I
103D CONGRESS
2D SESSION
H. R. 4791
To establish Federal standards for the resolution of health care malpractice
claims, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 19, 1994
Mr. GRAMS (for himself, Mr. GINGRICH, Mr. ARMEY, Mr. DELAY, Mr. SOLO-
MON, Mr. STENHOLM, Mr. HASTERT, Mr. DEAL, Mr. STEARNS, Mr. TAL-
ENT, Mr. DREIER, Mr. SAXTON, Mr. KNOLLENBERG, Mr. INHOFE, Mr.
ZIMMER, Mr. CALVERT, Mr. STUMP, Mr. TORKILDSEN, Mr. HEFLEY, Mr.
DOOLITTLE, Mr. BAKER of California, Mr. HORN, Mr. KING, Mr. LEWIS
of Florida, Mrs. FOWLER, Mr. HANCOCK, Mr. LINDER, Mr. BARCIA of
Michigan, and Mr. SMITH of Oregon), introduced the following bill; which
was referred to the Committee on the Judiciary
A BILL
To establish Federal standards for the resolution of health
care malpractice claims, 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; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medical Malpractice Fairness Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—GENERAL PROVISIONS
Sec. 101. Findings.
Sec. 102. Definitions.
Sec. 103. Period of applicability.
TITLE II—FEDERAL REFORM OF HEALTH CARE MALPRACTICE
Sec. 201. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 202. Liability of multiple defendants several only.
Sec. 203. Treatment of noneconomic and punitive damages.
Sec. 204. General restrictions on payment of damages.
Sec. 205. Uniform statute of limitations.
Sec. 206. Treatment of attorney’s fees and other costs.
Sec. 207. Qualifications for expert witnesses.
Sec. 208. Preemption; effect on sovereign immunity.
TITLE III—REQUIREMENTS FOR ADR
Sec. 301. Basic requirements for State alternative dispute resolution systems.
Sec. 302. Certification of State systems; applicability of alternative Federal sys-
tem.
TITLE I—GENERAL PROVISIONS
SEC. 101. FINDINGS.
Congress finds that—
(1) the health care and insurance industries are
industries affecting interstate commerce and the
health care malpractice litigation systems existing
throughout the United States affect interstate com-
merce by contributing to the high cost of health care
and premiums for malpractice insurance purchased
by health care providers; and
(2) the Federal Government has a major inter-
est in health care as a direct provider of health care
and as a source of payment for health care, and has
a demonstrated interest in assessing the quality of
(ii) the drug or device is generally rec-
ognized as safe and effective under regula-
tions issued by the Secretary of Health
and Human Services under section 201(p)
of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321(p)).
(B) EXCEPTION
IN
CASE
OF
MISREPRE-
SENTATION OR FRAUD.—Notwithstanding sub-
paragraph (A), the term ‘‘medical product’’
shall not include any product described in such
subparagraph if it is shown that the product is
approved by the Food and Drug Administration
for marketing as a result of withheld informa-
tion, misrepresentation, or an illegal payment
by the manufacturer of the product.
(10) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means losses for physical
and emotional pain, suffering, inconvenience, phys-
ical impairment, mental anguish, disfigurement, loss
of enjoyment of life, and other nonpecuniary losses,
but does not include punitive or exemplary damages.
(11) PUNITIVE
DAMAGES; EXEMPLARY
DAM-
AGES.—The terms ‘‘punitive damages’’ and ‘‘exem-
plary damages’’ mean compensation, in addition to
compensation for actual harm suffered, that is
awarded for the purpose of punishing a person for
conduct deemed to be malicious, wanton, willful, or
excessively reckless.
(12) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(13) STATE.—Except as otherwise provided, the
term ‘‘State’’ means each of the several States, the
District of Columbia, Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, and the Northern
Mariana Islands.
SEC. 103. PERIOD OF APPLICABILITY.
The provisions of this Act shall apply to claims initi-
ated during the 5-year period beginning upon the expira-
tion of the 1-year period that begins on the date of the
enactment of this Act.
TITLE II—FEDERAL REFORM OF
HEALTH CARE MALPRACTICE
SEC. 201. REQUIREMENT FOR INITIAL RESOLUTION OF AC-
TION THROUGH ALTERNATIVE DISPUTE RES-
OLUTION.
(a) IN GENERAL.—
(1) STATE CASES.—A health care malpractice
action may not be brought in any State court during
a calendar year unless the health care malpractice
claim that is the subject of the action has been ini-
tially resolved under an alternative dispute resolu-
tion system certified for the year by the Secretary
under section 302(a), or, in the case of a State in
which such a system is not in effect for the year,
under the alternative Federal system established
under section 302(b).
(2) FEDERAL
DIVERSITY
ACTIONS.—A health
care malpractice action may not be brought in any
Federal court under section 1332 of title 28, United
States Code, during a calendar year unless the
health care malpractice claim that is the subject of
the action has been initially resolved under the alter-
native dispute resolution system referred to in para-
graph (1) that applied in the State whose law ap-
plies in such action.
(3) CLAIMS AGAINST UNITED STATES.—
(A) ESTABLISHMENT
OF
PROCESS
FOR
CLAIMS.—The Attorney General shall establish
an alternative dispute resolution process for the
resolution of tort claims consisting of health
care malpractice claims brought against the
United States under chapter 171 of title 28,
United States Code. Under such process, the
resolution of a claim shall occur after the com-
pletion of the administrative claim process ap-
plicable to the claim under section 2675 of such
title.
(B) REQUIREMENT FOR INITIAL RESOLU-
TION
UNDER
PROCESS.—A health care mal-
practice action based on a health care mal-
practice claim described in subparagraph (A)
may not be brought in any Federal court unless
the claim has been initially resolved under the
alternative dispute resolution process estab-
lished by the Attorney General under such sub-
paragraph.
(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—
(A) the ADR reaches a decision on wheth-
er the defendant is liable to the plaintiff for
damages; and
(B) if the ADR determines that the de-
fendant is liable, the ADR reaches a decision on
the amount of damages assessed against the de-
fendant.
(c) PROCEDURES FOR FILING ACTIONS.—
(1) NOTICE
OF
INTENT
TO
CONTEST
DECI-
SION.—Not later than 60 days after a decision is is-
sued with respect to a health care malpractice claim
under an alternative dispute resolution system, each
party affected by the decision shall submit a sealed
statement to a court of competent jurisdiction indi-
cating whether or not the party intends to contest
the decision.
(2) DEADLINE FOR FILING ACTION.—A health
care malpractice action may not be brought by a
party unless—
(A) the party has filed the notice of intent
required by paragraph (1); and
(B) the party files the action in a court of
competent jurisdiction not later than 90 days
after the decision resolving the health care mal-
practice claim that is the subject of the action
is issued under the applicable alternative dis-
pute resolution system.
(3) COURT
OF
COMPETENT
JURISDICTION.—
For purposes of this subsection, the term ‘‘court of
competent jurisdiction’’ means—
(A) with respect to actions filed in a State
court, the appropriate State trial court; and
(B) with respect to actions filed in a Fed-
eral court, the appropriate United States dis-
trict court.
(d) LEGAL EFFECT OF UNCONTESTED ADR DECI-
SION.—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 verdict of a health care malpractice action
adjudicated in a State or Federal trial court. The previous
sentence shall not apply to a decision that is contested
by a party affected by the decision pursuant to subsection
(c)(1).
SEC. 202. LIABILITY OF MULTIPLE DEFENDANTS SEVERAL
ONLY.
The liability of each defendant in a health care mal-
practice action shall be several only and shall not be joint,
and each defendant’s fault shall be determined on the
basis of a percentage allocated to the defendant in direct
proportion to the defendant’s percentage of responsibility
(as determined by the trier of fact).
SEC. 203. TREATMENT OF NONECONOMIC AND PUNITIVE
DAMAGES.
(a) LIMITATION
ON AMOUNT
OF NONECONOMIC
DAMAGES.—The total amount of noneconomic damages
that may be awarded to a claimant and the members of
the claimant’s family for losses resulting from the injury
which is the subject of a health care malpractice 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) PROHIBITING PUNITIVE DAMAGES EXCEPT
IN CASES OF GROSS OR CRIMINAL NEGLIGENCE.—No
punitive or exemplary damages may be awarded
against any individual with respect to a health care
malpractice claim unless the claimant establishes by
clear and convincing evidence that the harm suffered
by the claimant was the result of conduct manifest-
ing deliberate disregard for the health and safety of
the claimant or (in the case of a claim arising from
the use of a medical product) to the health and safe-
ty of those persons who might be harmed by the
medical product.
(2) 
LIMITATION
CONCERNING
CERTAIN
AWARDS.—In the case of a health care malpractice
claim in which the plaintiff alleges an injury result-
ing from the use of a medical product, no punitive
or exemplary damages may be awarded against the
manufacturer or seller of such product.
(3) PAYMENTS TO STATE FOR MEDICAL QUAL-
ITY ASSURANCE ACTIVITIES.—
(A) IN GENERAL.—Any punitive damages
awarded with respect to a health care mal-
practice claim shall be paid to the State in
which the action is brought or, in a case
brought in Federal court, in the State in which
the health care services that caused the injury
that is the subject of the claim were provided.
(B) ACTIVITIES
DESCRIBED.—A State
shall use amounts paid pursuant to subpara-
graph (A) to carry out activities to assure the
safety and quality of health care services pro-
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 health care malpractice
and the availability of alternative dispute
resolution 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).
SEC. 204. GENERAL RESTRICTIONS ON PAYMENT OF DAM-
AGES.
(a) REDUCTIONS FOR CONTRIBUTIONS FROM COL-
LATERAL SOURCES.—
(1) IN GENERAL.—The total amount of dam-
ages received by an individual shall be reduced by
any other payment which has been made or which
will be made to such individual to compensate such
individual for an injury, including payments 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 such individual for such injury.
(2) ADMISSION AS EVIDENCE.—The availability
of a payment described in paragraph (1) shall be
made known to the trier of fact.
(b) PERIODIC PAYMENT OF DAMAGES FOR FUTURE
EXPENSES.—No individual may be required to pay more
than $100,000 in a single payment in damages for ex-
penses to be incurred in the future, but shall be permitted
to make such payments on a periodic basis. The periods
for such payments shall be determined by the court, based
on projections of when expenses are likely to be incurred.
SEC. 205. UNIFORM STATUTE OF LIMITATIONS.
(a) IN GENERAL.—Except as provided in subsection
(b), no health care malpractice claim may be initiated
after the expiration of the 2-year period that begins on
the date the alleged injury should reasonably have been
discovered, or the expiration of the 4-year period that be-
gins on the date the alleged injury occurred, whichever is
later.
(b) EXCEPTION FOR MINORS UNDER AGE 6.—In the
case of an alleged injury suffered by a minor who has not
attained 6 years of age, no health care malpractice claim
may be initiated after the expiration of the 2-year period
that begins on the date the alleged injury should reason-
ably have been discovered, but in no event later than 4
years after the date the alleged injury occurred or the date
on which the minor attains 8 years of age, whichever is
later.
SEC. 206. TREATMENT OF ATTORNEY’S FEES AND OTHER
COSTS.
(a) LIMITATION ON CONTINGENCY FEES.—An attor-
ney shall not contract for or collect a contingency fee for
representing a claimant in the resolution of a health care
malpractice claim in excess of the following:
(1) 50 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 $100,000 (or portion
thereof) of the amount recovered by the claimant.
(4) 10 percent of any additional amounts recov-
ered by the claimant in excess of $200,000.
(b) REQUIRING PARTY CONTESTING ADR RULING
TO PAY ATTORNEY’S FEES AND OTHER COSTS.—
(1) IN GENERAL.—The court in a health care
malpractice action shall require the party that (pur-
suant to section 201(c)(1)) contested the ruling of
the alternative dispute resolution system with re-
spect to the health care malpractice claim that is the
subject of the action to pay to the opposing party
the costs incurred by the opposing party under the
action, including attorney’s fees, fees paid to expert
witnesses, and other litigation expenses (but not in-
cluding court costs, filing fees, or other expenses
paid directly by the party to the court, or any fees
or costs associated with the resolution of the claim
under the alternative dispute resolution system), but
only if—
(A) in the case of an action in which the
party that contested the ruling is the claimant,
the amount of damages awarded to the party
under the action does not exceed the amount of
damages awarded to the party under the ADR
system by at least 15 percent; and
(B) in the case of an action in which the
party that contested the ruling is the defendant,
the amount of damages assessed against the
party under the action is not at least 15 per-
cent less than the amount of damages assessed
under the ADR system.
(2) EXCEPTIONS.—Paragraph (1) shall not
apply if—
(A) the party contesting the ruling made
under the previous alternative dispute resolu-
tion system shows that—
(i) the ruling was procured by corrup-
tion, 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
(iv) the ruling was based on an error
of law;
(B) the party contesting the ruling made
under the alternative dispute resolution system
presents new evidence before the trier of fact
that was not available for presentation under
the ADR system;
(C) the health care malpractice action
raised a novel issue of law; or
(D) the court finds that the application of
such paragraph to a party would constitute an
undue hardship, and issues an order waiving or
modifying the application of such paragraph
that specifies the grounds for the court’s deci-
sion.
(3) 
REQUIREMENT
FOR
PERFORMANCE
BOND.—The court in a health care malpractice ac-
tion shall require the party that (pursuant to section
201(c)(1)) contested the ruling of the alternative
dispute resolution system with respect to the health
care malpractice claim that is the subject of the ac-
tion to post a performance bond (in such amount
and consisting of such funds and assets as the court
determines to be appropriate), except that the court
may waive the application of such requirement to a
party if the court determines that the posting of
such a bond is not necessary to ensure that the
party shall meet the requirements of this subsection
to pay the opposing party the costs incurred by the
opposing party under the action.
(4) LIMIT ON ATTORNEY’S FEES PAID.—Attor-
neys’ fees that are required to be paid under para-
graph (1) by the contesting party shall not exceed
the amount of the attorneys’ fees incurred by the
contesting party in the action. If the attorneys’ fees
of the contesting party are based on a contingency
fee agreement, the amount of attorneys’ fees for
purposes of the preceding sentence shall not exceed
the reasonable value of those services.
(5) RECORDS.—In order to receive attorneys’
fees under paragraph (1), counsel of record in the
health care malpractice action involved shall main-
tain accurate, complete records of hours worked on
the action, regardless of the fee arrangement with
the client involved.
(c) CONTINGENCY FEE DEFINED.—As used in this
section, the term ‘‘contingency fee’’ means any fee for pro-
fessional services which is, in whole or in part, contingent
upon the recovery of any amount of damages, whether
through judgment or settlement.
SEC. 207. QUALIFICATIONS FOR EXPERT WITNESSES.
(a) MEDICAL EXPERTISE.—No individual may testify
as an expert witness with respect to a health care mal-
practice claim unless the individual has expertise in the
relevant issues of medical practice involved in the claim.
(b) PAYMENT OF CONTINGENCY FEE PROHIBITED.—
The payment made to an expert witness for testimony with
respect to a health care malpractice claim may not vary
on the basis of the disposition of the claim.
SEC. 208. PREEMPTION; EFFECT ON SOVEREIGN IMMUNITY.
(a) PREEMPTION.—The standards established by this
title shall supersede any State law only to the extent that
State law establishes higher payment limits, permits the
recovery of a greater amount of damages or the awarding
of a greater amount of attorney’s fees, or establishes a
longer period during which a health care malpractice claim
may be initiated.
(b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in this Act shall be con-
strued 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.
TITLE III—REQUIREMENTS FOR
ADR
SEC. 301. BASIC REQUIREMENTS FOR STATE ALTERNATIVE
DISPUTE RESOLUTION SYSTEMS.
(a) IN GENERAL.—A State’s alternative dispute reso-
lution system meets the requirements of this section if the
system—
(1) applies to all health care malpractice claims
under the jurisdiction of the courts of that State;
(2) requires that a written opinion resolving the
dispute be issued not later than 6 months after the
date by which each party against whom the claim is
filed has received notice of the claim (other than in
exceptional cases for which a longer period is re-
quired for the issuance of such an opinion), and that
the opinion contain—
(A) findings of fact relating to the dispute,
and
(B) a description of the costs incurred in
resolving the dispute under the system (includ-
ing any fees paid to the individuals hearing and
resolving the claim), together with an appro-
priate assessment of the costs against any of
the parties;
(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
(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 an action contesting 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 STANDARDS TO ALTERNATIVE
DISPUTE RESOLUTION.—The provisions of title II shall
apply with respect to claims brought under a State alter-
native dispute resolution system or the alternative Federal
system in the same manner as such provisions apply with
respect to health care malpractice actions brought in the
State.
SEC. 302. CERTIFICATION OF STATE SYSTEMS; APPLICABIL-
ITY OF ALTERNATIVE FEDERAL SYSTEM.
(a) CERTIFICATION.—
(1) IN
GENERAL.—Not later than 9 months
after the date of the enactment of this Act and peri-
odically thereafter, the Secretary, in consultation
with the Attorney General, shall determine whether
a State’s alternative dispute resolution system meets
the requirements of this part for the following cal-
endar year.
(2) BASIS FOR CERTIFICATION.—The Secretary
shall certify a State’s alternative dispute resolution
system under this subsection for a calendar year if
the Secretary determines under paragraph (1) that
the system meets the requirements of section 301.
(b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS-
TEM.—
(1) ESTABLISHMENT
AND
APPLICABILITY.—
Not later than 9 months after the date of the enact-
ment of this Act, the Secretary, in consultation with
the Attorney General, shall establish by rule an al-
ternative Federal ADR system for the resolution of
health care malpractice claims during a calendar
year in States that do not have in effect an alter-
native dispute resolution system certified under sub-
section (a) for the year.
(2) REQUIREMENTS FOR SYSTEM.—Under the
alternative Federal ADR system established under
paragraph (1)—
(A) paragraphs (1), (2), (6), and (7) of
section 301(a) shall apply to claims brought
under the system;
(B) if the system provides for the resolu-
tion of claims through arbitration, the claims
brought under the system shall be heard and
resolved by arbitrators appointed by the Sec-
retary in consultation with the Attorney Gen-
eral; and
(C) with respect to a State in which the
system is in effect, the Secretary may (at the
State’s request) modify the system to take into
account the existence of dispute resolution pro-
cedures in the State that affect the resolution
of health care malpractice claims.
(3) TREATMENT
OF
STATES
WITH
ALTER-
NATIVE SYSTEM IN EFFECT.—If the alternative Fed-
eral ADR system established under this subsection is
applied with respect to a State for a calendar year—
(A) the State shall reimburse the United
States (at such time and in such manner as the
Secretary may require) for the costs incurred
by the United States during the year as a result
of the application of the system with respect to
the State; and
(B) notwithstanding any other provision of
law, no funds may be paid to the State (or to
any unit of local government in the State) or to
any entity in the State pursuant to the Public
Health Service Act.
Æ
HR 4791 IH——2