A bill to restore fairness and reliability to the medical justice system and promote patient safety by fostering alternatives to current medical tort litigation, and for other purposes.

Summary: Fair and Reliable Medical Justice Act - Amends the Public Health Service Act to authorize the Secretary of Health and Human Services to award up to ten demonstration grants to states for the development, implementation, and evaluation of alternatives to current tort litigation for resolving disputes over injuries allegedly caused by health care providers or health care organizations. Requires such states to: (1) develop such an alternative to current tort litigation; and (2) promote a reduction of health care errors by allowing for patient safety data related to such disputes to be collected and analyzed by organizations that engage in efforts to improve patient safety and the quality of health care.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair and Reliable Medical Justice 
Act''.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to restore fairness and reliability to the medical 
        justice system by fostering alternatives to current medical 
        tort litigation that promote early disclosure of health care 
        errors and provide prompt, fair, and reasonable compensation to 
        patients who are injured by health care errors;
            (2) to promote patient safety through disclosure of health 
        care errors; and
            (3) to support and assist States in developing such 
        alternatives.

SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399R. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO 
              CURRENT MEDICAL TORT LITIGATION.

    ``(a) In General.--The Secretary is authorized to award 
demonstration grants to States for the development, implementation, and 
evaluation of alternatives to current tort litigation for resolving 
disputes over injuries allegedly caused by health care providers or 
health care organizations. In awarding such grants, the Secretary shall 
ensure the diversity of the alternatives so funded.
    ``(b) Duration.--The Secretary may award up to 10 grants under 
subsection (a) and each grant awarded under such subsection may not 
exceed a period of 5 years.
    ``(c) Conditions for Demonstration Grants.--
            ``(1) Requirements.--Each State desiring a grant under 
        subsection (a) shall--
                    ``(A) develop an alternative to current tort 
                litigation for resolving disputes over injuries 
                allegedly caused by health care providers or health 
                care organizations; and
                    ``(B) promote a reduction of health care errors by 
                allowing for patient safety data related to disputes 
                resolved under subparagraph (A) to be collected and 
                analyzed by organizations that engage in efforts to 
                improve patient safety and the quality of health care.
            ``(2) Alternative to current tort litigation.--Each State 
        desiring a grant under subsection (a) shall demonstrate how the 
        proposed alternative described in paragraph (1)(A)--
                    ``(A) makes the medical liability system more 
                reliable through prompt and fair resolution of 
                disputes;
                    ``(B) encourages the disclosure of health care 
                errors;
                    ``(C) enhances patient safety by detecting, 
                analyzing, and reducing medical errors and adverse 
                events;
                    ``(D) maintains access to liability insurance; and
                    ``(E) provides patients the opportunity to opt out 
                of or voluntarily withdraw from participating in the 
                alternative.
            ``(3) Sources of compensation.--Each State desiring a grant 
        under subsection (a) shall identify the sources from and 
        methods by which compensation would be paid for claims resolved 
        under the proposed alternative to current tort litigation, 
        which may include public or private funding sources, or a 
        combination of such sources. Funding methods shall to the 
        extent practicable provide financial incentives for activities 
        that improve patient safety.
            ``(4) Scope.--
                    ``(A) In general.--Each State desiring a grant 
                under subsection (a) may establish a scope of 
                jurisdiction (such as a designated geographic region, a 
                designated area of health care practice, or a 
                designated group of health care providers or health 
                care organizations) for the proposed alternative to 
                current tort litigation that is sufficient to evaluate 
                the effects of the alternative.
                    ``(B) Notification of patients.--A State proposing 
                a scope of jurisdiction under subparagraph (A) shall 
                demonstrate how patients would be notified that they 
                are receiving health care services that fall within 
                such scope, and that they may opt out of or voluntarily 
                withdraw from participating in the alternative.
            ``(5) Preference in awarding demonstration grants.--In 
        awarding grants under subsection (a), the Secretary shall give 
        preference to States--
                    ``(A) that have developed the proposed alternative 
                through substantive consultation with relevant 
                stakeholders, including patient advocates, health care 
                providers and health care organizations, attorneys with 
                expertise in representing patients and health care 
                providers, medical malpractice insurers, and patient 
                safety experts;
                    ``(B) that make proposals that are likely to 
                enhance patient safety by detecting, analyzing, and 
                reducing medical errors and adverse events; and
                    ``(C) in which State law at the time of the 
                application would not prohibit the adoption of an 
                alternative to current tort litigation.
    ``(d) Application.--
            ``(1) In general.--Each State desiring a grant under 
        subsection (a) shall submit to the Secretary an application, at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
            ``(2) Review panel.--
                    ``(A) In general.--In reviewing applications under 
                paragraph (1), the Secretary shall consult with a 
                review panel composed of relevant experts appointed by 
                the Comptroller General.
                    ``(B) Composition.--
                            ``(i) Nominations.--The Comptroller General 
                        shall solicit nominations from the public for 
                        individuals to serve on the review panel.
                            ``(ii) Appointment.--The Comptroller 
                        General shall appoint, at least 14 but not more 
                        than 19, highly qualified and knowledgeable 
                        individuals to serve on the review panel and 
                        shall ensure that the following entities 
                        receive fair representation on such panel:
                                    ``(I) Patient advocates.
                                    ``(II) Health care providers and 
                                health care organizations.
                                    ``(III) Attorneys with expertise in 
                                representing patients and health care 
                                providers.
                                    ``(IV) Medical malpractice 
                                insurers.
                                    ``(V) State officials.
                                    ``(VI) Patient safety experts.
                    ``(C) Chairperson.--The Comptroller General, or an 
                individual within the Government Accountability Office 
                designated by the Comptroller General, shall be the 
                chairperson of the review panel.
                    ``(D) Availability of information.--The Comptroller 
                General shall make available to the review panel such 
                information, personnel, and administrative services and 
                assistance as the review panel may reasonably require 
                to carry out its duties.
                    ``(E) Information from agencies.--The review panel 
                may request directly from any department or agency of 
                the United States any information that such panel 
                considers necessary to carry out its duties. To the 
                extent consistent with applicable laws and regulations, 
                the head of such department or agency shall furnish the 
                requested information to the review panel.
    ``(e) Reports.--
            ``(1) By state.--Each State receiving a grant under 
        subsection (a) shall submit to the Secretary an annual report 
        evaluating the effectiveness of activities funded with grants 
        awarded under such subsection.
            ``(2) By secretary.--The Secretary shall submit to Congress 
        an annual compendium of the reports submitted under paragraph 
        (1).
    ``(f) Technical Assistance.--
            ``(1) In general.--The Secretary shall provide technical 
        assistance to the States applying for or awarded grants under 
        subsection (a).
            ``(2) Requirements.--Technical assistance under paragraph 
        (1) shall include--
                    ``(A) guidance on non-economic damages, including 
                the consideration of individual facts and circumstances 
                in determining appropriate payment, guidance on 
                identifying avoidable injuries, and guidance on 
                disclosure to patients of health care errors and 
                adverse events; and
                    ``(B) the development, in consultation with States, 
                of common definitions, formats, and data collection 
                infrastructure for States receiving grants under this 
                section to use in reporting to facilitate aggregation 
                and analysis of data both within and between States.
            ``(3) Use of common definitions, formats, and data 
        collection infrastructure.--States not receiving grants under 
        this section may also use the common definitions, formats, and 
        data collection infrastructure developed under paragraph 
        (2)(B).
    ``(g) Evaluation.--
            ``(1) In general.--The Secretary, in consultation with the 
        review panel established under subsection (d)(2), shall enter 
        into a contract with an appropriate research organization to 
        conduct an overall evaluation of the effectiveness of grants 
        awarded under subsection (a) and to annually prepare and submit 
        a report to Congress. Such an evaluation shall begin not later 
        than 18 months following the date of implementation of the 
        first program funded by a grant under subsection (a).
            ``(2) Contents.--The evaluation under paragraph (1) shall 
        include--
                    ``(A) an analysis of the effects of the grants 
                awarded under subsection (a) on the measures described 
                in paragraph (3);
                    ``(B) a comparison between and among the 
                alternatives approved under subsection (a) of the 
                measures described in paragraph (3); and
                    ``(C) a comparison between and among States 
                receiving grants approved under subsection (a) and 
                similar States not receiving such grants of the 
                measures described in paragraph (3).
            ``(3) Measures.--The evaluations under paragraph (2) shall 
        analyze and make comparisons on the basis of--
                    ``(A) the nature and number of disputes over 
                injuries allegedly caused by health care providers or 
                health care organizations;
                    ``(B) the nature and number of claims in which tort 
                litigation was pursued despite the existence of an 
                alternative under subsection (a);
                    ``(C) the disposition of disputes and claims 
                described in clauses (i) and (ii), including the length 
                of time and estimated costs to all parties;
                    ``(D) the medical liability environment;
                    ``(E) health care quality;
                    ``(F) patient safety in terms of detecting, 
                analyzing, and reducing medical errors and adverse 
                events; and
                    ``(G) patient and health care provider and 
                organization satisfaction with the alternative under 
                subsection (a) and with the medical liability 
                environment.
            ``(4) Funding.--The Secretary shall reserve 5 percent of 
        the amount appropriated in each fiscal year under subsection 
        (j) to carry out this subsection.
    ``(h) Option to Provide for Initial Planning Grants.--Of the funds 
appropriated pursuant to subsection (j), the Secretary may use a 
portion not to exceed $500,000 per State to provide planning grants to 
such States for the development of demonstration project applications 
meeting the criteria described in subsection (c). In selecting States 
to receive such planning grants, the Secretary shall give preference to 
those States in which State law at the time of the application would 
not prohibit the adoption of an alternative to current tort litigation.
    ``(i) Definitions.--In this section:
            ``(1) Health care services.--The term `health care 
        services' means any services provided by a health care 
        provider, or by any individual working under the supervision of 
        a health care provider, that relate to--
                    ``(A) the diagnosis, prevention, or treatment of 
                any human disease or impairment; or
                    ``(B) the assessment of the health of human beings.
            ``(2) Health care organization.--The term `health care 
        organization' means any individual or entity which is obligated 
        to provide, pay for, or administer health benefits under any 
        health plan.
            ``(3) Health care provider.--The term `health care 
        provider' means any individual or entity--
                    ``(A) licensed, registered, or certified under 
                Federal or State laws or regulations to provide health 
                care services; or
                    ``(B) required to be so licensed, registered, or 
                certified but that is exempted by other statute or 
                regulation.
            ``(4) Net economic loss.--The term `net economic loss' 
        means--
                    ``(A) reasonable expenses incurred for products, 
                services, and accommodations needed for health care, 
                training, and other remedial treatment and care of an 
                injured individual;
                    ``(B) reasonable and appropriate expenses for 
                rehabilitation treatment and occupational training;
                    ``(C) 100 percent of the loss of income from work 
                that an injured individual would have performed if not 
                injured, reduced by any income from substitute work 
                actually performed; and
                    ``(D) reasonable expenses incurred in obtaining 
                ordinary and necessary services to replace services an 
                injured individual would have performed for the benefit 
                of the individual or the family of such individual if 
                the individual had not been injured.
            ``(5) Non-economic damages.--The term `non-economic 
        damages' means losses for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), injury to reputation, and all other non-pecuniary 
        losses of any kind or nature, to the extent permitted under 
        State law.
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary. 
Amounts appropriated pursuant to this subsection shall remain available 
until expended.''.