COVID-19 Liability Protections Are Crucial to Ensuring Economic Recovery

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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

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

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.


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