I 
108TH CONGRESS 
1ST SESSION H. R. 1178
To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for medical malpractice liability insurance premiums, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 11, 2003
Ms. GINNY BROWN-WAITE of Florida introduced the following bill; which was 
referred to the Committee on Ways and Means, and in addition to the 
Committee on the Judiciary, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to allow a 
credit against income tax for medical malpractice liability 
insurance premiums, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Physician Relief Act 
of 2003’’. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds the following:
(1) Medical liability insurance premiums are 
soaring to the highest rates since the mid-1980s. 
(2) The average increase for 2001 was approxi-
mately 15 percent, and it is predicted that rates 
could rise as much as 50 percent this year for some 
specialties in some regions. 
(3) Some of the largest insurers are raising 
rates more than 30 percent in many States. 
(4) In 1999, jury awards in claims cases 
jumped 7 percent compared to the previous year. In 
addition, according to Jury Verdict Research, it cost 
30 percent more to settle a suit than it did just a 
year before in 1998. 
(5) About 45 percent of the jury awards in 
1998–99 were for that amount or more, up from 39 
percent during the preceding 12 months. 
(6) Physicians in West Virginia, New York, 
Pennsylvania, Mississippi, Florida, and other south-
eastern States are already in crisis. In New York 
and Florida, obstetricians, gynecologists, and sur-
geons routinely pay more than $100,000 a year for 
$1,000,000 coverage. Some are paying more than 
$200,000. 
(b) PURPOSE.—It is the purpose of this Act to imple-
ment health care liability reforms designed to—
(1) protect access of all Americans to good 
health care and competent physicians; and 
(2) relieve the undue burden on physicians that 
is created by excessive medical malpractice claims 
and judgments. 
SEC. 3. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits, or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding—
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.—
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, the trier of fact 
shall consider only the following: 
(A) The severity of the harm caused by the 
conduct of such party. 
(B) The duration of the conduct or any 
concealment of it by such party. 
(C) The profitability of the conduct to such 
party.
(D) The number of products sold or med-
ical procedures rendered for compensation, as 
the case may be, by such party, of the kind
causing the harm complained of by the claim-
ant. 
(E) Any criminal penalties imposed on 
such party, as a result of the conduct com-
plained of by the claimant. 
(F) The amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages awarded in a health care lawsuit may be up 
to as much as two times the amount of economic 
damages awarded or $250,000, whichever is greater. 
The jury shall not be informed of this limitation. 
SEC. 4. TAX CREDIT FOR MEDICAL MALPRACTICE LIABIL-
ITY INSURANCE PREMIUMS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45G. MEDICAL MALPRACTICE LIABILITY INSURANCE 
PREMIUMS. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
medical malpractice liability insurance premium credit de-
termined under this section is the amount paid or incurred 
during the taxable year for medical malpractice liability
insurance coverage for the medical malpractice liability of 
a physician who is the taxpayer or any employee of the 
taxpayer. 
‘‘(b) LIMITATION.—The credit allowed by subsection 
(a) for any taxable year shall not exceed $2,000 with re-
spect to each covered physician.’’
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of such Code is amended by striking ‘‘plus’’ 
at the end of paragraph (14), by striking the period at 
the end of paragraph (15) and inserting ‘‘, plus’’, and by 
adding at the end the following new paragraph: 
‘‘(16) the medical malpractice liability insur-
ance premium credit determined under section 
45G(a).’’. 
(c) NO CARRYBACKS.—Subsection (d) of section 39 
of such Code (relating to carryback and carryforward of 
unused credits) is amended by adding at the end the fol-
lowing: 
‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT 
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is 
attributable to the medical malpractice liability in-
surance premium credit determined under section 
45G may be carried back to a taxable year ending 
before the date of the enactment of section 45G.’’.
(d) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code (relating to certain expenses for which credits 
are allowable) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) CREDIT FOR MEDICAL MALPRACTICE LIABILITY 
INSURANCE PREMIUMS.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the medical malpractice li-
ability insurance premiums otherwise allowable as a 
deduction for the taxable year which is equal to the 
amount of the credit allowable for the taxable year 
under section 45G (determined without regard to 
section 38(c)). 
‘‘(2) CONTROLLED GROUPS.—In the case of a 
corporation which is a member of a controlled group 
of corporations (within the meaning of section 
41(f)(5)) or a trade or business which is treated as 
being under common control with other trades or 
business 
(within 
the 
meaning 
of 
section 
41(f)(1)(B)), this subsection shall be applied under 
rules prescribed by the Secretary similar to the rules 
applicable under subparagraphs (A) and (B) of sec-
tion 41(f)(1).’’. 
(e) CONFORMING AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of chapter
1 of such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 45G. Medical malpractice liability insurance premiums.’’.
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act in taxable years end-
ing after such date.
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