Health club Anytime Fitness has filed a class action lawsuit against its insurance company for denying a claim related to their business interruption insurance because it had to close due to COVID-19.

Fountain Enterprises LLC d/b/a Anytime Fitness – West Point has sued Markel Insurance Company saying that the insurance company breached its contract by denying them the claim.

The plaintiff states that on April 1, 2019, it purchased a commercial insurance policy from Markel and received the Health Clubs Commercial Property Elite Enhancement coverage with the policy. This enhancement protects Anytime Fitness against the actual loss of business income due to a suspension of their operations, the plaintiff claims.

In addition, Anytime Fitness allegedly had in effect “Extra Expense” coverage in which Markel promised to pay necessary expenses the company incurred during a period of restoration that it would not have otherwise incurred if there had been no physical loss to the property.

Anytime Fitness maintains that the The Health Clubs Commercial Property Elite Enhancement endorsement also provides for additional “Civil Authority” coverage, under which Markel promised to pay for loss of business income it sustained caused by actions of civil authorities that prohibits access to the described premises.

The company claims that it had to shut down operations to its franchises because of numerous civil orders that were put down by governmental authorities. 

“As a result of the Orders of the various civil authorities, [Anytime Fitness] suffered, and/or continues to suffer, significant and injurious losses and expenses directly related to the inability to use the physical locations covered by the Policy,” the Anytime Fitness class action lawsuit states.

Anytime Fitness says that the insurance policy obligated Markel to provide coverage for, and to pay, business income losses and extra expense losses resulting from the suspension of the gym’s operations, including suspensions resulting from actions of civil authorities. The company claims that a notice of loss was reported to Markel on April 18, 2020.

The plaintiff maintains that Markel reneged on these obligations and failed to fulfill its contractual obligation to provide coverage for Anytime Fitness business income losses and extra expense losses resulting from the suspension of business operations.

The denial of claim came four business days after the notice of loss, which shows that Markel did not engage in a meaningful investigation of the claims or review of the policy, Anytime Fitness says.

“The actions of Markel in improperly denying Fountain’s claim were a blatant disregard for the contractual rights of Fountain resulting in a material breach of Markel’s duties and obligation owed under the Policy and deprived Fountain of the benefit of its bargain, causing serious financial damages to Fountain,” the Anytime Fitness class action lawsuit goes on to state.

Anytime Fitness says that, because of COVID-19, it froze the memberships of its customers with the time credited to the end of the membership.

In addition, for non-pre-paid members, the gym says that it credited the members for the time-period the location was closed and allowed the members to choose the month they wished the credit to be applied.

The company maintains that, as a result of the suspensions of operations at their facilities, it was unable to acquire new members.

Additionally, Anytime Fitness was allegedly unable to sell in-store items to members, which typically occurred during the normal course of its business operations on a daily basis.

Anytime Fitness states that there has been a direct physical loss and damage to the covered premises under the policy by contaminating the property, denying access to the property, causing the property to be physically uninhabitable by customers and employees, causing its function to be nearly eliminated or destroyed.

In addition, the company has allegedly suffered a suspension of normal business operations and a cessation of all operations on the premises, sustained losses of business income, and incurred extra expenses.

“Plaintiff has suffered a suspension and/or cessation of all normal business operations given the response to the global pandemic associated with the spread of COVID-19, including the actions of civil authority described herein,” the Anytime Fitness class action lawsuit goes on to state.

Markel has refused to pay for these losses and expenses under the terms of the policy, despite their obligations, the Anytime Fitness class action lawsuit claims.

Prospective Class Members include: “All Anytime Fitness franchisees that purchased Business Income and Extra Expense coverage under a policy issued by the Defendant containing the Health Clubs Commercial Property Elite Enhancement (Form MCP 1217 09 14), and that suffered a suspension of business operations for which Defendant has either actually denied or stated it will deny a claim for the losses or has otherwise failed to acknowledge, accept as a covered cause of loss, or pay for the covered losses.”

Do you own a business that was denied coverage from COVID-19? Leave a message in the comments section below.

The plaintiffs are represented by Diandra S. Debrosse Zimmermann, Lisa B. Weinstein, April S. Rogers and Adam J. Gomez of Grant & Eisenhofer PA, L.N. Chandler Rogers of Rogers Law Group and Winston B. Collier of The Collier Firm.

The Anytime Fitness Insurance Coverage Class Action Lawsuit is Fountain Enterprises LLC, et al. v. Markel Insurance Co., Case No. 1:20-cv-03689, in the U.S. District Court for the Northern District of Illinois.

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