court and shall require the payment of costs and at-
torneys fees. The court may also impose additional 
appropriate sanctions, such as striking the plead-
ings, dismissing the suit, and sanctions plus interest, 
upon the person in violation, or upon both such per-
son and such person’s attorney or client (as the case 
may be). 
(2) SECOND VIOLATION.—If, after notice and a 
reasonable opportunity to respond, a court, upon 
motion or upon its own initiative, determines that 
subsection (b) has been violated and that the attor-
ney or party with respect to which the determination 
was made has committed one previous violation of 
subsection (b) before this or any other court, the 
court shall find each such attorney or party in con-
tempt of court and shall require the payment of 
costs and attorneys fees, and require such person in 
violation (or both such person and such person’s at-
torney or client (as the case may be)) to pay a mon-
etary fine. The court may also impose additional ap-
propriate sanctions, such as striking the pleadings, 
dismissing the suit and sanctions plus interest, upon 
such person in violation, or upon both such person 
and such person’s attorney or client (as the case 
may be).
(3) THIRD VIOLATION.—If, after notice and a 
reasonable opportunity to respond, a court, upon 
motion or upon its own initiative, determines that 
subsection (b) has been violated and that the attor-
ney or party with respect to which the determination 
was made has committed more than one previous 
violation of subsection (b) before this or any other 
court, the court shall find each such attorney or 
party in contempt of court, refer each such attorney 
to one or more appropriate State bar associations 
for disciplinary proceedings, require the payment of 
costs and attorneys fees, and require such person in 
violation (or both such person and such person’s at-
torney or client (as the case may be)) to pay a mon-
etary fine. The court may also impose additional ap-
propriate sanctions, such as striking the pleadings, 
dismissing the suit, and sanctions plus interest, 
upon such person in violation, or upon both such 
person and such person’s attorney or client (as the 
case may be). 
SEC. 104. MANDATORY MEDIATION. 
(a) IN GENERAL.—In any medical malpractice ac-
tion, before such action comes to trial, mediation shall be 
required. Such mediation shall be conducted by one or 
more mediators who are selected by agreement of the par-
ties or, if the parties do not agree, who are qualified under 
applicable State law and selected by the court. 
(b) STATE OPTION TO ALLOW ARBITRATION.—In ad-
dition to mediation under subsection (a), in any medical 
malpractice action, arbitration shall be available to the 
parties if the State so provides and, if so, shall be available 
to the parties to the extent the parties so agree. 
(c) REQUIREMENTS.—Mediation under subsection (a) 
shall be made available by a State subject to the following 
requirements: 
(1) Participation in such mediation shall be in 
lieu of any alternative dispute resolution method re-
quired by any other law or by any contractual ar-
rangement made by or on behalf of the parties be-
fore the commencement of the action. 
(2) Each State shall disclose to residents of the 
State the availability and procedures for resolution 
of consumer grievances regarding the provision of 
(or failure to provide) health care services, including 
such mediation. 
(3) Each State shall provide that such medi-
ation may begin before or after, at the option of the 
claimant, the commencement of a medical mal-
practice action.
(4) The Attorney General, in consultation with 
the Secretary of Health and Human Services, shall, 
by regulation, develop requirements with respect to 
such mediation to ensure that it is carried out in a 
manner that— 
(A) is affordable for the parties involved; 
(B) encourages timely resolution of claims; 
(C) encourages the consistent and fair res-
olution of claims; and 
(D) provides for reasonably convenient ac-
cess to dispute resolution. 
(d) FURTHER REDRESS AND ADMISSIBILITY.—Any 
party dissatisfied with a determination reached with re-
spect to a medical malpractice claim as a result of an al-
ternative dispute resolution method applied under this sec-
tion shall not be bound by such determination. The results 
of any alternative dispute resolution method applied under 
this section, and all statements, offers, and communica-
tions made during the application of such method, shall 
be inadmissible for purposes of adjudicating the claim. 
SEC. 105. LIMITATION ON PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may not be 
awarded in a medical malpractice action, except upon 
proof of— 
(1) gross negligence;
(2) reckless indifference to life; or 
(3) an intentional act, such as voluntary intoxi-
cation or impairment by a physician, sexual abuse or 
misconduct, assault and battery, or falsification of 
records. 
(b) ALLOCATION.—In such a case, the award of puni-
tive damages shall be allocated 50 percent to the claimant 
and 50 percent to a trustee appointed by the court, to 
be used by such trustee in the manner specified in sub-
section (d). The court shall appoint the Secretary of 
Health and Human Services as such trustee. 
(c) EXCEPTION.—This section shall not apply with 
respect to an action if the applicable State law provides 
(or has been construed to provide) for damages in such 
an action that are only punitive or exemplary in nature. 
(d) TRUST FUND.— 
(1) IN GENERAL.—This subsection applies to 
amounts allocated to the Secretary of Health and 
Human Services as trustee under subsection (b). 
(2) AVAILABILITY.—Such amounts shall be 
available for use by the Secretary of Health and 
Human Services under paragraph (3) and shall re-
main so available until expended. 
(3) USE.—
(A) Subject to subparagraph (B), the Sec-
retary of Health and Human Services, acting 
through the Director of the Agency for 
Healthcare Research and Quality, shall use the 
amounts to which this subsection applies for ac-
tivities to reduce medical errors and improve 
patient safety. 
(B) The Secretary of Health and Human 
Services may not use any part of such amounts 
to establish or maintain any system that re-
quires mandatory reporting of medical errors. 
(C) The Secretary of Health and Human 
Services shall promulgate regulations to estab-
lish programs and procedures for carrying out 
this paragraph. 
(4) INVESTMENT.— 
(A) The Secretary of Health and Human 
Services shall invest the amounts to which this 
subsection applies in such amounts as such Sec-
retary determines are not required to meet cur-
rent withdrawals. Such investments may be 
made only in interest-bearing obligations of the 
United States. For such purpose, such obliga-
tions may be acquired on original issue at the
issue price, or by purchase of outstanding obli-
gations at the market price. 
(B) Any obligation acquired by the Sec-
retary in such Secretary’s capacity as trustee of 
such amounts may be sold by the Secretary at 
the market price. 
SEC. 106. REDUCTION IN PREMIUMS PAID BY PHYSICIANS 
FOR 
MEDICAL 
MALPRACTICE 
INSURANCE 
COVERAGE. 
(a) IN GENERAL.—Not later than 180 days after the 
date of the enactment of this Act, each medical mal-
practice liability insurance company shall— 
(1) develop a reasonable estimate of the annual 
amount of financial savings that will be achieved by 
the company as a result of this title; 
(2) develop and implement a plan to annually 
dedicate at least 50 percent of such annual savings 
to reduce the amount of premiums that the company 
charges physicians for medical malpractice liability 
coverage; and 
(3) submit to the Secretary of Health and 
Human Services (hereinafter referred to in this sec-
tion as the ‘‘Secretary’’) a written certification that 
the company has complied with paragraphs (1) and 
(2).
(b) REPORTS.—Not later than one year after the date 
of the enactment of this Act and annually thereafter, each 
medical malpractice liability insurance company shall sub-
mit to the Secretary a report that identifies the percentage 
by which the company has reduced medical malpractice 
coverage premiums relative to the date of the enactment 
of this Act. 
(c) ENFORCEMENT.—A medical malpractice liability 
insurance company that violates a provision of this section 
is liable to the United States for a civil penalty in an 
amount assessed by the Secretary, not to exceed $11,000 
for each such violation. The provisions of paragraphs (3) 
through (5) of section 303(g) of the Federal Food, Drug, 
and Cosmetic Act apply to such a civil penalty to the same 
extent and in the same manner as such paragraphs apply 
to a civil penalty under such section. 
(d) DEFINITION.—For purposes of this section, the 
term ‘‘medical malpractice liability insurance company’’ 
means an entity in the business of providing an insurance 
policy under which the entity makes payment in settlement 
(or partial settlement) of, or in satisfaction of a judgment 
in, a medical malpractice action or claim. 
SEC. 107. DEFINITIONS. 
In this title, the following definitions apply:
(1) ALTERNATIVE DISPUTE RESOLUTION METH-
OD.—The term ‘‘alternative dispute resolution meth-
od’’ means a method that provides for the resolution 
of medical malpractice claims in a manner other 
than through medical malpractice actions. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who alleges a medical malpractice claim, 
and any person on whose behalf such a claim is al-
leged, including the decedent in the case of an action 
brought through or on behalf of an estate. 
(3) HEALTH CARE PROFESSIONAL.—The term 
‘‘health care professional’’ means any individual who 
provides health care services in a State and who is 
required by the laws or regulations of the State to 
be licensed or certified by the State to provide such 
services in the State. 
(4) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any organization or 
institution that is engaged in the delivery of health 
care services in a State and that is required by the 
laws or regulations of the State to be licensed or cer-
tified by the State to engage in the delivery of such 
services in the State. 
(5) INJURY.—The term ‘‘injury’’ means any ill-
ness, disease, or other harm that is the subject of
a medical malpractice action or a medical mal-
practice claim. 
(6) 
MANDATORY.—The 
term 
‘‘mandatory’’ 
means required to be used by the parties to attempt 
to resolve a medical malpractice claim notwith-
standing any other provision of an agreement, State 
law, or Federal law. 
(7) MEDIATION.—The term ‘‘mediation’’ means 
a settlement process coordinated by a neutral third 
party and without the ultimate rendering of a formal 
opinion as to factual or legal findings. 
(8) MEDICAL MALPRACTICE ACTION.—The term 
‘‘medical malpractice action’’ means an action in any 
State or Federal court against a physician, or other 
health professional, who is licensed in accordance 
with the requirements of the State involved that— 
(A) arises under the law of the State in-
volved; 
(B) alleges the failure of such physician or 
other health professional to adhere to the rel-
evant professional standard of care for the serv-
ice and specialty involved; 
(C) alleges death or injury proximately 
caused by such failure; and
(D) seeks monetary damages, whether 
compensatory or punitive, as relief for such 
death or injury. 
(9) MEDICAL MALPRACTICE CLAIM.—The term 
‘‘medical malpractice claim’’ means a claim forming 
the basis of a medical malpractice action. 
(10) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, American Samoa, 
Guam, the Commonwealth of the Northern Mariana 
Islands, the Virgin Islands, and any other territory 
or possession of the United States. 
SEC. 108. APPLICABILITY. 
(a) IN GENERAL.—Except as provided in section 104, 
this title shall apply with respect to any medical mal-
practice action brought on or after the date of the enact-
ment of this Act. 
(b) FEDERAL COURT JURISDICTION
NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in 
this title shall be construed to establish any jurisdiction 
in the district courts of the United States over medical 
malpractice actions on the basis of section 1331 or 1337 
of title 28, United States Code.