How Tennessee COVID-19 Liability Legislation Protects Companies, Workers, Economy

Morgan Ribeiro: Welcome to PointByPoint. This is Waller's Chief Business Development Officer and the host of the podcast Morgan Ribeiro. As businesses across the U.S. gradually reopen, employers from nearly every industry have expressed deep concern that they will soon be subject to unwarranted litigation despite investing significant costs and efforts to implement protective measures designed to keep their employees and customers safe.
More specifically, state healthcare providers on the frontlines of the pandemic are burdened with liability concerns stemming from the delivery of essential medical care to COVID-19 patients during extraordinarily difficult circumstances. With COVID-19 related lawsuits on the rise across the country, employers, employees and consumers are challenged with navigating a new landscape of potential liabilities during these unprecedented times. With me today are Nicole Watson, an attorney in the firm's government relations group, and Bradley Jackson, President and CEO of the Tennessee Chamber. Nicole and Bradley, thank you for joining me today.
To get things started, in late summer, you both worked together to craft legislation in Tennessee that provides protections against unsupported legal claims, allowing businesses to resume operations with confidence and actively participate in Tennessee's economic recovery. Bradley, I'll start with you. At a high level, can you give us an overview of the legislation and its goals?

Bradley Jackson: Well, thank you very much for having us today. On behalf of the Tennessee Chamber, the Tennessee manufacturers and really business all across our state, liability protections, it's really one of the proudest things that we've accomplished during the pandemic. When we survey our businesses and ask them what is one of the most important things that you feel you need to be successful or to get through the pandemic, economic recovery is vitally important.
The issue of liability protections or having liabilities out there in this uncertain world was a major concern of theirs and something the legislature really needed to pass. And when you go back and look at the world back on March 5, which was when the first case happened in Tennessee, a number of employers immediately started making changes to their operations and to their protocols. And then when the shutdown happened on March 12, then a lot of those businesses were operating in an uncertain world. It was completely uncharted territory. The legislature really had limited definitions as to who has authority under a pandemic, of what guidance should you follow. There was a lot of conflicting guidance, whether it was from the CDC, OSHA, WHO and then even Tennessee was putting out guidance. So for businesses, you want to be compliant, you want to do what's right, especially those that are essential businesses that are up and running. So for them, they're working hard to be compliant, and they wanted to make sure that there were protections in place to avoid any sort of frivolous lawsuit that could come up.

Morgan: Nicole, anything you want to add to that?

Nicole Watson: What we were looking to do is make sure that all litigation concerns for businesses, frontline health providers, and others who were deemed essential workers were protected, and we feel that this legislation did that, and the Chamber really jumped in early to make sure that all of these people and businesses were protected during this time of uncertainty.

Morgan: Can you each describe your role in this process? I think it's really interesting to see how a firm like ours collaborates with the Chamber to work with the legislature to pass this legislation that impacts businesses across Tennessee. Nicole, I'll start with you, just to hear more about your role and the firm's role in the process.

Nicole: Waller represents the Chamber, the Tennessee Chamber of Commerce and Manufacturing, as their Government Affairs Council, and as a member of the Tennessee Recovery and Safe Harbor Coalition Committee, I worked with committee members to draft the legislation, incorporating feedback from the various industry stakeholders and state legislators. When the General Assembly finalized the language, I coordinated with stakeholders and members of the General Assembly to prepare a strategy for passage of the bill. So my role was more often the trenches of writing the bill, making sure that everyone's concerns were met from healthcare workers to businesses, to schools and everyone that's covered under the legislation. So it took months, literally months, to draft the legislation. It was a lot of back and forth, and we had huge, huge help from the Tennessee Chamber and all its members for their feedback and input.

Morgan: Great, and Bradley, what about the Chamber's role?

Bradley: Really the focus of what we do is we want Tennessee to be a great state for business, and we have a number of partners to do that. Waller has been a long term partner. We contract with you all to help us with government affairs services. And with Nicole's background, it was a perfect fit around liability reform or protections to establish those.
The Chamber has been around for a long time. We are primarily a state government affairs lobbying organization. We work to weigh in on anything that impacts business. So, Waller, in addition to this, they give us input on economic development policy and maybe tax policy, healthcare policy, and anything that the legislature looks at, the Chamber really dives in and weighs in on behalf of the business community. So this was a great opportunity for us, especially as we saw other Southeastern states start to talk about liability protections, overall, it was a really strong effort, and the Chamber had 33 other coalition members that were supportive of this legislation, and that's one of the main reasons it got through the legislature so quickly.

Morgan: Nicole, today, nearly 20 states across the U.S. have enacted similar legislation or executive orders providing liability protection against COVID-19 related legal claims. How did you all look at other states for guidance? Any bills that you would call out in particular?

Nicole: When we first started looking to draft this legislation, we pulled from other states that had actually either issued an executive order or passed legislation to this measure, and honestly, when we started back in March/April timeframe, there weren't very many. But Alabama actually was one of the very first to introduce a COVID-19 liability protection bill in early May, which was ultimately sidelined due to disputes among industry stakeholders down there. But the bill was one of the first of its kind and provided a helpful framework for drafting protections for businesses and healthcare providers on the state level. Governor Ivey down there had the power to issue an executive order on May 8, when things went awry with that bill, that covered businesses and healthcare and other entities so they weren't liable for death or injury to persons or to property in any way arising from COVID-19.
But the standard of heightened misconduct is similar to the gross negligence standard implemented in the COVID-19 recovery bill in Tennessee. However, given authorial emergency powers are granted differently in each state, and Governor Ivey just had a much broader power than we do here in Tennessee, that's why she was able to do everything through executive order when we had to actually pass legislation here.
Another state is Texas. And while they did not actually enact the bill that that was introduced down there, Sen. John Cornyn, who is in party with Majority Leader McConnell at the federal level, drafted limited liability legislation set to be included in the second CARES relief package. So I think that the state legislator down there probably thought since he was going to take care of it on the federal level, they didn't really push as hard. But the Senate version of the second round really failed due to the stalemate between of course the partisan issues in Washington right now. So they didn't get anything passed either.
California is another big state that introduced legislation during all this madness. And it also ultimately was postponed with their legislature adjourned in August. So we're just watching other states around us who have done things, most of them thanks for the executive order, again because their governors have that power. But if you have done legislative things, legislators are kind of off and on right now because of the virus. So they meet during emergency times. But right now, as I said, most of it is through executive order. So we'll see how things pan out by the end of the year, first of next year, how many states actually jump on board and passed some kind of legislation when people can meet again.

Morgan: I would love to hear from each of you more specifically about the process that you all went through. What were some of the issues that you ran into when trying to get this passed? Was there pushback? I always find this fascinating, the process and the steps that you need to take to really push something forward like this.

Nicole: Some of the pushback that we got right out of the gate was the retroactivity portion of the bill because the first draft of the legislation had a retroactive clause back to March 5, which was the day that was the first case of coronavirus by the state health department in Tennessee. So we wanted to make sure that businesses were covered in the legislation from March 5 on, and that was in our first version of the bill. And, of course, there were red flags that were drawn when we put that in the legislation because the Tennessee Constitution does have a retroactive clause in it. But we felt that this was such an uncertain time and that things were so different and the way we had written the first draft of the bill that the court would possibly uphold our legislation to include the retroactive portion of the bill. But when we got to the legislator, of course, the House in the Senate had very different ideas on that. So that was one of the holdups the first go-around when we met on this legislation.

Bradley: Regarding retroactivity in the legislature, first of all, part of the message that we came with the legislature was that it is a pandemic and the legislature really has an obligation to citizens, businesses, and everyone to ensure the overall stability of our state. So as they look at this legislation, ultimately a court always will have to decide what the legislature passes. It's always a little premature to say something either is Constitutional or it's not. So we really did encourage the legislature to move forward in their best judgment to protect everyone and ensure Tennessee's economic stability and viability during all this. So we never considered this. It's very clear that the Constitution prohibits what is known as a taking. If you have $100,000 settlement, the government cannot change the statute and come back and get that settlement. This was really more of a procedural change that directed courts on how to look at negligence, really a higher standard to review any type of COVID-19 cases. So, we felt that we were in a good position on it. And ultimately the legislature, like so many other things, came to a reasonable compromise on it that afforded us the ability to get the legislation through.

Nicole: As Bradley was saying, the Senate and the House could not get on the same page our first go around in the early summer, when they met to address this legislation and some other top COVID-19 related legislation as well. So we found ourselves in a predicament where we had to go back to the drawing board, and the Lee administration was actually the one to come to the table and issue an executive order because they had the power to provide COVID-19 related liability protections for healthcare providers specifically. So that gave us a little lead way into the legislature again, and the governor decided to call a special session so that we could address this legislation and two other pieces of legislation in August, so we were thankful for that.

Morgan: You started to get into this, how you ultimately resolved these issues and developed a path forward for an alternative option. So the administrative staff that they work closely with the House and Senate leadership, can you talk in more detail about that?

Nicole: So to address the issue on a wider scale, because as I said Governor Lee could only cover healthcare providers specifically under his authority through executive powers. Governor Lee called a special session to enact COVID-19 limited liability legislation. He called the special session on August 3, and the session was going to be for August 10 through 13. So what happened is the leadership from the Senate and the House and stakeholders including the Tennessee Chamber and our drafting coalition and others got together, put our heads together and came up with a bill that took out the word safe harbor actually, and now that the enacted law is called the Tennessee COVID-19 Recovery Act. So they took out again, the word safe harbor removed from the original title of the bill, because this version eliminated any reference to health guidance. The first version of the bill listed all the health guidance, from CDC guidelines to anything that was issued to cover local mandates in Tennessee. And we agreed with the administration that that could be a little confusing for people. And it can cause confusion at the litigation level and with courts as well, since those things could change day-to-day and in the future, as well. So we took out all the references to health guidances and the General Assembly ultimately passed the legislation during their special session. So we were able to resolve our differences, we removed the retroactivity part and limited it to address only retroactive claims in August, and everyone seemed to be happy with that. So we have a bill that we feel is comprehensive and everyone was happy with and the industry got what they needed as far as limited liability protections and the Senate and the House were on the same page.

Morgan: You mentioned that, to some extent, some of those that are covered by this piece of legislation, but can you speak more specifically to those who are covered?

Nicole: So the bill actually specifies that an individual or entity, and it's defined as a person in the bill, will not be liable for loss, damages, injury or death, collectively referred to as injury in the bill, that arises from COVID-19 unless the claimant provides clear and convincing evidence that the person caused the injury by an act or omission constituting gross negligence or willful misconduct. So our standard was gross negligence or willful misconduct in the bill, but the bill, as I've mentioned, does define person and under the Tennessee COVID-19 Recovery Act, person is defined as individuals, healthcare providers, sole proprietors, corporations, limited liability companies, partnerships, trusts, religious organizations, associations, nonprofits, and any other legal entity whether formed as for-profit or nonprofit entity. So it covers the whole gamut of anyone that we thought could be facing any type of liability claim because they were open to the public or they had to come in contact with people during this time when we were supposed to be six feet apart and wearing masks. So we felt that it was a pretty comprehensive bill. And the definition of person again, covers everyone.

Bradley: Now a little background about the entire legislative process. The legislature really abruptly adjourned around April. They passed a budget, made some cuts and got out of town, and then they were scheduled to come back on June 1, so that gave us enough time to really ramp up and be prepared to bring to the legislature beginning June 1 a piece of legislation. Now, unfortunately, that is the first bill that died really on the floor of the House on June 19 at 2:03 AM, I believe, so like my mother always says nothing ever good happens after midnight, and that's true in legislature, too. So what we did do is we gathered all of our stakeholders, had some honest conversations with legislators who were very open that we really did need to consider and call a special session, and a lot of them were not comfortable with that simply because of the pandemic that was that was out there. But they realized that this was was so important, and their commitment to the business community showed greatly in their willingness to come back to a special session and pass the legislation, I believe, right at three days, which is the minimum that they could be in.
So really, it was one of their better hours; we really appreciate the House and Senate leadership and the governor's office really for coordinating and pulling everyone together. So as with anything that happens in the legislature, nothing is ever certain, it was a very tricky time to do what we do when you work bills in the legislature and not be able to be there in person, to have to text or call or try other ways to do it, but we were able to get it done.

Nicole: We couldn't be in the building, and that difference provided another challenge. Some of us did camp out in the lobby and catch people as we could, but that was an added layer to this whole process is that the Senate and the House had different rules during the special sessions as to where stakeholders could be, so in the House, we could actually go in some of the committee rooms if we had our mask on, but in the Senate, we weren't allowed at all. So it made our job a little bit challenging.

Morgan: It's interesting as we think about this bill, and obviously getting it passed was quite the process, but then now that it's enacted, always want to know about sort of practically speaking, how will this work and how does it apply? So I think the first question is, what's the period of applicability?

Nicole: Well, I mentioned earlier that we took out the retroactive part in the new bill of the Tennessee COVID-19 Recovery Act. And what was put in the new version was that the bill would actually start on August 3 of 2020. So anything from August 3, 2020, going forward will be covered under this act. It also includes a grandfather clause that extends claims occurring before August 3, if a complaint or civil warrant was filed, notice the claim was filed with the Tennessee claims commission or notice was satisfied under state law pertaining to healthcare liability claims. And yes, I was reading that from the bill, because that's very important to note, what will be considered as a part of this bill. Previously filed complaints, however, related to COVID-19 before August 3 will be subject to a simple negligence standard. So not all hope is lost for people if things were filed before the August 3 date, but it'll just be a different standard than what's in the bill.

Bradley: I would add that the legislation, we feel like it was a very fair bill. There were some allegations that you all are closing the doors to the courthouse to be able to allow fair to move forward. And we do not feel that that is correct. We think it's a very fair bill, it does not let bad actors completely out, it merely raises the standard instead of just negligence, it's more of a gross negligence or willful misconduct standard for businesses, that you have to prove during this time. When you line it up with other bills or executive orders that have passed across the nation, that it's a very fair approach.
I would say in terms of the need of this, when you look at litigation across the country, and it has not started to hit as quickly in Tennessee, but there have been cases that have been filed. But when you really look at California, Florida, Texas, Mississippi, other states, there are a number of these cases, matter of fact, we've seen TV ads talking about, have you been harmed during COVID, give us a call, an employer could be liable. So we know these are coming, and Tennessee getting really ahead of this curve, we think was vitally important to ensure economic success here.

Nicole: I think it was really right for the state to be one of the first states to pass something this comprehensive. And we've only had about 56 to 60 COVID-19 related complaints filed since March in Tennessee. But as Bradley said, those are going to grow as time goes on and people get their bearings and their head wrapped around what's actually happening. So we're very pleased with the legislature and the administration to get something this comprehensive passed for our business community.

Morgan: Well, and along those lines, my next question was going to be what what does this mean for the business community, which I would imagine was much celebrated in terms of its impact on Tennessee's economy.

Nicole: So what it does is that COVID-19 claims are now subject to a heightened pleading standard. As Bradley said, this by no means shuts the doors to the courthouse to any litigation, it just provides a higher standard, and, honestly, it allows the economy to be up and running and for things to stay going in Tennessee. So we felt that that was necessary from the perspective of all people, not just businesses, and keeping their doors open, for the well being of mankind to have something to keep going. So this legislation allows that to happen. It also weeds out frivolous legal claims in the beginning stage of litigation, so that people are, again, businesses are not put out of business because of legal costs, because now these heightened standards and pleading standards allow for things to either be shut down from the beginning or should go forward. So that's also another protection from the business community as well.

Morgan: Any practical advice you all would offer up businesses? Where did they go from here?

Nicole: While this legislation affords liability protection from COVID-19 related claims, it doesn't protect the organization to act with gross negligence or willful misconduct as stated in the bill. So I would just encourage our clients and all businesses across the state to continue implementing COVID-19 protocols as directed by local or state and federal guidelines to protect their customers and employees. I think that we've given an outlet through this legislation for protection and for Tennessee's economy to keep up and running, but people still have to be responsible and take into account what's happening around us in this pandemic. So I would just say, for businesses and others, to keep following those state guidelines and protect yourself as much as possible.

Bradley: I think in terms of moving forward for the business community, obviously, we are going to continue to monitor liability protections and see if there need to be further modifications. Nicole and I are constantly talking about the legislation. Do there need to be changes in it? And I suspect that'll be something we'll consider in the in the future legislature.

In addition to that, I think overall economic recovery. We know that there are certain sectors of businesses that are out there and still hurting. What are things that we can we can do to ensure that they recover, because ultimately, it's in all of our interest that these businesses can get up, reopen and do it safely, to help our economy. I think that the essential business part of this was really key. We worked on this very early to where Governor Lee in his executive orders define what an essential business was, because you have to understand when there was a major shutdown, a lot of businesses looked to us and said, can I operate? I make essential goods, products, provide central health services, I have to be able to operate. So I think making sure that there's some consistency around that long term for the business community is very important as well.

Morgan: Nicole, you mentioned this earlier, but we have a number of listeners that are from outside the state of Tennessee. Anything that you would add about how this, the bigger topic at hand, and how that impacts businesses across the U.S.?

Nicole: Again, I would just say if you're a business owner and listening, please follow local and state protocols wherever you are located. Follow the guidelines that are given to you because that way you're protected under whatever legislation or laws your state has passed if they have passed any or any executive order. So just don't be that person who's grossly negligent in your business operations, and take care of yourself so you can continue as we wait and go through this pandemic together. We just need to make sure that we're responsible and that you do everything possible so you can stay in business.