Understanding Liability Concerns as Businesses & Schools Step Up to Manufacture Critical Personal Protective Equipment

The need for Personal Protective Equipment (PPE) throughout the COVID-19 Pandemic has been vast and unprecedented. Critical equipment such as N95 masks, surgical masks, face shields, gloves, hand sanitizer and more have reached critically low levels at health institutions around the country. These shortages have prompted many organizations, businesses and schools to step up and begin the manufacturing of PPE to aid in the fight against COVID-19. While these actions are obviously commendable in such a time of need, it is important to understand the potential liability concerns that emerge as a result of manufacturing of products not necessarily in the organization’s typical scope of business.

Companies & Schools Stepping Up
Under Armour has started manufacturing of face masks and face shields in support of the University of Maryland Medical Center. The company is also experimenting with manufacturing hospital gowns for the medical system.
Not only are clothing companies beginning the manufacturing of PPE, breweries and distilleries in several states, including giants like Budweiser, are leveraging their supplies and equipment to create hand sanitizers.
Business aren’t alone in creating PPE for frontline workers. Colleges and higher education institutions have utilized their 3D printing technology to create face shields and ventilator tools for hospitals.

Liability Concerns
While the actions taken by businesses and schools are worth celebrating, it is important to understand the liability concerns that could exist.
Product liability laws vary from state to state, but generally fall into three main categories. These categories include:
•    Warnings (failure to warn or inadequate warnings)
•    Design defects
•    Manufacturing defects
Strict liability and negligence concepts apply to each of the theories of liability. Purchasers of these products may bring commercial claims for breach of warranty in the event of product failure.
It is important to be aware of these risks before commencing the manufacturing of PPE. The law firm of Saul Ewing Arnstein & Lehr recommends providing a highly visible warnings or disclaimers on manufactured PPE to help mitigate the risk of product liability lawsuits and put the user of this equipment on notice that the products may not be designed to perfection or insulate the user from COVID-19.

Liability Relief
As PPE shortages continue, measures are being taken to protect companies who are manufacturing these equipment from liability. The National Law Review highlighted a declaration from the Secretary of Health and Human Services made on March 10. This declaration provides tort immunity under the Public Readiness and Emergency Preparedness (PREP) Act to organizations involved in creating “countermeasures” against COVID-19.
The covered “countermeasures” triggering this PREP Act immunity include the production of any drug, medicine, vaccine, or device used to treat, diagnose, cure, mitigate, or prevent COVID-19. This could potentially include PPE.
For businesses and colleges producing PPE, the following outline explains what is granted immunity under this declaration:
Covered Businesses – Manufacturers, distributers, program planners and qualified persons cannot be sued under federal or state law. This also includes their officials, agents and employees who manufacture, test, develop, distribute, administer or use “covered countermeasures.”
Covered Products – Aside from the manufacturing of drugs and devices used to treat or prevent COVID-19, any device used to administer these products and all components or constituent materials are also covered. These include products and technologies designed to “enhance” the effects of drugs, devices and products used to help in the effort against COVID-19. Immunity could additionally be extended to fabric and other material suppliers involved in the PPE supply chain.

In these uncertain times, businesses and organizations across the globe want to step up and do their part. While it is always important to lend a helping hand in times of crisis, it is also important to understand the risks involved to protect your organization. Talk to your RCM&D advisor today for more on what steps to take before your organization begins to manufacture or distribute PPE for our frontline workers.