COVID-19 Litigation Update

As we have recently reported, the clear trend in the United States Courts is towards finding that the typical Business Interruption (BI) coverages in U.S. commercial property policies will not be triggered by the COVID-19 pandemic.  Thus far, the majority of the decisions on this coverage issue have gone in favor of the insurance industry.

Interestingly, on Tuesday, September 15, 2020, the High Court of Justice for the Business and Property Courts in Great Britain issued a ruling in a “test case” relating to 370,000 British BI claims.  In a lengthy opinion authored by Lord Justice Flaux (pictured below in the traditional attire of the Queen’s Bench), the High Court found that the policy forms at issue extended BI coverage for losses related to the COVID-19 pandemic.

Fortunately, this ruling from across the pond is unlikely to have much impact on the ongoing litigation of this dispute in the U.S.  That is because the policy forms that the industry presented to the High Court in the “test case” included a coverage for losses related to the spread of infectious disease.  Lord Flaux found that most – though not all – of the policy forms would provide coverage.  Because it was a “test case” there was not any specific finding of coverage for any individual insured.  Rather, the decision provides the manner in which insureds should present their claims depending on the forms or combination of forms in each policy.

Perhaps the most interesting aspect of this ruling is the contrast in how the U.S. and U.K. markets reacted to the early 2010’s SARS outbreak.  In the more risk-averse U.S. market, the industry response to SARS was to quickly adopt virus exclusions.  In the handful of rulings on COVID-19-related BI coverage that we have seen to date, it appears that the courts in the U.S. will enforce that exclusion.

In the U.K., the market responded to SARS by offering infectious disease coverage.  The insurers offering that coverage have obviously had a decade to collect the premiums that go with it.  However, according to the ruling of the High Court, it appears that those insurers will now be required to pay the claims of a broad cross-section of British businesses.  Only time will tell which market had the better strategy for dealing with coverage issues associated with the current global pandemic.

As always, if you would like to discuss the issues in this newsletter or any other matter, please feel free to contact Lether Law Group at any time.

The above article is an opinion based on various resources such as industry knowledge and is not to be construed as legal advice or to be used as such. If you require legal advice or would like to inquire further about the information contained in this article, please feel free to contact our office directly.

Insurers Face Increased Pressure to Expedite Wildfire Claims Due to Notice from Insurance Commissioner


While we all continue to deal with the effects and impacts of the COVID-19 pandemic, the western part of our country is now experiencing almost unprecedented wildfires. Over the last two weeks, the west coast has been devastated by wildfires with more than 4.7 million acres burned. Given the widespread devastation losses will likely be in the billions. The large scope of damages will have a drastic impact on insurers both from a potential loss perspective and from substantially increased demand on insurers to adjust claims within statutory time limits for each state.

The anticipated demands on insurers to quickly and efficiently process wildfire claims is exacerbated by a recent emergency notice from the California Insurance Commissioner. On August 26, 2020, the California Insurance Commissioner issued an emergency notice urging insurers to expedite handling of wildfire loss claims and to provide greater flexibility in the handling of claims including the following:

  • Provide a minimum four-month advance payment of Loss of Use, Fair Rental Value, or Additional Living Expense.
  • Allow a minimum 60-day billing grace period to allow for any lost or destroyed renewal notices.
  • Advance payment of at least 35% of limits for personal property without the need to complete an inventory,
  • Accept an inventory on non-company specific forms as long as it contains substantially the same information as the company form.
  • Expedite payment of vehicle damage claims covered under comprehensive loss coverage.
  • Cooperate with consolidated removal efforts coordinated through city, country, and state agencies unless the insurer can provide debris removal more rapidly.
Given the scope of the known and anticipated losses in California, this emergency notice will put additional pressure on the already strained resources that insurers are faced with in light of the COVID-19 pandemic. While not a requirement, this emergency notice may also have the effect of increasing the likelihood of inflated and/or fraudulent claims. The notice provides almost identically to legislation currently on the California Governor’s desk. SB-872 (residential property insurance: state of emergency), which is intended to go into effect in January 2021 for all fire loss claims where a state of emergency is declared. This proposed legislation also raises several issues that insurers need to be aware of. Importantly, with respect to land value, current California law provides that policy holders have the right to buy or rebuild a total loss at a different location. Because insurers do not insure land value, some insurers have read this law to allow for the deduction of land value. This new law expressly prohibits that practice.

It is likely that Washington and Oregon will issue similar notices in the near future in light of the similar scope of losses in those states. Regardless, we anticipate another substantial round of Business Interruption claims as a result of the wildfires. In light of the fact that hundreds of people have been forced into shelters due to evacuations, there also is likely to be an increase in COVID-19 related claims. More importantly, the present impacts of the COVID-19 pandemic will necessarily impact the adjustment and resolution of wildfire claims as resources and necessary activities are all still curtailed in the current environment.

As a result of the large number of losses and requests to expedite adjustment, the threat of inflated and/or fraudulent claims is increased. Therefore, it is important that insurers proactively investigate, adjust, and seek consultation from appropriate professionals as early as possible in the claims process. This includes retaining and seeking opinions from construction/remediation professionals, cause and origin professionals, financial/accounting experts, and, when necessary, legal advice from coverage counsel whenever concerns arise.

Lether Law Group has been handling large first-party property losses for over 32 years. This includes large fire loss and wildfire claims. If you would like to discuss these recent developments or any other matters, please feel free to contact us at any time.

The above article is an opinion based on various resources such as industry knowledge and is not to be construed as legal advice or to be used as such. If you require legal advice or would like to inquire further about the information contained in this article, please feel free to contact our office directly.

Remembering Victims and Survivors

On the anniversary of September 11, 2001, we at Lether Law Group stand united in remembering the victims and survivors of the attacks on New York and Washington, D.C. In light of those events, and the challenges still present today, we especially give thanks for our first responders and the heroes who so bravely honored, and continue to honor, our country.

JPML Denies Move to Create MDL for COVID-19 Business Interruption Lawsuits

Earlier today, the Panel for Multi-District Litigation issued an Order denying consolidation of hundreds business interruption coverage lawsuits related to COVID-19.

The Panel held that the allegedly common issues supporting consolidation, “share only a superficial commonality.”  The Panel further held that there would be little potential for common discovery and that because each case will involve, “different coverages, conditions, exclusions, and policy provisions purchased by different businesses in different industries located in different states,” the differences in analyzing coverage will overwhelm any common issues.

The Panel held that consolidation would present serious managerial and efficiency concerns that make consolidation inappropriate for these claims.

COVID-19 Related Business Interruption in District Courts

As a result of this ruling, nearly all of the COVID-19 related business interruption lawsuits filed through the United States will remain in the District Courts where each case originated.

The exception may be for a limited number of insurers.  The Panel has asked for additional briefing as to whether insurer-specific MDL’s might be appropriate for Lloyd’s, Cincinnati Ins. Co., the Hartford insurers, and Society Insurance.

Lether Law Group represented The Dentists Insurance Company in opposing MDL treatment for these matters.  We are pleased that we were able to obtain this result.  If you have any questions or if we can be of assistance on any COVID-19 related matters, including class actions, please feel free to contact us at any time.

Oregon Supreme Court Strikes Down $500,000 Non-Economic Damages Cap for Personal Injury Claims as Unconstitutional

On July 9, 2020, the Oregon Supreme Court issued its Opinion in Busch v. McInnis Waste Sys., Inc., Case No. SC S066098. Five of the seven justices representing the majority held that the $500,000 cap on non-economic damages for personal injury claims was unconstitutional under the Remedy Clause of Article I, Section 10 of the Oregon Constitution. This cap on damages was enacted in its current form in 1987 and is found at ORS 31.710(1). The statute provides:
Except for claims subject to ORS 30.260 to 30.300 [Actions against Public Entities] and ORS chapter 656 [Worker’s Compensation], in any civil action seeking damages arising out of bodily injury, including emotional injury or distress, death or property damage of any one person including claims for loss of care, comfort, companionship and society and loss of consortium, the amount awarded for non-economic damages shall not exceed $500,000.

In Busch, the plaintiff filed suit to seek personal injury damages against a private garbage company after he was run over by a garbage truck while a pedestrian in a crosswalk in downtown Portland. The plaintiff eventually underwent an amputation above-the-knee due to his injuries. Liability was admitted prior to trial. The jury awarded the plaintiff $10,500,000 in non-economic damages. However, the trial court reduced the non-economic damages awarded by the jury to $500,000 due to the application of ORS 31.710(1). The Court of Appeals reversed and review was accepted by the Supreme Court.

The Court’s decision in Busch follows a long line of cases addressing the constitutionality of statutory damages caps. These challenges are based on the Remedy Clause, which provides “every man shall have remedy by due course of law for injury done him in his person, property, or reputation.” In Busch, the Court confirmed that the new framework for analyzing the constitutional issues raised by all statutory damages caps was set forth in Horton v. OHSU, 359 Or 168 (2016). This new framework looks at the purpose and mechanics of the statutory scheme including the damages cap and whether a substantial remedy remained in general and as applied to the plaintiff. In Horton, the Court upheld the damages cap set forth in the Oregon Tort Claims Act, which applies to civil actions against public entities (and their employees). The Busch court used the analytical framework in Horton to distinguish the cases and strike down the damages cap proscribed in ORS 31.710(1) as applied to personal injury claims. The primary distinguishing point between the two caps is that the Oregon Tort Claims Act provided tort remedies against the State which did not exist before the Act due to sovereign immunity.

With the addition of the Busch decision, there is now more certainty regarding the application of statutory damages caps in Oregon. This is especially true in straight-forward personal injury claims involving private parties. However, because there is no bright-line rule, there remains the potential for uncertainty in other contexts.

Based on this new decision, we anticipate a significant increase in claim activity and exposures in Oregon. Lether Law Group has a number of highly experienced attorneys licensed to practice in Oregon courts. This includes shareholders Tom Lether, Eric Neal and Westin McLean. If you have any questions regarding the application of Oregon law on pending claims in that jurisdiction, please feel free to contact our offices.

Washington Insurance Commissioner Releases New Guidance to Businesses in Light of Recent Events

On June 3, 2020, Washington Insurance Commissioner Mike Kriedler advised Washington State business owners to contact their insurance providers as soon as possible if they have experienced loss or damage in association with recent occurrences of looting and vandalism taking place throughout the state.  The following is a link to the full announcement:

The announcement included the following statements:
  • Damage to commercial property/business caused by theft, vandalism, and/or fire should be covered under a commercial property policy unless that type of loss is specifically excluded;
  • Coverage for damage to plate glass windows is dependent upon the individual policy language;
  • Business that have been temporarily closed because of the COVID-19 pandemic are not considered vacant under the terms of an insurance policy; and
  • A “war and military action” exclusion should not exclude damage caused during a protest.
 In addition, the Insurance Commissioner advised business owners to take the following immediate steps if they plan on filing a claim: 1) contact their insurance company; and 2) consider hiring professional help with debris clean up and to secure their property to protect against further damage.
This announcement is not surprising given recent events and widespread resulting property damage.However, this advisement and increase in civil disturbance claims raise numerous coverage issues.These include the potential application of coverage exclusions including the vacancy exclusion, mitigation and duty to protect from further loss requirements, and valuation issues.
In addition, the steps necessary for an insured to properly mitigate damages and protect insured property from further loss is also fact dependent and will require a careful examination of the steps taken by an insured.Whether, and to what extent, any such mitigation efforts are covered by a policy will depend on the individual policy.The potential for coverage for any such steps should be discussed with an insured early in the claim handling process.

Finally, in light of the potentially severe impacts of the COVID-19 pandemic on business throughout the state and country, we expect more complicated valuation disputes.The risk of inflated claims may also increase.

Whether property damage by theft, vandalism, or fire is covered will ultimately be dependent upon the terms and conditions of the actual policy and the specific facts presented in any claim.As result, it is important that insurers proactively and thoroughly investigate each claim based on its unique facts.It will also be necessary to thoroughly and timely respond to these claims in order to avoid extracontractual exposures.

These are just a few of the potential coverage issues raised by the Insurance Commissioner’s announcement and the damage caused during by the recent civil disturbance claims.

Lether Law Group has been handling large first-party property losses for over 32 years.This includes earthquake claims, storm and hurricane losses, wildfire claims, and even a number of claims involving civil disturbances.If you would like to discuss these recent developments or any other matters, please feel free to contact us at any time.