SUPERIOR COURT OF NEW JERSEY 

 APPELLATE DIVISION 

 DOCKET NO. A-3711-20 

THE PLASTIC SURGERY 

CENTER, P.A., JOT 

MANAGEMENT, LLC, d/b/a 

SYCAMORE MEDICAL 

MANAGEMENT, and 

THE WOODS O.R., INC., 

d/b/a THE SURGERY CENTER 

FOR OUTPATIENT SURGERY, 

Plaintiffs-Appellants, 

v.

THE HANOVER INSURANCE 

GROUP, INC., and 

MASSACHUSETTS BAY 

INSURANCE COMPANY, 

MARSCHIL INSURANCE 

AGENCY, INC., d/b/a 

NORTHEAST INSURANCE 

SERVICES, 

Defendants-Respondents. 

______________________________ 

Submitted January 19, 2023 – Decided January 12, 2024 

Before Judges Accurso, Vernoia and Firko. 

NOT FOR PUBLICATION WITHOUT THE 

APPROVAL OF THE APPELLATE DIVISION 

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
2 A-3711-20

On appeal from the Superior Court of New Jersey, Law 

Division, Monmouth County, Docket No. L-1874-20. 

Maggs, McDermott & DiCicco, LLC, attorneys for 

appellants (Michael M. DiCicco, of counsel and on the 

briefs; Stephanie L. DeLuca, on the briefs). 

Finazzo Cossolini O'Leary Meola & Hager, LLC, 

attorneys for respondents The Hanover Insurance 

Group, Inc., and Massachusetts Bay Insurance 

Company (Jeremiah Lynn O'Leary, on the brief). 

The opinion of the court was delivered by 

VERNOIA, J.A.D. 

Plaintiffs The Plastic Surgery Center, P.A. (TPSC), JOT Management 

LLC d/b/a Sycamore Medical Management (Sycamore), and The Woods O.R., 

Inc. d/b/a The Center for Outpatient Surgery (TCOPS) (collectively, 

"plaintiffs"), appeal from a Law Division order granting defendants', The 

Hanover Insurance Group, Inc. (Hanover) and Massachusetts Bay Insurance 

Company (Mass Bay) (collectively, "defendants"), motion for summary 

judgment and dismissing plaintiffs' amended complaint with prejudice. 1 Based 

on our de novo review of the record on appeal, we affirm. 

I.

1

 The amended complaint also included causes of action against Marschil 

Insurance Agency, Inc., doing business as Northeast Insurance Services. Those 

causes of action were dismissed by stipulation of the parties. 
3 A-3711-20

We discern the following undisputed facts from the summary judgment 

record and consider them in a light most favorable to plaintiffs because they are 

the parties against whom summary judgment was entered. Brill v. Guardian Life 

Ins. Co. of Am., 142 N.J. 520, 540 (1995). 

TPSC is a medical practice specializing in plastic, reconstructive, and 

cosmetic surgery. TCOPS is an ambulatory surgery center owned and operated 

by TPSC. Sycamore is a management services organization that provides its 

services to TPSC and TCOPS. 

Hanover is a holding company and Mass Bay is an insurance company 

licensed to do business in New Jersey. Mass Bay issued two successive annual 

policies to plaintiffs (collectively, "the policy") in exchange for premium 

payments. The policy covered the period March 8, 2019, to March 8, 2021. 

Under the policy, Mass Bay agreed to indemnify plaintiffs for certain losses at 

plaintiffs' thirty-seven insured properties in New Jersey and Pennsylvania under 

separate Business Income, Extra Expense, and Civil Authority coverage 

provisions.2 

2

 Although the policy insures plaintiffs' New Jersey and Pennsylvania 

properties, the parties do not dispute that New Jersey law governs the 

interpretation of the policy. 
4 A-3711-20

The Business Income provision provides coverage for "the actual loss of 

Business Income[,]" the insured sustained during a period of suspension of its 

operations caused "by direct physical loss of or damage to a described premises 

shown in the Declarations," where the "loss or damage" is "caused by or 

resulting from any Covered Cause of Loss." The Extra Expense provision 

provides coverage for "necessary Extra Expense[s]" plaintiffs incurred during a 

period of restoration of their operations "due to direct physical loss of or 

damage" to an insured premises "caused by or resulting from a Covered Cause 

of Loss." 

A "Covered Cause of Loss" under the policy includes "risks of direct 

physical loss[,]" unless the claimed loss is otherwise excluded or limited by a 

separate provision in the policy. For example, the policy explicitly excludes 

coverage for loss or damage "caused directly or indirectly" by "[a]ny virus, 

bacterium or other microorganism that induces or is capable of inducing 

physical distress, illness or disease." 

The Civil Authority coverage provision provides coverage for business 

income loss and extra expense as follows: 

(1) When a Covered Cause of Loss causes damage to 

property other than property at the described premises, 

[defendants] will pay for the actual loss of Business 

Income [the insured] sustain[ed] and necessary Extra 
5 A-3711-20

Expense caused by action of civil authority that 

prohibits access to the described premises due to direct 

physical loss of or damage to property within one mile 

of the described premises, provided that both of the 

following apply: 

 (a) Access to the area immediately surrounding 

the damaged property is prohibited by civil authority as 

a result of the damage, and the described premises are 

within that area but are not more than one mile from the 

damaged property; 

 (b) The action of civil authority is taken in 

response to dangerous physical conditions resulting

from the damage or continuation of the Covered Cause 

of Loss that caused the damage, or the action is taken 

to enable a civil authority to have unimpeded access to 

the damaged property. 

Pertinent to this appeal, on March 9, 2020, Governor Phillip Murphy 

issued Executive Order 103, declaring a public health emergency and state of 

emergency in New Jersey in response to the COVID-19 pandemic.3 On March 

21, 2020, Governor Murphy issued Executive Order 107, which required closure 

of facilities where personal care services are performed including medical spas 

at which solely elective and cosmetic procedures are performed.4 On March 23, 

2020, Governor Murphy issued Executive Order 109, which suspended all 

3

 Exec. Order No. 103 (Mar. 9, 2020), 52 N.J.R. 549(a) (Apr. 6, 2020). 

4

 Exec. Order No. 107 (Mar. 21, 2020), 52 N.J.R. 554(a) (Apr. 6, 2020). 

 
6 A-3711-20

elective surgeries and invasive procedures performed on adults and cancelled or 

postponed indefinitely all elective or invasive procedures already scheduled. 5 

Similarly, Pennsylvania Governor Tom Wolf issued March 19 and March 23, 

2020 executive orders requiring the closure of all non-life sustaining businesses 

and effectively prohibiting Pennsylvania hospitals and surgical centers from 

performing elective medical and surgical procedures. 

In response to the executive orders, plaintiffs temporarily suspended 

certain business operations—elective medical and surgical procedures—at their 

various locations in New Jersey and Pennsylvania. More particularly, their 

office and surgical encounters dropped from 2,870 and 941, respectively, in 

January 2020, to 1,280 and 345, respectively, in April 2020. On March 24, 2021, 

plaintiffs furloughed 116 employees due to a "slowdown in business" that they 

attribute to the executive orders and COVID-19. By June 14, 2020, plaintiffs 

had rehired the furloughed staff. 

Plaintiffs filed suit against defendants, seeking a declaratory judgment 

that they were entitled to coverage under the policy's Business Income, Extra 

Expense, and Civil Authority provisions for losses allegedly sustained as a result 

5

 Exec. Order No. 109 (Mar. 23, 2020), 52 N.J.R. 827(a) (Apr. 20, 2020). 

 
7 A-3711-20

of the presence of COVID-19 at their insured premises in New Jersey and 

Pennsylvania and the restrictions on the operations at those premises under the 

executive orders. 

Defendants filed an answer denying plaintiffs' claimed entitlement to 

coverage under the policy. Defendants' answer asserted affirmative defenses, 

including: plaintiffs are not entitled to coverage under the Business Income and 

Extra Expense provisions because plaintiffs did not suffer a direct physical loss 

of or damage to covered property; the executive orders did not trigger coverage 

under the Civil Authority provision; and any claimed coverage under the policy 

is otherwise excluded under the virus exclusion. 

Defendants later moved for summary judgment, arguing plaintiffs are not 

entitled to relief as a matter of law because the policy does not provide coverage 

for plaintiffs' alleged causes of loss. Defendants argued: plaintiffs had not 

suffered a direct physical loss of or damage to their property such that they are 

entitled to coverage under any of the policy's provisions; neither COVID-19 nor 

the executive orders resulted in any direct physical loss of or damage to 

plaintiffs' properties within the plain language of the policy; and plaintiffs' 

alleged losses do not fall within the policy's provisions or are otherwise excluded 

from coverage under the policy. 
8 A-3711-20

Plaintiffs opposed the motion, arguing they established facts supporting 

their entitlement to coverage under the Business Income, Extra Expense, and 

Civil Authority provisions that is not barred by the virus exclusion. Plaintiffs 

argued they had suffered a "physical loss" of the insured premises by virtue of 

the presence of COVID-19 and as a result of the executive orders. Plaintiffs 

also alleged they are otherwise entitled to coverage under the Civil Authority 

provision because discovery would establish the presence of COVID-19 at the 

properties, or within one mile of them, that resulted in direct physical loss of or 

damage to the properties and required the closure or curtailment of plaintiffs' 

operations. Plaintiffs also argued the virus exclusion in the policy is 

unenforceable on the grounds of regulatory estoppel. 

Following argument, the motion court found that under the policy's plain 

language, there is coverage only for direct physical loss of or damage to the 

insured premises under the policy's Business Income and Extra Expense 

provisions, and plaintiffs had not sustained such damage or loss because 

plaintiffs' business operations continued at their properties, with the limited 

exception of elective surgical and medical procedures. The court further found 

that even if plaintiffs could prove a direct physical loss of or damage to their 

properties due to the presence of COVID-19 on their premises, the policy's plain 
9 A-3711-20

language states there is no coverage under the virus exclusion. The court did 

not expressly address plaintiffs' regulatory estoppel argument. The court 

granted defendants' motion for summary judgment and dismissed plaintiffs' 

complaint with prejudice. This appeal followed. 

II. 

Our review of an order granting a summary judgment motion is de novo. 

Gilbert v. Stewart, 247 N.J. 421, 442 (2021) (citing Branch v. Cream-O-Land 

Dairy, 244 N.J. 567, 582 (2021)). We apply the same standard as the trial court 

and determine whether the record shows "no genuine issue as to any material 

fact challenged and that the moving party is entitled to a judgment . . . as a 

matter of law." Burnett v. Gloucester Cnty. Bd. of Chosen Freeholders, 409 N.J. 

Super. 219, 228 (App. Div. 2009) (quoting R. 4:46-2(c)). 

"An issue of material fact is 'genuine only if, considering the burden of 

persuasion at trial, the evidence submitted by the parties on the motion, together 

with all legitimate inferences therefrom favoring the non-moving party, would 

require submission of the issue to the trier of fact.'" Grande v. St. Clare's Health 

Sys., 230 N.J. 1, 24 (2017) (quoting R. 4:46-2(c)). To determine whether there 

are genuine issues of material fact, we consider "whether the competent 

evidential materials presented, when viewed in the light most favorable to the 
10 A-3711-20

non-moving party, are sufficient to permit a rational factfinder to resolve the 

alleged disputed issue in favor of the non-moving party." Davis v. Brickman 

Landscaping, Ltd., 219 N.J. 395, 406 (2014) (quoting Brill, 142 N.J. at 540). 

When "interpreting insurance contracts, we first examine the plain 

language of the policy and, if the terms are clear, they 'are to be given their plain, 

ordinary meaning.'" Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 270 (2008) 

(quoting Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001)). The policy 

must "be enforced as written when its terms are clear" so the "expectations of 

the parties will be fulfilled." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010) 

(citations omitted). 

We nevertheless recognize that insurance policies are generally 

"contract[s] of adhesion between parties who are not equally situated." Oxford 

Realty Grp. Cedar v. Travelers Excess & Surplus Lines Co., 229 N.J. 196, 215 

(2017) (quoting Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J. 110, 118 

(2005) (alteration in original)). Thus, where an insurance policy is ambiguous, 

courts construe the terms in favor of the insured. MAC Prop. Grp. LLC v. 

Selective Fire & Cas. Ins. Co., 473 N.J. Super. 1, 18 (App. Div.) (citation 

omitted), certif. denied sub nom, MAC Prop. Grp. LLC v. Selective Fire & Cas. 

Ins., Co., 252 N.J. 258 (2022). 
11 A-3711-20

A genuine ambiguity arises when "'the phrasing of the policy is so 

confusing that the average policyholder cannot make out the boundaries of 

coverage,'" Birmingham v. Travelers N.J. Ins. Co., 475 N.J. Super. 246, 256 

(App. Div. 2023) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 

(1979)), and "when 'the text appears overly technical or contains hidden pitfalls, 

cannot be understood without employing subtle or legalistic distinction, is 

obscured by fine print, or requires strenuous study to comprehend,'" ibid. 

(quoting Zacarias, 168 N.J. at 601). The reasonable expectations of the parties 

are of no moment where the terms of the policy are unambiguous. Oxford Realty 

Grp. Cedar, 229 N.J. at 212; see also Cypress Point Condo. Ass'n v. Adria 

Towers, L.L.C., 226 N.J. 403, 415 (2016) ("[w]hen the terms of an insurance 

contract are clear, it is the function of a court to enforce it as written"). 

By extension, "[e]xclusions in insurance contracts 'are presumptively 

valid and will be given effect if [they are] 'specific, plain, clear, prominent, and 

not contrary to public policy.'" MAC Prop. Grp. LLC, 473 N.J. Super. at 35 

(quoting Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)). "'The basic 

notion [is] that the premium paid by the insured does not buy coverage for 

all . . . damage but only for that type of damage provided for in the policy.'" Id. 

at 19 (quoting Weedo, 81 N.J. at 237). Limitations on coverage "designed 'to 
12 A-3711-20

restrict and shape the coverage otherwise afforded'" are therefore permissible. 

Ibid. (quoting Hardy ex rel. Dowdell v. Abdul-Matin, 198 N.J. 95, 102 (2009)). 

III. 

We examine the pertinent provisions of the policy in accordance with the 

above-mentioned principles. The Business Income provision obligated 

defendants to compensate plaintiffs for actual loss of business income sustained 

during a suspension of business operations where the suspension was caused by 

direct physical loss of or damage to an insured premises resulting from a covered 

loss. Under the Extra Expense provision, defendants are obligated to 

compensate plaintiffs for necessary expenses incurred during the period of 

restoration that resulted from a direct physical loss of or damage to an insured 

premises. 

Under the Civil Authority provision, defendants are obligated to 

compensate plaintiffs for the loss of business income and necessary extra 

expense caused by civil authority that prohibited access to an insured premises 

as the result of the direct physical loss of or damage of other properties within 

one mile of the insured premises resulting from a covered cause of loss at the 

other properties. As noted, the policy excluded coverage for loss or damage 

"caused directly or indirectly" by "[a]ny virus, bacterium or other 
13 A-3711-20

microorganism that induces or is capable of inducing physical distress, illness 

or disease." 

 On appeal, plaintiffs argue the motion court erred by granting summary 

judgment because plaintiffs had demonstrated an entitlement to coverage under 

the Business Income, Extra Expense, and Civil Authority provisions of the 

policy and that they had sustained a Covered Cause of Loss under the policy. In 

making their arguments, plaintiffs expressly acknowledge, in accordance with 

the policy's plain language, that to establish an entitlement to coverage under 

those provisions they are required to establish "a suspension of [their] business 

operations . . . caused by direct physical loss of or damage to property at [the] 

premises . . . or the issuance of a civil authority order." Plaintiffs claim the 

presence of COVID-19, and the executive orders' prohibition against performing 

elective procedures, resulted in the direct physical loss of or damage to the 

property at their premises such that they are entitled to coverage. Plaintiffs also 

argue the virus exclusion cannot be applied to exclude the coverage because the 

court granted summary judgment prematurely—that is, before plaintiffs had an 

opportunity to develop evidence supporting their claim the virus exclusion is

unenforceable under the doctrine of regulatory estoppel. 
14 A-3711-20

In MAC Property Group LLC, we rejected virtually identical arguments—

regarding virtually identical policy provisions—as those asserted by plaintiffs 

here. 473 N.J. Super 1. We interpreted an insurance policy that provided 

business income loss coverage where the plaintiff had alleged it suffered losses 

due to "direct physical loss of or damage to" covered property resulting in a 

period of suspension of business operations during the period of restoration of 

the property. Id. at 20. We held that business losses suffered as the result of 

executive orders barring or curtailing the plaintiff's operations in response to the 

COVID-19 pandemic did not constitute "direct physical loss of or damage to" 

the insured property such as to permit or require coverage. Id. at 10. We 

explained the phrase "direct physical loss of or damage to" property was neither 

ambiguous nor "so confusing that the average policyholders . . . could not 

understand that coverage extended only to instances where the insured property 

has suffered a detrimental physical altercation of some kind, or there was a 

physical loss of the insured property." Id. at 21-22. 

As noted in MAC Property Group LLC, "scores of federal and state 

appellate-level courts . . . have addressed" claims for coverage for losses due to 

executive orders limiting or curtailing business operations due to the COVID19 pandemic under insurance policies providing coverage for "direct physical 
15 A-3711-20

loss of or damage" to insured property, and the "overwhelming majority of them 

have" dismissed the complaints "because the losses were not due to physical loss 

or damage to their insured premises." Id. at 26-27; see also Verveine Corp. v. 

Strathmore Ins. Co, 489 Mass. 534, 542 (2022) (noting that "[e]very appellate 

court that has been asked to review COVID-19 insurance claims has agreed" that 

"'direct physical loss of or damage to' property requires some 'distinct, 

demonstrable, physical alteration of the property'"); see, e.g., Wilson v. USI Ins. 

Serv. LLC, 57 F.4th 131, 142-43 (3d Cir. 2023) (applying New Jersey Law, and 

finding COVID-19 executive orders limiting or curtailing operation of an 

insured's business did not result in a "direct physical loss of or damage" to the 

insured's property because the orders were not issued in response to physical 

damage to the property and "[t]he propert[y] could certainly be used and 

inhabited, just not in the way the business[] would have liked"). 

Applying what we determined was the plain and ordinary meaning of the 

phrase "direct physical loss of or damage to property," we explained that because 

New Jersey has "adopted a broad notion of the term 'physical[,]'" when the word 

is paired with another word, e.g. "'physical injury,'" "the resulting term means a 

'detrimental alteration[],' or 'damage or harm to the physical condition of a 

thing,'" MAC Prop. Grp. LLC, 473 N.J. Super. at 20. We concluded the 
16 A-3711-20

plaintiffs were not entitled to coverage because they had failed to show COVID19 physically damaged their equipment or property on the insured premises, or 

that the presence of COVID-19 rendered the insured premises uninhabitable, 

and therefore the plaintiffs failed to establish they suffered a direct physical loss 

of or damage to their property under the plain and unambiguous language of the 

policy. Id. at 23. 

 Here, plaintiffs' arguments fail for the same reasons we rejected the claims 

in MAC Property Group LLC. The uncontroverted material facts establish 

plaintiffs have not, and cannot, show they suffered any "direct physical loss or 

damage" to their property such that they are entitled to coverage under the 

Business Income, Extra Expense, or Civil Authority provisions of the policy. It 

is undisputed the executive orders did not require that plaintiffs cease operations 

completely, or render the insured premises uninhabitable, and instead they 

resulted only in a curtailment of plaintiffs' normal business operations. 

Plaintiffs claim they suffered a "physical loss" and damage because the 

"physical presence of COVID-19" did not allow use of their businesses for 

elective medical procedures for a finite duration. As we have explained, for 

plaintiffs to be entitled to coverage under the policy language, "the loss itself 

must be a 'direct physical' loss, clearly requiring a direct, physical deprivation 
17 A-3711-20

of possession" and a partial curtailment of the of use of the premises "'without 

any physical alteration [to the premises] to accompany it'" does not amount to 

such. MAC Prop. Grp. LLC, 473 N.J. Super. at 26 (alteration in original) 

(quoting Verveine Corp., 489 Mass. at 545); see also Wilson, 57 F.4th at 142-

43. Therefore, as a matter of law, plaintiffs are not entitled to coverage under 

the Business Income or Extra Expense provisions of the policy because the

material facts do not reflect that their premises were directly, physically altered 

such that they suffered a direct physical loss of or damage to their property 

within the policy's plain language. 

In MAC Property Group LLC, we also considered a claim for coverage 

under a civil authority provision that is essentially identical to the provision at 

issue here. 473 N.J. Super. at 27-30. We found no coverage under the provision 

because it provided coverage where the civil authority "prohibited [the plaintiff 

from] access to the insured premises," and we explained the Governor Murphy's 

executive orders did not prohibit access to the insured premises but instead only 

restricted business activities at the premises. Id. at 30. Thus, because the 

plaintiff alleged that the executive orders only restricted its business activities, 

and did not prohibit access to its insured premises, we did not find the civil 

authority provision provided coverage. Ibid. So too here. 
18 A-3711-20

In pertinent part, the Civil Authority provision in plaintiffs' policy 

provides coverage where the exercise of civil authority "prohibits access to the 

described premises due to direct physical loss of or damage to property within 

one mile of the described premises." The undisputed facts establish the 

executive orders did not impose such a prohibition and did not bar access to 

plaintiffs' insured premises. Rather, the executive orders permitted access to 

plaintiffs' insured premises and limited only the procedures that could be 

performed following access. Moreover, there is no evidence the executive 

orders were issued "due to direct physical loss of or damage to property within 

one mile of the [plaintiffs' insured] premises" as is required for coverage under 

the Civil Authority provision. Plaintiffs are therefore not entitled to coverage 

under the Civil Authority provision of the policy. 

 We recognize plaintiffs' claim they were unable to complete their planned 

discovery of information from the New Jersey Department of Banking and 

Insurance concerning plaintiffs' addition of the virus exclusion to the policy. 

Plaintiffs had sought the information under the Open Public Records Act, 

N.J.S.A. 47:1A-1 to -13, and argue the requested information may have 

supported their contention the virus exclusion is unenforceable under the 

doctrine of regulatory estoppel. See MAC Prop. Grp. LLC, 473 N.J. Super. at 
19 A-3711-20

33 (rejecting plaintiff's claim the doctrine of regulatory estoppel barred an 

insurer carrier from enforcing a virus exclusion barring coverage for business 

losses suffered as a result of COVID-19). We find it unnecessary to address 

plaintiffs' contention summary judgment was awarded prematurely because it 

was not afforded the opportunity to obtain the information, because plaintiffs 

otherwise failed to present evidence establishing an entitlement to coverage 

under the policy provisions under which they sought coverage. Stated 

differently, we need not address the validity of the virus exclusion because 

plaintiffs failed to demonstrate an entitlement to coverage in the first instance. 

 Plaintiffs' remaining arguments, to the extent we have not addressed them, 

lack sufficient merit to warrant any further discussion in a written opinion. R.

2:11-3(e)(1)(E). 

 Affirmed.