State & Federal Agencies Debate Protecting Businesses from COVID-19 Liability

As Republicans and Democrats debate adding COVID-19 liability protection to a new stimulus bill, states have started passing laws to prevent customers from suing if they contract the virus at a business.

North Carolina, Oklahoma, Utah and Wyoming were the first to prohibit lawsuits against businesses if they took all required precautions. Iowa passed a bill protecting businesses from litigation except for cases that involve hospitalization or death. The Arizona House of Representatives passed a business protection bill, but the state senate did not vote on it before the session closed in May. California and New York, which had some of the highest numbers of COVID-19 cases in the country, have yet to pass bills addressing these proposed business protections.

For now, most states are focusing on protecting healthcare providers and not addressing business liability directly. Many have begun debating their own laws while some have petitioned the government for a federal law.

Congress has yet to decide on the issue, but some members refuse to sign on to a new stimulus bill without these liability protections. The proposed second stimulus would be in addition to the $2 trillion provided by the CARES act, which was passed in March. Leaders are calling for a second stimulus because cases have started rising again in most of the southern and western United States.

Senate Majority Leader Mitch McConnell recently called for five-year liability protection for businesses, healthcare providers and schools. He told news outlets this type of protection should be part of any new stimulus bill.

After the first bill, lawsuits were filed against some businesses that submitted fraudulent claims Others withdraw claims after they better understood the requirements. Since the government had to issue clarification on who could apply, business leaders are looking for clearer direction regarding a second stimulus.

In May, the U.S. Chamber of Commerce, along with 250 other organizations, sent a letter to congress requesting protection related to the pandemic. The proposed legislation would prevent lawsuits against businesses, non-profit organizations, educational institutions and healthcare providers that follow Center for Disease Control (CDC) guidelines.

The chamber and its co-signers believe the economy cannot recover if they face an onslaught of litigation. Businesses have already lost significant income from the required closures or reduced capacity restrictions, which will not likely be covered by insurance as most coverages does not include pandemic compensation.

Some argue there is no legal precedent to sue a business for catching a virus, but there has not been a similar pandemic for comparison in more than 100 years. Others say no law firm would take such a case because of the unclear direction. Business organizations do not appear to be as hopeful.

The New York Times and other news outlets are reporting these protections are not supported by the Democrats in Congress or labor unions. Opponents believe a lack of liability will endanger customers and workers. They believe businesses will fail to apply necessary safety protocols if the liability is lifted, and they will force employees to work in unsafe conditions. A few lawsuits have already been filed by family members of employees who died after allegedly catching COVID-19 at work.

Even with a national standard, businesses may have to formulate plans to prove safety procedures were followed since they were mandated. Since each state has had different restrictions, law firms and investigators will need to stay current on the shifting regulations to apply the appropriate law to a given time period. Those states that have gone back and forth on restrictions pose an even greater challenge.

If federal law does not address the liability issue, law firms and investigators may have to navigate different state laws to disprove transmission claims. This is becoming increasingly important as people began to travel to less restrictive states when their home state remains closed.

Any potential case may also need to examine if customers who do not adhere to CDC guidelines, such as wearing a mask or maintaining a six-foot distance from others, would forfeit rights to sue a business.

Lawmakers may also need to determine whether any new national law would address those business owners who refuse to require masks or other PPE due to what they see as an infringement on first amendment rights. Investigations will need to track restrictions at the state, county and, in some cases, city level to determine what was required at the time of the alleged transmission and how it would apply.

While Congress debates the federal law, some businesses have started requiring customers and employees to sign liability waivers before allowing them to enter. Gyms, salons and political rallies have been most likely to require customers or attendees to sign these waivers up front. This has received much of the same opposition facing the federal law, including fears that the waivers will promote poor safety conditions and increase transmission of the virus.

Similar to the laws passed at the state level, these waivers limit liability based on how well the business or event implements the safety precautions. Without a national standard, this adds another layer to any future investigation. Law and investigation firms with experience and personnel in multiple states will be better equipped to handle cases with this level of variation.

While they wait for state or federal direction, businesses might seek assistance from such firms as they balance reopening with avoiding legal liability. Most of the United States is eager to go back to normal and not seriously considering the potential legal and economic impact that lays ahead. Those that can put together comprehensive guidelines early can possibly avoid lawsuits after reopening.

Sources: New York Times | Washington Post | Claims Journal | CNN | US Chamber of Commerce

Posted by Michael Famiglietti on Tuesday, July 14, 2020


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