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H.R. 5253 (107th): Medical Liability Insurance Crisis Response Act of 2002


The text of the bill below is as of Jul 26, 2002 (Introduced). The bill was not enacted into law.


HR 5253 IH

107th CONGRESS

2d Session

H. R. 5253

To modify the antitrust exemption applicable to the business of medical malpractice insurance, to address current issues for health care providers, to reform medical malpractice litigation by making available alternative dispute resolution methods, requiring plaintiffs to submit affidavits of merit before proceeding, and enabling judgments to be satisfied through periodic payments, to reform the medical malpractice insurance market, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 26, 2002

Mr. SANDLIN (for himself, Mr. SHOWS, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. REYES, Mr. ISRAEL, Mr. DOGGETT, Mr. ROSS, Mr. PASCRELL, Ms. SANCHEZ, Ms. BERKLEY, Mr. GONZALEZ, Mr. HOLT, Mr. MEEKS of New York, and Ms. SOLIS) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committees on Energy and Commerce, Ways and Means, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To modify the antitrust exemption applicable to the business of medical malpractice insurance, to address current issues for health care providers, to reform medical malpractice litigation by making available alternative dispute resolution methods, requiring plaintiffs to submit affidavits of merit before proceeding, and enabling judgments to be satisfied through periodic payments, to reform the medical malpractice insurance market, 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; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Medical Liability Insurance Crisis Response Act of 2002’.

    (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

TITLE I--ANTITRUST MATTERS: AMENDMENTS TO THE MCCARRAN-FERGUSON ACT

      Sec. 101. Short title.

      Sec. 102. Rules of construction.

      Sec. 103. Amendments.

      Sec. 104. Study and report.

      Sec. 105. Effective date.

TITLE II--ADDRESSING CURRENT ISSUES FOR HEALTH CARE PROVIDERS

      Sec. 201. Prompt payment of claims.

      Sec. 202. Eliminating nurse shortages.

‘Part H--National Nurse Service Corps Scholarship Program

‘Sec. 851. National Nurse Service Corps Scholarship Program.

‘Part I--Initiatives to Recruit Nurses and Combat the Nursing Shortage

‘Sec. 855. Nurse recruitment grant program.

‘Part J--Initiatives to Strengthen the Nurse Workforce

‘Sec. 857. Grants for career ladder programs.

‘Sec. 858. Grants for nurse training in long-term care for the elderly.

‘Sec. 859. Grants for internship and residency programs.

‘Sec. 860. Developing retention strategies and best practices in nursing staff management.

‘Sec. 861. Stipend and scholarship program.

TITLE III--MEDICAL MALPRACTICE LIABILITY REFORM

      Sec. 301. Definitions.

      Sec. 302. Federal tort reform.

      Sec. 303. Alternative dispute resolution methods.

      Sec. 304. Preventing frivolous malpractice suits.

      Sec. 305. Requirement for affidavit of merit.

      Sec. 306. Periodic payment of awards.

TITLE IV--MEDICAL MALPRACTICE INSURANCE REFORMS

      Sec. 401. Advisory Commission on Medical Malpractice.

      Sec. 402. Freeze in medical malpractice insurance rates.

      Sec. 403. Withdrawal from medical malpractice insurance market.

      Sec. 404. Guaranteed renewability of coverage.

      Sec. 405. Guaranteed coverage for certain health care providers.

      Sec. 406. Medical malpractice insurance disclosure.

      Sec. 407. Medical malpractice insurance price comparison.

TITLE V--ADDITIONAL PROVISIONS

      Sec. 501. State consideration of additional and alternative methods.

      Sec. 502. Mandating equal treatment between traditional insurers and risk retention groups, including medical malpractice risk retention groups.

TITLE I--ANTITRUST MATTERS: AMENDMENTS TO THE McCARRAN-FERGUSON ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ‘Medical Malpractice Insurance Competitive Pricing Act of 2002’.

SEC. 102. RULES OF CONSTRUCTION.

    The amendments made by this title preserve--

      (1) the provisions relating to State taxing and regulatory authority in section 2 of the Act of March 9, 1945 (59 Stat. 34; 15 U.S.C. 1012), commonly known as the McCarran-Ferguson Act;

      (2) the availability, to persons engaged in the business of medical malpractice insurance, of the defense of State action in the same manner and to the same extent as such defense is available to other persons;

      (3) the availability, to persons engaged in the business of medical malpractice insurance, of any antitrust immunity or defense that may be applicable under law other than the McCarran-Ferguson Act;

      (4) the legal standards applicable under the McCarran-Ferguson Act, as in effect before such Act is amended by this title, to all conduct described in the safe harbors found in subparagraphs (B) and (C) of section 2(b)(1) of the McCarran-Ferguson Act, as amended by this title; and

      (5) the provisions relating to boycott, coercion, or intimidation in section 3(b) of the McCarran-Ferguson Act.

SEC. 103. AMENDMENTS.

    Section 2 of the Act of March 9, 1945 (59 Stat. 34; 15 U.S.C. 1012), commonly known as the McCarran-Ferguson Act, is amended--

      (1) in subsection (b) by striking ‘: Provided,’ and all that follows through ‘law.’ and inserting the following: ‘except as follows:

      ‘(1)(A) The antitrust laws shall be applicable to the business of medical malpractice insurance except as provided in subparagraphs (B) and (C).

      ‘(B) The antitrust laws shall not be applicable to conduct that consists of making an agreement or engaging in joint conduct--

        ‘(i)(I) to collect, compile, classify, or disseminate historical data;

        ‘(II) to develop procedures to collect, compile, classify, or disseminate historical data; or

        ‘(III) to verify that historical data is accurate and complete;

        ‘(ii) to determine, using standard actuarial techniques, or disseminate, a loss development factor or developed losses;

        ‘(iii) to develop or disseminate a standard medical malpractice insurance policy form (including a standard addendum to a medical malpractice insurance policy form and standard terminology in such a policy form) if such agreement or joint conduct does not include an agreement to adhere to such standard form, or to require adherence to such standard form, except that the fact that 2 or more persons engaged in the business of medical malpractice insurance use such standard form--

          ‘(I) shall not be sufficient in itself to support a finding that an agreement to adhere, or to require adherence, to such standard form exists; and

          ‘(II) may be used only for the purpose of supplementing or explaining direct evidence of the existence of an agreement to adhere, or to require adherence, to such standard form;

        ‘(iv) to develop or disseminate, for use in providing medical malpractice insurance in a State, a manual that is filed, before dissemination, with the State entity that regulates the business of medical malpractice insurance under State law, if such manual includes only--

          ‘(I) information and conduct described in clauses (i), (ii), and (iii), including relativity factors;

          ‘(II) during the transition period, a trend factor or information to which a trend factor has been applied, to the extent permitted under subparagraph (C); and

          ‘(III) explanations and instructions for using the manual (or any of the information contained in the manual), if such agreement or joint conduct does not include an agreement among competitors to adhere, or to require adherence, to any of such explanations or instructions;

        ‘(v) to provide medical malpractice insurance pursuant to a public necessity market mechanism; or

        ‘(vi) to administer a public necessity market mechanism in a State, pursuant to the authorization of and under the supervision of such State, if all persons who provide medical malpractice insurance in such State pursuant to such mechanism, and all persons seeking to obtain medical malpractice insurance through such mechanism, have a reasonable opportunity to appeal determinations affecting them to a governmental entity;

      to the extent that such conduct is regulated by State law.

      ‘(C) During the transition period, the antitrust laws shall not be applicable to conduct that consists of making an agreement or engaging in joint conduct to determine or disseminate a trend factor, to the extent that such conduct is regulated by State law.

      ‘(2) Subsequent to the transition period, the independent purchase of a trend factor by a person engaged in the business of medical malpractice insurance from a person not engaged in providing such insurance (and not affiliated with a person engaged in providing such insurance) shall be presumed not to violate the antitrust laws.

      ‘(3) The Federal Trade Commission Act shall be applicable to the business of medical malpractice insurance to the extent that such business is not regulated by State law, except that, with respect to enforcement of the antitrust laws, section 5 of such Act shall be applicable to the business of medical malpractice insurance to the same extent as the other antitrust laws.’, and

      (2) by adding at the end the following:

    ‘(c) For purposes of subsection (b)--

      ‘(1) the term ‘antitrust laws’ has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) as such section 5 applies to conduct that constitutes a violation of the Sherman Act or the Clayton Act;

      ‘(2) the term ‘developed losses’ means aggregate paid losses and aggregate reserves held for received claims, as adjusted by a loss development factor;

      ‘(3) the term ‘historical data’ means information respecting--

        ‘(A) losses paid by, claims received by, reserves for such claims set aside by, or units of exposure to loss in medical malpractice insurance policies sold by any person engaged in the business of medical malpractice insurance; or

        ‘(B) medical malpractice insurance premiums received by any person engaged in the business of medical malpractice insurance, if such information is not disseminated in a form from which information respecting premiums received by any separately identifiable person engaged in the business of medical malpractice insurance may be derived;

      ‘(4) the term ‘medical malpractice insurance policy’ means a contract under which medical malpractice insurance is sold to an insured;

      ‘(5) the term ‘loss’ means an amount paid or to be paid by a person engaged in the business of medical malpractice insurance to (or for the benefit of) a claimant to satisfy a claim on a medical malpractice insurance policy, and includes any attorney, investigatory, or litigation expenses that are separately incurred, identified, and allocated by such person with respect to that particular claim;

      ‘(6) the term ‘loss development factor’ means an adjustment to be made to the aggregate of losses incurred during a prior period of time that have been paid or for which claims have been received and reserves are being held, in order to estimate the aggregate of the losses incurred during such period that will ultimately be paid;

      ‘(7) the term ‘medical malpractice insurance’ means insurance against loss caused by the action or inaction of any health care provider;

      ‘(8) the term ‘public necessity market mechanism’ means a plan established by State law or by the State entity that regulates the business of medical malpractice insurance under State law--

        ‘(A) for providing a type of medical malpractice insurance in a State;

        ‘(B) in which the persons providing such type of medical malpractice insurance pursuant to such mechanism represent a substantial number of the persons engaged in the business of providing such type of insurance in such State and are either required by State law, or

formally requested or ordered by such State entity, to participate;

        ‘(C) the purpose of which is to make such type of insurance available to persons who would not otherwise be able to obtain such type of insurance at affordable cost; and

        ‘(D) in which the rate for such type of insurance is subject to the approval or disapproval of such State;

      ‘(9) the term ‘relativity factor’ means a ratio comparing one classification of historical data to another such classification, or comparing developed losses in one such classification to developed losses in another such classification;

      ‘(10) the term ‘transition period’ means the 2-year period beginning on the effective date of the Insurance Competitive Pricing Act of 2002; and

      ‘(11) the term ‘trend factor’ means an adjustment to be made to developed losses in order to account for any change that is anticipated to affect losses.’.

SEC. 104. STUDY AND REPORT.

    (a) STUDY- During the 5-year period beginning on the effective date of this title, the Attorney General shall conduct a study to determine the effect of this title, and the amendments made by this title, on the business of medical malpractice insurance.

    (b) REPORT- Not later than 1 year after the expiration of the 5-year period referred to in subsection (a), the Attorney General shall submit, to the Speaker of the House of Representatives and the President pro tempore of the Senate, a report summarizing the results of the study required by subsection (a).

SEC. 105. EFFECTIVE DATE.

    This title shall take effect 1 year after the date of the enactment of this Act.

TITLE II--ADDRESSING CURRENT ISSUES FOR HEALTH CARE PROVIDERS

SEC. 201. PROMPT PAYMENT OF CLAIMS.

    (a) GROUP HEALTH PLANS-

      (1) PUBLIC HEALTH SERVICE ACT AMENDMENTS- (A) Subpart 2 of part A of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:

‘SEC. 2707. PROMPT PAYMENT OF CLAIMS.

    ‘(a) IN GENERAL- A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant, beneficiary, or enrollee with respect to benefits covered by the plan or issuer, in a manner that is no less protective than the provisions referred to in subsection (b).

    ‘(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

      ‘(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

      ‘(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to ‘not less than 95 percent of all claims submitted under this part’ shall be deemed to be a reference to ‘100 percent of all claims submitted under the plan or coverage involved’.

    ‘(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, to comply with the provisions referred to in subsection (b).’.

      (2) ERISA AMENDMENTS- (A) Subpart B of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new section:

‘SEC. 714. PROMPT PAYMENT OF CLAIMS.

    ‘(a) IN GENERAL- A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant or beneficiary with respect to benefits covered by the plan or issuer, in a manner that is no less protective than the provisions referred to in subsection (b).

    ‘(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

      ‘(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

      ‘(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to ‘not less than 95 percent of all claims submitted under this part’ shall be deemed to be a reference to ‘100 percent of all claims submitted under the plan or coverage involved’.

    ‘(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, to comply with the provisions referred to in subsection (b).’.

      (D) The table of contents in section 1 of such Act is amended by inserting after the item relating to section 713 the following new item:

      ‘Sec. 714. Prompt payment of claims.’.

      (3) INTERNAL REVENUE CODE AMENDMENTS-

        (A) IN GENERAL- Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is amended--

          (i) in the table of sections, by inserting after the item relating to section 9812 the following new item:

‘Sec. 9813. Prompt payment of claims.’;

          and

          (ii) by inserting after section 9812 the following:

‘SEC. 9813. PROMPT PAYMENT OF CLAIMS.

    ‘A group health plan shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant or beneficiary with respect to benefits covered by the plan, in a manner that is no less protective than the provisions referred to in subsection (b).

    ‘(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

      ‘(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

      ‘(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to ‘not less than 95 percent of all claims submitted under this part’ shall be deemed to be a reference to ‘100 percent of all claims submitted under the plan involved’.

    ‘(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan to comply with the provisions referred to in subsection (b).’.

    (b) INDIVIDUAL HEALTH INSURANCE- (1) Part B of title XXVII of the Public Health Service Act is amended by inserting after section 2752 the following new section:

‘SEC. 2753. PROMPT PAYMENT OF CLAIMS.

    ‘The provisions of section 2707 shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as they apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.’.

    (c) PROTECTION OF STATES’ RIGHTS- Any issue relating to prompt payment for health care services or supplies that is not governed by any provision of law as amended by this section shall be governed by otherwise applicable State or Federal law. This section (and the provisions amended by this section) does not preempt or supercede any law that imposes shorter time frames for payment, greater penalties for non-payment, and, in general, provides greater assurances that group health plans and health insurance issuers provide for prompt payment of claims submitted for health care services or supplies furnished to a participant, beneficiary, or enrollee with respect to benefits covered by the plan or issuer.

    (d) EFFECTIVE DATES-

      (1) GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE COVERAGE- The amendments made by subsection (a) apply with respect to group health plans for plan years beginning on or after January 1, 2003.

      (2) INDIVIDUAL HEALTH INSURANCE COVERAGE- The amendment made by subsection (b) apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.

SEC. 202. ELIMINATING NURSE SHORTAGES.

    Title VIII of the Public Health Service Act (42 U.S.C. 296 et seq.) is amended--

      (1) in section 846(a)(3), by inserting ‘in a nursing home, in a hospice, in a home health agency, in a nurse-managed health center, in a public health department,’ after ‘in a public hospital,’;

      (2) in section 801, by adding at the end the following:

      ‘(9) HEALTH CARE FACILITY- The term ‘health care facility’ means an Indian Health service health center, a Native Hawaiian health center, a hospital, a migrant health center, a community health center, a Federally qualified health center, a nurse-managed health center, a rural health clinic, a nursing home, a home health care agency, a hospice, a public health clinic, a long-term care facility, a skilled nursing facility, or any other public, nonprofit, or private facility designated by the Secretary.’; and

      (3) by adding at the end the following:

‘PART H--NATIONAL NURSE SERVICE CORPS SCHOLARSHIP PROGRAM

‘SEC. 851. NATIONAL NURSE SERVICE CORPS SCHOLARSHIP PROGRAM.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall establish a National Nurse Service Corps Scholarship program (referred to in this section as the ‘program’) that provides scholarships to individuals seeking nursing education in exchange for service by such individuals in critical nursing shortage areas or facilities.

    ‘(b) PREFERENCE- In awarding scholarships under this section, the Secretary shall give preference to applicants with the greatest financial need, applicants who agree to serve in health care facilities experiencing nursing shortages in medically underserved areas, applicants currently working in a health care facility who agree to serve the period of obligated service at such facility, minority nurse applicants, and applicants with an interest in a practice area of nursing that has unmet needs.

    ‘(c) REQUIREMENTS- To be eligible to participate in the program, an individual must--

      ‘(1) be accepted for enrollment, or be enrolled, in an accredited school of nursing, on a full- or part-time basis, to take courses leading to a collegiate or associate degree in nursing, or a diploma in nursing;

      ‘(2) submit an application to participate in the program; and

      ‘(3) enter into an agreement with the Secretary, at the time of submittal of such application, to--

        ‘(A) accept the conditions of the scholarship and remain enrolled in a school of nursing;

        ‘(B) maintain an acceptable level of academic standing;

        ‘(C) maintain enrollment in a course of study until the individual completes the course of study; and

        ‘(D) serve as a nurse for a period of not less than 2 years in a critical nursing shortage area or facility, or the individual may complete such required period of service on a part-time basis subject to--

          ‘(i) an agreement entered into by the facility and the individual which is approved by the Secretary; and

          ‘(ii) the individual agrees in writing that the period of obligated service will be extended so that the aggregate amount of less than full-time service performed will equal the amount of service that would be performed through full-time service.

    ‘(d) RULE OF CONSTRUCTION- In selecting individuals to participate in the program, the Secretary shall give preference to individuals serving at public or nonprofit private facilities, unless only a private facility is present in the geographic area that the Secretary determines is experiencing a nursing shortage. While giving priority to individuals who propose to provide service in public or nonprofit private facilities, the Secretary must not disregard the needs of areas that individuals seek to provide services in which no public or nonprofit private facility is operating, including rural areas.

    ‘(e) APPLICATIONS-

      ‘(1) IN GENERAL- The application forms for the programs shall include--

        ‘(A) a fair summary of the rights and liabilities of an individual whose application is approved by the Secretary; and

        ‘(B) information respecting meeting a service obligation and such other information as may be necessary for the individual to understand the program.

      ‘(2) ACCESSIBILITY- The application form and all other information furnished by the Secretary shall be written so that it may be understood by the average individual applying to participate in the program. The Secretary shall make such application forms, and other information available to individuals desiring to participate in the program, on a date sufficiently early to ensure that such individuals have adequate time to carefully review and evaluate such forms and information.

      ‘(3) DISTRIBUTION- The Secretary shall distribute to junior and senior high schools, community colleges, universities, and schools of nursing materials providing information on the program and shall encourage the schools to disseminate the materials to students of the schools.

    ‘(f) SCHOLARSHIP-

      ‘(1) IN GENERAL- A scholarship provided to a student for a school year under a written contract under the program shall consist of--

        ‘(A) payment to, or (in accordance with paragraph (2)) on behalf of the student of--

          ‘(i) the tuition of the student in such school year; and

          ‘(ii) all other reasonable educational expenses and support services, including fees, books, and laboratory expenses incurred by the student in such school year; and

        ‘(B) payment to the student of a stipend of $400 per month (adjusted in accordance with paragraph (3)) for each month that the student is enrolled.

      ‘(2) CONTRACTS-

        ‘(A) WITH A SCHOOL OF NURSING- The Secretary may contract with a school of nursing, in which a participant in the program is enrolled, for the payment to the school of nursing of the amounts of tuition and other reasonable educational expenses described in paragraph (1)(A).

        ‘(B) WITH AN INDIVIDUAL- The Secretary shall prepare a written contract for the program that shall be provided to any individual who is enrolled or accepted for enrollment at a school of nursing and who desires to participate in the program at the time that an application is provided to such individual. The contract described in this paragraph shall contain a provision that any financial obligation of the United States arising out of a contract entered into under this section and any obligation of the individual which is conditioned thereon, is contingent upon funds being appropriated for scholarships under this section.

      ‘(3) MONTHLY STIPEND- The amount of the monthly stipend for each month that a student is enrolled, specified in paragraph (1)(B) and as previously adjusted (if at all) in accordance with this paragraph, shall be increased by the Secretary as the Secretary determines to be reasonable.

    ‘(g) BREACH OF AGREEMENT- In the case of an individual who enters into an agreement under this section to provide service as a nurse in consideration for receiving a scholarship, such individual is liable to the Federal Government in accordance with sections 338E and 338F as amended in the future. If the individual begins providing less than full-time service but fails to begin or complete the period of obligated service, the methods stated in section 338E(c) for determining the damages for breach of the individual’s written contract will be used after converting periods of obligated service or of service performed into their full-time equivalence.

    ‘(h) FUND REGARDING USE OF AMOUNTS RECOVERED FOR CONTRACT BREACH- There is established in the Treasury of the United States a fund to be known as the National Nurse Service Corps Replacement Fund. Such fund shall be governed under section 338F.

    ‘(i) SERVICE INFORMATION- The Secretary shall provide to an individual who has participated in the program and is nearing the conclusion of his or her service obligation, information regarding other opportunities for nursing in critical nursing shortage areas or facilities.

    ‘(j) REPORT- Not later than 18 months after the first loan cycle, and annually thereafter, the Secretary shall prepare and submit to Congress a report describing the program, including statements regarding--

      ‘(1) the number of enrollees, scholarships, and grant recipients by year of study;

      ‘(2) the number of graduates;

      ‘(3) the amount of scholarship payments made for each of tuition, stipends, and other expenses;

      ‘(4) which educational institution the scholar attended;

      ‘(5) the number and placement location of the scholars;

      ‘(6) the default rate and actions required;

      ‘(7) the amount of outstanding default funds;

      ‘(8) to the extent that it can be determined, the reason for the default;

      ‘(9) the demographics of the individuals participating in the scholarship program; and

      ‘(10) recommendations for future modifications of the scholarship program.

    ‘(k) DEFINITIONS- In this section:

      ‘(1) COMMUNITY HEALTH CENTER- The term ‘community health center’ has the meaning given such term in section 330(a).

      ‘(2) CRITICAL NURSING SHORTAGE AREA OR FACILITY-

        ‘(A) IN GENERAL- The term ‘critical nursing shortage area or facility’ means--

          ‘(i) an urban or rural area that the Secretary determines is experiencing a nursing shortage;

          ‘(ii) a population that the Secretary determines has such a shortage; or

          ‘(iii) a health care facility or other public, nonprofit, or private facility that the Secretary determines has a shortage.

        ‘(B) FACTORS TO CONSIDER- In making a determination regarding a critical nursing shortage area or facility, the Secretary shall use the criteria in section 846 for not more than 12 months, and after such period--

          ‘(i) the ratio of available nurses to the number of individuals in the area or population group;

          ‘(ii) the demonstrated need of a health care facility or other public, nonprofit, or private facility in the area; or

          ‘(iii) the presence of innovative retention strategies utilized by eligible facilities.

      ‘(3) RURAL HEALTH CLINIC- The term ‘rural health clinic’ has the meaning given such term in section 1861(aa)(2) of the Social Security Act.

    ‘(l) AUTHORIZATION OF APPROPRIATIONS- For the purpose of payments under agreements entered into under subsection (a), there are authorized to be appropriated $40,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘PART I--INITIATIVES TO RECRUIT NURSES AND COMBAT THE NURSING SHORTAGE

‘SEC. 855. NURSE RECRUITMENT GRANT PROGRAM.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall award grants to eligible entities to increase nursing education opportunities.

    ‘(b) ELIGIBLE ENTITY- In this section, the term ‘eligible entity’ means a school of nursing, or a health care facility, or a partnership of such school and facility.

    ‘(c) USE OF FUNDS- An eligible entity that receives a grant under subsection (a) shall use funds received from such grant to--

      ‘(1) support outreach programs at primary, junior, and secondary schools that inform guidance counselors and students of education opportunities regarding nursing;

      ‘(2) carry out special projects to increase nursing education opportunities for individuals who are from disadvantaged backgrounds (including economically disadvantaged backgrounds and racial and ethnic minorities underrepresented among registered nurses) by providing student scholarships or stipends, pre-entry preparation, or retention activities;

      ‘(3) support education programs for nursing students who require assistance with math, science, English, and medical terminology;

      ‘(4) meet the costs of dependent care and transportation for individuals who are taking part in a nursing education program at any level; or

      ‘(5) support community-based partnerships seeking to recruit nurses in rural communities and medically underserved urban communities, and other communities experiencing a nursing shortage.

    ‘(d) APPLICATION- An eligible entity desiring a grant under subsection (a) shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require.

    ‘(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $10,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘PART J--INITIATIVES TO STRENGTHEN THE NURSE WORKFORCE

‘SEC. 857. GRANTS FOR CAREER LADDER PROGRAMS.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall award grants to eligible entities to assist individuals and develop programs to assist individuals in obtaining education and training required to enter the nursing profession and advance within such profession.

    ‘(b) DEFINITION- The term ‘eligible entity’ means a school of nursing or a health care facility, or a partnership of such school and facility.

    ‘(c) USE OF FUNDS- An eligible entity that receives a grant under subsection (a) shall use such funds received through such grant to--

      ‘(1) establish student scholarships or stipends for nurse professionals, licensed practical nurses, certified nurse assistants, and home health aides who enroll in entry level nursing programs, advanced practice nursing degree programs, RN/Master nursing degree programs, doctoral nursing programs, nurse administrator programs, and training programs focused on specific technology use or disease management;

      ‘(2) provide career counseling to individuals seeking to advance within the nursing profession;

      ‘(3) provide employees of the facility advanced training and education at the school of nursing or health care facility;

      ‘(4) establish or expand nursing practice arrangements in noninstitutional settings to demonstrate methods to improve access to primary health care in medically underserved communities; and

      ‘(5) develop programs, including distance learning programs in coordination with the Office for the Advancement of Telehealth, to facilitate educational advancement for individuals with existing degrees or health care training.

    ‘(d) APPLICATION- An eligible entity seeking a grant under subsection (a) shall submit an application to the Secretary at such time, in such a manner, and containing such information as the Secretary may reasonably require.

    ‘(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $20,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘SEC. 858. GRANTS FOR NURSE TRAINING IN LONG-TERM CARE FOR THE ELDERLY.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall award grants to eligible entities to develop and incorporate gerontology curriculum and competencies and to encourage individuals to enter the nursing profession with a focus on providing long-term care for the elderly.

    ‘(b) ELIGIBLE ENTITY- The term ‘eligible entity’ means a--

      ‘(1) school of nursing;

      ‘(2) health care facility; or

      ‘(3) partnership of paragraphs (1) and (2).

    ‘(c) USE OF FUNDS- An eligible entity that receives a grant under subsection (a) shall use funds under such grant to--

      ‘(1) provide training to individuals who will provide long-term care for the elderly;

      ‘(2) develop stand alone courses in gerontological nursing to support concentrations, minors, and majors in the discipline;

      ‘(3) train faculty members in gerontological nursing; or

      ‘(4) provide continuing education in gerontological nursing.

    ‘(d) APPLICATION- An eligible entity desiring a grant under subsection (a) shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require.

    ‘(e) DEFINITIONS- For the purposes of this section, the term ‘health care facility’ means a hospital, nursing home, home health care agency, hospice, skilled nursing facility, long-term care facility, or any other facility designated by the Secretary.

    ‘(f) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $12,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘SEC. 859. GRANTS FOR INTERNSHIP AND RESIDENCY PROGRAMS.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall award grants to an eligible entity to develop internship and residency programs that encourage mentoring and the development of specialties.

    ‘(b) DEFINITION- The term ‘eligible entity’ means a partnership of a school of nursing and health care facility.

    ‘(c) USE OF FUNDS- An eligible entity that receives a grant under subsection (a) shall use such funds received through such grant to--

      ‘(1) develop internship and residency programs and curriculum and training programs for graduates of a nursing program;

      ‘(2) provide support for faculty and mentors; and

      ‘(3) provide support for nurses participating in internship and residency programs on both a full-time and part-time basis.

    ‘(d) APPLICATION- An eligible entity seeking a grant under subsection (a) shall submit an application to the Secretary at such time, in such a manner, and containing such information as the Secretary may reasonably require.

    ‘(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $10,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘SEC. 860. DEVELOPING RETENTION STRATEGIES AND BEST PRACTICES IN NURSING STAFF MANAGEMENT.

    ‘(a) PROGRAM AUTHORIZED- The Secretary shall award grants to eligible entities to carry out and evaluate demonstrations of models and best practices in nursing care and develop innovative strategies or approaches for retention of professional nurses.

    ‘(b) DEFINITIONS- In this section:

      ‘(1) ELIGIBLE ENTITY- The term ‘eligible entity’ means--

        ‘(A) a partnership or coalition containing a health care facility and a school of nursing;

        ‘(B) a partnership or coalition containing a health care facility and another organization with expertise in outcome and cost-effectiveness measurement; or

        ‘(C) containing a health care facility demonstrating proficiency in outcomes and cost-effectiveness measurement, and receipt of accreditation by an accepted organization shall constitute evidence of such proficiency.

      ‘(2) NURSE LEADERSHIP- The term ‘nurse leadership’ includes nurse executives, nurse administrators, and nurse managers.

      ‘(3) PROFESSIONAL NURSE- The term ‘professional nurse’ means a registered nurse who holds a valid and unrestricted license to practice nursing in a State.

    ‘(c) DISTRIBUTION OF GRANTS- Grants awarded under this section shall be distributed among a variety of geographic regions and among a range of different types and sizes of health care facilities.

    ‘(d) DURATION OF GRANTS- Grants awarded under this section shall be awarded for a period not greater than 2 years (and may be renewable only once).

    ‘(e) ALLOCATION- The Secretary shall determine the amount of a grant awarded under this section to the nursing services of the health care facility based on the number of staffed beds as follows, and if the Secretary deems appropriate these amounts may be adjusted:

      ‘(1) A maximum of $200,000 for a facility with less than 100 staffed beds.

      ‘(2) A maximum of $400,000 for a facility with less than 400 staffed beds.

      ‘(3) A maximum of $600,000 for a facility with 400 or more staffed beds.

    ‘(f) PRIORITY CRITERIA- The Secretary shall give priority in awarding grants under this section to health care facilities that have not previously received a grant under this section, and in the case of a grant renewal, the Secretary shall give priority to grant recipients who have demonstrated outcome improvements or have been designated as a magnet hospital by the American Nurses Credentialing Center.

    ‘(g) USE OF FUNDS- An eligible entity that receives a grant under subsection (a) shall use such grant funds to do one or more of the following:

      ‘(1) Improve the quality of the health care facility work environment, including improving communication and collaboration among health care professionals.

      ‘(2) Initiate or maintain aggressive nurse retention programs, including other initiatives as deemed appropriate by the nurse retention committee at the health care facility.

      ‘(3) Reduce workplace injuries.

      ‘(4) Reduce rates of nursing sensitive patient outcomes.

      ‘(5) Provide high quality evaluations of the cost-effectiveness and patient-outcomes of best practices, to assist health care facility decision-makers in determining appropriate nurse retention strategies.

      ‘(6) Promote continuing nursing education and career development.

    ‘(h) APPLICATION-

      ‘(1) IN GENERAL- An eligible entity desiring a grant under subsection (a) shall submit an application to the Secretary at such time, and in such manner, and containing such information as the Secretary may reasonably require.

      ‘(2) CONTENTS- The application submitted under paragraph (1) shall include a description of--

        ‘(A) the project or projects proposed to be carried out with grant funds;

        ‘(B) the means by which to evaluate the project with respect to its cost-effectiveness and outcomes as they relate to staff turnover, workplace injuries, and patient care outcomes that are sensitive to nursing care; and

        ‘(C) the system of patient outcomes measurement, which shall be described by the nurse leadership and professional nurses of the health care facility and shall be sensitive to nursing care and shall evaluate the specific needs of the patients served by the health care facility and the educational needs of the nursing staff at such facility to meet the needs of the patients, and the health care facility must allocate sufficient funds to carry out the system;

        ‘(D) the health care facility’s organizational and clinical decision-making processes that incorporate the input of the nursing staff, including the development of a nurse retention committee, the inclusion of nurse executive participation in senior level management of the health care facility, and a nurse residency training program for new graduate nurses entering the workforce on a full-time basis, or nurses returning to work at a health care facility on a full-time basis after an absence of not less than 3 years without working in the nursing field.

    ‘(i) AUTHORIZATION OF APPROPRIATIONS- There is to be authorized to be appropriated to carry out this section $10,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.

‘SEC. 861. STIPEND AND SCHOLARSHIP PROGRAM.

    ‘(a) PROGRAM AUTHORIZED-

      ‘(1) IN GENERAL- The Secretary shall establish a scholarship and stipend program to encourage individuals to seek a masters degree or a doctoral degree at a school of nursing.

      ‘(2) LIMITATION- Assistance provided under paragraph (1) for a part-time masters degree program shall be provided for not more than 6 years and for a part-time doctoral degree program not more than 7 years.

    ‘(b) ELIGIBILITY- To be eligible to receive a scholarship or stipend under this section, an individual shall--

      ‘(1) submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require;

      ‘(2) be accepted for enrollment, or be enrolled, in an accredited school of nursing, on a full- or part-time basis to take courses leading to a masters degree or doctoral degree;

      ‘(3) enter into an agreement with the Secretary, at the time of submittal of such application, to--

        ‘(A) accept the conditions of the scholarship and remain enrolled in a school of nursing;

        ‘(B) maintain an acceptable level of academic standing; and

        ‘(C) maintain enrollment in a course of study until the individual completes the course of study; and

      ‘(4) teach at an accredited school of nursing for 1 year for each year of assistance with a course load determined by the school of nursing where the teaching will take place, and the individual may complete such required period of service on a part-time basis subject to--

        ‘(A) an agreement entered into by the facility and the individual which is approved by the Secretary; and

        ‘(B) the individual agrees in writing that the period of obligated service will be extended so that the aggregate amount of less than full-time service will equal the amount of service that would be performed through full-time service.

    ‘(c) APPLICATION- The Secretary shall disseminate application forms to individuals and in such forms, include--

      ‘(1) a summary of the rights and liabilities of an individual whose application is approved by the Secretary; and

      ‘(2) information respecting meeting the service obligation described in subsection (b)(4).

    ‘(d) SCHOLARSHIP-

      ‘(1) IN GENERAL- A scholarship provided to a student for a school year under a written contract under the program shall consist of--

        ‘(A) payment to, or (in accordance with paragraph (2)) on behalf of the student of--

          ‘(i) the tuition of the student in such school year; and

          ‘(ii) all other reasonable educational expenses and support services, including fees, books, and laboratory expenses incurred by the student in such school year; and

        ‘(B) payment to the student of a stipend of $400 per month (adjusted in accordance with paragraph (3)) for each month that the student is enrolled.

      ‘(2) CONTRACTS-

        ‘(A) WITH A SCHOOL OF NURSING- The Secretary may contract with a school of nursing, in which a participant in the program is enrolled, for the payment to the school of nursing of the amounts of tuition and other reasonable educational expenses described in paragraph (1)(A).

        ‘(B) WITH AN INDIVIDUAL- The Secretary shall prepare a written contract for the program that shall be provided to any individual who is enrolled or accepted for enrollment at a school of nursing and who desires to participate in the program at the time that an application is provided to such individual. The contract described in this paragraph shall contain a provision that any financial obligation of the United States arising out of a contract entered into under this section and any obligation of the individual which is conditioned thereon, is contingent upon funds being appropriated for scholarships under this section.

      ‘(3) MONTHLY STIPEND- The amount of the monthly stipend for each month that a student is enrolled, specified in paragraph (1)(B) and as previously adjusted (if at all) in accordance with this paragraph, shall be increased by the Secretary as the Secretary determines to be reasonable.

    ‘(e) BREACH OF AGREEMENT- In the case of an individual who enters into an agreement under this section to provide service as a nurse in consideration for receiving a scholarship, such individual is liable to the Federal Government in accordance with sections 338E and 338F as amended in the future. If the individual begins providing less than full-time service but fails to begin or complete the period of obligated service, the methods stated in section 338E(c) for determining the damages for breech of the individual’s written contract will be used after converting periods of obligated service or of service performed into their full-time equivalence.

    ‘(f) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section $10,000,000 for fiscal year 2003 and such sums as may be necessary for fiscal years 2004 through 2007.’.

TITLE III--MEDICAL MALPRACTICE LIABILITY REFORM

SEC. 301. DEFINITIONS.

    In this title, the following definitions apply:

      (1) ALTERNATIVE DISPUTE RESOLUTION SYSTEM- The term ‘alternative dispute resolution system’ means a system that provides for the resolution of medical malpractice claims in a manner other than through medical malpractice liability actions.

      (2) CLAIMANT- The term ‘claimant’ means any person who alleges a medical malpractice claim, and any person on whose behalf such a claim is alleged, including the decedent in the case of an action brought through or on behalf of an estate.

      (3) FUTURE DAMAGES- The term ‘future damages’ means damages for economic or noneconomic loss incurred after the time of judgment.

      (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 the laws or regulations of the State to be licensed or 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 the laws or regulations of the State 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 illness, disease, or other harm that is the subject of a medical malpractice liability action or a medical malpractice claim.

      (7) MANDATORY- The term ‘mandatory’ means required to be used by the parties to attempt to resolve a medical malpractice claim notwithstanding any other provision of an agreement, State law, or Federal law.

      (8) MEDIATION- The term ‘mediation’ means a settlement process coordinated by a neutral third party and without the ultimate rendering of a formal opinion as to factual or legal findings.

      (9) MEDICAL MALPRACTICE CLAIM- The term ‘medical malpractice claim’ means a claim against a health care provider, a health care professional, or a blood or tissue bank licensed or registered by the Food and Drug Administration in which a claimant alleges that injury was caused by the provision of (or the failure to provide) health care services, except that such term does not include--

        (A) any claim based on an allegation of an intentional tort; or

        (B) any claim based on an allegation that a product is defective or unreasonably dangerous.

      (10) MEDICAL MALPRACTICE LIABILITY ACTION- The term ‘medical malpractice liability action’ means a civil action brought in a State or Federal court against a health care provider, a health care professional, or a blood or tissue bank licensed or registered by the Food and Drug Administration in which the plaintiff alleges a medical malpractice claim.

SEC. 302. FEDERAL TORT REFORM.

    (a) IN GENERAL- Except as provided in section 303, this title shall apply with respect to any medical malpractice liability action brought in any State or Federal court, except that this title shall not apply to 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 claim or action.

    (b) PREEMPTION- The provisions of this title shall preempt any State law to the extent such law relates to a type of tort reform included under this title and is inconsistent with such provisions.

    (c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE OF LAW OR VENUE- Nothing in this title shall be construed to--

      (1) waive or affect any defense of sovereign immunity asserted by any State under any provision of law;

      (2) waive or affect any defense of sovereign immunity 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 respect to claims brought by a foreign nation or a citizen 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.

    (d) FEDERAL COURT JURISDICTION NOT ESTABLISHED ON FEDERAL QUESTION GROUNDS- Nothing in this title shall be construed to establish any jurisdiction in the district courts of the United States over medical malpractice liability actions on the basis of section 1331 or 1337 of title 28, United States Code.

SEC. 303. ALTERNATIVE DISPUTE RESOLUTION METHODS.

    (a) MANDATORY MEDIATION- In any medical malpractice liability action, before such action comes to trial, mediation shall be required. Such mediation shall be conducted by one or more mediators who are selected by agreement of the parties or, if the parties do not agree, who are qualified under applicable State law and selected by the court.

    (b) REQUIREMENTS- Mediation under subsection (a) shall be made available by a State subject to the following requirements:

      (1) Participation in such mediation shall be in lieu of any alternative dispute resolution method required by any other law or by any contractual arrangement made by or on behalf of the parties before the commencement of the action.

      (2) Each State shall disclose to residents of the State the availability and procedures for resolution of consumer grievances regarding the provision of (or failure to provide) health care services, including such mediation.

      (3) Each State shall provide that such mediation may begin before or after, at the option of the claimant, the commencement of a medical malpractice liability action.

      (4) The Attorney General, in consultation with the Secretary of Health and Human Services, shall, by regulation, develop requirements with respect to such mediation to ensure that it is carried out in a manner that--

        (A) is affordable for the parties involved;

        (B) encourages timely resolution of claims;

        (C) encourages the consistent and fair resolution of claims; and

        (D) provides for reasonably convenient access to dispute resolution.

    (c) FURTHER REDRESS AND ADMISSIBILITY- Any party dissatisfied with a determination reached with respect to a medical malpractice claim as a result of an alternative dispute resolution method applied under this section shall not be bound by such determination. The results of any alternative dispute resolution method applied under this section, and all statements, offers, and communications made during the application of such method, shall be inadmissible for purposes of adjudicating the claim.

SEC. 304. PREVENTING FRIVOLOUS MALPRACTICE SUITS.

    (a) CERTIFICATION- The signatures of attorneys or parties constitute a certificate by them that they have read the pleading that to the best of their knowledge, information, and belief formed after reasonable inquiry the medical malpractice claim is not groundless and brought in bad faith or groundless and groundless and brought for the purpose of harassment. Attorneys or parties who shall bring a fictitious suit as an experiment to get an opinion of the court, or who shall file any fictitious pleading in a cause for such a purpose, or shall make statements in a pleading which they know to be groundless and false, for the purpose of securing a delay of the trial of the cause, shall be held guilty of contempt. If a pleading is signed in violation of this subsection, the court, upon motion or upon its own initiative, after notice and hearing, shall impose an appropriate sanction, such as striking the pleadings, dismissing the suit, and requiring payment of costs, attorneys fees, and sanctions (if appropriate) plus interest, upon the person who signed it, a represented party, or both.

    (b) PROCESS; RULES- Courts shall presume that pleadings are filed in good faith. No sanctions under this section may be imposed except for good cause, the particulars of which must be stated in the sanction order. The term ‘groundless’ means, for purposes of this section, having no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. A general denial does not constitute a violation of this subsection (a). The amount requested in damages, if any, does not constitute a violation of subsection (a).

SEC. 305. REQUIREMENT FOR AFFIDAVIT OF MERIT.

    (a) REQUIRING SUBMISSION WITH COMPLAINT- No medical malpractice liability action may be brought by any individual unless, at the time the individual brings the action (except as provided in subsection (b)(1)), the individual (or the individual’s attorney) submits an affidavit declaring that--

      (1) the individual (or the individual’s attorney) has consulted and reviewed the facts of the action with a qualified specialist;

      (2) the individual (or the individual’s attorney) has obtained a written report by a qualified specialist that clearly identifies the individual and that includes the specialist’s statement of belief that, based on a review of the available medical record and other relevant material, there is a reasonable and meritorious cause for the filing of the action against the defendant; and

      (3) on the basis of the qualified specialist’s review and consultation, that the individual (or the individual’s attorney) has concluded that there is a reasonable and meritorious cause for the filing of the action.

    (b) EXTENSION IN CERTAIN INSTANCES-

      (1) IN GENERAL- Subject to paragraph (2), subsection (a) shall not apply with respect to an individual who brings a medical malpractice liability action without submitting an affidavit described in such subsection if--

        (A) the individual is unable to obtain the affidavit before the expiration of the applicable statute of limitations;

        (B) as of the time the individual brings the action, the individual has been unable to obtain adequate medical records or other information necessary to prepare the affidavit; or

        (C) other good cause exists for failing to submit the affidavit.

      (2) DEADLINE FOR SUBMISSION WHERE EXTENSION APPLIES- In the case of an individual who brings an action for which paragraph (1) applies, the action shall be dismissed unless the individual (or the individual’s attorney) submits the affidavit described in subsection (a) not later than--

        (A) in the case of an action for which subparagraph (A) of paragraph (1) applies, 90 days after bringing the action;

        (B) in the case of an action for which subparagraph (B) of paragraph (1) applies, 90 days after obtaining the information described in such subparagraph; or

        (C) in the case of an action for which subparagraph (C) of paragraph (1) applies, 90 days after the good cause involved ceases to exist.

    (c) QUALIFIED SPECIALIST DEFINED- In subsection (a), a ‘qualified specialist’ means, with respect to a medical malpractice liability action, a health care professional who is reasonably believed by the individual bringing the action (or the individual’s attorney)--

      (1) to be knowledgeable in the relevant issues involved in the action,

      (2) to practice (or to have practiced) or to teach (or to have taught) in the same area of health care or medicine that is at issue in the action, and

      (3) in the case of an action against a physician, to be board certified in a specialty relating to that area of medicine.

    (d) SANCTIONS FOR SUBMITTING FALSE ALLEGATIONS- Upon the motion of any party or its own initiative, the court in a medical malpractice liability action may impose a sanction on a party or the party’s attorney (or both), including a requirement that the party reimburse the other party to the action for costs and a reasonable attorney’s fee, if an affidavit described in subsection (a) is submitted without reasonable cause and is found to be untrue.

    (e) CONFIDENTIALITY OF SPECIALIST- Upon a showing of good cause by a defendant, the court may ascertain the identity of a specialist referred to in subsection (a) while preserving confidentiality.

SEC. 306. PERIODIC PAYMENT OF AWARDS.

    (a) AUTHORITY TO PERMIT PERIODIC PAYMENTS- The court may instruct the trier of fact to find, or may otherwise order that, part or all of future damages that exceed $250,000 be paid on an appropriate periodic basis. The court shall ensure that the amount and present value of periodic payments constitute full recovery of the damages awarded for the claimant’s injury and that the payment schedule is found to be in the best interests of all the parties to the action.

    (b) BOND OR SECURITY FOR FUTURE DAMAGES- If future damages are awarded on a periodic basis, the court shall require the defendant to post security or a bond, or otherwise ensure the full payment of such damages.

    (c) MODIFICATION OF PAYMENT SCHEDULE- Except where the parties agree otherwise, in a medical malpractice liability action, the court shall retain authority to modify, on the basis of changed circumstances, the payment schedule of any periodic payments of future damages awarded in the action.

    (d) DEATH OF PLAINTIFF- Except where the parties agree otherwise, if a plaintiff to whom future damages are awarded in a medical malpractice liability action and made payable on a periodic basis dies before completion of the payment of such damages, the court shall order the payment of any remaining portion of such damages be paid to the estate of the plaintiff. Insofar as damages in a medical malpractice liability action include payment for future medical expenses for the plaintiff, the previous sentence shall not apply and no such payments shall be made for expenses incurred after the date of death of the plaintiff.

TITLE IV--MEDICAL MALPRACTICE INSURANCE REFORMS

SEC. 401. ADVISORY COMMISSION ON MEDICAL MALPRACTICE.

    (a) APPOINTMENT-

      (1) IN GENERAL- Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services, in consultation with the Congress, shall appoint an Advisory Commission on Medical Malpractice (in this section referred to as the ‘Commission’).

      (2) COMPOSITION- The Commission shall consist of 11 members, appointed without regard to the civil service laws. Seven members shall be representatives of health care professional organizations, 2 of whom shall be self-employed physicians (allopathic or osteopathic). The remaining members shall have expertise in health care quality or economics, but 2 shall have expertise in insurance and at least 1 shall be a representative of patients.

      (3) TERMS; QUORUM- The members of the Commission shall serve until submission of the report pursuant to subsection (d), at which time the Commission shall terminate. A vacancy arising in the Commission shall be filled in the same manner as the original appointment is made. A majority of members shall constitute a quorum, and action shall be taken only by a majority vote of those present and voting.

    (b) DUTIES- The Commission shall examine the causes of the medical malpractice crisis. As part of such examination, the Commission shall study and examine the following issues:

      (1) The financial statements and information submitted to regulators by insurance companies that offer medical malpractice insurance, as well as any other information maintained by regulators that may be relevant to this issue.

      (2) How reductions in the investment income of insurers may be adversely affecting the financial outlook of these companies, thus increasing physician premiums to compensate for any declines.

      (3) The underwriting history of medical malpractice insurance to determine whether premiums have historically experienced similar increases and also determine whether current market conditions are in some way unique.

      (4) The competitiveness of markets, particularly in those areas experiencing the sharpest premium increases. For example, has the lack of competition in the medical malpractice insurance market adversely affected physician premiums?

      (5) How malpractice settlements and judgments compare to premiums earned for medical malpractice lines of insurance. In particular, how incurred but not yet reported holdings have affected the reserve practices of medical malpractice insurers.

      (6) The effect of current laws (at both the Federal and State levels) on medical malpractice insurance rates.

      (7) The underlying causes of changes in medical malpractice insurance premiums.

    (c) STAFFING; COMPENSATION-

      (1) STAFFING- The Secretary of Health and Human Services shall furnish to the Commission an executive secretary and such secretarial, clerical, and other services as may be necessary to conduct its business, and may call upon other agencies of the Government for statistical data, reports, and other information which will assist the Commission in the performance of its duties.

      (2) COMPENSATION- Members of the Commission, while serving on business of the Commission (inclusive of travel time), shall be entitled to receive the daily equivalent of the annual rate of basic maximum rate of pay payable from time to time under section 5376 of title 5, United States Code, for each day and, while so serving away from their homes or regular places of business, may be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as provided in section 5703 of title 5, United States Code, for individuals in the Government employed intermittently.

    (d) REPORT- Not later than one year after the date the Commission is appointed, the Commission shall submit to Congress a report that provides specific legislative changes that would address the problems the Commission found, including a proposal for the reduction of medical malpractice insurance rates.

    (e) RESPONSE TO REPORT- The appropriate committees of the House of Representatives and the Senate shall hold hearings on the Commission’s report and consider legislation to address these problems.

SEC. 402. FREEZE IN MEDICAL MALPRACTICE INSURANCE RATES.

    (a) DECLARATION OF INTERSTATE COMMERCE- Congress finds that medical malpractice insurance coverage affects interstate commerce.

    (b) FREEZE- Notwithstanding any other provision of law, effective on the date of the enactment of this Act, the rates charged for medical malpractice insurance coverage during the period beginning on the day after the date of the enactment of this Act and ending on the date that is 6 months after the date the Commission files its report under section 401(d) shall not exceed the rates in effect for such coverage as of January 1, 2002 (or, in the case of coverage not offered as of such date, such comparable rate as is approved by the Secretary of Health and Human Services).

    (c) EXCEPTION- Any entity which can demonstrate to the Secretary of Health and Human Services that under the terms of subsection (b) it would be unable to earn a fair rate of return shall be exempt from the freeze in rates under such subsection.

SEC. 403. WITHDRAWAL FROM MEDICAL MALPRACTICE INSURANCE MARKET.

    (a) LIMITATION- Any entity that discontinues writing medical malpractice insurance coverage in a State shall also discontinue the writing of any other line of insurance in such State.

    (b) ORDERLY WITHDRAWAL- If an entity discontinues writing medical malpractice insurance coverage in a State, it shall file with the insurance commissioner of that State a plan of orderly withdrawal, pursuant to which the insurer shall make such arrangements as are necessary to ensure that any person insured by the entity shall continue to be insured until the end of the term of the policy held by such person.

    (c) SUNSET- Subsections (a) and (b) shall only apply during the 3-year period beginning on the date of the enactment of this Act.

SEC. 404. GUARANTEED RENEWABILITY OF COVERAGE.

    (a) IN GENERAL- Subject to subsection (b), all medical malpractice insurance coverage shall be guaranteed renewable. Rates for such coverage shall increase by no more than the rate of increase in the health care component of the consumer price index for all urban consumers.

    (b) EXCEPTIONS-

      (1) RATE FREEZE- Subsection (a) shall not affect or supersede the application of section 402.

      (2) LIMITATION- An entity is not required to renew medical malpractice insurance coverage in the case of fraud, excessive claims on which indemnity has been paid, or nonpayment of premiums by the insured health care provider.

SEC. 405. GUARANTEED COVERAGE FOR CERTAIN HEALTH CARE PROVIDERS.

    Any entity that is licensed to offer medical malpractice insurance coverage shall offer medical malpractice insurance coverage to any health care provider that has zero medical malpractice claims (as defined in section 301(10)) on which indemnity has been paid during the previous 3 years.

SEC. 406. MEDICAL MALPRACTICE INSURANCE DISCLOSURE.

    (a) IN GENERAL- Annually on or before March 1, every insurer writing medical malpractice insurance coverage to a health care provider shall file with the Secretary of Health and Human Services a copy of the Annual Statement it files with the Department of Insurance in the State in which it is domiciled. Every such insurer shall also file the following information with the Secretary:

      (1) INFORMATION ON CLOSED CLAIMS-

        (A) The number of new claims reported during the preceding year, and the total amounts reserved for such claims and for allocated loss adjustment expenses in connection with such claims.

        (B) The number of claims closed during the preceding year, and the amount paid on such claims, broken out as follows:

          (i) The number of claims closed each year with payment, and the amount paid on such claims and on allocated loss adjustment expenses in connection with such claims.

          (ii) The number of claims closed each year without payment, and the amount of allocated loss adjustment expenses in connection with such claims.

      (2) INFORMATION REGARDING VERDICTS, PAYMENT, AND SEVERITY OF INJURY IN CONNECTION WITH VERDICTS- For each verdict rendered against the insurer for more than $100,000, the amount of the verdict, the amount paid to the plaintiff, and the category of injury suffered by the plaintiff, categorized as follows:

        (A) TEMPORARY INJURY-

          (i) Emotional distress.

          (ii) lacerations, contusions, minor scars, and rash not resulting in permanent scarring or disfigurement.

          (iii) Non-life-threatening infections.

          (iv) Falls not resulting in fractures.

          (v) Medication errors.

        (B) PERMANENT INJURY-

          (i) Major injury, including loss of one or more fingers, organs, limbs, deafness, loss of sight, loss of fertility, permanent scarring or disfigurement, and brain damage.

          (ii) Catastrophic injury requiring life-long care or having a fatal prognosis.

        (C) DEATH- Death.

      (3) INFORMATION ON RATE CHANGES- Each rate change implemented during the preceding five-year period, by state and by medical specialty.

      (4) INFORMATION ON PREMIUMS AND LOSSES BY MEDICAL SPECIALTY-

        (A) Written premiums and paid losses for the preceding year, and earned premiums and incurred losses for the preceding year, broken out by medical specialty.

        (B) Number of providers insured in each medical specialty.

      (5) INFORMATION ON PREMIUMS AND LOSSES BY EXPERIENCE OF THE INSURED-

        (A) Written premiums and paid losses for the preceding year, and earned premiums and incurred losses for the preceding year, broken out as follows:

          (i) All insureds with no incidents within the preceding five-year period.

          (ii) All insureds with one incident within the preceding five-year period.

          (iii) All insureds with two incidents within the preceding five-year period.

          (iv) All insureds with three or more incidents within the preceding five-year period.

        (B) Number of providers insured--

          (i) with no incidents within the preceding five-year period;

          (ii) with one incident within the preceding five-year period;

          (iii) with two incidents within the preceding five-year period; or

          (iv) with three or more incidents within the preceding five-year period.

      (6) INFORMATION ON THE PERFORMANCE OF THE INVESTMENTS OF THE INSURER- The value of the investments held in the investment portfolio of the insurer as of December 31 of the preceding calendar year, and the rate of return earned on such

investments, broken down by category of investment, as follows:

        (A) United States government bonds.

        (B) Bonds exempt from tax by the United States.

        (C) Other bonds (unaffiliated).

        (D) bonds of affiliates.

        (E) Preferred stocks (unaffiliated),

        (F) Preferred stocks of affiliates.

        (G) Common stock (unaffiliated).

        (H) Common stock of affiliates.

        (I) Mortgage loans.

        (J) Real estate.

        (K) Any additional categories of investments specified by the Secretary.

    (b) ANNUAL REPORT- The Secretary shall submit to Congress by July 1 of each year a report on the performance of the medical malpractice insurance market during the preceding year. Such report shall be based on the information submitted pursuant to this section.

    (c) RULES- The Secretary shall promulgate rules to carry out the purposes of this section.

    (d) INSURER DEFINED- For purposes of this section, the term ‘insurer’ includes every insurance company authorized to transact insurance business in any State, every risk retention group, every insurance company issuing insurance to or through a purchasing group, and any other person providing insurance coverage.

SEC. 407. MEDICAL MALPRACTICE INSURANCE PRICE COMPARISON.

    (a) INTERNET SITE- Not later than July 1, 2003, and after consultation with the medical malpractice insurance industry, the Secretary of Health and Human Services shall establish an interactive, secure internet site (in this section referred to as the ‘internet site’) which shall enable any health care provider licensed in the United States to obtain a quote from each medical malpractice insurer licensed to write the type of coverage sought by the provider.

    (b) ONLINE FORMS-

      (1) IN GENERAL- The internet site shall enable health care providers to complete an online form that shall capture a comprehensive set of information sufficient to generate a quote for each insurer. The Secretary shall develop transmission software components which allow such information to be formatted for delivery to each medical malpractice insurer based on the requirements of the computer system of the insurer.

      (2) PROTECTION OF CONFIDENTIALITY OF INFORMATION DISCLOSED- All information provided by a health care provider for purposes of generating a quote through the internet site shall be used only for that purpose and shall not be used in connection with the National Physician’s Data Bank or for any other purposes, including in connection with any legal action.

    (c) INTEGRATION OF RATING CRITERIA- The Secretary shall integrate the rating criteria of each insurer into its online form after consultation with each insurer. The Secretary shall integrate such criteria using one of the following methods:

      (1) Developing a customized interface with the insurer’s own rating engine.

      (2) Accessing a third-party rating engine of the insurer’s choice.

      (3) Loading the carrier’s rating information into a rating engine operated by the Secretary.

      (4) Any other method agreed on between the Secretary and the insurer.

    (d) PRESENTATION OF QUOTES- After a health care provider has answered all the questions appearing on the online form, such provider will be presented with quotes from each medical malpractice insurer licensed to write the coverage requested by the provider.

    (e) ACCURACY OF QUOTES- Quotes provided at the internet site shall at all times be accurate. Whenever any insurer changes its rates, such rate changes shall be implemented at the internet site by the Secretary, in consultation with the insurer, as soon as practicable, but in no event later than 10 days after such changes take effect. During any period during which an insurer has changed its rates but the Secretary has not yet implemented such changed rates on the internet site, quotes for that insurer shall not be obtainable at the internet site.

    (f) USER-FRIENDLY FEATURES- The Secretary shall design the internet site to incorporate user-friendly formats and self-help guidance materials, and shall develop a user-friendly internet user-interface.

    (g) CONTACT INFORMATION- The internet site shall also provide contact information, including address and telephone number, for each medical malpractice insurer for which a provider obtains a quote at the site.

    (h) REPORT- Not later than December 31, 2004, the Secretary shall submit a report to the Congress on the development, implementation and effects of the internet site. Such report shall be based on--

      (1) the Secretary’s consultation with health care providers, medical malpractice insurers, State insurance commissioners, and other interested parties; and

      (2) the Secretary’s analysis of other information available to the Secretary.

    The report shall describe the Secretary’s views concerning the extent to which this section has contributed to increasing the availability of medical malpractice insurance coverage, and the effect this section has had on the cost of medical malpractice insurance coverage.

TITLE V--ADDITIONAL PROVISIONS

SEC. 501. STATE CONSIDERATION OF ADDITIONAL AND ALTERNATIVE METHODS.

    It is the sense of Congress that the States, as primary regulators of the insurance industry, should consider the following additional and alternative methods for dealing with the rates and availability of medical malpractice insurance:

      (1) Using claims history as a rating factor in establishing premiums and requiring each medical malpractice insurer to offer its lowest rate to all doctors in a State meeting its eligibility criteria for such rate.

      (2) Limiting the percentage of an insurer’s assets that can be invested in stocks or other high-risk investments and preventing insurers from seeking to recoup losses on their investments by raising rates.

      (3) Requiring prior approval by the state insurance regulators of any medical malpractice insurance rates and allowing health care providers to intervene in proceedings regarding rate changes.

      (4) Establishing new medical malpractice insurance entities, using loans authorized by States, similar to the model (enacted in Missouri) that established a new workers compensation insurer.

      (5) Setting up a fund to address birth-related neurological injury compensation.

SEC. 502. MANDATING EQUAL TREATMENT BETWEEN TRADITIONAL INSURERS AND RISK RETENTION GROUPS, INCLUDING MEDICAL MALPRACTICE RISK RETENTION GROUPS.

    (a) RISK RETENTION GROUPS- Section 3 of the Liability Risk Retention Act of 1986 (15 U.S.C. 3902) is amended--

      (1) in subsection (a)(1), in the matter before subparagraph (A), by inserting ‘or have a disparate impact on,’ after ‘directly or indirectly’; and

      (2) in subsection (c), by inserting ‘or has a disparate impact on’ after ‘which discriminates against’.

    (b) PURCHASING GROUPS- Section 4 of such Act (15 U.S.C. 3903) is amended--

      (1) in subsection (a)--

        (A) by striking ‘or’ at the end of paragraph (7);

        (B) by redesignating paragraph (8) as paragraph (9); and

        (C) by inserting after paragraph (7) the following new paragraph:

      ‘(8) have a disparate impact on a purchasing group; or’; and

      (2) in subsection (c), by inserting ‘or has a disparate impact on’ after ‘which discriminates against’.