Lloyd’s loses COVID-19 BI case against Baylor College of Medicine

Lloyd’s of London syndicates have lost a COVID-19-related business interruption (BI) court case against Baylor College of Medicine (Baylor Medicine) – breaking the insurance industry’s winning streak in such cases.

In what Reuters reported to be the first case to result in a plaintiff’s verdict, Baylor Medicine won a $12 million jury verdict against several Lloyd’s of London syndicates in state court in Houston, Texas.

In previous COVID-19-related BI insurance cases, an overwhelming majority of federal and state courts sided with insurers, ruling that the virus does not cause any “direct physical loss or damage” to” property, according to the University of Pennsylvania’s COVID Coverage Litigation Tracker.

However, in Baylor Medicine’s case, lead lawyer Murray Fogler of Fogler, Brar, O’Neil & Gray said in an email Friday noted a “courageous state court judge decided that the question of whether the virus causes direct physical loss or damage to property is a fact issue for the jury.” The Harris County District Court jury then deliberated for less than a day before giving its verdict for the medical school.

In September 2020, Baylor Medicine filed suit against Lloyd’s underwriters and two other insurers, ACE American Insurance Co. and XL Insurance America, with the total policies providing $100 million in coverage.

In an amended complaint, Baylor Medicine alleged that state and county orders designed to slow the pandemic’s spread left it to “dramatically reduce” its operations in its clinics, implement telehealth services, and significantly curtail laboratory research and teaching programs, totalling $70 million in costs and counting. As the clinic remained open, the virus was present on the property.

Reuters confirmed that District Judge Donna Roth has not yet entered the verdict as a judgment. However, Fogler expects Lloyd’s to appeal the decision.