Insurance companies love keeping their customers happy, except when it comes time to pay a claim. Then, many suddenly go silent. In the wake of the COVID-19 pandemic, a number of casino operators submitted claims for the losses they incurred through months of work stoppages, yet most insurers have clammed up. Circus Circus was one of those who sought relief, but has so far not been able to find it. Going after the carrier, American International Group (AIG), in court hasn’t helped, either, and AIG now wants the suit to be tossed out.
Precedent-setting Lawsuit from Circus Circus
For decades, insurance carriers have looked for any loophole to escape from having to pay on claims. Some will figure out some way to twist the insurance policy’s fine print to their advantage, even as they rake in millions of dollars annually. When Circus Circus tried to submit a claim to AIG last year over COVID-19 losses, the company balked, leading to a lawsuit. The casino argued that the firm was using “sleight-of-hand, distortions of fact, and contortions of law” to shirk its responsibilities; however, a federal judge in Nevada ruled in favor of AIG.
Circus Circus wasn’t satisfied with the result, appealing the ruling up the chain. It pushed its suit to the Ninth Circuit Court of Appeals, asserting that it deserves to be compensated for physical loss and damage. However, AIG has requested that the suit be thrown out, as there is no evidence of a link between COVID-19 and physical damage.
According to one lawyer, that isn’t completely accurate. Law360 explains that attorney Christopher J. Cunio pointed out that prior lawsuits – unrelated to COVID-19 losses – have supported a causal relationship between a non-tangible incident and tangible damage. He argues that Circus Circus has demonstrably shown a link for “for direct physical loss and direct physical damage under the AIG policy” and that the casino’s “allegations of persistent and pervasive physical alteration of the content of the indoor air and the characteristics of the surfaces” are consistent with Nevada laws.
Slow Progress in the Courtroom
The suit has been ongoing for more than a year, although the Ninth Circuit court only received it a few months ago. Circus Circus wants things to move along, reportedly feeling like AIG is trying to drag things out as much as possible. United Policyholders, a non-profit organization that provides a source of data for insurance matters, and a number of casino operators are siding with Circus Circus and are hoping that their support will carry some weight.
Among the supporters are JC Hospitality LLC, which is behind the Virgin Hotels Las Vegas and Casino project, and Boyd Gaming Corp. They have had their own issues because of COVID-19 and are also trying to seek compensation from their carriers, but without much success. They are joined by other casino operators, including the Mohegan Tribal Gaming Authority and the Mashantucket Pequot tribe, who have sought assistance from the courts for their insurance claims. However, if history is any indication, none will have the success they expect.