(3) 
LUMP-SUM
SETTLEMENTS.—This 
sub-
section shall not be construed to preclude a settle-
ment providing for a single, lump-sum payment.
(d) TREATMENT
OF COLLATERAL SOURCE PAY-
MENTS.—
(1) INTRODUCTION
INTO
EVIDENCE.—In any
health care liability action, any defendant may intro-
duce evidence of collateral source payments. If any
defendant elects to introduce such evidence, the
claimant may introduce evidence of any amount paid
or contributed or reasonably likely to be paid or con-
tributed in the future by or on behalf of the claim-
ant to secure the right to such collateral source pay-
ments.
(2) NO SUBROGATION.—No provider of collat-
eral source payments shall recover any amount
against the claimant or receive any lien or credit
against the claimant’s recovery or be equitably or le-
gally subrogated the right of the claimant in a
health care liability action.
(3) APPLICATION TO SETTLEMENTS.—This sub-
section shall apply to an action that is settled as well
as an action that is resolved by a fact finder.
SEC. 4. AWARD OF ATTORNEY’S FEES.
(a) GENERAL RULE.—If the claimant in a health
care liability action seeks noneconomic damages in excess
of $250,000 or 3 times the economic damages, whichever
is lesser, and the request for such damages in such
amount is made before the determination of liability of
one party or another by verdict or order of judgment, the
prevailing party in such action shall be entitled to attor-
ney’s fees from the non-prevailing party, except that the
sum of the attorney’s fees to which the prevailing party
is entitled shall not exceed the attorney’s fees of the non-
prevailing party.
(b) LIMITATION.—The court in a health care liability
action may, in its discretion, limit the fees authorized to
be recovered under subsection (a) if the amount of such
fees is deemed unjust.
(c) LIMITATIONS ON CONTINGENT FEES.—
(1) IN GENERAL.—The total of all contingent
fees for representing all claimants in a health care
liability claim or action shall not exceed the following
limits:
(A) 40 percent of the first $50,000 recov-
ered by the claimant.
(B) 33 1/3 percent of the next $50,000 re-
covered by the claimant.
(C) 25 percent of the next $50,000 recov-
ered by the claimant.
(D) 15 percent of any amount by which
the recovery by the claimant exceeds $600,000.
(2) APPLICABILITY.—The limitations prescribed
by paragraph (1) shall apply whether the recovery is
by judgment, settlement, mediation, arbitration, or
any other form of ADR. A court acting in a health
care liability claim or action involving a minor or in-
competent person retains the authority to authorize
or approve a fee that is less than the maximum per-
mitted under paragraph (1).
(3) DEFINITIONS.—For purposes of this sub-
section:
(A) CONTINGENT FEE.—The term ‘‘contin-
gent fee’ includes all compensation to any per-
son which is payable only if a recovery is ef-
fected on behalf of one or more claimants.
(B) RECOVERY.—The term ‘‘recovery’’
means the net sum recovered after deducting
any disbursements or costs incurred in connec-
tion with prosecution or settlement of the claim,
including all costs paid or advanced by any per-
son. Costs of health care incurred by the plain-
tiff and the attorney’s office overhead costs or
charges for legal services are not deductible dis-
bursements of costs for such purpose.
(d) HOURS WORKED.—Counsel of record in a health
care liability action shall maintain accurate and up-to-date
records of hours worked for such action regardless of the
fee arrangement with the attorney’s client.
(e) COSTS.—Nothing in this section shall affect the
right of a prevailing party to be awarded costs under ap-
plicable law.
(f) EFFECTIVE DATE.—This section shall apply with
respect to a health care liability action which is brought
after the date of the enactment of this Act for a claim
arising from an injury occurring after such date of enact-
ment.
SEC. 5. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action
or claim shall contain provisions relating to statute of limi-
tations, noneconomic damages, joint and several liability,
punitive damages, collateral source rule, periodic pay-
ments, and award of attorney’s fees which are identical
to the provisions relating to such matters in this Act.
SEC. 6. DEFINITIONS.
As used in this Act:
(1) ACTUAL DAMAGES.—The term ‘‘actual dam-
ages’’ means damages awarded to pay for economic
loss.
(2) ADR.—The term ‘‘ADR’’ means an alter-
native dispute resolution system established under
Federal or State law that provides for the resolution
of health care liability claims in a manner other than
through health care liability actions.
(3) CLAIMANT.—The term ‘‘claimant’’ means
any person who brings a health care liability action
and any person on whose behalf such an action is
brought. If such action is brought through or on be-
half of an estate, the term includes the claimant’s
decedent. If such action is brought through or on be-
half of a minor or incompetent, the term includes
the claimant’s legal guardian.
(4) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that meas-
ure or degree of proof that will produce in the mind
of the trier of fact a firm belief or conviction as to
the truth of the allegations sought to be established.
Such measure or degree of proof is more than that
required under preponderance of the evidence but
less than that required for proof beyond a reason-
able doubt.
(5) COLLATERAL
SOURCE
PAYMENTS.—The
term ‘‘collateral source payments’’ means any
amount paid or reasonably likely to be paid in the
future to or on behalf of a claimant, or any service,
product, or other benefit provided or reasonably like-
ly to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death,
pursuant to—
(A) any State or Federal health, sickness,
income-disability, accident or workers’ com-
pensation Act;
(B) any health, sickness, income-disability,
or accident insurance that provides health bene-
fits or income-disability coverage;
(C) any contract or agreement of any
group, organization, partnership, or corporation
to provide, pay for, or reimburse the cost of
medical, hospital, dental, or income disability
benefits; and
(D) any other publicly or privately funded
program.
(6) DRUG.—The term ‘‘drug’’ has the meaning
given such term in section 201(g)(1) of the Federal
Food, 
Drug, 
and 
Cosmetic 
Act 
(21 
U.S.C.
321(g)(1)).
(7) ECONOMIC DAMAGES.—The term ‘‘economic
damages’’ means ojectively verifiable monetary losses
incurred as a result of the provision of, use of, or
payment for (or failure to provide, use, or pay for)
health care services or medical products such as past
and future medical expenses, loss of past and future
earnings, cost of obtaining domestic services, loss of
employment, loss due to death, burial costs, and loss
of business or employment opportunities.
(8) HARM.—The term ‘‘harm’’ means any le-
gally cognizable wrong or injury for which punitive
damages may be imposed.
(9) 
HEALTH
BENEFIT
PLAN.—The 
term
‘‘health benefit plan’’ means—
(A) a hospital or medical expense incurred
policy or certificate,
(B) a hospital or medical service plan con-
tract,
(C) a health maintenance subscriber con-
tract, or
(D) a MedicarePlus product (offered under
part C of title XVIII of the Social Security
Act),
that provides benefits with respect to health care
services.
(10) HEALTH
CARE
LIABILITY
ACTION.—The
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court or pursuant
to alternative dispute resolution against a health
care provider, an entity which is obligated to provide
or pay for health benefits under any health benefit
plan (including any person or entity acting under a
contract or arrangement to provide or administer
any health benefit), or the manufacturer, distributor,
supplier, marketer, promoter, or seller of a medical
product, in which the claimant alleges a claim (in-
cluding third party claims, cross claims, counter
claims, or distribution claims) based upon the provi-
sion of (or the failure to provide or pay for) health
care services or the use of a medical product, re-
gardless of the theory of liability on which the claim
is based or the number of plaintiffs, defendants, or
causes of action.
(11) HEALTH
CARE
LIABILITY
CLAIM.—The
term ‘‘health care liability claim’’ means a claim in
which the claimant alleges that injury was caused by
the provision of (or the failure to provide) health
care services or medical products.
(12) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any person that is en-
gaged in the delivery of health care services in a
State and that is required by the laws or regulations
of the State to be licensed or certified by the State
to engage in the delivery of such services in the
State.
(13) 
HEALTH
CARE
SERVICE.—The 
term
‘‘health care service’’ means any service for which
payment may be made under a health benefit plan
including services related to the delivery or adminis-
tration of such service.
(14) MEDICAL PRODUCT.—The term ‘‘medical
product’’ means a drug (as defined in section
201(g)(1)) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321(g)(1)) or a medical device (as
defined in section 201(h)) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 321(h)), includ-
ing any component or raw material used in a drug
or device but excluding health care services.
(15) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to an
individual for pain and suffering, inconvenience,
emotional distress, mental anguish, loss of consor-
tium, injury to reputation, humiliation, and other
nonpecuniary losses.
(16) PERSON.—The term ‘‘person’’ means any
individual, corporation, company, association, firm,
partnership, society, joint stock company, or any
other entity, including any governmental entity.
(17) PREVAILING PARTY.—The term ‘‘prevail-
ing party’’ means a party to a health care liability
action who obtains a final judgment (other than by
settlement) exclusive of interest on all or a portion
of the claims asserted during the litigation.
(18) PRODUCT SELLER.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘‘product seller’’ means a
person who, in the course of a business con-
ducted for that purpose—
(i) sells, distributes, rents, leases, pre-
pares, blends, packages, labels, or is other-
wise involved in placing, a product in the
stream of commerce, or
(ii) installs, repairs, or maintains the
harm-causing aspect of a product.
(B) EXCLUSION.—Such term does not in-
clude—
(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 fur-
nishing of judgment, skill, or services; or
(iii) any person who—
(I) acts in only a financial capac-
ity with respect to the sale of a prod-
uct; or
(II) leases a product under a
lease arrangement in which the selec-
tion, possession, maintenance, and op-
eration of the product are controlled
by a person other than the lessor.
(19) PUNITIVE DAMAGES.—The term ‘‘punitive
damages’’ means damages awarded against any per-
son not to compensate for actual injury suffered, but
to punish or deter such person or others from en-
gaging in similar behavior in the future.
(20) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa,
the Northern Mariana Islands, and any other terri-
tory or possession of the United States.
SEC. 7. EFFECTIVE DATE.
This Act will apply to any health care liability action
brought in a Federal or State court and to any health
care liability claim subject to an ADR system, that is initi-
ated on or after the date of enactment of this Act, except
that any health care liability claim or action arising from
an injury occurring prior to the date of enactment of this
Act shall be governed by the applicable statute of limita-
tions provisions in effect at the time the injury occurred.
Æ