Risk Management

Montana federal court balks at moving COVID BI case to state court

Judy Greenwald

February 11, 2022 Reprints

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A federal district court in Montana has refused to move COVID-19-related-litigation filed by a Montana health system against a Zurich Insurance Group Ltd. unit to state court, ruling the policy’s forum selection provision is not a waiver of the insurer’s right to decide which court will rule.

The U.S. District Court in Billings adopted a magistrate judge’s recommendation and concluded that policy language did not require Zurich unit American Guarantee and Liability Insurance Co. to submit to the jurisdiction chosen by the Billings Clinic, a Billings-based health care system that serves Montana, Wyoming and the western regions of South and North Dakota, according to Tuesday’s ruling by the U.S. District court in Billings in Billings Clinic vs. American Guarantee and Liability Insurance Co.

Zurich had issued an all-risk policy to Billings that provided up to $650 million in covered losses, according to the ruling. Billings Clinic filed suit against the insurer in Montana state court for breach of contract after Zurich refused to provide coverage for pandemic-related losses.

Zurich moved the litigation to the federal district court, and Billings moved to remand the case back to state court.

“The court finds that the plain language of the Policy’s forum selection clause does not constitute an implicit waiver of AGLIC’s right to remove requiring the party to include an express reservation of that right,” the decision said.

Attorneys in the case had no comment or did not respond to a request for comment.

Although most COVID-19 related cases in cases both state and federal court have gone against policyholders, companies have had somewhat more success in state courts.