CLM National: November 2020

News and verdicts that affect you from across the country

November 27, 2020 Photo

A decision in North Carolina bucks the national trend in COVID-19 business-interruption lawsuits, New Jersey and Michigan expand access to workers’ compensation benefits, and, in Nevada, a settlement is approved in the lawsuit surrounding the October 2017 Las Vegas mass shooting.


Wildfire Legislation Signed to Protect California Consumers

Gov. Gavin Newsom signed three bills to enable future wildfire survivors to recover faster and protect the rights of domestic workers during an emergency. SB 872 expands the definition of additional living expenses that must be paid to homeowners for losses incurred in a state of emergency and requires an advance payment of no less than four months for costs such as housing, furniture rental, and transportation. AB 2756 provides additional insurance for disaster survivors to rebuild and requires more transparency and a signed acknowledgment when a new policy is sold that does not cover losses from fire. AB 2658 protects domestic workers from employer retaliation (such as firing) if they refuse to work in hazardous conditions or emergency situations. These protective measures will prevent an employer from ordering an employee to stay in or enter a mandatory evacuation zone due to wildfires or a local public health order (such as COVID-19).—From CLM Members Tracy M. Lewis and Ian Kaplanom CLM Member Laura M. Martinez


Unambiguous Not So Clear

Under the doctrine of reasonable expectations, even if one part of an insurance policy is unclear, if the policy, when read as a whole, is clear, then it is not ambiguous, according to a recent Alaska Supreme Court decision. The case, Kathleen M. Downing v. Country Life Insurance Company, involved a daughter who purchased an executive whole life policy that paid a flat $500,000 upon her death, and a paid-up additions rider (PUAR). The first page of the policy stated the PUAR provided coverage of $1,079,014, but the second page included a table explaining the guaranteed cash value and paid-up insurance per year of the policy. After a year of paying the premiums, the daughter assigned the PUAR to her mother. The daughter died during the second year of the policy coverage. The mother sued, arguing that she was entitled to $1,079,014. Although the Alaska Supreme Court found the first page of the policy misleading, the table on page two made clear that the policyholder could stop making payments at any time and withdraw the current cash value.—From CLM Member Sarah E. Davenport


$800 Million MGM Settlement Approved

The 8th Judicial District Court of Clark County in Las Vegas approved an $800 million settlement between MGM Resorts International and plaintiffs representing victims of the Oct. 1, 2017 mass shooting at the Route 91 Harvest music festival in Las Vegas. Judge Linda M. Bell cited several factors in determining the settlement was reached in good faith, including the near-unanimous participation among potential claimants and MGM contributing $49 million of its own funds above the full policy limits of its insurance. Judge Bell also noted the “extraordinary work and effort by counsel in this case to achieve the maximum amount available to claimants under the settlement agreement despite having an immensely difficult, unique, and tragic set of circumstances.”—From Managing Editor Phil Gusman


Emergency Rules Expand Workers’ Comp Access

Gov. Gretchen Whitmer signed emergency rules on Oct. 16, 2020, to clarify workers’ compensation coverage for health care employees and first responders who have tested positive for COVID-19. The emergency rules apply to workers in the medical industry, including hospitals, medical-care facilities, and emergency medical services, as well as law enforcement, fire safety, and others. These employees are presumed eligible for compensable personal injuries under the Workers’ Disability Compensation Act if they are diagnosed with COVID-19 either by a physician or as the result of a presumed positive test result. The emergency rules replace protections previously afforded by Executive Order 2020-128, which is no longer effective as a result of the Michigan Supreme Court’s finding that the Emergency Powers of the Governor Act of 1945 is unconstitutional. They are effective through March 20, 2021.—From Managing Editor Phil Gusman

North Carolina

Decision Bucks Trend in COVID-19 BI Cases

A state court has ruled in North State Deli LLC, et al. v. The Cincinnati Insurance Co., et al. that Cincinnati Insurance Co. must pay 16 restaurants’ claims for business-interruption losses due to government-ordered COVID-19 shutdowns—a decision that runs counter to those of most judges who have ruled on similar cases. Hundreds of COVID-19-related cases are making their way through U.S. courts. The central point in rulings that have favored insurer defendants has been that coverage depends—as specified in the insurance policies—on the policyholder suffering a “direct physical loss.” Insurance Information Institute CEO Sean Kevelighan says, “Insurers have been prevailing nationwide in nearly all of the litigated COVID-19 business-interruption lawsuits because, as North Carolina’s insurance commissioner has noted, ‘Standard business-interruption policies are not designed to provide coverage for viruses, diseases, or pandemic-related losses because of the magnitude of the potential losses.’” Cincinnati Insurance said it plans to appeal.—From I.I.I. Senior Research Analyst Jeff Dunsavage

New Jersey

COVID-19 Bill Expands Workers’ Comp Benefit Access

Gov. Phil Murphy signed into law S2380, which dramatically expands access to workers’ compensation benefits for workers infected with COVID-19. Retroactive to March 9, 2020, COVID-19-positive workers in New Jersey who qualify as “essential employees” are now entitled to a rebuttable presumption that the employee’s infection is causally related to the employee’s employment, so long as the infected individuals worked somewhere other than their own residence at the time of infection. This new law provides for a broad definition of “essential employees,” including not only employees in the public safety, health care, transportation, hospitality, and retail industries, but also any other employee defined as an “essential employee” in a state of emergency declaration. This legislation significantly upends the handling of infectious disease claims in New Jersey’s workers’ compensation system. The rebuttable nature of the presumption of causation is largely illusory in that it requires an employer to prove a negative, i.e., that the employee was not exposed at work.—From CLM Member Andrew Heck

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Phil Gusman

Phil Gusman is CLM's director of content.

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