Source: https://lynchlaw-group.com/violating-covid-19-orders-may-lead-to-criminal-and-licensing-sanctions-for-businesses-part-2/
Timestamp: 2020-07-03 10:35:40
Document Index: 379066990

Matched Legal Cases: ['art 2', '§ 5101', '§ 43', '§ 501', '§ 521', '§ 532', '§ 521', '§ 403', '§ 105']

Businesses Violating COVID-19 Orders May Face Criminal and Licensing Sanctions: Part 2 - The Lynch Law Group, LLC - Attorneys in Cranberry Twp and PittsburghThe Lynch Law Group, LLC – Attorneys in Cranberry Twp and Pittsburgh
Fines, Loss of Insurance Coverage Are Possible Penalties for Noncompliant Entities
In Part I of discussing this issue (PA Businesses Violating COVID-19 Orders May Face Sanctions), information was provided concerning the criminal and licensing consequences that are possible for individuals and businesses violating any of the COVID-19 orders of the Governor or Secretary of Health. In this part, we discuss the rights of persons facing enforcement actions, as well as another unintended consequence of violating the orders: loss of insurance coverage.
Citations by Law Enforcement or a Licensing Board
If you or your business is cited by any law enforcement agency for violating any order of the Governor, Secretary of Health, or a municipality’s declaration of emergency, in almost all circumstances the citation will be a summary offense that is initially prosecuted in your local district magistrate’s office. More serious charges, such as obstruction with the administration of justice (18 Pa.C.S. § 5101), are also possible should you forcibly refuse to obey the commands of a law enforcement officer or enforcement agent.
If you are cited with a summary offense for failing to obey a COVID-19 order, a hearing will occur in front of a magisterial district judge. If found guilty, you could face a fine of up to $300; failure to pay the fine may lead to imprisonment. Appeals of a guilty verdict at the magistrate level may be taken to the county court of common pleas. These appeals must be filed within 30 days of the judgment being entered at the magistrate level.
Citations by an enforcement arm of a licensing board or agency, however, may become more complicated. Within ten days of receiving an enforcement citation, the cited business must file a plea either admitting or denying the citation filed by the enforcement agents; the failure to respond may be considered grounds for additional discipline. If the allegations are denied, then a hearing is held before a hearing examiner. If the hearing examiner finds a violation occurred and imposes a civil penalty or other discipline, the cited business has a right of appeal to the appropriate licensing board within twenty days of the examiner’s decision. 49 Pa. Code § 43b.3. Further appeals from the board level are then available to the Commonwealth Court under the Administrative Agency Law, 2 Pa.C.S. §§ 501, et seq.
For businesses that do not operate under a license from a board, commission, or agency, consequences for violating the COVID-19 orders may exist under the powers granted to both the Secretary of Health or local municipalities. For example, the Secretary of Health issued orders pursuant to her authority to control infectious diseases under 35 P.S. § 521.5 and 71 P.S. § 532 requiring the wearing of masks in operating businesses and imposing requirements for sanitation. Should a business not abide by those mandates, the Secretary has broad authority to take necessary measures to isolate, quarantine, otherwise control the spread of COVID-19. 35 P.S. § 521.5. Similarly, municipalities have the authority to recind certificates of occupancy or business operation certificates should a business be operating illegally or outside of applicable law. See, e.g., 34 Pa. Code § 403.46; International Existing Building Code § 105.4. Rights and procedures for appeal in either of these circumstances are dependent on the facts of the citation and the municipal or building code, ordinance, or statute allegedly violated.
Businesses Risk Loss of Insurance Coverage for Impermissible Activity
On May 11, 2020, Pennsylvania’s Insurance Commissioner Jessica Altman reminded business owners that their commercial, general liability insurance policies normally exclude coverage for illegal or unauthorized business activity. In the press release, “Commissioner Altman warned non-compliant businesses defying the governor and secretary’s business closure orders that many insurance policies contain provisions that exclude coverage for businesses or individuals engaging in illegal acts or conduct. These exclusions may apply to property coverage, liability coverage, advertising injury coverage, and a host of other essential coverages.” Altman Press Release, May 11, 2020.
The statement by Commissioner Altman is broad, and the applicability of her warning will be highly dependent on a business’s insurance policy and the facts and circumstances of the potential insurance claim. General liability policies almost universally, however, contain exclusions from coverage for intentional, illegal acts. Therefore, a question could be raised: if a business owner must file an insurance claim while intentionally or knowingly violating the COVID-19 orders by operating, would insurance coverage be excluded? If a patron trips and falls inside a salon in a red or yellow phase county, would the insurance company deny coverage? The answer likely lies in the particular facts of the matter. In other words, the illegal act of operating outside of the COVID-19 orders would not have caused the patron to fall; however, but for the illegal operation, the patron likely would not have been inside of the business. The answer to this and similar situations is unknown, but one that the courts will certainly have to provide in the months and years to come as COVID-19 issues continue to spread.
Statements by the Governor, district attorneys, politicians, and pundits over the last few days have made the rough waters of Pennsylvania’s business community even more turbulent. The attorneys at The Lynch Law Group remain committed and focused to assist our clients and fellow business owners with questions and legal issues as they arise in this ever-evolving time.
Todd M. Pappasergi focuses his practice in litigation, business/commercial law, and complex appellate litigation. He also represents and counsels public entities on matters, both in and outside of court. You can reach Todd at (724) 776-8000 or tpappasergi@lynchlaw-group.com.
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