Alerts

Product Liability and COVID-19

Alerts / April 17, 2020

There may be a variety of defenses available to product manufacturers faced with potential product liability claims. Examples of these defenses include traditional common law and statutory defenses, such as:

  • Contributory Negligence or Comparative Fault
  • Assumption of Risk
  • Misuse/Abnormal Use Defense
  • Intended User Defense
  • Substantial Change Defense
  • Disclaimer of Warranty
  • Indemnity
  • Expiration of Statute of Limitations
  • Lack of Duty to Warn

Generally, the laws of the state in which the potential claimant is allegedly injured dictate the availability of these defenses. However, in certain instances, federal law may preempt state law. Federal preemption occurs when (1) Congress explicitly preempts the state law, (2) a state law actually conflicts with federal law or (3) Congress has implicitly indicated an intent to occupy a given field to the exclusion of state law.

The PREP Act Preempts State Law

On March 17, 2020, pursuant to the Public Readiness and Emergency Preparedness Act (PREP Act) and the Pandemic and All-Hazards Preparedness Reauthorization Act, the U.S. Health and Human Services secretary issued a declaration (Declaration) under the Public Health Service Act to provide broad immunity from liability for certain persons and activities engaged in medical countermeasures against the new coronavirus. The Declaration provides immunity from liability against claims of loss arising from the manufacture, distribution, administration or use of medical countermeasures developed to fight COVID-19, except for claims involving willful misconduct. This immunity offers protection for companies, governmental entities and individuals engaged in medical efforts to control the COVID-19 pandemic as well as those involved in the administration of the countermeasures.

Therefore, the PREP Act preempts state law, and during the effective period of the Declaration, or anytime conduct is undertaken thereunder, no state or political subdivision of a state may establish or enforce any law or legal requirement that is different from or is in conflict with the act that “relates to the design, development, clinical testing or investigation, formulation, manufacture, distribution, sale, donation, purchase, marketing, promotion, packaging, labeling, licensing, use, any other aspect of safety or efficacy, or the prescribing, dispensing, or administration by qualified persons of the covered countermeasure, or to any matter included in a requirement applicable to the covered countermeasure under this section or any other provision of this chapter, or under the Federal Food, Drug, and Cosmetic Act.” 42 U.S.C. § 247d-6d(b)(8).

What Are the Covered Countermeasures?

Covered countermeasures are “any antiviral, any other drug, any biologic, any diagnostic, any other device, or any vaccine used to treat, diagnose, cure, prevent, or mitigate COVID-19, or the transmission of SARS-COV-2 or a virus mutating therefrom, or any device used in the administration of any such product, and all components and constituent materials of any such product.” 85 Fed. Reg. at 15202.

Covered countermeasures fall into one or more of the following categories: qualified pandemic or epidemic products; security countermeasures; or drugs, biologic products or devices authorized for investigational or emergency use as defined in the PREP Act; the Federal Food, Drug, and Cosmetic Act; and the Public Health Service Act. 85 Fed. Reg. at 15199.

A “qualified pandemic or epidemic product” means a drug or device as defined in the Federal Food, Drug, and Cosmetic Act or a biological product as defined in the Public Health Service Act that is:

Manufactured, used, designed, developed, modified, licensed or procured to diagnose, mitigate, prevent, treat or cure a pandemic or epidemic; or to limit the harm such pandemic or epidemic might otherwise cause.

Manufactured, used, designed, developed, modified, licensed or procured to diagnose, mitigate, prevent, treat or cure a serious or life-threatening disease or condition caused by a product described above.

A product or technology intended to enhance the use or effect of a drug, biological product or device.
42 U.S.C. § 247d-6d(i)(7).

A security countermeasure is a drug or device as defined in the Federal Food, Drug, and Cosmetic Act or a biological product as defined in the Public Health Service Act that the secretary determines to be (1) a priority to “diagnose, mitigate, prevent, or treat harm from any biological, chemical, radiological, or nuclear agent identified as a material threat”; (2) a priority to “diagnose, mitigate, prevent, or treat harm from a condition that may result in adverse health consequences or death and may be caused by administering a drug, biological product, or device against such an agent”; or (3) a necessary countermeasure to protect public health. 42 U.S.C. § 247d-6b(c)(1).

Broad Scope of Immunity Under the PREP Act

The PREP Act affords manufacturers and distributors engaged in covered countermeasures a broad scope of immunity from liability. Under the secretary’s interpretation, “liability claims alleging negligence by a manufacturer in creating a vaccine, or negligence by a health care provider in prescribing the wrong dose, absent willful misconduct,” are precluded. 85 Fed. Reg. at 15200.

Further, during the effective period of the Declaration, the PREP Act precludes claims for liability “relating to the management and operation of a countermeasure distribution program or site, such as a slip-and-fall injury or vehicle collision by a recipient receiving a countermeasure at a retail store serving as an administration or dispensing location that alleges, for example, lax security or chaotic crowd control.” 85 Fed. Reg. at 15200.

What Is the Applicable Time Period?

The Declaration extends the effective period for different means of distribution of covered countermeasures through Oct. 1, 2024. 85 Fed. Reg. at 15202. Immunity from liability for covered countermeasures administered and used in accordance with the public health and medical response of an appropriate jurisdictional authority runs through (1) the final day the emergency Declaration is in effect or (2) Oct. 1, 2024, whichever occurs first. 85 Fed. Reg. at 15202. The Declaration also provides an additional 12 months of immunity from liability for manufacturers “to arrange for the disposition of covered countermeasures” and for covered persons “to take such other actions as are appropriate to limit the administration or use of” the covered countermeasures. 85 Fed. Reg. at 15202.

Defendants can raise the preemption defense under acts of Congress and claim that their product complies with the Declaration governing the product in question. In these circumstances, once a determination is made that the product manufacturer has complied with the Declaration, product liability claims are barred and expressly preempted by federal law.

The PREP Act Does Not Offer Absolute Immunity

It is important to note that immunity provided to covered entities under the PREP Act is not absolute and does not extend to acts of willful misconduct. The bar to prove willful misconduct is high under the PREP Act and requires evidence of an act or omission that is taken (1) intentionally to achieve a wrongful purpose, (2) knowingly without legal or factual justification and (3) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.

Additionally, claims for an injury occurring at a manufacturer’s site that are not directly related to countermeasures, “such as a slip and fall with no direct connection to the countermeasure’s administration or use,” would not be barred. 85 Fed. Reg. at 15200. Determining whether immunity applies will depend on the particular facts and circumstances.

Conclusion

The intent of the Declaration is to expedite the design, development, testing, manufacture and administration of drugs and devices designed to diagnose, treat, prevent, mitigate or cure COVID-19. Protection from liability afforded to manufacturers and distributors engaging in covered medical countermeasures to combat the COVID-19 pandemic ideally will accelerate that process and fill the current shortage of personal protective equipment and treatments needed to resolve this crisis. Products that fall outside the Declaration and protections of the PREP Act will have to rely on the traditional product liability defenses.

Authorship Credit: Greg Ulmer, Matt Caligur, James Phillips and Ryan Walton

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