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Appeals court rules for insurer in COVID-19 suit

Posted On: Aug. 31, 2021 1:59 PM CST


In what is apparently the third federal appeals court ruling on the issue, the 11th U.S. Circuit Court of Appeals in Atlanta has ruled against a dental practice in a COVID-19 business interruption lawsuit.

Monday’s ruling by the 11th U.S. Circuit in Gilreath Family & Cosmetic Dentistry Inc. v. The Cincinnati Insurance Co. was similar to a  previous ruling by the 8th U.S. Circuit Court of Appeals in St. Louis which also denied coverage to a dental practice suing Cincinnati Financial on the basis the plaintiff had not alleged any “direct physical loss or damage” to property.

A ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia agreed with insurers that COVID-19 business interruption cases could be heard in federal district courts rather than state courts. 

In the latest ruling, a unanimous three-judge appeals court panel affirmed a ruling by the U.S. District Court in Atlanta in the case filed by the Marietta, Georgia-based practice, and said, “Gilreath has alleged nothing that would qualify, to a layman or anyone else, as physical loss or damage…In fact, though the practice postponed routine and elective procedures, Gilreath still used the office to perform emergency procedures, the ruling said.

“Gilreath finds it problematic that its office is an enclosed space where viral particles tend to linger, and where patients and staff must interact in close quarters.

“Even so, we do not see how the presence of those particles would cause physical damage or loss to the property. Gilreath thus has failed to state a claim that Cincinnati Insurance breached the policy’s ‘Business Income’ or ‘Extra Expense’” provisions, said the ruling, which also denied coverage on the basis the plaintiff was not entitled to coverage under its policy’s civil authority provision for the same reason.

Cincinnati issued a statement that said in part, “We thank the court for its careful consideration of this case and are pleased with its decision affirming that neither the COVID-19 pandemic or the related government-imposed restrictions constitute the direct physical loss or damage required to trigger coverage under our property insurance policy.”

The dental practice’s attorneys did not respond to a request for comment.