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Page 6 — Property Management Quarterly — April 2020 www.crej.com Law O ver the last few weeks, coronavirus (COVID-19) has reached a pandemic level, creating a crisis for busi- nesses across industries. Here are four legal questions we have considered in helping clients navigate this unprecedented situa- tion. 1. Would business interruption insurance cover losses stemming from a pandemic? Most businesses purchase some level of “business interruption” coverage as part of their commercial property insur- ance policies. But to what extent would this coverage apply in the event that a business suffers losses as a result of a potential or actual coronavirus pandemic? Property insurance policies, by definition, are intended to cover casualties to the policyholder’s real and personal property. While many businesses will suffer busi- ness interruptions and lost profits as a result of a pandemic, before most property policies are triggered, however, two conditions must be met. First, the loss must result from a covered cause of loss that is not excluded by the policy. Second, there must be a “direct physical loss of or damage to” insured property. The “direct physical loss” require- ment will be particularly important in determining whether losses resulting from a coronavirus out- break will be covered under a prop- erty insurance policy. This is a fact- specific inquiry. On one hand, there would likely be coverage for losses resulting from the contamination of covered property, such as might be the case if an insured premises becomes uninhab- itable because an employee who worked in the space contracted coronavirus. By contrast, if a busi- ness loses money merely because of a voluntary quar- antine or a decline in the demand for its product, there would likely not be a “direct physi- cal loss.” Some property policies will con- tain specific endorsements for loss- es resulting from “communicable or infectious diseases,” and policy- holders should determine whether their policy contains this type of endorsement. 2. Are you responsible for report- ing coronavirus cases? Colorado law requires reporting known or suspected coronavirus cases and of any unusual illness, outbreak or epidemic of illnesses that may be of public concern, including cases of a newly recognized disease. The definition in the regulations of who must make such a report is exceedingly broad and requires that any “health care provider or other person knowing of or suspecting a case” must report. “Other person” is defined to include, but is expressly not lim- ited to, coroners, persons in charge of hospitals or other health care institutions as well as persons in charge of schools and licensed day care centers. Because this list is illustrative and not exhaustive, arguably it should be read broadly to mean what it says – that “any person having knowl- edge” must make a report. Additionally, beyond state law, private businesses must evaluate whether they have any reporting obli- gations under federal law – including under the Occupational Safety and Health Act – or under local or munici- pal law. Private businesses that operate in multiple jurisdictions also should be aware of any additional or different reporting obligations in each jurisdic- tion in which they operate. However, given the rapid develop- ment of the situation, government authorities may issue guidance narrowing who must report or may become so inundated that they are no longer able to take reports. For example, as of this writing, the Col- orado Department of Public Health and Environment’s phone lines are answered by a message that the department is not currently taking any calls because of the high vol- ume. Thus, it will be necessary to check current guidance at the time a report is contemplated. 3. What do nonhealth care busi- nesses need to know about Health Insurance Portability and Account- ability Act compliance during the coronavirus outbreak? HIPAA applies to “covered enti- ties,” defined as health care clear- inghouses, health care providers and health plans. Addi- tionally, persons or entities perform- ing services on behalf of a covered entity that involve the use or disclo- sure of protected health informa- tion – referred to as “business associates” – also must comply with HIPAA. If a business does not meet the definitions for a covered entity or business associate, it is not subject to HIPAA. This means that businesses that do not operate in or service the health care industry may not be required to comply with HIPAA. One exception is that an employ- er-sponsored group health plan with more than 50 participants is considered a covered entity. There are specific HIPAA rules govern- ing the relationship between an employer-sponsored group health plan and the employer who spon- sors it, which are beyond the scope of this article. However, as busi- nesses formulate their plans for managing coronavirus, it is impor- tant to undertake an analysis and determine whether they must com- ply with HIPAA – either directly, as a business associate, or as an employ- er-sponsored health plan. Legal issues for managers during an epidemic Please see Pray, Page 22 Jonathan Pray Shareholder, Brownstein Hyatt Farber Schreck Kevin Walsh Shareholder, Brownstein Hyatt Farber Schreck Anna-Liisa Mullis Shareholder, Brownstein Hyatt Farber Schreck