SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Health Care Cost Con-
tainment Act’’.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The intolerably high number of Americans
without adequate health insurance has resulted in
major part from the high cost of health insurance
premiums.
(2) By eliminating the full tax deductibility of
most medical expenses, the Federal Government has
effectively increased the cost of health insurance.
This same misguided policy has increased the cost of
regular maintenance of one’s own health through
regular physician visits. This policy of the Federal
Government, therefore, has both discouraged the
purchase of health insurance and exposed taxpayers
to greater expense because individuals are more like-
ly to develop chronic illnesses and more likely to go
without insurance to pay for critical care.
(3) Excessive, wasteful, and abusive litigation in
medical care liability suits throughout the United
States has also significantly contributed to the high
cost of health care in America. The enormous sums
and valuable time that hospitals and physicians lose
because of needless litigation amount to a huge tax
on health care for all Americans. Even more expen-
sive is the huge and thoroughly unnecessary cost of
so-called ‘‘defensive medicine’’. Because of the ubiq-
uitous threat of lawsuits, doctors and other health
care providers all too often prescribe unnecessary
tests, studies, and procedures simply to protect
themselves—not their patients. Reforming the
abuses of our civil litigation system in medical cases
is therefore an essential step in controlling health
care costs.
(4) Noneconomic damages in medical cases
should be eliminated. Payment of huge money dam-
ages for conceptually elusive measure of loss such as
‘‘pain and suffering’’ and ‘‘inconvenience’’ has prov-
en to be unworkable. Our society simply cannot af-
ford it. Money damages should be limited to repay-
ment of actual monetary losses such as medical ex-
penses, out-of-pocket costs, lost future earnings, and
other traditional measures of actual damages.
(5) Punitive damages in medical care liability
suits are meant to punish malefactors rather than
provide a windfall to attorneys and random litigants.
The existence of this potential windfall (always unre-
lated to the actual damages suffered in any case)
creates a perverse incentive for even more litigation
against ‘‘deep pockets’’ doctors, hospitals, and
health care providers. Punitive damages should,
therefore, be paid over to community hospitals to
offset the cost of indigent care. This will end one of
the most significant incentives for abusive and un-
necessary litigation that drives up medical costs.
Even more importantly, it will reduce the cost of
health care for the poor and taxpayers alike.
(6) Medical care liability suits should be decided
on their merits. But in recent years, the vast major-
ity of medical care liability suits have been decided
without a single day of trial, when parties realize
that they cannot afford the lawyers’ costs and other
expenses of obtaining their day in court. This has
led all too often to economic blackmail, in which in-
nocent parties—hospitals, physicians, nurses, other
health care workers—are forced to settle for large
amounts even though they should, in fact, be held
harmless by our legal system. Patients with meritori-
ous medical malpractice cases find their recoveries
substantially reduced by attorneys’ fees. Health care
providers victimized by groundless litigation must
often pay enormous fees simply to prove they are
blameless. To redress this inequity, the loser in a
medical case should pay the costs and attorneys’ fees
of the winner. This will end another perverse incen-
tive in the present system for unnecessary litigation
that drives up health care costs.
(7) By reducing the cost of health care and by
making health insurance more affordable, millions
more Americans will be able to obtain needed health
coverage. This, in turn, will increase the size of in-
surance risk pools, further reducing the cost of nec-
essary insurance for all Americans.
SEC. 3. RESTORATION OF THE FULL DEDUCTIBILITY OF
MEDICAL EXPENSES.
Section 213(a) of the Internal Revenue Code of 1986
(relating to the treatment of medical and dental expenses)
is amended to read as follows:
‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be
allowed as a deduction the expenses paid during the tax-
able year, not compensated for by insurance or otherwise,
for medical care of the taxpayer, the taxpayer’s spouse,
or a dependent (as defined in section 152).’’.
SEC. 4. ATTORNEYS’ FEES IN MEDICAL CARE LIABILITY
SUITS.
(a) AWARDING
ATTORNEYS’ FEES
AND
OTHER
COSTS TO PREVAILING PARTY.—The nonprevailing party
in a medical care liability suit shall pay to the prevailing
party in such suit its litigation expenses under the action
(including attorneys’ fees and fees paid to expert wit-
nesses, but not including court fees, filing fees, or other
expenses paid directly to the court). The amount to be
paid for such litigation expenses shall not exceed the liti-
gation expenses of the nonprevailing party in such medical
care liability suit. If the nonprevailing party receives attor-
ney services under a contingent fee agreement, the amount
of the attorneys’ fees paid under this subsection shall not
exceed the reasonable value of those services, determined
without regard to the contingent nature of the fee ar-
rangement.
(b) DEFINITION OF PREVAILING PARTY.—The term
‘prevailing party’ means a party to a medical care liability
suit who obtains a favorable final judgment (other than
by settlement) on all or a portion of the claims asserted
in the action.
SEC. 5. ELIMINATION OF NONECONOMIC DAMAGES IN MED-
ICAL CARE LIABILITY SUITS.
(a) SCOPE OF PROHIBITION.—Noneconomic damages
may not be imposed in a medical care liability suit. Com-
pensatory damages may be awarded as in any other type
of action.
(b) DEFINITION OF NONECONOMIC DAMAGES.—The
term ‘noneconomic damages’ means damages for pain,
suffering, inconvenience, or any other nonpecuniary loss,
but does not include punitive damages.
SEC. 6. PUNITIVE DAMAGES TO BE REDIRECTED TO COM-
MUNITY HOSPITALS TO PAY FOR INDIGENT
CARE.
(a) LOCAL GOVERNMENT TO RECEIVE MONEYS ON
BEHALF OF HOSPITALS.—Any punitive damages imposed
in a medical care liability suit shall be paid to the county,
parish, or comparable unit of local government in which
the action is brought and which has primary responsibility
for payment for indigent health services in its jurisdiction.
(b) USE OF MONEYS.—A county, parish, or com-
parable unit of local government which receives moneys
under subsection (a) shall use it toward payment of its
unreimbursed expenses incurred in providing health care
to individuals entitled to medical assistance under titles
XVIII and XIX of the Social Security Act.
SEC. 7. APPLICABILITY.
(a) APPLICABILITY.—This Act shall apply with re-
spect to any medical care liability suit brought in any
State or Federal court, except that this Act shall not apply
to 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.
(b) EFFECT ON STATE LAW.—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 estab-
lished by or under this Act shall be governed by otherwise
applicable State or Federal law.
(c) 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
care liability suits on the basis of sections 1331 or 1337
of title 28, United States Code.
(d) DEFINITION
OF
MEDICAL
CARE
LIABILITY
SUIT.—The term ‘medical care liability suit’ means an ac-
tion for damages arising out of the provision of (or the
failure to provide) health care services.
SEC. 8. EFFECTIVE DATE.
This Act shall apply with respect to claims accruing
or suits brought on or after the first day of January of
the calendar year following the date of the enactment of
this Act.
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