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Additional Budget News > COVID Liability Protections Set to Expire in February

| Tort Reform & Legal Climate

The bipartisan state budget negotiated by House and Senate leaders and signed by the Governor on July 12, spans nearly two hundred pages and is accompanied by a 443-page committee report. Unless you’re a state budget nerd, you’ve probably not pored over the language. That’s okay, because we have. More than likely, you’ve already read of our excitement over the visionary effort to transform the state’s infrastructure funding model. But there’s more.

Less discussed was the inclusion in the budget of language that provided the Department of Health and Human Services with statutory authority to waive certain rules in the event of a future emergency. In particular, Section 9E.2 includes a number of changes to various state statutes under the heading of “emergency flexibilities for certain facilities and services regulated by the division of health service regulation.”

At the conclusion of that section appears the following language:

This section becomes effective on the date Executive Order No. 116 (Declaration of a State of Emergency to Coordinate Response and Protective Actions to Prevent the Spread of COVID-19) expires or is rescinded.

This language has been the subject of media reports that highlight that when the Governor signed the budget, he also announced that he would rescind the State of Emergency, effective Monday, August 15.  Thus, these provisions should now become law next month. While it is tempting to conclude that the Governor plans to lift the emergency so that these provisions would become law, it should be noted that these provisions have no effect unless and until a new emergency is declared.

Some of those same media reports suggest that ending the State of Emergency also automatically and immediately effectuates an end to the limited COVID immunities for businesses that were passed in 2020. We’ve written about those.

Critical to the business community is to note that the civil protections do not expire simultaneously with the end of the State of Emergency. Language in S.L. 2020-89 makes clear that for any claims against a business which arise during a period of 180 days after the State of Emergency, the limited immunity may still be effective to negate liability if the claim is one arising from an act or omission alleged to have resulted in the contraction of COVID-19. This provision has already been invoked in litigation in North Carolina, but be forewarned, its days are now numbered. Let’s cross our fingers and hope the expiration of the protection next February doesn’t result in unsolicited love letters from plaintiffs’ lawyers.