Law in the Time of Corona
The jury is still out on how our legal system ultimately will respond to COVID-19 claims, but we have seen enough at this point to begin making some preliminary general observations.
May 23, 2020 at 03:09 PM
7 minute read
At the end of Gabriel Garcia Marquez's critically acclaimed novel, "Love in the Time of Cholera," two lovers are the last passengers on a ship that is about to dock at its final port on a river. The lovers ask the captain of the ship to raise the yellow flag of cholera so that the port will not allow the ship to dock, and the lovers can avoid the scandal of being seen together publicly. The lovers are then exiled to cruise the river forever because of the supposed cholera outbreak onboard the ship. Lawyers in the time of the corona similarly feel perhaps exiled forever from the law practice that existed before the onset of the deadly coronavirus, or COVID-19.
COVID-19 has sickened millions and killed hundreds of thousands, worldwide. COVID-19's sudden appearance and the dramatic shutdown of the world in response to it have forced quarantines, shuttered businesses, and thrown markets and the economy into dizzying tailspins. COVID-19 also has been fertile ground for lawsuits of all types.
There are four primary types of COVID-19 litigation: 1) claims against businesses that deal with captive populations, 2) claims by employees against their employers for failing to adequately protect the employees, 3) claims related to business disruptions, and 4) claims against insurers.
No doubt, it will be years before all COVID-19 claims percolate through our legal system. The jury is still out on how our legal system ultimately will respond to COVID-19 claims, but we have seen enough at this point to begin making some preliminary general observations.
The first type of COVID-19-related claim is claims against businesses that deal with captive, vulnerable populations. Such businesses include hospitals, nursing homes, cruise ships, restaurants, hotels, airlines and certain employers such as meat packers.
When standards of medical care are breached will jurors excuse the breaches due to COVID-19's extenuating circumstances? Based on the deferential manner in which jurors treated health care providers even before the pandemic, the answer in many cases no doubt will be yes. Nevertheless, state chapters of the powerful American Medical Association are now lobbying policy-makers for protections from medical malpractice suits.
A large percentage of all COVID-19 deaths have occurred in nursing homes and assisted living homes. According to some studies, at least one in five facilities in the U.S. has been hit by COVID-19. At least 10,000 nursing home residents had died from COVID-19 by the end of April 2020, according to The Wall Street Journal and the Kaiser Family Foundation. In Texas, at least one in three deaths from COVID-19 has occurred in a long-term care facility. Populations in these facilities are particularly vulnerable to COVID-19 because they are elderly, confined and often suffer from preexisting medical conditions that dispose them to be less able to fight off COVID-19. Residents and workers alike too often have been denied protective equipment such as face masks.
The cruise ship industry also has been hard hit by COVID-19. The ships are tightly packed, a high proportion of the people cruising on the ships are elderly, and crew members often sleep in close proximity in bunk-beds and share bathrooms. Hundreds of passengers and crew have become infected, and scores have filed suit after becoming infected on cruise ships.
The second type of COVID-19-related claim is claims by employees against their employers for failing to protect them. Employers must follow all state and local standards applicable in their localities. Employers also must not run afoul of OSHA's "general duty clause," requiring employers to provide a "workplace free from recognized hazards likely to cause death or serious physical harm." OSHA has recommended that employers follow the CDC guidelines. These include, among others: 1) 6-foot distancing, 2) taking temperatures of employees, 3) disinfecting surfaces, 4) the wearing of masks, and 5) the installation of physical barriers.
In March 2020, OSHA issued a 35-page booklet with suggestions for what employers should do to protect employees from COVID-19. The booklet recommends, among other things: 1) telling employees to engage in "frequent and thorough hand-washing," 2) encouraging "respiratory etiquette, including covering coughs and sneezes," and 3) to "provide customers and the public with tissues." It further recommends that, when COVID-19 is present in the area, employers should "consider offering face masks to ill employees and customers," and that health care workers dealing with sick patients "should wear respirators." But the booklet conspicuously notes that "this guidance is not a standard or a regulation, and it creates no legal obligations."
The third type of COVID-19-related claim is claims related to business disruptions. The battle over whether contractual obligations are excused by COVID-19 will be fought on a contract-by-contract basis, depending upon the specific language of the contract at issue, the contractual obligation being litigated, and the applicable controlling law.
"Force majeure" clauses excusing performance when "acts of God" or other extraordinary events prevent a party from fulfilling its contractual obligations are routine in contracts, but there is no single, standard clause. Typically, contracts spell out the extraordinary circumstances that will excuse performance. Often, these include war, rioting, terrorism and changes in governmental regulations that prevent performance of the contract. Most contracts, however, do not explicitly spell out epidemics and pandemics as circumstances that will excuse performance of the contract. If there is a catchall provision excusing performance, such as a clause that excuses performance based on "any other event beyond the reasonable control of a party," the answer to the question of whether COVID-19 may fall under that provision will vary, depending upon the jurisdiction.
The fourth type of COVID-19-related claim is claims against insurance companies for failing to provide coverage for COVID-19. The answer to whether a policy provides coverage for COVID-19 may be ambiguous. The battle for insurance coverage will be fought, insurance policy by insurance policy, and case by case, depending upon the language of the policy, the applicable circumstances, and the applicable law.
A key coverage phrase in today's "all-risk" policies is that coverage exists for "physical loss or damage" to covered property. Insurers argue that there is no coverage for COVID-19 losses because COVID-19 did not cause any direct physical damage to the insured's property. Insureds argue that they have indeed suffered a "physical loss of" property because such a loss necessarily includes loss of use of the property arising from COVID-19.
A policy may contain a specific "virus" exclusion, but the exclusion, if it is within the policy, may be only the more-ambiguous "micro-organism" exclusion. There is authority for the proposition that viruses such as COVID-19 are not "micro-organisms" because viruses, unlike bacteria and other micro-organisms, cannot replicate outside of the host, and a "micro-organism" must be able to do that. There may be a "pandemic" exclusion within a policy, but whether the exclusion will prevent coverage for COVID-19 will depend upon the specific language of the exclusion.
Should there be blanket immunity for COVID-19 claims? The U.S. Chamber of Commerce and Senate Majority Leader Mitch McConnell, among others, are pushing for immunity from COVID-19 claims for employers and businesses. Nevertheless, we have learned through painful past experience that removing incentives to do the right thing all too often results in the wrong thing being done. When no one is accountable, no one is safe.
Quentin Brogdon is a partner in Crain Brogdon Rogers, in Dallas. He is a fellow of the invitation-only International Academy of Trial Lawyers, American College of Trial Lawyers and International Society of Barristers.
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