Source: Bloomberg Law
The coronavirus pandemic has left companies across an array of industries wondering what to do if they can’t perform the services they are contractually obligated to provide, Bloomberg Law reported.
Health-care attorneys and others who specialize in contract resolution say they’ve been getting this question from clients a lot in the past week as federal and state leaders have taken increasingly restrictive measures to stop the spread of COVID-19.
However, even contracts that planned for unforeseeable circumstances may not exonerate a company from all liability. That’s why attorneys expect to see contract breaches become a major source of litigation when it’s back to business as usual.
Pillsbury’s senior health-care council Allen Briskin said, “It’s going to be a huge mess, not only have most of us not planned for a pandemic in the practical sense, we haven’t planned for it in a legal sense.”
Briskin has already seen a notice from one major health system, though he declined to name which one.
“Preemptive letters like that stem from an ignorance about what force majeure really is in some law departments,” said Briskin. “You look at that and say what does that even mean? The hospitals are still open, they’re still treating patients.”
Companies can’t legally declare force majeure until they’re facing a specific breach of contract, Briskin said, explaining that it’s a legal concept that comes into play when contracted parties are fighting about money.
“It’s not like you can just say ‘force majeure’ and declare a snow day for yourself and be relieved of all your external obligations,” said Briskin. “But the thing about force majeure is it’s not some overarching legal concept that applies to all contracts. How force majeure affects you is based upon the way it’s written in your contract.”
Additionally, companies may be dealing with the disruptions of a multiple of contracts at one time, Bloomberg Law reported.
“Any health system, health plan or health-care provider participating in managed care significantly is going to have tens if not hundreds of these contracts,” Briskin concluded. “A large health system probably has a few hundred managed care contracts. They enter into these things with a multitude of payers.”
Read the full story in Bloomberg Law.