[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1337 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1337

 To restore fairness and reliability to the medical justice system and 
  promote patient safety by fostering alternatives to current medical 
                tort litigation, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 29, 2005

 Mr. Enzi (for himself and Mr. Baucus) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
 To restore fairness and reliability to the medical justice system and 
  promote patient safety by fostering alternatives to current medical 
                tort litigation, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair and Reliable Medical Justice 
Act''.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to restore fairness and reliability to the medical 
        justice system by fostering alternatives to current medical 
        tort litigation that promote early disclosure of health care 
        errors and provide prompt, fair, and reasonable compensation to 
        patients who are injured by health care errors;
            (2) to promote patient safety through early disclosure of 
        health care errors; and
            (3) to support and assist States in developing such 
        alternatives.

SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 3990. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    ``(a) In General.--The Secretary is authorized to award 
demonstration grants to States for the development, implementation, and 
evaluation of alternatives to current tort litigation for resolving 
disputes over injuries allegedly caused by health care providers or 
health care organizations.
    ``(b) Duration.--The Secretary may award up to 10 grants under 
subsection (a) and each grant awarded under such subsection may not 
exceed a period of 5 years.
    ``(c) Conditions for Demonstration Grants.--
            ``(1) Requirements.--Each State desiring a grant under 
        subsection (a) shall--
                    ``(A) develop an alternative to current tort 
                litigation for resolving disputes over injuries 
                allegedly caused by health care providers or health 
                care organizations that may be 1 of the models 
                described in subsection (d); and
                    ``(B) promote a reduction of health care errors by 
                allowing for patient safety data related to disputes 
                resolved under subparagraph (A) to be collected and 
                analyzed by organizations that engage in voluntary 
                efforts to improve patient safety and the quality of 
                health care delivery.
            ``(2) Alternative to current tort litigation.--Each State 
        desiring a grant under subsection (a) shall demonstrate how the 
        proposed alternative described in paragraph (1)(A)--
                    ``(A) makes the medical liability system more 
                reliable through prompt and fair resolution of 
                disputes;
                    ``(B) encourages the early disclosure of health 
                care errors;
                    ``(C) enhances patient safety; and
                    ``(D) maintains access to liability insurance.
            ``(3) Sources of compensation.--Each State desiring a grant 
        under subsection (a) shall identify the sources from and 
        methods by which compensation would be paid for claims resolved 
        under the proposed alternative to current tort litigation, 
        which may include public or private funding sources, or a 
        combination of such sources. Funding methods shall to the 
        extent practicable provide financial incentives for activities 
        that improve patient safety.
            ``(4) Scope.--
                    ``(A) In general.--Each State desiring a grant 
                under subsection (a) may establish a scope of 
                jurisdiction (such as a designated geographic region, a 
                designated area of health care practice, or a 
                designated group of health care providers or health 
                care organizations) for the proposed alternative to 
                current tort litigation that is sufficient to evaluate 
                the effects of the alternative.
                    ``(B) Notification of patients.--A State proposing 
                a scope of jurisdiction under subparagraph (A) shall 
                demonstrate how patients would be notified that they 
                are receiving health care services that fall within 
                such scope.
            ``(5) Preference in awarding demonstration grants.--In 
        awarding grants under subsection (a), the Secretary shall give 
        preference to States--
                    ``(A) that have developed the proposed alternative 
                through substantive consultation with relevant 
                stakeholders; and
                    ``(B) in which State law at the time of the 
                application would not prohibit the adoption of an 
                alternative to current tort litigation.
    ``(d) Models.--
            ``(1) In general.--Any State desiring a grant under 
        subsection (a) that proposes an alternative described in 
        paragraph (2), (3), or (4) shall be deemed to meet the criteria 
        under subsection (c)(2).
            ``(2) Early disclosure and compensation model.--In the 
        early disclosure and compensation model, the State shall--
                    ``(A) require that health care providers or health 
                care organizations notify a patient (or an immediate 
                family member or designee of the patient) of an adverse 
                event that results in serious injury to the patient, 
                and that such notification shall not constitute an 
                acknowledgment or an admission of liability;
                    ``(B) provide immunity from tort liability to any 
                health care provider or health care organization that 
                offers in good faith to pay compensation in accordance 
                with this section to a patient for an injury incurred 
                in the provision of health care services (limited to 
                claims arising out of the same nucleus of operative 
                facts as the injury, and except in cases of fraud 
                related to the provision of health care services, or in 
                cases of criminal or intentional harm);
                    ``(C) set a limited time period during which a 
                health care provider or health care organization may 
                make an offer of compensation benefits under 
                subparagraph (B), with consideration for instances 
                where prompt recognition of an injury is unlikely or 
                impossible;
                    ``(D) require that the compensation provided under 
                subparagraph (B) include--
                            ``(i) payment for the net economic loss of 
                        the patient, on a periodic basis, reduced by 
                        any payments received by the patient under--
                                    ``(I) any health or accident 
                                insurance;
                                    ``(II) any wage or salary 
                                continuation plan; or
                                    ``(III) any disability income 
                                insurance;
                            ``(ii) payment for the non-economic damages 
                        of the patient, if appropriate for the injury, 
                        based on a defined payment schedule developed 
                        by the State in consultation with relevant 
                        experts and with the Secretary in accordance 
                        with subsection (g); and
                            ``(iii) reasonable attorney's fees;
                    ``(E) not abridge the right of an injured patient 
                to seek redress through the State tort system if a 
                health care provider does not enter into a compensation 
                agreement with the patient in accordance with 
                subparagraph (B) or if the compensation offered does 
                not meet the requirements of subparagraph (D) or is not 
                offered in good faith;
                    ``(F) permit a health care provider or health care 
                organization that offers in good faith to pay 
                compensation benefits to an individual under 
                subparagraph (B) to join in the payment of the 
                compensation benefits any health care provider or 
                health care organization that is potentially liable, in 
                whole or in part, for the injury; and
                    ``(G) permit any health care provider or health 
                care organization to contribute voluntarily in the 
                payment of compensation benefits to an individual under 
                subparagraph (B).
            ``(3) Administrative determination of compensation model.--
                    ``(A) In general.--In the administrative 
                determination of compensation model--
                            ``(i) the State shall--
                                    ``(I) designate an administrative 
                                entity (in this paragraph referred to 
                                as the `Board') that shall include 
                                representatives of--
                                            ``(aa) relevant State 
                                        licensing boards;
                                            ``(bb) patient advocacy 
                                        groups;
                                            ``(cc) health care 
                                        providers and health care 
                                        organizations; and
                                            ``(dd) attorneys in 
                                        relevant practice areas;
                                    ``(II) set up classes of avoidable 
                                injuries, in consultation with relevant 
                                experts and with the Secretary in 
                                accordance with subsection (g), that 
                                will be used by the Board to determine 
                                compensation under clause (ii)(II);
                                    ``(III) modify tort liability, 
                                through statute or contract, to bar 
                                negligence claims in court against 
                                health care providers and health care 
                                organizations for the classes of 
                                injuries established under subclause 
                                (II), except in cases of fraud related 
                                to an injury, or in cases of criminal 
                                or intentional harm;
                                    ``(IV) outline a procedure for 
                                informing patients about the modified 
                                liability system described in this 
                                paragraph and, in systems where 
                                participation by the health care 
                                provider, health care organization, or 
                                patient is voluntary, allow for the 
                                decision by the provider, organization, 
                                or patient of whether to participate to 
                                be made prior to the provision of, use 
                                of, or payment for the health care 
                                service;
                                    ``(V) provide for an appeals 
                                process to allow for review of 
                                decisions; and
                                    ``(VI) establish procedures to 
                                coordinate settlement payments with 
                                other sources of payment;
                            ``(ii) the Board shall--
                                    ``(I) resolve health care liability 
                                claims for certain classes of avoidable 
                                injuries as determined by the State and 
                                determine compensation for such claims;
                                    ``(II) develop a schedule of 
                                compensation to be used in making such 
                                determinations that includes--
                                            ``(aa) payment for the net 
                                        economic loss of the patient, 
                                        on a periodic basis, reduced by 
                                        any payments received by the 
                                        patient under any health or 
                                        accident insurance, any wage or 
                                        salary continuation plan, or 
                                        any disability income 
                                        insurance;
                                            ``(bb) payment for the non-
                                        economic damages of the 
                                        patient, if appropriate for the 
                                        injury, based on a defined 
                                        payment schedule developed by 
                                        the State in consultation with 
                                        relevant experts and with the 
                                        Secretary in accordance with 
                                        subsection (g); and
                                            ``(cc) reasonable 
                                        attorney's fees; and
                                    ``(III) update the schedule under 
                                subclause (II) on a regular basis.
                    ``(B) Appeals.--The State, in establishing the 
                appeals process described in subparagraph (A)(i)(V), 
                may choose whether to allow for de novo review, review 
                with deference, or some opportunity for parties to 
                reject determinations by the Board and elect to file a 
                civil action after such rejection. Any State desiring 
                to adopt the model described in this paragraph shall 
                indicate how such review method meets the criteria 
                under subsection (c)(2).
                    ``(C) Timeliness.--The State shall establish 
                timeframes to ensure that claims handled under the 
                system described in this paragraph provide for 
                adjudication that is more timely and expedited than 
                adjudication in a traditional tort system.
            ``(4) Special health care court model.--In the special 
        health care court model, the State shall--
                    ``(A) establish a special court for the timely 
                adjudication of disputes over injuries allegedly caused 
                by health care providers or health care organizations 
                in the provision of health care services;
                    ``(B) ensure that such court is presided over by 
                judges with health care expertise who meet applicable 
                State standards for judges and who agree to preside 
                over such court voluntarily;
                    ``(C) provide authority to such judges to make 
                binding rulings on causation, compensation, standards 
                of care, and related issues with reliance on 
                independent expert witnesses commissioned by the court;
                    ``(D) provide for an appeals process to allow for 
                review of decisions; and
                    ``(E) at its option, establish an administrative 
                entity similar to the entity described in paragraph 
                (3)(A)(i)(I) to provide advice and guidance to the 
                special court.
    ``(e) Application.--
            ``(1) In general.--Each State desiring a grant under 
        subsection (a) shall submit to the Secretary an application, at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
            ``(2) Review panel.--
                    ``(A) In general.--In reviewing applications under 
                paragraph (1), the Secretary shall consult with a 
                review panel composed of relevant experts appointed by 
                the Comptroller General.
                    ``(B) Composition.--
                            ``(i) Nominations.--The Comptroller General 
                        shall solicit nominations from the public for 
                        individuals to serve on the review panel.
                            ``(ii) Appointment.--The Comptroller 
                        General shall appoint, at least 11 but not more 
                        than 15, highly qualified and knowledgeable 
                        individuals to serve on the review panel and 
                        shall ensure that the following entities 
                        receive fair representation on such panel:
                                    ``(I) Patient advocates.
                                    ``(II) Health care providers and 
                                health care organizations.
                                    ``(III) Attorneys with expertise in 
                                representing patients and health care 
                                providers.
                                    ``(IV) Insurers.
                                    ``(V) State officials.
                    ``(C) Chairperson.--The Comptroller General, or an 
                individual within the Government Accountability Office 
                designated by the Comptroller General, shall be the 
                chairperson of the review panel.
                    ``(D) Availability of information.--The Comptroller 
                General shall make available to the review panel such 
                information, personnel, and administrative services and 
                assistance as the review panel may reasonably require 
                to carry out its duties.
                    ``(E) Information from agencies.--The review panel 
                may request directly from any department or agency of 
                the United States any information that such panel 
                considers necessary to carry out its duties. To the 
                extent consistent with applicable laws and regulations, 
                the head of such department or agency shall furnish the 
                requested information to the review panel.
    ``(f) Report.--Each State receiving a grant under subsection (a) 
shall submit to the Secretary a report evaluating the effectiveness of 
activities funded with grants awarded under such subsection at such 
time and in such manner as the Secretary may require.
    ``(g) Technical Assistance.--
            ``(1) In general.--The Secretary shall provide technical 
        assistance to the States awarded grants under subsection (a).
            ``(2) Requirements.--Technical assistance under paragraph 
        (1) shall include--
                    ``(A) the development of a defined payment schedule 
                for non-economic damages (including guidance on the 
                consideration of individual facts and circumstances in 
                determining appropriate payment), the development of 
                classes of avoidable injuries, and guidance on early 
                disclosure to patients of adverse events; and
                    ``(B) the development, in consultation with States, 
                of common definitions, formats, and data collection 
                infrastructure for States receiving grants under this 
                section to use in reporting to facilitate aggregation 
                and analysis of data both within and between States.
            ``(3) Use of common definitions, formats, and data 
        collection infrastructure.--States not receiving grants under 
        this section may also use the common definitions, formats, and 
        data collection infrastructure developed under paragraph 
        (2)(B).
    ``(h) Evaluation.--
            ``(1) In general.--The Secretary, in consultation with the 
        review panel established under subsection (e)(2), shall enter 
        into a contract with an appropriate research organization to 
        conduct an overall evaluation of the effectiveness of grants 
        awarded under subsection (a) and to annually prepare and submit 
        a report to the appropriate committees of Congress. Such an 
        evaluation shall begin not later than 18 months following the 
        date of implementation of the first program funded by a grant 
        under subsection (a).
            ``(2) Contents.--The evaluation under paragraph (1) shall 
        include--
                    ``(A) an analysis of the effect of the grants 
                awarded under subsection (a) on the number, nature, and 
                costs of health care liability claims;
                    ``(B) a comparison of the claim and cost 
                information of each State receiving a grant under 
                subsection (a); and
                    ``(C) a comparison between States receiving a grant 
                under this section and States that did not receive such 
                a grant, matched to ensure similar legal and health 
                care environments, and to determine the effects of the 
                grants and subsequent reforms on--
                            ``(i) the liability environment;
                            ``(ii) health care quality;
                            ``(iii) patient safety; and
                            ``(iv) patient and health care provider and 
                        organization satisfaction with the reforms.
    ``(i) Option to Provide for Initial Planning Grants.--Of the funds 
appropriated pursuant to subsection (k), the Secretary may use a 
portion not to exceed $500,000 per State to provide planning grants to 
such States for the development of demonstration project applications 
meeting the criteria described in subsection (c). In selecting States 
to receive such planning grants, the Secretary shall give preference to 
those States in which State law at the time of the application would 
not prohibit the adoption of an alternative to current tort litigation.
    ``(j) Definitions.--In this section:
            ``(1) Health care services.--The term `health care 
        services' means any services provided by a health care 
        provider, or by any individual working under the supervision of 
        a health care provider, that relate to--
                    ``(A) the diagnosis, prevention, or treatment of 
                any human disease or impairment; or
                    ``(B) the assessment of the health of human beings.
            ``(2) Health care organization.--The term `health care 
        organization' means any individual or entity which is obligated 
        to provide, pay for, or administer health benefits under any 
        health plan.
            ``(3) Health care provider.--The term `health care 
        provider' means any individual or entity--
                    ``(A) licensed, registered, or certified under 
                Federal or State laws or regulations to provide health 
                care services; or
                    ``(B) required to be so licensed, registered, or 
                certified but that is exempted by other statute or 
                regulation.
            ``(4) Net economic loss.--The term `net economic loss' 
        means--
                    ``(A) reasonable expenses incurred for products, 
                services, and accommodations needed for health care, 
                training, and other remedial treatment and care of an 
                injured individual;
                    ``(B) reasonable and appropriate expenses for 
                rehabilitation treatment and occupational training;
                    ``(C) 100 percent of the loss of income from work 
                that an injured individual would have performed if not 
                injured, reduced by any income from substitute work 
                actually performed; and
                    ``(D) reasonable expenses incurred in obtaining 
                ordinary and necessary services to replace services an 
                injured individual would have performed for the benefit 
                of the individual or the family of such individual if 
                the individual had not been injured.
            ``(5) Non-economic damages.--The term `non-economic 
        damages' means losses for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), injury to reputation, and all other non-pecuniary 
        losses of any kind or nature, to the extent permitted under 
        State law.
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary. 
Amounts appropriated pursuant to this subsection shall remain available 
until expended.''.
                                 <all>