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105th Congress                                            Rept. 105-465
 2nd Session            HOUSE OF REPRESENTATIVES             Part 1
_______________________________________________________________________


 
              RICKY RAY HEMOPHILIA RELIEF FUND ACT OF 1998

                                _______
                                

                 March 25, 1998.--Ordered to be printed

                                _______


 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 1023]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1023) to provide for compassionate payments with 
regard to individuals with blood-clotting disorders, such as 
hemophilia, who contracted human immunodeficiency virus due to 
contaminated blood products, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           1
Purpose and Summary........................................           5
Background and Need for the Legislation....................           5
Hearings...................................................           8
Committee Consideration....................................           9
Committee Oversight Findings...............................           9
Committee on Government Reform and Oversight Findings......           9
New Budget Authority and Tax Expenditures..................           9
Congressional Budget Office Cost Estimate..................           9
Constitutional Authority Statement.........................          13
Section-by-Section Analysis and Discussion.................          13
Agency Views...............................................          16

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Ricky Ray 
Hemophilia Relief Fund Act of 1998''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

                    TITLE I--HEMOPHILIA RELIEF FUND

Sec. 101. Ricky Ray Hemophilia Relief Fund.
Sec. 102. Compassionate payment relating to individuals with blood-
clotting disorders and HIV.
Sec. 103. Determination and payment.
Sec. 104. Limitation on transfer of rights and number of petitions.
Sec. 105. Time limitation.
Sec. 106. Certain claims not affected by payment.
Sec. 107. Limitation on agent and attorney fees.
Sec. 108. Definitions.

     TITLE II--TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN 
  HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID AND SSI PROGRAMS

Sec. 201. Treatment of certain private settlement payments in 
hemophilia-clotting-factor suit under the Medicaid and SSI programs.

                    TITLE I--HEMOPHILIA RELIEF FUND

SEC. 101. RICKY RAY HEMOPHILIA RELIEF FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a trust fund to be known as the ``Ricky Ray Hemophilia 
Relief Fund'', which shall be administered by the Secretary of the 
Treasury.
    (b) Investment of Amounts in Fund.--Amounts in the Fund shall be 
invested in accordance with section 9702 of title 31, United States 
Code, and any interest on and proceeds from any such investment shall 
be credited to and become part of the Fund.
    (c) Availability of Fund.--Amounts in the Fund shall be available 
only for disbursement by the Secretary of Health and Human Services 
under section 103.
    (d) Termination.--The Fund shall terminate upon the expiration of 
the 5-year period beginning on the date of the enactment of this Act. 
If all of the amounts in the Fund have not been expended by the end of 
the 5-year period, investments of amounts in the Fund shall be 
liquidated, the receipts of such liquidation shall be deposited in the 
Fund, and all funds remaining in the Fund shall be deposited in the 
miscellaneous receipts account in the Treasury of the United States.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to the Fund to carry out this title $750,000,000.

SEC. 102. COMPASSIONATE PAYMENT RELATING TO INDIVIDUALS WITH BLOOD-
                    CLOTTING DISORDERS AND HIV.

    (a) In General.--If the conditions described in subsection (b) are 
met and if there are sufficient amounts in the Fund to make each 
payment, the Secretary shall make a single payment of $100,000 from the 
Fund to any individual who has an HIV infection and who is described in 
one of the following paragraphs:
            (1) The individual has any form of blood-clotting disorder, 
        such as hemophilia, and was treated with antihemophilic factor 
        at any time during the period beginning on July 1, 1982, and 
        ending on December 31, 1987.
            (2) The individual --
                    (A) is the lawful spouse of an individual described 
                in paragraph (1); or
                    (B) is the former lawful spouse of an individual 
                described in paragraph (1) and was the lawful spouse of 
                the individual at any time after a date, within the 
                period described in such subparagraph, on which the 
                individual was treated as described in such paragraph 
                and through medical documentation can assert reasonable 
                certainty of transmission of HIV from individual 
                described in paragraph (1).
            (3) The individual acquired the HIV infection through 
        perinatal transmission from a parent who is an individual 
        described in paragraph (1) or (2).
    (b) Conditions.--The conditions described in this subsection are, 
with respect to an individual, as follows:
            (1) Submission of medical documentation of hiv infection.--
        The individual submits to the Secretary written medical 
        documentation that the individual has an HIV infection.
            (2) Petition.--A petition for the payment is filed with the 
        Secretary by or on behalf of the individual.
            (3) Determination.--The Secretary determines, in accordance 
        with section 103(b), that the petition meets the requirements 
        of this title.

SEC. 103. DETERMINATION AND PAYMENT.

    (a) Establishment of Filing Procedures.--The Secretary of Health 
and Human Services shall establish procedures under which individuals 
may submit petitions for payment under this title. The procedures shall 
include a requirement that each petition filed under this Act include 
written medical documentation that the relevant individual described in 
section 102(a)(1) has (or had) a blood-clotting disorder, such as 
hemophilia, and was treated as described in such section.
    (b) Determination.--For each petition filed under this title, the 
Secretary shall determine whether the petition meets the requirements 
of this title.
    (c) Payment.--
            (1) In general.--To the extent there are sufficient amounts 
        in the Fund to cover each payment, the Secretary shall pay, 
        from the Fund, each petition that the Secretary determines 
        meets the requirements of this title in the order received.
            (2) Payments in case of deceased individuals.--
                    (A) In general.--In the case of an individual 
                referred to in section 102(a) who is deceased at the 
                time that payment is made under this section on a 
                petition filed by or on behalf of the individual, the 
                payment shall be made as follows:
                            (i) If the individual is survived by a 
                        spouse who is living at the time of payment, 
                        the payment shall be made to such surviving 
                        spouse.
                            (ii) If the individual is not survived by a 
                        spouse described in clause (i), the payment 
                        shall be made in equal shares to all children 
                        of the individual who are living at the time of 
                        the payment.
                            (iii) If the individual is not survived by 
                        a person described in clause (i) or (ii), the 
                        payment shall be made in equal shares to the 
                        parents of the individual who are living at the 
                        time of payment.
                            (iv) If the individual is not survived by a 
                        person described in clause (i), (ii), or (iii), 
                        the payment shall revert back to the Fund.
                    (B) Filing of petition by survivor.--If an 
                individual eligible for payment under section 102(a) 
                dies before filing a petition under this title, a 
                survivor of the individual may file a petition for 
                payment under this title on behalf of the individual if 
                the survivor may receive payment under subparagraph 
                (A).
                    (C) Definitions.--For purposes of this paragraph:
                            (i) The term ``spouse'' means an individual 
                        who was lawfully married to the relevant 
                        individual at the time of death.
                            (ii) The term ``child'' includes a 
                        recognized natural child, a stepchild who lived 
                        with the relevant individual in a regular 
                        parent-child relationship, and an adopted 
                        child.
                            (iii) The term ``parent'' includes fathers 
                        and mothers through adoption.
            (3) Timing of payment.--The Secretary may not make a 
        payment on a petition under this title before the expiration of 
        the 120-day period beginning on the date of the enactment of 
        this Act or after the expiration of the 5-year period beginning 
        on the date of the enactment of this Act.
    (d) Action on Petitions.--The Secretary shall complete the 
determination required by subsection (b) regarding a petition not later 
than 120 days after the date the petition is filed under this title.
    (e) Humanitarian Nature of Payment.--This Act does not create or 
admit any claim of or on behalf of the individual against the United 
States or against any officer, employee, or agent thereof acting within 
the scope of employment or agency that relate to an HIV infection 
arising from treatment with antihemophilic factor, at any time during 
the period beginning on July 1, 1982, and ending on December 31, 1987. 
A payment under this Act shall, however, when accepted by or on behalf 
of the individual, be in full satisfaction of all such claims by or on 
behalf of that individual.
    (f) Administrative Costs Not Paid From Fund.--No costs incurred by 
the Secretary in carrying out this title may be paid from the Fund or 
set off against, or otherwise deducted from, any payment made under 
subsection (c)(1).
    (g) Termination of Duties of Secretary.--The duties of the 
Secretary under this section shall cease when the Fund terminates.
    (h) Treatment of Payments Under Other Laws.--A payment under 
subsection (c)(1) to an individual--
            (1) shall be treated for purposes of the internal revenue 
        laws of the United States as damages received on account of 
        personal injuries or sickness;
            (2) shall not be included as income or resources for 
        purposes of determining the eligibility of the individual to 
        receive benefits described in section 3803(c)(2)(C) of title 
        31, United States Code, or theamount of such benefits, and such 
benefits shall not be secondary to, conditioned upon reimbursement 
from, or subject to any reduction because of receipt of, any such 
payment; and
            (3) shall not be treated as a third party payment or 
        payment in relation to a legal liability with respect to such 
        benefits and shall not be subject (whether by subrogation or 
        otherwise) to recovery, recoupment, reimbursement, or 
        collection with respect to such benefits (including the Federal 
        or State governments or any entity that provides such benefits 
        under a contract).
    (i) Regulatory Authority.--The Secretary may issue regulations 
necessary to carry out this title.
    (j) Time of Issuance of Procedures.--The Secretary shall, through 
the promulgation of appropriate regulations, guidelines, or otherwise, 
first establish the procedures to carry out this title not later than 
120 days after the date of the enactment of this Act.

SEC. 104. LIMITATION ON TRANSFER OF RIGHTS AND NUMBER OF PETITIONS.

    (a) Rights Not Assignable or Transferable.--Any right under this 
title shall not be assignable or transferable.
    (b) 1 Petition With Respect to Each Victim.--With respect to each 
individual described in paragraph (1), (2), or (3) of section 102(a), 
the Secretary may not make payment with respect to more than 1 petition 
filed in respect to an individual.

SEC. 105. TIME LIMITATION.

    The Secretary may not make any payment with respect to any petition 
filed under this title unless the petition is filed within 3 years 
after the date of the enactment of this Act.

SEC. 106. CERTAIN CLAIMS NOT AFFECTED BY PAYMENT.

    A payment made under section 103(c)(1) shall not be considered as 
any form of compensation, or reimbursement for a loss, for purposes of 
imposing liability on the individual receiving the payment, on the 
basis of such receipt, to repay any insurance carrier for insurance 
payments or to repay any person on account of worker's compensation 
payments. A payment under this title shall not affect any claim against 
an insurance carrier with respect to insurance or against any person 
with respect to worker's compensation.

SEC. 107. LIMITATION ON AGENT AND ATTORNEY FEES.

    Notwithstanding any contract, the representative of an individual 
may not receive, for services rendered in connection with the petition 
of an individual under this title, more than 2 percent of a payment 
made under this title on the petition. Any such representative who 
violates this section shall be fined not more than $50,000.

SEC. 108. DEFINITIONS.

    For purposes of this title:
            (1) The term ``AIDS'' means acquired immune deficiency 
        syndrome.
            (2) The term ``Fund'' means the Ricky Ray Hemophilia Relief 
        Fund.
            (3) The term ``HIV'' means human immunodeficiency virus.
            (4) Unless otherwise provided, the term ``Secretary'' means 
        Secretary of Health and Human Services.

     TITLE II--TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN 
  HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID AND SSI PROGRAMS

SEC. 201. TREATMENT OF CERTAIN PRIVATE SETTLEMENT PAYMENTS IN 
                    HEMOPHILIA-CLOTTING-FACTOR SUIT UNDER THE MEDICAID 
                    AND SSI PROGRAMS.

    (a) In General.--Notwithstanding any other provision of law, a 
settlement payment shall not be considered income or resources in 
determining a class member's eligibility for, or the amount of--
            (1) medical assistance under title XIX of the Social 
        Security Act, or
            (2) supplemental security income benefits under title XVI 
        of such Act.
    (b) Definitions.--For purposes of this section:
            (1) Class member.--The term ``class member'' means a member 
        of the Settlement Class in the settlement in In Re Factor VIII 
        or IX Concentrate Blood Products Litigation (United States 
        District Court, Northern District of Illinois, Eastern 
        Division; Civil Action No. 96-C-5024).
            (2) Settlement payment.--The term ``settlement payment'' 
        means a payment to a class member under the settlement 
        described in paragraph (1).

    Amend the title so as to read:

      A bill to provide for compassionate payments with regard 
to individuals with blood-clotting disorders, such as 
hemophilia, who contracted human immunodeficiency virus due to 
contaminated antihemophilic factor, and for other purposes.

                          Purpose and Summary

    H.R. 1023, the ``Ricky Ray Hemophilia Relief Fund Act of 
1997,'' provides ``compassionate payments'' to individuals with 
blood-clotting disorders, such as hemophilia, who contracted 
human immunodeficiency virus (HIV) due to the contaminated 
blood product anti-hemophilic factor (AHF).
    H.R.1023 establishes a $750 million ``Ricky Ray Hemophilia 
Relief Fund,'' which will fund the payments. Each eligible 
individual would receive a $100,000 payment. The following 
persons would be eligible for this payment: (1) an individual 
with a blood-clotting disorder who used anti-hemophilic factor 
at any time between July 1, 1982 and December 31, 1987; (2) a 
lawful spouse or former lawful spouse during the stated time 
period; or (3) an individual who acquired HIV from the mother 
during pregnancy. In the case of a deceased individual, payment 
would be made to the surviving spouse, children, or parents, in 
that order. If the individual is not survived by any of these 
individuals the payment will revert back to the fund.

                Background and Need For the Legislation

    In the late 1970s and early 1980s, half of all people with 
hemophilia (approximately 7,200 individuals, the majority of 
which are male) were infected with HIV due to their use of 
anti-hemophilic factor (AHF) blood-clotting products. Before 
the identification of and tests to detect its presence, HIV 
entered the blood supply. During this period, because people 
with blood-clotting disorders needed to use these products to 
live a relatively normal life, and each dose came from a pool 
of thousands of blood donors, it was almost certain that they 
would become HIV-infected. People with blood-clotting disorders 
were already financially burdened by the medical costs of 
treating that disorder. With yearly medical costs of over 
$150,000, and a lack of legal remedy available to them, these 
families have been financially devastated.
Chronology of Events
    In June 1981, the Morbidity & Mortality Weekly Report noted 
cases of Pneumocystis carinii pneumonia (PCP) in previously 
healthy homosexual men. In July 1982, the first three cases of 
Pneumocystis carinii pneumonia were reported in individuals 
with hemophilia A. That same month, the Department of Health 
and Human Services held a forum to discuss whether the three 
cases 
of PCP in persons with hemophilia were related to the 
infections occurring in the gay community. The participants in 
that forum included government agencies, the National 
Hemophilia Foundation, the American Red Cross, the National Gay 
Task Force, blood banking organizations and public health 
organizations. At that time, because of insufficient data, 
there was no consensus about whether individuals with 
hemophilia were in a similar situation to that of the gay 
community.
    In the spring of 1983, heat-treated anti-hemophilic factor 
became available in the United States. The original approval 
was based upon the belief that the heat process would 
neutralize non-A/non-B hepatitis.
    In December 1983, the first individuals with hemophilia B 
were reported to have AIDS-like symptoms. At that time, there 
were approximately 25 cases of AIDS identified in individuals 
with hemophilia.
    In April 1984, the causative agent responsible for 
transmission of AIDS was isolated and identified, making it 
possible to expand scientific knowledge about the disease and 
its mode of transmission.
    In 1985, the National Hemophilia Foundation recommended 
that only heat-treated AHF be used to treat hemophilia, and 
heat-treated AHF was widely accepted as effective in 
deactivating HIV. In March 1985, a test to screen blood 
products for the AIDS virus became available.
    In April 1993, Senators Kennedy and Graham and Congressman 
Goss requested that the Department of Health and Human Services 
(HHS) open an investigation into the events leading to the 
transmission of HIV to individuals with hemophilia from 
contaminated blood products. HHS requested that the Institute 
of Medicine (IOM) establish a Committee to study the 
transmission of HIV through the blood supply.
    Several cases were filed against the industry by HIV-
infected individuals with hemophilia. In September of 1993, the 
case of Wadleigh v. Rhone-Poulenc, Rorer, Inc. was filed. On 
August 17, 1994, the U.S. District Court for the Northern 
District of Illinois ordered the certification of that case as 
a class action. In March 1995, the U.S. Court of Appeals for 
the Seventh Circuit granted a writ of mandamus and directed the 
district judge to decertify the class in part because allowing 
the certification of the class could have resulted in the 
bankruptcy of the industry.
    On July 13, 1995, the IOM Committee's 1995 study, entitled 
``HIV and the Blood Supply,''was released.
    On May 1, 1997, the U.S. District Court for the Northern 
District of Illinois approved a private settlement between the 
four pharmaceutical companies that made anti-hemophilic factor 
and HIV-infected individuals with hemophilia who used their 
product. Under the terms of the settlement, the companies 
created a $600 million settlement fund for persons infected 
with HIV through their use of AHF. Each member of the 
settlement class can receive $100,000 from that fund.
Basis for Humanitarian Payments
    A federal Maternal and Child Health Bureau ongoing cost and 
utilization study for 1996-97 placed the average annual medical 
costs for an HIV-positive person with severe hemophilia at 
$168,480.
    In reviewing the 1995 Institute of Medicine Study in its 
entirety, this Committee found that there were many things that 
could have been done differently based on the knowledge 
available today. However, based on the accepted standards 
during that period, the actions taken were reasonable when 
considering all the uncertainty surrounding the AIDS virus. 
Therefore, rather than basing assistance to the hemophilia 
community on any one interpretation of the past, this Act 
provides needed humanitarian assistance to these individuals 
without conflicting with current law and precedent on 
government liability.
    The majority of cases brought by other blood users, such as 
transfusion and cryoprecipitate victims, have been litigated or 
settled. In transfusion cases where a primary provider or small 
child was infected, settlements usually were for several 
hundred thousands of dollars. The majority of HIV-infected 
people with hemophilia (approximately 84%) were males under 45, 
and 34% of those were under the age of 25. After many years of 
litigation, the industry which produced the blood-clotting 
products containing HIV has set up a fund which provides 
$100,000 to HIV-infected individuals with hemophilia and their 
families, if they sign waivers relieving the industry of any 
liability. However, when considering the incredible financial 
burden placed on these families due to medical costs and, in 
many cases, loss of the primary provider in the family, this 
amount will not sufficiently lift this community out of the 
financial crisis that has developed. While no amount will 
completely alleviate the losses felt by this community, H.R. 
1023 provides an additional payment equal to that provided by 
the industry. The amount available to these devastated families 
would then be comparable to that potentially realized by other 
HIV-infected blood victims through separate individual 
settlements.
Summary of Changes in H.R. 1023 as Recommended by the Committee
    The amendment in the nature of a substitute adopted by the 
Committee removed the findings provisions of the original bill. 
An extensive review of the historical background upon which 
this legislation was based has not led to any consensus. As 
stated earlier, these payments, made pursuant to the 
legislation, are not based on any one interpretation of the 
past. The amendment in the nature of a substitute provides this 
assistance based on the belief that this community needs 
humanitarian assistance.
    H.R. 1023, as introduced, conflicted with law and precedent 
because it required government compensation for claims based 
upon the regulatory actions of the Government. The 
discretionary function exception \1\ to the Federal Tort Claims 
Act bars suits based on the discretionary acts of the 
Government. That provision has been consistently interpreted by 
the courts to bar claims against the Federal government growing 
out of their regulatory activities. As a practical matter, the 
Government regulates many things. If the bar on these claims 
was eliminated, the enormous amount of potential suits would 
interfere with the fair and efficient governance of the 
country.
---------------------------------------------------------------------------
    \1\ 28 U.S.C. 2680(a).
---------------------------------------------------------------------------
    In the amendment in the nature of a substitute, all 
references to blood/blood products have been changed to anti-
hemophilic factor for conformity and to indicate the Committee 
intends to address only users of this particular type of blood 
product.
    The original bill authorized $900,000,000 because the 
individual payments would have been $125,000. The amendment in 
the nature of a substitute authorizes $750,000,000 because the 
individual payments will be $100,000 to match the industry's 
contribution to the community.
    The reference to an estate being the primary recipient of 
the funds should the person be deceased in the original bill 
was deleted. In the case of a deceased individual, payment can 
only go first to a spouse, then to children and finally to 
parents. If none of those survivors exists, the money goes back 
to fund. This change reflects the intent to assist only the 
immediate family of those infected.
    Time periods for the Secretary to establish regulations and 
review applications were changed to 120 days instead of 90 
days. These changes were made at the request of the Department 
of Health and Human Services.
    The original bill provided an option of a series of 
payments. The bill now provides only for a lump sum payment.
    The original provision titled ``Satisfaction of Claims 
Against the Government'' was replaced by ``Humanitarian Nature 
of Payment'' with a portion of the original language 
incorporated in that section to fully protect the Government. 
This more clearly shows the intent of the Committee that this 
assistance is humanitarian, and that this assistance is not 
based on any valid claim against the Government.
    The provision for ``Judicial Review'' was deleted. Because 
this is a required payment, judicial review is already 
available to these individuals in the Court of Federal Claims.
    The language ``to receive compensation under this title for 
harm suffered by the individual'' was deleted and replaced with 
``in respect to an individual.'' The original language did not 
reflect the humanitarian nature of payment.
    The bill now provides that 2 percent of the money is 
allowed for attorney fees, instead of the 5 percent allowed in 
the original bill.

                                Hearings

    The Committee's Subcommittee on Immigration and Claims held 
one day of hearings on H.R. 1023 on September 19, 1996. 
Testimony was received from the Honorable Mike DeWine; the 
Honorable Porter J. Goss; Philip R. Lee, M.D., Assistant 
Secretary for Health, Department of Health and Human Services; 
Eva M. Plaza, Deputy Assistant Attorney General, Civil 
Division, Department of Justice; Dana A. Kuhn, Ph.D.; Louise 
Ray; Deborah K. Noriega; Loras J. Goedken; Joyce Lawson; 
Michael A. Stoto, Ph.D., Director, Division of Health Promotion 
and Disease Prevention, Institute of Medicine, National Academy 
of Sciences; Jay Tidmarsh, Associate Professor of Law, Notre 
Dame Law School; Andrew R. Klein, Associate Professor of Law, 
Samford University, Cumberland School of Law; Robert W. Reilly, 
Executive Director, International Plasma Products Industry 
Association; Mark Meyer, Cunningham, Meyer & Vedrine, 
Representing the National Hemophilia Foundation; and Thomas F. 
Zuck, M.D., Director, Hoxworth Blood Center, University of 
Cincinnati Medical Center, Representing the American 
Association of Blood Banks, with additional material submitted 
by Lynn Martin of Oakland, Michigan; John A. Lanzon of 
Southfield, Michigan; Mr. Bob Baldwin; Warren P. Ingram of 
Lawrenceville, Georgia; Robert P. Falkenstein of Philadelphia, 
Pennsylvania; the American Blood Resources Association; and 
James B. Reed, Esquire.

                        Committee Consideration

    On October 29, 1997, the Committee met in open session and 
ordered reported favorably the bill H.R. 1023 with an amendment 
by voice vote, a quorum being present.

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 1023, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 20, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1023, the Ricky 
Ray Hemophilia Relief Fund Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Anne 
Cappabianca, who can be reached at 226-9010, and Eric Rollins, 
who can be reached at 226-2820.
            Sincerely,

                                           June E. O'Neill, Director.  
    Enclosure.

    cc: Hon. John Conyers, Jr.,
         Ranking Minority Member.

H.R. 1023--Ricky Ray Hemophilia Relief Fund Act of 1998
            Summary
    H.R. 1023 would authorize $750 million to make compensatory 
payments to hemophiliacs who contracted HIV from an 
antihemophilic factor, and to certain of their family members. 
By accepting payments, individuals would agree that any claim 
they have against the federal government would be fully 
satisfied. The bill also would exclude from eligibility 
determinations for Medicaid and Supplemental Security Income 
(SSI) benefits settlement payments from a private class action 
lawsuit by hemophiliacs who contracted HIV.
    Assuming the authorized amounts would be appropriated, CBO 
estimates that H.R. 1023 would result in additional 
discretionary spending of $767 million over the 1998-2003 
period. The bill would also increase direct spending by $17 
million and therefore be subject to pay-as-you-go procedures. 
H.R. 1023 does not contain any intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
of 1995.
            Estimated Cost to the Federal Government
    The estimated budgetary impact of H.R. 1023 is shown in the 
following table. For the purposes of this estimate, CBO assumes 
an enactment date of July 1, 1998.

                                                                                                                
                                    [By Fiscal Year, In Millions Of Dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
Authorization Level.......................................      752        3        3        3        3        2
Estimated Outlays.........................................        2      116      228      228      116       77
                                                 DIRECT SPENDING                                                
Estimated Budget Authority................................        1        4        4        3        3        2
Estimated Outlays.........................................        1        4        4        3        3        2
----------------------------------------------------------------------------------------------------------------

    The costs of this legislation fall within budget functions 
550 (Health) and 600 (Income Security).
            Basis of Estimate
Title I
    H.R. 1023 would authorize $750 million to be placed in a 
trust fund, from which compensatory payments would be made to 
qualified claimants. Eligible claimants include individuals 
with blood-clotting disorders who contracted HIV from 
contaminated antihemophilic factor between July 1, 1982, and 
December 1, 1987. Spouses of these patients also qualify as 
claimants, provided they demonstrate that they contracted HIV 
from their infected spouse. Finally, any children of these 
couples who contracted HIV perinatally could petition for 
payments. Claimants must be able to submit medical 
documentation of their HIV status, a hemophilia diagnosis, and 
the date of the antihemophilic factor treatment.
    The Secretary of Health and Human Services would administer 
the trust fund, which would pay $100,000 to each approved 
claimant. Claims would be paid in the order received until the 
fund is depleted. However, the Secretary could make payments 
for only five years after enactment of the bill. For the 
purposes of this estimate, CBO assumes that payments would 
equal the amount authorized.
    If a claimant died before filing a petition, his survivors 
could submit a petition in his name. If the claimant died 
before the claim was settled, payment would be made to his 
spouse, children, or parents, in that order. In accepting these 
payments, petitioners would agree that any claims they have 
against the government or its agents are fully satisfied.
    The bill provides that all claims must be filed within 
three years of its enactment. Therefore, CBO assumes that the 
majority of payments from the fund would occur during the first 
four years of the program's operation. We also assume that 
payments would not start until fiscal year 1999, when outlays 
would total $113 million.
    H.R. 1023 specifies that, for tax purposes, payments from 
the fund would be considered damages received on account of 
personal injuries or sickness. However, this provision would 
not affect federal revenues since, under current law, there 
would be no compensatory payments that could be taxed. The bill 
also stipulates that, in determining eligibility for Medicaid 
or other entitlement benefits under section 3803(c)(2)(C) of 
title 31 of the United States Code, payments to claimants could 
not be counted as income or resources.
    Under the proposal, individuals accepting payments from the 
fund agree not to pursue any further claim against the federal 
government. These claims might have taken the form of 
individual lawsuits against the federal government, or of a 
class-action lawsuit. CBO cannot estimate the amount of the 
government's liability, if any, under current law. However, it 
is possible that this provision of the bill could yield some 
savings to the federal government.
    Finally, the bill would require that administrative costs 
not be paid from the fund's appropriation. Based on the 
administrative costs of other, similar federal trust funds, CBO 
estimates that the fund's administrative costs would be $2 
million in 1998, and $16 million over the 1998-2003 period.
Title II
    H.R. 1023 would exempt settlement payments arising from the 
1997 class action lawsuit In Re Factor VIII or IX Concentrate 
Blood Products Litigation from consideration as income or 
resources in determining eligibility for Medicaid or SSI 
benefits. The In Re Factor VIII or IX settlement resolves 
claims by hemophiliacs who contracted HIV through contaminated 
blood products against the manufacturers of those blood 
products. Under the settlement, hemophiliacs or their survivors 
would receive a payment of $100,000 per case of HIV infection. 
These settlement payments have already been exempted from 
Medicaid eligibility determinations by the Balanced Budget Act 
of 1997.
    Under current law, settlement payments are treated as 
income in SSI eligibility determinations. The size of the 
payments in the In Re Factor VIII or IX settlement would almost 
certainly make individuals currently receiving SSI ineligible. 
H.R. 1023 thus preserves SSI eligibility for a group of people 
who would otherwise become ineligible.
    Approximately 3,250 hemophiliacs who have contracted HIV 
through tainted blood products are currently alive. Of this 
total, CBO estimates that 1,250 people are receiving SSI 
benefits. A small number of these individuals would not be 
affected by the bill because they will place their settlement 
payments in a special needs trust, which preserves their SSI 
eligibility. The estimated cost of preserving SSI eligibility 
for the remaining beneficiaries will be $1 million in 1998, $4 
million in 1999, and less in subsequent years.
            Pay-As-You-Go Considerations
    The provisions of Title II of this bill would affect direct 
spending and would therefore be subject to pay-as-you-go 
procedures. The pay-as-you-go effects of the bill are shown in 
the following table. For the purposes of enforcing pay-as-you-
go procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.

                                                                                                                                                        
                                                        [By Fiscal Year, In Millions Of Dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1998     1999     2000     2001     2002     2003     2004     2005     2006     2007     2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in outlays....................................        1        4        4        3        3        2        2        2        1        1        1
                                                            Change in receipts Not applicable                                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------

            Estimated Impact on State, Local, and Tribal Governments
    H.R. 1023 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act of 1995 (UMRA). By 
excluding payments from the In Re Factor VIII or IX settlement 
from being used to consider SSI eligibility, some SSI 
recipients would remain eligible for state benefits. However, 
CBO estimates that the cost of these benefits would be less 
than $500,000 annually and that states have sufficient 
authority to amend their financial or programmatic 
responsibilities to offset these costs.
            Estimated Impact on the Private Sector
    None.
            Estimate Prepared By:
    Federal Costs: Anne Cappabianca (Title I) (226-9010), Eric 
Rollins (Title II) (226-2820); Impact on State, Local, and 
Tribal Governments: Leo Lex (225-3220); Impact on the Private 
Sector: Julia Matson (226-2674);
            Estimate Approved By:
    Paul N. Van de Water, Assistant Director for Budget 
Analysis.

                   Constitutional Authority Statement

    Pursuant to Rule XI, clause 2(l)(4) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article 1, section 1, clause 8, of the 
Constitution.

                      Section-By-Section Analysis

Section 1. Short Title; Table of Contents
    Section 1 provides that the short title of this bill will 
be the ``Ricky Ray Hemophilia Relief Fund Act of 1998.'' A 
technical amendment to change ``1997'' to ``1998'' was added to 
reflect the year the act is anticipated to be enacted. This 
section also contains the table of contents.
Section 101. Ricky Ray Hemophilia Relief Fund
    This section lays out the structure of the fund.
    Subsection (a) establishes the fund in the Treasury and 
indicates the fund will be administered by the Secretary of the 
Treasury.
    Subsection (b) directs that the amounts in the fund will be 
invested in accordance with law concerning investment of trust 
funds held by the Government (they shall be invested in 
Government obligations, and earn interest of at least 5% 
annually) and any proceeds shall become part of the Fund.
    Subsection (c) indicates that the funds will only be 
available for disbursement by the Secretary of Health and Human 
Services.
    Subsection (d) directs that the fund shall terminate 5 
years after enactment, and that at that time all funds 
remaining will be deposited into the miscellaneous receipts 
account of the Treasury.
    Finally, subsection (e) authorizes $750,000,000 to be 
appropriated to the fund. This legislation does not create any 
entitlement. The payments may be made only to the extent that 
sums are appropriated for this purpose.
Section 102. Compassionate Payment Relating To Individuals With Blood-
        clotting Disorders and HIV
    This section lays out the amount of the payment; the type 
of individuals who qualify; and the conditions for payment. A 
technical amendment was included in this section at the request 
of the Congressional Budget Office.
    Subsection (a) states that if conditions of this section 
are met by an individual with HIV, a single payment of $100,000 
will be made to that individual. This section defines 
individuals who are eligible to be: (1) a HIV-infected 
individual who was treated with anti-hemophilic factor at any 
time during the period beginning on July 1, 1982 and ending on 
December 31, 1987; (2) a HIV-infected individual who was the 
lawful spouse of a person as described in (1) or a former 
lawful spouse who was a lawful spouse of a person as described 
in (1) during the above mentioned time period; or (3) an 
individual who acquired the HIV infection through perinatal 
transmission from a parent who is an individual described in 
(1) or (2).
    Subsection (b) sets out the conditions under which an 
individual may receive payment. Those conditions are: 1) 
submission of medical documentation of HIV infection; 2) filing 
of a petition for payment with the Secretary of HHS; and 3) a 
determination by the Secretary that the petition meets the 
requirements of this title.
Section 103. Determination and Payment
    This section states that the Secretary shall pay from the 
Fund each petition which meets the requirements in Title I of 
the Act. A technical amendment was included in this section at 
the request of the Congressional Budget Office.
    Subsection (a) directs the Secretary of HHS to set up 
procedures for submission of petitions for payments. It 
specifically directs that those procedures include written 
medical documentation.
    Subsection (b) directs the Secretary of HHS to make a 
determination for each petition filed.
    Subsection (c) directs the Secretary to pay each petition 
that meets the requirements of the Act. In the case of deceased 
individual, this subsection directs that payment be made first 
to a surviving spouse, then to all children, and lastly to 
parents of the deceased. If there are no survivors within those 
categories, the payment reverts back to the Fund. This 
subsection also provides definitions for purposes of this 
section. The term ``spouse'' means an individual lawfully 
married to the deceased at the time of death. The term 
``child'' includes a natural child, a step-child who lived with 
the deceased in a regular parent/child relationship, and an 
adopted child. The term ``parent'' shall include fathers and 
mothers through adoption. Finally, this subsection directs that 
the Secretary cannot make payment on petitions before 120 days 
after enactment or 120 days after the 5-year period beginning 
on the date of enactment.
    Subsection (d) restricts the time the Secretary of HHS has 
to consider a petition to 120 days after the date the petition 
is filed.
    Subsection (e) states that payment under this bill will be 
humanitarian in nature. It further states that this act does 
not create or admit any claim and that any alleged claim by an 
individual would be satisfied by this payment.
    Subsection (f) states that no costs incurred by HHS in 
carrying out the act will be deducted from the Fund.
    Subsection (g) states that the duties of the Secretary end 
when the Fund terminates.
    Subsection (h) lays out the way that the payments are to be 
interpreted under other laws. First, the payments are to be tax 
exempt. Second, the payments are not to be considered income 
when determining a person's eligibility for benefits such as 
SSI, Medicaid, food stamps, etc. Third, it provides that a 
state government, the federal government, or an entity which 
provides those benefits cannot seek reimbursement from the 
payments to reimburse funds expended for an individual.
    Subsection (i) indicates the Secretary may issue 
regulations necessary to carry out this legislation.
    Subsection (j) directs the Secretary to establish all 
regulations and procedures to carry out the Act within 120 days 
of enactment.
Section 104. Limitation On Transfer Of Rights And Number Of Petitions
    Subsection (a) states that no rights given in this bill are 
transferrable.
    Subsection (b) states that only one payment made be made on 
a petition for an individual.
Section 105. Time Limitation
    This section restricts payment by the Secretary to only 
petitions filed within three years of enactment.
Section 106. Certain Claims Not Affected By Payment
    This section states that a payment will not be considered 
compensation or reimbursement for a loss for purposes of 
repayments to insurance carriers or entities which have 
provided workman's compensation. Nor shall it affect any claim 
an individual has against an insurance carrier or against a 
person with respect to workman's compensation.
Section 107. Limitation on Agent and Attorney Fees
    This section directs that no more than 2% of this payment 
can be paid for attorney fees. Any violators of this section 
may be fined up to $50,000.
Section 108. Definitions
    This section sets out the definitions for terms used in the 
Act. ``AIDS'' is defined as meaning acquired immune deficiency 
syndrome. ``Fund'' is defined as meaning the Ricky Ray 
Hemophilia Relief Fund. ``HIV'' is defined as meaning human 
immunodeficiency virus. ``Secretary'' is defined as meaning the 
Secretary of Health and Human Services unless otherwise 
provided.
Section 201. Treatment Of Certain Private Settlement Payments In 
        Hemophilia-Clotting-Factor Suit Under The Medicaid And SSI 
        Programs.
    Subsection (a) of this section directs that any monies 
received by an individual from the private settlement with 
industry will not affect that individual's eligibility for 
Medicaid or supplemental security income benefits.
    Subsection (b) defines ``class member'' as a member of the 
settlement class in In Re Factor VIII or IX Concentrate Blood 
Products Litigation (United States District Court, Northern 
District of Illinois, Eastern Division; Civil Action No. 96-C-
5024); and ``settlement payment'' as a payment to a class 
member described in this subsection.

                              Agency Views

    The comments of the Department of Health and Human Services 
on H.R. 1023, as introduced in the 104th Congress, are as 
follows:
                The Secretary of Health and Human Services,
                                      Washington, DC, June 5, 1996.
Hon. Lamar Smith, Chairman,
Subcommittee on Immigration and Claims
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman:  This is in response to your request for 
the views of the Department of Health and Human Services on 
H.R. 1023, the ``Ricky Ray Hemophilia Relief fund Act of 
1995.'' The Department of Justice concurs with these views.
    H.R. 1023 would create a compensation fund for individuals 
(or the estates or survivors of individuals) who have HIV 
infection and who either (i) have hemophilia or a similar 
blood-clotting disorder and were treated with blood-clotting 
agents during the period from January 1, 1980, through December 
31, 1987, or (ii) are the spouses or children of such 
individuals. The bill would authorize appropriations to the 
fund of $1 billion, and would entitle each individual who 
demonstrated eligibility to receive $125,000 from amounts 
available in the fund. The program would terminate five years 
after enactment.
    On behalf of the Administration, let me first express our 
deep concern about the tragedy that has so affected the 
hemophilia community with respect to HIV transmission through 
blood and blood products. We have great sympathy for the 
victims and their families who suffered and continue to suffer 
from consequences of the contamination of antihemophilic 
factors in the 1980s.
    In recognition of this tragedy, in July 1993 this 
Department asked the National Academy of Sciences; Institute of 
Medicine (IOM) to conduct a rigorous review of Federal blood 
regulation during the 1980s. The IOM reported back to us in 
July 1995. As a result of information gained in that review, we 
have instituted several blood safety reforms, including the 
establishment of an interagency Blood Safety Committee to 
monitor the safety at blood products. As you know, however, the 
IOM review found no negligence in the Federal Government's 
regulation of blood products in the 1980s. Rather, the IOM 
determined that during a period of tremendous scientific 
uncertainty, our scientists made good-faith decisions based on 
available data. These same Federal government scientists later 
discovered that heat treatment of blood products kills HIV. By 
March 1995, FDA approved tests to identify HIV in blood. These 
tests were rapidly put into widespread use. Additionally, 
between 1983 and 1985, FDA approved heat treatment methods of 
viral inactivation for manufacturers of clotting factor 
concentrates to address the risk of HIV contamination. The 
implementation of the test and heat treatment has combined to 
virtually eliminate the threat of HIV contamination of people 
with hemophilia through blood products.
    We share your concern about the individuals with hemophilia 
and their families who suffered as a result of the events of 
the 1980s. Although the IOM found no negligence on the part of 
U.S. Government officials, the IOM did conclude that the entire 
public health system, including both the private and public 
sectors, may have missed opportunities to reduce the risk of 
HIV infection from blood products.
    The Administration will be pleased to work with the 
Congress to develop an appropriate way to assist those infected 
with HIV through the use of blood and blood products in the 
1980s. In developing a bipartisan program to assist people with 
hemophilia who were infected by HIV, a number of important 
issues of policy as well as numerous technical and statutory 
issues will need to be addressed, including the ramifications 
of the precedent that would be set and how to pay for the 
benefits.
    We look forward to working with you to address this 
tragedy. We have been advised by the Office of Management and 
Budget that there is no objection to the submission of this 
letter to the Congress from the standpoint of the 
Administration's program.
            Sincerely,
                                          Donna E. Shalala.