I
103D CONGRESS
1ST SESSION
H. R. 1989
To provide for medical injury compensation reform for health care services
furnished using funds provided under certain Federal programs or under
group health plans, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 5, 1993
Mr. MCMILLAN (for himself, Mr. TAYLOR of North Carolina, Mr. SANTORUM,
Mr. DELAY, Mr. GINGRICH, Mr. HASTERT, Mr. HOBSON, Mr. KASICH,
Mr. KOLBE, Mr. PAXON, Mrs. ROUKEMA, Mr. WALKER, Mr.
BALLENGER, Mr. BLILEY, Mr. DREIER, Mr. GOSS, Mr. GRANDY, Mr.
SOLOMON, Mr. CASTLE, Mr. SUNDQUIST, and Mr. SAM JOHNSON of
Texas) introduced the following bill; which was referred jointly to the
Committees on the Judiciary, Ways and Means, and Energy and Com-
merce
A BILL
To provide for medical injury compensation reform for health
care services furnished using funds provided under cer-
tain Federal programs or under group health plans, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medical Injury Com-
pensation Fairness Act of 1993’’.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—Congress finds that—
(1) health care expenditures are escalating be-
yond the ability of Americans to afford them, having
increased from 5.9 percent of gross national product
in 1965 to over 12 percent in 1990;
(2) the medical injury compensation system
currently in effect in the United States is ineffectual
in compensating injured persons, has very high ad-
ministrative costs, and contributes to the high level
of unnecessary spending on health care;
(3) as many as 15 out of 16 persons injured
due to medical negligence never get compensation
through the current medical malpractice system;
(4) malpractice insurance premiums, only 40
percent of which ever reach injured persons as com-
pensation for their injuries, increased at an average
rate of 18.3 percent per year from 1982 to 1988;
(5) unnecessary defensive medical practices,
rendered by physicians in anticipation of juries’ ret-
rospective application of poorly specified standards
of care to their diagnostic and treatment choices,
add billions of dollars to the Nation’s health care
bill;
(6) the law governing medical malpractice oper-
ates to limit access to health care by driving costs
to unaffordable levels and by discouraging physicians
from treating high-risk patients and from practicing
in high-risk areas and specialties; and
(7) the Federal Government, which directly fi-
nances about 30 percent of the health care
consumed in the United States and subsidizes a sub-
stantial portion of private health insurance, has a le-
gitimate financial interest in addressing the prob-
lems associated with the current medical malpractice
system.
(b) PURPOSE.—It is the purpose of this Act to—
(1) encourage the efficient resolution of medical
injury claims, using alternative methods of dispute
resolution;
(2) ensure fairness in the awards granted in
medical injury cases;
(3) reduce inappropriate, unnecessary or defen-
sive medical practices;
(4) reduce public and private health care costs;
(5) improve access to health care; and
(6) facilitate informed, responsible choices in
the selection of alternative methods of dispute reso-
lution and in the specification of appropriate stand-
ards for medical practice.
SEC. 3. MANDATORY RESOLUTION OF CLAIMS THROUGH
CERTIFIED DISPUTE RESOLUTION SYSTEMS.
(a) APPLICATION TO CLAIMS ARISING FROM SERV-
ICES FINANCED THROUGH CERTAIN FEDERAL PRO-
GRAMS.—
(1) IN
GENERAL.—Each individual or entity
providing or receiving health care services for which
payment may be made in whole or in part with
funds provided under a Federal program described
in paragraph (2) shall be deemed to have entered
into an agreement—
(A) to resolve any medical malpractice li-
ability claim arising from the provision of (or
failure to provide) such services through a State
dispute resolution system that is certified by
the Secretary under section 4(b) (or the alter-
native Federal ADR system applicable under
section 4(c)); and
(B) to bring any medical malpractice liabil-
ity action that arises from a claim resolved
through such a system only in accordance with
the procedures described in section 5.
(2) FEDERAL
PROGRAMS
DESCRIBED.—The
Federal programs described in this paragraph are as
follows:
(A) The health insurance program under
title XVIII of the Social Security Act.
(B) A State plan for medical assistance
under title XIX of the Social Security Act.
(C) The health benefit program for Fed-
eral employees under chapter 89 of title 5,
United States Code.
(D) Any program for the provision of hos-
pital care and medical services by the Depart-
ment of Veterans Affairs under chapter 17 of
title 38, United States Code.
(E) A program for the provision of services
at facilities of the Indian Health Service or at
other facilities under the Indian Health Care
Improvement Act.
(F) The program authorized under sec-
tions 1079 and 1086 of title 10, United States
Code.
(G) The program for providing medical
care at facilities of the uniformed services under
title 10, United States Code.
(b) APPLICATION TO SERVICES FURNISHED UNDER
EMPLOYER-SPONSORED HEALTH PLANS.—
(1) RESTRICTION ON DEDUCTIBILITY OF BUSI-
NESS EXPENSES.—Section 162 of the Internal Reve-
nue Code of 1986 is amended—
(A) by redesignating subsection (m) as
subsection (n); and
(B) by inserting after subsection (l) the
following new subsection:
‘‘(m) CONDITIONING DEDUCTIBILITY
OF HEALTH
INSURANCE EXPENSES
ON APPLICATION
OF ALTER-
NATIVE DISPUTE RESOLUTION PROCEDURES.—Notwith-
standing any other provision of this Code, no deduction
may be taken under this section (including a deduction
taken under subsection (l)) for expenses paid for insurance
which constitutes medical care unless there is in effect an
agreement described in section 3(a) of the Medical Injury
Compensation Fairness Act of 1993 with respect to the
resolution of medical malpractice claims arising from the
provision of (or failure to provide) such medical care.’’.
(2) REQUIREMENT FOR EXEMPTION FROM EX-
CISE TAX FOR NONCONFORMING PLANS OF TAX-EX-
EMPT ORGANIZATIONS.—Section 5000(c) of the In-
ternal Revenue Code of 1986 is amended by striking
the period at the end and inserting the following: ‘‘,
or (in the case of an employee or an employer orga-
nization exempt from taxation under subtitle A) does
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 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) CERTIFICATION OF STATE SYSTEMS.—
(1) IN GENERAL.—Not later than October 1 of
each year (beginning with 1994), the Secretary, in
consultation with the Attorney General, shall deter-
mine whether a State’s alternative dispute resolution
system meets the requirements of subsection (a) for
the following calendar 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 subsection (a).
(c) APPLICABILITY OF ALTERNATIVE FEDERAL SYS-
TEM.—
(1) ESTABLISHMENT
AND
APPLICABILITY.—
Not later than October 1, 1994, the Secretary, in
consultation with the Attorney General, shall estab-
lish by rule an alternative Federal ADR system for
the resolution of medical malpractice liability claims
during a calendar year in States that do not have
in effect an alternative dispute resolution system
certified under subsection (b) for the year.
(2) REQUIREMENTS FOR SYSTEM.—Under the
alternative Federal ADR system established under
paragraph (1)—
(A) paragraphs (2), (6), and (7) of sub-
section (a) shall apply to claims brought under
the system;
(B) claims brought under the system shall
be heard and resolved by arbitrators appointed
by the Secretary in consultation with the Attor-
ney General; 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 medical malpractice liability claims.
SEC. 5. STANDARDS FOR MEDICAL MALPRACTICE LIABIL-
ITY ACTIONS BROUGHT AFTER RESOLUTION
UNDER ADR SYSTEM.
(a) NO ACTION PERMITTED UNTIL RESOLUTION OF
CLAIM UNDER ADR SYSTEM.—
(1) IN GENERAL.—If a medical malpractice li-
ability claim is subject to an agreement under sec-
tion 3(a), no medical malpractice liability action that
is based on the claim may be brought in any court
until the claim is initially resolved under an alter-
native dispute resolution system in accordance with
this Act.
(2) INITIAL
RESOLUTION
OF
CLAIMS
UNDER
ADR.—For purposes of paragraph (1), an action is
‘‘initially resolved’’ under an alternative dispute res-
olution 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.
(b) 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 claim under an alternative
dispute resolution system described in section 4,
each party affected by the decision shall submit a
sealed statement to a court of competent jurisdiction
indicating whether or not the party intends to con-
test the decision.
(2) DEADLINE FOR FILING ACTION.—No civil
action arising from a claim that is subject to alter-
native dispute resolution under this Act may be
brought unless the action is filed in a court of com-
petent jurisdiction not later than 90 days after the
decision resolving the medical malpractice liability
claim that is the subject of the action is issued
under the applicable alternative dispute resolution
system.
(3) MANDATORY PRE-TRIAL SETTLEMENT CON-
FERENCE.—
(A) IN GENERAL.—Before the beginning of
the trial phase of any medical malpractice li-
ability action arising from a claim that is sub-
ject to alternative dispute resolution under this
Act, the parties shall attend a conference called
by the court for purposes of determining wheth-
er grounds exist upon which the parties may
negotiate a settlement for the action.
(B) REQUIRING PARTIES TO SUBMIT SET-
TLEMENT
OFFERS.—At the conference called
pursuant to subparagraph (A), each party to a
medical malpractice liability action shall present
an offer of settlement for the action.
(4) 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.
(c) EFFECT
OF ADR DECISION
ON BURDEN
OF
PROOF IN SUBSEQUENT ACTION.—In any action arising
from a claim that is subject to an agreement under section
3(a), the trier of fact shall uphold the decision made under
the previous alternative dispute resolution system with re-
spect to the claim unless the party contesting the decision
proves by a preponderance of the evidence that the deci-
sion was incorrect.
(d) REQUIRING PARTY CONTESTING ADR RULING
TO PAY ATTORNEY’S FEES AND OTHER COSTS.—
(1) IN GENERAL.—The court in a medical mal-
practice liability action shall require the party that
(pursuant to subsection (b)(1)) contested the ruling
of the alternative dispute resolution system with re-
spect to the medical malpractice liability 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 ex-
pert witnesses, and other litigation expenses (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 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 plaintiff,
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 previous alternative dispute resolu-
tion system presents new evidence before the
trier of fact that was not available for presen-
tation under the ADR system;
(C) the medical malpractice 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.
(e) 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 an 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 (b)(1).
(f) APPLICABILITY OF STANDARDS.—The standards
described in section 5 shall apply to any action arising
from a claim that is subject to an agreement under section
3(a) in the same manner as such standards apply to the
resolution of such claims.
SEC. 6. STANDARDS FOR THE RESOLUTION OF CLAIMS AND
ACTIONS.
(a) APPLICABILITY.—This section shall apply with
respect to medical malpractice liability claims for which
an agreement described in section 3(a) is in effect.
(b) STATUTE OF LIMITATIONS.—
(1) IN GENERAL.—No 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 claim should reasonably have been discovered,
but in no event after the expiration of the 4-year pe-
riod that begins on the date the alleged injury oc-
curred.
(2) EXCEPTION FOR MINORS.—In the case of
an alleged injury suffered by a minor who has not
attained 6 years of age, no 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.
(c) CALCULATION AND PAYMENT OF DAMAGES.—
(1) LIMITATION ON 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 claim may not exceed
$250,000, regardless of the number of parties
against whom the claim is brought or the number of
claims brought with respect to the injury.
(2) TREATMENT OF PUNITIVE DAMAGES.—
(A) LIMITATION ON AMOUNT.—The total
amount of punitive damages that may be im-
posed under a claim may not exceed twice the
total of the damages awarded to the claimant
and the members of the claimant’s family.
(B) PAYMENTS TO STATE FOR MEDICAL
QUALITY ASSURANCE ACTIVITIES.—
(i) IN GENERAL.—Any punitive dam-
ages imposed under a claim shall be paid
to the State in which the claim is brought.
(ii) ACTIVITIES DESCRIBED.—A State
shall use amount paid pursuant to clause
(i) to carry out activities to assure the
safety and quality of health care services
provided 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
resolution systems;
(III) carrying out public edu-
cation programs relating to medical
malpractice and the availability of al-
ternative dispute resolution systems in
the State; and
(IV) carrying out programs to re-
duce malpractice-related costs for re-
tired providers or other providers vol-
unteering to provide services in medi-
cally underserved areas.
(iii) MAINTENANCE
OF
EFFORT.—A
State shall use any amounts paid pursuant
to clause (i) to supplement and not to re-
place amounts spent by the State for the
activities described in clause (ii).
(3) 
PERIODIC
PAYMENTS
FOR
FUTURE
LOSSES.—If more than $100,000 in damages for ex-
penses to be incurred in the future is awarded to the
claimant, the party against whom the damages are
awarded shall provide for payment for such damages
on a periodic basis determined appropriate by the al-
ternative dispute resolution system (based upon pro-
jections of when such expenses are likely to be in-
curred), unless it is determined that it is not in the
claimant’s best interests to receive payments for
such damages on such a periodic basis.
(4) MANDATORY OFFSETS FOR DAMAGES PAID
BY A COLLATERAL SOURCE.—
(A) IN
GENERAL.—The total amount of
damages received by a claimant shall be re-
duced (in accordance with subparagraph (B))
by any other payment that has been or will be
made to compensate the claimant for the injury
that was the subject of the claim, including
payment under—
(i) Federal or State disability or sick-
ness programs;
(ii) Federal, State, or private health
insurance programs;
(iii) private disability insurance pro-
grams;
(iv) employer wage continuation pro-
grams; and
(v) any other source of payment in-
tended to compensate the claim for such
injury.
(B) 
AMOUNT
OF
REDUCTION.—The
amount by which an award of damages to a
claimant shall be reduced under subparagraph
(A) shall be—
(i) the total amount of any payments
(other than such award) that have been
made or that will be made to the claimant
to compensate the claimant for the injury
that was the subject of the claim; minus
(ii) the amount paid by the claimant
(or by the spouse, parent, or legal guard-
ian of the claimant) to secure the pay-
ments described in clause (i).
(d) LIMITATION
ON ATTORNEY’S FEES.—If the
claimant has entered into an agreement with the claim-
ant’s attorney to pay the attorney’s fees on a contingency
basis, the attorney’s fees for the claim may not exceed—
(1) 25 percent of the first $150,000 of any
award or settlement paid to the claimant; or
(2) 15 percent of any additional amounts paid
to the claimant.
(e) JOINT AND SEVERAL LIABILITY.—The liability of
each party against whom a claim is filed shall be several
only and shall not be joint, and each party shall be liable
only for the amount of damages allocated to the party in
direct proportion to the party’s percentage of responsibil-
ity (as determined by the trier of fact).
(f) UNIFORM STANDARD FOR DETERMINING NEG-
LIGENCE.—A party against whom a claim is filed may not
be found to have acted negligently unless the party’s con-
duct at the time of providing the health care services that
are the subject of the claim was not reasonable.
(g) APPLICATION
OF MEDICAL PRACTICE GUIDE-
LINES.—
(1) USE OF GUIDELINES AS AFFIRMATIVE DE-
FENSE.—In the resolution of any claim, it shall be
a complete defense to any allegation that a party
against whom the claim is filed was negligent that,
in the provision of (or the failure to provide) the
services that are the subject of the claim, the party
followed the appropriate practice guideline.
(2) RESTRICTION ON GUIDELINES CONSIDERED
APPROPRIATE.—
(A) GUIDELINES
SANCTIONED
BY
SEC-
RETARY.—For purposes of paragraph (1), a
practice guideline may not be considered appro-
priate with respect to claims during a year un-
less the Secretary has sanctioned the use of the
guideline for purposes of an affirmative defense
to claims brought during the year in accordance
with subparagraph (B) or (C).
(B) PROCESS
FOR
SANCTIONING
GUIDE-
LINES.—Not less frequently than October 1 of
each year (beginning with 1994), the Secretary,
shall review the practice guidelines and stand-
ards developed by the Administrator for Health
Care Policy and Research pursuant to section
1142 of the Social Security Act, and shall sanc-
tion those guidelines which the Secretary con-
siders appropriate for purposes of an affirma-
tive defense to claims brought during the next
calendar year as appropriate practice guidelines
for purposes of paragraph (1).
(C) USE
OF
STATE
GUIDELINES.—Upon
the application of a State, the Secretary may
sanction practice guidelines selected by the
State for purposes of an affirmative defense to
claims brought in the State as appropriate
practice guidelines for purposes of paragraph
(1) if the guidelines meet such requirements as
the Secretary may impose.
(3) PROHIBITING APPLICATION OF FAILURE TO
FOLLOW GUIDELINES AS PRIMA FACIE EVIDENCE OF
NEGLIGENCE.—No claimant may be deemed to have
presented prima facie evidence that a party against
whom the claim is filed was negligent solely by show-
ing that the party failed to follow the appropriate
practice guideline.
(h) SPECIAL PROVISION FOR CERTAIN OBSTETRIC
SERVICES.—
(1) IMPOSITION
OF
HIGHER
STANDARD
OF
PROOF.—
(A) IN GENERAL.—In the case of a claim
relating to services provided during labor or the
delivery of a baby, if the party against whom
the claim is filed did not previously treat the
claimant for the pregnancy, the trier of fact
may not find that the party committed mal-
practice and may not assess damages against
the party unless the malpractice is proven by
clear and convincing evidence.
(B) APPLICABILITY TO GROUP PRACTICES
OR
AGREEMENTS
AMONG
PROVIDERS.—For
purposes of subparagraph (A), a party shall be
considered to have previously treated an indi-
vidual for a pregnancy if the party is a member
of a group practice whose members previously
treated the claimant for the pregnancy or is
providing services to the claimant during labor
or the delivery of a baby pursuant to an agree-
ment with another party.
(2) CLEAR
AND
CONVINCING
EVIDENCE
DE-
FINED.—In paragraph (1), the term ‘‘clear and con-
vincing evidence’’ 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 allega-
tions sought to be established, except that such
measure or degree of proof is more than that re-
quired under preponderance of the evidence, but less
than that required for proof beyond a reasonable
doubt.
(i) PREEMPTION.—
(1) IN GENERAL.—This section supersedes any
State law only to the extent that State law—
(A) permits the recovery of a greater
amount of damages by a plaintiff;
(B) permits the collection of a greater
amount of attorneys’ fees by a plaintiff’s attor-
ney;
(C) establishes a longer period during
which a medical malpractice liability claim may
be initiated; or
(D) establishes a stricter standard for de-
termining whether a defendant was negligent or
for determining the liability of defendants de-