Kirkland, WA / USA - circa March 2020: Street view of the Life Care Center of Kirkland building, ground zero of the coronavirus outbreak in Kirkland.

The PREP Act and Nursing Homes’ Fight to Move COVID Claims to Federal Court

By Kaitlynn Milvert

As nursing homes face wrongful death claims amid the COVID-19 pandemic, they increasingly have pursued a common litigation strategy: attempting to reroute state tort lawsuits to federal court.

A recent ruling in the Third Circuit Court of Appeals rejected this tactic. As the first court of appeals ruling on this issue, the decision avoids extending a federal statute limiting pandemic liability into unprecedented areas and defines at least some limits on the statute’s effect on state tort suits.

Nursing Home Litigation Strategy Under the PREP Act

Nursing homes’ efforts to move state tort suits en masse to federal court hinge on the interpretation of a particular federal statute: the Public Readiness and Emergency Preparedness Act, or PREP Act.

The PREP Act empowers the Secretary for Health and Human Services (HHS) to issue a declaration that limits liability related to the use or administration of “covered countermeasures,” such as vaccines, ventilators, or personal protective equipment (PPE). During the COVID-19 pandemic, HHS first issued such a declaration in March 2020.

The PREP Act scheme displaces traditional liability schemes in two main ways. First, the Act sets up a compensation fund for certain injuries directly resulting from the use or administration of countermeasures. Second, for claims involving “willful misconduct,” the Act provides a federal cause of action that can be brought only in the federal district court for the District of Columbia.

But nursing homes’ arguments — which HHS, concerningly, has seemed to endorse in an Advisory Opinion on the issue — go several steps further.

Nursing homes and their allies have contended that the PREP Act sets up a form of “complete preemption” that broadly bars state tort claims, including even those related to the failure to use countermeasures. Instead, they argue, plaintiffs can only seek relief through the federal compensation fund or through the PREP Act’s “willful misconduct” claim.

Embracing the argument for this broad “complete preemption” and rerouting claims into federal court would represent an unprecedented expansion of preemption under the PREP Act. It would sweep into the Act’s scope not only claims for injuries related to specific pandemic-related measures — such as vaccine administration or product defects in PPE — but also far broader claims related to failures to employ appropriate countermeasures to prevent the spread of infection.

The Third Circuit Decision: Some Limits on PREP Act Preemption

The Third Circuit recently issued the first federal court of appeals decision on the issue in Estate of Maglioli v. Alliance HC Holdings. In its ruling, the court declined the nursing home’s invitation to embrace an all-encompassing interpretation of PREP Act preemption.

The court instead reasoned that, even if the PREP Act provides complete preemption for claims of “willful misconduct,” its preemptive effect would not clearly extend to the other state-law tort claims that the plaintiffs had brought.

The Third Circuit accordingly determined that the lawsuit did not belong in federal court and should instead proceed in state court where it was originally filed. Per the court, the plaintiffs had “asserted only garden-variety state-law claims, so state court is where these cases belong.”

The Third Circuit’s decision is largely consistent with most district court decisions that have confronted the question of whether to hear these types of cases in federal court or to send them back to state court. The decision thus affirms, rather than changes course in, the emergent line of cases concerning nursing home liability. It also sets important persuasive precedent ahead of other courts of appeal where similar cases are pending.

To be sure, plaintiffs in COVID-19 wrongful death suits against nursing homes still face significant — and perhaps insurmountable — obstacles. A majority of states have immunized nursing homes from at least some types of liability through legislation or executive action at the state level. Moreover, the PREP Act itself may still preempt some claims that state courts find to fall within its scope.

In deciding against allowing nursing homes to push state tort lawsuits into federal court, the Third Circuit’s decision in no way throws the doors open for nursing home liability in COVID-19-related suits. Crucially, though, the ruling does avoid contorting the PREP Act’s alternative liability scheme into a tool for systematically rerouting all state tort claims into a separate federal system that is likely to prove even less viable for those seeking redress.

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