Insurer wants radiology practice’s class-action suit tossed: ‘COVID-19 damages lungs, not property’

A commercial property insurer is asking a judge to toss one imaging practice’s proposed class-action lawsuit tied to the COVID-19 pandemic.

It was back in April that Alliance Radiology first sued Continental Casualty Co., claiming it had lost business as leaders looked to comply with state orders to postpone nonurgent imaging. The 28-rad practice said its policy does not have a virus-related exclusion, and believes the pandemic constitutes “physical damage,” which would trigger a payout.

CCC fired back on Monday, charging that the Kansas City, Missouri, practice failed to allege any actual alteration to their covered properties. State-mandated orders never closed Alliance’s facilities, rather hospital directives restricted its operations, Law360 reported.

"The fleeting presence of a virus that can survive on surfaces for only a few hours or days, and can be easily removed through ordinary cleaning or disinfectants, is not physical loss of or damage to property," CCC told a Kansas judge. “COVID-19 damages human lungs, not property,” the carrier added later.

In making its case earlier this year, Alliance Radiology cited the “sue and labor” clause. Such policies are typically found in maritime insurance and are meant to make policyholders whole, for instance, if they need to toss cargo off of a ship to prevent it from sinking. The practice said in the suit that its sue-and-labor clause requires it to take steps to protect its property from damage. Leaders did so, they argued, by complying with the state’s stay-at-home orders.

Read more about the legal battle below.