Essentia Health said on Wednesday that its pollution liability coverage with ACE American Insurance Co. should pay for its losses as the virus contaminated its space and that the insurer's position that only "environmental pollution" is covered by the policy does not stand.
"The plain, ordinary meaning of the policy terms 'irritant' and 'contaminant' include a virus under Minnesota's controlling standards of insurance policy interpretation," the system said, stressing that the coronavirus is a pollution condition defined in ACE's insurance policy.
ACE's contention that the "pollution condition" is "confined to environmental pollution" has been rejected by several Minnesota courts, Essentia said. The system said multiple Minnesota cases have held that a pollution exclusion does not bar just environmental pollution but also "irritant" and "contaminant" pollution, so the same standard that pollution includes irritants like a virus should hold in the current case.
"The Policy specifically defines 'loss' to include 'business interruption loss.' ... Here, the Complaint alleges that Essentia has suffered millions of dollars in covered business interruption loss," the system said Wednesday.
The health system has said the virus that causes COVID-19 was present at its locations because five employees and 24 patients tested positive in April, and nearly 1,000 employees and more than 1,300 patients by the end of 2020.
In March, ACE told the court that the Minnesota health care system can't recover $5 million in pandemic-related losses sustained after its services were reduced. COVID-19 is a communicable disease rather than an environmental pollutant under its policy, the carrier said at the time.
Essentia sued the carrier in January, alleging that its losses came from a government shutdown order affecting nonessential hospital services, such as elective operations, mammograms and regular physical exams. Essentia argued it incurred $59 million in losses in April 2020 and its the coronavirus-related losses are covered under the policy's "pollution condition," asking for $5 million in compensation under its policy.
The system has told the court that its policy with ACE should cover losses related to the virus, as they are covered under the "pollution condition" endorsement in the policy and not subject to any of the policy's exclusions.
The health care system has pointed to other suits in which ACE has been involved, saying the insurer had previously acknowledged in court that viruses are considered a "pollution condition," as in one suit over the avian flu virus. The carrier has also stated publicly that SARS and influenza, as well as other disease-causing agents, are "contaminants," according to the suit.
In addition, ACE has represented to the Wisconsin Office of the Commissioner of Insurance that the term "contaminant" includes viral and bacterial contaminants, such as SARS and influenza, as well as other disease-causing agents, according to court records.
Counsel for the parties could not be immediately reached for comment.
Essentia is represented by Rikke A. Dierssen-Morice, Bryan R. Freeman and Judah A. Druck of Maslon LLP.
ACE American is represented by Alexandra L. Zabinski, Cheryl A. Hood Langel and Robert L. McCollum of McCollum Crowley PA; and Kevin M. Haas of Clyde & Co. US LLP.
The case is Essentia Health v. ACE American Insurance Co., case number 0:21-cv-00207, in the U.S. District Court for the District of Minnesota.
--Additional reporting by Shawn Rice. Editing by Peter Rozovsky.
Correction: An earlier version of this story incorrectly quantified Essentia's claim. The error has been corrected.
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