Medical center sues insurance firm

Chan Soon-Shiong estimates losses from COVID-19 at more than $5M

Travelers Insurance Co. of Hartford, Conn., filed papers this week in U.S. District Court, Johnstown, refusing coverage to an area medical center, which is seeking financial damages stemming from the state-ordered shutdown of nonessential businesses due to the spread of the COVID 19 virus.

In filing the papers, Travelers was responding to an April lawsuit by Windber Hospital’s Chan Soon-Shiong Medical Center, which has facilities in Windber, Johnstown and Portage.

The medical center in the lawsuit contends it has an “All Risks” insurance policy with Travelers that it believes covers the loss of income and the expenses of reopening its medical centers.

The policy covers the time period from Oct. 19, 2019, to Oct. 19, 2020.

Chan Soon-Shiong estimates its losses will exceed $5 million.

The Medical Center is asking a federal court judge to issue a ruling telling Travelers the center is entitled to financial relief under the policy and asking the judge to issue an injunction barring Travelers from denying coverage.

Another aspect of the lawsuit, filed by attorneys James C. Haggerty of Philadelphia and John P. Goodrich of Pittsburgh, is that Windber and Chan Soon-Shiong are seeking a court declaration that its lawsuit represents a “class” of medical centers that are seeking coverage under similar insurance polices statewide.

Travelers has denied coverage on the grounds that there is a clause in the medical center’s policy that denies coverage for damages caused by a “virus, bacterium or other microorganisms that induces or is capable of inducing physical distress, illness or disease.”

The insurance company stated in its answer, filed by attorney Richard D. Gable Jr. of Philadelphia, “The COVID-19 pandemic has affected the public and most businesses throughout the country in unprecedented ways.

“But these challenging and unfortunate circumstances do not create coverage for losses that fall outside the terms of a policyholder’s insurance contract,” the company said.

The medical center is claiming it is entitled to insurance coverage for business income and extra expenses losses due to orders issued by Gov. Tom Wolf and the Pennsylvania Department of Health.

Those orders issued on March 6, March 19 and March 23, closed and forced the medical centers to furlough their employees.

The insurance company also stated that Chan Soon-Shiong cannot prove direct damages to its centers that would be covered despite the alleged “virus exclusion.”

The case has been assigned to U.S. District Judge Kim R. Gibson, who, on Wednesday ordered that a July 14 telephone status conference be held among the parties.

Gibson has also referred the case to the federal court’s Alternative Dispute Resolution Program to determine if the parties can settle the issues out of court.

Travelers indicated in the papers filed this week that it normally would cover the loss of business income due to the suspension of operations caused by direct physical loss or damage, such as contamination, during a period of restoration.

But it maintains Chan Soon-Shiong cannot claim coverage because the recent shutdown and loss of business resulted from a virus, Travelers repeated.

Travelers has asked Gibson to dismiss the medical center’s lawsuit.

A spokesperson stated that Chan Soon-Shiong is once again treating patients.

The medical center employs 449 people.


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