A federal district court in New York on Monday dismissed COVID-19 business interruption litigation filed by a New York healthcare system against American International Group Inc. and Allianz SE units, stating that the losses were not caused by direct physical loss or damage under the coverage.
AIG unit Lexington Insurance Co. and the Interstate Fire & Casualty Co. Allianz unit. had provided all-risk coverage to New Hyde Park-based Northwell Health Inc., with a $ 1.25 billion policy limit in according to the complaint in Northwell Health, Inc. against Lexington Insurance Co. and Interstate Fire & Casualty Co.
Lexington provided 90% of the coverage and Interstate 1
Northwell, which stopped offering outpatient services and performing elective procedures at the beginning of the pandemic, sought the loss of business interruptions from insurers, which they denied.
The health care system sued insurers before the U.S. District Court in New York in February, accusing it of violating politics and the union in good faith and fair trade.
Judge Jed S Rakoff's judgment stated that Northwell "has identified a litany of possible provisions approving compensation for its COVID-19 related costs and losses. However, Northwell's argument for coverage under each of those provisions is not convincing. "
The health service failed to claim breach of contract both because the coverage" requires that the alleged cost or loss be caused by direct physical loss or damage. and because Northwell does not adequately invoke further, independent coverage requirements under these provisions, ”the decision was mentioned when it granted the insurers a summary judgment dismissing the case.
An Allianz lawyer and AIG had no comment while Northwell lawyers did not respond to requests for comment.