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CLM National: February 2022

News and verdicts that affect you from across the country

February 16, 2022 Photo

The U.S. Supreme Court prevents implementation of OSHA’s employer vaccine mandate; New York Gov. Kathy Hochul signs, and then seeks revisions to, a new insurance disclosure law opposed by many in the industry; and, in Illinois, the Seventh Circuit Court of Appeals dismisses four lawsuits seeking business interruption coverage for COVID-19 closure orders.

California

New Survival Statute Takes Effect

A significant change in California law regarding survival actions took effect on Jan. 1, 2022. All plaintiffs who file civil actions on or after this date are now permitted to recover damages for a deceased party’s pre-death pain, suffering, or disfigurement. A survival action is a lawsuit brought by a decedent’s successors or heirs for the recovery of damages that the decedent would have had from the time of injury up until death. Previously, if an injured party died before the case resolved, any damages arising from pain, suffering, or disfigurement were extinguished and no longer recoverable. In addition to the ability to seek punitive damages, the decedent’s damages, pursued by successors or heirs, were limited to economic damages like lost wages and medical expenses. Opponents of the new amendment argue that because California already authorized successors and heirs to sue for punitive damages, the new law will allow them to effectively double dip, resulting in markedly higher verdicts.—From CLM Members Morgan A. Metzger and Nathan A. Guest, Wood Smith Henning & Berman

Colorado

Marshall Fire Losses Estimated at $1 Billion

A devastating fire that spread quickly on Dec. 30, 2021, is estimated to have caused around $1 billion in insured losses, according to Karen Clark & Company (KCC). Nearly 1,000 structures were destroyed, and 100 more were damaged in what KCC says is the most destructive wildfire in Colorado history. The fire was contained after the affected area received around 10 inches of snow on Dec. 31. Fires do not typically occur in Colorado so late in the year, but KCC says unusually warm and dry weather along the Colorado Front Range primed the environment for the Marshall Fire. The cause is under investigation but KCC says an “intense, downslope wind event that impacted the Colorado Front Range assisted with the fast rate of spread.” The fire burned approximately 6,000 acres across Superior, Louisville, and unincorporated Boulder County, Colo.—From Senior Managing Editor Phil Gusman

Mississippi

Workers’ Comp System Remedy for Negligence Claims

In Schaffner Manufacturing Company, Inc. vs. Darius Powell, the Mississippi Supreme Court found that the state’s workers’ compensation system is the exclusive remedy for plaintiff’s claims against his employer for negligence; and negligent hiring, retention, and supervision. Plaintiff Darius Powell was allegedly assaulted and injured by two co-workers. He filed complaints against the co-workers and against the employer, Shaffner Manufacturing Company. A circuit court found the assault, battery, and intentional infliction of emotional distress claims against the co-workers were barred by the statute of limitations, but the court disagreed with defendants’ argument that the claims against Shaffner fell within the scope of the Mississippi Workers’ Compensation Act, and the court denied the joint motion to dismiss those claims. The Mississippi Supreme Court reversed, stating, “These claims properly fall within the scope of the act. Therefore, the act is Powell’s exclusive remedy for those claims, and those claims should have been dismissed.”—From Senior Managing Editor Phil Gusman

Illinois

Court Weighs In on COVID-19 BI Claims

On Dec. 9, 2021, the Seventh Circuit Court of Appeals handed insurers an enormous victory when it issued four decisions affirming the dismissal of lawsuits seeking business income coverage for losses sustained from the COVID-19 closure orders. The Seventh Circuit joined the Sixth, Eighth, Ninth, and Eleventh circuits in holding the phrase “direct physical loss or damage” requires a physical alteration to property for coverage to be triggered under “all-risks” property policies. The Seventh Circuit also found the Microorganism and Ordinance or Law exclusions barred coverage. The four coordinated decisions are: Bradley Hotel Corp v. Aspen Specialty Ins. Co.; Cresent Plaza Hotel Owner, L.P. v. Zurich American. Ins. Co.; Mashallah, Inc. v. West Bend Mutual Ins. Co.; Sandy Point Dental, P.C. v. The Cincinnati Ins. Co. The decisions reflect the Seventh Circuit’s clear position that most all-risk property policies will not provide coverage for the massive losses sustained by businesses during the pandemic shutdowns.—From CLM Members David M. Holmes and Michael J. O’Malley, Wilson Elser

Washington, D.C.

Supreme Court Prevents Vaccine Mandate

On Jan. 13, 2022, the U.S. Supreme Court granted the applications from parties who challenged the Emergency Temporary Standard (ETS) from OSHA that required employers with 100 or more employees to, among other things, compel employees to either obtain the COVID-19 vaccine or test weekly and wear a mask in the workplace. The Supreme Court did not rule on the merits of the ETS, but instead granted an injunction preventing it from taking immediate effect while litigation on the merits proceeds in lower courts. A majority of the court found that the ETS was, on its face, a general public health measure rather than an “occupational safety or health standard.” But the court allowed CMS to enforce its “vaccine mandate” nationwide while litigation on the merits of that mandate continues. Private employers no longer have to comply with OSHA’s ETS, but facilities that receive Medicare and Medicaid funding must immediately work to ensure compliance with the CMS mandate.—From CLM Members Christian M. Gunneson and Dana C. Ring, Wood Smith Henning & Berman

New York

Hochul Signs Insurance Disclosure Requirement Law

Shortly after enacting important changes to the insurance disclosure requirements, Gov. Kathy Hochul appears to already be amending them for the better. On Dec. 31, 2021, Hochul signed into law the Comprehensive Insurance Disclosure Act (CIDA), which intends to reduce delaying tactics by explicitly compelling disclosure of the complete primary, excess, and umbrella policies implicated by the claim. Within 60 days after serving an answer, a defendant is now required to provide plaintiffs with notice and proof of the existence and contents of any insurance agreement through which a judgment could be satisfied, and provide documentation regarding lawsuits that have reduced or eroded, or may reduce or erode, available amounts of said policies. Hochul signed CIDA into law effective immediately, but she inserted proposed changes, including only requiring an insurer to produce the policy that relates to the current claim. However, the initial CIDA remains in effect while the proposed amendment is pending. The current disclosure deadline is March 1, 2022.—From CLM Members Cathleen Kelly Rebar and Stephen Illions, Rebar Kelly

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About The Authors
Phil Gusman

Phil Gusman is senior managing editor for CLM Magazine and Construction Claims magazine.  phil.gusman@theclm.org

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