[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 11 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 11

  To award grants to States to promote the development of alternative 
dispute resolution systems for medical malpractice claims, to generate 
    knowledge about such systems through expert data gathering and 
 assessment activities, to promote uniformity and to curb excesses in 
 State liability systems through federally-mandated liability reforms, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 4, 1995

    Mr. Kyl introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
  To award grants to States to promote the development of alternative 
dispute resolution systems for medical malpractice claims, to generate 
    knowledge about such systems through expert data gathering and 
 assessment activities, to promote uniformity and to curb excesses in 
 State liability systems through federally-mandated liability reforms, 
                        and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Care Injury Compensation 
Reform Act of 1995''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds that--
            (1) 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) the Federal Government has a major interest in health 
        care as a direct provider of health care through the Public 
        Health Service, as a source of payment for health care through 
        Medicare, Medicaid, and other programs, and has a demonstrated 
        interest in assessing the quality of care, access to care, and 
        the costs of care through the evaluative activities of several 
        Federal agencies;
            (3) there is increasing concern that health care liability 
        claims have significant negative effects on the health care 
        system, including--
                    (A) increasing costs attributable to defensive 
                medical practices, including the rising cost of medical 
                liability insurance and costs attributable to the 
                inefficiencies in the civil justice system;
                    (B) adverse effects on the quality of health care 
                through the encouragement of defensive health care 
                practices including unnecessary tests and procedures; 
                and
                    (C) adverse effects on patient access to care 
                because the fear of liability discourages health care 
                professionals from continuing to practice in high risk 
                specialties and certain geographic regions of the 
                country;
            (4) it has been demonstrated that the civil justice system 
        is a costly, inefficient, and inequitable mechanism for 
        resolving claims against health care providers and producers;
            (5) a disproportionately large percentage of funds expended 
        to compensate patients who suffer health care injuries is 
        distributed to a few individuals, while others are denied 
        adequate compensation;
            (6) an exorbitant portion of awards in medical malpractice 
        actions goes towards paying the transaction costs of the 
        judicial system rather than compensating individuals for health 
        care injuries; and
            (7) there is optimism that alternative dispute resolution 
        systems have the potential to significantly improve the adverse 
        effects of the medical liability environment; however, more 
        data and analysis is necessary to fully understand the benefits 
        of various procedural devices.
    (b) Purpose.--The purposes of this Act are to--
            (1) provide incentives to States to develop alternative 
        dispute resolution procedures to attain a more efficient, 
        expeditious, and equitable resolution of health care 
        malpractice disputes;
            (2) enhance general knowledge concerning the benefits of 
        different forms of alternative dispute resolution mechanisms; 
        and
            (3) establish uniformity and curb excesses in the State-
        based medical liability systems through federally-mandated 
        reforms.

SEC. 3. DEFINITIONS.

    As used in this Act:
            (1) Alternative dispute resolution system.--The term 
        ``alternative dispute resolution system'' means a system that 
        is enacted or adopted by a State to resolve medical malpractice 
        claims or medical product liability claims instead of resorting 
        to a judicial proceeding in a State court.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care liability action and, in the case of an 
        individual who is deceased, incompetent, or a minor, the person 
        on whose behalf such an action is brought.
            (3) Clear and convincing evidence.--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.
            (4) Economic losses.--The term ``economic losses'' means 
        losses for hospital and other medical expenses, lost wages, 
        lost employment, and other pecuniary losses.
            (5) Health care liability action.--The term ``health care 
        liability action'' means any civil action brought pursuant to 
        State law in which a plaintiff alleges a medical malpractice 
        claim against a health care provider, health care professional, 
        or medical product producer.
            (6) 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.
            (7) 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 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.
            (8) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice claim or a medical product liability claim.
            (9) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means any claim relating to the provision 
        of (or the failure to provide) health care services without 
        regard to the theory of liability asserted, and includes any 
        third-party claim, cross-claim, counterclaim, or contribution 
        claim in a health care liability action.
            (10) 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).
            (11) Medical product liability claim.--The term ``medical 
        product liability claim'' means any claim in which a claimant 
        alleges an injury arising from or relating to the use of a 
        medical product.
            (12) Medical product producer.--The term ``medical product 
        producer'' means any entity that is the designer, manufacturer, 
        producer, or seller of a medical product that is the subject of 
        a medical product liability claim.
            (13) Noneconomic losses.--The term ``noneconomic losses'' 
        means 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.
            (14) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (15) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, and Guam.

  TITLE I--GRANTS TO STATES FOR ALTERNATIVE DISPUTE RESOLUTION SYSTEMS

SEC. 101. GRANTS TO STATES.

    (a) In General.--The Secretary shall make grants to States for the 
implementation and evaluation of alternative dispute resolution 
systems.
    (b) Eligibility.--A State is eligible to receive a grant under this 
section if the State submits to the Secretary an application at such 
time, in such form, and containing such information and assurances as 
the Secretary may require, including--
            (1) a description of the alternative dispute resolution 
        system that the State intends to implement with amounts 
        received under the grant;
            (2) assurances that the State will comply with all data 
        gathering requirements promulgated by the Secretary under 
        section 102(a); and
            (3) any information and assurances necessary to enable the 
        Secretary to determine whether the State's alternative dispute 
        resolution system meets the qualification standards for such 
        systems developed by the Secretary under section 102(a).
    (c) Number of Grants.--
            (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall award not less than 10 grants each fiscal year 
        under this section.
            (2) Exception.--Notwithstanding paragraph (1), the 
        Secretary may award less than 10 grants under this section in a 
        fiscal year if the Secretary determines that there are an 
        inadequate number of applications submitted that meet the 
        eligibility and approval requirements of this section in such 
        fiscal year.
    (d) Designation of Model States.--
            (1) In general.--The Secretary shall designate each State 
        receiving a grant under this section as a model alternative 
        dispute resolution State.
            (2) Extension of period of grant.--Upon application to the 
        Secretary, a State designated under paragraph (1) shall be 
        eligible for a 2-year extension of the grant received under 
        this section.
            (3) Dissemination of information to other states.--The 
        Secretary shall disseminate information on the alternative 
        dispute resolution systems implemented by the States designated 
        under paragraph (1) to other States, health care professionals, 
        health care providers, and other interested parties.

SEC. 102. ADMINISTRATION.

    (a) Standards and Regulations for Alternative Dispute Resolution 
Grant Program.--
            (1) In general.--In consultation with the Director of the 
        Agency for Health Care Policy and Research, the Secretary shall 
        develop and promulgate standards and regulations necessary to 
        carry out the grant program established under section 101, 
        including--
                    (A) qualification standards for alternative dispute 
                resolution systems that States must meet in order to 
                receive grants under such section; and
                    (B) regulations establishing data gathering 
                requirements for States receiving grants under such 
                section.
            (2) Criteria for programs.--In developing qualification 
        standards for alternative dispute resolution systems under 
        paragraph (1)(A), the Secretary shall take into account the 
        effectiveness of such systems in--
                    (A) supporting access to health care;
                    (B) encouraging improvements in the quality of 
                health care;
                    (C) enhancing and not impairing the physician-
                patient relationship;
                    (D) encouraging innovation that leads to an 
                improved level of health care;
                    (E) compensating for avoidable medical injury due 
                to provider fault and not compensating for injury which 
                is unavoidable by standard medical practice;
                    (F) resolving claims promptly and in amounts 
                proportional to the injury;
                    (G) providing predictable outcomes; and
                    (H) operating efficiently in terms of financial 
                costs, professional energies, and governmental 
                processes.
    (b) Technical Assistance.--The Secretary shall provide States with 
technical assistance to enable States to submit applications for grants 
under section 101, including information on the establishment and 
operation of alternative dispute resolution systems.
    (c) Evaluation of Alternative Dispute Resolution Systems.--Not 
later than 4 years after awarding the first grant to a State under 
section 101, the Secretary shall prepare and submit to Congress a 
report describing and evaluating the alternative dispute resolution 
systems implemented by States with funds provided under such grants, 
and shall include in the report--
            (1) information on--
                    (A) the effect of such systems on the cost of 
                health care within the State,
                    (B) the impact of such systems on the access of 
                individuals to health care within the State, and
                    (C) the effect of such systems on the quality of 
                health care provided within such State; and
            (2) an analysis of the feasibility and desirability of 
        establishing a national alternative dispute resolution system.

           TITLE II--UNIFORM STANDARDS FOR MALPRACTICE CLAIMS

SEC. 201. APPLICABILITY.

    Except as provided in section 209, this title shall apply to any 
health care liability action brought in a Federal or State court and to 
any medical malpractice claim or medical product liability claim 
subject to an alternative dispute resolution system.

SEC. 202. CALCULATION AND PAYMENT OF DAMAGES.

    (a) Periodic Payments for Future Losses.--No person may be required 
to pay more than $100,000 in a single payment in damages (whether for 
economic or noneconomic losses) for expenses to be incurred in the 
future, but shall be permitted to make such payments on a periodic 
basis. The periods for such payments shall be determined by the court, 
based upon projections of when such expenses are likely to be incurred.
    (b) Limitation on Noneconomic Losses.--The total amount of damages 
that 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 an action or claim may not exceed $250,000, regardless of 
the number of health care professionals, health care providers, and 
health care producers against whom the action or claim is brought or 
the number of actions or claims brought with respect to the injury.
    (c) Mandatory Offsets for Damages Paid by a Collateral Source.--
            (1) In general.--The total amount of damages received by an 
        individual shall be reduced (in accordance with paragraph (2)) 
        by any other payment that has been or will be made to the 
        individual to compensate the individual for the injury that was 
        the subject of the action or claim.
            (2) Amount of reduction.--The amount by which an award of 
        damages to an individual shall be reduced under paragraph (1) 
        shall be--
                    (A) the total amount of any payments (other than 
                such award) that have been made or that will be made to 
                the individual to compensate the individual for the 
                injury that was the subject of the action or claim; 
                minus
                    (B) the amount paid by the individual (or by the 
                spouse, parent, or legal guardian of the individual) to 
                secure the payments described in subparagraph (A).
    (d) Attorney's Fees.--A claimant's attorney's fees may not exceed--
            (1) 25 percent of the first $150,000 of any award or 
        settlement paid to the claimant; or
            (2) 15 percent of any additional amounts paid to the 
        claimant.
    (e) Limitation on Punitive Damages.--The total amount of punitive 
damages that may be assessed with respect to an action or claim may not 
exceed twice the total amount of the damages awarded to compensate the 
claimant for losses resulting from the injury which is the subject of 
the claim or action, regardless of the number of health care 
professionals, health care providers, and health care producers against 
whom the action or claim is brought or the number of actions or claims 
brought with respect to the injury.

SEC. 203. JOINT AND SEVERAL LIABILITY FOR NONECONOMIC LOSSES.

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

SEC. 204. UNIFORM STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice claim or medical product 
liability claim may be initiated after the expiration of the 2-year 
period that begins on the earlier of the date which the alleged injury 
that is the subject of such action was discovered or the date on which 
such injury 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 or medical product 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. 205. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) In General.--In the case of a medical malpractice claim or 
medical product liability claim 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.
    (b) Applicability to Group Practices or Agreements Among 
Providers.--For purposes of subsection (a), 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.

SEC. 206. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.

    (a) Standard of Reasonableness.--Except as provided in subsection 
(b), a defendant may not be found to have committed malpractice unless 
the defendant's conduct at the time of providing the health care 
services that are the subject of the action was not reasonable.
    (b) Actions Brought Under Strict Liability.--Subsection (a) shall 
not apply to any action in which the claimant asserts that the 
defendant is liable under a theory of strict liability.

SEC. 207. RESTRICTIONS ON PUNITIVE DAMAGES RELATING TO MEDICAL PRODUCT 
              LIABILITY CLAIMS.

    (a) Restrictions for Approved Products or Devices.--
            (1) In general.--Punitive damages otherwise permitted by 
        applicable law shall not be awarded with respect to any medical 
        product liability claim alleged against a medical product 
        producer if--
                    (A) the drug or device that is the subject of such 
                claim--
                            (i) was subject to approval under section 
                        505 or premarket approval under section 515 of 
                        the Federal Food, Drug, and Cosmetic Act by the 
                        Food and Drug Administration with respect to--
                                    (I) the safety of the formulation 
                                or performance of the aspect of the 
                                drug or device; or
                                    (II) the adequacy of the packaging 
                                or labeling of the drug or device, and
                            (ii) was approved by the Food and Drug 
                        Administration; or
                    (B) the drug or device 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.
            (2) Exception in case of withheld information, 
        misrepresentation, or illegal payment.--The provisions of 
        paragraph (1) shall not apply if it is determined on the basis 
        of clear and convincing evidence that the medical product 
        producer--
                    (A) withheld from or misrepresented to the Food and 
                Drug Administration information concerning such drug or 
                device that is required to be submitted under the 
                Federal Food, Drug, and Cosmetic Act or section 352 of 
                the Public Health Service Act that is material and 
                relevant to the action; or
                    (B) made an illegal payment to an official of the 
                Food and Drug Administration for the purpose of 
securing approval of the drug or device.
    (b) Separate Proceeding To Determine Punitive Damages.--
            (1) Considerations.--At the request of a medical product 
        producer in a health care liability action in which a medical 
        product liability claim is alleged against the producer, the 
        trier of fact shall consider in a separate proceeding--
                    (A) whether punitive damages are to be awarded and 
                the amount of the award; or
                    (B) the amount of punitive damages following a 
                determination of punitive liability.
            (2) Evidence.--If a separate proceeding is requested in 
        accordance with paragraph (1), 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 to the claimant.
    (c) Criteria for Determining Amount of Punitive Damages.--Subject 
to the limitation on punitive damages provided in section 202(e), all 
relevant evidence shall be considered in determining the amount of 
punitive damages assessed with respect to a medical product liability 
claim, including--
            (1) the financial condition of the medical product 
        producer;
            (2) the severity of the harm caused by the conduct of the 
        medical product producer;
            (3) the duration of the conduct or any concealment of the 
        conduct by the medical product producer;
            (4) the profitability of the conduct to the medical product 
        producer;
            (5) the number of products sold by the medical product 
        producer of the kind causing the harm complained of by the 
        claimant;
            (6) awards of punitive or exemplary damages to persons 
        similarly situated to the claimant;
            (7) prospective awards of compensatory damages to persons 
        similarly situated to the claimant;
            (8) any criminal penalties imposed on the medical product 
        producer as a result of the conduct complained of by the 
        claimant; and
            (9) the amount of any civil fines assessed against the 
        defendant as a result of the conduct complained of by the 
        claimant.

SEC. 208. JURISDICTION OF FEDERAL COURTS.

    The district courts of the United States shall not have 
jurisdiction of any health care liability action based on sections 1331 
or 1337 of title 28, United States Code.

SEC. 209. PREEMPTION.

    (a) In General.--This title supersedes any State law only to the 
extent that the State law permits the recovery by a claimant or the 
assessment against a defendant of a greater amount of damages, permits 
the awarding of a greater amount of attorneys' fees, establishes a 
longer period during which a medical malpractice claim or medical 
product liability claim may be initiated, or establishes a less strict 
standard of proof for determining whether a defendant has committed 
malpractice, than the provisions of this title.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this title 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 in inconvenient forum.
                                 <all>
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