Shortens statute of limitations for medical malpractice action. Caps noneconomic damages and contingent attorney's fees awards. Permits evidence of collateral benefits. Disallows punitive damages claim in initial complaint. Permits periodic payments of future damages.

A BILL FOR AN ACT

SECTION 1. Chapter 671, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part   . Patient access to health care services

§671-A Findings and purpose. (a) The legislature finds that our current civil justice system adversely affects patient access to health care services, better patient care, and cost-efficient health care. The health care liability system is a costly and ineffective mechanism for resolving claims of health care liability and compensating injured patients, and is a deterrent to the sharing of information among health care professionals, thereby impeding efforts to improve patient safety and quality of care.

(b) The purpose of this part is to implement reasonable, comprehensive, and effective health care liability reforms designed to:

§671-B Definitions. As used in this part, unless the context clearly requires otherwise:

"Alternative dispute resolution" means a system that provides for the resolution of medical tort lawsuits in a manner other than through a civil action brought in a state or federal court.

"Claimant" means any person who brings a medical tort lawsuit, including a person who asserts or claims a right to legal or equitable contribution, indemnity, or subrogation, arising out of a health care liability claim or action, and any person on whose behalf such a claim is asserted or such an action is brought, whether deceased, incompetent, or a minor.

"Collateral source benefits" means any amount paid or reasonably likely to be paid in the future to or on behalf of the claimant or any service, product, or other benefit provided or reasonably likely to be provided in the future to or on behalf of the claimant, as a result of the injury or wrongful death, pursuant to:

"Compensatory damages" means objectively verifiable monetary losses incurred as a result of the provision of; use of; payment for; or failure to provide, use, or pay for, health care services or medical products, such as past and future medical expenses, loss of past and future earnings, cost of obtaining domestic services, loss of employment, and loss of business or employment opportunities, damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature. The term "compensatory damages" includes economic damages and noneconomic damages, as those terms are defined in this section.

"Contingent fee" includes all compensation to any person or persons that is payable only if a recovery is effected on behalf of one or more claimants.

"Economic damages" means objectively verifiable monetary losses incurred as a result of the provision of; use of; payment for; or failure to provide, use, or pay for; health care services or medical products, such as past and future medical expenses, loss of past and future earnings, cost of obtaining domestic services, loss of employment, and loss of business or employment opportunities.

"Health care goods or services" means any goods or services, provided by a health care organization, provider, or by any individual working under the supervision of a health care provider, that relate to the diagnosis, prevention, or treatment of any human disease or impairment or the assessment of the health of human beings.

"Health care liability action" means a civil action brought in a state or federal court or pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based or the number of plaintiffs, defendants, or other parties or the number of causes of action in which the claimant alleges a health care liability claim.

"Health care liability claim" means a demand by any person, regardless of whether pursuant to alternative dispute resolution, against a health care provider, health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, including third-party claims, cross-claims, counter-claims, or contribution claims that are based upon the provision of; use of; payment for; or the failure to provide, use, or pay for, health care services or medical products, regardless of the theory of liability on which the claim is based or the number of plaintiffs, defendants, or other parties or the number of causes of action.

"Health care organization" means any person or entity which is obligated to provide or pay for health benefits under any health plan, including any person or entity acting under a contract or arrangement with a health care organization to provide or administer any health benefit.

"Health care provider" means any person or entity required by state or federal laws or regulations to be licensed, registered, or certified to provide health care services and being either so licensed, registered, or certified, or exempted from such requirement by other statute or regulation.

"Malicious intent to injure" means intentionally causing or attempting to cause physical injury, other than providing standard and adequate health care goods or services.

"Medical product" means a drug or device intended for humans, and the terms "drug" and "device" have the meanings given these terms in sections 201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321), respectively, including any component or raw material used in those sections, but excluding health care services.

"Medical tort lawsuit" means any health care liability claim concerning the provision of health care goods or services affecting interstate commerce, or any health care liability action concerning the provision of health care goods or services affecting interstate commerce, brought in a state or federal court or pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based or the number of claimants, plaintiffs, defendants, or other parties or the number of claims or causes of action in which the claimant alleges a health care liability claim.

"Noneconomic damages" means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature.

"Punitive damages" means damages awarded for the purpose of punishment or deterrence, and not solely for compensatory purposes, against a health care provider, health care organization, or a manufacturer, distributor, or supplier of a medical product. Punitive damages are neither economic nor noneconomic damages.

"Recovery" means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim, including all costs paid or advanced by any person. Costs of health care incurred by the plaintiff and the attorneys' office overhead costs or charges for legal services are not deductible disbursements or costs for such purpose.

§671-C Compensating patient injury. (a) In any medical tort lawsuit, the full amount of a claimant's economic loss may be fully recovered without limitation.

(b) In any medical tort lawsuit, the amount of noneconomic damages recovered may be as much as $250,000 per claimant, regardless of the number of parties against whom the action is brought.

(c) In any medical tort lawsuit, an award for future noneconomic damages shall not be discounted to present value. The jury shall not be informed about the maximum award for noneconomic damages. An award for noneconomic damages in excess of $250,000 shall be reduced either before the entry of judgment or by amendment of the judgment after entry of judgment, and the reduction shall be made before accounting for any other reduction in damages required by law. If separate awards are rendered for past and future noneconomic damages and the combined awards exceed $250,000, the future noneconomic damages shall be reduced first.

(d) In any medical tort lawsuit, each party shall be liable for that party's share of any damages only and not for the share of any other person. Each party shall be liable only for the amount of damages allocated to the party in direct proportion to the party's percentage of responsibility. A separate judgment shall be rendered against each party for the amount allocated to the party. For purposes of this section, the trier of fact shall determine the proportion of responsibility of each party for the claimant's harm.

§671-D Maximizing patient recovery. (a) In any medical tort lawsuit, the court shall supervise the arrangements for payment of damages to protect against conflicts of interest that may have the effect of reducing the amount of damages awarded that are actually paid to claimants. In particular, in any medical tort lawsuit in which the attorney for a party claims a financial stake in the outcome by virtue of a contingent fee, the court shall have the power to restrict the payment of a claimant's damage recovery to such attorney and to redirect the damages to the claimant based upon the interests of justice and principles of equity. In no event shall the total of all contingent fees for representing all claimants in a medical tort lawsuit exceed the following limits:

(b) The limitations in this section shall apply whether the recovery is by judgment, settlement, mediation, arbitration, or any other form of alternative dispute resolution. In a medical tort lawsuit involving a minor or incompetent person, a court retains the authority to authorize or approve a fee that is less than the maximum permitted under this section.

§671-E Additional health benefits. In any medical tort lawsuit, any party may introduce evidence of collateral source benefits. If a party elects to introduce such evidence, any opposing party may introduce evidence of any amount paid or contributed or reasonably likely to be paid or contributed in the future by or on behalf of the opposing party to secure the right to such collateral source benefits. No provider of collateral source benefits shall recover any amount against the claimant or receive any lien or credit against the claimant's recovery or be equitably or legally subrogated to the right of the claimant in a medical tort lawsuit. This section shall apply to any medical tort lawsuit that is settled as well as a medical tort lawsuit that is resolved by a fact finder.

§671-F Punitive damages. (a) Punitive damages, if otherwise permitted by applicable state or federal law, may be awarded against a defendant in a medical tort lawsuit only if it is proven by clear and convincing evidence that the defendant acted with malicious intent to injure the claimant or that the defendant deliberately failed to avoid unnecessary injury that the defendant knew the claimant was substantially certain to suffer. In any medical tort lawsuit where no judgment for compensatory damages is rendered against a defendant, no punitive damages may be awarded with respect to the claim in such lawsuit. No demand for punitive damages shall be included in a medical tort lawsuit as initially filed. A court may allow a claimant to file an amended pleading for punitive damages only upon a motion by the claimant and after a finding by the court, upon review of supporting and opposing affidavits or after a hearing, after weighing the evidence, that the claimant has established by a substantial probability that the claimant will prevail on the claim for punitive damages. At the request of any party in a medical tort lawsuit, the trier of fact shall consider in a separate proceeding:

If a separate proceeding is requested, evidence relevant only to the claim for punitive damages, as determined by applicable law, shall be inadmissible in any proceeding to determine whether compensatory damages are to be awarded.

(b) In determining the amount of punitive damages, the trier of fact shall consider only the following:

(3) The profitability of the conduct to the defendant;

The amount of punitive damages awarded in a medical tort lawsuit may be up to as much as two times the amount of economic damages awarded or $250,000, whichever is greater. The jury shall not be informed of this limitation.

§671-G Authorization of payment of future damages to claimants in medical tort lawsuits. (a) In any medical tort lawsuit, if an award of future damages, without reduction to present value, equaling or exceeding $50,000 is made against a party with sufficient insurance or other assets to fund a periodic payment of the judgment, the court, at the request of any party, shall enter a judgment ordering that the future damages be paid by periodic payments in accordance with the applicable law.

(b) This section applies to all actions that have not been first set for trial or retrial before the effective date of this part."

SECTION 2. Section 657-7.3, Hawaii Revised Statutes, is amended to read as follows:

"§657-7.3 Medical torts; limitation of actions; time. (a) No action for injury or death against a chiropractor, clinical laboratory technologist or technician, dentist, naturopath, nurse, nursing home administrator, dispensing optician, optometrist, osteopath, physician or surgeon, physical therapist, podiatrist, psychologist, or veterinarian duly licensed or registered under the laws of the State, or a licensed hospital as the employer of any such person, based upon [such] the person's alleged professional negligence, or for rendering professional services without consent, or for error or omission in [such] the person's practice[,] shall be brought more than [two years] one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the injury, but in any event not more than [six] three years after the date of the alleged act or omission causing the injury or death. This [six-year] three-year time limitation shall be tolled for any [period during which the person has failed to disclose any act, error, or omission upon which the action is based and which is known to the person.] of the following:

(b) Actions by a minor shall be commenced within [six] three years from the date of the alleged wrongful act except the actions by a minor under the age of [ten] six years shall be commenced within [six] three years of manifestation of injury or [by] prior to the minor's [tenth] eighth birthday, whichever provides a longer period. Such time limitation shall be tolled for any minor for any period during which the parent, guardian, insurer, or health care provider has committed fraud or gross negligence[,] or has been a party to a collusion in the failure to bring action on behalf of the injured minor for a medical tort. The time limitation shall also be tolled for any period during which the minor's injury or illness alleged to have arisen, in whole or in part, from the alleged wrongful act or omission could not have been discovered through the use of reasonable diligence."

SECTION 3. Section 663-8.7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§663-8.7[]] Limitation on pain and suffering. Damages recoverable for pain and suffering as defined in section 663-8.5 shall be limited to a maximum award of $375,000; provided that this limitation shall not apply to tort actions enumerated in section 663-10.9(2)[.] and to a medical tort lawsuit, as defined in section 671-B."

SECTION 4. Section 671-15, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) After a finding of liability, the medical claim conciliation panel shall decide the amount of damages, if any, which should be awarded in the case[.], subject to the requirements of section 671-C. The decision as to damages shall include in simple, concise terms a division as to which portion of the damages recommended are attributable to economic losses and which to noneconomic losses; provided the panel may not recommend punitive damages."

SECTION 5. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. This Act shall not apply to any cause of action for which a complaint has been filed prior to its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2005.