Flood of COVID-19-related lawsuits expected to hit courts

Toronto restaurateurHemant Bhagwanisays he washit hard bythe government-imposed restrictions placed on his businesses because of the coronavirus pandemic, buthe assumed his insurance company would cover the losses.

But Bhagwani, who says he has paid over $5 millionin insurance premiumsacross his various restaurants, including for business interruption coverage,now says Allianz Global Risks is denying his claims.

"They went back and forth with us and said this is not covered. We don't cover a pandemic."

So he is suing. According to the statement of claim, theinsurance company has "breached the policies."

"Thisis not fair. I feelfor 18 yearsI have paid insurance. I've never defaulted," Bhagwanisaid. "I think they need to come up and ... cover us right now."

Allianz Global Risks, which did not reply to inquiries from CBCNews, is just one of a number of insurance companies facing lawsuits from angry clients who are being denied COVID-19-related claims. And the insurance industryis just one of a number of entities targeted bylegal action emanating from the pandemic.

Legal experts say to expect a slew oflawsuits to be filed in the coming months.

"Will there bea big bubble? Yes, absolutely," saidErik Knutsen, a Queen's University law professor and co-author ofCanadian Tort Law andThe Civil Litigation Process.

"Is that a bad thing? No, because that's how we sort these things out. That's the mechanism. Do I expect there will be a large explosion of COVID-19related litigation? 100 per cent."

'Flood of litigation'

Jasminka Kalajdzic, an associate law professor at the University of Windsor and director of the Class Action Clinic, agreed that there willlikely be a "flood of litigation.

"Any time there is mass harm,lots of people suffering financially, physically, they'relooking tohold people accountable, entities accountable," she said.

"Whether any of these, most of these, cases are going to be successfulis abig question."

According to research conducted by the law firm DLA Piper, there were just under 700COVID-19 related individual legal actions and 176class actions filed in the U.S. as of April 28.

In Canada, a total of 17 COVID-19-related class actions were filed across Canada with many more under investigation as of the same date. There have also been a number of high profile, non-class action claims commenced, the law firm said.

Because Canadian class action plaintiff lawyers closely monitor U.S. court filings, the law firm said itanticipates a"host of 'copycat'class proceedings in Canada."

In the U.S.:

• Nursing homes, where the virus has been most deadly,are expected to be hit by an onslaught of litigation.
• Companies includingAmazon and Costco are facing lawsuits, accused ofprice gouging.
• Insurance companies are being taken to court for denying claims.
• Airlines are being sued for not refunding tickets.
• Cruise lines are being sued for negligence in theirresponse to the COVID-19 outbreak.
• Schools are facing lawsuits from students who aredemanding partial refunds on tuition and campus fees, arguingthey're not getting the calibre of education they were promised.

Canada may follow similar path

Experts say Canada may follow a similar path and in a few cases already has.

For instance, a$50-million class action lawsuit has been launched against ReveraRetirement Living on behalf of the families of COVID-19 victims atthe company's long-term care facilities in Ontario.

Also, a Regina-based law firm has issued a national class action against indemnity insurers in Canada that are not paying business owners for losses accumulateddue to the pandemic.

Andclass action lawsuits are being launched against Canadian airlines by passengersseeking full refunds forflights cancelled during thepandemic.

Reasonableness defence

For many of these cases,Knutsen said that the defendants will have to prove that theiractions were "reasonable" in the circumstances.

"What you have to do is basically look around and say, 'What did similar industriesdo at the time or whathave they oughtto have been doing at the time based on the knowledge at that time?'

"The main defence for reasonableness is you don't have to be perfect."

As well, courts expect individualsto have acted as a reasonable person would in an emergency, he said.

If it's a case of negligence, like those pertaining tonursing homes or cruise lines, the defence will likely be that none of it was foreseeable, that theycouldn't predict orpreventall infections and that theycomplied with government regulations, Kalajdzic said.

Force majeure

Buteven thoughplaces like nursing homes may have met the minimum standards set out by the government,that doesn't mean they met the negligence standard, Knutsen said.

Even if astatute of standards has beenpassed by the government, those standards may not meet the reasonableness test, he said.

"You mayhave to do more. The catch is it has to be obvious to a layperson,nota lawyer, a non-expert, that the standard itself was deficient."

As for insurance companies,Kalajdzic said they willlikely employ the force majeure defence, also known as "an act of God,"arguing they are not bound to cover the claims of their clients because of an unusual event that could not have been predicted or prevented.

For business interruption coverage claims, insurers could also argue that the coverage is intended in the event ofa business sufferingdirect physical loss or damage to the property, Knutsen said.

"Theargumentfrom the insurers, I expect [will be], you didn't suffer a direct physical loss or damage in some fire."

Pressure for lawmakers to immunize companies

However, in the U.S., at least, there's already a lot of pressure on governments to pass statutes that immunize various companies against liability,Kalajdzic said.

Nursing homes are pushing back against potentiallawsuits with a lobbying effort to get states to grant them emergency protection from claims of inadequate care.

"There may be a solid case in law, but if the government passes a statute that provides statutory protection against liability, then there's very little litigants can do," Kalajdzic said.

And there's precedent, she said.In the wake of 9/11,Congress passed a statute that immunized airlines from any civil liability.

"I think industries that are reeling, like airlines, like cruise ships, like service industry,health-care facilities, they're probably going to be looking to the government for protection," she said.