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Tribes suing insurer over losses during pandemic-induced shutdowns

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Both casino-owning tribes are suing a Rhode Island insurance company they say improperly denied them benefits for the millions of dollars in business losses they incurred because of the COVID-19 pandemic.

The Mohegan Tribal Gaming Authority, the corporate entity that owns and manages Mohegan Sun, sued Friday in New London Superior Court, laying out a case similar to one the Mashantucket Pequot Tribe filed in January and which the insurer — Factory Mutual Insurance Co. of Johnston, R.I. — is seeking to have dismissed.

The Mashantuckets’ suit, originally filed in New London, has been transferred to Hartford Superior Court, where it’s being treated as complex litigation.

Judge Thomas Moukawsher has scheduled a hearing in the case for Aug. 2.

In their suit, the Mashantuckets claim their Foxwoods Resort Casino and other businesses they own on and around their Mashantucket reservation, including the Mashantucket Pequot Museum and Research Center, the Spa at Norwich Inn in Norwich and Lake of Isles, their North Stonington golf course, suffered more than $76 million in losses because of pandemic-induced shutdowns, triggering provisions of an “all risk” insurance policy issued by Factory Mutual.

The Mohegan authority says in its suit that Mohegan Sun “suffered millions of dollars in lost revenue” from March 17 to March 31, 2020, a period in which the resort casino was closed after the authority declared an emergency.

Chuck Bunnell, the Mohegan Tribe’s chief of staff, acknowledged Friday that the tribes’ suits “are pretty standard in our industry,” and declined further comment. A spokeswoman for the Mashantuckets said the tribe could not comment on pending litigation.

Neither Factory Mutual nor attorneys involved in the case answered messages seeking comment.

Both complaints devote ample space to COVID-19’s impact on the casinos and other tribal properties. The Mohegans’ insurance policy was in effect from March 1, 2020, to March 1, 2021, while the Mashantucket policy covered the period from July 1, 2019, through July 1, 2020.

Mashantucket leaders temporarily closed Foxwoods on March 17, 2020, and 10 days later reaffirmed their closure of the casino and other tribal businesses, including the museum and Two Trees Inn, an off-reservation hotel. Such closures triggered the “business interruption coverage” the tribe purchased from Factory Mutual, the suit says.

The Mashantuckets paid Factory Mutual nearly $2 million for the policy and more than $23.9 million over the past decade for policies that preceded it and have since replaced it, according to the suit.

“The Policy provides up to $1,655,000,000 of coverage per occurrence,” the suit says.

Mashantucket businesses employed more than 5,400 people before COVID-19 began spreading, and there have been at least 205 suspected or confirmed cases among tribal employees, according to the suit.

In a court filing supporting its motion to strike the Mashantuckets’ complaint, Factory Mutual argues the relief the tribe seeks “is unavailable under the clear and unambiguous terms” of the insurance policy. The company says the policy excludes viruses as a covered risk of loss and specifically excludes coverage from “contamination.”

Responding in a memorandum this week, the Mashantuckets say Factory Mutual issued them “a unique policy form” that expressly covers “physical loss or damage” caused by communicable disease. The tribe's suit seeks unspecified damages.

The Mohegan authority's suit claims damages "in excess of $15,000, exclusive of interest and costs," as is standard.

b.hallenbeck@theday.com

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