Will Drug and Medical Device Manufacturers Combating COVID-19 be Subject to Tort Liability?
In an effort to combat the COVID-19 pandemic President Donald Trump has invoked the Defense Production Act (“DPA”), specifically ordering General Motors (“GM”) to manufacture ventilators. Of course, GM does not normally produce ventilators. Just this week the President, threatening to invoke the DPA, reached an agreement with 3M Company as to where and to whom it would deliver its protective face masks. As the number of diagnosed cases and deaths increase in the United States, it is likely that other companies will be under executive orders to produce products outside their areas of expertise. The DPA is a powerful law that was written in the spirit of the industrial mobilization that the United States implemented during World War II and could very well help to carry us through this pandemic. But what will happen if one of GM’s ventilators contains a manufacturing defect? What if a drug or medical device company under executive orders produces a product that harms a patient, medical treater, or someone else? Can those companies be subject to liability? The answer lies in the interplay between the DPA and the Public Readiness and Emergency Preparedness (“PREP”) Act.
The PREP Act
The PREP Act authorizes the Secretary of the Department of Health and Human Services to issue a Declaration that provides immunity from liability for any loss relating to or resulting from countermeasures taken to fight diseases or other threats to public health. This immunity applies to entities and individuals involved in the development, manufacturing, distribution and administration of any countermeasures described in the Declaration. The only broad exception to this immunity is in the case of “willful misconduct.”
While the DPA was passed in 1950, the PREP Act was enacted in December of 2005 as a means of protecting pharmaceutical companies who were attempting to create a vaccine for the avian influenza and to protect the public health in the case of a pandemic disease outbreak. The PREP Act provides immunity for those performing “covered countermeasures” and specifically covers “manufacturers” and “distributors.” It states that a “covered countermeasure” must address a “qualified pandemic or epidemic” and specifically identifies drugs and medical devices created to fight pandemics or epidemics as covered countermeasures. Also covered are “licensed healthcare professionals” and a wide variety of individuals including “volunteers.”
The March 17, 2020, Declaration
The Department of Health and Human Services issued its Declaration in response to COVID-19 on March 17, 2020, and backdated its enforcement to February 4, 2020. It currently expires on October 1, 2024, but can be extended if necessary. It is a wide-ranging Declaration broadly defining covered countermeasures as “any antiviral, any other drug, any biologic, any diagnostic, any other device, or any vaccine used to treat, diagnose, cure, prevent or mitigate COVID-19” or its transmission. It also covers any device used in the administration of such a product and “all components and constituent materials of any such product.” The Declaration has no geographical limitation and defines the covered population as “manufacturers and distributors” as well as individuals using or prescribing the device or drug.
The only exception for immunity is for “willful misconduct” that causes a “serious physical injury.” A “serious physical injury” is an injury that is life-threatening, or results in or requires medical or surgical intervention to preclude permanent impairment of a body function or results in permanent damage to a body structure. “Willful misconduct” is defined under the Act as an act or failure to act that is taken (1) to intentionally achieve a wrongful purpose; (2) knowingly without legal or factual jurisdiction; and (3) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit. This is a very high standard, indeed, and is more restrictive than typical state law standards.
The PREP Act offers broad substantive protections. It includes important procedural provisions that provide additional protection for manufacturers, distributors, and others covered under the Act. It also authorizes the “Countermeasures Injury Compensation Program” to compensate eligible individuals who suffer a serious physical injury as a result of a countermeasure administered under the Declaration. Funds must be appropriated into this Program by Congress in order for any claims to be paid. The causal connection between the countermeasure and the serious physical injury must be supported by compelling, reliable, valid, medical, and scientific evidence in order for the individual to be considered for compensation.
A tort claim may be filed by the injured person only if no funds are appropriated by Congress, if more than 240 days have passed since the claimant filed the claim, or if the claimant decides not to take the compensation. All actions against a covered manufacturer must be venued in the U.S. District Court for the District of Columbia. This prohibits any sort of venue shopping by plaintiff’s attorneys and forces suit in what is likely an inconvenient jurisdiction for most plaintiff’s attorneys. Additionally, the Act preempts state tort law and requires heightened pleading standards similar to those required in fraud actions. Along with the Complaint, a plaintiff must file an affidavit by a physician who did not treat the plaintiff certifying that the plaintiff suffered serious physical injury or death as alleged and that it was proximately caused by the administration or use of a covered countermeasure, as well as certified medical records documenting the injury or death and the proximate causal connection. If the defendant moves to dismiss the complaint, the court is required to stay discovery until it has made its ruling on the motion. The Act also allows for an automatic right to an interlocutory appeal of any decision denying a dispositive motion. Likewise, in the event that an appeal is taken, discovery is stayed until the appeal is ruled upon. As far as recovery, a plaintiff cannot recover “collateral source payments,” such as medical bills or other expenses covered by insurance or Medicare.
Immunity provided under the PREP Act has rarely been challenged and, according to the U.S. Department of Health and Human Services, never successfully. For example, in Parker v. St. Lawrence Cnty. Public Health Dep’t, 102 A.D.3d 140 (2012), the Appellate Division of the New York Supreme Court upheld the dismissal of a lawsuit filed against a county that conducted a school-based vaccination clinic as part of the response to the H1N1 virus. The appellate court found that the county was protected under the PREP Act’s immunity provisions and that its conduct did not rise to the level of “willful misconduct.”
In Kehler v. Hood, 2012 WL 1945952 (E.D. Mo.), the third-party manufacturer was dismissed from the case where plaintiff conceded that third-party manufacturer was covered by the PREP Act and there was no allegation of willful and wanton misconduct. The case was remanded back to state court for it to determine the outcome of plaintiff’s claim that a physician and his employing hospital failed to obtain the plaintiff’s informed consent prior to administrating a H1N1 vaccination which resulted in plaintiff suffering injuries.
The PREP Act affords broad protection for companies such as GM who are under executive order to produce products outside of their core business to fight the COVID-19 virus. It also affords protection to companies like 3M who are specifically combating COVID-19 via ramped up production of masks. Given that the PREP Act specifically cites drug and device manufacturers responding to a pandemic being granted immunity, it is likely that any drug or device companies producing products to fight the COVID-19 pandemic–whether under executive order or not–can do so with very little risk of liability.
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