The Cherokee Nation of Oklahoma has suffered a defeat in a Supreme Court hearing over their lawsuit against Lexington Insurance Company, as a result losing the right to compensation for shuttering their casinos during the Covid-19 pandemic. The Supreme Court was the final arbiter after the Nation had won in the district court, and this loss means that the casinos will now not receive compensation for the closure.
There are ten Cherokee-run casinos in Oklahoma and, at the height of the pandemic, the Cherokee Nation voluntarily shut all ten facilities as part of an effort to slow the spread of the virus. The case brought by the tribal leaders held that the insurance company was liable to provide compensation for losses that came about as the result of a public health emergency. While this was agreed by the district court, Lexington appealed the decision and took the matter to the highest court in the state, which found in their favor.
The decision turned on whether the insurance agreement between the parties meant that Lexington would be expected to bear the costs of a decision taken in a health emergency. While the losses to the casinos were undeniable, and the reason for the closures clear, the Supreme Court found that the contract made between the parties covered financial compensation for a “tangible loss or property damage”. In their consideration, it seems, the closure of casinos for a health emergency did not fall under that heading.
The Supreme Court stated in its decision that the Cherokee Nation did not sustain immediate, tangible deprivation, nor did they suffer any damage to property. Perhaps crucially, the decision to shut casinos was taken unilaterally by the ownership, which may have been a deciding factor in the conclusion that no immediate, tangible deprivation was experienced.
While this appellate court decision was a response to an initial finding in favor of the casinos, the overall momentum in such cases has been with the insurance companies. This case is not the first example of a casino seeking compensation under their insurance agreement in the aftermath of the pandemic, and in every case to this point, the courts have found in favor of the insurer whether that has been the immediate result or the outcome of an appeal. Nonetheless, insurance companies have begun to write clauses into new agreements that state the insurance does not cover outbreaks of communicable diseases such as Covid.
In theory, the Cherokee Nation could yet test the waters to see if this decision could be taken to the United States Supreme Court, which is the highest court in the United States. They would, however, need to demonstrate that this is an issue that requires the intervention of the federal court, and would then need to convince a largely non-interventionist nine-judge panel to make the decision that the state of Oklahoma should be overruled in this case. That would be a huge burden of proof, and there is no sign that the Cherokee Nation considers this to be a path it is willing to take.