North Carolina health system sues insurer over $1.5B policy payout

Novant Health has filed a lawsuit against a subsidiary of Zurich, alleging the insurance carrier should cover the Winston-Salem, N.C.-based health system's pandemic-related losses, according to Law360.

The health system is suing American Guarantee and Liability Insurance for breach of contract, alleging the company refused to honor its obligations under a $1.5 billion policy. Novant further alleges that the insurer failed to fully investigate its claim. 

Novant says it experienced physical loss to its property because COVID-19 affected its business. For example, halting elective procedures and procedure cancellations resulted in "the inability to use its property for its intended purposes," according to court documents cited by Law360

Novant claims it lost hundreds of millions of dollars due to suspending nonessential surgeries, and argues those losses should be covered by the insurance policy. 

Novant first sued the insurance company in March in North Carolina state court. The lawsuit was removed to federal court April 16. 

Lawyers representing the parties did not respond to Law360's request for comment. 

Health systems in New Jersey and Virginia are also suing Zurich for allegedly refusing to cover their pandemic-related losses. 

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.