COVID-19: Congress and States Debate New Liability Protections for Reopening Businesses

Adopting liability protections to offer assurances to businesses facing significant liability risks is not a new concept. After the terrorist attacks of September 11, 2001, Congress passed the Support Anti-Terrorism by Fostering Effective Technologies Act (SAFETY Act) of 2002, to incentivize and protect development in anti-terror technologies. Under the SAFETY Act, proven anti-terror technologies may receive protections from suit, minimizing or even eliminating a company’s overall liability exposure in the event of a successful terrorist attack. In providing liability protections, Congress acknowledged that addressing and limiting the risks inherent to anti-terror technologies would make it more likely for innovators to continue developing these capabilities, and for these technologies to be adopted into widespread use. 

In the health care space, Congress has also provided liability immunity for the manufacture, testing, development, distribution, administration and use of medical countermeasures against an array of public health emergencies, including pandemics, through the Public Readiness and Emergency Preparedness (PREP) Act. In response to lawmakers’ concerns about increased vaccine and drug injury lawsuits, the PREP Act provides immunity from liability for claims of loss caused, arising out of, relating to, or resulting from administration or use of these countermeasures. This includes liability protection for death, physical, mental or emotional injury, the need for medical monitoring, and property damage and loss. As of February 4, 2020, the Secretary of Health and Human Services has declared that PREP Act protections are in effect for applicable countermeasures taken in response to the COVID-19 pandemic. Nonetheless, these covered countermeasures are ultimately limited to arrangements with the federal government, or part of an authorized emergency response at the federal, regional, state or local level. This leaves significant gaps in protection for businesses responding to the COVID-19 pandemic outside of the authorized response, and does not apply to more general liability risks many businesses restarting operations will face. 

Enactment of an additional, more generalized liability shield for businesses reopening following the COVID-19 pandemic remains controversial and a largely partisan issue. Senate Majority Leader Mitch McConnell has signaled that providing such protections for businesses is a top legislative priority, even suggesting that he will not advance any further stimulus packages without inclusion of these protections. Leader McConnell expressed concern that without liability shields, there will be a “second pandemic” of “lawsuits against doctors, nurses, hospitals and brave business people who are opening up.” Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, however, have both expressed concern that such proposals could diminish workers’ protections and are a distraction from passing other legislation that would more directly help businesses and workers reeling from the impacts of COVID-19. While some Democrats have indicated initial support for these measures, particularly as they affect small businesses, the liability shield proposals do not currently have widespread bipartisan support.

While Congress continues to debate expanded liability protections for COVID-19-related reopenings, states have begun to adopt their own liability protection measures. Michigan, New York and New Jersey have passed statutes, or implemented via executive order, protections for medical malpractice claims stemming from COVID-19 treatments. Utah has gone further, enacting a standalone liability protection statute providing immunity to premises owners and operators for “damages or injury resulting from exposure to COVID-19” so long as there was no willful misconduct, or reckless or intentional infliction of harm. Under the Utah scheme, businesses are not required to apply for these protections; all businesses reopening are provided this limited safe harbor. Relatedly, Oklahoma has also enacted a statute limiting liability for reopening businesses. Under the new law, business cannot be liable for COVID-19 exposures when acting in compliance with, or consistent with any applicable federal or state regulation. Several other states, including Louisiana, Kansas and Minnesota, are also considering adopting COVID-19-related liability protections.

What a federal COVID-19 immunity statute may ultimately look like, if enacted, remains unclear. However, Senate Majority Leader McConnell has indicated that protections will be designed to bar certain types of claims related to the business reopenings. This will likely still require some form of affirmative showing of compliance with applicable health and safety guidelines, unlike under the Utah scheme. For example, businesses may be required to demonstrate compliance with the Centers for Disease Control and Prevention (CDC) and Occupational Safety and Health Administration (OSHA) COVID-19 guidelines in order to obtain liability protection. Another possibility could include the creation of a new governmental office to review and issue COVID-19 liability protections, as had been done under the SAFETY Act liability protection program. However, given the time constraints for implementing new liability protections, any new office dedicated to reviewing liability claims would likely come as a secondary step in liability protections and would not be the sole provider of those protections.

Given the possible wide sweep of claims that could that arise as the country reopens, there are a number of considerations to be on the lookout for whenever draft legislation is published. They include:

• Will the protections be tied to existing liability protection statutes, for example, and expansion of the PREP Act, or will a new law be created?
• Will the liability protections be tied specifically to premises liability?
• Will service providers be able to pursue liability protections regardless of who their customers are?
• Will a mechanism be created to allow for entities to proactively obtain liability protections?
• Will the liability protections represent a “floor,” meaning that states will not be able to lessen them?
• Could the liability protections apply to future pandemics, and if so how?
• Will there be an ability to tie the protections to pandemic insurance coverage should it ever become widely available?

Adoption of new COVID-19 related liability protections will continue to be hotly debated in Congress over the coming weeks.  In the meantime, states are expected to continue adopting some form of protections as phased reopening continues throughout the country. Businesses should be familiar with available liability protections at both the state and federal level and, if applicable, be prepared to apply for and demonstrate compliance with such protections.

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.