Per yesterday’s news update, “Medical & Dental Expense Tax Deduction Increased Under New Law,” see below for a detailed summary of HB 118, an act to provide limited immunity from liability for claims based on transmission of COVID-19. This summary was prepared for the benefit of our membership by the law firm of Smith Anderson. Questions or comments, please feel free to reach out to NCACPA Counsel, Dave Horne, at dhorne@….
HB 118 Liability Safe Harbor Expands Immunity Protections From COVID-19 Liability Claims
By Christopher G. Smith www.smithlaw.com/professionals-Christopher-Smith
Robert Desmond www.smithlaw.com/professionals-Robert-Desmond
David Ortiz www.smithlaw.com/professionals-David-Ortiz
On July 2, 2020, Governor Roy Cooper signed HB 118 Liability Safe Harbor, expanding the immunity protections that it created last month in response to the COVID-19 Pandemic. House Bill 118 (HB 118) grants immunity for all COVID-19 infection claims arising out of ordinary negligence to all businesses and persons, very broadly defined. Previously, on May 2, 2020, the General Assembly passed Senate Bill 704 (SB 704), which limited immunity protection to healthcare “providers” and “facilities,” “essential businesses” and “emergency response entities” with the protection for businesses and emergency response entities further limited to only claims by employees and customers. The limited reach of that protection was revisited by the General Assembly in HB 118.
Our goal in these few paragraphs is to explain how HB 118 expanded civil immunity to all “person[s]” against all infection claims during the ongoing pandemic, building significantly upon the earlier, more limited grant of immunity provided in SB 704.It is worth noting that both SB 704 and HB 118 passed the General Assembly with an overwhelming bipartisan majority. HB 118 does not supplant SB 704 but complements and extends protection by providing an immunity shield to a much broader and, essentially, all-encompassing category of persons, businesses and claims.
Specifically, HB 118 provides that “no person shall be liable for any act or omission that does not amount to gross negligence, willful or wanton conduct, or intentional wrongdoing.” The definition of “person” includes all natural persons and every type of legal entity.[1] While SB 704 provided that same protection against negligence lawsuits, the protection was limited to healthcare “providers,” “facilities,” “essential businesses,” and “emergency response entities,” and for businesses to claims by “employees” or “customers.” HB 118 applies to all of the entities to which SB 704 applied and more.
The immunity provided by both laws, however, is limited to claims of ordinary negligence and will not shield persons or businesses from claims or acts arising out of gross negligence, willful or wanton conduct, or intentional wrongdoing. Although HB 118 does not define these terms, North Carolina courts have defined “gross negligence” as “wanton conduct done with conscious or reckless disregard for the rights and safety of others.” Suarez ex rel. Nordan v. Am. Ramp Co., 831 S.E.2d 885, 893 (2019) (quotation omitted). In lay terms, all businesses and persons have a liability shield if they make a negligent mistake, i.e., we all are protected if we make a mistake, but not if we make a really stupid mistake. If we make a really stupid mistake or worse, we lose the protection. These issues and what conduct will eliminate protection against liability are sure to be addressed in COVID-19 related litigation, which has begun and is likely to continue for some time.
HB 118 also requires businesses to provide “reasonable notice” of actions taken in order to reduce the risk of transmission of COVID-19 to individuals present on premises owned, possessed, or controlled by businesses. While businesses are required to make this posting, the legislation does not state that the immunity provided is contingent on posting the notice. Further, the provision requiring the notice specifically provides that no business may be liable for the failure of any individual to follow the provisions of the notice. Thus, businesses are not required to, or liable for, policing those who patronize them. And, of course, employers are not shielded from worker’s compensation claims which do not require any proof of negligence, just that the employee can prove that their injury – whether a COVID-19 infection or other injury occurred on the job.
Finally, it is noteworthy that, while HB 118 is immediately effective upon enactment, its protections do not expire upon rescission of the Governor’s Executive Order No. 116 declaring a state of emergency (issued March 10, 2020), but will extend for an additional 180 days after the Governor rescinds that Executive Order. The protections afforded by SB 704, by contrast, will expire with the rescission of that Executive Order. That abrupt, mechanical termination of SB 704’s protections, as well as the limitation of those protections to just healthcare facilities/ providers, essential/emergency response businesses, and the limitation to claims by employees or customers, were among the most important reasons motivating the General Assembly to revisit the issue of a COVID-19 liability shield. The bill was supported by a large coalition of business and higher education organizations.
1] The definition of “person” in @99E-70(2) includes and “individual; corporation; nonprofit corporation; business trust; estate; trust partnership; limited liability company; sole proprietorship; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal entity.”
Finally, it is noteworthy that, while HB 118 is immediately effective upon enactment, its protections do not expire upon rescission of the Governor’s Executive Order No. 116 declaring a state of emergency (issued March 10, 2020), but will extend for an additional 180 days after the Governor rescinds that Executive Order. The protections afforded by SB 704, by contrast, will expire with the rescission of that Executive Order. That abrupt, mechanical termination of SB 704’s protections, as well as the limitation of those protections to just healthcare facilities/ providers, essential/emergency response businesses, and the limitation to claims by employees or customers, were among the most important reasons motivating the General Assembly to revisit the issue of a COVID-19 liability shield. The bill was supported by a large coalition of business and higher education organizations.
1] The definition of “person” in §99E-70(2) includes and “individual; corporation; nonprofit corporation; business trust; estate; trust partnership; limited liability company; sole proprietorship; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal entity.