Recently, a federal judge in Illinois ruled that where state suspension orders due to covid-19 in different states affected an insured, the insured was affected by separate events in each affected state. Dental Experts, LLC v. Massachusetts Bay Ins. Co.no. 20 C 5887, 2022 WL 2528104 (ND Ill. 7 July 2022).
Dental Experts LLC and other affiliated dental clinics in 10 states were forced to stop unnecessary surgeries under various state orders linked to covid-19.
On summary assessment, dentists claimed that 20 different executive orders in these 10 states amounted to 20 different events. In a competing summary motion, the insurer claimed that all executive orders were a single event according to the policy definition of event, which defines an event as “any loss or damage attributable to: a. An act, event, cause or series of similar, related acts, events or causes involving one or more persons; or b. an act, event, cause or series of similar, related acts, events or causes not involving any person. “
The U.S. District Court considered the executive orders to be the operational event, noting that state responses to the pandemic varied between states and localities, concluding that “it was the executive orders that forced dentists to close their offices, not the pandemic itself.”;
Since Illinois follows the “causal test” to determine the number of events, the court looked at analogous cases and also applied the “causal test” to determine that dentists actually suffered from multiple events. These cases considered that when each alleged loss derives from a “separate and intrusive human act”, each of these losses amounts to a separate event.
The court held that here the “separate and intrusive human act” was the group of executive orders issued separately by different state or local authorities where practitioners were forced to close, and dentists’ losses are thus qualified as multiple events. However, the Court also held that since “no reasonable fact-taker could interpret an executive order deriving from a previous order from the same authority – in other words, a subsequent executive order in the same jurisdiction that actually served as a renewal – as a separate occurrence” that it were 10 events, not 20. In other words, the insurer was responsible for an executive order that required closure for each jurisdiction in which Dental Experts operates.
This opinion is significant because it is the first decision related to covid-19 coverage that has determined that an individual insured’s losses may be due to more than one event because it was related to covid-19. Therefore, policyholders with multi-state operations should evaluate whether their insurance allows them to claim multiple events for their losses due to covid-19 to ensure that they seek full coverage under their insurance.