Claims Amongst COVID-19


On or about March 16, 2020, what has been identified as the first COVID-19 lawsuit was filed – a declaratory judgment action filed on behalf of the owners of Oceana Grill in New Orleans as against Lloyd’s of London and Louisiana Governor John Edwards. The suit alleges that the ‘all risk’ insurance policy Oceana purchased from Lloyd’s must cover the restaurant’s mandated reduction in hours of operation and the resulting business loss. Per Oceana (represented by Gauther Murphy & Houghtaling, LLC of New Orleans), the ‘all risk’ policy excluded losses resulting from pathogens only to the extent they were employed maliciously or as an act of terror, further pleading its case as follows:

  1. A declaratory judgment determining that the coverage provided under the policy will prevent the plaintiffs from being left without vital coverage acquired to ensure the survival of their business should operations cease due to a global pandemic virus and civil authorities’ response.
  2. While some rogue media outlets have called the 2019-2020 Coronavirus an exaggerated mass hysteria that will unlikely create significant physical damage, the scientific and those personally affected by the virus, recognize the Coronavirus as a cause of real physical loss and damage.
  1. The virus is physically impacting public and private property, and physical spaces in cities around the world. Any effort by Lloyd’s to deny the reality that the virus causes physical damage and loss would constitute a false and potentially fraudulent misrepresentation that could endanger policyholders and the public.


Citing Governor Edwards’ order that limited gatherings to 250 people (and excepting only places “’like’ airports, medical facilities, shopping centers or malls, office buildings, factories or manufacturing facilities, or grocer or department stores”), Oceana alleges that limiting its business to 50 percent capacity (250) and limiting its hours of operation inescapably will result in significant losses. In terms of relief, Oceana seeks clarification of the Governor’s order and of its policy coverage:

  1. Plaintiffs seek a Declaratory Judgment on whether the Governor’s March 13, 2020 Civil Authority Order applies to restaurants whose capacity exceeds 250 people.
  2. Plaintiffs also seek a Declaratory Judgment to determine whether the Governor ‘s March 13, 2020 Order and the Mayor’s March 15, 2020 restrictions trigger the civil authority provision of the policy issued to the plaintiff.
  3. Plaintiffs ask the Court to affirm that because the policy provided by Lloyd’s does not contain an exclusion for a viral pandemic,  the policy provides coverage to plaintiffs for any future civil authority shutdowns of restaurants in the  New   Orleans area due to physical loss from Coronavirus contamination and that the policy provides business income coverage in the event that the coronavirus has contaminated the insured premises.


Shortly after the Oceana claim, six Chicago hospitality companies brought suit against their insurer Society Insurance arising from denials of coverage on pandemic related business loss claims. Then again, shortly thereafter, Thomas Keller, owner of French Laundry filed suit against his insurer based upon a similar denial. While it appears that almost six hundred suits, claims, and motions are pending since COVID-19 arrived in this country, the vast majority are criminal matters. A few relate to election laws, the timing of legislative acts and sessions, and other administrative complications arising from the pandemic. Several suits have been filed by persons detained by ICE, seeking release. While the system does not today reflect them, arguably workers’ compensation claims will grow as well, as workers in essential fields experience injuries arising out of and in the course of their mandated duties. And the Federal Pandemic Unemployment Act as of April 3, 2020, was identifying the highest number of claims arising not surprisingly from the travel, hospitality, and retail sectors.

As we consider the upcoming rabbit hole of insurance claims and litigation, it bears noting the types of suits filed after the not-too-distant Ebola breakout in this country. Of note, the reported suits arose largely from quarantines (including a class action) that were alleged to be unnecessary and unlawful in retrospect, discrimination based upon fears of spread that did not materialize, and deliberate intent, based upon an employer’s exposing workers to a known hazard without proper and necessary precautions. We would expect suits to arise from failures to warn, the timing of warnings, the scope of deprivations, the scarcity of resources.

As COVID has continued in this country, insurers have taken proactive stances as well, including by example one providing a dedicated link for claims related to business generally and to interruptions specifically. Other insurers have provided broad-based information, including updates for insureds holding travel insurance or contemplating an early departure from the workplace. Yet others are working to advise the public of insurable risks and expected claims. And some have deferred premium payments through May 15, 2020. West Virginia’s Office of the Insurance Commissioner issued guidance on business interruption claims, to help inform and prepare the industry, along with a link to the Small Business Development Center’s Business Survival Tips.  Business and industry have re-tooled, reconsidered, worked together to change the outcome – to repurpose assembly lines to make ventilators – it’s the new world in which we find ourselves.

Yet despite these efforts, injury and loss have resulted and will continue to result, and the next few years will demonstrate the scope and nature of the claims. For these reasons, as the pandemic evolves, we at Shuman McCuskey & Slicer are monitoring the evolving law (FFCRA, CARES Act) and the evolving suits and claims. We stand ready to provide you information and advice, and to defend you or your insureds. We are here to help you.