(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 liability 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. STATUTE OF LIMITATIONS.
(a) GENERAL STATUTE OF LIMITATIONS.—No health
care liability claim or action may be commenced later than
one year after the plaintiff discovers, or through the use
of reasonable diligence should have discovered, the injury.
In no event shall a health care liability claim or action
be permitted to be filed later than 3 years after the date
of the injury. Such time limitation may be tolled upon
proof of the presence of a foreign object, exclusive of infec-
tious agents, which has no therapeutic or diagnostic pur-
pose or effect in the person of the injured plaintiff.
(b) MINORS UNDER THE AGE OF 6.—In the case of
an alleged injury sustained by a minor before the age of
6, no health care liability claim or action may be com-
menced by or on behalf of the minor later than (1) 3 years
from the date of injury or (2) the date on which the minor
attains the age of 8, whichever provides a longer period.
Such limitation may be tolled upon proof of the presence
of a foreign object, exclusive of infectious agents, which
has no therapeutic or diagnostic purpose or effect in the
person of the injured plaintiff.
SEC. 203. 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 health care liability action
in excess of the following:
(1) 25 percent of the first $100,000 (or portion
thereof) recovered by the claimant.
(2) 20 percent of the next $150,000 (or portion
thereof) recovered by the claimant.
(3) 15 percent of the next $250,000 (or portion
thereof) recovered by the claimant.
(4) 10 percent of any amount in excess of
$500,000 recovered by the claimant.
(b) REQUIRING PARTY CONTESTING ADR RULING
TO PAY ATTORNEY’S FEES AND OTHER COSTS.—
(1) IN GENERAL.—The court in a health care
liability action shall require the party that (pursuant
to section 201(c)(1)) contested the ruling of the al-
ternative dispute resolution system with respect to
the health care liability claim that is the subject of
the action to pay to the opposing party the costs in-
curred by the opposing party under the action, in-
cluding attorney’s fees, fees paid to expert witnesses,
and other litigation expenses (but not including
court costs, filing fees, or other expenses paid di-
rectly 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 10 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 10 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 liability 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 liability action
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 liability claim that is the subject of the action
to post a performance bond (in such amount and
consisting of such funds and assets as the court de-
termines 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 ATTORNEYS’ 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 liability action involved shall maintain
accurate, complete records of hours worked on the
action, regardless of the fee arrangement with the
client involved.
(c) CALCULATION OF PERIODIC PAYMENTS.—If peri-
odic payments are awarded to the claimant pursuant to
section 204(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).
(d) EFFECT OF FAILURE TO COMPLY.—Failure to
comply with this section by an attorney at law shall be
grounds for professional discipline by the appropriate
State agency responsible for the conduct of disciplinary
actions against attorneys-at-law.
(e) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘contingency fee’’ means any fee
for professional legal services which is in whole or in
part contingent upon the recovery of any amount of
damages, whether through judgment or settlement;
and
(2) the term ‘‘recovered’’ means the net sum re-
covered after deducting any disbursements or costs
incurred in connection with prosecution or settle-
ment of the claim, except that costs of medical care
incurred by the claimant and the attorney’s office
overhead costs or charges shall not be deductible dis-
bursements under this paragraph.
SEC. 204. CALCULATION AND PAYMENT OF DAMAGES.
(a) LIMITATION ON NONECONOMIC DAMAGES.—The
total amount of noneconomic damages that may be award-
ed to a claimant for losses resulting from the injury which
is the subject of a health care liability action may not ex-
ceed $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) 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 health care
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 appropriate by the court
(based upon projections of when such expenses are likely
to be incurred).
(c) MANDATORY OFFSETS FOR DAMAGES PAID BY A
COLLATERAL SOURCE.—The total amount of damages re-
ceived by a claimant in a health care liability action shall
be reduced by any other payment that has been or will
be made to the individual to compensate the claimant 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 claimant for such injury.
(d) TREATMENT OF PUNITIVE DAMAGES.—
(1) IN
GENERAL.—Punitive damages may, if
otherwise permitted by applicable law, be awarded in
any civil actions subject to this Act only if it is prov-
en by clear and convincing evidence that the defend-
ant intended to injure the claimant for a reason un-
related to the provision of health care services, or
that the defendant understood the claimant was sub-
stantially certain to suffer unnecessary injury, yet
the defendant deliberately failed to avoid such in-
jury. Punitive damages may not be awarded against
a defendant, however, with respect to any claim
where no judgment for compensatory damages (in-
cluding nominal damages) is rendered against such
defendant.
(2) LIMITATION CONCERNING CERTAIN MEDI-
CAL PRODUCTS.—
(A) IN GENERAL.—Punitive damages shall
not be awarded pursuant to this section against
a manufacturer or distributor of a medical
product which caused the claimant’s harm
where—
(i) such medical product was subject
to premarket approval of review by the
Food and Drug Administration under sec-
tion 505, 506, 510, 515, or 520 of the
Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355, 356, 360, 360e, or 360j) or
section 351 of the Public Health Service
Act (42 U.S.C. 262) with respect to the
safety of the formulation or performance of
the aspect of such medical product which
caused the claimant’s harm or the ade-
quacy of the packaging or labeling of such
medical product, and, where required, such
medical product was marketed in conform-
ity with regulations of the Food and Drug
Administration; or
(ii) the medical product is generally
recognized as safe and effective pursuant
to conditions established by the Food and
Drug Administration and applicable regu-
lations, including without limitations those
related to packaging and labeling.
(B) EXCEPTIONS.—The provisions of sub-
paragraph (A) shall not apply in any case in
which—
(i) the defendant, before or after the
grant of permission to market such medi-
cal product, knowingly withheld from or
misrepresented to the Food and Drug Ad-
ministration required information that is
material and relevant to the performance
of such medical product and is casually re-
lated to the harm which the claimant alleg-
edly suffered; or
(ii) the defendant made an illegal pay-
ment to an official of the Food and Drug
Administration for the purpose of either
securing or maintaining approval of such
medical product.
(3) REQUIREMENTS FOR PLEADING OF PUNI-
TIVE DAMAGES.—No demand for punitive damages
shall be included in a claim or action for health care
liability as initially filed. A court may allow a claim-
ant to file an amended pleading for punitive dam-
ages only upon motion by a claimant and after a
finding by a court upon review of supporting and op-
posing affidavits or after a hearing, that after weigh-
ing the evidence the claimant has established by a
substantial probability that the claimant will prevail
on the claim for punitive damages. The court shall
not grant a motion allowing the filing of an amended
pleading that includes a claim for punitive damages
if the motion for such an order is not filed within
2 years after the complaint or initial pleading is filed
or not less than 9 months before the date the matter
is first set for trial, whichever is earlier.
(4) SEPARATE PROCEEDING.—At the request of
any defendant in a health care liability action, the
trier of fact shall consider in a separate proceeding
(1) whether punitive damages are to be awarded and
the amount of such award, or (2) the amount of pu-
nitive damages following a determination of punitive
liability. If a separate proceeding is requested, evi-
dence relevant only to the claim of punitive damages,
as determined by applicable State law, shall be ad-
missible in any proceeding to determine whether
compensatory damages are to be awarded.
(5) DETERMINING AMOUNT OF PUNITIVE DAM-
AGES.—
(A) FACTORS CONSIDERED.—In determin-
ing the amount of punitive damages, the trier
of fact shall consider only—
(i) the severity of the harm caused by
the conduct of the defendant;
(ii) the duration of the conduct or any
concealment of it by the defendant;
(iii) the profitability of the conduct to
the defendant;
(iv) the number of products sold or
medical procedures rendered for compensa-
tion, as the case may be, by the defendant
of the kind causing the harm complained
of by the claimant;
(v) awards of punitive or exemplary
damages to persons similarly situated to
the claimant;
(vi) prospective awards of compen-
satory damages to persons similarly situ-
ated to the claimant;
(vii) any criminal imposed on the de-
fendant as a result of the conduct com-
plained of by the claimant; and
(viii) the amount of any civil fines as-
sessed against the defendant as a result of
the conduct complained of by the claimant.
(B) GENERAL LIMITATION.—In no event
shall the amount of punitive damages awarded
exceed 2 times the amount of compensatory
damages awarded or $250,000 whichever is
greater. The jury shall not be informed of this
limitation.
SEC. 205. JOINT AND SEVERAL LIABILITY.
A defendant may be held severally but not jointly lia-
ble in a health care liability action. A person found liable
for damages in any such action may be found liable, if
at all, only for those damages directly attributable to the
person’s proportionate share of fault or responsibility for
the injury, and may not be found liable for damages at-
tributable to the proportionate share of fault or respon-
sibility of any other person (without regard to whether
that person is a party to the action) for the injury, includ-
ing any person bringing the action.
SEC. 206. INJUNCTIVE RELIEF.
Whenever any person has engaged or is about to en-
gage in any conduct in violation of this subtitle, the appro-
priate court may, upon application of an interested party,
issue an injunction or other appropriate order restraining
such conduct.
SEC. 207. PERMITTING STATE PROFESSIONAL SOCIETIES
TO PARTICIPATE IN DISCIPLINARY ACTIVI-
TIES.
(a) ROLE OF PROFESSIONAL SOCIETIES.—Notwith-
standing any other provision of State or Federal law, a
State agency responsible for the conduct of disciplinary
actions for a type of health care practitioner may enter
into agreements with State or county professional societies
of such type of health care practitioner to permit such so-
cieties to participate in the licensing of such health care
practitioner, and to review any health care malpractice ac-
tion, health care malpractice claim or allegation, or other
information concerning the practice patterns of any such
health care practitioner. Any such agreement shall comply
with subsection (b).
(b) REQUIREMENTS OF AGREEMENTS.—Any agree-
ment entered into under subsection (a) for licensing activi-
ties or the review of any health care malpractice action,
health care malpractice claim or allegation, or other infor-
mation concerning the practice patterns of a health care
practitioner shall provide that—
(1) the health care professional society conducts
such activities or review as expeditiously as possible;
(2) after the completion of such review, such so-
ciety shall report its findings to the State agency
with which it entered into such agreement;
(3) the conduct of such activities or review and
the reporting of such findings be conducted in a
manner which assures the preservation of confiden-
tiality of health care information and of the review
process; and
(4) no individual affiliated with such society is
liable for any damages or injury directly caused by
the individual’s actions in conducting such activities
or review.
(c) AGREEMENTS NOT MANDATORY.—Nothing in
this section may be construed to require a State to enter
into agreements with societies described in subsection (a)
to conduct the activities described in such subsection.
(d) EFFECTIVE DATE.—This section shall take effect
2 years after the date of the enactment of this Act.
Subtitle B—Requirements for State
Alternative Dispute Resolution
Systems (ADR)
SEC. 211. BASIC REQUIREMENTS.
(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 liability 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
parties;
(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
MALPRACTICE
LIABILITY
STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—
The provisions of subtitle A shall apply with respect to
claims brought under a State alternative dispute resolu-
tion system or the alternative Federal system in the same
manner as such provisions apply with respect to health
care liability actions brought in the State.
SEC. 212. CERTIFICATION OF STATE SYSTEMS; APPLICABIL-
ITY OF ALTERNATIVE FEDERAL SYSTEM.
(a) CERTIFICATION.—
(1) IN GENERAL.—Not later than October 1 of
each year (beginning with 1997), the Secretary, in
consultation with the Attorney General, shall deter-
mine whether a State’s alternative dispute resolution
system meets the requirements of this subtitle for
the following calendar year.
(2) BASIS FOR CERTIFICATION.—The Secretary
shall certify a State’s alternative dispute resolution