Trial Court Grants Motion to Dismiss Complaint Based on Virus Exclusion in Policy

As the year goes on, state and federal trial courts will continue to tackle legal issues brought on by COVID-19. One recent decision comes from the Middle District of Florida, which recently granted an insurance carrier’s Motion to Dismiss a dental practice’s Complaint brought under the business income and civil authority provisions of the policy.

In Martinez, DMD, P.A. v. Allied Insurance Company of America,¹ the carrier provided a commercial insurance policy to a dental practice. In March 2020, Florida’s Governor issued an executive order declaring a state of emergency in Florida due to COVID-19 and President Trump, the Centers for Disease Control and Prevention (CDC), and Medicaid recommended that dentists limit non-essential dental procedures. In its Complaint, the dental office alleged that it (1) incurred costs to decontaminate the dental office and (2) lost business income for the limited services the dentist could render during COVID-19.

After experiencing monetary losses, the dental office claimed that the carrier breached the insurance policy by denying benefits under the business income and the civil authority provisions of the policy. Along with physical damage, the dental practice sustained monetary losses from the need to decontaminate and close and also suffered a loss of business income.

The carrier filed a Motion to Dismiss, arguing that the dental office failed to state a claim upon which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). As its reasons, the carrier cited to the policy, arguing that there was no coverage because there was no action of civil authority prohibiting access to the dental office, that no damage had been sustained within a one-mile radius, and the policy contained an exclusion for loss or damage caused “directly or indirectly” by “[a]ny virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness, or disease.”

After considering the arguments of counsel, and accepting the allegations as true, the trial court granted the insurer’s Motion to Dismiss, finding that because the damage resulted from a virus, it did not fall under the “Covered Cause of Loss” plain language of the policy.

While this decision comes from the Middle District of Florida, other trial courts will continue to grapple with legal questions stemming from COVID-19. To remain apprised of the changing legal landscape, insureds should contact capable legal counsel to assist them with any uncertainty.
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¹ Martinez v. Allied Ins. Co. of Am., 220CV00401, 2020 WL 5240218 (M.D. Fla. Sept. 2, 2020).