Washington State University Sues Insurer For $63M Over COVID-19 Costs
Spokesman-Review (Spokane, WA)
Washington State University wants its insurance provider to pay $63 million more to cover its costs responding to the COVID-19 pandemic.
The university's lawsuit against Factory Mutual, originally filed in Whitman County in July, has been moved to federal court in Spokane. In it, the school argues that Factory Mutual is interpreting its policy too narrowly and denying additional payments.
"The Pandemic made it necessary for WSU to suspend operations, incur extra expense, and to undertake costly efforts to protect and preserve property from further damage or loss including making physical alterations to its property," the university argues in its complaint, which requests damages "not less than $63,068,573."
Factory Mutual, operating under the trade name FM Global and based in Rhode Island, requested that the lawsuit be heard in federal court. It denies that it owes the additional money to WSU.
"FM Global values the long-term relationships we have with our policyholders and we are proud to be leading the industry for claims service," Steven Zenofsky, assistant vice president of public relations at the company, said in a statement. "It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided."
A WSU spokesman confirmed Wednesday that the school had received an initial payment, but far less than it believes it's owed by Factory Mutual. Under the terms of the policy, WSU was eligible for up to $1 million in payments based on the terms the insurer applied to the case.
The university argues that the arrival of COVID-19 in Whitman County in March 2020 necessitated the closure of dorms, cancellation of sporting events, the need to provide testing to students and staff and to upgrade ventilation systems in its buildings, all of which ate into the university's bottom line.
Factory Mutual denied Washington State University's request to defray some of those costs, citing a need to show "direct physical loss or damage" in order to receive additional payments, according to the university's complaint. Other provisions in the policy would trigger repayments totaling up to $300 million, according to the lawsuit.
Private companies have taken Factory Mutual and other insurers to court making similar arguments, including the clothing company Ralph Lauren, which had a request for additional insurance payouts from Factory Mutual denied by a federal judge in New Jersey in May.
The federal government also provided funds to colleges and universities as part of its multiple coronavirus relief packages. While some of that money was dedicated to assisting students with costs, Washington State University has been awarded $65.3 million as part of the "institutional relief" funding contained in the federal aid, intended to be used to cover the costs of shifting instruction online.
WSU had received $10.9 million of that federal money as of June 30, according to the university.
No court date had been set in the case as of Wednesday.
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