Estate of Maglioli v. Alliance HC Holdings LLC

Joseph Maglioli, Wanda Kaegi, Stephen Blaine, and Dale Petry were four of more than fifty residents of two nursing homes owned and operated by Alliance Healthcare who died of COVID-19 in the early days of the pandemic. Their survivors filed lawsuits in New Jersey state court, arguing that their deaths were the result of Alliance’s failure to observe appropriate safety precautions, including by failing to provide employees with masks and failing to screen and monitor employees, visitors, and residents who may have been exposed to the coronavirus.

Citing 28 U.S.C. § 1442(a), the federal-officer removal statute, Alliance removed the cases from state court to federal court. Alliance claimed that it was “acting under” the direction of a federal officer when operating its nursing homes because it was subject to heavy regulation as part of its participation in the Medicare and Medicaid programs, and because the federal government had issued guidance on infection control in nursing homes. It also argued that the Public Readiness and Emergency Preparedness (PREP) Act, a statute enacted in 2005 to encourage the production and distribution of vaccines, “completely preempted” the plaintiffs’ claims and thus provided a basis for federal-court jurisdiction. In August 2020, the district court rejected Alliance’s arguments, and remanded the case to state court.

Alliance appealed the remand order to the U.S. Court of Appeals for the Third Circuit. In an amicus brief in support of the plaintiffs, Public Citizen explained that, under Supreme Court case law, regulation and non-binding guidance cannot create a relationship that satisfies the “acting under” requirement of § 1442(a). We also explained that the PREP Act has no application to claims, such as those in this case, that do not arise from “use or administration” of any “covered countermeasures,” as those terms are used in the Act, but rather arise from general neglect in failing to abide by a nursing home’s duty to provide a safe environment to its residents.

In an opinion issued in October 2021, the Third Circuit agreed with our arguments and held that Alliance was not “acting under” any federal officers, that the PREP Act did not preempt negligence claims, and that the Grable doctrine did not apply. The Third Circuit denied Alliance’s petition for rehearing and rehearing en banc in February 2022.