‘‘(A) the lessor retains the ultimate author-
ity to hire, terminate, and reassign such em-
ployees,
‘‘(B) the lessor is responsible for the pay-
ment of wages, payroll-related taxes, and em-
ployee benefits, without regard to payment by
the lessee to the lessor for its services,
‘‘(C) the lessor maintains the right of di-
rection and control over its employees, except to
the extent that the lessee is responsible for su-
pervision of the work performed consistent with
the lessee’s responsibility for its product or
service,
‘‘(D) in accordance with section 301(a) of
the Labor Management Relations Act, 1947 (29
U.S.C. 185(a)), the lessor retains in the ab-
sence of an applicable collective bargaining
agreement, the right to enter into arbitration
and to decide employee grievances, and
‘‘(E) no owner, officer, or director of, or
partner in, a lessee is an employee of the lessor,
and not more than 10 percent of the individuals
covered under the arrangement consist of own-
ers, officers, or directors of, or partners in,
such a lessee (or any combination thereof).
‘‘(b) DEFINITIONS.—For purposes of this section:
‘‘(1) LESSOR.—The term ‘lessor’ means the
business or other entity from which services of indi-
viduals are obtained under an employee leasing
healthcare arrangement.
‘‘(2) LESSEE.—The term ‘lessee’ means a busi-
ness or other entity which receives the services of in-
dividuals provided under an employee leasing
healthcare arrangement.’’.
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by the
preceding provisions of this subtitle) is further
amended by inserting after the item relating to sec-
tion 710 the following new item:
‘‘Sec. 711. Employee leasing healthcare arrangements.’’.
SEC. 216. ENFORCEMENT PROVISIONS RELATING TO MUL-
TIPLE EMPLOYER WELFARE ARRANGEMENTS
AND EMPLOYEE LEASING HEALTHCARE AR-
RANGEMENTS.
(a) ENFORCEMENT
OF FILING REQUIREMENTS.—
Section 502 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132) is amended—
(1) in subsection (a)(6), by striking ‘‘subsection
(c)(2) or (i) or (l)’’ and inserting ‘‘paragraph (2) or
(4) of subsection (c) or subsection (i) or (l)’’; and
(2) by adding at the end of subsection (c) the
following new paragraph:
‘‘(4) The Secretary may assess a civil penalty against
any person of up to $1,000 a day from the date of such
person’s failure or refusal to file the information required
to be filed with the Secretary under section 101(d).’’.
(b) ACTIONS BY STATES IN FEDERAL COURT.—Sec-
tion 502(a) of such Act (29 U.S.C. 1132(a)) is amended—
(1) in paragraph (5), by striking ‘‘or’’ at the
end;
(2) in paragraph (6), by striking the period and
inserting ‘‘, or’’; and
(3) by adding at the end the following:
‘‘(7) by a State official having authority under
the law of such State to enforce the laws of such
State regulating insurance, to enjoin any act or
practice which violates any provision of part 7 which
such State has the power to enforce under part 7.’’.
(c) CRIMINAL PENALTIES FOR CERTAIN WILLFUL
MISREPRESENTATIONS.—Section 501 of such Act (29
U.S.C. 1131) is amended—
(1) by inserting ‘‘(a)’’ after ‘‘SEC. 501.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) Any person who, either willfully or with willful
blindness, falsely represents, to any employee, any employ-
ee’s beneficiary, any employer, the Secretary, or any State,
an arrangement established or maintained for the purpose
of offering or providing any benefit described in section
3(1) to employees or their beneficiaries as being a multiple
employer welfare arrangement granted an exemption
under part 7, as being an employee leasing healthcare ar-
rangement under such an exemption, or as having been
established or maintained under or pursuant to a collective
bargaining agreement shall, upon conviction, be impris-
oned not more than five years, be fined under title 18,
United States Code, or both.’’.
(d) CEASE ACTIVITIES ORDERS.—Section 502 of
such Act (29 U.S.C. 1132) is amended by adding at the
end the following new subsection:
‘‘(m)(1) Subject to paragraph (2), upon application
by the Secretary showing the operation, promotion, or
marketing of a multiple employer welfare arrangement
providing benefits consisting of medical care described in
section 607(1) that—
‘‘(A) is not licensed, registered, or otherwise ap-
proved under the insurance laws of the States in
which the arrangement offers or provides benefits, or
‘‘(B) is not operating in accordance with the
terms of an exemption granted by the Secretary
under part 7,
a district court of the United States shall enter an order
requiring that the arrangement cease activities.
‘‘(2) Paragraph (1) shall not apply in the case of a
multiple employer welfare arrangement if the arrangement
shows that it—
‘‘(A) is fully insured, within the meaning of
section 701(9),
‘‘(B) is licensed, registered, or otherwise ap-
proved in each State in which it offers or provides
benefits, except to the extent that such State does
not require licensing, registration, or approval of
fully insured multiple employer welfare arrange-
ments, and
‘‘(C) with respect to each such State, is operat-
ing in accordance with applicable State insurance
laws that are not superseded under section 514.
‘‘(3) The court may grant such additional equitable
or remedial relief, including any relief available under this
title, as it deems necessary to protect the interests of the
public and of persons having claims for benefits against
the arrangement.’’.
(e) RESPONSIBILITY
FOR CLAIMS PROCEDURE.—
Section 503 of such Act (29 U.S.C. 1133) is amended by
adding at the end (after and below paragraph (2)) the fol-
lowing new sentence: ‘‘The terms of each multiple em-
ployer welfare arrangement to which this section applies
and which provides benefits consisting of medical care de-
scribed in section 607(1) shall require the operating com-
mittee or the named fiduciary (as applicable) to ensure
that the requirements of this section are met in connection
with claims filed under the arrangement.’’.
SEC. 217. FILING REQUIREMENTS FOR HEALTH BENEFIT
MULTIPLE EMPLOYER WELFARE ARRANGE-
MENTS.
Section 101 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1021) is amended—
(1) by redesignating subsection (e) as sub-
section (f); and
(2) by inserting after subsection (d) the follow-
ing new subsection:
‘‘(e)(1) Each multiple employer welfare arrangement
shall file with the Secretary a registration statement de-
scribed in paragraph (2) within 60 days before commenc-
ing operations (in the case of an arrangement commencing
operations on or after January 1, 1994) and no later than
February 15 of each year (in the case of an arrangement
in operation since the beginning of such year), unless, as
of the date by which such filing otherwise must be made,
such arrangement provides no benefits consisting of medi-
cal care described in section 607(1).
‘‘(2) Each registration statement—
‘‘(A) shall be filed in such form, and contain
such information concerning the multiple employer
welfare arrangement and any persons involved in its
operation (including whether the arrangement is
fully insured), as shall be provided in regulations
which shall be prescribed by the Secretary, and
‘‘(B) if the arrangement is not fully insured,
shall contain a certification that copies of such reg-
istration statement have been transmitted by cer-
tified mail to—
‘‘(i) in the case of an arrangement with re-
spect to which an exemption under part 7 is in
effect, the State insurance commissioner of the
domicile State of such arrangement, or
‘‘(ii) in the case of an arrangement which
is not so exempt, the State insurance commis-
sioner of each State in which the arrangement
is located.
‘‘(3) The person or persons responsible for filing the
annual registration statement are—
‘‘(A) the trustee or trustees so designated by
the terms of the instrument under which the mul-
tiple employer welfare arrangement is established or
maintained, or
‘‘(B) in the case of a multiple employer welfare
arrangement for which the trustee or trustees can-
not be identified, or upon the failure of the trustee
or trustees of an arrangement to file, the person or
persons actually responsible for the acquisition, dis-
position, control, or management of the cash or
property of the arrangement, irrespective of whether
such acquisition, disposition, control, or management
is exercised directly by such person or persons or
through an agent designated by such person or
persons.
‘‘(4) Any agreement entered into under section
506(c) with a State as the primary domicile State with
respect to any multiple employer welfare arrangement
shall provide for simultaneous filings of reports required
under this subsection with the Secretary and with the
State insurance commissioner of such State.’’.
SEC. 218. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding
at the end the following new subsection:
‘‘(c) RESPONSIBILITY WITH RESPECT TO MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS.—
‘‘(1) STATE ENFORCEMENT.—
‘‘(A) 
AGREEMENTS
WITH
STATES.—A
State may enter into an agreement with the
Secretary for delegation to the State of some or
all of the Secretary’s authority under sections
502 and 504 to enforce the provisions of this
title applicable to multiple employer welfare ar-
rangements with respect to which an exemption
under part 7 is or has been in effect. The Sec-
retary shall enter into the agreement if the Sec-
retary determines that the delegation provided
for therein would not result in a lower level or
quality of enforcement of the provisions of this
title.
‘‘(B) 
DELEGATIONS.—Any 
department,
agency, or instrumentality of a State to which
authority is delegated pursuant to an agree-
ment entered into under this paragraph may, if
authorized under State law and to the extent
consistent with such agreement, exercise the
powers of the Secretary under this title which
relate to such authority.
‘‘(C) CONCURRENT
AUTHORITY
OF
THE
SECRETARY.—If the Secretary delegates author-
ity to a State in an agreement entered into
under subparagraph (A), the Secretary may
continue to exercise such authority concurrently
with the State.
‘‘(D) RECOGNITION OF PRIMARY DOMICILE
STATE.—In entering into any agreement with a
State under subparagraph (A), the Secretary
shall ensure that, as a result of such agreement
and all other agreements entered into under
subparagraph (A), only one State will be recog-
nized, with respect to any particular multiple
employer welfare arrangement, as the primary
domicile State to which authority has been dele-
gated pursuant to such agreements.
‘‘(2) ASSISTANCE TO STATES.—The Secretary
shall—
‘‘(A) provide enforcement assistance to the
States with respect to multiple employer welfare
arrangements, including, but not limited to, co-
ordinating Federal and State efforts through
100
the establishment of cooperative agreements
with appropriate State agencies under which
the Pension and Welfare Benefits Administra-
tion keeps the States informed of the status of
its cases and makes available to the States in-
formation obtained by it,
‘‘(B) provide continuing technical assist-
ance to the States with respect to issues involv-
ing multiple employer welfare arrangements
and this Act,
‘‘(C) assist the States in obtaining from
the Office of Regulations and Interpretations
timely and complete responses to requests for
advisory opinions on issues described in sub-
paragraph (B), and
‘‘(D) distribute copies of all advisory opin-
ions described in subparagraph (C) to the State
insurance commissioner of each State.’’.
SEC. 219. EFFECTIVE DATE; TRANSITIONAL RULES.
(a) EFFECTIVE DATE.—The amendments made by
this subtitle shall take effect January 1, 1994, except that
the Secretary of Labor may issue regulations before such
date under such amendments. The Secretary shall issue
all regulations necessary to carry out the amendments
made by this subtitle before the effective date thereof.
101
(b) TRANSITIONAL RULES.—If the sponsor of a mul-
tiple employer welfare arrangement which, as of January
1, 1994, provides benefits consisting of medical care de-
scribed in section 607(1) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1167(1)) files with
the Secretary of Labor an application for an exemption
under part 7 of subtitle B of title I of such Act within
180 days after such date and the Secretary has not, as
of 90 days after receipt of such application, found such
application to be materially deficient, section 514(b)(6)(A)
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply
with respect to such arrangement during the 18-month pe-
riod following such date. If the Secretary determines, at
any time after the date of enactment of this Act, that any
such exclusion from coverage under the provisions of such
section 514(b)(6)(A) of a multiple employer welfare ar-
rangement would be detrimental to the interests of individ-
uals covered under such arrangement, such exclusion shall
cease as of the date of the determination. Any determina-
tion made by the Secretary under this subsection shall be
in the Secretary’s sole discretion.
102
Subtitle C—Repeal of COBRA
Continuation Requirements
SEC. 221. REPEAL OF REQUIREMENTS OF THE INTERNAL
REVENUE CODE OF 1954.
(a) IN GENERAL.—Section 4980B of the Internal
Revenue Code of 1986 is repealed.
(b) CONFORMING AMENDMENTS.—Section 414 of
such Code is amended—
(1) in subsection (n)(3)(C), by striking ‘‘505,
and 4980B’’ and inserting ‘‘and 505’’, and
(2) in subsection (t)(2), by striking ‘‘505, or
4980B’’ and inserting ‘‘or 505’’.
(c) EFFECTIVE DATE.—The repeal effected by sub-
section (a) shall apply to health plans offered in a State
by an employer as of the first date that a State multicare
program is in effect in the State.
SEC. 222. REPEAL OF REQUIREMENTS OF EMPLOYEE RE-
TIREMENT INCOME SECURITY ACT OF 1974.
(a) IN GENERAL.—Part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 is
repealed.
(b) CONFORMING AMENDMENT.—Section 502(c)(1)
of such Act (29 U.S.C. 1132(c)(1)) is amended by striking
‘‘paragraph (1) or (4) of section 606 or’’.
103
(c) EFFECTIVE DATE.—The repeal effected by sub-
section (a) shall apply to health plans offered in a State
by an employer as of the first date that a State multicare
program is in effect in the State.
SEC. 223. REPEAL OF REQUIREMENTS OF PUBLIC HEALTH
SERVICE ACT.
(a) IN GENERAL.—Title XXII of the Public Health
Service Act is repealed.
(b) EFFECTIVE DATE.—The repeal effected by sub-
section (a) shall apply to health plans offered in a State
by an employer as of the first date that a State multicare
program is in effect in the State.
TITLE 
III—STATES 
WITHOUT
STATE 
MULTICARE 
PRO-
GRAMS; 
FEDERAL 
HEALTH
CARE PROGRAMS; NATIONAL
REINSURANCE POOL
Subtitle 
A—Multicare 
Plans 
in
States without State Multicare
Programs
SEC. 301. GENERAL PROVISIONS.
(a) IN GENERAL.—In the case of a State without a
State multicare program approved under title I, the Sec-
retary may provide for—
104
(1) the operation (through the Department of
Health and Human Services) of such a program in
the State, and
(2) the approval and offering of multistate
plans in the State,
in the same manner as such a program and plans would
have been offered if a State multicare program were in
operation in the State.
(b) APPLICATION OF ALL REQUIREMENTS.—In the
case of multicare plans offered pursuant to subsection (a),
such plans shall meet all the same requirements of title
II (including requirements relating to consumer rights)
that would have applied if the plans were offered under
a State multicare program.
(c) CONSUMER EDUCATION AND ASSISTANCE.—In
the case of a State without a State multicare program ap-
proved under title I:
(1) DISTRIBUTION OF PLAN INFORMATION.—
The Secretary shall provide, through local Social Se-
curity Administration offices and State welfare of-
fices, for assistance to medicare, medicaid, and low-
income beneficiaries in the selection of multicare
plans pursuant to this section. Such offices shall
provide eligible individuals with the information nec-
105
essary to qualify them for reduced cost-sharing and
to explain their available options.
(2) DISTRIBUTION OF PLAN INFORMATION.—
The Secretary shall provide for distribution of infor-
mation on approved multicare plans.
Subtitle B—Federal Health Care
Programs
SEC. 321. MEDICARE PROGRAM.
(a) NEGOTIATION AUTHORITY.—The Secretary of
Health and Human Services is authorized to negotiate an
agreement with a State multicare program to provide med-
icare-eligible individuals with access to multicare plans.
(b) TERMS OF AGREEMENTS.—
(1) IN GENERAL.—Under an agreement under
this section, medicare-eligible individuals—
(A) are permitted to choose to enroll in
multicare plans, and
(B) are provided payment of an amount to-
wards the cost of enrolling in the plan.
(2) OTHER TERMS.—An agreement under this
section—
(A) may not increase the total Federal cost
of care, and
(B) shall ensure that medicare-eligible in-
dividuals can easily compare the benefits of en-
106
rollment under a multicare plan to the benefits
provided under the medicare program.
(c) SPECIAL RULES.—
(1) NO FEDERAL CONTRIBUTION.—No Federal
contribution is available to a State under section
101(c)(1) with respect to enrollment of an individual
with a multicare plan under an agreement under
this section.
(2) CONSTRUCTION.—Nothing in this section
shall be construed as—
(A) requiring a State multicare program to
enter into an agreement under this section as a
condition of approval of the program under this
Act or otherwise, or
(B) as authorizing the Secretary or a State
to require a medicare-eligible individual to en-
roll with a multicare plan under the agreement.
SEC. 322. FEDERAL EMPLOYEES HEALTH BENEFIT PRO-
GRAM.
(a) USE OF FEDERAL CONTRIBUTION TOWARD PUR-
CHASE OF MULTICARE PLAN.—In the case of an individ-
ual who is a Federal employee or annuitant eligible to en-
roll in a health benefit plan under chapter 89 of title 5,
United States Code and is residing in a State—
107
(1) with a State multicare program, instead of
enrolling under such a plan the individual is entitled
to elect (in a form and manner specified by the Di-
rector of the Office of Personnel Management in
consultation with the Secretary) to have the amount
of the Federal Government contribution toward such
plan under such chapter applied toward enrollment
of the individual (and qualified family members)
under a multicare plan; and
(2) without a State multicare program, instead
of enrolling under such a plan the individual is enti-
tled to elect (in a form and manner specified by the
Director of the Office of Personnel Management in
consultation with the Secretary) to have the amount
of the Federal Government contribution toward such
plan under such chapter applied toward enrollment
of the individual (and qualified family members)
under a Federally approved multicare plan.
(b) APPROVAL OF FEHBP PLANS.—The Secretary
may approve a health benefit plan offered under chapter
89 of title 5, United States Code, as a multicare plan
under this Act if the plan—
(1) participates in a reinsurance mechanism
that meets the requirements of section 107, and
108
(2) otherwise complies with the requirements
for a multicare plan under title II.
(c) TREATMENT OF FEHBP PLANS AS MULTICARE
PLANS FOR PURPOSES OF FEDERAL CONTRIBUTION.—
For purposes of section 121, a health benefit plan in which
an individual is enrolled under chapter 89 of title 5, Unit-
ed States Code is treated as a multicare plan in which
the individual is enrolled.
(d) CONSTRUCTION.—Nothing in this section shall be
construed as authorizing the Office of Personnel Manage-
ment to require any individual to enroll with a multicare
plan under this section.
SEC. 323. REPORT RECOMMENDING INTEGRATION OF
CHAMPUS, VETERANS HEALTH, AND INDIAN
HEALTH SERVICES.
(a) IN GENERAL.—The Secretary of Health and
Human Services, in coordination with the Secretary of
Veterans Affairs, the Secretary of Defense, and the Sec-
retary of the Interior, shall submit to Congress a report
that includes recommendations on how (and the extent to
which) the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), the health care pro-
grams of the Department of Veterans Affairs, and the In-
dian Health Service may be integrated with the multicare
program established under this Act.
109
(b) DEADLINE.—The report under subsection (a)
shall be submitted not later than 2 years after the date
of the enactment of this Act to the Committees on Armed
Services, Energy and Commerce, Interior, Veterans’ Af-
fairs, and Ways and Means of the House of Representa-
tives and to the Committees on Armed Services, Finance,
Labor and Human Resources, and Veterans’ Affairs of the
Senate.
SEC. 324. CONSUMER RIGHTS FOR INDIVIDUALS IN FED-
ERAL PROGRAMS.
(a) NOTICE OF RIGHTS; ENFORCEMENT.—
(1) NOTICE.—The Secretary shall notify indi-
viduals provided health care services under a Federal
health care program of their consumer rights under
this section and of the procedures established by the
Secretary to ensure these rights.
(2) DEVELOPMENT
OF
REGULATIONS.—The
Secretary shall develop regulation to implement the
consumer rights established under this section.
(3) STATE ENFORCEMENT.—The Secretary is
responsible, through modification of requirements of
Federal health care programs, for assuring compli-
ance of physicians with the requirements of this sec-
tion.
110
(b) PROVISION OF PATIENT COST-SHARING INFOR-
MATION.—
(1) IN
GENERAL.—Each physician who fur-
nishes professional services for which payment may
be made under a Federal health care program shall
provide, as a condition for the payment of funds for
such services under such program, that a patient is
provided, in advance of the receipt of the services
(except as provided by the Secretary in the case of
emergency services), with information on the ex-
pected total costs of the services and an estimate of
the patient’s share of the costs. Such information
may be based on the estimates for the average cost
for such services.
(2) TOTAL COST.—For purposes of paragraph
(1), the total cost of treatment—
(A) in the case of a patient’s initial visit,
shall consist of the initial visit only, and
(B) in the case of subsequent treatment,
shall include all expenses resulting from the
treatment procedure prescribed by the physi-
cian.
(3) EXCEPTION
FOR
EMERGENCIES.—In the
case of emergency services, the information under
111
this subsection shall be provided at the earliest rea-
sonable time after such services are provided.
(c) PATIENT ACCESS TO MEDICAL INFORMATION.—
In the case of an individual who receives professional serv-
ices from a physician for which payment may be made
under a Federal health care program, the individual has
a right to obtain information contained in the individual’s
medical record maintained by the physician.
(d) FEDERAL HEALTH CARE PROGRAM.—In this sec-
tion, the term ‘‘Federal health care program’’ includes the
medicare program, the medicaid program, and the Federal
employees health benefits program.
Subtitle C—National Reinsurance
Mechanism
SEC. 331. NATIONAL REINSURANCE MECHANISM.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—The Secretary shall establish
a national reinsurance mechanism for use by self-in-
sured closed multicare plans described in subsection
(b) which have not made an election described in
subsection (c). Such a mechanism shall be designed
to meet the requirements described in section
107(b).
(2) GOVERNANCE.—The mechanism shall be
governed by a commission appointed by the Sec-
112
retary. The membership of the commission shall in-
clude the Secretary (or the Secretary’s designee) and
representatives of plan sponsors, major providers,
labor, State reinsurance mechanisms, consumers,
State governments, and the business community.
(b) PLANS COVERED.—The plans described in this
subsection are self-insured plans that operate in 3 or more
States.
(c) ELECTION.—A plan described in subsection (b)
shall be permitted to make a one-time election as to wheth-
er to participate in the national reinsurance mechanism
under this section or to participate in State reinsurance
mechanisms established under section 107 (or by the Sec-
retary under section 301).
TITLE 
IV—MEDICAL 
MAL-
PRACTICE 
LIABILITY 
RE-
FORM
Subtitle A—Medical Malpractice
Liability Reform
PART 1—GENERAL PROVISIONS
SEC. 401. FEDERAL REFORM OF MEDICAL MALPRACTICE
LIABILITY ACTIONS.
(a) CONGRESSIONAL FINDINGS.—
(1) EFFECT
ON
INTERSTATE
COMMERCE.—
Congress finds that the health care and insurance
113
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.—Con-
gress finds that the medical malpractice litigation
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
114
Government because of their status as such
professionals or providers.
(b) APPLICABILITY.—This subtitle shall apply with
respect to any medical malpractice liability claim and to
any medical malpractice liability action brought in any
State or Federal court, except that this subtitle 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 plaintiff’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
421, this subtitle supersedes State law only to the extent
that State law differs from any provision of law estab-
lished by or under this subtitle. Any issue that is not gov-
erned by any provision of law established by or under this
subtitle shall be governed by otherwise applicable State or
Federal law.
(d) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this subtitle shall be construed to establish any jurisdiction
in the district courts of the United States over medical
115
malpractice liability actions on the basis of sections 1331
or 1337 of title 28, United States Code.
SEC. 402. DEFINITIONS.
As used in this subtitle:
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolu-
tion system’’ or ‘‘ADR’’ means a system established
by a State that provides for the resolution of medical
malpractice liability claims in a manner other than
through medical malpractice liability actions.
(2) 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.
(3) 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.
(4) 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
116
certified by the State to provide such services in the
State.
(5) 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.
(6) INJURY.—The term ‘‘injury’’ means any ill-
ness, disease, or other harm that is the subject of
a medical malpractice liability action or claim.
(7) MEDICAL
MALPRACTICE
LIABILITY
AC-
TION.—The term ‘‘medical malpractice liability ac-
tion’’ means a civil action (other than an action in
which the plaintiff’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 plaintiff al-
leges a medical malpractice liability claim.
(8) 
MEDICAL
MALPRACTICE
LIABILITY
CLAIM.—The term ‘‘medical malpractice liability
claim’’ means a claim in which the claimant alleges
117
that injury was caused by the provision of (or the
failure to provide) health care services.
(9) 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).
(10) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to
compensate 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.
(11) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(12) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands,
Guam, and American Samoa.
SEC. 403. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b) and sections 419 and 442, this subtitle shall apply with
respect to claims accruing or actions brought on or after
118
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 subtitle with respect to claims or
actions 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 subtitle at the
time of submitting its application, the Secretary
shall approve the State’s application, and this sub-
title shall apply with respect to actions brought in
the State on or after the expiration of the 90-day
period that begins on the date the Secretary issues
the response. If the Secretary denies the State’s ap-
plication, the Secretary shall provide the State with
a written explanation of the grounds for the deci-
sion.
119
PART 2—UNIFORM STANDARDS FOR MEDICAL
MALPRACTICE LIABILITY ACTIONS
SEC. 411. 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. 412. REQUIREMENT FOR INITIAL RESOLUTION OF AC-
TION THROUGH ALTERNATIVE DISPUTE RES-
OLUTION.
(a) IN GENERAL.—No medical malpractice liability
action may be brought in any State court unless the medi-
cal malpractice liability claim that is the subject of the
action has been initially resolved under an alternative dis-
120
pute resolution system certified by the Secretary under
section 432(b).
(b) INITIAL
RESOLUTION
OF
CLAIMS
UNDER
ADR.—For purposes of subsection (a), an action is ‘‘ini-
tially resolved’’ under an alternative dispute resolution
system if—
(1) the ADR reaches a decision on whether the
defendant is liable to the plaintiff for damages; and
(2) if the ADR determines that the defendant
is liable, the ADR determines the amount of dam-
ages assessed against the defendant.
(c) PROCEDURES FOR FILING ACTIONS.—
(1) DEADLINE.—No medical malpractice liabil-
ity action may be brought unless the action is filed
in a court of competent jurisdiction not later than
90 days after an opinion resolving the medical mal-
practice liability claim that is the subject of the ac-
tion is issued under the applicable alternative dis-
pute resolution system.
(2) COURT
OF
COMPETENT
JURISDICTION.—
For purposes of paragraph (1), the term ‘‘court of
competent jurisdiction’’ means—
(A) with respect to actions filed in a State
court, the appropriate State trial court; and
121
(B) with respect to actions filed in a Fed-
eral court, the appropriate United States dis-
trict court.
(d) STATUS
OF
ADR DECISION.—The decision
reached under an alternative dispute resolution system
shall, for purposes of enforcement by a court of competent
jurisdiction, have the same status in the court as the ver-
dict of a medical malpractice liability action adjudicated
in a State or Federal trial court.
(e) TREATMENT OF ADR DECISION.—
(1) REQUIREMENTS FOR GOING FORWARD WITH
ACTION.—In order to bring a medical malpractice li-
ability action to contest the decision made under the
previous alternative dispute resolution system with
respect to a medical malpractice liability claim, the
party contesting the decision must—
(A) show that—
(i) the decision was procured by cor-
ruption, fraud, or undue means,
(ii) there was partiality or corruption
under the system,
(iii) there was other misconduct under
the system that materially prejudiced the
party’s rights, or
122
(iv) the decision was based on an
error of law; or
(B) present new evidence before the trier
of fact that was not available for presentation
under the ADR system.
(2) BURDEN OF PROOF.—In any medical mal-
practice liability action, the trier of fact shall uphold
the decision made under the previous alternative dis-
pute resolution system with respect to the claim that
is the subject of the action unless the party contest-
ing the decision proves by a preponderance of the
evidence that the decision was incorrect.
SEC. 413. RELATION TO ALTERNATIVE DISPUTE RESOLU-
TION OF FEDERAL AGENCIES.
(a) MANDATORY APPLICATION OF FEDERAL ADR IN
MALPRACTICE CLAIMS AGAINST UNITED STATES.—Sec-
tion 2672 of title 28, United States Code, is amended by
striking the period at the end of the first paragraph and
inserting the following: ‘‘, except that each Federal agency
shall use arbitration or such alternative means of dispute
resolution to settle any tort claim against the United
States consisting of a medical malpractice liability claim
(as defined in section 402(8) of the Multicare Act of
1994).’’.
123
(b) TRANSMITTAL
OF
INFORMATION
OF
MAL-
PRACTICE CLAIMS RESOLVED UNDER FEDERAL ADR.—
Section 584 of title 5, United States Code, as added by
section 4(b) of the Administrative Dispute Resolution Act
(Public Law 101-552), is amended by adding at the end
the following new subsection:
‘‘(k) Each agency shall transmit on a regular basis
to the Administrator for Health Care Policy and Research
information on issues in controversy consisting of medical
malpractice liability claims (as defined in section 402(8)
of Multicare Act of 1994) that are resolved under the
agency’s dispute resolution proceeding under this sub-
chapter, in a manner that assures that the identity of the
parties to such proceedings shall not be revealed.’’.
SEC. 414. MANDATORY PRE-TRIAL SETTLEMENT CON-
FERENCE.
(a) IN GENERAL.—Before the beginning of the trial
phase of any medical malpractice liability action, the par-
ties shall attend a conference called by the court for pur-
poses of determining whether grounds exist upon which
the parties may negotiate a settlement for the action.
(b) REQUIRING PARTIES TO SUBMIT SETTLEMENT
OFFERS.—At the conference called pursuant to subsection
(a), each party to a medical malpractice liability action
shall present an offer of settlement for the action.
124
SEC. 415. CALCULATION AND PAYMENT OF DAMAGES.
(a) LIMITATION ON NONECONOMIC DAMAGES.—The
total amount of noneconomic damages that may be award-
ed to a plaintiff and the members of the plaintiff’s family
for losses resulting from the injury which is the subject
of a medical malpractice liability action may not exceed
$250,000, regardless of the number of parties against
whom the action is brought or the number of actions
brought with respect to the injury.
(b) TREATMENT OF PUNITIVE DAMAGES.—
(1) 
LIMITATION
ON
AMOUNT.—The 
total
amount of punitive damages that may be imposed
under a medical malpractice liability action may not
exceed twice the total of the damages awarded to the
plaintiff and the members of the plaintiff’s family.
(2) PAYMENTS TO STATE FOR MEDICAL QUAL-
ITY ASSURANCE ACTIVITIES.—
(A) IN GENERAL.—Any punitive damages
imposed under a medical malpractice liability
action shall be paid to the State in which the
action is brought.
(B) ACTIVITIES
DESCRIBED.—A State
shall use amount paid pursuant to subpara-
graph (A) to carry out activities to assure the
safety and quality of health care services pro-
125
vided in the State, including (but not limited
to)—
(i) licensing or certifying health care
professionals and health care providers in
the State;
(ii) operating alternative dispute reso-
lution systems;
(iii) carrying out public education pro-
grams relating to medical malpractice and
the availability of alternative dispute reso-
lution systems in the State; and
(iv) carrying out programs to reduce
malpractice-related costs for retired provid-
ers or other providers volunteering to pro-
vide services in medically underserved
areas.
(C) MAINTENANCE OF EFFORT.—A State
shall use any amounts paid pursuant to sub-
paragraph (A) to supplement and not to replace
amounts spent by the State for the activities
described in subparagraph (B).
(c) PERIODIC PAYMENTS FOR FUTURE LOSSES.—If
more than $100,000 in damages for expenses to be in-
curred in the future is awarded to the plaintiff in a medi-
cal malpractice liability action, the defendant shall provide
126
for payment for such damages on a periodic basis deter-
mined appropriate by the court (based upon projections
of when such expenses are likely to be incurred), unless
the court determines that it is not in the plaintiff’s best
interests to receive payments for such damages on such
a periodic basis.
(d) MANDATORY OFFSETS FOR DAMAGES PAID BY
A COLLATERAL SOURCE.—
(1) IN GENERAL.—The total amount of dam-
ages received by a plaintiff in a medical malpractice
liability action shall be reduced (in accordance with
paragraph (2)) 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—
(A) Federal or State disability or sickness
programs;
(B) Federal, State, or private health insur-
ance programs;
(C) private disability insurance programs;
(D) employer wage continuation programs;
and
(E) any other source of payment intended
to compensate the plaintiff for such injury.
127
(2) AMOUNT OF REDUCTION.—The amount by
which an award of damages to a plaintiff shall be re-
duced under paragraph (1) shall be—
(A) the total amount of any payments
(other than such award) that have been made
or that will be made to the plaintiff to com-
pensate the plaintiff for the injury that was the
subject of the action; minus
(B) the amount paid by the plaintiff (or by
the spouse, parent, or legal guardian of the
plaintiff) to secure the payments described in
subparagraph (A).
SEC. 416. TREATMENT OF ATTORNEY’S FEES AND OTHER
COSTS.
(a) LIMITATION
ON ATTORNEY’S FEES.—If the
plaintiff in a medical malpractice liability action has en-
tered into an agreement with the plaintiff’s attorney to
pay the attorney’s fees on a contingency basis, the attor-
ney’s fees for the action may not exceed—
(1) 25 percent of the first $150,000 of any
award or settlement paid to the plaintiff; or
(2) 15 percent of any additional amounts paid
to the plaintiff.
(b) AWARDING
ATTORNEY’S
FEES
AND
OTHER
COSTS TO WINNING PARTY.—
128
(1) IN GENERAL.—If the court in a medical
malpractice liability action upholds a ruling of the
alternative dispute resolution system with respect to
whether or not a health care professional or health
care provider committed malpractice or with respect
to the amount of damages awarded, the court shall
require the party that contested the ruling to pay to
the opposing party the costs incurred by the oppos-
ing party under the action, including attorney’s fees,
fees paid to expert witnesses, and other litigation ex-
penses (but not including court costs, filing fees, or
other expenses paid directly by the party to the
court, or any fees or costs associated with the reso-
lution of the claim that is the subject of the action
under the alternative dispute resolution system).
(2) PERMITTING COURT TO WAIVE OR MODIFY
IMPOSITION OF COSTS.—A court may issue a written
order waiving or modifying the application of para-
graph (1) to a party if the court finds that the appli-
cation of such paragraph to the party would con-
stitute an undue hardship, or if the medical mal-
practice liability action raised a novel issue of law.
The order shall specify the grounds for the court’s
decision to waive or modify the application of such
paragraph.
129
SEC. 417. 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. 418. UNIFORM STANDARD FOR DETERMINING NEG-
LIGENCE.
Except as provided in subsection (b), a defendant in
a medical malpractice liability action may not be found
to have acted negligently unless the defendant’s conduct
at the time of providing the health care services that are
the subject of the action was not reasonable.
SEC. 419. APPLICATION OF MEDICAL PRACTICE GUIDE-
LINES IN MALPRACTICE LIABILITY ACTIONS.
(a) USE
OF GUIDELINES
AS AFFIRMATIVE DE-
FENSE.—In any medical malpractice liability action, it
shall be a complete defense to any allegation that the de-
fendant was negligent that, in the provision of (or the fail-
ure to provide) the services that are the subject of the
action, the defendant followed the appropriate practice
guideline.
(b) RESTRICTION ON GUIDELINES CONSIDERED AP-
PROPRIATE.—
130
(1) 
GUIDELINES
SANCTIONED
BY
SEC-
RETARY.—For purposes of subsection (a), a practice
guideline may not be considered appropriate with re-
spect to actions brought during a year unless the
Secretary has sanctioned the use of the guideline for
purposes of an affirmative defense to medical mal-
practice liability actions brought during the year in
accordance with paragraph (2) or (3).
(2) PROCESS FOR SANCTIONING GUIDELINES.—
Not less frequently than October 1 of each year (be-
ginning with 1995), the Secretary, shall review the
practice guidelines and standards developed by the
Administrator for Health Care Policy and Research
pursuant to section 1142 of the Social Security Act,
and shall sanction those guidelines which the Sec-
retary considers appropriate for purposes of an af-
firmative defense to medical malpractice liability ac-
tions brought during the next calendar year as ap-
propriate practice guidelines for purposes of sub-
section (a).
(3) USE OF STATE GUIDELINES.—Upon the ap-
plication of a State, the Secretary may sanction
practice guidelines selected by the State for purposes
of an affirmative defense to medical malpractice li-
ability actions brought in the State as appropriate
131
practice guidelines for purposes of subsection (a) if
the guidelines meet such requirements as the Sec-
retary may impose.
(c) PROHIBITING APPLICATION OF FAILURE TO FOL-
LOW GUIDELINES AS PRIMA FACIE EVIDENCE OF NEG-
LIGENCE.—No plaintiff in a medical malpractice liability
action may be deemed to have presented prima facie evi-
dence that a defendant was negligent solely by showing
that the defendant failed to follow the appropriate practice
guideline.
SEC. 420. 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
132
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.
(c) EFFECTIVE DATE.—This section shall apply to
claims accruing or actions brought on or after the expira-
tion of the 2-year period that begins on the date of the
enactment of this Act.
SEC. 421. PREEMPTION.
(a) IN GENERAL.—This part supersedes any State
law only to the extent that State law—
(1) permits the recovery of a greater amount of
damages by a plaintiff;
133
(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 420(a) 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
134
of a foreign nation on the ground of inconvenient
forum.
PART 3—REQUIREMENTS FOR STATE ALTERNATIVE
DISPUTE RESOLUTION SYSTEMS (ADR)
SEC. 431. BASIC REQUIREMENTS FOR ADR.
(a) IN GENERAL.—A State’s alternative dispute reso-
lution system meets the requirements of this section if the
system—
(1) applies to all medical malpractice liability
claims under the jurisdiction of the State courts;
(2) requires that a written opinion resolving the
dispute be issued that contains findings of fact relat-
ing to the dispute;
(3) requires individuals who hear and resolve
claims under the system to meet such qualifications
as the State may require (in accordance with regula-
tions of the Secretary);
(4) is approved by the State or by local govern-
ments in the State;
(5) with respect to a State system that consists
of multiple dispute resolution procedures—
(A) permits the parties to a dispute to se-
lect the procedure to be used for the resolution
of the dispute under the system, and
135
(B) if the parties do not agree on the pro-
cedure to be used for the resolution of the dis-
pute, assigns a particular procedure to the par-
ties;
(6) provides for the transmittal to the State
agency responsible for monitoring or disciplining
health care professionals and health care providers
of any findings made under the system that such a
professional or provider committed malpractice, un-
less, during the 90-day period beginning on the date
the system resolves the claim against the profes-
sional or provider, the professional or provider
brings a medical malpractice liability action contest-
ing the decision made under the system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research
of information on disputes resolved under the sys-
tem, in a manner that assures that the identity of
the parties to a dispute shall not be revealed.
(b) APPLICATION
OF
MALPRACTICE
LIABILITY
STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—
The provisions of part 2 shall apply with respect to claims
brought under a State’s alternative dispute resolution sys-
tem in the same manner as such provisions apply with
136
respect to medical malpractice liability actions brought in
the State.
SEC. 432. CERTIFICATION OF STATE SYSTEMS.
(a) IN GENERAL.—Not later than October 1 of each
year (beginning with 1995), the Secretary, in consultation
with the Attorney General, shall determine whether a
State’s alternative dispute resolution system meets the re-
quirements of this part for the following calendar year.
(b) BASIS FOR CERTIFICATION.—The Secretary shall
certify a State’s alternative dispute resolution system
under this subsection if the Secretary determines under
subsection (a) that the system meets the requirements of
section 431.
SEC. 433. REPORTS ON IMPLEMENTATION AND EFFECTIVE-
NESS OF ALTERNATIVE DISPUTE RESOLU-
TION SYSTEMS.
(a) IN GENERAL.—Not later than 5 years after the
date of the enactment of this Act, the Secretary shall pre-
pare and submit to Congress a report describing and eval-
uating State alternative dispute resolution systems oper-
ated pursuant to this part.
(b) CONTENTS OF REPORT.—The Secretary shall in-
clude in the report prepared and submitted under sub-
section (a)—
(1) information on—
163
(i) the Secretary shall specify the period
during which such hospital did not carry out
fully the terms of such agreement, and
(ii) such waiver shall have no legal effect
with respect to such period.
(6) ISSUANCE OF GUIDELINES.—Not later than
6 months after the date of the enactment of this
Act, the Secretary shall establish the guidelines for
applications under paragraph (2).
(c) DELEGATION OF AUTHORITY.—The Secretary is
authorized to delegate the authority under this section
with respect to a hospital in a State to the State multicare
program established under title I. To the extent the Sec-
retary delegates authority to a State under the previous
sentence with respect to hospitals in a State, any subse-
quent in this title to the ‘‘Secretary’’ is deemed a reference
to the State multicare program.
SEC. 703. REPORTS.
(a) REPORTS TO THE SECRETARY.—Each hospital
with respect to which a waiver is issued under section
702(b)(4) shall submit to the Secretary—
(1) during the period such waiver is in effect,
an annual report at such time, in such form, and
containing such information as the Secretary may
require, including a detailed description of the imple-