Imaging practice files class action lawsuit after insurer refuses to cover COVID-related losses
A Kansas City, Missouri, radiology practice is suing its commercial insurer after the company refused to cover losses caused by the COVID-19 pandemic.
Alliance Radiology first filed suit against CNA Financial Corp. on April 29, saying it has lost business as leaders have 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, Business Insurance reported Friday.
In making its case for the class action suit, Alliance Radiology is citing 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 report noted.
The practice said in the suit that its sue-and-labor clause requires it to take steps to protect its property from damage. Leaders have done so, they argue, by complying with the state’s stay-at-home orders. Several major policy holders similarly cited sue-and-labor clauses when suing for Y2K-related business losses in the year 2000.
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Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.