Essentia files $5 million lawsuit against insurance company

A lawsuit filed in federal court last week alleges Essentia Health was wrongfully denied coverage of losses caused by the coronavirus pandemic. The Duluth-based health care provider is demanding a jury trial and $5 million in damages from ACE American Insurance.

Essentia Health Hospital FILE.JPG
Essentia Health in Duluth as seen in July. (Tyler Schank / 2020 file / News Tribune)
Tyler Schank
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A lawsuit filed by Essentia Health on Thursday is requesting $5 million in compensation from ACE American Insurance for refusing to cover losses from the COVID-19 pandemic.

The lawsuit, filed in federal court by attorneys at Maslon LLP in Minneapolis, claims Duluth-based Essentia was wrongfully denied "business interruption loss" coverage May 8, 2020, after citing $59.54 million in losses across 15 insured care facilities in April as a direct result of the pandemic.

The losses are credited in part to the executive order issued by Minnesota Gov. Tim Walz in March that postponed all nonessential or elective surgeries, plus the suspension of regular physical exams and doctor visits.

Essentia is arguing that the COVID-19 pandemic is a pollution condition and therefore is covered by ACE's "Premises Pollution Liability Portfolio Insurance Policy," which has a condition limit of $5 million. The policy period for the coverage is April 1, 2018, to April 1, 2021.

The complaint includes instances of other cases in which ACE conceded in court that viruses, including SARS and influenza, were pollution contaminants.


The complaint alleges that ACE has proposed and insisted on the addition of a communicable, infectious or contagious diseases exclusionary endorsement to its policy that would deny coverage of losses related to bacteria, viruses, microorganisms, pathogens or prions.

"ACE's actions in seeking to add this virus exclusion into its renewal policies is a reflection of the lack of clarity and ambiguity in the policy as to whether a virus like the coronavirus constitutes a 'pollution condition,'" the complaint states.

Essentia claims that the denial of this coverage is a breach of contract between the two entities and demands a jury trial.

Representatives from Essentia declined to comment on the lawsuit.

ACE, located in Philadelphia, Pennsylvania, is part of the Chubb Limited corporation. Chubb has not responded to a request for comment.

Laura Butterbrodt covers health for the Duluth News Tribune. She has a bachelor of arts in journalism from South Dakota State University and has been working as a reporter in Minnesota and South Dakota since 2014.
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