An insurer said an auto parts manufacturer can't get $50 million in coverage for COVID-19 losses, telling a North Carolina federal court the company concealed that an employee's positive test result was false since it was the only evidence that the virus was present at one of the manufacturer's facilities.

In a motion for summary judgment filed Monday, Sompo America Insurance Co. contended that Teijin Automotive Technologies NA Holding Corp. cannot satisfy the requirements to trigger coverage under a communicable disease endorsement. The endorsement requires the "actual, not suspected," presence of a communicable disease at an insured location, and also requires that access to such a location was limited, restricted or prohibited by either an order of a governmental agency or an officer of Teijin.

"Teijin has not satisfied either trigger," the insurer said. "In fact, in the absence of proof to substantiate its claim, Teijin resorted to outright deception, concealing that a COVID-19 positive test for an employee at the Huntington plant — the sole basis for more than half of the $50 million of its alleged damages — was actually a 'false positive.'"

The insurer further argued that Teijin is not entitled to coverage because it willfully concealed or misrepresented facts about its claim.

Teijin asserted in a competing motion, also filed Monday, that Sompo's position conflicts with the science that false negatives are more likely than false positives.

The auto parts manufacturer said it has easily satisfied the endorsement's first requirement of the "actual, not suspected," presence of a communicable disease because it is a "low hurdle" requiring "something more than little to no evidence," not a lab-confirmed test.

The presence of COVID-19 at its facilities is established by evidence of biostatistics and employee data of COVID-19 infections, which "confirms what everyone during the pandemic knew: COVID-19 was everywhere, including at Teijin's facilities," the manufacturer said.

The endorsement's second requirement of restricted access has also been met, given that government orders regulated businesses like Teijin's by limiting access to essential workers and restricting access for symptomatic or COVID-19 positive individuals, Teijin said. The manufacturer added that its officers also made decisions to restrict access to Teijin's plants as a result of the virus.

Teijin filed the suit in February 2024, seeking to recoup coverage for losses at its Indiana, Ohio, Michigan and North Carolina locations. The manufacturer asserted claims for breach of contract, bad faith and violations of North Carolina's Unfair and Deceptive Trade Practices Act.

Last March, U.S. District Judge Thomas D. Schroeder rejected Sompo's request to toss the suit, finding that Teijin sufficiently alleged that its losses were covered under the communicable disease endorsement. The judge also held that Teijin's allegations were sufficient to support its UDTPA claim.

Teijin also argued Monday that the undisputed facts show that Sompo violated the UDTPA by misrepresenting policy requirements and unreasonably denying coverage.

Sompo, however, said that the court may determine that it erred in its policy interpretation, but that does not mean it violated the UDTPA.

"Sompo's initial denial of the claim based on the lack of actual presence of COVID-19 was reasonable, and including a second basis for denial — even if ultimately incorrect — 'does not make the explanation unreasonable' as a matter of law," the insurer said.

Representatives of the parties did not immediately respond to requests for comment Tuesday.

Teijin is represented by Darren S. Teshima, Sabrina T. McGraw, Bruno Campos and Matthew Schlesinger of Covington & Burling LLP and Richard C. Worf Jr. of Robinson Bradshaw & Hinson PA.

Sompo is represented by Gary Svirsky, Richard B. Goetz, Zoheb Noorani, Kellie A. Swannie, Matthew M. Higgins and Kristin Cope of O'Melveny & Myers LLP and Jennifer K. Van Zant of Brooks Pierce McLendon Humphrey & Leonard LLP.

The case is Teijin Automotive Technologies NA Holding Corp. v. Sompo America Insurance Co., case number 1:24-cv-00159, in the U.S. District Court for the Middle District of North Carolina.