Charlie Norwood

Mr. NORWOOD

Mr. NORWOOD. Mr. Speaker, I know you know that this House is very attuned to the ongoing debate over reining in the abuses of the managed care industry in general. But today I would like to bring attention to a more specific injustice, one that is not addressed by the managed care reform legislation under consideration by the House-Senate conferees committee. Mr. Speaker, before this session is out, we need to pass legislation that will address the worst HMO in the country, our military health care system. As is the case with all managed care abuses, our military system is failing to deliver the benefits for which its beneficiaries have paid. These patients were promised fully funded health care for life in exchange for 20 years of military service. That is a defined benefit, just like those benefits defined in civilian-managed care plans. You pay the premium, and you should receive the benefit. Our military retirees paid for their benefit with 2 decades of service. In return, they were guaranteed that they would not have to pay out of pocket for health care by having access to military health care facilities or supplemental insurance, CHAMPUS, that would pay the bills at civilian hospitals if military facilities were not available. That is the coverage that Sergeant First Class John Nation and his wife, Barbara, of Southport, North Carolina, thought they had after John served 21 years in the Army. That service included two tours in Vietnam with the artillery. Sergeant Nation was certified by the Veterans Administration as suffering cancer from exposure to Agent Orange during that war. Here is the benefit that Sergeant Nation received: because there was not an Army or VA hospital within 2\1/2\ hours of their home, they had to seek civilian treatment. Because Barbara had private health insurance through her job at Carolina Power & Light, CHAMPUS refused to accept primary responsibility for John's treatment. When CHAMPUS received the portion of John's bills not covered by the private insurance, they still refused to pay for the vast majority of the care. They told Barbara, his wife, that the charges exceeded their rate schedule, so they were not obligated to pay anything. On bills that were within their rate schedule, CHAMPUS rejected the majority of chemotherapy, radiation, and hospital charges on technical grounds. John passed away. Barbara was forced to surrender her entire retirement savings to pay the bills rejected by CHAMPUS. Now, I ask every Member of this House, is this fully funded health care for life as promised? Does the treatment that Sergeant First Class John Nation received from the U.S. Government qualify as having provided the benefits that he and his family were promised? John Nation honored his part of the contract. We failed to honor ours. It is time we made good on our promises to the Nation's military retirees; and I urge each and every one of you to support H.R. 3573, the Keep Our Promises to America's Military Retirees Act. 260 Members have now cosponsored this bill so that we may keep our word. It is important that the Federal Government keep its word. You cannot expect retention to improve in the military; you cannot expect that people are going to stay in as a career, when we will not keep our word to them. Mr. Speaker, this should be one of our top priorities, because it is the right thing for the United States Government to do for the men and women that risked life and limb to defend this Nation.

Mr. NORWOOD

Mr. NORWOOD. Madam Speaker, every year since coming to Congress in 1995, I have made a point to bring to our attention the sacrifices made by our veterans to defend our country. Each year, we call for our Nation to honor those who have served. Yet each year, we continue to ignore the promises made to our veterans and military retirees concerning health care benefits. In my mind, it is impossible to honor someone while at the same time refusing to honor commitments made to that person. It is time to stop honoring our veterans with just words, ladies and gentlemen, instead let us honor them with action. Retirees that entered the military prior to 1956 were promised that if they served 20 years, they would receive free health care for life for both themselves and their dependents. For those who signed up after 1956, they were told that they would receive free health care at military facilities or supplemental health insurance. Today both groups are pushed out of the military health care system entirely and enrolled in Medicare, the same plan they would have received had they never served a day. On September 28, I introduced the Keep Our Promises to America's Military Retirees Act, H.R. 3573, along with the gentleman from Mississippi (Mr. Shows), as a nonpartisan restoration of the health care benefit we owe our retirees. A companion bill, S. 2003 is being introduced by the Senator from Georgia (Mr. Coverdell) and the Senator from South Dakota (Mr. Johnson). The pre-1956 retirees would be enrolled in the Federal Employees Health Benefit Plan at no cost, just like we told them, no matching premiums, no deductibles, no copays. The post-1956 retirees would be enrolled under the same rules as civilian Federal retirees. As we consider this legislation, we need to be keenly aware that there is more at stake than just these benefits. Today's young people take note of the level of importance we place on military service. If we renege on our promises to veterans, we have stated in a very loud voice that we hold their sacrifices in contempt. Why should anyone sacrifice life, limb, career or temporary personal freedom, when their reward will be the contempt of those that they defend? They will not. And when the next challenge to national existence erupts, there will be few or none willing to carry America's banner. As of the State of the Union address, there are 236 Members of the House who have signed onto this legislation. It is the fairest, most practical means of any available to redeem the promises we made to our retired veterans. We have a clear-cut majority, very evenly split between our two parties, ready to bring this bill forward. There are certainly cost issues that have to be addressed. I urge leaders on both side of the aisle to move quickly to bring this bill up before all appropriate committees of jurisdiction. Madam Speaker, we have an unanticipated budget surplus. If we cannot restore the promises we made to these men and women now, we never will. Madam Speaker, let us pay off our past due promises before we take on any new spending. It is now our turn to defend the lives of the men and women who spent a lifetime defending ours.

Mr. NORWOOD

Mr. NORWOOD. Mr. Speaker, I thank the gentleman from California (Mr. Thomas) for yielding me this time. Mr. Speaker, I want to be very clear. I certainly support the conference committee taking action on managed care reform as soon as possible, as Members on both sides of the aisle would agree to. But we do have to ask ourselves why are we bringing this motion before the House again today? We have finally received a commitment from House and Senate leaders to produce a final bill by early April, which will include the ability to sue ERISA-governed HMOs that cause injury and death. This is a massive concession by many who have been opposed to restoring the rights to sue. They should be welcomed with open arms. Instead, I fear we may be poisoning the negotiations by rewarding them with a political slap in the face. I do not know of any nonpolitical reason why we have the motion today. However, because I fully support patient protections, I will not vote against this motion. This is only our second day back to voting. People who have been our hard-core opponents are now offering an olive branch. We need to take it and make the best of it that we possibly can make. For that reason, I will not vote for this new motion. For now I will simply vote ``present.'' We need to encourage negotiation. The GOP leadership should be able to compromise in good faith on liability. Democratic leaders should be able to do the same on accessibility. I believe that President Clinton, the Republican leadership, the Democratic leadership, should accept immediately the 90 percent of the reforms that everyone agrees on that were in both the Norwood-Dingell and the Coburn-Shadegg bills, and all three should work out a compromise on liability and access. Mr. Speaker, it can and it must be done, but now is not the time to embarrass anybody. Now is not the time for politics from either side. Now is the time for serious people to have a serious discussion about the policy, the health care policy in this Nation that affects every one of our constituents.

Mr. NORWOOD

Mr. NORWOOD. Mr. Speaker, on October 7, the House passed a patient protection bill, 275 votes; and if we listened to the argument today, it is very clear to me that those who did not vote for that bill want to go into conference and have the bill that they put up that failed be the bill before conference. The gentleman from Ohio and the gentleman from California have all made it very clear that this is not binding, though the gentleman from Arizona (Mr. Shadegg), says, well, this is binding; but it is not and we all know that. It is not legal. The gentleman from Tennessee stood up and said that well, this would restrict our negotiators, which is not true. We are going to send our Members into conference, and they are going to do the best they can to work against a Senate bill that is absolutely not worth the paper it is written on. Now, that is a tall order; but we are told by the gentleman from California that this is our effort to tilt the relationship between the House and the Senate, and we are told by the gentleman from Oklahoma this is a political ploy. Well, I will say what this really is. This is about rumors floating around from a conference that will not even allow the authors on the Republican side to be on the conference. That is what this is all about. This is about a conference that is going to put everybody on the conference from the Republican side who voted against the bill. Now I think we might ought to be concerned about what is going to happen in conference when we send everybody in there who voted against the bill. That is what we call tilting the relationship between the House and the Senate, and that is what we call a political ploy. I want to thank my friend, the gentleman from Michigan (Mr. Dingell), on the other side of the aisle, for having considered me for one of the seats on the conference committee since my own party as yet has not offered me a seat. I am grateful. I humbly declined, as I believe my outspokenness against my own party's position in this matter might become the issue, and the committee does not need any distractions from the real issues before us, and that is protecting patients. Therefore, as I remain free to continue my outspokenness, I implore my leaders to be aware of the political reality as they seek a final course of action on this issue. They have for the last 5 years opposed patient protections and publicly allied themselves in joint news conferences with HMO lobbyists. Under public pressure, we forced a vote on October 7. They have even refused to allow a single subcommittee vote on this legislation. This, in spite of the support by the majority of the House, and a third of the Republican caucus, the majority of patients in this country support it; the majority of doctors, the majority of hospitals, even the majority of employers. I feel these same opponents believe they can now subvert the conference committee to produce a report repugnant to the original legislation in order to force the House of Representatives to really reject the final report. These opponents believe a multimillion dollar public relations campaign can shift that blame to the other party. I say today that the fate of the next election is in the balance and that plan will fail. Because of their past actions and affiliations, our party has no credibility on HMO reform. All the clever commercials that money can buy will not change that fact, but that fact can and should change if our conferees act with courage to enforce the will of this House. That is what this motion is all about. Go into the conference and fight for the position of this House. It is in perfect concert with the will of the American people. I urge my colleagues to support these instructions, to insist on full unencumbered legal accountability for HMOs; true external appeals and the protections of all Americans, all Americans, with health insurance, not just the few who need this the least. I want both Republican and Democratic patients to win. To accomplish that, both parties need to honor the will of the people instead of the will of the lobbyists. As I recall, that is our job and that is our duty.

Mr. NORWOOD

Mr. NORWOOD. Mr. Chairman, I thank the gentleman from New York for yielding this time to me, but I will tell my colleagues I am sort of tired of hearing myself talk. It has all been said, and it has all been done, and what we need to do now is mount the top of Hamburger Hill.

Mr. NORWOOD. Mr. Chairman, I indeed thank the gentleman for yielding me this time, and I would like to take a moment to talk about the gentleman from New York (Mr. Houghton) and the gentleman from South Carolina (Mr. Graham), not only two good friends, but two cosponsors of our bill, and I want both of them to know how much I appreciate the work they have done with us. The gentleman from New York (Mr. Houghton) knows that we have spent many hours trying to, within our bill, reach accommodation with him. I will just submit for the Record a CRS report that agrees that the changes that he has worked so hard to get in our bill we were able to do that and accommodate him. Congressional Research Service, Library of Congress, Washington, DC, October 5, 1999. To: Hon. Charlie Norwood, Attention: Rodney Whitlock. From: Kimberly D. Jones, Legislative Attorney, American Law Division. Subject: Legal Analysis of Whether the Amendment in the Nature of a Substitute To H.R. 2723 offered by Representatives Norwood, Dingell, Ganske and Berry Addresses Concern Raised by Representative Houghton. This memorandum is in response to your request for a legal opinion whether concerns raised in regard to H.R. 2723 by Representative Houghton in a document provided by your office have been addressed by a substitute amendment being offered by Representatives Norwood, Dingell, Ganske and Berry (Substitute Amendment). H.R. 2723 would amend Section 514 of ERISA to prevent ERISA's preemption provision from interfering with a state law that seeks to recover damages for personal injury or wrongful death resulting from acts connected to or arising out of an arrangement regarding ``the provision of insurance, administrative services, or medical services'' by a group health plan. In addition, the bill establishes standards of internal review and creates an external review process. Under the bill, no punitive damages may be awarded if the defendant complied with external review in a timely manner, as defined under the bill. It bars from review those decisions denying coverage for items specifically excluded from the plan. In a document provided by your office, Representative Houghton raises a number of concerns with H.R. 2723. The first concern is that the liability clause in Section 302(a)(1) of H.R. 2723 shows ``no connection between wrongdoing and who is sued.'' Section 302(a)(1) states: (1) Non-preemption of certain causes of action.-- (A) In general.--Except as provided in this subsection, nothing in this title shall be construed to invalidate, impair, or supersede any cause of action by a participant or beneficiary (or the estate of a participant or beneficiary) under State law to recover damages resulting from personal injury or for wrongful death against any person-- (i) in connection with the provision of insurance, administrative services, or medical services by such person to or for a group health plan . . ., or (ii) that arises out of the arrangement by such person for the provision of such insurance, administrative services, or medical services by other persons. Specifically, Representative Houghton's letter expresses concern about the potentially broad definition of the term ``any person'' and the potential activities that could be grounds for a cause of action under the bill. Representative Houghton also expresses concern about the bill permitting a suit based on any act of the plan, whether ``good or bad.'' The language of section 302(a)(1) is the same in both H.R. 2723 and the substitute amendment. Therefore, both would allow claims under state law. The potential parties to a suit and the basis of a suit would be determined by state law. Ultimately, the participant or beneficiary would have to satisfy the elements of a state law claim and meet the standard of proof required to prevail under state law. Another concern raised by Representative Houghton is that state law may not provide an adequate remedy. Currently, many states have laws that allow only a ``natural person'' to be licensed as a doctor or to practice medicine. As a result, many states prohibit a corporation or similar professional entity from giving medical advice or practicing medicine.\1\ In states where these corporate practice of medicine laws exist, HMOs (and other managed care plans) are legally prohibited from and are not considered to be practicing medicine or making medical decisions, even if they contract with licensed physicians to perform services on their behalf and/or make benefit decisions that affect the doctor's treatment. These laws could present an obstacle to HMO enrollees who seek to sue their HMO for medical malpractice or negligence. However, other state claims that do not address the standards for practicing medicine could be brought, i.e., negligent processing of a benefit, or ``bad faith'' denials. It should also be noted that some states have acted to remove the shield that managed care plans have against state medical malpractice claims. Texas, California and Missouri have enacted laws that would give patients the right to sue their managed care plan for injuries resulting from acts of the plan. --------------------------------------------------------------------------- \1\ Footnotes at the end of article. --------------------------------------------------------------------------- Another issue raised by Representative Houghton is that H.R. 2723 would allow an individual to go to court without exhausting internal and external review. H.R. 2723 states: (3) Futility of exhaustion.--An individual bringing an action under this subsection is not required to exhaust administrative processes [internal and external review] . . . where the injury to or death of such individual has occurred before completion of such processes. The language of the substitute amendment states: (e) Futility of Exhaustion.--An individual bringing an action under this subsection is required to exhaust administrative processes [internal and external review] . . ., unless the injury to or death of such individual has occurred before the completion of such processes. The substitute amendment clarifies the language of H.R. 2723 to require a participant or beneficiary to exhaust internal and external review before commencing an action under state law, unless the injury or death has already occurred. The final concern raised in the letter is the possibility that an employer may be liable for under H.R. 2723 for ``any exercise of discretionary authority including hiring the insurance company.'' Under H.R. 2723, no cause of action may be brought against an employer or plan sponsor (or its employees) which provides a group health plan. This provision also expressly prohibits a person from seeking indemnification from the employer or plan sponsor (or its employees) for damages awarded under the Act. However, the bill also includes an exception to these provisions where the employer or plan sponsor (or its employees) exercised its discretionary authority to make a benefits decision and the decision resulted in harm. The exercise of discretionary authority does not include the decision to include or exclude certain benefits from the plan, to provide extra-contractual benefits, or a decision not to provide a benefit while internal or external review is being conducted. The bill does not permit a cause of action under state law for failing to provide a benefit or service that is not covered by the plan. Under H.R. 2723, it is possible that an employer who has a self-insured plan could be liable under a state cause of action. If the employer in the administration of the plan or the provision of benefits uses discretionary authority to make a benefits decision, it would fall under the exception to the employer protection provision of the bill. This is more likely to happen if the employer chooses to administer the plan itself. If the employer contracts with an insurance company to provide these benefits, the bill could be used to protect the employer if it did not exercise discretionary authority on a claims decision. It is less likely than an employer would be directly involved if the administration of the plan has been contracted to an insurance company. However, if the employer becomes involved in a claims decision it would be liable. Also, it could be argued that, although the insurance company made the decision, the company is an agent of the employer and acting on the employer's behalf. As the employer's agent, the argument could be made that the actions of the insurance company could be imputed to the employer. It is not clear if this argument would be successful. The language of the employer provision in the substitute amendment is similar to H.R. 2723, except the term ``group health plan'' is included in the category of parties that may not be sued under this Act. The provision states, [Section 302(a)] ``does not authorize--(i) any cause of action against a group health plan or an employer or other plan sponsor maintaining the plan, or (i) a right to recovery, indemnity, or contribution by a person against a group health plan or an employer or other plan sponsor (or such an employee) for damages assessed against the person pursuant to a cause of action under [Section 302(a)(1)]. The term ``group health plan'' is also included in the exception to the employer provision which states: Subparagraph (A) shall not preclude any cause of action described in [Section 302(a)] against [a] group health plan or an employer or other plan sponsor (or against an employee of such a plan, employer, or sponsor acting within the scope of employment) if--(i) such action is based on the exercise by the plan, employer, or sponsor (or employee of discretionary authority to make a decision on a claim for benefits covered under the plan or health insurance coverage in the case at issue; and (ii) the exercise by the plan, employer, or sponsor (or employee) of such authority resulted in personal injury or wrongful death. The inclusion of the term ``group health plan'' would clarify the bill's application to fully-insured plans. The term ``group health plan'' is defined under ERISA as ``an employee welfare benefit plan to the extent that the plan provides medical care . . . to employees or their dependents . . . directly or through insurance, reimbursement, or otherwise.'' \2\ Therefore the employer provision would protect a group health plan from liability, unless it exercised discretionary authority to make a decision on a claim for benefits covered under the plan or health insurance coverage in the case at issue. In a fully-insured plan, a company will contract with an insurance company to provide coverage for its employees. This company is known as a ``health insurance issuer'' under ERISA. The term ``health insurance issuer'' is defined under ERISA as ``an insurance company, insurance service, or insurance organization 9including a health maintenance organization . . .) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance. . . . Such term does not include a group health plan.'' \3\ In essence, in the case of a fully-insuredd plan, the plan and the health insurance issuer are two distinct entities. By including group health plans in the employer exception and special rule provisions of the substitute amendment, it is unlikely that the actions of the health insurance issuer will be imputed to the plan. However, a fully-insured plan could face liability if it exercises discretionary authority to make a decision on a claim for benefits covered under the plan or health insurance coverage in the case at issue. In the case of a self-insured plan, the result is the same under both H.R. 2723 and under the substitute amendment. Where the employer assumes the risk of providing health insurance to its employees, the employer and the plan are for practical purposes the same. As such the acts of a self- insured plan could subject the employer to liability due to the high probability that the employer will have and use discretionary authority to make a decision on a claim for benefits covered under the plan or coverage in the case at issue. Kimberly D. Jones, Legislative Attorney. Footnotes \1\ D. Cameron Dobbins, Survey of State Laws Relating to the Corporate Practice of Medicine, 9 Health Lawyer 18 (1997). Approximately 15 states have corporate practice of medicine laws. \2\ 29 U.S.C.A. Sec. 1191b(a) (West Supp. 1999). \3\ 29 U.S.C.A. Sec. 1191b(b)(2). The Houghton amendment would make insurers liable in Federal court rather than State court. That is sort of the bottom line. H.R. 2723 and every bill, incidentally, I have introduced on liability ensures we want them to face State liability. I would just like my colleagues to consider a thought, consider this quote from Chief Justice William Rehnquist, and he says, and I quote, ``Congress should commit itself to conserving the Federal courts as a distinctive judicial forum of limited jurisdiction in our system of Federalism. Civil and criminal jurisdictions should be assigned to the Federal courts only to further clearly define and justify national interests, leaving to the State courts the responsibility for adjudicating all other matters.'' Should HMO liability be considered a national interest warranting Federal jurisdiction? In the Federal courts today, there are 65 vacancies and the courts anticipate another 16 vacancies forthcoming. Twenty-two courts are considered to be emergency status, under emergency status. They do not have appropriate coverage from the bench to consider the cases before them. To this situation we are going to add a new Federal tort? The Speedy Trial Act of 1974 requires the Federal bench to give priority to criminal cases over civil cases. In 1998, criminal case filings were up 15 percent. A single mother whose child needs constant care because of a decision made by an HMO will have to stand in line behind all of the drug dealers before she can try to hold the HMO liable for its action. State courts are easier for patients to access. Almost every town in America has a State court. Federal courts are few and far between. States like Texas and Georgia and California already have moved to make insurers accountable for their actions. State courts are a more appropriate and accessible venue for personal injury and wrongful death. Considering the problems that patients will have in accessing Federal court, it is hard to imagine that HMO liability meets the Chief Justice's definition of a national interest. It certainly does not meet the single mother's definition. Like all politics, all health care really is local. H.R. 2723 holds insurers liable for their decisions that harm or kill someone in the most appropriate venue: State courts. My dear friend, and I do mean that sincerely, my dear friend, the gentleman from South Carolina (Mr. Graham), he knows Frogmore, South Carolina, is a long way from a Federal court. You just cannot get there from here. We just need to do this at home. We also need to consider that the companies that do have a business in all 50 States, my goodness, they have to deal with 50 States now. Because you have a business in all 50 States does not preempt you from ever going into State court. What about slip and fall? That happens every day. They have to be ready in every State. I am not even going to ask Members to vote against my friends, just vote for H.R. 2723 intact on the next vote. Mr. Chairman, I include for the Record the following statement on physician pathology services: It is the intent of this legislation that the access to care subtitle apply to clinical pathology and specialized clinical pathology services. However, I am aware that the language may not be specific enough on this particular issue. Therefore, when we go to conference with the Senate, I am willing to work to further clarify this issue by including clarifying language on access to clinical pathology and specialized clinical pathology services in sections 111 and 112 of this legislation It is the intent of this legislation that the access to care subtitle apply in the same manner to clinical pathology and specialized clinical pathology services as it would to other specialty medical services in this legislation. It is my intention that when we go to conference with the Senate that I will work to further clarify this issue by including explicit language on access to clinical pathology and specialized clinical pathology services in section 114 of the legislation. Charlie Norwood.

Mr. NORWOOD. Mr. Chairman, will the gentleman yield?

Mr. NORWOOD. Mr. Chairman, well, it is almost over. I think it has been a great 2 days, frankly. There are so many good ideas and so many good people in here, all of whom have brought the most interesting points of view to this debate. I am proud of this House. I agree with the gentleman from Michigan (Mr. Dingell) that it has been a very civilized, correct type of debate. Mr. Chairman, I have had the strangest feelings. This has been going on for me for a long time. I woke up today and I felt, well, it must be May 1969. The 101st Airborne Division was ready to take Hamburger Hill in a place far away in Vietnam. It had been their tenth try. They had to fight on bad ground. And they had to win. That division one more time locked and loaded and went straight uphill to take Hamburger Hill, and that day they won for America. I feel like we are running uphill our tenth time today, and we are going to get to the top of the mountain, and we are going to do it for America. I have tried, interestingly enough, for 4 years to make this a partisan debate. I did everything I could do, I think, to try to get the Republicans to take this issue. This is such an important issue to America, so important to so many people. Each one of us, each member of our families, each one of our constituents, every American is what this issue really was all about. I realized this year that we will not succeed that way, that for us to change the law in this country to protect our patients, we have to do it in a bipartisan fashion. That is the only thing that will work. That is the only thing that will really give us the new law that we need. I am asking my colleagues today, do not vote for this because they are a Republican, do not vote for this because they are a Democrat. That is not what this is about. I want them to vote for this bill, I want every one of them to vote for this bill today as an American. Let us show this country that on issues of this high quality and importance for the American people, we are going to come out of this House. And we are going to produce a good bill. We are going to conference, and we are going to face an uphill battle. Everybody knows that. We are going to go to conference and listen to my friend the gentleman from New York (Mr. Houghton) and the gentleman from South Carolina (Mr. Graham) and the gentleman from Tennessee (Mr. Hilleary) and others, and we are going to try to make it even better. And we can do that, and we can do that if we work together. I mean, everything maybe does not have to be bipartisan, but today's vote is an American vote. I ask every one of my colleagues, if they possibly can, vote for this bill today. And if they cannot, I respect them. And their opinion is important. But if you can, do. Mr. Chairman, I thank my colleague, an interesting hard-working gentleman, a man that will tell it straight, and, boy, do I admire that. I thank the gentleman from Iowa (Mr. Ganske) for his hard work. I thank the gentleman from Oklahoma (Mr. Coburn). As my colleagues know, we are going to pass a bill out in an few minutes that the gentleman from Oklahoma wrote, or he certainly helped write. He will probably fuss about me saying that, maybe one or two things. But I thank the staffs in our offices, all of our offices that have worked so hard. Everybody, cast that American vote.

Mr. NORWOOD. Mr. Chairman, I thank the gentleman from Michigan for yielding me this time. Mr. Chairman, I have been rather interested about the attacks on discretionary authority. Of course, I am not a lawyer, but I took a minute, and I tried to look up what in the world are they hanging their hat on. I mean, all discretionary authority really means is that an employer can make an independent decision. He has the power to do that about a health care plan. What we do in this bill with the discretionary authority, we say that it is about a claim for benefits covered under the plan. That is what they have the authority to do. We are saying, ``do not use your authority to go in and deny care under this claim if it is a benefit in your claim, and you have to answer to that if you kill somebody.'' It is pretty simple. I say to the gentleman from South Carolina (Mr. Graham) I am all for limiting liability. Now, he knows that. That is why we have limited liability in our bill once one gets passed external review. I thought that it would make good sense. There is great limitation of liability at the State level. We see about half the States have really good punitive. Half the States, and sometimes not the same ones, have very good limitations on noneconomic. I think I am for limiting liability.

Mr. NORWOOD. Mr. Chairman, will the gentleman yield?

Mr. NORWOOD. Mr. Chairman, I just want to point out to the gentleman from California (Mr. Thomas) that we all try to use independent, well- experienced lawyers. The lawyer from CRS who says that we do not preempt State law is out of law school for 3 years and has never practiced ERISA law. We tried to find some experienced people to do our ruling.

Mr. NORWOOD. Mr. Chairman, I thank the gentleman from Michigan for yielding me this time. Let me make this very clear. Let me also just thank the gentleman from Oklahoma (Mr. Coburn). I think that his bill has tremendous things in it in terms of patient protections. They have tried very hard. He and I have worked together for months and months and months. But the problem is, and I will try to get through some of them at this point, the problem is that, when they get into their liability section, it takes us for the first time to Federal court. There are so many concoctions in there that it is going to be basically very impossible for a patient who has been wronged to have that wrong made right. Now, there is really a reason why the California Medical Association and the Texas Medical Association and the Medical Association of Georgia have all sent letters to their Members of Congress saying that the Coburn bill would preempt State law. They are right. My colleagues tried. I congratulate them for trying. But they failed. Let us take a look at what the bill says. Nothing shall be construed to preclude any action under State law not otherwise preempted under this title. The title they are amending is ERISA, section 502. The courts have consistently ruled from the Pilot Life case on that any remedy that exists under ERISA, section 502, will preempt State law. By allowing a patient to sue in Federal court, their bill creates a new Federal remedy under ERISA, section 502. The courts have consistently ruled a Federal remedy preempts State law. Any cause of action under State law like California or Georgia or Texas that would conflict with a new Federal cause of action they have created is necessarily preempted. Their own language says so. There is no way the Texas, Georgia, and California laws would not be preempted. Now my colleagues tried. I do not blame them for trying. I would not want to tell the Members from California or Texas or Georgia that my colleagues are preempting their State laws. Then, again, I do not have to do that. In addition to what we are putting in ERISA, Federal law is supreme and has been so since 1819 and the Barron v. Baltimore case that the Supreme Court ruled on. Now, that is one of my hiccups being from Georgia, and I think a lot of people might have that, that we are taking away State law. Let us point out another little problem, because they are in there. Lord knows I am not against the gentleman from Oklahoma (Mr. Coburn). I love his bill except for these little issues, and that is why we have to defeat it. Under the Norwood-Dingell bill, a person is held accountable for the consequences of the decision based on the medical merits of that decision. If a doctor makes a decision, he is judged on whether or not that decision was good. Good medicine. We want an insurer who overrules a doctor judged by the same standard. We want an insurer who overrules a doctor judged by the same standard. Now, under the Coburn-Shadegg substitute, an insurer will be judged by whether they practice good accounting.

Mr. NORWOOD. The gentleman's understanding is exactly correct, Mr. Chairman.

Mr. NORWOOD. I would say to the gentleman, Mr. Chairman, that I hope my son is watching this colloquy. He is an insurance agent. But the gentleman is absolutely correct in his assumption.

Mr. NORWOOD. Mr. Chairman, will the gentleman yield?

Mr. NORWOOD. Mr. Chairman, this is the painful part. It is not any fun going against our friends. And the gentleman from Oklahoma (Mr. Coburn) is my friend. Of course, I wish he would not go against our bill which he worked so hard on and so long to help us write. My colleagues, what this really is all about is about two very strong American principles. It is about the right to choose in this country and choose our own doctor, and it is about the right to ask people to be responsible for their actions. We do that all the time, and it is time that we ask the insurance industry to be responsible for its actions. I am going to vote against the Coburn amendment because all the good things he has in his bill that he knows I agree with, he is right, I did help him write them, but I am going to vote against him because they really have gone too far with their liability part. And yes, they do and will make insurance companies liable in Federal court. There is no question that they will. But the problem is the poor patient has to jump through so many hurdles before they can get there. It is correct for us to not endorse frivolous lawsuits and extortion that happens out there in the legal profession today. We know that. That is why we have tried to do our best to protect the employers. But I cannot support his bill because I have to worry about and I am worried about and I have been for 5 years, tomorrow, today, it is about that mother today who took her child to the pediatrician and the doctor says her child needs to be hospitalized and the insurance industry 2,000 miles away says, no, we cannot do that. It is about a friend of mine, Bob Schumacher, who, like me, is a small businessman and lives in Macon, Georgia. Bob used to be a member in NFIBE. He used to be a member in the Chamber of Commerce. But his wife is dying and the plan that he bought as the employer will not pay the benefits, and he basically has no recourse today. I want him to get recourse and get it fast, and we think in our bill that is the best way to do that.

Mr. NORWOOD. The gentleman wins. I am not a lawyer. I am not sure. I just know when one has liability under our bill, it has to be in State court.

Mr. NORWOOD. Mr. Chairman, I think it would be sort of nice and fun if I took a minute and responded to my good friend the gentleman from North Carolina (Mr. Ballenger). He said that he is a business owner, a small business owner, and he does not want his business sued, he does not want to be sued. I could not agree with that more. Of course we do not want to do that. That is why we really do not do that. The gentleman from North Carolina has discretionary authority over his small company. He is the CEO, he is the owner, he is the President. But he is also the congressman. He is in Washington. He is not making medical necessity decisions for his employees at all. It is that third- party administrator that he hired to decide whether those patients get to be hospitalized or whether they get that surgery or whether they get that operation. That is who we are talking about. That is who we are putting under the gun, that third-party administrator. Our bill says over and over again, it protects the gentleman from North Carolina, but it does go after that third-party administrator in a very tailored way. All it says, one thing, if one denies a benefit that is a benefit in the plan, that was a benefit the gentleman from North Carolina thought his people ought to have, and one denies it arbitrarily, and one kills somebody, one has to be responsible for those decisions. What are they going to do? They are going to carry malpractice insurance like the rest of the world has to. What is that going to cost? Fifteen to 20 cents a month per patient. But it gives those people that are patients, that work for the gentleman from North Carolina the feeling, the encouragement they actually will have decisions made by their doctors, not by that clerk that may be living in Missouri. That is what it is all about. I have told the gentleman from North Carolina over and over again, we are not going to sue him. We do not want to sue him. We do not want to sue small businesses. That is why we wrote the bill. Page 99, look at it. We protect the gentleman from North Carolina. But his third-party administrator must be careful.

Mr. NORWOOD. Mr. Chairman, I thank the gentleman for yielding me time. Mr. Chairman, let me start by saying I agree with the gentleman from Arizona (Mr. Shadegg), my good friend, that he really does, I believe, sincerely want to try to protect patients; and he really does think that he is in the middle. We dealt earlier with one bill that absolutely does not at all, and we are dealing with their bill that does not, in some respects either, and my view is that we are in the middle. I have listened to all of my colleagues make the argument that they protect businesses and that we do not. I have listened to my colleagues take on the use of the term discretionary authority and how by using direct participation, my colleague's bill protects employers so much better. But when we look at the terms very closely, we see, really, that there are not really any differences. We protect an employer from liability for their choice of plan and any benefits they put in their plan. They protect an employer from liability for their choice of plan and any benefits they put in their plan. Notice, the same thing. We protect an employer who provides an extra contractual benefit that is not in a plan. My colleagues protect an employer who provides an extra contractual benefit that is not in the plan. Notice we are saying the same things. We protect an employer who does not intervene in a review. My colleagues protect an employer who does not intervene in a review. Notice, I am repeating myself. But my colleagues want to go further. My colleagues want to protect an employer who advocates for a patient. Now, I would not disagree, and I would argue that our bill does not make an employer liable who advocates for a patient, unless by advocating my colleagues mean an employer can get in and settle a dispute by making a medical decision about what coverage is appropriate, what coverage is medically needed. If that is what my colleagues mean by advocate, then I am not going to support that. But the bottom line is our efforts to protect employers really say the same thing. Our bill does not authorize any cause of action against an employer, plan sponsor, or employee. That will be the new Federal law that goes into ERISA. In our bill, there is no right of recovery by a person against an employer, plan sponsor, or employee for damages. Now, we go on further to say, there is one exception. In our bill we simply say, one can be liable for a cause of action against an employer, plan sponsor or employee if, if, any of the above exercise their discretionary authority to make a decision on a claim that is a benefit in the plan covered by the plan, and that decision results in personal injury or wrongful death. I do not know how to say that any clearer. Discretionary authority simply means that the employer has the power to make a decision. One can make a decision in our bill to give an employee a benefit that maybe is not in the plan. The new Federal law will say, one is not liable if one wishes to do that. It is clear as a bell. Look on page 99. We further protect employers by allowing the employer to put in what they want in the plan and what they do not want in the plan. If they want to exclude hospitalization, that is not my business. They can exclude hospitalization in the plan that they buy. The new Federal law will make certain that they are not liable because they did that. One is not liable in our bill for not being involved in external review. My word, it is so very narrow. It simply says if the CEO, and it is much like the Thomas bill in the protections that it gives. We simply say, if the CEO really wants to get in there and make a medical necessity decision that takes away a benefit that is a benefit in the claim and the patient dies, one needs to be liable.

Mr. NORWOOD. Mr. Chairman, I would just point out that in our bill we have limited punitive damages. That is a step forward. We go to the State courts because we know that there is a great deal of tort reform around the States, 30 States or so have limited punitives or none, caps on noneconomics. So I would say that is another good reason not to set up a new Federal tort where we just simply do not have any type of tort reform. And we cannot depend on the States to do the right thing in an area that they have typically and historically controlled for the last 200 years.

Mr. NORWOOD

Mr. NORWOOD. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I appreciate the opportunity finally, after 5 years, for us to come together and decide an issue that has really confronted this body for 5 years, but the truth is it has confronted the American patient for 25 years. The issue is whether managed care insurance companies can be held truly accountable in court when they breach their contract and someone is injured or dies. Since 1974, this Congress has given HMOs a free pass to deny promised benefits without any legal responsibility for the damages that they do and have caused. Are we willing to correct this injustice, finally, after 25 years? If so, we simply must pass a bill that can become a law which reverses that 1974 mistake, and a bill that we are certain will be signed by the President. We must also be able to answer in the affirmative the following question: If someone makes a wrongful medical decision or breaches their contract and a member of someone's family dies, will that family have an absolute, unconditional right to seek redress in court? Yes or no, no strings attached? There is only one bill that we will consider that can pass this test, and that is a bipartisan bill supported by both Republicans and Democrats. I believe that everyone in this body knows that to be a fact. To cast a vote really for any other bill is to cast a vote to block managed care reform. Not one Member of this body will be able to hide behind a vote for a watered-down bill that cannot become a law and claim to be on the side of patients. We know better. The American people know better. Vote no, Mr. Chairman, on every substitute. Vote yes on the only legislation that has really a chance of becoming law and changing the disaster that this Congress visited on the American people with the 1973 HMO Act and the 1974 ERISA Act. Mr. Chairman, I reserve the balance of my time.

Mr. NORWOOD. Mr. Chairman, I just simply want to read from our bill about the exercise of discretionary authority. We say very clearly, unlike the gentleman from California (Mr. Thomas) just described it, we say very clearly in this bill that an employer under any circumstances cannot be held liable for what they want to put in a plan or for what they do not want to put in a plan. That is totally their business, none of mine. They cannot be liable regardless of what happens to anybody. The only way they can be liable is if they deny a benefit, a treatment that is in the plan, and that results in the death of a patient.

Mr. NORWOOD. If the gentleman will continue to yield, Mr. Chairman, one of the reasons we wanted to make sure that we had good tort reform that would particularly protect the fee-for-service plans is that under State law, which we are pretty fond of, there are only 22 States that cap punitive damages, so we wanted to get them all. We have them all under there. But under State law, there are 24 States that limit non- economic damages. There is not any Federal tort reform. We have tort reform at the State level. That is where we always have dealt historically with problems in the health care field with medicine, malpractice, and tort, is at the State level. We like it there, because it has these wonderful, absolute limits in there.

Mr. NORWOOD. Mr. Chairman, I would like to ask my friend a question. If that provision were to hold, then would the insurance companies not just simply delay getting them through all these appeals until the patient dies? Then they do not have to pay any benefits.

Mr. NORWOOD. Mr. Chairman, will the gentleman yield?