[Pages S4218-S4231]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Y2K ACT
The PRESIDING OFFICER. Under the previous order, the Senate will now
proceed to the consideration of S. 96. The clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 96) to regulate commerce between and among the
several States by providing for the orderly resolution of
disputes arising out of computer-based problems relating to
processing data that includes a 2-digit expression of that
year's date.
The Senate proceeded to consider the bill, which had been reported
from the
[[Page S4219]]
Committee on Commerce, Science, and Transportation, with an amendment
to strike all after the enacting clause and inserting in lieu thereof
the following:
SECTION 1. SHORT TITLE; TABLE OF SECTIONS.
(a) Short Title.--This Act may be cited as the ``Y2K Act''.
(b) Table of Sections.--The table of sections for this Act
is as follows:
Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Title I--OPPORTUNITY TO RESOLVE Y2K PROBLEMS.
Sec. 101. Pre-filing notice.
Sec. 102. Pleading requirements.
Sec. 103. Duty to mitigate.
Sec. 104. Proportionate liability.
Title II--Y2K ACTIONS INVOLVING CONTRACT-RELATED CLAIMS.
Sec. 201. Contracts enforced.
Sec. 202. Defenses.
Sec. 203. Damages limitation .
Sec. 204. Mixed actions.
Title III--Y2K ACTIONS INVOLVING TORT CLAIMS.
Sec. 301. Damages in tort claims.
Sec. 302. Certain defenses.
Sec. 303. Liability of officers and directors.
Title IV--Y2K CLASS ACTIONS.
Sec. 401. Minimum injury requirement.
Sec. 402. Notification.
Sec. 403. Forum for Y2K class actions.
SEC. 2. FINDINGS AND PURPOSES.
The Congress finds that:
(1) The majority of responsible business enterprises in the
United States are committed to working in cooperation with
their contracting partners towards the timely and cost-
effective resolution of the many technological, business, and
legal issues associated with the Y2K date change.
(2) Congress seeks to encourage businesses to concentrate
their attention and resources in short time remaining before
January 1, 2000, on addressing, assessing, remediating, and
testing their Y2K problems, and to minimize any possible
business disruptions associated with the Y2K issues.
(3) It is appropriate for the Congress to enact legislation
to assure that Y2K problems do not unnecessarily disrupt
interstate commerce or create unnecessary caseloads in
Federal courts and to provide initiatives to help businesses
prepare and be in a position to withstand the potentially
devastating economic impact of Y2K.
(4) Y2K issues will potentially affect practically all
business enterprises to at least some degree, giving rise
possibly to a large number of disputes.
(5) Resorting to the legal system for resolution of Y2K
problems is not feasible for many businesses, particularly
small businesses, because of its complexity and expense.
(6) The delays, expense, uncertainties, loss of control,
adverse publicity and animosities that frequently accompany
litigation of business disputes can only exacerbate the
difficulties associated with the Y2K date change, and work
against the successful resolution of those difficulties.
(7) Congress recognizes that every business in the United
States should be concerned that widespread and protracted Y2K
litigation may threaten the network of valued and trusted
business relationships that are so important to the effective
functioning of the world economy, and which may put
unbearable strains on an overburdened and sometime
ineffective judicial system.
(8) A proliferation of frivolous Y2K lawsuits by
opportunistic parties may further limit access to courts by
straining the resources of the legal system and depriving
deserving parties of their legitimate rights to relief.
(9) Congress encourages businesses to approach their Y2K
disputes responsibly, and to avoid unnecessary, time-
consuming and costly litigation about Y2K failures,
particularly those that are not material. Congress supports
good faith negotiations between parties when there is a
dispute over a Y2K problem, and, if necessary, urges the
parties to enter into voluntary, non-binding mediation rather
than litigation.
SEC. 3. DEFINITIONS.
In this Act:
(1) Y2K action.--The term ``Y2K action'' means a civil
action commenced in any Federal or State court in which the
plaintiff's alleged harm or injury resulted directly or
indirectly from an actual or potential Y2K failure, or a
claim or defense of a defendant is related directly or
indirectly to an actual or potential Y2K failure.
(2) Y2K failure.--The term ``Y2K failure'' means failure by
any device or system (including any computer system and any
microchip or integrated circuit embedded in another device or
product), or any software, firmware, or other set or
collection of processing instructions to process, to
calculate, to compare, to sequence, to display, to store, to
transmit, or to receive date-related data, including
failures--
(A) to deal with or account for transitions or comparisons
from, into, and between the years 1999 and 2000 accurately;
(B) to recognize or accurately process any specific date in
1999, 2000, or 2001; or
(C) accurately to account for the year 2000's status as a
leap year, including recognition and processing of the
correct date on February 29, 2000.
(3) Actual damages.--The term ``actual damages'' means
direct damages for injury to tangible property, and the cost
of repairing or replacing products that have a material
defect.
(4) Economic loss.--Except as otherwise specifically
provided in a written contract between the plaintiff and the
defendant in a Y2K action (and subject to applicable State
law), the term ``economic loss''--
(A) means amounts awarded to compensate an injured party
for any loss other than for personal injury or damage to
tangible property (other than property that is the subject of
the contract); and
(B) includes amounts awarded for--
(i) lost profits or sales;
(ii) business interruption;
(iii) losses indirectly suffered as a result of the
defendant's wrongful act or omission;
(iv) losses that arise because of the claims of third
parties;
(v) losses that must be pleaded as special damages; and
(vi) consequential damages (as defined in the Uniform
Commercial Code or analogous State commercial law); but
(C) does not include actual damages.
(5) Material defect.--The term ``material defect'' means a
defect in any item, whether tangible or intangible, or in the
provision of a service, that substantially prevents the item
or service from operating or functioning as designed or
intended. The term ``material defect'' does not include a
defect that--
(A) has an insignificant or de minimis effect on the
operation or functioning of an item or computer program;
(B) affects only on a component of an item or program that,
as a whole, substantially operates or functions as designed;
or
(C) has an insignificant or de minimis effect on the
efficacy of the service provided.
(6) Personal injury.--The term ``personal injury''--
(A) means any physical injury to a natural person,
including death of the person; but
(B) does not include mental suffering, emotional distress,
or like elements of injury that do not constitute physical
harm to a natural person.
(7) State.--The term ``State'' means any State of the
United States, the District of Columbia, Commonwealth of
Puerto Rico, the Northern Mariana Islands, the United States
Virgin Islands, Guam, American Samoa, and any other territory
or possession of the United States, and any political
subdivision thereof.
(8) Contract.--The term ``contract'' means a contract,
tariff, license, or warranty.
(9) Person.--
(A) In general.--The term ``person'' has the meaning given
to that term by section 1 of title 1, United States Code.
(B) Government entities.--The term ``person'' includes an
agency, instrumentality, or other entity of Federal, State,
or local government (including multijurisdictional agencies,
instrumentalities, and entities) when that agency,
instrumentality, or other entity is a plaintiff or a
defendant in a Y2K action.
(10) Alternative dispute resolution.--The term
``alternative dispute resolution'' means any process or
proceeding, other than adjudication by a court or in an
administrative proceeding, in which a neutral third party
participates to assist in the resolution of issues in
controversy, through processes such as early neutral
evaluation, mediation, minitrial, and arbitration.
SEC. 4. APPLICATION OF ACT.
(a) General Rule.--This Act applies to any Y2K action
brought in a State or Federal court after February 22, 1999.
(b) No New Cause of Action Created.--Nothing in this Act
creates a new cause of action under Federal or State law.
(c) Actions for Personal Injury or Wrongful Death
Excluded.--This Act does not apply to a claim for personal
injury or for wrongful death.
(d) Written Contract Controls.--The provisions of this Act
do not supersede a valid, enforceable written contract
between a plaintiff and a defendant in a Y2K action.
(e) Preemption of State Law.--This Act supersedes State law
to the extent that it establishes a rule of law applicable to
a Y2K action that is inconsistent with State law.
SEC. 5. PUNITIVE DAMAGES LIMITATIONS.
(a) In General.--In any Y2K action in which punitive
damages may be awarded under applicable State law, the
defendant shall not be liable for punitive damages unless the
plaintiff proves by clear and convincing evidence that the
defendant acted with conscious and flagrant disregard for the
rights and property of others.
(b) Caps on Punitive Damages.--
(1) In general.--Punitive damages against a defendant in
such a Y2K action may not exceed the larger of--
(A) 3 times the amount awarded for actual damages; or
(B) $250,000.
(2) Special rule.--In the case of a defendant--
(A) who--
(i) is sued in his or her capacity as a individual; and
(ii) whose net worth does not exceed $500,000; or
(B) that is an unincorporated business, a partnership,
corporation, association, unit of local government, or
organization with fewer than 25 full-time employees,
paragraph (1) shall be applied by substituting ``smaller''
for ``larger''.
(c) Government Entities.--Punitive damages in such a Y2K
action may not be awarded against a person described in
section 3(8)(B).
TITLE I--OPPORTUNITY TO RESOLVE Y2K PROBLEMS
SEC. 101. PRE-FILING NOTICE.
(a) In General.--Before commencing a Y2K action, except an
action that seeks only injunctive relief, a prospective
plaintiff with a Y2K
[[Page S4220]]
claim shall serve on each prospective defendant in that
action a written notice that identifies with particularity--
(1) the manifestations of any material defect alleged to
have caused harm or loss;
(2) the harm or loss allegedly suffered by the prospective
plaintiff;
(3) the remedy sought by the prospective plaintiff;
(4) the basis upon which the prospective plaintiff seeks
that remedy; and
(5) the name, title, address, and telephone number of any
individual who has authority to negotiate a resolution of the
dispute on behalf of the prospective plaintiff.
(b) Delay of Action.--Except as provided in subsection (d),
a prospective plaintiff may not commence a Y2K action in
Federal or State court until the expiration of 90 days from
the date of service of the notice required by subsection (a).
(c) Response to Notice.--Within 30 days after receipt of
the notice specified in subsection (a), each prospective
defendant shall serve on each prospective plaintiff a written
statement acknowledging receipt of the notice, and proposing
the actions it has taken or will take to address the problem
identified by the prospective plaintiff. The written
statement shall state whether the prospective defendant is
willing to engage in alternative dispute resolution.
(d) Failure To Respond.--If a prospective defendant--
(1) fails to respond to a notice provided pursuant to
subsection (a) within the 30 days specified in subsection
(c); or
(2) does not describe the action, if any, the prospective
defendant will take to address the problem identified by the
prospective plaintiff,
then the 90-day period specified in subsection (a) will
terminate at the end of the 30-day period as to that
prospective defendant and the prospective plaintiff may
commence its action against that prospective defendant.
(e) Failure To Provide Notice.--If a defendant determines
that a plaintiff has filed a Y2K action without providing the
notice specified in subsection (a) and without awaiting the
expiration of the 90-day period specified in subsection (b),
the defendant may treat the plaintiff's complaint as such a
notice by so informing the court and the plaintiff. If any
defendant elects to treat the complaint as such a notice--
(1) the court shall stay all discovery and all other
proceedings in the action for 90 days after filing of the
complaint; and
(2) the time for filing answers and all other pleadings
shall be tolled during this 90-day period.
(f) Effect of Contractual Waiting Periods.--In cases in
which a contract requires notice of nonperformance and
provides for a period of delay prior to the initiation of
suit for breach or repudiation of contract, the period of
delay provided in the contract is controlling over the
waiting period specified in subsections (a) and (e).
(g) State Law Controls Alternative Methods.--Nothing in
this section supersedes or otherwise preempts any State law
or rule of civil procedure with respect to the use of
alternative dispute resolution for Y2K actions.
SEC. 102. PLEADING REQUIREMENTS.
(a) Nature and Amount of Damages.--In all Y2K actions in
which damages are requested, the complaint shall provide
specific information as to the nature and amount of each
element of damages and the factual basis for the damages
calculation.
(b) Material Defects.--In any Y2K action in which the
plaintiff alleges that a product or service is defective, the
complaint shall contain specific information regarding the
manifestations of the material defects and the facts
supporting a conclusion that the defects are material.
(c) Required State of Mind.--In any Y2K action in which a
claim is asserted on which the plaintiff may prevail only on
proof that the defendant acted with a particular state of
mind, the complaint shall, with respect to each element of
that claim, state with particularity the facts giving rise to
a strong inference that the defendant acted with the required
state of mind.
SEC. 103. DUTY TO MITIGATE.
Damages awarded in any Y2K action shall exclude
compensation for damages the plaintiff could reasonably have
avoided in light of any disclosure or other information of
which the plaintiff was, or reasonably could have been,
aware, including reasonable efforts made by a defendant to
make information available to purchasers or users of the
defendant's product or services concerning means of remedying
or avoiding Y2K failure.
SEC. 104. PROPORTIONATE LIABILITY.
(a) In General.--A person against whom a final judgment is
entered in a Y2K action shall be liable solely for the
portion of the judgment that corresponds to the relative and
proportional responsibility of that person. In determining
the percentage of responsibility of any defendant, the trier
of fact shall determine that percentage as a percentage of
the total fault of all persons, including the plaintiff,
who caused or contributed to the total loss incurred by
the plaintiff.
(b) Several Liability.--Liability in a Y2K action shall be
several but not joint.
TITLE II--Y2K ACTIONS INVOLVING CONTRACT-RELATED CLAIMS
SEC. 201. CONTRACTS ENFORCED.
In any Y2K action, any written term or condition of a valid
and enforceable contract between the plaintiff and the
defendant, including limitations or exclusions of liability
and disclaimers of warranty, is fully enforceable, unless the
court determines that the contract as a whole is
unenforceable. If the contract is silent with respect to any
matter, the interpretation of the contract with respect to
that matter shall be determined by applicable law in force at
the time the contract was executed.
SEC. 202. DEFENSES.
(a) Reasonable Efforts.--In any Y2K action in which breach
of contract is alleged, in addition to any other rights
provided by applicable law, the party against whom the claim
of breach is asserted shall be allowed to offer evidence that
its implementation of the contract, or its efforts to
implement the contract, were reasonable in light of the
circumstances for the purpose of limiting or eliminating the
defendant's liability.
(b) Impossibility or Commercial Impracticability.--In any
Y2K action in which breach of contract is alleged, the
applicability of the doctrines of impossibility and
commercial impracticability shall be determined by applicable
law in existence on January 1, 1999, and nothing in this Act
shall be construed as limiting or impairing a party's right
to assert defenses based upon such doctrines.
SEC. 203. DAMAGES LIMITATION.
In any Y2K action for breach or repudiation of contract, no
party may claim, nor be awarded, consequential or punitive
damages unless such damages are allowed--
(1) by the express terms of the contract; or
(2) if the contract is silent on such damages, by operation
of State law at the time the contract was executed or by
operation of Federal law.
SEC. 204. MIXED ACTIONS.
If a Y2K action includes claims based on breach of contract
and tort or other noncontract claims, then this title shall
apply to the contract-related claims and title III shall
apply to the tort or other noncontract claims.
TITLE III--Y2K ACTIONS INVOLVING TORT CLAIMS
SEC. 301. DAMAGES IN TORT CLAIMS.
A party to a Y2K action making a tort claim may not recover
damages for economic loss unless--
(1) the recovery of such losses is provided for in a
contract to which the party seeking to recover such losses is
a party;
(2) such losses result directly from a personal injury
claim resulting from the Y2K failure; or
(3) such losses result directly from damage to tangible
property caused by the Y2K failure (other than damage to
property that is the subject of the contract),
and such damages are permitted under applicable Federal or
State law.
SEC. 302. CERTAIN DEFENSES.
(a) Good Faith; Reasonable Efforts.--In any Y2K action
except an action for breach or repudiation of contract, the
party against whom the claim is asserted shall be entitled to
establish, as a complete defense to any claim for damages,
that it acted in good faith and took measures that were
reasonable under the circumstances to prevent the Y2K failure
from occurring or from causing the damages upon which the
claim is based.
(b) Defendant's State of Mind.--In a Y2K action making a
claim for money damages in which the defendant's actual or
constructive awareness of an actual or potential Y2K failure
is an element of the claim, the defendant is not liable
unless the plaintiff, in addition to establishing all other
requisite elements of the claim, proves by clear and
convincing evidence that the defendant knew, or recklessly
disregarded a known and substantial risk, that the failure
would occur in the specific facts and circumstances of the
claim.
(c) Foreseeability.--In a Y2K action making a claim for
money damages, the defendant is not liable unless the
plaintiff proves by clear and convincing evidence, in
addition to all other requisite elements of the claim, that
the defendant knew, or should have known, that the
defendant's action or failure to act would cause harm to the
plaintiff in the specific facts and circumstances of the
claim.
(d) Control Not Determinative of Liability.--The fact that
a Y2K failure occurred in an entity, facility, system,
product, or component that was within the control of the
party against whom a claim for money damages is asserted in a
Y2K action shall not constitute the sole basis for recovery
of damages in that action.
(e) Preservation of Existing Law.--The provisions of this
section are in addition to, and not in lieu of, any
requirement under applicable law as to burdens of proof and
elements necessary for prevailing in a claim for money
damages.
SEC. 303. LIABILITY OF OFFICERS AND DIRECTORS.
(a) In General.--A director, officer, trustee, or employee
of a business or other organization (including a corporation,
unincorporated association, partnership, or non-profit
organization) shall not be personally liable in any Y2K
action making a tort or other noncontract claim in that
person's capacity as a director, officer, trustee, or
employee of the business or organization for more than the
greater of--
(1) $100,000; or
(2) the amount of pre-tax compensation received by the
director, officer, trustee, or employee from the business or
organization during the 12 months immediately preceding the
act or omission for which liability was imposed.
(b) Exception.--Subsection (a) does not apply in any Y2K
action in which it is found by clear and convincing evidence
that the director, officer, trustee, or employee--
(1) intentionally made misleading statements regarding any
actual or potential year 2000 problem; or
(2) intentionally withheld from the public significant
information there was a legal duty to disclose to the public
regarding any actual or potential year 2000 problem of that
business or organization which would likely result in
actionable Y2K failure.
(c) State Law, Charter, or Bylaws.--Nothing in this section
supersedes any provision of
[[Page S4221]]
State law, charter, or a bylaw authorized by State law, in
existence on January 1, 1999, that establishes lower limits
on the liability of a director, officer, trustee, or employee
of such a business or organization.
TITLE IV--Y2K CLASS ACTIONS
SEC. 401. MINIMUM INJURY REQUIREMENT.
In any Y2K action involving a claim that a product or
service is defective, the action may be maintained as a class
action in Federal or State court as to that claim only if--
(1) it satisfies all other prerequisites established by
applicable Federal or State law or applicable rules of civil
procedure; and
(2) the court finds that the alleged defect in a product or
service is material as to the majority of the members of the
class.
SEC. 402. NOTIFICATION.
(a) Notice by Mail.--In any Y2K action that is maintained
as a class action, the court, in addition to any other notice
required by applicable Federal or State law, shall direct
notice of the action to each member of the class by United
States mail, return receipt requested. Persons whose receipt
of the notice is not verified by the court or by counsel for
one of the parties shall be excluded from the class unless
those persons inform the court in writing, on a date no later
than the commencement of trial or entry of judgment, that
they wish to join the class.
(b) Contents of Notice.--In addition to any information
required by applicable Federal or State law, the notice
described in this subsection shall--
(1) concisely and clearly describe the nature of the
action;
(2) identify the jurisdiction where the case is pending;
and
(3) describe the fee arrangement of class counsel.
SEC. 403. FORUM FOR Y2K CLASS ACTIONS.
(a) Jurisdiction.--The District Courts of the United States
have original jurisdiction of any Y2K action, without regard
to the sum or value of the matter in controversy involved,
that is brought as a class action if--
(1) any member of the proposed plaintiff class is a citizen
of a State different from the State of which any defendant is
a citizen;
(2) any member of the proposed plaintiff class is a foreign
Nation or a citizen of a foreign Nation and any defendant is
a citizen or lawful permanent resident of the United States;
or
(3) any member of the proposed plaintiff class is a citizen
or lawful permanent resident of the United States and any
defendant is a citizen or lawful permanent resident of a
foreign Nation.
(b) Predominant State Interest.--A United States District
Court in an action described in subsection (a) may abstain
from hearing the action if--
(1) a substantial majority of the members of all proposed
plaintiff classes are citizens of a single State;
(2) the primary defendants are citizens of that State; and
(3) the claims asserted will be governed primarily by the
laws of that State.
(c) Limited Controversies.--A United States District Court
in an action described in subsection (a) may abstain from
hearing the action if--
(1) the value of all matters in controversy asserted by the
individual members of all proposed plaintiff classes in the
aggregate does not exceed $1,000,000, exclusive of interest
and costs;
(2) the number of members of all proposed plaintiff classes
in the aggregate in less than 100; or
(3) the primary defendants are States, State officials, or
other governmental entities against whom the district court
may be foreclosed from ordering relief.
(d) Diversity Determination.--For purposes of applying
section 1322(b) of title 28, United States Code, to actions
described in subsection (a) of this section, a member of a
proposed class is deemed to be a citizen of a State different
from a corporation that is a defendant if that member is a
citizen of a State different from each State of which that
corporation is deemed a citizen.
(e) Removal.--
(1) In general.--A class action described in subsection (a)
may be removed to a district court of the United States in
accordance with chapter 89 of title 28, United States Code,
except that the action may be removed--
(A) by any defendant without the consent of all defendants;
or
(B) any plaintiff class member who is not a named or
representative class member of the action for which removal
is sought, without the consent of all members of the class.
(2) Timing.--This subsection applies to any class before or
after the entry of any order certifying a class.
(3) Procedure.--
(A) In general.--Section 1446(a) of title 28, United States
Code, shall be applied to a plaintiff removing a case under
this section by treating the 30-day filing period as met if a
plaintiff class member who is not a named or representative
class member of the action for which removal is sought files
notice of removal within 30 days after receipt by such class
member of the initial written notice of the class action
provided at the trial court's direction.
(B) Application of section 1446.--Section 1446 of title 28,
United States Code, shall be applied--
(i) to the removal of a case by a plaintiff under this
section by substituting the term ``plaintiff'' for the term
``defendant'' each place it appears; and
(ii) to the removal of a case by a plaintiff or a defendant
under this section--
(I) by inserting the phrase ``by exercising due diligence''
after ``ascertained'' in the second paragraph of subsection
(b); and
(II) by treating the reference to ``jurisdiction conferred
by section 1332 of this title'' as a reference to subsection
(a) of this section.
(f) Application of Substantive State Law.--Nothing in this
section alters the substantive law applicable to an action
described in subsection (a).
(g) Procedure After Removal.--If, after removal, the court
determines that no aspect of an action that is subject to its
jurisdiction solely under the provisions of section 1332(b)
of title 28, United States Code, may be maintained as a class
action under Rule 23 of the Federal Rules of Civil Procedure,
the court shall strike the class allegations from the action
and remand the action to the State court. Upon remand of the
action, the period of limitations for any claim that was
asserted in the action on behalf of any named or unnamed
member of any proposed class shall be deemed tolled to the
full extent provided under Federal law.
The PRESIDING OFFICER. The Chair recognizes the Senator from Arizona.
Mr. McCAIN. Mr. President, I am going to offer a compromise amendment
that is at the desk, and I further ask unanimous consent that debate
only be in order following the offering of that amendment until 2:15
today.
The PRESIDING OFFICER. Without objection, it is so ordered.
Committee Amendment Withdrawn
Mr. McCAIN. Mr. President, as chairman of the Commerce Committee and
with the authority of the committee, I withdraw the committee
amendment.
The PRESIDING OFFICER. The committee amendment is withdrawn.
The committee amendment was withdrawn.
Amendment No. 267
(Purpose: To regulate interstate commerce by making provision for
dealing with losses arising from Year 2000 problem-related failures
that may disrupt communications, intermodal transportation, and other
matters affecting interstate commerce)
Mr. McCAIN. I send a substitute amendment to the desk.
The PRESIDING OFFICER. The clerk will report the substitute
amendment.
The assistant legislative clerk read as follows:
The Senator from Arizona [Mr. McCain], for himself, Mr.
Wyden, Mr. Gorton, Mr. Abraham, Mr. Lott, Mr. Frist, Mr.
Burns, Mr. Smith of Oregon, and Mr. Santorum proposes an
amendment numbered 267.
Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. McCAIN. Mr. President, I am pleased to offer, with my friend and
colleague from Oregon, Senator Wyden, a substitute amendment to S. 96,
the Y2K Act. The substitute amendment we offer is truly a bipartisan
effort. We have worked diligently with our colleagues on both sides of
the aisle and will continue to do so to address concerns, narrow some
provisions, and assure that this bill will sunset when it is no longer
pertinent and necessary.
Senator Wyden, who said at our committee markup that he wants to get
to ``yes,'' has worked tirelessly with me to get there. He has offered
excellent suggestions and comments, and I think the substitute we bring
today is a better piece of legislation for his efforts.
Specifically, this substitute would provide time for plaintiffs and
defendants to resolve Y2K problems without litigation. It reiterates
the plaintiff's duty to mitigate damages and highlights the defendant's
opportunity to assist plaintiffs in doing that by providing information
and resources. It provides for proportional liability in most cases
with exceptions for fraudulent or intentional conduct or where the
plaintiff has limited assets.
It protects governmental entities, including municipalities, school,
fire, water and sanitation districts from punitive damages, and it
eliminates punitive damage limits for egregious conduct while providing
some protection against runaway punitive damage awards. It provides
protection for those not directly involved in a Y2K failure.
The bill as amended does not cover personal injury and wrongful death
cases. It is important to keep in mind the broad support this bill has
from virtually every segment of our economy. This bill is important not
only to the high-tech industry or to big business but carries the
strong support of small business, retailers and wholesalers. Many of
those supporting the
[[Page S4222]]
bill will find themselves as both plaintiffs and defendants. They have
weighed the benefits and drawbacks of the provisions of this bill and
have overwhelmingly concluded that their chief priority is to prevent
and fix Y2K problems and make our technology work and not divert the
resources into time-consuming and costly litigation.
Mr. President, I would like to interrupt my prepared statement at
this time to mention that when we passed this legislation through the
Commerce Committee, unfortunately, on one of the rare occasions in the
more than 2 years that I have been chairman of the committee, it was
passed on a party line vote, on a vote of 11 to 9.
At that time Senator Wyden, Senator Kerry, Senator Dorgan and others
expressed a strong desire to work in a bipartisan fashion so that we
could pass this legislation. Most of us are aware that when legislation
goes to the floor along party lines and is divided on party lines, the
chances of passage are minimal, to say the least.
We worked with Senator Wyden and others, and we made eight major
compromises in the original legislation, sufficient in the view of many
to enhance the ability of this legislation to be passed and, very
frankly, satisfy at least some of the concerns of the trial lawyers and
others that had been voiced about the legislation.
Last night, Senator Wyden and the Senator from Connecticut, Senator
Dodd, and I met, and we discussed three major concerns that Senator
Dodd had, which two we could agree to, and on the third there was some
discussion about language. It was my distinct impression at that time
that we had come to an agreement on these three particular additional
items.
Apparently this morning that is not the case. On the third item there
is still not agreement between ourselves and Senator Dodd and his
staff. I hope we can continue to work on that language.
Mr. President, I have been around here now for 13 years. I have seen
legislation compromise after compromise made to the point where the
legislation itself becomes meaningless. We are approaching that point
now.
I will be glad to negotiate with anyone. My friend from
Massachusetts, Senator Kerry, and I have been in discussions as well.
But we cannot violate some of the fundamental principles that I just
articulated as the reason for this legislation. If we weren't facing a
very severe crisis in about 7 or 8 months from now--7 months, I guess--
then there would not be a need for this legislation.
Our object is to protect innocent business people, both large, medium
and small, from being exposed to the kind of lawsuits which we know
will transpire if we do not do something about the problem.
It is not only important that we receive the support of the ``high-
tech community,'' which is very important to the future of our Nation's
economy, but the medium-size businesses, the small businesses, the
retailers and others are all in support of this legislation.
I am aware of the power of the American Trial Lawyers Association. I
have been beaten by them on several occasions. They have a string of
victories to their credit. They are also, among others, another
argument for campaign finance reform, which is a diatribe I will not
enter in today. The fact is this issue needs to be resolved. I would be
very disappointed if over a couple of points we cannot agree and this
legislation fails to proceed.
Did my friend from Oregon have a question or a comment?
Mr. WYDEN. Yes.
Mr. McCAIN. Mr. President, I ask unanimous consent to yield to the
Senator from Oregon, without losing my claim to the floor.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Oregon is recognized.
Mr. WYDEN. Thank you, Mr. President. I thank the chairman of the
Commerce Committee for his comments. I will just advise my colleagues
where I think we are.
First, I think it is important to note that the chairman of the
Commerce Committee has made nine major changes in the legislation--all
of them proconsumer, proplaintiff--since the time this legislation left
the Commerce Committee. I and other Democrats felt it was important. I
want the Record to show that those are major, substantive changes, and
as the chairman indicated, we had some discussions with Senator Dodd
last night and I am hopeful they are going to bear fruit as well,
because Senator Dodd has tackled this in a very thoughtful way as well.
I also think it is important that our leadership, Senator Lott and
Senator Daschle, continue, as they have tried to do, to help us work
through some of the procedural issues which are not directly relevant
to this legislation, so that it is possible to vote on the McCain-Wyden
substitute expeditiously.
I want to tell the Senate that now is the time when this can be done
in a thoughtful and deliberative way. I don't think the Senate wants to
come back next January, when there is a state of panic, as I believe
there well could be, over this problem. The time to do it is now. That
is what we have been working on in committee.
This is not a partisan issue. It affects every computer system that
uses date information, and I want it understood how this happened. Y2K
is not a design flaw; it was an engineering tradeoff. In order to get
more space on a disc and in memory, the precision of century indicators
was abandoned. Now, it is hard to believe today that disc and memory
space used to be at a premium, but it was. The tradeoff became an
industry standard, and computers cannot work at all without these
industry standards. The standards are the means by which programs and
systems exchange information, and it was recently noted: ``The near
immortality of computer software came as a shock to programmers. Ask
anybody who was there. We never expected this stuff to still be
around.''
One way to solve the problem might be to dump all the old layers of
computer code, but that is not realistic. So our goal ought to be to
try to bring these systems into compliance as soon as possible and, at
the same time--and this is what the McCain-Wyden substitute does--have
a safety net in place.
This is a bipartisan effort. I would like to briefly wrap up by
outlining several of the major changes. The first is that there is a 3-
year sunset provision. There are a number of individuals and groups who
said, ``Well, this is just an effort to rewrite the tort law and make
changes that are going to stand for all time.'' This provision says
that any Y2K failure must occur before January 1, 2003, in order to be
eligible to be covered by the legislation.
Second, there were various concerns that there were vague defenses in
the legislation, particularly terms that involve a reasonable effort.
We said that that ought to be changed, we ought to make sure there
aren't any new and ill-defined Federal defenses. That has been changed.
Finally, and especially important, for truly egregious kinds of
conduct and fraudulent activity, where people simply misrepresent the
facts in the marketplace, we ensure that punitive damages and the
opportunity to send a deterrent to egregious and fraudulent activity
are still in place.
So I think these are just some of the major changes we are going to
outline in the course of the debate. I also say that the latest draft
also restores liability for directors and officers, which was again an
effort to try to be responsive to those who felt that the legislation
was not sufficiently proconsumer.
I only say--and I appreciate that the chairman of the committee
yielded me this time--that I think after all of these major changes,
which have taken many hours and, in fact, weeks since the time this
legislation came before the Committee on Commerce, we have now produced
legislation that particularly Democratic Members of the Senate can
support.
This is not legislation where, for example, if someone had their arm
cut off tragically in a tractor accident, they would not have a remedy.
We make sure that all personal injuries which could come about--say an
elevator doesn't work and a person is tragically injured. This
legislation doesn't affect that. That person has all the remedies in
the tort law and the personal injury laws that are on the books. This
involves ensuring that there is not chaos in the marketplace early next
year, that we don't tie up thousands of our
[[Page S4223]]
businesses in frivolous suits and do great damage to the emerging
sector of our economy that is information driven.
I thank the chairman for the many changes he has made, and I am
especially hopeful that over the next few hours the two leaders,
Senator Lott and Senator Daschle, can help us work through the
procedural quagmire the Senate is in, so we can pass this legislation
now, at a time where there is an opportunity to pursue it in a
deliberative way.
I yield the floor.
Mr. McCAIN. Mr. President, I thank the Senator from Oregon for his
enormous work on this legislation. I think it bears repeating what we
have been able to do here. I believe any objective observer would agree
that what Senator Wyden has brought to the bill represents a tremendous
movement from the bill we originally passed in the Commerce Committee.
These discussions with Senator Wyden and others resulted in at least
eight major changes. The biggest change was that we eliminated the so-
called good-faith defense, because we could not define good faith and
reasonable efforts.
We also put in, as Senator Wyden mentioned, a sunset of January 1,
2003. There is no cap on punitive damages when the defendant has
intentionally caused harm to the plaintiff. It clarifies that if a
plaintiff gives 30 days notice of a problem to the defendant, the
defendant has 60 days to fix it. This doesn't result in a 90-day delay
for litigation but does offer a critical opportunity to solve problems
rather than litigate.
Language regarding the state of mind and liability of bystanders was
significantly narrowed, redrafted, and clarified in order to assure
that the provisions are consistent with the Year 2000 Information and
Readiness Disclosure Act of 1998.
The economic loss rule was likewise rewritten and narrowed to reflect
the current law in the majority of States.
Proportionate liability was significantly compromised to incorporate
exceptions to the general rule to protect plaintiffs from suffering
loss.
Class action language was revised and narrowed, and language
respecting the effect of State law on contracts and the rules with
respect to contract interpretation was also revised to address concerns
that Senator Wyden raised.
In other words, I believe we have gone a long way.
Mr. President, the opponents of this legislation will make several
arguments. I respect those arguments. One will be that we are changing
tort law--that we are somehow fundamentally changing the law despite
the fact that this has a sunset provision in it of January 1, 2003.
Also, they will say it is not a big problem; it is not nearly as big
a problem as you think it is; there are going to be suits dismissed;
that the manufacturers and the high-tech community and the
businesspeople are setting up a straw man here because it is not that
huge an issue despite the estimates that there can be as much as $300
billion to $1 trillion taken out of the economy.
Let me quote from the Progressive Policy Institute backgrounder of
March 1999. They state:
As the millennium nears, the year 2000 computer problem
poses a critical challenge to our economy. Tremendous
investments are being made to fix Y2K problems with U.S.
companies expected to spend more than $50 billion. However,
these efforts could be hampered by a barrage of potential
legislation as fear of liability may keep some businesses
from effectively engaging in Y2K remediation efforts.
Trial attorneys across the country are actually preparing for the
potential windfall. For those who doubt the emergence of such leviathan
litigation, one only needs to listen to what is coming out of certain
quarters of the legal community. At the American Bar Association annual
convention in Toronto last August, a panel of experts predicted that
the legal costs associated with Y2K will exceed that of asbestos,
breast implants, tobacco, and Superfund litigation combined. That is
more than three times the total annual estimated cost of all civil
litigation in the United States.
That is what was propounded at the American Bar Association
convention in Toronto last August.
Mr. President, it isn't the Bank of America that is saying that. It
isn't the high-tech community. It is the American Bar Association.
Seminars on how to try Y2K cases are well underway, and
approximately 500 law firms across the country have put
together Y2K litigation teams to capitalize on the event.
Also, several lawsuits have already been filed making trial
attorneys confident that a large number of businesses, big
and small, will end up in court as both a plaintiff and a
defendant. Such overwhelming litigation would reduce
investment and slow income growth for American workers.
Indeed, innovation and economic growth will be stifled by
the rapacity of strident litigators. In addition to the
potentially huge costs of litigation, there is another unique
element to the Y2K problem. In contrast to past cases of
business liability where individual firms or even industries
engaged in some wrongful and damaging practices, the Y2K
problem potentially affects all aspects of the economy as it
is for all intents and purposes a unique one-time event. It
is best understood as an incomparable societal problem rooted
in the early stages of our Nation's transformation to a
digital economy. Applying some of the existing standards of
litigation to such a distinct and communal problem is simply
not appropriate.
Legislation is needed to provide incentives for businesses
to fix Y2K problems, to encourage resolution of Y2K conflicts
outside of the courtroom, and to ensure that the problem is
not exploited by untenable lawsuits.
The Progressive Policy Institute goes on to say at the end:
In order to diminish the threat of burdensome and
unwarranted litigation, it is essential that any legislation
addressing Y2K liability do the following:
Encourage remediation over litigation and the assignment of
blame;
Enact fair rules that reassure businesses;
That honest efforts at remediation will be rewarded by
limiting liability while enforcing contracts and punishing
negligence;
Promote alternative dispute resolution;
And, finally discourage frivolous lawsuits while protecting
avenues of redress for parties that suffer real injuries.
Mr. President, on those four principles we acted in this legislation,
and then we moved back to, if not the principles of it, some of what,
in my view, were the most desirable parts of the legislation on the
nine major issues which I just described in our negotiations with
Senator Wyden and others. Then we even made concessions in two
additional areas with Senator Dodd. And now it is not enough.
Mr. WYDEN. Mr. President, will the Senator yield?
Mr. McCAIN. Does the Senator from Oregon have a question?
Mr. WYDEN. I do. I think there is one other important point that
needs to be made. It seems to me that the legislation as it stands now
makes it very clear that what is really going to govern the vast
majority of cases is the written contractual terms between businesses.
If you look at page 11 of the subcommittee report, it makes it very
clear that the act doesn't apply to personal injuries or to wrongful
deaths. What is going to apply are the written contractual terms
between businesses.
As I recall, the chairman of the Commerce Committee thought
originally that in this and other major changes there ought to be a
Federal standard in this area. There was a concern that was, again,
writing new law and tort law. The chairman decided to make it clear
that it was going to be written in contractual terms that were going to
govern these agreements between businesses.
What is the chairman's understanding of how that came about, and why
those written contractual terms were important in this reform?
Mr. McCAIN. I say to my friend from Oregon that he has pretty well
pointed out that there were several standards which could be used for
both legal as well as the sense of how the people who are involved in
the Y2K situation are involved. To have one standard, I think, was
clearly called for, although perhaps I would have liked to have seen a
tougher standard. But the fact is that this was a process of how we
develop legislation. We also wanted to respect the individual
contracts, as the Senator from Oregon knows.
Mr. President, I just want to say again that my dear friend from
South Carolina has been very patient, and I know that he wants to speak
at some length. I appreciate both his compassion and commitment and
knowledge of the issue.
We have tried to compromise. We will continue to try to compromise.
We
[[Page S4224]]
are now reaching close to a point where the legislation would be
meaningless.
I am all in favor of a process where amendments are proposed, where
they are debated and voted on. I think that is the way we should do
business.
If the Senator from South Carolina has a problem with this
legislation, I hope he will propose an amendment to this legislation. I
will be glad to debate it, and we will be glad to have votes.
It is important that we resolve this legislation. I would not like to
see, nor do I think the people of this country deserve, a gridlock
where blocking of any legislation to move forward on this issue takes
place. I don't think that is fair. I don't think it is fair or
appropriate on an issue of this magnitude of which time is of the
essence. We can't have a blockage of this issue and take this
legislation up several months from now.
I respect the views of others who oppose this legislation. But let's
go through a legislative process. I am willing to stay here all day and
all night to debate the amendments, whatever they may be. I don't want
to introduce a cloture motion, because obviously that cuts off people's
ability to debate this issue because of the timeframe and time limits
involved in a cloture motion.
But I also urge my colleagues who oppose this legislation, let's not
engage in extraneous amendments on minimum wage, or violence on TV, or
guns, or anything else. That, frankly, in all due respect to my
colleagues, is avoiding this issue. This issue needs to be addressed.
In the eyes of every American, there is a huge problem arising at
12:01, January 1 of the year 2000. We have an obligation to address
that problem.
For us to now be sidetracked with other issues and extraneous
amendments, or others, is doing a great disservice to those men and
women, small businesses and large and medium size, which will be
affected by this serious problem, of which, by the way, even with a
select committee we really haven't gotten a good handle on the
magnitude of the problem. It depends on what part of our economy, what
part of government, et cetera.
But there is no one who alleges that there is no problem. It is our
obligation to try to address this problem. Let's do it in an orderly
fashion with debate, with amendments, and then vote on final passage.
I urge my colleagues to respect such a process.
Unanimous-Consent Agreement
Mr. McCAIN. Mr. President, I ask unanimous consent when the Senate
reconvenes at 2:15 it be in order for the Senate Chaplain to offer a
prayer in honor of the moment of silence being observed in Colorado,
and following the prayer the junior Senator from Colorado be recognized
to speak, to be followed by the senior Senator from Colorado who, after
some remarks, will offer a moment of silence.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order
for the 12:30 recess be extended 10 minutes, until 12:40.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HOLLINGS. Mr. President, I will go right to the point with
respect to the compromise. I have in hand a letter from Craig R.
Barrett, the distinguished CEO of Intel. Without reading the entire
letter, the consensus is that what they would really need is a
settlement or compromise regarding four particular points. One is
procedural incentives; another is with respect to the provisions of
contracts, that they have specificity; third, threshold pleading
provisions and the amount of damages in materiality of defects which
would help constrain class action suits; and, of course, the matter of
proportionality, or joint and several.
I contacted Mr. Grove and told him we would yield on three points,
but we didn't want to get into tort law with a contract provision--all
triable under the Uniform Commercial Code. He didn't think he could
yield on that fourth one.
Since that time, I understand that the downtown Chamber of Commerce
says they are not yielding at all with respect to the test in tort law.
My colleague from Oregon says there are nine points and that we have
gotten together. That is garbage. That is not the case at all, I can
say that right now.
They are determined to change the proof of neglect by ``the greater
weight of the preponderance of evidence'' to ``clear and convincing.''
I thought that was compromise. Reviewing the McCain-Wyden amendment
that is now under debate, Members will find on that page scratched out
and written in, ``clear and convincing evidence.'' They want to change
the burden in tort cases from ``the greater weight of the preponderance
of evidence'' to ``clear and convincing.''
How can you do that when you do not have the elements before you? You
do not have control of the manufacturer; you do not have control of the
software. If you are like me and other professionals like our doctor
friends or CPAs, they don't know those kinds of things. They have to do
the best they can by the greater weight of the preponderance of
evidence--not clear and convincing.
So they stick to punitive, they stick to clear and convincing, they
stick to joint and several, but they come on the floor of the Senate
and exclaim how reasonable they are and then allude, of course, to the
trial lawyers and talk about campaign financing, but say as an aside,
We don't want to get into it--as if the Senator from South Carolina is
paid by trial lawyers to do this.
I represented corporate America, and I will list those companies. I
was proud of the Electric and Gas. I was proud of the wholesale grocer,
Piggly Wiggly firm. We had 121 stores. I was their chief counsel on an
antitrust case which I took all the way to the U.S. Supreme Court. I
won. I had good corporate clients, too. I am proud of trial lawyers. We
don't have time for frivolous cases.
This downtown crowd will never see the courtroom. They sit there in
the mahogany rooms with the Persian rugs. Their colleagues call and
say, Let's get a continuance, I want to play golf this afternoon--the
clock runs on billable hours. The clock is running and the clients
never know the difference. And they pay $450 to $500 an hour.
The distinguished Senator from Ohio who sat in front of me, now a
national hero, is indebted to a case for billable hours.
We know about downtown. I don't understand aspersions with respect to
the trial bar--we are looking out for the injured parties.
I want these matters in the Record. The case is clear cut, in this
Senator's mind. For example, I talked for about an hour in the office
with the distinguished head of Intel, Andy Grove, some weeks back. I
don't want anyone to be misled, he is for proportionality. That is
explained in the letter. However, he said it wasn't a real problem.
I ask unanimous consent that an article in the March issue of
Business Week entitled ``Be Bug-Free or Get Squashed'' be printed in
the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Business Week, Mar. 1, 1999]
Be Bug-Free or Get Squashed--Big Companies May Soon Dump Suppliers That
Aren't Y2K-Ready
Lloyd Davis is feeling squeezed. In 1998, his $2 million,
25-employee fertilizer-equipment business was buffeted by the
harsh winds that swept the farm economy. This year, his
Golden Plains Agricultural Technologies Inc. in Colby, Kan.,
is getting slammed by Y2K. Davis needs $71,000 to make his
computer systems bug-free by Jan. 1. But he has been able to
rustle up only $39,000. His bank has denied him a loan
because--ironically--he's not Y2K-ready. But Davis knows he
must make the fixes or lose business. ``Our big customers
aren't going to wait much longer,'' he frets.
Golden Plains and thousands of other small businesses are
getting a dire ultimatum from the big corporations they sell
to: Get ready for Y2K, or get lost. Multinationals such as
General Motors, McDonald's, Nike, and Deere are making the
first quarter--or the second at the latest--the deadline for
partners and vendors to prove they're bug-free. A recent
survey by consultants Cap Gemini America says 69% of the
2,000 largest companies will stop doing business with
companies that can't pass muster. The National Federation of
Independent Business figures more than 1 million companies
with 100 workers or less won't make the cut and as many as
half could lose big chunks of business or even fail.
Weak Links. Cutting thousands of companies out of the
supply chain might strain supply lines and could even crimp
output. But most CEOs figure it'll be cheaper in the long run
to avoid bugs in the first place.
[[Page S4225]]
Some small outfits are already losing key customers. In the
past year, Prudential Insurance Co. has cut nine suppliers
from its ``critical'' list of more than 3,000 core vendors,
and it continues to look for weak links, says Irene Dec,
vice-president for information systems at the company. At
Citibank, says Vice-President Ravi Apte, ``cuts have already
been made.''
Suppliers around the world are feeling the pinch. Nike Inc.
has warned its Hong Kong vendors that they must prove they're
Y2K ready by Apr. 1. In India, Kishore Padmanabhan, vice-
president of Bombay's Tata Consultancy Services, says repairs
are runing 6 to 12 months behind. In Japan, ``small firms are
having a tough time making fixes and are likely to be the
main source of any Y2K problems,'' says Akira Ogata, general
research manager for Japan Information Service Users Assn.
Foreign companies operating in emerging economies such as
China, Malaysia, and Russia are particularly hard-pressed to
make Y2K fixes. In Indonesia, where the currency has
plummeted to 27% of its 1977 value, many companies still
don't consider Y2K a priority.
A December, 1998 World Bank survey shows that only 54 of
139 developing countries have begun planning for Y2K. Of
those, 21 are taking steps to fix problems, but 33 have yet
to take action. Indeed, the Global 2000 Coordinating Group,
an international group of more than 230 institutions in 46
countries, has reconsidered its December, 1998 promise to the
U.N. to publish its country-by-country Y2K-readiness ratings.
The problem: A peek at the preliminary list has convinced
some group members that its release could cause massive
capital flight from some developing countries.
Big U.S. companies are not sugar-coating the problem.
According to Sun Microsystems CEO Scott G. McNealy, Asia is
``anywhere from 6 to 24 months behind'' in fixing the Y2K
problem--one he says could lead to shortages of core
computers and disk drives early next year. Unresolved, says
Guy Rabbat, corporate vice-president for Y2K at Solectron
Corp. in San Jose, Calif., the problem could lead to price
hikes and costly delivery delays.
Thanks to federal legislation passed last fall allowing
companies to share Y2K data to speed fixes, Sun and other
tech companies, including Cisco Systems, Dell Computer,
Hewlett-Packard, IBM, Intel, and Motorola, are teaming up to
put pressure on the suppliers they judge to be least Y2K-
ready. Their new High-Technology Consortium on Year 2000 and
Beyond is building a private database of suppliers of
everything from disk drives to computer-mouse housings. He
says the group will offer technical help to laggard firms--
partly to show good faith if the industry is challenged later
in court. But ``if a vendor's not up to speed by April or
May,'' Rabbat says ``it's serious crunch time.''
Warnings. Other industries are following suit. Through the
Automotive Industry Action Group, GM and other carmakers have
set Mar. 31 deadlines for vendors to become Y2K-compliant. In
March, members of the Grocery Manufacturers of America will
meet with their counterparts from the Food Marketing
Institute to launch similar efforts. Other companies are
sending a warning to laggards--and shifting business to the
tech-savvy. ``Y2K can be a great opportunity to clean up and
modernize the supply chain,'' says Roland S. Boreham, Jr.,
chairman of the board of Baldor Electric Co, in Fort Smith,
Ark.
In Washington, Senators Christopher S. Bond (R-Mo.) and
Robert F. Bennett (R-Utah) have introduced separate bills to
make it easier for small companies like Davis' to get loans
and stay in business. And the World Bank has shelled out $72
million in loans and grants to Y2K-stressed nations,
including Argentina and Sri Lanka. But it may be too little
too late: AT&T alone has spent $900 million fixing its
systems.
Davis, for one, is not ready to quit. ``I've survived
tornadoes, windstorms, and drought,'' he says. ``We'll be
damaged, yes, but we'll survive.'' Sadly, not everyone will
be able to make that claim.
Mr. HOLLINGS. Through the Automotive Industry Action Group, GM and
other carmakers have set a March 31 deadline for vendors to become Y2K
compliant. In March, members of the Grocery Manufacturers of America
will meet with their counterparts from the Food Marketing Institute to
launch similar efforts. Other companies are sending warnings to
laggards and shifting business, so the text-savvy Y2K can be a great
opportunity to clean up and modernize the supply system.
The market is working. We pointed that out. In a report by none other
than Bill Gates at the World Economic Forum, they believe the
millennium bug, aside from some possible glitches in delivery and
supply, may pose only modest problems. Mr. Gates talked about it not
being a real problem.
I ask unanimous consent to have printed in the Record an article from
the New York Times, dated April 12, entitled ``Lawsuits Related to Y2K
Problem Start Trickling Into the Courts.''
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the New York Times, Apr. 12, 1999]
Lawsuits Related to Y2K Problem Start Trickling Into the Courts
(By Barnaby J. Feder)
A trickle of new lawsuits in recent months is expanding the
legal landscape of the Year 2000 computer problem. But so
far, the cases offer little support for the dire predictions
that courts will be choked by litigation over Y2K, as the
problem is known.
Some major equipment vendors, including IBM, AT&T and
Lucent Technologies Inc., for example, have joined the ranks
of those being sued for not forewarning customers that
equipment they sold in recent years cannot handle Year 2000
dates and for not supplying free upgrades.
A California suit claims that Circuit City Stores Inc.,
CompUSA Inc. and other mass-market retailers violated that
state's unfair business practices law by not warning
customers about Year 2000 problems in computers and other
equipment they sold. And an Alabama lawyer sued the state of
Alabama on behalf of two welfare recipients, asking that the
state be ordered to set aside money to upgrade its computer
systems to ensure that benefits will be delivered without
interruption.
Despite such skirmishes, though, which lawyers say only
offer hints of the wide variety of cases yet to come, there
is no sign yet of the kind of high-stakes damage suits that
some have projected could overwhelm courts with $1 trillion
in claims.
In fact, while Congress and many state legislatures are
suddenly awash in proposed laws meant to prevent such a tidal
wave, many lawyers actively involved with Year 2000 issues
now question just how big the litigation threat really is.
``There was more reason to be alarmed a year ago,'' said
Wynne Carvill, a partner at Thelen, Reid & Priest in San
Francisco, one of the first law firms to devote major
resources to Year 2000. ``People are finding things to fix
but not many that would shut them down.''
The work and the litigation stems from the practice in
older computers and software programs of using two digits to
denote the year in a date; some mistakenly read next year's
``00'' as meaning 1900, and others do not recognize it as a
valid number.
Somewhere between 50 and 80 cases linked to the Year 2000
problem have been filed so far, according to various
estimates. The vast majority focus on whether hardware and
software vendors are obligated to pay for fixing or replacing
equipment and programs that malfunction when they encounter
Year 2000 dates.
When such cases involve consumer products, a key issue has
been whether lawsuits could be filed before any malfunctions
have actually occurred. Plaintiff's lawyers have likened the
situation to a car known to have a safety hazard; Detroit
would be expected to take the initiative, send out recall
notices to car owners and pay for the fix before an accident
occurred, they say.
But in the major rulings so far, courts in California and
New York have concluded that the law in those states does not
treat the fast-changing, low-cost world of consumer software
like cars.
Actions against Intuit Inc., the manufacturer of Quicken, a
popular financial package, have been dismissed because
consumers were unable to demonstrate that they had already
been damaged.
Intuit has promised to make free software patches available
before next Jan. 1, but is fighting efforts by plaintiffs'
lawyers in California to force the company to compensuate
consumers who dealt with the problem by purchasing upgrades
before learning of the free fix.
The case against mass retailers, filed in Contra Costa
County, Calif., in January, argues that the stores violated a
state consumer protection statute by selling a wide array of
software, including Windows 98 and certain versions of
Quicken, Microsoft Works, Peachtree Accounting and Norton
Anti-Virus, without warning customers about potential Year
2000 problems or supplying free patches from the
manufacturers.
In cases where consumers were told of software defects, the
complaint contends, they were sometimes told that the least
expensive solution was to buy an upgrade from the store, even
though the manufacturers had a stated policy of providing
free patches.
The complaint also cites hardware with Year 2000 defects
that was sold in the stores without warning, including
equipment from Compaq Computer, NEC and Toshiba from 1995 to
1997. it also contends that as recently as this year, the
stores have been packaging a wide variety of new computers
with software that contains Year 2000 defects.
The stores have moved to dismiss the suit, arguing among
other things that failing to warn consumers about defects
does not amount to misleading them under the California law.
Many other cases have involved business software, services
and computer equipment, but lawyers describe them largely as
``plain vanilla'' contract disputes.
The first case to result in a settlement paying damages to
a plaintiff involved Produce Palace International, a Warren,
MI., grocery that had complained that its business had been
repeatedly interrupted by the failure of a computerized
checkout scanning system to read credit cards expiring in the
Year 2000. In the settlement, reached last November, the
vendor, TEC America Inc., an Atlanta-based unit of the TEC
Corp. of Japan, paid Produce Palace $250,000.
[[Page S4226]]
Several software manufacturers have settled suits on terms
that provide free upgrades and payments to the lawyers that
sued them. Last month, for example, a magistrate for U.S.
District Court in New Jersey approved a settlement that
provided up to $46 million in upgrades and $600,000 in cash
to doctors who had purchased billing management software from
Medical Manager Corp.
That is not the end of Year 2000 problems for Medical
Manager, which is based in Tampa, FL. It still has to contend
with a shareholder lawsuit filed in U.S. District Court in
Florida last fall after its stock tumbled on the news of the
New Jersey class-action suit. Several other shareholder suits
have been filed against other software companies based on
claims linking Year 2000 problems to stock declines.
In general, defendants have fared well in Year 2000
business software cases. Courts have strictly interpreted
contracts and licenses to prevent plaintiffs from collecting
on claims for upgrades or services unless they were
specifically called for in the contract.
In December, an Ohio court threw out a potential class-
action claim against Macola Inc., a software company,
contending that early versions of its accounting program with
Year 2000 defects should be upgraded for free because the
company advertised it as ``software you'll never outgrow.''
The court ruled that anyone actually licensing the software
accepted the explicit and very limited terms of the warranty
as all that Macola had legally promised. That decision has
been appealed.
One closely watched case involves the Cincinnati Insurance
Co.'s request that a U.S. District Court in Cedar Rapids,
Iowa, declare that the company is not obligated to defend or
reimburse a client that has been sued on an accusation that
it failed to provide hospital management software free of
Year 2000 defects.
It is the first case to raise the question of whether
insurance companies may be ultimately liable for much of the
hundreds of billions spent on Year 2000 repairs, if not
damages from breakdowns in the future. But lawyers say the
actual insurance policy at issue may not cover the crucial
years in the underlying suit against Cincinnati Insurance's
client. That wrinkle, they say, could let the insurer off the
hook without the court's shedding light on the larger issues.
``The results in the initial cases have dampened the fervor
somewhat,'' said Charles Kerr, a New York lawyer who heads
the Year 2000 section of the Practicing Law Institute, a
legal education group. ``Legislation could change the
landscape dramatically.''
Many lawyers say the momentum for some kind of action in
Congress looks unstoppable. Seven states have already barred
Year 2000 damage suits against themselves and similar
proposals were filed in 30 other legislatures this year. Some
states have already passed bills limiting private lawsuits as
well. A recent example, signed last Tuesday in Colorado,
gives businesses that attempt to address their Year 2000
risks stronger defenses against lawsuits; it also bans
punitive damages as a remedy in such litigation.
Mr. HOLLINGS. I ask unanimous consent to have printed in the Record
an article entitled ``Liability for the Millennium Bug'' from the New
York Times, dated April 26.
The being no objection, the article was ordered to be printed in the
Record, as follows:
[The New York Times, Apr. 26, 1999]
Liability for the Millennium Bug
With 249 days to go until the year 2000, many experts are
alarmed and others are only mildly concerned about the danger
of computer chaos posed by the so-called millennium bug. One
prediction seems safe, however. Whatever the damage, there
will be lots of lawsuits. In anticipation, some in Congress,
mainly Republicans, want legislation to limit the right of
people and businesses to sue in the event of a Y2K disaster.
Their reasoning is that the important thing is to get people
to fix their computer problems now rather than wait and sue.
But the legislation is misguided and potentially unfair. It
could even lessen the incentive for corrective action.
As most people know by now, the millennium bug arises from
the fact that chips and software have been coded to mark the
years with only two digits, so that when the date on
computers moves over to the year 2000, the computers may go
haywire when they register 1900 instead. A recent survey by a
Senate Special Committee on the Year 2000 found that while
many Government agencies and larger companies have taken
action to correct the bug, 50 percent of the country's small-
and medium-size businesses have not. The failure is
especially worrisome in the health sector, with many
hospitals and 90 percent of doctors' offices unprepared.
If hospitals, supermarkets, utilities and small businesses
are forced to shut down because of computer problems,
lawsuits against computer and software manufacturers will
certainly result. Some experts estimate that liability could
reach $1 trillion. Legislation to protect potential
defendants, sponsored by Senator John McCain of Arizona, is
expected to be voted on in the Senate this week. The bill
would impose caps on punitive damages and tighter standards
of proof of liability, and provide for a 90-day waiting
period in which the sued company would be allowed to cure the
problem. The bills would also suspend ``joint and several
liability,'' under which wealthy defendants, like chip or
software companies, could have to pay the full cost of
damages if other parties could not be sued because they were
overseas or unable to pay.
These provisions would curtail or even suspend a basic
protection, the right to sue, that consumers and businesses
have long enjoyed. The White House and the Congressional
Democratic leadership are right to view such a step as
unnecessary. Existing liability laws offer plenty of
protections for businesses that might be sued. Proponents of
the legislation argue, for example, that companies that make
good-faith efforts to alert customers of Y2K problems should
not be punished if the customers ignore the warning, or if
the companies bear only a small portion of the
responsibility. But state liability laws already allow for
these defenses. The larger worry is that the prospect of
immunity could dissuade equipment and software makers from
making the effort to correct the millennium-bug problem.
It might make sense to have a 90-day ``cooling off'' period
for affected businesses to get help to fix as many problems
as possible without being able to file lawsuits. But it would
be catastrophic if stores, small businesses and vital
organizations like hospitals and utilities were shut down for
90 days. They should have the same recourse to relief from
the parties that supplied them with faulty goods that any
other customer has.
Government can certainly help by providing loans, subsidies
and expertise to computer users and, perhaps, by setting up
special courts to adjudicate claims. Congress can also
clarify the liability of companies once it becomes clear how
widespread the problem really is. But before the new year,
the Government should not use the millennium bug to overturn
longstanding liability practices. A potential crisis is no
time to abrogate legal rights.
Mr. HOLLINGS. This article says a potential crisis is no time to
abrogate legal rights. They come out in opposition of this particular
legislation.
My colleague from Oregon says that has all been cleaned up by his
particular amendment. Not at all. I ask unanimous consent an article
from the Oregonian, dated March 22, be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
Y2K Escape Clause
(By Paul Gillin)
Faced with an almost certain flood of year 2000-related
litigation, industry groups are banding together to try to
limit their liability. Users should oppose those efforts with
all their power. This legal debate is tricky because the
combatants are equally opportunistic and unpleasant. On one
side is the Information Technology Association of America, in
alliance with various other industrial groups. They have
proposed a law that, among other things, would limit punitive
damages in year 2000 cases to triple damages and give
defendants 90 days to fix a problem before being named in a
suit. On the other side are lawyers' associations that
anticipate a bonanza of fees, even if the year 2000 problem
doesn't turn out to be that serious.
Hard as it is to find a good guy, you have to give the
lawyers their due. Year 2000 may be their opportunity, but it
isn't their problem.
The problem belongs--hook, line and sinker--to the vendors
that capriciously ignored warnings from as long ago as the
late '70s and that now are trying to buy a free pass from
Congress. It's appalling to look at the list of recent
software products that have year 2000 problems. It has been
five years since year 2000 awareness washed over the computer
industry, which makes it difficult to believe that products
such as Office 97 aren't fully compliant.
The industry players behind this legislation package are
the same ones that helped push through the Trojan horse
called the Year 2000 Information and Readiness Disclosure Act
last October. That bill provides vendors with a cloak of
legal protection based on past statements about efforts to
correct the problem. The industry players have tried to color
the bills as reasonable hedges against frivolous lawsuits
that will sap the legal system post-new year. Yet defendants
in personal injury and class-action suits enjoy no such
protections.
Vendors have had plenty of time to prepare for 2000. The
fact that some were more preoccupied with quarterly earnings
and stock options than in protecting their customers is no
excuse for giving them a get-out-of-jail-free card now.
Mr. HOLLINGS. One line in the article reads,
Sponsoring GOP Senators say this bill would provide
incentives for solving technical issues before failures
occur, but in fact it does just the opposite. It eliminates
the threat of lawsuits as a negative incentive for companies
that might otherwise neglect their responsibilities in
addressing their Y2K problems or reimbursing consumers for
their losses. Federal legislation that overrides
[[Page S4227]]
State courts is a serious infringement on States' rights that
merits only rare application, while a massive computer
meltdown meets that criteria. Congress passed the tightly-
crafted bipartisan bill to help companies work through the
problem.
As you can see from the Business Week article, they worked through
that problem.
Mr. President, there was some interesting testimony that we received
before our committee a few weeks back from a Dr. Robert Courtney. It is
talking about the cases.
Incidentally, I ask unanimous consent to print in the Record a letter
of yesterday from the Honorable Ronald N. Weikers.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Philadelphia, PA, April 26, 1999.
Re Y2K Legislation Unnecessary.
Mr. Moses Boyd,
Office of the Honorable Fritz Hollings, Washington, DC.
Dear Mr. Boyd: Thank you for speaking with me earlier.
Thirteen (13) of the 44 Y2K lawsuits that have been filed to
date have been dismissed entirely or almost entirely. Twelve
(12) cases have been settled for moderate sums or for no
money. The legal system is weeding out frivolous claims, and
Y2K legislation is therefore unnecessary.
Thirty-five (35) cases have been filed on behalf of
corporate entities, such as health care providers, retailers,
manufacturers, service providers and more. Nine (9) cases
have been filed on behalf of individuals. This trend will
continue. Thus, the same corporations that are lobbying for
Y2K legislation may be limiting their own rights to recover
remediation costs or damages.
I have studied the Y2K problem carefully from the legal
perspective, and have written a book entitled ``Litigating
Year 2000 Cases'', which will be published by West Group in
June. I frequently write and speak about this subject. I do
not represent any clients that have an interest in the
passage or defeat of any proposed Y2K legislation. Feel free
to call me, should you have any questions. Thank you very
much.
Very truly yours,
Ronald N. Weikers.
Mr. HOLLINGS. This letter is addressed to my staff, Mr. Moses Boyd.
It says:
Dear Mr. Boyd: Thank you for speaking with me earlier.
Thirteen (13) of the 44 Y2K lawsuits that have been filed to
date have been dismissed entirely or almost entirely. Twelve
(12) cases have been settled for moderate sums or for no
money. The legal system is weeding out frivolous claims, and
Y2K legislation is therefore unnecessary.
Thirty-five (35) cases have been filed on behalf of
corporate entities, such as health care providers, retailers,
manufacturers, service providers, and more. Nine (9) cases
have been filed on behalf of individuals. This trend will
continue. Thus, the same corporations that are lobbying for
Y2K legislation may be limiting their own rights to recover
remediation costs or damages.
I have studied the Y2K problem carefully from the legal
perspective, and have written a book entitled ``Litigating
Year 2000 Cases,'' which will be published by West Group in
June. I frequently write and speak about the subject. I do
not represent any clients that have an interest in the
passage or defeat of any proposed Y2K legislation. Feel free
to call me, should you have any questions. Thank you very
much. Very truly yours, Ronald N. Weikers, Attorney at Law,
Philadelphia, Pennsylvania.
Mr. President, there are things in here to emphasize. One is: ``I do
not represent any clients that have an interest in the passage or
defeat of any proposed Y2K legislation.'' And I emphasize that his book
will be published by the West Group in June. The month after next, in
about 5 or 6 weeks, this book will be coming out. I can tell you as a
practicing attorney that the West Group is not going to publish any
partisan political book or edition. It would not sell to the lawyers on
both sides. We like to look up and find the authorities, not political
arguments. The West Group is in that particular field professionally of
documenting in a research fashion the matter of Y2K cases in this
particular interest. I can tell you right now they have pretty good
evidence about what has been occurring.
What has been occurring is best evidenced by the testimony of Dr.
Robert Courtney before the Committee on Commerce, Science, and
Transportation on February 9 on S. 96, the Y2K Act. I ask unanimous
consent that his testimony be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
Testimony of Dr. Robert Courtney at the Senate Committee on Commerce,
Science, and Transportation Hearing on S. 96, the Y2K Act, February 9,
1999
Good morning, my name is Bob Courtney, and I am a doctor
from Atlantic County, New Jersey. It is an honor for me to be
here this morning, and I thank you for inviting me to offer
testimony on the Y2K issue.
As a way of background, I am an ob/gyn and a solo
practitioner. I do not have an office manager. It's just my
Registered Nurse, Diane Hurff, and me, taking care of my 2000
patients.
These days, it is getting tougher and tougher for those of
us who provide traditional, personalized medical services.
The paperwork required by the government on one hand, and by
insurance companies on the other is forcing me to spend fewer
hours doing what I do best--taking care of patients and
delivering their babies.
But it was a Y2K problem which recently posed a serious
threat to my practice, and that is why I am here this
morning.
As a matter of clarification, although I am a doctor, I am
not here to speak on behalf of the American Medical
Association. Although I am also a small businessman, I am not
here to speak on behalf of the Chamber of Commerce. I cannot
tell you who these organizations feel about the legislation
before the Committee. But I can tell you how it would have
affected my practice and my business.
I am one of the lucky ones. While a potential Y2K failure
impacted my practice, the computer vendor that sold me the
software system and I were able to reach an out-of-court
settlement which was fair and expedient. From what my
attorney, Harris Pogust, who is here with me today tells me,
I doubt I would have been so lucky had this legislation been
in effect.
In 1987, I purchased a computer system from Medical
Manager, one of the leading medical systems providers in the
country. I used the Medical Manager system for tracking
surgery, scheduling due dates and billing. The system worked
well for me for ten years, until the computer finally crashed
from lack of sufficient memory.
In 1996, I replaced my old system with a new, state of the
art pentium system from Medical Manager for $13,000. This was
a huge investment for a practice of my size.
I remember joking with the computer salesman at the time
that this was a big purchase for me, and that I was counting
on this system to last as long as the last one did.
I remember the salesman telling me that he was sure that I
would get at least ten years out of it. He showed me a list
of how many of his local customers had used the Medical
Manager for longer than ten years.
And, the salesman pointed me to this advertising brochure
put out by Medical Manager. It states that their product
would provide doctors with ``the ability to manage [their]
future.''
In truth, I never asked the salesman about whether the new
system that I was buying was Y2K compliant. I honestly did
not know even to ask the question. After all, I deliver
babies. I don't program computers. Based on the salesman's
statements and the brochure, I assumed the system would work
long into the future. After all, he had promised me over ten
years' use, which would take me to 2006.
But just one year later, I received a form letter from
Medical Manager telling me that the system I had just
purchased had a Y2K problem. It was a problem that would make
it impossible for me to schedule due dates or handle my
administrative tasks--as early as 1999.
Medical Manager also offered to fix the problem that they
had created--but for $25,000.
I was outraged, as I suspect anyone sitting around this
table would be. The original system had cost me $15,000 when
I purchased it in 1986. The upgraded system cost me $13,000
in 1996. Now, a year later, they wanted another $25,000. They
knew when they sold me the $13,000 system that it would need
this upgrade--but of course, they didn't tell me.
I wrote back to the company that I fully expected them to
fix the problem for free, since I had just bought the system
from them and I had been promised that it would work long
into the future.
The company ignored my request, however, and several months
later, sent me an estimate for fixing the problem--again, for
over $25,000.
At this point, I was faced with a truly difficult dilemma.
My practice depends on the use of a computer system to track
my patients' due dates, surgeries and billings--but I did not
have $25,000 to pay for an upgrade. Additionally, I was
appalled at the thought of having to pay Medical Manager for
a problem that they had created and should have anticipated.
If I had to pay that $25,000, that would force me to drop
many of my indigent patients that I now treat for free.
Since Medical Manager insisted upon charging me for the new
system, and because my one year-old system was no longer
dependable, I retained an attorney and sued Medical Manager
to fix or replace my computer system at their cost.
Within two months of filing our action, Medical Manager
offered to settle by providing all customers who bought a
non-Y2K compliant system from them after 1990 with a free
upgrade that makes their systems Y2K compliant by utilizing a
software ``patch.''
This settlement gave me what I wanted from Medical
Manager--the ability to use my computer system as it was
meant to be used. To my great satisfaction, the legal system
worked for me and the thousands of other doctors who bought
Medical Manager's products since 1990. In fact, since I
brought
[[Page S4228]]
my claim against Medical Manager, I have received numerous
telephone calls and letters from doctors across the country
who had similar experiences.
Additionally, even Medical Manager has stated that it was
pleased with the settlement. According to the Medical Manager
president who was quoted in the American Medical News,
``[f]or both our users and our shareholders, the best thing
was to provide a Y2K solution. This is a win for our users
and a win for us.'' [pick up article and display to Senators]
I simply do not see why the rights of doctors and other
small businesses to recover from a company such as Medical
Manager should be limited--which is what I understand this
bill would do. Indeed, my attorney tells me that if this
legislation had been in effect when I bought my system,
Medical Manager would not have settled. I would still be in
litigation, and might have lost my practice.
As an aside, at roughly the same time I bought the non-
compliant system from Medical Manager, I purchased a sonogram
machine from ADR. That equipment was Y2K compliant. The
Salesman never told me it was compliant. It was simply built
to last. Why should we be protecting the vendors or
manufacturers of defective products rather than rewarding the
responsible ones?
Also, as a doctor, I also hope the Committee will look into
the implications of this legislation for both patient health
and potential medical malpractice suits. This is an issue
that many doctors have asked me about, and that generates
considerable concern in the medical community.
In sum, I do appreciate this opportunity to share my
experiences with the Committee. I guess the main message I
would like to leave you with is that Y2K problems affect the
lives of everyday people like myself, but the current legal
system works. Changing the equation now could give companies
like Medical Manager an incentive to undertake prolonged
litigation strategies rather than agree to speedy and fair
out-of-court settlements.
I became a doctor, and a sole practitioner, because I love
delivering babies. I give each of my patients my home phone
number. I am part of their lives. This Y2K problem could have
forced me to give all that up. It is only because of my
lawyer, and the court system, that I can continue to be the
doctor that I have been. This bill, and others like it, would
take that away from me. Please don't do that. Leave the
system as it is. The court worked for me--and it will work
for others.
Thank you.
Mr. HOLLINGS. Mr. President, he is a doctor from Atlantic County, NJ.
I will not read it in its entirety, but he said:
. . . But it was a Y2K problem which recently posed a
serious threat to my practice, and that is why I am here this
morning.
. . . Although I am a doctor, I am not here to speak on
behalf of the [AMA]. Although I am a small businessman, I am
not here to speak on behalf of the Chamber of Commerce. I
cannot tell you how these organizations feel. . . . But I can
tell you how it would have affected my business.
I am one of the lucky ones. While a potential Y2K failure
impacted my practice, the computer vendor that sold me the
software system and I were able to reach an out-of-court
settlement which was fair and expedient.
. . . In 1987, I purchased a computer system from Medical
Manager, one of the leading medical systems providers in the
country. I used the Medical Manager system for tracking
surgery, scheduling due dates and billing.
Incidentally, that is very important for a doctor. If he gets sued
for malpractice, it might be based on his computer and not on his
professional treatment.
I go on to read:
. . . The system worked well for me for ten years, until
the computer finally crashed from lack of sufficient memory.
In 1996, I replaced my old system with a new, state of the
art pentium system from Medical Manager for $13,000. This was
a huge investment for a practice my size.
I remember joking with the computer salesman at the time
that this was a big purchase for me, and I was counting on
this system to last as long as the last one did--
which was over 10 years--
I remember the salesman telling me that he was sure that I
would get at least ten years out of it. He showed me a list
of how many of his local customers had used the Medical
Manager for longer than ten years.
Jumping down:
. . . one year later, I received a form letter from Medical
Manager telling me the system I had just purchased had a Y2K
problem. It was a problem that would make it impossible for
me to schedule due dates or handle my administrative tasks--
as early as 1999.
Medical Manager also offered to fix the problem that they
had created--but for $25,000.
He only paid $13,000.
I was outraged, as I suspect anyone sitting around this
table would be. The original system had cost me $15,000 when
I purchased it in 1986. The upgraded system cost me $13,000
in 1996. Now, a year later, they wanted another $25,000. They
knew when they sold me the $13,000 system that it would need
this upgrade--but, of course, they didn't tell me.
The company ignored my request, however, and several months
later, sent me an estimate for fixing the problem--again, for
$25,000.
But he said he didn't have the $25,000.
. . . I was appalled at the thought of having to pay
Medical Manager for a problem that they had created and
should have anticipated.
. . . I had to pay that $25,000. . .[so] I retained an
attorney and sued Medical Manager [under the present law].
. . . To my great satisfaction, the legal system worked for
me and the thousands of other doctors who bought Medical
Manager's products since 1990. In fact, since I brought my
claim against Medical Manager, I have received numerous
telephone calls and letters from doctors across the country
who had similar experiences.
I can go down the letter, Mr. President. The point is that he settled
the case that was for some $1,455,000 for 17,000 doctors.
I ask unanimous consent to print in the Record a note from Jack Emery
of the American Medical Association.
There being no objection, the note ordered to be printed in the
Record, as follows:
American Medical Association
Memo to: Washington Representatives, National Medical
Specialty Societies
From: Jack Emery 202/789-7414
Date: March 4, 1999
Subject: Legislation Addressing Y2K Liability
Several specialties have called to ask about the American
Medical Association's (AMA) position on H.R. 455 and S. 461.
The AMA is opposed to this legislation which would limit Y2K
liability. I've attached a copy of testimony the AMA
presented to the Ways and Means Committee last week on Y2K. I
call your attention to page nine of that testimony where we
address our specific concerns with this type of legislation.
We understand that Barnes Kaufman, a PR firm, is attempting
to schedule a meeting on this issue later this week to mount
opposition to such legislation. Someone from this office will
attend the meeting whenever it is scheduled.
Mr. HOLLINGS. Mr. President, this is dated March 4, 1999:
Several specialities have called to ask about the American
Medical Association's (AMA) position on H.R. 455 and S. 461.
The AMA is opposed to this legislation which would limit Y2K
liability.
I've attached a copy of testimony the AMA presented to the
Ways and Means Committee last week on Y2K. I call your
attention to page nine of that testimony where we address our
specific concerns with this type of legislation.
I ask unanimous consent to have printed in the Record that testimony
which was prepared before the committee on the House side.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Statement of Donald J. Palmisano, M.D., J.D., Member, Board of
Directors, and Chair, Development Committee, National Patient Safety
Foundation, and Member, Board of Trustees, American Medical Association
(Testimony Before the House Committee on Ways and Means--Hearing on the
Year 2000 Conversion Efforts and Implications for Beneficiaries and
Taxpayers, February 24, 1999)
Mr. Chairman and members of the Committee, my name is
Donald J. Palmisano, MD, JD. I am a member of the Board of
Trustees of the American Medical Association (AMA), a Board
of Directors member of the National Patient Safety Foundation
(NPSF) and the Chair of the Development Committee for the
same foundation. I also practice vascular and general surgery
in New Orleans, Louisiana. On behalf of the three hundred
thousands physician and medical student members of the AMA, I
appreciate the chance to comment on the issue of year 2000
conversion efforts and the implications of the year 2000
problem for health care beneficiaries.
Introduction
The year 2000 problem has arisen because many computer
systems, software and embedded microchips cannot properly
process date information. These devices and software can only
read the last two digits of the ``year'' field of data; the
first two digits are presumer to be ``19.'' Consequently,
when data requires the entry of a date in the year 2000 or
later, these systems, devices and software will be incapable
of correctly processing the data.
Currently, nearly all industries are in some manner
dependent on information technology, and the medical industry
is no exception. As technology advances and its contributions
mount, our dependency and consequent vulnerability become
more and more evident. The year 2000 problem is revealing to
us that vulnerability.
By the nature of its work, the medical industry relies
tremendously on technology, on computer sytems--both hardware
and software, as well as medical devices that have embedded
microchips. A survey conducted last year by the AMA found
that almost 90% of the nation's physicians are
[[Page S4229]]
using computers in their practices, and 40% are using them to
log patient histories.\1\ These numbers appear to be growing
as physicians seek to increase efficiency and effectiveness
in their practices and when treating their patients.
---------------------------------------------------------------------------
See footnotes end of article.
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Virtually every aspect of the medical profession depends in
some way on these systems--for treating patients, handling
administrative office functions, and conducting transactions.
For some industries, software glitches or even system
failures, can, at best, cause inconvenience, and at worst,
cripple the business. In medicine, those same software or
systems malfunctions can, much more seriously, cause patient
injuries and deaths.
Patient Care
Assessing the current level of risk attributable
specifically to the year 2000 problem within the patient care
setting remains problematic. We do know, however, that the
risk is present and it is real. Consider for a minute what
would occur if a monitor failed to sound an alarm when a
patient's heart stopped beating. Or if a respirator delivered
``unscheduled breaths'' to a respirator-dependent patient. Or
even if a digital display were to attribute the name of one
patient to medical data from another patient. Are these
scenarios hypothetical, based on conjecture? No. Software
problems have caused each one of these medical devices to
malfunction with potentially fatal consequences.\2\ The
potential danger is present.
The risk of patient injury is also real. Since 1986, the
FDA has received more than 450 reports identifying software
defects--not related to the year 2000--in medical devices.
Consider one instance--when software error caused a radiation
machine to deliver excessive doses to six cancer patients;
for three of them the software error was fatal.\3\ We can
anticipate that, left unresolved, medical device software
malfunctions due to the millennium bug would be prevalent and
could be serious.
Medical device manufacturers must immediately disclose to
the public whether their products are Y2K compliant.
Physicians and other health care providers do not have the
expertise or resources to determine reliably whether the
medical equipment they possess will function properly in the
year 2000. Only the manufacturers have the necessary in-depth
knowledge of the devices they have sold.
Nevertheless, medical device manufacturers have not always
been willing to assist end-users in determining whether their
products are year 2000 compliant. Last year, the Acting
Commissioner of the FDA, Dr. Michael A. Friedman, testified
before the U.S. Senate Special Committee on the Year 2000
Problem that the FDA estimated that only approximately 500 of
the 2,700 manufacturers of potentially problematic equipment
had even responded to inquiries for information. Even when
vendors did respond, their responses frequently were not
helpful. The Department of Veterans Affairs reported last
year that of more than 1,600 medical device manufacturers it
had previously contacted, 233 manufacturers did not even
reply and another 187 vendors said they were not responsible
for alterations because they had merged, were purchased by
another company, or were no longer in business. One hundred
two companies reported a total of 673 models that were not
compliant but should be repaired or updated this year.\4\
Since July 1998, however, representatives of the
manufacturers industry have met with the Department of
Veterans Affairs, the FDA, the AMA and others to discuss
obstacles to compliance and have promised to do more for the
health care industry.
administrative
Many physicians and medical centers are also increasingly
relying on information systems for conducting medical
transactions, such as communicating referrals and
electronically transmitting prescriptions, as well as
maintaining medical records. Many physician and medical
center networks have even begun creating large clinical data
repositories and master person indices to maintain,
consolidate and manipulate clinical information, to increase
efficiency and ultimately to improve patient care. If these
information systems malfunction, critical data may be lost,
or worse--unintentionally and incorrectly modified. Even an
inability to access critical data when needed can seriously
jeopardize patient safety.
Other administrative aspects of the Y2K problem involve
Medicare coding and billing transactions. In the middle of
last year, HCFA issued instructions through its contractors
informing physicians and other health care professionals that
electronic and paper claims would have to meet Y2K compliance
criteria by October 1, 1998. In September 1998, however, HCFA
directed Medicare carriers and fiscal intermediaries not to
reject or ``return as unprocessable'' any electronic media
claims for non-Y2K compliance until further notice. That
notice came last month. In January 1999, HCFA instructed both
carriers and fiscal intermediaries to inform health care
providers, including physicians, and suppliers that claims
received on or after April 5, 1999, which are not Y2K
compliant will be rejected and returned as unprocessable.
We understand why HCFA is taking this action at this time.
We genuinely hope, however, that HCFA, to the extent
possible, will assist physicians and other health care
professionals who have been unable to achieve Y2K compliance
by April 5. We have been informed that HCFA has decided to
grant physicians additional time, if necessary, for
reasonable good faith exceptions, and we strongly support
that decision. Physicians are genuinely trying to comply with
HCFA's Y2K directives. In fact, HCFA has already represented
that 95% of the electronic bills being submitted by
physicians and other Medicare Part B providers already meet
HCFA's Y2K filing criteria. HCFA must not withhold
reimbursement to, in any sense, punish those relatively few
health care professionals who have lacked the necessary
resources to meet HCFA's Y2K criteria. Instead, physicians
and HCFA need to continue to work together to make sure that
their respective data processing systems are functioning
properly for the orderly and timely processing of Medicare
claims data.
We also hope that HCFA's January 1999 instructions are not
creating a double standard. According to the instructions.
HCFA will reject non-Y2K compliant claims from physicians,
other health care providers and suppliers. HCFA however
has failed to state publicly whether Medicare contractors
are under the same obligation to meet the April 5th
deadline. Consequently, after April 5th non-compliant
Medicare contractors will likely continue to receive
reimbursement from HCFA while physicians, other health
care providers, and suppliers that file claims not meeting
HCFA's Y2K criteria will have their claims rejected. this
inequity must be corrected.
Medicare administrative issues are of critical importance
to patients, physicians, and other health care professionals.
In one scenario that took place in my home state of
Louisiana, Arkansas Blue Cross & Blue Shield, the Medicare
claims processor for Louisiana, implemented a new computer
system--intended to be Y2K compliant--to handle physicians'
Medicare claims. Although physicians were warned in advance
that the implementation might result in payment delays of a
couple of weeks, implementation problems resulted in
significantly longer delays. For many physicians, this became
a real crisis. Physicians who were treating significant
numbers of Medicare patients immediately felt significant
financial pressure and had to scramble to cover payroll and
purchase necessary supplies.\5\
We are encouraging physicians to address the myriad
challenges the Y2K dilemma poses for their patients and their
practices, which include claims submission requirements. The
public remains concerned however that the federal government
may not achieve Y2K compliance before critical deadlines. An
Office of Management and Budget report issued on December 8,
1998, disclosed that the Department of Health and Human
Services is only 49% Y2K compliant.\6\ In a meeting last
week, though, HCFA representatives stated that HCFA has made
significant progress towards Y2K compliance, specifically on
mission critical systems. In any case, we believe that HCFA
should lead by example and have its systems in compliance as
quickly as possible to allow for adequate parallel testing
with physician claims submission software and other health
care professionals. Such testing would also allow for further
systems refinements, if necessary.
reimbursement and implementation of BBA
To shore up its operations, HCFA has stated that it will
concentrate on fixing its internal computers and systems. As
a result, it has decided not to implement some changes
required under the Balanced Budget Act (BBA) of 1997, and it
plans to postpone physicians' payment updates from January 1,
2000, to about April 1, 2000.
In the AMA's view, the Y2K problem is and has been an
identifiable and solvable problem. Society has known for many
years that the date problem was coming and that individuals
and institutions needed to take remedial steps to address the
problem. There is no justification for creating a situation
where physicians, hospitals and other providers now are being
asked to pay for government's mistakes by accepting a delay
in their year 2000 payment updates.
HCFA has indicated to the AMA that the delay in making the
payment updates is not being done to save money for the
Medicare Trust Funds. In addition, the agency has said that
the eventual payment updates will be conducted in such a way
as to fairly reimburse physicians for the payment update they
should have received. In other words, the updates will be
adjusted so that total expenditures in the year 2000 on
physician services are no different than if the updates had
occurred on January 1.
We are pleased that HCFA has indicated a willingness to
work with us on this issue. But we have grave concerns about
the agency's ability to devise a solution that is equitable
and acceptable to all physicians.
Also, as it turns out, the year 2000 is a critical year for
physicians because several important BBA changes are
scheduled to be made in the resource-based relative value
scale (RMRVS) that Medicare uses to determine physician
payments. This relative value scale is comprised of three
components: work, practice expense, and malpractice expense.
Two of the three--practice expense and malpractice--are due
to undergo Congressionally-mandated modifications in the year
2000.
In general, the practice expense changes will have
different effects on the various specialities. Malpractice
changes, to some modest degree, would offset the practice
expense
[[Page S4230]]
redistributions. To now delay one or both of these changes
will have different consequences for different medical
specialties and could put HCFA at the eye of storm that
might have been avoided with proper preparation.
To make matters worse, we also are concerned that delays in
Medicare's reimbursement updates could have consequences far
beyond the Medicare program. Many private insurers and state
Medicaid agencies base their fee-for-service payment systems
on Medicare's RBRVS. Delays in reimbursement updates caused
by HCFA may very well lead other non-Federal payers to follow
Medicare's lead, resulting in a much broader than expected
impact on physicians.
Current Level of Preparedness
Assessing the status of the year 2000 problem is difficult
not only because the inventory of the information systems and
equipment that will be affected is far from complete, but
also because the consequences of noncompliance for each
system remain unclear. Nevertheless, if the studies are
correct, malfunctions in noncompliant systems will occur and
equipment failures can surely be anticipated. The analyses
and surveys that have been conducted present a rather bleak
picture for the health care industry in general, and
physicians' practices in particular.
The Odin Group, a health care information technology
research and advisory group, for instance, found from a
survey of 250 health care managers that many health care
companies by the second half of last year still had not
developed Y2K contingency plans.\7\ The GartnerGroup has
similarly concluded, based on its surveys and studies, that
the year 2000 problem's ``effect on health care will be
particularly traumatic . . . [l]lives and health will be at
increased risk. Medical devices may cease to function.'' \8\
In its report, it noted that most hospitals have a few
thousand medical devices with microcontroller chips, and
larger hospital networks and integrated delivery systems have
tens of thousands of devices.
Based on early testing, the GartnerGroup also found that
although only 0.5-2.5 percent of medical devices have a year
2000 problem, approximately 5 percent of health care
organizations will not locate all the noncompliant devices in
time.\9\ It determined further that most of these
organizations do not have the resources or the expertise to
test these devices properly and will have to rely on the
device manufacturers for assistance.\10\
As a general assessment, the GartnerGroup concluded that
based on a survey of 15,000 companies in 87 countries, the
health care industry remains far behind other industries in
its exposure to the year 2000 problem.\11\ Within the health
care industry, the subgroups which are the furthest behind
and therefore at the highest risk are ``medical practices''
and ``in-home service providers.'' \12\ The GartnerGroup
extrapolated that the costs associated with addressing the
year 2000 problem for each practice group will range up to
$1.5 million per group.\13\
Remediation Efforts--AMA's Efforts
We believe that through a united effort, the medical
profession in concert with federal and state governments can
dramatically reduce the potential for any adverse effects
with the medical community resulting from the Y2K problem.
For its part, the AMA has been devoting considerable
resources to assist physicians and other health care
providers in learning about and correcting the problem.
For nearly a year, the AMA has been educating physicians
through two of its publications, AMNews and the Journal of
the American Medical Association (JAMA). AMNews, which is a
national news magazine widely distributed to physicians and
medical students, has regularly featured articles over the
last twelve months discussing the Y2K problem, patient safety
concerns, reimbursement issues, Y2K legislation, and other
related concerns. JAMA, one of the world's leading medical
journals, will feature an article written by the
Administrator of HCFA, explaining the importance for
physicians to become Y2K compliant. The AMA, through these
publications, hopes to raise the level of consciousness among
physicians of the potential risks associated with the year
2000 for their practices and patients, and identify avenues
for resolving some of the anticipated problems.
The AMA has also developed a national campaign entitled
``Moving Medicine Into the New Millennium: Meeting the Year
2000 Challenge,'' which incorporates a variety of
educational seminars, assessment surveys, promotional
information, and ongoing communication activities designed
to help physicians understand and address the numerous
complex issues related to the Y2K problem. The AMA is
currently conducting a series of surveys to measure the
medical profession's state of readiness, assess where
problems exist, and identify what resources would best
reduce any risk. The AMA already has begun mailing the
surveys, and we anticipate receiving responses in the near
future. The information we obtain from this survey will
enable us to identify which segments of the medical
profession are most in need of assistance, and through
additional timely surveys, to appropriately tailor our
efforts to the specific needs of physicians and their
patients. The information will also allow us to more
effectively assist our constituent organizations in
responding to the precise needs of other physicians across
the country.
One of the many seminar series the AMA sponsors is the
``Advanced Regional Response Seminars'' program. We are
holding these seminars in various regions of the country and
providing specific, case-study information along with
practical recommendations for the participants. The seminars
also provide tips and recommendations for dealing with
vendors and explain various methods for obtaining beneficial
resource information. Seminar participants receive a Y2K
solutions manual, entitled ``The Year 2000 Problem:
Guidelines for Protecting Your Patients and Practice.'' This
seventy-five page manual, which is also available to hundreds
of thousands of physicians across the country, offers a host
of different solutions to Y2K problems that physicians will
likely face. It raises physicians' awareness of the problem,
year 2000 operational implications for physicians' practices,
and identifies numerous resources to address the issue.
In addition, the AMA has opened a web site (URL: www.ama-
assn.org) to provide the physician community additional
assistance to better address the Y2K problem. The site serves
as a central communications clearinghouse, providing up-to-
date information about the millennium bug, as well as a
special interactive section that permits physicians to post
questions and recommended solutions for their specific Y2K
problems. The site also incorporates links to other sites
that provide additional resource information on the year 2000
problem.
On a related note, the AMA in early 1996 began forming the
National Patient Safety Foundation or ``NPSF.'' Our goal was
to build a proactive initiative to prevent avoidable injuries
to patient in the health care system. In developing the NPSF,
the AMA realized that physicians, acting alone, cannot always
assure complete patient safety. In fact, the entire community
of providers is accountable to our patients, and we all have
a responsibility to work together to fashion a systems
approach to identifying and managing risk. It was this
realization that prompted the AMA to launch the NPSF as a
separate organization, which in turn partnered with other
health care organizations, health care leaders, research
experts and consumer groups from throughout the health care
sector.
One of these partnerships is the National Patient Safety
Partnership (NPSP), which is a voluntary public-private
partnership dedicated to reducing preventable adverse medical
events and convened by the Department of Veterans Affairs.
Other NPSP members include the American Hospital Association,
the Joint Commission on Accreditation of Healthcare
Organizations, the American Nurses Association, the
Association of America Medical Colleges, the Institute for
Healthcare Improvement, and the National Patient Safety
Foundation at the AMA. The NPSP has made a concerted effort
to increase awareness of the year 2000 hazards that patients
relying on certain medical devices could face at the turn of
the century.
Recommendations
As an initial step, we recommend that the Administration or
Congress work closely with the AMA and other health care
leaders to develop a uniform definition of ``compliant'' with
regard to medical equipment. There needs to be clear and
specific requirements that must be met before vendors are
allowed to use the word ``compliant'' in association with
their products. Because there is no current standard
definition, it may mean different things to different
vendors, leaving physicians with confusing, incorrect, or no
data at all. Physicians should be able to spend their time
caring for patients and not be required to spend their time
trying to determine the year 2000 status of the numerous
medical equipment vendors with whom they work.
We further suggest that both the public and private sectors
encourage and facilitate health care practitioners in
becoming more familiar with year 2000 issues and taking
action to mitigate their risks. Greater efforts must be made
in educating health care consumers about the issues
concerning the year 2000, and how they can develop Y2K
remediation plans, properly test their systems and devices,
and accurately assess their exposure. We recognize and
applaud the efforts of this Committee, the Congress, and the
Administration in all of your efforts to draw attention to
the Y2K problem and the medical community's concerns.
We also recommend that communities and institutions learn
from other communities and institutions that have
successfully and at least partially solved the problem.
Federal, state and local agencies as well as accrediting
bodies that routinely address public health issues and
disaster preparedness are likely leaders in this area. At the
physician level, this means that public health physicians,
including those in the military, organized medical staff, and
medical directors, will need to be actively involved for a
number of reasons. State medical societies can help take a
leadership role in coordinating such assessments.
We also must stress that medical device and software
manufacturers need to publicly disclose year 2000 compliance
information regarding products that are currently in use. Any
delay in communicating this information may further
jeopardize practitioners' efforts at ensuring compliance. A
strategy needs to be developed to more effectively motivate
all manufacturers to promptly provide compliance status
reports. Additionally, all compliance information should be
accurate, complete, sufficiently detailed and readily
understandable to physicians. We
[[Page S4231]]
suggest that the Congress and the federal government enlist
the active participation of the FDA or other government
agencies in mandating appropriate reporting procedures for
vendors. We highly praise the Department of Veterans Affairs,
the FDA, and others who maintain Y2K web sites on medical
devices and offer other resources, which have already helped
physicians to make initial assessments about their own
equipment.
We are aware that the ``Year 2000 Information and Readiness
Disclosure Act'' was passed and enacted into law last year,
and is intended to provide protection against liability for
certain communications regarding Y2K compliance. Although the
AMA strongly believes that information must be freely shared
between manufacturers and consumers, we continue to caution
against providing liability caps to manufacturers in exchange
for the Y2K information they may provide, for several
reasons. First, as we have stated, generally vendors alone
have the information about whether their products were
manufactured to comply with year 2000 data. These
manufacturers should disclose that information to their
consumers without receiving an undue benefit from a liability
cap.
Second, manufacturers are not the only entities involved in
providing medical device services, nor are they alone at risk
if an untoward event occurs. When a product goes through the
stream of commerce, several other parties may incur some
responsibility for the proper functioning of that product,
from equipment retailers to equipment maintenance companies.
Each of these parties, including the end-user--the
physician--will likely retain significant liability exposure
if the device malfunctions because of a Y2K error. However,
none of these parties will typically have had sufficient
knowledge about the product to have prevented the Y2K error,
except the device manufacturer. To limit the manufacturer's
liability exposure under these circumstances flies in the
face of sound public policy.
We also have to build redundancies and contingencies into
the remediation efforts as part of the risk management
process. Much attention has been focused on the vulnerability
of medical devices to the Y2K bug, but the problem does not
end there. Patient injuries can be caused as well by a
hospital elevator that stops functioning properly. Or the
failure of a heating/ventilation/air conditioning system. Or
a power outage. The full panoply of systems that may break
down as our perception of the scope of risk expands may not
be as easily delineated as the potential problems with
medical devices. Building in back-up systems as a fail-safe
for these unknown or more diffuse risks is, therefore,
absolutely crucial.
As a final point, we need to determine a strategy to notify
patients in a responsible and professional way. If it is
determined that certain medical devices may have a problem
about which patients need to be notified, this needs to be
anticipated and planned. Conversely, to the extent we can
reassure patients that devices are compliant, this should be
done. Registries for implantable devices or diagnosis- or
procedure-coding databases may exist, for example, which
could help identify patients who have received certain
kinds of technologies that need to be upgraded and/or
replaced or that are compliant. This information should be
utilized as much as possible to help physicians identify
patients and communicate with them.
As we approach the year 2000 and determine those segments
of the medical industry which we are confident will weather
the Y2K problem well, we will all need to reassure the
public. We need to recognize that a significant remaining
concern is the possibility that the public will overreact to
potential Y2K-related problems. The pharmaceutical industry,
for instance, is already anticipating extensive stockpiling
of medications by individuals and health care facilities. In
addition to continuing the remediation efforts, part of our
challenge remains to reassure patients that medical treatment
can be effectively and safely provided through the transition
into the next millennium.
conclusion
We appreciate the Committee's interest in addressing the
problems posed by the year 2000, and particularly, those
problems that relate to physicians. Because of the broad
scope of the millennium problem and physicians' reliance on
information technology, we realize that the medical community
has significant exposure. The Y2K problem will affect patient
care, practice administration, and Medicare/Medicaid
reimbursement. The AMA, along with the Congress and other
organizations, seeks to better educate the health care
community about Y2K issues, and assist health care
practitioners in remedying, or at least reducing the impact
of, the problem. The public and private sectors must
cooperate in these endeavors, while encouraging the
dissemination of compliance information.
footnotes
\1\ ``Doctors Fear Patients Will Suffer Ills of the
Millennium Bug; Many Are Concerned That Y2K Problem Could
Erroneously Mix Medical Data--Botching Prescriptions and Test
Results,'' Los Angeles Times, Jan. 5, 1999, p. A5.
\2\ Anthes, Gary H., ``Killer Apps; People are Being Killed
and Injured by Software and Embedded Systems,''
Computerworld, July 7, 1997.
\3\ Id.
\4\ Morrissey, John, and Weissenstein, Eric, ``What's
Bugging Providers,'' Modern Healthcare, July 13, 1998, p. 14.
Also, July 23, 1998 Hearing Statement of Dr. Kenneth W.
Kizer, Undersecretary for Health Department of Veterans
Affairs, before the U.S. Senate Special Committee on the Year
2000 Technology Problem.
\5\ ``Year 2000 Bug Bites Doctors; Glitch Stymies Payments
for Medicare Work,'' The Times-Picayune, June 6, 1998, page
C1.
\6\ ``Clinton Says Social Security is Y2K Ready,'' Los
Angeles Times, December 29, 1998, p. A1. See ``Government
Agencies Behind the Curve on Y2K Issue,'' Business Wire,
January 28, 1999 (stating that Computer Week on November 26,
1998 reported only a 34% Y2K compliance level for the
Department of Health and Human Services).
\7\ ``Health Care Not Y2K-Ready--Survey Says Companies
Underestimate Need For Planning; Big Players Join Forces,''
Information Week, January 11, 1999.
\8\ GartnerGroup, Kenneth A. Kleinberg, ``Healthcare
Worldwide Year 2000 Status,'' July 1998 Conference
Presentation, p. 2 (hereinafter, GartnerGroup).
\9\ Id. at p. 8.
\10\ Id.
\11\ Id. at p. 10.
\12\ Id. at p. 13.
\13\ Id
Mr. HOLLINGS. I do not want to mislead. As I understand, as of this
morning my staff contacted Mr. Emery. And they said that the AMA is not
openly opposing the legislation, but if there is going to be
legislation, they want to be taken care of. They want all the tort
things to take care of them, too.
Mr. WYDEN addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. I ask unanimous consent to speak for 3 minutes just to
briefly respond to several of the points made by the Senator from South
Carolina.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. WYDEN. Thank you, Mr. President. I will be very brief.
I specifically want to talk on this matter with respect to the
evidence which would be considered in these suits. The sponsors of the
substitute have made it very clear in the Senate that we will strike
the clear and convincing evidence standard. It is an important point
that the Senator from South Carolina has made.
What we have indicated is that we think it is in the public interest
to essentially use the standard the Senate adopted in the Year 2000
Information and Readiness Disclosure Act which passed overwhelmingly in
the Senate. So we have something already with a strong level of
bipartisan support, and it is an indication again that the sponsors of
the substitute want to be sympathetic and address the points being made
by the Senator from South Carolina.
But at the end of the day, this is not legislation about trial
lawyers or campaign finance. And I have not mentioned either of those
subjects on the floor of the Senate. But this is about whether or not
the Senate is going to act now, when we have a chance to address this,
in a deliberative way, and produce good Government--something which
will make sense for consumers and plaintiffs who are wronged and at the
same time ensure that we do not have tumult in the marketplace early
next year.
I am very hopeful we can go forward with this legislation.
I thank the Presiding Officer for the opportunity to respond. I yield
the floor.
Mr. HOLLINGS. Mr. President, I ask unanimous consent I may address
the Senate for 1 minute.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. HOLLINGS. Mr. President, I am reading page 30. The language
there--the last 3 lines; 23, 24, and 25--``The defendant is not liable
unless the plaintiff establishes that element of the claim in
accordance with the evidentiary standard required,'' which is the
greater weight by the preponderance of the evidence. That is lined out.
And written--and I understand in Chairman McCain's handwriting--here,
``by clear and convincing evidence.''
Again on page 31 of the particular bill under consideration, on lines
19 and 20, ``in accordance with the evidentiary standard required'' is
lined out; and inserted in lieu thereof ``by clear and convincing
evidence.''
That is why I addressed it that way. That is what we have before us.
I thank the Chair.
____________________