Top Developments in COVID-19 Litigation

April 12, 2021

Jason A. Levine, Ryan Martin-Patterson, Stephen Tagert, Alston & Bird LLP

OVERVIEW

The top COVID-19 litigation developments this past week include: New York’s repeal of a COVID-19 liability shield for nursing homes; an accused price-gouger’s claim that a key provision of the Defense Production Act is void for vagueness; a lawsuit seeking to invalidate South Carolina’s return-to-work order for state employees; and a putative class action demanding overtime pay for time spent receiving on-the-job COVID-19 screenings.

1. New York Repeals COVID-19 Liability Shield for Nursing Homes

Overview: On April 7, 2021, New York Governor Andrew Cuomo signed a bill repealing a  legislative shield against COVID-19 liability for nursing homes and other health care providers.

The Bill: Governor Cuomo signed the Emergency or Disaster Treatment Protection Act in April 2020.  It largely exempted health care providers and nursing homes from criminal and civil liability, with exceptions for willful and reckless conduct, along with gross negligence.  The Act clarified that acts, omissions, or decisions resulting from staffing or resource shortages would not be considered willful or reckless misconduct, nor gross negligence. 

The Act received significant criticism.  Although a repeal attempt failed last June, the legislature limited the Act’s reach in August, tying the immunity shield more closely to health care services relating to the diagnosis or treatment of COVID-19 cases.  The Act came under fire again this past January, after the New York Attorney General released a report showing that COVID-19 deaths in nursing homes in New York were underreported by 6,645.  The new Bill signed by Governor Cuomo repeals the Act in its entirety and removes the liability shield going forward.

Our Take: New York appears to be moving in the opposite direction of a nationwide trend.  While many states have chosen to implement additional liability protections for health care providers and nursing homes against liability related to COVID-19, New York is one of very few states to strip away such protections.  It is difficult to know whether the undercounting of COVID-19 deaths in nursing homes in New York played a role in the passage of this Bill.  In any event, understaffed and underfunded nursing homes in the State may now find themselves at risk of being held financially liable for deaths related to COVID-19.

2. Accused Price-Gouger Challenges Defense Production Act as Void for Vagueness 

Overview: Krikor Topouzian moved to dismiss a criminal information filed against him in the Northern District of Illinois, on the grounds that his prosecution for accumulating and selling N-95 masks at inflated – and illegal – prices is based on an impermissibly vague section of the Defense Production Act (“DPA”).

The Motion to Dismiss: Topouzian argues that the charges against him should be dismissed because he was not afforded a reasonable opportunity to understand what was barred by the DPA.  Topouzian claims he was neither ordered by the government to stop selling N-95 masks, nor told what price was permissible.  He further contends that Section 102 of the DPA, on which the government bases his prosecution, is unclear on its face as to what is “in excess of prevailing market prices.”  Topouzian therefore claims that Section 102 is void for vagueness on grounds of fair notice and discriminatory enforcement.

Our Take: We have previously covered other price-gouging actions taken by the government, including under state statutes very similar to the challenged provision of the DPA.  If the court were to grant Topouzian a dismissal on vagueness grounds (which we consider unlikely), and that decision were upheld on appeal (which we consider even more unlikely), this could have a cascade effect on price-gouging statutes and enforcement actions generally.  The government’s response is due on April 19, and we will follow developments in this case.   

3.  ACLU Sues South Carolina Governor Over Return-to-Work Order

Overview: The ACLU sued South Carolina Governor Henry McMaster, among other defendants, alleging that his return-to-work order for state employees violates the South Carolina Human Affairs Law and the South Carolina Constitution.

The Complaint: In Executive Order 2021-12, Governor McMaster ordered state agencies “to immediately expedite the transition back to normal operations,” including by submitting a “plan to expeditiously return all non-essential employees and staff to the workplace on a full-time basis.” The ACLU alleges that the Order and its implementing Memorandum will require state employees with disabilities and caretaking responsibilities to return to work in person regardless of their health or ability to find appropriate care coverage and will allow telework only for employees who had such arrangements before the pandemic.  The complaint further asserts that many employees cannot realistically change their children’s school or after-school arrangements as the Executive Order would effectively require them to do.  And although the Memorandum allows for a temporary reasonable accommodation for employees with illnesses identified as high-risk by the CDC until such employees have had an opportunity to be vaccinated, the complaint contends that such accommodation is insufficient for those for whom the vaccine may be contraindicated or who may have disabilities not identified as high-risk by the CDC.

Although the complaint discusses a number of laws relating to disability discrimination, the complaint asserts only two causes of action: (1) violation of the separation of powers and the non-delegation clauses under the South Carolina Constitution, and (2) ultra vires action because the Governor allegedly exceeded his emergency authority to provide for the “safety, security, and welfare of the State” in issuing the Order.  The ACLU asks the court to enjoin implementation of the Executive Order.

Our Take: As the COVID-19 vaccine has become more available, states and employers will continue to have to navigate the ways the pandemic has affected employees’ lives.  Whether or not this lawsuit succeeds, it is a reminder for employers that the transition back to in-person activities may be difficult for employees who completely reoriented their lives a year ago.  And although the claims in this case focus on the limits on governmental authority, some of the concerns raised in the complaint about accommodation of disabilities may be repackaged in suits against private employers.

4. Employees Sue San Diego Medical Group for Overtime for COVID Screenings

Overview: On March 30, 2021, a current employee of Children’s Specialists of San Diego brought a putative class action on behalf of current and former employees against the health care provider, alleging they are owed unpaid wages for time spent undergoing COVID screenings at work.

The Complaint: According to the allegations in the complaint, employees at Children’s Specialists were routinely asked to work during their meal and other breaks without being compensated for overtime.  In addition, employees were allegedly so busy that they were often essentially required to come to work early and stay late without compensation, in purported violation of California labor laws.  Children’s Specialists also assertedly asked plaintiffs to use their personal cell phones for work tasks, including clocking in and out, without reimbursement, and to appear at work ten minutes early for COVID screening, without compensation, in violation of California labor laws.  The putative class consists of all current and former employees who were harmed by these practices in the last four years.

Our Take: Suits for compensation or overtime related to pre-work COVID-19 screenings are becoming more common; Walmart and Amazon are also facing similar class actions.  Employers who require hourly employees to undergo pre-work screenings for COVID-19 can expect to face litigation over compensation for such screenings, especially in plaintiff-friendly states like California.

Jason Levine is a commercial and antitrust litigation partner in the Washington, D.C. office of Alston & Bird LLP.  Ryan Martin-Patterson and Stephen Tagert are associates at the firm.