending in state appeals courts, according to the tracker.
The case on Friday is Oral Surgeons PC v. Cincinnati Insurance Co, 8th United States Court of Appeals, No. 20-3211.
For OSPC: Tyler Smith and Randy Wilharber of Peddicord & Wharton
For Cincinnati Insurance Co: Daniel Litchfield of Litchfield & Cavo