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[House Report 107-697]
[From the U.S. Government Publishing Office]

107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-697
======================================================================
 
 PROVIDING FOR CONSIDERATION OF H.R. 4600, HELP EFFICIENT, ACCESSIBLE, 
           LOW COST, TIMELY HEALTH CARE (HEALTH) ACT OF 2002

                                _______
                                

 September 25, 2002.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

   Mr. Reynolds, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 553]

    The Committee on Rules, having had under consideration 
House Resolution 553, by a record vote of 9 to 2, report the 
same to the House with the recommendation that the resolution 
be adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for consideration in the House of 
H.R. 4600, the Help Efficient, Accessible, Low Cost, Timely 
Health Care (HEALTH) Act of 2002, under a closed rule. The rule 
provides one hour of debate on the bill, as amended, with 40 
minutes equally divided and controlled by the chairman and 
ranking minority member of the Committee on the Judiciary and 
20 minutes equally divided and controlled by the chairman and 
ranking minority member of the Committee on Energy and 
Commerce. The rule waives all points of order against 
consideration of the bill.
    The rule provides that the bill shall be considered as read 
for amendment. The rule further provides that in lieu of the 
amendments recommended by the Committees on the Judiciary and 
on Energy and Commerce now printed in the bill, the amendment 
in the nature of a substitute printed in this report shall be 
considered as adopted. Finally, the rule provides one motion to 
recommit with or without instructions.
    The waiver of all points of order includes a waiver of 
clause 4(a) of rule XIII (requiring a three-day layover of the 
committee report). The waiver of clause 4(a) of rule XIII is 
needed because the report was not available until Wednesday, 
September 25 and the bill may be considered by the House as 
early as Thursday, September 26.

                            COMMITTEE VOTES

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee Record Vote No. 173

    Date: September 25, 2002.
    Measure: H.R. 4600.
    Motion by: Mr. McGovern.
    Summary of motion: To grant an open rule.
    Results: Defeated 2 to 8.
    Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Sessions--Nay; Reynolds--Nay; 
McGovern--Yea; Hastings (FL)--Yea; Dreier--Nay.

Rules Committee Record Vote No. 174

    Date: September 25, 2002.
    Measure: H.R. 4600.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order and grant the 
appropriate waivers to the amendment offered by Representative 
Markey requiring that savings realized by insurers as a result 
of the $250,000 cap on damages for pain and suffering be passed 
on to health care providers in the form of lower premiums.
    Results: Defeated 2 to 8.
    Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Sessions--Nay; Reynolds--Nay; 
McGovern--Yea; Hastings (FL)--Yea; Dreier--Nay.

Rules Committee Record Vote No. 175

    Date: September 25, 2002.
    Measure: H.R. 4600.
    Motion by: Mr. Linder.
    Summary of motion: To report the resolution.
    Results: Agreed to 9 to 12.
    Vote by Members: Goss--Yea; Linder--Yea; Pryce--Yea; Diaz-
Balart--Yea; Hastings (WA)--Yea; Myrick--Yea; Sessions--Yea; 
Reynolds--Yea; McGovern--Nay; Hastings (FL)--Nay; Dreier--Yea.

               SUMMARY OF AMENDMENT CONSIDERED AS ADOPTED

    The amendment in the nature of a substitute consists of the 
text of H.R. 4600 as reported from the Judiciary Committee with 
the following changes:
    Amendment to Section 3: This amendment clarifies the 
underlying bill so that the statute of limitations is 3 years 
from the date of manifestation of the injury or one year after 
that claimant discovers, or through the use of reasonable 
diligence should have discovered the injury, which ever occurs 
first. The amendment also makes this section consistent with 
California state law, which is the model for the underlying 
bill by providing an exception to the 3-year limitation in 
instances of fraud, intentional concealment, or the presence of 
a foreign body that has no therapeutic effect.
    Amendment to Section 7. This amendment clarifies the 
underlying bill by providing a substantial compliance test for 
firms whose products have been approved by the Food and Drug 
Administration (FDA). This ensures that if the manufacturing 
and distribution of a medical product was not in compliance 
with the FDA regulations than it may be subject to punitive 
damages in a health care lawsuit, as defined in the bill.
    Amendment to Section 6. This amendment clarifies the 
underlying bill so that it does not apply to two sections of 
the Social Security Act.
    Amendment to Section 13. This amendment is a sense of 
Congress resolution that a health insurer should be liable for 
damages for harm caused when it makes a decision as to what 
care is medically necessary and appropriate.

                TEXT OF AMENDMENT CONSIDERED AS ADOPTED

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Help Efficient, Accessible, 
Low-cost, Timely Healthcare (HEALTH) Act of 2002''.

SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--
          (1) Effect on health care access and costs.--Congress 
        finds that our current civil justice system is 
        adversely affecting patient access to health care 
        services, better patient care, and cost-efficient 
        health care, in that the health care liability system 
        is a costly and ineffective mechanism for resolving 
        claims of health care liability and compensating 
        injured patients, and is a deterrent to the sharing of 
        information among health care professionals which 
        impedes efforts to improve patient safety and quality 
        of care.
          (2) Effect on interstate commerce.--Congress finds 
        that the health care and insurance industries are 
        industries affecting interstate commerce and the health 
        care liability litigation systems existing throughout 
        the United States are activities that affect interstate 
        commerce by contributing to the high costs of health 
        care and premiums for health care liability insurance 
        purchased by health care system providers.
          (3) Effect on federal spending.--Congress finds that 
        the health care liability litigation systems existing 
        throughout the United States have a significant effect 
        on the amount, distribution, and use of Federal funds 
        because of--
                  (A) the large number of individuals who 
                receive health care benefits under programs 
                operated or financed by the Federal Government;
                  (B) the large number of individuals who 
                benefit because of the exclusion from Federal 
                taxes of the amounts spent to provide them with 
                health insurance benefits; and
                  (C) the large number of health care providers 
                who provide items or services for which the 
                Federal Government makes payments.
  (b) Purpose.--It is the purpose of this Act to implement 
reasonable, comprehensive, and effective health care liability 
reforms designed to--
          (1) improve the availability of health care services 
        in cases in which health care liability actions have 
        been shown to be a factor in the decreased availability 
        of services;
          (2) reduce the incidence of ``defensive medicine'' 
        and lower the cost of health care liability insurance, 
        all of which contribute to the escalation of health 
        care costs;
          (3) ensure that persons with meritorious health care 
        injury claims receive fair and adequate compensation, 
        including reasonable noneconomic damages;
          (4) improve the fairness and cost-effectiveness of 
        our current health care liability system to resolve 
        disputes over, and provide compensation for, health 
        care liability by reducing uncertainty in the amount of 
        compensation provided to injured individuals;
          (5) provide an increased sharing of information in 
        the health care system which will reduce unintended 
        injury and improve patient care.

SEC. 3. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

  The time for the commencement of a health care lawsuit shall 
be 3 years after the date of manifestation of injury or 1 year 
after the claimant discovers, or through the use of reasonable 
diligence should have discovered, the injury, whichever occurs 
first. In no event shall the time for commencement of a health 
care lawsuit exceed 3 years after the date of manifestation of 
injury unless tolled for any of the following:
          (1) Upon proof of fraud;
          (2) Intentional concealment; or
          (3) The presence of a foreign body, which has no 
        therapeutic or diagnostic purpose or effect, in the 
        person of the injured person.
Actions by a minor shall be commenced within 3 years from the 
date of the alleged manifestation of injury except that actions 
by a minor under the full age of 6 years shall be commenced 
within 3 years of manifestation of injury or prior to the 
minor's 8th birthday, whichever provides a longer period. Such 
time limitation shall be tolled for minors for any period 
during which a parent or guardian and a health care provider or 
health care organization have committed fraud or collusion in 
the failure to bring an action on behalf of the injured minor.

SEC. 4. COMPENSATING PATIENT INJURY.

  (a) Unlimited Amount of Damages for Actual Economic Losses in 
Health Care Lawsuits.--In any health care lawsuit, the full 
amount of a claimant's economic loss may be fully recovered 
without limitation.
  (b) Additional Noneconomic Damages.--In any health care 
lawsuit, the amount of noneconomic damages recovered may be as 
much as $250,000, regardless of the number of parties against 
whom the action is brought or the number of separate claims or 
actions brought with respect to the same occurrence.
  (c) No Discount of Award for Noneconomic Damages.--In any 
health care lawsuit, an award for future noneconomic damages 
shall not be discounted to present value. The jury shall not be 
informed about the maximum award for noneconomic damages. An 
award for noneconomic damages in excess of $250,000 shall be 
reduced either before the entry of judgment, or by amendment of 
the judgment after entry of judgment, and such reduction shall 
be made before accounting for any other reduction in damages 
required by law. If separate awards are rendered for past and 
future noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be reduced 
first.
  (d) Fair Share Rule.--In any health care lawsuit, each party 
shall be liable for that party's several share of any damages 
only and not for the share of any other person. Each party 
shall be liable only for the amount of damages allocated to 
such party in direct proportion to such party's percentage of 
responsibility. A separate judgment shall be rendered against 
each such party for the amount allocated to such party. For 
purposes of this section, the trier of fact shall determine the 
proportion of responsibility of each party for the claimant's 
harm.

SEC. 5. MAXIMIZING PATIENT RECOVERY.

  (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall 
supervise the arrangements for payment of damages to protect 
against conflicts of interest that may have the effect of 
reducing the amount of damages awarded that are actually paid 
to claimants. In particular, in any health care lawsuit in 
which the attorney for a party claims a financial stake in the 
outcome by virtue of a contingent fee, the court shall have the 
power to restrict the payment of a claimant's damage recovery 
to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. 
In no event shall the total of all contingent fees for 
representing all claimants in a health care lawsuit exceed the 
following limits:
          (1) 40 percent of the first $50,000 recovered by the 
        claimant(s).
          (2) 33\1/3\ percent of the next $50,000 recovered by 
        the claimant(s).
          (3) 25 percent of the next $500,000 recovered by the 
        claimant(s).
          (4) 15 percent of any amount by which the recovery by 
        the claimant(s) is in excess of $600,000.
  (b) Applicability.--The limitations in this section shall 
apply whether the recovery is by judgment, settlement, 
mediation, arbitration, or any other form of alternative 
dispute resolution. In a health care lawsuit involving a minor 
or incompetent person, a court retains the authority to 
authorize or approve a fee that is less than the maximum 
permitted under this section.

SEC. 6. ADDITIONAL HEALTH BENEFITS.

  In any health care lawsuit, any party may introduce evidence 
of collateral source benefits. If a party elects to introduce 
such evidence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid or 
contributed in the future by or on behalf of the opposing party 
to secure the right to such collateral source benefits. No 
provider of collateral source benefits shall recover any amount 
against the claimant or receive any lien or credit against the 
claimant's recovery or be equitably or legally subrogated to 
the right of the claimant in a health care lawsuit. This 
section shall apply to any health care lawsuit that is settled 
as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act.

SEC. 7. PUNITIVE DAMAGES.

  (a) In General.--Punitive damages may, if otherwise permitted 
by applicable State or Federal law, be awarded against any 
person in a health care lawsuit only if it is proven by clear 
and convincing evidence that such person acted with malicious 
intent to injure the claimant, or that such person deliberately 
failed to avoid unnecessary injury that such person knew the 
claimant was substantially certain to suffer. In any health 
care lawsuit where no judgment for compensatory damages is 
rendered against such person, no punitive damages may be 
awarded with respect to the claim in such lawsuit. No demand 
for punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a motion by the 
claimant and after a finding by the court, upon review of 
supporting and opposing affidavits or after a hearing, after 
weighing the evidence, that the claimant has established by a 
substantial probability that the claimant will prevail on the 
claim for punitive damages. At the request of any party in a 
health care lawsuit, the trier of fact shall consider in a 
separate proceeding--
          (1) whether punitive damages are to be awarded and 
        the amount of such award; and
          (2) the amount of punitive damages following a 
        determination of punitive liability.
If a separate proceeding is requested, evidence relevant only 
to the claim for punitive damages, as determined by applicable 
State law, shall be inadmissible in any proceeding to determine 
whether compensatory damages are to be awarded.
  (b) Determining Amount of Punitive Damages.--
          (1) Factors considered.--In determining the amount of 
        punitive damages, the trier of fact shall consider only 
        the following:
                  (A) the severity of the harm caused by the 
                conduct of such party;
                  (B) the duration of the conduct or any 
                concealment of it by such party;
                  (C) the profitability of the conduct to such 
                party;
                  (D) the number of products sold or medical 
                procedures rendered for compensation, as the 
                case may be, by such party, of the kind causing 
                the harm complained of by the claimant;
                  (E) any criminal penalties imposed on such 
                party, as a result of the conduct complained of 
                by the claimant; and
                  (F) the amount of any civil fines assessed 
                against such party as a result of the conduct 
                complained of by the claimant.
          (2) Maximum award.--The amount of punitive damages 
        awarded in a health care lawsuit may be up to as much 
        as two times the amount of economic damages awarded or 
        $250,000, whichever is greater. The jury shall not be 
        informed of this limitation.
  (c) No Civil Monetary Penalties for Products That Comply With 
FDA Standards.--
          (1) In general.--No punitive damages may be awarded 
        against the manufacturer or distributor of a medical 
        product based on a claim that such product caused the 
        claimant's harm where--
                  (A)(i) such medical product was subject to 
                premarket approval or clearance by the Food and 
                Drug Administration with respect to the safety 
                of the formulation or performance of the aspect 
                of such medical product which caused the 
                claimant's harm or the adequacy of the 
                packaging or labeling of such medical product; 
                and
                  (ii) such medical product was so approved or 
                cleared; or
                  (B) such medical product is generally 
                recognized among qualified experts as safe and 
                effective pursuant to conditions established by 
                the Food and Drug Administration and applicable 
                Food and Drug Administration regulations, 
                including without limitation those related to 
                packaging and labeling, unless the Food and 
                Drug Administration has determined that such 
                medical product was not manufactured or 
                distributed in substantial compliance with 
                applicable Food and Drug Administration 
                statutes and regulations.
          (2) Liability of health care providers.--A health 
        care provider who prescribes a drug or device 
        (including blood products) approved by the Food and 
        Drug Administration shall not be named as a party to a 
        product liability lawsuit involving such drug or device 
        and shall not be liable to a claimant in a class action 
        lawsuit against the manufacturer, distributor, or 
        product seller of such drug or device.
          (3) Packaging.--In a health care lawsuit for harm 
        which is alleged to relate to the adequacy of the 
        packaging or labeling of a drug which is required to 
        have tamper-resistant packaging under regulations of 
        the Secretary of Health and Human Services (including 
        labeling regulations related to such packaging), the 
        manufacturer or product seller of the drug shall not be 
        held liable for punitive damages unless such packaging 
        or labeling is found by the trier of fact by clear and 
        convincing evidence to be substantially out of 
        compliance with such regulations.
          (4) Exception.--Paragraph (1) shall not apply in any 
        health care lawsuit in which--
                  (A) a person, before or after premarket 
                approval or clearance of such medical product, 
                knowingly misrepresented to or withheld from 
                the Food and Drug Administration information 
                that is required to be submitted under the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                301 et seq.) or section 351 of the Public 
                Health Service Act (42 U.S.C. 262) that is 
                material and is causally related to the harm 
                which the claimant allegedly suffered; or
                  (B) a person made an illegal payment to an 
                official of the Food and Drug Administration 
                for the purpose of either securing or 
                maintaining approval or clearance of such 
                medical product.

SEC. 8. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN 
                    HEALTH CARE LAWSUITS.

  (a) In General.--In any health care lawsuit, if an award of 
future damages, without reduction to present value, equaling or 
exceeding $50,000 is made against a party with sufficient 
insurance or other assets to fund a periodic payment of such a 
judgment, the court shall, at the request of any party, enter a 
judgment ordering that the future damages be paid by periodic 
payments in accordance with the Uniform Periodic Payment of 
Judgments Act promulgated by the National Conference of 
Commissioners on Uniform State Laws.
  (b) Applicability.--This section applies to all actions which 
have not been first set for trial or retrial before the 
effective date of this Act.

SEC. 9. DEFINITIONS.

  In this Act:
          (1) Alternative dispute resolution system; adr.--The 
        term ``alternative dispute resolution system'' or 
        ``ADR'' means a system that provides for the resolution 
        of health care lawsuits in a manner other than through 
        a civil action brought in a State or Federal court.
          (2) Claimant.--The term ``claimant'' means any person 
        who brings a health care lawsuit, including a person 
        who asserts or claims a right to legal or equitable 
        contribution, indemnity or subrogation, arising out of 
        a health care liability claim or action, and any person 
        on whose behalf such a claim is asserted or such an 
        action is brought, whether deceased, incompetent, or a 
        minor.
          (3) Collateral source benefits.--The term 
        ``collateral source benefits'' means any amount paid or 
        reasonably likely to be paid in the future to or on 
        behalf of the claimant, or any service, product or 
        other benefit provided or reasonably likely to be 
        provided in the future to or on behalf of the claimant, 
        as a result of the injury or wrongful death, pursuant 
        to--
                  (A) any State or Federal health, sickness, 
                income-disability, accident, or workers' 
                compensation law;
                  (B) any health, sickness, income-disability, 
                or accident insurance that provides health 
                benefits or income-disability coverage;
                  (C) any contract or agreement of any group, 
                organization, partnership, or corporation to 
                provide, pay for, or reimburse the cost of 
                medical, hospital, dental, or income disability 
                benefits; and
                  (D) any other publicly or privately funded 
                program.
          (4) Compensatory damages.--The term ``compensatory 
        damages'' means objectively verifiable monetary losses 
        incurred as a result of the provision of, use of, or 
        payment for (or failure to provide, use, or pay for) 
        health care services or medical products, such as past 
        and future medical expenses, loss of past and future 
        earnings, cost of obtaining domestic services, loss of 
        employment, and loss of business or employment 
        opportunities, damages 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), hedonic damages, injury 
        to reputation, and all other nonpecuniary losses of any 
        kind or nature. The term ``compensatory damages'' 
        includes economic damages and noneconomic damages, as 
        such terms are defined in this section.
          (5) Contingent fee.--The term ``contingent fee'' 
        includes all compensation to any person or persons 
        which is payable only if a recovery is effected on 
        behalf of one or more claimants.
          (6) Economic damages.--The term ``economic damages'' 
        means objectively verifiable monetary losses incurred 
        as a result of the provision of, use of, or payment for 
        (or failure to provide, use, or pay for) health care 
        services or medical products, such as past and future 
        medical expenses, loss of past and future earnings, 
        cost of obtaining domestic services, loss of 
        employment, and loss of business or employment 
        opportunities.
          (7) Health care lawsuit.--The term ``health care 
        lawsuit'' means any health care liability claim 
        concerning the provision of health care goods or 
        services affecting interstate commerce, or any health 
        care liability action concerning the provision of 
        health care goods or services affecting interstate 
        commerce, brought in a State or Federal court or 
        pursuant to an alternative dispute resolution system, 
        against a health care provider, a health care 
        organization, or the manufacturer, distributor, 
        supplier, marketer, promoter, or seller of a medical 
        product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, 
        plaintiffs, defendants, or other parties, or the number 
        of claims or causes of action, in which the claimant 
        alleges a health care liability claim.
          (8) Health care liability action.--The term ``health 
        care liability action'' means a civil action brought in 
        a State or Federal Court or pursuant to an alternative 
        dispute resolution system, against a health care 
        provider, a health care organization, or the 
        manufacturer, distributor, supplier, marketer, 
        promoter, or seller of a medical product, regardless of 
        the theory of liability on which the claim is based, or 
        the number of plaintiffs, defendants, or other parties, 
        or the number of causes of action, in which the 
        claimant alleges a health care liability claim.
          (9) Health care liability claim.--The term ``health 
        care liability claim'' means a demand by any person, 
        whether or not pursuant to ADR, against a health care 
        provider, health care organization, or the 
        manufacturer, distributor, supplier, marketer, 
        promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, 
        counter-claims, or contribution claims, which are based 
        upon the provision of, use of, or payment for (or the 
        failure to provide, use, or pay for) health care 
        services or medical products, regardless of the theory 
        of liability on which the claim is based, or the number 
        of plaintiffs, defendants, or other parties, or the 
        number of causes of action.
          (10) Health care organization.--The term ``health 
        care organization'' means any person or entity which is 
        obligated to provide or pay for health benefits under 
        any health plan, including any person or entity acting 
        under a contract or arrangement with a health care 
        organization to provide or administer any health 
        benefit.
          (11) Health care provider.--The term ``health care 
        provider'' means any person or entity required by State 
        or Federal laws or regulations to be licensed, 
        registered, or certified to provide health care 
        services, and being either so licensed, registered, or 
        certified, or exempted from such requirement by other 
        statute or regulation.
          (12) Health care goods or services.--The term 
        ``health care goods or services'' means any goods or 
        services provided by a health care organization, 
        provider, or by any individual working under the 
        supervision of a health care provider, that relates to 
        the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment of the health 
        of human beings.
          (13) Malicious intent to injure.--The term 
        ``malicious intent to injure'' means intentionally 
        causing or attempting to cause physical injury other 
        than providing health care goods or services.
          (14) Medical product.--The term ``medical product'' 
        means a drug or device intended for humans, and the 
        terms ``drug'' and ``device'' have the meanings given 
        such terms in sections 201(g)(1) and 201(h) of the 
        Federal Food, Drug and Cosmetic Act (21 U.S.C. 321), 
        respectively, including any component or raw material 
        used therein, but excluding health care services.
          (15) Noneconomic damages.--The term ``noneconomic 
        damages'' means damages 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), 
        hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature.
          (16) Punitive damages.--The term ``punitive damages'' 
        means damages awarded, for the purpose of punishment or 
        deterrence, and not solely for compensatory purposes, 
        against a health care provider, health care 
        organization, or a manufacturer, distributor, or 
        supplier of a medical product. Punitive damages are 
        neither economic nor noneconomic damages.
          (17) Recovery.--The term ``recovery'' means the net 
        sum recovered after deducting any disbursements or 
        costs incurred in connection with prosecution or 
        settlement of the claim, including all costs paid or 
        advanced by any person. Costs of health care incurred 
        by the plaintiff and the attorneys' office overhead 
        costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
          (18) State.--The term ``State'' means each of the 
        several States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Northern Mariana Islands, the Trust 
        Territory of the Pacific Islands, and any other 
        territory or possession of the United States, or any 
        political subdivision thereof.

SEC. 10. EFFECT ON OTHER LAWS.

  (a) Vaccine Injury.--
          (1) To the extent that title XXI of the Public Health 
        Service Act establishes a Federal rule of law 
        applicable to a civil action brought for a vaccine-
        related injury or death--
                  (A) this Act does not affect the application 
                of the rule of law to such an action; and
                  (B) any rule of law prescribed by this Act in 
                conflict with a rule of law of such title XXI 
                shall not apply to such action.
          (2) If there is an aspect of a civil action brought 
        for a vaccine-related injury or death to which a 
        Federal rule of law under title XXI of the Public 
        Health Service Act does not apply, then this Act or 
        otherwise applicable law (as determined under this Act) 
        will apply to such aspect of such action.
  (b) Other Federal Law.--Except as provided in this section, 
nothing in this Act shall be deemed to affect any defense 
available to a defendant in a health care lawsuit or action 
under any other provision of Federal law.

SEC. 11. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

  (a) Health Care Lawsuits.--The provisions governing health 
care lawsuits set forth in this Act preempt, subject to 
subsections (b) and (c), State law to the extent that State law 
prevents the application of any provisions of law established 
by or under this Act. The provisions governing health care 
lawsuits set forth in this Act supersede chapter 171 of title 
28, United States Code, to the extent that such chapter--
          (1) provides for a greater amount of damages or 
        contingent fees, a longer period in which a health care 
        lawsuit may be commenced, or a reduced applicability or 
        scope of periodic payment of future damages, than 
        provided in this Act; or
          (2) prohibits the introduction of evidence regarding 
        collateral source benefits, or mandates or permits 
        subrogation or a lien on collateral source benefits.
  (b) Protection of States' Rights.--Any issue that is not 
governed by any provision of law established by or under this 
Act (including State standards of negligence) shall be governed 
by otherwise applicable State or Federal law. This Act does not 
preempt or supersede any law that imposes greater protections 
(such as a shorter statute of limitations) for health care 
providers and health care organizations from liability, loss, 
or damages than those provided by this Act.
  (c) State Flexibility.--No provision of this Act shall be 
construed to preempt--
          (1) any State statutory limit (whether enacted 
        before, on, or after the date of the enactment of this 
        Act) on the amount of compensatory or punitive damages 
        (or the total amount of damages) that may be awarded in 
        a health care lawsuit, whether or not such State limit 
        permits the recovery of a specific dollar amount of 
        damages that is greater or lesser than is provided for 
        under this Act, notwithstanding section 4(a); or
          (2) any defense available to a party in a health care 
        lawsuit under any other provision of State or Federal 
        law.

SEC. 12. APPLICABILITY; EFFECTIVE DATE.

  This Act shall apply to any health care lawsuit brought in a 
Federal or State court, or subject to an alternative dispute 
resolution system, that is initiated on or after the date of 
the enactment of this Act, except that any health care lawsuit 
arising from an injury occurring prior to the date of the 
enactment of this Act shall be governed by the applicable 
statute of limitations provisions in effect at the time the 
injury occurred.

SEC. 13. SENSE OF CONGRESS.

  It is the sense of Congress that a health insurer should be 
liable for damages for harm caused when it makes a decision as 
to what care is medically necessary and appropriate.

                                
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