I

107TH CONGRESS

1ST SESSION H. R. 1639

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

IN THE HOUSE OF REPRESENTATIVES

APRIL 26, 2001

Mr. TOMMEY (for himself and Mr. SCHAFFER) introduced the following bill;

which was referred to the Committee on the Judiciary, and in addition

to the Committee on Energy and 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 ‘‘Common Sense Med5 ical Malpractice Reform Act of 2001’’.

6 SEC. 2. FEDERAL REFORM OF HEALTH CARE LIABILITY

7 ACTIONS.

8 (a) APPLICABILITY.—This Act shall apply with re9 spect to any health care liability action brought in any
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1 State or Federal court and to any health care liability

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

3 apply to an action for damages arising from a vaccine4 related injury or death to the extent that title XXI of the

5 Public Health Service Act applies to the action.

6 (b) PREEMPTION.—

7 (1) IN GENERAL.—This Act shall amend chap8 ter 171 of title 28, United States Code, (relating to

9 tort claims procedure) and preempt any State law to

10 the extent that such State law is inconsistent with

11 the limitations in this Act.

12 (2) STRONGER STATE LAWS.—This Act shall

13 not preempt any State law that provides for defenses

14 or places limitations on a person’s liability in addi15 tion to those contained in this Act or otherwise im16 poses greater restrictions on liability or damages

17 than those provided in this Act.

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

19 displace the implementation of any State sponsored or pri20 vate ADR system.

21 (c) LIMITATIONS.—This Act supersedes chapter 171

22 of title 28, United States Code (relating to tort claims pro23 cedure) and preempts State law with respect to both pro24 cedural and substantive matters only to the extent that

25 such chapter or State law differs from any provision of
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1 this Act or provision established under this Act. Section

2 5 shall supersede or preempt any provision of such chapter

3 or State law which prohibits the introduction of evidence

4 regarding collateral source benefits or mandates or per5 mits subrogation or a lien on the plaintiff’s award for the

6 cost of providing collateral source benefits. Any issue that

7 is not governed by any provision of this Act shall be gov8 erned by otherwise applicable Federal or State law.

9 (d) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

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

11 construed to—

12 (1) waive or affect any defense of sovereign im13 munity asserted by any State under any provision of

14 law;

15 (2) waive or affect any defense of sovereign im16 munity asserted by the United States;

17 (3) affect the applicability of any provision of

18 the Foreign Sovereign Immunities Act of 1976;

19 (4) preempt State choice-of-law rules with re20 spect to claims brought by a foreign nation or a cit21 izen of a foreign nation; or

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

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

24 dismiss a claim of a foreign nation or of a citizen
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1 of a foreign nation on the ground of inconvenient

2 forum.

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

4 which this Act applies and which is brought under section

5 1332 of title 28, United States Code, the amount of non6 economic damages or punitive damages, and attorneys’

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

8 the matter in controversy exceeds the sum or value of

9 $75,000.

10 (f) FEDERAL COURT JURISDICTION NOT ESTAB11 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

12 this Act shall be construed to establish any jurisdiction

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

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

15 title 28, United States Code.

16 SEC. 3. STATUTE OF LIMITATIONS.

17 A health care liability action may not be brought

18 after the expiration of the 1-year period that begins on

19 the date on which the alleged injury that is the subject

20 of the action was discovered or should reasonably have

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

22 3-year period that begins on the date the alleged injury

23 occurred.
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1 SEC. 4. CALCULATION AND PAYMENT OF DAMAGES.

2 (a) TREATMENT OF NONECONOMIC DAMAGES.—In

3 any health care liability claim or action, the amount of

4 noneconomic damages shall not exceed $250,000, regard5 less of the number of parties against whom the action is

6 brought or the number of claims or actions brought with

7 respect to the injury.

8 (b) JOINT AND SEVERAL LIABILITY.—In any health

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

10 the amount of noneconomic damages attributable to such

11 defendant in direct proportion to such defendant’s share

12 of fault or responsibility for the claimant’s actual dam13 ages, as determined by the trier of fact. In all such cases,

14 the liability of a defendant for noneconomic damages shall

15 be several and not joint.

16 (c) TREATMENT OF PUNITIVE DAMAGES.—

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

18 to the extent permitted by applicable State law, be

19 awarded in any health care liability action for harm

20 in any Federal or State court against a defendant if

21 the claimant establishes by clear and convincing evi22 dence that the harm suffered was the result of

23 conduct—

24 (A) specifically intended to cause harm, or

25 (B) manifesting a conscious, flagrant indif26 ference to the rights or safety of others.
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1 (2) AMOUNT.—In no event shall the amount of

2 punitive damages awarded exceed two times the

3 amount of compensatory damages awarded or

4 $250,000, whichever is greater. The jury shall not

5 be informed of this limitation.

6 (3) APPLICABILITY.—This subsection shall

7 apply to any health care liability action brought in

8 any Federal or State court on any theory where pu9 nitive damages are sought. This subsection does not

10 create a cause of action for punitive damages. This

11 subsection does not preempt or supersede any State

12 or Federal law to the extent that such law would

13 further limit the award of punitive damages.

14 (4) BIFURCATION.—At the request of any

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

16 proceeding whether punitive damages are to be

17 awarded and the amount of such award. If a sepa18 rate proceeding is requested, evidence relevant only

19 to the claim of punitive damages, as determined by

20 applicable State law, shall be inadmissible in any

21 proceeding to determine whether actual damages are

22 to be awarded.

23 (5) DRUGS AND DEVICES—

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

25 shall not be awarded against a manufacturer or
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1 product seller of a drug or medical device which

2 caused the claimant’s harm where—

3 (I) such drug or device was subject to

4 premarket approval by the Food and Drug

5 Administration with respect to the safety

6 of the formulation or performance of the

7 aspect of such drug or device which caused

8 the claimant’s harm, or the adequacy of

9 the packaging or labeling of such drug or

10 device which caused the harm, and such

11 drug, device, packaging, or labeling was

12 approved by the Food and Drug Adminis13 tration; or

14 (II) the drug is generally recognized

15 as safe and effective pursuant to conditions

16 established by the Food and Drug Admin17 istration and applicable regulations, includ18 ing packaging and labeling regulations.

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

20 in which the defendant, before or after pre21 market approval of a drug or device—

22 (I) intentionally and wrongfully with23 held from or misrepresented to the Food

24 and Drug Administration information con25 cerning such drug or device required to be
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1 submitted under the Federal Food, Drug,

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

3 or section 351 of the Public Health Service

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

5 relevant to the harm suffered by the claim6 ant, or

7 (II) made an illegal payment to an of8 ficial or employee of the Food and Drug

9 Administration for the purpose of securing

10 or maintaining approval of such drug or

11 device.

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

13 action for harm which is alleged to relate to the

14 adequacy of the packaging or labeling of a drug

15 which is required to have tamper-resistant

16 packaging under regulations of the Secretary of

17 Health and Human Services (including labeling

18 regulations related to such packaging), the

19 manufacturer or product seller of the drug shall

20 not be held liable for punitive damages unless

21 such packaging or labeling is found by the court

22 by clear and convincing evidence to be substan23 tially out of compliance with such regulations.

24 (d) PERIODIC PAYMENTS FOR FUTURE LOSSES.—
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1 (1) GENERAL RULE.—In any health care liabil2 ity action in which the damages awarded for future

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

4 person shall not be required to pay such damages in

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

6 to make such payments periodically based on when

7 the damages are found likely to occur, as such pay8 ments are determined by the court.

9 (2) FINALITY OF JUDGMENT.—The judgment

10 of the court awarding periodic payments under this

11 subsection may not, in the absence of fraud, be re12 opened at any time to contest, amend, or modify the

13 schedule or amount of the payments.

14 (3) LUMP-SUM SETTLEMENTS.—This sub15 section shall not be construed to preclude a settle16 ment providing for a single, lump-sum payment.

17 (e) TREATMENT OF COLLATERAL SOURCE PAY18 MENTS.—

19 (1) INTRODUCTION INTO EVIDENCE.—In any

20 health care liability action, any defendant may intro21 duce evidence of collateral source payments. If any

22 defendant elects to introduce such evidence, the

23 claimant may introduce evidence of any amount paid

24 or contributed or reasonably likely to be paid or con25 tributed in the future by or on behalf of the claim-
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1 ant to secure the right to such collateral source pay2 ments.

3 (2) NO SUBROGATION.—No provider of collat4 eral source payments shall recover any amount

5 against the claimant or receive any lien or credit

6 against the claimant’s recovery or be equitably or le7 gally subrogated the right of the claimant in a

8 health care liability action.

9 (3) APPLICATION TO SETTLEMENTS.—This sub10 section shall apply to an action that is settled as well

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

12 SEC. 5. LIMITATIONS ON CONTINGENT FEES.

13 (a) IN GENERAL.—The total of all contingent fees

14 for representing all claimants in a health care liability

15 claim or action shall not exceed the following limits:

16 (1) 40 percent of the first $50,000 recovered by

17 the claimant.

(2) 331 18 ⁄3 percent of the next $50,000 recovered

19 by the claimant.

20 (3) 25 percent of the next $50,000 recovered by

21 the claimant.

22 (4) 15 percent of any amount by which the re23 covery by the claimant exceeds $600,000.

24 (b) APPLICABILITY.—The limitations shall apply

25 whether the recovery is by judgment, settlement, medi-
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1 ation, arbitration, or any other form of ADR. A court act2 ing in a health care liability claim or action involving a

3 minor or incompetent person retains the authority to au4 thorize or approve a fee that is less than the maximum

5 permitted under this section.

6 (c) DEFINITIONS.—For purposes of this subsection:

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

8 fee’’ includes all compensation to any person which

9 is payable only if a recovery is effected on behalf of

10 one or more claimants.

11 (2) RECOVERY.—The term ‘‘recovery’’ means

12 the net sum recovered after deducting any disburse13 ments or costs incurred in connection with prosecu14 tion or settlement of the claim, including all costs

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

16 incurred by the plaintiff and the attorney’s office

17 overhead costs or charges for legal services are not

18 deductible disbursements of costs for such purpose.

19 SEC. 6. ALTERNATIVE DISPUTE RESOLUTION.

20 Any ADR used to resolve a health care liability action

21 or claim shall contain provisions relating to statute of limi22 tations, noneconomic damages, joint and several liability,

23 punitive damages, collateral source rule, periodic pay24 ments, and limitations on contingent fees which are iden25 tical to the provisions relating to such matters in this Act.
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1 SEC. 7. DEFINITIONS.

2 As used in this Act:

3 (1) ACTUAL DAMAGES.—The term ‘‘actual dam4 ages’’ means damages awarded to pay for economic

5 loss.

6 (2) ADR.—The term ‘‘ADR’’ means an alter7 native dispute resolution system established under

8 Federal or State law that provides for the resolution

9 of health care liability claims in a manner other than

10 through health care liability actions.

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

12 any person who brings a health care liability action

13 and any person on whose behalf such an action is

14 brought. If such action is brought through or on be15 half of an estate, the term includes the claimant’s

16 decedent. If such action is brought through or on be17 half of a minor or incompetent, the term includes

18 the claimant’s legal guardian.

19 (4) CLEAR AND CONVINCING EVIDENCE.—The

20 term ‘‘clear and convincing evidence’’ is that meas21 ure or degree of proof that will produce in the mind

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

23 the truth of the allegations sought to be established.

24 Such measure or degree of proof is more than that

25 required under preponderance of the evidence but
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1 less than that required for proof beyond a reason2 able doubt.

3 (5) COLLATERAL SOURCE PAYMENTS.—The

4 term ‘‘collateral source payments’’ means any

5 amount paid or reasonably likely to be paid in the

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

7 product, or other benefit provided or reasonably like8 ly to be provided in the future to or on behalf of a

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

10 pursuant to—

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

12 income-disability, accident or workers’ com13 pensation Act;

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

15 or accident insurance that provides health bene16 fits or income-disability coverage;

17 (C) any contract or agreement of any

18 group, organization, partnership, or corporation

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

20 medical, hospital, dental, or income disability

21 benefits; and

22 (D) any other publicly or privately funded

23 program.

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

25 given such term in section 201(g)(1) of the Federal
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1 Food, Drug, and Cosmetic Act (21 U.S.C.

2 321(g)(1)).

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

4 damages’’ means ojectively verifiable monetary losses

5 incurred as a result of the provision of, use of, or

6 payment for (or failure to provide, use, or pay for)

7 health care services or medical products such as past

8 and future medical expenses, loss of past and future

9 earnings, cost of obtaining domestic services, loss of

10 employment, loss due to death, burial costs, and loss

11 of business or employment opportunities.

12 (8) HARM.—The term ‘‘harm’’ means any le13 gally cognizable wrong or injury for which punitive

14 damages may be imposed.

15 (9) HEALTH BENEFIT PLAN.—The term

16 ‘‘health benefit plan’’ means—

17 (A) a hospital or medical expense incurred

18 policy or certificate,

19 (B) a hospital or medical service plan con20 tract,

21 (C) a health maintenance subscriber con22 tract, or

23 (D) a MedicarePlus product (offered under

24 part C of title XVIII of the Social Security
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1 Act), that provides benefits with respect to

2 health care services.

3 (10) HEALTH CARE LIABILITY ACTION.—The

4 term ‘‘health care liability action’’ means a civil ac5 tion brought in a State or Federal court or pursuant

6 to alternative dispute resolution against a health

7 care provider, an entity which is obligated to provide

8 or pay for health benefits under any health benefit

9 plan (including any person or entity acting under a

10 contract or arrangement to provide or administer

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

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

13 product, in which the claimant alleges a claim (in14 cluding third party claims, cross claims, counter

15 claims, or distribution claims) based upon the provi16 sion of (or the failure to provide or pay for) health

17 care services or the use of a medical product, re18 gardless of the theory of liability on which the claim

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

20 causes of action.

21 (11) HEALTH CARE LIABILITY CLAIM.—The

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

23 which the claimant alleges that injury was caused by

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

25 care services or medical products.
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1 (12) HEALTH CARE PROVIDER.—The term

2 ‘‘health care provider’’ means any person that is en3 gaged in the delivery of health care services in a

4 State and that is required by the laws or regulations

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

6 to engage in the delivery of such services in the

7 State.

8 (13) HEALTH CARE SERVICE.—The term

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

10 payment may be made under a health benefit plan

11 including services related to the delivery or adminis12 tration of such service.

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

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

15 201(g)(1)) of the Federal Food, Drug, and Cosmetic

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

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

18 Drug, and Cosmetic Act (21 U.S.C. 321(h)), includ19 ing any component or raw material used in a drug

20 or device but excluding health care services.

21 (15) NONECONOMIC DAMAGES.—The term

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

23 individual for pain and suffering, inconvenience,

24 emotional distress, mental anguish, loss of consor-
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1 tium, injury to reputation, humiliation, and other

2 nonpecuniary losses.

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

4 individual, corporation, company, association, firm,

5 partnership, society, joint stock company, or any

6 other entity, including any governmental entity.

7 (17) PRODUCT SELLER.—

8 (A) IN GENERAL.—Subject to subpara9 graph (B), the term ‘‘product seller’’ means a

10 person who, in the course of a business con11 ducted for that purpose—

12 (i) sells, distributes, rents, leases, pre13 pares, blends, packages, labels, or is other14 wise involved in placing, a product in the

15 stream of commerce, or

16 (ii) installs, repairs, or maintains the

17 harm-causing aspect of a product.

18 (B) EXCLUSION.—Such term does not

19 include—

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

21 (ii) a provider of professional services

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

23 product is incidental to the transaction and

24 the essence of the transaction is the fur25 nishing of judgment, skill, or services; or
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1 (iii) any person who—

2 (I) acts in only a financial capac3 ity with respect to the sale of a prod4 uct; or

5 (II) leases a product under a

6 lease arrangement in which the selec7 tion, possession, maintenance, and op8 eration of the product are controlled

9 by a person other than the lessor.

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

11 damages’’ means damages awarded against any per12 son not to compensate for actual injury suffered, but

13 to punish or deter such person or others from en14 gaging in similar behavior in the future.

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

16 the several States, the District of Columbia, Puerto

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

18 the Northern Mariana Islands, and any other terri19 tory or possession of the United States.

20 SEC. 8. EFFECTIVE DATE.

21 This Act will apply to any health care liability action

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

23 care liability claim subject to an ADR system, that is initi24 ated on or after the date of enactment of this Act, except

25 that any health care liability claim or action arising from
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1 an injury occurring prior to the date of enactment of this

2 Act shall be governed by the applicable statute of limita3 tions provisions in effect at the time the injury occurred.

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