Authors: Anthony D. DellaCroce, JD
Significant questions remain about the practical and legal ramifications of the government's responses to COVID-19, including the Stafford Act and the Public Readiness and Emergency Preparedness (PREP) Act. We are providing an update to our April 2020 paper, detailing how certain aspects of the federal government's response has progressed and highlighting additional hurdles currently developing.
The PREP Act provides some immunity for healthcare organizations that may face civil litigation from patients and their families, but it does not eliminate the need for medical professional liability coverage. We have identified some of the allegations healthcare organizations are currently facing and may face in the future.
It has been a year since the COVID-19 crisis emerged on the world stage, posing rarely seen challenges of significant magnitude, simultaneously impacting the human experience on, inter alia, international, national, individual, political, social, financial and medical levels. In the United States, the broad public response to COVID-19 began in earnest in March 2020, when then-President Trump declared a public health emergency, and invoked both The Stafford Act and the PREP Act. As we highlighted in our April 2020 paper, these actions were generally aimed at unlocking federal relief funds, allowing flexibility in the medical response to the virus and providing some civil immunity to certain individuals propounding countermeasures to COVID-19.
But where have we come in a year? A remarkable distance, scientifically. There are multiple COVID-19 vaccines that have been or are in process of being rolled out. Bloomberg is maintaining a vaccine tracker and updating this model daily, detailing the number of vaccines each state is administering.1 However, the rollout fell short of initial projections, as hospitals and other institutional healthcare organizations provided the vaccinations but are not equipped to handle the volume of people seeking the vaccine, as the supply is not keeping pace with the demand.2 The next phase is for pharmacies and health clinics to offer the vaccinations, since they are more traditional vaccination administration sites and are more readily accessible to people, thus increasing the delivery of shots to the broader population.3
However, significant questions remain about the practical and legal ramifications of the government's responses to COVID-19, the Stafford Act and the PREP Act. The purpose of this paper is to provide an update to our April 2020 paper,4 discuss how certain aspects of the federal government's response have progressed and highlight additional hurdles currently developing.
Emergency declaration and federal relief monies
In the relatively short time since his inauguration, President Biden has proposed the $1.9 trillion American Rescue Plan as part of the nation's ongoing response to COVID-19. While this package aims to provide financial aid across multiple sectors — including directly to struggling communities, families and small businesses — a large portion of the plan is aimed directly at healthcare providers. Healthcare spending would include $415 billion for national vaccine efforts, $50 billion for expanded COVID-19 testing and $10 billion for increased domestic pandemic supply production.5
If passed, Biden's plan would bring the total amount of relief funding put forth by the federal government to $5.0 trillion.6 A large portion of the federal funding made available to healthcare providers was done via the Coronavirus Aid, Relief and Economics Security Act (CARES Act). In fact, the CARES Act made over $178 billion available to healthcare providers, including the Paycheck Protection Program, to provide liquidity to hospitals and physician practices. It should be noted, however, that the CARES Act was passed with its own auditing provisions to ensure proper and accurate use by providers. The astute eye sees that Section 1510 creates a Pandemic Response Accountability Committee aimed at finding and prohibiting wasteful spending, similar to actions the Department of Justice (DOJ) undertakes to investigate fraud and false claims against the government and restore funds to federal programs, including Medicare, Medicaid and TRICARE.
"Even in the face of a nationwide pandemic, the department's dedicated employees continued to investigate and litigate cases involving fraud against the government and to ensure that citizens' tax dollars are protected from abuse and are used for their intended purposes," said Acting Assistant Attorney General Clark.7 In fact, of the more than $2.2 billion in settlements and judgments the DOJ recovered in the fiscal year ending September 30, 2020, more than $1.8 billion related to the healthcare industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.7
We believe that the DOJ will be equally as vigilant in monitoring healthcare providers' use of the CARES Act funds to ensure their appropriateness and comply with the provisions stipulated in the act.
Provisions impacting healthcare providers
As a reminder, when President Trump declared a public health emergency in March 2020, the government invoked both the Stafford Act and the PREP Act. In addition, Congress passed the CARES Act on March 27, 2020, to provide economic support for American workers, families and businesses.
The Stafford Act
The Stafford Act is a 1988 U.S. federal law designed to bring orderly and systematic means of federal natural disaster assistance for state and local governments to discharge their responsibilities to aid citizens. In addition, the Stafford Act authorizes the Secretary of Health and Human Services to waive many laws allowing for more immediate response by allocating the limited resources more efficiently.
These legal deferments:8
- Waive laws to enable telehealth services for remote doctor visits and hospital check-ins.
- Waive certain federal licensing requirements so doctors from other states can provide services and cross state lines.
- Waive requirements that critical-access hospitals limit the number of beds to 25 or the length of stay to 96 hours.
- Waive a requirement for a three-day hospital stay before transfer to a nursing home.
- Allow hospitals to bring additional physicians on board and obtain additional office space.
- Waive rules that severely restrict hospital care of patients within the hospital itself, ensuring that the emergency capacity can be enhanced.
In seeming recognition of the growth and sustainability of telehealth, in December, Congress reintroduced the Protecting Access to Post-COVID-19 Telehealth Act to provide for the following:
- Continuation of the expanded use of telehealth beyond the pandemic
- Eliminating restrictions on the use in Medicare, providing a bridge for patients currently using telehealth because of the virus
- Requiring a study on telehealth utilization during COVID-199
The CARES Act
Congress passed the CARES Act on March 27, 2020, including the Provider Relief Fund (PRF), to provided rapid and direct economic assistance for American workers. In addition, it provided support for healthcare providers defined by the Department of Health and Human Services (HHS) to help battle the COVID-19 pandemic. Through the CARES Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA), the federal government allocated $178 billion in payments and distributed through the PRF.
The PREP Act
As discussed in our April 2020 paper, in March 2020, the HHS invoked the PREP Act, providing certain immunity from civil liability (except for willful misconduct) for claims pertaining to the administration of countermeasures to the disease provided by qualified persons. As we then noted, the interpretation and application of the PREP Act would evolve with time.
And, in fact, concerns over application and breadth of the PREP Act began promptly. Fearing that the PREP Act did not sufficiently protect healthcare workers, a number of state executives quickly began passing orders aimed at clarifying a broader protection for healthcare providers. New York was the first to do so, on March 23, 2020,10 and — in contrast to the PREP Act — enumerated further medical specialties immune from certain liabilities due to acts or omissions made in response to the public health crises. Specifically, it stated providers are "Immune from civil liability for any injury or death alleged to have been sustained directly as a result of an act or omission by such medical professional in the course of providing medical services in support of the State's response to the COVID outbreak…."10 While not following New York's order verbatim, and in some instances varying significantly in wording and effect, a number of additional states followed suit and have continued to provide immunities to potential professional torts by providers. In all, at present, 30 states issued such executive orders or similar laws.11
Moreover, since invoking the PREP Act, HHS has issued four amendments to the declaration and five advisory opinions about its application. Broadly, these amendments have pertained to the definition of covered countermeasures to include respirators; broadened the definition of qualified persons; and clarified the declaration is to apply to not just COVID-19, but also other diseases and threats caused by COVID. According to the HHS website, the fourth amendment, issued on December 3, 2020:12
- Authorizes healthcare personnel using telehealth to order or administer covered countermeasures, such as a diagnostic test that has received an emergency use authorization (EUA) from the Food and Drug Administration (FDA), for patients in a state other than the state where the healthcare personnel are already permitted to practice. (While many states have decided to permit healthcare personnel in other states to provide telehealth services to patients within their borders, not all states have done so.)
- Provides an additional pathway to satisfy the declaration's Limitations on Distribution section. Now covered persons have immunity under the PREP Act if they use on-label covered countermeasures licensed, approved, cleared or authorized by the FDA (or that are permitted to be used under an investigational new drug application or an investigational device exemption) to combat the COVID-19 public health emergency without satisfying the declaration's other limitations on distribution, such as having an agreement with the federal government.
- Provides a new pathway for immunity under the PREP Act for covered persons who use respiratory protective devices approved by NIOSH that the HHS Secretary determines to be a priority for use to combat the COVID-19 public health emergency without satisfying the declaration's other restrictions, such as having an agreement with the federal government.
- Expands the scope of PREP Act immunity to cover potentially more healthcare providers who could administer COVID-19 and other vaccines by modifying and clarifying what CPR and other training is required for certain pharmacists, pharmacy interns and pharmacy technicians to order or administer childhood or COVID-19 vaccines pursuant to the PREP Act declaration.
- Clarifies the scope of PREP Act immunity in various ways. For instance, the amendment makes explicit that there can be situations where not administering a covered countermeasure to a particular individual can fall within the PREP Act and the declaration's liability protections. The amendment also incorporates the HHS Office of the General Counsel's advisory opinions concerning the PREP Act and declaration.
The fifth amendment, issued on January 28, 2021,13 removes limitations for healthcare professionals holding active licenses or certifications from administering COVID-19 vaccines across state lines, so long as the vaccination efforts are in conjunction with federal, state or local authorities in that state.
It also allows retired or non-licensed doctors, nurses or nurse practitioners who held a license within the past five years to administer COVID-19 vaccines, as long as:
- The license was in good standing upon expiration.
- The professional is not on the Office of the Inspector General's list of excluded individuals or entities.
It is worth noting that this provision does not include physician assistants, and that any retired or non-licensed healthcare professional also must undergo an on-site observation period by a currently practicing healthcare professional. Finally, in order to qualify as a covered person under either category, the healthcare professional must complete the CDC's COVID-19 vaccination training.
Current litigation landscape amid COVID-19
These amendments were not issued in a vacuum, but rather as COVID-19-based litigation was first being commenced against healthcare providers. At this point, such litigation is largely contained to the senior care sector, but there is the possibility it could broaden in scope over time, somewhat dependent upon the plaintiff bar's success in these early test cases. Review of a number of the complaints shows alleged departures being pled in conjunction with alleged failures to properly test senior care residents for COVID-19, failing to isolate/properly secure residents, failure to treat, failure to secure and maintain adequate medical supplies and PPE, and improperly keeping residents from outside family members.
Of interest now is how these cases are being litigated procedurally, and how the courts are interpreting and applying the PREP Act. Generally, cases against senior care facilities are being asserted in state courts of apparent jurisdiction, alleging deviations in local medical care standards. In response, defendant healthcare providers are removing the cases to federal court, arguing these courts properly have jurisdiction as the PREP Act provides a full preemption to the state litigation. Initial federal court rulings, however, distinguished between the use of countermeasures referenced in the PREP Act and the alleged failure to act or failure to utilize countermeasures as alleged by plaintiffs. Finding that the PREP Act required a causal connection between the use of countermeasures and the alleged injury, these courts ruled that the PREP Act was not broadly applicable and remanded the cases to state courts for individual litigation.14
However, conspicuously following the fourth amendment and fifth advisory opinion on the PREP Act, on January 29, 2021, a federal court in the Central District of California issued a tentative order dismissing a COVID-19-based lawsuit against a senior care facility based on application of the PREP Act. The complaint alleged that the defendants failed to implement infection control measures and follow health guidelines that would have prevented the spread of COVID-19, and caused the death of the resident. The court found, however, that the PREP Act was a complete bar to plaintiff's action and that the case should be dismissed.15
It will take some time until this split in court rulings is rectified and unified application of the PREP Act — one way, or the other — is reached by the courts. However, the court case ruling is currently on appeal, and that outcome may provide further guidance on the ultimate outcome.
Conclusion – Telehealth and the Stafford, CARES & PREP Acts
While the Stafford, CARES and PREP Acts were aimed at benefiting the public response to COVID-19 and helping medical providers, these efforts do not alleviate the need for insurance coverages and discussing the relevant liability issues with your chosen risk consultants.
As discussed, the Stafford Act has helped foster increased use of telehealth and its modalities. The recently proposed Protecting Access to Post-COVID-19 Telehealth Act is a step forward in permanently changing the regulatory frameworks governing the proffering and utilization of such care. But this landscape is still developing and is ripe with pitfalls.
Additionally, the relief funds made available via the CARES Act and other governmental programs are unprecedented in scope—and largely subject to governmental audit and review.
Moreover the breadth and application of the PREP Act is still being determined. It is clear, however, that neither the PREP Act, nor the like state-specific COVID-19 healthcare immunities, preclude the need for effective medical professional liability insurance that may respond to claims arising from COVID-19.
Whether the potential immunities apply is incident- and fact-specific, and will need to be reviewed as part of the investigation of the incident by the healthcare organization and risk manager.
Healthcare providers facing lawsuits from various allegations arising from COVID-19, even if the allegations fall squarely within the immunity prescribed by the PREP Act, will require the retention of defense counsel, and incur costs to defend and/or have them dismissed.
Although plaintiff attorneys have brought dozens of COVID-19- related negligence cases against long-term care facilities, there are fewer claims involving acute-care providers as of January 2021. A COVID-19 litigation tracking website maintained by the law firm Hunton Andrews Kurth shows only 14 COVID-19-related medical negligence cases filed across the county through January 8, 2021.16
However, we believe other healthcare providers will face similar assertions when we emerge from the throes of the pandemic, including but are not limited to:
- Delayed or missed COVID-19 diagnoses
- Delayed immunizations, care or testing because of pandemic conditions
- Failure to follow proper infection control procedures
- Improper rationing of resources
- Failure to spot medical contraindications for administering COVID-19 vaccines
- Potential understaffing as the duration of the situation continues
- Risk managers who stay abreast of how the immunity is playing out with current litigation will be better prepared to represent their organization's interest. For more information on this topic as it relates to the healthcare industry, contact Audrey Greening, Anthony DellaCroce or a member of your Gallagher team.
Risk managers who stay abreast of how the immunity is playing out with current litigation will be better prepared to represent their organization's interest. For more information on this topic as it relates to the healthcare industry, contact Audrey Greening, Anthony DellaCroce or a member of your Gallagher team.
1 Bloomberg. "More Than 265 Million Shots Given: Covid-19 Tracker." January 28, 2021.
2 Ingram, David. "’We need more’: Cities and hospitals feel pinch of Covid-19 vaccine shortages." NBC News. January 21, 2021.
3 Public Health Emergency. "PREP Act 5th Amendment." February 8, 2021.
4 Gallagher. "Understanding how the Stafford Act and PREP Act Affect Healthcare during COVID-19." April 2020.
5 Holland & Knight. "President Biden Proposes Massive COVID-19 Rescue Plan: Summary and Outlook." January 20, 2021.
6 USASpending.gov. "COVID-19 Spending." February 4, 2021.
7 The United State Department of Justice. "Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020." February 4, 2021.
8 Congressional Research Service. "Stafford Act Declarations for COVID-19 FAQs." April 22, 2020.
9 "U.S. lawmakers reintroduce House bill safeguarding access to telehealth." Healthcare IT News. January 29, 2021.
10 The Council of State Governments. "State Executive Orders — COVID-19 Resources for State Leaders." February 5.
11 State of New York Executive Order. "Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency."
12 U.S. Department of Health & Human Services. "HHS Amends PREP Act Declaration, Including to Expand Access to COVID-19 Countermeasures Via Telehealth." January 26, 2021.
13 Public Health Emergency. "PREP Act 5th Amendment." February 8, 2021.
14 Estate of Maglioli v. Andover Subacute Rehab Ctr. I, No 206605 (KM)(ESK), 2020 U.S. Dist. LEXIS 145055, at *1-2 (D.N.J. Aug. 12, 2020); and Baskin v. Big Blue Healthcare, Case No. 2:20-cv-2267-HLT-JPO, 2020 U.S. Dist. LEXIS 150012 (D. Kan. Aug. 19, 2020).
15 Gilbert Garcia et al. v. Welltower OpCo Group LLC et al., 8:20-cv-02250-JVS-KESx.
16 Hunton Andrews Kurth."COVID-19 Compliant Tracker." January 26, 2021.