Specific virus liability rules unneeded
A simmering issue in the COVID-19 pandemic is what to do about liability. There are discussions and proposals in Washington and state capitols.
My instinct regarding this is to follow one of Ronald Reagan’s favorite sayings: Don’t just do something, stand there. However, let me start with two large concessions.
First, the American tort system is badly in need of a comprehensive overhaul. Our country is too litigious. Moreover, the cost of litigating often overwhelms true civil justice.
Second, Senate Majority Leader Mitch McConnell is undoubtedly right that there will be an avalanche of COVID-19 liability lawsuits.
Given the hugely disproportionate number of COVID-19 deaths coming from nursing homes, they are sure to get hammered. There will be lawsuits alleging unsafe working conditions. Several manufacturers quickly switched to unfamiliar products — such as masks and ventilators — to help out or because they were commandeered via the Defense Production Act. They might well be thanked with lawsuits alleging design defects.
And medical providers will be sued for the decisions they made in treating COVID-19 patients.
To head all this off, and keep it from being a drag on getting the economy going again, McConnell wants Congress to enact broad liability protection as part of additional coronavirus legislation. There are several problems with this. The tort system acts as a check on behavior and a source of compensation for damages caused by negligence. There shouldn’t be an anything-goes standard for COVID-19. And substitutes for the tort system are hard to craft.
One idea is to offer safe harbor if federal and state guidelines were followed. However, in most cases, those guidelines are vague and far from comprehensive. And it is not desirable for them to be more comprehensive or overly prescriptive. Individual circumstances differ. Regulatory flexibility is a virtue, but hard to justify if adherence offers a liability free pass.
Another idea is to increase the standard from negligence to gross negligence. Gov. Doug Ducey has purported to do this for medical professionals through an Executive Order. But there is a state constitutional provision, proscribing laws that limit the amount of damages to be recovered for causing death or injury, that raises doubt about the legality of Ducey’s order.
Regardless, given that the stakes are arguably higher with respect to COVID-19, why should the standard of conduct for, say, employers to provide a safe workplace be lower? I’m all for opening up the economy and have argued against the shutdown orders from the beginning. But, in so doing, the threat of liability can serve as a useful prod for employers to do so as safely as possible. And it’s hard to see government regulation serving as an adequate substitute.
Even medical professionals haven’t really seen the difficult triage decisions that were thought to justify a higher liability standard.
The small business lobby, in Washington and various state capitols, are asking for laws requiring insurance companies to pay COVID-19 claims under business interruption policies, even when there are relevant exclusions in the policies. These disputes would ordinarily be litigated.
If politicians start overriding the contractual provisions of insurance policies, the cost of all lines of insurance will rise. Not only will insurance companies have to collect premiums to cover the risks they know they are insuring. They will have to collect premiums to cover the risks they don’t think they are insuring, but which politicians may add later.
Arizona U.S. Sen. Martha McSally wants to go in the other direction and increase the ability to sue for COVID-19 damages. Or at least sue China.
She has a bill amending the Foreign Sovereign Immunities Act, which generally prevents foreign governments from being sued for their policy decisions in U.S. courts, allowing Americans to sue China for COVID-19 damages.
The best that can be said for this is that it’s a slightly less bad idea than her contention that the federal government shouldn’t have to pay back the trillion dollars it borrowed from the Chinese government. Nonetheless, raising doubts about the U.S. commitment to the principle of international sovereign immunity regarding policy decisions, like raising doubts about repaying debt, isn’t in our long-term interests.
On another day, a general discussion and debate about broad-based tort reform would be useful. But making COVID-19 specific rules on the fly doesn’t seem necessary or justified.