Healthcare Network Loses Battle for COVID-19 Coverage in N.J. Federal Court

PARAMUS, N.J. — A New Jersey judge has dismissed a healthcare network’s COVID-19 coverage action against Zurich American Insurance Co., ruling that its loss of revenue during the pandemic was not caused by “direct physical loss or damage to property,” as required by the policy.

In an Oct. 18 order, Judge Robert C. Wilson of the Bergen County (N.J.) Superior Court explained that Valley Health System Inc. and its affiliates failed to allege a “distinct, demonstrable, physical alteration of property.”

“The requirement that the loss be ‘physical,’ given the ordinary definition of that term is widely held to exclude …