Health Care Cost Containment Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Cost Containment Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The intolerably high number of Americans without 
        adequate health insurance has resulted in major part from the 
        high cost of health insurance premiums.
            (2) By eliminating the full tax deductibility of most 
        medical expenses, the Federal Government has effectively 
        increased the cost of health insurance. This same misguided 
        policy has increased the cost of regular maintenance of one's 
        own health through regular physician visits. This policy of the 
        Federal Government, therefore, has both discouraged the 
        purchase of health insurance and exposed taxpayers to greater 
        expense because individuals are more likely to develop chronic 
        illnesses and more likely to go without insurance to pay for 
        critical care.
            (3) Excessive, wasteful, and abusive litigation in medical 
        care liability suits throughout the United States has also 
        significantly contributed to the high cost of health care in 
        America. The enormous sums and valuable time that hospitals and 
        physicians lose because of needless litigation amount to a huge 
        tax on health care for all Americans. Even more expensive is 
        the huge and thoroughly unnecessary cost of so-called 
        ``defensive medicine''. Because of the ubiquitous threat of 
        lawsuits, doctors and other health care providers all too often 
        prescribe unnecessary tests, studies, and procedures simply to 
        protect themselves--not their patients. Reforming the abuses of 
        our civil litigation system in medical cases is therefore an 
        essential step in controlling health care costs.
            (4) Noneconomic damages in medical cases should be 
        eliminated. Payment of huge money damages for conceptually 
        elusive measure of loss such as ``pain and suffering'' and 
        ``inconvenience'' has proven to be unworkable. Our society 
        simply cannot afford it. Money damages should be limited to 
        repayment of actual monetary losses such as medical expenses, 
        out-of-pocket costs, lost future earnings, and other 
        traditional measures of actual damages.
            (5) Punitive damages in medical care liability suits are 
        meant to punish malefactors rather than provide a windfall to 
        attorneys and random litigants. The existence of this potential 
        windfall (always unrelated to the actual damages suffered in 
        any case) creates a perverse incentive for even more litigation 
        against ``deep pockets'' doctors, hospitals, and health care 
        providers. Punitive damages should, therefore, be paid over to 
        community hospitals to offset the cost of indigent care. This 
        will end one of the most significant incentives for abusive and 
        unnecessary litigation that drives up medical costs. Even more 
        importantly, it will reduce the cost of health care for the 
        poor and taxpayers alike.
            (6) Medical care liability suits should be decided on their 
        merits. But in recent years, the vast majority of medical care 
        liability suits have been decided without a single day of 
        trial, when parties realize that they cannot afford the 
        lawyers' costs and other expenses of obtaining their day in 
        court. This has led all too often to economic blackmail, in 
        which innocent parties--hospitals, physicians, nurses, other 
        health care workers--are forced to settle for large amounts 
        even though they should, in fact, be held harmless by our legal 
        system. Patients with meritorious medical malpractice cases 
        find their recoveries substantially reduced by attorneys' fees. 
        Health care providers victimized by groundless litigation must 
        often pay enormous fees simply to prove they are blameless. To 
        redress this inequity, the loser in a medical case should pay 
        the costs and attorneys' fees of the winner. This will end 
        another perverse incentive in the present system for 
        unnecessary litigation that drives up health care costs.
            (7) By reducing the cost of health care and by making 
        health insurance more affordable, millions more Americans will 
        be able to obtain needed health coverage. This, in turn, will 
        increase the size of insurance risk pools, further reducing the 
        cost of necessary insurance for all Americans.

SEC. 3. RESTORATION OF THE FULL DEDUCTIBILITY OF MEDICAL EXPENSES.

    Section 213(a) of the Internal Revenue Code of 1986 (relating to 
the treatment of medical and dental expenses) is amended to read as 
follows:
    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction the expenses paid during the taxable year, not compensated 
for by insurance or otherwise, for medical care of the taxpayer, the 
taxpayer's spouse, or a dependent (as defined in section 152).''.

SEC. 4. ATTORNEYS' FEES IN MEDICAL CARE LIABILITY SUITS.

    (a) Awarding Attorneys' Fees and Other Costs to Prevailing Party.--
The nonprevailing party in a medical care liability suit shall pay to 
the prevailing party in such suit its litigation expenses under the 
action (including attorneys' fees and fees paid to expert witnesses, 
but not including court fees, filing fees, or other expenses paid 
directly to the court). The amount to be paid for such litigation 
expenses shall not exceed the litigation expenses of the nonprevailing 
party in such medical care liability suit. If the nonprevailing party 
receives attorney services under a contingent fee agreement, the amount 
of the attorneys' fees paid under this subsection shall not exceed the 
reasonable value of those services, determined without regard to the 
contingent nature of the fee arrangement.
    (b) Definition of Prevailing Party.--The term `prevailing party' 
means a party to a medical care liability suit who obtains a favorable 
final judgment (other than by settlement) on all or a portion of the 
claims asserted in the action.

SEC. 5. ELIMINATION OF NONECONOMIC DAMAGES IN MEDICAL CARE LIABILITY 
              SUITS.

    (a) Scope of Prohibition.--Noneconomic damages may not be imposed 
in a medical care liability suit. Compensatory damages may be awarded 
as in any other type of action.
    (b) Definition of Noneconomic Damages.--The term `noneconomic 
damages' means damages for pain, suffering, inconvenience, or any other 
nonpecuniary loss, but does not include punitive damages.

SEC. 6. PUNITIVE DAMAGES TO BE REDIRECTED TO COMMUNITY HOSPITALS TO PAY 
              FOR INDIGENT CARE.

    (a) Local Government to Receive Moneys on Behalf of Hospitals.--Any 
punitive damages imposed in a medical care liability suit shall be paid 
to the county, parish, or comparable unit of local government in which 
the action is brought and which has primary responsibility for payment 
for indigent health services in its jurisdiction.
    (b) Use of Moneys.--A county, parish, or comparable unit of local 
government which receives moneys under subsection (a) shall use it 
toward payment of its unreimbursed expenses incurred in providing 
health care to individuals entitled to medical assistance under titles 
XVIII and XIX of the Social Security Act.

SEC. 7. APPLICABILITY.

    (a) Applicability.--This Act shall apply with respect to any 
medical care liability suit brought in any State or Federal court, 
except that this Act shall not apply to a claim or action for damages 
arising from a vaccine-related injury or death to the extent that title 
XXI of the Public Health Service Act applies to the action.
    (b) Effect on State Law.--This Act supersedes State law only to the 
extent that State law differs from any provision of law established by 
or under this Act. Any issue that is not governed by any provision of 
law established by or under this Act shall be governed by otherwise 
applicable State or Federal law.
    (c) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this Act shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
care liability suits on the basis of sections 1331 or 1337 of title 28, 
United States Code.
    (d) Definition of Medical Care Liability Suit.--The term `medical 
care liability suit' means an action for damages arising out of the 
provision of (or the failure to provide) health care services.

SEC. 8. EFFECTIVE DATE.

    This Act shall apply with respect to claims accruing or suits 
brought on or after the first day of January of the calendar year 
following the date of the enactment of this Act.

Summary: Health Care Cost Containment Act - Amends the Internal Revenue Code to allow individuals to deduct the full amount of unreimbursed medical and dental expenses. Requires the losing party in a medical care liability suit to pay limited amounts of the winning party's litigation expenses. Prohibits noneconomic damages in such suits. Requires punitive damages to be paid to the unit of local government having primary responsibility for paying for indigent health services. Requires those amounts to be used for care for individuals entitled to assistance under titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act. Applies this Act to any medical care liability suit in any State or Federal court, except vaccine-related matters. Supersedes inconsistent State laws.