Liability Issues for Businesses in the Time of COVID-19

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Text, Wednesdays with Woodward (registered trademark) A Webinar Series. Liability Issues for Businesses in the Time of COVID-19. Logos under the text, U.S. Chamber Institute for Legal Reform, SBE Council, Small Business & Entrepreneurship Council, Travelers Institute, Travelers, Institute For Veterans And Military Families Syracuse University, J.P Morgan Chase & Company, Founding Partner, ACCION.  

Joan Woodward in a video window in the upper right corner. 

(SPEECH) 
Hi, everyone. Welcome. Joan Woodward here. We are just letting people in the door, and it's going to just take 30 seconds or so. So please bear with us. Our numbers are climbing nicely. We had an overwhelming response today to today's webinar, so I want to give it another few seconds to let people in the door. So thank you. 

OK. We're still climbing on the numbers, but we're going to go ahead and get started. So thanks again for joining us today. Before I begin, this is our third webinar, Wednesdays with Woodward, and about shielding your business from liability issues around COVID-19. 

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This program or presentation is only a tool to assist you in managing your responsibility to maintain safe premises, practices, operations and equipment, and is not for the benefit of any other party. The program or presentation does not cover all potentially hazardous conditions or unsafe acts that may exist and does not constitute legal advice. For decisions regarding use of the practices suggested by this program or presentation, follow the advice of your own legal counsel. Travelers disclaims all forms of warranties whatsoever, without limitation, implementation of any practices suggested by this program or presentation is at your sole discretion, and Travelers or its affiliates shall not be liable to any party for any damages whatsoever arising out of, or in connection with, the information provided or its use. This material does not amend, or otherwise affect, the provisions or coverages  of any insurance policy or bond issued by Travelers, nor is it a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Please note that this session is being recorded by Travelers. The recorded session may be used, copied, adapted, distributed, publicly displayed and or performed as Travelers deems appropriate. 

(SPEECH) 
So before we begin, I'd like to take a moment to draw your attention to this disclaimer on the screen. Our speakers today are going to cover different legal scenarios to help us all think through what's happening out there. But for any legal decisions that may relate to you, using this information discussed during this presentation, always please do follow the advice of your own legal counsel. 

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Photos with text, Joan Woodward, EVP, Public Policy & President, Travelers Institute MODERATOR, Yafit Cohn, VP, Group General Counsel, Chief Sustainability Officer Travelers, SPEAKER, Harold Kim, President US Chamber Institute for Legal Reform, SPEAKER 

(SPEECH) 
So as I said, my name is Joan Woodward. I'll be your moderator today. For those of you who may not be familiar with the Travelers Institute, we are the public policy educational informational arm of the Travelers Insurance company. 

And for over 11 years, we've hosted educational forums across the United States and Canada just like this on issues that really affect our customers, our communities, agents and broker partners, and over 30,000 employees. Issues like small business advocacy, what we're doing today, disaster preparedness, distracted driving, autonomous vehicles, to name a few. 

This is our fourth webinar in our Wednesdays with Woodward series where I have the pleasure of interviewing and speaking with thought leaders and experts about pressing topics that impact both of us on a personal and our professional lives. Over the next few months, every Wednesday we'll host free educational webinars through Thanksgiving. Visit travelersinstitute.org to see recordings of our past events and register for upcoming webinars. 

I want to say a special thank you today to our partner organizations for this event, the US Chamber of Commerce, Institute for Legal Reform, the US Small Business and Entrepreneurship Council, ACCION, and the Institute for Veterans and Military Families. 

Our speakers today are going to discuss really important issues impacting businesses and owners of any size. As businesses start to reopen their doors to employees, customers, and vendors, many are asking themselves what liability they may face due to COVID-19. 

We know that answering these questions will be likely successfully reopening the economy, which is critically important, especially as schools debate how they're going to reopen in a few weeks. A recent US Chamber poll found that more than 2/3 of businesses with 20 to 500 employees are worried about lawsuits they may face related to COVID. And more than 50% of smaller businesses, those with under 20 employees, are worried about that issue as well. 

At Travelers, we have a very long history of supporting small business owners. We hope that this discussion will help shed some light on what liabilities business owners may face, and also what's going on in Capitol Hill, and how they may shield those businesses from liability. We all know Capitol Hill is moving slowly, and very frustrating to watch, but there are many, many, I think, very positive signs telling us that there will be some action on this legislation in the next couple of weeks. 

So during these presentations, please feel free to submit your questions using the Q&A button at the bottom of your screen. So just hover over the bottom middle, and you'll see Q&A. And don't wait to submit your questions till the end. We'd like to see some coming in as our speakers speak. 

So with that, I'm pleased to introduce our terrific speakers today who have extensive experience on these issues. The speakers we'll hear from include Yafit Cohn. She is Vice President and Group General Counsel at Travelers. She's also our Chief Sustainability Officer. So Yafit will place the current COVID liability issues in the context of the broader tort environment, drawing on expertise at Travelers and also at Simpson Thacher as a member of their Public Company Advisory Practice before coming to Travelers. 

Next, we'll have Harold Kim. Harold is President of the US Chamber Institute for Legal Reform. The mission of the institute is to champion a fair legal system that promotes economic growth, opportunities, and Harold provides strategic vision and leadership for the ILR, overseeing their activities including advocacy, research, communication, and voter education initiatives. 

Prior to ILR, Harold served as Special Assistant to the President in the White House Office of Legislative Affairs under President George W. Bush, focusing on issues related to national security, the judiciary, and civil justice reform. With that, I'm really pleased to hand this over to our first speaker, Yafit Cohn. 

Joan, thank you so much for having me. And I'm sorry you can't see me today. The power just went out here in New Jersey where I am, so I apologize for that. But I'm really happy to be talking to you all today. And as Joan mentioned, I thought that it would be interesting and important to give you a sense of the litigation system in this country as it pertains to tort suits before we get into the specific COVID liability issues and the importance of liability protections. 

So for starters, our tort litigation system is absolutely essential to the proper functioning of our society and our economy. And by that, I mean the tort system is a vehicle for holding parties accountable for negligent behavior, reckless, intentionally harmful behavior. And so it serves as a deterrent and helps promote ethical and equitable practices among business entities. 

And if you look at it from the positive side, having a system of enforced laws in place have provided certainty and stability, which has given investors the confidence to invest, and it's provided the foundation that businesses need to succeed in this country. And of course, the tort litigation system enables those who are harmed by negligence or reckless behavior to receive redress. 

The problem is that our system is out of balance right now, and I wanted to discuss just a few of the weaknesses in our tort system, as well as some of the other trends that we've been observing in recent years that altogether contribute to an unlevel playing field and a tort environment that's plagued by litigation abuse, and is inefficient and costly for everyone. So I'll reference five disturbing trends. Next slide, please. 

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Trend 1: Attorney Advertising Has Exploded, Increasing Attorney Representation. 

Two bar charts. The first depicts a rise in TV Legal Advertising, Number of TV Ads, TV Ad Spending from 2008 to 2019. The second compares Injured Claimant Recoveries for every dollar of economic loss between Unrepresented and Represented Claimants. 

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The first trend I wanted to discuss relates to attorney advertising and attorney representation. If you look at that left-hand side of the screen, you could see that since 2008, the amount of money spent by law firms on TV advertising has more than doubled. And it's reached $1.2 billion in 2019. 

In the third quarter of 2019 alone, it's estimated that more than $250 million were spent on almost 3.7 million ads for local legal services or soliciting legal claims across the country. And a lot of that advertising is actually conducted by what we would call aggregators or businesses that recruit plaintiffs and then send their information to law firms. 

So all this advertising has unsurprisingly helped to drive up the number of disputes that are handled by lawyers and the number of tort suits filed. But in the end of the day, a lot of tort claims, especially those that involve insurance carriers, can actually be resolved relatively quickly and easily between the parties and without a contested proceeding. 

At Travelers, I could tell you that we've observed a significant uptick in recent years in attorney representation, including in simple small dollar claims. And for those claims, attorney involvement generally decreases the amount of money that's taken home by the plaintiffs. 

So if you look at the right side of the screen here, this is from a 2017 study on bodily injury cases that involved claimed losses less than or equal to the policy limits. And it found that those claimants who did not hire an attorney actually received a net of $1.17 per dollar of economic loss versus $0.78 for those who needed to pay their attorney. 

And the other thing is that claimants often wait longer to get less. Auto claims, for example, that are represented by attorneys take on average one and a half times as long to close as those without an attorney. Next slide, please. 

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Trend 2: Plaintiffs' Attorneys Shop for Favorable Forums. Manipulation of weak or non-existent rules governing where cases are filed. Results in defendants facing claims in jurisdictions to which they only have a tangential connection. Also occurs within states, where courts in one county are deemed more favorable. 

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The second trend I wanted to reference has to do with forum shopping, which you may have heard about. Forum shopping at its core is a manipulation of weak or non-existent rules that govern where cases may be filed. And that's done for the purpose of litigating in more plaintiff-friendly courts. 

Forum shopping also occurs within states where courts in one county are deemed to be more favorable than others. So Illinois is actually a good example, because its venue rules allow a defendant to sue where any part of the transaction took place. 

And those rules can be and have been stretched so far that in one case, the Illinois Court of Appeals concluded that venue was proper in a county called St. Clair County where a plaintiff alleged that a doctor in a different county negligently arranged for that plaintiff's medical supervision during a transport to St. Louis, Illinois-- Missouri, and the ambulance simply passed through St. Clair County on the way. Those types of weak venue rules drive litigation to specific counties considered to be the most plaintiff-friendly venues with the most generous verdict. 

So to give you an example, following a $250 million asbestos verdict for an out-of-state plaintiff in Madison County, Illinois, plaintiffs then flocked to the same county to file loads of additional asbestos cases. And ultimately, over 90% of the county's asbestos plaintiffs were out of state. So the result of all of that is that defendants ultimately are paying damages not based on what constitutes fair compensation where the injury occurred, but on whether the plaintiff's attorney is successful in forum shopping. 

And the discrepancy in damages among venues can be enormous. There was a 2006 study, for example, that found that the financial benefit to an asbestos plaintiff ranged from $800,000 to $3.8 million, depending on where the plaintiff's attorney was able to file the case. Next slide, please. 

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Trend 3: Third-Party Litigation Funding Firms Alter Structural Incentives. Between 2013 and 2016, American law firms have quadrupled their use of litigation financing. According to some estimates, the amount of money now invested in the litigation funding industry is close to $10 billion. Returns on this investment can be high – in some cases in the “70 to 90 percent range.” 

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The third trend that we're seeing relates to something called third-party litigation funding, which is the practice of investing in another party's litigation in exchange for an expected return. And that return often takes the form of a stake in any settlement or award. 

The reason that third-party litigation funding is popular is because a plaintiff then gets financing at the inception of litigation and no longer bears all the cost and all the risk of litigating. And in the past few years, we've seen litigation financing increase significantly. Between 2013 and 2016, US law firms have quadrupled their use of litigation financing. And the amount of money that's now invested in litigation funding is approximately $10 billion. 

So of course, in some cases, litigation financing helps ensure access to the courts for plaintiffs who deserve redress but might not otherwise be able to afford litigation. But if you look at it in the aggregate, third-party litigation funding has actually had a pernicious impact on our civil justice system. Fundamentally, the problem with third-party litigation funding is one of misaligned incentives, I would say. 

When a third party has a financial stake in the lawsuit, the lawyers being funded by that party are often controlled by that party, and that's sometimes to the detriment of the actual party and interests. And a second party-- sorry, a second problem with the litigation funding scenario is that the loans can come with exorbitant interest rates, sometimes as high as 200%. As you might imagine, this situation could frustrate reasonable settlement efforts as plaintiffs prolong litigation by making larger demands in order to pay back their cash advances. 

At the end of the day, these high rates could leave litigants with little or no money at the end of the lawsuit. I'll give you one example. Travelers recently participated in a case where the plaintiff was advanced $27,000 to file a lawsuit in New York. And after five years of litigation, the case concluded. 

And after contingency fees and litigation costs were all paid, the plaintiff was left with less than $1,000. Meanwhile, the litigation financing firm received $100,000. So all in all, the involvement of third-party litigation funding firms drives up the cost of litigation significantly, and the increased costs are often not going into plaintiffs' pockets. Next slide, please. 

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Trend 4: Plaintiffs Often Recover Medical Damages They Did Not Incur. 2000 Wisconsin Supreme Court Case. Plaintiff's Medical Bill $597,000 minus Plaintiff's Resolved Medical Bill $355,000 = Plaintiff's Recovered Phantom Damages $242,000. 

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This fourth trend relates to something called phantom damages. To back up for a second, we all know that the basic purpose of tort damages is to compensate the plaintiff for an injury that was sustained due to the defendant's conduct. However, a lot of states actually allow plaintiffs to recover what are known as phantom damages, which are damages for medical bills that the medical provider actually billed, but never collected. 

In those states, plaintiffs are allowed to introduce into evidence amounts billed by the medical provider, but not the amounts that were actually paid in full and final settlement of those bills by the plaintiff. And there can be enormous disparities between the medical bills and the actual payments in a given case. 

So if you look at the screen here, this is a real case from 2000. The Wisconsin Supreme Court concluded in this case that it was proper for the trial court to exclude evidence that the plaintiff's medical bills of $597,000 were actually resolved for only $355,000. And that allowed the plaintiff to recover close to $250,000 in phantom damages. So that resulted in a clear windfall for the plaintiff. 

So if you take recoveries like these, you multiply them across thousands of civil cases adjudicated every year, and those add up to enormous sums for damages that were never incurred by anyone. Again, that drives up the cost of our system. Next slide, please. 

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Trend 5: Juries Are Increasingly Willing to Disregard the Law to Teach a Lesson. Data in two pie charts: Percentage of potential jurors who say they would decide a case based on their own personal beliefs of right or wrong: Potential Jurors, 75%. Potential Millennial Jurors, 82%.  Jurors believe that “companies should be punished for bad behavior, even if those practices cause no harm to anyone.” 

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The fifth and final trend I wanted to mention relates to jury attitudes and outsized verdicts. Impartiality, as we all know, is a bedrock principle of our legal system. But we're seeing evidence today that evolving jury attitudes could be jeopardizing that impartiality. 

If you look at the left side of the screen here, you could see that according to a 2019 survey, 75% of potential jurors say they would decide a case based on their own personal beliefs of right or wrong, even if those beliefs conflicted with the law as instructed by the judge. And among millennials, that number jumped to 82%. So this troubling trend actually coincides with another troubling trend, which is that over the past few years, the public's view of big business has soured considerably. 

And what you see on the right side of the screen here is also from a 2019 survey that indicated that almost nine in 10 jurors believe that companies should be punished for bad behavior, even if those practices caused no harm to anyone. Next slide, please. 

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Trend 5: "Nuclear Verdicts" Are Proliferating. A bar chart. Percentage of verdicts 2018 and 2019 Comparison. Since 2011, the annual number of verdicts greater than $5 million has increased by over 50 percent. The size of such awards is also increasing. In 2019, we saw a 300% increase in the number of 20 million-dollar awards versus the average from 2001 through 2009. 

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So these major shifts in jury attitudes are reflected in the proliferation of verdict awards that are significantly higher than would be expected, given the evidence and the injuries in the case. And those outsized verdicts are often known as nuclear verdicts. They often refer to awards of more than $5 to $10 million. 

And they're often borne not out of the fact and not even out of sympathy for the plaintiffs, but of the jury's anger with a corporate defendant. And they're often meant to essentially send a message to the defendant. 

Since 2011, we've seen the number of annual verdicts--sorry, the annual number of verdicts greater than $5 million increasing by over 50%. The size of those awards is increasing as well. So in 2019, we saw a 300% increase in the number of $20 million awards versus the average from 2001 through 2009. 

And of course, there are instances where plaintiffs have been severely injured as a result of wrongful conduct by a defendant. Those plaintiffs absolutely deserve to be adequately compensated. The problem is that even deserving plaintiffs are sometimes receiving outsized awards that bear little relationship to their injuries, and ultimately that can skew our system and contribute to the increased cost of the tort system, which every one of us pays in the end. So next and last slide for me. 

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Shared Costs of the U.S. Tort System. Cost of U.S. Tort System, $429 billion, $3,300 Per Household 

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Speaking of the cost of the US tort system, ILR has estimated that as of 2016, those costs were about $429 billion. And that means that as a portion of the country's total GDP, the US tort system is more than twice as expensive as the tort system of the average Eurozone country. 

If you look at this in perspective, what that means is that if total costs--if the total costs of the tort system were shared evenly and equally among American families, each household would be responsible for over $3,300 per year. And it's even more than that in some states. 

So to circle back to where I started from, all of this is saying that tort liability costs have soared well beyond the level necessary to discourage reckless and negligent behavior and to compensate those who've been harmed, and all Americans are now paying the price. So I wanted to let you know that this is essentially the tort environment that many businesses will find themselves dealing with in the event a federal COVID liability shield is not passed. And now I will hand it over to Harold. 

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Harold Kim in a video window in the upper right corner. 

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Thank you, Yafit. And really appreciate the opportunity to talk to everybody about what's happening here in Washington, DC. 

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The U.S. Capitol. Text, COVID Liability Issues in Washington 

(SPEECH) 
I'm hoping that we can go to the first slide in my deck to guide this conversation. Thank you. Next slide, please. 

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The Coming Wave. Major national discussion on legal reform. Awakening in the business community. Trial lawyers circling. 

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So here in Washington, liability reform is front and center. It is a major national discussion that's happening in Congress and that's happening in the administration, but also in state capitals across the country. And it really is a result of a significant amount of concern that we've been hearing ever since March when the country shut down to look at the emerging liabilities coming out of this pandemic. 

And it has steadily grown ever since then. We've seen case filings to date, and we expect even more to come if it is not contained when it comes to potential liabilities. 

I've got to say, in my 20 years of doing legal reform, there really is an awakening in the business community. We have heard concerns from every sector of the American economy. It doesn't matter if you are a Fortune 500 company or a coffee shop in downtown Atlanta. There are significant concerns about what it means to reopen. What are the risks, and am I going to get sued? 

And I'll have to say that some of the things that you heard from Yafit when it comes to the infrastructure of the plaintiff's lawyer’s business model is starting to really gear up. We're talking about advertising. We're talking about third-party litigation funders getting a lot more involved in this arena, and something that is animating the debate here in Washington and across the country. Next slide, please. 

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The three "T's": Timely. Bill introduced last week. Congress must take immediate action before the flood begins. The August sweet spot. 

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Ever since March of this year, we have been calling for rational policy solutions that should get bipartisan support. And I call it the three T's. They need to be Timely solutions, they need to be Temporary solutions, and they have to be Targeted. 

This legislation that we have been working on ever since the spring of this year was introduced last week by Senator John Cornyn from Texas and co-sponsored by the Majority Leader Mitch McConnell. And it is critically important, number one, that something is done now. 

Now, we've heard from the plaintiff's bar that there's not a whole flood of litigation yet. This is not really a problem. Why are we wasting time in this arena? 

And I will tell you that the cloud of liability is pretty significant. We've done polling. We've done message testing. We've done a number of discussions with small business councils and with state and local chambers, and this concern is real, because it is about risk. It's about uncertainty. And there is no playbook about how to emerge from this pandemic as the country slowly tries to reopen. 

Right now, as we speak, negotiations are happening between the White House and the Democratic leadership. Mark Meadows, the White House Chief of Staff, in addition to Secretary Steven Mnuchin, are sort of the lead negotiators, but they're talking very heavily with Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi. 

Now, this is going to be part of a broader economic stimulus plan, which is going to include things like extension of unemployment insurance, funding to state and local jurisdictions that are really starting to feel the pinch from the coronavirus. And as we speak right now, these discussions are happening. And Congress usually goes on their August recess, so they have a work period that is likely to end next week. 

If you're following The Washington Post or The Wall Street Journal, there are a lot of discussions going on. They're doing it in three to four-hour chunks of time. But we do think that there is a potential opportunity to get something past the goal line that, again, has to be timely in order to give the certainty that businesses need. 

So August-- this month is going to be the sweet spot. Unlikely that something is going to happen this week, but hopefully by next week, we'll see some progress. If you wouldn't mind going to the next slide, please. 

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The three "T's": Temporary. Establish protections during: Five year window from December 2019-2024. Declaration of emergency. Not establishing a permanent federal law. 116th CONGRESS, 2D SESSION. S.4 3 1 7 To lessen the burdens on interstate commerce by discouraging insubstantial lawsuits related to COVID-19 while preserving the ability of individuals and businesses that have suffered real injury to obtain complete relief. IN THE SENATE OF THE UNITED STATES. July 27, 2020. Mr. Cornyn (for himself and Mr. MCCONNELL) introduced the following bill; which was read twice and referred to the Committee on the Judiciary 

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The second T is temporary. We're not looking at liability reforms in perpetuity. The legislation that was introduced last week, Senate Bill 4317 that you see here on your screen, is really time limited. It's a five-year window from December of 2019 up until December of 2024. Now, if there's a declaration of emergency that extends beyond that, then the operative provisions would remain intact. But we do think that it is a reasonable window of time in order to really look at the claims that could emerge out of the coronavirus. 

And it's important to underscore that this is not establishing permanent, long-term types of reforms. And we think it is narrowly tailored in order to respond to the concerns that we're certainly hearing from the business community. The next slide, please. 

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Darts on a dartboard. Text, The Three "T's": Targeted. Tailored protections that address four types of claims: exposure, medical, product, employment 

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So the final T is it's got to be targeted. What we have done over the course of the past several months is really identify the major areas of liability risk. And on the screen, you're going to see them. 

First and foremost, I think that this is probably the biggest ticket item, and that relates to exposure claims. These are claims that employees could bring against employers or customers against businesses, or even students against universities, saying that you did not take reasonable precautions to prevent exposure to the coronavirus. We're talking about negligence claims that could be combined in class action matters and things that we know that the plaintiff lawyers are really carefully looking at. 

A lot of states to date have addressed some of these issues through state legislation, but we think a federal solution is absolutely critical. And the solution is that if you as a business or as a defendant follow CDC guidance and/or state or local guidance on things like social distancing, use of PPE, hand sanitizers, that you shouldn't be sued. And there would be specific exemptions or exceptions for gross negligence and willful misconduct. 

The second area of protection is really going to cover the front lines. We're talking about doctors, nurses, hospitals, those who are addressing the coronavirus head on. A number of states to date from New York to Michigan to the Southeast have enacted their own versions of liability protections to try and avoid medical malpractice claims, because things are happening in real time. 

Decisions are being made. And to second-guess those decisions has been deemed to be completely unacceptable, because those who are putting their lives at risk to treat and care for coronavirus-related patients shouldn't be sued at the end of that rainbow. 

The third area is product liability. We've seen companies re-manufacture and re-purpose by manufacturing ventilators and respirators, as well as distilleries in Kentucky now manufacturing hand sanitizer. And there are existing federal protections that would extend product liability defenses that we think should be extended to the appropriate countermeasures that are being used in the context of this global pandemic. 

And finally, the other area that we had addressed and is addressed in the legislation itself are employment laws, federal, employment, and labor laws. We're talking about potential liabilities under the Americans with Disabilities Act with Title VII claims and things that should be carved out for employers as they try to find out ways to appropriately safeguard and protect their workforce. 

This is a 65-page Bill. We think it is very, very reasonable. And it is completely targeted to the concerns that we have heard, again, since March of this year. If you wouldn't mind going to the very last slide, please. 

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Green states on a map of the United States; Nevada, Utah, Arizona, Alaska, Hawaii, Wyoming, Kansas, Oklahoma, Iowa, Arkansas, Louisiana, Wisconsin, Michigan, Illinois, Indiana, Kentucky, Tennessee, Mississippi, Alabama, Georgia, North Carolina, Virginia, Delaware, New Jersey, Connecticut, Rhode Island, Massachusetts, Pennsylvania, New York, Text, State Activity 

(SPEECH) 
I mentioned state activity. This is a map of the states that have actually done things over the course of the past several months. By last count, it's about 32. It's a combination of legislation enacted by democratic legislature, signed by republican governors, vice versa. And also, executive orders and proclamations from governors themselves realizing that the liability threats are of significant importance as the country tries to reopen. 

So I am happy to talk more about the work that the chamber is doing, give you a little more granular detail in terms of the legislation, and any other questions that you might have. So with that, Joan, I'm going to turn it back over to you. 

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In a photo, men and women raise their hands. Text, Questions? 

(SPEECH) 
OK. Thank you so much, Harold. And Yafit, thank you so much for the macro overview of what's going on out there in the court system. And we're sorry not to see your face today, and we understand you lost power, so thank you for scrambling to join us. 

I do want to get to-- we have a lot of questions coming in, and if you don't know how to ask a question, just hover over the bottom of your screen-- it says Q&A-- and type your question right there. And we're going to get to as many as we can today. As I said, we have a bunch coming in, so that's great. 

First, I have a couple questions just to dive in a little more into the details, especially Harold with regard to the Bill. So both he and I are Hill rats. We worked on the Hill for many years, and we understand how this works exactly. From the outside, it looks very messy. Its sausage being made. 

And I guess my first question is before the details of the Bill, let's just talk about the process. So we have a Bill coming out of the Senate now, and is there a companion Bill in the House? Do we think it's going to get tucked in at the last minute? Or are they going to debate this thing on the floor of the Senate and the House extensively before it gets kind of tucked in? 

Well, the Liability Bill was introduced in the Senate as a separate, freestanding Bill. It's not going to go through what we would call regular order. There's not going to be committee hearings and a committee markup. It was really introduced as a marker to get co-sponsorships from republicans as well as democrats. 

But we anticipate that it could become part of a broader package that is currently being negotiated. And it has the backing, the full backing of the Senate Majority leader who has thrown down the gauntlet and said that any Phase 4 Economic Recovery Bill must-- and I will underscore that word must-- include liability protections. 

There has been a few items of legislation introduced in the House, a bipartisan Bill. But it's not in scope compared to the Senate Bill. And so we think that this will be part of a broader package that is currently being negotiated through three flash points. One is with the White House, with the democratic leadership, and then of course, with the Senate republican and House republican leadership. 

OK. So that's the process. Let's talk about--the devil is in the details, and how this would actually work. When would it go into effect? And you said it would be retroactive back to December 2019. At least, that's the hope right now in the Bill. 

Give us some details, exactly how this would work for a university, for a business owner, a small business owner, a big corporation. Does this encompass all of those potential entities, or is it just business-related? But nonprofits, churches. Talk to about some of the details of who is included here. 

So let me answer the first part of your question. When does it become effective? It would become effective upon the President signing the Bill, which he usually does with a big old Sharpie that he's done in the past. And it would reach back to claims that were filed after December of 2019. 

And the legislation itself would create a federal cause of action for COVID-19-related claims, and it would cover businesses, accommodations, and services. So it's not necessarily the entity that's identified in the definition section of the Bill, but the type of activity. 

And so it's broad in terms of its reach, and it would certainly cover businesses, but it would also cover schools, universities, K through 12. And in fact, the schools and universities, higher learning institutions have all come out in support of this legislation, calling for these protections as universities are looking to open up this fall. 

And something that has a lot of support from a broad range of virtually any entity that creates a convening type of function. We're talking about sports teams. We're talking about churches, nonprofits. And the extent of the liability protections are pretty well thought out in terms of how it would be housed within this Federal Bill. 

OK. And if it doesn't get inserted in this particular Economic Stimulus Bill, is it dead? Does it come back again if there's another stimulus Bill? I mean, what are your chances-- I don't want to put you on the spot, but I know Mitch McConnell said it has to be in there. But we heard from the president saying a payroll tax cut had to be in the stimulus Bill, so give us the odds there. 

I think the conventional wisdom is that this Phase 4 package is the last train leaving the station. You've got to remember, in November, we have an election. And members of Congress are going to want to be back campaigning, and so this is probably it. 

Certainly, when it comes to Majority Leader McConnell, he has emphasized that this is probably the last economic recovery package. He's still dealing with his caucus in terms of the price tag. The democrats sent a Bill over that had funding in the range of a little north of $3 trillion, and the republicans are talking about $1 trillion. And so there's a lot of back and forth that's happening in terms of how to fund this, how to get the appropriations process. 

And so a lot of different moving pieces. We do think that there is a pathway moving forward, because there is an incredible need to do something, whether it's the $600 a week unemployment insurance that has expired already, and the amount of political activity that House members, that Senate members are hearing on a very, very critical basis and in an enormous amount of volume from their constituencies. 

OK. So a lot of horse trading of proposals. And most likely, the Bill's probably going to get more expensive rather than less expensive if this is going to get inserted. So OK. Thank you, Harold. We'll be back to you in a minute with some of our audience questions, but I want to turn to Yafit. So Yafit, what can business owners do to minimize their exposure to COVID-19 liabilities? 

So that's a great question. It's kind of hard to provide overarching liability advice to all businesses because every business, the situation is so different. But in broad strokes, I would say that it's absolutely key for every business to create the safest environment for employees, for customers, for vendors and others. 

And I would say in very broad strokes, that involves four steps. Number one, identify and understand your risk. And that involves assessing your business activities, identifying what controls may be needed to help protect employees and customers. And Harold mentioned this earlier. You know, that could be the sanitizing, face covering, Plexiglas shields, physical distancing, whatever. 

The second step is really once you've identified those controls, implement them. And of course, you have to be sure that your plan aligns with CDC guidance as well as any applicable industry guidance, and of course federal, state, and local requirements and guidance. 

Third, I would say train and educate your employees. You should establish documentable training procedures for all employees, and make sure they understand what they need to do and the importance of the measures that you're taking. 

I think customers and vendors should be instructed on the steps that you're taking as well. And it might make sense in some instances to put up relevant signage for your employees, customers, et cetera. And fourth-- 

Sorry, go ahead. 

Sorry? 

Go ahead. 

I was just going to say, and fourth, just monitor the plan's effectiveness and adjust it as needed. So any plan like this needs to be dynamic. Consider what's working. Consider what needs improvement. And also, keep on top of what guidance or requirements are changing. This is an evolving landscape, and obviously the response plan should be modified as needed. 

And I just wanted to add in the end of the day, I do think that making your business the safest that it can be is the most important step you could take to reduce your exposure. But as you could tell from my presentation, there's no way to eliminate the risk, regardless of how careful you are. 

I think that what's going to happen here unfortunately is if there's no liability shield in place, it's going to be an opportunity for plaintiffs' lawyers to create an issue of fact as to whether the business did or didn't take a particular step. And that's ultimately going to defeat a motion for summary judgment, which means that the case would move forward toward trial. 

And I think all that in the end of the day is going to put pressure on companies and on their insurers to settle. So I do think a lot of cases would be filed with a settlement goal in mind, which is why I think we need the liability shield. 

OK. Just a quick follow-up on that. Are liability issues different when thinking about employees versus external folks like customers or vendors? Are there different issues there for liability? 

Yes. So I think that's a great question too. I'll mention two differences. The first is that employee injuries are generally outside the scope of the tort litigation system. They're generally handled in the Workers' Compensation System. And second, aside from that forum issue, the questions that would need to be addressed are different, depending on whether you're talking about the Tort Litigation System or the Workers' Comp System. 

So in a lawsuit that's brought by a customer or some other external individual, the question will really be whether the business was negligent and whether that negligence was the proximate cause of the plaintiff's injuries. But in the Workers' Compensation System, there's really no liability determination. The central question there is simply whether the injury arose out of the course of employment, in which case it would be covered by workers' comp. And it really bears mention that the liability protections that Harold was talking about before are not applicable in the workers' compensation context. 

OK. Thank you, Yafit. So Harold, in your view, what is really the best way to support our businesses, to help them get what they need at this moment before the shield is passed? 

Well, I would urge your listeners, viewers, folks who are on this webinar to check out the US Chamber website. We have a number of digital resources for businesses of all stripes to look at issues and guides on things like reopening, on customizable workplace flyers. 

It's a really important resource that I think accumulates what's happening at the state level, at the local level. And it's a good resource that we've been getting a lot of positive feedback about. And so I would encourage your viewers to go there and check it out, because there's a wealth of information that I think is going to be helpful as companies and businesses really try and navigate through these challenging times. 

And then of course, we could use as much help as possible in terms of connecting with members of Congress about the importance of getting liability safeguards into place. And to do it in a timely manner, because the clock is ticking. This needs to be done incredibly quickly, because we have to start this country up and running again in terms of its economy. And the impact on schools, from K through 12 to higher learning institutions, are all calling for these protections, again, to remove that cloud of concern, that liability concern, the risk that is out there in this time of great, great uncertainty. 

That's great. So Harold, Yafit had mentioned that the ILR does a lot of research into litigation funding. How do you think this COVID legal environment today will affect litigation funding going forward? Is this going to be helpful or not? 

[LAUGHTER] 

Well, let me put it to you this way. IMF Bentham--I think they're called Omni Bridgeway right now--they're one of the biggest litigation funders in the country. And their head of investments--I believe her name is Allison Chock--just a few months ago said that they are drinking water out of a fire hose, that the opportunities for them in times of great crisis are very significant. And so they're looking to potentially fund all lines of litigation, not just the exposure claims that we talked about. And so these funders are in the driver's seat. 

And we've been calling just basically for the disclosure of these funding agreements because defendants often don't even know that there's a funder lurking in the background, controlling the strings of litigation. And what that does for litigation, which is a very uncertain proposition to begin with, is that it completely distorts that process, because it becomes less about compensating someone based upon the facts and the law and more about an investment vehicle which completely skews how litigation should work in this country. 

And something that we are very focused on as part of this infrastructure that Yafit did a great job laying out. It's the funding. It's the advertising. It's the forum shopping. It's the attorney-driven litigation that's not about finding your way to a jury trial and getting to a courtroom. I mean, certainly that happens. But it's all the types of litigation that's used to put enormous amount of pressure on defendants to settle their cases, either in federal or in state court. 

OK. And we're going to get to some of the state court issues in a moment. I have a number of questions coming in from the audience, and we're going to try to do rapid fire here for Harold and Yafit to kind of answer as much as we can get to.

So first couple of questions here. With the virus having such a long period before someone shows symptoms, it's virtually impossible to prove liability as to where they caught it. So how does this hold up in court? How would that even work? Yafit, you want to take that first? 

Sure. Absolutely. Would it be virtually impossible to prove liability? Yes. I think if there's one piece of good news in any of this, it's that I suspect it will be difficult for plaintiffs to prove causation, except in limited circumstances. 

But unfortunately, in the end of the day, I don't think that's going to prevent the plaintiff's bar from filing lawsuits in hopes of settlement, which we've been talking about. And it's just part of the litigation abuse that we're seeing in the country. 

I think ultimately, when you talk to world-class litigators, they'll tell you that even if you're 100% right, there's only a 70% chance you're going to win in court. So there's a lot of pressure to settle, particularly where the dollars are large. 

Harold, what's your take on this? 

We hear that, oh, causation is going to be an incredibly difficult barrier to establish, but we're not looking at this from the perspective of, oh, OK, this case is going to go all the way to a jury trial. To Yafit's point, we're concerned about attorney-driven litigation that's aimed at leveraging settlements. We've seen it with class action lawsuits, data privacy, consumer-related cases. 

And there are a lot of questionable or warrantless claims that's not substantiated by the science. And it's the machinery of this that we're concerned about, because there is a huge opportunity to make an enormous amount of money off this. 

I mean, if you look historically at major national crises, first, Congress has acted to do something on liability like they did post-9/11. But look at the financial crisis back in 2008 and 2009. We still haven't gotten over the flood of class action lawsuits that were filed. And that's what we're anticipating here unless Congress acts, because there's going to be a lot of blame to be thrown around here, and it's just part of their playbook that we ought to be prepared for. 

And shame on us if we cannot get appropriate liability protections in place to get us back up on our feet for something that no business should be responsible for. I mean, it's not as though businesses were responsible for the coronavirus. I mean, this just happened. I mean, it's a once-in-a-lifetime sort of thing. And everybody is in this-- not everybody-- but the trial lawyers are in this mindset of trying to point blame, and that's not the mindset that we should be in right now. 

So Harold, talk to us just for a minute about how this Federal Bill, if enacted, will complement what's going on in the states. Is it contradictory? Does it preempt it? How does it work between state and potentially the shield in the federal level? 

Sure. There's a carefully crafted preemption provision in the Bill. Actually, a couple of provisions based upon the various areas of claims. Exposure, product liability, medical liability. And basically, the best way to describe it is that the Federal Bill would act as a floor for liability protections. But if a state--let's say North Carolina or Utah, and I think Georgia just did something in the last 24 hours--enacts stronger protections than those state laws would prevail under the express reading of the legislative provisions in the Senate Bill. 

OK, thanks. Another question coming in. Will there be a federal backstop like we saw right after Y2K or 9/11 or TRIA? Will there be some sort of backstop for pandemics in the future? 

Is that for me or Yafit? 

Either. Harold, why don't you take that one? 

Well, I know that there's a lot of talk and discussion about business interruption insurance. I mean, that has definitely been a good bulk of litigation, where restaurant owners or other businesses are trying to get coverage for their commercial policies. 

And there is a lot of talk about doing something similar to other bold initiatives in the past, whether it was TRIA or the 9/11 fund or the flood insurance program. But it's not as perfected as the liability Bill that Congress is currently considering, and I know that there are a lot of stakeholders discussing this. 

What I will tell you is that the chamber has been very vocal about any legislative attempts to rewrite these contracts retroactively, either at the federal or at the state level, because that would completely crater insurance markets, because a pandemic is fundamentally not an insurable risk. The analogy I usually get is if every car in the country got into a car accident at the same time, that would have incredible harm and damage to insurance markets. And we need stable insurance markets in order to spread the risks for businesses and for homeowners and personal lines. 

I'll just add to that. Sorry, I'll just add to that, Joan. From an insurance perspective, I completely agree that there's no way for an insurer to diversify the risk in the midst of a pandemic. In the end of the day, a pandemic is a disaster of a proportion that only the federal government has the capacity to deal with. 

But to Harold's point, at Travelers, we are intent on being part of the solution. We're deeply engaged currently through our trade organizations in trying to develop some sort of public-private partnership that's aimed at creating a mechanism for the industry to bear some of the risk when there's a pandemic. So I guess stay tuned. It remains to be determined, but something that we're working on through our trade organizations. 

OK. Stay tuned on that. Of course, we'll have another webinar on that if it warrants. Yafit, a question for you came in. In your opinion, should clients wait to open when they're absolutely sure or take the risk of opening only to be shut down again by a local or a state government?

I think that's really tough. There's really no right answer. I think like a lot of decisions, it's really going to depend on the specific facts. I think it'll require fact-specific analysis or risk and reward analysis. And it'll depend on the business's needs as well. 

So I think in the end of the day, if everything is working well for the business now with employees working from home, it's probably not worth the risk. But again, I think it's something that every business will have to weigh in terms of potential consequences of reopening or not reopening. 

OK. Another one for you coming in. On your trend number five on jury verdicts, do you believe--Yafit, do you believe that social justice has or will impact jury awards? Is there data regarding racial, ethnic disparities in verdicts? 

Oh, that's a great question. So I am not sure what it's going to be. With you, I would not be surprised if it would impact jury attitudes. But to be honest with you, it's a little bit too early for us to tell. 

What we do know is we're trending in one particular direction, and we've been trending in that direction for a while. So I think that's just where we are right now. At a certain point, we'll be able to know more with respect to the social justice impact. 

OK. Great. Another question probably for you, Yafit. Do you think special events, events cancellation policies will eventually include coverage for COVID-19-related instances? Now all programs are excluding, and we have clients that want to have this type of coverage. Do you think there will be at some point in the insurance industry some limited coverage for special events, events cancellation?

I'm not sure of the answer to that question, to be honest with you. I do come back to the fact that as Harold said, pandemics are generally uninsured, because they're generally uninsurable, so I'm not exactly sure. But there are event cancellation policies that exist today. I don't know what's going to happen with those going forward, whether they're going to become more prevalent. I'm really not sure, to be honest. 

OK. Now to you, Harold. A question coming in. Even in the absence of strict compliance with safety-- even in the absence of strict compliance with safety guidelines, plaintiffs would still need to prove gross negligence, correct? Everyone is making a good faith effort for the most part, but strict compliance must be very difficult for defendants. 

Well, it's a challenge, because the guidelines are evolving as we learn more about the coronavirus. I mean, I remember just months ago, it was recommended not to even wear masks. And I go to the grocery store. Every other week, there's something different when it comes to face shields and countermeasures. 

And so I think it is a challenge for companies of all sizes to try and understand, what are the appropriate standards to follow? Some are mandatory. Some aren't. CDC guidance certainly is not mandatory, but you do have other states and localities getting involved in this. 

And so again, I would go to the resource that I mentioned on the US Chamber's website, which does help businesses get a better holistic understanding of what the standards are, and to calibrate your own countermeasures based upon the nature of your business. But we think that the language in the legislation is flexible enough to afford defendants the ability to have a good faith defense against liability claims from exposure to employment claims and to the things that we have identified, again, since March of this year. 

Joan, just to piggyback off of that, I also wanted to mention that in May, we had put up a website as well-- it's available on travelers.com--that's called Navigating Your Business Through COVID-19. And that also has a whole bunch of risk management resources that help-- that are meant to help businesses safely reopen. And there's some industry-specific guidance on there as well, so that I think is worth checking out too. 

OK. Great. Great resource. Got a question. What is the worst-case scenario if trends Yafit listed continue to go on? Our worst-case scenario, we don't get the Shield Bill passed this year, Yafit's slides become even scarier. Harold, you go first. What's our worst-case scenario? We're going to end on a positive note, but that's not the end. 

The worst-case scenario is a flood of claims that we've seen comparable to asbestos litigation, perhaps even more, just given the reach of the pandemic. And uncontrollable litigation that's going to spike up tort costs that we have certainly quantified from a few years ago. That was part of Yafit's presentation. 

And then as a result of that litigation, capitalizing new areas of litigation that go beyond COVID-19. And I think that that was going to create some serious problems for companies as they're trying to manage their risks moving forward. And the flooding of our court system at the state level and at the federal level, because right now, even cases, they're not getting resolved as quickly because of the court closures, partial openings. 

And so it's going to have an impact on our civil justice system. When we talk about access to justice, it could do a lot of long-term as well as short-term damage. 

I completely agree with that. I'll just add on top of that, what's going to happen is that the cost of everything is going to go up. The cost of goods and services is going to go up. The cost of insurance is going to go up. And there's going to be a cost to the competitiveness of the US economy. So I think this results in a cost to everyone and everything. 

All right. Another quick question we'll get in before the end of the hour. We've seen multiple claims come in over the last few days in the opposite of safety. Customers are refusing to wear masks for local guidelines and claim they're being discriminated against and have mental anguish and embarrassment by being asked to put one on or leave the premises. I believe in both cases; people claim medical reasons for not wearing them. Any advice for our insurers on this scenario and situation? 

I think that's a great question. It's really tricky to navigate that one. I don't have any particular advice. I think in that kind of situation, it probably would warrant a call to the business's council. 

All right. Harold, any thoughts on that one? 

I would add that over the course of the last four weeks, we've heard more concerns from businesses about being the proverbial enforcers of mask policy, where at least at the federal level, it's not mandatory. And certainly, there are a lot of political ramifications and dynamics that are involved in this. 

And we had sent a letter to the National Governors Association as well as the White House in order to encourage the government officials to be a little more direct in terms of actual mandates and not allow the business community basically be on the front lines to enforce mask policy. Because you're seeing fights at Walmart, people pulling guns on others, and the safety issues to the workforce are pretty significant. 

And it's not just happening in a few pockets of this country. So it's a big issue, and something that has to be addressed at the root cause in terms of, what are those policies? How can the government actually create standards that will give the type of guidance to the business community as they deal with their customers? 

OK. Well, we've come to the end of our program here. I just want to ask Harold, we said we'd put you on the spot a little bit. What are the chances of this liability shield making it into the final Bill in the next couple of weeks?

I'm an optimist. I think it gets done. There are going to be a lot of ups and downs. It's going to be dead, and then it's going to resurrect. And I just think that there's too much at stake here. And whether you're a republican or a democrat, there is a critical moment in time in our country's economy to do something on a very grand scale, whether it's on unemployment insurance, whether it's on evictions that are likely to happen without Congress stepping in. And of course, the liability piece of it. 

Yafit, do you have a--thank you, Harold, very much for your participation today. Yafit, do you have a thought on, is it going to get done? 

Yeah. So our best intel says, yes, it will, but you never know. It's outside of our hands. But to echo something that Harold said before, call your Congress member. Call your Senator. We could use all the help that we could get in getting this done. 

OK. Terrific. Listen, I want to thank both of you. It was really terrific. We can go on. We have lots more questions, but we have to end this today. This will be replayed on our website. So please do visit us at travelersinstitute.org to hear this replay in a few days and to register for upcoming programs. As I said, every other Wednesday, we have a session like this. 

Our next webinar will be two weeks from today, August 19. 

(DESCRIPTION) 
Text, Wednesdays With Woodward, A Webinar Series. Life After Shelter in Place: A Conversation with Stanford University School of Medicine Dean Lloyd Minor, MD. Wednesday, August 19th, 1:00-2:00pm EDT. Learn more at travelersinstitute.org 

(SPEECH) 
I'll have the pleasure of interviewing and speaking with the Stanford University School of Medicine Dean, Dr. Lloyd Minor. 

Dr. Minor will share the state of play on combating COVID, including the latest developments with vaccines and therapeutics. Every day, you're either turning on CNBC or reading The Wall Street Journal that the federal government has purchased lots of doses of these Phase III trial drugs coming out from many different companies.

And Dr. Minor is going to talk with us about how that works. How's the supply chain of vaccine and therapeutics? Who gets it first? What countries are in line to get it first? So we're really thrilled to have him, again, two weeks from today, 1 o'clock. And please register on our website, travelersinstitute.org. And if you were on this call today, you'll receive an email from us also with the invitation, and you can register that way.

So again, we're so pleased to have you all. Please put your mask on. Please stay away from others who don't have a mask. And I hope your kids can get back to school in a normal way over the next couple of weeks. I certainly hope my four will. And please stay safe out there. And thank you for joining us. Take care.

Thank you, Joan.

Thank you.

Thank you.