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Texas Court overturns $12 mn jury award granted to Baylor College in a COVID-19 case

Texas Appeals Court overturns $12 mn jury award granted to Baylor College in a COVID-19 case

A Texas appeals court overturned a $12 mn jury award granted to Baylor College of Medicine in a COVID-19 business interruption case, according to BestWire.

Justice Ken Wise of Texas’ 14th Court of Appeals stated that the decision helped ensure consistency in interpreting identical insurance provisions.

Baylor’s lawsuit was among the first COVID-related business interruption cases heard by a jury. The jury initially awarded $48.5 mn in damages against XL Insurance America, Ace America Insurance, and multiple Lloyd’s syndicates.

Court records show XL Insurance and Ace America successfully appealed in February 2024. The judge ruled Baylor failed to prove that virus-related exclusions were unclear.

In the Lloyd’s syndicate appeal, the court found no sufficient evidence to support the jury’s conclusion that COVID caused “direct physical loss of or damage” to Baylor’s property.

The appeals judge noted that courts nationwide have generally ruled COVID did not physically affect property. Courts have also stated that direct physical loss or damage requires a tangible alteration or deprivation of property.

Attempts to reach Baylor and the insurers’ legal representatives for comment were unsuccessful.

Most courts have ruled similarly, but one major exception involved North Carolina restaurant owners who demonstrated that COVID and the resulting government shutdown led to direct physical loss.

A three-judge panel of the 14th Court of Appeals said in Lloyd’s Syndicate 1967 et al. v. Baylor College of Medicine that the majority of courts that have ruled in COVID-19 coverage disputes disagreed with policyholders that the virus can cause covered physical damage.

The panel said it was “striving for uniformity with other jurisdictions that have applied identical or similar policy language.”

The Houston-based medical school sued Lloyd’s underwriters and other insurers that issued it “all risks” policies in Texas’ 295th District Court for Harris County in September 2020 after they denied coverage for business losses caused by the pandemic.