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May 22, 2020

CT businesses push for pandemic liability protections

HBJ Photo | Joe Cooper Mondo restaurant at 10 Main St. in downtown Middletown.
By Gregory B. Hladky and Ana Radelat, CT Mirror

Worried Connecticut business owners are seeking state or federal protections against potential liability lawsuits from customers and employees who may contract COVID-19.

As Connecticut begins the process of reopening its full economy, there are fears that a lack of such protections may keep some from re-starting their operations.

Pressure for some kind of action is being put on both Congress and on Gov. Ned Lamont, who has already issued an executive order  to protect hospitals and nursing homes from COVID-19 lawsuits as long as those medical workers and facilities were making “good faith efforts” to deal with the disease. The executive order also exempted the medical care community from lawsuits over deaths or injuries involving shortages of personal protective equipment and other medical supplies during the pandemic.

But it’s uncertain whether Lamont can provide broad business liability protection through another executive order, and there are questions about the role of the state legislature, doubts that Congress will be able to act on the issue any time soon, and concerns about “competing guidelines” from federal and state agencies about what COVID-19 safety procedures businesses must follow to avoid legal troubles.

“It’s certainly a big issue,” said Joe Brennan, president of the Connecticut Business and Industry Association. “This is coming up in every conversation I have with businesses … We want to protect those [business owners] who are doing everything they can to protect their employees and the general public.”

“It’s a high-level concern,” Brennan said this week. “Whether or not some [business owners] decide not to open because of that, I can’t say.”

Trial lawyers are warning, though, that overly broad pandemic protections for businesses could be unconstitutional and could backfire.

“The challenge is to thread the needle carefully enough to provide businesses protections they want but that doesn’t give them blanket protection from liability that would discourage them from being safe,” said the state Senate’s top Democratic leader, Martin Looney of New Haven. “If you know you have a bar on liability, why spend the money and time on making your premises safe from the pandemic?”

Questions over Lamont’s emergency powers
Lamont said Wednesday that he believes the clear pandemic safety protocols and rules the state has issued “gives businesses some confidence if they follow those protocols” they will be safe to reopen. “That will give them some protection from lawsuits,” Lamont said at his daily briefing Wednesday.

Many business leaders aren’t yet convinced that following those protocols will be enough, however, nor that the governor even has the power to help protect them from COVID-19 lawsuits.

Lamont’s staff appears to agree with that assessment.

David Lehman, Lamont’s economic development commissioner, said the governor’s emergency powers and those related executive orders were “focused on public health” rather than business liability concerns. “Either the state legislature or our federal delegation in Congress need to address this,” Lehman said.

Lamont received no guidance from his special advisory committee on reopening Connecticut’s economy about business liability protections, officials said Wednesday.

The Center for Medicare Advocacy, a group that advocates for nursing home residents, took issue with efforts by Lamont, and other governors and state legislators, to provide new legal protections to nursing homes.

“Through executive orders and state legislation, governors and states are rapidly granting immunity to various health care providers, including nursing facilities,” center officials said.

Eric George, president of the Insurance Association of Connecticut, said there’s been an effort to persuade Lamont to use the emergency powers he’s tapped because of the pandemic to shield businesses from lawsuits that businesses consider unjust.

“The governor could pass some immediate protections,” George said.

But some business leaders say they’ve been told by Lamont administration officials that the governor doesn’t have the authority to grant the kind of broad liability protections many commercial operations want.

“Our understanding is there are limited things the governor can do through an executive order on this,” said Timothy Phalen, president of the Connecticut Retail Merchants Association. He said that was the message being given by Economic Development Commissioner David Lehman.

Brennan said his organization’s legal experts are uncertain whether an executive order by Lamont or action by the General Assembly would be required to provide business liability protection. “We’re open to whatever would be most effective and expedient,” Brennan said.

Armando Paolino, a lobbyist for the Connecticut Lodging Association, said he believes that either Lamont or the legislature could take liability action for businesses. “It could go either way,” he said.

Paolino said the normal route would be for the business community to ask the legislature to provide pandemic protections, but the General Assembly isn’t now in session and it’s unclear when it will return for a special session.

Looney said the legislature hasn’t researched the question of whether Lamont could use his emergency powers to provide liability protection beyond medical professionals and facilities. “It’s an open question,” he said.

Under those emergency powers, which are currently in effect until early September, “he can suspend or modify any statute,” Looney said.

Congressional lobbying battles
The lobbying war over new legal protections for businesses is also raging in Washington D.C., with insurers, business interests and medical professionals on one side and consumer advocates, unions and trial lawyers on the other.

Claiming COVID-19 will become “the biggest trial lawyer bonanza in history,” Senate Majority Leader Mitch McConnell, R-Ky, has said the Senate will not consider another major stimulus package if it does not contain liability protections. He said those “significant new protections” would help businesses reopen.

McConnell also said he wants to “raise the liability threshold” for medical malpractice lawsuits, something congressional Republicans have long sought.

“We need strong legal protections to ensure that our historic recovery efforts are not drained away from health care workers, schools, and university or small businesses in order to line the pockets of trial lawyers,” McConnell said.

McConnell is working with Sen. John Cornyn, R-Texas, on legislation that would also offer “new legal protections” for nonprofits and government agencies and try to create an environment where schools will be comfortable to reopen in the fall.

Democrats, who are traditional allies of organized labor and trial lawyers, are pushing back against the notion of “blanket” liability protections, although they have left the door open to some negotiations.

Pushback from trial lawyers
Julia Duncan, senior director of government affairs for the American Association of Justice, the nation’s largest trial lawyer association, said McConnell and Cornyn have not produced a bill, so it’s difficult to comment on their initiative.

But Duncan said “immunity is absolutely the last thing that businesses need” to combat the pandemic, because, under current law “if businesses are acting responsibly, they cannot be sued.”

She also disputes the notion promoted by the GOP that the pandemic has unleashed a flood of lawsuits.

“The data does not bear that out,” Duncan said.

She said many of the lawsuits cited by those seeking liability protections were filed by inmates, who have suffered a high death rate from COVID-19 and say their facilities aren’t doing enough to keep them safe. Others are initiated by businesses against insurers who have denied claims under their “business interruptions” coverage for losses caused by shutdown.

Still others are cases involving nursing homes and meatpacking plants that have been negligent in safeguarding the health of residents and workers.

A big problem with trying to curb lawsuits through federal legislation is that most civil lawsuits spawned by the pandemic would be heard in state, not federal, courts.

“It raises very serious constitutional issues,” Duncan said.

Looney said he expects Connecticut’s trial lawyers will also be lobbying hard to prevent any state protections from being too broad. “There has to be a way to hold actual negligence accountable,” said Looney, who is a lawyer himself.

Multiple federal and state safety standards for businesses
One of the worries plaguing business owners involves the various pandemic-related safety standards and protections for workers and customers that businesses are now required to follow.

The Centers for Disease Control and Prevention, the Occupational Safety and Health Administration, as well as state economic and health agencies have all issued what seem at times to be “competing guidelines,” Brennan said.

Employers are concerned that, “if they are not in 100% compliance” with every one of those safety guidelines, “they could be opening themselves up to problems,” Brennan said.

CDC officials issued a new summary Wednesday of its “initiatives, activities and tools” that are intended to “help states, tribes, localities and territories, as well as businesses and community organization operate as safety as possible during the COVID-19 pandemic.”

Lamont said Wednesday that Connecticut has “the best protocols” for businesses to follow as they reopen.

But Brennan said there remain “gray areas” between the two sets of guidelines that worry businesses.

“They talk in general terms about what you need to clean and the training of employees,” Brennan said. Examples of potential problem areas include exactly what areas and surfaces in different businesses need to be disinfected or sanitized, according to Brennan.

“Any time anyone wants to be litigious they can find a wedge,” he said.

Few insurance protections
Connecticut insurance officials have warned businesses that most commercial and personal property insurance policies “typically contain specific exclusions for loss or damage caused by war, nuclear action and radiation” because potential losses for insurers are so extreme and most businesses couldn’t afford such policies. “Global pandemics like COVID-19 usually fall into this category,” the state Insurance Department warned in a recent news release.

“Everybody knows there will be issues that arise from this pandemic,” Paolino said. “We’re concerned about fair and equitable treatment, that this will not turn into just another attack on the deep pockets of big business.”

Business leaders insist they aren’t attempting to protect “bad actors” who fail to provide adequate COVID-19 safety measures like masks and gloves for workers or don’t make every effort to give customers enough space to avoid infection.

“We want to protect businesses that are trying to do the right thing,” Brennan said.

Timothy Phalen, president of the Connecticut Retail Merchants Association, said business owners want to know how they can defend themselves against questionable claims by customers or employees who contract the virus.

“How do I know that it was actually my store that caused that infection?” Phalen cited as one of the questions owners have. “How do I defend that?”

Lehman said the administration knows “there are certain to be lawsuits [resulting from the pandemic]. Some will be valid and some will be frivolous,” and the legal system is set up to handle those types of legal actions. He said the best way for business owners to limit their legal liability “is for them to follow the rules.” The question is: which ones?

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