[Congressional Record Volume 149, Number 37 (Friday, March 7, 2003)]
[Extensions of Remarks]
[Pages E392-E393]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  THE MEDICAL MALPRACTICE INSURANCE AND LITIGATION REFORM ACT OF 2003

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                        Thursday, March 6, 2003

  Mr. CONYERS. Mr. Speaker, I am pleased to introduce the Medical 
Malpractice Insurance and Litigation Reform Act of 2003. This 
legislation responds to the real problems in the medical malpractice 
insurance market--namely, higher prices driven by lack of competition 
and investment losses by insurers leading to a boom bust cycle. To 
respond to these problems, Title I of the bill insures that the 
antitrust laws apply to medical malpractice insurers, price comparisons 
can be easily obtained, and procedural checks are in place to insure 
that premium increases are warranted and can be challenged by health 
care providers.
  Above and beyond these requirements, the bill responds to concerns 
that medical malpractice is not available in parts of the country. As a 
result, Title II would create a Federal medical malpractice insurance 
association, housed within the Department of Health and Human Services, 
to provide medical malpractice insurance where it is not available at 
reasonable terms.
  In addition, the bill responds to the complaint that medical 
malpractice insurance premiums are being driven higher as a result of 
frivolous complaints. Title III of the bill provides for a series of 
measures designed to insure that the lawsuit itself is not frivolous 
and that the pleadings filed in connection with the suit are accurate 
and meritorious. Title III also provides for alternative dispute 
resolution designed to encourage resolution of medical malpractice 
actions outside of court. The following is a more detailed description 
of the legislation.

     Section-by-Section Analysis Medical Malpractice Insurance and 
                         Litigation Reform Act


             Title I--Medical Malpractice Insurance Reform

       This Title constitutes an effort to respond to some of the 
     flaws apparent in the medical malpractice insurance 
     marketplace and the regulation of that market. Among other 
     things, the title insures that the antitrust laws apply to 
     medical malpractice insurers, price comparisons can be easily 
     obtained, and procedural checks are in place to insure that 
     premium increases are warranted.
       Section 101. Prohibition on Anticompetitive Activities by 
     Medical Malpractice Insurers. Repeals McCarran-Ferguson to 
     ensure that insurers don't engage in price fixing. The Act, 
     enacted in 1945, exempts from the Federal antitrust laws all 
     anticompetitive insurance industry practices except boycotts. 
     Over the years, uneven oversight of the insurance industry by 
     the States, coupled with no possibility of Federal antitrust 
     enforcement, has created an environment that fosters a wide 
     range of anticompetitive practices.
       Section 102. Medical Malpractice Insurance Price 
     Comparison. Creates an Internet site at which health care 
     providers could obtain the price charged for the type of 
     coverage the provider seeks from any malpractice insurer 
     licensed in the doctor's state. This section specifies the 
     availability of online forms and that all information will 
     remain confidential.
       Section 103. Procedural Requirements for Medical 
     Malpractice Insurers' Proposed Rate Increases. Gives doctors 
     standing in any state administrative proceeding to challenge 
     proposed rate increases and requires insurance companies to 
     provide justification for any rate increase prior to 
     implementing such increase. Only a handful of states 
     (Alabama, Arizona, Illinois, New York, Oklahoma, and possibly 
     a few others) require that rates be filed and approved by the 
     state insurance department before they can be used.


      Title II--Federal Medical Malpractice Insurance Association

       There have been isolated reports that physicians are unable 
     to obtain medical malpractice insurance at any rate and this 
     title is designed to deal with that problem by providing a 
     federal backstop. The title also provides for disclosure of 
     information by private insurers so that more information can 
     be obtained on the reasons for any problems in the 
     malpractice insurance marketplace.
       Section 201. Establishment; Purpose. Establishes an 
     Association within the Department of Health and Human 
     Services to provide medical malpractice insurance where it is 
     not available at reasonable terms.
       Section 202. Board of Directors. Creates a board of 
     directors for the Association. The board has authority to run 
     the Association and to act like a governing body of a private 
     insurance carrier. This section sets out specifics as to the 
     number of appointments, eligibility, and vacancies.
       Section 203. Administration. An administrator is appointed 
     to act as the Association's chief executive officer, in 
     charge of day-to-day operations and management of the 
     Association. The Association shall be fully operational no 
     later than 180 days after the date of enactment of the Act.
       Section 204. Rates. Gives the board authority to establish 
     rates to be charged by the Association. The board will use an 
     actuary to recommend rates, and rates shall be set at amounts 
     sufficient, when invested, to carry all claims to maturity, 
     meet reasonable expenses of conducting the business of the 
     Association and maintain reasonable surplus. The insurance 
     program shall be neither more nor less than self-supporting. 
     The Association is authorized to purchase reinsurance.
       Section 205. Investment Policy. Provides that the board of 
     directors shall formulate and adopt an investment policy and 
     supervise investment activities of the Association. Gives the 
     Association the ability to retain independent investment 
     counsel and requires the board to periodically review and 
     appraise the investment strategy.
       Section 206. Medical Malpractice Risk Management Program. 
     Requires the administrator to develop a risk management 
     program for all policyholders and to solicit input from the 
     National Association of Insurance Commissioners in developing 
     the program. Insurance may be refused or terminated if any 
     insured disregards the plan and the administrator may 
     consider compliance with the plan in determining premiums 
     of the insured.
       Section 207. Seed Money to be Funded by Treasury Department 
     Loan. Provides for the funding of the Association by the 
     Secretary of Treasury through one or more 5 year term loans 
     in an amount not to exceed $100,000,000 for start-up funding.
       Section 208. Disclosure of Data by Medical Malpractice 
     Insurers. This section requires each insurance provider to 
     file a copy of its annual statement with the Chairperson of 
     the Association. The insurer shall also provide information 
     regarding (1) closed claims; (2) verdicts, payment, and 
     severity of injury in connection with verdicts; (3) rate 
     changes; (4) premiums and losses by medical speciality; (5) 
     premiums and losses by experience of the insured; (6) 
     performance of the investments of the insurer.
       Section 209. Annual Report by Chairperson. Requires the 
     Chairperson to file an annual report with the President and 
     Congress that includes: (1) a statement of the Association's 
     accounts, funds, and securities; (2) copies of reports 
     required by the National Association of Insurance Carriers; 
     (3) any requests for additional loans; (4) an assessment of 
     the medical malpractice insurance marketplace; (5) an 
     assessment as to why health care providers have been unable 
     to obtain insurance at reasonable prices; and (6) a report 
     summarizing the information disclosed pursuant to Section 208 
     and attaching the disclosed information.
       Section 210. Financial Matters. Requires the administrator 
     to submit to the board an estimated budget of the expenses of 
     administering the Association. If assets exceed liabilities, 
     necessary reserves and reasonable surplus, the Association 
     shall declare a cash dividend or allow a credit to any health 
     care provider that has complied with the risk management 
     program.
       Section 211. Definitions.

[[Page E393]]

       Title III--Limiting Frivolous Medical Malpractice Lawsuits

       The complaint is frequently heard that medical malpractice 
     insurance premiums are being driven higher as a result of 
     frivolous complaints. This title responds to that charge with 
     a series of measures designed to insure that the lawsuit 
     itself is not frivolous and the pleadings filed in connection 
     with the suit are accurate and meritorious. The title also 
     provides for alternative dispute resolution designed to 
     encourage resolution of medical malpractice actions outside 
     of court.
       Section 301. Health Care Specialist Affidavit. This section 
     requires an affidavit by a qualified specialist before any 
     medical malpractice lawsuit may be filed. ``Qualified 
     specialist'' is defined as a health care professional with 
     knowledge of the relevant facts of the case, expertise in the 
     specific area of practice at issue in the case, and board 
     certified in a speciality relating to the area of practice.
       Section 302. Sanctions for Frivolous Actions and Pleadings. 
     Sets out sanctions for filing improper pleadings in medical 
     malpractice actions violations, such as those which are 
     designed to harass, are frivolous, or are factually 
     inaccurate. For first time violators, the court shall require 
     the attorney to pay costs and attorneys fees and may also 
     strike pleadings, dismiss the lawsuit, or administer other 
     appropriate sanctions. For second time violators, the court 
     shall also require the attorney to pay a monetary fine. For 
     third time violators, the court shall also refer the attorney 
     to the appropriate State bar association for disciplinary 
     proceedings.
       Section 303. Mandatory Mediation. This section establishes 
     an alternative dispute resolution system for medical 
     malpractice cases. Participation in mediation shall be in 
     lieu of any other ADR method required by law or by 
     contractual arrangements by the parties. A similar approach 
     is recommended by the Committee for Economic Development, 
     which suggests that defendants make and victims accept 
     ``early offers.'' The effect of the ``early offer'' program, 
     according to the CED, is that defendants will reduce the 
     likelihood of incurring costs of litigation and having to pay 
     large and uncertain punitive and noneconomic damages, and 
     victims would obtain fair compensation without delay, expense 
     and trauma of litigation.
       Section 304. Applicability. Specifies that the title 
     applies to any medical malpractice liability action brought 
     in state or federal court, except for claims arising from 
     vaccine-related injuries.
       Section 305. Definitions.

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