Jury awards $48.5M to Baylor College of Medicine for Covid-19 business-disruption claim


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A Texas jury has awarded the first jury verdict in a lawsuit seeking $48,529,961 in lost business income and insurance coverage for damages caused by the virus against Baylor College of Medicine in Houston for damages caused by the Covid-19.

A verdict form posted online Tuesday by the 295th Judicial District showed that 10 of the 12-member jury returned a verdict against Lloyd’s of London Syndicate, which sold Bayer a comprehensive commercial property policy. The jury awarded $42,855,000 for lost net profits, $3,365,661 for additional costs and $2,309,300 for research project costs.

Plaintiff’s attorney Robin O’Neill, a partner with the law firm Fogler, Brar, O’Neill Gray, said the Baylor case is different from the hundreds of other cases decided against policyholders so far. Baylor operates a hospital that has remained open throughout the outbreak and adopted a policy outside of normal virus isolation.

“I think Baylor is in a somewhat different position because we can confirm the presence of the virus on the property throughout coverage,” she said.

Robin O’Neill

While Bayer hasn’t shut down completely because of the pandemic, O’Neill said, it has had to curtail operations and pay additional costs. For example, the hospital had to invest in video equipment to implement a “telehealth program.” The college had to limit research services because human subjects could not 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 ruled that Ace American Insurance Co. and dismissed XL Insurance America as a defendant because their policy excluded coverage for damage caused by viruses.

“She was very intelligent in her decisions,” O’Neill said.

Baylor is seeking $59 million in business interruption, $7.1 million in additional costs and $2.3 million in damages to its research activities.

Very few, if any, business-interruption claims related to Covid have reached arbitration. According to a litigation tracker run by the University of Pennsylvania, hundreds of lawsuits against insurers have been dismissed in trial courts after it was determined that the virus could not have caused physical injury or damage covered by insurance policies. The tracker lists no court decisions for policyholders and only two court decisions in favor of the insurer.

Most appellate courts that have heard covid-business-interruption cases have ruled against coverage. State Supreme Courts in Massachusetts, Iowa, South Carolina and Wisconsin have ruled that SARS-CoV-2 cannot cause direct bodily harm or injury.

Exceptions were:

  • California’s 2nd Appellate District reversed a Los Angeles County Superior Court decision dismissing a business interruption lawsuit filed by Hotel Erwin.
  • The Louisiana 4th Circuit Court of Appeals found coverage owed by Oceania Grill.
  • The New York Appellate Division, First Department, ruled in favor of the New York Botanical Garden because the unusual policy language “includes communicable diseases.

O’Neil said she is confident her client will win if Lloyd’s Harris County ruling is appealed. Texas appeals courts have yet to rule on whether the virus can cause direct physical injury or harm, according to UPN Litigation Tracker.

“We feel good about our chances,” O’Neill said.


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