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MiLB teams sue insurance providers over denied virus claims

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Fifteen minor league baseball teams have filed a lawsuit alleging breach of contract by insurance providers after being denied claims for business-interruption insurance due to the coronavirus pandemic.

Major League Baseball announced Monday that it will attempt to play a 60-game regular season, but its minor league clubs – many under threat of losing affiliations amid negotiations with MLB – are unlikely to play until at least 2021.

Minor league franchises said in the suit filed Tuesday that even though they continue to pay yearly premiums to insurance providers for business-interruption insurance, they have been denied coverage after Baseball Commissioner Rob Manfred indefinitely suspended their seasons in March.

Minor league teams are mostly small, independently owned businesses, and their model depends on affiliates receiving players, coaches and other team personnel provided by major league clubs.

Government restrictions on mass gatherings are also precluding minor league teams from hosting fans at their ballparks, by far the greatest source of revenues for those franchises. Over 40 million fans attended minor league games involving 176 affiliates last season.

The suit claims teams are stuck with over $2 million in expenses on average, including as much as $1 million in ballpark lease payments, marketing costs, food and beverage supplies, and salaries and benefits for permanent employees.

Teams say providers are citing two reasons for denying claims – because losses are not resulting from direct physical loss or damage to property, or because policies include language excluding coverage for loss or damage caused by viruses.

Teams say the loss of use of their ballparks due to government restrictions on fan gatherings and their inability to obtain players qualifies as physical loss. They allege the latter clause is void because it’s unenforceable and inapplicable.

The likely loss of the 2020 season comes at an already challenging time for the minors. The Professional Baseball Agreement between MLB and minor league team owners is set to expire after this season, and MLB proposed reducing the guarantee minimum of affiliates from 160 to 120.

The suit, filed in U.S. District Court in Philadelphia, names Philadelphia Indemnity Insurance Co., Acadia Insurance Co., National Casualty Co., Scottsdale Indemnity Co., and Scottsdale Insurance Co. as defendants. Defendants did not immediately responded to requests for comment.

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Baseball seeking a second lab for MLB COVID-19 tests

MLB COVID-19 tests
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Ken Rosenthal of The Athletic reported last night that Major League Baseball is “actively pursuing an additional medical lab site to increase the speed and efficiency” of MLB COVID-19 tests.

The current setup — as planned by MLB and approved by the MLBPA as a part of the plan to play the 2020 season — is for all MLB COVID-19 tests to be sent to and processed by MLB’s PED testing lab in Salt Lake City, Utah. As you likely heard, there have been delays in the administration of COVID-19 tests and in the shipping of tests to Utah, but to date no one has reported that the lab itself has not been able to handle the tests once they’ve arrived there. If MLB is looking for a second lab site a week into this process, it suggests that their plans for the Utah lab might not be working the way they had anticipated.

The issues with testing have created unease around the game in recent days, with some players and team executives speaking out against Major League Baseball’s handling of the plan in the early going. Commissioner Rob Manfred, meanwhile, has responded defensively to the criticism.

Meanwhile, the New York Times reported this morning that, months into the COVID-19 pandemic, the United States still lacks testing capacity. From the report:

Lines for coronavirus tests have stretched around city blocks and tests ran out altogether in at least one site on Monday, new evidence that the country is still struggling to create a sufficient testing system months into its battle with Covid-19 . . .“It’s terrifying, and clearly an evidence of a failure of the system,” said Dr. Morgan Katz, an infectious disease expert at Johns Hopkins Hospital . . . in recent weeks, as cases have surged in many states, the demand for testing has soared, surpassing capacity and creating a new testing crisis.

It’s less than obvious, to say the least, how Major League Baseball plans to expand capacity for MLB COVID-19 tests while America as a whole is experiencing “a new testing crisis” and a “failure of the system.” At the very least it’s less than obvious how, even if Major League Baseball can do so, it can do so ethically.