Jay Rockefeller

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Please.

Mr. ROCKEFELLER. I say to the Senator further that where she refers to big business, about 30 percent of the businesses in this country are run by women, owned or run by women. The great majority of them are in fact small businesses. The guess is that by the end of this century, about 40 percent of all small businesses in this country will be run by women. Of course, it is the small businesses who are the least able to take on the risk of litigation and often withdraw products rather than subject themselves to that because they could be thrown out of business because maybe of a jury decision. Julie Nimitz, obviously a woman, in Senate testimony--she runs a sporting goods company and is the chief executive officer of it, in fact. She is one of the two CEO's who run a U.S. manufacturer of football helmets, and she said, ``Our employees hold their breath every time a case goes to the jury because a runaway award would mean the end of the company.'' Norma Wallace, who is head of an engineering company, said that the current situation with litigation--and evidently her company is in the machine tool industry--is made a great deal less competitive by the product liability system. So the question of will women be helped or will women be hurt, I think, is not quite as easy as my friend indicates.

Mr. ROCKEFELLER. I am trying to give a different point of view, that the Dalkon shield and breast implants are not covered because they are not approved by the FDA and besides the FDA defense from last year's bill is not even a part of this bill. It is interesting. The New England Journal of Medicine indicated that women, and particularly women, I believe, who are pregnant, are now being excluded from clinical studies of different pharmaceuticals. That is not helpful for women. Benedictine is a morning sickness drug that in fact was approved and is used all over the world, and is not used in this country because they felt that they were unable to withstand litigation and potential charges. So there must be millions of women who do not have the advantage of that particular drug, which is approved everywhere else in the world.

Mr. ROCKEFELLER. I thank the Senator very much. Understand that this bill would not in any way protect anybody who makes a product, the Dalkon shield or any harmful product, such as silicone breast implants. The Senator does understand that?

Mr. ROCKEFELLER. Good.

Mr. ROCKEFELLER. I understand that very well. I simply was responding to the point that the Senator made about the DES. And the point is that had this bill been in effect at the time would have been in an entirely different circumstance. I wanted the Senator to know that. When the Senator mentions that women are hurt by this bill, women in America now have long been deprived. If the Senator wishes to further yield--

Mr. ROCKEFELLER. On this bill----

Mr. ROCKEFELLER. I did not try to explain that they did see it the way the Senator from West Virginia sees it. What I was suggesting is that they do not know that in this bill, they are not eliminated by the statute of limitations. The statute of limitations changes entirely. Whether or not they know it, that is the fact. That is just something I want those who are listening to understand. It is the same thing as last year, when we had the FDA in and the consumer groups that the good Senator refers to. They were constantly saying, ``Well, that would mean that if you had a problem with the Dalkon shield or breast implants, you did not have a cause of action.'' All of which was totally an untruth, but it was said-- megaphoned and megaphoned so loudly--that because they had never been approved by the FDA, therefore, they will have no defense whatsoever.

Mr. ROCKEFELLER. If the Senator will yield? What the Senator fails to understand is that if this law before the Senate had been in effect at the time that, for example, Representative Patsy Mink went through her horrible circumstances, that in fact she would have had the recourse to sue that she does not have under the present law. Because under the present law in some cases the statute of limitations runs out in 2 years after time of injury. She did not know something was wrong for quite a while. Very specifically, in our bill, it is explicitly laid out that if something happens 20 years later, 30 years later, 40 years later, the statute of limitations does not begin until a person knows, first, that they have been hurt; and, second, why they have been hurt--what is the cause, why they have been hurt. It is at that point that the statute of limitations begins to run. So that Representative Patsy Mink could have indeed gone, even today, had this bill been in effect back then.

Mr. ROCKEFELLER. I would just conclude, because my friend from Wisconsin has been more than patient in waiting to speak, by just saying two things. No. 1 is, I ask unanimous consent to have a letter from the American Small Business Leaders on Product Liability Reform printed in the Record.

Mr. ROCKEFELLER. By the modern FDA.

Mr. ROCKEFELLER. We had that discussion, the Senator and I did, yesterday.

Mr. ROCKEFELLER. Is the Senator aware in this bill about DES?

Mr. ROCKEFELLER. Will the Senator yield?

Mr. ROCKEFELLER

Mr. ROCKEFELLER. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. ROCKEFELLER. I yield myself 3 minutes.

Mr. ROCKEFELLER. Mr. President, at 6 o'clock, we are going to have two votes, and as the Democratic manager of this bill I wanted to alert colleagues on both sides as to the plan that the Senator from Washington [Mr. Gorton] and myself have, what we are going to do so that Senators might be appraised of the situation.

Mr. ROCKEFELLER. Mr. President, I yield myself time.

Mr. ROCKEFELLER. Mr. President, during the course of the discussion this afternoon, it seems that the debate has centered on the premise that somehow there isn't anything wrong with the present system. Let me try to lay out some of the reasons why we need to change the product liability system, not radically, but change it in a way which makes it fair to consumers and to businesses. Let us just start out by saying the consumers lose often under the current system. They receive inadequate compensation through product litigation. Severely injured consumers only recover about a third of their actual damages, while their mildly injured counterparts recover approximately five times their economic losses. There is a disparity there which is not good. Consumers wait forever. They have to wait 2\1/2\ years to receive their compensation because of the whole process of a trial and depositions and then appeals, particularly where punitive damages are concerned, which can force people to wait even longer. So an injured person can be forced to wait between 2\1/2\ to 4 years to get compensated for something that happened to them, let us say in a machine shop where their hand was mangled which puts them in a position of having to depend entirely on their own resources, worker's compensation, and health insurance, if they have any health insurance. The consumer pays heavily for our current product liability system, and that is because the costs of liability insurance increase the costs of products that people need. Consumers also suffer because manufacturers decide not to introduce needed new products, and thus the consumers do not get the products they need. Consumers may be paying 50 percent of the cost of the ladder in insurance costs for liability. For some pharmaceuticals it is up to 95 percent. Under our system, consumers can pay outrageous costs. The current tort system pays more to lawyers and transaction costs than it does to claimants. That is really a quite remarkable statement. How can we have a product liability system where somebody is injured and the lawyers on both sides end up getting more money than does the injured person? I do not understand why that is not something that somebody would want to change and make better. I think the consumer loses on that. The consumer also faces a closed courthouse door under the current law, and that is because in some States the statute of limitations simply does not allow the consumer to take his or her request for due process into the courtroom because it is already closed; the door is closed. And we are saying in our bill that, in fact, we are going to make sure that anybody who has been injured, but may not even know it at the time because it may be a toxic injury or a chemical injury of some sort, will still be able to be compensated. Under our bill, injured persons will still be able to seek compensation 15 or 20 years after they have been injured if they do not discover that injury until that much time has elapsed. This is called the discovery rule, and it applies not only to the discovery that the individual is sick, but also to the cause of the illness, and once that has been discovered, the statute of limitations for 2 years begins to run. This is a very proconsumer change, particularly in the world that we are moving into, which has so many toxic chemicals that can threaten the health of consumers. I think, also, because we have talked about consumers--and this is meant to be a balanced bill so let us also talk about manufacturers. I think manufacturers lose under the current system. Liability stifles research, and it stifles development. This has been amply recorded in the literature. Many businesses spend a lot more on litigation than on research and development. That may not be the only reason. Companies tend to be pulling back on R&D anyway. But the fact that they spend more on litigation--many do--than on R&D does not sound to me like an American sort of system. Well, that is our current system. I would think people would want to make it a better one. Liability makes successful products unmarketable. I have already talked this afternoon about Bendectin, the antinausea medication, different AIDS-related and pre-AIDS-related vaccines and medicines, football helmets, and others. They simply are not made available because it is decided they are too big a risk and therefore Bendectin, which is available in Canada and has been for years, is not available in the United States, and thus our consumers and our manufacturers lose under this because they are precluded from doing something for fear of litigation. Liability decreases funding. That is fairly obvious. The fear of product liability has diminished investment in basic scientific research. Now, that is important because you have basic research and you have applied research leading to commercialization of a product, and they are very different. Basic research is sort of the seminal research. That is the kind of thing where you really have to have a sense of stability and predictability and confidence in the future, and that is now way down, and part of the reason for that is the fear of product liability litigation. I think that the United States itself, as a country, loses under the current system of product liability. Insurance rates disable manufacturers. American manufacturers pay 10 to 50 times more product liability insurance rates than do their foreign competitors. Well, at some point, when you are fighting over every nickel in a car or in some vaccine, or something else, these things matter, and the foreign country wins out and we lose out. So America loses out. In fact, in Texas, in a single year, they have estimated that the liability system has cost the State of Texas 79,000 jobs. I cannot prove that, but that is what has been said. Texas stands behind that. Seventy-nine thousand jobs in West Virginia would be as if a substantial part of the population simply moved out. And then the funny thing also is that there is no real proof that the current product liability system does not enhance product safety. It is interesting that the number of tort suits rose dramatically in the 1980's, even though consumer injury rates declined steadily. Tort goes up, injuries go down, and now that was not just in the 1980's but also in the 1970's. For 20 years, injuries were going down and tort actions were going up. Let me spend a moment discussing the costs of the tort system in the United States. Estimates of the cost of tort litigation, of which product liability litigation is part, range from $80 billion to $117 billion a year. Concerning the need for uniformity, the United States has 51 separate product liability systems. The European Economic Community, which is 13 countries, has one product liability system. Japan has one system. I have worked very hard in Japan. For years we had something called the structural impediment talks with the Japanese, and we would tell each other what we thought each country ought to do to improve their performance so that our trade deficit would get better and theirs would get less better, and one of the things the Japanese kept saying to us was that you ought to get more uniformity into your product liability laws because you are getting eaten alive by a lot of countries, including ourselves. This is staggering, and I hope that those who hear my voice will listen to this. Nearly 90 percent of all companies in the United States of America can expect to become a defendant in a product liability case at least once. It has been suggested that there were only 11 cases in which punitive damages were awarded in 1990. But if 90 percent of all businesses can expect to be sued at some point, this is the so-called doing the wrong thing each day? Manufacturers today can be sued for products that were manufactured in the 1800's. I do not think that is the American way. Companies can be forced to pay damages to persons whose abuse of alcohol and illegal drugs caused their injuries. That is wrong; that is unfair. In 1994, the Gallup survey said that one in five small businesses reported that they have decided not to introduce a new product or not to enhance an existing one out of concern for potential product liability. That is 20 percent of all small businesses saying we are not going to improve our product, or we are going to withdraw the products we are about to introduce. Interestingly, the Brookings Institution found no link between lawsuits and the safety of products. That is an important statement. And they documented many instances where safety improvements are not made, again, because of the fear of litigation. That being, if they made an improvement, it would imply that the previous iteration was somehow not safe and therefore they might get sued. The United States is the only nation in the world that allows a safety improvement to be admitted as evidence that the preceding product was less safe. We do it legally. Therefore, companies have reason to be afraid. I note that it is 5 o'clock. I yield the floor.

Mr. ROCKEFELLER. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, I commend Americans who are participating in the National Day of Service. Today, people all across this Nation are working together in community service. As we speak, people of all ages and backgrounds are using their hands and hearts to show their American spirit. This day should remind us all of what it means to be an American, for today, our people are standing side by side. They are gathering, not to discuss their differences, but to pursue common goals. Today, Americans are standing side by side immunizing infants. They are standing side by side tutoring school-age children. They are standing side by side restoring urban parks, feeding and sheltering the homeless, and rehabilitating housing and community centers. Today, we stand united as Americans. In West Virginia, people in Braxton County will work together to create a nature trail near the Braxton County Middle School so students can learn more about their environment. In Welch, people are working to clean a vacant school so it can be converted in a facility to offer a safe shelter for victims of domestic violence by the local agency known as SAFE, Stop Abusive Family Environments. These activities for National Youth Service Day are just a few examples of important community work sponsored by the West Virginia Commission National and Community Service. This day strikes a warm, familiar chord for me personally. From personal experience, I know the benefit of working with others to build better communities. In 1964, the VISTA program brought me to a coal camp community in Emmons, WV. There, I followed Kennedy's call to service and worked with the people of Emmons, trying to do my small part in building a stronger community. Together, we built a baseball field and a community center. We brought the people much needed preventative health care. We rallied to bring a schoolbus to Emmons and helped to keep Emmons' kids in school. From personal experience, I know that community service benefits participants as much as it benefits communities. My work with VISTA taught me a very important lesson: That I can make a difference. Today, the people of America celebrate that same lesson: Each and every American can make a difference. Let us all be careful not to forget that important lesson at the end of the National Day of Service. Let us remember and reaffirm that lesson every day of the year. Why must we remember the lesson every day of the year? The reason is simple: Community service programs work. Just look at the resounding success of AmeriCorps. AmeriCorps gives thousands of young Americans the tools to make a difference in their own lives and in the lives of others. AmeriCorps participants perform vital services in America. Just over 6 months ago, 85 West Virginians were sworn into AmeriCorps. Today they are working with 20,000 people nationwide to keep schools safe, restore natural resources, tutor teenagers, and more--all in exchange for education. Programs like AmeriCorps simultaneously open doors to higher education and help build stronger communities. They allow Americans to help each other, and build trust, understanding, and hope. Mr. President, I am proud to stand in support of the National Day of Service. I salute everyone working in community service. I congratulate each of them for making a difference.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, VA, like other Federal departments, is taking a hard look at its programs in order to improve the way it operates, and in so doing, improve the services it provides to its beneficiaries--in the case of VA, veterans and their families. I am committed to providing VA with the legislative authorities and management flexibility needed to renew its health care system to meet the current and the future needs of our Nation's veterans. One of the steps VA must take is to revamp its infrastructure to use the most clinically appropriate, most effective, and most efficient approaches to health care delivery available in this country. VA plans to restructure by shifting from a system which is heavily oriented toward inpatient hospital care, to a system which provides more care in outpatient and noninstitutional settings, such as care in the community and in veterans' homes. The bill I am introducing today is designed to support VA's reengineering efforts by extending existing authorities to provide health care to eligible veterans in community settings. I am proud that Senators Daschle, Akaka, Dorgan, and Wellstone have joined with me as original cosponsors. summary of provisions Mr. President, this legislation contains amendments to title 38, United States Code, and to various public laws that would: First, extend until December 31, 2000, VA's authority to contract with non-VA halfway houses for treatment and rehabilitation services for veterans with substance abuse problems. Second, extend until December 31, 2000, VA's authority to conduct a pilot program of noninstitutional alternatives to nursing home care. Third, reauthorize until December 31, 2000, VA's Homeless Chronically Mentally Ill Program, which provides outreach and contract care in non- VA facilities for homeless veterans with severe mental illnesses. Fourth, reauthorize until December 31, 2000, the Compensated Work Therapy/Transitional Residence Program for certain veterans, including those who suffer from substance abuse problems and homelessness. Fifth, extend until December 31, 2000, VA's authority to enter into enhanced-use leases. background Clearly, veterans who are eligible for VA health care services need access to a full range of institutional and noninstitutional services to meet their medical and health-related needs. Ideally, every patient would be provided the most appropriate type and level of care needed, and that care would be delivered in the most appropriate and least restrictive setting. treatment for alcohol or drug dependence or abuse disabilities This legislation would extend VA's authority to contract with non-VA halfway houses for treatment and rehabilitation services for veterans with substance abuse problems. Current law authorizes VA, through December 31, 1995, to provide veterans who are suffering from substance abuse disabilities with care on a contract basis through community halfway houses. Such community facilities provide a supervised, substance-free environment, maintain residents' health, and help residents improve their independent living and social skills. This contract program provides an important step in a veteran's transition from inpatient substance abuse treatment and detoxification to independent living in a community. The contract program currently operates at 106 medical centers; 6,300 veterans were treated through the program in fiscal year 1994. First authorized in 1979, the program has been an integral step in the treatment of substance abuse for veterans. noninstitutional alternatives to nursing home care This legislation would extend VA's authority to provide health and health-related services for veterans needing long-term care. Under current law, this program will expire on September 30, 1995. Authorized by Public Law 101-366 and expanded by Public Law 103-452, the program is targeted to those veterans who, but for the receipt of these services, would need to be placed in a nursing home. Homemaker and home health aide services furnished under this program provide veterans with assistance in performing fundamental activities of daily living, such as eating, bathing, dressing, transferring, and other personal care activities. VA staff provide the case management, and public and private sector agencies deliver the services in veterans' own homes. Veterans can continue to live at home and receive, at less cost to VA and to the taxpayer, the same type of services that would otherwise be provided in a hospital or nursing home. With a budget of $10 million in fiscal year 1994, 110 VA medical centers purchased homemaker and home health aide services for more than 3,000 veterans. homeless chronically mentally ill program This legislation would reauthorize for 5 years the Homeless Chronically Mentally Ill [HCMI] program. Under current law, the HCMI program will expire on September 30, 1995. The HCMI program, one of the two major VA homeless programs, authorizes VA outreach workers to contact homeless veterans in the community, assess and refer veterans to community services, and place eligible veterans in contracted community-based residential treatment facilities. The HCMI program was enacted in 1987 as a pilot program with a budget of only $5 million. Since that time, the program has grown significantly. In fiscal year 1994, it had a $24.5 million budget and operated out of 57 medical centers in 31 States and the District of Columbia. Similar to the contract program for veterans with chronic substance abuse problems, the HCMI program continues to prove its worth. compensated work therapy/transitional residences This legislation would reauthorize through fiscal year 2000 a demonstration program that provides veterans with compensated work therapy and transitional residence [CWT/TR]. The current authority for this program expires on October 1, 1995. Currently, section 7 of Public Law 102-54, enacted in 1991, authorizes VA to conduct a CWT/TR demonstration program with two components. Under one component, VA is authorized to purchase and renovate no more than 50 residences as therapeutic transitional houses for chronic substance abusers, many of whom are also homeless, jobless, and have mental illnesses. Under the second component, VA is authorized to contract with nonprofit corporations which would own and operate the transitional residences in conjunction with existing VA compensated work therapy programs. Under both components, veterans pay rent from money earned by working for private businesses or Federal agencies which have contracts with VA to employ the veterans. Once the residence is fully renovated and operational, the rent collected from the veterans participating in the program is intended to pay the operating costs of the residence. Thirty-six transitional residences run by VA were fully operational in 1994. Fourteen additional residences are currently in the process of being purchased or of activating operational beds. A preliminary VA evaluation of the existing programs indicates that well over half of participating veterans complete the program and have enjoyed substantially better sobriety, employment, and housing status than before entering the program. The analysis notes that, while these programs need additional study, they seem to have enjoyed some initial success. While VA has implemented the first component of the demonstration program as originally envisioned by the Congress, I note that VA has only implemented the second component of this program, which requires VA to enter into agreement with nonprofits to purchase and run the transitional houses, as part of its HCMI program. Of the 29 VA contracts with nonprofits for the HCMI program, VA provides compensated work therapy at 27 of them. I remain concerned that VA has not formally implemented the second component of the demonstration program. Enhanced-Use Lease Authority This legislation would extend the authority for VA to enter into enhanced-use leases for an additional 5 years. This authority will expire on December 31, 1995. Under current law, the Secretary has the authority to enter into enhanced-use leases under which another party can use VA property so long as at least part of the property will provide for an activity which contributes to the mission of the Department and enhances the use of the property. This program was enacted in 1991 as a test program in an effort to fund cost-effective alternatives to the manner in which VA traditionally acquired and managed its facility and capital holdings. The program was based on the concept that by out-leasing underused VA property on a long-term basis to non-VA users for uses compatible with VA programs, the Department would be able to obtain facilities, services, or money for VA requirements that would otherwise be unavailable or unaffordable. According to VA, the initial results of this program are promising, and have significantly reduced costs to the Department and provided corresponding benefits to the local community. For example, through enhanced-use leasing, a Veterans Benefits Administration regional office is scheduled to open at the VA Medical Center in Houston, TX, this spring, at 56 percent of the cost initially appropriated for traditional acquisition, plus an annual income to VA. This summer, the Department is expected to open a new child care facility at the Washington, DC, VA Medical Center operated by a private child care provider; child care will be provided at a discounted cost to VA employees--all at no cost to VA. The Department is pursuing other enhanced-use leasing projects, including child care projects for nine sites based on the Washington, DC, VA Medical Center model; parking garages at VA medical centers in St. Louis (John Cochran), Chicago (West Side), and Pittsburgh; training on emergency procedures at the West Palm Beach VA Medical Center; a Managed Care Clinical Research and Education Center at the Minneapolis VA Medical Center; new research space, a new outpatient clinic, and added parking at the Durham VA Medical Center; a new energy facility at the North Chicago VAMC; shared energy agreements at various VAMC's; and potentially, a continuous care retirement community at the Murfreesboro VAMC. conclusion Mr. President, many veterans who have suffered from chronic illnesses they could live and receive the long-term care they needed. Fortunately, there are more options today, including receiving care in one's own home. A long-term illness is no longer synonymous with institutionalization. If medical, health-related, and social services are available, it can make the difference between a veteran being able to live his or her last years in the comfort of his own home, or having to be placed in an institution. Among other goals, the Veterans Community-Based Care Act of 1995 will help make this possible for the men and women who have worn the country's uniform. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. ROCKEFELLER

Mr. ROCKEFELLER. Mr. President, the issue of product liability reform is well known to many Senators. I look forward to the debate we begin today because I believe that the bill that we will be considering, S. 565, the Product Liability Fairness Act, builds upon past deliberations of this body to achieve reform in the moderate, bipartisan manner that has characterized this effort in recent years. Let me pause a moment to thank my colleague and friend, Senator Slade Gorton, for all his efforts and counsel in crafting the bill that we have introduced. In addition, Senator Lieberman, Senator Dodd, Senator Hatch, and Senator McConnell have played critical roles in writing this legislation and bringing us to the point of floor deliberation. Mr. President, the Senate has considered the topic of product liability reform for over 14 years, and six times the Commerce, Science, and Transportation Committee has reported bills favorably to the floor. Most recently, the committee reported out the current bill, S. 565, by a vote of 13 to 6 on April 6. We have persisted in our efforts to reform the laws governing product liability because we believe that the current system is broken and that we can make changes that will benefit both consumers and makers of products. We have tried, and I think succeeded, in achieving balance in our effort to streamline the law in this area. We have simultaneously reduced costs and delays for both plaintiffs and defendants. In 1985, when I first came to the Senate and joined the Commerce Committee, I voted against a product liability reform measure. The committee vote was tied at that time, and I felt strongly that the version of the bill then being considered aided manufacturers at the expense of safe products for American consumers. Since then, the product liability effort has changed 180 degrees. The legislation has evolved into the even-handed, moderate approach we are considering today. Senator Gorton and I have worked diligently over recent months to hone the bill we are looking at today to ensure that it strikes the right balance between the interests of both consumers and business. Adjustments were made to reflect substantive and other concerns which we concluded were obstacles to the enactment of this bill. We believe we have significantly improved the legislation from earlier drafts and have been responsive to the issues which prevented earlier enactment of this legislation. Let me draw my colleagues' attention to the substantive changes made in this year's bill compared with the version introduced in the last Congress. The most significant change addresses concerns that have been raised about excessive punitive damages-- This year's bill establishes a standard for awarding punitive damages that is essentially unchanged from last year's bill. We have, however, added a provision that requires punitive damages to be awarded in proportion to the harm caused at a ratio of three times a claimant's economic loss or $250,000, whichever is greater. Our rationale for this ratio is the goal of bringing to punitive damages some relationship between the size of the harm and the punishment, a goal supported by the American Bar Association, the American College of Trial Lawyers, the American Law Institute, and the U.S. Supreme Court. Also concerning punitive damages, we eliminated the Government standards defenses in last year's bill, referred to as the FDA and FAA defenses, which would have prevented punitive damages for instances in which certain classes of products, such as drugs, medical devices, or certain types of aircraft had been certified by the Federal Government as safe. While I remain supportive of the concept of a Government standards defense, a number of Senators expressed reservation during last year's debate about this provision, and we have accommodated those concerns by removing the provision. Another change in this year's legislation concerns the statute of repose, which we have slightly modified to include a category of products known as durable goods used in the workplace. Last year's bill was restricted to workplace capital goods, a slightly narrower category. Workplace durable goods are defined as having an economic life span of 3 years or greater or being depreciable under the Tax Code. The workplace distinction, identical to last year's bill, preserves the intent of increasing incentives for employers to maintain the safety of equipment used in a place of employment, rather than shifting that responsibility off to a manufacturer even after the useful life of the product in question has expired. In addition, we have moved the statute of repose period to 20 years from 25 years in last year's bill, which is still longer than any State statute of repose, the longest of which is 15 years. The third significant change made prior to introduction of this year's bill concerns the addition of a provision that had been part of last year's House companion bill that requires a reduction of a claimant's award due to unforeseeable misuse or alteration of the product. For example, if someone purchases a hair dryer that has attached to it a large warning label stating, ``Do not use in the bathtub,'' and the purchaser immediately uses the hair dryer in the bathtub with adverse consequences, it does not make sense to hold the manufacturer liable for such misuse, and this provision would prevent that. In addition to the changes made prior to introduction, several substantive changes were made in the Commerce Committee markup of the bill. First, we incorporated a bill, S. 303, the Biomaterials Access Assurance Act, introduced by Senator Lieberman and Senator McCain, as title II of our committee-reported product liability bill. This title of the bill is designed to ensure that needed raw materials are available to the manufacturers of medical devices by limiting the liability for firms that supply biomaterials. The title only limits liability for suppliers who have done nothing wrong; the ability of consumers to recover from negligent device manufacturers is preserved. We made several other substantive changes in the committee markup. We modified our product seller provision to extend protection to blameless rental and leasing companies. This will address the fact that in 11 States car rental companies can be forced to pay for damage caused by people who rent their cars, even though the car rental companies did nothing wrong. We made a change to the statute of repose that will ensure that manufacturers keep their promises by enabling injured workers to sue for damage caused by products over 20 years old if the manufacturers guaranteed their products' safety for a longer period. Finally, we modified our alternative dispute resolution provision, which gives States an incentive to create proplaintiff, voluntary, nonbinding arbitration mechanisms. This provision contains a penalty for defendants who ``unreasonably refuse'' to participate in the arbitration, and a criticism was raised during hearings on the bill that greater specificity was needed for the definition of ``unreasonable refusal,'' so a set of factors was added to address that concern. Mr. President, I will have a lot more to say about the substance of the bill as debate unfolds, but I know that other Senators wish to speak, so I would like to keep my remarks brief. Let me conclude by restating the reasons that we must pass national product liability reform this year. Under our current system, injured consumers often find it impossible to get a just and prompt resolution, and just as frequently, blameless manufacturers are forced to spend thousands of dollars on baseless lawsuits. The system frequently allows negligent companies to avoid penalties and even rewards undeserving plaintiffs. Product liability law should deter wasteful suits and discipline culpable practices but not foster hours of waste and endless litigation. The adverse effect of having a hodge-podge of rules is severe for everyone. Injured persons and those who make products alike face a 55- unit roulette wheel when it comes to determining rights and responsibilities. The results hurt everyone. Injured persons have testified that they may be unable to obtain needed medical devices for their continued health and well-being. Manufacturers have indicated that good and useful products are not placed on the market. The Brookings Institution has documented many instances where safety improvements were not made because of fear about uncertainties in our legal system. Included in their discussion were built-in child seats and air bags. As I have studied this complex area, I have found that incentives for preventing accidents are often not in the right place. In formulating our bill, we have striven to place incentives on the person who can best prevent an injury. This is a matter that has not been given adequate attention during past debates, but given the opportunity to carefully study our bill, Senators will see that care and thought has been invested to assure that no wrongdoer goes unpunished and that positive prosafety behavior is encouraged. For all of these reasons, I look forward to our debate, and I welcome the criticisms, insights, and suggestions for improvements that I'm sure our colleagues will contribute during this process. I yield the floor. Amendment No. 596 (Purpose: Substitute reported committee language of S. 565 for H.R. 956)

Mr. ROCKEFELLER

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

Mr. ROCKEFELLER. Mr. President, the issue of product liability reform is very well known now to Senators after many years. I look forward to the debate that we begin today and in these coming days, because I believe the bill we are going to be considering, S. 565, Product Liability Fairness Act, builds upon past deliberations of this body to achieve reform in the moderate, bipartisan fashion which has been the nature in which we have approached this problem. I want to pause for a moment to thank my remarkable colleague and friend, Slade Gorton, for all of his efforts and counsel in crafting this bill and for setting a feeling about it which is efficient, temperate, wise, unemotional and lends itself to the collection of votes. In addition, Senator Lieberman, Senator Dodd, Senator Hatch, Senator McConnell, have played really critical roles in rating this legislation and bringing us to this point in our deliberation. The Senate has considered the topic of product liability reform for over 14 years. And six times the Commerce Committee has reported bills favorably to the floor. Most recently, the committee reported out the current bill, S. 565, by a vote of 13 to 6 on April 6. We have persisted in our efforts to reform the laws governing product liability because we believe that the current system is broken and that we can make changes that will benefit both consumers and makers of products. We have tried and, I think, succeeded, in achieving balance in our effort to streamline the law along these lines. We have simultaneously reduced costs and delays for both plaintiffs and defendants. In 1985, when I first came to the Senate--that was my first year in the Senate--and joined the Commerce Committee, I in fact voted against a product liability reform measure pending at that time. The committee vote, because of my vote, was tied and the vote, therefore, failed. I felt strongly that the version of the bill then being considered aided manufacturers at the expense of safe products for American consumers. That was my view. Since then, the product liability effort has changed 180 degrees. The legislation has evolved gradually into an evenhanded, moderate approach that we are considering here today. Senator Gorton and I have worked diligently over recent months to hone the bill that we are looking at today to ensure that it strikes the right balance between the interests of both consumers and business, and we do mean that. Adjustments were made to reflect substantive and other concerns which we concluded were obstacles to the enactment of this bill. We believe we have significantly improved the legislation from earlier drafts and have been responsive to the issues which prevented earlier enactment of this legislation. Let me draw my colleagues' attention to the substantive changes made in this year's bill compared with the version introduced in the last Congress. The most significant change addresses concerns that have been raised about excessive punitive damages, damages that are awarded to punish and to deter wrongdoing. This year's bill establishes a standard for awarding punitive damages that is essentially unchanged from last year's bill. We have, however, added a provision that requires punitive damages to be awarded in proportion to the harm caused, at a ratio of three times the claimant's economic loss, or $250,000, whichever is greater. I might say that this approach to punitive damages is well within the construct of the law in many areas. Our rationale for this ratio is the goal of bringing to punitive damages some relationship between the size of the harm and the punishment, a goal supported by the American Bar Association, the American College of Trial Lawyers, the American Law Institute and, in fact, the U.S. Supreme Court. Also concerning punitive damages, we eliminated the Government standards defenses in last year's bill, referred to as the FDA and FAA defenses, which would have prevented punitive damages for instances in which certain classes of products such as drugs, medical devices, or certain types of aircraft had been certified by the Federal Government as safe. While I remain supportive of the concept of a Government standards defense, nevertheless, a number of Senators expressed reservation during last year's debate about this provision, and we have accommodated those concerns by removing the provision. Another change in this year's legislation concerns the statute of repose which we have slightly modified to include a category of products known as durable goods used in the workplace. Last year's bill was restricted to workplace capital goods, a slightly narrower category. Workplace durable goods are defined as having an economic lifespan of 3 years, or being depreciable under the Tax Code. The workplace distinction, identical to last year's bill, preserves the intent of increasing incentives for employers to maintain the safety of equipment used in the place of employment, rather than shifting that responsibility off to a manufacturer even after the useful life of the product in question has expired. In addition, we have moved the statute of repose period to 20 years. Last year it was 25 years. People will say, well, that is 5 years less. Well, it may be, but it is still longer than any State statute of repose anywhere in the Nation by at least 5 years. I think the average is around 10 to 12 years. One State has 15 years. Ours is 20 years. We think that is trying to lean a little bit toward the consumer. The third significant change made prior to introduction of this year's bill concerns the addition of a provision that had been part of last year's House companion bill that requires a reduction of a claimant's award due to unforeseeable misuse or alteration of the product. For example, if someone purchases a hair dryer that has attached to it a large warning label stating ``please do not use this in the bath tub,'' and the purchaser immediately uses the hair dryer in the bath tub with probable adverse consequences, it does not make sense to hold the manufacturer liable for such misuse, and this provision would prevent that. In addition to the changes made prior to introduction, several substantive changes were made in the Commerce Committee markup of the bill itself. First, we incorporated a bill, S. 303, the Biomaterials Access Assurance Act, introduced by Senator Lieberman and Senator McCain, as title II of our committee-reported product liability bill. This title of the bill is designed to ensure that needed raw materials are available to the manufacturers of medical devices by limiting the liability for firms that supply biomaterials. The title only limits liability for suppliers who have done nothing wrong. The ability of consumers to recover from negligent device manufacturers is preserved. We made several other substantive changes in the committee markup. We modified our product seller provision to extend protection to blameless rental and leasing companies. This will address the fact that in 11 States car rental companies can be forced to pay for damage caused by people who rent their cars, even though the car rental companies obviously did not make the car and did not do anything wrong. We made a change to the statute of repose that will ensure that manufacturers keep their promise by enabling injured workers to sue for damage caused by products over 20 years old if the manufacturers guaranteed their product's safety for a longer period. Finally, we modified our alternative dispute resolution provision which gives States an incentive to create proplaintiff, voluntary, nonbinding arbitration mechanisms. This provision contains a penalty for defendants who unreasonably refuse to participate in the arbitration. A criticism was raised during our committee hearings on the bill that greater specificity was needed for the definition of unreasonable refusal, so a set of factors was added to address that concern. Mr. President, I will have a lot more to say about the substance of the bill as this debate unfolds, but I know there is at least one other Senator who conclude by stating the reasons we must pass product liability reform this year after all of these years. Under our current system, injured consumers often find it impossible to get just and prompt resolution. Just as frequently, blameless manufacturers are forced to spend thousands of dollars on baseless lawsuits. The system frequently allows negligent companies to avoid penalties and even rewards undeserving plaintiffs. Product liability law should deter wasteful suits and discipline culpable practices, but not foster hours of waste and endless, endless, endless litigation. The adverse effect of having a hodgepodge of rules is severe for everyone. In fact, is a rather major fact in American life, I might add. Injured persons and those who make products alike face a 55-unit roulette wheel when it comes to determining rights and responsibilities. The results hurt everyone. Injured persons have testified that they may be unable to obtain needed medical devices for their continued health and well-being, and there is a lot of very powerful testimony on that front. Manufacturers have indicated that good and useful products are not placed on the market. The Brookings Institution has documented many instances where safety improvements were not made because of fears about uncertainties in our legal system, which brings up the sort of fascinating concept that manufacturers will decline to improve a product for fear that that lends the implication that the product that they previously had was somehow insufficient. It is now a fact of life in many places where they simply, therefore, do not improve the product so as not to make themselves liable to that interpretation, all of which, of course, is absolutely ridiculous. Included in the Brookings discussion were, for example, built-in child seats and air bags. As I have studied this complex area, I found incentives for preventing accidents are often not in the right place. In formulating our bill, we have striven to place incentive on the person who can best prevent an injury. This is a matter that has not been given adequate attention during past debates, but given the opportunity to carefully study our bill, Senators, I believe, will see that care and thought has been invested to assure that no wrongdoer goes unpunished and that positive prosafety behavior is encouraged. For all of these reasons I very much look forward to our debate. I welcome the criticisms, the insights, and the suggestions for improvements that I am sure our colleagues will contribute during the process of this debate. I yield the floor.