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Nursing Homes Fight Orders Sending Covid Death Suits to States

June 22, 2021, 10:01 AM

The Third Circuit on Wednesday will become the first federal appeals court to hear oral arguments on whether state-law Covid-19-related wrongful death suits against nursing homes belong in state or federal court.

Similar appeals are pending in the Second, Fifth, Ninth, Eleventh, and D.C. circuits from federal district court opinions rejecting nursing homes’ arguments that the federal officer removal law gave them authority to hear the cases.

All but one of those courts also rejected arguments that the Public Readiness and Emergency Preparedness Act completely preempts state law in this area.

That issue probably will go to the U.S. Supreme Court, no matter which side wins, said Lori Semlies, head of the long-term care practice team at Wilson Elser Moskowitz Edelman & Dicker LLP, a national insurance defense firm.

Semlies and two of her colleagues filed a friend of the court brief on behalf of long-term care providers supporting Alliance HC Holdings Inc. The issues are important, she said, because this segment of the health-care industry serves important needs, and the impact of these cases will be felt throughout the U.S.

Alliance operates the New Jersey nursing homes where Joseph Maglioli and Wanda Kaegi resided before their deaths in early 2020. It will spar with the residents’ estates in the U.S. Court of Appeals for the Third Circuit over whether the U.S. District Court for the District of New Jersey got it wrong when it sent the cases back to state court.

‘Uphill Battle’

Under the federal officer removal law, federal courts have jurisdiction over cases against “any person acting under” or at the direction of a U.S. officer or agency, for any conduct related to that action.

“The fact that dozens of district judges, ranging greatly in terms of ideology, have all rejected the nursing homes’ federal officer argument, and only one accepted their complete preemption argument, suggests they face an uphill battle,” Adam Pulver, an attorney with Washington-based Public Citizen, told Bloomberg Law.

Public Citizen filed a friend of the court brief supporting the estates.

A win for the nursing homes on the federal officer claim “would be groundbreaking and of wide consequences,” Pulver said. It would suggest that all Covid-related claims against federally regulated industries would belong in federal court, he said.

That would be “a significant departure from existing doctrine,” Pulver said.

‘Never Seen Anything Like This’

But nursing homes had “never seen anything like” the Covid-19 pandemic before, Semlies said. They needed the government to tell them what to do, she said.

Nursing homes essentially became “extensions” of the federal agencies, Semlies said. They relied on constantly changing guidelines from the Health and Human Services Department, the Centers for Medicare & Medicaid Services, and the Center for Disease Control & Prevention, she said.

And they simply couldn’t do some of the things that later became standards for preventing the spread, she said. For example, Covid-19 tests weren’t widely available in the early months of the pandemic and, of course, there were no vaccines.

Nursing homes basically were “doing the government’s work” using what information and guidance they had, Semlies said.

Federal Law Immunity

Federal laws usually don’t completely preempt state laws, but occasionally one is so “extraordinary” as to change a state-law claim into a federal one. The nursing homes and estates differed as to whether the PREP Act is such a law.

“The impact of any decision relating to the PREP Act could vary,” Pulver said. The nursing homes still will have to show it applies regardless of where a case is tried, he said. That is, they will have to prove that “the wrongful death claims based on neglect and malpractice relate to the administration or use of a covered countermeasure.”

Semlies agreed, to an extent. The question for the Third Circuit isn’t whether the act applies, but whether the cases belong in federal court, she said. Nursing homes can raise PREP Act immunity as a defense even in state courts, she said.

But keeping these cases in federal courts will ensure they are consistently judged according to a uniform federal standard, not standards that may vary from state-to-state, she said.

The PREP Act was intended exactly for the type of situation presented by the Covid-19 pandemic—a national health-care crisis requiring a nationwide response, Semlies said.

Additionally, the HHS secretary made it clear that the PREP Act applies broadly, Semlies said. Its immunity provision isn’t limited only to the administration or use of a covered countermeasure, but extends to an alleged failure to administer or use a covered countermeasure, she said.

The language is “black and white,” Semlies said. For example, the PREP Act would provide immunity to a Covid vaccine distribution center, such as a retail pharmacy, even in a slip-and-fall case, she said.

The agency’s interpretation of the law, moreover, is entitled to deference, Semlies said.

Early Covid-19 Deaths

Maglioli and Kaegi died of Covid-19 related infections at Alliance’s facilities between April 9 and May 7, 2020. Their estates sued in state court, alleging the defendants failed to take safety precautions to fight the spread of coronavirus.

Alliance removed the cases to federal court, but the district court sent them back to state court in August 2020.

Lewis Brisbois Bisgaard & Smith LLP represents Alliance. Marchese Law Firm LLC and Gordon, Fournaris & Mammarella PA represent the estates.

The case is Estate of Maglioni v. Alliance HC Holdings, LLC, 3d Cir., No. 20-2833, oral argument scheduled 6/23/21.

To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com; Carmen Castro-Pagán at ccastro-pagan@bloomberglaw.com

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