[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1158 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1158

To modify the antitrust exemption applicable to the business of medical 
   malpractice insurance, to address current issues for health care 
providers, to reform medical malpractice litigation by making available 
alternative dispute resolution methods, requiring plaintiffs to submit 
  affidavits of merit before proceeding, and enabling judgments to be 
satisfied through periodic payments, to reform the medical malpractice 
               insurance market, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 6, 2003

 Mr. Sandlin introduced the following bill; which was referred to the 
Committee on the Judiciary, and in addition to the Committees on Energy 
 and Commerce, Ways and Means, and Education and the Workforce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To modify the antitrust exemption applicable to the business of medical 
   malpractice insurance, to address current issues for health care 
providers, to reform medical malpractice litigation by making available 
alternative dispute resolution methods, requiring plaintiffs to submit 
  affidavits of merit before proceeding, and enabling judgments to be 
satisfied through periodic payments, to reform the medical malpractice 
               insurance market, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medical Liability 
Insurance Crisis Response Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
  TITLE I--ANTITRUST MATTERS: AMENDMENTS TO THE MCCARRAN-FERGUSON ACT

Sec. 101. Short title.
Sec. 102. Rules of construction.
Sec. 103. Amendments.
Sec. 104. Study and report.
Sec. 105. Effective date.
     TITLE II--ADDRESSING CURRENT ISSUES FOR HEALTH CARE PROVIDERS

Sec. 201. Prompt payment of claims.
Sec. 202. Eliminating nurse shortages.
       ``Part H--National Nurse Service Corps Scholarship Program

        ``Sec. 851. National Nurse Service Corps Scholarship Program.
``Part I--Initiatives to Recruit Nurses and Combat the Nursing Shortage

        ``Sec. 855. Nurse recruitment grant program.
        ``Part J--Initiatives to Strengthen the Nurse Workforce

        ``Sec. 857. Grants for career ladder programs.
        ``Sec. 858. Grants for nurse training in long-term care for the 
                            elderly.
        ``Sec. 859. Grants for internship and residency programs.
        ``Sec. 860. Developing retention strategies and best practices 
                            in nursing staff management.
        ``Sec. 861. Stipend and scholarship program.
            TITLE III--MEDICAL MALPRACTICE LIABILITY REFORM

Sec. 301. Definitions.
Sec. 302. Federal tort reform.
Sec. 303. Alternative dispute resolution methods.
Sec. 304. Preventing frivolous malpractice suits.
Sec. 305. Requirement for affidavit of merit.
            TITLE IV--MEDICAL MALPRACTICE INSURANCE REFORMS

Sec. 401. Advisory Commission on Medical Malpractice.
Sec. 402. Limitation on rate of increase in medical malpractice 
                            insurance rates.
Sec. 403. Withdrawal from medical malpractice insurance market.
Sec. 404. Guaranteed renewability of coverage.
Sec. 405. Guaranteed coverage for certain health care providers.
Sec. 406. Medical malpractice insurance disclosure.
Sec. 407. Medical malpractice insurance price comparison.
                    TITLE V--TAX-RELATED PROVISIONS

Sec. 501. Deduction for premiums for medical liability insurance for 
                            high risk specialties.
Sec. 502. Deduction for premiums for medical liability insurance for 
                            practices serving medically underserved 
                            communities.
                    TITLE VI--ADDITIONAL PROVISIONS

Sec. 601. State consideration of additional and alternative methods.
Sec. 602. Mandating equal treatment between traditional insurers and 
                            risk retention groups, including medical 
                            malpractice risk retention groups.

  TITLE I--ANTITRUST MATTERS: AMENDMENTS TO THE McCARRAN-FERGUSON ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Medical Malpractice Insurance 
Competitive Pricing Act of 2003''.

SEC. 102. RULES OF CONSTRUCTION.

    The amendments made by this title preserve--
            (1) the provisions relating to State taxing and regulatory 
        authority in section 2 of the Act of March 9, 1945 (59 Stat. 
        34; 15 U.S.C. 1012), commonly known as the McCarran-Ferguson 
        Act;
            (2) the availability, to persons engaged in the business of 
        medical malpractice insurance, of the defense of State action 
        in the same manner and to the same extent as such defense is 
        available to other persons;
            (3) the availability, to persons engaged in the business of 
        medical malpractice insurance, of any antitrust immunity or 
        defense that may be applicable under law other than the 
        McCarran-Ferguson Act;
            (4) the legal standards applicable under the McCarran-
        Ferguson Act, as in effect before such Act is amended by this 
        title, to all conduct described in the safe harbors found in 
        subparagraphs (B) and (C) of section 2(b)(1) of the McCarran-
        Ferguson Act, as amended by this title; and
            (5) the provisions relating to boycott, coercion, or 
        intimidation in section 3(b) of the McCarran-Ferguson Act.

SEC. 103. AMENDMENTS.

    Section 2 of the Act of March 9, 1945 (59 Stat. 34; 15 U.S.C. 
1012), commonly known as the McCarran-Ferguson Act, is amended--
            (1) in subsection (b) by striking ``: Provided,'' and all 
        that follows through ``law.'' and inserting the following: 
        ``except as follows:
            ``(1)(A) The antitrust laws shall be applicable to the 
        business of medical malpractice insurance except as provided in 
        subparagraphs (B) and (C).
            ``(B) The antitrust laws shall not be applicable to conduct 
        that consists of making an agreement or engaging in joint 
        conduct--
                    ``(i)(I) to collect, compile, classify, or 
                disseminate historical data;
                    ``(II) to develop procedures to collect, compile, 
                classify, or disseminate historical data; or
                    ``(III) to verify that historical data is accurate 
                and complete;
                    ``(ii) to determine, using standard actuarial 
                techniques, or disseminate, a loss development factor 
                or developed losses;
                    ``(iii) to develop or disseminate a standard 
                medical malpractice insurance policy form (including a 
                standard addendum to a medical malpractice insurance 
                policy form and standard terminology in such a policy 
                form) if such agreement or joint conduct does not 
                include an agreement to adhere to such standard form, 
                or to require adherence to such standard form, except 
                that the fact that 2 or more persons engaged in the 
                business of medical malpractice insurance use such 
                standard form--
                            ``(I) shall not be sufficient in itself to 
                        support a finding that an agreement to adhere, 
                        or to require adherence, to such standard form 
                        exists; and
                            ``(II) may be used only for the purpose of 
                        supplementing or explaining direct evidence of 
                        the existence of an agreement to adhere, or to 
                        require adherence, to such standard form;
                    ``(iv) to develop or disseminate, for use in 
                providing medical malpractice insurance in a State, a 
                manual that is filed, before dissemination, with the 
                State entity that regulates the business of medical 
                malpractice insurance under State law, if such manual 
                includes only--
                            ``(I) information and conduct described in 
                        clauses (i), (ii), and (iii), including 
                        relativity factors;
                            ``(II) during the transition period, a 
                        trend factor or information to which a trend 
                        factor has been applied, to the extent 
                        permitted under subparagraph (C); and
                            ``(III) explanations and instructions for 
                        using the manual (or any of the information 
                        contained in the manual), if such agreement or 
                        joint conduct does not include an agreement 
                        among competitors to adhere, or to require 
                        adherence, to any of such explanations or 
                        instructions;
                    ``(v) to provide medical malpractice insurance 
                pursuant to a public necessity market mechanism; or
                    ``(vi) to administer a public necessity market 
                mechanism in a State, pursuant to the authorization of 
                and under the supervision of such State, if all persons 
                who provide medical malpractice insurance in such State 
                pursuant to such mechanism, and all persons seeking to 
                obtain medical malpractice insurance through such 
                mechanism, have a reasonable opportunity to appeal 
                determinations affecting them to a governmental entity;
        to the extent that such conduct is regulated by State law.
            ``(C) During the transition period, the antitrust laws 
        shall not be applicable to conduct that consists of making an 
        agreement or engaging in joint conduct to determine or 
        disseminate a trend factor, to the extent that such conduct is 
        regulated by State law.
            ``(2) Subsequent to the transition period, the independent 
        purchase of a trend factor by a person engaged in the business 
        of medical malpractice insurance from a person not engaged in 
        providing such insurance (and not affiliated with a person 
        engaged in providing such insurance) shall be presumed not to 
        violate the antitrust laws.
            ``(3) The Federal Trade Commission Act shall be applicable 
        to the business of medical malpractice insurance to the extent 
        that such business is not regulated by State law, except that, 
        with respect to enforcement of the antitrust laws, section 5 of 
        such Act shall be applicable to the business of medical 
        malpractice insurance to the same extent as the other antitrust 
        laws.'', and
            (2) by adding at the end the following:
    ``(c) For purposes of subsection (b)--
            ``(1) the term `antitrust laws' has the meaning given it in 
        subsection (a) of the first section of the Clayton Act (15 
        U.S.C. 12), except that such term includes section 5 of the 
        Federal Trade Commission Act (15 U.S.C. 45) as such section 5 
        applies to conduct that constitutes a violation of the Sherman 
        Act or the Clayton Act;
            ``(2) the term `developed losses' means aggregate paid 
        losses and aggregate reserves held for received claims, as 
        adjusted by a loss development factor;
            ``(3) the term `historical data' means information 
        respecting--
                    ``(A) losses paid by, claims received by, reserves 
                for such claims set aside by, or units of exposure to 
                loss in medical malpractice insurance policies sold by 
                any person engaged in the business of medical 
                malpractice insurance; or
                    ``(B) medical malpractice insurance premiums 
                received by any person engaged in the business of 
                medical malpractice insurance, if such information is 
                not disseminated in a form from which information 
                respecting premiums received by any separately 
                identifiable person engaged in the business of medical 
                malpractice insurance may be derived;
            ``(4) the term `medical malpractice insurance policy' means 
        a contract under which medical malpractice insurance is sold to 
        an insured;
            ``(5) the term `loss' means an amount paid or to be paid by 
        a person engaged in the business of medical malpractice 
        insurance to (or for the benefit of) a claimant to satisfy a 
        claim on a medical malpractice insurance policy, and includes 
        any attorney, investigatory, or litigation expenses that are 
        separately incurred, identified, and allocated by such person 
        with respect to that particular claim;
            ``(6) the term `loss development factor' means an 
        adjustment to be made to the aggregate of losses incurred 
        during a prior period of time that have been paid or for which 
        claims have been received and reserves are being held, in order 
        to estimate the aggregate of the losses incurred during such 
        period that will ultimately be paid;
            ``(7) the term `medical malpractice insurance' means 
        insurance against loss caused by the action or inaction of any 
        health care provider;
            ``(8) the term `public necessity market mechanism' means a 
        plan established by State law or by the State entity that 
        regulates the business of medical malpractice insurance under 
        State law--
                    ``(A) for providing a type of medical malpractice 
                insurance in a State;
                    ``(B) in which the persons providing such type of 
                medical malpractice insurance pursuant to such 
                mechanism represent a substantial number of the persons 
                engaged in the business of providing such type of 
                insurance in such State and are either required by 
                State law, or formally requested or ordered by such 
                State entity, to participate;
                    ``(C) the purpose of which is to make such type of 
                insurance available to persons who would not otherwise 
                be able to obtain such type of insurance at affordable 
                cost; and
                    ``(D) in which the rate for such type of insurance 
                is subject to the approval or disapproval of such 
                State;
            ``(9) the term `relativity factor' means a ratio comparing 
        one classification of historical data to another such 
        classification, or comparing developed losses in one such 
        classification to developed losses in another such 
        classification;
            ``(10) the term `transition period' means the 2-year period 
        beginning on the effective date of the Insurance Competitive 
        Pricing Act of 2003; and
            ``(11) the term `trend factor' means an adjustment to be 
        made to developed losses in order to account for any change 
        that is anticipated to affect losses.''.

SEC. 104. STUDY AND REPORT.

    (a) Study.--During the 5-year period beginning on the effective 
date of this title, the Attorney General shall conduct a study to 
determine the effect of this title, and the amendments made by this 
title, on the business of medical malpractice insurance.
    (b) Report.--Not later than 1 year after the expiration of the 5-
year period referred to in subsection (a), the Attorney General shall 
submit, to the Speaker of the House of Representatives and the 
President pro tempore of the Senate, a report summarizing the results 
of the study required by subsection (a).

SEC. 105. EFFECTIVE DATE.

    This title shall take effect 1 year after the date of the enactment 
of this Act.

     TITLE II--ADDRESSING CURRENT ISSUES FOR HEALTH CARE PROVIDERS

SEC. 201. PROMPT PAYMENT OF CLAIMS.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--(A) Subpart 2 of 
        part A of title XXVII of the Public Health Service Act is 
amended by adding at the end the following new section:

``SEC. 2707. PROMPT PAYMENT OF CLAIMS.

    ``(a) In General.--A group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, shall provide for prompt payment of claims submitted for 
health care services or supplies furnished to a participant, 
beneficiary, or enrollee with respect to benefits covered by the plan 
or issuer, in a manner that is no less protective than the provisions 
referred to in subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan or coverage involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, to comply with the provisions referred to in subsection 
(b).''.
            (2) ERISA amendments.--(A) Subpart B of part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 is amended by adding at the end the following new section:

``SEC. 714. PROMPT PAYMENT OF CLAIMS.

    ``(a) In General.--A group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, shall provide for prompt payment of claims submitted for 
health care services or supplies furnished to a participant or 
beneficiary with respect to benefits covered by the plan or issuer, in 
a manner that is no less protective than the provisions referred to in 
subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan or coverage involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, to comply with the provisions referred to in subsection 
(b).''.
            (D) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 713 the 
        following new item:

``Sec. 714. Prompt payment of claims.''.
            (3) Internal revenue code amendments.--
                    (A) In general.--Subchapter B of chapter 100 of the 
                Internal Revenue Code of 1986 is amended--
                            (i) in the table of sections, by inserting 
                        after the item relating to section 9812 the 
                        following new item:

                              ``Sec. 9813. Prompt payment of claims.'';
                        and
                            (ii) by inserting after section 9812 the 
                        following:

``SEC. 9813. PROMPT PAYMENT OF CLAIMS.

    ``A group health plan shall provide for prompt payment of claims 
submitted for health care services or supplies furnished to a 
participant or beneficiary with respect to benefits covered by the 
plan, in a manner that is no less protective than the provisions 
referred to in subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan to comply with the 
provisions referred to in subsection (b).''.
    (b) Individual Health Insurance.--(1) Part B of title XXVII of the 
Public Health Service Act is amended by inserting after section 2752 
the following new section:

``SEC. 2753. PROMPT PAYMENT OF CLAIMS.

    ``The provisions of section 2707 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as they apply to health insurance coverage offered 
by a health insurance issuer in connection with a group health plan in 
the small or large group market.''.
    (c) Protection of States' Rights.--Any issue relating to prompt 
payment for health care services or supplies that is not governed by 
any provision of law as amended by this section shall be governed by 
otherwise applicable State or Federal law. This section (and the 
provisions amended by this section) does not preempt or supercede any 
law that imposes shorter time frames for payment, greater penalties for 
non-payment, and, in general, provides greater assurances that group 
health plans and health insurance issuers provide for prompt payment of 
claims submitted for health care services or supplies furnished to a 
participant, beneficiary, or enrollee with respect to benefits covered 
by the plan or issuer.
    (d) Effective Dates.--
            (1) Group health plans and group health insurance 
        coverage.--The amendments made by subsection (a) apply with 
        respect to group health plans for plan years beginning on or 
        after January 1, 2003.
            (2) Individual health insurance coverage.--The amendment 
        made by subsection (b) apply with respect to health insurance 
        coverage offered, sold, issued, renewed, in effect, or operated 
        in the individual market on or after such date.

SEC. 202. ELIMINATING NURSE SHORTAGES.

    Title VIII of the Public Health Service Act (42 U.S.C. 296 et seq.) 
is amended--
            (1) in section 846(a)(3), by inserting ``in a nursing home, 
        in a hospice, in a home health agency, in a nurse-managed 
        health center, in a public health department,'' after ``in a 
        public hospital,'';
            (2) in section 801, by adding at the end the following:
            ``(9) Health care facility.--The term `health care 
        facility' means an Indian Health service health center, a 
        Native Hawaiian health center, a hospital, a migrant health 
        center, a community health center, a Federally qualified health 
        center, a nurse-managed health center, a rural health clinic, a 
        nursing home, a home health care agency, a hospice, a public 
        health clinic, a long-term care facility, a skilled nursing 
        facility, or any other public, nonprofit, or private facility 
        designated by the Secretary.''; and
            (3) by adding at the end the following:

       ``PART H--NATIONAL NURSE SERVICE CORPS SCHOLARSHIP PROGRAM

``SEC. 851. NATIONAL NURSE SERVICE CORPS SCHOLARSHIP PROGRAM.

    ``(a) Program Authorized.--The Secretary shall establish a National 
Nurse Service Corps Scholarship program (referred to in this section as 
the `program') that provides scholarships to individuals seeking 
nursing education in exchange for service by such individuals in 
critical nursing shortage areas or facilities.
    ``(b) Preference.--In awarding scholarships under this section, the 
Secretary shall give preference to applicants with the greatest 
financial need, applicants who agree to serve in health care facilities 
experiencing nursing shortages in medically underserved areas, 
applicants currently working in a health care facility who agree to 
serve the period of obligated service at such facility, minority nurse 
applicants, and applicants with an interest in a practice area of 
nursing that has unmet needs.
    ``(c) Requirements.--To be eligible to participate in the program, 
an individual must--
            ``(1) be accepted for enrollment, or be enrolled, in an 
        accredited school of nursing, on a full- or part-time basis, to 
        take courses leading to a collegiate or associate degree in 
        nursing, or a diploma in nursing;
            ``(2) submit an application to participate in the program; 
        and
            ``(3) enter into an agreement with the Secretary, at the 
        time of submittal of such application, to--
                    ``(A) accept the conditions of the scholarship and 
                remain enrolled in a school of nursing;
                    ``(B) maintain an acceptable level of academic 
                standing;
                    ``(C) maintain enrollment in a course of study 
                until the individual completes the course of study; and
                    ``(D) serve as a nurse for a period of not less 
                than 2 years in a critical nursing shortage area or 
                facility, or the individual may complete such required 
                period of service on a part-time basis subject to--
                            ``(i) an agreement entered into by the 
                        facility and the individual which is approved 
                        by the Secretary; and
                            ``(ii) the individual agrees in writing 
                        that the period of obligated service will be 
                        extended so that the aggregate amount of less 
                        than full-time service performed will equal the 
                        amount of service that would be performed 
                        through full-time service.
    ``(d) Rule of Construction.--In selecting individuals to 
participate in the program, the Secretary shall give preference to 
individuals serving at public or nonprofit private facilities, unless 
only a private facility is present in the geographic area that the 
Secretary determines is experiencing a nursing shortage. While giving 
priority to individuals who propose to provide service in public or 
nonprofit private facilities, the Secretary must not disregard the 
needs of areas that individuals seek to provide services in which no 
public or nonprofit private facility is operating, including rural 
areas.
    ``(e) Applications.--
            ``(1) In general.--The application forms for the programs 
        shall include--
                    ``(A) a fair summary of the rights and liabilities 
                of an individual whose application is approved by the 
                Secretary; and
                    ``(B) information respecting meeting a service 
                obligation and such other information as may be 
                necessary for the individual to understand the program.
            ``(2) Accessibility.--The application form and all other 
        information furnished by the Secretary shall be written so that 
        it may be understood by the average individual applying to 
        participate in the program. The Secretary shall make such 
        application forms, and other information available to 
        individuals desiring to participate in the program, on a date 
        sufficiently early to ensure that such individuals have 
        adequate time to carefully review and evaluate such forms and 
        information.
            ``(3) Distribution.--The Secretary shall distribute to 
        junior and senior high schools, community colleges, 
        universities, and schools of nursing materials providing 
        information on the program and shall encourage the schools to 
        disseminate the materials to students of the schools.
    ``(f) Scholarship.--
            ``(1) In general.--A scholarship provided to a student for 
        a school year under a written contract under the program shall 
        consist of--
                    ``(A) payment to, or (in accordance with paragraph 
                (2)) on behalf of the student of--
                            ``(i) the tuition of the student in such 
                        school year; and
                            ``(ii) all other reasonable educational 
                        expenses and support services, including fees, 
                        books, and laboratory expenses incurred by the 
                        student in such school year; and
                    ``(B) payment to the student of a stipend of $400 
                per month (adjusted in accordance with paragraph (3)) 
                for each month that the student is enrolled.
            ``(2) Contracts.--
                    ``(A) With a school of nursing.--The Secretary may 
                contract with a school of nursing, in which a 
                participant in the program is enrolled, for the payment 
                to the school of nursing of the amounts of tuition and 
                other reasonable educational expenses described in 
                paragraph (1)(A).
                    ``(B) With an individual.--The Secretary shall 
                prepare a written contract for the program that shall 
                be provided to any individual who is enrolled or 
                accepted for enrollment at a school of nursing and who 
                desires to participate in the program at the time that 
                an application is provided to such individual. The 
                contract described in this paragraph shall contain a 
                provision that any financial obligation of the United 
                States arising out of a contract entered into under 
                this section and any obligation  of the individual 
which is conditioned thereon, is contingent upon funds being 
appropriated for scholarships under this section.
            ``(3) Monthly stipend.--The amount of the monthly stipend 
        for each month that a student is enrolled, specified in 
        paragraph (1)(B) and as previously adjusted (if at all) in 
        accordance with this paragraph, shall be increased by the 
        Secretary as the Secretary determines to be reasonable.
    ``(g) Breach of Agreement.--In the case of an individual who enters 
into an agreement under this section to provide service as a nurse in 
consideration for receiving a scholarship, such individual is liable to 
the Federal Government in accordance with sections 338E and 338F as 
amended in the future. If the individual begins providing less than 
full-time service but fails to begin or complete the period of 
obligated service, the methods stated in section 338E(c) for 
determining the damages for breach of the individual's written contract 
will be used after converting periods of obligated service or of 
service performed into their full-time equivalence.
    ``(h) Fund Regarding Use of Amounts Recovered for Contract 
Breach.--There is established in the Treasury of the United States a 
fund to be known as the National Nurse Service Corps Replacement Fund. 
Such fund shall be governed under section 338F.
    ``(i) Service Information.--The Secretary shall provide to an 
individual who has participated in the program and is nearing the 
conclusion of his or her service obligation, information regarding 
other opportunities for nursing in critical nursing shortage areas or 
facilities.
    ``(j) Report.--Not later than 18 months after the first loan cycle, 
and annually thereafter, the Secretary shall prepare and submit to 
Congress a report describing the program, including statements 
regarding--
            ``(1) the number of enrollees, scholarships, and grant 
        recipients by year of study;
            ``(2) the number of graduates;
            ``(3) the amount of scholarship payments made for each of 
        tuition, stipends, and other expenses;
            ``(4) which educational institution the scholar attended;
            ``(5) the number and placement location of the scholars;
            ``(6) the default rate and actions required;
            ``(7) the amount of outstanding default funds;
            ``(8) to the extent that it can be determined, the reason 
        for the default;
            ``(9) the demographics of the individuals participating in 
        the scholarship program; and
            ``(10) recommendations for future modifications of the 
        scholarship program.
    ``(k) Definitions.--In this section:
            ``(1) Community health center.--The term `community health 
        center' has the meaning given such term in section 330(a).
            ``(2) Critical nursing shortage area or facility.--
                    ``(A) In general.--The term `critical nursing 
                shortage area or facility' means--
                            ``(i) an urban or rural area that the 
                        Secretary determines is experiencing a nursing 
                        shortage;
                            ``(ii) a population that the Secretary 
                        determines has such a shortage; or
                            ``(iii) a health care facility or other 
                        public, nonprofit, or private facility that the 
                        Secretary determines has a shortage.
                    ``(B) Factors to consider.--In making a 
                determination regarding a critical nursing shortage 
                area or facility, the Secretary shall use the criteria 
                in section 846 for not more than 12 months, and after 
                such period--
                            ``(i) the ratio of available nurses to the 
                        number of individuals in the area or population 
                        group;
                            ``(ii) the demonstrated need of a health 
                        care facility or other public, nonprofit, or 
                        private facility in the area; or
                            ``(iii) the presence of innovative 
                        retention strategies utilized by eligible 
                        facilities.
            ``(3) Rural health clinic.--The term `rural health clinic' 
        has the meaning given such term in section 1861(aa)(2) of the 
        Social Security Act.
    ``(l) Authorization of Appropriations.--For the purpose of payments 
under agreements entered into under subsection (a), there are 
authorized to be appropriated $40,000,000 for fiscal year 2003 and such 
sums as may be necessary for fiscal years 2004 through 2007.

``PART I--INITIATIVES TO RECRUIT NURSES AND COMBAT THE NURSING SHORTAGE

``SEC. 855. NURSE RECRUITMENT GRANT PROGRAM.

    ``(a) Program Authorized.--The Secretary shall award grants to 
eligible entities to increase nursing education opportunities.
    ``(b) Eligible Entity.--In this section, the term `eligible entity' 
means a school of nursing, or a health care facility, or a partnership 
of such school and facility.
    ``(c) Use of Funds.--An eligible entity that receives a grant under 
subsection (a) shall use funds received from such grant to--
            ``(1) support outreach programs at primary, junior, and 
        secondary schools that inform guidance counselors and students 
        of education opportunities regarding nursing;
            ``(2) carry out special projects to increase nursing 
        education opportunities for individuals who are from 
        disadvantaged backgrounds (including economically disadvantaged 
        backgrounds and racial and ethnic minorities underrepresented 
        among registered nurses) by providing student scholarships or 
        stipends, pre-entry preparation, or retention activities;
            ``(3) support education programs for nursing students who 
        require assistance with math, science, English, and medical 
        terminology;
            ``(4) meet the costs of dependent care and transportation 
        for individuals who are taking part in a nursing education 
        program at any level; or
            ``(5) support community-based partnerships seeking to 
        recruit nurses in rural communities and medically underserved 
        urban communities, and other communities experiencing a nursing 
        shortage.
    ``(d) Application.--An eligible entity desiring a grant under 
subsection (a) shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 2003 
and such sums as may be necessary for fiscal years 2004 through 2007.

        ``PART J--INITIATIVES TO STRENGTHEN THE NURSE WORKFORCE

``SEC. 857. GRANTS FOR CAREER LADDER PROGRAMS.

    ``(a) Program Authorized.--The Secretary shall award grants to 
eligible entities to assist individuals and develop programs to assist 
individuals in obtaining education and training required to enter the 
nursing profession and advance within such profession.
    ``(b) Definition.--The term `eligible entity' means a school of 
nursing or a health care facility, or a partnership of such school and 
facility.
    ``(c) Use of Funds.--An eligible entity that receives a grant under 
subsection (a) shall use such funds received through such grant to--
            ``(1) establish student scholarships or stipends for nurse 
        professionals, licensed practical nurses, certified nurse 
        assistants, and home health aides who enroll in entry level 
        nursing programs, advanced practice nursing degree programs, 
        RN/Master nursing degree programs, doctoral nursing programs, 
        nurse administrator programs, and training programs focused on 
        specific technology use or disease management;
            ``(2) provide career counseling to individuals seeking to 
        advance within the nursing profession;
            ``(3) provide employees of the facility advanced training 
        and education at the school of nursing or health care facility;
            ``(4) establish or expand nursing practice arrangements in 
        noninstitutional settings to demonstrate methods to improve 
        access to primary health care in medically underserved 
        communities; and
            ``(5) develop programs, including distance learning 
        programs in coordination with the Office for the Advancement of 
        Telehealth, to facilitate educational advancement for 
        individuals with existing degrees or health care training.
    ``(d) Application.--An eligible entity seeking a grant under 
subsection (a) shall submit an application to the Secretary at such 
time, in such a manner, and containing such information as the 
Secretary may reasonably require.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $20,000,000 for fiscal year 2003 
and such sums as may be necessary for fiscal years 2004 through 2007.

``SEC. 858. GRANTS FOR NURSE TRAINING IN LONG-TERM CARE FOR THE 
              ELDERLY.

    ``(a) Program Authorized.--The Secretary shall award grants to 
eligible entities to develop and incorporate gerontology curriculum and 
competencies and to encourage individuals to enter the nursing 
profession with a focus on providing long-term care for the elderly.
    ``(b) Eligible Entity.--The term `eligible entity' means a--
            ``(1) school of nursing;
            ``(2) health care facility; or
            ``(3) partnership of paragraphs (1) and (2).
    ``(c) Use of Funds.--An eligible entity that receives a grant under 
subsection (a) shall use funds under such grant to--
            ``(1) provide training to individuals who will provide 
        long-term care for the elderly;
            ``(2) develop stand alone courses in gerontological nursing 
        to support concentrations, minors, and majors in the 
        discipline;
            ``(3) train faculty members in gerontological nursing; or
            ``(4) provide continuing education in gerontological 
        nursing.
    ``(d) Application.--An eligible entity desiring a grant under 
subsection (a) shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(e) Definitions.--For the purposes of this section, the term 
`health care facility' means a hospital, nursing home, home health care 
agency, hospice, skilled nursing facility, long-term care facility, or 
any other facility designated by the Secretary.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $12,000,000 for fiscal year 2003 
and such sums as may be necessary for fiscal years 2004 through 2007.

``SEC. 859. GRANTS FOR INTERNSHIP AND RESIDENCY PROGRAMS.

    ``(a) Program Authorized.--The Secretary shall award grants to an 
eligible entity to develop internship and residency programs that 
encourage mentoring and the development of specialties.
    ``(b) Definition.--The term `eligible entity' means a partnership 
of a school of nursing and health care facility.
    ``(c) Use of Funds.--An eligible entity that receives a grant under 
subsection (a) shall use such funds received through such grant to--
            ``(1) develop internship and residency programs and 
        curriculum and training programs for graduates of a nursing 
        program;
            ``(2) provide support for faculty and mentors; and
            ``(3) provide support for nurses participating in 
        internship and residency programs on both a full-time and part-
        time basis.
    ``(d) Application.--An eligible entity seeking a grant under 
subsection (a) shall submit an application to the Secretary at such 
time, in such a manner, and containing such information as the 
Secretary may reasonably require.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 2003 
and such sums as may be necessary for fiscal years 2004 through 2007.

``SEC. 860. DEVELOPING RETENTION STRATEGIES AND BEST PRACTICES IN 
              NURSING STAFF MANAGEMENT.

    ``(a) Program Authorized.--The Secretary shall award grants to 
eligible entities to carry out and evaluate demonstrations of models 
and best practices in nursing care and develop innovative strategies or 
approaches for retention of professional nurses.
    ``(b) Definitions.--In this section:
            ``(1) Eligible entity.--The term `eligible entity' means--
                    ``(A) a partnership or coalition containing a 
                health care facility and a school of nursing;
                    ``(B) a partnership or coalition containing a 
                health care facility and another organization with 
                expertise in outcome and cost-effectiveness 
                measurement; or
                    ``(C) containing a health care facility 
                demonstrating proficiency in outcomes and cost-
                effectiveness measurement, and receipt of accreditation 
                by an accepted organization shall constitute evidence 
                of such proficiency.
            ``(2) Nurse leadership.--The term `nurse leadership' 
        includes nurse executives, nurse administrators, and nurse 
        managers.
            ``(3) Professional nurse.--The term `professional nurse' 
        means a registered nurse who holds a valid and unrestricted 
        license to practice nursing in a State.
    ``(c) Distribution of Grants.--Grants awarded under this section 
shall be distributed among a variety of geographic regions and among a 
range of different types and sizes of health care facilities.
    ``(d) Duration of Grants.--Grants awarded under this section shall 
be awarded for a period not greater than 2 years (and may be renewable 
only once).
    ``(e) Allocation.--The Secretary shall determine the amount of a 
grant awarded under this section to the nursing services of the health 
care facility based on the number of staffed beds as follows, and if 
the Secretary deems appropriate these amounts may be adjusted:
            ``(1) A maximum of $200,000 for a facility with less than 
        100 staffed beds.
            ``(2) A maximum of $400,000 for a facility with less than 
        400 staffed beds.
            ``(3) A maximum of $600,000 for a facility with 400 or more 
        staffed beds.
    ``(f) Priority Criteria.--The Secretary shall give priority in 
awarding grants under this section to health care facilities that have 
not previously received a grant under this section, and in the case of 
a grant renewal, the Secretary shall give priority to grant recipients 
who have demonstrated outcome improvements or have been designated as a 
magnet hospital by the American Nurses Credentialing Center.
    ``(g) Use of Funds.--An eligible entity that receives a grant under 
subsection (a) shall use such grant funds to do one or more of the 
following:
            ``(1) Improve the quality of the health care facility work 
        environment, including improving communication and 
        collaboration among health care professionals.
            ``(2) Initiate or maintain aggressive nurse retention 
        programs, including other initiatives as deemed appropriate by 
        the nurse retention committee at the health care facility.
            ``(3) Reduce workplace injuries.
            ``(4) Reduce rates of nursing sensitive patient outcomes.
            ``(5) Provide high quality evaluations of the cost-
        effectiveness and patient-outcomes of best practices, to assist 
        health care facility decision-makers in determining appropriate 
        nurse retention strategies.
            ``(6) Promote continuing nursing education and career 
        development.
    ``(h) Application.--
            ``(1) In general.--An eligible entity desiring a grant 
        under subsection (a) shall submit an application to the 
        Secretary at such time, and in such manner, and containing such 
        information as the Secretary may reasonably require.
            ``(2) Contents.--The application submitted under paragraph 
        (1) shall include a description of--
                    ``(A) the project or projects proposed to be 
                carried out with grant funds;
                    ``(B) the means by which to evaluate the project 
                with respect to its cost-effectiveness and outcomes as 
                they relate to staff turnover, workplace injuries, and 
                patient care outcomes that are sensitive to nursing 
                care; and
                    ``(C) the system of patient outcomes measurement, 
                which shall be described by the nurse leadership and 
                professional nurses of the health care facility and 
                shall be sensitive to nursing care and shall evaluate 
                the specific needs of the patients served by the health 
                care facility and the educational needs of the nursing 
                staff at such facility to meet the needs of the 
                patients, and the health care facility must allocate 
                sufficient funds to carry out the system;
                    ``(D) the health care facility's organizational and 
                clinical decision-making processes that incorporate the 
                input of the nursing staff, including the development 
                of a nurse retention committee, the inclusion of nurse 
                executive participation in senior level management of 
                the health care facility, and a nurse residency 
                training program for new graduate nurses entering the 
                workforce on a full-time basis, or nurses returning to 
                work at a health care facility on a full-time basis 
                after an absence of not less than 3 years without 
                working in the nursing field.
    ``(i) Authorization of Appropriations.--There is to be authorized 
to be appropriated to carry out this section $10,000,000 for fiscal 
year 2003 and such sums as may be necessary for fiscal years 2004 
through 2007.

``SEC. 861. STIPEND AND SCHOLARSHIP PROGRAM.

    ``(a) Program Authorized.--
            ``(1) In general.--The Secretary shall establish a 
        scholarship and stipend program to encourage individuals to 
        seek a masters degree or a doctoral degree at a school of 
        nursing.
            ``(2) Limitation.--Assistance provided under paragraph (1) 
        for a part-time masters degree program shall be provided for 
        not more than 6 years and for a part-time doctoral degree 
        program not more than 7 years.
    ``(b) Eligibility.--To be eligible to receive a scholarship or 
stipend under this section, an individual shall--
            ``(1) submit an application to the Secretary at such time, 
        in such manner, and containing such information as the 
        Secretary may reasonably require;
            ``(2) be accepted for enrollment, or be enrolled, in an 
        accredited school of nursing, on a full- or part-time basis to 
        take courses leading to a masters degree or doctoral degree;
            ``(3) enter into an agreement with the Secretary, at the 
        time of submittal of such application, to--
                    ``(A) accept the conditions of the scholarship and 
                remain enrolled in a school of nursing;
                    ``(B) maintain an acceptable level of academic 
                standing; and
                    ``(C) maintain enrollment in a course of study 
                until the individual completes the course of study; and
            ``(4) teach at an accredited school of nursing for 1 year 
        for each year of assistance with a course load determined by 
        the school of nursing where the teaching will take place, and 
        the individual may complete such required period of service on 
        a part-time basis subject to--
                    ``(A) an agreement entered into by the facility and 
                the individual which is approved by the Secretary; and
                    ``(B) the individual agrees in writing that the 
                period of obligated service will be extended so that 
                the aggregate amount of less than full-time service 
                will equal the amount of service that would be 
                performed through full-time service.
    ``(c) Application.--The Secretary shall disseminate application 
forms to individuals and in such forms, include--
            ``(1) a summary of the rights and liabilities of an 
        individual whose application is approved by the Secretary; and
            ``(2) information respecting meeting the service obligation 
        described in subsection (b)(4).
    ``(d) Scholarship.--
            ``(1) In general.--A scholarship provided to a student for 
        a school year under a written contract under the program shall 
        consist of--
                    ``(A) payment to, or (in accordance with paragraph 
                (2)) on behalf of the student of--
                            ``(i) the tuition of the student in such 
                        school year; and
                            ``(ii) all other reasonable educational 
                        expenses and support services, including fees, 
                        books, and laboratory expenses incurred by the 
                        student in such school year; and
                    ``(B) payment to the student of a stipend of $400 
                per month (adjusted in accordance with paragraph (3)) 
                for each month that the student is enrolled.
            ``(2) Contracts.--
                    ``(A) With a school of nursing.--The Secretary may 
                contract with a school of nursing, in which a 
                participant in the program is enrolled, for the payment 
                to the school of nursing of the amounts of tuition and 
                other reasonable educational expenses described in 
                paragraph (1)(A).
                    ``(B) With an individual.--The Secretary shall 
                prepare a written contract for the program that shall 
                be provided to any individual who is enrolled or 
                accepted for enrollment at a school of nursing and who 
                desires to participate in the program at the time that 
                an application is provided to such individual. The 
                contract described in this paragraph shall contain a 
                provision that any financial obligation of the United 
                States arising out of a contract entered into under 
                this section and any obligation of the individual which 
                is conditioned thereon, is contingent upon funds being 
                appropriated for scholarships under this section.
            ``(3) Monthly stipend.--The amount of the monthly stipend 
        for each month that a student is enrolled, specified in 
        paragraph (1)(B) and as previously adjusted (if at all) in 
        accordance with this paragraph, shall be increased by the 
        Secretary as the Secretary determines to be reasonable.
    ``(e) Breach of Agreement.--In the case of an individual who enters 
into an agreement under this section to provide service as a nurse in 
consideration for receiving a scholarship, such individual is liable to 
the Federal Government in accordance with sections 338E and 338F as 
amended in the future. If the individual begins providing less than 
full-time service but fails to begin or complete the period of 
obligated service, the methods stated in section 338E(c) for 
determining the damages for breech of the individual's written contract 
will be used after converting periods of obligated service or of 
service performed into their full-time equivalence.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 2003 
and such sums as may be necessary for fiscal years 2004 through 
2007.''.

            TITLE III--MEDICAL MALPRACTICE LIABILITY REFORM

SEC. 301. DEFINITIONS.

    In this title, the following definitions apply:
            (1) Alternative dispute resolution system.--The term 
        ``alternative dispute resolution system'' means a system that 
        provides for the resolution of medical malpractice claims in a 
        manner other than through medical malpractice liability 
        actions.
            (2) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice claim, and any person on whose 
        behalf such a claim is alleged, including the decedent in the 
        case of an action brought through or on behalf of an estate.
            (3) Future damages.--The term ``future damages'' means 
        damages for economic or noneconomic loss incurred after the 
        time of judgment.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by the laws or 
        regulations of the State to be licensed or certified by the 
        State to provide such services in the State.
            (5) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by the laws or regulations of the State to be 
        licensed or certified by the State to engage in the delivery of 
        such services in the State.
            (6) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or a medical malpractice claim.
            (7) Mandatory.--The term ``mandatory'' means required to be 
        used by the parties to attempt to resolve a medical malpractice 
        claim notwithstanding any other provision of an agreement, 
        State law, or Federal law.
            (8) Mediation.--The term ``mediation'' means a settlement 
        process coordinated by a neutral third party and without the 
        ultimate rendering of a formal opinion as to factual or legal 
        findings.
            (9) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means a claim against a health care 
        provider, a health care professional, or a blood or tissue bank 
        licensed or registered by the Food and Drug Administration in 
        which a claimant alleges that injury was caused by the 
        provision of (or the failure to provide) health care services, 
        except that such term does not include--
                    (A) any claim based on an allegation of an 
                intentional tort; or
                    (B) any claim based on an allegation that a product 
                is defective or unreasonably dangerous.
            (10) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        brought in a State or Federal court against a health care 
        provider, a health care professional, or a blood or tissue bank 
        licensed or registered by the Food and Drug Administration in 
        which the plaintiff alleges a medical malpractice claim.

SEC. 302. FEDERAL TORT REFORM.

    (a) In General.--Except as provided in section 303, this title 
shall apply with respect to any medical malpractice liability action 
brought in any State or Federal court, except that this title shall not 
apply to a claim or action for damages arising from a vaccine-related 
injury or death to the extent that title XXI of the Public Health 
Service Act applies to the claim or action.
    (b) Preemption.--The provisions of this title shall preempt any 
State law to the extent such law relates to a type of tort reform 
included under this title and is inconsistent with such provisions.
    (c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this title shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this title shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of section 1331 or 1337 of 
title 28, United States Code.

SEC. 303. ALTERNATIVE DISPUTE RESOLUTION METHODS.

    (a) Mandatory Mediation.--In any medical malpractice liability 
action, before such action comes to trial, mediation shall be required. 
Such mediation shall be conducted by one or more mediators who are 
selected by agreement of the parties or, if the parties do not agree, 
who are qualified under applicable State law and selected by the court.
    (b) Requirements.--Mediation under subsection (a) shall be made 
available by a State subject to the following requirements:
            (1) Participation in such mediation shall be in lieu of any 
        alternative dispute resolution method required by any other law 
        or by any contractual arrangement made by or on behalf of the 
        parties before the commencement of the action.
            (2) Each State shall disclose to residents of the State the 
        availability and procedures for resolution of consumer 
        grievances regarding the provision of (or failure to provide) 
        health care services, including such mediation.
            (3) Each State shall provide that such mediation may begin 
        before or after, at the option of the claimant, the 
        commencement of a medical malpractice liability action.
            (4) The Attorney General, in consultation with the 
        Secretary of Health and Human Services, shall, by regulation, 
        develop requirements with respect to such mediation to ensure 
        that it is carried out in a manner that--
                    (A) is affordable for the parties involved;
                    (B) encourages timely resolution of claims;
                    (C) encourages the consistent and fair resolution 
                of claims; and
                    (D) provides for reasonably convenient access to 
                dispute resolution.
    (c) Further Redress and Admissibility.--Any party dissatisfied with 
a determination reached with respect to a medical malpractice claim as 
a result of an alternative dispute resolution method applied under this 
section shall not be bound by such determination. The results of any 
alternative dispute resolution method applied under this section, and 
all statements, offers, and communications made during the application 
of such method, shall be inadmissible for purposes of adjudicating the 
claim.

SEC. 304. PREVENTING FRIVOLOUS MALPRACTICE SUITS.

    (a) Certification.--The signatures of attorneys or parties 
constitute a certificate by them that they have read the pleading that 
to the best of their knowledge, information, and belief formed after 
reasonable inquiry the medical malpractice claim is not groundless and 
brought in bad faith or groundless and groundless and brought for the 
purpose of harassment. Attorneys or parties who shall bring a 
fictitious suit as an experiment to get an opinion of the court, or who 
shall file any fictitious pleading in a cause for such a purpose, or 
shall make statements in a pleading which they know to be groundless 
and false, for the purpose of securing a delay of the trial of the 
cause, shall be held guilty of contempt. If a pleading is signed in 
violation of this subsection, the court, upon motion or upon its own 
initiative, after notice and hearing, shall impose an appropriate 
sanction, such as striking the pleadings, dismissing the suit, and 
requiring payment of costs, attorneys fees, and sanctions (if 
appropriate) plus interest, upon the person who signed it, a 
represented party, or both.
    (b) Process; Rules.--Courts shall presume that pleadings are filed 
in good faith. No sanctions under this section may be imposed except 
for good cause, the particulars of which must be stated in the sanction 
order. The term ``groundless'' means, for purposes of this section, 
having no basis in law or fact and not warranted by good faith argument 
for the extension, modification, or reversal of existing law. A general 
denial does not constitute a violation of this subsection (a). The 
amount requested in damages, if any, does not constitute a violation of 
subsection (a).

SEC. 305. REQUIREMENT FOR AFFIDAVIT OF MERIT.

    (a) Requiring Submission With Complaint.--No medical malpractice 
liability action may be brought by any individual unless, at the time 
the individual brings the action (except as provided in subsection 
(b)(1)), the individual (or the individual's attorney) submits an 
affidavit declaring that--
            (1) the individual (or the individual's attorney) has 
        consulted and reviewed the facts of the action with a qualified 
        specialist;
            (2) the individual (or the individual's attorney) has 
        obtained a written report by a qualified specialist that 
        clearly identifies the individual and that includes the 
        specialist's statement of belief that, based on a review of the 
        available medical record and other relevant material, there is 
        a reasonable and meritorious cause for the filing of the action 
        against the defendant; and
            (3) on the basis of the qualified specialist's review and 
        consultation, that the individual (or the individual's 
        attorney) has concluded that there is a reasonable and 
        meritorious cause for the filing of the action.
    (b) Extension in Certain Instances.--
            (1) In general.--Subject to paragraph (2), subsection (a) 
        shall not apply with respect to an individual who brings a 
        medical malpractice liability action without submitting an 
        affidavit described in such subsection if--
                    (A) the individual is unable to obtain the 
                affidavit before the expiration of the applicable 
                statute of limitations;
                    (B) as of the time the individual brings the 
                action, the individual has been unable to obtain 
                adequate medical records or other information necessary 
                to prepare the affidavit; or
                    (C) other good cause exists for failing to submit 
                the affidavit.
            (2) Deadline for submission where extension applies.--In 
        the case of an individual who brings an action for which 
        paragraph (1) applies, the action shall be dismissed unless the 
        individual (or the individual's attorney) submits the affidavit 
        described in subsection (a) not later than--
                    (A) in the case of an action for which subparagraph 
                (A) of paragraph (1) applies, 90 days after bringing 
                the action;
                    (B) in the case of an action for which subparagraph 
                (B) of paragraph (1) applies, 90 days after obtaining 
                the information described in such subparagraph; or
                    (C) in the case of an action for which subparagraph 
                (C) of paragraph (1) applies, 90 days after the good 
                cause involved ceases to exist.
    (c) Qualified Specialist Defined.--In subsection (a), a ``qualified 
specialist'' means, with respect to a medical malpractice liability 
action, a health care professional who is reasonably believed by the 
individual bringing the action (or the individual's attorney)--
            (1) to be knowledgeable in the relevant issues involved in 
        the action,
            (2) to practice (or to have practiced) or to teach (or to 
        have taught) in the same area of health care or medicine that 
        is at issue in the action, and
            (3) in the case of an action against a physician, to be 
        board certified in a specialty relating to that area of 
        medicine.
    (d) Sanctions for Submitting False Allegations.--Upon the motion of 
any party or its own initiative, the court in a medical malpractice 
liability action may impose a sanction on a party or the party's 
attorney (or both), including a requirement that the party reimburse 
the other party to the action for costs and a reasonable attorney's 
fee, if an affidavit described in subsection (a) is submitted without 
reasonable cause and is found to be untrue.
    (e) Confidentiality of Specialist.--Upon a showing of good cause by 
a defendant, the court may ascertain the identity of a specialist 
referred to in subsection (a) while preserving confidentiality.

            TITLE IV--MEDICAL MALPRACTICE INSURANCE REFORMS

SEC. 401. ADVISORY COMMISSION ON MEDICAL MALPRACTICE.

    (a) Appointment.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services, in consultation with the Congress, shall appoint an 
        Advisory Commission on Medical Malpractice (in this section 
        referred to as the ``Commission'').
            (2) Composition.--The Commission shall consist of 11 
        members, appointed without regard to the civil service laws. 
        Seven members shall be representatives of health care 
        professional organizations, 2 of whom shall be self-employed 
        physicians (allopathic or osteopathic). The remaining members 
        shall have expertise in health care quality or economics, but 2 
        shall have expertise in insurance and at least 1 shall be a 
        representative of patients.
            (3) Terms; quorum.--The members of the Commission shall 
        serve until submission of the report pursuant to subsection 
        (d), at which time the Commission shall terminate. A vacancy 
        arising in the Commission shall be filled in the same manner as 
        the original appointment is made. A majority of members shall 
        constitute a quorum, and action shall be taken only by a 
        majority vote of those present and voting.
    (b) Duties.--The Commission shall examine the causes of the medical 
malpractice crisis. As part of such examination, the Commission shall 
study and examine the following issues:
            (1) The financial statements and information submitted to 
        regulators by insurance companies that offer medical 
        malpractice insurance, as well as any other information 
        maintained by regulators that may be relevant to this issue.
            (2) How reductions in the investment income of insurers may 
        be adversely affecting the financial outlook of these 
        companies, thus increasing physician premiums to compensate for 
        any declines.
            (3) The underwriting history of medical malpractice 
        insurance to determine whether premiums have historically 
        experienced similar increases and also determine whether 
        current market conditions are in some way unique.
            (4) The competitiveness of markets, particularly in those 
        areas experiencing the sharpest premium increases. For example, 
        has the lack of competition in the medical malpractice 
        insurance market adversely affected physician premiums?
            (5) How malpractice settlements and judgments compare to 
        premiums earned for medical malpractice lines of insurance. In 
        particular, how incurred but not yet reported holdings have 
        affected the reserve practices of medical malpractice insurers.
            (6) The effect of current laws (at both the Federal and 
        State levels) on medical malpractice insurance rates.
            (7) The underlying causes of changes in medical malpractice 
        insurance premiums.
    (c) Staffing; Compensation.--
            (1) Staffing.--The Secretary of Health and Human Services 
        shall furnish to the Commission an executive secretary and such 
        secretarial, clerical, and other services as may be necessary 
        to conduct its business, and may call upon other agencies of 
        the Government for statistical data, reports, and other 
        information which will assist the Commission in the performance 
        of its duties.
            (2) Compensation.--Members of the Commission, while serving 
        on business of the Commission (inclusive of travel time), shall 
        be entitled to receive the daily equivalent of the annual rate 
        of basic maximum rate of pay payable from time to time under 
        section 5376 of title 5, United States Code, for each day and, 
        while so serving away from their homes or regular places of 
        business, may be allowed travel expenses, including per diem in 
        lieu of subsistence, in the same manner as provided in section 
        5703 of title 5, United States Code, for individuals in the 
        Government employed intermittently.
    (d) Report.--Not later than one year after the date the Commission 
is appointed, the Commission shall submit to Congress a report that 
provides specific legislative changes that would address the problems 
the Commission found, including a proposal for the reduction of medical 
malpractice insurance rates.
    (e) Response to Report.--The appropriate committees of the House of 
Representatives and the Senate shall hold hearings on the Commission's 
report and consider legislation to address these problems.

SEC. 402. LIMITATION ON RATE OF INCREASE IN MEDICAL MALPRACTICE 
              INSURANCE RATES.

    (a) Declaration of Interstate Commerce.--Congress finds that 
medical malpractice insurance coverage affects interstate commerce.
    (b) Limitation on Rate of Increase.--Notwithstanding any other 
provision of law, effective on the date of the enactment of this Act, 
the rates charged for medical malpractice insurance coverage during the 
period beginning on the day after the date of the enactment of this Act 
and ending on the date that is 6 months after the date the Commission 
files its report under section 401(d) shall not exceed the rates in 
effect for such coverage as of January 1, 2002 (or, in the case of 
coverage not offered as of such date, such comparable rate as is 
approved by the Secretary of Health and Human Services) by more on an 
annual than the annual rate of increase in the consumer price index for 
all urban consumers plus 2 percentage points.
    (c) Exception.--Any entity which can demonstrate to the Secretary 
of Health and Human Services that under the terms of subsection (b) it 
would be unable to earn a fair rate of return shall be exempt from the 
limitation in rates under such subsection.

SEC. 403. WITHDRAWAL FROM MEDICAL MALPRACTICE INSURANCE MARKET.

    (a) Limitation.--Any entity that discontinues writing medical 
malpractice insurance coverage in a State shall also discontinue the 
writing of any other line of insurance in such State.
    (b) Orderly Withdrawal.--If an entity discontinues writing medical 
malpractice insurance coverage in a State, it shall file with the 
insurance commissioner of that State a plan of orderly withdrawal, 
pursuant to which the insurer shall make such arrangements as are 
necessary to ensure that any person insured by the entity shall 
continue to be insured until the end of the term of the policy held by 
such person.
    (c) Sunset.--Subsections (a) and (b) shall only apply during the 3-
year period beginning on the date of the enactment of this Act.

SEC. 404. GUARANTEED RENEWABILITY OF COVERAGE.

    (a) In General.--Subject to subsection (b), all medical malpractice 
insurance coverage shall be guaranteed renewable. Rates for such 
coverage shall increase by no more than the rate of increase in the 
health care component of the consumer price index for all urban 
consumers.
    (b) Exceptions.--
            (1) Rate freeze.--Subsection (a) shall not affect or 
        supersede the application of section 402.
            (2) Limitation.--An entity is not required to renew medical 
        malpractice insurance coverage in the case of fraud, excessive 
        claims on which indemnity has been paid, or nonpayment of 
        premiums by the insured health care provider.

SEC. 405. GUARANTEED COVERAGE FOR CERTAIN HEALTH CARE PROVIDERS.

    Any entity that is licensed to offer medical malpractice insurance 
coverage shall offer medical malpractice insurance coverage to any 
health care provider that has zero medical malpractice claims (as 
defined in section 301(10)) on which indemnity has been paid during the 
previous 3 years.

SEC. 406. MEDICAL MALPRACTICE INSURANCE DISCLOSURE.

    (a) In General.--Annually on or before March 1, every insurer 
writing medical malpractice insurance coverage to a health care 
provider shall file with the Secretary of Health and Human Services a 
copy of the Annual Statement it files with the Department of Insurance 
in the State in which it is domiciled. Every such insurer shall also 
file the following information with the Secretary:
            (1) Information on closed claims.--
                    (A) The number of new claims reported during the 
                preceding year, and the total amounts reserved for such 
                claims and for allocated loss adjustment expenses in 
                connection with such claims.
                    (B) The number of claims closed during the 
                preceding year, and the amount paid on such claims, 
                broken out as follows:
                            (i) The number of claims closed each year 
                        with payment, and the amount paid on such 
                        claims and on allocated loss adjustment 
                        expenses in connection with such claims.
                            (ii) The number of claims closed each year 
                        without payment, and the amount of allocated 
                        loss adjustment expenses in connection with 
                        such claims.
            (2) Information regarding verdicts, payment, and severity 
        of injury in connection with verdicts.--For each verdict 
        rendered against the insurer for more than $100,000, the amount 
        of the verdict, the amount paid to the plaintiff, and the 
        category of injury suffered by the plaintiff, categorized as 
        follows:
                    (A) Temporary injury.--
                            (i) Emotional distress.
                            (ii) lacerations, contusions, minor scars, 
                        and rash not resulting in permanent scarring or 
                        disfigurement.
                            (iii) Non-life-threatening infections.
                            (iv) Falls not resulting in fractures.
                            (v) Medication errors.
                    (B) Permanent injury.--
                            (i) Major injury, including loss of one or 
                        more fingers, organs, limbs, deafness, loss of 
                        sight, loss of fertility, permanent scarring or 
                        disfigurement, and brain damage.
                            (ii) Catastrophic injury requiring life-
                        long care or having a fatal prognosis.
                    (C) Death.--Death.
            (3) Information on rate changes.--Each rate change 
        implemented during the preceding five-year period, by state and 
        by medical specialty.
            (4) Information on premiums and losses by medical 
        specialty.--
                    (A) Written premiums and paid losses for the 
                preceding year, and earned premiums and incurred losses 
                for the preceding year, broken out by medical 
                specialty.
                    (B) Number of providers insured in each medical 
                specialty.
            (5) Information on premiums and losses by experience of the 
        insured.--
                    (A) Written premiums and paid losses for the 
                preceding year, and earned premiums and incurred losses 
                for the preceding year, broken out as follows:
                            (i) All insureds with no incidents within 
                        the preceding five-year period.
                            (ii) All insureds with one incident within 
                        the preceding five-year period.
                            (iii) All insureds with two incidents 
                        within the preceding five-year period.
                            (iv) All insureds with three or more 
                        incidents within the preceding five-year 
                        period.
                    (B) Number of providers insured--
                            (i) with no incidents within the preceding 
                        five-year period;
                            (ii) with one incident within the preceding 
                        five-year period;
                            (iii) with two incidents within the 
                        preceding five-year period; or
                            (iv) with three or more incidents within 
                        the preceding five-year period.
            (6) Information on the performance of the investments of 
        the insurer.--The value of the investments held in the 
        investment portfolio of the insurer as of December 31 of the 
        preceding calendar year, and the rate of return earned on such 
        investments, broken down by category of investment, as follows:
                    (A) United States government bonds.
                    (B) Bonds exempt from tax by the United States.
                    (C) Other bonds (unaffiliated).
                    (D) bonds of affiliates.
                    (E) Preferred stocks (unaffiliated),
                    (F) Preferred stocks of affiliates.
                    (G) Common stock (unaffiliated).
                    (H) Common stock of affiliates.
                    (I) Mortgage loans.
                    (J) Real estate.
                    (K) Any additional categories of investments 
                specified by the Secretary.
    (b) Annual Report.--The Secretary shall submit to Congress by July 
1 of each year a report on the performance of the medical malpractice 
insurance market during the preceding year. Such report shall be based 
on the information submitted pursuant to this section.
    (c) Rules.--The Secretary shall promulgate rules to carry out the 
purposes of this section.
    (d) Insurer Defined.--For purposes of this section, the term 
``insurer'' includes every insurance company authorized to transact 
insurance business in any State, every risk retention group, every 
insurance company issuing insurance to or through a purchasing group, 
and any other person providing insurance coverage.

SEC. 407. MEDICAL MALPRACTICE INSURANCE PRICE COMPARISON.

    (a) Internet Site.--Not later than July 1, 2003, and after 
consultation with the medical malpractice insurance industry, the 
Secretary of Health and Human Services shall establish an interactive, 
secure internet site (in this section referred to as the ``internet 
site'') which shall enable any health care provider licensed in the 
United States to obtain a quote from each medical malpractice insurer 
licensed to write the type of coverage sought by the provider.
    (b) Online Forms.--
            (1) In general.--The internet site shall enable health care 
        providers to complete an online form that shall capture a 
        comprehensive set of information sufficient to generate a quote 
        for each insurer. The Secretary shall develop transmission 
        software components which allow such information to be 
        formatted for delivery to each medical malpractice insurer 
        based on the requirements of the computer system of the 
        insurer.
            (2) Protection of confidentiality of information 
        disclosed.--All information provided by a health care provider 
        for purposes of generating a quote through the internet site 
        shall be used only for that purpose and shall not be used in 
        connection with the National Physician's Data Bank or for any 
        other purposes, including in connection with any legal action.
    (c) Integration of Rating Criteria.--The Secretary shall integrate 
the rating criteria of each insurer into its online form after 
consultation with each insurer. The Secretary shall integrate such 
criteria using one of the following methods:
            (1) Developing a customized interface with the insurer's 
        own rating engine.
            (2) Accessing a third-party rating engine of the insurer's 
        choice.
            (3) Loading the carrier's rating information into a rating 
        engine operated by the Secretary.
            (4) Any other method agreed on between the Secretary and 
        the insurer.
    (d) Presentation of Quotes.--After a health care provider has 
answered all the questions appearing on the online form, such provider 
will be presented with quotes from each medical malpractice insurer 
licensed to write the coverage requested by the provider.
    (e) Accuracy of Quotes.--Quotes provided at the internet site shall 
at all times be accurate. Whenever any insurer changes its rates, such 
rate changes shall be implemented at the internet site by the 
Secretary, in consultation with the insurer, as soon as practicable, 
but in no event later than 10 days after such changes take effect. 
During any period during which an insurer has changed its rates but the 
Secretary has not yet implemented such changed rates on the internet 
site, quotes for that insurer shall not be obtainable at the internet 
site.
    (f) User-Friendly Features.--The Secretary shall design the 
internet site to incorporate user-friendly formats and self-help 
guidance materials, and shall develop a user-friendly internet user-
interface.
    (g) Contact Information.--The internet site shall also provide 
contact information, including address and telephone number, for each 
medical malpractice insurer for which a provider obtains a quote at the 
site.
    (h) Report.--Not later than December 31, 2004, the Secretary shall 
submit a report to the Congress on the development, implementation and 
effects of the internet site. Such report shall be based on--
            (1) the Secretary's consultation with health care 
        providers, medical malpractice insurers, State insurance 
        commissioners, and other interested parties; and
            (2) the Secretary's analysis of other information available 
        to the Secretary.
The report shall describe the Secretary's views concerning the extent 
to which this section has contributed to increasing the availability of 
medical malpractice insurance coverage, and the effect this section has 
had on the cost of medical malpractice insurance coverage.

                    TITLE V--TAX-RELATED PROVISIONS

SEC. 501. DEDUCTION FOR PREMIUMS FOR MEDICAL LIABILITY INSURANCE FOR 
              HIGH RISK SPECIALTIES.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by adding at the end the 
following new section:

``SEC. 199. DEDUCTION FOR PREMIUMS FOR MEDICAL LIABILITY INSURANCE FOR 
              HIGH RISK SPECIALTIES.

    ``(a) In General.--In the case of a physician whose medical 
practice is in a high risk specialty, there shall be allowed as a 
deduction from gross income for the taxable year an amount equal to 125 
percent of the aggregate premiums paid for medical liability insurance 
with respect to such specialty for such taxable year.
    ``(b) High Risk Specialty.--
            ``(1) In general.--For purposes of this section, a 
        specialty is a high risk specialty for a taxable year if, for 
        the calendar year in which the taxable year begins, the average 
        premiums for medical liability insurance with respect to such 
        specialty are equal to or greater than 67 percent of the 
        average premiums for medical liability insurance for all 
        specialties for such calendar year, based on a weighted average 
        of the number of physicians practicing in each specialty.
            ``(2) Specialties taken into account.--For purposes of 
        paragraph (1), the Secretary, in consultation with the 
        Secretary of Health and Human Services and appropriate 
        professional organizations, shall determine the specialties to 
        be taken into account for purposes of paragraph (1) and shall 
        consider those specialities for which a payment may be made 
        under section 1886(h) of the Social Security Act. In making 
        such determination, the Secretary shall provide for an 
        appropriate treatment of subspecialties.
            ``(3) Publication of specialities.--The Secretary shall 
        publish the high risk specialities for a calendar year before 
        the beginning of the calendar year.
    ``(c) Physician.--The term `physician' has the meaning given such 
term by section 1861(r)(1) of the Social Security Act.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Medical practice spanning more than 1 specialty.--In 
        the case of a medical practice a portion of which is in a high 
        risk specialty, the portion of the premiums paid for medical 
        liability insurance that may be taken into account under 
        subsection (a) shall be determined under regulations prescribed 
        by the Secretary.
            ``(2) Group practice, etc.--Under regulations prescribed by 
        the Secretary, the deduction allowed by this section shall be 
        allowed in case of a group practice or health care facility 
        which is a C corporation in the manner prescribed by the 
        Secretary.
            ``(3) Denial of double benefit.--No deduction shall be 
        allowed under any other provision of this chapter for any 
        amount for which a deduction is allowed under this section.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
the following new item:

                              ``Sec. 199. Deduction for premiums for 
                                        medical liability insurance for 
                                        high risk specialties.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 502. DEDUCTION FOR PREMIUMS FOR MEDICAL LIABILITY INSURANCE FOR 
              PRACTICES SERVING MEDICALLY UNDERSERVED COMMUNITIES.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by adding at the end the 
following new section:

``SEC. 200. DEDUCTION FOR PREMIUMS FOR MEDICAL LIABILITY INSURANCE FOR 
              PRACTICES SERVING MEDICALLY UNDERSERVED COMMUNITIES.

    ``(a) In General.--In the case of a physician whose medical 
practice serves medically underserved communities, there shall be 
allowed as a deduction from gross income for the taxable year an amount 
equal to 125 percent of the aggregate premiums paid for medical 
liability insurance with respect to such practice for such taxable 
year.
    ``(b) Medically Underserved Community.--For purposes of this 
section, the term `medically underserved community' means a medically 
underserved community (as defined by section 799B of the Public Health 
Service Act) that has been designated under one of the categories 
specified in such section for a calendar year in which the taxable year 
of the physician begins.
    ``(c) Physician.--The term `physician' has the meaning given such 
term by section 1861(r)(1) of the Social Security Act.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Medical practice spanning more than 1 community.--In 
        the case of a medical practice a portion of which serves a 
        medically underserved community, the portion of the premiums 
        paid for medical liability insurance that may be taken into 
        account under subsection (a) shall be determined under 
        regulations prescribed by the Secretary.
            ``(2) Group practice, etc.--Under regulations prescribed by 
        the Secretary, the deduction allowed by this section shall be 
        allowed in case of a group practice or health care facility 
        which is a C corporation in the manner prescribed by the 
        Secretary.
            ``(3) Denial of double benefit.--No deduction shall be 
        allowed under any other provision of this chapter for any 
        amount for which a deduction is allowed under this section.
            ``(4) Election.--A physician may elect whether to take a 
        deduction under this section or under section 199.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
the following new item:

                              ``Sec. 200. Deduction for premiums for 
                                        medical liability insurance for 
                                        practices serving medically 
                                        underserved communities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

                    TITLE VI--ADDITIONAL PROVISIONS

SEC. 601. STATE CONSIDERATION OF ADDITIONAL AND ALTERNATIVE METHODS.

    It is the sense of Congress that the States, as primary regulators 
of the insurance industry, should consider the following additional and 
alternative methods for dealing with the rates and availability of 
medical malpractice insurance:
            (1) Using claims history as a rating factor in establishing 
        premiums and requiring each medical malpractice insurer to 
        offer its lowest rate to all doctors in a State meeting its 
        eligibility criteria for such rate.
            (2) Limiting the percentage of an insurer's assets that can 
        be invested in stocks or other high-risk investments and 
        preventing insurers from seeking to recoup losses on their 
        investments by raising rates.
            (3) Requiring prior approval by the state insurance 
        regulators of any medical malpractice insurance rates and 
        allowing health care providers to intervene in proceedings 
        regarding rate changes.
            (4) Establishing new medical malpractice insurance 
        entities, using loans authorized by States, similar to the 
        model (enacted in Missouri) that established a new workers 
        compensation insurer.
            (5) Setting up a fund to address birth-related neurological 
        injury compensation.

SEC. 602. MANDATING EQUAL TREATMENT BETWEEN TRADITIONAL INSURERS AND 
              RISK RETENTION GROUPS, INCLUDING MEDICAL MALPRACTICE RISK 
              RETENTION GROUPS.

    (a) Risk Retention Groups.--Section 3 of the Liability Risk 
Retention Act of 1986 (15 U.S.C. 3902) is amended--
            (1) in subsection (a)(1), in the matter before subparagraph 
        (A), by inserting ``or have a disparate impact on,'' after 
        ``directly or indirectly''; and
            (2) in subsection (c), by inserting ``or has a disparate 
        impact on'' after ``which discriminates against''.
    (b) Purchasing Groups.--Section 4 of such Act (15 U.S.C. 3903) is 
amended--
            (1) in subsection (a)--
                    (A) by striking ``or'' at the end of paragraph (7);
                    (B) by redesignating paragraph (8) as paragraph 
                (9); and
                    (C) by inserting after paragraph (7) the following 
                new paragraph:
            ``(8) have a disparate impact on a purchasing group; or''; 
        and
            (2) in subsection (c), by inserting ``or has a disparate 
        impact on'' after ``which discriminates against''.
                                 <all>