Lawrence General Hospital v. Continental Casualty Co., No. 23-1286 (1st Cir. 2024)

United States Court of Appeals, First Circuit.

LAWRENCE GENERAL HOSPITAL, Plaintiff, Appellant, v. CONTINENTAL CASUALTY COMPANY, Defendant, Appellee.

No. 23-1286

Decided: January 10, 2024

Before Gelpí, Howard, and Rikelman, Circuit Judges.

Roman Martinez, with whom Robert J. Gilbert, Michael Huggins, David A. Barrett, Margaret A. Upshaw, and Latham & Watkins LLP were on brief, for appellant. Kannon K. Shanmugam, with whom H. Christopher Boehning, Matthew M. Higgins, Brian M. Lipshutz, Kenneth N. Thayer, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Conn Kavanaugh Rosenthal Peisch & Ford, LLP were on brief, for appellee.

In Lawrence General Hospital v. Continental Casualty Co., the United States Court of Appeals for the First Circuit reviewed a case in which Lawrence General Hospital (LGH) sought insurance coverage for losses allegedly incurred during the COVID-19 pandemic. LGH argued that its policy with Continental Casualty Company covered these losses under two provisions: (1) coverage for “direct physical loss of or damage to property,” and (2) a Health Care Endorsement that covered losses and costs related to compliance with government decontamination orders.

The court, applying Massachusetts state law, upheld the lower court’s dismissal of LGH’s claim regarding “direct physical loss of or damage to property.” The court agreed with the lower court that the presence of the SARS-CoV-2 virus did not constitute “direct physical loss or damage” to LGH’s property, as required for coverage under that provision.

However, the court found merit in LGH’s claim under the Health Care Endorsement. The endorsement provided coverage for losses and costs incurred due to compliance with government decontamination orders. The court determined that LGH had been subject to such orders during the COVID-19 pandemic and, therefore, had a valid claim under this endorsement. Consequently, the appellate court reversed the lower court’s dismissal of this claim and remanded the case for further proceedings to address LGH’s entitlement to coverage under the Health Care Endorsement.

In summary, the First Circuit affirmed the dismissal of LGH’s claim related to “direct physical loss of or damage to property” but reversed and remanded the dismissal of the claim under the Health Care Endorsement, allowing LGH to pursue this aspect of its insurance coverage claim.