[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 300 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 300

      To reform the civil justice system, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 31 (legislative day, January 30), 1995

 Mr. McConnell (for himself and Mr. Abraham) introduced the following 
    bill; which was read twice and referred to the Committee on the 
                               Judiciary

_______________________________________________________________________

                                 A BILL


 
      To reform the civil justice system, 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 ``Lawsuit Reform Act of 1995''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Findings.
Sec. 4. Authority.
Sec. 5. Equity in legal fees.
Sec. 6. Early offer and recovery mechanisms.
Sec. 7. Reform of joint and several liability.
Sec. 8. Single recovery.
Sec. 9. Limitation on punitive damages.
Sec. 10. Alternative dispute resolution.
Sec. 11. Reliability of expert evidence.
Sec. 12. Express authorization for private right of action.
Sec. 13. Applicability.
Sec. 14. Severability.
Sec. 15. Effective date.

SEC. 3. FINDINGS.

    The Congress finds that--
            (1) the United States civil justice system is inefficient, 
        unpredictable, costly, and impedes competitiveness in the world 
        marketplace for business and employees;
            (2) the defects in the civil justice system have a direct 
        and undesirable effect on interstate commerce by decreasing the 
        availability of goods and services in commerce;
            (3) reform efforts should respect the role of the States in 
        the development of civil justice rules, but recognize the 
        national Government's role in removing barriers to interstate 
        commerce;
            (4) the spiralling cost of litigation has continued 
        unabated for the past 30 years; and
            (5) there is a need to restore rationality, certainty, and 
        fairness to the legal system, to promote honesty and integrity 
        within the legal profession, and to encourage alternative means 
        to the contentious litigation system in resolving disputes.

SEC. 4. AUTHORITY.

    This Act is enacted pursuant to Congress' powers under Article I, 
section 8, clauses 3, 9, and 18, of the United States Constitution.

SEC. 5. EQUITY IN LEGAL FEES.

    (a) Disclosure of Attorney's Fees Information.--
            (1) Definitions.--For purposes of this subsection--
                    (A) the term ``attorney'' means any natural person, 
                professional law association, corporation, or 
                partnership authorized under applicable State law to 
                practice law;
                    (B) the term ``attorney's services'' means the 
                professional advice or counseling of or representation 
                by an attorney, but such term shall not include other 
                assistance incurred, directly or indirectly, in 
                connection with an attorney's services, such as 
                administrative or secretarial assistance, overhead, 
                travel expenses, witness fees, or preparation by a 
                person other than the attorney of any study, analysis, 
                report, or test;
                    (C) the term ``claimant'' means any natural person 
                who files a civil action arising under any Federal law 
                or in any diversity action in Federal court and--
                            (i) if such a claim is filed on behalf of 
                        the claimant's estate, the term shall include 
                        the claimant's personal representative; or
                            (ii) if such a claim is brought on behalf 
                        of a minor or incompetent, the term shall 
                        include the claimant's parent, guardian, or 
                        personal representative;
                    (D) the term ``contingent fee'' means the cost or 
                price of an attorney's services determined by applying 
                a specified percentage, which may be a firm fixed 
                percentage, a graduated or sliding percentage, or any 
                combination thereof, to the amount of the settlement or 
                judgment obtained;
                    (E) the term ``hourly fee'' means the cost or price 
                per hour of an attorney's services;
                    (F) the term ``initial meeting'' means the first 
                conference or discussion between the claimant and the 
                attorney, whether by telephone or in person, concerning 
                the details, facts, or basis of the claim;
                    (G) the term ``natural person'' means any 
                individual, and does not include an artificial 
                organization or legal entity, such as a firm, 
                corporation, association, company, partnership, 
                society, joint venture, or governmental body; and
                    (H) the term ``retain'' means the act of a claimant 
                in engaging an attorney's services, whether by express 
                or implied agreement, by seeking and obtaining the 
                attorney's services.
            (2) Decision on compensation.--A claimant who retains an 
        attorney may elect whether to compensate the attorney's 
        services in connection with the claim on an hourly basis or a 
        contingent fee basis.
            (3) Disclosure at initial meeting.--An attorney retained by 
        a claimant shall, at the initial meeting, disclose to the 
        claimant the claimant's right to elect the method of 
        compensating the attorney's services and the claimant's right 
        to receive a written statement of the information described 
        under paragraph (5).
            (4) Right of attorney.--If, within 30 days after receiving 
        the information described under paragraph (5), a claimant has 
        failed to elect the method of compensating the attorney's 
        services, the attorney may select the method of compensation 
        and shall notify the claimant of the selection.
            (5) Information after initial meeting.--Within 30 days 
        after the initial meeting, an attorney retained by a claimant 
        shall provide a written statement to the claimant containing--
                    (A) the estimated number of hours of the attorney's 
                services that will be spent--
                            (i) settling or attempting to settle the 
                        claim or action; and
                            (ii) handling the claim through trial;
                    (B) the attorney's hourly fee for services in the 
                claim or action and any conditions, limitations, 
                restrictions, or other qualifications on the fee the 
                attorney determines are appropriate; and
                    (C) the attorney's contingent fee for services in 
                the claim or action and any conditions, limitations, 
                restrictions, or other qualifications on the fee the 
                attorney determines are appropriate.
            (6) Information after settlement.--An attorney retained by 
        a claimant shall, within a reasonable time not later than 30 
        days after the date on which the claim or action is finally 
        settled or adjudicated, provide a written statement to the 
        claimant containing--
                    (A) the actual number of hours of the attorney's 
                services in connection with the claim;
                    (B) the total amount of the hourly fees or total 
                contingent fee for the attorney's services in 
                connection with the claim; and
                    (C) the actual fee per hour of the attorney's 
                services in connection with the claim, determined by 
                dividing the total amount of the hourly fees or the 
                total contingent fee by the actual number of hours of 
                attorney's services.
            (7) Failure to disclose.--A claimant to whom an attorney 
        fails to disclose information required by this section may 
        withhold 10 percent of the fee and file a civil action for 
        damages in the court in which the claim or action was filed or 
        could have been filed.
            (8) Other remedies.--This section shall supplement and not 
        supplant any other available remedies or penalties.
    (b) Limitation on Attorney Contingent Fees.--
            (1) Definitions.--For purposes of this subsection, the 
        term--
                    (A) ``allegedly liable party'' means a person, 
                partnership, corporation, and the insurers thereof, or 
                any other individual or entity alleged by the claimant 
                to be liable for at least some portion of the damages 
                alleged by the claimant;
                    (B) ``claimant'' means an individual who, in his or 
                her own right, or vicariously, is seeking compensation 
                for tortious physical or mental injury, property 
                damage, or economic loss;
                    (C) ``contingent fee'' means the fee negotiated in 
                a contingent fee agreement which is only payable from 
                the proceeds of any recovery on behalf of a claimant;
                    (D) ``contingent fee agreement'' means a fee 
                agreement between an attorney and a claimant wherein 
                the attorney agrees to bear the risk of no or 
                inadequate compensation in exchange for a proportionate 
                share of part of or all of any recovery by settlement 
                or verdict obtained for the claimant;
                    (E) ``contingent fee attorney'' means an attorney 
                who agrees to represent a claimant in exchange for a 
                contingent fee;
                    (F) ``fixed fee'' means an agreement between an 
                attorney and a claimant whereby the attorney agrees to 
                perform a specific legal task in exchange for a 
                specific sum to be paid by a claimant;
                    (G) ``hourly rate fee''--
                            (i) means the fee generated by an agreement 
                        or otherwise by operation of law between an 
                        attorney and a claimant stating that the 
                        claimant pay the attorney a fee determined by 
                        multiplying the hourly rate negotiated, or 
                        otherwise set by law, between the attorney and 
                        the claimant, by the number of hours that the 
                        attorney has worked on behalf of the claimant 
                        in furtherance of the claimant's interest; and
                            (ii) may also be a contingent fee to the 
                        extent it is only payable from the proceeds of 
                        any recovery on behalf of the claimant;
                    (H) ``pre-retention offer'' means an offer to 
                settle a claim for compensation for damages arising out 
                of a civil action made to a claimant not represented by 
                an attorney at the time of the offer;
                    (I) ``post-retention offer'' means an offer in 
                response to a demand for compensation made within the 
                time constraints, and conforming to the provisions of 
this subsection, to settle a claim for damages arising out of a civil 
action made to a claimant who is represented by a contingent fee 
attorney;
                    (J) ``response'' means a written communication by a 
                claimant or an allegedly responsible party or the 
                attorney for either, deposited into the United States 
                Mail and sent by certified mail; and
                    (K) ``settlement offer'' means a written offer of 
                settlement stated in a response filed within the time 
                limits described in this subsection.
            (2) Applicability.--(A) This subsection shall apply with 
        respect to any civil action filed against any person in any 
        Federal or State court based upon any cause of action 
        (including, but not limited to negligence, strict or product 
        liability, breach of implied warranty or professional 
        malpractice) in which damages are sought for tortious physical 
        or mental injury, property damage, or economic loss, except a 
        civil action arising under a Federal law that authorizes an 
        award of attorney fees to a prevailing party.
            (B)(i) Nothing in this section shall apply to any agreement 
        between a claimant and an attorney to--
                    (I) retain the attorney on an hourly rate fee or 
                fixed fee basis solely to evaluate a pre-retention 
                offer; and
                    (II) retain the attorney to collect overdue amounts 
                from an accepted pre-retention or post-retention 
                settlement offer.
            (ii) This subsection shall not apply to contingent fee 
        agreements in civil actions where neither a pre-retention nor a 
        post-retention offer of settlement is made.
            (3) Written hourly rate fee agreement.--With respect to a 
        civil action, if a contingent fee attorney has not entered into 
        a written agreement with a claimant at the time of retention 
        setting forth the attorney's hourly rate, then a reasonable 
        hourly rate shall be payable, subject to the limitations 
        described in this section.
            (4) Nature of demand for compensation.--(A) With respect to 
        a civil action, at any time after retention, a contingent fee 
        attorney shall, on behalf of the claimant, send a demand for 
        compensation by certified mail to an allegedly responsible 
        party.
            (B) The demand for compensation under subparagraph (A) 
        shall contain the material facts relevant to the civil action 
        involved and a description of the evidence determined by the 
        contingent fee attorney to be discoverable by the alleged 
        liable party during the course of litigation, including--
                    (i) the name, address, age, marital status and 
                occupation of the claimant or of the injured or 
                deceased party if the claimant is operating in a 
                representative capacity;
                    (ii) a brief description of how the damages arose;
                    (iii) the names and, if known, the addresses, 
                telephone numbers, and occupations of all known 
                witnesses;
                    (iv) copies of photographs in the claimant's 
                possession which relate to the claim for damages;
                    (v) the basis for claiming that the party to whom 
                the claim is addressed is at least partially liable for 
                causing the injury;
                    (vi) if the claim for damages is based upon a 
                physical or mental injury--
                            (I) a description of the nature of the 
                        injury, the names and addresses of all 
                        physicians, other health care providers, and 
                        hospitals, clinics, or other medical service 
                        entities that provided medical care to the 
                        claimant or injured party including the date 
                        and nature of the service; and
                            (II) medical records relating to the injury 
                        and those involving a prior injury or 
                        preexisting medical condition which an 
                        allegedly liable party would be able to 
                        introduce into evidence in a trial or, in lieu 
                        thereof, providing executed releases allowing 
                        the allegedly responsible party to obtain such 
                        records directly from the claimant's 
                        physicians, health care providers and entities 
                        that provided medical care; and
                    (vii) with respect to demand for a compensation 
                that includes an amount for medical expenses, wages 
                lost or other special damages suffered as a consequence 
                of the injury, relevant documentation thereof, 
                including records of earnings if a claimant is self-
                employed and employer records of earnings if a claimant 
                is employed.
            (C) A claimant's attorney shall provide copies of each 
        demand for compensation under this paragraph to the claimant 
        and to each allegedly liable party at the time of the dispatch 
        of the demand for compensation. Where reproduction costs would 
be significant relative to the size of the settlement offer, the 
claimant's attorney, may, in the alternative, offer other forms of 
access to the materials, convenient and at reasonable cost to allegedly 
responsible party's attorney.
            (D) A contingent fee attorney who fails to file a demand 
        for compensation under this paragraph shall not be entitled to 
        any fee greater than 10 percent of any settlement or judgment 
        received by the claimant client after reasonable expenses have 
        been deducted.
            (5) Time limit for response setting forth settlement 
        offer.--(A) An allegedly liable party shall have 60 days from 
        the date of the receipt of a demand for compensation under 
        paragraph (4) to issue a response stating a settlement offer.
            (B) If within 30 days after the date of the receipt of a 
        demand for compensation under paragraph (4), an allegedly 
        liable party notifies the attorney of the claimant that such 
        party seeks to have a medical examination of the claimant, and 
        the claimant is not made available for such examination within 
        10 days after the date of the receipt of such a request, the 
        60-day period described under subparagraph (A) shall be 
        extended by one day for each day that such request is not 
        honored after the expiration of such 10-day period. Any such 
        extension shall also include a further period of 10 days from 
        the date of the completion of the medical examination.
            (C) A response under this paragraph shall be open for 
        acceptance for a minimum of 30 days from the date of the 
        receipt of such response by the attorney of the claimant and 
        shall state whether such response expires in 30 days or remains 
        open for acceptance for a longer period or until notice of 
        withdrawal is given.
            (D) A settlement offer in a response under this subsection 
        may be increased during the 60-day period described under 
        subparagraph (A) by issuing an additional response.
            (E) If an additional response has been sent under this 
        paragraph, the time for acceptance shall be 10 days from the 
        date of the receipt of such additional response by the attorney 
        of the claimant or 30 days from the date of the receipt of the 
        initial response, whichever is later, unless the additional 
        response specifies a longer period of time for acceptance as 
        described under subparagraph (C).
            (6) Material to accompany settlement offer.--An allegedly 
        responsible party and the attorney of such party shall include 
        in any response stating a settlement offer under paragraph (5) 
        copies of materials in their possession concerning the claim 
        upon which the allegedly liable party relied in making a 
        settlement offer, except for material which such party believes 
        in good faith would not be discoverable by the claimant during 
        the course of litigation. Where reproduction costs would be 
        significant relative to the size of the settlement offer, the 
        allegedly responsible party, may, in the alternative, offer 
        other forms of access to the materials, convenient and at 
        reasonable cost to claimant's attorney.
            (7) Effect of pre-demand settlement offer.--A settlement 
        offer under this subsection to a claimant represented by a 
        contingent fee attorney made prior to the receipt of a demand 
        for compensation, which is open for acceptance for 60 days or 
        more from the time of its receipt and which conforms to the 
        requirements of paragraph (6), shall be considered a post-
        retention offer and shall have the same effect under this 
        subsection as if it were a response to a demand for 
        compensation.
            (8) Pre-retention offer.--(A) An attorney retained after a 
        claimant has received a pre-retention offer under this 
        subsection may not enter into an agreement with the claimant to 
        receive a contingent fee based upon or payable from the 
        proceeds of the pre-retention offer which remains in effect.
            (B) An attorney entering a fee agreement that would 
        effectively result in a claimant's paying a percentage of a 
        pre-retention offer to the attorney for prosecuting the claim 
        shall be considered to have charged an unreasonable and 
        excessive fee. With respect to an attorney where a pre-
        retention offer has been provided--
                    (i) the attorney may contract with a claimant to 
                receive an hourly rate fee or fixed fee for advising 
                the claimant regarding the pre-retention offer; or
                    (ii) the attorney may contract with a claimant to 
                receive a contingent fee applicable to any amount 
                received by a claimant, by settlement or judgment, 
                above the amount of the pre-retention offer.
            (9) Post-retention offer where a pre-retention offer has 
        been made.--A claimant in receipt of a pre-retention offer 
        under this subsection which such claimant has not accepted and 
        who later receives a post-retention offer which is accepted, is 
        not obligated to pay the retained attorney a fee greater than 
        the hourly rate fee calculated on the basis of the number of 
        hours the attorney has worked on behalf of claimant in 
        furtherance of the claimant's claim, but not exceeding 20 
        percent of the excess of the post-retention offer less the pre-
        retention offer.
            (10) Post-Retention offer where no pre-retention offer has 
        been made.--A claimant not in receipt of a pre-retention offer 
        under this subsection who has received a post-retention offer 
        which is accepted, is not obligated to pay the retained 
        attorney a fee greater than the hourly rate fee calculated on 
        the basis of the number of hours the attorney has worked on 
        behalf of claimant in furtherance of claimant's claim, but not 
        exceeding 10 percent of the first $100,000, plus 5 percent of 
        any amount above $100,000, of the accepted post-retention offer 
        after reasonable expenses have been deducted.
            (11) Calculation of attorney fee when there is a subsequent 
        resolution of the claim.--If an allegedly liable party's post-
        retention settlement offer under this subsection is rejected, 
        but a later settlement offer is accepted, or there is a 
        judgment in favor of claimant, the claimant, irrespective of 
        any pre-retention offer, is not obligated to pay the retained 
        attorney a fee greater the sum of--
                    (A) the amount of the fee that would have been 
                calculated under paragraph (10) had the post-retention 
                offer been accepted but only as applied to the 
                subsequent settlement offer or judgment up to the 
                amount of the post-retention offer; and
                    (B) the product of multiplying the contingent fee 
                percentage negotiated between the contingent fee 
                attorney and claimant and the amount by which the 
                subsequent settlement or judgment exceeds the post-
                retention offer, after reasonable expenses have been 
                deducted.
            (12) Provision of closing statement.--Upon receipt of any 
        settlement or judgment under this subsection, and prior to 
        disbursement thereof, a contingent fee attorney shall provide 
        the claimant with a written statement detailing how the 
        proceeds are to be distributed, including the amount of the 
        expenses paid out or to be paid out of the proceeds, the amount 
        of the fee, how the fee amount is calculated, and the amount 
        due the claimant.
            (13) Effect on contravening agreements.--(A) A contingent 
        fee attorney who enters into a fee agreement with a claimant 
        which violates the provisions of this subsection is deemed to 
        have charged an unreasonable and excessive fee.
            (B) A claimant who has entered into an agreement with a 
        contingent fee attorney which violates the provisions of this 
        subsection is entitled to recover from the attorney any 
        reasonable fees and costs incurred to establish such agreement 
        violated the provisions of this subsection.
            (C) The failure by the claimant's attorney, or the attorney 
        for an alleged responsible party, to comply with the provisions 
        of this subsection may be considered grounds for disciplinary 
        proceedings and sanctions as determined appropriate by the 
        licensing or regulatory agency or court of the State in which 
        the claim arose.
    (c) Amendment to the Federal Rules of Civil Procedure.--Rule 11(c) 
of the Federal Rules of Civil Procedure is amended--
            (1) in the matter preceding paragraph (1) by striking out 
        ``may'' and inserting in lieu thereof ``shall'';
            (2) in subdivision (1)(A) in the third sentence by striking 
        out ``may'' and inserting in lieu thereof ``shall''; and
            (3) in paragraph (2)--
                    (A) by amending the first sentence to read as 
                follows: ``A sanction imposed for a violation of this 
                rule shall be sufficient to deter repetition of such 
                conduct or comparable conduct by others similarly 
                situated and to compensate the parties that were 
                injured by such conduct.''; and
                    (B) in the second sentence by striking ``, if 
                imposed on motion and warranted for effective 
                deterrence,''.
    (d) Prevailing Party Costs and Attorneys' Fees.--
            (1) In general.--Subject to paragraphs (2) and (3), in any 
        civil action filed against any person in any Federal or State 
        court, based on any cause of action (including, but not limited 
        to negligence, strict or product liability, breach of implied 
        warranty or professional malpractice) in which damages are 
        sought for tortious physical or mental injury, property damage, 
        or economic loss the court may award each prevailing party 
        costs and reasonable attorneys' fees.
            (2) Amount of award.--An award of costs and reasonable 
        attorneys' fees under paragraph (1) may not exceed--
                    (A) the actual cost incurred by the nonprevailing 
                party or the attorneys' fee payable for services in 
                connection with such civil action; or
                    (B) if no such cost was incurred by the 
                nonprevailing party due to a contingency fee agreement, 
                an amount equal to the reasonable costs that would have 
                been incurred by the nonprevailing party for a 
                noncontingent attorneys' fee payable for services in 
                connection with such civil action.
            (3) Limitation.--
                    (A) Notwithstanding paragraph (1) or (2), the court 
                shall not award an attorney's fee in any case in which 
                the nonprevailing party--
                            (i) had a taxable income of less than 
                        $75,000 in the calendar year preceding the 
                        calendar year in which the civil action was 
                        filed, if the nonprevailing party is an 
                        individual; or
                            (ii) had an average taxable income of less 
                        than $50,000 for the 3 calendar years preceding 
                        the calendar year in which the civil action was 
                        filed, if the nonprevailing party is not an 
                        individual.
                    (B) The court shall retain discretion to refuse to 
                award or may reduce the amount awarded as an attorney's 
                fee under paragraph (1) to the extent the court finds 
                would be in the interests of justice.

SEC. 6. EARLY OFFER AND RECOVERY MECHANISMS.

    (a) In General.--Chapter 111 of title 28, United States Code, is 
amended by adding at the end thereof the following new section:
``Sec. 1659. Early offer and recovery mechanisms
    ``(a) For purposes of this section:
            ``(1) The term `allegedly liable defendant' means a person, 
        partnership, or corporation alleged by the claimant to be 
        responsible for at least some portion of an injury alleged by a 
        claimant.
            ``(2) The term `allowable expense' means reasonable 
        expenses incurred for products, services, and accommodations 
        reasonably needed for medical care, training, and other 
        remedial treatment and care of an injured individual.
            ``(3) The term `claimant' means an individual who, in his 
        or her own right, or vicariously, is seeking compensation for 
        tortious physical or mental injury, property damage or economic 
        loss.
            ``(4) The term `collateral benefits' means all benefits and 
        advantages received or entitled to be received (regardless of 
        the right of recoupment of any other entity, through 
        subrogation, trust agreement, lien, or otherwise) by an injured 
        individual or other entity as reimbursement of loss because of 
        personal injury, payable or required to be paid--
                    ``(A) in accordance with the laws of any State or 
                the Federal Government (other than through a claim for 
                breach of an obligation or duty);
                    ``(B) under the terms of any health or accident 
                insurance, wage or salary continuation plan, or 
                disability income insurance; or
                    ``(C) in discharge of familial obligations or 
                support.
            ``(5) The term `economic loss' means--
                    ``(A) pecuniary loss and monetary expenses incurred 
                by or on behalf of an injured individual as a result of 
                tortious physical or mental injury, property damage, or 
                economic loss, including allowable expenses, work loss, 
                and replacement services loss, whether caused by pain 
                and suffering or physical impairment, but not including 
                noneconomic loss; minus
                    ``(B) collateral benefits.
            ``(6) The term `entity' includes an individual or person.
            ``(7) The term `intentional misconduct' means conduct, 
        whether by act or omission, which intentionally causes, or 
        attempts to cause, by the one who acts or fails to act, injury 
        or with knowledge that injury is substantially certain to 
        follow. A person does not intentionally cause, or attempt to 
        cause, injury if such party's act or failure to act is for the 
        purpose of averting bodily harm to such party or another.
            ``(8) The term `replacement services loss' means reasonable 
        expenses incurred in obtaining ordinary and necessary services 
        from others, not members of the injured individual's household 
        or family, in lieu of those the injured individual would have 
        performed for the benefit of the household or family, but does 
        not include benefits received by the injured individual.
            ``(9) The term `serious injury' means bodily injury which 
        results in dismemberment, significant and permanent loss of an 
        important bodily function, or significant and permanent 
        scarring or disfigurement.
            ``(10) The term `wanton conduct' means conduct that the 
        allegedly responsible party must have realized was excessively 
        dangerous, done heedlessly and recklessly, and with a conscious 
        disregard to the consequences or the rights and safety of the 
        claimant.
            ``(11) The term `work loss' means loss of income from work 
        the injured individual would have performed if the individual 
        had not been injured, reduced by any income from substitute 
        work actually performed by the individual or by income the 
        individual would have earned in available appropriate 
        substitute work that the individual was capable of performing 
        but unreasonably failed to undertake.
    ``(b)(1) In any civil action or claim against any person, filed in 
any Federal or State court, based on any cause of action to recover 
damages or compensation for tortious physical or mental injury, 
property damage, or economic loss, any allegedly liable defendant shall 
have the option to offer, not later than 120 days after an injury or 
after the initiation of the liability claim, to compensate a claimant 
for reasonable economic loss, including future economic loss, less 
amounts available from collateral sources, and including reasonable 
hourly attorneys' fees for the claimant. A claimant who agrees in 
writing to such offer shall be foreclosed from bringing or continuing a 
civil action against any allegedly liable defendant and any other 
individuals or entities included under subsection (c). The claimant may 
extend the time for receiving the offer.
    ``(2) Nothing in this section shall preclude a State from enacting 
a requirement that compensation benefits offered under paragraph (1) 
shall include a minimum dollar amount in response to a claim for 
serious injury.
    ``(c) An offer under subsection (b) may include other allegedly 
liable defendants, individuals, or entities that were involved in the 
events which give rise to the civil action, regardless of the theory of 
liability on which the claim is based, with their consent.
    ``(d) Future economic damages shall be payable to an individual 
under this section as such damages occur.
    ``(e) If, after an offer is made under subsection (b), the 
participants in the offer dispute their relative contributions to the 
payments to be made to the individual, such disputes shall be resolved 
through binding arbitration in accordance with applicable rules and 
procedures established by the Attorney General of the United States.
    ``(f)(1) In no event shall a civil action be foreclosed under 
subsection (b) against any allegedly liable party if the injured 
individual elects to prove, beyond a reasonable doubt, that the 
allegedly liable party caused the injury by intentional or wanton 
misconduct.
    ``(2) This subsection shall not apply with respect to a personal 
injury unless the injured individual provides the allegedly liable 
party making an offer with a notice of such an election not later than 
90 days after the date the offer of compensation benefits was made.
    ``(g) Nothing in this section shall be construed to effect any 
applicable statute of limitations of any State or of the United 
States.''.
    (b) Technical and Conforming Amendments.--The table of sections for 
chapter 111 of title 28, United States Code, is amended by adding at 
the end thereof the following new item:

``1659. Early offer and recovery mechanisms.''.

SEC. 7. REFORM OF JOINT AND SEVERAL LIABILITY.

    (a) Definition.--As used in this section, the term ``concerted 
action'' or ``acting in concert'' means the participation in joint 
conduct by 2 or more persons who agreed to jointly participate in such 
conduct with actual knowledge of the wrongfulness of the conduct.
    (b) In General.--(1) Except as provided under subsection (c), joint 
and several liability may not be applied to any civil action or claim 
against any person, filed in any Federal or State court, based on any 
cause of action to recover damages or compensation for tortious 
physical or mental injury, property damage, or economic loss.
    (2) A person found liable for damages in any such action--
            (A) may be found liable, if at all, only for damages 
        directly attributable to the person's pro rata share of fault 
        or responsibility; and
            (B) may not be found liable for damages attributable to the 
        pro rata share of fault or responsibility of any other person 
        (without regard to whether that person is a party to the 
        action), including any person filing the action.
    (c) Limitation.--This section shall not apply to persons acting in 
concert where the concerted action proximately caused the injury for 
which one or more persons are found liable for damages.

SEC. 8. SINGLE RECOVERY.

    (a) Inadmissible Evidence.--In any civil action or claim against 
any person, filed in any Federal or State court, based on any cause of 
action to recover damages or compensation for tortious physical or 
mental injury, property damage, or economic loss, the court shall not 
allow the admission into evidence of proof of economic losses that have 
been or will be paid by--
            (1) Federal, State, or other governmental disability, 
        unemployment, or sickness programs;
            (2) Federal, State, or other governmental or private health 
        insurance programs;
            (3) private or public disability insurance programs;
            (4) employer wage continuation programs;
            (5) any other program or compensation system, if the 
        payment is intended to compensate the claimant for the same 
        injury or disability which is the subject of the claim; or
            (6) persons other than family members of the claimant.
    (b) Admissible Evidence.--Only evidence of economic loss that has 
not or will not be paid by the sources described under subsection (a) 
shall be admissible in an action or claim covered by this section.
    (c) Elimination of Subrogation.--An entity that is the source of 
the payments for losses that are inadmissible under subsection (a)--
            (1) shall not recover any amount against the claimant;
            (2) shall not be subrogated to the rights of the claimant 
        against the defendant; and
            (3) shall not have a lien against the claimant's judgment, 
        on account of its payment to the claimant for economic loss.
    (d) Pretrial Determination.--The determination of whether a 
claimant seeking damages or compensation has received, will receive, or 
is entitled to receive, payment from any one or more sources described 
under subsection (a) (1) through (6) shall be made by the court in 
pretrial proceedings.

SEC. 9. LIMITATION ON PUNITIVE DAMAGES.

    (a) In General.--Except as provided under section 1977A of the 
Revised Statutes (42 U.S.C. 1981a), the amount of punitive damages that 
may be awarded in any civil action or claim filed in any Federal or 
State court, based on any cause of action to recover damages or 
compensation for tortious physical or mental injury, property damage, 
or economic loss shall not exceed the greater of--
            (1) 3 times the amount awarded to the claimant for the 
        economic injury on which such claim is based; or
            (2) $250,000.
    (b) Application by Court.--This section shall be applied by the 
court and shall not be disclosed to the jury.

SEC. 10. ALTERNATIVE DISPUTE RESOLUTION.

    (a) General Policy.--The policy of the United States is to 
encourage the creation and use of alternative dispute resolution 
techniques, and to promote the expeditious resolution of such actions, 
because the traditional litigation process is not always suited to the 
timely, efficient, and inexpensive resolution of civil actions.
    (b) Notice of Availability of Alternative Dispute Resolution.--In 
any civil action or claim arising under any Federal law or in any 
diversity action in Federal court, each attorney who has made an 
appearance in the case and who represents one or more of the parties to 
the action shall, with respect to each party separately represented, 
advise the party of the existence and availability of alternative 
dispute resolution options, including extra judicial proceedings such 
as minitrials, third-party mediation, court supervised arbitration, and 
summary jury trial proceedings.
    (c) Certification of Notice.--Each attorney described under 
subsection (b) shall, simultaneous with the filing of a complaint or a 
responsive pleading, file a certification to the court that the 
attorney has provided the notice required under subsection (b) to the 
client or clients of such attorney. The attorney shall state in the 
certification whether such client will agree to one or more of the 
alternative dispute resolution techniques.
    (d) Agreement To Proceed With Alternative Dispute Resolution.--If 
all parties to an action agree to proceed with one or more alternative 
dispute resolution proceedings, the court shall issue an appropriate 
order governing the conduct of such proceedings. The issuance of an 
order governing the proceedings shall constitute a waiver, by each 
party subject to the order, of the right to proceed further in court.

SEC. 11. RELIABILITY OF EXPERT EVIDENCE.

    Rule 702 of the Federal Rules of Evidence is amended--
            (1) by striking out ``If'' and inserting in lieu thereof 
        ``(a) In General.--Subject to subsection (b), if''; and
            (2) by adding at the end thereof the following:
    ``(b) Adequate Basis for Opinion.--Testimony in the form of an 
opinion by a witness that is based on scientific knowledge shall be 
inadmissible in evidence unless the court determines that such opinion 
is--
            ``(1) based on scientifically valid reasoning; and
            ``(2) sufficiently reliable so that the probative value of 
        such evidence outweighs the dangers specified under rule 403.
    ``(c) Expert Opinions on Novel Scientific Principles or 
Discoveries.--Where testimony in the form of an opinion by a witness is 
sought to be used to establish a novel scientific principle or 
discovery, it shall be admissible only if the principle or discovery, 
or its scientific underpinning, is sufficiently established to have 
gained general acceptance in the field in which it belongs.
    ``(d) Disqualification.--Testimony by a witness who is qualified as 
an expert under subsection (a) is inadmissible in evidence if such 
witness is entitled to receive any compensation directly or indirectly 
contingent on the legal disposition of any claim with respect to which 
such testimony is offered.''.

SEC. 12. EXPRESS AUTHORIZATION FOR PRIVATE RIGHT OF ACTION.

    (a) In General.--Chapter 85 of title 28, United States Code, is 
amended by adding at the end thereof the following new section:
``Sec. 1368. Private right of action
    ``No district court shall have jurisdiction over any civil action 
filed by a party based on a private right of action, unless such 
private right of action is expressly authorized in the statute on which 
such action is based.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 85 of title 28, United States Code, is amended by adding at the 
end thereof the following new item:

``1368. Private right of action.''.
    (c) State Courts.--No Federal statute shall be construed to give 
rise to a private right of action in a State court, unless such private 
right of action is expressly authorized in the statute on which such 
action is based.

SEC. 13. APPLICABILITY.

    (a) Preemption.--This Act shall preempt and supersede other Federal 
or State laws only to the extent any such law is inconsistent with this 
Act. This Act shall not preempt any Federal or State law that provides 
for defenses in addition to those contained in this Act, places greater 
limitations on the amount of attorney's fees that can be collected, or 
additional disclosure requirements upon attorneys, or otherwise imposes 
restrictions on economic, noneconomic, or punitive damages. Any issue 
arising under this Act that is not governed by the provisions of this 
Act shall be governed by applicable Federal or State law.
    (b) Rule of Construction.--Nothing in this Act 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 chapter 97 
        of title 28, United States Code;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or 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 or of a citizen of a foreign nation on the ground of 
        inconvenient forum.
    (c) State Election Regarding Applicability.--A provision of this 
Act shall not apply to a State if such State enacts a statute--
            (1) citing the authority of this subsection; and
            (2) declaring the election of such State that such 
        provision shall not apply to the State.

SEC. 14. SEVERABILITY.

    If any provision of this Act or the application of any such 
provision to any person or circumstance is held invalid, the remainder 
of this Act and the application of any provision to any other person or 
circumstance shall not be affected thereby.

SEC. 15. EFFECTIVE DATE.

    This Act shall take effect and apply to claims or actions filed on 
and after the date occurring 30 days after the date of enactment of 
this Act.
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