The United States Court of Appeals for the Third Circuit (“Federal Appellate Court”) held in its precedential opinion filed on October 20, 2021: “Federal courts have limited jurisdiction. We may decide only cases or controversies that the Constitution and Congress say we may decide. Here, the estates of the deceased filed wrongful-death lawsuits against the nursing homes. They filed in state court and asserted only garden-variety state-law claims, so state court is where these cases belong. We will affirm the order of the District Court.”
Joseph Maglioli, Dale Petry, Wanda Kaegi, and Stephen Blaine were residents of two different New Jersey nursing homes when they died from COVID-19. Their estates claim that the nursing homes acted negligently in handling the COVID-19 pandemic, causing the residents’ deaths. The estates commenced negligence and wrongful-death lawsuits against the nursing homes in state court on behalf of themselves, the family members of the deceased, and residents similarly situated.
The nursing homes removed to federal court, but the District Court dismissed the cases for lack of subject-matter jurisdiction and remanded them to state court. The nursing homes appealed, arguing that the District Court has three independent grounds for federal jurisdiction: federal officer removal, complete preemption of state law, and the presence of a substantial federal issue. The estates did not invoke the power of the federal courts.
In 2005, Congress passed the Public Readiness and Emergency Preparedness Act (“PREP Act”), 42 U.S.C. §§ 247d-6d, 247d6e. The PREP Act (“Act”) protects certain covered individuals—such as pharmacies and drug manufacturers—from lawsuits during a public-health emergency. The Act lies dormant until invoked by the Secretary of the Department of Health and Human Services (“HHS”). If the Secretary deems a health threat a public-health emergency, the Secretary may publish a declaration in the Federal Register recommending certain “covered countermeasures.” When the Secretary makes such a declaration, the covered individuals become immune from suit and liability from claims related to the administration of a covered countermeasure. § 247d6d(a)(1).
In March 2020, the Secretary issued a declaration under the PREP Act, declaring that COVID-19 is a public-health emergency. 85 Fed. Reg. 15,198, 15,201 (Mar. 17, 2020). The Secretary recommended a series of covered countermeasures that includes drugs, devices, and products “used to treat, diagnose, cure, prevent, or mitigate COVID-19,” subject to the PREP Act’s definitions. The Secretary has since amended the declaration seven times. HHS has also issued advisory opinions and guidance letters on various issues related to the declaration.
The Secretary controls the scope of immunity through the declaration and amendments, within the confines of the PREP Act. A covered person enjoys immunity from all claims arising under federal or state law that relate to the use of a covered countermeasure. 42 U.S.C. § 247d-6d(a)(1). Covered persons include manufacturers, distributors, program planners, and qualified persons, as well as their officials, agents, and employees. 85 Fed. Reg. at 15,201.
The scope of immunity is broad. Covered persons are immune from “any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure.” 42 U.S.C. § 247d-6d(a)(2)(B). That includes claims relating to “the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such countermeasure.”
The Act establishes a fund to compensate “eligible individuals for covered injuries directly caused by the administration or use of a covered countermeasure.” § 247d-6e(a). The Secretary has broad authority to issue regulations determining who and what types of injuries qualify for compensation under the fund. Id. § 247d6e(b)(4)–(5).
There is one exception to this statutory immunity. The PREP Act provides “an exclusive Federal cause of action against a covered person for death or serious physical injury proximately caused by willful misconduct.” § 247d6d(d)(1). “Willful misconduct” is in turn defined as “an act or omission that is taken—(i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.” § 247d-6d(c)(1)(A). The Act clarifies that willful misconduct “shall be construed as establishing a standard for liability that is more stringent than a standard of negligence in any form or recklessness.” § 247d-6d(c)(1)(B). Notwithstanding the statutory definition, the Secretary may issue regulations that further restrict what acts or omissions qualify as willful misconduct.
Federal Appellate Court Opinion
The Federal Appellate Court stated, “HHS is not delegated authority under the PREP Act to interpret the scope of federal courts’ jurisdiction. To the extent the PREP Act delegates authority to the Secretary, it “does not empower the Secretary to regulate the scope of the judicial power vested by the statute” … The nursing homes have cited no decisions in which a federal court of appeals deferred to an agency’s interpretation of federal-court jurisdiction, and we are aware of none.”
Federal Officer Removal Statute
The federal-officer-removal statute permits certain officers of the United States to remove actions to federal court. 28 U.S.C. § 1442(a)(1). To remove a case under § 1442(a)(1), a defendant must meet four requirements: (1) the defendant must be a “person” within the meaning of the statute; (2) the plaintiff’s claims must be based upon the defendant “acting under” the United States, its agencies, or its officers; (3) the plaintiff’s claims against the defendant must be “for or relating to” an act under color of federal office; and (4) the defendant must raise a colorable federal defense to the plaintiff’s claims.
The Federal Appellate Court stated: “We will affirm because the nursing homes were not “acting under” the United States, its agencies, or its officers. The nursing homes are private parties, not federal actors. They may nevertheless invoke federal-officer removal if they show they were “acting under” federal officers … The phrase “acting under” is broad, and we construe it liberally. Id. But the phrase is not boundless. Merely complying with federal laws and regulations is not “acting under” a federal officer for purposes of federal-officer removal. Id. at 153. Even a firm subject to detailed regulations and whose “activities are highly supervised and monitored” is not “acting under” a federal officer. Id. The nursing homes must demonstrate something beyond regulation or compliance. They must show that their actions “involve an effort to assist, or to help carry out, the duties or tasks of the federal superior.”
“The nursing homes here do not assist or help carry out the duties of a federal superior. They are not government contractors … They do not have the close relationship with the federal government that we recognized in the nonprofit community defenders. They are not delegated federal authority, nor do they provide a service that the federal government would otherwise provide … Even assuming the nursing homes are subject to intense regulation, that alone does not mean they were “acting under” federal officers.”
The Federal Appellate Court stated: “the PREP Act creates an exclusive cause of action for willful misconduct. But the estates allege only negligence, not willful misconduct. The estates’ negligence claims thus do not fall within scope of the exclusive federal cause of action. They are not completely preempted, so they belong in state court.”
“Just because the PREP Act creates an exclusive federal cause of action does not mean it completely preempts the estates’ state-law claims. To remove to federal court, the nursing homes also must show that the state-law claims fall within the scope of the exclusive federal cause of action. In other words, we must determine whether the estates could have brought their claims under the PREP Act’s cause of action for willful misconduct … Congress could have created a cause of action for negligence or general tort liability. It did not. Just as intentional torts, strict liability, and negligence are independent causes of action, so too willful misconduct under the PREP Act is an independent cause of action … we cannot infer from that fleeting statement [the plaintiff’s request for punitive damages] that the estates allege the nursing homes acted with intent “to achieve a wrongful purpose,” or with knowledge that their actions lacked “legal or factual justification.” 42 U.S.C. § 247d-6d(c)(1)(A). Thus, the estates could not have brought their claims under § 247d-6d(d)(1) of the PREP Act.”
“We do not hold that all state-law causes of action are invulnerable to complete preemption under the PREP Act. Conceivably, some state-law claims could fall within Congress’s narrow cause of action for willful misconduct. We also do not address whether the PREP Act preempts the estates’ claims under ordinary preemption rules. That is for the state court to determine on remand. We hold only that (1) the estates’ negligence claims based on New Jersey law do not fall under the PREP Act’s narrow cause of action for willful misconduct, and (2) the PREP Act’s compensation fund is not an exclusive federal cause of action triggering removal jurisdiction.”
Source Estate of Joseph Maglioli v. Alliance HC Holdings LLC, Nos. 20-2833.
If you or a loved one suffered injuries (or death) while a resident of a nursing home in the United States due to an infection acquired in a nursing home such as COVID-19, nursing home neglect, nursing home negligence, nursing home abuse, or nursing home fraud, you should promptly contact a local nursing home claim attorney in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf, if appropriate.
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