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With hundreds of cases now pending nationwide involving insurance coverage claims for business interruptions stemming from the COVID-19 pandemic, a federal panel has been considering the prospect of consolidating the litigation into one multidistrict litigation (MDL) to promote their efficient resolution. On August 12, 2020, the panel issued a decision ruling out a single nationwide MDL, but leaving open the possibility of smaller, insurer-specific MDLs.

In “COVID-19 Business Interruption Litigation May Be Consolidated for a Select Few,” David F. Klein examines this decision and its implications more closely.

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As the COVID-19 public health crisis continues to surge globally, insurers have closed ranks behind the position that commercial property policies are “not designed” to cover pandemic-related losses, including business interruption. But the various justifications they advance for this assertion often collapse under scrutiny of the relevant policy language. Insurers have taken an early stand on the threshold issue of whether the actual or threatened presence of coronavirus and/or COVID-19 can even trigger coverage as a matter of law, telling both their insureds and the courts that the virus’s presence does not constitute “physical loss of or damage to property,” the event typically required for property policies to respond.

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Back-to-office-costs-300x200As businesses around the world continue to assess when and how to reopen their offices, the marketplace has become saturated with innovative “back to office” products and services. Whether a business chooses to invest in the latest body temperature scanner (such as Kogniz, a thermal security platform that uses AI to track fevers from a distance), room occupancy monitor (such as Density, which measures the depth and body patterns of people walking through doors to ensure social distancing is enforced), or UV light sanitizing stations and self-sanitizing keyboards (such as the Cubby and Defender), the decision may be influenced, in part, by the availability of insurance coverage for the additional investment. At a more basic level, businesses may provide workers with personal protective equipment (PPE), such as masks, gloves and hand sanitizer, or make changes to their workspaces such as social distancing signage.

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GettyImages-470318916-liu-disgorgement-300x200Late in June, the U.S. Supreme Court issued a decision in Liu v. SEC, a closely watched case in which the Court in an 8-1 opinion curtailed the authority of the Securities and Exchange Commission (SEC) to seek disgorgement of profits from private parties in judicial enforcement proceedings. The Court articulated restrictions on the SEC’s disgorgement power, including (1) limiting disgorgement amounts to the net profits from wrongdoing, (2) limiting the SEC’s ability to seek disgorgement of profits on a joint and several basis, and (3) directing the SEC to return disgorged monies to aggrieved investors rather than depositing them in the U.S. Treasury. Although it does not address insurance issues directly, the Court’s analysis of the disgorgement remedy is bound to revive discussion of the issue of insurability of losses suffered as a result of settlements or judgments characterized as disgorgement.

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685386640-appraisal-300x200Even if an insurance company attempts to deny its coverage obligations, there are still processes that a policyholder can explore, short of litigation, that could resolve a coverage dispute.  Appraisal is an alternative dispute resolution process designed to efficiently resolve measurement disputes between policyholders and their insurers. Appraisal can streamline a coverage lawsuit and narrow the disputed issues—it may even limit the need for expert reports and depositions. There is a strong public policy favoring appraisals throughout the country, not only because they may provide a less expensive alternative to litigation, but also because appraisal rulings are enforceable and strictly applied in court. Some states even require that form standard insurance policies include an appraisal clause requiring either party to, on demand, submit a dispute over the amount of a loss to an appraisal panel. (See Virginia Code § 38.2-2105; Cal. Ins. Code § 2071; McKinney’s Ins. Law§ 3404; N.J.S.A. § 17:36-5.20.) That panel typically consists of two appraisers, who select an umpire.

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GettyImages-1224787949-pitfalls-scaled-e1593726952521-300x263Almost four months have passed since the World Health Organization declared COVID‑19 a global pandemic on March 11, 2020. Continued social distancing and other precautionary measures have driven many organizations to expand work-from-home protocols for the foreseeable future or even permanently—in turn prompting many organizations to review their cyber insurance policies in addition to the rest of their insurance portfolios. While cyber risk policies are not widely standardized, there are several common traps that are found in many cyber risk policies, and early awareness of them can be the difference between a covered claim and a hard-fought coverage battle. While these traps are not specific to COVID-19 concerns, they may become increasingly important as organizational cyber exposures increase. Three of the more salient pitfalls are discussed in this post.

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GettyImages-471597853-polcy-time-bombs-300x216Insurance policies are legal documents. In the event of a dispute, their scope and meaning will be submitted to a court or arbitrator for interpretation. Most brokers are not attorneys. Most risk managers are not attorneys. And few companies seek counsel to review policies before a claim arises. But underwriters, assisted by their counsel, increasingly are including litigation-focused provisions in their policies. Although these provisions often appear innocuous to readers unfamiliar with insurance litigation issues, they are like time bombs designed to explode in the event of a contested, litigated claim.

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iStock_86660363_MEDIUM-gavel-money-300x200As coverage counsel, we witness firsthand the precarious positions policyholders are often left in due to the actions (or inactions) of their insurance carriers. A prime example of such a catch-22 scenario is when an insurer refuses to consent to a settlement offer while defending under a reservation of rights.

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In “Potential Insurance Coverage for Looted Cannabis Dispensaries in California and Beyond,” our colleague Benjamin D. Tievsky explains how affected businesses can look to their commercial property policies for potential property damage and business interruption coverage, and discusses coverage issues insurers may attempt to raise.

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id585177932-construction-300x300Times of crisis can bring out the best in people. Unfortunately, times like this can also be an opportunity for exploitation of inexpensive, and potentially forced, labor. As America reopens its economy, it is likely that we will begin to see a surge in many industries. The resulting demand for labor, coupled with unprecedented unemployment and related desperation not only in America, but worldwide, could lead unscrupulous individuals and companies to exploit American and foreign workers. We saw this with previous disasters, such as Hurricane Katrina, where foreign laborers were exploited in the rebuilding process with false promises of citizenship. Now, to be clear, exploitation occurs even during times of economic prosperity; however, it can be even more pronounced and egregious when people must deal with uncertainties and hardships never before experienced in their lifetimes.

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