Maglioli v. Alliance HC Holdings LLC
| Decision Date | 20 October 2021 |
| Docket Number | 20-2834,Nos. 20-2833,s. 20-2833 |
| Citation | 16 F.4th 393 |
| Parties | Estate of Joseph MAGLIOLI; Bernard Maglioli; Dante Maglioli; Estate of Dale Petry; Christopher Petry v. ALLIANCE HC HOLDINGS LLC, d/b/a Andover Subacute & Rehabilitation I; Alliance HC II LLC, d/b/a Andover Subacute & Rehabilitation II (Alliance Healthcare being improperly pleaded by name and as a separate entity); Chaim Scheinbaum; Louis Schwartz; John and Jane Does 1-10; ABC and XYZ Corporations 1-10 Alliance HC Holdings, LLC, d/b/a Andover Subacute & Rehabilitation I; Alliance HC II LLC, d/b/a Andover Subacute & Rehabilitation II (Alliance Healthcare being improperly pleaded by name and as a separate entity); Chaim "Mutty" Scheinbaum; Louis Schwartz, Appellants Estate of Wanda Kaegi; Victor Kaegi; Estate of Stephen Blaine; Sharon Farrell v. Alliance HC Holdings LLC, d/b/a Andover Subacute & Rehabilitation I; Alliance HC II LLC, d/b/a Andover Subacute & Rehabilitation II (Alliance Healthcare being improperly pleaded by name and as a separate entity); Chaim "Mutty" Scheinbaum; Louis Schwartz; John and Jane Does 1-10; ABC and XYZ Corps 1-10 Alliance HC Holdings, LLC, d/b/a Andover Subacute & Rehabilitation I; Alliance HC II LLC, d/b/a Andover Subacute & Rehabilitation II (Alliance Healthcare being improperly pleaded by name and as a separate entity); Chaim "Mutty" Scheinbaum; Louis Schwartz, Appellants |
| Court | U.S. Court of Appeals — Third Circuit |
Salvatore C. Martino, Malinda A. Miller, Lewis Brisbois Bisgaard & Smith LLP, One Riverfront Plaza, Suite 800, Newark, New Jersey 07102, Jeffry A. Miller, Lann G. McIntyre [ARGUED], Lewis Brisbois Bisgaard & Smith LLP, 550 West C Street, Suite 1700, San Diego, California 92101, Counsel for Appellants Alliance HC Holdings LLC, Alliance HC II LLC, Chaim Scheinbaum, and Louis Schwartz
Andrew Kim, William M. Jay, Goodwin Procter LLP, 1900 N Street, N.W., Washington, D.C. 20036, Counsel for Amicus Appellant DRI, Inc.
Russell L. Hewit, Ryan A. Notarangelo, Dughi, Hewit & Domalewski, P.C., 340 North Avenue, Cranford, NJ 07016, Counsel for Amicus Appellant Hackensack Meridian Health
Melissa A. Murphy-Petros, Wilson Elser Moskowitz Edelman & Dicker LLP, 55 West Monroe Street, Suite 3800, Chicago, Illinois 60603, Lori Rosen Semlies, Wilson Elser Moskowitz Edelman & Dicker LLP, 1133 Westchester Avenue, White Plains, New York 10604, Daniel E. Tranen, Wilson Elser Moskowitz Edelman & Dicker LLP, 7751 Carondelet Avenue, Suite 203, Clayton, Missouri 63105, Counsel for Amici Appellants Cambridge Rehabilitation & Healthcare Center, Oakland Rehabilitation & Healthcare Center, and Willow Springs Rehabilitation & Healthcare Center
William M. Kelleher, Neil R. Lapinski [ARGUED], Phillip A. Giordano, Gordon, Fournaris & Mammarella, P.A., 1925 Lovering Avenue, Wilmington, DE 19806, Daniel G.P. Marchese, The Marchese Law Firm, LLC, 93 Spring Street, Suite 300, Newton, NJ 07860, Counsel for Appellees Estate of Wanda Kaegi, Victor Kaegi, Estate of Stephen Blaine, Sharon Farrell, Estate of Joseph Maglioli, Bernard Maglioli, Dante Maglioli, Estate of Dale Petry, and Christopher Petry
Adam R. Pulver, Allison M. Zieve, Scott L. Nelson, Public Citizen Litigation Group, 1600 20th Street NW, Washington, DC 20009, Counsel for Amicus Appellee Public Citizen Inc.
Before: CHAGARES, PORTER, and ROTH, Circuit Judges.
Our Constitution divides powers between the national government and the states. Powers not delegated to the national government remain with the people in the states. See Bond v. United States , 564 U.S. 211, 221, 131 S.Ct. 2355, 180 L.Ed.2d 269 (2011) ; The Federalist No. 45 (James Madison). The pandemic has tested our federal system, but this case confirms its resilience. The defendants invite us to assert the "judicial Power of the United States" over a matter that belongs to the states. U.S. Const. art. III. We decline that invitation. We will not exercise power that the Constitution and Congress have not given us. There is no COVID-19 exception to federalism.
Joseph Maglioli, Dale Petry, Wanda Kaegi, and Stephen Blaine were residents of two different New Jersey nursing homes. Tragically, they died from COVID-19. Their estates claim that the nursing homes acted negligently in handling the COVID-19 pandemic, causing the residents’ deaths. The estates commenced negligence and wrongful-death lawsuits against the nursing homes in state court on behalf of themselves, the family members of the deceased, and residents similarly situated. The nursing homes removed to federal court, but the District Court dismissed the cases for lack of subject-matter jurisdiction and remanded them to state court. The nursing homes appealed, arguing that the District Court has three independent grounds for federal jurisdiction: federal-officer removal, complete preemption of state law, and the presence of a substantial federal issue. We disagree. The estates have not invoked the power of the federal courts, and Congress has not given us power to take this case from the state court. So we will affirm the District Court's order dismissing the cases for lack of jurisdiction.
We begin with some background on the applicable law. In 2005, Congress passed the Public Readiness and Emergency Preparedness Act ("PREP Act"), 42 U.S.C. §§ 247d-6d, 247d-6e. The PREP Act protects certain covered individuals—such as pharmacies and drug manufacturers—from lawsuits during a public-health emergency. The Act lies dormant until invoked by the Secretary of the Department of Health and Human Services ("HHS"). If the Secretary deems a health threat a public-health emergency, he may publish a declaration in the Federal Register recommending certain "covered countermeasures." Id. § 247d-6d(b)(1). When the Secretary makes such a declaration, the covered individuals become immune from suit and liability from claims related to the administration of a covered countermeasure. Id. § 247d-6d(a)(1).
In March 2020, the Secretary issued a declaration under the PREP Act, declaring that COVID-19 is a public-health emergency. See Declaration Under the PREP Act for Medical Countermeasures Against COVID-19, 85 Fed. Reg. 15,198, 15,201 (Mar. 17, 2020). The Secretary recommended a series of covered countermeasures that includes drugs, devices, and products "used to treat, diagnose, cure, prevent, or mitigate COVID-19," subject to the PREP Act's definitions. Id. at 15,202. The Secretary has since amended the declaration seven times. See Seventh Amendment to Declaration Under the PREP Act for Medical Countermeasures Against COVID-19, 86 Fed. Reg. 14,462 (Mar. 16, 2021). HHS has also issued advisory opinions and guidance letters on various issues related to the declaration.1
The Secretary controls the scope of immunity through the declaration and amendments, within the confines of the PREP Act. A covered person enjoys immunity from all claims arising under federal or state law that relate to the use of a covered countermeasure. 42 U.S.C. § 247d-6d(a)(1). Covered persons include manufacturers, distributors, program planners, and qualified persons, as well as their officials, agents, and employees. 85 Fed. Reg. at 15,201.
The scope of immunity is broad. Covered persons are immune from "any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure." 42 U.S.C. § 247d-6d(a)(2)(B). That includes claims relating to "the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such countermeasure." Id.
What happens to the claims blocked by PREP Act immunity? Congress did not leave those injured by covered countermeasures without recourse. The Act establishes a fund to compensate "eligible individuals for covered injuries directly caused by the administration or use of a covered countermeasure." Id. § 247d-6e(a). The Secretary has broad authority to issue regulations determining who and what types of injuries qualify for compensation under the fund. Id. § 247d-6e(b)(4)–(5).
There is one exception to this statutory immunity. The PREP Act provides "an exclusive Federal cause of action against a covered person for death or serious physical injury proximately caused by willful misconduct." Id. § 247d-6d(d)(1). "Willful misconduct" is in turn defined as "an act or omission that is taken—(i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit." Id. § 247d-6d(c)(1)(A). The Act clarifies that willful misconduct "shall be construed as establishing a standard for liability that is more stringent than a standard of negligence in any form or recklessness." Id. § 247d-6d(c)(1)(B). Notwithstanding the statutory definition, the Secretary may issue regulations that further restrict what acts or omissions qualify as willful misconduct. Id. § 247d-6d(c)(2)(A).
These wrongful-death actions arise from the treatment of residents at two nursing homes in New Jersey. The plaintiffs’ two complaints state the same five claims: (1) negligence—wrongful death as to the named defendants; (2) negligence—wrongful death as to unnamed defendants; (3) negligence—ordinary negligence as to unnamed non-medical employees of the nursing homes and medical malpractice as to all unknown medical professionals; (4) negligence as proximate cause of the residents’ injuries; and (5) punitive damages.
The estates allege that the residents’ deaths "were a direct result of [the nursing homes’] failures to take measures to protect them at the facilities from the deadly Covid-19 virus, and/or medical malpractice." App. 119, 176. For example, the estates claim the nursing homes acted negligently by...
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