We are not talking here about the book “Of Mice and Men” written by John Steinbeck but; rather the recent incident In Yosemite National Park involving Deer Mice infecting visitors to Curry Village with Hantavirus Pulmonary Syndrome (HPS). The incident was reported in early September, 2012 after a ninth person had contracted the disease that had already killed three people. The latest guest that contracted the disease had stayed in the hotel in July and had recovered from the disease. Deer mice are the carriers of this virus and spread it to humans by their waste products left behind, in this case, in the cabins and inhaled by the guests when the virus mixed with the dust and air in the poorly ventilated cabins. There is no cure for HPS which kills more than 1/3 of the individuals it infects. Early detection is the key to preventing serious illness.
There are a lot of issues in play on this loss as relates the responsibilities and potential insurance exposures and solutions for Curry Village AND Yosemite National Park as a whole. I might as well warn you now that many of the potential insurance losses may not be covered.
Notifying the Public about the infestation and disease:
This comes with a price tag and a long-term affect. Yosemite had originally notified 30,000 visitors who slept in two specific locations in the park and then had to expand their warning by notifying 230,000 more who stayed in the general areas in the park as a precaution. This notification goes well beyond just emails. Representatives must make statements in the press and make every effort to manage the crisis. Following a “crisis” it is vital that an organization communicate to the public about what occurred in order to save their reputation and limit public anxiety. This key public awareness effort and costs associated with the campaign can be covered under specialty coverage known as Crisis Management or Crisis Communication Coverage. Coverage can be purchased as a stand-alone policy, by endorsement to the CGL or Umbrella and some companies are including limited coverage in a “bucket” of coverages they add to their policy. Liberty Mutual, for example launched a crisis management insurance endorsement to their umbrella policy with a standard limit of $50,000 with additional coverage up to $250,000 available.
See the entire Business Insurance article at: http://www.businessinsurance.com/article/20120118/NEWS05/120119881?tags=%7C338%7C69%7C75%7C305%7C340%7C83#
Some insurance companies, such as Philadelphia Insurance Company, includes Crisis Management coverage in their package policies. The coverage language will vary slightly and a number of specifically described coverage responses are included within this “bucket” limit.
Another crucial component to reacting to a crisis of this type is to be pro-active in having a Crisis Risk Management Plan in effect. This goes way beyond the issue of mitigating the loss when it happens to. What is important to address is the “long –term “effect of such an incident that stays in the minds of potential customers long after the problem has been remedied.
Taking all necessary measures to make sure they have eradicated the problem with safeguards put into effect that it will not occur again.
The outbreak of HPS has been linked to a higher rodent population in the national park. The National Park Service currently has assigned two epidemiologists to work in the park trapping rodents for testing. Additional studies are being done to determine if the Yosemite rodent population is higher than normal after a record snowpack in 2011 provided ample water for the grass seeds mice favor.
“Rodents and mice are native to the park, but we are looking at the populations and working with our wildlife biologists to determine if the population is too high,” Gediman said. “There are rodents here, and we could never trap them all so that’s not going to mitigate it.” Since the first illness was reported earlier this month, employees of Delaware North disinfected all 408 canvas-sided and wood-sided cabins in Curry Village. Workers are in the midst of shoring up the cabins in an attempt to keep mice from have easy access. http://www.insurancejournal.com/news/west/2012/08/29/261096.htm
It is clear from this report that the park is taking significant measures to identify the problem; contain the problem but, admittedly, cannot eradicate the cause of the problem which is indigenous to the area.
On September 26, 2012, California public health officials and researchers announce that a groundbreaking series of studies of this rare disease have been launched and they will essentially be using the 1,200 square mile park as its natural laboratory to gain insights into this disease and its transmittal to humans. Public health officials are also developing a voluntary medical screening of the parks’ 2,500 plus employees.
And all of this comes at a cost to the park which, for all practical purposes, is not a cost that would be covered by insurance. Perhaps you are thinking Extra Expense would pay for these extra costs—but, look more closely at what caused this loss!
Loss of Income and Extra Expense
This is the easiest insurance answer of them all—no coverage. It is true that the park is suffering extra expenses; it is true that the park can demonstrate that they lost income directly as a result of the illnesses caused by the rodents; it is true that the park will suffer a long-term effect of this loss to the public perception of this loss and fear to re-visit the area. The Insurance Journal Article of August 29, 2012: “People with reservations in the affected cabins are not being notified before arrival, but they are being warned during check-in to report any sightings of mouse feces. Rangers are handing out information brochures at the park entrance warning people to avoid mice in general and mouse droppings in particular.”
This statement comes as somewhat of a surprise to me that the park would not be notifying people who have reservations about the outbreak and potential danger. It is reported that many visitors have cancelled their reservations that have become aware of the situation in the park.
However, this loss does not meet the required elements of a covered loss under Business Income or Extra Expense coverage. Specifically there is no direct damage AND there is a specific exclusion in the Special Cause of Loss form for: “Nesting or infestation, or discharge or release of waste products or secretions, by insects, birds, rodents or other animals.” CP 10 30 10 00.
The loss of income, in this cause arises from the “bodily injury” (illness and death) as a result of rodent waste products. Neither Business Income nor Extra Expense will come to pay in this loss.
Financial Loss to the Individual due to cancellation of their registration
The internet is taking advantage of showcasing this incident as to why an individual would need Travel Insurance. As a result of the outbreak Delaware North Cos Parks & Resort’s spokeswoman Lisa Cesaro said : “for us, we’ve had unprecedented cancellations. There was a 20% cancellation rate on Labor Day weekend that should have been sold out. There is travel insurance and travel cancellation insurance available by many insurance providers. Needless to say, we have to check the provisions of these policies carefully to make sure that this type of incident would be covered and reimburse the traveler for any costs they incur for cancelling their travel.
Now we look to what is going to become a focus in this loss. Specifically if there is any liability on the part of the park and the specific living quarters that where the infections were contracted. It is reported that the tent cabins were “questionable” mentioning they were built in 2009, meaning that up until this year people had stayed in them following harsh winters. This was the first season in which people stayed in them after a mild winter.
Jim Patton, curator and professor emeritus of integrative biology for the Museum of Vertebrate Zoology at UC Berkeley, believes the tent cabin conditions at Curry Village had more to do with the spread of the virus than the mouse population or the amount of pathogen circulating among rodents.
Eight of the nine people who contracted the disease in Yosemite slept in the higher-end “signature” tent cabins, on the east side of Curry Village between early June and mid-July. The other victim hiked and camped around the same time in Tuolumne Meadows and the high sierra camps about 15 miles away. http://www.sfgate.com/health/article/Hantavirus-outbreak-puzzles-experts-3888327.php
So, that leads us to a number of issues regarding liability insurance. The first is whether or not the Park is vulnerable to any lawsuits for injury or wrongful death. More and more information is coming to light, but here is what is known at this time:
Approximately 10,000 tourists visited Yosemite National Park this summer and 12,000 in campsites in the surrounding area. An unknown number of those may have been exposed to the Hantavirus. It appears that Park employees+ and private concession camp employees may have been aware of the infestation going back to 2010. Visitors were not notified until the recent deaths made notification a requirement.
Lawyers are still deliberating whether or not there is adequate evidence of negligence to form a class-action lawsuit, but are clearly looking at individual litigation in the known cases of injury and death.
Legal liability? If it is shown that Park staff knew and did not disclose, absolutely the attorneys are going to argue for negligence.
As a personal aside: Fear of disclosure and cover up has caused irreparable harm over the years. The thought that this could be the situation in my beloved Yosemite is personally very disturbing. I spent every summer while growing up with my family there and believe that there is not a more beautiful place on this earth.
Well, let’s move on to the issue of “occurrence”. The general liability policy defines this as “an accident, including repeated exposure to substantially the same general harmful conditions.” So, it is possible that all of the injuries and wrongful death claims will be treated as a single occurrence, thus triggering the typical $1,000,000 limit of liability on the CGL. If there is a sizeable deductible or self-insured retention on that CGL, the adjusters may argue that each even is its own occurrence (even if the inhalation of the virus took place over days or weeks). Now is the time that you would like to see to things in the coverage structure: (1) If there is a deductible or retention, a policy aggregate to stop the loss to the insured (2) An Umbrella policy with really high limits of liability. At this point, there is no way to determine the number of injured parties, some of whom may not even yet be aware that they have been injured.
That leads us to the next issue, which is the statute of limitations. In California the statute does not begin until the date of discovery. That means another two full years, at least, until the suit must be filed to stop the statute from applying. Since many of the visitors are families, for the children, the statute is tolled until the child reaches its age of majority (18) and then a full two years after that.
Now, the last item is not a good one and that is the Fungus or Bacteria exclusion endorsement. This liability exclusion doesn’t just confine itself to these two items, regardless of its name. Now, I am not a scientist, researcher or physician, but I believe that bacteria is not a virus and thus this exclusion does not remove coverage. But I am not going to bet against claims adjusters taking a really hard-line on this one. Since the researchers and health officials are quick to point out that not a lot is known about this disease, Note also that some insurers do not use the standard ISO exclusion endorsement, but rather strike out on their own and remove all coverage for any microorganism or known or unknown pathogen.
The last area of discussion are the employees. We might as well conclude this article on another easy insurance note: If the employees are infected are they covered? You bet. Remember, AOE –COE (Arising out of and in the course of employment). I think it is of interest that they will all be used as “voluntary” medical screening. Hopefully, the Park will develop a really thorough disclaimer and release before the volunteers line up.
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center
Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR
Director of Education, Insurance Community Center