II 

109TH CONGRESS 

1ST SESSION S. 1337 

To restore fairness and reliability to the medical justice system and promote 

patient safety by fostering alternatives to current medical tort litigation, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 29, 2005 

Mr. ENZI (for himself and Mr. BAUCUS) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL

To restore fairness and reliability to the medical justice system and promote patient safety by fostering alternatives 

to current medical tort litigation, and for other purposes.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fair and Reliable Med5 ical Justice Act’’. 

6 SEC. 2. PURPOSES. 

7 The purposes of this Act are— 

8 (1) to restore fairness and reliability to the 

9 medical justice system by fostering alternatives to 
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1 current medical tort litigation that promote early 

2 disclosure of health care errors and provide prompt, 

3 fair, and reasonable compensation to patients who 

4 are injured by health care errors; 

5 (2) to promote patient safety through early dis6 closure of health care errors; and 

7 (3) to support and assist States in developing 

8 such alternatives. 

9 SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE 

10 ALTERNATIVES TO CURRENT MEDICAL TORT 

11 LITIGATION. 

12 Part P of title III of the Public Health Service Act 

13 (42 U.S.C. 280g et seq.) is amended by adding at the end 

14 the following: 

15 ‘‘SEC. 3990. STATE DEMONSTRATION PROGRAMS TO EVALU16 ATE ALTERNATIVES TO CURRENT MEDICAL 

17 TORT LITIGATION. 

18 ‘‘(a) IN GENERAL.—The Secretary is authorized to 

19 award demonstration grants to States for the develop20 ment, implementation, and evaluation of alternatives to 

21 current tort litigation for resolving disputes over injuries 

22 allegedly caused by health care providers or health care 

23 organizations. 
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1 ‘‘(b) DURATION.—The Secretary may award up to 10 

2 grants under subsection (a) and each grant awarded under 

3 such subsection may not exceed a period of 5 years. 

4 ‘‘(c) CONDITIONS FOR DEMONSTRATION GRANTS.— 

5 ‘‘(1) REQUIREMENTS.—Each State desiring a 

6 grant under subsection (a) shall— 

7 ‘‘(A) develop an alternative to current tort 

8 litigation for resolving disputes over injuries al9 legedly caused by health care providers or 

10 health care organizations that may be 1 of the 

11 models described in subsection (d); and 

12 ‘‘(B) promote a reduction of health care 

13 errors by allowing for patient safety data re14 lated to disputes resolved under subparagraph 

15 (A) to be collected and analyzed by organiza16 tions that engage in voluntary efforts to im17 prove patient safety and the quality of health 

18 care delivery. 

19 ‘‘(2) ALTERNATIVE TO CURRENT TORT LITIGA20 TION.—Each State desiring a grant under sub21 section (a) shall demonstrate how the proposed al22 ternative described in paragraph (1)(A)— 

23 ‘‘(A) makes the medical liability system 

24 more reliable through prompt and fair resolu25 tion of disputes; 
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1 ‘‘(B) encourages the early disclosure of 

2 health care errors; 

3 ‘‘(C) enhances patient safety; and 

4 ‘‘(D) maintains access to liability insur5 ance. 

6 ‘‘(3) SOURCES OF COMPENSATION.—Each State 

7 desiring a grant under subsection (a) shall identify 

8 the sources from and methods by which compensa9 tion would be paid for claims resolved under the pro10 posed alternative to current tort litigation, which 

11 may include public or private funding sources, or a 

12 combination of such sources. Funding methods shall 

13 to the extent practicable provide financial incentives 

14 for activities that improve patient safety. 

15 ‘‘(4) SCOPE.— 

16 ‘‘(A) IN GENERAL.—Each State desiring a 

17 grant under subsection (a) may establish a 

18 scope of jurisdiction (such as a designated geo19 graphic region, a designated area of health care 

20 practice, or a designated group of health care 

21 providers or health care organizations) for the 

22 proposed alternative to current tort litigation 

23 that is sufficient to evaluate the effects of the 

24 alternative. 
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1 ‘‘(B) NOTIFICATION OF PATIENTS.—A 

2 State proposing a scope of jurisdiction under 

3 subparagraph (A) shall demonstrate how pa4 tients would be notified that they are receiving 

5 health care services that fall within such scope. 

6 ‘‘(5) PREFERENCE IN AWARDING DEMONSTRA7 TION GRANTS.—In awarding grants under sub8 section (a), the Secretary shall give preference to 

9 States— 

10 ‘‘(A) that have developed the proposed al11 ternative through substantive consultation with 

12 relevant stakeholders; and 

13 ‘‘(B) in which State law at the time of the 

14 application would not prohibit the adoption of 

15 an alternative to current tort litigation. 

16 ‘‘(d) MODELS.— 

17 ‘‘(1) IN GENERAL.—Any State desiring a grant 

18 under subsection (a) that proposes an alternative de19 scribed in paragraph (2), (3), or (4) shall be deemed 

20 to meet the criteria under subsection (c)(2). 

21 ‘‘(2) EARLY DISCLOSURE AND COMPENSATION

22 MODEL.—In the early disclosure and compensation 

23 model, the State shall— 

24 ‘‘(A) require that health care providers or 

25 health care organizations notify a patient (or an 
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1 immediate family member or designee of the 

2 patient) of an adverse event that results in seri3 ous injury to the patient, and that such notifi4 cation shall not constitute an acknowledgment 

5 or an admission of liability; 

6 ‘‘(B) provide immunity from tort liability 

7 to any health care provider or health care orga8 nization that offers in good faith to pay com9 pensation in accordance with this section to a 

10 patient for an injury incurred in the provision 

11 of health care services (limited to claims arising 

12 out of the same nucleus of operative facts as 

13 the injury, and except in cases of fraud related 

14 to the provision of health care services, or in 

15 cases of criminal or intentional harm); 

16 ‘‘(C) set a limited time period during 

17 which a health care provider or health care or18 ganization may make an offer of compensation 

19 benefits under subparagraph (B), with consider20 ation for instances where prompt recognition of 

21 an injury is unlikely or impossible; 

22 ‘‘(D) require that the compensation pro23 vided under subparagraph (B) include— 

24 ‘‘(i) payment for the net economic loss 

25 of the patient, on a periodic basis, reduced 
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1 by any payments received by the patient 

2 under— 

3 ‘‘(I) any health or accident insur4 ance; 

5 ‘‘(II) any wage or salary continu6 ation plan; or 

7 ‘‘(III) any disability income in8 surance; 

9 ‘‘(ii) payment for the non-economic 

10 damages of the patient, if appropriate for 

11 the injury, based on a defined payment 

12 schedule developed by the State in con13 sultation with relevant experts and with 

14 the Secretary in accordance with sub15 section (g); and 

16 ‘‘(iii) reasonable attorney’s fees; 

17 ‘‘(E) not abridge the right of an injured 

18 patient to seek redress through the State tort 

19 system if a health care provider does not enter 

20 into a compensation agreement with the patient 

21 in accordance with subparagraph (B) or if the 

22 compensation offered does not meet the require23 ments of subparagraph (D) or is not offered in 

24 good faith; 
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1 ‘‘(F) permit a health care provider or 

2 health care organization that offers in good 

3 faith to pay compensation benefits to an indi4 vidual under subparagraph (B) to join in the 

5 payment of the compensation benefits any 

6 health care provider or health care organization 

7 that is potentially liable, in whole or in part, for 

8 the injury; and 

9 ‘‘(G) permit any health care provider or 

10 health care organization to contribute volun11 tarily in the payment of compensation benefits 

12 to an individual under subparagraph (B). 

13 ‘‘(3) ADMINISTRATIVE DETERMINATION OF

14 COMPENSATION MODEL.— 

15 ‘‘(A) IN GENERAL.—In the administrative 

16 determination of compensation model— 

17 ‘‘(i) the State shall— 

18 ‘‘(I) designate an administrative 

19 entity (in this paragraph referred to 

20 as the ‘Board’) that shall include rep21 resentatives of— 

22 ‘‘(aa) relevant State licens23 ing boards; 

24 ‘‘(bb) patient advocacy 

25 groups; 
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1 ‘‘(cc) health care providers 

2 and health care organizations; 

3 and 

4 ‘‘(dd) attorneys in relevant 

5 practice areas; 

6 ‘‘(II) set up classes of avoidable 

7 injuries, in consultation with relevant 

8 experts and with the Secretary in ac9 cordance with subsection (g), that will 

10 be used by the Board to determine 

11 compensation under clause (ii)(II); 

12 ‘‘(III) modify tort liability, 

13 through statute or contract, to bar 

14 negligence claims in court against 

15 health care providers and health care 

16 organizations for the classes of inju17 ries established under subclause (II), 

18 except in cases of fraud related to an 

19 injury, or in cases of criminal or in20 tentional harm; 

21 ‘‘(IV) outline a procedure for in22 forming patients about the modified 

23 liability system described in this para24 graph and, in systems where partici25 pation by the health care provider, 
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1 health care organization, or patient is 

2 voluntary, allow for the decision by 

3 the provider, organization, or patient 

4 of whether to participate to be made 

5 prior to the provision of, use of, or 

6 payment for the health care service; 

7 ‘‘(V) provide for an appeals proc8 ess to allow for review of decisions; 

9 and 

10 ‘‘(VI) establish procedures to co11 ordinate settlement payments with 

12 other sources of payment; 

13 ‘‘(ii) the Board shall— 

14 ‘‘(I) resolve health care liability 

15 claims for certain classes of avoidable 

16 injuries as determined by the State 

17 and determine compensation for such 

18 claims; 

19 ‘‘(II) develop a schedule of com20 pensation to be used in making such 

21 determinations that includes— 

22 ‘‘(aa) payment for the net 

23 economic loss of the patient, on a 

24 periodic basis, reduced by any 

25 payments received by the patient 
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1 under any health or accident in2 surance, any wage or salary con3 tinuation plan, or any disability 

4 income insurance; 

5 ‘‘(bb) payment for the non6 economic damages of the patient, 

7 if appropriate for the injury, 

8 based on a defined payment 

9 schedule developed by the State 

10 in consultation with relevant ex11 perts and with the Secretary in 

12 accordance with subsection (g); 

13 and 

14 ‘‘(cc) reasonable attorney’s 

15 fees; and 

16 ‘‘(III) update the schedule under 

17 subclause (II) on a regular basis. 

18 ‘‘(B) APPEALS.—The State, in establishing 

19 the appeals process described in subparagraph 

20 (A)(i)(V), may choose whether to allow for de 

21 novo review, review with deference, or some op22 portunity for parties to reject determinations by 

23 the Board and elect to file a civil action after 

24 such rejection. Any State desiring to adopt the 

25 model described in this paragraph shall indicate 
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1 how such review method meets the criteria 

2 under subsection (c)(2). 

3 ‘‘(C) TIMELINESS.—The State shall estab4 lish timeframes to ensure that claims handled 

5 under the system described in this paragraph 

6 provide for adjudication that is more timely and 

7 expedited than adjudication in a traditional tort 

8 system. 

9 ‘‘(4) SPECIAL HEALTH CARE COURT MODEL.—

10 In the special health care court model, the State 

11 shall— 

12 ‘‘(A) establish a special court for the time13 ly adjudication of disputes over injuries alleg14 edly caused by health care providers or health 

15 care organizations in the provision of health 

16 care services; 

17 ‘‘(B) ensure that such court is presided 

18 over by judges with health care expertise who 

19 meet applicable State standards for judges and 

20 who agree to preside over such court volun21 tarily; 

22 ‘‘(C) provide authority to such judges to 

23 make binding rulings on causation, compensa24 tion, standards of care, and related issues with 
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1 reliance on independent expert witnesses com2 missioned by the court; 

3 ‘‘(D) provide for an appeals process to 

4 allow for review of decisions; and 

5 ‘‘(E) at its option, establish an administra6 tive entity similar to the entity described in 

7 paragraph (3)(A)(i)(I) to provide advice and 

8 guidance to the special court. 

9 ‘‘(e) APPLICATION.— 

10 ‘‘(1) IN GENERAL.—Each State desiring a 

11 grant under subsection (a) shall submit to the Sec12 retary an application, at such time, in such manner, 

13 and containing such information as the Secretary 

14 may require. 

15 ‘‘(2) REVIEW PANEL.— 

16 ‘‘(A) IN GENERAL.—In reviewing applica17 tions under paragraph (1), the Secretary shall 

18 consult with a review panel composed of rel19 evant experts appointed by the Comptroller 

20 General. 

21 ‘‘(B) COMPOSITION.— 

22 ‘‘(i) NOMINATIONS.—The Comptroller 

23 General shall solicit nominations from the 

24 public for individuals to serve on the re25 view panel. 
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1 ‘‘(ii) APPOINTMENT.—The Comp2 troller General shall appoint, at least 11 

3 but not more than 15, highly qualified and 

4 knowledgeable individuals to serve on the 

5 review panel and shall ensure that the fol6 lowing entities receive fair representation 

7 on such panel: 

8 ‘‘(I) Patient advocates. 

9 ‘‘(II) Health care providers and 

10 health care organizations. 

11 ‘‘(III) Attorneys with expertise in 

12 representing patients and health care 

13 providers. 

14 ‘‘(IV) Insurers. 

15 ‘‘(V) State officials. 

16 ‘‘(C) CHAIRPERSON.—The Comptroller 

17 General, or an individual within the Govern18 ment Accountability Office designated by the 

19 Comptroller General, shall be the chairperson of 

20 the review panel. 

21 ‘‘(D) AVAILABILITY OF INFORMATION.—

22 The Comptroller General shall make available 

23 to the review panel such information, personnel, 

24 and administrative services and assistance as 
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1 the review panel may reasonably require to 

2 carry out its duties. 

3 ‘‘(E) INFORMATION FROM AGENCIES.—The 

4 review panel may request directly from any de5 partment or agency of the United States any 

6 information that such panel considers necessary 

7 to carry out its duties. To the extent consistent 

8 with applicable laws and regulations, the head 

9 of such department or agency shall furnish the 

10 requested information to the review panel. 

11 ‘‘(f) REPORT.—Each State receiving a grant under 

12 subsection (a) shall submit to the Secretary a report evalu13 ating the effectiveness of activities funded with grants 

14 awarded under such subsection at such time and in such 

15 manner as the Secretary may require. 

16 ‘‘(g) TECHNICAL ASSISTANCE.— 

17 ‘‘(1) IN GENERAL.—The Secretary shall provide 

18 technical assistance to the States awarded grants 

19 under subsection (a). 

20 ‘‘(2) REQUIREMENTS.—Technical assistance 

21 under paragraph (1) shall include— 

22 ‘‘(A) the development of a defined payment 

23 schedule for non-economic damages (including 

24 guidance on the consideration of individual 

25 facts and circumstances in determining appro-
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1 priate payment), the development of classes of 

2 avoidable injuries, and guidance on early disclo3 sure to patients of adverse events; and 

4 ‘‘(B) the development, in consultation with 

5 States, of common definitions, formats, and 

6 data collection infrastructure for States receiv7 ing grants under this section to use in reporting 

8 to facilitate aggregation and analysis of data 

9 both within and between States. 

10 ‘‘(3) USE OF COMMON DEFINITIONS, FORMATS, 

11 AND DATA COLLECTION INFRASTRUCTURE.—States 

12 not receiving grants under this section may also use 

13 the common definitions, formats, and data collection 

14 infrastructure developed under paragraph (2)(B). 

15 ‘‘(h) EVALUATION.— 

16 ‘‘(1) IN GENERAL.—The Secretary, in consulta17 tion with the review panel established under sub18 section (e)(2), shall enter into a contract with an ap19 propriate research organization to conduct an overall 

20 evaluation of the effectiveness of grants awarded 

21 under subsection (a) and to annually prepare and 

22 submit a report to the appropriate committees of 

23 Congress. Such an evaluation shall begin not later 

24 than 18 months following the date of implementa-
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1 tion of the first program funded by a grant under 

2 subsection (a). 

3 ‘‘(2) CONTENTS.—The evaluation under para4 graph (1) shall include— 

5 ‘‘(A) an analysis of the effect of the grants 

6 awarded under subsection (a) on the number, 

7 nature, and costs of health care liability claims; 

8 ‘‘(B) a comparison of the claim and cost 

9 information of each State receiving a grant 

10 under subsection (a); and 

11 ‘‘(C) a comparison between States receiv12 ing a grant under this section and States that 

13 did not receive such a grant, matched to ensure 

14 similar legal and health care environments, and 

15 to determine the effects of the grants and sub16 sequent reforms on— 

17 ‘‘(i) the liability environment; 

18 ‘‘(ii) health care quality; 

19 ‘‘(iii) patient safety; and 

20 ‘‘(iv) patient and health care provider 

21 and organization satisfaction with the re22 forms. 

23 ‘‘(i) OPTION TO PROVIDE FOR INITIAL PLANNING

24 GRANTS.—Of the funds appropriated pursuant to sub25 section (k), the Secretary may use a portion not to exceed 
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1 $500,000 per State to provide planning grants to such 

2 States for the development of demonstration project appli3 cations meeting the criteria described in subsection (c). 

4 In selecting States to receive such planning grants, the 

5 Secretary shall give preference to those States in which 

6 State law at the time of the application would not prohibit 

7 the adoption of an alternative to current tort litigation. 

8 ‘‘(j) DEFINITIONS.—In this section: 

9 ‘‘(1) HEALTH CARE SERVICES.—The term 

10 ‘health care services’ means any services provided by 

11 a health care provider, or by any individual working 

12 under the supervision of a health care provider, that 

13 relate to— 

14 ‘‘(A) the diagnosis, prevention, or treat15 ment of any human disease or impairment; or 

16 ‘‘(B) the assessment of the health of 

17 human beings. 

18 ‘‘(2) HEALTH CARE ORGANIZATION.—The term 

19 ‘health care organization’ means any individual or 

20 entity which is obligated to provide, pay for, or ad21 minister health benefits under any health plan. 

22 ‘‘(3) HEALTH CARE PROVIDER.—The term 

23 ‘health care provider’ means any individual or enti24 ty— 
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1 ‘‘(A) licensed, registered, or certified under 

2 Federal or State laws or regulations to provide 

3 health care services; or 

4 ‘‘(B) required to be so licensed, registered, 

5 or certified but that is exempted by other stat6 ute or regulation. 

7 ‘‘(4) NET ECONOMIC LOSS.—The term ‘net eco8 nomic loss’ means— 

9 ‘‘(A) reasonable expenses incurred for 

10 products, services, and accommodations needed 

11 for health care, training, and other remedial 

12 treatment and care of an injured individual; 

13 ‘‘(B) reasonable and appropriate expenses 

14 for rehabilitation treatment and occupational 

15 training; 

16 ‘‘(C) 100 percent of the loss of income 

17 from work that an injured individual would 

18 have performed if not injured, reduced by any 

19 income from substitute work actually per20 formed; and 

21 ‘‘(D) reasonable expenses incurred in ob22 taining ordinary and necessary services to re23 place services an injured individual would have 

24 performed for the benefit of the individual or 
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1 the family of such individual if the individual 

2 had not been injured. 

3 ‘‘(5) NON-ECONOMIC DAMAGES.—The term 

4 ‘non-economic damages’ means losses for physical 

5 and emotional pain, suffering, inconvenience, phys6 ical impairment, mental anguish, disfigurement, loss 

7 of enjoyment of life, loss of society and companion8 ship, loss of consortium (other than loss of domestic 

9 service), injury to reputation, and all other non-pe10 cuniary losses of any kind or nature, to the extent 

11 permitted under State law. 

12 ‘‘(k) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated to carry out this section 

14 such sums as may be necessary. Amounts appropriated 

15 pursuant to this subsection shall remain available until ex16 pended.’’.

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