Olmsted Medical Center v. Continental Casualty Company, 65 F.4th 1005

Olmsted Medical Center, a Minnesota healthcare provider, purchased business‑property insurance from Continental Casualty covering losses from “direct physical loss of or damage to” covered property.
In March 2020 Gov. Walz issued executive orders (including EO 20‑09) restricting elective/nonessential procedures; Olmsted alleges ~60% of its procedures were affected and claims over $19 million in losses.
Olmsted submitted a claim in May 2020 alleging SARS‑CoV‑2 contamination at its premises (numerous staff/patient/community positive tests) and that compliance with executive orders and quarantine/isolation protocols forced cancellations; Continental denied the claim.
Relevant policy provisions at issue: business‑interruption, contingent‑business interruption, civil‑authority, and ingress‑egress — each tied to “direct physical loss of or damage to” property (business‑interruption uses “of or damage to”).
The district court granted Continental’s Rule 12(b)(6) motion; Olmsted appealed to the Eighth Circuit asserting SARS‑CoV‑2 contamination plus regulatory actions constituted a covered direct physical loss.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether allegations of SARS‑CoV‑2 presence and compliance with health orders state a “direct physical loss of or damage to” property under Minnesota law	Presence of virus on surfaces and resulting operational shutdowns (plus EO compliance) constitute physical contamination/physical loss	Mere presence of virus or temporary loss of use does not physically alter or damage property and so falls outside policy’s physical‑loss requirement	Dismissal affirmed: allegations insufficient; SARS‑CoV‑2 presence and regulatory restrictions do not plausibly allege direct physical loss or damage
Whether the phrasing “loss of” (vs “loss to”) expands coverage for business‑interruption provision	“Direct physical loss of or damage to” should be read broadly to cover loss of use even if property not physically altered	Policy read as a whole, including repair/replace time limitation, implies physical alteration is required; “of” does not transform coverage here	Court rejects Olmsted’s “of”/“to” distinction; policy’s synthesis and time‑limit language confirm requirement of physical alteration

Pentair, Inc. v. Am. Guarantee & Liab. Ins. Co., 400 F.3d 613 (8th Cir. 2005) (loss of use alone is not a “direct physical loss or damage”)
Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021) (COVID‑related suspensions without physical alteration insufficient to plead physical loss)
Torgerson Props., Inc. v. Cont’l Cas. Co., 38 F.4th 4 (8th Cir. 2022) (contamination can be a direct physical loss, but blanket shutdown orders are not)
Marshall Produce Co. v. St. Paul Fire & Marine Ins. Co., 98 N.W.2d 280 (Minn. 1959) (loss in value from smoke exposure can constitute loss or damage under different policy language)
General Mills, Inc. v. Gold Medal Ins. Co., 622 N.W.2d 147 (Minn. Ct. App. 2001) (contamination by persistent adulterant rendered product unusable)
Sentinel Mgmt. Co. v. New Hampshire Ins. Co., 563 N.W.2d 296 (Minn. Ct. App. 1997) (asbestos contamination could seriously impair building function)
Source Food Tech., Inc. v. U.S. Fid. & Guar. Co., 465 F.3d 834 (8th Cir. 2006) (distinguishing coverage wording and noting potential difference between “of” and “to”)
Verveine Corp. v. Strathmore Ins. Co., 184 N.E.3d 1266 (Mass. 2022) (presence of SARS‑CoV‑2 alone does not constitute direct physical effect on property)