COVID-19: Products and General Liability Tort Implications


March 2020

March 26, 2020

The novel coronavirus 2019 disease (“COVID-19”) is rapidly spreading while causing physical as well as economic damage to both individuals and businesses. Aside from the traumatic physical toll, a major financial impact of COVID-19 may stem from the tort claims that could follow from its existence. COVID-19 can be a deadly disease, and, consequently, the entities and individuals that are tenuously involved in its transmission, or fail to take necessary steps to prevent its transmission, may be a prime target for tort liability claims. The primary industries that may be targeted for these inevitable tort suits include healthcare, transportation, manufacturing, and hospitality. Consequently, it is vital that these entities and other businesses recognize the potential risk of civil liability and take corresponding action geared toward minimizing, if not preventing, its transmission.

The framework of our tort system may subject entities to products liability claims, negligence claims, toxic tort claims, and premises liability claims. Understanding the importance of encouraging businesses to actively engage in preventing the spread of COVID-19, our federal government has already taken some steps to protect the individuals and entities involved in curtailing the spread of COVID-19. Nevertheless, under our existing tort system, a variety of potential types of claims may follow from this pandemic.

PREP Act Immunity

On March 17, 2020 the Department of Health & Human Services (“DHHS”) issued a Declaration for Medical Countermeasures Against COVID-19 under the Public Readiness and Emergency Preparedness Act (“PREP Act”) 42 U.S. Code §?247d–6d, et. seq. The Declaration provides limited immunity from suit to certain individuals and entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of “covered countermeasures” (emphasis added).

The phrase “covered countermeasures” is broadly defined to include “any antiviral, any other drug, any biologic, any diagnostic, any other device, or any vaccine, used to treat, diagnose, cure, prevent, or mitigate COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, or any device used in the administration of any such product, and all components and constituent materials of any such product.” Covered countermeasures must be “qualified pandemic or epidemic products,” or “security countermeasures,” or drugs, biological products, or devices authorized for investigational or emergency use, as those terms are defined in the PREP Act, the FD&C Act, and the Public Health Service Act.

Also relevant, the Declaration defines “Administration” as the “physical provision of the countermeasures to recipients, or activities and decisions directly relating to public and private delivery, distribution and dispensing of the countermeasures to recipients, management and operation of countermeasure programs, or management and operation of locations for purpose of distributing and dispensing countermeasures.”

The only exception to this immunity is for claims involving “willful misconduct” as defined by the PREP Act. The PREP Act defines willful misconduct as “an act or omission that is taken (i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.”

The persons and entities able to utilize this immunity are generally “those that manufacturer, distribute, administer, prescribe or use” countermeasures. For example, the entities that likely fall within the scope of this definition are manufacturers of masks, respirators, pharmaceuticals, vaccines and other medical treatment products. The Declaration is retroactively effective, and applies from February 4, 2020 through at least October 1, 2024. The language of the Declaration, in combination with the PREP Act enabling legislation, leaves open questions as to whether the immunity is applicable to COVID-19 countermeasures that were manufactured, distributed, or administered prior to February 4, 2020, and whether the immunity is only triggered by claims made during the referenced time period, irrespective of manufacturing and distribution dates.

It is critical to emphasize, however, that although not passed and signed into law, the Declaration is binding federal law and is officially published in the Federal Register. It is issued pursuant to the PREP Act, which provides the specific authority for DHHS to issue declarations immunizing persons and entities from liability arising from public health emergencies. Accordingly, the present scope and protections of the Declaration are not a certainty moving forward, and may change or expand in the future as the threat to public health develops.

Therefore, although the Declaration is favorable to those entities involved in the COVID-19 pandemic, the immunity is limited in scope, time, and applicability to certain entities. It is possible that prospective plaintiffs may attempt to “thread the needle” with their claims through the limited gaps in this immunity. Indeed, class action lawsuits were filed in New York and California, in the past, against hand sanitizer manufacturers based on allegations that the products claimed to prevent the spread of certain viruses. We anticipate that one area that may be tested with the courts is whether hand sanitizers and anti-bacterial wipes are considered covered countermeasures. The plain language of the Declaration suggests to the authors that they may very well be covered by the Declaration’s immunity, but early case decisions will be instructive precedent.

Products Liability Claims

Irrespective of whether manufacturers of healthcare products are afforded immunity, these entities should be proactive in the way that they design, test, make, market, and distribute their products. These conservative measures are recommended so as to avoid the vitiation of their immunity by way of the willfulness exception of the Declaration.

The spread of COVID-19 spawned a race to prevent, cure, and detect the virus. Entities that embarked on this quest must ensure that they are following the applicable Food and Drug Administration (“FDA”) guidelines. Recognizing the exigency of the situation, the FDA, on March 18, 2020, released guidance entitled “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic.” This guidance provides important measures for patient safety and makes certain protocol modifications. In particular, the FDA recommends that sponsors evaluate alternative methods for the: implementation of safety assessments; delivery methods; delay of certain assessments; and rescheduling of study visits. It is critical that this guidance be followed, so as to reduce the risk of any future products liability claims alleging that the FDA guidance was willfully disregarded.

Further, it is important that products developed or already on the market do not present exaggerated claims that their products treat, prevent, or cure COVID-19. Although it may be financially enticing to market a product to fill the COVID-19 treatment or prevention void in the marketplace, doing so may result in a products liability claim. Any express statement made in an advertisement, product label, or other marketing mechanism must comply with the product’s actual and known capabilities, during this very uncertain time. Otherwise, such representations may fall within the “willful misconduct” exception to the Declaration for engaging in acts knowingly without legal or factual justification. If somehow the PREP Act Declaration is deemed not to apply here, litigation may follow. Respirator and medical mask companies also need to be particularly careful not to exaggerate the capabilities of their products. It is well known that mask and respirator manufacturers have long been toxic tort defendants in the asbestos litigation, even where the products’ intent was to minimize an entirely different toxic risk.

All product manufacturers, particularly those not afforded protection by the Declaration, must take appropriate precautions geared toward preventing their products and packaging from infection by COVID-19. While it is beyond the content of this article to address scientific causation issues, at a minimum, there are reports that the virus may continue to live for hours or days on certain surfaces. Accordingly, any infected individual or material poses a threat to the manufacturing process and distribution of products. If the components or packaging of the product derive from an infected area or country, proper safeguards should be in place to follow existing state of the art procedures to reduce the risk of transmission of the virus. Obviously, the ubiquitous nature of the virus itself will also make the chain of causation claim by any given plaintiff difficult, but this alone has not thwarted other types of mass tort litigation in this country. For example, today’s opioid litigation is being brought by states, counties and the like on a theory that their societal costs were caused by the particular conduct of companies that manufactured, distributed or sold opioid drugs, stretching traditional notions of legal causation to their limits.

The injured-party pool for COVID-19 is substantially growing each day, which opens up the possibility that certain plaintiff firms will pursue class action litigation as well. This only highlights the need for manufacturers without Declaration immunity protection to take all necessary and reasonable precautions so that their products are reasonably safe and properly marketed.

Negligence and Premises Liability Claims

Concerns about potential premises liability claims stemming from COVID-19 are paramount in healthcare facilities, including hospitals, nursing homes, urgent care facilities, and emergency services providers. This is true because COVID-19 places an enormous burden on our healthcare system to not only treat, but also to prevent further spread of this foreign disease. The risk of contracting COVID-19 is high in healthcare facilities and, thus, they may serve as targets for COVID-19 tort litigation.

We anticipate these facilities may be able to argue that the limited immunity provided by the Declaration should apply to shield these facilities from suit. As outlined previously, the term “Administration,” includes, but is not limited to, “physical provision of the countermeasures to recipients, or activities and decisions directly relating to public and private delivery, distribution and dispensing of the countermeasures to recipients ...” There is no bright line establishing which healthcare entities are afforded immunity as administrators. This is especially true, considering the broad range of facilities that will likely provide healthcare assistance during the pandemic. Hospitals and urgent care facilities that directly administer COVID-19 treatment are more likely to be successful claiming immunity compared to less-involved entities, such as nursing homes and radiology centers. Whether a healthcare facility is afforded immunity under the Declaration will be dependent on an individualized analysis. However, the Declaration does not appear to provide any immunity for claims of negligent proliferation of the virus within a premises.

It is beyond the scope of this article to address any potential claims against healthcare facilities for breach of the applicable standard of care in treating patients. But, it appears unlikely that these providers will be afforded immunity under the Declaration for premises liability and ordinary negligence claims. Moreover, even where immunity is deemed to exist, to pierce the shield of the Declaration’s immunity, claims may allege that these entities and/or individuals disregarded the known or obvious risks of COVID-19, amounting to willful conduct. Such claims would be similar to, for example, those claims alleging intentional torts against employers in order to plead around workers’ compensation immunity for negligence. Absent immunity, healthcare facilities may be the subject of claims that they failed to take proper measures to stop the spread of COVID-19 to others within the facility. It is important that healthcare facilities heed government warnings, and take necessary and reasonable precautions to reduce the risk of spread, a daunting task in the face of news of triage units, cruise ships and other heretofore unseen “medical” facilities in this country. A provider should do its best to implement and follow infection control policies, and all CDC and other directives for reducing the spread of the disease.

The application of immunity to the myriad of businesses and their purposes will depend on a case-by-case analysis of their conduct. Due to the proximity of individuals on any type of public transportation, the concern of COVID-19 transmission is obvious. Likewise, hospitality entities like hotels and restaurants also present the possibility for human contact and, necessarily, the spread of COVID-19. These businesses may be held liable for any action or (or inaction) that they take to prevent transmission and spread of COVID-19. For example, an individual who contracts COVID-19 at a hotel, without warning from the hotel notwithstanding the hotel’s knowledge of the presence of the virus, may seek to hold the hotel liable. If a tenant in an apartment building that used the common areas contracts the virus, and the landlord/owner becomes aware of this, it may become the subject of claims for failure to properly warn tenants of the existence of the virus within the premises, and/or for failure to take proper precautions such as sterilization of common areas. To avoid or at least minimize liability, businesses like these should be forthcoming to those within the scope of risk about the existence of the virus, and follow then existing state of the art processes aimed toward prevention of the spread of the virus.

Legislation

The federal government has commenced providing aide to corporations and individuals as a result of the COVID-19 outbreak. As described above, the Declaration, by and through the PREP Act enabling legislation, provides limited immunity to certain individuals and entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of drugs, devices, biological products, and supporting technology that is intended to limit the harm of the COVID-19 pandemic.

Some additional legislation is also on the way to further aid businesses and employees. On March 18, 2020, President Trump signed a multi-billion dollar emergency economic relief bill – H.R. 6201, the Families First Coronavirus Response Act (“Act”) – into law to help combat the COVID-19 pandemic which ensures free testing, provides paid sick leave, enhances unemployment insurance, increases spending on health insurance, and adds over $1 billion in food aid. The Act also amends the PREP Act’s definition of Covered Countermeasures to include “personal respiratory protective device[s]” that are (1) “approved by the National Institute for Occupational Safety and Health” (“NIOSH”); (2) “subject to the emergency use authorization issued by the Secretary on March 2, 2020, or subsequent emergency use authorizations”; and, (3) “used during the period beginning on January 27, 2020, and ending on October 1, 2024, in response to the public health emergency declared on January 31, 2020, pursuant to section 319 as a result of confirmed cases of 2019 Novel Coronavirus[.]” The statutory amendment clarifies that the Declaration’s immunity applies to NIOSH-approved masks.

What we know is that under our currently existing tort system, new tort claims stemming from this pandemic are a virtual certainty. And we know that DHHS issued a Declaration providing limited immunity to those manufacturers, distributors, and administrators of products attempting to treat and limit the spread of COVID-19. What presently is unknown is whether there may be prospective legislation to curtail the economic losses from additional tort claims, of many varieties.

As represented by the recent downturn of the stock market, corporations are feeling the economic impact of the COVID-19 pandemic. Nevertheless, at this moment, Congress is considering legislation aimed at the economic loss felt by entities and corporations who are involved in the crisis, or hit hardest by it. Certain legislative bodies are presently attempting to extend insurance coverage for losses relating to COVID-19. It is possible that legislation, in addition to the foregoing, may be enacted specifically aimed at the tort implications of COVID-19. The current COVID-19 situation is constantly changing. These changes are occurring daily, and sometimes take place by the hour. Thus, businesses should be on the lookout for any legislation which may affect their industry.

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