[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 956 Engrossed in House (EH)]

  1st Session
                                H. R. 956

_______________________________________________________________________

                                 AN ACT


 
   To establish legal standards and procedures for product liability 
                  litigation, 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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Common Sense 
Product Liability and Legal Reform Act of 1995''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
                   TITLE I--PRODUCT LIABILITY REFORM

Sec. 101. Applicability and preemption.
Sec. 102. Liability rules applicable to product sellers.
Sec. 103. Defense based on claimant's use of intoxicating alcohol or 
                            drugs.
Sec. 104. Misuse or alteration.
Sec. 105. Frivolous pleadings.
Sec. 106. Statute of repose.
Sec. 107. Foreign products.
Sec. 108. Definitions.
    TITLE II--LIMITATION ON SPECULATIVE AND ARBITRARY DAMAGE AWARDS

Sec. 201. Treble damages as penalty in civil actions.
Sec. 202. Limitation on noneconomic damages in health care liability 
                            actions.
Sec. 203. Fair share rule for noneconomic damage awards.
Sec. 204. Definitions.
                   TITLE III--BIOMATERIALS SUPPLIERS

Sec. 301. Liability of biomaterials suppliers.
Sec. 302. Procedures for dismissal of civil actions against 
                            biomaterials suppliers.
Sec. 303. Definitions.
         TITLE IV--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 401. Application limited to interstate commerce.
Sec. 402. Effect on other law.
Sec. 403. Federal cause of action precluded.
Sec. 404. Effective date.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) the civil justice system, which is designed to 
        safeguard our most cherished rights, to remedy injustices, and 
        to defend our liberty, is increasingly being deployed to 
        abridge our rights, create injustice, and destroy our liberty;
            (2) our Nation is overly litigious, the civil justice 
        system is overcrowded, sluggish, and excessively costly, and 
        the costs of lawsuits, both direct and indirect, are inflicting 
        serious and unnecessary injury on the national economy;
            (3) excessive, unpredictable, and often arbitrary damage 
        awards and unfair allocations of liability have a direct and 
        undesirable effect on interstate commerce by increasing the 
        cost and decreasing the availability of goods and services;
            (4) the rules of law governing product liability actions, 
        damage awards, and allocations of liability have evolved 
        inconsistently within and among the several States, resulting 
        in a complex, contradictory, and uncertain regime that is 
        inequitable to both plaintiffs and defendants and unduly 
        burdens interstate commerce;
            (5) as a result of excessive, unpredictable, and often 
        arbitrary damage awards and unfair allocations of liability, 
        consumers have been adversely affected through the withdrawal 
        of products, producers, services, and service providers from 
        the national market, and from excessive liability costs passed 
        on to them through higher prices;
            (6) excessive, unpredictable, and often arbitrary damage 
        awards and unfair allocations of liability jeopardize the 
        financial well-being of many individuals as well as entire 
        industries, particularly the Nation's small businesses, and 
        adversely affects governments, taxpayers, nonprofit entities 
        and volunteer organizations;
            (7) the excessive costs of the civil justice system 
        undermine the ability of American companies to compete 
        internationally, and serve to decrease the number of jobs and 
        the amount of productive capital in the national economy;
            (8) the unpredictability of damage awards is inequitable to 
        both plaintiffs and defendants and has added considerably to 
        the high cost of liability insurance, making it difficult for 
        producers, consumers, and individuals to protect their 
        liability with any degree of confidence and at a reasonable 
        cost;
            (9) because of the national scope of the problems created 
        by the defects in the civil justice system, it is not possible 
        for the several States to enact laws that fully and effectively 
        respond to those problems;
            (10) it is the constitutional role of the national 
        government to remove barriers to interstate commerce; and
            (11) there is a need to restore rationality, certainty, and 
        fairness to the civil justice system in order to protect 
        against excessive, arbitrary, and uncertain damage awards and 
        to reduce the volume, costs, and delay of litigation.
    (b) Purposes.--Based upon the powers contained in Article I, 
Section 8, Clause 3 of the United States Constitution, the purposes of 
this Act are to promote the free flow of goods and services and to 
lessen burdens on interstate commerce by--
            (1) establishing certain uniform legal principles of 
        product liability which provide a fair balance among the 
        interests of product users, manufacturers, and product sellers;
            (2) placing reasonable limits on damages over and above the 
        actual damages suffered by a claimant;
            (3) ensuring the fair allocation of liability in civil 
        actions;
            (4) reducing the unacceptable costs and delays of our civil 
        justice system caused by excessive litigation which harm both 
        plaintiffs and defendants; and
            (5) establishing greater fairness, rationality, and 
        predictability in the civil justice system.

                   TITLE I--PRODUCT LIABILITY REFORM

SEC. 101. APPLICABILITY AND PREEMPTION.

    (a) Preemption.--This title governs any product liability action 
brought in any State or Federal court, on any theory for harm caused by 
a product. A civil action brought for commercial loss shall be governed 
only by applicable commercial or contract law.
    (b) Relationship to State Law.--This title supersedes State law 
only to the extent that State law applies to an issue covered by this 
title. Any issue that is not governed by this title shall be governed 
by otherwise applicable State or Federal law.

SEC. 102. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS.

    (a) General Rule.--Except as provided in subsection (b), in any 
product liability action, a product seller other than a manufacturer 
shall be liable to a claimant for harm only if the claimant establishes 
that--
            (1)(A) the product which allegedly caused the harm 
        complained of was sold by the product seller; (B) the product 
        seller failed to exercise reasonable care with respect to the 
        product; and (C) such failure to exercise reasonable care was a 
        proximate cause of the claimant's harm; or
            (2)(A) the product seller made an express warranty 
        applicable to the product which allegedly caused the harm 
        complained of, independent of any express warranty made by a 
        manufacturer as to the same product; (B) the product failed to 
        conform to the warranty; and (C) the failure of the product to 
        conform to the warranty caused the claimant's harm; or
            (3) the product seller engaged in intentional wrongdoing as 
        determined under applicable State law and such intentional 
        wrongdoing was a proximate cause of the harm complained of by 
        the claimant.
For purposes of paragraph (1)(B), a product seller shall not be 
considered to have failed to exercise reasonable care with respect to 
the product based upon an alleged failure to inspect a product where 
there was no reasonable opportunity to inspect the product in a manner 
which would, in the exercise of reasonable care, have revealed the 
aspect of the product which allegedly caused the claimant's harm.
    (b) Exception.--In a product liability action, a product seller 
shall be liable for harm to the claimant caused by such product as if 
the product seller were the manufacturer of such product if--
            (1) the manufacturer is not subject to service of process 
        under the laws of any State in which the action might have been 
        brought; or
            (2) the court determines that the claimant would be unable 
        to enforce a judgment against the manufacturer.
    (c) Rental and Leases.--Notwithstanding any other provision of law, 
any person, except a person excluded from the definition of product 
seller, engaged in the business of renting or leasing a product shall 
be subject to liability pursuant to subsection (a) of this section, but 
shall not be liable to a claimant for the tortious act of another 
solely by reason of ownership of such product.

SEC. 103. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING ALCOHOL OR 
              DRUGS.

    (a) General Rule.--In any product liability action, it shall be a 
complete defense to such action if--
            (1) the claimant was intoxicated or was under the influence 
        of intoxicating alcohol or any drug when the accident or other 
        event which resulted in such claimant's harm occurred; and
            (2) the claimant, as a result of the influence of the 
        alcohol or drug, was more than 50 percent responsible for such 
        accident or other event.
    (b) Construction.--For purposes of subsection (a)--
            (1) the determination of whether a person was intoxicated 
        or was under the influence of intoxicating alcohol or any drug 
        shall be made pursuant to applicable State law; and
            (2) the term ``drug'' means any controlled substance as 
        defined in the Controlled Substances Act (21 U.S.C. 802(6)) 
        that has been taken by the claimant other than in accordance 
        with the terms of a lawfully issued prescription.

SEC. 104. MISUSE OR ALTERATION.

    (a) General Rule.--In a product liability action, the damages for 
which a defendant is otherwise liable under State law shall be reduced 
by the percentage of responsibility for the claimant's harm 
attributable to misuse or alteration of a product by any person if the 
defendant establishes by a preponderance of the evidence that such 
percentage of the claimant's harm was proximately caused by--
            (1) a use or alteration of a product in violation of, or 
        contrary to, a defendant's express warnings or instructions if 
        the warnings or instructions are adequate as determined 
        pursuant to applicable State law, or
            (2) a use or alteration of a product involving a risk of 
        harm which was known or should have been known by the ordinary 
        person who uses or consumes the product with the knowledge 
        common to the class of persons who used or would be reasonably 
        anticipated to use the product.
    (b) Workplace Injury.--Notwithstanding subsection (a), the damage 
for which a defendant is otherwise liable under State law shall not be 
reduced by the percentage of responsibility for the claimant's harm 
attributable to misuse or alteration of the product by the claimant's 
employer or any co-employee who is immune from suit by the claimant 
pursuant to the State law applicable to workplace injuries.

SEC. 105. FRIVOLOUS PLEADINGS.

    (a) General Rule.--
            (1) Signing of pleading.--The signing or verification of a 
        pleading in a product liability action in a State court subject 
        to this title constitutes a certificate that to the signatory's 
        or verifier's best knowledge, information, and belief, formed 
        after reasonable inquiry, the pleading is not frivolous as 
        determined under paragraph (2).
            (2) Definitions.--
                    (A) For purposes of this section, a pleading is 
                frivolous if the pleading is--
                            (i) groundless and brought in bad faith;
                            (ii) groundless and brought for the purpose 
                        of harassment; or
                            (iii) groundless and interposed for any 
                        improper purpose, such as to cause unnecessary 
                        delay or needless increase in the cost of 
                        litigation.
                    (B) For purposes of subparagraph (A), the term 
                ``groundless'' means--
                            (i) no basis in fact; or
                            (ii) not warranted by existing law or a 
                        good faith argument for the extension, 
                        modification, or reversal of existing law.
    (b) Determination That Pleading Frivolous.--
            (1) Motion for determination.--Not later than 60 days after 
        the date a pleading in a product liability action in a State 
        court is filed, a party to the action may make a motion that 
        the court determine if the pleading is frivolous.
            (2) Court action.--The court in a product liability action 
        in a State court shall on the motion of a party or on its own 
        motion determine if a pleading is frivolous.
    (c) Considerations.--In making its determination of whether a 
pleading is frivolous, the court shall take into account--
            (1) the multiplicity of parties;
            (2) the complexity of the claims and defenses;
            (3) the length of time available to the party to 
        investigate and conduct discovery; and
            (4) affidavits, depositions, and any other relevant matter.
    (d) Sanction.--If the court determines that a pleading is 
frivolous, the court shall impose an appropriate sanction on the 
signatory or verifier of the pleading. The sanction may include one or 
more of the following:
            (1) the striking of a pleading or the offending portion 
        thereof;
            (2) the dismissal of a party; or
            (3) an order to pay to a party who stands in opposition to 
        the offending pleading the amounts of the reasonable expenses 
        incurred because of the filing of the pleading, including 
        costs, reasonable attorney's fees, witness fees, fees of 
        experts, and deposition expenses.
    (e) Construction.--For purposes of this section--
            (1) a general denial does not constitute a frivolous 
        pleading; and
            (2) the amount requested for damages does not constitute a 
        frivolous pleading.

SEC. 106. STATUTE OF REPOSE.

    (a) General Rule.--A product liability action shall be barred 
unless the complaint is served and filed within 15 years of the date of 
delivery of the product to its first purchaser or lessee, who was not 
engaged in the business of selling or leasing the product or of using 
the product as a component in the manufacture of another product.
    (b) Exception.--Subsection (a)--
            (1) does not bar a product liability action against a 
        defendant who made an express warranty in writing as to the 
        safety of the specific product involved which was longer than 
        15 years, but it will apply at the expiration of such warranty,
            (2) does not apply to a physical illness the evidence of 
        which does not ordinarily appear less than 15 years after the 
        first exposure to the product, and
            (3) does not affect the limitations period established by 
        the General Aviation Revitalization Act of 1994.

SEC. 107. FOREIGN PRODUCTS.

    (a) General Rule.--In any product liability action for injury that 
was sustained in the United States and that relates to the purchase or 
use of a product manufactured outside the United States by a foreign 
manufacturer, the Federal court in which such action is brought shall 
have jurisdiction over such manufacturer if the manufacturer knew or 
reasonably should have known that the product would be imported for 
sale or use in the United States.
    (b) Admission.--If in any product liability action a foreign 
manufacturer of the product involved in such action fails to furnish 
any testimony, document, or other thing upon a duly issued discovery 
order by the court in such action, such failure shall be deemed an 
admission of any fact with respect to which the discovery order 
relates.
    (c) Process.--Process in an action described in subsection (a) may 
be served wherever the foreign manufacturer is located, has an agent, 
or transacts business.

SEC. 108. DEFINITIONS.

    As used in this title:
            (1) The term ``claimant'' means any person who brings a 
        product liability action and any person on whose behalf such an 
        action is brought. If such an action is brought through or on 
        behalf of an estate, the term includes the claimant's decedent. 
        If such action is brought through or on behalf of a minor or 
        incompetent, the term includes the claimant's legal guardian.
            (2) The term ``commercial loss'' means any loss of or 
        damage to a product itself incurred in the course of the 
        ongoing business enterprise consisting of providing goods or 
        services for compensation.
            (3) The term ``economic loss'' means any pecuniary loss 
        resulting from harm (including the loss of earnings, medical 
        expense loss, replacement services loss, loss due to death, and 
        burial costs) to the extent recovery for such loss is allowed 
        under applicable State law.
            (4) The term ``harm'' means any physical injury, illness, 
        disease, or death or damage to property caused by a product. 
        The term does not include commercial loss or loss or damage to 
        a product itself.
            (5) The term ``manufacturer'' means--
                    (A) any person who is engaged in a business to 
                produce, create, make, or construct any product (or 
                component part of a product) and who (i) designs or 
                formulates the product (or component part of the 
                product), (ii) has engaged another person to design or 
                formulate the product (or component part of the 
                product), or (iii) uses the design or formulation of 
                the product developed by another person;
                    (B) a product seller of the product who, before 
                placing the product in the stream of commerce--
                            (i) designs or formulates or has engaged 
                        another person to design or formulate an aspect 
                        of the product after the product was initially 
                        made by another, or
                            (ii) produces, creates, makes, or 
                        constructs such aspect of the product, or
                    (C) any product seller not described in 
                subparagraph (B) which holds itself out as a 
                manufacturer to the user of the product.
            (6) The term ``noneconomic loss'' means subjective, 
        nonmonetary loss resulting from harm, including pain, 
        suffering, inconvenience, mental suffering, emotional distress, 
        loss of society and companionship, loss of consortium, injury 
        to reputation, and humiliation.
            (7) The term ``person'' means any individual, corporation, 
        company, association, firm, partnership, society, joint stock 
        company, or any other entity (including any governmental 
        entity).
            (8)(A) The term ``product'' means any object, substance, 
        mixture, or raw material in a gaseous, liquid, or solid state 
        which--
                    (i) is capable of delivery itself or as an 
                assembled whole, in a mixed or combined state, or as a 
                component part or ingredient;
                    (ii) is produced for introduction into trade or 
                commerce;
                    (iii) has intrinsic economic value; and
                    (iv) is intended for sale or lease to persons for 
                commercial or personal use.
            (B) The term does not include--
                    (i) human tissue, human organs, human blood, and 
                human blood products; or
                    (ii) electricity, water delivered by a utility, 
                natural gas, or steam.
            (9) The term ``product liability action'' means a civil 
        action brought on any theory for harm caused by a product or 
        product use.
            (10) The term ``product seller'' means a person who, in the 
        course of a business conducted for that purpose, sells, 
        distributes, rents, leases, prepares, blends, packages, labels 
        a product, is otherwise involved in placing a product in the 
        stream of commerce, or installs, repairs, or maintains the 
        harm-causing aspect of a product. The term does not include--
                    (A) a seller or lessor of real property;
                    (B) a provider of professional services in any case 
                in which the sale or use of a product is incidental to 
                the transaction and the essence of the transaction is 
                the furnishing of judgment, skill, or services; or
                    (C) any person who--
                            (i) acts in only a financial capacity with 
                        respect to the sale of a product; or
                            (ii) leases a product under a lease 
                        arrangement in which the selection, possession, 
                        maintenance, and operation of the product are 
                        controlled by a person other than the lessor.
            (11) The term ``State'' means any State of the United 
        States, the District of Columbia, Commonwealth of Puerto Rico, 
        the Northern Mariana Islands, the Virgin Islands, Guam, 
        American Samoa, and any other territory or possession of the 
        United States, or any political subdivision of any of the 
        foregoing.

    TITLE II--LIMITATION ON SPECULATIVE AND ARBITRARY DAMAGE AWARDS

SEC. 201. PUNITIVE DAMAGES AS PENALTY IN CIVIL ACTIONS.

    (a) General Rule.--Punitive damages may, to the extent permitted by 
applicable State law, be awarded in any civil action for harm in any 
Federal or State court against a defendant if the claimant establishes 
by clear and convincing evidence that the harm suffered was result of 
conduct--
            (1) specifically intended to cause harm, or
            (2) conduct manifesting a conscious, flagrant indifference 
        to the rights or safety of others.
    (b) Proportional Awards.--The amount of punitive damages that may 
be awarded in any civil action subject to this title shall not exceed 3 
times the amount of damages awarded to the claimant for economic loss, 
or $250,000, whichever is greater. This section shall be applied by the 
court and shall not be disclosed to the jury.
    (c) Applicability.--Except as provided in section 401, this section 
shall apply to any civil action brought in any Federal or State court 
on any theory where punitive damages are sought. This section does not 
create a cause of action for punitive damages. This section does not 
preempt or supersede any State or Federal law to the extent that such 
law would further limit the award of punitive damages.
    (d) Bifurcation.--At the request of any party, the trier of fact 
shall consider in a separate proceeding whether punitive damages are to 
be awarded and the amount of such award. If a separate proceeding is 
requested, evidence relevant only to the claim of punitive damages, as 
determined by applicable State law, shall be inadmissible in any 
proceeding to determine whether compensatory damages are to be awarded.
    (e) Considerations.--In determining the amount of punitive damages, 
the trier of fact shall consider all relevant, admissible evidence, 
including--
            (1) the severity of the harm caused by the conduct of the 
        defendant,
            (2) the duration of the conduct or any concealment of it by 
        the defendant,
            (3) the profitability of the specific conduct that caused 
        the harm to the defendant,
            (4) the number of products sold, the frequency of services 
        provided, or the type of activities conducted by the defendant 
        of the kind causing the harm complained of by the claimant,
            (5) awards of punitive damages to persons similarly 
        situated to the claimant,
            (6) possibility of prospective awards of compensatory 
        damages to persons similarly situated to the claimant,
            (7) any criminal penalties imposed on the defendant as a 
        result of the conduct complained of by the claimant,
            (8) the amount of any civil and administrative fines and 
        penalties assessed against the defendant as a result of the 
        conduct complained of by the claimant, and
            (9) whether the foregoing considerations have been a factor 
        in any prior proceeding involving the defendant.
    (f) Drugs and Devices.--
            (1)(A) Punitive damages shall not be awarded against a 
        manufacturer or product seller of a drug (as defined in section 
        201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321(g)(1)) or medical device (as defined in section 
        201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        321(h)) which caused the claimant's harm where--
                    (i) such drug or device was subject to premarket 
                approval by the Food and Drug Administration with 
                respect to the safety of the formulation or performance 
                of the aspect of such drug or device which caused the 
                claimant's harm or the adequacy of the packaging or 
                labeling of such drug or device, and such drug was 
                approved by the Food and Drug Administration; or
                    (ii) the drug is generally recognized as safe and 
                effective pursuant to conditions established by the 
                Food and Drug Administration and applicable 
                regulations, including packaging and labeling 
                regulations.
            (B) Subparagraph (A) shall not apply in any case in which 
        the defendant, before or after premarket approval of a drug or 
        device--
                    (i) intentionally and wrongfully withheld from or 
                misrepresented to the Food and Drug Administration 
                information concerning such drug or device required to 
                be submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and relevant to the harm suffered by the 
                claimant, or
                    (ii) made an illegal payment to an official or 
                employee of the Food and Drug Administration for the 
                purpose of securing or maintaining approval of such 
                drug or device.
            (2) Packaging.--In a product liability action for harm 
        which is alleged to relate to the adequacy of the packaging (or 
        labeling relating to such packaging) of a drug which is 
        required to have tamper-resistant packaging under regulations 
        of the Secretary of Health and Human Services (including 
        labeling regulations related to such packaging), the 
        manufacturer of the drug shall not be held liable for punitive 
        damages unless the drug is found by the court by clear and 
        convincing evidence to be substantially out of compliance with 
        such regulations.

SEC. 202. FAIR SHARE RULE FOR NONECONOMIC DAMAGE AWARDS.

    (a) Fair Share of Liability Imposed According to Share of Fault.--
In any product liability or other civil action brought in State or 
Federal court, a defendant shall be liable only for the amount of 
noneconomic damages attributable to such defendant in direct proportion 
to such defendant's share of fault or responsibility for the claimant's 
actual damages, as determined by the trier of fact. In all such cases, 
the liability of a defendant for noneconomic damages shall be several 
and not joint.
    (b) Applicability.--Except as provided in section 402, this section 
shall apply to any product liability or other civil action brought in 
any Federal or State court on any theory where noneconomic damages are 
sought. This section does not preempt or supersede any State or Federal 
law to the extent that such law would further limit the application of 
the theory of joint liability to any kind of damages.

SEC. 203. LIMITATION ON NONECONOMIC DAMAGES IN HEALTH CARE LIABILITY 
              ACTIONS.

    (a) Maximum Award of Noneconomic Damages.--In any health care 
liability action, in addition to actual damages or punitive damages, or 
both, a claimant may also be awarded noneconomic damages, including 
damages awarded to compensate injured feelings, such as pain and 
suffering and emotional distress. The maximum amount of such damages 
that may be awarded to a claimant shall be $250,000. Such maximum 
amount shall apply regardless of the number of parties against whom the 
action is brought, and regardless of the number of claims or actions 
brought with respect to the health care injury. An award for future 
noneconomic damages shall not be discounted to present value. The jury 
shall not be informed about the limitation on noneconomic damages, but 
an award for noneconomic damages in excess of $250,000 shall be reduced 
either before the entry of judgment or by amendment of the judgment 
after entry. An award of damages for noneconomic losses in excess of 
$250,000 shall be reduced to $250,000 before accounting for any other 
reduction in damages required by law. If separate awards of damages for 
past and future noneconomic damages are rendered and the combined award 
exceeds $250,000, the award of damages for future noneconomic losses 
shall be reduced first.
    (b) Applicability.--Except as provided in section 401, this section 
shall apply to any health care liability action brought in any Federal 
or State court on any theory or pursuant to any alternative dispute 
resolution process where noneconomic damages are sought. This section 
does not create a cause of action for noneconomic damages. This section 
does not preempt or supersede any State or Federal law to the extent 
that such law would further limit the award of noneconomic damages. 
This section does not preempt any State law enacted before the date of 
the enactment of this Act that places a cap on the total liability in a 
health care liability action.
    (c) Definitions.--As used in this section:
            (1) The term ``claimant'' means any person who asserts a 
        health care liability claim or brings a health care liability 
        action, including a person who asserts or claims a right to 
        legal or equitable contribution, indemnity or subrogation, 
        arising out of a health care liability claim or action, and any 
        person on whose behalf such a claim is asserted or such an 
        action is brought, whether deceased, incompetent or a minor.
            (2) The term ``economic loss'' has the same meaning as 
        defined at section 203(3).
            (3) The term ``health care liability action'' means a civil 
        action brought in a State or Federal court or pursuant to any 
        alternative dispute resolution process, against a health care 
        provider, an entity which is obligated to provide or pay for 
        health benefits under any health plan (including any person or 
        entity acting under a contract or arrangement to provide or 
        administer any health benefit), or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, in which the claimant alleges a claim 
        (including third party claims, cross claims, counter claims, or 
        distribution claims) based upon the provision of (or the 
        failure to provide or pay for) health care services or the use 
        of a medical product, regardless of the theory of liability on 
        which the claim is based, or the number of plaintiffs, or 
        defendants or causes of action.

SEC. 204. DEFINITIONS.

    As used in this title:
            (1) The term ``actual damages'' means damages awarded to 
        pay for economic loss.
            (2) The term ``claimant'' means any person who brings a 
        civil action and any person on whose behalf such an action is 
        brought. If such action is brought through or on behalf of an 
        estate, the term includes the claimant's decedent. If such 
        action is brought through or on behalf of a minor or 
        incompetent, the term includes the claimant's legal guardian.
            (3) 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. The level of proof 
        required to satisfy such standard is more than that required 
        under preponderance of the evidence, but less than that 
        required for proof beyond a reasonable doubt.
            (4) The term ``economic loss'' means any pecuniary loss 
        resulting from harm (including the loss of earnings, medical 
        expense loss, replacement services loss, loss due to death, and 
        burial costs), to the extent recovery for such loss is allowed 
        under applicable State law.
            (5) The term ``harm'' means any legally cognizable wrong or 
        injury for which punitive damages may be imposed.
            (6) The term ``noneconomic damages'' means damages other 
        than punitive damages or actual damages.
            (7) The term ``punitive damages'' means damages awarded 
        against any person or entity to punish or deter such person or 
        entity, or others, from engaging in similar behavior in the 
        future.
            (8) The term ``State'' means any State of the United 
        States, the District of Columbia, Commonwealth of Puerto Rico, 
        the Northern Mariana Islands, the Virgin Islands, Guam, 
        American Samoa, and any other territory or possession of the 
        United States, or any political subdivision of any of the 
        foregoing.

                   TITLE III--BIOMATERIALS SUPPLIERS

SEC. 301. LIABILITY OF BIOMATERIALS SUPPLIERS.

    A biomaterials supplier may, to the extent required and permitted 
by any other applicable law, be liable for harm to a claimant caused by 
a medical device, only if the claimant in a product liability action 
shows that the conduct of the biomaterials supplier was an actual and 
proximate cause of the harm to the claimant and--
            (1) the raw materials or component parts delivered by the 
        biomaterials supplier either--
                    (A) did not constitute the product described in the 
                contract between the biomaterials supplier and the 
                person who contracted for delivery of the product; or
                    (B) failed to meet any specifications that were--
                            (i) provided to the biomaterials supplier 
                        and not expressly repudiated by the 
                        biomaterials supplier prior to acceptance of 
                        delivery of the raw materials or component 
                        parts;
                            (ii)(I) provided to the biomaterials 
                        supplier;
                            (II) provided to the manufacturer by the 
                        biomaterials supplier; or
                            (III) contained in a master file that was 
                        submitted by the biomaterials supplier to the 
                        Secretary of Health and Human Services and that 
                        is currently maintained by the biomaterials 
                        supplier of purposes of premarket approval of 
                        medical devices; or
                            (iii)(I) included in the submissions for 
                        the purposes of premarket approval or review by 
                        the Secretary of Health and Human Services 
                        under section 510, 513, 515, or 520 of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        360, 360c, 360e, or 360j); and
                            (II) have received clearance from the 
                        Secretary of Health and Human Services, if such 
                        specifications were provided by the 
                        manufacturer to the biomaterials supplier and 
                        were not expressly repudiated by the 
                        biomaterials supplier prior to the acceptance 
                        by the raw materials or component parts;
            (2) the biomaterials supplier intentionally and wrongfully 
        withheld or misrepresented information that is material and 
        relevant to the harm suffered by the claimant; or
            (3) the biomaterials supplier had actual knowledge of 
        prospective fraudulent or malicious activities in the use of 
        its supplies where such activities are relevant to the harm 
        suffered by the claimant.

SEC. 302. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
              BIOMATERIALS SUPPLIERS.

    (a) Motion To Dismiss.--
            (1) General rule.--Any biomaterials supplier who is a 
        defendant in any product liability action involving a medical 
        device which allegedly caused the harm for which the action is 
        brought and who did not take part in the design, manufacture, 
        or sale of such medical device may, at any time during which a 
        motion to dismiss may be filed under an applicable law, move to 
        dismiss the action on the grounds that--
                    (A) the claimant has failed to establish that the 
                supplier furnished raw materials or component parts in 
                violation of applicable contractual requirements or 
                specifications agreed to by the biomaterials supplier; 
                or
                    (B) the claimant has failed to comply with the 
                requirements of subsection (b).
            (2) Exception.--The biomaterials supplier may not move to 
        dismiss the action if--
                    (A) the biomaterials supplier intentionally and 
                wrongfully withheld or misrepresented information that 
                is material and relevant to the harm suffered by the 
                claimant; or
                    (B) the biomaterials supplier had actual knowledge 
                of prospective fraudulent or malicious activities in 
                the use of its supplies where such activities are 
                relevant to the harm suffered by the claimant.
    (b) Manufacturer of Medical Device Shall Be Named a Party.--The 
claimant shall be required to name the manufacturer of the medical 
device to which the biomaterials supplier furnished raw materials or 
component parts as a party to the product liability action, unless--
            (1) the manufacturer is subject to service of process 
        solely in a jurisdiction in which the biomaterials supplier is 
        not domiciled or subject to a service of process; or
            (2) an action against the manufacturer is barred by 
        applicable law.
    (c) Proceedings on Motion to Dismiss.--The following rules shall 
apply to any proceeding on a motion to dismiss filed under this 
section:
            (1) Affidavits relating to status of defendant.--
                    (A) Defendant affidavit.--The defendant in the 
                action may support a motion to dismiss by filing an 
                affidavit demonstrating that defendant is a 
                biomaterials supplier and that it is neither the 
                manufacturer nor the product seller of the medical 
                device which caused the harm alleged by the claimant.
                    (B) Response to motion to dismiss.--In response to 
                a motion to dismiss described in this section, the 
                claimant may submit an affidavit demonstrating why it 
                asserts that--
                            (i) the defendant who filed the motion to 
                        dismiss is not a biomaterials supplier with 
                        respect to the medical device which caused the 
                        harm alleged by the claimant;
                            (ii) on what basis it asserts that the 
                        supplier furnished raw materials or component 
                        parts in violation of applicable contractual 
                        requirements or specifications agreed to by the 
                        biomaterials supplier;
                            (iii) the biomaterials supplier 
                        intentionally and wrongfully withheld or 
                        misrepresented information that is material and 
                        relevant to the harm suffered by the claimant; 
                        or
                            (iv) the biomaterials supplier had actual 
                        knowledge of prospective fraudulent or 
                        malicious activities in the use of its supplies 
                        where such activities are relevant to the harm 
                        suffered by the claimant.
            (2) Effect of motion to dismiss on discovery.--If a 
        defendant files a motion to dismiss, no discovery shall be 
        permitted in connection with the action that is the subject of 
        the motion, unless the affidavits submitted in accordance with 
        this section raise material issues of fact concerning whether--
                    (A) the supplier furnished raw materials or 
                component parts in violation of applicable contractual 
                requirements or specifications agreed to by the 
                biomaterials supplier;
                    (B) the biomaterials supplier intentionally and 
                wrongfully withheld or misrepresented information that 
                is material and relevant to the harm suffered by the 
                claimant; or
                    (C) the biomaterials supplier had actual knowledge 
                of prospective fraudulent or malicious activities in 
                the use of its supplies where such activities are 
                relevant to the harm suffered by the claimant.
        Any such discovery shall be limited solely to such material 
        facts.
            (3) Response to motion to dismiss.--The court shall rule on 
        the motion to dismiss solely on the basis of the affidavits 
        filed under this section and on the basis of any evidence 
        developed in the course of discovery under paragraph (2) and 
        subsequently submitted to the court in accordance with 
        applicable rules of evidence.
    (d) Attorney Fees.--The court shall require the claimant to 
compensate the biomaterials supplier for attorney fees and costs, if--
            (1) the claimant named or joined the biomaterials supplier; 
        and
            (2) the court found the claim against the biomaterials 
        supplier to be without merit and frivolous.

SEC. 303. DEFINITIONS.

    For purposes of this title:
            (1) The term ``biomaterials supplier'' means an entity that 
        directly or indirectly supplies, or licenses another person to 
        supply, a component part or raw material for use in the 
        manufacture of a medical device--
                    (A) that is intended by the manufacturer of the 
                device--
                            (i) to be placed into a surgically or 
                        naturally formed or existing cavity of the body 
                        for a period of at least 30 days; or
                            (ii) to remain in contact with bodily 
                        fluids of internal human tissue through a 
                        surgically produced opening for a period of 
                        less than 30 days; and
                    (B) suture materials used in implant procedures.
            (2) Notwithstanding paragraph (1), the term ``biomaterials 
        supplier'' excludes any person, with respect to a medical 
        device which is the subject of a product liability action--
                    (A) who is engaged in the manufacture, preparation, 
                propagation, compounding, or processing (as defined in 
                section 510(a)(1) of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 360(a)(1)) of the medical 
                device, and has or should have registered with the 
                Secretary of Health and Human Services pursuant to 
                section 510 of the Federal Food, Drug, and Cosmetic Act 
                (21 U.S.C. 360) and the regulations issued under such 
                section, and has or should have included the medical 
                device on a list of devices filed with the Secretary of 
                Health and Human Services pursuant to section 510(j) of 
                such Act (21 U.S.C. 360(j)) and the regulations issued 
                under such section; or
                    (B) who, in the course of a business conducted for 
                that purpose, has sold, distributed, leased, packaged, 
                labeled, or otherwise placed the implant in the stream 
                of commerce after it was manufactured.
            (3) The term ``harm'' means any physical injury, illness, 
        disease, or death or damage to property caused by a product. 
        The term does not include commercial loss or loss or damage to 
        a product itself.
            (4) The term ``product liability action'' means a civil 
        action brought on any theory for harm caused by a product or 
        product use.

         TITLE IV--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

SEC. 401. APPLICATION LIMITED TO INTERSTATE COMMERCE.

    Titles I, II, and III shall apply only to product liability or 
other civil actions affecting interstate commerce. For purposes of the 
preceding sentence, the term ``interstate commerce'' means commerce 
among the several States or with foreign nations, or in any territory 
of the United States or in the District of Columbia, or between any 
such territory and another, or between any such territory and any State 
or foreign nation, or between the District of Columbia and any State or 
territory or foreign nation.

SEC. 402. EFFECT ON OTHER LAW.

    Nothing in title I, II, or III shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any law;
            (2) supersede any Federal law;
            (3) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (4) affect the applicability of any provision of chapter 97 
        of title 28, United States Code;
            (5) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (6) 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. 403. FEDERAL CAUSE OF ACTION PRECLUDED.

    The district courts of the United States shall not have 
jurisdiction pursuant to this Act based on section 1331 or 1337 of 
title 28, United States Code.

SEC. 404. EFFECTIVE DATE.

    Titles I, II, and III shall apply with respect to actions which are 
commenced after the date of the enactment of this Act.

            Passed the House of Representatives March 10, 1995.

            Attest:

                                                                 Clerk.
104th CONGRESS

  1st Session

                               H. R. 956

_______________________________________________________________________

                                 AN ACT

   To establish legal standards and procedures for product liability 
                  litigation, and for other purposes.