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24 October 202115 minute read

Maglioli: Third Circuit hands down first-of-its-kind COVID-19 opinion

On October 20, 2021, the Third Circuit Court of Appeals handed down an opinion in Estate of Maglioli v Alliance HC Holdings LLC, et al., No. 20-2833, stating that suits relating to COVID-19 deaths at nursing homes in New Jersey must be litigated in state, rather than in federal, court. The first-of-its-kind opinion will likely provide a framework for Circuit Courts of Appeal as they analyze the issues presented in similar pending appeals.[1] While the opinion appears, on its face, to be a hit to defendants seeking to use the Public Readiness and Emergency Preparedness Act (PREP Act)[2] as a way into the district courts, all is not lost.

A defendant’s ability to remove personal injury and wrongful death cases from state courts to the US district courts is paramount among the many issues being litigated related to the COVID-19 pandemic. Hundreds of these cases, filed in state courts across the country, have been removed to the district courts on various grounds related to the liability protection provisions of the PREP Act. Maglioli is representative of the largest segment of these cases, those filed against nursing homes and similar entities for claims that a plaintiff (or decedent) contracted COVID-19 under the care of the facility.

In Maglioli, four individuals, residents of two different New Jersey nursing homes, contracted and passed away from COVID-19. “The estates of each of these individuals claim that the nursing homes acted negligently in handling the COVID-19 pandemic, causing the residents’ deaths,”[3] the case stated.

Similar to the other cases, the Maglioli defendants/appellants filed a notice of removal, arguing that the federal district court has jurisdiction because (1) the defendants are acting under the direction of a federal officer such that they can remove under the Federal Officer Removal Statute; (2) the PREP Act completely preempts the state law claims raised in the various complaints; and (3) the state law complaints raise significant federal issues.

The Maglioli court summarized these cases as follows:

The story in all of these cases is essentially the same. Estates of deceased nursing-home residents sue the nursing homes in state court, alleging that the nursing homes negligently handled COVID-19. The nursing homes remove to federal court on the basis of a combination of federal-officer removal, complete preemption, and a substantial federal issue.[4]

The court further noted that nearly all district courts that have considered these issues have ordered the cases remanded back to the state courts. While not all were cited by the Maglioli court, there are nearly 100 such decisions and orders – a notable exception being Garcia v Welltower OpCo Grp. LLC, No. SACV 20-02250, 2021 WL 492581 (C.D. Cal. Feb. 10, 2021).

The court addressed four major arguments in the opinion: (1) whether certain interpretations contained in declarations from the Health and Human Services Secretary are entitled to deference; (2) whether the nursing homes at issue can remove under the Federal Officer Removal Statute; (3) whether the PREP Act completely preempts state law claims; and (4) whether the PREP Act defense raised a significant federal issue such to allow removal. The court held that the answer to each issue was: no. A summary of each holding is provided below, along with some takeaways for those involved in other similar matters.

A. Jurisdictional findings

1. Chevron deference for interpretations of the PREP Act by the Secretary of the Department of Health and Human Services

Under the PREP Act statutory scheme, the Secretary of the Department of Health and Human Services has issued a number of interpretations in amended declarations under the PREP Act and advisory opinions related to the Act. Specifically, the HHS has noted that “[t]he plain language of the PREP Act makes clear that there is complete preemption of state law.”[5] Part and parcel to the arguments that the PREP Act provides complete preemption – and, thus, can be used as a basis to remove a case to the district courts – is that the courts should defer to this guidance under Chevron U.S.A., Inc. v Natural Resources Defense Council, Inc.[6]

The court here held, however, that “[d]eference is not owed to these interpretations for the simple reason that HHS is not delegated authority under the PREP Act to interpret the scope of federal courts’ jurisdiction.”[7] The court continues to hold that the PREP Act “does not empower the Secretary to regulate the scope of judicial power vested by the statute.[8]

The Maglioli court went further, holding that the agency’s interpretations also are not entitled to respect under Skidmore v Swift & Co., 323 U.S. 134 (1944) as such interpretations, in the court’s opinion, “lack the power to persuade.”[9]

2. The nursing homes’ ability to remove under the Federal Officer Removal Statute

While the court ultimately determined that removal was not proper under the Federal Officer Removal Statute,[10] it is important to understand that the court was only able to consider the other grounds for removal on appeal because this statute was cited as a ground for removal in the notice filed by the appellants below.[11]

As noted by the court, “[t]o remove a case under § 1442(a)(1), a defendant must meet four requirements: (1) the defendant must be a ‘person’ within the meaning of the statute; (2) the plaintiff’s claims must be based upon the defendant ‘acting under’ the United States, its agencies, or its officers; (3) the plaintiff’s claims against the defendant must be ‘for or relating to’ an act under color of federal office; and (4) the defendant must raise a colorable federal defense to the plaintiff’s claims.”[12]

The court did not address each of the above criteria in this context, as it held the nursing homes were not “‘acting under’ the United States, its agencies, or its officers.”[13] While the Court acknowledged that a private party can invoke federal officer removal, they held that “[m]erely complying with federal laws and regulations is not ‘acting under’ a federal officer.”[14]

The court held that the nursing homes “must demonstrate something beyond regulation or compliance. They must show that their actions ‘involve an effort to assist, or help carry out, the duties or tasks of the federal superior.’”[15] The court further held that federal-officer removal is inappropriate as the nursing homes have failed to show an “unusually close relationship” with the federal government or that they provide a service that the federal government would otherwise provide.[16]

Finally, the court rejected the notion that the classification of nursing homes as “essential critical infrastructure” by the Cybersecurity and Infrastructure Security Agency[17] provided the necessary support to find that they were “acting under” a federal officer.  Given that that countless other industries and professions – such as “doctors, weather forecasters, clergy, farmers, bus drivers, plumbers, [and] dry cleaners”[18] – were similarly classified as “essential critical infrastructure,” this holding will likely have an impact in matters beyond cases involving nursing homes and similar facilities.[19]

3. Complete preemption of state law by the PREP Act

Next, the court rejected the argument that the PREP Act confers federal jurisdiction under the complete preemption doctrine.  Complete preemption exists when “a federal law not only preempts a state law to some degree but also substitutes a federal cause of action for the state cause of action, thereby manifesting Congress’s intent to permit removal.”[20]  Further, “Complete preemption is a jurisdictional concept, while ordinary preemption is a defense to liability.  Ordinary preemption, which can take the form of express, conflict, or field preemption, is generally an affirmative defense that state law has in some way been displaced by federal law. But an ordinary-preemption defense does not make a complaint removable to federal court.”[21] 

The Maglioli court held that, although the PREP Act does create an exclusive federal cause of action, it does so only with respect to claims for “willful misconduct” arising from the use or administration of a covered countermeasure under 42 U.S.C. § 247d-6d(d)(1).  The court found that none of the plaintiffs’ claims fell within the scope of a such a willful misconduct action, however, and that complete preemption therefore did not apply: “The [plaintiffs] allege only negligence, not willful misconduct. The [plaintiffs’] negligence claims thus do not fall within scope of the exclusive federal cause of action. They are not completely preempted, so they belong in state court.[22] 

In determining the plaintiffs had not asserted any willful misconduct, the court took a narrow approach.  The plaintiffs alleged in their complaint, as part of their request for punitive damages, that the defendants engaged in “conduct that was grossly reckless, willful, and wanton.”[23]  Yet, the court characterized such allegations as merely a “fleeting statement” that did not satisfy the PREP Act’s definition of “willful misconduct,” which requires: (1) “an act or omission,” that is taken (2) “intentionally to achieve a wrongful purpose,” (3) “knowingly without legal or factual justification,” and (4) “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.”[24]  Despite this finding, the court was careful to acknowledge that “[w]e do not hold that all state-law causes of action are invulnerable to complete preemption under the PREP Act. Conceivably, some state-law claims could fall within Congress’s narrow cause of action for willful misconduct.”[25]

4. Federal question jurisdiction under Grable & Sons Metal Prod., Inc. v Darue Eng’g & Mfg.

Lastly, the court rejected the appellants’ arguments that the case raised “significant federal issues” and was removable under 28 U.S.C. § 1441(a).[26]  Under the Grable test, the federal issue must be (1) necessarily raised, (2) actually disputed, (3) substantial and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.  The court found that appellants failed the first step of Grable because a well-pleaded state-law negligence complaint does not “necessarily raise” the PREP Act.  The court found that PREP Act preemption is, at best, a federal defense, and “[a]s a defense, it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court.”[27]

B. Takeaways and moving forward

1. Substantive application of PREP Act defenses will be a question for state courts

As noted above, all is not lost on these issues for the defense. Despite the court’s complete rejection of the appellants’ arguments, the court was careful to limit the scope of its decision to the jurisdictional questions presented.  Unlike some district court decisions on this issue – which have strayed into dicta regarding whether the PREP Act’s immunity provisions would apply to the substantive claims – the Third Circuit made clear that it was not addressing “whether the PREP Act preempts the estates’ claims under ordinary preemption rules. That is for the state court to determine on remand.”[28]

2. Impact on appeals pending in this and other Circuit Courts

Similar appeals are pending in nearly every circuit, and other matters remain pending within the Third Circuit as well. Given the near-uniform treatment of these issues by district courts across the country, it seems unlikely that a circuit split will arise right away. However, as there is at least one case in which the district court retained jurisdiction (Garcia), it is possible that the Ninth Circuit, where Garcia will be argued on appeal, could disagree with the Third Circuit.

The timing of this opinion is particularly important for the Ninth Circuit, as two very similar matters were argued before the Ninth Circuit Court of Appeals one day after this opinion was published. Martin v Serrano Post Acute LLC, et al., Nos. 20-56067 and 20-56078 and Saldana v Glenhaven Healthcare LLC, et al., No. 20-56194, both seek to overturn a district court’s remand order, and both arise under the PREP Act. Immediately after the Maglioli opinion came down, counsel for the appellees in these matters filed notices of supplemental authority – and the opinion and its relevance for Martin and Saldana was a primary focus at oral argument.

3. Complete preemption for willful misconduct claims

While the court did find that the claims that fit within the “willful misconduct” provisions of the PREP Act are narrow, it was clear that such claims are completely preempted. The court held that “[t]he PREP Act unambiguously creates an exclusive federal cause of action. For nearly all injuries caused by covered countermeasures falling under the Act, the Secretary has the sole authority to administer and provide compensation from the designated fund.”[29] The court further held that “[t]he PREP Act’s language easily satisfies the standard for complete preemption of particular causes of action. It provides an “exclusive cause of action ... and also set[s] forth procedures and remedies governing that cause of action.”[30]

4. Viability of Grable for certain matters

In Maglioli, the nursing homes only invoked the Grable doctrine on the basis that the PREP Act was a defense to the complaint. The court found that this was insufficient because the “PREP Act preemption defense” was not actually mentioned in the complaint.[31] In other matters, however, the allegations pled in the complaint may go beyond those of the plaintiffs/appellees in Maglioli. The court seemingly left open the possibility that other allegations may “necessarily raise” a PREP Act defense such that removal would be proper under Grable. Prudent practitioners will carefully review each complaint filed in this area to determine whether allegations that are actually pled distinguish that matter from the situation in Maglioli.

While Maglioli appears to significantly limit the ability of a nursing home to move a case from a state court to a US district court based on the PREP Act, many open issues remain. Given the large number of filings across the country, this is certainly not going to be the final word on any of the issues addressed above.


[1] Appeals of PREP Act remand orders are currently pending in the Second, Third, Fifth, Sixth, Ninth, Eleventh, and DC Circuit Courts of Appeal.

[2] 42 U.S.C. § 247d-6d.

[3] Maglioli v Alliance HC Holdings LLC, -- F.4th --, 2021 WL 4890189,*2.

[4] Id. at *3.

[5] Fifth Amendment to the Declaration Under the Public Readiness and Emergency Preparedness Act, 86 Fed. Reg. 7 (Feb. 2, 2021).

[6] 467 U.S. 837 (1984).

[7] Maglioli at *4.

[8] Id., citing Adams Fruit Co. v. Barrett, 494 U.S. 638 (1990).

[9] Id.

[10] 28 U.S.C. § 1442(a)(1).

[11] See, BP P.L.C. v. Mayor of Balt., 141 S. Ct. 1532, 1538 (2021).

[12] Maglioli at *5, citing 28 U.S.C. § 1442(a)(1).

[13] Id.

[14] Id., citing Watson v Philip Morris Cos., 551 U.S. 142, 153 (2007).

[15] Id., citing Watson, 551 U.S. at 152.

[16] Id., citing In re Commonwealth’s Motion to Appoint Couns. Against or Directed to Def. Ass’n of Phila., 790 F.3d 457, 469 (3d Cir. 2015).

[17] Cybersecurity & Infrastructure Sec. Agency, Advisory Memorandum on Ensuring Essential Critical Infrastructure Workers’ Ability to Work During the Covid-19 Response 7 (Dec. 16, 2020),

[18] Maglioli at *6.

[19] See, eg, Buljic v Tyson Foods and Fernandez v Tyson Foods, 8th US Circuit Court of Appeals, Nos. 21-1010 and 21-1012.

[20] Schmeling v NORDAM, 97 F.3d 1336, 1342 (10th Cir. 1996).

[21] Robertson v Big Blue Healthcare, Inc., 2021 WL 764566, at *8 (D. Kan. Feb. 26, 2021). 

[22] Maglioli at *7.

[23] Id. at *10.

[24] Id. (citing 42 U.S.C. § 247d-6d(c)(1))

[25] Id. at *12.

[26] Id., citing Grable & Sons Metal Prod., Inc. v Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005).

[27] Id., quoting Metro. Life Ins. Co. v Taylor, 481 U.S. 58, 63 (1987).

[28] Id.

[29] at *9, citing 42 U.S.C. § 247d-6e(a)–(b).

[30] Id., citing Beneficial Nat'l Bank, 539 U.S. at 8, 123 S.Ct. 2058.

[31] Id. at *12.