Federal Court Ruling Casts Doubt on Nursing Homes’ Ability to Use PREP Act to Remove State-Law Claims

Troutman Pepper

Troutman Pepper

Who Needs to Know
All health care providers, particularly those with operations in New Jersey.

Why It Matters
This decision casts doubt on the ability of nursing homes to rely on the PREP Act to shield them from liability against state-law claims or, at the very least, to remove such claims to federal court.

On August 12, the U.S. District Court for the District of New Jersey ruled that the Public Readiness and Emergency Preparedness Act (PREP Act) could not be used to remove to federal court state-law claims against a nursing home for its alleged failure to follow appropriate safety precautions.[1] In this case, the children of a nursing home resident who died as a result of COVID-19 brought various state-law claims against the nursing home, alleging that the nursing home’s lack of safety precautions caused their father’s death. The nursing home argued that these state-law claims were covered and preempted by the PREP Act and filed a notice to remove the case to federal court. The federal court disagreed with the nursing home and remanded the case to New Jersey state court.

The PREP Act

Enacted in 2005, the PREP Act authorizes the Secretary of Health and Human Services (the Secretary) to provide certain individuals and entities (referred to as “covered persons”) with immunity from liability arising out of or related to the manufacture, distribution, administration, or use of certain covered medical countermeasures (referred to as “covered countermeasures”), except for claims of willful misconduct.[2] The Act defines “covered countermeasures” as “pandemic or epidemic product[s]” or “drug[s] or device[s]” (as defined by the FDA) that are authorized for emergency use.

In March 2020, the Secretary published several declarations providing immunity for certain countermeasure activities related to the COVID-19 pandemic. One of these declarations expanded the definition of “covered countermeasures” to include drugs, diagnostics, devices, or vaccines used to treat, diagnose, or mitigate COVID-19 or its transmission, or any device used in the “administration” of one of those products.[3] The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) further expanded this definition by including OSHA-approved respiratory protective devices (i.e., face masks) as a “covered countermeasure.”[4]

In these contexts, the Secretary recently clarified that the term “administration” means: (1) the actual provision of countermeasures to recipients; (2) the activities and decisions directly relating to the distribution and dispensing of countermeasures to recipients; (3) the management and operation of countermeasure programs; or (4) the management and operation of locations for the purpose of distributing and dispensing countermeasures.

Finally, the PREP Act contains an explicit preemption provision. This provision prohibits any state from establishing or enforcing a law or legal requirement that is different from, or in conflict with, the PREP Act and that relates to any activity involving the development, manufacture, or administration of the covered countermeasures.[5]

The New Jersey Litigation

On May 19, 2020, the children of a nursing home resident who died as a result of COVID-19 filed a class action lawsuit against their father’s nursing home and related parties (including individuals) in New Jersey Superior Court. The complaint alleged, among other things, negligence, wrongful death, and medical malpractice claims arising out of the deaths of at least 83 residents at the nursing home as a result of COVID-19. The complaint was brought on behalf of all residents of the nursing home who died as a result of COVID-19.

To support these claims, the children accused the nursing home of failing to follow appropriate safety precautions, including those issued by the U.S. Centers for Disease Control and Prevention (CDC) and the New Jersey Department of Health. Among the specific allegations were claims that the nursing home failed to monitor outside visitors, food preparation, employees, and other residents. The children also alleged that the nursing home failed to implement proper protocols and procedures, such as providing personal protective equipment, including face masks, to certain staff members.

On May 29, the nursing home filed a notice to remove the case from New Jersey state court to federal court on the grounds that the PREP Act preempted the lawsuit.[6] Specifically, the nursing home argued that the PREP Act provides liability protections for the use of pandemic and epidemic products, including face masks, and therefore covers the claims alleged in the complaint. The nursing home also argued that it fell within the definition of “covered persons” under the Act.

The Federal Court’s Decision

On August 12, the federal court (to which the nursing home sought to remove the case) rejected the nursing home’s attempt at removal and ruled that the PREP Act does not preempt the state-law claims. Specifically, the court held that PREP Act preemption does not mandate a federal forum; it mandates only that state law cannot conflict with the Act’s provisions.

Moreover, the court ruled that, even if the PREP Act did mandate a federal forum, it does not cover the state-law claims for purposes of preemption, because PREP Act immunity only covers “the administration and distribution of products meant to curb the spread of COVID-19,” not the quality or level of care received by patients in health care facilities. Critically, in so ruling, the court accepted the plaintiffs’ argument that the PREP Act protects “those who employ countermeasures, not those who decline to employ them.” The court also relied on the fact that some of the plaintiffs’ allegations of negligence, such as the facility’s failure to comply with “social distancing, quarantining [and] lockdowns,” are not covered by the PREP Act at all.

Key Takeaways for Nursing Homes

From a practical perspective, this decision casts doubt on the ability of nursing homes to rely on the PREP Act to shield them from liability against state-law claims or, at the very least, to remove these claims to federal court. Here, the court outright rejected the argument that state-law claims are preempted by the PREP Act and further suggested that these claims are not covered by the PREP Act at all. Although this decision is not binding in other jurisdictions, it is the first reported decision addressing PREP Act immunity in the context of state-law claims arising out of COVID-19 deaths. As such, it would not be surprising to see other courts give the New Jersey district court’s opinion substantial weight if asked to evaluate these issues.

Even before this decision, it was far from clear that nursing homes could rely on PREP Act immunity to shield them from liability for state-law claims made for alleged failures to follow COVID-19 safety guidelines. As the court pointed out, the PREP Act was designed to protect the administration (or possibly the lack thereof) of a vaccine or drug during a pandemic. It was not designed to protect facilities from complying with appropriate levels and quality of patient care. Many state and CDC safety guidelines, such as cohorting, weekly testing, social distancing, gloves, contact tracing, and visitor restrictions, do not fit under the definition of “covered countermeasures” under the Act.

On the flip side, the federal court was clear that it was not ruling on whether the nursing home was actually immune from liability under the PREP Act, because it lacked jurisdiction to do so. The court, instead, deferred that issue to the state court. The federal court seemed to accept the idea that nursing homes are “covered persons” under the Act.

For the time being, nursing homes and other health care providers should heed the warnings of this decision and should not rely on the PREP Act to provide immunity or a removal mechanism when dealing with state-law claims. Instead, facilities are better served by relying on the various state-specific executive orders and legislation that provide varying levels of immunity during the COVID-19 pandemic.

Troutman Pepper has been closely tracking and monitoring executive and legislative developments bearing on immunity for nursing homes and other health care providers. We have developed a tracking tool that follows operational guidance, immunity provisions, and whistleblower laws in 17 jurisdictions.

[1] Estate of Maglioli v. Andover Subacute Rehab. Center I, No. 2:20-cv-06605-KM-ESK (D.N.J. Aug. 12, 2020).

[2] 85 Fed. Reg. 21013 (Apr. 15, 2020).

[3] 85 Fed. Reg. 15202 (Mar. 17, 2020).

[4] 42 U.S.C. § 247d-6d(i)(1)(D).

[5] 42 U.S.C. § 247d-6d(b)(8).

[6] The nursing home also argued removal under 28 U.S.C. § 1442(a)(1), which provides removal for claims against persons “acting under” the United States, its agencies, or its officers. The court rejected this argument as well, though we do not discuss it here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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