[House Report 107-693]
[From the U.S. Government Publishing Office]



107th Congress                                            Rept. 107-693
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 2
======================================================================
 
 HELP EFFICIENT, ACCESSIBLE, LOW COST, TIMELY HEALTH CARE (HEALTH) ACT 
                                OF 2002

                                _______
                                

 September 25, 2002.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4600]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4600) to improve patient access to health care 
services and provide improved medical care by reducing the 
excessive burden the liability system places on the health care 
delivery system, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     7
Background and Need for Legislation..............................     7
Hearings.........................................................     9
Committee Consideration..........................................     9
Committee Votes..................................................    10
Committee Oversight Findings.....................................    19
Statement of General Performance Goals and Objectives............    19
New Budget Authority, Entitlement Authority, and Tax Expenditures    19
Committee Cost Estimate..........................................    19
Congressional Budget Office Estimate.............................    19
Federal Mandates Statement.......................................    28
Advisory Committee Statement.....................................    28
Constitutional Authority Statement...............................    28
Applicability to Legislative Branch..............................    28
Section-by-Section Analysis of the Legislation...................    29
Dissenting Views.................................................    33

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Help Efficient, Accessible, Low Cost, 
Timely Health Care (HEALTH) Act of 2002''.

SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--
          (1) Effect on health care access and costs.--Congress finds 
        that our current civil justice system is adversely affecting 
        patient access to health care services, better patient care, 
        and cost-efficient health care, in that the health care 
        liability system is a costly and ineffective mechanism for 
        resolving claims of health care liability and compensating 
        injured patients, and is a deterrent to the sharing of 
        information among health care professionals which impedes 
        efforts to improve patient safety and quality of care.
          (2) Effect on interstate commerce.--Congress finds that the 
        health care and insurance industries are industries affecting 
        interstate commerce and the health care liability litigation 
        systems existing throughout the United States are activities 
        that affect interstate commerce by contributing to the high 
        costs of health care and premiums for health care liability 
        insurance purchased by health care system providers.
          (3) Effect on federal spending.--Congress finds that the 
        health care liability litigation systems existing throughout 
        the United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                  (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                  (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent to provide them with health insurance 
                benefits; and
                  (C) the large number of health care providers who 
                provide items or services for which the Federal 
                Government makes payments.
  (b) Purpose.--It is the purpose of this Act to implement reasonable, 
comprehensive, and effective health care liability reforms designed 
to--
          (1) improve the availability of health care services in cases 
        in which health care liability actions have been shown to be a 
        factor in the decreased availability of services;
          (2) reduce the incidence of ``defensive medicine'' and lower 
        the cost of health care liability insurance, all of which 
        contribute to the escalation of health care costs;
          (3) ensure that persons with meritorious health care injury 
        claims receive fair and adequate compensation, including 
        reasonable noneconomic damages;
          (4) improve the fairness and cost-effectiveness of our 
        current health care liability system to resolve disputes over, 
        and provide compensation for, health care liability by reducing 
        uncertainty in the amount of compensation provided to injured 
        individuals; and
          (5) provide an increased sharing of information in the health 
        care system which will reduce unintended injury and improve 
        patient care.

SEC. 3. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

  The time for the commencement of a health care lawsuit shall be 3 
years after the date of injury or 1 year after the claimant discovers, 
or through the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time for 
commencement of a health care lawsuit exceed 3 years unless tolled for 
any of the following:
          (1) Upon proof of fraud;
          (2) Intentional concealment; or
          (3) The presence of a foreign body, which has no therapeutic 
        or diagnostic purpose or effect, in the person of the injured 
        person.
Actions by a minor shall be commenced within 3 years from the date of 
the alleged injury except that actions by a minor under the full age of 
6 years shall be commenced within 3 years or prior to the minor's 8th 
birthday, whichever provides a longer period. Such time limitation 
shall be tolled for minors for any period during which a parent or 
guardian and a health care provider or health care organization have 
committed fraud or collusion in the failure to bring an action on 
behalf of the injured minor.

SEC. 4. COMPENSATING PATIENT INJURY.

  (a) Unlimited Amount of Damages for Actual Economic Losses in Health 
Care Lawsuits.--In any health care lawsuit, the full amount of a 
claimant's economic loss may be fully recovered without limitation.
  (b) Additional Noneconomic Damages.--In any health care lawsuit, the 
amount of noneconomic damages recovered may be as much as $250,000, 
regardless of the number of parties against whom the action is brought 
or the number of separate claims or actions brought with respect to the 
same occurrence.
  (c) No Discount of Award for Noneconomic Damages.--In any health care 
lawsuit, an award for future noneconomic damages shall not be 
discounted to present value. The jury shall not be informed about the 
maximum award for noneconomic damages. An award for noneconomic damages 
in excess of $250,000 shall be reduced either before the entry of 
judgment, or by amendment of the judgment after entry of judgment, and 
such reduction shall be made before accounting for any other reduction 
in damages required by law. If separate awards are rendered for past 
and future noneconomic damages and the combined awards exceed $250,000, 
the future noneconomic damages shall be reduced first.
  (d) Fair Share Rule.--In any health care lawsuit, each party shall be 
liable for that party's several share of any damages only and not for 
the share of any other person. Each party shall be liable only for the 
amount of damages allocated to such party in direct proportion to such 
party's percentage of responsibility. A separate judgment shall be 
rendered against each such party for the amount allocated to such 
party. For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.

SEC. 5. MAXIMIZING PATIENT RECOVERY.

  (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall supervise the 
arrangements for payment of damages to protect against conflicts of 
interest that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. In particular, in any 
health care lawsuit in which the attorney for a party claims a 
financial stake in the outcome by virtue of a contingent fee, the court 
shall have the power to restrict the payment of a claimant's damage 
recovery to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. In no 
event shall the total of all contingent fees for representing all 
claimants in a health care lawsuit exceed the following limits:
          (1) 40 percent of the first $50,000 recovered by the 
        claimant(s).
          (2) 33\1/3\ percent of the next $50,000 recovered by the 
        claimant(s).
          (3) 25 percent of the next $500,000 recovered by the 
        claimant(s).
          (4) 15 percent of any amount by which the recovery by the 
        claimant(s) is in excess of $600,000.
  (b) Applicability.--The limitations in this section shall apply 
whether the recovery is by judgment, settlement, mediation, 
arbitration, or any other form of alternative dispute resolution. In a 
health care lawsuit involving a minor or incompetent person, a court 
retains the authority to authorize or approve a fee that is less than 
the maximum permitted under this section.

SEC. 6. ADDITIONAL HEALTH BENEFITS.

  In any health care lawsuit, any party may introduce evidence of 
collateral source benefits. If a party elects to introduce such 
evidence, any opposing party may introduce evidence of any amount paid 
or contributed or reasonably likely to be paid or contributed in the 
future by or on behalf of the opposing party to secure the right to 
such collateral source benefits. No provider of collateral source 
benefits shall recover any amount against the claimant or receive any 
lien or credit against the claimant's recovery or be equitably or 
legally subrogated to the right of the claimant in a health care 
lawsuit. This section shall apply to any health care lawsuit that is 
settled as well as a health care lawsuit that is resolved by a fact 
finder.

SEC. 7. PUNITIVE DAMAGES.

  (a) In General.--Punitive damages may, if otherwise permitted by 
applicable State or Federal law, be awarded against any person in a 
health care lawsuit only if it is proven by clear and convincing 
evidence that such person acted with malicious intent to injure the 
claimant, or that such person deliberately failed to avoid unnecessary 
injury that such person knew the claimant was substantially certain to 
suffer. In any health care lawsuit where no judgment for compensatory 
damages is rendered against such person, no punitive damages may be 
awarded with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit as 
initially filed. A court may allow a claimant to file an amended 
pleading for punitive damages only upon a motion by the claimant and 
after a finding by the court, upon review of supporting and opposing 
affidavits or after a hearing, after weighing the evidence, that the 
claimant has established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the request of any 
party in a health care lawsuit, the trier of fact shall consider in a 
separate proceeding--
          (1) whether punitive damages are to be awarded and the amount 
        of such award; and
          (2) the amount of punitive damages following a determination 
        of punitive liability.
If a separate proceeding is requested, evidence relevant only to the 
claim for punitive damages, as determined by applicable State law, 
shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
  (b) Determining Amount of Punitive Damages.--
          (1) Factors considered.--In determining the amount of 
        punitive damages, the trier of fact shall consider only the 
        following:
                  (A) the severity of the harm caused by the conduct of 
                such party;
                  (B) the duration of the conduct or any concealment of 
                it by such party;
                  (C) the profitability of the conduct to such party;
                  (D) the number of products sold or medical procedures 
                rendered for compensation, as the case may be, by such 
                party, of the kind causing the harm complained of by 
                the claimant;
                  (E) any criminal penalties imposed on such party, as 
                a result of the conduct complained of by the claimant; 
                and
                  (F) the amount of any civil fines assessed against 
                such party as a result of the conduct complained of by 
                the claimant.
          (2) Maximum award.--The amount of punitive damages awarded in 
        a health care lawsuit may be up to as much as two times the 
        amount of economic damages awarded or $250,000, whichever is 
        greater. The jury shall not be informed of this limitation.
  (c) No Civil Monetary Penalties for Products That Comply With FDA 
Standards.--
          (1) In general.--No punitive damages may be awarded against 
        the manufacturer or distributor of a medical product based on a 
        claim that such product caused the claimant's harm where--
                  (A)(i) such medical product was subject to premarket 
                approval or clearance by the Food and Drug 
                Administration with respect to the safety of the 
                formulation or performance of the aspect of such 
                medical product which caused the claimant's harm or the 
                adequacy of the packaging or labeling of such medical 
                product; and
                  (ii) such medical product was so approved or cleared; 
                or
                  (B) such medical product is generally recognized 
                among qualified experts as safe and effective pursuant 
                to conditions established by the Food and Drug 
                Administration and applicable Food and Drug 
                Administration regulations, including without 
                limitation those related to packaging and labeling.
          (2) Liability of health care providers.--A health care 
        provider who prescribes a drug or device (including blood 
        products) approved by the Food and Drug Administration shall 
        not be named as a party to a product liability lawsuit 
        involving such drug or device and shall not be liable to a 
        claimant in a class action lawsuit against the manufacturer, 
        distributor, or product seller of such drug or device.
          (3) Packaging.--In a health care lawsuit for harm which is 
        alleged to relate to the adequacy of the packaging or labeling 
        of a drug which is required to have tamper-resistant packaging 
        under regulations of the Secretary of Health and Human Services 
        (including labeling regulations related to such packaging), the 
        manufacturer or product seller of the drug shall not be held 
        liable for punitive damages unless such packaging or labeling 
        is found by the trier of fact by clear and convincing evidence 
        to be substantially out of compliance with such regulations.
          (4) Exception.--Paragraph (1) shall not apply in any health 
        care lawsuit in which--
                  (A) a person, before or after premarket approval or 
                clearance of such medical product, knowingly 
                misrepresented to or withheld from the Food and Drug 
                Administration information that is required to be 
                submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and is causally related to the harm which the 
                claimant allegedly suffered; or
                  (B) a person made an illegal payment to an official 
                of the Food and Drug Administration for the purpose of 
                either securing or maintaining approval or clearance of 
                such medical product.

SEC. 8. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN 
                    HEALTH CARE LAWSUITS.

  (a) In General.--In any health care lawsuit, if an award of future 
damages, without reduction to present value, equaling or exceeding 
$50,000 is made against a party with sufficient insurance or other 
assets to fund a periodic payment of such a judgment, the court shall, 
at the request of any party, enter a judgment ordering that the future 
damages be paid by periodic payments in accordance with the Uniform 
Periodic Payment of Judgments Act promulgated by the National 
Conference of Commissioners on Uniform State Laws.
  (b) Applicability.--This section applies to all actions which have 
not been first set for trial or retrial before the effective date of 
this Act.

SEC. 9. DEFINITIONS.

  In this Act:
          (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care lawsuits 
        in a manner other than through a civil action brought in a 
        State or Federal court.
          (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care lawsuit, including a person who asserts or 
        claims a right to legal or equitable contribution, indemnity or 
        subrogation, arising out of a health care liability claim or 
        action, and any person on whose behalf such a claim is asserted 
        or such an action is brought, whether deceased, incompetent, or 
        a minor.
          (3) Collateral source benefits.--The term ``collateral source 
        benefits'' means any amount paid or reasonably likely to be 
        paid in the future to or on behalf of the claimant, or any 
        service, product or other benefit provided or reasonably likely 
        to be provided in the future to or on behalf of the claimant, 
        as a result of the injury or wrongful death, pursuant to--
                  (A) any State or Federal health, sickness, income-
                disability, accident, or workers' compensation law;
                  (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                  (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income disability benefits; and
                  (D) any other publicly or privately funded program.
          (4) Compensatory damages.--The term ``compensatory damages'' 
        means objectively verifiable monetary losses incurred as a 
        result of the provision of, use of, or payment for (or failure 
        to provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities, damages for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature. The term 
        ``compensatory damages'' includes economic damages and 
        noneconomic damages, as such terms are defined in this section.
          (5) Contingent fee.--The term ``contingent fee'' includes all 
        compensation to any person or persons which is payable only if 
        a recovery is effected on behalf of one or more claimants.
          (6) Economic damages.--The term ``economic damages'' means 
        objectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities.
          (7) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services affecting interstate commerce, 
        or any health care liability action concerning the provision of 
        health care goods or services affecting interstate commerce, 
        brought in a State or Federal court or pursuant to an 
        alternative dispute resolution system, against a health care 
        provider, a health care organization, or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, plaintiffs, 
        defendants, or other parties, or the number of claims or causes 
        of action, in which the claimant alleges a health care 
        liability claim.
          (8) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal Court or pursuant to an alternative dispute resolution 
        system, against a health care provider, a health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, regardless 
        of the theory of liability on which the claim is based, or the 
        number of plaintiffs, defendants, or other parties, or the 
        number of causes of action, in which the claimant alleges a 
        health care liability claim.
          (9) Health care liability claim.--The term ``health care 
        liability claim'' means a demand by any person, whether or not 
        pursuant to ADR, against a health care provider, health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, counter-
        claims, or contribution claims, which are based upon the 
        provision of, use of, or payment for (or the failure to 
        provide, use, or pay for) health care services or medical 
        products, regardless of the theory of liability on which the 
        claim is based, or the number of plaintiffs, defendants, or 
        other parties, or the number of causes of action.
          (10) Health care organization.--The term ``health care 
        organization'' means any person or entity which is obligated to 
        provide or pay for health benefits under any health plan, 
        including any person or entity acting under a contract or 
        arrangement with a health care organization to provide or 
        administer any health benefit.
          (11) Health care provider.--The term ``health care provider'' 
        means any person or entity required by State or Federal laws or 
        regulations to be licensed, registered, or certified to provide 
        health care services, and being either so licensed, registered, 
        or certified, or exempted from such requirement by other 
        statute or regulation.
          (12) Health care goods or services.--The term ``health care 
        goods or services'' means any goods or services provided by a 
        health care organization, provider, or by any individual 
        working under the supervision of a health care provider, that 
        relates to the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment of the health of human 
        beings.
          (13) Malicious intent to injure.--The term ``malicious intent 
        to injure'' means intentionally causing or attempting to cause 
        physical injury other than providing health care goods or 
        services.
          (14) Medical product.--The term ``medical product'' means a 
        drug or device intended for humans, and the terms ``drug'' and 
        ``device'' have the meanings given such terms in sections 
        201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act 
        (21 U.S.C. 321), respectively, including any component or raw 
        material used therein, but excluding health care services.
          (15) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages for physical and emotional pain, suffering, 
        inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature.
          (16) Punitive damages.--The term ``punitive damages'' means 
        damages awarded, for the purpose of punishment or deterrence, 
        and not solely for compensatory purposes, against a health care 
        provider, health care organization, or a manufacturer, 
        distributor, or supplier of a medical product. Punitive damages 
        are neither economic nor noneconomic damages.
          (17) Recovery.--The term ``recovery'' means the net sum 
        recovered after deducting any disbursements or costs incurred 
        in connection with prosecution or settlement of the claim, 
        including all costs paid or advanced by any person. Costs of 
        health care incurred by the plaintiff and the attorneys' office 
        overhead costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
          (18) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 10. EFFECT ON OTHER LAWS.

  (a) Vaccine Injury.--
          (1) To the extent that title XXI of the Public Health Service 
        Act establishes a Federal rule of law applicable to a civil 
        action brought for a vaccine-related injury or death--
                  (A) this Act does not affect the application of the 
                rule of law to such an action; and
                  (B) any rule of law prescribed by this Act in 
                conflict with a rule of law of such title XXI shall not 
                apply to such action.
          (2) If there is an aspect of a civil action brought for a 
        vaccine-related injury or death to which a Federal rule of law 
        under title XXI of the Public Health Service Act does not 
        apply, then this Act or otherwise applicable law (as determined 
        under this Act) will apply to such aspect of such action.
  (b) Other Federal Law.--Except as provided in this section, nothing 
in this Act shall be deemed to affect any defense available to a 
defendant in a health care lawsuit or action under any other provision 
of Federal law.

SEC. 11. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

  (a) Health Care Lawsuits.--The provisions governing health care 
lawsuits set forth in this Act preempt, subject to subsections (b) and 
(c), State law to the extent that State law prevents the application of 
any provisions of law established by or under this Act. The provisions 
governing health care lawsuits set forth in this Act supersede chapter 
171 of title 28, United States Code, to the extent that such chapter--
          (1) provides for a greater amount of damages or contingent 
        fees, a longer period in which a health care lawsuit may be 
        commenced, or a reduced applicability or scope of periodic 
        payment of future damages, than provided in this Act; or
          (2) prohibits the introduction of evidence regarding 
        collateral source benefits, or mandates or permits subrogation 
        or a lien on collateral source benefits.
  (b) Protection of States' Rights.--Any issue that is not governed by 
any provision of law established by or under this Act (including State 
standards of negligence) shall be governed by otherwise applicable 
State or Federal law. This Act does not preempt or supersede any law 
that imposes greater protections (such as a shorter statute of 
limitations) for health care providers and health care organizations 
from liability, loss, or damages than those provided by this Act.
  (c) State Flexibility.--No provision of this Act shall be construed 
to preempt--
          (1) any State statutory limit (whether enacted before, on, or 
        after the date of the enactment of this Act) on the amount of 
        compensatory or punitive damages (or the total amount of 
        damages) that may be awarded in a health care lawsuit, whether 
        or not such State limit permits the recovery of a specific 
        dollar amount of damages that is greater or lesser than is 
        provided for under this Act, notwithstanding section 4(a); or
          (2) any defense available to a party in a health care lawsuit 
        under any other provision of State or Federal law.

SEC. 12. APPLICABILITY; EFFECTIVE DATE.

  This Act shall apply to any health care lawsuit brought in a Federal 
or State court, or subject to an alternative dispute resolution system, 
that is initiated on or after the date of the enactment of this Act, 
except that any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this Act shall be governed by the 
applicable statute of limitations provisions in effect at the time the 
injury occurred.

SEC. 13. SENSE OF CONGRESS.

  It is the sense of Congress that a health insurer should be liable 
for damages for harm caused when it makes a decision as to what care is 
medically necessary and appropriate.

                          Purpose and Summary

    H.R. 4600 seeks to improve patient access to health care 
services and provide improved medical care by reducing the 
excessive burden the liability system places on the health care 
delivery system.

                  Background and Need for Legislation

    One of the primary purposes of the tort system is to 
provide an avenue for compensation for injured victims. The 
tort system also serves to deter behaviors that can cause harm 
to individuals and society as a whole. Nevertheless, excessive 
litigation can distort these useful functions, and lead to 
impacts that are the opposite of what is intended--harming the 
very people the system aims to protect. In the health care 
sector, excessive litigation has been extremely harmful to 
patient access to care.
    In several states across the country, medical liability 
insurance rates have skyrocketed, causing major insurers to 
drop coverage or raise premiums. St. Paul's Companies, the 
largest malpractice carrier in the United States, covering 9 
percent of doctors, announced in December 2001 that it would no 
longer offer coverage to health care providers. In addition, 
MIXX, PHICO, Frontier Insurance Group, and Doctors Insurance 
Reciprocal have either limited their coverage or left the 
medical liability insurance market. States that had not enacted 
meaningful medical liability reforms (such as Nevada, Georgia, 
Oregon, Mississippi, Ohio, Pennsylvania, and Washington) were 
particularly affected.
    In some cases, the new premiums are more than the actual 
income a health care provider accumulates annually. Even 
doctors that have never lost a single medical malpractice 
judgment or ever had a claim filed against them are seeing huge 
increases in medical liability premiums. The Medical Liability 
Monitor reports that medical liability insurance premiums are 
increasing at the highest rate since the mid-1980's. In 
Florida, medical liability insurance coverage for pregnancy-
related care is as high as $202,000 in some counties. Medical 
liability insurance rates are up 81 percent in Pennsylvania, 
and higher for some health care specialties.
    Doctors, unable to afford medical liability insurance, are 
being forced to drop part of their specialty practice, retire 
early, or move to another state to practice. In several states, 
patients are being left without access to high-quality care. 
For example, the University of Nevada Medical Center closed its 
trauma center in Las Vegas for ten days. The trauma center was 
able to re-open only because some of the surgeons agreed to 
become county employees for a limited time, which capped their 
liability for non-economic damages if they were sued. When the 
Las Vegas trauma center closed, the most severely injured 
patients would have to be transported to the nearest Level I 
trauma center, located five hours away. In Mississippi, over a 
third of the neurosurgeons have left the state in the past 
year. In West Virginia, rural areas, such as Putnam County and 
Jackson County, the sole community provider hospitals in the 
areas have closed their obstetrics units because the price of 
medical malpractice insurance is unaffordable.
    The mere threat of a health care lawsuit is so perverse 
that many doctors engage in defensive medicine. Stanford 
economists Daniel Kessler and Mark McClellan have conducted 
studies using national data on Medicare populations and 
concluded that patients from states that adopted medical care 
litigation reforms--such as limiting non-economic damage awards 
(pain and suffering)--incur significantly lower hospital costs 
while suffering no increase in adverse health outcomes 
associated with the illness for which they were treated. Based 
on these studies, the authors have quantified the cost of 
``defensive medicine,'' in which doctors perform tests and 
prescribe medicines that are not necessary to better the health 
of the patient, but rather serve as a precautionary step just 
in case the doctor is named in a lawsuit. Published in the 
Quarterly Journal of Economics, their study, ``Do Doctors 
Practice Defensive Medicine,'' estimates that direct medical 
care litigation reforms could lead to reductions of well over 
$50 billion per year in health care expenditures, without 
serious adverse consequences for patients.
    In 1975, Governor Jerry Brown signed into law California's 
Medical Injury Compensation Reform Act (MICRA). This landmark 
legislation has helped to stabilize the California medial 
liability insurance market for over twenty-seven years. MICRA 
reforms authorize 100 percent recovery of economic loss and up 
to $250,000 in non-economic loss. In order to ensure the 
complete recovery of damages for injured patients, MICRA 
prevents bankruptcies in which plaintiff's would receive only 
pennies on the dollar by authorizing courts to require periodic 
payments for future damages. To instill fairness and prevent 
double recoveries, MICRA authorizes defendants to introduce 
evidence showing theplaintiff received compensation for losses 
from outside sources. MICRA's reforms also allow more money to go 
directly to injured patients by including limits on contingency fees 
lawyers can charge in health care cases.
    Overall, according to data of the National Association of 
Insurance Commissioners, the rate of increase in medical 
liability premiums in California since 1976 has been a very 
modest 167%, whereas the rest of the United States has 
experienced a 505% rate of increase. The price of some lines of 
medical liability insurance have even gone down significantly 
in California after MICRA was enacted. According to the 
Doctor's Company, in 1976, when California's MICRA law went 
into effect, the average medical malpractice premium was 
$23,698 in 2001 dollars. In 2001, the average premium was only 
$14,107.
    On July 24, 2002, President Bush called on Congress to pass 
legislation that includes minimum standards to make the medical 
liability system more fair, predictable, and timely. Several of 
the provisions are similar to California's MICRA. H.R. 4600 
includes many of the provisions outlined by President Bush.

                                Hearings

    The Subcommittee on Health held a hearing on ``Harming 
Patient Access to Care: The Impact of Excessive Litigation'' on 
July 17, 2002. The Subcommittee received testimony from: Lisa 
Hollier, M.D., on behalf of the American College of 
Obstetricians and Gynecologists; Sam Roberts, M.D.; Mr. Stuart 
H. Fine, Chief Executive Officer, Grand View Hospital, on 
behalf of the American Hospital Association; Ms. Lauren 
Townsend, Coalition for Consumer Justice; Ms. Fran Visco, 
President, National Breast Cancer Coalition; Richard Anderson, 
M.D., CEO, The Doctor's Company, on behalf of the Physician 
Insurers Association of America; Mr. Jamie Court, on behalf of 
the Foundation for Taxpayer and Consumer Rights; Mr. Travis 
Plunkett, on behalf of the Consumer Federation of America; 
Victor E. Schwartz, Esq., Shook, Hardy & Bacon L.L.P.; and Mr. 
Jim Hurly, on behalf of the American Academy of Actuaries.

                        Committee Consideration

    On September 18, 2002 the Full Committee met in open markup 
session and favorably ordered reported H.R. 4600, as amended, 
by a roll call vote of 27 yeas and 22 nays, a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following are the recorded votes taken on the motion by Mr. 
Tauzin to order H.R. 4600 reported to the House, and on the 
amendments offered to the measure, including the names of those 
members voting for and against.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

          Statement of General Performance Goals and Objective

    To improve patient access to health care services and 
provide improved medical care by reducing the excessive burden 
the liability system places on the health care delivery system.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4600, the Help, Efficient, Accessible, Low Cost, Timely Health 
Care (HEALTH) Act of 2002, would result in no new or increased 
budget authority, entitlement authority, or tax expenditures or 
revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 25, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4600, the Help 
Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) 
Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Alexis 
Ahlstrom (for federal revenues and spending), and Stuart Hagen 
(for the private-sector impact).
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 4600--Help Efficient, Accessible, Low Cost, Timely Health Care 
        (HEALTH) Act of 2002

    Summary: H.R. 4600 would impose limits on medical 
malpractice litigation in state and federal courts by capping 
awards and attorney fees, reducing the statute of limitations, 
eliminating joint and several liability, and changing the way 
collateral-source benefits are treated.
    Those changes would lower the cost of malpractice insurance 
for physicians, hospitals, and other health care providers and 
organizations. That reduction in insurance costs would, in 
turn, lead to lower charges for health care services and 
procedures, and ultimately, to a decrease in rates for health 
insurance premiums.
    Because employers would pay less for health insurance for 
employees, more of their employees' compensation would be in 
the form of taxable wages and fringe benefits. As a result, CBO 
estimates that enacting H.R. 4600 would increase federal 
revenues by $40 million in 2003 and by $2.4 billion over the 
2003-2012 period.
    Enacting H.R. 4600 also would reduce federal direct 
spending for Medicare, Medicaid, the government's share of 
premiums for annuitants under the Federal Employees Health 
Benefits (FEHB) program, and other federal health benefits 
programs. CBO estimates that direct spending would decline by 
$11.3 billion over the 2004-2012 period. Because the bill would 
affect revenues and direct spending, pay-as-you-go procedures 
would apply.
    Federal spending for active workers participating in the 
FEHB program is included in the appropriations for federal 
agencies, and therefore is discretionary. CBO estimates that 
enactment of H.R. 4600 would reduce discretionary spending for 
the FEHB program by about $400 million over the 2004-2012 
period.
    The bill would preempt state laws that provide less 
protection for health care providers and organizations from 
liability, loss, or damages (other than caps on awards for 
damages). That preemption would be an intergovernmental mandate 
as defined in the Unfunded Mandates Reform Act (UMRA). Such a 
preemption would limit the application of state law, but it 
would require no action by states that would result in 
additional spending or a loss of revenue. Thus, the threshold 
established by UMRA for intergovernmental mandates ($58 million 
in 2002, adjusted annually for inflation) would not be 
exceeded.
    H.R. 4600 would impose a private-sector mandate on 
attorneys in malpractice cases by limiting the size of the 
awards they could receive. CBO estimates that the direct cost 
of that mandate would exceed the annual threshold specified in 
UMRA ($115 million in 2002, adjusted annually for inflation) in 
each of the first five years the mandate would be effective.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4600 is shown in the following table. 
The effects of this legislation on direct spending fall within 
budget functions 550 (health) and 570 (Medicare). The effects 
on spending subject to appropriation fall within multiple 
budget functions.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            By fiscal year, in millions of dollars--
                                       -----------------------------------------------------------------------------------------------------------------
                                          2003     2004     2005     2006      2007       2008       2009       2010       2011       2012     2003-2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Income and HI Payroll Taxes (on-             30       80      130      160        170        180        190        210        240        260       1,650
 budget)..............................
Social Security Payroll Taxes (off-          10       30       60       70         80         90         90        100        110        110         750
 budget)..............................

      Total...........................       40      110      190      230        250        270        280        310        350        370       2,400

                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority............        0     -250     -390     -690     -1,220     -1,520     -1,660     -1,770     -1,880     -1,920     -11,300
Estimated Outlays.....................        0     -250     -390     -690     -1,220     -1,520     -1,660     -1,770     -1,880     -1,920     -11,300

      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level.........        0      -20      -40      -40        -40        -50        -50        -50        -50        -60        -400
Estimated Outlays.....................        0      -20      -40      -40        -40        -50        -50        -50        -50        -60        -400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--HI = Medicare Hospital Insurance program.

    Basis of estimate: This estimate assumes that H.R. 4600 
will be enacted in October 2002. It would apply to lawsuits 
initiated on or after the date of enactment.

Major provisions of the bill

    H.R. 4600 would place caps on awards by limiting non-
economic damages, such as pain and suffering, to $250,000, and 
punitive damages to twice the amount of economic damages or 
$250,000, whichever is greater. Punitive damages would be 
further constrained by limiting the circumstances under which 
they may be sought. Economic, or compensatory, damages would 
not be limited. Attorney fees would be restricted as follows: 
40 percent of the first $50,000 of the award, 33.3 percent of 
the next $50,000 of the award, 25 percent of the next $500,000, 
and 15 percent of that portion of the award in excess of 
$600,000. The caps on attorney fees would apply regardless of 
whether the award was determined in the courts or settled 
privately, and could be reduced further at the discretion of 
the court. (The court could not, however, increase attorney 
fees beyond the caps.) For awards of future damages equal to or 
exceeding $50,000, any party to the lawsuit could request that 
future damages be paid by periodic payments.
    The bill would impose a statute of limitations requiring 
that lawsuits begin within three years after the injury alleged 
to have happened as a result of malpractice occurs or one year 
after the claimant discovers, or should have discovered, the 
injury, whichever occurs first. Under the joint and several 
liability provisions of current law, defendants found negligent 
in a lawsuit are each liable for the full amount of damages, 
regardless of their proportionate share of responsibility for 
the injury. H.R. 4600 would limit the liability of each 
defendant to the share of damages attributable to his or her 
responsibility.
    Collateral-source benefits are other sources of 
compensation a claimant may have access to in the event of an 
injury. A common source of such benefits is the claimant's 
health insurance, which would likely pay for a portion of the 
medical costs arising from the injury. Other sources include 
disability insurance payments, workers' compensation, and life 
insurance payments. The bill would allow evidence of such 
benefits to be introduced at trial by either claimants or 
defendants. In addition, providers of collateral-source 
benefits would not be allowed to place a lien on the claimant's 
award or recover any amount from the claimant, whether or not 
the case goes to trial.

Impact on medical malpractice insurance premiums

    CBO's estimate of the impact of this bill is based on a 
statistical analysis of historical premiums for medical 
malpractice insurance coverage in states that have and have not 
enacted medical malpractice tort limitations. We conducted 
another analysis using medical malpractice claims data provided 
by the Physician Insurers Association of America. CBO also 
considered the impact of factors not directly related to trends 
in malpractice claim payments that may have contributed to 
recent increases in medical malpractice premiums. Those factors 
include reduced investment income of insurers, the need of 
insurers to replenish depleted reserves, and recent increases 
in reinsurance costs for all types of insurance.
    CBO's analysis indicated that certain tort limitations, 
primarily caps on awards and rules governing offsets from 
collateral-source benefits, effectively reduce average premiums 
for medical malpractice insurance. Consequently, CBO estimates 
that, in states that currently do not have controls on 
malpractice torts, H.R. 4600 would significantly lower premiums 
for medical malpractice insurance from what they would 
otherwise be under current law. That effect would increase 
somewhat over the ten-year time horizon of this estimate 
because caps on awards would not be indexed to increase with 
inflation. As a result, the caps on awards would become more 
constraining in later years.
    CBO estimates that, under this bill, premiums for medical 
malpractice insurance ultimately would be an average of 25 
percent to 30 percent below what they would be under current 
law. However, other factors discussed above may exert upward 
pressure on future premiums, possibly obscuring at least some 
of the anticipated effect of the legislation. The effect of 
H.R. 4600 would vary substantially across states, depending on 
the extent to which a state already limits malpractice 
litigation. There would be almost no effect on malpractice 
premiums in about one-quarter of the states, while reductions 
in premiums would be substantially larger than the overall 
average in about one-third of the states.

Impact on health insurance premiums

    The percentage effect of H.R. 4600 on overall health 
insurance premiums would be far smaller than the percentage 
impact on medical malpractice insurance premiums. Malpractice 
cost account for a very small fraction of total health care 
spending; even a very large reduction in malpractice costs 
would have a relatively small effect on total health plan 
premiums. In addition, some of the savings leading to lower 
medical malpractice premiums--those savings arising from 
changes in the treatment of collateral-source benefits--would 
represent a shift in costs from medical malpractice insurance 
to health insurance. Because providers of collateral-source 
benefits would be prevented fromrecovering their costs arising 
from the malpractice injury, some of the costs that would be borne by 
malpractice insurance under current law would instead be borne by the 
providers of collateral-source benefits. Most such providers are health 
insurers.
    CBO's estimate does not include savings from reductions in 
the practice of defensive medicine--services and procedures 
that are provided largely or entirely to avoid potential 
liability. Estimating the amount of health care spending 
attributable to defense medicine is difficult. Most estimates 
are speculative in nature, relying, for the most part, on 
surveys of physicians' responses to hypothetical clinical 
situations, and clinical studies of the effectiveness of 
certain intensive treatments. Compounding the uncertainty about 
the magnitude of spending for defensive medicine, there is 
little empirical evidence on the effect of medical malpractice 
tort controls on spending for defensive medicine and, more 
generally, on overall health care spending.
    A small number of studies have observed reductions in 
health care spending correlated with changes in tort law, but 
that research was based largely on a narrow part of the 
population and considered only hospital spending for a small 
number of ailments that are disproportionately likely to 
experience malpractice claims. Using broader measures of 
spending, CBO's initial analysis could find no statistically 
significant connection between malpractice tort limits and 
overall health care spending. Although the provisions of H.R. 
4600 could result in the initiation of fewer lawsuits, the 
economic incentives for individual physicians or hospitals to 
practice defensive medicine would appear to be little changed.
    Nonetheless, while there is insufficient evidence to 
justify including a defensive medicine adjustment in the 
estimate, the promising nature of the studies' results merits 
further analysis. CBO has obtained a person-based longitudinal 
database that contains detailed claims information on Medicare 
spending for covered services used by a random sample of fee-
for-service beneficiaries between 1989 and 1997. Using these 
data, CBO hopes to expand the analysis of earlier researchers 
to include broader measures of spending (including hospital 
services, physician care, post-acute care, and ancillary 
services) and a larger number of conditions, to help determine 
the extent to which the results of the earlier studies may 
apply to overall health care spending.

Federal revenues

    CBO estimates that, over a three-year period, enacting H.R. 
4600 would lower the price employers, state and local 
governments, and individuals pay for health insurance by about 
0.4 percent, before accounting for the responses of health 
plans, employers, and workers to the lower premiums. Those 
responses would include an increase in the number of employers 
offering insurance to their employees and in the number of 
employees enrolling in employer-sponsored insurance, changes in 
the types of health plans that are offered, and increases in 
the scope or generosity of health insurance benefits. CBO 
assumes that these behavioral responses would offset 60 percent 
of the potential impact of the bill on the total costs of 
health plans.
    The remaining 40 percent of the potential reduction in 
premium costs, or about 0.2 percent of group health insurance 
premiums, would occur in the form of lower spending for health 
insurance. Those savings would be passed through to workers, 
increasing both their taxable compensation and other fringe 
benefits. For employees of private firms, CBO assumes that all 
of that savings would ultimately be passed through to workers. 
We assume that state, local, and tribal governments would 
absorb 75 percent of the decrease and would increase their 
workers' taxable income and other fringe benefits to offset the 
remaining one-quarter of the decrease. CBO estimates that the 
resulting increase in taxable income would grow from $126 
million in calendar year 2003 to $1.1 billion in 2012.
    Those increases in workers' taxable compensation would lead 
to more federal tax revenues. The estimate assumes an average 
marginal rate of about 20 percent for income taxes and the 
current-law rates for the Hospital Insurance and Social 
Security payroll taxes (2.9 percent and 12.4 percent, 
respectively). CBO further assumes that 15 percent of the 
change in taxable compensation would not be subject to the 
Social Security payroll tax. As a result, we estimate that 
federal tax revenues would increase by $40 million in 2003 and 
by a total of $2.4 billion over the 2003-2012 period if H.R. 
4600 were enacted. Social Security payroll taxes, which are 
off-budget, account for about 30 percent of those totals.

Federal spending

    CBO estimates that H.R. 4600 would reduce direct spending 
for federal health insurance programs by $11.3 billion over the 
2004-2012 period. Those totals reflect reductions in spending 
resulting from the effect of lower premiums for malpractice 
insurance, partially offset by increases in direct spending 
because federal programs could no longer collect collateral-
source benefits.
    CBO estimates that premiums for the Federal Employees 
Health Benefits (FEHB) program would decline by the same 0.4 
percent as the estimated average change in premiums for private 
health insurance. (That estimate includes the effects of H.R. 
4600 on both premiums for malpractice insurance and the 
collection of collateral-source benefits.) We assume that 
participants in the FEHB program would offset 60 percent of 
that reduction by choosing more expensive plans, so that 
spending for the FEHB program would decline by about 0.2 
percent. The 2003 premiums for FEHB plans have already been 
announced, so there would be no effect on FEHB spending in 
2003.
    Federal spending for annuitants in the FEHB program is 
considered direct spending. CBO estimates that H.R. 4600 would 
reduce direct spending for annuitants in FEHB by $270 million 
over the 2004-2012 period. Federal spending for active workers 
participating in the FEHB program is included in the 
appropriations for federal agencies, and therefore is 
discretionary. CBO estimates that enactment of H.R. 4600 would 
reduce discretionary spending for FEHB by about $400 million 
over the 2004-2012 period. Spending for postal workers and 
postal annuitants participating in the FEHB program is off-
budget. CBO estimates that changes in spending for Postal 
Service participants would be offset by changes in the prices 
of postal services, and therefore would net to zero.
    Each year, the Centers for Medicare & Medicaid Services 
sets Medicare payment rates for physician services and hospital 
services that include explicit adjustments for changes in the 
cost of malpractice premiums. CBO estimates that H.R. 4600 
would have no effect on Medicare spending in 2003, because 
payment rates have already been set for hospital services and 
will be set for physician services before the effects of the 
bill could be incorporated in the rate-setting process. CBO 
estimates that incorporating lower malpractice premiums in 
Medicare payment rates would reduce Medicare spending by $10.8 
billion over the 2004-2012 period.
    CBO assumes that the rates that state Medicaid programs pay 
for hospital and physician services would change in proportion 
to the changes in Medicare payments. In addition, lower 
Medicare payment rates would result in lower payments by 
beneficiaries for cost sharing and premiums. Therefore, H.R. 
4600 would reduce spending by federal programs that pay 
premiums and cost sharing for certain Medicare beneficiaries--
Medicaid and the Tricare for Life program of the Department of 
Defense (DoD). CBO estimates that H.R. 4600 would reduce direct 
spending for Medicaid and DoD by $3.6 billion over the 2004-
2012 period.
    Under current law, Medicare and Medicaid pay the medical 
costs arising from medical malpractice injuries. In the event 
that a patient wins a settlement, the programs require 
reimbursement for the costs they incurred. H.R. 4600 would 
prohibit Medicare and Medicaid from making any future 
collections. CBO estimates that implementing this provision 
would increase outlays by $3.4 billion over the 2004-2012 
period.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects through 2006 are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, in millions of dollars--
                                              ----------------------------------------------------------------------------------------------------------
                                                2002   2003    2004     2005     2006      2007       2008       2009       2010       2011       2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts..........................      0     30       80      130      160        170        180        190        210        240        260
Changes in outlays...........................      0      0     -250     -390     -690     -1,220     -1,520     -1,660     -1,770     -1,880     -1,920
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impacts: The Unfunded 
Mandates Reform Act defines a mandate as legislation that 
``would impose an enforceable duty'' upon the private sector or 
a state, local, or tribal government. CBO believes that UMRA's 
definition of a mandate does not include legislation that 
would, for example, impose requirements or limitations on 
recoveries, address burdens of proof, or modify evidentiary 
rules because such changes would be methods of enforcing 
existing duties, rather than new duties themselves as 
contemplated by UMRA. The provisions of H.R. 4600 would not 
impose or change the underlying enforceable duties or standards 
of care applicable to those providing medical items and 
services under current law. Rather, they would address the 
enforcement of existing standards of professional behavior 
through tort litigation procedures.
    Clearly, a cap on recoveries of damages from medical 
malpractice would lower recoveries by future plaintiffs while 
reducing the costs borne by potential defendants. This cost 
effect, however, would not itself establish a new mandate. It 
would be more reasonably viewed as part of the process for 
enforcing the professional duties of medical providers, rather 
than an enforceable duty as defined by UMRA.

Intergovernmental mandates and other public-sector impacts

    Intergovernmental mandates. The bill would preempt state 
laws that would prevent the application of any provisions of 
the bill, but it would not preempt any state law that provides 
greater protections for health care providers and organizations 
from liability, loss, or damages. Those that provide a lesser 
degree of protection would be preempted. (State laws governing 
damage awards would not be preempted, regardless of whether 
they were higher or lower than the caps provided for in the 
bill.) These preemptions would limit the application of state 
law, but they would require no action by states that would 
result in additional spending or a loss of revenue. Thus, the 
threshold established by UMRA for intergovernmental mandates 
($58 million in 2002, adjusted annually for inflation) would 
not be exceeded.
    Other Public-Sector Impacts. State, local, and tribal 
governments would realize net savings as a result of provisions 
of H.R. 4600. State, local, and tribal governments that assess 
income taxes also would realize increased tax revenues as a 
result of increases in workers' taxable income. CBO has not 
estimated the magnitude of those increased revenues.
    State, local, and tribal government would save money as a 
result of lower health insurance premiums precipitated by the 
bill. Based on information from the Bureau of the Census and 
the Joint Committee on Taxation and on our estimates of the 
effect of the bill on health care premiums, CBO estimated that 
state and local governments would save about $5 billion over 
the 2003-2012 period as a result of lower premiums for health 
care benefits they provide to their employees. That figure is 
based on estimates of state and local spending for health care 
growing from about $95 billion in 2003 to $189 billion in 2012 
and an expectation that savings would phase in over a three-
year period. The estimate accounts for some loss in receipts 
because state health, sickness, income-disability, accident, 
and workers' compensation programs would no longer be able to 
recover a share of malpractice damage awards.
    State and local governments also would save Medicaid costs 
as a result of lower health care spending, CBO estimates that 
state Medicaid spending would decrease by about $2 billion over 
the 2003-2012 period.

Private-sector mandates and other impacts

    The bill would impose a private-sector mandate on attorneys 
in malpractice cases by limiting the size of the awards they 
could receive. CBO estimates that the direct cost of that 
mandate to affected attorneys would amount to about $140 
million in 2003, rising to about $320 million in 2007. Those 
costs would exceed the annual threshold specified in UMRA ($115 
million in 2002, adjusted annually for inflation) in each of 
the first five years the mandate would be effective.
    Previous CBO estimate: On September 24, 2002, CBO produced 
a cost estimate for H.R. 4600 as ordered reported by the House 
Committee on the Judiciary on September 10, 2002. The two bills 
are identical with the exception of a minor difference in the 
set of exceptions to the statute of limitations. That 
difference does not effect CBO's estimate of the impact of the 
bill in premiums for health insurance, on federal revenues and 
spending, on state, local, or tribal governments, or on the 
private sector.
    Estimate prepared by: Federal Revenues: Alexis Ahlstrom. 
Federal Outlays: Medicaid--Jeanne De Sa and Eric Rollins; 
Medicare--Julia Christensen and Alexis Ahlstrom; and FEHB--
Alexis Ahlstrom. Impact on State Local, and Tribal Governments: 
Leo Lex. Impact on the Private Sector: Stuart Hagen.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 establishes the short title of the bill as the 
``Help Efficient, Accessible, Low Cost, Timely Health Care 
(HEALTH) Act of 2002''.

Section 2. Findings and purpose

    Section 2 states the findings and purpose of the bill.

Section 3. Encouraging speedy resolution of claims

    Section 3 states that a health care lawsuit shall be 
commenced 3 years after the date of injury or 1 year after the 
claimant discovers, or through the use of reasonable diligence 
should have discovered, the injury, whichever occurs first. A 
health care lawsuit is defined in the legislation as meaning 
``any health care liability claim concerning the provision of 
health care goods or services affecting interstate commerce, or 
any health care liability action concerning the provision of 
health care good or services affecting interstate commerce, 
brought in a State or Federal court or pursuant to an 
alternative dispute resolution system, against a health care 
provider, a health care organization, or the manufacturer, 
distributor, supplier, marketers, promoter, or seller of a 
medical product, regardless of the theory of liability on which 
the claim is based, or the number of claimants, plaintiffs, 
defendants, or other parties, or the number of claims or causes 
of action, in which the claimant alleges a health care 
liability claim.'' In no event shall the time for commencement 
of a health care lawsuit exceed 3 years unless tolled for any 
of the following: (1) upon proof of fraud; (2) intentional 
concealment; or, (3) the presence of a foreign body, which has 
no therapeutic or diagnostic purpose or effect, in the person 
of the injured person. There is an exception for alleged 
injuries sustained by a minor before the age of 6, in which 
case a health care lawsuit may be commenced by or on behalf of 
the minor until the later of 3 years from the date of injury, 
or the date on which the minor attains the age of 8. This time 
period is tolled for minors for any period during which a 
parent or guardian and a health care provider or health care 
organization have committed fraud or collusion in the failure 
to bring an action on behalf of the injured minor.

Section 4. Compensating patient injury

    Section 4 provides that a claimant's economic loss may be 
fully recovered, without limitation. Economic loss includes, 
for example, objectively verifiable monetary losses, past and 
future medical expenses, loss of past and future earnings, cost 
of obtaining domestic services, loss of employment, and loss of 
business or employment opportunities. In addition to unlimited 
recovery of economic loss, a claimant may recover up to 
$250,000 in non-economic damages. Non-economic damages means 
damages for physical and emotional pain, suffering, 
inconvenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of society and 
companionship, loss of consortium, hedonic damages, injury to 
reputation, and all other nonpecuniary losses of any kind or 
nature. In any healthcare lawsuit, an award for future 
noneconomic damages cannot be discounted to present value. 
Juries are not to be informed about the maximum award for 
noneconomic damages. An award for noneconomic damages in excess 
of $250,000 shall be reduced either before the entry of the 
judgment, or by amendment of the judgment after entry. This 
section also establishes a fair share rule, thereby abolishing 
joint and several liability, that apportions damages in 
proportion to a defendant's degree of fault.

Section 5. Maximizing patient recovery

    Section 5 requires that courts supervise the arrangements 
for payment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. This section 
establishes a sliding fee schedule for the payment of 
contingency fees from a claimant's damage recovery as follows: 
40 percent of the first $50,000 recovered by the claimant; 
33\1/3\ percent of the next $50,000 recovered by the claimant; 
25 percent of the next $500,000 recovered by the claimant; and 
15 percent of any amount by which the recovery by the 
claimant(s) is in excess of $600,000.

Section 6. Additional health benefits

    Section 6 clarifies that in any health care lawsuit, any 
party may introduce evidence of collateral source benefits 
received or reasonably likely to be received from other parties 
(and which benefits would cover the same injuries).

Section 7. Punitive damages

    Section 7 states that punitive damages may be awarded, if 
otherwise permitted by applicable state or federal law, against 
any person in a health care lawsuit. The amount of punitive 
damages awarded may be as much as two times the amount of 
economic damages awarded or$250,000, whichever is greater. 
Juries are not to be informed of the formula. Punitive damages may only 
be awarded if it is first proven by clear and convincing evidence that 
a defendant acted with malicious intent to injure the claimant, or that 
such person deliberately failed to avoid unnecessary injury that such 
person knew the claimant was substantially certain to suffer. This 
section states that no demand for punitive damages shall be included in 
a health care lawsuit as initially filed. Punitive damages in 
healthcare lawsuits may not be awarded if compensatory damages are not 
awarded. This section allows for bifurcation procedures, at either 
party's request, so that the proceedings on punitive damages would be 
separate from and subsequent to the proceedings on compensatory 
damages.
    This section does not permit the award of punitive damages 
against the manufacturer or distributor of a medical product 
based on a claim that the product caused the harm where: the 
product was subject to premarket approval or clearance by the 
Food and Drug Administration (FDA) with respect to the safety 
of the formulation or performance of the product or the 
adequacy of the labeling of the product, and the product was 
approved and cleared by the FDA; or, the medical product is 
generally recognized among qualified experts as safe and 
effective pursuant to conditions established by the FDA and 
applicable regulations. This section prohibits a health care 
provider from being named as a party in a product liability 
lawsuit for prescribing a drug or device that is approved by 
the Food and Drug Administration. Punitive damages may be 
awarded against a manufacturer or distributor of a medical 
product, however, if a person, before or after premarket 
approval or clearance of the product knowingly misrepresented 
or withheld information from the FDA that is required to be 
submitted that is material and causally related to the harm 
which the claimant allegedly suffered. Punitive damages may 
also be awarded if a person made an illegal payment to an FDA 
official for the purpose of either securing or maintaining 
approval or clearance.

Section 8. Authorization of payment of future damages to claimants in 
        health care lawsuits

    Section 8 requires the court, at the request of any party, 
to order that the award of future damages equaling or exceeding 
$50,000 be paid by periodic payments in accordance with the 
Uniform Periodic Payment of Judgments Act promulgated by the 
National Conference of Commissioners on Uniform State Laws.

Section 9. Definitions

    Section 9 defines the terms included in the legislation.

Section 10. Effect on other laws

    Section 10 states that this legislation does not apply to 
civil actions brought for a vaccine-related injury or death 
which is covered under provisions of the Public Health Service 
Act. It also states that nothing in the Act should affect any 
defense available to a defendant in a health care lawsuit or 
action under any other provision of federal law.

Section 11. State flexibility and protection of State's rights

    Section 11 states that the provisions governing health care 
lawsuits outlined in the legislation preempt State law to the 
extent that State law prevents the application of these 
provisions. The legislation also supersedes the Federal Tort 
Claims Act (FTCA) to the extent that the FTCA provides for a 
greater amount of damages or contingent fees, a longer period 
in which a health care lawsuit may be commenced, or a reduced 
application of periodic payments of future damages. The FTCA is 
also superseded if it prohibits the introduction of evidence 
regarding collateral source benefits, or mandates or permits 
subrogation or a lien on collateral source benefits.
    Section 11 states that any issue that is not governed by 
any provision of law established by the legislation is governed 
by otherwise applicable state or federal law. The legislation 
does not preempt or supersede any law that imposes greater 
protections for health care providers and health care 
organizations from liability, loss, or damages.
    Section 11 also states that this legislation does not 
preempt any state statutory limit (enacted before, on, or after 
the date of enactment of H.R. 4600) on the amount of 
compensatory or punitive damages (or the total amount of 
damages) that may be awarded in a health care lawsuit.

Section 12. Applicability; effective date

    Section 12 states that the provisions of the legislation 
apply to any health care lawsuit brought in federal or state 
court, or subject to alternative dispute resolutions system, 
that is initiated on or after the date of the enactment of the 
Act, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of the Act is 
governed by the applicable statute of limitations provisions in 
effect at the time the injury occurred.

                            DISSENTING VIEWS

    We are concerned that many health care providers face 
difficulty obtaining reasonably priced medical malpractice 
insurance; this is a serious problem that merits attention. But 
this legislation was rushed through in a partisan fashion, and 
does not reflect a deliberative effort to craft a comprehensive 
and workable legislative solution in Committee.
    The Subcommittee on Health held only one hearing on this 
matter in July. Despite testimony about the detrimental effect 
of this legislation on injured patients and about the need to 
more fully understand factors contributing to the insurance 
premium increases, not a single substantive change was made to 
the legislation. And a subcommittee markup was bypassed 
altogether. Instead, Members were given less than two days 
notice of a Full Committee markup. Every one of over a dozen 
amendments offered by the Minority was defeated on a partisan 
basis. Debate was limited after it was announced that the 
Republican leadership in the House had required the legislation 
to be reported after only just one afternoon's consideration. 
Clearly, this was not a process of bipartisan collaboration or 
one that would lend itself to addressing the problem 
thoroughly. The legislation is now being rushed to the Floor 
just one week after being reported, at the end of the session. 
Much less severe legislation against injured victims has 
already been defeated in the Senate, and with multiple 
necessary appropriations bills awaiting consideration on the 
Floor, the timing of this action is most curious.
    The bill offers a ``solution'' prior to having discovered 
the root of the problem. Merely attacking injured patients' 
right of redress under the judicial system, as this bill does, 
is short-sighted, mean-spirited, and ultimately will do little 
to address providers' concerns with malpractice insurance.
    We do not dispute that there is a problem. Providers have 
seen insurance rates increase dramatically in recent years, and 
some specialties are finding it impossible to secure coverage. 
The situation is leaving doctors with few options. Those who 
can afford it will pay the increased cost of providing medical 
services. Those who cannot afford the increase are forced to 
assume significant personal liability, leave high-risk 
specialties, or leave the profession altogether. At best, 
health care will become more expensive for patients. At worst, 
in addition to higher prices, patients will be denied access to 
care, and lifesaving treatments will not be provided.
    But while the rising cost of malpractice insurance is a 
very real concern for doctors and patients alike, we have 
serious reservations about this proposed ``solution'' for two 
primary reasons. First, what has caused the increase in 
malpractice insurance premiums is not easily identified. 
Moreover, it is not clear that this legislation will reduce the 
medical malpractice premiums that providers must pay to 
insurance companies. Second, the scope and severity of the 
provisions in H.R. 4600 impose unreasonable restrictions on an 
injured patient's ability to hold wrongdoers accountable. The 
legislation provides nothing more than a shield for bad actors 
rather than meaningful reforms for overburdened doctors and 
providers.
    To find an effective solution, we must closely examine the 
insurance industry and how its conduct affects medical 
malpractice premiums, an activity not undertaken by this 
Committee. Are medical malpractice insurers properly pricing 
their product? Are they accounting for their income and 
expenses while planning for expected downturns in the economy? 
Or, are they raising rates on doctors to compensate for 
questionable business judgments and accounting practices?
    We know that many factors completely unrelated to jury 
verdicts and the civil justice system affect insurance rates: 
changes in state law and regulatory requirements; 
competitiveness of the insurance market; the types of policies 
issued within the industry; interest rates; and national 
economic trends. Moreover, there is scant evidence to date that 
various state tort reforms have realized appreciable premium 
savings. In a comparison of states that enacted severe tort 
restrictions during the mid-1980's and those that resisted 
enacting tort reform, a recent study found no correlation 
between tort reform and insurance rates.\1\ Inflation adjusted 
premiums per doctor have actually declined over the past 
decade.\2\ In California, which has one of the most restrictive 
malpractice laws in the country, the Medical Injury 
Compensation Reform Act (MICRA), premiums are 8% higher than 
premiums in states without non-economic damage caps.\3\ At the 
same time, medical malpractice insurers in California are 
paying out in claims less than 50 cents on every dollar they 
have taken in through premiums.\4\
---------------------------------------------------------------------------
    \1\ Center for Justice and Democracy, Premium Deceit--the Failure 
of Tort Reform to Cut Insurance Rates.
    \2\ Testimony of Travis Plunkett, before the Subcommittee on Health 
of the Committee on Energy and Commerce, July 17, 2001.
    \3\ Medical Liability Monitor, 2001.
    \4\ Testimony of Jamie Court, before the Subcommittee on Health of 
the Committee on Energy and Commerce, July 17, 2001.
---------------------------------------------------------------------------
    Insurance markets are subject to cycles, periods of 
underpricing of premiums to increase market share and book 
premium dollars, followed by a hardening of the market. Once 
the market hardens, competition intensifies, underwriting 
results deteriorate, and investment incomes fall. Insurance 
companies then need to raise premiums to cover losses. For 
example, as a result of the underpricing of insurance policies 
over the past decade, it would take a 50% hike in rates to 
increase inflation-adjusted rates to the same level as existed 
ten years ago.\5\ We are now in the midst of a `hard' phase of the 
insurance cycle and increases in malpractice premiums are consistent 
with overall market trends. This problem is not unique to malpractice 
insurance. While medical malpractice insurance premiums for the three 
riskiest specialties increased 10% from 2000 to 2001, auto insurance 
premiums saw similar increases of 8.4% during that same period.\6\
---------------------------------------------------------------------------
    \5\Testimony of Travis Plunkett, before the Subcommittee on Health 
of the Committee on Energy and Commerce, July 17, 2001.
    \6\Public Citizen, Equal Opportunity Rate Hikes, July 2002.
---------------------------------------------------------------------------
    A serious effort to provide relief to providers from high 
malpractice premiums would have looked at these and other 
issues. A number of Congressional Democrats have requested the 
General Accounting Office look into these questions so that we 
may make informed decisions about any federal action needed. 
The Committee, however, chose to take a one-sided approach.
    In addition to the above mentioned concerns that H.R. 4600 
is premature and may not remedy the current problem, draconian 
provisions in the legislation make it even more unpalatable. 
There are many flaws in the legislation, but our dissenting 
views will focus on four of the most egregious: the cap on non-
economic damages; the cap on punitive damages; the ``FDA 
defense''; and the overly restrictive statute of limitations.

Non-economic damages

    H.R. 4600 limits non-economic damages to $250,000 for all 
claims against negligent hospitals and doctors, drug and device 
manufacturers, nursing homes, HMOs and other insurers. This cap 
is an aggregate cap; no matter how many defendants participated 
in causing the injury or the severity of the injury, the most 
an injured patient can recover is $250,000. Non-economic 
damages compensate patients for very real injuries such as the 
loss of a limb or eyesight, the loss of mobility, the loss of 
brain or organ function, the loss of fertility, severe 
disfigurement and excruciating, chronic pain Juries are not 
allowed to be told of this cap, presumably because proponents 
of this legislation do not want them to try to compensate for 
such a harsh limit in other areas.
    The severity of this cap is astounding. The intent is to 
parallel the cap in California's MICRA law, which was enacted 
in 1975 and never indexed to inflation. The value of this cap 
has declined to a mere $40,389 in 2002 dollars. Using the 
Consumer Price Index for medical care, this cap today would be 
more than $1.5 million. In addition, the California law only 
applies to medical malpractice cases and not claims against 
drug and device manufacturers, HMOs, insurance companies, or 
nursing homes covered under H.R. 4600.
    In addition, by capping non-economic damages, H.R. 4600 
discriminates against women, children, the elderly, minorities, 
the unemployed and others who cannot show substantial economic 
loss (i.e., lost wages or salary). A child who suffers brain 
damage or other catastrophically debilitating injury would 
recoup little in economic damages, and would be left with a 
maximum of $250,000 for the remainder of his life, which could 
exceed 70 or 80 years.
    Non-economic damages are also an important measure of 
compensatory damages for older persons, and in particular 
nursing facility residents. These individuals have neither long 
life expectancies nor large earning capacities, the traditional 
measures of economic damages. By so stringently limiting non-
economic damages, H.R. 4600 would remove a strong financial 
incentive to nursing facilities to provide residents with 
decent care.

Punitive damages

    The legislation sets a nearly impossible standard for 
awarding punitive damages and then limits such damages to twice 
economic damages or $250,000, whichever is greater. By basing 
punitive damages on the level of economic losses, the bill 
discriminates against injured women, children, elderly and 
others who tend to have lower incomes. For example, if Ken Lay 
were injured while CEO of Enron, his economic damages would 
have been worth millions upon millions of dollars. If a stay-
at-home mother were injured, she would have minimal economic 
damages awarded to her.
    In order to assess punitive damages, H.R. 4600 imposes a 
federal standard of ``clear and convincing'' evidence that (1) 
the defendant acted with malicious intent to injure or (2) the 
defendant understood the plaintiff was substantially certain to 
suffer unnecessary injury yet deliberately failed to avoid such 
injury. This standard of ``malicious intent'' requires more 
than criminal misconduct; such a standard would likely protect 
a drunk doctor who kills a patient because a court would likely 
hold that the doctor was unable to form the necessary intent.
    The bill also could increase the length and cost of 
malpractice actions because it prohibits plaintiffs from 
seeking punitive damages in an initial suit. Only at the 
court's discretion, after a finding by the court that there is 
a substantial probability that the plaintiff will prevail, may 
the plaintiff file an amended proceeding to request punitive 
damages be awarded. This requirement for a separate proceeding 
in essence turns one trial into two.

FDA defense

    H.R. 4600 goes beyond protecting providers from malpractice 
awards; it also provides immunity from punitive damages to 
manufacturers of drugs and devices that are approved or cleared 
by the FDA as well as those that are not FDA-approved but 
are``generally recognized as safe and effective,'' and to products that 
comply with packaging regulations. This is akin to arguing that because 
someone drives at the speed limit, they cannot be negligent or 
reckless. It is clearly possible to obey the speed limit, yet still act 
in a negligent or reckless manner.
    Approval of drugs and devices by the FDA provides no 
guarantee that a particular device is not defective, that the 
manufacturer has continued to maintain safety after approval, 
or that all problems are discovered before approval. This topic 
was the subject of considerable debate in Committee. Proponents 
of the provision argued that because the bill includes an 
exception for cases where information was knowingly 
misrepresented or withheld from the FDA and the FDA requires 
manufacturers to report certain items to the FDA, if a 
manufacturer did not report problems, such manufacturer would 
not be exempted from punitive damages.
    Notwithstanding the fact that the exception referenced only 
applies to withholding or misrepresenting information to the 
FDA, and thus protecting a manufacturer from punitive damages 
if it blatantly misrepresented its product to the public, there 
are numerous other problems with this provision. Manufacturers 
are not required to report all problems with manufacturing or 
changes in their process to the FDA. Moreover, some of the 
reports are only filed annually. What of patients injured 
before the report is filed?
    After approval, the FDA does not review individual drugs 
for manufacturing defects and the FDA does not have nearly 
enough resources to continuously monitor the conditions in 
every facility here and abroad. And, in particular now that 
approvals have been accelerated, the FDA ends up withdrawing 
approved drugs from the market for safety problems discovered 
after the approval. Also, dozens of cleared devices are 
recalled from the market each year for safety or effectiveness 
problems not identified in the clearance process. In the 
meantime, patients have been injured. The FDA cannot be 
omnipresent, nor should it be.
    If enacted this provision could have the perverse incentive 
of encouraging manufacturers to be disengaged in quality 
monitoring in their manufacturing process. If a manufacturer 
does not know about problems, they cannot be accused of failing 
to report the problems to the FDA. Basically, what they don't 
know can't hurt them, but could surely hurt consumers.
    Ultimately, by shielding manufacturers of dangerous or 
defective drugs from exposure to punitive damages, this bill 
would remove incentives for manufacturers to make the safest 
products and to quickly withdraw dangerous products from the 
market. Congress should not reduce any incentives for the 
industry to police itself above and beyond government 
regulation.

Statute of limitations

    H.R. 4600 also sets a stringent federal statute of 
limitations on state tort cases. The statute of limitations for 
bringing an action is the earlier of three years after the date 
of injury or one year after the date of discovery, but in no 
event shall the time for commencement of a lawsuit exceed three 
years. This provision also was subject to considerable debate 
in Committee, with particular focus of the effect of this 
absolute time limit. While some injuries are manifested 
immediately, many times malpractice or product defects are not 
manifested or diagnosed for some time, for example, a 
hemophiliac who contracts HIV from tainted blood may not learn 
of the disease until five years later. By establishing a 
absolute time limit for filing a case this legislation would 
completely preclude many injured patients from any recourse and 
would therefore shield negligent practitioners, facilities, and 
manufacturers from any liability whatsoever.
    To conclude, the legislation before us today focuses on 
drastic reforms of the judicial system and extends those 
draconian reforms beyond the realm of medical malpractice 
rather than focusing on the underlying causes of the medical 
malpractice premium increases facing providers. While 
inefficiencies in our courts may be a contributing factor to 
the current crisis, they are by no means the only cause--or 
even the single largest cause--of the current crisis.
    Moreover, even if we accepted the notion that verdicts and 
settlements benefitting injured patients have increased 
significantly, which is less than clear, it is our 
responsibility to examine why judgments favorable to victims 
are on the rise--a factor this legislation does not even touch 
upon. Are there fatal flaws with our health care delivery 
system and HMO's that cause more medical errors and patient 
injuries? Failure to examine all aspects of the problem is 
irresponsible, and in this instance will wind up 
disproportionately hurting women, children, elderly, and others 
who are injured as a result of the few careless or even 
malicious health care providers
    The rise in malpractice premiums is a real problem that 
calls for real reform. All aspects of this crisis should be 
examined thoroughly and responsibly. And above all, any 
legislative solution should strike a careful balance preserving 
an injured patient's right to just compensation and the 
delivery of health care without unreasonable costs of 
insurance.
                                   John D. Dingell.
                                   Ted Strickland.
                                   Albert R. Wynn.
                                   Mike Doyle.
                                   Karen McCarthy.
                                   Edward J. Markey.
                                   Rick Boucher.
                                   Bobby L. Rush.
                                   Sherrod Brown.
                                   Bart Stupak.
                                   Eliot L. Engel.
                                   Peter Deutsch.
                                   Tom Sawyer.

                            DISSENTING VIEWS

    We believe that H.R. 4600 is a gross violation of the 
constitutional concept of federalism. H.R. 4600 would make many 
changes to the common law that severally limit the traditional 
rights of plaintiffs seeking damages from the malpractice of 
physicians and negligence from a variety of health related 
entities including Health Maintenance Organizations and 
pharmaceutical manufacturers and distributors. This bill is not 
a matter to be decided by Congress because it proposes tort 
reforms that are traditionally, and possibly constitutionally, 
areas for decisions by state legislatures.
    Many of the supporters of H.R. 4600 have stated that the 
bill is similar to California's Medical Injury Compensation 
Reform Act (MICRA), and that MICRA has been successful for 
California. MICRA is a law that the California state 
legislature enacted based on the particular needs of California 
and its citizens. Even assuming that MICRA has been successful 
for California, Congress cannot determine that a blanket one-
size-fits-all medical malpractice bill based on MICRA will be 
successful for any other state.
    Yet another reason a federal one-size-fits-all approach to 
medical malpractice reform is not warranted is that all fifty 
states have already addressed medical malpractice to varying 
degrees. About half of all states are either reviewing their 
medical malpractice laws or are expected to review their laws 
this year. Not only are states dealing with medical malpractice 
on their own, many state courts have held various portions of 
state medical malpractice laws unconstitutional. In twenty 
states, courts have ruled that caps on damages are 
unconstitutional and eighteen state courts have ruled that 
their statutes of limitations are unconstitutional. Since the 
issue of medical malpractice reform is under consideration in 
the states, there is no rationale for federal action.
    Furthermore, H.R. 4600 would make sweeping changes to 
common law traditions by eliminating joint and several 
liability, capping the amount of non-economic damages, limiting 
punitive damages, and severely restricting the time for 
recovery by victims of medical malpractice. Under common law, 
defendants are joint and severally liable for harm to 
plaintiffs to ensure that the victims can actually recover 
damages for their injuries. Yet, H.R. 4600 entirely eliminates 
joint and several liability for medical malpractice lawsuits, 
which means victims are less likely to receive compensation for 
their injuries and the defendants who caused harm are insulated 
from having to pay for their mistakes.
    Additionally, H.R. 4600 caps non-economic damages at 
$250,000 in the aggregate. Non-economic damages compensate 
victims for injuries that are very real. These are injuries 
like the loss of a leg, disfigurement, pain and suffering, and 
the loss of fertility. Under common law, non-economic damages 
are not capped. By limiting non-economic damages to $250,000, 
H.R. 4600 insures that victims receive arbitrary compensation 
for the horrendous and oftentimes permanent injuries they 
suffer, rather than allowing a jury to determine the 
appropriate level of compensation in each individual case.
    H.R. 4600 also severely limits the awarding of punitive 
damages. According to common law, a plaintiff must prove 
``reckless indifference,'' in order to win punitive damages. 
Yet, H.R. 4600 would require plaintiffs to prove ``malicious 
intent to injure,'' which is much more difficult to prove. This 
ensures that only in the most egregious cases will punitive 
damages be imposed. Additionally, the bill would protect 
manufacturers and distributors of medical products by shielding 
them from punitive damages if their products were approved by 
the Federal Drug Administration or, even more problematic, if 
their products were ``generally recognized among qualified 
experts as safe and effective.''
    H.R. 4600 is an affront to states' rights. Congress should 
not become an uber-state legislature by passing a bill to 
significantly restructure what is most appropriately a matter 
for state governments.
                                   Diana DeGette.
                                   Tom Sawyer.
                                   Edward J. Markey.
                                   Gene Green.

                                
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