Coronavirus Impact Updates

CARES Act Expands Protection From Liability to Manufacturers and Others Involved in the Manufacture, Distribution and Supply of Approved Respiratory Protective Devices

Coronavirus

Manufacturers, distributers and others involved in the production and supply of certain devices and drugs needed in the fight against COVID-19 are provided a higher level of protection from liability under both State and Federal law with respect to claims for loss related to the use of the products by individuals.

What is Covered?

The CARES Act, signed into law on March 28, 2020, in response to the COVID-19 pandemic, amended the Public Health Service Act (PHSA) to include certain respiratory protective devices in its definition of a “covered countermeasure” which, when certain requirements are met, affords manufacturers and others involved in the production, supply and distribution of that product a higher level of protection from liability not otherwise allowed under the law.  A “covered countermeasure” means (A) a qualified pandemic or epidemic product; (B) a security countermeasure; (C) a drug, biological product, or device that is authorized for emergency use in accordance with requirements under the Federal Food, Drug and Cosmetic Act; and now, (D) a respiratory protective device that is approved by the National Institute for Occupational Safety and Health and that is  determined by regulator to be a priority for use during a public health emergency declared under the PHSA

Who is Covered?

The above protection applies to any “covered person,” defined as (1) the United States; or a person or entity that is (2) a manufacturer of the countermeasure; (3) a distributor of the countermeasure; (4) a program planner of such countermeasure; (5) a qualified person who prescribed, administered, or dispensed such countermeasure; or (6) an official, agent, or employee of one of the above entities. 

The statute defines a “covered person” very broadly. For example, the term “manufacturer” expressly includes (1) a contractor or subcontractor of the manufacturer; (2) a supplier or licenser 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; and (3) any or all of the parents, subsidiaries, affiliates, successors, and assigns of a manufacturer.  A “distributor” includes a person or entity engaged in the distribution of drugs, biologics, or devices, including but not limited to manufacturers, re-packers, common carriers, contract carriers, own-label distributors, private label distributors, jobbers, brokers, warehouses and wholesale drug warehouses, independent wholesale drug traders and retail pharmacies. The purpose, of course, is to encourage the manufacture and distribution of these products when they are needed in an emergency, by creating protection from liability for those producing, distributing, and making the products available through the supply chain. 

Protection from What?

The CARES Act added the specified respiratory device to the list of products and devices that “covered persons” can produce and distribute during a declared public emergency with an added protection from liability.  Specifically, subject to certain other provisions, “a ‘covered person’ shall be immune from suit and liability under Federal and State law with respect to all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure if a declaration [of public health emergency, meeting the requirements for the same], has been issued with respect to such countermeasure.”   This “immunity applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure, including a causal relationship with the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such countermeasure.”  The “loss” can be any type of loss, including (1) death; (2) physical, mental, or emotional injury, illness, disability or condition; (3) fear of physical, mental, or emotional injury, illness, disability or condition, including any need for medical monitoring; and (4) loss of or damage to property, including business interruption loss.

With respect to manufacturers or distributors, the immunity provided under this provision only applies if (A) the countermeasure was administered or used during the effective period of the declaration that was issued with respect to that countermeasure; and (B) the countermeasure was administered or used for the category or categories of diseases, health conditions, or threats to health specified in the declaration. Unless the declaration stated that these protections only apply to countermeasures obtained through a particular means of distribution, the protections will apply regardless of whether the countermeasure was obtained by donation, commercial sale, or any other means of distribution.  A manufacturer or distributor enjoys a rebuttable presumption that “any administration or use, during the effective period of the emergency declaration…, of a countermeasure [was] for the category or categories of diseases, health conditions, or threats to health with respect to which declaration was issued.”

During the period declared under the applicable emergency declaration, or at any time with respect to conduct undertaken in accordance with the declaration State law is pre-empted broadly by this provision, such that “no State or political subdivision of a State may establish, enforce, or continue in effect with respect to a covered countermeasure, any provision of law or legal requirement” that conflicts with the declaration and “relates to the design, development, clinical testing or investigation, formulation, manufacture, distribution, sale, donation, purchase, marketing, promotion, packaging, labeling, licensing, use, any other aspect of safety or efficacy, or the prescribing, dispensing, or administration by qualified persons of the covered countermeasure, or to any matter included in a requirement applicable to the covered countermeasure under this section or any other provision of this Act or under the Federal Food, Drug and Cosmetic Act.”

Other than sovereign immunity and similar protections afforded the United States and its employees and agents, the sole exception to immunity from suit and liability of covered persons under this provision, is a “Federal cause of action against a covered person for death or ‘serious physical injury’ proximately caused by willful misconduct by such covered person.”  Serious physical injury is defined as “an injury that (A) is life threatening; (B) results in permanent impairment of a body function or permanent damage to a body structure; or (C) necessitates medical or surgical intervention to preclude permanent impairment of a body function or permanent damage to a body structure.”  In addition to narrowing substantially the permitted claims that can be asserted, the PHSA imposes numerous burdens on any effort to recover under such a claim: it must be brought by verified complaint plead with particularity, accompanied by a physician affidavit and certified medical records, proved by clear and convincing evidence in the United States District Court for the District of Columbia Circuit, heard by a judicial panel rather than a single judge, subject to extremely limited discovery, and strictly limited as to the recovery of damages.  In addition, a manufacturer defendant may be able to argue certain other exclusions apply warranting a complete dismissal. These and other limitations on the already limited claims make pursuit of any claim daunting for the plaintiff. 

The CARES Act expands the list of products deemed to be necessary during the current public health emergency, COVID-19, and by doing so, provides those manufacturers, distributors and other suppliers who commit to making sure these products are available an enhanced level of protection against liability.  The class of protected companies and individuals is purposefully broad and is designed to incentivize the production and distribution of products needed during the emergency. However, in order to take advantage of any of the protections provided, a manufacturer or distributor must take care to meet the stringent standards and gain the approval and certification of the National Institute for Occupational Safety and Health.    

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