[Congressional Record Volume 147, Number 84 (Monday, June 18, 2001)]
[Senate]
[Pages S6384-S6386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE PATIENTS' BILL OF RIGHTS
Mr. SPECTER. Mr. President, I have sought recognition to comment
about the legislation which is due to come to this Chamber tomorrow. I
thought it might be useful to focus on a Dear Colleague letter which I
sent out last week, which reads as follows:
A key point of controversy on legislation now pending in
the Senate is whether patients will be permitted to collect
damages from insurance companies without a statutory
limitation. Under more than 200 years of common law
precedents, a harmed plaintiff has been able to recover
compensation as set by a jury for economic losses and pain
and suffering when a defendant is negligent and punitive
damages for gross, malicious or intentional misconduct.
The McCain-Edwards-Kennedy Bill, of which I am a co-
sponsor, provides for Federal court jurisdiction on the issue
of whether a claim is covered by the contractual provisions
of a health care plan and for state court jurisdiction on
medical malpractice claims.
Serious concerns have been raised to that bill because of a
history of very high verdicts in state courts on personal
injury claims which could significantly raise the cost of
health care in the United States. There is substantial
experience that Federal court trials result in a more
reasoned and judicious result in malpractice cases.
I intend to offer a compromise amendment which would
maintain Federal court jurisdiction under McCain-Edwards-
Kennedy for coverage claims (which have also been referred to
as quantity or eligibility decisions) and extend Federal
court jurisdiction, excluding state court jurisdiction, on
medical
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malpractice claims (which have also been referred to as
quality or treatment decisions) which would preserve
plaintiffs' traditional common law remedies in a more
reasoned judicial setting.
The consequences of ERISA have been extremely complicated. Enacted in
the early 1970s, it has been held in many, many cases to bar plaintiffs
from recovering for personal injuries. Cases brought under ERISA,
section 502, are governed by the doctrine of complete preemption, which
applies when Congress so completely preempts a particular area of law
that any civil complaint raising this select group of claims is
necessarily Federal in character.
Under section 514, a plaintiff's claim is barred if the claim relates
to an employee benefit plan. If a plaintiff's claim does not relate to
an employee benefit plan, then the claim is not barred and is heard in
State courts. There is a growing line of cases finding that State
causes of action, States' Patients' Bill of Rights, do not relate to an
employee benefit plan and, therefore, are not preempted if they address
the quality of services to be provided.
There have been many cases in this complicated field, and they are
referred to by the Court of Appeals for the Fifth Circuit in a case
decided slightly less than a year ago on June 20, 2000, in a case
captioned Aetna Health Plans of Texas, Inc., v. the Texas Department of
Insurance. There the Fifth Circuit noted that the courts have
``repeatedly struggled with the open-ended character of the preemption
provisions of ERISA'' and also the Federal Employees Health Benefits
Act.
The Fifth Circuit goes on to say:
The courts have faithfully followed the Supreme Court's
broad reading of ``relate to'' preemption under 502(a), in
its opinions decided during the first twenty years after
ERISA's enactment. Since then, in a trilogy of cases, the
[Supreme] Court has confronted the reality that if ``relate
to'' is taken to the furthest stretch of its indeterminacy,
preemption will never run its course, ``for really universal
relations stop nowhere.''
There has been a succinct summary of the key issues raised by ERISA
preemption in a case decided earlier this year on March 27, 2001, by
the United States Court of Appeals for the Third Circuit, captioned
Pryzbowski v. United States Health Care Incorporated. In Pryzbowski,
the court noted prior Third Circuit opinions where the court
distinguished between claims directed to the quality of the benefits
the plaintiff received versus claims that the plans erroneously
withheld benefits, that is, claims that seek to enforce plaintiff's
rights under the terms of their respective plans or to clarify their
rights to future benefits. In Pryzbowski the Third Circuit went on to
say that:
We stated that claims that merely attack the quality of
benefits do not fall within the scope of section 502(a)'s
enforcement provisions and are not completely preempted,
whereas claims challenging the quantum of benefits due under
an ERISA-regulated plan are completely preempted under
section 502(a)'s civil enforcement scheme.
The Third Circuit then went on to note:
Though the quality-quantity distinction was helpful in
those cases, we have acknowledged that the distinction would
not always be clear.
From Pryzbowski and other cases, it is apparent that if a Patients'
Bill of Rights is enacted which gives the Federal courts jurisdiction
over the scope of the plan, or the so-called quantity decision, and the
State courts jurisdiction over the quality or the treatment decision,
then there will be a plethora of nearly endless litigation as to what
belongs in which court. The court decisions are replete with cases
where the facts have been analyzed. It is frequently very difficult to
distinguish between the two categories, quantity or quality, and it
often ends up with the case remanded for other facts to be determined.
It is my suggestion that the Federal court retain total jurisdiction
over both category of cases, whether they are the quantity decisions,
which relate to eligibility decisions, or the quality decisions, which
relate to treatment decisions. My suggestion is that it would be much
preferable to have exclusive jurisdiction vested in the Federal courts.
There is considerable concern about excessive verdicts in State
courts when contrasted with the more judicious decisions in the Federal
courts. What my compromise suggests is that by giving exclusive
jurisdiction to the Federal courts, traditional plaintiff's damage
claims could be retained without so-called caps or limitations.
There has been enormous concern about what would happen if the
Patients' Bill of Rights refers to the State courts these medical
malpractice cases without any limitation on damages.
Last year, the Judiciary Committee considered amending diversity
jurisdiction in class action cases because diversity jurisdiction was
so easily defeated when a class of plaintiffs would sue a defendant. If
there was a single plaintiff residing in the same State as the
defendant, then diversity was defeated.
This legislation, which amended diversity jurisdiction and was passed
out of the Judiciary Committee, was sought by so many defendants who
felt unfairly treated by State court decisions. The report of the
Judiciary Committee on the Class Action Fairness Act of 2000 (S.R. 106-
420) contains some statements which are relevant to consideration of
having medical malpractice cases tried solely in the Federal courts
rather than the State courts.
This is what the Judiciary Committee report said at page 15:
The ability of plaintiffs' lawyers to evade Federal
diversity jurisdiction has helped spur a dramatic increase in
the number of class actions litigated in State courts--an
increase that is stretching the resources of the State court
systems.
Then on page 16, the Judiciary Committee majority report goes on to
point out the concern of unfairness in State court actions saying:
The Committee finds, however, that one reason for the
dramatic explosion of class actions in State courts is that
some State court judges are less careful than their Federal
court counterparts about applying the procedural requirements
that govern class actions. Many State court judges are lax
about following the strict requirements of rule 23 (or the
State's governing rule), which are intended to protect the
due process rights of both unnamed class members and
defendants. In contrast, Federal courts generally do
scrutinize proposed settlements much more carefully and pay
closer attention to the procedural requirements for
certifying a matter for class treatment.
Then the Judiciary Committee majority report goes on at page 17 to
point out:
A second abuse that is common in State courts class actions
is the use of the class device as ``judicial blackmail.''
Because class actions are such a powerful tool, they can give
a class attorney unbounded leverage. Such leverage can
essentially force corporate defendants to pay ransom to class
attorneys by settling--rather than litigating--frivolous
lawsuits.
The majority report then goes on to say:
State court judges often are inclined to certify cases for
class action treatment not because they believe a class trial
would be more efficient than an individual trial, but because
they believe class certification will simply induce the
defendant to settle the case without trial.
Now, in citing these references to the Judiciary Committee report, I
do not seek to impugn all State court judges because most State court
judges are careful and judicious and follow settled principles. But
there have been a considerable number of these certifications of class
actions, and there have been many cases which involve forum shopping,
judge shopping, which seek to go to specific counties or specific
States where there are excessive verdicts.
By contrast, the Federal courts have an established reputation where
there is different selection of judges. In many States, judges are
elected--my own State of Pennsylvania. Here, again, I am not intending
any broad condemnation, but in the Federal courts, where judges are
selected for life tenure, it is fair to say that the caliber of the
judiciary is superior. That, again, is a generalization.
Again, there are many fine State court judges. But the experience in
the State courts, as illustrated by this class action report, gives
grave concern to many who are worried that if the Patients' Bill of
Rights is enacted and there are unlimited damages possible in State
court (medical malpractice cases), which is now the provision under the
McCain-Edwards-Kennedy bill, that there will be widespread abuses.
Those same concerns are not found with respect to these malpractice
cases in the Federal courts.
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We are about to enter on to a difficult and protracted debate on a
Patients' Bill of Rights. It is my view, and has been, as reflected in
the votes I have cast on the Senate floor for several years now, that
America needs a Patients' Bill of Rights and that the traditional
remedies not be capped or limited. But a good tradeoff, in my judgment,
would be that exclusive jurisdiction would be vested in the Federal
courts. This is not really a problem for plaintiffs of ``forum non
conveniens''--the Latin phrase which means an inconvenient court--
because there are underlying Federal questions on ERISA. And even when
cases are brought in the State court, invariably, they end up on
removal actions in the Federal court. When you start to try to make
distinctions under ERISA 502, ERISA 514, trying to distinguish between
the quantity of coverage versus the quality of coverage, they
necessarily overlap; and it will be a saving of judicial resources if
all of those cases are heard in the Federal court. I ask my colleagues
to consider this.
I ask unanimous consent at this time that the full text of my Dear
Colleague letter, dated June 13, be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
June 13, 2001.
Dear Colleague: A key point of controversy on legislation
now pending in the Senate is whether patients will be
permitted to collect damages from insurance companies without
a statutory limitation. Under more than 200 years of common
law precedents, a harmed plaintiff has been able to recover
compensation as set by a jury for economic losses and pain
and suffering when a defendant is negligent and punitive
damages for gross, malicious or intentional misconduct.
The McCain-Edwards-Kennedy Bill, of which I am a co-
sponsor, provides for Federal court jurisdiction on the issue
of whether a claim is covered by the contractual provisions
of a health care plan and for state court jurisdiction on
medical malpractice claims.
Serious concerns have been raised to that bill because of a
history of very high verdicts in state courts on personal
injury claims which could significantly raise the cost of
health care in the United States. There is substantial
experience that Federal court trials result in a more
reasoned and judicious result in malpractice cases.
I intend to offer a compromise amendment which would
maintain Federal court jurisdiction under McCain-Edwards-
Kennedy for coverage claims and extend Federal court
jurisdiction, excluding state court jurisdiction, on medical
malpractice claims which would preserve plaintiffs'
traditional common law remedies in a more reasoned judicial
setting.
Since the Patients' Bill of Rights will be on the Senate
floor next week, I thought it useful to call this proposal to
your attention so that you may consider it. My staff and I
are available to respond to questions and to amplify the
details of this proposed compromise since this is a
simplified statement on complex legal issues.
Sincerely,
Arlen Specter.
Mr. SPECTER. I thank the Chair for sitting late. It is not easy to
come in on a Monday afternoon. The distinguished Senator from Utah, a
senior Republican on the Judiciary Committee, has performed
extraordinary service. I thought it not unfitting that I should cite
his report on class action cases since he was the author of those
pearls of wisdom I quoted.
I believe that concludes our business.
I yield the floor.
The PRESIDING OFFICER. Under the previous order, the Senate stands
adjourned until 10 a.m. tomorrow.
Thereupon, the Senate, at 4:03 p.m., adjourned until Tuesday, June
19, 2001, at 10 a.m.
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