[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3535 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3535

   To establish limits on medical malpractice claims, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 24, 1998

Mr. Ensign (for himself, Mr. Ney, Mr. Christensen, Mr. Gibbons, and Mr. 
    Shays) introduced the following bill; which was referred to the 
    Committee on the Judiciary, and in addition to the Committee on 
Commerce, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To establish limits on medical malpractice claims, 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. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.

    (a) Applicability.--This Act shall apply with respect to any health 
care liability action brought in any State or Federal court and to any 
health care liability claim subject to an ADR, except that this Act 
shall not apply to--
            (1) an action for damages arising from a vaccine-related 
        injury or death to the extent that title XXI of the Public 
        Health Service Act applies to the action, or
            (2) an action under the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1001 et seq.).
    (b) Preemption.--This Act shall not preempt any State law that--
            (1) provides for defenses or places limitations on a 
        person's liability in addition to those contained in this Act 
        or otherwise imposes greater restrictions than those provided 
        in this Act; or
            (2) imposes greater restrictions on liability or damages 
        than those provided in this Act.
No provision of this Act shall be construed to preempt or displace the 
implementation of any State sponsored or private ADR system.
    (c) Limitations.--This Act supersedes chapter 171 of title 28, 
United States Code, (relating to tort claims procedure) and preempts 
State law with respect to both procedural and substantive matters only 
to the extent that such chapter or State law differs from any provision 
of this Act or provision established under this Act. Section 4 shall 
supersede or preempt any provision of such chapter or State law which 
prohibits the introduction of evidence regarding collateral source 
benefits or mandates or permits subrogation or a lien on the 
plaintiff's award for the cost of providing collateral source benefits. 
Any issue that is not governed by any provision of this Act shall be 
governed by otherwise applicable Federal or State law.
    (d) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (c) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (e) Amount in Controversy.--In an action to which this Act applies 
and which is brought under section 1332 of title 28, United States 
Code, the amount of noneconomic damages or punitive damages, and 
attorneys' fees or costs, shall not be included in determining whether 
the matter in controversy exceeds the sum or value of $75,000.
    (f) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this Act shall be construed to establish any 
jurisdiction in the district courts of the United States over health 
care liability actions on the basis of section 1331 or 1337 of title 
28, United States Code.

SEC. 2. STATUTE OF LIMITATIONS.

    A health care liability action may not be brought after the 
expiration of the 2-year period that begins on the date on which the 
alleged injury that is the subject of the action was discovered or 
should reasonably have been discovered, but in no case after the 
expiration of the 5-year period that begins on the date the alleged 
injury occurred.

SEC. 3. CALCULATION AND PAYMENT OF DAMAGES.

    (a) Joint and Several Liability.--In any health care liability 
action, 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) Treatment of Punitive Damages.--
            (1) General rule.--Punitive damages may, to the extent 
        permitted by applicable State law, be awarded in any health 
        care liability 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 the result of 
        conduct--
                    (A) specifically intended to cause harm, or
                    (B) conduct manifesting a conscious, flagrant 
                indifference to the rights or safety of others.
            (2) Applicability.--This subsection shall apply to any 
        health care liability action brought in any Federal or State 
        court on any theory where punitive damages are sought. This 
        subsection does not create a cause of action for punitive 
        damages. This subsection does not preempt or supersede any 
        State or Federal law to the extent that such law would further 
        limit the award of punitive damages.
            (3) 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 actual damages are to be awarded.
            (4) Drugs and devices.--
                    (A) In general.--(i) Punitive damages shall not be 
                awarded against a manufacturer or product seller of a 
                drug or medical device 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 which caused 
                        the harm, and such drug, device, packaging, or 
                        labeling 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.
                    (ii) Clause (i) 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.
                    (B) Packaging.--In a health care liability action 
                for harm which is alleged to relate to the adequacy of 
                the packaging or labeling 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 or product seller of the drug shall not be 
                held liable for punitive damages unless such packaging 
                or labeling is found by the court by clear and 
                convincing evidence to be substantially out of 
                compliance with such regulations.
    (c) Periodic Payments for Future Losses.--
            (1) General rule.--In any health care liability action in 
        which the damages awarded for future economic and noneconomic 
        loss exceeds $50,000, a person shall not be required to pay 
        such damages in a single, lump-sum payment, but shall be 
        permitted to make such payments periodically based on when the 
        damages are found likely to occur, as such payments are 
        determined by the court.
            (2) Finality of judgment.--The judgment of the court 
        awarding periodic payments under this subsection may not, in 
        the absence of fraud, be reopened at any time to contest, 
        amend, or modify the schedule or amount of the payments.
            (3) Lump-sum settlements.--This subsection shall not be 
        construed to preclude a settlement providing for a single, 
        lump-sum payment.
    (d) Treatment of Collateral Source Payments.--
            (1) Introduction into evidence.--In any health care 
        liability action, any defendant may introduce evidence of 
        collateral source payments. If any defendant elects to 
        introduce such evidence, the claimant may introduce evidence of 
        any amount paid or contributed or reasonably likely to be paid 
        or contributed in the future by or on behalf of the claimant to 
        secure the right to such collateral source payments.
            (2) No subrogation.--No provider of collateral source 
        payments shall recover any amount against the claimant or 
        receive any lien or credit against the claimant's recovery or 
        be equitably or legally subrogated the right of the claimant in 
        a health care liability action.
            (3) Application to settlements.--This subsection shall 
        apply to an action that is settled as well as an action that is 
        resolved by a fact finder.

SEC. 4. AWARD OF ATTORNEY'S FEES.

    (a) General Rule.--If the claimant in a health care liability 
action seeks noneconomic damages in excess of $250,000 or 3 times the 
economic damages, whichever is lesser, and the request for such damages 
in such amount is made before the determination of liability of one 
party or another by verdict or order of judgment, the prevailing party 
in such action shall be entitled to attorney's fees from the non-
prevailing party, except that the sum of the attorney's fees to which 
the prevailing party is entitled shall not exceed the attorney's fees 
of the non-prevailing party.
    (b) Limitation.--The court in a health care liability action may, 
in its discretion, limit the fees authorized to be recovered under 
subsection (a) if the amount of such fees is deemed unjust.
    (c) Limitations on Contingent Fees.--
            (1) In general.--The total of all contingent fees for 
        representing all claimants in a health care liability claim or 
        action shall not exceed the following limits:
                    (A) 40 percent of the first $50,000 recovered by 
                the claimant.
                    (B) 33 1/3 percent of the next $50,000 recovered by 
                the claimant.
                    (C) 25 percent of the next $50,000 recovered by the 
                claimant.
                    (D) 15 percent of any amount by which the recovery 
                by the claimant exceeds $600,000.
            (2) Applicability.--The limitations prescribed by paragraph 
        (1) shall apply whether the recovery is by judgment, 
        settlement, mediation, arbitration, or any other form of ADR. A 
        court acting in a health care liability claim or action 
        involving a minor or incompetent person retains the authority 
        to authorize or approve a fee that is less than the maximum 
        permitted under paragraph (1).
            (3) Definitions.--For purposes of this subsection:
                    (A) Contingent fee.--The term ``contingent fee' 
                includes all compensation to any person which is 
                payable only if a recovery is effected on behalf of one 
                or more claimants.
                    (B) Recovery.--The term ``recovery'' means the net 
                sum recovered after deducting any disbursements or 
                costs incurred in connection with prosecution or 
                settlement of the claim, including all costs paid or 
                advanced by any person. Costs of health care incurred 
                by the plaintiff and the attorney's office overhead 
                costs or charges for legal services are not deductible 
                disbursements of costs for such purpose.
    (d) Hours Worked.--Counsel of record in a health care liability 
action shall maintain accurate and up-to-date records of hours worked 
for such action regardless of the fee arrangement with the attorney's 
client.
    (e) Costs.--Nothing in this section shall affect the right of a 
prevailing party to be awarded costs under applicable law.
    (f) Effective Date.--This section shall apply with respect to a 
health care liability action which is brought after the date of the 
enactment of this Act for a claim arising from an injury occurring 
after such date of enactment.

SEC. 5. ALTERNATIVE DISPUTE RESOLUTION.

    Any ADR used to resolve a health care liability action or claim 
shall contain provisions relating to statute of limitations, 
noneconomic damages, joint and several liability, punitive damages, 
collateral source rule, periodic payments, and award of attorney's fees 
which are identical to the provisions relating to such matters in this 
Act.

SEC. 6. DEFINITIONS.

    As used in this Act:
            (1) Actual damages.--The term ``actual damages'' means 
        damages awarded to pay for economic loss.
            (2) ADR.--The term ``ADR'' means an alternative dispute 
        resolution system established under Federal or State law that 
        provides for the resolution of health care liability claims in 
        a manner other than through health care liability actions.
            (3) Claimant.--The term ``claimant'' means any person who 
        brings a health care liability 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.
            (4) 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. 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.
            (5) Collateral source payments.--The term ``collateral 
        source payments'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of a claimant, or any 
        service, product, or other benefit provided or reasonably 
        likely to be provided in the future to or on behalf of a 
        claimant, as a result of an injury or wrongful death, pursuant 
        to--
                    (A) any State or Federal health, sickness, income-
                disability, accident or workers' compensation Act;
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income disability benefits; and
                    (D) any other publicly or privately funded program.
            (6) Drug.--The term ``drug'' has the meaning given such 
        term in section 201(g)(1) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 321(g)(1)).
            (7) Economic damages.--The term ``economic damages'' means 
        ojectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products such as past and future medical expenses, loss of past 
        and future earnings, cost of obtaining domestic services, loss 
        of employment, loss due to death, burial costs, and loss of 
        business or employment opportunities.
            (8) Harm.--The term ``harm'' means any legally cognizable 
        wrong or injury for which punitive damages may be imposed.
            (9) Health benefit plan.--The term ``health benefit plan'' 
        means--
                    (A) a hospital or medical expense incurred policy 
                or certificate,
                    (B) a hospital or medical service plan contract,
                    (C) a health maintenance subscriber contract, or
                    (D) a MedicarePlus product (offered under part C of 
                title XVIII of the Social Security Act),
        that provides benefits with respect to health care services.
            (10) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal court or pursuant to alternative dispute resolution 
        against a health care provider, an entity which is obligated to 
        provide or pay for health benefits under any health benefit 
        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, 
        defendants, or causes of action.
            (11) Health care liability claim.--The term ``health care 
        liability claim'' means a claim in which the claimant alleges 
        that injury was caused by the provision of (or the failure to 
        provide) health care services or medical products.
            (12) Health care provider.--The term ``health care 
        provider'' means any person that is engaged in the delivery of 
        health care services in a State and that is required by the 
        laws or regulations of the State to be licensed or certified by 
        the State to engage in the delivery of such services in the 
        State.
            (13) Health care service.--The term ``health care service'' 
        means any service for which payment may be made under a health 
        benefit plan including services related to the delivery or 
        administration of such service.
            (14) Medical product.--The term ``medical product'' means 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 a medical 
        device (as defined in section 201(h)) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 321(h)), including any 
        component or raw material used in a drug or device but 
        excluding health care services.
            (15) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to an individual for pain and suffering, 
        inconvenience, emotional distress, mental anguish, loss of 
        consortium, injury to reputation, humiliation, and other 
        nonpecuniary losses.
            (16) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.
            (17) Prevailing party.--The term ``prevailing party'' means 
        a party to a health care liability action who obtains a final 
        judgment (other than by settlement) exclusive of interest on 
        all or a portion of the claims asserted during the litigation.
            (18) Product seller.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``product seller'' means a person who, in the 
                course of a business conducted for that purpose--
                            (i) sells, distributes, rents, leases, 
                        prepares, blends, packages, labels, or is 
                        otherwise involved in placing, a product in the 
                        stream of commerce, or
                            (ii) installs, repairs, or maintains the 
                        harm-causing aspect of a product.
                    (B) Exclusion.--Such term does not include--
                            (i) a seller or lessor of real property;
                            (ii) 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
                            (iii) 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.
            (19) Punitive damages.--The term ``punitive damages'' means 
        damages awarded against any person not to compensate for actual 
        injury suffered, but to punish or deter such person or others 
        from engaging in similar behavior in the future.
            (20) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, the Northern Mariana Islands, 
        and any other territory or possession of the United States.

SEC. 7. EFFECTIVE DATE.

    This Act will apply to any health care liability action brought in 
a Federal or State court and to any health care liability claim subject 
to an ADR system, that is initiated on or after the date of enactment 
of this Act, except that any health care liability claim or action 
arising from an injury occurring prior to the date of enactment of this 
Act shall be governed by the applicable statute of limitations 
provisions in effect at the time the injury occurred.
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