The Economic Recovery: States Offer Varied Liability Protections for Businesses

Unfortunately for these businesses, while governments have been developing economic assistance programs for business affected by COVID-19, they have been slow to put in place clear immunities from civil liability for businesses operating during the public health emergency. While the federal government has offered limited protections to health care workers and manufacturers of health care equipment, states have adopted initiatives that vary widely in scope and coverage by jurisdiction.

The Divergence of State Legislation

Particularly for businesses operating across state borders, navigating individualized state protections may seem daunting. However, despite a lack of consistency, several categories of protections have been emerging. Several states have focused protections on specific industries directly involved in treating COVID-19 illnesses, while other states have been erecting more expansive “premises liability protections.”

Specific Facility and Industry Protections

Health Care Providers
One of the more commonly adopted protections is aimed at health care workers and others directly involved in the treatment of COVID-19. More than 30 states and the federal government have passed legislation or issued executive orders to provide some form of liability protection to health care providers. These laws and orders provide a variety of different protections in both who they protect and the type of conduct they shield from liability. These protections generally apply to “health care providers,” “health care facilities” and “volunteers” treating, diagnosing and preventing COVID-19 in response to the public health emergency. The District of Columbia’s law is even broader, providing immunity from liability for treatment provided by a health care provider, volunteer, first responder, government contractor or subcontractor given to persons suspected of having COVID-19.

In 13 of the 14 states that have passed this type of legislation (with Iowa as the only state to apply civil liability protection to all levels of negligence), the immunity granted does not relieve a health care worker of liability for civil damages due to that person’s gross negligence, recklessness or willful misconduct. This type of negligence carve-out from immunity has been controversial and difficult to parse. For example, in Iowa, the recently adopted COVID-19 Response and Back-to-Business Limited Liability Act contains two provisions pulling in different directions. On the one hand, the immunity for health care workers explicitly “does not relieve any person of liability for civil damages for any act or omission which constitutes recklessness or willful misconduct.” On the other hand, the statute contains a requirement that, in order to bring a civil action alleging exposure or potential exposure to COVID-19, the action must either (a) relate to a diagnosis of COVID-19 that requires inpatient hospitalization or results in death or (b) involve an act that was intended to cause harm or that constitutes actual malice. 

While some of the states’ liability protections are limited to services related to the treatment of COVID-19 patients, other states offer broader protections to health care providers for patient injuries suffered during the state’s response to COVID-19, even where injuries are not COVID-19-related, if the injury was caused by an act or omission during the health care emergency. For example, New York Public Health Law § 3802 grants immunity protection to a “health care facility or health care professional ... arranging for or providing health care services pursuant to a COVID-19 emergency rule or otherwise in accordance with applicable law” where “the treatment of the individual is impacted by the health care facility’s or health care professional’s decisions or activities in response to or as a result of the COVID-19 outbreak and in support of the state’s directives.”

Distributors and Manufacturers of PPE and Other Products
Some state statutes and executive orders provide immunity for manufacturers and providers of PPE and other “qualified products” used to treat or prevent exposure to COVID-19. Alaska, Iowa and Kansas have applied the law to all providers or manufacturers of PPE, while Kentucky and Oklahoma limit protection to manufacturers of PPE or personal hygiene supplies businesses that do not normally make or provide such products and have only done so in response to the public health emergency. Alaska’s law does, however, include a requirement that the health care provider or manufacturer notify the user of the PPE that the equipment may not meet established standards and requirements.

States have also taken different approaches with regard to the retroactivity of these laws. Iowa, Louisiana and Oklahoma have made these protections retroactive while Kentucky has not addressed whether conduct prior to the enactment of the legislation is covered by the new law.

Adult Care Facilities
A particularly controversial area involves adult care facilities. According to a recent New York Times report, at least 54,000 residents and workers have died from COVID-19 at nursing homes and other long-term care facilities for older adults in the United States, and in at least 24 states, a majority of deaths are linked to nursing homes. Thus, in many states, there is a significant tension between nursing homes and their lobbyists, on the one hand, who claim that they need protection from lawsuits to stay in business, and patients and senior rights activists, on the other, who argue that such businesses need to be held accountable.

The first state to pass sweeping protection for nursing homes, as well as other health care facilities, was New York, which provides nursing homes the same civil liability protections that are afforded to hospitals under New York Public Health Law § 3802. Since then, at least 18 other states have adopted similar protections through legislation or executive order, primarily by expanding the definition of “health care facilities” to include nursing homes as part of their laws creating liability protections.

Restaurants and Event Planners
The restaurant and hospitality industries are other obvious potential targets for COVID-19-related litigation. Again, the proper scope of such protections can be a polarizing question. Workers may seek redress from their employer for a failure to provide PPE, or not permitting employees to wear PPE, or requiring employees to return to work, or for workers’ compensation claims, or for wrongful termination claims. Employers trying to navigate an already turbulent business climate—and, indeed, stay in business at all—may seek protection so they are not beset from all directions by lawsuits by those exposed to COVID-19 in the establishment. Louisiana is the first state to directly address this issue, enacting legislation that provides liability protection for event planners and restaurants for any injury or death resulting from exposure to COVID-19 stemming from such activities unless damages were caused by gross negligence or willful and wanton misconduct. The law provides additional guidance and liability protection for restaurants if the responsible party operated in substantial compliance with Louisiana’s state of emergency declaration and applicable COVID-19 procedures established by a federal, state or local agency.

In addition, while North Carolina law does not directly address restaurants, it broadly applies immunity from civil liability from any injury or death caused by COVID-19 while doing business with or employed by an entity deemed “essential” by executive order unless damages were caused by gross negligence, reckless conduct or intentional infliction of harm. Governor Cooper’s May 20, 2020 Order, which allowed additional businesses to open, expanded this limited immunity to dine-in restaurants so long as they comply with occupancy, distancing, signage, sanitation and other requirements.

Although most states’ laws do not provide explicit protections for the restaurant and hospitality industries, several states have passed premises liability protections, which may be applicable to restaurant or hospitality businesses facing potential liability for COVID-19 exposure.

Premises Liability Protection
States including Iowa, Louisiana, Utah and Arkansas (through executive order) have created premises liability protections to businesses. In these states (to varying degrees), businesses are protected from liability unless their actions were the result of “intentional,” “grossly negligent” or “reckless” behavior, or otherwise failed to substantially comply with COVID-19 federal, state or local procedures.

But even states adopting liability protections have yet to define what action is reasonable and what conduct creates liability. At least one state, Iowa, has provided some more certainty in this area by providing a “safe harbor,” where liability is barred for COVID-19-related injuries if the business was in substantial compliance or consistent with any federal or state statute, regulation, order, or public health guidance related to COVID-19 that was applicable to the person or activity at issue at the time of the alleged exposure.

As Congress continues to debate the merits of liability protection statutes, businesses look to their states for guidance. The responses, or in some cases non-responses, of several states reveals the wide range of approaches taken to shield various entities from civil liability and the large number of individuals that remain at risk of being sued for potential COVID-19-related claims. A lack of clear guidance as to what constitutes a defense to a COVID-19-related tort claim opens the door to prolonged, expensive litigation. Meanwhile, even in states that have passed civil liability laws, the differences among who they apply to and what conduct is covered creates confusion for companies operating across state lines that will have to navigate various standards to determine potential causes of liability.

The variety of civil liability protection laws passed by some states and the reluctance of other states to enact any new legislation highlights the need for federal legislation to establish clear guidelines regarding immunity to potential lawsuits in this field. These liability protections may go beyond health care workers and provide clear requirements for manufacturers and other business owners. As state governments enact legislation providing broader liability protections, existing laws can serve as templates to determine the entities and products that should be covered. For the economy to effectively reopen, all parties need to know the risks involved, what precautions they need to take, and what type of liability they may face.

For more information, please reach out to your regular Pillsbury contact or the authors of this client alert.

Pillsbury’s experienced multidisciplinary COVID-19 Task Force is closely monitoring the global threat of COVID-19 and providing real-time advice across industry sectors, drawing on the firm’s capabilities in crisis management, employment law, insurance recovery, real estate, supply chain management, cybersecurity, corporate and contracts law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 (Coronavirus) Resource Center.