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As states across the country strive to breathe life into their economies in the wake of sobering economic and employment forecasts, a national debate is brewing over the need for business liability protection from COVID-19-related lawsuits. Business owners are concerned about the prospect of employees or customers contracting, or even allegedly contracting, the COVID-19 virus while on business premises and how that could translate into liability lawsuits that might cripple, perhaps fatally, a business’s ability to recover from the devastating economic impact of the virus. In response to those concerns, business and industry groups are pushing state and federal lawmakers to consider protective legislation that would bar lawsuits for COVID-19-related claims.
The Scope of the Problem
In addition to the catastrophic public health consequences that the COVID-19 virus has caused in the United States, the impact on the operation of businesses, large and small, has also been devastating. Businesses struggling to stay open or reopen in the midst of the pandemic potentially face coronavirus-related liability from a number of different sources, including their own employees and customers.
Chief among liability concerns is the fear of lawsuits for negligence alleging that the actions or inactions of a business caused an employee or customer (or, secondarily, a family member) to become infected with the virus. Employee claims against businesses alleging workplace-acquired COVID-19 infection would be expected to trigger workers’ compensation benefits in many cases. But claims by both employees and customers alleging a failure by the business to provide a virus-free working or shopping environment outside the confines of workers’ compensation laws are likely. Even businesses that take aggressive steps to try to limit COVID-19 exposure in the workplace walk a tightrope in trying to ensure that their efforts do not trigger discrimination, privacy, or regulatory complaints. The situation can be further aggravated by the fact that commercial general liability policies and commercial property policies may not offer coverage for COVID-19-related claims, a determination dependent on the specific policy language used.
While many legal commentators believe that employee or customer claims against a business for origination of a COVID-19 illness would be difficult to prove and thus less likely to be brought, the economic burden to an employer of having to defend or settle such claims could be unsustainable, particularly in the case of a small business. Initially, COVID-19-related lawsuits were directed primarily at the cruise industry and nursing homes, where people are in close proximity for extended periods of time, making the causation element of a negligence claim less problematic to establish. But a growing wave of lawsuits against employers is now appearing across the country, and the fear of substantial class action litigation by large groups of employees or consumers alleging the failure of a business to take appropriate measures to protect against COVID-19 exposure and infection is a looming threat.
To varying degrees, legislatively created immunity is already a reality in the COVID-19 healthcare environment. The pandemic has created an unprecedented minefield for potential medical malpractice liability, given the lack of any uniformly recognized protocol for treating the disease and the absence of a prevailing standard of care against which a practitioner’s actions can be fairly and reliably measured. In response to those concerns, federal lawmakers and many state lawmakers have taken steps to provide healthcare professionals with some measure of liability protection. For instance, at the federal level, the secretary of the Department of Health and Human Services issued a declaration on March 10, 2020, under the authority of the Public Readiness and Emergency Preparedness Act of 2005 (42 U.S.C. § 247d-6d) providing immunity from liability to certain individuals and entities from claims related to the manufacture, distribution, prescription, administration, and use of defined medical “countermeasures” against the COVID-19 pandemic. See 85 Fed. Reg. 15,198 (Mar. 17, 2020). These covered countermeasures include products used (drugs, biologics, diagnostics, and vaccines, to name a few) that are used to diagnose, treat, mitigate, or cure COVID-19 and that meet various other requirements of federal law.
This effort to protect healthcare workers is being echoed at the state level. According to data assembled by the American Tort Reform Association, most states have now granted some level of liability immunity to healthcare providers treating COVID-19 patients, either by legislative enactment or executive order. This includes hospitals, nursing homes, physicians, and other medical personnel. While a discussion of federal and state medical immunity protections is beyond the scope of this article, suffice it to say that those protective efforts are ongoing and do not appear to be the subject of any significant level of opposition or debate. The same cannot be said for the notion of affording similar immunity protection to the non-medical business community for COVID-19-related claims.
The Pros and Cons of the Debate
The debate over COVID-19-related business immunity highlights a tension between two objectives: economic recovery and public health. Employees need to get back to work to promote economic recovery for all, but they also need to feel comfortable that they are not unreasonably risking their health or their lives in doing so.
At the national level, industry groups are at the forefront of a push for political action to protect businesses from COVID-19-related lawsuits. In a May 27, 2020, letter joined by over 200 other trade associations, the U.S. Chamber of Commerce openly called for Congress to provide “temporary and targeted” liability relief legislation for businesses. See Press Release, U.S. Chamber of Commerce, U.S. Chamber Calls for Liability Protection for Businesses as Fear of Lawsuits Continue to Grow (May 27, 2020). More than 50 state and local chambers requested similar “safe harbor” federal legislation in a May 20, 2020, letter to Congress. See Coalition Letter on Liability Relief Legislation (May 20, 2020). In a similar vein, the National Association of Manufacturers has made policy recommendations for legislation limiting COVID-19 state and federal lawsuits against essential manufacturers. See Nat’l Ass’n of Manufacturers, Pandemic Liability Policy Recommendations.
U.S. Senate Majority Leader Mitch McConnell was widely reported earlier this year as identifying business liability protection as a “red line” priority in any further federal COVID-19 relief package. Most recently, Senate Republicans on July 27 introduced federal legislation in the proposed Safe Work Act (SB 4317) that would create nationwide restrictions on COVID-19 tort liability claims. These restrictions would, in most cases, preempt all other federal, state, and tribal laws on the subject. Any such federal liability protection would almost certainly face a constitutional challenge. In testimony before the U.S. Senate Judiciary Committee in May of this year, Georgetown University Law Center Professor David Vladeck indicated that any newly created federal protective legislation that preempts existing state liability statutes “likely exceeds Congress’s constitutional authority.” See Examining Liability During the COVID-19 Pandemic: Hearing Before the S. Comm. on the Judiciary, 116th Cong. (May 12, 2020) (testimony of Professor David C. Vladeck). That view is not universally accepted. See, e.g., Michael A. Carvin & Yaakov M. Roth, “Constitutionality of Proposed Federal Liability Limitations for COVID-19 Exposure Claims,” FedSoc Blog (May 14, 2020).
Proponents of business liability protection in the COVID-19 context argue that businesses need to be protected from what many fear will be a deluge of frivolous lawsuits that, while perhaps ultimately unsuccessful, would be prohibitively costly for many businesses to defend at this juncture in the pandemic. Senate Majority Leader McConnell has said this feared flood of lawsuits could amount to a “second pandemic.” Supporters argue that full immunity for employers is necessary to reassure the business community that efforts to stay open or reopen will not be further threatened by the specter of protracted coronavirus-related litigation.
Opponents of business liability protection argue that the fear of COVID-19-related litigation is unfounded because liability would be particularly difficult to establish, given both the relatively long incubation period of the virus and the resultant difficulty of proving that any given place of business was the source of a plaintiff’s COVID-19 infection. In addition, many suits against employers would be precluded by currently existing workers’ compensation laws. Opposition to blanket COVID-19 immunity for businesses also rests on the assertion that such protective legislation would remove any incentive for a business to maintain a safe workplace and could effectively punish safety-compliant businesses by giving a competitive edge to those businesses that choose to be irresponsible and minimize or ignore health and safety precautions in order to save money and boost profits. Illustrative of the arguments against blanket business immunity, and particularly any federal legislation that would preempt state law remedies, is a May 6, 2020, letter addressed to the Speaker and minority leader of the U.S. House of Representatives, and the majority and minority leaders of the U.S. Senate, from a handful of consumer groups, including Consumer Reports, the Consumer Federation of America, and the National Association of Consumer Advocates. See Letter from Consumer Reports and others opposing COVID liability shield for businesses (May 6, 2020).
To date, no federal legislation has been enacted that would provide immunity from liability for COVID-19-related claims other than the protections now afforded to healthcare workers. But as of September 1, 2020, more than a dozen states (including Georgia, Louisiana, North Carolina, Oklahoma, Utah, and Wyoming) have passed protective legislation of their own. Many more states have similar protective legislation. North Carolina’s law (SB 704, signed into law on May 4, 2020) provides COVID-19 immunity to “essential businesses” identified in the governor’s prior emergency orders, but the law denies immunity for gross negligence, reckless misconduct, or intentional infliction of harm. Utah’s law (SB 3007, also signed into law on May 4, 2020) casts a wider net in extending immunity protection to all persons and businesses from COVID-19-related claims. The Utah law denies immunity in cases of willful misconduct or reckless or intentional infliction of harm. Like Utah’s law, Oklahoma’s law (SB 1946, signed into law on May 21, 2020) provides immunity for COVID-19-related claims to all individuals and entities, subject to certain carve-outs and contingencies involving intentional or reckless conduct. Oklahoma has also enacted legislation (SB 1947, signed into law on May 15, 2020) explicitly extending product liability immunity protection in favor of those who manufacture or supply personal protective equipment and medications used in the treatment of the virus. In Wyoming, legislation was signed into law on May 20, 2020 (Senate File 1002) granting immunity for COVID-19-related claims to business entities that follow instructions from a state, city, town, or county health officer in responding to a public health emergency. The Wyoming law does not apply to gross negligence or to willful or wanton misconduct. Louisiana’s law (SB 435, signed into law on June 12, 2020) confers immunity upon all persons and businesses, includes a carve-out for gross negligence, willful misconduct or intentional criminal misconduct, and is retroactive to March 11, 2020. The Georgia law (SB 359, signed into law on August 5, 2020), provides tort immunity similar to the other states with a carve-out for gross negligence, willful and wanton misconduct, reckless infliction of harm, or intentional infliction of harm. Interestingly, the Georgia law also creates a rebuttable presumption that a claimant assumed the risk of any COVID-19 related harm if the business posted or otherwise provided a written warning notice of such risk in accordance with requirements set forth in the statute.
The fate of pandemic-related tort liability lawsuits against businesses is currently up in the air at the federal level, while an increasing number of states are opting to restrict such litigation. Although the debate is often characterized by its extremes—full (blanket) immunity or no immunity—a number of commentators have identified a middle ground consisting of some form of conditional or qualified immunity. This approach would provide COVID-19-related immunity only to those businesses meeting designated health, safety, and operational standards identified by governmental authorities as necessary to reasonably protect employees and customers from COVID-19 exposure and infection. Compliant businesses would be afforded full immunity, while noncompliant businesses would remain susceptible to traditional claims and remedies for negligence and other torts.
One thing appears to be almost certain: The new face of tort litigation in the COVID-19 era is being crafted right now in Senate and House chambers in Washington, D.C., and across the country. The results of that facelift may well determine the availability of certain tort claims for COVID-19-related injuries and the strategies trial lawyers will need to employ in order to prosecute and defend pandemic-related claims in the months, and perhaps years, ahead.
Paul Dowdell is with Sacks Tierney in Scottsdale, Arizona.
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