The novel and unexpected COVID-19 pandemic of 2020 brought significant health and economic problems to West Virginia, the United States and the world. In an effort to avoid
overwhelming hospitals with critically ill patients and fatalities, governments made quick decisions to close down certain sectors of the economy and issued stay-at-home orders to individuals
which helped stem the spread of COVID-19. These actions led to high levels of unemployment, as many businesses were forced to make difficult choices and lay off or furlough employees. It put many companies,
both large and small, at risk of financial ruin. First responders, hospitals and healthcare providers got ready for a potential onslaught of COVID-19 patients at substantial unexpected cost. Meanwhile, other
sectors of the economy were deemed essential and had to quickly adapt to best protect the health of their employees and customers, also at substantial cost. At the same time, protocols for safe operations
continued to evolve as more was learned about the spread of the virus.
As the economy re-opens and prepares to operate in a world with COVID-19, many employers may find themselves as the subject of lawsuits stemming from situations created by this pandemic.
This position paper covers multiple topics and provides suggestions on what should be done to best protect jobs and our economy so that we can resume pre-coronavirus levels of commerce as soon as possible.
1. Mandating Business Interruption Insurance Coverage for Pandemic-Related Claims
Issue
Congress and state legislatures across the country are considering legislation that would force insurance companies to pay claims under business interruption insurance policies to businesses
suffering lost income due to business closures or restrictions imposed by state governments in response to the COVID-19 pandemic. Many of these proposals would mandate business interruption coverage
without regard to whether an insurance policy actually provides coverage for pandemic-related claims.
Background
Business interruption insurance is designed to cover financial losses to replace income for a defined time period, limited to covered events, known as perils, in which the cause of the temporary lost income is
covered under the insurance policy contract. While insurance policies differ, generally this coverage is activated by a physical loss such as building damage.
Most business interruption policies do not cover business income losses caused by pandemics like COVID-19, absent an explicit policy endorsement. First, there is no coverage because a business likely will
not suffer any physical damage due to a pandemic. Although forced closures and other restrictions on the operations of a business, such as only permitting restaurants to sell food for delivery or carry out,
are arguably “interruptions” to business in the literal sense, no direct physical damage (i.e., a building fire) occurs to a business’s property from a business closure or operation restrictions.
Second, these policies often contain specific exclusions of coverage for pandemic or virus-related claims. The reason policies exclude these types of claims is simple: the shared and simultaneous impact upon
nearly every person and every business, due to widespread incidents like pandemics, is too wide and too damaging to project. In other words, because insurers are unable to anticipate the business income losses
that may result from such a widespread risk, they are unable to accurately price business interruption policy premiums to cover such risks.
Indeed, the West Virginia insurance Commissioner issued a Bulletin relating Business Interruption Coverage and COVID-19 on March 26, 2020. Bulletin No. 20-08 recognizes that The potential loss costs from such
perils are so great that providing coverage would jeopardize the financial solvency of insurers and many businesses could not afford the premium costs to cover such catastrophic events even if they were covered
perils. Global pandemics like COVID-19 usually fall into this category of risks or perils that are not covered.
The proposed federal legislation, H.R. 6494, would require any insurer that offers business interruption coverage to “make available, in all of its policies providing business interruption insurance, coverage
for losses resulting from . . . any viral pandemic; [and] any forced closure of businesses . . . by law or order of any government or governmental officer or agency[.]” H.R. 6494 even goes so far as to completely
void policy exclusions for losses resulting from a viral pandemic.
To date, seven (7) states have introduced similar legislation mandating business interruption policy coverage for COVID-19-related claims. Though the state legislation varies in scope, most of these proposals
would apply to businesses who employ fewer than 150 people.
The Chamber's Position
The West Virginia Chamber of Commerce strongly opposes any legislation that would mandate pandemic-related business interruption coverage for policies that specifically exclude such claims.
First, insurance policies are contracts – in this instance, contracts between an insurer and a business owner. Both the insurer and the business owner contractually agreed to the terms of existing business interruption
policies, including their exclusions for virus- or pandemic-related claims. Retroactively mandating coverage in the face of conflicting policy terms would fundamentally change contract law more generally and jeopardize
any party’s ability to rely on the language of any contract in the future. That’s not good for business.
Second, small businesses will need both continued and future coverage for business interruption. If markets are forced to cover perils not stated in the policy, companies will either be unable to write any future
business interruption coverage or will have to price it to any peril irrespective of the policy terms, resulting in a policy price above what many businesses can afford. This creates an untenable position for small
businesses and others after a subsequent fire or storm. It is imperative that policyholders and insurers have the ability to continue to rely on contract terms that have been agreed to by the parties, approved by
regulators, and repeatedly tested in courts.
Third, these legislative proposals would bankrupt insurance companies and cause a collapse of the insurance market. Proponents of the legislation often cite the estimated $800 billion “surplus” reserve held by insurers
as justification for forcing business interruption coverage. However, this reasoning is misguided and inaccurate. If insurers are forced to pay for pandemic-related business interruption claims not contemplated by
existing policies, this reserve will be quickly depleted, and insurance companies will become insolvent. This “run” on insurer reserves would inevitably result in insufficient resources to honor claims actually covered
by business interruption policies, such as damage from hurricanes, fire, or tornadoes. Maintaining a vibrant, competitive, and solvent insurance climate in West Virginia is the only way to protect West Virginia businesses
from future losses.
Further, this issue presents legitimate constitutionality concerns. Many legal experts agree that government-forced rewriting of insurance contracts is unconstitutional, and the passage of any such legislation would
force insurers to vigorously defend their contractual and constitutional rights through costly litigation, further depleting resources available to pay claims.
West Virginia cannot afford to turn back the significant strides we have made in the civil justice reform landscape, which is precisely what this effort would do.
The only viable solution is for Congress to create the COVID-19 Business and Employee Continuity and Recovery Fund. As the United States adapts to COVID-19 and our economy fights for survival, insurers that provide
coverage to West Virginia businesses, and businesses across the county are joining with retail partners and broad business groups to ensure that federal money is injected into the small-business community immediately
and with the longevity necessary to save jobs and our future economic health. The proposed Recovery Fund, modeled after the September 11th Victim Compensation Fund, would permit the federal government to distribute
federal relief money and liquidity to businesses and their employees impacted by the COVID-19 pandemic. Because of the seemingly-universal nature of this risk, it is critical that a remedy for impacted businesses be
enacted at the federal level without jeopardizing the solvency of insurers.
2. Product Liability Protections
Issue
Whether product-liability protections are in order for producers and distributors of necessary Personal Protective Equipment. Due to the speed with which the COVID-19 pandemic affected the world, severe supply
shortages of many essential products needed to help limit the spread of the virus quickly occurred. Many individuals and businesses stepped up to help manufacture these needed items, but now may face product liability
lawsuits related to their public service during a national emergency.
Background
As a result of the COVID-19 pandemic, many consumers, health care providers, first responders and others are looking for a way to protect themselves by using a variety of products. These products include, but
are not limited to, personal protective equipment, ranging from homemade masks to equipment designed to protect healthcare providers, hand sanitizers, and various anti-bacterial cleaning products. Congress recognized
the possibility of lawsuits against certain manufacturers of personal protective equipment by including protections from liability for manufacturers of respirators in the Coronavirus Aid, Relief, and Economic Security
(CARES) Act. Unfortunately, the Act did not include protections from product liability claims as to the many other devices and products being manufactured to protect us all from the hazards of COVID-19, despite the
fact that manufacturers and others face the threat of possible lawsuits due to their efforts. As a result, the West Virginia Chamber recommends enacting a statute providing limited immunity to entities that
manufacture, use or distribute this personal protective equipment absent a showing of malicious intent to harm users of the product or willful misconduct.
The Chamber's Position
Any statute limiting liability for the manufacture, use or distribution of personal protective equipment should apply to the following: any device, equipment, substance, or material recommended by the Centers for
Disease Control and Prevention, Food and Drug Administration, Environmental Protection Agency, Department of Homeland Security, another federal authority, or West Virginia authority to limit the spread of coronavirus,
including but not limited to respirators, masks, surgical apparel, gowns, gloves, other apparel intended for a medical purpose, sanitizers, disinfectants, cleaning products.
Persons who manufacture, label, donate or distribute personal protective equipment should not be liable for damages, injury or death caused by personal protective equipment donated or sold at a price not to exceed
the cost of production to a charitable organization, governmental unit or licensed health care provider or facility absent a showing of willful misconduct.
Any other person or entity who manufactures, labels, or distributes personal protective equipment should not be liable for damages, injury or death caused by such personal protective equipment absent a showing of
gross negligence, willful misconduct, or intentional infliction of harm.
Any person or entity who used, employed, dispensed, or administered personal protective equipment in reliance on and by generally following applicable government standards and guidance related to such personal
protective equipment should not be liable for damages, injury or death caused by or related to use of the personal protective equipment absent a showing of gross negligence, willful misconduct, or intentional infliction of harm.
The statute should contain a statute of limitations of one year from accrual of the cause of action and contain a sunset provision of the later of October 1, 2024 or the date on which there is no declaration by the
Secretary of Health and Human Services under section 319F–3(b) of the Public Health Service Act (42 U.S.C. 247d–6d(b)) that is in effect with respect to coronavirus. A claim should be deemed to have “accrued” when
the injury or claim is manifest to the would-be-claimant or should have been manifest to a reasonable person in the same or similar situation as the would-be claimant.
3. Liability Protection from Employees Diagnosed with COVID-19 Asserting Workers Compensation Claims
Issue
Whether employers should be protected from additional Worker Compensation claims. Employers whose businesses were deemed essential during the state’s “Stay at Home” order and those employers who are now
re-opening as permitted by the Governor are concerned that employees who have been previously diagnosed with COVID-19 or may acquire it in the future may claim they were exposed to COVID-19 in the workplace and
that they therefore should be eligible to receive Worker Compensation benefits.
Background
Worker Compensation benefits are designed to offer medical and financial benefits to workers “injured” in the scope of their employment. “Injury” includes occupational diseases due to causes and conditions
characteristic of or peculiar to a particular occupation. In past situations involving contagious diseases such as H1N1, hepatitis or AIDS, only certain employees such as healthcare providers and first responders
could make an occupational disease claim. They also had to prove when and where the transmission occurred or prove there was a substantial connection between their occupation and the transmission of the disease.
Many states are changing these rules by enacting presumptions that any “essential employee” who becomes infected must have been exposed to COVID-19 in the workplace. Not only will such presumptions result in thousands
of dollars in added costs, it ignores the reality that many essential workers have no additional exposure because of the nature of their work and they could have just as easily been exposed by their own activities
unrelated to their job.
The Chamber's Position
The Chamber appreciates and recognizes the potential impact of a COVID-19 infection on individuals who remained at work in industries deemed essential. Before any legislation is crafted to create a presumption
that a worker has contracted the disease on the job, the Chamber respectfully offers the following suggestions:
a) To the extent the legislature considers applying workers’ compensation coverage to coronavirus-related claims, whatever coverage may apply should be offset by the paid leave provided under the Families First
Coronavirus Response Act (FFCRA) that provides federal funding for emergency paid sick leave at businesses with less than 500 employees and 80 hours of paid leave up to $511 per day.
In addition, any presumptions under workers’ compensation should be limited in application and not cover all industries deemed “essential.” For example, any such presumption should only apply to front line health
care workers and first responders who actually worked with or provided a service to infected persons. In short, there must be a causal connection between the conditions under which the work was performed and COVID-19,
and which can be seen to have followed as a natural incident to the work as a result of the exposure occasioned by the nature of the employment.
b) Additionally, since West Virginia lifted its “stay at home” order, individuals have been free to socialize in larger numbers and operate more or less as usual, although the risk of exposure is still present. As a
result, it will be essentially impossible to determine whether a future exposure is truly occupational. Presumptions should apply only from the start of the “stay at home order” until lifted.
c) Any presumption should only apply to temporary total disability provisions to the extent that the exposure is truly occupational. Such a policy will ensure that workers’ compensation plans can maintain coverage
without placing enormous stress on the entire system, while providing coverage for those most likely to have become infected as a result of their work.
4. Immunity from Lawsuits Against Employers Related to WV's Workers Compensation Deliberate Intent Statute
Issue
Whether employers, both those deemed essential and otherwise, are concerned that employees infected with COVID-19 will claim they were exposed while at work and that their employer is liable under West Virginia’s
deliberate intent statute because of some unintended situation despite an employer’s efforts to follow CDC or other governmental guidelines.
Background
The legislature recently revised the 5 factor test for deliberate intent under the Worker Compensation statute. It now says that an employee proves deliberate intent if they can show: (1) the existence of a specific
unsafe working condition that presented a high degree of risk and a strong probability of serious injury or death; (2) that the employer, pre-injury, had actual knowledge of the existence of the specific unsafe working
condition and of the high degree of risk and the strong probability of serious injury or death presented by the specific unsafe working condition; (3) that the specific unsafe working condition was a violation of a
state or federal safety statute, rule, or regulation, whether cited or not, or of a commonly accepted and well-known safety standard within the industry or business of the employer; (4) that notwithstanding the existence
of each of the above-referenced facts, the person or persons alleged to have actual knowledge intentionally thereafter exposed the employee to the specific unsafe working condition; and (5) that the employee suffered
serious compensable injury or compensable death as a direct and proximate result of the specific unsafe working condition. It is quite likely that employers will be unable to ensure that CDC guidelines are followed
every minute of every day, whether because of mistakes made by supervisors or co-workers or an inability to fully comply because of misplaced, stolen or unavailable PPE due to nationwide shortages.
The Chamber's Position
COVID-19 is an unseen and highly contagious disease, yet some persons who are infected may show no symptoms. The CDC has changed its guidance for employers multiple times because COVID-19 is novel and we are still learning
about it. Meanwhile employers large and small are experiencing a nationwide shortage of PPE and cleaning supplies. Under these circumstances, the Legislature is encouraged to put in place protections that prevent employers
from being held liable from claims of worker compensation deliberate intent liability.
5. Temporary Protections for Hospitals and Healthcare Providers
Issue
Whether health care facilities should be afforded temporary and limited liability protections for their good faith actions taken in the course of efforts to assist in the state’s response to the COVID-19 health pandemic.
Background
As the novel coronavirus SARS-Cov2 and the resulting disease state COVID-19 began to sweep across large cities on the east and west coasts, it posed a direct threat to the U.S. medical system and its supporting supply chains.
West Virginians watched the news as Italy, Seattle and New York City were inundated with COVID-19 patients under resource-constrained conditions and health care providers were faced with conserving, substituting, adapting,
re-using and re-allocating critical supplies. As West Virginia was preparing for the COVID-19 pandemic to begin affecting its population, Governor Jim Justice signed a number of executive orders to limit the spread of the
virus in the state. Among these actions were executive orders that pertained to healthcare providers, including a prohibition on elective medical care. Healthcare providers also struggled to obtain personal protective
equipment (PPE) for their staff due to world-wide shortages of these critical materials. Meanwhile, science, healthcare organizations, the CDC and medical providers engaged in a high speed quest for knowledge in a global
effort to diagnose a growing variety of COVID-19 symptoms impacting different age groups and a quest to find and use possible treatments. While elective medical care was put on hold, drastically reducing revenues of many
healthcare facilities and providers, those preparing to treat COVID-19 patients and those making substantial changes to help reduce the spread of COVID-19 incurred substantial additional expenditures.
The Chamber's Position
Healthcare providers are a critical component of the state’s economy and the health and well-being of all West Virginians. Ensuring that these facilities are able to recover from difficulties arising from the COVID-19
pandemic is essential to the health and economic future of our state and its citizens.
These facilities, their employees and management, as well as all medical providers, should be given immunity from civil liability for any injury or death alleged to have been sustained because of a provider’s or facility’s
good faith acts or omissions while providing health care services in support of West Virginia’s COVID-19 response as laid out in executive orders and directives by the West Virginia Department of Health and Human Resources
(DHHR). This should include acts or omissions attributable to a lack of resources that rendered the health care provider or facility unable to provide the level or manner of care that otherwise would have been required in
the absence of the COVID-19 pandemic, and to any acts or omissions resulting from efforts or medical decision-making to comply with executive orders of DHHR directives to slow the spread of the virus.
Of course, immunity should not extend to acts or omissions that rise to the level of a crime, fraud, actual malice, or a conscious, reckless, and outrageous indifference to the health, safety and welfare of others.
6. Liability Protections for General Businesses
Issue
Whether liability protections should be adopted for businesses in general. Businesses that are in the process of re-opening and resuming commerce following the COVID-19 pandemic and government-mandated closures are facing a
new uncertainty – the risk of being sued if a patron, employee or other visitor catches the virus.
Background
As COVID-19 spread across the United States, many types of businesses were ordered to close by government directive in an attempt to slow the spread of the disease. Some businesses were deemed essential but were required to
adapt policies to protect customers, clients, and employees from exposure to the virus. Most businesses have experienced major adverse financial impacts due to the spread of COVID-19, and many will be forced to close their
doors. Those businesses that are reopening and ramping up operations are frequently doing so under much greater strain than normal.
As businesses are re-opening, many are now doing so with the fear of being sued for an individual allegedly catching COVID-19 at their establishment. Despite the impossibility of proving exactly where an individual would
have contracted this virus, these types of suits are appearing across the country, further jeopardizing the ability of employers to recover from the COVID-19 pandemic.
The Chamber's Position
Safeguards should be put in place to protect employers from lawsuits related to COVID-19. Specifically, policymakers should consider adopting the following standards:
1. Compliance with federal, state or other governmental guidelines regarding safe business operations as a result of the COVID-19 pandemic shall be a complete defense to any claim of COVID-19 related injury or
illness by employees or non-employees.
2. Actual knowledge of an unsafe condition relating to COVID-19 should be required to be proven in order to make a prima facie case of fault in a COVID-19 related claim by an employee or non-employee.
3. Constructive knowledge (i.e., should have known) of an unsafe condition relating to COVID-19 is insufficient to establish a prima facie case of fault in a COVID-19 related claim by an employee or non-employee.
4. In the absence of federal, state or other governmental guidelines regarding safe business operation as a result of the COVID-19 pandemic, compliance with business or industry standards for the specific business
at issue shall be a complete defense to any claim of COVID-19 related injury or illness by employees or non-employees.
5. Identify the mechanism to operate, such as waiver, assumption of the risk.
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