[House Report 108-32]
[From the U.S. Government Publishing Office]



108th Congress                                             Rept. 108-32
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
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:
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------

  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\
---------------------------------------------------------------------------
    \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.'').
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------

 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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------
    \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)).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.'').
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
  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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

 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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
  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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

                         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\
---------------------------------------------------------------------------
    \199\ See Cal.C.C.P. Sec. 340.5.
---------------------------------------------------------------------------

                                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\
---------------------------------------------------------------------------
    \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?
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
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            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\
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    \126\ 1995 Product Liability Hearings, Statement of the Conference 
of Chief Justices at 6-7.
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    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\
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    \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\
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    \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.
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    \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.
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    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \150\ 15 U.S.C. Sec. 6605(c).
    \151\ Id. Sec. 6605(d).
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \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)).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
            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\
---------------------------------------------------------------------------
    \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 
---------------------------------------------------------------------------
      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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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)).
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \158\ H.R. 5, Sec. 6; see supra note 13.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
            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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \169\ H.R. 5, Sec. 8; see supra note 22.
---------------------------------------------------------------------------
            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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.

                                
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