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COVID-19 has sparked significant litigation across the country and presents new challenges for courts to decide. While lawmakers are attempting to limit COVID-19-related litigation by passing liability shield laws and introducing penalties for making a practice out of COVID-19 litigation for attorneys, more and more COVID-19-related lawsuits are being filed. One tool available to courts to reduce this caseload is consolidation under 28 U.S.C. § 1407, which authorizes the Judicial Panel on Multidistrict Litigation (MDL) to centralize cases with one or more common questions of fact. Multidistrict litigation was created to help courts navigate the work-related asbestos cases of the 1990s. The federal MDL panel has received petitions to consider MDL for lawsuits related to COVID-19 business interruption insurance and against banks regarding their handling of COVID-19 SBA loans and repayment of agents.

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Since March, hundreds of businesses have filed lawsuits against insurance companies for denied lost revenue claims following COVID-19 shelter-in-place orders. Businesses that have been forced to shut down and shelter-in-place in response to government orders may be able to recover lost earnings through civil authority insurance coverage. Civil authority insurance is a common extension of coverage in business interruption insurance policies. Civil authority insurance provides coverage for income losses resulting from mandatory government orders that impaired or prohibited access to an insured’s business.

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All types of businesses across the nation have incurred substantial losses in earnings due to COVID-19 shutdowns and are struggling to make it through these difficult times. Businesses that were unable to operate during the pandemic either from voluntary or mandatory shutdowns should consult their insurance policies to determine whether they have business interruption coverage. Business interruption insurance generally covers lost earnings incurred from an interruption of normal business operations caused by damage to the insured property. The purpose of the insurance policy is to put the policyholder back in the position it would have been had the interruption not occurred.

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