I

103D CONGRESS

1ST SESSION H. R. 1572

To award grants to States to promote the development of alternative dispute

resolution systems for medical malpractice claims, to generate knowledge

about such systems through expert data gathering and assessment activities, to promote uniformity and to curb excesses in State liability systems

through federally-mandated liability reforms, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 31, 1993

Mr. KYL (for himself, Mr. STENHOLM, Mr. STUMP, Mr. SAM JOHNSON of

Texas, Mrs. JOHNSON of Connecticut, Mr. BARTON of Texas, Mr.

KOLBE, and Mr. GINGRICH) introduced the following bill; which was referred to the Committee on the Judiciary

A BILL

To award grants to States to promote the development of

alternative dispute resolution systems for medical malpractice claims, to generate knowledge about such systems through expert data gathering and assessment activities, to promote uniformity and to curb excesses in

State liability systems through federally-mandated liability reforms, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Medical Care Injury

3 Compensation Reform Act of 1993’’.

4 SEC. 2. FINDINGS; PURPOSE.

5 (a) FINDINGS.—Congress finds that—

6 (1) the health care and insurance industries are

7 industries affecting interstate commerce and the

8 medical malpractice litigation systems existing

9 throughout the United States affect interstate com10 merce by contributing to the high cost of health care

11 and premiums for malpractice insurance purchased

12 by health care providers;

13 (2) the Federal Government has a major inter14 est in health care as a direct provider of health care

15 through the Public Health Service, as a source of

16 payment for health care through Medicare, Medic17 aid, and other programs, and has a demonstrated in18 terest in assessing the quality of care, access to care,

19 and the costs of care through the evaluative activi20 ties of several Federal agencies;

21 (3) there is increasing concern that health care

22 liability claims have significant negative effects on

23 the health care system, including—

24 (A) increasing costs attributable to defen25 sive medical practices, including the rising cost

26 of medical liability insurance and costs attrib-
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1 utable to the inefficiencies in the civil justice

2 system;

3 (B) adverse effects on the quality of health

4 care through the encouragement of defensive

5 health care practices including unnecessary

6 tests and procedures; and

7 (C) adverse effects on patient access to

8 care because the fear of liability discourages

9 health care professionals from continuing to

10 practice in high risk specialties and certain geo11 graphic regions of the country;

12 (4) it has been demonstrated that the civil jus13 tice system is a costly, inefficient, and inequitable

14 mechanism for resolving claims against health care

15 providers and producers;

16 (5) a disproportionately large percentage of

17 funds expended to compensate patients who suffer

18 health care injuries is distributed to a few individ19 uals, while others are denied adequate compensation;

20 (6) an exorbitant portion of awards in medical

21 malpractice actions goes towards paying the trans22 action costs of the judicial system rather than com23 pensating individuals for health care injuries; and

24 (7) there is optimism that alternative dispute

25 resolution systems have the potential to significantly
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1 improve the adverse effects of the medical liability

2 environment; however, more data and analysis is

3 necessary to fully understand the benefits of various

4 procedural devices.

5 (b) PURPOSE.—It is the purpose of this Act to—

6 (1) provide incentives to States to develop alter7 native dispute resolution procedures to attain a more

8 efficient, expeditious, and equitable resolution of

9 health care malpractice disputes;

10 (2) enhance general knowledge concerning the

11 benefits of different forms of alternative dispute res12 olution mechanisms; and

13 (3) establish uniformity and curb excesses in

14 the State-based medical liability systems through

15 federally-mandated reforms.

16 SEC. 3. DEFINITIONS.

17 As used in this Act:

18 (1) ALTERNATIVE DISPUTE RESOLUTION SYS19 TEM.—The term ‘‘alternative dispute resolution sys20 tem’’ means a system that is enacted or adopted by

21 a State to resolve medical malpractice claims or

22 medical product liability claims instead of resorting

23 to a judicial proceeding in a State court.

24 (2) CLAIMANT.—The term ‘‘claimant’’ means

25 any person who brings a health care liability action
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1 and, in the case of an individual who is deceased, in2 competent, or a minor, the person on whose behalf

3 such an action is brought.

4 (3) CLEAR AND CONVINCING EVIDENCE.—The

5 term ‘‘clear and convincing evidence’’ is that meas6 ure or degree of proof that will produce in the mind

7 of the trier of fact a firm belief or conviction as to

8 the truth of the allegations sought to be established,

9 except that such measure or degree of proof is more

10 than that required under preponderance of the evi11 dence, but less than that required for proof beyond

12 a reasonable doubt.

13 (4) ECONOMIC LOSSES.—The term ‘‘economic

14 losses’’ means losses for hospital and other medical

15 expenses, lost wages, lost employment, and other pe16 cuniary losses.

17 (5) HEALTH CARE LIABILITY ACTION.—The

18 term ‘‘health care liability action’’ means any civil

19 action brought pursuant to State law in which a

20 plaintiff alleges a medical malpractice claim against

21 a health care provider, health care professional, or

22 medical product producer.

23 (6) HEALTH CARE PROFESSIONAL.—The term

24 ‘‘health care professional’’ means any individual who

25 provides health care services in a State and who is
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1 required by State law or regulation to be licensed or

2 certified by the State to provide such services in the

3 State.

4 (7) HEALTH CARE PROVIDER.—The term

5 ‘‘health care provider’’ means any organization or

6 institution that is engaged in the delivery of health

7 care services in a State that is required by State law

8 or regulation to be licensed or certified by the State

9 to engage in the delivery of such services in the

10 State.

11 (8) INJURY.—The term ‘‘injury’’ means any ill12 ness, disease, or other harm that is the subject of

13 a medical malpractice claim or a medical product

14 liability claim.

15 (9) MEDICAL MALPRACTICE CLAIM.—The term

16 ‘‘medical malpractice claim’’ means any claim relat17 ing to the provision of (or the failure to provide)

18 health care services without regard to the theory of

19 liability asserted, and includes any third-party claim,

20 cross-claim, counterclaim, or contribution claim in a

21 health care liability action.

22 (10) MEDICAL PRODUCT.—The term ‘‘medical

23 product’’ means a device (as defined in section

24 201(h) of the Federal Food, Drug, and Cosmetic
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1 Act) or a drug (as defined in section 201(g)(1) of

2 the Federal Food, Drug, and Cosmetic Act).

3 (11) MEDICAL PRODUCT LIABILITY CLAIM.—

4 The term ‘‘medical product liability claim’’ means

5 any claim in which a claimant alleges an injury aris6 ing from or relating to the use of a medical product.

7 (12) MEDICAL PRODUCT PRODUCER.—The term

8 ‘‘medical product producer’’ means any entity that is

9 the designer, manufacturer, producer, or seller of a

10 medical product that is the subject of a medical

11 product liability claim.

12 (13) NONECONOMIC LOSSES.—The term ‘‘non13 economic losses’’ means losses for physical and emo14 tional pain, suffering, inconvenience, physical im15 pairment, mental anguish, disfigurement, loss of en16 joyment of life, loss of consortium, and other

17 nonpecuniary losses.

18 (14) SECRETARY.—The term ‘‘Secretary’’

19 means the Secretary of Health and Human Services.

20 (15) STATE.—The term ‘‘State’’ means each of

21 the several States, the District of Columbia, the

22 Commonwealth of Puerto Rico, the Virgin Islands,

23 and Guam.
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1 TITLE I—GRANTS TO STATES

2 FOR ALTERNATIVE DISPUTE

3 RESOLUTION SYSTEMS

4 SEC. 101. GRANTS TO STATES.

5 (a) IN GENERAL.—The Secretary shall make grants

6 to States for the implementation and evaluation of alter7 native dispute resolution systems.

8 (b) ELIGIBILITY.—A State is eligible to receive a

9 grant under this section if the State submits to the Sec10 retary an application at such time, in such form, and con11 taining such information and assurances as the Secretary

12 may require, including—

13 (1) a description of the alternative dispute reso14 lution system that the State intends to implement

15 with amounts received under the grant;

16 (2) assurances that the State will comply with

17 all data gathering requirements promulgated by the

18 Secretary under section 102(a); and

19 (3) any information and assurances necessary

20 to enable the Secretary to determine whether the

21 State’s alternative dispute resolution system meets

22 the qualification standards for such systems devel23 oped by the Secretary under section 102(a).

24 (c) NUMBER OF GRANTS.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the Secretary shall award not less than

3 10 grants each fiscal year under this section.

4 (2) EXCEPTION.—Notwithstanding paragraph

5 (1), the Secretary may award less than 10 grants

6 under this section in a fiscal year if the Secretary

7 determines that there are an inadequate number of

8 applications submitted that meet the eligibility and

9 approval requirements of this section in such fiscal

10 year.

11 (d) DESIGNATION OF MODEL STATES.—

12 (1) IN GENERAL.—The Secretary shall des13 ignate each State receiving a grant under this sec14 tion as a model alternative dispute resolution State.

15 (2) EXTENSION OF PERIOD OF GRANT.—Upon

16 application to the Secretary, a State designated

17 under paragraph (1) shall be eligible for a 2-year ex18 tension of the grant received under this section.

19 (3) DISSEMINATION OF INFORMATION TO

20 OTHER STATES.—The Secretary shall disseminate

21 information on the alternative dispute resolution sys22 tems implemented by the States designated under

23 paragraph (1) to other States, health care profes24 sionals, health care providers, and other interested

25 parties.
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1 SEC. 102. ADMINISTRATION.

2 (a) STANDARDS AND REGULATIONS FOR ALTER3 NATIVE DISPUTE RESOLUTION GRANT PROGRAM.—

4 (1) IN GENERAL.—In consultation with the Di5 rector of the Agency for Health Care Policy and Re6 search, the Secretary shall develop and promulgate

7 standards and regulations necessary to carry out the

8 grant program established under section 101, includ9 ing—

10 (A) qualification standards for alternative

11 dispute resolution systems that States must

12 meet in order to receive grants under such

13 section; and

14 (B) regulations establishing data gathering

15 requirements for States receiving grants under

16 such section.

17 (2) CRITERIA FOR PROGRAMS.—In developing

18 qualification standards for alternative dispute resolu19 tion systems under paragraph (1)(A), the Secretary

20 shall take into account the effectiveness of such

21 systems in—

22 (A) supporting access to health care;

23 (B) encouraging improvements in the qual24 ity of health care;

25 (C) enhancing and not impairing the physi26 cian-patient relationship;
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1 (D) encouraging innovation that leads to

2 an improved level of health care;

3 (E) compensating for avoidable medical in4 jury due to provider fault and not compensating

5 for injury which is unavoidable by standard

6 medical practice;

7 (F) resolving claims promptly and in

8 amounts proportional to the injury;

9 (G) providing predictable outcomes; and

10 (H) operating efficiently in terms of finan11 cial costs, professional energies, and govern12 mental processes.

13 (b) TECHNICAL ASSISTANCE.—The Secretary shall

14 provide States with technical assistance to enable States

15 to submit applications for grants under section 101, in16 cluding information on the establishment and operation of

17 alternative dispute resolution systems.

18 (c) EVALUATION OF ALTERNATIVE DISPUTE RESO19 LUTION SYSTEMS.—Not later than 4 years after awarding

20 the first grant to a State under section 101, the Secretary

21 shall prepare and submit to Congress a report describing

22 and evaluating the alternative dispute resolution systems

23 implemented by States with funds provided under such

24 grants, and shall include in the report—

25 (1) information on—
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1 (A) the effect of such systems on the cost

2 of health care within the State,

3 (B) the impact of such systems on the ac4 cess of individuals to health care within the

5 State, and

6 (C) the effect of such systems on the qual7 ity of health care provided within such State;

8 and

9 (2) an analysis of the feasibility and desirability

10 of establishing a national alternative dispute resolu11 tion system.

12 TITLE II—UNIFORM STANDARDS

13 FOR MALPRACTICE CLAIMS

14 SEC. 201. APPLICABILITY.

15 Except as provided in section 209, this title shall

16 apply to any health care liability action brought in a Fed17 eral or State court and to any medical malpractice claim

18 or medical product liability claim subject to an alternative

19 dispute resolution system.

20 SEC. 202. CALCULATION AND PAYMENT OF DAMAGES.

21 (a) PERIODIC PAYMENTS FOR FUTURE LOSSES.—No

22 person may be required to pay more than $100,000 in a

23 single payment in damages (whether for economic or non24 economic losses) for expenses to be incurred in the future,

25 but shall be permitted to make such payments on a peri-
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1 odic basis. The periods for such payments shall be deter2 mined by the court, based upon projections of when such

3 expenses are likely to be incurred.

4 (b) LIMITATION ON NONECONOMIC LOSSES.—The

5 total amount of damages that may be awarded to an indi6 vidual and the family members of such individual for non7 economic losses resulting from an injury which is the sub8 ject of an action or claim may not exceed $250,000, re9 gardless of the number of health care professionals, health

10 care providers, and health care producers against whom

11 the action or claim is brought or the number of actions

12 or claims brought with respect to the injury.

13 (c) MANDATORY OFFSETS FOR DAMAGES PAID BY A

14 COLLATERAL SOURCE.—

15 (1) IN GENERAL.—The total amount of dam16 ages received by an individual shall be reduced (in

17 accordance with paragraph (2)) by any other pay18 ment that has been or will be made to the individual

19 to compensate the individual for the injury that was

20 the subject of the action or claim.

21 (2) AMOUNT OF REDUCTION.—The amount by

22 which an award of damages to an individual shall be

23 reduced under paragraph (1) shall be—

24 (A) the total amount of any payments

25 (other than such award) that have been made
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1 or that will be made to the individual to com2 pensate the individual for the injury that was

3 the subject of the action or claim; minus

4 (B) the amount paid by the individual (or

5 by the spouse, parent, or legal guardian of the

6 individual) to secure the payments described in

7 subparagraph (A).

8 (d) ATTORNEY’S FEES.—A claimant’s attorney’s fees

9 may not exceed—

10 (1) 25 percent of the first $150,000 of any

11 award or settlement paid to the claimant; or

12 (2) 15 percent of any additional amounts paid

13 to the claimant.

14 (e) LIMITATION ON PUNITIVE DAMAGES.—The total

15 amount of punitive damages that may be assessed with

16 respect to an action or claim may not exceed twice the

17 total amount of the damages awarded to compensate the

18 claimant for losses resulting from the injury which is the

19 subject of the claim or action, regardless of the number

20 of health care professionals, health care providers, and

21 health care producers against whom the action or claim

22 is brought or the number of actions or claims brought with

23 respect to the injury.
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1 SEC. 203. JOINT AND SEVERAL LIABILITY FOR NON2 ECONOMIC LOSSES.

3 The liability of each defendant for noneconomic losses

4 shall be several only and shall not be joint, and each de5 fendant shall be liable only for the amount of noneconomic

6 losses allocated to the defendant in direct proportion to

7 the defendant’s percentage of responsibility (as deter8 mined by the trier of fact).

9 SEC. 204. UNIFORM STATUTE OF LIMITATIONS.

10 (a) IN GENERAL.—No medical malpractice claim or

11 medical product liability claim may be initiated after the

12 expiration of the 2-year period that begins on the earlier

13 of the date which the alleged injury that is the subject

14 of such action was discovered or the date on which such

15 injury should reasonably have been discovered, but in no

16 event after the expiration of the 4-year period that begins

17 on the date the alleged injury occurred.

18 (b) EXCEPTION FOR MINORS.—In the case of an al19 leged injury suffered by a minor who has not attained 6

20 years of age, no medical malpractice liability claim or med21 ical product liability claim may be brought after the expi22 ration of the 2-year period that begins on the date the

23 alleged injury that is the subject of the action should rea24 sonably have been discovered, but in no event after the

25 date on which the minor attains 10 years of age.
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1 SEC. 205. SPECIAL PROVISION FOR CERTAIN OBSTETRIC

2 SERVICES.

3 (a) IN GENERAL.—In the case of a medical mal4 practice claim or medical product liability claim relating

5 to services provided during labor or the delivery of a baby,

6 if the defendant health care professional did not previously

7 treat the plaintiff for the pregnancy, the trier of fact may

8 not find that the defendant committed malpractice and

9 may not assess damages against the defendant unless the

10 malpractice is proven by clear and convincing evidence.

11 (b) APPLICABILITY TO GROUP PRACTICES OR

12 AGREEMENTS AMONG PROVIDERS.—For purposes of sub13 section (a), a health care professional shall be considered

14 to have previously treated an individual for a pregnancy

15 if the professional is a member of a group practice whose

16 members previously treated the individual for the preg17 nancy or is providing services to the individual during

18 labor or the delivery of a baby pursuant to an agreement

19 with another professional.

20 SEC. 206. UNIFORM STANDARD FOR DETERMINING NEG21 LIGENCE.

22 (a) STANDARD OF REASONABLENESS.—Except as

23 provided in subsection (b), a defendant may not be found

24 to have committed malpractice unless the defendant’s con25 duct at the time of providing the health care services that

26 are the subject of the action was not reasonable.
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1 (b) ACTIONS BROUGHT UNDER STRICT LIABILITY.—

2 Subsection (a) shall not apply to any action in which the

3 claimant asserts that the defendant is liable under a

4 theory of strict liability.

5 SEC. 207. RESTRICTIONS ON PUNITIVE DAMAGES RELAT6 ING TO MEDICAL PRODUCT LIABILITY

7 CLAIMS.

8 (a) RESTRICTIONS FOR APPROVED PRODUCTS OR

9 DEVICES.—

10 (1) IN GENERAL.—Punitive damages otherwise

11 permitted by applicable law shall not be awarded

12 with respect to any medical product liability claim

13 alleged against a medical product producer if—

14 (A) the drug or device that is the subject

15 of such claim—

16 (i) was subject to approval under sec17 tion 505 or premarket approval under sec18 tion 515 of the Federal Food, Drug, and

19 Cosmetic Act by the Food and Drug

20 Administration with respect to—

21 (I) the safety of the formulation

22 or performance of the aspect of the

23 drug or device; or
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1 (II) the adequacy of the packag2 ing or labeling of the drug or device,

3 and

4 (ii) was approved by the Food and

5 Drug Administration; or

6 (B) the drug or device is generally recog7 nized as safe and effective pursuant to condi8 tions established by the Food and Drug Admin9 istration and applicable regulations, including

10 packaging and labeling regulations.

11 (2) EXCEPTION IN CASE OF WITHHELD INFOR12 MATION, MISREPRESENTATION, OR ILLEGAL PAY13 MENT.—The provisions of paragraph (1) shall not

14 apply if it is determined on the basis of clear and

15 convincing evidence that the medical product pro16 ducer—

17 (A) withheld from or misrepresented to the

18 Food and Drug Administration information

19 concerning such drug or device that is required

20 to be submitted under the Federal Food, Drug,

21 and Cosmetic Act or section 352 of the Public

22 Health Service Act that is material and relevant

23 to the action; or

24 (B) made an illegal payment to an official

25 of the Food and Drug Administration for the
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1 purpose of securing approval of the drug or

2 device.

3 (b) SEPARATE PROCEEDING TO DETERMINE PUNI4 TIVE DAMAGES.—

5 (1) CONSIDERATIONS.—At the request of a

6 medical product producer in a health care liability

7 action in which a medical product liability claim is

8 alleged against the producer, the trier of fact shall

9 consider in a separate proceeding—

10 (A) whether punitive damages are to be

11 awarded and the amount of the award; or

12 (B) the amount of punitive damages fol13 lowing a determination of punitive liability.

14 (2) EVIDENCE.—If a separate proceeding is re15 quested in accordance with paragraph (1), evidence

16 relevant only to the claim of punitive damages (as

17 determined by applicable State law) shall be inad18 missible in any proceeding to determine whether

19 compensatory damages are to be awarded to the

20 claimant.

21 (c) CRITERIA FOR DETERMINING AMOUNT OF PUNI22 TIVE DAMAGES.—Subject to the limitation on punitive

23 damages provided in section 202(e), all relevant evidence

24 shall be considered in determining the amount of punitive
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1 damages assessed with respect to a medical product liabil2 ity claim, including—

3 (1) the financial condition of the medical prod4 uct producer;

5 (2) the severity of the harm caused by the con6 duct of the medical product producer;

7 (3) the duration of the conduct or any conceal8 ment of the conduct by the medical product pro9 ducer;

10 (4) the profitability of the conduct to the medi11 cal product producer;

12 (5) the number of products sold by the medical

13 product producer of the kind causing the harm com14 plained of by the claimant;

15 (6) awards of punitive or exemplary damages to

16 persons similarly situated to the claimant;

17 (7) prospective awards of compensatory dam18 ages to persons similarly situated to the claimant;

19 (8) any criminal penalties imposed on the medi20 cal product producer as a result of the conduct com21 plained of by the claimant; and

22 (9) the amount of any civil fines assessed

23 against the defendant as a result of the conduct

24 complained of by the claimant.
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1 SEC. 208. JURISDICTION OF FEDERAL COURTS.

2 The district courts of the United States shall not

3 have jurisdiction of any health care liability action based

4 on sections 1331 or 1337 of title 28, United States Code.

5 SEC. 209. PREEMPTION.

6 (a) IN GENERAL.—This title supersedes any State

7 law only to the extent that the State law permits the recov8 ery by a claimant or the assessment against a defendant

9 of a greater amount of damages, permits the awarding of

10 a greater amount of attorneys’ fees, establishes a longer

11 period during which a medical malpractice claim or medi12 cal product liability claim may be initiated, or establishes

13 a less strict standard of proof for determining whether a

14 defendant has committed malpractice, than the provisions

15 of this title.

16 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

17 OF LAW OR VENUE.—Nothing in this title shall be

18 construed to—

19 (1) waive or affect any defense of sovereign im20 munity asserted by any State under any provision of

21 law;

22 (2) waive or affect any defense of sovereign im23 munity asserted by the United States;

24 (3) affect the applicability of any provision of

25 the Foreign Sovereign Immunities Act of 1976;
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1 (4) preempt State choice-of-law rules with re2 spect to claims brought by a foreign nation or a citi3 zen of a foreign nation; or

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

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

6 dismiss a claim of a foreign nation or of a citizen

7 of a foreign nation on the ground in inconvenient

8 forum.

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