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INSIGHT: Navigating Covid-19 and the Liability Storms Ahead

May 18, 2020, 8:00 AM

The most common risk that organizations are likely to face as the coronavirus pandemic continues is an exposure claim, and liability will grow as businesses reopen.

State law may provide a structure for dealing with employment-based claims. For example, if an employee in an essential industry such as meat processing contracts Covid-19, their exclusive remedy may be workers’ compensation if the disease arose out of and in the course of employment.

However, some state workers’ compensation laws exclude what are called “ordinary diseases of life” such as the flu. The claim may be stronger if the employee is employed in the health-care setting where the “occupational disease” is an attendant hazard of the job, not unlike hepatitis, which has been held compensable in many jurisdictions.

Several states are considering legislative initiatives to expand coverage for Covid-19 for certain occupations, including health-care workers and emergency responders.

Another likely scenario is a claim by a customer for contracting Covid-19 from an employee. The likely theory of recovery is common law negligence, but plaintiffs face a significant hurdle in establishing causation when infection could come from myriad sources. The advent of new technologies such as genetic typing may be too costly for most claims, but hold promise for tracing exposure and establishing causation.

Third-party claims may also arise as businesses struggle to remain in operation or reopen. A demand letter recently sent by a law firm illustrates a possible scenario:
Company A employs Employee A. Company B employs Employee B. Both Company A and B are in industries where telework is not practicable. Employee A and Employee B reside together. Employee A contracted Covid-19 and was instructed by Company A to self-quarantine. Employee B continued to report for work at Company B, and several days later Company B learned that Employee A tested positive for Covid-19. In response, Company B closed its facility and ceased operating for two weeks. Company B alleges Company A had an obligation to require Employee A to inform Employee B to notify Company B and to self-quarantine rather than report for work. Company B demands that Company A pay for Company B damages.

The demand letter was rejected and whether recovery exists remains to be seen.

Administrative Liability

The Occupational Safety and Health Administration reported that it has received numerous Covid-19 related complaints related to lack of personal protective equipment, such as masks and gloves, as well as insufficient training. When a specific OSHA standard does not apply, OSHA can cite employers for violating its expansive general duty clause, which requires providing “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.”

OSHA’s current efforts appear focused on health-care employers, although that scope is likely to widen as businesses reopen.

Some essential industries that have remained in operation have been the subject of employee walkouts to protest allegedly unsafe working conditions. Private sector employers—including nonunionized facilities—could face unfair labor practice charges in the event they discipline or terminate participating employees as such actions may constitute concerted, protected activity under Section 7 of the National Labor Relations Act.

Criminal Liability

By now most have read stories about the Sussex County, N.J., nursing home where more than 30 residents died from Covid-19 and 17 bodies piled up in a makeshift morgue within the facility. Calls for criminal investigations and prosecutions were quickly stifled as New Jersey, along with a host of states, implemented measures to provide civil and criminal immunity to health-care facilities and providers caring for Covid-19 patients. Notably, these measures generally do not apply to acts or omissions constituting fraud, gross negligence, recklessness, or willful misconduct.

Thus, the window remains slightly open for criminal prosecutions in egregious cases. The Department of Justice also recently issued guidance to law enforcement officials that Covid-19 meets the statutory definition of a “biological agent” and cases of “purposeful exposure and infection of others with COVID-19” could be prosecuted under federal terrorism statutes.

Push for Federal Immunity

Right now, there is also a strong push to adopt immunity legislation at the federal level.

The “Facilitating Innovation to Fight Coronavirus Act” bill introduced by Sen. Ben Sasse (R-Neb.), chairman of the Senate Judiciary Subcommittee on Oversight, seeks to preempt federal and state law and provide immunity to health-care providers for using or modifying a medical device for an unapproved use or out-of-scope practice, testing or treatment.

Senate Majority Leader Mitch McConnell (R-Ky.)—with the support of the U.S. Chamber of Commerce—appears to want to go even further, indicating on April 27 his intention to provide immunity to non-health-care employers from “opportunistic lawsuits.”

The extent and exact nature of liability faced by companies in the wake of Covid-19 remains to be seen. The landscape shifts every day and it’s possible we won’t have certainty until we are well beyond the current circumstances. Employers should stay informed as to possible risks and monitor applicable state and federal legislative efforts.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Mark A. Fahleson is a litigator and employment law attorney with Rembolt Ludtke LLP in Lincoln, Neb. He is a member of DRI —The Voice of the Defense Bar, the leading association for lawyers who represent the interests of business and individuals in civil matters. He served as a panelist for DRI’s recent webinar focused on issues law firms and their clients will face as they reopen after Covid-19 shutdowns.

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