[Federal Register Volume 87, Number 165 (Friday, August 26, 2022)]
[Rules and Regulations]
[Pages 52446-52463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18314]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 45

[Docket ID: DOD-2021-OS-0047]
RIN 0790-AL22


Medical Malpractice Claims by Members of the Uniformed Services

AGENCY: Department of Defense (DoD) Office of General Counsel, DoD.

ACTION: Final rule.

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SUMMARY: DoD is publishing this rule to finalize the implementation of 
requirements of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2020 permitting members of the uniformed services or their 
authorized representatives to file claims for personal injury or death 
caused by a Department of Defense health care provider in certain 
military medical treatment facilities. Because Federal courts do not 
have jurisdiction to consider these claims, DoD is issuing this rule to 
provide uniform standards and procedures for considering and processing 
these actions.

DATES: This final rule is in effect September 26, 2022.

FOR FURTHER INFORMATION CONTACT: Melissa D. Walters, (703) 681-6027, 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    Signed into law on December 20, 2019, section 731 of the 2020 NDAA 
allows members of the uniformed services or their authorized 
representatives to file claims for personal injury or death caused by a 
DoD health care provider in certain military medical treatment 
facilities.
    Historically, members of the armed forces have been unable to bring 
suit against the government under the Feres doctrine, named for the 
plaintiff in Feres v. United States, 340 U.S. 135 (1950). Based on this 
1950 Supreme Court decision, Active Duty military personnel may not sue 
the government for personal injuries suffered incident to service 
(generally, while on active duty). The 2020 NDAA allows Service 
members, with certain limitations, to bring administrative claims to 
seek compensation for personal injury or death resulting from medical 
malpractice that occurred in certain military medical treatment 
facilities, in addition to compensation already received under the 
comprehensive compensation system that currently exists for military 
members and their families.
    A substantiated claim of up to $100,000 will be paid directly to 
the Service member or his/her estate by DoD. The Treasury Department 
will review and pay claims that the Secretary of Defense values at more 
than $100,000. Service members must present a claim that is received by 
DoD within two years after the claim accrues. However, the statute 
allowed Service

[[Page 52447]]

members to file claims in 2020 for injuries that occurred in 2017.

Legal Authority for This Rule

    Based on section 731 of the NDAA, this rule finalizes in Title 32 
of the Code of Federal Regulations a new part 45, Medical Malpractice 
Claims by Members of the Uniformed Services. Title 10 U.S.C. 2733a(f) 
sets forth the required contents of the rule. This rule describes the 
claims process, which includes: the claimant's submission of 
information to initiate a medical malpractice claim; the claimant's 
response to an adjudicator's request for new information required to 
substantiate the claim or to determine damages; an Initial 
Determination issued by DoD; the opportunity for a claimant to seek 
reconsideration of damage calculations in the case of clear error; and, 
in most cases, the opportunity for a claimant to file an administrative 
appeal.
    Claims will be adjudicated based on uniform national standards 
consistent with generally accepted standards used in a majority of 
States in adjudicating claims under the Federal Tort Claims Act (FTCA), 
28 U.S.C. 2671 et seq., without regard to the place where the Service 
member received medical care.

Discussion of Comments and Changes

    An interim final rule was published in the Federal Register (86 FR 
32194-32215) on June 17, 2021. Comments were accepted for 60 days until 
August 16, 2021. A total of 93 comments were received. Summaries of the 
comments and the Department's responses are below. In the first 
section, we address general or overarching comments. In the sections 
that follow, we address comments related to specific portions of the 
regulation. The Department's responses are based not just upon the 
public comments but also upon the Department's experience with 
processing claims under the interim final rule. DoD will engage in an 
iterative regulatory process as it continues to receive and process 
medical malpractice claims. DoD will review this rule on a periodic 
three-year cycle in accordance with departmental retrospective review 
requirements.

General

    The Department received a number of comments that were outside of 
the scope of the interim final rule.
    Some comments included or consisted of personal narratives from 
Service members or their family members about specific medical care 
received from DoD. To the extent these individuals or their 
representatives believe that malpractice occurred, they may follow 
procedures in the final rule to submit a claim for adjudication.
    A number of comments sought to have DoD establish an independent 
review or appellate process by what was described as a disinterested 
party or body or a third party, including review by a Federal court. 
One commenter recommended review through a body similar to the 
Independent Review Commission established by DoD to make 
recommendations for addressing sexual assault. Some commenters linked 
the lack of such a process with a lack of transparency. A law firm 
recommended review of DoD's final decision by a court, such as the U.S. 
Court of Appeals for Veterans Claims. Some commenters were concerned 
DoD would not follow its own procedures or the law in the absence of 
judicial review. Several commenters indicated that DoD would be able to 
make unconstitutional decisions in the absence of court review.
    Title 10 U.S.C. 2733a does not include a provision for third-party 
or court review. Rather, the statute calls for the Secretary of Defense 
to allow, settle, and pay covered medical malpractice claims. The 
process established by the Department to implement Title 10 U.S.C. 
2733a is intended to be non-adversarial. The Department has attempted 
to minimize claimant costs by not requiring expensive expert reports up 
front and affording claimants an opportunity to submit additional 
evidence prior to denial of a claim and, if deemed meritorious, in 
support of damages. The discussion below addresses adjustments made by 
the Department in the final rule in response to comments to increase 
the amount of information provided to claimants.
    A few comments addressed DoD's Regulatory Analysis. One merely 
described the analysis as bold without more. Another generally 
described DoD's projections in unfavorable terms without making any 
recommendations. Other comments recommended that the Government 
Accountability Office investigate the number of deaths or disabilities 
incurred in non-combat healthcare settings since the United States 
Supreme Court decided Feres v. United States in 1950 in order to 
accurately project the number of malpractice claims per year. A law 
firm disputed DoD's estimate that seven claims a year would result in 
payments, but provided no rationale. The same law firm also stated that 
the estimated rates for attorneys and medical experts were ``grossly 
underestimated'' and did not appear to be consistent with those 
acknowledged in a majority of States, but again provided no information 
that would inform revised estimates. Based on the comments received, 
DoD is finalizing this section of the rule without changes.
    A Member of Congress and some consumer advocacy groups requested 
that DoD pause adjudication of medical malpractice claims until the 
final rule has been issued. To have done so, however, would have been 
contrary to 10 U.S.C. 2733a(f)(3), which required DoD to prescribe an 
interim final rule.
    Other comments outside the scope of the interim final rule were 
comments about the adequacy of medical coverage and disability benefits 
offered to the military through DoD and the Department of Veterans 
Affairs (VA); a comment about VA forms; a comment about the cost of 
life insurance; a comment about DoD's medical records system; a comment 
about separations through the Disability Evaluation System that the 
commenter believed were premature; a comment about the time taken by 
DoD to issue the interim final rule; issues with the medical quality 
assurance process and the Healthcare Resolutions Program; objections to 
certain medical procedures performed by DoD; comments by a Service 
members' organization regarding the development of the interim final 
rule; timeliness of responses to requests under the Freedom of 
Information Act; views about conditions contributing to malpractice 
claims and the adequacy of funding appropriated by Congress to pay 
claims; whether a rule about concurrent receipt of retirement and 
disability pay was fair; and the DoD bureaucracy in general.
    Some comments were general and therefore non-actionable, such as 
one individual's general reference to bringing clarity to the interim 
final rule without any specifics being provided. Other comments 
referred generally to making changes to remove unspecified limits and 
restrictions, non-specific concerns about transparency, and statements 
that the interim final rule exceeded DoD's statutory authority without 
specifics.
    One comment included questions for DoD about the source of funds 
used to pay claims and what statistics showed about the cost of 
malpractice claims. Providing answers to these questions is not within 
the scope of this regulatory process. We note that the sources of 
funding are established by statute. A substantiated claim of up to 
$100,000 will be paid directly to the claimant or the claimant's estate 
by DoD. The Treasury Department will review and

[[Page 52448]]

pay claims that the Secretary of Defense values at more than $100,000.

Section 45.2 Claims Payable and Not Payable in General

    Comment: One individual generally expressed concerns regarding the 
inclusion of defenses available to the United States under the FTCA, 28 
U.S.C. Chapter 171, in Section 45 .2. Several commenters suggested that 
DoD could deny a claim by classifying a health care provider's decision 
as ``discretionary.''
    DoD Response: DoD made no changes. Certain exclusions from the FTCA 
are included in Section 45.2 because they apply to claims under this 
new authority as well. This includes the discretionary function 
exemption, which generally bars claims challenging a discretionary 
agency policy but would not bar claims under 10 U.S.C. 2733a involving 
health care providers' choices that breach their professional duty of 
care under Section 45.6. Section 45.2(f)(iii) lists examples of DoD 
policy decisions to which the discretionary function exception applies, 
including patient triage, disease prevention, and fitness for duty.
    Comment: One individual sought a 50-year period in which to file 
claims instead of the current two-year period and other individuals 
sought to allow claims going back to 1950, the date of the U.S. Supreme 
Court decision in Feres v. United States. One commenter proposed 
allowing claims back to September 11, 2001.
    DoD Response: Title 10 U.S.C. 2733a(b)(2) requires claims to be 
presented to the Department in writing within two years after the claim 
accrues. A claim accrues as of the latter of the date of the act or 
omission by a DoD health care provider that is the basis of the 
malpractice claim; or the date on which the claimant knew, or with the 
exercise of reasonable diligence should have known, of the injury and 
that malpractice was its possible cause.

Section 45.3 Authorized Claimants

    Comment: A number of commenters sought to expand authorized 
claimants to include derivative claims by family members or other third 
parties, such as claims for loss of consortium. These comments 
generally indicated that excluding derivative claims was contrary to 
congressional intent. One individual expressed the view that the 
interim final rule discriminated against these potential claimants, 
thereby dis-incentivizing service in the Armed Forces. Consumer groups 
and a lawyers' association commented that wrongful death claims by 
family members are allowed in most, if not all, States. A lawyers' 
association commented that the FTCA and non-Service member claims under 
the Military Claims Act (MCA) allowed for derivative claims. A law firm 
commented that Section 45.3 appeared to preclude claims by deceased 
Service members as well as those Service members' families.
    DoD Response: Title 10 U.S.C. 2733a(b)(1) only authorizes claims by 
members of the uniformed services, including claims by the 
representative of a deceased member of the uniformed services.
    Members of the uniformed services and their representatives are 
subject to the requirements of Title 10 U.S.C. 2733a(b)(1). Thus, the 
final regulation does not permit derivative claims by family members or 
other claims from third parties alleging a separate injury such as loss 
of consortium as a result of harm to a member of the uniformed 
services. Family members of uniformed service members who believe they 
have been subjected to malpractice themselves may bring malpractice 
claims under different statutory provisions--either the FTCA or, if 
outside the United States, under the MCA.
    Comment: Individuals, a law firm, and Service members' 
organizations indicated that trainees and participants in the Delayed 
Entry Program should be allowed to bring claims.
    DoD Response: Title 10 U.S.C. 2733a(i)(3) requires the personal 
injury or death to have occurred in Federal status for the claim to be 
allowed under this provision. It does not include applicants or 
recruits who have not yet been accessed into active duty.

Section 45.4 Filing a Claim

    Comment: Multiple commenters, including individuals, Service 
members' organizations, a law firm, a Veterans' organization, and 
Members of Congress commented that DoD should allow discovery to allow 
claimants to learn about their care and treatment. A Member of Congress 
requested that DoD authorize limited discovery, including the 
opportunity for claimants to interview or depose medical providers and 
sought explicit authorization in this section for claims adjudicators 
to conduct investigations in addition to accessing pertinent DoD 
records. This Member of Congress indicated alternatively that claimants 
be provided with the results of any interviews with health care 
providers conducted by DoD. Two Members of Congress indicated the rule 
should add a means by which claimants may submit questions they believe 
a claims examiner should ask a health care provider in the course of 
reviewing a claim and, to the extent possible, address those questions 
in the explanation that is provided back to the claimant. An individual 
made a comment to the effect that discovery promoted accountability.
    Two commenters indicated that it was unfair that claimants' lawyers 
could not obtain access to all of DoD's records regarding claimants' 
medical treatment. A law firm commented that limiting claimants to 
their own medical records and records obtained via public records 
requests prevented claimants from discovering material evidence. An 
individual made a comment suggesting that DoD limited an individual's 
right to use counsel to obtain medical records and expressed concern 
about the time to obtain those records. Some commenters sought access 
to medical quality assurance records related to the healthcare provided 
to the claimant. One individual commented that the process lacked 
transparency because claimants would lack access to material that was 
protected by privilege, such as information protected by attorney-
client privilege or medical quality assurance information.
    DoD Response: Individuals, or their authorized representatives, 
already m/ay obtain copies of records in DoD's possession that are part 
of their personnel and medical records in accordance with the Privacy 
Act of 1974, 5 U.S.C. 552a; DoD's Privacy Act regulation at 32 CFR part 
310; and DoD Manual 6025.18, ``Health Insurance Portability and 
Accountability Act (HIPAA) Privacy Rule in DoD Health Care Programs.'' 
\1\ Individuals may obtain copies of these records regardless of 
whether they file a claim. Once a claim is filed, the rule allows 
claimants to seek extensions of time for good cause shown if they are 
having difficulty obtaining medical records to submit in support of 
their claims. DoD modified the references in Section 45.4(e) to better 
assist individuals in understanding their rights of access to and 
amendment of their records.
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    \1\ Available at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodm/602518m.pdf?ver=2019-03-13-123513-717.
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    The administrative adjudication of claims under this authority was 
intended to be non-adversarial. It is also consistent with the 
administrative adjudication of claims under the MCA, 10 U.S.C. 2733. 
Court-like discovery such as depositions and written interrogatories, 
and even ``discovery-like'' processes such as informal interviews, are 
contrary to that intent

[[Page 52449]]

and would cause the claims process to become adversarial and 
protracted. DoD does not provide claimants with copies of expert 
reports and interview summaries in MCA claims, but instead provides 
claimants with the basis for the denial of a claim.
    DoD agrees that claimants should be informed of the basis for an 
offer of settlement or informed why their claim is denied. As discussed 
more fully under Section 45.12: Initial and Final Determinations, in 
response to comments about access to information, DoD has modified 
Sections 45.12 and 45.13. DoD has added language to Sections 45.12 and 
45.13 to ensure that claimants are provided with a meaningful basis for 
an offer of settlement or are provided a meaningful explanation for the 
denial of a claim that includes the specific basis for the denial.
    DoD added language to paragraph 45.4(d) to include additional 
actions that may be taken by DoD in connection with substantiating a 
claim, such as interviews of health care providers.
    DoD made no changes in response to the comment seeking medical 
quality assurance information, as DoD may not lawfully disclose this 
information in this context under 10 U.S.C. 1102.
    Comment: A Veterans' organization commented that the administrative 
process in the interim final rule may be difficult to navigate, with 
different requirements depending on the type of injury. The Veterans' 
organization suggested simplifying the process and suggested making 
claims forms available online and allowing electronic filing.
    DoD Response: DoD did not make any changes in the rule in response 
to this comment, although DoD supports making the process as easy to 
navigate for Service members as possible and can make changes that 
would be helpful as DoD gains experience in processing claims.
    Comment: A Veterans' organization indicated that the provision in 
Section 45.4(d) that may require claimants to submit an expert opinion 
in support of their claims placed an unnecessary and expensive burden 
on Service members. The organization commented that if DoD needed 
additional information, it should obtain an independent medical 
opinion.
    DoD Response: No changes were made in response to this comment. 
Section 45.4(d) applies when DoD already believes it has all the 
information necessary (which may include an expert opinion obtained by 
DoD) and intends to deny the claim. This provision was intended to 
spare claimants the expense of providing an expert report up front. 
Instead, DoD will issue an Initial Determination explaining that DoD 
intends to deny the claim and providing the claimant with the 
opportunity to submit an expert report. DoD administratively removed 
language in Section 45.4 referring to the interim final rule.

Section 45.5 Elements of a Payable Claim: Facilities and Providers

    Comment: Several commenters believed that care that was outside of 
a military medical treatment facility should be covered. Some indicated 
that the limitation to care provided in military medical treatment 
facilities overlooked care provided to Service members in other 
contexts and that all situations in which medical care was provided 
should be covered. A law firm indicated that malpractice claims should 
be afforded to Service members in DoD confinement facilities.
    DoD Response: No changes were made in response to these comments. 
Title 10 U.S.C. 2733a(b)(3) requires the act or omission constituting 
malpractice to have occurred in a covered military medical treatment 
facility. Title 10 U.S.C. 2733a(i)(1) defines ``covered military 
medical treatment facility'' as a facility described in 10 U.S.C. 
1073d. These facilities are medical centers, hospitals, and ambulatory 
care centers. DoD must limit claims to those covered under the 
statutory definition.

Section 45.6 Element of Payable Claim: Negligent or Wrongful Act or 
Omission

    Comment: Individuals commented that DoD should have the burden of 
proof when determining malpractice claims. These individuals also 
commented that claims should be immediately paid in cases in which the 
injury was determined to be a sentinel event by a regulatory agency, 
the care was not administered according to evidence-based practice 
guidelines, and where health care providers were practicing outside the 
scope of the state in which they are licensed.
    DoD Response: DoD made no changes in response to this comment. 
Placing the burden of proof with DoD would be inconsistent with the 
requirement in 10 U.S.C. 2733a(f)(2)(B) for DoD to adopt uniform 
standards consistent with generally accepted standards used in a 
majority of States. The rule generally addresses the standard of care 
and indicates claimants may present evidence in support of their belief 
that the standard of care was not met.
    If DoD has already determined that the standard of care was not met 
in a particular circumstance before a claim is filed, DoD would be able 
to engage with the claimant to determine an appropriate amount to offer 
in settlement without requiring any additional information to 
substantiate the claim.
    DoD would determine whether health care providers were acting in 
furtherance of their duties in the military medical treatment facility. 
Title 10 U.S.C. Section 1094(d) mandates that, notwithstanding any 
State law regarding the licensure of health care providers, designated 
licensed individual providers may practice their profession in any 
location in any jurisdiction of the United States, regardless of where 
the provider or patient is located, so long as the practice is within 
the scope of the provider's authorized federal duties. This includes 
telemedicine providers.
    Comment: A Veterans' organization suggested clarifying the 
reference to the preponderance of the evidence standard to advise 
claimants that ``preponderance of the evidence'' requires providing 
only that something is more likely than not. The Veterans' organization 
cited several court cases with varying formulations of the law.
    DoD Response: DoD did not make any changes in response to this 
comment. Although ``preponderance of the evidence'' is a commonly-used 
legal standard, as the comment itself illustrates, it is subject to 
various descriptions and DoD does not believe it advisable to include 
one particular formulation over another. After more experience in 
adjudicating claims under this final rule, if it appears that a 
definition is needed, DoD will revisit this.

Section 45.7 Element of Payable Claim: Proximate Cause

    Comment: Individuals, Service members' organizations, a law firm, 
and unions commented that DoD did not specify how it will calculate 
damages based upon loss of chance or failure to diagnose claims and 
what steps it will take to review claims in this regard.
    DoD Response: DoD did not make any changes based on this comment. 
The rule sets out general legal standards that must be applied in light 
of the specific facts of each individual claim. The rule states that 
the portion of harm attributable to the breach of duty will be the 
percentage of chance lost in proportion to the overall clinical outcome 
and that damages will be calculated based on this portion of harm. 
Including more detail would be neither feasible nor appropriate.
    DoD administratively modified the first sentence of Section 
45.7(d)(2) to

[[Page 52450]]

read that ``DoD may consider medical quality assurance records'' 
instead of ``will consider'' for consistency with the second sentence 
of Section 45.7(d)(2) which states that results of medical quality 
assurance records ``may'' be considered.

Section 45.8 Calculation of Damages: Disability Rating

    Comment: Individuals, a Service members' organization, a law firm, 
and unions did not believe DoD should use disability ratings 
established through the DoD Disability Evaluation System or by the VA 
in calculating damages for medical malpractice claims on the grounds 
that these are different systems. The law firm indicated that DoD did 
not have authority to hold a claim in abeyance pending DoD or VA 
disability determinations. An individual was concerned that disability 
ratings may be inaccurate.
    DoD Response: DoD did not make changes due to this comment. The 
purposes for which these disability ratings and compensation will be 
used is explained in the text of the rule. In short, disability ratings 
and compensation are useful for purposes of assessing the extent of the 
harm caused by the medical malpractice and in determining lost earning 
capacity. DoD will only use these ratings if they are useful and 
pertinent to the element of damages at issue. After more experience in 
adjudicating claims under this final rule, if it appears that 
disability ratings are not useful in assessing the extent of harm 
caused by the medical malpractice and in determining lost earning 
capacity, DoD will revisit this. DoD will review this rule on a 
periodic three-year cycle in accordance with departmental retrospective 
review. Congress gave DoD broad authority to issue regulations to 
implement the claims process and, if a disability rating and 
compensation are needed for purposes of assessing damages, holding the 
claim in abeyance ensures these damages are calculated accurately.

Section 45.10 Calculation of Damages: Non-Economic Damages

    Comment: A number of comments, including comments from individuals, 
a law firm, unions, consumer groups, a Veterans' organization, and 
Members of Congress, sought elimination of the cap on non-economic 
damages. A number of individuals proposed an increase to $1,000,000 and 
one individual proposed an increase to $3,000,000.
    Commenters, including some Members of Congress, consumer groups, 
and a lawyers' association commented that while a majority of States 
capped non-economic damages in medical malpractice cases, an average of 
the caps in these States did not account for the fact that other States 
did not cap non-economic damages. Two Members of Congress commented 
that some States had tiered or categorized caps that allowed higher 
caps in cases involving severe injury or death and that DoD should 
consider the higher limit in these systems. One Member of Congress 
estimated that this would result in a limit of at least $800,000. 
Members of Congress indicated the Department should factor in inflation 
and should retroactively reopen and adjust those claims settled before 
issuance of the final rule.
    Several commenters interpreted the rule to mean that 26 states had 
non-economic damage caps of $500,000 and indicated this was incorrect 
based on their own research. One individual indicated the cap of 
$500,000 was too low based on a description of an incident caused by 
what the individual believes to have been medical malpractice. A law 
firm and a lawyers' association indicated that the FTCA had no limit on 
damages. The lawyers' association indicated that caps on non-economic 
damages placed Service members at a disadvantage compared to those 
whose damages were not capped under the FTCA or the MCA, are unfair to 
Service members living in States with no cap, and did not adequately 
compensate those with the most severe injuries. Consumer groups stated 
that only 23 States have laws expressly capping non-economic damages in 
medical malpractice cases and some States provide exceptions for 
serious injury or death.
    Consumer groups commented that caps on non-economic damages have a 
disproportionate impact on women because of the types of injuries women 
are likely to experience such as sexual or reproductive harm or 
pregnancy loss.
    DoD Response: After considering these comments, DoD increased the 
cap on non-economic damages to $600,000. Title 10 U.S.C. 2733a(f)(2)(B) 
requires the regulations prescribed by DoD to adjudicate claims based 
on uniform national standards consistent with generally accepted 
standards used in a majority of States in adjudicating claims under the 
FTCA, 28 U.S.C. 2671 et seq., without regard to the place where the 
Service member received medical care. This is a different standard from 
the FTCA. Under the FTCA, 28 U.S.C. 2672 and 28 U.S.C. 1346(b)(1), the 
law applied is the law of the place where the medical care was 
provided. A majority of States, 29, have caps on non-economic damages 
applicable in medical malpractice claims. The median of these caps is 
approximately $500,000.
    The cap of $600,000 represents DoD's best approximation of the 
current average of the caps on non-economic damages in medical 
malpractice cases in those States having caps and it is consistent with 
the median amount. States have varying formulas for determining caps on 
non-economic damages and the $600,000 cap takes into account current 
state law in this regard. Some States periodically increase their non-
economic damage caps to account for inflation, and the final rule takes 
these increases into account and retains the requirement for periodic 
updates to the cap to account for inflationary increases.
    Where a State had a higher cap for more serious injuries or death, 
DoD used that cap, in an effort for balance with those States that 
appeared to allow a higher, unspecified amount in cases involving more 
serious injuries or death. Three States appear to have caps on 
noneconomic damages that combine economic and non-economic damages 
together under one cap. For these States, DoD used one-half the total 
cap in the calculation of the average on the assumption that cases 
involving more serious injuries or death likely would have greater 
economic damages, eroding the amount available for non-economic 
damages. Commenters did not provide a basis for calculating the 
proposed $1,000,000 or $3,000,000 caps. DoD cannot arbitrarily adopt a 
proposed cap unsupported by an articulable legal basis for doing so 
and, in any event, must apply generally accepted standards used in a 
majority of States.
    DoD did not modify the interim final rule to allow reopening and 
adjustment of claims settled before publication of the final rule to 
apply the higher damages cap. Congress required the interim final rule 
in 10 U.S.C. 2733a(f)(3) ``in order to implement expeditiously'' the 
provisions of that section and was aware claims might be settled before 
the final rule was issued. There is no basis for reopening settled 
claims under 10 U.S.C. 2733a, which does not permit DoD to pay claims 
unless the amount tendered is accepted by the claimant in full 
satisfaction.
    Comment: Two Members of Congress and a Veterans' organization 
commented that the current elements of non-economic damages should be 
expanded beyond the listed elements to a wider range of non-economic 
categories recognized elsewhere in tort law, such as for emotional 
distress and loss of consortium. The Veterans' organization commented 
that it was unclear if ``physical disfigurement''

[[Page 52451]]

extends to all forms of physical impairment and recommended a catchall 
phrase to incorporate ``other non-financial losses'' it stated were 
recoverable in a majority of States.
    DoD Response: DoD did not change the interim final rule as a result 
of these comments. The rule already defines ``past and future conscious 
pain and suffering'' broadly to include ``mental and emotional trauma 
or distress'' and ``loss of enjoyment of life.'' The definition of 
``physical impairment'' likewise mirrors a definition used for MCA 
claims, set forth at 32 CFR 536.77. As derivative claims are not 
permitted under 10 U.S.C. 2733a(b)(1), damages for loss of consortium 
are inapplicable. DoD did not add a catchall phrase. A catchall phrase 
in this context could lead to confusion or improper awards of damages 
given the requirement in 10 U.S.C. 2733a for uniform standards 
consistent with generally accepted standards used in a majority of 
States.

Section 45.11 Calculation of Damages: Offsets for DoD and VA 
Compensation

    Comment: A number of commenters, including individuals, law firms, 
a union, Service members' organizations, consumer groups, a lawyers' 
association, a Veterans' organization, and some of the Members of 
Congress who submitted comments sought to limit or eliminate offsets 
from potential malpractice damage awards for other compensation paid by 
the United States for the same harm. Some made comments to the effect 
that offsets for military benefits such as TRICARE and disability could 
leave Service members with little compensation for the injuries they 
have suffered and may discourage claims. Some commenters questioned 
DoD's authority to make offsets and noted that 10 U.S.C. 2733a does not 
explicitly reference offsets. A law firm indicated that the offsets 
removed incentives for improvement and accountability. Another law firm 
noted that the process under this rule was a non-adversarial 
administrative claim process involving DoD, and not a tort claim 
against the United States under the FTCA, so offsets should not be 
applied. Multiple commenters mentioned the collateral source rule in 
connection with offsets. A law firm commented that several of the 
offsets, such as Active Duty pay, housing allowance, and TRICARE, did 
not appear related to malpractice and including them was unfair. An 
individual made a similar comment.
    Individuals, Service members' organizations, and unions, 
referencing the collateral source rule, indicated that DoD should award 
the cost of health care services provided or paid for by DoD or the VA 
as part of economic damages. The Service members' organization believed 
not doing so would discourage Service members from filing claims. A 
lawyers' association stated that courts had found the amounts of future 
medical payment. such as from TRICARE indeterminable. An individual and 
a lawyers' association indicated that individuals might not want to 
receive care from government health care providers for the injuries 
they sustained. One commenter was concerned about TRICARE's solvency 
and ability to cover a Service member's lifetime medical needs. Another 
commenter was concerned that Service members would have issues with 
obtaining needed care through TRICARE or the VA and that the VA might 
not approve needed benefits or might not approve benefits in a timely 
fashion. A commenter believed it would eliminate work for DoD if DoD 
eliminated offsets versus periodically conducting a review of offsets 
for purposes of making changes.
    Several commenters erroneously questioned the inclusion of 
Servicemembers Group Life Insurance (SGLI) payments as an offset. 
Several commenters believed that offsets could limit a Service member 
from getting benefits to which that Service member was entitled and 
another believed that the compensation system would involve 
``recouping'' benefits paid by the VA. A commenter incorrectly seemed 
to suggest that DoD would assume remarriage for purposes of determining 
offsets.
    One commenter questioned whether the fact that the non-exhaustive 
listings of programs that did or did not offset potential malpractice 
damage awards would allow claimants to know what was included and 
thought this might be difficult to ascertain.
    A lawyers' association commented that the government should bear 
the burden of proof with respect to offsets.
    DoD Response: DoD did not make changes to this section, other than 
adding that the government is responsible for determining offsets, with 
claimants required to provide information not available to DoD but 
requested by DoD for this purpose. Both the interim and final rule 
provide for offsets from potential malpractice damage awards from 
compensation paid or expected to be paid by DoD or the VA for the same 
harm that was caused by the medical malpractice. These offsets are 
necessary so that the United States does not pay more than once for the 
same injury. Given that there is no third party involved in providing 
benefits other than the United States, the collateral source rule is 
not applicable.
    Moreover, as explained in the preamble to the interim final rule, 
Federal law provides a comprehensive system of compensation for 
military members and their families in cases of death or disability 
incurred in military service. This system applies to all causes of 
death or disability incurred in service, whether due to combat 
injuries, training mishaps, motor vehicle accidents, naturally 
occurring illnesses, household events, or malpractice with limited 
exceptions (e.g., when the member is absent without leave or the injury 
is due to the member's intentional misconduct or willful negligence). A 
medical malpractice claim under this part will have no effect on any 
other compensation the member or family is entitled to under this 
comprehensive compensation system. A chart in the Regulatory Analysis 
provides examples of benefits to which Service members are entitled 
under this system.
    Nothing in the rule precludes Service members in any way from 
receiving benefits to which they are entitled. SGLI is listed 
specifically in Section 45.11(g) as a payment and benefit that is not 
an offset from economic and non-economic damages. It was not included 
as an offset because it is a benefit for which Service members have 
paid premiums. Nothing in the rule would permit ``recoupment'' of 
benefits already provided to Service members. The rule also states that 
DoD will not assume remarriage with respect to any lifetime payments or 
benefits that may terminate upon the remarriage of a surviving spouse.
    Finally, but most importantly, DoD has a robust Clinical Quality 
Management Program which operates independently of medical malpractice 
claims by Service members or others (under DoD Instruction (DoDI) 
6025.13 \2\ and Defense Health Agency Procedural Manual 6025.13 \3\) to 
assess the quality of health care services, identify areas where 
improvements can be made, and ensure appropriate accountability.
---------------------------------------------------------------------------

    \2\ DoDI 6025.13, ``Medical Quality Assurance (MQA) and Clinical 
Quality Management in the Military Health System (MHS),'' February 
17, 2011, Incorporating Change 2 on April 1, 2020, is available at 
https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/602513p.pdf?ver=2019-03-11-081734-313.
    \3\ Defense Health Agency Procedural Manual, ``Clinical Quality 
Management in the Military Health System,'' June 27, 2022, is 
available at https://health.mil/Reference-Center/Policies?query=6025.13&isDateRange=0&broadVector=000&newsVector=0000000&refVector=000000000100000&refSrc=1.

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[[Page 52452]]

    With regard to the comment that the listings of programs that did 
or did not offset potential malpractice damage awards was not all-
inclusive, an illustrative list was included in the rule because 
benefit programs are numerous and are subject to frequent changes by 
law or regulation. The rule allows for a process. DoD contemplates a 
process for determining damages that involves exchanges of information 
to ensure accuracy, so claimants would be informed about those damages 
during that time or through Initial or Final Determinations.

Section 45.12 Initial and Final Determinations

    Comment: In connection with a comment about discovery, a law firm 
commented that the government should be required to produce all 
evidence that it relied upon in making its decision, as well as any 
evidence that supports claimant's allegations of negligence. The law 
firm also commented that a ``meaningful explanation,'' supported by 
findings of fact and conclusions of law should be provided for any 
claim that is denied versus a ``brief explanation for the denial of the 
claim to the extent practicable.'' A Veterans' organization requested 
removing ``to the extent practicable'' and instead requiring a brief 
statement of the basis for any denial. Individuals commented that there 
was no mechanism to ascertain whether DoD reviewed the records it 
should have reviewed. A number of commenters sought more information in 
initial and final determinations and appeals for purposes of 
transparency.
    DoD Response: DoD agrees that claimants should be informed of the 
basis for an offer of settlement or informed why their claim is denied. 
In response to comments about discovery and access to information 
generally, DoD has modified Sections 45.12 and 45.13. DoD modified 
Sections 45.12 and 45.13 to change ``brief'' to ``meaningful,'' so that 
a meaningful explanation of the basis for an Initial Determination 
denying a claim will be provided, including the specific basis for the 
denial. Although this was implied in the interim final rule, DoD also 
added language requiring that a meaningful basis for an offer of 
settlement be provided. Explanations will be subject to laws pertaining 
to disclosure of information, as discussed in the Supplementary 
Information related to Section 45.4.
    Comment: A law firm recommended adjusting the amount of time to 
cure a deficiency following receipt of an initial determination to 90 
days instead of 30 days. Similarly, the law firm recommended affording 
Service members 90 days instead of 60 days to request reconsideration 
and to appeal. The law firm further recommended a provision requiring 
DoD to confirm Service member receipt of Initial Determinations.
    DoD Response: The final rule provides 90 days to cure a deficiency 
instead of 30 days and allows 90 days instead of 60 days to request 
reconsideration and to appeal. Extending the time to cure a deficiency 
is consistent with DoD's intent for a claimant-friendly process that 
provides ample opportunity for Service members or their representatives 
to provide information in support of their claims and reduces the need 
for DoD to process requests for extension.
    DoD did not adopt a requirement for DoD to confirm receipt of 
Initial Determinations. The interim final rule adopted a presumption of 
receipt for the convenience of both the Service member and DoD and to 
provide flexibility with respect to delivery methods. The interim final 
rule adopted a lenient standard for overcoming the presumption: the 
date of receipt is presumed to be five calendar days after mailing or 
emailing unless there is evidence to the contrary.
    Although DoD may elect to use a delivery method confirming receipt, 
email ``return receipts'' are not always reliable and certified mail 
may be inconvenient for Service members who are not at home when 
delivery is attempted. A presumption of receipt establishes a clear and 
fixed date for calculating time and reduces administrative burden. A 
presumption of receipt is consistent with practices in some other 
judicial and administrative bodies, such as the Federal courts \4\ and 
the Merit Systems Protection Board.\5\
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    \4\ Rule 5(b) of the Federal Rules of Civil Procedure provides 
that service is complete upon mailing or by emailing (unless the 
email does not reach the person to be served). https://www.uscourts.gov/rules-policies/current-rules-practice-procedure/federal-rules-civil-procedure.
    \5\ Under 5 CFR 1201.22(b)(3), correspondence that is properly 
addressed and sent to the appellant's address via postal or 
commercial delivery is presumed to have been duly delivered to the 
addressee. The presumption may be overcome by the circumstances of a 
particular case.
---------------------------------------------------------------------------

    Even though DoD is not adopting a requirement to confirm receipt of 
delivery, in response to the comment, DoD revisited the length of time 
for presumption of delivery. The United States Postal Service is 
changing its target for first class mail delivery from 1-3 days to 1-5 
days.\6\ DoD accordingly increased the time for presumption of receipt 
from five to seven calendar days after an Initial Determination was 
mailed or emailed. DoD also clarified in Sections 45.12(c)(1) and 
45.13(a) that the time period for action begins to run upon receipt by 
the claimant or the claimant's representative.
---------------------------------------------------------------------------

    \6\ https://crsreports.congress.gov/product/pdf/IN/IN11776.
---------------------------------------------------------------------------

    DoD administratively added language in Section 45.12(a)(1) to 
clarify that it is the DoD Component that issued the Initial 
Determination that acts on requests for extension of time relating to 
deficient filings. DoD also administratively added language to Section 
45.12(d)(4) to clarify that the DoD Component that issued the Initial 
Determination will review alleged clear error in connection with 
requests for reconsideration. These changes make it clear that these 
processes are not conducted by the Appeals Board.
    Comment: A law firm sought the opportunity for claimants to have a 
virtual hearing, noting that Boards for Correction of Military Records 
rarely afford a hearing and, in the law firm's view, lacked due process 
as a result. A Member of Congress also commented that claimants should 
be afforded a hearing, whether in person or virtual, to better capture 
the claimants' full experiences, particularly with respect to pain and 
suffering.
    DoD Response: The claims process was intended to be easy to 
navigate and non-adversarial. A hearing would unduly increase manpower, 
cost, and administrative burdens on the Department and would cause 
undue disruption in the delivery of health care and medical readiness. 
It would also cause the proceedings to become adversarial in nature and 
increase the decision time and expense for both the Service member and 
the Department. Service members may submit any evidence in any form 
they wish and, particularly with respect to damages, back-and-forth 
engagement is contemplated to ensure the Department has full and 
accurate information from which to make a determination.
    DoD administratively clarified in Section 45.12(c)(1) that it is 
the DoD Component which issued the Initial Determination that grants an 
extension of time for good cause.

45.13 Appeals

    Comment: One individual commented that DoD should allow for an 
appellate process and another commented there was no right of appeal.
    DoD Response: No changes were made as a result of this comment. The 
rule at Section 45.13 establishes an appeals process. To the extent 
these comments were seeking an appellate process outside of DoD, this 
is

[[Page 52453]]

addressed in the section titled ``General,'' above.
    Comment: Individuals, Service members' organizations, a Veterans' 
organization, and unions sought the opportunity to submit additional 
evidence in support of a claim on appeal. Some stated that the 
inability to submit additional evidence on appeal affected the 
opportunity for a fair assessment of the claim. The Veterans' 
organization indicated additional information might become available or 
that claimants' medical conditions may change, noting that the VA's and 
the Social Security Administration's administrative processes allow for 
new evidence on appeal. The Veterans' organization linked this comment 
to a lack of a discovery mechanism in the rule. A Member of Congress 
commented that claimants should be afforded a hearing on appeal to 
provide an actual opportunity to be heard if they are dissatisfied with 
the earlier disposition of their claims. Another Member of Congress 
indicated that a hearing on appeal imparted more information than could 
be captured in written statements and allowed traumatic experiences to 
be heard and acknowledged. A law firm stated that the opportunity for 
an oral presentation was used in what it characterized as almost every 
other non-adversarial claims process used by the Federal government.
    DoD Response: DoD did not change the rule to permit additional 
evidence to be submitted on appeal. DoD modified Sections 45.12 and 
45.13, adding language to ensure that claimants are provided with a 
meaningful basis for an offer of settlement or with a meaningful 
explanation for the denial of a claim that includes the specific basis 
for the denial. Claimants have ample opportunity to provide any 
information they wish at the Initial Determination stage. When a 
claimant initially does not submit an expert report in support of his 
or her claim and DoD intends to deny the claim, DoD will provide a 
meaningful explanation for the intent to deny the claim that includes 
the specific basis for the denial and provides the claimant with an 
opportunity to submit an expert report. Appellate review limited to the 
record below is consistent with procedures in many other appellate 
bodies, such as the Federal courts of appeal.
    Comment: Some commenters stated that there was no transparency on 
who is going to sit on the Appeals Board, such as whether members are 
medical experts, legal experts, or Commanding Officers, and were 
concerned that Appeals Board members would not fully consider the 
record in an unbiased manner.
    DoD Response: In response to the comments, DoD modified the rule to 
indicate that the Appeals Board is comprised of attorneys, in addition 
to the current language indicating that Appeals Board members are 
comprised of DoD officials who are ``experienced in medical malpractice 
claims adjudication'' and who ``have not had any previous role in the 
claims adjudication under appeal.'' In part in response to concerns 
about timeliness, and in part as an administrative matter, DoD adjusted 
the final rule to increase the number of Appeals Board members and 
allow for panels of members. This will permit more appeals to be 
considered simultaneously in light of the requirement that an Appeals 
Board member considering a claim not have had a previous role in 
adjudicating the claim.
    DoD administratively clarified in Section 45.13(a) that it is the 
DoD Component which issued the Initial Determination that grants an 
extension of time for good cause and not the Appeals Board.

45.15 Other Claims Procedures and Administrative Matters

    Comment: A law firm and two Members of Congress commented that the 
rule should include a timeline for DoD to process claims, in part so 
claimants would have some sense of how long they would need to wait and 
to give DoD a benchmark for progress.
    DoD Response: This comment was not adopted. Unlike other statutes, 
10 U.S.C. 2733a does not provide a right to go to court after a certain 
period of time. Similar to other adjudicative processes, too many 
variables preclude a reliable estimate. DoD has structured a process 
designed to allow claimants the time necessary to present information, 
including seeking extensions of time for good cause shown. DoD has 
expanded some time frames in the final rule in a manner favorable to 
claimants in response to comments. Exchanges of information, 
particularly with respect to damages, will take time in complex cases. 
DoD believes putting estimates in the final rule that turn out to be 
unrealistic for any number of reasons will only lead to claimant 
frustration. DoD is committed to adjudicating claims in a timely manner 
and will continue to endeavor to do so.
    Comment: A Veterans' organization sought to include a requirement 
for DoD to respond to records requests within 45 days because claims 
must be presented within two years of accrual and because records may 
be needed to submit a viable claim.
    DoD Response: This comment was not adopted. Responses to records 
requests are governed by processes outside of this rule. Moreover, DoD 
has established a process which requires very little information to be 
submitted at the time a claim is filed, with opportunities to submit 
additional evidence during the Initial Determination phase.
    Comment: A Member of Congress requested that the rule be clarified 
to ensure that those issuing Initial Determinations and the attorneys 
advising them have expertise in medical malpractice and receive 
specialized training related to the military medical system.
    DoD Response: DoD did not include language in the final rule on 
this topic, as these are matters internal to DoD and related to the 
regulation of the practice of law within DoD. Nonetheless, DoD shares 
the Member of Congress' interest in ensuring quality decisions are made 
by persons with appropriate training and expertise.
    Comment: One commenter suggested that there be dedicated points of 
contact for Service members and their representatives to contact about 
their claims. DoD did not make changes to the rule based on this 
comment, as this can be addressed outside the rule, such as by 
including points of contact on communications about the claim.
    DoD Response: DoD administratively modified Section 45.15(f) to 
state that the phrase ``DoD Components'' may include, but is not 
limited to, Military Departments.

Regulatory Analysis

    The public comments received were not relevant to the RIA; 
therefore, DoD is finalizing the RIA with no further revisions.

a. Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review''

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health. and safety effects; distribution of impacts; and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility. This final rule has been determined to be a 
significant regulatory action, although

[[Page 52454]]

not economically significant. Accordingly, it has been reviewed by the 
Office of Management and Budget as required by these Executive Orders.

b. Summary

    This interim final rule implements requirements of the NDAA for 
Fiscal Year 2020 permitting members of the uniformed services or their 
authorized representatives to file claims for personal injury or death 
caused by a DoD health care provider in certain military medical 
treatment facilities. Because Federal courts do not have jurisdiction 
to consider these claims, DoD is issuing this rule to provide uniform 
standards and procedures for considering and processing these actions 
administratively.

c. Affected Population

    At the end of Fiscal Year 2019, there were approximately 1,400,000 
Active Duty, 390,000 Reserve and National Guard, and 250,000 other 
uniformed Service members eligible for DoD healthcare benefits or 
around 19% of the total eligible beneficiary population. These 
uniformed Service members will be able to file claims with DoD alleging 
malpractice. There were approximately 8,140,000 other eligible 
beneficiaries to include retirees, retiree family members, and family 
members of Active Duty Service members. These other eligible 
beneficiaries currently may file claims with DoD alleging malpractice.

d. Costs

    As a result of the rule, individuals who believe they were 
subjected to malpractice may consider filing a claim. In determining 
whether to file a claim, individuals may consult with medical 
professionals and attorneys and we assume that most claimants will have 
attorneys. We estimate that this will require 5 hours for individuals 
to locate an attorney, view and download pertinent medical records, and 
discuss the case with an attorney (or a medical professional for 
claimants without attorneys). At a mean hourly rate of $27.07 based on 
data from the Bureau of Labor Statistics (BLS), the cost of this 
activity is $135.
    The cost for a consultation with a medical professional, whether 
directly by the claimant or through an attorney varies by the type of 
professional. Based upon information available from consultations and 
reports obtained in malpractice claims against the government and 
estimates of time spent by DoD in similar activity when handling those 
claims, we estimate a typical review of records would take about 3 to 5 
hours (and include reviewing journals in support of the professional's 
opinion), with an additional 2 to 4 hours to write a report (if such a 
report is submitted with a claim, which is not required). The 
Department will assume for purposes of this analysis that the same type 
of professional would be consulted as the professional against whom the 
malpractice is alleged (e.g., a doctor providing an opinion about the 
standard of care if a doctor is alleged to have committed malpractice). 
Most medical malpractice claims are brought on a contingent fee basis 
so there is no initial cost to the claimant. Based on similar claim 
analysis activity in handing malpractice claims, we estimate an 
attorney might spend 17-26 hours analyzing a claim before filing. We 
use BLS data to value time spent by these individuals, and we adjust 
mean wage rates upward by 100 percent to account for overhead and 
benefits. This implies hourly rates of $206.12 for physicians, $76.94 
for nurses, $111.62 for physician assistants, and $143.18 for lawyers. 
As a result, the estimated cost for medical review would be 
approximately $231 to $1,855, and the estimated cost for attorney time 
would be approximately $2,434 to $3,723.
    The cost to a Service member or an authorized representative for 
the filing itself will vary based on the amount of information the 
Service member includes with his or her filing. A basic letter stating 
the factual basis for the claim and including a demand for a specified 
dollar amount would cost the claimant postage ($0.55 per claim, or 
$27.50 for an estimated 50 claims) and possibly minimal photocopying. 
Claimants will likely choose to use certified mail, requiring 
additional postage of $3.35 per claim (or $167.50 for an estimated 50 
claims per year). Two affidavits are likely required, one containing a 
statement from the claimant indicating he or she consulted with a 
health care professional and obtained an opinion from that health care 
professional that the medical standard of care was breached and one 
affirming that a representative is authorized to represent the 
claimant. Those entitled to legal assistance under 10 U.S.C. 1044 (such 
as Active Duty Service members, retired Service members, and survivors) 
would be able to obtain notarial services at no cost. Most likely, 
those filing claims would fall into one of these categories and so 
could obtain notarial services at no cost. However, this rule results 
in societal costs associated with these notarial services. We estimate 
that notarial services will require the equivalent of 20 minutes of 
paralegal time. Using BLS data, and adjusting upward by 100 percent to 
account for overhead and benefits to arrive at an hourly rate of $54.44 
implies $18.14 in costs per claim. Finally, although not required, a 
claimant could submit any other information he or she chooses, which 
would result in a variable cost. DoD assumes that pertinent medical 
records outside its system would be fairly recent and could be accessed 
via web portals, resulting in a cost to the claimant of only the cost 
of printing and postage. If the claimant elects to submit receipts, the 
claimant would need to pay the cost of printing or photocopying, as 
well as postage.
    In 2020, DoD received 149 malpractice claims filed by Active Duty 
beneficiaries under the process in this part and 173 malpractice claims 
filed by other beneficiaries under either the FTCA or MCA. Section 
2733a(b)(4) requires claims to be presented to DoD within two years 
after the claim accrues, although section 731 of the Fiscal Year 2020 
NDAA allowed claims accruing in 2017 to be filed in 2020. In future 
years, when three years' worth of claim filings are not compressed in 
the same year and the requirement for consultation with a health care 
professional in certain circumstances in advance of filing takes 
effect, DoD would anticipate around 50 claims per year. Based on 
information related to malpractice claims not filed after 
consideration, we estimate that 90% of the claims considered by 
individuals and their attorneys will not be filed. As a result, we 
estimate that 500 claims will be considered, and that 50 claims will be 
filed by Service members per year.
    The categories of costs for considered claims are described above. 
In sum, we estimate costs of $2,822 to $5,735 per claim. This implies 
total costs of $1,401,102 to $2,857,602 each year for considered 
claims.
    Next, we estimate costs associated with processing claims. Many 
steps in processing a claim will be the same for DoD whether or not the 
claim has merit. Based on activity in non-medical malpractice claims, 
we anticipate 3 hours of paralegal time for activities such as logging 
in claims, sending acknowledgment letters, mailing certified letters 
containing the outcome of a claim, drafting vouchers for payment, and 
filing/data entry. Assuming a GS-11 paralegal at the step 5 salary rate 
of $81,634 based on the 2020 Washington, DC, locality pay table (an 
hourly rate of $39.12) and the total value of labor including wages, 
benefits, and overhead being equal to 200 percent of the wage rate, the 
cost for this

[[Page 52455]]

paralegal activity per claim is $234.72. We estimate that the 
approximately same amount of time that a claimant's attorney would 
spend analyzing a claim (17-26 hours of attorney time) would be spent 
by DoD attorneys to analyze the claim, conduct legal research, consult 
with experts, and draft a determination. Assuming a GS 13/14 at an 
average GS 13/14 salary of $127,788 based on the 2020 Washington, DC, 
locality pay table (an hourly rate of $61.23) and the total value of 
labor including wages, benefits, and overhead being equal to 200 
percent of the wage rate, this attorney activity would cost $2,081 to 
$3,184 per claim.
    Of these 50 claims, for purposes of this analysis, based on 
historical malpractice claims data involving non-Service members, we 
assume 27% of claimants will have claims for which DoD determines 
malpractice occurred, or 14 claims. For these claims, based on time 
spent by DoD on the damages portion of current malpractice claims 
against the government, DoD estimates claimants' attorneys and DoD 
attorneys will spend 6-8 hours respectively on matters pertaining to 
damages. This results in a cost per claim of $859 to $1,145 for 
claimants' attorneys and $748 to $997 for DoD attorneys.
    Of submitted claims, DoD estimates that claimants will appeal all 
claims that do not result in a payment of damages, resulting in 36 
appeals annually. Note that this is described in more detail in the 
transfers section. We estimate it will take around the same amount of 
time spent on initial determination activities for appeal activities, 
or 17-26 hours per claim for both claimants' attorneys (at a cost of 
$2,434 to $3,723) and DoD attorneys (at a cost of $2,081 to $3,184) and 
3 hours per claim by DoD paralegals (at a cost of $235). This implies 
total annual costs of $171,000 to $257,112 for appeals.
    As a result, we estimate total annual processing costs for these 50 
claims to be $309,284 to $458,036.
    In summary, total estimated annual costs of this interim final rule 
are $1,710,386 to $3,315,638.

e. Transfers

    Regardless of the number of claims in which malpractice occurred, 
the only claims in which damages will be awarded are those which exceed 
the offsets for any payment to be made. Subject to some exceptions such 
as insurance benefits for which Service members have paid premiums, 
benefits received through the DoD and VA comprehensive compensation 
system applicable to all injuries and deaths will be applied as an 
offset in calculating malpractice damages to prevent a double recovery. 
Because of these offsets, regardless of the number of claims filed, the 
only claims pertinent for purposes of payments made by the government 
are those that would exceed applicable offsets.
    We estimate 7 claims per year will result in additional payments 
made to individuals, which is the number of claims anticipated to 
involve additional payments after offsets are applied. To help explain 
how we reached this estimate, we prepared the following tables as 
notional examples to illustrate what benefits are available under the 
existing comprehensive compensation system, both those that are offset 
and those that are not, and the value of these benefits in Fiscal Year 
2020. In addition to the benefits in the above tables, disability 
retirees and survivors receive healthcare for life through TRICARE. In 
Fiscal Year 2020, based on information from the Office of the Assistant 
Secretary of Defense for Health Affairs, the average value of the 
TRICARE benefit for an under-65 retiree family of three was $14,600 per 
year. Benefits provided through the Social Security Administration, 
such as Social Security disability benefits and Social Security 
survivor benefits, are also in addition to the above tables. 
Calculations in the tables were provided by the Office of Military 
Compensation Policy, within the Office of the Under Secretary of 
Defense for Personnel and Readiness.
BILLING CODE 5001-06-P

[[Page 52456]]

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[[Page 52457]]


[GRAPHIC] [TIFF OMITTED] TR26AU22.002


[[Page 52458]]


[GRAPHIC] [TIFF OMITTED] TR26AU22.003

     
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    \7\ In these tables, ``O-5'' refers to an officer grade; ``E-4'' 
to an enlisted grade.
    \8\ Amount shown is annual. The spouse SBP annuity is 55% of 
what retired pay would have been had the member retired with a full 
disability retirement on the date of his or her death. SBP is 
adjusted annually for cost-of-living. The amount reflected is for 
2020 and assumes the spouse receives the full amount of SBP. SBP is 
subject to offset if the spouse also receives DIC (only for the 
portion of DIC payable to the spouse. If SBP is paid to the children 
instead of the spouse, there is no offset but the annuity ends when 
all children reach the age of majority).
    \9\ Basic Monthly Rate for 2020 is $1,340.14 plus $332.00 per 
child age 18 or younger. $16,081 is payable as DIC for the spouse 
which is offset against SBP.
    \10\ SSIA is only received if SBP is reduced by the amount of 
DIC. If children receive SBP in full while the spouse receives DIC, 
no SSIA is paid.
    \11\ The total payout for the spouse of the E-4 is higher than 
that for the E-6 because the spouse is 7 years younger, but both 
live until age 87.

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[[Page 52459]]

[GRAPHIC] [TIFF OMITTED] TR26AU22.004


[[Page 52460]]


[GRAPHIC] [TIFF OMITTED] TR26AU22.005


[[Page 52461]]


[GRAPHIC] [TIFF OMITTED] TR26AU22.006

BILLING CODE 5001-06-C
    We estimate that 7 claims per year would have damages that would 
exceed the offset amount of $1.1 million. We used the notional example 
in Table 2(d), the lowest of the estimates in the notional examples, as 
the basis for the $1.1 million offset. For the Table 2(b) example of 
the married enlisted member with two children in the grade of E-6 who 
is medically retired with a 50 percent disability rating, the current 
value of her lifetime compensation would be $1,142,430. In addition to 
the $1,142,430 paid, benefits include medical care for the retired 
Service member and her family. All these amounts would offset any 
damages award.
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    \12\ For simplicity of calculation, each member is assumed to 
have 12 months of service ``over 8 years'' and 24 months of service 
``over 6 years'' in the same paygrade they currently hold, with a 
retirement date of December 31, 2019. Prior to retirement, each 
member was covered under the High-3 retirement program.
    \13\ For members who entered service prior to January 1, 2018, 
the applicable multiplier is 2.5 percent unless the member elected 
to opt into the Blended Retirement System or elected the Career 
Status Bonus and converted to the REDUX retirement program. For 
these examples, all members are assumed to have remained under the 
legacy ``High-3'' retirement program with a 2.5 percent multiplier.
    \14\ Rates for veteran + spouse + child + additional child at 
https://www.benefits.va.gov/COMPENSATION/resources_comp01.asp#BM05.
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    We then estimated the number of claims likely to exceed $1.1 
million using claims data from non-Service member claims under the FTCA 
or MCA. In 2019 and 2020, the Military Departments had 14 claims from 
retirees or dependents under the FTCA or MCA with damages that exceeded 
$1.1 million, whether through settlement or an adverse court judgment. 
The average amount payable for these 14 claims over 2 years was 
approximately $2.7 million. In one year, therefore, we estimate that 7 
claims by Service members would go forward that exceed the $1.1 million 
threshold for payable damages. Assuming 7 claims per year going forward 
exceeding $1.1 million, and average damages of $1.6 million (the 
difference between the average amount of $2.7 million paid per claim in 
the non-Active Duty claims and the estimated $1.1 million in offsets 
per Service member claim), the additional payments made by the U.S. 
Government because of section 731 are estimated to be $11.2 million per 
year. Of this, the first $100,000 for each claim would be paid by DoD 
and the remainder paid by the Treasury Department, for an estimated 
total of $0.7 million to be paid by DoD based on 7 claims and $1.05 
million to be paid by the Treasury Department.
    As the tables above illustrate, Government paid benefits would not 
be a factor, as this claims process would have no impact on what the 
benefits Service member is already receiving, has received, or is 
entitled to receive in the future based on his or her injuries.
    Total transfers from the U.S. government to claimants are estimated 
to be $11.2 million per year.

f. Benefits

    Absent the claims process established by section 731, Service 
members would not have the opportunity for potential monetary payments 
above the amounts they currently receive through current DoD and VA 
benefits. In addition to providing an additional potential compensation 
remedy, the claims process reinforces DoD Clinical Quality Management 
Program procedures for appropriate accountability of DoD health care 
providers. National Practitioner Data Bank (NPDB) reporting includes 
cases where DoD compensation is paid through the Disability Evaluation 
System or survivor benefits attributable to medical malpractice by a 
DoD health care provider and now, under this part, paid malpractice 
claims. Reports to the NPDB are accompanied by reports to State 
licensing boards and certifying agencies of the health care providers 
involved. The claims process further provides an opportunity for DoD to 
identify opportunities for improvement in the delivery of healthcare, 
potentially preventing harm to others based upon measures taken by DoD 
as a result of a claim even if the claim does not result in the payment 
of monetary damages. Finally, this process is only applicable in 
certain cases of medical malpractice.

[[Page 52462]]

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this final 
rule as not a major rule, as defined by 5 U.S.C. 804(2).

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    This final rule is not subject to the Regulatory Flexibility Act (5 
U.S.C. 601) because it is not a notice of proposed rulemaking under 5 
U.S.C. 601(2).

Assistance for Small Entities

    This final rule does not impose requirements on small entities.

Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1532) requires agencies to assess anticipated costs and benefits before 
issuing any rule whose mandates require non-Federal spending in any one 
year of $100 million in 1995 dollars, updated annually for inflation. 
This final rule does not mandate any requirements for State, local, or 
tribal governments, nor affect private sector costs.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    It has been determined that this final rule does not impose new 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act of 1995.

Executive Order 13132, ``Federalism''

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This final rule does not have a substantial effect on 
State and local governments.

List of Subjects in 32 CFR Part 45

    Medical, Malpractice, Claims, Uniformed Services.

    Accordingly, the interim final rule adding 32 CFR part 45 which was 
published at 86 FR 32194-32215 on June 17, 2021 is adopted as a final 
rule with the following changes:

PART 45--MEDICAL MALPRACTICE CLAIMS BY MEMBERS OF THE UNIFORMED 
SERVICES [AMENDED]

0
1. The Authority for part 45 continues to read as follows:

    Authority:  10 U.S.C. 2733a.


0
2. Amend Sec.  45.4 by revising paragraphs (b)(5), (d), and (e) to read 
as follows:


Sec.  45.4  Filing a claim.

* * * * *
    (b) * * *
    (5) If the claimant is not represented by an attorney, unless the 
alleged medical malpractice is within the general knowledge and 
experience of ordinary laypersons, an affidavit from the claimant 
affirming that the claimant consulted with a health care professional 
who opined that a DoD health care provider breached the standard of 
care that caused the alleged harm. Alternatively, if the claimant is 
represented by an attorney, unless the alleged medical malpractice is 
within the general knowledge and experience of ordinary laypersons, the 
claim must include an affidavit from the attorney affirming that the 
attorney consulted with a health care professional who opined that a 
DoD health care provider breached the standard of care that caused the 
alleged harm.
* * * * *
    (d) Substantiating the claim. Under section 2733a(b)(6), DoD is 
allowed to pay a claim only if it is substantiated. The claimant has 
the burden to substantiate the claim by a preponderance of the 
evidence. Upon receipt of a claim, DoD may require that the claimant 
provide additional information DoD believes is necessary for 
adjudication of the claim, including the submission of an expert 
opinion at the claimant's expense. DoD may determine an expert opinion 
is not necessary when negligence is within the general knowledge and 
experience of ordinary laypersons, such as when a foreign object is 
unintentionally left in the body or an operation occurred on the wrong 
body part. DoD may take other steps necessary to adjudicate the claim 
accurately, including conducting interviews of health care providers.
    (e) No discovery. There is no discovery process for adjudication of 
claims under this part. However, claimants may obtain copies of records 
in DoD's possession that are part of their personnel and medical 
records in accordance with the Privacy Act of 1974, 5 U.S.C. 552a; 
DoD's Privacy Act regulation at 32 CFR part 310; and DoD Manual 
6025.18, ``Health Insurance Portability and Accountability Act (HIPAA) 
Privacy Rule in DoD Health Care Programs.'' Claimants are not entitled 
to attorney work product, attorney-client privileged communications, 
material that is part of a DoD Quality Assurance Program protected 
under 10 U.S.C. 1102, pre-decisional material, or other privileged 
information.

0
3. Amend Sec.  45.7 by revising paragraph (d)(2) to read as follows:


Sec.  45.7  Element of payable claim: proximate cause.

* * * * *
    (d) * * *
    (2) DoD may consider medical quality assurance records relevant to 
the health care provided to the patient. DoD's Clinical Quality 
Management Program features reviews of many circumstances of clinical 
care. Results of any such reviews of the care involved in the claim 
that occurred before or after the claim was filed may be considered by 
DoD in the adjudication of the claim. As required by 10 U.S.C. 1102, 
DoD medical quality assurance records are confidential. While such 
records may be used by DoD, any information contained in or derived 
from such records may not be disclosed to the claimant.

0
4. Amend Sec.  45.10 by revising paragraph (c) to read as follows:


Sec.  45.10  Calculation of damages: non-economic damages.

* * * * *
    (c) Cap on non-economic damages. In any claim under this part, 
total non-economic damages may not exceed a cap amount. The current cap 
amount is $600,000. Updates to cap amounts in subsequent years will be 
published periodically, consistent with changes in prevailing amounts 
in the majority of the States with non-economic damages caps.
* * * * *

0
4. Amend Sec.  45.11 by revising paragraph (a) to read as follows:


Sec.  45.11  Calculation of damages: offsets for DoD and VA Government 
compensation.

    (a) In general. Total potential damages calculated under this part, 
both economic and non-economic, are reduced by offsetting most of the 
compensation otherwise provided or expected to be provided by DoD or VA 
for the same harm that is the subject of the medical malpractice claim. 
The general rule is that prospective medical malpractice damage awards 
are offset by DoD or VA payments and benefits that are primarily funded 
by Government appropriations. However, there is no offset for U.S. 
Government payments and benefits that are substantially funded by the 
military member. DoD is responsible for determining offsets, but 
claimants must provide information not available to DoD, but requested 
by DoD for the purpose of determining offsets.
* * * * *

[[Page 52463]]


0
5. Amend Sec.  45.12 by revising paragraphs (a)(1), (c), (d)(2), and 
(d)(4) to read as follows:


Sec.  45.12  Initial and Final Determinations.

* * * * *
    (a) * * *
    (1) DoD will provide the claimant 90 calendar days following 
receipt of the Initial Determination to cure the deficiency, unless an 
extension of time is granted for good cause by the DoD Component which 
issued the Initial Determination. The date of receipt of the Initial 
Determination will be presumed to be seven calendar days after the date 
the Initial Determination was mailed or emailed, unless there is 
evidence to the contrary.
* * * * *
    (c) Denial of claim--absence of an expert report. Where applicable, 
if the claimant initially does not submit an expert report in support 
of his or her claim and DoD intends to deny the claim, DoD will issue 
an Initial Determination stating that DoD will issue a Final 
Determination denying the claim in the absence of an expert report or 
manifest negligence. DoD will provide a meaningful explanation for the 
intent to deny the claim that includes the specific basis for the 
denial.
    (1) DoD will provide the claimant 90 calendar days following 
receipt of the Initial Determination by the claimant or, if the 
claimant is represented, by the claimant's representative, to submit an 
expert report, unless an extension of time is granted for good cause. 
The date of receipt of the Initial Determination will be presumed to be 
seven calendar days after the date the Initial Determination was mailed 
or emailed, unless there is evidence to the contrary.
    (2) If the claimant does not timely submit an expert report, DoD 
will issue a Final Determination denying the claim. A Final 
Determination issued under this paragraph (c) may not be appealed.
    (d) * * *
    (2) The Initial Determination may be in the form of a certified 
letter and/or an email. The Initial Determination may take the form of 
a grant of a claim and an offer of settlement or a denial of the claim. 
Subject to applicable confidentiality requirements, such as 10 U.S.C. 
1102, privileged information, and paragraph (a) of this section, DoD 
will provide a meaningful basis for an offer of settlement or will 
provide a meaningful explanation for the denial of a claim that 
includes the specific basis for the denial.
* * * * *
    (4) The claimant may request reconsideration of the damages 
calculation contained in an Initial Determination if, within the time 
otherwise allowed to file an administrative appeal, the claimant 
identifies an alleged clear error--a definite and firm conviction that 
a mistake has been committed--in the damages calculation. The DoD 
Component that issued the Initial Determination will review the alleged 
clear error and will issue an Initial Determination on Reconsideration 
either granting or denying reconsideration of the Initial Determination 
and adjusting the damages calculation, if appropriate. The Initial 
Determination on Reconsideration will include information on the 
claimant's right to appeal under the procedures in Sec.  45.13.

0
6. Amend Sec.  45.13 by revising paragraphs (a), (b), and (d)(1) to 
read as follows:


Sec.  45.13  Appeals.

    (a) In general. This section describes the appeals process 
applicable to Initial Determinations under this part, which include 
Initial Determinations on Reconsideration. With the exception of 
Initial Determinations issued under Sec.  45.12(a), in any case in 
which the claimant disagrees with an Initial Determination, the 
claimant has a right to file an administrative appeal. The claimant 
should explain why he or she disagrees with the Initial Determination, 
but may not submit additional information in support of the claim 
unless requested to do so by DoD. An appeal must be received within 90 
calendar days of the date of receipt of the Initial Determination by 
the claimant or, if the claimant is represented, the claimant's 
representative, unless an extension of time is granted for good cause 
by the DoD Component that issued the Initial Determination. The date of 
receipt of the Initial Determination will be presumed to be seven 
calendar days after the date the Initial Determination was mailed or 
emailed, unless there is evidence to the contrary. If no timely appeal 
is received, DoD will issue a Final Determination.
    (b) Appeals Board. Appeals will be decided by an Appeals Board 
administratively supported by the Office of the General Counsel, 
Defense Health Agency. Although there may be, in DoD's discretion, 
multiple offices that initially adjudicate claims under this part (such 
as offices in the Military Departments), there is a single DoD Appeals 
Board. The Appeals Board will consist of DoD attorneys designated by 
the Defense Health Agency from that agency and/or the Military 
Departments who are experienced in medical malpractice claims 
adjudication. Appeals Board members must not have had any previous role 
in the claims adjudication under appeal. The Appeals Board will 
consider cases in panels designated by the General Counsel of the 
Defense Health Agency of not fewer than three and no more than five 
Appeals Board members. Appeals are decided on a written record and 
decisions will be approved by a majority of the members. There is no 
adversarial proceeding and no hearing. There is no opposing party. The 
Appeals Board may obtain information or assessments from appropriate 
sources, including from the claimant, to assist in deciding the appeal. 
The Appeals Board is bound by the provisions of this part and will not 
consider challenges to them.
* * * * *
    (d) * * * (1) Every claimant will be provided a written Final 
Determination on the claimant's appeal. The Final Determination may 
adopt by reference the Initial Determination or revise the Initial 
Determination, as appropriate. If the Final Determination revises the 
Initial Determination, DoD will provide a meaningful explanation of the 
basis for the revisions.
* * * * *

0
7. Amend Sec.  45.15 by revising paragraph (f) to read as follows:


Sec.  45.15  Other claims procedures and administrative matters.

* * * * *
    (f) Authority for actions under this part. To ensure consistency 
and compliance with statutory requirements, supplementation of the 
procedures in this part is not permitted without approval in writing by 
the General Counsel of the Department of Defense. The General Counsel 
of the Department of Defense, under DoD Directive 5145.01, ``General 
Counsel of the Department of Defense,'' may delegate in writing 
authority for making Initial and Final Determinations, and other 
actions by DoD officials under this part. As used in this part, and at 
DoD's discretion, ``DoD'' or ``DoD Components'' may include, but is not 
limited to, Military Departments.

    Dated: August 22, 2022.
Patricia L. Toppings
OSD Federal Register Liaison, Department of Defense.
[FR Doc. 2022-18314 Filed 8-25-22; 8:45 am]
BILLING CODE 5001-06-P