Case Against Insurer for Failing to Pay Business Interruptions Policy Removed to Federal Court

The case brought by Inspira Health Network against American Guarantee and Liability Insurance Company, originally filed in the Superior Court of New Jersey Law Division, Gloucester County, was removed to the District of New Jersey on Wednesday. The case alleges failure to pay under contractual provisions of the business interruption policy due to conditions caused by the COVID-19 pandemic.

Inspira Health Network maintained a business interruption insurance policy with American Guarantee and Liability Insurance Company, according to the filing. Reportedly, the policy, drafted for a medical practice, specifically contained a provision providing coverage for losses caused by communicable diseases, as well as separate provisions that provided coverage for physical loss of access and use of the facility. The complaint noted that the provision for losses caused by communicable disease specifically included losses caused by governmental orders, shutdowns, and slowdowns so long as the incident was greater than 24 hours. The policy then noted the instigation of governmental decrees suspending the elective procedures that are the main business of the Inspira Health Network and the use of its facilities. These orders included actual suspension of activities for a period exceeding the 24 hour threshold, as well as later regulations that required a slow down in the number of procedures performed due to spacing and cleaning requirements.

While noting that there have been previous case law decisions regarding the physical loss of access coverage in the policy, the complaint specifically stated that the coverage for losses caused by communicable diseases was specifically implemented due to the client being a medical facility and provider and this clause did not contain limitations requiring physical loss of furnishings.

The plaintiff sued for counts including declaratory judgment regarding the coverage. The plaintiff seeks enforcement of the insurance contracts written provisions. The plaintiff is represented by Archer & Greiner. The defendants are represented by Ford Marrin Esposito Witmeyer & Gleser.