I

103D CONGRESS

2D SESSION H. R. 4659

To impose certain requirements on health care liability claims.

IN THE HOUSE OF REPRESENTATIVES

JUNE 27, 1994

Mr. STUMP introduced the following bill; which was referred to the Committee

on the Judiciary

A BILL

To impose certain requirements on health care liability

claims.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Federal Health Care Liability Reform Act of 1994’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—GENERAL PROVISIONS

Sec. 101. Federal reform of medical injury compensation.

Sec. 102. Preemption of State law.

Sec. 103. Definitions.

Sec. 104. Effective date.
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TITLE II—HEALTH CARE LIABILITY REFORM

Subtitle A—Reform Described

Sec. 201. Requirement for initial resolution of action through alternative dispute resolution.

Sec. 202. Statute of limitations.

Sec. 203. Attorneys’ fees.

Sec. 204. Calculation and payment of damages.

Sec. 205. Joint and several liability.

Sec. 206. Injunctive relief.

Sec. 207. Permitting State professional societies to participate in disciplinary

activities.

Subtitle B—Requirements for State Alternative Dispute Resolution Systems

(ADR)

Sec. 211. Basic requirements.

Sec. 212. Certification of State systems; applicability of alternative Federal system.

Sec. 213. Reports on implementation and effectiveness of alternative dispute

resolution systems.

1 TITLE I—GENERAL PROVISIONS

2 SEC. 101. FEDERAL REFORM OF MEDICAL INJURY COM3 PENSATION.

4 (a) CONGRESSIONAL FINDINGS.—

5 (1) EFFECT ON INTERSTATE COMMERCE.—The

6 Congress finds that the health care and insurance

7 industries are industries affecting interstate com8 merce and the medical malpractice litigation systems

9 existing throughout the United States affect inter10 state commerce by contributing to the high cost of

11 health care and premiums for malpractice insurance

12 purchased by health care providers.

13 (2) EFFECT ON FEDERAL SPENDING.—The

14 Congress finds that the medical malpractice litiga15 tion systems existing throughout the United States
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1 have a significant effect on the amount, distribution,

2 and use of Federal funds because of—

3 (A) the large number of individuals who

4 receive health care benefits under programs op5 erated or financed by the Federal Government;

6 (B) the large number of individuals who

7 benefit because of the exclusion from Federal

8 taxes of the amounts spent by their employers

9 to provide them with health insurance benefits;

10 (C) the large number of health care provid11 ers and health care professionals who provide

12 items or services for which the Federal Govern13 ment makes payments; and

14 (D) the large number of such providers

15 and professionals who have received direct or

16 indirect financial assistance from the Federal

17 Government because of their status as such

18 professionals or providers.

19 (b) APPLICABILITY.—This Act shall apply with re20 spect to any health care liability claim and to any health

21 care liability action brought in any State or Federal court,

22 except that this Act shall not apply to—

23 (1) a claim or action for damages arising from

24 a vaccine-related injury or death to the extent that
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1 title XXI of the Public Health Service Act applies to

2 the claim or action; or

3 (2) a claim or action in which the claimant’s

4 sole allegation is an allegation of an injury arising

5 from the use of a medical product.

6 (c) FEDERAL COURT JURISDICTION NOT ESTAB7 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

8 this Act shall be construed to establish any jurisdiction

9 in the district courts of the United States over health care

10 liability actions on the basis of section 1331 or 1337 of

11 title 28, United States Code.

12 SEC. 102. PREEMPTION OF STATE LAW.

13 (a) IN GENERAL.—Subject to the provisions con14 tained in subsection (b) of this section, the provisions gov15 erning health care liability actions set forth in this Act

16 supersede State law to the extent that State law differs

17 from any provisions of law established by or under this

18 Act with respect to the limitation contained in such provi19 sions. Any issue that is not governed by any provision of

20 law established herein will be governed by otherwise appli21 cable State or Federal law.

22 (b) LIMITATIONS.—The provisions of this Act will su23 persede any State law, with respect to both procedural and

24 substantive matters, only to the extent that State law per25 mits the recovery of a greater amount of damages by a
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1 plaintiff than that authorized under section 204, permits

2 the awarding of a greater amount of attorneys’ fees than

3 what is authorized under section 203, reduces the applica4 bility or scope of the regulation of periodic payment of

5 future damages authorized under section 204(b), or estab6 lishes a longer period during which a health care liability

7 claim may be initiated than that permitted under section

8 202. The provisions of this Act shall supersede any Fed9 eral or State law which mandates reimbursement from the

10 plaintiff’s recovery for the cost of collateral source bene11 fits. The provisions of this Act shall not preempt any State

12 law that imposes greater restrictions on liability or dam13 ages than those provided herein.

14 (c) VACCINE INJURY.—

15 (1) To the extent that title XXI of the Public

16 Health Service Act establishes a Federal rule of law

17 applicable to a civil action brought for a vaccine-re18 lated injury or death—

19 (A) this Act does not affect the application

20 of the rule of law to such an action, and

21 (B) any rule of law prescribed by this Act

22 in conflict with a rule of law of such title XXI

23 shall not apply to such action.

24 (2) If there is an aspect of a civil action

25 brought for a vaccine-related injury or death to
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1 which a Federal rule of law under title XXI of the

2 Public Health Service Act does not apply, then this

3 Act or otherwise applicable law (as determined

4 under this Act) will apply to such aspect of such

5 action.

6 (d) OTHER FEDERAL LAW.—Except as provided in

7 this section, nothing in this Act shall be deemed to effect

8 any defense available to a defendant in a health care liabil9 ity claim or action under any other provision of Federal

10 law.

11 SEC. 103. DEFINITIONS.

12 As used in this Act:

13 (1) ALTERNATIVE DISPUTE RESOLUTION SYS14 TEM; ADR.—The term ‘‘alternative dispute resolution

15 system’’ or ‘‘ADR’’ means a system that provides

16 for the resolution of health care liability claims in a

17 manner other than through health care liability ac18 tions brought in the State or Federal courts.

19 (2) CLAIMANT.—The term ‘‘claimant’’ means

20 any person who asserts a health care liability claim

21 or bring a health care liability action, including a

22 person who asserts or claims a right to legal or equi23 table contribution, indemnity or subrogation, arising

24 out of a health care liability claim or action, and any

25 person on whose behalf such a claim is asserted or
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1 such an action is brought, whether deceased, incom2 petent or a minor.

3 (3) DERIVATIVE CLAIM.—The term ‘‘derivative

4 claim’’ means any third-party claim arising from the

5 claim of injury of a person by a health care service

6 or product, such as loss of consortium, emotional

7 distress, injury to an unborn child, or wrongful

8 death.

9 (4) ECONOMIC DAMAGES.—The term ‘‘economic

10 damages’’ means objectively verifiable monetary

11 losses incurred as a result of the provision of (or

12 failure to provide) health care services or the use of

13 a medical product, such as past and future medical

14 expenses, loss of past and future earnings, cost of

15 obtaining domestic services, loss of employment, and

16 loss of business or employment opportunities.

17 (5) HEALTH CARE LIABILITY ACTION.—The

18 term ‘‘health care liability action’’ means a civil ac19 tion brought in a State or Federal court or pursuant

20 to ADR, against a health care provider, a health

21 care organization, or the manufacturer, distributor

22 or supplier of a medical product, regardless of the

23 theory of liability on which the claim is based, or the

24 number of plaintiffs, or defendants or causes of ac-
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1 tion, in which the claimant alleges a health care li2 ability claim.

3 (6) HEALTH CARE LIABILITY CLAIM.—The

4 term ‘‘health care liability claim’’ means a demand

5 by any person, whether or not pursuant to ADR,

6 against a health care provider, health care organiza7 tion, or the manufacturer, distributor or supplier of

8 a medical product, including, but not limited to,

9 third-party claims, cross-claims, counter-claims or

10 contribution claims, which are based upon the provi11 sion of (or the failure to provide) health care serv12 ices or the use of a medical product, regardless of

13 the theory of liability on which the claim is based,

14 or the number of plaintiffs, defendants, or causes of

15 action.

16 (7) HEALTH CARE ORGANIZATION.—The term

17 ‘‘health care organization’’ means any person or en18 tity which is obligated to provide health benefits

19 under any health plans, including any person or en20 tity acting under a contract or arrangement with a

21 health care organization to provide or administer

22 any health benefit.

23 (8) HEALTH CARE PROVIDER.—The term

24 ‘‘health care provider’’ means any person or entity

25 required by State or Federal laws or regulations to
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1 be licensed, registered, or certified to provide health

2 care services, and being either so licensed, reg3 istered, or certified, or exempted from such require4 ment by other statute or regulation.

5 (9) HEALTH CARE SERVICES.—The term

6 ‘‘health care services’’ means any service provided by

7 a health care provider, or by any individual working

8 under the supervision of a health care provider, that

9 relates to the diagnosis, prevention, or treatment of

10 any human disease or impairment, or the assessment

11 of the health of human beings.

12 (10) MEDICAL PRODUCT.—The term ‘‘medical

13 product’’ means a drug (as defined in section

14 201(g)(1) of the Federal Food, Drug and Cosmetic

15 Act (21 U.S.C. 321(g)(1))) or a medical device as

16 defined in section 201(h) of the Federal Food, Drug

17 and Cosmetic Act (21 U.S.C. 321(h)), including any

18 component or raw material used therein, but exclud19 ing health care services, as defined in paragraph (1)

20 of this section.

21 (11) NONECONOMIC DAMAGES.—The term

22 ‘‘noneconomic damages’’ means damages for phys23 ical and emotional pain, suffering, inconvenience,

24 physical impairment, mental anguish, disfigurement,

25 loss of enjoyment of life, loss of society and compan-
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1 ionship, loss of consortium (other than loss of do2 mestic service), hedonic damages, injury to reputa3 tion and all other nonpecuniary losses of any kind

4 or nature.

5 (12) PUNITIVE DAMAGES.—The term ‘‘punitive

6 damages’’ means damages awarded, for the purpose

7 of punishment or deterrence, and not solely for com8 pensatory purposes, against a health care provider,

9 health care organization, or a manufacturer, dis10 tributor or supplier of a medical product. Punitive

11 damages are neither economic nor noneconomic

12 damages.

13 (13) STATE.—The term ‘‘State’’ means each of

14 the several States, the District of Columbia, the

15 Commonwealth of Puerto Rico, the Virgin Islands,

16 Guam, American Samoa, the Northern Mariana Is17 lands, the Trust Territory of the Pacific Islands, and

18 any other territory or possession of the United

19 States.

20 SEC. 104. EFFECTIVE DATE.

21 (a) IN GENERAL.—Except as provided in subsection

22 (b) and section 207, this Act shall apply with respect to

23 claims accruing or actions brought on or after the expira24 tion of the 3-year period that begins on the date of the

25 enactment of this Act.
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1 (b) EXCEPTION FOR STATES REQUESTING EARLIER

2 IMPLEMENTATION OF REFORMS.—

3 (1) APPLICATION.—A State may submit an ap4 plication to the Secretary requesting the early imple5 mentation of this Act with respect to claims or ac6 tions brought in the State.

7 (2) DECISION BY SECRETARY.—The Secretary

8 shall issue a response to a State’s application under

9 paragraph (1) not later than 90 days after receiving

10 the application. If the Secretary determines that the

11 State meets the requirements of this Act at the time

12 of submitting its application, the Secretary shall ap13 prove the State’s application, and this Act shall

14 apply with respect to actions brought in the State on

15 or after the expiration of the 90-day period that be16 gins on the date the Secretary issues the response.

17 If the Secretary denies the State’s application, the

18 Secretary shall provide the State with a written ex19 planation of the grounds for the decision.
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1 TITLE II—HEALTH CARE

2 LIABILITY REFORM

3 Subtitle A—Reform Described

4 SEC. 201. REQUIREMENT FOR INITIAL RESOLUTION OF AC5 TION THROUGH ALTERNATIVE DISPUTE RES6 OLUTION.

7 (a) IN GENERAL.—

8 (1) STATE CASES.—A health care liability ac9 tion may not be brought in any State court during

10 a calendar year unless the health care liability claim

11 that is the subject of the action has been initially re12 solved under an alternative dispute resolution system

13 certified for the year by the Secretary under section

14 212(a), or, in the case of a State in which such a

15 system is not in effect for the year, under the alter16 native Federal system established under section

17 212(b).

18 (2) FEDERAL DIVERSITY ACTIONS.—A health

19 care liability action may not be brought in any Fed20 eral court under section 1332 of title 28, United

21 States Code, during a calendar year unless the

22 health care liability claim that is the subject of the

23 action has been initially resolved under the alter24 native dispute resolution system referred to in para-
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1 graph (1) that applied in the State whose law ap2 plies in such action.

3 (3) CLAIMS AGAINST UNITED STATES.—

4 (A) ESTABLISHMENT OF PROCESS FOR

5 CLAIMS.—The Attorney General shall establish

6 an alternative dispute resolution process for the

7 resolution of tort claims consisting of health

8 care liability claims brought against the United

9 States under chapter 171 of title 28, United

10 States Code. Under such process, the resolution

11 of a claim shall occur after the completion of

12 the administrative claim process applicable to

13 the claim under section 2675 of such title.

14 (B) REQUIREMENT FOR INITIAL RESOLU15 TION UNDER PROCESS.—A health care liability

16 action based on a health care liability claim de17 scribed in subparagraph (A) may not be

18 brought in any Federal court unless the claim

19 has been initially resolved under the alternative

20 dispute resolution process established by the At21 torney General under such subparagraph.

22 (b) INITIAL RESOLUTION OF CLAIMS UNDER

23 ADR.—For purposes of subsection (a), an action is ‘‘ini24 tially resolved’’ under an alternative dispute resolution

25 system if—
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1 (A) the ADR reaches a decision on wheth2 er the defendant is liable to the plaintiff for

3 damages; and

4 (B) if the ADR determines that the de5 fendant is liable, the ADR reaches a decision on

6 the amount of damages assessed against the de7 fendant.

8 (c) PROCEDURES FOR FILING ACTIONS.—

9 (1) NOTICE OF INTENT TO CONTEST DECI10 SION.—Not later than 60 days after a decision is is11 sued with respect to a health care liability claim

12 under an alternative dispute resolution system, each

13 party affected by the decision shall submit a sealed

14 statement to a court of competent jurisdiction indi15 cating whether or not the party intends to contest

16 the decision.

17 (2) DEADLINE FOR FILING ACTION.—A health

18 care liability action may not be brought by a party

19 unless—

20 (A) the party has filed the notice of intent

21 required by paragraph (1); and

22 (B) the party files the action in a court of

23 competent jurisdiction not later than 90 days

24 after the decision resolving the health care li25 ability claim that is the subject of the action is
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1 issued under the applicable alternative dispute

2 resolution system.

3 (3) COURT OF COMPETENT JURISDICTION.—

4 For purposes of this subsection, the term ‘‘court of

5 competent jurisdiction’’ means—

6 (A) with respect to actions filed in a State

7 court, the appropriate State trial court; and

8 (B) with respect to actions filed in a Fed9 eral court, the appropriate United States dis10 trict court.

11 (d) LEGAL EFFECT OF UNCONTESTED ADR DECI12 SION.—The decision reached under an alternative dispute

13 resolution system shall, for purposes of enforcement by a

14 court of competent jurisdiction, have the same status in

15 the court as the verdict of a health care liability action

16 adjudicated in a State or Federal trial court. The previous

17 sentence shall not apply to a decision that is contested

18 by a party affected by the decision pursuant to subsection

19 (c)(1).

20 SEC. 202. STATUTE OF LIMITATIONS.

21 (a) GENERAL STATUTE OF LIMITATIONS.—No health

22 care liability claim or action may be commenced later than

23 one year after the plaintiff discovers, or through the use

24 of reasonable diligence should have discovered, the injury.

25 In no event shall a health care liability claim or action
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1 be permitted to be filed later than 3 years after the date

2 of the injury. Such time limitation may be tolled upon

3 proof of the presence of a foreign object, exclusive of infec4 tious agents, which has no therapeutic or diagnostic pur5 pose or effect in the person of the injured plaintiff.

6 (b) MINORS UNDER THE AGE OF 6.—In the case of

7 an alleged injury sustained by a minor before the age of

8 6, no health care liability claim or action may be com9 menced by or on behalf of the minor later than (1) 3 years

10 from the date of injury or (2) the date on which the minor

11 attains the age of 8, whichever provides a longer period.

12 Such limitation may be tolled upon proof of the presence

13 of a foreign object, exclusive of infectious agents, which

14 has no therapeutic or diagnostic purpose or effect in the

15 person of the injured plaintiff.

16 SEC. 203. ATTORNEYS’ FEES.

17 (a) LIMITATION ON CONTINGENCY FEES.—An attor18 ney shall not contract for or collect a contingency fee for

19 representing a claimant in a health care liability action

20 in excess of the following:

21 (1) 25 percent of the first $100,000 (or portion

22 thereof) recovered by the claimant.

23 (2) 20 percent of the next $150,000 (or portion

24 thereof) recovered by the claimant.
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1 (3) 15 percent of the next $250,000 (or portion

2 thereof) recovered by the claimant.

3 (4) 10 percent of any amount in excess of

4 $500,000 recovered by the claimant.

5 (b) REQUIRING PARTY CONTESTING ADR RULING

6 TO PAY ATTORNEY’S FEES AND OTHER COSTS.—

7 (1) IN GENERAL.—The court in a health care

8 liability action shall require the party that (pursuant

9 to section 201(c)(1)) contested the ruling of the al10 ternative dispute resolution system with respect to

11 the health care liability claim that is the subject of

12 the action to pay to the opposing party the costs in13 curred by the opposing party under the action, in14 cluding attorney’s fees, fees paid to expert witnesses,

15 and other litigation expenses (but not including

16 court costs, filing fees, or other expenses paid di17 rectly by the party to the court, or any fees or costs

18 associated with the resolution of the claim under the

19 alternative dispute resolution system), but only if—

20 (A) in the case of an action in which the

21 party that contested the ruling is the claimant,

22 the amount of damages awarded to the party

23 under the action does not exceed the amount of

24 damages awarded to the party under the ADR

25 system by at least 10 percent; and
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1 (B) in the case of an action in which the

2 party that contested the ruling is the defendant,

3 the amount of damages assessed against the

4 party under the action is not at least 10 per5 cent less than the amount of damages assessed

6 under the ADR system.

7 (2) EXCEPTIONS.—Paragraph (1) shall not

8 apply if—

9 (A) the party contesting the ruling made

10 under the previous alternative dispute resolu11 tion system shows that—

12 (i) the ruling was procured by corrup13 tion, fraud, or undue means,

14 (ii) there was partiality or corruption

15 under the system,

16 (iii) there was other misconduct under

17 the system that materially prejudiced the

18 party’s rights, or

19 (iv) the ruling was based on an error

20 of law;

21 (B) the party contesting the ruling made

22 under the alternative dispute resolution system

23 presents new evidence before the trier of fact

24 that was not available for presentation under

25 the ADR system;
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1 (C) the health care liability action raised a

2 novel issue of law; or

3 (D) the court finds that the application of

4 such paragraph to a party would constitute an

5 undue hardship, and issues an order waiving or

6 modifying the application of such paragraph

7 that specifies the grounds for the court’s deci8 sion.

9 (3) REQUIREMENT FOR PERFORMANCE

10 BOND.—The court in a health care liability action

11 shall require the party that (pursuant to section

12 201(c)(1)) contested the ruling of the alternative

13 dispute resolution system with respect to the health

14 care liability claim that is the subject of the action

15 to post a performance bond (in such amount and

16 consisting of such funds and assets as the court de17 termines to be appropriate), except that the court

18 may waive the application of such requirement to a

19 party if the court determines that the posting of

20 such a bond is not necessary to ensure that the

21 party shall meet the requirements of this subsection

22 to pay the opposing party the costs incurred by the

23 opposing party under the action.

24 (4) LIMIT ON ATTORNEY’S FEES PAID.—Attor25 neys’ fees that are required to be paid under para-
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1 graph (1) by the contesting party shall not exceed

2 the amount of the attorneys’ fees incurred by the

3 contesting party in the action. If the attorneys’ fees

4 of the contesting party are based on a contingency

5 fee agreement, the amount of attorneys’ fees for

6 purposes of the preceding sentence shall not exceed

7 the reasonable value of those services.

8 (5) RECORDS.—In order to receive attorneys’

9 fees under paragraph (1), counsel of record in the

10 health care liability action involved shall maintain

11 accurate, complete records of hours worked on the

12 action, regardless of the fee arrangement with the

13 client involved.

14 (c) CALCULATION OF PERIODIC PAYMENTS.—If peri15 odic payments are awarded to the claimant pursuant to

16 section 204(b), the court shall place a total value on these

17 payments based upon the projected life expectancy of the

18 claimant and include this amount in computing the total

19 award from which attorneys’ fees are calculated under

20 subsection (a).

21 (d) EFFECT OF FAILURE TO COMPLY.—Failure to

22 comply with this section by an attorney at law shall be

23 grounds for professional discipline by the appropriate

24 State agency responsible for the conduct of disciplinary

25 actions against attorneys-at-law.
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1 (e) DEFINITIONS.—For purposes of this section—

2 (1) the term ‘‘contingency fee’’ means any fee

3 for professional legal services which is in whole or in

4 part contingent upon the recovery of any amount of

5 damages, whether through judgment or settlement;

6 and

7 (2) the term ‘‘recovered’’ means the net sum re8 covered after deducting any disbursements or costs

9 incurred in connection with prosecution or settle10 ment of the claim, except that costs of medical care

11 incurred by the claimant and the attorney’s office

12 overhead costs or charges shall not be deductible dis13 bursements under this paragraph.

14 SEC. 204. CALCULATION AND PAYMENT OF DAMAGES.

15 (a) LIMITATION ON NONECONOMIC DAMAGES.—The

16 total amount of noneconomic damages that may be award17 ed to a claimant for losses resulting from the injury which

18 is the subject of a health care liability action may not ex19 ceed $250,000, regardless of the number of parties against

20 whom the action is brought or the number of actions

21 brought with respect to the injury.

22 (b) PERIODIC PAYMENTS FOR FUTURE LOSSES.—If

23 more than $50,000 in damages for expenses to be incurred

24 in the future is awarded to the claimant in a health care

25 liability action, the court shall, at the request of either
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1 party, enter a judgment ordering such damages to be paid

2 on a periodic basis determined appropriate by the court

3 (based upon projections of when such expenses are likely

4 to be incurred).

5 (c) MANDATORY OFFSETS FOR DAMAGES PAID BY A

6 COLLATERAL SOURCE.—The total amount of damages re7 ceived by a claimant in a health care liability action shall

8 be reduced by any other payment that has been or will

9 be made to the individual to compensate the claimant for

10 the injury that was the subject of the action, including

11 payment under—

12 (1) Federal or State disability or sickness pro13 grams;

14 (2) Federal, State, or private health insurance

15 programs;

16 (3) private disability insurance programs;

17 (4) employer wage continuation programs; and

18 (5) any other source of payment intended to

19 compensate the claimant for such injury.

20 (d) TREATMENT OF PUNITIVE DAMAGES.—

21 (1) IN GENERAL.—Punitive damages may, if

22 otherwise permitted by applicable law, be awarded in

23 any civil actions subject to this Act only if it is prov24 en by clear and convincing evidence that the defend25 ant intended to injure the claimant for a reason un-
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1 related to the provision of health care services, or

2 that the defendant understood the claimant was sub3 stantially certain to suffer unnecessary injury, yet

4 the defendant deliberately failed to avoid such in5 jury. Punitive damages may not be awarded against

6 a defendant, however, with respect to any claim

7 where no judgment for compensatory damages (in8 cluding nominal damages) is rendered against such

9 defendant.

10 (2) LIMITATION CONCERNING CERTAIN MEDI11 CAL PRODUCTS.—

12 (A) IN GENERAL.—Punitive damages shall

13 not be awarded pursuant to this section against

14 a manufacturer or distributor of a medical

15 product which caused the claimant’s harm

16 where—

17 (i) such medical product was subject

18 to premarket approval of review by the

19 Food and Drug Administration under sec20 tion 505, 506, 510, 515, or 520 of the

21 Federal Food, Drug, and Cosmetic Act (21

22 U.S.C. 355, 356, 360, 360e, or 360j) or

23 section 351 of the Public Health Service

24 Act (42 U.S.C. 262) with respect to the

25 safety of the formulation or performance of
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1 the aspect of such medical product which

2 caused the claimant’s harm or the ade3 quacy of the packaging or labeling of such

4 medical product, and, where required, such

5 medical product was marketed in conform6 ity with regulations of the Food and Drug

7 Administration; or

8 (ii) the medical product is generally

9 recognized as safe and effective pursuant

10 to conditions established by the Food and

11 Drug Administration and applicable regu12 lations, including without limitations those

13 related to packaging and labeling.

14 (B) EXCEPTIONS.—The provisions of sub15 paragraph (A) shall not apply in any case in

16 which—

17 (i) the defendant, before or after the

18 grant of permission to market such medi19 cal product, knowingly withheld from or

20 misrepresented to the Food and Drug Ad21 ministration required information that is

22 material and relevant to the performance

23 of such medical product and is casually re24 lated to the harm which the claimant alleg25 edly suffered; or
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1 (ii) the defendant made an illegal pay2 ment to an official of the Food and Drug

3 Administration for the purpose of either

4 securing or maintaining approval of such

5 medical product.

6 (3) REQUIREMENTS FOR PLEADING OF PUNI7 TIVE DAMAGES.—No demand for punitive damages

8 shall be included in a claim or action for health care

9 liability as initially filed. A court may allow a claim10 ant to file an amended pleading for punitive dam11 ages only upon motion by a claimant and after a

12 finding by a court upon review of supporting and op13 posing affidavits or after a hearing, that after weigh14 ing the evidence the claimant has established by a

15 substantial probability that the claimant will prevail

16 on the claim for punitive damages. The court shall

17 not grant a motion allowing the filing of an amended

18 pleading that includes a claim for punitive damages

19 if the motion for such an order is not filed within

20 2 years after the complaint or initial pleading is filed

21 or not less than 9 months before the date the matter

22 is first set for trial, whichever is earlier.

23 (4) SEPARATE PROCEEDING.—At the request of

24 any defendant in a health care liability action, the

25 trier of fact shall consider in a separate proceeding
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1 (1) whether punitive damages are to be awarded and

2 the amount of such award, or (2) the amount of pu3 nitive damages following a determination of punitive

4 liability. If a separate proceeding is requested, evi5 dence relevant only to the claim of punitive damages,

6 as determined by applicable State law, shall be ad7 missible in any proceeding to determine whether

8 compensatory damages are to be awarded.

9 (5) DETERMINING AMOUNT OF PUNITIVE DAM10 AGES.—

11 (A) FACTORS CONSIDERED.—In determin12 ing the amount of punitive damages, the trier

13 of fact shall consider only—

14 (i) the severity of the harm caused by

15 the conduct of the defendant;

16 (ii) the duration of the conduct or any

17 concealment of it by the defendant;

18 (iii) the profitability of the conduct to

19 the defendant;

20 (iv) the number of products sold or

21 medical procedures rendered for compensa22 tion, as the case may be, by the defendant

23 of the kind causing the harm complained

24 of by the claimant;
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1 (v) awards of punitive or exemplary

2 damages to persons similarly situated to

3 the claimant;

4 (vi) prospective awards of compen5 satory damages to persons similarly situ6 ated to the claimant;

7 (vii) any criminal imposed on the de8 fendant as a result of the conduct com9 plained of by the claimant; and

10 (viii) the amount of any civil fines as11 sessed against the defendant as a result of

12 the conduct complained of by the claimant.

13 (B) GENERAL LIMITATION.—In no event

14 shall the amount of punitive damages awarded

15 exceed 2 times the amount of compensatory

16 damages awarded or $250,000 whichever is

17 greater. The jury shall not be informed of this

18 limitation.

19 SEC. 205. JOINT AND SEVERAL LIABILITY.

20 A defendant may be held severally but not jointly lia21 ble in a health care liability action. A person found liable

22 for damages in any such action may be found liable, if

23 at all, only for those damages directly attributable to the

24 person’s proportionate share of fault or responsibility for

25 the injury, and may not be found liable for damages at-
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1 tributable to the proportionate share of fault or respon2 sibility of any other person (without regard to whether

3 that person is a party to the action) for the injury, includ4 ing any person bringing the action.

5 SEC. 206. INJUNCTIVE RELIEF.

6 Whenever any person has engaged or is about to en7 gage in any conduct in violation of this subtitle, the appro8 priate court may, upon application of an interested party,

9 issue an injunction or other appropriate order restraining

10 such conduct.

11 SEC. 207. PERMITTING STATE PROFESSIONAL SOCIETIES

12 TO PARTICIPATE IN DISCIPLINARY ACTIVI13 TIES.

14 (a) ROLE OF PROFESSIONAL SOCIETIES.—Notwith15 standing any other provision of State or Federal law, a

16 State agency responsible for the conduct of disciplinary

17 actions for a type of health care practitioner may enter

18 into agreements with State or county professional societies

19 of such type of health care practitioner to permit such so20 cieties to participate in the licensing of such health care

21 practitioner, and to review any health care malpractice ac22 tion, health care malpractice claim or allegation, or other

23 information concerning the practice patterns of any such

24 health care practitioner. Any such agreement shall comply

25 with subsection (b).
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1 (b) REQUIREMENTS OF AGREEMENTS.—Any agree2 ment entered into under subsection (a) for licensing activi3 ties or the review of any health care malpractice action,

4 health care malpractice claim or allegation, or other infor5 mation concerning the practice patterns of a health care

6 practitioner shall provide that—

7 (1) the health care professional society conducts

8 such activities or review as expeditiously as possible;

9 (2) after the completion of such review, such so10 ciety shall report its findings to the State agency

11 with which it entered into such agreement;

12 (3) the conduct of such activities or review and

13 the reporting of such findings be conducted in a

14 manner which assures the preservation of confiden15 tiality of health care information and of the review

16 process; and

17 (4) no individual affiliated with such society is

18 liable for any damages or injury directly caused by

19 the individual’s actions in conducting such activities

20 or review.

21 (c) AGREEMENTS NOT MANDATORY.—Nothing in

22 this section may be construed to require a State to enter

23 into agreements with societies described in subsection (a)

24 to conduct the activities described in such subsection.
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1 (d) EFFECTIVE DATE.—This section shall take effect

2 2 years after the date of the enactment of this Act.

3 Subtitle B—Requirements for State

4 Alternative Dispute Resolution

5 Systems (ADR)

6 SEC. 211. BASIC REQUIREMENTS.

7 (a) IN GENERAL.—A State’s alternative dispute reso8 lution system meets the requirements of this section if the

9 system—

10 (1) applies to all health care liability claims

11 under the jurisdiction of the courts of that State;

12 (2) requires that a written opinion resolving the

13 dispute be issued not later than 6 months after the

14 date by which each party against whom the claim is

15 filed has received notice of the claim (other than in

16 exceptional cases for which a longer period is re17 quired for the issuance of such an opinion), and that

18 the opinion contain—

19 (A) findings of fact relating to the dispute,

20 and

21 (B) a description of the costs incurred in

22 resolving the dispute under the system (includ23 ing any fees paid to the individuals hearing and

24 resolving the claim), together with an appro-
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1 priate assessment of the costs against any of

2 the parties;

3 (3) requires individuals who hear and resolve

4 claims under the system to meet such qualifications

5 as the State may require (in accordance with regula6 tions of the Secretary);

7 (4) is approved by the State or by local govern8 ments in the State;

9 (5) with respect to a State system that consists

10 of multiple dispute resolution procedures—

11 (A) permits the parties to a dispute to se12 lect the procedure to be used for the resolution

13 of the dispute under the system, and

14 (B) if the parties do not agree on the pro15 cedure to be used for the resolution of the dis16 pute, assigns a particular procedure to the

17 parties;

18 (6) provides for the transmittal to the State

19 agency responsible for monitoring or disciplining

20 health care professionals and health care providers

21 of any findings made under the system that such a

22 professional or provider committed malpractice, un23 less, during the 90-day period beginning on the date

24 the system resolves the claim against the profes25 sional or provider, the professional or provider
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1 brings an action contesting the decision made under

2 the system; and

3 (7) provides for the regular transmittal to the

4 Administrator for Health Care Policy and Research

5 of information on disputes resolved under the sys6 tem, in a manner that assures that the identity of

7 the parties to a dispute shall not be revealed.

8 (b) APPLICATION OF MALPRACTICE LIABILITY

9 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

10 The provisions of subtitle A shall apply with respect to

11 claims brought under a State alternative dispute resolu12 tion system or the alternative Federal system in the same

13 manner as such provisions apply with respect to health

14 care liability actions brought in the State.

15 SEC. 212. CERTIFICATION OF STATE SYSTEMS; APPLICABIL16 ITY OF ALTERNATIVE FEDERAL SYSTEM.

17 (a) CERTIFICATION.—

18 (1) IN GENERAL.—Not later than October 1 of

19 each year (beginning with 1995), the Secretary, in

20 consultation with the Attorney General, shall deter21 mine whether a State’s alternative dispute resolution

22 system meets the requirements of this subtitle for

23 the following calendar year.

24 (2) BASIS FOR CERTIFICATION.—The Secretary

25 shall certify a State’s alternative dispute resolution
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1 system under this subsection for a calendar year if

2 the Secretary determines under paragraph (1) that

3 the system meets the requirements of section 211.

4 (b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS5 TEM.—

6 (1) ESTABLISHMENT AND APPLICABILITY.—

7 Not later than October 1, 1995, the Secretary, in

8 consultation with the Attorney General, shall estab9 lish by rule an alternative Federal ADR system for

10 the resolution of health care liability claims during

11 a calendar year in States that do not have in effect

12 an alternative dispute resolution system certified

13 under subsection (a) for the year.

14 (2) REQUIREMENTS FOR SYSTEM.—Under the

15 alternative Federal ADR system established under

16 paragraph (1)—

17 (A) paragraphs (1), (2), (6), and (7) of

18 section 211(a) shall apply to claims brought

19 under the system;

20 (B) if the system provides for the resolu21 tion of claims through arbitration, the claims

22 brought under the system shall be heard and

23 resolved by arbitrators appointed by the Sec24 retary in consultation with the Attorney Gen25 eral; and
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1 (C) with respect to a State in which the

2 system is in effect, the Secretary may (at the

3 State’s request) modify the system to take into

4 account the existence of dispute resolution pro5 cedures in the State that affect the resolution

6 of health care liability claims.

7 (3) TREATMENT OF STATES WITH ALTER8 NATIVE SYSTEM IN EFFECT.—If the alternative Fed9 eral ADR system established under this subsection is

10 applied with respect to a State for a calendar year—

11 (A) the State shall reimburse the United

12 States (at such time and in such manner as the

13 Secretary may require) for the costs incurred

14 by the United States during the year as a result

15 of the application of the system with respect to

16 the State; and

17 (B) notwithstanding any other provision of

18 law, no funds may be paid to the State (or to

19 any unit of local government in the State) or to

20 any entity in the State pursuant to the Public

21 Health Service Act.
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1 SEC. 213. REPORTS ON IMPLEMENTATION AND EFFECTIVE2 NESS OF ALTERNATIVE DISPUTE RESOLU3 TION SYSTEMS.

4 (a) IN GENERAL.—Not later than 5 years after the

5 date of the enactment of this Act, the Secretary shall pre6 pare and submit to the Congress a report describing and

7 evaluating State alternative dispute resolution systems op8 erated pursuant to this part and the alternative Federal

9 system established under section 212(b).

10 (b) CONTENTS OF REPORT.—The Secretary shall in11 clude in the report prepared and submitted under sub12 section (a)—

13 (1) information on—

14 (A) the effect of the alternative dispute

15 resolution systems on the cost of health care

16 within each State,

17 (B) the impact of such systems on the ac18 cess of individuals to health care within the

19 State, and

20 (C) the effect of such systems on the qual21 ity of health care provided within the State; and

22 (2) to the extent that such report does not pro23 vide information on no-fault systems operated by

24 States as alternative dispute resolution systems pur25 suant to this part, an analysis of the feasibility and

26 desirability of establishing a system under which
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1 health care liability claims shall be resolved on a no2 fault basis.

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