Having one judge oversee more than 1,000 cases -- grouped by individual insurers -- would be too cumbersome and it’s more efficient to have courts around the U.S. decide whether the coronavirus fallout triggered coverage by major insurers such as Hartford, Travelers and Lloyds of London, the legal panel ruled Friday. The group did agree to have a federal judge in Chicago oversee cases against Society Insurance, a smaller carrier.
It was the last gasp of plaintiffs’ lawyers attempting to pull together business-interruption cases against major insurers. They’re seeking to recover losses from the economic blows wrought by the virus, which prompted a wave of bankruptcy filings. They argued having one judge overseeing the litigation would cut duplication and hold dow legal costs.
“Rather than have one judge attempt to organize and resolve the core policy interpretation issues,” having judges already hearing the cases decide if coverage exists “will result in quicker and more efficient resolution of this litigation,” U.S. District Judge
Insurers warn the tidal wave of business-interruption suits could swamp them. Analysts warned this year that the industry could face at least $100 billion in losses from the pandemic, which could wind up being the most in insurance history.
“This is the correct result,”
Firms ranging from the owner of National Basketball Association’s
The insurers claim that since the virus hasn’t caused any physical damage -- unlike a hurricane or earthquake -- there’s no coverage. Different judges around the country have come to differing decisions on that issue.
Having a single judge decide the coverage issue would eliminate conflicting rulings that could clog appellate courts,
The panel, which oversees multidistrict litigation in U.S. federal courts, noted some cases already have progressed to the point where a judge is ready to decide the coverage issue and consolidating them would slow down their progress.
“Time is of the essence in this litigation,” Caldwell wrote. “Many plaintiffs are on the brink of bankruptcy as a result of business lost due to the Covid-19 pandemic and the government closure orders.”
The panel did find benefit in consolidating 34 cases against Society before U.S. District Judge
The cases are IN RE Hartford Covid-19 Business Interruption Protection Insurance Litigation, MDL No. 2963 and In RE Society Insurance Co. Covid-19 Business Interruption Protection Insurance Litigation, MDL No. 2964.
(Updates with other insurers covered by rulings starting in first paragraph)
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