Rothman Clinic Sues Zurich Over COVID-19 Insurance Coverage

Reconstructive Orthopaedic Associates II, LLC doing business as The Rothman Institute (Rothman) is suing Schaumburg, Illinois-based Zurich American Insurance Company (Zurich) over alleged damages related to the COVID-19 pandemic.

Last month, Rothman filed its lawsuit in the Court of Common Pleas of Philadelphia County, Pennsylvania. This month, Zurich removed the matter to the United States District Court for the Eastern District of Pennsylvania.

Rothman, with offices in Pennsylvania, New Jersey, and New York, is alleging in its complaint that Zurich issued a commercial property insurance policy to Rothman insuring Rothman’s various offices. Rothman claims that the company sustained “loss or damages covered under the insurance policy” and “Zurich has only agreed to cover a nominal portion of the loss or damages that Rothman has sustained due to the COVID-19 pandemic.”

The dispute arises over whether Rothman is entitled to insurance coverage for losses sustained during the statewide stay-at-home orders during the COVID-19 pandemic. Notably, Rothman argues that COVID-19 is a microorganism. Thus, under its policy with Zurich, it is entitled to coverage for loss or damages related to COVID-19.

Rothman also claims that during a June 12, 2020 phone call between Rothman and Zurich, Zurich agreed that Rothman business segments could “recover its business income losses if those business segments could not operate.” However, Rothman contends that on June 25, 2020, Zurich issued a letter stating that coverage was limited to that potentially available under “Communicable Disease Suspension of Operations – Business Income.”

Additionally, Rothman claims that Zurich limited coverage to four of Rothman’s administrative locations. Zurich purportedly denied coverage for Rothman’s healthcare locations because, as required under the policy, access was not prohibited, and the government never provided Rothman with a “notice of closing” for those locations. Rothman contends that it is entitled to coverage because patients were unable to enter a large number of its locations “due to government orders, CDC guidelines and directives and/or local healthcare related government restrictions.”

Per its complaint, Rothman is requesting the following: a declaration that there is coverage under its insurance policy; monetary damages in excess of $75,000.00; pre-judgment interest; and additional relief.

As of the date of this article, Zurich has not yet filed a response.