Businesses involved in the fight against the spread of COVID-19—such as those that manufacture personal protective equipment (PPE), distribute diagnostic tests or develop vaccines—may be concerned about potential lawsuits down the road claiming that their alleged negligence in manufacturing, distributing or developing their products resulted in the spread of the disease. This is especially true for businesses that were willing to revamp their entire operations to help fight the pandemic by developing or manufacturing new products or devices with which they previously had no experience. What protections, if any, does a business have if it is faced with such a lawsuit?
The PREP Act
Enter the federal Public Readiness and Emergency Preparedness Act, 42 U.S.C. § 247d-65 (the “PREP Act”). Enacted by Congress in 2005, the PREP Act authorizes the Secretary of the U.S. Department of Health and Human Services (the “HHS”) to issue a declaration during public health emergencies to grant tort liability immunity to individuals and private businesses (if they qualify as “covered persons”) that are involved in manufacturing, developing, testing, dispensing and distributing covered medical “countermeasures” (such as vaccines, medical devices and PPE) that are used against the pandemic. The intent of the PREP Act is to encourage private businesses to participate in the development of countermeasures to combat the pandemic without fear that they will later be sued for negligence.
In response to the current COVID-19 outbreak, HHS Secretary Alex Azar issued a PREP Act declaration on March 17, 2020 and amended it on April 10, 2020. On May 19, 2020, the HHS published a modified advisory opinion that provided additional guidance on the scope of the PREP Act.
Who Enjoys Immunity Under the PREP Act?
The PREP Act provides broad immunity to “covered persons,” which are defined under the Act as any person or entity that is:
- A manufacturer of a covered countermeasure (which includes suppliers and licensors of any product, intellectual property, service, research tool or component or other article used in the design, development, clinical testing, investigation or manufacturing of a covered countermeasure);
- A distributor of a covered countermeasure (which includes persons and entities involved in the distribution of drugs and devices, such as common carriers, air carriers, private-label distributors, brokers, warehouses and retail pharmacies);
- A program planner (i.e., state and local governments and their employees) of a covered countermeasure;
- A qualified person (i.e., licensed health care professionals) who prescribes, administers or dispenses a covered countermeasure; and
- Any official, agent or employee of the above.
What Is a “Covered Countermeasure” Under the PREP Act?
Covered countermeasures may include medical devices, PPE (such as masks, gloves and facemasks), vaccines and other medications used to diagnose, treat, cure or prevent COVID-19 or its transmission. In general, the countermeasure must be approved, cleared or licensed by the FDA.
On May 19, 2020, the HHS issued a modified advisory opinion on the PREP Act that provided additional guidance on what constitutes a “covered countermeasure.” A list of certain devices that qualify as covered countermeasures can be found at: https://www.fda.gov/media/136702/download.
The HHS’ modified advisory opinion also clarified that the PREP Act does not impose strict liability on covered business for determining whether a product is or is not a covered countermeasure. Specifically, the HHS stated that a businesses that otherwise meet the requirements for PREP Act immunity will not lose that immunity—even if the product is not a covered countermeasure—if that business reasonably could have believed that the product was a covered countermeasure. For example, if a business purchased 100,000 tests or respirators that appeared to be authorized by the FDA but were actually counterfeit, the business would still be immune from a claim arising out of the use of a counterfeit test or respirator.
As with covered countermeasures, a business that otherwise meets the requirements for PREP Act immunity will not lose that immunity—even if the business is not a covered person—if that business reasonably could have believed, under the current, emergent circumstances, that it was a covered person.
Potential Cases in Which PREP Act Immunity Would Apply
The reach of PREP Act immunity is not limited to only those situations that one might initially envision (e.g., liability claims alleging negligence by a manufacturer in creating a vaccine or against a health care provider proscribing a wrong dose). As explained in the HHS’ declaration, the PREP Act would also preclude a liability claim relating to the management and operation of a countermeasure distribution program or site, such as a slip-and-fall injury or automobile accident by a recipient receiving a countermeasure at a retail store serving as an administration or dispensing location that alleges, for instance, lax security or chaotic crowd control. However, a claim alleging an injury occurred at the site that was not directly related to the countermeasures activities is not covered, such as a slip-and-fall accident with no direct connection to the countermeasure’s administration or use.
Are There Any Exceptions to PREP Act Immunity?
Yes. There is no immunity for claims that do not arise out of activities that are covered by the declaration (or for non-tort claims, such as those brought under the Americans with Disabilities Act), nor would there be immunity from lawsuits that do not allege that a covered countermeasure was the cause of the alleged injury. The PREP Act also does not apply to claims of “willful misconduct” that results in death or serious physical injury. Finally, there is no protection for claims filed outside of the United States.
Compensation for Injuries
Despite the broad immunity offered by the PREP Act, injured persons are not without recourse. Similar to workers’ compensation, the PREP Act substitutes a no-fault compensation system for traditional litigation that can be uncertain and costly. Individuals who have been seriously injured or died because of a covered countermeasure may be entitled to compensation from the Covered Countermeasures Process Fund.
As the country gradually reopens, one can expect that there will be a substantial number of personal injury lawsuits, class actions and product liability claims filed against businesses that were involved in the manufacture, development, distribution and administration of efforts aimed at combating the spread of COVID-19. The immunity afforded by the PREP Act will likely play a central role in how those cases are resolved.