[Congressional Record (Bound Edition), Volume 149 (2003), Part 5]
[House]
[Pages 6001-6009]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  MEDICAL MALPRACTICE INSURANCE CRISIS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from New Jersey (Mr. Pallone) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Madam Speaker, I am here tonight to talk about the 
medical malpractice insurance crisis which we face in New Jersey and in 
many States around the country. My concern is that the legislation, 
H.R. 5, which the Republican leadership intends to bring to the floor 
of the House of Representatives tomorrow, will not solve the problem in 
any way and in fact is another example of politics as usual where the 
Republican leadership, in this case with the support of the President, 
are bringing up a bill that they realize has no chance of passage. It 
may pass here and then it will go over to the other body and fail 
because it was not done on a bipartisan basis; it was not done in an 
effort to try to bring the parties together and put together something 
that would actually accomplish the purpose of bringing malpractice 
premiums down. Rather, it is sort of a bone to special interests.
  In other words, it is something that is being put out so the 
Republicans can say and the Republican leadership can tell the doctor 
groups, the hospital groups, the HMOs, the drug companies, the medical 
device companies that somehow they are doing something to help them 
when in reality they are not because it is not a bill that will 
ultimately pass.
  I want to talk a little bit about the crisis because it is real. In 
my home State of New Jersey, we have major problems with increasing 
malpractice premiums. Some of the doctors actually went out on strike 
about a month ago because of their concerns; and it continues to be a 
problem, particularly with certain specialty doctors. But in many 
cases, it is an across-the-board problem in New Jersey.
  What is happening now with this Republican bill, H.R. 5, is it is 
essentially a one-size-fits-all approach that does not look at the 
actual underlying issue of health care and medical malpractice. It is 
really designed to put a cap on jury awards at $250,000, the theory 
being if you do not allow large jury awards, that will bring down the 
cost of malpractice insurance premiums. There is no evidence that is 
true.
  The Republican leadership often cites the State of California as an 
example of where that kind of cap, a $250,000 cap, was put into place; 
but we know when the cap was put into place in California, premiums did 
not go down. The only time when premiums went down in California was 
when there was an initiative passed by the voters that actually 
addressed the cause and said that premiums could not rise a certain 
amount. That did accomplish bringing the premiums down because they 
were not allowed to increase significantly. But the $250,000 cap did 
not accomplish that.
  There are many factors that contribute to the malpractice crisis in 
New Jersey and elsewhere. There is the changing face of health care in 
our Nation, namely an increase in high-risk procedures with inherently 
bad outcomes. There are also the recent problems we have seen in the 
health care market, namely a shift to managed care, to HMOs which have 
increasingly created bad outcomes. In addition, bad accounting or bad 
business judgment on the part of insurance companies has to be taken 
into consideration when discussing dramatic rises in medical 
malpractice premiums.
  Now, wherever there has been success in trying to reduce premiums for 
malpractice insurance, it is because there has been some kind of 
combination of maybe some tort reform, but also linked to trying to 
actually address directly the effort to reduce the premiums themselves. 
As I said, in California the premium increases were actually capped.
  In my home State of New Jersey a few years ago in the 1970s when we 
had a problem with rising malpractice insurance premiums, we set up a 
reinsurance fund which basically said that the insurance companies had 
to pay a certain amount of money into a fund, and

[[Page 6002]]

that money would be used to reduce premium costs when there was a 
crisis.
  I actually proposed this in the Committee on Energy and Commerce in 
the subcommittee that has jurisdiction over this issue. Last week when 
we had a markup, I proposed H.R. 485, the Federal Medical Malpractice 
Insurance Stabilization Act, that would create a national reinsurance 
fund just like we had in New Jersey. The proposal mandates that the 
Secretary of Health and Human Services establish a program where 
insurance companies pay into a Federal fund. In time of crisis, these 
funds are made available to the companies in an effort to provide 
stability in the marketplace for medical malpractice coverage.
  I mention this not because it is the cure-all, but when I tried to 
raise it in the subcommittee, the Republicans said it was not germane. 
They would not allow it to be considered as an amendment. Why? Because 
they have this one-size-fits-all philosophy. They want to cap damage 
awards by the jury, and they do not want to deal with caps on premium 
costs that would actually bring down the cost of malpractice insurance.
  I have a lot of issues that I want to talk about in the context of 
this malpractice reform issue, but I wanted to give an example because 
I think it is important when we are on the floor and we talk about 
legislation, we do not just talk about it in an abstract way; we give 
specific examples of what it means.
  I want to give some specific examples in New Jersey, two examples of 
people who would be negatively impacted by the Republican proposal that 
is coming up tomorrow, in particular because of the way the language in 
that bill caps punitive damages, noneconomic damages, at $250,000; and 
also the way it designs and limits liability for punitive damages. It 
is a good way for me to illustrate the problems with that legislation 
because what would happen in this legislation is many people that have 
serious injuries or have even died, there would be very little 
recovery. The cap on the $250,000 essentially is a huge limitation on 
some of these people and their families that would suffer a great deal 
if this legislation were passed. So let me give Members two examples.
  One example is Jersey City, New Jersey, a Vietnam veteran who was 
also a merchant marine barge captain was diagnosed with a carcinoid 
benign bleeding tumor in his left lung which required that the lung be 
removed. The diagnosing physician was part of a practice group that 
also included other doctors, including a surgeon who was set to perform 
the operation, although that surgeon had no contact with the patient 
prior to the surgery. The physician mistakenly removed the healthy 
right lung of the patient rather than the diseased left lung. They 
could not then also remove the patient's remaining functioning lung 
which contained the tumor.
  Madam Speaker, after this error was discovered with this New 
Jerseyan, the physicians in this case allegedly altered the medical 
records and told the patient that after beginning surgery, they 
determined that they needed to remove the other lung because of a 
previously undiagnosed disease. However, the Vietnam veteran later 
learned that the pathology report on the removed lung revealed it was a 
completely healthy lung. Due to the extraordinary alleged coverup 
attempted by the defendants and their efforts in seeking to convince 
the patient that it was actually a good thing that they had removed the 
wrong lung, the plaintiff added a count to his complaint for punitive 
damages, not just for compensatory damages.
  Today, Madam Speaker, this Jersey City Vietnam veteran requires 
oxygen 24 hours a day and has a host of medical problems as a result of 
the operation. Meanwhile, the tumor in his remaining lung will likely 
continue to grow. If it becomes cancerous, there is little that can be 
done to treat it. His lawsuit is pending.
  What would H.R. 5 that the Republicans have brought up do? H.R. 5 
would harm this Vietnam veteran in two ways. First, it would virtually 
eliminate meaningful economic compensation, limiting it to just 
$250,000, as we discussed. This is a small amount to compensate a man 
who has been an active professional and who now must have oxygen tanks 
with him at all times for the rest of his life.

                              {time}  1830

  Moreover, he has to live in fear that the tumor that his physicians 
failed to remove will become cancerous and metastasize, spreading 
cancer throughout his body, or will perhaps rupture, possibly drowning 
him in his own blood.
  Secondly, if you look at H.R. 5, which we are going to consider 
tomorrow, the Republican bill, it sets standards for the award of 
punitive damages that would protect the kind of after-the-fact 
concealment of injury that is alleged in this case. So he cannot even 
sue because they tried to cover up the malpractice. Because in the 
bill, punitive damages would not be available unless the physician 
acted with malice specifically to injure the patient, which was not the 
case, or deliberately failed to avoid injuring the patient, which was 
not the case, because in this case the conduct for which punitive 
damages are claimed is not the malpractice or even the injury itself 
but the cover-up of the malpractice and the harm and the doctors' 
deliberate deceit of their patient and as a result removing this 
healthy lung.
  You can see how in this case, this patient basically would not be 
able to recover what is needed. I am going to give another example 
later, but I see one of my colleagues is here. I do not want to prolong 
this, but I do want to say one other thing about this bill which I 
think is so important. I had an amendment. In fact, the Committee on 
Rules is considering it now, although I doubt that they will allow it 
because I am sure the Republican majority is not going to allow these 
various amendments since they have the one-size-fits-all bill and that 
is what they want. But what the committee did and what the bill does 
that we are going to consider tomorrow is it not only limit damages and 
claims, if you will, for malpractice against a physician or a hospital, 
which is what the crisis is all about in New Jersey and I am sure my 
friend from Massachusetts would agree, the people that are concerned 
about malpractice are physicians and hospitals. They are the ones who 
have the premiums that are going up and that is where the crisis is. 
But this bill is not limited to doctors or even hospitals. It limits 
the liability or the claims, if you will, that can be recovered from 
HMOs, from drug manufacturers and even from medical device 
manufacturers.
  The most egregious aspect of it is with regard to the HMOs. Because, 
Madam Speaker, as I think you know, we here in this House over the last 
few years have tried to pass a patients' bill of rights that would 
essentially say that if a decision was made by your HMO to deny you 
care, that you can appeal either through an administrative procedure or 
go to court and sue the HMO because they denied you the care that you 
were supposed to have. A number of the courts now in about 12 States, 
including the Federal Second Circuit Court in New York which covers a 
number of States, have now said that a person can sue an HMO. What this 
bill does tomorrow that we are going to be considering is take away 
your ability to sue the HMO in certain circumstances. It limits it 
considerably. So while we in Congress have been trying, or at least 
articulating the fact that we would like to expand people's ability to 
appeal a denial of a decision with regard to an HMO that really 
negatively hurt them or impacted their health, this bill would do the 
opposite. This would take away whatever rights people now have to sue 
their HMO or to recover from an HMO when they make a mistake through 
denial of care.
  It is incredible for me to think that not only is this not going to 
work effectively to reduce premiums for malpractice, not only is this 
going to limit the ability of many victims, as I used my New Jersey 
example, to sue or to collect damages when they have been seriously 
injured, but the bill even goes beyond the issue at hand, which is 
rising premiums for doctors and hospitals

[[Page 6003]]

and lets off HMOs and drug companies and medical device companies, 
basically in my opinion special interests who are helping the 
Republican leadership and so now they have to get some kind of 
compensation for what they do.
  I see my colleague from Massachusetts is here. I yield to him at this 
time.
  Mr. TIERNEY. I thank the gentleman from New Jersey and ask that he 
stay nearby because I want to have a conversation with him if I can 
eventually on this.
  I have had some very interesting conversations with constituents in 
my office for a period of time now about this issue, ever since the 
bill was filed. Primarily the concept was that people come in and they 
are upset because of what they think are the consequences of this bill 
from whatever perspective they come.
  Consumer groups come in on behalf of patients and talk about how 
unjust it is for the limitations that it puts on patients. Lawyers come 
in because they are concerned. They, of course, believe that they are 
doing the right thing in representing victims of malpractice. They 
believe that part of what they do that is noble and right is that they 
try to get people recovery so that they can continue on with their 
lives in some sort of respectable manner after some consequence or some 
disaster has happened to them. And doctors come in because they think 
that the bill may be helpful to them because they do not want to bear 
the unlimited exposure to lawsuit damages and do not want their 
premiums rising through the roof. So we have those three groups sort of 
pitting against themselves, or some combination. But when you sit 
people down and talk to them, it is really easy to see that this bill 
is not about doctors, it is not about lawyers, it is not about 
patients, it is about insurance companies. It is about insurance 
companies and those others that you mentioned at the end of your 
remarks who somehow managed to get into a bill that they are billing as 
being a limitation on premiums for malpractice but managed to sneak in 
there immunity for themselves and total absolution from any liability 
for their malfeasance or their mistakes or their negligence or their 
wrongful acts even if they are deliberate. The fact of the matter is 
that that does not serve the American public at all. It does not serve 
any of those other three groups that we talked about.
  I have any number, as I am sure you do, a number of friends that are 
doctors, physicians in different fields, ranging from those that have a 
very high risk factor to those that have a very small risk factor. 
There is not a one of them that when I engage them in conversation that 
does not have compassion for their patient. When you say to someone, as 
I did just the other day to a doctor, this particular doctor deals with 
people with cerebral palsy, an absolutely dedicated physician. I said 
to him, if one of your patients by virtue of your mistake was injured 
at a very young age and the consequences were that they were going to 
have this disaster for the rest of their lives, do you think that 
$250,000 would fairly compensate them?
  They say, well, no, of course not.
  I ask if they realize that in this bill that is the limitation that 
is put on that. And that women that get injured that may not be 
working, may be bringing up a family in a household, they do not have 
economic earnings from which they can then generate a recovery but they 
have the rest of their lives to go forward when they may then have to 
go out and try and earn a living and they may be stopped from doing 
that, do you think for someone in that consequence, that $250,000 is 
enough?
  Well, of course not, was the answer. And right on down the line, 
example after example. I came in late, but I know you were giving some 
examples earlier.
  Their answer back to me was, why don't you engage and try to do 
something that is reasonable? If you don't think $250,000 is 
reasonable, why don't you engage them in that? I tell them that the 
simple fact of the matter is that this is not about a conversation. We 
are more than willing to sit down and talk about what is fair and what 
is just. The problem is that the insurance industry and the HMOs and 
the others that are driving this piece of legislation and I think using 
the doctors as a tool in this by trying to get them to believe that 
their premiums will go down when they will not, and history shows that 
they have not and studies indicate that they are not intended to by 
this bill, that they try to get them involved in that instead of 
realizing that this is all about the insurance industry, all about the 
HMOs, all about those other manufacturers that want to be absolved from 
liability and they do not want a discussion. They want to try to 
generate the heat high enough so that you are either for it or against 
it. There seems to be a lot of that going on around here these days. 
They make a bill very difficult and absolutely without any compromise.
  You will find out that when the bill comes to the floor tomorrow, 
they will not be asking for amendments to make it better or to improve 
it. They will not be asking for any prolonged debate to talk about all 
the aspects of this, not just premiums but how do we protect doctors 
from unlimited liability, how do we protect patients to make sure they 
get their just due without putting doctors out of business. None of 
that will be open for debate. It will simply be a vehicle for people to 
make a case, perhaps in the next election in 2004 or whatever or to 
show themselves to their benefactors that they are out there waving the 
flag on their behalf. That is unfair. It is unfair to patients, it is 
unfair to doctors, it is unfair to lawyers and it is unfair to the 
American public at large.
  The fact of the matter is that if you couch it in terms that this is 
all about keeping premiums down, it is something interesting to note 
that in California, where this is supposedly the model for this whole 
program, in the 1970s when they put in a cap on recovery, the fact of 
the matter is premiums did not go down. The next 4 years they went up 
considerably, and since that point in time, they have been pretty much 
running the average of around the rest of the country. So that is a 
fallacy. In Florida, when the Florida legislation said to the insurance 
industry, well, then if we are going to pass a bill like this, you have 
to certify to us that premiums will go down, the insurance industry 
said, no, we won't do that. In Nevada the same thing happened out there 
where they talked about enacting severe damage caps. The insurance 
industry came out and said very clearly that they would still not lower 
premiums. The studies indicate and history indicates that the insurance 
industry makes its money primarily not from premiums so much as from 
the investment of those premiums into other vehicles, whether they are 
bonds and to a lesser extent stocks and other vehicles and generate 
income from that. When the market is down, as it is now, and they are 
not paying off as they are, when it goes down, then they have to jack 
up the premiums to get the profits to which they think they need to go 
on with their company. Then they have to tell somebody that it is not 
about insurance companies and profit because they know that will not be 
extremely profitable because everybody wants people to have a profit 
but they do not want necessarily to be gouged. So they cannot go out 
and tell people that we just want to get a higher profit and we are 
going to do anything, we are not going to take any decrease in our 
profits, but instead we are going to go out and get the doctors, they 
cannot say that. They turn around and they say, you know what the 
problem is here? The people that are subject to malpractice, the people 
that have lost something in their lives, they are the problem. They are 
getting too high a recovery. Obviously because they are represented by 
lawyers helping them get that recovery, then lawyers are bad people, 
too.
  The fact of the matter is many times these are complicated cases. 
Something happens, and if a doctor makes a mistake, it is complicated, 
and it is difficult sometimes to find out just where that mistake 
occurred, which part of the process, which doctor or other health care 
person was involved

[[Page 6004]]

in that. A suit might be filed to find out, to discover where that was. 
Then the people that are not involved are let out or the person who is 
responsible, their insurance company gets engaged in the situation. You 
would hope that this is a system we have structured to give that person 
a fair recompense for their injuries. That is the way that it is 
supposed to work.
  The problem is of course that now they are putting up there, they are 
saying that this whole idea of somebody recovering is where the culprit 
is. There has not been any great increase in huge recoveries across 
this country. They cannot point to statistics showing that all of a 
sudden we have had a spike in incredibly high recoveries for people. 
And those few high recoveries are generally knocked down by appeals 
courts to a much more realistic number. It just happens that there was 
something in the course of that case that the jury got upset with, 
whether it was somebody trying to cover up something that was done or 
an insurance company failing to pay off on time, or something that 
caused them to get an award up there and courts generally ratchet that 
back.
  But if we are not going to proceed on the basis that we have done in 
the past of having a system where somebody who through no fault of 
their own is seriously injured, looks to the person who was negligent, 
to the person who conducted the malpractice for a contribution, which 
they then in return insure against, then we have to find out what else 
it is that we are going to put in place for a system. If we think that 
we want somebody else to decide other than a jury as to what somebody's 
fair recovery is, then let us hear what it is. Let us have a debate 
about that. Who should replace a jury of your peers in deciding that? 
If you think there should be a cap on the amount of money that people 
recover, let us have some experts as well as the general public engaged 
in the debate about what would a fair amount be, because you certainly 
need to take care of these people. We have decided as a society that 
the innocent part of that should not be the one that suffers the burden 
and goes without having any ability to sustain the rest of their lives. 
We have decided that we have to try and share that blame by making the 
person who has been negligent responsible and letting them insure for 
it.
  Society has to have a replacement. We can complain about the system 
that we have all we want, but we should be having a debate instead 
about what changes in it we are going to make if we think that parts in 
it are not working. As I said in the beginning of my remarks, I have 
great sympathy for the doctors who feel they have to practice 
defensively, for the doctors who feel that their exposure is unlimited, 
for the doctors who insurance companies abuse by raising their premiums 
on the false pretense that it is the situation where people are getting 
too much for their injury. We have to sit down with people and say, 
what else are we going to put in place, how else are we going to make 
these decisions in a fair way so that people get fairly compensated for 
their injuries and so that we understand that doctors have to remain in 
practice and they have to remain in practice without the fear of being 
put out of business either financially or because they were constantly 
engaged in litigation.
  I do not hear that kind of conversation coming from the other side of 
the aisle, from the majority. I frankly do not hear anybody saying we 
are going to sit down and try to iron this out. Did it go to committee? 
It went to committee, but people should not feel that there was an open 
dialogue in committee, that there was any deliberation and honest 
debate and suggestions about what changes might be made. It went to 
committee so that the majority who put forward the bill could ram it 
through on a straight party line vote and get it to the next level so 
we could do the same thing so that they would have some talking points 
to go back to their benefactors with and to campaign against and say 
like, oh my God, other people that don't vote for this bill want to put 
the doctors out of business, and we are the ones who want to save the 
doctors when in fact the premiums will not go down a stitch, the 
insurance companies will not allow the bill to be amended to put a 
requirement that if the recoveries go down, the premiums go down, and 
the fact of the matter really is it is all about the insurance 
companies, the HMOs and the others that are going to be shielded from 
liability and it is not about the doctors, not about the lawyers and, 
shamefully, it is least about the people that are really the ones that 
we should be focusing on here, the people that are injured through 
malpractice.
  The best thing these insurance companies could do, one of the best 
things they could do is help doctors put in place some way to police 
those 5 percent of the medical profession that are responsible for 54 
percent of the claims. It seems to me and I think others that that is 
one area to look at that would take care of a large part of the problem 
of legal actions and a large part of the problem with that small 
percentage of the premium increase that may be attributable to claims.

                              {time}  1845

  My recollection of reports and data shows that it is about half a 
percentage point on those premiums. But that would make sense. Find 
ways to hold accountable that 5 percent of doctors that have 54 percent 
of the claims, and make sure they are either reeducated so they are no 
longer guilty of malpractice, or move them out of the profession to 
someplace else where they are happy, to a less risky end of the 
business.
  Then let us make sure we take a look at the insurance companies. If 
they are going to jack up prices every time their investment returns go 
down, then we have to look at the company industry and say something is 
wrong here. Doctors should not be subjected to these spikes in premiums 
just because the economy has gone down and that is where you invested 
all of your eggs, and now you are suffering a loss and you want to 
maintain your high profits, you are not satisfied with a lesser profit. 
Then we have to find a way to deal with that through insurance 
regulation.
  Short of that, and if they are going to insist on putting that bill 
through, we would at least hope they would have provided some 
discussion about what is a fair amount; and $250,000, even by doctors 
accounts, is not a fair amount of a cap. We would have had some 
discussion about what are we going to do about policing those 5 percent 
of the medical profession that create 54 percent of the incidents that 
end up in lawsuits. And we would have done something with the fact of 
trying to work our way around so that doctors did not feel they were 
subject to legal suit in order for people to get discovery as to who is 
responsible, find some way earlier in the process for the facts to be 
known so that people could move forward, and have a good public debate 
about this so that everybody's interests were resolved.
  That is not happening, my colleague from New Jersey, you know that 
very well; and I would just say to you that I would be happy to have a 
conversation with you on it if you want, but I think you would agree 
that we could have done a much better job sitting down as a full House, 
with a full complement of the committee, with all three parties, the 
Independents, the Republicans and the Democrats, and people 
representing the consumers, patients, the doctors, and the insurance 
companies, and talked about what is needed to be done in order for this 
to really be done correctly.
  I think it is shameful we started out with this yelling and screaming 
contest, that it is all or nothing, there cannot be any reasonable 
conversation. Doctors feel they are put in the position of, gee, in 
order to save ourselves, we have to go along with this low cap, and we 
have to go along with the provisions of the bill that effectively make 
it difficult for people injured to even find legal representation, 
because it is going to be so expensive to proceed on that suit; and 
there will not be any compensation because the amounts have been capped 
and lawyers will not

[[Page 6005]]

come on, and they will be without a lawyer.
  Only one in eight people that are subject to malpractice now file a 
claim anyway, and I guess the insurance companies would like to collect 
those premiums from the doctors and have that one in eight number be 
even less. Their profits would be that much higher, but society would 
not benefit from it. People that were injured would still have to go 
through their lives with those egregious situations and without help; 
and I think that we should focus on making the situation better, not 
having a political battle here that does not allow for debate.
  Mr. PALLONE. I want to thank my colleague from Massachusetts for 
bringing up the reality of what is happening here politically. I know 
neither one of us wants to talk about politics. We would rather talk 
with the substance of this issue and what could be done to bring 
premiums down, because that is where the crisis is.
  But what is happening with the Republican leadership, and even the 
President on this, is totally political. I mean, I have to tell you, I 
will just give you the background in the Committee on Energy and 
Commerce. This came up just before the election, I think it was 
sometime in October, that the Republican leadership on the Committee on 
Energy and Commerce decided to bring this up. There may have been a 
hearing, I do not even remember if there was; if there was, maybe there 
was one. And they quickly brought this up in the committee, wanted to 
bring to the floor, just before the election in October, just to make 
the political point that they were trying to accomplish something.
  Mr. TIERNEY. If the gentleman will yield, I think you take it back a 
step further. If you remember the debates about the Patients' Bill of 
Rights, where doctors and consumer-patients, consumer groups and others 
were together on this issue, understood that we needed to have 
protections against HMOs and the like, needed to be able to file an 
appeal to an egregious situation, I think a lot of it stemmed from the 
insurance companies and HMOs at that point in time saying we have to 
get back the equation here, and the way we will do it is we will 
improve our financial situation, and we will try to drive a wedge 
between those patients and their doctors.
  Where they finally have come together and have focused the light on 
us and we are losing ground on the Patients' Bill of Rights, we have to 
again drive that wedge, and the way we will do it is by telling doctors 
that their premiums are going up, because patients that are subject to 
malpractice are getting too much compensation for their injuries, which 
they cannot justify and cannot move in that direction.
  It is shameful. As I say, the doctors, in my view, are good people 
with the right mind, the right heart on this thing. When you sit down 
and talk with them, they understand that they are being used.
  Their first comment always is, well, why do the Members of Congress 
not talk about what would be the right amount, if any amount, to talk 
about fair compensation? Why do they not talk about what should have to 
happen before a claim is filed? Why do they not talk about reining in 
the insurance companies?
  I said we are perfectly willing, but conversation needs two parties, 
and there is one party here. We are listening. We would be more than 
willing to talk. The other side is not willing to have anybody listen, 
and they are only willing to ram things through; and unfortunately, 
that is what you are going to see tomorrow, and I do not think anybody 
is going to be served by it.
  Hopefully, the other body in this institution will have the wisdom to 
stop that and force it back; and then maybe, maybe if there is enough 
pressure from other groups, we can have a conversation trying to 
improve the situation for everybody's benefit.
  Mr. PALLONE. The gentleman is right on point. Let me tell you how 
much on point you are. Not only was this same bill essentially rammed 
in just a few weeks before the election through the committee, but, of 
course, it had to be the first order of business when we came back.
  When we on the Committee on Energy and Commerce asked the Republican 
leadership on the committee to sit down with us and talk about a 
bipartisan bill that did not just deal with capping damages at 
$250,000, but actually dealt with all different aspects of the crisis, 
reinsurance, giving money, capping premiums or whatever, essentially 
what we were told, informally, was well, we cannot do that now. We 
cannot sit down. We have to bring this to the floor fast. Then it will 
go over to the Senate, and, do not worry, it will not pass there. Then 
we will sit down and talk with you about what we are really going to 
do.
  This is essentially what we were told. This came in the subcommittee. 
Two weeks ago there was a hearing on Thursday. It was marked up in the 
subcommittee last Tuesday, it was voted out of the full committee last 
Thursday, and it was brought to the floor. Everybody understood that 
this had to go to the floor and there was not any opportunity to talk 
about what really could be accomplished, and we had to pass it in the 
House as a political measure for the reasons you said; and then when it 
gets to the Senate, okay, they will not pass it, we will have to sit 
down and talk.
  This is the politics of it. There is no question about it.
  Mr. TIERNEY. I just want to thank the gentleman for taking the time 
this evening to allow for some debate, probably much more than we will 
get tomorrow on this, so we could have a full discourse on what is 
going on and what the content of the bill is and what the effects are 
going to be on people. I think tomorrow we will hear a lot of the 
standard positions that people are taking, one side or another.
  This discourse hopefully allowed us to broaden that out a little bit 
and talk about some the specifics. I thank the gentleman again for 
taking the time to do it and showing his leadership.
  Mr. PALLONE. I appreciate the gentleman coming down.
  Let me say another thing. This bill is primarily based, this bill 
that we are going to vote on tomorrow, is primarily based on the notion 
that damages, punitive and noneconomic damages, have to be capped at 
$250,000. What I have said over and over again to the Republican 
leadership in our committee, in the Committee on Energy and Commerce, 
is where is this magic $250,000 figure coming from? I hear over and 
over again, I guess because it was used in California, but there is 
absolutely no reason to believe that $250,000 is somehow some magical 
term to cap damages.
  I think there are many on the Democratic side of the aisle, including 
myself, that do not have a philosophical problem with a cap on damages, 
but $250,000 is too low. Why is it not $1 million? Why is it not $1.5 
million? Nobody on the Republican side of the aisle will give us an 
answer for that. They just insist that it has to be $250,000.
  As my colleague from Massachusetts said, any effort to deal with this 
issue, other than capping damages, the Republicans completely reject. 
They say that the only thing we are really trying to do here is tort 
reform. We are not trying to deal with lowering premiums or addressing 
premium costs, other than through the vehicle of capping damages and 
tort reform. That is it.
  Now, I just wanted to use another example, if I could, Madam Speaker, 
of how this legislation, this Republican bill that is coming up 
tomorrow, would be unfair to specific individuals.
  I have another example in my home State in Newark, New Jersey, which 
is New Jersey's largest city, of a 12-year-old in Newark. I would just 
like to run through the case, explain what the case is, and why H.R. 5 
would be very damaging.
  This is a 12-year-old 8th grader who developed flu-like symptoms in 
September 2001. His mother took him to their family doctor, who gave 
him a prescription for antibiotics. When he showed no improvement, the 
boy and his mother returned and a different doctor changed the 
prescription. The boy seemed to be getting worse, continued vomiting 
and became dehydrated.

[[Page 6006]]

  After 2 more weeks, his mother took her son to the emergency room. A 
blood test revealed there was something seriously wrong. Further 
testing determined that he had leukemia. However, he was informed he 
had a 95 percent chance of complete recovery.
  Madam Speaker, the boy's pediatric oncologist prepared him for four 
chemotherapy protocols. After three administrations of the chemotherapy 
protocol, his progress chart noted that his leukemia was considered in 
remission.
  The 12-year-old Newark boy went in for the final chemotherapy 
treatment at that point. The order for this administration should have 
been for one 60 milligram dose of a drug called doxarubicin. Instead, 
the written order called for three doses instead of one, and the 
chemistry department at the hospital reviewed the protocol but did not 
notice the overdose.
  After the third dose, the boy had a violent reaction. The head 
oncology nurse reviewed the chart and said, ``There has been a terrible 
mistake,'' and called the doctor. The doctor said, ``Oh, no, how could 
this have happened?''
  The boy's mother was informed that her son had received a massive 
overdose and he would be very sick. The most serious problem, she was 
informed, would be an overproduction of mucous throughout his body.
  Now, Madam Speaker, the boy's health deteriorated, forcing him to 
stay in the hospital. He developed inflammation and ulceration of the 
linings of his mouth, throat and gastrointestinal tract. He experienced 
cardiac dysfunction, began vomiting blood and finally had swelling all 
over his body.
  He transferred to a different hospital that began aggressive bone 
marrow transplants, but, unfortunately, too much damage had been done; 
and in April of last year this young boy died of severe adult 
respiratory distress syndrome, ARDS, caused by excessive mucous in the 
lungs.
  Again, I use the example, because I want to show what the impact 
would be with H.R. 5, the Republican bill that we are going to consider 
tomorrow. The impact of this legislation would be very severe.
  Being a 12-year-old, he did not have any income. The total amount of 
his economic loss would be the cost of medical treatment for his cancer 
treatment. The total available amount of noneconomic damages, 
compensation to his mother for the poisoning of her son, for his 
lingering, painful death, and her for permanent loss, would be capped 
at $250,000.
  Now, again, what is the magical $250,000? Where does it come from? I 
do not know. Nobody will give me an answer.
  I have had some people who I consider somewhat heartless say to me, 
well, you know, a boy dies, a young person dies, a minor dies. Why 
should we pay the parents any more than $250,000? In other words, they 
were not dependent on him economically. He did not have a wife, he did 
not have children, he did not have a job. He was too young for all 
that. But I think that is a very heartless approach.
  It also begs the question of the fact that if there is very little 
penalty and very little consequence of negligence or medical mistakes, 
then one could argue that there is not much of an incentive to not keep 
making them on the part of the hospital or certain physicians maybe 
that should not be out there practicing.
  I do not say that because I think that most doctors make mistakes or 
are negligent. I certainly do not. But there always are some, like in 
every profession, that do.
  One of the reasons we have punitive damages and that we do not have a 
cap is because we want to make sure that there is a certain amount of 
punishment, so that people do not continue to practice and they are 
more cautious and do not make these mistakes. Otherwise, why would the 
mistakes not continue to be made?
  I have other examples, Madam Speaker; but before I get to some of the 
other examples, I want to talk a little bit about the fact that this 
bill goes beyond just malpractice premiums, insurance premiums, for 
doctors and hospitals, and deals with drug companies and deals with 
HMOs and deals with medical device manufacturers, because I think the 
fact that this Republican leadership legislation goes way beyond the 
order of the day, way beyond the issue of premiums for doctors and 
hospitals is a strong indication, maybe the strongest indication, that 
it is really nothing but special interest legislation designed to help 
some friends of the Republican leadership.
  I offered an amendment in committee, which is also being considered 
in the Committee on Rules, and was, of course, voted down in committee 
strictly on partisan lines and probably the same will happen in the 
Committee on Rules. I cannot imagine that we would be able to consider 
it tomorrow. But basically it would have struck the provisions in the 
bill that deal with the issue other than doctor and hospital premium 
costs.
  I just want to talk a little bit about the amendment, because I 
think, again, it brings forth why this bill is really not meant to 
accomplish the goal of addressing the malpractice crisis.

                              {time}  1900

  The amendment that I proposed strikes the language that includes 
liability protections on punitive and noneconomic damages for these 
industries; in other words, medical device manufacturers, HMOs, drug 
companies, and other health insurance companies. These are industries 
outside the scope of medical practitioners and, therefore, medical 
malpractice.
  The limitations in the bill on liability covering defective medical 
products, dangerous prescription drugs, and claims against HMOs and 
health insurance companies I think are appalling, Madam Speaker. 
Shielding all of these additional industries from liability has no 
effect on medical malpractice insurance premiums which only affect 
doctors and hospitals and would only harm the current product liability 
system.
  What H.R. 5 does, as written, is to leave victims with little 
recourse. These additional protections, the ones that I mentioned that 
go outside of the doctors and the hospitals, render victims completely 
unable to hold pharmaceutical companies, makers of defective medical 
products, and insurance companies accountable, even when they are 
proven negligent. Even if they are proven negligent, one cannot 
recover, other than based on a small amount.
  In essence, what the bill does that we are going to be considering 
tomorrow is really a bill designed to reduce the consequences of the 
mistakes and wrongdoing of large corporations at the expense of victims 
of those harmful actions.
  So here we are. Traditionally in our system, in our Anglo-American 
jurisprudence system that we are so proud of, it has lasted over 1,000 
years, the effort was to protect the victim. Now, what we are doing 
with this bill is protecting the large corporations who do not need any 
protection. It is certainly not in the circumstances that are 
delineated here.
  But the worst aspect of it, Madam Speaker, in my opinion, is with 
regard to HMOs. Because as I said, on a bipartisan basis, there were 
different bills; there was a Democratic bill and there was a Republican 
bill and the Republican bill passed and it was not, in my opinion, as 
good as the Democratic bill. But the bottom line is there were efforts 
on both sides of the aisle in the last 4 years in this body to try to 
deal with HMOs and reform HMOs so that patients had some rights. If 
they were denied care, they could go to some sort of a board or 
commission, administrative appeal, or they could go to court to 
overturn a wrongful decision that denied them care or caused them 
damages.
  But what H.R. 5 does that we are going to consider tomorrow is it 
preempts State law and it amends Federal law far beyond, again, 
relating to doctors and hospitals, and it says that it applies to any 
``health care lawsuit brought in a Federal or State court.'' Now, that 
is where we get to the HMOs. Eleven States have laws that provide

[[Page 6007]]

that HMOs may be held liable for refusing to authorize payment for 
appropriate care. These laws would be completely preempted by H.R. 5 if 
it passes and becomes law. And, in particular, what is happening is the 
courts in the States and even at the Federal level are expanding 
victims' rights because Congress has not acted. We never passed, Madam 
Speaker, the Patients' Bill of Rights. It passed in the House, but it 
never passed in the Senate. It was never signed by the President. So in 
the absence of having Federal law that would protect patients who are 
in an HMO, States have passed laws and now the courts have even stepped 
in and said that one can sue and seek grievances for HMO action.
  In fact, one of the most important Federal courts, the United States 
Court of Appeals for the Second Circuit, which covers New York, 
Vermont, and Connecticut, recently held that Americans can sue HMOs and 
other insurers for injuries resulting from their cost-minimizing 
decisions. Now, this ruling, if it is upheld by the Supreme Court, 
would essentially make the Patients' Bill of Rights the law of the 
land. We would not even have to pass it. It would essentially make the 
Patients' Bill of Rights apply to the entire country. But these kinds 
of lawsuits, the Second Circuit opinion, State law, either enacted by 
the legislature or by the State courts, would all be preempted and 
severely limited by H.R. 5.
  To me, to hear my colleagues on the Republican side spend the last 2 
or 3 years saying that they want to protect patients' rights in HMOs 
and then have them vote on this tomorrow, which I am sure is going to 
be voted on by most of my Republican colleagues, that would take away 
all of those rights or at least severely limit them I think is just 
incredibly hypocritical. Even the President, the President said that he 
supported the Patients' Bill of Rights too and now he is saying that he 
favors this malpractice bill, which would essentially limit one's 
ability to sue and take action against an HMO. I really do not 
understand where my Republican colleagues are coming from on this.
  Now, I just wanted to mention, there is a Democratic substitute to 
H.R. 5, which hopefully the Committee on Rules will put it in order but 
if they do not, I guess we can do it on a motion to recommit tomorrow 
so we would have some opportunity to bring it up. Basically what the 
Democratic substitute does is the opposite of most of the negative 
aspects of H.R. 5 that I talked about tonight. It tries to look at the 
malpractice issue in a much broader context, not only for tort reform 
dealing with lawsuits and damages, but also for insurance reform. In 
fact, it has a commission that would evaluate the cause and the scope 
of the recent and dramatic increases of medical malpractice insurance 
premiums and, most importantly, actually establishes a grant program, 
if you will. It is similar, I suppose, to the kind of reinsurance 
program that I mentioned where grants could actually be given to States 
or, in certain circumstances, where premiums go up. I really maintain 
that the only way that we are going to reduce premiums is not through 
any kind of a cap on damages in court, but rather by addressing it 
directly, by either having a reinsurance program that gives money back 
to the States or to the insurance companies so that the premiums go 
down, or providing some sort of grant program to reduce premiums. 
Again, it was the capping of premiums in California that made the 
difference, not the $250,000 in damages.
  I see the gentleman from Texas is here, and I would like to yield to 
him at this time. I thank the gentleman for coming down.
  Mr. SANDLIN. Madam Speaker, I thank the gentleman from New Jersey 
(Mr. Pallone) for yielding time and I thank him for his important 
efforts in this regard.
  We can say that H.R. 5 was filed in that it calls attention to a very 
serious problem we are facing in the United States of America, and that 
problem is that the insurance carriers are absolutely gouging America's 
physicians and hospitals and other health care providers. The irony is 
that H.R. 5, while calling attention to that problem, does absolutely 
nothing to solve the problem.
  We hear much coming from the other side about frivolous lawsuits. 
There is not a Member of this House that supports frivolous lawsuits 
and, in fact, if the other side was interested in getting rid of 
frivolous lawsuits, they would have put something in this legislation 
to take care of it. The Democrats support putting in specific 
provisions that say, if a suit and a claim has absolutely no basis in 
fact, no basis in law, no reasonable extension of law, that suit should 
be dismissed, the plaintiffs should pay the costs, and the plaintiff 
and the plaintiff's attorney should be sanctioned by the court for 
filing a suit without merit, period. If the other side was that 
interested in getting rid of frivolous lawsuits, they would have that 
in their legislation. However, they have ignored that.
  Also, I think it is quite unusual that the claim is: Malpractice 
premiums are skyrocketing; we have to do something to help the doctors. 
Madam Speaker, the only people that are not at the table in this 
debate, the only people that are not affected by this law, the only 
people who are not subjected to any restrictions by H.R. 5, and that is 
the insurance carriers. The insurance carriers will get everything they 
want. It is a great payday for them, because they want a cap of 
$250,000 to limit what they will pay to aggrieved parties. However, 
they will not agree, they will not discuss, they will not even consider 
the possibility of lowering premiums.
  That is absolutely outrageous. This is not a debate between doctors 
and lawyers; this should be doctors, lawyers, patients, consumers, 
pointing the finger at the insurance companies and saying, if you want 
this relief, you have to do something when you get it. But we know they 
are not going to do it. Do we know why we know? We know because we look 
at history. Historically, in the States that have caps their premiums 
are higher than in the States without caps. Now, go figure. That is 
because when the insurance carriers know that they have a limit, it is 
carte blanche. When they lost money, as the gentleman from New Jersey 
mentioned, in the stock market, they have a way for the government to 
help them get that money back or a quasi-government function; they just 
send a letter to our doctors. They send a letter and they say, you need 
to pay us more money.
  Now, oftentimes we will hear folks on the other side of the aisle 
talk about MICRA in California. MICRA has not been a success, and MICRA 
is not what limited the cost of malpractice premiums in the State of 
California. MICRA was passed in 1975. Rates continued to go up. Doctors 
continued to have problems. Do we know what happened? In 1988, the 
voters of California, who do not support MICRA by the way, the voters 
of California passed Proposition 103. Proposition 103 was not 
malpractice reform. Proposition 103 did not say we have to limit what 
families get for the death of their children. Proposition 103 said we 
are going to regulate insurance and we are going to roll back the rates 
20 percent.
  Well, it is no surprise when we say we are going to roll back the 
rates 20 percent that rates go down. That is what it was designed to 
do. That is what happened in California. That is the only thing that 
has been a success. MICRA has had nothing to do with it. Do not be 
misled in this House either. MICRA is not H.R. 5. There are many, many 
significant differences between MICRA and H.R. 5. MICRA limits only, 
and puts a cap only on personal injury damages as a result of 
malpractice. The Health Act protects HMOs, it protects manufacturers of 
defective products, it protects; in fact, anyone engaged in any stretch 
of the imagination in the health care industry will be protected from 
civil rights violation claims, anti-fraud violation claims, anti-
consumer claims. You name it, they are protected. It is just payola to 
the carriers and the HMOs.
  The HMOs did not get the protection they wanted in the Patients' Bill 
of Rights. They have not gotten that deal

[[Page 6008]]

done yet. So now they are back. Now they are back. Let us make no 
mistake about it: $250,000 is not pain and suffering. Madam Speaker, 
$250,000 is what the other side says that you get for the loss of your 
child. How much is the loss of your child worth? How much is the loss 
of a limb worth? How much is going blind worth? I do not know, but my 
friends on the other side somehow looked into a ball and they said, we 
know how much it is worth. If your child is dead, like Miss Santillan, 
that is worth $250,000 minus the cost and attorneys fees, thank you 
very much, next case. We have case after case after case.
  I yield now to the gentleman from New Jersey, because he might want 
to talk about some of these specific cases that I know he has some 
information about, or maybe the gentlewoman from Texas (Ms. Jackson-
Lee) has some information she would like to share.
  Mr. PALLONE. Madam Speaker, I will yield to the gentlewoman from 
Texas, but I think what the gentleman said in particular about the fact 
that this amount of damages, the $250,000 has no basis in fact. During 
the Committee on Commerce hearing last week, I asked many times, where 
does the $250,000 come from? What is it based on? The reply: the 
California statute. And that was passed years ago. So we can argue that 
just based on inflation alone, that that is no longer relevant. But 
then again, the Republicans just want to move ahead, steamroll it, and 
they are just not really interested in the reality of this and what 
really matters to the victims. So I appreciate the gentleman's 
comments.
  I yield to the gentlewoman from Texas.
  Ms. JACKSON-LEE of Texas. Madam Speaker, I thank the distinguished 
gentleman from New Jersey. I am also delighted to join my good friend, 
the gentleman from Texas (Mr. Sandlin), and I appreciate his leadership 
on this issue. Both of our committees have been working intently, the 
Committee on Commerce and the Committee on the Judiciary have been 
working very, very hard on this legislation. I think we have had the 
same quest and the same theme; that is, to strike at the 
misinterpretation by our physicians and hospitals, our friends that 
believe that H.R. 5 is going to solve their premium problem. That is 
really the crux of this legislation. It really is not insurance 
legislation which really should be relegated to the States.
  It is interesting that my good friends would share their States 
rights positions over and over again when we go to the floor to talk 
about problems that should be solved by the national government, and 
then my good friends on the other side of the aisle are constantly 
chiding at the idea of rights to the States, rights to the States, the 
10th amendment. But clearly, H.R. 5 abrogates, usurps, takes away, 
preempts States' jurisdiction on this question dealing with protecting 
victims and helping doctors.
  So I want to say to my good friends across the Nation, and 
particularly my friends in Texas, that this legislation does nothing 
for you as it relates to those high premiums on your insurance.
  My neighbor is the President of the National Medical Association. I 
realize the pain of knowing that a doctor has had to close his or her 
practice because they have been shocked, shocked or shot, or hit with a 
premium increase of $10,000, $50,000, $100,000.

                              {time}  1915

  What this legislation does, H.R. 5, and I am glad the gentleman from 
New Jersey (Mr. Pallone) has gathered us for this Special Order to be 
able to say, it does not hit the point of the premiums. It hits at the 
time of the decision. So what you are doing is undermining juries when 
victims have been adjudged to have been a victim. This does not have 
anything to do with frivolous lawsuits; 61 percent of the cases are 
dismissed. This says when children like Nathaniel come into the 
courthouse, Nathaniel is blind and paralyzed because physicians that he 
went to and a nurse that he went to noticed that he was not eating and 
that he was jaundiced, he was yellow, and failed to diagnose what 
Nathaniel had. Did not tell his parents, You needed to hospitalize him, 
after seeing a number of pediatricians.
  So we now have a little boy who has no income, no way to discern what 
his income might have been. He has no income to be able to have you 
assess what he needs to care for him for the rest of his life because 
he has never worked. And you are going to suggest that if he went to a 
court and got a judgment that he should have a cap on noneconomic 
damages and, likewise, he should have a cap on punitive damages?
  Madam Speaker, this does not make any sense. And so I have offered 
amendments that would induce the insurance companies to take their 
profits, put them back into the physicians and reduce the premiums by 
50 percent. Fifty percent of the savings go to the doctor. And I would 
move to strike the noneconomic damages, move to strike the limits on 
the cap on punitive damages, and I also asked that 2 percent of the 
savings would go to help our doctors who are alcohol and drug dependent 
only, a few just like there were only a few percentage of our doctors 
who, in fact, perpetrate these acts that would warrant such severe 
litigation.
  We want good health care in rural and urban America, suburban 
America. H.R. 5 does nothing but blow up HMOs and insurance companies. 
It does not do anything. I encourage my insurance companies, my 
friends, the pharmaceuticals, physicians, doctors, let us sit down and 
get at the core of the problem, the small percentage of these doctors 
that need help, the American Medical Association can do with us and 
work with us to do that. The national association can do that. Let us 
work together to ensure that we have good patient care, a good 
Patients' Bill of Rights, good strong Medicare and Medicaid, and good 
strong resources for our doctors to do the job that they need.
  I am delighted the gentleman from New Jersey (Mr. Pallone) gave me 
this opportunity. I just want to hold this sheet of California up to 
make sure that everyone really knows that their medical malpractice 
legislation did nothing. They had to actually do insurance reform much 
later to actually get the doctors' premiums down. My understanding is 
the California Medical Association is not supporting this legislation 
because they saw what happened in their State.
  So I would hope that tomorrow we would be of good sense and good mind 
and defeat this legislation on the floor on behalf of our doctors and 
our hospitals and our patients.
  Mr. PALLONE. Madam Speaker, I appreciate the gentlewoman for coming 
down. I know she was up in the Committee on Rules trying to get one of 
her amendments that she described passed. I doubt they will pass it 
because they are doing everything on a partisan basis.
  We only have maybe a minute or two left. I just wanted to thank the 
gentlewoman for bringing up the fact that traditionally when you are 
dealing with insurance regulation it is done by the States. It is 
tremendously unprecedented to take an issue that has primarily been 
dealt with by the States where there are State laws on medical 
malpractice and tort reform and all of the sudden put it under this 
huge Federal rubric and think we are going to solve all these problems. 
Particularly when something is so complex like this, the States are 
traditionally the laboratories where we see what can be done to make 
things work and maybe the Federal Government copies it later if it 
works.
  That I think is just another indication that this is just being for 
special interests. This is just being done by the Republicans tomorrow 
for politics because they want to take this one-size-fits-all solution, 
knowing it is never going to pass the Senate, knowing it is never going 
to become law, just so they can say to the drug companies and to the 
HMOs and to the doctors, we have done something to try to deal with 
your problem. Not even caring whether or not it is actually going to 
accomplish the goal because otherwise they would wait and see what is 
working in the States or they would wait and they would take a more 
comprehensive view

[[Page 6009]]

before we moved ahead with Federal legislation.
  I think that was a very good point the gentlewoman made, and it is 
one of the points that we need to continue to make.
  We are not going to win this one tomorrow, but we have to bring up 
the debate. If what happens is that it does go over to the Senate and 
then we are allowed to sit down as Democrats and Republicans and come 
up with a solution that goes beyond just a cap on damages, then so be 
it. I welcome that opportunity. I do not understand why we have to wait 
for it to pass the House to do that. But hopefully that opportunity 
will be there, and we will be up front making sure we can come up with 
a solution.
  Ms. JACKSON-LEE of Texas. Just for a moment, I know our time is 
ending. I think the statement we are making on the floor tonight, and I 
will be an eternal optimist, one, that we get 2 hours of debate and an 
open rule and the gentleman's amendments are allowed in and mine are 
allowed in, because this is such a historic and important decision that 
the Congress will be making in the backdrop of the number of young men 
and women who are now on the frontlines fighting for our freedom. It 
could be one of their relatives that would be subjected to this; but 
the point should be made, as I close, that we are not against doctors. 
We are not against hospitals, my friends. We are trying to help you 
make this legislation right.

                          ____________________