The Measles Are Back
How to inoculate against business interruption and other epidemic claims risks.
By Linda Pierce , Matthew Ross , Ian Stewart
The recent measles outbreak has sparked a national conversation on the conflict between public safety versus personal belief when it comes to vaccinations. This epidemic follows closely on the recent Ebola outbreak in West Africa as well as other notable outbreaks like SARS and H1N1 (swine flu). As individuals, we can only watch these events unfold. But as claims professionals, we should seek to identify and mitigate the risks from outbreaks like the measles that may impact our clients and insureds.
The recent measles outbreak has been traced back to an unknown person, Patient Zero, who visited Disneyland between Dec. 15 and Dec. 20, 2014. While Patient Zero has not been identified, Disneyland has been designated as ground zero for the outbreak, with over 130 cases linked directly to the park.
Why Disneyland? According to medical experts, the airborne disease spreads quickly in public areas such as theme parks. Disneyland also hosts visitors from around the world. It is widely suspected that Patient Zero visited Disneyland from an international destination, likely where vaccinations are not as accepted or accessible. Also contributing to the rapid spread is the fact that Disneyland’s youngest visitors are among the most susceptible to the disease. Even setting aside the anti-vaccination movement, the second dose of the preventative vaccine is typically not administered until a child is two years old, leaving younger unvaccinated babies and toddlers unprotected.
While Disneyland has received the most media attention over this outbreak, potential claims are not limited to the park, and the issues they present are not limited to this occurrence. The disease has now spread to 17 states, which means families and businesses around the country are at risk of being impacted in some way by the disease.
Since the measles outbreak began, there have been more than 150 confirmed cases, making this the worst U.S. outbreak in years. The epidemic has caused significant concern among parents and physicians, disagreement among scholars, and backlash against the anti-vaccination movement. Those in claims and litigation management are left with this question: Where does this leave us? With the increasing frequency and intensity of outbreaks, and the resulting media attention, we can expect more—and more creative—insurance claims.
In addition to possible reputational damage, Disneyland has suffered economic repercussions as a result of having the outbreak traced to the park. While the park did not close, there was a decrease in visitors. After the outbreak, the California Department of Public Health warned those who are unvaccinated to stay away from public places and points of tourism, including airports and congested sites like Disneyland. Where did that leave visitors who either were unvaccinated or simply frightened? Many families who had prepurchased tickets at close to $100 per ticket sought refunds.
The park ticket has a disclaimer that states owners are not liable for “non-utilization of ticket components” due to, among other items, “circumstances beyond their control.” There is no evidence that Disneyland should have known of the outbreak sooner, or that it failed to follow standard guidelines once it was discovered and traced back to the park. The spreading of the disease appears to have been beyond Disneyland’s control, and it may be protected by the ticket’s disclaimer.
Nevertheless, Disneyland may be responsible for business interruption losses that it incurred. The media reported that the park has considered patron refunds on a case-by-case basis. In this instance, Disneyland is likely responsible for any refunds issued. Standard form business interruption insurance would typically not cover these losses since Disneyland was not shut down by the government, and any business that was interrupted was not caused by a peril typically insured under a property policy.
Business interruption losses suffered as a result of the measles outbreak are certainly not limited to Disneyland. Like outbreaks of the recent past, including the swine flu and Ebola, businesses of every size and type can be impacted. Daycares, schools, medical facilities, and even houses of worship have closed as a result of the measles. Many of these closures have been precautionary, such as the daycare where an infant was found to have contracted the measles. Other businesses suffer purely as a result of the panic that is created during an epidemic. This happened to the Ohio bridal store that was visited by Dallas nurse Amber Vinson days before her Ebola diagnosis. Although the store was shut and cleaned, and Vinson was cured, the store nevertheless went out of business due to the stigma of being associated with Ebola. Especially for small businesses, the impact of being associated with a dangerous disease can be devastating, and the business can be left with significant uninsured losses.
In addition to temporary closures, epidemics also can lead to the cancellation of scheduled events. Events from school plays to church services have been canceled due to the recent measles outbreak. Under a traditional event cancellation policy, the insured event must be either “canceled,” “abandoned,” “curtailed,” “postponed,” or “relocated.” While the definitions of these terms may seem straightforward, establishing whether these policy terms have been met can be difficult. In order to establish a covered claim for the postponement of an insured event, it typically must be shown that there was an “unavoidable deferment” of the event, which can be difficult to prove, depending on the circumstances of the claim.
What about events that are not canceled but attendance is low due to fear caused by the outbreak? Under those circumstances, insureds may attempt to seek coverage under the enforced reduced attendance section of a traditional event cancellation policy. This is the coverage that was sought by a medical association that had organized a convention during the swine flu outbreak in 2009. The medical association claimed that it had low registration for its convention as a result of the swine flu because doctors did not want to travel and risk contracting the disease, putting their patients at risk.
The coverage for enforced reduced attendance is triggered only if the substantial and abnormal reduction in attendance is “solely and directly the result of the same proximate cause,” and must be “beyond the control” of the insured, the organizers of the insured event, the attendees, and exhibitors. While the swine flu itself was beyond the control of anyone involved, the decision whether to attend the annual meeting was within the control of the attendees and exhibitors. There was no definitive way to establish why individual attendees did not want to attend the event. Perhaps they were fearful of contracting the swine flu, but there was nothing that prevented their attendance. For example, there were no travel restrictions or quarantines in the area where the event was held.
The same is likely true for the measles outbreak. Businesses from Disneyland to Joe’s Dance School will have to establish that the decrease in attendance at an event was beyond not only their control, but also beyond the control of those planning on attending the event. A claim, therefore, that is based upon parents’ decisions not to attend an event because they are fearful that their children may contract measles would likely not be covered.
Other Claims and Lawsuits
Epidemics that spread rapidly like the recent measles outbreak are likely to lead to an increase in medical malpractice and other errors and omissions (E&O) claims. This may include suits against physicians for the failure to detect symptoms and diagnose measles as well as claims based upon the failure to properly vaccinate. The MMR vaccine, which can be up to 99 percent effective in preventing the contraction of measles, must be administered in two separate doses. If the proper dosages are not administered within the appropriate timespan, the patient can remain susceptible to the disease.
During the recent outbreak, many health care facilities were forced to issue quarantines. Claims may arise from the alleged failure to execute the quarantine plan or to issue proper warnings, as patients may claim that those failures contributed to the spread of the disease. Additionally, both hospitals and schools have an obligation to maintain records related to patients’ and students’ vaccination records. A facility’s E&O coverage may be triggered in instances where those record-keeping procedures are challenged if an attendee contracts the measles.
Employment practices liability insurance claims also could come into play. Generally, employees have privacy rights to their medical history, including vaccinations. While it may be incumbent on some employers (particularly in health care) to ensure that employees do not present a health risk to others, employers may not be legally able to require employees to get vaccinated or even inquire into vaccination history. In some states, notably California, individuals can choose not to get vaccinated based on personal belief. Employers need to understand what information about an employee’s physical condition can be obtained and how to interact with employees if the employer becomes aware that an employee has not been vaccinated.
Businesses also may choose to bar access to individuals who have not been vaccinated. These decisions may present claims for denial of equal access.
Lastly are general liability concerns. Standard commercial general liability policies provide that an insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’…to which this insurance applies.” In the event customers, clients, or patrons contract measles at a facility, it is conceivable that suit may be brought against a business for negligently causing, facilitating, or failing to warn against measles exposure.
What Makes Measles Different
An important distinction between the measles and other outbreaks is the threat of lawsuits by individuals. The anti-vaccination movement and the opposition to it injects politically charged issues involving public safety and personal rights to claims that may be brought as a result of the outbreak. This debate pits those parents who choose not to vaccinate their children for medical or personal reasons against those who blame the “anti-vaxxers” for the measles outbreak. While the legal premise and sustainability of claims made by parents are yet to be seen, there appear to be plenty of lawyers willing to take these cases, if only to bring attention to the issue and effectuate change.
From a claims perspective, the issue becomes determining which policies may be triggered by these claims. For public entities such as schools, claims by parents may fall under a general liability policy. But what about claims made against parents? For example, can a valid claim be submitted under a homeowners’ policy after a playdate results in someone’s child contracting measles?
The spread of measles-related claims and the impact on the insurance industry remains unknown at this time. It nevertheless may be expected that claims arising out of epidemics and outbreaks will be based on a variety of legal theories and may potentially trigger a number of different coverages. For those of us with clients or insureds who may be exposed to these risks, it pays to be vigilant.