```

[Congressional Record Volume 141, Number 69 (Thursday, April 27, 1995)]
[Senate]
[Pages S5843-S5850]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                          AMENDMENTS SUBMITTED

                                 ______

   THE COMMON SENSE LEGAL STANDARDS REFORM ACT OF 1995; COMMON SENSE 
                  PRODUCT LIABILITY REFORM ACT OF 1995

                                 ______

                McCONNELL (AND OTHERS) AMENDMENT NO. 603

  Mr. McCONNELL (for himself, Mr. Lieberman, and Mrs. Kassebaum) 
proposed an amendment to amendment No. 596 proposed by Mr. Gorton to 
the bill (H.R. 956) to establish legal standards and procedures for 
product liability litigation, and for other purposes; as follows:
       At the end of the pending amendment, add the following new 
     title:
                TITLE ____--HEALTH CARE LIABILITY REFORM

     SEC. ____01. SHORT TITLE.

       This title may be cited as the ``Health Care Liability 
     Reform and Quality Assurance Act of 1995''.
                Subtitle A--Health Care Liability Reform

     SEC. ____11. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) Effect on health care access and costs.--The civil 
     justice system of the United States is a costly and 
     inefficient mechanism for resolving claims of health care 
     liability and compensating injured patients and the problems 
     associated with the current 
     [[Page S5844]] system are having an adverse impact on the 
     availability of, and access to, health care services and the 
     cost of health care in the United States.
       (2) Effect on interstate commerce.--The health care and 
     insurance industries are industries affecting interstate 
     commerce and the health care liability litigation systems 
     existing throughout the United States affect interstate 
     commerce by contributing to the high cost of health care and 
     premiums for health care liability insurance purchased by 
     participants in the health care system.
       (3) Effect on federal spending.--The health care liability 
     litigation systems existing throughout the United States have 
     a significant effect on the amount, distribution, and use of 
     Federal funds because of--
       (A) the large number of individuals who receive health care 
     benefits under programs operated or financed by the Federal 
     Government;
       (B) the large number of individuals who benefit because of 
     the exclusion from Federal taxes of the amounts spent to 
     provide such individuals with health insurance benefits; and
       (C) the large number of health care providers who provide 
     items or services for which the Federal Government makes 
     payments.
       (b) Purpose.--It is the purpose of this title to implement 
     reasonable, comprehensive, and effective health care 
     liability reform that is designed to--
       (1) ensure that individuals with meritorious health care 
     injury claims receive fair and adequate compensation;
       (2) improve the availability of health care service in 
     cases in which health care liability actions have been shown 
     to be a factor in the decreased availability of services; and
       (3) improve the fairness and cost-effectiveness of the 
     current health care liability system of the United States to 
     resolve disputes over, and provide compensation for, health 
     care liability by reducing uncertainty and unpredictability 
     in the amount of compensation provided to injured 
     individuals.

     SEC. ____12. DEFINITIONS.

       As used in this subtitle:
       (1) Claimant.--The term ``claimant'' means any person who 
     commences a health care liability action, and any person on 
     whose behalf such an action is commenced, including the 
     decedent in the case of an action brought through or on 
     behalf of an estate.
       (2) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' means that measure or degree of proof 
     that will produce in the mind of the trier of fact a firm 
     belief or conviction as to the truth of the allegations 
     sought to be established, except that such measure or degree 
     of proof is more than that required under preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.
       (3) Collateral source rule.--The term ``collateral source 
     rule'' means a rule, either statutorily established or 
     established at common law, that prevents the introduction of 
     evidence regarding collateral source benefits or that 
     prohibits the deduction of collateral source benefits from an 
     award of damages in a health care liability action.
       (4) Economic losses.--The term ``economic losses'' means 
     objectively verifiable monetary losses incurred as a result 
     of the provision of (or failure to provide or pay for) health 
     care services or the use of a medical product, including past 
     and future medical expenses, loss of past and future 
     earnings, cost of obtaining replacement services in the home 
     (including child care, transportation, food preparation, and 
     household care), cost of making reasonable accommodations to 
     a personal residence, loss of employment, and loss of 
     business or employment opportunities. Economic losses are 
     neither noneconomic losses nor punitive damages.
       (5) Health care liability action.--The term ``health care 
     liability action'' means a civil action against a health care 
     provider, health care professional, health plan, or other 
     defendant, including a right to legal or equitable 
     contribution, indemnity, subrogation, third-party claims, 
     cross claims, or counter-claims, in which the claimant 
     alleges injury related to the provision of, payment for, or 
     the failure to provide or pay for, health care services or 
     medical products, regardless of the theory of liability on 
     which the action is based. Such term does not include a 
     product liability action, except where such an action is 
     brought as part of a broader health care liability action.
       (6) Health plan.--The term ``health plan'' means any person 
     or entity which is obligated to provide or pay for health 
     benefits under any health insurance arrangement, including 
     any person or entity acting under a contract or arrangement 
     to provide, arrange for, or administer any health benefit.
       (7) Health care professional.--The term ``health care 
     professional'' means any individual who provides health care 
     services in a State and who is required by Federal or State 
     laws or regulations to be licensed, registered or certified 
     to provide such services or who is certified to provide 
     health care services pursuant to a program of education, 
     training and examination by an accredited institution, 
     professional board, or professional organization.
       (8) Health care provider.--The term ``health care 
     provider'' means any organization or institution that is 
     engaged in the delivery of health care items or services in a 
     State and that is required by Federal or State laws or 
     regulations to be licensed, registered or certified to engage 
     in the delivery of such items or services.
       (9) Health care services.--The term ``health care 
     services'' means any services provided by a health care 
     professional, health care provider, or health plan or any 
     individual working under the supervision of a health care 
     professional, that relate to the diagnosis, prevention, or 
     treatment of any disease or impairment, or the assessment of 
     the health of human beings.
       (10) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a health care 
     liability action.
       (11) Medical product.--The term ``medical product'' means a 
     drug (as defined in section 201(g)(1) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a medical 
     device as defined in section 201(h) of such Act (21 U.S.C. 
     321(h)), including any component or raw material used 
     therein, but excluding health care services, as defined in 
     paragraph (9).
       (12) Noneconomic losses.--The term ``noneconomic losses'' 
     means losses for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of consortium, 
     loss of society or companionship (other than loss of domestic 
     services), and other nonpecuniary losses incurred by an 
     individual with respect to which a health care liability 
     action is brought. Noneconomic losses are neither economic 
     losses nor punitive damages.
       (13) Punitive damages.--The term ``punitive damages'' means 
     damages awarded, for the purpose of punishment or deterrence, 
     and not for compensatory purposes, against a health care 
     professional, health care provider, or other defendant in a 
     health care liability action. Punitive damages are neither 
     economic nor noneconomic damages.
       (14) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (15) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, and 
     the Commonwealth of Puerto Rico.

     SEC. ____13. APPLICABILITY.

       (a) In General.--Except as provided in subsection (c), this 
     subtitle shall apply with respect to any health care 
     liability action brought in any Federal or State court, 
     except that this subtitle shall not apply to an action for 
     damages arising from a vaccine-related injury or death to the 
     extent that title XXI of the Public Health Service Act 
     applies to the action.
       (b) Preemption.--
       (1) In general.--The provisions of this subtitle shall 
     preempt State law only to the extent that such law is 
     inconsistent with the limitations contained in such 
     provisions and shall not preempt State law to the extent that 
     such law--
       (A) places greater restrictions on the amount of or 
     standards for awarding noneconomic or punitive damages;
       (B) places greater limitations on the awarding of attorneys 
     fees for awards in excess of $150,000;
       (C) permits a lower threshold for the periodic payment of 
     future damages;
       (D) establishes a shorter period during which a health care 
     liability action may be initiated or a more restrictive rule 
     with respect to the time at which the period of limitations 
     begins to run; or
       (E) implements collateral source rule reform that either 
     permits the introduction of evidence of collateral source 
     benefits or provides for the mandatory offset of collateral 
     source benefits from damage awards.
       (2) Rules of construction.--The provisions of this subtitle 
     shall not be construed to preempt any State law that--
       (A) permits State officials to commence health care 
     liability actions as a representative of an individual;
       (B) permits provider-based dispute resolution;
       (C) places a maximum limit on the total damages in a health 
     care liability action;
       (D) places a maximum limit on the time in which a health 
     care liability action may be initiated; or
       (E) provides for defenses in addition to those contained in 
     this title.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in this subtitle shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     actions brought by a foreign nation or a citizen of a foreign 
     nation;
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss an action of 
     a foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (6) supersede any provision of Federal law.
       (d) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this subtitle shall be 
     construed to establish any jurisdiction in the district 
     courts of the United States over health care liability 
     actions on the basis of section 1331 or 1337 of title 28, 
     United States Code.

     SEC. ____14. STATUTE OF LIMITATIONS.

       A health care liability action that is subject to this 
     title may not be initiated unless 
     [[Page S5845]] a complaint with respect to such action is 
     filed within the 2-year period beginning on the date on which 
     the claimant discovered or, in the exercise of reasonable 
     care, should have discovered the injury and its cause, except 
     that such an action relating to a claimant under legal 
     disability may be filed within 2 years after the date on 
     which the disability ceases. If the commencement of a health 
     care liability action is stayed or enjoined, the running of 
     the statute of limitations under this section shall be 
     suspended for the period of the stay or injunction.

     SEC. ____15. REFORM OF PUNITIVE DAMAGES.

       (a) Limitation.--With respect to a health care liability 
     action, an award for punitive damages may only be made, if 
     otherwise permitted by applicable law, if it is proven by 
     clear and convincing evidence that the defendant--
       (1) intended to injure the claimant for a reason unrelated 
     to the provision of health care services;
       (2) understood the claimant was substantially certain to 
     suffer unnecessary injury, and in providing or failing to 
     provide health care services, the defendant deliberately 
     failed to avoid such injury; or
       (3) acted with a conscious, flagrant disregard of a 
     substantial and unjustifiable risk of unnecessary injury 
     which the defendant failed to avoid in a manner which 
     constitutes a gross deviation from the normal standard of 
     conduct in such circumstances.
       (b) Punitive Damages Not Permitted.--Notwithstanding the 
     provisions of subsection (a), punitive damages may not be 
     awarded against a defendant with respect to any health care 
     liability action if no judgment for compensatory damages, 
     including nominal damages (under $500), is rendered against 
     the defendant.
       (c) Separate Proceeding.--
       (1) In general.--At the request of any defendant in a 
     health care liability action, the trier of fact shall 
     consider in a separate proceeding--
       (A) whether punitive damages are to be awarded and the 
     amount of such award; or
       (B) the amount of punitive damages following a 
     determination of punitive liability.
       (2) Only relevant evidence admissible.--If a defendant 
     requests a separate proceeding under paragraph (1), evidence 
     relevant only to the claim of punitive damages in a health 
     care liability action, as determined by applicable State law, 
     shall be inadmissible in any proceeding to determine whether 
     compensatory damages are to be awarded.
       (d) Determining Amount of Punitive Damages.--In determining 
     the amount of punitive damages in a health care liability 
     action, the trier of fact shall consider only the following:
       (1) The severity of the harm caused by the conduct of the 
     defendant.
       (2) The duration of the conduct or any concealment of such 
     conduct by the defendant.
       (3) The profitability of the conduct of the defendant.
       (4) The number of products sold or medical procedures 
     rendered for compensation, as the case may be, by the 
     defendant of the kind causing the harm complained of by the 
     claimant.
       (5) Evidence with respect to awards of punitive or 
     exemplary damages to persons similarly situated to the 
     claimant, when offered by the defendant.
       (6) Prospective awards of compensatory damages to persons 
     similarly situated to the claimant.
       (7) Evidence with respect to any criminal or administrative 
     penalties imposed on the defendant as a result of the conduct 
     complained of by the claimant, when offered by the defendant.
       (8) Evidence with respect to the amount of any civil fines 
     assessed against the defendant as a result of the conduct 
     complained of by the claimant, when offered by the defendant.
       (e) Limitation Amount.--The amount of damages that may be 
     awarded as punitive damages in any health care liability 
     action shall not exceed 3 times the amount awarded to the 
     claimant for the economic injury on which such claim is 
     based, or $250,000, whichever is greater. This subsection 
     shall be applied by the court and shall not be disclosed to 
     the jury.
       (f) Restrictions Permitted.--Nothing in this title shall be 
     construed to imply a right to seek punitive damages where 
     none exists under Federal or State law.

     SEC. ____16. PERIODIC PAYMENTS.

       With respect to a health care liability action, if the 
     award of future damages exceeds $100,000, the adjudicating 
     body shall, at the request of either party, enter a judgment 
     ordering that future damages be paid on a periodic basis in 
     accordance with the guidelines contained in the Uniform 
     Periodic Payments of Judgments Act, as promulgated by the 
     National Conference of Commissioners on Uniform State Laws in 
     July of 1990. The adjudicating body may waive the 
     requirements of this section if such body determines that 
     such a waiver is in the interests of justice.

     SEC. ____17. SCOPE OF LIABILITY.

       (a) In General.--With respect to punitive and noneconomic 
     damages, the liability of each defendant in a health care 
     liability action shall be several only and may not be joint. 
     Such a defendant shall be liable only for the amount of 
     punitive or noneconomic damages allocated to the defendant in 
     direct proportion to such defendant's percentage of fault or 
     responsibility for the injury suffered by the claimant.
       (b) Determination of Percentage of Liability.--With respect 
     to punitive or noneconomic damages, the trier of fact in a 
     health care liability action shall determine the extent of 
     each party's fault or responsibility for injury suffered by 
     the claimant, and shall assign a percentage of responsibility 
     for such injury to each such party.

     SEC. ____18. MANDATORY OFFSETS FOR DAMAGES PAID BY A 
                   COLLATERAL SOURCE.

       (a) In General.--With respect to a health care liability 
     action, the total amount of damages received by an individual 
     under such action shall be reduced, in accordance with 
     subsection (b), by any other payment that has been, or will 
     be, made to an individual to compensate such individual for 
     the injury that was the subject of such action.
       (b) Amount of Reduction.--The amount by which an award of 
     damages to an individual for an injury shall be reduced under 
     subsection (a) shall be--
       (1) the total amount of any payments (other than such 
     award) that have been made or that will be made to such 
     individual to pay costs of or compensate such individual for 
     the injury that was the subject of the action; minus
       (2) the amount paid by such individual (or by the spouse, 
     parent, or legal guardian of such individual) to secure the 
     payments described in paragraph (1).
       (c) Determination of Amounts From Collateral Services.--The 
     reductions required under subsection (b) shall be determined 
     by the court in a pretrial proceeding. At the subsequent 
     trial--
       (1) no evidence shall be admitted as to the amount of any 
     charge, payments, or damage for which a claimant--
       (A) has received payment from a collateral source or the 
     obligation for which has been assured by a third party; or
       (B) is, or with reasonable certainty, will be eligible to 
     receive payment from a collateral source of the obligation 
     which will, with reasonable certainty be assumed by a third 
     party; and
       (2) the jury, if any, shall be advised that--
       (A) except for damages as to which the court permits the 
     introduction of evidence, the claimant's medical expenses and 
     lost income have been or will be paid by a collateral source 
     or third party; and
       (B) the claimant shall receive no award for any damages 
     that have been or will be paid by a collateral source or 
     third party.

     SEC. ____19. TREATMENT OF ATTORNEYS' FEES AND OTHER COSTS.

       (a) Limitation on Amount of Contingency Fees.--
       (1) In general.--An attorney who represents, on a 
     contingency fee basis, a claimant in a health care liability 
     action may not charge, demand, receive, or collect for 
     services rendered in connection with such action in excess of 
     the following amount recovered by judgment or settlement 
     under such action:
       (A) 33\1/3\ percent of the first $150,000 (or portion 
     thereof) recovered, based on after-tax recovery, plus
       (B) 25 percent of any amount in excess of $150,000 
     recovered, based on after-tax recovery.
       (2) Calculation of periodic payments.--In the event that a 
     judgment or settlement includes periodic or future payments 
     of damages, the amount recovered for purposes of computing 
     the limitation on the contingency fee under paragraph (1) 
     shall be based on the cost of the annuity or trust 
     established to make the payments. In any case in which an 
     annuity or trust is not established to make such payments, 
     such amount shall be based on the present value of the 
     payments.
       (b) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of damages, whether through judgment 
     or settlement.

     SEC. ____20. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION 
                   MECHANISMS.

       (a) Establishment by States.--Each State is encouraged to 
     establish or maintain alternative dispute resolution 
     mechanisms that promote the resolution of health care 
     liability claims in a manner that--
       (1) is affordable for the parties involved in the claims;
       (2) provides for the timely resolution of claims; and
       (3) provides the parties with convenient access to the 
     dispute resolution process.
       (b) Guidelines.--The Attorney General, in consultation with 
     the Secretary and the Administrative Conference of the United 
     States, shall develop guidelines with respect to alternative 
     dispute resolution mechanisms that may be established by 
     States for the resolution of health care liability claims. 
     Such guidelines shall include procedures with respect to the 
     following methods of alternative dispute resolution:
       (1) Arbitration.--The use of arbitration, a nonjury 
     adversarial dispute resolution process which may, subject to 
     subsection (c), result in a final decision as to facts, law, 
     liability or damages. The parties may elect binding 
     arbitration.
       (2) Mediation.--The use of mediation, a settlement process 
     coordinated by a neutral third party without the ultimate 
     rendering of a formal opinion as to factual or legal 
     findings.
       (3) Early neutral evaluation.--The use of early neutral 
     evaluation, in which the parties make a presentation to a 
     neutral attorney or other neutral evaluator for an assessment 
     of the merits, to encourage settlement. 
     [[Page S5846]] If the parties do not settle as a result of 
     assessment and proceed to trial, the neutral evaluator's 
     opinion shall be kept confidential.
       (4) Early offer and recovery mechanism.--The use of early 
     offer and recovery mechanisms under which a health care 
     provider, health care organization, or any other alleged 
     responsible defendant may offer to compensate a claimant for 
     his or her reasonable economic damages, including future 
     economic damages, less amounts available from collateral 
     sources.
       (5) Certificate of merit.--The requirement that a claimant 
     in a health care liability action submit to the court before 
     trial a written report by a qualified specialist that 
     includes the specialist's determination that, after a review 
     of the available medical record and other relevant material, 
     there is a reasonable and meritorious cause for the filing of 
     the action against the defendant.
       (6) No fault.--The use of a no-fault statute under which 
     certain health care liability actions are barred and 
     claimants are compensated for injuries through their health 
     plans or through other appropriate mechanisms.
       (c) Further Redress.--
       In general.--The extent to which any party may seek further 
     redress (subsequent to a decision of an alternative dispute 
     resolution method) concerning a health care liability claim 
     in a Federal or State court shall be dependent upon the 
     methods of alternative dispute resolution adopted by the 
     State.
       (d) Technical Assistance and Evaluations.--
       (1) Technical assistance.--The Attorney General may provide 
     States with technical assistance in establishing or 
     maintaining alternative dispute resolution mechanisms under 
     this section.
       (2) Evaluations.--The Attorney General, in consultation 
     with the Secretary and the Administrative Conference of the 
     United States, shall monitor and evaluate the effectiveness 
     of State alternative dispute resolution mechanisms 
     established or maintained under this section.

     SEC. ____21. APPLICABILITY.

       This title shall apply to all civil actions covered under 
     this title that are commenced on or after the date of 
     enactment of this title, including any such action with 
     respect to which the harm asserted in the action or the 
     conduct that caused the injury occurred before the date of 
     enactment of this title.
      Subtitle B--Protection of the Health and Safety of Patients

     SEC. ____31. ADDITIONAL RESOURCES FOR STATE HEALTH CARE 
                   QUALITY ASSURANCE AND ACCESS ACTIVITIES.

       Each State shall require that not less than 50 percent of 
     all awards of punitive damages resulting from all health care 
     liability actions in that State, if punitive damages are 
     otherwise permitted by applicable law, be used for activities 
     relating to--
       (1) the licensing, investigating, disciplining, and 
     certification of health care professionals in the State; and
       (2) the reduction of malpractice-related costs for health 
     care providers volunteering to provide health care services 
     in medically underserved areas.

     SEC. ____32. QUALITY ASSURANCE, PATIENT SAFETY, AND CONSUMER 
                   INFORMATION.

       (a) Advisory Panel.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this title, the Administrator of the Agency for 
     Health Care Policy and Research (hereafter referred to in 
     this section as the ``Administrator'') shall establish an 
     advisory panel to coordinate and evaluate, methods, 
     procedures, and data to enhance the quality, safety, and 
     effectiveness of health care services provided to patients.
       (2) Participation.--In establishing the advisory panel 
     under paragraph (1), the Administrator shall ensure that 
     members of the panel include representatives of public and 
     private sector entities having expertise in quality 
     assurance, risk assessment, risk management, patient safety, 
     and patient satisfaction.
       (3) Objectives.--In carrying out the duties described in 
     this section, the Administrator, acting through the advisory 
     panel established under paragraph (1), shall conduct a survey 
     of public and private entities involved in quality assurance, 
     risk assessment, patient safety, patient satisfaction, and 
     practitioner licensing. Such survey shall include the 
     gathering of data with respect to--
       (A) performance measures of quality for health care 
     providers and health plans;
       (B) developments in survey methodology, sampling, and audit 
     methods;
       (C) methods of medical practice and patterns, and patient 
     outcomes; and
       (D) methods of disseminating information concerning 
     successful health care quality improvement programs, risk 
     management and patient safety programs, practice guidelines, 
     patient satisfaction, and practitioner licensing.
       (b) Guidelines.--Not later than 2 years after the date of 
     enactment of this title, the Administrator shall, in 
     accordance with chapter 5 of title 5, United States Code, 
     establish health care quality assurance, patient safety and 
     consumer information guidelines. Such guidelines shall be 
     modified periodically when determined appropriate by the 
     Administrator. Such guidelines shall be advisory in nature 
     and not binding.
       (c) Reports.--
       (1) Initial report.--Not later than 6 months after the date 
     of enactment of this title, the Administrator shall prepare 
     and submit to the Committee on Labor and Human Resources of 
     the Senate and the Committee on Commerce of the House of 
     Representatives, a report that contains--
       (A) data concerning the availability of information 
     relating to risk management, quality assessment, patient 
     safety, and patient satisfaction;
       (B) an estimation of the degree of consensus concerning the 
     accuracy and content of the information available under 
     subparagraph (A);
       (C) a summary of the best practices used in the public and 
     private sectors for disseminating information to consumers; 
     and
       (D) an evaluation of the National Practitioner Data Bank 
     (as established under the Health Quality Improvement Act of 
     1986), for reliability and validity of the data and the 
     effectiveness of the Data Bank in assisting hospitals and 
     medical groups in overseeing the quality of practitioners.
       (2) Interim report.--Not later than 1 year after the date 
     of enactment of this title, the Administrator shall prepare 
     and submit to the Committees referred to in paragraph (1) a 
     report, based on the results of the advisory panel survey 
     conducted under subsection (a)(3), concerning--
       (A) the consensus of indicators of patient safety and risk;
       (B) an assessment of the consumer perspective on health 
     care quality that includes an examination of--
       (i) the information most often requested by consumers;
       (ii) the types of technical quality information that 
     consumers find compelling;
       (iii) the amount of information that consumers consider to 
     be sufficient and the amount of such information considered 
     overwhelming; and
       (iv) the manner in which such information should be 
     presented;

     and recommendations for increasing the awareness of consumers 
     concerning such information;
       (C) proposed methods, building on existing data gathering 
     and dissemination systems, for ensuring that such data is 
     available and accessible to consumers, employers, hospitals, 
     and patients;
       (D) the existence of legal, regulatory, and practical 
     obstacles to making such data available and accessible to 
     consumers;
       (E) privacy or proprietary issues involving the 
     dissemination of such data;
       (F) an assessment of the appropriateness of collecting such 
     data at the Federal or State level;
       (G) an evaluation of the value of permitting consumers to 
     have access to information contained in the National 
     Practitioner Data Bank and recommendations to improve the 
     reliability and validity of the information; and
       (H) the reliability and validity of data collected by the 
     State medical boards and recommendations for developing 
     investigation protocols.
       (3) Annual report.--Not later than 1 year after the date of 
     the submission of the report under paragraph (2), and each 
     year thereafter, the Administrator shall prepare and submit 
     to the Committees referred to in paragraph (1) a report 
     concerning the progress of the advisory panel in the 
     development of a consensus with respect to the findings of 
     the panel and in the development and modification of the 
     guidelines required under subsection (b).
       (4) Termination.--The advisory panel shall terminate on the 
     date that is 3 years after the date of enactment of this 
     title.
                        Subtitle C--Severability

     SEC. ____41. SEVERABILITY.

       If any provision of this title, an amendment made by this 
     title, or the application of such provision or amendment to 
     any person or circumstance is held to be unconstitutional, 
     the remainder of this title, the amendments made by this 
     title, and the application of the provisions of such to any 
     person or circumstance shall not be affected thereby.
                                 ______

                        THOMAS AMENDMENT NO. 604

  Mr. THOMAS proposed an amendment to amendment No. 603 proposed by Mr. 
McConnell to amendment No. 596 proposed by Mr. Gorton to the bill H.R. 
956, supra; as follows:

       At the appropriate place in the amendment insert the 
     following new section:

     SEC.   . SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

       (a) In General.--In the case of a health care liability 
     claim relating to services provided during labor or the 
     delivery of a baby, if the health care professional or health 
     care provider against whom the claim is brought did not 
     previously treat the claimant for the pregnancy, the trier of 
     the fact may not find that such professional or provider 
     committed malpractice and may not assess damages against such 
     professional or provider unless the malpractice is proven by 
     clear and convincing evidence.
       (b) Applicability to Group Practices or Agreements Among 
     Providers.--For purposes of subsection (a), a health care 
     professional shall be considered to have previously treated 
     an individual for a pregnancy if the professional is a member 
     of a group practice in which any of whose members previously 
     treated the individual for the pregnancy or is providing 
     services to the individual during 
     [[Page S5847]] labor or the delivery of a baby pursuant to an 
     agreement with another professional.
                                 ______

                      WELLSTONE AMENDMENT NO. 605

  Mr. WELLSTONE proposed an amendment to amendment No. 603 proposed by 
Mr. McConnell to the amendment No. 596 proposed by Mr. Gorton to the 
bill H.R. 956, supra; as follows:
       In section ____32(c)(1) of the amendment, strike 
     subparagraph (B) and all that follows through the end of the 
     section and insert the following:
       (B) an estimation of the degree of consensus concerning the 
     accuracy and content of the information available under 
     subparagraph (A); and
       (C) a summary of the best practices used in the public and 
     private sectors for disseminating information to consumers.
       (2) Interim report.--Not later than 1 year after the date 
     of enactment of this title, the Administrator shall prepare 
     and submit to the Committees referred to in paragraph (1) a 
     report, based on the results of the advisory panel survey 
     conducted under subsection (a)(3), concerning--
       (A) the consensus of indicators of patient safety and risk;
       (B) an assessment of the consumer perspective on health 
     care quality that includes an examination of--
       (i) the information most often requested by consumers;
       (ii) the types of technical quality information that 
     consumers find compelling;
       (iii) the amount of information that consumers consider to 
     be sufficient and the amount of such information considered 
     overwhelming; and
       (iv) the manner in which such information should be 
     presented;

     and recommendations for increasing the awareness of consumers 
     concerning such information;
       (C) proposed methods, building on existing data gathering 
     and dissemination systems, for ensuring that such data is 
     available and accessible to consumers, employers, hospitals, 
     and patients;
       (D) the existence of legal, regulatory, and practical 
     obstacles to making such data available and accessible to 
     consumers;
       (E) privacy or proprietary issues involving the 
     dissemination of such data;
       (F) an assessment of the appropriateness of collecting such 
     data at the Federal or State level; and
       (G) the reliability and validity of data collected by the 
     State medical boards and recommendations for developing 
     investigation protocols.
       (3) Annual report.--Not later than 1 year after the date of 
     the submission of the report under paragraph (2), and each 
     year thereafter, the Administrator shall prepare and submit 
     to the Committees referred to in paragraph (1) a report 
     concerning the progress of the advisory panel in the 
     development of a consensus with respect to the findings of 
     the panel and in the development and modification of the 
     guidelines required under subsection (b).
       (4) Termination.--The advisory panel shall terminate on the 
     date that is 3 years after the date of enactment of this 
     title.

     SEC. ____33. REQUIRING REPORTS ON MEDICAL MALPRACTICE DATA.

       (a) In General.--Section 421 of the Health Care Quality 
     Improvement Act of 1986 (42 U.S.C. 11131) is amended--
       (1) by striking subsections (a) and (b);
       (2) by redesignating subsections (c) and (d) as subsections 
     (d) and (e), respectively;
       (3) by inserting before subsection (d) (as redesignated by 
     paragraph (2)) the following subsections:
       ``(a) In General.--
       ``(1) Requirement of reporting.--Subject to paragraphs (2) 
     and (3), each person or entity which makes payment under a 
     policy of insurance, self-insurance, or otherwise in 
     settlement (or partial settlement) of, or in satisfaction of 
     a judgment in, a medical malpractice action or claim shall 
     report, in accordance with section 424, information 
     respecting the payment and circumstances of the payment.
       ``(2) Payments by practitioners.--Except as provided in 
     paragraph (3), the persons to whom paragraph (1) applies 
     include a physician, or other licensed health care 
     practitioner, who makes a payment described in such paragraph 
     and whose act or omission is the basis of the action or claim 
     involved.
       ``(3) Refund of fees.--With respect to a physician, or 
     other licensed health care practitioner, whose act or 
     omission is the basis of an action or claim described in 
     paragraph (1), such paragraph shall not apply to a payment 
     described in such paragraph if--
       ``(A) the payment is made by the physician or practitioner 
     or entity as a refund of fees for the health services 
     involved; and
       ``(B) the payment does not exceed the amount of the 
     original charge for the health services.
       ``(b) Information To Be Reported.--The information to be 
     reported under subsection (a) by a person or entity regarding 
     a payment and an action or claim includes the following:
       ``(1)(A)(i) The name of each physician or other licensed 
     health care practitioner whose act or omission is the basis 
     of the action or claim.
       ``(ii) To the extent authorized under title II of the 
     Social Security Act (42 U.S.C. 401 et seq.), the social 
     security account number assigned to the physician or 
     practitioner.
       ``(B) If the physician or practitioner may not be 
     identified for purposes of subparagraph (A)--
       ``(i) a statement of such fact and an explanation of the 
     inability to make the identification; and
       ``(ii) the name of the hospital or other health services 
     organization for whose benefit the payment was made.
       ``(2) The amount of the payment.
       ``(3) The name (if known) of any hospital or other health 
     services organization with which the physician or 
     practitioner is affiliated or associated.
       ``(4)(A) A statement describing the act or omission, and 
     injury or illness, upon which the action or claim is based.
       ``(B) A statement by the physician or practitioner 
     regarding the action or claim, if the physician or 
     practitioner elects to make such a statement.
       ``(C) If the payment was made without the consent of the 
     physician or practitioner, a statement specifying such fact 
     and the reasons underlying the decision to make the payment 
     without such consent.
       ``(5) Such other information as the Secretary determines is 
     required for appropriate interpretation of information 
     reported under this subsection.
       ``(c) Certain Reporting Criteria; Notice to 
     Practitioners.--
       ``(1) Reporting criteria.--The Secretary shall establish 
     criteria regarding statements described in subsection (b)(4). 
     Such criteria shall include--
       ``(A) criteria regarding the length of each of the 
     statements;
       ``(B) criteria for entities regarding the notice required 
     by paragraph (2), including criteria regarding the date by 
     which--
       ``(i) the entity is to provide the notice; and
       ``(ii) the physician or practitioner is to submit the 
     statement described in subsection (b)(4)(B) to the entity; 
     and
       ``(C) such other criteria as the Secretary determines 
     appropriate.
       ``(2) Notice of opportunity to make a statement.--In the 
     case of an entity that prepares a report under subsection 
     (a)(1) regarding a payment and an action or claim, the entity 
     shall notify any physician or practitioner identified under 
     subsection (b)(1)(A) of the opportunity to make a statement 
     under subsection (b)(4)(B).''; and
       (3) by adding at the end the following new subsection:
       ``(f) Definitions of Entity and Person.--For purposes of 
     this section--
       ``(1) the term `entity' includes the Federal Government, 
     any State or local government, and any insurance company or 
     other private organization; and
       ``(2) the term `person' includes a Federal officer or a 
     Federal employee.''.
       (b) Definition of Health Services Organization.--Section 
     431 of the Health Care Quality Improvement Act of 1986 (42 
     U.S.C. 11151) is amended--
       (1) by redesignating paragraphs (5) through (14) as 
     paragraphs (6) through (15), respectively; and
       (2) by inserting after paragraph (4) the following 
     paragraph:
       ``(5) The term `health services organization' means an 
     entity that, directly or through contracts or other 
     arrangements, provides health services. Such term includes a 
     hospital, health maintenance organization or another health 
     plan organization, and a health care entity.''.
       (c) Conforming Amendments.--
       (1) In general.--The Health Care Quality Improvement Act of 
     1986 (42 U.S.C. 11101 et seq.) is amended--
       (A) in section 411(a)(1), in the matter preceding 
     subparagraph (A), by striking ``431(9)'' and inserting 
     ``431(10)'';
       (B) in section 421(d) (as redesignated by subsection 
     (a)(2)), by inserting ``person or'' before ``entity'';
       (C) in section 422(a)(2)(A), by inserting before the comma 
     at the end the following: ``, and (to the extent authorized 
     under title II of the Social Security Act (42 U.S.C. 401 et 
     seq.)) the social security account number assigned to the 
     physician''; and
       (D) in section 423(a)(3)(A), by inserting before the comma 
     at the end the following: ``, and (to the extent authorized 
     under title II of the Social Security Act (42 U.S.C. 401 et 
     seq.)) the social security account number assigned to the 
     physician or practitioner''.
       (2) Applicability of requirements to federal entities.--
       (A) Applicability to federal facilities and physicians.--
     Section 423 of the Health Care Quality Improvement Act of 
     1986 (42 U.S.C. 11133) is amended by adding at the end the 
     following subsection:
       ``(e) Applicability to Federal Facilities and Physicians.--
       ``(1) In general.--Subsection (a) applies to Federal health 
     facilities (including hospitals) and actions by such 
     facilities regarding the competence or professional conduct 
     of physicians employed by the Federal Government to the same 
     extent and in the same manner as such subsection applies to 
     health care entities and professional review actions.
       ``(2) Relevant board of medical examiners.--For purposes of 
     paragraph (1), the Board of Medical Examiners to which a 
     Federal health facility is to report is the Board of Medical 
     Examiners of the State within which the facility is 
     located.''.
       (B) Applicability to federal hospitals.--Section 425 of the 
     Health Care Quality Improvement Act of 1986 (42 U.S.C. 11135) 
     is 
     [[Page S5848]] amended by adding at the end the following 
     subsection:
       ``(d) Applicability to Federal Hospitals.--Subsections (a), 
     (b), and (c) apply to hospitals under the jurisdiction of the 
     Federal Government to the same extent and in the same manner 
     as such subsections apply to other hospitals.''.
       (C) Memoranda of understanding.--Section 432 of the Health 
     Care Quality Improvement Act of 1986 (42 U.S.C. 11152) is 
     amended--
       (i) by striking subsection (b); and
       (ii) by redesignating subsection (c) as subsection (b).

     SEC. ____34. ADDITIONAL PROVISIONS REGARDING ACCESS TO 
                   INFORMATION; MISCELLANEOUS PROVISIONS.

       (a) Access to Information.--Section 427(a) of the Health 
     Care Quality Improvement Act of 1986 (42 U.S.C. 11137(a)) is 
     amended to read as follows:
       ``(a) Access Regarding Licensing, Employment, and Clinical 
     Privileges.--The Secretary (or the agency designated under 
     section 424(b)) shall, on request, provide information 
     reported under this part concerning a physician or other 
     licensed health care practitioner to--
       ``(1) State licensing boards; and
       ``(2) hospitals and other health services organizations--
       ``(A) that have entered (or may be entering) into an 
     employment or affiliation relationship with the physician or 
     practitioner; or
       ``(B) to which the physician or practitioner has applied 
     for clinical privileges or appointment to the medical 
     staff.''.
       (b) Additional Disclosures of Information.--Section 427 of 
     the Health Care Quality Improvement Act of 1986 (42 U.S.C. 
     11137) is amended by adding at the end the following 
     subsection:
       ``(e) Availability of Information to Public.--
       ``(1) Reports, guidelines and regulations.--
       ``(A) Initial report.--Not later than 3 months after the 
     date of enactment of the Health Care Liability Reform and 
     Quality Assurance Act of 1995, the Secretary shall prepare 
     and submit to the Committee on Labor and Human Resources of 
     the Senate and the Committee on Commerce of the House of 
     Representatives a report that contains recommendations for 
     improving the reliability and validity of such information.
       ``(B) Guidelines and regulations.--Not later than 180 days 
     after the date of enactment of the Health Care Liability 
     Reform and Quality Assurance Act of 1995, the Secretary shall 
     establish guidelines and promulgate regulations providing for 
     the dissemination of information to the public under sections 
     421, 422, and 423 of the Health Care Quality Improvement Act 
     of 1986. With respect to such guidelines and regulations the 
     Secretary shall determine whether information respecting 
     small payments reported under section 421 shall be disclosed 
     to the public. In addition, the Secretary shall ensure that 
     such information shall include information on the expected 
     norm for information reported under such section 421 for a 
     physician's or practitioner's specialty. Such expected norm 
     shall be based on assessments that are clinically and 
     statistically valid as determined by the Secretary, in 
     consultation with individuals with expertise in the area of 
     medical malpractice, consumer representatives, and certain 
     other interested parties that the Secretary determines are 
     appropriate.''.
       (c) Conforming Amendments.--Section 427 of the Health Care 
     Quality Improvement Act of 1986 (42 U.S.C. 11137) is 
     amended--
       (1) in subsection (b)(1), in the first sentence, by 
     striking ``Information reported'' and inserting ``Except for 
     information disclosed under subsection (e), information 
     reported''; and
       (2) in the heading for the section, by striking 
     ``miscellaneous provisions'' and inserting ``additional 
     provisions regarding access to information; miscellaneous 
     provisions''.
                                 ______

                    KENNEDY AMENDMENTS NOS. 606-607

  (Ordered to lie on the table.)
  Mr. KENNEDY submitted two amendments intended to be proposed by him 
to amendment No. 603 proposed by Mr. McConnell to amendment No. 596 
proposed by Mr. Gorton to the bill H.R. 956, supra; as follows:

                           Amendment No. 606

       Strike the material from page 8, line 20 through page 10, 
     line 17, and insert in lieu thereof the following:
       (a) In General.--Except as provided in subsections (b) and 
     (c), this subtitle shall apply with respect to any health 
     care liability action brought in any Federal or State court, 
     except that this subtitle shall not apply to an action for 
     damages arising from a vaccine-related injury or death to the 
     extent that title XXI of the Public Health Service Act 
     applies to the action.
       (b) Preexemption.--The provisions of this subtitle shall 
     not be construed to preempt any state law, but shall govern 
     any question with respect to which there is no state law.
                                                                    ____

                           Amendment No. 607

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medical Liability Reform Act 
     of 1995''.
                       TITLE I--LIABILITY REFORM

     SEC. 101. FEDERAL TORT REFORM.

       (a) Applicability.--
       (1) In general.--Except as provided in section 102, this 
     title shall apply with respect to any medical malpractice 
     liability action brought in any State or Federal court, 
     except that this title shall not apply to a claim or action 
     for damages arising from a vaccine-related injury or death to 
     the extent that title XXI of the Public Health Service Act 
     applies to the claim or action.
       (2) Effect on sovereign immunity and choice of law or 
     venue.--Nothing in this title shall be construed to--
       (A) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (B) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (C) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (D) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (E) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (3) Federal court jurisdiction not established on federal 
     question grounds.--Nothing in this title shall be construed 
     to establish any jurisdiction in the district courts of the 
     United States over medical malpractice liability actions on 
     the basis of section 1331 or 1337 of title 28, United States 
     Code.
       (b) Definitions.--In this Act, the following definitions 
     apply:
       (1) Alternative dispute resolution system; ADR.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system that provides for the resolution of medical 
     malpractice claims in a manner other than through medical 
     malpractice liability actions.
       (2) Claimant.--The term ``claimant'' means any person who 
     alleges a medical malpractice claim, and any person on whose 
     behalf such a claim is alleged, including the decedent in the 
     case of an action brought through or on behalf of an estate.
       (3) Health care professional.--The term ``health care 
     professional'' means any individual who provides health care 
     services in a State and who is required by the laws or 
     regulations of the State to
      be licensed or certified by the State to provide such 
     services in the State.
       (4) Health care provider.--The term ``health care 
     provider'' means any organization or institution that is 
     engaged in the delivery of health care services in a State 
     and that is required by the laws or regulations of the State 
     to be license or certified by the State to engage in the 
     delivery of such services in the State.
       (5) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a medical 
     malpractice liability action or a medical malpractice claim.
       (6) Medical malpractice liability action.--The term 
     ``medical malpractice liability action'' means a cause of 
     action brought in a State or Federal court against a health 
     care provider or health care professional by which the 
     plaintiff alleges a medical malpractice claim.
       (7) Medical malpractice claim.--The term ``medical 
     malpractice claim'' means a claim brought against a health 
     care provider or health care professional in which a claimant 
     alleges that injury was caused by the provision of (or the 
     failure to provide) health care services, except that such 
     term does not include--
       (A) any claim based on an allegation of an intentional 
     tort;
       (B) any claim based on an allegation that a product is 
     defective that is brought against any individual or entity 
     that is not a health care professional or health care 
     provider; or
       (C) any claim brought pursuant to any remedies or 
     enforcements provision of law.

     SEC. 102. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION 
                   MECHANISMS.

       (a) Application to Malpractice Claims Under Plans.--Prior 
     to or immediately following the commencement of any medical 
     malpractice action, the parties shall participate in the 
     alternative dispute resolution system administered by the 
     State under subsection (b). Such participation shall be in 
     lieu of any other provision of Federal or State law or any 
     contractual agreement made by or on behalf of the parties 
     prior to the commencement of the medical malpractice action.
       (b) Adoption of Mechanism by State.--Each State shall--
       (1) maintain or adopt at least one of the alternative 
     dispute resolution methods satisfying the requirements 
     specified under subsection (c) and (d) for the resolution of 
     medical malpractice claims arising from the provision of (or 
     failure to provide) health care services to individuals 
     enrolled to a health plan; and
       (2) clearly disclose to enrollees (and potential enrollees) 
     the availability and procedures for consumer grievances, 
     including a description of the alternative dispute resolution 
     method or methods adopted under this subsection.
       (c) Specification of Permissible Alternative Dispute 
     Resolution Methods.--
       [[Page S5849]] (1) In general.--The Board shall, by 
     regulation, development alternative dispute resolution 
     methods for the use by States in resolving medical 
     malpractice claims under subsection (a). Such methods shall 
     include at least the following:
       (A) Arbitration.--The use of arbitration, a nonjury 
     adversarial dispute resolution process which may, subject to 
     subsection (d), result in a final decision as to facts, law, 
     liability or damages.
       (B) Claimant-requested binding arbitration.--For claims 
     involving a sum of money that falls below a threshold amount 
     set
      by the Board, the use of arbitration not subject to 
     subsection (d). Such binding arbitration shall be at the 
     sole discretion of the claimant.
       (C) Mediation.--The use of mediation, a settlement process 
     coordinated by a neutral third party without the ultimate 
     rendering of a formal opinion as to factual or legal 
     findings.
       (D) Early neutral evaluation.--The use of early neutral 
     evaluation, in which the parties make a presentation to a 
     neutral attorney or other neutral evaluator for an assessment 
     of the merits, to encourage settlement. If the parties do not 
     settle as a result of assessment and proceed to trial, the 
     neutral evaluator's opinion shall be kept confidential.
       (E) Certificate of merit.--The requirement that a medical 
     malpractice plaintiff submit to the court before trial a 
     written report by a qualified specialist that includes the 
     specialist's determination that, after a review of the 
     available medical record and other relevant material, there 
     is a reasonable and meritorious cause for the filing of the 
     action against the defendant.
       (2) Standards for establishing methods.--In developing 
     alternative dispute resolution methods under paragraph (1), 
     the Board shall assure that the methods promote the 
     resolution of medical malpractice claims in a manner that--
       (A) is affordable for the parties involved;
       (B) provides for timely resolution of claims;
       (C) provides for the consistent and fair resolution of 
     claims; and
       (D) provides for reasonably convenient access to dispute 
     resolution for individuals enrolled in plans.
       (3) Waiver authority.--Upon application of a State, the 
     Board may grant the State the authority to fulfill the 
     requirement of subsection (b) by adopting a mechanism other 
     than a mechanism established by the Board pursuant to this 
     subsection, except that such mechanism must meet the 
     standards set forth in paragraph (2).
       (d) Further Redress.--Except with respect to the claimant-
     requested binding arbitration method set forth in subsection 
     (c)(1)(B), and notwithstanding any other provision of a law 
     or contractual agreement, a plan enrollee dissatisfied with 
     the determination reached as a result of an alternative 
     dispute resolution method applied under this section may, 
     after the final resolution of the enrollee's claim under the 
     method, bring a cause of action to seek damages or other 
     redress with respect to the claim to the extent otherwise 
     permitted under State law. The results of any alternative 
     dispute resolution procedure are inadmissible at any 
     subsequent trial, as are all statements, offers, and other 
     communications made during such procedures, unless otherwise 
     admissible under State law.

     SEC. 103. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY 
                   FEES.

       (a) In General.--An attorney who represents, on a 
     contingency fee basis, a plaintiff in a medical malpractice 
     liability action may not charge, demand, receive, or collect 
     for services rendered in connection with such action 
     (including the resolution of the claim that is the subject of 
     the action under any alternative dispute resolution system) 
     in excess of--
       (1) 33\1/3\ percent of the first $150,000 of the total 
     amount recovered by judgment or settlement in such action; 
     plus
       (2) 25 percent of any amount recovered above the amount 
     described in paragraph (1);

     unless otherwise determined under State law. Such amount 
     shall be computed after deductions are made for
      all the expenses associated with the claim other than those 
     attributable to the normal operating expenses of the 
     attorney.
       (b) Calculation of Periodic Payments.--In the event that a 
     judgment or settlement includes periodic or future payments 
     of damages, the amount recovered for purposes of computing 
     the limitation on the contingency fee under subsection (a) 
     may, in the discretion of the court, be based on the cost of 
     the annuity or trust established to make the payments. In any 
     case in which an annuity or trust is not established to make 
     such payments, such amount shall be based on the present 
     value of the payments.
       (c) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of damages, whether through judgment 
     or settlement.

     SEC. 104. REDUCTION OF AWARDS FOR RECOVERY FROM COLLATERAL 
                   SOURCES.

       (a) Reduction of Award.--The total amount of damages 
     recovered by a plaintiff in a medical malpractice liability 
     action shall be reduced by an amount that equals--
       (1) the amount of any payment which the plaintiff has 
     received or to which the plaintiff is presently entitled on 
     account of the same injury for which the damages are awarded, 
     including payment under--
       (A) Federal or State disability or sickness programs;
       (B) Federal, State, or private health insurance programs;
       (C) private disability insurance programs;
       (D) employer wage continuation programs; and
       (E) any other program, if the payment is intended to 
     compensate the plaintiff for the same injury for which 
     damages are awarded; less
       (2) the amount of any premiums or any other payments that 
     the plaintiff has paid to be eligible to receive the payment 
     described in paragraph (1) and any portion of the award 
     subject to a subrogation lien or claim.
       (b) Subrogation.--The court may reduce a subrogation lien 
     or claim described in subsection (a)(2) by an amount 
     representing reasonable costs incurred in securing the award 
     subject to the lien or claim.
       (c) Inapplicability of Section.--This section shall not 
     apply to any case in which the court determines that the 
     reduction of damages pursuant to subsection (a) would 
     compound the effect of any State law limitation on damages so 
     as to render the plaintiff less than fully compensated for 
     his or her injuries.

     SEC. 105. PERIODIC PAYMENT OF AWARDS.

       (a) In General.--A party to a medical malpractice liability 
     action may petition the court to instruct the trier of fact 
     to award any future damages on an appropriate periodic basis. 
     If the court, in its discretion, so instructs the trier of 
     fact, and damages are awarded on a periodic basis, the court 
     may require the defendant to purchase an annuity or other 
     security instrument (typically based on future damages 
     discounted to present value) adequate to assure payments of 
     future damages.
       (b) Failure or Inability To Pay.--With respect to an award 
     of damages described in subsection (a), if a defendant fails 
     to make payments in a timely fashion, or if the defendant 
     becomes or is at risk of becoming insolvent, upon such a 
     showing the claimant may petition the court for an order 
     requiring that remaining balance be discounted to present 
     value and paid to the claimant in a lump-sum.
       (c) Modification of Payment Schedule.--The court shall 
     retain authority to modify the payment schedule based on 
     changed circumstances.
       (d) Future Damages Defined.--As used in this section, the 
     term ``future damages'' means any economic or noneconomic 
     loss other than that incurred or accrued as of the time of 
     judgment.

     SEC. 106. CONSTRUCTION.

       Nothing in this title shall be construed to preempt any 
     State law that sets a maximum limit on total damages.

   PART 2--OTHER PROVISIONS RELATING TO MEDICAL MALPRACTICE LIABILITY

     SEC. 201. STATE MALPRACTICE REFORM DEMONSTRATION PROJECTS.

       (a) Establishment.--The Secretary shall award grants to 
     States for the establishment of malpractice reform 
     demonstration projects in accordance with this section. Each 
     such project shall be designed to assess the fairness and 
     effectiveness of one or more of the following models:
       (1) No-fault liability.
       (2) Enterprise liability.
       (3) Practice guidelines.
       (b) Definitions.--For purposes of this section:
       (1) Medical adverse event.--The term ``medical adverse 
     event'' means an injury that is the result of medical 
     management as opposed to a disease process that creates 
     disability lasting at least one month after discharge, or 
     that prolongs a hospitalization for more than one month, and 
     for which compensation is available under a no-fault medical 
     liability system established under this section.
       (2) No-fault medical liability systems.--The terms ``no-
     fault medical liability system'' and ``system'' mean a system 
     established by a State receiving a grant under this section 
     which replaces the common law tort liability system for 
     medical injuries with respect to certain qualified health 
     care organizations and qualified insurers and which meets the 
     requirements of this section.
       (3) Provider.--The term ``provider'' means physician, 
     physician assistant, or other individual furnishing health 
     care services in affiliation with a qualified health care 
     organization.
       (4) Qualified health care organization.--The term 
     ``qualified health care organization'' means a hospital, a 
     hospital system, a managed care network, or other entity 
     determined appropriate by the Secretary which elects in a 
     State receiving a grant under this section to participate in 
     a no-fault medical liability system and which meets the 
     requirements of this section.
       (5) Qualified insurer.--The term ``qualified insurer'' 
     means a health care malpractice insurer, including a self-
     insured qualified health care organization, which elects in a 
     State receiving a grant under this section to participate in 
     a no-fault medical liability system and which meets the 
     requirements of this section.
       (6) Enterprise liability.--The term ``enterprise 
     liability'' means a system in which State law imposes 
     malpractice liability on 
     [[Page S5850]] the health plan in which a physician 
     participates in place of personal liability on the physician 
     in order to achieve improved quality of care, reductions in 
     defensive medical practices, and better risk management.
       (7) Practice guidelines.--The term ``practice guidelines'' 
     means guidelines established by the Agency for Health Care 
     Policy and Research pursuant to the Public Health Service Act 
     or this Act.
       (c) Applications by States.--
       (1) In general.--Each State desiring to establish a 
     malpractice reform demonstration project shall submit an 
     application to the Secretary at such
      time and in such manner as the Secretary shall require.
       (2) Contents of application.--An application under 
     paragraph (1) shall include--
       (A) an identification of the State agency or agencies that 
     will administer the demonstration project and be the grant 
     recipient of funds for the State;
       (B) a description of the manner in which funds granted to a 
     State will be expended and a description of fiscal control, 
     accounting, and audit procedures to ensure the proper 
     dispersal of and accounting for funds received under this 
     section; and
       (C) such other information as the Secretary determines 
     appropriate.
       (3) Consideration of applications.--In reviewing all 
     applications received from States desiring to establish 
     malpractice demonstration projects under paragraph (1), the 
     Secretary shall consider--
       (A) data regarding medical malpractice and malpractice 
     litigation patterns in each State;
       (B) the contributions that any demonstration project will 
     make toward reducing malpractice and costs associated with 
     health care injuries;
       (C) diversity among the populations serviced by the 
     systems;
       (D) geographic distribution; and
       (E) such other criteria as the Secretary determines 
     appropriate.
       (d) Evaluation and Reports.--
       (1) By the states.--Each State receiving a grant under this 
     section shall conduct on-going evaluations of the 
     effectiveness of any demonstration project established in 
     such State and shall submit an annual report to the Secretary 
     concerning the results of such evaluations at such times and 
     in such manner as the Secretary shall require.
       (2) By the secretary.--The Secretary shall submit an annual 
     report to Congress concerning the fairness and effectiveness 
     of the demonstration projects conducted under this section. 
     Such report shall analyze the reports received by the 
     Secretary under paragraph (1).
       (e) Funding.--
       (1) In general.--There are authorized to be appropriated 
     such sums as may be necessary to carry out the purposes of 
     this section.
       (2) Limitations on expenditures.--
       (A) Administrative expenses.--Not more than 10 percent of 
     the amount of each grant awarded to a State under this 
     section may be used for administrative expenses.
       (B) Waiver of cost limitations.--The limitation under 
     subparagraph (A) may be waived as determined appropriate by 
     the Secretary.
       (f) Eligibility for No-Fault Demonstration.--A State is 
     eligible to receive a no-fault liability demonstration grant 
     if the application of the State under subsection (c) 
     includes--
       (1) an identification of each qualified health care 
     organization selected by the State to participate in the 
     system, including--
       (A) the location of each organization;
       (B) the number of patients generally served by each 
     organization;
       (C) the types of patients generally served by each 
     organization;
       (D) an analysis of any characteristics of each organization 
     which makes such organization appropriate for participation 
     in the system;
       (E) whether the organization is self-insured for 
     malpractice liability; and
       (F) such other information as the Secretary determines 
     appropriate;
       (2) an identification of each qualified insurer selected by 
     the State to participate in the system, including--
       (A) a schedule of the malpractice insurance premiums 
     generally charged by each insurer under the common law tort 
     liability system; and
       (B) such other information as the Secretary determines 
     appropriate;
       (3) a description of the procedure under which qualified 
     health care organizations and insurers elect to participate 
     in the system;
       (4) a description of the system established by the State to 
     assure compliance with the requirements of this section by 
     each qualified health care organization and insurer; and
       (5) a description of procedures for the preparation and 
     submission to the State of an annual report by each qualified 
     health care organization and qualified insurer participating 
     in a system that shall include--
       (A) a description of activities conducted under the system 
     during the year; and
       (B) the extent to which the system exceeded or failed to 
     meet relevant performance standards including compensation 
     for and deterrence of medical adverse events.
       (g) Eligibility for Enterprise Liability Demonstration.--A 
     State is eligible to receive an enterprise liability 
     demonstration grant if the State--
       (1) has entered into an agreement with a health plan (other 
     than a fee-for-service plan) operating in the State under 
     which the plans assumes legal liability with respect to any 
     medical malpractice claim arising from the provision of (or 
     failure to provide) services under the plan by any physician 
     participating in the plan; and
       (2) has provided that, under the law of the State, a 
     physician participating in a plan that has entered into an 
     agreement with the State under paragraph (1) may not be 
     liable in damages or otherwise for such a claim and the plan 
     may not require such physician to indemnify the plan for any 
     such liability.
       (h) Eligibility for Practice Guidelines Demonstration.--A 
     State is eligible to receive a practice guidelines 
     demonstration grant if the law of the State provides that in 
     the resolution of any medical malpractice action, compliance 
     or non-compliance with an appropriate practice guideline 
     shall be admissible at trial as a rebuttable presumption 
     regarding medical negligence.

  Mr. KENNEDY. Mr. President, at an appropriate time on Monday, I 
intend to offer two second-degree amendments to the McConnell 
amendment. I have already described them briefly; one would clarify 
that this bill does not preempt State law, while the other would be a 
complete substitute consisting of the malpractice subtitle of the 
Health Care Reform Act favorably reported by the Labor Committee last 
year.
  I will file them at this time so that they are available for review 
by the membership.
                                 ______

                        SNOWE AMENDMENT NO. 608

  Ms. SNOWE proposed an amendment to amendment No. 603 proposed by Mr. 
McConnell to the amendment No. 596 proposed by Mr. Gorton to the bill 
H.R. 956, supra; as follows:

       On p. 14, line 22, insert:
       In section   15 of the amendment, strike subsection (e) and 
     insert the following new subsection:
       (e) Limitation on Amount.--
       (1) In general.--The amount of punitive damages that may be 
     awarded to a claimant in a health care liability action that 
     is subject to this title shall not exceed 2 times the sum 
     of--
       (A) the amount awarded to the claimant for economic loss; 
     and
       (B) the amount awarded to the claimant for noneconomic 
     loss.
       (2) Application by court.--This subsection shall be applied 
     by the court and the application of this subsection shall not 
     be disclosed to the jury.
                                 ______

                         KYL AMENDMENT NO. 609

  Mr. KYL proposed an amendment to amendment No. 603 proposed by Mr. 
McConnell to amendment No. 596 proposed by Mr. Gorton to the bill, H.R. 
956, supra; as follows:

     SEC.   . FAIR COMPENSATION FOR NONECONOMIC LOSSES AND 
                   PUNITIVE DAMAGES.

       (a) Full Compensation for Noneconomic Losses.--
     Notwithstanding any other provision of this Act, an attorney 
     who represents, on a contingency fee basis, a claimant in a 
     civil action in a Federal or State court may not charge, 
     demand, receive, or collect for services rendered in 
     connection with such action on any amount recovered by 
     judgment or settlement under such action for noneconomic 
     losses in excess of 25 percent of the first $250,000 (or 
     portion thereof) recovered, based on after-tax recovery.
       (b) Attorney Fees for Punitive Damages.--With respect to 
     any award or settlement for punitive damages, an attorney's 
     fee, if any, received by an attorney who represents, on a 
     contingency fee basis, a claimant in a civil action in a 
     Federal or State court shall be established by the court 
     based on the work performed by the attorney, and shall be 
     ethical and reasonable. It shall be a rebuttable presumption 
     that an ethical and reasonable attorney's fee in such an 
     action is 25 percent of such award for punitive damages.
       (c) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of losses or damages, whether through 
     judgment or settlement.

                          ____________________
```