COVID-19 shutdowns cost tribes millions. Should insurance cover the loss in Oklahoma?
After Oklahoma’s tribal casinos shut down all at once amid the COVID-19 pandemic, tribal governments turned to insurance to help fill the financial void.
But in a test case decided this month, Oklahoma’s highest court ruled the fine print of the Cherokee Nation’s insurance policy does not cover revenue lost due to a global pandemic.
The 6-3 ruling reverses a lower court decision and sets a new benchmark for COVID-19 insurance lawsuits in Oklahoma, including several similar suits filed by other tribal nations. Businesses and nonprofits have also sued for insurance coverage of lost revenue.
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Insurance laws vary from one state to the next, so the question of how to deal with an unexpected pandemic has led courts to reach differing opinions, said Tom Baker, who tracks the rulings in each state and teaches insurance law at the University of Pennsylvania.
“At the end of the day, this was an open question under the law of all the states,” Baker said.
The Cherokee Nation case was closely watched because it was the first case to signal where Oklahoma's top court stood. The state Supreme Court concluded casinos operated by the northeast Oklahoma tribe “did not sustain any actual, tangible deprivation or damage to the property” to trigger insurance payments for lost revenue.
“This court cannot rewrite the policy and expand coverage for losses that fall outside the plain and unambiguous terms of the insurance contract,” the Sept. 13 decision said.
In a statement issued by Cherokee Nation Attorney General Sara Hill’s office, the tribe said it is reviewing the ruling.
“The Cherokee Nation filed suit against these insurance companies to recoup losses incurred during the COVID-19 pandemic,” the statement said. “It is our core mission to be good stewards of tribal funds which belong to the Cherokee people.”
The ruling also affects the Muscogee and Choctaw nations, because the court joined their similar lawsuits with the Cherokee Nation’s case.
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The Cherokee Nation is the largest tribe in Oklahoma and operates several casinos, including Hard Rock Hotel & Casino near Tulsa. It shut all gaming operations down for several weeks starting in March 2020.
The tribe contended that its insurance providers should cover the monetary losses from the shutdowns because COVID-19 made the properties unusable, which amounted to a direct physical loss under its policy.
A Cherokee County district court judge sided with the Cherokee Nation, prompting Lexington Insurance and other providers to appeal in February 2021.
Three justices disagreed with the Supreme Court’s majority opinion. Justice James Edmondson argued in a dissent that the language in the tribe’s insurance policy did not clearly exclude losses caused by COVID-19. He also noted that coverage under the insurance policy did not explicitly exclude health hazards until the day after the Cherokee Nation filed a claim for coverage.
The argument made by the Cherokee Nation is one of the two main approaches used in similar lawsuits across the country, Baker said. The other is that direct contact with COVID-19 amounted to physical damage covered by insurance.
It’s unclear whether any Oklahoma tribe may make that argument in future court proceedings. Attorneys at the Oklahoma City law firm Whitten Burrage, which has filed nearly all of the cases on behalf of tribes, did not respond to messages regarding the decision.
Without insurance to cover the gap, federal aid has been the biggest financial resource to help tribal nations recover from COVID-19 and its devastating impacts in Native communities.
Molly Young covers Indigenous affairs for the USA Today Network's Sunbelt Region. Reach her at mollyyoung@gannett.com or 405-347-3534.
This article originally appeared on Oklahoman: Court: Insurance doesn't cover Cherokee tribe's revenue hit from COVID
