Several recent decisions at the county and federal trial court levels have thrust Ohio into the spotlight for business interruption lawsuits. According to legal sources monitoring the hundreds of business interruption lawsuits working through the legal process, 83% of the trial court decisions have been in favor of insurance carriers.
However, in what was likely the highest profile ruling in a U.S. federal court, Judge Polster of the U.S. Northern District Court, ruled in Henderson Road Restaurant Systems, Inc. v. Zurich, that coverage for business interruption losses related to the COVID-19 pandemic applies. This ruling comes from the same court but a different judge that ruled the exact opposite in the same month. If you are confused, so are we. That is why OIA is here for you – to monitor and sort issues like this out.
In addition to the inconsistent nature of rulings from this court, another judge also may have created the first opportunity to have a case substantively adjudicated before a court of last resort, the Ohio Supreme Court, which will further magnify the scrutiny of our state’s rulings.
The case most interesting to state interpretation of the business interruption coverage involves a procedural move to expedite the legal process to get ruling on the substance of the coverage issue. Specifically, in the federal district case, Neuro-Communications Services v. The Cincinnati Insurance Company, Judge Pearson asked the Ohio Supreme Court to certify the question of interpreting whether “direct physical loss or damage” language in the business interruption coverage applies according to the facts and law.
Judge Pearson issued the order certifying the question listed below: “Does the general presence in the community, or on surfaces at a premises, of the novel coronavirus known as SARS-CoV-2, constitute direct physical loss or damage to property; or does the presence on a premises of a person infected with COVID-19 constitute direct physical loss or damage to property at the premises?”
The Ohio Supreme Court has discretionary jurisdiction as to whether it accepts certified questions from other jurisdictions. This may occur when requested by federal courts throughout the country, or by other state supreme courts. If the Ohio Supreme Court grants Judge Pearson’s request and certifies the question, it will likely be the first time a state court of last resort answers the substantive legal question on business interruption coverage for COVID and a pandemic.
OIA is considering whether to weigh in through an amicus brief (friend of the court) to share our legal arguments on the substantive coverage questions. At this point, there are no opportunities in appellate courts to weigh in on the substance of the argument, instead the opportunities are procedural in nature. However, we know the opportunity will arise in time.
The challenging question for OIA’s membership is whether we should weigh in on an issue where there is a clear divide in policyholder and carrier interpretation of the policy language. While many agents have had the difficult conversation with their clients about the lack of coverage based on their carriers’ policy language interpretations, filing an amicus brief would be a very public statement on behalf of the agent community as to whether we collectively believe coverage applies to the facts.
Again, there are hundreds of lawsuits pending in state and federal courts across the country. OIA and Big “I” national are monitoring the issue and will report to the membership anytime a significant decision is announced so you can keep your clients and team informed.
In high profile disputes like this one, the litigation process is going to be similar to a rollercoaster. There will be ups and downs and inconsistent rulings from the various levels and jurisdictions across the country. This process will further define the judges and judicial forums as activists versus strict constructionists.
Please share your thoughts with Jeff Smith, JD, CIC, CAE, OIA’s Executive Director, at Jeff@ohioinsuranceagents.com on whether you believe OIA should publicly weigh in on the issue.