Order Code RS22327
Updated December 20, 2005
CRS Report for Congress
Received through the CRS Web
Pandemic Flu Liability Limitation Legislation
Henry Cohen
Legislative Attorney
American Law Division
Summary
Division E of House Conference Report 109-359 (agreed to by the House on
December 19, 2005), which accompanies H.R. 2863, which is the Department of
Defense appropriations for FY2006, would limit liability with respect to pandemic flu
countermeasures. Specifically, upon a declaration by the Secretary of Health and
Human Services of a public health emergency or the credible risk of such emergency,
Division E would, with respect to a “covered countermeasure,” eliminate liability, with
one exception, for the United States, and for manufacturers, distributors, program
planners, persons who prescribe, administer or dispense the countermeasure, and
employees of any of the above. The exception would be that a defendant who engaged
in willful misconduct would be subject to liability under a new federal cause of action,
though not under state tort law. Division E’s limitation on liability would be a more
severe restriction on victims’ ability to recover than exists in most federal tort reform
statutes. However, victims could, in lieu of suing, accept payment under a new
“Covered Countermeasure Process Fund,” if Congress appropriates money for this fund.
Immunity from Liability
This report analyzes the pandemic flu liability limitation legislation pending in the
109th Congress — specifically, Division E of House Conference Report 109-359 (agreed
to by the House on December 19, 2005), which accompanies H.R. 2863, which is the
Department of Defense appropriations for FY2006 — and compares it with existing
federal tort reform statutes. Division E, which is titled the “Public Readiness and
Emergency Preparedness Act,” would create § 319F-3 of the Public Health Service Act,
which would provide that, except in one circumstance (discussed below under “New
Federal Cause of Action”), a “covered person” would be immune from suit and liability
for “all claims for loss caused by, arising out of, relating to, or resulting from the
administration to or the use by an individual of a covered countermeasure if a declaration
... has been issued with respect to such countermeasure.” The declaration referred to
would be a declaration by the Secretary of Health and Human Services of a public health
emergency or the credible risk of such emergency.
Congressional Research Service ˜ The Library of Congress

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Division E would define a “covered person” to include the United States and a (i)
manufacturer, (ii) distributor, (iii) program planner, (iv) qualified person who prescribed,
administered, or dispensed a covered countermeasure, or (v) official, agent, or employee
of (i) through (iv). Under the Federal Tort Claims Act, officials, agents, and employees
of the United States are already immune from tort liability. 28 U.S.C. §§ 2679(b)(1),
2671.
Immunity would apply “to any claim for loss that has a causal relationship with the
administration to or use by an individual of a covered countermeasure, including a causal
relationship with the design, development, clinical testing or investigation, manufacture,
labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase,
donation, dispensing, prescribing, administration, or use of such countermeasure.”
A “covered countermeasure” would include
(A) “a qualified pandemic or epidemic
product,” (B) “a security countermeasure,” or (C) a drug, biological product, or device
that is authorized for emergency use in accordance with section 564 of the Federal, Food,
Drug, and Cosmetic Act. Each of the terms in (A), (B), and (C) is itself defined in
Division E as follows.
(A) “Qualified pandemic or epidemic product” is defined as a drug, biological
product. or device, as these three terms are defined in the Federal, Food, Drug, and
Cosmetic Act, with the additional limitation that all three terms apply only to “a product
manufactured, used, designed, developed, modified, licensed, or procured ... to diagnose,
mitigate, prevent, treat, or cure a pandemic or epidemic,” or “a serious or life-threatening
disease or condition caused by [such] a product” — but only if such a product meets one
of three other qualifications under the Federal Food, Drug, and Cosmetic Act.
(B) “Security countermeasure” is defined in Division E as it is defined in § 319F-
2(c)(1)(B) of the Public Health Service Act,1 as a drug, biological product, or device (as
those terms are defined in the Federal Food, Drug, and Cosmetic Act) that the Secretary
of Health and Human Services approves as necessary to diagnose, mitigate, prevent, or
treat harm from any biological, chemical, radiological, or nuclear agent.2
(C) “Drug,” “biological product,” and “device” are all defined by the Federal Food,
Drug, and Cosmetic Act.
New Federal Cause of Action
The single circumstance in which Division E would allow a covered person to be
held liable would be when a “death or serious physical injury” was caused by the “willful
misconduct” of a covered person. Division E defines “willful misconduct” 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.” In
addition, the Secretary of HHS, in consultation with the Attorney General, “shall
1 Section 319F-2 was enacted by the Project Bioshield Act of 2004, P.L. 108-276, § 3, and is
codified at 42 U.S.C. § 247d-6b.
2 This is a summary of a more complex definition.

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promulgate regulations ... that further restrict the scope of actions or omissions by a
covered person that may qualify as ‘willful misconduct.’” Furthermore, “the plaintiff
shall have the burden of proving by clear and convincing evidence willful misconduct by
each covered person sued and that such willful misconduct caused the death or serious
physical injury.” The “clear and convincing” standard is higher than the usual burden of
proof in civil cases, which is proof by a “preponderance of the evidence.” Finally, if an
act or omission by a manufacturer or distributor is subject to regulation by Division E or
by the Federal Food, Drug, and Cosmetic Act, then such act or omission shall not
constitute willful misconduct if neither the Secretary of HHS nor the Attorney General has
initiated an enforcement action with respect to the act or omission, or if such an
enforcement action has been initiated and the enforcement action has been terminated or
finally resolved without a specified penalty imposed on the covered person.
The proceeding in which an injured party would seek to prove that a covered person
had engaged in willful misconduct would be a new federal cause of action that Division
E would create; suits under state tort law would be prohibited. Subsection (d) of the new
§ 319F-3 provides: “For purposes of section 2679(b)(2)(B) of title 28, United States Code,
such a cause of action is not an action brought for violation of a statute of the United
States under which an action against a person is otherwise authorized.” This apparently
means that the new federal cause of action could not be brought against a federal
employee.3
Division E provides that suits under the new federal cause of action could be brought
only in the U.S. District Court for the District of Columbia, and that such court shall apply
the substantive law, including choice of law principles, of the state in which the alleged
willful misconduct occurred. The reference to “choice of law principles” means that the
court would apply the law of the state in which the alleged willful misconduct occurred,
but, if that state’s law provided that a different state’s law should apply, then the court
would apply the other state’s law.4
Although federal district court cases are usually heard by a single judge, cases under
Division E’s new federal cause of action would be “assigned initially to a panel of three
judges. Such panel shall have jurisdiction over such action for purposes of considering
motions to dismiss, motions for summary judgment, and matters related thereto. If such
panel has denied such motions, or if the time for filing such motions has expired, such
panel shall refer the action to the chief judge for assignment for further proceedings,
including any trial.” This suggests that the panel’s jurisdiction would be limited to
pretrial motions, and that a single judge would run the trial, including ruling on motions
to dismiss and motions for summary judgment that were made after the trial began.
3 Strictly speaking, § 2679(b)(1)(B) does not authorize actions against federal employees, but
provides that § 2679(b)(1)(A), which gives federal employees immunity from suits under state
tort law, shall not apply to actions brought under federal statutes. It is such federal statutes, not
§ 2679(b)(1)(B), that authorize actions against federal employees.
4 The reason that the bill would create a federal cause of action and have a federal court apply
state law, rather than simply requiring state causes of action to be brought in federal court, may
be that it might have been unconstitutional to allow state causes of action between plaintiffs and
defendants from the same state to be brought in federal court. See, In re TMI Litigation Cases
Consol. II, 940 F.2d 832, 848-851 (3d Cir. 1991).

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Under the new federal cause of action, damage awards would be reduced by the
amount of collateral source benefits, with “collateral source benefits” defined to include
amounts the plaintiff is entitled to receive from any governmental program, workers’
compensation law, health or disability insurance, and the like. Collateral sources would
have no right of subrogation, which means that they could not recover, out of the damages
the plaintiff recovers in a lawsuit brought under the new federal cause of action, benefits
that they had paid the plaintiff.
Under the new federal cause of action, noneconomic damages, which are damages
for pain and suffering and other non-monetary losses, “may be awarded only in an amount
directly proportional to the percentage of responsibility of a defendant for harm to the
plaintiff.” This means that, if two defendants were found liable for willful misconduct,
then they would not be jointly and severally liable for noneconomic damages, which
means that they would not each be liable for the full amount of the plaintiff’s
noneconomic damages. If, for example, one of the two defendants was 25 percent
responsible for the harm and the other was 75 percent responsible for the harm, then the
plaintiff could recover no more than 25 percent of his noneconomic damages from the
first, even if the second were insolvent. With respect to economic damages, however, the
plaintiff could recover up to 100 percent from either liable party, if state law provided for
joint and several liability.
Under the new federal cause of action, Rule 11 sanctions against attorneys, law
firms, or parties, for filing frivolous claims or defenses or filing papers for improper
purposes, would be mandatory. Rule 11 currently makes sanctions discretionary on the
part of the court.
Covered Countermeasure Process Fund
Division E would also create a new section 319F-4 of the Public Health Service Act
which, upon issuance by the Secretary of the declaration referred to in the first paragraph
of this report, would establish in the Treasury the “Covered Countermeasure Process
Fund.” “[T]he Secretary shall, after amounts have by law been provided for the Fund
under subsection (a)5 provide compensation to an eligible individual for a covered injury
[i.e., serious physical injury or death] directly caused by the administration or use of a
covered countermeasure pursuant to such declaration.”6 Despite the “shall” quoted in the
previous sentence, an eligible “individual has an election to accept the compensation or
to bring an action under” the new federal cause of action, but could not do both.
Compensation under this fund would be in the same amount as is prescribed by sections
264, 265, and 266 of the Public Service Health Act for persons injured as a result of the
administration of certain countermeasures against smallpox.7 These three sections
5 The reference to subsection (a) seems unclear because subsection (a) provides for the
establishment of the fund, not for its funding.
6 Thus, the Covered Countermeasure Process Fund will not provide compensation unless
Congress enacts a separate statute that appropriates money for it.
7 Sections 264, 265, and 266 were enacted by the Smallpox Protection Act, Public Law 108-20
(2003), and are codified, respectively, at 42 U.S.C. § 239c, 239d, and 239e.

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provide, respectively, medical benefits, compensation for lost employment income, and
death benefits, but do not provide damages for pain and suffering.

Comparison with Existing Federal Tort Reform Statutes
Congress has enacted other tort reform statutes to limit liability under state law, and
these statutes are briefly summarized in the appendix to CRS Report 95-797, Federal Tort
Reform Legislation: Constitutionality and Summaries of Selected Statutes, by Henry
Cohen.8 The rest of this report will describe the broad categories into which these statutes
may be placed, so that Division E can be compared with them.
Some federal statutes eliminate liability and do not provide for an alternate means
of recovery by victims. The General Aviation Revitalization Act, enacted in 1994, for
example, bars, without exception, products liability suits against manufacturers of small
planes more than 18 years old. The Protection of Lawful Commerce in Arms Act, enacted
in October 2005, bars, with exceptions, suits against manufacturers and sellers of firearms
or ammunition, and trade associations, for damages resulting from the criminal or
unlawful misuse of a firearm or ammunition. The exceptions in the Protection of Lawful
Commerce in Arms Act, include, but are not limited to, violations of law.
With some statutes, Congress has eliminated the right to sue for ordinary negligence,
but not eliminated it for gross negligence or for intentional or willful misconduct.
Examples include the Bill Emerson Good Samaritan Food Donation Act, the Volunteer
Protection Act, the Aviation Medical Assistance Act of 1998, the Cardiac Arrest Survival
Act of 2000, and the Paul D. Coverdell Teacher Protection Act of 2001. Division E, by
eliminating liability for gross negligence and retaining it only for willful misconduct,
would go further in preempting state law than the statutes cited in this paragraph do.
Division E, however, would also allow injured persons to elect to accept compensation
from the Covered Countermeasure Process Fund, if Congress appropriates money for it.
More than fifty federal statutes provide total immunity to particular private parties,
but make the U.S. government liable, under the Federal Tort Claims Act, in their stead.9
An example of such a statute is section 304 of the Homeland Security Act of 2002, which
immunizes from liability manufacturers and administrators of smallpox vaccine.10 There
8 CRS Report 95-797 includes citations to all statutes mentioned in this section of the present
report.
9 These statutes make private parties immune from suit by declaring them federal employees for
liability purposes, as the Federal Tort Claims Act makes federal employees immune from liability
for torts they commit in the course of employment. For additional information, see CRS Report
97-579, Making Private Entities and Individuals Immune From Tort Liability by Declaring Them
Federal Employees, by Henry Cohen.
10 The Project BioShield Act of 2004, P.L. 108-276, which enacted § 319F-1(d)(2) of the Public
Service Health Act, 42 U.S.C. § 247d-6a(d)(2), provides that a person carrying out a personal
service contract under the statute, “and an officer, employee, or governing board member of such
person shall, subject to a determination by the Secretary, be deemed to be an employee of the
Department of Health and Human Services for purposes of [the FTCA].” The section, however,
contains exceptions to the immunity from liability that the FTCA otherwise grants to federal
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are situations, however, in which the U.S. government may not be held liable under the
FTCA, and, in those situations, victims may be left without a remedy.11 Even when the
United States may be held liable under the FTCA, it may never be held liable for punitive
damages.
Occasionally Congress immunizes private parties but establishes a federal
compensation program. Examples include the Radiation Exposure Compensation Act,
which immunized government contractors who carried out atomic weapons testing
programs from 1946 to 1962, as well as the National Childhood Vaccine Injury
Compensation Act of 1986 and the September 11th Victims Compensation Fund of 2001.
These three programs differ in various ways. Only the radiation law precludes lawsuits.
The vaccine law requires that victims first apply for no-fault, limited compensation under
the National Vaccine Injury Compensation Program (which is funded by a manufacturers’
excise tax on certain vaccines). Claimants, however, may reject what they are offered
under the program and sue under state law, though with some limitations on their rights
under state law. The September 11th fund did not limit the right to sue unless one chose
to file for compensation under the fund, but, with respect to lawsuits, it capped airlines’
liability at the limits of their liability insurance coverage.
Finally, some federal tort reform statutes do not eliminate the right to sue and do not
establish alternative compensation mechanisms. Rather, they cap noneconomic and
punitive damages, limit each defendant’s share of the total liability to its share of
responsibility for the plaintiff’s injuries, or take other steps to limit recovery. Examples
include the Y2K Act, which limited liability for Y2K failures, and the SAFETY Act,
which limits the liability of sellers of anti-terrorism technologies. The SAFETY Act
substitutes a federal cause of action for state causes of action, but continues to apply state
law.12 Capping damages and otherwise limiting liability while retaining the right to sue
is also the approach taken by pending medical malpractice legislation, such as H.R. 5,
109th Congress, which the House passed on July 28, 2005.
10 (...continued)
employees: “Should payment be made by the United States to any claimant . . . , the United States
shall have . . . the right to recover against [the person deemed a federal employee] for that portion
of the damages so awarded or paid, as well as interest and any costs of litigation, resulting from
the failure . . . to carry out any obligation or responsibility . . . under a contract with the United
States or from any grossly negligent or reckless conduct or intentional or willful misconduct. . . .”
11 Federal employees, civilian or military, may not sue under the FTCA, but may receive federal
benefits if injured on the job. Plaintiffs who may sue under the FTCA nevertheless may not
recover, and be left without a remedy, if one of the FTCA’s exceptions applies. These include
the discretionary function exception and the exception for claims arising in a foreign country.
For additional information, see CRS Report 95-717, Federal Tort Claims Act: Current
Legislative and Judicial Issues, by Henry Cohen.
12 For additional information on the SAFETY Act, see CRS Report RL31649, Homeland Security
Act of 2002: Tort Liability Provisions, by Henry Cohen.
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