[House Report 108-32]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-32
HOUSE OF REPRESENTATIVES
1st Session Part 1
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HELP EFFICIENT, ACCESSIBLE, LOW-COST, TIMELY HEALTHCARE (HEALTH) ACT OF
2003
_______
March 11, 2003.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on the Judiciary,
submitted the following
R E P O R T
together with
DISSENTING AND ADDITIONAL DISSENTING VIEWS
[To accompany H.R. 5]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 5) 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, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 7
Background and Need for the Legislation.......................... 18
Hearings......................................................... 62
Committee Consideration.......................................... 62
Vote of the Committee............................................ 62
Committee Oversight Findings..................................... 69
Performance Goals and Objectives................................. 69
New Budget Authority and Tax Expenditures........................ 69
Congressional Budget Office Cost Estimate........................ 70
Constitutional Authority Statement............................... 78
Section-by-Section Analysis and Discussion....................... 79
Markup Transcript................................................ 83
Dissenting Views................................................. 237
Additional Dissenting Views...................................... 265
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 Healthcare (HEALTH) Act of 2003''.
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;
(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 manifestation 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 after
the date of manifestation of injury 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 manifestation of injury except that actions by a minor
under the full age of 6 years shall be commenced within 3 years of
manifestation of injury 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. This section shall not apply to section 1862(b) (42 U.S.C.
1395y(b)) or section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social
Security Act.
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, if awarded, in a health care lawsuit, 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, if
awarded, in a health care lawsuit may be as much as $250,000 or
as much as two times the amount of economic damages awarded,
whichever is greater. The jury shall not be informed of this
limitation.
(c) No Punitive Damages 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,
unless the Food and Drug Administration has determined
that such medical product was not manufactured or
distributed in substantial compliance with applicable
Food and Drug Administration statutes and regulations.
(2) Liability of health care providers.--A health care
provider who prescribes, or who dispenses pursuant to a
prescription, 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, or any medical product,
affecting interstate commerce, or any health care liability
action concerning the provision of health care goods or
services, or any medical product, 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
relate 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 law (whether effective before, on, or after
the date of the enactment of this Act) that specifies a
particular monetary amount of compensatory or punitive damages
(or the total amount of damages) that may be awarded in a
health care lawsuit, regardless of whether such monetary amount
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
The costs of the tort system are predicted to soon swamp
the national economy,\1\ and already a national insurance
crisis is ravaging the nation's essential health care system.
Medical professional liability insurance rates have
skyrocketed, causing major insurers to drop coverage or raise
premiums to unaffordable levels. Doctors and other health care
providers have been forced to abandon patients and practices,
particularly in high-risk specialties such as emergency
medicine \2\ and obstetrics and gynecology.\3\ Women are being
particularly hard hit, as are low-income neighborhoods and
rural areas. Soaring premiums have also left medical schools
reeling, and small medical schools are particularly
vulnerable.\4\ And according to the Department of Health and
Human Services:
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\1\ See Michael Freedman, ``The Tort Mess'' Forbes (May 13, 2002)
(``In the next few years, predicts insurance consultancy Tillinghast-
Towers Perrin, tort costs could increase twice as fast as the economy,
going from $200 billion last year to $298 billion, or 2.4% of GDP, by
2005. Since 1994 the average jury award in tort cases as a whole has
tripled to $1.2 million, in medical malpractice it has tripled to $3.5
million and in product liability cases it has quadrupled to $6.8
million, according to just released data from Jury Verdict
Research.''). Also, according to the Council of Economic Advisers,
``the United States tort system is the most expensive in the world,
more than double the average cost of other industrialized nations . . .
To the extent that tort claims are economically excessive, they act
like a tax on individuals and firms . . . With estimated annual direct
costs of nearly $180 billion, or 1.8 percent of GDP, the U.S. tort
liability system is the most expensive in the world, more than double
the average cost of other industrialized nations that have been
studied. This cost has grown steadily over time, up from only 1.3
percent of GDP in 1970, and only 0.6 percent in 1950.'' Council of
Economic Advisers, ``Who Pays for Tort Liability Claims? An Economic
Analysis of the U.S. Tort Liability System'' (April 2002) at 1-2.
\2\ See Patricia Neighmond, National Public Radio, ``All Things
Considered'' Analysis--High Cost of Malpractice Insurance in Nevada is
Causing Some Physicians to Stop Practicing Trauma Medicine or Leave the
State (April 3, 2002) (``NEIGHMOND: . . . Some doctors have stopped
practicing emergency medicine because they can no longer afford
malpractice insurance . . . [S]tate law requires a certain number of
emergency physicians and specialists to be on call 24 hours a day 7
days a week. And if the Trauma Center can't comply, it could be shut
down. If that happens [,] critically injured patients would have to be
sent to trauma centers in nearby States. Dr. CARRISON: Some patients
are going to die that wouldn't die, and that extra time, that's what
saves lives. Time saves lives. The quicker you're at the trauma center,
the better chance you have of survival.'').
\3\ In a March 7, 2002 release, the American College of
Obstetricians and Gynecologists (``ACOG'') states that ``the meteoric
rise in liability premiums threatens women's access to [health] care.''
ACOG continues that ``[e]xperience demonstrates that obstetric
providers--when confronted with substantially higher costs for
liability coverage--will stop delivering babies, reduce the number they
do deliver, and further cut back, or eliminate, care for high-risk
patients, the uninsured, and the underinsured . . .''.
\4\ See Myrle Croasdale, ``Rocketing liability rates squeeze
medical schools,'' American Medical News (May 20, 2002) (``The
University of Nevada School of Medicine in Reno could be forced to
close if it can't find affordable liability insurance by June 30. In
West Virginia, Marshall University's Joan C. Edwards School of Medicine
in Huntington has cut its pathology program and is trimming resident
class size. Pennsylvania State University College of Medicine in
Hershey is cutting faculty salaries, which will make it hard to land
top researchers . . . [According to] Jordan J. Cohen, MD, president of
the Assn. of American Medical Colleges, . . . `I think it's adding to
the view that medicine is plagued by liability costs and is constantly
on the defensive,' Dr. Cohen says. `I wonder how many students are not
even considering medicine because of the changes that have occurred.'
'').
Doctors who would volunteer their time to provide care
in free clinics and other volunteer organizations, or
who would volunteer their services to the Medical
Reserve Corps, are afraid to do so because they do not
have malpractice insurance. This makes it more
difficult for clinics to provide care to low-income
patients. The clinics must spend their precious
resources to obtain their own coverage, and have less
money available to provide care to people who need it.
The proportion of physicians in the country providing
any charity care fell from 76% to 72% between 1997 and
1999 alone, increasing the need for doctors willing to
volunteer their services.\5\
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\5\ Department of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System'' (July 24, 2002) at 4 (citing
Center for Health Systems Change, ``An Update on the Community Tracking
Study, A Focus on the Changing Health System,'' Issue Brief No. 18
(February 1999)).
According to the Associated Press, the current medical
professional liability premium crisis has also prevented
doctors from conducting charity missions.\6\
---------------------------------------------------------------------------
\6\ See ``Doctors say insurance costs force them to cut charity
work,'' The Associated Press (August 26, 2002) (``Local doctors say the
high cost of medical malpractice insurance is having the secondary
effect of curbing their ability to do charitable work. A physicians
group last month canceled an annual trip to poorer regions of
Appalachia after being unable to sign up enough doctors . . . `We've
gone every year for several years. We take supplies, many types of
specialists, and we treat people there,' said Theresa Chin, assistant
to and wife of Dr. Victorino Chin of Holy Family Health Clinic. `None
of the doctors want to go because they are afraid of being sued.' '').
---------------------------------------------------------------------------
The current crisis was summarized in TIME magazine as
follows:
In some States, hospitals are closing entire clinics
and rural communities are losing their only
practitioners. Mercy Hospital of Philadelphia closed
its maternity ward after annual insurance premiums for
its group of four hospitals swelled to $22 million,
from $7 million in 2000. In Arizona one woman gave
birth by the side of the road before she reached the
only remaining maternity ward in an area of 6,000 sq.
mi. The sole trauma center in Las Vegas closed for 10
days in July, forcing critically injured patients to be
helicoptered to California or treated in ill-equipped
local emergency rooms.
Sommer Hollingsworth, president of the Nevada
Development Authority, which works to attract employers
to southern Nevada, observed that of about 350 firms
his group sought to recruit over the past year, ``we've
never had anyone ask about the nuclear waste at Yucca
Mountain, but client after client wants to know what we
are going to do about the doctor situation. The quality
of the medical system plays a big role for companies
choosing to relocate.''
Nevada has been especially hard hit because it's one of
the States with the sharpest rise in malpractice costs.
But those costs are climbing nationwide. According to
one study, from 1999 to 2000 the median plaintiff's
jury award in medical-malpractice cases increased 43%,
from $700,000 to $1 million. Last year the MIIX Group,
an insurer in 24 States, saw 26 claim payments of more
than $1 million. This year it has faced an average of
one new $1 million-plus claim every week . . .
Because their reimbursement rates are often fixed by
contracts with HMOs and managed-care groups, doctors
cannot readily pass on their increased costs. To pay
higher insurance premiums, some doctors have cut back
on staff. But others are dropping high-risk specialties
or retiring early. ``I would be working just to pay my
malpractice costs,'' said Debra Wright, a Las Vegas
obstetrician who took a leave of absence this spring to
avoid a premium increase to $180,000, from $50,000 last
year. She hopes to resume her work if rates go down.
Cheryl Edwards has stopped her obstetrics practice
altogether and moved from Las Vegas to Los Angeles for
a gynecology and cosmetic-surgery practice. ``I was
getting up in the middle of the night and losing money
with every baby I delivered.''
Reformers point to California, where jury awards for
noneconomic damages, such as pain and suffering, are
capped at $250,000 and malpractice rates have held
relatively steady over the past year. With tort reform,
says Ron Neupauer, a vice president of Medical
Insurance Exchange of California, ``you don't have the
emotion-laden blockbuster verdicts.'' . . . Even when
tort reforms are put in place, they can take time to
bite. In Nevada, where liability caps were passed last
month, most insurers have declined to lower rates until
they see the change reflected on their balance sheets,
which could take years. They may have a point: courts
in six States have struck down as unconstitutional
limits on a jury's ability to determine damages in
malpractice cases, and lawyers in Nevada are readying a
case against the new limits.
While the interest groups jockey, access to the courts
is less urgent for most people than access to a doctor.
After calling every day for weeks, Elizabeth Gromny
finally persuaded her obstetrician to handle her
delivery, but only because another patient in military
service had been transferred out of State. But
complications have forced Gromny to visit specialists,
and many specialists have also posted signs in their
offices warning that the insurance crisis might force
them to close their doors. ``I'm constantly worried
about what could happen,'' says Gromny. ``When you're
pregnant, the last thing you want to have to worry
about is your doctor.'' \7\
---------------------------------------------------------------------------
\7\ Laura Bradford, ``Out of Medicine; As premiums soar for
malpractice insurance, doctors get harder to find,'' TIME (September
16, 2002).
The current crisis has been caused by increasingly
escalating ``mega-verdicts.'' Before the 1960's, only one
physician in seven had ever been sued in their entire
lifetime,\8\ whereas today's rate is about one in seven per
year.\9\ In addition, according to the Department of Health and
Human Services:
---------------------------------------------------------------------------
\8\ See ``Opinion Survey of Medical Professional Liability,'' JAMA
164:1583-1594 (1957).
\9\ See R. Bovbjerg, ``Medical Malpractice: Problems & Reforms,''
The Urban Institute, Intergovernmental Health Policy Project (1995).
The number of mega-verdicts is increasing rapidly. The
average award rose 76% from 1996-1999. The median award
in 1999 was $800,000, a 6.7% increase over the 1998
figure of $750,000; and between 1999 and 2000, median
malpractice awards increased nearly 43%. Specific
physician specialties have seen disproportionate
increases, especially those who deliver babies. In the
small proportion of cases where damages were awarded,
the median award in cases involving obstetricians and
gynecologists jumped 43% in 1 year, from $700,000 in
1999 to $1,000,000 in 2000. The number of million
dollar plus awards has increased dramatically in recent
years. In the period 1994-1996, 34% of all verdicts
that specified damages assessed awards of $1 million or
more. This increased by 50% in 4 years; in 1999-2000,
52% of all awards were in excess of $1 million. There
have been 21 verdicts of $9 million or more in
Mississippi since 1995--one of $100,000,000. Before
1995 there had been no awards in excess of $9,000,000.
These mega-awards for non-economic damages have
occurred (as would be expected) in States that do not
have limitations on the amounts that can be recovered .
. . Mirroring the increase in jury awards, settlement
payments have steadily risen over the last two decades.
The average payment per paid claim increased from
approximately $110,000 in 1987 to $250,000 in 1999.
Defense expenses per paid claim increased by $24,000
over the same period.\10\
---------------------------------------------------------------------------
\10\ Department of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System'' (July 24, 2002) at 9-10.
---------------------------------------------------------------------------
As a recent survey conducted for Floridians for Quality
Affordable Healthcare concluded, ``Our survey shows that most
South Florida physicians have been sued at least once. In
contrast to the notion that only `bad' physicians get sued, we
found that the odds of being sued are highly correlated with
certain specialties . . . [E]ach and every neurosurgeon and
vascular surgeon in our sample has been sued at least once.
Neurosurgeons have the highest number of lawsuits, with an
average of over 5.2 per physician. Over 94% of cardiovascular
or thoracic surgeons have been sued; over 90% of general
surgeons; almost 89% of radiologists; and over 78% of
obstetrician/gynecologists have been sued at least once . . .
The 1,460 physicians who answered this survey question have
been sued an average of 1.44 times. Over 57% of the physician
respondents have been sued at least once in their career.''
\11\ That more claims are brought against some doctors more
than others does not mean the former are ``bad doctors.''
Rather, they practice in high-risk specialties, perform high-
risk procedures, and are more willing to treat high-risk
patients.
---------------------------------------------------------------------------
\11\ Summary of Results: Physician Professional Liability Survey
(conducted by RCH Healthcare Advisers, LLC) (December 2002).
---------------------------------------------------------------------------
H.R. 5 (the HEALTH Act), modeled after California's
quarter-century old and highly successful health care
litigation reforms, addresses the current crisis and will make
health care delivery more accessible and cost-effective in the
United States. California's Medical Injury Compensation Reform
Act (``MICRA''), which was signed into law by Governor Jerry
Brown, has proved immensely successful in increasing access to
affordable medical care. Overall, according to data of the
National Association of Insurance Commissioners, the rate of
increase in medical professional liability premiums in
California since 1976 has been a very modest 167%, whereas the
rest of the United States have experienced a 505% rate of
increase, a rate of increase 300% larger than that experienced
in California.\12\ If California's legal reforms were
implemented nationwide, we would have to spend 300% less in
medical professional liability insurance, and those saved funds
(billions of dollars annually) could have gone to patient care.
As the Los Angeles Times reported, ``According to data for 2000
from the National Association of Insurance Commissioners,
insurers spent a smaller percentage of premiums collected--
45.8%--in California to pay claims against medical providers
than the national average of 80.9%'' \13\ Cruz Reynoso,
Democratic Vice Chairman of the U.S. Civil Rights Commission
and a former Justice on the California Supreme Court, wrote in
a recent op-ed, ``What is obvious about MICRA is that it works
and works well . . . Our [California] doctors and hospitals pay
significantly less for liability protection today than their
counterparts in States without MICRA-type reforms.'' \14\
Democratic Senator Dianne Feinstein has also stated that ``I
think we can get the California MICRA passed in the Senate and
expanded because it stood the test of time. It's workable. It's
balanced. It has provided a substantial level of
satisfaction.'' \15\
---------------------------------------------------------------------------
\12\ The following comments by the Democratic Vice Chairman of the
U.S. Commission on Civil Rights, Planned Parenthood of Los Angeles, and
the AIDS Health Care Foundation have been transcribed from a CD-ROM
that includes videotaped interviews with supporters of California's
health care litigation reforms, on which the HEALTH Act is modeled. The
CD-ROM, entitled ``MICRA: Keeping Health Care Available and
Affordable,'' was compiled by Californians Allied for Patient
Protection:
Comments by Cruz Reynoso, Democratic Vice Chairman of the U.S.
Commission on Civil Rights (appointed by former Senate Majority Leader
George Mitchell in 1993), Professor of Law at UCLA, and former Justice
---------------------------------------------------------------------------
of the California Supreme Court:
``Medical insurance has been going up. I think there's no question that
what the legislature did and continues to do has had an influence on
keeping those expenses down and that's a very important public policy
obviously for the State. The litigation as I've seen it as a lawyer,
and as a judge, and as a law professor is filed for its settlement
value and therefore, and particularly if you have at the end of the
line the possibly of punitive damages, of high damages aside from the
punitive damages, there's a great incentive to try to settle the matter
and so there could easily be a quite adverse ramification for the whole
industry . . . Publicly-funded medical centers were very supportive of
the continued protection of MICRA because if their own insurance rates
would go up they would be less able to serve the poor. I think that's
very much a matter in the mix that the legislature should take into
account . . . I think that folks ought to have access to the courts and
I think we need a balance of having access and yet in such a way that
it won't be a negative for the interests of society. I personally have
favored having as much access to the courts as possible, but at the
same time you have to be careful that it doesn't do so in a way that is
destructive, for example, in the medical field, destructive of the
ability of society to respond to the medical needs of the people. I
think MICRA has tried very hard to reach a balance between the
interests that plaintiffs have in going into court and the public
policy that we've long had in California, and in our country, and the
interest of providing reasonable insurance and medical attention.''
Comments by Nancy Sasaki, President and CEO of Planned Parenthood, Los
Angeles:
``A lot of times Planned Parenthood is seen as the primary provider for
women . . . If the caps [on non-economic damages] in MICRA were to be
increased, you actually would begin to see kind of a domino effect. One
of the primary areas that would be of concern to us is how that would
affect prenatal care and obstetric care. If insurance costs for the
physicians go up they typically will then, as any business would, look
at what services are their highest risks, which services are costing
them the most, and they may no longer provide that. And that's happened
in the past, where physicians have stopped providing obstetric care
because of costs. If that were to happen, with our prenatal program, we
would have no place to send women for deliveries. We don't do
deliveries ourselves, we need a physician who's a certified ob-gyn to
provide those, and if we have no place to send them, they'll end up in
the emergency rooms of the hospitals delivering with no continuity of
care, not knowing the doctor that they're going into, and that's
another issue that we've really fought to try and reduce is emergency
care for routine types of care that should be able to be provided by a
physician. So in that sense, prenatal care would be affected. Our own
insurance costs could possibly go up . . . so [if] our costs go up that
means that we may not be able to serve as many people as we currently
serve and therefore you have greater problems with access to care . . .
It's a serious threat to Planned Parenthood because when I sit behind
my desk the things that I'm thinking about are those things that are
happening in the environment that affect our ability to provide care
for women in Los Angeles county.''
Comments by Donna Stidham, Director of Managed Care and Patient
Services, AIDS Health Care Foundation:
``The under-served and the unserved patients tend to be people of
color, tend to be women, tend to be people that don't have the
resources, and statistics are showing us that is where the [AIDS]
epidemic is moving . . . They desperately need the care. [An] increase
in the MICRA cap . . . would increase our premiums phenomenally. In a
single clinic setting it could probably increase their premiums maybe
twenty or thirty thousand dollars. For multiple physicians, I'd hate to
even guess, but it'd be in the hundreds of thousands, which would take
away from direct patient care because that's where our dollars go is in
caring for the patients, paying for their medications, paying for their
outpatient services, paying for the physicians to care for them, and
the nurses to care for them. So it would directly take away from care,
from the patients. You'd see us perhaps not being able to admit all
types of patients. Right now we can take any kind of patient, whether
they have the ability to pay or not. It would force us to look at
taking patients that only have a third party insurer, maybe not even
taking some of the patients that have third party insurers because
their reimbursement rate wasn't high enough, such as Medicare or
Medicare. We'd have to make those sort of hard decisions, and if you
make those decisions you're cutting out exactly the people it's our
mission to serve. And there are still large awards for patients who've
been harmed. But the pain and suffering, that's where it used to be out
of control here [in California].''
---------------------------------------------------------------------------
\13\ Edwin Chen, ``Curb Malpractice Suits to Fix `Badly Broken'
System, Bush Says'' The Los Angeles Times (July 26, 2002) at A30.
\14\ Cruz Reynoso, ``California's Medical Liability Cure,'' The Los
Angeles Times (February 4, 2003) at B13.
\15\ Transcript, CNN with Wolf Blitzer (January 16, 2003).
---------------------------------------------------------------------------
According to the Congressional Budget Office, ``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, [the HEALTH Act] would
significantly lower premiums for medical malpractice insurance
from what they would otherwise be under current law . . . CBO
estimates that, under [the HEALTH Act], premiums for medical
malpractice insurance ultimately would be an average of 25
percent to 30 percent below what they would be under current
law.'' \16\ Economists have also concluded that direct medical
care litigation reforms--including caps on non-economic damage
awards--generally reduce the growth of malpractice claims rates
and insurance premiums, and reduce other stresses on doctors
that may impair the quality of medical care.\17\ By
incorporating MICRA's time-tested reforms at the Federal level,
the HEALTH Act will make medical malpractice insurance
affordable again, encourage health care practitioners to
maintain their practices, and reduce health care costs for
patients. Its enactment will particularly help traditionally
under-served rural and inner city communities, and women
seeking obstetrics care.\18\
---------------------------------------------------------------------------
\16\ Congressional Budget Office Cost Estimate of H.R. 4600 (the
HEALTH Act) (September 24, 2002).
\17\ See Daniel P. Kessler and Mark B. McClellan, ``The Effects of
Malpractice Pressure and Liability Reforms on Physicians' Perceptions
of Medical Care,'' 60 Law and Contemporary Problems 1: 81-106 (1997),
at 105 (``[P]hysicians from States enacting liability reforms that
directly reduce malpractice pressure experience lower growth over time
in malpractice claims rates and in real malpractice insurance premiums.
[Also], physicians from reforming States report significant relative
declines in the perceived impact of malpractice pressure on practice
patterns.'').
\18\ The Association of Obstetricians and Gynecologists (``ACOG'')
recently issued a ``Red Alert'' on May 6, 2002, listing nine States in
which obstetricians and gynecologists are leaving their professions due
to unaffordable professional liability rates caused by a lack of
litigation reforms:
Florida: This State has the highest average premium for ob-gyns in the
nation, at $158,000 per year in 2000. But in certain areas, notably
Dade County, rates can soar to $208,949. Ob-gyns in this State are more
likely than their colleagues in other States to no longer practice
obstetrics. The liability situation has been so chronic in Florida,
that during the crisis of the 1980's, the State began to allow doctors
to ``go bare'' (not have liability coverage) as long as they could post
---------------------------------------------------------------------------
bond or prove ability to pay a judgment of up to $250,000.
Mississippi: Liability premiums for obstetrical care rose from 20% to
400% in 2001. Certain counties are known for being liability ``hot
spots,'' notorious for high jury awards. ``Forum shopping'' by
plaintiffs' attorneys--to file cases in high-award counties no matter
where the medical case originated--is becoming more common. Most
serious of all: the State suffers from a chronic shortage of medical
care in rural areas. Few cities under 20,000 have physicians delivering
babies. Yazoo City--pop. 14,550--has no one practicing obstetrics.
Nevada: The St. Paul Companies, Inc., which dropped its medical
liability coverage in the last year, had insured 54% of Nevada's ob-
gyns. Physicians are rushing to find available or affordable insurance.
The University of Nevada Medical Center may lose its medical liability
coverage as of July 1. The State ranks 5th among States in the highest
physician liability premium (at $94,820 per year) but only 47th out of
50 States in the number of physicians for its population. Las Vegas
could lose as many as 10% of its physicians in the coming year. A
survey of ob-gyns in Clark County found that 42.3% were now making
plans to leave the State, if the crisis was not resolved in a few
months: 6 out of 10 ob-gyns say they would stop obstetrics.
New Jersey: Three medical liability insurance companies will stop
insuring NJ doctors in 2002 for financial reasons. The State's two
largest medical liability insurers have stated they cannot pick up all
the extra business and are rejecting doctors they deem high risk. The
president of the New Jersey Hospital Association says that rising
medical liability premiums are a ``wake-up call'' that the State may
lose doctors. Hospital premiums have risen 250% over the last 3 years.
Sixty-five percent of hospital facilities report they are losing
physicians due to liability insurance costs. New York: The State is
second only to Florida in the cost of liability insurance for ob-gyns
($144,973 per year in 2000), and is renowned for higher jury verdict
amounts. (There is no upper limit on noneconomic damages in jury
verdicts.) Attempts to pass a no-fault compensation program for birth-
related injuries--similar to laws in VA and FL--have been unsuccessful.
According to Insurance analysts, the majority of physicians may see a
20% hike in premium costs beginning July 1, 2002. NY is presently faced
with a shortage of ob care in certain rural regions.
Pennsylvania: The State is the second highest in the nation for total
payouts for medical liability--$352 million in fiscal year 2000, or
nearly 10% of the national total. Despite some tort reform measures
passed by the State legislature this past winter, ob-gyns were
disappointed the measures did not provide more relief. The State
abandoned its provision of a catastrophic loss fund. South Philadelphia
is losing its only maternity ward: Methodist Hospital has announced
that after a century of service, its labor and delivery ward would be
closing by June 30, 2002, due to rising costs of medical liability
insurance.
Texas: In parts of the State, premiums have soared to $160,746 a year.
Premiums can vary widely across the State, with some regions less
affected than others by cost increases. The Texas Medical Association
expects premiums for 2002 to increase by 30% to 200%. According to the
Texas Attorney General John Cornyn, Texas doctors are two times as
likely to be sued as their colleagues across the country. Preliminary
results of a recent Texas Medical Association survey indicate that more
than half of responding physicians, including those in the prime of
their careers, are considering early retirement because of the State's
medical liability problems.
Washington: In late 2001, the second largest insurance carrier in the
State announced it was withdrawing from the medical liability market in
Washington: the decision impacted about 1,500 physicians. In 2001,
insurance premiums for many physicians increased 55% or more from the
year before, and ranged from $34,000-59,000 per year. Some Tacoma
specialists reported 300% increases in premiums. Unlike California,
Washington currently has no cap on noneconomic damages in medical
liability cases.
West Virginia: The State is known for high jury verdict awards, and
unaffordable insurance rates could fuel an exodus of doctors from the
State. A majority of the State is already classified as medically
underserved and cannot afford to lose physicians. Yet an informal ACOG
survey found that half of all ob-gyn residents and two-thirds of ob-
gyns in private practice plan to leave the State if the crisis is not
resolved.
ACOG has also noted that ``In three other States--Ohio, Oregon, and
Virginia--a crisis is brewing, while four other States--Connecticut,
Illinois, Kentucky and Missouri--should be watched for mounting
problems . . .'' ACOG News Release, ``Nation's Obstetrical Care
Endangered by Growing Liability Insurance Crisis'' (May 6, 2002).
MICRA's reforms, which have been the law in California for
25 years, include a $250,000 cap on noneconomic damages, limits
on the contingency fees lawyers can charge; authorization for
defendants to introduce evidence showing the plaintiff received
compensation for losses from outside sources (to prevent double
recoveries); and authorization for courts to require periodic
payments for future damages instead of lump sum awards that
prevent bankruptcies in which plaintiff's would receive only
pennies on the dollar. The HEALTH Act also includes provisions
creating a ``fair share'' rule, by which damages are allocated
fairly, in direct proportion to fault, and reasonable
guidelines--but not caps--on the award of punitive damages.
Finally, the HEALTH Act will accomplish reform without in any
way limiting compensation for 100% of plaintiffs' economic
losses (anything to which a receipt can be attached), including
their medical costs, their lost wages, their future lost wages,
rehabilitation costs, and any other economic out of pocket loss
suffered as the result of a health care injury. The HEALTH Act
also does not preempt any State law that otherwise caps
damages.
Enactment of the HEALTH Act will not result in more medical
malpractice cases being brought in Federal court than would be
brought in Federal court otherwise. The Supreme Court has held
that a ``federal standard'' does not confer Federal question
jurisdiction in the absence of Congressional creation of a
Federal cause of action.\19\ Consequently, medical malpratice
cases under the HEALTH Act could continue to be brought in
State court.
---------------------------------------------------------------------------
\19\ See Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813
(1986).
---------------------------------------------------------------------------
Finally, many State supreme courts have judicially
nullified reasonable litigation management provisions enacted
by State legislatures, many of which sought to address the
crisis in medical professional liability that reduces patients'
access to health care.\20\ Consequently, in such States,
passage of Federal legislation by Congress may be the only
means of addressing the State's current crisis in medical
professional liability and restoring patients' access to health
care. Laws passed by States that have already provided for, or
may in the future provide for, different limits on damages in
health care lawsuits will be preserved under the HEALTH Act, as
the HEALTH Act provides that ``No provision of this Act shall
be construed to preempt . . . any State law (whether effective
before, on, or after the date of the enactment of this Act)
that specifies a particular monetary amount of compensatory or
punitive damages (or the total amount of damages) that may be
awarded in a health care lawsuit, regardless of whether or not
such monetary amount is greater or lesser than is provided for
under this Act . . .'' Some States have limited noneconomic
damages in medical malpractice actions, but at levels higher
than $250,000.\21\ Some States place aggregate limits on
medical malpractice awards.\22\ Montana limits noneconomic
damages in medical malpractice cases at $250,000, but its
health care litigation reforms do not include other elements of
the HEALTH Act.\23\
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\20\ Alabama--Clark and Halliburton Industrial Services Division v.
Container Corp. of America, 589 So. 2d 184 (Ala. 1991) (statute
allowing for periodic payments of personal injury awards over $150,000
held unconstitutional under State constitution); Henderson v. Alabama
Power Co., 627 So. 2d 878 (Ala. 1993) (statute setting $250,000 limit
on punitive damages awards held unconstitutional under State
constitution); Moore v. Mobile Infirmary Association, 592 So. 2d 156
(Ala. 1991) (statute setting $400,000 limit on noneconomic damages
awards in health care liability actions held unconstitutional under
State constitution); Smith v. Schulte, 671 So. 2d 1334 (Ala.) (1987
statute setting $1 million aggregate limit on damages awards in health
care liability actions held unconstitutional under State constitution),
cert. denied, 517 U.S. 1220 (1996); Alaska--Turner Construction Co.,
Inc. v. Scales, 752 P.2d 467 (Alaska 1988) (six-year statute of repose
on suits filed against design professionals held unconstitutional under
State constitution); Arizona--Anson v. American Motors Co., 747 P.2d
581 (Ariz. App. 1987) (two-year statute of limitations for wrongful
death actions, with accrual at time of death, held unconstitutional
under State constitution); Barrio v. San Manuel Division Hospital For
Magma Copper Co., 692 P.2d 280 (Ariz. 1984) (statute of limitations
which required minor injured when below age of seven to bring action
for medical malpractice by the time she reached age ten held
unconstitutional under State constitution); Hazine v. Montgomery
Elevator Co., 861 P.2d 625 (Ariz. 1993) (twelve-year product liability
statute of repose held unconstitutional under State constitution);
Kenyon v. Hammer, 688 P.2d 961 (Ariz. 1984) (three-year statute of
limitations for wrongful death claim held unconstitutional under State
constitution); Colorado--Austin v. Litvak, 682 P.2d 41 (Colo. 1984)
(three-year statute of repose in medical malpractice actions held
unconstitutional under State constitution insofar as the statute
applied to persons whose claims were based on negligent misdiagnosis);
Florida--Smith v. Department of Insurance, 507 So. 2d 1080 (Fla. 1987)
(statute setting $450,000 limit on noneconomic damages awards held
unconstitutional under State constitution); Georgia--Denton v. Con-Way
Southern Express, Inc., 402 S.E.2d 269 (Ga. 1991) (statute authorizing
admission of collateral sources of recovery available to plaintiffs
seeking special damages for tortious injury held unconstitutional under
State constitution); Illinois--Best v. Taylor Machine Works, Inc., 689
N.E.2d 1057 (Ill. 1997) (Civil Justice Reform Amendments of 1995's
$500,000 limit on noneconomic damages award and abolition of joint
liability held unconstitutional under State constitution); Indiana--
Martin v. Richey, 711 N.E.2d 1273 (Ind. 1999) (two-year occurrence-
based statute of limitations as applied to plaintiff was held
unconstitutional under State constitution); Van Dusen v. Stotts, 712
N.E.2d 491 (Ind. 1999) (same); Harris v. Raymond, 715 N.E.2d 388 (Ind.
1999) (same); Kansas--Farley v. Engelken, 740 P.2d 1058 (Kan. 1987)
(abrogation of collateral source rule in health care liability actions
held unconstitutional under State constitution); Kansas Malpractice
Victims Coalition v. Bell, 757 P.2d 251 (Kan. 1988) (Kansas Health Care
Provider Insurance Availability Act provisions setting $1 million limit
on aggregate damages in health care liability actions and provision
requiring annuity for payments for future economic loss in all health
care liability actions held unconstitutional under State constitution);
Thompson v. KFB Insurance Co., 850 P.2d 773 (Kan. 1993) (statute
allowing evidence of collateral source benefits where claimant demands
judgment for damages in excess of $150,000 held unconstitutional under
State constitution); Kentucky--McCollum v. Sisters of Charity of
Nazareth Health Corp., 799 S.W.2d 15 (Ky. 1990) (five-year statute of
repose for health care liability actions held unconstitutional under
State constitution); O'Bryan v. Hedgespeth, 892 S.W.2d 571 (Ky. 1995)
(statute allowing admission of evidence of collateral source payments
in personal injury actions held unconstitutional under State
constitution); Williams v. Wilson, 972 S.W.2d 260 (Ky. 1998) (1988
punitive damages reform statute requiring a plaintiff to show that the
defendant acted with ``flagrant indifference to the rights of the
plaintiff and with a subjective awareness that such conduct will result
in human death or bodily harm'' as a predicate for punitive damages
liability held unconstitutional under State constitution); Missouri--
Strahler v. St. Luke's Hospital, 706 S.W.2d 7 (Mo. 1986) (statute of
limitations for health care liability actions held unconstitutional
under State constitution insofar as the statute applied to minors); New
Hampshire--Brannigan v. Usitalo, 587 A.2d 1232 (N.H. 1991) (statute
limiting recovery for noneconomic loss to $875,000 in personal injury
actions held unconstitutional under State constitution); Heath v.
Sears, Roebuck & Co., 464 A.2d 288 (N.H. 1983) (twelve-year statute of
repose and 3-year statute of limitations for product liability actions
held unconstitutional under State constitution); North Dakota--Hanson
v. Williams County, 389 N.W.2d 319 (N.D. 1986) (ten-year product
liability statute of repose held unconstitutional under State
constitution); Ohio--Adamsky v. Buckeye Local School District, 653
N.E.2d 212 (Ohio 1995) (two-year statute of limitations for personal
injury actions against political subdivisions held unconstitutional
under State constitution, as applied to minors); Crowe v. Owens Corning
Fiberglas, 718 N.E.2d 923 (Ohio 1999) (limitation on punitive damages
held unconstitutional under State constitution); Gaines v. Preterm-
Cleveland, Inc., 514 N.E.2d 709 (Ohio 1987) (health care liability
statute of repose held unconstitutional under State constitution as
applied to adult litigants who, following discovery, did not have
adequate time to file actions); Galayda v. Lake Hospital Systems, Inc.,
644 N.E.2d 298 (Ohio 1994) (statute requiring periodic payments of
future damages awards in medical malpractice suits held
unconstitutional under State constitution), reconsideration denied, 644
N.E.2d 1389 (Ohio), cert. denied sub nom. Damian v. Galayda, 516 U.S.
810 (1995); Gladon v. Greater Cleveland Regional Transit Authority,
1994 WL 78468 (Ohio App. Mar. 10, 1994) ($250,000 limit on noneconomic
damages awards held unconstitutional under State constitution), rev'd
on other grounds, 662 N.E.2d 287 (Ohio 1996); Hardy v. VerMeulen, 512
N.E.2d 626 (Ohio 1987) (statute barring health care liability claims
brought more than 4 years after act or omission constituting alleged
malpractice occurred, as applied to bar claims of health care liability
plaintiffs who did not know or could not have known of their injuries,
held unconstitutional under State constitution), cert. denied, 484 U.S.
1066 (1988); Mominee v. Scherbarth, 503 N.E.2d 717 (Ohio 1986) (statute
which required health care liability actions to be brought within 1
year from date cause of action accrued, or 4 years from date alleged
malpractice occurred, whichever came first, held unconstitutional under
State constitution insofar as the statute applied to minors); Morris v.
Savoy, 576 N.E.2d 765 (Ohio 1991) ($200,000 limit on general damages in
health care liability actions held unconstitutional under State
constitution); Schwan v. Riverside Methodist Hospital, 452 N.E.2d 1337
(Ohio 1983) (statute of limitations for health care liability actions,
as it applied to minors, held unconstitutional under State
constitution); Sorrell v. Thevenir, 633 N.E.2d 504 (Ohio 1994) (statute
providing offset of collateral source benefits received by plaintiff
held unconstitutional under State constitution); Samuels v. Coil Bar
Corp., 579 N.E.2d 558 (Ohio Cm. Pl. 1991) (same as applied to wrongful
death actions); Oregon--Lakin v. Senco Products, Inc., 987 P.2d 463
(Or. 1999) ($500,000 limit on noneconomic damages in personal injury
and wrongful death actions arising out of common law held
unconstitutional under State constitution); Rhode Island--Kennedy v.
Cumberland Engineering Co., Inc., 471 A.2d 195 (R.I. 1984) (ten-year
statute of repose for product liability actions held unconstitutional
under State constitution); South Dakota--Knowles v. Federal, 544 N.W.2d
183 (S.D. 1996) ($1 million aggregate limit on economic and noneconomic
damages in health care liability actions held unconstitutional under
State constitution, but more limited statute capping noneconomic
damages awards in health care liability actions at $500,000 remained in
effect); Texas--Lucas v. Federal, 757 S.W.2d 687 (Tex. 1988) ($500,000
aggregate limit on damages in health care liability actions held
unconstitutional under State constitution); Nelson v. Krusen, 678
S.W.2d 918 (Tex. 1984) (two-year statute of limitations for medical
malpractice actions held unconstitutional under State constitution);
Utah--Berry v. Beech Aircraft Corp., 717 P.2d 670 (Utah 1985) (statute
of repose barring product liability claims 6 years after of purchase or
10 years after date of manufacture of product held unconstitutional
under State constitution); Lee v. Gaufin, 867 P.2d 572 (Utah 1993)
(provision of Utah Health Care Malpractice Act subjecting minors to 2-
year statute of limitations and 4-year statute of repose held
unconstitutional under State constitution); Washington--Sofie v.
Fibreboard Corp., 771 P.2d 711 (Wash. 1989) (variable limit on
noneconomic damages awards held unconstitutional under State
constitution); Wisconsin--Kohnke v. St. Paul Fire & Marine Insurance
Co., 410 N.W.2d 585 (Wis. App. 1987) (medical malpractice statute of
limitations held unconstitutional under State constitution), aff'd on
other grounds, 424 N.W.2d 191 (Wis. 1988).
\21\ See La. Rev. Stat. Ann. Sec. 40:1299.42(b) (1992) (limiting
noneconomic damages to $500,000); Mass. Gen. Laws, Ch. 231, Sec. 60H
(2000) (limiting noneconomic damages to $500,000); Mich. Comp. Laws
Sec. 600.1483 (1996) (limiting noneconomic damages to $500,000 if
certain criteria are met, otherwise capping them at $280,000); N.D.
Cent. Code Sec. 32-42-02 (1996) (limiting noneconomic damages to
$500,000); S.D. Codified Laws Sec. 21-3-11 (Michie 1987) (limiting
noneconomic damages to $500,000); Utah Code Ann. Sec. 78-14-7.1 (1999)
(limiting noneconomic damages to $400,000, adjusted for inflation); W.
Va. Code Sec. 55-7B-8 (1994) (limiting noneconomic damages to
$1,000,000); Wis. Stat. Sec. 893.55 (1997) (limiting noneconomic
damages to $350,000, adjusted for inflation).
\22\ See N.M. Stat. Ann. Sec. 41.5 (Michie 1996) (limit to
$600,000, excluding punitive damages and medical care and related
benefits);Va. Code Ann. Sec. 8.01-581.15 (Michie Cum. Supp. 2000).
\23\ See Mont. Code Ann. Sec. 25-9-411 (1999) (limiting noneconomic
damages to $250,000).
---------------------------------------------------------------------------
According to the Department of Health and Human Services:
[A] major contributing factor to the most enormous
increases in liability premiums has been rapidly
growing awards for non-economic damages in States that
have not reformed their litigation system to put
reasonable standards on these awards. Among the States
with the highest average medical malpractice insurance
premiums are Florida, Illinois, Ohio, Nevada, New York,
and West Virginia. These States have not reformed their
litigation systems as others have. (Florida's caps
apply only in limited circumstances. New York has
prevented insurers from raising rates, and accordingly
it is expected that substantial increases will be
needed in 2003.) . . . The effect of these premiums on
what patients must pay for care can be seen from an
example involving obstetrical care. The vast majority
of awards against obstetricians involve poor outcomes
at childbirth. As a result, payouts for poor infant
outcomes account for the bulk of obstetricians'
insurance costs. If an obstetrician delivers 100 babies
per year (which is roughly the national average) and
the malpractice premium is $200,000 annually (as it is
in Florida), each mother (or the government or her
employer who provides her health insurance) must pay
approximately $2,000 merely to pay her share of her
obstetrician's liability insurance. If a physician
delivers 50 babies per year, the cost for malpractice
premiums per baby is twice as high, about $4,000. It is
not surprising that expectant mothers are finding their
doctors have left States that support litigation
systems imposing these costs. In addition to premium
increases for physicians, nursing home malpractice
costs are rising rapidly because of dramatic increases
in both the number of lawsuits and the size of awards.
Nursing homes are a new target of the litigation
system. Between 1995 and 2001, the national average of
insurance costs increased from $240 per occupied
skilled nursing bed per year to $2,360. From 1990 to
2001, the average size of claims tripled, and the
number of claims increased from 3.6 to 11 per 1,000
beds. These costs vary widely across States, again in
relation to whether a State has implemented reforms
that improve the predictability of the legal system.
Florida ($11,000) had one of the highest per bed costs
in 2001. Nursing homes in Mississippi have been faced
with increases as great as 900% in the past 2 years.''
\24\
---------------------------------------------------------------------------
\24\ Department of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System'' (July 24, 2002) at 12-13.
Also according to the Department of Health and Human
---------------------------------------------------------------------------
Services:
The insurance crisis is less acute in States that have
reformed their litigation systems. States with limits
of $250,000 or $350,000 on non-economic damages have
average combined highest premium increases of 12-15%,
compared to 44% in States without caps on non-economic
damages . . . [T]here is a substantial difference in
the level of medical malpractice premiums in States
with meaningful caps, such as California, Wisconsin,
Montana, Utah and Hawaii, and States without meaningful
caps.\25\
---------------------------------------------------------------------------
\25\ Id. at 14-15.
The California courts have described several purposes of
California Civil Code section 3333.2, which limits recovery of
noneconomic damages to $250,000. One purpose is to ``provide a
more stable base on which to calculate insurance rates'' by
eliminating the ``unpredictability of the size of large
noneconomic damage awards, resulting from the inherent
difficulties in valuing such damages and the great disparity in
the price tag which different juries placed on such losses.''
\26\ Another purpose is to ``promote settlements by eliminating
`the unknown possiblity of phenomenal awards for pain and
suffering that can make litigation worth the gamble.' '' \27\ A
third purpose is to be fair to medical malpractice plaintiffs
by ``reduc[ing] only the very large noneconomic damage awards,
rather than to diminish the more modest recoveries from pain
and suffering and the like in the great bulk of cases.'' \28\
---------------------------------------------------------------------------
\26\ Fein v. Permanent Medical Group, 38 Cal.3d 137, 163 (1985);
see also Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital
8 Cal.4th 100, 112 (1984).
\27\ Fein v. Permanent Medical Group, 38 Cal.3d 137, 163 (1985).
\28\ Id.
---------------------------------------------------------------------------
Background and Need for the Legislation
THE NATIONAL HEALTH CARE LITIGATION AND MALPRACTICE INSURANCE CRISIS
RAVAGING THE HEALTH CARE SYSTEM
A recent survey conducted for the bipartisan legal reform
organization ``Common Goo'--whose Board of Advisors include
former Senator George McGovern, former Speaker of the House
Newt Gingrich, former Deputy Attorney General during the
Clinton Administration Eric Holder, former Senator Alan
Simpson, former Senator Paul Simon, and former Attorney General
Richard Thornburgh--reveals the dire need for reforming health
care litigation in America. What follows is an excerpt from the
``Executive Summary'' of the survey's findings:
Rather than explore the number of suits, the size of
jury awards, or the costs of malpractice insurance,
this survey sought to explore--through interviews with
physicians, nurses and hospital administrators--how the
fear of litigation affects the practice of medicine and
the delivery of medical care. The results are striking.
Concerns about liability are influencing medical
decision-making on many levels. From the increased
ordering of tests, medications, referrals, and
procedures to increased paperwork and reluctance to
offer off-duty medical assistance, the impact of the
fear of litigation is far-reaching and profound.
Broadly, half (51%) of all physicians think that their
ability to provide quality medical care to patients has
gotten worse in the past 5 years. Further, more than
three-fourths of physicians feel that concern about
malpractice litigation (76%) has hurt their ability to
provide quality care in recent years. All respondent
groups report increased levels of concern or awareness
about the risks of malpractice liability over their
career and nearly one-third (29%) of physicians state
that they have been interested in a certain specialty
but shied away from it due to fear of higher legal
exposure. These findings seem to suggest that the broad
impact of the fear of litigation is significant and
growing.
Some of the more arresting study findings are on the
impact of liability concerns on the provision of
medical care. Broadly, nearly all physicians and
hospital administrators feel that unnecessary or
excessive care is veryoften or sometimes provided
because of fear about litigation. More specifically,
physicians report that the fear of malpractice claims
causes themselves and/or other physicians to:
Order more tests than they would based only
on professional judgment of what is medically needed.
(91% have noticed other physicians, and 79% report they
themselves do this due to concerns about malpractice
liability)
Refer patients to specialists more often than
they would based only on their professional judgment of
what is medically needed. (85% have noticed other
physicians, and 74% report they themselves do this due
to concerns about malpractice liability)
Suggest invasive procedures such as biopsies
to confirm diagnoses more often than they would based
only on their professional judgment of what is
medically needed. (73% have noticedother physicians,
and 51% report they themselves do this due to concerns
about malpractice liability)
Prescribe more medications such as
antibiotics than they would based only on their
professional judgment of what is medically needed. (73%
have noticed other physicians, and 41% report they
themselves do this due to concerns about malpractice
liability) . . .
Not surprisingly, there is nearly unanimous agreement
among physicians, nurses and hospital administrators
that these extra tests, referrals and procedures
contribute in a significant way to health care costs
issues . . .
Conversations with colleagues appear to be impacted by
the fear of litigation. While more than two-thirds of
both physicians and nurses report that frank
discussions of an adverse event or error at least
sometimes helps them or a colleague avoid making a
similar mistake in an actual medical case, many report
that their colleagues are often uncomfortable having
such conversations.
Only one-fourth or fewer of physicians,
nurses and hospital administrators think that their
colleagues are very comfortable discussing adverse
events or uncertainty about proper treatment with them.
Even fewer--roughly 5%--think that their
colleagues are very comfortable discussing medical
errors with them.
Fear of liability is cited by physicians and hospital
administrators as the leading factor that discourages
medical professionals from openly discussing and
thinking of ways to reduce medical errors . . .
The clear majority of physicians, nurses and hospital
administrators all feel that malpractice claims occur
mainly from adverse results rather than actual
error.\29\
---------------------------------------------------------------------------
\29\ See Harris Interactive, ``Common Good Fear of Litigation
Study: The Impact of Medicine,'' Final Report (April 11, 2002)
(``Executive Summary'') at 8-11.
The survey asked physicians, ``Based on your experience,
have you noticed the fear of malpractice liability causing
physicians to . . . ?'' The results are startling. The
following percentages of physicians reported that litigation
fears caused them to order more tests than they would based
only on professional judgment of what is medically needed
(91%); prescribe more medications such as antibiotics than they
would based only on professional judgement of what is medically
needed (73%); refer patients to specialists more often than
they would based only on professional judgment (85%); and
suggest invasive procedures more often than they would based
solely on their professional judgment (73%).\30\ Ninety-four
percent of physicians think such extra tests, referrals, or
procedures contribute in a significant way to health care
costs.\31\ When asked ``Generally speaking, how much do you
think that fear of liability discourages medical professionals
from openly discussing and thinking of ways to reduce medical
errors?'' Fifty-nine percent of physicians replied ``a lot.''
\32\ And according to the Department of Health and Human
Services, ``Doctors are reluctant to collect quality-related
information and work together to act on it for fear that it
will be used against them or their colleagues in a lawsuit.
Perhaps as many as 95% of adverse events are believed to go
unreported.'' \33\
---------------------------------------------------------------------------
\30\ Id. at 20 (Table 7).
\31\ Id. at 21 (Table 8).
\32\ Id. at 30 (Table 17).
\33\ Department of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System'' (July 24, 2002) at 6 (citing
Maulik, Joshi, Anderson, John et.al., ``A Systems Approach to Improving
Error Reporting,'' 16 Journal of Health Care Information Management 1).
---------------------------------------------------------------------------
Doctors themselves, who are most keenly aware of the
litigation threats they face, are not blaming insurance
companies for high premiums because they know the problem lies
in an unregulated medical litigation system.\34\ 60% of
America's private practice physicians, as well as dentists,
hospitals, and other healthcare providers, are insured by
insurance companies that were created by doctors, and which are
owned and operated by doctors, and which provide only medical
malpractice insurance for doctors in the States in which they
are based.\35\ In fact, most such insurers are mutual insurance
companies, in which any `excess profits'' must be rebated to
the policyholders through dividends or used to offset
unexpected losses and thereby hold down premiums for
policyholders and potential insureds. The Common Ground survey
also found that 87% of physicians stated they fear potential
malpractice liability more today than they did when they
started their careers,\36\ and 83% somewhat or strongly
disagree with the statement that physicians can trust the
current system of justice to achieve a reasonable result.\37\
Indeed, median awards for malpractice claims grew 7 times the
rate of general inflation between 1994 and 2000, while
negotiated settlement payouts grew at nearly triple the rate of
inflation.\38\
---------------------------------------------------------------------------
\34\ As the chair of Our Common Good has written, ``The moral
authority of victims is powerful. But the resulting laissez-faire
lawsuit culture means that social policy gets made, by default, at the
intersection of personal tragedy and personal greed. All of society
ends up victimized by the victims . . . Suing is not a unilateral right
of freedom, like free speech or a property right. Those hallowed
constitutional rights--the safeguards of our freedom--protect us
against government power. Suing, by contrast, is a use of government
power against another free citizen, coming down to that fateful verdict
when the full power of government may compel the defendant to pay
millions. Being sued is like being indicted for a crime, except that
the penalty is money. Today in America, however, we let any self-
interested person use that power without any significant check . . .
Setting limits on lawsuits is not an infringement of freedom, but a
critical tool of freedom. Otherwise one angry person, by legal threats,
can bully everyone else. Limiting lawsuits is also a critical tool of
social policy. For example, Americans cannot sue utility companies for
damage sustained from blackouts, because legislatures long ago
prohibited such suits to keep utility bills from skyrocketing.''
Phillip K. Howard, ``There Is No `Right to Sue','' The Wall Street
Journal (July 31, 2002) at A14. As Justice Oliver Wendell Holmes wrote
in the Harvard Law Review, the law is a ``standard which we hold the
parties to know beforehand . . . not a matter dependent upon the whim
of the particular jury . . .'' Oliver Weldell Holmes, ``Law in Science
and Science in Law,'' 12 Harv.L.Rev. 443, 458 (1899).
\35\ See http://www.thepiaa.org/about--piaa/what--is--piaa.htm.
\36\ See Harris Interactive, ``Common Good Fear of Litigation
Study: The Impact of Medicine,'' Final Report (April 11, 2002) at 16
(Table 3).
\37\ Id. at 39 (Table 26).
\38\ See American Medical Association, ``Trends Report: Medical
Professional Liability Insurance'' (April 2002) at 7. While median jury
awards and settlements for alleged malpractice grew at 18.4% and 7.4%
per year, respectively, from 1994 to 2000, the rate of general
inflation was only 2.5% per year over the same period.
---------------------------------------------------------------------------
As the Reagan Administration's Tort Policy Working Group
reported in its seminal study of the effects of tort laws on
insurance premiums:
[Losses due to previous price decisions] are ``sunk
costs'' which the industry cannot recoup simply by
charging higher premiums. If premiums in fact are
higher than the insured risks and the currently
available investment return dictate, either other
sources of capital . . . should offer the same
insurance at a lower price, or insureds will retain
these ``excess profits'' for themselves through self-
insurance or the formation of captives. The fact that
there appears to be little insurance coverage being
made available by new or expanding underwriters . . .
strongly indicates that recoupment of losses is not a
particularly compelling explanation for the current
insurance availability/affordability crisis.
It is particularly puzzling that the proponents of this
theory advocate the abolition of the insurance
industry's antitrust immunity contained in the
McCarran-Ferguson Act (Public Law 79-15) as an
appropriate response to the asserted problem of the
industry's cash-flow ``mismanagement.'' It is hard to
reconcile the argument that the current problems of the
insurance industry stem from ``excessive competition''
with the proffered solution of removing the industry's
antitrust immunity. Since the goal of antitrust law is
to enhance competition, if one truly believes that the
problems of the insurance industry are a result of too
much competition, the last thing one would advocate is
a legal change which would increase the level of
competition. While the Working Group did not review and
takes no position on the continuing validity of the
industry's antitrust immunity, it is readily obvious
that the suggestion that allegedly ``excessive
competition'' can be cured by even more competition is
patently absurd.
The reasons why the loss recoupment (or excessive pricing)
theories advocated by some make little economic sense can
briefly by summarized as follows:
Insurers, like all profit maximizing
companies, charge the price which maximizes their
profits. Past gains or past losses are irrelevant to
setting the price today which will maximize profits
tomorrow. The argument that insurers are charging
higher premiums to recoup past losses suggests that
absent such losses their premiums would be lower--that
is, that they would not be charging premiums that
maximize their profits. That makes little sense.
Even if excessive premiums were being charged
by some insurers to recoup their past losses, for the
reasons discussed, other insurers would offer the same
coverage at lower prices reflecting the actual risk, or
insureds would retain such excess profits for
themselves through self-insurance or the formation of
captives.\39\
---------------------------------------------------------------------------
\39\ Report of the Tort Policy Working Group on the Causes, Extent
and Policy Implications of the Current Crisis in Insurance Availability
and Affordability (February 1986) at 27-28. Many insurance companies
are mutuals, meaning that they are owned by their policyholders. The
suggestion that they are charging their policyholder-owners
unnecessarily high premiums makes even less sense, since any such
excess profits must be rebated through policyholder dividends.
As the Tort Policy Working Group also stated, ``These same
points apply equally well to arguments that premiums are set
excessively high to recoup losses resulting from mismanaged
investment portfolios. Just as past losses are irrelevant to
determining the premiums which will maximize profits,
investment portfolio losses should have no bearing on
premiums.'' \40\ The Tort Policy Working Group continued:
---------------------------------------------------------------------------
\40\ Id. at 29, n.20.
A[n] . . . important contribution of tort liability to
the availability/affordability crisis is the tremendous
uncertainty that has been generated by rapidly changing
standards of liability and causation. The ``rules of
the game'' have become so unpredictable that the
insurance industry often cannot assess liability risks
with any degree of confidence. This appears to have
severely exacerbated the problem.\41\
---------------------------------------------------------------------------
\41\ Id. at 3.
---------------------------------------------------------------------------
Further:
The increase in the number of tort lawsuits and the
level of awarded damages (or settlements) in and of
itself has an obvious inflating effect on insurance
premiums. To illustrate, assuming all other factors are
held constant, if the number of lawsuits against a
company or person doubles in 10 years, and if the
average damage award (or settlement) doubles over this
same period, that company or person will experience at
least a four-fold increase in insurance premiums over
those 10 years. As noted above, however, for both
medical malpractice and product liability the last 10
years have witnessed much more than a doubling in
lawsuits and average awards . . . [T]he current
explosion in premiums results in large part from the
fact that now that the insurance industry is facing
substantial underwriting losses, it must price coverage
to reflect the actual risks presented by tort law.\42\
---------------------------------------------------------------------------
\42\ Id. at 49.
---------------------------------------------------------------------------
. . .
Simply put, insurance, like other business activities,
operates most efficiently within a stable legal regime.
Tort law, unfortunately, over recent years has been
anything but stable . . . In conclusion, the current
problems of tort law can be summarized as follows:
Too many defendants are found liable (or
forced into settlements) where there should be no
liability, either because they engaged in no wrongful
activity, or because they did not cause the underlying
injury.
Damages have become excessive, particularly
in the area of non-economic damages such as pain and
suffering, mental anguish and punitive damages. And,
Transaction costs are far too high.\43\
---------------------------------------------------------------------------
\43\ Id. at 51-52.
The ability of the tort system to deter injuries caused by
medical negligence is greatly reduced by the haphazard
relationship between negligent injuries and compensation
through the tort system. Research of the Harvard Medical
Practice Study consisted of reviews of medical tort claims
filed by a specialist medical reviewer teams. The Harvard Study
team concluded that ``when we compared the tort claims brought
by the patients in our sample with the judgment made by our
medical reviewers, we found that in a substantial proportion of
cases where claims were filed, our reviewers judged from the
medical record that a negligent adverse event had not occurred.
Thus, the tort system imposes the costs of defending claims on
[health care] providers who may not even have been involved in
an injury, let alone a negligent injury.'' \44\ Indeed, the
researchers found that, of the 47 medical malpractice claims
they studied that resulted in litigation,\45\ ``[i]n 14 cases,
the physicians reviewed the record and found no adverse event.
For most of these cases, the physicians examined the outcome
and concluded that the cause was the underlying disease rather
than medical treatment . . . In these 14 cases, our physician
reviewers took a stand opposite to that of the plaintiff-
patient's expert.'' \46\ Further, the reviewers found that in
an additional 10 cases an adverse event occurred, but there was
no negligence on the part of the health care provider.\47\
Thus, of the 47 claims filed that the researchers analyzed,
less than half demonstrated any actual negligence, and many
demonstrated no discernable injury.\48\ Physicians will respond
to the incentives created by tort law only if they believe
their punishments are connected in some rational way to their
negligence. But research shows that they do not believe that.
They tend to see the tort system more as a random generator of
punishments and rewards. A majority of physicians feel that
they will be held legally liable for seriously adverse
outcomes, almost regardless of the quality of care they
actually provided. Physicians and risk managers are therefore
moved by the threat of malpractice liability to avoid the risk
of liability rather than to avoid the risk of injury.\49\
---------------------------------------------------------------------------
\44\ See Harvard Medical Practice Study to the State of New York,
Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation,
and Patient Compensation in New York at 11-5 (1990).
\45\ See id. at 7-1.
\46\ See id. at 7-33.
\47\ See id. at 7-33.
\48\ See also Paul Weiler, et al., A Measure of Malpractice (1993)
at 71 (``[Of those 47,] 10 claims involved hospitalization that had
produced injuries, though not due to provider negligence; and another
three cases exhibited some evidence of medical causation, but not
enough to pass our probability threshold. That left 26 malpractice
claims, more than half the total of 47 in our sample, which provided no
evidence of medical injury, let alone medical negligence.'').
\49\ See Harvard Medical Practice Study to the State of New York,
Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation,
and Patient Compensation in New York at 9-34 (1990).
---------------------------------------------------------------------------
The data produced by the Harvard Medical Practice Study has
been further analyzed to determine how accurately malpractice
litigation leads to payment. Confidential medical records were
reviewed to determine the insurers' honest assessment of the
patients' injuries, and the study's findings indicate that in
malpractice claims, only the severity of the patient's
disability, not negligence or even the occurrence of an injury
caused by medical care, was statistically significant in
predicting whether a plaintiff would receive payment.\50\ From
its previous study, the Harvard authors identified 51 litigated
claims and followed them over a 10-year period. The authors
conclude, ``Among the malpractice claims we studied, the
severity of the patient's disability, not the occurrence of an
adverse event or an adverse event due to negligence, was
predictive of payment to the plaintiff.'' \51\ As one writer on
seeing these findings put it: ``If the permanence of a
disability, not the fact of negligence, is the reason for
compensation, the determination of negligence may be an
expensive sideshow.'' \52\ This is widely understood by
physicians as determined by a recent survey conducted for the
bipartisan legal reform organization ``Common Good,'' which
found that 96% of physicians believe malpractice claims occur
mainly from adverse results rather than actual medical
errors.\53\
---------------------------------------------------------------------------
\50\ See Troyan A. Brennan, et al., Relation Between Negligent
Adverse Events and the Outcomes of Medical Malpractice Litigation, 335
New England Journal of Medicine 1963 (December 26, 1996) at 1966
(``Overall, empirical evidence does not strongly support using the
negligence standard to prevent medical injury.'').
\51\ See id. at 1963.
\52\ Id. at 1967.
\53\ See Harris Interactive, ``Common Good Fear of Litigation
Study: The Impact of Medicine,'' Final Report (April 11, 2002) at 42
(Table 29). See also O'Connell, Jeffrey and Pohl, Christopher, ``How
Reliable is Medical Malpractice Law?,'' 359 Journal of Law and Health
(1998) (``The evidence is growing that there is a poor correlation
between injuries caused by negligent medical treatment and malpractice
litigation.'').
---------------------------------------------------------------------------
The Harvard Study researchers conclude that ``In the
multivariate analysis, disability (permanent vs. temporary or
none) was the only significant predictor of payment . . . .
Neither the presence of an adverse event due to negligence . .
. nor the presence of an adverse event of any type . . . was
associated with payment to the plaintiff.'' \54\
---------------------------------------------------------------------------
\54\ Troyan A. Brennan, et al., Relation Between Negligent Adverse
Events and the Outcomes of Medical Malpractice Litigation, 335 New
England Journal of Medicine 1963 (December 26, 1996) at 1965. Another
report by the Institute of Medicine regarding medical errors states
that ``Preventable adverse events [in U.S. hospitals] are a leading
cause of death'' and ``at least 44,000, and perhaps as many as 98,000,
Americans die in hospitals each year as a result of medical errors.''
L.T. Kohn, J.M. Corrigan, M. Donaldson, eds., ``To Err is Human:
Building a Safer Health System'' (Institute of Medicine: 1999).
However, those conclusions have been disputed. See Clement J. McDonald,
Michael Weiner, and Siu L. Hui, ``Deaths Due to Medical Errors Are
Exaggerated in Institute of Medicine Report,'' 284 JAMA 1: 93-95 (July
5, 2000), at 93-94 (``Motor vehicle occupants do survive their ride if
collisions are avoided. Unlike most people who step into motor
vehicles, most patients admitted to hospitals have high disease burdens
and high death risks even before they enter the hospital . . . The
Harvard Study [upon which the Institute of Medicine's conclusions are
based] includes no information about the baseline risk of death in [the
patients studied] or information about deaths in any comparison group.
Therefore, it cannot be determined whether adverse events are
correlated with, let alone whether they cause, death . . . Given these
facts, using available data and some reasonable assumptions, we believe
that the increment in the published death rate due to adverse events
above the baseline death rate could be very small.'').
---------------------------------------------------------------------------
The medical journal Annals of Medicine has recently
detailed a series of reports of medical errors. In an editorial
about the new series, Dr. Robert M. Wachter, associate chairman
of the department of medicine at the University of California
at San Francisco, and his colleagues wrote that the medical
profession ``for reasons that include liability issues'' \55\
has not harnessed the full power of errors to teach and thereby
reduce errors.
---------------------------------------------------------------------------
\55\ Editorial, ``Learning from Our Mistakes: Quality Grand Rounds,
a New Case-Based Series of Medical Errors and Patient Safety,'' 136
Annals of Internal Medicine 11 (June 4, 2002) at 850.
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Research has demonstrated that direct medical care
litigation reforms--including caps on non-economic damage
awards--reduce the growth of malpractice claims rates and
insurance premiums, and reduce other stresses on doctors that
may impair the quality of medical care.\56\ Researchers'
findings point to the stresses created by the adversarial
quality of both litigation and equally adversarial pre-trial
maneuvers.\57\ Indeed, physicians who are under the malpractice
gun are isolated from both their patients and their
professional colleagues; they feel vilified by the accusations
and the personal invective that litigation requires; they are
distracted and engage in excessive rumination, to the detriment
of timely and effective medical decision-making; and they
experience a marked loss of professional self-confidence.
Litigation causes stress; stress causes dysfunctional
behaviors; and these behaviors can contribute to the making of
additional errors.\58\ Researchers have found that
significantly more of sued physicians than nonsued physicians
reported that they were likely to stop seeing patients with
whom the risk of litigation seemed greater, to think about
retiring early, and to discourage their children from pursuing
medicine as a career. Also, research has found that both sued
and nonsued physicians order more diagnostic tests that their
clinical judgment deems unnecessary and have stopped performing
certain high-risk procedures. As the researchers concluded,
``The changes in professional behavior among the respondents
suggest that malpractice litigation may have an impact on
physicians' freedom to exercise their own clinical judgment. As
a result, patients may be deprived of the full range of a
physician's professional expertise. In addition, almost half of
those sued (48.9%) reported that because of fear of potential
litigation they will not see certain kinds of patients . . .
[A]ccess to health care may be becoming restricted because of
factors associated with malpractice litigation. The funding
that many physicians may opt for early retirement and
discourage others from entering medicine may also eventually
have an impact on health care availability . . . [T]he
resultant stress on both sued and nonsued physicians may in the
long run not serve the public interest or the quality of
medicine. It may diminish rather than enhance the integrity and
availability of medical care.'' \59\
---------------------------------------------------------------------------
\56\ See Daniel P. Kessler and Mark B. McClellan, ``The Effects of
Malpractice Pressure and Liability Reforms on Physicians' Perceptions
of Medical Care,'' 60 Law and Contemporary Problems 1: 81-106 (1997),
at 105 (``[P]hysicians from States enacting liability reforms that
directly reduce malpractice pressure experience lower growth over time
in malpractice claims rates and in real malpractice insurance premiums.
[Also], physicians from reforming States report significant relative
declines in the perceived impact of malpractice pressure on practice
patterns.'').
\57\ See Thomasson et al., Patient Safety Implications of Medical
Malpractice Claimed Resolution Procedures, in Proceedings of Enhancing
Patient Safety and Reducing Errors in Health Care (1998) at 158.
\58\ See Sara C. Charles, M.D. et al., Sued and Nonsued Physicians'
Satisfaction, Dissatisfactions, and Sources of Stress, 28 Psychosamtics
462, 466 (1987) (``The finding that sued physicians were more stressed
from dealing with high-risk and emergency situations, being on call,
and from fear of making an incorrect diagnosis suggests that the
experience of litigation accentuates the stresses of ordinary practice
. . . Increased anxiety about these activities, however, may result in
avoidant behaviors, which, in the long run, diminish rather tan refine
clinical competence.'').
\59\ Sara C. Charles, M.D. et al., Sued and Nonsued Physicians
Self-reported Reactions to Malpractice Litigation, 142:4 Am. J.
Psychiatry 437, 440 (1985).
---------------------------------------------------------------------------
Senator Joe Lieberman has described the current medical
care legal crisis as follows: ``Mr. President, in my view, you
can add the civil justice system to the list of fundamental
institutions in our country that are broken and in need of
repair . . . In our time, unfortunately, the civil justice
system has too often become a game of legalistic sophistry, of
bullying, of bluffing, a game which overcompensates lawyers,
undercompensates victims, particularly seriously injured
victims, and costs all the rest of us an awful lot of money in
higher prices for consumer products, for health care, higher
premiums for insurance, fewer jobs, and fewer new products to
improve and protect our lives . . . Our present system for
compensating patients who have been injured by medical
malpractice is ineffective, inefficient and, again, in many
respects, unfair.'' \60\
---------------------------------------------------------------------------
\60\ Senator Lieberman, floor statement on the Common Sense Product
Liability and Legal Reform Act (April 27, 1995). As Senator Lieberman
has summed up his own reform proposals: ``Key provisions of the reform
include, No. 1, establishing a uniform statute of limitations, 2 years;
No. 2, allowing periodic payments for awards . . . No. 3, applying
several--not joint and several--liability for noneconomic damages, pain
and suffering.'' These or very similar provisions are in the HEALTH
Act.
---------------------------------------------------------------------------
As Senator Lieberman has described, the crisis is national
in scope and warrants a Federal response: ``Mr. President, I
did not always support a national or Federal approach to
product liability reform or tort reform generally, and I can
understand the hesitancy, particularly of some of the Members,
to support Federal involvement in what traditionally has been a
province of the States . . . So I listened to [] folks, and I
came to understand the necessity of Federal action and, of
course, to understand the reality and appreciate the reality
that we are one country; that products travel from State to
State; that people using them travel from State to State; and
that there is a crying need out there in the interest of every
State and our country, our economy, the equity of our society,
to build a floor of fairness, a common system that will protect
the rights of all.'' \61\
---------------------------------------------------------------------------
\61\ Id.
---------------------------------------------------------------------------
The personal impact of the current crisis is made clear in
the following poignant report from the Mississippi Clarion-
Ledger:
Dr. Kirk Kooyer arrived in the Mississippi Delta in
1994 to serve the poor. ``I came here with a Christian
conviction in my heart,'' said the 39-year-old Michigan
native. Now he and his wife, Maria Weller, a Vicksburg
pediatrician, are moving their mission to North Dakota,
he said, because of increasing litigation. ``It's the
harassment of dealing with meritless lawsuits,'' he
said. ``It makes you feel frustrated and demoralized.''
. . . When Kooyer leaves Rolling Fork on Thursday,
Sharkey and Issaquena counties will lose their only
pediatrician, who is also a board-certified internist.
Two doctors will remain to handle all emergencies at
the already struggling Sharkey-Issaquena Community
Hospital, where nearly every patient is below the
poverty level. ``If one of us is on vacation and the
other one's sick, you don't have a doctor,'' said Dr.
Andrew George of Rolling Fork, one of the remaining
physicians. ``You can't have a hospital without a
doctor.'' Hospital administrator Winfred Wilkinson said
the loss of Kooyer ``is going to put a terrible strain
on us. What's going to be hard is to find someone to
replace him because whoever comes will face the same
thing. It's the patients who'll suffer.'' . . . Since
Kooyer arrived in 1994, Sharkey County's infant
mortality has declined. According to State Department
of Health statistics, mortality dropped from an average
of 10 deaths per 1,000 live births between 1990 and
1994 to 3.4 deaths between 1996 and 2000. Contributing
to that success is the Cary Christian Center, which
provides prenatal classes and home visits. Kooyer has
assisted in the ministry there. ``Every year, we save
one or two babies in the emergency room,'' Kooyer said.
``I'm concerned a lot of the progress we've made could
be lost when there's no longer a pediatrician in
Sharkey County.'' . . . ``It just kills me he's leaving
because he's one of the brightest physicians around,''
said Dr. Chris Glick of Jackson, president-elect of the
National Perinatal Association. ``He's made an
incredible difference in the health of women and
children.'' In fact, if Normal Rockwell painted a
doctor, he would probably look like Kooyer, she said.
``People say, 'I want my doctor to be a kind-hearted
family man who's soft and gentle.' That's what he is.
``It's so ironic he's being run off because he's the
kind of guy we need in the Delta. He could have had a
very well-to-do practice in Michigan but instead he
chose to work in the poorest counties in Mississippi as
a gift from his heart.'' . . .\62\
---------------------------------------------------------------------------
\62\ Jerry Mitchell, ``Tort Reform: Just What the Doctor Ordered?''
Clarion-Ledger (July 29, 2002) at A1.
---------------------------------------------------------------------------
SKYROCKETING INSURANCE RATES ARE PREVENTING ACCESS TO HEALTH CARE
The combined national effects of the nation's patchwork of
medical care litigation rules have led doctors to face
skyrocketing insurance rates and caused untold numbers of
doctors to leave the profession or reduce the number of
patients they see.\63\
---------------------------------------------------------------------------
\63\ See, e.g., Joelle Babula, ``Crisis Alters Lives,
Livelihoods,'' The Las Vegas Review-Journal (April 7, 2002) (`` `You
don't just pick a doctor out of the phone book to perform open heart
surgery on your baby daughter,' said Emma's father, Steve Walker. `We
were supposed to wait as long as we could for the surgery, until she
gets bigger and stronger. But now she won't get that chance because the
doctors may no longer be here.' Emma's heart surgeon, Dr. Robert
Wiencek, is one of only four pediatric cardiac surgeons in Las Vegas.
The four doctors, who practice together at Cardiovascular Surgery
Associates, all are preparing to move out of State because they are
having problems finding medical malpractice insurance . . . `My
cardiologist friends in California pay between $45,000 and $50,000 a
year for malpractice,' Wiencek said. `What I pay now is $78,000 and I
expect that to at least double.' If Wiencek and his group do move and
if Emma needs more surgeries or has to postpone her next one, her
family will follow Wiencek wherever he ends up. `We'd fly or drive
wherever he goes,' said Emma's mother, Kelly Walker. `We found out
about Emma's heart condition when I was 4 months pregnant, and this
team of doctors has been with us since then.' ''.).
---------------------------------------------------------------------------
Women are being particularly hard hit. The American College
of Obstetricians and Gynecologists (``ACOG''), in a release
entitled ``How Caps Protect Women's Access to Health Care,''
states that it ``believes that the meteoric rise in liability
premiums threatens women's access to [health] care.'' ACOG
continues that ``[e]xperience demonstrates that obstetric
providers--when confronted with substantially higher costs for
liability coverage--will stop delivering babies, reduce the
number they do deliver, and further cut back, or eliminate,
care for high-risk patients, the uninsured, and the
underinsured . . . Also hurt without a cap will be the nation's
39 million uninsured patients--the majority of them women and
children--who rely on non-profit licenced community clinics for
health care. Unable to shift higher insurance costs to their
patients, these clinics will have no alternative but to care
for fewer people.'' ACOG continued that, without a cap on non-
economic damages, ``women's access to prenatal care will be
reduced'' and that ``[a]s premiums increase, women's access to
general health care--including regular screenings for
reproductive cancers, high blood pressure and cholesterol,
diabetes, sexually transmitted diseases, and other serious
health risks--will decrease without a cap.'' \64\ As the Las
Vegas Review-Journal reports, ``Most of the doctors are insured
by American Physicians Assurance, a company that recently began
charging doctors even more for delivering what it considers too
many babies, said Dennis Coffin, an insurance agent
representing the company . . . Doctors say that if they deliver
less than 125 babies a year, they face annual malpractice
premiums that jump from about $40,000 to $80,000. Those who
deliver between 125 and 175 babies will have to pay more than
$100,000 per year in medical malpractice premiums. The prices
continue to rise for doctors who deliver more than 175 babies a
year.'' \65\
---------------------------------------------------------------------------
\64\ Release, American College of Obstetricians and Gynecologists,
``How Caps Protect Women's Access to Health Care'' (March 7, 2002).
\65\ Joelle Babula, ``Medical Malpractice Crisis: Pregnant Women
Turned Away'' Las Vegas Review-Journal (May 7, 2002).
---------------------------------------------------------------------------
Skyrocketing medical insurance rates have caused similar
crises nationwide.\66\ Medical malpractice insurance premiums
are increasing at the highest rate since the mid-1980's \67\
and consequently doctors are practicing more defensively,
ordering unnecessary extra tests and choosing unnecessary
procedures that limit their risks.\68\
---------------------------------------------------------------------------
\66\ Doctors across America are seeing steep jumps in their medical
malpractice premiums from years 2000 to 2001. See Steve Friess,
``Malpractice Insurance Soars, Doctors Feel Hit'' USA Today (April 8,
2002) (``St. Paul ended coverage for 42,000 doctors nationwide, citing
nearly $1 billion in losses, attributed primarily to high jury awards
and settlements in malpractice lawsuits. Now those doctors are shopping
for other insurance, but other companies are refusing to write policies
for obstetricians, general surgeons and emergency room doctors in
States with no or ineffective limits to jury awards.''). In Florida,
liability insurance coverage for pregnancy-related care is now running
as high as $202,000 in some counties. See USA Today, ``You Might Feel a
Bit of a Pinch: Malpractice Insurance Costs Push Doctors to Cut
Services or Move'' (December 4, 2001). In Texas, liability insurance
coverage for pregnancy-related care runs as high as $160,000 for
physicians in Dallas, Houston, and Galveston. Id. In Michigan,
liability insurance coverage for general surgery in Detroit is running
as high as $94,000 annually. Id. The following are some more examples
provided in 26 Medical Liability Monitor 10 (October 2001) ``Trends in
2001 Rates for Physicians Medical Professional Liability Insurance.''
Internal Medicine--Florida (Dade and Broward counties) $26,896-50,774;
Florida (Palm Beach county) $30,464-44,660; Michigan (Wayne and McComb
counties, Detroit area) $18,376-40,233; Illinois (Chicago/Cook County)
$15,539-28,153; Massachusetts $8,428-9,768; Ohio (Cleveland area)
$10,853-16,270; Texas (Dallas, Houston, Galveston) $14,552-25,563 and
(rest of Texas) $16,779-28,289; Nevada (Las Vegas area) $11,636-15,804;
New York (N.Y., Nassau, Suffolk counties) $16,751-21,648; General
surgeons--Florida (Dade/Broward counties) $63,189-159,166; Florida
(Palm Beach county) $62,120-81,998; Massachusetts $27,244-31,521; Texas
(Dallas, Houston, Galveston) $34,306-133,957 and (rest of Texas)
$29,830-50,293; Michigan (Wayne and McComb counties, Detroit area)
$66,611-94,195; Illinois (Chicago/Cook County) $50,021-70,178; Ohio
(Cleveland area) $33,397-60,021; Nevada (Las Vegas area) $40,388-
56,892; West Virginia $36,094-56,371; Obstetricians/gynecologists--
Florida (Dade/Broward counties) $143,249-202,949; Florida (Palm Beach
county) $128,584-169,731; Massachusetts $76,176-88,288; Texas (Dallas,
Houston, Galveston) $69,918-160,746 and (rest of Texas) $46,607-78,579;
New York (New York, Nassau, Suffolk counties) $89,317-115,429; Michigan
(Wayne and McComb counties, Detroit area) $87,444-123,890; Illinois
(Chicago/Cook County) $88,928-110,091; Ohio (Cleveland) $58,131-95,310;
Nevada (Las Vegas area) $71,092-94,820; Ohio (Cleveland) $58,131-
95,310; West Virginia $63,165-84,551.
---------------------------------------------------------------------------
In 2002, medical malpractice insurance rates are up by the following
amounts in the following States: Internal medicine--Arkansas (32.5%);
Colorado (9.4%); D.C. (19%); Georgia (29% to 34%); Illinois (16% to
35%); Indiana (46% to 58.3%); Louisiana (23.4%); Maryland (25%);
Montana (58%); Nevada (27.5%); Pennsylvania (46% to 81%); Texas (40% to
57%); Utah (40%); Virginia (25.9%); West Virginia (36%-66.8%); General
surgery--Arkansas (32.5%); Colorado (8.7%); D.C. (19%); Georgia (29% to
34); Illinois (16% to 35%); Indiana (39.4% to 52.3%); Louisiana (15%);
Maryland (24.9%); Montana (55.7%); Nevada (39.5%); Pennsylvania (46% to
81%); Texas (32.1% to 54%); Utah (40%); Virginia (25.8%); West Virginia
(36% to 50.3%); Obstetrics/gynecology--Arkansas (32.5%); Colorado
(5.6%); D.C. (19%); Georgia (29% to 34%); Illinois (16% to 35%);
Indiana (39.4% to 52.4%); Louisiana (15%); Maryland (25%); Montana
(55.5%); Nevada (15% to 38.5%); Pennsylvania (40% to 81%); Texas (31.7%
to 48%); Utah (40%); Virginia (25.9%); West Virginia (28.5% to 36%).
See 27 Medical Liability Monitor 1 (January 21, 2002) at 5.
---------------------------------------------------------------------------
\67\ See Joseph B. Treaster, ``Doctors Face A Big Jump In
Insurance'' The New York Times (March 22, 2002) (``Higher malpractice
insurance rates are likely to add to rising health care costs, although
managed care has limited doctors' ability to pass along their higher
expenses. Beyond that, rising malpractice rates have caused some
doctors to quit practicing or to practice medicine defensively,
ordering extra tests or choosing procedures that limit their risks.
`The situation is very ominous,' said Gerry Conway, the director of
government affairs for the New York State Medical Society. `Increases
like this cannot be absorbed by physicians.' ''); Tricia Cortez,
``Texas Doctors Plan One Day Strike'' Loredo Morning Times (February
19, 2002) (``One Laredo doctor, who requested anonymity, said
malpractice insurance for doctors has doubled or even tripled because
of the escalating number of lawsuits and jury awards. `Last year, I was
paying $9,000 in insurance for $1.5 million maximum yearly coverage.
This year, I am paying $24,000 a year for $600,000 maximum coverage.
So, my insurance premiums nearly tripled, but my coverage was cut in
half,' the doctor said. These costs, however, pale in comparison to
insurance costs paid by obstetricians/gynecologists and other high-risk
specialty doctors. Dr. Santiago Gutierrez, a Laredo ob-gyn, said fellow
ob-gyns along the border are paying $60,000 to $250,000 in malpractice
insurance a year . . . A January article in American Medical News
reported that Texas was one of eight States where physicians saw
medical liability rates increase by 30 percent or more.'').
\68\ See Joseph B. Treaster, ``Malpractice Rates Are Rising
Sharply; Health Costs Follow,'' The New York Times (September 10, 2001)
(``Medical malpractice insurance premiums are increasing at the highest
rate since the mid-1980's, adding to rising health care costs. Insurers
say the increases, typically in the double digits, result mainly from a
rise in jury awards, now averaging $3.49 million. Some of the biggest
insurers are raising rates in many States by more than 30 percent. Even
insurers owned by doctors and hospitals, which work to keep rates low,
are increasing prices by 10 percent to 18 percent. Insurers began
raising rates last year, after several years of price-cutting
competition that left premiums behind inflation. A 4-percent rise in
premiums last year was the biggest since 1994, and insurers say the
increases are greatly accelerating this year . . . Health care costs
are expected to increase about 10 percent this year. Rising malpractice
premiums account for about one-tenth of the increase, according to Dr.
William F. Jessee, chief executive of the Medical Group Management
Association, which represents 188,000 doctors, or nearly half of those
who buy the coverage . . . Rising medical malpractice premiums are also
adding to medical costs in another way: Doctors are practicing more
defensively, ordering extra tests and choosing procedures that limit
their risks. Dr. Nigel Spier, an obstetrician-gynecologist in
Hollywood, Fla., said doctors were performing more Caesarean
deliveries, for example, which are more costly than vaginal deliveries.
Insurers put most of the blame for the increases on a jump in big
awards by juries and large settlements. While the number of malpractice
suits has been holding steady, the average jury award rose to $3.49
million in 1999, up 79 percent from $1.95 million in 1993, according to
the latest compilation by Jury Verdict Research of Horsham, Pa. . . .
St. Paul, the second-largest malpractice insurer, has raised rates for
doctors an average of 24 percent this year in 25 States, with rates
jumping 65 percent in Ohio and Mississippi. Scpie Companies is raising
rates an average of 30 percent to 50 percent in a dozen States,
including Florida and Texas.'').
---------------------------------------------------------------------------
The medical insurance crisis has already caused St. Paul--
an insurer of 42,000 doctors, 750 hospitals, 5,800 health care
facilities, and 72,000 health care providers such as nurses--to
leave the business entirely.\69\ In the words of Thomas A.
Bradley, chief financial officer of St. Paul, the medical
malpractice insurance crisis was ``basically another World
Trade Center loss for us this year.'' \70\ Other medical
malpractice insurers have also recently left the market,\71\
and many others have become insolvent. Licensed carriers'
medical professional liability insurance business has, on
average, been unprofitable in every year from 1990-2000.\72\ It
has also been recently reported that ``nearly all companies
that used to write nursing home liability [insurance] are
getting out of the business.'' \73\ Since the costs of nursing
home care are mainly paid by Medicaid and Medicare, these
increased costs are borne by taxpayers, and consume resources
that could otherwise be used to expand health (or other)
programs.
---------------------------------------------------------------------------
\69\ See Joseph T. Hallinan, ``St. Paul Gradually Will Pull Out Of
Malpractice-Insurance Sector,'' The Wall Street Journal (December 13,
2001) at B2 (``Among its biggest money losers is the medical-
malpractice business, expected to generate underwriting losses this
year of $940 million. St. Paul provides malpractice insurance to 42,000
doctors in the U.S., in addition to 750 hospitals, 5,800 health-care
facilities and 72,000 health-care providers such as nurses. St. Paul
said it won't cancel these policies but will instead allow them to
lapse as they come up for renewal. The company said it will take
roughly 2 years to complete the process of not renewing the business.
Last year, the malpractice business accounted for about 10% of the
company's $5.8 billion of total written premiums. St. Paul insures
about 6% of the nation's 797,000 doctors.'').
\70\ ``St. Paul to Exit Medical Malpractice, Pose $900 Million
Charge,'' Best's Insurance News (December 12, 2001) (``While medical
malpractice was once 40% of St. Paul's book of business, the company
has been backing away from the line, which has now fallen to 10.5% of
its net premiums written in 2000, according to A.M. Best Co. data. The
company will take in an estimated $530 million in net written premiums
for medical malpractice in 2001, and will post an underwriting loss of
$940 million, including the $600 million reserve charge, for the year.
`It's basically another World Trade Center loss for us this year,'
Thomas A. Bradley, chief financial officer, said in the call. Medical
malpractice has become an increasingly difficult business to write,
Fishman said, noting that over the years, many low-risk doctors have
pulled out of the commercial market to form mutual companies that
offered cheaper coverage, which has increased adverse selection in the
market. `The fundamentals of the business has changed. This is not just
a cycle,' he said.'').
\71\ See Meg Green, ``Med Malcontent: Top medical malpractice
writer St. Paul Cos. Abandons the Unprofitable Business. Who Will Fill
the Void?'' Best's Review (February 1, 2002) at 12 (``St. Paul Cos.'
decision to withdraw from the market . . . comes on the heels of two
other companies also leaving the market this year. Phico Group Inc.,
which wrote $182.5 million in direct medical malpractice premiums for
2000, has been taken under control by regulators. Also, Frontier
Insurance Group, which wrote $69.3 million in direct medical
malpractice premiums, stopped taking on risk earlier this year . . .
`It used to be someone had to make an error to get sued,' Riley said.
`Now you have failure to do something. These cases are being brought in
hindsight.' . . . The medical malpractice market is littered with
failed companies. From Frontier and Phico to companies like PIC
Insurance Group and PIE Mutual Insurance Co., both of which were taken
over by regulators--some insurers are finding medical malpractice too
dangerous to their bottom line. Once a profitable product for insurers,
medical malpractice has seen losses soar in recent years as combined
ratios have skyrocketed. In 2000, the industry lost $1.30 for every $1
in premium it took in, according to A.M. Best Co. data.'').
\72\ See American Medical Association, ``Trends Report: Medical
Professional Liability Insurance'' (April 2002) at 5.
\73\ A.M. Best Company, Inc., ``As Nursing home liability losses
soar, carriers stop writing business,'' (February 7, 2000).
---------------------------------------------------------------------------
According to the Department of Health and Human Services:
The litigation crisis is affecting patients' ability to
get care not only because many doctors find the
increased premiums unaffordable but also because
liability insurance is increasingly difficult to obtain
at any price, particularly in non-reform States.
Demonstrating and exacerbating the problem, several
major carriers have stopped selling malpractice
insurance.
St. Paul Companies, which was the largest
malpractice carrier in the United States, covering 9%
of doctors, announced in December 2001 that it would no
longer offer coverage to any doctor in the country.
MIXX pulled out of every State; it will
reorganize and sell only in New Jersey.
PHICO and Frontier Insurance Group have also
left the medical malpractice market.
Doctors Insurance Reciprocal stopped writing
group specialty coverage at the beginning 2002.
States that had not enacted meaningful reforms (such as
Nevada, Georgia, Oregon, Mississippi, Ohio,
Pennsylvania, and Washington) were particularly
affected. Fifteen insurers have left the Mississippi
market in the past 5 years.\74\
---------------------------------------------------------------------------
\74\ Department of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System'' (July 24, 2002) at 14.
Many other insurers are also pulling out of the
professional medical liability market, while staying in the
insurance market generally as a combination of factors that
came together in the past few years caused turmoil in the
medical-malpractice market. Frequency of claims has leveled off
at a high level, for example, while the severity of claims has
grown at an annual rate of 5% to 8%.\75\ The commonly made
claim that sharp increases in medical liability insurance rates
are due to insurer losses in the stock market is dubious, as
less than 15% of the assets of medical liability insurance
companies are stocks.\76\
---------------------------------------------------------------------------
\75\ See Best's Insurance News, ``Nevada Complaint Blames St. Paul
Cos. for Med-Mal Crisis'' (May 31, 2002) (``A combination of factors
that came together in the past few years caused turmoil in the medical-
malpractice market, said Larry Smarr, president of Physicians Insurers
Association of America, a trade group representing most of the
physician-owned medical liability companies. `Frequency of claims has
leveled off, but at a high level, while the severity of claims has
grown at an annual rate of 5% to 8% and there has been nothing to
forestall that trend,' he said. `We're seeing more and more larger
awards driving up costs to the extent that carriers have to take rate
increases.' The industry is on an uphill progression on paid-claims
severity, Smarr said. When you look at California, which has instituted
tort reform, the medical-malpractice costs have risen since 1976--the
year the California micro law went into effect--through 2001, just as
it has in other States, he said. But according to information compiled
by the National Association of Insurance Commissioners, California med-
mal costs grew by 196% in that time, compared with the rest of the
country, which grew by 505% for the same period, he said.'').
\76\ See Physician Insurers Association of America, ``Bordering on
Malpractice: Serious Errors Found in Consumer Federation of America
Report on Medical Liability Insurance'' (May 9, 2002).
---------------------------------------------------------------------------
In a February 7, 2003, letter responding to questions from
Senator Gregg, the President of the National Association of
Insurance Commissioners stated the following: ``To date,
insurance regulators have not seen evidence that suggests
medical malpractice insurers have engaged or are engaging in
price fixing, bid rigging, or market allocation. The
preliminary evidence points to rising loss costs and defense
costs associated with litigation as the principal drivers of
medical malpractice prices.'' \77\ He further stated that
``states have strong laws that prohibit price-fixing and anti-
competitive practices by insurers.'' \78\
---------------------------------------------------------------------------
\77\ Letter from Mike Pickens, President, National Association of
Insurance Commissioners, to Senator Judd Gregg (February 7, 2003).
\78\ Id.
---------------------------------------------------------------------------
State insurance commissioners strictly regulate insurance
companies to make sure they don't engage in speculative
investments that tie their earnings to wildly fluctuating stock
market activity, and according to extensive research by Brown
Brothers Harriman,\79\ over the last 5 years, the amount
medical malpractice companies have invested in equities has
remained fairly constant. In 2001, the equity allocation was
9.03%. Using information from National Association of Insurance
Commissioners filings, medical malpractice companies have less
invested in equities than other sectors of the industry.
Further, in order for any form of insurance coverage to be
viable, the insurance company must receive more in premium
dollars and investment income than they pay in losses and
expenses. A simple measure of this is the ratio of paid losses
to premiums. Over the last 27 years, and especially over the
last 16, the paid loss ratio in medical malpractice coverage
has steadily increased. Using data derived from Americans for
Insurance Reform's ``Medical Malpractice Insurance: Stable
Losses/Unstable Rates'' (October 10, 2002), over the last 27
years, the average paid loss ratio was 47% and the minimum paid
loss ratio was 16%. In 2001, the industry paid loss ratio was
nearly 75%. In other words, for every dollar that comes in the
door, 75 cents is paid out. When combined with other expenses
such as general operating expenses, it is clear that it has
been extremely difficult--if not impossible--for insurance
companies to earn a profit writing medical malpractice
insurance.
---------------------------------------------------------------------------
\79\ Raghu Ramachandran, Senior Portfolio Strategist, Brown
Brothers Harriman, ``Did Investments Affect Medical Malpractice
Premiums?'' (January 21, 2003) (available at http://salsa.bbh.com/news/
Articles/MedMal.html).
---------------------------------------------------------------------------
It appears that the investment gain of medical malpractice
companies has not declined. While the amount of gain medical
malpractice companies receive from equities has declined, the
bond rally caused by the decline in interest rates and realized
in the form of capital gains has more than offset this decline.
Expenses including losses have grown faster than premiums while
investment gains remain relatively constant. From this, it is
clear that investments did not precipitate the current
crisis.\80\
---------------------------------------------------------------------------
\80\ Raghu Ramachandran, Senior Portfolio Strategist, Brown
Brothers Harriman, ``A Note on Investment Income of Medical Malpractice
Companies,'' (February 4, 2003) (available at http://salsa.bbh.com/
news/Articles/medmal2).
---------------------------------------------------------------------------
The true cause of skyrocketing medical professional
liability premiums is escalating jury verdicts. According to
exhaustive research by the firm Tillinghast-Towers Perrin,
``Since 1975 (the first year in this study for which medical
malpractice costs are separately identified), the increase in
medical malpractice costs has outpaced increases in overall
U.S. tort costs. Medical malpractice costs have risen an
average of 11.6% per year, in contrast to an average annual
increase of 9.4% per year in overall tort costs.'' \81\
---------------------------------------------------------------------------
\81\ Tillinghast-Towers Perrin, U.S. Tort Costs: 2002 Update--
Trends and Findings on the U.S. Tort System, at 2.
---------------------------------------------------------------------------
An extensive analysis of the previous medical professional
liability crisis also concluded that increased litigation
costs--not anything else--was the ``dominant cause.'' The
authors of the study included a business school professor, a
law professor, an actuarial professor, and a doctor--all
members of the professional staff of the Academic Task Force
for Review of the Insurance and Tort Systems, an agency within
the Executive Office of the Governor of the State of Florida
tasked with studying the causes of the medical professional
liability crisis in the late 1980's. These researchers came to
the following conclusions:
Based upon the data analyzed by the authors, excessive
profitability is not a cause of the medical malpractice
problem . . . The authors . . . reject the assertion
that excess insurance company profits are a cause of
the medical malpractice crisis . . .
Clearly . . . the underwriting cycle \82\ and alleged
poor insurance company management and investment
practices are not the primary cause of increases in the
cost of malpractice insurance . . . [T]he underwriting
cycle is not unique to medical malpractice insurance,
nor even to third-party liability insurance in general.
The underwriting cycle affects other types of insurance
such as first-party fire, windstorm, and other property
insurance. These lines have not experienced comparable
premium increases, however, nor have most other
liability lines . . .
---------------------------------------------------------------------------
\82\ Insurance premiums represent one of the two main sources of
revenue for insurance carriers. The other source is the profits earned
by insurance carriers from investing premium dollars between the time
premiums are received from the insured and the time these funds are
disbursed to pay for losses and expenses attributable to that policy
year. When investment rates of return are unusually high, insurers
reduce rates to insure as many risks as possible and thereby capture
and invest premium dollars. During underwriting cycles, rates are
reduced when carriers expect to offset any losses with investment
income. If investment income falls, insurers lose that source of
income, creating pressure to raise premiums.
[B]oth of the factors that determine total claims
costs--frequency and severity of claims--have been
responsible for the large increase in total paid claims
and the resulting increase in malpractice premiums . .
. The study demonstrates that increased premiums are
not the result of high insurance company profits but
rather are primarily driven by increased loss payments
. . . When viewed over the course of a decade . . . the
dramatic increase in claims payments is the dominant
cause of increased malpractice premiums . . . [T]he
huge increase in the size of claims payments,
particularly the increasing frequency of very large
payments, largely accounts for the total increase in
paid losses.\83\
---------------------------------------------------------------------------
\83\ D. Nye, D. Gifford, B. Webb, and M. Dewar, ``The Causes of the
Medical Malpractice Crisis: An Analysis of Claims Data and Insurance
Company Finances,'' 76 Georgetown L.J. 1495, 1515, 1525, 1528-29, 1556,
1560 (1988).
Beyond insurers, rising rates due to an unregulated
litigation system are decimating the ranks of doctors and
physicians, who are being forced to leave their patients and
practices.\84\ The problem is particularly acute for
practitioners in managed care, where prescribed fixed costs
prevent them from recouping insurance costs.\85\ Hardest hit by
the premium increase are doctors in high-risk specialties, such
as obstetrics and emergency medicine.\86\ Obstetricians and
gynecologists are facing increasing numbers of lawsuits
nationwide,\87\ yet the majority of these costly lawsuits are
dropped or settled without any payment on behalf of the
practitioner.\88\ This situation is depleting the ranks of
obstetricians and gynecologists.\89\ Further, malpractice
premiums are disproportionately high among obstetricians and
family practitioners that deliver babies.\90\ These high
premiums and correspondingly lower incomes discourage medical
students from entering into obstetrics or high risk
specialties. In addition, physicians approaching retirement
will have a greater incentive to retire earlier instead of
later. Surveys of physicians show that malpractice premiums are
affecting decisions on specialty areas that rising malpractice
premiums will most significantly impact low-income women who
are insured through Medicaid.\91\ In sum, rising malpractice
premiums will cost lives.\92\ High or no caps on non-economic
damages in medical malpractice cases decrease access to health
care, particularly for low-income people and those seeking
physician care in high-risk specialties such as obstetrics and
gynecology.
---------------------------------------------------------------------------
\84\ See Rachel Zimmerman and Christopher Oster, ``Assigning
Liability: Insurers' Missteps Helped Provoke Malpractice `Crisis',''
The Wall Street Journal, (June 24, 2002 edition) at A1 (``[M]alpractice
litigation has a big effect on premiums . . . Premiums in Maine are
relatively low [because] the heavily rural population isn't notably
litigious . . . ``Scpie stopped writing coverage in any State other
than California.''). Scpie Holdings, a medical professional liability
insurer, can survive in California, where health care is particularly
accessible, because California enacted reasonable medical litigation
management reforms over 25 years ago that include a $250,000 cap on
noneconomic damages and limits on the contingency fees lawyers can
charge, among other reforms. The HEALTH Act contains the very same
litigation management reforms that have kept medical professional
liability premiums affordable--and health care accessible--in
California. Modeled after California's reforms, the HEALTH Act will do
the same for the rest of country. See also ``Lack of Surgeons Threatens
Network,'' Mississippi State Medical Association Legislative Report
(March 15, 2002) Dr. Hugh Gamble, MSMA President and Trauma Committee
Chairman said hospitals around the State are in danger of losing their
trauma level status because surgeons are leaving the State . . .
Neurosurgeons in Tupelo, Columbus, Greenwood and Greenville are
limiting trauma care because of the liability risk. Dr. Rodney
Frothingham, ``People who have children traveling from school in the
north half of the State are going to have to pray a little harder that
they make it home safely,'' said Frothingham.); John Porretto, the
Associated Press, ``Doctors Looking Elsewhere to Practice,'' published
in the Tupelo Daily Journal (March 21, 2002) (``The Mississippi State
Medical Association says it knows of at least 20 frustrated physicians
who have decided in the past 3 weeks to quit or move as it's become
clear Mississippi lawmakers will not pass tort reform legislation in
the 2002 session, which ends April 7. Dr. Hugh Gamble of Greenville,
the medical association's president, estimates the State could lose 10
percent of its 4,000 to 4,500 doctors to departure or retirement by
year's end . . . Mississippi Insurance Commissioner George Dale said
Wednesday the chances of more companies offering malpractice coverage
in the near future are not good . . .''); Mel Huff, ``Texas Docs Twice
as Likely to Get Sued,'' The Brownsville Herald (March 17, 2002) (``A
Texas Medical Association survey of area doctors taken in April 2001
showed that of those who responded, 65 percent had been sued; 71
percent said they were afraid to respond to emergency room calls
because of lawsuits; and 55 percent said they were inclined to leave
the Valley if the liability crisis does not improve . . . Dr. Carlos
Chavez, a Brownsville heart surgeon, described the effect of frivolous
lawsuits as a chain reaction that increases physicians' malpractice
premiums, causes them to practice medicine more defensively, drives up
costs and ultimately restricts the availability of health care . . .
Dr. Bradley Nordyke, a general practitioner, noted that although he has
never been sued, his insurance company told him last year that his
coverage was being dropped. He found another carrier at a 400 percent
rate increase. Then--although he still has not been sued--that insurer
also dropped him . . . Dr. Carol Erwin said that today she can treat
only half as many patients as she could 20 years ago because of the
increase in paperwork needed to document a defense against potential
lawsuits.''); Tom Gorman, ``Physicians Fold Under Malpractice Fee
Burden,'' The Los Angeles Times (March 4, 2002) at A1 (``In Las Vegas,
more than 10% of the doctors are expected by summer to quit or
relocate, plunging the city toward crisis. Already, specialists are
becoming harder to find around the country and trauma centers that
treat life-threatening emergencies are closing . . . The turmoil began
when the St. Paul Cos. of Minnesota, the nation's second largest
malpractice insurer, announced in December it would no longer renew
policies for 42,000 doctors nationwide. The insurer said it had lost
nearly $1 billion in its malpractice business last year. Other
companies are offering coverage, but charging much higher rates to
avoid the losses encountered by St. Paul. The situation is particularly
acute in Las Vegas, home to two-thirds of the State population, because
60% of its 1,700 doctors were insured by St. Paul. Replacement policies
are costing some doctors four or five times as much--$200,000 or higher
annually, more than most doctors' take-home pay . . . Dr. Cheryl
Edwards, 41, closed her decade-old obstetrics and gynecology practice
in suburban Henderson because her insurance jumped from $37,000 to
$150,000 a year. She moved her practice to West Los Angeles, leaving
behind 30 pregnant patients. `I was happy in Las Vegas,' she said, `but
I had no choice but to leave.' In California--where juries hearing
malpractice lawsuits are limited to maximum awards of $250,000 for pain
and suffering--Edwards' insurance premium this year is $17,000. Because
of 1975 tort reform, doctors in California are largely unaffected by
increasing insurance rates. But the situation is dire in States such as
Nevada where there is no monetary cap . . . The Legislature, however,
isn't scheduled to meet for a year. Dr. Frank Jordan--a 31-year veteran
of vascular surgery, including 13 years in Las Vegas--couldn't wait. He
closed his practice and retired. `I did the math,' the 56-year-old
doctor said. `If I were to stay in business for 3 years, it would cost
me $1.2 million for insurance. I obviously can't afford that. I'd be
bankrupt after the first year, and I'd just be working for the
insurance company. What's the point?' . . . Last year, St. Paul lost
$1.88 in Nevada for every dollar paid by doctors, spokeswoman Andrea
Woods said . . . Both trauma centers in Wheeling, W.Va., have closed
because their neurosurgeons couldn't pay their new malpractice
premiums. The trauma center at Abington Memorial Hospital outside
Philadelphia faces closure next month as its doctors scramble to find
affordable insurance. Las Vegas' only trauma center has announced it
will close for 12 hours March 12 because two of its eight trauma
surgeons can't afford insurance premiums. People in southern Nevada
needing emergency surgery during that period will be airlifted to
hospitals in Southern California, Phoenix, Reno or Salt Lake City.'').
\85\ See Terry E. Tyrpin, ``Tort Reform Would Cure Med Mal
Crisis,'' National Underwriter Property & Casualty-Risk & Benefits
Management (January 28, 2002) at 25 (``Because most doctors are locked
into 1-IMO or PPO plans that prescribe fixed costs for services, there
is not much wiggle room for doctors to charge their patients higher
medical fees that reflect increased overhead expenses, such as
insurance. Doctors are now resorting to dropping risky procedures,
fleeing heavily litigious States, practicing without insurance, or
deciding they can no longer afford to practice medicine. Insurers also
are backed into a corner. Unless they pass on the cost of the
exorbitant jury awards, insurers transacting professional liability
coverage in the medical field will be looking for more commercially
viable business. If the medical malpractice insurance market contracts
as insurers look for more lucrative areas in which to allocate capital,
it could force some medical professionals to refrain from practicing or
to affiliate with large firms with pre-existing insurance coverage.
Ultimately, the cost of medical care will go up if malpractice coverage
becomes scarce. If the cost of insurance dissuades some from practicing
medicine, those communities will have fewer choices among physicians .
. . In Texas, insurers pay out $1.65 in losses and expenses per $1
received in malpractice premiums. In Connecticut, that ratio is more
than 180 percent. The national average is a 126 combined ratio--not
exactly the type of lure that will drive insurers to pick up the 10
percent marketshare St. Paul is leaving behind . . . Increasing rates
by an average of 24 percent this year in 27 States couldn't save St.
Paul, the nation's largest malpractice underwriter . . . Meanwhile, in
August, the Pennsylvania Insurance Department placed PHICO into
rehabilitation after its surplus dropped from $127 million to $6
million in just 6 months. Both companies' failed medical malpractice
business--which leaves between 50,000 and 100,000 doctors across the
country without coverage--are high-profile symptoms of a high-stakes
problem.'').
\86\ See Emily Richmond, ``Nevada Doctors Face Insurance Crisis;
Skyrocketing Premiums Could Force Some Out of Business,'' The Las Vegas
Sun (January 28, 2002) (``Nevada has one of highest rates of medical
malpractice suit filings, legal experts said. There's no limit in
Nevada to what juries can award patients for damages in medical
malpractice suits, unlike the $250,000 cap in neighboring California.
`We see lawyers moving here from as far away as Florida to take
advantage of the no cap,' said Las Vegas attorney John Cotton, who
specializes in defending physicians and health-care providers. `You
can't turn on the television without seeing one of their ads.' . . .
Hardest hit by the premium increase are doctors in high-risk
specialties, such as obstetrics and emergency medicine.'').
\87\ See 5 ACOG Clinical Review 5 (September/October 2000) at 15
(``The average number of claims filed against all [ob/gyn] 1999 survey
respondents during their careers was 2.53. This number represents a
significant increase from the 1996 survey (2.31).'').
\88\ See id. at 16 (``Of the 570 closed claims that were reported
in the survey, 53.9% were dropped or settled without any payment on
behalf of the ob/gyn. These claims include those dropped by the
plaintiff, dismissed by the court, and settled without payment by the
ob/gyn.'').
\89\ See id. (``Of the survey respondents, 8.9% reported that they
no longer practiced obstetrics as a result of the risk of malpractice.
Another 17.1% reported that they had decreased the level of high-risk
obstetric care. An additional 6.2% reported that they had decreased the
number of deliveries . . . Of the ob/gyns who completed the survey,
8.2% reported that they decreased gynecologic services as a result of
the risk of malpractice.'').
\90\ See Stephen A. Norton, ``The Malpractice Premium Costs of
Obstetrics,'' Inquiry, (Spring 1997) at 62.
\91\ See id. at 68. See also Committee to Study Medical
Professional Liability and the Delivery of Obstetrical Care, Division
of Health Promotion and Disease Prevention, Institute of Medicine, 1
Medical Professional Liability and the Delivery of Obstetrical Care
(1989) at 6-7 (``Although this reduction in available obstetrical care
[due to the current state of liability law] may affect the entire
population, the evidence suggests that it particularly affects low-
income women . . . The general reductions in obstetrical practice among
obstetricians, family physicians, and nurse-midwives reported in both
State and national survey data appear to have a disproportionate affect
on the availability of care for low-income women . . . Sixty-seven
percent of the respondents to the survey indicated that professional
liability concerns reduced their center's ability to furnish
obstetrical services of the scope of services they could offer . . .
[T]he committee is persuaded that the effects of medical liability
concerns in obstetrics are being disproportionately experienced by poor
women and women whose obstetrical care is financed by Medicaid or
provided by Community and Migrant Health Centers, and that this problem
is, in turn, exacerbating the long-standing problems of financing and
delivering obstetrical care to poor women.'').
\92\ See Patricia Neighmond, National Public Radio, ``All Things
Considered'' (April 3, 2002) (``NEIGHMOND: But today the University
Medical Trauma Center is on fragile footing. The reason? Some doctors
have stopped practicing emergency medicine because they can no longer
afford malpractice insurance. In certain cases, premiums have increased
sixfold in just 1 year. One trauma surgeon's policy rose to $200,000,
about the same amount as his income. Nevada State law requires a
certain number of emergency physicians and specialists to be on call 24
hours a day 7 days a week. And if the Trauma Center can't comply, it
could be shut down. If that happens, Carrison says critically injured
patients would have to be sent to trauma centers in nearby States. Dr.
CARRISON: Some patients are going to die that wouldn't die, and that
extra time, that's what saves lives. Time saves lives. The quicker
you're at the trauma center, the better chance you have of
survival.'').
---------------------------------------------------------------------------
A report prepared on behalf of the American Health Care
Association analyzing the cost of general liability and
professional liability (``GL/PL'') claims to the long term care
industry in the United States summarizes the current crisis in
that industry:
National trends in GL/PL losses are increasing at an
alarming rate. In the 5-year period between 1990 and
1995 costs more than doubled from $240 per bed to $590
per bed. Since 1995 costs have quadrupled to an
estimated $2,360 per bed . . . In many States, the
increase in liability costs is largely offsetting
annual increases in Medicaid reimbursements . . . The
average long term care GL/PL cost per annual occupied
skilled nursing bed has increased at an annual rate of
24% a year from $240 in 1990 to $2,360 in 2001.
National costs are now ten times higher than they were
in the early 1990's . . . Florida and Texas were
leaders in driving the increase in GL/PL costs for the
long term care industry. With trends during the 1990's
in the range of 25% to 35% a year, costs in these two
States have risen to close to $11,000 per bed in
Florida and $5,500 per bed in Texas. Numerous States
across the country are indicating similar annual trends
including Georgia (50%), West Virginia (50%), Arkansas
(45%), Mississippi (40%), Alabama (31%), and California
(29%). With current costs in these States up to $3,300
per bed, it won't take long at these annual trend rates
to reach Florida level loss costs . . . GL/PL claim
costs have absorbed 20% ($3.78) of the $18.47 increase
in the countrywide average Medicaid reimbursement rate
from 1995 to 2000. Almost half of the total amount of
claim costs paid for GL/PL claims in the long term care
industry is going directly to attorneys . . . Annual
commercial insurance premium levels increased on
average 130% between 2000 and 2001, often with reduced
coverage . . . On average, a quarter of a million more
dollars of premium was charged per insured for almost
half a million less coverage per claim.\93\
---------------------------------------------------------------------------
\93\ Theresa W. Bourdon and Sharon C. Dubin, Aon Risk Consultants,
Inc., ``Long Term Care General Liability and Professional Liability
Actuarial Analysis'' (February 28, 2002) at 3-4.
Due to the significant lag time between the time an
insurance policy is issued and the payment of any claims that
may arise, it is difficult to measure actual insurance payment
trends as of any given moment. That is, data on medical
professional liability claims closed with indemnity on behalf
of individual defendants for claims reported in 2000 show that
the average total payment per claim is $149,449 for the
reporting period of 0-12 months, $258,968 for the reporting
period of 13-24 months, $292, 825 for the reporting period 25-
36 months, $312,981 for the reporting period 37-48 months, and
$408,352 thereafter.\94\ This means that looking at total
payments made this year will fail to account for medical
professional liability claims paid out 2 years from now and
consequently they will underestimate the depth of the current
crisis, especially since smaller claims tend to be paid out
first, and larger more controversial claims paid out much
later. However, data reported for closed claims demonstrate the
following escalation in average loss and allocated loss
adjustment expenses for the following years: 1991 ($181,351);
1992 ($206,050); 1993 ($214,293); 1994 ($218,262); 1995
($210,299); 1996 ($230,223); 1997 ($257,557); 1998 ($266,308);
and 1999 ($286,184).\95\ The average payments have risen 81.1%
between 1991 and 2000. This is a compound annual growth of
approximately 6.9%, which is over two and a half times as great
as the 2.6% compound annual growth of the Consumer Price Index
during this same period.\96\
---------------------------------------------------------------------------
\94\ See Physician Insurers Association of America, ``Analysis of
October 13, 2001 Consumer Federation of America Report on Medical
Malpractice Industry Performance'' (May 1, 2002) at 4.
\95\ See id. at 5.
\96\ See id. at 6.
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THE HEALTH ACT INCLUDES REFORMS WITH PROVEN TRACK RECORDS OF MAKING
HEALTH CARE MORE ACCESSIBLE
The HEALTH Act is modeled on California's Medical Injury
Compensation Reform Act of 1975 (``MICRA''), whose major
reforms include a $250,000 cap on the amount of non-economic
damages, such as those for pain and suffering, that may be
awarded in medical malpractice lawsuits \97\; limits on
contingency fees lawyers can charge in such suits \98\;
authorization for defendants in such cases to introduce
evidence showing the plaintiff received compensation for all or
a portion of the plaintiff's losses and a prohibition on
subrogation to the rights of the plaintiff by providers of
collateral source payments \99\; and authorization for courts
to require periodic payments for future damages instead of lump
sum awards.\100\ The contingency fee limits were upheld by the
California Supreme Court in Roa v. Lodi Medical Group.\101\ The
other provisions were upheld by the California Supreme Court in
Fein v. Permanente Medical Group,\102\ and the United States
Supreme Court upheld the same without written opinions.\103\
The Congressional Research Service has concluded that current
Supreme Court Commerce Clause jurisprudence supports the
constitutionality of Congressional regulation of medical
malpractice.\104\
---------------------------------------------------------------------------
\97\ See Ca. Civ. Sec. 3333.2.
\98\ See Ca. Bus. & Prof. Sec. 6146.
\99\ See Ca. Civ. Sec. 3333.1.
\100\ See Ca. Civ. Pro. Sec. 667.7.
\101\ 37 Cal.3d 920 (1985).
\102\ 38 Cal.3d 137 (1985).
\103\ Fein v. Permanente Medical Group, 38 Cal.3d 137 (1985),
appeal dismissed, 474 U.S. 892 (1985) (Justice White dissenting); Roa
v. Lodi Medical Group, Inc., 37 Cal.3d 920, (1985), appeal dismissed,
474 U.S. 990 (1985).
\104\ See Henry Cohen, CRS Report for Congress 95-797: Federal Tort
Reform Legislation: Constitutionality and Summaries of Selected
Statutes (updated March 26, 2002) at 3 (``The Court in [United States
v. Lopez] then noted that, if the Gun-Free School Zones Act of 1990 was
`to be sustained, it must be under the third category as a regulation
of an activity that substantially affects interstate commerce' [citing
514 U.S. 549, 561 (1995)]. The Act, however, had `nothing to do with
``commerce'' or any sort of economic enterprise . . . [and] is not an
essential part of a larger regulation of economic activity, in which
the regulatory scheme could be undercut unless the intrastate activity
were regulated'' [citing 514 U.S. 549, 561 (1995)]. The same apparently
could be said of some torts, such as the assault example suggested
above. But it does not appear that it could be said with respect to
torts that substantially affect commerce, such as the manufacture of
defective products or medical malpractice.'') (emphasis added). See
also Henry Cohen, CRS Report for Congress 95-797A: Federal Tort Reform
Legislation: Constitutionality and Summaries of Selected Statutes
(updated May 23, 2002) (Summary) (concluding that ``Congress has the
authority to enact tort reform `generally,' [including] reforms that
have been widely implemented at the State level, such as caps on
damages and limitations on joint and several liability and on the
collateral source rule'' and that ``there would appear to be no due
process or federalism (or any other constitutional) impediments to
Congress' limiting a State common law right of recovery'' and that
``there seems little doubt that tort reform legislation, in general,
would be within Congress' commerce power.'').
---------------------------------------------------------------------------
As outlined in a report examining the effects of raising
California's existing cap on non-economic damages in medical
malpractice cases, high or no such caps increase incentives to
litigate weak or marginal claims.\105\ Further, as the Reagan
Administration's Tort Policy Working Group reported in its
seminal study of the effects of tort laws on insurance
premiums, ``Plaintiffs' attorneys also often see high non-
economic damage awards as necessary to justify high contingency
fees, which may lead them to press for a high non-economic
damage award when it may be in their clients' interest to
obtain a quick and fair settlement.'' \106\ Further,
``Contingency fees also distort the incentives of attorneys.
Such fees may lead plaintiffs' attorneys to hold out for high
non-economic damages (and, potentially, windfall profits for
the attorney requiring only minimal additional work on the
attorney's part), while the clients may be best served with
obtaining economic damages and more limited non-economic
damages as promptly as possible.'' \107\
---------------------------------------------------------------------------
\105\ See Hamm et al., ``California's MICRA Reforms: How Would A
Higher Cap on Non-Economic Damages Affect the Cost of an Access to
Health Care?'' LECG, Inc. (July 27, 1998) at 5.
\106\ Report of the Tort Policy Working Group on the Causes, Extent
and Policy Implications of the Current Crisis in Insurance Availability
and Affordability (February 1986) at 67.
\107\ Id. at 73.
---------------------------------------------------------------------------
When health care providers are forced to pay more for
malpractice insurance, payers--including businesses providing
employee health insurance and consumers--ultimately pick up the
tab. The Government Accounting Office (``GAO''), in its study
of medical liability costs, has documented the linkages between
malpractice premiums and the cost of health care. The GAO found
that ``hospitals and physicians incur and pass on to consumers
additional expenses that directly or indirectly relate to
medical liability. Therefore, estimates of higher malpractice
premiums--taken by themselves--understate the full effect of
medical liability costs on national health expenditures.''
\108\ Additional evidence shows that an increase in malpractice
premiums results in an increase in doctor's fees. Researchers
who modeled the effects of premium increases on doctors' fees
and found that an increase in medical malpractice premiums
increased doctors' fees by an average of 16% for physician
visits, and 9-17% for hospital visits.\109\
---------------------------------------------------------------------------
\108\ See GAO (GAO/AIMD-95-169), ``Medical Liability: Impact on
hospital and Physician Cost Extends Beyond Insurance,'' (September
1995) at 1.
\109\ Danzon, Patricia M., Pauly, Mark V., and Raynard S. Kington,
``The Effects of Malpractice Litigation on Physicians' Fees and
Incomes,'' 80 AEA Papers and Proceedings 2: 122-27 (May 1990) at 125.
---------------------------------------------------------------------------
To the extent that physicians are successful in shifting
the increased costs resulting from the higher cap to patients,
the cost of employer-sponsored health insurance will go up. An
increase in the cost of employer-sponsored health insurance
programs will affect employees in one of two ways. One,
employers that continue to offer health insurance to their
employees are likely to raise the employees' required
contribution toward the cost of health care by requiring larger
coinsurance payments, higher deductibles, or increases in the
employee's share of premiums. Two, some employers may decide to
terminate health insurance coverage for their employees, or
firms on the verge of adding health insurance to their benefit
package may decide not to so, for reasons of costs. Employers
may also decide to reduce the size of their benefit package.
A fundamental tenet of economics is that, for most goods
and services, an increase in price will cause a reduction in
demand. Consequently, increases in health care insurance
premiums lead to an increase in the number of individuals going
without coverage. An increase in health insurance costs will
decrease participation in health insurance programs,
particularly by low-income workers. And just as an increase in
price causes consumers to buy less, a reduction in price causes
providers to supply less health care. Retirement decisions are
influenced by future earnings potential. If a physician nearing
retirement sees his or her malpractice costs increase a
significant amount, the physician will be more likely to retire
sooner rather than later. Further, hospitals currently provide
uncompensated care to the uninsured. An increase in
expenditures on the direct and indirect costs of medical
liability will require hospitals to cut back on other
expenditures, including such care. This will reduce the ability
of these institutions to provide needed services to those
unable to pay for them.\110\
---------------------------------------------------------------------------
\110\ See Hamm et al., ``California's MICRA Reforms: How Would A
Higher Cap on Non-Economic Damages Affect the Cost of an Access to
Health Care?'' LECG, Inc. (July 27, 1998) at 24.
---------------------------------------------------------------------------
In addition, many rural and inner city areas are medically
under-served because these communities do not offer the
potential income that other communities offer. To the extent it
is more difficult for physicians to pass along the higher cost
of malpractice premiums to lower-income families, a higher cap
will exacerbate the provider shortage in rural and inner city
areas.\111\ The higher costs brought about by a higher cap on
non-economic damages will increase these hospitals' costs
without adding to their revenues, further jeopardizing their
survival.\112\
---------------------------------------------------------------------------
\111\ See id. at 21.
\112\ See id. at 22.
---------------------------------------------------------------------------
Finally, MICRA's limits on attorneys fees allow more money
to go directly to injured patients.\113\ According to the
Department of Health and Human Services:
---------------------------------------------------------------------------
\113\ Defense fees, unlike the fees charged by the complainant's
lawyer, are not based on the size of the award nor are they contingent
upon winning the case. The defending party has a powerful economic
incentive to keep defense costs to a minimum.
The friction generated by operating the [medical
litigation] system takes most of the money. When
doctors and hospitals buy insurance (sometimes they are
required to buy coverage that provides more
``protection'' than the total amount of their assets),
it is intended to compensate victims of malpractice for
their loss. However, only 28% of what they pay for
insurance coverage actually goes to patients; 72% is
spent on legal, administrative, and related costs. Less
than half of the money that does go back to injured
patients is used to compensate the patient for economic
loss that is not compensated from other sources--the
purpose of a compensation system. More than half of the
amount the plaintiff receives duplicates other sources
of compensation the patient may have (such as health
insurance) and goes for subjective, non-economic
damages (a large part of which, moreover, actually goes
to the plaintiff's lawyer). The malpractice system does
not accurately identify negligence, deter bad conduct,
or provide justice. The results it obtains are
unpredictable, even random. The same study that found
that only 1.53% of patients who were injured by medical
error filed a claim also found, on the flip side, that
most events for which claims were filed did not
constitute negligence. Other studies show the same
random results.\114\
---------------------------------------------------------------------------
\114\ Department of Health and Human Services, ``Confronting the
New Health Care Crisis: Improving Health Care Quality and Lowering
Costs by Fixing Our Medical Liability System'' (July 24, 2002) at 11.
Most other countries, including England and Scotland,
prohibit contingent fees in many circumstances.\115\ Indeed,
other professional associations in the United States, including
medicine and accounting, regard the use of contingent fees in
those occupations as unethical. Yet unlike their counterparts
in other countries and certain other professions, lawyers in
the United States have long been permitted to charge contingent
fees. With lawyers now representing plaintiffs on a contingent
fee basis in the vast majority of the roughly one million tort
cases that are filed each year, the practice is more common
than ever.\116\ Researchers have estimated that ``no less than
$7.5 to $10 billion in unethical, windfall contingency fees are
now charged annually.'' \117\
---------------------------------------------------------------------------
\115\ See Mary A. Glendon, A Nation under Lawyers 54 (1994).
\116\ See Lester Brickman, Contingency Fee Abuses, Ethical
Mandates, and the Disciplinary System: The Case Against Case-by-Case
Enforcement, 53 Wash. & Lee L. Rev. 1339, 1349, n.45 (1996).
Plaintiffs' lawyers take roughly 95% of all personal injury cases on a
contingency. See Richard W. Painter, Litigating on a Contingency: A
Monopoly of Champions or a Market for Champerty, 71 Chi.-Kent L. Rev.
625, 626 n.3 (1995) (citing sources).
\117\ Lester Brickman, ABA Regulation of Contingency Fees: Money
Talks, Ethics Walks, 65 Fordham L. Rev. 247, 314 app. A (1996).
---------------------------------------------------------------------------
As the Reagan Administration's Tort Policy Working Group
reported in its seminal study of the effects of tort laws on
insurance premiums, ``Where plaintiff's award is moderate, such
a contingency fee may, in fact, be quite reasonable, since the
attorney has significant costs and may face substantial risks
that must be reimbursed.'' \118\ The HEALTH Act's sliding scale
under which attorneys fees are allocated allows attorneys to
keep more of plaintiff's moderate awards. However, we live in a
world of limited resources. Those resources can either fund
lawyers--who are ``officers of the court'' and not simply
private actors--and the legal system, or they can fund patients
in our health care system, and the HEALTH Act appropriately
limits contingency fees attorneys charge for very large
plaintiff's awards.
---------------------------------------------------------------------------
\118\ Report of the Tort Policy Working Group on the Causes, Extent
and Policy Implications of the Current Crisis in Insurance Availability
and Affordability (February 1986) at 72.
---------------------------------------------------------------------------
For example, today, in a case in which a victim that is
awarded $2,000,000 in economic damages to cover his or her
demonstrable, quantifiable injuries--including the costs of
pain relief medication, their lost wages, their future lost
wages, rehabilitation costs, and any other quantifiable
losses--and $500,000 in unquantifiable noneconomic damages, the
victim's lawyer will take his standard one-third cut out of the
total $2.5 million award. That would leave the lawyer with
$832,500 and the victim would recover $1,667,500. With the
protections of the HEALTH Act in place, on the other hand, the
same case would yield tens of thousand of dollars more for the
victim. Even though the HEALTH Act caps noneconomic damages at
$250,000, it reduces the amounts of money a victim's lawyer can
take the higher the victim's demonstrable economic damages are.
The HEALTH Act limits attorney awards on the following scale:
lawyers can only take 40% of the first $50,000 awarded, 33.3%
of the next $50,000 awarded, 25% of the next $500,000 awarded,
and 15% of any award over $600,000. Under this scale, of a
total award of $2,000,000 in economic damages and $250,000 in
noneconomic damages, the victim's lawyer would gets $409,150,
and the victim would get $1,840,850 in damages. That's $173,350
more than the same victim would get without the protections of
the HEALTH Act. Even with the cap on unquantifiable noneconomic
damages in the HEALTH Act--which allows doctors to stay in
business to provide medical care in the first place by making
liability insurance affordable--the larger the demonstrable,
quantifiable economic damages are, the better off victims will
be under the HEALTH Act because under its provisions lawyers
can take only 15% of awards over $600,000. The more actual
losses a victim suffers, the better off they are under the
HEALTH Act. The more clearly a victim has suffered harm (that
is, the more quantifiable their damages are), the better off
that victim will be under the HEALTH Act. And it is only fair
that victims with more demonstrable losses be able to keep a
greater percentage of their awards. The HEALTH Act provides
more money to victims, and less money to lawyers. Indeed,
insofar as quantifiable, economic damages may be awarded under
the HEALTH Act,\119\ the HEALTH Act not only does not limit
such awards; it requires that a greater percentage of such
awards go to victims, not lawyers. In sum, under the HEALTH
Act, the larger a victim's demonstrable, real-life economic
damages are, the more they will receive because lawyers will be
allowed to take only 15% of awards over $600,000. Standard
attorney contingency fee agreements allow lawyers to take one-
third--a full 33.3%--of their client's awards, so victims are
left with only 66%. The HEALTH Act would allow victims to keep
roughly 75% of awards under $600,000, and 85% of awards over
$600,000.
---------------------------------------------------------------------------
\119\ See Marilyn Werber Serafini, ``Risky Business'' The National
Law Journal (May 18, 2002) at 1474 (``Trial lawyers don't dispute that
court awards have risen. But they argue that the increase has been
mostly in awards for economic damages, which are meant to reimburse a
patient for lost wages, and to cover tangible expenses, such as medical
bills for hospital stays, rehabilitation, and physician visits.'').
---------------------------------------------------------------------------
Further, as the Reagan Administration's Tort Policy Working
Group reported in its seminal study of the effects of tort laws
on insurance premiums, ``[T]he prevailing plaintiff is not only
liable to his attorney for the agreed to contingency fee, but
also for litigation expenses. Such expenses often can amount to
an additional five to 8 percent of the underlying award.''
\120\ Allowing victims to keep more of their awards, and
lawyers less, will allow them to recoup more of their awards
devoted to paying litigation expenses.
---------------------------------------------------------------------------
\120\ Report of the Tort Policy Working Group on the Causes, Extent
and Policy Implications of the Current Crisis in Insurance Availability
and Affordability (February 1986) at 72, n.20.
---------------------------------------------------------------------------
THE HEALTH ACT PREVENTS WASTEFUL AND UNNECESSARY ``DEFENSIVE MEDICINE''
One of the most harmful effects of limitless non-economic
damages is their adverse impact on settlement. When a
contingency fee attorney is presented with the possibility of a
windfall on non-economic damages, that attorney is much less
likely to settle a case. If Congress is to encourage settlement
rather than litigation, it must control the arbitrary and
unpredictable award of non-economic damages. To avoid
situations in which a contingency fee attorney can claim injury
occurred because certain tests weren't performed, doctors
engage in ``defensive medicine'' by performing tests and
prescribing medicines that are not necessary for health.
Research by economists demonstrates that direct litigation
reforms, including the same caps on non-economic damages and
collateral source rule reforms included in the HEALTH Act,
would greatly increase health care productivity by reducing the
incidence of wasteful ``defensive medicine'' without increasing
harmful health outcomes.\121\ The types of reforms these
researchers considered ``direct'' include caps on non-economic
damage awards and collateral source rule reforms.\122\
---------------------------------------------------------------------------
\121\ See Daniel P. Kessler and Mark B. McClellan, ``How Liability
law Affects Medical Productivity,'' National Bureau of Economic
Research (NBER) Working Paper 7533 (February 2000) at 31-32
(``[P]revious research suggests that `direct' reforms--designed to
reduce the level of compensation of potential claimants--improve
productivity in health care by reducing the prevalence of defensive
treatment practices . . . Direct reforms affect treatment intensity
primarily through their effect on claims rates . . . Because defending
against any claim imposes nonfinancial as well as financial costs on
physicians, and because the nonfinancial costs of claim defense are
correlated with compensation, direct reforms reduce treatment intensity
by reducing both the (insured) financial and the (uninsured)
nonfinancial dimensions of malpractice pressure. However, these reform-
induced reductions in treatment intensity have negligible effects on
health outcomes. This implies that doctors practice defensive medicine,
and that reform-induced reductions in the level of liability improve
medical productivity . . . For example, our estimates suggest a savings
of $4.76 in hospital expenditures on elderly patients with cardiac
illness for each $1 reduction in ALAE (e.g., litigation costs incurred
by the malpractice insurer in connection with claim defense) per
physician per year. In contrast, we found no consistent evidence of any
substantial effects on health outcomes of reducing such measures of
malpractice pressure.'').
\122\ See Daniel P. Kessler and Mark B. McClellan, ``How Liability
law Affects Medical Productivity,'' National Bureau of Economic
Research (NBER) Working Paper 7533 (February 2000) at 25 (Table 1).
---------------------------------------------------------------------------
ENACTING THE HEALTH ACT WILL SAVE FEDERAL TAXPAYERS BILLIONS OF DOLLARS
A YEAR
Economists have conducted two extensive studies using
national data on Medicare populations and concluded that
patients from States that adopted direct medical care
litigation reforms--such as limits on damage awards--incur
significantly lower hospital costs while suffering no increase
in adverse health outcomes associated with the illness for
which they were treated. In sum, the studies concluded that in
States with medical litigation reforms in place, there was an
average reduction of 4.3% in hospital costs for patients in
managed care programs,\123\ and an average reduction of 7.4% in
hospital costs for patients in non-managed care programs.\124\
They have thereby quantified the cost of ``defensive
medicine,'' in which doctors perform tests and prescribe
medicines that are not necessary for health in order to avoid
patients' future claims that they suffered adverse health
effects because the doctor did not do more.
---------------------------------------------------------------------------
\123\ Daniel P. Kessler and Mark B. McClellan, ``Medical Liability,
Managed Care, and Defensive Medicine,'' National Bureau of Economic
Research (NBER) Working Paper 7537 (February 2000) at 16. The
researchers in this study analyzed populations in managed care
programs. Id. at 3.
\124\ Daniel P. Kessler and Mark B. McClellan, ``Do Doctors
Practice Defensive Medicine?'' The Quarterly Journal of Economics (May
1996) at 386 (``Our analysis indicates that reforms that directly limit
liability--caps on damage awards . . . and collateral source rule
reforms--reduce hospital expenditures by 5 to 9 percent within three to
5 years of adoption . . . .''). The researchers in this study analyzed
populations in predominantly non-managed care programs in the mid-
1980's, and found that, of the populations studied with two different
types of illnesses, direct health care litigation reforms would reduce
hospital expenditures by 5.8% and 8.9% several years after their
adoption. Id. at 367, 382.
---------------------------------------------------------------------------
If the same sorts of litigation reforms studied by
economists were to apply nationwide, those health care cost
reductions--which, again, are not associated with any adverse
health outcomes--would result in vast savings of Federal
taxpayer dollars currently spent through the Medicare and
Medicaid programs.\125\
---------------------------------------------------------------------------
\125\ Medicaid is a needs-based, health care benefit financed
jointly by State and Federal Government, but administered by the State
governments, whereas Medicare is a Federal health care program, not
based on need, financed by FICA taxes (Part A), and a combination of
premiums plus matching Federal funds (Part B).
---------------------------------------------------------------------------
Using recent data, it is estimated that 96.8% of Federal
Medicare payments pays for physician and hospital
expenses.\126\ In 2001, the net Federal outlays for Medicare
beneficiaries in managed care group plans was $42.1 billion
\127\ out of total Federal Medicare benefits of $233
billion.\128\ If direct health care litigation reforms had been
applied nationwide a few years ago, we could expect $40.8
billion in managed care costs reduced by 4.3%, and $191 billion
in non-managed care costs reduced by 7.4%. This amounts to a
total of approximately $15.45 billion ($1.75 billion plus $13.7
billion) in Federal taxpayer savings in Federal Medicare
hospital costs.
---------------------------------------------------------------------------
\126\ ``Medicare: Payments to Physicians'' CRS Report to Congress
(November 26, 2001) at 6, 2.
\127\ Congressional Budget Office, Medicare and Medicaid/SCHIP
``Fact Sheets''.
\128\ Id.
---------------------------------------------------------------------------
The latest estimates from the Congressional Budget Office
are that, in 2002, Federal Medicaid payments to beneficiaries
in managed care programs will be $19.6 billion out of total
Federal Medicaid payments of $146.1 billion.\129\ There is no
way to know exactly how much Federal Medicaid payments go to
pay certain expenses because there are no requirements under
Medicaid for providers to notify States or for States to notify
the Federal Government regarding the amounts of Medicaid funds
that go to pay certain costs. However, if we assume that
roughly the same percentages of Federal dollars go to pay for
hospital costs under Medicaid as they do under Medicare, then
if direct health care litigation reforms had been applied
nationwide a few years ago, we could expect the $19.6 billion
in managed care costs to be reduced by 4.3%, and the $126.5
billion in non-managed care costs to be reduced by 7.4%.
Therefore, we could expect a total of approximately $10.2
billion ($843 million plus $9.36 billion) in Federal taxpayer
savings in Medicare hospital costs.
---------------------------------------------------------------------------
\129\ Id.
---------------------------------------------------------------------------
Further, we also know that in the years following the
enactment of the Medical Injury Compensation Reform Act
(``MICRA'') in California--which among other things capped
noneconomic damages at $250,000--medical malpractice premiums
declined by roughly 25%.\130\ Federal Medicare payments for
physician services are estimated at $41.2 billion in 2001,\131\
and the percent of that figure that pays for malpractice
premiums is 3.2%,\132\ or $1.32 billion. Consequently, if
direct health care litigation reforms had been applied
nationwide a few years ago, we could expect $33 million in
Federal Medicare savings. If roughly the same 3.2% in
malpractice premiums came from the in $117.4 billion Federal
dollars spent on Medicaid in 2000,\133\ we could expect an
additional $939 million in Federal Medicaid savings.
---------------------------------------------------------------------------
\130\ Office of Health Research, Statistics & Technology, U.S.
Department of Health and Human Services (1981) at 203.
\131\ ``Medicare: Payments to Physicians'' CRS Report to Congress
(November 26, 2001) at 1.
\132\ Id. at 6, 2.
\133\ ``Medicaid: A Fact Sheet'' CRS Report to Congress (updated
October 25, 2001) at 1.
---------------------------------------------------------------------------
In sum, if direct health care litigation reforms had been
applied nationwide a few years ago, we could expect a total of
approximately $25.65 billion in Federal taxpayer savings in
Medicare and Medicaid hospital costs, plus another $972 million
in Federal taxpayer savings in Medicare and Medicaid
malpractice premium costs, per year. That constitutes a total
Federal savings of $27 billion, enough money to provide
millions of Americans with annual health care insurance
coverage.
These estimated savings are in line with aggregate
statistics regarding Federal expenditures on health services
and supplies reported by the Health Care Financing
Administration (``HCFA''). The HCFA projects that the Federal
Government spent $431.8 billion on health services and supplies
in 2001.\134\ Using an estimated savings rate of 6.5%--weighted
to account for greater savings rates in non-managed care and
accounting for the fact that more Federal funds pay for health
care for beneficiaries in non-managed care than in managed
care--one would expect that if direct medical care litigation
reforms had been applied nationwide a few years ago, the
Federal taxpayer would have saved approximately $28 billion in
2001.
---------------------------------------------------------------------------
\134\ See Table 4: Health Services and Supplies Expenditures
Aggregate and per Capita Amounts, Percent Distribution and Average
Annual Percent Change by Source of Funds: Selected Calendar Years 1980-
2011 (Health Care Financing Administration) at http://www.hcfa.gov/
stats/NHE-Proj/proj2001/tables/t4.htm.
---------------------------------------------------------------------------
The two economists measured the savings from direct health
care litigation reforms on hospital expenditures for treating
elderly heart disease patients. As they reported, however,
``Hospital expenditures on treating elderly heart disease
patients are substantial--over $8 billion per year in 1991--but
they comprise only a fraction of total expenditures on health
care. If our results are generalizable to medical expenditures
outside the hospital, to other illnesses, and to younger
patients, then direct reforms could lead to expenditure
reductions of well over $50 billion per year without serious
adverse health outcomes.'' \135\ The $50 billion figure has
been cited by former Senators George McGovern and Alan Simpson,
who co-signed a Wall Street Journal op-ed urging health care
litigation reform stating ``Legal fear drive[] [doctors] to
prescribe medicines and order tests, even invasive procedures,
that they feel are unnecessary. Reputable studies estimate that
this `defensive medicine' squanders $50 billion a year, enough
to provide medical care to millions of uninsured Americans.''
\136\ The savings resulting from direct health care litigation
reforms is particularly important given the dire predictions of
increased health care costs in the coming decade. For example,
a report by the Centers for Medicare and Medicaid Services, an
arm of the Department of Health and Human Services, reports
that health costs are expected to grow at a rate of 7.3 percent
annually between now and 2011. The report, published on March
12, 2002, in the journal Health Affairs, says health care
spending could reach $2.8 trillion, or 17 percent of the
nation's gross domestic product, by 2011, up from 13.2 percent
in 2000. Last January, the centers said health care costs rose
6.9 percent, to $1.3 trillion, in 2000, as Americans spent more
on prescription drugs and hospital care. Health care spending
averaged $4,637 per person, marking what the report's authors
called the ``end of an era of reasonable health care cost
growth throughout most of the 1990's.'' \137\
---------------------------------------------------------------------------
\135\ Daniel P. Kessler and Mark McClellan, ``Do Doctors Practice
Defensive Medicine?'' The Quarterly Journal of Economics (May 1996) at
387-88. See also Department of Health and Human Services, ``Confronting
the New Health Care Crisis: Improving Health Care Quality and Lowering
Costs by Fixing Our Medical Liability System'' (July 24, 2002) at 7
(citing Kessler, D. and McClellan, M., ``Do Doctors Practice Defensive
Medicine,'' Quarterly Journal of Economics, 111(2): 353-390 (1996))
(``The leading study estimates that limiting unreasonable awards for
non-economic damages could reduce health care costs by 5-9% without
adversely affecting quality of care. This would save $60-108 billion in
health care costs each year. These savings would lower the cost of
health insurance and permit an additional 2.4-4.3 million Americans to
obtain insurance.'').
\136\ See George McGovern and Alan Simpson, ``We're Reaping What We
Sue,'' The Wall Street Journal (April 17, 2002) at A20.
\137\ See press release of the Centers for Medicare & Medicaid
Services, ``Health Care Costs Expected to Rise to $2.8 Trillion Over
Next 10 Years'' (March 12, 2002); see also ``Health Costs May Double by
2011'' The Washington Post (March 12, 2002) at A4.
---------------------------------------------------------------------------
Senator Lieberman, in advocating direct health care
litigation reforms such as those contained in the HEALTH Act,
has also commented on the need to reduce wasteful medical
spending. In his floor statement on the Common Sense Product
Liability and Legal Reform Act, Senator Lieberman stated that
``The system promotes the overuse of medical tests and
procedures defensively by doctors who have told me, and I am
sure told every other Member of this Chamber, they would not
order this test, it is not medically necessary, but they do it
to protect themselves from the fear of a possible lawsuit. The
Rand Corp. has estimated the ways in which the current
defensive practice of medicine actually costs the victims of
malpractice. Rand has estimated that injured patients receive
only 43 percent of the money spent on medical malpractice and
medical product liability litigation. That is 43 cents out of
every dollar, and victims often receive their awards only after
many, many years of delay because of the ornate process, the
bullying and bluffing that the current rules of malpractice
encourage . . . Let me go back to defensive medicine and try to
detail briefly its impact on the current system because it is
even greater than the direct cost of liability insurance. The
Office of Technology Assessment--our own office here--has found
that as high as 8 percent of diagnostic procedures are ordered
primarily because of doctors' concerns about being sued. That
does not sound like a high percentage, but it amounts to
billions of dollars. These defensive practices alone--sometimes
difficult to measure--present a hidden but very significant
burden on our health care system . . . Taxpayers and health
care consumers bear the financial burden of these excessive
costs. Liability insurance and defensive medicine insurance
premiums also drive up the cost of Medicare and Medicaid and
therefore exacerbate an increased Federal budget deficit.''
\138\
---------------------------------------------------------------------------
\138\ Senator Lieberman, floor statement on the Common Sense
Product Liability and Legal Reform Act (April 27, 1995).
---------------------------------------------------------------------------
According to the Department of Health and Human Services:
The Federal Government--and thus every taxpayer who
pays Federal income and payroll taxes--also pays for
health care, in a number of ways. It provides direct
care, for instance, to members of the armed forces,
veterans, and patients served by the Indian Health
Service. It provides funding for the Medicare and
Medicaid programs. It funds Community Health Centers.
It also provides assistance, through the tax system,
for workers who obtain insurance through their
employment. The direct cost of malpractice coverage and
the indirect cost of defensive medicine increases the
amount the Federal Government must pay through these
various channels, it is estimated, by $28.6-47.5
billion per year. This amount includes $23.66-42.59
billion for the cost of defensive medicine; $3.91
billion in liability insurance paid to Medicare,
Medicaid, Veteran's Affairs, and other Federal
programs; $246 million in liability insurance paid
through health benefits for its employees and retired
employees; and $778 million in lost tax revenue from
self-employed and employer-sponsored health insurance
premiums that are excluded from income. If reasonable
limits were placed on non-economic damages to reduce
defensive medicine, it would reduce the amount of
taxpayers' money the Federal Government spends by
$25.3-44.3 billion per year. This amount includes
$23.66-42.59 billion in savings from elimination of
defensive medicine and $1.68 billion in reductions in
liability insurance premiums paid by the Federal
Government. This is a very significant amount. It would
more than fund a prescription drug benefit for Medicare
beneficiaries and help uninsured Americans obtain
coverage through a refundable health credit. The
Administration's proposed Medicare prescription drug
plan is estimated to cost $190 billion over 10 years by
the CBO. The Administration's proposed Health Insurance
Tax Credit is estimated to cost $89 billion over 10
years.\139\
---------------------------------------------------------------------------
\139\ Department of Health and Human Services, ``Confronting the
New Health Care Crisis: Improving Health Care Quality and Lowering
Costs by Fixing Our Medical Liability System'' (July 24, 2002) at 6
(citing Maulik, Joshi, Anderson, John et.al., ``A Systems Approach to
Improving Error Reporting,'' 16 Journal of Health Care Information
Management 1).
---------------------------------------------------------------------------
CONGRESS SHOULD ENACT A FAIR SHARE RULE
Respect for the law is fostered when it is fair and just
and punishments are proportionate to the wrongs committed. As
Thomas Jefferson noted, ``if the punishment were only
proportional to the injury, men would feel that their
inclination as well as their duty to see the laws observed.''
\140\
---------------------------------------------------------------------------
\140\ Thomas Jefferson, A Bill for Proportioning Crimes and
Punishments in Cases Heretofore Capital, in 2 The Papers of Thomas
Jefferson 492, 493 (Julian P. Boyd ed., 1950).
---------------------------------------------------------------------------
The rule of joint liability, commonly called joint and
several liability, provides that when two or more persons
engage in conduct that might subject them to individual
liability and their conduct produces a single injury, each
defendant will be liable for the total amount of damages.\141\
Joint liability is unfair because it puts full responsibility
on those who may have been only marginally at fault.\142\
---------------------------------------------------------------------------
\141\ See Coney v. J.L.G. Indus., Inc., 454 N.E.2d 197 (Ill. 1983).
\142\ For example, in Walt Disney World Co. v. Wood, 515 So.2d 198
(Fla. 1987), Disney was required to pay 86% of the damages award, even
though it was found only 1% at fault for the claimant's harm.
---------------------------------------------------------------------------
As Senator Lieberman has observed, ``There is a concept--
joint and several liability started out in the law as a way of
proportioning responsibility when an accident was caused by a
number of different parties working together in a way that
caused negligence, and often it was not clear which one
actually caused it. So they said everybody could be held liable
regardless of the percentage of negligence. It now has grown to
a point where what it really means is that somebody who is not
liable, or liable very little, if they happen to have deep
pockets, they can be held fully liable. That is the wrong
message to send . . . If you hurt somebody, you have to pay. If
you do not, you should not have to pay. What kind of cynicism
is developed when somebody who did little or no wrong ends up
having to pay the whole bill because somebody else slipped
away. Our amendment also adopts the basic proposal of the
underlying bill that punitive damages--which have been much
discussed here and are an essential part of the continued
bullying and bluffing that goes on in our tort system--be
limited to $250,000 or three times economic damages.'' \143\
---------------------------------------------------------------------------
\143\ Senator Lieberman, floor statement on the Common Sense
Product Liability and Legal Reform Act (April 27, 1995).
---------------------------------------------------------------------------
The Volunteer Protection Act of 1997,\144\ abolished joint
liability for non-economic damages for volunteers of nonprofit
organizations. That law was overwhelmingly supported by a
bipartisan majority of Congress.\145\ Joint liability also
brought about a serious public health crisis that critically
threatened the availability of implantable medical devices,
such as pacemakers, heart valves, artificial blood vessels, and
hip and knee joints. Companies had ceased supplying raw
materials and component parts to medical implant manufacturers
because they found the costs of responding to litigation far
exceeded potential sales revenues, even though courts were not
finding the suppliers liable. Congress responded to the crisis
and enacted legislation, the Biomaterials Access Assurance Act
of 1998,\146\ that allows medical device suppliers to obtain
early dismissal, without extensive discovery or other legal
costs, in certain tort suits involving finished medical
implants.
---------------------------------------------------------------------------
\144\ P.L. No. 105-19, 111 Stat. 218.
\145\ See Dan Carney, Volunteer Liability Limit Heads to President,
Cong. Q., May 24, 1997, at 1199 (``The measure passed the House on May
21 by a vote of 390-35, and the Senate cleared it by voice vote later
that day. An earlier Senate version passed May 1 by a vote of 99-1. '')
(omitting references to bill numbers).
\146\ P.L. No. 105-230, 21 U.S.C. Sec. Sec. 1601-1606.
---------------------------------------------------------------------------
As Senator Lieberman has observed, ``Consumers are the ones
who suffer when valuable innovations do not occur or when
needed products, like life-saving medical devices, do not come
to market or are not available in our country any longer
because no one will supply the necessary raw materials. The
inadequacies and excesses of our product liability system are
quite literally matters of life and death for some people whose
lives depend on medical devices that may no longer be available
in the United States.'' \147\
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\147\ Senator Lieberman, floor statement on the Common Sense
Product Liability and Legal Reform Act (April 27, 1995).
---------------------------------------------------------------------------
Joint and several liability, although motivated by a desire
to insure that plaintiffs are made whole, leads to a search by
plaintiffs' attorneys for ``deep pockets'' and to a
proliferation of lawsuits against those minimally liable or not
liable at all. The HEALTH Act, by providing for a ``fair
share'' rule that apportions damages in proportion to a
defendant's degree of fault, prevents unjust situations in
which hospitals can be forced to pay for all damages resulting
from an injury even when the hospital is minimally at fault.
For example, say a drug dealer staggers into the emergency room
with a gunshot wound after a deal goes bad. The surgeon that
works on him does the best he can, but it is not perfect. The
drug dealer sues.\148\ The jury finds the drug dealer
responsible for the vast majority of his own injuries, but it
also finds the hospital 1% responsible because the physician
was fatigued after working too long. Today the hospital can be
made to pay 100% of the damages if no other defendant has the
means to pay their share of the damages. That is unfair.
---------------------------------------------------------------------------
\148\ This hypothetical is not fanciful. See Ray Flanagan, ``After
Stabbing Son, Mom Sues Doctors'' The Scranton Time Tribune (May 29,
2002) (``Mrs. Taylor and her husband, Brian, are suing . . . the
obstetricians who treated her in the months before she exploded in
violence that left her son, Zachary, with two punctured lungs, a
severed jugular vein and scalp wounds on July 14, 2000 . . . They
accuse the doctors and their employers of not adequately responding as
she became more psychotic, delusional and depressed as the end of her
pregnancy neared.'').
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The HEALTH Act's ``fair share'' rule in which damages must
be allocated against a defendant only in direct proportion to
that defendant's fault means accountability.
THE HEALTH ACT ALLOWS UNLIMITED ECONOMIC DAMAGES
H.R. 5 does not limit in any way an award of ``economic
damages'' from anyone responsible for harm. Economic damages
include anything whose value can be quantified, including lost
wages or home services (including lost services provided by
stay-at-home mothers), medical costs, the costs of pain-
reducing drugs, therapy, and lifetime rehabilitation care, and
anything else to which a receipt can be attached. Only economic
damages--which the Federal legislation does not limit--can be
used to pay for drugs and services that actually reduce pain.
Nothing in H.R. 5 prevents juries from awarding very large
amounts to victims of medical malpractice, including stay-at-
home mothers and children. California's legal reforms cap non-
economic damages at $250,000, but do not cap quantifiable
economic damages. In just the last few years, juries in
California have awarded the following in economic damages to
medical malpractice victims: an $84,250,000 award to a 5-year-
old boy, a $59,317,500 award to a 3-year-old girl, a
$50,239,557 award to a 10-year-old boy, a $12,558,852 award to
a 30-year-old homemaker, $27,573,922 award to a 25-year-old
woman,\149\ and $49 million to a minor child.\150\ In those
very rare cases in which a plaintiff was injured yet can
demonstrate absolutely no quantifiable economic losses, under
H.R. 5 that plaintiff can still get up to $250,000 in
noneconomic damages and up to $250,000 in punitive damages, for
a total of $500,000 in damages even when absolutely no
quantifiable damages at all result from an alleged injury.
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\149\ Information provided by Californians Allied for Patient
Protection.
\150\ Steven Andrew Olsen, by and through his Guardian Ad Litem,
Kathy Olsen v. Regents of University of California, Superior Court of
California, County of San Diego, Case No. 666808 (order entered January
24, 1995).
---------------------------------------------------------------------------
H.R 5 also does not preempt any State law that limits
damages at specific amounts, be they higher or lower than the
limits provided for in H.R. 5.
THE HEALTH ACT IS A NECESSARY CONGRESSIONAL RESPONSE TO A NATIONAL
ECONOMIC CRISIS
Reform at the Federal level is necessary to increase
workers' access to health care everywhere. We live in an
interconnected economy that includes many businesses that
operate in many different States. Unlimited liability in some
States makes health care costs go up. When health care costs go
up in one State, they can affect a company's ability to offer
health insurance to employees nationwide. Because of this, CBO
concluded that the HEALTH Act would lead to ``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.'' \151\
---------------------------------------------------------------------------
\151\ Congressional Budget Office Cost Estimate of H.R. 4600 (the
HEALTH Act) (September 24, 2002).
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Modern Federal liability reform efforts have their roots in
a project that took place from 1976 to 1980 under Presidents
Ford and Carter. During that time, a Federal Interagency Task
Force on Product Liability conducted an in-depth research and
analysis of State product liability law. The Task Force found
that the patchwork of ever-changing product liability laws in
fifty-one jurisdictions--fifty States and the District of
Columbia--created problems for interstate commerce.\152\ The
HEALTH Act would be enacted pursuant to Congress' authority to
regulate interstate commerce under Article I, Sec. 8 of the
Constitution.
---------------------------------------------------------------------------
\152\ See Interagency Task Force On Product Liability, U.S.
Department of Commerce, Final Report V-19 to V-21 (1976).
---------------------------------------------------------------------------
The HEALTH Act does not preempt existing or future State
laws that cap the amount of economic, non-economic, or punitive
damages that may be awarded in a health care lawsuit. It does,
however, preempt State laws \153\ that contain weaker
protections and conflict with the HEALTH Act's other
provisions.
---------------------------------------------------------------------------
\153\ The term ``state law'' includes the common law as well as
statutes and regulations. See Cipollone v. Liggett Group, 505 U.S. 504,
522 (1992) (``At least since Erie R. Co. v. Tompkins, [304 U.S. 64
(1938)], we have recognized the phrase `state law' to include common
law as well as statutes and regulations.''); Norfolk & Western R. Co.
v. Train Dispatchers, 499 U.S. 117, 128 (1991) (stating the phrase
``all other law, including State and municipal law'' ``does not admit
of [a] distinction . . . between positive enactments and common-law
rules of liability.'').
---------------------------------------------------------------------------
It takes time, of course, for legal reforms to fully
control insurance premiums. As the Reagan Administration's Tort
Policy Working Group reported in its seminal study of the
effects of tort laws on insurance premiums:
[M]any insurers are reluctant to write policies which
take tort reforms completely into account until those
reforms have been found to be constitutionally valid .
. . Just as insurers are reluctant to write policies on
the basis of statutes that may be declared
unconstitutional, they also are reluctant to write
policies on the basis of statutes whose meaning is
ambiguous and whose effect may be eviscerated through
hostile judicial interpretation . . . It also is
important to note that tort liability is only one
factor--albeit the most important factor--which
determines the price of insurance. There are other
considerations which also change over time, such as the
prevailing interest rates, the return available from
investment securities, State regulatory practices
(including reserve requirements), and taxes, which
affect the price of insurance. If some or all of these
considerations exert upward pressure on the price of
insurance, tort reform provisions may do no more in the
short-term than to reduce the rate of premium
increases.\154\
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\154\ Tort Policy Working Group, An Update on the Liability Crisis
(March 1987), at 90-91.
However, as the Reagan Administration's Tort Policy Working
Group made clear, there is no question that the HEALTH Act's
reforms do work: ``The inescapable conclusion is that MICRA has
had a very substantial impact on the cost of medical
malpractice insurance for California physicians.'' \155\
---------------------------------------------------------------------------
\155\ Id. at 95.
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THE HEALTH ACT'S PROVISIONS ALLOWING CONSIDERATION OF COLLATERAL SOURCE
COMPENSATION PREVENTS UNFAIR DOUBLE RECOVERIES
Many plaintiffs receive compensation for medical bills or
lost wages via health insurance, disability insurance or
workers' compensation, yet the hospital, physician or other
health care provider being sued is not allowed to tell the jury
about this other source of compensation. Even after these
``collateral source payments'' have already been paid to the
person bringing the lawsuit, that person is allowed to try to
collect a second time in their lawsuit. As a result, plaintiffs
often are paid twice for the same damages. This phenomenon is
sometimes referred to as double recovery. However, allowing the
plaintiff to collect twice for the same medical bills or other
economic losses drives up the cost of health care for all.
The HEALTH Act allows the trier of fact to determine
whether to offset damage awards based on evidence of collateral
benefits. The trier of fact should be informed of the
collateral source as a factor to consider when determining the
net amount of compensation necessary to make the claimant
whole. The purpose of this provision is to reduce a double
recovery, or recovery substantially greater than the trier of
fact determined to be appropriate under a the circumstances.
The HEALTH Act also prohibits ``collateral sources'' from
obtaining reimbursement from medical malpractice defendants or
their insurers. This provision is modeled after that in
California's MICRA law,\156\ and its purpose was described in
an opinion signed by former Supreme Court Justice and current
Vice Chair of the U.S. Commission on Civil Rights Cruz Reynoso,
as follows: ``by redistributing the financial impact of
malpractice among the different types of insurers involved in
the health field, the costs would be spread over a wider base,
alleviating the immediate problems posed by a growing cadre of
uninsured doctors and a potential shortage of medical care.''
\157\
---------------------------------------------------------------------------
\156\ Ca.Civ. Sec. 3333.1.
\157\ Barme v. Wood, 689 P.2d 446, 450 (Ca. 1984).
---------------------------------------------------------------------------
THE HEALTH ACT DOES NOT CAP PUNITIVE DAMAGES, BUT DOES INCLUDE
REASONABLE GUIDELINES FOR THEIR USE
The United States Supreme Court has observed that punitive
damages have ``run wild'' in the United States, jeopardizing
fundamental constitutional rights.\158\ The Supreme Court has
also emphasized that ``the impact of [a punitive damages award]
is unpredictable and potentially substantial.'' \159\
---------------------------------------------------------------------------
\158\ Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 18
(1991). See also Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 432
(1994) (stating that punitive damages ``pose an acute danger of
arbitrary deprivation of property,'' raising serious due process
concerns).
\159\ International Bhd. of Elec. Workers v. Foust, 442 U.S. 42, 50
(1979).
---------------------------------------------------------------------------
The HEALTH Act does not cap punitive damages. Rather, it
includes reasonable guidelines that would govern their award.
Under these guidelines, a punitive damages award could not
exceed the greater of $250,000, or two times the amount of
economic damages that are awarded (and economic damages under
the HEALTH Act are not limited at all). Federal legislation
should put reasonable parameters on punitive damages to make
the punishment fit the offense.\160\ Proportionality has been
an important part of the United States Supreme Court's
consideration of the validity of criminal punishment.\161\ Even
serious crimes such as larceny, robbery, and arson have
sentences defined with a maximum set forth in a statute.\162\
As former Supreme Court Justice Lewis Powell wrote, ``It is
long past time to bring the law of punitive damages into
conformity with our notions of just punishment.'' \163\ Under
the HEALTH Act, the larger the economic losses suffered by the
victim, the larger the punishment will be.
---------------------------------------------------------------------------
\160\ Congress included a cap on punitive damages for individuals
and small businesses in the Year 2000 Readiness and Responsibility Act,
Pub. L. 106-37, 113 Stat. 135 (1999). The ``Y2K Act'' established
procedures and legal standards for lawsuits stemming from Year 2000
date-related computer failures.
\161\ See Solem v. Helm, 463 U.S. 277, 284 (1983) (``The principle
that a punishment should be proportionate to the crime is deeply rooted
and frequently repeated in common-law jurisprudence ''); Weems. v.
United States, 217 U.S. 349, 366-67 (1910) (it is ``a precept of the
fundamental law'' as well as ``a precept of justice that punishment
should be graduated and proportioned to the offense '').
\162\ Some examples of Federal criminal fines, even for
particularly egregious crimes, do not exceed $250,000 and include the
following: tampering with consumer products ($250,000 if death
results), U.S. Sentencing Guidelines Manual Sec. Sec. 2N1.1, 5E1.2
(1998); assault on the President ($30,000), U.S. Sentencing Guidelines
Manual Sec. Sec. 2A6.1, 5E1.2 (1998); bank robbery ($75,000), U.S.
Sentencing Guidelines Manual Sec. Sec. 2B3.1, 5E1.2; and sexual
exploitation of children ($100,000), U.S. Sentencing Guidelines Manual
Sec. Sec. 2G2, 5E1.2 (1998). See generally Jonathan Kagan, Comment,
Toward a Uniform Application of Punishment: Using the Federal
Sentencing Guidelines as a Model for Punitive Damages Reform, 40
U.C.L.A. L. Rev. 753 (1993).
\163\ Lewis Powell, ``The `Bizarre' Results of Punitive Damages,''
Wall Street Journal (March 8, 1995), at A21.
---------------------------------------------------------------------------
Academic groups have recommended limiting punitive damages
to prevent excessive punitive damages awards.\164\
---------------------------------------------------------------------------
\164\ See American Bar Association, Special Committee on Punitive
Damages of the American Bar Association, Section on Litigation,
Punitive Damages: A Constructive Examination (1986) at 64-66
(recommending that punitive damages awards in excess of three-to-one
ratio to compensatory damages be considered presumptively
``excessive''); American College of Trial Lawyers, Report on Punitive
Damages of the Committee on Special Problems in the Administration of
Justice 15-16 (1989), at 15 (proposing that punitive damages be awarded
up to two times a plaintiff's compensatory damages or $250,000,
whichever is greater); American Law Institute, 2 Enterprise
Responsibility for Personal Injury--Reporters' Study (1991), at 258-59
(endorsing concept of ratio coupled with alternative monetary ceiling).
---------------------------------------------------------------------------
At the State level, limits on punitive damages awards exist
in a number of States.\165\
---------------------------------------------------------------------------
\165\ See Ala. Code Sec. 6-11-21 (1999); Alaska Admin. Code tit. 58
Sec. 9.17.020(f)-(h) (1999); Colo. Rev. Stat. Sec. 13-21-
102(1)(a)(1998); Conn. Gen. Stat. Sec. 52-240b (1999); Fla. Stat. Ann.
Sec. 768.73(1)(b) (West Supp. 1998); Ind. Code Ann. Sec. 34-51-3-4
(1999); Kan. Stat. Ann. Sec. 60-3701 (1998); N.J. Stat. Ann.
Sec. 2A:15-5.14 (West 1999); N.C. Gen. Stat. Sec. 1D-25 (1999); N.D.
Cent. Code Sec. 32.03.2-11(4) (1999); Okla. Stat. tit. 23 Sec. 9.1
(1998); Tex. Civ. Prac. & Rem. Code Ann. Sec. 41.008 (West 1999); Va.
Code Ann. Sec. 8.01-38.1 (1999).
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Opponents of punitive damages reform argue that changes in
the law are not needed because large punitive damages awards
are often reduced on appeal. However, the practical reality is
that the impact of potentially infinite punitive damages
stretches beyond an actual award. The amounts of punitive
damages actually awarded are dwarfed by the amounts paid out in
settlements because of the mere threat of the imposition of
potentially infinite punitive damages causes defendants to
settle for large amounts they would not have otherwise. On
average, over 90% of product liability cases are settled out of
court or otherwise disposed of without trial.\166\ In many of
these cases, the threat of punitive damages may be abused to
force higher settlements.\167\ As Yale law professor George
Priest has observed: ``[T]he availability of unlimited punitive
damages affects the 95% to 98% of cases that settle out of
court prior to trial. It is obvious and indisputable that a
punitive damages claim increases the magnitude of the ultimate
settlement and, indeed, affects the entire settlement process,
increasing the likelihood of litigation.'' \168\ This
observation is supported by the findings of a February 1996
study by the Pacific Research Institute for Public Policy. The
Institute's study concluded that the unpredictability of a
prospective punitive damage award contributes significantly to
the uncertainty, and therefore the risk, of a court trial
outcome; and that both the uncertainty posed by the prospect of
unlimited punitive damages, combined with the relative
probability of a punitive damage award if a case goes to jury
trial, provide litigants who demand punitive damages with
potent leverage against risk-averse defendants, and tip the
balance in settlement bargains in favor of litigants with weak
or frivolous cases.\169\
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\166\ See Brian J. Ostrom and Neal B. Kauder, State Justice Inst.,
Examining the Work of State Courts, 1993: A National Perspective from
the Court Statistics Project 24 (1993).
\167\ See Stephen Daniels and Joanne Martin, Myth and Reality in
Punitive Damages, 75 Minn.L.Rev. 1, 28 (1990) (noting that ``jury
verdicts in the minority of matters actually adjudicated play an
important role in determining the worth, or settlement value, of civil
matters filed but not tried''). Furthermore, in some States, punitive
damages are not insurable. Thus, a business that does not self-insure
can be subject to unwarranted pressure to settle a case for
compensatory damages, which are insurable; a punitive damages award
could end the business.
\168\ George L. Priest, Punitive Damages Reform: The Case of
Alabama, 56 La. L. Rev. 825, 830 (1996).
\169\ See Steven Hayward, Pacific Research Inst. Public Policy, The
Role of Punitive Damages In Civil Litigation: New Evidence 8 (1996).
---------------------------------------------------------------------------
It has also been argued that unlimited punitive damages are
needed to police wrongdoing. However, there is no credible
evidence that the behavior of profit-making enterprises is less
safe in either those States that have set limits on punitive
damages or in the six States--Louisiana, Nebraska, Washington,
New Hampshire, Massachusetts, and Michigan--that do not permit
punitive damages at all.\170\ Furthermore, plaintiffs in these
six States have no more difficulty obtaining legal
representation than in those States where punitive damages are
potentially limitless.
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\170\ See W. Kip Viscusi, Punitive Damages: The Social Costs of
Punitive Damages Against Corporations In Environmental and Safety
Torts, 87 Geo. L.J. 285, 294 (1998).
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THE ``CLEAR AND CONVINCING'' RULE IS APPROPRIATELY APPLIED TO CLAIMS
FOR QUASI-CRIMINAL PUNITIVE DAMAGES
The HEALTH Act provides that punitive damages may be
awarded against a person in a health care lawsuit only if it
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. The ``clear and convincing evidence'' burden of proof
standard is appropriate because it reflects the quasi-criminal
nature of punitive damages. Such a standard takes a middle
ground between the burden of proof standard ordinarily used in
civil cases--that is, proof by a ``preponderance of the
evidence''--and the criminal law standard, that is, proof
``beyond a reasonable doubt.''
The ``clear and convincing evidence'' standard is the law
in twenty-nine States and the District of Columbia \171\ and it
has been recommended by the principal academic groups that have
analyzed the law of punitive damages over the past 15 years,
including the American Bar Association, the American College of
Trial Lawyers, and the National Conference of Commissioners on
Uniform State Laws.\172\ The Supreme Court has also
specifically endorsed the ``clear and convincing evidence''
standard in punitive damages cases.\173\ There is also support
for the ``clear and convincing evidence'' standard at the
Federal level. The Volunteer Protection Act of 1997,\174\ which
was enacted with strong bipartisan support, requires ``clear
and convincing evidence'' of punitive damages liability before
punitive damages can be imposed against volunteers of nonprofit
organizations.
---------------------------------------------------------------------------
\171\ See Ala. Code Sec. 6-11-20 (1999); Alaska Stat.
Sec. 09.17.020 (1999); Cal. Civ. Code Sec. 3294(a) (1999); Fla. Stat.
ch. 768.73 (1998); Ga. Code Ann. Sec. 51-12-5.1 (1999); Iowa Code Ann.
Sec. 668A.1 (1997); Kan. Stat. Ann. Sec. 60-3701(c) (1998); Ky. Rev.
Stat. Ann. Sec. 411.184(2) (Michie/Bobbs-Merrill 1998); Minn. Stat.
Ann. Sec. 549.20 (West Supp. 1998); Miss. Code Ann. Sec. 11-1-65(1)(a)
(Supp. 1998); Mont. Code Ann. Sec. 27-1-221(5) (1998); N.J. Stat. Ann.
Sec. 2A:15-5.12 (1999); Nev. Rev. Stat. Ann. Sec. 42-005(1) (1998);
N.C. Gen. Stat. 10-15(b) (1999); N.D. Cent. Code Sec. 32-03.2-11 (Supp.
1999); Ohio Rev. Code Ann. Sec. 2307.80(A) (Anderson 1999); Okla. Stat.
Ann. tit. 23, Sec. 9.1 (West Supp. 1998); Or. Rev. Stat. Sec. 18.537
(1997); S.C. Code Ann. Sec. 15-33-135 (Law. Co-op. Supp. 1998); S.D.
Codified Laws Ann. Sec. 21-1-4.1 (1999); Tex. Civ. Prac. & Rem. Code
Sec. 41.003 (1999); Utah Code Ann. Sec. 78-18-1 (1999); Linthicum v.
Nationwide Life Ins. Co., 723 P.2d 675 (Ariz. 1986); Jonathan Woodner,
Co. v. Breeden, 665 A.2d 929 (D.C. 1995); Masaki v. General Motors
Corp., 780 P.2d 566 (Haw. 1989); Travelers Indem. Co. v. Armstrong, 442
N.E.2d 349 (Ind. 1982); Tuttel v. Raymond, 494 A.2d 1353 (Me. 1985);
Owens-Illinois v. Zenobia, 601 A.2d 633 (Md. 1992); Rodriguez v. Suzuki
Motor Corp., 936 S.W.2d 104 (Mo. 1996); Hodges v. S.C. Toof & Co., 833
S.W.2d 896 (Tenn. 1992); Wangen v. Ford Motor Co., 294 N.W.2d 437 (Wis.
1980). One State, Colorado, requires proof ``beyond a reasonable
doubt'' in punitive damages cases. See Colo. Rev. Stat. Sec. 13-25-
127(2) (1987).
\172\ See American Bar Association, Special Committee on Punitive
Damages of the American Bar Association, Section on Litigation,
Punitive Damages: A Constructive Examination 19 (1986); American
College of Trial Lawyers, Report on Punitive Damages of the Committee
on Special Problems in the Administration of Justice 15-16 (1989);
National Conference Of Commissioners On Uniform State Laws, Uniform Law
Commissioners' Model Punitive Damages Act Sec. 5 (approved on July18,
1996); see also American Law Institute, 2 Enterprise Responsibility for
Personal Injury--Reporters' Study 248-49 (1991).
\173\ See Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 23
n.11 (1991) (stating that ``[t]here is much to be said in favor of a
State's requiring, as many do . . . a standard of `clear and convincing
evidence' '').
\174\ Pub. L. No. 105-19, 111 Stat. 218.
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BIFURCATED PROCEDURES FOR CONSIDERING PUNITIVE DAMAGES PREVENTS UNFAIR
AND PREJUDICIAL AWARDS
The HEALTH Act also contains a procedural reform called
``bifurcation.'' Under such a procedure, at either party's
request, a trial would be divided so that the proceedings on
punitive damages would be separate from and subsequent to the
proceedings on compensatory damages. This procedure would
achieve judicial economy by having the same jury determine both
compensatory damages and punitive damages issues.
Bifurcated trials are fair because they prevent evidence
that is highly prejudicial and relevant only to the issue of
punishment from being heard by jurors and improperly considered
when they are determining underlying liability. For example,
plaintiffs' lawyers routinely introduce evidence of a company's
net worth. Although a jury is often instructed to ignore such
evidence unless it decides to punish the defendant, this is
very difficult as a practical matter for jurors to do. The net
result may be that jurors overlook key issues regarding whether
a defendant is liable for compensatory damages and make an
award simply because they believe the defendant can afford to
pay it. Bifurcation would help prevent that unfair result
because evidence of the defendant's net worth would be
inadmissible in the first, compensatory damages phase of the
case. Bifurcation also helps jurors compartmentalize a trial,
allowing them to more easily separate the burden of proof that
is required for compensatory damage awards--that is, proof by a
preponderance of the evidence--from a higher burden of proof
for punitive damages, that is, proof by clear and convincing
evidence.
Recognizing the benefit of bifurcation, some courts have
adopted the procedure as a matter of common law reform.\175\
Other States have made changes through court rules or
legislation.\176\ Bifurcation of punitive damages trials is
supported by the American Bar Association, the American College
of Trial Lawyers, and the National Conference of Commissioners
on Uniform State Laws, among other well-known
organizations.\177\
---------------------------------------------------------------------------
\175\ See Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992);
Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994).
\176\ See, e.g., Cal. Civ. Code Sec. 3295(d); Minn. Stat. Ann.
Sec. 549.20; Miss. Code Ann. Sec. 11-1-65(1)(a).
\177\ See American Bar Association, Special Committee on Punitive
Damages of the American Bar Association, Section on Litigation,
Punitive Damages: A Constructive Examination (1986) at 19; American
College of Trial Lawyers, Report on Punitive Damages of the Committee
on Special Problems in the Administration of Justice (1989) at 18-19;
National Conference Of Commissioners On Uniform State Laws, Uniform Law
Commissioners' Model Punitive Damages Act Sec. 5 (approved on July18,
1996) at Sec. 11; American Law Institute, 2 Enterprise Responsibility
for Personal Injury--Reporters' Study 248-49 (1991) at 255 n.41.
---------------------------------------------------------------------------
The HEALTH Act provides that 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. These provisions are
also in California's MICRA law.\178\
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\178\ See Ca.Civ.Pro. Sec. 425.13 (``In any action for damages
arising out of the professional negligence of a health care provider,
no claim for punitive damages shall be included in a complaint or other
pleading unless the court enters an order allowing an amended pleading
that includes a claim for punitive damages to be filed. The court may
allow the filing of an amended pleading claiming punitive damages on a
motion by the party seeking the amended pleading and on the basis of
the supporting and opposing affidavits presented that the plaintiff has
established that there is a substantial probability that the plaintiff
will prevail on the claim pursuant to section 3294 of the Civil
Code.'').
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CONGRESS SHOULD ENACT A SAFE HARBOR FROM PUNITIVE DAMAGES FOR FDA
COMPLIANCE
Litigation is threatening the viability of the life-saving
drug industry.\179\ To help encourage new drug development and
contain the costs of life-saving drugs, the HEALTH Act contains
a safe harbor from punitive damages for defendants whose drugs
or medical products \180\ comply with rigorous regulations and
do not misrepresent or withhold information from the FDA or
make illegal payments to FDA officials. Under the HEALTH Act,
the FDA retains its authority to outright ban harmful products.
---------------------------------------------------------------------------
\179\ See Michael Freedman, ``The Tort Mess'' Forbes (May 13, 2002)
(``The pharmaceutical industry has always been a ripe target for suits.
The difference nowadays is simply that the dollar amounts have gotten
bigger. Between 1989 and 2000 the 300,000 claimants alleging damage
from the Dalkon Shield contraceptive device got $2.6 billion in
settlements. By contrast, the 320,000 claimants in the Wyeth (formerly
American Home Products) diet drug litigation will share $13 billion.
The litigation sliced Wyeth's net worth from $7 billion in 1996 to $2.8
billion in 2000. If a drug saves 100 lives for every one it loses,
someone who faces certain death should not hesitate to use it. But what
happens if the tort system says every death must be paid for? The
average payout on a wrongful death claim increased from $1 million in
1994 to $5.7 million in 2000 (the most recent data point available),
according to Jury Verdict Research. To merely break even, the drug's
maker would have to charge $57,000 for every dose. It can't get away
with that. So a potential wonder drug may never see the light of day. A
study in the Journal of the American Medical Association estimates that
100,000 people die each year in the U.S. from drug-related deaths. If
the families of each sued and won that average of $5.7 million, total
liability would hit $570 billion. That's twice the combined revenues of
the top 12 drug companies . . . Steven Garber, a researcher at the Rand
Research Institute for Civil Justice, says drug companies are willing
to take on the risk of lawsuits in marketing blockbusters like Viagra
and Vioxx. But in other cases the chance of liability is too great.
Garber says companies once stopped making new products for use during
pregnancy because of the high risk of birth defects. Companies also
limit research on orphan drugs--those that cure rare, often fatal
illnesses--because the potential tort liability outweighs the profit
potential.'').
\180\ The term ``medical product'' as used in the HEALTH Act is
meant to include human blood and its components and derivatives. The
Committee recognizes that the statutory definition of ``drug'' in
section 201(g)(1) of the Federal Food, Drug and Cosmetic Act includes
these products. See United States v. Calise, 217 F.Supp. 705, 709
(S.D.N.Y. 1962) (human blood is a drug under section 201(g)(1)).
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FDA standards and regulations are rigorous. The regulatory
objectives of the Food, Drug, and Cosmetics Act (``FDCA'') are
to ensure that the manufacturer shares all risk information
with the FDA so that the agency may make informed risk-benefit
judgments about the utility of a pharmaceutical. These
judgments occur throughout the life of the drug. The agency
determines which drugs reach the market and the labeling for
those that do. The receipt of new safety information can lead
the agency, after holding a hearing, to withdraw approval for
marketing of a drug.\181\ The Secretary of Health and Human
Services also has the authority to order the withdrawal of
marketing approval without a hearing where there appears to be
an ``imminent hazard to public health.'' \182\
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\181\ See 21 U.S.C. Sec. 355(e)(1); 21 C.F.R. Sec. 5.82.
\182\ See 21 U.S.C. Sec. 355(e).
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In particular, before permitting the sale of a
pharmaceutical product, the manufacturer is required to
generate both safety and efficacy information and must present
this information to the FDA in a new drug application
(``NDA'').\183\ The NDA process requires the pharmaceutical
manufacturer to submit proposed labeling for the drug.\184\ The
FDA and the manufacturer then generate the drug's initial label
based on the manufacturer-supplied information concerning the
drug's safety and efficacy.\185\ If the FDA approves the NDA
and licenses the drug for sale, the manufacturer has a
continuing obligation to report safety-related information to
the agency.\186\ Drug product labeling often changes over time
as the FDA receives information from the manufacturer or other
sources about a drug's safety in the marketplace.
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\183\ Under the FDCA, the manufacturer must submit an NDA to the
agency and receive pre-marketing approval in order to market a ``new
drug,'' that is, any drug that is ``not generally recognized, among
experts qualified by scientific training and experience to evaluate the
safety and effectiveness of drugs, as safe and effective for use under
the condition prescribed, recommended, or suggested in the labeling
thereof.'' 21 U.S.C. Sec. 321(p)(1). If the manufacturer of a ``new
drug'' wishes to distribute it lawfully, he can submit an NDA in
conformance with 21 U.S.C. Sec. 355(b). Approval for marketing can be
obtained only if, among other things, the applicant submits ``adequate
and well-controlled studies'' demonstrating safety and efficacy. Id.
Sec. 355(d). Alternatively, the manufacturer can claim that the product
is not a ``new drug'' because it is ``generally recognized'' as being
``safe and effective'' for its intended uses. Id. Sec. 321(p)(1), (2).
Courts have, however, construed such general recognition to be based on
the same adequate and well-controlled investigations required for
approval of an NDA under 21 U.S.C. Sec. 355(d). See Weinberger v.
Bentex Pharmaceuticals, Inc., 412 U.S. 645, 653 (1973).
\184\ 21 U.S.C. Sec. 355(b)(1)(F).
\185\ Although the manufacturer submits proposed initial labeling
with the NDA, the actual labeling is often the result of negotiations
between the FDA and the manufacturer. The agency's power to disapprove
the NDA ensures that it retains practical control over the contents of
drug labeling.
\186\ The post-marketing requirements are set forth in 21 C.F.R.
Sec. 314.80 (1993).
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To obtain FDA approval for marketing a prescription drug, a
pharmaceutical applicant must generate substantial pre-
marketing safety and efficacy information through human
clinical trials. The FDA must ensure that the proposed new drug
complies with the FDCA mandate that safety be established and
that ``substantial evidence'' of efficacy be demonstrated for
the drug's proposed uses.\187\ The FDA review process often
takes years of evaluation after the NDA's submission.
Ultimately, approval by the FDA reflects a risk-benefit
judgment that the product will enhance public health. The
entire NDA process is a lengthy one, typically taking between
five and 7 years to complete.
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\187\ See 21 U.S.C. Sec. 355(d) (1988) (``[S]ubstantial evidence''
means evidence consisting of adequate and well-controlled
investigations, including clinical investigations, by experts qualified
. . . to evaluate the effectiveness of the drug involved, on the basis
of which it could fairly and responsibly be concluded by such experts
that the drug will have the effect it purports or is represented to
have under the conditions of use prescribed, recommended, or suggested
in the labeling or proposed labeling thereof.'').
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The FDCA and its implementing regulations ensure that a
manufacturer shares risk information with the FDA.\188\ Post-
marketing surveillance consists of two primary components--
reports of individual adverse experiences and epidemiologic
studies. Serious reactions must be reported within fifteen
working days of receipt of the information.\189\ A
comprehensive, post-marketing system of reporting and record-
keeping requirements ensures that the manufacturer reports
adverse drug experiences discovered in clinical,
epidemiological, or surveillance studies, through review of the
medical literature, or otherwise.\190\ Post-marketing reporting
obligations include the disclosure of data regarding adverse
reactions outside the United States.
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\188\ See 21 C.F.R. Sec. 314.80.
\189\ See 21 C.F.R. Sec. 314.80(c)(1).
\190\ See 21 C.F.R. Sec. Sec. 310.303(a), 314.80(c).
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The FDCA regulatory scheme in the end confers upon the FDA
final regulatory authority for a pharmaceutical product's
labeling. Due to the FDA's experience and expertise, initial
labeling and post-marketing drug labeling determinations are
ultimately made by the FDA, an agency with a high degree of
institutional competence.
A few States have specifically focused on pharmaceuticals
and punitive damages and statutorily provide an FDA regulatory
compliance defense against such damages.\191\
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\191\ The five States that have proscribed punitive damages where
the manufacturer has complied with the FDCA are Arizona,
Az.Rev.State.Ann. Sec. 12-701; New Jersey, N.J.Stat.Ann. Sec. 2A:58C-
5(c); Ohio, Ohio.Rev.Code Ann. Sec. 2307.80(c); Oregon, Or.Rev.Stat.
Sec. 30.927; and Utah, Utah Code Ann. Sec. 78-18-2. Colorado and North
Dakota also have versions of the government standard defense. See
Co.St. Sec. 13-21-403; N.D.St. Sec. 32-03.2-11.
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The award of punitive damages against pharmaceutical companies who
have complied with the FDCA is quite rare. See Product Liability
Government Standards Defense Proposal, 53 F-D-C REP. (The Pink Sheet),
Sept. 23, 1991, at 6 (quoting Northeastern University Law Professor
Michael Rustad) (``[A]lmost all the [punitive damages] drug cases we
studied involved either fraudulent test results, suppression of
negative impacts or withholding information from the Food and Drug
Administration . . .''). However, the availability of punitive damages
undoubtedly has untoward effects on the course of pharmaceutical
litigation. According to some commentators: ``The mere presence of
punitive damage counts has an undesirable effect on the course of drug
product liability litigation. As is true for punitive damage claims
involving other products, these counts are only rarely dismissed on
summary judgment. . . . Punitive damage claims, therefore, have caused
substantial increases in settlement and litigation costs for
pharmaceutical manufacturers.'' Bruce N. Kuhlik & Richard F. Kingham,
The Adverse Effects of Standardless Punitive Damage Awards on
Pharmaceutical Development and Availability, 45 Food Drug Cosm.L.J.
693, 697 (1990). This effect alone warrants preclusion of punitive
damages where there has been regulatory compliance.
Where the FDA has approved a pharmaceutical for marketing,
the agency has made an explicit judgment that the product will
aid the public health. This judgment should be respected absent
fraud or the provision of false information, the failure to
include material safety information in the NDA, or the failure
to provide post-marketing information which would have led to
withdrawal of the product or changes in the approved uses of
the product. The requirements for an NDA are so extensive
however that, at the margin, punitive damages will not provide
additional societal benefits beyond those achieved by the
FDCA's rules and regulations.
Opponents of the HEALTH Act often cite litigation
surrounding the Dalkon Shield and Copper-7 IUD's as examples of
harmful products the FDA did not find harmful. At the time
Dalkon Shield and Copper-7 IUD's that were the subject of
litigation were sold, the Food, Drug, and Cosmetic Act did not
require approval by the FDA before a medical device could be
marketed and the FDA could initiate enforcement action against
a device only if it could be established that the device was
adulterated or misbranded.\192\ However, in 1976, Congress
enacted amendments which require premarket approval for medical
devices such as the Dalkon Shield.\193\ Both the Senate and
House Committee Reports specifically mention the Dalkon Shield
as a product which had caused harm that could have been
prevented if the new law had been in effect when it was first
marketed.\194\ Consequently, the FDA approval process is much
more extensive today than it was at the time Dalkon Shield and
Copper-7 IUD's that have been the subject of litigation were
sold.
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\192\ See 21 U.S.C. Sec. Sec. 331(a)-(c), 351, 352 (1970).
\193\ See Pub. L. No. 94-295, 90 Stat. 539 (codified at 21 U.S.C.
Sec. Sec. 360-360K (1976)).
\194\ See S. Rep. No. 33, 94th Cong., 1st Sess. 1 (1975); H.R. Rep.
No. 853, 94th Cong., 2d Sess. 8 (1976).
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The HEALTH Act also provides that, in a health care lawsuit
for harm which is alleged to relate to the adequacy of the
packaging or labeling of a drug required to have tamper-
resistant packaging under Department of Health and Human
Services regulations, including labeling regulations related to
such packaging, the manufacturer or drug seller may not be held
liable for punitive damages unless the packaging or labeling is
found by clear and convincing evidence to be substantially out
of compliance with such regulations.
Section 7 of H.R. 5 also contains a provision that protects
doctors and pharmacists from being named in products liability
lawsuits for forum shopping purposes. Such provision addresses
situations in which plaintiffs' attorneys name a local doctor
or pharmacist as a defendant in a lawsuit to oust Federal
courts of appropriate jurisdiction in products liability cases
so they can fix cases in plaintiff-friendly and potentially
biased courts. Under the rules governing diversity jurisdiction
in Federal cases, complete diversity must exist for a case to
be brought in, or removed to, Federal court--that is, all of
the plaintiffs must be from different States than all of the
defendants. Therefore, if a plaintiffs' attorney names a local
defendant, however marginal its involvement may be in the case,
the attorney can prevent the case from being heard in Federal
court. In order to put an end to this abuse of the legal
system, H.R. 5 contains a provision that precludes plaintiffs
from naming a health care provider who prescribes, or dispenses
pursuant to a prescription, a drug or device approved by the
FDA as a party to a product liability lawsuit regarding that
drug or device. The effect of that section is to preclude
plaintiffs' lawyers from naming a local doctor as a defendant
in a lawsuit simply to defeat Federal court jurisdiction. This
provision prevents health care providers from being subject to
lawsuit abuse. When doctors or pharmacies are added to product
liability cases when they have only sold a product as it was
manufactured, judgments are virtually never entered against
them. Rather, the manufacturer pays. Nevertheless, local
doctors and pharmacists are subject to huge legal costs and
valuable time away from an important job.
Take the following example recounted in the Mississippi
Clarion-Ledger describing the problem faced by a Dr. Kirk
Kooyer:
Last fall, Kooyer found himself sued again, this time
for prescribing Propulsid. The U.S. Food and Drug
Administration has linked the heartburn drug to 80
deaths nationally and has said it should be used only
as a last resort for patients given heart tests to
ensure they are at a low risk for the side effects.
When Hazel Norton of Rolling Fork, the who filed suit,
read the drug might cause harm, she said she stopped
taking it. ``Actually, I didn't get hurt by
Propulsid,'' Norton, who had the drug prescribed for
her heartburn, said. But because she had taken the
drug, she said she thought she could join a class-
action lawsuit ``and I might get a couple of thousand
dollars.'' The last thing she intended, Norton said,
was for Kooyer to be sued. ``He's really a good doctor,
very intelligent,'' said Norton, who's been Kooyer's
patient since 1994. ``He makes you feel so
comfortable.'' She said she intended for the drug
company to be sued, but that lawyers told her it would
be better for her case to sue Kooyer in order to keep
the case in Mississippi. After finding out Kooyer had
been sued, she said she wrote a letter to her
attorneys, objecting. ``I'm kind of upset. I do not
want him leaving because of all the suits,'' she said.
``If we run off all the doctors, what are the people
gonna do?'' Kooyer was eventually dropped from the
litigation but not before he made up his mind to leave
Mississippi.\195\
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\195\ Jerry Mitchell, ``Tort Reform: Just What the Doctor
Ordered?'' Clarion-Ledger (July 29, 2002) at A1.
Another example is Hilda Bankston, a Mississippi
pharmacist, who has testified before both the House and Senate
Judiciary Committees that the pharmacy that she and her husband
formerly owned has been named as a defendant in ``hundreds'' of
lawsuits against pharmaceutical manufacturers simply to keep
the cases in State court. Mrs. Bankston described the
``nightmare'' that she endured as follows: ``In using Bankston
Drugstore as a springboard into Jefferson County courts, class
action attorneys have caused me to spend countless hours
retrieving information for potential plaintiffs. I have been
dragged into court on numerous occasions to testify. I have
endured the whispers and questions of my customers and
neighbors wondering what we did to end up in court so often.''
\196\ Local business owners should not have to endure what Mrs.
Bankston has had to endure.
---------------------------------------------------------------------------
\196\ Written testimony of Hilda Bankston submitted to the
Committee on February 6, 2002.
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PROVIDING FOR PERIODIC PAYMENTS PRESERVES PLAINTIFFS' FUNDS AND MAKES
FULL COMPENSATION MORE LIKELY BY MAKING IT EASIER FOR DEFENDANTS TO
AFFORD
The HEALTH Act provides that in any health care lawsuit, if
an award for 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 (``UPPJA'') promulgated by
the National Conference of Commissioners on Uniform State
Laws.\197\ The periodic payment system recommended by the
National Conference of Commissioners on Uniform State Laws
calls for payment of such damages as they accrue, periodically,
rather than for payment of a lump sum all at one time following
the award of damages. The Uniform Law Commissioners contributed
to this evolution with the Model Periodic Payment of Judgments
Act in 1980. In 1990, this earlier act was replaced by an
updated Uniform Periodic Payment of Judgments Act. The
advantages of this system are, one, a periodic payment system
removes the risk that the money will be lost by either improper
expenditure or bad investment before it is needed to pay for
actual loss. A periodic payment award of damages is usually
funded through the purchase of an annuity from an insurance
company or other similar system of secured payment. The
obligation of payment is secured without burdening the injured
person with the responsibility for keeping and investing the
damage award. Second, the defendant is able to acquire the
annuity or similar system of secured payment at a price less
than the aggregate amount of the damages that must be paid to
the plaintiff. This is an immediate savings to the defendant--
and the defendant's casualty insurer--who is obligated to pay
the damages. This savings is obtained without depriving the
plaintiff of any damages to which he or she is entitled and
without risking insolvency on the part of the defendant, which
would result in victims receiving mere pennies on the dollar.
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\197\ Further, the ability of the defendant to obtain a savings is
translated into lower premium costs for casualty insurance. Anything
that lowers casualty insurance rates or that retards the inflation of
those rates, benefits anyone who has some exposure to liability for
personal injury of another person, and buys insurance to cover
potential loss if there is such an injury.
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Under UPPJA, either party to a tort action involving bodily injury
may elect to have the award of future damages for economic loss be in
periodic form. The other party may contest such an election by showing
that the time period for periodic payment is too short or the amount of
damages too small to make periodic payment an advantage over a lump sum
award, or by showing that a periodic payment judgment cannot be
properly and securely funded. If an election is effective, UPPJA then
requires a specific sequence of findings pertaining to damages that
lead to a declaration of a periodic payment award. Initially, both past
and future damages are stated separately in lump sum form. Deductions
are then made in specific order for pro rata shares of such things as
prior settlements with joint tortfeasors, and comparative fault
determinations, followed by setoffs or credits. After dealing with
these issues, the court then allocates attorneys' fees. They must be
taken insofar as possible from future, non-economic damages. The
remainder of such fees are taken proportionally from the other
categories of damages, if future non-economic damages are insufficient.
After all of the deductions, the court lastly determines punitive
damages, if any, in a lump sum. The periodic payment of future damages
is then set out, literally year by year. This is how a periodic payment
award is established under UPPJA.
In establishing a periodic payment award, the court may receive
evidence of future changes in the purchasing power of the dollar, and
the trier of fact may factor such evidence into the allocation of
damages or make separate findings upon the annual rates of change that
must be applied to the actual damage figure. In this way a judgment can
be created that takes inflation into account over the life of the
judgement.
Before a periodic payment award is made, the defendant must provide a
qualified funding plan. A qualified plan can take several forms,
including an annuity from a qualified insurance company. The essential
characteristic for each form is adequate security to assure payment of
the award over its lifetime to the injured person. Part of that
assurance is reliance upon what UPPJA calls a qualified insurer.
UPPJA requires the State insurance commissioner to keep a list of
qualified insurers. These are insurers that meet standards of
reliability and financial quality as expressed in common industry
rating systems. A qualified funding plan cannot be effected without
reliance upon a qualified insurer in some fashion either to provide the
plan or guarantee the obligation. The list maintained by the insurance
commissioner assures that there will be a reliable pool of qualified
insurers from which plans can be obtained to fund periodic payment
judgments. The UPPJA provides assurances to those who suffer bodily
injury that funds will be available to pay the damages while reducing
the costs of such damage awards. Its adoption uniformly will be of
great benefit to both defendants and plaintiffs.
As the Reagan Administration's Tort Policy Working Group
reported in its seminal study of the effects of tort laws on
insurance premiums, ``Periodic payments, as noted, are not
unfair to plaintiffs because the payments would be scheduled to
be made as the damages are in fact incurred (that is, as
earnings are actually lost, or as certain expenses actually
occur).'' \198\
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\198\ Report of the Tort Policy Working Group on the Causes, Extent
and Policy Implications of the Current Crisis in Insurance Availability
and Affordability (February 1986) at 70.
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STATUTE OF LIMITATIONS
The best way to allow every patient her day in court while
preventing prejudice to health care providers is to codify a
reasonable statute of limitations, along with a statute of
repose, which the HEALTH Act does. Statutes of limitation
define the time period following an injury in which a suit must
be brought. Their purpose is to protect defendants from
prejudicially stale claims by requiring trials to be conducted
while the best evidence is still available and, at the same
time, encouraging patients to have themselves checked for any
illnesses that may result from negligent medical care sooner
rather than later. Statutes of limitations are particularly
important for ob-gyns, because without reasonable statutes of
limitation they remain subject to lawsuits even decades after
they deliver a child. The HEALTH Act provides for a 3-year
statute of limitations with exception for minors. It provides
that a health care lawsuit may be commenced no later than 3
years after the date of manifestation 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 after the date of manifestation of
injury 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
manifestation of injury except that actions by a minor under
the full age of 6 years shall be commenced within 3 years of
manifestation of injury 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. These provisions are
based on California's MICRA law.\199\
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\199\ See Cal.C.C.P. Sec. 340.5.
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SUMMARY
A national insurance crisis is ravaging the nation's health
care system. Skyrocketing insurance rates have caused major
insurers to drop coverage, decimated the ranks of doctors and
other health care providers by forcing them to abandon patients
and practices, particularly in high-risk specialties such as
obstetrics and emergency medicine. The problem is particularly
acute for practitioners in managed care, where prescribed fixed
costs prevent them from recouping insurance costs. The HEALTH
Act, modeled after California's quarter-century old and highly
successful health care litigation reforms, addresses the
current crisis and will make health care delivery more
accessible and cost-effective in the United States. Its time-
tested reforms will make medical malpractice insurance
affordable again, encourage health care practitioners to
maintain their practices, reduce health care costs for
patients, and save billions of dollars a year in Federal
taxpayer dollars by significantly reducing the incidence of
wasteful ``defensive medicine'' without increasing the
incidence of adverse health outcomes. Its enactment will
particularly help traditionally under-served rural and inner
city communities, and women seeking obstetrics care. It will
create a ``fair share'' rule, by which damages are allocated
fairly, in direct proportion to fault, reasonable guidelines--
but not caps--on the award of punitive damages, and a rule
preventing unfair and wasteful windfall double-recoveries.
Finally, it will accomplish reform without in any way limiting
compensation for 100% of plaintiffs' economic losses, their
medical costs, their lost wages, their future lost wages,
rehabilitation costs, and any other economic out of pocket loss
suffered as the result of a health care injury. The HEALTH Act
also does not preempt any State law that otherwise caps
damages, including those for pain and suffering.
Many opponents of the legislation make two fundamental
errors. First, they think that when friends or loved ones
suffer serious injuries requiring immediate medical attention,
Americans will think first about lawyers and lawsuits, not
doctors and healing. And second, they assume that when friends
or loved ones suffer serious injuries, there will be a doctor
to sue in the first place. But we know just the opposite is
true. Americans want most to see their friends and loved ones
receive the best and most accessible health care available, but
with greater and greater frequency doctors are not there to
deliver it. To be clear, with or without the HEALTH Act,
wrongfully injured victims can receive unlimited awards to
cover their medical costs--including the costs of pain relief
medication--their lost wages, their future lost wages,
rehabilitation costs, and any other quantifiable losses. The
difference is that without the HEALTH Act, there will be no
doctors to potentially sue because there will be no doctors
administering care because they will have been priced out of
the healing profession by unaffordable professional liability
insurance rates.
Regardless of the merits of any given case, there are
inherent problems with so-called ``pain and suffering'' or
``noneconomic'' damages: they are utterly standardless,
unquantifiable, and subject to discriminatory application based
of whether or not a particular person happens to be sympathetic
or unsympathetic, and even whether or not a particular case has
attracted media attention. Tony Dyess injury did not receive
media attention. He was in a car accident in Mississippi. There
were no longer any neurosurgeons in the area. They had stopped
practicing because they couldn't afford medical professional
liability insurance. It took 6 hours to airlift Tony Dyess to a
hospital that could treat his brain injury. It was too late.
The ``golden hour'' had passed, and Tony Dyess has been left
permanently brain damaged. As Tony Dyess' wife Leanne has said,
From my perspective, sitting here today, this problem far
exceeds any other challenge facing America's health care--even
the challenge of the uninsured. My family had insurance when
Tony was injured. We had good insurance. What we didn't have
was a doctor. And now, no amount of money can relieve our pain
and suffering.'' \200\
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\200\ Written testimony of Leanne Dyess, submitted to the Committee
March 24, 2003.
---------------------------------------------------------------------------
Injured victims should be adequately compensated for their
injuries. But too often in this debate we lose sight of the
larger health care picture. The best evidence about medical
injuries comes from two large studies of hospital records,
which both concluded that under 1 percent of hospital charts
showed negligent medical injury.\201\ This country is blessed
with the finest health care technology in the world. It is
blessed with the finest doctors in the world. People are
smuggled into this country for a chance at life and healing--
the best chance they have in the world. Just read the report
charting health trends recently issued by the Department of
Health and Human Services.\202\ During the past half century,
death rates among children and adults up to age 24 were cut in
half. Mortality among adults 25-64 years fell nearly as much,
and dropped among those 65 years and over by a third. The
infant mortality rate has plummeted 75% since 1950. These
amazing statistics did not just happen. They happened because
America produces the best health care technology and the best
doctors to use it. But today, there are fewer and fewer doctors
to use that miraculous technology, or to use that technology
where their patients are. For example, we have the best brain
scanning and brain operation devices in history, and fewer and
fewer neurosurgeons to use them. According to the American
Board of Neurological Surgery, in 2001 alone, 327 board-
certified neurosurgeons retired, an alarming 10% of the entire
neurological workforce in the United States.\203\ Only about
150 neurosurgeons graduate from residency training programs
each year, and it takes about 5 years of post-residency to
become board certified. Yet while fewer and fewer neurosurgeons
can be reached by injured people within the ``golden hour''
that often separates life and death, unlimited lawsuits--driven
by the desire of some personal injury lawyers for their cut of
unlimited awards for unquantifiable damages--are driving
doctors out of the healing profession. They are setting back
the clock. They are making us all less safe. When someone gets
sick, or is bringing a child into the world, and we can't call
a doctor, who can one call? A lawyer?
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\201\ D. Mills, J. Boyden, and D. Rubsamen, ``Report on the Medical
Insurance Feasibility Study,'' (San Francisco: Sutter Publications
1977, sponsored jointly by the California Medical Association and
California Hospital Association); A. Localio, A. Lawthers, T. Brennan,
N. Laird, L. Hebert, L. Peterson, J. Newhouse, P. Weiler, and H. Hiatt,
``Relation Between Malpractice Claims and Adverse Events Due to
Negligence,'' New Engl. J. Med. 325:245-251 (1991).
\202\ See ``HHS Issues Report Showing Dramatic Improvements in
America's Health Over Past 50 Years: Infant Mortality at Record Low,
Life Expectancy at Record High'' (September 12, 2002) (available at
http://www.cdc.gov/nchs/releases/02news/hus02.htm).
\203\ Statement of the Alliance of Specialty Medicine, submitted to
the Committee on February 28, 2003.
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As amazing as America's health statistics are, California--
where the reforms in H.R. 5, including its cap on noneconomic
damages, have been the law for over 25 years--has even
healthier people than the nation as a whole. According to
California Health Statistics for the year 2000 (the most recent
available information) the overall mortality rate in California
is 24% below the national average and the infant mortality rate
in California is 19% below the national average. Lower
noneconomic damage awards in California have led to healthier
people.
Under H.R. 5, victims will be fairly compensated and
medical errors will be deterred. Without H.R. 5, victims will
be left to suffer and die because there will fewer doctors
there to treat them. Sound policy does not favor supporting
people's abstract ability to sue a doctor for unlimited,
unquantifiable damages when doing so means that there is no
doctor to treat people in the first place. The American Bar
Association estimates there are 1 million lawyers in America.
But all of us--all 287 million Americans--are patients. As
patients, and for patients, the Committee recommends that the
House pass the HEALTH Act.
Hearings
On March 4, 2003, the Committee held 1 day of hearings on
H.R. 5. Testimony was received from Sherry Keller, Conyers,
Georgia; Leanne Dyess, Member, Coalition for Affordable and
Reliable Health Care; Donald J. Palmisano, M.D., J.D.,
President-elect, American Medical Association; Lawrence E.
Smarr, President, Physician Insurers Association of America,
with additional material submitted by other individuals and
organizations.
Committee Consideration
On March 5, 2003, the Committee met in open session and
ordered favorably reported the bill H.R. 5 with amendment by a
rollcall vote of 15 yeas and 13 nays, a quorum being present.
Vote of the Committee
1. Mr. Delahunt offered an amendment to the amendment in
the nature of a substitute to H.R. 5 that would have allowed
health care providers (such as obstetricians and gynecologists)
to be sued for up to 21 years after they allegedly caused an
injury (for example, up to 21 years after they delivered a
baby). By a rollcall vote of 15 yeas to 19 nays, the amendment
was defeated.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus...................................................... X
Mr. Hostettler..................................................
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler...................................................... X
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 15 19
----------------------------------------------------------------------------------------------------------------
2. Mr. Berman offered an amendment that would have delayed
the implementation of the amendment in the nature of a
substitute to H.R. 5 until after States put in place various
health care provider licensing and disciplining procedures. By
a rollcall vote of 10 yeas to 16 nays, the amendment was
defeated.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon......................................................
Mr. Bachus......................................................
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter......................................................
Mr. Feeney...................................................... X
Ms. Blackburn...................................................
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Meehan......................................................
Mr. Delahunt.................................................... X
Mr. Wexler...................................................... X
Ms. Baldwin..................................................... X
Mr. Weiner......................................................
Mr. Schiff......................................................
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 10 16
----------------------------------------------------------------------------------------------------------------
3. Mr. Nadler offered an amendment to the amendment in the
nature of a substitute to H.R. 5 that would have allowed courts
to make public court records when specified criteria were met.
By a rollcall vote of 13 yeas to 19 nays, the amendment was
defeated.
ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus......................................................
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren.....................................................
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 13 19
----------------------------------------------------------------------------------------------------------------
4. Mr. Nadler offered an amendment to the amendment in the
nature of a substitute to H.R. 5 that would have indexed its
default limits on damages to the consumer price index. By a
rollcall vote of 16 yeas to 17 nays, the amendment was
defeated.
ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus...................................................... X
Mr. Hostettler.................................................. X
Mr. Green.......................................................
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 16 17
----------------------------------------------------------------------------------------------------------------
5. Mr. Watt offered an amendment to the amendment in the
nature of a substitute to H.R. 5 that would have prohibited its
protections from applying in State courts and in alternative
dispute resolution procedures. By a rollcall vote of 12 yeas to
18 nays, the amendment was defeated.
ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus......................................................
Mr. Hostettler..................................................
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn...................................................
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren.....................................................
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 12 18
----------------------------------------------------------------------------------------------------------------
6. Mr. Delahunt offered an amendment to the amendment in
the nature of a substitute to H.R. 5 that would have increased
its default limits on damages from $250,000 to $1,600,000. By a
rollcall vote of 14 yeas to 15 nays, the amendment was
defeated.
ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................ X
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte...................................................
Mr. Chabot......................................................
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus......................................................
Mr. Hostettler..................................................
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter......................................................
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren.....................................................
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 14 15
----------------------------------------------------------------------------------------------------------------
7. Mr. Scott offered an amendment to strike the amendment
in the nature of a substitute to H.R. 5's provisions relating
to subrogation by providers of collateral source benefits. By a
rollcall vote of 11 yeas to 17 nays, the amendment was
defeated.
ROLLCALL NO. 7
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble....................................................... X
Mr. Smith (Texas)............................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte...................................................
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus...................................................... X
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren.....................................................
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff......................................................
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 11 17
----------------------------------------------------------------------------------------------------------------
8. Mr. Scott offered an amendment to strike subsection 4(d)
of the amendment in the nature of a substitute to H.R. 5. By a
rollcall vote of 12 yeas to 16 nays, the amendment was
defeated.
ROLLCALL NO. 8
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble....................................................... X
Mr. Smith (Texas)...............................................
Mr. Gallegly.................................................... X
Mr. Goodlatte...................................................
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon......................................................
Mr. Bachus......................................................
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake....................................................... X
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren.....................................................
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 12 16
----------------------------------------------------------------------------------------------------------------
9. Motion to Report H.R. 5 with an amendment in the nature
of a substitute was agreed to by a rollcall vote of 15 yeas to
13 nays.
ROLLCALL NO. 9
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Coble.......................................................
Mr. Smith (Texas)...............................................
Mr. Gallegly.................................................... X
Mr. Goodlatte...................................................
Mr. Chabot...................................................... X
Mr. Jenkins..................................................... X
Mr. Cannon...................................................... X
Mr. Bachus......................................................
Mr. Hostettler.................................................. X
Mr. Green....................................................... X
Mr. Keller...................................................... X
Ms. Hart........................................................ X
Mr. Flake.......................................................
Mr. Pence....................................................... X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Carter...................................................... X
Mr. Feeney...................................................... X
Ms. Blackburn................................................... X
Mr. Conyers..................................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Meehan...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler......................................................
Ms. Baldwin..................................................... X
Mr. Weiner...................................................... X
Mr. Schiff......................................................
Mr. Sanchez..................................................... X
Mr. Sensenbrenner, Chairman..................................... X
-----------------------------------------------
Total....................................................... 15 13
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Performance Goals and Objectives
H.R. 5 does not authorize funding. Therefore, clause 3(c)
of rule XIII of the Rules of the House of Representatives is
inapplicable.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 5, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 10, 2003.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5, the Help
Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act
of 2003.
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), who can be
reached at 226-9010, Leo Lex (for the State, local, and tribal
impacts), who can be reached at 225-3220, and Stuart Hagen (for
the private-sector impact), who can be reached at 226-6666.
Sincerely,
Douglas Holtz-Eakin.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 5--Help Efficient, Accessible, Low-Cost, Timely Healthcare
(HEALTH) Act of 2003.
SUMMARY
H.R. 5 would impose limits on medical malpractice
litigation in State and Federal courts by capping awards and
attorney fees, modifying 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 other fringe benefits. As a
result, CBO estimates that enacting H.R. 5 would increase
Federal revenues by $15 million in 2004 and by $3 billion over
the 2004-2013 period.
Enacting H.R. 5 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 $14.9 billion
over the 2004-2013 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. 5 would reduce discretionary spending for the
FEHB program by about $230 million over the 2004-2013 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 ($59 million
in 2003, adjusted annually for inflation) would not be
exceeded.
H.R. 5 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
($117 million in 2003, adjusted annually for inflation) in all
but the first year the mandate would be effective.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 5 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.
BASIS OF ESTIMATE
This estimate assumes that H.R. 5 will be enacted in July
2003. It would apply to lawsuits initiated on or after the date
of enactment.
Major Provisions of the Bill
H.R. 5 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 3 years after the injury alleged to
have happened as a result of malpractice occurs or 1 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. 5 would limit the liability of each defendant
to the share of damages attributable to his or her
responsibility.
The bill would allow evidence of collateral-source benefits
to be introduced at trial by either claimants or defendants.
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. 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 and claims data for
medical malpractice insurance coverage in States that have and
have not enacted laws that limit awards for medical malpractice
torts. The data include information on malpractice awards and
insurance premiums, the characteristics of State insurance
markets, State laws regarding malpractice torts, and
socioeconomic measures. Data were provided by several
organizations including Medical Liability Monitor; Insurance
Services Office, Inc.; Physician Insurers Association of
America; National Association of State Insurance Commissioners;
and the U.S. Census Bureau. 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 for unpaid claims, changes in
market structure in certain States, and increases in the price
of reinsurance.
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. 5 would significantly lower premiums
for medical malpractice insurance from what they would
otherwise be under current law. That effect would increase
somewhat over the 10-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 also took into consideration the likelihood
that, in the future, some additional States would enact laws
limiting malpractice torts in the absence of Federal
legislation.
CBO estimates that, under this bill, premiums for medical
malpractice insurance ultimately would be an average of 25
percent to 30 percent lower than what they would be under
current law. However, other factors noted above may affect
future premiums, possibly obscuring the anticipated effect of
the legislation. The effect of H.R. 5 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-fifth 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. 5 on overall health insurance
premiums would be far smaller than the percentage impact on
medical malpractice insurance premiums. Malpractice costs
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 from recovering 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. A
substantial portion of collateral source benefits are provided
by 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 defensive 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 few 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 spending for a small number of ailments. One
study analyzed the impact of tort limits on Medicare hospital
spending for patients suffering acute myocardial infarction or
ischemic heart disease, and observed a significant reduction in
spending in States with such laws. Other research examined the
effect of tort limits on the proportion of births by Caesarean
section. It also found savings in States with tort limits,
albeit of a much smaller magnitude. Using a longitudinal
database of Medicare spending for fee-for-service beneficiaries
between 1989 and 1999, CBO found no effect of tort controls on
medical spending in an analysis that considered a broader set
of ailments. Moreover, using a different data set, CBO could
find no statistically significant difference in per capita
health care spending between States with and without
malpractice tort limits. These findings are preliminary,
however, and CBO continues to explore this issue.
Federal Revenues
CBO estimates that, over a 3-year period, enacting H.R. 5
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. In the short term, some of the savings would be
retained by employers as higher profits, and would result in
higher collections of income taxes from employers. Ultimately,
however, 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 $65
million in calendar year 2004 to $1.4 billion in 2013.
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 $15 million in 2004 and
by a total of $3 billion over the 2004-2013 period if H.R. 5
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. 5 would reduce direct spending for
Federal health insurance programs by $14.9 billion over the
2004-2013 period.
CBO estimates that premiums for the 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. 5 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.
Federal spending for annuitants in the FEHB program is
considered direct spending. CBO estimates that H.R. 5 would
reduce direct spending for annuitants in FEHB by $230 million
over the 2004-2013 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. 5 would
reduce discretionary spending for FEHB by about $230 million
over the 2004-2013 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. 5 would
have no effect on Medicare spending in 2003, because payment
rates have already been set for hospital and physician
services. CBO estimates that incorporating lower malpractice
premiums in Medicare payment rates would reduce Medicare
spending by $11.2 billion over the 2004-2013 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. 5
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. 5 would reduce direct spending
for Medicaid and DoD by $3.5 billion over the 2004-2013 period.
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 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. 5 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
($59 million in 2003, 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 the bill. 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 governments 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 estimates that
State and local governments would save about $6 billion over
the 2004-2013 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 2004 to $185 billion in 2013
and an expectation that savings would phase in over a 3-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 spending for Medicaid would decrease by $2.5 billion over
the 2004-2013 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 be less than $100 million
in 2003, and about $340 million per year in 2004 through 2007.
Those costs would exceed the annual threshold specified in UMRA
($117 million in 2003, adjusted annually for inflation) in all
but the first year the mandate would be effective.
PREVIOUS COST ESTIMATE
On September 24, 2002, CBO provided a cost estimate for
H.R. 4600 as ordered reported by the Committee on the
Judiciary. The current estimate differs from the earlier
estimate in three ways. It:
Reflects the exclusion of the Medicare and
Medicaid programs from the collateral-source benefits
provision in the bill, thus allowing them to continue
to be secondary payers in medical malpractice cases.
This change increases the estimated savings to the
Medicare and Medicaid programs.
Corrects the previous estimate, which
overstated on-budget savings in the FEHB program
because it included off-budget effects related to the
Postal Service.
Reflects changes in projections under current
law of tax-sheltered health expenditures, as well as
changes in projections of spending under current law
for the Medicare, Medicaid, and FEHB programs.
ESTIMATE PREPARED BY:
Federal Revenues: Alexis Ahlstrom (226-9010)
Federal Outlays: Medicaid--Jeanne De Sa and Eric Rollins;
Medicare--Julia Christensen and Alexis Ahlstrom; and FEHB--
Alexis Ahlstrom (226-9010).
Impact on State, Local, and Tribal Governments: Leo Lex (225-
3320)
Impact on the Private Sector: Stuart Hagen (226-2666)
ESTIMATE APPROVED BY:
Robert A. Sunshine
Assistant Director for Budget Analysis
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 3 of the
Constitution.
Section-by-Section Analysis and Discussion
Section 1. Short Title.
This section provides that the Act may be cited as the
``Help Efficient, Accessible, Low-Cost, Timely, Healthcare
(HEALTH) Act of 2003.''
Section 2. Findings and Purpose.
This section sets out Congressional findings and the
purposes of the Act.
Section 3. Encouraging Speedy Resolution of Claims.
This section provides that a health care lawsuit may be
commenced no later than 3 years after the date of manifestation
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 after the
date of manifestation of injury 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 manifestation of
injury except that actions by a minor under the full age of 6
years shall be commenced within 3 years of manifestation of
injury 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.
Section 4. Compensating Patient Injuries.
Subsection (a) of this section provides that any economic
damages (that is, any damages to which a receipt can be
attached) are unrestricted. It provides that the full amount of
a claimant's economic loss, including their medical costs, the
costs of pain relief medication, their lost wages, their future
lost wages, rehabilitation costs, and any other economic out of
pocket loss suffered as the result of a health care injury, may
be recovered.
Subsection (b) of this section provides that ``pain and
suffering'' and other noneconomic damages are capped at
$250,000. It provides that 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.
Subsection (c) of this section provides that in any health
care lawsuit, an award for future noneconomic damages shall not
be discounted to present value. 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.
Subsection (d) of this section provides that defendants
should only be liable for the percentage of damages for which
they are at fault. It provides that each party shall be liable
only for the amount of damages allocated to such party in
direct proportion to their percentage of fault.
Section 5. Maximizing Patient Recovery.
Subsection (a) of this section limits on attorneys' fees.
It provides that in no event shall the total of all attorneys
fees for representing all claimants in a health care lawsuit
exceed the following limits: (1) 40% of the first $50,000
recovered by the claimants; (2) 33.3% percent of the next
$50,000 recovered by the claimants; (3) 25% of the next
$500,000 recovered by the claimants; and (4) 15% of any amount
by which the recovery by the claimants is in excess of
$600,000.
Subsection (b) of this section provides that 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.
Section 6. Additional Health Benefits.
This section provides that a jury can hear evidence of
payments received by plaintiffs from other sources. It provides
that any party may introduce evidence of collateral source
benefits received or reasonably likely to be received from
other sources (and which benefits would cover the same
injuries) in order to prevent double recoveries.
Section 7. Punitive Damages.
This section provides guidelines for punitive damages.
Subsection (a) of this section provides that 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; provides that where no
judgment for compensatory damages is rendered against a
defendant, no punitive damages may be awarded; provides that
for a ``bifurcated'' punitive damages trial in which a claimant
may request punitive damages upon a motion and after a finding
by the court, upon review of supporting and opposing affidavits
or after a hearing, that the claimant has established by a
substantial probability that the claimant will prevail on the
claim for punitive damages; if a such 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.
Subsection (b) of this section sets out the criteria the
trier of fact may use to award punitive damages. This
subsection also provides that in determining the amount of
punitive damages, the amount of punitive damages awarded may be
up to as much as two times the amount of economic damages
awarded or $250,000, whichever is greater.
Subsection (c) of this section provides a safe harbor from
punitive damages for manufacturers of products that are FDA-
approved, with an exception for those who give false or
incomplete information or who make illegal payments. It
provides that 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)
such medical product was subject to premarket approval or
clearance by the FDA 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 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 FDA and
applicable FDA regulations, including without limitation those
related to packaging and labeling. Also provides that in a
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. These provisions regarding
drugs and medical devices shall not apply in any lawsuit in
which (A) a person, before or after premarket approval or
clearance of such medical product, knowingly misrepresented to
or withheld from the FDA information that is required to be
submitted under the Federal Food, Drug, and Cosmetic Act 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 FDA official for the purpose of either securing
or maintaining approval or clearance of such medical product.
Section 8. Authorization of Payment of Future Damages to Claimants in
Health Care Lawsuits.
This section allows periodic payments of future awards over
time. It provides that, if an award of future damages 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.
Section 9. Definitions.
This sections provides the definitions of terms used in the
Act.
Section 10. Effects on Other Laws.
Subsection (a) of this section provides that 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, this Act does not affect the
application of the rule of law to such an action; and 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. This section
also provides that 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.
Subsection (b) of this section provides that 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.
Section 11. State Flexibility and Protection of States' Rights.
Subsection (a) of this section provides that 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 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
prohibits the introduction of evidence regarding collateral
source benefits, or mandates or permits subrogation or a lien
on collateral source benefits.
Subsection (b) of this section provides that 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.
Subsection (c) of this section provides that no provision
of this Act shall be construed to preempt any State law
(whether effective before, on, or after the date of the
enactment of this Act) that specifies a particular monetary
amount of compensatory or punitive damages (or the total amount
of damages) that may be awarded in a health care lawsuit,
regardless of whether such monetary amount is greater or lesser
than is provided for under this Act, notwithstanding section
4(a), or any defense available to a party in a health care
lawsuit under any other provision of State or Federal law.
Section 12. Applicability; Effective Date.
This section provides that 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.
Markup Transcript
BUSINESS MEETING
WEDNESDAY, MARCH 5, 2003
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee notice, pursuant to call, at 10 a.m., in Room
2141, Rayburn House Office Building, Hon. F. James
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
Chairman Sensenbrenner. The Committee will be in order. A
working quorum is present. Pursuant to notice, I now call up
the bill H.R. 5, the Health Proficient Accessible Low Cost
Timely Health Care Act of 2003 for purposes of markup and move
its favorable recommendation to the House.
Without objection, the bill will be considered as read and
open for amendment at any point.
[The bill, H.R. 5, follows:]
Chairman Sensenbrenner. Without objection, the amendment in
the nature of a substitute which all Members have before them
will be considered as read--considered as original text for
purpose of amendment and will be open for amendment at any
point.
[The amendment follows:]
Chairman Sensenbrenner. The Chair now recognizes himself
for 5 minutes to explain the bill and the substitute amendment.
A national medical insurance crisis driven by uncontrolled
litigation is devastating our Nation's health care system.
Medical professional liability insurance rates have soared,
causing major insurers to either drop coverage or raise
premiums to unaffordable levels. Doctors are being forced to
abandon patients and practices particularly in high risk
specialties such as emergency medicine, brain surgery and OB-
GYN.
H.R. 5 is modeled after the California quarter-century-old
and highly successful health care litigation reforms known as
MICRA. MICRA's reforms which are included in the HEALTH Act
include a $250,000 cap on noneconomic damages, limits on the
contingency fees lawyers can charge, and authorization for
defendants to introduce evidence to prevent double recoveries.
The bill also includes provisions creating a fair share rule by
which damages are allocated fairly in direct proportion to
fault, reasonable guidelines on the award of punitive damages,
and a safe harbor from punitive damages for products that meet
applicable FDA safety requirements.
It is important to note that nothing in the bill limits in
any way economic damage awards from anyone responsible for
harm. Economic damages include anything whose value can be
quantified such as lost wages, lost services, provided medical
costs, the cost of pain-reducing drugs and lifetime
rehabilitation care, and anything else to which a receipt can
be attached. Because of this, the reforms in the HEALTH Act
still allow for very large multimillion-dollar awards to
deserving victims, including homemakers and children.
The amendment in the nature of a substitute I am offering
makes a few changes to the bill. As introduced, the bill
includes a safe harbor from punitive damages for manufacturers
of FDA-approved products, but does not contain exceptions for
which or cases in which information required to be given to the
FDA was withheld in cases in which illegal payments were made
to the FDA.
My amendment in the nature of the substitute restores the
language that passed the House last year which includes these
exceptions. Not only are they sound policy, but they will
further encourage manufacturers to fully share information with
the FDA, because if they don't, they will lose the protection
of the provision.
The amendment in the nature of substitute also makes clear
that the protections in the bill apply to manufacturers of
medical products, and it protects pharmacists as well as
doctors from being named in product liability suits against
drug manufacturers simply because a personal injury lawyer
wants to keep the case in a favorite jurisdiction.
We all recognize that injured victims should be adequately
compensated, but too often in this debate we lose sight of the
broader health care picture. The USA has the finest health care
technology in the world. It is blessed with the finest doctors
in the world. People are smuggled into this country for a
chance at life and healing. The Department of Health and Human
Services issued a report recently that includes some amazing
statistics. During the past half century, death rates among
children and adults up to age 24 were cut in half and infant
mortality has plummeted 75 percent. Mortality among adults
between ages 25 and 64 fell nearly as much, and dropped among
those 65 or older by a third. In 2000, Americans enjoyed the
longest life expectancy in history, almost 77 years.
These just didn't happen; they happened because America
produces the best health care technology and the best doctors
to use them. But now there are fewer and fewer doctors that use
miraculous technology, or to use the technology where their
patients are. We have the best brain scanning and brain
operation devices in history and fewer and fewer neurosurgeons
to use them. Unlimited lawsuits are driving doctors out of the
healing profession. They are reversing the clock. They are
making us all less safe, all in the name of unlimited lawsuits
and personal injury lawyers' loss for their cut of unlimited
awards for unquantifiable damages; that when somebody gets sick
or is bringing a child into the world, if we can't call a
doctor, who will we call, the plaintiff's bar?
We as a Nation have to choose. Do we want the abstract
ability to sue a doctor for jackpot damage awards when doing so
means there will be no doctors to treat ourselves and our loved
ones in the first place? On behalf of all 287 million
Americans, all of whom are patients, I urge the Committee to
favorably report this bill, and yield 5 minutes to the
gentleman from Michigan.
Mr. Conyers. Thank you and good morning, Mr. Chairman and
Members of the Committee. The question before us today is
should we supersede the law in all 50 States to cap noneconomic
damages, to cap and limit punitive damages, to cap attorneys'
fees for poor victims, to shorten the statute of limitations,
to eliminate joint and several liability, and eliminate any
benefits that--from third party payments? If you answer no to
those questions, then it will be difficult for you to support
the measure that is presented for markup today.
Let's go through this. There are serious problems in health
care, but H.R. 5 does not solve those problems. Now, we have
studies which are available to Members and others that show
that the caps on damages do not reduce insurance premiums. Caps
on damages do not reduce insurance premiums. Now, if we can
agree on that, then this measure before us has yet another
problem.
Now, in a comparison of States that enacted severe tort
restrictions in the mid-1980's and those that resisted enacting
any tort reform, guess what? No correlation was found between
tort reform and insurance rates. If that is true, then the
rationale behind this measure is in deep trouble.
An example are two States I will pick at random, Florida
and Michigan. The data from the 2002 Medical Liability Monitor
shows that Florida and Michigan, two States with caps, had the
highest average premiums in the country, while Minnesota and
Oklahoma, two States without caps, had two of the three lowest
average rates in the country.
Ladies and gentlemen of the Committee, these are the facts
that have been presented to me. If there is something wrong
with them, I hope that it will be brought out during the course
of our discussion and markup. Data from the 2001 Medical
Liability Monitor showed that for internal medicine, States
with caps on damages had higher premiums than States without
caps. For general surgeons, insurance premiums were 2.3 percent
higher in States with caps on damages. Higher. Now, if these
facts, scrupulously gathered by the very efficient legal staff
on Judiciary, are in any way erroneous or misleading or
inaccurate or inapplicable, please, please, let us discuss this
before you cast your vote before we leave here today.
So why are medical malpractice premiums rising? Well, if
you understand or study the economics underlying insurance
investment, then you would soon realize that insurers make
their money from investment income, which is plummeting at this
point. During years of high stock market returns and interest
rates, malpractice premiums go down. They always do. When
investment income decreases--and we are going through that part
of a 4-year bear market right now--the industry responds by
increasing premiums and reducing coverage, which creates the
liability insurance crisis which is what supposedly brings us
here now.
Chairman Sensenbrenner. The gentleman's time has expired.
Mr. Conyers. May I get a minute?
Chairman Sensenbrenner. Without objection.
Mr. Conyers. Thank you, sir. This boom-and-bust cycle has
happened before, in the seventies and the eighties and the
present--and presently. The reality is that somewhere between
98,000 and 100,000 people die in this country in hospitals,
clinics, medical facilities every year from medical
malpractice. So what we don't need to do is make the problem
worse and then ignore the true causes for what causes the
present crisis that we are in. And that is what I am afraid is
the direction we are moving in with this measure.
Now, 5 percent of all the health care professionals are
responsible for 54 percent of all malpractice claims paid. And
the measure before us doesn't do much or maybe not anything
about patient safety with that fact in mind. And on top of it,
the industry of which I complain is exempt from antitrust laws.
And we don't do anything to increase competition here.
Chairman Sensenbrenner. The gentleman's time has once again
expired.
Mr. Conyers. I will submit the rest of my statement and I
thank the Chairman for his indulgence.
Chairman Sensenbrenner. Without objection, all Members'
opening statements will appear in the record at this point.
[The prepared statement of Ms. Jackson Lee follows:]
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress From the State of Texas
Mr. Chairman, thank you for allowing me the opportunity to speak on
H.R. 5. This medical malpractice reform bill comes at a very difficult
time in our nation. We are facing a crisis in our health care system.
I believe that our time would be better utilized not debating
medical malpractice reform, but discussing legislation that promotes
safety.
We are all aware of a recent disturbing report that an organ
transplant at Duke University went awry, because of a botched heart
transplant performed on a Mexican immigrant, Jesica Santillan, who was
17. This tragedy has shocked our nation and is a reminder of the
enormous number of fatal medical errors--from 44,000 to 98,000 per
year, according to a study from the Institute of Medicine. It also
indicates a crisis in our nation's organ donor system.
H.R. 5 would shift costs onto injured individuals and their
families. The provisions in the bill are unfair to victims: nursing
home operators, medical device manufacturers, pharmaceutical companies,
hospitals, and HMOs are covered by the bill's definition of ``health
care liability claim'' and would be equally insulated from liability.
As we know, punitive damages are rarely awarded in medical
malpractice cases; however, just the threat of punitive damages is
important to deterring reckless disregard for patient safety by HMOs,
nursing homes, and drug and medical device manufacturers.
The awards for non-economic loss (pain and suffering resulting from
injuries such as lost child-bearing ability, disfigurement, and
paralysis) compensate for human suffering.
The $250,000 cap on non-economic damages is simply not sufficient
in the face of the injustices to patients who are victims of medical
error. Experience has shown that damage cap provisions would do little
or nothing to reduce medical malpractice insurance premiums paid by
doctors while hurting severely injured patients.
A federal cap of $250,000 on non-economic damages is not likely to
reduce malpractice premiums because it does not address the causes of
the malpractice insurance crisis.
According to the National Association of Insurance Commissioners,
the three major causes of sharp underwriting cycles are large ``loss
shocks,'' changes in interest rates, and under-pricing. Lower interest
rates and under-pricing have been in place for a while. This is
important because insurance companies invest premiums in bonds and
stocks before paying them out in claims. The investment ``float'' on
medical malpractice insurance is particularly long--about six years.
When interest rates decline or the market is down, insurance companies
make up for the loss in income by raising rates. As interest rates have
dropped sharply in the last few years, insurers have had to cover a lot
of lost income.
More importantly, non-economic damages disproportionately affect
children, seniors, low-income workers, and stay at home mothers.
H.R. 5 by placing a cap on attorneys' fees would prevent many
victims from obtaining legal counsel. And, the doctrine of joint and
several liability says that when two defendants, such as a doctor and a
hospital, are both found liable for negligence, a plaintiff may collect
the entire award from either of them if necessary. H.R. 5 changes this
rule and would leave patients no recovery for the share of damages
assigned to an uninsured, underinsured, or bankrupt defendant.
The law in most states starts the limitation period running from
the discovery of the malpractice, not the discovery of the injury. This
bill would shorten the statute of limitations to one year after
discovery of the injury.
The study by the Institute of Medicine proposed a non-punitive
method of reporting fatal errors. At Duke University officials have
announced they will have three people verbally confirm matching blood
type. However, the devastation has already occurred and affected the
life of Jesica and her family.
Unfortunately, as we debate medical malpractice reform this botched
organ transplant reminds us how the Republican proposed bill that would
set a $250,000 cap on compensation for disfigurement, mutilation,
blindness and other ``non-economic'' injuries caused by medical errors
hurts patients who have undergone botched surgeries.
H.R. 5 would devastate the rights of patients like Jesica Santillan
and their families. This legislation ignores people like Jesica and her
family--who have suffered real injuries. These limits on damages deny
justice for life-altering losses.
Jesica suffered from a congenital heart defect called restrictive
cardiomyopathy. This heart deformity also affected her lungs; she was
on the wait list for three years to receive a heart and lung
transplant.
The value of Jesica's life as proposed by H.R. 5 would be measured
only by the loss of her, ``past and future earnings . . . and [the]
loss of [her] business and employment opportunities.''
It is not the cap on noneconomic damages alone that makes H.R. 5
unfair to the family of Jesica Santillan. Nor is the cap the sole
provision in the bill that would act as a disincentive to bringing
malpractice cases. Damages under this legislation are awarded only if a
plaintiff proves that proves that a defendant specifically intended to
injure a patent.
Across the country, efforts have been made to pass laws limiting
the rights of medical malpractice victims. These laws typically include
the following restrictions: caps on damages; limits on attorney fees;
elimination of the collateral source rule; establishment of structured
settlement or periodic payment system; mandatory submission of claims
to panels or arbitration; and repose statutes.
Courts across the country have recognized the unconstitutionality
of such sweeping restrictions on medical malpractice victims' rights.
The vast majority of states--31--have ruled that such restrictions on
the rights of medical malpractice victims are unconstitutional.
It would be another tragedy if Congress uses its Constitutional
authority to eliminate the legal rights of hard-working American
families.
My state of Texas has held that such statutes violate fundamental
constitutional rights. Texas is one state along with 19 others where
the courts have ruled that caps or limitations on medical malpractice
damages are unconstitutional. States' medical malpractice caps on
damages have been struck down as unconstitutional violations of equal
protection, jury trial, open courts, or due process guarantees.
There is no evidence that malpractice costs have contributed to
overall rising medical costs. In fact, deterring malpractice among
physicians is the best way to bring down costs and protect our
families.
In my state of Texas approximately three to seven thousand
preventable deaths in Texas each year are due to medical errors. The
costs resulting from preventable medical errors to Texas residents,
families and communities are estimated at $1.3 billion to $2.2 billion
each year, but the cost of medical malpractice insurance to Texas
doctors is only $421.2 million per year. And, in Texas, the total
number of Texas malpractice claims has dropped for two consecutive
years. Between 1997 and 2002, the number of physicians and osteopaths
practicing in Texas increased from 31,459 to 37,188--an increase of
18.2 percent. However to my knowledge, no definitive decreases have
made for Texan doctors for their medical malpractice premium rates.
Let us remember as we debate this critical issue that Jesica, a
poor 17-year-old whose family was smuggled into the United States from
Mexico in the hopes of getting medical care for her, died as a result
of physician error. The physicians at Duke University Medical Center
mistakenly replaced Jesica's deformed heart and poorly functioning
lungs with organs from a donor with the wrong blood type. Only after
much publicity did a second transplant come--two weeks later, but
Jesica, unfortunately, died.
Our nation's tort reform system is not broken. It is the lives of
patients who have undergone procedures that have cost them their lives
who are the victims. The system of health services in our country needs
reform and not the Constitutional rights of victims seeking rightful
redress in our nation's court system.
Chairman Sensenbrenener. Are there amendments?
Mr. Goodlatte. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from Virginia.
Mr. Goodlatte. Mr. Chairman, I have an amendment at the
desk.
Chairman Sensenbrenner. The clerk will report the
amendment.
The Clerk. Amendment to H.R. 5 offered by Mr. Goodlatte.
Add at the end the following----
Mr. Goodlatte. Mr. Chairman I ask unanimous consent that
the amendment be considered as read.
Chairman Sensenbrenner. Well, we will--will the gentleman
from Virginia allow the amendment to be distributed first?
Mr. Scott. Mr. Chairman, parliamentary inquiry.
Chairman Sensenbrenner. The clerk will continue reporting
the amendment.
The Clerk. Section ________. Award of Reasonable Costs and
Attorneys' Fees After an Offer of Settlement.
(a) In General. In any health care lawsuit, any party may
at any time----
Chairman Sensenbrenner. Without objection, the amendment
will be considered as read.
[The amendment follows:]
Mr. Scott. Parliamentary inquiry.
Chairman Sensenbrenner. The gentleman will state his
inquiry.
Mr. Scott. What is the base bill?
Chairman Sensenbrenner. There is a base bill and an
amendment in the nature of a substitute which I have offered
that are both pending and both are amendable.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Sensenbrenner. Without objection, the Goodlatte
amendment is considered as read. And the gentleman from
Virginia is recognized for 5 minutes.
Mr. Goodlatte. Thank you, Mr. Chairman. Mr. Chairman, this
is a good bill, and while I like some provisions in the bill
better than others, the core of it, the caps on noneconomic and
punitive damages are badly needed, and I think as a result we
should support this legislation. And it is particularly
supportable because it allows the States to alter those caps if
they deem that to be appropriate to do so, based upon their
particular circumstances.
One complaint I have about the bill, however, is that it
does very little to discourage frivolous and fraudulent
lawsuits. And that is because there are few sanctions in
Federal or State court imposed upon those who bring such
actions, and this amendment would cure that. This is not a
traditional amendment--English, loser-pays amendment--it is
more in the nature of an offer of settlement. And what it does
is it encourages the parties in a valid lawsuit to move toward
settlement of the case and avoid bringing cases to trial
unnecessarily. But it also assures the parties in the case that
if a case is of a very weak nature, if it is frivolous or if it
indeed is fraudulent, that more than just the usual court costs
can be recovered in the case. And what it does is it provides a
situation in which the prevailing party can, under certain
circumstances, but not under all circumstances, recover some
attorneys' fees from the other party. And basically, that is
based upon an offer in settlement, which if refused--and either
party can make such an offer in settlement, and I suspect the
way this will work, both parties will negotiate. If at the end
of those negotiations the parties nonetheless go to court, if
the prevailing party is the plaintiff and he obtains more in
the court case than his last offer of settlement, he will
recover some attorneys' fees from the defendant. If the
defendant in the case prevails and the--or if the plaintiff
recovers less than the defendant's last offer in settlement,
the defendant will recover some attorneys' fees from the
plaintiff.
Now, this will only apply to attorneys' fees incurred by
the parties less than 10 days before the trial and the trial
itself. So those who are concerned that a very long and
protracted discovery period might result in excessive
attorneys' fees generated by, for example, a defendant who puts
a lot of time and money into the case, they will not be able to
recover all of that. Nor if they go to trial with six attorneys
will they be able to recover all of the fees for the six
attorneys, because they cannot recover more than the cost paid
by the plaintiff for his attorneys' fees.
Now you say, well, the plaintiff may have paid nothing
because he had a contingent fee. And the amendment also takes
that into account by requiring the court to impute a value
based upon the time expended by the plaintiff's attorney for
the value of the attorneys' fees incurred by the plaintiff.
This is a good amendment that will encourage settlement of
cases but it will also, more importantly, provide a bulwark
against those who look in the phone book and see the hundreds
of ads in any Yellow Pages in any phone book in America that
say ``no fee if no recovery''; the suggestion being that there
is no risk for the plaintiff to go to trial in these cases
because they don't have to worry about having to pay any fees
whether they have a meritorious case or not. This will cure
that problem by saying oh, yes, if you take a nonmeritorious
case to trial and you are unreasonable in the settlement
process of the case, you will risk having to pay some
attorneys' fees. I urge my colleagues to----
Mr. Delahunt. Would the gentleman yield for a question?
Mr. Goodlatte. I would.
Mr. Delahunt. I just want to be clear about your amendment.
When it comes to the recoupment of legal fees by the plaintiff,
if the plaintiff should prevail in the case in terms--as the
case goes to trial, and a verdict is returned for the
plaintiff, what is the--is the entire fee, the contingent fee,
assessed on the defendant, on the defendant's carrier? Is that
my understanding?
Mr. Goodlatte. No. It is a fee based upon the value of the
time expended from 10 days before trial through the trial. If
you have a contingent fee, the court will impute an hourly
basis for the value.
Mr. Delahunt. Just for those 10 days.
Mr. Goodlatte. Ten days plus the trial of the case. That is
right. So if it is a very protracted discovery period, you are
not going to be faced with all those attorneys' fees, only the
attorneys' fees related to actually preparing for trial and
going to trial as an incentive (a) to settle cases and (b) to
not bring it.
Chairman Sensenbrenner. The gentleman's time has expired.
Mr. Berman. Will the gentleman yield?
Chairman Sensenbrenner. For what purpose does the gentleman
from California seek recognition?
Mr. Berman. To strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Berman. I would like to pursue with the author of the
amendment a question. He frames his amendment as an amendment
to deal with frivolous or fraudulent lawsuits and then creates
a dynamic where offers that are rejected and then not achieved
risk liability for attorneys' fees. What is a reasonable offer
of a fraudulent and frivolous claim?
Mr. Goodlatte. Well, it doesn't--it would apply to any
claim, but frivolous and fraudulent claims will be the ones
most vulnerable.
Mr. Berman. Your purpose of that amendment was to weed out
frivolous and fraudulent lawsuits?
Mr. Goodlatte. And to promote settlement of the case.
Mr. Berman. And what is a reasonable offer of a frivolous
and fraudulent lawsuit?
Mr. Goodlatte. If the gentleman will yield.
Mr. Berman. Yes.
Mr. Delahunt. Perhaps I can best explain this by giving an
example. If the gentleman were to file suit against me for
malpractice, and I were to--for $100,000 and I were to offer
him $50,000 to settle the case and he turned that--you turned
that down and we went to trial. If the case came back between
what I offered and what you demanded, there would be no
attorneys' fees paid by either party for the other party. They
would pay their own attorneys' fees. If it came back less than
$50,000, in other words you left the settlement on the table
and got less in court, you would be required to pay a portion
of our attorneys' fees. On the other hand, if you got more than
the $100,000 you sought originally----
Mr. Berman. No, I understand.
Mr. Goodlatte. That is how, it is an offer in settlement.
Mr. Berman. I understand. I just--I think the record should
show this is an amendment designed to put the plaintiff in a
contingency fee case, the whole purpose of which is to allow
moderate- and lower-income people who cannot afford to retain
an attorney on an hourly basis or to provide an advance payment
of legal fees, this is an amendment that puts them at serious
personal risk and has nothing to do with false or frivolous
lawsuits. This isn't about the court assessing sanctions
against a plaintiff or an attorney who brought such a case.
This is a--this is a proposal to deal with trying to promote
settlements of reasonable cases, because my assumption is, I
don't--you don't offer to pay me $50,000 to settle my false or
frivolous lawsuits.
Mr. Goodlatte. Would the gentleman yield?
Mr. Berman. Sure.
Mr. Goodlatte. As I stated at the outset, it is designed to
both promote settlement of valid cases and to weed out
frivolous and fraudulent cases.
Mr. Berman. Who does anything--only to the extent that
putting the plaintiff at risk of paying vast amounts of sums as
he decides whether or not to bring a lawsuit, formal practice,
presuming there are some false and fraudulent lawsuits included
therein, but there is nothing about this amendment that is
designed to separate the false and frivolous lawsuits from the
reasonable lawsuits.
And I understand what the gentleman is doing, but I don't
think you should put the cloak of this is just to get at
frivolous and false lawsuits. This has nothing to do with
frivolous and false lawsuits. This has to do with undermining
the fundamental rationale of the contingency fee for moderate-
and lower-income people.
I yield back Mr. Chairman.
Mr. Bachus. Mr. Chairman.
Chairman Sensenbrenner. For what purpose does the gentleman
from Alabama seek recognition?
Mr. Bachus. I have a question.
Chairman Sensenbrenner. Does the gentleman strike the last
word?
Mr. Bachus. I would like to ask the proponent of the
amendment----
Chairman Sensenbrenner. Will the gentleman strike the last
word?
Mr. Bachus. Move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Bachus. Mr. Goodlatte, you base the fee on an hourly
basis? What about depositions, expert witnesses' fees?
Mr. Goodlatte. They would not apply because it only applies
to the time expended from 10 days before trial through the
trial of the case. Extended lengthy discovery, which is one of
the complaints that we heard from the other--this, by the way,
this amendment has passed this Committee in two other
litigation reform bills and has passed the full House in that.
But the purpose is to limit the exposure in fairness to those
who complain, as the gentleman from California did, that
somehow this is targeted at lower-income people. It will only
have a limited amount of attorneys' fees.
Mr. Bachus. Well I am actually more confused now than ever.
You are saying this amendment only applies to attorneys' fees
and expenses incurred in 10 days before trial.
Mr. Scott. Will the gentleman yield?
Mr. Goodlatte. Let him ask his question first.
Chairman Sensenbrenner. The time belongs to the gentleman
from Alabama.
Mr. Bachus. So when the judge makes a finding on attorney
fees, he is just setting attorneys' fees for those last 10
days?
Mr. Goodlatte. That is right. That is to limit the
exposure. He also is limited to not granting an award of
attorneys' fees more than the equivalent in terms of a computed
hourly rate to the contingent fee of the plaintiff , so that
neither party is going to be able to load up on attorneys' fees
because they have six attorneys representing the defendant.
Mr. Bachus. So there wouldn't be any compensation for
attorneys' fees or expenses from the date the suit was filed to
10 days before.
Mr. Goodlatte. There are no attorneys' fees in any cases
like that today. This is a way to do that but to do it in a
controlled and limited manner.
Mr. Bachus. So the attorney, the plaintiff's attorney can
still collect his contingency fee.
Mr. Goodlatte. Oh, yeah, absolutely.
Mr. Bachus. So he would get a contingency fee plus he would
get this award?
Mr. Goodlatte. No. The plaintiff would recover the
attorneys' fees and then they could use a portion of that to
pay a portion of the contingent fee. That would depend upon the
arrangement that the plaintiff had with their attorney.
Mr. Scott. Will the gentleman yield?
Mr. Bachus. I am still not sure I----
Chairman Sensenbrenner. Does the gentleman from Alabama
yield to the gentleman from Virginia?
Mr. Bachus. I yield to the gentleman from Virginia.
Mr. Scott. Well, I am a little confused as you are because
on page 3, line 7--line 6--it says the court shall order the
offereee to pay the offerer's costs and expenses including
attorneys' fees, which would suggest that there is something
going on in addition to attorneys' fees.
Mr. Goodlatte. No. No.
Mr. Scott. No? Well, let me--and one other thing, to the
gentleman from Alabama, when you talk about the plaintiff
paying this contingent fee, that is true. But if you come in
under the offer, if they have offered 300,00 and you come in at
280, a result less favorable, the plaintiff has to pay his own
attorneys' fees and some of the defendant's attorneys' fees
too?
Mr. Goodlatte. That is correct.
Mr. Bachus. Well, taking back my time, Mr. Goodlatte, that
would mean a case when, if you got $280,000, which would mean
that it was actually--that was quite a lot of damage--that you
couldn't recover for your cost of depositions, for your filing
fee, for your expert witnesses. I would almost say that we
ought to have a provision, if we wanted to get rid of these,
that put an impetus on the parties to come forward in, say, the
first 30 days or the first 90 days after the suit was filed
before all these expenses were incurred. What if you had a
defendant that knew that they had committed malpractice, but
for 2 years they didn't reveal that, and it took a bunch of
depositions and hearings and--to smoke that out? I would almost
say you need to add to this provision for some sort of
sanctions or penalty when the defendant is guilty of fraudulent
nondisclosure.
Mr. Goodlatte. If the gentleman would yield, very quickly.
This does not preempt the usual standard provisions in either
State or Federal law that allows a judge under rule 11 in
Federal court to award some of those expenses to pay for expert
witnesses that are paid for, things like that, if the court
deems it appropriate. What this does, it adds an element of
attorneys' fees, because in most cases today very little if
anything is awarded, as a hindrance to those who bring suits
and do not either act reasonably in settlement of the case, or
bring a suit that is frivolous or fraudulent in its outset.
Chairman Sensenbrenner. The gentleman's time has expired.
Gentleman from Michigan.
Mr. Conyers. Mr. Chairman, we have got a vote pending.
Could I ask my good friend from Virginia if he would kindly
consider withdrawing the amendment, which was not considered
when we brought this bill back up again since we didn't even
have Subcommittee hearings. And perhaps we can work together--
there seems to be a lot of confusion about it.
Mr. Goodlatte. Well, I need to have this bill passed by the
Committee before it goes to the floor. So if the gentleman is
suggesting that we bring it up again later in this process
after I have some discussions, that would be fine.
Mr. Conyers. Absolutely.
Mr. Goodlatte. What is the Chairman's position on that?
Chairman Sensenbrenner. Without objection, the amendment is
withdrawn without prejudice to it being reintroduced prior to
the Committee reporting the bill.
Mr. Goodlatte. Thank you, Mr. Chair.
Chairman Sensenbrenner. So ordered. The Committee stands
recessed for the vote. Members will please return promptly.
[Recess.]
Chairman Sensenbrenner. The Committee will be in order.
When the Committee recessed, pending was a motion to favorably
report the bill H.R. 5. Unanimous consent had been granted to
have both the bill and the amendment in the nature of a
substitute considered as read and open for amendment at any
point. There--with the withdrawal of the Goodlatte amendment
there is no amendment pending.
Are there amendments?
Mr. Delahunt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from Massachusetts.
Mr. Delahunt. Mr. Chairman I have an amendment at the desk.
Chairman Sensenbrenner. The clerk will report the
amendment.
The Clerk. Amendment to H.R. 5 offered by Mr. Delahunt.
Section 3, amend the text to read as follows:
(a) Statute of Limitations. In any State or Federal court a
health care lawsuit----
Chairman Sensenbrenner. Without objection, the amendment is
considered as read and the gentleman from Massachusetts is
recognized for 5 minutes.
[The amendment follows:]
Mr. Delahunt. Mr. Chairman, this amendment would bar health
care lawsuits in all cases unless the complaint is filed within
a 3-year period after the date the injury occurs or should have
been discovered or is discovered. And it would follow the law
in most States, or many States rather, by ensuring that the
statute does not begin to run while the claimant is still a
minor.
Without this particular amendment that we are considering
now, it would bar recovery for people like Justin Mathers, a
remarkable young man from Englewood Cliffs, New Jersey. I met
him at a malpractice forum that was held last month in this
very room. His testimony was the most powerful and poignant I
have heard since I arrived here in Congress, and I truly wish
all of my colleagues had an opportunity to hear what he had to
say. He was born through a breach delivery because the
obstetrician failed to perform a C-section before Justin's
mother went into labor. His umbilical cord prolapsed, cutting
off his blood and oxygen supply. Eventually he was resuscitated
but immediately developed seizures and other symptoms of
cerebral palsy. The condition has deprived him of the ability
to perform many essential life activities. He has great
difficulty speaking. It was difficult to understand him. But
his clear mind and keen intellect came through. He spoke
movingly of the daily challenges he faces. And he told us that
he was determined to spare his family the financial burden of
caring for him as he grew older.
For whatever reason, his parents chose not to sue the
doctor for her negligence. But when Justin turned 20, he filed
suit on his own behalf. Eventually they reached a settlement
that will enable Justin to live a relatively independent live.
He could do this because in new Jersey, like many other States,
the statute of limitation for minors is tolled until they come
of age. Had H.R. 5 been the law, it would have preempted the
New Jersey statute and Justin would have forfeited his
opportunity to seek recovery.
Similarly, the bill as is currently written, would override
State laws that toll the statute where the medical injury has
not been discovered, allowing claimants whose conditions are
discovered at a later stage only 1 year to file a claim. This
unfairly penalizes victims of medical error whose consequences
are not immediately apparent or who discover years later that
the condition from which they suffer was in fact caused by a
medical error.
Just reflect for a moment on the thousands of young people
with hemophilia who acquired AIDS through a contaminated blood
infusion. In my district we have a number of families who lost
their sons in this way, due to the negligence of the blood
products industry to institute proper screening. Under the bill
as written, such victims would only have 1 year, once they
become aware of the condition, to file suit; hardly a
reasonable opportunity to consider their legal options and to
find a lawyer that are willing to take the case on.
The amendment would correct this injustice, affording all
claimants the same opportunity to take legal action once they
become aware of their injury, provided the failure to discover
the condition sooner was not due to their failure to exercise
reasonable diligence.
We take a look in this--we talk a lot in this Committee
about respecting States rights. Well, I believe if a State has
made a determination not to bar recovery in cases like these,
that decision is entitled to our respect and those victims are
entitled to their day in court, and I urge support for this
amendment.
Chairman Sensenbrenner. The gentleman's time has expired.
The Chair rises in opposition to the amendment and
recognizes himself for 5 minutes. This amendment should be
opposed, because effectively what it does is it has a statute
of limitations of up to 21 years for minors. This will drive
practically every OB-GYN in the country out of business,
because any insurance company, whether it is in the medical
liability area or any other type of casualty area, has to
predict its losses, set aside reserves, and then base its
premiums accordingly. With an OB-GYN, if negligence occurs at
the delivery of a child, that exposure would last for 18 years
plus the 3 that is given in the amendment by the gentleman from
Massachusetts, and that would mean that the liability premiums
for OB-GYNs would become confiscatory--and try finding an OB-
GYN when the time comes to bring a life into the world.
Now, I think the statue of limitations in the underlying
bill and the amendment in the nature of a substitute are
reasonable. It makes--the statute makes an exception for minors
under the age of 6, extending the time within which a suit must
be filed or the longer of 3 years from the manifestation of the
injury or the date when the minor reaches age 8. These
provisions are based upon the California MICRA law. And that
means that whether there is negligence that has resulted in
injury to a newborn, there is a reasonable amount of time to
file the lawsuit, which can be up to 8 years.
What the gentleman from Massachusetts is attempting to do
is to extend it so that it is an unreasonable time, and those
that have to buy insurance will pay and pay and pay till they
are out of business. I urge the defeat of the amendment, yield
back the balance of my time.
For what purpose the gentleman from Florida seek
recognition?
Mr. Wexler. Speak in support of the amendment, Mr.
Chairman.
Chairman Sensenbrenner. Gentleman is recognized for 5
minutes.
Mr. Wexler. Thank you, Mr. Chairman. The proponents of this
bill would argue as the Chairman so eloquently did, that the
generous statute of limitations that exists in certain States
contributes greatly to the so-called medical malpractice crisis
that is being experienced throughout the country.
Mr. Delahunt's amendment would effectively, as I understand
it, take the statute of limitations that is in the bill which
is a 1-year-from-date-of-injury statute of limitations, the
date that the injury was discovered, but no later than 3 years
after the date of injury, with the exception of those instances
in which the Chairman right fully pointed out with children
under 6.
I rise in support of the amendment because the whole
argument of the statute of limitations contributing greatly
this so-called generous statute of limitations contributing to
our crisis is misplaced. And I would like to talk a moment
about the situation in Florida, because I think it highlights
why this amendment should be passed and why the basic premise
of the objection and many of the basic premises of the bill are
faulty.
In Florida, which is a State of roughly 16 million people,
we would be told that there are an extraordinary amount of
medical malpractice cases and an extraordinary amount of awards
in excess of $250,000. And that is why we are here. That is why
the Congress is going to usurp the State's ability to regulate
medical malpractice. There is a Federal crisis.
Well, the truth of the matter is in the most-reported year
in Florida, which I believe is 2001, a State of 16 million
people, there were roughly 230 medical malpractice awards in
excess of $250,000. Not 20,000 awards, not 30,000 awards, not
even a thousand awards; 230 awards in a State of 16 million
people. But because these 230 awards were provided by juries of
our peers, we are now going to limit the statute of limitations
even further to make certain that there are less.
Now what is the real reason, contributory reason for the
malpractice situation in Florida, which I believe is comparable
to many States? What we now know from the group Public Citizen
in Florida, based on a recent study from data from the
Institute of Medicine, 6 percent of physicians are responsible
for 50 percent of the malpractice cases in Florida. Six percent
are responsible for half the malpractice cases in Florida. That
is not a statute of limitations problem. That is a peer review
problem. That is a failure of the medical profession to peer-
review properly and take the few bad apples out. That is a
failure of the insurance industry. That is a failure of the
hospitals that employ or otherwise associate themselves with
the physicians that are causing the problem.
Let's go further in Florida, if I may. Florida's chief
financial officer, a statewide elected Republican, very
appropriately admitted that the huge losses by the reinsurance
market and the undercharging by insurance companies in a
competitive market in previous years have contributed
significantly to the rapidly rising increases in medical
malpractice rates. The chief financial officer in Florida, an
elected Republican, didn't tell the State legislature we have a
statute of limitations problem. What he told the State
legislature is that we have insurance companies that are
messing around with the market. They are not dealing fairly
with the people of Florida, and that is the aspect that needs
to be changed. It is an issue of insurance reform. It is an
issue of peer review. It is an issue of many contributory
factors, but it is not an issue of a statute of limitation, and
and that is why I support Mr. Delahunt's amendment.
Thank you very much.
Chairman Sensenbrenner. The gentleman's time has expired.
For what purpose does the gentleman from Florida, Mr. Feeney,
seek recognition?
Mr. Feeney. Mr. Chairman, to oppose the amendment.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Feeney. With all due respect to my friend and colleague
from Florida, I have a little different perspective on the
situation that we have in Florida. Indeed, I will tell you that
the Governor's task force made up and chaired by my hometown
university president, Dr. John Hitt, concluded the other day
after a very nonpartisan review of the situation in Florida,
that indeed we are in a deep crisis, that we do need to have
caps and that the statute of limitations issues are part the
problem.
I will tell you in my hometown the Sanford emergency room
had to shut down for 4 days back in August. Orlando Regional
Medical Center, I just recently toured about four or 5 months
ago and their helicopter their trauma unit is now talking about
closing down because their neurosurgeons will not practice.
Orlando Regional Medical Center serves about 33 counties,
including the home county that I represent, throughout my
district, and I don't know what we are going to do if and when
that trauma unit closes down. I will tell you that my family's
OB-GYN, Dr. Diaz, who delivered both my 10-year-old Tommy and
my 4-year-old Sean, unfortunately is no longer delivering
babies after thousands of successful deliveries, including one
very difficult one of my 4-year-old Sean, where he sat with us
for about 4 or 5 hours to make sure that everything turned out
okay--and it did, although Sean misbehaves on a periodic basis.
It wasn't due to the delivery.
The fact of the matter is that it is not just Dr. Diaz, but
there are thousands of OB-GYNs practicing in Florida that are
either cutting back on the services they offer or they are
going out of business completely. We have got young residents
that typically of an 80 percent ratio would stay in Florida
that are now fleeing the State because of our medical
malpractice crisis.
Dr. Joseph Boyd, an Orlando neurosurgeon, had his rates
increased by 65 percent last year. I will tell you that we are
in a deep crisis. Governor Bush yesterday introduced a doctor
from south Florida who treated a young woman 4 months pregnant.
That woman was unable to find an OB-GYN to deal with her and to
treat her for the first 4 months of her pregnancy.
Unfortunately, by the time this doctor was able to see her,
because nobody else would, thanks to the medical malpractice
crisis, her baby had died of a very easily treatable situation.
Mr. Chairman, I would suggest that the problem we have in
Florida is that, just like any other State, there is going to
be a certain amount of accidents. There are going to be a
certain amount of malpractice that we need to deal with and
reimburse the victims of that malpractice. But the problem we
have is not that insurance companies are charging too little or
too much. Ten years ago we had over 26 insurers writing medical
malpractice premiums. If they are making obscene profits, I
want to know why we are down to two or three or four insurance
companies and why doctors can't get the coverage that they
need. We have doctors fleeing the emergency rooms, the delivery
rooms. We have patients that now can't find a doctor. And Mr.
Chairman, I respectfully would ask everybody to support--to
oppose the amendment and support this good bill for Florida's
future.
Chairman Sensenbrenner. The gentleman's time has expired.
For what purpose does the gentleman from New York seek
recognition?
Mr. Weiner. To support the amendment.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Weiner. And ask Mr. Delahunt--and I will yield to him
to answer the question. It seems that so much of the arguments
of the opponents to your amendment seem to be looking past the
notion that we are preempting State law wantonly in terms of
finding ways to help people become whole, like the case that
you outlined. Can you take the balance of my time to discuss
that issue a little bit? Because it seems that for many people
who describe themselves as States-righters and limited
government people, this seems to be an enormous abridgment on
the States rights to come up with laws on their own. And of
course, this whole effort shows utter contempt for the notion
that juries are capable of dealing with these cases and coming
up with fair compensation.
I yield the balance of my time.
Mr. Delahunt. Well, I thank the gentleman for yielding. And
the Chair made a statement that if we do not adopt, if we do
adopt the amendment that I have before the Committee, it would
drive OB-GYNs out of their States. And with all due respect to
the Chair, I have to take issue because there is absolutely no
data, empirical evidence, that supports that premise. It just
doesn't exist.
We had a hearing here yesterday. At no time--and there were
three witnesses that were put forth by the majority--at no time
did they submit testimony to that effect. The reality is that
there are many States that toll for minors according--that
would comply with the amendment that I have put forth.
Many, most of these States, by the way, are States where
the American Medical Association agrees that there is not a
crisis, that there is not a crisis. Let me read them to you.
Arizona, Illinois, Indiana, Kansas, Kentucky, Maine, Minnesota,
Missouri, New Jersey--well, New Jersey does. North Carolina,
Pennsylvania, Oregon, Rhode Island, South Dakota, Tennessee,
Utah, Vermont.
If the underlying bill passes not amended by what I have
put forward, these--all of these States will have their--the
provisions which toll the statutes for minors preempted. I
don't think we want to go down that route, particularly when it
does not appear, according to the AMA, a crisis in those
particular States.
Now, the gentleman from--the gentleman from Florida speaks
to the issue of malpractice driving out OB-GYN is in the State
of Florida. I would suggest that the forces that are escalating
malpractice premiums in some States are complex and they
require a systematic set of solutions, not just a simple--a
single remedy, a panacea that is not going to do the job. There
was a story today in USA today and I am quoting from an analyst
with Tillinghast-Towers Perrin by the name of James Hurley.
Hurley says our efforts to improve patient safety, tougher
review and discipline procedures for doctors and hospitals, and
a closer look at how the past decade's efforts to cut costs in
health care may affect the quality of medical care.
Let me suggest that the level of reimbursements through
Medicare and Medicaid to health care providers all over this
country are deteriorating the quality of health care that the
American people are receiving there, and are as much
responsible for the malpractice claims given the stress level
that is obviously being imposed on physicians and other health
care providers.
So it--to say that it is frivolous lawsuits, to say that it
is, you know, greedy trial lawyers that are causing this
particular crisis--and by the way, we have had crises before.
We had them in the seventies and we had them in the eighties,
and we are having this one now. But it's my understanding that
in the last 9 months, in fact, the amount of jury verdicts that
have been reported are down substantially. What our problem is,
we have a lousy economy, okay. The investment income that----
Chairman Sensenbrenner. The gentleman's time has expired.
The question is on the amendment.
Mr. Conyers. Mr. Chairman. I am sorry. I need to make a
comment on this, please.
Chairman Sensenbrenner. The gentleman from Michigan is
recognized for 5 minutes.
Mr. Conyers. Thank you very much. I wanted to commend Mr.
Wexler of Florida for his proposal to attempt to repair the
limitations that are--or Mr. Delahunt's attempt to repair the
limitations here. But my friend from Florida, Mr. Feeney,
raises a good question. He said why does--why, if the insurance
companies are making so much money, why are they--so many of
them going out of business?
And I just wanted to make a suggestion to him that when you
make bad investments, your income goes down if you are an
insurer, and if your income goes down, the malpractice premiums
go up. And sometimes their choices and problems in the stock
market are so bad that they can't raise it high enough and they
go out of business. And that is why you may be seeing so many
of them going under. They made bad choices, some of them which
are not correctable by just raising the premiums on the
doctors.
But to the amendment, can someone just give me, make me
feel a little bit better about this? What if a hemophiliac
contracted HIV from tainted blood but didn't learn about it,
through no fault of her own obviously, about the disease, until
4 years later? Where would she end up under this bill? I
presume out in the streets without a remedy.
Or what about a person who took a newly developed drug
prescribed by her dermatologist, to learn 4 years later that
the drug caused heart damage, damage to her own heart? What
about that for limitations? Anybody?
Okay. What about the case of a man who had a defective
pacemaker implanted that failed as a result of a product defect
5 years later? What is his remedy under limitations? Anybody?
So we have got to protect these people, Members of the
Committee. Is there somebody that doesn't want to? Well, if you
really want to, we have got to take into consideration the
Delahunt provision that is before us. Now, you can't be silent
on all these questions and then vote against Delahunt. I mean,
that is not going to work here. There has got to be some
reasons. We are not here to look at each other and just vote
like automatons. You have got to have some reasons for what you
are doing, and I would like somebody to make me feel better if
this is--if we don't make the changes that the Delahunt
amendment includes, well, what are we doing here this
afternoon?
I return my time.
Mr. Keller. Mr. Chairman.
Chairman Sensenbrenner. For what purpose the gentleman from
Florida, Mr. Keller, seek recognition?
Mr. Keller. Move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Keller. I want to argue against the amendment but
specifically limit my comments really to the other side of what
is going on in Florida as first introduced by Mr. Wexler and
later commented by Mr. Feeney. I can tell you from firsthand
experience, there absolutely is a crisis in Florida.
I represent Orlando and it is home to Orlando Regional
Medical Centers's level one trauma unit. A level one trauma
unit treats people with serious head injuries. We have the only
one within several hours. It was announced this past week that
that unit is closing down at the end of the month because
neurosurgeons are paying in excess of $200,000 a year in
medical malpractice premiums and they can't do it anymore. So
it is shutting down.
What effect does that have? Well, we don't have to guess,
because yesterday we had a lady, Ms. Dyess, who testified that
her husband was critically injured because he was taken to a
similar unit in her home State and the neurosurgeons weren't
there. They couldn't afford to be there.
Now, I met recently with a group of emergency room
physicians from this hospital, the main group of private
physicians there. They told me that they haven't had a single
claim at all this past year. Yet their medical malpractice
premiums went from $24,000 to $80,000. It is a genuine problem.
Mr. Wexler says that a Republican, Gallagher, said that he
doesn't think these caps are such a good idea. And I don't know
what, frankly, Mr. Gallagher was thinking. But I do know that
there was a commission put together by the Governor, made up of
university presidents, including a Democrat named Donna
Shalala, former Secretary of HHS under President Clinton, and
that commission said that we need precisely what we are trying
to do today: a $250,000 cap on damages.
We have heard different excuses that why this isn't a good
idea. First, insurance companies won't give the reductions to
MDs. Well, we heard yesterday from testimony that they will
reduce premiums. Second, we have heard that there is really not
a crisis; that they have lost all the money in the stock
market. We heard from the largest group of physician insurers
yesterday they invest less than 10 percent of their money in
the stock market. It has nothing whatsoever to do with it.
Third, something--that in California the MICRA law didn't have
anything to do with it; it was Prop 103. We learned yesterday
that really mostly deals with auto insurance.
We have a real crisis and it is genuine. It is in Florida.
Mr. Wexler says that maybe we can do a better job of getting
rid of bad doctors, and I think that is probably true
everywhere. There have been several recent highly publicized
cases in my hometown where licenses were revoked, where we had
awful malpractice cases, and I think there is some merit to
that argument. But there is a genuine crisis.
Mr. Conyers. Would the gentleman yield, please?
Mr. Keller. I yield back my time.
Mr. Watt. Would the gentleman yield to me?
Chairman Sensenbrenner. The gentleman from Florida has
yielded back his time. For what purpose does the gentleman from
North Carolina seek recognigtion?
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. Thank you, Mr. Chairman. I have a subsequent
amendment where I will be trying to frame this whole States
rights issue, so I will try not to take the whole 5 minutes
here. I just want to rise in support of Mr. Delahunt's
amendment briefly, and to say to Mr. Feeney and the gentleman
who just spoke, that I really don't have any doubt that Florida
is having a crisis.
We just got word in North Carolina that North Carolina is
having a--is on the verge of having a crisis. But it seems to
me to be sheer arrogance on our part and contrary substantially
to most of everything that my Republican colleagues say they
believe in, block granting things to the States, getting them
back to the local level, allowing States to make decisions
about Medicaid through block grants, block granting the housing
programs back to the States, and all of a sudden we have this
level of arrogance that somehow we have the ability, better
ability, better intellect, to solve Florida's problems or North
Carolina's problems than the legislators in North Carolina and
Florida.
A lot of us came out of the State legislature, not because
we thought we were brighter than the people in the State
legislature, but because we thought we could serve a different
role at the Federal level. And so this is not about whether
Florida has a crisis or North Carolina has a crisis. This is
about the--how the Federal form of government that we operate
under fits together. And I, for the life of me, have never seen
anybody malpractice across State lines. I don't know of any
hospitals that are sitting on State lines where the malpractice
takes place in this way. I just--tort law, malpractice
litigation, has always been a matter of State law.
And I just for the life of me, I can't understand how we
think in our arrogant minds, sitting here, that we somehow have
a better solution to fix Florida's problems than the
legislators in Florida have to fix Florida's problems. If they
have got a crisis in Florida, let them fix it. If we have got a
crisis in North Carolina, let us fix it. I thought that was
consistent with the philosophy that most of you all espouse all
the time and is certainly consistent with the Federal framework
that our Founding Fathers and our constitutional frameworkers
set up for us.
And so this seems to me to be an argument of expedience. We
are not getting the result that we want at the State level, so
let's federalize it. Well, a lot of things get done at the
State level that I don't like, but that doesn't mean that I
have some better ability to deal with that problem than the
folks in the State legislature do.
So, I will come back to this issue at a later time, but I
just think we are deluding ourselves and we are making the
wrong argument here when we talk about these crises at State
levels. Sure, we have got crisies at the State level. Let them
solve them.
I yield back.
[11:30 a.m.]
Chairman Sensenbrenner. The question is on the amendment--
--
Ms. Baldwin. Mr. Speaker, I move to strike the last word.
Chairman Sensenbrenner. The gentlewoman is recognized for 5
minutes.
Ms. Baldwin. I yield my time to Mr. Wexler.
Mr. Wexler. Thank you. I will be brief, Mr. Chairman. If I
could just inquire of my friends and colleagues from Florida,
Mr. Keller and Mr. Feeney, following the gentleman from North
Carolina's line of argument, is there something in Federal law
that we are not aware of that is preventing the Florida
legislature from acting? Because certainly it is not politics;
it is a legislature totally controlled by the Republican Party,
with a Republican Governor, and it has been that way not just
this term, but for the past 4 years.
So what is it that we in this Congress are doing that is
preventing the Florida legislature from adopting whatever tort
reform it sees fit to do? As I see it, the only thing they
could not do is maybe the one thing we should do, which is
remove the antitrust exemption which the insurance companies
currently enjoy, but certainly you are not arguing for that.
So what is it, what remedy do you think should be available
to the State of Florida that is not available because of
something we are preventing them from doing?
I yield my time to Mr. Feeney, if I could, Mr. Chairman.
Mr. Feeney. Actually, Congress isn't doing anything to
prevent the Republican or formerly Democratic legislature from
doing the sorts of things that we need to do here. It is the
six Democrats on the Florida Supreme Court. I would refer the
gentleman to Smith v. the Department of Insurance, April 23,
1987, when the Supreme Court basically said that under our
right of access provisions, under the Florida Constitution,
that a $450,000 cap would be unconstitutional.
So the point of the matter is that judges with certain
partisan attitudes actually have prevented the people's
legislature from enacting the very thing that we are trying to
do here, and that is to preserve access to our doctors for the
patients that I represent throughout the district.
Mr. Watt. Will the gentleman yield?
Mr. Wexler. Yes, of course.
Mr. Watt. I am just wondering whether we ought to impeach
the State judges now. Do we have the authority to do that at
the Federal level, too, just because of expedience, or do you
understand that there is some constitutional framework that we
are obligated as a matter of our constitutional oath to try to
maintain here?
Mr. Conyers. Would the gentleman yield?
Chairman Sensenbrenner. Let me point out that the time
belongs to the gentlewoman from Wisconsin.
Mr. Conyers. Will the gentlewoman yield?
Ms. Baldwin. I will be delighted to yield to Mr. Conyers.
Mr. Conyers. I just want my friend from North Carolina to
know that impeachment only runs through Federal judges and
other officers of the Federal Government.
Mr. Watt. Will the gentlewoman yield?
Ms. Baldwin. Yes.
Mr. Watt. I think that is only when it is expedient to run
to Federal judges. I mean if we are going to talk about
expedience, where do we get off this slippery slope once we get
on it?
Mr. Conyers. We could try to impeach a few State judges if
you really insist. I mean file your petition. Let's go for it.
Ms. Waters. Mr. Chairman.
Chairman Sensenbrenner. The gentlewoman from Wisconsin
still has 1 minute and 40 seconds left. Does she want to talk
for that period of time?
Ms. Baldwin. I would be delighted to yield back my
remaining time.
Chairman Sensenbrenner. Okay. The time has been yielded
back.
The question is on the Delahunt amendment.
Ms. Waters. Mr. Chairman, I would like to get on record on
this, and I move to strike the last word.
Chairman Sensenbrenner. Okay. The gentlewoman is recognized
for 5 minutes.
Ms. Waters. Thank you very much.
Mr. Chairman, I think that certainly very, very strong
arguments have been made in support of Mr. Delahunt's amendment
and I, too, join in supporting this amendment. I think that the
information, the evidence, and the documentation on behalf of
injured people certainly has been made here in this Committee
today in so many ways, and I am very appreciative for our
Ranking Member's identification of the kind of cases that must
always be kept in mind, so that we understand what it is we do
here today.
I think the central debate on not only this amendment, but
on this bill, really does have to do with this business about
whether or not there is a lawsuit explosion and whether or not
there is a crisis in this country.
Let me just say that I suppose that doctors in any State or
jurisdiction at any time could all decide to walk off, out of
their offices, off the job, out of the hospital, and I suppose
if they do it next year and they want to reduce the cap some
more and the year after that they want to reduce the cap, we
could be put in the position of saying we have no alternatives,
we have to do that. But I certainly think we do have
alternatives, and I think some of them have been pointed out.
But I would like to just speak to this lawsuit explosion
idea. We have been told that there is a lawsuit explosion and
that runaway juries are giving skyrocketing awards and injured
patients are winning a so-called ``litigation lottery.'' yet,
according to the Harvard Medical Practice Study, only one in
eight malpractice victims ever file a claim for compensation.
According to the National Practitioner Database, which is
composed of jury verdicts and settlements, the average payout
for 2001 in a medical malpractice case was only $125,000. This
amount is hardly comparable to lottery winnings. In fact,
studying payouts in constant dollars, we can see that the
amount has been stable.
So my question is, where is the explosion? Where is the
insurance industry getting their numbers? The Wall Street
Journal answered that question on January 24 in an article, and
the excerpt from that article basically said that the
litigation statistics most insurers trumpet are incomplete. The
statistics come from Jury Verdict Research, a Horsham,
Pennsylvania information service, but Jury Verdict Research
says its malpractice database has large gaps. It collects wide
information unsystematically, and it cannot say how many cases
it misses. More important, the database excludes trial
victories by doctors and hospitals, verdicts that are worth
zero dollars. That is a lot to ignore.
I simply want to get that into the record.
Mr. Watt. Will the gentlewoman yield?
Ms. Waters. Yes, I yield.
Mr. Watt. I just wanted to add one other statistic to the
statistic that the gentlewoman has just mentioned. The total,
if you added all of the medical negligence recoveries in this
country together for last year or the year before last, it
would be about $7 billion, I am told, out of a health care
system that has approximately $1.2, $1.3 trillion worth of
transactions. That would work out to less than one-half of 1
percent of the cost of the health care.
So all of this stuff that we are hearing about how this is
going to make some dramatic savings in the health care industry
is just not the case.
Mr. Delahunt. Would the gentlewoman yield for a question?
Ms. Waters. Yes, I would yield for a question.
Mr. Delahunt. I would ask Mr. Watt if he has had an
opportunity in his review of that $7 billion figure, if that $7
billion was broken down into economic and noneconomic costs,
could he inform us what was the amount of that $7 billion
aggregate that was allocated to noneconomic costs?
Mr. Watt. If the gentlewoman will yield.
Ms. Waters. I will yield to the gentleman.
Mr. Watt. I don't know the break-out, but I would tell you
that if you took your caps to zero, if you eliminated medical
malpractice, you would be having less than one-half of 1
percent.
Chairman Sensenbrenner. The gentlewoman's time has expired.
The gentleman from California, Mr. Schiff.
Mr. Schiff. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Schiff. I recognize the concern that the medical
community has about rising liability costs, and I think
physicians are in a very difficult place right now where they
are getting squeezed by the HMOs that are highly regulating
their practices and interfering with the patient-physician
relationship on the one hand, and they are facing increases in
liability insurance on the other, some of which are precluding
them from practicing, and certainly precluding many from
enjoying the practice of medicine. I happen to think that the
vast, vast majority of people that go into medicine do so for
the right reasons.
I am not sure that this is really going to address the
problem that physicians are facing. It is a very massive
preemption of 50 different States' approaches to dealing with
this, this crisis in many States and this problem in all of the
States.
In California, we passed something very similar called
MICRA. We passed this over 25 years ago. It had no adjustment
for inflation, and the cap was set at $250,000. Now, $250,000
in 1978 in California is a lot different than $250,000 in 2003.
Why doesn't this bill have a COLA? That is one of the most
modest positive changes that could be made. Why is even a COLA
being opposed in this bill?
It has to be because the expectation is that you have the
same inertia, the same inability to later change this, and 25
years from now the limit would still be $250,000. Why are we
preempting a whole host of other things that States are doing?
We are preempting statutes of limitations, fair share rules,
contingent fee rules, collateral source rules, and we are also
preempting even the standard for punitive damages.
So in California where we have struck quite a complex
balance where we have certain caps, we have all the protections
that Mr. Berman outlined in the hearing yesterday of greater
physician accountability, protections for facilities to report
other bad physicians' practices. We have several things that
crack down on physicians who are committing malpractice that
are a substitute or a proxy, in some respects, for the lack of
higher deterrent damage awards.
This bill does not have that intricate balance and it would
upset that balance in many States like California that have
gone through the laborious process of resolving that problem
for their constituents and for their medical practitioners.
When I asked the insurance company representative at the
hearing yesterday, would you support a sunset in this bill that
says that if rates don't go down as a result of this bill, that
it would be sunsetted out of existence, the answer was, well, I
can't give you an answer. I won't give you an answer. And why
won't we get an answer on that? Because there is a very real
prospect that the doctors will get no relief, the patients will
get no relief, and the additional revenues that are saved as a
result of this will be retained by the insurers, which is great
if you are in the insurance business. It just doesn't do much
to address the problem. That is the broader question: will this
bill really address the problem, or will it simply preempt the
50 laboratories around the country in their efforts to deal
with the problem?
I am kind of fascinated and a little bit shocked to hear my
colleague suggest that well, we need to do this because in some
States our State Constitution is so protective of patients that
we can't deal with it, so we want the Federal Government not
only to preempt State statutory law, we would like them to come
preempt our State constitutions as well. That seems to be an
odd defense of the doctrine of local control to say you are not
preempting enough if you just preempt our statutory law; you
need to preempt our State Constitution. Most States have a
mechanism, I don't know what the situation is in Florida, for
amending the Constitution if that is necessary, and I think it
just goes to the scope and the scale of the preemption that is
contemplated here.
Ms. Waters. Will the gentleman yield for a moment?
Mr. Schiff. I think I only have a couple of seconds left. I
just want to say very quickly, and then I will yield whatever
remaining time I have, we do have a problem here. I am not
convinced, given the severity of this bill, that we are going
to address the problem in a way that will not really impede the
quality of care and recourse for patients.
I yield the balance of my time to the gentlewoman from
California.
Ms. Waters. I would like to ask the gentleman from
California if, in fact, and I think we should make it clear
that we do have MICRA, but aside from the fact that you just
pointed out we don't have cost of living increases in MICRA,
that we generally do not support MICRA, and I think that is
your position. Could you elaborate on that?
Chairman Sensenbrenner. The gentleman's time has expired.
Ms. Waters. I want it on the record that MICRA is a problem
in California.
Chairman Sensenbrenner. Without objection, the gentleman
will have an additional minute.
Mr. Schiff. I thank the Chair for yielding.
I think the failure of MICRA to keep pace with inflation
has been a problem. I think there are some salutary aspects of
MICRA, but this bill goes way beyond MICRA, both in capping
noneconomic damages--or capping noncompensatory damages at a
level they were 25 years ago, capping punitive damages in a way
that California doesn't cap them at all, in changing the
standard of punitive damages, and a whole host of other things.
So this is not MICRA, this is a much more restrictive
measure than MICRA even was 25 years ago, and it does not
contain, as Mr. Berman outlined yesterday, any of the
safeguards that MICRA has.
Chairman Sensenbrenner. The gentleman's time has once again
expired.
The question is on the Delahunt amendment. Those in favor
will say aye; opposed, no. The noes appear to have it.
Mr. Delahunt. Mr. Chairman, I request a recorded vote.
Chairman Sensenbrenner. A recorded vote is demanded. All
those in favor of the Delahunt amendment will as your name is
called answer aye. Those opposed will say no.
The Clerk will call the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith votes no.
Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly votes no.
Mr. Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte votes no.
Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot votes no.
Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
Mr. Bachus. No.
The Clerk. Mr. Bachus votes no.
Mr. Hostettler.
[no response.]
The Clerk. Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
[no response.]
The Clerk. Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake votes no.
Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter votes no.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn votes no.
Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt votes aye.
Ms. Lofgren.
Ms. Lofgren. Aye.
The Clerk. Ms. Lofgren votes aye.
Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Ms. Waters.
Ms. Waters. Aye.
The Clerk. Ms. Waters votes aye.
Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan votes aye.
Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
Mr. Wexler. Aye.
The Clerk. Mr. Wexler votes aye.
Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner votes aye.
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Are there Members who wish to cast
or change their vote? The gentleman from Utah, Mr. Cannon.
Mr. Cannon. No.
Chairman Sensenbrenner. The gentleman from Tennessee, Mr.
Jenkins.
Mr. Jenkins. No.
Chairman Sensenbrenner. Are there further Members in the
chamber who wish to cast or change their votes? The gentlewoman
from Pennsylvania, Ms. Hart.
Ms. Hart. No.
Chairman Sensenbrenner. Anybody else who wishes to cast or
change their vote? If not, the Clerk will report.
The Clerk. Mr. Chairman, there are 15 ayes and 19 nays.
Chairman Sensenbrenner. And the amendment is not agreed to.
Are there further amendments? The gentleman from
California, Mr. Berman.
Mr. Berman. Mr. Chairman, I have an amendment at the desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Mr. Berman. At the end of the
bill, add the following new section: section, applicability.
Mr. Berman. Mr. Chairman, I ask unanimous consent that this
amendment be considered as read.
Chairman Sensenbrenner. Without objection, and the
gentleman is recognized for 5 minutes.
[The amendment follows:]
Mr. Berman. Mr. Chairman, the concept of this amendment was
addressed by the gentleman from California, Mr. Schiff. One can
debate whether we should federalize tort liability or not, one
can debate the extent to which the serious constraints imposed
by this bill taken from MICRA to a large extent will have
effects on insurance premiums, but the one thing I know is that
this bill keeps referencing the reforms in California and then
cherry picks those reforms to not take any of the reforms on
medical discipline that were contained in the MICRA law, or any
of the insurance company reforms.
My amendment deals with one aspect of that, and that is the
medical discipline reforms, and what it does is simply say that
for this bill to go into effect we maintain the concept of
State control of the discipline process, but we say that the
States responsible for licensing and disciplining health care
providers have to make public the identity and mandate a
reporting of the judgment or settlement of any case of medical
malpractice over $10,000 and any actions by a hospital to deny
or suspend hospital privileges for that very small percentage
of bad actors, doctors who are repeatedly the objects of
medical malpractice lawsuits, doctors and other health care
providers. These are all modeled on the California law, except
that we raise the standard from $3,000 to $10,000 in terms of
settlements and judgments, and we impose the obligation to be
public.
It seems to me philosophically you have to go one of two
ways on this. If we are going to reduce the accountability for
the conduct by virtue of these changes, some of which, by the
way, at least in the State context, I support, things like
periodic payments provisions and, to the dismay of my friend
from Virginia, Mr. Scott, I think the collateral source rule
makes some sense, but if you accept those premises even on the
State level that they are going to reduce the level of
accountability, then you have to provide the public with
another avenue to deal with the problem of that 5 percent that
Mr. Conyers talked about, that 5 percent or less of physicians
who are responsible for the majority of the medical malpractice
cases. And all this does is say, report the judgments and
settlements over $10,000 to your disciplinary board--hospitals
report decisions about suspending or revoking privileges of
physicians and other health care providers in your hospitals to
the State medical disciplinary board, and make those reports
and decisions available to the public so that a patient can
have an informed choice. If you are limiting his ability to
recover, then at least give him more access to information, and
if you do that, then this bill in its entirety can operate in
your State.
That is it, sort of plain and simple. Rather than cherry
picking the MICRA reforms, many States have no reporting
requirements or very weak reporting requirements. Do not touch
the issue of revocation of privileges. California did at the
very same time it passed all those tort reforms. I would
suggest that logic makes the same sense here.
I yield back the balance of my time.
Chairman Sensenbrenner. I yield myself 5 minutes in
opposition to the amendment.
First of all, today the gentleman from California has a
very soft spot in my heart, because we could have dunked your
amendment on germaneness grounds because you are imposing a
duty on the Department of Health and Human Services rather than
the Attorney General. HHS is outside the jurisdiction of this
Committee. But I think we ought to beat your amendment on the
merits rather than on a point of order.
Mr. Berman. Would the gentleman yield?
Chairman Sensenbrenner. Of course.
Mr. Berman. I am stunned to hear and sorry to see the
gentleman, for the first time, ever conceding any jurisdiction
of this Committee.
Chairman Sensenbrenner. Well, I am simply acquiescing to
the erosion of the jurisdiction of this Committee that appears
to have taken hold on my left. But again this amendment ought
to be defeated on its merits.
First, I don't think that we should be changing State
reporting and State open records requirements here. The
licensing function has not been touched by this bill. I will
grant you that there are problems with bad actors in the
medical profession, just like there are problems with bad
actors in practically every other profession. But I simply
don't want to see, for example, an entire hospital's license to
function be yanked as a result of the fact that there were
mistakes that occurred in the hospital, because that will
simply make the hospital much less willing to deal with risky
medical procedures that some patients might require in order to
attempt to try to bring them back to health.
Also, the amendment of the gentleman from California, you
know, it doesn't deal with consent decrees. The consent decree
is not admitting liability, but offering the payment that is
requested. The consent decree type of settlement is something
that would encourage cases to be settled before trial. If cases
go to trial, it is much more expensive, particularly to the
insurance carrier where the lawyer is paid on an hourly basis.
All of that gets folded into the liability premiums that all
physicians have to pay.
What this does is this ends up having a financial
disincentive to physicians that really practice medicine
ethically, honestly, and unnegligently, because any insurance
is a risk-sharing scheme, and it is the good doctors and the
good hospitals that are going to end up having to pay for the
bad ones.
So for all of these reasons I would urge that the
gentleman's amendment, nongermane though it is, be rejected.
I yield back the balance of my time.
Mr. Conyers. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from Michigan.
Mr. Conyers. I rise in support of the amendment, and I
yield to the gentleman from California.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Berman. I thank the gentleman for yielding.
I simply want to point out that this amendment does not
preempt anything, and I think there should be at least a little
humility about an amendment which says to the States you want
the Federal--you want us to federalize your traditional
jurisdiction in tort reform, in tort liability; all we say is
if you want that, then you, in a process, and we lay it out, we
don't preempt anything, if you want to take advantage of the
federalization of that, then provide the compensating processes
by which people can learn about what is happening to the
physicians, the hospitals, the other health care providers,
that they are utilizing.
In the mid-1970's, I carried a bill in the legislature and
it was fought by the medical association like mad, but we
managed to get it through, that said patients had a right to
see their medical records. People are not stupid. They are
going to understand that a physician may have settled something
for a few thousand--and remember the bar here, the floor is
$10,000, not just a small payoff, they are not going to
necessarily make decisions automatically on the basis that one
physician or one hospital had one malpractice liability case
over the course of their whole history. Trust the people. We do
not preempt anything. We simply say, the corollary of
federalizing and constraining tort liability and, therefore,
that kind of accountability, is beefing up the discipline
system to ensure that the public has the right to know the
history of malpractice claims, settlements, and judgments. We
cover settlements. I am not sure what the Chairman is referring
to when he says we don't cover consent settlements. We cover
all settlements over $10,000, and judgments and decisions by
peer review boards on hospitals to discipline a particular
physician.
I think it is a very sensible and reasonable approach that
does not open up the issue of whether we should be federalizing
or not and does not get into this great debate about whether
tort liability limitations will reduce premiums. It simply
says, if you want to take the MICRA example, do it on at least
two of the sides. This does not touch insurance regulation, but
do it on two sides, limits on tort liability, but beefing up
the information and the strength of your medical disciplinary
processes.
Mr. Delahunt. Will the gentleman yield? I thank the
gentleman for yielding and I rise to support the amendment. I
think it is an important amendment for many reasons. It might,
I don't know, because I haven't seen any studies or have access
to any data, but it might impact the levels of medical
malpractice premiums that are causing us all concern. But as
importantly, even more importantly, it could have a positive
impact in terms of the quality of medical care that is being
rendered to patients.
We have another crisis in this country, and that is that
there are an unacceptable level of medical care errors. I would
point out a 1999 study by the Institute of Medicine, which is
an arm of the National Academy of Sciences, that blamed medical
mistakes for the deaths of 44,000 to 98,000 hospitalized
Americans each year. We have a real crisis on our hands. I
would suggest that the gentleman's amendment would go to
protect those Americans that take advantage of our health care
system and particularly our hospital system.
I would think that given the statistics that have been
mentioned here today in terms of 5 percent of the physicians
who are responsible for some, I think it was 54 percent of
malpractice claims----
Chairman Sensenbrenner. The time of the gentleman from
Michigan has expired.
Mr. Delahunt. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The Chair said he would recess the
Committee at noon. The Chair is prepared to recess the
Committee. The votes are scheduled at 1 o'clock. The Committee
will reconvene at either 1:30 p.m. or 10 minutes after the end
of the last vote on suspensions.
The committee is recessed.
[Whereupon, at 12:00 p.m., the Committee was recessed, to
reconvene at 2:20 p.m. This same day.]
[2:20 p.m.]
Chairman Sensenbrenner. The Committee will be in order.
When the Committee recessed, pending was a motion to report the
bill H.R. 5 favorably. Also pending----
Mr. Nadler. Mr. Chairman.
Chairman Sensenbrenner. The Chair has to put the question
first.
Also pending was an amendment by the Chairman in the nature
of a substitute and an amendment to the amendment in the nature
of a substitute offered by the gentleman from California, Mr.
Berman. The pending question is on the Berman amendment.
Now, for what purpose does the gentleman from New York seek
recognition?
Mr. Delahunt. Mr. Chairman, if Mr. Nadler will yield, I
thought you had recognized me.
Chairman Sensenbrenner. No. I recessed the Committee.
Would you like to be recognized now?
Mr. Delahunt. Yes, I would, Mr. Chairman.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Delahunt. I just want to suggest that this particular
amendment makes eminently good sense. It would appear that the
proponents of the underlying bill are using the California
statute, its acronym is MICRA, as an example of how to reduce
or at least stabilize medical insurance, medical malpractice
premiums. Yet, as the gentleman from California pointed out,
and I know, or I believe that he served in the California
legislature at that point in time, the only provision of MICRA
that is culled is the cap on damages, on noneconomic damages. I
would suggest that this amendment is part of that California
statute, as Mr. Berman explained it, and it could very well be
a critical component of whatever, if any, success California
has achieved with the passage of that particular legislation.
Why should we hesitate, and I ask this looking for an
answer, why should we hesitate to inform and educate the
public? If the proponents are truly concerned about a
comprehensive effort, then this amendment should be passed. We
should not simply take one particular aspect of the California
law and think that it is a panacea, as has been reported in
numerous professional trade publications. This is an unanswered
and complex issue.
It could also presumably serve as a tool to weed out those
physicians who happen to be responsible for a disproportionate
share of medical errors. What we have now, I would submit, is a
system where good physicians, those who deliver quality health
care, are subsidizing the bad doctors, those who again, while
they are a small percentage, 5 percent to be exact, are
responsible for some 54 percent of malpractice claims,
according to the National Protection Database.
So let's end that subsidy, and maybe this is a tool that
will help us go in that direction. I would hope at the same
time that if we have an educated public and an informed public,
that it might help reduce the up to 98,000 deaths caused by
medical errors each year, 98,000 medical errors that result in
death each year. That is a crisis, and the amendment being
proposed by Mr. Berman again is a tool that might result in the
saving of lives, if you will. I can't see why there should be
any opposition to the amendment.
To respond to the Chair's observation, I would suggest that
his argument supports a selective federalism. In other words,
when it comes to the statute of limitations, when it comes to
caps, we will observe federalism. But when it comes to
protections or possible protection for the public, we won't.
I yield to Mr. Berman.
Mr. Berman. I am wondering if there is some kind of
doctrine of Gestapo that should be applied. If the other side
wants to argue in some bills you have to preserve the
laboratory of the States, to create a federalism, a dynamic
State action and quit trying to preempt and federalize
everything, and in other bills argue for federalizing
traditional State roles and nationalizing things that
essentially can be addressed at the local or State level. That
is fine, but should the Gestapo doctrine apply that says in the
same bill, you can't argue both sides of the issue?
Mr. Coble. [Presiding.] The gentleman's time has expired,
but I will permit him to respond to that.
Mr. Delahunt. Well, it is a very interesting concept and
listening to our colleague from Florida and their Supreme
Court, maybe if it was one that was put forth before the
Florida Supreme Court it might even be recognized.
Mr. Coble. The gentleman's time has expired. Anybody on my
right want to be heard? If not, I recognize the gentlewoman
from Wisconsin.
Ms. Baldwin. Mr. Chairman, I move to strike the last word.
Mr. Coble. The gentlewoman from Wisconsin is recognized for
5 minutes.
Ms. Baldwin. I want to thank Mr. Berman for his amendment.
It raises the key issue in this debate: accountability. We must
have a health care system that is accountable to its citizens.
Recourse to the court system is fundamental to accountability,
but this amendment helps clarify that there are other
protections that also promote accountability.
Soaring malpractice insurance rates need to be addressed
with two principles in mind. First, do no harm to the victims
of medical errors. Second, start by addressing the problems of
inadequate or expensive malpractice insurance.
If we adopt these two fundamental principles, narrow
Federal caps on noneconomic damages are not the way to address
the problems with malpractice insurance.
I want to start by talking just a moment about the medical
liability insurance situation in my home State of Wisconsin. In
short, we do not have any sort of crisis in Wisconsin. When
Wisconsin first addressed this issue in 1975, we started from
the premise that you don't deal with malpractice insurance
costs by blaming the victims, you start by addressing the
insurance issues, and that is what Wisconsin attempted to do.
We did three key things.
First, we required that all doctors have malpractice
insurance. Second, we created an insurer of last resort, the
Wisconsin Health Care Liability Insurance Plan, to provide
affordable malpractice insurance to those who could not find
any in the private marketplace. It is known as WHCLIP and
WHCLIP has been very successful with rate increases at or near
inflation in recent years.
Finally, we created something called the Wisconsin
Patients' Compensation Fund. The Patients' Compensation Fund
covers all economic damages exceeding $1 million per occurrence
or $3 million per year. The Patients' Compensation Fund, the
PCF, rates were down, and let me emphasize this, rates were
down 45 percent over the past 4 years. This year, there was an
increase, it was just 5 percent.
By pooling risk and making sure that all doctors have
coverage Wisconsin has successfully addressed this issue, and
these actions controlled malpractice insurance costs long
before Wisconsin ever debated or looked at or ultimately did
cap noneconomic damages.
As I have said, we did three things in Wisconsin to
specifically address the insurance problems; however, we really
did a lot more in this arena. We have had numerous safeguards
for providing accountability to our health care system. The
State of Wisconsin protects pay in manners beyond recourse to
the courts, which brings me to my final point: this really
should be a State issue. Each State has the authority and
capacity to address the problems they have. H.R. 5 provides a
one-size-fits-all approach that is overly broad and encroaches
on traditional State authority. Application of nationwide caps
does not account for different patient protections in each
State. At the very least, the provisions of H.R. 5 should be
combined with commensurate measures to ensure accountability,
and Mr. Berman's amendment brings that important process
forward.
I urge the Members of the Committee to adopt the Berman
amendment, and I yield back any remaining time.
Chairman Sensenbrenner. [presiding.] For what purpose does
the gentleman from Wisconsin seek recognition?
Mr. Green. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Green. Thank you, Mr. Chairman.
With due respect to my friend and colleague, I am also from
the State of Wisconsin, and we served together during the
period in time when the Patients' Compensation Fund was fixed.
In the early 1990's, as a result of not having the very types
of limits that this legislation would put into place, our
Patients' Compensation Fund was actuarially in great debt. In
fact, it was on the verge of going out of business without a
dramatic escalation of premiums by health care providers who
pay into the fund.
If we had not taken action, if we had not put into place
some of the very limits that we are talking about with the
legislation before us today, that Patients' Compensation Fund
for which my colleague is rightly proud would be out of
business. We would have the type of malpractice liability
crisis which other States do.
The American Medical Association produced a report not so
very long ago in which it said that the State of Wisconsin was
one of seven States that did not have a crisis and they pointed
specifically to the types of changes and limitations that this
legislation before us would do. It pointed to those changes as
being the reason why our State was not in crisis.
If we do not take the action today before us, we will see
the liability crisis spread to other States. It will hurt
access to care. We have learned that firsthand in Wisconsin.
Had we not imposed caps like we are talking about today, we
would be among the States in health care crisis.
Ms. Baldwin. Will the gentleman yield?
Mr. Green. I would be happy to yield to my colleague from
Wisconsin.
Ms. Baldwin. As this debate unfolds here and certainly as
it unfolded in Wisconsin, I know that the sides take very
strict interpretation of the facts before it. But I think many
would argue that in the State of Wisconsin we were reacting to
an actuarial misjudgment about the state of that fund and, in
fact, they recalculated only a few years later and found a $110
million miscalculation, essentially. We reacted----
Mr. Green. Well, reclaiming my time, the board of directors
of the Patients' Compensation Fund would strenuously disagree
with your interpretation. In fact, just recently, as you know,
the Governor of the State of Wisconsin is seeking to take $200
million out of that fund, and if he does that, according to the
board of directors of the Patients' Compensation Fund, he will
put it back dramatically into deficit.
This fund is what stabilizes malpractice premiums. There
are not many States that have this, but it stabilizes premiums,
and this again is all due to the fact that we placed reasonable
limitations on noneconomic damages.
The truth of the matter is, in the Wisconsin experience, we
had a crisis. We had rapidly rising rates. We had health care
practitioners talking about leaving the State or leaving the
higher risk specialties. It was the Patients' Compensation Fund
which was stabilized by the legislation that we created which
had restrictions similar to what we are talking about today
that solved that crisis. Had we not, Wisconsin would not be one
of the States that rightfully boasts of its situation; it would
be one of the States in crisis.
So with due respect, I strenuously disagree with your
interpretation. In fact, that simply is not borne out by
history.
With that, I yield back my time.
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. For what purpose does the gentleman
from North Carolina seek recognition?
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. Mr. Chairman, I was going to stay out of this,
but this debate has reached the point of almost being surreal
at the level that we were talking about this morning.
What Wisconsin did, regardless of whether you accept Ms.
Baldwin's analysis or whether you accept Mr. Green's analysis,
is that they, on a State level, came to grips with this matter
in their State and dealt with it in a way that fit the State of
Wisconsin, not on a one-size-fits-all, not without honoring the
federalism level, not presuming that the State legislators,
these two brilliant people who came out of there were stupid
and not going to do what was in the State's interest.
The point I keep making over and over again is, you know,
sure, Wisconsin does not have a crisis now, some States have a
crisis. But there is no rationale for us trying to think that
we can solve whatever that crisis is, or for that matter, that
we should try to solve whatever that crisis is. And it is
absolutely inconsistent with everything else that you all say
you stand for. To have us here debating about how Wisconsin
fixed it and the pros and cons of it illustrates that better
than anything else.
With that, I will yield to Mr. Berman.
Mr. Berman. Well, I just, along the lines of the gentleman
from North Carolina, I thought the discussion between the two
Members from Wisconsin was fascinating. It was the perfect
illustration of an agreement that this was not a crisis in
Wisconsin, a disagreement about which of the measures taken was
responsible for keeping it not a crisis, and a model that
certainly is applicable to all 50 States. Wisconsin was the
pioneer of States that used the concept of the States as
laboratories to pioneer things like workers' compensation, if
my memory serves me correctly, and a whole variety of other
measures, rather than waiting for a Federal solution.
Let these 50 States deal with an issue. This is not product
liability legislation where a manufacturer is distributing
products to 50 different States. We are talking primarily in
this bill, not exclusively but primarily, about health care
providers operating in a State under State laws, under State
disciplinary processes, and in a State tort system which can be
amended at the State level. I thought the debate between the
two Members from Wisconsin illustrated Mr. Watt's point just
perfectly.
Mr. Watt. Mr. Chairman, if I can reclaim my time for just a
moment, I am going to try to illustrate my goodwill by voting
against Mr. Berman's amendment.
Mr. Berman. Is that the way you----
Mr. Watt. Because really, the very point I made this
morning was once you get on this slippery slope--what Mr.
Berman is proposing to do probably is a wonderful idea and the
States ought to be doing that, they ought to be thinking about
it. But the problem is once you get on this slippery slope of
us trying to define what the States ought to be doing, there is
no way to get off it, and that is the problem with this bill.
You all are putting us on this slippery slope as if we have
some magic solution to every State's problem as opposed to
worrying about what our own issues ought to be. I am going to
give you a chance to vote on that. Let's do this in the Federal
courts on Federal matters and let the States do what they want
to do.
Mr. Berman. Will the gentleman yield for just one moment?
Mr. Watt. I am happy to yield to him.
Mr. Berman. I am wondering, when you are on a slippery
slope it is sometimes better to sit up and be ready to slide
down well rather than tumble head over heels.
Mr. Watt. You want to know why I am voting against it.
Because it is going to lose anyway, and it is not going to
affect outcome, and I am trying to make a point here.
Mr. Berman. Fair enough.
Mr. Watt. I am trying to be consistent.
Chairman Sensenbrenner. The question is on the Berman
amendment. Those in favor say aye, those opposed, no. The noes
appear to have it.
Mr. Berman. Mr. Chairman, I request a rollcall.
Chairman Sensenbrenner. Those in favor of the amendment
will answer as your names are called ``aye'' and those opposed
``no.''
The Clerk will call the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
[No response.]
The Clerk. Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith votes no.
Mr. Gallegly.
[no response.]
The Clerk. Mr. Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte votes no.
Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot votes no.
Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler votes no.
Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
[no response.]
The Clerk. Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
[no response.]
The Clerk. Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
[no response.]
The Clerk. Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. No, with an asterisk.
The Clerk. Mr. Watt votes no.
Ms. Lofgren.
Ms. Lofgren. Aye.
The Clerk. Ms. Lofgren votes aye.
Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
Mr. Wexler. Aye.
The Clerk. Mr. Wexler votes aye.
Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
[no response.]
The Clerk. Mr. Schiff.
[no response.]
The Clerk. Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast their vote?
The gentleman from North Carolina.
Mr. Coble. No.
Chairman Sensenbrenner. Mr. Keller.
Mr. Keller. No.
Chairman Sensenbrenner. Are there further Members who wish
to cast or change their vote?
The gentleman from California, Mr. Gallegly.
Mr. Gallegly. No.
Chairman Sensenbrenner. The Clerk will report.
The Clerk. Mr. Chairman, there are 10 ayes and 16 noes.
Chairman Sensenbrenner. The amendment is not agreed to.
Are there further amendments?
Mr. Nadler. Mr. Chairman, I have two amendments, the first
is number----
Chairman Sensenbrenner. Do you wish to have them considered
en bloc?
Mr. Nadler. No, no, no.
Chairman Sensenbrenner. Okay.
Mr. Nadler. The first amendment is Nadler 030.
Chairman Sensenbrenner. The Clerk will report Nadler 030.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Mr. Nadler. After section 11,
insert the following new section and redesignate----
Mr. Nadler. Mr. Chairman, I move to waive the reading.
Chairman Sensenbrenner. Without objection, the amendment is
considered as read and the gentleman from New York is
recognized for 5 minutes.
[The amendment follows:]
Mr. Nadler. Thank you, Mr. Chairman.
This amendment is designed to prevent the often dangerous
practice of sealing information from malpractice lawsuits that
could be used to protect the health and safety of others. Too
often a doctor who may be guilty of a malpractice settles a
lawsuit with a plaintiff and places a restriction in the
settlement that all details of the case must remain secret.
This ensures that no one else will ever know of the harm he or
she has inflicted upon the victim. It also ensures that doctors
who may be not the most competent cannot be avoided by future
victims.
I remind Members of the heartbreaking story we heard
yesterday from Sherry Keller. She went into the hospital for a
routine hysterectomy and wound up with a spinal cord injury. We
are fortunate that she was able to share her story with us
yesterday and that she will be able to tell others of the
malpractice she suffered. But for those injured patients who
enter into secret settlements, their stories will never come to
light and the doctors who ruin their lives will go on to treat
other patients, their dangerous practices hidden from the
public.
If we really want to reduce the incidence of malpractice
lawsuits, the place to begin would be to reduce the incidence
of malpractice itself. Without full disclosure of these cases,
medical boards will not know which doctors to monitor and
patients will not know which doctors to avoid. It is important
for people to be aware of the health and safety hazards that
may exist in the medical profession so that other people can
make informed choices about their lives and, I might add, so
that public agencies and professional organizations can crack
down on such dangers.
When critical information is sealed from the public, other
people may be harmed as a result.
Some Members may remember that this past fall, South
Carolina's Federal judges recognized the danger inherent in
sealed settlements and moved to end this disgraceful practice,
except in extraordinary circumstances. As the New York times
wrote in praising this decision, quote, ``The main loser in
secret settlements is the public consumers of the private
information they need to protect themselves from unsafe
products,'' unquote. In this case, unsafe doctors.
I hope that this will signal the beginning of a trend
toward openness in the courts across the country. But we should
take the step today to protect the public health and safety by
passing this amendment. Let me add that this amendment is
reasonably drafted to protect for gag orders--to allow for gag
orders when a judge finds that it is appropriate. It is written
in such a way that the judge must make a finding of fact where
a gag order is requested. If the judge finds that the privacy
interest is broader than the public interest, then the judgment
must issue the gag order. If the judge finds the public
interest and the health and safety outweighs the privacy
interests asserted, the judge may not issue such an order.
The judge also has to make the order drafted as tight as
possible. This will prevent the unnecessary disclosure of
confidential information, but will not allow the sealing of
information whose sealing may harm the public. When it comes to
health and safety, public access to malpractice lawsuit
materials is essential.
I urge my colleagues to support this amendment. And I yield
back the balance of my time.
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes in opposition to the amendment. This is another
federalization amendment which I am sure my friend from North
Carolina will vigorously oppose.
I think that the best way to deal with what is sealed and
what is not sealed is on a case-by-case basis and to leave that
up to the judge that is presiding over each individual case. He
can decide under what circumstances matters can be placed under
seal, what type of protective orders can be placed under seal,
and sometimes this is to help ensure the privacy of the
plaintiff from having people snoop around in court records.
I would hope this amendment would be rejected. It is much
broader than the amendment that was previously rejected,
offered by Mr. Berman of California.
I yield back the balance of my time. Gentleman from
California.
Mr. Berman. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Berman. I yield to the gentleman from New York.
Mr. Nadler. Thank you. I thank the gentleman from
California for yielding to me and I would comment that the
Chairman said this should be done on a case-by-case basis,
which is exactly what this amendment does. The amendment says
that such records may be sealed if the court makes a finding of
fact, in writing, that the order would restrict access to a
court record would not restrict the disclosure of information
which is relevant to public health and safety, or that the
public interest in disclosing potential health or safety
hazards is clearly outweighed by a specific and substantial
interest in maintaining the confidentiality information of
records in question. That is what this amendment says.
So it is the--the judge would make a finding of fact in
each case. It is specific case by case, as the Chairman
suggested. All the amendment prohibits is an automatic sealing,
because the plaintiff and the--a plaintiff says I will give a
million dollars--I am sorry--defendant says I will give a
million dollars but you have got to seal the record; the
defendant says okay, and the judge rubber-stamps it. That is
what is forbidden here. The judge still has the authority to
seal the information if he finds that the public interest is
outweighed by some specific privacy interest and that the
information--or that the information is not necessary for
public health and safety.
As for federalization, this whole bill federalizes, you
know, medical malpractice and that is not an argument against
this. Much of what we have heard today, much of what we have
heard today and at the hearing yesterday, is that a lot of the
problem with high premiums come from the fact that a relatively
small number of doctors commit a relatively large percentage of
the malpractice, and this would go a long way toward solving
that problem.
Mr. Delahunt. Would the gentleman yield for a question?
Mr. Nadler. Yes, I will yield.
Mr. Delahunt. The Chair indicated a concern for the privacy
of the plaintiff. Would the gentleman from----
Mr. Nadler. I am sorry.
Mr. Delahunt. The Chair indicated in his response on the
amendment that it very well might violate a privacy interest of
the plaintiff. Would the gentleman from New York insert a
friendly amendment to make the issue of confidentiality at the
option of the plaintiff to address the concerns by the----
Mr. Nadler. No, because the--no, because once you--I thank
the gentleman. Once you make it the option of the plaintiff or
the defendant, the defendant is going to say to the plaintiff,
you can have the million dollars only if you exercise this
option.
What we have done in this amendment is to say that if there
is a privacy interest asserted, the judge makes the decision
whether that--the public interest overcomes that privacy
interest. It says specifically the judge must make a finding of
fact, in writing, that the public interest is clearly
outweighed by a specific and substantial interest in
maintaining the confidentiality. If he makes that finding, it
goes the other way.
Mr. Delahunt. I appreciate the response and I think it is a
valid one; yet at the same time, think it is important that we
understand that these confidentiality agreements are usually
concluded not because of a decision by the plaintiff, and not
because of a concern on--with privacy issues by the plaintiff--
but, rather, because of the position of the defendant.
Mr. Nadler. Reclaiming my time, I agree with you. But if we
allow the plaintiff the option, that will be a condition
imposed upon him by the defendant.
Mr. Delahunt. Well, I daresay that that would be a stretch.
But I am trying to see whether--if an amendment to your
amendment would meet the concerns that were expressed by the
Chairman so that possibly we could have a unanimous amendment.
Mr. Nadler. I would point out also that the bill says--the
third requirement that I didn't read is that the judge must
find that the order to restrict access to a court record is no
broader than necessary to protect the privacy interest
asserted. It is taken care of by the judge here. You have to
let the judge decide it because otherwise the amendment
wouldn't do anything at all because the defendant would always
demand----
Mr. Delahunt. Well I am glad that you, you know, read the
language relative to the privacy interest because it possibly--
I think it changed the opinion.
Mr. Nadler. Well, the privacy interest is completely
protected as long as--the judge has to find that the public
interest and the public health and safety outweighs the privacy
interest asserted. The privacy interest must be specifically
asserted.
And I would simply say that all this amendment does is
change the defaults. Under current law it is presumed it can be
sealed. Under this amendment it would presume you can't presume
it either way. But the judge can make the finding if you assert
a privacy interest and he asserts a public health interest.
Chairman Sensenbrenner. The time of the gentleman from
California has expired.
Mr. Nadler. I thank the gentleman.
Chairman Sensenbrenner. For what purpose does the gentleman
from Virginia, Mr. Scott, seek recognition?
Mr. Scott. Move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Scott. Mr. Chairman, on page 3, line 18 of the bill
under discussion, one of the purposes is to provide increased
sharing of information in the health care system which will
reduce unintended injury and improve patient care. I found
nothing in the bill, other than this potential amendment, that
would fulfill that purpose.
And I would therefore support the amendment. Yield back.
Chairman Sensenbrenner. Thank you. The gentleman's time has
expired. The question is on the Nadler amendment 030.
Those in favor will say aye.
Opposed, no.
The noes appear to have it.
Mr. Nadler. Mr. Chairman, I ask for a rollcall.
Chairman Sensenbrenner. A rollcall is demanded and will be
ordered. Those in favor of Nadler 030 will, as your names are
called, answer aye. Those opposed, no. And the clerk will call
the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
[No response.]
The Clerk. Mr. Smith.
[No response.]
The Clerk. Mr. Gallegly.
[No response.]
The Clerk. Mr. Goodlatte.
[No response.]
The Clerk. Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot, no.
Mr. Jenkins.
[No response.]
The Clerk. Mr. Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon, no.
Mr. Bachus.
[No response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler, no.
Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green, no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller, no.
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart, no.
Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake, no.
Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence, no.
Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes, no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King, no.
Mr. Carter.
[No response.]
The Clerk. Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney, no.
Mrs. Blackburn.
[No response.]
The Clerk. Mr. Conyers.
[No response.]
The Clerk. Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman, aye.
Mr. Boucher.
[No response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler, aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott, aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt, aye.
Ms. Lofgren.
[No response.]
The Clerk. Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee, aye.
Ms. Waters.
Ms. Waters. Aye.
The Clerk. Ms. Waters, aye.
Mr. Meehan.
[No response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt, aye.
Mr. Wexler.
[No response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin, aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner, aye.
Mr. Schiff.
[No response.]
The Clerk. Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez, aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman, no.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast or change their vote? Gentleman from Virginia,
Mr. Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte, no.
Chairman Sensenbrenner. Gentleman from Tennessee, Mr.
Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins, no.
Chairman Sensenbrenner. Gentleman from North Carolina, Mr.
Coble.
Mr. Coble. No.
The Clerk. Mr. Coble, no.
Chairman Sensenbrenner. Gentleman from Texas, Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith no.
Chairman Sensenbrenner. Gentleman from California, Mr.
Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly, no.
Chairman Sensenbrenner. Gentleman from Michigan, Mr.
Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers, aye.
Chairman Sensenbrenner. Further Members who wish to cast or
change their votes? Gentleman from Texas, Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter, no.
Chairman Sensenbrenner. Gentlewoman from Tennessee, Mrs.
Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn, no.
Chairman Sensenbrenner. Anybody else? Going once, going
twice, and the clerk will report. Gentleman from California,
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff, aye.
Chairman Sensenbrenner. Gentleman from Massachusetts, Mr.
Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan, aye.
Chairman Sensenbrenner. Let's try again. The clerk will
report.
The Clerk. Mr. Chairman, there are 13 ayes and 19 nays.
Chairman Sensenbrenner. The amendment is not agreed to.
Are there further amendments? Gentleman from New York.
Mr. Nadler. Mr. Chairman.
Chairman Sensenbrenner. Gentleman from New York.
Mr. Nadler. Thank you. I have my amendment number 31.
Chairman Sensenbrenner. The clerk will report amendment
number 31.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Mr. Nadler:
Sections 4(b), 4(c), and 7(b)(2), insert after
``$250,000"----
Mr. Nadler. Mr. Chairman , move to dispense with the
reading.
Chairman Sensenbrenner. Without objection, the reading is
dispensed with. The gentleman is recognized for 5 minutes.
[The amendment follows:]
Mr. Nadler. Thank you, Mr. Chairman. This is a very simple
amendment that merely indexes the $250,000 cap on noneconomic
and punitive damages in the bill. This amendment last year got
an even vote. There was not a bipartisan--it got a bipartisan
vote; it was defeated on a tie vote.
So I hope people will listen carefully. It simply indexes,
the amendment, the $250,000 cap for the cost of living.
Providing for a cost-of-living adjustment whenever there is a
dollar amount in a bill is simply responsible legislating,
whatever the issue. And in this case I think it is especially
appropriate. Perhaps $250,000 was a reasonable cap in 1975 when
MICRA was enacted in California more than 27 years ago. But
that was not indexed. So the people who voted for a $250,000
cap in 1975, it is still 75,000--$250,000 today; and it is the
equivalent in 1975 dollars of a little less than $39,000,
$38,877 for pain and suffering. If the MICRA cap had kept pace
with inflation, it would be about $850,000 today, a more
reasonable place to start.
Given that we are already beginning with such a stringent
cap in this bill, namely, 27 years behind MICRA, it certainly
makes sense to provide for an increase to allow for inflation
so that the very modest compensation available does not become,
with the passage of time, absolutely meaningless. I hope that
is not what the supporters of this bill ultimately intend. This
is a commonsense change that would ensure at least some measure
of basic fairness in the bill so that people with noneconomic
damages, especially if you are talking about older people or
children who have no job loss, you know, no income loss, just
because they were killed and the only damage is pain and
suffering, loss of companionship, whatever, if you set a
$250,000 now, 15 years from now it is going to be $50,000. That
shouldn't be.
So I urge people to consider this seriously and to vote for
this amendment to simply index the $250,000 cap on noneconomic
damages and on punitive damages, to index it according to the
cost of living, as we do so many other things.
I thank the Chairman and I yield back the balance of my
time.
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes in opposition of the amendment.
This amendment should be opposed because it severely
weakens the cap on noneconomic damages. Caps on noneconomic
damages are essential to the success of the HEALTH Act's
reform. The key to the success of the MICRA reforms in
California is its cap on noneconomic damages of $250,000 which
are not indexed to inflation. In the NAIC study, liability
premiums show that from 1976 to 2000 the premiums in California
increased 167 percent, whereas in the rest of the country they
have been increased by 505 percent. I think that very clearly
shows that not indexing the pain and suffering damages in
California has had a distinct affect on controlling medical
liability premiums.
The California cap has stood the test of time and remains
an effective check on medical professional liability rates
precisely because it was not indexed to inflation back in 1975.
Perhaps some graduates of the California legislature will
shortly be admitting their mistake for not indexing it to
inflation; but it wasn't, and we have seen what has happened
with the premiums. What may be described by some as an
arbitrary figure in 1975 has become the keystone of the only
proven long-term legislative solution for the current crisis in
access to medical care. Indexing that figure to inflation would
throw a wrench into the long-term medical professional
liability premium-reducing machine that is California's MICRA
reforms.
I will tell you what: Show me where the Consumer Price
Index measures pain and suffering and I will support indexing
to inflation. The simple fact is that pain and suffering can't
be measured and therefore it makes no sense to index it to the
CPI. Quantifiable economic damages are not limited by H.R. 5
because those damages can be measured and are adjusted upward
for future years to account for inflationary effects on
economic goods and services that can be quantified. Pain and
suffering can't be quantified so it makes no sense to tie it to
the quantification of things that have nothing to do with pain
and suffering. It is mixing apples and oranges.
Keep this in mind. California, where a cap on noneconomic
damages that has not been indexed to inflation and which has
been the law for over 25 years, has healthier people than the
Nation as a whole. According to California health statistics
for the year 2000, the overall mortality rate in California is
24 percent below the national average and the infant mortality
rate in California is 19 percent below the national average.
Lower economic damage awards in California have led to
healthier people.
And I yield back the balance of my time.
Mr. Berman. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from California, for
what purpose do you seek recognition?
Mr. Berman. I move to strike the last word.
Chairman Sensenbrenner. You are recognized for 5 minutes.
Mr. Berman. First of all, California is healthier because
the Democrats have controlled the legislature there for the
last 40 or 50 years.
Chairman Sensenbrenner. Will the gentleman yield?
Mr. Berman. Yes, sir.
Chairman Sensenbrenner. Are all the tax increases that are
on the docket there, are they raising people's blood pressure
out there?
Mr. Berman. We are a people--a laid-back people.
Secondly, pain and suffering can't be quantified and,
dammit, let's accept this $250,000 cap in pain and suffering.
The quantification works when it serves your purpose.
And third, I yield to the gentleman from New York, Mr.
Nadler, for further comments on this.
Mr. Nadler. Thank you. I am really astounded, I must say. I
thank the gentleman for yielding. I am astounded at the
Chairman's argument. What you are really saying is the
California bill, which includes among other provisions a
$250,000 cap has succeeded in keeping down premiums. Therefore,
it should be--and it is not indexed. And if we indexed it,
maybe premiums would go up and maybe they wouldn't; and maybe
people would be healthier and maybe they wouldn't; because, Mr.
Berman said, maybe people are healthy in California because the
Democrats have controlled the legislature, because it is
sunnier, or for whatever reason. I mean you have to establish
some causal relationship to what you assert.
But the fact of the matter is what you are really saying is
why don't we allow people zero recovery for pain and suffering;
because if you index something at whatever number, take 50,000,
250,000, 550,000, and you don't index it, eventually that
number is going to be almost zero. It is going to be almost
worthless depending how long you want to go.
Now, yes, it is impossible to quantify pain and suffering.
But are you going to say to me--is anyone really going to say
that someone such as the witness who was sitting in that chair
yesterday, who will never walk again, whose spine was injured
by injury, who didn't--who had no great economic loss because
she wasn't working, but she shouldn't be compensated for her
loss of the ability to walk or the fact that she will be
confined to a wheelchair forever? That the death of a child
should not be compensated at all?
I think most of us agree, I hope everybody in this room
agrees that pain and suffering should be compensated to some
extent. Once you have said that, I don't know how you set it at
250 or 500, or what the cap is, but once you set a cap, if you
don't index it for inflation, that cap gradually becomes
worthless and it becomes for all practical purposes zero.
And frankly, if you are trying to pass a bill--now, I
disagree with you on this bill, obviously. But hopefully the
proponents of this bill, hopefully the supporters of this bill
think it is a fair and a balanced bill, and a fair and a
balanced bill may say that some people will recover less in the
interests of keeping insurance premiums down because that is
the proper balance. So, other people will say they have nothing
to do with each other. That is the debate on the bill. But even
if they do have something to do with each other, even if you
assume that it is terrible high malpractice awards that are
resulting in high insurance premiums and other evils, therefore
we have got to cap them, fine. But you still have to balance
it. You are not going to say that in order to cap--in order to
keep insurance rates from going too high, we are going to say
that people who are injured by someone's negligence can recover
nothing, should get nothing for their injury, for their pain
and suffering, for their noneconomic injuries. And that is what
the argument of the Chairman really says.
I would come back and say again, if you think that $250,000
is a fair amount today and will help cap malpractice insurance
rates today, then the equivalent in real dollars, $250,000 10
years from now, or what is worth $250,000 in today's dollars 10
years from now, will be just as fair or unfair and will be just
as effective or ineffective in helping malpractice rates.
I hope the argument isn't we will start at 250 and we will
get everybody gullible enough to vote for it, knowing that
eventually it is going to go down, year by year, to 200 and 150
and 100 and 50 and 30,000 and eventually be worth less than
nothing, and maybe we will keep insurance rates down at the
price of people who are injured by someone else's negligence
getting nothing back. That is just not right and I hope people
will seriously think of this. And if $250,000, in real dollars,
in today's dollars, is fair today, then the same amount of
money in real dollars is fair tomorrow and 10 years from now
and that is what this amendment does.
I yield back to----
Ms. Jackson Lee. Mr. Chairman.
Chairman Sensenbrenner. For what purpose dos the
gentlewoman from Texas, Ms. Jackson Lee, seek recognition?
Ms. Jackson Lee. I would like to strike the last word.
Chairman Sensenbrenner. The gentlewoman is recognized for 5
minutes.
Ms. Jackson Lee. Thank you very much. Let me rise to
support Mr. Nadler's I think very reasonable response to the
pain and the hurt and the loss of life that many of the victims
expressed to us yesterday. One of the concerns that I have had
in even bringing this legislation to the point that it is now,
listening to the President's remarks yesterday that this is
couched as a fight between lawyers and doctors.
Now, in this august room with these very esteemed Members,
some of whom are lawyers, who have taken the oath as I have--
some have not, and we are very gratified for their presence to
bring a breath of fresh air. I think it should be clear that
lawyers have their duty and obligations under the constitution
and the laws of this land and doctors have their role and
responsibilities.
It seems to me that we are hypocrites if we cannot at the
same time that this legislation proposes to be reasonable and
responsible in the area of caps, and we can't be sufficiently
responsible to acknowledge the pain and that $250,000 without
an accelerator clause, if you will, makes sense, because of the
fact that we are talking about people who have been devastated.
Mr. President, this is not a fight between lawyers and
doctors, as we would all say. There are doctors who are my best
friend. I hope lawyers can say the same thing. But it is to
John McCormick who did not testify here yesterday, who lost his
13-month-old daughter because of clear malfeasance and
incompetence that could be attributable to some of the
providers he had to deal with in his State of Massachusetts; or
to the lack of a physician being present, or however the
situation occurred to the witness from Mississippi; or the
other witness, Mrs. Keller I believe her name was, who came
here in a wheelchair.
So this seems to me that this is pushing the envelope when
you can't even add to legislation a clause that responds to the
fact that $250,000 20 years from now is a joke. And frankly,
you can go back to California and take this bill with you,
because the California relief did not come until they put in
price controls in 1988. It did not occur with this legislation.
I am appalled that when you find most of my constituents and
others in this country shut out of the judiciary system,
literally without the ability to get counsel, no dollars to be
able to go into the courthouse, most plaintiff cases thrown out
of court, and most of my constituents literally hanging outside
the courtroom door, short of contingency fees, and the
structure that we have, blocked away from the judicial system,
that we would even entertain this kind of legislation when men
and women are on the front lines fighting for our freedom who
have had to give up cars and homes because they have had to go
off into the military, which I bless them for doing because
they can't afford it. And I think that this is an outrage.
I would be happy to yield to the distinguished gentlelady
from California as I continue. This is outrageous and I would
yield to the gentlelady.
Ms. Lofgren. I just want to thank the gentlelady for her
passionate comments and I oppose this bill. I don't think the
Federal Government ought to be in the job of preempting the
tort laws of the 50 States. But I will say for those who
disagree with me, you should be looking for this kind of an
amendment because should this ever become law, the pressure to
change the law is going to be immense. That is what is
happening in California right now. Because what everyone
thought about $250,000 in 1975, it is a small percentage today.
And so if you really want this bill to last, you should
approve this amendment. I thank the gentlelady for yielding.
Ms. Jackson Lee. Well, thank the distinguished gentlelady
from California who is actually living the experience.
Mr. Chairman, what I say about Mr. Nadler's amendment--and
the gentlelady is absolutely right. This is an amendment that
should be passed in a bipartisan way, because I hope that we
leave this room and we clarify to the American people this is
not a fight between two professionals, doctors and lawyers. I
would rather be fighting for the victims who have lost babies,
lost limbs, lost their ability to function and lost their loved
one.
And so this small clause actually speaks to the fairness
that this bill suggests that it is attempting. And I think it
is nothing but a payout to the insurance industry. It doesn't
help doctors and it doesn't help lawyers, and I hope that you
support the Nadler----
Chairman Sensenbrenner. The time of the gentlelady has
expired.
Ms. Jackson Lee. I hope that you support the Nadler
amendment. Thank you, Mr. Chairman.
Chairman Sensenbrenner. The question is on----
Mr. Delahunt. Mr. Chairman.
Chairman Sensenbrenner. Who seeks recognition?
Mr. Delahunt. Mr. Chairman, down here.
Chairman Sensenbrenner. The gentleman from Massachusetts,
Mr. Delahunt.
Mr. Delahunt. I thank the Chair for recognizing me. I will
be submitting an amendment that will make an adjustment from
1975, but I am pleased that we finally have determined where
the $250,000 figure came from. For a while, I just thought that
it came--was pulled out of the air. But it would appear that
that figure was adopted from the California bill. And if any of
the proponents of the legislation differ with that statement, I
would call on them to respond, because I think it is important.
I don't know what the methodology was back in 1975 to
achieve the figure of $250,000. But somehow the California
legislature in 1975 was able to quantify pain and suffering.
Now, maybe there was some magic to it. But $250,000 today is
the equivalent of $38,000 back in 1975. I think it is important
for a moment to address this issue of pain and suffering and,
really, what does it mean in terms of reduction of malpractice
premiums.
There was a report that was undertaken in behalf of the New
Jersey Medical Association by a consultant firm. They
estimated--and this was done for the New Jersey Medical
Association, not for a trade association of trial lawyers, but
physicians. They estimated that a State cap of $250,000 for
pain and suffering might result in a 5 to 7 percent savings for
physicians for premiums. Five to 7 percent.
If we accept the argument that it is solely the cap, the
$250,000, that is exclusively responsible for the experience in
California, then we ignore all of the other aspects of the
provisions of that law that were previously enumerated when Mr.
Berman put forth his amendment. I don't think that anybody
will--can unequivocally state, because there is no evidence.
There is no data that show that simply a cap on noneconomic
damages is responsible. Of course, jury verdicts are going up
because the cost of health care has gone up over 27 years.
Wages have gone up over 27 years. But to not adjust the cap for
noneconomic damages I suggest is cruel, particularly when I
remember the testimony of a woman from California whose son is
blind as a result of a shunt and a medical error that was
involved in his medical care; who is blind, who will never see,
be able to talk; is for all intents and purposes someone that
will never lead a normal life; that the jury awarded him in
California $7 million, but he was only able to receive 250,000
because of that limitation. Is that fair? It is cruel.
I yield back.
Chairman Sensenbrenner. The question is on the Nadler
amendment.
Those in favor will say aye.
Opposed, no.
Noes appear to have it. Noes have it.
Mr. Nadler. Mr. Chairman, I ask for the ayes and nays.
Chairman Sensenbrenner. The rollcall will be ordered. Those
in favor of Nadler amendment number 31 will, as your name is
called, answer aye. Those opposed, no. The clerk will call the
roll.
The Clerk. Mr. Hyde.
Mr. Hyde. No.
The Clerk. Mr. Hyde, no.
Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble, no.
Mr. Smith.
[No response.]
The Clerk. Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly, no.
Mr. Goodlatte.
[No response.]
The Clerk. Mr. Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot, aye.
Mr. Jenkins.
Mr. Jenkins. Aye.
The Clerk. Mr. Jenkins, aye.
Mr. Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon, no.
Mr. Bachus.
[No response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler, no.
Mr. Green.
[No response.]
The Clerk. Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller, no.
Ms. Hart.
[No response.]
The Clerk. Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake, no.
Mr. Pence.
[No response.]
The Clerk. Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes, no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King, no.
Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter, no.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney, no.
Mrs. Blackburn.
[No response.]
The Clerk. Mr. Conyers. Oh I am sorry. Mrs. Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn, no.
Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers, aye.
Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman, aye.
Mr. Boucher.
[No response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler, aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott, aye.
Mr. Watt.
[No response.]
The Clerk. Ms. Lofgren.
Ms. Lofgren. Aye.
The Clerk. Ms. Lofgren, aye.
Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee, aye.
Ms. Waters.
[No response.]
The Clerk. Mr. Meehan.
[No response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt, aye.
Mr. Wexler.
[No response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin, aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner, aye.
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff, aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez, aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman, no.
Chairman Sensenbrenner. Are there additional Members in the
room who wish to cast or change their vote? Gentleman from
Texas, Mr. Smith.
Mr. Smith. Mr. Chairman I vote no.
The Clerk. Mr. Smith, no.
Chairman Sensenbrenner. Gentleman from Alabama, Mr. Bachus.
Mr. Bachus. Yes.
The Clerk. Mr. Bachus, yes.
Chairman Sensenbrenner. The gentlewoman from Pennsylvania,
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart, no.
Chairman Sensenbrenner. Gentleman from Indiana, Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence, no.
Chairman Sensenbrenner. Gentleman from North Carolina, Mr.
Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt, aye.
Chairman Sensenbrenner. The gentleman from Massachusetts,
Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan, aye.
Chairman Sensenbrenner. Gentleman from Virginia, Mr.
Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte, no.
Chairman Sensenbrenner. Further Members who wish to cast or
change their votes? If not, the clerk will report.
The Clerk. Mr. Chairman, there are 16 ayes and 17 nays.
Chairman Sensenbrenner. And the amendment is not agreed to.
Are there further amendments? Gentleman from North
Carolina, Mr. Watt.
Mr. Watt. I have an amendment at the desk, Mr. Chairman.
Chairman Sensenbrenner. Clerk will report the amendment.
The Clerk. Amendment to the amendment in the nature of a
substitute.
Mr. Watt. I ask unanimous consent that the amendment be
considered as read.
Chairman Sensenbrenner. Will the gentleman forbear until
the amendment is passed out? The clerk will continue to report.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Mr. Watt:
In section 9----
Chairman Sensenbrenner. Without objection, the amendment is
considered as read. The gentleman will be recognized for 5
minutes.
[The amendment follows:]
Mr. Watt. Thank you Mr. Chairman. Let me first of all make
a couple of disclaimers. Number one, the Members of the
Committee should be aware that I plan to vote against this bill
even if this amendment passes, because I think this whole
concept of what we are doing is a bad idea, whether we are
doing it at the Federal level or whether we are doing it at the
State level. It seems to me to run contrary to the whole
concept of personal responsibility. We hold everybody else in
our society personally responsible for negligence and the
conduct that they engage in, and I see no reason that we should
make an exception for physicians, lawyers, other professionals
that we don't make in general.
But if there is a rational place to do this, and if we can
do it within the constitutional framework in which we are
operating, without doing harm to the whole concept of
federalism under which our constitutional framework was set up
and which we have bought into for years, I guess I concede that
we have the authority, even though I think it is a bad idea, to
do it with respect to imposing these caps with respect to
Federal cases, cases that are in the Federal court, where there
is a clear Federal jurisdiction.
And that is what this amendment would do. Basically it
would limit the effect of this legislation to cases that are
brought into Federal court. Presumably, then, there would be a
rational Federal connection; otherwise the case wouldn't be in
Federal court. There would be diversity of citizenship. There
would be some rational Federal basis.
As I said this morning, I have not seen a malpractice or a
negligent act performed by a physician that overlapped State
lines, that--and I do not believe that we have any monopoly on
what works. I confess that I used to think that the Federal
Government was guardian of certain things, that it stood for
something more important perhaps than what the States stood
for. My position on that has evolved over the years. I used to
think, before I got here, that Members of Congress had some
superior intellectual prowess perhaps over the people who
served in the State legislature. My opinion on that has
certainly evolved in the last 11 years that I have been here.
And I just don't see a rational basis for federalizing tort law
in the way that this bill does it. If there is a rationale for
it--and I think that this has been illustrated more than
anything else in the discussion about Florida and what is
taking place in Florida, earlier in the discussion about
Wisconsin, and the debate between Ms. Baldwin and Mr. Green--if
there is a rationale for doing something, that rationale exists
at the State level and we should not undo our whole system of
federalism to impose a one-size-fits-all solution to this
problem at the Federal level. So I would ask my colleagues to
try to exercise some analytical----
Chairman Sensenbrenner. The gentleman's time has expired.
Ms. Jackson Lee. Mr. Chairman.
Chairman Sensenbrenner. The Chair recognizes himself in
opposition to the amendment. This amendment eviscerates the
bill because it only applies the reforms to lawsuits that are
filed in Federal court, not in State court, not pursuant to
some type of alternative dispute resolution. That means----
Mr. Watt. Is the Chairman running the clock for himself?
Chairman Sensenbrenner. Well, the clock didn't start----
Mr. Watt. Thank you, Mr. Chairman.
Chairman Sensenbrenner. The Chair never talks for 5
minutes. You know that.
Mr. Watt. I was just wondering whether you were operating
under a different set of rules.
Chairman Sensenbrenner. No. The Chair operates under more
restrictive rules than the gentleman from North Carolina.
But what this amendment does, it eviscerates the bill
because it only applies to actions brought in Federal court,
not the State court, not in alternative dispute resolutions. So
a plaintiff's lawyer that is looking to get the medical
liability jackpot will simply steer away from Federal court.
And I think that that would eviscerate this law because you
would end up having no lawsuits filed in Federal court. You
would still have the same problems that this bill is designed
to correct. And the ultimate bottom line of correcting this is
to provide for accessibility of quality medical care throughout
the country.
Now, I don't know what the redistricting has done in the
gentleman from North Carolina's district, but if the only place
can you find qualified highly skilled neurosurgeons in North
Carolina is either in Durham or in Charlotte, I would submit
that there will probably be a lot of the gentleman's
constituents that will be underserved should they need the
services of a very highly skilled neurosurgeon. And that is
what the bottom line is, should amendments like this be
adopted.
I would urge the defeat of the gentleman's amendment, and I
yield back the balance of my 3 minutes and 15 seconds.
For what purpose does the gentleman from Virginia seek
recognition?
Mr. Scott. Mr. Chairman, to speak in favor of the
amendment, Mr. Chairman.
Chairman Sensenbrenner. Gentleman is recognized for 5
minutes.
Mr. Scott. Mr. Chairman, I think it is a good amendment and
I yield the balance of my time to the gentleman from North
Carolina.
Mr. Watt. I just--I want to complete the sentence that I
was in the middle of when my 5 minutes expired and the rules
were applied to me. I don't mind abiding by the same rules that
the Chairman is abiding by. As long as they apply equally, I
play by them.
The Chairman should understand that the most recent
egregious medical negligence case in America was in North
Carolina at Duke University Medical School. The notion that we
could impliedly, implicitly, expressly, or otherwise sanction
that kind of irresponsibility, capping the pain that the
parents or the patient experienced having the wrong organs with
the wrong blood type put into a person's body and then seeing
her wither away, and watching it play out in the national
press, we ought to be sick about the prospect of even thinking
that we should hold welfare moms accountable and then excuse in
some way that kind of irresponsibility.
And that is what I think about this bill in the final
analysis. I mean I have tried to--you know, you all are always
standing up talking about personal responsibility and people
having responsibility for what they do in life when it is
convenient for you to do it. That is when you stand up and do
it. Well, it ain't convenient for you in this case because
somebody contributed to a campaign fund or this person got more
power than that person. It ain't convenient for you to think
about the compromise and the bargain that was made between the
States and the Federal Government when our Nation was formed.
It ain't convenient for you all of a sudden because it serves
some kind of political purpose and agenda that you are playing
out. You ought to get responsible for what we are doing here
today.
That is what this bill is about. And I say to you, and I
say it up front, I am not voting for it, whether you pass this
amendment or not. I said it. Because it would be irresponsible
for me to vote for it and say to doctors, no, you don't have
any responsibility, while at the same time we are saying to
welfare moms, yeah, you have got to have responsibility for
everything you do.
If you are going to apply a standard of responsibility,
apply the same standard and apply the same standard to yourself
as you think about these votes that we are casting in this
Committee. And I say to you that this is irresponsible. That is
what this bill is. It is irresponsible. And I say it to you as
somebody who has seen a woman--represented a woman who walked
into surgery for a simple hysterectomy and stayed in a coma for
10 years. I am going to reward some doctor who was responsible
for that?
Ms. Jackson Lee. Would you yield, Mr. Scott?
Mr. Scott. I yield.
Ms. Jackson Lee. Let me just say that the question simply
is should it be the State's prerogative. And I just recount
that California's law was fixed by Californians when they fixed
the rates. This should be a State's issue and we should not be
doing this legislation today.
I yield back. I support the amendment.
Mr. Feeney. Mr. Chairman.
Chairman Sensenbrenner. The time of the gentleman has
expired. The gentleman from Florida, Mr. Feeney.
Mr. Feeney. Thank you, Mr. Chairman. I appreciate the
intent of the amendment and want to address that. On the issue
of convenience, I respect the fact that what we do here is we
balance different interests. And I will tell you that it is not
convenient for the people in 33 counties that are losing their
trauma center in central Florida to fly to Jacksonville or
Miami when they have a head injury or an emergency. It is
certainly not convenient for the people of Florida as they are
turned away by their neurosurgeons, by their OB-GYNs, by an
increasing number of health professionals, to go to, say,
California, which has a fairly healthy health care system with
respect to medical malpractice rates. And the fact of the
matter is that we are seeing patients with serious treatment
needs being turned away in many places across the State of
Florida, as they are in other crisis States.
Now, I do think that the gentleman has some interesting
points with respect to his amendment about the federalism
issues. I happen to be a big advocate of the 10th amendment,
and I wrestled with the issue because I think being
intellectually honest and consistent is something that, as
difficult as it is in a process like this, is important to
strive for. I will suggest to you that if there are true
libertarians on the Committee who take the position that the
Federal Government ought to get out entirely of the health care
business, then I think that they would be perfectly appropriate
to oppose this bill.
But the fact of the matter is we provide health care
services to our current Armed Forces, to our veterans, to
patients served in the Indian health care system. We provide an
enormous Medicare system for all of our seniors, and we--
through tax dollars. We have a significant Medicaid system for
people in need. We have tax credits, that I approve of, to
encourage individuals to take care of their own health care
needs, and we have tax credits for employers, which I approve
of, to encourage them to cover the people that work for them.
Those tax credits, by the way, maybe $4,000 for a family of
four if you have got a responsible medical malpractice system,
but they may be 5 or 6 or $7,000 in costs if you have an
irresponsible system.
I think we owe it to taxpayers, if we are going to be in
the health care subsidy business, I don't think we have any
choice but to make sure that the tax dollars in our Medicare,
our Medicaid, treatment of the armed services, treatment of the
veterans, and through the tax credits are dealt with
responsibly. The estimates are anywhere between 25 and a $100
billion that can be saved to Federal taxpayers if we will have
a responsible civil litigation system that will hold doctors
responsible for negligence on all of the economic damages, all
of the actual medical costs.
And one last thing I would tell the gentleman is that we do
have a problem in the State of Florida. We have a very active
judiciary that is perfectly happy--by the way, several of whom
are former trial attorneys and perhaps their view of this is
colored by their background--but they are very happy to
substitute their biases and their prejudices on political
issues like this for those of the elected representatives.
We don't have a choice, and I don't think the Federal
taxpayers have a choice, other than to do the responsible
thing.
Mr. Watt. Will the gentleman yield?
Mr. Feeney. I would be pleased to.
Mr. Watt. I appreciate the gentleman yielding. And I
certainly appreciate his having internalized what I am saying,
to at least think about what it is we are doing here. I agree
with you, if we wanted to apply a cap to Medicaid recipients,
Medicare recipients, veterans who receive the benefit of our
Federal largesse, we have the right to do that. There is at
least some Federal nexus there.
That is why I did this amendment, because there are cases
in which there is a Federal nexus that would justify us--I
wouldn't think it was--I wouldn't think it would be a good idea
to do it, but I--at least you wouldn't come face to face with
this States rights rhetoric that most people conveniently walk
away from.
This bill is way overboard beyond what you are talking
about, and I hope the gentleman will think carefully about it.
Mr. Feeney. Well, I am grateful for the concession with
respect to things that we pay for or subsidize. We do have a
right to do away with injustices in the malpractice system. And
I therefore would suggest that maybe if you would take a look
at the tax credit provisions in our Code that cover all the
private insurance issues out there and would suggest that
between the defense I have medical practices that are
necessitated by an overactive trial bar and between the tax
credit costs for high jury verdicts, the bottom line is we are
giving larger credits than we need to, and the Federal Treasury
is losing the opportunity to pay for things like Medicare
prescription drug coverage, et cetera, because we are giving
larger credits than we would have to give without the out-of-
balance----
Chairman Sensenbrenner. The gentleman from Florida's time
has expired.
Mr. Delahunt. Move to strike the last word, Mr. Chairman.
Chairman Sensenbrenner. The gentleman from New York, Mr.
Weiner was waiving his hand.
Mr. Weiner. Thank you Mr. Chair. I move to strike the last
word. I would point out that in response to the gentleman's
comments, one thing was not responded to, and it is the notion
that individuals have responsibility. And one of the ways that
we enforce that responsibility is through the justice system.
You know, to think that--to listen to some of this debate, you
would think that the people that these laws were written to
protect were everyone as a group. In fact, it is to try to give
individuals who were harmed a place to go--and some the stories
that Mr. Delahunt mentioned.
And I guess there is also another current here, not so much
that the States can't do it themselves; there is utter contempt
apparent on the part of the sponsors of this legislation and
its supporters for regular Americans who sit on juries. They
are apparently incapable of figuring out these issues. They are
incapable of drawing conclusions about what a reasonable amount
for pain and suffering is. They are incapable of saying, you
know, what, a 16-year-old person who's had a botched transplant
may have different pain and suffering than a 70-year-old who
has had a botched transplant. They are completely incapable of
making that decision.
Where did that contempt for regular Americans who sit on
juries come from? What makes you think, what makes you so
contemptuous of the people in your districts that sit on juries
every day, who are able to listen to complex evidence, go back
and forth, hear persuasion from lawyers, evidence? Why is it
that there is such contempt for their ability to make these
decisions? I mean, it is puzzling to me that for folks that
talk all the time about returning accountability and returning
responsibility to individual Americans that, when it comes to
these types of decisions oh, no, they can't do it; we have got
to do it for them. We have got to come up with one bill that
has one number here in the Federal Government that is going to
make these decisions.
I can tell you, you know, the idea that people who get
their jury notices and go and sit on these trials and listen to
the evidence back and forth, that they are too dumb to figure
it out is essentially the undercurrent of this legislation. I
mean, what--why do you have such contempt for your constituents
that way? They can figure it out. There are smart people in
your districts. They elected you. They must be smart people.
You know, why is it that not only are we taking authority
from the States under all of this, we are taking authority away
from people's ability to judge what went on to their neighbors
and people within their own State. And I don't share that level
of contempt. I don't share that sense that, so, we can't figure
out pain and suffering, that 9 or 12 of my constituents can't
figure it out.
And the previous speaker, the distinguished gentleman from
Florida, talked about overactive judges. Well, do you only want
to make this bill for judges, for juries before judges? I mean,
then maybe we can talk about that. And let juries be able to
figure out these things if you don't trust the judges. And the
juries aren't elected to anything; they are Democrats, they are
Republicans, they are independents. They are people with common
sense, with ``seychel.'' I don't know how to spell it, but it
is a Yiddish word for common sense, and I apologize in advance
for violating the rules of the Committee for speaking a foreign
language.
[3:45 p.m.]
Mr. Weiner. But the--except in Brooklyn, it arguably is not
a foreign language, but that is a whole other story.
Chairman Sensenbrenner. The gentleman's intent is clear.
Mr. Weiner. Thank you, sir. I also apologize for spitting
during my remarks.
But if you think that the State legislatures can't, okay.
If you don't like them or if you don't think they can figure it
out for themselves, as I think they can, fine. But at least you
should have some confidence in the abilities of individuals to
sort these matters out. They have been doing it for hundreds of
years, and God willing, and with the wisdom of this Committee,
they will be able to continue to do it.
I yield back the balance of my time.
Chairman Sensenbrenner. The question is on the Watt
amendment.
Mr. Delahunt. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Delahunt. I just want to pick up on what the gentleman
from Florida said in terms of the closing of the hospitals.
Again, I am not familiar with the particulars in Florida, nor
specifically in his district, but again, I don't know what
juries are like in Florida, and maybe there are runaway juries
in Florida, but that is something for the Florida Legislature
and the Florida political leadership to make a decision on.
But I am having a problem when I continue to hear that
physicians are fleeing from certain jurisdictions, because
there have been studies, I mean actual legitimate studies, that
have been conducted, again, not by trial lawyer associations,
but by the American Medical Association. This one was done in
2001, so it is relatively up to date. I just want to read the
conclusions that I have reached into the record, and these are
from--this is from the research.
Despite plans by doctors' groups and the insurance
industry, doctors are not leaving certain fields because they
cannot afford the insurance premiums. Data from the American
Medical Association actually shows that there are 4.4 percent
more physicians in patient care per 100,000 of the population
in States without damage caps, without damage caps. There are
5.8 percent more OB-GYN physicians per 100,000 women in States
without caps. And in States without malpractice limitations,
there are 233 physicians per 100,000 residents, while in States
with malpractice limitations there are 223 physicians per
100,000 residents.
So rather than just simply, as we have during the course of
this debate, accept these statements that people are fleeing
and hospitals are closing, according to the American Medical
Association that is not the case. Now, it might be the case in
Florida, and obviously it is an issue that has to be addressed,
but it doesn't rely exclusively, as this bill would, on capping
noneconomic losses. I am sure there are multiple reasons why
that is happening; I dare say the limited--the limited
reimbursements to hospitals under Medicaid and Medicare. I
mean, that I know is an issue, because when I talk to my
physicians, that is what I am hearing. I am not hearing about
malpractice premiums, I am hearing about the fact that Medicare
does not adequately cover the cost to health care providers,
and that is clearly part of the problem also, and we ignore it,
just like we ignore the fact that a disproportionate number of
physicians are responsible for the majority of malpractice
claims. Yet if one accepts this bill, it is really all about
caps and noneconomic damages.
I yield back.
Chairman Sensenbrenner. The question is on the Watt
amendment. Those in favor will say aye.
Those opposed, no.
The noes appear to have it.
Mr. Watt. Mr. Chairman, I ask for a recorded vote.
Chairman Sensenbrenner. A rollcall is ordered. Those in
favor of the Watt amendment will, as your names are called,
answer aye; those opposed, no.
The Clerk will call the roll.
The Clerk. Mr. Hyde.
Mr. Hyde. No.
The Clerk. Mr. Hyde votes no.
Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith votes no.
Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly votes no.
Mr. Goodlatte.
[no response.]
The Clerk. Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot votes no.
Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Mr. Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon votes no.
Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
[no response.]
The Clerk. Mr. Green.
[No response.]
The Clerk. Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
[no response.]
The Clerk. Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake votes no.
Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter votes no.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
[no response.]
The Clerk. Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt votes aye.
Ms. Lofgren.
[no response.]
The Clerk. Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner votes aye.
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast or change their votes? The gentleman from
Wisconsin, Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Chairman Sensenbrenner. The gentlewoman from Pennsylvania,
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Chairman Sensenbrenner. The gentleman from Indiana, Mr.
Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Chairman Sensenbrenner. Anybody else? The gentleman from
Massachusetts, Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan votes aye.
Chairman Sensenbrenner. Are there other Members in the
chamber who wish to cast or change their vote?
The gentleman from Virginia, Mr. Goodlatte.
Mr. Goodlatte. No.
The Clerk. Mr. Goodlatte votes no.
Chairman Sensenbrenner. The Clerk will report.
Ms. Jackson Lee. Mr. Chairman, how am I recorded?
Chairman Sensenbrenner. How is the gentlewoman from Texas
recorded?
The Clerk. Ms. Jackson Lee is reported as aye.
Ms. Jackson Lee. Aye.
Chairman Sensenbrenner. The Clerk will report.
The Clerk. Mr. Chairman, there are 12 ayes and 18 nays.
Chairman Sensenbrenner. And the amendment is not agreed to.
Further amendments?
Mr. Delahunt. Mr. Chairman, I have an amendment at the
desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5, offered by Mr. Delahunt. Section 4,
strike $250,000 each place such term appears and insert
$1,600,000.
Chairman Sensenbrenner. The gentleman from Massachusetts is
recognized for 5 minutes.
[The amendment follows:]
Mr. Delahunt. Thank you, Mr. Chairman.
The bill, as has been discussed repeatedly, places a cap on
noneconomic damages in the amount of $250,000, a number which I
think we have discovered comes from the so-called MICRA
legislation adopted in California in 1975, 23 years ago now.
This amendment would adjust that number for inflation,
including medical inflation, to reflect the value of $250,000
in today's terms. If it worked then, I guess that we can adjust
it for inflation and it would work now.
As the charts indicate, and I have asked them to be
distributed, that when the amount is adjusted to reflect the
changes in the Consumer Price Index over the last quarter
century, it turns out that $250,000 was worth just $38,877 in
1975. In fact, it would have taken $1,600,000 to purchase the
same amount of medical care in 2002 that $250,000 would have
bought in 1975, therefore this $1,600,000 figure in the
amendment.
Under section 4 of the bill as written the defendant only
gets $250,000, as we have discussed. That does not go very far,
obviously, if you have a catastrophic illness with attendant
expenses. In fact, the bill provides that the jury should not
even be told about the limitation, perhaps because jurors would
be shocked today at that number. Jurors can award whatever they
wish, but unbeknownst to them this bill instructs the court to
reduce the award to $250,000. If we are going to limit
noneconomic damages, let's at least place the limit at a level
that will allow patients to get the care that they need.
I urge support for the amendment.
Chairman Sensenbrenner. The gentleman's time has expired.
The Chair recognizes himself for 5 minutes in opposition to
the amendment.
This amendment attempts to do something that the Democrats
that control the California legislature apparently have
neglected to do in the years that have passed since the cap of
$250,000 was placed in the MICRA legislation; that is, increase
it. Increasing the cap, in my opinion, is simply going to
increase premiums and restrict access to quality medical care,
as we are seeing the crisis occur in other States that do not
have caps on noneconomic damages.
Let me say that there is nothing in this legislation that
limits economic damages by one penny, and in his argument the
gentleman from Massachusetts has stated that if there were a
lot of damages involved which were, by implication, economic in
nature, this would fall under the cap. That is not true. The
economic damages under this bill and under MICRA in California
are unlimited. If someone is made a vegetable and has
rehabilitation expenses and pain medication expenses and all of
the attendant problems involved that can be quantified and
receipts are attached to it, those damages will be included in
the judgment without limitation.
I urge the defeat of this amendment.
The question is on the Delahunt amendment. Those in favor
will say aye. Those opposed, no. The noes appear to have it.
Mr. Delahunt. rollcall, please.
Chairman Sensenbrenner. Those in favor of the Delahunt
amendment will as your names are called answer aye, those
opposed no.
The Clerk will call the roll.
The Clerk. Mr. Hyde.
Mr. Hyde. No.
The Clerk. Mr. Hyde votes no.
Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith votes no.
Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly votes no.
Mr. Goodlatte.
[no response.]
The Clerk. Mr. Chabot.
[no response.]
The Clerk. Mr. Jenkins.
Mr. Jenkins. Aye.
The Clerk. Mr. Jenkins votes aye.
Mr. Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon votes no.
Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
[no response.]
The Clerk. Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake votes no.
Mr. Pence.
[no response.]
The Clerk. Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
[no response.]
The Clerk. Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn votes no.
Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Mr. Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt votes aye.
Ms. Lofgren.
[no response.]
The Clerk. Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Ms. Waters.
Ms. Waters. Aye.
The Clerk. Ms. Waters votes aye.
Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan votes aye.
Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
[no response.]
The Clerk. Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner votes aye.
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Members who wish to cast or change
their vote? The gentleman from Indiana, Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Chairman Sensenbrenner. The gentlewoman from Wisconsin, Ms.
Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Chairman Sensenbrenner. Are there further Members who wish
to cast or change their votes?
If not, the Clerk will report.
The Clerk. Mr. Chairman, there are 14 ayes and 15 nays.
Chairman Sensenbrenner. And the amendment is not agreed to.
Ms. Jackson Lee. Mr. Chairman.
Chairman Sensenbrenner. The gentlewoman from Texas, Ms.
Jackson Lee.
Ms. Jackson Lee. Mr. Chairman, I would like to bring up en
bloc amendments Jackson Lee 31, 32, and number 5.
Chairman Sensenbrenner. The Clerk will report the
amendments and without objection, they will be considered en
bloc.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Ms. Jackson Lee of Texas. At
the end of the bill add the following section: section,
limitation on malpractice insurance rate increases. No medical
malpractice insurer shall increase its rates for the 12-month
period beginning on the date of the enactment of this act,
except to the extent necessary to enable such insurer to earn a
fair rate of return.
Ms. Jackson Lee. Mr. Chairman, I ask unanimous consent that
the amendments be accepted as read.
Chairman Sensenbrenner. Well, accepted means they are
adopted, so.
Ms. Jackson Lee. Considered as read. Thank you for the
clarification, Mr. Chairman. I was trying to see if you were
paying attention. Considered as read, Mr. Chairman, thank you.
Chairman Sensenbrenner. Without objection, the amendments
are considered as read.
The gentleman from Texas.
[The amendments follow:]
Mr. Smith. Mr. Chairman, I would like to reserve a point of
order.
Chairman Sensenbrenner. A point of order is reserved. The
gentlewoman is recognized for 5 minutes.
Mr. Watt. Mr. Chairman, parliamentary inquiry.
Chairman Sensenbrenner. The gentleman will state it.
Mr. Watt. I thought Ms. Jackson Lee had listed three
amendments for consideration en bloc.
Chairman Sensenbrenner. She wanted two considered en bloc.
I guess she----
Mr. Watt. She said three.
Ms. Jackson Lee. Yes, number 5 as well. It is reduction in
premiums paid by physicians for medical malpractice. Do you
have that one? Yes. He has all three, right? All three are
here. I am taking all three en bloc.
Chairman Sensenbrenner. We only had two passed out.
Ms. Jackson Lee. He is going to do so. He will be coming
shortly.
Chairman Sensenbrenner. The Clerk will report the third
amendment.
Chairman Sensenbrenner. Does the Clerk have the third
amendment?
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Ms. Jackson Lee. At the end of
the bill add the following new section: section, reduction in
premiums----
Chairman Sensenbrenner. Without objection, the amendment is
considered as read.
Mr. Watt. Reserving the right to object, Mr. Chairman, I
would like to see it, too.
Chairman Sensenbrenner. The Clerk will read.
The Clerk. Reduction in premiums paid by physicians for
medical malpractice insurance coverage. A, in general, not
later than 180 days after the date of enactment of this act,
each medical malpractice liability insurance company shall (1)
develop a reasonable estimate of the annual amount of financial
savings that will be achieved by the company as a result of
this act; (2) develop and implement a plan to annually----
Mr. Watt. I withdraw my objection, Mr. Chairman.
Chairman Sensenbrenner. Without objection, the amendment is
considered as read.
Without objection----
Ms. Jackson Lee. Mr. Chairman, I want to change the
proposal, Mr. Chairman.
Chairman Sensenbrenner. Without objection, the third
amendment will be considered en bloc with the other two
amendments. Without objection----
Ms. Jackson Lee. Mr. Chairman.
Chairman Sensenbrenner. You will be recognized in due
course.
Without objection, the reservation against the first two
amendments en bloc by the gentleman from Texas, Mr. Smith, will
apply to the tripartite amendment en bloc.
Now that we have gotten the appropriate parliamentary
procedure out of the way, for what purpose does the gentlewoman
from Texas seek recognition?
Ms. Jackson Lee. And that is the reason I wanted to
inquire, Mr. Chairman. I would like to have 3 and 4 en bloc,
and I would like to have the third one separately. So 3 and 4.
Chairman Sensenbrenner. There are only three.
Ms. Jackson Lee. There are 31 and 32, Mr. Chairman, en
bloc, and then what is labeled reduction in premiums paid by
physicians for medical malpractice separately.
Chairman Sensenbrenner. Well, that is what we were doing
before we had the confusion.
Ms. Jackson Lee. I understand, Mr. Chairman. I beg your
pardon.
Chairman Sensenbrenner. The gentlewoman from Texas now asks
to sever out the third amendment, and any Member has the right
to demand a separate vote.
So there will be a separate vote on the third amendment,
but the reservation of the gentleman from Texas, Mr. Smith,
against all three amendments is preserved, and the gentlewoman
from Texas, Ms. Jackson Lee, is recognized for 5 minutes.
Ms. Jackson Lee. Mr. Chairman, thank you for your kindness
and the clarification procedurally of where we stand at this
point.
Let me pursue the line of reasoning that I have presented
earlier about the question of making this not a debate or an
argument between physicians and between lawyers, particularly
in this time of need as relates to first responders, homeland
security. We are quite aware of the importance that the medical
community, medical professionals are to our community, but I
think that we have missed the boat. I say that because in
listening to the testimony of the victim witnesses yesterday,
each and every one of them had a compelling story of why what
we are doing today is misguided and misdirected. This is, in
fact, a State question.
Mr. Chairman, I would like to include into the Record
letters from Patricia Donnelly, Richard Flag, Jody Johns,
Sherry Keller, John McCormick, Kyle Reynolds and Ms. Stein to
President Bush dated March 3, 2002 where the victims asked to
meet with the President. To date, I do not know whether they
have gotten a response, but I do believe, and I would ask
unanimous consent for that to be submitted for the Record.
Chairman Sensenbrenner. Without objection.
[The material referred to follows:]
Ms. Jackson Lee. I do believe that we need to address the
question of whether or not this is about the profits of
insurers or whether or not this is a crisis.
Mr. Chairman, in order to support my amendments that have
to do with limitation on malpractice insurance rate increases
and also investing into a counseling pool for a physicians
impaired fund to provide services, including but not limited to
drug and alcohol treatment counseling for physicians. This will
allow the insurance companies to, in essence, address the
question of whether or not they are in the business for profits
or in the business to serve the physicians and the community.
In data that was presented to us by the physicians'
insurance companies themselves, they acknowledge that 61
percent of these medical malpractice lawsuits are dropped, 61
percent. Thirty-two percent are in settlement, and only 6
percent, if you will--only 1 percent, plaintiffs prevail, and 6
percent, defense verdicts prevail.
What is the crisis? In their own testimony they said in the
current approximately 2 to 1 ratio these carriers in aggregate
are still in sound financial shape.
I would say to my colleagues there is no crisis in the
medical malpractice insurance industry other than the fact that
these insurers are looking for profits way beyond reason and
they are penalizing doctors, some of whom may have their
problems, some of whom may have made egregious mistakes, but
some of whom who have never had a charge against them by high
and usurious premium rates, and they are therefore the ones
that are responsible for closing the doors of doctors in Texas,
California, North Carolina, and elsewhere.
Doctors will tell us that they themselves want to weed out
those doctors who are failing to meet the standard of care. If
we remove from that standard of care the actual punitive
aspect, the penalty aspect of those who fail to do their duty,
then we are no better than those who do not do their duty, and
we have failed the little girl in North Carolina who lost her
life and her chance, we failed the 13-month-old baby, we failed
the citizen in Florida who lost the wrong limb, and we failed
the countless wheelchair victims who are not here, not able to
be in the condition that they would like to be in.
The last amendment which I speak to, which is to be voted
on separately, is the question of reduction in premiums paid by
physicians for premium medical malpractice insurance.
Mr. Chairman, I have already said to you that there is no
crisis, that the insurers themselves say that they are
aggregately in sound financial condition, that 61 percent of
these cases are dropped. If that is the case, and if my doctors
come to me and simply say it is not an argument with lawyers
and those who need to petition the courts and those who
legitimately have a grievance, it is our premiums that are
closing the doors, I believe that we can work together and have
an amendment that says develop a reasonable estimate of the
annual amount of financial savings that will be achieved by the
company as a result of this act, develop and implement a plan
to annually dedicate at least 50 percent of any annual savings
to reduce the amount of premiums that the company would
otherwise charge physicians for medical malpractice liability
if we are in this together.
If we have chosen to ignore the Constitution on States
rights and what is left to the States, if we are going to
accept the challenge of amending laws that really should remain
in the State, and if the argument or the cry from the American
Medical Association is regarding the premiums that are keeping
them from doing their business, if the testimony from the
witness from Mississippi was that she did not have a doctor to
attend her husband because they had to move out of Mississippi,
then this amendment, the last amendment should be a bipartisan
amendment that we all should support.
Overall we have no crisis, but I would think that we would
want to help doctors who are impaired, and finally, Mr.
Chairman, I would hope that we would be able to vote on capping
of these medical premiums and providing some relief to our
doctors.
Chairman Sensenbrenner. The gentlewoman's time has expired.
Does the gentleman from Texas insist upon his point of
order?
Mr. Smith. Mr. Chairman, I do.
Chairman Sensenbrenner. The gentleman will state his point
of order.
Mr. Smith. Mr. Chairman, I do insist on my point of order
because these amendments are nongermane. In all instances they
deal with an attempt to regulate or impact the insurance
industry, and that is the jurisdiction of another Committee.
More particularly, one bill asks the State insurance agencies
to set up a fund, another amendment deals with insurance
premiums, and the other amendment deals with insurance rates.
None of these pertain to the underlying critical mass of the
bill, which is liability and, for that reason, they are
nongermane. Perhaps the gentlewoman from Texas would consider
withdrawing her amendments.
Chairman Sensenbrenner. Does the gentlewoman from Texas
wish to be heard on the point of order?
Ms. Jackson Lee. I certainly do, Mr. Chairman. I will
follow in the footsteps and the spirit of the Ranking Member
and I think Mr. Berman said earlier, I didn't know that there
was any jurisdiction that this Committee would concede.
These amendments are at the end of the bill, frankly. I
believe that they go to the question of liability. It indicates
that if the insurance companies find that this act has impacted
positively on their bottom line rate of return, that they have
the ability to develop a plan that could invest in the
reduction of premiums. Likewise, it says develop a study, and
that is the last amendment which I ask to be voted on
separately.
Secondarily, I would think that we are talking about
questions of liability on the grounds of malfeasance of
physicians who have not met the standard of care. I would think
that we would want to insure with funds that the insurance
company might have to invest in aiding impaired physicians. So
I cannot imagine that this is so far off of the question of
liability that these amendments could not be added at the end
of the legislation.
Chairman Sensenbrenner. The Chair is prepared to rule.
The three amendments that have been offered by the
gentlewoman from Texas each fail the test of germaneness in two
respects. First, one of the tests of germaneness for
consideration of legislation in Committee is whether the
subject discussed in the amendment is within the jurisdiction
of the Committee. Each of the three amendments relate to
insurance regulation or the setting up of an insurance fund, as
described by the gentleman from Texas, Mr. Smith, in his point
of order. That subject is under the jurisdiction of the
Committee on Energy and Commerce and not under the jurisdiction
of the Committee on the Judiciary.
Secondly, the amendments have to relate to the overall
subject matter of the bill. The subject matter of this bill is
not insurance regulation, it is medical liability litigation
reform and, consequently, the amendments do not relate to the
overall subject matter of the bill and thus are not germane.
The gentleman from Texas' point of order is sustained.
Are there further amendments? The gentleman from Virginia,
Mr. Scott.
Mr. Scott. Mr. Chairman, I have an amendment at the desk.
Chairman Sensenbrenner. The Clerk will report the
amendment.
Mr. Scott. Amendment number 8.
The Clerk. Amendment in the nature of a substitute to H.R.
5.
Chairman Sensenbrenner. Without objection, the amendment is
considered as read. The gentleman is recognized for 5 minutes.
[The amendment follows:]
Mr. Scott. Mr. Chairman, this is what I am calling the
small business protection amendment. It deals with collateral
source.
Mr. Chairman, the collateral source rule provides that the
benefit of insurance should go to the plaintiff who paid for
the insurance and if there are two different plaintiffs, each
with identical cases, one with insurance and one without
insurance, the one with insurance ought to end up better off at
the end. And if the defendant caused the damage, the defendant
ought to pay, and then how the plaintiff covers his expenses
ought not be the defendant's concern. So if the plaintiff's has
insurance, so be it. On the other hand, if he set aside his
money into a medical savings account or regular savings
account, that is the plaintiff's business, even if he relies on
a rich uncle. How the plaintiff pays his bills is the
plaintiff's business, and if insurance is how he has arranged
to pay that ought not benefit the defendant.
Now, since some are troubled by the existence of health
insurance, then one has to consider the three parties at
interest. You have the plaintiff, the defendant, and you have
Blue Cross/Blue Shield.
Now, the contract between the plaintiff and Blue Cross/Blue
Shield is between them. The contract could say if there is
malpractice injury and you recover, you can keep the Blue
Cross/Blue Shield money, and then they will charge a premium.
Or the contract could say that you can't keep the money, you
have to give it back, but you don't have to pay as much.
Whatever the contract is really ought to be between the
plaintiff and Blue Cross/Blue Shield.
This bill hijacks the insurance proceeds and hands the
benefits over to the wrongdoer. By allowing evidence of the
insurance to be introduced, you have to assume that the jury
will deduct the insurance payment from the amount owed.
Now, of the three parties at interest, a good case could be
made that the plaintiff would be able to keep the insurance
proceeds since he paid for it. A good case can be made to
prohibit the plaintiff from benefiting from his insurance and
allowing Blue Cross/Blue Shield to keep the money but charge
less premium. It is hard to imagine any rationale that will
allow the defendant of the three parties at interest to be the
beneficiary of the plaintiff's insurance, but that is what this
bill does, and it incredibly prohibits the subrogation
agreement where Blue Cross/Blue Shield can get their money
back.
Now, this has the bizarre effect of having the employer,
the victim's employer end up having to pay the malpractice
expenses, because the bill says if you have a health care
policy and the employee stays in the hospital because of
malpractice the employer has to pay the hospital bill.
Now, if the defendant has a $1 million malpractice
insurance, he doesn't have to pay for the injury, the employer
has to pay.
Now, let's look at the case that the gentleman from North
Carolina mentioned when someone went into the hospital and was
in the hospital for 10 years in a coma because of malpractice.
In that case the employer, if he is self-insured, has to pay
the bill. If he is experience rated, the employer has to pay
all the bill and the doctor's malpractice insurance policy will
get the benefit of all of those payments over all of those
years. That is bizarre. You ought to at least provide, as this
amendment does, to allow subrogation. If you don't want the
victim to get the benefit of his insurance, then, okay, then
let Blue Cross/Blue Shield get its money back, or let the
employer get his money back; don't make the employer pay for
the malpractice.
Now, if you don't pass the amendment, that is exactly what
you are doing. You are making the employer pay for the
malpractice, and if he is experience rated, as long as that
small business employee has somebody, has a family member in
the hospital, his insurance rates will be jacked up year after
year so long as that person stays in a coma.
Now, you tell your small business, your small businessmen
that they can get caught in that trap because of malpractice.
You can avoid that if you pass this amendment.
I yield back.
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes in opposition to the amendment.
This is not a complete repeal of the collateral source
rule, but it is a very limited modification of the collateral
source provisions that are contained in the bill.
The provisions of the Health Act prohibiting collateral
sources from obtaining reimbursement for medical malpractice
defendants or their insurers is taken directly from the MICRA
law and is designed to reduce upward pressure on medical
professional liability insurance rates that would result if
providers of collateral source benefits such as those providing
insurance for health care costs can sue doctors or their
insurers a second time to recover such costs they paid to the
plaintiff.
The purpose of this provision in the MICRA law was
described in an opinion signed by former California Supreme
Court Justice and current Vice Chair of the U.S. Commission on
Civil Rights, Cruz Reynoso as follows: ``by redistributing the
financial impact of malpractice among the different types of
insurers involved in the health field, the costs would be
spread over a wider base, alleviating the immediate problems
posed by a growing cadre of uninsured doctors and a potential
shortage of medical care.'' this is in the case of Barme v.
Wood, 689 Pacific 2nd 446 at page 450, California Supreme
Court, 1984.
Justice Reynoso I think hit the nail on the head why this
amendment should be rejected, and I urge the Members to follow
his advice.
I yield back the balance of my time.
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from North Carolina.
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. Mr. Chairman, this strikes me as being yet
another example of the proponents of this bill deciding who to
protect and who not to protect and coming up with just a
bizarre adverse impact on employers who have gone out of their
way, many of them small businesses, to provide insurance
coverage or health care coverage, self-insured, to their
employees. And the only justification I heard the Chairman say
was okay, MICRA did it that way. I guess MICRA is going to
drive you right off the edge of the cliff, you are going to
fall off the edge of the cliff following MICRA, just because
MICRA did it that way. It makes absolutely no sense to do this
in the way that the bill does it.
Mr. Scott's amendment corrects that situation, and I just
cannot believe that we are sitting here talking about spreading
risk to the employer, who had no responsibility for the
plaintiff's injury, and protecting the insurance carrier of the
person who did wrong or the doctor who did wrong, and we have
the nerve to talk about holding people responsible for the
conduct that they are responsible for. I mean this is insane.
This provision, I mean it makes absolutely no sense, and the
public policy that underlies it makes no sense.
So I hope that you all will at least consider what you are
doing, and I yield the balance of my time to Mr. Scott.
Mr. Scott. Mr. Chairman, I don't know what happened in
California, but the fact that it is legal to have this kind of
provision doesn't mean it is good policy.
We have choice on who is going to pay the hospital bill,
the doctor's insurance that created the malpractice, or the
employer that happened to self-insure and is covering his
employees, and if he is experience-rated, he is essentially
self-insured. So if a person goes into a coma because of
malpractice, somebody is going to pay. You already decided that
you don't want the plaintiff to benefit from the insurance, so
what happens? The employer will pay the bill or the malpractice
coverage will pay the bill, and if you have a small business
that is experience-rated, you take a hit like this, they won't
be able to afford health insurance for the rest of their
employees.
So tell your small businesses what you did.
Mr. Watt. I yield back the balance of my time.
Chairman Sensenbrenner. The question is on the Scott
amendment. Those in favor will say aye, opposed, no. The noes
appear to have it.
Mr. Scott. Recorded vote, Mr. Chairman.
Chairman Sensenbrenner. A recorded vote is ordered. Those
in favor of the Scott amendment will as your names are called
answer aye, those opposed, no.
The Clerk will call the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
Mr. Smith. No.
The Clerk. Mr. Smith votes no.
Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly votes no.
Mr. Goodlatte.
[no response.]
The Clerk. Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot votes no.
Mr. Jenkins.
[no response.]
The Clerk. Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
[no response.]
The Clerk. Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
[no response.]
The Clerk. Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
Mr. Carter. Yes.
The Clerk. Mr. Carter votes yes.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn votes no.
Mr. Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Mr. Berman.
[no response.]
The Clerk. Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
[no response.]
The Clerk. Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt votes aye.
Ms. Lofgren.
[no response.]
The Clerk. Ms. Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner votes aye.
Mr. Schiff.
[no response.]
The Clerk. Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast or change their votes? The gentleman from
Tennessee, Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Chairman Sensenbrenner. The gentleman from Utah, Mr.
Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon votes no.
Chairman Sensenbrenner. The gentleman from Alabama, Mr.
Bachus.
Mr. Bachus. No.
The Clerk. Mr. Bachus votes no.
Chairman Sensenbrenner. The gentleman from Indiana, Mr.
Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler votes no.
Chairman Sensenbrenner. The gentleman from California, Mr.
Berman.
Mr. Berman. I will put a statement in the record when I
realize my mistake.
Chairman Sensenbrenner. Okay. How is the gentleman from
California, Mr. Berman, recorded?
The Clerk. Mr. Chairman, I don't have him recorded.
Mr. Berman. I said no.
The Clerk. Mr. Berman votes no.
Chairman Sensenbrenner. The gentleman from New York, Mr.
Nadler.
Mr. Nadler. Mr. Chairman, how am I recorded?
The Clerk. Mr. Nadler, you are not recorded.
Mr. Nadler. I vote aye.
The Clerk. Mr. Nadler votes aye.
Chairman Sensenbrenner. The gentleman from Massachusetts,
Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan votes aye.
Chairman Sensenbrenner. Any other Members in the chamber
who wish to cast or change their votes? If not, the Clerk will
report.
The Clerk. Mr. Chairman, there are 11 ayes and 17 nays.
Chairman Sensenbrenner. The amendment is not agreed to.
Are there further amendments? The gentleman from Virginia,
Mr. Scott.
Mr. Scott. I have an amendment at the desk, number 6.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to the amendment in the nature of a
substitute to H.R. 5 offered by Mr. Scott of Virginia. Strike
section 4, subsection (d).
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
[The amendment follows:]
Mr. Scott. Mr. Chairman, this deals with the so-called fair
share rule which eliminates joint and several liability.
Under present law, if there is a malpractice case, the
plaintiff has to prove that there was malpractice, that the
malpractice caused the damages, and then you have to prove your
damages in total. This creates a bizarre and impossible
standard. It requires that you have to show such person's
proportion of the responsibility, whatever that means. If all
the plaintiff knows is that he has a res ispa case where he
went in and got malpractice inflicted on him, how does a
plaintiff prove who did what? That is the whole point of a res
ipsa case. If this bill passes, the plaintiff will have to have
a separate lawsuit against each and every person that had
anything to do with the malpractice. You will have to establish
the standard of care for the doctor, for the anesthesiologist,
for the nurse.
In the case of the person we heard from yesterday who was
transported to another hospital and had additional malpractice
inflicted, you would have to prove the ambulance carrier and
the emergency room and the physicians in the new hospital. You
would have to establish a standard of care, you would have to
show how they violated the standard of care, you would have to
show causation. I don't know how you apportion what damage in
the case we heard from yesterday, who did what and what
responsibility they may have had. One could say that I was
responsible for the original malpractice, but it was the
subsequent malpractice that caused the stroke and paralyzed
him. So who knows what?
With separate experts for each case, you have separate
fees. This converts a simple case like the one at Duke
University, where the wrong organs were transplanted, to an
impossible quagmire where you have to show each and every
person that had anything to do with it, where was the fault.
How much did the surgeon have to do with it, how much did the
transplant people have to do with it, and what about the second
transplant? It converts a cap, the $250,000 cap into something
impossible, because with each case, you have about $10,000
worth of costs against the doctor, against the hospital,
against the transplant people.
In fact, the wrong organ transplant is exactly the kind of
case where you probably won't even get anybody to handle the
case, because with a cap on damages, a cap on attorneys' fees,
and excess number of defendants, you will never be able to
prove your case.
There is no need for all of this. Health care providers
already can agree in advance how to apportion responsibility
and they provide insurance accordingly. If there is a clear
case of malpractice, they have already agreed which insurance
company will pay, and that would be the end of it.
This bill requires separate suits against everybody, and
there is no excuse for having that kind of quagmire imposed on
someone.
So I would hope, Mr. Chairman, that we would not abolish
the joint and several liability which has been the law in just
about every State that I know of for a very long time.
I yield back.
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes in opposition to the amendment.
The gentleman from Virginia is correct in saying that this
amendment repeals the fair share rule in the bill and goes back
to joint and several liability. The result is that it puts full
responsibility on those who may have only been marginally at
fault. I would commend the gentleman from Virginia to the case
of Walt Disney World Company v. Wood, the Florida Supreme
Court, 1987, where Disney was required to pay an entire damages
award even though it was found only 1 percent at fault for the
claimant's harm.
Joint and several liability, although motivated by a desire
to ensure that plaintiffs are made whole, has led to a surge by
plaintiffs' attorneys with deep pockets and a proliferation of
lawsuits against those minimally liable or not liable at all.
This bill, by providing a fair share rule, it apportions
damages in proportion of a defendant's degree of fault,
prevents unjust situations in which hospitals can be forced to
pay for all damages resulting from an injury even when the
hospital is minimally at fault.
For example, say a drug dealer staggers into the emergency
room with a gunshot wound after a drug deal goes bad. The
surgeon that works on him does the best he can, but is not
perfect. The drug dealer sues. The jury finds the drug dealer
99 percent responsible for his own injuries, but it also finds
the hospital 1 percent responsible because the physician was
fatigued after having worked too long. Today, in many States
the hospital can be made to pay 100 percent of the damages
because the drug dealer is without means, and that is unfair.
Now, this hypothetical is not fanciful. There was an
article in the Scranton Time Tribune on May 29, 2002, by an
author or a journalist named Ray Flanagan. He says, ``Mrs.
Tailor and her husband, Brian, are suing the obstetricians who
treated her in the months before she exploded in violence that
left her son, Zachary, with two punctured lungs, a severed
jugular vein, and scalp wounds on July 14, 2000. They accused
the doctors and their employers of not adequately responding as
she became more psychotic, delusional and depressed as the end
of her pregnancy neared. If the doctors were found 1 percent
negligent by the trier of fact, they could end up paying the
whole freight.
Senator Lieberman has noted, the joint and several
liability rule now has grown to a point where it really means
that somebody who is not liable or liable very little, if they
happen to have deep pockets, can be held fully liable. That is
the wrong message to send. If you hurt somebody, you have to
pay. If you do not, you should not have to pay.
I urge the defeat of the amendment, and I yield back the
balance of my time.
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from North Carolina,
Mr. Watt.
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. I think we must have a different system in North
Carolina, because I think what the gentleman, the Chairman,
just described under North Carolina law would not be joint and
several liability, but contributory negligence. It is kind of
bizarre, it is not fair, but even if in that case you just
described where the drunk staggered in, if he was only 1
percent negligent in North Carolina, the defendant could plead
contributory negligence and avoid any liability for 100
percent, even his 99 percent.
I am not sure that this language would cover that or not,
whether you are talking about only joint and several liability
of defendants, or this does not seem to me to deal with the
plaintiffs contributing to the injury. Maybe it does; maybe the
word ``party'' is broad enough to cover that. But if that is
the objective you are trying to achieve, you might ought to
look at it between now and the floor, because I am not sure
your language is going to cover what you just described anyway.
What I do know is that this is going to have exactly the
opposite effect of what you all purport to be your public
policy interest, because what is going to happen at this point
is everybody is going to be pointing the finger at everybody
else, and nobody is going to acknowledge what their percentage
share is, and you are never ever going to have any settlement
of any of these cases. All of them, regardless of how minor or
how major they are, will be litigated all the way to the end,
not necessarily on the question of liability but on the
question of who contributed to it, and you will be in
litigation for years and years and years on the most simple
kind of proposition.
Mr. Delahunt. Would the gentleman yield for a question?
Mr. Watt. Can you get your own time? I wanted to yield the
balance of my time to Mr. Scott, because he had another
response to make to this.
Mr. Scott. Mr. Chairman, I would just add to the points
that the gentleman from North Carolina made, and that is that
all of the insurance can be done in the health care system. The
hospital can require everybody to have insurance, or the
hospital can cover everybody. That is a decision that can be
made in advance. The final judgment, I don't know if you have
final judgment on any of those cases, I have never heard of
them, but I would hate to think that because there is a
speculative possibility that you are going to ruin the
malpractice case law for everybody and convert what is really a
res ipsa loquitur case into one where nobody can ever get to
the end of a trial.
The purpose of insurance is to cover the damage. When
damage occurs, it ought to be paid. That could be arranged in
advance, and I would hope that we would not, that we would not
set aside centuries of law just because somebody can imagine
something that has never happened.
The kind of case where you pick and choose between possible
defendants is not the kind of case that happens in health care
because you go to one hospital. The kind of case where Disney
may be involved is a case where you have product liability,
something else going on, somebody over here, somebody over
there, in a totally different situation. It doesn't have
anything to do with medical malpractice where you go to the
hospital and the hospital's insurance will be the one paying
the bill if there is malpractice.
Ms. Jackson Lee. Will you yield? Mr. Scott, will you yield?
Mr. Watt. I yield the balance to Ms. Jackson Lee.
Ms. Jackson Lee. I plan to go to the Rules Committee
because of several of these issues that have not been addressed
in this Committee, particularly on these noneconomic damages,
but the point that Mr. Scott is making with this amendment is
so crucial because we are always complaining about ambulance-
chasing lawyers. This will be patient-chasing perpetrators of
the harm or the injury, and therefore, what this legislation
does is completely extinguish the consistency that we have
found.
Chairman Sensenbrenner. The time of the gentleman from
North Carolina has expired.
The question is on the Scott amendment. Those in favor will
say aye, those opposed, no. The noes appear to have it. Noes
have it.
Mr. Scott. Mr. Chairman, rollcall.
Chairman Sensenbrenner. A rollcall is ordered. Those in
favor of the Scott amendment will as your name is called answer
aye, those opposed, no.
The Clerk will call the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
Mr. Coble. No.
The Clerk. Mr. Coble votes no.
Mr. Smith.
[no response.]
The Clerk. Mr. Gallegly.
Mr. Gallegly. No.
The Clerk. Mr. Gallegly votes no.
Mr. Goodlatte.
[no response.]
The Clerk. Mr. Chabot.
Mr. Chabot. No.
The Clerk. Mr. Chabot votes no.
Mr. Jenkins.
Mr. Jenkins. No.
The Clerk. Mr. Jenkins votes no.
Mr. Cannon.
Mr. Cannon. No.
The Clerk. Mr. Cannon votes no.
Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
[no response.]
The Clerk. Mr. Green.
Mr. Green. No.
The Clerk. Mr. Green votes no.
Mr. Keller.
Mr. Keller. No.
The Clerk. Mr. Keller votes no.
Ms. Hart.
Ms. Hart. No.
The Clerk. Ms. Hart votes no.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
Mr. Pence. No.
The Clerk. Mr. Pence votes no.
Mr. Forbes.
Mr. Forbes. No.
The Clerk. Mr. Forbes votes no.
Mr. King.
Mr. King. No.
The Clerk. Mr. King votes no.
Mr. Carter.
Mr. Carter. No.
The Clerk. Mr. Carter votes no.
Mr. Feeney.
Mr. Feeney. No.
The Clerk. Mr. Feeney votes no.
Mrs. Blackburn.
Mrs. Blackburn. No.
The Clerk. Mrs. Blackburn votes no.
Mr. Conyers.
[no response.]
The Clerk. Mr. Berman.
[no response.]
The Clerk. Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
[no response.]
The Clerk. Mr. Scott.
Mr. Scott. Aye.
The Clerk. Mr. Scott votes aye.
Mr. Watt.
Mr. Watt. Aye.
The Clerk. Mr. Watt votes aye.
Ms. Lofgren.
[no response.]
The Clerk. Ms. Jackson Lee.
[no response.]
The Clerk. Ms. Waters.
[no response.]
The Clerk. Mr. Meehan.
[no response.]
The Clerk. Mr. Delahunt.
Mr. Delahunt. Aye.
The Clerk. Mr. Delahunt votes aye.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. Aye.
The Clerk. Ms. Baldwin votes aye.
Mr. Weiner.
Mr. Weiner. Aye.
The Clerk. Mr. Weiner votes aye.
Mr. Schiff.
Mr. Schiff. Aye.
The Clerk. Mr. Schiff votes aye.
Ms. Sanchez.
Ms. Sanchez. Aye.
The Clerk. Ms. Sanchez votes aye.
Mr. Chairman.
Chairman Sensenbrenner. No.
The Clerk. Mr. Chairman votes no.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast or change their vote?
The gentleman from Arizona, Mr. Flake.
Mr. Flake. No.
The Clerk. Mr. Flake votes no.
Chairman Sensenbrenner. The gentleman from Indiana, Mr.
Hostettler.
Mr. Hostettler. No.
The Clerk. Mr. Hostettler votes no.
Chairman Sensenbrenner. The gentleman from California, Mr.
Berman.
Mr. Berman. Aye.
The Clerk. Mr. Berman votes aye.
Chairman Sensenbrenner. The gentleman from New York, Mr.
Nadler.
Mr. Nadler. Aye.
The Clerk. Mr. Nadler votes aye.
Chairman Sensenbrenner. The gentlewoman from Texas Ms.
Jackson Lee.
Ms. Jackson Lee. Aye.
The Clerk. Ms. Jackson Lee votes aye.
Chairman Sensenbrenner. The gentleman from Massachusetts,
Mr. Meehan.
Mr. Meehan. Aye.
The Clerk. Mr. Meehan votes aye.
Chairman Sensenbrenner. The gentleman from Michigan, Mr.
Conyers.
Mr. Conyers. Aye.
The Clerk. Mr. Conyers votes aye.
Chairman Sensenbrenner. The Clerk will report?
The Clerk. Mr. Chairman, there are 12 ayes and 16 nays.
Chairman Sensenbrenner. And the amendment is not agreed to.
Are there further amendments? Gentleman from Virginia, Mr.
Scott.
Mr. Scott. Mr. Chairman, I have an amendment at the desk,
Number 7.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to the amendment in the nature a
substitute to H.R. 5 offered by Mr. Scott of Virginia. Strike
section five.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
[The amendment follows:]
Mr. Scott. Mr. Chairman, This eliminates the section that
limits attorney's fees. Mr. Chairman, if we are talking about
malpractice insurance premiums, this amendment will have no
effect and this provision has no effect on malpractice premiums
because the defendant doesn't pay the attorneys, the
plaintiffs' attorneys. The provision in the bill has no effect
on defendant attorneys' fees, and the malpractice insurance
carrier does pay those. So if you have a frivolous defense and
the defense lawyer runs up unnecessary expenses, the
malpractice premium pays those fees.
Now, let's be serious. Limitation on the plaintiffs'
attorneys' fees, that is not being initiated or advanced by
anybody representing the plaintiffs. There are no consumer
groups out here asking for this. There are no victims groups
asking for this. The check against frivolous lawsuits is
already in place because if you bring a frivolous lawsuit, when
you lose you get paid nothing. The complicated winning cases
might not be able to be brought because with the other
provisions in the bill they may be too complicated and by
limiting attorneys' fees winning cases might not be able to be
brought. So the effect of this is to deny some meritorious
cases to be brought at all. That is not fair to those who are
victims of malpractice, and so the amendment ought to pass and
the limitation on attorneys' fees ought to be eliminated from
the bill.
And I yield back.
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes in opposition to the amendment. The gentleman from
Virginia is correct, that under the Health Act, with the
provision that the gentleman seeks to strike, there would be no
reduction in payments on judges. What this amendment does is
that it limits attorneys' fees and that means that the victims
actually get more money and the attorneys actually get less
money.
Now, we heard the gentleman from Virginia argue about with
the collateral source rule, the gentleman from North Carolina
as well, about how the actual damages would be apportioned
amongst various insurers in the health insurance field. There
is a policy judgment that was made in putting together this
bill. There also is a policy judgment in this area, which means
that those of us that favor the provision that the gentleman
from Virginia wishes to amend out want to put more money in
victims' pockets.
I would point out that this provision is also patterned
after the California MICRA law and under the bill, without the
Scott amendment, the Health Act would allow victims to keep
roughly 75 percent of awards under $600,000 and 85 percent of
awards over $600,000.
So I think that this is really truly an anti-victim
amendment, and I would urge the Members of the Committee to
reject it and yield back the balance of my time.
Mr. Watt. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from New York, Mr.
Nadler.
Mr. Nadler. Mr. Chairman, I will simply observe that this--
--
Chairman Sensenbrenner. Do you want to strike the last
word?
Mr. Nadler. I indeed would strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Nadler. Mr. Chairman, this is not an anti-victim
amendment. It is a pro-victim amendment because the fact of the
matter is when you do--these lawsuits are all done on
contingent fees. It costs a great deal of money to do a
lawsuit. It may cost a hundred, $200 thousand to bring the
lawsuit, all of which has to be put up front by the attorney.
The attorney is not going to do that unless he thinks it is a
very good claim and he is very likely to win and unless the
recovery is likely to get him at least to recover his costs
plus a reasonable--whatever he regards as reasonable profit. By
limiting the percentages and limiting the total of recovery,
what you are saying is you are going to make it very difficult
for people to get attorneys. In fact, for the first $100,000
recovery you are saying that the attorney can get 36,000 and 25
percent of the next 500,000. You are limiting as a practical--
and by combining that with the $250,000 for pain and suffering,
you are saying that a lot of lawsuits which may be very
meritorious are simply not going to have attorneys because it
doesn't pay for any attorney to take the case. So if a
plaintiff has a meritorious lawsuit, by saying that the
attorney can get a smaller percentage than perhaps otherwise
would be the case, what you are really saying is there will be
no attorney. And unless you want to set up a situation where
the State would pay for the attorneys, which I might favor but
I doubt most of the Committee Members here would, you are
really saying that there should be no access to the courts for
these attorneys at all, for these victims at all, and that is
the practical effect of this.
Mr. Berman. Would the gentleman yield?
Mr. Nadler. Yes, I will.
Mr. Berman. I thank the gentleman for yielding. It is
funny. If the purpose of the provision which the gentleman from
Virginia seeks to strike is to put more money in the pockets of
victims and if the premise of so many of the reforms of this
bill is the belief that what the insurance companies have to
pay out in these medical malpractice awards is reflected in
higher premiums, I was wondering if the gentleman finds it
strange that while here is an effort to legislate the
relationship between the injured patient and his or her
attorney on the plaintiffs side there is no effort to regulate
what attorneys representing defendant insurance companies can
charge on an hourly basis or in providing bonuses for victories
which require insurance companies to pay out more money and,
under the theory of the majority, would therefore cause higher
payouts from the insurance company and higher premiums on the
practitioners. It seems a little unbalanced to me.
Ms. Hart. Mr. Chairman.
Chairman Sensenbrenner. The time belongs to the gentleman
from New York.
Mr. Nadler. I yield back. I think--well, let me just say
before I yield back, I think I made my point but I think Mr.
Berman's point was very well taken, and if you are worried
about the total insurance premiums, how do we have a bill that
doesn't regulate the very exorbitant premiums paid by the
insurance companies to their attorneys?
I yield back.
Chairman Sensenbrenner. For what purpose gentlewoman from
Pennsylvania seek recognition?
Ms. Hart. Move to strike the last word, Mr. Chairman.
Chairman Sensenbrenner. Gentlewoman is recognized for 5
minutes.
Ms. Hart. Thank you, Mr. Chairman. I also oppose the
amendment, and I think that the arguments that the gentlemen
are making are not taking into consideration what the awards
actually are in a number of these cases. We had statistics from
the Committee showing awards in the $20 and $30 and $40 million
ranges for these clients who are deserving of money that will
pay their bills and, you know, sustain them in the future that
they have to live with an injury. It is unconscionable for an
attorney to take 33 percent of such an award. In fact, it has
no relationship or bearing whatsoever to the amount of work
that the lawyer did for the case. In fact, and it also
continues to basically extort more money away from the poorest
client, who is stuck with that lawyer because nobody else will
take the case in some situations. I think what we are doing is
clearly the right thing for the injured patient. The arguments
for this amendment are specious and it is clearly, if you look
at California's awards, working out well for the legitimately
injured patient who needs the recovery, keeping in mind the
money that is awarded to the injured victim is awarded to the
injured victim and we are preventing larger shares of that
money from going into the pockets of attorneys. And I am one,
but I think they should be awarded fair fees.
Mr. Nadler. Will the gentlelady yield for a question?
Ms. Hart. I yield back.
Mr. Nadler. Will the gentlelady yield for a question?
Mr. Delahunt. I move to strike the last word, Mr. Chairman.
Mr. Watt. Move to strike the last word.
Chairman Sensenbrenner. The gentleman from North Carolina
is recognized for 5 minutes.
Mr. Watt. Thank you, Mr. Chairman. I subscribe to all the
arguments that have been made by Mr. Scott, in particular that
if this is about the cost of medical care, this provision is
certainly misplaced in this bill because it had--this can't
even--you can't even argue with a straight face has any impact
on medical care.
I subscribe to Mr. Nadler's arguments, too, but I guess I
approach this from a different vantage point because it seems
to me that the only policy judgment that is being furthered by
this provision in the bill is the whole concept of big brother.
I practiced law for 22 years, and most of the judgments
that I got in cases were less than $50,000, and I never charged
anybody a 40 percent contingency fee. So this whole notion that
you are advancing that you are somehow doing something that
benefits the plaintiffs in the case is just wrong. I mean, you
are playing big brother here and you are playing it in a way
that is not even effective for that purpose. My standard
contingent fee was 25 percent on a settlement and 33\1/3\
percent on a trial, and most of my recoveries were under
$50,000. And now all of a sudden you are saying that you are
going to--big brother is going to save me--save my clients by
setting a national standard that says instead of charging 25
percent and 33 percent I ought to be charging 40 percent.
There is something perverse about this, and the only thing
that this advances is the whole concept, again, which is
absolutely inconsistent with everything you say you stand for,
this is big brother if I have ever seen it, and it has nothing
to do with the bill.
I will yield the balance of my time to Mr. Scott.
Mr. Scott. Thank you, Mr. Watt. I think the gentlelady from
Pennsylvania had it exactly right. The cases are large. That is
because if it is a $30,000 to $50,000 case you can't find a
lawyer at all. You have to have a huge case even to bring it.
What this does is it just ups the threshold of what can be
brought. Small cases will just be out of luck. You won't be
able to get a lawyer. But I think as you go through all of the
rhetoric on both sides you will just notice that consumer
groups and victims groups are not supporting this amendment,
this provision. They are not trying to limit attorneys' fees
and if it was good for victims and goods for consumers, you
would think that they would be supporting limitations on
attorneys' fees, which they are not.
Yield back.
Mr. Delahunt. Mr. Chairman.
Chairman Sensenbrenner. Gentleman from Massachusetts.
Mr. Delahunt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Delahunt. I am really pleased. I shouldn't say pleased,
but I am really surprised to hear the proponents of this bill,
my friends to my right, embrace a system that is comparable to
wage and price controls. It is really rather remarkable. But I
want to remember this because it is so significant that when we
have debates on a variety of other subjects we can refer to
this particular moment in history.
You know, it is interesting that we don't have any caps on
the salaries, the unconscionable salaries of CEOs, many of
which have really plundered corporate America, have made bad
management decisions, and have helped this economy go right
into the tank with a variety of different practices that we are
learning now were not in the best--were not made with sound
judgment. But what we are doing in terms of the underlying bill
is, I think it was Mr. Nadler that said, what we are really
doing is we are denying access to justice for people who are
hurt because there is no attorney that is going to take on a
frivolous malpractice claim. It is just too expensive. And by
the way, it is rather difficult to find a physician to testify
against another physician. These kind of cases require
substantial up-front costs.
I keep hearing about frivolous lawsuits, but I have yet to
hear a definition. Can someone define for me what a frivolous
lawsuit is? There are many cases that are taken by attorneys
that have a reasonable expectation of success. Oftentimes they
don't prevail. But does that translate into a frivolous
lawsuit?
Come on. We know why this provision is in there. Because it
is perceived that this is a way to punish trial lawyers. Let's
put it right out there. Well, you know what? I don't really
care about trial lawyers although some of them are my best
friends. This should be about the patient. It shouldn't be
about doctors. It shouldn't be about trial lawyers. It should
be about taking care of those who are the most vulnerable in
our society.
I yield back.
Chairman Sensenbrenner. The question is on the Scott
amendment. Those in favor will say aye. Those opposed no. Noes
appear to have it. Noes have it, and the Scott amendment is not
agreed to.
Are there further amendments?
Mr. Scott. Mr. Chairman.
Chairman Sensenbrenner. The gentleman from Virginia, Mr.
Scott.
Mr. Scott. Mr. Chairman, I have an amendment at the desk.
Number 9.
Chairman Sensenbrenner. The Clerk will report the
amendment.
The Clerk. Amendment to the amendment in the nature of
substitutes to H.R. 5 offered by Mr. Scott of Virginia. Strike
section 2.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
[The amendment follows:]
Mr. Scott. Mr. Chairman, this strikes the findings and
purposes part of the bill because frankly I don't agree with
all of the findings and purpose. For example, on line 8 of the
first page Congress finds that our current civil justice system
is adversely affecting patient access to care, to health care
services, when we know that of the health care expenses less
than one-half of 1 percent goes to malpractice. If we didn't
just cut back on malpractice payments but eliminated
malpractice payments, you wouldn't be able to measure the
effect it has on health care.
On Page 2 we have got the effect on Federal spending.
Congress finds that the health care liability and litigation
system existing throughout the United States has a significant
effect on the amount, distribution and use of Federal funds. If
you can't bring a malpractice claim you might end up destitute
and on Medicaid. So this bill might have an adverse effect.
Under purpose, it says that the purpose of the bill is to
reduce the incidence of defensive medicine. I don't want to
reduce the effect of defensive medicine. I like defensive
medicine. And if a doctor isn't going to do an important test
on me, is only going to do an important test on me because of
his fear of malpractice, good. Don't change it. I don't want to
die because he didn't want to do a test. I would rather live
because he had the malpractice claim over him and did defensive
medicine. Now, if he is charging for tests that is not needed
and blaming it on malpractice, he is stealing my money. That is
fraud. But if it is a needed test that they will only do
because he will be responsible in a malpractice claim, I want
him to do the test.
It says it will lower the cost of health care liability
insurance. Now, we have heard people go back and forth. We
defeated the amendment from the gentlelady from Texas, or felt
it out of order, I guess, that would have required some cost
savings to be reflected in the premiums. But that didn't go
anywhere. Another is to ensure that persons with meritorious
health care injury claims receive fair and adequate
compensation. But we just eliminated joint and several
liability. We limited attorneys' fees and we make it less
possible under the bill that they will receive a fair and
adequate compensation.
Improve the fairness and cost effectiveness, reducing the
uncertainty and the amount of compensation. Well, I don't know
if it is fair to have a random $250,000 amount. I don't know if
that is fair. It certainly reduces--I guess it reduces
uncertainty that you can't get over a certain amount. But
because of my problems with all of those, Mr. Chairman, I would
just assume that we eliminated section 2, and that is what the
amendment does.
Yield back.
Chairman Sensenbrenner. I recognize myself for 5 minutes in
opposition of the amendment. If you don't like the bill, vote
against it. But it seems to me that the authors of the bill
ought to be able to determine their own findings in support of
their legislation.
With that, I yield back the balance of my time. The
question is on the Scott amendment. Those in favor of the Scott
amendment will say aye, opposed no. The noes appear to have it.
The noes have it. The Scott amendment is not agreed to.
Are there further amendments? If not, the question occurs
on the amendment in the nature of a substitute. Those in favor
as amended, those in favor will say aye, those opposed no. The
ayes appear to have it. The ayes have it, and the amendment in
the nature of a substitute is agreed too.
The question now occurs on the motion to report the bill
H.R. 5 favorably, as amended. Those in favor will say aye,
opposed no. The ayes appear to have it. The ayes have it, and
the motion is----
Mr. Watt. rollcall.
Chairman Sensenbrenner. rollcall is ordered. The question
is on reporting H.R. 5 favorably, as amended. Those in favor
will as your names are called answer aye, those opposed no.
Clerk will call the roll.
The Clerk. Mr. Hyde.
[No response.]
The Clerk. Mr. Coble.
[No response.]
The Clerk. Mr. Smith.
[no response.]
The Clerk. Mr. Gallegly.
Mr. Gallegly. Aye.
The Clerk. Mr. Gallegly votes aye.
[no response.]
The Clerk. Mr. Chabot.
[no response.]
The Clerk. Mr. Jenkins.
Mr. Jenkins. Aye.
The Clerk. Mr. Jenkins votes aye.
Mr. Cannon.
[no response.]
The Clerk. Mr. Bachus.
[no response.]
The Clerk. Mr. Hostettler.
Mr. Hostettler. Aye.
The Clerk. Mr. Hostettler votes aye.
Mr. Green.
Mr. Green. Aye.
The Clerk. Mr. Green votes aye.
Mr. Keller.
Mr. Keller. Aye.
The Clerk. Mr. Keller votes aye.
Ms. Hart.
Ms. Hart. Aye.
The Clerk. Ms. Hart votes aye.
Mr. Flake.
[no response.]
The Clerk. Mr. Pence.
Mr. Pence. Aye.
The Clerk. Mr. Pence votes aye.
Mr. Forbes.
Mr. Forbes. Aye.
The Clerk. Mr. Forbes votes aye.
Mr. King.
Mr. King. Aye.
The Clerk. Mr. King votes aye.
Mr. Carter.
Mr. Carter. Aye.
The Clerk. Mr. Carter votes aye.
Mr. Feeney.
Mr. Feeney. Aye.
The Clerk. Mr. Feeney votes aye.
Mrs. Blackburn.
Mrs. Blackburn. Aye.
The Clerk. Mrs. Blackburn votes aye.
Mr. Conyers.
Mr. Conyers. No.
The Clerk. Mr. Conyers votes no.
Mr. Berman.
Mr. Berman. No.
The Clerk. Mr. Berman votes no.
Mr. Boucher.
[no response.]
The Clerk. Mr. Nadler.
Mr. Nadler. No.
The Clerk. Mr. Nadler votes no.
Mr. Scott.
Mr. Scott. No.
The Clerk. Mr. Scott votes no.
Mr. Watt.
Mr. Watt. No.
The Clerk. Mr. Watt votes no.
Ms. Lofgren.
Ms. Lofgren. No.
The Clerk. Ms. Lofgren votes no.
Ms. Jackson Lee.
Ms. Jackson Lee. No.
The Clerk. Ms. Jackson Lee votes no.
Ms. Waters.
Ms. Waters. No.
The Clerk. Ms. Waters votes no.
Mr. Meehan.
Mr. Meehan. No.
The Clerk. Mr. Meehan votes no.
Mr. Delahunt.
Mr. Delahunt. No.
The Clerk. Mr. Delahunt votes no.
Mr. Wexler.
[no response.]
The Clerk. Ms. Baldwin.
Ms. Baldwin. No.
The Clerk. Ms. Baldwin votes no.
Mr. Weiner.
Mr. Weiner. No.
The Clerk. Mr. Weiner votes no.
Mr. Schiff.
[no response.]
The Clerk. Ms. Sanchez.
Ms. Sanchez. No.
The Clerk. Ms. Sanchez votes no.
Mr. Chairman.
Chairman Sensenbrenner. Aye.
The Clerk. Mr. Chairman votes aye.
Chairman Sensenbrenner. Are there Members in the chamber
who wish to cast or change their vote? Gentleman from Ohio Mr.
Chabot.
Mr. Chabot. Aye.
The Clerk. Mr. Chabot aye.
Chairman Sensenbrenner. Gentleman from Utah, Mr. Cannon.
Mr. Cannon. Aye.
The Clerk. Mr. Cannon aye.
Chairman Sensenbrenner. Further Members who wish to cast or
change their vote?
The Clerk. Mr. Chairman, there are 15 ayes and 13 noes.
Chairman Sensenbrenner. And the motion to report favorably
is agreed to. Without objection, the bill will be reported
favorably to the House in the form of a single amendment in the
nature of a substitute incorporating the amendments adopted
here today. Without objection, the Chairman is authorized to
move to go to conference pursuant to House rules. Without
objection, the staff is directed to make any technical and
conforming changes and all Members will be given 2 days, as
provided by the rule, in which to submit additional dissenting
supplemental or minority views.
The Chair thanks the Members for their patience, and the
Committee is adjourned.
[Whereupon, at 5:10 p.m., the Committee was adjourned.]
Dissenting Views
INTRODUCTION
H.R. 5 \1\ is among the most dangerous, one-sided liability
limitation bills ever considered by the Congress--far worse
than any measure considered during the Contract with America.
---------------------------------------------------------------------------
\1\ Help Efficient, Accessible, Low-Cost, Timely Health Care
(HEALTH) Act of 2003, H.R. 5, 108th Cong. (2003).
---------------------------------------------------------------------------
The most obvious problem with H.R. 5 is that it does not
solve the problem it purports to address. Study after study
have shown that draconian laws capping damages do not reduce
insurance premiums. Comparisons of states that have enacted
severe tort restrictions and those that have not found no
correlation between liability limitation laws and insurance
rates.\2\ Indeed, some of the resisting states experienced
lower increases in insurance rates, while some states that
enacted liability limitation laws experienced higher rate
increases relative to the national trends. For example, data
from the 2002 Medical Liability Monitor shows that Michigan, a
state with caps, had one of the highest average premiums in the
country, while Minnesota and Oklahoma, two states without caps,
had two of the three lowest average rates in the country.\3\
Data from the 2001 Medical Liability Monitor showed that in the
practice of internal medicine, states with caps on damages had
higher premiums than states without caps.\4\ For general
surgeons, insurance premiums were 2.3% higher in states with
caps on damages.\5\ On average, malpractice premiums were no
higher in the 27 States that have no limitations on malpractice
damages, than in the 23 States that do have such limits.\6\
---------------------------------------------------------------------------
\2\ Robert J. Hunter and Joanne Doroshow, Premium Deceit--the
Failure of to Cut Insurance Prices, Center for Justice & Democracy
(1999).
\3\ Medical Liability Monitor (Oct. 2002).
\4\ Medical Liability Monitor (Vol. 26, #10--Oct. 2001).
\5\ Id.
\6\ Senate Congressional Record, July 30, 2002, S7534.
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So why are medical malpractice premiums rising? The
principal culprit is the insurance industry. Insurers make
their money from investment income, which is plummeting right
now. During years of high stock market returns and interest
rates, malpractice premiums go down. When investment income
decreases--and we are in the middle of a 4-year bear market--
the industry responds by sharply increasing premiums and
reducing coverage, creating a ``liability insurance crisis.''
This boom-bust cycle took place in the 70's and 80's, and its
happening again now.\7\
---------------------------------------------------------------------------
\7\ See infra Section II.B.
---------------------------------------------------------------------------
There can be little doubt that H.R. 5 will work an obvious
and irreparable unfairness on the hundreds of thousands of
medical malpractice victims in this country. These victims
include people like Linda McDougal, who received a double
mastectomy when she didn't even have cancer, and Sherry Keller,
who is now quadriplegic because her doctor failed to properly
stitch the incision from her hysterectomy and then left her on
an examination table for 35-45 minutes, during which time she
went into shock, fell off the table, and banged her head. At a
victims' forum held on February 11, 2003, Democrats invited
these individuals as well as scores of other victims of medical
malpractice to tell their story and to discuss how H.R. 5
negatively impacts them. Each informed us how an arbitrary
$250,000 cap on their pain and suffering would work a blatant
unfairness in their situation.
Beyond our concerns about the bill's unfair and unneeded
limitations on medical malpractice, we have been given no
justification for why the bill limits the liability of
insurance companies and health maintenance organizatons (HMO's)
for failure to provide coverage or for insulating drug and
medical product manufacturers from liability.\8\
---------------------------------------------------------------------------
\8\ See infra Section III.
---------------------------------------------------------------------------
The bill takes no account of the fact that 5% of all health
care professionals are responsible for 54% of all malpractice
claims paid.\9\ The bill also ignores the fact that between
44,000 and 98,000 people die each and every year from medical
malpractice.\10\ The last thing we need to do is exacerbate the
problem, while ignoring the true causes of the medical
malpractice crisis in America. Yet this is precisely what H.R.
5 does.
---------------------------------------------------------------------------
\9\ National Practitioner Data Bank, Sept. 1, 1990-Sept. 30, 2002.
\10\ Kohn, Corrigan, Donaldson, eds., To Err is Human: Building a
Safer Health System, Institute of Medicine, National Academy Press:
Washington, DC (1999).
---------------------------------------------------------------------------
The following is a brief description of the bill and a more
detailed itemization of our concerns with it.
Description of Legislation
H.R. 5 limits the amount of non-economic damages--damages
for pain and suffering--to $250,000.\11\
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\11\ H.R. 5, Sec. 4(b). ``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.'' Id. This provision does not apply if a state law
``specifies a particular monetary amount of compensatory or punitive
damages . . . that may be awarded in a health care lawsuit, regardless
of whether such monetary amount is greater or lesser than is provider
for under this Act.'' Id. at Sec. 11(c).
---------------------------------------------------------------------------
In addition, H.R.5 eliminates joint and several liability,
a longstanding common law doctrine that ensures that victims
will be made whole.\12\ Similarly, the bill alters the rules of
evidence regarding a collateral source and eliminates the
doctrine of subrogation, the effect of which is to shift the
costs of malpractice from negligent defendants to innocent
victims.\13\
---------------------------------------------------------------------------
\12\ Relief from joint and several liability is addressed under the
Fair Share Rule:
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.
H.R. 5, Sec. 4(d).
---------------------------------------------------------------------------
\13\ The topic is addressed under the topic of 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. This section shall not apply to section
1862(b) (42 U.S.C. 1395y(b)) or section 1902(a)(25) (42
---------------------------------------------------------------------------
U.S.C. 1396a(a)(25)) of the Social Security Act.
H.R. 5, Sec. 6.
The bill dramatically limits a victim's ability to recover
punitive damages in two distinct ways. First, the bill imposes
a heightened standard for the recovery of punitive damages,
requiring clear and convincing evidence that the defendant
acted with malicious intent to injure the victim, or the
defendant understood the victim was substantially certain to
suffer unnecessary injury yet deliberately failed to avoid such
injury.\14\ It also limits punitive damages to two times the
amount of economic damages or $250,000, whichever is
greater.\15\
---------------------------------------------------------------------------
\14\ H.R. 5, Sec. 7(a).
\15\ H.R. 5, Sec. 7(b)(2).
---------------------------------------------------------------------------
The second category of punitive damages affected by the
bill relates to manufacturers and distributors of drugs and
medical devices. Specifically, the bill bans punitive damage
liability for manufacturers of drugs and devices that are
approved by the FDA.\16\ It also extends this immunity to the
manufacturers of drugs and devices that are not FDA-approved
but are ``generally recognized among qualified experts as safe
and effective,'' and to manufacturers or sellers of drugs from
punitive damages for packaging or labeling defects.\17\ The
only exceptions to this section, allowing a defendant to be
held liable, are if the defendant knowingly misrepresented to
or withheld from the FDA information that is required to be
submitted, and that information caused the harm, or if the
defendant made an illegal payment to an official of the FDA to
secure market approval.\18\
---------------------------------------------------------------------------
\16\ H.R. 5, Sec. 7(c).
---------------------------------------------------------------------------
(1) 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;
H.R. 5, Sec. 7(c)(1)(A).
---------------------------------------------------------------------------
\17\ If manufacturers and distributors do not fall under Section
7(c)(1)(A), they are still exempt from punitive damages if:
---------------------------------------------------------------------------
(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, unless the Food and Drug Administration has
determined that such medical product was not manufactured or
distributed in substantial compliance with applicable Food and Drug
Administration statutes and regulations.
H.R. 5, Sec. 7(c)(1)(B).
---------------------------------------------------------------------------
\18\ Section 7(c)(4) provides that a health care provider may be
liable if the person ``before or after premarket approval or clearance
of such medical product, knowingly misrepresented to or withheld from
the [FDA] information that is required to be submitted under the
Federal Food, Drug, and Cosmetic Act . . . or section 351 of the Public
Health Service Act . . . that is material and is casually related to
the harm which the claimant allegedly suffered''; or
---------------------------------------------------------------------------
H.R. 5 also sets unprecedented limits on the amount an
attorney may receive in contingency fee payments. Specifically,
the total amount of all contingent fees for representing all
claimants in a health care lawsuit may not exceed: (1) 40% of
the first $50,000 recovered by the claimant(s); (2) 33 \1/3\%
of the next $50,000 recovered by the claimant(s); (3) 25% of
the next $500,000 recovered by the claimant(s); and (4) 15% of
any amount by which the recovery by the claimant(s) is in
excess of $600,000.\19\
---------------------------------------------------------------------------
\19\ H.R. 5, Sec. 5(a).
---------------------------------------------------------------------------
H.R. 5 also provides an extremely restrictive statute of
limitations for medical malpractice actions. It states that a
``health care lawsuit may be commenced no later than 3 years
after the date of manifestation of injury or 1 year after the
claimant discovers, or through the use of reasonable diligence
should have discovered, the injury, whichever occurs first.''
\20\ (emphasis added). Although disguised as a 3-year statute
of limitation, the effect of this provision is that the
claimant has exactly 1 year from the date of discovering the
injury to file suit. This is because the claimant will discover
the injury on the same day the injury manifests itself.\21\
---------------------------------------------------------------------------
\20\ H.R. 5, Sec. 3.
\21\ The provision has two exceptions. The statute of limitations
is tolled upon proof of fraud, intentional concealment, or the presence
of a foreign body in the person injured. The second exception is for
minors who have sustained injury before the age of 6. These victims may
bring a lawsuit until the later of 3 years from the date of
manifestation of the injury, or the date on which the minor attains the
age 8. H.R. 5, Sec. 3.
---------------------------------------------------------------------------
The bill also provides for periodic payments rather than a
lump sum payment to victims.\22\ And finally, H.R. 5 is not
limited to medical malpractice actions but covers lawsuits for
failure to cover against HMOs and other health insurers as
well.\23\
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\22\ H.R. 5, Sec. 8(a). ``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.'' Id.
\23\ H.R. 5, Sec. 9(7) defines a as:
[A]ny health care liability claim concerning the provision
of health care goods or services, or any medical product,
affecting interstate commerce, or any health care liability
action concerning the provision of health care goods or
services, or any medical product, 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.
I. Background
Medical malpractice is a tort-based legal claim for damages
arising out of an injury caused by a health care provider. Tort
claims are part of the ``common law,'' or judge-made law, of
the United States' civil justice system. Typically, tort claims
have been reserved to the States.\24\
---------------------------------------------------------------------------
\24\ Federal Tort Reform Legislation: Constitutionality and
Summaries of Selected Statutes (CRS Report 95-797 A), at 1.
---------------------------------------------------------------------------
The tort system provides a number of benefits to society.
First, it compensates victims who have been injured by the
negligent conduct of others. Second, it deters future
misconduct and carelessness that may cause injury and punishes
wrongdoers who inflict injury. Third, it prevents future injury
by removing dangerous products and practices from the
marketplace. Fourth, it informs an otherwise unknowing public
of such harmful products or practices, thereby expanding public
health and safety.\25\
---------------------------------------------------------------------------
\25\ Joan Claybrook, Consumers and Tort Law, 34 Fed. B. News & J.
127 (1987).
---------------------------------------------------------------------------
Most medical malpractice claims are based on the tort of
``negligence,'' defined as conduct ``which falls below the
standard established by law for the protection of others
against unreasonable risk of harm.'' \26\ In medical
malpractice cases, this legal standard is based on the
practices of the medical profession,\27\ and is usually
determined based on the testimony of expert witnesses.
---------------------------------------------------------------------------
\26\ Restatement (Second) of Torts Sec. 282 (1965).
\27\ David M. Harney, Medical Malpractice Sec. 21.2, at 413 (2d ed
1987).
---------------------------------------------------------------------------
As with other torts, remedies for medical malpractice may
consist of compensatory damage awards for economic losses such
as medical expenses or lost wages; non-economic losses such as
pain and suffering, reduced life expectancy, diminished quality
of life, loss of a limb, loss of fertility, loss of a child or
spouse, and loss of mobility; and punitive damages to punish
and deter willful and wanton conduct.
II. General Concerns
A review of the empirical evidence gathered over the last
decade supports a number of conclusions: first, medical
malpractice is a serious problem in the United States; second,
H.R. 5 does not respond to the problem of rampant medical
malpractice and ignores the principal reason for the ``crisis''
it purports to solve--the insurance industry's cycles and
practices; and third, liability limitation laws have not
reduced premiums for medical malpractice to any significant
extent.
A. Medical malpractice is a serious problem in the United
States.
Medical malpractice in the United States is a very real
problem with devastating consequences. According to a study
conducted in 1999 by the National Academy of Sciences Institute
of Medicine (``IOM''), between 44,000 and 98,000 deaths occur
each year in U.S. hospitals due to medical errors, and this
does not even include malpractice committed at outpatient
centers, physician offices and clinics.\28\ These numbers are
greater than the number of people who die due to motor vehicle
accidents (43,458), breast cancer (42,297) or AIDS
(16,516).\29\
---------------------------------------------------------------------------
\28\ See Kohn et al., supra note 10. Using the lower estimate,
medical malpractice in hospitals is the 8th leading cause of death in
this country; using the higher estimate, it is the 5th leading cause of
death. Id.
\29\ Id.
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Study after study have shown that the prevalence of medical
malpractice extolls an enormous burden on its victims. A 1990
Harvard Medical Practice study found that medical negligence in
New York hospitals results in 27,000 injuries and 7,000 deaths
each year.\30\ At a 1992 meeting of the American Association
for the Advancement of Science, it was reported that more than
1.3 million hospitalized Americans, or nearly 1 in 25, are
injured annually by medical treatment, and about 100,000 such
patients, or 1 in 400, die each year as a direct result of such
injuries.\31\ A new study in Pediatrics magazine found that
medical errors occurred in more than one in 10 cases involving
children with complex medical problems.\32\
---------------------------------------------------------------------------
\30\ Harvard Medical Practice Study, Patients, Doctors and Lawyers:
Medical Injury, Malpractice Litigation, and Patient Compensation in New
York (1990).
\31\ Christine Russell, Human Error: Avoidable Mistakes Kill
100,000 Patients a Year, Wash. Post Health Mag., Feb. 18, 1992; see
also Harvey Wachsman, Lethal Medicine, The Epidemic of Medical
Malpractice in America (1993).
\32\ Peter Eisler et al., Hype Outraces Facts in Malpractice
Debate, USA Today, Mar. 5, 2003.
---------------------------------------------------------------------------
Another recent study from Harvard Medical School and the
University of Ottawa examined medical errors affecting patients
after they were discharged from an unnamed teaching
hospital.\33\ The study, reported in the February 4, 2003 issue
of the Annals of Internal Medicine, found that nearly 20% of
400 patients discharged from the hospital suffered an ``adverse
event'' that occurred after discharge but resulted from the
care they received at the hospital, rather than from an
underlying disease or condition.\34\ Thirty percent of those
patients were temporarily disabled, and two of them suffered
permanent disability--one from a life-threatening infection
that followed a procedure and was not recognized while the
patient was at the hospital.\35\
---------------------------------------------------------------------------
\33\ See Sandra G. Boodman, Medical Errors Come Home, Wash. Post.,
Feb. 18, 2003 at HE01.
\34\ Id.
\35\ Id.
---------------------------------------------------------------------------
Almost every day now we read a new story about a botched
surgery, a mix-up in the medical records, an unnecessary
amputation, or the discovery of medical objects inside
patients.\36\ However, despite the high amount of malpractice
being committed, the number of lawsuits filed on behalf of
malpractice's victims is quite low. The landmark Harvard
Medical Practice Study found that eight times as many patients
are injured by malpractice as ever file a claim; 16 times as
many suffer injuries as receive any compensation.\37\ In
contrast, the 1999 IOM study found that total national cost of
medical malpractice (lost income, lost household production,
disability and health care costs) is quite high, estimated to
be between $17 billion and $29 billion each year.\38\
---------------------------------------------------------------------------
\36\ See, e.g., Shankar Vedantam, Surgical Expertise, Undone by
Error, Wash. Post., Feb. 24, 2003, at A01; Rob Stein, Teenage Girl in
Botched Organ Transplant Dies, Wash. Post., Feb. 23, 2003, at A01;
Mastectomy Mistake Fuels Debate, CBSnews.com, Jan. 21, 2003; Denise
Grady, Forgotten Surgical Tools ``Uncommon but Dangerous,'' N.Y. Times,
Jan. 21, 2003, at F5. (citing study that sponges or surgical
instruments are left inside patients at least 1,500 times a year).
\37\ See supra note 30.
\38\ See Kohn et al., supra note 10.
---------------------------------------------------------------------------
There is no denying that medical malpractice is a serious
problem in our country right now. H.R. 5, however, does nothing
about this problem. According to data from the National
Practitioner Data Bank, from 1990 to 2002, just 5% of doctors
were involved in 54% of all medical malpractice payouts,
including jury awards and settlements.\39\ The data shows that
of the 35,000 doctors with two or more payouts during that
period, only 8% were disciplined by state medical boards. Among
the 2,774 doctors who had made payments in five or more cases,
only 463 (1 in 6) had been disciplined.\40\ An amendment
offered by Mr. Berman during the markup of H.R. 5 would have
provided for greater accountability of doctors. The amendment
would have required states to make public the identity and
mandate a reporting of the judgment or settlement of any case
of malpractice over $10,000. It also would have made public any
actions by a hospital to deny or suspend hospital privileges
for bad doctors. Unfortunately, the amendment was defeated by a
vote of 16-10.\41\ H.R. 5 simply is not concerned with fixing
the root problem of medical malpractice.
---------------------------------------------------------------------------
\39\ See supra note 9; see also Sidney M. Wolfe, A Free Ride for
Bad Doctors, N.Y. Times, Mar. 4, 2003.
\40\ Id.
\41\ See Markup of H.R. 5, Transcript at pp. 62-82.
---------------------------------------------------------------------------
Along these same lines, a comparison of a recent report by
the American Health Quality Association, which ranked states
according to the quality of care delivered to Medicare
beneficiaries, and the states that the AMA and PIAA say are in
``crisis'' shows that there is a significant relationship
between those states in crisis and those states with the lowest
quality of care rankings.\42\ Specifically, a comparison shows
that five of the twelve states (42%) currently in a medical
liability ``crisis'' (according to the AMA/PIAA) ranked at the
bottom 25% of all states for quality of care. Nine of the
twelve states (75%) currently in a ``crisis'' rated in the
bottom 50% of all states for quality of care.
---------------------------------------------------------------------------
\42\ See The American Health Quality Association, Change in the
Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-
2001 (JAMA, 2003; 289: 305-312).
---------------------------------------------------------------------------
Similarly, those states in ``crisis'' show a significant
relationship to those states with poor doctor discipline
records. For example, Pennsylvania--where doctors recently went
on strike over insurance costs--has disciplined only 5% of the
512 doctors who had made payments in malpractice suits five or
more times.\43\ Moreover, Pennsylvania's 5.3% of the doctors in
the United States makes up 18.5% of doctors nationally with
five or more malpractice payments.\44\ West Virginia, another
state in crisis, has .57% of the country's physicians, but they
make up 1.69% of doctors nationally who have made malpractice
payments five or more times. Only one-fourth of those doctors
have been disciplined by the medical review board.\45\
---------------------------------------------------------------------------
\43\ See Sidney M. Wolfe, A Free Ride for Bad Doctors, N.Y. Times,
Mar. 4, 2003.
\44\ Id.
\45\ Id.
---------------------------------------------------------------------------
B. H.R. 5 ignores the principal cause of the ``crisis''--
the cyclical nature of the insurance industry and
the investment practices of insurance companies.
Supporters of H.R. 5 claim that insurance companies have
become insolvent or have left certain markets because of
excessive litigation and unrestrained jury awards. This so-
called ``crisis'' mirrors the last insurance ``crisis'' that
hit the United States in the mid-1980's and an earlier one in
the mid-1970's. Similar to its predecessors, today's insurance
``crisis'' has less to do with the legal system, tort laws,
lawyers or juries and more to do with the insurance
underwriting cycle and insurance companies' own investment
practices.
Insurance industry experts have articulated the cyclical
nature of the industry, showing a boom and bust cycle of so-
called ``crises'' beginning in the 1970's.\46\ During the first
``crisis,'' medical malpractice insurance premiums increased by
large margins and certain specialities were denied
coverage.\47\ As a result, all states but one initiated reforms
designed to provide alternative sources of insurance and to
reduce the number and costs of claims. Physician and hospital-
owned insurance companies emerged as an alternative to
traditional policy providers,\48\ and, for at least a decade,
insurance was accessible and affordable in a market dominated
by these companies.
---------------------------------------------------------------------------
\46\ U.S. Congress, Office of Technology Assessment, Pub. No. OTA-
BP-H-119, Impact of Legal Reforms on Medical Malpractice Costs 13
(1993) [hereinafter OTA Report on Legal Reforms].
\47\ Id.
\48\ Medical insurance providers consist of both stock and mutual
insurance companies. The physician and hospital owned companies are
among the mutual insurance companies created to provide the lowest
possible premiums.
---------------------------------------------------------------------------
The mid-1980's saw another such ``crisis.'' Prior to that,
the insurance industry maintained affordable premiums and only
minimal increases because of investments at high interest rates
that produced significant yields. When interest rates dropped
in 1984, however, insurance providers responded with
considerable increases in medical malpractice insurance
premiums.\49\ The mid-1980's saw insurance rate increases of
300% or more for manufacturers, municipalities, doctors, nurse-
midwives, day-care centers, non-profit groups and many other
commercial customers of liability insurance.
---------------------------------------------------------------------------
\49\ See OTA Report on Legal Reforms at 15.
---------------------------------------------------------------------------
As Joanne Doroshow, Executive Director of the Center for
Justice and Democracy, testified at a hearing before the
Subcommittee on Commercial and Administrative Law, what
precipitates these crises is always the same:
Insurers make their money from investment income.
During years of high interest rates and/or insurer
profits, insurance companies engage in fierce
competition for premiums dollars to invest for maximum
return. More specifically, insurers engage in severe
underpricing to insure very poor risks just to get
premium dollars to invest. But when investment income
decreases because interest rates drop, the stock market
plummets and/or cumulative price cuts make profits
become unbearably low, the industry responds by sharply
increasing premiums and reducing coverage, creating a
``liability insurance crisis.'' \50\
---------------------------------------------------------------------------
\50\ See Help Efficient, Accessible, Low-Cost, Timely Health Care
(HEALTH) Act of 2002: Hearing on H.R. 4600 before the House Subcomm. on
Commercial and Admin. Law, 107th Cong. (June 1, 2002) (statement of
Joanne Doroshow, Executive Director of the Center for Justice &
Democracy) [hereinafter ``Doroshow statement].
---------------------------------------------------------------------------
Another factor that affects insurance rates is the fact that since
1945 insurance companies have been exempt from antitrust laws. See
McCarran-Ferguson Act, 15 U.S.C. Sec. Sec. 1011-1015 (1945). Under the
McCarran-Ferguson Act, courts have held that state regulation need not
be meaningful or active in a particular instance to trigger the
antitrust exemption. The result over the years has been uneven
oversight of the insurance industry by the states, coupled with no
possibility of Federal antitrust enforcement, creating an environment
that has fostered a wide range of anticompetitive practices.
Raul King, an economist and insurance industry expert at
Congressional Research Service described today's situation at
the victims' forum held by House Democrats on February 11,
2003:
What has happened in the 1990's, after the last medical
malpractice crisis in the mid-'80's is that in the
1990's the markets were up. For an extended period of
time interest rates were relatively low, but the bottom
line is that investments were very, very high, and they
can continue to price their business in such a way to
maximize premium for investment purposes.
Some would argue that starting in 2000 when not only
the medical malpractice area but insurance in general,
not just medical malpractice, but all P&C, property and
casualty insurance, when the market cycle started to
turn, investments were not what they expected. Interest
rates were low, and across the board rates started
firming up.
Incidentally, when the market is considered soft,
coverage is readily available. Prices are relatively
low. The insurance company will make their products
available in the marketplace, and they will
aggressively sell as much as they can because they want
the business, and it's intensely competitive.
Some would argue that this soft market that went
beyond the 6 years but right up close to 10 years, and
this what the consumer groups have argued as cash flow
underwriting what Bob Hunter, for example, would argue
is cash flow underwriting, they run into a problem.
Their investments can't cover their premium losses and
underwriting losses.
So what they have to do is to increase premiums
dramatically. They have to in some cases withdraw from
the marketplace, change the amount of insurance they'll
make available in the marketplace. Rather than selling
a $500,000 policy, they'll sell only a $250,000 policy,
and that's all that's available in a given state.\51\
---------------------------------------------------------------------------
\51\ See Democratic Forum on Malpractice, February 11, 2003,
Transcript at 32-33. Another insurer described the problem as well:
---------------------------------------------------------------------------
What is happening to the market for medical malpractice
insurance in 2001 is a direct result of trends and events
present since the mid to late 1990's. Throughout the 1990's
and reaching a peak around 1997 and 1998, insurers were on
a quest for market share, that is, they were driven more by
the amount of premium they could book rather than the
adequacy of premiums to pay losses. (Emphasis added). In
large part this emphasis on market share was driven by a
desire to accumulate large amounts of capital with which to
turn into investment income. Driven in large part by
lobbyist for the insurance industry and doctors' groups,
H.R. 4600 is the latest attempt to the system.
Unfortunately, H.R. 4600 does not address the real
problems, which include the quantity of malpractice being
committed by the medical profession and the inability of
many victims to obtain reasonable compensation.
In a perfect world, investment income would cover any
deficiencies that might exist in underwriting results and
the insurers' aggressive marketing and pricing strategy
would prove to be successful. Alas, we do not live in a
perfect insurance world and, as competition intensified,
underwriting results deteriorated. Regardless of the level
of risk management intervention, proactive claims
management, or tort reform, the fact remains that if
insurance policies are consistently underpriced, the
insurer will lose money.
See Charles Klodkin, Medical Malpractice Insurance Trends? Chaos!,
Gallagher Healthcare Insurance Services (Sept. 2001).
Thus, there are many factors, completely unrelated to jury
verdicts and the civil justice system, that affect insurance
rates, including: (1) changes in state law and regulatory
requirements; (2) competitiveness within the insurance market;
(3) the types of policies issued within the industry; (4)
interest rates; (5) state socio-economic factors, such as
urbanization; (6) national economic trends; and (7) huge
portfolio losses due to the falling stock market.\52\ According
to the National Association of Insurance Commissioners, these
factors fall into three categories: (a) changes in interest
rates, (b) underpricing in soft markets, and (c) adverse shock-
losses that lead to super-competitive cycles.\53\
---------------------------------------------------------------------------
\52\ Numerous GAO studies and testimony over the past two decades
have repeatedly demonstrated that the nexus between litigation,
insurance rates, and health care costs is neither linear nor
coextensive. See, e.g., Medical Malpractice: A Continuing Problem With
Far-Reaching Implications (GAO/T-HRD-90-24), 101st Cong. (Apr. 26,
1990) (Statement of Charles A. Bowsher, Comptroller General of the
United States).
\53\ Cummings et al., eds. Cycles and Crises in Property/Casualty
Insurance: Causes and Implications, NAIC, 1991 at 339; see also Risk
Managers Blame Insurers for Renewal Woes, National Underwriter, Jan.
14, 2002.
---------------------------------------------------------------------------
All three factors are present in the current crisis. Well
before September 11th, the Federal Reserve cut interest rates
several times, while insurers engaged in underpricing of the
soft market.\54\ The attacks of September 11th accelerated the
price increases that had already begun by providing the adverse
shock-loss component of the equation.\55\ For example, St. Paul
Insurance Company withdrew from the medical malpractice market,
creating major supply and demand problems.\56\ Although St.
Paul cited liability risks as the reason for its withdrawal, it
is also noteworthy that St. Paul lost a lot of money in the
Enron scandal.\57\ In addition, St. Paul engaged in a premium
price war in the 1990's, using the go-go stock market to cover
the spread and invested reserves grew so large that some of the
funds were released to the bottom line as profit. When the
stock market crashed, however, St. Paul was left with the
option of exiting the market or increasing premiums.\58\
---------------------------------------------------------------------------
\54\ See Risk Managers Blame Insurers for Renewal Woes, National
Underwriter, Jan. 14, 2002.
\55\ See Year in Review, Business Insurance, Dec. 24, 2001 (To be
sure, the market began firming in 2000. But the Sept. 11 terrorist
attacks sent insurance prices skyrocketing far beyond the estimates of
increases that earlier were being attributed to a normal hard cycle.).
\56\ See The St. Paul Companies 2001 Annual Report at 3.
\57\ Doroshow statement.
\58\ Todd Sloane, Back on the tort reform merry-go-round, 32 Modern
Healthcare 28, July 15, 2002.
---------------------------------------------------------------------------
Both the American Medical Association and members of the
insurance industry acknowledge the role the insurance industry
has played in creating the latest medical malpractice crisis.
In an internal memo from the AMA's Board of Trustees, the
author states that ``the insurance underwriting cycle is now at
a point where insurers have both pricing power and a need to
increase revenues through premiums as returns on investments
are no longer able to subsidize underwriting losses and as
insurers have suffered large claim losses in other areas.''
\59\ The author also stated the following:
---------------------------------------------------------------------------
\59\ Report 35 of the Board of Trustees (A-02) on Liability Reform,
at p.2.
For several years, insurers kept prices artificially
low while competing for market share and new revenue to
invest in a booming stock market. As the bull market
surged, investments by these historically conservative
insurers rose to 10.6% in 1999, up from a more typical
3% in 1992. With the market now in a slump, the
insurers can no longer use investment gains to
subsidize low rates. The industry reported realized
capital gains of $381 million last year, down 30% from
the high point in 1998, according to the A.M. Best
Company, one of the most comprehensive sources of
insurance industry data.\60\
---------------------------------------------------------------------------
\60\ Id.
Similarly, a bi-partisan committee of the West Virginia
legislature stated that the ``insurance industry has played a
role in the continuing limitations on accessible and affordable
insurance coverage for the health care providers'' and that
``any limitations placed on the judicial system will have no
immediate effect on the cost of liability insurance for health
care providers.'' \61\ The National Conference of State
Legislatures has stated that falling interest rates for bonds
and stock prices weakened insurers' main source of profit--
their investment income.\62\ The Physician Insurers Association
of America confirmed that investment income contributed 47% to
its companies' revenue in 1995, but only 31% in 2001.\63\
---------------------------------------------------------------------------
\61\ Final Report of the Insurance Availability and Medical
Malpractice Industry Committee, Jan. 7, 2003.
\62\ See Eisler et al., supra note 32.
\63\ Id.
---------------------------------------------------------------------------
Still, despite this history and the insurance industry and
AMA's own admissions, H.R. 5 addresses none of these problems.
It does nothing about the insurance companies' bad investment
practices or the insurance companies' boom and bust cycles. It
does nothing to repeal the anomalous McCarran-Ferguson
antitrust exemption for the insurance industry.\64\ It does
nothing to require that medical malpractice premium increases
be justified or to even permit health care providers to
challenge these increases, despite the fact that many state
laws are deficient in these areas.\65\ Rather, as in every
other cyclical insurance industry ``crisis,'' the target and
focus have been the legal system and restrictions on victims'
rights to recovery.
---------------------------------------------------------------------------
\64\ See supra note 50.
\65\ Only a handful of states, including Alabama, Arizona,
Illinois, New York and Oklahoma require that rates be filed and
approved by the state insurance department before they can be used. See
National Association of Insurance Commissioners, Compendium of State
Laws on Insurance Topics, Rate Filing Methods For Property/Casualty
Insurance, Workers' Compensation, Title, 2002.
---------------------------------------------------------------------------
C. Empirical evidence establishes that liability limitation
laws have not had a significant impact in reducing
insurance premiums.
Supporters of H.R. 5 argue that jury awards have
skyrocketed, which in turn has caused malpractice premiums to
increase, doctors to practice defensive medicine, and doctors
to leave their practices in certain states with high premiums.
They argue that Federal restrictions on victims' abilities to
pursue and collect on malpractice claims will reduce these
problems. A review of the empirical data indicates that the
proponents' arguments are incorrect and legal restrictions like
those contained in H.R. 5 will not increase consumer welfare.
First, the empirical data shows that settlements and jury
awards, including punitive damages, are not increasing at a
rate far beyond the rate of inflation. According to the
actuarial analysis of medical malpractice insurance conducted
by J. Robert Hunter, Director of Insurance for the Consumer
Federation of America,\66\ the average malpractice payout has
not changed much over the decade, and continues to hover at
approximately $30,000 without any adjustment for inflation.\67\
For the decade ending in December 2000, each closed claim for
medical malpractice, including million dollar verdicts,
averaged only $27,824.\68\
---------------------------------------------------------------------------
\66\ See Letter from J. Robert Hunter, Director of Insurance for
the Consumer Federation of America, to Joanne Doroshow, Executive
Director of the Center for Justice & Democracy (Oct. 13, 2001) and
attached spreadsheet [hereinafter ]. To conduct this analysis, Mr.
Hunter used the most recent insurance data available from the National
Association of Insurance Commissioners and A.M. Best and Company. Id.
\67\ Id; see also Medical Malpractice Insurance: Stable Losses/
Unstable Rates, Americans for Insurance Reform, Oct. 10, 2002 (``Not
only has there been no `explosion' in medical malpractice payouts at
any time during the last 30 years . . . payments (in constant dollars)
have been extremely stable and virtually flat since the mid-1980s.'').
\68\ Id.
---------------------------------------------------------------------------
With regard to actual jury awards, data from the National
Practitioner Data Bank shows that the average judgment declined
in the first 9 months of 2002, dropping from $426,247 from
$593,647 in 2001.\69\ This startling statistic, the most recent
empirical evidence on jury awards, cuts right to the heart of
the rationale for the bill.
---------------------------------------------------------------------------
\69\ National Practitioner Data Bank.
---------------------------------------------------------------------------
Supporters of H.R. 5 cite anecdotal evidence that jury
awards are increasing. One such study, conducted by Jury
Verdict Research (``JVR'') and released in March 2002, showed
that jury awards in medical malpractice cases jumped 43% from
1999 to 2000.\70\ Studies such as this, however, are too
narrowly focused to provide the complete picture. The JVR study
cites data that is skewed toward the high-end and doesn't
include defense verdicts (verdicts in which no money was
awarded), verdicts in non-jury trials, verdict reductions by
remittitur, or verdicts overturned on appeal.\71\ The JVR and
similar studies are not adjusted for inflation and have no
relation to what insurance companies actually pay out to
claimants.\72\
---------------------------------------------------------------------------
\70\ Jennifer E. Shannon and David Boxold, Medical Malpractice:
Verdicts, Settlements and Statistical Analysis, Jury Verdict Research,
2002.
\71\ JVR admitted that its 2,951-case malpractice database has
large gaps in it--it collects award information sporadically and
unsystematically, does not know how many it misses, cannot calculate
the percentage change in the median for childbirth negligence cases,
and excludes trial victories by doctors and hospitals that are worth
zero dollars. Press Release, Flawed Jury Data Masks Trends, Center for
Justice and Democracy (Mar. 23, 2002); see also Todd Sloane, Back On
The Tort Reform Merry-Go-Round, 32 Modern Healthcare 28, July 15, 2002;
Rachel Zimmerman and Christopher Oster, Assigning Liability: Insurers'
Missteps Helped Provoke Malpractice `Crisis'--Lawsuits Alone Didn't
Cause Premiums to Skyrocket; Earlier Price War a Factor--Delivering Ms.
Kline's Baby, The Wall Street Journal, A1, June 24, 2002 (discussing
JVR's incomplete study).
\72\ Id.
---------------------------------------------------------------------------
Punitive damages, which are designed to deter willful and
wanton misconduct, are infrequently awarded. According to
Department of Justice statistics, in 1996 only 1.1% of medical
malpractice plaintiffs who prevailed at trial were awarded
punitive damages and juries awarded only 1.2% of those
awards.\73\
---------------------------------------------------------------------------
\73\ Tort Trials and Verdicts in Large Counties, 1996, U.S.
Department of Justice, Bureau of Justice Statistics, NCJ 179769 (August
2000), p. 7.
---------------------------------------------------------------------------
Second, medical malpractice premiums have not increased
beyond the rate of inflation. The evidence compiled by Mr.
Hunter shows that inflation-adjusted medical malpractice
premiums have actually declined in the last decade.\74\ Average
premiums per doctor climbed from $7,701 in 1991 to $7,843 in
2000, an increase of only 1.9%. When adjusted for inflation,
these figures demonstrate premiums have actually decreased by
32.5%.\75\ A recent USA Today study found that doctors spend
less on malpractice insurance--3.2% of their revenue--than on
rent.\76\ Equally important, Mr. Hunter's analysis supports the
conclusion that the cost of medical malpractice at the national
health care expenditure level is quite low: for every $100 of
national heath care costs, medical malpractice insurance costs
66 cents, and in 2000 the cost was 56 cents, the second lowest
rate of the decade.\77\
---------------------------------------------------------------------------
\74\ Hunter Analysis, supra note 66.
\75\ Id.
\76\ See Eisler et al., supra note 32.
\77\ Hunter Analysis, supra note 66.
---------------------------------------------------------------------------
Third, there is little evidence to support proponents'
claim that doctors, fearing litigation, engage in the practice
of defensive medicine. Less than 8% of all diagnostic
procedures are performed because of liability fears, and most
doctors who use aggressive diagnostic procedures do so because
they believe the tests are medically indicated.\78\ A study
conducted by the non-partisan Office of Technology Assessment
(``OTA'') found that ``in the majority of clinical scenarios
used in OTA's and other surveys, respondents did not report
substantial levels of defensive medicine, even though the
scenarios were specifically designed to elicit a defensive
response.'' \79\ The OTA further found that ``[c]onventional
tort reforms that tinker with the existing process for
resolving malpractice claims while retaining the personal
liability of the physician are [unlikely to] alter physician
behavior.'' \80\ The effects of H.R. 5's limitations on
defensive medicine are therefore likely to be small.
---------------------------------------------------------------------------
\78\ OTA Report on Legal Reforms, supra note 46 at 74.
\79\ Id.
\80\ Id. at 92.
---------------------------------------------------------------------------
Fourth, studies show that, despite claims by doctors'
groups and the insurance industry,\81\ doctors are not leaving
certain fields because they cannot afford the insurance
premiums. Data from the American Medical Association actually
shows that there are 4.4% more physicians in-patient care per
100,000 of the population in states without damage caps.\82\
There are 5.8% more ob/gyn physicians per 100,000 women in
states without caps.\83\ And in states without malpractice
limitations, there are 233 physicians per 100,000 residents,
while in states with malpractice limitations, there are 223
physicians per 100,000 residents.\84\
---------------------------------------------------------------------------
\81\ See Statement of the American Medical Association to the House
Committee on Energy and Commerce, 107th Cong. at 2-7 (July 17, 2002);
Statement of the National Medical Liability Reform Coalition, before
the House Committee on Energy and Commerce, July 17, 2002, 107th Cong.,
at 2 (July 17, 2002).
\82\ American Medical Association, Physician Characteristics and
Distribution in the U.S. (2001 ed.).
\83\ Health Care State Rankings (Morgan Quitno Press, 2001).
\84\ Senate Congressional Record, July 30, 2002, S7534.
---------------------------------------------------------------------------
Studies conducted in particular states make this clear. For
example, Charleston Gazette reporters Lawrence Messina and
Martha Leonard's series ``The Price of Practice'' \85\ found
that, contrary to claims by the West Virginia Medical
Association that doctors had left the state because of its lack
of liability limitation laws, the number of doctors in West
Virginia had actually increased. In fact, between 1990 and 2000
the number of doctors had increased by 14.3%, a rate twenty
times greater than the population.\86\
---------------------------------------------------------------------------
\85\ Martha Leonard, State Has Seen Sharp Increase in Number of
Doctors, Sunday Gazette Mail, Feb. 25, 2001.
\86\ Id.
---------------------------------------------------------------------------
The same is true in Pennsylvania. A census conducted by the
Pennsylvania Medical Professional Liability Catastrophe Loss
Fund found that between 1990 and 2000, the number of doctors
increased by 13.5%, while the population increased by only
3.4%.\87\ Not only is Pennsylvania not losing doctors, it had
more doctors in 2001 than it did in the preceding five to 10
years.\88\ Furthermore, the Philadelphia Inquirer notes that in
2000, ``Pennsylvania ranked ninth-highest nationally for
physician concentration, a top-10 position it has held since
1992. There were 318 doctors for every 100,000 residents in
2000, according to the American Medical Association.'' \89\
---------------------------------------------------------------------------
\87\ Ann Wlazelek, Doctors' Ad Campaign Baseless; They're Not
Fleeing Pa., but Malpractice Straits Create `Hostile' Climate, Morning
Call, Mar. 24, 2002; Josh Goldstein, Recent Census of Doctors Shows No
Flight from Pa., Philadelphia Inquirer, Oct. 2, 2001.
\88\ Goldstein, supra note 87.
\89\ Wlazelek, supra note 87. Studies done on the ob/gyn market in
New York yield similar conclusions. See New York Public Interest
Research Group Study (available at: http://www.nypirg.org/ health/
malpractice--facts.html (last visited Feb. 1, 2003) (N.Y. ranked 3rd in
the nation in number of ob/gyn's per capita; the number of physicians
in N.Y. has skyrocketed and increasing at a rate faster than the
national average; N.Y. ranked 2nd in number of doctors per capita).
---------------------------------------------------------------------------
Fifth, there is no evidence to support the claim that
restrictions on malpractice litigation will bring about
appreciable health care savings. One reason is that medical
negligence recoveries in this country in 2001 added up to $4.5
billion. Amidst a health care system that has about $1.4
trillion worth or transactions, recoveries for malpractice
constitute less than 1 percent of the cost of healthcare.\90\
---------------------------------------------------------------------------
\90\ See Lorraine Woellert, Commentary: A Second Opinion on the
Malpractice Plague, Business Week, Mar. 3, 2003.
---------------------------------------------------------------------------
Moreover, there is scant quantitative evidence that
previous state attempts have accomplished this purported
goal.\91\ In a comparison of states that enacted severe tort
restrictions during the mid-1980's and those that resisted
enacting any liability limitation laws, no correlation
---------------------------------------------------------------------------
\91\ It is hardly a foregone conclusion that such restrictions will
the problem. In fact, both Republican and Democratic members of the
Judiciary Committee requested the General Accounting Office to conduct
an inquiry into the effect of state tort laws on medical professional
liability premium increases nationwide.
---------------------------------------------------------------------------
was found between such laws and insurance rates.\92\
Indeed, some of the resisting states experienced low increases
in insurance rates or loss-costs relative to the national
trends, while some states that enacted liability limitation
laws experienced high rate or loss cost increases relative to
the national trends. For example, in 2002, Michigan, a state
with caps, had one of the highest average premiums in the
country. Minnesota and Oklahoma, two states without caps, had
two of the three lowest average rates in the country.\93\
Furthermore, data provided by Medical Liability Monitor in 2001
showed that in the practice of internal medicine, states with
caps on damages had higher premiums than states without
caps.\94\ For general surgeons, insurance premiums were 2.3%
higher in states with caps on damages.\95\ And for ob/gyn's,
premiums were only 3.3% lower in states with caps on
damages.\96\ On average, malpractice premiums were no higher in
the twenty-seven states that have no limitations on malpractice
damages, than in the twenty-three states that have such
limits.\97\
---------------------------------------------------------------------------
\92\ See Premium Deceit, supra note 2.
\93\ See 2002 Medical Liability Monitor, supra note 3.
\94\ See 2001 Medical Liability Monitor, supra note 4.
\95\ Id.
\96\ Id.
\97\ See Senate Congressional Record, supra note 6. Moreover,
studies show that rising insurance rates have been a trend in the
entire commercial industry, not just in the medical malpractice
industry. Insurance prices have risen by 21% for small commercial
accounts, by 32% for mid-size commercial accounts, and by 36% for large
commercial accounts. Insurance for the construction industry, the
commercial automobile industry, the property industry, the workers'
compensation industry, and others have all increased between 24% and
56%. See Council of Insurance Agents and Brokers, 4th Quarter 2001
Survey, released January 2002.
---------------------------------------------------------------------------
The vast majority of the evidence shows that liability
limitation laws do little if anything to reduce medical
malpractice premiums.\98\ For example, one of Florida's largest
malpractice insurers recently acknowledged that a $250,000 cap
on pain and suffering damages will not cure soaring insurance
rates.\99\ For example, a report from the New Jersey Medical
Society estimated that a state cap of $250,000 for noneconomic
damages might result in 5% to 7% savings for physicians.\100\
---------------------------------------------------------------------------
\98\ Insurance industry spokespersons practically admit this. As
Sherman Joyce, President of the American Tort Reform Association
(ATRA), stated, Study Finds No Link Between Tort Reforms and Insurance
Rates, Liability Week, July 19, 1999. ATRA's General Counsel, Victor
Schwartz, told Business Insurance that Michael Prince, Tort Reforms
Don't Cut Liability Rates, Study Says, Business Insurance, July 19,
1999. Debra Ballen, the executive vice president of the American
Insurance Association, stated that Press Release, AIA Cites Fatal Flaws
in Critic's Reports on Tort Reform, Mar. 13, 2002. And Florida
insurers, writing about Florida's omnibus tort reform law of 1986 said
that the Medical Professional Liability, State of Florida, St. Paul
fire and Marine Insurance Company, St. Paul Mercury Insurance Company.
---------------------------------------------------------------------------
Moreover, studies conducted by the National Association of Attorneys
General and state commissions in New Mexico, Michigan and Pennsylvania
confirmed that the crisis was caused not by the legal system but rather
by the insurance cycle and mismanaged underwriting by the insurance
industry. Francis X. Bellotti, Attorney General of Massachusetts, et
al., Analysis of the Causes of the Current Crisis of Unavailability and
Unaffordability of Liability Insurance (Boston, MA: Ad Hoc Insurance
Committee of the National Association of Attorneys General, May 1986).
---------------------------------------------------------------------------
\99\ See Phil Galewitz, Dose of Reality for Doctors, Palm Beach
Post, Jan. 29, 2003.
\100\ See Eisler et al., supra note 32. One study suggested that
payouts may be rising not because of noneconomic damage awards but
because of Id.
---------------------------------------------------------------------------
The California experience is perhaps the best example of
this trend. In 1975, California enacted into law the ``Medical
Injury Compensation Reform Act'' (``MICRA''), after which many
provisions of H.R. 5 are modeled, including caps on non-
economic damages, collateral source offsets, and limitations on
attorneys' fees.\101\ Despite these ``reforms,'' premiums for
medical malpractice insurance in California grew more quickly
between 1991 and 2000 than the national average (3.5% vs. 1.9%,
respectively).\102\ Between 1975 and 1993, California's health
care costs rose 343%, almost double the rate of inflation.\103\
---------------------------------------------------------------------------
\101\ See Cal. Civ. Proc. Code Sec. 667.7 (West 1987) (providing
for periodic payment of damages); id. Sec. 1295 (West 1982) (allowing
physicians and patients to contract for binding arbitration); Cal. Civ.
Code Sec. 3333.1 (West 1997) (allowing collateral source evidence); id.
Sec. 3333.2 (providing limitation on noneconomic damages); Cal. Bus. &
Prof. Code Sec. 6146(a) (West 1990) (limiting contingency fees).
\102\ Hunter analysis, supra note 66.
\103\ Data provided by Consumers' Union.
---------------------------------------------------------------------------
A comprehensive study of MICRA's impact conducted in 1995
found the following: (1) per capita health care expenditures in
California have exceeded the national average every year
between 1975 and 1993 by an average of 9% per year; (2)
California's medical malpractice liability premiums actually
increased by 190% in the twelve years following enactment of
MICRA; (3) hospital patient costs are higher in California than
in other major states; and (4) California's health care costs
have continued to increase at a rate faster than inflation
since the passage of MICRA.\104\
---------------------------------------------------------------------------
\104\ See Proposition 103 Enforcement Project, MICRA: The Impact on
Health Care Costs of California's Experiment With Restrictions on
Medical Malpractice Lawsuits, 1995.
---------------------------------------------------------------------------
Some of MICRA's supporters claim that MICRA caused
California's insurance premiums to drop. To the extent that is
true, the reduction has nothing to do with MICRA and more to do
with Proposition 103, which passed the California legislature
in 1988. Among other things, Proposition 103 prohibited annual
increases greater than 15% by insurers without public hearing,
and required insurers to rebate earlier premiums and led to a
freeze on premiums for several years.\105\ As a result of
Proposition 103, insurance companies refunded over $1.2 million
to policyholders, including doctors.\106\ Within 3 years of
passage of Proposition 103, total medical malpractice premiums
had dropped by 20.2% from the 1998 high.\107\
---------------------------------------------------------------------------
\105\ See Testimony of Harvey Rosenfield, before the House
Committee on Energy and Commerce, Feb. 10, 2003; see also Joseph B.
Treaster, Malpractice Insurance: No Clear or Easy Answers, N.Y. Times,
Mar. 5, 2003.
\106\ Id.
\107\ Id.
---------------------------------------------------------------------------
Not only does the evidence show that California's attempt
failed to lower premiums for doctors, it also shows that
California's insurance companies are reaping excessive profits
in the aftermath of MICRA. In 1997, California's insurers
earned more than $763 million, yet paid out less than $300
million to claimants.\108\ The National Association of
Insurance Commissioners reported the following: (1) malpractice
insurance profits are ten times greater than the profits of
other lines of insurance in California; (2) the average profit
for malpractice insurance in California was 25.40% of the
collected premium; and (3) less than half of medical
malpractice premiums are paid to claimants--only 38.4% of
medical malpractice premiums collected in California since
1988.\109\
---------------------------------------------------------------------------
\108\ California Department of Insurance.
\109\ National Association of Insurance Commissioners,
Profitability By Line By State in 1997 (Dec. 1998).
---------------------------------------------------------------------------
H.R. 5 Goes Beyond Medical Malpractice And Applies To
Insulate HMO's Insurers, Drug Companies, And Manufacturers And
Distributors Of Medical Devices.
Although H.R. 5's proponents frequently tout it as a
medical malpractice bill, its scope is far broader. In fact,
the bill applies to (1) lawsuits against HMOs and other
insurers, and (2) products liability claims against drug
companies and manufacturers and distributors of medical
devices.\110\
---------------------------------------------------------------------------
\110\ H.R. 5, Sec. 9(7); see supra note 23.
---------------------------------------------------------------------------
III. H.R. 5 completely preempts states' patients' bills of rights that
have allowed HMOs to be sued for wrongful actions.
As currently drafted, this bill guts HMO reform laws the
states have already passed. We find it extremely problematic
that legislation purporting to be a medical malpractice bill
would be broad enough to cover lawsuits against HMO's and other
insurers, particularly because such legislation preempts
patients' bills of rights passed by some states. For example,
Arizona's patients' bill of rights has no limits on damages for
HMO lawsuits.\111\ California, on which much of H.R. 5 is
based, also has no HMO caps.\112\ Georgia's statute has no caps
for non-economic damages in lawsuits against HMOs.\113\ Nor
does Maine's HMO statute.\114\ Finally, Oklahoma and Washington
have no limitations on non-economic damages.\115\ H.R. 5
completely eviscerates the protections specifically enacted by
these states.
---------------------------------------------------------------------------
\111\ Az. Rev. Stat. Sec. 20-3153 et seq. (2000).
\112\ Ca. Civil Code Sec. 3428 (West 1999).
\113\ Ga. Code Ann. Sec. 51-1-48 et seq.. (1999).
\114\ Me. Rev. Stat. Ann. Tit. 24, Sec. 4313 (West 1999).
\115\ Okla. Stat. Tit. 36, Sec. 6593 et seq.. (2000); Wash. Rev.
Code Sec. 48.43.545 (2000).
---------------------------------------------------------------------------
A. H.R. 5 also covers products liability lawsuits against
manufacturers and distributors of medical devices
and drugs.
H.R. 5 exempts from liability for punitive damages
manufacturers and distributors of medical devices, as well as
pharmaceutical companies, who have obtained FDA approval.\116\
If the FDA mistakenly allows a defective product on the market,
the victims would not be able to sue at all. And, even if the
FDA does not approve the device, manufacturers and distributors
would still be shielded from punitive damage liability if the
product is ``generally recognized among qualified experts as
safe and effective'' pursuant to FDA regulations.\117\
---------------------------------------------------------------------------
\116\ H.R. 5, Sec. 7(c).
\117\ H.R. 5, Sec. 7(c)(1)(B); see supra note 17.
---------------------------------------------------------------------------
Moreover, these Federal regulators approve the design of
the product before it enters the manufacturing process only;
they do not approve the manufacturing of each batch of a
product. Nevertheless, the manufacturer of a defective product
is exempt from punitive damages under this bill. Examples of
products such as the Dalkon Shield, the Cooper-7 IUD device,
high absorbency tampons linked to toxic shock syndrome, and
silicone gel breast implants provide further reasons for our
concerns. Each of these deadly products was approved by the
FDA.\118\
---------------------------------------------------------------------------
\118\ The bill does provide exceptions where manufacturers or
distributors knowingly misrepresented to or withheld from the FDA
information that it was required to submit, and where a person made an
illegal payment to an official at the FDA. This provision alleviates
only one of many concerns we have about H.R. 5's extreme limitation on
the availability of punitive damages.
---------------------------------------------------------------------------
IV. H.R. 5 Raises Constitutional And Federalism Concerns
A. Constitutional Concerns
Among the many problems with H.R. 5, we are also concerned
that the bill may be unconstitutional under the Commerce
Clause, the Fifth Amendment, and the Seventh Amendment.
First, the bill as drafted invites legal challenges to
Congressional authority to legislate in this area, given the
Supreme Court's recent Commerce Clause jurisprudence. There is
a genuine issue as to whether H.R. 5 is a permissible exercise
of Congress' power to regulate interstate commerce,\119\
especially when applied to purely intrastate medical services.
The bill contains no interstate commerce jurisdictional
requirement, and merely makes a flat and unsubstantiated
assertion that all of the activities it regulates affect
interstate commerce.\120\ The Supreme Court repeatedly has
frowned upon Federal intervention into areas like medical
malpractice law that have been traditionally reserved to the
states.\121\
---------------------------------------------------------------------------
\119\ Article I, Section 8 of the Constitution provides, inter
alia, U.S. Const. art I, Sec. 8, cl. 3.
\120\ Section 2 of the bill states that COngress find that the
health care and insurance industries are industries affecting
interstate commerce and the health care liability and litigation
systems existing throughout the United States are activities that
affect interstate commerce by contributing to the high cost of health
care and premiums for health care liability insurance purchased by
health care system providers. According to the Lopez Court, one of the
problems with the school gun ban was that it contained ``no express
jurisdictional element which might limit its reach to a discrete set of
firearms possessions that additionally have an explicit connection with
or effect on interstate commerce.''
\121\ The Court in Lopez observed that there were certain
traditional areas of state law, such as criminal law and education,
which should be off limits to Federal intervention. The concurrence by
Justices Kennedy and O'Connor also reasoned that the Federal Government
should avoid involving itself in areas which fall within the
``traditional concern of the states,'' noting that over 40 States had
adopted laws outlawing the possession of firearms on or near school
grounds.
---------------------------------------------------------------------------
The bill also invites challenges that it violates the Fifth
Amendment, which provides that no person shall be ``deprived of
life, liberty, or property without due process of law,'' \122\
a proscription which has been held to include an equal
protection component.\123\ Plaintiffs will no doubt argue that
the law does not provide a legislative quid pro quo and, as
such, violates the Fifth Amendment. In exchange for depriving
plaintiffs of their common law rights, the bill does not
provide any offsetting legal benefits, at least to the parties
directly harmed by the loss of their common law rights.
---------------------------------------------------------------------------
\122\ U.S. Const. amend. V.
\123\ See Bolling v. Sharpe, 347 U.S. 497 (1954) (Fifth Amendment
due process found to incorporate equal protection guarantees in case
involving public school desegregation by the Federal Government in the
District of Columbia).
---------------------------------------------------------------------------
Finally, the bill may violate the Seventh Amendment, which
provides, ``[i]n suits at common law, where the value in
controversy shall exceed twenty dollars, the right of trial by
jury shall be preserved, and no fact tried by a jury shall be
otherwise re-examined in any Court of the United States, than
according to the rules of the common law.'' \124\ Because the
bill eliminates the right of a jury to determine the
appropriate amount of punitive and non-economic damages, H.R. 5
arguably deprives a plaintiff of the right to jury trial with
respect to those elements of the case. These problems are
highlighted by the fact that courts in some states that have
enacted similar liability limitation laws, such as caps on non-
economic damages and collateral source offsets, have ruled such
reforms unconstitutional as violative of equal protection, due
process, and the right to a trial by jury and access to
courts.\125\
---------------------------------------------------------------------------
\124\ U.S. Const. amend. VII.
\125\ Specifically, thirty-one states (AL, AZ, CA, CO, FL, GA, ID,
IL, IN, KS, KY, LA, MO, NE, NH, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD,
TN, TX, UT, WA, WI, WY) have ruled that such sweeping restrictions on
the rights of medical malpractice victims are unconstitutional. Courts
in twenty states (AL, CO, FL, GA, ID, IL, KS, NE, NH, ND, OH, PA, OK,
OR, SC, SC, TX, UT, WA, WI) have ruled caps or limitations on medical
malpractice damages to be unconstitutional. Courts in NH and PA have
ruled that statutory limitations on attorneys fees in medical
malpractice cases are unconstitutional, unfairly burdening medical
malpractice victims and their lawyer, or resulting in an
unconstitutional infringement on the right to jury trial. Courts in KS,
NH, ND, OH, PA, and RI have ruled that medical malpractice statutes
eliminating the common law rule are unconstitutional violations of due
process and equal protection. Eighteen states (AZ, CA, CO, GA, IN, KY,
LA, MO, NH, NM, NC, OH, OK, SD, TX, UT, WA, and WI) have held that
their states' medical malpractice ultimate statutes of limitations are
unconstitutional. Courts in four states (AZ, KS, NH, and OH) have ruled
that structured settlement provisions of their states' medical
malpractice statutes are unconstitutional violations of the right to
jury trial, equal protection and due process. And courts in eighteen
states (AZ, CA, CO, GA, IN, KY, LA, MO, NH, NM, NC, OH, OK, SD, TX, UT,
WA, and WI) have ruled similar restrictions unconstitutional for
failing to include adequate discovery provisions, for imposing
restrictions which are too short in time, and for discriminating
against minors or incompetent adults, in violation of equal protection,
open courts, or due process guarantees, or the privileges and
immunities clauses of state constitutions.
---------------------------------------------------------------------------
B. Federalism Concerns
We are also concerned that the bill imposes the will of
Congress on what has traditionally been exclusively a state law
issue. As such, H.R. 5 could undermine over two centuries of
respect for federalism by superimposing a new set of Federal
standards on the States.
Federalizing medical malpractice lawsuits will not result
in uniformity. However well articulated, H.R. 5 will be applied
in many different contexts and will be interpreted and
implemented differently by both state and Federal courts.\126\
---------------------------------------------------------------------------
\126\ 1995 Product Liability Hearings, Statement of the Conference
of Chief Justices at 6-7.
---------------------------------------------------------------------------
Moreover, H.R. 5 takes away the state Supreme Courts' role
as the final arbiters of their tort laws. Yet, the Republican
majority stated that this is precisely the goal H.R. 5 is
trying to accomplish. At the markup of H.R. 5, several members
discussed the crisis in Florida and the fact that the Florida
legislature has been unsuccessful in capping damages for
medical malpractice cases. Mr. Wexler asked: ``So what is it
that we in this Congress are doing that is preventing the
Florida legislature from adopting whatever tort reform it sees
fit to do?'' \127\ Rep. Feeney (R-Fla.) responded as follows:
---------------------------------------------------------------------------
\127\ Markup of H.R. 5, Transcript at 45.
Actually, Congress isn't doing anything to prevent
the Republican or formerly Democratic legislature from
doing the sorts of things that we need to do here. It
is the six Democrats on the Florida Supreme Court. I
would refer the gentleman to Smith v. the Department of
Insurance, April 23, 1987, when the Supreme Court
basically said that under [Florida's] right of access
provisions, under the Florida Constitution, that a
$450,000 cap would be unconstitutional.
So the point of the matter is that judges with
certain partisan attitudes actually have prevented the
people's legislature from enacting the very thing that
we are trying to do here, and that is to preserve
access to our doctors for the patients that I represent
throughout the district.\128\
---------------------------------------------------------------------------
\128\ Id. at 46.
The argument Mr. Feeney makes is very problematic. Whatever
reason he attributes to the Florida Supreme Court's decision to
strike down the legislation imposing caps on damages in medical
malpractice cases, the fact remains that the Florida Supreme
Court should be the final arbiter of that issue. It violates
principles of federalism for the United States Congress to
decide that, because it does not like a decision made by the
Florida Supreme Court, it should enact legislation that would
overturn the court's decision.
H.R. 5 reaches far into state substantive civil law,
forcing states to provide the necessary judicial structure to
resolve medical malpractice disputes without permitting them to
decide the social and economic questions in the law that their
courts administer.
V. Specific Concerns
In addition to the general problems raised above concerning
the overall purpose and effect of H.R. 5, we have a number of
specific concerns relating to particular provisions of the
legislation. Most importantly, we are concerned that H.R. 5
does not solve the alleged insurance and litigation crises but
rather unjustly restricts a patient's right to recover for
injuries inflicted by a negligent and careless health care
provider. The following is an itemization of some of the most
pressing problems adopted by the majority in passing H.R. 5.
A. $250,000 aggregate cap on non-economic damages \129\
---------------------------------------------------------------------------
\129\ Non-economic damages compensate victims for the human
suffering they experience as the result of negligent conduct. Although
intangible, these injuries are real and include infertility, permanent
disability, disfigurement, pain and suffering, loss of a limb or other
physical impairment. These damages are not accounted for in damages for
lost wages, which are unrestricted under H.R. 5.
---------------------------------------------------------------------------
We particularly object to the $250,000 cap on non-economic
damages for three reasons: it is manifestly unfair, it
discriminates against women and children and those in low-
economic brackets, and it does not take into account inflation.
First, the cap is unfair because it puts a price tag on the
most horrendous of injuries and applies a ``one-size-fits-all''
philosophy that objectifies and erases the person and
uniqueness of his or her suffering. An incident told by Kathy
Olsen, who attended the victims' forum held by House Democrats
on February 11, 2003,\130\ illustrates the harsh reality of
H.R. 5. Ms. Olsen told her son, Steve's, story. Steve Olsen is
blind and brain damaged because of medical negligence. When he
was 2 years old he fell on a stick in the woods. Steve's doctor
gave Steve steroids and sent him home. Although his parents
asked for a CAT scan, the doctor refused. The following day,
Steve returned to the hospital in a coma because of the growing
brain abscess he had developed, which would have been detected
had the CAT scan been performed. At trial, the jury concluded
that the doctor had committed medical malpractice and awarded
$7.1 million in ``non-economic'' damages. One of the jurors
explained that they saw Steve as a boy doomed to a life of
darkness, loneliness and pain. He would never play sports, work
or enjoy normal relationships with his peers. He would have to
endure a lifetime of treatment, therapy, prosthesis fitting and
around-the-clock supervision. The judge, however, was forced
the reduce that damage award to $250,000 because of the state's
cap.
---------------------------------------------------------------------------
\130\ Democratic Forum on Malpractice, February 11, 2003,
Transcript at 60.
---------------------------------------------------------------------------
Ms. Olsen is outraged by President Bush's statement that
the jury system looks like a ``giant lottery.'' Ms. Olsen
declares: ``California's malpractice law has failed innocent
victims, consumers, and taxpayers. Under this law people are
victimized twice, once by the wrongdoer and again by the laws
that deny them the right to hold the wrongdoer accountable.''
\131\ As to the cap on damages, Ms. Olsen says that the ``law
is regressive by hurting the most seriously injured victims,
those who are permanently and catastrophically injured by
medical negligence. . . . In California, and now proposed
nationwide, no matter how old you are or how disabled you
become or how catastrophic your injuries are, there is a one
size fits all limit on your pain and suffering.'' \132\
---------------------------------------------------------------------------
\131\ Id. at 62.
\132\ Id.
---------------------------------------------------------------------------
Second, the $250,000 cap discriminates against women,
children, seniors, and the poor.\133\ These categories of
victims do not have high economic damages and are more likely
to receive a greater percentage of their compensation in the
form of non-economic damages. The result is that homemakers and
children will be limited to $250,000 in non-economic damages,
but CEO's could recover millions of dollars.\134\
---------------------------------------------------------------------------
\133\ In their 1995 article, Thomas Koenig and Michael Rustad
studied the effects of tort reforms on the different genders, finding
that women are disproportionately affected by such reforms. Thomas
Koenig and Michael Rustad, His and Her Tort Reform: Gender Injustice in
Disguise, 70 Wash. L. Rev. 1 (1995). Specifically, the study found that
women receive smaller economic verdicts for equivalent injuries because
of lower overall wages. Id. at 78. And medical malpractice awards to
women were almost three times more likely to include a pain and
suffering component as those given to men. Id. at 84. This is true
because women are most likely to suffer severe non-economic loss (loss
of fertility, disfigurement, etc.) and be the victims of the types of
medical malpractice that lead to punitive damages (sexual assault,
fraud, false imprisonment, and extreme violation of medical standards,
etc.).
\134\ Id.
---------------------------------------------------------------------------
A striking example of how the one-size-fits-all cap harms
victims without economic damages can be found in the case of
Linda McDougal. Ms. McDougal went to the hospital for a biopsy
after a routine mammogram disclosed a suspicious shadow on one
breast. A few days later, her doctor called to tell her she had
cancer and would need a double mastectomy. At the victims'
forum, Ms. McDougal described the effect this news had on her:
``My world was shattered.'' \135\ After the operation, Ms.
McDougal found out that she never had cancer--the pathologist
mixed up Ms. McDougal's charts with another patient's. ``The
medical profession betrayed the trust I had in them. It's been
very difficult for me to deal with this. My scars are not only
physical, but emotional as well.'' \136\ Ms. McDougal has not
filed a lawsuit yet, but she knows that should Congress pass
legislation capping non-economic damages, her recovery will be
limited to $250,000 because she does not have economic damages.
As Ms. McDougal said at the forum, she lost wages of about
$8,000 and her hospital expenses were about $48,000, which her
insurance company covered. But she went on: ``My disfigurement
from medical negligence is almost entirely noneconomic. . . . I
could never have predicted or imagined in my worst nightmare
that I would end up having both of my breasts removed
needlessly because of a medical error. No one plans on being a
victim of medical malpractice, but it happened.'' \137\
---------------------------------------------------------------------------
\135\ Democratic Forum on Malpractice, February 11, 2003,
Transcript at 48.
\136\ Id. at 49.
\137\ Id. at 50-51.
---------------------------------------------------------------------------
Another recent example is Jesica Santillan, a 17 year old
girl from Mexico whose family moved to the United States so
Jesica could receive a heart and lung transplant at Duke
University Hospital.\138\ The organs flown from Boston to
Durham identified the donor's blood as Type-A blood, but the
hospital mixed-up the paperwork and transplanted organs with
Type-O-positive blood instead. As a result, Jesica, who had
been waiting 3 years for the organs, suffered a near-fatal
heart attack and a seizure. A machine kept her heart and lungs
going for awhile, but on February 22, 2003, just 2 weeks after
the initial surgery, Jesica died.\139\ Like Linda McDougall,
however, Jesica had no economic damages and, should her family
decide to sue, would be capped at $250,000 under H.R. 5.
---------------------------------------------------------------------------
\138\ See AP, Girl Near Death in Botched Transplant, Wash. Post
Feb. 19, 2003 at A02.
\139\ See Shankar Vedantam, Surgical Expertise, Undone by Error,
Wash. Post Feb. 24, 2003 at A01.
---------------------------------------------------------------------------
Third, the cap makes it hard for people with legitimate
cases to find lawyers to represent them. As one attorney from
California stated, ``[e]ven in those cases resolved on the eve
of trial, . . . [lawyers] typically have to invest up to
$100,000 to hire experts and develop the cases. They would do
the same work and invest the same amount of money to tackle a
case with a potential payoff in the millions. So they choose
the more lucrative cases.'' \140\
---------------------------------------------------------------------------
\140\ See Joseph B. Treaster, Malpractice Insurance: No Clear or
Easy Answers, N.Y. Times, Mar. 5, 2003.
---------------------------------------------------------------------------
Finally, the $250,000 cap is based on MICRA's cap,\141\
which was set in 1975 and has not been adjusted for inflation.
A close look at California's numbers adjusted for inflation
shows exactly what $250,000 is worth today. Using the consumer
price index, the medical care value of $250,000 has dropped to
just $38,877 over the 27 years since MICRA was enacted. One
would need about $1,600,000 in 2002 for the equivalent medical
purchasing power of $250,000 in 1975.
---------------------------------------------------------------------------
\141\ Although based on MICRA, H.R. 5's cap on non-economic damages
is much more restrictive. For example, California courts recognize a
separate claim for loss of consortium--claims brought for loss to the
marital relationship--brought by the spouse of an injured patient. The
cap in H.R. 5 is a completely aggregate cap. Under H.R. 5, the amount
of non-economic damages that can be recovered by an injured patient and
his or her spouse cannot exceed $250,000 for non-economic losses.
---------------------------------------------------------------------------
Representatives Nadler and Delahunt both offered amendments
that would allow for adjustment of the $250,000 to the consumer
price index.\142\ As Mr. Nadler pointed out, ``[T]he fact of
the matter is what you are really saying is why don't we allow
people zero recovery for pain and suffering; because if you
index something at whatever number, take 50,000, 250,000,
550,000, and you don't index it, eventually that number is
going to be almost zero. It is going to be almost worthless
depending how long you want to go.'' \143\
---------------------------------------------------------------------------
\142\ Mr. Nadler's amendment would have added the following
language after $250,000 every time it appears in the bill: Mr.
Delahunt's amendment would have struck $250,000 each place it appears
in the bill and replaced it with $1,600,000. Mr. Nadler's amendment was
defeated by a vote of 17-16; Mr. Delahunt's amendment was defeated 15-
14.
\143\ Markup of H.R. 5, Transcript at p. 108.
---------------------------------------------------------------------------
B. Abolition of joint and several liability
We oppose H.R. 5's total elimination of joint and several
liability from medical malpractice cases because the result is
to shift responsibility from the wrongdoer to the innocent
victims of medical malpractice. Joint and several liability has
been a part of the American common law for centuries.\144\ The
doctrine provides that all tortfeasors who are responsible for
an injury are ``jointly and severally'' liable for the
claimant's damages. This means the victim can sue all
responsible defendants and recover from each one in proportion
to that defendant's degree of fault, or sue any one defendant
and recover the total amount of damages. A defendant who pays
more than its share is then entitled, under the doctrine of
contribution, to seek compensation from other responsible
parties based on their degree of fault.\145\ The doctrine is
designed to help ensure that victims of wrongful conduct are
able to fully recover damages for their injuries, especially
when one or more of the defendants is judgment-proof.\146\
---------------------------------------------------------------------------
\144\ See e.g. Michael L. Rustad and Thomas H. Koenig, Taming the
Tort Monster: The American Civil Justice System As A Battleground of
Social Theory, 68 Brook L. Rev. 1 (Fall 2002); Matthew W. Light, Who's
the Boss?: Statutory Damage Caps, Courts, and State Constitutional Law,
58 Wash. & Lee L. Rev. 315 (Winter, 2001).
\145\ Restatement (Third) of Torts Sec. 23 (1999).
\146\ At the 2002 markup of H.R. 4600, Chairman Sensenbrenner
stated the crux of the issue when, after acknowledging that the rule is
he said: ``The HEALTH Act, by providing a fair share rule, it
apportions damages in proportion to a defendant's degree of fault and
prevents unjust situations in which hospitals can be forced to pay for
all damages for an injury, even when the hospital is minimally at
fault.'' 2002 Medical Malpractice Hearing, Transcript at 16. As we see
it, if one has to choose between protecting victims of malpractice or
protecting hospitals who every so often may not receive contribution
from the other wrongdoers, the choice is obvious. As Mr. Scott put it,
``which is more fair? For the hospital to decide to apportion all of
that amongst itself, which is all insured anyway? Or have the plaintiff
have that possibility and lose 1 percent there because they couldn't
find that one, or 2 percent there, and they collect all from this one
and a little bit--this one goes bankrupt? Which is more fair? You've
got somebody with a $100,000 judgment and 50 people, possibily at
fault'' Id. at 31.
---------------------------------------------------------------------------
The majority's reasons for eliminating joint and several
liability \147\ in medical malpractice cases is nothing but an
extreme reaction to mostly unsubstantiated anecdotal stories,
rather than a moderate response to the facts. In the 2002
markup of H.R. 4600 Mr. Bachus gave a hypothetical of a drug
dealer who gets shot during a drug deal gone bad, who then goes
to the hospital and receives treatment from a doctor who is
fatigued. Mr. Bachus raised the possibility that the drug
dealer would be found to be 99 percent at fault and the
hospital 1 percent at fault, but the drug dealer recovers 100
percent because of joint and several liability.\148\ As Mr.
Frank correctly pointed out, ``a drug dealer who was shot and
was 99 percent responsible and recovered . . . is the sort of
example that makes no constructive contribution to the
debate.'' \149\
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\147\ The issue did not come up at the 2003 markup of H.R. 5, but
was discussed at length in the 2002 markup of H.R. 4600.
\148\ Id. at 28.
\149\ Id. at 34.
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These preposterous hypotheticals are the basis for the
majority's extreme response--the elimination of the doctrine
altogether--even though far more moderate responses previously
have been propounded. For example, in 1999 the Congress passed
the Y2K bill, which had several limitations on the total
abolition of joint and several liability. First, it had a
complete carve-out where the defendant acted with specific
intent to injure the victim or knowingly committed fraud.\150\
In addition, the Y2K Act provides that if portions of the
victim's damage claim ultimately prove to be uncollectible, and
the victim is an individual with a net worth of less than
$200,000 and damages are greater than 10 percent of a victim's
net worth, a solvent defendant is responsible for paying an
additional 100 percent share of the liability, or an additional
150 percent of this amount if it acted with ``reckless
disregard for the likelihood that its acts would cause
injury.'' \151\
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\150\ 15 U.S.C. Sec. 6605(c).
\151\ Id. Sec. 6605(d).
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C. Limits on punitive damages in medical malpractice cases
The limitations on punitive damages are also of major
concern to us for two reasons: the heightened standard is
practically impossible for victims to prove,\152\ and the
$250,000 cap is inadequate in extreme cases of abuse, such as
those involving rape or drugs.
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\152\ H.R. 4600, Sec. 7(a) (``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.'' (emphasis added)).
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First, the heightened standard for recovery--the
requirement of clear and convincing evidence that the defendant
acted with malicious intent to injure (or he was substantially
certain the victim would suffer injury but failed to avoid such
injury)--is so extreme it is practically criminal. This
standard makes it almost impossible for victims who have been
egregiously wronged to recover punitive damages.\153\
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\153\ We also think this provision is unnecessary because punitive
damages are so rarely awarded in medical malpractice cases. In fact, a
Westlaw search of punitive damage award cases to date since 1980 shows
that punitive damages were awarded in only twelve cases, most of which
involved egregious conduct by the health care professional.
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Second, even victims who could meet this standard are still
limited by the cap at $250,000 or two times the amount of
economic damages. This cap completely eviscerates the deterrent
effect punitive damages have on egregious misconduct of
defendants because the threat of having to pay a maximum of
$250,000 would not affect many large companies or wealthy
individuals. Moreover, the cap applies no matter what the
conduct, even in situations where a medical professional harmed
a patient because he was under the influence of alcohol or
drugs, or where a doctor sexually assaults his patient.\154\
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\154\ In fact, a report by Public Citizen found that ``47.7% of
doctors [found to have been disciplined for sexual abuse or misconduct
by a disciplinary board] were allowed to continue practicing, their
behavior probably unknown to most if not all of their patients.''
Sidney Wolfe et al., 20,125 Questionable Doctors, Public Citizen Health
Research Group, Washington, D.C. (2000).
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D. Elimination of punitive damages for products approved by
the FDA.
In addition to the caps on punitive damages, we are
especially troubled by the bill's abolition of punitive damages
for products that have been approved by the FDA. Simply because
a product has been approved by the FDA does not mean the
company should be immunized from punitive liability when the
product, despite such approval, causes severe harm to an
individual. This is especially compelling given that studies
have shown that medical devices cause approximately 53 deaths
and over 1,000 serious injuries annually, costing approximately
$26 billion annually.\155\ Government safety standards, at
their best, establish only a minimum level of protection for
the public. At their worst, they can be outdated, under-
protective, or under-enforced.\156\
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\155\ A recent article by Robert Cohen and J. Scott Orr sets out
startling statistics with respect to the medical implant industry. A
few are as follows:
GDuring the past 10 years, 573 recall notices
covering more than 2 million implants were issued for
lapses such as mislabeling, structural failure, or
manufacturing error. All but one of these errors were
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noticed by manufacturers, not the FDA.
GOf the 3500 proposed medical devices reviewed by
the FDA last year, 98% were approved under an expedited
process that requires no clinical testing.
GFederal law requires the FDA to inspect medical
device manufacturers every 2 years, but due to budget
constraints, it actually visits U.S. plants on average
every 5 years and overseas plants ever 13 years.
See Robert Cohen and J. Scott Orr, Faulty Medical Implants Enter Market
Through Flawed System, Newhouse News Service, 2002.
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\156\ The bill response to one of our concerns from last year's
H.R. 4600 by providing an exception to the provision for cases where
the manufacturer or distributor knowingly misrepresented to or withheld
from the FDA information it was required to submit, and where a person
paid an FDA official to secure market approval. H.R. 5, Sec. 7(c)(4).
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Moreover, the bill completely insulates manufacturers and
distributors of products and drugs from defects arising during
the manufacturing process, which occurs after the FDA has given
its approval of the device. This means that a drug company
distributing an FDA-approved product, which is manufactured in
a flawed manner that harms consumers would be insulated from
punitive damages, even if the flawed manufacture was
intentional or reckless.
And finally, banning punitive damages for FDA-approved
products will have a disproportionate impact on women and
seniors, who make up the largest class of victims of medical
products. There are many examples of FDA-approved products that
are dangerous and have caused harm to scores of women,
including DES, the Dalkon Shield and Copper-7 IUDs, super-
absorbent tampons, high-estrogen oral contraceptives, and the
weight loss drug phen-fen.\157\
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\157\ See also Koenig and Rustad, supra, at 38-46 () (citing Lack
of Life Saving Medical Devices, Hearing on S. 687 Before the Subcomm.
on Reg. and Gov't Info. Comm. of the Senate Comm. on Gov't Affairs,
103d Cong., 2d Sess. (testimony of Kristin Rand, counsel on behalf of
Consumer's Union)).
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E. Alteration of the collateral source rule and elimination
of the doctrine of subrogation.
We dissent from the bill's alteration of the collateral
source rule. The bill allows either party to introduce evidence
to the jury of payment from a collateral source and eliminates
the doctrine of subrogation.\158\ The effect is to shift the
costs of malpractice from negligent defendants to innocent
victims.
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\158\ H.R. 5, Sec. 6; see supra note 13.
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The collateral source rule prevents a wrongdoer from
reducing the amount of damages it must pay a victim by the
amount the victim receives from outside sources.\159\ Payments
from outside sources often include health or disability
insurance, for which the victim already paid premiums and
taxes. The rule is fair because the doctrine of subrogation,
which provides that the collateral source has the right to
reimbursement from the victim out of the damage award, ensures
that no source pays more than its share of the liability.\160\
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\159\ See, e.g., Heflend v. Southern Cal. Rapid Transit Dist., 465
P.2d 61 (1970) for an analysis of the collateral source rule.
\160\ See Kenneth Abraham, Distributing Risk: Insurance, Legal
Theory, and Public Policy, 1330-172 (1986); Fleming, The Collateral
Source Rule and Loss Allocation in Tort Law, 54 Cal. L. Rev. 1478,
1481-85 (1966).
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We oppose this provision because it allows the jury to hear
evidence of a payment a victim may have received from his or
her insurance company--payment for which the victim contracted
and paid premiums--and may reduce the amount of damages the
victim can collect from the negligent defendant by that amount.
In essence, the negligent defendant gets the benefit of the
victim's health insurance contract.
In addition to shifting costs to the victim, eliminating
the collateral source rule would discourage prudent insurance
planning by penalizing consumers for acting responsibly\161\
and would undermine the deterrent effect of the malpractice
system by enabling negligent health care providers to avoid
liability for damages they inflict.\162\
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\161\ See James L. Branton, The Collateral Source Rule, 18 St.
Mary's L.J. 883 (1987).
\162\ See Patricia M. Danzon, The Frequency and Severity of Medical
Malpractice Claims: New Evidence, 49 Law & Contemp. Probs. 57, 72
(Spring 1986).
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F. Contingency fee limitations
In addition, we disagree with the provision in the bill
limiting contingency fees for attorneys.\163\ Contingency fee
arrangements can serve a useful and essential function in the
legal system.\164\ They allow injured victims who could not
otherwise afford legal representation access to the courts
because the attorney agrees to take the case on behalf of an
injured patient without obtaining any money up front from the
client.\165\ The attorney thus incurs a risk in taking on the
case because if the client loses, the attorney never gets
paid.\166\ Not only does this help ensure that poor victims
have access to the civil justice system, it also serves as a
screening mechanism for unmeritorious cases on which attorneys
will not take a risk.\167\
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\163\ H.R. 5, Sec. 5.
\164\ See Herbert M. Kritzer, Lawyer Fees and Lawyer Behavior in
Litigation: What does the Empirical Literature Really Say?, 80 Tex. L.
Rev. 1943 (2002); Herbert M. Kritzer, Economic Policy Litigation
Conference Seven Dogged Myths Concerning Contingency Fees, 80 Wash. U.
L.Q. 739 (Fall 2002).
\165\ Id.
\166\ Id.
\167\ Id.
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H.R. 5's restrictions make it more difficult for poor
victims of medical malpractice with legitimate claims to find
legal representation. Moreover, it is unfair to restrict
victims' attorneys fees but not defendants, especially when
defense attorneys are usually paid by the hour and thus have
incentive to engage in meaningless litigation to drive up the
costs.\168\
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\168\ We also find it interesting that the majority would support a
bill that is so anti-capitalistic. Restrictions on contingency fees are
restrictions on compensation to attorneys who have worked hard and
performed in the marketplace. This provision could not be more
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G. Periodic payments
As with the other provisions of the bill, the provision
regarding periodic payments harms victims and protects
wrongdoers.\169\ First, it allows the negligent party or
insurance company to invest and earn interest on the victim's
compensation. Second, it puts the onus on the victim, not the
wrongdoer, to pursue the compensation in the event that the
wrongdoer files for bankruptcy or refuses to pay. And if the
wrongdoer files for bankruptcy, the chances of the victim ever
receiving compensation for his or her loss is close to nothing.
Finally, it leaves the victim without adequate resources in the
event of an unanticipated medical emergency, if costs of the
victims's medical care increase beyond his or her means, or a
special medical technology is made available which the victim
requires. In these circumstances, the injured patient would
have to retain a lawyer to have the schedule modified.
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\169\ H.R. 5, Sec. 8; see supra note 22.
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H. Reduced statute of limitations
Finally, we oppose this statute of limitations because it
is a 1-year statute of limitations disguised as a 3-year
statute of limitations. H.R. 5 provides that health care
lawsuits must be commenced ``3 years after the date of
manifestation of injury or 1 year after the claimant discovers,
or through the use of reasonable diligence should have
discovered, the injury, whichever occurs first.'' \170\
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\170\ H.R. 5, Sec. 3. The bill tolls the statute of limitations
upon proof of fraud, intentional concealment, or the presence of a
foreign body in the person injured. Id. In addition, there is an
exception for minors who have sustained injury before the age of six.
These victims may bring a lawsuit until the later of 3 years from the
date of injury, or the date on which the minor attains the age of
eight. Id.
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Although this provision addresses one of our concerns from
last year--that the statute of limitations does not account for
injuries that have long incubation periods, such as HIV--it
still is extremely restrictive and harmful to patients. The 3
year provision essentially is a sham because the bill calls for
the earlier of 3 years from the date of manifestation or 1 year
from the date of discovery. Those two dates will almost always
be the same--a patient will discover a disease on the same date
the disease begins to manifest itself. As Mr. Delahunt stated,
``such victims would only have 1 year, once they become aware
of the condition, to file suit; hardly a reasonable opportunity
to consider their legal options and to find a lawyer that is
willing to take the case on.'' \171\
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\171\ Markup of H.R. 5, Testimony of Mr. Delahunt, Mar. 5, 2003,
Tr. at p.27.
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CONCLUSION
Collectively, the supposed ``reforms'' included in H.R. 5
would severely limit victims' ability to recover compensation
for damages caused by medical negligence, defective products,
and irresponsible insurance providers. In addition to raising
core issues of fairness, the legislation would intrude into an
area which has traditionally been the sole province of the
states, many of which have enacted their own medical
malpractice legislation in recent years. H.R. 5, which is
designed to limit medical malpractice premiums and jury awards,
presents a ``fix'' that is not supported by the empirical
evidence; indeed it is being propounded at a time when the
great wealth of data suggests that there is no medical
malpractice ``crisis'' in our society. For these and other
reasons set forth above, we strongly believe H.R. 5 should be
rejected.
John Conyers, Jr.
Rick Boucher.
Jerrold Nadler.
Robert C. Scott.
Melvin L. Watt.
Sheila Jackson Lee.
William D. Delahunt.
Robert Wexler.
Tammy Baldwin.
Anthony D. Weiner.
Linda T. Sanchez.
Additional Dissenting Views
In addition to the dissenting views, I would add the
following:
1. In addition to the comments on the bill's elimination of
joint and several liability, I would add that this new burden
on the plaintiff is administratively unfair to the plaintiff.
The apportionment of malpractice responsibility is routinely
made in the health care field by apportionment of insurance
coverage. Health care providers can and do decide in advance
who will pay for what coverage. The plaintiff, on the other
hand, is not in a position to apportion damages, because the
plaintiff often has no idea what happened, much less who was
responsible. The entire concept of res ipsa loquitur is based
on the fact that some cases are so obviously the result of
malpractice that the general burden of proof is eased for such
victims. With the elimination of joint and several liability,
and without knowing exactly what happened, the plaintiff will
have to make a separate case, including establishing a standard
of care, violation of that standard and proximate cause for
each conceivable participant in his care and always have the
possibility of defendants pointing to an ``empty chair'' or an
insolvent defendant at the trial. This burden comes with the
costs of expert witnesses for each doctor, nurse and hospital
even minimally involved in the most egregious and obvious
cases. As the dissent mentions, any defendant can always seek
contribution without the elimination of joint and several
liability.
2. In addition to the comments in the dissent on the
collateral source rule, I would add that there are three
interested parties: the plaintiff, the health insurance company
and the defendant. Good arguments can be made for the plaintiff
to benefit from the provisions he has made to pay his bills.
Some may have saved money over the years, including a medical
savings account, and others may have paid for insurance. Those
persons who have invested in insurance should be able to
benefit from their thrift. If one is not persuaded by that
argument, and is offended by the plaintiff ``being paid twice''
for the same bill, then one could reasonably say that the
health insurance carrier should be able to get its money back
though subrogation, and charge a smaller premium based on the
anticipation that some of their claims will not ultimately have
to be paid, because a tortfeasor will be responsible. The last
person of interest who should benefit from the plaintiff's
insurance should be the tortfeasor. In fact the prohibition
against subrogation in the bill creates the bizarre situation
in which a self-insured small business could have an employee
in a malpractice induced coma, and have to pay all of the
hospital bills, notwithstanding the fact that the negligent
doctor is fully insured.
3. Finally, one of the reasons why the ``average''
malpractice award is increasing is because smaller cases are
not brought. The complexity of the cases makes it impossible to
hire an attorney if the award is too small to generate a
meaningful attorney's fee. This ``average'' will undoubtedly
increase if this bill is enacted because of limitations on
damages, limitations on attorney's fees, elimination of joint
and several liability and elimination of collateral sources. A
better measure of the impact of malpractice litigation has on
the health care system is the fact that all malpractice awards
and settlements have been approximately \1/2\ of 1% of the
national health care costs and have been recently increasing at
the same rate as the health care costs generally.
Robert C. Scott.