[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1370 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1370
To reform the health care liability system.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 3, 2001
Mr. McConnell introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To reform the health care liability system.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Common Sense
Medical Malpractice Reform Act of 2001''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purpose.
Sec. 3. Definitions.
Sec. 4. Applicability.
Sec. 5. Statute of limitations.
Sec. 6. Limitation on non-economic damages.
Sec. 7. Reform of punitive damages.
Sec. 8. Periodic payments.
Sec. 9. Scope of liability.
Sec. 10. Mandatory offsets for damages paid by a collateral source.
Sec. 11. Treatment of attorneys' fees and other costs.
Sec. 12. State-based alternative dispute resolution mechanisms.
Sec. 13. Applicability.
Sec. 14. Severability.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--Congress finds the following:
(1) Effect on health care access and costs.--The civil
justice system of the United States is a costly and inefficient
mechanism for resolving claims of health care liability and
compensating injured patients and that the problems associated
with the current system are having an adverse impact on the
availability of, and access to, health care services and the
cost of health care in the United States.
(2) Effect on interstate commerce.--The health care and
insurance industries are industries affecting interstate
commerce and the health care liability litigation systems
existing throughout the United States affect interstate
commerce by contributing to the high cost of health care and
premiums for health care liability insurance purchased by
participants in the health care system.
(3) Effect on federal spending.--The health care liability
litigation systems existing throughout the United States have a
significant effect on the amount, distribution, and use of
Federal funds because of--
(A) the large number of individuals who receive
health care benefits under programs operated or
financed by the Federal Government;
(B) the large number of individuals who benefit
because of the exclusion from Federal taxes of the
amounts spent to provide them with health insurance
benefits; and
(C) the large number of health care providers who
provide items or services for which the Federal
Government makes payments.
(b) Purpose.--It is the purpose of this Act to implement
reasonable, comprehensive, and effective health care liability reform
that is designed to--
(1) ensure that individuals with meritorious health care
injury claims receive fair and adequate compensation;
(2) improve the availability of health care service in
cases in which health care liability actions have been shown to
be a factor in the decreased availability of services; and
(3) improve the fairness and cost-effectiveness of our
current health care liability system of the United States to
resolve disputes over, and provide compensation for, health
care liability by reducing uncertainty and unpredictability in
the amount of compensation provided to injured individuals.
SEC. 3. DEFINITIONS.
In this Act:
(1) Alternative dispute resolution (adr).--The term
``alternative dispute resolution'' or ``adr'' means a system
that provides for the resolution of health care liability
claims or actions in a manner other than through a civil action
brought in a Federal or State court.
(2) Attorney.--The term ``attorney'' means any natural
person, professional association, corporation, or partnership
authorized under applicable law to practice law.
(3) Attorney services.--The term ``attorney services''
means the professional advice or counseling of or
representation by an attorney. Such term shall not include out-
of-pocket expenses in connection with providing attorney
services, such as travel expenses, witness fees, copying,
messengers, postage, phone, or preparation by a person other
than the attorney of any study, analysis, report, or test.
(4) Claimant.--The term ``claimant'' means any person who
commences a health care liability action, and any person on
whose behalf such an action is commenced, including the
decedent in the case of an action brought through or on behalf
of an estate.
(5) Clear and convincing evidence.--The term ``clear and
convincing evidence'' means 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.
(6) Collateral source benefit.--The term ``collateral
source benefit'' means a rule, either established in statute or
established at common law, that prevents the introduction of
evidence regarding collateral source benefits or that prohibits
the deduction of collateral source benefits from an award of
damages in a health care liability action.
(7) Economic losses.--The term ``economic losses'' means
objectively verifiable monetary losses incurred as a result of
the provision of (or failure to provide or pay for) health care
services or the use of a medical product, including past and
future medical expenses, loss of past and future earnings,
cost of obtaining replacement services in the home (including child
care, transportation, food preparation, and household care), cost of
making reasonable accommodations to a personal residence, loss of
employment, and loss of business or employment opportunities. Economic
losses are neither non-economic losses nor punitive damages.
(8) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court pursuant to ADR against a health care provider,
health care professional, or other defendant, including a right
to legal or equitable contribution, indemnity, subrogation,
third-party claims, cross claims, or counter-claims, in which
the claimant alleges injury related to--
(A) the provision of health care services or
medical products; or
(B) the failure to provide for health care services
or medical products;
regardless of the theory of liability on which the action is
based. Such term does not include a product liability action,
except where such an action is brought as part of a broader
health care liability action.
(9) Health care professional.--The term ``health care
professional'' means any individual who provides health care
services in a State and who is required by Federal or State
laws or regulations to be licensed, registered or certified to
provide such services or who is certified to provide health
care services pursuant to a program of education, training and
examination by an accredited institution, professional board,
or professional organization.
(10) Health care provider.--The term ``health care
provider'' means any organization or institution that is
engaged in the delivery of health care items or services in a
State and that is required by Federal or State laws or
regulations to be licensed, registered or certified to engage
in the delivery of such items or services.
(11) Health plan.--The term ``health plan'' means an
employee welfare benefit plan (as defined in section 3(1) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(1))) to the extent that the plan provides medical care
(including items and services paid for as medical care) to
employees or their dependents (as defined under the terms of
the plan) directly or through insurance, reimbursement, or
otherwise.
(12) Health care services.--The term ``health care
services'' means any services provided by a health care
professional or health care provider, or any individual working
under the supervision of a health care professional, that
relate to the diagnosis, prevention, or treatment of any
disease or impairment, or the assessment of the health of human
beings.
(13) Injury.--The term ``injury'' means any illness,
disease, or other harm that is the subject of a health care
liability action.
(14) 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,
loss of society or companionship (other than loss of domestic
services), and other non-pecuniary losses incurred by an
individual with respect to which a health care liability action
is brought. Noneconomic losses are neither economic losses nor
punitive damages.
(15) Punitive damages.--The term ``punitive damages'' means
damages awarded, for the purpose of punishment or deterrence,
and not for compensatory purposes, against a health care
provider, health care professional, or other defendant in a
health care liability action. Punitive damages are neither
economic nor noneconomic damages.
(16) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(17) State.--The term ``State'' means each of the several
States of the United States, the District of Columbia, and the
Commonwealth of Puerto Rico, a territory of possession of the
United States, an agency or instrumentality of a State, and a
multi-State, regional, or interstate entity having governmental
duties and powers.
(18) State law.--The term ``State law'' includes all
constitutional provisions, statutes, laws, judicial decisions,
rules regulations, or other State action having the effect of
law of, or any State.
SEC. 4. APPLICABILITY.
(a) In General.--Except as provided in subsections (c) and (d),
this Act shall apply with respect to any health care liability action
brought in any Federal or State court, and any claim brought pursuant
to an alternative dispute resolution, except that this Act shall not
apply to 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.
(b) Preemption.--
(1) In general.--The provisions of this Act shall preempt
any State law in effect on, or enacted after, the date of
enactment of this Act to the extent that such law is
inconsistent with the limitations contained in such provisions.
The provisions of this Act shall not preempt any State law to
the extent that such law--
(A) places greater restrictions on the amount of or
standards for awarding economic or punitive damages
than those provided for in this Act;
(B) places greater limitations on the awarding of
attorneys fees for awards in excess of $150,000 than
those provided for in this Act;
(C) permits a lower threshold for the periodic
payment of future damages than that provided for in
this Act;
(D) establishes a shorter period during which a
health care liability action may be initiated or a more
restrictive rule with respect to the time at which the
period of limitations begins to run than that provided
for in this Act; or
(E) either permits the introduction of evidence of
collateral source benefits or provides for the
mandatory offset of collateral source benefits from
damage awards.
(2) Rule of construction.--The provisions of this Act shall
not be construed to preempt any State law that--
(A) permits State officials to commence health care
liability actions as a representative of an individual;
(B) permits provider-based alternative dispute
resolution;
(C) places a maximum limit on the total damages in
a health care liability action;
(D) places a maximum limit on the time in which a
health care liability action may be initiated; or
(E) provides for defenses in addition to those
contained in this Act.
(c) State Option.--
(1) In general.--With respect to a provision of this Act,
such provision shall not apply to a health care liability
action involving parties that are residents of the same State
if the action is brought in a court of that State and the State
has enacted a law--
(A) specifically citing the authority of this
subsection; and
(B)(i) proclaiming that the State has determined
that such provision shall not apply to such actions; or
(ii) establishing provisions that specifically
contradict the provisions of this Act.
(2) Multiple state.--With respect to a health care
liability action involving parties that are residents of more
than one State, if each such State has enacted a law described
in paragraph (1), the choice-of-law rules of each such State
shall govern the rules and procedures applicable in the action.
(3) Corporate entity.--For purposes of this subsection, a
corporate entity shall be deemed to be a resident of the State
in which such entity is incorporated and the State in which the
principal place of business of the entity is located.
(4) Rule of construction.--Nothing in this subsection shall
be construed as requiring a State to reenact any provision of
State law if such law existed on the date of enactment of this
Act and such law is not otherwise preempted under the
provisions of subsection (b).
(d) Effect on Sovereign Immunity and Choice of Law or Venue.--
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 the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
actions brought by a foreign nation or a citizen of a foreign
nation;
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss an action of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum; or
(6) supersede any provision of Federal law.
(e) 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 sections 1331 or 1337 of title
28, United States Code.
SEC. 5. STATUTE OF LIMITATIONS.
A health care liability action that is subject to this Act may not
be initiated unless a complaint with respect to such action is filed
within the 2-year period beginning on the date on which the claimant
discovered or, in the exercise of reasonable care, should have
discovered the injury and its cause, except that such an action
relating to a claimant under legal disability may be filed within 2
years after the date on which the disability ceases. If the
commencement of a health care liability action is stayed or enjoined,
the running of the statute of limitations under this section shall be
suspended for the period of the stay or injunction.
SEC. 6. LIMITATION ON NON-ECONOMIC DAMAGES.
(a) In General.--In any health care liability action that is
subject to this Act, the amount of noneconomic damages shall not exceed
$250,000 regardless of the number of parties against whom the action is
brought or the number of claims or actions brought with respect to the
injury that is the subject of the action.
(b) Calculation of Award.--For purposes of this section, an award
for future noneconomic damages in a health care liability action shall
not be discounted to present value. A jury shall not be informed about
the limitation on noneconomic damages in such an action. Any award for
noneconomic damages that is in excess of $250,000 shall be reduced
prior to the entry of judgment or by an amendment of the judgment after
such entry. Any award of damages for noneconomic losses that is in
excess of $250,000, shall be reduced to $250,000 before accounting for
any other reduction in damages required by law. If separate awards of
damages for past and future noneconomic damages are rendered and the
combined awards exceed $250,000, the award of damages for future
noneconomic losses shall be reduced first.
SEC. 7. REFORM OF PUNITIVE DAMAGES.
(a) Limitation.--With respect to a health care liability action, an
award for punitive damages may only be made, if otherwise permitted by
applicable law, if it is proven by clear and convincing evidence that
the defendant--
(1) intended to injure the claimant for a reason unrelated
to the provision of health care services;
(2) understood the claimant was substantially certain to
suffer unnecessary injury, and in providing or failing to
provide health care services, the defendant deliberately failed
to avoid such injury; or
(3) acted with a conscious disregard of a substantial and
unjustifiable risk of unnecessary injury which the defendant
failed to avoid in a manner which constitutes a gross deviation
from the normal standard of conduct in such circumstances.
(b) Punitive Damages Not Permitted.--Notwithstanding the provisions
of subsection (a), punitive damages may not be awarded against a
defendant with respect to any health care liability action if no
judgment for compensatory damages, including nominal damages (under
$500), is rendered against the defendant.
(c) Requirements for Pleading of Punitive Damages.--
(1) In general.--No demand for punitive damages shall be
included in a health care liability action as initially filed.
(2) Amended pleading.--A court may allow a claimant to file
an amended complaint or pleading for punitive damages in a
health care liability action if--
(A) the claimant submits a motion to amend the
complaint or pleading within the earlier of--
(i) 2 years after the complaint or initial
pleading is filed, or
(ii) 9 months before the date the matter is
first set for trial; and
(B) after a finding by a court upon review of
supporting and opposing affidavits or after a hearing,
that after weighing the evidence the claimant has
established by a substantial probability that the
claimant will prevail on the claim for punitive
damages.
(d) Separate Proceeding.--
(1) In general.--At the request of any defendant in a
health care liability action, the trier of fact shall consider
in a separate proceeding--
(A) whether punitive damages are to be awarded and
the amount of such award, or
(B) the amount of punitive damages following a
determination of punitive liability.
(2) Only relevant evidence admissible.--If a defendant
requests a separate proceeding under paragraph (1), evidence
relevant only to the claim of punitive damages in a health care
liability action, as determined by applicable State law, shall
be inadmissible in any proceeding to determine whether
compensatory damages are to be awarded.
(e) Determining Amount of Punitive Damages.--In determining the
amount of punitive damages in a health care liability action, the trier
of fact shall consider only the following:
(1) The severity of the harm caused by the conduct of the
defendant.
(2) The duration of the conduct or any concealment of it by
the defendant.
(3) The profitability of the conduct of the defendant.
(4) The number of products sold or medical procedures
rendered for compensation, as the case may be, by the defendant
of the kind causing the harm complained of by the claimant.
(5) Awards of punitive or exemplary damages to persons
similarly situated to the claimant, when offered by the
defendant.
(6) Prospective awards of compensatory damages to persons
similarly situated to the claimant.
(7) Any criminal penalties imposed on the defendant as a
result of the conduct complained of by the claimant, when
offered by the defendant.
(8) The amount of any civil fines assessed against the
defendant as a result of the conduct complained of by the
claimant, when offered by the defendant.
(f) Limitation Amount.--The amount of damages that may be awarded
as punitive damages in any health care liability action shall not
exceed 3 times the amount awarded to the claimant for the economic
injury on which such claim is based, or $250,000, whichever is greater.
This subsection shall be applied by the court and shall not be
disclosed to the jury.
(g) Restrictions Permitted.--Nothing in this section shall be
construed to imply a right to seek punitive damages where none exists
under Federal or State law.
SEC. 8. PERIODIC PAYMENTS.
With respect to a health care liability action, if the award of
future damages exceeds $100,000, the adjudicating body shall, at the
request of either party, enter a judgment ordering that future damages
be paid on a periodic basis in accordance with the guidelines contained
in the Uniform Periodic Payments of Judgments Act, as promulgated by
the National Conference of Commissioners on Uniform State Laws in July
of 1990. The adjudicating body may waive the requirements of this
section if such body determines that such a waiver is in the interests
of justice.
SEC. 9. SCOPE OF LIABILITY.
(a) In General.--With respect to punitive and noneconomic damages,
the liability of each defendant in a health care liability action shall
be several only and may not be joint. Such a defendant shall be liable
only for the amount of punitive or noneconomic damages allocated to the
defendant in direct proportion to such defendant's percentage of fault
or responsibility for the injury suffered by the claimant.
(b) Determination of Percentage of Liability.--With respect to
punitive and noneconomic damages, the trier of fact in a health care
liability action shall determine the extent of each defendant's fault
or responsibility for injury suffered by the claimant, and shall assign
a percentage of responsibility for such injury to each such defendant.
SEC. 10. MANDATORY OFFSETS FOR DAMAGES PAID BY A COLLATERAL SOURCE.
(a) In General.--With respect to a health care liability action,
the total amount of damages received by an individual under such action
shall be reduced, in accordance with subsection (b), by any other
payment that has been, or will be, made to an individual to compensate
such individual for the injury that was the subject of such action.
(b) Amount of Reduction.--The amount by which an award of damages
to an individual for an injury shall be reduced under subsection (a)
shall be--
(1) the total amount of any payments (other than such
award) that have been made or that will be made to such
individual to pay costs of or compensate such individual for
the injury that was the subject of the action; minus
(2) the amount paid by such individual (or by the spouse,
parent, or legal guardian of such individual) to secure the
payments described in paragraph (1).
(c) Determination of Collateral Source Benefits.--The reductions
required under subsection (b) shall be determined by the court in a
pretrial proceeding. At the subsequent trial--
(1) no evidence shall be admitted as to the amount of any
charge, payments, or damage for which a claimant--
(A) has received payment from a collateral source
or the obligation for which has been assured by a third
party; or
(B) is, or with reasonable certainty, will be
eligible to receive payment from a collateral source of
the obligation which will, with reasonable certainty be
assumed by a third party; and
(2) the jury, if any, shall be advised that--
(A) except for damages as to which the court
permits the introduction of evidence, the claimant's
medical expenses and lost income have been or will be
paid by a collateral source or third party; and
(B) the claimant shall receive no award for any
damages that have been or will be paid by a collateral
source or third party.
SEC. 11. TREATMENT OF ATTORNEYS' FEES AND OTHER COSTS.
(a) In General.--No attorney in any health care liability action to
which this Act applies shall charge, demand, receive, or collect for
services rendered in connection with such action in excess of 25
percent of any judgment or settlement recovered under such action.
(b) Calculation of Periodic Payments.--In the event that a judgment
or settlement includes periodic or future payments of damages, the
amount recovered for purposes of computing the limitation under
subsection (a) shall be based on the cost of the annuity or trust
established to make the payments. In any case in which an annuity or
trust is not established to make such payments, such amount shall be
based on the present value of the payments.
SEC. 12. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION MECHANISMS.
(a) Establishment by States.--Each State is encouraged to establish
or maintain alternative dispute resolution mechanisms that promote the
resolution of health care liability claims in a manner that--
(1) is affordable for the parties involved in the claims;
(2) provides for the timely resolution of claims; and
(3) provides the parties with convenient access to the
dispute resolution process.
(b) Guidelines.--The Attorney General, in consultation with the
Secretary and the Administrative Conference of the United States, shall
develop guidelines with respect to alternative dispute resolution
mechanisms that may be established by States for the resolution of
health care liability claims. Such guidelines shall include procedures
with respect to the following methods of alternative dispute
resolution:
(1) Arbitration.--The use of arbitration, a nonjury
adversarial dispute resolution process which may, subject to
subsection (d), result in a final decision as to facts, law,
liability or damages. The parties may elect binding
arbitration.
(2) Mediation.--The use of mediation, a settlement process
coordinated by a neutral third party without the ultimate
rendering of a formal opinion as to factual or legal findings.
(3) Early neutral evaluation.--The use of early neutral
evaluation, in which the parties make a presentation to a
neutral attorney or other neutral evaluator for an assessment
of the merits, to encourage settlement. If the parties do not
settle as a result of assessment and proceed to trial, the
neutral evaluator's opinion shall be kept confidential.
(4) Early offer and recovery mechanism.--The use of early
offer and recovery mechanisms under which a health care
provider, health care organization, or any other alleged
responsible defendant may offer to compensate a claimant for
his or her reasonable economic damages, including future
economic damages, less amounts available from collateral
sources.
(5) Certificate of merit.--The requirement that a claimant
in a health care liability action submit to the court before
trial a written report by a qualified specialist that includes
the specialist's determination that, after a review of the
available medical record and other relevant material, there is
a reasonable and meritorious cause for the filing of the action
against the defendant.
(6) No-fault.--The use of a no-fault statute under which
certain health care liability actions are barred and claimants
are compensated for injuries through their health plans or
through other appropriate mechanisms.
(c) Further Redress.--
(1) In general.--The extent to which any party may seek
further redress (subsequent to a decision of an alternative
dispute resolution method established by a State under this
section) concerning a health care liability claim in a Federal
or State court shall be dependent upon the methods of
alternative dispute resolution adopted by the State involved.
(2) Claimant.--With respect to further redress described in
paragraph (1), if the party initiating such court action is the
claimant and the claimant receives a level of damages that is
at least 25 percent less under the decision of the court than
under the State alternative dispute resolution method, such
party shall bear the reasonable costs, including legal fees,
incurred in the court action by the other party or parties to
such action.
(3) Provider or other defendant.--With respect to further
redress described in paragraph (1), if the party initiating a
court action is the health care professional or health care
provider, or other defendant in a health care liability action
and the health care professional, health care provider, or
other defendant is found liable for a level of damages that is
at least 25 percent more under the decision of the court than
under the State alternative dispute resolution method, such
party shall bear the reasonable costs, including legal fees,
incurred in the court action by the other party or parties to
such action.
(d) Technical Assistance and Evaluations.--
(1) Technical assistance.--The Attorney General may provide
States with technical assistance in establishing or maintaining
alternative dispute resolution mechanisms under this section.
(2) Evaluations.--The Attorney General, in consultation
with the Secretary and the Administrative Conference of the
United States, shall monitor and evaluate the effectiveness of
State alternative dispute resolution mechanisms established or
maintained under this section.
SEC. 13. APPLICABILITY.
This Act shall apply to all civil actions covered under this Act
that are commenced on or after the date of enactment of this Act,
including any such action with respect to which the harm asserted in
the action or the conduct that caused the harm occurred before the date
of enactment of this Act.
SEC. 14. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such to any person or circumstance shall not be affected thereby.
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