Cedars-Sinai Medical Center is suing an insurance company for allegedly breaching a contract to provide pollution cleanup cost coverage at its facilities that were associated with the coronavirus pandemic.
Cedars-Sinai’s Los Angeles Superior Court lawsuit seeks unspecified damages with interest from AIG Specialty Insurance Co. as well as attorneys’ fees and a declaration of the rights of the parties.
Cedars-Sinai spent nearly $336,000 in premiums thinking it was obtaining superior coverage, but after years of “unjustified delays,” AIG wrongfully denied coverage to the plaintiff based on “shifting and sometimes even conflicting positions,” the suit states.
An AIG representative did not immediately reply to a request for comment on the suit brought Feb. 9.
Under what the suit states is an AIG commercial pollution legal liability policy, Cedars-Sinai seeks millions of dollars in cleanup costs and business interruption losses directly resulting from the spread of the coronavirus throughout its insured properties.
According to the suit, the hospital’s policy expressly covers losses caused by “the discharge, dispersal, release or escape of viruses,” making it unlike other cases brought by commercial plaintiffs that required direct physical loss or damage to property and often barred coverage for losses caused by viruses.
In contrast, the Cedars-Sinai policy with AIG does not require such a demonstration of physical loss or damage and doe allow compensation for losses connected to viruses, the suit alleges.
Cedars-Sinai had thousands of confirmed positive COVID-19 tests from patients who repeatedly brought the COVID-19 onto Cedars-Sinai’s properties and spread the virus throughout them, resulting in substantial cleanup costs and business interruptions that included cancellations of thousands of elective surgeries and procedures, the suit states.
Cedars-Sinai is entitled to reimbursement for the losses under the express terms of the policy’s coverages, according to the complaint.
In its coverage denial, AIG initially rejected coverage under a separate property policy that had an express exclusion for pollution, then later maintained that the spread of the COVID-19 is not a pollution condition, the suit states.
“AIG cannot have it both ways, either the spread of the coronavirus is pollution or it is not, and AIG cannot take blatantly contradictory positions regarding the meaning of the term `pollution’ simply to benefit itself at the expense of its insured,” the suit states.