Jon Kyl

Mr. KYL

Mr. KYL. I will be happy to reply.

Mr. KYL

Mr. KYL. Madam President, just a moment to explain what this amendment is. I know we are getting close to the time to vote, and the Senator from Connecticut wishes to speak, as well. This section 103 is titled ``Alternative Dispute Resolution Procedures.'' It establishes that in a jurisdiction where an alternative dispute resolution procedure is provided for, that either the claimants or the defendant may utilize such procedure. That is point one. Of course, that does not change anything or add anything to existing law. The second part of this provides how the procedure shall be utilized. Again, that adds nothing to the existing law. The third part of section 103 establishes that if the defendant refuses to go along with or to accept the plaintiff's request and certain other conditions are satisfied, then the defendant shall be found liable for attorney's fees and costs. That is, in effect, the British rule, the loser pays. But there is no such provision for plaintiffs. I thought this was merely an oversight. Obviously both parties to a litigation should be accorded the same rights under the rules of procedure. But it is not an oversight. I am told that certain Members of the body require this dichotomy in the rules in order to vote in favor of the bill. Madam President, if that is what it takes we should not be doing it. This is grossly unfair. It would be an absolute and total departure from everything that our legal system stands for. All parties to litigation plead their cases, defend their cases, prosecute their cases under the same set of rules. We do not have rules that apply to one side but that do not apply to another; particularly where we are trying to avoid litigation in the first place by providing for alternative dispute resolution. So, where a State has such a procedure we ought to be encouraging both parties to go through such a procedure. If there is to be a penalty attached, then that penalty should be the same for either party. If there is not, that is the business of the State jurisdiction. But the Federal Government should not be interceding and saying if a State has such a procedure it only applies to the defendant; plaintiff is under no obligation to go through with it if requested by the defendant. So, Madam President, we will talk more about this tomorrow but I wanted my colleagues to know that this gross unfairness does need to be corrected in the bill. It is a very simple amendment, but I will be asking my colleagues to support this amendment tomorrow. I yield the floor.

Mr. KYL. Madam President, I am simply going to make a unanimous- the pending amendment and offer an amendment, which I send to the desk and ask for its immediate consideration.

Mr. KYL

Mr. KYL. I speak in support of the Dole amendment. The comments of the Senator from Utah just given really portray I think in the most thorough way the basic thrust of this amendment and the arguments for it. I will very briefly just add at the margins some information which I think helps to flesh out the arguments that have just been made by the Senator from Utah. As he pointed out, this amendment would extend the product liability punitive damage limitation in the Gorton-Rockefeller bill to be set at two times the economic damages in all civil actions involving interstate commerce. The exception is the civil rights and environmental laws. Therefore, at the margin, this amendment makes the underlying bill even better than it is. Historically, as has been noted, punitive damages were awarded in only the rarest and most egregious cases in order to punish, to make an example of the defendant when that defendant's conduct fell below a certain standard. According to Prof. George Priest of Yale Law School, who has already been quoted here, 65 to 78 percent of all tort actions over the last fiscal year include punitive damages in the pleadings. So what was originally designed to be a recovery in the very most narrow situation has now become part of the pleadings in a majority, even exceeding three-fourths, of the cases. Although punitive damage awards represent a relatively small part of the overall awards, the amount of the average award continues to increase. For example, according to Investors Business Daily, in an article of April 3 of this year, a study of jury awards between 1965 and 1984 shows that the average inflation adjusted damage award increased 1,595 percent, Mr. President. These awards clearly are skyrocketing, and they need to be reined in. Punitive damage awards have in effect become a lottery in which the jackpot is continuously doubling. The lawyer's incentive to file suit is the 30 percent of the settlement amount and the 40 percent of most trial judgments that he or she realizes. The plaintiff's incentive is the often outrageous jury verdict. Two well-publicized examples will be recalled by most people: The nearly $1 million awarded to the McDonald's customer who put hot coffee between her legs while driving and, unfortunately, was burned; and the Alabama case in which actual damages totaled only $1,200 but the jury awarded $4 million in punitive damages. I said that punitive damages were skyrocketing a moment ago. Those were not my words. Those were the words in an opinion of Justice Sandra Day O'Connor, who said in a 1993 Supreme Court opinion that they were ``skyrocketing.'' She was addressing a lower court ruling which upheld a $4.3 million award, Mr. President, to a convicted felon who, in the course of violently robbing a 72-year-old subway passenger, was shot and paralyzed by a transit authority police officer. The case was McCummings versus New York City Transit Authority, 1993. This is outrageous, Mr. President. It is the kind of cap that we need to place into law. These outrageous punitive damages create a tort tax paid by consumers in the form of higher prices, higher insurance premiums, and reduced market choice and quality. It is a regressive tort tax paid disproportionately by citizens on the lower end of the economic spectrum because higher prices, of course, hit them the hardest. Do punitive damages serve as a necessary deterrent? Sadly, Mr. President, in many cases, no. Again, according to Richard Posner, the best theory is that full compensatory damages generate exactly the optimal level of deterrent. Mr. President, punitive damages are a quasi-criminal remedy. They are the product of a bygone era when the resources of public prosecutors were slim. Today, public prosecutors are better able to serve the public interest in a certain level of punishment. To the contrary, plaintiffs and their lawyers seeking huge punitive damages awards often initiate litigation without consideration of the public interest, but of their own interest. That is why these damages need to be controlled. Let me cite just a few of the examples. The Senator from Utah cited some egregious examples a moment ago. Another example: A juror in a punitive damages case said that his fellow jurors discussed a damage award of between $100,000 and $8.5 million before deciding on $10 million. Later, when asked why $10 million was chosen, this juror said, ``Quite honestly, I think it had something to do with finding a round figure. We were given no guidelines.'' There was a recent article in USA Today, March 6, 1995, which I think had some interesting points to make and some other examples to cite. I will cite just a couple quotations from the article. The court system that's supposed to assure fair compensation for people harmed through the fault of others looks at times more like a gambling casino than the house of Justice. Some injured individuals are walking away with pots of money--far, far beyond any actual losses they've suffered. Here are some of the horror stories that the USA Today story cited. The Alabama woman awarded $250,000 in punitive damages even though she wasn't injured and wasn't even present when a gas water heater malfunctioned. The San Francisco mugger who won a $24,595 judgment for leg injuries when a cab driver pinned him to a wall with his taxi to keep the criminal from escaping. The Miami woman awarded $250,000 after she, having used cocaine and alcohol and splashed herself with gasoline, was severely burned trying to light a barbecue. The Florida theme park ordered to pay 86 percent of a woman's award for injuries received on its ``Grand Prix'' ride, even though the jury found the park only 1 percent at fault and the woman's husband--who rammed his car into hers-- 85 percent at fault. The tricycle manufacturer who settled out of court for $7.5 million rather than risk an even more generous jury award over the color of its trikes. According to one five-state study, the dollar volume of punitive-damage awards against business alone is up 89-fold over a 20-year span. I want to quote just one other thing from this USA Today article before I close, Mr. President. Given the emotional pull of tragic personal injuries or honest businesses driven to bankruptcy, few opportunities to exaggerate have been missed by either side. But there is at bottom an undeniable sense: The system doesn't operate fairly. And that sense of unfairness invites opportunists to try to cash in--looking for a jackpot on the chance that the system's unfairness will work in their favor: And then this article goes on to note a couple other cases. Like the Michigan man who lost an eye when a July 4 skyrocket exploded in his face and then sued his parents for letting him set off fireworks when he was drunk. Or the 305-pound man who had a stomach-stapling operation and sued the hospital because he was allowed near a refrigerator and ate so much he popped his staples. Mr. President, these examples would be humorous if the problem were not so serious. The problem is that we are all paying for this, for this jackpot, this lottery that is called punitive damages. It is time to rein it in. It is time to put a modest cap on these punitive damages. That is all the amendment of the majority leader does. It is time that we adopt this kind of approach to the liability reform that is before us today and, hopefully, that we will be voting on later this afternoon. I urge my colleagues to support this amendment. I yield the floor.

Mr. KYL

Mr. KYL. I thank my colleague. Mr. President, at this time, I ask unanimous consent to lay aside the pending amendment.

Mr. KYL. Let me see if I can get that for you. I do not have that in my prepared remarks.

Mr. KYL. I would be happy to continue to respond to my colleague, because they are very good questions. They go right to the heart of the issue. Obviously, by proposing the reform, we are hoping to have an impact pact on the problem. Part of the problem, as I indicated, is the fact that, particularly in rural areas but not limited to rural areas, and in particular ob-gyn's have either stopped practicing or have cut back their practice just to the gynecological services rather than obstetrical services. If you go by the numbers I cited, you have an indication at least of what these physicians were able to do before this litigation system got to the point that it is today. It is impossible, of course, to predict precisely, but I will go back to the numbers that I stated just a moment ago, because the study was very recent. I think it was either 1993 or 1994. Nationally, 12.3 percent of the ob-gyn's have given up obstetrics totally, due to liability pressures. That is in a book, as I said, that was written by the Institute of Medicine called Medical Professional Liability and the Delivery of Obstetrical Care. Nationally, 22.8 percent of the ob-gyn's have drastically decreased the amount of care they have provided because of this. So one could conclude that, if we were able to put a cap on these damages, at least some of this problem would go away. But, obviously, because you would still be able to recover up to $500,000 in noneconomic damages, I am not contending that all of these physicians would go back to practicing. Of course, this does not relate either to the increases in costs of the medical malpractice premiums for those physicians who do choose to stay in practice or for those who are involved in other areas of specialty. So, it is impossible to say with precision, but I think it is safe to say that at least it would reduce medical costs and get some of these rural areas better covered by physician services.

Mr. KYL. Mr. President, I say to my colleague that the information that we have, according to a study that was recently done, is that less than 2 percent of the cases would be affected by the $500,000 cap. But, of course, because of the large amount of money involved, it would have a very large impact on constraining costs.

Mr. KYL. Mr. President, this is the noneconomic damages limitation amendment that many of us have been talking about for some time. I indicated earlier this morning that I would be introducing it. It works in tandem with the limitation on lawyer's fees to ensure that the victims of negligence are properly compensated and that neither the public needs to end up continuing to pay this tort tax that we talked about earlier nor that lawyers or others in the system become enriched at the expense of the victims of negligence. This particular amendment would place a limitation of $500,000 on noneconomic damages that are awarded to compensate a claimant for pain, suffering, emotional distress, and other related injuries. Mr. President, every day in America, physicians take care of over 9 million patients. These are professionals who are dedicated to the service of their fellow citizens. They do a tremendous job. They serve in times of crisis and natural disasters often at great personal risk. A good example is the heroic service of the doctors in the aftermath of the bombing in Oklahoma City. The medical profession is dedicated to doing everything possible to ensure that the practice of medicine conforms at all times with both Government rules and regulations and, of course, with the high standards that are inherent in the profession itself. But physicians are not God. They are human like all the rest of us, and occasionally mistakes are made and sometimes patients suffer injuries as a result. When this occurs, injured patients must be awarded full and fair compensation for their injuries should they choose to pursue a legal remedy. But in today's litigious climate, roughly one-third of all physicians, 50 percent of all sued in their careers. Let me go through those figures again: 50 percent of all surgeons and 75 percent of all obstetricians will be sued in their careers. Courts determine that roughly three-fourths of these cases have no merit, and they are ultimately dismissed with no payment being made to the claimant, but the psychological and financial costs of defending these cases, oftentimes frivolous, but these unpredictable situations are staggering. Defending against meritless lawsuits has in effect become an occupational hazard of practicing medicine and, of course, these costs are passed on to all the rest of us in the form of higher medical costs, diminished quality, and access to health care. Mr. President, as we in the Congress address legal reform, we should not miss the opportunity to rationally address the overly litigious nature of medical liability actions. The Kyl amendment would limit noneconomic damages to $500,000. The amendment would apply only to noneconomic damages, known sometimes as pain and suffering. No other country compensates victims of health care injuries as generously as $500,000 for noneconomic damages. For example, in Canada, there is a cap on noneconomic damages of $180,000. In a 1994 report to Congress, the Physician Payment Review Commission, which is the Federal Commission established to review Medicare payments, said: Much of the unpredictability and inconsistency that characterizes today's malpractice awards is because of noneconomic damages, which account for 50 percent of total payments. Reducing the unpredictability and eliminating the potential for unreasonably high awards would improve decisionmaking during the course of a lawsuit and would promote settlement. In other words, Mr. President, in order to encourage settlement rather than litigation, we should address this ``lottery mentality'' of awarding arbitrary and unpredictable noneconomic damages. According to a September 1993 report by the Office of Technology Assessment, and I am quoting now: Limits on noneconomic damages is the single most effective reform in containing medical liability premiums. Let me repeat that, because all of us are concerned now about what kind of health care reform we will be adopting later this year, and in the context of both legal reform and health care reform, this is a startling statement. It is the OTA, 1993. Limits on noneconomic damages is the single most effective reform in containing medical liability premiums. Without a reasonable limitation on these nonquantifiable losses, medical liability insurance premiums and medical product liability costs will continue to skyrocket. Physicians are forced to drop insurance coverage or, in order to minimize the risk, to stop performing high-risk procedures such as delivering babies. According to a book published by the respected Institute of Medicine called ``Medical Professional Liability and the Delivery of Obstetrical Care,'' the most comprehensive, authoritative study of rural health care access, the delivery of obstetrical care in all rural areas of America is seriously threatened by professional liability concerns: 12.3 percent of the ob/gyn's nationally have given up obstetrics totally due to liability pressures--12.3 percent; 22.8 percent of ob/ gyn's nationally have drastically decreased the amount and level of obstetric care they provide. In some States, the problem is much worse than nationally. In rural Arizona, the most recent study shows that 21 percent of the ob- gyn's have totally stopped providing obstetric care. The reason? The cost of malpractice insurance and threats of suits in Arizona. Mr. President, how is this system enhancing medical care in our country? Somehow, this system is protecting people in need of medical care? It is precluding physicians from serving the patients, and in the rural areas in particular the kind of care that women delivering babies are getting is less than it could be, less than it should be, because you do not have that obstetrician there helping with the delivery. There is an impact on the minority community. The National Council of Negro Women believes that ``a cap on noneconomic damages is an essential part of comprehensive legal reform legislation.'' This is in a letter dated just February 14 of this year, from Eleanor Hinton Hoytt, director of national programs of the National Council of Negro Women. The council realizes that low-income minority communities are facing increasing shortages of physicians who can afford to pay liability insurance premiums. We know, Mr. President, of many examples of physicians who, on the very first day of the year, January 1, either have to have a liability insurance policy costing them anywhere from $30,000, $40,000, $50,000, $60,000, and even upward of $70,000 before they can see their very first patient, much more than most people in this country make in a year. The argument may be made that limiting noneconomic damages would restrict the right of an injured patient to sue and collect for economic damages and that, of course, is not true. My amendment does not prevent filing suit and recovering all economic damages for past and future medical expenses, loss of past and future earnings, loss of consortium, loss of employment or any other business opportunity, nor does my amendment limit suits that seek damages for malicious acts for which punitive damages are warranted. A cap on noneconomic damages such as the Kyl amendment does not discourage the filing of lawsuits. In California, which has a cap just half the cap that I am proposing here, a cap of $250,000 as opposed to $500,000, there were 16\1/2\ percent more cases filed in 1993 than in 1992, the year before the limit in California went into effect. So it did not preclude the filing of actions. Moreover, in California, the cost of liability premiums has been reduced in part because of this cap. Prior to imposition of the $250,000 cap in California, the State had the highest liability premiums in the Nation. Premiums are now one-third to one-half the rate in States like New York, Florida, and other States that have not established a limit. Mr. President, as part of the Contract With America, the House has passed a more restrictive cap of $250,000 on noneconomic damages, the same limit as in some other States, including California. Some in the Senate said, in response to that, that the $250,000 cap may be fine in most cases, but there are always those few exceptional egregious cases that should have a greater limit. So we doubled it. We increased it 100 percent to $500,000. And bear in mind, this would be on top of all of the economic damages awarded, in other words, all of the sums of money required to make the victim whole, to pay for all of the economic losses, losses of future employment opportunities, whatever it might be, including all of the bills, of course. And, as I said, in the case of punitive damage awards, those are not limited by this particular amendment. So we are only talking about the noneconomic damages, those unquantifiable damages. No one can put a dollar amount on how much pain and suffering it is when someone is injured. What we are saying is there should be a predictable sum that at least represents the absolute top. There is a lot of public support for some kind of cap here. For example, a very recent poll conducted by the Health Care Liability Alliance indicated that 17 percent of the public supports a cap on common noneconomic damages. So we think, Mr. President, this is an amendment which will strengthen the bill. It will strengthen the Kassebaum-McConnell- Lieberman amendment, which has to do with medical malpractice, and therefore at the appropriate time, I guess sometime after 11 o'clock tomorrow, we are going to call for a vote on this amendment, and I hope it will pass. I wish to conclude with two arguments that have been made in opposition to this amendment. The first is that the people who are injured by some kind of negligence need to keep the lion's share of the money they win, and the point with respect to these caps is do they not ordinarily keep what they win? And the answer to that, of course, is that that is not true. According to the Rand Corp., plaintiffs keep only 43 cents of every dollar lawyers. So, Mr. President, what we are trying to do here is to put two amendments in tandem. There is already an amendment which I have offered which would limit the attorney's fees in these kinds of cases. By limiting the attorney's fees, we enable the claimant to keep more of the award. So, at the same time that a cap would be placed on the noneconomic damages, a cap of a half million dollars, the claimants would be able to keep more of that half million dollars because of the limits on attorney's fees. So the net result is that the claimant will not be hurt, will not have recovery reduced by this cap on noneconomic damages. The claimant will do as well, if not better, by virtue of the fact that we would also limit the attorney's fees. The loser will be the attorney who is trying to get the great jackpot here, the big bonanza, of earning something like $300,000 for 1 hour of work. That will be the loser, not the claimant, with this particular cap. The bottom line is that the claimants will do as well or better if we combine this with the limitation on attorney's fees. Second, there is a question that I have heard: Is it not true that a $500,000 cap on noneconomic damages will keep deserving patients from getting million-dollar settlements when they really need them? And the answer is, of course, no. One of the reasons for increasing the cap to $500,000 rather than $250,000 is to ensure that in that very exceptional cases, in addition to all of the economic damages awarded, there will be an opportunity to get up to a half million dollars. But the point is that patients with valid claims are today collecting millions of dollars in States with caps, such as California, despite the cap on noneconomic damages there of $250,000. In California, the number of million-dollar verdicts and settlements has hovered around 30 per year throughout the 1990's, with the average indemnity in these cases over $2 million. These million-dollar-plus cases included awards for wrongful death, birth injuries diagnosed in related areas, failure or delay in treatment, and substandard post-surgical care. So, Mr. President, despite the fact there has been a limit on noneconomic damages in California of only half the amount we are suggesting here, there have still been settlements and awards that far exceed $1 million. So we are not limiting those cases, and everyone acknowledges they are the very small exceptions to the rule here. But we are not limiting those particular recoveries. In conclusion, Mr. President, there are two amendments that I have offered to the underlying medical malpractice amendment offered by Senators Kassebaum, Lieberman, and McConnell. The first is a limitation on attorney's fees, essentially, at 25 percent, although there are some nuances to it, of any recovery. And second is the limitation on noneconomic damages. The two of these amendments, working in tandem, ensure that people will be able to bring claims, that they will be able to recover more of the award either in settlement or by jury verdict themselves, that the attorney will receive less but attorneys will still receive a perfectly adequate compensation, and there will be no disincentive for them to actually bring the lawsuits because the attorney's fees cap is actually high enough so that there is not a disincentive. The combination of that with the cap on noneconomic damages will enable the plaintiffs to be fully compensated, but also reduce the cost to society as a whole in the form of increased medical malpractice premiums and, therefore, in the form of higher costs charged for medical care generally because those costs have to be passed on by the physicians and the hospitals that have to acquire the insurance. We believe these are two important and necessary amendments to the underlying legislation. I ask my colleagues to support these amendments. I yield back my time. Mr. WELLSTONE addressed the Chair.

Mr. KYL. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. KYL. Mr. President, I have been trying to watch the proceedings on the floor all day. I was here twice before talking about amendments that are pending before the body on the issue of malpractice reform. I have been disappointed, frankly, that there has not been more debate joined on two very, very critical questions, except for a brief colloquy which the Senator from Minnesota and I had earlier today, I have heard virtually no refutation of the points that I have set forth regarding the two amendments. I wanted to spend 5 minutes this evening summarizing my views prior to the time that we will have votes on these two issues tomorrow. Mr. President, you know that we have before us the product liability legislation by which we are going to try to reform this Nation's product liability laws. Pending is also an amendment--the McConnell-Lieberman-Kassebaum amendment-- which will add the medical malpractice area to that reform. There are a couple of specific amendments pending to that which we hope will help to further reform our tort law relating to medical malpractice; specifically, an amendment that would limit attorney's fees and, secondly, one that would put a cap on noneconomic damages. more of the recoveries of these cases to the victims, to the plaintiffs or claimants in the cases. In the past, the claimants received--in fact, today the claimants receive on the order of 40 to 50 percent of the recoveries, and the attorneys receive most of the rest. In fact, several studies demonstrate that at least half of the recovery in these kinds of cases go to the attorneys. Let me cite two or three of those studies, Mr. President. There is a Rand study which demonstrates that about 50 percent of the money goes to lawyers, and less than 50 percent goes to the claimants. Some of it goes to administration. There are other studies that show somewhere in the neighborhood of between 40 and 50 percent. The bottom line is that the claimants are not getting the recovery; the attorneys are. As a result, what we have sought to do is to limit the recovery of the attorneys in the noneconomic damage area to 25 percent of the first $250,000. That is over $60,000. In addition to that, the attorney, under the McConnell amendment, would be getting either 33\1/3\ percent of the first $150,000, or 25 percent of everything thereafter, on all economic damages. So let us take a very large recovery for the sake of argument. Let us take a million-dollar recovery. The attorneys could easily get between a quarter of a million or more in their contingent fee from that. Then, of course, if punitive damages are further sought, an attorney, under my amendment, could go to the court and ask for a reasonable fee. Twenty-five percent would be presumed to be reasonable, and the court would have to determine it based on reasonableness and the ethics standards to apply to attorney fees. We are not limiting attorneys from recovering their fees. We are saying in a great big recovery, where it is a multimillion-dollar recovery, the bulk is not going to go to the attorneys. About 75 percent would go to the claimants. The adjunct to that is a limitation on the noneconomic damages themselves. By giving the claimants more of the money that they get and giving less of it to the attorneys, we can afford to put a cap on the noneconomic damages. That is what the second amendment I have introduced would do. The House-passed cap is $250,000. But a lot of our colleagues in the Senate said $250,000 was just too stringent in that exceptional case. They are rare, but in those exceptional cases where you would want to give an award of more than a quarter of a million dollars, you can provide an award of up to $500,000 under my amendment. It could not be discounted at the present value. So that is a lump sum of money. Invested over a period of time, it could make millions of dollars. That is on top of the economic damages, which would be collected to totally recompense the plaintiff for all out-of-pocket expenses as well as lost earning power and any other economic damages. So you do not limit the totality of the award so much as you provide that the claimant gets the award by putting a limit of $500,000 on the noneconomic damages. By having a limit on the attorney's fees, the claimants get essentially the same thing. But the attorney's fees are reduced to a more reasonable level. So these two amendments fit hand- in-glove. We are going to be voting on them tomorrow. I urge my colleagues to support the limit on attorney's fees and the limit on noneconomic damages. Some of my colleagues says the limit on attorney's fees is not strong enough. It does not really whack the lawyers. That is not my objective. My objective is to make sure there is a fairness and a balance here and that some reason is restored to the system. With respect to the noneconomic damages limit, there is a question about really whether that will do any good. I just want to cite to my colleagues the Office of Technology Assessment report of 1993 which said: Limits on noneconomic damages is the single most effective reform in containing medical liability premiums. We all suffer by virtue of medical expenses going out of sight, of physicians having to close down their practices or decline to serve certain kinds of patients because of the escalating costs of medical malpractice premiums. This is one of the cost-drivers in this whole health care reform debate. We have to get that under control. When a group like the OTA notes the fact that this is one of the most significant reforms we can pass, it seems to me important to do so. So again, I urge my colleagues, when we vote on these two amendments tomorrow to, of course, support the McConnell-Kassebaum-Lieberman amendment and to support my amendment on attorney's fees and on limiting noneconomic damages. I think if we do all three of those things, we will have strengthened the bill and will be better able to go to conference and come out with a really strong bill that, as a result, we can tell the American people we have done something in this area of medical malpractice and tort liability reform. Thank you, Mr. President. Mr. President, I suggest the absence of a quorum.

Mr. KYL. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. KYL. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. KYL. May I say, before my colleague leaves the floor, I appreciate his questions. They are all very good. I wish we had more of an opportunity to engage in colloquy. I think we would get to the bottom of some of these things.

Mr. KYL. I will be happy to try to respond to my colleague. First of all, by its very nature, these noneconomic damages are not quantifiable, so no one can say a particular amount is or is not warranted, which is to say of course, except we have put this decision in the hands of the jury. They are no more capable of divining a figure than the rest of us. We ask them to do it. We charge them with that responsibility, and they discharge their responsibility and, in many cases, do so very, very well. But these are very emotional cases, by their very nature. Ordinarily, the jury is well within the bounds of reason when it fixes the damage amount. We are only talking about those very, very exceptional cases, the less than 2 percent which exceed the half of a million dollars. So no one can say in one case it should have been $501,000 and in another case $499,000. But I think we should be guided by two or three different principles. First of all, we should understand that all of the economic damages are unaffected by this, so that with regard to the young man who has been confined to a wheelchair there would have to be a question about the loss of his earning power throughout the rest of his life, and he would receive damages for that entire sum of money. If he was building houses or something of that sort, his economic damages would be tremendous at that point, they would probably be in the millions and millions of dollars. In other cases, because of the nature of the economic loss, it would not be. If you are talking about a 65-year-old person who is about at the end of the earning part of their career, the economic damages would not be quite as large. We are already compensating for the economic loss. Second, since we cannot know precisely how much pain and suffering should be compensated, I think we ought to fix it at a level that is adequate to compensate an egregious case but not such as to permit all of the rest of society to pay a very large price as we are paying. What kind of a price do we put on the poor woman in rural Minnesota or rural Arizona who loses a child because there is not an obstetrician there to help deliver her baby because the high cost of medical malpractice premiums prevented that person from practicing? I know several communities in Arizona where every one of the OB's have left town because they cannot make it with the high premiums that they have to pay. I have cited these statistics here. So when we talk about how many millions of dollars should one person receive for being injured, I turn that around and say, how many millions of dollars worth of damage are being caused by the fact that physicians are not able to practice the way we all would like to have them practice and the way they used to practice. Finally, I note that our amendment does not provide for reduction in present value, therefore, in the case of the young man, the example the Senator cited, that $500,000, since he already received the economic damages--he has been made whole in that sense--this $500,000 can generate maybe several millions of dollars, many millions of dollars of income during that person's lifetime. We are enabling the person to collect the entire sum rather than having it to be reduced to present value. question, because ordinarily we would like to have the experimentation at the State level, and that certainly has been a part of my philosophy over the years. But we found in many areas from standards we have established on health care delivery, from the FDA, in welfare, in so many different areas we have found we want to have some kind of at least minimal national standards. In the case of people trying to do business and provide insurance so that hospitals and physicians can provide care to people so that they will receive the kind of health care that they need, in order for them to do that, they are going to need to have some kind of standard by which they can operate. If there is a different standard in every State, it is going to be very difficult--in fact, they have said it--it is very difficult for these insurers to insure against the different standards in different States. So some predictability and a maximum level of exposure, we think, would go a long way toward enabling companies around the country to reduce the overall cost of health care which, of course, would tie into our efforts to try to establish some kind of health care reform later in the session in Congress.

Mr. KYL. I think my colleague raises a good point. The mere fact that half of the physicians will, half of the surgeons in the country will be sued for medical malpractice has a great deal to do with the malpractice premium problem as well. So it is very difficult to tell how much of the problem is due to the large number of cases that will be filed and have to be defended, regardless of whether they have merit or not--three-fourths of them actually being thrown out--and how many problems, on the other hand, are due to very large awards. Because it is impossible to divide those numbers out, it is impossible to say precisely how much good we will do with this amendment. But this amendment is just one narrow piece of a much larger underlying amendment, as my colleague knows, that is being offered by Senators Lieberman, Kassebaum, and McConnell, that hopefully will also deal with the number of claims that are filed. So we are trying to get at it in three different ways: We are trying to limit the circumstances under which these cases are filed and trying to get them into alternative dispute rather than going all the way through trial, No. 1; second, we are trying to limit the nonessential costs, and in this case, we are saying some of the attorney's costs are just not necessary, we want to give more of that money to the claimants; and third--and I think this goes directly to the point of the Senator from Minnesota--there may not be very many cases where you have these astronomical awards but those few cases do represent a lot of money and they represent a lot of psychological horror to the insurance companies and to the physicians. They are the ones everybody knows about. That is the McDonald's coffee that burned the claimant and all of the other cases that we are very familiar with. Of course, that is not a medical malpractice case, but it is those kinds of awards that get put into people's minds and it is that which probably, in the case of the insurance companies, ends up causing them to, in effect, dictate to their insured, the physician, that a case be settled, even though I heard a lot of physicians saying, ``I wanted to fight that case because I knew I was not negligent, I knew we didn't cause this damage, or at least it was not negligence,'' but the insurance company said it was cheaper to settle because of the potential for one of these astronomical awards. Because that is the sense of it, it is probably impossible to tell precisely what effect it will have. But I think a combination of all three of those approaches together will have a significant impact on bringing the costs down.

Mr. KYL

Mr. KYL. Mr. President, in this article, the majority leader, I think, makes a very powerful point; among them, points that are in support of the amendment that is currently pending before the Senate, which I offered on Thursday afternoon, an amendment which would put some reasonable caps on attorney's fees. As the majority leader notes in this article, the people who suffer the most from our current litigation system are, as he puts it, the little guy. He quotes a survey from the National Federation of Independent Business in a couple of States, Texas and Tennessee, which found that one-third to one-half of small businesses have been either sued or been threatened with suit to punitive damages. Because of this kind of lawsuit abuse, the majority leader notes that the Girl Scout Council, for example, in Washington, must sell 87,000 boxes of cookies each year just to pay for liability insurance. The average Little League's liability insurance jumped 1,000 percent in a recent 5-year period. Just a couple of examples of the fact that we are all paying the costs of this litigation system, the tort taxes, if you will. If you are a woman and you need to go see your OB/GYN on January 2, be aware that on January 1, before that physician can even open the doors to see anyone, that physician is going to be paying medical malpractice premiums of probably a minimum of $30,000 and in many cases far more than that. Neurosurgeons are up in the $60-$70,000 range or higher. In other words, before most physicians can even begin to treat us, at the beginning of the year, they have had to shell out in medical malpractice premium costs more money than most Americans make in a year. The cost of those premiums is--just as the cost of the liability insurance premiums paid for by the Girl Scouts or the Boy Scouts or other organizations--the cost of those premiums is borne by everyone of us in the products that we buy, in the services that we receive. The majority leader goes on to point out in this article that there are three myths, all of which get to the basic point that the person who suffers is the little guy, as he noted. And the persons who make out in this litigation lottery are the lawyers. I must say at the outset, I practiced law for 20 years and I have a deep and abiding respect both for my fellow lawyers and for our legal system. But in the past, where there have been changes that have required action to compensate, where it has gotten out of balance, the legal profession has been pretty well able to restore balance to the system. That has not been possible with respect to this litigation lottery. You have a large group of lawyers who make their living by charging contingency fees to clients and then recovering very large--sometimes enormously large--sums of money as a result of the cases that they settle or that they bring to trial. One of the myths that the majority leader notes is that the trial lawyers protect the consumers. But the fact of the matter is that over half of the money recovered by the plaintiffs in these cases goes to the lawyers. As a matter of fact, let me cite--this is not just one or two studies. There are several different studies that make this point. For example, one of the studies was done by the Department of Commerce just last year, a 1994 study, which stated that 40 cents of each dollar expended in litigation is paid in attorney's fees. On a recent edition of ABC's ``20/20,'' John Stossel reported that some trial lawyers are earning contingency fees that pay them the equivalent of $300,000 an hour. Think of that, Mr. President, $300,000 an hour. So this is not a matter of lawyers being properly compensated for taking cases. This is literally a matter of hitting the jackpot. It is not plaintiff who hits the jackpot, it is plaintiff's lawyer. A 1994 study by the Hudson Institute found that 50 cents out of each litigation dollar went to attorney's fees. That, by the way, was reported on in the June 1994 article in the Wall Street Journal. A study of the Rand Corporation also found that 50 cents out of each liability dollar goes to lawyers and transaction costs, rather than to injured victims. There are others. The point I am making here is that study after study after study has made the point that about half of all of the recoveries go to the lawyers. That is not fair to the victims. That is not fair to the plaintiffs. And what the amendment which I have offered and is currently pending before us will do is to ensure that the victim, the claimant, plaintiff recovers his or her fair share of whatever recovery is obtained. Effectively, that means something in the order of 75 percent of it. I think most Americans would find it astonishing that we would even be having a debate about whether or not the person who is injured, who actually suffers, should be receiving on the order of 75 percent of what the jury has awarded to that individual. Yet that is what this is all about. Our amendment simply limits the attorney's fees to approximately 25 percent of the recovery. I also note, when we talk about this first myth that the majority leader noted that the trial lawyers are just protecting consumers, one other example of the costs that get passed on. The American Tort Reform Association notes that half of the cost of a $200 football helmet goes to lawsuit-driven liability insurance. This is just one example of products in our society which have been the subject of these suits and which, therefore, are either not on the market or are on the market at a greatly increased cost, simply because of the litigation lottery. Myth No. 2, trial lawyers protect workers and the poor. But as the majority leader notes in his article, the current system victimizes no group more than the working poor and disadvantaged. Lawsuits add a $1,200 litigation tax on every consumer in America. That is the cost we are all paying as a result of this litigation lottery. The trial lawyers, through contingency fees, as I said, can effectively earn $300,000 an hour in some cases. So I do not think it is true to say that trial lawyers protect workers, just workers and the poor. Myth No. 3 that the majority leader points out is that the trial lawyers are the champions of safety; if they did not bring these lawsuits that, somehow, very dangerous products would still be on the market. There is some truth to the fact that high profile cases have helped to remove unsafe products from the market. But that exception to the rule should not be the basis for this lottery, this jackpot which results when people find they can recover astronomical sums for some perceived damage. It often, in fact, makes our lives less safe rather than more safe. One only has to look at the drugs that do not reach the market because the pharmaceutical companies are afraid if they produce some new drug without 30 years of testing on people that somebody might have an adverse reaction to it, sue the drug manufacturer, and make millions in punitive damages. It is not just drugs. It is also designs of all kinds of new products which manufacturers have said over and over again they are reluctant to change because, if they do, there will then be the inevitable lawsuit that that change resulted in some harm to someone as a result of which there will be a new lawsuit. All three myths, I think, need to be exploded. The bottom line of all three, as I said in the beginning, is that the lawyers are using this process not so much to create safety or protect the little guy--the little guy is the person who is actually hurt--but rather to earn a living which is far beyond what is necessary to protect the public. And that then gets to the amendment I have introduced and that is before us right now. Very briefly, my amendment will be actually criticized as being too generous to the trial lawyers because we start with the premise that the underlying legislation, the McConnell-Kassebaum-Lieberman amendment, already suffered. So a lawyer can recover either 33 percent of the first $150,000 and 25 percent of everything thereafter with no limit for the economic damages. So you can have a very large attorney fee just for the economic damage component of a lawsuit. Then you have the noneconomic damage component. This is the pain and suffering that is supposed to go to the person who suffered the pain and suffering. All we say in my amendment is that the lawyer would be entitled to no more than 25 percent of the first $250,000 of that pain and suffering. So that is an additional up to $60,000-plus in attorney's fees for the pain and suffering component of the suit. Then, if it is a suit in which punitive damages are sought and the lawyer believes that he should be entitled to a percentage of that as well, he may petition the court to have a percentage of the punitive damage award. The court would have to make that award based on what is reasonable and ethical. It should be based upon the amount of time the attorney put in; 25 percent would be presumed to be a reasonable fee but all of this is up to the court. So you see, this is a limitation but it is a limitation which will enable attorneys to receive multithousands and tens of thousands and even hundreds of thousands of dollars in fees for the kind of case that would warrant it. So there is no question there would be an incentive for anybody who has a claim--be it a little claim or a larger claim--to have that case brought to trial because a lawyer would have an incentive to do so. But what it provides is a cap so the lawyer does not have a lottery here, so the lawyer does not have an incentive to bring these cases just to see if that lawyer can hit the jackpot and earn literally hundreds and hundreds of thousands of dollars or millions of dollars in attorney's fees when we think that money should go to the plaintiff or the claimant, the victim in the case. That is what it is all about. We are going to be voting on that shortly after 11 o'clock tomorrow morning. I just urge all of my colleagues to view this issue in the light of what is best for the claimant, for the plaintiff, the injured party, and to view it in the light of what is best for the American people, who are paying a very large sum of money so that a lot of lawyers can get very rich. As I say, some people criticize this as not being tough enough on the lawyers. That is not what we are here for. We are not here to bash lawyers, but to put a cap on the big bonanza kind of recovery that we have all been reading about. Finally, I want to take a minute to say that at shortly after noon, I will be offering a second amendment. This is an amendment which will put a cap on the noneconomic damages--so-called pain and suffering--in these medical malpractice cases. It will put a cap of $500,000 on these medical malpractice cases. A lot of our colleagues have said the cap discussed earlier--a quarter of a million dollars--is just not quite big enough for that really exceptional case. In response to that, I think a lot of people have said, ``OK. We will provide for up to half a million dollars.'' Bear in mind that this is after the economic damages--after all of the bills have been paid, after all of the economic losses have been accounted for--there is the pain and suffering part of it. It does not relate to the punitive damages. There will be a different kind of treatment for that. This is just to say with respect to that noneconomic damage component, there will be a cap of half a million dollars. So I will be proposing that amendment and asking support from my colleagues for that amendment, as well. Mr. President, I yield the floor. Exhibit 1 [From the Los Angeles Times, Apr. 27, 1995 Ignore the Lawyers, Help the People (By Bob Dole) During the current Senate debate over legal reform, you will hear from the trial lawyers and their allies that legal reform is nothing more than a boost to big business. But the facts suggest otherwise. Who is hurt by lawsuit abuse? It's the little guy, according to recent surveys by the National Federation of Independent Businesses in Texas and Tennessee, which found that one-third to one-half of small businesses have been sued or been threatened with suit for punitive damages. Because of this kind of lawsuit abuse, the Washington-area Girl Scout council must sell 87,000 boxes of cookies each year just to pay for liability insurance, and the average local Little League's liability insurance jumped 1,000% in a recent five-year period. These are just a few examples of a problem that is big and getting bigger. Who profits from lawsuit abuse? The trial lawyers. As the Senate considers legislation to reform lawsuit abuses, the buzzing sound you hear is the trial lawyers swarming to the defense of their hive of honey: The lawsuit lottery. This picture, needless to say, is not the one trial lawyers would paint. According to them, they are the best (perhaps only) friends of the poor, consumers and women. They have one of the most effective public-relations efforts going. It is a costly exercise, characterized by millions in contributions to politicians and judges. Now they are mounting a $20- million campaign to stop lawsuit reform in the U.S. Senate. Why? Lost in the fog of propaganda is a fact well- understood by most Americans: Our legal system costs too much for everybody (except the trial lawyers) and has turned into a lottery where even the threat of outrageous damages with little or no connection to fault extorts money and time from charitable organizations, small businesses, blood banks and volunteer groups. But, like any effective gambling operation, the house always wins. And the house in this case is the trial lawyers and the system they so ardently defend. We need a system that ensures that those harmed by someone else's wrongful conduct are compensated fully. And we need to ensure that the system is not twisted in ways that deter folks from engaging in activities that we ought to encourage. That's why I have offered an amendment that would extend the protections against outrageous punitive damages now being considered for manufacturers to include volunteer and charitable organizations, small businesses and local governments. These reforms are an attempt to restore fairness and integrity to a system that has gone awry. But, given the distortions from the trial-lawyer lobby, it is clearly time to confront a few of their most cherished myths. Myth No. 1: Trial lawyers protect consumers. The California Trial Layers Assn. recently changed its name to the Consumer Attorneys of California. Some consumer Attorneys of California. Some consumer champions. Across the nation, abusive lawsuits drive up the costs of all kinds of goods. As noted by the American Tort Reform Assn., half of the cost of a $200 football helmet goes to lawsuit-driven liability insurance. Myth No. 2: Trial lawyers protect workers and the poor. The current system victimizes no group more than the working poor and the disadvantaged. Lawsuit add a $1,200 litigation tax on every consumer in America. Meanwhile, some trial lawyers through contingency fees effectively earn $300,000 per hour. The poor also pay in jobs. A RAND Corp. study estimates that wrongful termination suits have reduced the hiring levels in just one state by as many as 650,000 jobs. Myth No. 3: Trial lawyers are champions of safety. Personal injury lawyers put out literature informing us that Americans live in the safest society in the world because of our civil justice system. The reality is that our legal system long ago crossed a critical threshold: It often makes our daily lives less safe. Lawsuits not only stop pharmaceutical research and new drugs. They cause industrial engineers to avoid safety improvements for fear that current designs, by comparison, will be interpreted as defective. They make all organizations fearful of the new--because in the hands of personal injury lawyers, ``new and improved'' has come to mean ``new and open season for lawsuits.'' Part of our heritage as a free people is a legal system where justice, not the search for a windfall, is the goal. Over the past 40 years, we have strayed from that path. The powerful trial-lawyer lobby must not be allowed to kill reform with a campaign of disinformation, distortion and delay. I am determined that this is the year that civil- justice reform will pass the Senate. Mr. GRAMS addressed the Chair.

Mr. KYL. Mr. President, I would like to address for a few minutes the legislation which will be pending very shortly today, and specifically the amendment relating to medical malpractice that is before Members. I speak, of course, of the legislation to reform our product liability tort system and the amendment which would also reform the medical malpractice component of that civil tort litigation system. Some have said that we have, in effect, a tort tax in this country, a tax on all citizens by virtue of the increased costs of the products and the services, and in particular, I am speaking of medical services, that result from the fact that our tort system has become very expensive. The costs of operating that system have had to be folded into the costs of the products and the costs of the services in order to pay for the liability insurance, the lawyers' fees and the other expenses that fund this tort system of ours. That tort tax ends up being a tax on all Americans. Leader Bob Dole wrote an article, and it was published on this date, the title of which is ``Ignore the Lawyers, Help the People.'' Mr. President, I ask unanimous consent that this article be printed at the conclusion of my remarks this morning.

Mr. KYL

Mr. KYL. Mr. President, I would now like to discuss the amendment which I have just a moment ago offered, an amendment which will complement what the Senator from Colorado has just spoken of by helping to get health care costs under control, but, more importantly, to put a better balance into the awards that are received in cases where today the attorney is taking too much of that award and the victim is receiving too little of it. My amendment is an amendment which provides some very modest limitations on attorneys' fees in the kinds of cases in which very large awards have sometimes been granted and where, by virtue of the fact that the attorneys are awarded a contingent fee or have arranged for a contingent fee contract, they receive a percentage of that award. It is common in cases of this kind for the percentage to be at least one-third and frequently 50 percent, sometimes even more, of the recovery. That means that if a plaintiff in a case receives $100,000 in an award, the attorney is likely to receive somewhere between $30,000, $40,000, $50,000, leaving the plaintiff with frequently about half of what is recovered. There are some statistics in this regard which I would like to refer to which indicate that actually the percentage that the attorneys' fees are taking is even greater. When you add the other administrative fees of the court and so on, you end up with a situation in which the victims frequently get less than half the award the jury thinks they are receiving. This bill will, I hope, reform a situation that the Wall Street Journal wrote of in an article recently--March 12, specifically--noting that the result is that fees paid to plaintiffs' lawyers can range from $1,000 to $25,000 per hour--Mr. President, per hour. Twenty-five thousand dollars is more than a lot of Americans make in an entire year and yet, as the article notes, some lawyers have made that much per hour spent on a case. That is what we are trying to avoid with this amendment. A recent Department of Commerce report stated that 40 cents of each dollar expended in litigation is paid in attorneys' fees. A 1994 study by the Hudson Institute found that 50 cents out of each litigation dollar went to attorneys' fees. So you see, Mr. President, the notion that these attorneys' fees, contingency contracts, or agreements result in almost half, sometimes more than half, of the award going to the attorney are borne out by the studies that have been performed professionally on this matter. And that is what we are trying to change here. I think, really, Mr. President, for our tort system to retain, or to regain, really, credibility as a fair and equitable dispute-resolution system, it has to be more efficient, less litigious, and we have to ensure that a larger portion of the judgment awards actually goes to the claimants rather than to the attorneys. Now, some will say when I describe this amendment in just a moment that this is not really much of a limit on attorneys' fees. Those who like to bash lawyers will say you really have not limited them. My effort here is not to punish lawyers, but it is to try to ensure that more of the money that the jury awards goes into the pocket of the claimant. As I said, today the typical fee is at least a third, frequently at least 50 percent. I would like now to describe the three different kinds of awards that might be granted in a case and indicate what the percentage in each case would be under the underlying bill and under my amendment. Under the McConnell amendment, which is essentially pending before us here, the award is limited in a health care liability case, typical medical malpractice case, to one-third of the first $150,000, and 25 percent of any amount in excess of $150,000. So on the first $150,000 you get a third and on anything greater than that you get 25 percent. Now this guarantees, Mr. President, that there is an adequate incentive for an attorney to take a small case, because for the economic damages--these are damages that repay the doctor, the hospital, and so on and also provides for compensation for any economic losses, time loss from work, inability to perform work in the future and so on--it guarantees that the attorney is going to get a third of the first $150,000 and 25 percent of everything thereafter. So there is adequate compensation for a lawyer to take even a relatively small case. But cases usually involve another element of damages called noneconomic damages. And these are the so-called pain and suffering damages. So that after a person has been compensated for the out-of- pocket expenses to the hospitals and to the physicians and so on and for any lost wages and future lost economic earning power, juries also frequently--in serious cases virtually always--award the claimant a sum of money representing the pain and suffering that that claimant suffered; the hurt, the anguish, the pain. That award is frequently a multiple of the economic damages. So in many case, most cases, it exceeds the economic damages. What my amendment says is that the attorneys' fees should be limited to 25 percent of that award up to $250,000. So, in the case of the McConnell amendment, added onto the Kyl amendment on attorneys' fees, you would have essentially either 25 percent or 33 percent as the limitation. Now, as I say, compared to 50 percent, some people will say, ``Well, you haven't really gone down all that much.'' But since some of the very high awards are in excess of $250,000, we award. They are going to get plenty up to the $250,000, but what they will not get is that big bonanza, the jackpot, where they convince the jury that there is such an egregious situation here that the claimant gets, let us say $1 million, and the lawyer then is going to get at least a half a million. No. The claimant in this case would get the bulk of that $1 million, if that is the amount that is awarded. So what we are saying here is that the lawyer is going to be limited but guaranteed, in effect, a percentage of both the economic damages and noneconomic damages, if they are otherwise awardable. They just cannot exceed either 33 percent or 25 percent. In the case of the noneconomic damages, the pain and suffering damages, they cannot exceed 25 percent of the first $250,000, or in other words, $62,500. Now in some cases, Mr. President, there is a third kind of award and it is punitive damages. There have been several statements made about punitive damages and ways to limit punitive damages. These are the damages not intended to compensate the victim but rather to punish the defendant for wrong conduct, conduct that is very wrong, that is willful or malicious, is in great disregard of the rights of the public and intended to cause a defendant never to do it again or, in the case of a defective product, for example, to fix that product and never allow a defective product again to hit the market. In those cases, there are limits in the underlying bill on the amount of punitive damages that can be collected. Under the McConnell amendment, the total award for punitive damages in the medical malpractice kind of case is either $250,000 or three times the economic damages, whichever is greater. The Snowe amendment, which has been presented just before my comments, would limit the total award for punitive damages in these cases to two times compensatory damages, which is the sum of the economic and noneconomic damages. In either case, there is some limit on the amount of punitive damages. The question is, should attorneys receive any percentage of that as well? And what my amendment says is that if the attorney believes that he or she is entitled to a percentage of the punitive damages awards in addition to the other two kinds of awards, that attorney may petition the court and the court may grant reasonable and ethical attorneys' fees based upon the amount of time that the attorney has put into the case. There is a presumption that 25 percent is reasonable. So, here again, the attorney can petition the court, can get at least 25 percent. A court may even deem that a larger amount would be warranted. But, in any event, it has to be reasonable and ethical and based upon the amount of work that the attorney put in. So, as I say, Mr. President, some people will say, ``Well, this is not much of a limitation. You haven't whacked the attorneys. You haven't cut them out of all of their awards,'' and so on. And we have not. The reason we are offering the amendment this way is to guarantee that people who have a good case can get a lawyer to take their case, and with these limitations they can clearly get the lawyers to take their case. But what it prevents is the situation where the lawyer gets the bulk of the recovery and, in the case of the very large award, hits the jackpot, gets the big bonanza, in effect. The objectives of the overall legislation, Mr. President, are, first of all, to ensure that people can be compensated in our tort system. This bill helps to guarantee that result. We need incentives for lawyers to take these kinds of cases which frequently the plaintiff cannot pay for by the hourly rate or money up front to the lawyer, so there has to be a contingency fee. We provide for that. We need to ensure that in the case of the economic damages, the lawyer is limited in how much of those economic damages can be recovered as attorney's fees. That is limited in the underlying bill. We are saying that with respect to the pain and suffering damages, most of that ought to go to the victim. Seventy-five percent of it ought to go to the victim, the claimant, the plaintiff. But, again, we allow up to $250,000 of noneconomic damages, the recovery of 25 percent of that amount by the attorney and, as I said, in punitive damages, the opportunity to collect fees there, as well. So the real question is whether lawyers should be getting 50 percent, or somewhere between 25 and 33 percent. And I think, Mr. President, that this body will agree that placing some cap, some limit, is desirable and that it will help us to avoid the situation that causes a great deal of public anger, frankly, with our litigation process. Ironically, I think we might even help the legal profession, which is being greatly criticized by the public in public opinion surveys these days primarily because of their fees. There is a Hudson Institute study which notes that there has been a doubling of negative attitudes toward lawyers since 1986 and that exorbitant attorney's fees are a major factor in this increase in the public's ill will for lawyers. Ironically, we may even be helping the legal profession, and that is not all bad, either. We will be debating this amendment, and others, on Monday next, and I hope very much that all of the Members of the Senate will reflect on how this amendment, narrow that it is, will improve the bill, will improve the McConnell amendment, and will improve the pending amendment before the body and, as I said, allow the victims to recover more of what the juries award to them. Mr. President, I will debate and present further arguments with respect to this matter on Monday. At this time, I would like to make a closing statement on behalf of the leader.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that all Senators have until the close of business on May 10, 1995, to submit eulogies for our former colleague, the Senator from Mississippi, Mr. Stennis, and that at that time eulogies be printed as a Senate document.

Mr. KYL

Mr. KYL. Mr. President, I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that when the Senate completes its business today, it stand in adjournment until the hour of 11 a.m. on Monday, May 1, 1995; that following the prayer, the Journal of proceedings be deemed approved to date, no resolutions come over under the rule, the call of the calendar be waived, the morning hour be deemed to have expired, the time for the two leaders be reserved for their use later in the day, and there then be a period for the transaction of morning business not to extend beyond the hour of 12 noon, with Senators permitted to speak for up to 5 minutes each, with the following exceptions: Senator Gregg, 30 minutes; Senator Grams, 15 minutes. Further, that at 12 noon, the Senate immediately resume consideration of H.R. 956, the product liability bill.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Senate Resolution 112 submitted earlier today by Senators Dole, and Daschle concerning the retirement of Brian Hallen, the Senate enrolling clerk.

Mr. KYL

Mr. KYL. Mr. President, let me begin by complimenting the Senator from Connecticut for his very fine remarks in support of the legislation that we have introduced. I have had the pleasure to work for 8 years with his House colleague, Nancy Johnson, in the House of Representatives, who has been a leader in this area, and who has educated me and assisted greatly in the development of reform measures. I know that he shares with me his deep regard for his colleague and my former colleague from the House of Representatives, Nancy Johnson. I want to compliment both for the fine work that has been done in developing legislation and proposing it as an amendment to the underlying bill here today. I support the McConnell-Lieberman amendment to the Gorton-Rockefeller product liability bill. As I have traveled around my own State of Arizona for several years now, the cry has been that we have too much taxation, regulation, and litigation. There is simply a growing awareness by so many small business people, by so many other representatives of business or families, that there is something out of whack here. There is something out of balance in our society that is preventing America from competing, that is pitting citizen against citizen, that is removing the element of responsibility from our society, and most of all, hurting all as citizens and as consumers because of what some have called the litigation lottery. I think that the Senator from Connecticut is correct that what the opponents of this legislation must argue is that the status quo works. Yet, I think that almost no person can deny that fundamental reform is necessary. I practiced law for 20 years in my home State, Mr. President. I have a deep respect for the legal system as a result of that. Individuals who have been injured through the negligence of physicians or other parties do have their day in court. They are fairly, and I suggest, proportionately compensated for the injuries which are sustained as a result of the negligence of those who have treated them. It cannot be suggested that people today are not permitted full and complete recovery and all of the opportunity the law brings for their recoveries. Clearly, a strong and equitable civil justice system is an essential component of a free society like ours. Having said all of that, it is also true that what has served the few well, the injured plaintiffs well over the years, has come to ill serve society as it has gotten out of balance. The net result is that everyone as consumers are suffering as a result of the litigation lottery that I spoke of a moment ago. The high cost of civil litigation and the excessive medical malpractice recoveries have greatly contributed both to the high cost of insurance and high consumer prices. There is another way in which this explosion has hurt. It has hurt the doctor-patient relationship. As has been noted, a physician now treats in fear that what he does may result in a lawsuit, with the result that too many diagnostic services are ordered or prescriptions or other kinds of treatments are ordered, with the result that the costs go up. The same kind of psychological well-being that a patient seeks from a physician is broken down when that physician sees the patient as a potential lawsuit. This is not good for either the physician community or for the individuals who are being treated. In addition, the current medical malpractice system actually encourages litigation and resulting exorbitant out-of-court settlements. Let me cite some examples: The Senator from Connecticut cited Lewin-VHI, a consulting firm, which in 1994, studied and concluded that the direct medical liability costs have been growing at four times the rate of inflation--four times the rate of inflation. I do not think we can suggest that somehow this system has simply kept up with everything else in society. It is exploding at the rate of four times the rate of inflation. In 1998, according to the study, defensive medicine is projected to add $38 billion or more per year to national health care costs. If we are going to talk about true health care reform, Mr. President, we cannot do so honestly, without addressing this issue. It is not the sole answer. There is much else that must be done. But clearly this is one of the things which must be done. To pretend that we can have health care reform without addressing this problem in the bill that has been introduced is to deny a fundamental reality of our society today. The practice of defensive medicine, of course, is understandable. No one likes to be sued. According to a 1994 study by the Institute of Medicine, 40 percent of all physicians and 70 percent of all OB/GYN's will be sued during their careers. Mr. President, I believe it was you earlier this morning who talked about the fact that in many communities we do not have any more OB/ GYN's. We have GYN's, but nobody is wanting to deliver babies any more because of the large number of cases in which, when something has gone wrong or the baby is not perfect, the physician ends up being sued. There are many communities in my own State that are no longer served by obstetric physicians because of this phenomena. Mr. President, it was discussed this morning, the number of communities, particularly smaller communities, in your State and around the country that no longer have this service. So in order to bring this potential recovery in the litigation lottery for a very few, women all over the United States and families all over the United States suffer the consequences because their communities no longer provide this kind of service, and it puts a health risk to the people in the communities. Mr. President, my wife was involved in the March of Dimes effort for several years helping to raise money for something they called the ``Mom mobile,'' a large van that would provide prenatal services in the outlying areas of our State where there were no physicians to provide those services anymore. Among the reasons is this problem that we are talking about here today. Mr. President, also discussed was the extraordinarily negative impact that this has on the minority physician. I think, therefore, we all must recognize that when too many people are creating too much of a burden on the system, it affects all of America. It affects all Americans. When that occurs, we must acknowledge that something is wrong, that reform is necessary, and that it is not a matter of not wanting people who deserve to be compensated to recover. No one is arguing that. We are simply saying that we need to both permit their recovery, but also ensure that there are not excessive costs built into the system because the system has gotten out of balance. With this matter of defensive medicine having achieved the degree of cost in our society that it has, I think it is undeniable that the problem has to be addressed. use of our health care resources. Another study I would like to cite, the Competitiveness Center of the Hudson Institute, noted that of the billions of dollars spent on medical liability insurance, 57 cents out of each premium dollar goes to lawyers rather than to the injured patient. This study also found that medical liability costs add $450 in direct and indirect costs to each hospital admission. So where is the benefit to the people for whom we have so much compassion, who deserve to recover for injuries that they have sustained because of someone's fault when over half of the money goes to the system, goes to the lawyers? And these large costs are added to the hospitals and eventually, of course, to the insurance premiums, and when added to the other defensive medicine practices drive insurance costs up for everyone, preventing some people from being able to afford insurance. In other words, again, millions of Americans are suffering because the system, which is designed to help the few who are injured, has gotten so far out of balance. There is another study, a Rand study, which I believe has it somewhere in the neighborhood of 40 percent of the funds that are recovered going to victims and almost 60 percent going to administration or to the attorneys involved in the handling of the cases. The Hudson Institute study that I referred to a moment ago concluded the fear of lawsuits contributes more than 5 percent to hospital operating expenditures. That is again part of defensive medicine, of which we have been speaking. Ironically, our tort system also inhibits reimbursement for legitimate malpractice claims because of the high cost of retaining legal counsel and the length of time between the date the suit is filed and the resolution of the claim. In other words, these high costs have a tendency to snowball because of the cost of defense. The plaintiffs have to spend more time, their lawyers, so the costs of defending increase. That is another factor driving up the costs of the premiums. Again, that affects all of us and prevents some people from actually being able to be insured. I just had to make one reference to a comment that the Senator from Minnesota made earlier today on the floor. He talked about compensation in the form of punitive damages. I think it is important to make it very clear that while punitive damages are a component of our legal system, they have a very narrow and specific purpose in a very limited number of cases. Punitive damages were never intended as compensation. Punitive damages were intended to act as a disincentive for bad conduct in the future, to punish someone who was so recklessly in disregard of the rights of others that that party had to be punished so that the bad act would not be repeated. There is a lot of discussion of whether or not the punitive damages that are recovered should even go to the plaintiff, because they are not designed as compensation. You cannot get punitive damages unless you have already been compensated. That is the law. The compensation is in two forms. The so-called economic damages, which have two components: All of the medical bills and costs associated with the treatment and recovery for the injury, and the loss in economic wages or other cost factors associated with the effects of the injury on the injured party and the party's family. Those are designed to fully compensate for all of the dollar losses, past, present, and future. In addition to that, because we are a caring society and understand that there is more than just dollar loss, we compensate for what are called noneconomic damages, or sometimes called pain and suffering. And this is just. This is fair. This is necessary. We often say that no amount of money can compensate for certain kinds of injuries, and that is true. Yet, as a society, we recognize that some kind of payment is appropriate for those who have suffered. So we provide for that kind of compensation. There may be an amendment later on that suggests that there needs to be an upper limit to that compensation; that beyond a certain amount, we are talking about a litigation lottery and not something that would reasonably compensate for this pain and suffering. That will be reserved for a later time. But that is not involved in the bill that you, Mr. President, have introduced, the Senator from Kentucky and the Senator from Connecticut have introduced. As a result, I do not think we should be confused about this matter of punitive damages. By putting a cap on punitive damages, as this legislation does, we are not detracting from the compensation of the victim. We are simply adding a disincentive for further bad conduct. And there is a point at which you are not adding to the disincentive, by providing multiple punitive damages awards, for example. I am confident that in the discussions we engage in here, ultimately a reasonable balance can be achieved that will both restrain the spiraling tort litigation costs and recoveries and also afford citizens injured through the negligence of others just and reasonable compensation. That is our goal. I believe the amendment that has been offered here is a step in the right direction. I will not review the contents of the amendment. It has been well described by both the Senator from Kentucky this morning and a moment ago by the Senator from Connecticut. But it does reform the statute of limitations to make it uniform. It does cap the punitive damages. It provides for joint and several liability reform so, in effect, innocent parties do not end up paying the expense just because one of the so-called guilty parties cannot be found or is unable to economically respond in damages. And it also has a limitation on attorney's fees. I guess I will just conclude by reflecting on that for just a moment. As I said, I practiced law for 20 years and I have a deep respect for the legal profession. It is very important that lawyers be adequately compensated in order to have the incentive to take cases. That clearly is a part of the contingent fee aspect of many of these kinds of cases. But it is not too much, I think, to say that as we all begin to look on how we can reduce the cost of health care in our society, so that we do not have to resort to a kind of socialized medicine that many of us feared was going to be the result of the debate last year in the Congress, if we are going to reform it ourselves, then we have to look at a variety of things, including ways in which we can make it easier for Americans to buy insurance, to reduce the cost of health care, and a part of that is to reduce the overhead, including the attorney's fees that are involved. To a point, it is necessary to provide an incentive to take the cases. But beyond that point, it again becomes a part of this lottery, when in these multimillion-dollar recoveries the attorney receives over half of what is awarded to the plaintiff. This amendment is an effort to try to return some balance and provide that a good share of the recovery, if there is a recovery, goes to the plaintiff, to the injured party, rather than to the system and to the lawyers. So I am very much in support of the McConnell-Lieberman amendment, and I am hopeful when we have concluded the debate on this, there will be sufficient support in this body to approve the amendment so this bill can go to conference and, in conjunction with our House colleagues, develop a piece of legislation that the President can sign and finally get us on the road to reform in our litigation system in the United States of America. I yield the floor.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the resolution be considered and agreed to, that the preamble be agreed to, and that the motion to reconsider be laid upon the table, and that any statements relating to the resolution appear at the appropriate place in the record.