[Congressional Record (Bound Edition), Volume 151 (2005), Part 12]
[Extensions of Remarks]
[Pages 16751-16752]
[From the U.S. Government Publishing Office, www.gpo.gov]




          MEDICAL MALPRACTICE AND INSURANCE REFORM ACT OF 2005

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                        Wednesday, July 20, 2005

  Mr. CONYERS, Mr. Speaker, I am pleased to introduce the Medical 
Malpractice Insurance and Litigation Reform Act of 2005. In response to 
the issue of frivolous lawsuits, Title I of the bill provides for a 
series of measures designed to insure that the lawsuit itself is not 
frivolous and that the pleadings filed in connection with the suit are 
accurate and meritorious. Title I also provides for alternative dispute 
resolution designed to encourage resolution of medical malpractice 
actions outside of court.
  The bill also responds to the real problems in the medical 
malpractice insurance market, namely higher prices driven by lack of 
competition and investment losses by insurers leading to a boom/bust 
cycle. In response to these issues, Title II insures that the antitrust 
laws apply to medical malpractice insurers, price comparisons can be 
easily obtained, and procedural checks are in place to insure that 
premium increases are warranted and can be challenged by health care 
providers.
  Above and beyond these requirements, Title III of the legislation 
responds to concerns that medical malpractice is not available in 
certain parts of the country. As a result, this title would create 
monetary grants dispensed through the Health Resources and Services 
Administration to health care providers who choose to work in 
geographic areas with a shortage of one or more types of health 
providers.
  In addition, the bill responds to the need to fully examine the 
recent and dramatic increases in medical malpractice insurance 
premiums. Title IV creates an Independent Advisory Commission on 
Medical Malpractice Insurance to evaluate the cause of the recent 
premium increase. Title V authorizes the Department of Health and Human 
Services to collect the data necessary to examine the medical 
malpractice insurance industry. The following is a more detailed 
description of the legislation:

 ``The Medical Malpractice and Insurance Reform Act of 2005'' Section-
                          by-Section Analysis

       Scope. The legislation narrowly defines ``medical 
     malpractice action'' to cover ``licensed physicians and 
     health professionals'' for only cases involving medical 
     malpractice. These definitions are intended to include 
     doctors, hospitals, nurses, and other health professionals 
     who pay medical malpractice insurance premiums. See, Sec. 
     107(8).
       The Republican legislation is broadly drafted to include 
     HMOs, insurance companies, nursing homes, and drug and device 
     manufacturers for a broad range of liabilities including 
     suits by physicians against those companies. The full extent 
     to which H.R. 534 protects the wrongdoings of these companies 
     is still unknown.


                  Title I--Reducing Frivolous Lawsuits

       Sec. 101--Statute of Limitations. This section limits the 
     amount of time during which a patient can file a medical 
     malpractice action to the later of three years from the date 
     of injury or three years from the date the patient discovers 
     (or through the use of reasonable diligence should have 
     discovered) the injury. Children under the age of 18 have the 
     later of three years from their eighteenth birthday or three 
     years from the date the patient discovers (or through the use 
     of reasonable diligence should have discovered) the injury.
       The Republican legislation limits it to the earlier of 
     three years from the date an injury ``manifests'' itself or 
     one year from the date discovered, but in no event can it 
     exceed three years. This makes it more akin to a statute of 
     repose than a statute of limitations. H.R. 534 also 
     establishes a statute of repose for children injured under 
     the age of six that is the later of three years from the date 
     of manifestation or prior to the minor's eighth birthday.
       Sec. 102--Health Care Specialist Affidavit. This section 
     requires an affidavit by a qualified specialist before any 
     medical malpractice action may be filed. An extension may be 
     granted for such an affidavit if at the time the claim is 
     brought, the claimant has not been able to obtain medical 
     records or other information necessary for the affidavit. A 
     ``Qualified Specialist'' is a health care professional with 
     knowledge of the relevant facts of the case, expertise in the 
     specific area of practice, and in the case of an action 
     against a physician, board certification in a speciality 
     relating to the area of practice.
       Although the Republicans claim their legislation would 
     limit frivolous claims, H.R. 534 does nothing to ensure that 
     the claims filed by plaintiffs are legitimate. H.R. 534 has 
     no certification process prior to the filing of a medical 
     malpractice lawsuit. H.R. 534 only restricts the rights of 
     injured patients and physicians in meritorious lawsuits.
       Sec. 103--Sanctions for Frivolous Actions and Pleadings. 
     This section reduces the frivolous lawsuits by requiring that 
     every document in a medical malpractice action be signed by 
     at least one attorney of record. Any unsigned paper is 
     stricken. Second, all plaintiff attorneys who file a medical 
     malpractice action are required to certify that the case is 
     meritorious. Attorneys who erroneously file such a 
     certificate are subject to strict civil penalties. First time 
     violators, the court shall require the attorney to pay costs 
     and attorneys fees or administer other

[[Page 16752]]

     appropriate sanctions. Second time violators, the court shall 
     also require the attorney to pay a monetary fine. Third time 
     violators, the court shall also refer the attorney to the 
     appropriate State bar association for disciplinary 
     proceedings.
       The Republican legislation does not have a provision that 
     directly addresses the filing of frivolous lawsuits. H.R. 534 
     only restricts the rights of injured patients and physicians 
     in meritorious lawsuits.
       Sec. 104--Mandatory Mediation. This section establishes a 
     mandatory alternative dispute resolution (ADR) system for 
     medical malpractice cases. Participation in mediation shall 
     be in lieu of any other ADR method required by law or by 
     contractual arrangements by the parties. States also have the 
     option to allow arbitration. Any party dissatisfied with the 
     result reached through ADR will not be bound by this result 
     and all statements, offers and communication made as part of 
     ADR would be inadmissible as part of an adjudication. A 
     similar approach is recommended by the Committee for Economic 
     Development (CED), which suggests that defendants make and 
     victims accept ``early offers.'' The effect of the ``early 
     offer'' program, according to the CED, is that defendants 
     will reduce the likelihood of incurring litigation costs, and 
     victims would obtain fair compensation without the delay, 
     expense, or trauma of litigation.
       The Republican legislation does not address alternative 
     dispute resolution methods to reduce the number of medical 
     malpractice actions that are litigated. The sole remedy of 
     the Republican legislation is tort reform that will restrict 
     the rights of those who have been legitimately wronged.
       Sec. 105--Punitive Damages. This section limits the 
     circumstances under which a claimant can seek punitive 
     damages in a medical malpractice action. It also allocates 
     50% of any punitive damages that are awarded to a trust fund 
     managed by the Department of Health and Human Services (HHS) 
     through the Agency for Healthcare Research and Quality. The 
     money in the trust fund must be used for activities that 
     reduce medial errors and improve patient safety. The 
     Secretary will promulgate regulations that will establish 
     programs and procedures to carry out this objective. See 
     also, Sec. 221-223.
       The Republican legislation raises the evidentiary standard, 
     provides an exemption for FDA approved drugs or devices, and 
     caps punitive damages at the greater of twice the economic 
     damages or $250,000.
       Sec. 106--Reduction in Premiums. This section requires 
     medical malpractice insurance companies to annually project 
     the savings that will result from Title I of the bill. 
     Insurance companies must then develop and implement a plan to 
     annually dedicate at least 50% of those savings to reduce the 
     insurance premiums that medical professionals pay. Insurance 
     companies must report these activities to HHS annually. The 
     section provides for civil penalties for the noncompliance of 
     insurance companies.


             Title II--Medical Malpractice Insurance Reform

       Sec. 201--Prohibition on Anti-competitive Activities by 
     Medical Malpractice Insurers. This section would repeal 
     McCarran-Ferguson Act to ensure that insurers do not engage 
     in price fixing. The Act, enacted in 1945, exempts all anti-
     competitive insurance industry practices, except boycotts, 
     from the Federal antitrust laws. Over the years, uneven 
     oversight of the insurance industry by the States, coupled 
     with no possibility of Federal antitrust enforcement, have 
     created an environment that fosters a wide range of anti-
     competitive practices.
       Sec. 202--Medical Malpractice Insurance Price Comparison. 
     This section creates an internet site at which health care 
     providers could obtain the price charged for the type of 
     coverage the provider seeks from any malpractice insurer 
     licensed in the doctor's state. This section specifies the 
     availability of online forms and that all information will 
     remain confidential.
       The Republican bill does nothing to address the flaws 
     apparent in the medical malpractice insurance marketplace and 
     the regulation of that market. The sole remedy of the 
     Republican legislation is tort reform that will restrict the 
     rights of those who have been legitimately wronged.
       Sec. 203--Procedural Requirements for Proposed Rate 
     Increases. This section allows any health care professional 
     to challenge a proposed rate increase of medical malpractice 
     insurance in a State administrative proceeding. It also 
     requires that before it implements any rate increase, an 
     insurance provider submit to the appropriate state agency a 
     description of and justification for the rate increase.


 Title III--Enhancing Patient Access to Care Through Direct Assistance

       Sec. 301--Grants and Contracts Regarding Health Provider 
     Shortages. This section authorizes the Secretary of Health 
     and Human Services to award grants or contracts through the 
     Health Resources and Services Administration (HRSA) to health 
     care providers who choose to work in geographic areas that 
     have a shortage of one or more types of health providers as a 
     result of dramatic increases in malpractice insurance 
     premiums.
       Sec. 302--Health Professional Assignments to Trauma 
     Centers. This section amends the Public Health Service Act to 
     authorize the Secretary to send physicians from the National 
     Health Service Corps to trauma centers that are in danger of 
     closing (or losing their trauma center status) due to 
     dramatic increases in malpractice premiums.
       The Republican legislation does not directly address the 
     access to care issue caused by rising malpractice premiums. 
     The sole remedy of the Republican legislation is tort reform 
     that will restrict the rights of those who have been 
     legitimately wronged.


   Title IV--Independent Advisory Commission on Medical Malpractice 
                               Insurance

       Sec. 401-402--Independent Advisory Commission on Medical 
     Malpractice Insurance. This section establishes the national 
     Independent Advisory Commission on Medical Malpractice 
     Insurance. The Commission must evaluate the causes and scope 
     of the recent and dramatic increases in medical malpractice 
     insurance premiums, formulate additional proposals to reduce 
     those premiums, and make recommendations to avoid any such 
     increases in the future. In formulating its proposals, the 
     Commission must, at a minimum, consider a variety of 
     enumerated factors.
       The Republican legislation only addresses tort reform and 
     does not examine other causes of malpractice premium costs.
       Sec. 403--Report. This section requires the Commission to 
     file an initial report with Congress within 180 days of 
     enactment and to file annual reports until the Commission 
     terminates.
       Sec. 404--Membership. This section specifically establishes 
     the number and type of commissioners that the Comptroller 
     General of the United States must appoint to the Commission. 
     Generally, the membership of the Commission will include 
     individuals with national recognition for their expertise in 
     health finance and economics, actuarial science, medical 
     malpractice insurance, insurance regulation, health care law, 
     health care policy, health care access, allopathic and 
     osteopathic physicians, other providers of health care 
     services, patient advocacy, and other related fields, who 
     provide a mix of different professionals, broad geographic 
     representations, and a balance between urban and rural 
     representatives. Members of the commission will be appointed 
     for three year staggered terms.
       Sec. 405--Director and Staff, Experts and Consultants. This 
     section allows the Commission to hire personnel and contract 
     services necessary to perform its duties.
       Sec. 406--Powers. This section allows the Commission to 
     secure from any department or agency information necessary to 
     carry out its purpose. It also requires that the Commission 
     be subject to a periodic audit by the Comptroller General.
       Sec. 407--Authorization of Appropriations. This section 
     authorizes that such sums be appropriated to the Commission 
     for five fiscal years.


   Title V--Medical Malpractice Insurance Information Administration

       Sec. 501--Establishment. This section creates within the 
     Department of Health and Human Services an administration 
     that will collect and evaluate information on the medical 
     malpractice insurance market. Such information includes the 
     frequency of medical malpractice claims paid, the severity of 
     such claims, the portion of claims paid as settlements, the 
     portion of claims paid as a result of a trial, and the 
     division in claims between economic and non-economic damages. 
     The section also requires that insurance companies submit the 
     above data to the administration. The administrator may 
     compel submittal and there will be a civil money penalty for 
     not submitting the data.
       Sec. 502--Authorization of Appropriations. This section 
     authorizes appropriations for the administration.

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