[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1055 Introduced in Senate (IS)]






108th CONGRESS
  1st Session
                                S. 1055

 To amend the Internal Revenue Code of 1986 to provide physicians and 
    other health care professionals with a tax credit for qualified 
 expenditures for medical professional malpractice insurance, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 13, 2003

  Mr. Durbin introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide physicians and 
    other health care professionals with a tax credit for qualified 
 expenditures for medical professional malpractice insurance, 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. CREDIT FOR QUALIFIED EXPENDITURES FOR MEDICAL PROFESSIONAL 
              MALPRACTICE INSURANCE.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business tax credits) 
is amended by adding at the end the following:

``SEC. 45G. CREDIT FOR EXPENDITURES FOR MEDICAL PROFESSIONAL 
              MALPRACTICE INSURANCE.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
taxpayer which is an eligible person, the medical malpractice insurance 
expenditure tax credit determined under this section for a covered year 
shall equal the applicable percentage of the qualified medical 
malpractice insurance expenditures incurred by an eligible person 
during the covered year.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is--
            ``(1) in the case of an eligible person described in 
        subsection (c)(2)(A), 20 percent,
            ``(2) in the case of an eligible person described in 
        subsection (c)(2)(B), 10 percent, and
            ``(3) in the case of an eligible person described in 
        subsection (c)(2)(C), 15 percent.
    ``(c) Definitions.--In this section:
            ``(1) Covered year.--The term `covered year' means taxable 
        years beginning in 2003 and 2004.
            ``(2) Eligible person.--The term `eligible person' means--
                    ``(A) any physician (as defined in section 
                213(d)(4)) who practices in any surgical specialty or 
                subspecialty, emergency medicine, obstetrics, 
                anesthesiology or who does intervention work which is 
                reflected in medical malpractice insurance 
                expenditures,
                    ``(B) any physician (as so defined) who practices 
                in general medicine, allergy, dermatology, or 
                pathology, and
                    ``(C) any hospital or clinic,
        which meets applicable legal requirements to provide the health 
        care services involved.
            ``(3) Qualified medical malpractice insurance 
        expenditure.--The term `qualified medical malpractice insurance 
        expenditure' means so much of any professional insurance 
        premium, surcharge, payment or other cost or expense required 
        as a condition of State licensure which is incurred by an 
        eligible person in a covered year for the sole purpose of 
        providing or furnishing general medical malpractice liability 
        insurance for such eligible person as does not exceed twice the 
        Statewide average of such costs for similarly situated eligible 
        persons.
    ``(d) Special Rules.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        credit determined under this section shall be claimed by the 
        eligible person incurring the qualified medical malpractice 
        insurance expenditure.
            ``(2) Certification.--Each State, through its board of 
        medical licensure and State board (or agency) regulating 
        insurance, annually shall provide such information to the 
        Secretary of Health and Human Services as is necessary to 
        permit the Secretary to calculate average costs for purposes of 
        subsection (c)(3) and to certify such average costs (rounded to 
        the nearest whole dollar) to the Secretary of the Treasury on 
        or before the 15th day of November of each year.
    ``(e) Effective Date.--This section shall apply to qualified 
medical malpractice expenditures incurred after December 31, 2002.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (14), 
by striking the period at the end of paragraph (15) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(16) the medical malpractice insurance expenditure tax 
        credit determined under section 45G(a).''.
    (c) Limitation on Carryback.--Section 39(d) of the Internal Revenue 
Code of 1986 (relating to transition rules) is amended by adding at the 
end the following new paragraph:
            ``(11) No carryback of medical malpractice insurance 
        expenditure tax credit before effective date.--No portion of 
        the unused business credit for any taxable year which is 
        attributable to the credit determined under section 45G may be 
        carried back to any taxable year beginning before 2003.''.
    (d) Denial of Double Benefit.--Section 280C of the Internal Revenue 
Code of 1986 (relating to certain expenses for which credits are 
allowable) is amended by adding at the end the following new 
subsection:
    ``(d) Credit for Medical Malpractice Liability Insurance 
Premiums.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified medical malpractice insurance 
        expenditures otherwise allowable as a deduction for the taxable 
        year which is equal to the amount of the credit allowable for 
        the taxable year under section 45G (determined without regard 
        to section 38(c)).
            ``(2) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 41(f)(5)) or a trade or business which 
is treated as being under common control with other trades or business 
(within the meaning of section 41(f)(1)(B)), this subsection shall be 
applied under rules prescribed by the Secretary similar to the rules 
applicable under subparagraphs (A) and (B) of section 41(f)(1).''.
    (e) Grants to Non-Profit Hospitals and Clinics.--
            (1) In general.--The Secretary of Health and Human 
        Services, acting through the Administrator of the Health 
        Resources and Services Administration, shall award grants to 
        eligible non-profit hospitals and clinics to assist such 
        hospitals and clinics in defraying qualified medical 
        malpractice insurance expenditures.
            (2) Eligible non-profit hospital or clinic.--To be eligible 
        to receive a grant under paragraph (1) an entity shall--
                    (A) be a non-profit hospital or clinic;
                    (B) be unable to claim the tax credit described in 
                section 45G of the Internal Revenue Code of 1986 for 
                the year for which an application is submitted under 
                subparagraph (C); and
                    (C) prepare and submit to the Secretary of Health 
                and Human Services an application at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
            (3) Amount of grant.--The amount of a grant to a non-profit 
        hospital or clinic under paragraph (1) shall equal 15 percent 
        of the amount of the qualified medical malpractice insurance 
        expenditures of the hospital or clinic for the year involved.
            (4) Qualified medical malpractice insurance expenditure.--
        In this subsection, the term ``qualified medical malpractice 
        insurance expenditure'' means so much of any professional 
        insurance premium, surcharge, payment or other cost or expense 
        required as a condition of State licensure which is incurred by 
        a non-profit hospital or clinic in a year for the sole purpose 
        of providing or furnishing general medical malpractice 
        liability insurance for such hospital or clinic as does not 
        exceed twice the Statewide average of such costs for similarly 
        situated hospitals or clinics.
            (5) Authorization of appropriations.--There are authorized 
        to be appropriated to carry out this subsection, such sums as 
        may be necessary for each of fiscal years 2004 and 2005.
    (f) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 45G. Credit for expenditures for 
                                        medical professional 
                                        malpractice insurance.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to expenditures incurred after December 31, 2002.
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