Statement of Judiciary Committee Chairman Lamar Smith
Markup of H.R. 5, the HEALTH Act

Statement of Judiciary Committee Chairman Lamar Smith
Markup of H.R. 5, the HEALTH Act

Chairman Smith: I would like to welcome the doctors with us here today, many of whom are attending the American Medical Association’s annual legislative conference.

The HEALTH Act, H.R. 5, is modeled after California's decades-old and highly successful health care litigation reforms.  It addresses the current crisis in health care by reining in unlimited lawsuits and making health care delivery more accessible and cost-effective in the United States.

According to data of the National Association of Insurance Commissioners, the rate of increase in medical professional liability premiums in California since 1976 has been 280% lower than the rate of increase experienced in other states.

By incorporating California’s time-tested reforms at the Federal level, the HEALTH Act saves taxpayers billions of dollars, encourages health care practitioners to maintain their practices wherever they want to help people, and reduces health care costs for patients.  Its enactment especially will help traditionally under-served rural and inner city communities, and women seeking obstetrics care.

The reforms in H.R. 5 include a $250,000 cap on noneconomic damages and limits on the contingency fees lawyers can charge.

It authorizes defendants to introduce evidence showing the plaintiff received compensation for losses from outside sources to prevent double recoveries.  It allows courts to require periodic payments for future damages instead of lump sum awards that prevent bankruptcies in which plaintiff's would receive only pennies on the dollar. 

And the HEALTH Act includes provisions creating a “fair share” rule, by which damages are allocated fairly in direct proportion to fault, and reasonable guidelines -- but not caps -- on the award of punitive damages.

The HEALTH Act accomplishes reform without in any way limiting compensation for 100% of plaintiffs’ economic losses, which include anything to which a receipt can be attached.  In fact, the HEALTH Act contains the same legal reforms that have been the law in California for over 30 years, and in that state medical damages have been awarded in deserving cases in the 80 and 90 million dollar range.

Those unlimited damages include all their medical costs, their lost wages, their future lost wages, rehabilitation costs, and any other economic out of pocket loss suffered as the result of a health care injury.

The HEALTH Act also does not preempt any State law that otherwise caps damages.
The HEALTH Act reduces the waste in our health care system caused by so-called “defensive medicine.” This practice occurs when doctors are forced by the threat of lawsuits to conduct tests and prescribe drugs that aren’t medically required.

According to a Harvard University research study, 40% of medical malpractice lawsuits filed in the United States lack evidence of medical error or any actual patient injury. 

Many of these suits are nothing more than the legalized extortion of doctors and hospitals. But because there are so many lawsuits, doctors are forced to conduct medical tests simply to avoid a lawsuit in which lawyers claim “everything possible” was not done for a patient. 

Taxpayers pay for this wasteful defensive medicine, which adds to all our health care costs without improving the quality of patient care.

In his 2011 State of the Union Address, President Obama said “I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.” 

Let’s give the President something to consider by favorably reporting out this crucial legislation.

The HEALTH Act is more widely supported today than ever.  Last year, the Congressional Budget Office determined that this legal reform package would reduce the federal budget deficit by an estimated $54 billion over the next 10 years.

Another CBO report estimates that “... premiums for medical malpractice insurance ultimately would be an average of 25 percent to 30 percent below what they would be under current law.” 

The Government Accountability Office (GAO) has found that rising litigation awards are responsible for skyrocketing medical professional liability premiums.  Its report states that “GAO found that losses on medical malpractice claims – which make up the largest part of insurers’ costs – appear to be the primary driver of rate increases in the long run ...” 

The GAO also concluded that insurer profits “are not increasing, indicating that insurers are not charging and profiting from excessively high premium rates.”

All these recommended reforms are included in the HEALTH Act.

As a USA Today editorial concluded, “one glaring omission” from the Democrats’ health care law “was significant tort reform ... ”

We can remedy that today by favorably reporting out the HEALTH Act and showing our unified commitment to significant tort reform.