[House Document 104-207]
[From the U.S. Government Publishing Office]



                                     

104th Congress, 2d Session - - - - - - - - - -  House Document 104-207


 
                           VETO OF H.R. 956

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

     HIS VETO OF H.R. 956, A BILL TO ESTABLISH LEGAL STANDARDS AND 
  PROCEDURES FOR PRODUCT LIABILITY LITIGATION, AND FOR OTHER PURPOSES

 


   May 6, 1996.--Message and accompanying bill ordered to be printed
To The House of Representatives:
    I am returning herewith without my approval H.R. 956, the 
``Common Sense Product Liability Legal Reform Act of 1996.''
    I support real commonsense product liability reform. To 
deserve that label, however, legislation must adequately 
protect the interests of consumers, in addition to the 
interests of manufacturers and sellers. Further, the 
legislation must respect the important role of the States in 
our Federal system. The Congress could have passed such 
legislation, appropriately limited in scope and balanced in 
application, meeting these tests. Had the Congress done so, I 
would have signed the bill gladly. The Congress, however, chose 
not to do so, deciding instead to retain provisions in the bill 
that I made clear I could not accept.
    This bill inappropriately intrudes on State authority, and 
does so in a way that tilts the legal playing field against 
consumers. While some Federal action in this area is proper 
because no one State can alleviate nationwide problems in the 
tort system, the States should have, as they always have had, 
primary responsibility for tort law. The States traditionally 
have handled this job well, serving as laboratories for new 
ideas and making needed reforms. This bill unduly interferes 
with that process in products cases; moreover, it does so in a 
way that peculiarly disadvantages consumers. As a rule, this 
bill displaces State law only when that law is more favorable 
to consumers; it defers to State law when that law is more 
helpful to manufacturers and sellers. I cannot accept, absent 
compelling reasons, such a one-way street of federalism.
    Apart from this general problem of displacing State 
authority in an unbalanced manner, specific provisions of H.R. 
956 unfairly disadvantage consumers and their families. 
Consumers should be able to count on the safety of the products 
they purchase. And if these products are defective and cause 
harm, consumers should be able to get adequate compensation for 
their losses. Certain provisions in this bill work against 
these goals, preventing some injured persons from recovering 
the full measure of their damages and increasing the 
possibility that defective goods will come onto the market as a 
result of intentional misconduct.
    In particular, I object to the following provisions of the 
bill, which subject consumers to too great a risk of harm.
    First, as I previously have stated, I oppose wholly 
eliminating joint liability for noneconomic damages such as 
pain and suffering because such a change would prevent many 
persons from receiving full compensation for injury. When one 
wrongdoer cannot pay its portion of the judgment, the other 
wrongdoers, and not the innocent victim, should have to 
shoulder that part of the award. Traditional law accomplishes 
this result. In contrast, this bill would leave the victim to 
bear these damages on his or her own. Given how often companies 
that manufacture defective products go bankrupt, this provision 
has potentially large consequences.
    This provision is all the more troubling because it 
unfairly discriminates against the most vulnerable members of 
our society--the elderly, the poor, children, and nonworking 
women--whose injuries often involve mostly noneconomic losses. 
There is no reason for this kind of discrimination. Noneconomic 
damages are as real and as important to victims as economic 
damages. We should not create a tort system in which people 
with the greatest need of protection stand the least chance of 
receiving it.
    Second, as I also have stated, I oppose arbitrary ceilings 
on punitive damages, because they endanger the safety of the 
public. Capping punitive damages undermines their very purpose, 
which is to punish and thereby deter egregious misconduct. The 
provision of the bill allowing judges to exceed the cap if 
certain factors are present helps to mitigate, but does not 
cure this problem, given the clear intent of the Congress, as 
expressed in the Statement of Managers, that judges should use 
this authority only in the most unusual cases.
    In addition, I am concerned that the Conference Report 
fails to fix an oversight in title II of the bill, which limits 
actions against suppliers of materials used in devices 
implanted in the body. In general, title II is a laudable 
attempt to ensure the supply of materials needed to make life-
saving medical devices, such as artificial heart valves. But as 
I believe even many supporters of the bill agree, a supplier of 
materials who knew or should have known that the materials, as 
implanted, would cause injury should not receive any protection 
from suit. Title II's protections must be clearly limited to 
nonnegligent suppliers.
    My opposition to these Senate-passed provisions were known 
prior to the Conference on the bill. But instead of addressing 
these issues, the Conference Committee took several steps 
backward in the direction of the bill approved by the House.
    First, the Conference Report seems to expand the scope of 
the bill, inappropriately applying the limits on punitive and 
noneconomic damages to lawsuits, where, for example, a gun 
dealer has knowingly sold a gun to a convicted felon or a bar 
owner has knowingly served a drink to an obviously inebriated 
customer. I believe that such suits should go forward 
unhindered. Some in the Congress have argued that the change 
made in Conference is technical in nature, so that the bill 
still exempts these actions. But I do not read the change in 
this way--and in any event, I do not believe that a victim of a 
drunk driver should have to argue in court about this matter. 
The Congress should not have made this last-minute change, 
creating this unfortunate ambiguity, in the scope of the bill.
    In addition, the Conference Report makes certain changes 
that, though sounding technical, may cut off a victim's ability 
to sue a negligent manufacturer. The Report deletes a provision 
that would have stopped the statute of limitations from running 
when a bankruptcy court issues the automatic stay that prevents 
suits from being filed during bankruptcy proceedings. The 
effect of this seemingly legalistic change will be that some 
persons harmed by companies that have entered bankruptcy 
proceedings (as makers of defective products often do) will 
lose any meaningful opportunity to bring valid claims.
    Similarly, the Conference Report reduces the statute of 
repose to 15 years (and less if States so provide) and applies 
the statute to a wider range of goods, including handguns. This 
change, which bars a suit against a maker of an older product 
even if that product has just caused injury, also will preclude 
some valid suits.
    In recent weeks, I have heard from many victims of 
defective products whose efforts to recover compensation would 
have been frustrated by this bill. I have heard from a woman 
who would not have received full compensatory damages under 
this bill for the death of a child because one wrongdoer could 
not pay his portion of the judgment. I have heard from women 
whose suits against makers of defective contraceptive devices--
and the punitive damages awarded in those suits--forced the 
products off the market, in a way that this bill's cap on 
punitives would make much harder. I have heard from persons 
injured by products more than 15 years old, who under this bill 
could not bring suit at all.
    Injured people cannot be left to suffer in this fashion; 
furthermore, the few companies that cause these injuries cannot 
be left, through lack of a deterrent, to engage in misconduct. 
I therefore must return the bill that has been presented to me. 
This bill would undermine the ability of courts to provide 
relief to victims of harmful products and thereby endanger the 
health and safety of the entire American public. There is 
nothing common sense about such reforms to product liability 
law.

                                                William J. Clinton.
    The White House, May 2, 1996.
         H.R. 956                                              

  One Hundred Fourth Congress of the United States of America, at the 
 First Session, Begun and Held at the City of Washington on Wednesday, 
   the Third Day of January, One Thousand Nine Hundred and Ninety-Six

                                 An Act


   To establish legal standards and procedures for product liability 
                   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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Common Sense 
Product Liability Legal Reform Act of 1996''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.

                    TITLE I--PRODUCT LIABILITY REFORM

Sec. 101. Definitions.
Sec. 102. Applicability; preemption.
Sec. 103. Liability rules applicable to product sellers, renters, and 
          lessors.
Sec. 104. Defense based on claimant's use of intoxicating alcohol or 
          drugs.
Sec. 105. Misuse or alteration.
Sec. 106. Uniform time limitations on liability.
Sec. 107. Alternative dispute resolution procedures.
Sec. 108. Uniform standards for award of punitive damages.
Sec. 109. Liability for certain claims relating to death.
Sec. 110. Several liability for noneconomic loss.
Sec. 111. Workers' compensation subrogation.

                 TITLE II--BIOMATERIALS ACCESS ASSURANCE

Sec. 201. Short title.
Sec. 202. Findings.
Sec. 203. Definitions.
Sec. 204. General requirements; applicability; preemption.
Sec. 205. Liability of biomaterials suppliers.
Sec. 206. Procedures for dismissal of civil actions against biomaterials 
          suppliers.

         TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 301. Effect of court of appeals decisions.
Sec. 302. Federal cause of action precluded.
Sec. 303. Effective date.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
        (1) our Nation is overly litigious, the civil justice system is 
    overcrowded, sluggish, and excessively costly and the costs of 
    lawsuits, both direct and indirect, are inflicting serious and 
    unnecessary injury on the national economy;
        (2) excessive, unpredictable, and often arbitrary damage awards 
    and unfair allocations of liability have a direct and undesirable 
    effect on interstate commerce by increasing the cost and decreasing 
    the availability of goods and services;
        (3) the rules of law governing product liability actions, 
    damage awards, and allocations of liability have evolved 
    inconsistently within and among the States, resulting in a complex, 
    contradictory, and uncertain regime that is inequitable to both 
    plaintiffs and defendants and unduly burdens interstate commerce;
        (4) as a result of excessive, unpredictable, and often 
    arbitrary damage awards and unfair allocations of liability, 
    consumers have been adversely affected through the withdrawal of 
    products, producers, services, and service providers from the 
    marketplace, and from excessive liability costs passed on to them 
    through higher prices;
        (5) excessive, unpredictable, and often arbitrary damage awards 
    and unfair allocations of liability jeopardize the financial well-
    being of many individuals as well as entire industries, 
    particularly the Nation's small businesses and adversely affects 
    government and taxpayers;
        (6) the excessive costs of the civil justice system undermine 
    the ability of American companies to compete internationally, and 
    serve to decrease the number of jobs and the amount of productive 
    capital in the national economy;
        (7) the unpredictability of damage awards is inequitable to 
    both plaintiffs and defendants and has added considerably to the 
    high cost of liability insurance, making it difficult for 
    producers, consumers, volunteers, and nonprofit organizations to 
    protect themselves from liability with any degree of confidence and 
    at a reasonable cost;
        (8) because of the national scope of the problems created by 
    the defects in the civil justice system, it is not possible for the 
    States to enact laws that fully and effectively respond to those 
    problems;
        (9) it is the constitutional role of the national government to 
    remove barriers to interstate commerce and to protect due process 
    rights; and
        (10) there is a need to restore rationality, certainty, and 
    fairness to the civil justice system in order to protect against 
    excessive, arbitrary, and uncertain damage awards and to reduce the 
    volume, costs, and delay of litigation.
    (b) Purposes.--Based upon the powers contained in Article I, 
Section 8, Clause 3 and the Fourteenth Amendment of the United States 
Constitution, the purposes of this Act are to promote the free flow of 
goods and services and to lessen burdens on interstate commerce and to 
uphold constitutionally protected due process rights by--
        (1) establishing certain uniform legal principles of product 
    liability which provide a fair balance among the interests of 
    product users, manufacturers, and product sellers;
        (2) placing reasonable limits on damages over and above the 
    actual damages suffered by a claimant;
        (3) ensuring the fair allocation of liability in civil actions;
        (4) reducing the unacceptable costs and delays of our civil 
    justice system caused by excessive litigation which harm both 
    plaintiffs and defendants; and
        (5) establishing greater fairness, rationality, and 
    predictability in the civil justice system.

                   TITLE I--PRODUCT LIABILITY REFORM

SEC. 101. DEFINITIONS.

    For purposes of this title--
        (1) Actual malice.--The term ``actual malice'' means specific 
    intent to cause serious physical injury, illness, disease, death, 
    or damage to property.
        (2) Claimant.--The term ``claimant'' means any person who 
    brings an action covered by this title and any person on whose 
    behalf such an action is brought. If such an action is brought 
    through or on behalf of an estate, the term includes the claimant's 
    decedent. If such an action is brought through or on behalf of a 
    minor or incompetent, the term includes the claimant's legal 
    guardian.
        (3) Claimant's benefits.--The term ``claimant's benefits'' 
    means the amount paid to an employee as workers' compensation 
    benefits.
        (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. The level of proof required to satisfy such standard 
    is more than that required under preponderance of the evidence, but 
    less than that required for proof beyond a reasonable doubt.
        (5) Commercial loss.--The term ``commercial loss'' means any 
    loss or damage solely to a product itself, loss relating to a 
    dispute over its value, or consequential economic loss, the 
    recovery of which is governed by the Uniform Commercial Code or 
    analogous State commercial or contract law.
        (6) Compensatory damages.--The term ``compensatory damages'' 
    means damages awarded for economic and non-economic loss.
        (7) Durable good.--The term ``durable good'' means any product, 
    or any component of any such product, which has a normal life 
    expectancy of 3 or more years, or is of a character subject to 
    allowance for depreciation under the Internal Revenue Code of 1986 
    and which is--
            (A) used in a trade or business;
            (B) held for the production of income; or
            (C) sold or donated to a governmental or private entity for 
        the production of goods, training, demonstration, or any other 
        similar purpose.
        (8) Economic loss.--The term ``economic loss'' means any 
    pecuniary loss resulting from harm (including the loss of earnings 
    or other benefits related to employment, medical expense loss, 
    replacement services loss, loss due to death, burial costs, and 
    loss of business or employment opportunities) to the extent 
    recovery for such loss is allowed under applicable State law.
        (9) Harm.--The term ``harm'' means any physical injury, 
    illness, disease, or death or damage to property caused by a 
    product. The term does not include commercial loss.
        (10) Insurer.--The term ``insurer'' means the employer of a 
    claimant if the employer is self-insured or if the employer is not 
    self-insured, the workers' compensation insurer of the employer.
        (11) Manufacturer.--The term ``manufacturer'' means--
            (A) any person who is engaged in a business to produce, 
        create, make, or construct any product (or component part of a 
        product) and who (i) designs or formulates the product (or 
        component part of the product), or (ii) has engaged another 
        person to design or formulate the product (or component part of 
        the product);
            (B) a product seller, but only with respect to those 
        aspects of a product (or component part of a product) which are 
        created or affected when, before placing the product in the 
        stream of commerce, the product seller produces, creates, makes 
        or constructs and designs, or formulates, or has engaged 
        another person to design or formulate, an aspect of the product 
        (or component part of the product) made by another person; or
            (C) any product seller not described in subparagraph (B) 
        which holds itself out as a manufacturer to the user of the 
        product.
        (12) Noneconomic loss.--The term ``noneconomic loss'' means 
    subjective, nonmonetary loss resulting from harm, including pain, 
    suffering, inconvenience, mental suffering, emotional distress, 
    loss of society and companionship, loss of consortium, injury to 
    reputation, and humiliation.
        (13) Person.--The term ``person'' means any individual, 
    corporation, company, association, firm, partnership, society, 
    joint stock company, or any other entity (including any 
    governmental entity).
        (14) Product.--
            (A) In general.--The term ``product'' means any object, 
        substance, mixture, or raw material in a gaseous, liquid, or 
        solid state which--
                (i) is capable of delivery itself or as an assembled 
            whole, in a mixed or combined state, or as a component part 
            or ingredient;
                (ii) is produced for introduction into trade or 
            commerce;
                (iii) has intrinsic economic value; and
                (iv) is intended for sale or lease to persons for 
            commercial or personal use.
            (B) Exclusion.--The term does not include--
                (i) tissue, organs, blood, and blood products used for 
            therapeutic or medical purposes, except to the extent that 
            such tissue, organs, blood, and blood products (or the 
            provision thereof) are subject, under applicable State law, 
            to a standard of liability other than negligence; or
                (ii) electricity, water delivered by a utility, natural 
            gas, or steam except to the extent that electricity, water 
            delivered by a utility, natural gas, or steam, is subject, 
            under applicable State law, to a standard of liability 
            other than negligence.
        (15) Product liability action.--The term ``product liability 
    action'' means a civil action brought on any theory for harm caused 
    by a product.
        (16) Product seller.--
            (A) In general.--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 otherwise is involved in 
            placing a product in the stream of commerce; or
                (ii) installs, repairs, refurbishes, reconditions, or 
            maintains the harm-causing aspect of the product.
            (B) Exclusion.--The term ``product seller'' 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 lessor does not initially select the leased 
                product and does not during the lease term ordinarily 
                control the daily operations and maintenance of the 
                product.

        (17) Punitive damages.--The term ``punitive damages'' means 
    damages awarded against any person or entity to punish or deter 
    such person or entity, or others, from engaging in similar behavior 
    in the future.
        (18) State.--The term ``State'' means any State of the United 
    States, the District of Columbia, Commonwealth of Puerto Rico, the 
    Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, 
    and any other territory or possession of the United States or any 
    political subdivision of any of the foregoing.

SEC. 102. APPLICABILITY; PREEMPTION.

    (a) Preemption.--
        (1) In general.--This Act governs any product liability action 
    brought in any State or Federal court on any theory for harm caused 
    by a product.
        (2) Actions excluded.--A civil action brought for commercial 
    loss shall be governed only by applicable commercial or contract 
    law.
    (b) Relationship to State Law.--This title supersedes State law 
only to the extent that State law applies to an issue covered by this 
title. Any issue that is not governed by this title, including any 
standard of liability applicable to a manufacturer, shall be governed 
by otherwise applicable State or Federal law.
    (c) Effect on Other Law.--Nothing in this Act shall be construed 
to--
        (1) waive or affect any defense of sovereign immunity asserted 
    by any State under any law;
        (2) supersede or alter any Federal law;
        (3) waive or affect any defense of sovereign immunity asserted 
    by the United States;
        (4) affect the applicability of any provision of chapter 97 of 
    title 28, United States Code;
        (5) preempt State choice-of-law rules with respect to claims 
    brought by a foreign nation or a citizen of a foreign nation;
        (6) 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; or
        (7) supersede or modify any statutory or common law, including 
    any law providing for an action to abate a nuisance, that 
    authorizes a person to institute an action for civil damages or 
    civil penalties, cleanup costs, injunctions, restitution, cost 
    recovery, punitive damages, or any other form of relief for 
    remediation of the environment (as defined in section 101(8) of the 
    Comprehensive Environmental Response, Compensation, and Liability 
    Act of 1980 (42 U.S.C. 9601(8)).

SEC. 103. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, RENTERS, AND 
              LESSORS.

    (a) General Rule.--
        (1) In general.--In any product liability action, a product 
    seller other than a manufacturer shall be liable to a claimant only 
    if the claimant establishes--
            (A) that--
                (i) the product that allegedly caused the harm that is 
            the subject of the complaint was sold, rented, or leased by 
            the product seller;
                (ii) the product seller failed to exercise reasonable 
            care with respect to the product; and
                (iii) the failure to exercise reasonable care was a 
            proximate cause of harm to the claimant;
            (B) that--
                (i) the product seller made an express warranty 
            applicable to the product that allegedly caused the harm 
            that is the subject of the complaint, independent of any 
            express warranty made by a manufacturer as to the same 
            product;
                (ii) the product failed to conform to the warranty; and
                (iii) the failure of the product to conform to the 
            warranty caused harm to the claimant; or
            (C) that--
                (i) the product seller engaged in intentional 
            wrongdoing, as determined under applicable State law; and
                (ii) such intentional wrongdoing was a proximate cause 
            of the harm that is the subject of the complaint.
        (2) Reasonable opportunity for inspection.--For purposes of 
    paragraph (1)(A)(ii), a product seller shall not be considered to 
    have failed to exercise reasonable care with respect to a product 
    based upon an alleged failure to inspect the product--
            (A) if the failure occurred because there was no reasonable 
        opportunity to inspect the product; or
            (B) if the inspection, in the exercise of reasonable care, 
        would not have revealed the aspect of the product which 
        allegedly caused the claimant's harm.
    (b) Special Rule.--
        (1) In general.--A product seller shall be deemed to be liable 
    as a manufacturer of a product for harm caused by the product if--
            (A) the manufacturer is not subject to service of process 
        under the laws of any State in which the action may be brought; 
        or
            (B) the court determines that the claimant would be unable 
        to enforce a judgment against the manufacturer.
        (2) Statute of limitations.--For purposes of this subsection 
    only, the statute of limitations applicable to claims asserting 
    liability of a product seller as a manufacturer shall be tolled 
    from the date of the filing of a complaint against the manufacturer 
    to the date that judgment is entered against the manufacturer.
    (c) Rented or Leased Products.--
        (1) Notwithstanding any other provision of law, any person 
    engaged in the business of renting or leasing a product (other than 
    a person excluded from the definition of product seller under 
    section 101(16)(B)) shall be subject to liability in a product 
    liability action under subsection (a), but any person engaged in 
    the business of renting or leasing a product shall not be liable to 
    a claimant for the tortious act of another solely by reason of 
    ownership of such product.
        (2) For purposes of paragraph (1), and for determining the 
    applicability of this title to any person subject to paragraph (1), 
    the term ``product liability action'' means a civil action brought 
    on any theory for harm caused by a product or product use.
    (d) Actions for Negligent Entrustment.--A civil action for 
negligent entrustment shall not be subject to the provisions of this 
section, but shall be subject to any applicable State law.

SEC. 104. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING ALCOHOL OR 
              DRUGS.

    (a) General Rule.--In any product liability action, it shall be a 
complete defense to such action if--
        (1) the claimant was intoxicated or was under the influence of 
    intoxicating alcohol or any drug when the accident or other event 
    which resulted in such claimant's harm occurred; and
        (2) the claimant, as a result of the influence of the alcohol 
    or drug, was more than 50 percent responsible for such accident or 
    other event.
    (b) Construction.--For purposes of subsection (a)--
        (1) the determination of whether a person was intoxicated or 
    was under the influence of intoxicating alcohol or any drug shall 
    be made pursuant to applicable State law; and
        (2) the term ``drug'' means any controlled substance as defined 
    in the Controlled Substances Act (21 U.S.C. 802(6)) that was not 
    legally prescribed for use by the claimant or that was taken by the 
    claimant other than in accordance with the terms of a lawfully 
    issued prescription.

SEC. 105. MISUSE OR ALTERATION.

    (a) General Rule.--
        (1) In general.--In a product liability action, the damages for 
    which a defendant is otherwise liable under Federal or State law 
    shall be reduced by the percentage of responsibility for the 
    claimant's harm attributable to misuse or alteration of a product 
    by any person if the defendant establishes that such percentage of 
    the claimant's harm was proximately caused by a use or alteration 
    of a product--
            (A) in violation of, or contrary to, a defendant's express 
        warnings or instructions if the warnings or instructions are 
        adequate as determined pursuant to applicable State law; or
            (B) involving a risk of harm which was known or should have 
        been known by the ordinary person who uses or consumes the 
        product with the knowledge common to the class of persons who 
        used or would be reasonably anticipated to use the product.
        (2) Use intended by a manufacturer is not misuse or 
    alteration.--For the purposes of this Act, a use of a product that 
    is intended by the manufacturer of the product does not constitute 
    a misuse or alteration of the product.
    (b) Workplace Injury.--Notwithstanding subsection (a), and except 
as otherwise provided in section 111, the damages for which a defendant 
is otherwise liable under State law shall not be reduced by the 
percentage of responsibility for the claimant's harm attributable to 
misuse or alteration of the product by the claimant's employer or any 
coemployee who is immune from suit by the claimant pursuant to the 
State law applicable to workplace injuries.

SEC. 106. UNIFORM TIME LIMITATIONS ON LIABILITY.

    (a) Statute of Limitations.--
        (1) In general.--Except as provided in paragraph (2) and 
    subsection (b), a product liability action may be filed not later 
    than 2 years after the date on which the claimant discovered or, in 
    the exercise of reasonable care, should have discovered--
            (A) the harm that is the subject of the action; and
            (B) the cause of the harm.
        (2) Exception.--A person with a legal disability (as determined 
    under applicable law) may file a product liability action not later 
    than 2 years after the date on which the person ceases to have the 
    legal disability.
    (b) Statute of Repose.--
        (1) In general.--Subject to paragraphs (2) and (3), no product 
    liability action that is subject to this Act concerning a product, 
    that is a durable good, alleged to have caused harm (other than 
    toxic harm) may be filed after the 15-year period beginning at the 
    time of delivery of the product to the first purchaser or lessee.
        (2) State law.--Notwithstanding paragraph (1), if pursuant to 
    an applicable State law, an action described in such paragraph is 
    required to be filed during a period that is shorter than the 15-
    year period specified in such paragraph, the State law shall apply 
    with respect to such period.
        (3) Exceptions.--
            (A) A motor vehicle, vessel, aircraft, or train, that is 
        used primarily to transport passengers for hire, shall not be 
        subject to this subsection.
            (B) Paragraph (1) does not bar a product liability action 
        against a defendant who made an express warranty in writing as 
        to the safety or life expectancy of the specific product 
        involved which was longer than 15 years, but it will apply at 
        the expiration of that warranty.
            (C) Paragraph (1) does not affect the limitations period 
        established by the General Aviation Revitalization Act of 1994 
        (49 U.S.C. 40101 note).
    (c) Transitional Provision Relating to Extension of Period for 
Bringing Certain Actions.--If any provision of subsection (a) or (b) 
shortens the period during which a product liability action could be 
otherwise brought pursuant to another provision of law, the claimant 
may, notwithstanding subsections (a) and (b), bring the product 
liability action not later than 1 year after the date of enactment of 
this Act.

SEC. 107. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

    (a) Service of Offer.--A claimant or a defendant in a product 
liability action may, not later than 60 days after the service of--
        (1) the initial complaint; or
        (2) the applicable deadline for a responsive pleading;

whichever is later, serve upon an adverse party an offer to proceed 
pursuant to any voluntary, nonbinding alternative dispute resolution 
procedure established or recognized under the law of the State in which 
the product liability action is brought or under the rules of the court 
in which such action is maintained.
    (b) Written Notice of Acceptance or Rejection.--Except as provided 
in subsection (c), not later than 10 days after the service of an offer 
to proceed under subsection (a), an offeree shall file a written notice 
of acceptance or rejection of the offer.
    (c) Extension.--The court may, upon motion by an offeree made prior 
to the expiration of the 10-day period specified in subsection (b), 
extend the period for filling a written notice under such subsection 
for a period of not more than 60 days after the date of expiration of 
the period specified in subsection (b). Discovery may be permitted 
during such period.

SEC. 108. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.

    (a) General Rule.--Punitive damages may, to the extent permitted by 
applicable State law, be awarded against a defendant if the claimant 
establishes by clear and convincing evidence that conduct carried out 
by the defendant with a conscious, flagrant indifference to the rights 
or safety of others was the proximate cause of the harm that is the 
subject of the action in any product liability action.
    (b) Limitation on Amount.--
        (1) In general.--The amount of punitive damages that may be 
    awarded in an action described in subsection (a) may not exceed the 
    greater of--
            (A) 2 times the sum of the amount awarded to the claimant 
        for economic loss and noneconomic loss; or
            (B) $250,000.
        (2) Special rule.--Notwithstanding paragraph (1), in any action 
    described in subsection (a) against an individual whose net worth 
    does not exceed $500,000 or against an owner of an unincorporated 
    business, or any partnership, corporation, association, unit of 
    local government, or organization which has fewer that 25 full-time 
    employees, the punitive damages shall not exceed the lesser of--
            (A) 2 times the sum of the amount awarded to the claimant 
        for economic loss and noneconomic loss; or
            (B) $250,000.
    For the purpose of determining the applicability of this paragraph 
    to a corporation, the number of employees of a subsidiary or 
    wholly-owned corporation shall include all employees of a parent or 
    sister corporation.
        (3) Exception for insufficient award in cases of egregious 
    conduct.--
            (A) Determination by court.--If the court makes a 
        determination, after considering each of the factors in 
        subparagraph (B), that the application of paragraph (1) would 
        result in an award of punitive damages that is insufficient to 
        punish the egregious conduct of the defendant against whom the 
        punitive damages are to be awarded or to deter such conduct in 
        the future, the court shall determine the additional amount of 
        punitive damages (referred to in this paragraph as the 
        ``additional amount'') in excess of the amount determined in 
        accordance with paragraph (1) to be awarded against the 
        defendant in a separate proceeding in accordance with this 
        paragraph.
            (B) Factors for consideration.--In any proceeding under 
        paragraph (A), the court shall consider--
                (i) the extent to which the defendant acted with actual 
            malice;
                (ii) the likelihood that serious harm would arise from 
            the conduct of the defendant;
                (iii) the degree of the awareness of the defendant of 
            that likelihood;
                (iv) the profitability of the misconduct to the 
            defendant;
                (v) the duration of the misconduct and any concurrent 
            or subsequent concealment of the conduct by the defendant;
                (vi) the attitude and conduct of the defendant upon the 
            discovery of the misconduct and whether the misconduct has 
            terminated;
                (vii) the financial condition of the defendant; and
                (viii) the cumulative deterrent effect of other losses, 
            damages, and punishment suffered by the defendant as a 
            result of the misconduct, reducing the amount of punitive 
            damages on the basis of the economic impact and severity of 
            all measures to which the defendant has been or may be 
            subjected, including--

                    (I) compensatory and punitive damage awards to 
                similarly situated claimants;
                    (II) the adverse economic effect of stigma or loss 
                of reputation;
                    (III) civil fines and criminal and administrative 
                penalties; and
                    (IV) stop sale, cease and desist, and other 
                remedial or enforcement orders.

            (C) Requirements for awarding additional amount.--If the 
        court awards an additional amount pursuant to this subsection, 
        the court shall state its reasons for setting the amount of the 
        additional amount in findings of fact and conclusions of law.
            (D) Preemption.--This section does not create a cause of 
        action for punitive damages and does not preempt or supersede 
        any State or Federal law to the extent that such law would 
        further limit the award of punitive damages. Nothing in this 
        subsection shall modify or reduce the ability of courts to 
        order remittiturs.
        (4) Application by court.--This subsection shall be applied by 
    the court and application of this subsection shall not be disclosed 
    to the jury. Nothing in this subsection shall authorize the court 
    to enter an award of punitive damages in excess of the jury's 
    initial award of punitive damages.
    (c) Bifurcation at Request of Any Party.--
        (1) In general.--At the request of any party the trier of fact 
    in any action that is subject to this section shall consider in a 
    separate proceeding, held subsequent to the determination of the 
    amount of compensatory damages, whether punitive damages are to be 
    awarded for the harm that is the subject of the action and the 
    amount of the award.
        (2) Inadmissibility of evidence relative only to a claim of 
    punitive damages in a proceeding concerning compensatory damages.--
    If any party requests a separate proceeding under paragraph (1), in 
    a proceeding to determine whether the claimant may be awarded 
    compensatory damages, any evidence, argument, or contention that is 
    relevant only to the claim of punitive damages, as determined by 
    applicable State law, shall be inadmissible.

SEC. 109. LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.

    In any civil action in which the alleged harm to the claimant is 
death and, as of the effective date of this Act, the applicable State 
law provides, or has been construed to provide, for damages only 
punitive in nature, a defendant may be liable for any such damages 
without regard to section 108, but only during such time as the State 
law so provides. This section shall cease to be effective September 1, 
1996.

SEC. 110. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

    (a) General Rule.--In a product liability action, the liability of 
each defendant for noneconomic loss shall be several only and shall not 
be joint.
    (b) Amount of Liability.--
        (1) In general.--Each defendant shall be liable only for the 
    amount of noneconomic loss allocated to the defendant in direct 
    proportion to the percentage of responsibility of the defendant 
    (determined in accordance with paragraph (2)) for the harm to the 
    claimant with respect to which the defendant is liable. The court 
    shall render a separate judgment against each defendant in an 
    amount determined pursuant to the preceding sentence.
        (2) Percentage of responsibility.--For purposes of determining 
    the amount of noneconomic loss allocated to a defendant under this 
    section, the trier of fact shall determine the percentage of 
    responsibility of each person responsible for the claimant's harm, 
    whether or not such person is a party to the action.

SEC. 111. WORKERS' COMPENSATION SUBROGATION.

    (a) General Rule.--
        (1) Right of subrogation.--
            (A) In general.--An insurer shall have a right of 
        subrogation against a manufacturer or product seller to recover 
        any claimant's benefits relating to harm that is the subject of 
        a product liability action that is subject to this Act.
            (B) Written notification.--To assert a right of subrogation 
        under subparagraph (A), the insurer shall provide written 
        notice to the court in which the product liability action is 
        brought.
            (C) Insurer not required to be a party.--An insurer shall 
        not be required to be a necessary and proper party in a product 
        liability action covered under subparagraph (A).
        (2) Settlements and other legal proceedings.--
            (A) In general.--In any proceeding relating to harm or 
        settlement with the manufacturer or product seller by a 
        claimant who files a product liability action that is subject 
        to this Act, an insurer may participate to assert a right of 
        subrogation for claimant's benefits with respect to any payment 
        made by the manufacturer or product seller by reason of such 
        harm, without regard to whether the payment is made--
                (i) as part of a settlement;
                (ii) in satisfaction of judgment;
                (iii) as consideration for a covenant not to sue; or
                (iv) in another manner.
            (B) Written notification.--Except as provided in 
        subparagraph (C), an employee shall not make any settlement 
        with or accept any payment from the manufacturer or product 
        seller without written notification to the insurer.
            (C) Exemption.--Subparagraph (B) shall not apply in any 
        case in which the insurer has been compensated for the full 
        amount of the claimant's benefits.
        (3) Harm resulting from action of employer or coemployee.--
            (A) In general.--If, with respect to a product liability 
        action that is subject to this Act, the manufacturer or product 
        seller attempts to persuade the trier of fact that the harm to 
        the claimant was caused by the fault of the employer of the 
        claimant or any coemployee of the claimant, the issue of that 
        fault shall be submitted to the trier of fact, but only after 
        the manufacturer or product seller has provided timely written 
        notice to the insurer.
            (B) Rights of insurer.--
                (i) In general.--Notwithstanding any other provision of 
            law, with respect to an issue of fault submitted to a trier 
            of fact pursuant to subparagraph (A), an insurer shall, in 
            the same manner as any party in the action (even if the 
            insurer is not a named party in the action), have the right 
            to--

                    (I) appear;
                    (II) be represented;
                    (III) introduce evidence;
                    (IV) cross-examine adverse witnesses; and
                    (V) present arguments to the trier of fact.

                (ii) Last issue.--The issue of harm resulting from an 
            action of an employer or coemployee shall be the last issue 
            that is submitted to the trier of fact.
            (C) Reduction of damages.--If the trier of fact finds by 
        clear and convincing evidence that the harm to the claimant 
        that is the subject of the product liability action was caused 
        by the fault of the employer or a coemployee of the claimant--
                (i) the court shall reduce by the amount of the 
            claimant's benefits--

                    (I) the damages awarded against the manufacturer or 
                product seller; and
                    (II) any corresponding insurer's subrogation lien; 
                and

                (ii) the manufacturer or product seller shall have no 
            further right by way of contribution or otherwise against 
            the employer.
            (D) Certain rights of subrogation not affected.--
        Notwithstanding a finding by the trier of fact described in 
        subparagraph (C), the insurer shall not lose any right of 
        subrogation related to any--
                (i) intentional tort committed against the claimant by 
            a coemployee; or
                (ii) act committed by a coemployee outside the scope of 
            normal work practices.
    (b) Attorney's Fees.--If, in a product liability action that is 
subject to this section, the court finds that harm to a claimant was 
not caused by the fault of the employer or a coemployee of the 
claimant, the manufacturer or product seller shall reimburse the 
insurer for reasonable attorney's fees and court costs incurred by the 
insurer in the action, as determined by the court.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Biomaterials Access Assurance Act 
of 1996''.

SEC. 202. FINDINGS.

    Congress finds that--
        (1) each year millions of citizens of the United States depend 
    on the availability of lifesaving or life enhancing medical 
    devices, many of which are permanently implantable within the human 
    body;
        (2) a continued supply of raw materials and component parts is 
    necessary for the invention, development, improvement, and 
    maintenance of the supply of the devices;
        (3) most of the medical devices are made with raw materials and 
    component parts that--
            (A) are not designed or manufactured specifically for use 
        in medical devices; and
            (B) come in contact with internal human tissue;
        (4) the raw materials and component parts also are used in a 
    variety of nonmedical products;
        (5) because small quantities of the raw materials and component 
    parts are used for medical devices, sales of raw materials and 
    component parts for medical devices constitute an extremely small 
    portion of the overall market for the raw materials and medical 
    devices;
        (6) under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
    301 et seq.), manufacturers of medical devices are required to 
    demonstrate that the medical devices are safe and effective, 
    including demonstrating that the products are properly designed and 
    have adequate warnings or instructions;
        (7) notwithstanding the fact that raw materials and component 
    parts suppliers do not design, produce, or test a final medical 
    device, the suppliers have been the subject of actions alleging 
    inadequate--
            (A) design and testing of medical devices manufactured with 
        materials or parts supplied by the suppliers; or
            (B) warnings related to the use of such medical devices;
        (8) even though suppliers of raw materials and component parts 
    have very rarely been held liable in such actions, such suppliers 
    have ceased supplying certain raw materials and component parts for 
    use in medical devices because the costs associated with litigation 
    in order to ensure a favorable judgment for the suppliers far 
    exceeds the total potential sales revenues from sales by such 
    suppliers to the medical device industry;
        (9) unless alternate sources of supply can be found, the 
    unavailability of raw materials and component parts for medical 
    devices will lead to unavailability of lifesaving and life-
    enhancing medical devices;
        (10) because other suppliers of the raw materials and component 
    parts in foreign nations are refusing to sell raw materials or 
    component parts for use in manufacturing certain medical devices in 
    the United States, the prospects for development of new sources of 
    supply for the full range of threatened raw materials and component 
    parts for medical devices are remote;
        (11) it is unlikely that the small market for such raw 
    materials and component parts in the United States could support 
    the large investment needed to develop new suppliers of such raw 
    materials and component parts;
        (12) attempts to develop such new suppliers would raise the 
    cost of medical devices;
        (13) courts that have considered the duties of the suppliers of 
    the raw materials and component parts have generally found that the 
    suppliers do not have a duty--
            (A) to evaluate the safety and efficacy of the use of a raw 
        material or component part in a medical device; and
            (B) to warn consumers concerning the safety and 
        effectiveness of a medical device;
        (14) attempts to impose the duties referred to in subparagraphs 
    (A) and (B) of paragraph (13) on suppliers of the raw materials and 
    component parts would cause more harm than good by driving the 
    suppliers to cease supplying manufacturers of medical devices; and
        (15) in order to safeguard the availability of a wide variety 
    of lifesaving and life-enhancing medical devices, immediate action 
    is needed--
            (A) to clarify the permissible bases of liability for 
        suppliers of raw materials and component parts for medical 
        devices; and
            (B) to provide expeditious procedures to dispose of 
        unwarranted suits against the suppliers in such manner as to 
        minimize litigation costs.

SEC. 203. DEFINITIONS.

    As used in this title:
        (1) Biomaterials supplier.--
            (A) In general.--The term ``biomaterials supplier'' means 
        an entity that directly or indirectly supplies a component part 
        or raw material for use in the manufacture of an implant.
            (B) Persons included.--Such term includes any person who--
                (i) has submitted master files to the Secretary for 
            purposes of premarket approval of a medical device; or
                (ii) licenses a biomaterials supplier to produce 
            component parts or raw materials.
        (2) Claimant.--
            (A) In general.--The term ``claimant'' means any person who 
        brings a civil action, or on whose behalf a civil action is 
        brought, arising from harm allegedly caused directly or 
        indirectly by an implant, including a person other than the 
        individual into whose body, or in contact with whose blood or 
        tissue, the implant is placed, who claims to have suffered harm 
        as a result of the implant.
            (B) Action brought on behalf of an estate.--With respect to 
        an action brought on behalf of or through the estate of an 
        individual into whose body, or in contact with whose blood or 
        tissue the implant is placed, such term includes the decedent 
        that is the subject of the action.
            (C) Action brought on behalf of a minor or incompetent.--
        With respect to an action brought on behalf of or through a 
        minor or incompetent, such term includes the parent or guardian 
        of the minor or incompetent.
            (D) Exclusions.--Such term does not include--
                (i) a provider of professional health care services, in 
            any case in which--

                    (I) the sale or use of an implant is incidental to 
                the transaction; and
                    (II) the essence of the transaction is the 
                furnishing of judgment, skill, or services; or

                (ii) a person acting in the capacity of a manufacturer, 
            seller, or biomaterials supplier.
        (3) Component part.--
            (A) In general.--The term ``component part'' means a 
        manufactured piece of an implant.
            (B) Certain components.--Such term includes a manufactured 
        piece of an implant that--
                (i) has significant non-implant applications; and
                (ii) alone, has no implant value or purpose, but when 
            combined with other component parts and materials, 
            constitutes an implant.
        (4) Harm.--
            (A) In general.--The term ``harm'' means--
                (i) any injury to or damage suffered by an individual;
                (ii) any illness, disease, or death of that individual 
            resulting from that injury or damage; and
                (iii) any loss to that individual or any other 
            individual resulting from that injury or damage.
            (B) Exclusion.--The term does not include any commercial 
        loss or loss of or damage to an implant.
        (5) Implant.--The term ``implant'' means--
            (A) a medical device that is intended by the manufacturer 
        of the device--
                (i) to be placed into a surgically or naturally formed 
            or existing cavity of the body for a period of at least 30 
            days; or
                (ii) to remain in contact with bodily fluids or 
            internal human tissue through a surgically produced opening 
            for a period of less than 30 days; and
            (B) suture materials used in implant procedures.
        (6) Manufacturer.--The term ``manufacturer'' means any person 
    who, with respect to an implant--
            (A) is engaged in the manufacture, preparation, 
        propagation, compounding, or processing (as defined in section 
        510(a)(1)) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 360(a)(1)) of the implant; and
            (B) is required--
                (i) to register with the Secretary pursuant to section 
            510 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
            360) and the regulations issued under such section; and
                (ii) to include the implant on a list of devices filed 
            with the Secretary pursuant to section 510(j) of such Act 
            (21 U.S.C. 360(j)) and the regulations issued under such 
            section.
        (7) Medical device.--The term ``medical device'' means a 
    device, as defined in section 201(h) of the Federal Food, Drug, and 
    Cosmetic Act (21 U.S.C. 321(h)) and includes any device component 
    of any combination product as that term is used in section 503(g) 
    of such Act (21 U.S.C. 353(g)).
        (8) Raw material.--The term ``raw material'' means a substance 
    or product that--
            (A) has a generic use; and
            (B) may be used in an application other than an implant.
        (9) Secretary.--The term ``Secretary'' means the Secretary of 
    Health and Human Services.
        (10) Seller.--
            (A) In general.--The term ``seller'' means a person who, in 
        the course of a business conducted for that purpose, sells, 
        distributes, leases, packages, labels, or otherwise places an 
        implant in the stream of commerce.
            (B) Exclusions.--The 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 an implant is incidental to the 
            transaction and the essence of the transaction is the 
            furnishing of judgment, skill, or services; or
                (iii) any person who acts in only a financial capacity 
            with respect to the sale of an implant.

SEC. 204. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

    (a) General Requirements.--
        (1) In general.--In any civil action covered by this title, a 
    biomaterials supplier may raise any defense set forth in section 
    205.
        (2) Procedures.--Notwithstanding any other provision of law, 
    the Federal or State court in which a civil action covered by this 
    title is pending shall, in connection with a motion for dismissal 
    or judgment based on a defense described in paragraph (1), use the 
    procedures set forth in section 206.
    (b) Applicability.--
        (1) In general.--Except as provided in paragraph (2), 
    notwithstanding any other provision of law, this title applies to 
    any civil action brought by a claimant, whether in a Federal or 
    State court, against a manufacturer, seller, or biomaterials 
    supplier, on the basis of any legal theory, for harm allegedly 
    caused by an implant.
        (2) Exclusion.--A civil action brought by a purchaser of a 
    medical device for use in providing professional services against a 
    manufacturer, seller, or biomaterials supplier for loss or damage 
    to an implant or for commercial loss to the purchaser--
            (A) shall not be considered an action that is subject to 
        this title; and
            (B) shall be governed by applicable commercial or contract 
        law.
    (c) Scope of Preemption.--
        (1) In general.--This title supersedes any State law regarding 
    recovery for harm caused by an implant and any rule of procedure 
    applicable to a civil action to recover damages for such harm only 
    to the extent that this title establishes a rule of law applicable 
    to the recovery of such damages.
        (2) Applicability of other laws.--Any issue that arises under 
    this title and that is not governed by a rule of law applicable to 
    the recovery of damages described in paragraph (1) shall be 
    governed by applicable Federal or State law.
    (d) Statutory Construction.--Nothing in this title may be 
construed--
        (1) to affect any defense available to a defendant under any 
    other provisions of Federal or State law in an action alleging harm 
    caused by an implant; or
        (2) to create a cause of action or Federal court jurisdiction 
    pursuant to section 1331 or 1337 of title 28, United States Code, 
    that otherwise would not exist under applicable Federal or State 
    law.

SEC. 205. LIABILITY OF BIOMATERIALS SUPPLIERS.

    (a) In General.--
        (1) Exclusion from liability.--Except as provided in paragraph 
    (2), a biomaterials supplier shall not be liable for harm to a 
    claimant caused by an implant.
        (2) Liability.--A biomaterials supplier that--
            (A) is a manufacturer may be liable for harm to a claimant 
        described in subsection (b);
            (B) is a seller may be liable for harm to a claimant 
        described in subsection (c); and
            (C) furnishes raw materials or component parts that fail to 
        meet applicable contractual requirements or specifications may 
        be liable for a harm to a claimant described in subsection (d).
    (b) Liability as Manufacturer.--
        (1) In general.--A biomaterials supplier may, to the extent 
    required and permitted by any other applicable law, be liable for 
    harm to a claimant caused by an implant if the biomaterials 
    supplier is the manufacturer of the implant.
        (2) Grounds for liability.--The biomaterials supplier may be 
    considered the manufacturer of the implant that allegedly caused 
    harm to a claimant only if the biomaterials supplier--
            (A)(i) has registered with the Secretary pursuant to 
        section 510 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 360) and the regulations issued under such section; and
            (ii) included the implant on a list of devices filed with 
        the Secretary pursuant to section 510(j) of such Act (21 U.S.C. 
        360(j)) and the regulations issued under such section;
            (B) is the subject of a declaration issued by the Secretary 
        pursuant to paragraph (3) that states that the supplier, with 
        respect to the implant that allegedly caused harm to the 
        claimant, was required to--
                (i) register with the Secretary under section 510 of 
            such Act (21 U.S.C. 360), and the regulations issued under 
            such section, but failed to do so; or
                (ii) include the implant on a list of devices filed 
            with the Secretary pursuant to section 510(j) of such Act 
            (21 U.S.C. 360(j)) and the regulations issued under such 
            section, but failed to do so; or
            (C) is related by common ownership or control to a person 
        meeting all the requirements described in subparagraph (A) or 
        (B), if the court deciding a motion to dismiss in accordance 
        with section 206(c)(3)(B)(i) finds, on the basis of affidavits 
        submitted in accordance with section 206, that it is necessary 
        to impose liability on the biomaterials supplier as a 
        manufacturer because the related manufacturer meeting the 
        requirements of subparagraph (A) or (B) lacks sufficient 
        financial resources to satisfy any judgment that the court 
        feels it is likely to enter should the claimant prevail.
        (3) Administrative procedures.--
            (A) In general.--The Secretary may issue a declaration 
        described in paragraph (2)(B) on the motion of the Secretary or 
        on petition by any person, after providing--
                (i) notice to the affected persons; and
                (ii) an opportunity for an informal hearing.
            (B) Docketing and final decision.--Immediately upon receipt 
        of a petition filed pursuant to this paragraph, the Secretary 
        shall docket the petition. Not later than 180 days after the 
        petition is filed, the Secretary shall issue a final decision 
        on the petition.
            (C) Applicability of statute of limitations.--Any 
        applicable statute of limitations shall toll during the period 
        during which a claimant has filed a petition with the Secretary 
        under this paragraph.
    (c) Liability as Seller.--A biomaterials supplier may, to the 
extent required and permitted by any other applicable law, be liable as 
a seller for harm to a claimant caused by an implant if--
        (1) the biomaterials supplier--
            (A) held title to the implant that allegedly caused harm to 
        the claimant as a result of purchasing the implant after--
                (i) the manufacture of the implant; and
                (ii) the entrance of the implant in the stream of 
            commerce; and
            (B) subsequently resold the implant; or
        (2) the biomaterials supplier is related by common ownership or 
    control to a person meeting all the requirements described in 
    paragraph (1), if a court deciding a motion to dismiss in 
    accordance with section 206(c)(3)(B)(ii) finds, on the basis of 
    affidavits submitted in accordance with section 206, that it is 
    necessary to impose liability on the biomaterials supplier as a 
    seller because the related seller meeting the requirements of 
    paragraph (1) lacks sufficient financial resources to satisfy any 
    judgment that the court feels it is likely to enter should the 
    claimant prevail.
    (d) Liability for Violating Contractual Requirements or 
Specifications.--A biomaterials supplier may, to the extent required 
and permitted by any other applicable law, be liable for harm to a 
claimant caused by an implant, if the claimant in an action shows, by a 
preponderance of the evidence, that--
        (1) the raw materials or component parts delivered by the 
    biomaterials supplier either--
            (A) did not constitute the product described in the 
        contract between the biomaterials supplier and the person who 
        contracted for delivery of the product; or
            (B) failed to meet any specifications that were--
                (i) provided to the biomaterials supplier and not 
            expressly repudiated by the biomaterials supplier prior to 
            acceptance of delivery of the raw materials or component 
            parts;
                (ii)(I) published by the biomaterials supplier;
                (II) provided to the manufacturer by the biomaterials 
            supplier; or
                (III) contained in a master file that was submitted by 
            the biomaterials supplier to the Secretary and that is 
            currently maintained by the biomaterials supplier for 
            purposes of premarket approval of medical devices; or
                (iii) included in the submissions for purposes of 
            premarket approval or review by the Secretary under section 
            510, 513, 515, or 520 of the Federal Food, Drug, and 
            Cosmetic Act (21 U.S.C. 360, 360c, 360e, or 360j), and 
            received clearance from the Secretary if such 
            specifications were provided by the manufacturer to the 
            biomaterials supplier and were not expressly repudiated by 
            the biomaterials supplier prior to the acceptance by the 
            manufacturer of delivery of the raw materials or component 
            parts; and
        (2) such conduct was an actual and proximate cause of the harm 
    to the claimant.

SEC. 206. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
              BIOMATERIALS SUPPLIERS.

    (a) Motion To Dismiss.--In any action that is subject to this 
title, a biomaterials supplier who is a defendant in such action may, 
at any time during which a motion to dismiss may be filed under an 
applicable law, move to dismiss the action against it on the grounds 
that--
        (1) the defendant is a biomaterials supplier; and
        (2)(A) the defendant should not, for the purposes of--
            (i) section 205(b), be considered to be a manufacturer of 
        the implant that is subject to such section; or
            (ii) section 205(c), be considered to be a seller of the 
        implant that allegedly caused harm to the claimant; or
        (B)(i) the claimant has failed to establish, pursuant to 
    section 205(d), that the supplier furnished raw materials or 
    component parts in violation of contractual requirements or 
    specifications; or
        (ii) the claimant has failed to comply with the procedural 
    requirements of subsection (b).
    (b) Manufacturer of Implant Shall Be Named a Party.--The claimant 
shall be required to name the manufacturer of the implant as a party to 
the action, unless--
        (1) the manufacturer is subject to service of process solely in 
    a jurisdiction in which the biomaterials supplier is not domiciled 
    or subject to a service of process; or
        (2) an action against the manufacturer is barred by applicable 
    law.
    (c) Proceeding on Motion To Dismiss.--The following rules shall 
apply to any proceeding on a motion to dismiss filed under this 
section:
        (1) Affidavits relating to listing and declarations.--
            (A) In general.--The defendant in the action may submit an 
        affidavit demonstrating that defendant has not included the 
        implant on a list, if any, filed with the Secretary pursuant to 
        section 510(j) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 360(j)).
            (B) Response to motion to dismiss.--In response to the 
        motion to dismiss, the claimant may submit an affidavit 
        demonstrating that--
                (i) the Secretary has, with respect to the defendant 
            and the implant that allegedly caused harm to the claimant, 
            issued a declaration pursuant to section 205(b)(2)(B); or
                (ii) the defendant who filed the motion to dismiss is a 
            seller of the implant who is liable under section 205(c).
        (2) Effect of motion to dismiss on discovery.--
            (A) In general.--If a defendant files a motion to dismiss 
        under paragraph (1) or (2) of subsection (a), no discovery 
        shall be permitted in connection to the action that is the 
        subject of the motion, other than discovery necessary to 
        determine a motion to dismiss for lack of jurisdiction, until 
        such time as the court rules on the motion to dismiss in 
        accordance with the affidavits submitted by the parties in 
        accordance with this section.
            (B) Discovery.--If a defendant files a motion to dismiss 
        under subsection (a)(2)(B)(i) on the grounds that the 
        biomaterials supplier did not furnish raw materials or 
        component parts in violation of contractual requirements or 
        specifications, the court may permit discovery, as ordered by 
        the court. The discovery conducted pursuant to this 
        subparagraph shall be limited to issues that are directly 
        relevant to--
                (i) the pending motion to dismiss; or
                (ii) the jurisdiction of the court.
        (3) Affidavits relating status of defendant.--
            (A) In general.--Except as provided in clauses (i) and (ii) 
        of subparagraph (B), the court shall consider a defendant to be 
        a biomaterials supplier who is not subject to an action for 
        harm to a claimant caused by an implant, other than an action 
        relating to liability for a violation of contractual 
        requirements or specifications described in subsection (d).
            (B) Responses to motion to dismiss.--The court shall grant 
        a motion to dismiss any action that asserts liability of the 
        defendant under subsection (b) or (c) of section 205 on the 
        grounds that the defendant is not a manufacturer subject to 
        such section 205(b) or seller subject to section 205(c), unless 
        the claimant submits a valid affidavit that demonstrates that--
                (i) with respect to a motion to dismiss contending the 
            defendant is not a manufacturer, the defendant meets the 
            applicable requirements for liability as a manufacturer 
            under section 205(b); or
                (ii) with respect to a motion to dismiss contending 
            that the defendant is not a seller, the defendant meets the 
            applicable requirements for liability as a seller under 
            section 205(c).
        (4) Basis of ruling on motion to dismiss.--
            (A) In general.--The court shall rule on a motion to 
        dismiss filed under subsection (a) solely on the basis of the 
        pleadings of the parties made pursuant to this section and any 
        affidavits submitted by the parties pursuant to this section.
            (B) Motion for summary judgment.--Notwithstanding any other 
        provision of law, if the court determines that the pleadings 
        and affidavits made by parties pursuant to this section raise 
        genuine issues as concerning material facts with respect to a 
        motion concerning contractual requirements and specifications, 
        the court may deem the motion to dismiss to be a motion for 
        summary judgment made pursuant to subsection (d).
    (d) Summary Judgment.--
        (1) In general.--
            (A) Basis for entry of judgment.--A biomaterials supplier 
        shall be entitled to entry of judgment without trial if the 
        court finds there is no genuine issue as concerning any 
        material fact for each applicable element set forth in 
        paragraphs (1) and (2) of section 205(d).
            (B) Issues of material fact.--With respect to a finding 
        made under subparagraph (A), the court shall consider a genuine 
        issue of material fact to exist only if the evidence submitted 
        by claimant would be sufficient to allow a reasonable jury to 
        reach a verdict for the claimant if the jury found the evidence 
        to be credible.
        (2) Discovery made prior to a ruling on a motion for summary 
    judgment.--If, under applicable rules, the court permits discovery 
    prior to a ruling on a motion for summary judgment made pursuant to 
    this subsection, such discovery shall be limited solely to 
    establishing whether a genuine issue of material fact exists as to 
    the applicable elements set forth in paragraphs (1) and (2) of 
    section 205(d).
        (3) Discovery with respect to a biomaterials supplier.--A 
    biomaterials supplier shall be subject to discovery in connection 
    with a motion seeking dismissal or summary judgment on the basis of 
    the inapplicability of section 205(d) or the failure to establish 
    the applicable elements of section 205(d) solely to the extent 
    permitted by the applicable Federal or State rules for discovery 
    against nonparties.
    (e) Stay Pending Petition for Declaration.--If a claimant has filed 
a petition for a declaration pursuant to section 205(b)(3)(A) with 
respect to a defendant, and the Secretary has not issued a final 
decision on the petition, the court shall stay all proceedings with 
respect to that defendant until such time as the Secretary has issued a 
final decision on the petition.
    (f) Manufacturer Conduct of Proceeding.--The manufacturer of an 
implant that is the subject of an action covered under this title shall 
be permitted to file and conduct a proceeding on any motion for summary 
judgment or dismissal filed by a biomaterials supplier who is a 
defendant under this section if the manufacturer and any other 
defendant in such action enter into a valid and applicable contractual 
agreement under which the manufacturer agrees to bear the cost of such 
proceeding or to conduct such proceeding.
    (g) Attorney Fees.--The court shall require the claimant to 
compensate the biomaterials supplier (or a manufacturer appearing in 
lieu of a supplier pursuant to subsection (f)) for attorney fees and 
costs, if--
        (1) the claimant named or joined the biomaterials supplier; and
        (2) the court found the claim against the biomaterials supplier 
    to be without merit and frivolous.

        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

SEC. 301. EFFECT OF COURT OF APPEALS DECISIONS.

    A decision by a Federal circuit court of appeals interpreting a 
provision of this Act (except to the extent that the decision is 
overruled or otherwise modified by the Supreme Court) shall be 
considered a controlling precedent with respect to any subsequent 
decision made concerning the interpretation of such provision by any 
Federal or State court within the geographical boundaries of the area 
under the jurisdiction of the circuit court of appeals.

SEC. 302. FEDERAL CAUSE OF ACTION PRECLUDED.

    The district courts of the United States shall not have 
jurisdiction pursuant to this Act based on section 1331 or 1337 of 
title 28, United States Code.

SEC. 303. EFFECTIVE DATE.

    This Act shall apply with respect to any action commenced on or 
after the date of the enactment of this Act without regard to whether 
the harm that is the subject of the action or the conduct that caused 
the harm occurred before such date of enactment.

                              BILL EMERSON,
                   Speaker of the House of Representatives pro tempore.

                              STROM THURMOND,
                                   President of the Senate pro tempore.

[Endorsement on back of bill:]
I certify that this Act originated in the House of Representatives.
                                                 Robin H. Carle, Clerk.

                             
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