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Will healthcare organizations have immunity from medical professional liability?

Risk Control and Claims Advocacy|Risk & Analytics|Corporate Risk Tools and Technology|Insurance Consulting and Technology
COVID 19 Coronavirus

By Maryann McGivney | June 18, 2020

Despite legislation intended to protect healthcare workers from claims arising from COVID-19, immunity depends on multiple factors.

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While the world celebrates healthcare heroes working on the front lines of the COVID-19 pandemic, politicians in recognition of the need to protect them, have been enacting various immunity protections regarding liability. The immunities offered have taken various forms and have been enacted through diverse channels, creating challenges in the navigation of these provisions. The healthcare leaders at Honigman LLP (speaker: Sara Brundage) and Willis Towers Watson (speakers: Tom Hayden, Rick Howley, and Maryann McGivney) teamed up to discuss the various immunities and their impact on both claims and insurance in a webcast presented on May 27, 2020.

Understanding federal protections

The type of immunity protection available to healthcare organizations depends on whether the case is tried in a federal or state court. Within the federal system there are various federal acts regarding immunity applying to COVID-19, most notably, the Public Readiness and Emergency Preparedness (PREP) Act, and the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The PREP Act provides for broad immunity based on countermeasures that are declared by the government. The act does not explicitly define countermeasure and, due to the broad wording, it allows for a wide interpretation of what may be included. The CARES Act also provides a broad interpretation of immunity, but specifically addresses volunteers. Both acts would preempt any inconsistencies between federal and state courts, but only if your case is initiated or removed to federal court.

There are two ways that a case may be removed to a federal court, either through diversity of citizenship or questions of federal law. In the situation of diversity, the parties must be from different states. Given the global nature of COVID-19 and the removal of barriers to increase access to care, the likelihood of parties from different states is significantly increased. In addition, due to the lack of definitions and the broadness of the federal acts, questions of federal law are also highly likely. Therefore, as healthcare organizations consider the immunities available to address specific claim situations, both federal acts should be carefully considered as part of a defense strategy.

State immunities

In addition to federal immunities, state immunities may apply, and there are now close to 30 states with some sort of immunity available. New York was the first state to provide immunity via an executive order that allowed for individual, person-to-person immunity. The executive order was later broadened through a public act to extend immunity to organizations.

Massachusetts passed legislation providing immunity in early April. Regardless of the manner of immunity, the many variations of state immunities can make it difficult for multistate providers to understand which immunity provisions will be applicable.

Definitions matter

Additional challenges in understanding immunity come from the lack of definitions. Later-issued immunities often improve upon earlier ones, but there are still a number of considerations in evaluating these provisions. In most immunity provisions there is an exemption for gross negligence, but there is no discussion regarding how that standard would apply. Acting in good faith is another source of ambiguity as organizations try to measure good faith during a pandemic.

Standards used to measure things like gross negligence and good faith are yet to be determined. Will it be the same standard as before the pandemic, or will there be a new standard given the circumstances surrounding the pandemic? If there is a new standard, what will it be based on, and how soon will we know what the standard is?

Immunity can be date-dependent

In addition to definitions, the timelines of effective dates and expiration dates varies. Most immunities are tied to the date on which individual states declared a state of emergency, but we know of active COVID-19 cases within the U.S. as far back as January. In addition, COVID-19 cases are likely to be around well after the state of emergency declaration expires (unless they are extended).

The most challenging question regarding immunities is how far the provisions will expand. None of the provisions are clear about whether the immunity applies only to those patients diagnosed with COVID-19, or whether patients being treated for other health issues could also fall under the immunities.

Consider a patient whose treatment or diagnosis was delayed due to the COVID-19-related canceling of elective procedures, or a patient with pneumonia requiring a ventilator where none was available due to the surge of COVID-19 patients. Because of these ambiguities, it is important to apply immunity broadly, but to also be prepared to defend immunity vigorously.

Categorizing claims

As we consider the application of immunity provisions, consider the variety of claims that could arise from the pandemic. Potential claims can generally be categorized into three areas: personnel, administrative and premises. Often, it is not clear which category a claim could fall into, and some may cross into multiple categories.

Some examples of the types of claims arising from the pandemic include:

Personnel

  • Healthcare professionals contracting the virus in the course of treating patients
  • Volunteers involved in errors and omissions
  • Healthcare professionals working outside the scope of their specialties and licenses

Administrative

  • Decisions to use temporary facilities to assist in delivering care and housing patients
  • Being unprepared for the pandemic
  • Deciding to use telehealth services in lieu of onsite visits
  • Delay in care due to delays in diagnostic testing or other delays

Premises

  • Not taking the proper steps to prevent or mitigate spread
  • Failure to disinfect or appropriately maintain a facility (e.g., HVAC system is older and therefore does not properly vent the air.)

COVID-19’s impact on insurance market

Ultimately, the impact of COVID-19 claims has had a material impact on the marketplace. While the pandemic is not solely responsible for the hard market in professional liability, as issues such as increasing claim severity had already pressured rates pre-virus, the pandemic has accelerated the issues around rates and lack of capacity.

Exclusions around communicable disease, pandemics and COVID-specific policy language are rising and are now common in the senior living industry. Modifications of batch language to avoid multiple batch claims related to the pandemic and other policy term modifications further create capacity issues, particularly when they appear in the middle of an insurance program and impact the rest of the insurance tower.

The variety of circumstances and uncertainty of immunity wording makes it difficult for the commercial underwriting community to have confidence in the overall impact on healthcare professional liability claims. Therefore, from a carrier perspective, despite the broadness of some immunities, there is not much relief reflected in rates and terms. Whether immunities will ultimately drive down healthcare professional liability claims and even commercial insurance premiums is yet to be determined.

Disclaimer

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage will vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication.

Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.

Author

North America Corporate Risk and Broking - Healthcare Industry Practice Leader

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