[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Senate]
[Pages 14928-14931]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 4326. Mr. McCONNELL (for himself and Mr. Frist) proposed an 
amendment to amendment SA 4299 proposed by Mr. Reid (for Mr. Dorgan 
(for himself, Mr. Wellstone, Mr. Jeffords, Ms. Stabenow, Ms. Collins, 
Mr. Levin. Mr. Johnson, Mr. Miller, Mr. Durbin, Mr. Feingold, and Mr. 
Harkin), to the bill (S. 812) to amend the Federal Food, Drug, and 
Cosmetic Act to provide greater access to affordable pharmaceuticals; 
as follows:
       Strike the first word and insert the following:

                 TITLE __--HEALTH CARE LIABILITY REFORM

     SEC. __01. SHORT TITLE.

       This title may be cited as the ``Health Care Liability 
     Reform and Quality Assurance Act of 2002''.

                Subtitle A--Health Care Liability Reform

     SEC. __11. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) Effect on health care access and costs.--The civil 
     justice system of the United States is a costly and 
     inefficient mechanism for resolving claims of health care 
     liability and compensating injured patients and the problems 
     associated with the current system are having an adverse 
     impact on the availability of, and access to, health care 
     services and the cost of health care in the United States.
       (2) Effect on interstate commerce.--The health care and 
     insurance industries are industries affecting interstate 
     commerce and the health care liability litigation systems 
     existing throughout the United States affect interstate 
     commerce by contributing to the high cost of health care and 
     premiums for health care liability insurance purchased by 
     participants in the health care system.
       (3) Effect on federal spending.--The health care liability 
     litigation systems existing throughout the United States have 
     a significant effect on the amount, distribution, and use of 
     Federal funds because of--
       (A) the large number of individuals who receive health care 
     benefits under programs operated or financed by the Federal 
     Government;
       (B) the large number of individuals who benefit because of 
     the exclusion from Federal taxes of the amounts spent to 
     provide such individuals with health insurance benefits; and
       (C) the large number of health care providers who provide 
     items or services for which the Federal Government makes 
     payments.
       (b) Purpose.--It is the purpose of this title to implement 
     reasonable, comprehensive, and effective health care 
     liability reform that is designed to--
       (1) ensure that individuals with meritorious health care 
     injury claims receive fair and adequate compensation;
       (2) improve the availability of health care service in 
     cases in which health care liability actions have been shown 
     to be a factor in the decreased availability of services; and
       (3) improve the fairness and cost-effectiveness of the 
     current health care liability system of the United States to 
     resolve disputes over, and provide compensation for, health 
     care liability by reducing uncertainty and unpredictability 
     in the amount of compensation provided to injured 
     individuals.

     SEC. __12. DEFINITIONS.

       In this subtitle:
       (1) Claimant.--The term ``claimant'' means any person who 
     commences a health care liability action, and any person on 
     whose behalf such an action is commenced, including the 
     decedent in the case of an action brought through or on 
     behalf of an estate.
       (2) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' means 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, except that such measure or degree 
     of proof is more than that required under preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.

[[Page 14929]]

       (3) Collateral source rule.--The term ``collateral source 
     rule'' means a rule, either statutorily established or 
     established at common law, that prevents the introduction of 
     evidence regarding collateral source benefits or that 
     prohibits the deduction of collateral source benefits from an 
     award of damages in a health care liability action.
       (4) Economic losses.--The term ``economic losses'' means 
     objectively verifiable monetary losses incurred as a result 
     of the provision of (or failure to provide or pay for) health 
     care services or the use of a medical product, including past 
     and future medical expenses, loss of past and future 
     earnings, cost of obtaining replacement services in the home 
     (including child care, transportation, food preparation, and 
     household care), cost of making reasonable accommodations to 
     a personal residence, loss of employment, and loss of 
     business or employment opportunities. Economic losses are 
     neither noneconomic losses nor punitive damages.
       (5) Health care liability action.--The term ``health care 
     liability action'' means a civil action against a health care 
     provider, health care professional, health plan, or other 
     defendant, including a right to legal or equitable 
     contribution, indemnity, subrogation, third-party claims, 
     cross claims, or counter-claims, in which the claimant 
     alleges injury related to the provision of, payment for, or 
     the failure to provide or pay for, health care services or 
     medical products, regardless of the theory of liability on 
     which the action is based. Such term does not include a 
     product liability action, except where such an action is 
     brought as part of a broader health care liability action.
       (6) Health plan.--The term ``health plan'' means any person 
     or entity which is obligated to provide or pay for health 
     benefits under any health insurance arrangement, including 
     any person or entity acting under a contract or arrangement 
     to provide, arrange for, or administer any health benefit.
       (7) Health care professional.--The term ``health care 
     professional'' means any individual who provides health care 
     services in a State and who is required by Federal or State 
     laws or regulations to be licensed, registered or certified 
     to provide such services or who is certified to provide 
     health care services pursuant to a program of education, 
     training and examination by an accredited institution, 
     professional board, or professional organization.
       (8) Health care provider.--The term ``health care 
     provider'' means any organization or institution that is 
     engaged in the delivery of health care items or services in a 
     State and that is required by Federal or State laws or 
     regulations to be licensed, registered or certified to engage 
     in the delivery of such items or services.
       (9) Health care services.--The term ``health care 
     services'' means any services provided by a health care 
     professional, health care provider, or health plan or any 
     individual working under the supervision of a health care 
     professional, that relate to the diagnosis, prevention, or 
     treatment of any disease or impairment, or the assessment of 
     the health of human beings.
       (10) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a health care 
     liability action.
       (11) Medical product.--The term ``medical product'' means a 
     drug (as defined in section 201(g)(1) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a medical 
     device as defined in section 201(h) of such Act (21 U.S.C. 
     321(h)), including any component or raw material used 
     therein, but excluding health care services, as defined in 
     paragraph (9).
       (12) Noneconomic losses.--The term ``noneconomic losses'' 
     means losses for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of consortium, 
     loss of society or companionship (other than loss of domestic 
     services), and other nonpecuniary losses incurred by an 
     individual with respect to which a health care liability 
     action is brought. Noneconomic losses are neither economic 
     losses nor punitive damages.
       (13) Punitive damages.--The term ``punitive damages'' means 
     damages awarded, for the purpose of punishment or deterrence, 
     and not for compensatory purposes, against a health care 
     professional, health care provider, or other defendant in a 
     health care liability action. Punitive damages are neither 
     economic nor noneconomic damages.
       (14) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (15) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, and 
     the Commonwealth of Puerto Rico.

     SEC. __13. APPLICABILITY.

       (a) In General.--Except as provided in subsection (c), this 
     subtitle shall apply with respect to any health care 
     liability action brought in any Federal or State court, 
     except that this subtitle shall not apply to an action for 
     damages arising from a vaccine-related injury or death to the 
     extent that title XXI of the Public Health Service Act 
     applies to the action.
       (b) Preemption.--
       (1) In general.--The provisions of this subtitle shall 
     preempt State law only to the extent that such law is 
     inconsistent with the limitations contained in such 
     provisions and shall not preempt State law to the extent that 
     such law--
       (A) places greater restrictions on the amount of or 
     standards for awarding noneconomic or punitive damages;
       (B) places greater limitations on the awarding of attorneys 
     fees for awards in excess of $150,000;
       (C) permits a lower threshold for the periodic payment of 
     future damages;
       (D) establishes a shorter period during which a health care 
     liability action may be initiated or a more restrictive rule 
     with respect to the time at which the period of limitations 
     begins to run; or
       (E) implements collateral source rule reform that either 
     permits the introduction of evidence of collateral source 
     benefits or provides for the mandatory offset of collateral 
     source benefits from damage awards.
       (2) Rules of construction.--The provisions of this subtitle 
     shall not be construed to preempt any State law that--
       (A) permits State officials to commence health care 
     liability actions as a representative of an individual;
       (B) permits provider-based dispute resolution;
       (C) places a maximum limit on the total damages in a health 
     care liability action;
       (D) places a maximum limit on the time in which a health 
     care liability action may be initiated; or
       (E) provides for defenses in addition to those contained in 
     this title.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in this subtitle 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 the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     actions brought by a foreign nation or a citizen of a foreign 
     nation;
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss an action of 
     a foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (6) supersede any provision of Federal law.
       (d) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this subtitle shall be 
     construed to establish any jurisdiction in the district 
     courts of the United States over health care liability 
     actions on the basis of section 1331 or 1337 of title 28, 
     United States Code.

     SEC. __14. STATUTE OF LIMITATIONS.

       A health care liability action that is subject to this 
     title may not be initiated unless a complaint with respect to 
     such action is filed within the 2-year period beginning on 
     the date on which the claimant discovered or, in the exercise 
     of reasonable care, should have discovered the injury and its 
     cause, except that such an action relating to a claimant 
     under legal disability may be filed within 2 years after the 
     date on which the disability ceases. If the commencement of a 
     health care liability action is stayed or enjoined, the 
     running of the statute of limitations under this section 
     shall be suspended for the period of the stay or injunction.

     SEC. __15. REFORM OF PUNITIVE DAMAGES.

       (a) Limitation.--With respect to a health care liability 
     action, an award for punitive damages may only be made, if 
     otherwise permitted by applicable law, if it is proven by 
     clear and convincing evidence that the defendant--
       (1) intended to injure the claimant for a reason unrelated 
     to the provision of health care services;
       (2) understood the claimant was substantially certain to 
     suffer unnecessary injury, and in providing or failing to 
     provide health care services, the defendant deliberately 
     failed to avoid such injury; or
       (3) acted with a conscious, flagrant disregard of a 
     substantial and unjustifiable risk of unnecessary injury 
     which the defendant failed to avoid in a manner which 
     constitutes a gross deviation from the normal standard of 
     conduct in such circumstances.
       (b) Punitive Damages Not Permitted.--Notwithstanding the 
     provisions of subsection (a), punitive damages may not be 
     awarded against a defendant with respect to any health care 
     liability action if no judgment for compensatory damages, 
     including nominal damages (under $500), is rendered against 
     the defendant.
       (c) Separate Proceeding.--
       (1) In general.--At the request of any defendant in a 
     health care liability action, the trier of fact shall 
     consider in a separate proceeding--
       (A) whether punitive damages are to be awarded and the 
     amount of such award; or
       (B) the amount of punitive damages following a 
     determination of punitive liability.
       (2) Only relevant evidence admissible.--If a defendant 
     requests a separate proceeding under paragraph (1), evidence 
     relevant only to the claim of punitive damages in a health 
     care liability action, as determined by applicable State law, 
     shall be inadmissible in any proceeding to determine whether 
     compensatory damages are to be awarded.

[[Page 14930]]

       (d) Determining Amount of Punitive Damages.--In determining 
     the amount of punitive damages in a health care liability 
     action, the trier of fact shall consider only the following:
       (1) The severity of the harm caused by the conduct of the 
     defendant.
       (2) The duration of the conduct or any concealment of such 
     conduct by the defendant.
       (3) The profitability of the conduct of the defendant.
       (4) The number of products sold or medical procedures 
     rendered for compensation, as the case may be, by the 
     defendant of the kind causing the harm complained of by the 
     claimant.
       (5) Evidence with respect to awards of punitive or 
     exemplary damages to persons similarly situated to the 
     claimant, when offered by the defendant.
       (6) Prospective awards of compensatory damages to persons 
     similarly situated to the claimant.
       (7) Evidence with respect to any criminal or administrative 
     penalties imposed on the defendant as a result of the conduct 
     complained of by the claimant, when offered by the defendant.
       (8) Evidence with respect to the amount of any civil fines 
     assessed against the defendant as a result of the conduct 
     complained of by the claimant, when offered by the defendant.
       (e) Limitation Amount.--
       (1) In general.--The amount of damages that may be awarded 
     as punitive damages in any health care liability action shall 
     not exceed 2 times the sum of--
       (A) the amount awarded to the claimant for the economic 
     loss; and
       (B) the amount awarded to the claimant for noneconomic 
     loss.
       (2) Application by court.--This subsection shall be applied 
     by the court and the application of this subsection shall not 
     be disclosed to the jury.
       (f) Restrictions Permitted.--Nothing in this title shall be 
     construed to imply a right to seek punitive damages where 
     none exists under Federal or State law.

     SEC. __16. PERIODIC PAYMENTS.

       With respect to a health care liability action, if the 
     award of future damages exceeds $100,000, the adjudicating 
     body shall, at the request of either party, enter a judgment 
     ordering that future damages be paid on a periodic basis in 
     accordance with the guidelines contained in the Uniform 
     Periodic Payments of Judgments Act, as promulgated by the 
     National Conference of Commissioners on Uniform State Laws in 
     July of 1990. The adjudicating body may waive the 
     requirements of this section if such body determines that 
     such a waiver is in the interests of justice.

     SEC. __17. SCOPE OF LIABILITY.

       (a) In General.--With respect to punitive and noneconomic 
     damages, the liability of each defendant in a health care 
     liability action shall be several only and may not be joint. 
     Such a defendant shall be liable only for the amount of 
     punitive or noneconomic damages allocated to the defendant in 
     direct proportion to such defendant's percentage of fault or 
     responsibility for the injury suffered by the claimant.
       (b) Determination of Percentage of Liability.--With respect 
     to punitive or noneconomic damages, the trier of fact in a 
     health care liability action shall determine the extent of 
     each party's fault or responsibility for injury suffered by 
     the claimant, and shall assign a percentage of responsibility 
     for such injury to each such party.

     SEC. __18. MANDATORY OFFSETS FOR DAMAGES PAID BY A COLLATERAL 
                   SOURCE.

       (a) In General.--With respect to a health care liability 
     action, the total amount of damages received by an individual 
     under such action shall be reduced, in accordance with 
     subsection (b), by any other payment that has been, or will 
     be, made to an individual to compensate such individual for 
     the injury that was the subject of such action.
       (b) Amount of Reduction.--The amount by which an award of 
     damages to an individual for an injury shall be reduced under 
     subsection (a) shall be--
       (1) the total amount of any payments (other than such 
     award) that have been made or that will be made to such 
     individual to pay costs of or compensate such individual for 
     the injury that was the subject of the action; minus
       (2) the amount paid by such individual (or by the spouse, 
     parent, or legal guardian of such individual) to secure the 
     payments described in paragraph (1).
       (c) Determination of Amounts From Collateral Services.--The 
     reductions required under subsection (b) shall be determined 
     by the court in a pretrial proceeding. At the subsequent 
     trial--
       (1) no evidence shall be admitted as to the amount of any 
     charge, payments, or damage for which a claimant--
       (A) has received payment from a collateral source or the 
     obligation for which has been assured by a third party; or
       (B) is, or with reasonable certainty, will be eligible to 
     receive payment from a collateral source of the obligation 
     which will, with reasonable certainty be assumed by a third 
     party; and
       (2) the jury, if any, shall be advised that--
       (A) except for damages as to which the court permits the 
     introduction of evidence, the claimant's medical expenses and 
     lost income have been or will be paid by a collateral source 
     or third party; and
       (B) the claimant shall receive no award for any damages 
     that have been or will be paid by a collateral source or 
     third party.

     SEC. __19. TREATMENT OF ATTORNEYS' FEES AND OTHER COSTS.

       (a) Limitation on Amount of Contingency Fees.--
       (1) In general.--An attorney who represents, on a 
     contingency fee basis, a claimant in a health care liability 
     action may not charge, demand, receive, or collect for 
     services rendered in connection with such action in excess of 
     the following amount recovered by judgment or settlement 
     under such action:
       (A) 33\1/3\ percent of the first $150,000 (or portion 
     thereof) recovered, based on after-tax recovery, plus
       (B) 25 percent of any amount in excess of $150,000 
     recovered, based on after-tax recovery.
       (2) Calculation of periodic payments.--In the event that a 
     judgment or settlement includes periodic or future payments 
     of damages, the amount recovered for purposes of computing 
     the limitation on the contingency fee under paragraph (1) 
     shall be based on the cost of the annuity or trust 
     established to make the payments. In any case in which an 
     annuity or trust is not established to make such payments, 
     such amount shall be based on the present value of the 
     payments.
       (b) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of damages, whether through judgment 
     or settlement.

     SEC. __20. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION 
                   MECHANISMS.

       (a) Establishment by States.--Each State is encouraged to 
     establish or maintain alternative dispute resolution 
     mechanisms that promote the resolution of health care 
     liability claims in a manner that--
       (1) is affordable for the parties involved in the claims;
       (2) provides for the timely resolution of claims; and
       (3) provides the parties with convenient access to the 
     dispute resolution process.
       (b) Guidelines.--The Attorney General, in consultation with 
     the Secretary and the Administrative Conference of the United 
     States, shall develop guidelines with respect to alternative 
     dispute resolution mechanisms that may be established by 
     States for the resolution of health care liability claims. 
     Such guidelines shall include procedures with respect to the 
     following methods of alternative dispute resolution:
       (1) Arbitration.--The use of arbitration, a nonjury 
     adversarial dispute resolution process which may, subject to 
     subsection (c), result in a final decision as to facts, law, 
     liability or damages. The parties may elect binding 
     arbitration.
       (2) Mediation.--The use of mediation, a settlement process 
     coordinated by a neutral third party without the ultimate 
     rendering of a formal opinion as to factual or legal 
     findings.
       (3) Early neutral evaluation.--The use of early neutral 
     evaluation, in which the parties make a presentation to a 
     neutral attorney or other neutral evaluator for an assessment 
     of the merits, to encourage settlement. If the parties do not 
     settle as a result of assessment and proceed to trial, the 
     neutral evaluator's opinion shall be kept confidential.
       (4) Early offer and recovery mechanism.--The use of early 
     offer and recovery mechanisms under which a health care 
     provider, health care organization, or any other alleged 
     responsible defendant may offer to compensate a claimant for 
     his or her reasonable economic damages, including future 
     economic damages, less amounts available from collateral 
     sources.
       (5) Certificate of merit.--The requirement that a claimant 
     in a health care liability action submit to the court before 
     trial a written report by a qualified specialist that 
     includes the specialist's determination that, after a review 
     of the available medical record and other relevant material, 
     there is a reasonable and meritorious cause for the filing of 
     the action against the defendant.
       (6) No fault.--The use of a no-fault statute under which 
     certain health care liability actions are barred and 
     claimants are compensated for injuries through their health 
     plans or through other appropriate mechanisms.
       (c) Further Redress.--The extent to which any party may 
     seek further redress (subsequent to a decision of an 
     alternative dispute resolution method) concerning a health 
     care liability claim in a Federal or State court shall be 
     dependent upon the methods of alternative dispute resolution 
     adopted by the State.
       (d) Technical Assistance and Evaluations.--
       (1) Technical assistance.--The Attorney General may provide 
     States with technical assistance in establishing or 
     maintaining alternative dispute resolution mechanisms under 
     this section.
       (2) Evaluations.--The Attorney General, in consultation 
     with the Secretary and the Administrative Conference of the 
     United

[[Page 14931]]

     States, shall monitor and evaluate the effectiveness of State 
     alternative dispute resolution mechanisms established or 
     maintained under this section.

     SEC. __21. APPLICABILITY.

       This title shall apply to all civil actions covered under 
     this title that are commenced on or after the date of 
     enactment of this title, including any such action with 
     respect to which the harm asserted in the action or the 
     conduct that caused the injury occurred before the date of 
     enactment of this title.

      Subtitle B--Protection of the Health and Safety of Patients

     SEC. __31. ADDITIONAL RESOURCES FOR STATE HEALTH CARE QUALITY 
                   ASSURANCE AND ACCESS ACTIVITIES.

       Each State shall require that not less than 50 percent of 
     all awards of punitive damages resulting from all health care 
     liability actions in that State, if punitive damages are 
     otherwise permitted by applicable law, be used for activities 
     relating to--
       (1) the licensing, investigating, disciplining, and 
     certification of health care professionals in the State; and
       (2) the reduction of malpractice-related costs for health 
     care providers volunteering to provide health care services 
     in medically underserved areas.

                     Subtitle C--Obstetric Services

     SEC. __41. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

       (a) In General.--In the case of a health care liability 
     action relating to services provided during labor or the 
     delivery of a baby, if the health care professional or health 
     care provider against whom the action is brought did not 
     previously treat the claimant for the pregnancy, the trier of 
     the fact may not find that such professional or provider 
     committed malpractice and may not assess damages against such 
     professional or provider unless the malpractice is proven by 
     clear and convincing evidence.
       (b) Applicability to Group Practices or Agreements Among 
     Providers.--For purposes of subsection (a), a health care 
     professional shall be considered to have previously treated 
     an individual for a pregnancy if the professional is a member 
     of a group practice in which any of whose members previously 
     treated the individual for the pregnancy or is providing 
     services to the individual during labor or the delivery of a 
     baby pursuant to an agreement with another professional.

                        Subtitle D--Severability

     SEC. __51. SEVERABILITY.

       If any provision of this title, an amendment made by this 
     title, or the application of such provision or amendment to 
     any person or circumstance is held to be unconstitutional, 
     the remainder of this title, the amendments made by this 
     title, and the application of the provisions of such to any 
     person or circumstance shall not be affected thereby.

                          ____________________