Froedtert Health Inc. v. Factory Mut. Ins. Co.

Froedtert Health Inc. v. Factory Mut. Ins. Co.

Opinion

ORDER GRANTING MOTION TO DISMISS

This is one of many recent cases concerning whether a plaintiff's insurance policy covers claims related to the COVID-19 pandemic. Froedtert Health Inc and its affiliates (collectively "Froedtert") claim that Factory Mutual Insurance Company wrongfully denied coverage for COVID-19-related losses. ECF No. 18. Froedtert also claims the denial was made in bad faith. Id. at 28-29. It seeks declaratory relief and both compensatory and punitive damages. Id. at 26-29. Factory Mutual [*2]  has moved to dismiss on 12(b)(6) grounds. For the reasons given below, the Court will grant the motion and dismiss the case.

FACTUAL BACKGROUND¹

In late 2019, the potentially deadly virus known as SARS-CoV-2 (hereinafter referred to as COVID-19, the disease it causes) began spreading around the world, transmitted from person to person via respiratory droplets. ECF No. 18 at 8-17. By March 2020, Wisconsin Governor Tony Evers had declared a public health emergency. Id. at 14-15. As a result of the pandemic, Wisconsin healthcare providers faced serious challenges that strained their resources. Id. at 16-20.

Froedtert Health Inc is a parent entity of a Milwaukee-based healthcare network including Froedtert Memorial Lutheran Hospital Inc, Froedtert & The Medical College of Wisconsin Community Physicians Inc, Community Memorial Hospital of Menomonee Falls Inc, St Joseph's Community Hospital of West Bend Inc, Froedtert Surgery Center LLC, Drexel Town Square Surgery Center LLC, Inception Health Services LLC, and West Bend Surgery Center LLC. Id. at 1-2, 17.

Since the COVID-19 pandemic began, Froedtert has handled a surge of patients who have tested positive for COVID-19 and has had to adopt new protocols [*3]  for preventing the spread of the virus and for dealing with staffing issues when employees test positive. Id. at 17-20. It has spent millions of dollars on personal protective equipment and other equipment for employee and patient screening, waste disposal, cleaning, and sanitization. Id. It has also had to modify its janitorial services, patient check-in procedures, and the layout of its emergency room in order to ensure frequent cleanings and social distancing. Id. All told, Froedtert's losses and expenses related to the COVID-19 pandemic total more than $85 million. Id. at 19.

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