Ohio Supreme Court Accepts Business Interruption Legal Question

The Ohio Supreme Court granted a certified question from the U.S. Northern District of Ohio Court on whether the COVID-19 virus constitutes direct physical loss and requires a commercial insurance policy to cover business interruption losses. This is the first case of the approximately 1,500 filed in the U.S. that we are aware of to make it before a court of last resort.

Specifically, the Ohio Supreme Court granted certification of the legal question: “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-l9 constitute direct physical loss or damage to property at that premises?”

The four conservative justices certified the question to hear the case. The significance of this is that it likely means that the justices who have a precedent for interpreting the law based upon the strict reading of the contract would likely be those who are deciding this case. The three newer justices who have a more expansive judicial philosophy on how they interpret the law and the language in a contract were on the dissenting side of the decision.

Given Ohio’s conservative judicial slant, there have been several surprising decisions in favor of the plaintiffs/insured in Ohio state and federal courts. According to the “University of Pennsylvania’s Carey Law School tracking of BI lawsuits across the country, it shows that Ohio courts have ruled in favor of policyholders in 12 out of 22 cases.” This represents a 54% rate of success at the state and federal trial court level in our state whereas plaintiffs/insureds have only been successful in 20% of the cases across the country.

While it is difficult to read into what the decision will ultimately be, it is an interesting observation that the four conservatives voted to accept this question and fast track the deliberation so this specific legal question directly to the Supreme Court. This is a rare and unusual move for the Ohio Supreme Court. The petitioners now have 40 days to file their merit brief.

The OIA chose not to participate in amicus filing in this case. When we surveyed our advocacy committee and membership the overwhelming majority recommended that we do not participate – the primary concern being the unique position that it puts us in between our clients and the insurance companies. While we have decided to not make a formal filing, we will stay very close to the litigation and keep you apprised of all filings and activities in this case.

A ruling is likely to be issued before year end. We expect this ruling to have a significant impact on the precedent of state level cases filed in Ohio.

Please direct any questions or concerns to Jeff Smith at jeff@ohioinsuranceagents.com.

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