Judge Tosses Rock Dental's COVID-19 Lawsuit

Judge Tosses Rock Dental's COVID-19 Lawsuit
Kristi Crum

A federal judge last month dismissed a lawsuit filed by a Little Rock dental network that sued its insurance carrier for denying coverage for business losses suffered as a result of COVID-19, ruling the policy didn’t cover such losses.

In June, Rock Dental Arkansas PLLC and Rock Dental Missouri LLC sued Cincinnati Insurance Co. in U.S. District Court in Little Rock and sought unspecified damages for the loss of business income “as a result of the COVID-19 pandemic and the resulting civil orders,” the suit said. The lawsuit didn’t say how much money was lost. Rock Dental had 49 locations in Arkansas and 16 in Missouri last year. It now has 86 locations in Arkansas, Missouri and Tennessee.

The companies said they had an “all risk” policy that didn’t exclude or limit coverage for income losses from viruses, pandemics and communicable diseases.

Rock Dental filed a notice of loss to its insurance company, but the claim was denied, the lawsuit said. Rock Dental sued for breach of contract.

Cincinnati Insurance asked that the case be dismissed, and Judge Billy Roy Wilson agreed.

“Despite Plaintiffs’ protestation to the contrary, the policy language is unambiguous,” Wilson wrote in his July 28 order. “When considering the contract as a whole, there is no coverage under the policy, because Plaintiffs have not alleged that COVID-19 was ever present in its buildings, which means they are unable to establish direct physical loss or damage.”

Wilson said it’s the same finding made by the 8th Circuit Court of Appeals “involving the same policy language and the same allegations” with a different company.

Scott Holeman, media relations director for the Insurance Information Institute of New York, said that only the federal government would have “the financial wherewithal” to cover all the risks that stemmed from the pandemic.

“There are only a handful of business interruption policies that cover communicable disease contamination, and very few businesses purchase them because that coverage is pretty expensive,” Holeman said.

He said the Insurance Information Institute last year estimated that business interruption payout claims would have totaled $255 billion a month if insurance companies were required to pay them. “That would deplete the industry’s reserves,” Holeman said. “So then that would leave exposure to things like hurricane season and natural disasters, including wildfires.”

In March 2020, as the pandemic first spread across Arkansas, the Arkansas Insurance Department said that viruses and diseases are typically not covered unless they were specifically added to the policy.

“AID did receive a few complaints in the beginning of the pandemic when businesses first started to shut down, as pandemic related claims were almost always denied,” Jennifer Bruce, AID’s public information officer, said in an email to Arkansas Business. “In recent months, there have been very few, if any, complaints of this nature.”

Last week, Rock Dental filed notice that it will appeal Wilson’s decision to the 8th Circuit. Rock Dental is represented by James Allen Carney, Randall Keith Pulliam and Jake G. Windley of Carney Bates & Pulliam PLLC of Little Rock.

Kristi Crum, CEO of Rock Dental Brands of Little Rock, declined to comment on the case.

Growth Mode

Meanwhile, Crum said, Rock Dental is “in growth mode” as its patients return to dental offices.

Declining to release any specific information, she told Arkansas Business last week that Rock Dental would make an announcement soon about its growth.

“We want to continue to expand our footprint,” she said. “We have a mission here, … and it’s to create access to quality dental care with providers and teams that want to work together to build our community.”

Rock Dental Brands announced last month the acquisition of nine clinics across Arkansas, Tennessee and Missouri. Financial details of the transactions were not disclosed.

In the last 12 months, Rock Dental has seen more than 100,000 patients, about 10% more from the previous year.

She said some patients expressed hesitancy about returning, but Rock Dental has made sure to keep its providers and patients safe.

“Seeing 100,000 patients in one year, we have not had any cases of COVID inside our clinics,” Crum said. “So that would tell you what you need to know about our protocols and our processes.”