[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2851 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2851

To impose certain requirements on the resolution of medical malpractice 
liability claims, to amend the Internal Revenue Code of 1986 to require 
  persons making certain medical malpractice payments to report such 
   payments to the Secretary of the Treasury, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 3, 1993

   Mr. Thomas of California introduced the following bill; which was 
 referred jointly to the Committees on the Judiciary and Ways and Means

_______________________________________________________________________

                                 A BILL


 
To impose certain requirements on the resolution of medical malpractice 
liability claims, to amend the Internal Revenue Code of 1986 to require 
  persons making certain medical malpractice payments to report such 
   payments to the Secretary of the Treasury, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Liability Improvement Act of 
1993''.

SEC. 2. GENERAL PROVISIONS.

    (a) Congressional Findings.--
            (1) Effect on interstate commerce.--The Congress finds that 
        the health care and insurance industries are industries 
        affecting interstate commerce and the medical malpractice 
        litigation systems existing throughout the United States affect 
        interstate commerce by contributing to the high cost of health 
        care and premiums for malpractice insurance purchased by health 
        care providers.
            (2) Effect on federal spending.--The Congress finds that 
        the medical malpractice litigation systems existing throughout 
        the United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                    (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                    (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent by their employers to provide them with 
                health insurance benefits;
                    (C) the large number of health care providers and 
                health care professionals who provide items or services 
                for which the Federal Government makes payments; and
                    (D) the large number of such providers and 
                professionals who have received direct or indirect 
                financial assistance from the Federal Government 
                because of their status as such professionals or 
                providers.
    (b) Applicability.--This Act shall apply with respect to any 
medical malpractice liability claim and to any medical malpractice 
liability action brought in any State or Federal court, except that 
this Act shall not apply to--
            (1) a claim or action for damages arising from a vaccine-
        related injury or death to the extent that title XXI of the 
        Public Health Service Act applies to the action; or
            (2) a claim or action in which the claimant's sole 
        allegation is an allegation of an injury arising from the use 
        of a medical product.
    (c) Preemption of State Law.--Subject to section 12, this Act 
supersedes State law only to the extent that State law differs from any 
provision of law established by or under this Act. Any issue that is 
not governed by any provision of law established by or under this Act 
shall be governed by otherwise applicable State or Federal law.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this Act shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of sections 1331 or 1337 of 
title 28, United States Code.

SEC. 3. DEFINITIONS.

    As used in this Act:
            (1) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice liability claim, or, in the case 
        of an individual who is deceased, incompetent, or a minor, the 
        person on whose behalf such a claim is alleged.
            (2) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for losses for 
        hospital and other medical expenses, lost wages, lost 
        employment, and other pecuniary losses.
            (3) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (4) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by State law or regulation to be licensed or 
        certified by the State to engage in the delivery of such 
        services in the State.
            (5) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or claim.
            (6) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        (other than an action in which the claimant's sole allegation 
        is an allegation of an intentional tort) brought in a State or 
        Federal court against a health care provider or health care 
        professional (regardless of the theory of liability on which 
        the action is based) in which the claimant alleges a medical 
        malpractice liability claim.
            (7) Medical malpractice liability claim.--The term 
        ``medical malpractice liability claim'' means a claim in which 
        the claimant alleges that injury was caused by the provision of 
        (or the failure to provide) health care services.
            (8) Medical product.--The term ``medical product'' means a 
        device (as defined in section 201(h) of the Federal Food, Drug, 
        and Cosmetic Act) or a drug (as defined in section 201(g)(1) of 
        the Federal Food, Drug, and Cosmetic Act).
            (9) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, disfigurement, loss of enjoyment of 
        life, loss of consortium, and other nonpecuniary losses, but 
        does not include punitive damages.
            (10) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (11) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, and any other territory or possession of the United 
        States.

SEC. 4. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this Act 
shall apply with respect to claims accruing or actions brought on or 
after the expiration of the 3-year period that begins on the date of 
the enactment of this Act.
    (b) Exception for States Requesting Earlier Implementation of 
Reforms.--
            (1) Application.--A State may submit an application to the 
        Secretary requesting the early implementation of this Act with 
        respect to claims or actions brought in the State.
            (2) Decision by secretary.--The Secretary shall issue a 
        response to a State's application under paragraph (1) not later 
        than 90 days after receiving the application. If the Secretary 
        determines that the State meets the requirements of this Act at 
        the time of submitting its application, the Secretary shall 
        approve the State's application, and this Act shall apply with 
        respect to actions brought in the State on or after the 
        expiration of the 90-day period that begins on the date the 
        Secretary issues the response. If the Secretary denies the 
        State's application, the Secretary shall provide the State with 
        a written explanation of the grounds for the decision.

SEC. 5. ATTORNEYS' FEES.

    (a) Limitation on Contingency Fees.--An attorney shall not contract 
for or collect a contingency fee for representing a claimant in a 
medical malpractice liability action in excess of the following:
            (1) 40 percent of the first $50,000 (or portion thereof) of 
        the amount recovered by the claimant.
            (2) 33\1/3\ percent of the next $50,000 (or portion 
        thereof) of the amount recovered by the claimant.
            (3) 25 percent of the next $500,000 (or portion thereof) of 
        the amount recovered by the claimant.
            (4) 15 percent of any amounts recovered by the claimant in 
        excess of $600,000.
This subsection applies whether the recovery is by settlement, 
arbitration, or judgment.
    (b) Calculation of Periodic Payments.--If periodic payments are 
awarded to the claimant pursuant to section 8(b), the court shall place 
a total value on these payments based upon the projected life 
expectancy of the claimant and include this amount in computing the 
total award from which attorneys' fees are calculated under subsection 
(a).
    (c) Special Rule for Determining Amount Recovered.--In subsection 
(a), the term ``recovered'' means the net sum recovered after deducting 
any disbursements or costs incurred in connection with prosecution or 
settlement of the claim, except that costs of medical care incurred by 
the claimant and the attorney's office overhead costs or charges shall 
not be deductible disbursements under this subsection.

SEC. 6. LIMITATION ON NONECONOMIC DAMAGES.

    The total amount of damages which may be awarded to an individual 
and the family members of such individual for noneconomic losses 
resulting from an injury which is the subject of a medical malpractice 
liability claim may not exceed $250,000, regardless of the number of 
health care professionals and health care providers against whom the 
claim is brought or the number of claims brought with respect to the 
injury.

SEC. 7. STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice liability claim may be 
brought after the expiration of the 2-year period that begins on the 
date the alleged injury that is the subject of the action should 
reasonably have been discovered, but in no event after the expiration 
of the 4-year period that begins on the date the alleged injury 
occurred.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, no medical 
malpractice liability claim may be brought after the expiration of the 
2-year period that begins on the date the alleged injury that is the 
subject of the action should reasonably have been discovered, but in no 
event after the date on which the minor attains 10 years of age.

SEC. 8. PERIODIC PAYMENTS FOR FUTURE LOSSES.

    If more than $50,000 in damages for expenses to be incurred in the 
future is awarded to the claimant in a medical malpractice liability 
action, the court shall at the request of either party, enter a 
judgment ordering such damages to be paid on a periodic basis 
determined appropriate by the court (based upon projections of when 
such expenses are likely to be incurred).

SEC. 9. MANDATORY OFFSETS FOR DAMAGES PAID BY A COLLATERAL SOURCE.

    (a) In General.--The total amount of damages received by a 
plaintiff in a medical malpractice liability action shall be reduced 
(in accordance with subsection (b)) by any other payment that has been 
or will be made to the individual to compensate the plaintiff for the 
injury that was the subject of the action, including payment under--
            (1) Federal or State disability or sickness programs;
            (2) Federal, State, or private health insurance programs;
            (3) private disability insurance programs;
            (4) employer wage continuation programs; and
            (5) any other source of payment intended to compensate the 
        plaintiff for such injury.
    (b) Amount of Reduction.--The amount by which an award of damages 
to a plaintiff shall be reduced under subsection (a) shall be--
            (1) the total amount of any payments (other than such 
        award) that have been made or that will be made to the 
        plaintiff to compensate the plaintiff for the injury that was 
        the subject of the action; minus
            (2) the amount paid by the plaintiff (or by the spouse, 
        parent, or legal guardian of the plaintiff) to secure the 
        payments described in paragraph (1).

SEC. 10. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) Imposition of Higher Standard of Proof.--
            (1) In general.--In the case of a medical malpractice 
        liability action relating to services provided during labor or 
        the delivery of a baby, if the defendant health care 
        professional did not previously treat the plaintiff for the 
        pregnancy, the trier of fact may not find that the defendant 
        committed malpractice and may not assess damages against the 
        defendant unless the malpractice is proven by clear and 
        convincing evidence.
            (2) Applicability to group practices or agreements among 
        providers.--For purposes of paragraph (1), a health care 
        professional shall be considered to have previously treated an 
        individual for a pregnancy if the professional is a member of a 
        group practice whose members previously treated the individual 
        for the pregnancy or is providing services to the individual 
        during labor or the delivery of a baby pursuant to an agreement 
        with another professional.
    (b) Clear and Convincing Evidence Defined.--In subsection (a), the 
term ``clear and convincing evidence'' is that measure or degree of 
proof that will produce in the mind of the trier of fact a firm belief 
or conviction as to the truth of the allegations sought to be 
established, except that such measure or degree of proof is more than 
that required under preponderance of the evidence, but less than that 
required for proof beyond a reasonable doubt.

SEC. 11. JOINT AND SEVERAL LIABILITY.

    The liability of each defendant in a medical malpractice liability 
action shall be several only and shall not be joint, and each defendant 
shall be liable only for the amount of damages allocated to the 
defendant in direct proportion to the defendant's percentage of 
responsibility (as determined by the trier of fact).

SEC. 12. PREEMPTION.

    (a) In General.--This Act supersedes any State law only to the 
extent that State law--
            (1) permits the recovery of a greater amount of damages by 
        a plaintiff;
            (2) permits the collection of a greater amount of 
        attorneys' fees by a plaintiff's attorney;
            (3) establishes a longer period during which a medical 
        malpractice liability claim may be initiated; or
            (4) establishes a stricter standard for determining whether 
        a defendant was negligent or for determining the liability of 
        defendants described in section 10 in actions described in such 
        section.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (a) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.

SEC. 13. RETURNS RELATING TO TAXABLE MEDICAL MALPRACTICE AWARDS.

    (a) In General.--Subpart B of part III of subchapter A of chapter 
61 of the Internal Revenue Code of 1986 (relating to information 
concerning transactions with other persons) is amended by adding at the 
end thereof the following new section:

``SEC. 6050O. RETURNS RELATING TO TAXABLE MEDICAL MALPRACTICE AWARDS.

    ``(a) In General.--If--
            ``(1) any person makes medical malpractice payments to 
        another person during any calendar year,
            ``(2) a portion of such payments is includible in gross 
        income for purposes of chapter 1, and
            ``(3) the portion of such payments so includible exceeds 
        $600,
then the person making such payments shall make a return (at such time 
and in such form as the Secretary may by regulations prescribe) setting 
forth the name, address, and TIN of the person to whom such payments 
were made, the aggregate amount of such payments, and the portion of 
such payments includible in gross income for purposes of chapter 1.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required To Be Furnished.--Every person required to make 
a return under subsection (a) with respect to payments made to any 
person shall furnish to such person a written statement showing--
            ``(1) the name and address of the person required to make 
        such return, and
            ``(2) the information required to be shown on the return 
        with respect to the person to whom such payments were made.
The written statement required under the preceding sentence shall be 
furnished to the person on or before January 31 of the year following 
the calendar year for which the return under subsection (a) was made.
    ``(c) Medical Malpractice Payments.--For purposes of this section, 
the term `medical malpractice payment' means any payment (whether by 
suit or agreement and whether as a lump sum or periodic payment) on 
account of a medical malpractice liability claim (as defined in section 
3(7) of the Medical Liability Improvement Act of 1993).''
    (b) Penalties.--
            (1) Returns.--Subparagraph (A) of section 6724(d)(1) of 
        such Code is amended by striking ``or'' at the end of clause 
        (vi), by striking ``and'' at the end of clause (vii) and 
        inserting ``or'', and by adding at the end thereof the 
        following new clause:
                            ``(viii) section 6050O (relating to returns 
                        relating to taxable medical malpractice 
                        awards),''.
            (2) Statements.--Paragraph (2) of section 6724(d) of such 
        Code is amended by redesignating subparagraphs (P) through (S) 
        as subparagraphs (Q) through (T), respectively, and by 
        inserting after subparagraph (O) the following new 
        subparagraph:
                    ``(P) section 6050O(b) (relating to returns 
                relating to taxable medical malpractice awards),''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part III of subchapter A of chapter 61 is amended by adding at the end 
thereof the following new item:

                              ``Sec. 6050O. Returns relating to taxable 
                                        medical malpractice awards.''
    (d) Effective Date.--The amendments made by this section shall 
apply to payments after the date of the enactment of this Act.

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