I
103D CONGRESS
1ST SESSION
H. R. 2851
To impose certain requirements on the resolution of medical malpractice
liability claims, to amend the Internal Revenue Code of 1986 to require
persons making certain medical malpractice payments to report such
payments to the Secretary of the Treasury, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 3, 1993
Mr. THOMAS of California introduced the following bill; which was referred
jointly to the Committees on the Judiciary and Ways and Means
A BILL
To impose certain requirements on the resolution of medical
malpractice liability claims, to amend the Internal Reve-
nue Code of 1986 to require persons making certain
medical malpractice payments to report such payments
to the Secretary of the Treasury, 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 ‘‘Medical Liability Im-
provement Act of 1993’’.
SEC. 2. GENERAL PROVISIONS.
(a) CONGRESSIONAL FINDINGS.—
(1) EFFECT ON INTERSTATE COMMERCE.—The
Congress finds that the health care and insurance
industries are industries affecting interstate com-
merce and the medical malpractice litigation systems
existing throughout the United States affect inter-
state commerce by contributing to the high cost of
health care and premiums for malpractice insurance
purchased by health care providers.
(2) EFFECT
ON
FEDERAL
SPENDING.—The
Congress finds that the medical malpractice litiga-
tion systems existing throughout the United States
have a significant effect on the amount, distribution,
and use of Federal funds because of—
(A) the large number of individuals who
receive health care benefits under programs op-
erated or financed by the Federal Government;
(B) the large number of individuals who
benefit because of the exclusion from Federal
taxes of the amounts spent by their employers
to provide them with health insurance benefits;
(C) the large number of health care provid-
ers and health care professionals who provide
items or services for which the Federal Govern-
ment makes payments; and
(D) the large number of such providers
and professionals who have received direct or
indirect financial assistance from the Federal
Government because of their status as such
professionals or providers.
(b) APPLICABILITY.—This Act shall apply with re-
spect to any medical malpractice liability claim and to any
medical malpractice liability action brought in any State
or Federal court, except that this Act shall not apply to—
(1) a claim or action for damages arising from
a vaccine-related injury or death to the extent that
title XXI of the Public Health Service Act applies to
the action; or
(2) a claim or action in which the claimant’s
sole allegation is an allegation of an injury arising
from the use of a medical product.
(c) PREEMPTION OF STATE LAW.—Subject to section
12, this Act supersedes State law only to the extent that
State law differs from any provision of law established by
or under this Act. Any issue that is not governed by any
provision of law established by or under this Act shall be
governed by otherwise applicable State or Federal law.
(d) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this Act shall be construed to establish any jurisdiction
in the district courts of the United States over medical
malpractice liability actions on the basis of sections 1331
or 1337 of title 28, United States Code.
SEC. 3. DEFINITIONS.
As used in this Act:
(1) CLAIMANT.—The term ‘‘claimant’’ means
any person who alleges a medical malpractice liabil-
ity claim, or, in the case of an individual who is de-
ceased, incompetent, or a minor, the person on
whose behalf such a claim is alleged.
(2) ECONOMIC DAMAGES.—The term ‘‘economic
damages’’ means damages paid to compensate an in-
dividual for losses for hospital and other medical ex-
penses, lost wages, lost employment, and other pecu-
niary losses.
(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 State law or regulation 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 State
law or regulation to be licensed or certified 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 liability action or claim.
(6) MEDICAL
MALPRACTICE
LIABILITY
AC-
TION.—The term ‘‘medical malpractice liability ac-
tion’’ means a civil action (other than an action in
which the claimant’s sole allegation is an allegation
of an intentional tort) brought in a State or Federal
court against a health care provider or health care
professional (regardless of the theory of liability on
which the action is based) in which the claimant al-
leges a medical malpractice liability claim.
(7) 
MEDICAL
MALPRACTICE
LIABILITY
CLAIM.—The term ‘‘medical malpractice 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.
(8) MEDICAL
PRODUCT.—The term ‘‘medical
product’’ means a device (as defined in section
201(h) of the Federal Food, Drug, and Cosmetic
Act) or a drug (as defined in section 201(g)(1) of
the Federal Food, Drug, and Cosmetic Act).
(9) NONECONOMIC DAMAGES.—The term ‘‘non-
economic damages’’ means damages paid to com-
pensate an individual for losses for physical and
emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of
enjoyment of life, loss of consortium, and other
nonpecuniary losses, but does not include punitive
damages.
(10) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(11) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, and any other terri-
tory or possession of the United States.
SEC. 4. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), this Act shall apply with respect to claims accruing
or actions brought on or after the expiration of the 3-year
period that begins on the date of the enactment of this
Act.
(b) EXCEPTION FOR STATES REQUESTING EARLIER
IMPLEMENTATION OF REFORMS.—
(1) APPLICATION.—A State may submit an ap-
plication to the Secretary requesting the early imple-
mentation of this Act with respect to claims or ac-
tions brought in the State.
(2) DECISION BY SECRETARY.—The Secretary
shall issue a response to a State’s application under
paragraph (1) not later than 90 days after receiving
the application. If the Secretary determines that the
State meets the requirements of this Act at the time
of submitting its application, the Secretary shall ap-
prove the State’s application, and this Act shall
apply with respect to actions brought in the State on
or after the expiration of the 90-day period that be-
gins on the date the Secretary issues the response.
If the Secretary denies the State’s application, the
Secretary shall provide the State with a written ex-
planation of the grounds for the decision.
SEC. 5. ATTORNEYS’ FEES.
(a) LIMITATION ON CONTINGENCY FEES.—An attor-
ney shall not contract for or collect a contingency fee for
representing a claimant in a medical malpractice liability
action in excess of the following:
(1) 40 percent of the first $50,000 (or portion
thereof) of the amount recovered by the claimant.
(2) 331⁄3 percent of the next $50,000 (or por-
tion thereof) of the amount recovered by the claim-
ant.
(3) 25 percent of the next $500,000 (or portion
thereof) of the amount recovered by the claimant.
(4) 15 percent of any amounts recovered by the
claimant in excess of $600,000.
This subsection applies whether the recovery is by settle-
ment, arbitration, or judgment.
(b) CALCULATION OF PERIODIC PAYMENTS.—If peri-
odic payments are awarded to the claimant pursuant to
section 8(b), the court shall place a total value on these
payments based upon the projected life expectancy of the
claimant and include this amount in computing the total
award from which attorneys’ fees are calculated under
subsection (a).
(c) SPECIAL RULE FOR DETERMINING AMOUNT RE-
COVERED.—In subsection (a), the term ‘‘recovered’’
means the net sum recovered after deducting any dis-
bursements or costs incurred in connection with prosecu-
tion or settlement of the claim, except that costs of medi-
cal care incurred by the claimant and the attorney’s office
overhead costs or charges shall not be deductible disburse-
ments under this subsection.
SEC. 6. LIMITATION ON NONECONOMIC DAMAGES.
The total amount of damages which may be awarded
to an individual and the family members of such individual
for noneconomic losses resulting from an injury which is
the subject of a medical malpractice liability claim may
not exceed $250,000, regardless of the number of health
care professionals and health care providers against whom
the claim is brought or the number of claims brought with
respect to the injury.
SEC. 7. STATUTE OF LIMITATIONS.
(a) IN GENERAL.—No medical malpractice liability
claim may be brought after the expiration of the 2-year
period that begins on the date the alleged injury that is
the subject of the action should reasonably have been dis-
covered, but in no event after the expiration of the 4-year
period that begins on the date the alleged injury occurred.
(b) EXCEPTION FOR MINORS.—In the case of an al-
leged injury suffered by a minor who has not attained 6
years of age, no medical malpractice liability claim may
be brought after the expiration of the 2-year period that
begins on the date the alleged injury that is the subject
of the action should reasonably have been discovered, but
in no event after the date on which the minor attains 10
years of age.
SEC. 8. PERIODIC PAYMENTS FOR FUTURE LOSSES.
If more than $50,000 in damages for expenses to be
incurred in the future is awarded to the claimant in a
medical malpractice liability action, the court shall at the
request of either party, enter a judgment ordering such
damages to be paid on a periodic basis determined appro-
priate by the court (based upon projections of when such
expenses are likely to be incurred).
SEC. 9. MANDATORY OFFSETS FOR DAMAGES PAID BY A
COLLATERAL SOURCE.
(a) IN GENERAL.—The total amount of damages re-
ceived by a plaintiff in a medical malpractice liability ac-
tion shall be reduced (in accordance with subsection (b))
by any other payment that has been or will be made to
the individual to compensate the plaintiff for the injury
that was the subject of the action, including payment
under—
(1) Federal or State disability or sickness pro-
grams;
(2) Federal, State, or private health insurance
programs;
(3) private disability insurance programs;
(4) employer wage continuation programs; and
(5) any other source of payment intended to
compensate the plaintiff for such injury.
(b) AMOUNT OF REDUCTION.—The amount by which
an award of damages to a plaintiff shall be reduced under
subsection (a) shall be—
(1) the total amount of any payments (other
than such award) that have been made or that will
be made to the plaintiff to compensate the plaintiff
for the injury that was the subject of the action;
minus
(2) the amount paid by the plaintiff (or by the
spouse, parent, or legal guardian of the plaintiff) to
secure the payments described in paragraph (1).
SEC. 10. SPECIAL PROVISION FOR CERTAIN OBSTETRIC
SERVICES.
(a) IMPOSITION OF HIGHER STANDARD OF PROOF.—
(1) IN
GENERAL.—In the case of a medical
malpractice liability action relating to services pro-
vided during labor or the delivery of a baby, if the
defendant health care professional did not previously
treat the plaintiff for the pregnancy, the trier of fact
may not find that the defendant committed mal-
practice and may not assess damages against the de-
fendant unless the malpractice is proven by clear
and convincing evidence.
(2) APPLICABILITY TO GROUP PRACTICES OR
AGREEMENTS AMONG PROVIDERS.—For purposes of
paragraph (1), a health care professional shall be
considered to have previously treated an individual
for a pregnancy if the professional is a member of
a group practice whose members previously treated
the individual for the pregnancy or is providing serv-
ices to the individual during labor or the delivery of
a baby pursuant to an agreement with another pro-
fessional.
(b) CLEAR AND CONVINCING EVIDENCE DEFINED.—
In subsection (a), the term ‘‘clear and convincing evi-
dence’’ is that measure 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, except that such measure or degree of proof
is more than that required under preponderance of the evi-
dence, but less than that required for proof beyond a rea-
sonable doubt.
SEC. 11. JOINT AND SEVERAL LIABILITY.
The liability of each defendant in a medical mal-
practice liability action shall be several only and shall not
be joint, and each defendant shall be liable only for the
amount of damages allocated to the defendant in direct
proportion to the defendant’s percentage of responsibility
(as determined by the trier of fact).
SEC. 12. PREEMPTION.
(a) IN GENERAL.—This Act supersedes any State
law only to the extent that State law—
(1) permits the recovery of a greater amount of
damages by a plaintiff;
(2) permits the collection of a greater amount
of attorneys’ fees by a plaintiff’s attorney;
(3) establishes a longer period during which a
medical malpractice liability claim may be initiated;
or
(4) establishes a stricter standard for determin-
ing whether a defendant was negligent or for deter-
mining the liability of defendants described in sec-
tion 10 in actions described in such section.
(b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (a) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
the Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) 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.
SEC. 13. RETURNS RELATING TO TAXABLE MEDICAL MAL-
PRACTICE AWARDS.
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 of the Internal Revenue Code of
1986 (relating to information concerning transactions
with other persons) is amended by adding at the end
thereof the following new section:
‘‘SEC. 6050O. RETURNS RELATING TO TAXABLE MEDICAL
MALPRACTICE AWARDS.
‘‘(a) IN GENERAL.—If—
‘‘(1) any person makes medical malpractice
payments to another person during any calendar
year,
‘‘(2) a portion of such payments is includible in
gross income for purposes of chapter 1, and
‘‘(3) the portion of such payments so includible
exceeds $600,
then the person making such payments shall make a re-
turn (at such time and in such form as the Secretary may
by regulations prescribe) setting forth the name, address,
and TIN of the person to whom such payments were
made, the aggregate amount of such payments, and the
portion of such payments includible in gross income for
purposes of chapter 1.
‘‘(b) STATEMENTS TO BE FURNISHED TO PERSONS
WITH RESPECT TO WHOM INFORMATION IS REQUIRED
TO BE FURNISHED.—Every person required to make a
return under subsection (a) with respect to payments
made to any person shall furnish to such person a written
statement showing—
‘‘(1) the name and address of the person re-
quired to make such return, and
‘‘(2) the information required to be shown on
the return with respect to the person to whom such
payments were made.
The written statement required under the preceding sen-
tence shall be furnished to the person on or before Janu-
ary 31 of the year following the calendar year for which
the return under subsection (a) was made.
‘‘(c) MEDICAL MALPRACTICE PAYMENTS.—For pur-
poses of this section, the term ‘medical malpractice pay-
ment’ means any payment (whether by suit or agreement
and whether as a lump sum or periodic payment) on ac-
count of a medical malpractice liability claim (as defined
in section 3(7) of the Medical Liability Improvement Act
of 1993).’’
(b) PENALTIES.—
(1) RETURNS.—Subparagraph (A) of section
6724(d)(1) of such Code is amended by striking
‘‘or’’ at the end of clause (vi), by striking ‘‘and’’ at
the end of clause (vii) and inserting ‘‘or’’, and by
adding at the end thereof the following new clause:
‘‘(viii) section 6050O (relating to re-
turns relating to taxable medical mal-
practice awards),’’.
(2) STATEMENTS.—Paragraph (2) of section
6724(d) of such Code is amended by redesignating
subparagraphs (P) through (S) as subparagraphs
(Q) through (T), respectively, and by inserting after
subparagraph (O) the following new subparagraph:
‘‘(P) section 6050O(b) (relating to returns
relating 
to 
taxable 
medical 
malpractice
awards),’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart B of part III of subchapter A of chapter 61
is amended by adding at the end thereof the following new
item:
‘‘Sec. 6050O. Returns relating to taxable medical malpractice
awards.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments after the date of the
enactment of this Act.