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Insurers’ COVID-19 Notepad: What You Need to Know Now - Week of July 4, 2022

Client Alert | 2 min read | 07.05.22

Courts Dismiss COVID-19 Business Interruption Claims

On July 5, 2022, the Court of Appeals of North Carolina reversed a trial court’s order granting a deli’s motion for partial summary judgment in connection with a COVID-19 business interruption claim. The court found that the provisions requiring direct physical loss or damage were unambiguous and that the deli’s alleged loss was not from physical harm to its property but rather from governmental orders. Order at 6. According to the appellate court, “Plaintiffs’ desired definition of ‘physical loss’ as a general ‘loss of use’ is not supported by our caselaw or the unambiguous language in the Policies.” Id. Instead, “only direct, accidental, physical loss or damage” is covered. Id. The case is North State Deli, LLC v. Cincinnati Insurance Co.

On June 24, 2022, the district court for the Southern District of New York granted Pacific Indemnity Company’s motion to dismiss a clothing boutique’s COVID-19 business interruption claim. Relying on the Second Circuit’s decision in Kim-Chee LLC v. Phila. Indem. Ins. Co. and the “unbroken line of trial court decisions” that “have ruled that the closure of businesses due to the suspected presence of the virus . . . do not qualify as direct physical loss or damage,” the court found that the boutique failed to allege a direct physical loss. Order at 10. The case is Kiton Corp. v. Pac. Indem. Co.

New Business Interruption Suits Against Insurers:

An aircraft designer sued North American Elite Insurance Company for declaratory judgment, breach of contract, and bad faith claim handling under Minnesota law in New York state court (Queens County). The company’s policy allegedly contained communicable disease coverage and time element coverage. Complaint ¶¶ 1–4, 22–23. The policyholder alleges that the employees who tested positive for the coronavirus were present on the property, which “is direct proof of the actual, not suspected presence of the Coronavirus.” Id. ¶¶ 32, 34.

Insights

Client Alert | 6 min read | 03.26.24

California Office of Health Care Affordability Notice Requirement for Material Change Transactions Closing on or After April 1, 2024

Starting next week, on April 1st, health care entities in California closing “material change transactions” will be required to notify California’s new Office of Health Care Affordability (“OHCA”) and potentially undergo an extensive review process prior to closing. The new review process will impact a broad range of providers, payers, delivery systems, and pharmacy benefit managers with either a current California footprint or a plan to expand into the California market. While health care service plans in California are already subject to an extensive transaction approval process by the Department of Managed Health Care, other health care entities in California have not been required to file notices of transactions historically, and so the notice requirement will have a significant impact on how health care entities need to structure and close deals in California, and the timing on which closing is permitted to occur....