COVID-19 insurance lawsuit against Las Vegas Treasure Island heading to trial
Treasure Island Las Vegas is facing a lawsuit seeking compensation from its primary property insurance company for business losses during the COVID-19 pandemic.
A federal judge in Nevada District Court ruled on March 29 that a lawsuit filed by Treasure Island, LLC, the parent company of the Las Vegas Strip casino resort, against Affiliated FM Insurance Company is allowed to proceed. Treasure Island Law Firm, owned by billionaire Phil Ruffin, filed a lawsuit against AFM in July 2020 after AFM refused to pay a property insurance claim.
"Plaintiff has presented to the jury ample evidence that he suffered actual bodily loss and damage," U.S. District Judge James Mahan wrote.
AFM's legal team has asked Mahan for summary judgment and dismissal of the case. Mahan agreed that the insurance giant did not act in bad faith or violate Nevada's Unfair Claims Practices Act as Treasure Island alleged, but said the casino's claim that it suffered "physical loss or damage" requires further review.
In Nevada, the then-governor closed all land-based casinos. Steve Sisolaks (D) order valid from March 17 to June 4, 2020.
Rare Situation in the Future
In the wake of the pandemic, many commercial and tribal casinos have sued property insurance companies for failing to pay claims. Federal and state courts almost unanimously sided with the insurance companies because the casino buildings suffered no direct physical damage from the airborne virus.
Mahan, however, believes Treasure Island's legal record is not that clear. That's largely due to the casino's property insurance, which includes a communicable disease provision that covers "reasonable and necessary expenses incurred for the cleaning, removal, and disposal of communicable diseases...in the insured property."
Treasure Island applied for coverage under the Infectious Disease Part on March 19, 2020. Claim denied.
AFM's response said the claim was dismissed because "no insurance exists without physical loss or damage". Treasure Island filed the lawsuit in July.
Mahan agrees with Treasure Island that the air within the property is covered property and that covered property causes physical harm to employees and guests due to COVID-19 infection. Mahan also wrote that viruses and pathogens may not be excluded from coverage.
“The policy excludes ‘contamination and any costs arising out of contamination, including any costs incurred in preventing the use or occupation of the property, or in making the property safe or suitable for use or habitation.’”, the judge explained. .
Exclusion Denied
In his order, Mahan said AFM's contamination and use exclusions in the agreement were poorly worded and unspecific.
Although the Directive mentions the word "virus" in the context of the contamination exclusion, this fact alone does not indicate that the contamination exclusion applies in this case. There is a "communicable disease" clause in the policy that covers the physical removal of disease. Plaintiffs reasonably argued that "it makes no sense (and is impossible) to cover the physical removal of disease but exclude the virus that causes it," Mahan continued.
Mahan called the provisions "conflicting" and cited a 2011 case against Liberty Mutual Insurance Company, which concluded that "vague or unclear policy provisions" should be "construed narrowly and against the insurer." ".
Under Mahan's order, Treasure Island's case against AFM Global is set to go to a jury later this year, pending an appeal by the insurance company.
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Source: www.casino.org
