Insurance Upset

Answers, she discovered, were not forthcoming. “Nobody knew, because this was something that had never been tested before,” she says. The best the brokers could do was offer educated guesses. “The feeling seemed to be that if an employee claimed to become infected because of coming into work, the claim would be considered a workplace injury. So it would be covered by workers’ compensation rather than by our general liability policy.”

Sounds reasonable. Workers’ compensation, though, presented its own problem: a requirement that illness be incurred while an employee is physically on the job. Unless someone lived in a bubble and didn’t get out of it until they stepped foot in the office, notes Lawson, it would be difficult to isolate the infection’s exact source. “All the brokers I spoke with asked me, ‘How do you prove the employee contracted the illness at work?’”

The answer to that question remains unclear to this day. “I tried calling workers’ comp and never could get through to a human,” says Lawson, likening her experience to being on an endless treadmill. “I went round and round for a couple of weeks. So we left it there.”

Lawson’s experience typifies that of many legal organizations trying to determine coverage for COVID-19 damages.

“The ability to prove that any individual contracted the virus at a law office is going to be almost impossible,” says Bob Gregg, Co-Chair of the Employment Practice Law Group at Boardman & Clark LLP in Madison, Wisconsin. “It would have to be a highly unusual situation to pin it down to a particular spot out of all the places a person might have been — such as a grocery store from another customer, their own house from a relative or somewhere else from a friend.”

Sometimes contact tracing can help isolate the point of infection. When an employee at Thomas Horstemeyer recently tested positive for COVID-19, the infection was traced to another person at the office. The newly infected individual self-quarantined for two weeks at the firm’s direction. While a second test came back negative, a positive result would have pointed toward a workers’ compensation claim.

The uncertainty that has arisen around COVID-19 coverage may stimulate change in the typical insurance policy.

“I think that there was a strong argument to be made that the infection was contracted at the office in the line of duty,” says Jack Huddleston, the firm’s Executive Director of Administration. “If there is evidence of a linkage between the contact in the office and when the positive test occurred, I’m not sure how the insurance company could deny coverage.”

Even so, the firm had plan B in place if workers’ compensation were to reject the claim. “That’s what our short-term disability policy is for,” says Huddleston. “That insurance does not care if the illness was incurred while at the office. All that matters is that the person is disabled from work. What we would probably do is have the person file claims for both workers’ compensation and short-term disability and then let the insurance companies sort it out.”

If it’s challenging to determine the source of an infection incurred by employees, the same uncertainty arises when it comes to clients, vendors and visitors. Normally an employer would turn to protection provided by Commercial General Liability (CGL) insurance. Yet the small print in such policies often carves out infection coverage. Those that do cover communicable diseases usually require that the firm incur legal liability — but what constitutes breach of care regarding COVID-19 is an unsettled area and will most likely rely on violation of state and local laws that vary regionally.

The uncertainty that has arisen around COVID-19 coverage may stimulate change in the typical insurance policy.

“I would not be surprised if in the next 24 to 36 months we start to see a push for separate insurance for pandemics, just as a new breed of supplemental insurance came out a few years ago after all the security breaches and hacks and ransomware hit,” says Huddleston. “In particular, I think medical, short-term disability and workers’ compensation insurance may carve out specific riders that deal with pandemic issues.”

Huddleston adds that, in all this change, the market may be a key driver. “Prospective clients concerned about business sustainability may ask, ‘What are you going to do if there’s another pandemic? What plans and insurance do you have in place?’”