JPML To Consider Consolidation For COVID-19 Insurance Coverage Lawsuits

The U.S. Judicial Panel on Multidistrict Litigation (JPML) will hear oral arguments in late July, over whether to consolidate and centralize all COVID-19 insurance coverage lawsuits filed by businesses nationwide, who have been denied coverage for damages linked to the pandemic.

The panel is considering whether to consolidate for at least 16 individual and class action lawsuits filed against insurance carriers in recent months, each raising similar allegations that business interruption insurance coverage paid for have been routinely denied, regardless of the policy language or cause of the business losses during the COVID-19 outbreak, and subsequent restrictions imposted by state and local governments.

Several plaintiffs filed a motion to transfer the COVID-19 business loss lawsuits on April 20, asking the U.S. Judicial Panel on Multidistrict Litigation to centralize the claims before one judge in the Eastern District of Pennsylvania, to avoid contradictory rulings and schedules from different Courts and prevent duplicative discovery into common issues in the cases.

In subsequent filings, some plaintiffs have proposed the litigation be centralized in the U.S. District Court for the Northern District of Illinois or other venues, and some insurance carriers have filed oppositions to the establishment of consolidated proceedings at all.

In a notice of hearing session (PDF) issued on June 26, the JPML indicated that it will hear oral arguments on the matter on July 30, at the Thurgood Marshall Federal Judiciary Building in Washington, D.C. However, arguments will be presented through a videoconference or teleconference, due to the ongoing pandemic.

It is estimated that thousands of similar complains will likely be filed in the coming months, as more small businesses are pushed to the brink only to find their insurance companies are denying payments on policies they purchased. Some reports indicate as many as 140 such lawsuits have actually already been filed at the state and federal level.

Most of the lawsuits claim insurers have said they will not cover losses caused by viruses, and that they have provisions in their insurance contracts which state this. However, many businesses claim such causes only apply if there is loss due to an employee or customer illness on the property. However, in the current pandemic, numerous plaintiffs indicate that their business losses stem from government “stay-at-home” orders, which caused them to close temporarily. In addition, some plaintiffs say their insurance policies did not even contain a specific exclusion for viruses.

In complex product liability litigation, where a large number of claims are filed throughout the federal court system by individuals who suffered similar injuries as a result of the same or similar products or venues, it is common for the federal court system to centralize the litigation for pretrial proceedings. However, if settlements are not reached during discovery or following a series of early “bellwether” trials, each claim may later be remanded back to the U.S. District Court where it was originally filed to go before a jury.