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Business Liability Protection: The Red Line in the Next COVID-19 Relief Bill


House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.) "elbow bump" at an event in the U.S. Capitol earlier this year.

“We have to get our country open,” President Donald Trump said on Tuesday.

It’s a sentiment shared by an increasing number of Americans, and some governors. According to a New York Times tracker, “About half of the states have begun to reopen their economies and public life in some meaningful way.” Even more are contemplating it. But according to several public opinion polls, the majority of Americans are at least somewhat uncertain about the wisdom of these moves.

Even though they are eager to bring customers back through their doors and operations back online, most businesses are too. And that anxiety, and some federal lawmakers’ desire to ease it, is likely to be at the center of Congress’ debate over its fourth coronavirus response bill, which will occur over the weeks ahead. Indeed, the question of whether businesses should be held harmless from liability for reopening as their state and local leaders ease restrictions is already dividing Washington.

In a joint statement issued last week, Sen. Mitch McConnell (R-Ky.), the Senate Majority Leader, and Rep. Kevin McCarthy, the leader of the GOP in the U.S. House, said, “Senate and House Republicans are united in our demand that health care workers, small businesses, and other Americans on the front lines of this fight must receive strong protections from frivolous lawsuits … [T]hese protections will be absolutely essential to future discussions surrounding recovery legislation.”

In fact, these two have drawn a “red line”—they have said they and Republicans in both chambers of Congress will not agree to a fourth COVID-19 bill if it does not provide liability protection to businesses.

Democrats reacted quickly, and strongly, to the joint statement. Senate Minority Leader Chuck Schumer (D-N.Y.) called it “subterfuge.” House Speaker Nancy Pelosi (D-Calif.), said, “I don’t think at this time, with the coronavirus, that there’s any interest in having any less protection with our workers … It’s really sad — it's disgraceful, because there is such tremendous need.” Labor unions also quickly came out in opposition to Republicans’ demands. Kim Cordova, president of United Food and Commercial Workers Local 7, told The Wall Street Journal there would be “no incentive for these companies to have a safe workplace if he [Sen. McConnell] takes away any type of liability to them.”

The debate over COVID-19 liability provisions threatens to rip open the scars from a seemingly never-ending debate between the parties about lawsuits and legal reform. (According to Vanderbilt University legal scholar Brian Fitzpatrick, a 1966 amendment to the Federal Rules of Civil Procedure, which changed money damages class lawsuits from ones where class members had to opt in to be included, to one where all class members were included unless they opted out, launched the modern conflict over lawsuits. Fitzpatrick called that change “a boon to plaintiffs and a greater burden to the business community.”)

But before we examine how the latest battle in that war will play out, what is it exactly that Republicans want in the next COVID-19 bill in terms of liability reform?

While the party’s leaders have not yet outlined specific proposals, several U.S. trade associations have. The National Association of Manufacturers, for example, wants Congress to extend Good Samaritan protections to protect companies that donate equipment, or who may be producing protective gear or medical equipment for the first time in order to keep up with COVID-19 demands. The National Federation of Independent Business wants Congress to enact legislation to ensure small businesses cannot be sued unless they willfully ignore government safety and health guidance. Similarly, the general counsel for the National Retail Federation has said retailers want “a solution that is fair to businesses who did not cause COVID-19 and who took all of the reasonable precautions a store would take to prevent their customers and workers from being exposed.”

In a letter sent to House and Senate leaders in mid-April—well before Sen. McConnell and Rep. McCarthy drew their “red line”—the American Medical Association (AMA) and other groups representing medical practitioners asked Congress to “extend broad civil immunity to physicians and other clinicians for any injury or death alleged to have been sustained directly as a result of an act or omission in the course of providing medical services in response to the COVID-19 pandemic, with exceptions for gross negligence or willful misconduct.” The AMA also wants Congress to extend liability protections to physicians and other clinicians providing care to COVID-19 patients.

The AMA letter noted, “Congress has already acknowledged that liability is a significant impediment to physicians and other clinicians.” In the CARES Act, in fact, Congress “included important liability protections for health care volunteers who respond to the COVID-19 crisis.”

Manufacturers, retailers, and other businesses, particularly small businesses that work closely with the public, now will try to argue the same—that lack of liability protections will present a “significant impediment” to their ability to do their jobs.

Democrats are not likely to buy that argument, and the battle over business liability provisions looks like it could hold up the entire next COVID-19 relief bill.

What could be in that bill?

The White House reportedly wants any new spending to be directed at rebuilding U.S. infrastructure. President Trump also is revisiting his preference for payroll tax relief—an idea that he floated at the very beginning of the pandemic. Over the weekend, in fact, U.S. Treasury Secretary Steven Mnuchin said, “We are not doing anything unless we get a payroll tax cut.”

For their part, Democrats are unlikely to agree to a fourth spending bill unless it includes billions of dollars for state and local governments. Without aid, cash-strapped legislatures and governors could be forced to cut funding for teachers, first responders, and law enforcement. Though Republicans have argued that Congress already has provided $150 billion in aid to state and local officials in previous COVID-19 bills, in recent days Sen. McConnell has seemed more amenable to agreeing to some of the help that Democrats want.

There also, of course, is the fact that the second round of funding for the U.S. Small Business Administration’s Paycheck Protection Program likely will run out of money well before Congress even starts the debate over a fourth stimulus bill in earnest. A protracted fight over business liability could keep Republicans from helping the small businesses whose survival has been the centerpiece of so much of the work Congress and the White House have done over the last two months.

There is another option, though, but that would mean a patchwork of policies similar to the reopening orders.

If Washington does not act, according to a report from The Wall Street Journal, state lawmakers would be very likely to step in. In fact, “Already, more than a dozen states—including Arizona, Connecticut, Illinois, Massachusetts, Michigan, New York, and New Jersey—have granted civil liability protections to health-care providers such as hospitals, nursing homes, physicians or other medical personnel dealing with surges of COVID-19 patients.”

As states reopen, they will be asked to expand those protections—particularly if inside the Beltway lawmakers are stuck in an ideological fight over lawsuits and liability.

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