Coronavirus (COVID-19), HR Management & Compliance

What Tennessee’s New COVID-19 Liability Law Covers

As Tennessee employers have phased into (and out of and back into) various stages of reopening during the COVID-19 pandemic, the primary concern for most has been keeping on-site workers as safe as possible and their businesses afloat. A concurrent worry has been what to do if an employee or customer catches the virus. Could the business be liable? As described below, a new state law may help to reduce the potential exposure for employers.

COVID-19
Source: wan wei / Shutterstock

Employee Waivers Won’t Suffice

During the COVID-19 outbreak, many employers are wondering if they can ask employees to sign a waiver as a condition for returning to work. Unfortunately, while waivers may provide protection to businesses in certain situations, they generally aren’t a good solution for mitigating the risk from employee claims. That’s the case for two reasons.

First, if an injury or illness “arises out of” and occurs “in the course of” employment, the state workers’ comp law will apply. That’s good news for employers because workers’ comp (1) is generally held to be an exclusive remedy with limited damages available and (2) is covered by insurance already paid for. Therefore, even in a dire situation including the death of an employee, the employer won’t suffer a catastrophic economic blow.

Second, with the pandemic occurring in all aspects of society, it may be difficult if not impossible for the employee to prove he contracted the virus at work. Workers’ comp claims, however, cannot be waived.

Trying to bypass workers’ comp. An employee or his family might seek recovery outside of the workers’ comp system by filing a claim under another statute, or common law, or under a theory of negligence or violation of employee rights. The approach typically would require a showing of some type of misconduct on the employer’s part.

Although workers’ comp’s exclusive remedy would be a strong defense to such an effort, the fact is those kinds of claims are being filed around the country during the pandemic. If an employee prevails, the resulting damages can far exceed what workers’ comp might provide and could easily put an employer out of business.

So, for those kinds of claims, would a waiver work? Possibly. But, because of the inherent unequal bargaining power between employers and employees, some courts, including the U.S. Supreme Court, have found an agreement in which an employee prospectively waives his rights under workplace laws (e.g., in a return-to-work waiver) may not be enforceable.

All of which has left Tennessee employers in a dilemma and fearful of possible legal exposure after COVID-19 outbreaks among employees. Some employers and industry groups have asked state governments to step in to provide protection for employers, and Tennessee is now among a handful of states that have taken action.

What Tennessee COVID-19 Recovery Act Covers

Last month, Governor Bill Lee signed the Tennessee COVID-19 Recovery Act, limiting the types of legal charges coronavirus victims may assert and raising the pleading standards for claims to go forward. The state legislature had passed the bill in early August during a special session called by the governor.

The Act broadly protects “persons”—individuals and legal entities, including businesses, hospitals, schools, nonprofits, and religious institutions—from claims “arising from COVID-19” unless the claimant can prove gross negligence or willful misconduct by clear and convincing evidence.

The original bill failed to pass during the 111th General Assembly in June, primarily because of a disagreement in the House over a retroactivity clause that would have applied the limitations to claims beginning on March 6, 2020. The retroactivity provision was amended in the final version, along with other changes, but ultimately provided protections for entities and persons from simple negligence COVID lawsuits.

When Do Limitations on Claims Begin (and End)?

The Act applies to all claims arising from COVID-19 without any express time limitations, except when one of the following events occurred “on or before August 3, 2020”:

  • A complaint or civil warrant had already been filed;
  • For a claim under the Tennessee Claims Commission Act, the required presuit notice had already been given; or
  • For a claim under the Tennessee Health Care Liability Act, the presuit notice requirements had already been satisfied.

The August 3 date is significant because that’s when Governor Lee publicly called for the special session and announced the state’s intent to pass legislation limiting COVID-19 claims.

Moreover, the Act runs only until July 1, 2022, but continues to apply to any loss, illness, injury, or death occurring before then to which none of the above three exceptions apply. Put another way, if the virus is still here after July 1, 2022, and a claim “arises from COVID-19,” it would not fall under the Act. Of course, practically speaking, future legislation could extend the period of the Act’s applicability.

Notably, while the bill initially failed because of its proposed retroactivity dating back to March 2020, the final version removed all time limitations whatsoever, except for the three specific instances listed above (so long as they occurred on or before August 3).

Because the language doesn’t explicitly bar retroactive application, employees could eventually challenge the Act’s constitutionality, and future litigants should be mindful of the possibility.

Types of Permitted Claims

The new Tennessee law’s central provision states:

[N]otwithstanding any law to the contrary, there is no claim against any person for loss, damage, injury, or death arising from COVID-19, unless the claimant proves by clear and convincing evidence that the person proximately caused the loss, damage, injury, or death by an act or omission constituting gross negligence or willful misconduct.

The clause eliminates employees’ ability to assert basic negligence charges arising from COVID-19 and permits claims only in situations of “gross negligence or willful misconduct.” Furthermore, the Act states it doesn’t (1) create a cause of action (or claim), (2) eliminate a required element of any existing claim, (3) affect workers’ comp claims, or (4) amend, repeal, alter, or affect any immunity, defense, limitation of liability, or procedure available or required under law or contract.

The Act also applies to a broad range of claims, specifically any “arising from COVID-19.” As discussed below, the new law includes a heightened pleading standard for claims “based on exposure to or contraction of COVID-19,” which means it also covers claims not specifically arising from exposure to the virus. Such claims could arise, for example, when a hospital alters protocols (say, preoperation procedures) based on COVID-19, and the change results in injury to a patient.

Heightened Pleading Standards

For all claims under the Act, the individual “must file a verified complaint pleading specific facts with particularity.” The rules are stricter than those for ordinary negligence claims because they (1) require the complaint to be verified (in other words, sworn) and (2) implementing a heightened pleading standard, analogous to the “particularity” required of pleadings for fraud claims in accordance with Tennessee Rule of Civil Procedure 9.02.

In contrast, basic negligence claims don’t require a verified complaint—they need only a “short and plain statement of the claim” under Rule 8.01. Furthermore, for claims “arising from COVID-19” specifically “based on exposure to or contraction” of the virus, the individual must file a certificate of good faith stating:

  • The individual (or counsel) has consulted with a physician duly licensed to practice in Tennessee or a contiguous, bordering state;
  • The physician has provided a signed written statement confirming his or her competence to express an opinion on exposure to or contraction of COVID-19; and
  • Based on information and belief, the physician believes the alleged loss, damage, injury, or death was caused by an alleged act or omission of the defending party or parties.

Failure to comply with the heightened pleading requirements comes with a hefty price tag. An employee’s failure to satisfy any of the mandates subjects the legal action to dismissal with prejudice (or harm).

Bottom Line

For employers, the new state law will help to reduce exposure, but it doesn’t provide complete immunity from claims by employees or others in the workplace. Also, the statute doesn’t affect workers’ comp remedies. Moreover, it doesn’t preclude claims based on common-law or statutory theories of recovery outside of workers’ comp. It just makes it more difficult for employees to prevail.

Finally, continue to be vigilant about workplace safety:

  • Follow all current guidelines from the U.S. Centers for Disease Control and Prevention (CDC), the Occupational Safety and Health Administration (OSHA), and state and local authorities.
  • Carefully document all safety measures and policies, and provide related information and training to employees during the pandemic; and
  • Provide an avenue for them to report workplace safety concerns without fear of retribution.

Kara E. Shea, Clinton Sprinkle, and Hannah Kay Hunt Freeman are attorneys with Butler Snow LLP in Nashville. You can reach them at kara.shea@butlersnow.comclinton.sprinkle@butlersnow.com, or hannahkay.freeman@butlersnow.com, respectively.