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Public companies could face shareholder litigation over Ebola-related losses


Public companies could face shareholder litigation over Ebola-related losses if the U.S. outbreak becomes a wider pandemic, insurance and legal sources warn.

Companies in the health care, hospitality, entertainment and other industries are vulnerable to shareholder claims if they don't take adequate steps to minimize risks and respond to any Ebola-related event, experts say.

The key questions are whether a company has a pandemic plan and whether it has a public relations plan in case an outbreak threatens the company's brand, said Joseph F. Bermudez, a partner at Wilson Elser Moskowitz Edelman & Dicker L.L.P. in Denver.

Planning and active involvement in efforts to avoid losses are key to heading off shareholder claims, said Logan Payne, senior account manager for global client services at Lockton Cos. L.L.C. in Kansas City, Missouri.

“It's not just something on paper that you put in a binder and put on a shelf, but something that's actually followed through on,” Mr. Payne said of a pandemic plan.

Directors and officers liability insurance likely would cover any Ebola-related shareholder litigation, experts say. While D&O policies exclude coverage of bodily injury, they would not exclude shareholder economic losses traceable to an Ebola outbreak.

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