New HHS Advisory Opinion Confirms Complete Federal Preemption for PREP Act Cases and Applicability of the Act’s Defenses in Non-Use Situations

Seyfarth Shaw LLP

The US Department of Health and Human Services (“HHS”) issued an Advisory Opinion (“21-01”) Friday, reinforcing how the Public Readiness and Emergency Preparedness Act (“PREP Act” or the “Act”) (1) provides complete preemptive federal jurisdiction and invites jurisdictional discovery; and (2) applies to cases where the alleged harm results from failure to use (and even refusal to use) a covered countermeasure when that failure arises out of the conscious allocation and prioritization of the countermeasures.

As we have reported, the PREP Act, 42 U.S.C. § 247d-6d, affords broad federal immunity to a “covered person” with respect to claims relating to the authorized administration or use of a “covered countermeasure.” The scope of the federal immunity provided by the PREP Act is far-reaching. As a general matter, if all the elements of immunity are met, a covered person is protected from suit and liability under federal and state law with respect to “all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure.”1 This immunity includes claims arising out of contract and tort, and it covers personal injury, damage to property, and business interruption loss.

As we previously explained, HHS Secretary Alex Azar has recently amended his Declaration, which applies the Act to COVID-19 pandemic responses, to (1) include interstate telehealth covered countermeasures, (2) expand its reach to cover additional means of private distribution, (3) invoke federal preemptive jurisdiction for claims where the Act is raised as a defense, and (4) incorporate past Advisory Opinions into the Declaration.2

I. The PREP Act Provides Complete Preemptive Federal Jurisdiction.

Advisory Opinion 21-01 expands on the language of the amended Declaration to clarify that the PREP Act provides complete preemptive federal jurisdiction for cases in which it is a defense: “The sine qua non of a statute that completely preempts is that it establishes either a federal cause of action, administrative or judicial, as the only viable claim or vests exclusive jurisdiction in a federal court. The PREP Act does both.

In addition, the Advisory Opinion cites to the Secretary’s statement in the Fourth Declaration that “there are substantial federal legal and policy issues, and substantial federal legal and policy interests within the meaning of Grable & Sons Metal Products, Inc. v. Darue Eng’g. & Mf’g., 545 U.S. 308 (2005), in having a unified, whole-of-nation response to the COVID–19 pandemic among federal, state, local, and private-sector entities.”

Therefore, HHS determines that once invoked, the PREP Act provides complete preemptive federal jurisdiction, and the federal court retains the case to decide whether the immunity and preemption provisions apply; if they do not apply, then the court would try the case as it would a diversity case. HHS further notes that, even in the case of plaintiffs seeking to avoid federal jurisdiction through artful pleading, “federal courts are free to entertain discovery to ascertain, for jurisdictional purposes, the facts underlying the complaint.”

II. The PREP Act May Apply in Non-Use Cases.

Advisory Opinion 21-01 further clarifies that the PREP Act protections apply in cases where the complainant alleges harm from the defendant’s complete failure—or even refusal—to use covered countermeasures, particularly in those cases where such a failure arises from the conscious allocation of scarce resources among potential countermeasure recipients. Contrary to a host of recent court cases with different holdings, HHS opines that:

Where a facility has been allocated a scarce therapeutic purchased by the federal government and that facility fails to administer that therapeutic to an individual who meets the requirements of the FDA’s authorization, approval, or license, and whose physician prescribes that therapeutic, then the facility’s refusal to administer that therapeutic could still trigger the PREP Act assuming the non-use of the therapeutic was the result of conscious decision-making.

Put another way, the “decision-making that leads to the non-use of covered countermeasures by certain individuals is the grist of program planning, and is expressly covered by the PREP Act.” However, cases that involve the complete failure to use covered countermeasures (such as the failure to purchase any countermeasures, rather than as part of an overall plan) may not result in PREP Act immunity. Once again, federal jurisdictional discovery may clarify the facts of the underlying complaint to avoid this hole from swallowing the Act’s application as “plaintiffs become more adept at fashioning their pleadings.”

III. HHS’s Apparent Frustration With Recent Court Cases Interpreting the PREP Act.

The most recent Advisory Opinion also appears to evince HHS’s frustration with private businesses’ apparent failure to make full use of the PREP Act and the federal courts’ apparent failure to properly interpret the PREP Act.

In a previous advisory opinion (now incorporated into the Declaration), HHS has stressed how the PREP Act is available not just for health care workers, but also for use by private businesses, schools, and places of worship, and exists to “remove the legal uncertainty and risk” from these organizations engaging in combatting the pandemic. HHS has gone to even further lengths to call out a particular court decision (relied on by numerous other recent courts in their decisions not to apply the PREP Act), stating ”the court was wrong” in its interpretation of the Act.

The most recent Advisory Opinion continues in this vein, criticizing recent courts’ “‘black and white’ view” of the Act’s application as contrary to the plain language of the statute, while noting that courts appear “perplexed” by what circumstances may trigger federal PREP Act jurisdiction and immunity.

Whether federal courts will follow HHS’s recent guidance and interpretation of the Act remains a key question in how broadly the PREP Act will apply to cases moving forward.

1.  Exceptions apply to cases of wanton and willful harm that results in death or serious injury. These cases must be transferred to the District Court for the District of Columbia for resolution by a three-judge panel and may be subject to federal enforcement actions.

2.  While past advisory opinions have been incorporated into the Secretary’s official Declaration, this recent Advisory Opinion sets forth the current views of the HHS Office of the General Counsel. It is not a final agency action or a final order, and it does not have the force or effect of law.

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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