While most businesses wait for Congressional passage of liability protections from COVID-19 related losses, those actively involved in COVID countermeasures may take steps to receive statutory immunity now under the Public Readiness and Emergency Preparedness Act (PREP Act).1 Enacted in 2005, the PREP Act grants the Secretary of the Department of Health and Human Services authority to issue a Declaration that provides liability immunity to individuals and entities who meet coverage criteria (Covered Persons) against claims for losses caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of certain medical countermeasures (Covered Countermeasures), with limited exceptions such as willful misconduct. Since 2005, the HHS Secretary has issued Declarations in other health emergencies such as the Ebola and Zika outbreak. In early 2020, as COVID-19 was detected within the U.S., the Health and Human Services (HHS) Secretary issued a Declaration, effective Feb. 4, 2020, for certain medical products to be used against COVID-19.2
On May 19, 2020, the HHS General Counsel issued an omnibus advisory opinion to address questions arising about the scope of PREP Act immunity during the COVID-19 pandemic. Importantly, that advisory opinion concludes:
“Persons seeking PREP Act immunity are responsible for determining whether their products are Covered Countermeasures, whether a person or entity is a Covered Person, whether reasonable precautions have been taken to facilitate the safe use of Covered Countermeasures, and, in general, whether immunity applies to them and their activities.”
This bulletin addresses key questions to help determine whether PREP Act immunity may apply to those actively involved in the fight against the COVID-19 pandemic. As a practical matter, those who may want the protections of PREP Act immunity in the future should take steps now to answer these questions and make the determination.
What is the scope of immunity under the PREP Act and Declaration?
If all of the pre-conditions of the PREP Act and the Declaration are met, immunity broadly covers claims for tort and contractual losses and losses relating to compliance with federal, state, and local laws, regulations, and other legal requirements. PREP Act immunity must be read together with its broad, express preemption of state laws and state law claims.3 For federally-distributed Covered Countermeasures, immunity generally began on or after Feb. 4, 2020, extending through Oct. 1, 2024. For covered countermeasures outside of the federal distribution channel, the immunity period generally starts on Feb. 4, 2020, but will end upon the earlier of Oct. 1, 2024, or upon a Declaration ending of the public health emergency by HHS.
Instead of costly and uncertain litigation, those eligible individuals seek compensation from the Covered Countermeasures Process Fund for losses from serious personal injury (including death) or property damages caused by administration or use of a Countermeasure. HRSA administers the Countermeasures Injury Compensation Program (CICP) that handles requests for benefits for qualifying losses. The CICP provides a no-fault, speedy compensation system. For qualifying, serious injuries, CICP pays reasonable and necessary medical benefits as well as lost wages. Survivors may receive death benefits. Since CICP is a payer of last resort, payouts may be reduced by amounts from collateral sources such as other insurance coverage and workers’ compensation.
What are Covered Countermeasures?
Read together, the PREP Act and COVID-19 Declaration limits immunity to administration or use of Covered Countermeasures which are generally approved by the Food and Drug Administration (FDA), cleared, or licensed drugs, biologics, devices, and vaccines used to treat, diagnose, cure, prevent, or mitigate COVID-19. For this purpose, Covered Countermeasures also include items and products FDA authorized for emergency use (EUA), an Investigational Device Exemption (IDE) or an investigation new drugs application (IND); or described in an Emergency Use Instruction (EUI) by the CDC. Respiratory protective devices approved by the National Institute for Occupational Safety and Health (NIOSH) may be covered even if they may not be FDA regulated as a medical device.
On Dec. 3, 2020, the HHS Secretary expanded the scope of the COVID-19 Declaration to include health care personnel using telehealth to order or administer Covered Countermeasures, such as diagnostic tests for which FDA has granted an EUA for patients outside the state where the health care provider is licensed. Due to the PREP Act’s broad preemption authority, this expansion applies even within states that have not yet permitted telehealth services from providers in other states.
HHS is using best efforts under the circumstances to maintain a publicly available, electronic list of qualifying Covered Countermeasures. Even so, the PREP Act extends coverage to an entity or individual that “reasonably could have believed” that the product was a Covered Countermeasure and otherwise meets the requirements of the PREP Act and the Declaration.
Arguably, immunity could be available to manufacturers and distributors of PPE, diagnostic tests, and vaccines, as well as to providers and suppliers that administer tests or vaccines and/or that treat COVID patients (and even suspected COVID patients). But, each person who is potentially immune should make reasonable effort at this determination.
Who are Covered Persons?
Read together, the PREP Act and COVID-19 Declaration provide immunity to entities and individuals engaged in manufacturing, testing, development, distribution, administration, or use of a Covered Countermeasure. For this purpose, manufacturers include contractors, subcontractors, and suppliers. Entities generally include corporate affiliates and parent entities as well as agents and employees of any entity.
To qualify for immunity, there must also be a nexus to a governmental action such as (a) a present or future federal government contract, grant, or other form of agreement or (b) authorization by a federal, state, or local governmental agency that has authority to prescribe, administer, deliver, distribute or dispense Covered Countermeasures as part of a public health or medical response following an emergency declaration. Both the president and HHS secretary and governors and/or State Health Departments have issued emergency declarations regarding the COVID-19 pandemic.
What are Reasonable Precautions to Facilitate Safe Use of Countermeasures?
HHS encourages all Covered Persons using or administering Covered Countermeasures to document the reasonable precautions implemented to safely use the Covered Countermeasures. The reasonable precautions include prudent business practices and reasonable diligence to verify the authenticity of the Covered Countermeasures under the circumstances of the COVD-19 pandemic. HHS encourages all Covered Persons up and down the supply distribution chain to offer greater transparency to purchasers and end users for these purposes and to fulfill the stated public policy goals of the PREP Act. For example, it would be prudent to develop a paper trail of records and documentation to support the determination that a product, test, treatment, or similar item is a Covered Countermeasure. That paper trail could include a copy of a relevant FDA issued EUA or similar approval, or clearance from the FDA. Most of those products are listed on an HHS website that potentially Covered Persons should consult from time to time. Additional steps can be taken to update and reinforce appropriate contractual risk allocation provisions such as representations and warranties regarding FDA compliance and authorizations in addition to more typical indemnification and insurance provisions.
Those who can foresee the need for the protection of PREP Act immunity in the future should take steps now to answer these questions and make the determination. Further, practical steps for protection include adding contractual provisions to expressly incorporate the protective immunity of the PREP Act and Declaration to minimize the risk of costly litigation over more typical indemnity and reimbursement provisions. Providers should include robust, specific disclosures of the risks associated with treatments in patient consents. Even with properly determined statutory immunity, contractual provisions properly allocating risks, and properly drafted patient consents, Covered Persons involved in high-stakes combat with the COVID-19 pandemic should continue to maintain appropriate insurance coverages and risk management programs.
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1 42 U.S.C. Section 247d-6d and 247d-6e.
2 85 Federal Register 15,198 (March 17, 2020).
3 42 U.S.C. Section 247d-6d(b)(8)(A). See, also, Parker vs. St. Lawrence County Public Health Department, 102 A.D.3d 140 (2012).