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The U.S. District Court for Middle Tennessee has dismissed a COVID-19 lawsuit brought by a policyholder that had its business-interruption claim denied by its insurance carrier. The case is Agilitas USA vs. Hartford Fire Insurance Co., No. 3:21-cv-00094, 2021 U.S. Dist. LEXIS 211531 (M.D. Tenn. Nov. 2, 2021).
The court found that the insurance policy contained a virus exclusion that barred payment for the loss of income that the physical therapy firm suffered as a result of Tennessee governor Bill Lee's shut down of non-essential businesses early in the pandemic.
Agilitas, which was doing business as Results Physiotherapy, argued that Hartford's denial of their insurance claim was inappropriate because the loss of revenue was a result of the government's shutdown order, not a result of the coronavirus.
The judge disagreed, stating "[t]he plaintiff's loss or damage was inescapably 'caused directly or indirectly' by the coronavirus, and the virus exclusion applies," in her memorandum about dismissing the order.
Agilitas then argued that the business income clause of the policy applied in this case, but the judge found that the clause provides coverage only for "direct physical loss" or damage to the plaintiff's properties.
The judge cited a September ruling by the 6th Circuit Court of Appeals, which held that the policy's coverage for direct physical losses did not apply to loss of income from the COVID shutdown.
Editor's Note: As we have been reporting all year, this decision tracks with other virus coverage suit decisions nationwide. In federal courts, insurers have asked for more than 500 similar cases to be dismissed, and judges have dismissed 93% of those cases with prejudice.