Washington State University has filed a $63 million lawsuit against its insurance provider for allegedly failing to pay out proper coverage for financial losses stemming from the COVID-19 pandemic.
In a July 2 complaint, WSU accused Rhode Island-based Factory Mutual Insurance of breach of contract, bad faith and violations of the state Consumer Protection Act.
“The pandemic … is a natural disaster,” WSU’s complaint argues. “The Pandemic made it necessary for WSU to suspend operations, incur extra expense, and to undertake costly efforts to protect and preserve property.”
WSU argues its policy covers up to $300 million in maximum damages, including losses due to “communicable disease” response or interruption. The complaint alleges Factory Mutual had narrowly interpreted the policy to minimize the payout.
“Factory Mutual denied any additional coverage whatsoever under the Policy,” the complaint contends, “based on a self-serving interpretation of policy terms …”
University spokesman Phil Weiler confirmed the insurance provider paid out its sub-limit coverage of $1 million.
Factory Mutual, also operated as FM Global, faces dozens of similar pandemic-loss lawsuits, according to a COVID-19 litigation tracker at the University of Pennsylvania. Ralph Lauren, the Atlanta Falcons football team and a number of universities have filed suit.
“WSU paid substantial premiums to Factory Mutual in consideration for Factory Mutual’s promise to pay WSU’s claims for business income loss and other losses covered by the Policy,” the complaint states. “The Policy constitutes a contract between the parties.”
WSU listed its damages from breach of contract at “not less than $63,068,573,” but did not break down that total. Weiler declined to clarify how the university had assessed those damages.
“The amount and calculation for damages in the complaint is part of the current litigation,” he wrote in an email, “and is not something we are in a position to comment on at this time.”
Some other insurance lawsuits have seemingly hinged on whether a party could prove the virus was present on the insured property. WSU argues local positivity rates and testing results make it statistically certain the virus had circulated on university properties.
Much of WSU’s complaint outlines the global impacts of the pandemic, the resulting government shutdown orders and the contagious properties of COVID-19. WSU argued it moved many operations, including instruction, to online in March of 2020 and suspended activities that could not be continued safely — such as sports events.
WSU also argued it had to make many physical alterations to its properties to continue on-campus services, such as installing plexiglass barriers, upgrading HVAC systems or accommodating social distancing guidelines. They argued some insured properties could not be used at all.
“[The] presence of the dangerous and potentially fatal Covid-19 virus in and on property, including in indoor air, on surfaces, and on objects,” the complaint states, “renders the property lost, unsafe, and unfit for its normal usage.”
Attorneys for WSU also alleged Factory Mutual had used “talking points” to justify limiting its coverage without making a reasonable effort to assess actual losses.
“At no point,” the complaint alleges, “did [Factory Mutual] interview or request to interview any WSU employee or officer, visit WSU’s insured locations, or enter into a good faith negotiation over the potential for coverage under the Policy beyond the ‘Interruption by Communicable Disease’ coverage.”
WSU has requested the court grant relief of not less than the $63 million as well as payments for alleged violations of the Consumer Protection Act, legal fees and any other damages “the Court deems equitable, just and proper.”
Factory Mutual has not yet filed any legal answer to the recent complaint.
WOW, meanwhile U of I Operated with no losses. Hmm