To restore fairness and reliability to the medical justice system and promote patient safety by fostering alternatives to current medical tort litigation, and for other purposes.

June 29, 2005

Mr. ENZI (for himself and Mr. BAUCUS) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions

To restore fairness and reliability to the medical justice system and promote patient safety by fostering alternatives to current medical tort litigation, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Fair and Reliable Medical Justice Act'.

SEC. 2. PURPOSES.

The purposes of this Act are--

(1) to restore fairness and reliability to the medical justice system by fostering alternatives to current medical tort litigation that promote early disclosure of health care errors and provide prompt, fair, and reasonable compensation to patients who are injured by health care errors;

(2) to promote patient safety through early disclosure of health care errors; and

(3) to support and assist States in developing such alternatives.

SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO CURRENT MEDICAL TORT LITIGATION.

Part P of title III of the Public Health Service Act (42 U.S.C. 280g et seq.) is amended by adding at the end the following:

`SEC. 3990. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES TO CURRENT MEDICAL TORT LITIGATION.

`(a) In General- The Secretary is authorized to award demonstration grants to States for the development, implementation, and evaluation of alternatives to current tort litigation for resolving disputes over injuries allegedly caused by health care providers or health care organizations.

`(b) Duration- The Secretary may award up to 10 grants under subsection (a) and each grant awarded under such subsection may not exceed a period of 5 years.

`(c) Conditions for Demonstration Grants-

`(1) REQUIREMENTS- Each State desiring a grant under subsection (a) shall--

`(A) develop an alternative to current tort litigation for resolving disputes over injuries allegedly caused by health care providers or health care organizations that may be 1 of the models described in subsection (d); and

`(B) promote a reduction of health care errors by allowing for patient safety data related to disputes resolved under subparagraph (A) to be collected and analyzed by organizations that engage in voluntary efforts to improve patient safety and the quality of health care delivery.

`(2) ALTERNATIVE TO CURRENT TORT LITIGATION- Each State desiring a grant under subsection (a) shall demonstrate how the proposed alternative described in paragraph (1)(A)--

`(A) makes the medical liability system more reliable through prompt and fair resolution of disputes;

`(B) encourages the early disclosure of health care errors;

`(C) enhances patient safety; and

`(D) maintains access to liability insurance.

`(3) SOURCES OF COMPENSATION- Each State desiring a grant under subsection (a) shall identify the sources from and methods by which compensation would be paid for claims resolved under the proposed alternative to current tort litigation, which may include public or private funding sources, or a combination of such sources. Funding methods shall to the extent practicable provide financial incentives for activities that improve patient safety.

`(4) SCOPE-

`(A) IN GENERAL- Each State desiring a grant under subsection (a) may establish a scope of jurisdiction (such as a designated geographic region, a designated area of health care practice, or a designated group of health care providers or health care organizations) for the proposed alternative to current tort litigation that is sufficient to evaluate the effects of the alternative.

`(B) NOTIFICATION OF PATIENTS- A State proposing a scope of jurisdiction under subparagraph (A) shall demonstrate how patients would be notified that they are receiving health care services that fall within such scope.

`(5) PREFERENCE IN AWARDING DEMONSTRATION GRANTS- In awarding grants under subsection (a), the Secretary shall give preference to States--

`(A) that have developed the proposed alternative through substantive consultation with relevant stakeholders; and

`(B) in which State law at the time of the application would not prohibit the adoption of an alternative to current tort litigation.

`(d) Models-

`(1) IN GENERAL- Any State desiring a grant under subsection (a) that proposes an alternative described in paragraph (2), (3), or (4) shall be deemed to meet the criteria under subsection (c)(2).

`(2) EARLY DISCLOSURE AND COMPENSATION MODEL- In the early disclosure and compensation model, the State shall--

`(A) require that health care providers or health care organizations notify a patient (or an immediate family member or designee of the patient) of an adverse event that results in serious injury to the patient, and that such notification shall not constitute an acknowledgment or an admission of liability;

`(B) provide immunity from tort liability to any health care provider or health care organization that offers in good faith to pay compensation in accordance with this section to a patient for an injury incurred in the provision of health care services (limited to claims arising out of the same nucleus of operative facts as the injury, and except in cases of fraud related to the provision of health care services, or in cases of criminal or intentional harm);

`(C) set a limited time period during which a health care provider or health care organization may make an offer of compensation benefits under subparagraph (B), with consideration for instances where prompt recognition of an injury is unlikely or impossible;

`(D) require that the compensation provided under subparagraph (B) include--

`(i) payment for the net economic loss of the patient, on a periodic basis, reduced by any payments received by the patient under--

`(I) any health or accident insurance;

`(II) any wage or salary continuation plan; or

`(III) any disability income insurance;

`(ii) payment for the non-economic damages of the patient, if appropriate for the injury, based on a defined payment schedule developed by the State in consultation with relevant experts and with the Secretary in accordance with subsection (g); and

`(iii) reasonable attorney's fees;

`(E) not abridge the right of an injured patient to seek redress through the State tort system if a health care provider does not enter into a compensation agreement with the patient in accordance with subparagraph (B) or if the compensation offered does not meet the requirements of subparagraph (D) or is not offered in good faith;

`(F) permit a health care provider or health care organization that offers in good faith to pay compensation benefits to an individual under subparagraph (B) to join in the payment of the compensation benefits any health care provider or health care organization that is potentially liable, in whole or in part, for the injury; and

`(G) permit any health care provider or health care organization to contribute voluntarily in the payment of compensation benefits to an individual under subparagraph (B).

`(3) ADMINISTRATIVE DETERMINATION OF COMPENSATION MODEL-

`(A) IN GENERAL- In the administrative determination of compensation model--

`(i) the State shall--

`(I) designate an administrative entity (in this paragraph referred to as the `Board') that shall include representatives of--

`(aa) relevant State licensing boards;

`(bb) patient advocacy groups;

`(cc) health care providers and health care organizations; and

`(dd) attorneys in relevant practice areas;

`(II) set up classes of avoidable injuries, in consultation with relevant experts and with the Secretary in accordance with subsection (g), that will be used by the Board to determine compensation under clause (ii)(II);

`(III) modify tort liability, through statute or contract, to bar negligence claims in court against health care providers and health care organizations for the classes of injuries established under subclause (II), except in cases of fraud related to an injury, or in cases of criminal or intentional harm;

`(IV) outline a procedure for informing patients about the modified liability system described in this paragraph and, in systems where participation by the health care provider, health care organization, or patient is voluntary, allow for the decision by the provider, organization, or patient of whether to participate to be made prior to the provision of, use of, or payment for the health care service;

`(V) provide for an appeals process to allow for review of decisions; and

`(VI) establish procedures to coordinate settlement payments with other sources of payment;

`(ii) the Board shall--

`(I) resolve health care liability claims for certain classes of avoidable injuries as determined by the State and determine compensation for such claims;

`(II) develop a schedule of compensation to be used in making such determinations that includes--

`(aa) payment for the net economic loss of the patient, on a periodic basis, reduced by any payments received by the patient under any health or accident insurance, any wage or salary continuation plan, or any disability income insurance;

`(bb) payment for the non-economic damages of the patient, if appropriate for the injury, based on a defined payment schedule developed by the State in consultation with relevant experts and with the Secretary in accordance with subsection (g); and

`(cc) reasonable attorney's fees; and

`(III) update the schedule under subclause (II) on a regular basis.

`(B) APPEALS- The State, in establishing the appeals process described in subparagraph (A)(i)(V), may choose whether to allow for de novo review, review with deference, or some opportunity for parties to reject determinations by the Board and elect to file a civil action after such rejection. Any State desiring to adopt the model described in this paragraph shall indicate how such review method meets the criteria under subsection (c)(2).

`(C) TIMELINESS- The State shall establish timeframes to ensure that claims handled under the system described in this paragraph provide for adjudication that is more timely and expedited than adjudication in a traditional tort system.

`(4) SPECIAL HEALTH CARE COURT MODEL- In the special health care court model, the State shall--

`(A) establish a special court for the timely adjudication of disputes over injuries allegedly caused by health care providers or health care organizations in the provision of health care services;

`(B) ensure that such court is presided over by judges with health care expertise who meet applicable State standards for judges and who agree to preside over such court voluntarily;

`(C) provide authority to such judges to make binding rulings on causation, compensation, standards of care, and related issues with reliance on independent expert witnesses commissioned by the court;

`(D) provide for an appeals process to allow for review of decisions; and

`(E) at its option, establish an administrative entity similar to the entity described in paragraph (3)(A)(i)(I) to provide advice and guidance to the special court.

`(e) Application-

`(1) IN GENERAL- Each State desiring a grant under subsection (a) shall submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require.

`(2) REVIEW PANEL-

`(A) IN GENERAL- In reviewing applications under paragraph (1), the Secretary shall consult with a review panel composed of relevant experts appointed by the Comptroller General.

`(B) COMPOSITION-

`(i) NOMINATIONS- The Comptroller General shall solicit nominations from the public for individuals to serve on the review panel.

`(ii) APPOINTMENT- The Comptroller General shall appoint, at least 11 but not more than 15, highly qualified and knowledgeable individuals to serve on the review panel and shall ensure that the following entities receive fair representation on such panel:

`(I) Patient advocates.

`(II) Health care providers and health care organizations.

`(III) Attorneys with expertise in representing patients and health care providers.

`(IV) Insurers.

`(V) State officials.

`(C) CHAIRPERSON- The Comptroller General, or an individual within the Government Accountability Office designated by the Comptroller General, shall be the chairperson of the review panel.

`(D) AVAILABILITY OF INFORMATION- The Comptroller General shall make available to the review panel such information, personnel, and administrative services and assistance as the review panel may reasonably require to carry out its duties.

`(E) INFORMATION FROM AGENCIES- The review panel may request directly from any department or agency of the United States any information that such panel considers necessary to carry out its duties. To the extent consistent with applicable laws and regulations, the head of such department or agency shall furnish the requested information to the review panel.

`(f) Report- Each State receiving a grant under subsection (a) shall submit to the Secretary a report evaluating the effectiveness of activities funded with grants awarded under such subsection at such time and in such manner as the Secretary may require.

`(g) Technical Assistance-

`(1) IN GENERAL- The Secretary shall provide technical assistance to the States awarded grants under subsection (a).

`(2) REQUIREMENTS- Technical assistance under paragraph (1) shall include--

`(A) the development of a defined payment schedule for non-economic damages (including guidance on the consideration of individual facts and circumstances in determining appropriate payment), the development of classes of avoidable injuries, and guidance on early disclosure to patients of adverse events; and

`(B) the development, in consultation with States, of common definitions, formats, and data collection infrastructure for States receiving grants under this section to use in reporting to facilitate aggregation and analysis of data both within and between States.

`(3) USE OF COMMON DEFINITIONS, FORMATS, AND DATA COLLECTION INFRASTRUCTURE- States not receiving grants under this section may also use the common definitions, formats, and data collection infrastructure developed under paragraph (2)(B).

`(h) Evaluation-

`(1) IN GENERAL- The Secretary, in consultation with the review panel established under subsection (e)(2), shall enter into a contract with an appropriate research organization to conduct an overall evaluation of the effectiveness of grants awarded under subsection (a) and to annually prepare and submit a report to the appropriate committees of Congress. Such an evaluation shall begin not later than 18 months following the date of implementation of the first program funded by a grant under subsection (a).

`(2) CONTENTS- The evaluation under paragraph (1) shall include--

`(A) an analysis of the effect of the grants awarded under subsection (a) on the number, nature, and costs of health care liability claims;

`(B) a comparison of the claim and cost information of each State receiving a grant under subsection (a); and

`(C) a comparison between States receiving a grant under this section and States that did not receive such a grant, matched to ensure similar legal and health care environments, and to determine the effects of the grants and subsequent reforms on--

`(i) the liability environment;

`(ii) health care quality;

`(iii) patient safety; and

`(iv) patient and health care provider and organization satisfaction with the reforms.

`(i) Option to Provide for Initial Planning Grants- Of the funds appropriated pursuant to subsection (k), the Secretary may use a portion not to exceed $500,000 per State to provide planning grants to such States for the development of demonstration project applications meeting the criteria described in subsection (c). In selecting States to receive such planning grants, the Secretary shall give preference to those States in which State law at the time of the application would not prohibit the adoption of an alternative to current tort litigation.

`(j) Definitions- In this section:

`(1) HEALTH CARE SERVICES- The term `health care services' means any services provided by a health care provider, or by any individual working under the supervision of a health care provider, that relate to--

`(A) the diagnosis, prevention, or treatment of any human disease or impairment; or

`(B) the assessment of the health of human beings.

`(2) HEALTH CARE ORGANIZATION- The term `health care organization' means any individual or entity which is obligated to provide, pay for, or administer health benefits under any health plan.

`(3) HEALTH CARE PROVIDER- The term `health care provider' means any individual or entity--

`(A) licensed, registered, or certified under Federal or State laws or regulations to provide health care services; or

`(B) required to be so licensed, registered, or certified but that is exempted by other statute or regulation.

`(4) NET ECONOMIC LOSS- The term `net economic loss' means--

`(A) reasonable expenses incurred for products, services, and accommodations needed for health care, training, and other remedial treatment and care of an injured individual;

`(B) reasonable and appropriate expenses for rehabilitation treatment and occupational training;

`(C) 100 percent of the loss of income from work that an injured individual would have performed if not injured, reduced by any income from substitute work actually performed; and

`(D) reasonable expenses incurred in obtaining ordinary and necessary services to replace services an injured individual would have performed for the benefit of the individual or the family of such individual if the individual had not been injured.

`(5) NON-ECONOMIC DAMAGES- The term `non-economic damages' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other non-pecuniary losses of any kind or nature, to the extent permitted under State law.

`(k) Authorization of Appropriations- There are authorized to be appropriated to carry out this section such sums as may be necessary. Amounts appropriated pursuant to this subsection shall remain available until expended.'.

END