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Thursday, March 28, 2024

Arizona passes the buck on protection from COVID-19 lawsuits, finds its schools without insurance

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PHOENIX (Legal Newsline) – Arizona abandoned a measure that would have limited coronavirus liability for schools when they reopen, and now the state faces an insurance crisis that will jeopardize whether schools will be able to afford to open their doors.

KTAR News reported last week that the Arizona School Risk Retention Trust, which provides insurance for about 250 school districts and community colleges, told its members that it won’t be providing coverage for any COVID-19 claims.

The news came two months after the state’s Republican Senate failed to act on a liability-protection bill that narrowly passed the House. Rep. John Kavanagh’s bill said schools and businesses would not be liable to any person contracted during COVID-19 during the state of emergency unless they acted with gross negligence.

Kavanagh said he was disappointed that the Senate went out of session before hearing his bill - "Many businesses, nonprofits that serve children and schools are concerned about being sued over COVID, a fear that may be delaying or limiting their reopening, which also harms employees and the economy," he said.

Kavanagh intends to reintroduce his bill as soon as possible, either in a special session or when the Legislature convenes in January. He's going to go a step further, too, asking that there be hearings in coronavirus lawsuits that require plaintiffs to reasonably establish that they contracted the disease due to acts of the defendant.

Some states have a similar put-up-or-shut-up requirement in medical malpractice lawsuits, requiring an affidavit from an expert that the defendant breached the standard of care early in the litigation. 

"Such an early causation hearing will weed out frivolous lawsuits early in the process," Kavanagh said.

In the wake of the insurer’s decision, Gov. Doug Ducey told KTAR he would wait to see if Congress passes protections similar to what Kavanagh proposed before calling a special session.

Those protections are being pushed by Senate Republicans but, should they pass, face a difficult road through the Democrat-led House, which showed last year in a fight over PFAS that it prefers to expand liability rather than restrict it.

“COVID-19-related lawsuits and their consequent exorbitant legal costs could deter entities from reopening and could ultimately cripple businesses, educational institutions and nonprofit organizations both large and small,” says a July 30 letter to Congress from hundreds of business and legal reform groups.

“In the wake of prior crises, Congress came together to pass needed liability protections with strong bipartisan support because lawmakers understood the acute threat of lawsuits at moments of maximum economic vulnerability. That threat is present again now, perhaps more than ever.”

Signing the letter was the U.S. Chamber Institute for Legal Reform, which owns Legal Newsline. Also signing were the American Property Casualty Insurance Association, Council of Insurance Agents and Brokers and the National Association of Mutual Insurance Companies, as well as a few other insurance groups.

Insurers are currently fighting policyholders in court over claims their coronavirus-related losses should be covered by the force majeure clauses in policies. Some insurers say that’s not the case and that pandemic policies, instead, were available before the outbreak. Some say there needs to be physical damage to trigger coverage.

Personal injury lawyers, meanwhile, are finding creative ways to take advantage. In addition to taking millions in taxpayer-funded forgivable loans (which allowed one firm to up its advertising budget), class actions are popping up.

In Western Pennsylvania, Giant Eagle has been hit with more than 30 lawsuits from would-be shoppers who say they can't wear facemasks. Companies like TicketMaster and places that sell season passes like amusement parks have also been targeted by class action lawyers.

The fear for schools and businesses is being blamed for an outbreak, like nursing homes, Walmart, Safeway and Tyson Foods have been. In May, dozens of education groups led by the American Council on Education sent their plea for protection to Democrat and Republican leaders in the House and Senate.

The letter cited a fear of “huge transactional costs associated with defending against COVID-19 spread lawsuits.”

And at a hearing before the Senate Judiciary Committee, the general counsel of Texas Christian University warned that fear surrounding where a “liability cliff” will be is affecting the decision on when to reopen.

"When we know there's a liability cliff - some line that will be catastrophic to step across - but we don't know exactly where the edge of the cliff is, we will avoid the ground near the cliff altogether,” TCU’s Leroy Tuner told the committee.

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