U.S. District Judge J.P. Boulee incorrectly determined that coverage under Gilreath Dental Associates' policy required "actual, physical damage" to the clinic's property, the practice said Friday. But "loss," it contended, was a more ambiguous term than "damage," and included the practice's inability to use its property because of government orders.
"A plain reading of the definition of 'loss' shows that the policy was drafted to create expansive coverage," the practice said. "Physical loss and physical damage are two separate forms of 'loss' covered by the policy with separate, independent meanings."
Leading a proposed class action, Gilreath said its case was no different from another federal COVID-19 coverage case in Missouri that survived a dismissal bid — Studio 417 Inc. v. Cincinnati Insurance Co. — a suit that has been heavily cited by policyholders.
In that suit, the court said that pandemic damages could be covered under physical loss provisions in cases where virus molecules are potentially attached to surfaces in a building or on equipment. Judge Boulee, however, said that there weren't any confirmed cases of COVID-19 in Gilreath's office. It also didn't suffer physical damage, he said.
The Studio 417 case has taken center stage in litigation over insurance for COVID-19-related losses. In another case similar to Gilreath's in Missouri, a group of dentists successfully argued that the reduction in services necessitated by the virus was enough to trigger an insurance provision for "physical loss or damage," court records show.
On Friday, Gilreath faulted the district court for not giving the Studio 417 case the consideration it deserved because it concerned Missouri law. Insurance contract interpretation laws in Missouri and Georgia, it asserted, were substantially similar.
And because "loss" was undefined in its policy with Cincinnati, Gilreath said, any ambiguity must be resolved in the policyholder's favor under Georgia law.
Gilreath first filed suit against Cincinnati in May last year, saying its all-risk policy covered business interruption losses stemming from the pandemic. The practice was forced to suspend elective dental procedures at its Marietta clinic to comply with government restrictions, it said, dealing a blow to an essential stream of revenue.
It also contended that government orders prevented patients from seeking care at its facilities. But Cincinnati noted that the clinic could still offer patients emergency procedures.
Gilreath is one of eight pandemic coverage suits that have been tossed in Georgia, according to data compiled by the University of Pennsylvania Carey Law School. No policyholders in the state have survived dismissal bids from their insurers, the data showed, underscoring a national trend of rulings favoring insurers in pandemic suits.
Counsel for Gilreath declined to comment on the appeal.
Counsel for Cincinnati did not immediately respond to a request for comment.
Gilreath is represented by Patrick J. Hannon of Hall & Lampros LLP.
Cincinnati is represented by Janis Horning Spillers of Litchfield Cavo LLP.
The case is Gilreath Family & Cosmetic Dentistry Inc. v. The Cincinnati Insurance Co., case number 21-11046, in the Court of Appeals for the Eleventh Circuit.
--Additional reporting by Shawn Rice and Mike Curley. Editing by Vincent Sherry.
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