Northwell Health in New York is suing its property insurers for breach of contract due to their refusal to pay for business interruption losses and decontamination costs arising from the coronavirus pandemic.
Northwell said it is covered for these losses under an "all risk" policy through property insurers Lexington in Boston and Interstate in Chicago.
The defendants have refused to pay, according to the lawsuit filed on February 8 in the U.S. District Court in the Southern District of New York.
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While Northwell is leaving the amount to be awarded determined at trial, it said it provided documentation to the insurers of hundreds of millions of dollars of covered costs and losses.
The policies provide a total of $1.25 billion in coverage, with Lexington covering 90% and Interstate covering 10% on a proportionate-share basis, according to the lawsuit.
Losses suffered include the reduction of revenue for procedures deemed elective and the suspension of ambulatory physician practices, all due to COVID-19. Northwell has also paid to clean and disinfect its premises.
The insurers' denial letter of October 30, 2020 ignores that Northwell incurred costs and losses as a result of direct physical loss or damage to its property due to the pandemic, Northwell said.
The letter only addresses a pollution or contamination exclusion, which insurers contend excludes losses resulting from viruses, the lawsuit said.
In their denial, the insurers said that an Interruption by Communicable Disease and Decontamination Cost coverage Northwell bargained and paid for was unilaterally erased by the "pollution" exclusion.
"As a healthcare system, Northwell had the foresight to insure against the risks posed by pandemics that can impose a crippling strain on hospitals, medical facilities, and their workers. More specifically, in exchange for a substantial premium, Northwell purchased property insurance from defendants that covers 'all risks,'" the lawsuit said.
On January 6, the defendants reiterated their complete denial of coverage
WHY THIS MATTERS
The policies provide coverage for loss caused by communicable disease, Northwell said.
During the course of the pandemic, Northwell has taken care of more than 100,000 patients diagnosed with COVID-19. One of the state's largest health systems, by mid-July Northwell had cared for more COVID-19 patients than any other provider in the United States, it said.
In December, it sent nurses to the Henry Ford Health System when the Midwest was battling a surge in cases.
THE LARGER TREND
New York City was hard hit during the early days of the pandemic, having seen more than 15,000 cases by the end of March 2020. That number doubled every three to four days, the lawsuit said. By mid-May, New York had more than 375,000 confirmed cases and more than 27,500 deaths, a number that represented nearly one out of three COVID-19 deaths in the country.
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