Court Finds Each COVID Claim Against a National Nursing Home Chain is a Separate Event

Earlier this month, a federal court in Pennsylvania ruled that each claim alleging COVID-19 exposure at nursing homes owned by Genesis Healthcare, Inc. constituted a separate “healthcare event” under the nursing chain’s policy with National Fire and Marine Insurance Company. As a result, each claim was separately subject to the policy’s $3 million self-insured retention provision.

Thousands of residents at Genesis-owned nursing homes in 13 states contracted COVID-19 in 2020. In the wake of this outbreak, Genesis faced numerous lawsuits and pre-suit demands alleging that the nursing home facilities failed to protect their residents. Prior to receiving notice of any lawsuits from Genesis, National Fire and Marine’s agent sent an email to Genesis indicating that all COVID-19 claims would be treated as a single health care event and, thus, Genesis would only have to exceed the self-insured retention amount once. Subsequently, however, National Fire and Marine changed its position and filed a declaratory judgment action against Genesis seeking, among other rulings, a finding that each case involving COVID-19 exposure qualified as a separate health care event as defined in the policy.

Despite National Fire and Marine’s initial representation, the Court agreed that each case was a separate “health care event.” Genesis argued that all COVID-19 claims should be treated as a single health care event because they all stem from an alleged failure of its containment protocols. The Court, however, noted that Genesis never substantiated these alleged company-wide COVID-19 protocols. Moreover, the Court was not convinced the cases all stemmed from the same proximate cause because they each involved different conditions that caused the alleged COVID-19 exposure.

Given the structure of the applicable policy’s self-insured retention provision, the insurer is certainly happy with this outcome, but it is easy to imagine a factual scenario that would incentivize the insurer to seek a finding that the claims constituted a single “health care event.” Accordingly, for policyholders, it is always important to understand policy details such as the definition of a covered event, the self-insured retention amount, and the aggregate policy limits and how those details could dictate the insurer’s position in a coverage dispute.

The case is National Fire & Marine Insurance Co. v. Genesis Healthcare Inc., case number 2:22-cv-01500, in the U.S. District Court for the Eastern District of Pennsylvania.