Pittsburgh-based Allegheny Health Network and dozens of hospitals and physician practices are suing property insurer American Guarantee Liability Insurance Co., alleging breach of contract.
The lawsuit was filed in the Court of Common Pleas of Allegheny County in June, and the insurance company recently filed a motion to move the case to the court's Commerce and Complex Litigation Center, according to the Pittsburgh Post-Gazette.
Allegheny Health Network is seeking up to $1 billion in insurance-covered benefits under a policy purchased from the insurer for business interruption losses tied to the COVID-19 pandemic. The health system alleges the insurer refuses to pay more than $100,000 for losses, according to the report.
"AGLIC's failure to investigate or adjust the claim of AHN and claims of other policyholders in good faith has caused severe detriment to AHN and other policyholders across Pennsylvania and the nation and unnecessarily exposes business to severe financial hardship and potentially bankruptcy, threatening the employment of thousands, and damaging the economic well-being of society as a whole," Allegheny Health alleges in court documents.
Other health systems have filed similar actions against property insurers, and courts have ruled that COVID-19 does not cause direct physical loss or damage to property as required by the insurance policies.