COVID-19 Litigation: What Hotels Have Learned and How to Mitigate Future Exposure
COVID-19 Litigation: What Hotels Have Learned and How to Mitigate Future Exposure
With travelers returning to hotel destinations across the world, threats of COVID-19 contamination continue to expose the hospitality industry to various legal risks. With more than 2,000 COVID-related cases currently on file in the United States, the risk remains, especially in the areas of negligent exposure and labor and employment. This article will examine some of the increased legal risks to the hotel industry and some suggestions to mitigate or reduce exposure to COVID-19 related lawsuits.
After over a year of staying home in many jurisdictions, travelers are desperate to return to vacations, staycations, and over-night escapes from their daily routine.
Short-term rentals such as Airbnb and VRBO saw astronomically high increases in the later of 2020 and early 2021, but patrons are now returning to the ease and comfort of their favorite hotel chains. Hotel shares are increasing in price, properties are partially re-opening, and the hospitality industry is hiring again.
But while rooms are being book, some at increased prices due to demand, hospitality management and executives must be weary of new or increased liability in the wake of COVID-19. Understanding these legal exposures and management of these new risks are critical to the success of the recovering hotel industry. While property owners are not the insurers of their guests, hotels may have an increased duty to their patrons with respect to the known risk of COVID-19.
Most states follow a general negligence standard: that a hotelier or landowner must (1) keep the property in a reasonably safe condition and protect the guests from dangers the hotel is or should be aware; and (2) to warn the guest of hidden dangers which are or should be known to the hotel and unknown to the guest.
What is Reasonable?
What is reasonable with regards to COVID-19 related personal injury claims is going to be evaluated considering the standards at the time. For example, what was reasonable in February 2020, before most of the world understood the risk of COVID-19 or the science of transmission, will be different than the summer of 2020, and the spring of 2021, when news of the Delta variant struck.
When is a Warning Required?
Certainly everyone has heard of the virus and the ongoing pandemic. An argument could be made that guests should know of COVID-19 risks or that they could discover the risk of COVID-19 through the exercise of reasonable care. But the inquiry doesn’t stop there. What if the hotel had knowledge of exposure to COVID-19 and failed to make exposure known to guests who had likely contact?
The best practice, which is mandated in some states, is visible clear warnings in entry points and places of communal gathering of the existence of the virus and reasonable precautions related to sanitation, hygiene, and social distancing. Signage should not display a false sense of comfort or security and should adequately inform guests of the risk.
Will reasonable care and warnings protect the hotel industry from suit? Certainly, not. Waves of litigation related to COVID-19 claims for negligence, employment issues, and insurance policies have started to make headway. In fact, according to Penn Law’s COVID Coverage Litigation Tracker as of September 27, 2021, at least 2,053 COVID-19 related law suits have been file in the United States.
As of the date of this publication, the majority of those cases have been related to business interruption or income, but hundreds related to contamination, civil authority, labor and employment, and bodily injury have followed and continue to be filed. Keep in mind, that 207 of those cases are class actions, meaning they have multiple claimants, so the number of actual COVID-19 related legal claims trumps the actual number of cases filed.
Some of the legal risks faced by hoteliers are not new, but have been amplified by the pandemic. COVID-19 has created a niche market for negligent exposure claims. In order to defend such a claim, as discussed above, a hotel is going to have to exercise reasonable care at the time of the incident (exposure). While most health and safety standards stay fairly constant over time, COVID-19 introduced us to a world in which we tuned into to daily briefings from Dr. Anthony Fauci.
Consider for example the ever-evolving CDC sanitation protocols, mask policies, recommendations related to the size of gatherings, or food preparation standards: failure to comply with commercial reasonableness related to health and safety is a recipe for litigation. Wise management will adopt to the changing COVID-19 guidance provided by governmental agencies and create policies and procedures that are compliant and regularly communicated to employees and guests.
This means dedicated personnel monitoring the changes in health and safety standards, creation of evolving policies related to the hotel’s duty of care, and constant communications of the changing standards to employees and guests. Performance of sanitation and disinfection should be well-documented. Records should be compiled and reviewed by management regularly to ensure performance of the hotel’s health and safety standards. Hoteliers with the means should consider partnering with health care providers and/or consultants to develop reasonable and reliable safety policies.
While compliance is no guarantee that claims or litigation will not surface, some states, such as the hospitality-saturated state of Florida, have passed legislation limiting or providing immunity to liability for COVID-19 related claims if compliance with governmental standards is demonstrated. Under Florida’s new law, F.S. 768.38, if a court determines that the business entity made a good faith effort to substantially comply with authoritative or controlling government-issued health standards or guidance at the time the action occurred, then the business entity is immune from civil liability. North Carolina, Oklahoma, Utah, Wyoming, Alabama, Arkansas, Georgia and more have passed similar legislation. Such a limitation or immunity should drive hotel management into observing and strictly implementing CDC and state and local guidelines.
Another source of litigation amplified by COVID-19 are claims by employees. Employers must maintain safe working environments for their employees consistent with applicable law and regulations. Increased care and limited exposure for employees with higher risks should be evaluated. Awareness and development of policies to protect the privacy of persons with higher risk and confidentiality of employees’ vaccine status is critical, especially because many lawsuits based in personal injury related to COVID-19 have been lodged by employees.
Employers should carefully review local and state policies related to mask and vaccine mandates, vaccine passports, and mandatory testing policies before changing hotel policies. Policies related to the use, provision, or restrictions of Personal Protective Equipment (PPE) should be investigated. Individual rights to privacy and self-governance must be carefully weighed against general health and welfare, likely with legal guidance. Eligible employers should consult the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), and Title VII of the Civil Rights Act as they relate to employees impacted by COVID-19.
Protocols should be developed and implemented when a hotel learns that a guest or employee has contracted or come into direct contact with a person with COVID-19. These policies should include standards for reporting cases of COVID-19 and communicating potential exposure, while maintaining confidentiality of protected health information as required by the ADA and HIPAA. This also requires dedicated records related to the investigation of a possible infection or contact, as well as documentation of prompt and reasonable remedial measures to ensure proper sanitizing of the property where needed. Governmental reporting guidelines should be carefully followed.
Hotel management and executives should consult their insurance policies. Many general liability policies and business-interruption carriers have denied coverage under a force majeure (act of God) clause or other claimed exclusion. Risk management should be aware of its current coverage and seek clarity regarding COVID-19 related claims, obtaining additional or excess coverage where applicable. Many insurers have or plan to adopt a virus exclusion. Critical-illness coverage is traditionally supplemental benefit that must be bargained for. Hotel stakeholders should also look at their group health care plans, workers compensation policies, and long-term disability programs to see how they may be implicated or excluded if the claim is COVID-19 related.
In sum, the hospitality industry suffered and continues to suffer the consequences of the pandemic. Legal trends suggest that litigation will continue and that the long trail of COVID-19 related cases will continue to grow. In order to meet that ongoing challenge, hoteliers and executives should carefully examine their exposure and develop and implement reasonable policies to mitigate additional legal exposure.
Republished from the Hotel Business Review with permission from www.HotelExecutive.com.