A recent federal appeals court decision appears to put nursing homes at risk of lawsuits related to deaths of patients during the COVID-19 pandemic. It also might increase the risk for other healthcare entities.

The U.S. Court of Appeals for the 3rd Circuit held that nursing homes were not protected by the 2005 Public Readiness and Emergency Preparedness (PREP) Act in the way they thought, explains Drew Graham, JD, partner with Hall Booth Smith in New York City.

One aspect of the PREP Act limited liability for healthcare unless plaintiffs could show “willful misconduct” in causing the alleged injuries, Graham explains. Even when willful misconduct was alleged, those were to be transferred to a federal court in Washington, DC. However, the recent 3rd Circuit ruling says if no willful misconduct is alleged, and the claim is for ordinary negligence, those cases belong in state court.

The result is nursing homes might be subject to far more COVID-19 claims than they thought, Graham says. Other healthcare entities also might have reason to worry.

“One of the things we are concerned about is this being a ‘nursing homes first’ situation. With all the attention being on nursing homes right now, potentially this could involve other healthcare organizations,” Graham says. “As interpretations of this ruling begin to solidify, we are concerned that it might be an interpretation that is fully inconclusive of the hospital, allied institutions, pharmacies, first responders.”

As the first appellate decision on this issue, the 3rd Circuit’s ruling could affect three other pending cases that hinge on interpretations of the PREP Act, Graham says. Much of the risk to healthcare entities comes from the lack of consistency if COVID-19-related cases are not handled at the federal level.

“If the interpretation becomes inconsistent from state to state or county to county, it could potentially impact all individuals who participated in the disaster response, everyone who would be covered by the PREP Act,” Graham explains. “This has been characterized as a nursing home issue, but I don’t see any limitation by the 3rd Circuit that means it couldn’t be applied in the same way to a hospital or other healthcare organizations.”

There might be more concern as state protections enacted for COVID-19 begin to expire.

“The big takeaway is that the appellate court interpretation of the PREP Act has begun, and we expect it to pick up steam in the next two to three months,” Graham says. “If you have not been following it, now is the time to start paying attention to what the court limitations are likely to be. Ultimately, it looks like it will be state court judges who decide the interpretation of that act.”

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