A Texas jury has awarded Baylor College of Medicine in Houston $48,529,961 for damages caused by COVID-19. This is believed to be the first jury verdict in a lawsuit seeking insurance coverage for lost business income and other damages caused by the virus.
The verdict form posted online by Harris County’s 295th Judicial District on Tuesday showed that 10 members of a 12-man jury voted against the Lloyd’s of London syndicate, which sold an all-risk commercial property policy to Baylor. It shows that the judgment has been made. The jury awarded him $42,855,000 for lost net income, $3,365,661 for additional costs, and $2,309,300 for research project costs.
Plaintiffs attorney Robin O’Neil, a partner of Fogler, Brar, O’Neil Gray Law Firm, said Baylor’s lawsuit is similar to many of the hundreds of other lawsuits that have been decided against policyholders to date. Baylor said otherwise. Baylor, who operates a hospital that remained open during the pandemic, purchased a policy without the usual virus exclusions.
“Baylor was able to confirm the presence of the virus on the premises throughout our coverage period, so I think it was in a somewhat unique location,” she said.
While Baylor wasn’t completely closed because of the pandemic, O’Neill said it had to limit operations, which resulted in extra costs. I had to invest in video equipment. Universities also had to limit research services as human subjects could no longer participate. Clinics, classrooms and laboratories were forced to operate at reduced capacity.
Baylor named four insurers in the original complaint filed in September 2020, but Judge Donna Roth said policies issued by Ace American Insurance Co. and XL Insurance America did not include claims caused by the virus. dismissed as a defendant because it contained a contamination exclusion that did not permit compensation for damages suffered.
“She was very discerning in rulings,” O’Neill said.
She said Baylor sought $59 million in business interruption costs, $7.1 million in additional costs and $2.3 million in damages to research functions.
Few, if any, COVID-related business interruption claims have reached juries. Hundreds of lawsuits against insurance companies have been dismissed at first instance, according to a lawsuit tracker maintained by the University of Pennsylvania, ruling that the virus is unlikely to cause physical loss or damage covered by insurance policies. The tracker lists no trial rulings in favor of policyholders and only two trial rulings in favor of insurers.
Most appeals courts that have heard coronavirus business interruption cases have also ruled against the reports. The Supreme Courts of Massachusetts, Iowa, South Carolina, and Wisconsin have ruled that SARS-CoV-2 cannot cause direct physical loss or damage.
There were notable exceptions:
- The California Second Court of Appeals has overturned the Los Angeles County Superior Court’s ruling dismissing the business interruption lawsuit filed by Hotel Erwin.
- The Louisiana Fourth Court of Appeals held that the coverage owed Oceana Grill.
- The First Division of the New York Division of Appeals ruled in favor of the New York Botanical Gardens for its unusual policy language, including its coverage of “epidemic.”
O’Neill said he is confident his client will win if Lloyds appeals the Harris County judgment. No judgment has yet been made as to whether damages can be caused.
“We are happy with our chances,” said O’Neill.
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