Businesses Warn Fear of Lawsuits Could Stall Rebooting of Economy; Urge Coordination

By | April 15, 2020

Litigation surrounding coronavirus responses is already underway and businesses are warning that the fear of more lawsuits could hinder the reboot of the U.S. economy.

Returning America to work will require coordination between government and business and resolution of a number of regulatory, legal and liability issues, according to the Chamber of Commerce.

The issues the Chamber is concerned about include employer liability, products liability, medical liability, securities litigation, outdated regulations, health privacy and workplace safety.

“This pandemic is upending every way of life, including how businesses operate and care for employees and communities. As we adjust to this new reality, we must understand that many laws and regulations were designed for a different time and place, and today they could significantly hamper– or even contradict– recovery efforts,” U.S. Chamber President Suzanne Clark said.

In addition, the Business Roundtable, a group of CEOs of major companies, issued principles it said should guide a reopening of the U.S. economy. In a letter to Vice Mike President Pence that was shared with members of Congress and governors, the CEOs stressed putting the lives of Americans first.

“Americans need to know that policymakers and employers are prioritizing their safety. A successful recovery strategy must give Americans confidence that they can safely return to work and public spaces. This means reopening at the right time, as guided by public health officials,” the Roundtable wrote. “It also means that as community-based movement restrictions are gradually lifted, those restrictions will need to be replaced by other kinds of protections that keep Americans safe, including, among other things, personal protective equipment, cleaning procedures, testing and other diagnostic tools, and virus monitoring.”

The members of the Roundtable include CEOs of major financial, manufacturing, technology, transportation, consumer goods, pharmaceutical and other corporations. Insurance members include the CEOs of Aon, Assurant, Chubb, MetLife, Progressive, Starr, State Farm, Travelers, USAA and Verisk.

The Roundtable also stressed the need for federal guidelines on a range of issues to foster a “common understanding” of steps being taken across the country. “Federal guidelines will also help businesses of all sizes plan, prepare for and execute the most effective recovery possible,” the letter said. “Even on issues not covered by federal guidelines, states should endeavor to be as coordinated as possible, particularly states within the same region.”

National guidelines would be most important for appropriate safety measures such as personal protective equipment, cleaning procedures, testing and other diagnostic tools, and virus monitoring, according to the Roundtable. “Clear federal guidelines, implemented across states, will give workers and consumers greater confidence, will ensure that essential services can continue to function without interruption, and will help direct use of critical supplies to the areas with greatest need,” the statement said.

In her letter to Chamber members, Clark said that planning for the return to work in America can’t wait.

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“The American business community must begin preparing now for new processes, requirements, or restrictions for which there is no playbook or precedent. And we must not allow a lack of resources, regulations that are not fit-for-purpose, and the fear of litigation to sideline efforts to return to work and life—safely, successfully and sustainably,” Clark wrote.

Clark said the return to work will be gradual, phased-in, and will vary by location, sector, business type or size, and the health status of workers.

“It also will require continued social distancing, expanded use of personal protective equipment, and other counter-measures,” she wrote.

Litigation related to the coronavirus crisis has thus far involved insurance, employer liability and securities. Several businesses are suing insurers over business interruption claims denials. The owner of a nursing home tied to dozens of COVID-19 deaths is being sued. The estate of an employee who died from COVID-19 is suing Walmart. A Chicago nurse is suing the hospital she says fired her for speaking out on the lack of protective equipment. Securities lawsuits have been filed against a cruise line and another against a pharmaceutical company.

Liability Issues Ahead?

“A reopening plan that is medically based and relies on social distancing and other best practices for public health may raise significant regulatory and legal liability risks,” the Chamber said.

The Chamber said it has begun exploring other implications in addition to liabilities of returning to work. These other areas include the essential services and resources necessary for returning to work: general health screening, COVID-19 testing, personal protective equipment, childcare, and transportation. And also support for businesses and individuals during a phased reopening: businesses dependent on high-density gatherings or travel, and individuals delayed in returning to work.

The business lobby contends that the litigation risk will “become exacerbated during a reopening.” It has identified a number of regulatory and legal issues it believes need to be resolved including:

Health Privacy

There are federal and state laws governing the health privacy of individuals. However, these could conflict with potential reopening requirements for employers to verify employees’ COVID-19 status and/or their vulnerability due to underlying health conditions. They may also interfere with conduct needed for contact tracing in the workplace. The Chamber called for a broad safe-harbor for employers in the area of health privacy.

Discrimination Claims

Employers who conduct a medically-based or risk-based reopening, such as using age or underlying health conditions, may face liability under the Age Discrimination in Employment Act and the anti-discrimination provisions of the Americans with Disabilities Act. Employers need clear guidance about what practices are acceptable in conducting a medically-based or risk-based reopening and they need a safe harbor for actions taken by employers consistent with those guidelines, the Chamber said.

Safe Workplace Requirements

Generally, OSHA holds employers responsible for making personal protective equipment (PPE) and training available. However, if the federal government recommends PPE be available in all workplaces, the Chamber wants the federal government to make it clear that PPE used to combat the spread of COVID-19 is not subject to the normal OSHA requirements. Employers are also concerned they may face lawsuits and workers’ compensation issues around the limited supply of PPE. The federal government should clarify the scope of liability related to PPE, according to the Chamber.

Employment Practices

Employers are concerned about potential litigation around employees’ scope of work and travel destinations, wage-and-hour issues (for example, whether employees should be compensated while getting tested or passing through screening), leave policy, travel restrictions, telework protocols, and workers’ compensation. In addition, employers fear they could risk legal actions if they do not accommodate employees who insist on returning to work even though they have not completed health screenings or are high risk. Employers fear legal exposure for not following all procedural requirements if they have to lay off workers in response to social distancing policies and government-mandated closures.

Exposure Liability

“This is perhaps the largest area of concern for the overall business community,” says the Chamber. “It encompasses multiple types of claims that could be brought against business that have been designated as ‘essential’ as well as large swaths of the remaining business community once the economy is reopened.”

Among the concerns here are situations where a customer, employee, patient or member of the public is exposed to COVID-19 in a business facility or as the result of a business’ particular action, or failure to act, and then that claimant becomes sick. The legal theories underlying these claims may range from simple negligence to strict liability to public nuisance. If enough claims are brought, the Chamber warns they could drive businesses to bankruptcy and the threat of exposure-related lawsuits might also deter some businesses from reopening. The Chamber identifies several recommended solutions in these cases including providing a safe harbor for companies following CDC or state/local health department guidance, channeling certain claims into federal court rather state courts and restricting public nuisance claims.

Product Liability

Makers of certain products such as hand sanitizers, soaps and other cleaning supplies that are used to protect against, treat or test for COVID-19 may not have sufficient protection against litigation. Current law does not provide protection outside key healthcare-related spaces such as for a non-healthcare provider that provides PPE to its employees or uses recommended cleaning products.

Medical Liability

Healthcare providers and facilities caring for COVID-19 patients are concerned about medical liability lawsuits arising from care decisions, lack of care due to equipment shortages, or mistakes due to long hours or staff or equipment shortages. Nursing homes and assisted living facilities are also concerned with being sued for allegedly failing to protect patients from contracting COVID-19. At the federal level, the CARES Act provides some liability protections for volunteer healthcare providers caring for COVID-19 patients. The Chamber says the CARES Act language should be expanded to include all healthcare providers and facilities (not just volunteers). In addition, it supports state-level COVID-19 medical liability statutes such as one New York recently enacted.

Securities Litigation

Securities class actions already have been filed against a cruise line and pharmaceutical firm based on stock-price drops and claims that companies should have been warning investors about the potential consequences of a pandemic. The Chamber calls for an automatic stay on securities litigation cases related to the COVID-19 emergency until after the federal declaration of a public emergency has been rescinded. It is also worth considering a cap on damages in COVID-19 related securities lawsuits, the Chamber said.

False Claims Act

Cases brought under the federal False Claims Act can impose significant liability on entities receiving federal funding or contracts. According to the Chamber, these liability concerns could potentially delay relief under the CARES Act and future relief measures. The Chamber wants hold harmless language for firms participating in federal loan and relief programs.

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