By Shawn Rice

Law360 (March 3, 2021, 4:55 PM EST) -- An AIG unit and more than a dozen other insurers were the latest to be hit with a suit claiming they wrongly denied coverage for some $500 million in losses to the Resorts World Casino New York City and a Miami Hilton after COVID-19 prompted government shutdowns.

The insurers are all on the hook for losses caused by the shutdown orders in response to the coronavirus outbreak, according to Genting Americas Inc., which operates both the casino and the Hilton Miami Downtown, in Monday's New York state court complaint.

Both properties had to limit or completely cease operations in the shutdown, and implement new safety measures that the insurers should have to cover, Genting said.

Like other businesses, Genting turned to insurers in its "hour of greatest need" but was turned away, the company said. As Genting was faced with its "greatest crisis," the suit alleged, its insurers placed their bottom line above its needs while Genting, like others, struggled to reopen under new guidelines.

The lawsuit is at least the second in as many weeks filed by a Pillsbury Winthrop Shaw Pittman LLP team on behalf of casinos, which, like much of the hospitality industry, took a major hit as the COVID-19 pandemic swept the world and prompted shutdowns and rule changes as governments attempted to limit its spread.

On Feb. 25, the firm filed suit in Michigan state court on behalf of the owner of Motor City Casino Hotel alleging a Zurich affiliate insurer also must cover COVID-19-related losses after the casino had to shut down and change its cleaning operations.

In Monday's suit, Genting argued New York and its gaming commission's shutdown orders were in direct response to the virus, causing a covered physical loss, damage and destruction of property at the Big Apple's only casino. And in Miami, the hotel had to reduce services under orders from Florida's government.

The gaming commission's regulatory act in closing the casino is enough to trigger coverage, Genting said, alleging it doesn't need to show any physical loss for this specific type of coverage.

The issue of whether virus shutdowns represent a physical loss that triggers coverage under certain insurance policy provisions has come to the forefront as business owners duke it out in court with their insurers.

In the Western District of Missouri, a judge ruled in August that the presence of the virus made a property unusable and therefore triggered a physical loss. But in Georgia federal court, a judge ruled Monday that shutdowns alone don't warrant such coverage.

Genting said in its suit that the New York casino and Miami resort had covered losses because the coronavirus was present at the properties, as over 45 employees had positive COVID-19 tests. The coronavirus in the air and on surfaces made Genting's casino and resort unsafe for use, the company said.

Certain new protocols like social distancing, reduced capacity and cleaning standards also had to be put in place, Genting said, alleging additional costs were spent to maintain these health and safety guidelines upon reopening. These expenses to protect employees and customers are covered, Gentig said.

Counsel and representatives for Genting couldn't be reached for comment Wednesday. Representatives for AIG also couldn't be reached for comment.

Genting is represented by Joseph D. Jean, Scott D. Greenspan and Janine M. Stanisz of Pillsbury Winthrop Shaw Pittman LLP.

Counsel information for AIG and the other insurers was unavailable.

The case is Genting Americas Inc. et al. v. American International Group UK Ltd. et al., case number 704595/2021, in the New York State Supreme Court for Queens County.

--Additional reporting by Jeff Sistrunk. Editing by Marygrace Murphy.

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