[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2758 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2758

  To amend title I of the Employee Retirement Income Security Act to 
 establish new procedures and access to courts for grievances arising 
                       under group health plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 5, 1999

 Mr. Hilleary (for himself and Mrs. Emerson) introduced the following 
    bill; which was referred to the Committee on Education and the 
                               Workforce

_______________________________________________________________________

                                 A BILL


 
  To amend title I of the Employee Retirement Income Security Act to 
 establish new procedures and access to courts for grievances arising 
                       under group health plans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Common Ground Healthcare Security 
Act of 1999''.

SEC. 2. SPECIAL RULES FOR GROUP HEALTH PLANS.

    (a) In General.--Section 503 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1133) is amended--
            (1) by inserting ``(a) In General.--'' after ``Sec. 503.'';
            (2) by inserting ``(other than a group health plan)'' after 
        ``employee benefit plan''; and
            (3) by adding at the end the following new subsection:
    ``(b) Special Rules for Group Health Plans.--
            ``(1) Coverage determinations.--Every group health plan 
        shall--
                    ``(A) provide adequate notice in writing in 
                accordance with this subsection to any participant or 
                beneficiary of any adverse coverage decision with 
                respect to benefits of such participant or beneficiary 
                under the plan, setting forth the specific reasons for 
                such coverage decision and any rights of review 
                provided under the plan, written in a manner calculated 
                to be understood by the participant;
                    ``(B) provide such notice in writing also to any 
                treating medical care provider of such participant or 
                beneficiary, if such provider has claimed reimbursement 
                for any item or service involved in such coverage 
                decision, or if a claim submitted by the provider 
                initiated the proceedings leading to such decision;
                    ``(C) afford a reasonable opportunity to any 
                participant or beneficiary who is in receipt of the 
                notice of such adverse coverage decision, and who files 
                a written request for review of the initial coverage 
                decision within 180 days after receipt of the notice of 
                the initial decision, for a full and fair de novo 
                review of the decision by an appropriate named 
                fiduciary who did not make the initial decision; and
                    ``(D) meet the additional requirements of this 
                subsection.
            ``(2) Time limits for making initial coverage decisions for 
        benefits and completing internal appeals.--
                    ``(A) Time limits for deciding requests for benefit 
                payments, requests for advance determination of 
                coverage, and requests for required determination of 
                medical necessity.--Except as provided in subparagraph 
                (B)--
                            ``(i) Initial decisions.--If a request for 
                        benefit payments, a request for advance 
                        determination of coverage, or a request for 
                        required determination of medical necessity is 
                        submitted to a group health plan in such 
                        reasonable form as may be required under the 
                        plan, the plan shall issue in writing an 
                        initial coverage decision on the request before 
                        the end of the initial decision period under 
                        paragraph (10)(I) following the filing 
                        completion date.
                            ``(ii) Internal reviews of initial 
                        denials.--Upon the written request of a 
                        participant or beneficiary for review of an 
                        initial adverse coverage decision under clause 
                        (i), a review by an appropriate named fiduciary 
                        (subject to paragraph (3)) of the initial 
                        coverage decision shall be completed, including 
                        issuance by the plan of a written decision 
                        affirming, reversing, or modifying the initial 
                        coverage decision, setting forth the grounds 
                        for such decision, before the end of the 
                        internal review period following the review 
                        filing date. Such decision shall be treated as 
                        the final decision of the plan, subject to any 
                        applicable reconsideration under paragraph (4).
                    ``(B) Time limits for making coverage decisions 
                relating to emergency medical care and for completing 
                internal appeals.--
                            ``(i) Initial decisions.--In cases 
                        involving emergency medical care, a group 
                        health plan shall issue in writing an initial 
                        coverage decision on any request for expedited 
                        advance determination of coverage or for 
                        expedited required determination of medical 
                        necessity submitted, in such reasonable form as 
                        may be required under the plan, before the end 
                        of the emergency decision period under 
                        paragraph (10)(K) following the filing 
                        completion date.
                            ``(ii) Internal reviews of initial 
                        denials.--In cases involving emergency medical 
                        care, upon the written request of a participant 
                        or beneficiary for review of an initial adverse 
                        coverage decision under clause (i), a review by 
                        an appropriate named fiduciary (subject to 
                        paragraph (3)) of the initial coverage decision 
                        shall be completed, including issuance by the 
                        plan of a written decision affirming, 
                        reversing, or modifying the initial coverage 
                        decision, setting forth the grounds for the 
                        decision, before the end of the emergency 
                        decision period under paragraph (10)(K) 
                        following the review filing date. Such decision 
                        shall be treated as the final decision of the 
                        plan, subject to any applicable reconsideration 
                        under paragraph (4).
                    ``(C) Continued applicability of shorter time 
                limits under plan.--Nothing in this paragraph shall be 
                construed to exempt any group health plan from the 
                terms of such plan relating to timeliness of 
                decisionmaking thereunder to the extent that such terms 
                require time limits of shorter duration that those 
                provided under this paragraph.
            ``(3) Physicians must review initial coverage decisions 
        involving medical appropriateness or necessity or experimental 
        treatment.--
                    ``(A) In general.--If an initial coverage decision 
                under paragraph (2)(A)(i) or (2)(B)(i) is based on a 
                determination that provision of a particular item or 
                service is excluded from coverage under the terms of 
                the plan because the provision of such item or service 
                does not meet the plan's requirements for medical 
                appropriateness or necessity or would constitute 
                experimental treatment or technology, the review under 
                paragraph (2)(A)(ii) or (2)(B)(ii), to the extent that 
                it relates to medical appropriateness or necessity or 
                to experimental treatment or technology, shall be 
                conducted by a qualified physician who is selected to 
                serve as an appropriate named fiduciary under the plan 
                and who did not make the initial denial.
                    ``(B) Qualified physician.--For purposes of 
                subparagraph (A), the term `qualified physician' means 
                a physician who--
                            ``(i) is licensed, accredited, or 
                        certified, under the State law of the State in 
                        which the review occurs, to provide the 
                        particular item or service referred to in 
                        subparagraph (A),
                            ``(ii) is professionally accountable for 
                        the decision referred to in subparagraph (A) to 
                        the applicable licensing authority of such 
                        physician, and
                            ``(iii) is, in the course of making such 
                        decision, operating within the scope of such 
                        licensure, accreditation, or certification.
            ``(4) Elective external review by independent medical 
        expert and reconsideration of initial review decision.--
                    ``(A) In general.--The requirements of 
                subparagraphs (B), (C) and (D) shall apply--
                            ``(i) in the case of any adverse coverage 
                        decision which is not reversed upon a review 
                        conducted pursuant to paragraph (1)(C) 
                        (including any review pursuant to paragraph 
                        (2)(A)(ii) or (2)(B)(ii)), and
                            ``(ii) in the case of any failure to timely 
                        issue a coverage decision upon internal review 
                        under paragraph (2)(A)(ii) or (2)(B)(ii) which 
                        is deemed under paragraph (8) to be a denial of 
                        the request for such decision (thereby failing 
                        to constitute a coverage decision for which 
                        specific reasons have been set forth as 
                        required under paragraph (1)(A)).
                    ``(B) Limits on allowable advance payments by plan 
                enrollee executing external appeal.--The review under 
                this paragraph in connection with an adverse coverage 
                decision shall be available subject to any requirement 
                of the plan (unless waived by the plan for financial or 
                other reasons) for payment in advance to the plan by 
                the participant or beneficiary seeking review of an 
                amount not to exceed the greater of--
                            ``(i) the lesser of $100 or 10 percent of 
                        the cost of the medical care involved in the 
                        decision; or
                            ``(ii) $25,
                with each such dollar amount subject to compounded 
                annual adjustments in the same manner and to the same 
                extent as apply under section 215(i) of the Social 
                Security Act, except that, for any calendar year, such 
                amount as so adjusted shall be deemed, solely for such 
                calendar year, to be equal to such amount rounded to 
                the nearest $10. No such payment may be required in the 
                case of any participant or beneficiary whose enrollment 
                under the plan is paid for, in whole or in part, under 
                a State plan under title XIX or XXI of the Social 
                Security Act. Any such advance payment shall be 
                reimbursed to the participant or beneficiary if a 
                recommendation is reported under subparagraph (C)(iv) 
                to reverse or modify the coverage decision.
                    ``(C) Reconsideration of initial review decision.--
                In any case in which a participant or beneficiary who 
                has received an adverse decision of the plan upon 
                initial review of the coverage decision and who has not 
                commenced review of the initial coverage decision under 
                section 502 makes a request in writing, within 30 days 
                after the date of the receipt of such review decision, 
                for reconsideration of such review decision, the terms 
                of the plan shall provide for a procedure for such 
                reconsideration under which--
                            ``(i) one or more independent medical 
                        experts will be selected in accordance with 
                        subparagraph (F) to review the coverage 
                        decision described in subparagraph (A) to 
                        determine whether benefit determinations in 
                        accordance with such decision would meet the 
                        requirements for medical appropriateness or 
                        necessity or would constitute experimental 
                        treatment or technology;
                            ``(ii) one or more independent experts in 
                        contract interpretation will be selected in 
accordance with subparagraph (G) to review the coverage decision 
described in subparagraph (A), with respect to matters not described in 
clause (i), to determine whether such decision was in accordance with 
the terms of the plan and this title;
                            ``(iii) the record for review--
                                    ``(I) will be presented to such 
                                experts and maintained in such a manner 
                                which will ensure confidentiality of 
                                such record,
                                    ``(II) will include a specification 
                                of the terms of the plan and other 
                                criteria serving as the basis for the 
                                initial review decision,
                                    ``(III) will include all relevant 
                                medical records, and
                                    ``(IV) will include such other 
                                documentary evidence as may be 
                                submitted by the participant or 
                                beneficiary requesting review; and
                            ``(iv) each expert will report in writing 
                        to the plan the expert's decision, based on the 
                        determination made under clause (i) or (ii) as 
                        to whether such coverage decision should be 
                        affirmed, modified, or reversed, setting forth 
                        the grounds (including the clinical basis) for 
                        the recommendation.
                    ``(D) Time limits for reconsideration.--Any review 
                under this paragraph shall be completed before the end 
                of the reconsideration period (as defined in paragraph 
                (10)(M)) following the review filing date in connection 
                with such review.
                    ``(E) Final decision.--The decision of the experts 
                reported pursuant to subparagraph (C)(iv) in any case 
                on a matter considered under clause (i) or (ii) of 
                subparagraph (C) affirming, reversing, or modifying the 
                initial review decision of the plan regarding such 
                matter shall be the final decision of the plan 
                regarding such matter in such case.
                    ``(F) Independent medical experts.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `independent medical 
                        expert' means, in connection with any coverage 
                        decision by a group health plan, a 
                        professional--
                                    ``(I) who is a physician or, if 
                                appropriate, another medical 
                                professional;
                                    ``(II) who has appropriate 
                                credentials and has attained recognized 
                                expertise in the applicable medical 
                                field;
                                    ``(III) who was not involved in the 
                                initial decision or any earlier review 
                                thereof; and
                                    ``(IV) who is selected in 
                                accordance with clause (ii) and meets 
                                the requirements of subparagraph (H).
                            ``(ii) Selection of medical experts.--An 
                        independent medical expert is selected in 
                        accordance with this clause if--
                                    ``(I) the expert is selected by an 
                                intermediary which itself meets the 
                                requirements of subparagraph (H), by 
                                means of a method which ensures that 
                                the identity of the expert is not 
                                disclosed to the plan, any health 
                                insurance issuer offering health 
                                insurance coverage to the aggrieved 
                                participant or beneficiary in 
                                connection with the plan, and the 
                                aggrieved participant or beneficiary 
                                under the plan, and the identities of 
                                the plan, the issuer, and the aggrieved 
                                participant or beneficiary are not 
                                disclosed to the expert;
                                    ``(II) the expert is selected, by 
                                an appropriately credentialed panel of 
                                physicians meeting the requirements of 
                                subparagraph (H) established by a fully 
                                accredited teaching hospital meeting 
                                such requirements;
                                    ``(III) the expert is selected by 
                                an organization described in section 
                                1152(1)(A) of the Social Security Act 
                                which meets the requirements of 
                                subparagraph (H);
                                    ``(IV) the expert is selected by an 
                                external review organization which 
                                meets the requirements of subparagraph 
                                (H) and is accredited by a private 
                                standard-setting organization meeting 
                                such requirements and recognized as 
                                such by the Secretary; or
                                    ``(V) the expert is selected, by an 
                                intermediary or otherwise, in a manner 
                                that is, under regulations issued 
                                pursuant to negotiated rulemaking, 
                                sufficient to ensure the expert's 
                                independence,
                        and the method of selection is devised to 
                        reasonably ensure that the expert selected 
                        meets the independence requirements of 
                        subparagraph (H).
                    ``(G) Independent experts on contract 
                interpretation.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `independent expert on 
                        contract interpretation' means, in connection 
                        with any coverage decision by a group health 
                        plan, a professional--
                                    ``(I) who has demonstrated 
                                expertise in making contractual benefit 
                                entitlement determinations;
                                    ``(II) who is fully credentialed in 
                                the relevant area of expertise 
                                regarding the matter or matters at 
                                issue;
                                    ``(III) who was not involved in the 
                                initial decision or any earlier review 
                                thereof; and
                                    ``(IV) who is selected in 
                                accordance with clause (ii) and meets 
                                the requirements of subparagraph (H).
                            ``(ii) Selection of experts.--An 
                        independent expert on contract interpretation 
                        is selected in accordance with this clause if--
                                    ``(I) the expert is selected by an 
                                intermediary which itself meets the 
                                requirements of subparagraph (H), by 
                                means of a method which ensures that 
                                the identity of the expert is not 
                                disclosed to the plan, any health 
                                insurance issuer offering health 
                                insurance coverage to the aggrieved 
                                participant or beneficiary in 
                                connection with the plan, and the 
                                aggrieved participant or beneficiary 
                                under the plan, and the identities of 
                                the plan, the issuer, and the aggrieved 
                                participant or beneficiary are not 
                                disclosed to the expert;
                                    ``(II) the expert is selected, by 
                                an appropriately credentialed panel of 
                                experts in contract interpretation 
                                meeting the requirements of 
                                subparagraph (H);
                                    ``(III) the expert is selected by 
                                an organization described in section 
                                1152(1)(A) of the Social Security Act 
                                which meets the requirements of 
                                subparagraph (H);
                                    ``(IV) the expert is selected by an 
                                external review organization which 
                                meets the requirements of subparagraph 
                                (H) and is accredited by a private 
                                standard-setting organization meeting 
                                such requirements and recognized as 
                                such by the Secretary; or
                                    ``(V) the expert is selected, by an 
                                intermediary or otherwise, in a manner 
                                that is, under regulations issued 
                                pursuant to negotiated rulemaking, 
                                sufficient to ensure the expert's 
                                independence,
                        and the method of selection is devised to 
                        reasonably ensure that the expert selected 
                        meets the independence requirements of 
                        subparagraph (H).
                    ``(H) Independence requirements.--Any independent 
                expert in contract interpretation, any independent 
                medical expert, or any other entity described in 
                subparagraph (F)(ii) or (G)(ii) meets the independence 
                requirements of this subparagraph if--
                            ``(i) the expert or entity is not 
                        affiliated with any related party;
                            ``(ii) any compensation received by such 
                        expert or entity in connection with the 
                        external review is reasonable and not 
                        contingent on any decision rendered by the 
                        expert or entity;
                            ``(iii) under the terms of the plan and any 
                        health insurance coverage offered in connection 
                        with the plan, the plan and the issuer (if any) 
                        have no recourse against the expert or entity 
                        in connection with the external review; and
                            ``(iv) the expert or entity does not 
                        otherwise have a conflict of interest with a 
                        related party as determined under any 
                        regulations which the Secretary may prescribe.
                For purposes of clause (i), the term `affiliated' 
                means, in connection with any entity, having a 
                familial, financial, or professional relationship with, 
                or interest in, such entity, disregarding any 
                compensation received in connection with services 
                performed as a reviewing entity under this paragraph.
                    ``(I) Related party.--For purposes of subparagraphs 
                (F)(ii)(I) and (G)(ii)(I), the term `related party' 
                means--
                            ``(i) the plan or any health insurance 
                        issuer offering health insurance coverage in 
                        connection with the plan (or any officer, 
                        director, or management employee of such plan 
                        or issuer);
                            ``(ii) the physician or other medical care 
                        provider that provided the medical care 
                        involved in the coverage decision;
                            ``(iii) the institution at which the 
                        medical care involved in the coverage decision 
                        is provided;
                            ``(iv) the manufacturer of any drug or 
                        other item that was included in the medical 
                        care involved in the coverage decision; or
                            ``(v) any other party determined under any 
                        regulations which the Secretary may prescribe 
                        to have a substantial interest in the coverage 
                        decision.
            ``(5) Permitted alternatives to required internal review.--
                    ``(A) In general.--A group health plan shall not be 
                treated as failing to meet the requirements under 
                paragraphs (2)(A)(ii) and (2)(B)(ii) relating to review 
                of initial coverage decisions for benefits, if--
                            ``(i) in lieu of the procedures relating to 
                        review under paragraphs (2)(A)(ii) and 
                        (2)(B)(ii) and in accordance with such 
                        regulations (if any) as may be prescribed by 
                        the Secretary--
                                    ``(I) the aggrieved participant or 
                                beneficiary elects in the request for 
                                the review an alternative dispute 
                                resolution procedure which is available 
                                under the plan with respect to 
                                similarly situated participants and 
                                beneficiaries; or
                                    ``(II) in the case of any such plan 
                                or portion thereof which is established 
                                and maintained pursuant to a bona fide 
                                collective bargaining agreement, the 
                                plan provides for a procedure by which 
                                such disputes are resolved by means of 
                                any alternative dispute resolution 
                                procedure;
                            ``(ii) the time limits not exceeding the 
                        time limits otherwise applicable under 
                        paragraphs (2)(A)(ii) and (2)(B)(ii) are 
                        incorporated in such alternative dispute 
                        resolution procedure;
                            ``(iii) any applicable requirement for 
                        review by a physician under paragraph (3), 
                        unless waived by the participant or beneficiary 
                        (in a manner consistent with such regulations 
                        as the Secretary may prescribe to ensure 
                        equitable procedures), is incorporated in such 
                        alternative dispute resolution procedure; and
                            ``(iv) the plan meets the additional 
                        requirements of subparagraph (B).
                In any case in which a procedure described in subclause 
                (I) or (II) of clause (i) is utilized and an 
                alternative dispute resolution procedure is voluntarily 
                elected by the aggrieved participant or beneficiary, 
                the plan may require or allow (in a manner consistent 
                with such regulations as the Secretary may prescribe to 
ensure equitable procedures) the aggrieved participant or beneficiary 
to waive review of the coverage decision under paragraph (3), to waive 
further review of the coverage decision under paragraph (4) or section 
502, and to elect an alternative means of external review (other than 
review under paragraph (4)).
                    ``(B) Additional requirements.--The requirements of 
                this subparagraph are met if the means of resolution of 
                dispute allow for adequate presentation by the 
                aggrieved participant or beneficiary of scientific and 
                medical evidence supporting the position of such 
                participant or beneficiary.
            ``(6) Permitted alternatives to required external review.--
        A group health plan shall not be treated as failing to meet the 
        requirements of this subsection in connection with review of 
        coverage decisions under paragraph (4) if the aggrieved 
        participant or beneficiary elects to utilize a procedure in 
        connection with such review which is made generally available 
        under the plan (in a manner consistent with such regulations as 
        the Secretary may prescribe to ensure equitable procedures) 
        under which--
                    ``(A) the plan agrees in advance of the 
                recommendations of the experts under paragraph 
                (4)(C)(iii) to render a final decision in accordance 
                with such recommendations; and
                    ``(B) the participant or beneficiary waives in 
                advance any right to review of the final decision under 
                section 502.
            ``(7) Special rule for access to specialty care.-- In the 
        case of a request for advance determination of coverage 
        consisting of a request by a physician for a determination of 
        coverage of the services of a specialist with respect to any 
        condition, if coverage of the services of such specialist for 
        such condition is otherwise provided under the plan, the 
        initial coverage decision referred to in subparagraph (A)(i) or 
        (B)(i) of paragraph (2) shall be issued within the specialty 
        decision period. For purposes of this paragraph, the term 
        `specialist' means, with respect to a condition, a physician 
        who has a high level of expertise through appropriate training 
        and experience (including, in the case of a child, appropriate 
        pediatric expertise) to treat the condition.
            ``(8) Effect on plan of failure to comply with time limits 
        for decisionmaking.-- In any case in which a group health plan 
        fails to take reasonable care to ensure that the decision by 
        the plan, on a written request of a participant or beneficiary 
        made under paragraph (2) or (4), for a reversal or modification 
        of an earlier decision of the plan, is issued to the 
        participant or beneficiary as required under such paragraph 
        before the end of the applicable period specified in such 
        paragraph, for purposes of further review under this subsection 
        or section 502--
                    ``(A) the request shall be deemed to have been 
                denied by the plan, resulting in exhaustion of any 
                review required as a prerequisite for such further 
                review, and
                    ``(B) the position of the participant or 
                beneficiary serving as the basis for the request for 
                review shall be deemed consistent with the terms of the 
                plan, except to the extent that the plan proves in the 
                course of such further review that such position is not 
                consistent with the terms of the plan or this title.
            ``(9) Group health plan defined.--For purposes of this 
        section--
                    ``(A) In general.--The term `group health plan' 
                shall have the meaning provided in section 733(a).
                    ``(B) Treatment of partnerships.--The provisions of 
                paragraphs (1), (2), and (3) of section 732(d) shall 
                apply.
            ``(10) Other definitions.--For purposes of this 
        subsection--
                    ``(A) Request for benefit payments.--The term 
                `request for benefit payments' means a request, for 
                payment of benefits by a group health plan for medical 
                care, which is made by or on behalf of a participant or 
                beneficiary after such medical care has been provided.
                    ``(B) Required determination of medical 
                appropriateness or necessity.--The term `required 
                determination of medical appropriateness or necessity' 
                means a determination required under a group health 
                plan solely that proposed medical care meets, under the 
                facts and circumstances at the time of the 
                determination, the requirements for medical 
                appropriateness or necessity (which may be subject to 
                exceptions under the plan for fraud or 
                misrepresentation) as determined, in the case of an 
                initial coverage decision, by the qualified physician 
                (as defined in paragraph (3)(B)) or, in the case of an 
                elective external review, by the independent medical 
                expert (as defined in paragraph (4)(F)), irrespective 
                of whether the proposed medical care otherwise meets 
                other terms and conditions of coverage, but only if 
                such determination does not constitute an advance 
                determination of coverage (as defined in subparagraph 
                (C)).
                    ``(C) Advance determination of coverage.--The term 
                `advance determination of coverage' means a 
                determination under a group health plan that proposed 
                medical care meets, under the facts and circumstances 
                at the time of the determination, the plan's terms and 
                conditions of coverage (which may be subject to 
                exceptions under the plan for fraud or 
                misrepresentation).
                    ``(D) Request for advance determination of 
                coverage.--The term `request for advance determination 
                of coverage' means a request for an advance 
                determination of coverage of medical care which is made 
                by or on behalf of a participant or beneficiary before 
                such medical care is provided.
                    ``(E) Request for expedited advance determination 
                of coverage.--The term `request for expedited advance 
                determination of coverage' means a request for advance 
                determination of coverage, in any case in which the 
                proposed medical care constitutes emergency medical 
                care.
                    ``(F) Request for required determination of medical 
                appropriateness or necessity.--The term `request for 
                required determination of medical appropriateness or 
                necessity' means a request for a required determination 
                of medical appropriateness or necessity for medical 
                care which is made by or on behalf of a participant or 
                beneficiary before the medical care is provided.
                    ``(G) Request for expedited required determination 
                of medical appropriateness or necessity.--The term 
                `request for expedited required determination of 
                medical appropriateness or necessity' means a request 
                for required determination of medical appropriateness 
                or necessity in any case in which the proposed medical 
                care constitutes emergency medical care.
                    ``(H) Emergency medical care.--The term `emergency 
                medical care' means medical care in any case in which a 
                certification has been made in writing by an 
                appropriate physician (as provided in regulations which 
                shall be prescribed by the Secretary)--
                            ``(i) that failure to immediately provide 
                        the care to the participant or beneficiary 
                        could reasonably be expected to result in--
                                    ``(I) placing the health of such 
                                participant or beneficiary (or, with 
                                respect to such a participant or 
                                beneficiary who is a pregnant woman, 
                                the health of the woman or her unborn 
                                child) in serious jeopardy;
                                    ``(II) serious impairment to bodily 
                                functions; or
                                    ``(III) serious dysfunction of any 
                                bodily organ or part; or
                            ``(ii) that immediate provision of the care 
                        is necessary because the participant or 
                        beneficiary has made or is at serious risk of 
                        making an attempt to harm himself or herself or 
                        another individual.
                    ``(I) Initial decision period.--The term `initial 
                decision period' means a period of 14 days, or such 
                longer period as may be prescribed in regulations of 
                the Secretary.
                    ``(J) Internal review period.--The term `internal 
                review period' means a period of 14 days, or such 
                longer period as may be prescribed in regulations of 
                the Secretary.
                    ``(K) Emergency decision period.--The term 
                `emergency decision period' means a period of 72 hours, 
                or such longer period as may be prescribed in 
                regulations of the Secretary.
                    ``(L) Specialty decision period.--The term 
                `specialty decision period' means a period of 72 hours, 
                or such longer period as may be prescribed in 
                regulations of the Secretary.
                    ``(M) Reconsideration period.--The term 
                `reconsideration period' means a period of 14 days, or 
                such longer period as may be prescribed in regulations 
                of the Secretary, except that, in the case of a 
                decision involving emergency medical care, such term 
                means the emergency decision period.
                    ``(N) Filing completion date.--The term `filing 
                completion date' means, in connection with a group 
                health plan, the date as of which the plan is in 
                receipt of all information reasonably required (in 
                writing or in such other reasonable form as may be 
                specified by the plan) to make an initial coverage 
                decision.
                    ``(O) Review filing date.--The term `review filing 
                date' means, in connection with a group health plan, 
                the date as of which the appropriate named fiduciary 
                (or the expert or experts selected in the case of a 
                review under paragraph (4)) is in receipt of all 
                information reasonably required (in writing or in such 
                other reasonable form as may be specified by the plan) 
                to make a decision to affirm, modify, or reverse a 
                coverage decision.
                    ``(P) Medical care.--The term `medical care' has 
                the meaning provided such term by section 733(a)(2).
                    ``(Q) Health insurance coverage.--The term `health 
                insurance coverage' has the meaning provided such term 
                by section 733(b)(1).
                    ``(R) Health insurance issuer.--The term `health 
                insurance issuer' has the meaning provided such term by 
                section 733(b)(2).
                    ``(S) Written or in writing.--
                            ``(i) In general.--A request or decision 
                        shall be deemed to be `written' or `in writing' 
                        if such request or decision is presented in a 
                        generally recognized printable or electronic 
                        format. The Secretary may by regulation provide 
                        for presentation of information otherwise 
                        required to be in written form in such other 
                        forms as may be appropriate under the 
                        circumstances.
                            ``(ii) Medical appropriateness or 
                        experimental treatment determinations.--For 
                        purposes of this subparagraph, in the case of a 
                        request for advance determination of coverage, 
                        a request for expedited advance determination 
                        of coverage, a request for required 
                        determination of medical appropriateness or 
                        necessity, or a request for expedited required 
                        determination of medical appropriateness or 
                        necessity, if the decision on such request is 
                        conveyed to the provider of medical care or to 
                        the participant or beneficiary by means of 
                        telephonic or other electronic communications, 
                        such decision shall be treated as a written 
                        decision.
            ``(11) Determinations consistent with the terms of the 
        plan.--Nothing in this subsection shall be construed as 
        permitting, in the case of any group health plan, a 
        determination by any independent expert in contract 
        interpretation, any independent medical expert, or any other 
        person that such plan is required to provide an item or service 
        which is not covered under the terms of such plan. 
        Determinations under this subsection of whether an item or 
        service is covered under the terms of a group health plan shall 
        be made solely by a professional who has demonstrated expertise 
        in making contractual benefit entitlement determinations and 
        who is fully credentialed in the relevant area of expertise 
        regarding the matter or matters at issue.''.
    (b) Expedited Federal Court Review.--
            (1) In general.--Section 502 of such Act (29 U.S.C. 1132) 
        is amended--
                    (A) in subsection (a)(8), by striking ``or'' at the 
                end;
                    (B) in subsection (a)(9), by striking the period 
                and inserting ``; or'';
                    (C) by adding at the end of subsection (a) the 
                following new paragraph:
    ``(10) by a participant or beneficiary for appropriate relief under 
subsection (b)(4).''; and
            (D) by adding at the end of subsection (b) the following 
        new paragraph:
    ``(4) In any case in which exhaustion of administrative remedies in 
accordance with paragraph (2)(A)(ii) or (2)(B)(ii) of section 503(b) 
otherwise necessary for an action for relief under paragraph (1)(B) or 
(3) of subsection (a) has not been obtained and it is demonstrated to 
the court by means of certification by an appropriate physician that 
such exhaustion is not reasonably attainable under the facts and 
circumstances without undue risk of irreparable harm to the health of 
the participant or beneficiary, a civil action may be brought by a 
participant or beneficiary to obtain appropriate equitable relief. Any 
determinations made under paragraph (2)(A)(ii) or (2)(B)(ii) of section 
503(b) made while an action under this paragraph is pending shall be 
given due consideration by the court in any such action.''.
            (2) Concurrent jurisdiction.--Section 502(e)(1) of such Act 
        (29 U.S.C. 1132(e)(1)) is amended--
                    (A) in the first sentence, by striking ``under 
                subsection (a)(1)(B) of this section'' and inserting 
                ``under subsection (a)(1)(B) or (b)(4)''; and
                    (B) in the last sentence, by striking ``of actions 
                under paragraphs (1)(B) and (7) of subsection (a) of 
                this section'' and inserting ``of actions under 
                paragraphs (1)(B) and (7) of subsection (a) and 
                paragraph (4) of subsection (b)''.
            (3) Standard of review unaffected.--The standard of review 
        under section 502 of the Employee Retirement Income Security 
        Act of 1974 (as amended by this subsection) shall continue on 
        and after the date of the enactment of this Act to be the 
        standard of review which was applicable under such section as 
        of immediately before such date.

SEC. 3. AVAILABILITY OF COURT REMEDIES.

    (a) In General.--Section 502 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end 
the following new subsection:
    ``(n) Cause of Action Relating to Provision of Health Benefits.--
            ``(1) In general.--Any fiduciary of a group health plan (as 
        defined in section 733(a)) who fails to exercise ordinary care 
        resulting in personal injury to, or wrongful death of, a 
        participant or beneficiary shall be liable to the participant 
        or beneficiary for actual damages (including compensatory and 
        consequential damages, subject to paragraph (6)) proximately 
        caused by such failure, if such failure consists of--
                    ``(A) failing to exercise ordinary care in making 
                an incorrect determination that an item or service is 
                excluded from coverage under the terms of the plan 
                based on the fact that the item or service--
                            ``(i) does not meet the plan's requirements 
                        for medical appropriateness or necessity, or
                            ``(ii) would constitute experimental 
                        treatment or technology (as defined under the 
                        plan), or
                    ``(B) failing to exercise ordinary care to ensure 
                that--
                            ``(i) any initial coverage decision 
                        referred to in subparagraph (A)(i) or (B)(i) of 
                        section 503(b)(2) on which the cause of action 
                        is based, or
                            ``(ii) any decision by the plan on a 
                        request, made in writing by a participant or 
                        beneficiary under subparagraph (A)(ii) or 
                        (B)(ii) of section 503(b)(2) or under section 
                        503(b)(4), for a reversal or modification of an 
                        earlier decision of the plan on which the cause 
                        of action is based,
                is issued to the participant or beneficiary (in such 
                form and manner as may be prescribed in regulations of 
                the Secretary) before the end of the applicable period 
                specified in the applicable provision cited in clause 
                (i) or (ii).
            ``(2) Ordinary care.--For purposes of this subsection, the 
        term `ordinary care' means the care, skill, prudence, and 
        diligence under the circumstances then prevailing that a 
        prudent individual acting in a like capacity and familiar with 
        such matters would use in the conduct of an enterprise of a 
        like character and with like aims.
            ``(3) Exception for employers and other plan sponsors.--
                    ``(A) In general.--Subject to subparagraph (B), 
                paragraph (1) does not authorize--
                            ``(i) any cause of action against an 
                        employer or other plan sponsor maintaining the 
                        group health plan (or against an employee of 
                        such an employer or sponsor acting within the 
                        scope of employment), or
                            ``(ii) a right of recovery or indemnity by 
                        a person against an employer or other plan 
                        sponsor (or such an employee) for damages 
                        assessed against the person pursuant to a cause 
                        of action under paragraph (1).
                    ``(B) Special rule.--Subparagraph (A) shall not 
                preclude any cause of action described in paragraph (1) 
                commenced during a plan year against an employer or 
                other plan sponsor (or against an employee of such an 
                employer or sponsor acting within the scope of 
                employment) if--
                            ``(i) such action is based on the direct 
                        participation of the employer or other plan 
                        sponsor (or employee of the employer or plan 
                        sponsor) in the final decision of the plan 
                        under section 503(b)(2) on a claim for benefits 
                        covered under the plan or health insurance 
                        coverage in the case at issue; and
                            ``(ii) the decision on the claim resulted 
                        in personal injury or wrongful death.
                    ``(C) Direct participation.--For purposes of 
                subparagraph (B)(ii), in determining whether an 
                employer or other plan sponsor (or employee of an 
                employer or other plan sponsor) is engaged in direct 
                participation in the final decision of the plan under 
                section 503(b)(2) on a claim, the employer or plan 
                sponsor (or employee) shall not be construed to be 
                engaged in such direct participation solely because 
                of--
                            ``(i) any participation by the employer or 
                        other plan sponsor (or employee) in the 
                        selection of the group health plan or health 
                        insurance coverage involved,
                            ``(ii) any engagement by the employer or 
                        other plan sponsor (or employee) in any cost-
                        benefit analysis undertaken in connection with 
                        the selection of, or continued maintenance of, 
                        the plan or coverage involved, or
                            ``(iii) any other form of decisionmaking or 
                        other conduct performed by the employer or 
                        other plan sponsor (or employee) in connection 
                        with the plan or coverage involved which 
                        constitutes neither the making of a final 
                        decision of the plan consisting of a failure 
                        described in paragraph (1)(A) nor a failure 
                        described in paragraph (1)(B).
            ``(4) Requirement of exhaustion of administrative 
        remedies.--
                    ``(A) In general.--Paragraph (1) applies in the 
                case of any cause of action only if all remedies under 
                section 503 with respect to such cause of action have 
                been exhausted.
                    ``(B) External review required.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), administrative remedies under 
                        section 503 shall not be deemed exhausted until 
                        available remedies under section 503(b)(4) have 
                        been elected and are exhausted.
                            ``(ii) Exception for not reasonably 
                        attainable exhaustion of administrative 
                        remedies.--Clause (i) shall not apply in the 
                        case of any cause of action if it is 
                        demonstrated to the court by means of 
                        certification by an appropriate physician that 
                        such exhaustion is not reasonably attainable 
                        under the facts and circumstances without undue 
                        risk of irreparable harm to the health of the 
                        participant or beneficiary.
                    ``(C) Consideration of administrative 
                determinations.--Any determinations made under section 
                503(b) made while an action under this paragraph is 
                pending shall be given due consideration by the court 
                in such action.
            ``(5) Rebuttable presumption.--In the case of any action 
        commenced pursuant to paragraph (1), there shall be a 
        rebuttable presumption in favor of the decision of the 
        independent expert rendered upon completion of any review 
        elected under section 503(b)(4).
            ``(6) Standards for award of punitive damages.--
                    ``(A) General rule.--Nothing in this subsection 
                shall be construed as authorizing a cause of action for 
                punitive damages, except that punitive damages are 
                authorized in any case in which the plaintiff 
                establishes by clear and convincing evidence that 
                conduct carried out by the defendant with a conscious, 
                flagrant indifference to the rights or safety of others 
                was the proximate cause of the harm that is the subject 
                of the action.
                    ``(B) Limitation on Amount.--
                            ``(i) In general.--The amount of punitive 
                        damages that may be awarded in an action 
                        described in subparagraph (A) may not exceed 
                        the greater of--
                                    ``(I) 2 times the sum of the amount 
                                awarded to the claimant for economic 
                                loss; or
                                    ``(II) $250,000.
                            ``(ii) Special rule.--Notwithstanding 
                        clause (i), in any action described in 
                        subparagraph (A) against an individual whose 
                        net worth does not exceed $500,000 or against 
                        an owner of an unincorporated business, or any 
                        partnership, corporation, association, unit of 
                        local government, or organization which has 
                        fewer that 25 employees, the punitive damages 
                        shall not exceed the lesser of--
                                    ``(I) 2 times the sum of the amount 
                                awarded to the claimant for economic 
                                loss and noneconomic loss; or
                                    ``(II) $250,000.
                            ``(iii) Controlled groups.--
                                    ``(I) In general.--For the purpose 
                                of determining the applicability of 
                                clause (ii) to any employer, in 
                                determining the number of employees of 
                                an employer who is a member of a 
                                controlled group, the employees of any 
                                person in such group shall be deemed to 
                                be employees of the employer.
                                    ``(II) Controlled group.--For 
                                purposes of subclause (I), the term 
                                `controlled group' means any group 
                                treated as a single employer under 
                                subsection (b), (c), (m), or (o) of 
                                section 414 of the Internal Revenue 
                                Code of 1986.
                    ``(C) Exception for insufficient award in cases of 
                egregious conduct.--
                            ``(i) Determination by court.--If the court 
                        makes a determination, after considering each 
                        of the factors in subparagraph (D), that the 
                        application of subparagraph (A) would result in 
                        an award of punitive damages that is 
                        insufficient to punish the egregious conduct of 
                        the defendant against whom the punitive damages 
                        are to be awarded or to deter such conduct in 
                        the future, the court shall determine the 
                        additional amount of punitive damages (referred 
                        to in this subparagraph as the `additional 
                        amount') in excess of the amount determined in 
                        accordance with subparagraph (A) to be awarded 
                        against the defendant in a separate proceeding 
                        in accordance with this subparagraph.
                            ``(ii) Requirements for awarding additional 
                        amount.--If the court awards an additional 
                        amount pursuant to this subparagraph, the court 
                        shall state its reasons for setting the amount 
                        of the additional amount in findings of fact 
                        and conclusions of law.
                    ``(D) Factors for consideration in cases of 
                egregious conduct.--In any proceeding under 
                subparagraph (C), the matters to be considered by the 
court shall include (but are not limited to)--
                            ``(i) the extent to which the defendant 
                        acted with actual malice;
                            ``(ii) the likelihood that serious harm 
                        would arise from the conduct of the defendant;
                            ``(iii) the degree of the awareness of the 
                        defendant of that likelihood;
                            ``(iv) the profitability of the misconduct 
                        to the defendant;
                            ``(v) the duration of the misconduct and 
                        any concurrent or subsequent concealment of the 
                        conduct by the defendant;
                            ``(vi) the attitude and conduct of the 
                        defendant upon the discovery of the misconduct 
                        and whether the misconduct has terminated;
                            ``(vii) the financial condition of the 
                        defendant; and
                            ``(viii) the cumulative deterrent effect of 
                        other losses, damages, and punishment suffered 
                        by the defendant as a result of the misconduct, 
                        reducing the amount of punitive damages on the 
                        basis of the economic impact and severity of 
                        all measures to which the defendant has been or 
                        may be subjected, including--
                                    ``(I) compensatory and punitive 
                                damage awards to similarly situated 
                                claimants;
                                    ``(II) the adverse economic effect 
                                of stigma or loss of reputation;
                                    ``(III) civil fines and criminal 
                                and administrative penalties; and
                                    ``(IV) stop sale, cease and desist, 
                                and other remedial or enforcement 
                                orders.
                    ``(E) Application by court.--This paragraph shall 
                be applied by the court and application of this 
                paragraph shall not be disclosed to the jury. Nothing 
                in this paragraph shall authorize the court to enter an 
                award of punitive damages in excess of the jury's 
                initial award of punitive damages.
                    ``(F) Bifurcation at Request of Any Party.--
                            ``(i) In general.--At the request of any 
                        party the trier of fact in any action that is 
                        subject to this paragraph shall consider in a 
                        separate proceeding, held subsequent to the 
                        determination of the amount of compensatory 
                        damages, whether punitive damages are to be 
                        awarded for the harm that is the subject of the 
                        action and the amount of the award.
                            ``(ii) Inadmissibility of evidence relative 
                        only to a claim of punitive damages in a 
                        proceeding concerning compensatory damages.--If 
                        any party requests a separate proceeding under 
                        clause (i), in a proceeding to determine 
                        whether the claimant may be awarded 
                        compensatory damages, any evidence, argument, 
                        or contention that is relevant only to the 
                        claim of punitive damages, as determined by 
                        applicable State law, shall be inadmissible.
            ``(7) Several liability.--
                    ``(A) General Rule.--In an action described in 
                paragraph (1), the liability of each defendant shall be 
                several only and shall not be joint.
                    ``(B) Amount of Liability.--
                            ``(i) In general.--In any such action, each 
                        defendant shall be liable only for the amount 
                        allocated to the defendant in direct proportion 
                        to the percentage of responsibility of the 
                        defendant (determined in accordance with clause 
                        (ii)) for the harm to the plaintiff with 
                        respect to which the defendant is liable. The 
                        court shall render a separate judgment against 
                        each defendant in an amount determined pursuant 
                        to the preceding sentence.
                            ``(ii) Percentage of responsibility.--For 
                        purposes of determining the amount allocated to 
                        a defendant under this paragraph, the trier of 
                        fact shall determine the percentage of 
                        responsibility of each person responsible for 
                        the plaintiff's harm, whether or not such 
                        person is a party to the action.
            ``(8) Limitation of action.--Paragraph (1) shall not apply 
        in connection with any action commenced after the later of--
                    ``(A) 1 year after (i) the date of the last action 
                which constituted a part of the failure, or (ii) in the 
                case of an omission, the latest date on which the 
fiduciary could have cured the failure, or
                    ``(B) 1 year after the earliest date on which the 
                plaintiff first knew, or reasonably should have known, 
                of the bodily injury resulting from the failure.
            ``(9) Construction.--Nothing in this subsection shall be 
        construed as authorizing a cause of action--
                    ``(A) for the failure to provide an item or service 
                which is not covered under the group health plan 
                involved, or
                    ``(B) for any action taken by a fiduciary which 
                consists of full compliance with the reversal or 
                modification by a final decision under section 
                503(b)(4)(E) of an initial coverage decision under 
                section 503(b)(2).
            ``(10) Preemption.--This subsection supersedes any action 
        authorized under State law (as defined in section 514(c)(1)) 
        against any person for damages based on any failure described 
        in subparagraph (A) or (B) of paragraph (1) by such person to 
        the extent that an action against such person for damages based 
        on such failure is authorized under this subsection.''.
    (b) Conforming Amendment.--Section 502(a)(1)(A) of such Act (29 
U.S.C. 1132(a)(1)(A)) is amended by inserting ``or (n)'' after 
``subsection (c)''.

SEC. 4. EFFECTIVE DATES.

    (a) In General.--The amendments made by this Act (other than 
section 3) shall apply with respect to grievances arising in plan years 
beginning on or after January 1 of the second calendar year following 
the date of the enactment of this Act. The Secretary shall first issue 
all regulations necessary to carry out the amendments made by this Act 
before such date.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this Act (other than 
section 3), against a group health plan or health insurance issuer with 
respect to a violation of a requirement imposed by such amendments 
before the date of issuance of final regulations issued in connection 
with such requirement, if the plan or issuer has sought to comply in 
good faith with such requirement.
    (c) Collective Bargaining Agreements.--Any plan amendment made 
pursuant to a collective bargaining agreement relating to the plan 
which amends the plan solely to conform to any requirement added by 
this Act shall not be treated as a termination of such collective 
bargaining agreement.
    (d) Expanded Section 502 Remedies.--The amendments made by section 
3 shall apply to acts and omissions (from which a cause of action 
arises) occurring on or after the date of the enactment of this Act.
    (e) Sunset.--The amendments made by this Act shall not apply with 
respect to grievances arising (or acts or omissions occurring) in plan 
years beginning on or after January 1, 2005, and the provisions of the 
Employee Retirement Income Security Act of 1974 shall read after such 
date as if such amendments had not been enacted.

SEC. 5. SEVERABILITY.

    If any provision of this Act or amendment made by this Act, or the 
application of a provision or amendment to any person or circumstance, 
is held to be unconstitutional, the remainder of this Act and 
amendments made by this Act, and the application of the provisions and 
amendment to any person or circumstance, shall not be affected by the 
holding.
                                 <all>