As the coronavirus outbreak in the U.S. approaches the beginning of its sixth month, Congress continues to debate whether and to what extent the federal government should provide further economic support, relief, and stimulus. The House of Representatives and the Senate recently have proposed two very different coronavirus relief packages and efforts to reconcile the policy differences reflected in the two different approaches have to date not been successful. But while it remains to be seen what if anything ultimately may emerge, among the critical aspects of the proposed packages worth considering are the liability shield provisions in the proposed Senate package. The Senate liability shield bill, if enacted, could significantly diminish the potential liabilities of businesses and other organizations for the transmission of the COVID-19 disease in their facilities. These liability restrictions could have significant implications for these organizations’ liability insurers as well. And, as discussed below, the adoption of the kinds of liability restrictions that the Senate has proposed could have implications – at least indirectly —  for the organizations’ D&O insurers, too.


As part of the coronavirus relief package the Republican leadership released on Monday, July 24, 2020, the GOP lawmakers introduced a bill called the Safe to Work Act (here). In its preamble, the bill notes that “one of the chief impediments as this public-health crisis has unfolded is the risk of litigation.” The bill notes that “small and large businesses, schools, colleges and universities, religious, philanthropic and other non-profit institutions, and local government agencies confront the risk of a tidal wave of lawsuits accusing them of exposing employees, customers, students and worshipers to coronavirus.” Health care workers, the bill notes, also face the threat of lawsuits from their efforts to fight the virus. The bill notes further that because of these risks, these various types of institutions may decline to reopen.


In order to protect these institutions from these types of potential liability exposures, the bill proposes a number of procedural and substantive measures.


First, the bill mandates that all Coronavirus Exposure Actions (a defined term in the legislation) filed between December 1, 2019 and October 1, 2024 (or such other date as the U.S. Department of Health and Human Services may designate) must be filed in federal court. Any action filed in state court may be removed to federal court.


Second, in order to establish liability, the bill would require the Coronavirus Exposure Action plaintiff to establish gross negligence, defined as a “conscious, voluntary act or omission in reckless disregard” of a duty of case, and must also show that the defendant organization failed to make “reasonable efforts” to comply with the applicable federal or state public health guidelines. As noted in a July 27, 2020 Law 360 article about the Senate relief package (here), the reasonable efforts to comply provision “means that a grossly negligent defendant can possibly escape liability if it can establish it simply tried, but failed, to comply with coronavirus safety measures.”


Third, the proposed bill would bar noneconomic damages, such as pain and suffering, unless the plaintiff can establish that a defendant committed willful misconduct. Under the bill, punitive damages would only be available if the plaintiff establishes willful misconduct. The amount of punitive damages cannot exceed the amount of compensatory damages. The bill defines willful misconduct as an intentional act to achieve a wrongful purpose or the disregard of known or obvious risk “that is so great as to make it highly probable that the harm will outweigh the benefit.”


The bill contains a number of other interesting provisions that would suspend a host of other established legal standards and practices. For example the bill would set aside the so-called “collateral source doctrine,” pursuant to which under the laws of many states reimbursements for their injuries that claimants may have obtained from other sources, such as insurance or government reimbursements, are disregarded for purposes of calculating damages. Defendants would only be liable for their share of damages proportionate to their liability, rather than being jointly and severally liable. Perhaps most controversially of all, the bill includes a “loser pays” provision pursuant to which prevailing defendants may seek compensatory damages if the claim turns out to be meritless.



The efforts of Congress to come up with a continued relief package have so far been unproductive; it remains to be seen whether anything ultimately will be passed (although the looming November 3, 2020 election date may help concentrate the legislators’ minds). Similarly, it remains to be seen whether any form of the Safe to Work Act ultimately will make its way into law. It is important to note in that regard, however, Mitch McConnell, the Senate Majority Leader, has said that providing a liability shield for businesses and health care providers is a “red line issue” for the enactment of the next Congressional relief package.


While the various provisions of the proposed Act may never actually become law, the bill itself is worth considering. It is one of the most far-reaching tort relief packages to be proposed. The heightened liability standards, procedural safeguards, and damages limitations all are very extensive, and some of the lesser provisions (such as the restriction of the collateral source rule and the institutions of a “loser pays” model) reach far beyond many tort reform initiatives.


If the proposed measures were in fact to become law, the Act’s various provisions would provide significant protection not only for protected organizations and institutions, but also for their liability insurers as well. It seems likely that the bill would not only allow the various organizations to better defend themselves, but it would in many circumstances discourage prospective claimants from filing their actions in the first place.


While the potential benefit from the Act for liability insurers is apparent, there may also be other, arguably less apparent potential benefits for D&O insurers as well. To be sure, the bill itself provides no direct protection for organizations against claims for purely economic injury. However, there have already been a number of defendant companies that have been hit with securities class action lawsuits after the outbreak of the coronavirus in the companies’ facilities. These companies include two cruise lines – Norwegian Cruise Lines (about which refer here) and Carnival Corporation (here) – and one private prison system company, the Geo Group (here).


Among the concerns that organizations face as result of the outbreak in their facilities is the litigation risk the companies face as a result of the outbreak. If in the future other companies experiencing a coronavirus outbreak in their facilities are less likely to be sued and better able to defend themselves, it is possible that the companies would, in addition to a reduced likelihood of direct coronavirus liability litigation, also face a reduced possibility of a follow-on D&O claim.


Until we know for sure whether the liability shield proposed in the Senate actually gets enacted into law, much of this discussion and analysis is speculative. However, while the provisions may not ever be enacted into law, I thought it was important to point out here the legislation’s possible but also possibly not apparent potential indirect benefit for D&O insurers. Given these possibilities, D&O insurance practitioners may now be more attentive to what might happen in Congress with respect to the proposed liability shield.


One final note. In addition to the proposed federal liability shield, a number of states and localities have enacted their own versions of temporary liability shields, primarily for health care professionals. These measures generally are shorter in duration, more limited in scope, and also lack a number of measures that the proposed Senate bill would implement. Nevertheless, in certain situations, these state or local measures could be relevant to the extent they provide institutions and individuals protection from potential liability.