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[Congressional Record Volume 141, Number 74 (Friday, May 5, 1995)]
[Senate]
[Pages S6217-S6222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                          AMENDMENTS SUBMITTED

                                 ______

                COMMONSENSE PRODUCT LIABILITY REFORM ACT

                                 ______

                 COVERDELL (AND DOLE) AMENDMENT NO. 690

  Mr. COVERDELL (for himself and Mr. Dole) proposed an amendment to the 
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:

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Product Liability Fairness 
     Act of 1995''.

                       TITLE I--PRODUCT LIABILITY

     SEC. 101. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Claimant.--The term ``claimant'' means any person who 
     bring a product liability action and any person on whose 
     behalf such an action is brought. If an action is brought 
     through or on behalf of--
       (A) an estate, the term includes the decedent; or
       (B) a minor or incompetent, the term includes the legal 
     guardian of the minor or incompetent.
       (2) Claimant's benefits.--The term ``claimant's benefits'' 
     means the amount paid to an employee as workers' compensation 
     benefits.
       (3) Clear and convincing evidence.--
       (A) In general.--Subject to subparagraph (A), the term 
     ``clear and convincing evidence'' is that measure of 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.
       (B) Degree of proof.--The degree of proof required to 
     satisfy the standard of clear and convincing evidence shall 
     be--
       (i) greater than the degree of proof required to meet the 
     standard of preponderance of the evidence; and
       (ii) less than the degree of proof required to meet the 
     standard of proof beyond a reasonable doubt.
       (4) Commercial loss.--The term ``commercial loss'' means 
     any loss or damage to a product itself, loss relating to a 
     dispute over its value or consequential economic loss the 
     recovery of which is governed by the Uniform Commercial Code 
     or analogous State commercial law, not including harm.
       (5) Durable good.--The term ``durable good'' means any 
     product, or any component of any such product, which has a 
     normal life expectancy of 3 or more years or is of a 
     character subject to allowance for depreciation under the 
     Internal Revenue Code of 1986, and which is--
       (A) used in a trade or business;
       (B) held for the production of income; or
       (C) sold or donated to a governmental or private entity for 
     the production of goods, training, demonstration, or any 
     other similar purpose.
       (6) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including any medical 
     expense loss, work loss, replacement services loss, loss due 
     to death, burial costs, and loss of business or employment 
     opportunities), to the extent that recovery for the loss is 
     permitted under applicable State law. [[Page S6218]] 
       (7) Harm.--The term ``harm'' means any physical injury, 
     illness, disease, or death, or damage to property, caused by 
     a product. The term does not include commercial loss or loss 
     or damage to a product itself.
       (8) Insurer.--The term ``insurer'' means the employer of a 
     claimant, if the employer is self-insured, or the workers' 
     compensation insurer of an employer.
       (9) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who is engaged in a business to produce, 
     create, make, or construct any product (or component part of 
     a product), and who designs or formulates the product (or 
     component part of the product), or has engaged another person 
     to design or formulate the product (or component part of the 
     product);
       (B) a product seller, but only with respect to those 
     aspects of a product (or component part of a product) which 
     are created or affected when, before placing the product in 
     the stream of commerce, the product seller produces, creates, 
     makes, constructs, designs, or formulates, or has engaged 
     another person to design or formulate, an aspect of a product 
     (or component part of a product) made by another person; or
       (C) any product seller that is not described in 
     subparagraph (B) that holds itself out as a manufacturer to 
     the user of the product.
       (10) Noneconomic loss.--The term ``non-economic loss''--
       (A) means subjective, nonmonetary loss resulting from harm, 
     including pain, suffering, inconvenience, mental suffering, 
     emotional distress, loss of society and companionship, loss 
     of consortium, injury to reputation, and humiliation; and
       (B) does not include economic loss.
       (11) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (12) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; and
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (13) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for harm caused by a product.
       (14) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who--
       (i) in the course of a business conducted for that purpose, 
     sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.
       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--
       (I) acts in only a financial capacity with respect to the 
     sale of product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.
       (15) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, and the Commonwealth of the Northern Mariana 
     Islands, and any other territory or possession of the United 
     States, or any political subdivision thereof.
       (16) Time of delivery.--The term ``time of delivery'' means 
     the time when a product is delivered to the first purchaser 
     or lessee of the product that was not involved in 
     manufacturing or selling the product, or using the product as 
     a component part of another product to be sold.

     SEC. 102. APPLICABILITY; PREEMPTION.

       (a) Applicability.--
       (1) Actions covered.--Subject to paragraph (2), this title 
     applies to any product liability action commenced on or after 
     the date of enactment of this Act, without regard to whether 
     the harm that is the subject of the action or the conduct 
     that caused the harm occurred before such date of enactment.
       (2) Actions excluded.--
       (A) Actions for damage to product or commercial loss.--A 
     civil action brought for loss or damage to a product itself 
     or for commercial loss, shall not be subject to the 
     provisions of this title governing product liability actions, 
     but shall be subject to any applicable commercial or contract 
     law.
       (B) Actions for negligent entrustment.--A civil action for 
     negligent entrustment shall not be subject to the provisions 
     of this title governing product liability actions, but shall 
     be subject to any applicable State law.
       (b) Scope of Preemption.--
       (1) In general.--This Act supersedes a State law only to 
     the extent that State law applies to an issue covered under 
     this title.
       (2) Issues not covered under this act.--Any issue that is 
     not covered under this title, including any standard of 
     liability applicable to a manufacturer, shall not be 
     subject to this title, but shall be subject to applicable 
     Federal or State law.
       (c) Statutory Construction.--Nothing in this title may be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) 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; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief for remediation of the environment (as defined 
     in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980, 42 U.S.C. 
     9601(8)) or the threat of such remediation.
       (d) Construction.--To promote uniformity of law in the 
     various jurisdictions, this title shall be construed and 
     applied after consideration of its legislative history.
       (e) Effect of Court of Appeals Decisions.--Notwithstanding 
     any other provision of law, any decision of a circuit court 
     of appeals interpreting a provision of this title (except to 
     the extent that the decision is overruled or otherwise 
     modified by the Supreme Court) shall be considered a 
     controlling precedent with respect to any subsequent decision 
     made concerning the interpretation of such provision by any 
     Federal or State court within the geographical boundaries of 
     the area under the jurisdiction of the circuit court of 
     appeals.

     SEC. 103. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS.

       (a) General Rule.--
       (1) In general.--In any product liability action that is 
     subject to this title filed by a claimant for harm caused by 
     a product, a product seller other than a manufacturer shall 
     be liable to a claimant, only if the claimant establishes--
       (A) that--
       (i) the product that allegedly caused the harm that is the 
     subject of the complaint was sold, rented, or leased by the 
     product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of harm to the claimant; or
       (B) that--
       (i) the product seller made an express warranty applicable 
     to the product that allegedly caused the harm that is the 
     subject of the complaint, independent of any express warranty 
     made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused harm to the claimant; or
       (C) that--
       (i) the product seller engaged in intentional wrongdoing, 
     as determined under applicable State law; and
       (ii) such intentional wrongdoing was a proximate cause of 
     the harm that is the subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     a product if the product seller had no reasonable opportunity 
     to inspect the product that allegedly caused harm to the 
     claimant.
       (b) Special Rule.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product if--
       (1) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (2) the court determines that the claimant would be unable 
     to enforce a judgment against the manufacturer.

     For purposes of this subsection only, the statute of 
     limitations applicable to claims asserting liability of a 
     product seller as a manufacturer shall be tolled from the 
     date of the filing of a complaint against the manufacturer to 
     the date that judgment is entered against the 
     manufacturer. [[Page S6219]] 
       (c) Rented or Leased Products.--
       (1) Notwithstanding any other provision of law, any person 
     engaged in the business of renting or leasing a product 
     (other than a person excluded from the definition of product 
     seller under section 101 (14)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of such product.
       (2) For purposes of paragraph (1), and for determining the 
     applicability of this title to any person subject to 
     paragraph (1), the term ``product liability action'' means a 
     civil action brought on any theory for harm caused by a 
     product or product use.

     SEC. 104. DEFENSES INVOLVING INTOXICATING ALCOHOL OR DRUGS.

       (a) General Rule.--Notwithstanding any other provision of 
     law, a defendant in a product liability action that is 
     subject to this title shall have a complete defense in the 
     action if the defendant proves that--
       (1) the claimant was under the influence of intoxicating 
     alcohol or any drug that may not lawfully be sold over-the-
     counter without a prescription, and was not prescribed by a 
     physician for use by the claimant; and
       (2) the claimant, as a result of the influence of the 
     alcohol or drug, was more than 50 percent responsible for the 
     accident or event which resulted in the harm to the claimant.
       (b) Construction.--For purposes of this section, the 
     determination of whether a person was intoxicated or was 
     under the influence of intoxicating alcohol or any drug shall 
     be made pursuant to applicable State law.

     SEC. 105. REDUCTION FOR MISUSE OR ALTERATION OF PRODUCT.

       (a) General Rule.--
       (1) In general.--Except as provided in subsection (c), in a 
     product liability action that is subject to this title, the 
     damages for which a defendant is otherwise liable under 
     applicable State law shall be reduced by the percentage of 
     responsibility for the harm to the claimant attributable to 
     misuse or alteration of a product by any person if the 
     defendant establishes that such percentage of the harm was 
     proximately caused by a use or alteration of a product--
       (A) in violation of, or contrary to, the express warnings 
     or instructions of the defendant if the warnings or 
     instructions are determined to be adequate pursuant to 
     applicable State law; or
       (B) involving a risk of harm which was known or should have 
     been known by the ordinary person who uses or consumes the 
     product with the knowledge common to the class of persons who 
     used or would be reasonably anticipated to use the product.
       (2) Use intended by a manufacturer is not misuse or 
     alteration.--For the purposes of this title, a use of a 
     product that is intended by the manufacturer of the product 
     does not constitute a misuse or alteration of the product.
       (b) State Law.--Notwithstanding section 3(b), subsection 
     (a) of this section shall supersede State law concerning 
     misuse or alteration of a product only to the extent that 
     State law is inconsistent with such subsection.
       (c) Workplace Injury.--Notwithstanding subsection (a), the 
     amount of damages for which a defendant is otherwise liable 
     under State law shall not be reduced by the application of 
     this section with respect to the conduct of any employer or 
     coemployee of the plaintiff who is, under applicable State 
     law concerning workplace injuries, immune from being subject 
     to an action by the claimant.

     SEC. 106. UNIFORM STANDARDS FOR AWARD OF PUNITIIVE DAMAGES.

       (a) General Rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded against a 
     defendant in a product liability action that is subject to 
     this title if the claimant establishes by clear and 
     convincing evidence that the harm that is the subject of the 
     action was the result of conduct that was carried out by the 
     defendant with a conscious, flagrant indifference to the 
     safety of others.
       (b) Limitation on Amount.--
       (1) In general.--The amount of punitive damages that may be 
     awarded to a claimant in a product 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) Special Rule.--
       (A) The amount of punitive damages that may be awarded in 
     any civil action against an individual whose net worth does 
     not exceed $500,000 or against an owner of an unincorporated 
     business, or any partnership, corporation, association, unit 
     of local government, or organization which has fewer than 25 
     full-time employees, shall not exceed:
       (1) Two times the sum of--
       (a) the amount awarded to the claimant for economic loss; 
     and
       (b) the amount awarded to the claimant for non-economic 
     loss; or
       (2) $250,000,

     whichever amount is lesser.
       (B) Punitive damages may, to the extent permitted by 
     applicable State law, be awarded against a defendant in any 
     civil action whose net worth does not exceed $500,000 or 
     against an owner of an unincorporated business, or any 
     partnership corporation, association, unit of local 
     government, or organization which has fewer than 25 full-time 
     employees, if the claimant establishes by clear and 
     convincing evidence that the harm that is the subject of the 
     action was the result of conduct that was carried out by the 
     defendant with a conscious, flagrant indifference to the 
     safety of others.
       (3) Application by court.--This subsection shall be applied 
     by the court and the application of this subsection shall not 
     be disclosed to the jury.
       (c) Bifurcation at Request of Either Party.--
       (1) In general.--At the request of any party, the trier of 
     fact in a product liability action that is subject to this 
     title shall consider in a separate proceeding whether 
     punitive damages are to be awarded for the harm that is the 
     subject of the action and the amount of the award.
       (2) Inadmissibility of evidence relative only to a claim of 
     punitive damages in a proceeding concerning compensatory 
     damages.--If any party requests a separate proceeding under 
     paragraph (1), in any proceeding to determine whether the 
     claimant may be awarded compensatory damages, any evidence 
     that is relevant only to the claim of punitive damages, as 
     determined by applicable State law, shall be inadmissible.

     SEC. 107. UNIFORM THE LIMITATIONS ON LIABILITY.

       (a) Statute of Limitations.--
       (1) In general.--Except as provided in paragraph (2) and 
     subsection (b), a product liability action that is subject to 
     this title may be filed not later than 2 years after the date 
     on which the claimant discovered or, in the exercise of 
     reasonable care, should have discovered, the harm that is the 
     subject of the action and the cause of the harm.
       (2) Exceptions.--
       (A) Person with a legal disability.--A person with a legal 
     disability (as determined under applicable law) may file a 
     product liability action that is subject to this title not 
     later than 2 years after the date on which the person ceases 
     to have the legal disability.
       (B) Effect of stay or injunction.--If the commencement of a 
     civil action that is subject to this title is stayed or 
     enjoined, the running of the statute of limitations under 
     this section shall be suspended until the end of the period 
     that the stay or injunction is in effect.
       (b) Statute of Repose.--
       (1) In general.--Subject to paragraphs (2) and (3), no 
     product liability action that is subject to this title 
     concerning a product that is a durable good alleged to have 
     caused harm (other than toxic harm) may be filed after the 
     20-year period beginning at the time of delivery of the 
     product.
       (2) State law.--Notwithstanding paragraph (1), if pursuant 
     to an applicable State law, an action described in such 
     paragraph is required to be filed during a period that is 
     shorter than the 20-year period specified in such paragraph, 
     the State law shall apply with respect to such period.
       (3) Exceptions.--
       (A) A motor vehicle, vessel, aircraft, or train that is 
     used primarily to transport passengers for hire shall not be 
     subject to this subsection.
       (B) Paragraph (1) does not bar a product liability action 
     against a defendant who made an express warranty in writing 
     as to the safety of the specific product involved which was 
     longer than 20 years, but it will apply at the expiration of 
     that warranty.
       (C) Paragraph (1) does not affect the limitations period 
     established by the General Aviation Revitalization Act of 
     1994 (49 U.S.C. 40101 note).
       (c) Transitional Provision Relating to Extension of Period 
     for Bringing Certain Actions.--If any provision of subsection 
     (a) or (b) shortens the period during which a product 
     liability action that could be otherwise brought pursuant to 
     another provision of law, the claimant may, notwithstanding 
     subsections (a) and (b), bring the product liability action 
     pursuant to this title not later than 1 year after the date 
     of enactment of this Act.

     SEC. 108. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

       (a) General Rule.--In a product liability action that is 
     subject to this title, the liability of each defendant for 
     noneconomic loss shall be several only and shall not be 
     joint.
       (b) Amount of Liability.--
       (1) In general.--Each defendant shall be liable only for 
     the amount of noneconomic loss allocated to the defendant in 
     direct proportion to the percentage of responsibility of the 
     defendant (determined in accordance with paragraph (2)) for 
     the harm to the claimant with respect to which the defendant 
     is liable. The court shall render a separate judgment against 
     each defendant in an amount determined pursuant to the 
     preceding sentence.
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the claimant's harm, whether or not such 
     person is a party to the action.

     SEC. 109. WORKERS' COMPENSATION SUBROGATION STANDARDS.

       (a) General Rule.--
       (1) Right of subrogation.--
       (A) In General.--An insurer shall have a right of 
     subrogation against a manufacturer [[Page S6220]] or product 
     seller to recover any claimant's benefits relating to harm 
     that is the subject of a product liability action that is 
     subject to this title.
       (B) Written notification.--To assert a right of subrogation 
     under subparagraph (A), the insurer shall provide written 
     notice to the court in which the product liability action is 
     brought.
       (C) Insurer not required to be a party.--An insurer shall 
     not be required to be a necessary and proper party in a 
     product liability action covered under subparagraph (A).
       (2) Settlements and other legal proceedings.--
       (A) In general.--In any proceeding relating to harm or 
     settlement with the manufacturer or product seller by a 
     claimant who files a product liability action that is subject 
     to this title, an insurer may participate to assert a right 
     of subrogation for claimant's benefits with respect to any 
     payment made by the manufacturer or product seller by reason 
     of such harm, without regard to whether the payment is made--
       (i) as part of a settlement;
       (ii) in satisfaction of judgment;
       (iii) as consideration for a covenant not to sue; or
       (iv) in another manner.
       (B) Written notification.--Except as provided in 
     subparagraph (C), an employee shall not make any settlement 
     with or accept any payment from the manufacturer or product 
     seller without written notification to the employer.
       (C) Exemption.--Subparagraph (B) shall not apply in any 
     case in which the insurer has been compensated for the full 
     amount of the claimant's benefits.
       (3) Harm resulting from action of employer or coemployee.--
       (A) In general.--If, with respect to a product liability 
     action that is subject to this title, the manufacturer or 
     product seller attempts to persuade the trier of fact that 
     the harm to the claimant was caused by the fault of the 
     employer of the claimant or any coemployee of the claimant, 
     the issue of that fault shall be submitted to the trier of 
     fact, but only after the manufacturer or product seller has 
     provided timely written notice to the employer.
       (b) Rights of employer.--
       (i) In general.--Notwithstanding any other provision of 
     law, with respect to an issue of fault submitted to a trier 
     of fact pursuant to subparagraph (A), an employer shall, in 
     the same manner as any party in the action (even if the 
     employer is not a named party in the action), have the right 
     to--
       (I) appear;
       (II) be represented;
       (III) introduce evidence;
       (IV) cross-examine adverse witnesses; and
       (V) present arguments to the trier of fact.
       (ii) Last issue.--The issue of harm resulting from an 
     action of an employer or coemployee shall be the last issue 
     that is presented to the trier of fact.
       (C) Reduction of damages.--If the trier of fact finds by 
     clear and convincing evidence that the harm to the claimant 
     that is the subject of the product liability action was 
     caused by the fault of the employer or a coemployee of the 
     claimant--
       (i) the court shall reduce by the amount of the claimant's 
     benefits--
       (I) the damages awarded against the manufacturer or product 
     seller; and
       (II) any corresponding insurer's subrogation lien; and
       (ii) the manufacturer or product seller shall have no 
     further right by way of contribution or otherwise against the 
     employer.
       (D) Certain rights of subrogation not affected.--
     Notwithstanding a finding by the trier of fact described in 
     subparagraph (C), the insurer shall not lose any right of 
     subrogation related to any--
       (i) intentional tort committed against the claimant by a 
     coemployee; or
       (ii) act committed by a coemployee outside the scope of 
     normal work practices.
       (b) Attorney's Fees.--If, in a product liability action 
     that is subject to this section, the court finds that harm to 
     a claimant was not caused by the fault of the employer or a 
     coemployee of the claimant, the manufacturer or product 
     seller shall reimburse the insurer for reasonable attorney's 
     fees and court costs incurred by the insurer in the action, 
     as determined by the court.

     SEC. 110. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction under section 1331 or 1337 of title 28, United 
     States Code, over any product liability action covered under 
     this title.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Biomaterials Access 
     Assurance Act of 1995''.

     SEC. 202. FINDINGS.

       Congress finds that--
       (1) each year millions of citizens of the United States 
     depend on the availability of lifesaving or life enhancing 
     medical devices, many of which are permanently implantable 
     within the human body;
       (2) a continued supply of raw materials and component parts 
     is necessary for the invention, development, improvement, and 
     maintenance of the supply of the devices;
       (3) most of the medical devices are made with raw materials 
     and component parts that--
       (A) are not designed or manufactured specifically for use 
     in medical devices; and
       (B) come in contact with internal human tissue;
       (4) the raw materials and component parts also are used in 
     a variety of nonmedical products;
       (5) because small quantities of the raw materials and 
     component parts are used for medical devices, sales of raw 
     materials and component parts for medical devices constitute 
     an extremely small portion of the overall market for the 
     raw materials and medical devices;
       (6) under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.), manufacturers of medical devices are 
     required to demonstrate that the medical devices are safe and 
     effective, including demonstrating that the products are 
     properly designed and have adequate warnings or instructions;
       (7) notwithstanding the fact that raw materials and 
     component parts suppliers do not design, produce, or test a 
     final medical device, the suppliers have been the subject of 
     actions alleging inadequate--
       (A) design and testing of medical devices manufactured with 
     materials or parts supplied by the suppliers; or
       (B) warnings related to the use of such medical devices;
       (8) even though suppliers of raw materials and component 
     parts have very rarely been held liable in such actions, such 
     suppliers have ceased supplying certain raw materials and 
     component parts for use in medical devices because the costs 
     associated with litigation in order to ensure a favorable 
     judgment for the suppliers far exceeds the total potential 
     sales revenues from sales by such suppliers to the medical 
     device industry;
       (9) unless alternate sources of supply can be found, the 
     unavailability of raw materials and component parts for 
     medical devices will lead to unavailability of lifesaving and 
     life-enhancing medical devices;
       (10) because other suppliers of the raw materials and 
     component parts in foreign nations are refusing to sell raw 
     materials or component parts for use in manufacturing certain 
     medical devices in the United States, the prospects for 
     development of new sources of supply for the full range of 
     threatened raw materials and component parts for medical 
     devices are remote;
       (11) it is unlikely that the small market for such raw 
     materials and component parts in the United States could 
     support the large investment needed to develop new suppliers 
     of such raw materials and component parts;
       (12) attempts to develop such new suppliers would raise the 
     cost of medical devices;
       (13) courts that have considered the duties of the 
     suppliers of the raw materials and component parts have 
     generally found that the suppliers do not have a duty--
       (A) to evaluate the safety and efficacy of the use of a raw 
     material or component part in a medical device; and
       (B) to warn consumers concerning the safety and 
     effectiveness of a medical device;
       (14) attempts to impose the duties referred to in 
     subparagraphs (A) and (B) of paragraph (13) on suppliers of 
     the raw materials and component parts would cause more harm 
     than good by driving the suppliers to cease supplying 
     manufacturers of medical devices; and
       (15) in order to safeguard the availability of a wide 
     variety of lifesaving and life-enhancing medical devices, 
     immediate action is needed--
       (A) to clarify the permissible bases of liability for 
     suppliers of raw materials and component parts for medical 
     devices; and
       (B) to provide expeditious procedures to dispose of 
     unwarranted suits against the suppliers in such manner as to 
     minimize litigation costs.

     SEC. 203. DEFINITIONS.

       As used in this title:
       (1) Biomaterials supplier.--
       (A) In general.--The term ``biomaterials supplier'' means 
     an entity that directly or indirectly supplies a component 
     part or raw material for use in the manufacture of an 
     implant.
       (B) Persons included.--Such term includes any person who--
       (i) has submitted master files to the Secretary for 
     purposes of premarket approval of a medical device; or
       (ii) licenses a biomaterials supplier to produce component 
     parts or raw materials.
       (2) Claimant.--
       (A) In general.--The term ``claimant'' means any person who 
     brings a civil action,or on whose behalf a civil action is 
     brought, arising from harm allegedly caused directly or 
     indirectly by an implant, including a person other than the 
     individual into whose body, or in contact with whose blood or 
     tissue, the implant is placed, who claims to have suffered 
     hard as a result of the implant.
       (B) Action brought on behalf of an estate.--With respect to 
     an action brought on behalf or through the estate of an 
     individual into whose body, or in contact with whose blood or 
     tissue the implant is placed, such term includes the decedent 
     that is the subject of the action.
       (C) Action brought on behalf of a minor.--With respect to 
     an action brought on behalf or through a minor, such term 
     includes the parent or guardian of the minor.
       (D) Exclusions.--Such term does not include--
       (i) a provider of professional services, in any case in 
     which--
       (I) the sale or use of an implant is incidental to the 
     transaction; and [[Page S6221]] 
       (II) the essence of the transaction is the furnishing of 
     judgment, skill, or services; or
       (ii) a manufacturer, seller, or biomaterials supplier.
       (3) Component part.--
       (A) In general.--The term ``component part'' means a 
     manufactured piece of an implant.
       (B) Certain components.--Such term includes a manufactured 
     piece of an implant that--
       (i) has significant nonimplant applications; and
       (ii) alone, has no implant value or purpose, but when 
     combined with other component parts and materials, 
     constitutes an implant.
       (4) Harm.--
       (A) In general.--The term ``harm'' means--
       (i) any injury to or damage suffered by an individual;
       (ii) any illness, disease, or death of that individual 
     resulting from that injury or damage; and
       (iii) any loss to that individual or any other individual 
     resulting from that injury or damage.
       (B) Exclusion.--The term does not include any commercial 
     loss or loss of or damage to an implant.
       (5) Implant.--The term ``implant'' means--
       (A) a medical device that is intended by the manufacturer 
     of the device--
       (i) to be placed into a surgically or naturally formed or 
     existing cavity of the body for a period of at least 30 days; 
     or
       (ii) to remain in contact with bodily fluids or internal 
     human tissue through a surgically produced opening for a 
     period of less than 30 days; and
       (B) suture materials used in implant procedures.
       (6) Manufacturer.--The term ``manufacturer'' means any 
     person who, with respect to an implant--
       (A) is engaged in the manufacture, preparation, 
     propagation, compounding, or processing (as defined in 
     section 510(a)(1) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(a)(1)) of the implant; and
       (B) is required--
       (i) to register with the Secretary pursuant to section 510 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360) 
     and the regulations issued under such section; and
       (ii) to include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section.
       (7) Medical device.--The term ``medical device'' means a 
     device, as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(h)).
       (8) Raw material.--The term ``raw material'' means a 
     substance or product that--
       (A) has a generic use; and
       (B) may be used in an application other than an implant.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (10) Seller.--
       (A) In general.--The term ``seller'' means a person who, in 
     the course of a business conducted for that purpose, sells, 
     distributes, leases, packages, labels, or otherwise places an 
     implant in the stream of commerce.
       (B) Exclusions.--The term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services, in any case in 
     which the sale or use of an implant is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who acts in only a financial capacity with 
     respect to the sale of an implant.

     SEC. 204. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

       (a) General Requirements.--
       (1) In general.--In any civil action covered by this title, 
     a biomaterials supplier may raise any defense set forth in 
     section 205.
       (2) Procedures.--Notwithstanding any other provision of law 
     the Federal or State court in which a civil action covered by 
     this title is pending shall, in connection with a motion for 
     dismissal or judgment based on a defense described in 
     paragraph (1), use the procedures set forth in section 206.
       (b) Applicability.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, this title 
     applies to any civil action brought by a claimant, whether in 
     a Federal or State court, against a manufacturer, seller, or 
     biomaterials supplier, on the basis of any legal theory, for 
     ham allegedly caused by an implant.
       (2) Exclusion.--A civil action brought by a purchaser of a 
     medical device for use in providing professional services 
     against a manufacturer, seller or biomaterials supplier for 
     loss or damage to an implant or for commercial loss to the 
     purchaser--
       (A) shall not be considered an action that is subject to 
     this title; and
       (B) shall be governed by applicable commercial or contract 
     law.
       (c) Scope of Preemption.--
       (1) In general.--This title supersedes any State law 
     regarding recovery for harm caused by an implant and any rule 
     of procedure applicable to a civil action to recover damages 
     for such harm only to the extent that this title establishes 
     a rule of law applicable to the recovery of such damages.
       (2) Applicability of other laws.--Any issue that arises 
     under this title and that is not governed by a rule of law 
     applicable to the recovery of damages described in paragraph 
     (1) shall be governed by applicable Federal or State law.
       (d) Statutory Construction.--Nothing in this title may be 
     construed--
       (1) to affect any defense available to a defendant under 
     any other provisions of Federal or State law in an action 
     alleging harm caused by an implant; or
       (2) to create a cause of action or Federal court 
     jurisdiction pursuant to section 1331 or 1337 of title 28, 
     United States Code, that otherwise would not exist under 
     applicable Federal or State law.

     SEC. 205. LIABILITY OF BIOMATERIALS SUPPLIERS.

       (a) In General.--
       (1) Exclusion from liability.--Except as provided in 
     paragraph (2), a biomaterials supplier shall not be liable 
     for harm to a claimant cause by an implant.
       (2) Liability.--A biomaterials supplier that--
       (A) is a manufacturer may be liable for harm to a claimant 
     described in subsection (b);
       (B) is a seller may be liable for harm to a claimant 
     described in subsection (c); and
       (C) furnishes raw materials or component parts that fail to 
     meet applicable contractual requirements or specifications 
     may be liable for a harm to a claimant described in 
     subsection (d).
       (b) Liability as Manufacturer.--
       (1) In general.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant if the 
     biomaterials supplier is the manufacturer of the implant.
       (2) Grounds for liability.--The biomaterials supplier may 
     be considered the manufacturer of the implant that allegedly 
     caused harm to a claimant only if the biomaterial supplier--
       (A)(i) has registered with the Secretary pursuant to 
     section 510 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360) and the regulations issued under such section; 
     and
       (ii) included the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section;
       (B) is the subject of a declaration issued by the Secretary 
     pursuant to paragraph (3) that states that the supplier, with 
     respect to the implant that allegedly caused harm to the 
     claimant, was required to--
       (i) register with the Secretary under section 510 of such 
     Act (21 U.S.C. 360), and the regulations issued under such 
     section, but failed to do so; or
       (ii) include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section, 
     but failed to do so; or
       (C) is related by common ownership or control to a person 
     meeting all the requirements described in subparagraph (A) or 
     (B), if the court deciding a motion to dismiss in accordance 
     with section 206(c)(3)(B)(i) finds, on the basis of 
     affidavits submitted in accordance with section 206, that it 
     is necessary to impose liability on the biomaterial supplier 
     as a manufacturer because the related manufacturer meeting 
     the requirements of subparagraph (A) or (B) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (3) Administrative procedures.--
       (A) In general.--The Secretary may issue a declaration 
     described in paragraph (2)(B) on the motion of the Secretary 
     or on petition by any person, after providing--
       (i) notice to the affected persons; and
       (ii) an opportunity for an informal hearing.
       (B) Docketing and final decision.--Immediately upon receipt 
     of a petition filed pursuant to this paragraph, the Secretary 
     shall docket the petition. Not later than 180 days after the 
     petition is filed, the Secretary shall issue a final decision 
     on the petition.
       (C) Applicability of statute of limitations.--Any 
     applicable statute of limitations shall toll during the 
     period during which a claimant has filed a petition with the 
     Secretary under this paragraph.
       (c) Liability as Seller.--A biomaterials supplier may, to 
     the extent required and permitted by any other applicable 
     law, be liable as a seller for harm to a claimant caused by 
     an implant if--
       (1) the biomaterials supplier--
       (A) held title to the implant that allegedly caused harm to 
     the claimant as a result of purchasing the implant after--
       (i) the manufacture of the implant; and
       (ii) the entrance of the implant in the stream of commerce; 
     and
       (B) subsequently resold the implant; or
       (2) the biomaterials supplier is related by common 
     ownership or control to a person meeting all the requirements 
     described in paragraph (1), if a court deciding a motion to 
     dismiss in accordance with section 206(c)(3)(B)(i) finds, on 
     the basis of affidavits submitted in accordance with section 
     206, that it is necessary to impose liability on the 
     biomaterials supplier as a seller because the related 
     manufacturer meeting the requirements of paragraph (1) lacks 
     sufficient financial resources to satisfy any judgment that 
     the court feels it is likely to enter should the claimant 
     prevail. [[Page S6222]] 
       (d) Liability for Violating Contractual Requirements or 
     Specifications.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant, if the claimant 
     in an action shows, by a preponderance of the evidence, 
     that--
       (1) the raw materials or component parts delivered by the 
     biomaterials supplier either--
       (A) did not constitute the product described in the 
     contract between the biomaterials supplier and the person who 
     contracted for delivery of the product; or
       (B) failed to meet any specifications that were--
       (i) provided to the biomaterials supplier and not expressly 
     repudiated by the biomaterials supplier prior to acceptance 
     of delivery of the raw materials or component parts;
       (ii)(I) published by the biomaterials supplier;
       (II) provided to the manufacturer by the biomaterials 
     supplier; or
       (III) contained in a master file that was submitted by the 
     biomaterials supplier to the Secretary and that is currently 
     maintained by the biomaterials supplier for purposes of 
     premarket approval of medical devices; or
       (iii)(I) included in the submissions for purposes of 
     premarket approval or review by the Secretary under section 
     510, 513, 515, or 520 of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 360, 360c, 360e, or 360j); and
       (II) have received clearance from the Secretary,

     if such specifications were provided by the manufacturer to 
     the biomaterials supplier and were not expressly repudiated 
     by the biomaterials supplier prior to the acceptance by the 
     manufacturer of delivery of the raw materials or component 
     parts; and
       (2) such conduct was an actual and proximate cause of the 
     harm to the claimant.

     SEC. 206. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
                   BIOMATERIALS SUPPLIERS.

       (a) Motion To Dismiss.--In any action that is subject to 
     this title, a biomaterials supplier who is a defendant in 
     such action may, at any time during which a motion to dismiss 
     may be filed under an applicable law, move to dismiss the 
     action on the grounds that--
       (1) the defendant is a biomaterials supplier; and
       (2)(A) the defendant should not, for the purposes of--
       (i) section 205(b), be considered to be a manufacturer of 
     the implant that is subject to such section; or
       (ii) section 205(c), be considered to be a seller of the 
     implant that allegedly caused harm to the claimant; or
       (B)(i) the claimant has failed to establish, pursuant to 
     section 205(d), that the supplier furnished raw materials or 
     component parts in violation of contractual requirements or 
     specifications; or
       (ii) the claimant has failed to comply with the procedural 
     requirements of subsection (b).
       (b) Manufacturer of Implant Shall Be Named a Party.--The 
     claimant shall be required to name the manufacturer of the 
     implant as a party to the action, unless--
       (1) the manufacturer is subject to service of process 
     solely in a jurisdiction in which the biomaterials supplier 
     is not domiciled or subject to a service of process; or
       (2) an action against the manufacturer is barred by 
     applicable law.
       (c) Proceeding on Motion To Dismiss.--The following rules 
     shall apply to any proceeding on a motion to dismiss filed 
     under this section:
       (1) Affidavits relating to listing and declarations.--
       (A) In general.--The defendant in the action may submit an 
     affidavit demonstrating that defendant has not included the 
     implant on a list, if any, filed with the Secretary pursuant 
     to section 510(j) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(j)).
       (B) Response to motion to dismiss.--In response to the 
     motion to dismiss, the claimant may submit an affidavit 
     demonstrating that--
       (i) the Secretary has, with respect to the defendant and 
     the implant that allegedly caused harm to the claimant, 
     issued a declaration pursuant to section 205(b)(2)(B); or
       (ii) the defendant who filed the motion to dismiss is a 
     seller of the implant who is liable under section 205(c).
       (2) Effect of motion to dismiss on discovery.--
       (A) In general.--If a defendant files a motion to dismiss 
     under paragraph (1) or (21) of subsection (a), no discovery 
     shall be permitted in connection to the action that is the 
     subject of the motion, other than discovery necessary to 
     determine a motion to dismiss for lack of jurisdiction, until 
     such time as the court rules on the motion to dismiss in 
     accordance with the affidavits submitted by the parties in 
     accordance with this section.
       (B) Discovery.--If a defendant files a motion to dismiss 
     under subsection (a)(2) on the grounds that the biomaterials 
     supplier did not furnish raw materials or component parts in 
     violation of contractual requirements or specifications, the 
     court may permit discovery, as ordered by the court. The 
     discovery conducted pursuant to this subparagraph shall be 
     limited to issues that are directly relevant to--
       (i) the pending motion to dismiss; or
       (ii) the jurisdiction of the court.
       (3) Affidavits relating status of defendant.--
       (A) In general.--Except as provided in clauses (i) and (ii) 
     of subparagraph (B), the court shall consider a defendant to 
     be a biomaterials supplier who is not subject to an action 
     for harm to a claimant caused by an implant, other than an 
     action relating to liability for a violation of contractual 
     requirements or specifications described in subsection (d).
       (B) Response to motion to dismiss.--The court shall grant a 
     motion to dismiss any action that asserts liability of the 
     defendant under subsection (b) or (c) of section 205 on the 
     grounds that the defendant is not a manufacturer subject to 
     such section 205(b) or seller subject to section 205(c), 
     unless the claimant submits a valid affidavit that 
     demonstrates that--
       (i) with respect to a motion to dismiss contending the 
     defendant is not a manufacturer, the defendant meets the 
     applicable requirements for liability as a manufacturer under 
     section 205(b); or
       (ii) with respect to a motion to dismiss contending that 
     the defendant is not a seller, the defendant meets the 
     applicable requirements for liability as a seller under 
     section 205(c).
       (4) Basis of ruling on motion to dismiss.--
       (A) In general.--The court shall rule on a motion to 
     dismiss filed under subsection (a) solely on the basis of the 
     pleadings of the parties made pursuant to this section and 
     any affidavits submitted by the parties pursuant to this 
     section.
       (B) Motion for summary judgment.--Notwithstanding any other 
     provision of law, if the court determines that the pleadings 
     and affidavits made by parties pursuant to this section raise 
     genuine issues as concerning material facts with respect to a 
     motion concerning contractual requirements and 
     specifications, the court may deem the motion to dismiss to 
     be a motion for summary judgment made pursuant to subsection 
     (d).
       (d) Summary Judgment.--
       (1) In general.--
       (A) Basis for entry of judgment.--A biomaterials supplier 
     shall be entitled to entry of judgment without trial if the 
     court finds there is no genuine issue as concerning any 
     material fact for each applicable element set forth in 
     paragraphs (1) and (2) of section 205(d).
       (B) Issues of material fact.--With respect to a finding 
     made under subparagraph (A), the court shall consider a 
     genuine issue of material fact to exist only if the evidence 
     submitted by claimant would be sufficient to allow a 
     reasonable jury to reach a verdict for the claimant if the 
     jury found the evidence to be credible.
       (2) Discovery made prior to a ruling on a motion for 
     summary judgment.--If, under applicable rules, the court 
     permits discovery prior to a ruling on a motion for summary 
     judgment made pursuant to this subsection, such discovery 
     shall be limited solely to establishing whether a genuine 
     issue of material fact exists.
       (3) Discovery with respect to a biomaterials supplier.--A 
     biomaterials supplier shall be subject to discovery in 
     connection with a motion seeking dismissal or summary 
     judgment on the basis of the inapplicability of section 
     205(d) or the failure to establish the applicable elements of 
     section 205(d) solely to the extent permitted by the 
     applicable Federal or State rules for discovery against 
     nonparties.
       (e) Stay Pending Petition for Declaration.--If a claimant 
     has filed a petition for a declaration pursuant to section 
     205(b) with respect to a defendant, and the Secretary has not 
     issued a final decision on the petition, the court shall stay 
     all proceedings with respect to that defendant until such 
     time as the Secretary has issued a final decision on the 
     petition.
       (f) Manufacturer Conduct of Proceeding.--The manufacturer 
     of an implant that is the subject of an action covered under 
     this title shall be permitted to file and conduct a 
     proceeding on any motion for summary judgment or dismissal 
     filed by a biomaterials supplier who is a defendant under 
     this section if the manufacturer and any other defendant in 
     such action enter into a valid and applicable contractual 
     agreement under which the manufacturer agrees to bear the 
     cost of such proceeding or to conduct such proceeding.
       (g) Attorney Fees.--The court shall require the claimant to 
     compensate the biomaterials supplier (or a manufacturer 
     appearing in lieu of a supplier pursuant to subsection (f)) 
     for attorney fees and costs, if--
       (1) the claimant named or joined the biomaterials supplier; 
     and
       (2) the court found the claim against the biomaterials 
     supplier to be without merit and frivolous.

     SEC. 207. 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 Act, including any such action with respect 
     to which the harm asserted in the action or the conduct that 
     caused the harm occurred before the date of enactment of this 
     Act.

                          ____________________
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