A panel of federal judges will hear oral arguments this week during a video-conference hearing, to determine whether all COVID-19 insurance coverage lawsuits filed by small businesses nationwide should be consolidated before one U.S. District Judge for coordinated pretrial proceedings.
The same pandemic at the heart of the lawsuits has led to the U.S. Judicial Panel on Multidistrict Litigation (JPML) announcing in a supplemental notice (PDF) that this hearing session will be held through the Zoom video meeting app on Thursday, July 30.
The panel is considering whether to consolidate at least 16 individual and class action lawsuits filed against insurance carriers in recent months, each raising similar allegations that business interruption insurance claims have been routinely denied, regardless of the policy language or cause of the business losses during the COVID-19 outbreak.
Several plaintiffs filed a motion to transfer the COVID-19 business loss lawsuits on April 20, asking the panel 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, indicating that all of the claims should not be centralized since different facts and policy language are involved in the claims.
It is estimated thousands of similar complaints 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.