Madonia & Associates, Ltd. Part of Pioneering COVID-related Insurance CaseShare this post
Is having Covid-19 bodily injury? If you catch it at work, can the workplace file an insurance claim to cover expenses? These are questions that were at the heart of this case. In February 2021, the U.S. District Court of Northern Illinois held that a commercial general liability “CGL” insurer has a duty to defend our client against claims brought by employees allegedly exposed to coronavirus while on the job, as well as for the failure to provide masks, sanitizer, and social distancing at the workplace. It is one of the first decisions in the country with respect to insurers’ obligations to their insureds for COVID-19 claims in the context of commercial general liability coverage.
As background, our client filed a lawsuit claiming Austin Mutual Insurance Co. wrongly refused to cover their costs defending themselves against a proposed class action alleging the companies failed to protect workers amid the COVID-19 pandemic. According to the complaint filed in federal district court, the client paid legal fees to defend this lawsuit, and was looking for reimbursement from the insurer. According to the complaint, the insurance company denied coverage because it did not believe the lawsuit declares bodily injury. In February 2021, U.S. District Judge Charles Kocoras ruled against the insurance company’s motion to dismiss in one of the first decisions in the country with respect to insurers’ obligations to their insureds for Covid-19 claims in commercial liability.
To begin, our client was sued for public nuisance and negligence based on its decision to remain open during the COVID-19 pandemic without enhanced health and safety standards. The underlying plaintiffs sought an injunction requiring the company to: (1) provide employees with adequate protective equipment; (2) preclude the reuse of face masks; (3) supply hand sanitizer; (4) require that customers wear face masks; (5) monitor employee COVID-19 infections; and (6) provide employees with accurate information about COVID-19.
The suit was tendered to the insurance company, but coverage was denied. The insurer contended that the underlying suit did not meet “damages because of bodily injury.” The company responded that but for the underlying plaintiffs contracting COVID-19 (a bodily injury) it would not have had to expend money as “damages” to comply with the mandatory injunction in the underlying suit. Further, exposure to the virus constituted “bodily injury” and money spent to comply with the mandatory injunction would constitute “damages” “because of” the exposure to the virus.
On March 10, 2022, we notified the federal district court that we have resolved this coverage dispute. Though the terms of the settlement agreement are confidential, the parties anticipate dismissal of the action as noted in their joint notice of settlement.