The first wave of COVID-19-related product liability and other tort litigation has already hit U.S. courts, with a much bigger surge in lawsuits coming when the country reopens that will allege companies have been using “unreasonable” anti-pandemic measures to protect the public.
Recognizing that such lawsuits could choke off any hope of a sustained economic recovery, Congress should give serious consideration to passing federal liability protections to protect businesses from nuisance litigation.
Recent history demonstrates how vital liability protections are. Without them, the recovery lawsuits claiming businesses had inadequately prepared for future terrorist attacks would have stalled our post-9/11 recovery. Similarly, without liability protections, efforts to jump-start the pharmaceutical industry likely would have failed.
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As I wrote in an article just published by The Heritage Foundation, Congress should step in again with respect to the coronavirus pandemic; namely, by merging elements of the existing liability protection programs into a new law aimed at dramatically reducing the expected wave of nuisance lawsuits.
The two laws that should be combined offer similar protections, but in slightly different ways. First, in order to limit lawsuits arising out of terrorist attacks, Congress passed the Support Anti-Terrorism by Fostering Effective Technology Act of 2002.
The SAFETY Act offers liability protections to companies that deploy programs, services, and tools to protect against terrorist attacks. The liability protections of the SAFETY Act cover companies that seek the government’s review of their anti-terrorism products and/or services to determine whether they are effective and continually updated.
If so, the successful applicant will be entitled to either a cap on litigation damages or a dismissal of the lawsuit.
Additionally, Congress passed the Public Readiness and Emergency Preparedness Act in order to limit claims arising out of a variety of public health emergencies, such as pandemics.
The PREP Act automatically bars most types of lawsuits, but only for drugs and devices regulated by the Food and Drug Administration or specifically named by Congress.
Both laws are extremely helpful, but unfortunately, they don’t address the crippling effects posed by potential litigation accusing most businesses of “negligently” reopening in the wake of the COVID-19 pandemic.
The SAFETY Act does offer liability protections for recovery and mitigation plans, including plans to combat biological threats such as viruses. However, the SAFETY Act’s protections only apply when there has been an “act of terrorism,” which is obviously not the case with the coronavirus.
And while the PREP Act explicitly applies to pandemics such as the current COVID-19 situation, its protections do not apply to the drafting and implementation of needed anti-pandemic policies, such as disinfecting processes or social distancing measures that are vital to keeping infection rates down.
Congress needs to create a new program to address those liability gaps, and the most effective solution would be to enact legislation mirroring the SAFETY Act that is designed to cover lawsuits unaddressed by the PREP Act.
A SAFETY Act-like model would work best, as it provides an easy-to-replicate template for evaluating companies attempting to implement effective pandemic recovery and mitigation tools and processes, as well as liability protections strong enough to deter unscrupulous lawsuits.
The first needed component of a successful pandemic SAFETY Act law would be to ensure it applies to all businesses, whether for profit or not, and whether big or small.
Protecting small businesses is especially critical, as they are the backbone of the American economy and are particularly susceptible to opportunistic tort lawyers.
The protections offered by such a law, similar to the SAFETY Act and PREP Act, would require dismissal of claims alleging negligent implementation of pandemic mitigation or response measures, medical malpractice claims where the PREP Act does not apply, as well as product liability claims over the development or sale of anti-pandemic tools not covered by the PREP Act.
Businesses could obtain those protections either by applying for them proactively through a SAFETY Act-like approval process, or by demonstrating to a judge that they had implemented reasonable pandemic control and mitigation policies and procedures, including those recommended by federal and state authorities at the time of the alleged injury.
In either situation, the protections would be nullified if the court found that the business committed fraud or willful misconduct when implementing its pandemic mitigation plans.
Neither could the liability protections be used to stop a government investigation, but they could be used as an affirmative defense to establish that the business had engaged in reasonable, good-faith efforts to stop the spread of the pandemic.
An additional benefit of the pandemic SAFETY Act is that it could be used to help make available insurance coverage for pandemic claims. While some insurance policies will pay for losses from pandemics, that kind of coverage is far from widely available.
Congress should also consider creating a pandemic reinsurance program, similar to the one it previously created to stimulate the terrorism insurance market.
The pandemic SAFETY Act could be paired with the reinsurance law as a way to encourage a healthy investment in pandemic mitigation measures; namely, by offering reduced insurance premiums or expanded coverage to companies that seek out liability protections before trial.
History has shown how just the threat of lawsuits by aggressive tort lawyers can easily derail critical recovery efforts, and Congress should work to establish effective and appropriate liability limits to prevent that from happening.
By modifying and expanding existing statutes that limit liability in ways that ensure both fewer frivolous tort lawsuits as well as effective pandemic mitigation and recovery policies, Congress will have done its part to prevent unscrupulous lawyers from needlessly hindering the economic recovery Americans so desperately need.