85–573

108TH CONGRESS REPT. 108–32 " HOUSE OF REPRESENTATIVES ! 1st Session Part 2

HELP EFFICIENT, ACCESSIBLE, LOW-COST, TIMELY 

HEALTHCARE (HEALTH) ACT OF 2003

MARCH 11, 2003.—Ordered to be printed 

Mr. TAUZIN, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 5] 

[Including cost estimate of the Congressional Budget Office]

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 5) to improve patient access to health care services 

and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery system, 

having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass.

CONTENTS 

Page 

Amendment .............................................................................................................. 2

Purpose and Summary ............................................................................................ 7

Background and Need for Legislation .................................................................... 8

Hearings ................................................................................................................... 9

Committee Consideration ........................................................................................ 10

Committee Votes ...................................................................................................... 10

Committee Oversight Findings ............................................................................... 20

Statement of General Performance Goals and Objectives .................................... 20

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 20

Committee Cost Estimate ....................................................................................... 20

Congressional Budget Office Estimate ................................................................... 20

Federal Mandates Statement ................................................................................. 27

Advisory Committee Statement .............................................................................. 28

Constitutional Authority Statement ...................................................................... 28

Applicability to Legislative Branch ........................................................................ 28

Section-by-Section Analysis of the Legislation ...................................................... 28

Changes in Existing Law Made by the Bill, as Reported ..................................... 32

Dissenting Views ..................................................................................................... 33

2

AMENDMENT

The amendment is as follows: 

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 2003’’. 

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. 

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SEC. 4. COMPENSATING PATIENT INJURY. 

(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL ECONOMIC LOSSES IN HEALTH

CARE LAWSUITS.—In any health care lawsuit, nothing in this Act shall limit a claimant’s recovery of the full amount of the available economic damages, notwithstanding the limitation in subsection (b). 

(b) ADDITIONAL NONECONOMIC DAMAGES.—In any health care lawsuit, the amount of noneconomic damages, if available, 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 injury. 

(c) NO DISCOUNT OF AWARD FOR NONECONOMIC DAMAGES.—For purposes of applying the limitation in subsection (b), 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. Whenever a 

judgment of liability is rendered as to any party, 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) 331⁄3 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. The requirement for court supervision 

in the first two sentences of subsection (a) applies only in judicial proceedings. 

SEC. 6. ADDITIONAL HEALTH BENEFITS. 

In any health care lawsuit involving injury or wrongful death, 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 involving injury or 

wrongful death. 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 

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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, 

if awarded, in a health care lawsuit, 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, if awarded, in a 

health care lawsuit may be as much as $250,000 or as much as two times the 

amount of economic damages awarded, whichever is greater. The jury shall not 

be informed of this limitation. 

(c) NO PUNITIVE DAMAGES FOR PRODUCTS IN COMPLIANCE WITH FDA STAND- ARDS.—

(1) PUNITIVE DAMAGES.—

(A) IN GENERAL.—In addition to the requirements of subsections (a) and 

(b), punitive damages may not be awarded against the manufacturer or distributor of a medical product, or a supplier of any component or raw material of such medical product, on the basis that the harm to the claimant 

was caused by the lack of safety or effectiveness of the particular medical 

product involved, unless, the claimant demonstrates by clear and convincing evidence that—

(i) the manufacturer or distributor of the particular medical product, 

or supplier of any component or raw material of such medical product, 

failed to comply with a specific requirement of the Federal Food, Drug, 

and Cosmetic Act, section 351 of the Public Health Service Act, or the 

regulations promulgated thereunder; and 

(ii) the harm attributed to the particular medical product resulted 

from such failure to comply with such specific statutory requirement or 

regulation. 

(B) RULE OF CONSTRUCTION.—Subparagraph (A) may not be construed as 

establishing the obligation of the Food and Drug Administration to demonstrate affirmatively that a manufacturer, distributor, or supplier referred 

to in such subparagraph meets any of the conditions described in such subparagraph. 

(2) LIABILITY OF HEALTH CARE PROVIDERS.—A health care provider who prescribes, or who dispenses pursuant to a prescription, a medical product approved, licensed, or cleared by the Food and Drug Administration shall not be 

named as a party to a product liability lawsuit involving such product and shall 

not be liable to a claimant in a class action lawsuit against the manufacturer, 

distributor, or seller of such product. Nothing in this paragraph prevents a 

court from consolidating cases involving health care providers and cases involving products liability claims against the manufacturer, distributor, or product 

seller of such medical product. 

(3) EXCEPTION.—Paragraph (1) shall not apply in any health care lawsuit in 

which—

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(A) a person knowingly misrepresented to the Food and Drug Administration information which 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); or 

(B) a person made an illegal payment to a governmental official for the 

purpose of either (i) securing or maintaining approval, clearance, or licensure of such medical product or (ii) preventing an enforcement action. 

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, with- out 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. 

(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, 

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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. 

Such term does not include a claim or action which is based on criminal liability; which seeks civil fines or penalties paid to Federal, State, or local government; which is grounded in antitrust; or in which the dispute is over the price 

of health care goods or services. 

(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 or care 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, device, 

or biological product intended for humans, and the terms ‘‘drug’’, ‘‘device’’, and 

‘‘biological product’’ 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) and section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)), 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 PaVerDate Jan 31 2003 07:54 Mar 12, 2003 Jkt 085573 PO 00000 Frm 00006 Fmt 6659 Sfmt 6621 E:\HR\OC\HR032P2.XXX HR032P2
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cific 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 AND OTHER LAWS.—(1) 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. 

(2) This Act shall not preempt or supersede any State or Federal law that imposes 

greater procedural or substantive protections for health care providers and health 

care organizations from liability, loss, or damages than those provided by this Act 

or create a cause of action. 

(c) STATE FLEXIBILITY.—No provision of this Act shall be construed to preempt—

(1) any State law (whether effective before, on, or after the date of the enactment of this Act) that specifies a particular monetary amount of compensatory 

or punitive damages (or the total amount of damages) that may be awarded in 

a health care lawsuit, regardless of whether such monetary amount 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.

PURPOSE AND SUMMARY

H.R. 5 seeks to improve patient access to health care services 

and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery system. 

8

BACKGROUND AND NEED FOR LEGISLATION

One of the primary purposes of the tort system is to provide an 

avenue for compensation for injured victims. The tort system also 

serves to deter behaviors that can cause harm to individuals and 

society as a whole. Nevertheless, excessive litigation can distort 

these useful functions, and lead to impacts that are the opposite of 

what is intended—harming the very people the system aims to protect. In the health care sector, excessive litigation has been extremely harmful to patient access to care. 

Medical liability insurance rates have skyrocketed in several 

states across the country causing major insurers to drop coverage 

or raise premiums. St. Paul’s Companies, the largest malpractice 

carrier in the United States covering 9 percent of doctors, announced in December 2001 that it would no longer offer coverage 

to health care providers. In addition, MIXX, PHICO, Frontier Insurance Group, and Doctors Insurance Reciprocal have either limited their coverage or left the medical liability insurance market. 

States that had not enacted meaningful medical liability reforms 

(such as Nevada, Georgia, Oregon, Mississippi, Ohio, Pennsylvania, 

and Washington) were particularly affected. 

In some cases, the new premiums are more than the actual income a health care provider accumulates annually. Even doctors 

that have never lost a single medical malpractice judgment or ever 

had a claim filed against them are seeing huge increases in medical 

liability premiums. The Medical Liability Monitor reports that 

medical liability insurance premiums are increasing at the highest 

rate since the mid-1980’s. In Florida, medical liability insurance 

coverage for pregnancy-related care is as high as $202,000 in some 

counties. Medical liability insurance rates are up 81 percent in 

Pennsylvania, and higher for some health care specialties. 

Doctors unable to afford medical liability insurance are being 

forced to drop part of their specialty practice, retire early, or move 

to another state to practice. In several states patients are being left 

without access to high-quality care. For example, the University of 

Nevada Medical Center closed its trauma center in Las Vegas for 

ten days, causing the most severely injured patients to be transported to the next nearest Level I trauma center, located five hours 

away. The trauma center was only able to re-open because some of 

the surgeons agreed to become county employees for a limited time, 

which capped their liability for non-economic damages if they were 

sued. In Mississippi, over a third of the neurosurgeons have left the 

state in the past year. In rural areas of West Virginia, such as Putnam and Jackson counties, the sole community provider hospitals 

have closed their obstetrics units because the price of medical malpractice insurance is unaffordable. Without access to an obstetrician, women will be without access to prenatal care and the support of specialists if pregnancy complications arise. 

The mere threat of a health care lawsuit is so perverse that 

many doctors engage in defensive medicine. Stanford economists 

Daniel Kessler and Mark McClellan have conducted studies using 

national data on Medicare populations and concluded that patients 

from states that adopted medical liability reforms—such as a reasonable limit on non-economic damage awards (pain and suffering)—incur significantly lower hospital costs while suffering no 

9

increase in adverse health outcomes associated with the illness for 

which they were treated. Based on these studies, the authors have 

quantified the cost of ‘‘defensive medicine’’ in which doctors perform tests and prescribe medicines that are not necessary to better 

the health of the patient, but rather serve as a precautionary step 

just in case the doctor is named in a lawsuit. Published in the 

Quarterly Journal of Economics, their study, ‘‘Do Doctors Practice 

Defensive Medicine,’’ estimates that direct medical care litigation 

reforms could lead to reductions of well over $50 billion per year 

in health care expenditures without serious adverse consequences 

for patients. 

In 1975, California Governor Jerry Brown signed into law California’s Medical Injury Compensation Reform Act (MICRA), which 

has helped to stabilize the California medical liability insurance 

market. MICRA reforms permit recovery of 100 percent of economic 

loss and up to $250,000 in non-economic loss. In order to ensure 

the complete recovery of damages for injured patients, MICRA prevents bankruptcies in which plaintiffs would receive only pennies 

on the dollar by authorizing courts to require periodic payments for 

future damages. To instill fairness and prevent double recoveries, 

MICRA provides authorization for defendants to introduce evidence 

showing the plaintiff received compensation for losses from outside 

sources. MICRA’s reforms also allow more money to go directly to 

injured patients by including limits on contingency fees lawyers 

can charge in health care cases. 

Overall, according to data of the National Association of Insurance Commissioners, the rate of increase in medical professional liability premiums in California since 1976 has been a very modest 

167%, whereas the rest of the United States has experienced a 

505% rate of increase. The price of some lines of medical liability 

insurance has even gone down significantly in California since 

MICRA was enacted. According to the Doctor’s Company, in 1976 

when California’s MICRA law went into effect, the average medical 

malpractice premium was $23,698 in 2001 dollars. In 2001, the average premium was only $14,107. Furthermore, injured patients in 

California find that medical malpractice disputes in California are 

resolved 23 percent faster than the rest of the country. H.R. 5, the 

Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) 

Act of 2003 includes several provisions modeled after California’s 

MICRA. 

HEARINGS

The Subcommittee on Health held a hearing on ‘‘Assessing the 

Need to Enact Medical Liability Reform,’’ on February 27, 2003. 

The Subcommittee received testimony from: Mr. Fred Hiestand, 

CEO and General Counsel, Californians Allied for Patient Protection; Mr. Jim Hurley, on behalf of the American Academy of Actuaries; Ms. Heather Lewinski; Donald J. Palmisano, MD, JD, President, American Medical Association; Ms. Sara Rosenbaum, Hirsch 

Professor of Health Law & Policy, George Washington University 

Medical Center School of Public Health and Health Services; Mr. 

Harvey Rosenfield, President, Foundation for Consumer and Taxpayer Rights; Mr. Lawrence E. Smarr, President, Physicians Insurers Association of America. 

10

The Subcommittee on Oversight and Investigations held a field 

hearing on ‘‘The Medical Liability Insurance Crisis: A Review of 

the Situation in Pennsylvania’’ on February 10, 2003. The Subcommittee received testimony from: The Honorable Edward G. 

Rendell, Governor, Commonwealth of Pennsylvania; Julia W. 

Johansson, MD; Mr. Gregory Wozniak, President and Chief Executive Officer, St. Mary Medical Center; David J. Eskin, MD, Chief 

of Staff, Abington Memorial Hospital; Edward H. Dench, Jr., MD, 

President, Pennsylvania Medical Society; Donald J. Palmisano, 

MD, JD, Member, American Medical Association Board of Trustees; 

Ms. Leanne Dyess; Ms. Heather Lewinski; Mr. Lawrence E. Smarr, 

President, Physicians Insurers Association of America; Mr. James 

Hurley, ACAS, MAAA, Chairperson, Medical Malpractice Subcommittee, American Academy of Actuaries; Mr. Scott Diener, 

President and Chief Operating Officer, PMSLIC; Mr. Alan G. 

Rosenbloom, President & Chief Executive Officer, Pennsylvania 

Health Care Association and Center for Assisted Living Management; Thomas J. Nasca, MD, FACP, Dean of Jefferson Medical 

School, Senior Vice President Thomas Jefferson University; Mr. 

Harvey Rosenfield, President, Foundation for Consumer and Taxpayer Rights; Ms. Diane A. Menio, Executive Director, Center for 

Advocacy for the Rights and Interests of the Elderly (CARIE); Mr. 

John H. Reed; Neil Vidmar, Ph.D., Professor of Law, Duke Law 

School; and, Mr. James Mundy. 

COMMITTEE CONSIDERATION

On March 4, 2003, the Subcommittee on Health met in open 

markup session and approved H.R. 5 for Full Committee consideration, as amended, by a voice vote, a quorum being present. On 

March 6, 2003, the Full Committee met in open markup session 

and favorably ordered H.R. 5 reported to the House, as amended, 

by a voice vote, a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The following are 

the recorded votes taken on amendments offered to the measure, 

including the names of those Members voting for and against. A 

motion by Mr. Tauzin to order H.R. 5 reported to the House, as 

amended, was agreed to by a voice vote.

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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee held oversight hearings and 

made findings that are reflected in this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

The goal of H.R. 5 is to improve patient access to health care 

services and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery 

system. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee finds that H.R. 5, the 

Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) 

Act of 2003, would result in no new or increased budget authority, 

entitlement authority, or tax expenditures or revenues. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974.

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, March 10, 2003. 

Hon. W.J. ‘‘BILLY’’ TAUZIN, Chairman, Committee on Energy and Commerce, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5, the Help Efficient, Accessible, Low Cost, Timely Healthcare (HEALTH) Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Alexis Ahlstrom (for 

federal revenues and spending), Leo Lex (for the state, local, and 

tribal impacts), and Stuart Hagen (for the private-sector impact). 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, Director. 

Enclosure.

H.R. 5—Help Efficient, Accessible, Low-Cost, Timely Healthcare 

(HEALTH) Act of 2003

Summary: H.R. 5 would impose limits on medical malpractice 

litigation in state and federal courts by capping awards and attorney fees, modifying the statute of limitations, eliminating joint and 

21

several liability, and changing the way collateral-source benefits 

are treated. 

Those changes would lower the cost of malpractice insurance for 

physicians, hospitals, and other health care providers and organizations. That reduction in insurance costs would, in turn, lead to 

lower charges for health care services and procedures, and ultimately, to a decrease in rates for health insurance premiums. 

Because employers would pay less for health insurance for employees, more of their employees’ compensation would be in the 

form of taxable wages and other fringe benefits. As a result, CBO 

estimates that enacting H.R. 5 would increase federal revenues by 

$15 million in 2004 and by $3 billion over the 2004–2013 period. 

Enacting H.R. 5 also would reduce federal direct spending for 

Medicare, Medicaid, the government’s share of premiums for annuitants under the Federal Employees Health Benefits (FEHB) program, and other federal health benefits programs. CBO estimates 

that direct spending would decline by $14.9 billion over the 2004–

2013 period. 

Federal spending for active workers participating in the FEHB 

program is included in the appropriations for federal agencies, and 

therefore is discretionary. CBO estimates that enactment of H.R. 5 

would reduce discretionary spending for the FEHB program by 

about $230 million over the 2004–2013 period. 

The bill would preempt state laws that provide less protection for 

health care providers and organizations from liability, loss, or damages (other than caps on awards for damages). That preemption 

would be an intergovernmental mandate as defined in the Unfunded Mandates Reform Act (UMRA). Such a preemption would 

limit the application of state law, but it would require no action by 

states that would result in additional spending or a loss of revenue. 

Thus, the threshold established by UMRA for intergovernmental 

mandates ($59 million in 2003, adjusted annually for inflation) 

would not be exceeded. 

H.R. 5 would impose a private-sector mandate on attorneys in 

malpractice cases by limiting the size of the awards they could receive. CBO estimates that the direct cost of that mandate would exceed the annual threshold specified in UMRA ($17 million in 2003, 

adjusted annually for inflation) in all but the first year the mandate would be effective. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 5 is shown in the following table. The effects 

of this legislation on direct spending fall within budget functions 

550 (health) and 570 (Medicare). The effects on spending subject to 

appropriation fall within multiple budget functions.

By fiscal year, in millions of dollars— 

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004–

2013

CHANGES IN REVENUES

Income and HI Payroll Taxes 

(on-budget) ......................... 10 70 170 210 220 230 250 270 290 330 2,050

Social Security Payroll Taxes 

(off-budget) ......................... 5 20 60 90 100 110 120 130 140 150 925

Total ................................ 15 90 230 300 320 340 370 400 430 480 2,975

CHANGES IN DIRECT SPENDING

Estimated Budget Authority .... ¥170 ¥480 ¥910 ¥1,250 ¥1,570 ¥1,820 ¥1,990 ¥2,130 ¥2,220 ¥2,350 ¥14,900

22

By fiscal year, in millions of dollars— 

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004–

2013

Estimated Outlays ................... ¥170 ¥480 ¥910 ¥1,250 ¥1,570 ¥1,820 ¥1,990 ¥2,130 ¥2,220 ¥2,350 ¥14,900

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level ¥2 ¥10 ¥20 ¥20 ¥20 ¥30 ¥30 ¥30 ¥30 ¥30 ¥230

Estimated Outlays ................... ¥2 ¥10 ¥20 ¥20 ¥20 ¥30 ¥30 ¥30 ¥30 ¥30 ¥230

Note.—HI = Medicare Hospital Insurance program. 

Basis of estimate 

This estimate assumes that H.R. 5 will be enacted in July 2003. 

It would apply to lawsuits initiated on or after the date of enactment. 

Major provisions of the bill 

H.R. 5 would place caps on awards by limiting non-economic 

damages, such as pain and suffering, to $250,000, and punitive 

damages to twice the amount of economic damages or $250,000, 

whichever is greater. Punitive damages would be further constrained by limiting the circumstances under which they may be 

sought. Economic, or compensatory, damages would not be limited. 

Attorney fees would be restricted as follows: 40 percent of the first 

$50,000 of the award, 33.3 percent of the next $50,000 of the 

award, 25 percent of the next $500,000, and 15 percent of that portion of the award in excess of $600,000. The caps on attorney fees 

would apply regardless of whether the award was determined in 

the courts or settled privately, and could be reduced further at the 

discretion of the court. (The court could not, however, increase attorney fees beyond the caps.) For awards of future damages equal 

to or exceeding $50,000, any party to the lawsuit could request that 

future damages be paid by periodic payments. 

The bill would impose a statute of limitations requiring that lawsuits begin within three years after the injury alleged to have happened as a result of malpractice occurs or one year after the claimant discovers, or should have discovered, the injury, whichever occurs first. Under the joint and several liability provisions of current 

law, defendants found negligent in a lawsuit are each liable for the 

full amount of damages, regardless of their proportionate share of 

responsibility for the injury. H.R. 5 would limit the liability of each 

defendant to the share of damages attributable to his or her responsibility. 

The bill would allow evidence of collateral-source benefits to be 

introduced at trial by either claimants or defendants. Collateralsource benefits are other sources of compensation a claimant may 

have access to in the event of an injury. A common source of such 

benefits is the claimant’s health insurance, which would likely pay 

for a portion of the medical costs arising from the injury. Other 

sources include disability insurance payments, workers’ compensation, and life insurance payments. In addition, providers of collateral-source benefits would not be allowed to place a lien on the 

claimant’s award or recover any amount from the claimant, whether or not the case goes to trial. 

23

Impact on medical malpractice insurance premiums 

CBO’s estimate of the impact of this bill is based on a statistical 

analysis of historical premiums and claims data for medical malpractice insurance coverage in states that have and have not enacted laws that limit awards for medical malpractice torts. The 

data include information on malpractice awards and insurance premiums, the characteristics of state insurance markets, state laws 

regarding malpractice torts, and socioeconomic measures. Data 

were provided by several organizations including Medical Liability 

Monitor; Insurance Services Office, Inc.; Physician Insurers Association of America; National Association of State Insurance Commissioners; and the U.S. Census Bureau. CBO also considered the 

impact of factors not directly related to trends in malpractice claim 

payments that may have contributed to recent increases in medical 

malpractice premiums. Those factors include reduced investment 

income of insurers, the need of insurers to replenish depleted reserves for unpaid claims, changes in market structure in certain 

states, and increases in the price of reinsurance. 

CBO’s analysis indicated that certain tort limitations, primarily 

caps on awards and rules governing offsets from collateral-source 

benefits, effectively reduce average premiums for medical malpractice insurance. Consequently, CBO estimates that, in states 

that currently do not have controls on malpractice torts, H.R. 5 

would significantly lower premiums for medical malpractice insurance from what they would otherwise be under current law. That 

effect would increase somewhat over the ten-year time horizon of 

this estimate because caps on awards would not be indexed to increase with inflation. As a result, the caps on awards would become 

more constraining in later years. CBO also took into consideration 

the likelihood that, in the future, some additional states would 

enact laws limiting malpractice torts in the absence of federal legislation. 

CBO estimates that, under this bill, premiums for medical malpractice insurance ultimately would be an average of 25 percent to 

30 percent lower than what they would be under current law. However, other factors noted above may affect future premiums, possibly obscuring the anticipated effect of the legislation. The effect 

of H.R. 5 would vary substantially across states, depending on the 

extent to which a state already limits malpractice litigation. There 

would be almost no effect on malpractice premiums in about onefifth of the states, while reductions in premiums would be substantially larger than the overall average in about one-third of the 

states. 

Impact on health insurance premiums 

The percentage effect of H.R. 5 on overall health insurance premiums would be far smaller than the percentage impact on medical 

malpractice insurance premiums. Malpractice costs account for a 

very small fraction of total health care spending; even a very large 

reduction in malpractice costs would have a relatively small effect 

on total health plan premiums. In addition, some of the savings 

leading to lower medical malpractice premiums—those savings 

arising from changes in the treatment of collateral-source benefits—would represent a shift in costs from medical malpractice insurance to health insurance. Because providers of collateral-source 

24

benefits would be prevented from recovering their costs arising 

from the malpractice injury, some of the costs that would be borne 

by malpractice insurance under current law would instead be borne 

by the providers of collateral-source benefits. A substantial portion 

of collateral source benefits are provided by health insurers. 

CBO’s estimate does not include savings from reductions in the 

practice of defensive medicine—services and procedures that are 

provided largely or entirely to avoid potential liability. Estimating 

the amount of health care spending attributable to defensive medicine is difficult. Most estimates are speculative in nature, relying, 

for the most part, on surveys of physicians’ responses to hypothetical clinical situations, and clinical studies of the effectiveness 

of certain intensive treatments. Compounding the uncertainty 

about the magnitude of spending for defensive medicine, there is 

little empirical evidence on the effect of medical malpractice tort 

controls on spending for defensive medicine and, more generally, on 

overall health care spending. 

A few studies have observed reductions in health care spending 

correlated with changes in tort law, but that research was based 

largely on a narrow part of the population and considered only 

spending for a small number of ailments. One study analyzed the 

impact of tort limits on Medicare hospital spending for patients 

suffering acute myocardial infarction or ischemic heart disease, and 

observed a significant reduction in spending in states with such 

laws. Other research examined the effect of tort limits on the proportion of births by Caesarean section. It also found savings in 

states with tort limits, albeit of a much smaller magnitude. Using 

a longitudinal database of Medicare spending for fee-for-service 

beneficiaries between 1989 and 1999, CBO found no effect of tort 

controls on medical spending in an analysis that considered a 

broader set of ailments. Moreover, using a different data set, CBO 

could find no statistically significant difference in per capita health 

care spending between states with and without malpractice tort 

limits. These findings are preliminary, however, and CBO continues to explore this issue. 

Federal revenues 

CBO estimates that, over a three-year period, enacting H.R. 5 

would lower the price employers, state and local governments, and 

individuals pay for health insurance by about 0.4 percent, before 

accounting for the responses of health plans, employers, and workers to the lower premiums. Those responses would include an increase in the number of employers offering insurance to their employees and in the number of employees enrolling in employersponsored insurance, changes in the types of health plans that are 

offered, and increases in the scope or generosity of health insurance benefits. CBO assumes that these behavioral responses would 

offset 60 percent of the potential impact of the bill on the total 

costs of health plans. 

The remaining 40 percent of the potential reduction in premium 

costs, or about 0.2 percent of group health insurance premiums, 

would occur in the form of lower spending for health insurance. In 

the short term, some of the savings would be retained by employers 

as higher profits, and would result in higher collections of income 

taxes from employers. Ultimately, however, those savings would be 

25

passed through to workers, increasing both their taxable compensation and other fringe benefits. For employees of private firms, CBO 

assumes that all of that savings would ultimately be passed 

through to workers. We assume that state, local, and tribal governments would absorb 75 percent of the decrease and would increase 

their workers’ taxable income and other fringe benefits to offset the 

remaining one-quarter of the decrease. CBO estimates that the resulting increase in taxable income would grow from $65 million in 

calendar year 2004 to $1.4 billion 2013. 

Those increases in workers’ taxable compensation would lead to 

more federal tax revenues. The estimate assumes an average marginal rate of about 20 percent for income taxes and the current-law 

rates for the Hospital Insurance and Social Security payroll taxes 

(2.9 percent and 12.4 percent, respectively). CBO further assumes 

that 15 percent of the change in taxable compensation would not 

be subject to the Social Security payroll tax. As a result, we estimate that federal tax revenues would increase by $15 million in 

2004 and by a total of $3 billion over the 2004–2013 period if H.R. 

5 were enacted. Social Security payroll taxes, which are off-budget, 

account for about 30 percent of those totals. 

Federal spending 

CBO estimates that H.R. 5 would reduce direct spending for federal health insurance programs by $14.9 billion over the 2004–2013 

period. 

CBO estimates that premiums for the FEHB program would decline by the same 0.4 percent as the estimated average change in 

premiums for private health insurance. (That estimate includes the 

effects of H.R. 5 on both premiums for malpractice insurance and 

the collection of collateral-source benefits.) We assume that participants in the FEHB program would offset 60 percent of that reduction by choosing more expensive plans, so that spending for the 

FEHB program would decline by 0.2 percent.

Federal spending for annuitants in the FEHB program is considered direct spending. CBO estimates that H.R. 5 would reduce direct spending for annuitants in FEHB by $230 million over the 

2004–2013 period. Federal spending for active workers participating in the FEHB program is included in the appropriations for 

federal agencies, and therefore is discretionary. CBO estimates 

that enactment of H.R. 5 would reduce discretionary spending for 

FEHB by about $230 million over the 2004–2013 period. Spending 

for postal workers and postal annuitants participating in the FEHB 

program is off-budget. CBO estimates that changes in spending for 

Postal Service participants would be offset by changes in the prices 

of postal services, and therefore would net to zero. 

Each year, the Center for Medicare & Medicaid Services sets 

Medicare payment rates for physician services and hospital services that include explicit adjustments for changes in the cost of 

malpractice premiums. CBO estimates that H.R. 5 would have no 

effect on Medicare spending in 2003, because payment rates have 

already been set for hospital and physician services. CBO estimates 

that incorporating lower malpractice premiums in Medicare payment rates would reduce Medicare spending by $11.2 billion over 

the 2004–2013 period. 

26

CBO assumes that the rates that state Medicaid programs pay 

for hospital and physician services would change in proportion to 

the changes in Medicare payments. In addition, lower Medicare 

payment rates would result in lower payments by beneficiaries for 

cost sharing and premiums. Therefore, H.R. 5 would reduce spending by federal programs that pay premiums and cost sharing for 

certain Medicare beneficiaries—Medicaid and the Tricare for Life 

program of the Department of Defense (DoD). Estimates that H.R. 

5 would reduce direct spending for Medicaid and DoD by $3.5 billion over the 2004–2013 period. 

Intergovernmental and private-sector impacts: The Unfunded 

Mandates Reform Act defines a mandate as legislation that ‘‘would 

impose an enforceable duty’’ upon the private sector or a state, 

local, or tribal government. CBO believes that UMRA’s definition 

of a mandate does not include legislation that would impose requirements or limitations on recoveries, address burdens of proof, 

or modify evidentiary rules because such changes would be methods of enforcing existing duties, rather than new duties themselves 

as contemplated by UMRA. The provisions of H.R. 5 would not impose or change the underlying enforceable duties or standards of 

care applicable to those providing medical items and services under 

current law. Rather, they would address the enforcement of existing standards of professional behavior through tort litigation procedures. 

Clearly, a cap on recoveries of damages from medical malpractice 

would lower recoveries by future plaintiffs while reducing the costs 

borne by potential defendants. This cost effect, however, would not 

itself establish a new mandate. It would be more reasonably viewed 

as part of the process for enforcing the professional duties of medical providers, rather than an enforceable duty as defined by 

UMRA. 

Intergovernmental mandates and other public-sector impacts 

Intergovernmental Mandates. The bill would preempt state laws 

that would prevent the application of any provisions of the bill, but 

it would not preempt any state law that provides greater protections for health care providers and organizations from liability, 

loss, or damages. Those that provide a lesser degree of protection 

would be preempted. (State laws governing damage awards would 

not be preempted, regardless of whether they were higher or lower 

than the caps provided for in the bill.) These preemptions would 

limit the application of state law, but they would require no action 

by states that would result in additional spending or a loss of revenue. Thus, the threshold established by UMRA for intergovernmental mandates ($59 million in 2003, adjusted annually for inflation) would not be exceeded. 

Other Public-Section Impacts. State, local, and tribal governments would realize net savings as a result of provisions of the bill. 

State, local, and tribal governments that assess income taxes also 

would realize increased tax revenues as a result of increases in 

workers’ taxable income. CBO has not estimated the magnitude of 

those increased revenues. 

State, local, and tribal governments would save money as a result of lower health insurance premiums precipitated by the bill. 

Based on information from the Bureau of the Census and the Joint 

27

Committee on Taxation and on our estimates of the effect of the 

bill on the health care premiums, CBO estimates that state and 

local governments would save about $6 billion over the 2004–2013 

period as a result of lower premiums for health care benefits they 

provide to their employees. That figure is based on estimates of 

state and local spending for health care growing from about $95 

billion in 2004 to $185 billion in 2013 and an expectation that savings would phase in over a three-year period. The estimate accounts for some loss in receipts because state health, sickness, income-disability, accident, and workers’ compensation programs 

would no longer be able to recover a share of malpractice damage 

awards. 

State and local governments also would save Medicaid costs as 

a result of lower health care spending. CBO estimates that state 

spending for Medicaid would decrease by $2.5 billion over the 

2004–2013 period.

Private-sector mandates and other inputs 

The bill would impose a private-sector mandate on attorneys in 

malpractice cases by limiting the size of the awards they would receive. CBO estimates that the direct cost of that mandate to affected attorneys would be less than $100 million in 2003, and about 

$340 million per year in 2004 through 2007. Those costs would exceed the annual threshold specified in UMRA ($117 million in 

2003, adjusted annually for inflation) in all but the first year the 

mandate would be effective. 

Previous cost estimate: On September 24, 2002, CBO provided a 

cost estimate for H.R. 4600 as ordered reported by the Committee 

on the Judiciary. The current estimate differs from the earlier estimate in three ways. It: 

Reflects the exclusion of the Medicare and Medicaid programs from the collateral-source benefits provision in the bill, 

thus allowing them to continue to be secondary payers in medical malpractice cases. This change increases the estimated 

savings to the Medicare and Medicaid programs; 

Corrects the previous estimate, which overstated on-budget 

savings in the FEHB program because it included off-budget 

effects related to the Postal Service; 

Reflects changes in projections under current law of tax-sheltered health expenditures, as well as changes in projections of 

spending under current law for the Medicare, Medicaid, and 

FEHB programs. 

Estimate prepared by: Federal revenues: Alexis Ahlstrom; Federal outlays: Medicaid—Jeannee De Sa and Eric Rollins; Medicare—Julia Christensen and Alexis Ahlstrom; and FEHB—Alexis 

Ahlstrom. 

Impact on State, local, and tribal governments: Leo Lex. 

Impact on the private sector: Stuart Hagen. 

Estimate approved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

28

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional authority for this legislation is provided in Article I, section 8, clause 

3, which grants Congress the power to regulate commerce with foreign nations, among the several States, and with the Indian tribes. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Authority Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

Section 1 establishes the short title of the bill as the ‘‘Help Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) Act of 

2003.’’ 

Section 2. Findings and purpose 

Section 2 states the findings and purpose of the bill. 

Section 3. Encouraging speedy resolution of claims 

Section 3 states that a health care lawsuit shall be commenced 

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 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. There is an exception for alleged injuries sustained by a 

minor before the age of 6, in which case a health care lawsuit may 

be commenced by or on behalf of the minor until the later of 3 

years from the date of manifestation of injury, or the date on which 

the minor attains the age of 8. This time period is 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. 

The Committee does not intend the term injury to include business 

injuries. The term ‘‘manifestation of injury’’ means the injury has 

become reasonably evident. Thus, if someone unknowingly receives 

tainted blood, ‘‘manifestation of injury’’ is not the date of receiving 

the blood. Instead, it is the date on which adverse symptoms become reasonably evident. 

29

Section 4. Compensating patient injury 

Section 4 sets forth new guidelines regarding patients’ ability to 

recover for certain types of damages. Subsection 4(a) provides that 

in any health care lawsuit, nothing in this Act shall limit a claimant’s recovery for the full amount of available economic damages, 

notwithstanding the limitation in subsection (b). Under subsection 

4(b), there can be no more than $250,000 in non-economic damages 

with respect to the same injury. 

The cap in this section can apply separately to each party with 

a direct personal injury. For example, if there is a single class-action lawsuit where a drug manufacturer sold drugs that were taken 

by several individuals and those individuals suffered adverse 

events, each of those individuals could receive up to $250,000 in 

non-economic damages. Similarly, if a pregnant mother and her 

baby sustain physical injuries during an operation and a health 

care provider is found liable, then the mother and the baby could 

each recover damages up to the cap permitted in subsection 4(b). 

The Committee notes that the limitation on damages in subsection 4(b) does not necessarily apply per claimant. Under section 

9, the term claimant may include numerous parties who do not suffer direct injuries, including parties with derivative claims. 

Subsection 4(c) makes clear that courts should apply the $250,000 cap for non-economic damages without calculations that 

include discounting to present value. Whether a given award below 

the cap involves discounting, however, remains a function of separate state and Federal law. Juries will not be informed about the 

maximum award for non-economic damages. 

Subsection 4(d) provides that each party shall be liable for the 

amount of damages allocated to such party. This allocation shall be 

determined in direct proportion to such party’s percentage of responsibility for the damages. The Committee notes that this subsection does not override principles of vicarious liability. Furthermore, the ‘‘fair share’’ rule only applies when a judgment of liability is rendered. 

Section 5. Maximizing patient recovery 

Section 5 requires that courts supervise the arrangements for 

payment of damages to protect against conflicts of interests. This 

section also establishes a sliding fee schedule for the payment of 

attorneys’ contingency fees. Payments are allocated as follows: 40 

percent of the first $50,000 recovered by the claimant; 331⁄3 percent of the next $50,000 recovered by the claimant; 25 percent of the 

next $500,000 recovered by the claimant; and 15 percent of any 

amount by which the recovery by the claimant(s) is in excess of 

$600,000. 

The requirements for court supervision in the first paragraph do 

not apply outside of judicial proceedings. Thus, disputes settled 

prior to filing a lawsuit would not necessitate court supervision. 

The sliding fee schedule, by contrast, applies in all cases. 

Section 6. Additional health benefits 

Section 6 ensures that in any health care lawsuit involving injury or wrongful death, a party may introduce evidence of collateral 

source benefits received—or reasonably likely to be received—from 

other parties. This section also restricts a provider of collateral 

30

source benefits from subrogating a claimant’s recovery or obtaining 

any lien or credit against the claimant’s damage award. 

Section 7. Punitive damages 

Section 7 specifies new guidelines for the awarding of punitive 

damages. Under this section, punitive damages may be awarded, if 

otherwise permitted by applicable state or Federal law, against any 

person in a health care lawsuit. The amount of punitive damages 

awarded may be as high as two times the amount of economic damages awarded or $250,000, whichever amount is greater. 

This section does not permit juries to be informed of the formula 

for calculating punitive damages. Moreover, punitive damages may 

only be awarded if it is first proven by clear and convincing evidence that a defendant 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. This section states that no demand for punitive 

damages shall be included in a health care lawsuit as initially filed. 

Further, punitive damages in healthcare lawsuits may not be 

awarded if compensatory damages are not awarded. 

Paragraph 7(c)(1) shields manufacturers and distributors of medical products from punitive damages in certain instances. The provision is intended to shield those companies that are fully compliant with all Federal Food, Drug, and Cosmetic Act (FFDCA) laws 

and regulations (in the case of biological medical products, full compliance with the FFDCA and section 351 of the Public Health Service Act (PHSA) is required). The FFDCA ensures the safety and effectiveness of drugs, devices, and biological products, all of which 

are covered by this section. Unless a claimant can demonstrate by 

clear and convincing evidence a lack of compliance with any 

FFDCA or PHSA section 351 law or regulation, then a manufacturer, distributor or supplier is shielded from punitive damages. All 

other damages, if proven, are still available to the claimant.

Under paragraph 7(c)(1), if a claimant can prove by clear and 

convincing evidence that a manufacturer, distributor or supplier 

has not complied with the FFDCA or section 351 of the PHSA, the 

claimant must then further prove that the harm attributed to the 

medical product resulted from the proven compliance failure. A 

technical violation of the Act that is wholly unrelated to the harm 

will not remove the shield provided for in this section. Rather, punitive damages will only be available to claimants who prove both 

a violation of the Act or regulations, and then draw the nexus between failed compliance and harm. 

Paragraph 7(c)(1) applies to medical products, as defined in section 9. Included in this definition are nonprescription, over-thecounter (OTC) drugs. Many OTC drugs are marketed after approval of a new drug application (NDA) or abbreviated new drug 

application (ANDA). Many OTC drugs are also marketed pursuant 

to monographs or tentative final monographs promulgated by the 

Agency. While a final monograph is a regulation, a tentative final 

monograph represents the Agency’s current position on the requirements for safe and effective labeling, formulation and marketing of 

the OTC drug product. In some instances, tentative final monographs have been in existence for decades, yet have never been finalized. Companies follow these so-called ‘‘tentative’’ monographs 

31

and deliver safe and effective drug products. The Committee believes that the mere fact that the FDA has not taken the last step 

to finalize monographs in existence for decades should not preclude 

a manufacturer, distributor or supplier of such products from 

claiming the protections afforded by section 7(c). 

Subsection 7(c) does not create an affirmative obligation on the 

part of the FDA to demonstrate compliance or noncompliance for 

the purposes of private litigation. The section also revokes the 

shield for persons: (1) who knowingly misrepresent information to 

the FDA; (2) who bribe government officials for the purpose of obtaining approval of medical products; or, (3) who prevent governmental enforcement actions. 

Paragraph 7(c)(2) prohibits a health care provider who prescribes, or who dispenses pursuant to a prescription, a medical 

product that is approved by the FDA from being named as a party 

in a product liability lawsuit. Nothing in the paragraph prevents 

a court from consolidating cases involving health care providers 

and cases involving products liability claims. 

Section 8. Authorization of payment of future damages to claimants 

in health care lawsuits 

Section 8 requires the court, at the request of any party, to order that the award of future damages equaling or exceeding $50,000 be 

paid by periodic payments. 

Section 9. Definitions 

Section 9 defines many of the terms included in the legislation. 

The term ‘‘health care lawsuit’’ does not include a claim or action 

which is based on criminal liability; which seeks civil fines or penalties paid to Federal, State or local government; which is grounded 

in antitrust; or in which the dispute is over the price of health care 

goods or services. The latter exclusion addresses cases concerning 

price-fixing or over charging, not cases involving personal injury. 

Finally, the Committee intends the term ‘‘health care goods and 

services’’ to include those involving ‘‘the assessment or care of the 

health of human beings.’’ Such terms include the monitoring, supervision, and provision of direct assistance to claimants. 

Section 10. Effect on other laws 

Section 10 states that this legislation does not apply to civil actions brought for a vaccine-related injury or death which is covered 

under provisions of the Public Health Service Act. It also states 

that nothing in the Act should affect any defense available to a defendant in a health care lawsuit or action under any other provision of federal law. 

Section 11. State flexibility and protection of state’s rights 

Section 11 specifies many of the rules governing the relationship 

between the HEALTH Act and state and Federal laws. Specifically, 

subsection 11(a) provides that provisions governing health care 

lawsuits outlined in the legislation preempt state law to the extent 

that state law prevents the application of these provisions. The legislation also supersedes the Federal Tort Claims Act (FTCA) to the 

extent that the FTCA provides for a greater amount of damages or 

contingent fees, a longer period in which a health care lawsuit may 

32

be commenced, or a reduced application of periodic payments of future damages. The FTCA is also superseded if it prohibits the introduction of evidence regarding collateral source benefits, or mandates or permits subrogation or a lien on collateral source benefits. 

Under subsection 11(b), if an issue is not addressed by a provision of law established by this legislation, it shall be governed by 

otherwise applicable state or Federal law. The subsection further 

states that the Act does not preempt or supersede any law that imposes greater procedural or substantive protections for health care 

providers and health care organizations from liability, loss, or damages. 

Subsection 11(c) states that this legislation does not preempt any 

state law (enacted before, on, or after the date of enactment of H.R. 

5) that specifies a particular amount of compensatory or punitive 

damages (or the total amount of damages) that may be awarded in 

a health care lawsuit. The subsection also provides that the Act 

does not preempt any defense available to a party in a health care 

lawsuit under any other provision of state or Federal law. 

Finally, the Committee notes the interrelationship of a number 

of provisions of H.R. 5. H.R. 5 does not create a cause of action or 

provide for a remedy or recovery that is not available or permitted 

under other provisions of applicable law. Moreover, any protections, 

defenses, or restrictions that are legally enforceable or available 

under contracts would still apply. Before applying the provisions of 

H.R. 5, courts should first review the law applicable to the appropriate claim or cause of action without reference to H.R. 5. Courts 

should then apply the limitations of H.R. 5 where appropriate. 

Section 12. Applicability; effective date 

Section 12 states that the provisions of the legislation apply to 

any health care lawsuit brought in Federal or state court, or subject to alternative dispute resolutions system, that is initiated on 

or after the date of the enactment of the Act, except that any 

health care lawsuit arising from an injury occurring prior to the 

date of the enactment of the Act is governed by the applicable statute of limitations provisions in effect at the time the injury occurred. 

Section 13. Sense of Congress 

Section 13 states 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. Because section 13 is a sense of Congress, this provision has no direct 

legal impact. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

This legislation does not amend any existing Federal statute.

(33)

DISSENTING VIEWS 

We are concerned that many health care providers face difficulty 

obtaining reasonably priced medical malpractice insurance. This is 

a serious problem that could restrict patient access to care, and it 

merits attention. The Majority, however, rushed this legislation 

through the Committee in a partisan fashion. The legislation is unclear with respect to many important points of law, and it does not 

reflect a deliberative effort to craft a comprehensive and workable 

legislative solution. Since H.R. 5 would preempt the tort laws of all 

50 states, its poorly drafted and ambiguous provisions will lead to 

excessive litigation for years to come. 

The Subcommittee on Health held only one hearing on this matter in February. The Subcommittee received testimony about the 

detrimental effect this legislation would have on injured patients, 

the need to understand all factors that contribute to insurance premium increases, and the confusion resulting from many unclear 

provisions of the bill. Minimal changes were made to the legislation, leaving many questions unanswered. During full Committee 

Markup, every one of over a dozen amendments offered by the Minority was defeated on a partisan basis. This was not a process of 

bipartisan collaboration nor one that would lend itself to addressing the problem thoroughly. The legislation is now being rushed to 

the House Floor less than one week after being reported. 

The bill offers a ‘‘solution’’ prior to having discovered the root of 

the problem. Instead of reducing the occurrence of frivolous lawsuits, providing direct assistance to health care providers and communities, and examining every aspect of the problem, this legislation restricts the legal rights of those who have been truly 

wronged. 

We do not dispute that there is a problem. Providers have seen 

insurance rates increase dramatically in recent years, and some 

specialties are finding it impossible to secure coverage. The situation is leaving doctors with few options. Those who can afford it 

will pay the increased cost of providing medical services. Those who 

cannot afford the increase are forced to assume significant personal 

liability, leave high-risk specialties, or leave the profession altogether. At best, health care will become more expensive for patients. At worst, in addition to higher prices, patients will be denied access to care, and lifesaving treatments will not be provided. 

While the rising cost of malpractice insurance is a real concern 

for doctors and patients alike, we have serious reservations about 

the proposed ‘‘solution’’ for three primary reasons. First, what has 

caused the increase in malpractice insurance premiums is not easily identified. Moreover, it is not clear that this legislation will reduce the medical malpractice premiums that providers must pay to 

insurance companies. Second, the scope and severity of the provisions in H.R. 5 impose unreasonable restrictions on an injured paVerDate Jan 31 2003 08:48 Mar 12, 2003 Jkt 085573 PO 00000 Frm 00033 Fmt 6604 Sfmt 6604 E:\HR\OC\HR032P2.XXX HR032P2
34

tient’s ability to hold wrongdoers accountable. Third, the legislation 

is over-broad, protecting the interests of large corporations, such as 

Health Maintenance Organizations (HMO’s) and drug companies, 

at the expense of health care providers and patients. The legislation provides nothing more than a shield for bad actors rather than 

meaningful reforms for overburdened doctors and providers. 

To find an effective solution, we must closely examine the insurance industry and how its conduct affects medical malpractice premiums, an activity not undertaken by this Committee. We know 

that many factors completely unrelated to jury verdicts and the 

civil justice system affect insurance rates: changes in state law and 

regulatory requirements; competitiveness of the insurance market; 

the types of policies issued within the industry; interest rates; and 

national economic trends. Moreover, there is scant evidence to date 

that various state tort reforms have realized appreciable premium 

savings. In a comparison of states that enacted severe tort restrictions during the mid-1980’s and those that resisted enacting tort 

reform, a recent study found no correlation between tort reform 

and insurance rates. 

Insurance markets are subject to cycles, periods of underpricing 

of premiums to increase market share and book premium dollars, 

followed by a hardening of the market. Once the market hardens, 

competition intensifies, underwriting results deteriorate, and investment incomes fall. Insurance companies then need to raise premiums to cover losses. We are now in the midst of a ‘‘hard’’ phase 

of the insurance cycle and increases in malpractice premiums are 

consistent with overall market trends. This problem is not unique 

to malpractice insurance. While medical malpractice insurance premiums for the three riskiest specialties increased 10% from 2000 

to 2001, auto insurance premiums saw similar increases of 8.4% 

during that same period. 

A serious effort to provide relief to providers from high malpractice premiums would have looked at these and other issues. A 

number of Congressional Democrats have requested the General 

Accounting Office look into these questions. The Committee, however, chose to take a one-sided approach. Reps. Brown, Pallone, 

and Capps offered amendments that would encourage insurance reforms both on the state and federal levels. Each of those amendments was defeated on a partisan basis. Rep. Dingell offered an 

amendment in the nature of a substitute during the full Committee 

Markup of H.R. 5. The Democratic substitute would have provided 

direct assistance to health care providers and communities, reduced frivolous lawsuits, and established an independent advisory 

commission to thoroughly examine the problem and propose longterm solutions. It was also defeated on a partisan basis. 

There are many flaws in the legislation, but our dissenting views 

will focus on three of the most egregious: the cap on non-economic 

damages, the cap on punitive damages, and the overly restrictive 

and ambiguous statute of limitations. 

NON-ECONOMIC DAMAGES

H.R. 5 limits non-economic damages to $250,000 for all claims 

against negligent hospitals and doctors, drug and device manufacturers, nursing homes, HMOs and other insurers. This cap is an 

35

aggregate cap; no matter how many defendants participated in 

causing the injury or the severity of the injury, the most an injured 

patient can recover is $250,000. Non-economic damages compensate patients for very real injuries such as the loss of a limb 

or eyesight, the loss of mobility, the loss of brain or organ function, 

the loss of fertility, severe disfigurement and excruciating, chronic 

pain. Juries are not informed of this cap, presumably because proponents of this legislation do not want them to compensate for such 

a harsh limit by increasing the amount of damages in other areas. 

The severity of this cap is astounding. The intent is to parallel 

the cap in California’s MICRA law, which was enacted in 1975 and 

never indexed to inflation. The value of this cap has declined to a 

mere $40,389 in 2002 dollars. Using the Consumer Price Index for 

medical care, this cap today would be more than $1,500,000. In addition, the California law only applies to medical malpractice cases 

and not claims against drug and device manufacturers, HMO’s, insurance companies, or nursing homes covered under H.R. 5. Rep. 

Rush offered an amendment that would have indexed the cap to 

the rate of inflation, and Rep. Pallone offered an amendment that 

would have prohibited HMO’s and drug and device manufacturers 

from benefiting from the protections of this legislation. Both 

amendments were defeated on a partisan basis. 

In addition, by capping non-economic damages, H.R. 5 discriminates against women, children, the elderly, minorities, the unemployed and others who cannot show substantial economic loss (e.g., 

lost wages or salary). A child who suffers brain damage or other 

catastrophically debilitating injury would recoup little in economic 

damages, and would be left with a maximum of $250,000 for the 

remainder of his life, which could exceed 70 or 80 years. 

Non-economic damages are also an important measure of compensatory damages for older persons, and in particular nursing facility residents. These individuals have neither long life 

expectancies nor large earning capacities, the traditional measures 

of economic damages. By so stringently limiting non-economic damages, H.R. 5 would remove a strong financial incentive to nursing 

facilities to provide residents with decent care. Rep. DeGette offered an amendment to remove the cap on non-economic damages 

from the bill, and Ms. Schakowsky offered an amendment that prohibited nursing homes from benefitting from the protections of the 

legislation. Both amendments were defeated on party-line votes. 

PUNITIVE DAMAGES

The legislation sets a nearly impossible standard for awarding 

punitive damages and then limits such damages to twice economic 

damages or $250,000, whichever is greater. By basing punitive 

damages on the level of economic losses, the bill discriminates 

against injured women, children, elderly and others who tend to 

have lower incomes. For example, if a CEO of one of the drug companies that this legislation protects were injured, his economic 

damages would be worth millions upon millions of dollars. If a 

stay-at-home mother were injured, she would have minimal economic damages awarded to her. 

In order to assess punitive damages, H.R. 5 imposes a federal 

standard of ‘‘clear and convincing’’ evidence that (1) the defendant 

36

acted with malicious intent to injure or (2) the defendant understood the plaintiff was substantially certain to suffer unnecessary 

injury yet deliberately failed to avoid such injury. This standard of 

‘‘malicious intent’’ requires more than criminal misconduct; such a 

standard would likely protect a drunk doctor who kills a patient because a court would likely hold that the doctor was unable to form 

the necessary intent. 

The bill also could increase the length and cost of malpractice actions because it prohibits plaintiffs from seeking punitive damages 

in an initial suit. Only at the court’s discretion, after a finding by 

the court that there is a substantial probability that the plaintiff 

will prevail, may the plaintiff file an amended proceeding to request punitive damages be awarded. This requirement for a separate proceeding in essence turns one trial into two. 

STATUTE OF LIMITATIONS

H.R. 5 also sets a stringent federal statute of limitations on state 

tort cases. The statute of limitations for bringing an action is the 

earlier of three years after the date of manifestation of injury or 

one year after the date of discovery, but in no event shall the time 

for commencement of a lawsuit exceed three years. This provision 

also was subject to considerable debate in Committee, with particular focus on the meaning of manifestation. Proponents of the 

legislation were not certain what manifestation meant, but referred 

to Blacks Law Dictionary for guidance. In response to questioning 

by Rep. Dingell, Legislative Counsel noted that manifestation is 

not a term used in Federal law nor is it defined in the legislation. 

Since H.R. 5 includes one time frame from the reasonable discovery 

of an injury (one year) and a separate time frame from the manifestation of an injury (three years), manifestation of an injury must 

be something different than the reasonable discovery of that injury. 

Exactly what manifestation means remains unanswered. 

While some injuries are discovered immediately, often malpractice or product defects are not discovered or diagnosed for some 

time. For example, a hemophiliac who contracts HIV from tainted 

blood may not learn of the disease until five years later. Certainly 

it can be argued that HIV may manifest itself long before anyone 

could reasonably be expected to discover that injury. By establishing an absolute time limit for filing a case, this legislation 

would completely preclude many injured patients from any recourse and would therefore shield negligent practitioners, facilities, 

and manufacturers from any liability whatsoever. Moreover, use of 

the ambiguous term, manifestation, will lead to years of excessive 

and unnecessary litigation in both state and Federal courts. Rep. 

Engel offered an amendment to replace the statute of limitations 

with a clear and equitable alternative that was defeated on a 

party-line vote. 

DEMOCRATIC SUBSTITUTE

Unlike H.R. 5, the Democratic substitute directly addressed the 

needs of health care providers. Unlike H.R. 5, the Democratic substitute directly addressed the issue of frivolous law suits. Unlike 

H.R. 5, the Democratic substitute sought to find the true causes 

37

and the best long-term solutions to this problem by establishing an 

independent advisory commission. 

The scope of liability reforms in the Democratic substitute were 

limited to hospitals, physicians, nurses and other health professionals who pay malpractice insurance premiums. Unlike H.R. 5, it 

did not protect HMO’s, insurance companies and drug and device 

manufacturers. 

The amendment established an equitable statute of limitations 

that would begin three years from the date an injury is discovered 

or reasonably should have been discovered. For children who discover their injury while under the age of 18, they would have three 

years after turning 18 to file an action. 

As officers of the court, attorneys have an obligation to keep frivolous law suits from clogging the system. The Democratic substitute would have expanded that obligation by requiring attorneys 

to certify affirmatively that each of their medical malpractice actions has merit. If an attorney files a false certificate, the attorney 

would be subject to strict penalties by the courts. Unlike H.R. 5, 

this provision directly addresses the problem of frivolous law suits. 

The Democratic substitute would have also limited the circumstances under which punitive damages can be awarded to the 

most egregious of circumstances—gross negligence, reckless indifference to life, or intentional acts such as intoxication or sexual 

abuse. If punitive damages are awarded, half of the proceeds will 

be directed into a fund to reduce medical errors and improve patient safety. 

Where H.R. 5 does not provide any direct assistance to health 

care providers, the Democratic substitute included three provisions 

that were designed to help providers with their malpractice insurance costs. The first provision required malpractice insurance companies to pass along at least half of any savings achieved from this 

legislation to physicians on an annual basis. The second provision 

provided grants and contracts administered through the Department of Health and Human Services (HHS) to assist geographical 

regions of the country that are experiencing a shortage of physicians due to increased malpractice insurance costs. The third provision allowed HHS to send physicians from the National Health 

Service Corps to trauma centers that are about to close because of 

increased malpractice insurance costs. 

To conclude, the legislation before us today focuses on drastic reforms of the judicial system and extends those draconian reforms 

beyond the realm of medical malpractice. Rather than focusing on 

the underlying causes of malpractice premium increases and providing immediate assistance to health care providers, H.R. 5 limits 

the legal rights of patients with meritorious claims. H.R. 5 also 

limits the legal rights of providers against insurance companies, 

HMO’s and drug and device manufacturers. As the Democratic 

amendments demonstrated, any reforms of the judicial system 

should be narrowly tailored to reduce frivolous lawsuits and add 

stability to the courts. For example, Rep. Allen offered an amendment to encourage state pre-litigation screening panels, which was 

defeated on a partisan basis. H.R. 5 restricts claims with merit and 

brings uncertainty and confusion to the courts that will lead to excessive litigation for years to come. 

38

The rise in malpractice premiums is a real problem that calls for 

real reform. Failure to examine all aspects of this problem is irresponsible, and in this instance will disproportionately harm 

women, children, the elderly, and others who are injured. Above 

all, any legislative solution should strike a careful balance that preserves an injured patient’s right to just compensation and the delivery of health care without unreasonable costs of insurance.

JOHN D. DINGELL. 

LOIS CAPPS. 

JAN SCHAKOWSKY. 

FRANK PALLONE, Jr. 

TED STRICKLAND. 

HILDA L. SOLIS. 

SHERROD BROWN. 

EDWARD J. MARKEY. 

ELIOT L. ENGEL. 

HENRY A. WAXMAN. 

EDOLPHUS TOWNS. 

RICK BOUCHER. 

BART STUPAK. 

MIKE DOYLE.

(39)

DISSENTING VIEWS 

We believe that H.R. 5 is a gross violation of the constitutional 

concept of federalism. H.R. 5 would make many changes to the 

common law that severely limit the traditional rights of plaintiffs 

seeking damages from the malpractice of physicians and negligence 

from a variety of health related entities including Health Maintenance Organizations and pharmaceutical manufacturers and distributors. This bill is not a matter to be decided by Congress because it proposes tort reforms that are traditionally, and possibly 

constitutionally, areas for decisions by state legislatures. 

Because this issue has a long tradition in the state courts, they 

have taken a wide variety of views on the issue. In 20 states, 

courts have ruled that caps on damages are unconstitutional and 

18 state courts have ruled that their statutes of limitations are unconstitutional. It is inappropriate for Congress to limit the rights 

of individuals when state courts have ruled that those rights are 

protected under state constitutions. 

Furthermore, H.R. 5 would make sweeping changes to common 

law traditions by eliminating joint and several liability, capping the 

amount of non-economic damages, limiting punitive damages, and 

severely restricting the time for recovery by victims of medical malpractice. Under common law, defendants are joint and severally liable for harm to plaintiffs to ensure that the victims can actually 

recover damages for their injuries. Yet, H.R. 5 entirely eliminates 

joint and several liability for medical malpractice lawsuits, which 

means victims are less likely to receive compensation for their injuries and the defendants who caused harm are insulted from having 

to pay for their mistakes. Additionally, H.R. 5 caps non-economic damages at $250,000 in 

the aggregate. Non-economic damages compensate victims for injuries that are very real, like the loss of a leg, disfigurement, pain 

and suffering, and the loss of fertility. Under common law, non-economic damages are not capped. By limiting non-economic damages 

to $250,000, H.R. 5 ensures that victims receive arbitrary compensation for the horrendous and oftentimes permanent injuries 

they suffer, rather than allowing a jury to determine the appropriate level of compensation in each individual case. 

High malpractice insurance rates are a problem for our nation’s 

physicians. But capping damages to legitimate victims of medical 

malpractice will not solve the problem of high premiums. We believe other factors—like the cyclical nature of the insurance industry, the management of reserves, and the impact of increased medical costs on the ways that doctors provide care—significantly affect 

the rates of malpractice insurance. For example, the proponents of 

HR 5 credit MICRA with stabilizing rates in California. However, 

there is credible evidence that the stabilization of malpractice insurance rates resulted from the impact on the insurance industry 

40

of Proposition 103, rather than any caps on damages in malpractice 

lawsuits. 

Furthermore, there is no correlation between the level of malpractice insurance rates in a particular state and the caps on damages that state may have. For example, four of the five states with 

the highest malpractice premiums—Florida, Michigan, Texas, and 

Illinois—are states that have adopted some level of caps. H.R. 5 

will not reduce malpractice insurance premiums for physicians, but 

it will significantly limit the rights of malpractice victims to receive 

fair compensation for their harm. We believe that is necessary to 

conduct a comprehensive examination of the many factors that impact the pricing of insurance rates in order to appropriately address the problem of high malpractice insurance costs. 

H.R. 5 is an affront to the rights of states and malpractice victims. While H.R. 5 is silent on the very issue it purports to solve, 

malpractice insurance rates, it asks victims of medical negligence 

to accept arbitrary limits on the amount of compensation they may 

receive for their injuries. Congress should not act as an uber-state 

legislature by passing a bill to significantly restructure what is 

most appropriately a matter for state governments and take away 

the rights of citizens who have been harmed by medical malpractice. 

DIANA DEGETTE. LOIS CAPPS. EDOLPHUS TOWNS. RICK BOUCHER. EDWARD J. MARKEY. GENE GREEN. HENRY A. WAXMAN. BART STUPAK.

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