[Congressional Record Volume 141, Number 20 (Wednesday, February 1, 1995)]
[Senate]
[Pages S1964-S1968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           LAWSUIT REFORM ACT

 Mr. McCONNELL. Mr. President, I ask that the text of S. 300 be 
printed in the Record.
  The bill follows:
                                 S. 300

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Lawsuit Reform Act of 
     1995''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

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

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

     SEC. 4. AUTHORITY.

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

     SEC. 5. EQUITY IN LEGAL FEES.

       (a) Disclosure of Attorney's Fees Information.--
       (1) Definitions.--For purposes of this subsection--
     [[Page S1965]]   (A) the term ``attorney'' means any natural 
     person, professional law association, corporation, or 
     partnership authorized under applicable State law to practice 
     law;
       (B) the term ``attorney's services'' means the professional 
     advice or counseling of or representation by an attorney, but 
     such term shall not include other assistance incurred, 
     directly or indirectly, in connection with an attorney's 
     services, such as administrative or secretarial assistance, 
     overhead, travel expenses, witness fees, or preparation by a 
     person other than the attorney of any study, analysis, 
     report, or test;
       (C) the term ``claimant'' means any natural person who 
     files a civil action arising under any Federal law or in any 
     diversity action in Federal court and--
       (i) if such a claim is filed on behalf of the claimant's 
     estate, the term shall include the claimant's personal 
     representative; or
       (ii) if such a claim is brought on behalf of a minor or 
     incompetent, the term shall include the claimant's parent, 
     guardian, or personal representative;
       (D) the term ``contingent fee'' means the cost or price of 
     an attorney's services determined by applying a specified 
     percentage, which may be a firm fixed percentage, a graduated 
     or sliding percentage, or any combination thereof, to the 
     amount of the settlement or judgment obtained;
       (E) the term ``hourly fee'' means the cost or price per 
     hour of an attorney's services;
       (F) the term ``initial meeting'' means the first conference 
     or discussion between the claimant and the attorney, whether 
     by telephone or in person, concerning the details, facts, or 
     basis of the claim;
       (G) the term ``natural person'' means any individual, and 
     does not include an artificial organization or legal entity, 
     such as a firm, corporation, association, company, 
     partnership, society, joint venture, or governmental body; 
     and
       (H) the term ``retain'' means the act of a claimant in 
     engaging an attorney's services, whether by express or 
     implied agreement, by seeking and obtaining the attorney's 
     services.
       (2) Decision on compensation.--A claimant who retains an 
     attorney may elect whether to compensate the attorney's 
     services in connection with the claim on an hourly basis or a 
     contingent fee basis.
       (3) Disclosure at initial meeting.--An attorney retained by 
     a claimant shall, at the initial meeting, disclose to the 
     claimant the claimant's right to elect the method of 
     compensating the attorney's services and the claimant's right 
     to receive a written statement of the information described 
     under paragraph (5).
       (4) Right of attorney.--If, within 30 days after receiving 
     the information described under paragraph (5), a claimant has 
     failed to elect the method of compensating the attorney's 
     services, the attorney may select the method of compensation 
     and shall notify the claimant of the selection.
       (5) Information after initial meeting.--Within 30 days 
     after the initial meeting, an attorney retained by a claimant 
     shall provide a written statement to the claimant 
     containing--
       (A) the estimated number of hours of the attorney's 
     services that will be spent--
       (i) settling or attempting to settle the claim or action; 
     and
       (ii) handling the claim through trial;
       (B) the attorney's hourly fee for services in the claim or 
     action and any conditions, limitations, restrictions, or 
     other qualifications on the fee the attorney determines are 
     appropriate; and
       (C) the attorney's contingent fee for services in the claim 
     or action and any conditions, limitations, restrictions, or 
     other qualifications on the fee the attorney determines are 
     appropriate.
       (6) Information after settlement.--An attorney retained by 
     a claimant shall, within a reasonable time not later than 30 
     days after the date on which the claim or action is finally 
     settled or adjudicated, provide a written statement to the 
     claimant containing--
       (A) the actual number of hours of the attorney's services 
     in connection with the claim;
       (B) the total amount of the hourly fees or total contingent 
     fee for the attorney's services in connection with the claim; 
     and
       (C) the actual fee per hour of the attorney's services in 
     connection with the claim, determined by dividing the total 
     amount of the hourly fees or the total contingent fee by the 
     actual number of hours of attorney's services.
       (7) Failure to disclose.--A claimant to whom an attorney 
     fails to disclose information required by this section may 
     withhold 10 percent of the fee and file a civil action for 
     damages in the court in which the claim or action was filed 
     or could have been filed.
       (8) Other remedies.--This section shall supplement and not 
     supplant any other available remedies or penalties.
       (b) Limitation on Attorney Contingent Fees.--
       (1) Definitions.--For purposes of this subsection, the 
     term--
       (A) ``allegedly liable party'' means a person, partnership, 
     corporation, and the insurers thereof, or any other 
     individual or entity alleged by the claimant to be liable for 
     at least some portion of the damages alleged by the claimant;
       (B) ``claimant'' means an individual who, in his or her own 
     right, or vicariously, is seeking compensation for tortious 
     physical or mental injury, property damage, or economic loss;
       (C) ``contingent fee'' means the fee negotiated in a 
     contingent fee agreement which is only payable from the 
     proceeds of any recovery on behalf of a claimant;
       (D) ``contingent fee agreement'' means a fee agreement 
     between an attorney and a claimant wherein the attorney 
     agrees to bear the risk of no or inadequate compensation in 
     exchange for a proportionate share of part of or all of any 
     recovery by settlement or verdict obtained for the claimant;
       (E) ``contingent fee attorney'' means an attorney who 
     agrees to represent a claimant in exchange for a contingent 
     fee;
       (F) ``fixed fee'' means an agreement between an attorney 
     and a claimant whereby the attorney agrees to perform a 
     specific legal task in exchange for a specific sum to be paid 
     by a claimant;
       (G) ``hourly rate fee''--
       (i) means the fee generated by an agreement or otherwise by 
     operation of law between an attorney and a claimant stating 
     that the claimant pay the attorney a fee determined by 
     multiplying the hourly rate negotiated, or otherwise set by 
     law, between the attorney and the claimant, by the number of 
     hours that the attorney has worked on behalf of the claimant 
     in furtherance of the claimant's interest; and
       (ii) may also be a contingent fee to the extent it is only 
     payable from the proceeds of any recovery on behalf of the 
     claimant;
       (H) ``pre-retention offer'' means an offer to settle a 
     claim for compensation for damages arising out of a civil 
     action made to a claimant not represented by an attorney at 
     the time of the offer;
       (I) ``post-retention offer'' means an offer in response to 
     a demand for compensation made within the time constraints, 
     and conforming to the provisions of this subsection, to 
     settle a claim for damages arising out of a civil action made 
     to a claimant who is represented by a contingent fee 
     attorney;
       (J) ``response'' means a written communication by a 
     claimant or an allegedly responsible party or the attorney 
     for either, deposited into the United States Mail and sent by 
     certified mail; and
       (K) ``settlement offer'' means a written offer of 
     settlement stated in a response filed within the time limits 
     described in this subsection.
       (2) Applicability.--(A) This subsection shall apply with 
     respect to any civil action filed against any person in any 
     Federal or State court based upon any cause of action 
     (including, but not limited to negligence, strict or product 
     liability, breach of implied warranty or professional 
     malpractice) in which damages are sought for tortious 
     physical or mental injury, property damage, or economic loss, 
     except a civil action arising under a Federal law that 
     authorizes an award of attorney fees to a prevailing party.
       (B)(i) Nothing in this section shall apply to any agreement 
     between a claimant and an attorney to--
       (I) retain the attorney on an hourly rate fee or fixed fee 
     basis solely to evaluate a pre-retention offer; and
       (II) retain the attorney to collect overdue amounts from an 
     accepted pre-retention or post-retention settlement offer.
       (ii) This subsection shall not apply to contingent fee 
     agreements in civil actions where neither a pre-retention nor 
     a post-retention offer of settlement is made.
       (3) Written hourly rate fee agreement.--With respect to a 
     civil action, if a contingent fee attorney has not entered 
     into a written agreement with a claimant at the time of 
     retention setting forth the attorney's hourly rate, then a 
     reasonable hourly rate shall be payable, subject to the 
     limitations described in this section.
       (4) Nature of demand for compensation.--(A) With respect to 
     a civil action, at any time after retention, a contingent fee 
     attorney shall, on behalf of the claimant, send a demand for 
     compensation by certified mail to an allegedly responsible 
     party.
       (B) The demand for compensation under subparagraph (A) 
     shall contain the material facts relevant to the civil action 
     involved and a description of the evidence determined by the 
     contingent fee attorney to be discoverable by the alleged 
     liable party during the course of litigation, including--
       (i) the name, address, age, marital status and occupation 
     of the claimant or of the injured or deceased party if the 
     claimant is operating in a representative capacity;
       (ii) a brief description of how the damages arose;
       (iii) the names and, if known, the addresses, telephone 
     numbers, and occupations of all known witnesses;
       (iv) copies of photographs in the claimant's possession 
     which relate to the claim for damages;
       (v) the basis for claiming that the party to whom the claim 
     is addressed is at least partially liable for causing the 
     injury;
       (vi) if the claim for damages is based upon a physical or 
     mental injury--
       (I) a description of the nature of the injury, the names 
     and addresses of all physicians, other health care providers, 
     and hospitals, clinics, or other medical service entities 
     that provided medical care to the claimant or injured party 
     including the date and nature of the service; and
       (II) medical records relating to the injury and those 
     involving a prior injury or preexisting medical condition 
     which an allegedly liable party would be able to introduce 
     into evidence in a trial or, in lieu thereof, providing 
     executed releases allowing the allegedly responsible party to 
     obtain such 
     [[Page S1966]] records directly from the claimant's 
     physicians, health care providers and entities that provided 
     medical care; and
       (vii) with respect to demand for a compensation that 
     includes an amount for medical expenses, wages lost or other 
     special damages suffered as a consequence of the injury, 
     relevant documentation thereof, including records of earnings 
     if a claimant is self-employed and employer records of 
     earnings if a claimant is employed.
       (C) A claimant's attorney shall provide copies of each 
     demand for compensation under this paragraph to the claimant 
     and to each allegedly liable party at the time of the 
     dispatch of the demand for compensation. Where reproduction 
     costs would be significant relative to the size of the 
     settlement offer, the claimant's attorney, may, in the 
     alternative, offer other forms of access to the materials, 
     convenient and at reasonable cost to allegedly responsible 
     party's attorney.
       (D) A contingent fee attorney who fails to file a demand 
     for compensation under this paragraph shall not be entitled 
     to any fee greater than 10 percent of any settlement or 
     judgment received by the claimant client after reasonable 
     expenses have been deducted.
       (5) Time limit for response setting forth settlement 
     offer.--(A) An allegedly liable party shall have 60 days from 
     the date of the receipt of a demand for compensation under 
     paragraph (4) to issue a response stating a settlement offer.
       (B) If within 30 days after the date of the receipt of a 
     demand for compensation under paragraph (4), an allegedly 
     liable party notifies the attorney of the claimant that such 
     party seeks to have a medical examination of the claimant, 
     and the claimant is not made available for such examination 
     within 10 days after the date of the receipt of such a 
     request, the 60-day period described under subparagraph (A) 
     shall be extended by one day for each day that such request 
     is not honored after the expiration of such 10-day period. 
     Any such extension shall also include a further period of 10 
     days from the date of the completion of the medical 
     examination.
       (C) A response under this paragraph shall be open for 
     acceptance for a minimum of 30 days from the date of the 
     receipt of such response by the attorney of the claimant and 
     shall state whether such response expires in 30 days or 
     remains open for acceptance for a longer period or until 
     notice of withdrawal is given.
       (D) A settlement offer in a response under this subsection 
     may be increased during the 60-day period described under 
     subparagraph (A) by issuing an additional response.
       (E) If an additional response has been sent under this 
     paragraph, the time for acceptance shall be 10 days from the 
     date of the receipt of such additional response by the 
     attorney of the claimant or 30 days from the date of the 
     receipt of the initial response, whichever is later, unless 
     the additional response specifies a longer period of time for 
     acceptance as described under subparagraph (C).
       (6) Material to accompany settlement offer.--An allegedly 
     responsible party and the attorney of such party shall 
     include in any response stating a settlement offer under 
     paragraph (5) copies of materials in their possession 
     concerning the claim upon which the allegedly liable party 
     relied in making a settlement offer, except for material 
     which such party believes in good faith would not be 
     discoverable by the claimant during the course of litigation. 
     Where reproduction costs would be significant relative to the 
     size of the settlement offer, the allegedly responsible 
     party, may, in the alternative, offer other forms of access 
     to the materials, convenient and at reasonable cost to 
     claimant's attorney.
       (7) Effect of pre-demand settlement offer.--A settlement 
     offer under this subsection to a claimant represented by a 
     contingent fee attorney made prior to the receipt of a demand 
     for compensation, which is open for acceptance for 60 days or 
     more from the time of its receipt and which conforms to the 
     requirements of paragraph (6), shall be considered a post-
     retention offer and shall have the same effect under this 
     subsection as if it were a response to a demand for 
     compensation.
       (8) Pre-retention offer.--(A) An attorney retained after a 
     claimant has received a pre-retention offer under this 
     subsection may not enter into an agreement with the claimant 
     to receive a contingent fee based upon or payable from the 
     proceeds of the pre-retention offer which remains in effect.
       (B) An attorney entering a fee agreement that would 
     effectively result in a claimant's paying a percentage of a 
     pre-retention offer to the attorney for prosecuting the claim 
     shall be considered to have charged an unreasonable and 
     excessive fee. With respect to an attorney where a pre-
     retention offer has been provided--
       (i) the attorney may contract with a claimant to receive an 
     hourly rate fee or fixed fee for advising the claimant 
     regarding the pre-retention offer; or
       (ii) the attorney may contract with a claimant to receive a 
     contingent fee applicable to any amount received by a 
     claimant, by settlement or judgment, above the amount of the 
     pre-retention offer.
       (9) Post-retention offer where a pre-retention offer has 
     been made.--A claimant in receipt of a pre-retention offer 
     under this subsection which such claimant has not accepted 
     and who later receives a post-retention offer which is 
     accepted, is not obligated to pay the retained attorney a fee 
     greater than the hourly rate fee calculated on the basis of 
     the number of hours the attorney has worked on behalf of 
     claimant in furtherance of the claimant's claim, but not 
     exceeding 20 percent of the excess of the post-retention 
     offer less the pre-retention offer.
       (10) Post-Retention offer where no pre-retention offer has 
     been made.--A claimant not in receipt of a pre-retention 
     offer under this subsection who has received a post-retention 
     offer which is accepted, is not obligated to pay the retained 
     attorney a fee greater than the hourly rate fee calculated on 
     the basis of the number of hours the attorney has worked on 
     behalf of claimant in furtherance of claimant's claim, but 
     not exceeding 10 percent of the first $100,000, plus 5 
     percent of any amount above $100,000, of the accepted post-
     retention offer after reasonable expenses have been deducted.
       (11) Calculation of attorney fee when there is a subsequent 
     resolution of the claim.--If an allegedly liable party's 
     post-retention settlement offer under this subsection is 
     rejected, but a later settlement offer is accepted, or there 
     is a judgment in favor of claimant, the claimant, 
     irrespective of any pre-retention offer, is not obligated to 
     pay the retained attorney a fee greater the sum of--
       (A) the amount of the fee that would have been calculated 
     under paragraph (10) had the post-retention offer been 
     accepted but only as applied to the subsequent settlement 
     offer or judgment up to the amount of the post-retention 
     offer; and
       (B) the product of multiplying the contingent fee 
     percentage negotiated between the contingent fee attorney and 
     claimant and the amount by which the subsequent settlement or 
     judgment exceeds the post-retention offer, after reasonable 
     expenses have been deducted.
       (12) Provision of closing statement.--Upon receipt of any 
     settlement or judgment under this subsection, and prior to 
     disbursement thereof, a contingent fee attorney shall provide 
     the claimant with a written statement detailing how the 
     proceeds are to be distributed, including the amount of the 
     expenses paid out or to be paid out of the proceeds, the 
     amount of the fee, how the fee amount is calculated, and the 
     amount due the claimant.
       (13) Effect on contravening agreements.--(A) A contingent 
     fee attorney who enters into a fee agreement with a claimant 
     which violates the provisions of this subsection is deemed to 
     have charged an unreasonable and excessive fee.
       (B) A claimant who has entered into an agreement with a 
     contingent fee attorney which violates the provisions of this 
     subsection is entitled to recover from the attorney any 
     reasonable fees and costs incurred to establish such 
     agreement violated the provisions of this subsection.
       (C) The failure by the claimant's attorney, or the attorney 
     for an alleged responsible party, to comply with the 
     provisions of this subsection may be considered grounds for 
     disciplinary proceedings and sanctions as determined 
     appropriate by the licensing or regulatory agency or court of 
     the State in which the claim arose.
       (c) Amendment to the Federal Rules of Civil Procedure.--
     Rule 11(c) of the Federal Rules of Civil Procedure is 
     amended--
       (1) in the matter preceding paragraph (1) by striking out 
     ``may'' and inserting in lieu thereof ``shall'';
       (2) in subdivision (1)(A) in the third sentence by striking 
     out ``may'' and inserting in lieu thereof ``shall''; and
       (3) in paragraph (2)--
       (A) by amending the first sentence to read as follows: ``A 
     sanction imposed for a violation of this rule shall be 
     sufficient to deter repetition of such conduct or comparable 
     conduct by others similarly situated and to compensate the 
     parties that were injured by such conduct.''; and
       (B) in the second sentence by striking ``, if imposed on 
     motion and warranted for effective deterrence,''.
       (d) Prevailing Party Costs and Attorneys' Fees.--
       (1) In general.--Subject to paragraphs (2) and (3), in any 
     civil action filed against any person in any Federal or State 
     court, based on any cause of action (including, but not 
     limited to negligence, strict or product liability, breach of 
     implied warranty or professional malpractice) in which 
     damages are sought for tortious physical or mental injury, 
     property damage, or economic loss the court may award each 
     prevailing party costs and reasonable attorneys' fees.
       (2) Amount of award.--An award of costs and reasonable 
     attorneys' fees under paragraph (1) may not exceed--
       (A) the actual cost incurred by the nonprevailing party or 
     the attorneys' fee payable for services in connection with 
     such civil action; or
       (B) if no such cost was incurred by the nonprevailing party 
     due to a contingency fee agreement, an amount equal to the 
     reasonable costs that would have been incurred by the 
     nonprevailing party for a noncontingent attorneys' fee 
     payable for services in connection with such civil action.
       (3) Limitation.--
       (A) Notwithstanding paragraph (1) or (2), the court shall 
     not award an attorney's fee in any case in which the 
     nonprevailing party--
       (i) had a taxable income of less than $75,000 in the 
     calendar year preceding the calendar year in which the civil 
     action was filed, if the nonprevailing party is an 
     individual; or
     [[Page S1967]]   (ii) had an average taxable income of less 
     than $50,000 for the 3 calendar years preceding the calendar 
     year in which the civil action was filed, if the 
     nonprevailing party is not an individual.
       (B) The court shall retain discretion to refuse to award or 
     may reduce the amount awarded as an attorney's fee under 
     paragraph (1) to the extent the court finds would be in the 
     interests of justice.

     SEC. 6. EARLY OFFER AND RECOVERY MECHANISMS.

       (a) In General.--Chapter 111 of title 28, United States 
     Code, is amended by adding at the end thereof the following 
     new section:

     ``Sec. 1659. Early offer and recovery mechanisms

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

``1659. Early offer and recovery mechanisms.''.
     SEC. 7. REFORM OF JOINT AND SEVERAL LIABILITY.

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

     SEC. 8. SINGLE RECOVERY.

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

     SEC. 9. LIMITATION ON PUNITIVE DAMAGES.

       (a) In General.--Except as provided under section 1977A of 
     the Revised Statutes (42 U.S.C. 1981a), the amount of 
     punitive damages that may be awarded in any civil action or 
     claim filed in any Federal or State court, 
     [[Page S1968]] based on any cause of action to recover 
     damages or compensation for tortious physical or mental 
     injury, property damage, or economic loss shall not exceed 
     the greater of--
       (1) 3 times the amount awarded to the claimant for the 
     economic injury on which such claim is based; or
       (2) $250,000.
       (b) Application by Court.--This section shall be applied by 
     the court and shall not be disclosed to the jury.

     SEC. 10. ALTERNATIVE DISPUTE RESOLUTION.

       (a) General Policy.--The policy of the United States is to 
     encourage the creation and use of alternative dispute 
     resolution techniques, and to promote the expeditious 
     resolution of such actions, because the traditional 
     litigation process is not always suited to the timely, 
     efficient, and inexpensive resolution of civil actions.
       (b) Notice of Availability of Alternative Dispute 
     Resolution.--In any civil action or claim arising under any 
     Federal law or in any diversity action in Federal court, each 
     attorney who has made an appearance in the case and who 
     represents one or more of the parties to the action shall, 
     with respect to each party separately represented, advise the 
     party of the existence and availability of alternative 
     dispute resolution options, including extra judicial 
     proceedings such as minitrials, third-party mediation, court 
     supervised arbitration, and summary jury trial proceedings.
       (c) Certification of Notice.--Each attorney described under 
     subsection (b) shall, simultaneous with the filing of a 
     complaint or a responsive pleading, file a certification to 
     the court that the attorney has provided the notice required 
     under subsection (b) to the client or clients of such 
     attorney. The attorney shall state in the certification 
     whether such client will agree to one or more of the 
     alternative dispute resolution techniques.
       (d) Agreement To Proceed With Alternative Dispute 
     Resolution.--If all parties to an action agree to proceed 
     with one or more alternative dispute resolution proceedings, 
     the court shall issue an appropriate order governing the 
     conduct of such proceedings. The issuance of an order 
     governing the proceedings shall constitute a waiver, by each 
     party subject to the order, of the right to proceed further 
     in court.
     SEC. 11. RELIABILITY OF EXPERT EVIDENCE.

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

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

       (a) In General.--Chapter 85 of title 28, United States 
     Code, is amended by adding at the end thereof the following 
     new section:

     ``Sec. 1368. Private right of action

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

``1368. Private right of action.''.

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

     SEC. 13. APPLICABILITY.

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

     SEC. 14. SEVERABILITY.

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

     SEC. 15. EFFECTIVE DATE.

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

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