Cincinnati Insurance argued in its appellate brief that a lower court had correctly sided with it over Sandy Point Dental PC's claims that the dental practice was entitled to a policy payout to cover the financial losses it suffered as a result of Illinois Gov. J.B. Pritzker's coronavirus-related shutdown orders.
The insurer argued that the court should affirm the permanent dismissal of Sandy Point's suit because the lower court had applied its policy terms in a way that is supported not only by "numerous judicial decisions prior to the coronavirus pandemic," but also by most court decisions that have applied the same or similar policy language to COVID-19 claims.
The court decisions that have denied insurers' bids to dismiss policyholders' coronavirus-related claims failed to properly apply "established principles of insurance policy interpretation," Cincinnati Insurance argued. Among other deficiencies, those decisions focus too closely on defining the word "loss" without considering it within the context it's used, the insurer told the court.
"In this way, those cases ignore that the word 'loss' is modified by the words 'direct' and 'physical' in the policy," it argued.
The lower court also correctly found that Sandy Point failed to show that civil authority coverage applied to its claims, since the office couldn't show that access to its office was ever forbidden by government orders, Cincinnati Insurance argued. The coverage also doesn't apply because "no government order prohibited access to Sandy Point's premises, which is required for civil authority coverage," the insurer said.
"Rather, access was not only permitted but was affirmatively encouraged for healthcare operations, including dental offices," Cincinnati Insurance told the court.
In tossing Sandy Point's suit, the district court said the office failed to show that its property had suffered any "physical alteration or structural degradation" during its coronavirus-related closures that would entitle it to coverage. The lower court also found that Sandy Point failed to show the presence of the novel coronavirus on its property's surface, or a direct physical loss from its inability to access the clinic.
Sandy Point urged the Seventh Circuit to reverse that decision last month, arguing that the lower court had wrongly interpreted the phrase "direct physical loss or damage," a coverage requisite, to conclude that COVID-19 and the effect of government closure orders did not constitute property damage. It argued that the word "physical" should be understood expansively, and that the coronavirus should have therefore been found to cause physical damage to its property.
The office's April 2020 complaint claimed that after Pritzker ordered all non-essential businesses to close, Cincinnati Insurance wrongfully denied its coverage claim on the grounds that the COVID-19 epidemic didn't constitute physical damage that would trigger the work interruption policy. According to the complaint, while medical workers are considered essential, only emergency dental procedures are considered essential under the recommendations of state officials and the American Dental Association.
Sandy Point is represented by Jonathan Lubin of the Law Office of Jonathan Lubin and Charles Silverman of Charles Aaron Silverman PC.
Cincinnati Insurance is represented by Brian Reid, Alan Becker and Daniel Litchfield of Litchfield Cavo LLP.
The case is Sandy Point Dental PC v. Cincinnati Insurance Co., case number 21-1186, in the U.S. Court of Appeals for the Seventh Circuit.
--Additional reporting by Daphne Zhang and Mike Curley. Editing by Regan Estes.
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