The Pennsylvania Supreme Court recently issued an opinion providing helpful language policyholders and their counsel will likely cite in support of arguments for insurance covering business interruption losses related to the COVID-19 pandemic.
In Friends of DeVito, et al. v. Tom Wolf, Governor, et al., Pennsylvania business owners brought an emergency petition for relief against the governor’s executive order closing nonessential businesses to slow the spread of COVID-19. The petitioners generally argued the governor exceeded his statutory authority in issuing the executive order.
The court found “the governor is vested with broad emergency management powers under the Emergency Code.” Indeed, the governor is “responsible for meeting the dangers to this Commonwealth and people presented by disasters,” and the governor may, by proclamation or executive order, declare a state of emergency.
Upon the declaration of a disaster emergency, the governor has “expansive emergency management powers,” which include controlling the ingress and egress to and from a disaster area. The petitioners raised several challenges to the application of these powers in response to a viral illness such as COVID-19.
First, the petitioners argued COVID-19 is not a “natural disaster” as defined by the Emergency Code. The court disagreed, finding COVID-19 qualifies as a “natural disaster,” which is defined as: “Any hurricane, tornado, storm, flood, high water, wind-driven water, tidal wave, earthquake, landslide, mudslide, snowstorm, drought, fire, explosion or other catastrophe, which results in substantial damage to property, hardship, suffering or possible loss of life.”
Second, the petitioners argued that even if the COVID-19 pandemic constitutes a “disaster,” the governor’s authority to control ingress or egress to and from a disaster area did not apply because there had not been any disasters in the areas in which their businesses were located.
The court found “no merit” in that argument, and found the petitioners’ argument ignored “the nature of this virus and the manner in which it is transmitted[:]”
"The virus spreads primarily through person-to-person contact, has an incubation period of up to 14 days, one in four carriers of the virus are asymptomatic, and the virus can live on surfaces for up to four days. Thus, any location (including Petitioners’ businesses) where two or more people can congregate is within the disaster area."
Therefore, the court held the COVID-19 pandemic triggered the governor’s authority under the emergency code and the governor had the authority to declare “the entirety of the commonwealth a disaster area.”
Finally, the petitioners argued the respondents exceeded their police powers by ordering the closure of businesses deemed to be non-life-sustaining. The court disagreed, discussing again the risks of the virus. The court noted the exponential increase in positive cases and deaths in Pennsylvania within a short amount of time.