[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Proposed Rules]
[Pages 72412-72415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23013]



[[Page 72412]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 45

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


Medical Malpractice Claims by Members of the Uniformed Services

AGENCY: Department of Defense Office of General Counsel, DoD.

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense (DoD) proposes to amend the 
regulations governing medical malpractice claims by members of the 
uniformed services to adjust and update certain portions of the 
regulation related to calculation of damages. Currently, total 
potential damages are reduced by offsetting most of the compensation 
otherwise provided or expected to be provided by DoD or the Department 
of Veterans Affairs (VA) for the same harm that is the subject of the 
medical malpractice claim. The amendments would apply offsets to 
economic damages only. The amendments would also clarify when future 
lost wages may be awarded.

DATES: Comments will be accepted on or before December 19, 2023. The 
changes in the proposed rule would apply to claims received by DoD on 
or after the date the final rule is published in the Federal Register 
and to claims pending before DoD on that date.

ADDRESSES: You may submit comments, identified by docket number and/or 
regulatory identifier number (RIN) and title, by any of the following 
methods:
    <bullet> Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail: Department of Defense, Office of the Assistant to 
the Secretary of Defense for Privacy, Civil Liberties, and 
Transparency, Regulatory Directorate, 4800 Mark Center Drive, Attn: 
Mailbox 24, Suite 08D09, Alexandria, VA 22350-1700.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this Federal Register document. The 
general policy for comments and other submissions from members of the 
public is to make these submissions available for public viewing on the 
internet at http://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information.

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

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 2733a of title 10, United States Code, allows members of 
the uniformed services or their authorized representatives to file 
claims, and the Secretary of Defense to pay such claims, for personal 
injury or death caused by a DoD health care provider in a covered 
military medical treatment facility, as defined in that section. DoD 
published an interim final rule to establish uniform standards and 
procedures for adjudicating these claims on June 17, 2021 (86 FR 32194) 
and a final rule on August 26, 2022 (87 FR 52446).

II. Explanation of Changes With This Rule

    The proposed amendments to 32 CFR 45.11 would apply offsets for 
payments made by the U.S. Government to economic damages only. Under 
the current version of 32 CFR 45.11, total potential damages are 
reduced by offsetting most of the compensation otherwise provided or 
expected to be provided by DoD or VA for the same harm that is the 
subject of the medical malpractice claim.
    The amendments would also clarify that future lost wages may be 
awarded: (1) until the time DoD determines that the claimant is, or is 
expected to be, medically rehabilitated and able to resume employment; 
(2) in cases of permanent incapacitation, until expiration of the 
claimant's work-life expectancy; or (3) in cases of death, until the 
expiration of the claimant's work-life expectancy, after deducting for 
the claimant's personal consumption.

III. Section-by-Section Discussion

    The following is a section-by-section overview of the amendments in 
this rulemaking.
    Section 45.1--Purpose of this part. Proposed Sec.  45.1(b) 
eliminates a reference to the total value of compensation the claimant 
is expected to receive under a comprehensive system of compensation for 
death or disability being subject to offset. Instead, it generally 
refers to Sec.  45.11, which relates to offsets.
    Section 45.9--Calculation of damages: economic damages. Proposed 
Sec.  45.9(b)(4) changes ``loss of earning capacity'' to ``future lost 
earnings'' to parallel ``past lost earnings'' in Sec.  45.9(b)(3). 
Proposed Sec.  45.9(b)(4) includes a change to account for future lost 
earnings until the time DoD determines that the claimant is, or is 
expected to be, medically rehabilitated and able to resume employment 
or, in cases of permanent incapacitation, until expiration of the 
claimant's work-life expectancy. Future lost earnings must be 
substantiated by appropriate documentation and claimants have an 
obligation to mitigate damages.
    Proposed Sec.  45.9(d) is added to indicate that an injury or 
condition does not result in lost earnings for purposes of this 
regulation if the lost earnings are the result of disability 
discrimination. Lost earnings stemming from disability discrimination 
may be settled and paid under other provisions of law and therefore are 
not compensable under this regulation.
    For example, if a claimant suffers severe facial disfigurement as a 
result of medical malpractice but because a potential employer 
discriminates against that claimant for fear of negative reactions to 
the disfigurement, the claimant's redress for the inability to obtain 
employment would be under provisions of law relating to employment 
discrimination and not under 10 U.S.C. 2733a.
    Section 45.10--Calculation of damages: non-economic damages. 
Proposed Sec.  45.10(a) includes language currently in Sec.  45.10(b) 
regarding proof of a claimant's non-economic damages that DoD may 
require. This amendment keeps information relating to the proof of non-
economic damages together for clarity.
    Proposed Sec.  45.10(b) consolidates the description of the 
elements of non-economic damages into one paragraph. This eliminates 
confusion that might arise from separating conscious pain and suffering 
from disfigurement, as a single amount is awarded for all non-economic 
damages.
    Section 45.10(c) removes the amount of the cap on non-economic 
damages from the regulatory text. This change eliminates the need for 
publication of conforming administrative amendments to the regulation 
each time updates to the cap amount are published via Federal Register 
notice.
    Section 45.11--Calculation of damages: offsets for DoD and VA 
Government compensation. In the current version of the regulation, 
total potential damages calculated under this part, both economic and 
non-economic, are reduced by offsetting most of the compensation 
otherwise provided, or expected to be provided, by DoD or VA for the 
same harm that is the subject of the medical malpractice claim. Under 
the proposed amendments, offsets are applied to economic damages only.
    Proposed Sec.  45.11(a) states that total potential economic 
damages calculated under this part are reduced by offsetting

[[Page 72413]]

most of the compensation otherwise provided, or expected to be 
provided, by DoD or VA for the same harm that is the subject of the 
medical malpractice claim. This is a change from the current rule, 
which makes all offsets from the total potential economic and non-
economic damages. Compensation received from DoD or VA that does not 
relate to the malpractice is still excluded from the offset. Under 
Sec.  45.4(c), claimants have the burden of substantiating their claim 
by a preponderance of the evidence and, under Sec. Sec.  45.9(a) and 
45.10(a), the burden of proving the amount of damages by a 
preponderance of the evidence. This change makes it clear that DoD has 
the burden of establishing the applicability and amount of any offsets 
from the amount of damages otherwise payable to the claimant.
    Proposed Sec.  45.11(c), formerly Sec.  45.11(d) in the current 
regulation, states that present value is used to calculate offsets 
against economic damages. This change is necessary with the proposed 
change to offset economic damages only. An award of future lost 
earnings and retirement benefits is reduced to present value, so the 
offsetting compensation for future lost earnings and retirement 
benefits must also be reduced to present value.
    Proposed Sec.  45.11(d) contains the same language as Sec.  
45.11(c) in the current regulation, with the addition of language from 
Sec.  45.11(a) in the current regulation stating that claimants must 
provide information not available to DoD, but requested by DoD, for the 
purpose of determining offsets.
    Proposed Sec.  45.11(e) combines what is currently in Sec. Sec.  
45.11(e) through (g) in the current regulation. Proposed Sec.  45.11(e) 
removes the reference to pay and allowances while a member remains on 
active duty, or in an active status, as an offset because the member 
receiving these pay and allowances has not lost earnings.

IV. Regulatory Analysis

Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review''

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects; distribution of impacts; and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility. This proposed rule has been determined to be a 
significant regulatory action, although not economically significant. 
Accordingly, it has been reviewed by the Office of Management and 
Budget as required by these Executive orders.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601 et 
seq.)

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

Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1532) requires agencies to assess anticipated costs and benefits before 
issuing any rule whose mandates require non-Federal spending in any one 
year of $100 million in 1995 dollars, updated annually for inflation. 
This proposed rule does not mandate any requirements for State, local, 
or tribal governments, nor affect private sector costs.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    It has been determined that this proposed rule does not impose new 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act of 1995.

Executive Order 13132, ``Federalism''

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has federalism 
implications. This proposed rule does not have a substantial effect on 
State and local governments.

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

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

V. Impact of This Regulation

a. Summary

    The proposed amendments adjust and update certain portions of the 
regulation related to calculation of damages. The amendments would 
apply offsets to economic damages only. The amendments would also 
clarify when future lost wages may be awarded.

b. Affected Population

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

c. Costs

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

d. Transfers

    Regardless of the number of claims in which malpractice occurred, 
the only claims in which damages will be awarded are those which exceed 
the offsets for any payment to be made. The proposed changes solely 
impact non-economic damages. No changes are proposed that would impact 
offsets from economic damages.
    Based on claims adjudicated under this part in 2021 and 2022, four 
claims were adjudicated in which offsets were applied. The outcome 
would have been different in only one of these claims had the proposed 
amendments been in effect. In that one claim, $200,000 of the potential 
non-economic damages was subject to offset. This $200,000 would not 
have been offset from non-economic damages under the proposed changes.
    Claims in 2021 and 2022 may not necessarily be representative of 
claims in future years. Claims were accepted beginning January 1, 2020, 
but could only begin to be adjudicated beginning on July 17, 2021, when 
the Interim Final Rule became effective. The first claims adjudicated 
under this new process

[[Page 72414]]

were claims that did not require a decision on the merits of whether 
malpractice occurred, such as claims that were denied because the 
alleged malpractice fell outside the statute of limitations in 10 
U.S.C. 2733a(b)(4). Just as with claim resolution processes involving 
non-Service member claims, more complex claims, which tend to involve 
higher amounts of damages, require time for review. Since Service 
members' claims have only been able to be adjudicated since July 17, 
2021, more complex claims may still be under adjudication, and the one 
claim that would have had a different outcome in 2021 and 2022 may not 
be representative of the number of claims that would be impacted going 
forward.
    Taking the limited information into account, DoD estimates that the 
changes to the regulation would affect 2 claims per year, instead of 
basing its estimate on the one historical claim that would have been 
impacted. The average of the non-economic damages at issue in the four 
claims in which offsets were applied was $337,500. Assuming $337,500 
additional would be paid in 2 claims, the estimated total cost to the 
government therefore would be $675,000. Of this, the first $100,000 of 
each of the two claims would be paid by DoD, with the remainder to be 
paid by the Treasury.

e. Benefits

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

List of Subjects in 32 CFR Part 45

    Medical, Malpractice, Claims, Uniformed Services.

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

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

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

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

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


Sec.  45.1  Purpose of this part.

* * * * *
    (b) Relationship to military and veterans' compensation programs. 
Federal law provides a comprehensive system of compensation for 
military members and their families in cases of death or disability 
incurred in military service. This system applies to all causes of 
death or disability incurred in service, whether due to combat 
injuries, training mishaps, motor vehicle accidents, naturally 
occurring illnesses, or household events, with limited exceptions 
(e.g., when the member is absent without leave or the injury is due to 
the member's intentional misconduct or willful negligence). This 
comprehensive compensation system applies to cases of personal injury 
or death caused by medical malpractice incurred in service as it does 
to all other causes. This part provides for the possibility of separate 
compensation in certain cases of medical malpractice but in no other 
type of case. A medical malpractice claim under this part will have no 
effect on any other compensation the member or the member's family is 
entitled to under the comprehensive compensation system applicable to 
all members. However, if the U.S. government makes a payment for harm 
caused by malpractice, this payment reduces the potential damages under 
this part as provided in Sec.  45.11.
* * * * *
0
3. Amend Sec.  45.9 by revising paragraph (b)(4) and adding paragraph 
(d) to read as follows:


Sec.  45.9  Calculation of damages: economic damages.

* * * * *
    (b) * * *
    (4) Future lost earnings:
    (i) Until DoD determines that the claimant is, or is expected to 
be, medically rehabilitated and able to resume employment;
    (ii) In cases of permanent incapacitation, until expiration of the 
claimant's work-life expectancy; or
    (iii) In cases of death, until the expiration of the claimant's 
work-life expectancy, after deducting for the claimant's personal 
consumption.
    (iv) Future lost earnings must be substantiated by appropriate 
documentation and claimants have an obligation to mitigate damages.
    (v) In addition, loss of retirement benefits is compensable and 
similarly discounted after appropriate deductions. Estimates for future 
lost earnings and retirement benefits must be discounted to present 
value.
* * * * *
    (d) Disability discrimination. An injury or condition does not 
result in lost earnings for purposes of, and is not compensable under, 
this regulation if the lost earnings stem from disability 
discrimination, which may be settled and paid under other provisions of 
law.
* * * * *
0
4. Amend Sec.  45.10 by revising paragraphs (a) through (c) to read as 
follows:


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

    (a) In general. Non-economic damages are one component of a 
potential damages award. The claimant has the burden of proof on the 
amount of non-economic damages by a preponderance of evidence. DoD may 
request an interview of or statement from the claimant or other person 
with primary knowledge of the claimant. DoD may also require medical 
statements documenting the claimant's condition and, in cases of 
disfigurement, photographs documenting the claimant's condition.
    (b) Elements of non-economic damages. Non-economic damages include 
pain and suffering; physical discomfort; mental and emotional trauma or 
distress; loss of enjoyment of life; physical disfigurement resulting 
from an injury to a member that causes diminishment of beauty or 
symmetry of appearance rendering the member unsightly, misshapen, 
imperfect, or deformed; and the inability to perform daily activities 
that one performed prior to injury, such as recreational activities. 
Such damages are compensable as part of non-economic damages.
    (c) Cap on non-economic damages. In any claim under this part, 
total non-economic damages may not exceed a cap amount published by DoD 
via a Federal Register notice. DoD will periodically publish updates to 
this cap amount via Federal Register notices, consistent with changes 
in prevailing amounts in the majority of the States with non-economic 
damages caps.
* * * * *
0
5. Amend Sec.  45.11 by:
0
a. Revising paragraph (a);
0
b. Redesignating paragraph (c) and (d) as paragraphs (d) and (c), 
respectively;
0
c. Revising the first sentence in the newly redesignated paragraph (c);
0
d. Adding a sentence to the end of the newly redesignated paragraph 
(d);
0
e. Revising paragraph (e); and
0
f. Removing paragraphs (f) and (g).
    The revisions and additions read as follows:


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

    (a) In general. Total potential economic damages calculated under 
this part are reduced by offsetting most of the compensation otherwise 
provided or expected to be provided by DoD or VA

[[Page 72415]]

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

    Dated: October 12, 2023.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2023-23013 Filed 10-19-23; 8:45 am]
BILLING CODE 6001-FR-P