H.R. 5: The Protecting Access to Healthcare (PATH) Act

H.R. 5

The Protecting Access to Healthcare (PATH) Act

Sponsor
Sen. Bernard Sanders

Date
March 22, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Wednesday March 21, 2012 and Thursday March 22, 2012, the House is scheduled to consider H.R. 5, the “Protecting Access to Healthcare (PATH) Act,” sponsored by Rep. Phil Gingrey (R-GA) under a rule.  The rule provides six hours of general debate equally divided and controlled by the respective chairs and ranking minority members of the Committees on Energy and Commerce, the Judiciary, and Ways and Means and waives all points of order against consideration of the bill.  The rule provides that an amendment in the nature of a substitute consisting of the text of Rules Committee Print 112-18 shall be considered as adopted and the bill, as amended, shall be considered as read.  The rule makes in order only those further amendments printed in the Rules Committee report.  Each such amendment may be offered only in the order printed in the report, may be offered only by a Member designated in the report, shall be considered as read, shall be debatable for 10 minutes equally divided and controlled by the proponent and an opponent, shall not be subject to amendment, and shall not be subject to a demand for division of the question.  The rule waives all points of order against amendments printed in the report and provides one motion to recommit with or without instructions.

Rules Committee Print 112-18 merges H.R. 5 as introduced in 2011 and H.R. 452, the “Medicare Decisions Accountability Act of 2011,” into the “Protecting Access to Healthcare (PATH) Act” as Title I (the “Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2012”) and Title II (the “Medicare Decisions Accountability Act of 2012”) respectively, making any necessary technical and conforming changes. 

Previously,  H.R. 5, the “Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011,” was introduced by Rep. Phil Gingrey (R-GA) on January 24, 2011 and was referred to the Judiciary Committee and the Committee on Energy and Commerce.  The Judiciary Committee held a mark-up session on February 9, 2011 and February 16, 2011 and ordered the bill as amended favorably reported by a vote of 18-15.  The Committee on Energy and Commerce held a mark-up session on May 10-11, 2011 and ordered the bill as amended favorably reported by a vote of 30-20. 

Previously, H.R. 452, the “Medicare Decisions Accountability Act of 2011,” was introduced by Rep. Phil Roe (R-TN) on January 26, 2011 and was referred to the Committee on Ways and Means, the Rules Committee, and the Committee on Energy and Commerce.  The Committee on Ways and Means held a mark-up session on March 8, 2012 and ordered the bill as amended favorably reported by voice vote.  The Committee on Energy and Commerce held a mark-up session on March 5-6, 2012 and ordered the bill as amended favorably reported by voice vote.

Bill Summary

Sec. 101.  Short Title.

Section 101 would establish the short title as the ‘‘Help Efficient, Accessible, Low Cost, Timely Healthcare (HEALTH) Act of 2012.’’

 

Sec. 102.  Findings and Purpose.

The purposes would include the following:  (1) improving the availability of health care services in cases in which health care liability actions have been shown to be a factor in the decreased availability of services; (2) reducing the incidence of “defensive medicine” and lowering the cost of health care liability insurance, all of which contribute to the escalation of health care costs; (3) ensuring than persons with meritorious health care injury claims receive fair and adequate compensation, including reasonable noneconomic damages; (4) improving the fairness and cost-effectiveness of our current health care liability system to resolve disputes over, and provide compensation for, health care liability by reducing uncertainty in the amount of compensation provided to injured individuals; and (5) providing an increasing share of information in the health care system which will reduce unintended injury and improve patient care.

 

Sec. 103.  Encouraging Speedy Resolution of Claims.

Section 103 states that a health care lawsuit could be commenced within 3 years after the date of manifestation of injury or 1 year after the claimant discovers, or through the use of reasonable diligence should have discovered, the injury, whichever occurs first.  In no event would the time for commencement of a health care lawsuit exceed 3 years after the manifestation of injury unless tolled for any of the following: (1) upon proof of fraud; (2) intentional concealment; or (3) the presence of a foreign body, which has no therapeutic or diagnostic purpose or effect, in the person of the injured person.  The bill would provide an exception for alleged injuries sustained by a minor before the age of 6, in which case a health care lawsuit could be commenced by or on behalf of the minor until the later of 3 years from the date of manifestation of injury, or the date on which the minor attains the age of 8.  

 

Sec. 104.  Compensating Patient Injury.

Subsection 4(a) provides that in any health care lawsuit, nothing in this bill would limit a claimant’s recovery for the full amount of available economic damages, notwithstanding the limitation in subsection (b).  Under subsection 4(b), there would be no more than $250,000 in non-economic damages with respect to the same injury.  The cap in this section would apply separately to each party with a direct personal injury.  Subsection 104(c) would make clear that courts should apply the $250,000 cap for non-economic damages without calculations that include discounting to present value.  Juries would not be informed about the maximum award for non-economic damages.  Subsection 104(d) provides that each party shall be liable for the amount of damages allocated to such party.  This allocation shall be determined in direct proportion to such party’s percentage of responsibility for the damages. 

 

Sec. 105.  Maximizing Patient Recovery.

Section 105 would require that courts supervise the arrangements for payment of damages rendered by a judgment in a civil action to protect against conflicts of interests. This section would also establish a sliding fee schedule for the payment of attorneys’ contingency fees.  Payments would be allocated as follows: 40 percent of the first $50,000 recovered by the claimant(s); 33 1⁄3 percent of the next $50,000 recovered by the claimant(s); 25 percent of the next $500,000 recovered by the claimant(s); and 15 percent of any amount by which the recovery by the claimant(s) is in excess of $600,000.  The fee schedule would apply whether the recovery is by judgment, settlement, mediation, arbitration or any other form of alternative dispute resolution.

 

Sec. 106.  Punitive Damages.

Section 106 would specify guidelines for awarding punitive damages.  Under this section, punitive damages may be awarded, if otherwise permitted by applicable state or Federal law, against any person in a health care lawsuit.  The amount of punitive damages awarded could be as high as two times the amount of economic damages awarded or $250,000, whichever amount is greater. 

This section would not permit juries to be informed of the formula for calculating punitive damages. Moreover, punitive damages could only be awarded if it is first proven by clear and convincing evidence that a defendant acted with malicious intent to injure the claimant, or that such person deliberately failed to avoid unnecessary injury that such person knew the claimant was substantially certain to suffer.  This section would state that no demand for punitive damages could be included in a health care lawsuit as initially filed.  Further, punitive damages in healthcare lawsuits would not be awarded if compensatory damages are not awarded. 

Paragraph 106(c)(1) would shield manufacturers and distributors of medical products from punitive damages in certain instances.  The provision is intended to shield those companies that are fully compliant with all Federal Food, Drug, and Cosmetic Act (FFDCA) laws and regulations (in the case of biological medical products, full compliance with the FFDCA and section 351 of the Public Health Service Act (PHSA) is required).  The FFDCA ensures the safety and effectiveness of drugs, devices, and biological products, all of which are covered by this section.  Unless a claimant could demonstrate by clear and convincing evidence a lack of compliance with any FFDCA or PHSA section 351 law or regulation, then a manufacturer, distributor or supplier would be shielded from punitive damages.  All other damages, if proven, would still available to the claimant.

Under paragraph 106(c)(1), if a claimant could prove by clear and convincing evidence that a manufacturer, distributor or supplier has not complied with the FFDCA or section 351 of the PHSA, the claimant would then need to further prove that the harm attributed to the medical product resulted from the proven compliance failure.  A technical violation of the Act that is wholly unrelated to the harm would not remove the shield provided for in this section. Rather, punitive damages would only be available to claimants who could prove both a violation of the Act or regulations, and then could draw the nexus between failed compliance and harm.  Subsection 106(c) would not create an affirmative obligation on the part of the FDA to demonstrate compliance or noncompliance for the purposes of private litigation.  The section would also revoke the shield for persons: (1) who knowingly misrepresent information to the FDA or withhold information from the FDA; (2) who bribe government officials for the purpose of obtaining approval of medical products; and (3) who caused the medical product, which caused the claimant’s harm, to be misbranded or adulterated.   

Paragraph 106(c)(2) would prohibit a health care provider who prescribes, or who dispenses pursuant to a prescription, a medical product that is approved by the FDA from being named as a party in a product liability lawsuit.  

Paragraph 106(c)(3) would provide that when the alleged harm relates to the adequacy of the packaging or labeling of a drug required to have tamper-resistant packaging, there would be no liability for punitive damages for a manufacturer or seller unless the trier of fact finds by clear and convincing evidence that the packaging or labeling is substantially out of compliance with applicable regulations.

Sec. 107.  Authorization of Payment of Future Damages to Claimants in Health Care. Lawsuits

Section 107 would require the court, at the request of any party, to order that the award of future damages equaling or exceeding $50,000 be paid by periodic payments as long as the liable party has sufficient insurance or other assets to fund periodic payments.

Sec. 108.  Definitions.

Section 108 would define many of the terms included in the legislation. 

Sec. 109.  Effect on Other Laws.

Section 109 would state that this legislation does not apply to civil actions brought for a vaccine-related injury or death which is covered under provisions of the Public Health Service Act.  It also would state that nothing in this bill should affect any defense available to a defendant in a health care lawsuit or action under any other provision of federal law.

Sec. 110.  State Flexibility and Protection of State’s Rights.

Section 110 would specify many of the rules governing the relationship between the HEALTH Act and state and Federal laws. Specifically, subsection 110(a) would provide that provisions governing health care lawsuits outlined in the bill preempt state law to the extent that state law prevents the application of these provisions.  The bill would supersede the Federal Tort Claims Act (FTCA) to the extent that the FTCA provides for a greater amount of damages or contingent fees, a longer period in which a health care lawsuit may be commenced, or a reduced application of periodic payments of future damages. The FTCA would also be superseded if it prohibits the introduction of evidence regarding collateral source benefits, or mandates or permits subrogation or a lien on collateral source benefits.  

Under subsection 110(b), if an issue would not be addressed by a provision of law established by this legislation, it would be governed by otherwise applicable state or Federal law.  The subsection further states that the bill would not preempt or supersede any law that imposes greater procedural or substantive protections for health care providers and health care organizations from liability, loss, or damages.   

Subsection 110(c) would state that this legislation does not preempt any state law (enacted before, on, or after the date of enactment of H.R. 5) that specifies a particular amount of compensatory or punitive damages (or the total amount of damages) that may be awarded in a health care lawsuit.  The subsection would also provide that the bill does not preempt any defense available to a party in a health care lawsuit under any other provision of state or Federal law.

Sec. 111.  Applicability; Effective Date.

Section 111 would provide that the provisions of the bill apply to any health care lawsuit brought in Federal or state court, or subject to alternative dispute resolutions system, that would be initiated on or after the date of the enactment of the bill, except that any health care lawsuit arising from an injury occurring prior to the date of the enactment of the bill would be governed by the applicable statute of limitations provision in effect at the time the injury occurred.

 

TITLE II—REPEAL OF INDEPENDENT PAYMENT ADVISORY BOARD (IPAB)

According to the Committee on Ways and Means report (House Report 112-412 – Part 1),Title II would “repeal Section 1899A of the Social Security Act, which contains the IPAB provisions, while leaving in place provisions which provide for expedited consideration of IPAB-related proposals to reduce Medicare spending.  Those expedited procedures also created a point of order against a measure repealing them, requiring the House to take additional action to enable consideration of the bill. However, with IPAB repealed, there would be no such proposal for Congress to consider under those expedited procedures.” 

Cost

Title I and Title II:  CBO estimates that enacting Title I and Title II together would reduce future deficits by $13.7 billion over the 2013-2017 period and by $45.5 billion over the 2013-2022 period. 

Title I:  CBO estimates that the changes in direct spending and revenues resulting from enactment of the limitations on medical malpractice litigation would reduce deficits by $48.6 billion over the 2013-2022 period.

Title II:  CBO estimates that enacting the provision that would repeal the Independent Payment Advisory Board would increase deficits by $3.1 billion over the 2013-2022 period.

CBO estimates that enacting the bill would reduce direct spending and increase revenues; therefore, pay-as-you-go procedures apply.

For additional detail, please see CBO’s complete cost estimate here.

Amendments

Amendment No. 1—Rep. Woodall (R-GA):  This amendment would strike the findings in Title I.

Amendment No. 2—Rep. Bonamici (D-OR):  This amendment would delay date of enactment until Secretary of Health and Human Services submits to Congress a report on the potential effect of this title on health care premiums.

Amendment No. 3—Rep. Hastings, A. (D-FL):  This amendment would strike Title II (Repeal of the Independent Payment Advisory Board).

Amendment No. 4—Rep. Dent (R-PA) and Rep. Sessions (R-TX):  This amendment would address the crisis in access to emergency care by extending liability coverage to on-call and emergency room physicians under the Public Health Service Act.

Amendment No. 5—Rep. Gosar (R-AZ):  This amendment would restore the application of antitrust laws to the business of health insurance by amending the McCarran-Ferguson Act.

Amendment No. 6—Rep. Stearns (R-FL) and Rep. Matheson (D-UT):  This amendment would grant limited civil liability protection to health professionals that volunteer at federally declared disaster sites.

Additional Information

TITLE I—HEALTH ACT

 

According to the Committee on Energy and Commerce report, “the nation’s medical liability system imperils patient access and imposes tremendous costs on our nation.  It has forced doctors out of practicing in certain specialties; it has caused trauma centers to close; it has forced pregnant women to drive hours to find an obstetrician.  This badly broken system also imposes tremendous financial burdens:

“Americans spend over $200 billion every year in unnecessary ‘health care’ costs; … 

“President Obama has repeatedly cited the importance of medical tort reform, but nothing meaningful in this area was included in his signature Patient Protection and Affordable Care Act (PPACA), enacted on March 23, 2010.

“In sharp contrast, states like California and Texas, as well as others, have already enacted comprehensive medical liability reforms.  As discussed below, enacting these reforms nationally will decrease the costs of defensive medicine, reduce medical liability fears that inhibit quality of care improvement, end years of Washington inaction on this recurring crisis, and, as shown by the states, increase patient access to quality care while reducing costs, including liability premiums.

 

“The Costs of Defensive Medicine

“Doctors are sued at an alarming rate (by the age of 55, 61% of doctors have been sued) and forced to practice defensive medicine.  In fact, a 2005 survey published in the Journal of the American Medical Association revealed that 93% of doctors said they have practiced defensive medicine and 92% said they made referrals to specialists and/or ordered tests or procedures in part to insulate themselves from medical liability…

“Sixty percent of malpractice cases are dropped or dismissed and never go to court, but it costs a doctor an average of $18,000 to defend against a lawsuit.  Doctors are found not negligent in 90% of the cases that do go to trial, but each of these cases costs an average of $100,000 to defend…

“Medical malpractice premiums written in 2009 totaled approximately $10.8 billion.  Indirect costs, particularly increased use of tests and procedures by providers to protect against future lawsuits (‘‘defensive medicine’’), have been estimated to be much higher than direct premiums.

“The Pacific Institute puts the cost of defensive medicine at some $200 billion and estimates that these additional liability-based medical care costs add at least 3.4 million Americans to the rolls of the uninsured.  Nearly half of all medical malpractice claims do not involve injury or medical error.  Less than 15 cents of every litigation-related dollar goes to those injured from medical negligence.  Likewise, the Manhattan Institute concluded that about ten cents of every dollar paid for health care services goes to cover malpractice premiums, defensive medicine, and other costs associated with excessive litigation…

 “A Recurring Crisis, Yet Washington Has Failed To Act

“Medical malpractice reform has surfaced as a national issue repeatedly over recent decades during periods of ‘crisis’.  A 2004 survey found that three out of four emergency rooms had to divert ambulances because of a shortage of specialists due to medical liability issues.  The evidence from states like California that medical liability reform works has been available for over three decades.  Unnecessary costs and defensive medicine exact a negative effect on the federal health care programs of Medicare and Medicaid. 

“President Obama has repeatedly expressed his support for meaningful medical liability reform.  In a 2009 speech before the American Medical Association, the President acknowledged that defensive medicine leads to more tests and needless costs because doctors must protect themselves from frivolous lawsuits.  Again, during a speech to a Joint Session of Congress in September 2009, President Obama said ‘I don’t believe malpractice reform is a silver bullet, but I’ve talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.’  In his [2011]…State of the Union address, President Obama again included medical liability reform as part of his agenda…

 “As Shown by the States, Comprehensive Reform Will Increase Patient Access to Quality Care While Reducing Costs

“States that adopted caps saw tremendous benefits.  Patients who are harmed are still compensated 100% for economic losses (anything to which a receipt can be attached), suffered as the result of a health care injury.  California’s landmark legislation, the Medical Injury Compensation Reform Act of 1975 (MICRA) signed into law by Governor Jerry Brown (D), helped to stabilize the California medical liability insurance market.  From 1976 through 2009, California’s medical liability insurance premiums increased by 261% compared to a total increase of 945% for the other 49 states.

“Additionally, Texas adopted comprehensive medical malpractice reform, including caps on non-economic damages, in 2003, and these reforms have yielded remarkable outcomes, including an increase in new physicians, additional obstetricians, and reduced medical liability premiums.  From 2003 through 2009, the Texas Medical Board saw an increase of roughly 60% in their new physician licensure applications.  While other states were losing obstetricians, Texas actually gained obstetricians.  The number of obstetricians in Texas increased by 218 between 2002 and 2009 to a total of 2,444.  Finally, all major physician liability carriers in Texas have reduced their rates resulting in nearly all Texas physicians having their premiums lowered by at least 30% and some by well over 40% since 2004…

“In those states that have enacted meaningful reform, malpractice premiums are affordable, defensive medicine costs are lower and patients have greater access to care when and where they need it… 

“In states without liability reform, the system does not serve anyone except trial lawyers.  Injured patients are not compensated in a timely or equitable way.  They are forced to wade through several years of litigation and receive, on average, only 46 cents of every dollar awarded while the remaining 54 cents goes to their lawyers and other administrative fees.

“State reforms show that comprehensive medical liability reform, like H.R. 5, will improve patients’ access to quality care while reducing the overall cost of health care in America.”  (footnotes omitted) 

For additional information and perspective on these topics are how they are addressed in Title I (H.R. 5; 2011), see the Judiciary Committee report here.

More detailed background information about medical liability reform and Title I (H.R. 5; 2011) can be found in the most recent version of CRS report R41693 here.

 

TITLE II—REPEAL OF INDEPENDENT PAYMENT ADVISORY BOARD (IPAB)

 

The IPAB [Independent Payment Advisory Board] was created by Sections 3403 and 10320 of the Patient Protection and Affordable Care Act (P.L. 111–148).  Beginning in 2014, IPAB is tasked with making recommendations to cut per capita Medicare spending if such spending exceeds certain economic growth targets.

According to the Committee on Ways and Means report, “By April 30, 2013, and each subsequent year, the Chief Actuary at the Centers for Medicare and Medicaid Services (CMS) is required to calculate whether the projected growth in average per beneficiary Medicare spending over a five-year period (beginning two years before the year in which the calculation is being made and ending two years after) exceeds projected Medicare spending growth targets…  

“If the Chief Actuary determines that projected Medicare spending growth exceeds the projected spending growth targets, then the Chief Actuary must establish a savings target to rein in Medicare spending in the last year of the five-year period being examined…

“If Medicare per capita spending is projected to outpace the target, IPAB would then recommend Medicare cuts that, if enacted, would meet the savings target identified by the CMS Chief Actuary (IPAB’s recommended savings could exceed the savings target).  IPAB is prohibited from recommending polices that would ration care (although ‘ration’ is not defined in law), raise beneficiary premiums, increase cost sharing, or otherwise restrict benefits or eligibility…

“If IPAB does not submit recommendations (e.g., a majority of IPAB members do not vote in favor of a final package to send to Congress and the President that meets the targeted savings), the HHS Secretary would draft a proposal to achieve the necessary cuts (due to the President by January 25th, who would then send to Congress).  Similarly, if the Senate fails to confirm the President’s IPAB appointees, the HHS Secretary would be responsible for developing the legislation to cut Medicare to achieve the savings target and submitting that plan to the President.  The President would then have two days to submit that plan to Congress…

“If Congress does not pass legislation that meets IPAB’s savings requirements, the HHS Secretary would implement IPAB’s recommendations beginning August 15th of the year in which the IPAB issued such recommendations.  If Congress’ response to IPAB recommendations is to pass a different collection of Medicare cuts, the President can issue a veto (which requires the standard two-thirds vote to override)…

“IPAB will consist of 15 members appointed by the President and confirmed by the Senate…IPAB members are to have expertise in health finance, actuarial science, health plans, or integrated delivery systems and would consist of physicians or other health professionals, academics, economists, and urban/rural, consumer, and seniors interests.  However, the majority of IPAB members cannot be health care providers.  IPAB members could generally serve a maximum of two, six-year terms…IPAB receives its operation funding from the Medicare trust funds…

“Reasons for change

“Appointing an unelected and unaccountable board to cut Medicare spending will harm beneficiary access to care and force health care providers to limit the number of beneficiaries they will treat or even stop participating in Medicare altogether.

“While the statute suggests that IPAB will be prohibited from recommending policies that ration health care, the term ‘ration’ is not defined in the statute, meaning its definition and application would be determined by IPAB members.  Further, nothing would preclude IPAB from rationing care by way of driving down reimbursements for treatments and procedures to levels where no provider would provide the care.

“The Committee also has significant concerns about the degree of institutional power that will be taken from Congress and provided to IPAB and the Executive Branch.  The President controls IPAB appointments, whether considered by Congress or recess appointed.

“If IPAB is unable to submit a proposal to cut Medicare to Congress, the HHS Secretary submits a proposal instead.  Congress has limited ability to override the Medicare cuts proposed by IPAB and HHS, and any override could be vetoed by the President, ensuring that the President’s IPAB or HHS proposal becomes law.

“The Committee objects to IPAB’s ability to conduct its proceedings outside of the public domain, as well as its exemption from judicial review.  Such authority hinders consideration of beneficiary and provider input while robbing them of any recourse through the judicial system or appeal of IPAB decisions.”

For additional information and perspective on these topics are how they are addressed in Title II (H.R. 452), see the Committee on Energy and Commerce report here.

More detailed background information about IPAB and Title II (H.R. 452) can be found in the most recent version of CRS report R41511 here.