COVID Vaccinations and Liability Risk: What’s Fact, What Could Be Fiction

With millions of people having now been vaccinated, health care facilities and their insurers are on the lookout for vaccination-related risk.

By: Jonathan McGoran | March 9, 2021

The COVID-19 global pandemic has been historic in scale, and so is the vaccination effort being mounted in response to it.

Health care professionals and institutions face potential liability issues including possible adverse reactions and improper immunizations, multiple vaccines with sometimes extreme handling and dosage requirements, all exacerbated by a patchwork of state-by-state strategies, a wide range of delivery venues, and some public wariness over vaccines rushed to market via an Emergency Use Authorization, instead of an actual FDA approval.

“There’s a lot of concern and the largest concern right now is uncertainty,” said James McNitt, area president – health care, Risk Placement Services.

“We’re in a situation where the country’s coming together to administer as many vaccines as it can. And with that, we see medical professionals being pulled from their normal jobs or even pulled out of retirement and being asked to step up and help with the vaccine implementation.”

The scope of the effort exacerbates some of these concerns.

“Some of our biggest concerns are having mass vaccinations with[in] stadium lots with thousands of people,” said Nelly Rose, assistant vice president of clinical pharmacy for NFP Rx Solutions.

“How do you ensure proper monitoring for that 15-to-30-minute timeframe, as the CDC had recommended. And logistically speaking, how do you enforce recipients will be able to come back for their second dose?”

But in light of government protections, some think such liability concerns are overstated.

Michelle Mello, professor, Stanford Law School

“I don’t see any, to be honest. The PREP Act provides almost universal immunity for the administration of these vaccines,” said Robert Blasio, managing director of Gallagher Bassett Specialty, referring to the Public Readiness and Emergency Preparedness Act, which was enacted in 2005 to provide liability immunity for providers of countermeasures in response to public health emergencies, and also established limited compensation funds for patients injured by such countermeasures.

The COVID-19 pandemic has been explicitly included.

“The PREP Act has given coverage for COVID as a covered countermeasure until October 2025, and this immunity covers the administration of a vaccine. Anyone who administers a covered countermeasure is a qualified person under the Act and immune other than for willful misconduct,” Blasio said. “The courts have historically looked at the PREP Act and have interpreted it very, very broadly in favor of immunity.”

Professor Michelle Mello of Stanford Law School agreed.

“These providers are going to be covered by PREP Act liability protection, which extends to people who are administering countermeasures, not just those that manufacture them. There’s just a lot of obstacles for plaintiffs here,” said Mello.

“This is the exact scenario that the authors of the PREP Act were planning for,” she added. “They don’t want people to be chilled from participating in countermeasure efforts because of fears of liability.”

Where Does Liability Risk Lie?

PREP Act liability protections would not extend to cover willful or egregious misconduct, but such instances would have to be extreme.

“You start out with the presumption of immunity, and then I think it’s the burden of somebody bringing the claim to show that that conduct constituted willful misconduct,” said Blasio.

“And that’s a very big burden to prove, frankly,” he added. “It is way beyond negligence. One would have to show something very egregious, for example, someone intentionally giving a placebo instead of a vaccine and the recipient then suffering a serious physical injury because of COVID.”

Other potential liabilities could arise, though, surrounding issues like informed consent.

“If a patient experiences a severe complication to where they can’t work or they state they would never have the shot if they knew some of these complications would have happened as a result of getting the shot, who’s going to judge that consent?” said Ed Burtnette, vice president of liability at CorVel Corporation.

“Is that something that the patient is going to go ahead and file suit and say, ‘No, they didn’t tell me about all the specific things that could happen to me. And now I’ve got all these problems as a result of getting this shot?’ ”

Another potential exposure may stem from health workers themselves declining to take the vaccine.

“The EEOC says that vaccines can’t be mandated but can be encouraged,” said Terry Dreyer, SVP at Allied World’s U.S. Healthcare Division. “And the approval is not full FDA approval. It is approved for emergency use, which creates a little bit of a distinction there for how you can enforce that compliance.”

According to McNitt, some studies have suggested as many as 50% of health workers are declining the vaccine.

“If an individual went into a hospital to get their vaccine and … contracts COVID from an employee who had the opportunity to take the vaccine, but whose company didn’t mandate it and the employee declined it, is that hospital on the hook?” asked McNitt.

On top of that, health workers bringing the virus home to their families could be another source of liability.

An Increase in Litigation

While such liabilities may be hard to successfully litigate, that doesn’t mean lawsuits won’t be filed in the first place.

“You can see an uptick in overall defense costs, even if they’re frivolous,” said Dreyer. “It’s going to eat away at the retentions, especially aggregated retention.”

John Hall, founding partner of Hall Booth Smith, P.C., an Atlanta-based litigation firm that specializes in medical malpractice and liability defense, said that wave of litigation has already begun.

“Despite the PREP Act declaration, there is a large volume of COVID-related litigation already at both the federal and state levels, and new suits are being filed every day,” said Hall.

Blasio, however, has a different take.

Ed Burtnette, vice president of liability, CorVel Corporation

“We have not seen anywhere near the kind of volume that one would expect in terms of litigation relating to COVID,” he said, adding, “I do believe that there’s a strong sentiment that these cases will not be looked at lightly should they be brought to court, and they will be put to the test because of the PREP Act and because many states have implemented similar immunities.”

Coverage that Can Help

Fortunately, for the moment at least, what exposures remain would likely be included in existing coverages.

“Our policies trigger from a professional liability standpoint if somebody gets injured as a result of a medical professional doing something in error, whether or not it’s intentional,” said McNitt.

But he cautions that may not be the case going forward.

“Nearly every single insurance policy that will have a 2021 effective date on it is going to have some sort of a pandemic exclusion,” said McNitt. “So if there’s liability there or not, I wouldn’t expect an insurance company to be involved.”

Governmental immunities may also be less durable than expected.

“The immunities that have been granted at the state and national level for COVID will be tested in the coming years,” said Dreyer.

And by the time such cases come to trial, the atmosphere surrounding such litigation may change substantially.

“There is currently a backlog of litigation that is bottlenecking both claims life-cycles and the true picture of the medical sector, made up of preCOVID, traditional medical claims,” said Dreyer.

“When COVID-related claims come around, whether that’s two, three, or five years from now, the courts and jurors will have a short-term memory. I think the chaos of the actual environment that we are experiencing right now will be a little bit more faded and the criticism a little bit harsher. I think a claim that might be small dollars related to COVID could get an extra thumb on that scale for costs or the ultimate settlement, because it will have been so far outside of people’s purview that they’re judging that hospital by the traditional standards and not the unique situation we were living through during these unusual times.” &

Jon McGoran is a magazine editor based outside of Philadelphia. He can be reached at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.