CLM National: August 2020

A circuit court judge in Michigan weighs in on a COVID-19 business interruption coverage dispute, Virginia creates COVID-19 temporary workplace safety standards, and, in Colorado, new limits are placed on insurers seeking to assert a failure-to-cooperate defense.

Colorado

New Limits on Insurers Asserting Failure-to-Cooperate Defense

Effective Sept. 15, 2020, C.R.S. §10-3-1118 imposes new hurdles on insurers seeking to assert a failure-to-cooperate defense in first-party actions. The insurer must request information from the insured or their representative in writing if the insured or representative has consented to receive electronic documents from the insurer; the requested information must not be available to the insurer without the assistance of the insured; the insured must be given 60 days to respond to the request for information; the information requested must be information that a “reasonable person” would determine the insurer needs to adjust the claim or prevent fraud; and the insured must be given an opportunity to cure any alleged non-cooperation. The new statute also limits a failure-to-cooperate defense to the portion of the claim where the insurer’s ability to evaluate or pay was “materially and substantially prejudiced” by the insured’s non-cooperation.—From CLM Member Michael D. Simpson

Missouri

Governor Signs Punitive Damages Reforms

Gov. Mike Parson has signed SB 591, which makes it more difficult for plaintiffs to get punitive damages in civil actions. As mentioned in CLM Magazine’s June 2020 “National” column, after the legislature had passed the bill, the measure states that punitive damages shall only be awarded if the plaintiff proves by “clear and convincing evidence” that the defendant intentionally harmed the plaintiff without just cause or acted with a deliberate and flagrant disregard for the safety of others. Furthermore, it states that a claim for punitive damages shall not be contained in initial pleadings, and may only be filed as a written motion with permission of the court no later than 120 days prior to the final pre-trial conference or trial date. Upon signing the bill, Parson said it “will stop the unfair and unreasonable litigation our businesses face. This bill shows that Missouri is open for business and strikes a fair balance between protecting Missouri employers and employees from frivolous claims while ensuring the ability of those harmed to seek relief in court.”—From Managing Editor Phil Gusman

Illinois

Supreme Court Narrows Scope of Tort Immunity

In Hernandez v. Lifeline Ambulance LLC, et al., the Illinois Supreme Court recently held the tort immunity from ordinary negligence set forth in the Emergency Medical Services Act does not apply when an ambulance is in transit to pick up a patient for non-emergency transportation. Lifeline’s ambulance was involved in an accident on the way to retrieve a patient from a dialysis appointment and return them to a residential facility. Based on a reading of the statute’s plain language, the trial court dismissed the negligence claim since there is no limitation on the term “before or during transportation.” In affirming the appellate court’s reversal, a 4-3 majority ruled that the statutory immunity did not apply until the ambulance arrived at the intended destination to collect the patient on the basis that the act of driving to a pickup location is preparatory conduct and integral to providing medical care.—From Northeast Ohio Chapter President Michael C. Brink

Michigan

Summary Judgment in COVID-19 BI Case

A Michigan circuit court judge granted an insurer’s request for summary judgment in a case regarding whether a business interruption policy covers COVID-19 losses due to shutdown orders. In Gavrilides Management Company et al. vs. Michigan Insurance Co. the defense argued that the policy in question “clearly provides” that, for coverage to apply, “there must be a direct physical loss, or damage to” the insured property. The plaintiff’s attorney argued that the loss comes from the executive order restricting use of property. “Physically, you cannot use, for dining services, any of the interior of the building for a period of time,” plaintiff’s attorney said. Judge Joyce Draganchuk, in granting the summary judgment request, said the language requiring a physical loss of or damage to the property is clear. “Plaintiff just can’t avoid the requirement that there has to be something that physically alters the integrity of the property,” said Judge Draganchuk. “There has to be some tangible, i.e. physical, damage to the property.”—From Managing Editor Phil Gusman

Virginia

COVID-19 Workplace Safety Standards Adopted

The Virginia Department of Labor and Industry has implemented §16VAC25-220, its Emergency Temporary Standard outlining workplace safety and health standards amid the COVID-19 pandemic. In what news reports call the first-in-the-nation safety rules for employers, the new temporary rules outline exposure assessments employers must make at their businesses as well as requirements for notifying employees and other interests, including government agencies, about a worker who has tested positive. The rules also direct employers to develop plans for employees to report symptoms and for “flexible” sick-leave policies, as well as return-to-work plans for employees known or suspected to be infected with COVID-19. It also includes physical-distancing and other preventative requirements. Employers must also classify tasks as “very high,” “high,” “medium,” or “lower” risk levels. Each level has certain requirements that must be met. To see all of the requirements, go to doli.virginia.gov.—From Managing Editor Phil Gusman

Connecticut

Rebuttable Presumption for COVID-19 WC Claims

Connecticut Gov. Ned Lamont signed Executive Order 7JJJ, creating a rebuttable presumption that a COVID-19 positive test or written diagnosis due to COVID-19 symptoms arises out of and in the course of employment for workers in certain cases. The Connecticut rule applies to workers’ comp claims by “essential” workers employed in one of 16 critical infrastructure sectors as broadly defined by the DECD. For the presumption to apply, the employee must file a claim; test positive for or be diagnosed with COVID-19; provide a copy of the test result or written diagnosis; have lost one or more days of work between March 10 and May 20; have the diagnosis confirmed by a positive lab test, or symptoms must have been diagnosed as COVID-19, within three weeks of the missed work day(s); have been directed by their employer to work outside of the home at least one of the 14 days prior to missing work, with no work-at-home option; and have been employed by an essential employer.—From Michael D. Schweitzer, Samantha K. Levasseur, and Andrew J. Even of CLM member firm Goldberg Segalla