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[Congressional Record Volume 141, Number 69 (Thursday, April 27, 1995)]
[Senate]
[Pages S5798-S5802]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                      UNANIMOUS-CONSENT AGREEMENT

  Mr. DOLE. Mr. President, we have reached an agreement on the medical 
malpractice amendments. It has been cleared by the Democratic leader, 
Senator Daschle. I will now read the consent.
  I ask unanimous consent that all amendments regarding medical 
malpractice only be in order for the duration of Thursday's session of 
the Senate and Monday's session of the Senate, except for one amendment 
each, which may be offered by the majority and minority leaders, or 
their designees.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOLE. Mr. President, I further ask that any votes ordered on or 
in relation to the pending Thomas amendment, or on or in relation to 
the Wellstone amendment, and any other second-degree amendments that 
may be offered to the McConnell amendment occur in sequence at 11 a.m. 
on Tuesday, May 2, and that the final vote in sequence be on or in 
relation to the McConnell amendment No. 603, as amended, if amended.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOLE. For the information of all Senators, this agreement means 
that any Senator who wishes to offer an amendment regarding medical 
malpractice must offer and debate that amendment today and/or Monday, 
and those votes will occur beginning at 11 a.m. on Tuesday, and 
thereafter medical malpractice amendments would no longer be in order 
to the bill except for an amendment that may be offered by each leader 
or their designee. I assume that would be the managers of the bill.
  So having reached that agreement, I can announce there will be no 
more votes this evening. The Senate will not be in session tomorrow 
because both the Republicans and the Democrats have conferences 
tomorrow.
  The Senate will come in at noon on Monday, be back on the bill on 
Monday. We may come in at 11 a.m. for morning business. There will be 
no votes on Monday, but we expect a lot of debate on Monday. And then 
rollcall votes will start at 11 a.m. on Tuesday.
  Mr. GORTON. Mr. President, will the majority leader yield?
  Will the Senate come in on Tuesday and have any time before 11 
o'clock on Tuesday in which Members can speak to their amendments?
  Mr. DOLE. I would be happy to make that arrangement. In other words, 
come in at 10:30 and speak for 5 minutes on amendments which we have 
already discussed. They can offer amendments on Monday.
  Mr. GORTON. They can offer amendments on Monday. But I suggest to the 
leader that there be at least an hour before 11 o'clock for Members to 
summarize their amendments.
  Mr. DOLE. We set aside the hour between 10 and 11 to discuss any of 
the amendments. We try to divide it up so everybody is treated fairly. 
We may come in at 9:30 for a half hour of morning business.
  [[Page S5799]] So there will be no more votes tonight. There will be 
no votes tomorrow, and no votes on Monday, except I assume there will 
be considerable debate on Monday. And then, as suggested by the Senator 
from Washington, Senator Gorton, there will be an hour set aside before 
the votes start for discussion of any of the amendments that may be 
offered.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SIMPSON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SIMPSON. Mr. President, I want to speak briefly in opposition to 
the pending product liability reform legislation. I have not been 
vigorous in the debate to this point because there has been so much 
vigor expressed that I thought I would simply wait for a calmer moment.
  Let me assure all that it gives me no pleasure at all to be in the 
position of opposition to many of my good Republican colleagues on this 
issue. But I have a number of concerns about this legislation--always 
have had about this type of legislation--which I will just review 
briefly which compel me to oppose this measure.
  Mr. President, like many of my colleagues, I was a lawyer by trade--
as was my father, as was my grandfather, his father before him, and my 
two sons now; 100 years of Simpsons practicing law in the State of 
Wyoming and, in fact, practicing law in the same community in the State 
of Wyoming, Park County and Cody, WY. And so I take great pride in my 
profession. When I graduated from the University of Wyoming law school, 
I believed that the profession was very reputable, indeed honorable, 
and that it meant something, something ennobling, to be a lawyer.
  And, indeed, I think there are few professions outside of the law 
where one has the opportunity to directly rectify an inequity or 
injustice. And this is, I feel, the motivation for many of us who 
entered the profession.
  I remember doing lots of pro bono work. I remember charging 35 bucks 
an hour. I remember doing these things. I was in everything from 
replevining a one-eyed mule to reorganizing railroads, as the guy said. 
So I took great pride in the profession.
  I believe the legislation before us addresses a concern that is very 
real. There are, indeed--and sadly so--serious abuses and excesses 
within the practice of law--the profession I love--as there are in 
every other profession. And one thing that has clearly worsened the 
public perceptions of our profession is action by a seemingly ever-
increasing number of greedy--and that is the word, greedy, avaricious--
attorneys who have used the profession solely for their own gain and 
not for the public gain. Their sole purpose, at least in some that I 
have observed, is padding their own particular bank accounts.
  Time and again I hear accounts of attorneys who have charged many 
hundreds of dollars for preparing a simple will when the only thing 
they did was spend 5 minutes cranking the client's name into a 
computer-generated form. And these abuses do indeed occur. And there 
are the attorneys, I am sure, who take the 3-hour lunches and play the 
18 holes of golf every day and still manage to make a million bucks or 
more during the course of a year.
  The point I make in citing those examples is to note that one motive 
for this legislation is to attack irresponsible, costly behavior by 
those who practice law. But I would argue that this legislation 
specifically chooses to weed out the results of such ethical 
transgressions rather than to correct their root causes in the 
irresponsible practice of law. It is for lawyers to clean up their own 
act and to weed from their profession those who soil it and belittle 
it.
  Assuredly, irresponsibility may lie behind some of the large awards 
that are given out in product liability suits. But it does not 
necessarily follow that the solution is to limit punitive damages so as 
to affect even those which may be properly arrived at and properly 
computed.
  Particular concerns I have about such an approach include the 
preemption of State tort law and excluding joint and several liability. 
The latter measure could conceivably eliminate the only recourse of 
many citizens against substantial harm to their health, at no real cost 
to the unscrupulous in the legal profession.
  I believe one of the better results of the November 1994 elections 
has been to arrest the concentration of power in Washington, and to 
begin a correction of transferring some of it back to the beleaguered 
States and localities. And we have done some of that already. Partly 
for this reason, I oppose any federalizing of the major areas of tort 
law. This certainly would expand the scope of Federal Government 
activity by assuming 10th amendment powers that have been properly 
under the jurisdiction of the individual States for more than 200 
years.
  We must remember that federalization of tort law would, in my mind, 
severely limit the local citizenry's ability to influence tort law at 
the local or State legislative level. Greater proximity to the 
individual citizen would allow us to make certain that the laws adopted 
are those which best serve the local community's best interest.
  Federalization also sends the message that we in Congress do not 
trust the average citizen sitting on a jury to render a fair and 
equitable award. I can assure you I certainly do not agree with every 
award about which I have read and studied. But I just do not believe 
that the solution lies in taking that power away from the citizenry and 
in having the Federal Government fix the boundaries.
  I also believe that a statutory limitation on punitive damages will 
remove a very key motivating factor that now forces companies to design 
the safest products possible. I in no way imply that American companies 
as a rule seek to design unsafe products. That would be absurd. But I 
do believe it would be very poor policy to fix and to limit the cost of 
such irresponsibility right up front in a way that could maybe be 
planned around.
  And by that I mean by limiting punitive damages and setting a figure 
could--could--result in company officials developing liability 
scenarios of what they expect to lose from such suits and to ring it up 
on the scorecard. A hypothetical, unscrupulous company could calculate: 
``Well, if we make modification A here in the product, we project only 
500 people a year will be injured, or some killed. That would still 
result in a 20 percent yearly profit margin, even after paying the 
maximum punitive damages for every one of these injuries or lost 
lives.''
  Now, is that a pipe dream? I do not know. Possibly so. I do not know. 
But it is unseemly to me to facilitate the attachment of dollar values 
potentially to the cost of human lives.
  As a general principle, I believe it is clear that more often than 
not prescribing local actions at the Federal level does not work--that 
``one size fits all'' is not a practical approach.
  Let us not, therefore, repeat the mistakes of other recent 
Congresses, and instead leave alone an area which is traditionally 
under the purview of the States.
  So let us address the real root of the problem that is found in the 
legal profession itself--and there are plenty of them, and, I must say, 
they are grievous in many cases. But it is not in the legal system's 
infrastructure. It is in the legal profession itself. And the legal 
profession evolved as a means of protection for our citizens from its 
beginning.
  I hear often the quote from Shakespeare, ``Kill all the lawyers.'' 
Well, there was a reason for that request and that admonition. And that 
was if they got the lawyers out of the way, they could get on with 
their nefarious conduct. You want to reread that one.
  And that is an interesting part of that remarkable phrase in 
Shakespeare: Kill all the lawyers; because they could not get done what 
they intended to do if the lawyers had been there to protect.
  So I just wanted to share those things. I am well aware of what is 
going to happen to lawyers in this session of the Legislature. I wish 
there were always the most pristine reasons for that, but one of the 
most vivid ones in a political body will be simply the fact that the 
trial lawyers of America 
[[Page S5800]] and affiliates gave $1,626,000 to those of the other 
faith in the 1994 election and only $101,000 to those of our faith, and 
they are looking for them, hunting them down.
  So we have to be a little careful in that atmosphere, I would 
suggest. Not only did they bet on the wrong horse, they bet everything 
they had on all of the horses, and they all went backward down the 
track. That is a part of this that we want to keep in mind, that in the 
spirit of punishing the trial lawyers who showered forth their worldly 
goods upon those of the other faith, that we do not react in a way 
which is injurious to a profession that has protected us all. We all 
hate lawyers, except we love the one that represents us. Just like 
politicians, they have a lot of disgust for us, except for those who 
represent them.
  So I want to share those views and indicate my opposition to the 
measure, which has been consistent throughout my time here. I thank the 
Chair.
  Ms. SNOWE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. SNOWE. Mr. President, I ask unanimous consent to set aside the 
pending Wellstone amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                 Amendment No. 608 to Amendment No. 603

 (Purpose: To limit the amount of punitive damages that may be awarded 
                   in a health care liability action)

  Ms. SNOWE. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Maine [Ms. Snowe] proposes an amendment 
     numbered 608.

  Ms. SNOWE. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 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.

  Ms. SNOWE. Thank you, Mr. President. This legislation, unlike any 
other we have debated this year, touches each and every one of our 
daily lives. It touches our society as few bills do. In our homes. In 
our schoolrooms, In our work rooms. And in our hospital rooms.
  There is a compelling case for product liability reform in this 
country, and this bill provides for a positive foundation on which we 
can build in the future. It may not be the end-all to the liability 
reform debate. And it is not a panacea to the legal labyrinth that 
millions of Americans have found themselves caught in at some time in 
their lives.
  But it is a critical and long overdue first step in the process.
  Mr. President, many Americans may ask a very simple question as we 
begin this debate, and that is this: In this time of downsizing 
Government and devolving power back to the States, why do we need 
Federal legislation on product liability?
  It is a good question that merits a good answer.
  The problem involves a vast patchwork of product liability laws in 50 
States and the District of Columbia that send confusing and often 
conflicting signals to those who make, sell, or use products in the 
United States. Moreover, it is the uncertainty of this product 
liability system that creates unnecessary legal costs, impedes 
interstate commerce, and stifles innovation. And it unnecessarily 
places consumers--those we are trying to protect--at risk.
  Despite recent product liability reforms in various States around the 
country, there is still an overriding and strong need for a protective, 
uniform, and all-encompassing Federal product liability law.
  The problem with State product liability legislation--apart from the 
simple fact that different States have different rules--is that State 
legislation cannot capture or control the product liability problem 
outside its own borders.
  Every suit filed and every judgment rendered has a potential impact 
on every other consumer in America by leading to possible changes in 
the product itself, increasing the item's price, and potentially 
affecting the price and availability of a wide range of other products. 
In extreme cases, manufacturers may even cease production of some 
products.
  Even States in which product liability lawsuits are infrequent and 
judgments have been deemed appropriate are not immune from the impact 
of disparate State laws. I am proud to say that in my home State of 
Maine, it has been said that our jury verdicts have been reasonable and 
our judges fair. But the effect of the judgment in one State is 
shouldered by the consumers of that product in every other State. 
Therefore, the State of Maine residents pay a premium on every product 
they buy that has come in from outside the State of Maine--and on every 
product they buy from a local company that also distributes outside our 
State's borders.
  The simple fact is that the residents of Maine are impacted by the 
product liability laws of every other State. And just as States cannot 
single-handedly address the problems caused by our spiraling national 
debt, they cannot address the national product liability problem. I 
have come to the conclusion that a Federal product liability law is the 
only mechanism to assure that a fair and uniform law will apply evenly 
throughout the United States.
  I also recognize the role that uniformity plays in protecting the 
common good in certain circumstances. Civil rights laws and many 
environmental laws reflect the understanding that serving the common 
good may be best accomplished by maintaining similar standards across 
State borders. Not every issue affecting both States warrants a Federal 
standard, but some issues are pervasive enough--significant enough--
that we cannot help but recognize the need for some level of agreement.
  Mr. President, as a member of the Commerce Committee, I certainly 
have stressed the need for balance in this legislation and I offer my 
own personal check-list of the issues this legislation must address so 
that it is fair and equitable.
  First, we must allow safe consumer products to be developed to meet 
consumer needs, and ensure that consumers can seek reasonable 
compensation when injuries and damages occur.
  Second, the law must dissuade consumers from filing lawsuits 
frivolously, without discouraging Americans with substantive complaints 
from filing their own suit.
  Third, a uniform law must encourage companies to police the safety of 
their own products, both by offering incentives for excellence in 
safety and strong punishment when product safety is breached.
  Lastly, and perhaps most importantly, one of our fundamental goals 
must be to ensure this legislation protects the interests of the 
average American consumer who makes hefty use of products, but knows 
little of their innate safety or risk--much less their rights under the 
law.
  Although I believe the call for product liability reform is 
justified, I certainly understand the concerns of those who testified 
before the committee regarding the potential discriminatory impact of 
this bill--particularly the dual standards created within the cap on 
punitive damages.
  To understand the issue of a punitive damage cap, I think it is 
valuable to remember what punitive damages are--and are not. Punitive 
damages are punishment that serve an invaluable role in deterring 
quasi-criminal behavior by businesses. They have nothing to do with 
providing compensation to a person who has been harmed and are not 
intended in any way to make the plaintiff whole.
  That purpose is served by compensatory damages, which provide 
recovery for both economic damages--which include lost wages and 
medical expenses--and noneconomic damages, which include pain and 
suffering and other losses.
  [[Page S5801]] However, I also understand the concerns of those who 
would contain runaway juries by capping punitive damages. One of the 
overriding problems in our current system is the absence of any 
consistent, meaningful standards for determining whether punitive 
damages should be awarded and--if so--in what amounts.
  The absence of consistent standards not only leads to widely 
disparate and runaway punitive awards, but it also affects the 
settlement process. Individuals and companies that are used often face 
a catch-22: pay high legal fees to fight a case through trial, verdict, 
and appeal--or simply settle out of court for any amount less than 
these anticipated legal fees.
  Even for the defendant who recognizes the cost of proving innocence 
to be too great, or simply hopes to avoid the lottery nature of a 
possible punitive award--seeking a settlement carries a hidden cost. 
The lack of a uniform national standard--or simply the existence of 
vague State standards--forces the defendant to include a punitive 
premium in their settlements, even when the likelihood of a punitive 
award is small or even nonexistent.
  The high reversal rate of punitive damage awards underscores the 
absence of clear and understandable rules. Moreover, appealing the 
initial award is extremely costly and unnecessarily wasteful of both 
private and judicial resources. Although businesses and related 
entities pay the initial price of punitive awards, the impact of 
runaway awards is felt by consumers who pay higher prices in goods and 
services.
  And health care is not different. Malpractice is an issue that should 
concern every American because it directly impacts the amount of money 
they pay for health care and their access to care. A 1993 Lewin-VHI 
study estimates that the combined cost of physician and hospital 
defensive medicine to be as high as $25 billion. And the 1994 Physician 
Payment Review Commission Annual Report to Congress noted a 
``widespread concern that the current functioning of the malpractice 
system may promote the practice of defensive medicine and impeded 
efforts to improve the appropriateness and cost effectiveness of 
care.''
  Access to quality care was an issue that received a great deal of 
attention--as well it should--over the last 2 years as Congress looked 
at ways to reform our health care system. The cost of malpractice has a 
direct impact on access to care, especially for women. A 1990 survey 
found that liability concerns caused 12 percent of doctors to give up 
their obstetrical practices, 24 percent to reduce their treatment of 
high-risk patients, and 10 percent to reduce their number of 
deliveries.
  Concern has been expressed this afternoon during the debate that this 
is a matter that should be left up to the individual States. But the 
American taxpayers from Maine to Oregon have a direct stake in 
malpractice reform because the U.S. Government--in other words the 
American taxpayer--pays 32 percent of all the health care costs in this 
country. They are already paying a heavy price for the patchwork system 
of malpractice laws that currently exist and they deserve our best 
effort to provide a uniform standard that will help bring down the cost 
of health care and help ensure access to providers.
  As we establish a cap, it is vital that we ensure the measure we 
choose is fair, uniform, acts as adequate punishment, and serves as an 
effective deterrent. I believe the amendment I have offered 
accomplishes all of these objectives.
  I should mention that Senator Gorton, the primary sponsor of this 
legislation, has indicated that he will certainly support my amendment. 
And I thank the underlying sponsors, Senator McConnell and Senator 
Kassebaum, for their support as well for this amendment.
  My amendment is fair because it is blind to the socioeconomic 
position of the plaintiff. The current cap contained in the McConnell 
amendment would cap punitive damages at the greater of $250,000 or 
three times economic damages.
  Economic damages--again--are the out-of-pocket expenses incurred by 
the plaintiff, such as their lost wages and medical expenses. Although 
this measure might serve as adequate punishment and act as an adequate 
deterrent in many cases, it relies too greatly on the economic position 
of the plaintiff in establishing a sufficient level of punishment.
  I believe that all plaintiffs--regardless of their income--must be in 
a position to levy adequate punishment on those medical providers who 
have performed a particularly egregious act. We must not allow a 
medical provider to suffer only a slap on the wrist because his conduct 
harmed an individual of modest means.
  As a very basic example, assume that two individuals--a truck driver 
with an annual income of $24,000 and one a corporate executive with an 
annual income of $1.2 million--suffer from similar medical malpractice 
injuries from two separate defendants and are each hospitalized for 1 
month due to these injuries. Further assume that the medical expenses 
for these individuals are nearly identical at $100,000--an amount I am 
sure is far too low.
  Under the three times economic damages formula, the potential 
punitive damage award--or punishment--that could be levied in the suit 
involving the millionaire would be up to approximately $600,000. This 
would be derived by adding the individual's lost income--$100,000--with 
his or her medical expenses--$100,000--and multiplying by three.
  Conversely, the defendant in the lawsuit involving the truck driver 
could only be subjected to punitive damages of up to $306,000--or 51 
percent that of the millionaire's defendant. This amount is derived by 
trebling the sum of the plaintiff's lost wages--$2,000--and medical 
expenses $100,000.
  Although some would argue that the lower cap imposed in the suit 
involving the truck driver may serve as sufficient punishment, I 
believe it is fundamentally unfair. If the language of my amendment is 
adopted, the potential punitive award in the suit involving the truck 
driver will be far more in line with that of the millionaire. By 
including noneconomic damages--which are less tangible and include pain 
and suffering and the loss of one's eye, hand, or other faculty--the 
discriminatory effect of the cap will also be removed.
  Continuing with the example already described, let us further assume 
that the jury award for noneconomic damages caused by the loss of one 
of the plaintiff's eyes is $500,000 for both the millionaire and the 
truck driver.
  Using the two times compensatory measure, the possible punitive award 
would be $1.2 million for the millionaire and $1.004 million for the 
truck driver. In this way, the possible punitive award that could be 
imposed is nearly identical in both cases as the cap for the truck 
driver is 84 percent the size of the millionaire's cap.
  Although hard statistics on this issue are difficult to find, the 
1989 General Accounting Office report on product liability found that 
there was a strong correlation between the size of punitive awards and 
the size of compensatory damages. Excluding one extreme case in which 
compensatory damages far exceeded punitive damages, the punitive 
damages had a correlation of 0.71 with compensatory damages--which is 
just shy of a one-to-one ratio.
  Although each of the five States contained in the study had varying 
levels of correlation, this average demonstrates that a reasonable cap 
based on compensatory damages can be drafted.
  The Supreme Court has also expressed its concern with the manner in 
which punitive damages have been awarded--and lends credence to the 
argument in favor of a uniform cap. In the case of Pacific Mutual Life 
Insurance Company versus Haslip, the Supreme Court found that a four-
to-one ratio of compensatory to punitive damages was ``close to the 
line'' of being unconstitutional, and expressed a strong concern that 
punitive damages in the United States have ``run wild.'' Similar 
sentiments were expressed in TXO Production Corp. versus Alliance 
Resources Corp., a case involving a commercial land dispute.
  In both cases, Justices made clear that this was an area for 
reasonable and rational reform. Although no clear standard was 
identified, I believe the measure of two times compensatory damages 
would be deemed appropriate by the Supreme Court.
  [[Page S5802]] Finally, the American College of Trial Lawyers 
[ACTL]--a respected organization of experienced plaintiff and defense 
attorneys--recommended a cap based on a two times compensatory damages 
in their 1989 report on punitive damages.
  The ACTL report also recommended that the two times compensatory 
damage cap be combined with a minimum cap of $250,000, but I do not 
believe such a measure is advisable or necessary. I believe a single 
measure--such as the measure contained in my amendment--is the most 
easily understood and ensures that all relevant cases are subject to 
the same standard. Multiple measures and standards imply that there is 
an imbalance in the formula being utilized.
  I believe the measure of two times compensatory damages will work for 
everyone and will subject egregious offenders to strong punishment. 
This standard is fair and nondiscriminatory. It will apply to all 
litigants equally--whether you are a man or woman, wealthy or poor, a 
child or an adult.
  Mr. President, if we have to include a cap on punitive damages in 
this legislation, we must ensure it is the best cap possible. So I ask 
my colleagues to join me in support of this amendment to the McConnell 
amendment today, and during further consideration of the underlying 
bill next week, because I do intend to offer this very same amendment 
to the underlying legislation as well.
  I think the legislation, which is named the Product Liability 
Fairness Act, must live up to its name and therefore I think that my 
amendment will correct this discriminatory impact of punitive damages 
as it is currently drafted in this amendment as well as the underlying 
bill.
  I believe my amendment is the best alternative available and I 
encourage my colleagues to support it.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DASCHLE. Mr. President, I ask to speak in morning business and 
use part of my leader time to do so.
  The PRESIDING OFFICER. The Senator has that right.
  

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