COVID-19 EPLI Update

Elan Kandel represents insurance companies with respect to all aspects of claims involving directors and officers liability, employment practices liability, fiduciary liability, professional liability and commercial general liability policies.

Michelle Gordon is Claims Manager of the Management Liability team at Markel Service, Incorporated. Michelle is responsible for overseeing a team of claims examiners located across the US. Her team handles employment practices liability, directors and officers liability, and errors and omissions claims for private and public institutions. Prior to joining Markel Service, Incorporated, Michelle practiced law as an insurance defense attorney in New York, focusing on professional and general liability. She received her bachelor’s degree from Binghamton University and her law degree from Hofstra University School of Law. She is currently President-Elect of the New York City Association of Insurance Women.

Jamie A. LaPlante is experienced in all aspects of management-side employment and labor law at the state and federal levels. She defends employers in a variety of litigation matters under Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Family Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), and other state and federal laws and regulations, as well as breach of contract, whistleblower claims, workers’ compensation retaliation, and public policy violations.

Early in the COVID-19 pandemic, insurers predicted a flood of EPLI (employment practices liability insurance) claims related to the pandemic. So far, employers have held back the flood waters. Little by little, however, the claims have come trickling in, and we expect that trend to continue throughout 2021.

What are the potential sources of EPLI claims?

Employees cannot simply make a claim that they contracted COVID-19 and therefore, should recover from their employers. That does not mean that employers are immune from claims related to COVID-19.

Several different situations in the new COVID-19 workplace can result in potential liability:

  1. When employers lay off employees and recall some or none of those employees, the employers face risks of individual and systemic discrimination claims.
  2. When employers transition employees back to work in the workplace from remote work, it may give rise to employment claims related to requests to accommodate disabilities and religious practices and harassment.
  3. Employees may retaliate against employees returning from quarantine related to COVID-19 exposure or diagnosis.
  4. When return-to-work results in allegedly unsafe work conditions, employers can face citations from the Occupational Safety and Health Administration (OSHA) and employee retaliation claims following an OSHA investigation. Employers also face claims for negligence; public nuisance; negligent hiring, retention, and supervision; wrongful discharge; and whistleblowing related to unsafe workplaces.
  5. The COVID-19 relief bills provided two new causes of action for failure to provide required paid sick and family leave and for retaliation after the use of paid sick or family leave.
  6. Vaccination requirements and incentives can give rise to disability and religious discrimination claims, as well as wage-and-hour violations and privacy claims.
  7. Defamation and invasion of privacy claims can result from improper disclosure and handling of employee private health information.
  8. Employees who raise issues concerning PPP loan fraud or misuse of funds may have whistleblowing claims.

2020 revealed several litigation trends.

Looking at 2020 court filings, trends emerged. California and New Jersey lead the way with significantly more COVID-19-related employment cases than any other states. Florida, New York, Texas, Ohio, and Michigan round out the top states for employment claims related to COVID-19. In addition, two-thirds of the cases are filed in state court.

On March 25, 2020, an employee representative filed the first EPLI lawsuit against Walmart. The estate of a deceased Walmart employee sued, alleging that managers knew that several employees and customers had COVID-19 and failed to protect the decedent-employee. The estate claimed that the store failed to: adopt social distancing and quarantine guidelines; adequately clean and sterilize the facility; provide appropriate personal protective equipment (PPE); develop a response plan for infections; and provide warnings to employees who may have been exposed to COVID‑19.

In Texas, the family of a deceased meatpacking employee sued for negligence. The family alleged that the employer required an employee to report to work, despite disclosing symptoms of COVID-19, or be terminated. Employees claimed that the meatpacking company took no precautions against the spread of COVID-19, placing workers at risk of illness or death.

COVID-19 caused temporary and permanent layoffs that could give rise to EPLI lawsuits.

Many states implemented emergency health orders that required businesses to temporarily cease in-person operations. Those business where work-at-home was not possible immediately implemented layoffs—e.g., restaurant, retail, and beauty industries. Many of those employers that continued operations realized a decline in revenue that necessitated layoffs and/or pay cuts. EPLI lawsuits are likely if those layoff and/or pay cut decisions adversely affected certain protected groups (i.e., race, color, ethnicity, national origin, religion, age, disability, sex, sexual orientation, and gender identity).

Many workplaces failed to plan and adapt to the COVID-19 world.

A recent study by The Counterpart[i] found that most businesses that could implement work-at-home had not reopened their offices. In fact, many employers anticipated continuing remote work for many employees indefinitely. Yet half of employers surveyed had yet to adapt their workplace policies to COVID-19 or remote work. Those that did updated their policies updated them in order to permit: voluntary remote work, reimbursement of home office expenses, revised travel requirements, and staggered shifts. Nearly 75% of survey respondents cited safety as the reason for new policies and procedures. Surprisingly, 88% of survey respondents did not seek professional or legal counsel in implementing changes in response to the COVID-19 pandemic.

What are the risks when employers do decide to transition back to in-person work?

Many employers may be delaying the return to in-person work to avoid dealing with return-to-work issues. Inevitably, some employees will refuse to return to work in the office and cite safety concerns. The law permits employers to force an employee to return to work in person unless the employee needs remote work as a reasonable accommodation for a disability under the Americans with Disabilities Act (ADA).

Handling these accommodation requests incorrectly could give rise to disability discrimination claims under state and federal law. Even if an employee has a disability that subjects him/her to a greater risk of COVID-19 complications, remote work is not an automatic accommodation. An employee could be alternatively accommodated through a private, safe workspace, additional PPE, or alternative less crowded shift. Conversely, an employer cannot require a disabled employee to accept a work-at-home accommodation if he/she wants to work in the office, even if the accommodation is intended to protect the employee.

Further, employers may face employment claims if they harass or retaliate employees, or allow coworkers to do so, upon the employees’ return to work after quarantine. This underscores the need for employers to be discrete about who is told of an employee’s COVID-19 diagnosis or exposure. Only those employees within human resources who “need to know” should be informed.

How does an employer safely transition back to in-person work?

With all these concerns, how can an employer safely transition back to in-person work without risking employment claims? Before returning to in-person work, an employer should consider the following safety issues and appropriately mitigate COVID-19 risks:

  • Appropriate social distancing;
  • Redesigned meeting spaces;
  • Cleaning and sanitizing common and shared areas;
  • PPE – e., sanitizers, masks, gloves, etc.;
  • Daily symptom checking;
  • Encouraged use of paid sick leave when ill;
  • Testing; and
  • Contact tracing and quarantine requirements.

While EPLI policies often exclude OSHA citations, retaliation claims from employees who made OSHA complaints or participated in an OSHA investigation usually are not excluded. In addition, employees who in good faith and reasonably refuse to work due to safety concerns, can allege retaliation and wrongful discharge claims that may be covered by EPLI policies. Further, employers who require employees to work in an allegedly unsafe work environment could face claims for: negligence; public nuisance; negligent hiring, retention, and supervision; wrongful discharge; and whistleblowing.

Employers must comply with new COVID-19 employment laws.

The COVID-19 relief bills provided employees with new causes of action for employment claims related to the pandemic. The Families First Coronavirus Response Act (FFCRA) provided COVID-19 sick and family leave to employees who work for employers with less than 500 employees. The small employers covered by the FFCRA may lack robust human resources departments to assist them with compliance.

These employers could face claims under the FFCRA if they failed to provide the required (a) two weeks of paid sick or quarantine leave or (b) twelve weeks of paid family leave related to a daycare or school closure. In addition, through an amendment to the Family and Medical Leave Act (FMLA) and Fair Labor Standards Act (FLSA), the FFCRA provides employees with a right of action to sue in court for retaliation following the use or request for FFCRA leave. This is notable, as retaliation claims, unlike FMLA interference and FLSA wage-and-hour claims, often are covered by EPLI policies.

Employers must appropriately and confidentially handle an employee’s COVID-19 diagnosis or quarantine information.

Once an employer knows that an employee or his/her household member has COVID-19, the employer must handle that information confidentially. Only those employees within human resources that typically handle medical information (e.g., FMLA, workers’ compensation, and accommodation requests) should be informed. The employee’s supervisor only should be notified that the employee is off work. Employees who are exposed only should be notified that they were exposed to someone diagnosed with, or suspected to have, COVID-19. Identifying the employee is improper and unnecessary.

This process is full of potential landmines for an employer to step into, resulting in an employment claim for defamation, invasion of privacy, disability discrimination, and/or breach of Health Insurance Portability and Accountability Act (HIPAA) rules.

What about requiring or encouraging employees to get the COVID-19 vaccine?

The additional costs of PPE, social distancing, cleaning, sick leave, and other mitigation measures led many employers to encourage their employees to obtain one of the COVID-19 vaccines once they are available. The Equal Employment Opportunity Commission (EEOC)’s current guidance on the responsibilities of employers and rights of employees states that, if an employee cannot get vaccinated for COVID-19 because of a disability or a “sincerely held religious belief, practice, or observance,” and there is no reasonable accommodation possible, it would be lawful for the employer to exclude the employee from the workplace. This does not mean that the employer may automatically terminate the worker; rather, the employer must consider whether the employee is a direct threat to the rest of the workplace and/or whether remote work is a potential accommodation. A private work area, alternative schedule, or continued mask use could permit in-person work of an unvaccinated employee if most of the workforce is vaccinated. In addition, if the employer requires vaccination, the time spent obtaining the vaccine likely is compensable time under wage-hour laws.

Vaccine mandates are not the only concern. Many employers opted to encourage vaccination through incentives and workplace vaccine clinics. Some employers offered additional vacation days and cash in amounts ranging from $50 to $200. The most recent EEOC guidance on wellness incentives is that anything more than a de minimus incentive (e.g., a water bottle) in exchange for a wellness program is illegal under the ADA. The EEOC declined, thus far, to provide guidance on COVID-19 vaccine incentives, despite urging from the business community. Providing these incentives, despite the lack of guidance, remains a gray area of the law.

In addition, if an employer hosts a vaccine clinic at the workplace, poor handling of employee responses to vaccine screening questions could result in ADA violations, by converting the interaction into an improper workplace “medical examination.”

Some claims related to COVID-19 may be excluded by EPLI policy exclusions.

EPLI coverage exclusions may exclude some employment claims from EPLI policies. Many policies exclude FMLA claims, wage-and-hour claims, OSHA citations, bodily injury damages, WARN Act violations, and claims arising from criminal acts. These exclusions may exclude some—but certainly not all—employment claims related to COVID-19. It is important to review your EPLI policy and understand that there are exclusions that may apply for these type of claims.

The future remains unclear.

Thus far in 2021, it looks like employment claims related or stemming from COVID-19 are on the rise. In the first quarter of 2021, employees filed 671 new lawsuits against employers. By way of comparison, in 2020, there were 284 filings in second quarter, 458 in third quarter, and 539 in fourth quarter. The vast majority continue to be filed in state court. In addition, nearly one-half of all claims are based on disability, leave, and accommodation issues, with retaliation and whistleblower claims closely following in proportion. Regardless, employers—and EPLI insurers—should pay close attention to the potential employment claims that could result from the COVID‑19 pandemic and focus their efforts on prevention and compliance.

[i] “The Reinvention of the Workplace Study,” Counterpart™

Podcast Highlight: Let’s Talk Professional Liability with Allison Barrett

The professional liability insurance industry is full of accomplished emerging and senior leaders. This post is an exclusive look at one of the episodes in PLUS CEO Robbie Thompson’s series Let’s Talk Professional Liability, where he chats with various PL thought-leaders about business line trends, market conditions and what it takes to be successful in the industry. This episode features a conversation with Allison Barrett, Head of North American Financial Lines for AIG. If you’re looking to learn from some of the industry’s greatest, take a listen to this PLUS podcast.

Listen to the episode below:

If you like this podcast, you can listen to the rest of the episodes exclusively on the PLUS Connect App. Download the app here, and tap the “podcasts” tab to listen.

Allison Barrett is Head of North American Financial Lines for AIG. Allison joined AIG in 2019, coming to AIG from Willis where she served as Managing Director and Global Head of the company’s financial institutions business within the financial, executive and professional risk specialty group. Previously, Ms. Barrett was Vice President in Marsh’s US Financial and Professional Liability Practice. Ms. Barrett began her career as a Legislative Assistant on Capitol Hill. She holds a B.A. from Trinity College and a J.D. from Brooklyn Law School.

PLUS Healthcare & MedPL Symposium Session Questions and Answers from COVID and MPL: Tidal Wave or Trickle?

Peter Cridland, Paul Greve, and Lori Semlies provide answers to audience questions from their PLUS Healthcare & Medical PL Symposium panel, COVID-19 MPL Claims: Tidal Wave or Trickle? This session reviewed and analyzed actual and potential MPL claims related to COVID-19 as well as the laws enacted providing immunity for these types of claims at the federal and state levels and challenges to those laws or executive orders. The speakers answer attendee questions below.

Attendee questions:

  • Have you seen activity from COVID testing labs / screening services?
    • All: Not in any volume. One—Lori Semlies recently was able to get a suit against a hospital laboratory for defending a false positive hospital laboratory test discontinued.
  • For Lori, will you be using the conflicting and constantly changing guidance to nursing homes in their defense? We are recommending that they keep a running log of changes, regulatory memos, and their response.
    • YES!!  same—we sent them a playbook and are using a binder of the time line of the guidance
  • We are seeing pro plaintiff judges in some states moving the more volatile cases ahead of lower severity matters on the trial docket (even ahead of criminal trials) to ensure the plaintiff’s bar is prioritized. It presents an unbalanced front loaded problem for providers and carriers and risks further exacerbating the social inflation problem stemming from runaway verdicts. Grateful for any feedback.
    • Peter: I am seeing panic from the bench about the backlog which we expect to work against the defense bar
  • Even if the halo effect lasts with individual healthcare professionals, I don’t think it will translate to the organizations that employed them. The hospitals and healthcare facilities were laying staff off while nurses and doctors were working short staffed to care for COVID. How might defense look there?
    • Peter: Good point – the lack of “personification” of a healthcare entity has always been a challenge and will be brought into tighter focus here. This is where the “time machine” will play dividends – the entities were trying to react to changing guidance, treatment protocols, staffing availability, etc. – showing the jury what it was like for the hospital risk manager when things were changing so quickly and helping them put themselves in the hospitals “shoes” will help.
  • Please clarify why the disconnect between Justpoint and what we are actually seeing.
    • Paul: It is difficult to know how the plaintiff’s bar is calculating these numbers. There is no real national database to track active MPL litigation. But Justpoint cites Ohio as having the most cases. Yet in checking with defense attorneys in that state they have commented that they are not aware of any COVID claims and one has stated that the plaintiff’s attorneys he knows have said they do not have any desire to pursue this type of MPL litigation.
Peter Cridland
Vice President, TransRe 

Peter Cridland is a Vice President with TransRe, overseeing all U.S. Cyber Claims and handling Medical Professional Liability claims. He works with underwriting and claims teams globally on a variety of issues including risk tolerances, underwriting goals, and claims projections. Peter works with reinsureds to help them stay ahead of the curve on claims handling, loss prevention, and loss mitigation strategies. He is a frequent speaker on both healthcare and cyber liability topics, including the intersection of the two lines, and he founded and co-edits the TransRe Cyber Newsletter, with global distribution. Before coming to TransRe, Peter was a medical malpractice defense litigator in New York City.

 

Paul Greve, JD, RPLU
Markel Specialty
Paul A. Greve Jr. JD RPLU, is the Principal of Greve Medical Risk Management (GMRM). GMRM provides advice and strategy to insurance carriers, agencies, brokerages and health care systems on operations and growth through managing current and emerging health care professional liability risks. From September 2002 to February 2018 he was the Executive Vice President/Senior Consultant in the Willis National Health Care Practice. Paul served as a national resource for all aspects of health care professional liability insurance and risk management.

 

Lori Semlies
Attorney at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP

Lori Semlies, a co-chair of the firm’s Medical Malpractice & Health Care Practice, defends medical and nursing home malpractice claims in state and federal courts, including all phases of litigation through trial. She also formed the firm’s Coronavirus Task Force for the defense of health care claims. Lori sits on several firm committees, including Wilson Elser’s Executive Committee.