House Report 105-465 - RICKY RAY HEMOPHILIA RELIEF FUND ACT OF 1998

[House Report 105-465]
[From the U.S. Government Publishing Office]

105th Congress Rept. 105-465
2nd Session HOUSE OF REPRESENTATIVES Part 1
_______________________________________________________________________

RICKY RAY HEMOPHILIA RELIEF FUND ACT OF 1998

_______

March 25, 1998.--Ordered to be printed

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Mr. Hyde, from the Committee on the Judiciary, submitted the following

R E P O R T

[To accompany H.R. 1023]

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the
bill (H.R. 1023) to provide for compassionate payments with
regard to individuals with blood-clotting disorders, such as
hemophilia, who contracted human immunodeficiency virus due to
contaminated blood products, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.

TABLE OF CONTENTS

Page
The Amendment.............................................. 1
Purpose and Summary........................................ 5
Background and Need for the Legislation.................... 5
Hearings................................................... 8
Committee Consideration.................................... 9
Committee Oversight Findings............................... 9
Committee on Government Reform and Oversight Findings...... 9
New Budget Authority and Tax Expenditures.................. 9
Congressional Budget Office Cost Estimate.................. 9
Constitutional Authority Statement......................... 13
Section-by-Section Analysis and Discussion................. 13
Agency Views............................................... 16

The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Ricky Ray
Hemophilia Relief Fund Act of 1998''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.

TITLE I--HEMOPHILIA RELIEF FUND

Sec. 101. Ricky Ray Hemophilia Relief Fund.
Sec. 102. Compassionate payment relating to individuals with blood-
clotting disorders and HIV.
Sec. 103. Determination and payment.
Sec. 104. Limitation on transfer of rights and number of petitions.
Sec. 105. Time limitation.
Sec. 106. Certain claims not affected by payment.
Sec. 107. Limitation on agent and attorney fees.
Sec. 108. Definitions.

TITLE II--TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN
HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID AND SSI PROGRAMS

Sec. 201. Treatment of certain private settlement payments in
hemophilia-clotting-factor suit under the Medicaid and SSI programs.

TITLE I--HEMOPHILIA RELIEF FUND

SEC. 101. RICKY RAY HEMOPHILIA RELIEF FUND.

(a) Establishment.--There is established in the Treasury of the
United States a trust fund to be known as the ``Ricky Ray Hemophilia
Relief Fund'', which shall be administered by the Secretary of the
Treasury.
(b) Investment of Amounts in Fund.--Amounts in the Fund shall be
invested in accordance with section 9702 of title 31, United States
Code, and any interest on and proceeds from any such investment shall
be credited to and become part of the Fund.
(c) Availability of Fund.--Amounts in the Fund shall be available
only for disbursement by the Secretary of Health and Human Services
under section 103.
(d) Termination.--The Fund shall terminate upon the expiration of
the 5-year period beginning on the date of the enactment of this Act.
If all of the amounts in the Fund have not been expended by the end of
the 5-year period, investments of amounts in the Fund shall be
liquidated, the receipts of such liquidation shall be deposited in the
Fund, and all funds remaining in the Fund shall be deposited in the
miscellaneous receipts account in the Treasury of the United States.
(e) Authorization of Appropriations.--There is authorized to be
appropriated to the Fund to carry out this title $750,000,000.

SEC. 102. COMPASSIONATE PAYMENT RELATING TO INDIVIDUALS WITH BLOOD-
CLOTTING DISORDERS AND HIV.

(a) In General.--If the conditions described in subsection (b) are
met and if there are sufficient amounts in the Fund to make each
payment, the Secretary shall make a single payment of $100,000 from the
Fund to any individual who has an HIV infection and who is described in
one of the following paragraphs:
(1) The individual has any form of blood-clotting disorder,
such as hemophilia, and was treated with antihemophilic factor
at any time during the period beginning on July 1, 1982, and
ending on December 31, 1987.
(2) The individual --
(A) is the lawful spouse of an individual described
in paragraph (1); or
(B) is the former lawful spouse of an individual
described in paragraph (1) and was the lawful spouse of
the individual at any time after a date, within the
period described in such subparagraph, on which the
individual was treated as described in such paragraph
and through medical documentation can assert reasonable
certainty of transmission of HIV from individual
described in paragraph (1).
(3) The individual acquired the HIV infection through
perinatal transmission from a parent who is an individual
described in paragraph (1) or (2).
(b) Conditions.--The conditions described in this subsection are,
with respect to an individual, as follows:
(1) Submission of medical documentation of hiv infection.--
The individual submits to the Secretary written medical
documentation that the individual has an HIV infection.
(2) Petition.--A petition for the payment is filed with the
Secretary by or on behalf of the individual.
(3) Determination.--The Secretary determines, in accordance
with section 103(b), that the petition meets the requirements
of this title.

SEC. 103. DETERMINATION AND PAYMENT.

(a) Establishment of Filing Procedures.--The Secretary of Health
and Human Services shall establish procedures under which individuals
may submit petitions for payment under this title. The procedures shall
include a requirement that each petition filed under this Act include
written medical documentation that the relevant individual described in
section 102(a)(1) has (or had) a blood-clotting disorder, such as
hemophilia, and was treated as described in such section.
(b) Determination.--For each petition filed under this title, the
Secretary shall determine whether the petition meets the requirements
of this title.
(c) Payment.--
(1) In general.--To the extent there are sufficient amounts
in the Fund to cover each payment, the Secretary shall pay,
from the Fund, each petition that the Secretary determines
meets the requirements of this title in the order received.
(2) Payments in case of deceased individuals.--
(A) In general.--In the case of an individual
referred to in section 102(a) who is deceased at the
time that payment is made under this section on a
petition filed by or on behalf of the individual, the
payment shall be made as follows:
(i) If the individual is survived by a
spouse who is living at the time of payment,
the payment shall be made to such surviving
spouse.
(ii) If the individual is not survived by a
spouse described in clause (i), the payment
shall be made in equal shares to all children
of the individual who are living at the time of
the payment.
(iii) If the individual is not survived by
a person described in clause (i) or (ii), the
payment shall be made in equal shares to the
parents of the individual who are living at the
time of payment.
(iv) If the individual is not survived by a
person described in clause (i), (ii), or (iii),
the payment shall revert back to the Fund.
(B) Filing of petition by survivor.--If an
individual eligible for payment under section 102(a)
dies before filing a petition under this title, a
survivor of the individual may file a petition for
payment under this title on behalf of the individual if
the survivor may receive payment under subparagraph
(A).
(C) Definitions.--For purposes of this paragraph:
(i) The term ``spouse'' means an individual
who was lawfully married to the relevant
individual at the time of death.
(ii) The term ``child'' includes a
recognized natural child, a stepchild who lived
with the relevant individual in a regular
parent-child relationship, and an adopted
child.
(iii) The term ``parent'' includes fathers
and mothers through adoption.
(3) Timing of payment.--The Secretary may not make a
payment on a petition under this title before the expiration of
the 120-day period beginning on the date of the enactment of
this Act or after the expiration of the 5-year period beginning
on the date of the enactment of this Act.
(d) Action on Petitions.--The Secretary shall complete the
determination required by subsection (b) regarding a petition not later
than 120 days after the date the petition is filed under this title.
(e) Humanitarian Nature of Payment.--This Act does not create or
admit any claim of or on behalf of the individual against the United
States or against any officer, employee, or agent thereof acting within
the scope of employment or agency that relate to an HIV infection
arising from treatment with antihemophilic factor, at any time during
the period beginning on July 1, 1982, and ending on December 31, 1987.
A payment under this Act shall, however, when accepted by or on behalf
of the individual, be in full satisfaction of all such claims by or on
behalf of that individual.
(f) Administrative Costs Not Paid From Fund.--No costs incurred by
the Secretary in carrying out this title may be paid from the Fund or
set off against, or otherwise deducted from, any payment made under
subsection (c)(1).
(g) Termination of Duties of Secretary.--The duties of the
Secretary under this section shall cease when the Fund terminates.
(h) Treatment of Payments Under Other Laws.--A payment under
subsection (c)(1) to an individual--
(1) shall be treated for purposes of the internal revenue
laws of the United States as damages received on account of
personal injuries or sickness;
(2) shall not be included as income or resources for
purposes of determining the eligibility of the individual to
receive benefits described in section 3803(c)(2)(C) of title
31, United States Code, or theamount of such benefits, and such
benefits shall not be secondary to, conditioned upon reimbursement
from, or subject to any reduction because of receipt of, any such
payment; and
(3) shall not be treated as a third party payment or
payment in relation to a legal liability with respect to such
benefits and shall not be subject (whether by subrogation or
otherwise) to recovery, recoupment, reimbursement, or
collection with respect to such benefits (including the Federal
or State governments or any entity that provides such benefits
under a contract).
(i) Regulatory Authority.--The Secretary may issue regulations
necessary to carry out this title.
(j) Time of Issuance of Procedures.--The Secretary shall, through
the promulgation of appropriate regulations, guidelines, or otherwise,
first establish the procedures to carry out this title not later than
120 days after the date of the enactment of this Act.

SEC. 104. LIMITATION ON TRANSFER OF RIGHTS AND NUMBER OF PETITIONS.

(a) Rights Not Assignable or Transferable.--Any right under this
title shall not be assignable or transferable.
(b) 1 Petition With Respect to Each Victim.--With respect to each
individual described in paragraph (1), (2), or (3) of section 102(a),
the Secretary may not make payment with respect to more than 1 petition
filed in respect to an individual.

SEC. 105. TIME LIMITATION.

The Secretary may not make any payment with respect to any petition
filed under this title unless the petition is filed within 3 years
after the date of the enactment of this Act.

SEC. 106. CERTAIN CLAIMS NOT AFFECTED BY PAYMENT.

A payment made under section 103(c)(1) shall not be considered as
any form of compensation, or reimbursement for a loss, for purposes of
imposing liability on the individual receiving the payment, on the
basis of such receipt, to repay any insurance carrier for insurance
payments or to repay any person on account of worker's compensation
payments. A payment under this title shall not affect any claim against
an insurance carrier with respect to insurance or against any person
with respect to worker's compensation.

SEC. 107. LIMITATION ON AGENT AND ATTORNEY FEES.

Notwithstanding any contract, the representative of an individual
may not receive, for services rendered in connection with the petition
of an individual under this title, more than 2 percent of a payment
made under this title on the petition. Any such representative who
violates this section shall be fined not more than $50,000.

SEC. 108. DEFINITIONS.

For purposes of this title:
(1) The term ``AIDS'' means acquired immune deficiency
syndrome.
(2) The term ``Fund'' means the Ricky Ray Hemophilia Relief
Fund.
(3) The term ``HIV'' means human immunodeficiency virus.
(4) Unless otherwise provided, the term ``Secretary'' means
Secretary of Health and Human Services.

TITLE II--TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN
HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID AND SSI PROGRAMS

SEC. 201. TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN
HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID
AND SSI PROGRAMS.

(a) In General.--Notwithstanding any other provision of law, a
settlement payment shall not be considered income or resources in
determining a class member's eligibility for, or the amount of--
(1) medical assistance under title XIX of the Social
Security Act, or
(2) supplemental security income benefits under title XVI
of such Act.
(b) Definitions.--For purposes of this section:
(1) Class member.--The term ``class member'' means a member
of the Settlement Class in the settlement in In Re Factor VIII
or IX Concentrate Blood Products Litigation (United States
District Court, Northern District of Illinois, Eastern
Division; Civil Action No. 96-C-5024).
(2) Settlement payment.--The term ``settlement payment''
means a payment to a class member under the settlement
described in paragraph (1).

Amend the title so as to read:

A bill to provide for compassionate payments with regard
to individuals with blood-clotting disorders, such as
hemophilia, who contracted human immunodeficiency virus due to
contaminated antihemophilic factor, and for other purposes.

Purpose and Summary

H.R. 1023, the ``Ricky Ray Hemophilia Relief Fund Act of
1997,'' provides ``compassionate payments'' to individuals with
blood-clotting disorders, such as hemophilia, who contracted
human immunodeficiency virus (HIV) due to the contaminated
blood product anti-hemophilic factor (AHF).
H.R.1023 establishes a $750 million ``Ricky Ray Hemophilia
Relief Fund,'' which will fund the payments. Each eligible
individual would receive a $100,000 payment. The following
persons would be eligible for this payment: (1) an individual
with a blood-clotting disorder who used anti-hemophilic factor
at any time between July 1, 1982 and December 31, 1987; (2) a
lawful spouse or former lawful spouse during the stated time
period; or (3) an individual who acquired HIV from the mother
during pregnancy. In the case of a deceased individual, payment
would be made to the surviving spouse, children, or parents, in
that order. If the individual is not survived by any of these
individuals the payment will revert back to the fund.

Background and Need For the Legislation

In the late 1970s and early 1980s, half of all people with
hemophilia (approximately 7,200 individuals, the majority of
which are male) were infected with HIV due to their use of
anti-hemophilic factor (AHF) blood-clotting products. Before
the identification of and tests to detect its presence, HIV
entered the blood supply. During this period, because people
with blood-clotting disorders needed to use these products to
live a relatively normal life, and each dose came from a pool
of thousands of blood donors, it was almost certain that they
would become HIV-infected. People with blood-clotting disorders
were already financially burdened by the medical costs of
treating that disorder. With yearly medical costs of over
$150,000, and a lack of legal remedy available to them, these
families have been financially devastated.
Chronology of Events
In June 1981, the Morbidity & Mortality Weekly Report noted
cases of Pneumocystis carinii pneumonia (PCP) in previously
healthy homosexual men. In July 1982, the first three cases of
Pneumocystis carinii pneumonia were reported in individuals
with hemophilia A. That same month, the Department of Health
and Human Services held a forum to discuss whether the three
cases
of PCP in persons with hemophilia were related to the
infections occurring in the gay community. The participants in
that forum included government agencies, the National
Hemophilia Foundation, the American Red Cross, the National Gay
Task Force, blood banking organizations and public health
organizations. At that time, because of insufficient data,
there was no consensus about whether individuals with
hemophilia were in a similar situation to that of the gay
community.
In the spring of 1983, heat-treated anti-hemophilic factor
became available in the United States. The original approval
was based upon the belief that the heat process would
neutralize non-A/non-B hepatitis.
In December 1983, the first individuals with hemophilia B
were reported to have AIDS-like symptoms. At that time, there
were approximately 25 cases of AIDS identified in individuals
with hemophilia.
In April 1984, the causative agent responsible for
transmission of AIDS was isolated and identified, making it
possible to expand scientific knowledge about the disease and
its mode of transmission.
In 1985, the National Hemophilia Foundation recommended
that only heat-treated AHF be used to treat hemophilia, and
heat-treated AHF was widely accepted as effective in
deactivating HIV. In March 1985, a test to screen blood
products for the AIDS virus became available.
In April 1993, Senators Kennedy and Graham and Congressman
Goss requested that the Department of Health and Human Services
(HHS) open an investigation into the events leading to the
transmission of HIV to individuals with hemophilia from
contaminated blood products. HHS requested that the Institute
of Medicine (IOM) establish a Committee to study the
transmission of HIV through the blood supply.
Several cases were filed against the industry by HIV-
infected individuals with hemophilia. In September of 1993, the
case of Wadleigh v. Rhone-Poulenc, Rorer, Inc. was filed. On
August 17, 1994, the U.S. District Court for the Northern
District of Illinois ordered the certification of that case as
a class action. In March 1995, the U.S. Court of Appeals for
the Seventh Circuit granted a writ of mandamus and directed the
district judge to decertify the class in part because allowing
the certification of the class could have resulted in the
bankruptcy of the industry.
On July 13, 1995, the IOM Committee's 1995 study, entitled
``HIV and the Blood Supply,''was released.
On May 1, 1997, the U.S. District Court for the Northern
District of Illinois approved a private settlement between the
four pharmaceutical companies that made anti-hemophilic factor
and HIV-infected individuals with hemophilia who used their
product. Under the terms of the settlement, the companies
created a $600 million settlement fund for persons infected
with HIV through their use of AHF. Each member of the
settlement class can receive $100,000 from that fund.
Basis for Humanitarian Payments
A federal Maternal and Child Health Bureau ongoing cost and
utilization study for 1996-97 placed the average annual medical
costs for an HIV-positive person with severe hemophilia at
$168,480.
In reviewing the 1995 Institute of Medicine Study in its
entirety, this Committee found that there were many things that
could have been done differently based on the knowledge
available today. However, based on the accepted standards
during that period, the actions taken were reasonable when
considering all the uncertainty surrounding the AIDS virus.
Therefore, rather than basing assistance to the hemophilia
community on any one interpretation of the past, this Act
provides needed humanitarian assistance to these individuals
without conflicting with current law and precedent on
government liability.
The majority of cases brought by other blood users, such as
transfusion and cryoprecipitate victims, have been litigated or
settled. In transfusion cases where a primary provider or small
child was infected, settlements usually were for several
hundred thousands of dollars. The majority of HIV-infected
people with hemophilia (approximately 84%) were males under 45,
and 34% of those were under the age of 25. After many years of
litigation, the industry which produced the blood-clotting
products containing HIV has set up a fund which provides
$100,000 to HIV-infected individuals with hemophilia and their
families, if they sign waivers relieving the industry of any
liability. However, when considering the incredible financial
burden placed on these families due to medical costs and, in
many cases, loss of the primary provider in the family, this
amount will not sufficiently lift this community out of the
financial crisis that has developed. While no amount will
completely alleviate the losses felt by this community, H.R.
1023 provides an additional payment equal to that provided by
the industry. The amount available to these devastated families
would then be comparable to that potentially realized by other
HIV-infected blood victims through separate individual
settlements.
Summary of Changes in H.R. 1023 as Recommended by the Committee
The amendment in the nature of a substitute adopted by the
Committee removed the findings provisions of the original bill.
An extensive review of the historical background upon which
this legislation was based has not led to any consensus. As
stated earlier, these payments, made pursuant to the
legislation, are not based on any one interpretation of the
past. The amendment in the nature of a substitute provides this
assistance based on the belief that this community needs
humanitarian assistance.
H.R. 1023, as introduced, conflicted with law and precedent
because it required government compensation for claims based
upon the regulatory actions of the Government. The
discretionary function exception \1\ to the Federal Tort Claims
Act bars suits based on the discretionary acts of the
Government. That provision has been consistently interpreted by
the courts to bar claims against the Federal government growing
out of their regulatory activities. As a practical matter, the
Government regulates many things. If the bar on these claims
was eliminated, the enormous amount of potential suits would
interfere with the fair and efficient governance of the
country.
---------------------------------------------------------------------------
\1\ 28 U.S.C. 2680(a).
---------------------------------------------------------------------------
In the amendment in the nature of a substitute, all
references to blood/blood products have been changed to anti-
hemophilic factor for conformity and to indicate the Committee
intends to address only users of this particular type of blood
product.
The original bill authorized $900,000,000 because the
individual payments would have been $125,000. The amendment in
the nature of a substitute authorizes $750,000,000 because the
individual payments will be $100,000 to match the industry's
contribution to the community.
The reference to an estate being the primary recipient of
the funds should the person be deceased in the original bill
was deleted. In the case of a deceased individual, payment can
only go first to a spouse, then to children and finally to
parents. If none of those survivors exists, the money goes back
to fund. This change reflects the intent to assist only the
immediate family of those infected.
Time periods for the Secretary to establish regulations and
review applications were changed to 120 days instead of 90
days. These changes were made at the request of the Department
of Health and Human Services.
The original bill provided an option of a series of
payments. The bill now provides only for a lump sum payment.
The original provision titled ``Satisfaction of Claims
Against the Government'' was replaced by ``Humanitarian Nature
of Payment'' with a portion of the original language
incorporated in that section to fully protect the Government.
This more clearly shows the intent of the Committee that this
assistance is humanitarian, and that this assistance is not
based on any valid claim against the Government.
The provision for ``Judicial Review'' was deleted. Because
this is a required payment, judicial review is already
available to these individuals in the Court of Federal Claims.
The language ``to receive compensation under this title for
harm suffered by the individual'' was deleted and replaced with
``in respect to an individual.'' The original language did not
reflect the humanitarian nature of payment.
The bill now provides that 2 percent of the money is
allowed for attorney fees, instead of the 5 percent allowed in
the original bill.

Hearings

The Committee's Subcommittee on Immigration and Claims held
one day of hearings on H.R. 1023 on September 19, 1996.
Testimony was received from the Honorable Mike DeWine; the
Honorable Porter J. Goss; Philip R. Lee, M.D., Assistant
Secretary for Health, Department of Health and Human Services;
Eva M. Plaza, Deputy Assistant Attorney General, Civil
Division, Department of Justice; Dana A. Kuhn, Ph.D.; Louise
Ray; Deborah K. Noriega; Loras J. Goedken; Joyce Lawson;
Michael A. Stoto, Ph.D., Director, Division of Health Promotion
and Disease Prevention, Institute of Medicine, National Academy
of Sciences; Jay Tidmarsh, Associate Professor of Law, Notre
Dame Law School; Andrew R. Klein, Associate Professor of Law,
Samford University, Cumberland School of Law; Robert W. Reilly,
Executive Director, International Plasma Products Industry
Association; Mark Meyer, Cunningham, Meyer & Vedrine,
Representing the National Hemophilia Foundation; and Thomas F.
Zuck, M.D., Director, Hoxworth Blood Center, University of
Cincinnati Medical Center, Representing the American
Association of Blood Banks, with additional material submitted
by Lynn Martin of Oakland, Michigan; John A. Lanzon of
Southfield, Michigan; Mr. Bob Baldwin; Warren P. Ingram of
Lawrenceville, Georgia; Robert P. Falkenstein of Philadelphia,
Pennsylvania; the American Blood Resources Association; and
James B. Reed, Esquire.

Committee Consideration

On October 29, 1997, the Committee met in open session and
ordered reported favorably the bill H.R. 1023 with an amendment
by voice vote, a quorum being present.

Committee Oversight Findings

In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.

Committee on Government Reform and Oversight Findings

No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the Rules of the House of
Representatives.

New Budget Authority and Tax Expenditures

Clause 2(l)(3)(B) of House Rule XI is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.

Congressional Budget Office Cost Estimate

In compliance with clause 2(l)(3)(C) of rule XI of the
Rules of the House of Representatives, the Committee sets
forth, with respect to the bill, H.R. 1023, the following
estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974:

U.S. Congress,
Congressional Budget Office,
Washington, DC, March 20, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1023, the Ricky
Ray Hemophilia Relief Fund Act of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Anne
Cappabianca, who can be reached at 226-9010, and Eric Rollins,
who can be reached at 226-2820.
Sincerely,

June E. O'Neill, Director.
Enclosure.

cc: Hon. John Conyers, Jr.,
Ranking Minority Member.

H.R. 1023--Ricky Ray Hemophilia Relief Fund Act of 1998
Summary
H.R. 1023 would authorize $750 million to make compensatory
payments to hemophiliacs who contracted HIV from an
antihemophilic factor, and to certain of their family members.
By accepting payments, individuals would agree that any claim
they have against the federal government would be fully
satisfied. The bill also would exclude from eligibility
determinations for Medicaid and Supplemental Security Income
(SSI) benefits settlement payments from a private class action
lawsuit by hemophiliacs who contracted HIV.
Assuming the authorized amounts would be appropriated, CBO
estimates that H.R. 1023 would result in additional
discretionary spending of $767 million over the 1998-2003
period. The bill would also increase direct spending by $17
million and therefore be subject to pay-as-you-go procedures.
H.R. 1023 does not contain any intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act
of 1995.
Estimated Cost to the Federal Government
The estimated budgetary impact of H.R. 1023 is shown in the
following table. For the purposes of this estimate, CBO assumes
an enactment date of July 1, 1998.

[By Fiscal Year, In Millions Of Dollars]
----------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Authorization Level....................................... 752 3 3 3 3 2
Estimated Outlays......................................... 2 116 228 228 116 77
DIRECT SPENDING
Estimated Budget Authority................................ 1 4 4 3 3 2
Estimated Outlays......................................... 1 4 4 3 3 2
----------------------------------------------------------------------------------------------------------------

The costs of this legislation fall within budget functions
550 (Health) and 600 (Income Security).
Basis of Estimate
Title I
H.R. 1023 would authorize $750 million to be placed in a
trust fund, from which compensatory payments would be made to
qualified claimants. Eligible claimants include individuals
with blood-clotting disorders who contracted HIV from
contaminated antihemophilic factor between July 1, 1982, and
December 1, 1987. Spouses of these patients also qualify as
claimants, provided they demonstrate that they contracted HIV
from their infected spouse. Finally, any children of these
couples who contracted HIV perinatally could petition for
payments. Claimants must be able to submit medical
documentation of their HIV status, a hemophilia diagnosis, and
the date of the antihemophilic factor treatment.
The Secretary of Health and Human Services would administer
the trust fund, which would pay $100,000 to each approved
claimant. Claims would be paid in the order received until the
fund is depleted. However, the Secretary could make payments
for only five years after enactment of the bill. For the
purposes of this estimate, CBO assumes that payments would
equal the amount authorized.
If a claimant died before filing a petition, his survivors
could submit a petition in his name. If the claimant died
before the claim was settled, payment would be made to his
spouse, children, or parents, in that order. In accepting these
payments, petitioners would agree that any claims they have
against the government or its agents are fully satisfied.
The bill provides that all claims must be filed within
three years of its enactment. Therefore, CBO assumes that the
majority of payments from the fund would occur during the first
four years of the program's operation. We also assume that
payments would not start until fiscal year 1999, when outlays
would total $113 million.
H.R. 1023 specifies that, for tax purposes, payments from
the fund would be considered damages received on account of
personal injuries or sickness. However, this provision would
not affect federal revenues since, under current law, there
would be no compensatory payments that could be taxed. The bill
also stipulates that, in determining eligibility for Medicaid
or other entitlement benefits under section 3803(c)(2)(C) of
title 31 of the United States Code, payments to claimants could
not be counted as income or resources.
Under the proposal, individuals accepting payments from the
fund agree not to pursue any further claim against the federal
government. These claims might have taken the form of
individual lawsuits against the federal government, or of a
class-action lawsuit. CBO cannot estimate the amount of the
government's liability, if any, under current law. However, it
is possible that this provision of the bill could yield some
savings to the federal government.
Finally, the bill would require that administrative costs
not be paid from the fund's appropriation. Based on the
administrative costs of other, similar federal trust funds, CBO
estimates that the fund's administrative costs would be $2
million in 1998, and $16 million over the 1998-2003 period.
Title II
H.R. 1023 would exempt settlement payments arising from the
1997 class action lawsuit In Re Factor VIII or IX Concentrate
Blood Products Litigation from consideration as income or
resources in determining eligibility for Medicaid or SSI
benefits. The In Re Factor VIII or IX settlement resolves
claims by hemophiliacs who contracted HIV through contaminated
blood products against the manufacturers of those blood
products. Under the settlement, hemophiliacs or their survivors
would receive a payment of $100,000 per case of HIV infection.
These settlement payments have already been exempted from
Medicaid eligibility determinations by the Balanced Budget Act
of 1997.
Under current law, settlement payments are treated as
income in SSI eligibility determinations. The size of the
payments in the In Re Factor VIII or IX settlement would almost
certainly make individuals currently receiving SSI ineligible.
H.R. 1023 thus preserves SSI eligibility for a group of people
who would otherwise become ineligible.
Approximately 3,250 hemophiliacs who have contracted HIV
through tainted blood products are currently alive. Of this
total, CBO estimates that 1,250 people are receiving SSI
benefits. A small number of these individuals would not be
affected by the bill because they will place their settlement
payments in a special needs trust, which preserves their SSI
eligibility. The estimated cost of preserving SSI eligibility
for the remaining beneficiaries will be $1 million in 1998, $4
million in 1999, and less in subsequent years.
Pay-As-You-Go Considerations
The provisions of Title II of this bill would affect direct
spending and would therefore be subject to pay-as-you-go
procedures. The pay-as-you-go effects of the bill are shown in
the following table. For the purposes of enforcing pay-as-you-
go procedures, only the effects in the current year, the budget
year, and the succeeding four years are counted.

[By Fiscal Year, In Millions Of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in outlays.................................... 1 4 4 3 3 2 2 2 1 1 1
Change in receipts Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

Estimated Impact on State, Local, and Tribal Governments
H.R. 1023 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act of 1995 (UMRA). By
excluding payments from the In Re Factor VIII or IX settlement
from being used to consider SSI eligibility, some SSI
recipients would remain eligible for state benefits. However,
CBO estimates that the cost of these benefits would be less
than $500,000 annually and that states have sufficient
authority to amend their financial or programmatic
responsibilities to offset these costs.
Estimated Impact on the Private Sector
None.
Estimate Prepared By:
Federal Costs: Anne Cappabianca (Title I) (226-9010), Eric
Rollins (Title II) (226-2820); Impact on State, Local, and
Tribal Governments: Leo Lex (225-3220); Impact on the Private
Sector: Julia Matson (226-2674);
Estimate Approved By:
Paul N. Van de Water, Assistant Director for Budget
Analysis.

Constitutional Authority Statement

Pursuant to Rule XI, clause 2(l)(4) of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article 1, section 1, clause 8, of the
Constitution.

Section-By-Section Analysis

Section 1. Short Title; Table of Contents
Section 1 provides that the short title of this bill will
be the ``Ricky Ray Hemophilia Relief Fund Act of 1998.'' A
technical amendment to change ``1997'' to ``1998'' was added to
reflect the year the act is anticipated to be enacted. This
section also contains the table of contents.
Section 101. Ricky Ray Hemophilia Relief Fund
This section lays out the structure of the fund.
Subsection (a) establishes the fund in the Treasury and
indicates the fund will be administered by the Secretary of the
Treasury.
Subsection (b) directs that the amounts in the fund will be
invested in accordance with law concerning investment of trust
funds held by the Government (they shall be invested in
Government obligations, and earn interest of at least 5%
annually) and any proceeds shall become part of the Fund.
Subsection (c) indicates that the funds will only be
available for disbursement by the Secretary of Health and Human
Services.
Subsection (d) directs that the fund shall terminate 5
years after enactment, and that at that time all funds
remaining will be deposited into the miscellaneous receipts
account of the Treasury.
Finally, subsection (e) authorizes $750,000,000 to be
appropriated to the fund. This legislation does not create any
entitlement. The payments may be made only to the extent that
sums are appropriated for this purpose.
Section 102. Compassionate Payment Relating To Individuals With Blood-
clotting Disorders and HIV
This section lays out the amount of the payment; the type
of individuals who qualify; and the conditions for payment. A
technical amendment was included in this section at the request
of the Congressional Budget Office.
Subsection (a) states that if conditions of this section
are met by an individual with HIV, a single payment of $100,000
will be made to that individual. This section defines
individuals who are eligible to be: (1) a HIV-infected
individual who was treated with anti-hemophilic factor at any
time during the period beginning on July 1, 1982 and ending on
December 31, 1987; (2) a HIV-infected individual who was the
lawful spouse of a person as described in (1) or a former
lawful spouse who was a lawful spouse of a person as described
in (1) during the above mentioned time period; or (3) an
individual who acquired the HIV infection through perinatal
transmission from a parent who is an individual described in
(1) or (2).
Subsection (b) sets out the conditions under which an
individual may receive payment. Those conditions are: 1)
submission of medical documentation of HIV infection; 2) filing
of a petition for payment with the Secretary of HHS; and 3) a
determination by the Secretary that the petition meets the
requirements of this title.
Section 103. Determination and Payment
This section states that the Secretary shall pay from the
Fund each petition which meets the requirements in Title I of
the Act. A technical amendment was included in this section at
the request of the Congressional Budget Office.
Subsection (a) directs the Secretary of HHS to set up
procedures for submission of petitions for payments. It
specifically directs that those procedures include written
medical documentation.
Subsection (b) directs the Secretary of HHS to make a
determination for each petition filed.
Subsection (c) directs the Secretary to pay each petition
that meets the requirements of the Act. In the case of deceased
individual, this subsection directs that payment be made first
to a surviving spouse, then to all children, and lastly to
parents of the deceased. If there are no survivors within those
categories, the payment reverts back to the Fund. This
subsection also provides definitions for purposes of this
section. The term ``spouse'' means an individual lawfully
married to the deceased at the time of death. The term
``child'' includes a natural child, a step-child who lived with
the deceased in a regular parent/child relationship, and an
adopted child. The term ``parent'' shall include fathers and
mothers through adoption. Finally, this subsection directs that
the Secretary cannot make payment on petitions before 120 days
after enactment or 120 days after the 5-year period beginning
on the date of enactment.
Subsection (d) restricts the time the Secretary of HHS has
to consider a petition to 120 days after the date the petition
is filed.
Subsection (e) states that payment under this bill will be
humanitarian in nature. It further states that this act does
not create or admit any claim and that any alleged claim by an
individual would be satisfied by this payment.
Subsection (f) states that no costs incurred by HHS in
carrying out the act will be deducted from the Fund.
Subsection (g) states that the duties of the Secretary end
when the Fund terminates.
Subsection (h) lays out the way that the payments are to be
interpreted under other laws. First, the payments are to be tax
exempt. Second, the payments are not to be considered income
when determining a person's eligibility for benefits such as
SSI, Medicaid, food stamps, etc. Third, it provides that a
state government, the federal government, or an entity which
provides those benefits cannot seek reimbursement from the
payments to reimburse funds expended for an individual.
Subsection (i) indicates the Secretary may issue
regulations necessary to carry out this legislation.
Subsection (j) directs the Secretary to establish all
regulations and procedures to carry out the Act within 120 days
of enactment.
Section 104. Limitation On Transfer Of Rights And Number Of Petitions
Subsection (a) states that no rights given in this bill are
transferrable.
Subsection (b) states that only one payment made be made on
a petition for an individual.
Section 105. Time Limitation
This section restricts payment by the Secretary to only
petitions filed within three years of enactment.
Section 106. Certain Claims Not Affected By Payment
This section states that a payment will not be considered
compensation or reimbursement for a loss for purposes of
repayments to insurance carriers or entities which have
provided workman's compensation. Nor shall it affect any claim
an individual has against an insurance carrier or against a
person with respect to workman's compensation.
Section 107. Limitation on Agent and Attorney Fees
This section directs that no more than 2% of this payment
can be paid for attorney fees. Any violators of this section
may be fined up to $50,000.
Section 108. Definitions
This section sets out the definitions for terms used in the
Act. ``AIDS'' is defined as meaning acquired immune deficiency
syndrome. ``Fund'' is defined as meaning the Ricky Ray
Hemophilia Relief Fund. ``HIV'' is defined as meaning human
immunodeficiency virus. ``Secretary'' is defined as meaning the
Secretary of Health and Human Services unless otherwise
provided.
Section 201. Treatment Of Certain Private Settlement Payments In
Hemophilia-Clotting-Factor Suit Under The Medicaid And SSI
Programs.
Subsection (a) of this section directs that any monies
received by an individual from the private settlement with
industry will not affect that individual's eligibility for
Medicaid or supplemental security income benefits.
Subsection (b) defines ``class member'' as a member of the
settlement class in In Re Factor VIII or IX Concentrate Blood
Products Litigation (United States District Court, Northern
District of Illinois, Eastern Division; Civil Action No. 96-C-
5024); and ``settlement payment'' as a payment to a class
member described in this subsection.

Agency Views

The comments of the Department of Health and Human Services
on H.R. 1023, as introduced in the 104th Congress, are as
follows:
The Secretary of Health and Human Services,
Washington, DC, June 5, 1996.
Hon. Lamar Smith, Chairman,
Subcommittee on Immigration and Claims
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: This is in response to your request for
the views of the Department of Health and Human Services on
H.R. 1023, the ``Ricky Ray Hemophilia Relief fund Act of
1995.'' The Department of Justice concurs with these views.
H.R. 1023 would create a compensation fund for individuals
(or the estates or survivors of individuals) who have HIV
infection and who either (i) have hemophilia or a similar
blood-clotting disorder and were treated with blood-clotting
agents during the period from January 1, 1980, through December
31, 1987, or (ii) are the spouses or children of such
individuals. The bill would authorize appropriations to the
fund of $1 billion, and would entitle each individual who
demonstrated eligibility to receive $125,000 from amounts
available in the fund. The program would terminate five years
after enactment.
On behalf of the Administration, let me first express our
deep concern about the tragedy that has so affected the
hemophilia community with respect to HIV transmission through
blood and blood products. We have great sympathy for the
victims and their families who suffered and continue to suffer
from consequences of the contamination of antihemophilic
factors in the 1980s.
In recognition of this tragedy, in July 1993 this
Department asked the National Academy of Sciences; Institute of
Medicine (IOM) to conduct a rigorous review of Federal blood
regulation during the 1980s. The IOM reported back to us in
July 1995. As a result of information gained in that review, we
have instituted several blood safety reforms, including the
establishment of an interagency Blood Safety Committee to
monitor the safety at blood products. As you know, however, the
IOM review found no negligence in the Federal Government's
regulation of blood products in the 1980s. Rather, the IOM
determined that during a period of tremendous scientific
uncertainty, our scientists made good-faith decisions based on
available data. These same Federal government scientists later
discovered that heat treatment of blood products kills HIV. By
March 1995, FDA approved tests to identify HIV in blood. These
tests were rapidly put into widespread use. Additionally,
between 1983 and 1985, FDA approved heat treatment methods of
viral inactivation for manufacturers of clotting factor
concentrates to address the risk of HIV contamination. The
implementation of the test and heat treatment has combined to
virtually eliminate the threat of HIV contamination of people
with hemophilia through blood products.
We share your concern about the individuals with hemophilia
and their families who suffered as a result of the events of
the 1980s. Although the IOM found no negligence on the part of
U.S. Government officials, the IOM did conclude that the entire
public health system, including both the private and public
sectors, may have missed opportunities to reduce the risk of
HIV infection from blood products.
The Administration will be pleased to work with the
Congress to develop an appropriate way to assist those infected
with HIV through the use of blood and blood products in the
1980s. In developing a bipartisan program to assist people with
hemophilia who were infected by HIV, a number of important
issues of policy as well as numerous technical and statutory
issues will need to be addressed, including the ramifications
of the precedent that would be set and how to pay for the
benefits.
We look forward to working with you to address this
tragedy. We have been advised by the Office of Management and
Budget that there is no objection to the submission of this
letter to the Congress from the standpoint of the
Administration's program.
Sincerely,
Donna E. Shalala.