Articles and Presentations

COVID-19 Insurance Claims: It’s Not Just Property Anymore

5.5.2022 by Lindsey D. Dean

At the beginning of the pandemic, businesses filed hundreds of lawsuits seeking business interruption coverage under their commercial property insurance policies for losses stemming from COVID-19. Two years later, many of those cases have been resolved, largely in favor of insurers. However, insurers are now facing the reality that there is a new wave of COVID-19 claims on the horizon.

The door is swinging open for third party claims stemming from personal injuries during the pandemic, COVID workplace regulations, agents and brokers’ alleged failure to procure adequate insurance coverage, corporations’ representations to shareholders and cyber criminals’ efforts to exploit virtual work environments. Examples of this next wave are discussed below.

  1. Claims Stemming from Personal Injuries Suffered During the Pandemic: Nursing homes across the country have faced an onslaught of wrongful death lawsuits stemming from their alleged failure to take appropriate measures to protect their residents during the pandemic. For example, in Illinois, surviving family members filed a pair lawsuits against the owner of Westchester Health and Rehabilitation Center alleging that the nursing home knowingly exposed residents to positive or asymptomatic medical staff.[1] In Ohio, several relatives filed lawsuits against Menorah Park Center for Senior Living alleging that the Center falsified COVID test results.[2] Those lawsuits subsequently settled in the range of $75,000 to $90,000.

    While some COVID lawsuits against nursing homes have settled, others remain pending. The potential exposure to nursing homes and similar facilities may turn on whether the plaintiffs can demonstrate recklessness, gross negligence or willful misconduct, as federal regulations and various state laws enacted during the pandemic generally protect health care providers from civil liability for injuries or death stemming from the allegedly negligence provision of health care services in response to the pandemic. With the two-year statute of limitations for personal injury suits quickly approaching, insurers can expect to see a significant increase in lawsuits stemming from injuries sustained at the start of the pandemic in 2020. The Wall Street Journal recently reported that dozens of lawsuits have been filed in New York alone in the last month, and one plaintiffs’ firm in Illinois filed 78 cases just in March against nursing homes.[3]

    Depending upon the nature of the allegations in these lawsuits, the defendants may seek coverage under their general liability policies and/or policies providing coverage for professional services or wrongful acts by directors and officers of the companies. Given that most professional services and management liability policies contain bodily injury exclusion, the availability of coverage under those policies may be limited.

  2. Employment Practices Claims: According to Lex Machina, in 2020, plaintiffs filed more than 800 employment-related COVID-19 cases in federal court, with many more COVID-related claims filed in state court and with various agencies.[4] For example, employees filed a putative class action against Amazon alleging that it failed to compensate its employees for time spent on COVID symptom screening before each shift.[5] Another group of employees filed a lawsuit against their employer, a Boston hospital, alleging religious discrimination, retaliation and failure to accommodate under the Americans with Disabilities Act after they were denied religious or medical exemptions from the hospital’s mandatory COVID-19 vaccination policy.[6] As companies start to reopen their offices with varying vaccine mandates, mask requirements and other COVID-related regulations, insurers could see another increase in employment claims stemming from these employer regulations.
  3. Professional Liability Claims: In many of the business interruption coverage lawsuits, policyholders named their insurance agents and/or brokers as defendants along with their insurers, alleging that, if the policy did not afford coverage for the policyholder’s losses, then the broker or agent was negligent in procuring inadequate insurance coverage. Some courts dismissed the claims against brokers and agents as unripe for adjudication in the absence of a finding that the policy at issue provides no coverage, while others stayed the litigation as to the brokers until there was a final adjudication regarding coverage.[7]

    As noted above, the vast majority of courts have determined that commercial property policies provide no coverage for business losses stemming from the pandemic, and, as such, policyholders may now be allowed to pursue negligence claims against their brokers for failure to procure adequate coverage. That said, it appears that the likelihood that policyholders will succeed on such claims may be limited, as policyholders will likely have difficulty demonstrating that their brokers misrepresented that policies procured prior to 2020 would afford coverage for a pandemic that did not yet exist and that no reasonable person would have anticipated.

    In addition to claims against insurance agents and brokers, as noted above, there has been an influx of lawsuits against nursing homes and other healthcare providers, which may seek coverage under professional liability policies as well.

  4. Shareholder Lawsuits: The pandemic wrought havoc on nearly all businesses – public and private alike. In this regard, public companies were the subject of shareholder lawsuits based on alleged misrepresentations regarding anticipated earnings during the pandemic, among other things. ISS Securities Class Actions Services reported in February 2022 that shareholders have filed 54 COVID-related cases alleging violations of securities laws against entities in the biotech, software, pharmaceutical, health care, travel and technology industries.[8] The allegations in these lawsuits run the gamut from misrepresentations regarding COVID vaccine clinical trials[9] to misleading statements regarding a cruise line’s health and safety practices[10] to misrepresentations in an IPO prospectus concerning a health company’s ability to handle COVID-related costs.[11] According to ISS, at least 13 of these lawsuits have been dismissed, including lawsuits against Carnival Corporation and Norwegian Cruise Lines, but 37 remain pending.

  5. Cyber Claims: Early in the pandemic, many warned that cyber criminals were likely to take advantage of vulnerabilities present in virtual work environments. These concerns were not unfounded. There was an increase in ransomware attacks and fraudulent schemes during the pandemic, with the FBI reporting a 69% increase in total cyber crime complaints in 2020 and another 7% increase in 2021 and total potential losses exceeding $6.9 billion.[12]

    It is difficult to tell whether this increase in cyber incidents is attributable to more sophisticated cyber criminals, vulnerabilities due to the increase in remote work, or, most likely, some combination of the two. The FBI’s report mentioned above observes that cyber criminals have developed new schemes that exploit business’s newfound reliance on virtual communications. These tactics may be here to stay, as many employers are continuing with a fully remote or hybrid workforce. Accordingly, insurers will likely continue to see cyber criminals target business email accounts, and a corresponding influx of claims under both the third and first party coverage in cyber policies.

While some sense of normalcy will return as mask mandates are lifted, businesses reopen and employees return to the office, the ongoing impact of COVID-19 is likely to have far-reaching implications for insurers. As discussed above, the resolution of the business interruption litigation will likely be closely followed by claims under professional, casualty and cyber lines of coverage.

[1] Eileen B. Walsh v. SSC Westchester Operating Co. LLC, Case No. 20 CV 4505 (N.D. Ill.); Londa Claybon v. SSC Westchester Operation Co. LLC, Case No. 20 CV 4507.
[2] Thomas Nemeth v. Montefiore, et al., Case No. CV 21953475 (C.P. Cuyahoga Cty.); Marie Wimberly, et al. v. Montefiore, et al., Case No. CV 21 953915 (C.P. Cuyahoga Cty); Robyn Finkenthal Kulbarsh, et al. v. Montefiore, et al., Case No. CV 21 953958 (C.P. Cuyahoga Cty.); Randy Rosen v. Montefiore, CV 21 954152 (C.P. Cuyahoga Cty.).
[3] Gershman, Jacob, Nursing Homes Face Growing Number of Lawsuits from Covid-19 Fallout, The Wall Street Journal, (last visited April 27, 2022).
[4] COVID-19 Impact Analyzer, Lex Machina, (last visited April 27, 2022).
[5] Boone v. Services, LLC, No. 21-cv-00241 (E.D. Cal.).
[6] Lancione v. Mass General Brigham Inc., 21-cv-11686 (D. Mass).
[7] See, e.g. Terry Black’s Barbecue, LLC v. State Automobile Mut. Ins. Co., Case No. 20-cv-665, 2020 WL 6537230 (Nov. 5, 2020) (negligence claim against broker was unripe for adjudication, and, as such, broker was fraudulently joined as a defendant in business interruption coverage case).
[8] COVID-19 Update: Investor Related Class Actions, ISS Securities Class Actions Services, (last visited April 27, 2022).
[9] Monroe Cty. Employees’ Ret. Sys. v. Astrazeneca PLC, Case No. 21-cv-722 (S.D.N.Y.).
[10] In re Carnival Corp. Sec. Litig., 20-cv-22202 (S.D. Fla.).
[11] Marquez v. Bright Health Grp, Inc., 22-cv-00101 (E.D.N.Y.).
[12] Internet Crime Report 2020, Federal Bureau of Investigation, Internet Crime Complaint Center, (last visited April 27, 2022).