A tribe in Oklahoma with more than 10,000 employees has turned to the courts to help recoup coronavirus-related revenue losses from insurers.
The Choctaw Nation of Oklahoma and businesses nationwide are looking to their insurers to cover losses following COVID-19-related closures, which combined may exceed $300 billion a month. Now insurers have widely rejected the claims so businesses are suing insurers to force them to pay.
Choctaw Nation is touted as one of the largest employers in southeastern Oklahoma, and like most tribes across the nation, its gaming industry is its top revenue source. Choctaw closed its casinos on March 16 and more than a month later, a reopening date hasn’t been set. Since the closures, the tribal government has continued to pay all employees and provide health benefits.
“We are in unprecedented times, and our top priority must be to ensure the safety of our tribal members, guests, employees and communities we serve,” Choctaw Chief Gary Batton said in a statement. “Every day it is something new as we learn more and more about this virus. We closed our casino and resorts operations, cancelled events and sent the majority of our workforce to work from home in March in accordance with public health guidance to slow the spread of this virus.”
The Choctaw Nation declined to comment on lawsuit specifics. Batton said the lawsuit “is being handled by our general counsel, and we really cannot provide any specific information at this time."
(More information: Indian Country's COVID-19 syllabus -- Data, story summaries, lists of closures, resources)
Insurers say policies for natural or manmade disasters don’t cover virus outbreaks that bring economies to a standstill, and high-stakes battles in courtrooms are sure to follow. What’s at stake could be the survival of thousands of businesses if insurers don’t pay and the insolvency of big-name insurance companies if they do.
The expectation is that insurers will continue to reject the vast majority of claims, triggering waves of lawsuits from businesses in nearly every town and city. Such a filing frenzy could add to logjams in courts when they reopen fully after the pandemic easeas.
“Pandemic outbreaks are uninsured because they are uninsurable,” said David A. Sampson, president of the American Property Casualty Insurance Association
Forcing insurers to pay hundred of billions of dollars a month could quickly deplete the $800 billion set aside to cover future home, auto and other losses, according to the insurance association.
The question on which many cases will hinge is whether the presence of the virus in or near a business can be categorized as direct physical damage, something that would otherwise be clearly covered. It’s a question courts haven’t definitely answered
Insurance companies say most policies that cover unanticipated interruptions to a business’s operation specifically exclude pandemics. Such exclusions become more common after a SARS virus outbreak in the early 2000s devastated businesses in parts of Asia.
The Choctaw Nation plans to continue to pay employees and provide health benefits at least through May 16. “We are fortunate that we have not had to furlough or layoff anyone at this time,” Batton said.
Choctaw is in the early stages of recovery planning for tribal citizen services programs and business operations, Batton said. Batton updates tribal citizens weekly through YouTube videos posted on the tribe’s website.
“We want to ensure all tribal members, guests and associates that their safety will continue to be our main goal upon reopening,” he said. “We’re taking serious consideration for wellness checks for employees, masks and other considerations that will help us re-open safely. The Choctaw people have a record of standing together and supporting one another through all manners of diversity. Courage, patience, perseverance, commitment and partnership will enable us to win this battle again. The Choctaw Nation has done this for more than 13,000 years.”
The lawsuit comes when almost a dozen tribes filed suit against the U.S. Treasury Department. That suit is related to the $8 billion in coronavirus relief aid Congress allocated for tribes and if Alaska Native corporations should be eligible to receive from that pot of money.
The Navajo Nation, which has been battered by the coronavirus with more than 1,300 cases and 52 deaths, joined the other tribes in the lawsuit.
Dalton Walker and the Associated Press contributed to this story.
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