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103D CONGRESS

1ST SESSION H. R. 144

To reform the health care system by restoring the full tax deductibility

of medical expenses; eliminating incentives for abusive litigation against

hospitals, doctors, nurses, and health care providers; abolishing noneconomic damages in medical care liability actions; and redirecting punitive damages to community hospitals that care for the indigent.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. COX introduced the following bill; which was referred jointly to the

Committees on Ways and Means, the Judiciary, and Energy and Commerce

JUNE 2, 1993

Additional sponsors: Mr. ROHRABACHER, Mr. BAKER of Louisiana, Mr. DOOLITTLE, Mr. GALLEGLY, Mr. DORNAN, Mr. CUNNINGHAM, Mr. HANCOCK,

Mr. BLUTE, Mr. ARMEY, Mr. HERGER, Mr. ZIMMER, and Mr. DELAY

A BILL

To reform the health care system by restoring the full tax

deductibility of medical expenses; eliminating incentives

for abusive litigation against hospitals, doctors, nurses,

and health care providers; abolishing noneconomic damages in medical care liability actions; and redirecting

punitive damages to community hospitals that care for

the indigent.

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

2 This Act may be cited as the ‘‘Health Care Cost Con3 tainment Act’’.

4 SEC. 2. FINDINGS.

5 The Congress finds the following:

6 (1) The intolerably high number of Americans

7 without adequate health insurance has resulted in

8 major part from the high cost of health insurance

9 premiums.

10 (2) By eliminating the full tax deductibility of

11 most medical expenses, the Federal Government has

12 effectively increased the cost of health insurance.

13 This same misguided policy has increased the cost of

14 regular maintenance of one’s own health through

15 regular physician visits. This policy of the Federal

16 Government, therefore, has both discouraged the

17 purchase of health insurance and exposed taxpayers

18 to greater expense because individuals are more like19 ly to develop chronic illnesses and more likely to go

20 without insurance to pay for critical care.

21 (3) Excessive, wasteful, and abusive litigation in

22 medical care liability suits throughout the United

23 States has also significantly contributed to the high

24 cost of health care in America. The enormous sums

25 and valuable time that hospitals and physicians lose

26 because of needless litigation amount to a huge tax
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1 on health care for all Americans. Even more expen2 sive is the huge and thoroughly unnecessary cost of

3 so-called ‘‘defensive medicine’’. Because of the ubiq4 uitous threat of lawsuits, doctors and other health

5 care providers all too often prescribe unnecessary

6 tests, studies, and procedures simply to protect

7 themselves—not their patients. Reforming the

8 abuses of our civil litigation system in medical cases

9 is therefore an essential step in controlling health

10 care costs.

11 (4) Noneconomic damages in medical cases

12 should be eliminated. Payment of huge money dam13 ages for conceptually elusive measure of loss such as

14 ‘‘pain and suffering’’ and ‘‘inconvenience’’ has prov15 en to be unworkable. Our society simply cannot af16 ford it. Money damages should be limited to repay17 ment of actual monetary losses such as medical ex18 penses, out-of-pocket costs, lost future earnings, and

19 other traditional measures of actual damages.

20 (5) Punitive damages in medical care liability

21 suits are meant to punish malefactors rather than

22 provide a windfall to attorneys and random litigants.

23 The existence of this potential windfall (always unre24 lated to the actual damages suffered in any case)

25 creates a perverse incentive for even more litigation
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1 against ‘‘deep pockets’’ doctors, hospitals, and

2 health care providers. Punitive damages should,

3 therefore, be paid over to community hospitals to

4 offset the cost of indigent care. This will end one of

5 the most significant incentives for abusive and un6 necessary litigation that drives up medical costs.

7 Even more importantly, it will reduce the cost of

8 health care for the poor and taxpayers alike.

9 (6) Medical care liability suits should be decided

10 on their merits. But in recent years, the vast major11 ity of medical care liability suits have been decided

12 without a single day of trial, when parties realize

13 that they cannot afford the lawyers’ costs and other

14 expenses of obtaining their day in court. This has

15 led all too often to economic blackmail, in which in16 nocent parties—hospitals, physicians, nurses, other

17 health care workers—are forced to settle for large

18 amounts even though they should, in fact, be held

19 harmless by our legal system. Patients with meritori20 ous medical malpractice cases find their recoveries

21 substantially reduced by attorneys’ fees. Health care

22 providers victimized by groundless litigation must

23 often pay enormous fees simply to prove they are

24 blameless. To redress this inequity, the loser in a

25 medical case should pay the costs and attorneys’ fees
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1 of the winner. This will end another perverse incen2 tive in the present system for unnecessary litigation

3 that drives up health care costs.

4 (7) By reducing the cost of health care and by

5 making health insurance more affordable, millions

6 more Americans will be able to obtain needed health

7 coverage. This, in turn, will increase the size of in8 surance risk pools, further reducing the cost of nec9 essary insurance for all Americans.

10 SEC. 3. RESTORATION OF THE FULL DEDUCTIBILITY OF

11 MEDICAL EXPENSES.

12 Section 213(a) of the Internal Revenue Code of 1986

13 (relating to the treatment of medical and dental expenses)

14 is amended to read as follows:

15 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be

16 allowed as a deduction the expenses paid during the tax17 able year, not compensated for by insurance or otherwise,

18 for medical care of the taxpayer, the taxpayer’s spouse,

19 or a dependent (as defined in section 152).’’.

20 SEC. 4. ATTORNEYS’ FEES IN MEDICAL CARE LIABILITY

21 SUITS.

22 (a) AWARDING ATTORNEYS’ FEES AND OTHER

23 COSTS TO PREVAILING PARTY.—The nonprevailing party

24 in a medical care liability suit shall pay to the prevailing

25 party in such suit its litigation expenses under the action
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1 (including attorneys’ fees and fees paid to expert wit2 nesses, but not including court fees, filing fees, or other

3 expenses paid directly to the court). The amount to be

4 paid for such litigation expenses shall not exceed the liti5 gation expenses of the nonprevailing party in such medical

6 care liability suit. If the nonprevailing party receives attor7 ney services under a contingent fee agreement, the amount

8 of the attorneys’ fees paid under this subsection shall not

9 exceed the reasonable value of those services, determined

10 without regard to the contingent nature of the fee ar11 rangement.

12 (b) DEFINITION OF PREVAILING PARTY.—The term

13 ‘prevailing party’ means a party to a medical care liability

14 suit who obtains a favorable final judgment (other than

15 by settlement) on all or a portion of the claims asserted

16 in the action.

17 SEC. 5. ELIMINATION OF NONECONOMIC DAMAGES IN MED18 ICAL CARE LIABILITY SUITS.

19 (a) SCOPE OF PROHIBITION.—Noneconomic damages

20 may not be imposed in a medical care liability suit. Com21 pensatory damages may be awarded as in any other type

22 of action.

23 (b) DEFINITION OF NONECONOMIC DAMAGES.—The

24 term ‘noneconomic damages’ means damages for pain,
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1 suffering, inconvenience, or any other nonpecuniary loss,

2 but does not include punitive damages.

3 SEC. 6. PUNITIVE DAMAGES TO BE REDIRECTED TO COM4 MUNITY HOSPITALS TO PAY FOR INDIGENT

5 CARE.

6 (a) LOCAL GOVERNMENT TO RECEIVE MONEYS ON

7 BEHALF OF HOSPITALS.—Any punitive damages imposed

8 in a medical care liability suit shall be paid to the county,

9 parish, or comparable unit of local government in which

10 the action is brought and which has primary responsibility

11 for payment for indigent health services in its jurisdiction.

12 (b) USE OF MONEYS.—A county, parish, or com13 parable unit of local government which receives moneys

14 under subsection (a) shall use it toward payment of its

15 unreimbursed expenses incurred in providing health care

16 to individuals entitled to medical assistance under titles

17 XVIII and XIX of the Social Security Act.

18 SEC. 7. APPLICABILITY.

19 (a) APPLICABILITY.—This Act shall apply with re20 spect to any medical care liability suit brought in any

21 State or Federal court, except that this Act shall not apply

22 to a claim or action for damages arising from a vaccine23 related injury or death to the extent that title XXI of the

24 Public Health Service Act applies to the action.
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1 (b) EFFECT ON STATE LAW.—This Act supersedes

2 State law only to the extent that State law differs from

3 any provision of law established by or under this Act. Any

4 issue that is not governed by any provision of law estab5 lished by or under this Act shall be governed by otherwise

6 applicable State or Federal law.

7 (c) FEDERAL COURT JURISDICTION NOT ESTAB8 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

9 this Act shall be construed to establish any jurisdiction

10 in the district courts of the United States over medical

11 care liability suits on the basis of sections 1331 or 1337

12 of title 28, United States Code.

13 (d) DEFINITION OF MEDICAL CARE LIABILITY

14 SUIT.—The term ‘medical care liability suit’ means an ac15 tion for damages arising out of the provision of (or the

16 failure to provide) health care services.

17 SEC. 8. EFFECTIVE DATE.

18 This Act shall apply with respect to claims accruing

19 or suits brought on or after the first day of January of

20 the calendar year following the date of the enactment of

21 this Act.

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