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U.S. Businesses Are Fighting Insurers in the Biggest Legal Battle of the Pandemic

Plaintiffs’ lawyer John Houghtaling is leading the charge against insurance companies that say they don’t have to pay up for shutdowns.

Houghtaling at his mansion in New Orleans.

Houghtaling at his mansion in New Orleans.

Photographer: Daymon Gardner for Bloomberg Businessweek

John Houghtaling was working in the second-floor den of his mansion near the Garden District in New Orleans when a legal memo arrived in his email inbox. It was mid-March, not long before the pandemic shut down much of the U.S., and cooks in white aprons were downstairs preparing an extravagant dinner: lobster casserole, veal chops, seared foie gras. The celebrity chef Jérôme Bocuse, a close friend, would be attending that evening, along with two dozen other guests.

Seated on a velvet couch beneath an 18th century painting of Louis XV, Houghtaling, a plaintiffs’ lawyer who’s long specialized in suing the insurance industry, scanned the memo on his screen, growing increasingly agitated. The 10-page document, compiled by a law firm that represents major insurance carriers, was circulating among industry insiders who were anticipating that local governments would soon begin shutting down commerce because of the novel coronavirus. The memo outlined a series of arguments the providers planned to make to avoid paying virus-related claims from business-interruption coverage—policies companies purchase to hedge against fires and other catastrophes.