I 

110TH CONGRESS 

2D SESSION H. R. 5480 

To respond to a Medicare funding warning. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2008 

Mr. HOYER (for himself and Mr. BOEHNER) (both by request) introduced the 

following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on the Judiciary and Ways and 

Means, 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 respond to a Medicare funding warning. 

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 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Medicare Funding Warning Response Act of 2008’’. 

6 (b) REFERENCES.—In this Act: 

7 (1) Except where otherwise specifically pro8 vided, references in this Act shall be considered to 

9 be made to the Social Security Act, or to a section 

10 or other provision thereof. 


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1 (2) The term ‘‘Secretary’’ shall be deemed a 

2 reference to the Secretary of Health and Human 

3 Services. 

4 (3) The terms ‘‘Medicare’’ and ‘‘Medicare pro5 gram’’ mean the program under title XVIII of the 

6 Social Security Act (42 U.S.C. 1395 et seq.). 

7 (4) The Medicare Prescription Drug, Improve8 ment, and Modernization Act of 2003 (Public Law 

9 108–173) shall be referred to as the ‘‘MMA’’. 

10 (5) The term ‘‘excess general revenue medicare 

11 funding’’ has the meaning given such term by sec12 tion 801(c) of the MMA. 

13 (6) The term ‘‘Trustees Report’’ means the an14 nual report submitted under subsection (b)(2) of 

15 sections 1817 and 1841 of the Social Security Act 

16 (42 U.S.C. 1395i(b)(2) and 1395t(b)(2), respec17 tively). 

18 (c) PURPOSE.—It is the purpose of this Act to re19 spond to the medicare funding warning currently in effect 

20 under section 801(a)(2) of the MMA. 


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1 TITLE I—INTRODUCING PRIN2 CIPLES OF VALUE-BASED 

3 HEALTH CARE INTO THE 

4 MEDICARE PROGRAM 

5 SEC. 101. INTRODUCING PRINCIPLES OF VALUE-BASED 

6 HEALTH CARE INTO THE MEDICARE PRO7 GRAM. 

8 (a) ELECTRONIC HEALTH RECORDS.—The Secretary 

9 shall develop and implement a system for encouraging na10 tionwide adoption and use of interoperable electronic 

11 health records and to make available personal health 

12 records for Medicare beneficiaries. 

13 (b) PRICING TRANSPARENCY.—The Secretary shall 

14 make publicly available information on prices and pay15 ments under the Medicare program for treatments (includ16 ing episodes of care), items, and services to assist Medi17 care beneficiaries in making choices among providers, 

18 plans, and treatment options. 

19 (c) QUALITY TRANSPARENCY.—The Secretary shall 

20 make publicly available information on the quality of care 

21 provided to Medicare beneficiaries to assist them in mak22 ing choices among providers, plans, and treatments. To 

23 ensure the continued development and evolution of quality 

24 measures, the Secretary shall develop and implement a 

25 plan for ensuring that, by the year 2013, quality measures 


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1 are available and reported with respect to at least 50 per2 cent of the care provided under the Medicare program (de3 termined according to the amount of payment made under 

4 such program for items and services with respect to which 

5 such measures are available). The Secretary shall report 

6 to the Committees on Ways and Means and Energy and 

7 Commerce in the House of Representatives and the Com8 mittee on Finance in the Senate annually on the progress 

9 of the goal specified in the preceding sentence. 

10 (d) INCENTIVES FOR VALUE.— 

11 (1) INCENTIVES FOR PROVIDERS AND SUP12 PLIERS.— 

13 (A) IN GENERAL.—The Secretary shall de14 sign and implement a system for use in the 

15 Medicare program under which a portion of the 

16 payments that would otherwise be made under 

17 such program to some or all classes of individ18 uals and entities furnishing items or services to 

19 beneficiaries of such program would be based 

20 on the quality and efficiency of their perform21 ance. 

22 (B) IMPLEMENTATION.—The Secretary 

23 shall first implement such system in settings 

24 where measures are well-accepted and already 

25 collected, including hospitals, physicians’ ofVerDate Aug 31 2005 02:14 Feb 26, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5480.IH H5480

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1 fices, home health agencies, skilled nursing fa2 cilities, and renal dialysis facilities. The initial 

3 focus of such efforts shall be on quality, but the 

4 Secretary shall add measures of efficiency as 

5 they are identified. The system shall also in6 clude incentives for reducing unwarranted geo7 graphic variations in quality and efficiency. 

8 (C) SECRETARY’S AUTHORITY.—The Sec9 retary may implement the system described in 

10 this paragraph without regard to any provision 

11 of title XVIII of the Social Security Act that 

12 would, in the absence of subparagraphs (A) and 

13 (B), apply with respect to payment to an indi14 vidual or entity furnishing items or services for 

15 which payment may be made under the Medi16 care program. 

17 (2) BENEFICIARY INCENTIVES.— 

18 (A) IN GENERAL.—The Secretary shall im19 plement incentives for Medicare beneficiaries to 

20 use more efficient providers and preventive 

21 services known to reduce costs. 

22 (B) ACCESS TO HEALTH SAVINGS AC23 COUNTS.—The Secretary shall assure a transi24 tion into the Medicare program for individuals 

25 who are not yet enrolled in such program who 


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1 own health savings accounts, and shall provide 

2 for the availability of high deductible health 

3 plan options in the Medicare program. 

4 (e) BROADLY TRANSFORMING THE PRIVATE HEALTH

5 CARE MARKETPLACE.—The Secretary shall use and re6 lease Medicare data for quality improvement, performance 

7 measurement, public reporting, and treatment-related pur8 poses. In implementing the preceding sentence, the Sec9 retary shall apply risk adjustment techniques where ap10 propriate and shall determine the circumstances under 

11 which it is appropriate to release such data. 

12 (f) PROTECTING INDIVIDUALLY IDENTIFIABLE

13 HEALTH INFORMATION.—In implementing this title, the 

14 Secretary shall ensure that individually identifiable bene15 ficiary health information is protected (in accordance with 

16 the regulations adopted under section 264(c) of the Health 

17 Insurance Portability and Accountability Act of 1996 and 

18 such other laws and regulations as may apply). 

19 (g) REGULATIONS.—The Secretary may implement a 

20 system described in this section by regulation, but only 

21 if such regulation is issued after public notice and an op22 portunity for public comment. 

23 (h) DEFINITIONS.—As used in this section: 

24 (1) The term ‘‘efficiency’’ means the delivery of 

25 health care in a manner that reduces the costs of 


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1 providing care for Medicare beneficiaries while main2 taining or improving the quality of such care. 

3 (2) The term ‘‘information on quality of care’’ 

4 means such measures of— 

5 (A) the use of clinical processes and struc6 tures known to improve care; 

7 (B) health outcomes; and 

8 (C) patient perceptions of their care, as 

9 the Secretary may select with preference given 

10 to those measures that have been recognized 

11 through a consensus-based process. 

12 (i) SAVINGS REQUIREMENT.— 

13 (1) IN GENERAL.—The Secretary may imple14 ment the provisions of subsections (a) through (e) of 

15 section 101 and section 102 for a year only to the 

16 extent that the Secretary determines (and the Chief 

17 Actuary of the Centers for Medicare & Medicaid 

18 Services certifies) that— 

19 (A) the total amount of payment made 

20 under title XVIII of the Social Security Act 

21 over the five and ten year periods that begin 

22 with January 1 of such year as a result of the 

23 implementation of such subsections (a) through 

24 (e) and section 102 is less than the amount 


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1 that would have been made over such periods if 

2 such implementation had not occurred; and 

3 (B) the total amount of payment made 

4 under each of titles XIX and XXI of such Act 

5 over such periods as a result of such implemen6 tation is no greater than the amount that would 

7 have been made under each such title over such 

8 periods if such implementation had not oc9 curred. 

10 (2) AVAILABILITY OF APPROPRIATIONS.—The 

11 Secretary shall carry out the provisions of this sec12 tion subject to the availability of appropriations and 

13 to the extent permitted consistent with paragraph 

14 (1). 

15 SEC. 102. RELEASE OF PHYSICIAN PERFORMANCE MEAS16 UREMENTS. 

17 Section 1848(k) (42 U.S.C. 1395w–4(k)) is amended 

18 by adding at the end the following new paragraph: 

19 ‘‘(9) RELEASE OF QUALITY MEASUREMENTS.— 

20 ‘‘(A) IN GENERAL.—Notwithstanding sec21 tion 552a of title 5, United States Code, the 

22 Secretary may— 

23 ‘‘(i) release to the public physician24 specific measurements of the quality or ef25 ficiency of physician performance against a 


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1 standard (reflecting measurements that 

2 have been recognized through a consensus3 based process) that has been endorsed by 

4 the Secretary; and 

5 ‘‘(ii) release, to an entity that will 

6 generate or calculate such measurements, 

7 data that the entity may use to perform 

8 such task. 

9 ‘‘(B) ENDORSEMENT OF STANDARDS.— 

10 The Secretary may make an endorsement under 

11 subparagraph (A) by publication of a notice in 

12 the Federal Register.’’. 

13 TITLE II—REDUCING THE EX14 CESSIVE BURDEN THE LI15 ABILITY SYSTEM PLACES ON 

16 THE HEALTH CARE DELIVERY 

17 SYSTEM 

18 SEC. 201. SHORT TITLE. 

19 This title may be cited as the ‘‘Help Efficient, Acces20 sible, Low-cost, Timely Healthcare (HEALTH) Act of 

21 2008’’. 

22 SEC. 202. FINDINGS AND PURPOSE. 

23 (a) FINDINGS.— 

24 (1) EFFECT ON HEALTH CARE ACCESS AND

25 COSTS.—Congress finds that our current civil justice 


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1 system is adversely affecting patient access to health 

2 care services, better patient care, and cost-efficient 

3 health care, in that the health care liability system 

4 is a costly and ineffective mechanism for resolving 

5 claims of health care liability and compensating in6 jured patients, and is a deterrent to the sharing of 

7 information among health care professionals which 

8 impedes efforts to improve patient safety and quality 

9 of care. 

10 (2) EFFECT ON INTERSTATE COMMERCE.— 

11 Congress finds that the health care and insurance 

12 industries are industries affecting interstate com13 merce and the health care liability litigation systems 

14 existing throughout the United States are activities 

15 that affect interstate commerce by contributing to 

16 the high costs of health care and premiums for 

17 health care liability insurance purchased by health 

18 care system providers. 

19 (3) EFFECT ON FEDERAL SPENDING.—Con20 gress finds that the health care liability litigation 

21 systems existing throughout the United States have 

22 a significant effect on the amount, distribution, and 

23 use of Federal funds because of— 


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1 (A) the large number of individuals who 

2 receive health care benefits under programs op3 erated or financed by the Federal Government; 

4 (B) the large number of individuals who 

5 benefit because of the exclusion from Federal 

6 taxes of the amounts spent to provide them 

7 with health insurance benefits; and 

8 (C) the large number of health care pro9 viders who provide items or services for which 

10 the Federal Government makes payments. 

11 (b) PURPOSE.—It is the purpose of this title to imple12 ment reasonable, comprehensive, and effective health care 

13 liability reforms designed to— 

14 (1) improve the availability of health care serv15 ices in cases in which health care liability actions 

16 have been shown to be a factor in the decreased 

17 availability of services; 

18 (2) reduce the incidence of ‘‘defensive medi19 cine’’ and lower the cost of health care liability in20 surance, all of which contribute to the escalation of 

21 health care costs; 

22 (3) ensure that persons with meritorious health 

23 care injury claims receive fair and adequate com24 pensation, including reasonable noneconomic dam25 ages; 


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1 (4) improve the fairness and cost-effectiveness 

2 of our current health care liability system to resolve 

3 disputes over, and provide compensation for, health 

4 care liability by reducing uncertainty in the amount 

5 of compensation provided to injured individuals; and 

6 (5) provide an increased sharing of information 

7 in the health care system which will reduce unin8 tended injury and improve patient care. 

9 SEC. 203. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

10 The time for the commencement of a health care law11 suit shall be 3 years after the date of manifestation of 

12 injury or 1 year after the claimant discovers, or through 

13 the use of reasonable diligence should have discovered, the 

14 injury, whichever occurs first. In no event shall the time 

15 for commencement of a health care lawsuit exceed 3 years 

16 after the date of manifestation of injury unless tolled for 

17 any of the following— 

18 (1) upon proof of fraud; 

19 (2) intentional concealment; or 

20 (3) the presence of a foreign body, which has no 

21 therapeutic or diagnostic purpose or effect, in the 

22 person of the injured person. 

23 Actions by a minor shall be commenced within 3 years 

24 from the date of the alleged manifestation of injury except 

25 that actions by a minor under the full age of 6 years shall 


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1 be commenced within 3 years of manifestation of injury 

2 or prior to the minor’s 8th birthday, whichever provides 

3 a longer period. Such time limitation shall be tolled for 

4 minors for any period during which a parent or guardian 

5 and a health care provider or health care organization 

6 have committed fraud or collusion in the failure to bring 

7 an action on behalf of the injured minor. 

8 SEC. 204. COMPENSATING PATIENT INJURY. 

9 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

10 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

11 health care lawsuit, nothing in this title shall limit a claim12 ant’s recovery of the full amount of the available economic 

13 damages, notwithstanding the limitation in subsection (b). 

14 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

15 health care lawsuit, the amount of noneconomic damages, 

16 if available, may be as much as $250,000, regardless of 

17 the number of parties against whom the action is brought 

18 or the number of separate claims or actions brought with 

19 respect to the same injury. 

20 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

21 DAMAGES.—For purposes of applying the limitation in 

22 subsection (b), future noneconomic damages shall not be 

23 discounted to present value. The jury shall not be in24 formed about the maximum award for noneconomic dam25 ages. An award for noneconomic damages in excess of 


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1 $250,000 shall be reduced either before the entry of judg2 ment, or by amendment of the judgment after entry of 

3 judgment, and such reduction shall be made before ac4 counting for any other reduction in damages required by 

5 law. If separate awards are rendered for past and future 

6 noneconomic damages and the combined awards exceed 

7 $250,000, the future noneconomic damages shall be re8 duced first. 

9 (d) FAIR SHARE RULE.—In any health care lawsuit, 

10 each party shall be liable for that party’s several share 

11 of any damages only and not for the share of any other 

12 person. Each party shall be liable only for the amount of 

13 damages allocated to such party in direct proportion to 

14 such party’s percentage of responsibility. Whenever a 

15 judgment of liability is rendered as to any party, a sepa16 rate judgment shall be rendered against each such party 

17 for the amount allocated to such party. For purposes of 

18 this section, the trier of fact shall determine the propor19 tion of responsibility of each party for the claimant’s 

20 harm. 

21 SEC. 205. MAXIMIZING PATIENT RECOVERY. 

22 (a) COURT SUPERVISION OF SHARE OF DAMAGES

23 ACTUALLY PAID TO CLAIMANTS.—In any health care law24 suit, the court shall supervise the arrangements for pay25 ment of damages to protect against conflicts of interest 


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1 that may have the effect of reducing the amount of dam2 ages awarded that are actually paid to claimants. In par3 ticular, in any health care lawsuit in which the attorney 

4 for a party claims a financial stake in the outcome by vir5 tue of a contingent fee, the court shall have the power 

6 to restrict the payment of a claimant’s damage recovery 

7 to such attorney, and to redirect such damages to the 

8 claimant based upon the interests of justice and principles 

9 of equity. In no event shall the total of all contingent fees 

10 for representing all claimants in a health care lawsuit ex11 ceed the following limits: 

12 (1) 40 percent of the first $50,000 recovered by 

13 the claimant(s). 

(2) 331 14 ⁄3 percent of the next $50,000 recovered 

15 by the claimant(s). 

16 (3) 25 percent of the next $500,000 recovered 

17 by the claimant(s). 

18 (4) 15 percent of any amount by which the re19 covery by the claimant(s) is in excess of $600,000. 

20 (b) APPLICABILITY.—The limitations in this section 

21 shall apply whether the recovery is by judgment, settle22 ment, mediation, arbitration, or any other form of alter23 native dispute resolution. In a health care lawsuit involv24 ing a minor or incompetent person, a court retains the 

25 authority to authorize or approve a fee that is less than 


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1 the maximum permitted under this section. The require2 ment for court supervision in the first two sentences of 

3 subsection (a) applies only in civil actions. 

4 SEC. 206. ADDITIONAL HEALTH BENEFITS. 

5 In any health care lawsuit involving injury or wrong6 ful death, any party may introduce evidence of collateral 

7 source benefits. If a party elects to introduce such evi8 dence, any opposing party may introduce evidence of any 

9 amount paid or contributed or reasonably likely to be paid 

10 or contributed in the future by or on behalf of the oppos11 ing party to secure the right to such collateral source bene12 fits. No provider of collateral source benefits shall recover 

13 any amount against the claimant or receive any lien or 

14 credit against the claimant’s recovery or be equitably or 

15 legally subrogated to the right of the claimant in a health 

16 care lawsuit involving injury or wrongful death. This sec17 tion shall apply to any health care lawsuit that is settled 

18 as well as a health care lawsuit that is resolved by a fact 

19 finder. This section shall not apply to section 1862(b) (42 

20 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

21 1396a(a)(25)) of the Social Security Act, or to section 

22 8131 or section 8132 of title 5, United States Code. This 

23 section shall not apply to section 1862(b) (42 U.S.C. 

24 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

25 1396a(a)(25)) of the Social Security Act, or to section 


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1 8131 or section 8132 of title 5, United States Code, or 

2 to a collateral source provider that is an employee benefit 

3 plan under section 3(3) of the Employee Retirement In4 come Security Act of 1974 (29 U.S.C. 1002(3)). 

5 SEC. 207. PUNITIVE DAMAGES. 

6 (a) IN GENERAL.—Punitive damages may, if other7 wise permitted by applicable State or Federal law, be 

8 awarded against any person in a health care lawsuit only 

9 if it is proven by clear and convincing evidence that such 

10 person acted with malicious intent to injure the claimant, 

11 or that such person deliberately failed to avoid unneces12 sary injury that such person knew the claimant was sub13 stantially certain to suffer. In any health care lawsuit 

14 where no judgment for compensatory damages is rendered 

15 against such person, no punitive damages may be awarded 

16 with respect to the claim in such lawsuit. No demand for 

17 punitive damages shall be included in a health care lawsuit 

18 as initially filed. A court may allow a claimant to file an 

19 amended pleading for punitive damages only upon a mo20 tion by the claimant and after a finding by the court, upon 

21 review of supporting and opposing affidavits or after a 

22 hearing, after weighing the evidence, that the claimant has 

23 established by a substantial probability that the claimant 

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1 quest of any party in a health care lawsuit, the trier of 

2 fact shall consider in a separate proceeding— 

3 (1) whether punitive damages are to be award4 ed and the amount of such award; and 

5 (2) the amount of punitive damages following a 

6 determination of punitive liability. 

7 If a separate proceeding is requested, evidence relevant 

8 only to the claim for punitive damages, as determined by 

9 applicable State law, shall be inadmissible in any pro10 ceeding to determine whether compensatory damages are 

11 to be awarded. 

12 (b) DETERMINING AMOUNT OF PUNITIVE DAM13 AGES.— 

14 (1) FACTORS CONSIDERED.—In determining 

15 the amount of punitive damages, if awarded, in a 

16 health care lawsuit, the trier of fact shall consider 

17 only the following— 

18 (A) the severity of the harm caused by the 

19 conduct of such party; 

20 (B) the duration of the conduct or any 

21 concealment of it by such party; 

22 (C) the profitability of the conduct to such 

23 party; 

24 (D) the number of products sold or med25 ical procedures rendered for compensation, as 


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1 the case may be, by such party, of the kind 

2 causing the harm complained of by the claim3 ant; 

4 (E) any criminal penalties imposed on such 

5 party, as a result of the conduct complained of 

6 by the claimant; and 

7 (F) the amount of any civil fines assessed 

8 against such party as a result of the conduct 

9 complained of by the claimant. 

10 (2) MAXIMUM AWARD.—The amount of punitive 

11 damages, if awarded, in a health care lawsuit may 

12 be as much as $250,000 or as much as two times 

13 the amount of economic damages awarded, which14 ever is greater. The jury shall not be informed of 

15 this limitation. 

16 (c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT

17 COMPLY WITH FDA STANDARDS.— 

18 (1) IN GENERAL.— 

19 (A) No punitive damages may be awarded 

20 against the manufacturer or distributor of a 

21 medical product, or a supplier of any compo22 nent or raw material of such medical product, 

23 based on a claim that such product caused the 

24 claimant’s harm where— 


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1 (i)(I) such medical product was sub2 ject to premarket approval, clearance, or li3 censure by the Food and Drug Administra4 tion with respect to the safety of the for5 mulation or performance of the aspect of 

6 such medical product which caused the 

7 claimant’s harm or the adequacy of the 

8 packaging or labeling of such medical 

9 product; and 

10 (II) such medical product was so ap11 proved, cleared, or licensed; or 

12 (ii) such medical product is generally 

13 recognized among qualified experts as safe 

14 and effective pursuant to conditions estab15 lished by the Food and Drug Administra16 tion and applicable Food and Drug Admin17 istration regulations, including without 

18 limitation those related to packaging and 

19 labeling, unless the Food and Drug Admin20 istration has determined that such medical 

21 product was not manufactured or distrib22 uted in substantial compliance with appli23 cable Food and Drug Administration stat24 utes and regulations. 


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1 (B) RULE OF CONSTRUCTION.—Subpara2 graph (A) may not be construed as establishing 

3 the obligation of the Food and Drug Adminis4 tration to demonstrate affirmatively that a 

5 manufacturer, distributor, or supplier referred 

6 to in such subparagraph meets any of the con7 ditions described in such subparagraph. 

8 (2) LIABILITY OF HEALTH CARE PROVIDERS.— 

9 A health care provider who prescribes, or who dis10 penses pursuant to a prescription, a medical product 

11 approved, licensed, or cleared by the Food and Drug 

12 Administration shall not be named as a party to a 

13 product liability lawsuit involving such product and 

14 shall not be liable to a claimant in a class action 

15 lawsuit against the manufacturer, distributor, or 

16 seller of such product. Nothing in this paragraph 

17 prevents a court from consolidating cases involving 

18 health care providers and cases involving products li19 ability claims against the manufacturer, distributor, 

20 or product seller of such medical product. 

21 (3) PACKAGING.—In a health care lawsuit for 

22 harm which is alleged to relate to the adequacy of 

23 the packaging or labeling of a drug which is required 

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1 ices (including labeling regulations related to such 

2 packaging), the manufacturer or product seller of 

3 the drug shall not be held liable for punitive dam4 ages unless such packaging or labeling is found by 

5 the trier of fact by clear and convincing evidence to 

6 be substantially out of compliance with such regula7 tions. 

8 (4) EXCEPTION.—Paragraph (1) shall not 

9 apply in any health care lawsuit in which— 

10 (A) a person, before or after premarket ap11 proval, clearance, or licensure of such medical 

12 product, knowingly misrepresented to or with13 held from the Food and Drug Administration 

14 information that is required to be submitted 

15 under the Federal Food, Drug, and Cosmetic 

16 Act (21 U.S.C. 301 et seq.) or section 351 of 

17 the Public Health Service Act (42 U.S.C. 262) 

18 that is material and is causally related to the 

19 harm which the claimant allegedly suffered; or 

20 (B) a person made an illegal payment to 

21 an official of the Food and Drug Administra22 tion for the purpose of either securing or main23 taining approval, clearance, or licensure of such 

24 medical product. 


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1 SEC. 208. AUTHORIZATION OF PAYMENT OF FUTURE DAM2 AGES TO CLAIMANTS IN HEALTH CARE LAW3 SUITS. 

4 (a) IN GENERAL.—In any health care lawsuit, if an 

5 award of future damages, without reduction to present 

6 value, equaling or exceeding $50,000 is made against a 

7 party with sufficient insurance or other assets to fund a 

8 periodic payment of such a judgment, the court shall, at 

9 the request of any party, enter a judgment ordering that 

10 the future damages be paid by periodic payments. In any 

11 health care lawsuit, the court may be guided by the Uni12 form Periodic Payment of Judgments Act promulgated by 

13 the National Conference of Commissioners on Uniform 

14 State Laws. 

15 (b) APPLICABILITY.—This section applies to all ac16 tions which have not been first set for trial or retrial be17 fore the effective date of this Act. 

18 SEC. 209. DEFINITIONS. 

19 In this title: 

20 (1) ALTERNATIVE DISPUTE RESOLUTION SYS21 TEM; ADR.—The term ‘‘alternative dispute resolution 

22 system’’ or ‘‘ADR’’ means a system that provides 

23 for the resolution of health care lawsuits in a man24 ner other than through a civil action brought in a 

25 State or Federal court. 


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

2 any person who brings a health care lawsuit, includ3 ing a person who asserts or claims a right to legal 

4 or equitable contribution, indemnity or subrogation, 

5 arising out of a health care liability claim or action, 

6 and any person on whose behalf such a claim is as7 serted or such an action is brought, whether de8 ceased, incompetent, or a minor. 

9 (3) COLLATERAL SOURCE BENEFITS.—The 

10 term ‘‘collateral source benefits’’ means any amount 

11 paid or reasonably likely to be paid in the future to 

12 or on behalf of the claimant, or any service, product 

13 or other benefit provided or reasonably likely to be 

14 provided in the future to or on behalf of the claim15 ant, as a result of the injury or wrongful death, pur16 suant to— 

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

18 income-disability, accident, or workers’ com19 pensation law (except the Federal Employees’ 

20 Compensation Act (5 U.S.C. 8101 et seq.)); 

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

22 or accident insurance that provides health bene23 fits or income-disability coverage; 

24 (C) any contract or agreement of any 

25 group, organization, partnership, or corporation 


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

2 medical, hospital, dental, or income disability 

3 benefits; and 

4 (D) any other publicly or privately funded 

5 program. 

6 (4) COMPENSATORY DAMAGES.—The term 

7 ‘‘compensatory damages’’ means objectively 

8 verifiable monetary losses incurred as a result of the 

9 provision of, use of, or payment for (or failure to 

10 provide, use, or pay for) health care services or med11 ical products, such as past and future medical ex12 penses, loss of past and future earnings, cost of ob13 taining domestic services, loss of employment, and 

14 loss of business or employment opportunities, dam15 ages for physical and emotional pain, suffering, in16 convenience, physical impairment, mental anguish, 

17 disfigurement, loss of enjoyment of life, loss of soci18 ety and companionship, loss of consortium (other 

19 than loss of domestic service), hedonic damages, in20 jury to reputation, and all other nonpecuniary losses 

21 of any kind or nature. The term ‘‘compensatory 

22 damages’’ includes economic damages and non23 economic damages, as such terms are defined in this 

24 section. 


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1 (5) CONTINGENT FEE.—The term ‘‘contingent 

2 fee’’ includes all compensation to any person or per3 sons which is payable only if a recovery is effected 

4 on behalf of one or more claimants. 

5 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

6 damages’’ means objectively verifiable monetary 

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

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

9 for) health care services or medical products, such as 

10 past and future medical expenses, loss of past and 

11 future earnings, cost of obtaining domestic services, 

12 loss of employment, and loss of business or employ13 ment opportunities. 

14 (7) HEALTH CARE LAWSUIT.—The term 

15 ‘‘health care lawsuit’’ means any health care liability 

16 claim concerning the provision of health care goods 

17 or services or any medical product affecting inter18 state commerce, or any health care liability action 

19 concerning the provision of health care goods or 

20 services or any medical product affecting interstate 

21 commerce, brought in a State or Federal court or 

22 pursuant to an alternative dispute resolution system, 

23 against a health care provider, a health care organi24 zation, or the manufacturer, distributor, supplier, 

25 marketer, promoter, or seller of a medical product, 


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1 regardless of the theory of liability on which the 

2 claim is based, or the number of claimants, plain3 tiffs, defendants, or other parties, or the number of 

4 claims or causes of action, in which the claimant al5 leges a health care liability claim. Such term does 

6 not include a claim brought by the United States 

7 Government or a relator under the False Claims Act 

8 (31 U.S.C. 3729 et seq.) or a claim or action which 

9 is based on criminal liability; which seeks civil fines 

10 or penalties paid to Federal, State, or local govern11 ment; or which is grounded in antitrust. 

12 (8) HEALTH CARE LIABILITY ACTION.—The 

13 term ‘‘health care liability action’’ means a civil ac14 tion brought in a State or Federal Court or pursu15 ant to an alternative dispute resolution system, 

16 against a health care provider, a health care organi17 zation, or the manufacturer, distributor, supplier, 

18 marketer, promoter, or seller of a medical product, 

19 regardless of the theory of liability on which the 

20 claim is based, or the number of plaintiffs, defend21 ants, or other parties, or the number of causes of ac22 tion, in which the claimant alleges a health care li23 ability claim. 

24 (9) HEALTH CARE LIABILITY CLAIM.—The 

25 term ‘‘health care liability claim’’ means a demand 


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1 by any person, whether or not pursuant to ADR, 

2 against a health care provider, health care organiza3 tion, or the manufacturer, distributor, supplier, mar4 keter, promoter, or seller of a medical product, in5 cluding, but not limited to, third-party claims, cross6 claims, counter-claims, or contribution claims, which 

7 are based upon the provision of, use of, or payment 

8 for (or the failure to provide, use, or pay for) health 

9 care services or medical products, regardless of the 

10 theory of liability on which the claim is based, or the 

11 number of plaintiffs, defendants, or other parties, or 

12 the number of causes of action. 

13 (10) HEALTH CARE ORGANIZATION.—The term 

14 ‘‘health care organization’’ means any person or en15 tity which is obligated to provide or pay for health 

16 benefits under any health plan, including any person 

17 or entity acting under a contract or arrangement 

18 with a health care organization to provide or admin19 ister any health benefit. 

20 (11) HEALTH CARE PROVIDER.—The term 

21 ‘‘health care provider’’ means any person or entity 

22 required by State or Federal laws or regulations to 

23 be licensed, registered, or certified to provide health 

24 care services, and being either so licensed, regVerDate Aug 31 2005 02:14 Feb 26, 2008 Jkt 069200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H5480.IH H5480

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1 istered, or certified, or exempted from such require2 ment by other statute or regulation. 

3 (12) HEALTH CARE GOODS OR SERVICES.—The 

4 term ‘‘health care goods or services’’ means any 

5 goods or services provided by a health care organiza6 tion, provider, or by any individual working under 

7 the supervision of a health care provider, that relates 

8 to the diagnosis, prevention, or treatment of any 

9 human disease or impairment, or the assessment or 

10 care of the health of human beings. 

11 (13) MALICIOUS INTENT TO INJURE.—The 

12 term ‘‘malicious intent to injure’’ means inten13 tionally causing or attempting to cause physical in14 jury other than providing health care goods or serv15 ices. 

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

17 product’’ means a drug, device, or biological product 

18 intended for humans, and the terms ‘‘drug’’, ‘‘de19 vice’’, and ‘‘biological product’’ have the meanings 

20 given such terms in sections 201(g)(1) and 201(h) 

21 of the Federal Food, Drug and Cosmetic Act (21 

22 U.S.C. 321) and section 351(a) of the Public Health 

23 Service Act (42 U.S.C. 262(a)), respectively, includ24 ing any component or raw material used therein, but 

25 excluding health care services. 


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1 (15) NONECONOMIC DAMAGES.—The term 

2 ‘‘noneconomic damages’’ means damages for phys3 ical and emotional pain, suffering, inconvenience, 

4 physical impairment, mental anguish, disfigurement, 

5 loss of enjoyment of life, loss of society and compan6 ionship, loss of consortium (other than loss of do7 mestic service), hedonic damages, injury to reputa8 tion, and all other nonpecuniary losses of any kind 

9 or nature. 

10 (16) PUNITIVE DAMAGES.—The term ‘‘punitive 

11 damages’’ means damages awarded, for the purpose 

12 of punishment or deterrence, and not solely for com13 pensatory purposes, against a health care provider, 

14 health care organization, or a manufacturer, dis15 tributor, or supplier of a medical product. Punitive 

16 damages are neither economic nor noneconomic 

17 damages. 

18 (17) RECOVERY.—The term ‘‘recovery’’ means 

19 the net sum recovered after deducting any disburse20 ments or costs incurred in connection with prosecu21 tion or settlement of the claim, including all costs 

22 paid or advanced by any person. Costs of health care 

23 incurred by the plaintiff and the attorneys’ office 

24 overhead costs or charges for legal services are not 

25 deductible disbursements or costs for such purpose. 


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1 (18) STATE.—The term ‘‘State’’ means each of 

2 the several States, the District of Columbia, the 

3 Commonwealth of Puerto Rico, the Virgin Islands, 

4 Guam, American Samoa, the Northern Mariana Is5 lands, the Trust Territory of the Pacific Islands, and 

6 any other territory or possession of the United 

7 States, or any political subdivision thereof. 

8 SEC. 210. EFFECT ON OTHER LAWS. 

9 (a) VACCINE INJURY.— 

10 (1) To the extent that title XXI of the Public 

11 Health Service Act establishes a Federal rule of law 

12 applicable to a civil action brought for a vaccine-re13 lated injury or death— 

14 (A) this title does not affect the application 

15 of the rule of law to such an action; and 

16 (B) any rule of law prescribed by this title 

17 in conflict with a rule of law of such title XXI 

18 shall not apply to such action. 

19 (2) If there is an aspect of a civil action 

20 brought for a vaccine-related injury or death to 

21 which a Federal rule of law under title XXI of the 

22 Public Health Service Act does not apply, then this 

23 title or otherwise applicable law (as determined 

24 under this title) will apply to such aspect of such ac25 tion. 


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1 (b) OTHER FEDERAL LAW.—Except as provided in 

2 this section, nothing in this title shall be deemed to affect 

3 any defense available to a defendant in a health care law4 suit or action under any other provision of Federal law. 

5 SEC. 211. STATE FLEXIBILITY AND PROTECTION OF 

6 STATES’ RIGHTS. 

7 (a) HEALTH CARE LAWSUITS.—The provisions gov8 erning health care lawsuits set forth in this title preempt, 

9 subject to subsections (b) and (c), State law to the extent 

10 that State law prevents the application of any provisions 

11 of law established by or under this title. The provisions 

12 governing health care lawsuits set forth in this title super13 sede chapter 171 of title 28, United States Code, to the 

14 extent that such chapter— 

15 (1) provides or allows for a greater amount of 

16 damages or contingent fees, or a longer period in 

17 which a health care lawsuit may be commenced, 

18 than provided in this title; 

19 (2) precludes or reduces the applicability or 

20 scope of periodic payment of future damages as pro21 vided in this title; or 

22 (3) through application of State law, conflicts 

23 with provisions of this title concerning joint liability, 

24 collateral source benefits, subrogation, or liens. 


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1 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

2 LAWS.— 

3 (1) Any issue that is not governed by any provi4 sion of law established by or under this title (includ5 ing State standards of negligence) shall be governed 

6 by otherwise applicable State or Federal law. 

7 (2) This title shall not preempt or supersede 

8 any State or Federal law that imposes greater proce9 dural or substantive protections for health care pro10 viders and health care organizations from liability, 

11 loss, or damages than those provided by this title or 

12 create a cause of action. 

13 (c) STATE FLEXIBILITY.—No provision of this title 

14 shall be construed to preempt— 

15 (1) any State law (whether effective before, on, 

16 or after the date of the enactment of this title) that 

17 specifies a particular monetary amount of compen18 satory or punitive damages (or the total amount of 

19 damages) that may be awarded in a health care law20 suit, regardless of whether such monetary amount is 

21 greater or lesser than is provided for under this title, 

22 notwithstanding section 204(a); or 

23 (2) any defense available to a party in a health 

24 care lawsuit under any other provision of State or 

25 Federal law. 


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1 SEC. 212. APPLICABILITY; EFFECTIVE DATE. 

2 This title shall apply to any health care lawsuit 

3 brought in a Federal or State court, or subject to an alter4 native dispute resolution system, that is initiated on or 

5 after the date of the enactment of this title, except that 

6 any health care lawsuit arising from an injury occurring 

7 prior to the date of the enactment of this title shall be 

8 governed by the applicable statute of limitations provisions 

9 in effect at the time the injury occurred. 

10 TITLE III—INCREASING HIGH-IN11 COME BENEFICIARY AWARE12 NESS AND RESPONSIBILITY 

13 FOR HEALTH CARE COSTS 

14 SEC. 301. INCOME-RELATED REDUCTION IN PART D PRE15 MIUM SUBSIDY. 

16 (a) INCOME-RELATED REDUCTION IN PART D PRE17 MIUM SUBSIDY.— 

18 (1) IN GENERAL.—Section 1860D–13(a) (42 

19 U.S.C. 1395w–113(a)) is amended by adding at the 

20 end the following new paragraph: 

21 ‘‘(7) REDUCTION IN PREMIUM SUBSIDY BASED

22 ON INCOME.— 

23 ‘‘(A) IN GENERAL.—In the case of an indi24 vidual whose modified adjusted gross income 

25 exceeds the threshold amount applicable under 

26 subparagraph (B) for the calendar year, the 


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1 monthly amount of the premium subsidy appli2 cable to the premium under this section for a 

3 month after December 2008 shall be reduced 

4 (and the monthly beneficiary premium shall be 

5 increased) by the monthly adjustment amount 

6 specified in subparagraph (C). 

7 ‘‘(B) THRESHOLD AMOUNT.—For purposes 

8 of this paragraph, the threshold amount is— 

9 ‘‘(i) except as provided in clause (ii), 

10 $82,000; and 

11 ‘‘(ii) in the case of a joint return, 

12 twice the amount applicable under clause 

13 (i) for the calendar year. 

14 ‘‘(C) MONTHLY ADJUSTMENT AMOUNT.— 

15 ‘‘(i) IN GENERAL.—The monthly ad16 justment amount specified in this subpara17 graph for an individual for a month in a 

18 year is equal to the product of— 

19 ‘‘(I) the quotient obtained by di20 viding— 

21 ‘‘(aa) the applicable percent22 age specified in the table in 

23 clause (ii) for the individual for 

24 the calendar year reduced by 

25 25.5 percent; by 


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1 ‘‘(bb) 25.5 percent; and 

2 ‘‘(II) the base beneficiary pre3 mium (as computed under paragraph 

4 (2)). 

5 ‘‘(ii) APPLICABLE PERCENTAGE.— 

6 ‘‘(I) IN GENERAL.— 

The applicable 

‘‘If the modified adjusted gross income is: percentage is: 

More than $82,000 but not more than $102,000 ............ 35 percent

More than $102,000 but not more than $153,000 .......... 50 percent

More than $153,000 but not more than $205,000 .......... 65 percent

More than $205,000 ......................................................... 80 percent. 

7 ‘‘(II) JOINT RETURNS.—In the 

8 case of a joint return, subclause (I) 

9 shall be applied by substituting dollar 

10 amounts which are twice the dollar 

11 amounts otherwise applicable under 

12 subclause (I) for the calendar year. 

13 ‘‘(III) MARRIED INDIVIDUALS

14 FILING SEPARATE RETURNS.—In the 

15 case of an individual who— 

16 ‘‘(aa) is married as of the 

17 close of the taxable year (within 

18 the meaning of section 7703 of 

19 the Internal Revenue Code of 

20 1986) but does not file a joint re21 turn for such year, and 


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•HR 5480 IH

1 ‘‘(bb) does not live apart 

2 from such individual’s spouse at 

3 all times during the taxable year, 

4 subclause (I) shall be applied by 

5 reducing each of the dollar 

6 amounts otherwise applicable 

7 under such subclause for the cal8 endar year by the threshold 

9 amount for such year applicable 

10 to an unmarried individual. 

11 ‘‘(D) DETERMINATION BY COMMISSIONER

12 OF SOCIAL SECURITY.—The Commissioner of 

13 Social Security shall have the authority to make 

14 initial and reconsideration determinations nec15 essary to carry out the income-related reduction 

16 in premium subsidy under this paragraph. 

17 ‘‘(E) MODIFIED ADJUSTED GROSS IN18 COME.—For purposes of this paragraph, the 

19 term ’modified adjusted gross income’ has the 

20 meaning given such term in subparagraph (A) 

21 of section 1839(i)(4), determined for the tax22 able year applicable under subparagraphs (B) 

23 and (C) of such section. 

24 ‘‘(F) JOINT RETURN DEFINED.—For pur25 poses of this paragraph, the term ’joint return’ 


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1 has the meaning given to such term by section 

2 7701(a)(38) of the Internal Revenue Code of 

3 1986. 

4 ‘‘(G) PROCEDURES TO ASSURE CORRECT

5 INCOME-RELATED REDUCTION IN PREMIUM

6 SUBSIDY.— 

7 ‘‘(i) DISCLOSURE OF BASE BENE8 FICIARY PREMIUM.—Not later than Sep9 tember 15 of each year beginning with 

10 2008, the Secretary shall disclose to the 

11 Commissioner of Social Security the 

12 amount of the base beneficiary premium 

13 (as computed under paragraph (2)) for the 

14 purpose of carrying out the income-related 

15 reduction in premium subsidy under this 

16 paragraph with respect to the following 

17 year. 

18 ‘‘(ii) ADDITIONAL DISCLOSURE.—Not 

19 later than October 15 of each year begin20 ning with 2008, the Secretary shall dis21 close to the Commissioner of Social Secu22 rity the following information for the pur23 pose of carrying out the income-related re24 duction in premium subsidy under this 


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•HR 5480 IH

1 paragraph with respect to the following 

2 year: 

3 ‘‘(I) The monthly adjustment 

4 amount specified in subparagraph (C). 

5 ‘‘(II) Any other information the 

6 Commissioner of Social Security de7 termines necessary to carry out the 

8 income-related reduction in premium 

9 subsidy under this paragraph. 

10 ‘‘(H) RULE OF CONSTRUCTION.—The for11 mula used to determine the monthly adjustment 

12 amount specified under subparagraph (C) shall 

13 only be used for the purpose of determining 

14 such monthly adjustment amount under such 

15 subparagraph.’’. 

16 (2) COLLECTION OF MONTHLY ADJUSTMENT

17 AMOUNT.—Section 1860D–13(c) (42 U.S.C. 1395w– 

18 113(c)) is amended— 

19 (A) in paragraph (1), by striking ‘‘(2) and 

20 (3)’’ and inserting ‘‘(2), (3), and (4)’’; and 

21 (B) by adding at the end the following new 

22 paragraph: 

23 ‘‘(4) COLLECTION OF MONTHLY ADJUSTMENT

24 AMOUNT.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding any 

2 provision of this subsection or section 

3 1854(d)(2), subject to subparagraph (B), the 

4 amount of the income-related reduction in pre5 mium subsidy for an individual for a month (as 

6 determined under subsection (a)(7)) shall be 

7 paid through withholding from benefit pay8 ments in the manner provided under section 

9 1840. 

10 ‘‘(B) AGREEMENTS.—In the case where 

11 the monthly benefit payments of an individual 

12 that are withheld under subparagraph (A) are 

13 insufficient to pay the amount described in such 

14 subparagraph, the Commissioner of Social Se15 curity shall enter into agreements with the Sec16 retary, the Director of the Office of Personnel 

17 Management, and the Railroad Retirement 

18 Board as necessary in order to allow other 

19 agencies to collect the amount described in sub20 paragraph (A) that was not withheld under 

21 such subparagraph.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) MEDICARE.—Part D of title XVIII (42 

24 U.S.C. 1395w–101 et seq.) is amended— 

25 (A) in section 1860D–13(a)(1)— 


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•HR 5480 IH

1 (i) by redesignating subparagraph (F) 

2 as subparagraph (G); 

3 (ii) in subparagraph (G), as redesig4 nated by subparagraph (A), by striking 

5 ‘‘(D) and (E)’’ and inserting ‘‘(D), (E), 

6 and (F)’’; and 

7 (iii) by inserting after subparagraph 

8 (E) the following new subparagraph: 

9 ‘‘(F) INCREASE BASED ON INCOME.—The 

10 monthly beneficiary premium shall be increased pur11 suant to paragraph (7).’’; and 

12 (B) in section 1860D–15(a)(1)(B), by 

13 striking ‘‘paragraph (1)(B)’’ and 

14 inserting‘‘paragraphs (1)(B) and (1)(F)’’. 

15 (2) INTERNAL REVENUE CODE.—Section 

16 6103(l)(20) of the Internal Revenue Code of 1986 

17 (relating to disclosure of return information to carry 

18 out Medicare part B premium subsidy adjustment) 

19 is amended— 

20 (A) in the heading, by striking ‘‘PART B 

21 PREMIUM SUBSIDY ADJUSTMENT’’ and 

22 inserting ‘‘PARTS B AND D PREMIUM 

23 SUBSIDY ADJUSTMENTS’’; 

24 (B) in subparagraph (A)— 


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1 (i) in the matter preceding clause (i), 

2 by inserting ‘‘or 1860D–13(a)(7)’’ after 

3 ‘‘1839(i)’’; and 

4 (ii) in clause (vii), by inserting 

5 after‘‘subsection (i) of such section’’ the 

6 following: ‘‘or under section 1860D– 

7 13(a)(7) of such Act’’; and 

8 (C) in subparagraph (B)— 

9 (i) by inserting ‘‘or such section 

10 1860D–13(a)(7)’’ before the period at the 

11 end; 

12 (ii) as amended by clause (i), by add13 ing at the end the following new sentence: 

14 ‘‘Such return information may be disclosed 

15 to officers and employees of the Depart16 ments of Health and Human Services and 

17 Justice, to the extent necessary, and solely 

18 for their use, in any administrative or judi19 cial proceeding ensuing from an adjust20 ment to any such premium.’’; and 

21 (D) by adding at the end the following new 

22 subparagraph: 

23 ‘‘(C) TIMING OF DISCLOSURE.—Return in24 formation shall be disclosed to officers, employVerDate Aug 31 2005 02:14 Feb 26, 2008 Jkt 069200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\H5480.IH H5480

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1 ees, and contractors of the Social Security Ad2 ministration under subparagraph (A): 

3 ‘‘(i) for taxpayers currently entitled to 

4 benefits under title II of the Social Secu5 rity Act, or as qualified railroad retirement 

6 beneficiaries within the meaning of section 

7 7(d) of the Railroad Retirement Act of 

8 1974, within 4 months preceding the 

9 month in which the taxpayer first becomes 

10 entitled to benefits under part A or is eligi11 ble to enroll in part B or part D of title 

12 XVIII of the Social Security Act; and 

13 ‘‘(ii) for taxpayers not currently re14 ceiving benefits under title II of the Social 

15 Security Act, or as qualified railroad re16 tirement beneficiaries within the meaning 

17 of section 7(d) of the Railroad Retirement 

18 Act of 1974, or who have participated in 

19 Medicare qualified government employment 

20 as defined in section 210(p) of the Social 

21 Security Act, after the taxpayer applies for 

22 a benefit under part A or part B and is eli23 gible to enroll in part D of title XVIII of 

24 the Social Security Act.’’. 


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1 (c) IMPLEMENTATION.—Notwithstanding any other 

2 provision of law, the Secretary, in consultation with the 

3 Commissioner of Social Security may implement this sec4 tion, and the amendments made by this section, by pro5 gram instruction or otherwise. 

Æ 


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