COVID-19 Claim with Multiple Occurrences Prevails on Summary Judgment

    The federal district court found there were multiple occurrences of property damage under a disease contamination provision in the policy. Dental Express, LLC v. Massachusetts Bay Ins. Co., 2022 U.S. Dist. LEXIS 119701 (N.D. Ill. July 7, 2022). 

    Dental Express operated seventy-three dental offices across nine states and the District of Columbia. All of the practices were covered by a policy issued by Massachusetts Bay. When the pandemic struck, state and local authorities nationwide issued executive orders suspending the operations of nonessential businesses. Dental Express suspended its operations to comply with these orders and consequently lost business income. It filed claims with Massachusetts Bay.

    The policy’s disease contamination provision provided,

We will pay the actual covered loss of “business income” or “extra expensive” you sustain due to the necessary “suspension” or delay of your “operations” during the “period of Restoration.” The “suspension” must be caused by a disease contamination event declared by the National Center for Disease Control, or the applicable city, county or state Department of Health.

Coverage applied “on an ‘occurrence’ basis” and limited a claim to $25,000 per occurrence. 

    Massachusetts Bay agreed Dental Express was entitled to coverage, but only for $25,000 for all office closures because there was a single occurrence. Dental Express filed suit, arguing that, with several different executive orders, each qualified as an occurrence as set forth in the policy. 

    The court determined that the executive orders were the operative event, not the pandemic itself. Illinois followed a cause-based rule for policies that were premised liability on a per-occurrence basis. Therefore, the number of occurrences was determined by referring to the cause or causes of the damages.

    The policy here defined “a series of similar, related acts” as a single occurrence. Each of the claimed losses was the result of a separate and intervening human act – specifically, executive orders issued separately by a number of different state or local governmental authorities. Therefore, Dental Express’ losses qualified as multiple occurrences. Dental Express was entitled to summary judgment on liability on its breach of contract claims.