[Federal Register Volume 89, Number 92 (Friday, May 10, 2024)]
[Rules and Regulations]
[Pages 40378-40382]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10130]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 45

[Docket ID: DoD-2023-OS-0065]
RIN 0790-AL70


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: The DoD is finalizing amendments to apply offsets for payments 
made by the U.S. Government for medical malpractice claims to potential 
economic damages only and not to total potential damages. Under this 
rule total potential damages will no longer be reduced by offsetting 
most of the compensation otherwise provided or expected to be provided 
by DoD or the Department of Veterans Affairs (VA) for the same harm 
that is the subject of the medical malpractice claim. Instead, only 
economic damages will be reduced by offsetting most of the compensation 
otherwise provided or expected to be provided by DoD or the VA for the 
same harm that is the subject of the medical malpractice claim. This 
rule also clarifies future lost earnings may be awarded until the time 
DoD determines that the claimant is, or is expected to be, medically 
rehabilitated and able to resume employment; in cases of permanent 
incapacitation, until expiration of the claimant's work-life 
expectancy; or, in cases of death, until the expiration of the 
claimant's work-life expectancy, after deducting for the claimant's 
personal consumption.

DATES: This final rule is effective May 10, 2024.

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

SUPPLEMENTARY INFORMATION:

I. Background

    Section 2733a of title 10, United States Code, allows members of 
the uniformed services or their authorized representatives to file 
claims, and the Secretary of Defense to pay such claims, for personal 
injury or death caused by a DoD health care provider in a covered

[[Page 40379]]

military medical treatment facility, as defined in that section. DoD 
published an interim final rule to establish uniform standards and 
procedures for adjudicating these claims on June 17, 2021 (86 FR 32194) 
and a final rule on August 26, 2022 (87 FR 52446). Proposed amendments 
to this regulation were published in the Federal Register on October 
20, 2023 (88 FR 72412), that proposed to apply offsets for payments 
made by the U.S. Government to economic damages only and clarify when 
future lost earnings may be awarded. Comments were accepted for 60 days 
until December 19, 2023. DoD is making no changes to the regulatory 
text based on the comments received.

II. Discussion of Comments and Changes

    A total of 24 comments were posted on the regulatory docket. 
Summaries of the comments and the Department's responses are as 
follows.

General

    Two comments from individual members of the public reflected 
general support for the proposed changes. One of these commenters 
stated that the proposed changes would benefit Service members and 
reduce the financial burdens on them and their families following 
injury or death.
    One comment was too general to be actionable. The commenter 
generally sought to have a fair, efficient, and consistent system 
without making any suggestions for changes to the proposed rule.
    The Department received a number of comments that were outside of 
the scope of the proposed rule and therefore did not result in changes 
to the proposed rule. Several comments expressed concerns about the 
quality of care provided by DoD or the VA and included personal 
narratives from Service members, their family members, or others on 
Service members' behalf about specific medical care the Service members 
received from DoD and VA medical providers. One comment sought to have 
32 CFR part 45 extended to all patients of DoD's military health system 
and not just members of the uniformed services. Another commenter 
sought to have the doctrine in Feres v. United States, a 1950 Supreme 
Court decision, overturned to allow Service members to bring lawsuits 
in Federal court. An individual submitted comments seeking a change 
related to the definition of ``DoD health care provider'' in 32 CFR 
part 45. An additional comment beyond the scope of the regulation 
recommended that Service members receive copies of their DD Form 2807-
1, ``Report of Medical History,'' and their DD Form 2807-2, 
``Accessions Medical History Report,'' in addition to their DD Form 
214, ``Certificate of Uniformed Service.'' One comment suggested that 
Service members be educated about the claims process. Finally, one 
individual generally expressed concerns about the claims process, 
including a belief that settlements under the process were unfair and 
lacked transparency.

Section 45.9 Calculation of Damages: Economic Damages

    Comment: A State legislator supported the portions of the proposed 
rule clarifying when future lost wages may be awarded.
    Response: This comment did not recommend any changes to Sec.  45.9 
and no changes were made to this section.

Section 45.10 Calculation of Damages: Non-Economic Damages

    Comment: One individual commented that the rule change may provide 
additional compensation for non-economic harms, although noted that 
compensation could never make a malpractice victim or survivor whole. A 
number of comments, including comments from Members of Congress, a 
local elected official, a State legislator, and individuals sought 
elimination of the cap on non-economic damages.
    Response: DoD did not make any changes as a result of these 
comments. Section 2733a(g)(2)(B) of title 10, U.S.C., requires DoD to 
adjudicate claims, including calculating damages, 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. This standard in 10 
U.S.C. 2733a(g)(2)(B) is a different standard from the FTCA. Under the 
FTCA, 28 U.S.C. 2672 and 1346(b)(1), the law applied is the law of the 
place where the medical care was provided. A majority of States, 28, 
have caps on non-economic damages applicable in medical malpractice 
claims and therefore DoD has retained the cap on non-economic damages.
    DoD administratively removed a description of ``physical 
disfigurement'' that used outdated terminology and is unnecessary for 
purposes of claims adjudication.

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

    Comment: One commenter, a city elected official, was supportive of 
eliminating offsets from non-economic damages. A State legislator 
indicated support for the changes that would allow more Service members 
to receive compensation for non-economic damages than under the current 
regulation. A number of comments, including from Members of Congress, a 
State legislator, and individuals, sought to eliminate offsets from the 
portion of potential malpractice damage awards for economic damages in 
addition to the portion for non-economic damages. Some comments 
incorrectly seemed to suggest that ``offsets'' meant that the Service 
member's DoD and VA compensation would be reduced. Some comments also 
seemed to suggest, inaccurately, that the Department is offsetting an 
amount equal to all VA compensation for all line of duty injuries, not 
just offsetting the amount of compensation received for those 
additional injuries caused by malpractice.
    Response: 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, 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). This 
compensation system also applies to injuries incurred in service caused 
by medical malpractice.
    Offsets from economic damages account for the fact that 
compensation has already been paid or will be paid by the Government 
for economic injuries caused by the malpractice. In other words, the 
claimant has already received, is receiving, or will be receiving 
compensation from the U.S. Government on account of his or her economic 
losses. For example, VA disability ratings ``represent as far as can 
practically be determined the average impairment in earning capacity'' 
resulting from service-related injuries. (See 38 CFR 4.1) DoD is 
required by 10 U.S.C. 2733a(g)(2)(B) to apply the law in the majority 
of states when adjudicating Service member medical malpractice claims. 
Offsetting economic damages for compensation already paid by the United 
States is consistent with general tort law principles that states would 
apply.
    The fact that offsets are made from potential medical malpractice 
damages awards does not change a Service member's entitlement to the 
DoD or VA

[[Page 40380]]

compensation. The same amount of DoD or VA compensation is still paid 
to a claimant even if the claimant receives an award of medical 
malpractice damages. What happens with offsets is that the applicable 
amount of DoD or VA compensation is subtracted from the medical 
malpractice damages award that otherwise would be payable.
    Additionally, offsets are made only for the amount of compensation 
received from the DoD or VA that is related to the medical conditions 
caused by the malpractice. The amount of compensation for medical 
conditions unrelated to the malpractice is not offset. For example, if 
a Service member receives VA disability compensation both for a combat 
injury to her hand and for an injury to her knee caused by malpractice, 
only the amount of compensation for the knee injury would be used as an 
offset from the proposed damages award.
    DoD did not make changes to this section.

III. Effective Date

    Pursuant to 5 U.S.C. 553(d), DoD has decided not to delay the 
effective date of this rule and to make it effective immediately. The 
final rule relieves a restriction on the amount of non-economic damages 
claimants may receive. Moreover, there is good cause not to delay the 
effectiveness of this rule. The amendments apply to claims received by 
DoD on or after the date this final rule is published in the Federal 
Register and to claims pending before DoD on that date. An immediate 
effective date allows more timely adjudication of those claims 
currently pending which would be impacted by the final rule and more 
timely payments to those claimants. Further, delaying the effective 
date would result in no benefit to claimants because the final rule 
imposes no burdens on them and therefore they do not need time to 
prepare for compliance with the final rule.

IV. Regulatory Analysis

Executive Order 12866, ``Regulatory Planning and Review,'' as Amended 
by Executive Order 14094, ``Modernizing Regulatory Review'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review''

    Executive Orders 12866 (as amended by Executive Order 14094) and 
13563 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 under 
paragraph 3(f) of the amended Executive Order 12866. Accordingly, it 
has been reviewed by the Office of Management and Budget as required by 
these Executive orders.

Congressional Review Act (5 U.S.C. 804(2))

    This final rule is 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 et seq)

    The General Counsel of the Department of Defense certified that 
this final rule is not subject to the Regulatory Flexibility Act (5 
U.S.C. 601) because it would not, if promulgated, have a significant 
economic impact on a substantial number of small entities. Therefore, 
the Regulatory Flexibility Act, as amended, does not require a 
regulatory flexibility analysis.

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 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.

Executive Order 13175, ``Consultation and Coordination With Indian 
Tribal Governments''

    Executive Order 13175 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct compliance costs on one or more Indian tribes, 
preempts tribal law, or affects the distribution of power and 
responsibilities between the Federal Government and Indian tribes. This 
final rule will not have a substantial effect on Indian tribal 
governments.

V. Impact of this Regulation

a. Summary

    The amendments adjust and update certain portions of the regulation 
related to calculation of damages. Currently, DoD offsets from both 
economic and noneconomic damages compensation made by DoD and VA on 
account of the injuries from malpractice. The amendments apply offsets 
to economic damages only. Under the current rule, a claimant who has 
little or no economic damages would be unable to recover any damages if 
the compensation that the claimant already receives or will receive 
from DoD and VA for the injuries from malpractice exceeds the total 
amount of potential economic and non-economic damages. Under the 
amendment, these claimants will be able to recover non-economic damages 
because the amount of the DoD and VA compensation will no longer be 
used to offset the non-economic damages.
    The amendments also include two changes that were made to better 
describe the applicable principles used when adjudicating claims to 
make the rule clearer for claimants. First, language was added to 
address medical rehabilitation as it relates to future lost earnings by 
explicitly stating the principle that future lost earnings do not 
continue beyond the point when DoD determines that the claimant is, or 
is expected to be, medically rehabilitated and able to resume 
employment. Second, because 10 U.S.C. 2733a(b)(5) prevents recovery for 
claims that are allowed to be settled and paid under any other 
provision of law, language was added to explicitly state that an injury 
or condition does not result in lost earnings for purposes of this 
regulation if the lost earnings stem from disability discrimination, 
since disability discrimination is compensable under other provisions 
of law. These principles, if applicable to the facts of a claim, 
already would have been applied in adjudicating those claims. 
Therefore, these changes will have no meaningful economic impact.

[[Page 40381]]

b. Affected Population

    At the end of Fiscal Year 2022, there were approximately 1,410,000 
Active Duty Service members, and 440,000 Reserve and National Guard 
members eligible for DoD healthcare benefits. These uniformed Service 
members will be able to file claims with DoD alleging malpractice from 
care at DoD military medical treatment facilities as defined in 10 
U.S.C. 2733a.

c. Costs

    DoD does not estimate that any additional claims will be filed as a 
result of the amendments to the regulation. Since the enactment of 10 
U.S.C. 2733a, individuals who believe they have been subjected to 
malpractice have filed claims involving injuries ranging from minor 
injuries to death, regardless of the potential application of offsets.

d. 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. The amendments solely impact 
non-economic damages. No amendments are being made that impact offsets 
from economic damages.
    Similar to malpractice claims under the FTCA, claims payable under 
this regulation could include a wide range of non-economic damages 
depending on their facts. A claim involving minor pain and temporary 
injuries would result in a lower non-economic damages award than a 
claim involving significant, continuing pain and/or debilitating 
injury. Initially, non-economic damages were capped at $500,000. This 
cap was raised to $600,000 in August 2022 and again to $750,000 in 
October 2023.
    Based on claims adjudicated under this part in 2021 and 2022, four 
claims were adjudicated in which offsets were applied. In two of these 
claims, the economic damages alone were larger than the offsets so the 
payouts would not have been impacted had the amendments been in effect. 
Only for the remaining two claims would the outcome have been different 
had the amendments been in effect. In one claim, an additional $200,000 
would have been paid to the claimant if offsets had not been made from 
non-economic damages. In the other claim, an additional $100,000 would 
have been paid to the claimant if offsets had not been made from non-
economic damages.
    Claims in 2021 and 2022 may not necessarily be representative of 
claims in future years. Claims were accepted beginning January 1, 2020, 
but could only begin to be adjudicated beginning on July 17, 2021, when 
the interim final rule at 86 FR 32194 became effective. The first 
claims adjudicated under this new process were claims that did not 
require a decision on the merits of whether malpractice occurred, such 
as claims that were denied because the alleged malpractice fell outside 
the statute of limitations in 10 U.S.C. 2733a(b)(4). Just as with claim 
resolution processes involving non-Service member claims, more complex 
claims, which tend to involve higher amounts of damages, require time 
for review. Since Service members' claims have only been able to be 
adjudicated since July 17, 2021, more complex claims may still be under 
adjudication, and the two claims that would have had a different 
outcome in 2021 and 2022 may not be representative of the number of 
claims that would be impacted going forward.
    Taking the limited information DoD has into account, DoD estimates 
that the amendments to the regulation will affect two claims per year. 
The average of the additional non-economic damages at issue in the two 
claims which would have been impacted if this regulation had been in 
effect was $150,000. Assuming $150,000 additional would be paid in two 
claims, the estimated total additional transfers from the Government to 
claimants therefore would be $300,000. Of this, the first $100,000 of 
each of the two claims would be paid by DoD, with the remainder to be 
paid by the Treasury.
    There could be significant variation in the number of claims that 
would be impacted by the amendments to the regulation from year to 
year. In some years, there could be no claims affected by the 
amendments, so there would be zero additional transfers from the 
Government to claimants. In other years, there could be more claims 
impacted by the amendments and/or claims involving different amounts of 
non-economic damages than the $150,000 estimate. For example, assuming 
that in another year there were four claims in which non-economic 
damages would be paid and assuming the non-economic damages in these 
four claims would be paid at the cap of $750,000, this would lead to 
transfers of $3 million from the Government to claimants.

e. Benefits

    The amendments to the regulation will allow some Service members to 
receive compensation for non-economic damages that they would not have 
been able to receive under the current regulation. The amendments 
afford some Service members additional compensation in light of the 
non-economic harms they have experienced as a result of malpractice.

List of Subjects in 32 CFR Part 45

    Claims, Malpractice, Medical, Uniformed services.

    Accordingly, the Department of Defense amends 32 CFR part 45 to 
read as follows:

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

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

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

0
2. Amend Sec.  45.1 by revising paragraph (b) to read as follows:


Sec.  45.1   Purpose of this part.

* * * * *
    (b) Relationship to military and veterans' compensation programs. 
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, or household events, 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). This 
comprehensive compensation system applies to cases of personal injury 
or death caused by medical malpractice incurred in service as it does 
to all other causes. This part provides for the possibility of separate 
compensation in certain cases of medical malpractice but in no other 
type of case. A medical malpractice claim under this part will have no 
effect on any other compensation the member or the member's family is 
entitled to under the comprehensive compensation system applicable to 
all members. However, if the U.S. Government makes a payment for harm 
caused by malpractice, this payment reduces the potential damages under 
this part as provided in Sec.  45.11.
* * * * *

0
3. Amend Sec.  45.9 by revising paragraph (b)(4) and adding paragraph 
(d) to read as follows:


Sec.  45.9  Calculation of damages: economic damages.

* * * * *
    (b) * * *
    (4) For future lost earnings:

[[Page 40382]]

    (i) Until DoD determines that the claimant is, or is expected to 
be, medically rehabilitated and able to resume employment;
    (ii) In cases of permanent incapacitation, until expiration of the 
claimant's work-life expectancy; or
    (iii) In cases of death, until the expiration of the claimant's 
work-life expectancy, after deducting for the claimant's personal 
consumption.
    (iv) Future lost earnings must be substantiated by appropriate 
documentation and claimants have an obligation to mitigate damages.
    (v) In addition, loss of retirement benefits is compensable and 
similarly discounted after appropriate deductions. Estimates for future 
lost earnings and retirement benefits must be discounted to present 
value.
* * * * *
    (d) Disability discrimination. An injury or condition does not 
result in lost earnings for purposes of, and is not compensable under, 
this part if the lost earnings stem from disability discrimination, 
which may be settled and paid under other provisions of law.

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


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

    (a) In general. Non-economic damages are one component of a 
potential damages award. The claimant has the burden of proof on the 
amount of non-economic damages by a preponderance of evidence. DoD may 
request an interview of or statement from the claimant or other person 
with primary knowledge of the claimant. DoD may also require medical 
statements documenting the claimant's condition and, in cases of 
disfigurement, photographs documenting the claimant's condition.
    (b) Elements of non-economic damages. Non-economic damages include 
pain and suffering; physical discomfort; mental and emotional trauma or 
distress; loss of enjoyment of life; physical disfigurement; and the 
inability to perform daily activities that one performed prior to 
injury, such as recreational activities. Such damages are compensable 
as part of 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 published by DoD 
via a Federal Register notice. DoD will periodically publish updates to 
this cap amount via Federal Register notices, consistent with changes 
in prevailing amounts in the majority of the States with non-economic 
damages caps.
* * * * *

0
5. Amend Sec.  45.11 by:
0
a. Revising paragraph (a);
0
b. Redesignating paragraphs (c) and (d) as paragraphs (d) and (c), 
respectively;
0
c. Revising the first sentence in the newly redesignated paragraph (c);
0
d. Adding a sentence to the end of the newly redesignated paragraph 
(d);
0
e. Revising paragraph (e); and
0
f. Removing paragraphs (f) and (g).
    The revisions and addition read as follows:


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

    (a) In general. Total potential economic damages calculated under 
this part 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. DoD has the burden to 
establish the applicability and amount of any offsets.
* * * * *
    (c) * * * In determining offsets under this section from economic 
damages, DoD will use the present value of future payments and 
benefits. * * *
    (d) * * * Claimants must provide information not available to DoD, 
but requested by DoD, for the purpose of determining offsets.
    (e) Benefits and payments that may be considered as potential 
offsets. The general rule is that potential damages calculated under 
this part may be offset only by DoD or VA payments and benefits that 
are primarily funded by Government appropriations. Potential damages 
calculated under this part are not offset by U.S. Government payments 
and benefits that are substantially funded by the military member. The 
following examples are provided for illustrative purposes only, are not 
all-inclusive, and are subject to adjustment as appropriate.
    (1) The following DoD and VA payments and benefits are primarily 
funded from Government appropriations and will be offset:
    (i) Disability retired pay in the case of retirement due to the 
disability caused by the alleged medical malpractice;
    (ii) Disability severance pay in the case of non-retirement 
disability separation caused by the alleged medical malpractice.
    (iii) Incapacitation pay.
    (iv) Involuntary and voluntary separation pays and incentives.
    (v) Death gratuity.
    (vi) Housing allowance continuation.
    (vii) Survivor Benefit Plan.
    (viii) VA disability compensation, to include Special Monthly 
Compensation, attributable to the disability resulting from the 
malpractice.
    (ix) VA Dependency and Indemnity Compensation, attributable to the 
disability resulting from the malpractice.
    (x) Special Survivor Indemnity Allowance.
    (xi) Special Compensation for Assistance with Activities of Daily 
Living.
    (xii) Program of Comprehensive Assistance for Family Caregivers.
    (xiii) Fry Scholarship.
    (xiv) TRICARE coverage, including TRICARE-for-Life, for a 
disability retiree, family, or survivors. Future TRICARE coverage is 
part of the Government's compensation package for a disability retiree 
or survivor.
    (2) The following U.S. Government payments and benefits are 
substantially funded by the military members or are otherwise generally 
not eligible for consideration as potential offsets:
    (i) Servicemembers Group Life Insurance.
    (ii) Traumatic Servicemembers Group Life Insurance.
    (iii) Social Security disability benefits.
    (iv) Social Security survivor benefits.
    (v) Prior Government contributions to a Thrift Savings Plan.
    (vi) Commissary, exchange, and morale, welfare, and recreation 
facility access.
    (vii) Value of legal assistance and other services provided by DoD.
    (viii) Medical care provided while in active service or in an 
active status prior to death, retirement, or separation.

    Dated: May 6, 2024.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2024-10130 Filed 5-9-24; 8:45 am]
BILLING CODE 6001-FR-P