Viewpoint: N.J. Medical Society Manufactures a Scientific Dispute

A recent Law 360 article1 highlights the Medical Society of New Jersey’s (“Society,” or “MSNJ”) arguments in two COVID-19 business interruption cases, offered as amicus or “friend of the court” submissions designed to purportedly allow a complete presentation of the issues so the court may reach a proper decision.2

The Society’s amicus brief criticizes several decisions in which a court, in finding no coverage under property policies for business income losses suffered during the pandemic, stated that COVID-19 can be easily cleaned from surfaces. Such an observation, the Society claims, is “junk science.” The Society’s criticisms lack merit.

As an initial matter, it appears that the studies on which the Society relies actually support the opposite conclusion—that routine cleaning can remove the virus and “substantially reduce virus levels on surfaces.”3

The Society’s larger point—that despite cleaning, COVID can continue to be transmitted from person to person, primarily through the air—is hardly remarkable. At this point in the pandemic, it is commonly understood that because COVID is transmitted by contact with infected persons, you cannot stop COVID-19 transmission by simply wiping down items and countertops at a restaurant or convenience store. As a result, prophylactic measures were aimed at preventing people from gathering anywhere, rather than preventing access to certain particular properties.

More fundamentally, the Society’s junk science attacks have nothing to with the actual insurance coverage issues, i.e., whether there was “direct physical loss or damage to property” within the meaning of those terms in property policies. Most notably, the effectiveness of routine cleaning and disinfecting doesn’t change the fact that viral particles harm people but don’t harm property. The Society does not dispute the bedrock and non-controversial fact that viruses ultimately go away on their own in hours or days, even without cleaning, and do not physically alter property.4

Courts have repeatedly and properly held that this feature of a virus—as a legal matter—takes it outside the coverage afforded under commercial property policies. For example, a Massachusetts trial court declined to rely on a New Hampshire Medical Society amicus brief—which, like the MSNJ’s brief, argued “there is little evidence to suggest that routine use of disinfectants can prevent the transmission of Coronavirus from fomites (surfaces containing SARS-CoV-2)”5—because “mere ‘presence’ [of a contaminant] does not amount to loss or damage to the property.”6

As the Massachusetts court concluded, “[e]vanescent presence of a harmful airborne substance that will quickly dissipate on its own” is not the same thing as “the infiltration of a substance into the materials of a building.”7 And the Seventh Circuit (along with other courts) held that the temporary presence of COVID on property is not the same as “persistent physical contamination”8 similar to termites, poisonous gases, or asbestos fibers.9

Recently, the Indiana Court of Appeals nailed home the point:

[The insured] emphasizes that its experts opined that cleaning and air filtration, while helpful, are not completely effective in eliminating the virus. But the experts agreed that virus particles not eliminated by cleaning eventually die on their own. The trial court acknowledged that the virus can ‘repopulate’—new particles take the place of the old—but found that fact to be irrelevant because the new particles will also die naturally if not eliminated by cleaning first. Ultimately, the court believed [the insured] and its experts conflate the potential presence of SARS-CoV-2 inside the theatre with physical alteration to property. We agree with and adopt all these conclusions.10

The Society’s amicus brief highlights another fatal defect in the notion that property policies cover business losses allegedly caused by viral particles in the air or on a surface—a lack of causation.11 As the Society acknowledges, businesses that remained open during the pandemic were constantly having the virus reintroduced to their properties.12 Indeed, insureds often allege that, given the “ubiquity” and “pervasiveness” of SARS-CoV-2, no amount of cleaning or ventilation intervention will prevent a person infected with COVID-19 from entering an indoor space and exhaling millions of additional particles and virions into the air. Yet many of these insureds—especially restaurants and essential services—never stopped serving customers during the pandemic (e.g., they offered drive-through and/or pick-up), and most businesses resumed normal operations (such as in-door dining) some time ago.

Two conclusions follow these observations. One, with the virus presumptively present (allegedly) at an insured’s property since the start of the pandemic in January 2020 (or earlier), the virus’s presence cannot be the reason insureds closed (totally or partially) as of March 2020, when state and local governments began issuing “stay at home” orders.13 Two, the lack of the virus’s presence was certainly not the reason businesses reopened some months later in 2020 (or 2021-22): we know the virus is still present in the community. As courts have explained, it is no coincidence that business re-opened immediately when the government orders were lifted.14

In other words, it was government closure orders—not the presence of the virus at a particular business, and certainly not physical damage to property from the virus—that caused the business interruption. As one court put it, due to those orders, the insured’s “facilities would have had remained shut regardless of whether the virus was present in its facilities.”15 The insured’s property “did not change. The world around it did. And for the property to be useable again, no repair or change can be made to the property—the world must change.”16

And the world has changed—as of today, an overwhelming number of stores and businesses have resumed normal operations. And that happened without the need to repair, or throw in the trash, tables, chairs, and other items that may have come in contact with COVID particles.

In the end, these amicus submissions will not assist courts in deciding these cases—there is nothing that qualifies a physician to help explain whether a virus causes a physical alteration to property. And as explained above, whether or not routine cleaning removes the virus from the surface of property or the surrounding air is irrelevant to the ultimate coverage question. Indeed, as the Society concedes, it took “no position on the questions of insurance law before the court.”17

Footnotes:

1 www.law360.com/articles/1581192/nj-medical-society-blasts-junk-science-in-virus-suit-denials (“Junk Science article”).

2 U.S. v. Gotti, 755 F. Supp. 1157, 1158 (E.D.N.Y. 1991) (quotations omitted).

3 For example, the Society’s brief (at p.8), which was submitted in Tory Burch, LLC v. Zurich Am. Ins. Co. (link to brief in Junk Science article), points out that “the CDC has stated there is little evidence indicating that routine use of disinfectants can prevent the transmission of SARS-CoV-2 from fomites in community settings, such as convenience stores.” Without context, that statement is misleading. The cited CDC article continues, “[r]outine cleaning performed effectively with soap or detergent, at least once per day, can substantially reduce virus levels on surfaces. When focused on high-touch surfaces, cleaning with soap or detergent should be enough to further reduce the relatively low transmission risk from fomites in situations when there has not been a suspected or confirmed case of COVID-19 indoors.” Science Brief: SARS-CoV-2 & Surface (Fomite) Transmission for Indoor Community Environments, CDC (updated Apr. 5, 2021), https://www.cdc.gov/coronavirus/2019-ncov/more/science-and-research/surface-transmission.html (emphasis added). Additionally, in footnote 12 of the Society’s brief, the Society cites a study by Northwell Health and asserts “the virus proved capable of surviving the disinfection procedures used by trained hospital personnel.” That study, however, also found that even though there were COVID particles found post-decontamination, (i) 57.6% (129/224) of samples carried quantifiable virus pre-decontamination compared to 23.3% (45/193) post-decontamination, and (ii) the viral load pre-decontamination was between 10 and 100 viral copies/cm versus between 0 and 1 viral copies/cm post-decontamination. Zarina Brune et al., Effectiveness of SARS-CoV-2 Decontamination & Containment in a COVID-19 ICU, 18 INT’L J. ENV’T RSCH. & PUB. HEALTH 5, 2479 (Mar. 3, 2021), https://www.mdpi.com/1660-4601/18/5/2479. Thus, while the virus was not fully eliminated on all surfaces by the hospital’s decontamination procedure, the rate of contamination decreased significantly and the viral load on those items that still had traces of the virus had been reduced by 90-99.99%.

4 See, e.g., Kim-Chee LLC v. Phila. Indem. Ins. Co., 535 F.Supp.3d 152, 159 (W.D.N.Y. 2021) (“The virus is short-lived—if ‘life’ is the correct expression—and is rendered harmless by the passage of a few days of exposure to the environment.”), aff’d, No. 21-1082-CV, 2022 WL 258569, at *2 (2d Cir. Jan. 28, 2022) (noting “virus’s inability to physically alter or persistently contaminate property”).

5 Include link to brief.

6 Corton, LLC v. Lexington Ins. Co., No. 2284CV000638-B, at pp. 8-9 (Suffolk Cty. Super. Ct. Dec. 19, 2022) (quoting Verveine Corp. v. Strathmore Ins. Co., 184 N.E.3d 1266, 1276 (Mass. 2022)). Include link to decision.

7 Corton, at p.9 (quoting Verveine Corp., 184 N.E.3d at 1276)

8 Stant USA Corp. v. Factory Mut. Ins. Co., — F.4th –, 2023 WL 2326096, at *3 (7th Cir. Mar. 2, 2023).

9 Sandy Point Dental, P.C. v. Cincinnati Ins. Co., 20 F.4th 327, 334-35 (7th Cir. 2021) (“[T]he gas infiltration … cases led to more than a diminished ability to use the property. It was so severe that it led to complete dispossession,” and “the contamination made the premises uninhabitable and unfit for normal human occupancy. In other words, the gas infiltration made physical entry impossible, thus barring all uses by all persons. … Sandy Point may have been unable to put its property to its preferred (and, we assume, its most lucrative) use. But this is a far cry from the complete physical dispossession of property suffered by the policyholders in the gas-infiltration cases.” (emphasis added; internal citations & quotations omitted)); see also Kim-Chee, 2022 WL 258569, at *2 (“virus’s inability to physically alter or persistently contaminate property differentiates it from radiation, chemical dust, gas, asbestos, and other contaminants”); Conn. Dermatology Grp. v. Twin City Fire Ins. Co., 288 A.3d 187, 206 (Conn. 2023) (no coverage where “there has been no physical, tangible alteration of [insured’s] properties, no persistent, physical contamination of the properties rendering them uninhabitable, and no imminent threat of physical damage to or destruction of the properties rendering them unusable or inaccessible”); Wakonda Club v. Selective Ins. Co. of Am., 973 N.W.2d 545, 554 (Iowa 2022) (“The closures [due to COVID] are unlike the physical threat cases because there was no imminent physical threat to the insured’s property.”).

10 Ind. Repertory Theatre v. Cincinnati Cas. Co., — N.E.3d –, 2023 WL 1950974, at *3 (Ind. Ct. App. Feb. 13, 2023) (internal citations omitted & emphasis added).

11 Generally, the property policies at issue provide that they will cover the loss of business income the insured sustains due to the necessary suspension of its operations “caused by direct physical loss of or damage to property.” Inns By The Sea v. Cal. Mut. Ins. Co., 71 Cal.App.5th 688, 698 (2021) (“the issue we must resolve is whether the suspension of operations was ’caused by direct physical loss of or damage to property at [Inns’] premises.'” (emphasis added & quotations omitted)).

12 Soc’y Br., Att’y Certification at ¶ 9.

13 Inns By The Sea, 71 Cal.App.5th at 704 (“[C]onsider[] what would have taken place if Inns had thoroughly sterilized its premises to remove any trace of the virus after the Orders were issued. In that case, Inns would still have continued to incur a suspension of operations because the Orders would still have been in effect and the normal functioning of society still would have been curtailed. …”); see also Circus Circus LV, LP v. AIG Specialty Ins. Co, 21-15367, 2022 WL 1125663, at *1 (9th Cir. Apr. 15, 2022) (“Despite Circus Circus’s allegation that the COVID-19 virus was present on its premises, it has not identified any direct physical damage to its property caused by the virus which led to the casino’s closure.”); Torgerson Props., Inc. v. Continental Cas. Co., 520 F.Supp.3d 1155, 1158 (D. Minn. 2021) (“Here, it is not the presence of the virus on the premises that closed TPI’s properties (or caused people to stop visiting those properties), but rather the executive orders meant to slow the virus’s spread.”).

14 E.g., Raymours Furniture Co. v. Lexington Ins. Co., 655167/2020, 2021 WL 4789148, at *1 (N.Y. Sup. Ct. Oct. 14, 2021) (“The business interruption here wasn’t from Covid-19, rather it was caused by governmental shutdown orders which temporarily restricted non-essential business operations. For the avoidance of doubt, Raymours opened its stores as soon as governmental restrictions lifted and there was no change, at the time, in the effects of any Covid-19 particles.”); Circus Circus LV, LP v. AIG Specialty Ins. Co., 525 F. Supp.3d 1269, 1276 (D. Nev. 2021) (noting insured must show “permanent ‘loss’ or dispossession from the property”; “Circus Circus has alleged nothing of the sort, admitting that it reopened its doors a few months after the governor’s closure orders.”); IM Stein Inc. v. Society Ins., 20 CH 301, at pp. 6-7 (Ill. Cir. Ct. Nov. 15, 2021) (“The businesses were shut down or limited on March 16, 2020 regardless of whether there was coronavirus within them or not. Likewise, when the [stay at home] orders were lifted Plaintiffs did not have to establish their premises were coronavirus free. … Put another way, if the ‘continuous presence’ of the coronavirus rendered Plaintiffs’ premises unsafe and unfit for their intended use … how is it that Plaintiffs were able to resume business operations without establishing coronavirus had been eradicated from the premises?”).

15 Inns-by-the-Sea, 71 Cal.App.5th at 705 (emphasis added & quotations omitted).

16 Id.

17 Soc’y Br., at p.3.