Eleventh Circuit Says Business Interruptions Policy Did Not Cover Georgia Dental Clinic’s COVID-Related Losses
- September 03, 2021
The Eleventh Circuit held August 31 that a Georgia dental clinic’s business interruptions policy did not cover losses it incurred as a result of the COVID-related suspension of routine and elective procedures.
The Eleventh Circuit is the latest federal appeals court to address whether businesses can recover under insurance policies for losses stemming from the pandemic. In July, the Eighth Circuit rejected a similar claim by a dental clinic under its business interruptions policy. Oral Surgeons, P.C. v. The Cincinnati Ins. Co., No. 20-3211 (8th Cir. July 2, 2021).
In spring 2020, Gilreath Family & Cosmetic Dentistry, Inc. stopped performing non-emergency procedures at its office in Marietta, GA after Georgia’s governor ordered residents to “shelter in place” and following Centers for Disease Control and Prevention guidance. As a result, Gilreath lost a “substantial portion” of its income and sought to recover under its business interruptions policy with its insurer, Cincinnati Insurance Company.
Cincinnati Insurance denied the claim because Gilreath failed to assert any physical loss or damage to property, either at or off the dental practice’s premises. Gilreath sued for breach of the policy. A district court dismissed, finding the complaint failed to state any direct physical loss or damage to property had occurred. The Eleventh Circuit affirmed.
Gilreath claimed the policy’s provisions were triggered while the government restrictions were in effect. But the Eleventh Circuit disagreed, noting the COVID-19 pandemic and related shelter-in-place orders did not cause direct “accidental physical loss” or “damage” to the dental practice’s property per the policy as interpreted under Georgia law.
“Gilreath has alleged nothing that could qualify, to a layman or anyone else, as physical loss or damage,” the appeals court said. The shelter-in-place order did not damage or change the dental clinic property and, in fact, the practice continued to use the property for emergency procedures, the appeals court noted.
Gilreath Family & Cosmetic Dentistry, Inc. v. The Cincinnati Ins. Co., No. 21-11046 (11th Cir. Aug. 31, 2021) (unpublished).