Life Sciences: Liability and Immunity During COVID-19

[sounds of construction work in the background]
Mathieu: Hi, I’m Mathieu Rompré. Welcome to the Continuity podcast.

Peggy: And I’m Peggy Moss, and this… Mathieu, where are you?

Mathieu: Well, it’s a pandemic. I’m at home, and my street is just a giant construction zone right now. Don’t you think they should have put a warning on my door to let me know that people recording podcasts in the neighbourhood may experience disruptions? You know, just like the disclaimers on health-care products and medical devices.

Peggy: Hm, before you pull out all the legal stops, you might want to hear this. Today, we’re talking with Ariane Bisaillon and Jessica Lam. Both are litigation associates at Blakes. They represent life sciences businesses and know a lot about immunity, liability and forgiveness in the context of COVID-19.

Peggy: Jessica, it’s nearly impossible to talk about the pandemic without thinking of the health-care industry, whether with respect to COVID-19 outbreaks, medicines and medical devices used for virus prevention and treatment or PPE shortages. What are some of the big questions your clients are asking you right now?

Jessica: Well, one of the biggest questions that our clients have is whether there is any immunity from liability. So, in the United States the federal government has released a declaration that grants liability immunity against a wide range of claims relating to countermeasures that treat, diagnose or prevent COVID-19. Unlike the U.S., there is no equivalent federal level immunity in Canada, and that’s because the federal Emergencies Act has not been invoked. Now, all the provinces have invoked emergency legislation, but the potential liability immunity under those acts is generally quite narrow and is often dependent upon a specific order, appointment or other formal direction from the government. There is some broader protection in B.C., where general liability protection has been extended to persons who operate or provide essential services, and a couple of weeks ago, the Ontario government announced that it was looking at granting immunity from civil lawsuits related to COVID-19 to those who acted in good faith, but to date, we have not seen any recent announcements on the issue and no bill has been introduced yet relating to an immunity provision.

Mathieu: Ariane, what are some of the limits of these provisions, and what strategies can we use to mitigate exposure to liability?

Ariane: Most of the immunity legislation that Jessica mentioned has yet to be interpreted by the courts. So, there’s uncertainty as to the scope of the statutory immunity provisions in terms of who’s afforded the immunity but also the types of liability that these provisions cover. For instance, is it limited to product liability, or does it also cover misleading advertising or shortages and delayed supply? And another area of uncertainty is whether the immunity will remain in place after the state of health emergency is lifted by the various provinces. But the current context affords a unique opportunity to negotiate with governmental authorities in terms of public procurement contracts, and so this may include negotiating the adoption of broader and clearer indemnity provisions to secure clarity as to the exact scope covered by these indemnity provisions and make sure that it’s clear that it survives once the state of emergency is lifted. And when that’s not possible another risk mitigation strategy is to negotiate indemnification provisions with either government or private purchasers and with key suppliers. Again, this is an opportunity to specifically address certain liability risks and achieve greater predictability in terms of risk management.

Peggy: Jessica, what’s your sense of how courts will respond in terms of identifying the standard of care in a negligence action?

Jessica: I think the role that government has played in this crisis will play an important aspect of the standard of care analysis. All levels of government across Canada, as well as public health authorities, have issued directives or policies for the avoidance of COVID transmission risks. Evidence of compliance with these directives will be very helpful in supporting an argument that the defendant’s actions were reasonable. But these directives from various bodies, they’re not always consistent and they change quickly, which can make compliance difficult. Failure to comply with relevant directives could give rise to plaintiff’s arguments that the defendants fell below the required standard of care. So, it’s very important to become informed and stay informed of your relevant government and public health authority directives. That being said, courts should appreciate that these are unprecedented times. The government has raised a call to action, and companies are responding to this call to action and the urgent need for products and medical devices relating to COVID-19. All of this, the urgent need ― the government call to action and compliance with prevailing regulatory requirements ― will have to be taken into account in a negligence inquiry, and it should be helpful to defendants’ arguments that their actions were reasonable in the circumstances.

Mathieu: Ariane, our clients are also interested in class-action risks. What are some of the trends that you’re seeing in class actions as they relate to COVID-19?

Ariane: So, any major event that gets a lot of media coverage will typically trigger class-action lawsuits, and the plaintiffs’ bar is usually very reactive to these types of events and will file class-action lawsuits relatively fast after these events occur, and COVID-19 certainly is no exception to that trend. So far, we’ve seen class actions relating to consumer protection, business interruption insurance, but also, in the life sciences field, class actions against owners and operators of nursing homes have been a common occurrence. In terms of what to expect for future class actions, what we’ve seen in the past is that events that get a lot of media coverage also generate what we describe as creative class actions. So, one example is a class action that was filed in Quebec against the government for alleged negligence in addressing climate change that was brought on behalf of people who are 35 years old and younger. So, we need to keep an eye out for these types of novel causes of action that may be asserted in the context of COVID as well.

Peggy: Ariane, we’ve talked about a lot ― product liability, actions in negligence against institutions. Is there anything else that life sciences clients need to keep in mind in terms of litigation risk?

Ariane: Well, these are unprecedented times. We’ve seen spikes in the demand for specific products at the same time around the globe, reduced production capacity due to stay-at-home orders but also certain restrictions to international trade affecting the supply of certain high-demand products. So, all this combined together creates pressure on the supply chain and may, in turn, give rise to an increased risk of litigation between the parties and the supply chain for the manufacturing and sale of drugs, medical devices and other health products. And when developing a legal risk mitigation plan, businesses may consider, first of all, a review of their key supply contracts to really assess what’s the lay of the land in terms of their existing contracts, what do they provide for in terms of exclusivity clauses, force majeure clauses, indemnification, limitations of liability, and develop a plan accordingly. Identifying key substances, materials and suppliers in their supply chain, and vetting alternative suppliers in advance is also advisable and meets the regulatory reporting obligations.

Peggy: Thank you, Ariane and Jessica, for taking the time to talk with us today and giving us a sense of the complicated COVID landscape for the life sciences industry.

Mathieu: Listeners, if you’d like more information on this or any other topic related to COVID-19 and the law, please visit blakes.com.

Peggy: Until next time, stay safe and stay well.