Immunity from Coronavirus Liability: A Solution in Search of a Problem
News coverage of a potential third coronavirus stimulus bill and general coverage of businesses’ efforts to operate in this new pandemic environment contain numerous references to efforts by the business lobby to have Congress limit coronavirus claims. As Jennifer Haberkorn with the Los Angeles Times reports, some members of Congress “say they won’t support a new coronavirus relief bill unless it protects business owners from lawsuits related to COVID-19 exposure, sparking a lobbying frenzy from business groups hoping to get their industry or priority into the bill.” The article quotes the head of the U.S. Chamber of Commerce as saying that businesses shouldn’t have to worry about being sued if they are following the instructions of health officials. The Senate Majority Leader agrees and said that such protections are necessary to avoid “the biggest trial lawyer bonanza in history.”
In addition to Congress considering a bar on coronavirus claims, several states either enacted or are considering enacting bars on coronavirus claims. Some in South Carolina are pushing for a bar on coronavirus claims, and a coronavirus claims bar is one of the items being considered by the South Carolina Senate’s Reopen South Carolina Select Committee.
While concerns about bringing the American economy out of this slump, getting businesses open again, and getting unemployed people back to work are all important and valid concerns, a bar on liability for coronavirus claims is not going to help our economy. A bar on coronavirus claims is literally a solution in search of a problem. Not only is a bar on coronavirus claims not going to help Americans and the American economy, but such a liability bar is also likely to harm Americans and the American economy.
- There Is No Flood of Coronavirus Lawsuits.
Those pushing for a bar on coronavirus claims assert that such a bar is needed due to a flood of coronavirus lawsuits, a “trial lawyer bonanza.” However, there is no flood of coronavirus lawsuits. At the end of May 2020, a corporate law firm website tracking coronavirus related case filings counted 2,360 suits filed from January 30, 2020, to May 29, 2020. That count of 2,360 lawsuits is for the entire United States. While the website does not provide any indication of how many lawsuits in total were filed in the United States over the same time period, we can safely conclude that the 2,360 lawsuits are a minuscule proportion of the total lawsuits filed over this period, even though lawsuit filings in total are likely down due to the coronavirus. For example, in just Charleston County in May 2020—one county’s state court in one state for one month—there were 492 cases filed. Additionally, a large number of the cases counted by the law firm’s website are cases unrelated to business liability: challenges to business closure orders, challenges to stay-at-home orders, prisoner petitions, insurance policy disputes, landlord-tenant disputes, and contract termination disputes.
- Insurance Protects Businesses.
The vast majority of personal injury claims against businesses are paid by insurance, not by the business the claim is brought against. Businesses purchase liability insurance policies to protect them against the risk of negligent conduct by managers or employees resulting in a liability judgment against the business. Those liability insurance policies not only pay for any liability of the businesses, but those policies also pay for lawyers to defend the businesses against those claims. Businesses purchase those liability insurance policies from insurance companies who are in the business of pooling and spreading risks, assessing the likelihood of liability creating events occurring, and charging premiums and retaining reserves sufficient to cover such liability.
Those advocating for a bar on coronavirus liability claims state that such a bar is needed to protect business owners. However, business owners are already protected by insurance. The insurance companies do not need and should not be given any protection because assessing and covering risks is their business. To the extent they failed to properly assess risks and set aside funds to cover risks, those insurance companies made poor business decisions and should not be protected from their own bad business decisions. Moreover, insurance companies are covered by reinsurance policies which are essentially insurance policies for insurance companies. Under a reinsurance policy, if an insurer made bad business decisions and failed to adequately set aside funds to cover losses, the reinsurance policy will step in to cover the losses.
As a result, a bar on coronavirus claims is not necessary to protect businesses because businesses already have insurance to cover those claims. A bar on coronavirus claims would be nothing more than a handout for insurance companies at the expense of everyday people injured by negligent business practices.
- No Liability Exists if Businesses Follow laws and Take Reasonable Precautions.
Advocates of a bar on coronavirus claims also claim such a bar is necessary because businesses should not be subject to claims if they take reasonable precautions and follow the instructions of public health officials. However, the law already provides that businesses are not liable where they take reasonable precautions. An injured person can recover from a business for injuries resulting from the business’s negligence. For a business to have been negligent in causing the injury, the business must have acted unreasonably. In other words, under current law, businesses are liable for coronavirus injuries only where a person suffered those injuries as a result of a business acting unreasonably.
Businesses should not be protected from claims where the business acted unreasonably and a person suffered an injury as a result of the unreasonable actions. Those advocating for a bar on coronavirus claims seem to be suggesting a change in existing law is needed to protect businesses. If those advocating for a bar on claims want to change existing law, they need to articulate some reason other than that businesses should be protected when they act reasonably because businesses are already protected when they act reasonably.
- Businesses Should be Subject to Claims and Held Liable Where They Act Unreasonably.
In the South Carolina Lowcountry, we’ve spoken to employees, patients, customers, and others who told us of nursing homes, medical facilities, and other businesses that have taken actions directly contradictory to the instructions of public health officials. By doing so, these businesses are knowingly and unreasonably placing their patients, employees, and customers at a significantly heightened risk of contracting the coronavirus. There is no excuse for deciding to place business profits over the health of customers and employees. A business can make up for losses as the American economy recovers from this pandemic, but death or permanent injury caused by the coronavirus is irreversible.
Nursing home patients, employees, and customers are most often unable to know of and avoid a business that takes unreasonable actions in relation to the coronavirus. Additionally, businesses are in the best position to avoid the coronavirus risks to their patients, employees, and customers. Forcing those injured by businesses’ unreasonable actions to bear those injuries without compensation from the responsible business is unjust. The injured patients, employees, and customers did nothing wrong and are the unfortunate victims of the irresponsible decisions of those businesses.
Moreover, if businesses faced no potential liability for failing to take reasonable precautions to protect patients, customers, and employees from the coronavirus, those businesses would have little or no incentive to protect their patients, customers, and employees. Instead, those businesses could take whatever action they believe would generate the highest profit even if that profit came as a result of harming patients, employees, and customers.
- Contingency Agreements Discourage Frivolous Lawsuits.
The U.S. Chamber of Commerce admits that: “Depending on the legal theory underlying their claim, proving causation may be a challenge for plaintiffs.” However, the U.S. Chamber states that these causation problems won’t limit the flood of coronavirus lawsuits because: “If enough claims are brought, the scope and magnitude of the litigation still may exert enough pressure to threaten businesses or industries with bankruptcy.”
These assertions from the U.S. Chamber do not make sense when one considers how plaintiffs and plaintiffs’ lawyers bring cases. The plaintiffs’ cases are typically brought on a contingency fee basis where the plaintiff’s lawyer bears the costs of the case and is then reimbursed for the expenses and work from any recovery in the case. If the case is not successful for the plaintiff, in other words, if there is no recovery, the plaintiff’s lawyer is paid nothing and loses all of the money and time the lawyer spent on the case. Because of this arrangement, there is a strong incentive for plaintiffs’ lawyers to only accept cases that they believe they have a good chance of winning. If there is only a small likelihood that a plaintiff will actually prevail in a case due to problems with proving causation, a plaintiff’s lawyer is unlikely to be willing to take on the case.
For all of these reasons, the bar on coronavirus claims being pushed for by some lawmakers is a solution in search of a problem. Businesses do not need a bar on coronavirus claims, and enacting such a bar would be unjust and would harm Americans. Those Americans struggling to earn a paycheck to support their families in these difficult times, putting their health at risk to care for nursing home patients, and depending on businesses to act reasonably when buying groceries are who lawmakers should be concerned about protecting.