II

104TH CONGRESS

1ST SESSION S. 300

To reform the civil justice system, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 31 (legislative day, JANUARY 30), 1995

Mr. MCCONNELL (for himself and Mr. ABRAHAM) introduced the following

bill; which was read twice and referred to the Committee on the Judiciary

A BILL

To reform the civil justice system, 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 ‘‘Lawsuit Reform Act

5 of 1995’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

Sec. 3. Findings.

Sec. 4. Authority.

Sec. 5. Equity in legal fees.

Sec. 6. Early offer and recovery mechanisms.

Sec. 7. Reform of joint and several liability.

Sec. 8. Single recovery.

Sec. 9. Limitation on punitive damages.

Sec. 10. Alternative dispute resolution.
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Sec. 11. Reliability of expert evidence.

Sec. 12. Express authorization for private right of action.

Sec. 13. Applicability.

Sec. 14. Severability.

Sec. 15. Effective date.

1 SEC. 3. FINDINGS.

2 The Congress finds that—

3 (1) the United States civil justice system is in4 efficient, unpredictable, costly, and impedes competi5 tiveness in the world marketplace for business and

6 employees;

7 (2) the defects in the civil justice system have

8 a direct and undesirable effect on interstate com9 merce by decreasing the availability of goods and

10 services in commerce;

11 (3) reform efforts should respect the role of the

12 States in the development of civil justice rules, but

13 recognize the national Government’s role in remov14 ing barriers to interstate commerce;

15 (4) the spiralling cost of litigation has contin16 ued unabated for the past 30 years; and

17 (5) there is a need to restore rationality, cer18 tainty, and fairness to the legal system, to promote

19 honesty and integrity within the legal profession,

20 and to encourage alternative means to the conten21 tious litigation system in resolving disputes.
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1 SEC. 4. AUTHORITY.

2 This Act is enacted pursuant to Congress’ powers

3 under Article I, section 8, clauses 3, 9, and 18, of the

4 United States Constitution.

5 SEC. 5. EQUITY IN LEGAL FEES.

6 (a) DISCLOSURE OF ATTORNEY’S FEES INFORMA7 TION.—

8 (1) DEFINITIONS.—For purposes of this sub9 section—

10 (A) the term ‘‘attorney’’ means any natu11 ral person, professional law association, cor12 poration, or partnership authorized under appli13 cable State law to practice law;

14 (B) the term ‘‘attorney’s services’’ means

15 the professional advice or counseling of or rep16 resentation by an attorney, but such term shall

17 not include other assistance incurred, directly

18 or indirectly, in connection with an attorney’s

19 services, such as administrative or secretarial

20 assistance, overhead, travel expenses, witness

21 fees, or preparation by a person other than the

22 attorney of any study, analysis, report, or test;

23 (C) the term ‘‘claimant’’ means any natu24 ral person who files a civil action arising under

25 any Federal law or in any diversity action in

26 Federal court and—
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1 (i) if such a claim is filed on behalf of

2 the claimant’s estate, the term shall in3 clude the claimant’s personal representa4 tive; or

5 (ii) if such a claim is brought on be6 half of a minor or incompetent, the term

7 shall include the claimant’s parent, guard8 ian, or personal representative;

9 (D) the term ‘‘contingent fee’’ means the

10 cost or price of an attorney’s services deter11 mined by applying a specified percentage, which

12 may be a firm fixed percentage, a graduated or

13 sliding percentage, or any combination thereof,

14 to the amount of the settlement or judgment

15 obtained;

16 (E) the term ‘‘hourly fee’’ means the cost

17 or price per hour of an attorney’s services;

18 (F) the term ‘‘initial meeting’’ means the

19 first conference or discussion between the

20 claimant and the attorney, whether by tele21 phone or in person, concerning the details,

22 facts, or basis of the claim;

23 (G) the term ‘‘natural person’’ means any

24 individual, and does not include an artificial or25 ganization or legal entity, such as a firm, cor-
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1 poration, association, company, partnership, so2 ciety, joint venture, or governmental body; and

3 (H) the term ‘‘retain’’ means the act of a

4 claimant in engaging an attorney’s services,

5 whether by express or implied agreement, by

6 seeking and obtaining the attorney’s services.

7 (2) DECISION ON COMPENSATION.—A claimant

8 who retains an attorney may elect whether to com9 pensate the attorney’s services in connection with

10 the claim on an hourly basis or a contingent fee

11 basis.

12 (3) DISCLOSURE AT INITIAL MEETING.—An at13 torney retained by a claimant shall, at the initial

14 meeting, disclose to the claimant the claimant’s right

15 to elect the method of compensating the attorney’s

16 services and the claimant’s right to receive a written

17 statement of the information described under para18 graph (5).

19 (4) RIGHT OF ATTORNEY.—If, within 30 days

20 after receiving the information described under para21 graph (5), a claimant has failed to elect the method

22 of compensating the attorney’s services, the attorney

23 may select the method of compensation and shall no24 tify the claimant of the selection.
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1 (5) INFORMATION AFTER INITIAL MEETING.—

2 Within 30 days after the initial meeting, an attorney

3 retained by a claimant shall provide a written state4 ment to the claimant containing—

5 (A) the estimated number of hours of the

6 attorney’s services that will be spent—

7 (i) settling or attempting to settle the

8 claim or action; and

9 (ii) handling the claim through trial;

10 (B) the attorney’s hourly fee for services in

11 the claim or action and any conditions, limita12 tions, restrictions, or other qualifications on the

13 fee the attorney determines are appropriate;

14 and

15 (C) the attorney’s contingent fee for serv16 ices in the claim or action and any conditions,

17 limitations, restrictions, or other qualifications

18 on the fee the attorney determines are appro19 priate.

20 (6) INFORMATION AFTER SETTLEMENT.—An

21 attorney retained by a claimant shall, within a rea22 sonable time not later than 30 days after the date

23 on which the claim or action is finally settled or ad24 judicated, provide a written statement to the claim25 ant containing—
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1 (A) the actual number of hours of the at2 torney’s services in connection with the claim;

3 (B) the total amount of the hourly fees or

4 total contingent fee for the attorney’s services

5 in connection with the claim; and

6 (C) the actual fee per hour of the attor7 ney’s services in connection with the claim, de8 termined by dividing the total amount of the

9 hourly fees or the total contingent fee by the

10 actual number of hours of attorney’s services.

11 (7) FAILURE TO DISCLOSE.—A claimant to

12 whom an attorney fails to disclose information re13 quired by this section may withhold 10 percent of

14 the fee and file a civil action for damages in the

15 court in which the claim or action was filed or could

16 have been filed.

17 (8) OTHER REMEDIES.—This section shall sup18 plement and not supplant any other available rem19 edies or penalties.

20 (b) LIMITATION ON ATTORNEY CONTINGENT

21 FEES.—

22 (1) DEFINITIONS.—For purposes of this sub23 section, the term—

24 (A) ‘‘allegedly liable party’’ means a per25 son, partnership, corporation, and the insurers
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1 thereof, or any other individual or entity alleged

2 by the claimant to be liable for at least some

3 portion of the damages alleged by the claimant;

4 (B) ‘‘claimant’’ means an individual who,

5 in his or her own right, or vicariously, is seek6 ing compensation for tortious physical or men7 tal injury, property damage, or economic loss;

8 (C) ‘‘contingent fee’’ means the fee nego9 tiated in a contingent fee agreement which is

10 only payable from the proceeds of any recovery

11 on behalf of a claimant;

12 (D) ‘‘contingent fee agreement’’ means a

13 fee agreement between an attorney and a claim14 ant wherein the attorney agrees to bear the risk

15 of no or inadequate compensation in exchange

16 for a proportionate share of part of or all of

17 any recovery by settlement or verdict obtained

18 for the claimant;

19 (E) ‘‘contingent fee attorney’’ means an

20 attorney who agrees to represent a claimant in

21 exchange for a contingent fee;

22 (F) ‘‘fixed fee’’ means an agreement be23 tween an attorney and a claimant whereby the

24 attorney agrees to perform a specific legal task
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1 in exchange for a specific sum to be paid by a

2 claimant;

3 (G) ‘‘hourly rate fee’’—

4 (i) means the fee generated by an

5 agreement or otherwise by operation of law

6 between an attorney and a claimant stat7 ing that the claimant pay the attorney a

8 fee determined by multiplying the hourly

9 rate negotiated, or otherwise set by law,

10 between the attorney and the claimant, by

11 the number of hours that the attorney has

12 worked on behalf of the claimant in fur13 therance of the claimant’s interest; and

14 (ii) may also be a contingent fee to

15 the extent it is only payable from the pro16 ceeds of any recovery on behalf of the

17 claimant;

18 (H) ‘‘pre-retention offer’’ means an offer

19 to settle a claim for compensation for damages

20 arising out of a civil action made to a claimant

21 not represented by an attorney at the time of

22 the offer;

23 (I) ‘‘post-retention offer’’ means an offer

24 in response to a demand for compensation made

25 within the time constraints, and conforming to
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1 the provisions of this subsection, to settle a

2 claim for damages arising out of a civil action

3 made to a claimant who is represented by a

4 contingent fee attorney;

5 (J) ‘‘response’’ means a written commu6 nication by a claimant or an allegedly respon7 sible party or the attorney for either, deposited

8 into the United States Mail and sent by cer9 tified mail; and

10 (K) ‘‘settlement offer’’ means a written

11 offer of settlement stated in a response filed

12 within the time limits described in this sub13 section.

14 (2) APPLICABILITY.—(A) This subsection shall

15 apply with respect to any civil action filed against

16 any person in any Federal or State court based upon

17 any cause of action (including, but not limited to

18 negligence, strict or product liability, breach of im19 plied warranty or professional malpractice) in which

20 damages are sought for tortious physical or mental

21 injury, property damage, or economic loss, except a

22 civil action arising under a Federal law that author23 izes an award of attorney fees to a prevailing party.

24 (B)(i) Nothing in this section shall apply to any

25 agreement between a claimant and an attorney to—
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1 (I) retain the attorney on an hourly rate

2 fee or fixed fee basis solely to evaluate a pre3 retention offer; and

4 (II) retain the attorney to collect overdue

5 amounts from an accepted pre-retention or

6 post-retention settlement offer.

7 (ii) This subsection shall not apply to contin8 gent fee agreements in civil actions where neither a

9 pre-retention nor a post-retention offer of settlement

10 is made.

11 (3) WRITTEN HOURLY RATE FEE AGREE12 MENT.—With respect to a civil action, if a contin13 gent fee attorney has not entered into a written

14 agreement with a claimant at the time of retention

15 setting forth the attorney’s hourly rate, then a rea16 sonable hourly rate shall be payable, subject to the

17 limitations described in this section.

18 (4) NATURE OF DEMAND FOR COMPENSA19 TION.—(A) With respect to a civil action, at any

20 time after retention, a contingent fee attorney shall,

21 on behalf of the claimant, send a demand for com22 pensation by certified mail to an allegedly respon23 sible party.

24 (B) The demand for compensation under sub25 paragraph (A) shall contain the material facts rel-
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1 evant to the civil action involved and a description

2 of the evidence determined by the contingent fee at3 torney to be discoverable by the alleged liable party

4 during the course of litigation, including—

5 (i) the name, address, age, marital status

6 and occupation of the claimant or of the injured

7 or deceased party if the claimant is operating in

8 a representative capacity;

9 (ii) a brief description of how the damages

10 arose;

11 (iii) the names and, if known, the address12 es, telephone numbers, and occupations of all

13 known witnesses;

14 (iv) copies of photographs in the claimant’s

15 possession which relate to the claim for dam16 ages;

17 (v) the basis for claiming that the party to

18 whom the claim is addressed is at least partially

19 liable for causing the injury;

20 (vi) if the claim for damages is based upon

21 a physical or mental injury—

22 (I) a description of the nature of the

23 injury, the names and addresses of all phy24 sicians, other health care providers, and

25 hospitals, clinics, or other medical service
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1 entities that provided medical care to the

2 claimant or injured party including the

3 date and nature of the service; and

4 (II) medical records relating to the in5 jury and those involving a prior injury or

6 preexisting medical condition which an al7 legedly liable party would be able to intro8 duce into evidence in a trial or, in lieu

9 thereof, providing executed releases allow10 ing the allegedly responsible party to ob11 tain such records directly from the claim12 ant’s physicians, health care providers and

13 entities that provided medical care; and

14 (vii) with respect to demand for a com15 pensation that includes an amount for medical

16 expenses, wages lost or other special damages

17 suffered as a consequence of the injury, rel18 evant documentation thereof, including records

19 of earnings if a claimant is self-employed and

20 employer records of earnings if a claimant is

21 employed.

22 (C) A claimant’s attorney shall provide copies

23 of each demand for compensation under this para24 graph to the claimant and to each allegedly liable

25 party at the time of the dispatch of the demand for
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1 compensation. Where reproduction costs would be

2 significant relative to the size of the settlement offer,

3 the claimant’s attorney, may, in the alternative,

4 offer other forms of access to the materials, conven5 ient and at reasonable cost to allegedly responsible

6 party’s attorney.

7 (D) A contingent fee attorney who fails to file

8 a demand for compensation under this paragraph

9 shall not be entitled to any fee greater than 10 per10 cent of any settlement or judgment received by the

11 claimant client after reasonable expenses have been

12 deducted.

13 (5) TIME LIMIT FOR RESPONSE SETTING

14 FORTH SETTLEMENT OFFER.—(A) An allegedly lia15 ble party shall have 60 days from the date of the re16 ceipt of a demand for compensation under para17 graph (4) to issue a response stating a settlement

18 offer.

19 (B) If within 30 days after the date of the re20 ceipt of a demand for compensation under para21 graph (4), an allegedly liable party notifies the attor22 ney of the claimant that such party seeks to have a

23 medical examination of the claimant, and the claim24 ant is not made available for such examination with25 in 10 days after the date of the receipt of such a
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1 request, the 60-day period described under subpara2 graph (A) shall be extended by one day for each day

3 that such request is not honored after the expiration

4 of such 10-day period. Any such extension shall also

5 include a further period of 10 days from the date of

6 the completion of the medical examination.

7 (C) A response under this paragraph shall be

8 open for acceptance for a minimum of 30 days from

9 the date of the receipt of such response by the attor10 ney of the claimant and shall state whether such re11 sponse expires in 30 days or remains open for ac12 ceptance for a longer period or until notice of with13 drawal is given.

14 (D) A settlement offer in a response under this

15 subsection may be increased during the 60-day pe16 riod described under subparagraph (A) by issuing an

17 additional response.

18 (E) If an additional response has been sent

19 under this paragraph, the time for acceptance shall

20 be 10 days from the date of the receipt of such addi21 tional response by the attorney of the claimant or 30

22 days from the date of the receipt of the initial re23 sponse, whichever is later, unless the additional re24 sponse specifies a longer period of time for accept25 ance as described under subparagraph (C).
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1 (6) MATERIAL TO ACCOMPANY SETTLEMENT

2 OFFER.—An allegedly responsible party and the at3 torney of such party shall include in any response

4 stating a settlement offer under paragraph (5) cop5 ies of materials in their possession concerning the

6 claim upon which the allegedly liable party relied in

7 making a settlement offer, except for material which

8 such party believes in good faith would not be dis9 coverable by the claimant during the course of litiga10 tion. Where reproduction costs would be significant

11 relative to the size of the settlement offer, the alleg12 edly responsible party, may, in the alternative, offer

13 other forms of access to the materials, convenient

14 and at reasonable cost to claimant’s attorney.

15 (7) EFFECT OF PRE-DEMAND SETTLEMENT

16 OFFER.—A settlement offer under this subsection to

17 a claimant represented by a contingent fee attorney

18 made prior to the receipt of a demand for compensa19 tion, which is open for acceptance for 60 days or

20 more from the time of its receipt and which con21 forms to the requirements of paragraph (6), shall be

22 considered a post-retention offer and shall have the

23 same effect under this subsection as if it were a re24 sponse to a demand for compensation.
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1 (8) PRE-RETENTION OFFER.—(A) An attorney

2 retained after a claimant has received a pre-reten3 tion offer under this subsection may not enter into

4 an agreement with the claimant to receive a contin5 gent fee based upon or payable from the proceeds of

6 the pre-retention offer which remains in effect.

7 (B) An attorney entering a fee agreement that

8 would effectively result in a claimant’s paying a per9 centage of a pre-retention offer to the attorney for

10 prosecuting the claim shall be considered to have

11 charged an unreasonable and excessive fee. With re12 spect to an attorney where a pre-retention offer has

13 been provided—

14 (i) the attorney may contract with a claim15 ant to receive an hourly rate fee or fixed fee for

16 advising the claimant regarding the pre-reten17 tion offer; or

18 (ii) the attorney may contract with a

19 claimant to receive a contingent fee applicable

20 to any amount received by a claimant, by settle21 ment or judgment, above the amount of the

22 pre-retention offer.

23 (9) POST-RETENTION OFFER WHERE A PRE-RE24 TENTION OFFER HAS BEEN MADE.—A claimant in

25 receipt of a pre-retention offer under this subsection
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1 which such claimant has not accepted and who later

2 receives a post-retention offer which is accepted, is

3 not obligated to pay the retained attorney a fee

4 greater than the hourly rate fee calculated on the

5 basis of the number of hours the attorney has

6 worked on behalf of claimant in furtherance of the

7 claimant’s claim, but not exceeding 20 percent of the

8 excess of the post-retention offer less the pre-reten9 tion offer.

10 (10) POST-RETENTION OFFER WHERE NO PRE11 RETENTION OFFER HAS BEEN MADE.—A claimant

12 not in receipt of a pre-retention offer under this sub13 section who has received a post-retention offer which

14 is accepted, is not obligated to pay the retained at15 torney a fee greater than the hourly rate fee cal16 culated on the basis of the number of hours the at17 torney has worked on behalf of claimant in further18 ance of claimant’s claim, but not exceeding 10 per19 cent of the first $100,000, plus 5 percent of any

20 amount above $100,000, of the accepted post-reten21 tion offer after reasonable expenses have been de22 ducted.

23 (11) CALCULATION OF ATTORNEY FEE WHEN

24 THERE IS A SUBSEQUENT RESOLUTION OF THE

25 CLAIM.—If an allegedly liable party’s post-retention
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1 settlement offer under this subsection is rejected,

2 but a later settlement offer is accepted, or there is

3 a judgment in favor of claimant, the claimant, irre4 spective of any pre-retention offer, is not obligated

5 to pay the retained attorney a fee greater the sum

6 of—

7 (A) the amount of the fee that would have

8 been calculated under paragraph (10) had the

9 post-retention offer been accepted but only as

10 applied to the subsequent settlement offer or

11 judgment up to the amount of the post-reten12 tion offer; and

13 (B) the product of multiplying the contin14 gent fee percentage negotiated between the con15 tingent fee attorney and claimant and the

16 amount by which the subsequent settlement or

17 judgment exceeds the post-retention offer, after

18 reasonable expenses have been deducted.

19 (12) PROVISION OF CLOSING STATEMENT.—

20 Upon receipt of any settlement or judgment under

21 this subsection, and prior to disbursement thereof, a

22 contingent fee attorney shall provide the claimant

23 with a written statement detailing how the proceeds

24 are to be distributed, including the amount of the

25 expenses paid out or to be paid out of the proceeds,
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1 the amount of the fee, how the fee amount is cal2 culated, and the amount due the claimant.

3 (13) EFFECT ON CONTRAVENING AGREE4 MENTS.—(A) A contingent fee attorney who enters

5 into a fee agreement with a claimant which violates

6 the provisions of this subsection is deemed to have

7 charged an unreasonable and excessive fee.

8 (B) A claimant who has entered into an agree9 ment with a contingent fee attorney which violates

10 the provisions of this subsection is entitled to recover

11 from the attorney any reasonable fees and costs in12 curred to establish such agreement violated the pro13 visions of this subsection.

14 (C) The failure by the claimant’s attorney, or

15 the attorney for an alleged responsible party, to

16 comply with the provisions of this subsection may be

17 considered grounds for disciplinary proceedings and

18 sanctions as determined appropriate by the licensing

19 or regulatory agency or court of the State in which

20 the claim arose.

21 (c) AMENDMENT TO THE FEDERAL RULES OF CIVIL

22 PROCEDURE.—Rule 11(c) of the Federal Rules of Civil

23 Procedure is amended—
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1 (1) in the matter preceding paragraph (1) by

2 striking out ‘‘may’’ and inserting in lieu thereof

3 ‘‘shall’’;

4 (2) in subdivision (1)(A) in the third sentence

5 by striking out ‘‘may’’ and inserting in lieu thereof

6 ‘‘shall’’; and

7 (3) in paragraph (2)—

8 (A) by amending the first sentence to read

9 as follows: ‘‘A sanction imposed for a violation

10 of this rule shall be sufficient to deter repetition

11 of such conduct or comparable conduct by oth12 ers similarly situated and to compensate the

13 parties that were injured by such conduct.’’;

14 and

15 (B) in the second sentence by striking ‘‘,

16 if imposed on motion and warranted for effec17 tive deterrence,’’.

18 (d) PREVAILING PARTY COSTS AND ATTORNEYS’

19 FEES.—

20 (1) IN GENERAL.—Subject to paragraphs (2)

21 and (3), in any civil action filed against any person

22 in any Federal or State court, based on any cause

23 of action (including, but not limited to negligence,

24 strict or product liability, breach of implied warranty

25 or professional malpractice) in which damages are
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1 sought for tortious physical or mental injury, prop2 erty damage, or economic loss the court may award

3 each prevailing party costs and reasonable attorneys’

4 fees.

5 (2) AMOUNT OF AWARD.—An award of costs

6 and reasonable attorneys’ fees under paragraph (1)

7 may not exceed—

8 (A) the actual cost incurred by the

9 nonprevailing party or the attorneys’ fee pay10 able for services in connection with such civil

11 action; or

12 (B) if no such cost was incurred by the

13 nonprevailing party due to a contingency fee

14 agreement, an amount equal to the reasonable

15 costs that would have been incurred by the

16 nonprevailing party for a noncontingent attor17 neys’ fee payable for services in connection with

18 such civil action.

19 (3) LIMITATION.—

20 (A) Notwithstanding paragraph (1) or (2),

21 the court shall not award an attorney’s fee in

22 any case in which the nonprevailing party—

23 (i) had a taxable income of less than

24 $75,000 in the calendar year preceding the

25 calendar year in which the civil action was
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1 filed, if the nonprevailing party is an indi2 vidual; or

3 (ii) had an average taxable income of

4 less than $50,000 for the 3 calendar years

5 preceding the calendar year in which the

6 civil action was filed, if the nonprevailing

7 party is not an individual.

8 (B) The court shall retain discretion to

9 refuse to award or may reduce the amount

10 awarded as an attorney’s fee under paragraph

11 (1) to the extent the court finds would be in the

12 interests of justice.

13 SEC. 6. EARLY OFFER AND RECOVERY MECHANISMS.

14 (a) IN GENERAL.—Chapter 111 of title 28, United

15 States Code, is amended by adding at the end thereof the

16 following new section:

17 ‘‘§ 1659. Early offer and recovery mechanisms

18 ‘‘(a) For purposes of this section:

19 ‘‘(1) The term ‘allegedly liable defendant’

20 means a person, partnership, or corporation alleged

21 by the claimant to be responsible for at least some

22 portion of an injury alleged by a claimant.

23 ‘‘(2) The term ‘allowable expense’ means rea24 sonable expenses incurred for products, services, and

25 accommodations reasonably needed for medical care,
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1 training, and other remedial treatment and care of

2 an injured individual.

3 ‘‘(3) The term ‘claimant’ means an individual

4 who, in his or her own right, or vicariously, is seek5 ing compensation for tortious physical or mental in6 jury, property damage or economic loss.

7 ‘‘(4) The term ‘collateral benefits’ means all

8 benefits and advantages received or entitled to be re9 ceived (regardless of the right of recoupment of any

10 other entity, through subrogation, trust agreement,

11 lien, or otherwise) by an injured individual or other

12 entity as reimbursement of loss because of personal

13 injury, payable or required to be paid—

14 ‘‘(A) in accordance with the laws of any

15 State or the Federal Government (other than

16 through a claim for breach of an obligation or

17 duty);

18 ‘‘(B) under the terms of any health or ac19 cident insurance, wage or salary continuation

20 plan, or disability income insurance; or

21 ‘‘(C) in discharge of familial obligations or

22 support.

23 ‘‘(5) The term ‘economic loss’ means—

24 ‘‘(A) pecuniary loss and monetary expenses

25 incurred by or on behalf of an injured individ-
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1 ual as a result of tortious physical or mental in2 jury, property damage, or economic loss, includ3 ing allowable expenses, work loss, and replace4 ment services loss, whether caused by pain and

5 suffering or physical impairment, but not in6 cluding noneconomic loss; minus

7 ‘‘(B) collateral benefits.

8 ‘‘(6) The term ‘entity’ includes an individual or

9 person.

10 ‘‘(7) The term ‘intentional misconduct’ means

11 conduct, whether by act or omission, which inten12 tionally causes, or attempts to cause, by the one who

13 acts or fails to act, injury or with knowledge that in14 jury is substantially certain to follow. A person does

15 not intentionally cause, or attempt to cause, injury

16 if such party’s act or failure to act is for the purpose

17 of averting bodily harm to such party or another.

18 ‘‘(8) The term ‘replacement services loss’ means

19 reasonable expenses incurred in obtaining ordinary

20 and necessary services from others, not members of

21 the injured individual’s household or family, in lieu

22 of those the injured individual would have performed

23 for the benefit of the household or family, but does

24 not include benefits received by the injured individ25 ual.
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1 ‘‘(9) The term ‘serious injury’ means bodily in2 jury which results in dismemberment, significant

3 and permanent loss of an important bodily function,

4 or significant and permanent scarring or disfigure5 ment.

6 ‘‘(10) The term ‘wanton conduct’ means con7 duct that the allegedly responsible party must have

8 realized was excessively dangerous, done heedlessly

9 and recklessly, and with a conscious disregard to the

10 consequences or the rights and safety of the claim11 ant.

12 ‘‘(11) The term ‘work loss’ means loss of in13 come from work the injured individual would have

14 performed if the individual had not been injured, re15 duced by any income from substitute work actually

16 performed by the individual or by income the indi17 vidual would have earned in available appropriate

18 substitute work that the individual was capable of

19 performing but unreasonably failed to undertake.

20 ‘‘(b)(1) In any civil action or claim against any per21 son, filed in any Federal or State court, based on any

22 cause of action to recover damages or compensation for

23 tortious physical or mental injury, property damage, or

24 economic loss, any allegedly liable defendant shall have the

25 option to offer, not later than 120 days after an injury
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1 or after the initiation of the liability claim, to compensate

2 a claimant for reasonable economic loss, including future

3 economic loss, less amounts available from collateral

4 sources, and including reasonable hourly attorneys’ fees

5 for the claimant. A claimant who agrees in writing to such

6 offer shall be foreclosed from bringing or continuing a civil

7 action against any allegedly liable defendant and any other

8 individuals or entities included under subsection (c). The

9 claimant may extend the time for receiving the offer.

10 ‘‘(2) Nothing in this section shall preclude a State

11 from enacting a requirement that compensation benefits

12 offered under paragraph (1) shall include a minimum dol13 lar amount in response to a claim for serious injury.

14 ‘‘(c) An offer under subsection (b) may include other

15 allegedly liable defendants, individuals, or entities that

16 were involved in the events which give rise to the civil ac17 tion, regardless of the theory of liability on which the claim

18 is based, with their consent.

19 ‘‘(d) Future economic damages shall be payable to

20 an individual under this section as such damages occur.

21 ‘‘(e) If, after an offer is made under subsection (b),

22 the participants in the offer dispute their relative contribu23 tions to the payments to be made to the individual, such

24 disputes shall be resolved through binding arbitration in
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1 accordance with applicable rules and procedures estab2 lished by the Attorney General of the United States.

3 ‘‘(f)(1) In no event shall a civil action be foreclosed

4 under subsection (b) against any allegedly liable party if

5 the injured individual elects to prove, beyond a reasonable

6 doubt, that the allegedly liable party caused the injury by

7 intentional or wanton misconduct.

8 ‘‘(2) This subsection shall not apply with respect to

9 a personal injury unless the injured individual provides the

10 allegedly liable party making an offer with a notice of such

11 an election not later than 90 days after the date the offer

12 of compensation benefits was made.

13 ‘‘(g) Nothing in this section shall be construed to ef14 fect any applicable statute of limitations of any State or

15 of the United States.’’.

16 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

17 The table of sections for chapter 111 of title 28, United

18 States Code, is amended by adding at the end thereof the

19 following new item:

‘‘1659. Early offer and recovery mechanisms.’’.

20 SEC. 7. REFORM OF JOINT AND SEVERAL LIABILITY.

21 (a) DEFINITION.—As used in this section, the term

22 ‘‘concerted action’’ or ‘‘acting in concert’’ means the par23 ticipation in joint conduct by 2 or more persons who

24 agreed to jointly participate in such conduct with actual

25 knowledge of the wrongfulness of the conduct.
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1 (b) IN GENERAL.—(1) Except as provided under sub2 section (c), joint and several liability may not be applied

3 to any civil action or claim against any person, filed in

4 any Federal or State court, based on any cause of action

5 to recover damages or compensation for tortious physical

6 or mental injury, property damage, or economic loss.

7 (2) A person found liable for damages in any such

8 action—

9 (A) may be found liable, if at all, only for dam10 ages directly attributable to the person’s pro rata

11 share of fault or responsibility; and

12 (B) may not be found liable for damages attrib13 utable to the pro rata share of fault or responsibility

14 of any other person (without regard to whether that

15 person is a party to the action), including any per16 son filing the action.

17 (c) LIMITATION.—This section shall not apply to per18 sons acting in concert where the concerted action proxi19 mately caused the injury for which one or more persons

20 are found liable for damages.

21 SEC. 8. SINGLE RECOVERY.

22 (a) INADMISSIBLE EVIDENCE.—In any civil action or

23 claim against any person, filed in any Federal or State

24 court, based on any cause of action to recover damages

25 or compensation for tortious physical or mental injury,
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1 property damage, or economic loss, the court shall not

2 allow the admission into evidence of proof of economic

3 losses that have been or will be paid by—

4 (1) Federal, State, or other governmental dis5 ability, unemployment, or sickness programs;

6 (2) Federal, State, or other governmental or

7 private health insurance programs;

8 (3) private or public disability insurance pro9 grams;

10 (4) employer wage continuation programs;

11 (5) any other program or compensation system,

12 if the payment is intended to compensate the claim13 ant for the same injury or disability which is the

14 subject of the claim; or

15 (6) persons other than family members of the

16 claimant.

17 (b) ADMISSIBLE EVIDENCE.—Only evidence of eco18 nomic loss that has not or will not be paid by the sources

19 described under subsection (a) shall be admissible in an

20 action or claim covered by this section.

21 (c) ELIMINATION OF SUBROGATION.—An entity that

22 is the source of the payments for losses that are inadmis23 sible under subsection (a)—

24 (1) shall not recover any amount against the

25 claimant;
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1 (2) shall not be subrogated to the rights of the

2 claimant against the defendant; and

3 (3) shall not have a lien against the claimant’s

4 judgment, on account of its payment to the claimant

5 for economic loss.

6 (d) PRETRIAL DETERMINATION.—The determination

7 of whether a claimant seeking damages or compensation

8 has received, will receive, or is entitled to receive, payment

9 from any one or more sources described under subsection

10 (a) (1) through (6) shall be made by the court in pretrial

11 proceedings.

12 SEC. 9. LIMITATION ON PUNITIVE DAMAGES.

13 (a) IN GENERAL.—Except as provided under section

14 1977A of the Revised Statutes (42 U.S.C. 1981a), the

15 amount of punitive damages that may be awarded in any

16 civil action or claim filed in any Federal or State court,

17 based on any cause of action to recover damages or com18 pensation for tortious physical or mental injury, property

19 damage, or economic loss shall not exceed the greater of—

20 (1) 3 times the amount awarded to the claimant

21 for the economic injury on which such claim is

22 based; or

23 (2) $250,000.

24 (b) APPLICATION BY COURT.—This section shall be

25 applied by the court and shall not be disclosed to the jury.
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1 SEC. 10. ALTERNATIVE DISPUTE RESOLUTION.

2 (a) GENERAL POLICY.—The policy of the United

3 States is to encourage the creation and use of alternative

4 dispute resolution techniques, and to promote the expedi5 tious resolution of such actions, because the traditional

6 litigation process is not always suited to the timely, effi7 cient, and inexpensive resolution of civil actions.

8 (b) NOTICE OF AVAILABILITY OF ALTERNATIVE DIS9 PUTE RESOLUTION.—In any civil action or claim arising

10 under any Federal law or in any diversity action in Fed11 eral court, each attorney who has made an appearance in

12 the case and who represents one or more of the parties

13 to the action shall, with respect to each party separately

14 represented, advise the party of the existence and avail15 ability of alternative dispute resolution options, including

16 extra judicial proceedings such as minitrials, third-party

17 mediation, court supervised arbitration, and summary jury

18 trial proceedings.

19 (c) CERTIFICATION OF NOTICE.—Each attorney de20 scribed under subsection (b) shall, simultaneous with the

21 filing of a complaint or a responsive pleading, file a certifi22 cation to the court that the attorney has provided the no23 tice required under subsection (b) to the client or clients

24 of such attorney. The attorney shall state in the certifi25 cation whether such client will agree to one or more of

26 the alternative dispute resolution techniques.
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1 (d) AGREEMENT TO PROCEED WITH ALTERNATIVE

2 DISPUTE RESOLUTION.—If all parties to an action agree

3 to proceed with one or more alternative dispute resolution

4 proceedings, the court shall issue an appropriate order

5 governing the conduct of such proceedings. The issuance

6 of an order governing the proceedings shall constitute a

7 waiver, by each party subject to the order, of the right

8 to proceed further in court.

9 SEC. 11. RELIABILITY OF EXPERT EVIDENCE.

10 Rule 702 of the Federal Rules of Evidence is amend11 ed—

12 (1) by striking out ‘‘If’’ and inserting in lieu

13 thereof ‘‘(a) IN GENERAL.—Subject to subsection

14 (b), if’’; and

15 (2) by adding at the end thereof the following:

16 ‘‘(b) ADEQUATE BASIS FOR OPINION.—Testimony in

17 the form of an opinion by a witness that is based on sci18 entific knowledge shall be inadmissible in evidence unless

19 the court determines that such opinion is—

20 ‘‘(1) based on scientifically valid reasoning; and

21 ‘‘(2) sufficiently reliable so that the probative

22 value of such evidence outweighs the dangers speci23 fied under rule 403.

24 ‘‘(c) EXPERT OPINIONS ON NOVEL SCIENTIFIC PRIN25 CIPLES OR DISCOVERIES.—Where testimony in the form
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1 of an opinion by a witness is sought to be used to establish

2 a novel scientific principle or discovery, it shall be admissi3 ble only if the principle or discovery, or its scientific under4 pinning, is sufficiently established to have gained general

5 acceptance in the field in which it belongs.

6 ‘‘(d) DISQUALIFICATION.—Testimony by a witness

7 who is qualified as an expert under subsection (a) is inad8 missible in evidence if such witness is entitled to receive

9 any compensation directly or indirectly contingent on the

10 legal disposition of any claim with respect to which such

11 testimony is offered.’’.

12 SEC. 12. EXPRESS AUTHORIZATION FOR PRIVATE RIGHT OF

13 ACTION.

14 (a) IN GENERAL.—Chapter 85 of title 28, United

15 States Code, is amended by adding at the end thereof the

16 following new section:

17 ‘‘§ 1368. Private right of action

18 ‘‘No district court shall have jurisdiction over any

19 civil action filed by a party based on a private right of

20 action, unless such private right of action is expressly au21 thorized in the statute on which such action is based.’’.

22 (b) TECHNICAL AND CONFORMING AMENDMENT.—

23 The table of sections for chapter 85 of title 28, United

24 States Code, is amended by adding at the end thereof the

25 following new item:

‘‘1368. Private right of action.’’.
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1 (c) STATE COURTS.—No Federal statute shall be

2 construed to give rise to a private right of action in a State

3 court, unless such private right of action is expressly au4 thorized in the statute on which such action is based.

5 SEC. 13. APPLICABILITY.

6 (a) PREEMPTION.—This Act shall preempt and su7 persede other Federal or State laws only to the extent any

8 such law is inconsistent with this Act. This Act shall not

9 preempt any Federal or State law that provides for de10 fenses in addition to those contained in this Act, places

11 greater limitations on the amount of attorney’s fees that

12 can be collected, or additional disclosure requirements

13 upon attorneys, or otherwise imposes restrictions on eco14 nomic, noneconomic, or punitive damages. Any issue aris15 ing under this Act that is not governed by the provisions

16 of this Act shall be governed by applicable Federal or

17 State law.

18 (b) RULE OF CONSTRUCTION.—Nothing in this Act

19 shall be construed to—

20 (1) waive or affect any defense of sovereign im21 munity asserted by any State under any provision of

22 law;

23 (2) waive or affect any defense of sovereign im24 munity asserted by the United States;
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1 (3) affect the applicability of any provision of

2 chapter 97 of title 28, United States Code;

3 (4) preempt State choice-of-law rules with re4 spect to claims brought by a foreign nation or citi5 zen of a foreign nation; or

6 (5) affect the right of any court to transfer

7 venue or to apply the law of a foreign nation or to

8 dismiss a claim of a foreign or of a citizen of a for9 eign nation on the ground of inconvenient forum.

10 (c) STATE ELECTION REGARDING APPLICABILITY.—

11 A provision of this Act shall not apply to a State if such

12 State enacts a statute—

13 (1) citing the authority of this subsection; and

14 (2) declaring the election of such State that

15 such provision shall not apply to the State.

16 SEC. 14. SEVERABILITY.

17 If any provision of this Act or the application of any

18 such provision to any person or circumstance is held in19 valid, the remainder of this Act and the application of any

20 provision to any other person or circumstance shall not

21 be affected thereby.
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1 SEC. 15. EFFECTIVE DATE.

2 This Act shall take effect and apply to claims or ac3 tions filed on and after the date occurring 30 days after

4 the date of enactment of this Act.

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