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Agent of Shield: Corporate Protection or Prudent Reopen – Liability Protection under the HEALS Act

8/19/20

By: Davit Zargaryan

On July 27, 2020, the Senate released their proposal for “Phase 4” of emergency assistance to alleviate the impact of the COVID-19 pandemic. The Heath, Economic Assistance, Liability Protection and Schools (HEALS) Act is a combination of smaller bills intended to:

  • Allow certain small businesses to take an additional PPP loan; allocated $60 billion for the creation of a long-term loan program; and clarify qualifications and forgiveness, among other things.
  • Allocate $105 billion for schools, $15 billion for childcare, and additional billions for testing, vaccines, and research.
  • Allocate $306 billion for agriculture, the Food and Drug Administration, and the Departments of Defense and Commerce.
  • Establish a “Rescue Committee” to review the solvency of the Social Security and Medicare trust funds and report how to (1) avoid depletion, (2) establish solvency over 75 years, (3) simplify, and (4) improve the programs.
  • Address testing, stockpiles, data collection, grants and waivers for schools and students, in preparation for reopening of schools.
  • Support restaurant works by increasing tax deduction for business meals from 50% to 100%.
  • Establish a $7.5 billion tax credit, in order to shift PPE manufacturing from China to the United States.
  • Establish a five-year liability “shield” for business, healthcare providers and schools from plaintiffs seeking to recover for exposure to COVID-19.

Among the proposals the Safe to Work Act, which establishes liability protections for exposure to COVID-19, elicited a majority of the debate and controversy. Sen. John Cornyn’s (R-Texas) bill proposes a “prudent reopening of businesses and other organizations that serve as the foundation and backbone of the national economy […]”. Sen. Cornyn suggests that Congress must ensure that health care workers and facilities can act “fully to defeat the virus”. Additionally, he reasons that Congress must safeguard the investment of “taxpayer dollars under the CARES Act […]”.

To that end, the proposed bill would create an exclusive cause of action and establish a one-year statute of limitations for a plaintiff to bring forth an actual, alleged, feared, or potential exposure case within the jurisdictions of Federal, State, or Tribal Courts. To be successful a plaintiff must prove by clear and convincing evidence that:

  1. in engaging in the businesses, services, activities, or accommodations, the individual or entity was not making reasonable efforts in light of all the circumstances to comply with the applicable government standards and guidance in effect at the time of the actual, alleged, feared, or potential for exposure to coronavirus;
  2. the individual or entity engaged in gross negligence or willful misconduct that caused an actual exposure to coronavirus; and
  3. the actual exposure to coronavirus caused the personal injury of the plaintiff.

Additionally, the bill provides for defenses (and exceptions to defenses) if there is: (1) conflicting applicable government standards (unless mandatory), (2) written or published policies on the mitigation of transmission of coronavirus (rebuttable by showing noncompliance), and (3) transmission by a third party (unless a plaintiff can establish control or agency). The bill also blocks evidence of mitigation and compliance from being admitted to prove liability.

While negotiations between the House of Representatives, Senate and the White House continue, the Senate joined the House in adjourning until Labor Day. To date, Alabama, Arkansas, Georgia, Iowa, Kansas, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, Utah, and Wyoming have already taken steps to narrow liability limits related to COVID-19 exposure. The national legislation would provide a unified approach to a developing trend to protect, but not absolve, employers of their duty to maintain safe operations for customers and workers.

If you have questions or would like more information, please contact Davit Zargaryan at [email protected].