CNA Wins Eighth Circuit Appeal Over COVID-19 Business-Interruption Insurance Provisions

Paul, Weiss won a significant appellate victory on behalf of a CNA Financial Corporation subsidiary in a case concerning COVID-19 business-interruption insurance coverage. The appeal, Olmsted Medical Center v. Continental Casualty Company, presented the questions of whether business-interruption provisions in commercial property insurance policies should be drastically expanded to cover income lost during the COVID-19 pandemic.

In a unanimous published opinion, a panel of the U.S. Court of Appeals for the Eighth Circuit affirmed a Minnesota district court’s dismissal of the policyholder’s claims. The panel reaffirmed that the key policy language in four of the provisions—“direct physical loss of or damage to” property—refers to tangible alteration of property and does not extend to the loss of use of property. While the court acknowledged that “some forms of physical contamination may support a finding of ‘direct physical loss,’” it held that SARS-CoV-2 is not the kind of contaminant that results in such direct physical loss.

The claims in this case arise from the COVID-19 pandemic. The policyholder, which provides preventive, primary and specialty healthcare in southeastern Minnesota, filed a claim for coverage of lost business income with Continental Casualty Company, a CNA subsidiary. After Continental denied the claim, the policyholder filed an action alleging breach of contract, and seeking damages and declaratory relief. The district court dismissed the suit in January 2022.

The win is the 10th appellate victory for Paul, Weiss on behalf of CNA and its subsidiaries in COVID-19 business-interruption litigation.

The Paul, Weiss appellate team included litigation partners Kannon Shanmugam and Christopher Boehning, and counsel Daniel Levi.