I

106TH CONGRESS

1ST SESSION H. R. 2242

To establish limits on medical malpractice claims, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 16, 1999

Mr. GREENWOOD (for himself, Mr. SHAYS, Mr. SENSENBRENNER, Mrs. JOHNSON of Connecticut, Mr. DEAL of Georgia, Mr. WHITFIELD, Mr. NORWOOD, Mr. SMITH of New Jersey, and Mr. COOKSEY) introduced the following bill; which was referred to the Committee on the Judiciary, and

in addition to the Committee on Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To establish limits on medical malpractice claims, 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 ‘‘Medical Malpractice

5 Rx Act’’.
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1 SEC. 2. FEDERAL REFORM OF HEALTH CARE LIABILITY AC2 TIONS.

3 (a) APPLICABILITY.—This Act shall apply with re4 spect to any health care liability action brought in any

5 State or Federal court and to any health care liability

6 claim subject to an ADR, except that this Act shall not

7 apply to—

8 (1) an action for damages arising from a vac9 cine-related injury or death to the extent that title

10 XXI of the Public Health Service Act applies to the

11 action, or

12 (2) an action under the Employee Retirement

13 Income Security Act of 1974 (29 U.S.C. 1001 et

14 seq.).

15 (b) PREEMPTION.—This Act shall not preempt any

16 State law that—

17 (1) provides for defenses or places limitations

18 on a person’s liability in addition to those contained

19 in this Act or otherwise imposes greater restrictions

20 than those provided in this Act; or

21 (2) imposes greater restrictions on liability or

22 damages than those provided in this Act.

23 No provision of this Act shall be construed to preempt or

24 displace the implementation of any State sponsored or pri25 vate ADR system.
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1 (c) LIMITATIONS.—This Act supersedes chapter 171

2 of title 28, United States Code, (relating to tort claims

3 procedure) and preempts State law with respect to both

4 procedural and substantive matters only to the extent that

5 such chapter or State law differs from any provision of

6 this Act or provision established under this Act. Section

7 5 shall supersede or preempt any provision of such chapter

8 or State law which prohibits the introduction of evidence

9 regarding collateral source benefits or mandates or per10 mits subrogation or a lien on the plaintiff’s award for the

11 cost of providing collateral source benefits. Any issue that

12 is not governed by any provision of this Act shall be gov13 erned by otherwise applicable Federal or State law.

14 (d) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

15 OF LAW OR VENUE.—Nothing in subsection (c) shall be

16 construed to—

17 (1) waive or affect any defense of sovereign im18 munity asserted by any State under any provision of

19 law;

20 (2) waive or affect any defense of sovereign im21 munity asserted by the United States;

22 (3) affect the applicability of any provision of

23 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 cit3 izen 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 of inconvenient

8 forum.

9 (e) AMOUNT IN CONTROVERSY.—In an action to

10 which this Act applies and which is brought under section

11 1332 of title 28, United States Code, the amount of non12 economic damages or punitive damages, and attorneys’

13 fees or costs, shall not be included in determining whether

14 the matter in controversy exceeds the sum or value of

15 $50,000.

16 (f) FEDERAL COURT JURISDICTION NOT ESTAB17 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

18 this Act shall be construed to establish any jurisdiction

19 in the district courts of the United States over health care

20 liability actions on the basis of section 1331 or 1337 of

21 title 28, United States Code.

22 SEC. 3. STATUTE OF LIMITATIONS.

23 A health care liability action may not be brought

24 after the expiration of the 2-year period that begins on

25 the date on which the alleged injury that is the subject
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1 of the action was discovered or should reasonably have

2 been discovered, but in no case after the expiration of the

3 5-year period that begins on the date the alleged injury

4 occurred.

5 SEC. 4. CALCULATION AND PAYMENT OF DAMAGES.

6 (a) JOINT AND SEVERAL LIABILITY.—In any health

7 care liability action, a defendant shall be liable only for

8 the amount of noneconomic damages attributable to such

9 defendant in direct proportion to such defendant’s share

10 of fault or responsibility for the claimant’s actual dam11 ages, as determined by the trier of fact. In all such cases,

12 the liability of a defendant for noneconomic damages shall

13 be several and not joint.

14 (b) LIMITATION ON NONECONOMIC DAMAGES.—

15 (1) IN GENERAL.—The total amount of non16 economic damages that may be awarded to a claim17 ant for losses resulting from the injury which is the

18 subject of a health care liability action may not ex19 ceed $250,000, regardless of the number of parties

20 against whom the action is brought or the number

21 of actions brought with respect to the injury. The

22 limitation under this paragraph shall not apply to an

23 action for damages based solely on intentional denial

24 of medical treatment necessary to preserve a pa25 tient’s life that the patient is otherwise qualified to
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1 receive, against the wishes of a patient, or if the pa2 tient is incompetent, against the wishes of the pa3 tient’s guardian, on the basis of the patient’s

4 present or predicated age, disability, degree of med5 ical dependency, or quality of life.

6 (2) CAP INCREASE.—The limit prescribed by

7 paragraph (1) on the total amount of noneconomic

8 damages that may be awarded shall be adjusted an9 nually by changes in the Consumer Price Index for

10 all urban consumers published by the Department of

11 Labor.

12 (c) TREATMENT OF PUNITIVE DAMAGES.—

13 (1) GENERAL RULE.—Punitive damages may,

14 to the extent permitted by applicable State law, be

15 awarded in any health care liability action for harm

16 in any Federal or State court against a defendant if

17 the claimant establishes by clear and convincing evi18 dence that the harm suffered was the result of

19 conduct—

20 (A) specifically intended to cause harm, or

21 (B) conduct manifesting a conscious, fla22 grant indifference to the rights or safety of oth23 ers.

24 (2) APPLICABILITY.—This subsection shall

25 apply to any health care liability action brought in
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1 any Federal or State court on any theory where pu2 nitive damages are sought. This subsection does not

3 create a cause of action for punitive damages. This

4 subsection does not preempt or supersede any State

5 or Federal law to the extent that such law would

6 further limit the award of punitive damages.

7 (3) BIFURCATION.—At the request of any

8 party, the trier of fact shall consider in a separate

9 proceeding whether punitive damages are to be

10 awarded and the amount of such award. If a sepa11 rate proceeding is requested, evidence relevant only

12 to the claim of punitive damages, as determined by

13 applicable State law, shall be inadmissible in any

14 proceeding to determine whether actual damages are

15 to be awarded.

16 (4) DRUGS AND DEVICES.—

17 (A) IN GENERAL.—(i) Punitive damages

18 shall not be awarded against a manufacturer or

19 product seller of a drug or medical device which

20 caused the claimant’s harm where—

21 (I) such drug or device was subject to

22 premarket approval by the Food and Drug

23 Administration with respect to the safety

24 of the formulation or performance of the

25 aspect of such drug or device which caused
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1 the claimant’s harm, or the adequacy of

2 the packaging or labeling of such drug or

3 device which caused the harm, and such

4 drug, device, packaging, or labeling was

5 approved by the Food and Drug Adminis6 tration; or

7 (II) the drug is generally recognized

8 as safe and effective pursuant to conditions

9 established by the Food and Drug Admin10 istration and applicable regulations, includ11 ing packaging and labeling regulations.

12 (ii) Clause (i) shall not apply in any case

13 in which the defendant, before or after pre14 market approval of a drug or device—

15 (I) intentionally and wrongfully with16 held from or misrepresented to the Food

17 and Drug Administration information con18 cerning such drug or device required to be

19 submitted under the Federal Food, Drug,

20 and Cosmetic Act (21 U.S.C. 301 et seq.)

21 or section 351 of the Public Health Service

22 Act (42 U.S.C. 262) that is material and

23 relevant to the harm suffered by the claim24 ant, or
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1 (II) made an illegal payment to an of2 ficial or employee of the Food and Drug

3 Administration for the purpose of securing

4 or maintaining approval of such drug or

5 device.

6 (B) PACKAGING.—In a health care liability

7 action for harm which is alleged to relate to the

8 adequacy of the packaging or labeling of a drug

9 which is required to have tamper-resistant

10 packaging under regulations of the Secretary of

11 Health and Human Services (including labeling

12 regulations related to such packaging), the

13 manufacturer or product seller of the drug shall

14 not be held liable for punitive damages unless

15 such packaging or labeling is found by the court

16 by clear and convincing evidence to be substan17 tially out of compliance with such regulations.

18 (d) PERIODIC PAYMENTS FOR FUTURE LOSSES.—

19 (1) GENERAL RULE.—In any health care liabil20 ity action in which the damages awarded for future

21 economic and noneconomic loss exceeds $50,000, a

22 person shall not be required to pay such damages in

23 a single, lump-sum payment, but shall be permitted

24 to make such payments periodically based on when
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1 the damages are found likely to occur, as such pay2 ments are determined by the court.

3 (2) FINALITY OF JUDGMENT.—The judgment

4 of the court awarding periodic payments under this

5 subsection may not, in the absence of fraud, be re6 opened at any time to contest, amend, or modify the

7 schedule or amount of the payments.

8 (3) LUMP-SUM SETTLEMENTS.—This sub9 section shall not be construed to preclude a settle10 ment providing for a single, lump-sum payment.

11 (e) TREATMENT OF COLLATERAL SOURCE PAY12 MENTS.—

13 (1) INTRODUCTION INTO EVIDENCE.—In any

14 health care liability action, any defendant may intro15 duce evidence of collateral source payments. If any

16 defendant elects to introduce such evidence, the

17 claimant may introduce evidence of any amount paid

18 or contributed or reasonably likely to be paid or con19 tributed in the future by or on behalf of the claim20 ant to secure the right to such collateral source pay21 ments.

22 (2) NO SUBROGATION.—No provider of collat23 eral source payments shall recover any amount

24 against the claimant or receive any lien or credit

25 against the claimant’s recovery or be equitably or le-
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1 gally subrogated the right of the claimant in a

2 health care liability action.

3 (3) APPLICATION TO SETTLEMENTS.—This sub4 section shall apply to an action that is settled as well

5 as an action that is resolved by a fact finder.

6 SEC. 5. AWARD OF ATTORNEY’S FEES.

7 (a) GENERAL RULE.—If the claimant in a health

8 care liability action seeks noneconomic damages in excess

9 of $250,000 (or the cap in effect under section 4(b)(2))

10 or 3 times the economic damages, whichever is lesser, and

11 the request for such damages in such amount is made be12 fore the determination of liability of one party or another

13 by verdict or order of judgment, the prevailing party in

14 such action shall be entitled to attorney’s fees from the

15 non-prevailing party, except that the sum of the attorney’s

16 fees to which the prevailing party is entitled shall not ex17 ceed the attorney’s fees of the non-prevailing party.

18 (b) LIMITATION.—The court in a health care liability

19 action may, in its discretion, limit the fees authorized to

20 be recovered under subsection (a) if the amount of such

21 fees is deemed unjust.

22 (c) LIMITATIONS ON CONTINGENT FEES.—

23 (1) IN GENERAL.—The total of all contingent

24 fees for representing all claimants in a health care
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1 liability claim or action shall not exceed the following

2 limits:

3 (A) 40 percent of the first $50,000 recov4 ered by the claimant.

(B) 331 5 ⁄3 percent of the next $50,000 re6 covered by the claimant.

7 (C) 25 percent of the next $50,000 recov8 ered by the claimant.

9 (D) 15 percent of any amount by which

10 the recovery by the claimant exceeds $600,000.

11 (2) APPLICABILITY.—The limitations prescribed

12 by paragraph (1) shall apply whether the recovery is

13 by judgment, settlement, mediation, arbitration, or

14 any other form of ADR. A court acting in a health

15 care liability claim or action involving a minor or in16 competent person retains the authority to authorize

17 or approve a fee that is less than the maximum per18 mitted under paragraph (1).

19 (3) DEFINITIONS.—For purposes of this sub20 section:

21 (A) CONTINGENT FEE.—The term ‘‘contin22 gent fee’’ includes all compensation to any per23 son which is payable only if a recovery is ef24 fected on behalf of one or more claimants.
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1 (B) RECOVERY.—The term ‘‘recovery’’

2 means the net sum recovered after deducting

3 any disbursements or costs incurred in connec4 tion with prosecution or settlement of the claim,

5 including all costs paid or advanced by any per6 son. Costs of health care incurred by the plain7 tiff and the attorney’s office overhead costs or

8 charges for legal services are not deductible dis9 bursements of costs for such purpose.

10 (d) HOURS WORKED.—Counsel of record in a health

11 care liability action shall maintain accurate and up-to-date

12 records of hours worked for such action regardless of the

13 fee arrangement with the attorney’s client.

14 (e) COSTS.—Nothing in this section shall affect the

15 right of a prevailing party to be awarded costs under ap16 plicable law.

17 (f) EFFECTIVE DATE.—This section shall apply with

18 respect to a health care liability action which is brought

19 after the date of the enactment of this Act for a claim

20 arising from an injury occurring after such date of enact21 ment.

22 SEC. 6. ALTERNATIVE DISPUTE RESOLUTION.

23 Any ADR used to resolve a health care liability action

24 or claim shall contain provisions relating to statute of limi25 tations, noneconomic damages, joint and several liability,
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1 punitive damages, collateral source rule, periodic pay2 ments, and award of attorney’s fees which are consistent

3 with the provisions relating to such matters in this Act.

4 SEC. 7. DEFINITIONS.

5 As used in this Act:

6 (1) ACTUAL DAMAGES.—The term ‘‘actual dam7 ages’’ means damages awarded to pay for economic

8 loss.

9 (2) ADR.—The term ‘‘ADR’’ means an alter10 native dispute resolution system established under

11 Federal or State law that provides for the resolution

12 of health care liability claims in a manner other than

13 through health care liability actions.

14 (3) CLAIMANT.—The term ‘‘claimant’’ means

15 any person who brings a health care liability action

16 and any person on whose behalf such an action is

17 brought. If such action is brought through or on be18 half of an estate, the term includes the claimant’s

19 decedent. If such action is brought through or on be20 half of a minor or incompetent, the term includes

21 the claimant’s legal guardian.

22 (4) CLEAR AND CONVINCING EVIDENCE.—The

23 term ‘‘clear and convincing evidence’’ is that meas24 ure or degree of proof that will produce in the mind

25 of the trier of fact a firm belief or conviction as to
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1 the truth of the allegations sought to be established.

2 Such measure or degree of proof is more than that

3 required under preponderance of the evidence but

4 less than that required for proof beyond a reason5 able doubt.

6 (5) COLLATERAL SOURCE PAYMENTS.—The

7 term ‘‘collateral source payments’’ means any

8 amount paid or reasonably likely to be paid in the

9 future to or on behalf of a claimant, or any service,

10 product, or other benefit provided or reasonably like11 ly to be provided in the future to or on behalf of a

12 claimant, as a result of an injury or wrongful death,

13 pursuant to—

14 (A) any State or Federal health, sickness,

15 income-disability, accident or workers’ com16 pensation Act;

17 (B) any health, sickness, income-disability,

18 or accident insurance that provides health bene19 fits or income-disability coverage;

20 (C) any contract or agreement of any

21 group, organization, partnership, or corporation

22 to provide, pay for, or reimburse the cost of

23 medical, hospital, dental, or income disability

24 benefits; and
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1 (D) any other publicly or privately funded

2 program.

3 (6) DRUG.—The term ‘‘drug’’ has the meaning

4 given such term in section 201(g)(1) of the Federal

5 Food, Drug, and Cosmetic Act (21 U.S.C.

6 321(g)(1)).

7 (7) ECONOMIC DAMAGES.—The term ‘‘economic

8 damages’’ means objectively verifiable monetary

9 losses incurred as a result of the provision of, use

10 of, or payment for (or failure to provide, use, or pay

11 for) health care services or medical products such as

12 past and future medical expenses, loss of past and

13 future earnings, cost of obtaining domestic services,

14 loss of employment, loss due to death, burial costs,

15 and loss of business or employment opportunities.

16 (8) HARM.—The term ‘‘harm’’ means any le17 gally cognizable wrong or injury for which punitive

18 damages may be imposed.

19 (9) HEALTH BENEFIT PLAN.—The term

20 ‘‘health benefit plan’’ means—

21 (A) a hospital or medical expense incurred

22 policy or certificate,

23 (B) a hospital or medical service plan con24 tract,
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1 (C) a health maintenance subscriber con2 tract, or

3 (D) a Medicare+Choice product (offered

4 under part C of title XVIII of the Social Secu5 rity Act),

6 that provides benefits with respect to health care

7 services.

8 (10) HEALTH CARE LIABILITY ACTION.—The

9 term ‘‘health care liability action’’ means a civil ac10 tion brought in a State or Federal court or pursuant

11 to alternative dispute resolution against a health

12 care provider, an entity which is obligated to provide

13 or pay for health benefits under any health benefit

14 plan (including any person or entity acting under a

15 contract or arrangement to provide or administer

16 any health benefit), or the manufacturer, distributor,

17 supplier, marketer, promoter, or seller of a medical

18 product, in which the claimant alleges a claim (in19 cluding third party claims, cross claims, counter

20 claims, or contribution claims) based upon the provi21 sion of (or the failure to provide or pay for) health

22 care services or the use of a medical product, re23 gardless of the theory of liability on which the claim

24 is based or the number of plaintiffs, defendants, or

25 causes of action.
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1 (11) HEALTH CARE LIABILITY CLAIM.—The

2 term ‘‘health care liability claim’’ means a claim in

3 which the claimant alleges that injury was caused by

4 the provision of (or the failure to provide) health

5 care services or medical products.

6 (12) HEALTH CARE PROVIDER.—The term

7 ‘‘health care provider’’ means any person that is en8 gaged in the delivery of health care services in a

9 State and that is required by the laws or regulations

10 of the State to be licensed or certified by the State

11 to engage in the delivery of such services in the

12 State.

13 (13) HEALTH CARE SERVICE.—The term

14 ‘‘health care service’’ means any service for which

15 payment may be made under a health benefit plan

16 including services related to the delivery or adminis17 tration of such service.

18 (14) MEDICAL PRODUCT.—The term ‘‘medical

19 product’’ means a drug (as defined in section

20 201(g)(1)) of the Federal Food, Drug, and Cosmetic

21 Act (21 U.S.C. 321(g)(1)) or a medical device (as

22 defined in section 201(h)) of the Federal Food,

23 Drug, and Cosmetic Act (21 U.S.C. 321(h)), includ24 ing any component or raw material used in a drug

25 or device but excluding health care services.
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1 (15) NONECONOMIC DAMAGES.—The term

2 ‘‘noneconomic damages’’ means damages paid to an

3 individual for pain and suffering, inconvenience,

4 emotional distress, mental anguish, loss of consor5 tium, injury to reputation, humiliation, and other

6 nonpecuniary losses.

7 (16) PERSON.—The term ‘‘person’’ means any

8 individual, corporation, company, association, firm,

9 partnership, society, joint stock company, or any

10 other entity, including any governmental entity.

11 (17) PREVAILING PARTY.—The term ‘‘pre12 vailing party’’ means a party to a health care liabil13 ity action who obtains a final judgment (other than

14 by settlement) exclusive of interest on all or a por15 tion of the claims asserted during the litigation.

16 (18) PRODUCT SELLER.—

17 (A) IN GENERAL.—Subject to subpara18 graph (B), the term ‘‘product seller’’ means a

19 person who, in the course of a business con20 ducted for that purpose—

21 (i) sells, distributes, rents, leases, pre22 pares, blends, packages, labels, or is other23 wise involved in placing, a product in the

24 stream of commerce, or
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1 (ii) installs, repairs, or maintains the

2 harm-causing aspect of a product.

3 (B) EXCLUSION.—Such term does not

4 include—

5 (i) a seller or lessor of real property;

6 (ii) a provider of professional services

7 in any case in which the sale or use of a

8 product is incidental to the transaction and

9 the essence of the transaction is the fur10 nishing of judgment, skill, or services; or

11 (iii) any person who—

12 (I) acts in only a financial capac13 ity with respect to the sale of a prod14 uct; or

15 (II) leases a product under a

16 lease arrangement in which the selec17 tion, possession, maintenance, and op18 eration of the product are controlled

19 by a person other than the lessor.

20 (19) PUNITIVE DAMAGES.—The term ‘‘punitive

21 damages’’ means damages awarded against any per22 son not to compensate for actual injury suffered, but

23 to punish or deter such person or others from en24 gaging in similar behavior in the future.
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1 (20) STATE.—The term ‘‘State’’ means each of

2 the several States, the District of Columbia, Puerto

3 Rico, the Virgin Islands, Guam, American Samoa,

4 the Northern Mariana Islands, and any other terri5 tory or possession of the United States.

6 SEC. 8. EFFECTIVE DATE.

7 This Act will apply to any health care liability action

8 brought in a Federal or State court and to any health

9 care liability claim subject to an ADR system, that is initi10 ated on or after the date of enactment of this Act, except

11 that any health care liability claim or action arising from

12 an injury occurring prior to the date of enactment of this

13 Act shall be governed by the applicable statute of limita14 tions provisions in effect at the time the injury occurred.

Æ