Genesis Healthcare could be on the hook for millions of dollars in potential COVID-19 settlements, following a federal judge’s decision that the skilled nursing giant’s insurer does not have to cover all pandemic-related claims as a single event.

National Fire and Marine Insurance took Genesis to court earlier this year, concerned the provider did not intend to spend its own money to defend or resolve COVID claims after it hit a $3 million cap.

The insurer acknowledged that Genesis purchased coverage for losses over $3 million that it incurred while defending or satisfying cases “arising from a single healthcare event.” But National Fire balked when Genesis made a claim in 2021 characterizing its expected COVID payouts as all being part of the same, singular event.

Both sides asked the US District Court for the Eastern District of Pennsylvania to resolve the question of whether a range of COVID claims or possible COVID claims — Genesis has faced at least 43 so far, according to court documents — should be counted as one event or multiple events for insurance purposes. 

In his decision issued Thursday, Judge Mark. A Kearney found that the differences in facts and operating situations made the cases distinct, even in the cases where residents had the same diagnoses.

“These residents’ alleged injuries are all based on very different conditions,” Kearney wrote. “Even those residents who contracted COVID-19 at the different Genesis locations were not subjected to the same general conditions.” 

The Genesis corporate structure and differences in care factored into Kearney’s decision.

“The residents’ alleged exposure to COVID-19 and their resulting injuries arise from their stay at different Genesis facilities, operated by separate and distinct Genesis subsidiaries, at different locations,” Kearney added. “The COVID-related injuries are the result of separate and unrelated acts or omissions made by the thirty-two operating companies and presumably hundreds of their employees.”

He ruled that Genesis must satisfy the $3 million self-insured retention for each event before National Fire is obligated to provide coverage for the underlying lawsuits and pre-suit claims and potential claims. 

That decision could be a costly one for Genesis, and for similarly positioned large providers should other federal judges adopt similar interpretations.

Attorneys for Genesis did not respond to McKnight’s Long-Term Care News’ request for comment on the ruling by deadline Friday.

According to Kearney’s ruling, 29 cases in which claimants cite COVID conditions are still active against Genesis. The company had spent approximately $1.3 million on other cases as of the close of discovery six weeks ago, and leaders projected spending another $300,000 in the next five months. 

The company’s self-insured retention reserves, which includes both anticipated and incurred claims expense and loss payments for the current COVID-related lawsuits and pre-suit claims and potential claims, exceeded $4.8 million at all facilities, court documents show.
One bright spot for providers in the lengthy ruling: Kearney said COVID-related injuries to multiple residents at the same location during a COVID-19 outbreak may be considered a single healthcare event because those injuries would have resulted from the same, related acts by the same operating company and its employees.