I didn’t want the week to end without passing along this story from Massachusetts Lawyers Weekly on the First Circuit’s decision in Lawrence General Hospital v. Continental Casualty Company. In the decision, the First Circuit reaffirmed the principle that Covid shutdowns did not trigger business interruption coverage in insurance policies, as most courts have held to date. The Court did, however, find coverage under a different portion of the relevant policy, which expressly provided “disease contamination coverage.”
The coverage, policy language and economic issues at play in the question of whether business interruption coverage in insurance policies was triggered by pandemic era shutdowns have been widely discussed, and clearly the insurance industry has won those arguments. This case isn’t to the contrary, but instead finds coverage only under a separate policy provision that directly covered orders shutting down operations in response to certain health related events.
What’s more interesting to me, however, and which I wanted to pass along, was the comment by a policyholder side attorney, Andrew Caplan, that the case “shows how important it is for coverage attorneys to carefully study a policy and make coverage arguments based on specific policy wording as opposed to general coverage case law interpreting standard policy wording.”
I think he is absolutely right, and it’s a point that many lawyers – especially generalists who aren’t coverage experts – miss when they litigate coverage disputes. Far too often, lawyers get bogged down in the broad pronouncements that populate judicial decisions in this area, about topics such as ambiguities in insurance policies or the interrelationship of later issued endorsements with the terms of the main form of the policy. Most often, these types of comments in judicial decisions shed more heat than light, and if you study the decision closely, you will find that the decision turned, not on those types of generalized pronouncements, but instead on very precise evaluation of specific words in the policy. The key to winning these types of cases, as Caplan points out, is to focus on the specific policy language at play, not on general rules applicable to insurance policies, and to argue accordingly – in many ways, as a lawyer would with any other type of a contract.
The First Circuit’s decision in Lawrence General Hospital perfectly illustrates this point, particularly with regard to the Court’s discussion of the disease contamination coverage. The Court structures its analysis around certain broad principles that govern the interpretation of insurance policies, but those standards do not drive the decision. Instead, it is the Court’s molecular level (pun intended) analyses of the language and facts, conducted within the framework provided by those broad principles, that the decision is based upon.